Case: The New Marine Coal Co. (Bengal) Private Ltd Vs. Union Of India

it to recover it or its proceeds from a person who has wrongfully obtained possession of it. In the case before them, there was nothing in the draft or the endorsement with which the plaintiff had anything to do, calculated in any way to mislead the defendants. It was regularly endorsed, and was then enclosed in a letter to the plaintiffs correspondents, to be sent through the post. There could be no negligence in relying on the honesty of their servants in the discharge of their ordinary duty that of conveying letters to the post; nor can there be any duty to the general public to exercise the same care in transmission of the draft as if any of every servant employed were a notorious thief."These observations illustrate how before invoking a plea of estoppel on the ground of negligence, some duty must be shown to exist between the parties and negligence must be proved in relation to such duty.20. Similarly, in Baxenale v. Bennett, 1878 3 Q B D 525 at p. 530 Bramwell L. J., had occasion to consider the same point. In that case, the defendant gave H, his blank acceptance on a stamped paper and authorised H. to fill in his name as drawer. He returned the blank acceptance to the defendant in the same state in which he received it. The defendant put it into a drawer of his writing table at his chambers, which was unlocked and it was lost or stolen. C. afterwards filled in his own name without the defendants authority, and an action was brought on it by the plaintiff as endorsee for value. The Court of Appeal held that the defendant was not liable on the bill. Dealing with the question of negligence attributed to the defendant, Bramwell L. J. observed that"the defendant may have been negligent, that is to say, if he had the paper from a third person, as a bailee bound to keep it with ordinary care, he would not have kept it in a drawer unlocked."But, said the learned Judge, this negligence is not the proximate or effective cause of the fraud. A crime was necessary for its completion, and so, it was held that the defendant was not liable on the bill. This decision shows that negligence must be based on a duty owed by one party to the other and must, besides, be shown to have been the proximate or the immediate cause of the loss.21. It is in the light of this legal position that the question about estoppel raised by the respondent against the appellant in the Appellate Court may be considered. Can it be said that when the appellant received the intimation card, it owed a duty to the respondent to keep the said card in a locked drawer maintaining the key all the time with its Director? It would not be easy to answer this question in the affirmative; but assuming that the appellant had a kind of duty towards the respondent having regard to the fact that the intimation card was an important document the presentation of which with an endorsement as to authorisation duly made would induce the respondent to issue a cheque to the person presenting it, can the Court say that in trusting its employees to bring letters from the letter box to the Director, the appellant had been negligent? As we have already observed, in dealing with the present dispute on the basis that the intimation card had been dropped in the letter box of the appellant, it is possible to hold either that the said card was collected by the Peon and given over to Mr. Parikh, or it was not. In the former case after Mr. parikh got the said card, it had been removed from Mr. Parikhs table by someone, either by one of the eimployees of Mr. Parikh or some stranger. In the latter case, though, technically, the card had been delivered in the letter box of the appellant, it had not reached Mr. Parikh. In the absence of any collusion between Mr. Parikh and the person who made fraudulent use of the intimation card, can the respondent be heard to say that Mr. Parikh did not show that degree of diligence in receiving the card or in keeping it in safe custody after it was received as he should have? In our opinion, it would be difficult to answer this question infavour of the respondent. In ordinary course of business, every office that receives large correspondence keeps a letter box outside the premises of the office. The box is locked and the key is invariably given to the peon to collect the letters after they are delivered by postal Peons. This course of business proceeds on the assumption which must inevitably be made by all businessmen that the servants entrusted with the task of collecting the letters would act honestly, Similarly, in ordinary course of business, it would be assumed by a businessmen that after letters are placed on the table or in a file which is kept at some-other place, they would not be pilferred by any of his employees. Under these circumstances, if the intimation card in question was taken away by some fraudulent person, it would be difficult to hold that the appellant can be charged with negligence which, in turn, can be held to be the proximate cause of the loss caused to the respondent. In our opinion, therefore, Mukharji J., was in error in holding that the respondent could successfully plead estoppel by negligence against the appellant. As we have already observed, the question as to whether the claim made by the appellant against the respondent under S. 70 is concluded by the decision of this Court in the case of M/s. B. K. Mondal and Sons, AIR 1962 SC 779 in favour of the appellant,and so, it must be held that the Division Bench of the High Court erred in dismissing the appellants claim.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]15. Mr. Setalvad contends that a plea of negligence should have been raised by the respondent in its pleadings and the appellate Court was, therefore, in error in allowing such a plea to be raised for the first time in appeal.our opinion, there is some force in this contention. Negligence in popular language and in common sense means failure to exercise that care and diligence which the circumstances require. Naturally what amounts to negligence would always depend upon the circumstances and facts in any particular case. The nature of the contract, the circumstances in which the performance of the contract by one party or the other was expected, the degree of diligence, care and attention which, in ordinary course, was expected to be shown by the parties to the contract, the circumstances under which and the reason for which failure to show due diligence occurred are all facts which would be relevant before a judicial finding can be made on the plea of negligence. Since a plea of negligence was not raised by the respondent in the trial Court, the appellant is entitled to contend that it had no opportunity to meet this plea and dealing with it in appeal has, therefore, been unfair to it.16. Apart from this aspect of the matter, there is another serious objection which has been taken by Mr. Setalvad against the view which prevailed with Mukharji J. He argues that when a plea of estoppel on the ground of negligence is raised, negligence to which reference is made in support of such a plea is not the negligence as is understood in popular language or in common sense; it has a technical denotation. In support of a plea of estoppel on the ground of negligence, it must be shown that the party against whom the plea is raised owed a duty to the party who raises the plea. Just as estoppel can be pleaded on the ground of misrepresentation or act or omission, so can estoppel be pleaded on the ground of negligence; but before such a plea can succeed, negligence must be established in this technicalis another requirement which has to be proved before a plea of estoppel on the ground of negligence can be upheld and that requirement is that "the negligence on which it is based should not be indirectly or remotely connected with the misleading effect assigned to it, but must be the proximate or real cause of that result"**. Negligence, according to Halsbury, which can sustain a plea of estoppel must be in the transaction itself and it should be so connected with the result to which it led that it is impossible to treat the two separately. This aspect of the matter has not been duly examined by Mukharji J., when he made his finding against the appellant.It is in the light of this legal position that the question about estoppel raised by the respondent against the appellant in the Appellate Court may be considered. Can it be said that when the appellant received the intimation card, it owed a duty to the respondent to keep the said card in a locked drawer maintaining the key all the time with its Director? It would not be easy to answer this question in the affirmative; but assuming that the appellant had a kind of duty towards the respondent having regard to the fact that the intimation card was an important document the presentation of which with an endorsement as to authorisation duly made would induce the respondent to issue a cheque to the person presenting it, can the Court say that in trusting its employees to bring letters from the letter box to the Director, the appellant had been negligent? As we have already observed, in dealing with the present dispute on the basis that the intimation card had been dropped in the letter box of the appellant, it is possible to hold either that the said card was collected by the Peon and given over to Mr. Parikh, or it was not. In the former case after Mr. parikh got the said card, it had been removed from Mr. Parikhs table by someone, either by one of the eimployees of Mr. Parikh or some stranger. In the latter case, though, technically, the card had been delivered in the letter box of the appellant, it had not reached Mr. Parikh. In the absence of any collusion between Mr. Parikh and the person who made fraudulent use of the intimation card, can the respondent be heard to say that Mr. Parikh did not show that degree of diligence in receiving the card or in keeping it in safe custody after it was received as he should have? In our opinion, it would be difficult to answer this question infavour of the respondent. In ordinary course of business, every office that receives large correspondence keeps a letter box outside the premises of the office. The box is locked and the key is invariably given to the peon to collect the letters after they are delivered by postal Peons. This course of business proceeds on the assumption which must inevitably be made by all businessmen that the servants entrusted with the task of collecting the letters would act honestly, Similarly, in ordinary course of business, it would be assumed by a businessmen that after letters are placed on the table or in a file which is kept at some-other place, they would not be pilferred by any of his employees. Under these circumstances, if the intimation card in question was taken away by some fraudulent person, it would be difficult to hold that the appellant can be charged with negligence which, in turn, can be held to be the proximate cause of the loss caused to the respondent. In our opinion, therefore, Mukharji J., was in error in holding that the respondent could successfully plead estoppel by negligence against the appellant. As we have already observed, the question as to whether the claim made by the appellant against the respondent under S. 70 is concluded by the decision of this Court in the case of M/s. B. K. Mondal and Sons, AIR 1962 SC 779   in favour of the appellant,and so, it must be held that the Division Bench of the High Court erred in dismissing the appellants claim.In the courts below, elaborate arguments were urged by the parties on the question as to whether the contract, theof the suit, was invalid and if yes, whether a claim for compensation made by the appellant could be sustained under S. 70 of the Indian Contract Act. Both these questions are concluded by a recent decision of this Court in the State of West Bengal v. M/s. B. K. Modal and Sons, AIR 1962 SC 779  .As a result of this decision, there can be no doubt that the contract on which the suit is based is void and unenforceable, and this part of the decision is against the appellant. It is also clear under this decision that if in pursuance of the said void contract, the appellant has performed his part and the respondent has received the benefit of the performance of the contract by the appellant, S. 70 would justify the claim made by the appellant against the respondent. This part of the decision is in favour of the appellant. It is, therefore, unnecessary to deal with this aspect of the matter at length.The position of the evidence in respect of this point is no doubt unsatisfactory. It appears that Mr. Parikh who is the Director of the appellant company since 1948 is also the Director of K. Wara Ltd., which manages eight collieries like that of the appellant. K. Wara Ltd., has its office at 135, Canning Street. The appellant Company also has one office at the said place. A Post Box in which letters addressed to the appellant and K. Wara Ltd., could be dropped has been kept on the ground floor of the building in which the said offices are situated. The said Post Box is locked and naturally the key is given to one or the other of the Peons to open the said Box and take out the letters and deliver them to Mr. Parikh. Mr. Parikhs evidence show that his denial that he had received any intimation card could not be accepted at its face value for two reasons; the first was that even if thehad been received by the Peon and had not been delivered by him to Mr. Parikh, Mr. Parikh would not know that the card had been received and though his statement that he did not get the card may be literally true, it would not be true in the sense that the card had not been delivered to the appellant Company. Besides, Mr. Parikhs statement the he did not employ any despatch clerk and kept no inward to outward register is prima facie unbelievable and so, Mukharji J., was inclined to hold that the intimation card may have been received by the appellant Company. Having made this finding, Mukharji J., proceeded to examine the true legal positions in regard to the appellants claim, and as we have already observed, he held that since the appellant was guilty of negligence which facilitated the commission of the offence by some strangers, it was precluded from making a claim against the respondent. As we have already seen, Bose J., has put his decision on the narrow ground that the contract was invalid and S. 70 did not help the appellant. That ground, however, cannot now sustain the final conclusion of Bose J., in view of the recent decision of this Court in the case of M/s. B. K. Mondal and Sons, AIR 1962 779. Therefore, in dealing with the present appeal, we will assume that the finding recorded by Mukharji j., is correct and that the intimation card sent by the respondent to the appellant can be deemed to have been delivered to the appellant.It is in the light of this legal position that the question about estoppel raised by the respondent against the appellant in the Appellate Court may be considered. Can it be said that when the appellant received the intimation card, it owed a duty to the respondent to keep the said card in a locked drawer maintaining the key all the time with its Director? It would not be easy to answer this question in the affirmative; but assuming that the appellant had a kind of duty towards the respondent having regard to the fact that the intimation card was an important document the presentation of which with an endorsement as to authorisation duly made would induce the respondent to issue a cheque to the person presenting it, can the Court say that in trusting its employees to bring letters from the letter box to the Director, the appellant had been negligent? As we have already observed, in dealing with the present dispute on the basis that the intimation card had been dropped in the letter box of the appellant, it is possible to hold either that the said card was collected by the Peon and given over to Mr. Parikh, or it was not. In the former case after Mr. parikh got the said card, it had been removed from Mr. Parikhs table by someone, either by one of the eimployees of Mr. Parikh or some stranger. In the latter case, though, technically, the card had been delivered in the letter box of the appellant, it had not reached Mr. Parikh. In the absence of any collusion between Mr. Parikh and the person who made fraudulent use of the intimation card, can the respondent be heard to say that Mr. Parikh did not show that degree of diligence in receiving the card or in keeping it in safe custody after it was received as he should have? In our opinion, it would be difficult to answer this question infavour of the respondent. In ordinary course of business, every office that receives large correspondence keeps a letter box outside the premises of the office. The box is locked and the key is invariably given to the peon to collect the letters after they are delivered by postal Peons. This course of business proceeds on the assumption which must inevitably be made by all businessmen that the servants entrusted with the task of collecting the letters would act honestly, Similarly, in ordinary course of business, it would be assumed by a businessmen that after letters are placed on the table or in a file which is kept atplace, they would not be pilferred by any of his employees. Under these circumstances, if the intimation card in question was taken away by some fraudulent person, it would be difficult to hold that the appellant can be charged with negligence which, in turn, can be held to be the proximate cause of the loss caused to the respondent. In our opinion, therefore, Mukharji J., was in error in holding that the respondent could successfully plead estoppel by negligence against the appellant. As we have already observed, the question as to whether the claim made by the appellant against the respondent under S. 70 is concluded by the decision of this Court in the case of M/s. B. K. Mondal and Sons, AIR 1962 SC 779   in favour of the appellant,and so, it must be held that the Division Bench of the High Court erred in dismissing the appellants claim.