PRADEEP KUMAR AND ANOTHER versus POST MASTER GENERAL AND OTHERS

Citation: [2022] 19 S.C.R. 583 · Decided: 07-02-2022 · Supreme Court of India · Bench: L. NAGESWARA RAO, SANJIV KHANNA, BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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   [2022] 19 S.C.R. 583
583
PRADEEP KUMAR AND ANOTHER
v.
POST MASTER GENERAL AND OTHERS
(Civil Appeal Nos. 8775-8776 of 2016)
FEBRUARY 07, 2022
[L. NAGESWARA RAO, SANJIV KHANNA AND,
B. R. GAVAI, JJ.]
Negotiable Instruments Act, 1881: ss. 4, 78, 82 – Kisan Vikas
Patra Rules, 1988 – rr. 14, 15, 19 Government Savings Certificate
Act, 1959 s. 12 – Kisan Vikas Patras – Discharge of certificate –
Appellants during the years 1995 and 1996 purchased Kisan Vikas
Patras-‘KVPs’ in joint names from various post offices, of combined
face value on maturity Rs. 32.60 lacs – However, the KVPs were
encashed by one service agent allegedly acting on behalf of
appellants at a different post offices before the maturity date at a
lower value after the stipulated/lock-in period of holding – Sum of
Rs. 25,54,000/- paid by the sub post master, Post Office-respondent
no. 4 in cash to the service agent, who cheated the appellants and
pocketed the entire amount – Consumer complaint by the appellants
– NCDRC, while accepting some negligence on part of respondents
in making the payment, dismissed the complaint against the
respondents holding that they had acted in accordance with rr. 14
and 15 of the 1988 Rules, since there was no rule at the time of
encashment that the KVPs had to be paid by cheque and could not
be encashed in cash – However, the service agent, was held liable
to pay Rs. 25,54,000/– with interest @ 9% pa – On appeal, held:
Post office/bank can be held liable for the fraud or wrongs committed
by its employees – Respondents will be held liable for the acts of
Sub Post Master during the course of his employment – Payment
was made in violation of the statutory mandate of s.10 and, thus,
there is no valid discharge under clause (c) to s. 82 – Furthermore,
the service agent not being a ‘holder’, payment to her is not a valid
discharge u/s.78 rw s.8 – Respondents would have avoided the
liability and claimed valid discharge if they had accepted the KVPs
with the identity slip or if they had made payment by cross cheque,
in which case, they would have satisfied the condition that they had
made payment in good faith and there was no negligence, a
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SUPREME COURT REPORTS
[2022] 19 S.C.R.
requirement of clause (c) to s. 82 rw s.10 – Respondent Nos. 1 to 4
would be jointly and severally liable to pay the maturity value of
the KVPs as on the date the KVPs were presented to the post office
for encashment – Also appellants entitled to compensation of Rs.
1,00,000/-, as also costs.
Allowing the appeals, the Court
HELD: 1.1 In the impugned judgment, the NCDRC, while
accepting that some negligence could be attributed to the
respondents in making the payment, dismissed the complaint
against the respondents holding that they had acted in accordance
with rules 14 and 15 of the 1988 rules. Rule 19, requiring payment
by cheque when discharge value is more than Rs. 20,000/–, came
into force and is effective from 28-29th August 2001, whereas in
the present case, the KVPs were encashed at an earlier point of
time. Further, the appellants had not been truthful as it was difficult
to fathom as to why they had signed and acknowledged payment
on the backside of the KVPs and thereafter the KVPs were given
to an unknown agent. The appellants, having done so, acted with
open eyes and at their own peril and risk. [Para 9][592-E-F]
1.2 KVPs issued by the post office are a promissory
instrument as defined by Section 4 of the Negotiable Instruments
Act. Section 13 of the NI Act states that a negotiable instrument
may be payable either to order or to bearer. Sections 15 and 16
of the NI Act define ‘indorsement’, ‘indorsee’, ‘indorser’ and
‘indorsement in blank’ and ‘in full’. [Para 12][593-C-D; 594-B]
1.3 On a harmonious reading of Sections 8 and 78, it follows
that payment made to a person in possession of the instrument,
but not entitled to receive or recover the amount due thereon in
his name, is not a valid discharge. [Para 15][595-G]
1.4 As per Section 9, a ‘holder in due course’ is a person
who for consideration has become a possessor of the instrument
if payable to a bearer or if payable to the order to the person
mentioned, i.e. the payee, or becomes the indorsee thereof.
Holder in due course means the original holder or a transferee
in good faith, who has acquired possession of the negotiable
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instrument for consideration, without having sufficient cause to
believe that there was any defect in the titl

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