Reserved
State Consumer Disputes Redressal Commission, U.P.
Lucknow
Appeal no.1468 of 2018
Union of India through Senior Post Master,
Visheshwarganj, Post Office, Visheshwarganj,
Varanasi. ….. Appellant.
Versus
1- Rohit Baranwal s/o Anil Kumar Baranwal,
R/o Village Babusarai, Post Office, Maharajganj,
Sant Ravidas Nagar, Bhadohi.
2- Jagat Narayan Mishra s/o Sri Surya Narayan Mishra,
R/o 21/92/-93, Mahamandal Nagar, Lahurabir,
Varanasi. …. Respondents.
Present:-
1- Hon'ble Mr. Justice Ashok Kumar, President.
2- Hon'ble Mr. Vikas Saxena, Member.
1- Dr. Udai Veer Singh, Advocate for the appellant.
2- Sri Ajay Wahi, Advocate for the respondent no.1.
Date: 16. 9.2021
JUDEMENT
(Delivered by Mr. Vikas Saxena, Member)
1- This Appeal u/s 15 Consumer Protection Act,1986 has been filed by the opposite party no.1 of the Complaint no.243 of 2010 decided by the District Consumer Redressal Commission (then Forum), Varanasi vide judgment/order dtd. 26.07.2018 by which the complaint of the Consumer of the Post Office was allowed.
2- The complainant submitted this complaint with the averments that his father opened a new account of provident fund at the post office, Vishveshwar Ganj, Varanasi, that is, the opposite party number 1 in this appeal, through its agent the opposite party 2, who opened the account by depositing Rupees 50,000/- initially. The opposite party number 2 gave
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a pass-book with the entry of the deposit. The father of the complainant, in order to verify genuineness of the transaction and integrity of the agent, cross-checked the amount in his pass-book with the ledger account of the post-office and found it correct. Later on, he deposited many other sums of money in the PPF account on several dates, detail of all money tendered to be deposited is elaborated in Para 5 of the complaint. It is alleged that the agent, opposite party number 2 issued fake receipts, for these sums of money proffered by the account holder, but with these receipts the complainant's father was satisfied that his money was deposited in the account. As per the complainant, by means of all these deposits, the balance in the PPF account should have been approx. Rs. five lakh eighty six thousand but in the year 2010 when father of the complainant compared the ledger book with the passbook, it was found that all the subsequent deposited money was not shown in the ledger book. The complainant alleged that the opposite party number 2, in collusion with a few employees of the post office, embezzled the money, which was given by the complainant to the opposite party number 2 for depositing it in the PPF account. This was further alleged that his father also purchased some Kisan Vikas Patra with the assistance of opposite party number 2 for him and his family members, the certificate issued for these KVPs were, subsequently, all discovered to be forged and stolen. The party number 2, who is an employee of party number-1, misappropriated the amount for which the Post office is liable to pay. The complainant submitted this complaint for recovery of the amount and other damages.
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3- The opposite party one submitted his written statement, in which, he accepted opening of the PPF account and initial deposit of the a rupees 50,000 and said that the complainant blindly relied on the opposite party number- 2 and did not care to check the ledger from the 1998 to the year 2010, for 12 years. He also did not bother to take back the passbook from the agent. According the opp. party the act of depositing the amount for these 12 years, without verifying the amount at post office is an act of laxity and carelessness on part of the complainant. As per the party number -1 complaint himself is guilty of negligence for the alleged fraud of the opposing party no.2, otherwise he would have discovered the fraud, had he been a little attentive. The opposing party-1 has said that all the national saving agents appointed as per paragraph 10 of directory, which provides that is any fraud is committed by any agent, it is enquired by the appointing authority, who will, lodge a first information report in police station, after the enquiry. The national saving agents are appointed by the State Government through District Magistrate of the District concerned as District Saving officers, who is responsible for the act of an agent and the opposite party no.1 that is the post-office is not legally accountable for that. Moreover, the consumer court was not having jurisdiction to entertain such complaint, because the agent for the facility of work of the Post office is appointed by the District Magistrate of the District concerned and the acts of fraud and misdeeds committed by the agent are looked in to, by that authority. As a result, the so called agent for the works of a Post Office is not in fact his agent. It is also asserted by the opposite party no.1 that the
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complainant has alleged fraud and forgery in his complaint, therefore, the question involved needs a detailed enquiry, for this reason the consumer commission with summary powers has no jurisdiction to hear and decide this complaint.
4- Opposite party number 2 also submitted his written statement, in which he has stated that he deposited all the amount given by the complainant and never defrauded him. The complainant has submitted this false complaint to grab some money from the post office. The complainant is an educated person and cannot do such an act. He was competent enough enquired from the post office and to check the ledger, himself. There is no independent witness substantiate the version of the complainant in his complaint. He has submitted false and frivolous complaint which is liable to be rejected. The opposite party number two sought in compensation of Rs. 10,000/- from the complainant all his harassment.
5- After giving opportunity of hearing to the parties, the District Consumer Commission(then forum) allowed the complaint and directed the opposing party number-1 to pay the complainant Rs. 5,86,000/- along with annual interest of 12% and also damages and costs of the litigation.
6- Being aggrieved of the judgment the opposite party number one preferred this appeal. It is submitted by the appellant that the District Forum has failed to appreciate the provisions of paragraph 24A of Standardized Agencies is the system, which gives that in the misuse or misappropriation of investors money by an agent the appointing authority concerned should deal with the matter and takes suo-motu prompt action.
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7- We heard Ld.Counsel Shri Shri Krishna Pathak, Adv. for the appellants and Shri Ajay Wahi, Adv. for the respondent no. 1 and perused all the material on record.
8- On hearing counsels for both the parties and on perusal of the records this bench considered the following points for disposal of this appeal.
- Whether the agent Jagat Narayan Mishra was an agent of appellant post office in relation to the third party i.e. the complainant/ respondent for the impugned transactions ?
- Whether the appellant post office is bound by the impugned acts committed by the agent Jagat Narayan Mishra in taking the deposits on behalf of the post office ?
- Whether the post office is liable for the compensation towards the complainant and the impugned judgment is correct ?
Point no.1: In the present case, it is alleged by the complainant that the respondent no.2 Jagat Narayan Mishra received Rs.50000.00 cash from the complainant for opening of the said Public Provident Fund account No.10000925. It is further alleged that the agent committed fraud and misappropriated the money tendered to him for further deposits meant for the PPF account. The respondent no.2 also issued fake Kisan Vikas Patras for the complainant and thus, by committing fraud made the complainant lose money to the extent of approx. Rs. five lakh eighty six thousand. The appellant in their written statement disputed the authority of the respondent
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no.2 as their agent and have said that in paragraph 24 A of OM no.FI(53)NS/57 dated 31.12.1959 of Standardized Agency System issued by Ministry of Finance and special circular no.66 date 4.3.1960 of the Director General, Post, it is given that in case of misappropriation of investor's money by an agent, the appointing authority concerned would deal with the matter and take suo motu prompt action on it. It is also contended by the appellant that in the present case, the appointing authority of the respondent no.2 was the District Magistrate/Chief Development Officer, Varanasi. Therefore, the respondent no.2 cannot be assumed as an agent of the appellants and liability of misappropriation of payment made by the complainant cannot be fastened upon them. The Ld. Forum ought to have sought the agreement of appellant and respondent no.2 which might have shown the legal preposition that there is an agreement between the respondent no.2 and appointing authority and they are responsible for the consequences of any misdeed by the agent.
9- Regarding this argument submitted by the appellant, the provisions of Contract Act on the matter of appointment and authority of an agent should be taken in view because as per the pronouncement of the Hon’ble Apex court in Marine Container Services vs. Gogo Garments published in AIR 1999 SC page 80 (Para 4) law of contract applies to all litigants in matter of all contractual obligations including the litigants under the Consumer Protection Act,1986.
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10- The provisions of Indian Contract Act, 1872 relating to appointment of agent, it is given in section 182 –
182. “Agent” and “principal” defined.—An “agent” is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the “principal”
11- Thus, an agent is a person employed to do an act for another or to represent any in dealing with third persons which makes clear that any person who is representing the other person in a business dealing can be assumed an agent for the third persons. In this regard, Section 184, it is given that whoever assumed an agent becomes responsible to his principal according to its provisions of the Act. It is further given in Section 185 that any consideration is not necessary to create an agency most importantly Section 186 of the Contract Act gives that the authority of an agent may be expressed or implied. Defining expressed and implied authority, Section 187 of the Act says that -
187. Definitions of express and implied authority.—An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
12- As per Section 187, implied authority can be inferred from the circumstances of the case and from the ordinary course of dealing between the parties. In this particular case though the agent respondent no.2 was appointed by the District Magistrate, Varanasi as Chief Saving Officer, Varanasi but said agent was doing all the
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work and handling all the transaction for the Post-Office. He opened PPF account for and on behalf of the complainant and also purchased Kisan Vikas Partra of the appellant for him and his family members. Therefore, impliedly he was working for and as an agent of the Post Office in relation to the complainant, i.e. the third party. In this regard, the judgment of Hon’ble High Court in Dev Narayan Rao vs. Kukur Bind reported in 1902 ILR 24 Alld. Page 319 is relevant, wherein the Hon’ble High Court pronounced that the authority to an agent may be given by words written or spoken or by conduct of the authority.
13- Hon’ble Supreme Court in judgment Chairman, LIC vs. Rajiv Kumar Bhaskar reported in (2005) 6 SCC page 188 has pronounced that for third party a person can be assumed as an agent of his principal, if the third party has reasons to believe that the person is acting as an agent of that principal. In this particular case before the Hon'ble Court, the employer collected premium of LIC from their employees, the Hon’ble Apex Court found that the employees has reason to believe that their employer is collecting the premium of insurance as an agent of LIC. The aforesaid pronouncement of Hon’ble Apex Court is applicable to this particular case also. In this matter though the respondent no.2 was appointed by the District Magistrate as per version of the appellant yet he was doing all the transactions on behalf of the post office, therefore, for the third party i.e. the complainant, they can be characterized as an agent of post office as far as the
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transactions with the third party i.e. the complainant are concerned.
14- On this point, the judgment of Hon’ble NCDRC in Union of India and ors. vs. Arun Borse and ors. reported in 2007 (2) CPJ 165 (NC) can be cited which gives that no doubt the agent might have been appointed by the District Collector who was receiving transactions for purchasing Kisan Vikas Patra and as well as doing transaction of Post Office under small savings scheme. The Hon’ble NCDRC in Para 8 of the judgment said that no doubt the agent might have been appointed by the District Collector, at the same time this is internal arrangement of appointing agents for collecting money under the small savings scheme between the Union of India and the State Government. It is also true that as per the circular of Standardized Agency System, in case of misappropriation of investor’s money, by an agent, the State Government would bear the loss but this is also an internal arrangement between the Government of India and the State Government but the consumer/complainant is not concerned with the said arrangement and hence, he is entitled to recover the amount from both or any of them as their responsibility is joint and several.
15- In this particular case, upon guidelines of the aforesaid judgments of the Hon’ble Supreme Court and Hon’ble NCDRC, it can be inferred that though the agent respondent no.2 was appointed by the District Magistrate yet in matter of alleged misappropriation of the amount deposited in PPF account and in issuing fake Kisan Vikas Patra, the liability can be fixed upon on the State Government, the appointing
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authority, as well as in particular his principal i.e. the post office the appellants Union of India through post office, who are also liable for the loss and compensation to the complainant.
Point No.2:
16- It is given in Section 226 of the Contract Act that contracts entered into through an agent and obligation arising from the act done by an agent may be enforced and will have the some legal consequences, as if the contract had been entered into by the principal in person. In case of agent exceeding his authority of agent, it is given in section 226 of the Contract Act that when an agent does more than he is authorized to do which is within his authority can be separated from the part which beyond his authority so much only what he does as within his authority is binding between him and his principal. In case of fraud and misappropriation by an agent, the principal has been made liable for the transaction as per section 238 of the Contract Act which gives that the fraud committed by an agent acing in the course of business for their principal have the same effect as if such misrepresentation of fraud had been committed by the principal but fraud committed by agent in matter which do not fall within the authority of the agent do not effect their principal.
227. Principal how far bound, when agent exceeds authority.—When an agent does more than he is authorized to do, and when the part of what he does, which is within his authority, can be separated from the part which is beyond his authority, so much only of what he does as is within his authority is binding as between him and his principal.
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In case of fraud and misappropriation by an agent, the principal has been made liable for the transaction as per section 238 of the Contract Act which gives that the fraud committed by an agent acing in the course of business for their principal have the same effect as if such misrepresentation of fraud had been committed by the principal but fraud committed by agent in matter which do not fall within the authority of the agent do not effect their principal.
238. Effect, on agreement, of misrepresentation of fraud, by agent.—Misrepresentation made, or frauds committed, by agents acting in the course of their business for their principals, have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals.
17- In combined reading of Section 227 and 238 of the Contract Act, it can be visualized that if the third party can make out that the agent is making transactions beyond the authority of agent i.e. for which he has been authorized by the principal then liability of principal towards the third party does not arise but when from the simple transaction, it cannot be made out that the agent is not authorized to do for the transaction, he is making then the principal will liable for any action or misrepresentation committed by the agent.
18- In this particular case, it is clear from the record that the agent Jagat Narayan Mishra has colluded with the employees of the post office department. FIR for misappropriation, cheating and fraud has been registered against Jagat Narayan Mishra by Ganesh Baranwal vide his letter dated 3.10.2010, a
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copy of the same is on record as annexure ‘E” of the written statement of the respondent. FIR was also lodged against one Triloki Nath Ram working as Ledger Assistant in the said post office whose bail application was disposed of on 4.1.2012 wherein it was held that there was a collusion between the agent and employees of the post office. Copy of the said order dated 4.1.2012 is on record annexure ‘F’. A copy of FIR annexure ‘G’ of the written statement against Subhash Chandra Chaurasia, Counter Assistant in GPO, Vishesherganj, Varanasi was registered. The bail application of the said employee was also disposed on 4.1.2012, copy of the said order is on record as annexure ‘H’. Similarly, other FIRs were lodged by the complainant and his family members against the agent Jagat Narayan Mishra and employees of the post office which shows that the agent colluded with the employees of the post office so that he was successful in misappropriating the sum deposited in PPF accounts and also issuing fake Kisan Vikas Partras by which heavy loss was incurred to the complainant and his family members for which agent respondent no.2 and appellant as his principal both are jointly and severally liable.
19- In this regard, we rely on the judgment of the Hon’ble NCDRC in Rajendra Singh Mullik vs. Sr. Branch Manager, LIC reported in 2018(2) CPR 305 (NC). In this case, the complainant alleged that he had deposited a sum of money per year from 11.1.2005 for 8 years till 11.1.2012 and he deposited total Rs.81176.00. It is further submitted by him that the OP LIC refused to pay the deposited amount by saying that the complainant has deposited the amount in
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Jeevan Nidhi Pension Plan policy. Thus, it was alleged that agent of the OP played a fraud by depositing the amount in wrong policy. The Hon’ble NCDRC giving verdict that there was deficiency on the part of the LIC and their agent. The complainant has suffered unnecessarily. Therefore, he deserves to receive the entire amount along with interest.
20- It is also held in Haryana Gramin Bank and ors. vs. Jasvinder and ors. reported in IV (2010) CPJ 210 (NC). In the judgment it was pronounced that an employee is vicariously liable for action of employees. It is clear that the postal authorities are liable to provide adequate compensation of the depositors who suffered due to misdeed of its own employees.
21- On conclusion of the said discussions, it may summarized that in this particular case, the agent of the appellant the post office allegedly misappropriated the amount deposited by the complainant and his family members into PPF accounts and also the agent issued fake Kisan Vikas Partras by utilizing hard earned money of the complainant. Therefore, as principal of their agent, the appellants are liable to make good the loss incurred by the complainant.
22- Coming to the third point in this particular case, the ld. District Consumer Forum, Varanasi has decreed the complaint of the complainant and issued a direction to the appellant for payment of Rs.586000.00 along with 12% simple interest and also Rs.10000.00 compensation as well as Rs.14000.00 cost of the suit. The order for direction of recovery of Rs.5,86,000.00 appears to be sound in our view.
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The rate of interest decreed on this amoount @ 12% seems to be on higher side instead of 6% the prevailing interest is enough from the date of institution of the complaint till actual payment. Besides the compensation of Rs.10000.00 is not warranted in this case and also both the parties can bear their own cost in suit and appeal. In this way, the appeal is fit to be allowed partially.
Order
23- The appeal is partially allowed. The impugned order is modified to the extent that the direction of recovery of Rs.5,86,000.00/- from the appeallants and Respondant no.-2 ,jointly and severally, is confirmed. The rate of interest from date of institution of complaint till the final payment is modified to 6% per annum.Rest of the impugned order is confirmed.
24- There is no particular order in respect of costs in this appeal.
(Justice Ashok Kumar) (Vikas Saxena)
President Member
