1. The question for consideration in this appeal is whether the Railway administration is liable to the plaintiffs in the circumstances of the case.
2. The facts are not disputed for the purposes of this appeal. The husband of the 2nd defendant and the defendants 3 to 10 were carrying on a joint family business in Parvatipuram and in the course of such business, the 10th defendant on behalf of the family despatched on 18-1-1952 a wagon-load of bags of mustard seeds valued at Rs. 11,378/-from Parvatipuram railway station to Midnapur railway station. The consignment was made to 'self', although the goods were intended for Sri Krishna Oil Mills, Midnapur.
On 19-1-1952, these defendants, who wanted ready money, received from the plaintiffs the value of the goods and endorsed the railway receipt to their favour as well as a hundi drawn on the Midnapore firm. The plaintiffs borrowed money from the Andhra Bank for the purpose of paying the defendants and endorsed the railway receipt as well as the hundi to the Andhra Bank, who in their turn sent the railway receipt and the hundi duly endorsed to the Imperial Bank of India, Midnapore.
The railway receipt was in the hands of the Rank of Midnapore on 22-1-1952 and they immediately informed the Master of the Midnapore railway station on that very day that they were in possession of the railway receipt and asked him not to deliver the goods to anybody else. The Andhra Bank, Parvatipuram also sent an express telegram on 23-1-1952 to the same Station Master requesting him to deliver the goods only against the railway receipt to be produced by the Imperial Bank at Midnapore.
This telegram was followed by a confirmation letter from the Bank dated 23-1-1952. On 19-1-1952, the 10th defendant represented to the Station Master, Parvatipuram that he had lost the receipt relating to the goods and having been told that he could get delivery of the goods only on executing an indemnity bond in favour of the railway company, he signed on 22-1-1952 an indemnity bond in the terms required and armed with it proceeded to Midnapore and presenting it to the goods clerk obtained delivery of the goods on 24-1-1952.
The Station Master, Midnapore who was instructed not to deliver the goods by the Imperial Bank of India at Midnapore, says in his evidence as D. W. 1 that he duly instructed the goods-clerk not to deliver the goods to anybody except on the production of the railway receipt. Unfortunately, as the concerned goods-clerk is no longer alive, we are not in a position to say how it happened that he disobeyed the instructions of the Station Master; but the fact is that the goods were delivered to the 10th defendant. The plaintiffs having obtained by a valid transfer all the rights of the Midnapore Bank as well as the Andhra Bank brought the present suit for recovery of the value of the goods from the railway administration as well as from the defendants 2 to 10.
3. The trial Court held that the railway administration was not liable to the plaintiffs on the above facts. We are clearly of the opinion that, in so holding, it was in error. It is well-known, and Section 2(4) of the Indian Sale of Goods Act makes it clear, that a railway receipt is a document-of-title. As a rule, therefore, the administration should insist upon the production of the receipt before it parts with the goods to which it relates. The railway receipt may be endorsed by the consignor or his endorsee to any other person; when so endorsed it is a direction from the bailor to the bailee to deliver the goods to such other person and it is the duty of the bailee to obey the instructions of the bailor.
4. Reliance is placed by Mr. Krishnamurty for the respondents upon Section 57 of the Indian Railways Act which is in these terms:
'57. Where any animals, goods or sale-proceedings in the possession of a railway administration are claimed by two or more persons, or the ticket or receipt given for the animals or goods is not forthcoming, the railway administration may with old delivery of the animals, goods or sale-proceeds until the person entitled in its opinion to receive them has given an indemnity, to the satisfaction of the railway administration, against the claims of any other persons with respect to the animals, goods or sale proceeds'.
This section covers goods coming into the possession of the railway administration either for carriage or otherwise & the first clause obviously refers to rival claims made by two more persons in the case of goods corning into possession of the railway administration otherwise than for carriage, It goods are found, for instance, in a train and thus come into possession of the railway administration and two or more persons lay claim to them, this clause applies.
We are concerned however with the latter clause which relates to goods for which a receipt is obtained. When the receipt given is not forth corning, this section enables the railway administration to withhold delivery 'until the person entitled in its opinion to receive them has given an indemnity' to its satisfaction against the claims of any other persons with respect to the goods. Therefore, before a railway authority parts with the goods entrusted to it for carriage, it must be satisfied in the first place that the receipt is not forthcoming and secondly that the person claiming delivery is the person entitled to receive the goods.
Once these conditions are satisfied, it can insist upon an indemnity from a person in order to protect itself against the claims of any person who may subsequently be found or adjudged to be entitled to them. In the present case, it is not denied that the railway administration had notice that the railway receipt was available and would be forthcoming. In fact, the Station Master of Midnapore, as D. W. 1, admits that he had notice of its being with the local Imperial Bank and what is more, lie says that he instructed his subordinate, the goods-clerk, not to part with the goods unless the railway receipt is produced.
From this evidence, it is obvious that the goods clerk disobeyed the instructions of the Station Master. As we have already said, the goods clerk being not available we do not know what his explanation would have been. But one tiling is not in doubt. It is not claimed on behalf of the railway administration that they had reason to believe that the 10th defendant was the person entitled in their opinion to receive the goods.
There is no such averment in the written statement and nobody deposes to that effect. Neither of the conditions mentioned above has therefore been satisfied in this case. The mere fact that the consignment was made to self does not make the consignor the rightful owner, because by endorsing the receipt to another, he may have lost his title. If the railway authorities deliver the goods on production of the receipt, they are protected, but when they do so without its production, they do so at their risk.
Section 57 gives the railway company the right to withhold delivery until a particular point of time. The section does not protect the railway administration from the consequence of delivery to a wrong person. In fact, it provides for the possibility of a wrong delivery by enacting that the authorities should take an indemnity before delivering the goods to a person claiming them.
5. Mr. Krishnamurthy has referred us also to Section 72 of the Indian Railways Act which provides for the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to it for carriage in terms of specified sections of the Contract Act. But we are not dealing now with a case of loss, destruction or deterioration of animals or goods.
It is true however that the relevant provisions of the Indian Contract Act as to contracts of bailment would apply to the carriage of goods by the Railway authority, except in so far as they are altered or modified by the Railways Act. Under Section 166 of the Contract Act, where the bailor has no title to the goods, the bailee is protected from the consequences of wrong delivery if he acts in good faith in delivering them back to or in accordance with the instructions of the bailor.
When, to the knowledge of both the parties, the instructions are contained in a document, which is, besides, (according to well settled mercantile usage, not to mention the definition of 'document of title to goods' under Section 2(4) of the Indian Sale of Goods Act and that of 'mercantile document of title to goods' in the explanation to Section 137 of the Transfer of Property Act), a document-of-title, that is to say, a document capable on endorsement of passing the tide to the goods to which it relates, then, the instructions of the bailor can only be sought in the document and the bailee is bound to ask for that document, although where it is not forthcoming, he may act in his discretion but still at his risk.
Otherwise, the Railway authorities can hardly be stated to be acting in good faith. They will be absolutely protected it they refuse to deliver except on being reasonably satisfied that the document fs lost or destroyed; when however they deliver the goods in the absence of the receipt to a person who, in their opinion, is entitled thereto, they cannot have immunity from the claim of the lawful owner. That is indeed the reason why they take an indemnity against such a claim.
6. Reference may be made to a decision reported in M. & S. M. Rly. Co. Ltd. v. Haridoss Banmali Doss ILR 41 Mad 871: (AIR 1919 Mad 140) which the trial Court purported to follow in rejecting the plaintiff's claim against the 1st defendant. That is a decision of Wallis C.J., and Spencer J. The learned Judges decided in the first instance that the suit cut of which the appeal arose was barred as notice of the claim was not given as required by Section 77 of the Indian Railways Act.
But both the learned Judges also dealt with the Question whether in the circumstances of the case there was any cause of action against the railway company. The facts were that certain goods were consigned for carriage by the defendant-company by one Gurunadhan to his own order. The railway receipts relating to them were pledged by the consignor with the Bank of Madras.
It was contemplated that one Swaminatha Reddy should pay the value of the goods to the Bank, get the railway receipts endorsed in his favour and take delivery of the goods, Somehow or other, without paying the money due to the Bank and without producing the railway receipts, Swaminadha Reddy managed to take delivery of the goods from the railway company. Shortly thereafter however he paid the Bank of Madras and obtained the receipts.
Instead of handing over the railway receipts to the railway company he fraudulently obtained an advance from the plaintiff on pledge of the receipts. The question in the case was whether the plaintiff was entitled to recover the value of the goods from the company. It was argued before the learned Judges that the fact that the railway did not ask for the receipts when it delivered the goods made them responsible to the plaintiff for the value of the goods, the plaintiff having, on the strength of the receipts advanced money to Swarninadha Reddy.
It was further urged that the delivery to Swaminatha Reddy at the time when it was made was a wrongful delivery because he had then no right to the goods. Wallis C.J., pointed out that long before Swaminatha Reddi endorsed over the railway receipts to the plaintiff, he had paid the Bank of Madras and obtained the railway receipts and was therefore the only person entitled to the goods, and remarked that the contract of carriage was thereafter at an end.
The learned Judge observed that the goods had found their way into the hands of the lawful owner, and therefore no one was prejudiced by the misdelivery and no injurious consequences followed. He thought that 'in the event which happened, the case must be decided as if the railway made delivery of these goods to Swaminatha Reddy, without the production of the railway receipts at a time when he was entitled to them, although, he had not brought the railway receipts with him'. Spencer J., stated the argument for the Company in these terms:
'It may be that our clerk was negligent but he only risked our responsibility till the receipts were forthcoming. We knew nothing of Swaminatha Reddi's subsequent transactions with you and we did not conspire with him to cheat you. We acknowledge no liability to the public to see that our receipts are all collected, and the fact that this receipt happened to be left in the consignee's hands was not a proximate or effective cause of your being cheated, nor did it directly lead to that result.' In our opinion, this case has no application to the facts of the case before us. Indeed, there is a decision of a single Judge of the Madras High Court in favour of the appellants which is reported in Sait Madan Copal Trading v. Upadhayula Kameswara Rao, AIR 1936 Mad 25. In that case also the trial court had decided against the plaintiff placing reliance on ILR 41 Mad 871: (AIR 1919 Mad 140) and the learned Judge distinguished that case from the one before him in which the facts were almost on all fours with those of the present case and observed as follows: 'The cocoanuts were delivered to the person who was not entitled to receive them. The person who was entitled was the plaintiff. The primary duty of the Railway Company it cannot be denied was to deliver the goods to the rightful owner. They have not done so. Prima facie their liability is clear and the question is whether any facts have been proved which would absolve them from that liability .....It is well-known that railway receipts do pass from hand to hand and that in general, railway receipts are regarded as practically equivalent to documents of title. To deliver goods without the production of such a receipt on the mere authority of an unconfirmed telegram and without apparently the slightest explanation for the non-production seems to me a clear breach of duty.'
We find ourselves in entire agreement with the view of the learned Judge. In our opinion there was no jurisdiction for the delivery of the bags to the 10th defendant in the circumstances of this case and the railway administration is liable to the plaintiffs for their value. The suit was wrongly dismissed against the 1st defendant.
7. The appeal succeeds and there will be a decree in favour of the plaintiffs against the 1st defendant for the suit amount with subsequent interest at 5 1/2 per cent from the date of suit on Rs. 11,378/- till realisation and with costs both here and in the Court below. The 1st defendant will have two months to pay the money.