M/S.BHAGWATI VANASPATI TRADERS Vs. SR.SUPERIN.OF POST OFFICE,MEERUT

CONSUMER PROTECTION ACT, 1986

Tags Consumer

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 4854 of 2009, Judgment Date: Oct 10, 2014

“REPORTABLE”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4854 OF 2009

M/s. Bhagwati Vanaspati Traders …. Appellant

versus

Senior Superintendent of Post Offices, Meerut …. Respondent

J U D G M E N T

Jagdish Singh Khehar, J.

1. M/s. Bhagwati Vanaspati Traders, the appellant before us, is a

proprietorship concern. Mr. B.K. Garg is its sole proprietor. On

28.4.1995, M/s. Bhagwati Vanaspati Traders purchased one, six years’

National Savings Certificate (hereinafter referred to as, NSC) bearing

number 6NS/06DD 387742, by investing a sum of Rs.5,000/-. The above NSC

was to mature on 28.4.2001. The maturity amount payable on 28.4.2001 was

Rs.10,075/-.

2. Since M/s. Bhagwati Vanaspati Traders was not paid the amount due on

maturity, B.K. Garg made repeated visits to the office from where the NSC

was purchased. He was informed, that an NSC could only be issued in the

name of an individual, and that, the NSC taken in the name of M/s. Bhagwati

Vanaspati Traders, was not valid. He was also informed, that the matter

had been referred for advice to the Post Master General, Bareilly, and

that, the question of payment of the maturity amount would be considered

only after the receipt of inputs from Bareilly. Having waited for a

substantial length of time, and realizing that no further action had been

taken at the hands of the respondent, B.K. Garg visited the office of the

Post Master General, Bareilly. At Bareilly he was informed, that the

matter had been referred to the Director General (Post), Department of

Posts, New Delhi, and that, he would have to await the decision of the

Director General (Post). Having waited long enough, without any fruitful

result, M/s. Bhagwati Vanaspati Traders preferred Complaint Case no. 513 of

2004 before the District Consumer Disputes Redressal Forum, Meerut

(hereinafter referred to as, the District Forum). The District Forum, by

its order dated 1.2.2007 accepted the claim of M/s. Bhagwati Vanaspati

Traders, and accordingly, directed the respondent to pay the maturity

amount of Rs.10,075/- with 12% interest, from the date of maturity till the

date of payment. The respondent was additionally directed to pay, a sum of

Rs.5,000/- as compensation, and also cost of Rs.2,000/-, to the appellant

proprietorship concern.

3. Dissatisfied with the order dated 1.2.2007, passed by the District

Forum in favour of the appellant, the respondent Senior Superintendent of

Post Offices, Meerut, preferred Appeal no. 460 of 2007 before the State

Consumer Disputes Redressal Commission, Lucknow. The aforestated appeal

was allowed by the State Commission vide its order dated 21.1.2008. The

appellant concern then preferred Revision Petition no. 1456 of 2008 before

the National Consumer Disputes Redressal Commission, New Delhi. The

National Commission dismissed the revision petition, vide the impugned

order dated 4.9.2008. The special leave to appeal preferred by the

appellant, against the impugned order dated 4.9.2008, was granted by this

Court on 27.7.2009.

4. A perusal of the orders passed by the State Commission, as also, the

National Commission reveals, that the same were premised on the fact, that

the NSC purchased by M/s. Bhagwati Vanaspati Traders, had an irregularity,

inasmuch as, an NSC could only be purchased by an individual, and the same

could not be issued in the name of a concern, firm, institution, banking

institution or company etc. On account of the aforesaid irregularity, the

respondent placed reliance on rule 17 of the Post Office Savings Bank

General Rules, 1981. The above rule is being extracted hereunder:-

“17. Account opened in contravention of rules:- Subject to the provision

of rule 16, where an account is found to have been opened in contravention

of any relevant rule for the time being in force and applicable to the

account kept in the Post Office Savings Bank, the relevant Head Savings

Bank may, at any time, cause the account to be closed and the deposits made

in the account refunded to the depositor without interest.”

In addition to the above, the respondent had placed reliance on a decision

rendered by this Court in Post Master, Dargamitta HPO, Nellor v. Raja

Prameeelamma, (1998) 9 SCC 706, wherein this Court had held as under:-

“But as this contract was contrary to the terms notified by the Government

of India and this was due to inadvertence of the staff. In my opinion it

does not become a contract binding the Government of India being unlawful

and void. As such this is not a case of deficiency in service either in

terms of the law or in terms of the contract as defined in Section 2(1)(g)

of the Consumer Protection Act, 1986.”

(emphasis is ours)

During the course of hearing, learned counsel for the respondent, in

addition to the judgment extracted hereinabove, placed reliance on a recent

decision rendered by this Court in Arulmighu Dhandayadhapaniswamy

Thirukoil, Palani, Tamil Nadu v. Director General of Post Offices,

Department of Posts & Ors., (2011) 13 SCC 220, and drew our attention to

the following conclusions recorded therein;-

“18. This Court in Raja Prameeelamma case, (1998) 9 SCC 706, held that

even though the certificates contained the terms of contract between the

Government of India and the holders of the National Savings Certificate,

the terms in the contract were contrary to the Notification and therefore

the terms of contract being unlawful and void were not binding on the

Government of India and as such the Government refusing to pay interest at

the rate mentioned in the Certificate is not a case of deficiency in

service either in terms of law or in terms of contract as defined under

Section 2(1)(g) of the Consumer Protection Act, 1986. The above said

decision is squarely applicable to the case on hand.

19. It is true that when the Appellant deposited a huge amount with the

third Respondent from 5.5.1995 to 16.8.1995 under the Scheme for a period

of five years, it was but proper on the part of the Post Master to have

taken a note of the correct Scheme applicable to the deposit. It was also

possible for the Postmaster to have ascertained from the records, could

have applied the correct Scheme and if the Appellant, being an institution,

was not eligible to avail the Scheme and advised them properly. Though Mr.

S. Aravindh, learned Counsel for the Appellant requested this Court to

direct the third Respondent to pay some reasonable amount for his lapse,

inasmuch as such direction would go contrary to the Rules and payment of

interest is prohibited for such Scheme in terms of Rule 17, we are not

inclined to accept the same.”

(emphasis is ours)

Based on the decision of this Court relied upon by the State Commission, as

also, the National Commission in the impugned orders dated 21.1.2008 and

4.9.2008 respectively, as also, the latest judgment rendered by this Court

in Arulmighu Dhandayadhapaniswamy Thirukoil case (supra), it was the

emphatic contention of the learned counsel for the respondent, that there

was no question of release of the maturity amount to the appellant.

5. It was also the contention of the learned counsel for the respondent,

that the mistake at the hands of the postal authorities was innocent.

After the appellant’s claim was examined, a preliminary enquiry disclosed,

that the NSC was issued to M/s. Bhagwati Vanaspati Traders by Ved Bahadur

Singh (an employee of the postal department). A departmental proceeding

was held against the above employee, and he was duly punished. Accordingly

it was sought to be asserted, that it was not as if, the postal authorities

were intentionally depriving the appellant of the benefits of the NSC

purchased by him on 28.4.1995. The deprivation of the appellant, according

to learned counsel, was based on a pure determination of the legal rights

of the appellant.

6. The first contention advanced at the hands of the learned counsel for

the appellant was based on the decision rendered by this Court in Tata Iron

& Steel Co. Ltd. v. Union of India & Ors., (2001) 2 SCC 41, wherefrom

learned counsel invited our attention to the following observations:-

“20. Estoppel by conduct in modern times stands elucidated with the

decisions of the English Courts in Pickard v. Sears, 1837 6 Ad. & El.

469, and its gradual elaboration until placement of its true principles by

the Privy Council in the case of Sarat Chunder Dey v. Gopal Chunder

Laha, (1891-92) 19 IA 203, whereas earlier Lord Esher in the case of Seton

Laing Co. v. Lafone, 1887 19 Q.B.D. 68, evolved three basic elements of the

doctrine of Estoppel to wit:

“Firstly, where a man makes a fraudulent misrepresentation and another man

acts upon it to its true detriment: Secondly, another may be where a man

makes a false statement negligently though without fraud and another person

acts upon it: And thirdly, there may be circumstances under which, where a

misrepresentation is made without fraud and without negligence, there may

be an Estoppel.”

Lord Shand, however, was pleased to add one further element to the effect

that there may be statements made, which have induced other party to do

that from which otherwise he would have abstained and which cannot properly

be characterized as misrepresentation. In this context, reference may be

made to the decisions of the High Court of Australia in the case of Craine

v. Colonial Mutual Fire Insurance Co. Ltd., 1920 28 C.L.R. 305. Dixon, J.

in his judgment in Grundt v. The Great Boulder Pty. Gold Mines Pty.

Ltd., 1938 59 C.L.R. 641, stated that:

"In measuring the detriment, or demonstrating its existence, one does not

compare the position of the representee, before and after acting upon the

representation, upon the assumption that the representation is to be

regarded as true, the question of estoppel does not arise. It is only when

the representor wished to disavow the assumption contained in his

representation that an estoppel arises, and the question of detriment is

considered, accordingly, in the light of the position which the representee

would be in if the representor were allowed to disavow the truth of the

representation."

(In this context see Spencer Bower and Turner: Estoppel by Representation,

3rd Ed.). Lord Denning also in the case of Central Newbury Car Auctions

Ltd. v. Unity Finance Ltd., 1956 (3) All ER 905, appears to have subscribed

to the view of Lord Dixon, J. pertaining to the test of 'detriment' to the

effect as to whether it appears unjust or unequitable that the

representator should now be allowed to resile from his representation,

having regard to what the representee has done or refrained from doing in

reliance on the representation, in short, the party asserting the estoppel

must have been induced to act to his detriment. So long as the assumption

is adhered to, the party who altered the situation upon the faith of it

cannot complain. His complaint is that when afterwards the other party

makes a different state of affairs, the basis of an assertion of right

against him then, if it is allowed, his own original change of position

will operate as a detriment, (vide Grundts: High Court of Australia

(supra)).

21. Phipson on Evidence (Fourteenth Edn.) has the following to state as

regards estoppels by conduct.

“Estoppels by conduct, or, as they are still sometimes called, estoppels by

matter in pais, were anciently acts of notoriety not less solemn and formal

than the execution of a deed, such as livery of seisin, entry, acceptance

of an estate and the like, and whether a party had or had not concurred in

an act of this sort was deemed a matter which there could be no difficulty

in ascertaining, and then the legal consequences followed (Lyon v.

Reed, (1844) 13 M & W 285 (at p. 309). The doctrine has, however, in

modern times, been extended so as to embrace practically any act or

statement by a party which it would be unconscionable to permit him to

deny. The rule has been authoritatively stated as follows: ‘Where one by

his words or conduct willfully causes another to believe the existence of a

certain state of things and induces him to act on that belief so as to

alter this own previous position, the former is concluded from averring

against the latter a different state of things as existing at the same

time.’ (Pickard v. Sears (supra)). And whatever a man's real intention may

be, he is deemed to act willfully ‘if he so conducts himself that a

reasonable man would take the representation to be true and believe that it

was meant that he should act upon it.’ (Freeman v. Cooke, 1848 (2) Exch.

654: at p. 663).

Where the conduct is negligent or consists wholly of omission, there must

be a duty to the person misled (Mercantile Bank v. Central Bank, 1938 AC

287 at p. 304, and National Westminster Bank v. Barclays Bank

International, 1975 Q.B. 654). This principle sits oddly with the rest of

the law of estoppel, but it appears to have been reaffirmed, at least by

implication, by the House of Lords comparatively recently (Moorgate

Mercantile Co. Ltd. v. Twitchings, (1977) AC 890). The explanation is no

doubt that this aspect of estoppel is properly to be considered a part of

the law relating to negligent representations, rather than estoppel

properly so-called. If two people with the same source of information

assert the same truth or agree to assert the same falsehood at the same

time, neither can be estopped as against the other from asserting

differently at another time (Square v. Square, 1935 P. 120).”

22. A bare perusal of the same would go to show that the issue of an

estoppel by conduct can only be said to be available in the event of there

being a precise and unambiguous representation and on that score a further

question arises as to whether there was any unequivocal assurance prompting

the assured to alter his position or status. The contextual facts however,

depict otherwise. Annexure 2 to the application form for benefit of price

protection contains an undertaking to the following effect:-

“We hereby undertake to refund to EEPC Rs… the amount paid to us in full or

part thereof against our application for price protection. In terms of our

application dated against exports made during... In case any particular

declaration/certificate furnished by us against our above referred to

claims are found to be incorrect or any excess payment is determine to have

been made due to oversight/wrong calculation etc. at any time. We also

undertake to refund the amount within 10 days of receipt of the notice

asking for the refund, failing which the amount erroneously paid or paid in

excess shall be recovered from or adjusted against any other claim for

export benefits by EEPC or by the licensing authorities of CCI & C.”

and it is on this score it may be noted that in the event of there being a

specific undertaking to refund for any amount erroneously paid or paid in

excess (emphasis supplied), question of there being any estoppel in our

view would not arise. In this context correspondence exchanged between the

parties are rather significant. In particular letter dated 30.11.1990 from

the Assistant Development Commissioner for Iron & Steel and the reply

thereto dated 8.3.1991 which unmistakably record the factum of non-payment

of JPC price.”

(emphasis is ours)

Based on the aforesaid observations it was the emphatic contention of the

learned counsel for the appellant, that the rule of estoppel would come to

the aid of the appellant, inasmuch as, the appellant having been

consciously permitted to purchase the NSC, could not be denied the benefit

of the maturity amount by asserting, that there was some irregularity in

the purchase of the NSC.

7. It is not possible for us to accept the applicability of the

principle of estoppel in the facts and circumstances of this case. No

representation is ever shown to have been made to the appellant. It was

the appellant’s individual decision to purchase the NSC. It is not shown,

that a fraudulent representation was made to the appellant. It is also not

shown, that a false statement was negligently made to the appellant. The

rule of estoppel, in the present case, could have only been premised on

some conduct of the respondent, which had willfully induced the appellant

to invest in the NSC. Unfortunately, for the appellant, no such willful

conduct has been brought to our notice. Having given our thoughtful

consideration to the instant aspect of the matter, we feel that this case

would be governed by the proposition evolved in Moorgate Mercantile Co.

Ltd. v. Twitchings, (1977) AC 890, namely, where two people with the same

source of information assert the same truth or agree to assert the same

falsehood at the same time, neither can be estopped against the other.

Therefore, whilst it cannot be disputed, that the authorities issuing the

NSC were required to ensure, that the same was issued to only such persons

who were eligible in law to purchase the same, yet in terms of the mandate

of rule 17 extracted hereinabove, the vires whereof is not subject matter

of challenge, it is not possible for us to accept, that the rule of

estoppel could be relied upon at the behest of the appellant, for any

fruitful benefit.

8. To overcome the mandate of rule 17 extracted hereinabove, as also,

the decision rendered by this Court in Raja Prameeelamma case (supra), and

the proposition of law declared in Arulmighu Dhandayadhapaniswamy Thirukoil

case (supra), learned counsel for the appellant placed emphatic reliance on

the decision of this Court in Ashok Transport Agency v. Awadhesh Kumar &

another., (1998) 5 SCC 567. He invited our attention to the following

observations recorded therein:-

“6. A partnership firm differs from a proprietary concern owned by an

individual. A partnership is governed by the provisions of the Indian

Partnership Act, 1932. Though a partnership is not a juristic person but

Order XXX Rule 1 CPC enables the partners of a partnership firm to sue or

to be sued in the name of the firm. A proprietary concern is only the

business name in which the proprietor of the business carries on the

business. A suit by or against a proprietary concern is by or against the

proprietor of the business. In the event of the death of the proprietor of

a proprietary concern, it is the legal representatives of the proprietor

who alone can sue or be sued in respect of the dealings of the proprietary

business. The provisions of Rule 10 of Order XXX which make applicable the

provisions of Order XXX to a proprietary concern, enable the proprietor of

a proprietary business to be sued in the business names of his proprietary

concern. The real party who is being sued is the proprietor of the said

business. The said provision does not have the effect of converting the

proprietary business into a partnership firm. The provisions of Rule 4 of

Order XXX have no application to such a suit as by virtue of Order XXX Rule

10 the other provisions of Order XXX are applicable to a suit against the

proprietor of proprietary business "insofar as the nature of such case

permits". This means that only those provisions of Order XXX can be made

applicable to proprietary concern which can be so made applicable keeping

in view the nature of the case.”

(emphasis is ours)

Based on the observations recorded in the aforesaid judgment, the second

contention advanced by the learned counsel for the appellant was, that in

sum and substance, a sole proprietorship concern allows the fictional use

of a trade name on behalf of an individual. It was contended, that

truthfully only one individual is the owner of a sole proprietorship

concern. As such, according to learned counsel, the name of the sole

proprietorship concern, can again be substituted with the name of the sole

proprietor. If that is allowed, the NSC purchased by the appellant would

strictly conform to the mandate of law. According to learned counsel, it

makes no difference whether the individual’s name, or the proprietorship’s

name is recorded while purchasing an NSC. It was pointed out, that if the

respondent was not agreeable in accepting the trade name, the respondent

ought to have corrected the NSC by substituting the name of M/s. Bhagwati

Vanaspati Traders with that of its sole proprietor, namely, B.K. Garg.

9. We find merit in the second contention advanced at the hands of the

learned counsel for the appellant. It is indeed true, that the NSC was

purchased in the name of M/s. Bhagwati Vanaspati Traders. It is also

equally true, that M/s. Bhagwati Vanaspati Traders is a sole proprietorship

concern of B.K. Garg, and as such, the irregularity committed while issuing

the NSC in the name of M/s. Bhagwati Vanaspati Traders, could have easily

been corrected by substituting the name of M/s. Bhagwati Vanaspati Traders

with that of B.K. Garg. For, in a sole proprietorship concern an

individual uses a fictional trade name, in place of his own name. The

rigidity adopted by the authorities is clearly ununderstandable. The

postal authorities having permitted M/s. Bhagwati Vanaspati Traders to

purchase the NSC in the year 1995, could not have legitimately raised a

challenge of irregularity after the maturity thereof in the year 2001,

specially when the irregularity was curable. Legally, rule 17 of the Post

Office Savings Bank General Rules, 1981, would apply only when an applicant

is irreregularly allowed something more, than what is contemplated under a

scheme. As for instance, if the scheme contemplates an interest of Y% and

the certificate issued records the interest of Y+2% as payable on maturity,

the certificate holder cannot be deprived of the interest as a whole, on

account of the above irregularity. He can only be deprived of 2%, i.e.,

the excess amount, beyond the permissible interest, contemplated under the

scheme. A certificate holder, would have an absolute right, in the above

illustration, to claim interest at Y%, i.e., in consonance with the scheme,

despite rule 17. Ordinarily, when the authorities have issued a

certificate which they could not have issued, they cannot be allowed to

enrich themselves, by retaining the deposit made. This may well be

possible if the transaction is a sham or wholly illegal. Not so, if the

irregularity is curable. In such circumstances, the postal authorities

should devise means to regularize the irregularity, if possible.

10. It is not possible for us to deny relief to the appellant, based on

the judgments rendered by this Court in Raja Prameeelamma case (supra) and

Arulmighu Dhandayadhapaniswamy Thirukoil case (supra), in view of the fact

that, the matter was never examined in the perspective determined by us

hereinabove. In neither of the two judgments, the amendment of the NSC was

sought. The instant proposition of law, was also not projected on behalf

of the certificate holders, in the manner expressed above.

11. There was seriously no difficulty at all in the facts and

circumstances of the present case, to regularize the defect pointed out,

because M/s. Bhagwati Vanaspati Traders, is admittedly the sole

proprietorship concern of B.K. Garg. The postal authorities should have

solicited the change of the name in the NSC, through a representation by

B.K. Garg himself. On receipt of such a representation, the alleged

irregularity would have been cured, and the beneficiary of the deposit,

would have legitimately reaped the fruits thereof. Rather than adopting

the above simple course, the postal authorities chose to strictly and

rigidly interpret the terms of the scheme. This resulted in the denial of

the legitimate claims of the sole proprietor of the appellant concern,

i.e., B.K. Garg, of the investment made by him. In the above view of the

matter, we consider it just and appropriate, in exercise of our

jurisdiction under Article 142 of the Constitution of India, to direct the

Senior Superintendent of Post Offices, Meerut, to correct the NSC issued in

the name of M/s. Bhagwati Vanaspati Traders, by substituting the

appellant’s name, with that of B.K. Garg.

12. The irregularity having been cured, we hope that B.K. Garg will now

be released all the payments due to him, in terms of the order passed by

the District Forum. The respondent is accordingly directed to pay to B.K.

Garg, the maturity amount of Rs.10,075/- with 12% interest, from the date

of maturity, till the date of payment. He would be entitled to Rs.5,000/-

towards compensation, as was awarded to him by the District Forum. In

addition, we consider it just and appropriate to award him litigation costs

of Rs.10,000/-. The entire amount aforementioned, should be released to

B.K. Garg, the sole proprietor of M/s. Bhagwati Vanaspati Traders, within

one month from the date of receipt of a certified copy of this judgment.

13. The instant appeal is allowed in the aforesaid terms.

…………………………….J.

(Jagdish Singh Khehar)

…………………………….J.

(C. Nagappan)

New Delhi;

October 10, 2014.

ITEM NO.1A COURT NO.6 SECTION XVII

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

Civil Appeal No(s). 4854/2009

M/S.BHAGWATI VANASPATI TRADERS Appellant(s)

VERSUS

SR.SUPERIN.OF POST OFFICE,MEERUT Respondent(s)

[HEARD BY HON'BLE JAGDISH SINGH KHEHAR AND HON'BLE C.NAGAPPAN, JJ.]

Date : 10/10/2014 This appeal was called on for Judgment today.

For Appellant(s) Mr. V. K. Monga,Adv.(Not present)

For Respondent(s) Mr. Kamal Mohan Gupta,Adv.(Not present)

Hon'ble Mr. Justice Jagdish Singh Khehar pronounced the

judgment of the Bench comprising his Lordship and Hon'ble Mr. Justice C.

Nagappan.

For the reasons recorded in the Reportable judgment, which is

placed on the file, the appeal is allowed.

(Parveen Kr. Chawla) (Phoolan Wati Arora)

Court Master Assistant Registrar

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