Union Of India (Uoi) And Ors., ... vs Mr. Arun Borse, Government Of ...

on 5 April, 2007

National Consumer Disputes Redressal

Union Of India (Uoi) And Ors., ... vs Mr. Arun Borse, Government Of ... on 5 April, 2007
Equivalent citations: II (2007) CPJ 165 NC
Bench: M Shah, R Rao
ORDER M.B. Shah, J. (President)

1. The complainant, Arun Borse, paid a sum of Rs. 25,000/- for purchasing Kissan Vikas Patras
(KVPs) to the agent appointed by the State of M.P. through the District Collector, Gwalior under
Small Savings Scheme. The said amount was paid by the complainant out of the GPF and Gratuity
received by his father, who was a Government employee. Xerox copies of five receipts of this
transaction are produced on record. There is no dispute with regard to the genuineness of the said
receipts. The receipts are issued on behalf of the Govt. of India from the Authorised Agent's Receipt
Book of National Savings Organisation with a specific endorsement that the receipt was issued by
the agent/person authorized to issue the receipt.

2. As the KVPs were not received, the complainant approached the District Forum, Gwalior, by filing
Case No. 1295/1993. Before the District Forum, the Superintendent of Post Offices submitted that
the agent has played fraud on depositors and immediate measures were taken by informing the
Superintendent of Police and investigation is also being conducted by the police. After considering
the aforesaid fact, the District Forum arrived at the conclusion that the dispute is not covered by the
Consumer Protection Act, 1986, as there is no deficiency in service and, therefore, the complainant
ought to have filed a Civil Suit.

3. Against that order, the complainant preferred Appeal No. 415/1996 before the State Consumer
Disputes Redressal Commission, Madhya Pradesh. By its judgement and order dated 4.9.1998, the
State Commission allowed the Appeal and directed the respondents to refund the amount of Rs.
25,000/- with interest at the rate of 18% p.a. from 31.10.1992 with the direction to pay Rs. 100/- as
costs and Rs. 250/- as advocate's fee. Against that order this Revision Petition is filed.

4. Submissions:

Learned Counsel appearing on behalf of the petitioner, Union of India, submitted that the order
passed by the State Commission against the petitioner, cannot be justified because the agents are
appointed by the Collector of the concerned State Government. If the agent commits fraud, only the
State Government would be responsible and not the Union of India because Union of India has not
received the amount from the complainant. For this purpose, reference is made to the circulars
issued by the Central Government as per the Standardized Agency System. The relevant portions are
as under:

"Standardised Agency System - Issue of receipt books to agents":

(1). I am directed to refer to this Ministry's letter No. F.1(53)-NS/57 dated 31.12.1959 on the subject
cited above and to state that the existing system of allowing the agents to accept cash from investors
has been further reviewed. In supersession of this Ministry's letter No. F.3/37/91-NS.II dated

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 Union Of India (Uoi) And Ors., ... vs Mr. Arun Borse, Government Of ... on 5 April, 2007

16.8.1993, it has now been decided that the maximum limit of cash receipt books to be issued to
Small Savings Agents will henceforth be Rs. 50,000/- at a time. There will, however, be no
restriction for accepting cash from a single investor subject to the maximum limit of Rs. 50,000/- at
a time. There is no change in so far so issue of cheque receipt books is concerned.

(2). It is reiterated that the agents shall never, under any circumstances, exceed the amount upto
which a receipt form is valid for an investment or investments and they shall not make any
alteration in the matter printed on the receipt form and counterfoil.

(3). The Appointing Authorities will check the antecedents of the agents before their appointment.
In case where the Appointing Authority is an Officer authorized by a State Government, that State
Government will appoint Supervisory Authority whose duties include checking of receipt books on
demand and to report the irregularity, if any, to the Appointing Authority. In the event of any
misappropriation of investor's money by an agent appointed by an Appointing Authority authorized
by a State Government, that State Government will bear the loss.

(4). It is requested that necessary instructions may be issued accordingly to all concerned. It may be
ensured that the existing instructions relating to maintenance of the agents registers etc. and other
instructions issued by the Ministry from time to time are strictly followed by the post offices.

5. Findings:

In our view, the receipts which are produced on record establish beyond doubt that the agent has
received the amount on behalf of the 'Government of India'. The relevant part of the receipt is as
under:

To be used as Cash Receipt of Rs. 5,000 or less than Rs. 5,000 Government of India National
Savings Organisation Authorised Agent's Receipt Book ...

...

For Institutional Agents only appointed under S.A.S.

6. Further, the five receipts are signed by an authorized agent/person authorized to issue such
receipts. Also, there is an endorsement to the effect that the receipt is to be used by the institutional
agents only appointed under S.A.S. The person who collects the amount under the National Savings
Scheme is the agent of the Union of India. He is not the agent of the State Government, even though
the State Government appoints such person through the District Collector, as directed by the Union
of India.

7. In this view of the matter, it cannot be said that the Union of India is not liable to reimburse the
complainant for the fraud committed by its agent.

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 Union Of India (Uoi) And Ors., ... vs Mr. Arun Borse, Government Of ... on 5 April, 2007

8. No doubt, the agent might have been appointed by the District Collector, Gwalior, but at the same
time this is the internal arrangement of appointing agents for collecting money under the Small
Savings Schemes between the Union of India and the State Governments. It is also true that as per
the circular of the Standardized Agency System, in case of misappropriation of investor's money, by
an agent appointed by the appointing authority authorized by the State Government, the State
Government would bear the loss. This is also an internal arrangement between the Govt. of India
and the State Govt. but the consumer/complainant is not concerned with the said arrangement and
hence, he is entitled to recover the amount from both or any of them, as their responsibility is joint
and several.

9. Learned Counsel for the petitioner, however, referred to the decision rendered by the High Court
of M.P. in LPA No. 224/1996 which was filed by the Collector, District Gwalior, against the order
passed by the Learned Single Judge wherein it was held as under:

The agent who has taken the amount and who was an agent of the respondent/Governmental
authorities, the appellants are bound to reimburse the petitioners. The Collector has appointed the
agent. It is the Collector who is to take steps. The Collector should have taken steps to reimburse the
respondent/petitioner. Hence, we do not find any merit in the contention of the appellants. The LPA
is dismissed.

10. This judgment would not mean that the Govt. of India is not required to reimburse the
complainant who is defrauded by its agent. May be because of the internal arrangement between the
State Govt. and the Govt. of India, the State Govt. would be required to reimburse the Union of India
for the loss suffered by it, but for that the payment to the consumer cannot be delayed.

11. Hence, the order passed by the State Commission holding the petitioner and the State Govt.
jointly and severally liable, cannot be said to be in any way erroneous. However, considering the
facts, we reduce the rate of interest, as awarded by the State Commission, from 18% p.a. to 12% p.a.
In view of the above discussion, we hold that the Petitioner and the Government of Madhya Pradesh
(Respondent No. 2 herein) are jointly and severally liable and that they are directed to refund the
amount of Rs. 25,000/- with interest @ 12% p.a. from 31st October, 1992 till its payment.

12. Lastly, we would mention that there is gross delay in filing this Revision Petition because the
impugned order was passed by the State Commission on 4.9.1998 and the Revision Petition is filed
in January, 2001.

13. In the result, with the aforesaid modification, the Revision Petition is disposed of. Petitioner
shall pay costs quantified at Rs. 5000/- to the complainant.

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