Postal authorities remain liable for employees’ wrongful acts committed in the course of official duties.

P.N. Krishna claimed rights in five National Savings Certificates (NSCs) bearing Nos. 378451–378455, originally purchased by B.S. Sharadamba and B.S. Vishveswaraiah and allegedly transferred to him through Form NC-34. He applied to the Banashankari Post Office on 25 May 1998 for transfer of the certificates and subsequently made representations to higher postal authorities. On 27 April 2000, he submitted the original NSCs to the Postal Department for enquiry, transfer and payment of the maturity amount.

The Postal authorities contended that the certificates had already been transferred to other persons and encashed, and alleged that Krishna had colluded with the concerned Sub-Post Master to create a fraudulent transfer claim.

The District Forum dismissed the complaint, initially on the ground that complicated questions of law were involved and, after remand by the State Commission, again dismissed it on 7 February 2006.

In Appeal No. 680/2006, the Karnataka State Consumer Commission examined the original records and found that the original NSCs remained with Krishna, while the Department had permitted transfers to third parties without obtaining the originals or making the necessary endorsements. It consequently directed payment of the maturity value with interest and costs.

The National Consumer Disputes Redressal Commission dismissed the Postal Department’s Revision Petition No. 2889/2011, while reducing the interest rate from 12% to 9% per annum.

The Postal authorities challenged both orders under Articles 226 and 227 of the Constitution.

Whether the orders of the Karnataka State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission suffered from illegality or infirmity warranting interference under Articles 226 and 227 of the Constitution?

Whether the Postal Department could be held liable for deficiency in service where its employee allegedly transferred and discharged the NSCs in breach of departmental procedure?

Whether the allegations of fraud, collusion and disputed identity of the certificates rendered the consumer proceedings legally unsustainable?

The Court applied the principle that a public authority entrusted with savings instruments must follow its prescribed procedures and may be liable for deficiency in service when negligence in handling such instruments causes loss to the claimant.

It further applied the principle of vicarious responsibility that an employer, including the Postal Department, cannot ordinarily avoid liability for wrongful or fraudulent acts of an employee performed in the course of the employee’s assigned work, even if the employee acted dishonestly or contrary to departmental rules; the Department’s remedy may lie against the erring employee.

The Court also applied the limited scope of writ jurisdiction, holding that it would not reappreciate concurrent factual findings of consumer fora or substitute its own view absent perversity, patent illegality or jurisdictional error.

The Court additionally accepted that the complainant could be treated as a consumer and that the award of interest was within the consumer fora’s jurisdiction.

The State Commission’s finding that the original NSCs were in Krishna’s possession was based on examination of the original record, and the Postal Department could not satisfactorily explain how the certificates were transferred and encashed in favour of third parties without obtaining the originals or endorsing the transfers.

The Department’s own communication dated 9 May 2000 indicated that surrender of the original NSCs was required before fresh certificates could be issued; therefore, its failure to follow that procedure could not be attributed to Krishna.

The allegation of collusion was unsupported by cogent material. The employee’s subsequent departmental proceedings and compulsory retirement established, at most, that irregularities had occurred, not that Krishna had participated in them.

Since the disputed transactions were carried out by an employee while functioning within the Post Office and in connection with entrusted work, the Department could not escape responsibility merely by alleging that the employee had acted dishonestly or in breach of procedure.

The High Court also found no perversity or jurisdictional error in the concurrent findings of the consumer fora and accordingly declined to interfere in writ jurisdiction.

It affirmed the Postal Department’s liability for deficiency in service arising from the unauthorised transfer and discharge of the five NSCs despite the original certificates remaining with Krishna.

The Department was therefore required to pay the maturity value of the certificates, together with interest at 9% per annum as modified by the National Commission and applicable costs.

No exemplary costs were imposed, although the Court expressed strong displeasure at the Department’s prolonged failure to resolve the matter and directed it to ensure strict procedural compliance in future.