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SUPREME COURT OF INDIA
(From the National Consumer Disputes Redressal Commission, New Delhi)
L. NAGESWARA RAO, SANJIV KHANNA, B.R. GAVAI, JJ.
Pradeep Kumar and Another – Appellants
Versus
Post Master General and Others – Respondents
Civil Appeal Nos. 8775-8776 of 2016
Decided On : 07-02-2022
(A) Negotiable Instruments Act, 1881 – Sections 78 and 82 read with Sections 8 and 10 – Holder in due course – When payment is made in accordance with apparent tenor of instrument in good faith and without negligence to a person in possession thereof, it is payment in due course – Different principles apply for discharge from liability when negotiable instrument is payable to bearer or has been indorsed in blank, in which case payment must be made in terms of Section 10, whereas when negotiable instrument is payable to order, maker, acceptor or endorser would be discharged from liability when payment is made to ‘holder’ of instrument – Bank, when it makes payment of a forged cheque, it cannot resist claim of customer with defence of negligence on customer’s part – Post office, like a bank, can and is entitled to proceed against officers for loss caused due to fraud etc., but this would not absolve them from their liability if employee involved was acting in course of his employment and duties. (Paras 14, 17, 34 and 37)
(B) Consumer Protection Act, 1986 – Section 23 – Kisan Vikas Patra Rules, 1988 – Rules 14 and 15 – Kisan Vikas Patras (KVPs) – Fraudulent encashment by Agent – Payment was made to agent in violation of statutory mandate of Section 10 of NI Act and there is no valid discharge under clause (c) to Section 82 of NI Act – Agent not being a ‘holder’, payment to her is not a valid discharge under Section 78 read with Section 8 of NI Act – Fraud was committed by official in and during course of his employment – Respondents would be jointly and severally liable to pay maturity value of KVPs. (Paras 36, 39 and 41)
Facts of the case:
Appellants assail the judgment dated 15th May 2015 passed by National Consumer Disputes Redressal Commission, New Delhi, whereby their complaint registered as Consumer Case No. 148 of 2001 against Respondents has been dismissed, albeit allowed and decreed against agent.
Findings of Court:
Findings recorded in the inquiry report, which became the basis for the order of dismissal, which punishment was subsequently converted to compulsory retirement, would equally apply to the encashment of all KVPs. No valid distinction can be drawn between the case that became the subject matter of departmental enquiry and other cases of encashment of the KVPs. Hence, the post office/bank can be held liable for the fraud or wrongs committed by its employees.
Result : Appeals allowed.
Based on the provided legal document, here are the key points regarding the judgment:
JUDGMENT :
SANJIV KHANNA, J.
1. The aforementioned civil appeals preferred by Pradeep Kumar and Raj Rani (hereinafter wherever required referred to as ‘the appellants’) assail the judgment dated 15th May 2015 passed by the National Consumer Disputes Redressal Commission, New Delhi, the ‘NCDRC’ for short, whereby their complaint registered as Consumer Case No. 148 of 2001 against the Post Master General, U.P. Circle, Lucknow, Uttar Pradesh, Senior Superintendent of Posts, Lucknow Division, Post Master, Head Post Office Chowk, Lucknow and M.K. Singh, Sub-Post Master, Post Office, Yahiyaganj, Lucknow (hereinafter wherever required collectively referred to as ‘the respondents’) has been dismissed, albeit allowed and decreed against Rukhsana.
2. The appellants during the years 1995 and 1996 had purchased Kisan Vikas Patras, ‘KVPs’ for short, in joint names from various post offices located in the State of Uttar Pradesh in different denominations and with varying dates of maturity. The combined face value on maturity was Rs. 32.60 lacs; however, the KVPs were encashable at the post offices before the maturity date at a lower value after the stipulated/lock-in period of holding.
3. As per the appellants, in the last week of February 2000, they had approached the Post Master, Head Post Office Chowk, Lucknow, with the request to transfer the KVPs to the Chowk Post Office, Lucknow. The appellants were asked to apply with the Chowk Post Office. They were informed that the transfer request would be allowed after due verification of the KVPs and the identity/signatures on the transfer application from the record with the issuing post office. The process, they were forewarned, being time-consuming and cumbersome would require several visits to the post office. The Post Master, Head Post Office Chowk, Lucknow had recommended that they take services of Rukhsana, an agent appointed by the State of Uttar Pradesh and associated with the post office. As per the appellants, they were misled to believe that without the help of an agent like Rukhsana the transfer would not be possible and she would take care of their interest. Rukhsana, during the interaction, had informed the appellants that she had been working and associated with the post office for fifteen years, and being aware of the procedures would get the transfer effected without difficulty. On 03.03.2000, Rukhsana came to the residence of the appellants and as instructed, the appellants signed the original KVPs on the backside and handed them over to Rukhsana. She also took the Monthly Income Scheme (MIS) passbook stating that it was required to process the transfer. Rukhsana executed a receipt and gave it to the appellants confirming receipt of the KVPs.
4. Rukhsana did not on her own revert to the appellants and when contacted had assured them apropos the transfer. Meanwhile, appellant No. 1, i.e. Pradeep Kumar, had to leave Lucknow to join the official duty in Motihari, Bihar. Raj Rani, the second appellant, remained in touch with Rukhsana, who had informed that the process was taking time.
5. In June 2000, the appellants learnt that Rukhsana had cheated several investors and had been arrested by the police. Thereupon, the appellants made enquiries and discovered that the KVPs had been encashed from the Yahiyaganj Post Office and Lal Bagh Post Office. A sum of Rs. 25,54,000/- was paid in cash to Rukhsana, who had pocketed the entire amount. The appellants state that their enquiries reveal involvement of M.K. Singh, Sub-Post Master, Post Office, Yahiyaganj, the fourth respondent before us, who, contrary to the rules, had paid the maturity proceeds in cash and not by cheque in the names of the appellants. Underpinning the argument are the Kisan Vikas Patra Rules, 1988 “1988 Rules” for short and the Post Office Saving Bank Manual (Volume II), which we will refer to and delineate later.
6. The appellants made several representations to which the respondents did not respond, whereupon they filed t
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