Holding

The post office is not an agent of the sender and a foreign sovereign cannot be a sub‑agent; therefore, under the proviso to Section 34 of the Indian Post Office Act, the Union of India is not liable for the amount until it is actually received from the addressee, and the suit must be dismissed.

Summary

The respondent, Mohd. Nizam, sent thirty value‑payable parcels from India to Pakistan in 1949. The addressees in Pakistan paid the amounts, but because the money‑order service between the two countries was suspended on 19‑September‑1949, the money was never transferred to India. Nizam sued the Union of India for the sum of Rs. 1606‑8‑0. The trial court dismissed the suit on limitation grounds and the proviso to Section 34 of the Indian Post Office Act; the appellate courts reversed, holding the limitation rule was ultra‑vires and that the Pakistani government acted as a sub‑agent of India. The Supreme Court allowed the Union’s appeal, holding that two sovereign governments cannot be agents of each other, that the Pakistani administration was not a sub‑agent, and that under the proviso to Section 34 the Government of India is liable only after actually receiving the money from the addressee. Consequently the suit was dismissed. The Court also noted that the limitation rule was irrelevant to the decision.

Issues considered

Whether the Indian post office, upon accepting a value‑payable article, acts as an agent of the sender.
Whether the foreign sovereign (Pakistan) functions as a sub‑agent of the Indian government under the postal agreement.
Whether the proviso to Section 34 of the Indian Post Office Act bars liability of the Union of India when the sum has not been received from the addressee.
Whether Rule 102 of the Rules framed under the Indian Post Office Act is ultra vires the Act.

Legislation cited

Indian Contract Act, 1872s. 191
Indian Post Office Act, 1898s. 17, s. 23(3), s. 2(f), s. 34, s. 4
Rules framed under the Indian Post Office Acts. 102

Subjects

agencysub‑agentsovereign immunityvalue‑payable articlesIndian Post Office Actlimitation periodinternational postal agreementliability

Judgment

968

A UNION. OF INDIA
v.
MOHD. NIZAM
October 18, 1979
B (A. C. GUPTA AND E. S. VENKATARAMIAH, JJ.J

Indian Post O[ficl! Act, 1898, SeCtion 34, Scope of-Value Payable Artic£e
accepted by the Union of India for onward transmission to a foreign country
which in turn collects the amount from the addressee but fails to send back
due to suspension of the money order service between the two countries-
c Whether the pn,\t office is an agent of the sender and the foreign country a sub-
agent.

The respondent filed a suit for the recovery of a sum of Rs. 1606-8-0 being
the value of V.P. article paid by the addressee in Pakistan to that Government
for transmission to India-. Due to the suspension of the money order service
between Pakistan and India after 19-9-49, the amount was not sent by Pakistan >
P&T authorities to P&T authorities in India: Therefore, the appellant, pleaded
D
non-liability by virtue of proviso to Section 34 of the Indian Post Office Act,
1898~ The Trial Court dismissed the suit on the ground that the resPQndent's
claim was barred by limitation under Rule 102 of the Rules framed under the
Act and was also not maintainable in view of the proviso to S. 34. The first
appellate court reversed the said decision on the view that Rule 102' was ultra
vires the Indian Post Office Act and that non-payment by the Pakistan Govern-
E ment was' not a valid defence. The High Court on appeal by the appellant
affirmed the appellate decision holding that the post office established by the
Government of India was an agent of the plaintiff and the Government of Pakis-
tan was acting as the sub-agent.

Allowing the appeal, the Court

HEW : When two sovereign powers enter into an agreement, as in the
F instant case "in order to establish 3.n exchange of value payable articles", neither
of them can be described as an agent of the· other. 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 addressee, it
cannot be said that the Union of India had received the money but failed to
pay. [975 C-D]
·G 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 of the 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 of India and Pakistan, neither could be said to
be employed by or acting under the control of the other. In view of the fact
H that since 19-9-1949 the money order service with Pakistan remained suspended,
the proviso to section 34 of the Indian Post Office Act, 1872 is attracted which
absolves the Central Government from "any liability in respect of the sum
UNION v. MOHD. NIZAM (Gupta, J.) 969

-specified for recovery unless and until that sum has been received from the A.
'<!ddtessee". f975 E-Gl

CivrL APPELLATE JURISDICTION: Civil Appeal No. 446 of 1969 .
• Appeal by Special Leave from the Judgment and Order dated
1-4-66 of the Allahabad High Court in S.A. No. 1133/65.
B
R. P. Bhatt and Girish Chandra for the Appellant.
Pramod Swarup and R. Sathish for the Respondent.
The Judgment of the Court was delivered by

GUPTA, J. The stakes are not high in this appeal-it is valued at
Rs. 1606-8-0-but it raises two rather interesting questions. Does the
c
post office when it accepts a postal article for transmission act as an
agent of the sender of the article ? And where the postal article is
sent from India to an addressee in a foreign country, does the govern-
ment of that country act as a sub-agent for transmission of the
article? D
The questions arise on the following facts. The respondent bad
instituted a suit in th.e court of Munsif, Moradabad, for recovery of
a sum of Rs. 1606-8-0 from the Union of India (Post an9 Telegraph
Department) alleging that during the period from August 31, 1949
to September 17, 1949 the plaintiff despatched from the Moradabad E
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 Indfa 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 F
the Union of India did not receive the sum from the Pakistan Govern-
ment 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 of the Indian Post Office Act, 1898 and it was claimed that the
said provision absolved the Union of India from liability. Section 34 G I
Ieads 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 H
writing at the time of posting by the sender of a postal
.article shall be recoverable on the delivery thereof from the
970 SUPREME <XJURT &EPORTS [1980] 1 S.C.R..

A addressee, and that the sum, so recovered, shall be paid to
to the sender;
Pro:vided 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 addressee.
.
B Explanation :-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 plaintiff's;
. claim, made for the fast time on October 22, 1950 which was beyond
c 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 claims.
It also appears from the written statement that the postal autho-
D rities 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 resumed.
Shri 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
E
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 plaintiff's
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·
F 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 Pakistan
Government was a matter which concerned the two governments and'
G not the plaintiff whose claim could not be defeated because of non-
payment by the Pakisian 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 :
.u
"Section 34 of the Act merely bars a suit in a case where
the amount has not been received from the addressee. In
UNION v. MOHD. NIZAM (Gupta, J.) 971

the present case; it is admitted in the written statement as
well as by the defendant's witness that the addressees had
paid the amount to the Pakistan Government. That Govern-
ment was the agent of the Union of India .... If tbe 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
B
the Union of India and its agent and the Union of India is
1esponsible 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 Act.
c
The High Court procecdid on the footing that the post office
established by the Government of fodia 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. D·
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. What is the. warrant for such an assump-
tion'!- Before us Counsel for Union of India contended that the Post I:.
OffiC(l discharged a governmental function and acceptance of postal
articles for transmission did not give rise to any contractual relation-
ship.
The post office was established in India by a statute. Postage
required to avail of the postal services has been defined in section
2(f) of the Indian Post Office Act as "the duty chargeable for the
transmission by post of postal articles". Under section 4 the exclusive
privilege of conveying letters is reserved to the Central Government
with certain exceptions which are. not significant. Section 17 of the Act
says that "postage stamps" shall be deemed to be issued by Govern-
ment for the purpose of revenue. It appears from section 23(3) of the G
Act that under certain circumstances postal articles sent by post may
be opened and destroyed under the authority of the Post Master
General. These are only some of the provisions of the Act which seem
to indicate that the post office is not a common carrier, it is not an
agent of the sender of the postal article for reaching it to the addressee.
It is really a branch of the public service providing postal services
subject to the provisions of the Indian Post Office Act and the rules
made thereunder. The Jaw relating to the pest office in England is not
972 SUPREME COURT REPORTS (1980] 1 S.C.R.

very much differeut from that in this country. In Triefus & Co. Ltd.
v. Post Office(') the court of appeal held that the post office is a
branch of revenue and the Post Master General does not enter into
any contract with a person who entrusts to the post office a postal
packet for transmission overseas. This decision approves the observa-
.
tions of Lord Mansfield in Whitfield v. Lord Le Despencer('). In the
course of his judgment; Lord Mansfield said: "The Post Master has
no hire, enters into no contract, carries on no merchandise or com-
merce. 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
l
advantage to the public, arising from the fund. As a branch of police
c 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 cro\\11, and officers appointed by the crown.
There is no analogy therefore between the case of the Post Master and
a con1mon carrier."

Counsel for the respondent referred to the decision of this Court
in Commissioner of Income-Tax, Delhi v. Messrs P.M. Rathod &
Co.( 3 ) where it was held that 'the post office was an agent
of the seller for the recovery of price against delivery of goods.
Kapur, J. speaking fqr the Court said : "In the case of delivery of
E 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 he 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 payinent to the seller
and at the place where the gooi:Js are delivered and payment is made ...
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 for any damage to the seller." Reliance was
also placed on Union of India v. Amar Singh.(') In this case the

(I) [1957] 2 Q.B. 352.
H (2) [17781 2 Cowp. 754.
(3) [1960] l S.C.R. 401.
(4) [1960] 2 S.C.R. 75.
UNION v. MOHD. NIZAM (Gupta, J.) 973

respondent booked certain goods in September, 1947 with the N. W.
Railway at Quetta in Pakistan to New Delhi. The wagon containing
the goods was received at the Indian border station of Khem Karan
+ on November 1, 1947 from where the E.P. Railway took over. The
wagon reached New Delhi on February 13, 1948. The respondent
going to take delivery of the goods found a major portion of the
goods not traceable. In a suit for compensation for non-delivery of
goods against the Dominion of India, it was held on the facts of the
case that the N.W. Railway had implied authority to appoint the E.P.
Railway to act for the consignor during the journey of goods by the
E.P. Railway and by force of section 194 of.,lhe Indian Contract Act,
the E.P. Railway became an agent of the consignor. It was also held
that even if an agency could not be implied from the facts, a contract
c
of bailment could be inferred between the E.P. Railway and , the
respondent.
It is however not necessary to examine the circumstances and the
sense in which the Post Office or the Railway, in the two aforesaid
decisions was held to be an agent or a bailee, because the case before D
us can be disposed of on a short point. Admittedly the Government
of Pakistan did not make over the money realised from the addressees
i• Pakistan to the Union of India. The provisions of the Indian Post
Office Act did not apply beyond the territorial limits of India except
to citizens of India outside India. Postal communication between
different countries is established by postal treaties concluded among
them. In the course of the hearing of this case, counsel for the
appellant produced a copy of the Agreement for the exchange of value-
payable articles between India and Pakistan which became operative
from April l, 1948 and was to "continue in force until it shall be
modified or determined by mutual consent of the contracting parties,
I!'
or until one year after the date on which one of the contracting parties
shall have notified the other of its intention to terminate it". The
, Agreement starts as follows : •
"In order, to establish an exchange of value-payable articles between
•
India and Pakistan, the undersigned, duly anthorised for that purpose,
have agreed upon the following Articles : " The copy of the Agree- G
ment shows that it was executed in duplicate and signed for the
Director General of Posts and Telegraphs of the two countries at
New Delhi and Karachi respectively. The relevant Articles of the
Agreement are set out below. :
Article 4 D
Value-payable articles shall be entered in the registered
list, insured letter invoice, or parcel bill in the same way
....
974 SUPREME COURT REPORTS [198Qj l S.C.ft.

A as other registered articles, insured letters and insured or
uninsured parcels, as the. case may be, but with the addition,
the column for remarks, of the word "Value-payable",
followed by an entry .. of the amount in Indian rupee cur- ••
rency to be remitted to the sender, and also of the sender's
name and full address in clear characters.
Article 5
Every V.P. article shall be accompanied by a V.P. money
order in conformity with or analogous to the specimen 'A:
and "AA" annexed;,to the present Agreement. This money
order shall bear a statement of the amount to be remitted
to the sender and shall show, as a general rule, the sender
of the Article as payee of the order. . . .............. .

Article 6 ·
The amount to be remitted to the sender together with
t> the commission chargeable thereon (at the rate in force for
ordinary money orders drawn on the country of origin of the
value-payable article), shall be collected from the addressee.
The amo1mt to be remitted to the sender shall be transmitted
to the latter by postal money order and the commission shall
be retained by the Administration which issues the money
order.
Article 9
If the addressee of a value-payable article other than a
value-payable parcel, does not pay the amount of the charge
within the limit of time prescribed by the internal regulations
F
of the country of delivery, the article shall be sent back to
the office of origin. Each country shall communicate to the
, other its internal regulations in this respect.
Art'cle 10
In the event of the loss of a value-payable registered
article or when a value-payable insured letter or a value-
. payable insured or uninsured parcel has been lost or dam-
aged or its contents abstracted, the responsibility shall be
fixed and compensation paid under the same conditions as
in the case of other registered articles, insured letters or in-
II sured or uninsured parcels, as the case may be. When,
however, such an article, letter or parcel has once been dcll-
.vered, the Administration of the country of destination shall
I
...
UNION v. MOHD. NIZAM (Gupta, J.) 975

be responsible for the sum collected and must, if necessary, A
prove that it has remitted it, less the prescribed commission,
to the sender~

Article 12
B
Each Administration is authorised, in special circums-
tances that would justify such a measure, temporarily to sus-
pend the V.P. service wholly or in part, on condition that
notice of such suspension be given immediately to the other
Administration, and if deemed necessary, the notices of sus-
pension shall be communicated by telegraph. c
;.. 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 bet-
·ween the two countries it was not possible for the Indian postal
D
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 bnt failed to pay. Had
the Pakistan Government been really a sub-agent, payment to them E
would have been as good as payment to the Union of India, but that
is not the case here. Sub-ageut is defined in section 191 of the
I -L
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 of India and Pakistan, .neither could be said to be F
employed by or acting under the control of the other. We have
.already referred to the evidence of Complaint Inspe~tor 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 G
·specified for recovery unless and until that sum has been received
·from the addressee". The plaintiff's 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.
H
· The appeal is allowed, the judgment and decree of the High Court
care set aside and the snit is dismissed. In view of the order made
976 SUPREME COURT REPORTS [1980] 1 S.C.B..

A on February 26, 1969 the appellant will pay the costs of the respon-
, dent. We expect the defendant to act np to the assurance given to
the plaintiff as appearing in paragraph 3 of the written statement that
the plaintiff's "claim will be settled" on receipt of the money from.
Pakistan after resnmption of the money order service between the two.
conntries .
••
V.D.K. Appeal allowed.,

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