Case: Cesc Ltd Vs. Chief Post Master General

4. The case of the appellant is that it is aincorporated 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 South-west Regional Office of the Company at Taratola for carrying out the necessary operations, commonly known as theof 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 receivingmonthly electricity consumption bills as is made by the officials posted there. The appellant company had installed the requisite ‘frankingfor this purpose which are operated by the appellantstaff.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 ‘letterunder ‘Serial No.and ‘Sampler ‘Serial No.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 fornd ‘Samplefor 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 asnd ‘Samplethe 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 ‘bookaffixing 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 Consumptiondoes not come under the category of ‘bookand that such type ofcould be posted by affixing postage stamps as applicable to the ‘letterwith 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 quotedcase was reviewed by the appropriate authority. 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 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 to 29.10.98 at any Post Office and intimate the particulars of deposit to thisthe deficient amount of postage of Rs. 1,83,89,410/- is not deposited, the same will be treated as due to the Govt. of India from C.E.S.C. Limited.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 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 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 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.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 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 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 by way of an interim measure. Therefore, the Division Bench refused to interfere with that part of the order of the learned Single Judge.The case of the appellant is that it is ad 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 South-west Regional Office of the Company at Taratola for carrying out the necessary operations, commonly known as theof 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 receivingy electricity consumption bills as is made by the officials posted there. The appellant company had installed the requisite ‘frankingr this purpose which are operated by the appellant. 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 ‘letterr ‘Serial No.r ‘Serial No.. 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 fornd ‘Samplefor 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 asnd ‘Samplethe 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 ‘bookg 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 Consumptions not come under the category of ‘bookand that such type ofd be posted by affixing postage stamps as applicable to the ‘letterwith 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 quotedcase was reviewed by the appropriate authority. 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 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 to 29.10.98 at any Post Office and intimate the particulars of deposit to thise deficient amount of postage of Rs. 1,83,89,410/- is not deposited, the same will be treated as due to the Govt. of India from C.E.S.C. Limited.s 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 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 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 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.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 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 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 by way of an interim measure. Therefore, the Division Bench refused to interfere with that part of the order of the learned Single

Court's reasoning:
Section 11 it is clear that thewill be liable to pay the deficit postal charges, if any, once the addressee accepts the postal article or opens it. On the other hand, thewill be liable to be charged for the deficit 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.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 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 under Section 12 to recover such due from the sender- company.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 of the Postal Authority as noticed by the Division Bench of the High Court and for that the sender company cannot be made 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 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 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 theSection 11 it is clear that thewill be liable to pay the deficit postal charges, if any, once the addressee accepts the postal article or opens it. On the other hand, thewill be liable to be charged for the deficit 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.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 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 under Section 12 to recover such due from the sender- company.h 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 of the Postal Authority as noticed by the Division Bench of the High Court and for that the sender company cannot be made 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 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 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