Supreme Court of India
CESC LTD.versusCHIEF POST MASTER GENERAL & ORS.
- Citation
- 2012 INSC 232
- Decided
- 11 May 2012
- Disposal
- Appeal(s) allowed
- Bench
- RAJENDRA MAL LODHA
Holding
In the absence of any breach of licence conditions, the sender is not liable for deficit postage and the provisions of Clause 11(10)(xv) and Clause 34 of the Post Office Guide do not apply, rendering the demand notice illegal.
Summary
CESC Ltd., an electricity supplier, used franking machines to post monthly consumption bills as 'book post' at Rs 1 per bill based on a 29 May 1997 letter from the Director of Postal Services. The Postal Authority later cancelled that instruction on 29 October 1998 and demanded a deficit of Rs 1,83,89,410, alleging the correct rate was Rs 2‑3 per bill. CESC challenged the demand, arguing that under Section 11 of the Post Office Act, 1898 the sender is liable only if the addressee refuses, returns, or cannot be found, none of which occurred, and that no breach of licence conditions was shown to trigger Clause 11(10)(xv) or Clause 34 of the Post Office Guide. The Supreme Court held that without any breach, those guide provisions do not apply, and the sender cannot be held liable for the alleged deficit; consequently the demand notice was illegal. The Court set aside the High Court’s order, directed the Postal Authority to refund Rs 50 lakhs with interest, and allowed the appeals.
Issues considered
- The Postal Authority’s authority under the Post Office Act, 1898 and the Post Office Guide to demand deficit postage from the sender when no breach of licence conditions is alleged.
- Whether the sender is liable for deficit postage under Section 11 of the Post Office Act, 1898 in the absence of refusal, return, or death of the addressee.
- Whether Clause 11(10)(xv) and Clause 34 of the Post Office Guide are attracted in the present facts.
Legislation cited
Subjects
Post Office Actdeficit postagesender liabilityfranking machinepostal tarifflicense breachpostal authorityCivil Appeal
Judgment
(2012) 5 S.C.R. 1055
CESC LTD. A
v.
CHIEF POST MASTER GENERAL & ORS.
(Civil Appeal No. 2606 of 2006 etc.)
MAY 11, 2012
B
[R.M. LODHA AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
POST OFFICE ACT, 1898:
c
ss. 11 and 12 - Demand for deficit amount of postage
from sender of postal articles - Held: In the absence of any
breach of the conditions of licence, the provisions of clauses
11 (1 O)(xv) and 34 of Post Office Guide are not attracted - It is
apparent that due to a wrong intimation given by the Postal 0
Authority, the Company affixed the postal stamp of Rs.11- per
bill, treating it as 'book post' and the staff of the Postal
Department without any objection cleared and delivered it to
the respective addressees - The mistake having been
committed by the Postal Authority and there being failure on E
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 - The demand notice being not proper, is
set aside - Post Office Guide - Clauses 11(10)(xv) and 34. F
The appellant-company, engaged in the supply of
electricity, installed 'franking machines' and provided
space to the Post Office to set up a sub-office for the
purpose of receiving 'franked' monthly electricity G
consumption bills addressed to the consumers. By letter
dated 29.5.1997, the Director of Postal Service informed
the appellant-company that as per revised postal tariff
w.e.f. 1.6.1997, charges for monthly consumption bill, if
1055 H
1056 SUPREME COURT REPORTS (2012] 5 S.C.R.
A it was posted as 'Book', 'Pattern' and 'Sample packets'
would be Rs. 1/- for first 50 gms or fraction thereof. Based
on the said communication, the appellant-company made
the payment for the period from 1.6.1997 to 29.10.1998
treating the posts as 'book post', and affixing Rs. 1/- per
B postal article. On 29.10.1998, the appellant received
another letter informing that the letter dated 29.5.1997 was
treated as cancelled and the 'monthly consumption Bill'
did not come under the category of 'book post' I 'book
packets' and such type of bills could be posted by
C affixing postage stamps as applicable to 'letter mail' with
immediate effect. Thereafter, the company started posting
the consumption bills affixing Rs. 3/- stamps. The
Vigilance Officer, Department of Post, by letter dated
18.6.1999 made an additional claim for Rs. 1,83,89,410/-
D from the company for the period from 1.6.1997 to
29.10.1998, on the ground that postage rate from 1.6.1997
was Rs. 2/- per 'Book post' and Rs. 3/- from 30.8.1998. The
writ petition filed by the company was allowed by the
Single Judge of the High Court holding that the demand
notice was contrary to s. 11 (2) of the Postal Act, 1898.
E However, it was held that refund of Rs. 50 lacs deposited
by the company pursuant to the interim order would be
subject to the decision of the respondent authorities. On
the appeals filed by both the company as also by the
Postal Authorities, the Division Bench of the High Court
F upheld the demand notice and further held that the Post
Master General was completely empowered by Clause
11.5 (xv) and Clause 34 of the Post Office Guide read with
s. 12 of the Act to recover the amount specified under the
demand notice.
G
In the instant appeals filed by the company the
question for consideration before the Court was:
"whether the respondents have the authority and power
under the Indian Post Office Act, 1898 or the Post Office
H Guide or any other Rule/guidelines to demand the alleged
CESC LTD. v. CHIEF POST MASTER GENERAL & 1057
ORS.
deficit amount of postage from the "sender" of the postal A
articles, after receiving the same from the "sender"
without any objection to the deficit amount and after
delivering the postage articles to the addressee without
claiming any deficit amount from the "addressee".
Allowing the appeals, the Court B
HELD: 1.1 In the instant case, it has not been alleged
by the Postal Authority that the Company has breached
any of the conditions of licence. In the absence of any
such allegation relating to a breach, the provisions of C
Clause 11(10) (xv) or Clause 34 of the Post Office Guide
are not attracted. The Division Bench of the High Court
erred in holding that the provisions of Clause 11(10) (xv)
and Clause 34 are attracted in the case. [para 26-27)
[1068-B-D]
D
1.2 Section 11 of the Post Office Act, 1898 makes it
clear that the 'addressee' will be liable to pay the deficit
postal charges, if any, once the addressee accepts the
postal article or opens it. On the other hand, the 'sender'
will be liable to be charged for the deficit postage, if it is E
detected at the time of postage or if the addressee
refuses or return the postage or if the addressee is dead
or cannot be found. If such amount is found due from
the sender, the Postal Authority is empowered to recover
the sum dues from the sender u/~ 12 of the Act. [para 30) F
[1069-E-F]
1.3 It is not the case of the Postal Authority that any
of the postage has been refused or returned by any of
the addressee or any addressee is dead or could not be
found. In absence of any such allegation no charge can G
be made from the sender-company u/s 11 and it cannot
be made liable to pay the postage or sum due thereon
for franking Rs.1/- per bill for postage and for that there
was no occasion for the authority to exercise power u/s
12 to recover such due from the sender-company. [para H
1058 SUPREME COURT REPORTS [2012] 5 S.C.R.
A 31) (1069-G-H; 1070-A]
1.4 Admittedly, the Director of Postal Services by his
letter dated 29.5.1997 informed the Company that as per
the revision of postal tariff w.e.f. 1.6.1997, the electricity
bills can be posted by paying Rs.1/-w.e.f.1.6.1997, where
B the post is sent either as 'Book' or 'Pattern' or 'Sample
Packet'. Accordingly, the Company charged Rs. 1/- per
Bill for the period from 1.6.1997 till by letter dated
29.10.1998, the Company was informed of cancellation of
letter dated 29.5.1997. (para 32) (1070-B; 1071-C]
c 1.5 Thus it is apparent that due to a wrong intimation
given by the Postal Authority, the Company affixed the
postal stamp of Rs.1/- per bill, treating it as 'book post'
and the staff of the Postal Department without any
objection cleared and delivered to the respective
0 addressees. Though under Clause 30(iv) of the Post
Office Guide, the office which accepts the posting is
required to check the bundles franked for correct
postage and also to tally the total value of the articles,
before dispatch of the article, there is failure on the part
E of the office of the Postal Authority as noticed by the
Division Bench of the High Court and for that the sender
company cannot be made liable. [para 33and 35) [1072-
C; G-H; 1073-A]
F 1.6 The demand notice and the order passed by the
Division Bench of the High Court are set aside; the last
portion of the direction given by the Single Judge
authorizing the Postal Authority to decide the issue
afresh and allowing them to retain the amount of Rs. 50
G lakhs till such decision is also set aside. The respondents
are directed to refund the amount of Rs.50 lakhs
deposited by the Company pursuant to the interim order
passed by the High Court along with 6% interest. [para
37] (1073-E-F]
H CIVIL APPELLATE JURISDICTION : Civil Appeal No.
CESC LTD. v. CHIEF POST MASTER GENERAL & 1059
ORS.
2606 of 2006 etc. A
From the Judgment & Order dated 20.01.2004 of the
Calcutta High Court in A.P.O. No. 62 of 2001 in W.P. No. 2282
of 1999.
WITH B
C.A. No. 2607 of 2006.
K.V. Vishwanathan, Khaitan & Co. for the Appellant.
Ashok Bhan, Shalender Saini (for B.K. Parasad) for the
Respondents. C
The Judgment of the Court was delivered by
SUDHANSU JYOTI MUKHOPADHAYA, J. 1. These
appeals have been preferred by the appellant- CESC Limited
(hereinafter referred to as the "Company") against the common D
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 E
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 F
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 G
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 H
1060 SUPREME COURT REPORTS [2012] 5 S.C.R.
A 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
B 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 9f the
learned Single Judge since the notice of demand was quashed
C 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
D 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
E the South-west 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
F 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
G 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
CESC LTD. v. CHIEF POST MASTER GENERAL & 1061
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
consumption bills thus franked, were made over to the counter A
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 B
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. c
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 D
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' E
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 tariffw.e.f. 1st June, 1997,
as mentioned above will be applicable. F
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 G
were cleared by the postal departm~nt 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 H
1062 SUPREME COURT REPORTS [2012) 5 S.C.R.
A 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
B 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.
c 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 /-
D 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
E 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
F 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.
G 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
H of which is quoted hereunder:
CESC LTD. v. CHIEF POST MASTER GENERAL & 1063
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
"The case was reviewed by the appropriate authority. A
Though the approval of the Department was given
confirming the rates for sending electricity bills by Book
Post as Rs.1/-, the same was given by mistake. The
question remains that the electricity bills were posted at
Book post rate i.e. @ Rs.1/- bill during the period from June B
1997 to 29.8. 1998 and @ Rs.3/- during the period from
30.8.1998 to 29.10.1998.
It is once again requested kindly to deposit the deficit
amount of postage of Rs. 1,83,89,410/- in respect of
posting of electric bills during the period from June 1997 C
to 29.10.98 at any Post Office and intimate the particulars
of deposit to this office.
If the deficient amount of postage of Rs. 1,83,89,410/
- is not deposited, the same will be treated as due to the D
Govt. of India from C.E.S.C. Limited."
12. As the Postal Authority continued to make the demand,
the Company preferred the Writ Petition No. 2282 of 1999
mainly on the ground that the demand notice dated 10.9.1999 E
asking the appellant to deposit Rs.1,83,89,410/-, is contrary to
Section 11 (2) of the Indian Postal Act, 1898. The learned
Single Judge by order dated 7.11.2000 allowed the writ petition
affirming that the demand notice is contrary to Section 11 (2)
of the Indian Postal Act, 1898. The learned Single Judge found
F
that the pre- requisite of fastening liability on the sender of the
post under Section 11 is not permissible. Therefore, the
Company cannot be saddled with the responsibility to pay.
Furthermore, it was also found that the person issuing the
demand notice did not have the authority to issue such a notice.
However, the learned Single Judge of the Writ Court did not G
order the refund of Rs. 50 lacs, which was deposited by the
Company pursuant to the interim order, and held that the said
refund would be subject to the decision of the respondent
authorities.
H
1064 SUPREME COURT REPORTS [2012] 5 S.C.R.
A 13. The Division Bench by the impugned judgment held
that the Postal Authority through the Post Master General, West
Bengal Circle was completely empowered by Clause 11.5 (xv)
and 34 of the Post Office Guide read with Section 12 of the
Act to recover the outstanding sum remaining, due by the
B licensee Company to the Postal Authority. At the same time the
Post Master General was also competent enough to direct the
denial of acceptance of postal articles from the Company,
unless and until the outstanding is paid and the finding of the
learned Single Judge to the contrary on that score is wrong and
C was thereby set aside. The demand notice was upheld, but the
direction of the learned Single Judge, directing the authorities
to decide the representation of the Company by giving personal
hearing was upheld. The Division Bench upheld the order
passed by learned Single Judge, while directing the
continuance of deposit of the above sum of Rs.50 lacs as and
0
by way of an interim measure. Therefore, the Division Bench
refused to interfere with that part of the order of the learned
Single Judge.
14. The learned counsel appearing on behalf of the
E Company submitted that the Company was guided by the
Postal Department for franking and their office staff were
present at the site of the Company where franking were made.
The manner of posting the bills was as per the instructions
issued by the Postal Authorities. In this regard, there is no
F difference between a 'normal post' and 'franked' one and the
breach of the franking license conditions was not even alleged.
15. It was also contended that liability under Section 11 is
only upon the addressee while the liability of the sender is
contingent on the pre- requisites which had not happened. The
G demand was raised without adjudicating or ascertaining the
dues. This apart, the authority issuing the demand was not
competent to issue the same. It was further submitted that the
letter dated 18.6.1999 issued by the Vigilance Officer shows
that not only were the authorities making a demand from the
H wrong person, the right person under Section 11 being the
CESC LTD. v. CHIEF POST MASTER GENERAL & 1065
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
addressee, but were also asking the Company to pay for the A
"mistake" which was committed by them. Till that date, the Postal
Authority had not produced the so called notification dated
27.8.1997. Therefore, the appellant was seriously prejudiced
by non- production of that document.
B
16. It was further contended that the postal charges for
despatch of the electricity bill is recovered by the sender along
with the electricity tariff, which could only be done while
preparing the bill. Since the Company had no means of
recovering any amount and subsequently it cannot pass-on this
liability on the addressees, the claim of the postal authority was C
denied. It was also contended that there is no provision
whatsoever for levying arrears on postal charges and without
complying with the terms and mandate of Section 12 of the Act,
the Vigilance Officer issued a demand notice for Rs.
1,83,89,410/- with a threat that unless the aforesaid amount is D
deposited within 30 days, a direction would be given that all
postal services conveying articles, except the government
services despatched by the Company, be withheld. Ther:efore,
the demand was ex- facie illegal.
E
17. The learned counsel appearing on behalf of the Postal
Authority contended that the postal tariff was revised with effect
from 1.6.1997 and again from 1st August 1998. On 29.10.1998,
the mistake committed by the department was detected and,
therefore, the Postal Authority immediately cancelled their letter F
dated 29.5.1997 whereby the authorities informed the
Company that for the monthly consumption bills, if posted as
'book post' and 'sample packets' the revised tariff of Rs.1/- will
be applicable.
18. On 30.10.1998, the Company made a request to G
review the decision and thereafter, the Postal Authority made
their demand on 18.6.1999 and a further demand was made
on 18.8.1999 and finally on 10.9.1999, the threat of panel
action was also conveyed through the said letter. Attention was
also drawn to a letter dated 5.11.1998 wherein the Company H
1066 SUPREME COURT REPORTS [2012] 5 S.C.R.
A themselves agreed to bear the cost as may be required, on
demand. On 18.6.1999, the demand for deficit postage was
asked for, by the Postal Authority. On 26.7.1999 a demand for
deficit postage and a threat was made to recover the same as
Government duty followed by another demand dated 18.8.1999
B and a threat of penal action under the Act. It was contended
that those letters are not under challenge and in the writ petition,
only the letter of demand dated 10.9.1999 has been challenged
and is the subject matter of the writ petition.
19. The learned counsel for the Postal Authority referred
C to Rule 17 of the Indian Post Office Rules, 1933 which defines
"Book Packets". While Rule 19 stipulates the articles which
cannot be posted as "book packets". According to him, the
monthly consumption bills satisfied Rule 17 and are not covered
under Rule 19.
D
20. Further according to the counsel for the Postal
Authority, 'the Post Office Guide' is an administrative instruction
issued to fill up gaps if any, in the Indian Post Office Rules and
therefore it has a binding force. The Company having accepted
E the classification, and by affixing the postal stamps of Rs.3/-
per bill by franking since 29.10.1998, cannot object to pay the
prescribed rate which was due since 1st June, 1997.
21. We have heard the learned counsel for the parties and
have carefully perused the Indian Post Office Act, 1898 and the
F Post Office Guide as relied by them.
22. The present dispute pertains to the period between
1.6.1997 and 29.10.1998, and as the Company has been
affixing the postal franking stamps as per the demanded rate
G since 30.10.1998, there is no dispute regarding the subsequent
period.
23. The only question arising for consideration is whether
the respondents have the authority and power under the Indian
Post Office Act, 1898 or the Post Office Guide or any other Rule/
H guidelines to demand the alleged deficit amount of postage
CESC LTD. v. CHIEF POST MASTER GENERAL & 1067
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
from the "sender" of the postal articles, after receiving the same A
from the "sender'' without any objection to the deficit amount and
after delivering the postage articles to the addressee without
claiming any deficit amount from the "addressee".
24. Clause 11(10) (xv) of the Post Office Guide, relates to
B
recovery of an amount in the event of a breach of the conditions
of the license and reads as under:-
"11.Franking Machine.- A postal franking machine is a
, stamping maehine intended to stamp impressions of dies
of approved design on private and official postal articles C
in payment of postage and postal fees. A commission of
1-1/2 per cent is permitted on the value of franks used.
2. xxxxxxxxx
xxxxxxxxx D
(10) The licence is granted to the following conditions.
(xv) In the event of a breach of any condition of the
licence, the licence will be forthwith cancelled by the head
of the Postal Circle who will not be responsible for any loss E
which the licensee incurs thereby. Any sum that may be
due to the licensee on account of postage advanced will,
however, be refunded to him and any sum that may be due
to the Department on account of postage will be recovered
from him." F
25. Clause 34 of the said Guide stipulates cancellation of
a license in the event of a breach of any prescribed condition,
as quoted hereunder:-
"34. In the event of breach of any of the prescribed G
conditions the license will be forthwith cancelled by the
licensing authority who will not be responsible for any loss
which the licensee may incur thereby. Any sum that be due
to the licensee on account of postage advance will,
however, be refunded to him and any sum that may be due H
1068 SUPREME COURT REPORTS [2012] 5 S.C.R.
A to the Department on account of postage will be recovered
from him."
26. In this case, it has not been alleged by the Postal
Authority that the Company has breached any of the conditions
of license. In the absence of any such allegation relating to a
8
breach, the provisions of Clause 11(10) (xv) or Clause 34 of
the Post Office Guide are not attracted.
27. The applicability of Clause 34 is conditions precedent
such as (a) breach of any of the conditions of license to use
C the franking machine (b) cancellation of the license to use the
franking machine (c) a sum due to the department on account
of postage. Such conditions have not been fulfilled in this case
nor any averment has been made and no such stand has been
taken by the Postal Authority. Therefore. Clause 11 (1 O)(xv) or
D Clause 34 is not applicable in the present case. The Division
Bench of the High Court erred in holding that the provisions of
Clause 11 (10) (xv) and Clause 34 are attracted in the present
case.
E 28. Section 11 of the Act, 1898 stipulates "liability for
payment of postage" and reads as under:-
"11. Liability for payment of postage.-(1) The
addressee of a postal article on which postage or any
other sum chargeable under this Act is due shall be bound
F to pay the postage or sum so chargeable on his accepting
delivery of the postal article, unless he forthwith returns it
unopened:
Provided that, if any such postal article appears to
G the satisfaction of the Post Master General to have been
maliciously sent for the purpose of annoying the
addressee, he may remit the postage.
2) If any postal article on which postage or any other
sum chargeable under this act is due, is refused or
H returned as aforesaid, or if the addressee is dead
CESC LTD. v. CHIEF POST MASTER GENERAL & 1069
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
or cannot be found, then the sender shall be bound A
to pay the postage or sum due thereon under this
Act."
29. Section 12 of the said Act, 1898 empowers the Postal
6.uthority to recover the postage and other sums due, in
8
respect of postal articles which reads as under:-
"12. Recovery of postage and other sums due in
respect of postal articles.- If any person refuses to pay
any postage or other sum due from him under this Act in
respect of any postal article, the sum so due may, on C
application made by an officer of the Post Officer
authorised in this behalf by the written order of the Post
Master General, be recovered for the use of the Post Office
from the person so refusing, as if it were a fine imposed
under this Act, by any Magistrate having jurisdiction where D
that person may for the time being be resident, and the
Post Master General may further direct that any other postal
article, not being on (Government) Service, addressed to
that person shall be withheld from him until the sum so due
is paid or recovered as aforesaid." E
30. Thus from Section 11 it is clear that the 'addressee'
will be liable to pay the deficit postal charges, if any, once the
addressee accepts the postal article or opens it. On the other
hand, the 'sender' will be liable to be charged for the deficit
F
postage, if it is detected at the time of postage or if the
addressee refuse or return the postage or if the addressee is
dead or cannot be found. If such amount is found due from the
sender, the Postal Authority is empowered to recover the sum
dues from the sender under Section 12 of the Act.
G
31. It is not the case of the Postal Authority that any of the
postage has been refused or returned by any of the addressee
or any addressee is dead or could not be found. In absence of
any such allegation no charge can be made from the sender-
company under Section 11 and the Company cannot be made H
1070 SUPREME COURT REPORTS [2012) 5 S.C.R.
A liable to pay the postage or sum due thereon for franking Rs.1 I
- per bill for postage and for that there was no occasion for the
authority to exercise power under Section 12 to recover such
due from the sender- company.
B 32. Admittedly, the Director of Postal Services by his letter
dated 29.5.1997 informed the Company that as per the revision
of postal tariff w.e.f. 1.6.1997, the electricity bills can be posted
by paying Rs.1/- w.e.f. 1.6.1997, whether the post sent either
as 'Book' or 'Pattern' or 'Sample Packet'. The said letter reads
as follows:-
C
"DEPARTMENT OF POST. INDIA
OFFICE OF THE CHIEF POST MASTER GENERAL,
W.B. CIRCLE, YOGAYOG BHAWAN,
D CALCUTTA - 700 012
To
The Deputy Manager(Com)
C.E.S.C. House,
E Chowrighee Square
Calcutta 700 001
No. Tech/Z-27/9/90
Dated the 29.5.1997
F SUB: Revision of Tariffs in respect of certain Inland Postal
Services with effect from 01.6.1997.
REF: Your letter No. Nil dated 28.9.1997
Sir,
G
As per revised Postal Tariff w.e.f. 01.6.1997 charges for
Book, pattern and sample packets for first 50 Gms or
fraction thereof is Re.1/-. For every additional 50 Gms or
fraction thereof in excess of 50 Gms. is Rs.2/. Monthly
H consumption bill, if it is posted as Book, pattern and
CESC LTD. v. CHIEF POST MASTER GENERAL & 1071
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
sample packets the revised Postal Tariffs w.e.f. 01.6.1997, A
as mentioned above, will be applicable.
Thanking you,
Yours faithfully
B
Sd/-
(MRS. A. GHOSH)
Director of Postal Services
Calcutta Region/Cal-12"
In view of the letter dated 29.5.1997, the Company
c
charged Rs. 1/- per Bill for the period from 1.6.1997 till by letter
dated 29.10.1998, the Company was informed of cancellation
of such letter as evident and quoted hereunder:
"DEPARTMENT OF POST. INDIA D
OFFICE OF THE CHIEF POST MASTER GENERAL,
W.B. CIRCLE, YOGAYOG BHAWAN,
CALCUTIA - 700 012
From 0/0 the Chief P.M.G.To The Deputy Manager E
West Bengal Circle (Commercial) ,
Yogayog Bhawan Victoria House
Calcutta 700 012 Chowrighee Square
Calcutta 700 001
No. Tech/Z-27/9/90 Dated at Calcutta-700012 the F
29.10.1998
Subject
Sir,
G
I am directed to inform you that this office earlier
letter of even no. dtd. 29.5.97 is hereby treated as
cancelled. Monthly consumption bill is not under the
category of Book PosUBook Packets as per this office rule.
H
1072 SUPREME COURT REPORTS [2012] 5 S.C.R.
A This type of bill can be posted affixing the postage stamp
as applicable on the letter mail with immediate effect.
Yours faithfully
Sd/-
B
(S.C. Sahu)
A.D.P.S. (Technical)
For Chief Postmaster-General, Cal-12"
33. Thus it is apparent that due to a wrong intimation given
c by the Postal Authority, the Company affixed the postal stamp
of Rs.1 /- per bill, treating it as 'book post' and the staff of the
Postal Department without any objection cleared and delivered
to the respective addressees.
34. Clause 30(iv) of Post Office Guide reminds the office
D of the Postal Authority to check the bundles to ensure proper
check of franking articles and reads as under:-
"30. The following procedure must be insisted upon and
should be strictly endorsed in all the offices:
E
(iv) Office which accepts the posting should check the
bundles to see if various articles have been franked for
correct postage and also the total value of the articles
tallies with the details given in the dispatch slip and that
entries in col.1 to 3 of the Franking Machines register of
F posting have correctly been made. A separate dispatch
slip should be there for articles franked with different
machines. He will then put his initials, date and date stamp
in the Franking Machine Register of postings and return
the same to the licensee or his agent."
G
35. Though under Clause 30(iv) the office which accepts
the posting is required to check the bundles franked for correct
postage and also to tally the total value of the articles, before
dispatch of the article, there is failure on the part of the office
H of the Postal Authority as noticed by the Division Bench of the
CESC LTD. v. CHIEF POST MASTER GENERAL & 1073
ORS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
High Court and for that the sender company cannot be made A
liable.
36. The Postal Authority mislead the sender company
which caused charging of lesser amount for the bills is evident
from the letters written by the Director, as quoted in the 8
preceding paragraphs. The failure on the part of the Postal
Authority to ensure correct postage as per Clause 30(iv) is also
not in dispute. 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 C
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. The
demand notice being not proper was rightly held to be illegal
by the learned Single Judge. The question thus raised in this
case is answered in negative and against the respondents. D
37. In the result, the appeals are allowed. The demand
notice and the order passed by the Division Bench of the High
Court is set aside; the last portion of the direction given by the
learned Single Judge authorizing the Postal Authority to decide E
the issue afresh and allowing them to retain the amount of Rs.
50 lakhs till such decision is also set aside. The respondents
are directed to refund the amount of Rs.50 lakhs deposited by
the Company pursuant to the interim order passed by the High
Court along with 6% interest within three months from today. F
There will be no order as to costs.
R.P. Appeals allowed.
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