Case: The Morvi Mercantile Bank Ltd. And Anr Vs. Union Of India, Through The General Manager,Central Railwa

railway receipt to the consignee, the only remedy of the endorsee being against the endorser. This was the position in English law, except in the case of bills of lading the transfer of which by the Law Merchant operated as a transfer of the possession of as well as the property in the goods, as observed by Lord Wright in 61 Ind App 416 at p. 422 (AIR 1934 PC 246 at p. 248). The endorsee may bring an action as an assignee of the contract of carriage but then the assignment has to be proved as in every other case. It is true that by reason of S. 137 of the Transfer of Property Act, the provisions relating to the transfer of an actionable claim do not apply to a railway receipt, and the assignment need not be according to any particular form, but a railway receipt is not like a negotiable instrument (See Mercantile Bank of India Ltd. v. Central Bank of India Ltd., 65 Ind App 75 at p. 91 : (AIR 1938 PC 52 at p. 58).) It is also apparent that subject to the exceptions mentioned in Ss. 30 and 53 of the Indian Sale of Goods Act, 1930, and S. 178 of the Contract, Act, 1872, its possessor cannot give a better title to the goods than he has. The negotiation of the railway receipt may pass the property in the goods, but it does not transfer the contract contained in the receipt or the statutory contract under S. 74-E of the Indian Railways Act. Negotiability is a creature of statute of mercantile usage, not of judicial decisions apart from either. So, in the absence of any usage of trade or any statutory provision to that effect, a railway receipt cannot be accorded the benefits which flow from negotiability under the Negotiable Instruments Act, so as to entitle the endorsee as the holder for the time being of the document of title to sue the carrier ----the railway authorities in his own name. If the claim of the plaintiff is as an ordinary assignee of the contract of carriage, then the plaintiff has to prove the assignment in his favour. In the present case the plaintiff bank has furnished no such proof of assignment in its favour. In view of cl.(3) of the notice printed at the back of the railway receipt it is clear that an endorsement made on the face of the railway receipt by the consignee is meant to indicate the person to whom the consignee wishes delivery of the goods to be made if he himself does not attend to take delivery. An endorsement made by the consignee on the face of the railway receipt requesting the railway company to deliver the goods to the endorsee merely conveys to the railway company that the person in whose favour the endorsement is made by the consignee is constituted by him a person to whom he wishes that delivery of the goods should be made on his behalf. Clause (3) of the notice printed it the back of the Railway receipt states:"That the railway receipt given by the railway company for the articles delivered for conveyance, must be given up at destination by the consignee to the railway company, otherwise the railway may refuse to deliver and that the signature of the consignee or his agent in the delivery book at destination shall be evidence of complete delivery. 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 he wishes it 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". In the present case the plaintiff has not proved by proper evidence an assignment of the contract of carriage. In our opinion, the law on the point has been correctly stated by Bhagwati, J in 48 Bom LR 698 : AIR 1947 Bom 169. It follows, therefore, that the plaintiff has no right to bring the present suit against the Union of India. 26. Counsel for appellant has referred to the practice of merchants in treating a railway receipt as a symbol of goods and in making pledge of goods by pledge of railway receipts, but no such practice or custom has been alleged or proved on behalf of the plaintiff in the present case. In the absence of such allegation or proof it is not open to the Court to take any judicial notice of any such practice. Counsel for appellant also referred to possible inconvenience and hardship to merchants if such a practice is not judicially recognised, but the argument from inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure. In Sutters v. Briggs, 1922-1 AC 1 at p.8 Lord Birkenhead stated:"The consequences of this view of S. 2 of the Gaming Act, 1835 will no doubt be extremely inconvenient to many persons. But this is not a matter proper to influence the house unless in a doubtful case affording foothold for balanced speculation as to the probable intention of the legislature". In the present case the language of S.178 of the Contract Act is clear and explicit and if any hardship and inconvenience is felt it is for Parliament to take appropriate steps to amend the law and not for the courts to legislate under the guise of interpretation. 27. For the reasons expressed, we hold that Civil Appeal 474 of 1962 brought by the plaintiff bank should be dismissed and Civil Appeal 475 of 1962 brought by the Union of India through the General Manager, Central Railway should be allowed with costs and the suit of the plaintiff-bank should be dismissed with costs throughout. 28. ORDER

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

Explanation:
1[ds]The answer to this question depends upon the construction of S. 180 of the Contract Act. It reads:"If a third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made; and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury."Under this section, a pledge being a bailment of goods as security for payment of a debt, the pledgee will have the same remedies as the owner of the goods would have against a third person for deprivation of the said goods or injury to them. If so, it follows that the Bank, being the pledgee, can maintain the present suit for the recovery of the full value of the consignments amounting to Rs. 35,500The firm borrowed a sum of Rs. 20,000 from the Bank and executed a promissory note, Ex.104, dated October 6, 1949, in its favour. It also endorsed the railway receipts Nos. 233-27, 233/35 and 233/36 in favour of the Bank. The Accountant of the Bank deposed that the railway receipts were endorsed in favour of the Bank, which had advanced the said amount to the firm on the security of the said railway receipts. The evidence of this witness was not challenged in the High Court. The Bank advanced a large amount of money to the firm. The three transactions, namely, the advancing of loan, the execution of the promissory note and the endorsement if the railway receipts, together form one transaction. Their combined effect is that the Bank would be in control of the goods till the debt was discharged. This is a well known practice followed by Banks. The Judicial Committee both in 43 Ind App 164 : (AIR 1916 PC 7), and 61 Ind App 416 : (AIR 1934 PC 246  ) held that such a transaction was a pledge. We, therefore, hold on the facts of this case that the firm by endorsing the railway receipts in favour of the Bank for consideration pledged the goods covered by the said receipts to the Bank15. In this view it is not necessary to express our opinion on the question whether if the transaction was not a pledge of the goods, the Bank would be entitled to sue on the basis of the contract entered into between the firm and the railway.