Case: Union of India Vs. Mohd. Nizam

The respondent had instituted a suit in the court of Munsif, Moradabad, for recovery of a sum of Rs. 1606-8-0 from the Union of India (Post and Telegraph Department) alleging that during the period from August 31, 1949 to September 17, 1949 the plaintiff despatched from the Moradabad City Post Office thirty value-payable parcels to addresses in Lahore and Rawalpindi in Pakistan, that they received the articles and paid the entire amount payable, but the defendant Union of India failed to pay the sum to the plaintiff. The Union of India in their written statement admitted that the aforesaid articles were despatched by the plaintiff as claimed and that their value was recovered in Pakistan but the Un ion of India did not receive the sum from the Pakistan Government as the money order service between India and Pakistan remained suspended from September 19, 1949 and this was the reason why the sum could not be paid to the plaintiff. Reference was made to section 34 ofthe Indian Post Office Act, 1898 and it was claimed that the said provision absolved the Union of India from liabilitySection 34 reads as follows:"The Central Government may, by notification in the Official Gazette, direct that, subject to the other provisions of this Act and to the payment of fees at such rates as may be fixed by the notification, a sum of money specified in writing at the time of posting by the sender of a postal article shall be recoverable on the delivery thereof from the addressee, and that the sum, so recovered, shall be paid to the sender;Provided that the Central Government shall not incur any liability in respect of the sum specified for recovery unless and until that sum has been received from the addresseeExplanation:-Postal articles sent in accordance with the provisions of this section may be described as "value-payable" postal articles."It was further contended in the written statement that the plaintiffs claim, made for the first time on October 22, 1950 which was beyond one year from the date of the booking of the value-payable articles, was not admissible under rule 102 of the Rules framed under the Indian Post Office Act which fixed a time-limit of one year "from the date of the posting of the articles" for making such claimsIt also appears from the written statement that the postal authorities had assured the plaintiff that his claim would be settled on receipt of the money from Pakistan after the money order service between the two countries was resumedShri Om Prakash Sharma, Complaint Inspector, deposing for the defendant Union of India on April 15, 1953 stated that "since 19-9-1949 the money order system with Pakistan was stopped on account of devaluation and it still stands stopped, the V.P. sent by the plaintiff was realised in Pakistan after 19-9-1949"The trial court dismissed the suit on the ground that the plaintiffs claim was barred under rule 102 and was also not maintainable in view of the proviso to section 34 of the Indian Post Office Act. The first appellate court reversed this decision and decreed the suit on the finding that rule 102 in so far as it fixed a limit of one year for making the claim was ultra vires the Act; it was also held that the fact that Union of India had not been able to realise the sum from the Pakis tan Government was a matter which concerned the two governments and not the plaintiff whose claim could not be defeated because of nonpayment by the Pakistan Government.The High Court on appeal by the Union of India affirmed the decision of the lower appellate court decreeing the suit. Rejecting the contention that section 34 of the Indian Post Office Act barred the suit, the High Court held:"Section 34 of the Act merely bars a suit in a case where the amount has not been received from the addressee. In the present case, it is admitted in the written statement as well as by the defendants witness that the addressees had paid the amount to the Pakistan Government. That Government was the agent of the Union of India .... If the agent acting on behalf of the Union of India fails to do his duty, the plaintiff cannot be made to suffer. The matter is between the Union of India and its agent and the Union of India is responsible for paying the money to the plaintiff."As regards rule 102 the High Court agreed with the view expressed by the lower appellate Court that the rule was ultra vires the Indian Post Office ActThe High Court proceeded on the footing that the post office established by the Government of India was an agent of the plaintiff for transmission of the postal articles to addressees in Pakistan and the Government of Pakistan was really acting for the Government of India as a sub-agent, and that even if the sub-agent failed to pay, the liability of Union of India as agent of the plaintiff did not cease. Agency is founded upon contract, express or implied. The assumption here is that entrusting a postal article to the post office for transmission gives rise to a contractual relationship between the sender of the article and the post office.

Court's reasoning:
When two sovereign powers enter into an agreement as above, neither of them can be described as an agent of the other. The plaintiff was expected to know that without such an arrangement between the two countries it was not possible for the Indian postal authorities to reach the postal articles to addressees in Pakistan. It is plain that under such an agreement if the Pakistan Administration decided to suspend the V.P. service temporarily and did not make over the money realised from the addressees, it cannot be said that the Union of India had received the money but failed to pay. Had the Pakistan Government been really a sub-agent, payment to them would have been as good as payment to the Union of India, but that is not the case here. Sub-agent is defined in section 191 ofthe Indian Contract Act, 1872 as "a person employed by, and acting under the control of, the original agent in the business of the agency". Under the arrangement entered into between the two sovereign powers, Union o f India and Pakistan, neither could be said to be employed by or acting under the control of the other. We have already referred to the evidence of Complaint Inspector Om Parkash Sharma that since September 19, 1949 the money order service with Pakistan had remained suspended. That being so, the proviso to section 34 of the Indian Post Office Act is attracted which absolves the Central Government from "any liability in respect of the sum specified for recovery unless and until that sum has been received from the addressee". The plaintiffs claim cannot therefore succeed. In the view we take, it is not necessary to consider whether rule 102 is ultra vires the Indian Post Office Act.