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The Madras and Southern Mahratta Railway Company Limited Vs. Haridoss Banmalidoss - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in(1918)ILR41Mad871
AppellantThe Madras and Southern Mahratta Railway Company Limited
RespondentHaridoss Banmalidoss
Cases Referred and Macmillan v. London Joint Stock Bank
Excerpt:
indian railways act (ix of 1890), sections 72 and 77 - duty of railway company, as a bailee, under the indian contract act (ix of 1872)--delivery of goods to person entitled but without production or delivery of railway receipt--sub-sequent pledge of railway receipt--suit by pledgee--notice of claim, whether necessary--damage, cause of. - - 2. in these circumstances, two interesting questions have been raised and very elaborately argued before us. 5. section 161 provides for the contingency of the bailee's failure to discharge the duty prescribed in that section including the duty of making delivery. 7. so that these sections of the contract act, which are applied by the indian railways act, purport to deal not merely with the bailee's duty of safe custody but also with the performance..........a suit brought by the plaintiff who was the indorsee for value of two railway receipts to make the railway company liable for misdelivery. the facts were that the goods in question were consigned by one gurunatham, to his own order, to the madras harbour station of the defendant railway. gurunatham had pledged the railway receipts with the bank of madras, and the bank of madras were the persons entitled to delivery of the goods. it was intended that one swaminatha reddy should pay the bank and get the railway receipts assigned to him and then take delivery of the goods. he managed however to get possession of the goods from the railway company without production of the railway receipts and before he had paid the bank. this was apparently because for many years large consignments of.....
Judgment:

John Wallis, Kt., C.J.

1. This is an appeal from the judgment of Mr. Justice Kumaraswami Sastri in a suit brought by the plaintiff who was the indorsee for value of two railway receipts to make the Railway Company liable for misdelivery. The facts were that the goods in question were consigned by one Gurunatham, to his own order, to the Madras Harbour station of the defendant railway. Gurunatham had pledged the railway receipts with the Bank of Madras, and the Bank of Madras were the persons entitled to delivery of the goods. It was intended that one Swaminatha Reddy should pay the Bank and get the railway receipts assigned to him and then take delivery of the goods. He managed however to get possession of the goods from the Railway Company without production of the railway receipts and before he had paid the Bank. This was apparently because for many years large consignments of cotton had been consigned by Gurunatham in this way and had been duly taken delivery of by Swaminatha Reddy. Two or three days afterwards Swaminatha Reddy paid the Bank of Madras and obtained the railway receipts. When that happened, in our opinion, the contract of carriage by the Railway Company was entirely completed. Swaminatha Reddy however did not return the railway receipts to the Railway Company but committed a fraud on the plaintiff by obtaining an advance against the railway receipts which were taken as is usual to represent that the goods specified in the receipts were still in course of transit winch was not the case as they had already been delivered to him and had come into his possession as the rightful owner.

2. In these circumstances, two interesting questions have been raised and very elaborately argued before us. The first question is one of limitation whether the suit is barred under Section 77 of the Indian Railways Act because notice of the claim for compensation for the loss of the goods was not given in writing by the plaintiff or on his behalf to the Railway, within six months from the date of the delivery of the goods for carriage by the Railway. The learned Judge held that this section was inapplicable to the present case because the servants of the Railway delivered the goods to Swaminatha Reddy without the production by the railway receipts and with full knowledge that they were consigned not to Swaminatha Reddy but to Gurunatham. Mr. V.V. Srinivasa Ayyangar who argued this part of the case for the respondent relied on certain English decisions on the Carriers Act of 1830 which is practically re-enacted in India by Act III of 1865. That Act exempted carriers from liability in respect of loss or injury to certain valuable articles if they were consigned without being declared and the extra charges paid. That Act was construed by the Court of Exchequer in Hearn v. London and South Western Railway Co. (1855) 10 Ex. 793, where Parke, B., held that the exemption only applied to what I may describe as accidental loss; and similarly in the subsequent case of Morrit v. The North Eastern Railway Co. (1876) Q.B.D. 302, Mr. Justice Blackburn, as he then was, also observed that a misdelivery, such as that with which we are dealing would not be a loss covered by the Act. The Act was also construed in Millen v. Brasch & Co. (1882) 10 Q.B.D. 142, in which it was held among other things that delays would be covered by the word 'loss' as thus used. These decisions undoubtedly would support Mr. Srinivasa Ayyangar if the Indian Act was in pari materia with the Carriers Act of 1830, but it is not. That was an Act relieving carriers to a certain extent from their common law liability as insurers, and we may point out that in arriving at that construction Baron Parke took into account the preamble of the Act and the object with which it was passed. We must do the same with regard to this Act. Chapter VII of the Indian Railways Act of 1890 is headed 'Responsibility of railway administrations as carriers,' and prima facie is intended to deal with the whole subject. The marginal note, which is not part of the Act but represents what I gather upon an independent perusal of the section to be its meaning, describes Section 72 as:

Measure of the general responsibility of a railway administration as a carrier of animals and goods.

3. That measure of general responsibility is said, subject to the other provisions of that Act, to be that of a bailee under Sections 152 and 161 of the Indian Contract Act. Now Section 151 of the Contract Act deals with the duty of a bailee to take as much care of the goods bailed to him as he would take of his own goods while they are in his custody, and Section 152 says that in the absence of a special contract he is not responsible for the loss, destruction or deterioration of the thing bailed, if he takes this amount of care. Then Section 160 provides.

It is the duty of the bailee to return or deliver according to the bailor's directions the goods bailed without demand as soon as the time for which they were bailed has expired or the purpose for which they were bailed has been accomplished.

4. Therefore it deals with the duty of the bailee to duly deliver the goods bailed at the proper time and the marginal note to the section is:

Return of goods bailed on expiration of time or accomplishment of purpose.

5. Section 161 provides for the contingency of the bailee's failure to discharge the duty prescribed in that section including the duty of making delivery. It says:

If by the default of the bailee the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time.

6. The marginal note is:

Bailee's responsibility when goods are not duly returned.

7. So that these sections of the Contract Act, which are applied by the Indian Railways Act, purport to deal not merely with the bailee's duty of safe custody but also with the performance of the bailee's duty to deliver at the proper time. Therefore, it seems to me that this chapter must be taken, and was intended, to cover the whole liability of the Railway Company including among other things the responsibility of the Railway Company for misdelivery by whatever reason caused. That being so when we come to Section 77 and find that notice is required in any claim for compensation:

for the loss, destruction or deterioration of animals or goods,' it seems to me that notice is required in all claims which arise with reference to the liability defined in the earlier section and in the specified sections of the Contract Act, Sections 152 and 161, the latter of which covers all cases of non-delivery or misdelivery. In Section 9 of Act III of 1865, which is reproduced in Section 76 of the Indian Railways Act, it is provided:

In any suit brought against a common carrier for the loss, damage or non-delivery of goods entrusted to him for carriage, it shall not be necessary for the plaintiff to prove that such loss, damage or non-delivery was owing to the negligence or criminal act of the carrier, his servants or agents.

8. In Section 76 of the Railways Act it was not thought necessary to reproduce the word 'non-delivery' the reason being in my opinion that cases of non-delivery are already sufficiently provided for by the reference to Sections 152 and 161 of the Contract Act in the earlier section.

9. In this matter of requiring notice to the Railway Company within a reasonable time in order to enable them to make enquiries and if possible to recover the goods, there is really no reason for making a distinction between cases in which goods have been delivered inadvertently to the wrong person and cases such as the present in which they were delivered to a person other than the consignee who claimed to be entitled to them but did not produce the railway receipt as he should have done in support of his claim. We ought not to import distinctions of this sort into the Railways Act unless they rest upon some basis of sound reason which would be likely to have commended itself to the legislature, I see none such in this case. For these reasons, I think that the cases decided under the Carriers Act on which the learned Judge relied are inapplicable, and that the claim is barred, because notice was not given as required by Section 77 of the Railways Act.

10. That would be sufficient to dispose of the present case, but, as another interesting question was raised and was decided by the learned Judge, I propose to deal with it. It is said that the fact that the Railway did not get back the railway receipts when it delivered the goods ought to make them responsible to the plaintiff for the value of the goods, the plaintiff having, on the strength of the production of the railway receipts by Swaminatha Reddi, advanced money to him, considering the railway receipts as representing that goods to that value were in transit and in possession of the Railway Company. Much reliance has been placed in the arguments before us, and some reliance was also placed apparently by the learned Judge, on the fact that the delivery to Swaminatha Reddi, when it was made was a wrongful delivery, because at that time he had no right to the goods. But, long before Swaminatha Reddi indorsed over the railway receipts to the plaintiff, he had paid the Bank of Madras and obtained the railway receipts and was therefore the only person entitled to the goods, and also the contract of carriage was at an end. The goods had found their way into the hands of the lawful owner, and therefore no one was prejudiced by the misdelivery and no injurious consequences followed. There may have been damnum so far as the Bank of Madras was concerned, but it was damnum sine injuria. I think that in the event which happened the case must be decided as if the railway had made delivery of these goods to Swaminatha Reddi, without the production of the railway receipts at a time when he was entitled to them, although he had not brought the railway receipts with him.

11. But even so, it has been contended before us, that the action of the railway in not getting back the railway receipts was such negligence or breach of duty as to make them liable to subsequent transferees for value of the railway receipts This proposition has been supported mainly on the authority of the case of Nash v. De Freville (1900) 2 Q.B., 72. That was a case of the execution and delivery by the defendant of promissory notes payable on demand. Such an 'on demand' note is intended to be a continuing security and cannot be treated as overdue merely because it was indorsed over some years after the date of execution [Brooks v. Mitchell (1841) M. & W. 15]. Consequently it remains current in the hands of the payee or indorsee until the maker gets it back; and if, as in the case cited, he omits to get it back when he pays it, he cannot set up that payment against a subsequent transferee. Now it by no means follows that a decision as to a promissory note payable on demand is necessarily applicable to a spent bill of lading or a railway receipt. Indeed the analogy is rather with an overdue note. A bill of lading, in origin, as it still is in form, is nothing but a receipt for the goods from the master of the ship to the shipper. But for mercantile convenience and by mercantile usage, it has become a symbol of the goods as explained by Baron Martin in Barber v. Meyerstein (1870) 4 E.& Ir. App. 317. As possession could not be given of goods at sea, the bill of lading came to be treated as a symbol of the goods and a transfer of the bill of lading as equivalent to a transfer of the goods themselves. The question of the period during which bills of lading can pass title to the goods was considered in the leading case of Barber v. Meyerstein (1870) 4 E.& Ir. App., 317 to which I have just referred, and the general effect of that decision is that the property in the goods passes by indorsement of the bill of lading so long as the contract of carriage has not been completed by delivery to the proper consignee. This limitation follows from the very origin of this mercantile custom which, as already stated, depends on the fact that goods in transit are incapable of delivery. But once transit is over and they have come to the possession of the consignee, there is no reason for the goods any longer being held to pass by indorsement of the bill of lading, and no authority has been cited before us for the proposition that they would so pass. The contrary is in my opinion clearly assumed in Barber v. Meyerstein (1870) 4 E.& Ir. App., 317. At the very beginning of his judgment, Lord Hatherley says:

The question has really turned upon one point, and I may almost say upon one point alone, namely, whether or not the bills of lading had fully performed their office and were discharged and spent at the time that the plaintiff took his security Whether, in other words, the landing of those goods .... was or was not a delivery which had exhausted the whole effect of the bill of lading.

12. And the case proceeded on the footing, that, if that was so, any subsequent transfer of the bill of lading would be entirely ineffective. It was held in that case that that stage had not yet been reached. Similarly later on, Lord Hatherley says:

The shipowner contracts that he will deliver the goods on the payment of freight. He discharges his contract when he delivers the goods.

13. Then Lord Westbury says:

Unquestionably the bill of lading as long as the engagement to the shipowner has not been fulfilled, is a living current instrument and no doubt the transfer of it for value passes the absolute property in the goods.

14. There is no authority whatever for the proposition that, after the bill of lading has ceased to be a living instrument by the delivery of the goods, any dealing with it can affect the property in those goods. Similarly in Sandars Brothers v. Maclan & Co. (1883) 11 Q.B.D 327. Bowen, L.J., observed in a much quoted passage:

And for the purpose of passing such property in the goods and completing the title of the indorsee to the full possession thereof, the bill of lading, until complete delivery of the cargo has been made on shore to some one rightfully claiming under it remains in force as a symbol and carries with it not only the full ownership of the goods, but also all rights created by the contract of carriage between the shipper and the shipowner. It is a key which in the hands of a rightful owner is intended to unlock the door of a warehouse floating or fixed, in which the goods may chance to be.

15. Now, if that be so with regard to a bill of lading, it is equally so with regard to a railway receipt. The contract of the railway is to carry goods and to deliver them to the consignee. Ordinarily, it would be bound to deliver at its peril to the person entitled at the end of the transit. But Section 57 of the Indian Railways Act protects the railway, and empowers it to refuse delivery except upon the production of the railway receipt. The terms of the railway receipt show that the railway does not hold itself out as delivering goods only on production of the railway receipt. It only reserves liberty to refuse in its discretion to deliver the goods, unless the railway receipt is produced or unless, if the receipt is not produced, an indemnity is given. There is no reason for saying that the railway holds itself out to the mercantile community as never parting with goods except upon the production of the railway receipt. The railway is not in my opinion under any duty to the public or to anybody else to insist upon the return of the railway receipt. It is said that mercantile man in India treat railway receipts as documents of title and that the usage has now at any rate since the decision of the Privy Council in Ramdas Vithaldas v. Amerchand and Co. (1916) I.L.R. 40 Bom. 630 (P.C.) received legal recognition. But that cannot alter the position of the Railway Company in this respect. It seems to me that the first step in the respondent's position is not established, namely, that there was some duty on the part of the railway not to part with the goods except against the railway receipt.

16. Apart from that, there is the serious question as to whether what happened could be held to follow from their failure to do so. What happened was that a fraud and a crime were committed by Swaminatha Reddi in obtaining money from the plaintiff on a railway receipt for goods that had already been delivered to him at the end of the transit. Reliance has been placed on the maxim laid down in Lickbarrow v. Mason (1787) SLC 726.

that wherever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.

17. In that case, it was held that by parting with the bill of lading to the consignee the consignor had estopped himself from asserting his right to stop in transit against a transferee of the bill of lading from the consignee. It is however well established that there are serious limitations to the general application of this doctrine. In the Bank of Ireland v. Trustees of Evans' Charities (1855) 5 H.L.C, 389, it was held that the carelessness of the company in leaving its seal in the hands of its secretary, oven if it amounted to negligence did not estop it from disputing forged transfers of its securities made by the secretary under its seal. In the similar decision in The, Mayor Constables and Company of Merchants of the Staple of England v. The Governor and Company of the Bank of England (1887) 21 Q.B.D.160, Bowen, L.J., pointed out that there was a distinction between doing that which enabled a fraud to be effected, and being the cause of that fraud, and held that the fraudulent transfer in that case was not the natural consequence of the alleged negligence of the defendant Company so as to give rise to an estoppel against them. The limitations on this doctrine were further considered in Farquhason Brothers & Co. v. King & Co. (1802) A.C. 325 and in the very recent case of Macmillan v. London Joint Stock Bank (1917) 2 K.B. 439, where Swinfen Eady, L.J., referred to the opinion of Blackburn, J., in Swan v. The North British Australasian Company (1863) 2 H. & C. 175 that negligence in order to estop must be in the transaction, itself and must also be the proximate cause of the loss and Scrutton, L.J., observed (at p. 459):

I think the effect of the authorities is that if A owing a duty to B by the neglect of that duty induces B to believe that a certain state of facts exists he is estopped as against B from denying that such a state of facts exists. But the neglect must be in the transaction itself, not in previous history. . . . And the neglect must be the proximate cause of leading B to his belief. Neglect of precautions by A which enables C to commit a crime causing loss to B can never in my view give rise to a claim by B against A, for the loss is not the proximate or even natural consequence of the neglect.

18. As regards the present case, I think it has not been shown that the railway was under any duty to the public to get back the railway receipts on delivery of the goods; and, even if there was such a duty, I think, on the authorities cited, that would not render the railway liable for the fraud subsequently perpetrated by the holder of the receipts.

19. In the judgment under appeal the learned Judge observed:

Had Swaminatha Reddi & Co., on the dates when they obtained delivery of the goods, been the persons who were really entitled to delivery, it follows from the authorities above cited that the railway receipts would have exhausted their force and any negotiation subsequent to it by Swaminatha Reddi & Co. would not be operative or pass any title.

20. That, if I may say so, appears to me to accurately state the effect of the authorities. But the learned Judge went on to make a distinction which I am unable to follow and held the railway liable because at the time of delivery to Swaminatha Reddi, he was not the person entitled to the goods. I have already given my reasons for holding that this circumstance makes no difference having regard to the fact that Swaminatha Reddi had become entitled to the goods before the date of his transfer of the spent railway receipts to the plaintiff. For these reasons on both grounds I think the appeal must be allowed and the suit dismissed with costs throughout.

Spencer, J.

21. I entirely agree. I do not think I can usefully add much to what has fallen from my Lord the Chief Justice on the second point which he has discussed in the judgment just delivered. On the question of limitation I cannot follow the learned. Judge who tried this case in the opinion that he expressed that Section 77 of the Railways Act does not include cases where the Railway Company have with their eyes open delivered the goods to the wrong person. In Sections 72 and 77 of the Act 'loss' is coupled with 'destruction' or 'deterioration' of goods. Now it could not be asserted for a moment that in cases where a Railway Company found it necessary to destroy goods, say for some necessary purpose such as to clear their line to avoid danger of life to a passenger train such destruction would not come within the meaning of 'destruction of goods' in these sections.

22. If 'destruction' is to include deliberate acts of the Company or its servants I cannot see why the word 'loss' should only apply to cases where the goods have been mislaid. If the Company is liable for negligence it must a fortiori be liable for wilful acts. I think the intention of the legislature in inserting Section 77 into the Act must have been that by requiring notice to be given before claims are put in, the Company might have time to investigate such cases and meet the claims of persons who have suffered loss, if possible out of Court. The word 'loss' in the English language is, in my opinion, sufficiently wide to cover cases where the goods are not forthcoming either from deliberate acts or from acts of negligence and I see no reason to confine it only to cases of the latter kind.

23. I therefore agree in thinking that notice not having been given within six months of the consignment of these goods, the present suit cannot be maintained. I also agree in thinking that there is no cause of action against the Railway Company. The plaintiff presents his claim in two ways. Either he says to the Railway Company 'Property has passed to me by the pledge of the railway receipts which by mercantile usage represent goods. As I paid money in good faith on the belief that the goods were with you, you must give me the goods or their value if they have been converted.' Or, he says 'By the negligence of your booking clerk in making over the goods without taking the railway receipts I was led to believe that I had good security for the loan which I made to Swaminatha Reddi; you are responsible for the misrepresentation made to me and you must compensate me for the loss.'

24. The Railway Company can, in my opinion, meet both of these demands in a legal way. Its answer to the first will be this: 'The railway receipts are only symbols of property and they ceased to be living instruments of title from the moment the goods were delivered to a person having a right to take them. Swaminatha Reddi had a right to receive the goods and he actually took them before you acquired any interest under the pledge to you. You have been the victim of a fraud but the transaction so far as we are concerned had come to an end before you acquired an interest in the goods.' See Barber v. Meyerstein (1870) 4 E. & Ir. App. 317.

25. To the second its defence is this: 'It may be that our clerk was negligent but he only risked our responsibility till the receipts were forthcoming. We know nothing of Swaminatha Reddi's subsequent transactions with you and we did not conspire with him to cheat you. We acknowledge no liability to the public to see that our receipts are all collected, and the fact that this receipt happened to be left in the consignee's hands was not a proximate or effective cause of your being cheated, nor did it directly lead to that result.' See The Mayor, Constables and Company of Merchants of the Staple of England v. The Governor and Company of the Bank of England (1887) 21 Q.B.D. 160 and Macmillan v. London Joint Stock Bank (1917) 2 K.B. 439.


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