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Punjab National Bank Vs. Beniprasad Maheshwari and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 146 of 1976
Judge
Reported inAIR1981MP95
ActsRailways Act, 1890 - Sections 73, 77 and 77(5)
AppellantPunjab National Bank
RespondentBeniprasad Maheshwari and ors.
Appellant AdvocateJ.P. Sanghi, Adv.
Respondent AdvocateA.R. Choube and ;N.S. Kale, Advs.
Cases Referred(See Union of India v. Asharfi Devi
Excerpt:
.....discounting of the bills, the plaintiff became the owner of the goods that were booked under these railway receipts and it alone was entitled to the delivery of those goods; 1 denied his having endorsed that bills and railway receipts in question as also having discounted them in his account with the plaintiff. 7) were endorsed in favour of the plaintiff; that it had acted in good faith and under the provisions of the railways act in effecting the delivery to defendant no. 1 holding that the bills and the railway receipts were endorsed by defendant no. 1 holding that 'the plaintiff bank has failed to prove that the defendant no. 2, from which it can well be inferred that he was in league with defendant no. the subsequent sections in this chapter are like proviso or exception to the..........railway receipt no. b-670346 (ex. p. 7) from pipariya railway station to hubli. in both these railway receipts the consignor himself was the consignee. defendant no. 2 the consignor had obtained the delivery from the railway of the goods booked under the said railway receipts on executing indemnity bonds (ex. d/1 to ex. d/4) on 28th february, 1970 and 6th march, 1970 respectively on the ground that the original railway receipts were lost.6. the case of the plaintiff briefly stated as laid in the plaint was this.defendant no. 2 drew a hundi for rs. 11,500/- (hereinafter referred to as 'bill no. 1') in respect of the price of goods that were booked under railway receipt no. b-670243 (ex. p-3) in favour of defendant no. 1 on one bajranglal agra-wal of hubli and delivered it to.....
Judgment:

U.N. Bhachawat, J.

1. This is an appeal by the plaintiff against the judgment and decree dated the 7th May, 1976 of the Court of II Additional District Judge, Hoshangabad, in Civil Suit No. 7-B of 1972.

2. The plaintiff Bank had filed the suit for recovery of Rs. 35,574-93 (Rs. 28,000/-principal + Rs. 84/- Bank Commission and Rs. 7490-00 interest at the rate of 11 per cent per annum) against all the 3 defendants, who are respondents herein. The suit has been decreed for Rs. 32074.00 (Rs. 28,000/- principal, interest, 4074/-calculated at the rate of Rs. 6 per cent per annum) with costs and future interests at the rate of 6 per cent per annum on the principal amount from the date of the suit till realisation against defendant No. 2; for Rs. 148-00 against defendant No. 1 and has been totally dismissed against defendant No. 3. Being aggrieved by this judgment, the plaintiff Bank has filed the present appeal claiming a total amount of Rs. 35,574-93 against all the defendants.

3. At the outset it may be mentioned that the finding of the trial Court disallowing a sum of Rs. 3350/- in respect of the interest amount was not assailed before us during the course of the argument.

4. Defendants Nos. 1 and 2 are the merchants dealing in grains at Pipariya. They had their respective accounts with the plaintiff Bank (hereinafter referred to as 'the plaintiff'). These defendants were allowed bill-discounting facilities by the plaintiff.

5. The undisputed facts are that on 9th February, 1970, defendant No. 2 had booked 110 bags of Tevra Dal from Pipariya for Hubli under railway receipt No. B-670243 (Ex. P. 3). Thereafter on 16-2-1970 again defendant No. 2 had booked 110 bags of Tevra Dal under railway receipt No. B-670346 (Ex. P. 7) from Pipariya Railway Station to Hubli. In both these railway receipts the consignor himself was the consignee. Defendant No. 2 the consignor had obtained the delivery from the Railway of the goods booked under the said railway receipts on executing indemnity bonds (Ex. D/1 to Ex. D/4) on 28th February, 1970 and 6th March, 1970 respectively on the ground that the original railway receipts were lost.

6. The case of the plaintiff briefly stated as laid in the plaint was this.

Defendant No. 2 drew a hundi for Rs. 11,500/- (hereinafter referred to as 'bill No. 1') in respect of the price of goods that were booked under railway receipt No. B-670243 (Ex. P-3) in favour of defendant No. 1 on one Bajranglal Agra-wal of Hubli and delivered it to defendant No. 1 along with the said railway receipt duly endorsed in favour of defendant No. 1, who got it discounted in his account with the plaintiff on 28-2-70 having endorsed that and Railway receipt (Ex. P-3/ in favour of the plaintiff and delivered both to the plaintiff. The plaintiff after deducting its commission-charges Rs. 36-00 credited a sum of Rs. 11,464-00 in the account of defendant No. 1 and as per the written direction of defendant No. 1 transferred it the same day in the account of defendant No. 2. Defendant No. 2 drew another hundi for Rs. 12,500/- (hereinafter referred to as 'bill No. 2') in respect of the price of the goods booked under railway receipt No. B-670346 (Ex. P. 7) on Baj-ranglal Agrawal of Hubli, in favour of defendant No. 1 and delivered the same along with the railway receipt (Ex. P. 7) duly endorsing it in favour of defendant No. 1 to defendant No. 1, (sic) who obtained the payment of this bill No. 2 from the plaintiff on getting it discounted in his account after duly endorsing it and the railway receipt (Ex. P. 7) in favour of the plaintiff.

The aforesaid bills No. 1 and No. 2 were retired by the drawee. When plaintiff intimated defendant No. 1 this fact and demanded the amount of bills, bank charges and interest, defendant No. 1 gave to the plaintiff two fresh bills, Ex. P. 11 dated 27-4-70 for Rs. 16000/- in respect of railway receipt (Ex. P. 3) and Ex. P. 12 dated 24-4-70 in respect of the railway receipt (Ex. P. 7) for Rs. 12,000/- drawn by defendant No. 2 in favour of defendant No. 1 M/s. Premchand Kalabhai of Jamshedpur and duly endorsed by defendant No. 1 in favour of the plaintiff, and got transferred Rs. 700/- from the account of defendant No. 2 to the account of defendant No. 1 and thus defendant No. 1 got his account adjusted in respect of bills Nos. 1 and 2; but these bills Ex. P. 11 and Ex. P. 12 were also not retired by their drawee, hence the defendant No. 1 was liable to pay the sum of Rs. 28084 inclusive of bank charges, with interest at the rate of 11 per cent per annum from 27-4-1970 till the date of payment to the plaintiff.

As the railway receipts (Ex. P. 3) (Ex. P. 7) were endorsed in favour of the plaintiff, against the discounting of the bills, the plaintiff became the owner of the goods that were booked under these railway receipts and it alone was entitled to the delivery of those goods; defendant No, 2 had no right to take delivery and defendant No. 3 had no justification to deliver the goods to defendant No. 2. Therefore, defendant No. 2 was liable to plaintiff for illegally obtaining delivery of the goods and defendant No. 3 was liable for making a delivery to wrong person and not making delivery to plaintiff.

On the aforesaid grounds, the plaintiff sought decree for the amount claimed jointly and severally against each defendant.

7. Defendants No. 1 and No. 3 resisted the claim of the plaintiff; defendant No. 1 denied his having endorsed that bills and railway receipts in question as also having discounted them in his account with the plaintiff. He denied that he either obtained payment of these bills or got the amount credited in his account and also that he got an amount transferred from his account to the account of defendant No. 2. In short his defence was of total denial,

8. Defendant No. 3, while admitting the delivery of the goods under railway receipts (Ex. P. 3) and (Ex. P. 7) to defendant No. 2 against indemnity bonds, inter alia, contended that at the time of delivery of the goods, it had no knowledge that the railway receipts (Ex. P. 3 and Ex. P. 7) were endorsed in favour of the plaintiff; that it had acted in good faith and under the provisions of the Railways Act in effecting the delivery to defendant No. 2 and that there was negligence on the part of the plaintiff in having accepted the railway receipts and discounting the bills without verifying whether the goods booked under the railway receipts were lying undelivered on the dates the bills were allegedly discounted. It may be mentioned that the only question debated by the learned counsel for the parties was about the liability of defendants Nos. 1 and 3 about the sum of Rs. 28084/-. The correctness of the amount was not disputed of course it was contended on behalf of defendant No. 3 that in the event defendant No. 3 was found liable for effecting wrong delivery, the liability of defendant No. 3 could be only for the cost of the goods and this amount of Rupees 28084/- did not represent the cost of the goods so also no decree could be passed against defendant No. 3.

9. None appeared on behalf of defendant No. 2 nor any cross-objection has been filed on behalf of defendant No. 2. Defendant No. 2 was ex parte in the trial Court also and has not challenge the impugned decree passed against him.

10. It may also be mentioned that the impugned decree for Rs. 148-00 regarding the bank commission against defendant No. 1 holding that the bills and the railway receipts were endorsed by defendant No. 1 in favour of the plaintiff and presented by him in his account, has not been challenged on behalf of defendant No. 1 by filing a cross-objection and as such that part of the impugned decree stands final against defendant No. 1.

11. The trial Court has dismissed the claim of the plaintiff except for the bank commission against defendant No. 1 holding that 'the plaintiff bank has failed to prove that the defendant No. 1 had withdrawn the amount of any of these 4 demand drafts in cash or that the amount of those 4 demand drafts was transferred from the account of defendant No. 1 to the account of defendant no. 2 on his written instructions.'

12. The trial Court has dismissed the claim against defendant No. 3 holding that although the defendant No, 2 had unlawfully obtained the delivery of the goods of the said Railway Receipts through his counterpart on execution of the indemnity bonds, but as there was no collusion in between the defendant No. 2 and the Railway employees and as the Railway employees had bona fide accepted the indemnity bonds without notice of any encumbrance in any one's favour and had made the delivery as per provisions of Indian Railways Act and the Goods Tariff General Rules, the Railway Administration is absolved from any responsibility under Section 78B of the Indian Railways Act.'

13. We shall first proceed to consider the question of liability of defendant No. 1. The argument of the learned counsel for the plaintiff to fasten the liability on defendant No. 1 was that defendant No. 1 had presented and got discounted the bill after duly endorsing them in favour of the plaintiff and at the time of presenting and getting discounted these bills, defendant No. 1 was accompanied by defendant No. 2, from which it can well be inferred that he was in league with defendant No. 2 which get further fortified from the fact that the amount of the bills Nos. 1 and 2 were got transferred by him from his account to the account of defendant No. 2. Therefore, it should be held that defendant No. 1 is also liable for the amount of the bills along with defendant No. 2.

14. Learned counsel for defendant No. 1 in his argument in counter reiterated the reasonings of the trial Court, inter alia, the contention that from account Ex. P-15. it is clear that there was no amount due and payable by defendant No. 1 in his account.

15. The discussion by the trial Court on the question of liability of defendant No. I is contained in discussion of Issues Nos. 1 (a) to 4 (c) and 10, in paragraphs 10 to 28. With regard to the transfer of the amount of Bills No. 1 and No. 2 from the account of defendant No. 1 and defendant No. 2 it would be of material significance to point out that there is an omission to file the material document and a variance in the pleadings and proof on the part, of the plaintiff. In paragraph 4 of the plaint, the plaintiff has alleged 'and so a sum of Rs. 11464/- was credited to the account of the defendant No. 1 who directed in writing to the plaintiff to transfer this amount t,o the account of defendant No. 2 and so it was complied.' With regard to bill No. 2, the allegations contained in paragraph 4 (b) of the plaint is--'The said demand draft for Rs. 12,500/- drawn on M/s. Bajranglal Agrawal of Hubli was discounted for Rs. 12,500/- and this amount was paid by the plaintiff to the defendant No. 1 who signed both the aforesaid documents in favour of the plaintiff.'

16. What is to be impressed upon is that with regard to the second bill, neither there was a pleading that there was any instruction either in writing or oral from defendant No. 1 to transfer this amount from his account to the account of defendant No. 2 nor there was any allegation that this amount was transferred to the account of defendant No. 2 from the account of defendant No. 1. Now it is an admitted position that no written instruction, as alleged with regard to the first bill has been placed on record nor there ia any explanation for its non-production. In the evidence of the bank accountant, R. S. Pare (P. W. 1) it has been brought out on behalf of the plaintiff that on the direction of defendant No. 1, the amount of bills Nos. 1 and 2 was transferred to the account of defendant No. 2 from the account of defendant No. 1 and regarding which the Bank Manager. Shri L. R. Shri-vastava had issued transfer vouchers, Ex. P-5, Ex. P-6, Ex. P-9 and Ex. P-10. It is true that from the vouchers Ex. P. 5, Ex. P. 6, Ex. P. 9 and Ex. P. 10, coupled with the account Ex. P. 15. it appears that the amount of these bills Nos. 1 and 2 were first credited in the account of defendant No. 1 and then transferred to the account of defendant No. 2 on the very dates, that is, 28-2-1970 and 10-3-1970? but there are no signatures of defendant No. 1 on any of these documents. Neither in any of these transfer vouchers Ex. P. 5, Ex. P. 6, Ex. P. 9 and Ex. P. 10, there is a mention that transfer entries were being effected as per the instructions of defendant No. 1. It would also be pertinent to point out that with regard to bill No. 2 in the plaint it is alleged that on discounting, the amount was paid to defendant No. 1, whereas the documents Ex. P. 9 and Ex. P. 10 and the account Ex. P. 15 indicate that there was no payment to defendant No. 1 but a mere credit entry in the account of defendant No. 1. There is yet another important fact which negatives the case of the plaintiff about the transfer in defendant No. 2's account at the instruction of defendant No. 1. R. S. Pare (P.W.1) has in his examination-in-chief, stated that the amount of these two bills was transferred at the instructions of defendant No. 1; but this part of his version is impaired from his own statement in cross-examination. In cross-examination, he has admitted that except the instructions mentioned in pay-in-slips, that is Ex. P. 4 and Ex. P. 8, there was no other instruction given by defendant No. 1, to quote:--

(Matter in Hindi omitted -- Ed.)

In Ex. P. 4, which relates to bill No. 1 and in Ex. P. 8 which relates to bill No. 2, it is found that there are no such instructions. On the contrary, at item Nos. 6 and 7, instructions are to credit the proceeds in the account of defendant No. 1. We are, therefore, of the opinion that the finding of the trial Court that the transfer of the amount of bills Nos. 1 and 2 from the account of defendant No. 1 to the account of defendant No. 2 was not at the instructions of defendant No. 1, calls for no interference.

17. With regard to the bills (Ex. P. 11 and Ex. P. 12), the plaintiff's witness Shivram Namdeo (P. W. 2) has deposed that regarding them an entry, in the register of drafts-purchase, was made at serial Nos. 543 and 544 and the respective amounts of Rs. 16000/- and Rs. 12000/- of these bills were credited to the account of defendant No. 1 on the day they were presented. He further deposed that on that day a credit entry of Rs. 1760/- was also made in defendant No. 1's account, the same amount being transferred from the account of defendant No. 2 and that on that very day, that is, 27-4-70 Rs. 46,260/-were debited in the account of defendant No. 1 in respect of the bills that had returned unpaid. This account of defendant No. 1 is Ex. P. 15. Thus, from the evidence Of Shivram Namdeo (P. W. 2), it appears that whenever the bill was discounted a credit entry was made in the account of defendant No. 1 and when it was returned unpaid that entry was reversed by debiting the account of defendant No. 1, On the perusal of the account (Ex. P. 15), it is clear that there is nothing due in that account from defendant No. 1. No evidence was pointed out to us to indicate that amount of bills (Ex. P. 11 and Ex. P. 12) was paid to the defendant No. 1 or that against the credit of these bills in his account any money was drawn by defendant No. 1 .....In such a situation as held by the trial Court, no liability can be cast on defendant No. 1. Further on plaintiff's own showing these bills (Ex. P. 11 and Ex. P. 12) were given to plaintiff in lieu of the amount that was due to the plaintiff in respect of bills Nos. 1, 2 and admittedly the amount of those bills was transferred from the account of defendant No. 1 to the account of defendant No. 2 and as found by us, it was without the instructions of defendant No. 1. In such a situation defendant No. 1 cannot be held liable, in respect of any of these four bills. For these reasons, we are unable to persuade ourselves to take a view contrary to the one taken by the trial Court, The trial Court has arrived at this finding on the evaluation of the evidence on record and as on the perusal of the evidence on record, we are affirming its finding, we do not find it necessary to restate the effect of the evidence and reiterate the reasonings of the trial Court. We may state here that there is no foundation for the plea of any league between defendants Nos. 1 and 2 in the plaint. Hence the argument of the learned counsel regarding league between these defendants cannot be entertained.

18. We now turn to the consideration of the question of liability of defendant No. 3, the Railway. The trial Court has decided the question of liability of defendant No. 3 on the basis of Section 57 of the Indian Railways Act (hereinafter referred to as 'the Act'). The approach of the trial Court is under a misconception of the legal position. We may here point out that Section 57 appears in Chapter VI intituled 'Working of Railways'. This section as its language also suggests has nothing to do with the responsibility of the Railway Administration. When the receipt is not forthcoming this section enables the railways 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 person with respect to the goods, who may subsequently be found or adjudged to be entitled to them. It is Chapter VII intituled as 'Responsibility of Railway Administration as Carriers' which deals with the subject of responsibility of a railway administration. In this Chapter Section 73 defines the general responsibility of a railway administration amongst others for non-delivery of the goods. The subsequent sections in this Chapter are like proviso or exception to the general responsibility laid down in Section 73 of the Act. Thus, it follows that if any case falls within the particular provisions of a section, following Section 73, that section will apply to the exclusion of the provision defining the general liability of the Railway. Section 73 of the Act reads as under:

'73. General responsibility of a railway administration as a carrier of animals and goods -- Save as otherwise provided in this Act, a railway administration shall be responsible for the loss, destruction, damage, deterioration or non-delivery, in transit, of animals or goods delivered to the administration to be carried by railway, arising from any cause except the following, namely :--

(a) act of God;

(b) act of war;

(c) act of public enemies;

(d) arrest, restraint or seizure under legal process;

(e) orders or restrictions imposed by the Central Government or a State Government or by any Officer or authority subordinate to the Central Government or a State Government authorised in this behalf;

(f) act or omission or negligence of the consignor or the consignee or the agent or servant of the consignor or the consignee;

(g) natural deterioration or wastage in bulk or weight due to inherent defect, quality or vice of the goods;

(h) latent defects;

(i) fire, explosion or any unforeseen risk;

Provided that even where such loss, destruction, damage, deterioration or nondelivery is proved to have arisen from any one or more of the aforesaid causes, the railway administration shall not be relieved of its responsibility for the loss, destruction, damage, deterioration or non-delivery unless the railway administration further proves that it has used reasonable foresight and care in the carriage of the animals or goods.' On a plain reading of the section, it is clear that except in cases where any cause out of the causes enumerated in Clauses (a) to (i) is present the responsibility of the railway is absolute. Here again it would be pertinent to say that a combined reading of the principal provision along with the proviso makes it clear that even in cases where loss etc. is proved to have arisen from any of the causes enumerated in Clauses (a) to (i), the railway will be held liable unless it proves that it had used reasonable foresight and care. In short the character of liability of the railway is that of an insurer.

19. In the back-drop of the aforesaiddiscussion, we proceed to consider whether plaintiff's case is covered under Section 73 of the Act. It is undebatable that Section 2(4) of the Sale of Goods Act makes it clear that a railway receipt is a document of title; a mercantile document of title and an endorsee thereof would be the owner of the goods covered by it. It is beyond dispute before us that the plaintiff was the endorsee of the railway receipts Ex P. 3 and Ex. P. 7. In this state of fact and the law just discussed above, plaintiff was the owner of the goods covered under the railway receipts and entitled to the delivery of the goods.

20. The learned counsel for the parties were unable tc point out the dates when the goods reached the destination station, the dates of delivery of goods to defendant No. 2 and also that the goods were delivered to defendant No. 2 prior to the dates of endorsements of the respective railway receipts is in favour of plaintiff. It cannot be gainsaid that defendant No. 3 could alone be in possession of the documents to prove these facts.

21. Under Section 73 quoted-above, therailway is liable 'for the loss, destruction, damage, deterioration or non-delivery in transit.' The expression 'in transit' has been used to indicate the responsibility of the railway in respect of the period up to the termination of transit. When the transit terminates has been indicated in Clause (a) of Sub-section (5) of Section 77 of the Act. It says 'unless otherwise previously determined, transit terminates on the expiry of the free timeallowed (after the arrival of animals or goods at destination) for their unloading from railway wagons without payment of demurrage, and where such unloading has been completed within the free time so allowed, transit terminates on the expiry of the free time so allowed for the removal of the animals or goods from railway premises without payment of wharfage :'

22. Section 77 of the Act deals with the responsibility of a railway administration after termination of transit. The period of time after the termination is divided into two distinct periods of time (1) within 7 days and (2) after seven days of the termination of transit. Sub-section (1) of Section 77 of the Act lays down that for loss, etc. of the goods within 7 days the liability of the railway would be that of a bailee; but for goods carried at owner's risk rate it shall be liable only on proof of negligence or misconduct. Sub-section (2) of Section 77 of the Act lays down that the railway administration shall not be liable for loss etc. after the expiry of 7 days after termination of transit. Thus, this Section 77 which is also in Chapter VII alters or varies the absolute liability of the railway under Section 73 of the Act. In this view of the matter, if the railway, defendant No. 3 wanted to take advantage of Section 77 of the Act, it was obligatory on it to have pleaded as to what was the free period allowed when the goods had actually reached and were actually delivered.

23. It is a fact that goods have not been delivered to plaintiff; who has been held to be entitled to; so it is a case of non-delivery and as defendant No. 3 who was possessed of the requisite information about the termination of transit to take benefit of alteration of its absolute liability under Section 73 of the Act; has neither pleaded nor placed necessary facts therefore; we have to infer that the non-delivery was in transit. We may make it clear that delivery to a wrong person, in the instant case to defendant No. 2, would not take the case out of the ken of the expression 'non-delivery' so far as the plaintiff is concerned.

24. Defendant No. 3 has not pleaded facts to escape its absolute liability under Section 73 of the Act and as such we have no other alternative but to hold the railway, defendant No. 3 liable to plaintiff for non-delivery of the goods covered under railway receipt(s) Ex. P3 and Ex. P. 7. The question then arises as to what should be the amount for which it should be held liable. The argument of the learned counsel for defendant No. 3 was that defendant No. 3 could not be liable for more than the amount of the cost price of the goods and there is no proof for that. It is clear from the record that Rs. 28000/- which is the amount of bill Ex. P. 11 and Ex. P. 12 does not represent the cost price of the goods as entries for those very goods in the bills Nos. 1 and 2 were for Rs. 11,500/- and Rs. 12,500/- that is, Rs. 24000/-. Defendant No. 2 having drawn bills Nos. 1 and 2 initially in respect of the goods, it can safely be taken to be the cost price of the goods. The plaintiff has not pleaded the market price of the goods on the date on which the goods ought to have been delivered at the destination station. We are of the opinion that the railway, defendant No. 3 should be held liable for the cost price Rs 24,000/-. (See Union of India v. Asharfi Devi, AIR 1957 Madh Pra 114).

25. In the light of the foregoing discussion, the decree of the trial Court partially dismissing the suit of the plaintiff against defendant No. 1 is confirmed so far as it relates to defendant No. 3, it is reversed and the plaintiff's suit against defendant No. 3 stands decreed to the extent of Rs. 24,000/- with interest on this amount at the rate of 6 per cent per annum from the date of the decree of this Court till realisation for which amount and proportionate cost, defendant No. 3 shall be jointly and severally liable with defendant No. 2. The appeal is disposed of as indicated herein-above. The decree of the trial Court be modified and drawn as indicated herein above.


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