Case: Scindia Steam Navigation Co. Ltd Vs. Union of India

claim was being considered by them. We have, for instance, a letter addressed to the Stores Accounts Officer, E. P. Railway, Delhi, by the Head-quarters Office at Delhi in which the appellants claim is indicated at serial numbers 4 and 5, and the Stores Accounts Officer is asked to deal with it. The Administrative Officer, E. P. Railway, Delhi, wrote to appellant 1 to say that its claim had been registered and that further action would be taken when orders of the Railway Board had been received. The appellants then reminded the railway officers from time to time and on August 5, 1950, their attorneys were told that the claim was still under verification by the N. W. Railway and until it is verified by the F. A. and C. A. O., N. W. Railway, Lahore, it could not be finalised. The attorneys of the appellants then enquired as to how much time the process of verification would take, but since no satisfactory answer was given the appellants filed the present suit. It is, however, clear that some attempts were made by the railway authorities in India for getting the appellants claim verified but the said attempts did not succeed. Indeed, the learned Attorney-General, for the respondent, has filed an affidavit by Mr. R. L. Takyar, Legal Assistant, Northern Railway, Baroda House, New Delhi, which shows that in pursuance to the assurance given by the learned Advocate-General before the Bombay High Court attempts were made by the respondent to have the appellants claim verified but the said attempts failed, and it adds that "in the absence of the verification of the claim and the authorisation by the Pakistan Government, the Union of India was not in a position to make any payment ex gratia to the appellants". We sympathise with the grievance made by the appellants that they have been driven from pillar to post and have yet received no satisfaction to their claim either from the Pakistan Government or from the respondent; but the difficulty in the way of the appellants is that the statements in the correspondence to which we have been referred do not at all justify the appellants claim that the Communique represents an agreement between the two Dominions. First of all the appellants should have taken proper steps to prove the said Communique and should have called upon the respondent to produce all relevant documents in respect of the alleged agreement on which the appellants relied. Besides, the terms of the Communique themselves negative the theory that the Communique represents an agreement between the two Dominions. The Communique expressly refers to the discontinuance of payment by the Pakistan Government from about the middle of December owing to difference of opinion between the two Governments about the liability of these payments, and it proceeds to state the decision of the respondent that in order to avoid hardships to suppliers and contractors the respondent had decided that it should undertake initial liability for these payments and recover Pakistans share through Debt Settlement. That sometimes in the course of the correspondence the Pakistan authorities referred to the Press Communique as a joint Communique can hardly assist the appellants in showing that the Communique was the result of an agreement between the two Dominions. It is not unlikely that there may have been some agreement between the two Dominions because the conduct of the railway authorities in India can be satisfactorlly explained only on the basis of some agreement or other; but unfortunately the appellants have not produced sufficient or satisfactory material to prove their case that there was a specific agreement between the two Dominions which brought into play the provisions of Art. 3 (1) of the Order. On the material produced by the appellants the Courts below have made a concurrent finding that no such agreement had been proved. Having gone through the correspondence to which our attention was drawn we are satisfied that the appellants cannot successfully attack the validity or correctness of the said concurrent conclusion. Therefore, if the theory of an agreement between the two Dominions fails the Press Communique cannot help to sustain the appellants claim against the respondent. It is not suggested by the appellants that the unilateral statement which is contained in the Press Communique can itself without anything more help to sustain the appellants claim.17. Then Mr. Purshottam wanted to contend that the respondent was estopped from disputing its liability under the contract, and he also wanted to urge the ground of novatio. His contention was that the facts necessary for the purpose of pleading estoppel and novatio were available on the record in the interest of justice he should not be precluded from urging those points on the ground that the appellants had not taken the said points in the trial Court. We are not impressed by this argument.There can be no doubt that both the pleas are pleas which can be effectively raised only after pleading the relevant and material fact; had been averred in the plaint on which either of the two pleas can be raised and no issue was asked for in the trial Court in respect of either of the said pleas the Appeal Court was justified in refusing leave to the appellants to raise the said pleas for the first time in appeal. In our opinion. Mr. Purshottam is not right in contending that the Appeal Court was unduly technical when it refused leave to the appellants to raise the said pleas.We have already seen that on the pleadings as many as eleven issues were framed by the learned trial Judge. The plaint itself is an elaborately drawn document, and so the appellants cannot be heard to complain if for their failure to make adequate and proper pleadings they are not allowed to raise the plea of estoppel or novatio at the appellate stage. In our opinion, therefore, the Appeal Court was right in not permitting the said pleas to be raised in appeal.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]It would thus be seen that in considering the nature of the contract in the present appeal either of the two artificial tests approved by this Court must be applied.It is clear that the fact that the contract in question was made by the Conservator of Forests, Kanara, is immaterial in determining its character under Art. 8 (1), nor is it relevant to consider the fact that the contract had been made on behalf of theRailway. It is obvious that all contracts prior to the appointed day were made by the officers of the Government of India or by or on behalf of the said Government; and so both the Courts below are rightly agreed that in determining the character of the contract who initially made the contract with the appellants is of no relevance. Similarly the respondent cannot rely on the fact that the contract was made on behalf of the NorthWestern Railway and the originalRailway has now been split up into two sections, the Pakistan section being known by the name ofRailway and the Indian section being known by the name of Eastern Punjab Railway. It may be that theRailway on whose behalf the contract was made now runs in Pakistan alone, but that is hardly relevant for determining the character of the contract. In dealing with this question we must look at the substance of the contract and not its form.13. It is true that the timber which was carried to Karachi under the contract was for the purposes of theRailway as a whole and there is no evidence on the record to show that it was intended to be used for that section of the said railway which ran either through Sind or Western Punjab which subsequently formed part of Pakistan. On the other hand, the Appeal Court has found that the goods were lying in Karachi from August 15, 1947, to December 1947, and that it can be taken to be established that these goods were in the Dominion of Pakistan on the relevant date, and had been in fact used for the purposes of theRailway which was in the Dominion of Pakistan. We have already seen that the purpose of the contract is not to be confused with the ultimate user or disposal of the goods, but it appears that the learned trial Judge was somewhat influenced by the fact that the goods under the contract were originally intended for the use of theRailway as a whole and since the use of the said railway as a whole could not be said to be limited to the use of Pakistan alone the contract was not exclusively for the purposes of Pakistan. It is only in that context that we have referred to the finding of the Appeal Court that in the circumstances of this case there can be no doubt that the goods which lay in Karachi from August 15,, 1947, to December 1947, have in fact been used by theRailway which fell to the share of the Dominion ofhave seen the nature of the contract. It was a contract for the carriage of logs of teakwood timber from the Kanara forests to Karachi for the purpose of the railway. The destination of the delivery of goods was Karachi, and the object of securing the goods was to use them for the railway. In such a case it is difficult to resist the conclusion that if this contract had been made on August 15, 1947, it would not (sic) have been exclusively for the purposes of Dominion of Pakistan. It is inconceivable that on the appointed day a contract could have been made for the shipment of goods to Karachi unless the contract was for the purposes of the Dominion of Pakistan. If the contract had been even partially for the purposes of India shipment of all the goods to Karachi would not have been the term of the contract. The same result follows if we apply the alternative test. If Pakistan had existed on the date of the contract, in our opinion, the contract as made would obviously and clearly be for the purposes of Pakistan. That is the view taken by the Appeal Court, and we see no reason to differ from it.15. In this connection the Appeal Court has taken into account the fact that the goods had become the property of Pakistan by virtue of Art. 6 of the Order so that on the appointed day the goods the shipment of which was the subjectmatter of the contract were the property of Pakistan. If that be so, we do not see how we can escape the conclusion that the application of either or the two artificial tests prescribed by Art. 8 (1) will inevitably lead to the conclusion that the contract had been made exclusively for the purposes of Pakistan. We have already seen that the tests enunciated by the Bombay High Court in the case of Chinubhai Jeshingbhai, 54 Bom LR 561: (AIR 1953 Bom 13  ), have been expressly approved by this Court in the case of Chaman Lal Loona, 1957 SCR 1039  : ( (S) AIR 1957 SC 652  ). It is true that in terms the significance of the vesting of the title in the goods by the operation of Art. 6 of the Order to which the Bombay High Court attached considerable importance in the case of Chinubhai Jeshingbhai, 54 Bom LR 561: (AIR 1953 Bom 13  ), has not been noticed by this Court, and so in that sense it may be permissible to urge that that part of the judgment had not been expressly approved. However, such a contention, in our opinion is purely technical. We are inclined to hold that the alternative tests which have been expressly approved by this Court are wholly consistent with the consideration of ownership to which the Bombay High Court attached importance and is both relevant and material in the application of the said tests.If the goods which are theof the contract have become the goods of Pakistan that would be a relevant and material fact in considering whether the contract in question if made on the appointed day would have been made by Pakistan, or whether Pakistan would have made the said contract if it had been in existence on the actual date of the contract. Therefore, in our opinion, the Appeal Court was right in coming to the conclusion that the suit contract fell within the scope of Art. 8 (1) (a) and the assumption made by the appellants that Art. (1) (b) could be invoked against the respondent is not wellmay briefly indicate the broad features of the said correspondence. It appears that on July 10,1948, theRailway Department, Government of Pakistan, Karachi, wrote to the General Manager, N. W. Railway, Lahore, in regard to the question about the disposal of preparation claims outstanding against the undivided Government of India. In this letter he set out the contents of the Press Communique on which the appellants rely. The Collector of Stores, Karachi, drew attention of the appellants to the said Communique by his letter dated July 19, 1948. In their correspondence with the railway authorities the appellants have sometimes described this Communique as joint press notification. Similarly, in their letters written to appellant 1 the railway authorities in Pakistan also have described the said Communique as joint notification "said to have been issued by the Dominions of India and Pakistan". Then we have some letters from the railway authorities in India which would show that the appellants claim was being considered by them. We have, for instance, a letter addressed to the Stores Accounts Officer, E. P. Railway, Delhi, by theOffice at Delhi in which the appellants claim is indicated at serial numbers 4 and 5, and the Stores Accounts Officer is asked to deal with it. The Administrative Officer, E. P. Railway, Delhi, wrote to appellant 1 to say that its claim had been registered and that further action would be taken when orders of the Railway Board had been received. The appellants then reminded the railway officers from time to time and on August 5, 1950, their attorneys were told that the claim was still under verification by the N. W. Railway and until it is verified by the F. A. and C. A. O., N. W. Railway, Lahore, it could not be finalised. The attorneys of the appellants then enquired as to how much time the process of verification would take, but since no satisfactory answer was given the appellants filed the present suit. It is, however, clear that some attempts were made by the railway authorities in India for getting the appellants claim verified but the said attempts did not succeed. Indeed, the learnedfor the respondent, has filed an affidavit by Mr. R. L. Takyar, Legal Assistant, Northern Railway, Baroda House, New Delhi, which shows that in pursuance to the assurance given by the learnedbefore the Bombay High Court attempts were made by the respondent to have the appellants claim verified but the said attempts failed, and it adds that "in the absence of the verification of the claim and the authorisation by the Pakistan Government, the Union of India was not in a position to make any payment ex gratia to the appellants". We sympathise with the grievance made by the appellants that they have been driven from pillar to post and have yet received no satisfaction to their claim either from the Pakistan Government or from the respondent; but the difficulty in the way of the appellants is that the statements in the correspondence to which we have been referred do not at all justify the appellants claim that the Communique represents an agreement between the two Dominions. First of all the appellants should have taken proper steps to prove the said Communique and should have called upon the respondent to produce all relevant documents in respect of the alleged agreement on which the appellants relied. Besides, the terms of the Communique themselves negative the theory that the Communique represents an agreement between the two Dominions. The Communique expressly refers to the discontinuance of payment by the Pakistan Government from about the middle of December owing to difference of opinion between the two Governments about the liability of these payments, and it proceeds to state the decision of the respondent that in order to avoid hardships to suppliers and contractors the respondent had decided that it should undertake initial liability for these payments and recover Pakistans share through Debt Settlement. That sometimes in the course of the correspondence the Pakistan authorities referred to the Press Communique as a joint Communique can hardly assist the appellants in showing that the Communique was the result of an agreement between the two Dominions. It is not unlikely that there may have been some agreement between the two Dominions because the conduct of the railway authorities in India can be satisfactorlly explained only on the basis of some agreement or other; but unfortunately the appellants have not produced sufficient or satisfactory material to prove their case that there was a specific agreement between the two Dominions which brought into play the provisions of Art. 3 (1) of the Order. On the material produced by the appellants the Courts below have made a concurrent finding that no such agreement had been proved. Having gone through the correspondence to which our attention was drawn we are satisfied that the appellants cannot successfully attack the validity or correctness of the said concurrent conclusion. Therefore, if the theory of an agreement between the two Dominions fails the Press Communique cannot help to sustain the appellants claim against the respondent. It is not suggested by the appellants that the unilateral statement which is contained in the Press Communique can itself without anything more help to sustain the appellantsare not impressed by this argument.There can be no doubt that both the pleas are pleas which can be effectively raised only after pleading the relevant and material fact; had been averred in the plaint on which either of the two pleas can be raised and no issue was asked for in the trial Court in respect of either of the said pleas the Appeal Court was justified in refusing leave to the appellants to raise the said pleas for the first time in appeal. In our opinion. Mr. Purshottam is not right in contending that the Appeal Court was unduly technical when it refused leave to the appellants to raise the said pleas.We have already seen that on the pleadings as many as eleven issues were framed by the learned trial Judge. The plaint itself is an elaborately drawn document, and so the appellants cannot be heard to complain if for their failure to make adequate and proper pleadings they are not allowed to raise the plea of estoppel or novatio at the appellate stage. In our opinion, therefore, the Appeal Court was right in not permitting the said pleas to be raised in appeal.