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New Swadeshi Sugar Mills Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 866 of 1972
Judge
Reported inAIR1981All268
ActsRailways Act, 1890 - Sections 73
AppellantNew Swadeshi Sugar Mills Ltd.
RespondentUnion of India (Uoi)
Appellant AdvocateR.P. Tripathi and ;Ravi Kant, Advs.
Respondent AdvocateB.D. Mandhyan, Adv.
DispositionAppeal partly allowed
Excerpt:
.....the pineapples paid by it at trichur for it had failed to lead evidence to show as to what was the market price of pineapples at the, relevant time at the destination, namely, at allahabad. the submission has been countered on behalf of the railway administration byits learned counsel, who has urged with emphasis that upon its failure to lead evidence and establish as to what was the prevailing market price of. 6. in a case like the present, where the consignment was booked at owner's risk. one of the principles for award of damages is that as far as possible he who has proved a breach of a bargain to supply what he has contracted to get is to be placed as far as money can do it in as good a situation as if the contract had been performed. therefore, the principle is that as far as..........the pineapples paid by it at trichur for it had failed to lead evidence to show as to what was the market price of pineapples at the, relevant time at the destination, namely, at allahabad. the lower appellate court was of opinion that the trial court had committed an error in passing a decree in favour of the plaintiff for further amounts claimed by it. consequently it modified the decree reducing the amount to a sum of rs. 6687/50 which it arrived at after adding the cost of notice, as claimed by the plaintiff, to the price of the pineapples paid by the plaintiff at trichur. this decree has been assailed by the plaintiff in the present second appeal.5. it has been urged on behalf of the appellant, by its learned counsel sri ravi kant, that irrespective of the fact that the plaintiff.....
Judgment:

V.K. Mehrotra, J.

1. This is a plaintiff's second appeal whose suit for recovery of damages from the respondent was decreed in its entirety by the trial Court but the lower appellate Court modified that decree to an appreciable extent in favour of the defendant-respondent in an appeal by it.

2. On may, 19, 1966, the plaintiff handed over a consignment of pineapples to the Railways, owned by the defendant Union of India, for carriage to Allahabad at Trichur railway station. In the normal course, this, consignment should have reached Allahabad within five days of its delivery at Trichur. In fact, however, the consignment reached Allahabad on June 1, 1966 and it was found that the entire lot of pineapples had deteriorated and had become wholly rotten and unfit for use. This deterioration, according to the plaintiff, had been caused on account of the negligent handling of the consignment by the Railways. The Railways were, consequently, liable to compensate the plaintiff by paying to it a sum of Rs. 10,803/- as damages. The amount of damages was worked out as follows :--

(i) Cost of 7515 pineapples,

Rs. 6671.50

(ii) Transport and loading charges at the rate of Rs. 3/- perquintal paid at Trichur.

Rs. 400.29

(iii) Railway freight paid in advance at Trichur.

Rs. 2235.80

(iv) Travelling expenses of Sri D. C.Joshi, purchase officer of the plaintiff deputed to make purchases.

Rs. 454.85

(v) Expenses incurred in unloading the consignment atAllahabad.

Rs. 25.00

(vi) Cost of notice given to the defendant.

Rs. 16.00

Rs. 10,803.44

The suit was contested by the defendant on various grounds. The defendant disclaimed any negligence on its part or liability for paving any amount by way of damages to the plaintiff.

3. The trial Court framed the necessary issues and came to the conclusion that the defendant had been negligent in the handling the consignment and had not taken reasonable care. It was, consequently, according to the trial Court, liable to pay damages to theplaintiff as claimed by it. It, therefore, passed a decree for recovery of a sum of Rs. 10,803/44 in favour of the plaintiff. The defendant assailed this decree in an appeal.

4. The lower appellate Court, on reappraisal of the evidence on record, affirmed the conclusion of the trial Court that the deterioration in the consignment was the result of the negligence on the part of the Railways and that the plaintiff was thus entitled to claim damages. However, it felt that the plaintiff was not entitled to the award of any amount as damages in excess of the purchase price of the pineapples paid by it at Trichur for it had failed to lead evidence to show as to what was the market price of pineapples at the, relevant time at the destination, namely, at Allahabad. The lower appellate Court was of opinion that the trial Court had committed an error in passing a decree in favour of the plaintiff for further amounts claimed by it. Consequently it modified the decree reducing the amount to a sum of Rs. 6687/50 which it arrived at after adding the cost of notice, as claimed by the plaintiff, to the price of the pineapples paid by the plaintiff at Trichur. This decree has been assailed by the plaintiff in the present Second Appeal.

5. It has been urged on behalf of the appellant, by its learned counsel Sri Ravi Kant, that irrespective of the fact that the plaintiff had not been able to establish as to what was the prevailing market price of pineapples at Allahabad, the destination, at the relevant time, it would be entitled to a decree for an amount which would compensate the plaintiff for the damages suffered by it on account of the negligent handling of the consignment by the respondent Railways. The view of the lower appellate Court that the plaintiff would be entitled only to the price of the pineapples paid at Trichur has been assailed as incorrect. In particular, it is urged that the plaintiff would be entitled to the amount which was paid by it to the defendant-Railways as freight for carrying the consignment from Trichur to Allahabad when, on the findings recorded by the two courts below, the consignment had been a total loss to the plaintiff. The submission has been countered on behalf of the Railway Administration byits learned counsel, who has urged with emphasis that upon its failure to lead evidence and establish as to what was the prevailing market price of. pineapples at the relevant time at the destination the plaintiff could not claim any amount other than the amount spent by it in purchasing the pineapples found to have deteriorated.

6. In a case like the present, where the consignment was booked at owner's risk. the liability of the Railway Administration would be that of a bailee and not that of an insurer, irrespective of the amendment brought about in the Railways Act, 1890 in the year 1961 by Parliament Act No. 39 of 1961.

7. In Union of India v. Tolaram Hariram : AIR1980Guj172 a Division Bench of that Court observed thus fat p. 177) :

'In place of old Section 72 we have now Section 73 which specifies general responsibilities of the Railway Administration as a carrier of goods. A bare reading of that provision would show that the responsibility of the Railway Administration is now that of a common carrier. It is almost similar to that of a common carrier under the Common Law of England. Section 74, however, restricts the responsibility of the railway administration when the goods are not carried at the railway risk rate but are carried at the owner's risk rate. In such a case, Sub-section (3) of Section 74 provides that the railway administration shall not be responsible for any loss, destruction, damage, deterioration or non-delivery, of the goods from whatever cause arising, except upon proof that such loss, destruction, damages, deterioration or nondelivery was due to negligence or misconduct on the part of the railway administration or of any of its servants. Thus, when the goods are carried at the owner's risk rate, the liablity of the railway administration will not be absolute as that of an insurer but will be as that of a bailee.'

The aforesaid observations, with which I am in respectful agreement lay down the correct legal position about the extent of the liability of the railway administration for damages where the goods are booked by it for carriage at the owner's risk rate.

8. In Halsbury's Laws of England, 4th Edition, the principle for deter-mining the extent of damages, where the goods have been lost by the carrier during its carriage, has been stated in paragraph 458 of Volume V in the following words :--

'Where goods are entirely destroyed or lost by a common carrier the measure of the damages recoverable from him 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. If there is a market for that description of goods at that place, the damages are the market value of the goods there at the time when they ought to have been delivered; but if there is no market, then the damages are the cost price of the goods, together with the expenses of carriage, and such profit as might reasonably be expected to have been made in the ordinary course of business, provided the carrier had notice that the goods were bought for resale.....'

9. In Union of India v. Sugauli Sugar Works (P.) Ltd. : [1976]3SCR614 . the Supreme Court laid down the principle for determining the amount of damages in the event of non-delivery of a consignment on account of the negligence of railway employees in a case where the goods were carried at the railway risk rate in the following terms (in paragraph 22 of the report) :

'The market rate is a presumptive test because it is the general intention of the law that in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed. The rule as to market price is intended to secure only an indemnity to the purchaser. The market value is taken because it is presumed to be the true value of the goods to the purchaser. One of the principles for award of damages is that as far as possible he who has proved a breach of a bargain to supply what he has contracted to get is to be placed as far as money can do it in as good a situation as if the contract had been performed. The fundamental basis thus is compensation for the pecuniary loss which naturally flows from the breach. Therefore, the principle is that as far as possible theinjured party should be placed in as good a situation as if the contract had been performed. In other words, it is to provide compensation for pecuniary loss which naturally flows from the breach.

In that case the Supreme Court was dealing with the question of the liability of the Railways for compensating the loss occasioned on account of nondelivery of a consignment due to negligence of its employees in a case where, according to the Supreme Court, the liability of the Railway was that of a bailee.

10. It is settled law that where goods entrusted to the Railways for carriage are lost on account of the negligence of its employees, the test to determine the amount of damages is the prevailing price of the commodity at the place of destination if there is a market for that commodity there. As observed by the Supreme Court in the case of Sugauli Sugar Works (supra) it is a presumptive test. The question 'that, however, needs consideration in the present appeal is as to what is the measure of damages to be adopted in a case where there is no evidence of the prevailing market price at the destination in respect of the goods lost at about the time when they should. normally, have reached it. Having regard to the liability which the Railway Administration has as a bailee, it has to be held that the mere failure to adduce evidence about the prevailing market price at the destination would not deprive the consignor of his right to be compensated for the loss of the consignment. Where there is evidence of the prevailing market price at the destination that price can be utilised in computing the amount of damages and deducting therefrom the expenses which the consignor had of necessity te incur before he could make the goods consigned by him available for disposal at the place of destination. When, however, the test of market price for awarding compensation is not available to the court it has to take into account the various factors which would, in the words of the Supreme Court in Sugauli Sugar Works case (supra) 'Provide compensation for pecuniary loss which naturally flows from the breach.'Apart, therefore, from the cost of the goods, which have been lost, to the consignor, the expenses which he had necessarily to incur for transporting the goods to the destination have to be kept in mind.

11. In L. Nathu Lal v. Dominion of India : AIR1963All137 K. B. As-thana J. (as he then was) accepted the principle that the plaintiff in such a case should get damages on the basis of the difference between the cost price which he had paid plus freight and the actual price which he obtained by the sale of goods at the destination. In that case, the consignment of potatoes which had been booked at the owner's risk from Kanpur to Bombay was received at the latter station in a damaged condition and had to be sold away at a low rate. The plaintiff had not been able to establish by evidence that the variety of potatoes which he sent could fetch Rs. 5/- per maund which was the prevailing market price at Bombay. Damages on the basis of the difference between the market price at Bombay as alleged by the plaintiff and the price which he actually got by sale of damaged consignment was not awarded. Instead, the more equitable basis of awarding the plaintiff the cost of the goods and the expenses incurred by him for their carriage to Bombay was adopted for computing the amount of damages after deducting therefrom the amount which he actually got on sale of the damaged consignment.

12. In the Union of India v. Kuthari Trading Co. Ltd. (AIR 1969 Assam 84) a Division Bench of the Assam High Court took the view that the proper charges of transportation and delivery of the goods from the place of despatch to the destination had to be deducted from the amount of damages. In this respect it relied upon the decision in the case of Bala Prasad v. Union of India : AIR1965Pat408 and that of Indian General Navigation and Railway Co. Ltd. v. Eastern Assam Co. Ltd. (AIR 1921 Cal 315). It is noticeable that in the case before the Assam High Court the damages were computed on the basis of the prevailing market value at the destination and it was held that the amount incurred as expenses for transporation for delivery had to be deducted if this had not been paid by the consignor. A perusal of the judg-ment (in paragraph 12 of the report) makes it clear.

That paragraph runs thus :--

'The next point to be considered is how to determine the quantum of compensation where goods are lost in transit and not delivered to the consignee by the Railways or the common carrier. The quantum of damages in such cases may be estimated by two methods (i) by taking the cost price of the goods and adding a reasonable amount to it by way of loss or profit suffered for non-receipt of the goods : (ii) by taking the market value of the goods at the time and place of destination. When the damages are assessed according to the market value, the amount which would have caused to get them to the place of delivery must be deducted. In other words, the measure of damages is the value of the goods at the place of destination, in the condition in which the carrier undertook to deliver them at the time when they should have been delivered less the proper charges of transportation and delivery if these have not been paid by the consignor. The natural and probable consequence of the failure of the carrier to deliver the goods at the time and place they should have been delivered is prima facie a loss to the owner amounting to the value of the goods at that point. These views are supported by the decisions in Indian General Navigation and Railways Co. Ltd. v. Eastern Assam Co. Ltd. reported in AIR 1921 Cal 315 and Bala Prasad v. Union of India, reported in : AIR1965Pat408 .'

13. In Bala Prasad v. Union of India : AIR1965Pat408 upon which reliance has been placed on behalf of the respondent Railway in particular, the facts were these :--

A consignment of sugar bags was despatched from Marhowrah Railway Station on the North Eastern Railway to Tatanagar Railway Station under railway risk. Open delivery was taken by the plaintiff at Tatanagar Railway Station and as there was shortage of sugar in some of the bags and also damage to several bags of sugar on account of rain water entering inside the wagons, the plaintiff claimed damages from the Railways at the rate of Rupees 32/8/- per maund alleging that it was the prevailing market rate at Jamshedpur. The claim was decreed by the trial Judge at the rate of Rs. 29/3/6 per maund basing it on the actual cost price which was Rs. 27/6/5 and adding to it the railway freight at the rate of Rs, 1/5/3 per maund which was admittedly paid by the plaintiff, damages at the rate of Rs. 0/4/3 per maund and cartage at the rate of Rs. 0/3/6 per maund. This decree was varied by the single Judge of the High Court who held that the plaintiff was not entitled to add the freight paid by him to the amount due to him from the railway by way of damages. According to the learned Judge, once the plaintiffs' evidence about the market rate at the place of destination was not accepted. the only other way for estimating the market rate was to ascertain the actual price paid by the plaintiff and add to that the dunnage which was fixed at a lump sum of Rs. 30/-. The view taken by him was that the railway freight and cartage could not be allowed because expenditure in respect of those items was incurred by the plaintiff in the performance of his part of the contract with the railway. This view was upheld by the Division Bench of which the decision has been reported. The learned Judges constituting the Division Bench, observed fin paragraoh 5 of the report) as under :--

'Here, it was open to the plaintiff to show, apart from the actual cost price as proved from his bijak, what was the reasonable profit he would have made at the place of destination viz. Tata-nagar by the sale of the goods. He, however, led no evidence on this point but relied on his own meagre evidence about the selling rate of sugar at Tata-nagar, which has been disbelieved by the Courts of fact. Hence he is entitled only to the cost price as shown in the bijak plus dunnage as allowed by the learned single Judge, It was urged that by adopting this principle, the plaintiff is put to a loss, inasmuch as he gets only the price of the goods at the place of despatch, though that price would generally be far below the price at the place of destination, but this result is brought about by his own failure to prove the market value of the goods at the, place of destination in any of the methods indicated above, and this cannot be a ground for addingthe freight charges also to the cost price which would result in the railway carrying the goods free of charge for the plaintiff's sake.'

14. A perusal of the judgment aforesaid makes it clear that what was being upheld by the Division Bench was the view of the single Judge of that Court that where the amount of damages is to be ascertained, having regard to the market value at the place of destination, the amount paid by the plaintiff as freight charges for bringing the goods to the destination had to be excluded. The decision does not lay down that even in a case where the amount of damages is not to be fixed with re- ference to the market value at the place of destination, the freight charges cannot be taken into account for computing the same. If the learned judges purported to lay that down, I would, with utmost respect, venture to suggest that they have not taken a correct view of law.

15. The real principle for computing the amount of damages being that as far as possible the injured party should be placed in as good a situation as if the contract had been performed and that he should be provided compensation for pecuniary loss which naturally flows from the breach, it has to be held that the lower appellate Court misdirected itself in taking the view that the plaintiff was entitled only to the amount spent by it in purchasing the consignment of pineapples at Tri-chur. The Dlaintiff was entitled to an amount which, . indisputably, had been spent by it in bringing the consignment to Allahabad. It is entitled to be com-penseted to the extent of the pecuniary loss incurred by it in doing so. Apart, therefore, from the cost of the pineapples, the plaintiff was entitled to the amount of Rs. 2235.80 which admittedly had been paid by it to the Railway for carrying the goods from Tri-chur to Allahabad. There appears to be dearth of reliable evidence to establish that the other items claimed by the plaintiff as expenses were, in fact, incurred by it in connection with the consignment in question. At least no such evidence was brought, to my notice during the hearing of the appeal.

16. Coming now to the cross objection filed by the defendant, it is notice-able that the grounds urged in support thereof only amount to this that the finding of the two courts below that the deterioration in the consignment of the pineapples was occasioned on account of the negligence of the railway administration is erroneous. The finding, against the defendant, in this respect is based upon appreciation of evidence on record by the two court below. The courts have found concurrently in favour of the plaintiff in this regard. The finding cannot successfully be assailed in this court. The cross-objection deserves to fail.

17. In the result, the appeal succeeds and is allowed in part. The decree of the lower appellate court is modified. The plaintiff is held entitled to a decree for a sum of Rs. 8923/30 being the cost of pineapples at Trincur the railway freight paid by the plaintiff and the cost of the notice. In addition, the plaintiff shall be entitled to interest as awarded by the lower appellate Court. The cross-objection shall stand dismissed. In the circumstances of the case, however, the parties are directed to bear their own costs in this court.


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