Skip to content


The Canara Industrial and Banking Syndicate Ltd. Vs. V. Ramachandra Ganapathy Prabhu and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKarnataka High Court
Decided On
Case NumberAppeal No. 172 of 1961
Judge
Reported inAIR1968Kant133; AIR1968Mys133; (1967)1MysLJ490
ActsIndian Sale of Goods Act, 1930 - Sections 2(4); Indian Contract Act - Sections 148 and 172
AppellantThe Canara Industrial and Banking Syndicate Ltd.
RespondentV. Ramachandra Ganapathy Prabhu and anr.
Excerpt:
- karnataka value added tax act, 2003 [k.a. no. 30/2005] section 2 (15): [v.gopala gowda & arali nagaraj, jj] meaning of the term goods - activity of providing broad band connectivity by the appellant company to its subscribers, whether amounts to sale of light energy taxable under section 3 of the kavt act ? held, light energy is artificially created by the assessee company with its net work. artificially created electrical light energy which is used for transmission of data of the subscribers of the appellant/assessee company through its ofc network is good within the meaning of article 366(12) of the constitution of india, section 2(15) of the kvat act 2003 and also section 2(7) of the sale of goods act, 1930. further, the electro magnetic waves used in the operation of mobile.....gopivallabha iyengar, j.(1) the appellant; in this appeal was the plaintiff in original suit no. 69 of 1958 on the file of the subordinate judge of south kanara.(2) the plaintiff is a banking company. the first defendant is a merchant and commission agent carrying on business in mangalore town. the second defendant carries on business as a public carrier. the first defendant in the course of his business despatches goods through the second defendant to his customers at different places. on entrusting the goods to the second defendant, the first defendant obtains from him documents called 'way bills' to evidence the entrustment of the goods for carriage. the first defendant despatches the parcel way bills through the plaintiff bank endorsing the same in blank in favour of the plaintiff......
Judgment:

Gopivallabha Iyengar, J.

(1) The Appellant; in this appeal was the plaintiff in Original Suit No. 69 of 1958 on the file of the Subordinate Judge of South Kanara.

(2) The plaintiff is a Banking Company. The first defendant is a merchant and commission agent carrying on business in Mangalore Town. The second defendant carries on business as a Public Carrier. The first defendant in the course of his business despatches goods through the second defendant to his customers at different places. On entrusting the goods to the second defendant, the first defendant obtains from him documents called 'Way Bills' to evidence the entrustment of the goods for carriage. The first defendant despatches the parcel way bills through the plaintiff Bank endorsing the same in blank in favour of the plaintiff. Along with the way Bill, the first defendant delivers a demand draft duly drawn on his customer. The plaintiff despatches the demand drafts and the way bills to its branch at the destination for purposes of collection of the amount covered by the demand draft and delivery of the way bill to the drawee duly endorsed in his favour. The bank sends the demand draft for acceptances to the customer. If the customer accepts the demand draft and honours it any payment, the bank endorses the way bill in favour of the customer and delivers the same to him whereupon he takes delivery of the goods from the carrier on tendering the way bill duly endorsed in his favour. It was the practice of the plaintiff also to discount these demand drafts or bills as they are referred to in the plain and credit the amounts of the bills to the first defendant's account before the demand drafts are honoured by the drawee. This was because of an agreement of the first defendant with the plaintiff under which an overdraft to the extend of Rs. 20,000 is allowed by the plaintiff bank to him. The case of the plaintiff is that by the procedure above mentioned, the goods covered by the way bills were legally pledged to the Bank and formed part of the security on the basis of which the bills were discounted.

(3) The plaint allegations are that in accordance with this custom, the first defendant executed four demand drafts; two were drawn against M/s. Prabhu Coffee Works, Bangalore bearing No. DD 630 and DD o. 648 dated 30-9-1957 and 30-10-1957 for Rupees 6,100/- and Rs. 190 respectively; the other two bearing Nos. 649 and 650 dated 30-10-1957 for Rs. 5,460 and Rs. 8,190 respectively, were drawn against M/s. Ali Sons, Coffee and Tea Traders, Bangalore. Along with the demand drafts the corresponding way bills in original duly endorsed in favour of the bank were also submitted to the bank. It is the case of the plaintiff that the way bills are documents of title and by their being endorsed in favour of the Bank and delivered to them, the goods covered by the way bills were legally and validly pledged in favour of the bank. The demand drafts were discounted by the plaintiff-bank and the first defendant was credited with the amounts as shown in schedule 'A' attached to the plaint. The aggregate amount so credited was Rs. 27,995-0-9. These bills when presented by the bank were not honoured by the respective drawees. When the plaintiff sought to obtain delivery of the goods from the second defendant, it was found that the goods had been delivered to the first defendant himself. it is the case of the plaintiff that under the terms of the way bill, the send defendant was under an obligation to deliver the goods only on production of the original way bill. As the demand drafts were not honoured, the original way bills remained with the plaintiff bank and it is only the bank or its nominees that could take delivery of the goods from the second defendant on surrendering the original way bills. The second defendant having parted with the goods without the original of the way bills being surrendered, it is alleged that he is also liable for the amounts advanced by the plaintiff to the first defendant on the security of the way bills. Therefore it is claimed by the plaintiff that the defendants are liable to pay the amount advanced to the first defendant by the plaintiff bank. The plaintiff states that he notified the second defendant of the breach of the obligation on his part and the second defendant admitted his liability to make good the entire loss sustained by the bank in this connection and gave the letter dated 18-11-1957. On a notice being issued by the plaintiff through their counsel demanding the amount due to the bank, the second defendant replied denying his liability. The plaintiff therefore filed the suit for recovery of the sum of Rs. 27,995-0-9 together with interest on the same from 18-5-1958 upto the date of the suit. The first defendant while challenging the correctness of the allegations in paragraph 3 of the plaint confessed judgment claiming deduction is respect of a sum of Rs. 500 paid by him on 12-8-1958 after the institution of the suit. The suit was accordingly decreed against the first defendant.

(4) The second defendant denied his liability and contested the claim of the plaintiff on several grounds. It is unnecessary to traverse in detail all the grounds mentioned in the written statement. To appreciate the arguments advanced in this appeal, it is enough to mention that the second defendant submits that the way bills which were referred to as documents of title in the plaint are not documents of title under the law; that the delivery of the same with the bank endorsement in favour of the plaintiff does not create a pledge of the goods in favour of the plaintiff; that he was not notified by the plaintiff of the endorsement on the way bills and was not aware of the transactions between the first defendant and the plaintiff ; that there being no privity of contract between him and the plaintiff the plaintiff cannot hold him liable. He also contends that condition No. 10 at the back of the way bill does not create any right in favour of the plaintiff and does not enable him to hold the second defendant liable for any breach of the same. The second defendant has also contended that the letter dated 18-11-1957 was taken in the circumstances narrated in paragraph 18 of the written statement and that it was the result of fraud and deceit practiced on the second defendant and therefore it is void and of no effect and it is also not supported by consideration.

(5) The trial court decreed the suit as against the first defendant but in regard to the second defendant the suit was dismissed. the plaintiff being aggrieved by this dismissal of the suit has preferred this appeal.

(6) The learned Subordinate Judge has held that the way bills which accompany the demand drafts executed by the first defendant in favour of the bank and drawn on his customers and which are discounted by the plaintiff are 'documents of title'. He has also found that the way bills in question were endorsed in favour of the plaintiff by the first defendant and by such endorsement no pledge of the goods covered by the way bills was created in favour of the plaintiff. The learned Judge also held that the second defendant was not bound to deliver the goods to the person who produces the original way bill, and that it is sufficient discharge of his obligation if he delivers the goods to the person who is entitled to them. Condition No. 10 in the way bill regarding the delivery of the goods at the destination of surrender of the original way bill was held to be not an obligatory or essential term of the agreement of entrustment for carriage of goods to the second defendant and that the said clause is intended to be for the benefit of the second defendant and does not create any obligation on his part to deliver it only to the person in whose favour the way bill is drawn or is endorsed.

(7) Mr. T. Krishna Rao, the learned counsel appearing for the appellant, basing his argument on the finding of the learned Subordinate Judge that the way bills are documents of title and are duly endorsed by the owner or consignor in favour of the bank and are delivered to them, and the bank advances any amount on the security of the goods covered by such way bills, there is a pledge of the goods for the amount so advanced and the person who is in custody of the goods holds the same subject to the claim of the plaintiff, and therefore the second defendant was bound by this pledge and was answerable to the value of the goods to the person entitled to the goods, viz., plaintiff in this case. He submits that however bona fide the delivery of the goods by the second defendant to the first defendant may be, it cannot in any manner prejudice the right of the plaintiff as a pledgee against the second defendant who was only a bailee of the goods. In support of this contention, Sri Krishna Rao places strong reliance on the decision of the Supreme Court in : [1965]3SCR254 , Morvi Mercantile Bank v. Union of India. This decision proceeds on the basis that the railway receipt, which was the document concerned, is included within the definition of the term 'documents of title' under S. 2, sub-section (4) of the Indian Sale of Goods Act, 1930. If the documents of entrustment like the way bills in the instant case had been included within the above definition, then it would have followed that the owner of the goods can make a valid pledge of them by endorsing them as representing symbolic delivery of possession of the said goods. The difficulty in this case arises because we are concerned with a way bill issued by a public carrier and it is not specifically included in the definition of 'Document of Title' as a 'Railway Receipt' is. Therefore to consider whether the way bill is a document of title, we shall have to see the definition of the term 'document of title' under Section 2, sub-section (4) of the Sale of Goods Act. it is as follows:

' 'Document of Title to goods' includes a bill of lading dock warrant, warehouse keeper's certificates, wharfinger's certificate, railway receipt, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof to the possession or control of goods or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.'

If the way bill in this case should be treated as a 'document of title', it would then follow that under Section 172 of the Indian Contract Act, it could be pledged by transfer of the same Pledge means the bailment of goods as security for payment of a debt or performance of a promise. Bailment under Section 148 of the Indian Contract Act consists of delivery of goods by one person to another for a specific purpose. Pledge, therefore, presupposes the delivery of the goods. If the transaction between the first defendant and the plaintiff is to be construed as a pledge, the question for consideration would be whether there has been delivery, actual or constructive, of the goods to the Bank. In the case of a railway receipt, the Supreme Court has laid down that the railway receipt represents the goods, a pledge can be effected by transferring the railway receipt. Therefore it becomes necessary to consider whether the railway receipt could be equated with the way bill in this case. The decision in Ramdas Vithaldas v. S.Amerchand and Co. 43 Ind App 164 = (AIR 1916 PC 7) will be of assistance to answer this question. The document concerned in the case was a railway receipt. But at that time the railway receipt had not been included in the definition of 'document of title' in the Sale of Goods Act, 1930. To decide whether the railway receipt is a 'document of title' the Privy Council prescribed the test as follows:

'Whenever any doubt arises as to whether a particular document is a 'document showing title' or a 'document of title' to goods for the purposes of the Indian Contract Act, the test is whether the document in question is used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or delivery, the possessor of the document to transfer or receive the goods thereby represented'.

Referring to this decision, the Supreme Court in : [1965]3SCR254 deduced from it the following propositions:

'(1) the railway receipts in question in that case were used in the ordinary course of business in Bombay as proof of possession and control of the goods therein referred to or as authorising the holder to receive or transfer the goods:

(2) Such railway receipts were documents of title and a valid pledge of the goods covered by the receipts could be made under the Contract Act, before it was amended in 1930, by endorsing and delivering the same as security for the advances made to the owner of the goods'

The Supreme Court referring to the definition of 'document of title' in the Sale of Goods Act, 1930, observed that the inclusion of the railway receipts in the definition, indicates the legislative intention to accept the mercantile usage found by the Judicial Committee in 43 Ind App 164= AIR 1916 PC 7. Therefore, the appellant cannot derive any help from the decision of the Supreme Court reported in : [1965]3SCR254 except to the extent that if the way bill comes within the definition of the words 'documents of title', it could be treated like the railway receipt as in that case. In the absence of the way bill being included in the definition, the test applied by the Judicial Committee in respect of the railway receipts should be applied in the case of the way bill also. The appellant's contention is that in this case, there is proof that the way bill was being used in the ordinary course of business as proof of the possession or control of goods or purporting to authorise either by endorsement or by delivery the possessor of the documents to transfer or receive the goods thereby represented. Sri K. R. Karanth the learned counsel for the second respondent contends that no such usage has been established.

(8) In order to recognise a particular usage in the ordinary course of business, it is necessary that such usage must be certain definite, and uniformly recognised in the ordinary course of business. In this particular case, it is also necessary to examine whether there was an uniform practice that the goods covered by the way bills should be delivered by the carrier only on the production of the original way bill. The plaintiff has examined few businessmen, officers of the Banks and Public carriers in an attempt to establish the above usage. (After discussion of evidence on this point the judgment proceeded:)

Thus, it is seen that there is variation in regard to the practice adopted by each one of the transport companies.It can also be gathered from the evidence of the witnesses connected with the banks that the advances are made mainly on the security of the drawers of the bills and there is no uniform practice of taking delivery of the goods or seeking delivery of the same in case of dishonor of the bills drawn by the owner. The conditions pertaining to the transport of goods by the carriers also vary. Therefore, it is clear that there is no uniform practice adopted in the issue of way bills when goods are entrusted to the carriers for transport There is also no proof of usage that only the originals of way bills are negotiated and not the duplicates or others. In the absence of the uniform and definite usage regarding the issue of way bills, and their transfer on endorsement as equivalent to pledge of goods, we are unable to accept the contention that the way bills can be treated as 'documents of title' to goods and any other document used in the ordinary course of business as proof to the possession or control of goods or purporting to authorise either by endorsement or delivery the possessor of the document to transfer or receive the goods thereby represented' In view of this conclusion that the way bills are not documents of title. the legal position with regard to the pledge of these way bills is that the owner of the goods cannot pledge the goods covered by the way bills, as in the present case, unless the carriers are properly notified of the transfer and they agree to hold the goods as bailee for the pledgee, i.e., the Bank. It is not the case of the plaintiff that they notified the second defendant of the transfer of the way bill and the pledge of the goods in their favour and asking them not to deliver the goods to any one except themselves or to any one under their order. Therefore, we cannot accept the contention of the appellant that there has been a valid pledge of the goods in their favour, as security for the amounts advanced by them to the first defendant.

(9) The passengers at page 221 in Vol. 2 and at page 332 of Vil. 35 of Halsbury's Laws of England and at pages 48s and 500 of Pages Laws of Banking to which our attention was drawn by the learned counsel for the appellants relate to documents of title to goods. The decision reported in (1889) 14 Law Rep. (PD) 142 (The Stettin), also related to a bill of lading which is a document of title. If the way bills are not documents of title they cannot be of any help to the appellants.

(10) The learned counsel for the appellant next contends that condition No. 10 at the back of the way bill imposes an obligation on the second defendant to deliver the goods only on production of the original bill. The condition is as follows:

'The original copy of the consignment note should be surrendered by the consignee or by his duly authorised representative at the time of delivery at destination.'

It is not disputed that the goods have been delivered to the first defendant though he did not surrender the original of the way bill. The lower Court holds that condition No. 10 referred to above is for the benefit of the carrier and if the carrier fails to observe the said condition, the same by itself does not impose any liability upon him and that if condition No. 10 is for the benefit of the second defendant there could be no doubt that he could waive it.

Sri. K. R. Karanth, the learned counsel for the second defendant further drawn our attention to the fact that this condition is a part of the contract between the first defendant on the one hand and the second defendant on the other. If no right for the delivery of the goods is created n favour of the plaintiff by virtue of the transfer of the way bills, the plaintiff cannot complain that the goods have not been delivered in accordance with condition No. 10. He also contends that Condition No. 10 does not create any obligation on the part of the second defendant to deliver the goods only to the person who surrenders the original way bill. This condition, it is submitted is not obligatory and does not create a right in favour of the consignor or his transferee that the carrier is under a legal obligation not to deliver the goods unless the original is surrendered. A similar question came up for consideration in the decision of the Privy Council reported in (1914) ILR 41 Cal 670 Natcheappa Chetty v. Irrawaddy Flotilla Co. A representation similar to condition No. 10 printed at the back of the way bill in this case was embodied in a circular. The relevant clause in the Circular reads:

'Mat's receipts must however be given up before discharge is allowed to commence, or in the event of the Mate's receipt not having come to hand, the Company's usual guarantee must be signed.'

Adverting to this clause, the Judicial Committee expressed their opinion as hereunder:

'In the opinion of their Lordships the sentences now quoted from the circular of the respondent company merely set forth mode in which in conducting their own business, the respondent company would protect themselves in the course of their trade. But they cannot be founded upon by other parties as forming any part of an obligation to them restrictive of their freedom or methods of action in conducting their own affairs. As against customers they afford protection to the Irrawaddy Flotilla Company, and they give an intimation or warning that they shall not part with the goods unless Mate's receipts are given up, or otherwise unless a guarantee be obtained. But this protection of themselves they could freely give up if satisfied of the identity and solvency of the owner or nominee of the owner who demanded the goods at the port of delivery. And it is wholly jus tertii for any person in the position of the appellants (...) to plead that that clause of the shipowners' circular constitutes an obligation upon which they as outside parties are entitled to found.'

In the present case the contention of the second respondent is clearly supported by the above observations.

(11) In addition to this, we find that there is ample evidence in the case to hold that the condition was not being enforced and that it was within the knowledge of the plaintiff-bank. The learned counsel for the second respondent has drawn our attention to the several exhibits referred to here under viz., Exhibits B-1, B-2, B-4, B-5, B-7, B-8, B-9, B-10, B-11, B-12, B-13, and B-14 which are all duplicates of way bills issued by the second defendant in favour of the plaintiff Bank, the consignees being their own branches at several places. It is seen that these duplicates have been surrendered by the consignees and they have taken delivery of the goods consigned under them. Exhibit B-3 is an original way bill. Exhibit B-6 is a triplicate way bill. Similarly Exhibits B-15, B-16, B-17, B-18 and B-19 are also duplicates of the way bills on surrender of which the goods have been delivered to the consignee. Exhibit B-21 is an original way bill issued by Messrs. The United Transport Company. Exhibit B-29 also is an original way bill issued by M/s. Loretto Transport Service. Exhibit B-30 and B-31 are also originals of way bills which have passed through the plaintiff Bank before presentation for delivery to the second defendant. Exhibits B-33, B-34, B-35, B-36, B-37 and B-38 are duplicates of the way bills which have passed through the plaintiff-bank before delivery is sought thereunder. Exhibits B-40, B-41 and B-442 are also duplicates of way bills on presentation of which delivery has been effected. The Manager of the plaintiff-Bank who is examined as P. W. 5 has admitted that the above said way bills have passed through his office though they did not originate in his office. They are all way bills relating to goods sent from Bombay to Mangalore and they were endorsed by him to the parties at Mangalore after realisation of the amounts. Thus, it is clear that condition No. 10 in the way bill was not adhered to by the plaintiff-bank itself as a condition binding on the second defendant. It also appears to us that the learned Subordinate Judge was correct in his conclusion that there is no uniform practice that the goods covered by the way bills will not be delivered unless on the production of the originals or on the production of the original way bill, that by itself cannot render the second defendant liable to account for the goods. As already mentioned, the plaintiff bank as also the other banks have intimated the second defendant of their lien when the way bills were endorsed over to them with demand drafts drawn on the customers of the owner. Exhibits B-23 and B-24 are the letters of the Indian Overseas Bank Limited to the second defendent. Exhibits B-26, B-27 and B-28 are the letters by the plaintiff bank to the second defendant. As no information of pledge in regard to the four way bills concerned in this suit was sent to the second defendant, he had no knowledge of the alleged pledge in favour of the plaintiff. If, in these circumstances, accepting the duplicate way bills the second defendant has delivered the goods to the first defendant, it cannot be said that he has acted in breach of the terms of condition No. 10. The delivery of the goods to the first defendant is in accordance with the prevailing practice of which the plaintiff is quite aware. The plaintiff cannot, therefore found his claim on the delivery effected by the second defendant to the first defendant on the duplicate of the way bills.

(12) Sri. K. R. Karanth, the learned counsel for the second respondent, further contends that the remedy sought by the plaintiff in this case, viz., the recovery of the sums advanced by the plaintiff to the first defendant on the alleged pledge of the goods covered by the respective parcel way bills is misconceived and untenable under the law. He invited our attention to paragraph 399 of Halsbury's Laws of England, 3rd Edition Vol. 4 where with reference to measure of damages, it is stated that:-

'Where goods are entirely destroyed or lost by a common carrier, the measure of the damages recoverable against the carrier is prima facie the value of the property lost. The owner is entitled to the value of the goods dealt in by way of trade at the place to which they were consigned.'

Therefore, at best the plaintiff could have asked for the value of the goods actually entrusted for carriage by the first defendant to the second defendant. The claim cannot on any account be for the amounts advanced by the plaintiff, on the several drafts detailed in Schedule 'A' of the plaint. In this connection a reference to the Tannan's Banking Law And Practice In India' may be made. At page 314 the learned author observes:-

'In the first place, the banker should see that the bills he discounts, are genuine commercial bills and not in the nature of accommodation paper, as the former have the advantage of being backed up by goods while the latter, is without any real backing. For example, when a cloth merchant in Calcutta buys a few bales of dhoties from a Bombay merchant, and being unable to pay cash for this purchase, accepts a bill drawn upon him by the Bombay Merchant, he hopes to seel the goods and meet his acceptance with their sale proceeds. Thus, the bill is backed up by actual goods-dhoties. On the other hand, if the bill discounted is a 'Kite' or accommodation paper, which is merely a means between the drawer and the acceptor of raising money, it will not have such goods as a backing. The proceeds of such a bill may be utilised, not in the actual purchase of fresh goods but either in the payment of certain expenses or antecedent debts.'

There is no material in this case to decide what goods were consigned, what quantity it was and what its value was. The plaintiff did not plead that the amount claimed by him represented the value of the goods, The second defendant was not called upon to plead on this aspect. Therefore, there is much force in the contention of the respondent that the plaintiff cannot ask for the recovery of the monies advanced by him as he has done in this case. Further it is contended by Sri. K. R. Karanth that really the amounts advanced by the plaintiff are so advanced on the security of the bond Exhibit A-23, executed by the first defendant in their favour and that they never looked to the goods consigned with the parcel way bills as having been pledged to them by virtue of the demand drafts submitted to the bank with the parcel way bills endorsed in their favour by the first defendant. To sustain this argument, Sri. K. R. Karanth invites our attention to a few circumstances. The consignment under Exhibit A-2 way bill was on 28-9-1957; that the consignments under Exhibits A-4, A-6 and A-8 were all on 29-10-1957. It is in the evidence of P. W. 1 that the bills would reach Bangalore office in the ordinary course three or four days later that they would be presented to the drawee immediately thereafter. The intimation about the bill not being honoured would be received by him within a week. Therefore it will not be unreasonable to except that the intimation of dishonour of the bill Exhibit A-1 pertaining to Exhibit A-2 must have reached the plaintiff well before Exhibits A-3, A-5 and A-7 the demand drafts dated 29-10-1967 were received by the plaintiff, and advances were made to the first defendant on 30-10-1957. P. W. 1 states that he could not have advanced a second loan if the first defendant had played fraud in taking delivery of the goods covered by Exhibit A-2. It is clear from his evidence that he was watching the fate of the bill Exhibit A-1. Therefor P. W. 1 must have been aware of the non-acceptance of the bill Exhibit A-1 before Exhibits A-3, A-5 and A-7 were received by him. P. W. 1 states that the plaintiffs office at Bangalore has no godown to receive the goods. It is clear that P. W. 1 discounted the bills Exhibits A-3, A-5, and A-7 since they were within the limit of the overdraft sanctioned by the Head Office to the first defendant under Exhibits A-2, A-4, A-6 and A-8. No intimation was given to the second defendant in regard to these demand drafts or the alleged pledge. As already noted, the second series of demand drafts and the way bills were given by the first defendant tot he plaintiff on 30-10-1957. From 30-10-1957 upto Exhibit A-10, dated 18-11-1957 there is no evidence of any steps having been taken by the plaintiff to secure the goods. It is quite clear that the plaintiff did not keep track of the demand drafts or the parcel way bills. It is only on the 18th of November 1957 that the plaintiff is alleged to have sent a registered notice finding fault with the second defendant for delivering the goods without the production of the original way bill, and threatening criminal action against them for breach of trust and for reimbursement. The second defendant denied receipt of this letter but this denial cannot be accepted. Under Exhibit A-11 dated 28-11-1957 the second defendant sent a reply, acknowledging receipt of the letter Exhibit A-10 and stating that a clerk of their associate office at Bangalore was at the bottom of this 'unfortunate deal' and that they have taken necessary steps in this connection. Further it is stated that in view of the goods having been delivered they are liable to make good the plaintiff's entire losses in this connection. They also promise to furnish security and that they would write to the plaintiff a week later. Nothing happened till 20-1-1958 when a notice was issued by the plaintiffs through their counsel setting out the circumstances as mentioned in the plaint and claiming a sum of Rupees 36,758-72 NP. The second defendant sent a reply tot he said notice repudiating his liability and stating that the letter Exhibit A-11 was taken by the plaintiff's Manager under certain pressure and that he was not in any way responsible to bear the plaintiff's claim.

(13) It is necessary for us to go in detail into the question as to whether Exhibit A-11 was taken by the plaintiff's manager in the circumstances narrated in paragraph 18 of the second defendant's written statement. In any event the circumstances narrated above render it doubtful if the advances were made on the pledge of the goods covered by the concerned parcel way bills.

(14) The appellant's counsel submitted that the plaintiff's claim is also founded on Exhibit A-11. Exhibit A-11 reads as follows:

'LORETTO TRANSPORT SERVICE

TRANSPORT CONTRACTORS

Telegrams: Bunder,

'Plantation' Mangalore.1.

Mangalore. November 28, 1957.

Telephone 350 & 442

The Canara Industrial & Banking Syndicate Ltd., Mangalore.

Dear Sirs,

We are in receipt of your letter No. 5139/1319-70/GNL of the 18th instant and note with regret what you write. We have also enquired into the matter and have found out that clerk of our associate office at Bangalore was at the bottom of this unfortunate deal. We have already taken up necessary steps with our associate office in this connection.

In view of the goods having been delivered, we are liable to make good your entire losses in this connection and accordingly we hereby undertake to make good any such losses sustained by you on our account.

We will be furnishing necessary security in this connection and we will advise you within a week what securities we will be able to offer you.

Regretting every much for the inconvenience and troubles caused to you.

Yours faithfully,

Sd/- not clear.

Proprietor'

This was in reply to exhibit P-10. as already stated, the plaintiff found fault with the second defendant for having delivered the goods without the original way bill and threatening criminal action against them for breach of trust and reimbursement. Exhibit A-11 is referred to in paragraph III (6) of the plaint wherein it is stated:

'The second defendant being fully aware of the particulars of the fraud and consequential wrong delivery, admitted his liability. Accordingly he addressed a letter dated 28-11-1957 wherein he regretted his actions and intimated to the plaintiff that he had on enquiry into the matter found that a clerk of the Associate Office at Bangalore was at the bottom of this unfortunate deal and in view of the fact that goods having been delivered, the second defendant is liable to make good the entire losses in that connection. The second defendant further assured that he will be furnishing security and he will advise the plaintiff within a week what security he would be able to offer. The second defendant also regretted the trouble and loss to the plaintiff.'

This letter is not treated in the plaint as the basis of any claim against the second defendant. The cause of action is also not mentioned as arising from this document. Further, in view of our finding that under the several bills and the way bills, the plaintiff cannot have any claim against the second defendant, no liability can arise under Exhibit A-11. Exhibit A-11 if treated as an independent agreement, it fails as not being supported by consideration. In this regard the finding of the lower Court cannot be assailed. As an admission of liability it serves no purpose as there is no liability whatever. In these circumstances in our opinion it is unnecessary to further investigate the allegation that this document was taken only by the plaintiff's Manager to cover the laches on his part in allowing the first defendant to have the goods.

(15) We find, therefore, no reason to interfere with the decree passed by the learned Subordinate judge.

(16) The Judgment and decree of the lower Court are therefore confirmed and this appeal is dismissed with costs of Respondent No.2

(17) Appeal dismissed


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //