UNION OF INDIA vs ARUN BORSE

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. 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. 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. 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 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."

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."

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. 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. 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. 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."

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