In Brief
Pradeep Kumar and Raj Rani purchased Kisan Vikas Patras (investment certificates) worth Rs. 32.60 lakhs in 1995–96. In 2000, they handed the certificates to Rukhsana, a state-appointed agent, for transfer to another post office. Rukhsana fraudulently encashed them and disappeared with Rs. 25.54 lakhs. The appellants sued the Post Master General and post office officials. The National Consumer Disputes Redressal Commission dismissed the complaint, citing Rules 14–15 of the KVP Rules. The Supreme Court allowed the appeal, holding that the post office violated its statutory duties under the Negotiable Instruments Act and post office rules by: (i) accepting certificates without the required identity slip; (ii) paying a non-entitled agent in cash instead of by cheque; and (iii) ignoring mandatory verification procedures. The Court held the post office vicariously liable for its employee's fraud and ordered payment of maturity value, interest, compensation, and costs.
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