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The Union of India (Uoi) Vs. Firm LaxminaraIn Harnarain - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 53 of 1955
Judge
Reported inAIR1963Raj162
ActsSale of Goods Act, 1930 - Sections 23(1); Railways Act, 1890 - Sections 72 and 74C; Contract Act, 1872 - Sections 151, 152, 160 and 161; Booking of Goods Traffic Rules - Rules 32, 45 and 47
AppellantThe Union of India (Uoi)
RespondentFirm LaxminaraIn Harnarain
Appellant Advocate S.K. Agarwal, Adv.
Respondent Advocate B.K. Bhargava and; B.K. Acharya, Advs.
DispositionAppeal partly allowed
Cases ReferredBhikraj Jaipuria v. Union of India
Excerpt:
- - in this case also an examination of the railway receipt by the naked eye did not create any suspicion and consequently the delivery clerk granted delivery of the consignment unsuspectingly in the ordinary routine in good faith. 1, he found that the plaintiffs' evidence clearly proved that the plaintiffs firm had purchased 570 bags of rapeseeds which were consigned from b. on the other hand, the facts proved, on the record clearly negative any such appropriation. the railway receipt was endorsed by p in favour of a third party. it was then endorsed successively to various persons till it reached s. thereafter s endorsed the receipt in favour of p. ' the principle of the bombay case clearly applies to the facts of the present case and we see no force in the argument of mr. at a later.....chhangani, j.1. this is an appeal by the defendants union of india through the general manager, northern and western railways, against the judgment and decree of the district judge, alwar, dated the 4th july, 1955, decreeing the plaintiff-respondent's suit for an amount of rs. 48,349/11/3 with proportionate costs and allowing two months time within which the defendants should pay the decretal amount.2. the plaintiff-respondents instituted a suit on the 6th july, 1951 in the court of district judge, alwar, against the union of india, represented through the general manager, east india railway, calcutta and the general manager, b.b. and c.i. railway, bombay , predecessors-in-interest of the present railways. the plaintiffs put forward their case in the plaint as follows:they described.....
Judgment:

Chhangani, J.

1. This is an appeal by the defendants Union of India through the General Manager, Northern and Western Railways, against the judgment and decree of the District Judge, Alwar, dated the 4th July, 1955, decreeing the plaintiff-respondent's suit for an amount of Rs. 48,349/11/3 with proportionate costs and allowing two months time within which the defendants should pay the decretal amount.

2. The plaintiff-respondents instituted a suit on the 6th July, 1951 in the Court of District Judge, Alwar, against the Union of India, represented through the General Manager, East India Railway, Calcutta and the General Manager, B.B. and C.I. Railway, Bombay , predecessors-in-interest of the present railways. The plaintiffs put forward their case in the plaint as follows:

They described themselves as partners of a firm known as Laxminarain Harnarain, registered under the provisions of the Partnership Act. Their firm used to carry on business at Kedalganj, Alwar. Their case was that on 13th October, 1950 they despatched from Alwar Station 270 bags of rape-seedsweighing 610 maunds and 35 seers through Invoice No. 1, R. R. No. 80597 for Allahabad Station through B.B. and C.I. Railway. The goods were consigned in favour of self. Similarly, on 14th October, 1950, the plaintiffs booked another consignment from Alwar Station of 300 bags of rapeseeds weighing 678 maunds and 30 seers through Invoice No. 3, R. R. No. 80614 dated 14th October, 1950 for Allahabad Station. These bags were also consigned in favour of self. The plaintiffs sent the railway receipts through the United Commercial Bank Ltd., Alwar Branch, to the said bank at Allahabad, with instructions to hand over them to Nand Kishore on payment of the full price of the goods consigned. Although the plaint does not contain the necessary allegations, it appears that Nandkishore did not pay the price of the goods to the bank and did not obtain the railway receipts from the bank with the result that the railway receipts were sent back to the plaintiffs, but these allegations are not in dispute and have been mentioned here to give a correct picture of the case. The plaintiff's case further is that their representative went to Allahabad Station to obtain delivery of the consignments through these railway receipts on 1st November, 1950 and several times thereafter, but the defendant, the East India Railway, did not give delivery of the goods nor did it make any note of production of these railway receipts or of refusal of delivery of goods on these railway receipts. The plaintiffs thereupon served the railways initially with a notice under Section 77 of the Indian Railways Act and thereafter with another notice under Section 80 of the Code of Civil Procedure and then filed the present suit. The plaintiffs claimed compensation as under:

(a) Rs. 48,345/12/3 being the cost of 570 bags of rape-seeds pertaining to R/R Nos. 80597 and 80614;

(b) Rs. 4,834/9/- being the probable profits at approximate rate of 10% on the cost of goods which the plaintiffs would have earned;

(c) Rs. 2,864/8/- being the interest by way of compensation on the cost of goods as the plaintiffs' money was blocked due to non-delivery of the goods; and

(d) Rs. 3/15/- as expenses of notices.

3. The total amount thus claimed was Rs. 56,048/12/3. Both the railways as defendants filed separate written statements. They admitted that the goods as mentioned by the plaintiffs were consigned by the plaintiffs from Alwar to Allahabad in their own favour. They also did not dispute the fact that the goods could not be delivered to the plaintiffs. They, however, denied their liability for compensation. Their main plea for escaping the liability was fully described in their additional pleas as follows:

'That enquiries made by the railway administration so far reveal that a gang of cheats, one of whom represented himself as Seth Nand Kishore, proprietor of a bogus firm styled as 'Brijlal Nandkishore', the other as Pannalal, Manager of the said firm and so on, visited Alwar and asked the plaintiffs to purchase a big lot of rapeseeds on their behalf. They paid a sum of Rs. 501/- or so to the plaintiffs and requested them to despatch 570 bagsof rapeseeds out of the lot purchased to Allahabad and present the Railway Receipts and hundis to them there through Bank.'

Their further case was that the plaintiffs acting on the representations of the said cheats booked the suit consignment. The cheats, according to the defendants, got booked six bags of oil cakes under five different railway receipts under the name of Messrs. Pannalal Ramlal, Suchit House, SeshdhamRoad, Alwar, as senders to self as detailed in para 16 of the written statement. The defendants' further case was that after obtaining the railway receipts pertaining to the consignment of oil cakes, the culprits erased numbers and some other particulars of two of the railway receipt numbers 80606 and 80610 dated 13th October, 1950 relating toconsignments booked to Phaphund and Mirzapur respectively and forged the particulars of railway receipt numbers 80597 dated 13-10-50 and 80614 dated 14-10-50 into the said railway receipts. The consignments arrived at Allahabad on 21-10-50. The same day one Gangaprasad, a representative of Messrs. Rameshwar Oil Mills, Allahabad, presented Railway Receipt No. 80597 dated 13-10-50 (which subsequently turned out to be a forged Railway Receipt) to the goods clerk, Allahabad and demanded delivery of the consignment. Since Messrs. Rameshwar Oil Mills were a well-known party and their representative Gangaprasad had been visting the railway and taking delivery of consignments on behalf of his employers every now and then for a number of years and an examination of the Railway receipt by the naked eye did not create any suspicion, the delivery clerk granted delivery of the consignment unsuspectingly in the ordinary routine in good faith. Similarly, on 22-10-50 one Panalal accompanied by the said Gangaprasad, representative of Messrs. Rameshwar Oil Mills, presented Railway Receipt No. 80614 dated14-10-50 (which subsequently turned out to be a forged one) to the goods clerk, Allahabad and demanded delivery of the consignment. The said Gangaprasad also represented to the goods clerk that the goods relating to the Railway Receipt had been purchased by Messrs. Rameshwar Oil Mills and that the said Panalal was the manager of the consignor firm Messrs. Laxminarain Harnarain. In this case also an examination of the Railway Receipt by the naked eye did not create any suspicion and consequently the delivery clerk granted delivery of the consignment unsuspectingly in the ordinary routine in good faith. Thus the defendants pleaded loss of goods in spite of all reasonable care.

The defendants also disputed the plaintiffs' ownership of the consigned goods and pleaded that the suit at their instance was not maintainable. The defendants did not admit the amount of compensation and tried to shift the burden on the plaintiffs to prove all that.

4. On the pleadings of the parties, the trial Judge framed the following seven issues:

(1) Are the plaintiffs owners of the suit consignments and have they locus standi to sue?

(2) Whether the suit goods have been lost on account of misdelivery in spite of due care as is required of the bailee and what is its effect?

(3) In case, issue No. 2 is proved in the affirmative, have the suit goods been lost onaccount of negligence or misconduct on the part of the Railway Administration or its servants?

(4) Have the plaintiffs and their Bankers been negligent in their conduct with respect to the consignments in suit and has their conduct contributed to the delivery of the consignments to the wrong persons. If so, what is its effect?

(5) Are the plaintiffs and their Bankers guilty of laches and delays. If so, what is its effect?

(6) To what compensation, if any, are the plaintiffs entitled?

(7) Are the plaintiffs entitled to any interest.

If so, at what rate.

After recording the evidence of the parties, the trial Judge arrived at the following findings:

With regard to issue No. 1, he found that the plaintiffs' evidence clearly proved that the plaintiffs firm had purchased 570 bags of rapeseeds which were consigned from B.B. and C.I. Railway at Alwar Railway Station in two consignments on 13-10-50 and 14-10-50 through Railway Receipts Nos. 80597 and 80614 respectively for being transported to Allahabad Station of the East India Railway. The learned Judge no doubt found that the goods were purchased by the plaintiffs firm at the Instance of the manager of the firm styled 'Brijlal Nandkishore' and that the plaintiffs firm had received Rs. 501/- and had debited the price of the rapeseeds to the account of the Brijlal Nandkishore and still the trial Judge held that the plaintiffs having consigned the goods in their own favour retained their title and ownership in the goods and that they had the right to take delivery of the goods and to sue the defendants in case the goods were not delivered to them. Issue No. 1 was thus decided in favour of the plaintiffs.

5. As regards issue No. 2, the trial judge, in the first instance, stated the legal position in the following manner:

(1) Under Sections 152 and 161 of the Indian Contract Act, the railway must take such care of goods as a man of ordinary prudence would take of his own goods;

(2) The loss or damage of goods entrusted to the bailee is prima facie evidence of negligence and the burden of disproving negligence lies on the bailee and further this burden also lies on the Railway Administration in the absence of a contract to the contrary;

(3) The word 'loss' appearing in Section 72 of the Indian Railways Act must be given the wider meaning so as to include both loss to the railway as also loss to the owner and the object of the Act is not merely to protect railways but also to protect consigning public and the constructive loss such as non-delivery etc. should also be included in the word 'loss'.

6. The learned Judge then referred to certain rules of the Traffic Manual as also of the Audit Manual of the B.B. and C.I. Railway, particularly Rule 47 of Chapter II -- Goods of the Audit Manual, and purported to hold that the Junction Invoice having not been received at the Allahabad Railway Station upto the time of the delivery, the delivery clerk ought not to have parted with theThrough Invoice and ought to have retained it for the purposes of comparing it with the railway receipts before effecting delivery of the consignment. He also observed that the Goods Clerk Atmaram ought to have looked at the railway receipts carefully as a prudent and ordinary man would have done while making delivery and that he was not justified in looking at the railway receipts only cursorily. It was further observed by him that when the Junction Invoice was not there, the delivery clerk ought to have taken particular care that the railway receipts were genuine in every respect and did not show any signs of having been tampered with or being bogus receipts, and this could only have been done had the delivery clerk cared to look at the Through Invoices and compared them with the railway receipts presented to him. The clerk concerned, he observed, was certainly guilty of negligence or dereliction of his duty in not looking at the railway receipts carefully. As to the nature of the forgery effected in the two railway receipts C.W.5/2 and C.W.6/1, the trial Judge on his own perusal of the two admittedly forged receipts and the genuine receipts noted that in the forged receipts there appears clear tampering in Railway Receipt C.W.5/2 at points C and E marked by him with red pencil and in the railway receipt C.W.6/1 there are big green and blue ink spots at four places. According to the trial Judge, these things apparently should have created suspicion in the mind of the delivery clerk even, if he had not cared to compare these railway receipts with the Through Invoices. He referred to the evidence of the two hand-writing experts, one produced by the plaintiffs and the other by the defendants, but did not record any definite opinion as to whose evidence is preferable and he based his decision on his own comparison of the forged railway receipts with the genuine railway receipts by observing that the forgeries were of such a nature that they could have been detected even by a layman on a proper scrutiny. In the result, the trial Judge recorded a definite conclusion that the suit goods were lost on account of the mis-delivery and the defendants' employees did not take due care as was required of them to take. Issue No. 2 was thus decided against the defendants.

7. Issue No. 3 was also decided by the trial Judge against the defendants on a consideration of the findings arrived at in connection with issue No. 2.

8. In coming to issue No. 4, the trial Judge dealt with the question as to how the cheats who prepared the forged railway receipts could obtain particulars of the genuine railway receipt and recorded a conclusion that it was not clear from the record as to how the cheats came to know of the contents of the original railway receipts. Evidently, the trial Judge was not prepared to hold the plaintiffs responsible in this connection. Issue No. 4 was, therefore, decided with the observation that there was no satisfactory evidence on record to prove that the plaintiffs and their bankers were negligent in their conduct with respect to the consignments in suit.

9. In connection with issue No. 5, the defence had taken the stand that the plaintiffs had not sent any information to the railway that the railway receipts had been sent through a bank nor did thebank send any such information to the railway. The plaintiffs also came forward for delivery at a very late stage. The trial Judge held that these circumstances were not sufficient to establish that the plaintiffs or their bankers were guilty of any laches or delays which contributed to the mis-delivery of goods to cheats. Dealing with the amount of compensation payable to the plaintiffs, the trial Judge merely allowed the original cost of the goods to the plaintiffs. The plaintiffs claim for probable profits and interest was not held proved and was disallowed. On these findings the trial Judge gave a decree in favour of the plaintiffs in the terms already mentioned earlier. The defendants felt aggrieved by the decision of the trial Judge and hence the present appeal.

10. Mr. S. K. Agarwal appearing on behalf of the defendants-appellants, addressed very elaborate arguments touching the various aspects of the case and took us through the various rulings bearing on the controversy and the relevant evidence on record. He also cited a number, of English and Indian cases in the course of his arguments. Mr. B. K. Bhargava and thereafter Mr. B. K. Acharya appeared on behalf of the plaintiffs-respondents and supported the judgment of trial Court. We do not propose to summarise at one place the arguments of Mr. Agarwal and we propose to refer to them at appropriate places while dealing with the various points raised for our determination in this appeal.

11. In the first instance, Mr. Agarwal very vehemently contended that the suit by the plaintiffs was not maintainable. He contended that the plaintiffs having purchased the goods on behalf of the firm Brijlal Nandkishore and having accepted Rs. 501/- from them and having debited the amount of the goods to their account, they could not have retained the title and ownership in the goods. The title and ownership, according to him, stood transferred in favour of the firm Brijlal Nandkishore and consequently the plaintiffs had no locus standi to file the suit for recovery of the damages.

12. We have given our careful consideration to the argument advanced by Mr. Agarwal, but we feel quite unable to accept it. It is true, as admitted by the defendants, that the plaintiffs had accepted Rs. 501/- on behalf of the firm Brijlal Nandkishore. It is also true that the plaintiffs had debited the amount to the account of the said firm. These circumstances are, however, wholly insufficient to justify a conclusion that the plaintiffs had lost their title and interest in the goods and the title and ownership had stood transferred in favour of the firm Brijlal Nandkishore. In this connection, we may usefully refer to the following facts which are indisputable and have not been disputed. The plaintiffs did not hand over the railway receipts either to Nandkishore or Panalal. On the other hand, they rent them to the bank and desired that they be handed over to the purchaser only on payment of the price of the goods. The goods were also consigned by the plaintiffs in their own favour. These facts cannot, but in our opinion, be conclusive evidence of the plaintiffs' intention not to part with their title and ownership until the receipt of the price of the goods.

It may also be mentioned that on the defendants' own saying there is no real firm, styled as BrijlalNandkishore and that this firm was mentioned by the cheats in order to practise fraud upon the plaintiffs. II this, is the true position, then we are Wholly unable to accept that the plantiffs should be deemed to have divested themselves of the title and ownership of the goods.

Mr. Agarwal relied upon Section 23(1) of the Indian Sale of Goods Act and contended that the goods having been unconditionally appropriated to the contract by delivery of the goods to the railway for transmission to the buyer, the property in the goods should be treated as having passed on to the buyer. In this connection, he also relied upon the entries in the plaintiffs' account books debiting the amount to the account of the buyer. It may be observed in the first instance that a proper factualbasis for the argument on law advanced by Mr. Agarwal has not been made out. No evidence has been led to show that the goods were ever unconditionally appropriated to the contract. On the other hand, the facts proved, on the record clearly negative any such appropriation. The fact that the plaintiffs consigned the goods in their own favour is wholly inconsistent with a case of unconditional appropriation set up by the plaintiff at this stage.

We may also refer, in this connection, to Shamji Bhanji and Co. v. North Western Rly. Co., AIR 1947 Bom 169. In that case P sold certain goods to S. The goods were to be supplied to S at Peshawar. P entrusted the goods to a railway company to be carried to Peshawar at Railway risk. The company issued a railway receipt in P's name as the goods were consigned by P to himself at Peshawar. A clause in the notice to consignors printed at the back of the railway receipt was as follows:

'If the consignee does not himself attend to take delivery, he must endorse on the receipt a request for delivery to the person to whom hewishes it to be made and if the receipt is not produced, the delivery of the goods may, at the discretion of the railway company, be withheld until the person entitled in its opinion to receive them has given an indemnity to the satisfaction of the railway company'. P paid the freight. The railway receipt was endorsed by P in favour of a third party. It was then endorsed successively to various persons till it reached S. While S was the endorsee the goods were destroyed by fire in transit. Thereafter S endorsed the receipt in favour of P. In the Suit by P against the railway for loss of goods, it was contended that P had no title to maintain the suit.

On these facts, Bhagwati, J. held, that:

'(1) even though a railway receipt was a document of title to goods a mere endorsement of a railway receipt was not by itself enough to transfer the property in the goods represented by the receipt to the endorsee thereof. Without anything more, the endorsement of the railway receipt only constituted the endorsee the agent of the consignee for the purpose of taking delivery of the goods, represented by the receipt, from the railway company. The successive endorsements of the receipt merely constituted the successive endorsees the agents of the consignee for taking delivery of the goods from the railway company and the re-endorsment by the last endorsee S in favour of the consignee P only re-invested in P. his original right to take delivery of the goods.

(2) the endorsement created rights, if any, between the endorser and the endorsee inter se. It created no rights between the endorsee and the railway which had issued the railway receipt to the consignee the only remedy of the endorsee being against the endorser;

(3) P did not unconditionally appropriate the goods to the contract for sale but reserved the right of disposal, in so far as he obtained the railway receipt in respect of the goods in his own favour as consignee, until certain conditions were fulfilled namely the price of the goods was paid by S as against the receipt of the goods by him from the Railway at Peshawar. Therefore, notwithstanding the delivery of the goods to the railway for transmission to S the property in the goods could not pass to S until the conditions imposed by P were fulfilled. As the price was not paid by S the property in the goods never passed to him under Section 25, Sale of Goods Act; and

(4) as the property in the goods never passed from P to S, P alone was entitled to sue the railway for compensation for loss of the goods represented by the railway receipt because he alone had entered into the contract of carriage with the railway company.'

The principle of the Bombay case clearly applies to the facts of the present case and we see no force in the argument of Mr. Agarwal based on Section 23(1)of the Sale of Goods Act.

13. Mr. Agarwal had hinted during the course of his arguments that the trial Judge committed a mistake in dismissing his application praying for addition of Nandkishore and Panalal and Messrs. Rameshwar Oil Mills, as defendants to the suit. At a later stage, he conceded that these persons, at the best were proper parties and cannot be considered necessary parties and that their non-joinder cannot be fatal to the present suit. We, therefore, do not consider it necessary to go into this question any further.

14. A great controversy was raised in relation to issue No. 2. It was submitted that the trial Judge did not correctly appreciate the nature of the ralways' liability. Section 72 of the Indian Railways Act defines the liability of the railway as a bailee but subject to the other provisions of the Act. Relying upon Section 74C of the Railways Act, it was pointed out that in the absence of any writing showing that the sender or his agent elected to pay the railway risk rate, the consignor shall be deemed to have tendered the goods at the owner's risk and that on the assumption that the goods were tendered to the railway to be carried at the owner's risk, the railway administration shall not be responsible for any loss, destruction or deterioration of or damage to such goods from any cause whatsoever except upon proof that such loss, destruction, deterioration or damage was due to negligence or misconduct on the part of the railway administration or of any of its servants. On these points, it was argued, that issue No. 2 was not properly framed so as to place the burden upon the defendants to prove that the railway had not exercised due and reasonable care.The issue should have been so framed as to place the burden upon the plaintiffs to prove negligence or misconduct on the part of the railway administration of any of its servants.

Reference was also made in this connection to the forwarding note which is Ex. D.W.7/1 which does not contain any exercise of election by the plaintiff to pay at the railway risk or owner's risk. In order to appreciate the contention, it will be necessary to refer to the pleadings of the parties.

The plaintiffs in their plaint did not specifically state whether the goods were consigned at the railway risk or at the owner's risk, but generally sought to hold the defendants responsible as bailees. The defendants in their written statements also did not plead that the goods were consigned at theowner's risk nor did they rely upon any presumption arising under Section 74C of the Indian Railways Act and a consequent restriction or curtailment of their ordinary and normal liability. On the pleadings, the trial Judge framed issue No. 2 treating the railway as ordinary bailee subject to normal and ordinary liability and placed the burden upon the defendants. The defendants did not at any stage object to the framing of the issue as also to the placing of the burden on them and they took upon themselves the responsibility of proving that as bailee they exercised all reasonable and proper care and that the goods were lost to the owner in spite of the best care taken by them. In the absence of any pleadings placing reliance upon Section 74C of the Railways Act, we are of the opinion that the issue was properly framed and the burden was rightly placed upon the defendants.

We may also point out that in order to attract the applicability of Section 74C, it is necessary to find that the railway had quoted two different rates, one for goods consigned at the owner's risk and the other for goods consigned at the railway risk. In view of the manner in which the evidence was led, it was not possible for the parties to have brought on record proper material to establish whether the railway had prescribed two kinds of rates for rapeseeds which were in force in October, 1950. Mr. Acharya brought to our notice the Goods Tarrifs, Part I-A for the year commencing from December 1, 1950, which shows that the railway had not prescribed two rates for the rapeseeds. We have no doubt that the defendants having raised no controversy at the proper stage and the present argument involving an investigation of questionsof facts, they cannot be allowed to set up this plea at this stage, and we hold that the issue was properly framed and the burden was rightly placed upon the defendants. We may also observe that the defendants having accepted the burden and having led evidence, they cannot be allowed to turn found at this late stage.

Mr. Agarwal did not challenge the legal position stated by the trial Judge in the form of the three propositions indicated earlier, but he very strongly contended that the trial Judge was wholly Wrong in holding that under the rules the delivery clerk was bound to compare the railway receipt either with the Through Invoice or with the Junction Invoice before effecting the delivery. His argument is that the rules, in the first instance, donot require such comparison. We may at this stage refer to the relevant rules bearing upon the controversy. Rule 37 of Chapter XI -- Booking of Goods Traffic -- of the Traffic Manual of the B.B. and C.I. Railway provides that all combined invoice and receipt books must be kept under lock and key, in personal charge of the Station Master or Chief Goods Clerk and when issuing receipts the staff must bear in mind that they were granting receipts for money, and that the greatest care is therefore necessary in the preparation. This rule merely emphasises the importance of these railway receipts, but does not throw any specific light on the controversy before us.

Rule 41 provides that invoice must be despatched on the day they are issued. It may be propes to infer from this rule that the railway administration contemplates that the invoices should be despatched immediately so that the destination railway may be informed of the consignments and may remain alert in the matter of effecting deliveries under the railway receipts.

Then we may refer to the most important Rule 47 of Chapter II -- Goods of the Audit Manual of the B.B. and C.I. Railway, the relevant portion of which reads as under:

'47. Procedure to be followed when a Through Invoice is not to hand -- The following procedure will be followed when a through invoice is not to hand:

(a) If at the time of delivery the through invoice has not been received, the junction invoice should be endorsed in red ink at the destination station with the words 'Through invoice not received' and the junction invoice should take the place of the through invoice.

(b) If both the through and the junction invoices are not to hand a true copy of the receipt note should be prepared and certified as such (provided that the receipt note appears to be genuine in every respect and docs not show any signs of having been tampered with or being a bogus receipt) and submitted to the Audit Department in place of the through invoice.

(c) xx xx xx

(d) xx xx xxIt is true that this rule does not specificallyrequire the delivery clerk to make comparison ofthe railway receipt either with the Through orJunction Invoice. But the rule contemplates thepresence of either) the Junction Invoice or theThrough Invoice at the time of effecting delivery andalso of the desirability of a comparison of the railway receipt with either of them before effecting delivery. This inference is easily deducible from Rule47(b) which provides that if both theThrough and the Junction Invoices are not tohand, the delivery clerk is required to prepare atrue copy of the receipt note and certify it beforeeffecting delivery. It further provides that beforeeffecting delivery the delivery clerk should takecare to satisfy himself that the receipt note appears to be genuine in every respect and does notshow any signs of having been tampered with orbeing a bogus receipt. This caution prescribed forthe railway delivery clerk contemplates the possibility of somebody practising a fraud or a deception upon the railway in the absence of theJunction Invoice or Through Invoice and the absence of an opportunity of comparison of the railway receipt with the Junction Invoice or the Through Invoice. It does therefore indicate that ordinarily the delivery clerk should be in a position to, safeguard the railway against fraud or deception by comparing the railway receipt with the Junction Invoice or the Through Invoice. In our opinion, it should follow from the above that if for any reason Junction Invoice is not available for comparison, the delivery clerk should utilise the Through Invoice for this purpose and if necessary by delaying the despatch of it to the Accounts Office. We find it difficult to accept the position that if a Through Invoice is received and is sent thereafter to the Accounts Department, the delivery clerk is empowered to effect delivery without taking any care whatsoever for satisfying himself whether the goods are being taken under a genuine receipt or not, when Rule 47(b) contemplates the need of such care while effecting delivery only on the basis of the railway receipt.

Taking a proper and reasonable view of the Rule we hold that the delivery clerks are ordinarily expected to compare the Railway Receipt with either the Junction Invoice or Through Invoice before effecting deliveries and that comparison should not be dispensed with save in very exceptional circumstances. We further hold that the despatch of the Through Invoice to the Accounts Office being within the control of the Railway Authorities and being their internal matter cannot be treated as an exceptional circumstance justifying the dispensation of comparison. We, therefore, do not feel inclined to disagree with the trial Judge that the delivery clerk did not act properly in effecting delivery without a prior comparison. At any rate, there can be no escape from the conclusion that the delivery clerk committed a flagrant violation of this rule by omiting to take care to satisfy himself that the risk note appeared to be genuine in every respect and did not show any sign of having been tampered with. The delivery clerk Atmaram conducted himself in a most irresponsible manner when he stated that he merely cursorily looked at the railway receipt before effecting delivery.

Be that as it may, we need not rest our decision only on our above interpretation of the rules. We consider it necessary to refer to the general law governing the liability of the railway as bailee. Section 151 of the Indian Contract Act defines the liability of the bailee and provides that the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed. Section 152 further provides that the bailea can escape liability for the loss only if he satisfied that he has taken the amount of care of it as described in Section 151. Under Sections 160 and 161, it is the duty of the bailee to return or deliver the goods bailed either to the bailor or to a person according to the directions of the bailor. These provisions make it abundantly clear that the railway as a bailee is required to exercise as much care of the goods bailed to it as a man of ordi-nary prudence would take of his own goods as also for proper transport and delivery of the goods to the bailor or to the authorised representative. In judging the question of the amount of care to be taken by a railway administration, it will be quite proper and reasonable to take note of the opportunities and means that are properly and reasonably available to the railway administration for safeguarding the interests of the consignee.

It may be pointed out that Rule 32 of Chapter XI of Booking of Goods Traffic -- of Traffic Manual of the B. B. and C. I. Railway, requires that in a case of a foreign booking i.e. booking to a place lying within the territories of another railway administration, the Invoice is to be prepared in four foils viz. Through Invoice, Junction Invoice, Railway Receipt and Station Record Portion. According to Rule 45 of Chapter XI --Booking of Goods Traffic of the Traffic Manual, the Through Invoice must be forwarded to the receiving station by the first train. The Junction-Invoice must be sent to the first junction with a foreign railway and it is expected to accompany the goods to the destination railway station. Thus both Junction and Through Invoices are ordinarily available at the destination station where the goods are to be delivered. It is true that the Through Invoice has to be forwarded to the Audit Department on the 10th day and there should be no objection to the sending of the Through Invoice to the Audit Department provided the Junction. Invoice is available for comparison. Such, important document being available to the railway administration, the interest of the railway administration in the proper discharge of their duty as bailee certainly requires that these documents should be properly utilised for comparison with the railway receipt before effecting delivery. We also think it proper to observe that in case the function Invoice is not available, the delivery clerk should not permit the Through Invoice to be sent to the Accounts Department before effecting delivery, as the delivery clerk will have then no proper and effective means to prevent fraud or deception in the matter of delivery.

In support of this view, we may refer to Bhairuddin Nahata v. Union of India, AIR 1957 Cal 573. The facts in that case were that the plaintiff consigned to himself 201 bags of mustard seeds from Hathras Killah on the East Indian Railway. The goods were to be carried to Luckysarai, another station on the same railway. The goods could not be delivered to the plaintiff and lie claimed damages on account of non-delivery. The defence was that the consignment arrived at the destination station and delivery of it was given, to the consignee or his agent and an alternative case was also made that if the plaintiff had not received delivery of the consignment covered by the railway receipt, the defendant should be absolved from all liability in respect of the loss or non-delivery to the plaintiff inasmuch as he took as much care of the goods as a person of ordinary prudence would take of his own goods in similar circumstances. The learned Judge found that the goods were not delivered to the plaintiff but delivered to Gourishanker Mills on the production of spurious railway receipt. An argument was advanced before the learned Judge that delivery having been given on the production of a receipt which appears to be genuine to the goods clerk, the defendant must be absolved from all liability even if it should turn out that the document produced was not a genuine one.

While repelling the argument, the learned Judge made the following observations:

'I very much doubt whether the defendantwould be absolved from liability merely because some one had used a forged railway receipt. After all, the railway receipt is a document issued by the defendant and it was for the defendant to take proper steps to prevent misdelivery on forged documents. But even if I were to hold the defendant would not be liable in the case of a clever counterfeit -- a forgery which could not be detected by the use of reasonable diligence and ordinary prudence, the fact must be such as to lead to the conclusion that it was impossible for the railway employees at Luckysarai to detect and prevent the practice of such fraud.'

It was further observed by him that:

'I find it difficult to believe that the writingon the spurious document would look so like that on the genuine one that a scrutiny by a careful person would not reveal the intrinsic difference between the two.'

At a later stage the learned Judge remarked that 'when the goods were made over to Gourishanker Mills no care had been taken to compare the railway receipt produced by the Mills with the copy which should have been at Luckysarai. It is no answer to the plaintiff's claim to say that under the prevailing practice or through some mischance the document to be kept at the destination station until delivery was effected, had been sent on to the Chief Accounts Officer within 10 days from the receipt thereof. The whole purpose of sending a copy to the destination station was to ensure against delivery on forged receipts and if this copy was parted with before delivery the railwaycould hardly urge that it had taken due and proper care of the goods as a bailee.'

15. We consider that the propositions laid down in the above case embody sound and equitable rules for determining the amount of care to be taken by the railway administration and accepting them we hold that the requirement on the part of the Railway to take reasonable and proper care of the goods entrusted to it for transport and delivery does ordinarily involve the exercise of the caution of comparing the railway receipt with the Through Invoice or Junction Invoice. Applying the above principles to the facts of the present case, there can be no room for doubt that Atmaram, the delivery clerk at Allahabad Station, did not exercise due and proper care and rather acted negligently in effecting delivery without taking proper steps to compare the railway receiptwith the Junction Invoice or Through Invoice and at any rate by merely cursorily looking at the railway receipt.

The trial Judge has further examined the question of negligence on the part of the railway apart from the question of need of comparison of the railway receipt with the Through Invoice or the Junction Invoice and has recorded a finding againstthe railway. The plaintiffs and the defendants both examined experts for the purpose of showing the nature of the forgery. (His Lordship referred to their evidence and proceeded). We have also looked into the forged railway receipts and have come to the conclusion that the finding of the trial Judge is quite correct and calls for no interference.

16. There is yet one other point which lends support to our view. In the present case, it is not the case of the railway that the goods were destroyed during transit. The railway has been unable to deliver goods to the plaintiffs on account of misdelivery to some other persons under spurious documents. Now there is no express provision in the Indian Railways Act exempting the railway administration from liability on account of misdelivery. Misdelivery can only be pleaded under the general head 'loss' under Section 72 of the Indian Railways Act and in order to prove loss, the railway must prove not only that the misdelivery was effected in spite of reasonable and due care but it must also prove that it could not trace out and recover the goods in spite of due care. We have already shown above that the misdelivery was the result of the absence of the exercise of reasonable and due care by the railway administration. We are further of opinion that the railway administration did not exercise due and reasonable care in taking proper steps to trace out and recover the goods when within a very short period of misdelivery it came to know that the railway receipts on the basis of which the deliveries were effected were forged documents and when the goods delivered had been taken to the Rameshwar Oil Mills. A part of the goods were soon recovered from the Mills. We were, however, not told whether the railway took any steps to recover the balance of the goods from the Rameshwar Oil Mills. Nothing has been Brought on record to show as to whether the railway pursued the Rameshwar Oil Mills or the alleged cheats either in the criminal proceedings or in civil proceedings to recover the goods or the sale-proceeds thereof. In all these circumstances, we 'cannot reasonably' hold that the railway had acted with due care and attention in the discharge of its duty as a bailee. Even so, Mr. Agarwal argued that the railway clerk has to deal with a number of demands for delivery and an introduction of a rigidity in the making of deliveries either under some rules or otherwise may result in late delivery to the holders of the genuine receipts and may expose the railway to various risks.

17. We have given due consideration to the argument of Mr. Agarwal and find no substance in it. In our opinion, the difficulties of the railway administration have been unduly emphasised and they are not insurmountable and irremediable and, at any rate, they cannot be permitted to allow the railway to shake off its statutory liability as a bailee. Mr. Agarwal relied upon the following three English cases:

1. Galbraith and Grant Ltd. v. Block, (1922) 2 KB 155.

2. Heugh v. The London and North Western Rly., (1870) LR 5 Ex. 51.

3. The London and River Plate Bank v. The Bank of Liverpool, (1896) 1 QB 7.

But these decisions are clearly distinguishable on facts and do not render any substantial assistance to Mr. Agarwal.

In the first case it was held that: 'Where under a contract the seller of goods is required to deliver them at the buyer's premises he fulfils his obligation if he delivers them there to a person who apparently has authority to receive them, taking care to see that no unauthorised person receives them. If therefore the goods are received by an apparently respectable person, who has obtained access to the buyer's premises, and who signs for the goods in the buyer's absence and misappropriates them, the loss must fall on the buyer and not on the carrier of seller.'

It is clear that a finding of fact in that case clearly established the exercise of all reasonable care by the seller and it was on that finding that the liability of the seller was held disproved.

In the second English case also the learned Judge, who decided it, observed that the question whether due and reasonable care was exercised was for the jury to decide. The jury having found for the defendants, the Court refused to disturb the verdict.

The principle laid down in the third English case was that

'when a bill becomes due and is presented for payment, and is paid in good faith and the money is received in good faith, if such an interval of time has elapsed that the position of the holder may have been altered the money so paid cannot be recovered from the holder, although endorsement on the bill subsequently prove to be forgeries.'

The main factor which appears to have prevailed was that on account of lapse of interval the position of the holder had been altered and the money so paid could not be recovered from him. Neither of these cases induce us to modify the conclusions reached by us nor are they applicable to the factsof the present case. We have already held that the delivery clerk Atmaram acted negligently and ,without due and reasonable care in effecting delivery and that it was open to the railway to trace out and recover the goods from the Rameshwar Oil Mills.

On a consideration of the entire circumstances of the case, we have no hesitation in accepting the finding of the learned District Judge on issue No. 2 and rejecting the various contentions raised in this behalf.

18. Issue No. 3 raises the question of negligence of the railway administration. Evidently, the question of negligence is a matter of inference from the facts and circumstances of a particular case and may be presumed in the case where the defendant omits to exercise due care and skill he owes to the other side. The trial Judge has found that the cursory glance at the railway receipts was not enough to relieve the railway administration of its responsibility and that the railway administration while effecting delivery of the goods worth thousands of rupees ought to have exercised due care and skill about the genuineness of the railway receipts. On the facts and circumstances found by us while dealing with issue No. 2, we accept as correct the finding of the trial Judge with regard to issue No. 3 also.

19. Issues Nos. 4 and 5 were framed on the plea of the defendants that the plaintiffs and their agent, the bank, were negligent and guilty of laches. The facts relied upon in this connection were that the alleged cheats, who eventually defrauded the railway had been to Alwar and had asked the plaintiffs to purchase the goods on their behalf and had even paid Rs. 501/- to the plaintiffs. The further allegations relied upon are that the plaintiffs did not inform the railway of their having sent the railway receipts through the bank nor did the bank convey such information to the railway.

We have no doubt whatsoever that the allegations relied upon do not at all establish the plaintiffs' negligence and laches. The mere fact that the plaintiffs were asked by the cheats to purchase goods on their behalf and that they accepted Rs. 501/- from the cheats do not justify an inference that they acted negligently and thus contributed to the ultimate effect which was misdelivery in the present case. It must be remembered in this connection that the plaintiffs did not hand over the railway receipts to the cheats but they took care to send them through the bank. As regards the omission on the part of the plaintiffs and their agent, the bank, to inform the railway, we do not consider that any statutory duty was imposed upon them in that respect and omission to do so cannot be treated as negligence on their part. In this connection, the trial Judge has also observed that there was nothing on record to show that the cheats came to know about the contents of the original railway receipts from the plaintiffs. Issues Nos. 4 and 5, in our opinion, have been rightly decided against the defendants.

20. Dealing with issue No. 6. Mr. Agarwal very vehemently argued that there was no evidence whatsoever to determine the measure of damages inasmuch as there was no evidence to prove the market price of the goods on the date of the delivery. Reliance was placed on Bhikraj Jaipuria v. Union of India, (AIR 1962 SC 113). It was observed by their Lordships of the Supreme Court as follows:

'The High Court rightly pointed out that the appellant was, if at all, entitled only to compensation for loss suffered by him by reason of the wrongful breach of contract committed by the State, such compensation being the difference between the contract price and the ruling market rate on October 1, 1943 and that the appellant had failed to lead, evidence about the ruling market rate on October 1, 1943'

21. After giving our careful consideration to the legal position and the facts and circumstances of the case, we have felt persuaded to come to the conclusion that this contention also carries no weight. The rule as to the measure of damages in the Supreme Court case has been enunciated with reference to the breach of contract and ordinarily it may also be extended to cases of torts also. But we are unable to accept that the rules should be rigidly adopted even in cases of torts without any consideration of the pleadings of the parties. In the present case the plaintiffs alleging that the price of the rape-seeds was higher at Allahabad claimed damages in the following manner:

Rs. 48,345/12/3 as the cost price of the goods at Alwar.

Rs. 4,834/9/- on account of probable profits. The defendants in their written statements merely stated as follows:

'Para No. 10 of the plaint is not admitted. The various items of damages etc. are denied individually as well as in the aggregate.'

The plaintiffs' suggestion that the price of the rape-seeds at Allahabad was higher than at Alwar and he did expect some profits was not specifically denied. The plaintiffs very satisfactorily proved that they had incurred Rs. 48,345/12/3 in purchasing the rapeseeds before booking them to Allahabad. In these circumstances, the trial Judge cannot be said to be in error when he awarded damages to the extent of the cost actually incurred by the plaintiffs and disallowed the probable profits claimed by him. Bearing in mind the pleadings of the parties and the nature of controversy raised by them, we are unable to accept the argument of Mr. Agarwal that the plaintiffs having failed to prove the price of the rapeseeds on the date of the delivery, they are not entitled to any compensation whatsoever.

22. In the end Mr. Agarwal urged that while allowing compensation on the cost incurred by the plaintiffs, the trial Judge should have deducted an amount of Rs. 501/- which the plaintiffs admittedly received on behalf of the bogus firm Brijlal Nandkishore. This contention of Mr. Agarwal appears to be quite reasonable and the amount of Rs. 501/-deserves to be deducted from the amount of compensation allowed to the plaintiffs.

23. The net result of the above discussion is that except for an amount of Rs. 501/- which has to be deducted from the amount decreed in favour of the plaintiffs, the defendants' appeal has no force.

24. The appeal is partly accepted, the decretal amount is reduced by Rs. 501/- and the remaining appeal stands dismissed with costs.


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