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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: MOHD. NIZAM

DATE OF JUDGMENT18/10/1979

BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. VENKATARAMIAH, E.S. (J)

CITATION:  1980 AIR  431            1980 SCR  (1) 968  1980 SCC  (1) 264

ACT:      Indian Post  Office Act,  1898, Section  34, Scope  of- Value Payable  Article accepted  by the  Union of  India for onward transmission  to a  foreign  country  which  in  turn collects the  amount from  the addressee  but fails  to send back due  to suspension  of the  money order service between the two  countries- Whether  the post  office is an agent of the sender and the foreign country a subagent.

HEADNOTE:      The respondent  filed a  suit for the recovery of a sum of Rs.  1606-8-0 being the value of V.P. article paid by the addressee in Pakistan to that Government for transmission to India. Due  to the  suspension of  the money  order  service between Pakistan and India after 19-9-49, the amount was not sent by  Pakistan P&T  authorities  to  P&T  authorities  in India. Therefore,  the appellant,  pleaded non-liability  by virtue of  proviso to  Section 34  of the Indian Post Office Act, 1898.  The Trial Court dismissed the suit on the ground that the  respondent’s claim  was barred by limitation under Rule 102  of the Rules framed under the Act and was also not maintainable in  view of  the proviso  to S.  34. The  first appellate court  reversed the said decision on the view that Rule 102 was ultra vires the Indian Post Office Act and that non-payment by  the Pakistan  Government  was  not  a  valid defence. The  High Court on appeal by the appellant affirmed the  appellate   decision  holding   that  the  post  office established by  the Government  of India was an agent of the plaintiff and  the Government  of Pakistan was acting as the sub-agent.      Allowing the appeal, the Court ^      HELD  :   When  two  sovereign  powers  enter  into  an agreement, as  in the instant case "in order to establish an exchange of  value payable articles", neither of them can be described as  an agent  of the other. It is plain that under such an  agreement if the Pakistan Administration decided to suspend the  V.P. service  temporarily and did not make over the money  realised from  the addressee,  it cannot  be said that the Union of India had received the money but failed to pay. [975 C-D]      Had the  Pakistan Government  been really  a sub-agent,

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payment to  them would  have been  as good as payment to the Union of  India, but that is not the case here. Sub-agent is defined in  Section 191  of the  Contract Act,  1872, as  "a person employed  by and  acting under  the control  of,  the original agent  in the  business of  the agency."  Under the arrangement entered  into between  the two sovereign powers, Union of  India and  Pakistan, neither  could be  said to be employed by  or acting  under the  control of  the other. In view of  the fact  that  since  19-9-1949  the  money  order service with  Pakistan remained  suspended, the  proviso  to section 34  of the Indian Post Office Act, 1872 is attracted which absolves the Central Government from "any liability in respect of the sum 969 specified for  recovery unless  and until  that sum has been received from the addressee". [975 E-G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 446 of 1969.      Appeal by  Special Leave  from the  Judgment and  Order dated 1-4-66  of  the  Allahabad  High  Court  in  S.A.  No. 1133/65.      R. P. Bhatt and Girish Chandra for the Appellant.      Pramod Swarup and R. Sathish for the Respondent.      The Judgment of the Court was delivered by      GUPTA, J.  The stakes are not high in this appeal-it is valued at  Rs. 1606-8-0-but it raises two rather interesting questions. Does  the post  office when  it accepts  a postal article for  transmission act  as an  agent of the sender of the article  ? And  where the  postal article  is sent  from India to  an  addressee  in  a  foreign  country,  does  the government  of   that  country   act  as   a  sub-agent  for transmission of the article ?      The  questions   arise  on  the  following  facts.  The respondent had  instituted a  suit in  the court  of Munsif, Moradabad, for  recovery of  a sum  of Rs. 1606-8-0 from the Union of India (Post and Telegraph Department) alleging that during the period from August 31, 1949 to September 17, 1949 the plaintiff despatched from the Moradabad City Post Office thirty value-payable  parcels to  addresses  in  Lahore  and Rawalpindi in  Pakistan, that they received the articles and paid the  entire amount  payable, but the defendant Union of India failed  to pay  the sum to the plaintiff. The Union of India in their written statement admitted that the aforesaid articles were  despatched by  the plaintiff  as claimed  and that their  value was recovered in Pakistan but the Union of India did  not receive  the sum from the Pakistan Government as the  money  order  service  between  India  and  Pakistan remained suspended  from September 19, 1949 and this was the reason why  the sum  could not  be paid  to  the  plaintiff. Reference was  made to  section 34 of the Indian Post Office Act, 1898  and  it  was  claimed  that  the  said  provision absolved the Union of India from liability. Section 34 reads as follows:           "The Central  Government may,  by notification  in      the Official Gazette, direct that, subject to the other      provisions of  this Act  and to  the payment of fees at      such rates  as may  be fixed by the notification, a sum      of money specified in writing at the time of posting by      the sender  of a postal article shall be recoverable on      the delivery thereof from the 970

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    addressee, and  that the  sum, so  recovered, shall  be      paid to the sender;           Provided that  the Central  Government  shall  not      incur any liability in respect of the sum specified for      recovery unless  and until  that sum  has been received      from the addressee.           Explanation:-Postal articles  sent  in  accordance      with the provisions of this section may be described as      "value-payable" postal articles." It was  further contended  in the written statement that the plaintiff’s    claim, made for the first time on October 22, 1950 which  was beyond one year from the date of the booking of the value-payable articles, was not admissible under rule 102 of  the Rules  framed under  the Indian  Post Office Act which fixed  a time-limit  of one year "from the date of the posting of the articles" for making such claims.      It also  appears from  the written  statement that  the postal authorities  had assured the plaintiff that his claim would be settled on receipt of the money from Pakistan after the money  order  service  between  the  two  countries  was resumed.      Shri Om  Prakash Sharma,  Complaint Inspector, deposing for the  defendant Union  of India  on April 15, 1953 stated that "since  19-9-1949 the  money order system with Pakistan was stopped  on account  of devaluation  and it still stands stopped, the  V.P. sent  by the  plaintiff was  realised  in Pakistan after 19-9-1949".      The trial  court dismissed  the suit on the ground that the plaintiff’s claim was barred under rule 102 and was also not maintainable in view of the proviso to section 34 of the Indian Post  Office Act.  The first appellate court reversed this decision  and decreed the suit on the finding that rule 102 in so far as it fixed a limit of one year for making the claim was  ultra vires  the Act;  it was  also held that the fact that  Union of  India had  not been able to realise the sum  from   the  Pakistan  Government  was  a  matter  which concerned the  two governments  and not  the plaintiff whose claim could  not be  defeated because  of nonpayment  by the Pakistan Government.      The High Court on appeal by the Union of India affirmed the decision  of the  lower appellate  court  decreeing  the suit. Rejecting the contention that section 34 of the Indian Post Office Act barred the suit, the High Court held:           "Section 34  of the  Act merely  bars a  suit in a      case where  the amount  has not  been received from the      addressee. In 971      the  present  case,  it  is  admitted  in  the  written      statement as  well as  by the  defendant’s witness that      the addressees  had paid  the amount  to  the  Pakistan      Government. That  Government was the agent of the Union      of India  .... If  the agent  acting on  behalf of  the      Union of  India fails  to do  his duty,  the  plaintiff      cannot be  made to  suffer. The  matter is  between the      Union of  India and its agent and the Union of India is      responsible for paying the money to the plaintiff." As regards  rule 102  the High  Court agreed  with the  view expressed by  the lower  appellate Court  that the  rule was ultra vires the Indian Post Office Act.      The High  Court proceeded  on the footing that the post office established  by the  Government of India was an agent of the  plaintiff for transmission of the postal articles to addressees in  Pakistan and  the Government  of Pakistan was really acting  for the  Government of  India as a sub-agent, and that  even if the sub-agent failed to pay, the liability

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of Union  of India  as agent of the plaintiff did not cease. Agency is  founded upon  contract, express  or implied.  The assumption here  is that  entrusting a postal article to the post office  for transmission  gives rise  to a  contractual relationship between  the sender of the article and the post office. What  is the warrant for such an assumption ? Before us Counsel  for Union  of  India  contended  that  the  Post Office discharged  a governmental function and acceptance of postal articles  for transmission  did not  give rise to any contractual relationship.      The post  office was established in India by a statute. Postage required  to avail  of the  postal services has been defined in  section 2(f) of the Indian Post of Office Act as "the duty  chargeable for the transmission by post of postal articles".  Under  section  4  the  exclusive  privilege  of conveying letters is reserved to the Central Government with certain exceptions  which are not significant. Section 17 of the Act  says that  "postage stamps"  shall be  deemed to be issued by  Government for the purpose of revenue. It appears from  section   23(3)  of   the  Act   that  under   certain circumstances postal articles sent by post may be opened and destroyed under  the authority  of the  Post Master General. These are  only some of the provisions of the Act which seem to indicate that the post office is not a common carrier, it is not  an agent  of the  sender of  the postal  article for reaching it  to the  addressee. It is really a branch of the public service  providing postal  services  subject  to  the provisions of  the Indian Post Office Act and the rules made thereunder. The  law relating  to the post office in England is not 972 very much  different from that in this country. In Triefus & Co. Ltd.  v. Post  Office the  court of appeal held that the post office  is a  branch of  revenue and  the  Post  Master General does  not enter  into any contract with a person who entrusts to the post office a postal packet for transmission overseas. This  decision approves  the observations  of Lord Mansfield in  Whitfield v.  Lord Le Despencer. In the course of his  judgment, Lord  Mansfield said: "The Post Master has no hire,  enters into no contract, carries on no merchandise or commerce. But the post office is a branch of revenue, and a branch  of police,  created by  Act of  Parliament.  As  a branch of  revenue, there  are great  receipts; but there is likewise a  great surplus  of benefit  and advantage  to the public, arising from the fund. As a branch of police it puts the whole  correspondence of the Kingdom (for the exceptions are  very  trifling)  under  government,  and  entrusts  the management and  direction of  it to  the crown, and officers appointed by  the  crown.  There  is  no  analogy  therefore between the case of the Post Master and a common carrier."      Counsel for  the respondent referred to the decision of this Court  in Commissioner  of Income-Tax,  Delhi v. Messrs P.M. Rathod & Co. where it was held that the post office was an agent  of the  seller for  the recovery  of price against delivery of  goods. Kapur,  J. speaking for the Court said : "In  the  case  of  delivery  of  goods  by  V.P.P.,  it  is immaterial whether the buyer directs the goods to be sent by V.P.P. or  the seller  does so on his own accord because the goods handed  over to the Post Office by the seller can only be delivered  to the  buyer against payment and this payment is received  for and on behalf of the seller. The buyer does not pay  till the  goods are received by him and once he has paid the price it is the Post Office that is responsible for payment of the money received by it to the seller. The buyer has no  longer any responsibility in regard to it. Therefore

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a payment to the Post Office is payment to the seller and at the place  where the  goods are  delivered  and  payment  is made..... This shows that whatever be the jural relationship between the  seller  and  the  Post  Office  in  respect  of carriage of goods sent by the seller under the V.P.P. system it becomes  an agent  of the  seller for the recovery of the price and  if it fails to recover the price and delivers the goods it  is liable  for any damage to the seller." Reliance was also  placed on  Union of  India v.  Amar Singh. In this case the 973 respondent booked  certain goods in September, 1947 with the N. W.  Railway at Quetta in Pakistan to New Delhi. The wagon containing the  goods was  received  at  the  Indian  border station of  Khem Karan  on November  1, 1947  from where the E.P. Railway  took over.  The wagon  reached  New  Delhi  on February 13,  1948. The respondent going to take delivery of the goods  found a major portion of the goods not traceable. In a suit for compensation for non-delivery of goods against the Dominion  of India, it was held on the facts of the case that the  N.W. Railway  had implied authority to appoint the E.P. Railway  to act for the consignor during the journey of goods by the E.P. Railway and by force of section 194 of the Indian Contract Act, the E.P. Railway became an agent of the consignor. It was also held that even if an agency could not be implied  from the  facts, a contract of bailment could be inferred between the E.P. Railway and the respondent.      It  is   however   not   necessary   to   examine   the circumstances and  the sense in which the Post Office or the Railway, in  the two  aforesaid decisions  was held to be an agent or  a bailee,  because  the  case  before  us  can  be disposed of  on a  short point. Admittedly the Government of Pakistan did  not make  over the  money  realised  from  the addressees in Pakistan to the Union of India. The provisions of the  Indian Post  Office Act  did not  apply  beyond  the territorial limits  of India  except to  citizens  of  India outside  India.   Postal  communication   between  different countries is  established by postal treaties concluded among them. In the course of the hearing of this case, counsel for the appellant  produced a  copy of  the  Agreement  for  the exchange  of   value-payable  articles   between  India  and Pakistan which  became operative  from April 1, 1948 and was to  "continue  in  force  until  it  shall  be  modified  or determined by  mutual consent of the contracting parties, or until  one   year  after  the  date  on  which  one  of  the contracting parties  shall have  notified the  other of  its intention to terminate it". The Agreement starts as follows: "In order to establish an exchange of value-payable articles between India and Pakistan, the undersigned, duly authorised for that purpose, have agreed upon the following Articles :" The copy  of the  Agreement shows  that it  was executed  in duplicate and  signed for  the Director General of Posts and Telegraphs of  the two  countries at  New Delhi  and Karachi respectively. The relevant Articles of the Agreement are set out below:      Article 4           Value-payable articles  shall be  entered  in  the      registered list, insured letter invoice, or parcel bill      in the same way 974      as  other  registered  articles,  insured  letters  and      insured or  uninsured parcels,  as the case may be, but      with the  addition, the column for remarks, of the word      "Value-payable", followed  by an  entry...of the amount      in Indian  rupee currency to be remitted to the sender,

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    and also of the sender’s name and full address in clear      characters.      Article 5           Every V.P.  article shall be accompanied by a V.P.      money order  in conformity  with or  analogous  to  the      specimen ’A’ and "AA" annexed to the present Agreement.      This money  order shall  bear a statement of the amount      to be  remitted to  the sender  and shall  show,  as  a      general rule, the sender of the Article as payee of the      order.....................      Article 6           The amount  to be  remitted to the sender together      with the  commission chargeable thereon (at the rate in      force for ordinary money orders drawn on the country of      origin  of   the  value-payable   article),  shall   be      collected from the addressee. The amount to be remitted      to the  sender shall  be transmitted  to the  latter by      postal money order and the commission shall be retained      by the Administration which issues the money order.      Article 9           If the  addressee of a value-payable article other      than a value-payable parcel, does not pay the amount of      the charge  within the  limit of time prescribed by the      internal regulations  of the  country of  delivery, the      article shall  be sent  back to  the office  of origin.      Each  country   shall  communicate  to  the  other  its      internal regulations in this respect.      Article 10           In the  event  of  the  loss  of  a  value-payable      registered article  or  when  a  value-payable  insured      letter or  a value  payable insured or uninsured parcel      has been  lost or  damaged or  its contents abstracted,      the responsibility shall be fixed and compensation paid      under the  same conditions  as in  the  case  of  other      registered articles,  insured  letters  or  insured  or      uninsured parcels,  as the  case may be. When, however,      such  an  article,  letter  or  parcel  has  once  been      delivered,  the   Administration  of   the  country  of      destination shall 975      be responsible  for the  sum  collected  and  must,  if      necessary, prove  that it  has remitted  it,  less  the      prescribed commission, to the sender.      Article 12           Each  Administration  is  authorised,  in  special      circumstances  that   would  justify  such  a  measure,      temporarily to  suspend the  V.P. service  wholly or in      part, on  condition that  notice of  such suspension be      given immediately  to the  other Administration, and if      deemed necessary,  the notices  of suspension  shall be      communicated by telegraph.      When two  sovereign powers  enter into  an agreement as above, neither  of them  can be described as an agent of the other. The  plaintiff was expected to know that without such an arrangement between the two countries it was not possible for the  Indian  postal  authorities  to  reach  the  postal articles to  addressees in  Pakistan. It is plain that under such an  agreement if the Pakistan Administration decided to suspend the  V.P. service  temporarily and did not make over the money  realised from  the addressees,  it cannot be said that the Union of India had received the money but failed to pay. Had  the Pakistan  Government been  really a sub-agent, payment to  them would  have been  as good as payment to the Union of  India, but that is not the case here. Sub-agent is defined in  section 191  of the Indian Contract Act, 1872 as

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"a person  employed by, and acting under the control of, the original agent  in the  business of  the agency".  Under the arrangement entered  into between  the two sovereign powers, Union of  India and  Pakistan, neither  could be  said to be employed by  or acting  under the  control of  the other. We have already referred to the evidence of Complaint Inspector Om Parkash  Sharma that  since September  19, 1949 the money order service  with Pakistan  had remained  suspended.  That being so,  the proviso  to section  34 of  the  Indian  Post Office  Act   is  attracted   which  absolves   the  Central Government  from  "any  liability  in  respect  of  the  sum specified for  recovery unless  and until  that sum has been received from  the addressee".  The plaintiff’s claim cannot therefore succeed.  In the view we take, it is not necessary to consider  whether rule 102 is ultra vires the Indian Post Office Act.      The appeal  is allowed,  the judgment and decree of the High Court  are set aside and the suit is dismissed. In view of the order made 976 on February 26, 1969 the appellant will pay the costs of the respondent. We  expect  the  defendant  to  act  up  to  the assurance given to the plaintiff as appearing in paragraph 3 of the written statement that the plaintiff’s "claim will be settled"  on  receipt  of  the  money  from  Pakistan  after resumption of  the  money  order  service  between  the  two countries. V.D.K.                                       Appeal allowed. 977