K.S. Ramamurti, J.
1. The Union of India, represented by the Postmaster-General, Mount Road, Madras, is the appellant and the respondent is Amjad Miyan of Rampur, Uttar Pradesh. The latter instituted a suit, O.S. No. 1749 of 1962 on the file of the City Civil Court, Madras, against the Union of India to recover a sum of Rs. 5,555 representing the loss of an insured article. His case is that from Rampur he came to Trichy after a halt at Madras some time in August, 1960, that he left Rampur taking a sum of Rs. 5,000 (fifty hundred rupee currency notes) from one Dhulai Miyan of Rampur for purchasing lungies for the latter at Trichy, that after arriving at Trichy he abandoned that idea and therefore sent back the sum of Rs. 5,000 (the same identical 50 hundred rupee currency notes) to Dhulai Miyan at Rampur, The further case of the plaintiff is that he is an illiterate man does not know to read and write English and therefore, he sought the assistance of one Nawab Jan to fill in the requisite forms for sending the insurance to Dhulai Miyan of Rwipur, that this Nawab Jan, instead of putting the plaintiff's name in the postal forms for sending the insured article, used the name of the second defendant, Syed Haroon Rashid, a person living opposite to Nawab Jans that on the same day, the plaintiff wanted Nawab Jan to send a telegram, to Dhulai Miyan of Rampur, that Nawab Jan again sent the telegram in the name of Rashid to Dhulai Miyan at Rampur to the effect that a sum of Rs. 5,000 had been sent by insurance and that, in the telegram too, the name of the second defendant had been used as the sender of the telegram. The plaintiff's further case is that, later on, he left Trichy to Madras and while at Madras, he came to know that the insured cover did not reach Dhulai Miyan at Rampur. A complaint was given to the Postal Authorities about the loss of the insured article, but nothing came out of the same. After issuing a, lawyer's notice prior to the suit, the plaintiff instituted the present action. The first defendant is the Union of India represented by the Postmaster-General, Madras, and the second defendant is Syed Haroon Rashid in whose name the insured article as well as the telegram were sent. The second defendant remained ex parte and the suit was resisted by the first defendant on the ground, inter alia, that the plaintiff's case that he sent Rs. 5,000 by insurance is false, that the plaintiff did not have the sum of Rs. 5,000 at all and Issue No. 2 covered this aspect of the dispute between the parties, viz. 'Did the plaintiff send currency notes by insured cover on 6th September, 1960?' (The date 6th September, 1960 is a mistake for 18th August, 1960 because, in the plaint and in the earlier stages, the plaintiff mentioned the date of insurance wrongly as 6th September, 1960. It is only in the course of the trial, from the insurance receipt and other records, the correct date on which the insured article was alleged to have been sent was noticed as 18th August, 1960). On the side of the plaintiff, the only oral evidence is the plaintiff's sole, interested testimony. The defendant examined three witnesses : D.W. 1 is a clerk in the Post Office, Trichy Fort, who has given evidence that in August, 1960 he received an insured article insured for Rs. 5,000, addressed to one Dhulai Miyan of Rampur and the sender's name was given as One Rashid. He has also given evidence that the weight of the insured article was 48 rakes as mentioned in Exhibit B-3, the receipt issued by the Trichy Post Office for the receipt of the insured article. D.W. 1 states that he is the person who weighed the article arid noted the weight as 48 rakes in the receipt. D.W. 2 is a clerk in the Trichy Post Office, who despatched the telegram to Dhulai Miyan of Rampur in the name of one Rashid. D.W. 3 is the Assistant Superintendent of the Post Offices and he was Inspector of Post Offices (Complaints), in Trichy Division. He has given evidence that he received the complaint about the non-receipt of the insured article by Dhulai Miyan of Rampur, that investigation was conducted by the Postal Authorities, that D.W. 3 examined some witnesses, Dhulai Miyan (the addressee of the insured article) and the plaintiff Amjad Miyan at Rampur and Nawab Jan and Rashid of Trichy. The statements made in Hindustani by Amjad Miyan and Dhulai Miyan Were translated into English and those statements were signed by them. D.W. 3 has given evidence that, throughout his investigation, and when he recorded the statements from Dhulai Miyan and Amjad Miyan, he used an interpreter. P.W. 1 was cross-examined in detail with a view to establish that he never sent Rs. 5,000 (currency notes) to Rampur, that a gross fraud had been committed in this matter, that the entire Version of the plaintiff is false, that the plaintiff did not carry Rs. 5,000 with him from Rampur and that his present claim is as a result of fraud and collusion between the plaintiff, Dhulai Miyan and others. The trial Court, in a very brief and short judgment, decreed the claim on the short ground that, when once the plaintiff had proved that he sent an insured article insuring the same for Rs. 5,000 and it had not been delivered to the addressee, the plaintiff will be entitled to recover the sum of Rs. 5,000. It is a matter for regret that the trial Court did not appreciate the significance of Issue No. 2 and the importance and the significance of the trend of the cross-examination of P.W. 1 and the points established in the course of the cross-examination. The learned Judge has disposed of the matter in a rather mechanical manner and there is no portion in his judgment in which he has considered the crucial question whether the plaintiff carried with him Rs. 5,000 from Rampur to Trichy and whether the sum of Rs. 5,000 was actually put inside the insurance cover and despatched to Rampur. The trial Court has completely missed the context in which Section 33 of the Indian Post Office Act was relied upon on the side of the defendant. On a careful consideration of the real problem in the case, we have reached the conclusion that the plaintiff is bound to fail for the main reason that, from the evidence it is clear that the entire episode is false and the story of the plaintiff carrying Rs. 5,000 from Rampur to Trichy and sending it back to Rampur is nothing but a tissue of falsehood.
2. Before proceeding further, we think it necessary to make an important comment about the vital aspects of the case. It is a matter for regret that the trial Court lost sight of the fact that the proof of the plaintiff's case entirely rests upon his sole, interested testimony which is full of discrepancies, besides being directly contrary to what he had stated before the Postal Inspector at the time of the investigation of his complaint. That apart, the most important witnesses are (1) Dhulai Miyan of Rampur who is alleged to have given fifty hundred rupee currency notes (Rs. 5,000) to the plaintiff for purchase of lungies, (2) Nawab Jan and (3) Rashid, who are both said to be personally aware of the plaintiff putting Rs. 5,000 in currency notes in the insured cover and despatching the same to Rampur. Nawab Jan and Rashid are residents of Trichinopoly. There is absolutely no explanation why these three most important witnesses were not examined in the case. A perusal of the plaintiff's evidence, his answers in the cross-examination and the statement which he has made before the Postal Inspector in the course of the investigation shows that the aforesaid three persons, Dhulai Miyan of Rampur and Nawab Jan and Rashid of Trichy, have themselves given discrepant and prevaricating statements and their statements would completely expose the falsity of the plaintiff's version i.e. Dhulai Miyan never gave Rs. 5,000 to the plaintiff and therefore there was no question of the plaintiff sending the same by insurance. The main reason why these three persons were not examined is that they would be confronted with the statements that they had made before the Postal Inspector, which are suicidal to the version of the plaintiff. On account of their non-examination the first defendant has been seriously handicapped in placing the version of Dhulai Miyan who is alleged to have given Rs. 5,000 in currency notes to the plaintiff. On account of the non-examination of Nawab Jan and Rashid the first defendant has again been equally handicapped and prevented from establishing the attempt of the plaintiff to defraud the Postal Department. The plaintiff, on account of his dubious conduct, has effectively prevented the first defendant from placing the entire picture before the Court. There is absolutely no justification for not examining these three witnesses, who, on the plaintiff's showing, would throw light upon the crucial point in dispute. In our View, the necessary adverse inference which has got to be drawn from the non-examination of these material witnesses has a serious impact upon the assessment of the truth of the evidence of the plaintiff which, as already observed, is full of material discrepancies.
3. Before considering the evidence touching the episode of the remittance of the money of Rs. 5,000 through the Post Office by insurance, it is necessary to determine the precise nature and measure of liability which is undertaken by the Postal Department whenever a registered article is accepted for despatch after insurance. The post office is a branch of the public service; accordingly, the Postmaster-General is not a common carrier, the acceptance by him of letters and packets for transmission through the post does not give rise to any contractual relationship between him and the owner of the letter or packet, (vide : 30, Halsbury, page 148, Para. 239).
4. In very ancient times, postal services were maintained in Great Britain under a system of monopoly and, in course of time, during the time of Queen Elizabeth I and James I, private postal service was prohibited. In course of time, the postal service was taken up and maintained in England as a public service and from time to time, there have been successive statutes regulating this great public service, the postal service. The English Post Office Act of 1908 was in force for a considerable time and, today, in England, the consolidating statute which governs the postal service is the Post Office Act of 1953. The rulers in India maintained their own system of communication from time immemorial, and, in the year 1766, the East India Company established somewhat similar postal services, mainly intended for official correspondence. The postal service was made available to the public some time in the year 1774 and in 1837, a monopoly was established for the official post. Later on, as in England, the postal service was taken up as a public service by the Government itself and, in India, the postal service is governed by the provisions of the Indian Post Office Act of 1898 (hereinafter referred to as the Act) and the rules framed thereunder.
5. In England, the right of the subject against the Postmaster-General or the Crown in respect of loss of, or damage to, a registered inland postal packet is governed by the provisions of the English Act and the common law with its peculiar limitations on the subject's right to maintain an action against the Crown in respect of torts. In England, today, the position is governed by the provisions of the Post Office Act of 1953 and the provisions of the Crown Proceedings Act of 1947 and, in particular, Section 9 thereof, Which permit, in specified cases, an action against the Crown in respect of loss of, or damage to, a registered inland postal packet. We may, in this connection, refer to the statement of the law in England in Halsbury's Laws of England (Vol. 30), at pages 176 and 177, paragraphs 300 and 301:
300. Liability for loss in respect of Postal packets generally:
Except in the case of a registered inland postal packet, no proceedings in tort lie against the Crown for anything done or omitted to be done in relation to a postal packet by any person while employed as a servant or agent of the Crown. An officer of the Crown is not subject to any civil liability for any of the matters aforesaid, except at the suit of the Crown; nor do proceedings in contract lie against the Crown in respect of loss or damage to a postal packet.
301. Liability in respect of registered inland postal packets:
Proceedings may be brought against the Crown in respect of loss or damage to a registered inland postal packet, not being a telegram, in so far as the loss or damage is due to any wrongful act done or any neglect or default committed by a person employed as a servant or agent of the Crown while performing or purporting to perform his functions as such in relation to the receipt, carriage, delivery or other dealing with the packet.
Post Office regulations prescribe for the conditions to be observed in relation to registered inland postal packets for purposes of proceedings under the Crown Proceedings Act, 1947 : unless those conditions have been complied with the Crown will not be liable in any such proceedings.
In any such proceedings the amount recoverable is limited by the condition that it may not exceed the market value of the packet in question, excluding the market value of any message or information which it bears, at the time when the cause of action arose and that the amount recoverable may not, in any event, exceed the maximum amount which, under post office regulations, is available for compensating the persons aggrieved having regard to the fee paid in respect of the registration of the packet.
In a claim in respect of loss Or damage to a registered inland postal packet no relief is available except upon a claim by the sender or the addressee of the packet in question unless the Court otherwise allows. The sender or the addressee is entitled to claim such relief as may be available to him, whether or not he is the person damnified by the injury complained of, and he is entitled to give a good discharge in respect of all claims in respect of the packet.
In proceedings under the Crown Proceedings Act, 1947, it is presumed, until the contrary is shown on behalf of the Crown, that the loss of or damage to the packet was due to some wrongful act done, or some neglect pr default committed, by a person employed as a servant or agent of the Crown while performing or purporting to perform his functions as such in relation, to the receipt, carriage, delivery or other dealing with the packet.
Vide : also the observations in Clerk and Lindsell on Torts, latest (13th) Edition (1969) at page 139. The wide immunity which the Grown enjoys in England subject to the provisions of the Crown Proceedings Act of 1947, in respect of an action against the Grown does not prevail in India and a subject can maintain an action against the State both in respect of contracts and in respect of torts. It is true that the position with respect to the right of a subject to maintain an action against the State in respect of torts cannot be said to be finally and clearly settled. But, so far as the loss of, or damage to, postal articles is concerned, the matter is strictly governed by the provisions of the Act and the Rules framed thereunder. In other words, the liability is statutory.
6. It will be seen that the amount recoverable is the actual loss or damage sustained or the market value of the article lost and the amount cannot, in any event, exceed the maximum amount which may be fixed under the post office regulations. In other words, the plaintiff must prove that he has sustained a real loss ascertainable in terms of money; he cannot recover any amount merely upon a speculative or hypothetical basis and again, the amount cannot exceed the maximum fixed by the post office regulations. Even if the article is lost, if the plaintiff has not sustained any pecuniary loss or damage, he cannot recover merely because the registered article which was insured at a particular value was lost. The main emphasis is upon the value of the article, representing the loss or damage sustained by the plaintiff, in terms of money value.
7. Before the Grown Proceedings Act of 1947, on account of the peculiar doctrine of 'common law', that no action was maintainable against the Grown in respect of a tort, and so, in two very early cases in 1700 and 1778, it was contended that the liability of the post office was on a contract and a breach of covenant on the theory that the postal service was something like a service rendered by a common carrier and therefores the liability arose under the contract between the consignor and the common carrier. This theory was rejected and it was held that, in the matter of postal service rendered by the Crown, there is no notion of any contract. We may at this stage, refer to the classical statement of the law by Lord Mansfield in Whitfield v. Lord Le Despencer (1778) 2 Cowp. 752, in which the view expressed by Gould, J. in Lane v. Cotton (1701) 1 Ld. Raym. 646, has been referred to with approval by Lord Mansfield. In Whitfield v. Lord Le Dispencer (1778) 2 Cowp. 754, a Bank note sent through the postal service was stolen by one of the sorters of the Postal Department and an action was laid against the Postmaster-General for damages. After referring to the dicta of Gould, J. in Lane v. Cotton (1701) 1 Ld. Raym. 646 Lord Mansfield observed as follows:
The ground of Holt, L.C.J.'s opinion in that case, is founded upon comparing the situation of the Postmaster to that of a common carrier, or the master of a ship taking goods on board for freight. Now with all deference to so great an opinion, the comparison between a Postmaster and a carrier, or the master of a ship, seems to me to hold in no particular whatsoever. The Postmaster has no hire, enters into no contract, carries on no merchandize or commerce. But the Post office is a branch of revenue, and a branch of police, created by Act of Parliament. As a branch of revenue, there are great receipts; but there is likewise a great surplus of benefit and advantage to the public, arising from the fund. As a branch of police, it puts the whole correspondence of the kingdom (for the exceptions are very trifling) under government, and entrusts the management and direction of it to the Crown, and officers appointed by the Crown. There is no analogy therefore between the case of the Postmaster and a common carrier. The branch of revenue and the branch of police are to be governed by different officers. The superior has the appointment of the inferior officers; but they give security to the Crown. One requisite is, that they shall take the oaths taken by all public officers; another strong guard is, that they are made subject to heavy penalties; and this is carried so far, that, what in the case of a common carrier, or any other person, would be only a breach of trust, is in them declared to be a capital felony.
While referring to the decision in Lane v. Cotton (1701) 1 Ld. Raym. 646, given in 1699, describing it as a solemn judgment, Lord Mansfield stated thus:
In that year a solemn judgment was given, that an action on the case would not lie against the Postmaster-General, for a loss in the office by the negligence or fault of his servant. The nation understood it to be a judgment; and therefore it makes no difference, if what has been thrown out were true, and the writ of error was stopped in the way that has been mentioned. (That refers to the settlement of the action.) For the bar have taken notice of it as a judgment; the Parliament and the people have taken notice of it, every man who has sent a letter since has taken notice of it; many Acts of Parliament for the regulation and improvement of the Post Office, and other purposes relative, to it, have been passed since, which by their silence have recognised it. The mail has been robbed a hundred times since, and no action whatever has been brought. What have merchants done since and continue to do at this day, as a caution and security against a loss? They cut their bills and notes into two or three parts, and send, them at, different times : one, by this day's post, the other, by the next. This shows the sense of mankind as to their remedy. If there could have been any doubt therefore before the determination of Lane v. Cotton (1701) 1 Ld. Raym. 646, the solemn judgment in that case having stood uncontroverted ever since, puts the matter beyond dispute. Therefore, we are all clearly of opinion the action will not lie.
The above statement of the law that there is no contract or no covenant when the postal Department accepts a registered article for transmission from one place to another has held the field for over two and a half centuries and has been followed all the subsequent cases in England. Bainbridge v. The Postmaster-General (1906) 1 K.B. 178, Frampton v. Gillison (1927) 1 Ch. 196, Triefus and Co. Limited v. Post Office (1957) 2 Q.B. 352, and Building and Civil etc. v. Post Office (1956) 1 A.E.R. 163. As observed already, the general rule in England is that no action would lie against the Crown or the Postmaster-General, in respect of loss of, Or damage to, a postal article, but this immunity has been removed in respect of inland registered parcel by Section 9 and Sub-section (2) of the Grown Proceedings Act of 1947, which is in these terms:
9. (2) Notwithstanding the provisions of section thirteen of the Post Office Act, 1908, proceedings shall lie against the Crown under this sub-section in respect of loss of, Or damage to, a registered inland postal packet, not being a telegram, in so far as the loss or damage is due to any wrongful act done or any neglect or default committed by a person employed as a servant or agent of the Crown while performing or purporting to perform his functions as such in relation to the receipt, carriage, delivery or other dealing with the packet; Provided that....
In the case in Triefus and Co. Limited v. Post Office (1957) 2 Q.B. 352, the postal packets which were lost were not inland postal packets, but postal packets sent from London to New Zealand and the action could not be saved by Section 9(2) of the Crown Proceedings Act of 1947. It was held that the post office is a branch of the revenue and the Postmaster does not enter into any contract with the person who entrusts to the post office a postal packet for trasmission overseas. In that Case, two postal packets containing diamonds which were to be transmitted to New Zealand were stolen by a servant of the Post Office while in transit and the plaintiff brought an action to recover damages alleging inter alia breach of contract. The suit was dismissed on the preliminary question of law that there was no contract between the plaintiff and the Postal authorities, and the matter was governed by Section 13 of the Post Office Act, 1908 which denied any right of action against the Postal Department. The argument that Section 13 would not apply and that it is a case of an enforcement of a contractual liability was not accepted and it was also held that Section 13 was a bar to the suit even if it should be held that the transaction envisaged a set of circumstanes in which a contract may reasonably be inferred. In Building and Civil etc. v. Post Office (1963) 1 All. E.R. 163, the change introduced by Section 9(2) of the Grown Proceedings Act of 1947, was explained in these terms by Lord Denning, M.R., at page 167:
Before 1947, when you sent a letter by post and it was lost or damaged in transit, you could recover nothing. You could not recover in contract, because it was held that neither the Postmaster-General, nor the Post Office made any contract to carry the letter; see Whitfield v. Lord Le Despencer (1778) 2 Cowp. 754 per Lord Mansfield. You could not recover in tort, because the Postmaster-General was not liable for the torts of his subordinates; see Bainbridge v. Postmaster-General (1906) 1 K.B. 178. Even when you sent a registered letter, you could recover nothing for the loss of it, because any claim was excluded by the statute; see Section 13 of the Post Office Act, 1908. Since 1947 you can still recover nothing for ordinary letters; and nothing for registered letters sent overseas. It is still the case that no action lies in contract see Triefus and Co. Limited v. Post Office (1906) 1 K.B. 178, nor in tort (see Section 9(1) of the Grown Proceedings Act, 1947); but the law has been changed entirely as to registered inland postal packets. By Section 9(2) of the Act of 1947, it is enacted that:
Proceedings shall lie against the Grown under this sub-section in respect of loss of, or damage to, a registered inland postal packet.
This cause of action is, to my mind entirely statutory. The section does not merely lift a barrier to proceedings against the Grown (as it does in cases under Sections 1 and 2. of the Act of 1947). It gives a new statutory cause of action.
We may also refer to the following obser-vetions of Pearson, L. J. at page 170, emphasising that the liability is one which arises under the statute and not one of common law:
In my judgment, the plaintiff's only cause of action is the one created by Section 9(2) of the Grown Proceedings Act, 1947; and it is a purely statutory cause of action; and it is of a tortious character. It is shown to be a purely statutory cause of action by the provisions of Section 9 as a whole and particularly by the repeated use in Sub-section (2) of the words, 'under this sub-section', four times in conjunction with the word 'proceedings' and Once in conjunction with the word 'liable'. It was evidently desired to create the new statutory cause of action in Order to be able conveniently to limit the incidence and the amount of the liability by the provisions in Sub-section (2), and to prevent multiplicity of actions by the special provisions of Sub-section (3) and Sub-section (4). There are two reasons for saying that the new statutory cause of action created by Sub-section (2) is of a torticus character. First, Sub-section (1) provides that 'Subject as hereinafter provided, no proceedings in tort shall lie....' and then that which is 'hereinafter provided', evidently by way of exception from or qualification of Sub-section (1), is the statutory cause of action under Sub-section (2). Secondly, the cause of action is in respect of loss or damage...'due to any wrongful act done or any neglect Or default committed'.
The statutory cause of action is not expressly identified with, or assimilated to, any specific cause of action at common law. It has a natural resemblance to the common law cause of action against a carrier for loss of, or damage to, goods, especially as there is created by the last sentence of Sub-section (2) a rebuttable presumption that the loss of, or damage to, the postal packet was due to some wrongful act or neglect or default. I do not think that in this case any special consequence follows from the resemblance of the statutory cause of action to the common law cause of action against a carrier. It is, however, important, in relation to the ratio decidendi of the learned Judge based on the arguments before him, to notice that the statutory cause of action is not similar to the common law cause of action for conversion.
From the foregoing discussion it will be noticed that, prior to 1947 no action was maintained in respect of loss of, Or damage to, a postal article and that, in the service rendered by the Postal Department, no notion of a contract, express or implied, is involved. It is only after the Crown Proceedings Act of 1947, that a limited right of action was permitted in respect of inland postal articles, the two essential conditions being : (1) that the plaintiff must prove that he has sustained pecuniary loss of an article which has got a value in market; and (2) that he cannot recover any amount exceeding the amount prescribed by the post office regulations. In India, the question is to be determined with reference to the provisions of the Post Office Act. We shall now examine the law in India in the light of the provisions of the Indian Act.
8. An useful and detailed survey of the functions of the post office and the nature of its liabilities is to be found in Government of India v. Jeevaraj Alva A.I.R. 1970 Mys. 13, and Union of India v. Firm Rim Gopal : AIR1960All672 . The first Indian Act was the Post Office Act of 1854 followed by the Act of 1886 and the present Act (VI of 1898) is the consolidating statute relating to the post offices in India. The decision of the Allahabad High Court had to deal with the liability of the post office with regard to a V.P. article which was not delivered to the addressee. The learned Judge who rendered the judgment in that decision. Dhavan, J., has traced the historic development of the services rendered by the post office in England, in America and in India and has pointed out that the services rendered by the post office are merely statutory in all the three countries and that there is no contractual liability. The liability of the post office for mis-delivery or non-delivery of a V.P. article of insurance is only statutory. It was observed that in establishing the post office and running the postal service the State performs a Governmental function; the Government does not engage in commercial transaction nor does it enter into any contract with the sender and the charge on articles transmitted by post is in the nature of duty imposed by the State for the enjoyment of the facilities provided by the postal department and not a consideration for any contract, and the post office is not a common carrier. It was also observed that in the discharge of the functions of the post office, two departments are simultaneously functioning : the Revenue and the Police ; as a branch of Revenue, its receipts form a part of the general revenue of the Government and as a branch of Police, it places under its supervision and control the system of communication between citizens including their correspondence, in which the Government has reserved to itself extensive powers of inspection, control and disposal of postal articles entrusted to its care to be transmitted by post, powers which; negative any suggestion that its status is that of a carrier under contract.
9. In the preceding discussion, we have referred to the law in England by citation of the relevant passages in Halsbury Laws of England, Volume 30. The American law relating to the status of post offices is to be found in Corpus Juris Secundum (Volume 72) at pages 252, 295 and 298:
In conducting the post Office department, the United States is engaged in discharging a Governmental function. However, the power of Congress over the mails is not absolute. It must be considered in the light of definite prohibitions in the federal Constitution and is subject to the limitations imposed by the Bill of rights. (252)
Postage is the fee charged by law for carrying letters, packets and documents by the public mails, and, except in certain cases, specially provided for by law, postage on all matter is required to be pre-paid by stamps at the time of mailing. (295).
The establishment of the postal money order system was a voluntray act of the Government for the convenience of the public, and is merely an incident of the postal system and was inaugurated to enable the citizens to transmit small sums safely through the mails.... The Government exercises a governmental power for the public benefit in the establishment and operation of the postal money order system, and is not engaging in commercial trasactions. notwithstanding it may have some aspects of commercial banking. Thus the insurance of post money Orders is a governmental function rather than a commercial function. (298)
The liability of the Union Government in the case of any mis-delivery, non-delivery or loss of the insuted article or V.P. article is to be found within the four corners of the Act and the Rules framed thereunder, otherwise there will be no liability. At this juncture, it may be convenient to refer to the very early Bench decision of this Court reported in Mothu Rungayya Chetty v. Secretary of State : (1905)15MLJ226 which has been referred to with apparent approval by the Supreme Court in Income-tax Commissioner v. P.M. Rathod and Co. : [1959]37ITR145(SC) . In Mothu Rungayya Chetty v. Secretary of State : (1905)15MLJ226 , registered insured article containing jewellery was delivered by the post office without collecting the specified amount from the addressee. When the Secretary of State was sued for the value of the parcel, the suit was resisted on the ground that the proviso to Section 34 of the Act gave immunity from all liability to the effect that neither the Central Government nor the Secretary of State shall incur any liability in respect of the sum specified for recovery unless and until that sum is received from the addressee. This plea was rejected on the ground that Section 34, would not apply to the common law liability of the post office for delivering the parcel without collecting the money. The further contention was raised that the liability for not collecting the value of the article from the addressee is one of tort committed by an employee of the post Office and the Secretary of State was therefore not liable. This plea too was rejected by the Court in these terms:
It was contended before us that the suit was not cognizable by a Small Cause Court and also that the Secretary of State was not liable for the neglect of his servant. The answer to both these objections is that the case is one of contract and not of tort.
There is no discussion of the precise nature of the functions undertaken by the Government in running the postal department, and the attention of the Bench was not drawn to the law in England as well as the law in America to the effect that the liability is only statutory and the Government cannot be held liable as a common carrier in respect of a1 loss sustained by a subject while sending a V.P. article Or an insured article through the machinery of the post office. That apart, when once it was held that the proviso to Section 34 had no application where the parcel was delivered without collecting the money, the liability arose under the statute and the further question whether the liability is under contract Or tort did not directly arise, and the observations in this Bench decision will have to be understood in the light of the particular facts of that case. The attention of the Bench was also not drawn to the crucial aspect that, if the liability of the postal department was based upon contract, the Legislature would not have intended to impose an unqualified and absolute liability as in the case of a common carrier or insurer, but would have made a specific provision that the liability is only that of a bailee, the duty of the postal department being only to take such care of the article as a prudent owner would do. The absence of any such provision in the Post Office Act itself is clear proof that the liability is only statutory and not contractual. It may also be observed that the Bench decision referred to above did not consider whether the postage paid constitutes consideration in the case of every posted article, insured or uninsured registered or unregistered, or whether it is a duty collected by the State for the services rendered. It is unnecessary to refer to some of the decisions of the Supreme Court and other High Courts where the problem arose whether the post office can be said to be the agent of the sender and whether the posting of a cheque at a particular place will be regarded as a receipt of the money by the addressee at the place where the cheque was posted. In those cases, it was held that where a person gives directions to some other person, the consignee or the buyer, to send the money by means of a cheque through the post office posted at the place of the buyer or the consignee, the receipt of the cheque by the post office at the place of the buyer will be deemed to be receipt of the cheque by the agent of the person who gave such instructions. For instance, in Income-tax Commissioner v. P.M. Rithod and Co. : [1959]37ITR145(SC) , it was held that the payment to the post office by the addressee or the consignee was a payment to the seller and that, under the V.P.P. system, the post office becomes an agent of the seller for recovery of the price. In explaining the machinery underlying the V.P.P. system, the Supreme Court observed as follows:
In the case of delivery of goods by V.P.P. it is immaterial whether the buyer directs the goods to be sent by V.P.P. or the seller does so on his own accord because the goods handed over to the post office by the seller can only be delivered to the buyer against payment and this payment is received for and on behalf of the seller. The buyer does not pay till the goods are received by him and once fie has paid the price it is the post office that is responsible for payment of the money received by it to the seller.
The buyer has no longer any responsibility in regard to it. Therefore a payment to the post office is payment to the seller and at the place where the goods are delivered and the payment is made. Further, before the goods are delivered to the buyer the seller has, under the V.P.P. Rules, the power to direct the post office to make the delivery to the addressee free or to deliver against a sum different from that originally specified.
This would negative the post office being an agent of the buyer. This shows that whatever be the jural relationship between the seller and the post office in respect of carriage of goods sent by the seller under the V.P.P. system, it becomes an agent of the seller for the recovery of the price and if it fails to recover the price and delivers the goods, it is liable in damages to the seller.
The fact that the Supreme Court has referred to with approval the decision in Mothu Rungayya Chetty v. Secretary of State : (1905)15MLJ226 , should not be understood as the Supreme Court laying down the law that the liability of the post office is contracttual and not statutory. The decision of the Supreme Court is authority only to the limited extent that, when an article is sent by an owner by V.P.P., the post office becomes an agent for the recovery of the price, i.e., a jural relationship of principal and agent arises between the seller of the article and the post office. The decision of the Supreme Court is not authority for the position that jural relationship arises only by a contract and is not a statutory liability. It must be borne in mind that a particular jural relationship may arise out of a contract or spring from a statute, and how the liability arises in the case of a post office has to be determined with reference to the provisions of the Act, which, as already observed, create only a statutory liability and not a contractual liability. The liability between two persons may have incident of the jural relationship of a buyer and seller or a principal and agent or as co-owners, and this liability may rest on contract Or may arise out of a statute; the existence of a particular jural relationship is not necessarily attributable to a contract. A statutory liability also may bring about the particular jural relationship. Reference may next be made to the Bench decision of the Orissa High Court in Debananda v. Union of India : AIR1965Ori118 , in which it was held that the postal department is not a common carrier, that it does not enter into any contractual obligation over accepting insured articles and letters for transmission by post and that the liability for loss or mis-delivery is only as provided by the statute, Section 6 read with Section 33, and the rules framed under the Act. The Bench also pointed out that if the intention of the Legislature was that the relationship between the sender and the postal department was a contractual one, the Legislature would have made similar provisions as was done in Section 72 of the Indian Railways Act. The Bench had to discuss the precise nature of the liability of the post office under the Post Office Act with regard to the question whether the post office could be said to be a carrier within the meaning of Articles 30 and 31 of the Limitation Act. The latest decision of the Supreme Court in Union of India v. Sohanlal Sampatlal : [1971]2SCR706 , does not throw further light in the matter. A perusal of the discussion shows that the liability is essentially under the Act and the Rules framed thereunder.
10. Let us now examine the provisions of the Act and the Rules, which are to be found in Sections 6, 31, and 33 and Rules 72, 81, with regard to the liability of the post office for non-delivery or loss of insured articles. Those provisions are as follows:
Section 6. - The Government shall not incur any liability by reason of the loss, misdelivery Or delay of, or damage, to, any postal article in course of transmission by post, except in so far as such liability may in express terms be undertaken by the Central Government as hereinafter provided; and no officer of the Post Office shall incur any liability by reason of any such loss, misdelivery, delay or damage, unless he has caused the same fraudulently or by his wiful act or default.
Section 31. - The Central Government may, by notification in the Official Gazette, declare in what cases insurance shall be required, and direct that any postal article containing anything required to be insured, which has been posted without being insured, shall be returned to the sender or shall he delivered to the addressee, subject to the payment of such special fee as may be fixed by the notification;
Provided that the levy of such special fee as aforesaid shall not impose any liability upon the Central Government in respect of the postal article.
Section 33. - Subject to such conditions and restrictions as the Central Government may, by rule, prescribe, the Central Government shall be liable to pay compensation, not exceeding the amount for which a postal article has been insured, to the sender thereof for the loss of the postal article or its contents, Or for any damage caused to it in course of transmission by post:
Provided that the compensation so payable shall, in no case, exceed the value of the article lost Or the amount of the damage caused.
Rule 81 of the Rides. - There shall be payable to the sender of an insured postal article compensation not exceeding the amount for; which the article has been insured, for the loss of the postal article or any of its contents or for any damage caused to it in course of transmission by post:
Provided that the compensation shall in no case exceed the value of the article or any of its contents lost or the amount of the damage caused, and provided that in the case of loss the sender shall furnish full particulars of the contents of the postal article and their value:
Provided also, that no compensation shall be payable
(a) where there has been misdelivery arising out of incorrectness or incompletness of the address written by the sender;
(b) where there has been fraud on the part of the sender or the addressee;
(c) where the insured article has been delivered to the addressee and he has signed and returned the receipt therefore;
(d) where the sender has not given intimation of the loss within three months from the date of posting;
(e) where the loss or damage was due to improper or insecure packing;
(f) where there is no visible damage to the cover or seals;
(g) where the insured article contains gold coin or bullion Or both and has not been insured for the actual value of the contents;
(k) in the case of the loss of halves of currency notes;
(i) in the case of damage arising from a nature of the article insured; or
(j) where the insured article contained anything the transmission of which by post is prohibited.
Section 6 of the Act which exempts the Government from any liability for a loss is subject to Section 33 and Rule 81. A careful reading of Section 33, by itself, would show that the liability of the Government for misdelivery or non-delivery or loss of the insured article is not something in the abstract, but it is basically compensation payable by the Government representing the Value of the article or the contents covered by the insured parcel. Rule 72 of the Rules shows that registered parcels or articles may be insured only up to a value of Rs. 5,000 and that in no case the value should exceed, the real value of the contents of the articles insured. This again shows that this is a facility of insuring registered articles and parcels against misdelivery or loss in transmission and this facility of insurance cannot be used in a spirit of speculaion i.e., to insure the contents of a registered parcel for much more than the real value of the contents and claim the amount for which the parcel was insured when the articles are not delivered Or are lost. Insurance is merely a provision for the compensation for the actual value of the contents of the registered parcel and nothing more. Rule 81 extracted above again tends to the same inference like Rule 72, that the insurance is Only for securing the real compensation representing the actual value of the goods lost and nothing more. The proviso to Rule 81 contains, amongst other thing?, the important provision that if there has been any fraud on the part of the sender no compensation shall be payable. The above analysis of the relevant sections of the Act and the rules framed thereunder shows that the liability that is incurred by the Government is limited upto Rs. 5,000; the liability is only to pay compensation for the actual value of the goods lost and nothing more and, if there is any fraud on the part of the sender, no compensation would be payable. Mr. Parasaran, learned Counsel for the appellant, urged that in the instant case, no compensation would be payable mainly for two reasons : (1) no currency notes were kept inside the insured cover and the sender therefore, sustained no loss ; and (2) the sender was guilty of fraud in having used the machinery of insurance to claim the sum of Rs. 5,000 as though the postal authorities act as mere insurer whether or not the sender kept currency notes of the value of Rs. 5,000 inside the insured cover. It is true that, to some extent, there is overlapping of both the aspects and the real question is whether the seller is guilty of fraud in not having kept any currency notes, but still claiming a sum of Rs. 5,000, the amount insured. On a reading of the evidence of the plaintiff, the only witness on his side, we have not the slightest hesitation in holding that the plaintiff is not entitled to any compensation. The plaintiff's Version, from start to finish, is false, unnatural, and strange and even to narrate, it is worse than a fairy tale. The version is, Dulai Miyan of Rampur gave Rs. 5,000 in currency notes to the plaintiff and the plaintiff sent back the same identical notes from Trichy to Rampur. The plaintiff would have it that at Trichy he took the assistance of one Nawab Jan to fill in the requisite forms for sending the insurance to Dhulai Miyan and this Nawab Jan, instead of putting the plaintiff's name in the postal formss used the name of the second defendant and again the same mistake was committed when a telegram was asked to be sent by the plaintiff to Dhulai Miyan about the despatch of the insured article. When the plaintiff returns the money he will be very careful to send it in his own name so that the plaintiff will not be held liable again by Dhulai Miyan. Even assuming the plaintiff did not know to write English, he would insist upon the insurance being sent in his name and his signing the forms as that is the best security and proof for him to prove that he had returned back the sum of Rs. 5,000 which he took from Dhulai Miyan of Rampur. The story why the sum of Rs. 5,000 was entrusted to him at Rampur, why he returned it back, again, bristles with any number of improbabilities and unnaturalness. In the chief-examination the plaintiff made it appear that Dhulai Miyan of Rampur was trading in lungies and that the plaintiff was entrusted with the sum of Rs. 5,000 for purchase of lungies at Trichy and for that purpose the plaintiff came to Trichy after a break of journey at Madras. The answers given by the plaintiff in the cross-examination expose the utter falsity of the version. Admittedly, the plaintiff is doing mango business and no other business and has no experience at all in lungi business. The plaintiff admits in cross-examination that Dhulai Miyan is not doing any business in lungies, but is doing business only in tobacco. The plaintiff was asked whether there was any correspondence between him and Dhulai Miyan after he left Rampur and while he was in Madras and Trichy and again back in Madras for more than six weeks. The plaintiff stated that Dhulai Miyan had written a letter to him asking why the plaintiff had not sent either the lungies or the money. No such letter of Dhulai Miyan has been produced by the plaintiff. The plaintiff stated that he wrote to Dhulai Miyan that as lungies were costly he was returning the money. No such correspondence was produced. If the plaintiff wanted to purchase lungies he could as well have purchased them in Madras. It is simply incredible that, to purchase lungies, he took a journey all the way from Madras to Trichy where he was a stranger and lungies are more costly. The plaintiff says that the currency notes were counted and kept in the insurance cover in the shop of Nawab Jan and closed and Nawab Jan put the seal on the closed cover. As already observed, this Nawab Jan who is an important witness has not been examined, though a resident of Trichy. The plaintiff has given prevaricating versions as to why he came to Trichy; he mentioned the name of one Haji Yusuff in Madras and Razack in Trichy, neither of whom, again, was examined. This only shows that the plaintiff is freely mentioning names at random. It is impossible to accept the story that when the plaintiff wanted the insurance to be sent in his name he allowed the name of the second defendant to be used; it is highly improbable besides being false. Whether there is such a person as Dhulai Miyan in Rampur, whether he had means to send Rs. 5,000, for what purpose he actually gave Rs. 5,000 to the plaintiff, are all matters on which the evidence is very shaky. Exhibit B-l is the deposition or statement made by the plaintiff before the Inspector of Post Offices when the matter was initially investigated. The version of the plaintiff there on many portions of the case is at variance with the evidence of the plaintiff in Court. Before the Inspector of Post Offices Dhulai Miyan gave useless and stupid evidence. When asked for the correspondence between Dhulai Miyan and the plaintiff, Dhulai Miyan gave the evasive answer that his children might have torn it and therefore he could not produce. Curiously enough, before the Inspector of Post Offices, Dhulai Miyan's case was that the money was given for the purchase of gardens and for sharing the profit. Later on, Dhulai Miyan gave a different version that it was given for purchase of lungies. He gave yet a third version that the money was given as a loan to Amjad Miyan, who was to return the loan in the form of lungies. Dhulai Miyan said that after 25 days he received a letter from Amjad Miyan that lungies were dear and there would be no profit in purchasing and selling lungies', but no such letter was produced. Nor has Dhulai Miyan produced the letter, in which Amjad Miyan is alleged to have stated that he would be soon remitting the money. It is obvious that between the time when the sum of Rs. 5,000 was alleged to have been entrusted to Amjad Miyan and the despatch of the insurance cover within a period of two months and more, there Ought to have been correspondence between Dhulai Miyan and Amjad Miyan, if really a sum of Rs. 5,000 was given. The non-production of any correspondence, again, is conclusive proof that no such money was given by Dhulai Miyan. Syed Haroon Rasheed and Nawab Jan who gave statements before the Inspector of Post Offices have not been examined. That shows that they were not prepared to support the plaintiff and there was no suggestion of any enmity between the plaintiff and those persons. On such useless, worthless, evidence which consists of the sole interested testimony of the plaintiff and in the face of the suppression of material evidence, it is impossible to uphold the claim of the plaintiff.' In the course of the investigation the postal authorities appear to have come to the conclusion that the whole thing is a fraud and the insurance is a fictitious transaction and no money was sent in the insured cover. The learned Judge has not considered these aspects and has disposed of the matter in a slipshod manner, passing a decree as though the mere fact of insuring the registered article for Rs. 5,000 is sufficient. We may also add that during the course of the appeal, we asked the postal authorities in Madras to correctly ascertain the weight of fifty hundred rupee-currency notes of the year 1960 with an insurance cover and we found on a comparison, the weight of the insured cover sent by the plaintiff is far less than the normal weight of fifty hundred rupee-currency notes of the year 1960. We noticed that fifty hundred rupee-currency notes of the year 1960 in an insurance cover, the seals and the thread, all weighed 92 grams, which we verified in Court. But the weight of the insured article sent by the plaintiff is only 70.022 grams equivalent to 48 rates. This was verified in open Court and learned Counsel for the respondent could not furnish any explanation. That again proves that some paper had been kept inside the insured cover fraudulently and it was insured for Rs. 5,000. For all these reasons, the appeal is allowed and the plaintiff's suit is dismissed with costs here as well as in the trial Court, to be paid by the plaintiff. The second defendant will bear his own costs throughout.