POST OFFICES ARE VICARIOUSLY LIABLE FOR ANY WRONGFUL ACT COMMITTED BY ITS EMPLOYEE DURING EMPLOYMENT

A Supreme Court three-Judge Bench of Justices L Nageswara Rao, Sanjiv Khanna, and BR Gavai held that a post office can be held vicariously liable for the acts of its employees done during their employment. The bench further clarified that the post office shall be entitled to proceed against the defaulter officers for the fraud or wrongful act, but this would not pardon them from their liabilities.

BACKGROUND

In 1996, the appellants purchased Kisan Vikas Patras with the combined face value on the maturity of ₹32.60 lakh. However, the appellants were encashing the KVPs at the post offices before the maturity date at a lower value after the lock-in holding period. In February 2000, the appellants had approached the postmaster, Lucknow, requesting to transfer the KVPs to the Chowk Post Office, Lucknow. The officer informed that it would be a time-consuming process and would require regular visits to the post office. He recommended taking the services of Rukhsana, an agent appointed by Uttar Pradesh and associated with the post office.

On March 3, 2000, as per Rukhsana's instructions, the appellants signed original KVPs and the Monthly Income Scheme passbook on the backside and handed over the same to her, against which she provided a receipt.

In June 2000, the appellant learned that Rukhsana cheated several investors and is now arrested. The appellants moved the NCDRC seeking the payment of ₹ 25,54,000/- along with interest @ 18% per annum. On inquiring about their investment, they found that their KVPs were cashed and that the sub-postmaster of the post office was also involved in it. However, the NCDRC did not find involvement of the post office officer and held that authorities cannot be held vicariously liable for the fraud committed by their employee with respect to the encashment of KVPs. And hence, the present appeal before the Top Court.

HELD

The bench held that to hold a post office vicariously liable for the employee's acts, it must establish that the employee committed fraud or wrongful acts during employment.

While holding the post office vicariously liable, the bench set aside the order passed by the NCDRC.

Author: Papiha Ghoshal