Postal; CESC Ltd. Vs. Chief Post Master General [Supreme Court of India, 11-05-2012]

Indian Post Office Act, 1898 – Section 11(2) – Post Office Guide – Clause 30(iv) – The failure on the part of the Postal Authority to ensure correct postage – The mistake having been committed by the Postal Authority and there being failure on the part of office of the Postal Authority to check the postal articles and postage for recovering the amount from the addressee, it is not open for the Postal Authority to pass on such liability on the sender company or to recover the same from the Company.

Postal Authority

AIR 2012 SC 2027 : (2012) 6 SCC 286 : JT 2012 (5) SC 190 : 2012 (5) SCALE 492




MAY 11, 2012









These appeals have been preferred by the appellant- CESC Limited (hereinafter referred to as the “Company”) against the common order and judgment dated 20.1.2004 whereby the Division Bench of the Calcutta High Court allowed the appeal preferred by the first respondent- the Chief Post Master General, West Bengal Circle and others (hereinafter referred to as the “Postal Authority”) and dismissed the appeal preferred by the Company.

2. The order impugned before the Division Bench was passed in the Writ Petition No. 2282 of 1999 preferred by the Company against a demand notice dated 10.9.1999 issued by Postal Authority asking the Company to deposit a sum of Rs.1,83,89,410/-. The learned Single Judge by order dated 7.11.2000 had allowed the writ petition and held that the demand notice dated 10.9.1999 is contrary to

Section 11(2) of the Indian Post Office Act, 1898

(hereinafter referred to as “the Act”) and remitted the matter with a direction to the Postal Authority to consider the representation of the Company after giving it a hearing and with a further direction that, till the matter is decided, the entire deposit of Rs.50 lacs as was made by the Company in terms of the interim direction be kept with the Postal Authority. In case, it was decided that the amount was not payable by the Company, the Postal Authority would refund the same, but in the event it is found that the amount was due and payable by the Company, the Postal Authority shall adjust the same against the dues.

3. Against the said order, an appeal was preferred by the Company as the learned Single Judge allowed the Postal Authority to retain the amount of Rs. 50 lakhs deposited by the Company in terms of the interim order while another was preferred by the Postal Authority against the said order of the learned Single Judge since the notice of demand was quashed and the learned Single Judge held that the Postal Authority had no power to demand such amount.

4. The case of the appellant is that it is a ‘company’ incorporated under the provisions of the Companies Act and is conducting the business of supplying electricity. The Company has about 26 lakh of registered consumers which is increasing continuously. The consumption bills are sent by the Company to its consumers, every month through the Post Office. For the purpose of sending monthly consumption bills by post, a specific area has been allotted to the Post Office in the Southwest Regional Office of the Company at Taratola for carrying out the necessary operations, commonly known as the “Taratola Sorting Office” of the Postal Department. This practice is being followed by the company for a considerable period of time. The Officials of the Postal Department are posted at the said Taratola Sorting Office and a sub-office has been set up in a space provided by the appellant company exclusively for the purpose of receiving ‘franked’ monthly electricity consumption bills as is made by the officials posted there. The appellant company had installed the requisite ‘franking machines’ for this purpose which are operated by the appellant company’s staff.

5. The dispute relates to the period between 1.6.1997 to 29.10.1998, during which, the monthly consumption bills, upon being folded, were marked with the requisite postal stamp of Rs.1/- per bill using franking machines. The monthly consumption bills thus franked, were made over to the counter of the Postal Department located in the said premises. Upon being satisfied with the franking marks and the value thereof, the Postal Officials accepted and took the postal articles, namely, the monthly consumption bills for being dispatched to the addressee consumers. Till then there were no disputes that the appellant had ever breached the franking conditions as enshrined under the license. The monthly consumption bills are printed on a sheet of paper which are then merely folded for convenience. The consumption bills are not sealed at either end and when posted, are not enclosed in any envelop or wrapper. The consumption bills are also not stitched or stapled anywhere. Under the prescribed postal tariff as prevailing with effect from June 1, 1997, a charge of Rs.1/- per letter was prescribed for ‘letter cards’ under ‘Serial No. 3’ and for ‘Book’, ‘Pattern’ and ‘Sample Packets’ under ‘Serial No. 5’ thereof. The monthly consumption bills of the appellant company weighs much less than 50 grams.

6. By letter dated 29.5.1997, the Director of Postal Service informed the Company that as per revised postal tariff w.e.f 1st June, 1997, charges for ‘Book’, ‘Pattern’ and ‘Sample packets’ for first 50 gms. or fraction thereof is Rs.1/-. For every additional 50 gms. or fraction thereof in excess of 50 gms. is Rs.2/-. Monthly consumption bill, if it is posted as ‘Book’, ‘Pattern’ and ‘Sample packets’ the revised postal tariff w.e.f. 1st June, 1997, as mentioned above will be applicable.

7. Accordingly, from June 1997 to October 29, 1998, the appellant sent a total of 1,63,60,121 Bills, based on the aforesaid communication dated 29.5.1997, treating the posts as ‘book post’, affixing Rs.1/-, per postal articles. The posts were cleared by the postal department without any objection and were also delivered to the respective addressee consumers.

8. All of a sudden on 29.10.1998, the appellant, by another letter was informed that the letter dated 29th May, 1997 was treated as cancelled by the Postal Authority with further intimation that the ‘Monthly Consumption Bill’ does not come under the category of ‘book post’/ ‘book packets’ and that such type of ‘bills’ could be posted by affixing postage stamps as applicable to the ‘letter mail’ with immediate effect. The appellant objected to the cancellation and requested the postal authorities for a review of the decision and to restore the status quo. However, in compliance with the aforementioned letter the Company started posting the consumption bills affixing Rs.3/- stamps under protest and without prejudice.

9. Suddenly the Vigilance Officer, Department of Post by letter dated 18.6.1999 made additional claim for Rs. 1,83,89,410/- for the period from 1st June, 1997 to 29th October, 1998 during which a total of 1,69,60,121 bills were despatched by the company affixing franking stamp of Rs.1/- per bill. Such claim was made on the ground of postage rate from 1st June, 1997 was Rs.2/- per Book Post and from 30th August, 1998 the rate was Rs.3/- per Book Post.

10. The Company replied on 30.10.98, that under Section 11, the liability is not of the Company to pay but that of the addressee consumers as the posts have already been delivered by the Postal Authority without any objection and hence no such objection can be raised at this stage. It was informed that neither was there any objection taken by the Postal Authority at the time of entrustment of the posts nor at the time of delivery, when they were actually delivered to the addressee. This demand was raised long after the posts had been delivered to the respective addressees and hence it requested to review the decision.

11. Pursuant to the said letter the Postal Authority informed the company by letter dated 26.7.1999 that the case was reviewed by the appropriate authority and reiterated the demand for Rs.1,83,89,410/- thereby rejected the prayer for review as is evident from the said letter. The relevant portion of which is quoted hereunder: