New Delhi, Feb 7: The Supreme Court Monday said that the post office is entitled to proceed against its officers for the loss caused due to fraud but this would not absolve them from their liability if the concerned employee was acting in the course of his employment and duties.
Observing that a post office or a bank can be held liable for the fraud or wrongs committed by their employees, the apex court set aside the May 2015 verdict of the National Consumer Disputes Redressal Commission (NCDRC) which had dismissed a complaint filed against the Post Master General of Uttar Pradesh circle and some other officers of the department in a matter related to ‘Kisan Vikas Patra’ (KVP).
The complaint pertained to the encashment of some KVPs, which were purchased in joint names by two persons in 1995 and 1996 from various post offices in Uttar Pradesh, to the tune of Rs 25.54 lakhs.
A bench headed by Justice L Nageswara Rao directed that the officers would be jointly and severally liable to pay maturity value of KVPs as on date the KVPs were presented to the post office for encashment.
“Thus, the post office, like a bank, can and is entitled to proceed against the officers for the loss caused due to the fraud, etc, but this would not absolve them from their liability if the employee involved was acting in the course of his employment and duties,” said the bench, also comprising Justices Sanjiv Khanna and B R Gavai.
The top court noted that in February 2000, the complainants had approached the postmaster of the head post office in Lucknow with a request to transfer the KVPs to another post office.
They had alleged the postmaster had recommended that they take services of an agent appointed by the state of Uttar Pradesh and associated with the post office.
The complainants had said that they were misled to believe that without the help of the agent, the transfer would not be possible and the agent came to their residence and took the signed original KVPs.
They said in June 2000, they learnt that the agent had cheated several investors and was arrested by the police.
The complainant had said that they discovered the KVPs had been encashed from the Yahiyaganj and Lal Bagh post offices and a sum of Rs 25,54,000 was paid in cash to the agent who pocketed the entire amount.
They had claimed that enquiries revealed the involvement of a sub-postmaster who, contrary to the rules, had paid the maturity proceeds in cash and not by cheque in their names.
In its verdict, the NCDRC while accepting that some negligence could be attributed to the officer in making the payment, dismissed the complaint against the department officials holding that they had acted in accordance with the Kisan Vikas Patra Rules.
The NCDRC had held the agent liable to pay Rs 25,54,000 with interest at 9 per cent per annum from the date of release of the amount from the post office till the date of realisation by the complainants.
The apex court noted in its judgement that the agent, who has neither appeared before it to contest the plea nor has challenged the NCDRC judgement, was prosecuted and convicted on the charges including that of cheating and criminal breach of trust.
The bench dealt with the aspect of whether the department would be liable for the wrongs and acts of the concerned sub-postmaster.
The bench noted that a post office, as an abstract entity, functions through its employees who as individuals are capable of being dishonest and committing acts of fraud themselves or in collusion with others.
“Such acts of bank/post office employees, when done during their course of employment, are binding on the bank/post office at the instance of the person who is damnified by the fraud and wrongful acts of the officers of the bank/post office,” it said.
“Such acts of bank/post office employees being within their course of employment will give a right to the appellants to legally proceed for injury, as this is their only remedy against the post office,” the top court said.
The bench, while referring to the details of the case, said there is no doubt that the fraud was committed by the sub-postmaster in and during the course of his employment.
It also noted that the department had taken action in the proceedings initiated against the sub-postmaster.
“In view of the aforesaid findings, we allow these appeals and set aside the impugned order passed by the NCDRC dismissing the consumer case filed by the appellants,” it said.
The bench said that the direction passed by the NCDRC against the agent would remain undisturbed.
It directed that the appellants would be entitled to compensation of Rs one lakh along with a cost of Rs 10,000. (PTI)
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