Postal FD can be withdrawn before maturity, says Orissa HC after noting ‘exceptional circumstances’

In a landmark ruling, the Orissa High Court has allowed a woman to withdraw funds from her Postal National Savings Time Deposit Scheme, 2019 account before the five-year maturity period, after she sought urgent financial assistance for a family marriage.

The Court overruled the objections raised by the postal department, which had previously denied her request.

Court Cites Hindu Law and Traditional Necessities

Hearing the matter, the Court invoked principles of Hindu law, noting that three traditional necessities of aapaatkaale (emergency), vyaahaarike (social obligations), and kutumbaarthe (family needs) justify early access to funds.

The HC took note that the petitioner required the money for a family marriage, and since the funds in the deposit belonged to her and not to the entity holding the money, she could withdraw the amount.

The decision also took note of the petitioner’s counsel, highlighting that the amended Rule 8(d) of the National Savings Time Deposit Scheme, 2019, notified on November 7, 2023, did not completely prohibit premature withdrawal.

The rule allows encashment after four years at a reduced interest rate, but it does not bar access before that in genuine circumstances, the petitioner argued.

Postal Department’s Standpoint

The postal department contended that premature withdrawal is permitted only after four years and before maturity, making Das ineligible for early encashment.

However, the court rejected this interpretation, noting that Rule 8(d) is subordinate legislation and should be read with leniency.

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Court Directs Prompt Processing

The Court instructed postal authorities to process Das’s request within two weeks, warning that any delay would attract a 1% monthly interest as personal liability on the officers concerned. 

While the court did not comment on the interest applicable for premature withdrawal, it emphasised that depositors’ rights over their funds cannot be obstructed without valid legal grounds.