Case: Union Of India Vs. West Punjab Factories Ltd

1. These three appeals raise common questions and will be dealt with together. They arise out of two suits filed against the Government of India claiming damages for loss of goods which were destroyed by fire on the railway platform at Morar Road Railway Station. One of the suits was filed by Birla Cotton Factory Limited, now represented by the West Punjab Factories Limited (hereinafter referred to as the factory). It related to six consignments of cotton bales booked from six stations on various dates in February and March 1943 by the factory to Morar Road Railway Station. In five of the cases, the consignment was consigned to J. C. Mills while in one it was consigned to self. The consignments arrived at Morar Road Railway Station on various dates in March. Delivery was given of a part of one consignment on March 7, 1943 while the remaining goods were still in the custody and possession of the railway. On March 8, 1943 a fire broke out at the Morar Road Railway Station and these goods were involved in the first and serve damage was caused to them. It is not necessary to refer to the details of the damage for the matter is not in dispute between the parties. The case of the Factory was that the damage and loss was caused while the goods were in the custody and control of the railway administration and it was due to misconduct, negligence and carelessness on the part of the railway administration. Consequently, the suit was filed for Rs. 77,000 and odd along with interest upto the date of the suit and interest pendente lite and future interest2. In the other suit there was one consignment of 45 bales of cotton yarn. This consignment was booked from Belangunj to Morar Road Railway Station on February 22, 1943 and the railway receipt relating to this consignment was endorsed in favour of Ishwara Nand Sarswat who filed the suit. This consignment arrived at Morar Road Railway Station on February 23, 1943. Ishwara Nand Sarswat went to take delivery of this consignment on March 10, 1943, his case being that he had received the railway receipt on March 9, 1943. He then came to know that the consignment was involved in a fire which had taken place on March 8, 1943 and serve damage had been done to the consignment. Ishwara Nand Sarswat therefore, filed the suit on the ground that damage and loss was due entirely to the gross negligence of the railway administration. He claimed Rs. 72,000 and odd as damages and also claimed interest upto the date of the suit and pendente lite and future interest3. The suits were resisted by the Government of India. In the first suit by the Factory, it was pleaded that the Factory could not sue as the goods in five of the receipts had been consigned to the J. C. Mills; secondly, it was pleaded that delivery had been given of at least five of the consignment to the J. C. Mills before the fire broke out and the railway administration was not, therefore, responsible for the damage done by the fire, for it was the fault of the J. C. Mills not to have removed the goods immediately after the delivery; thirdly, it was pleaded that damages should have been granted at the rate of Rs. 38 per bale, which was the price contracted for between the buyer and the seller and not at the market rate on the date of the damage as was done by the Courts below; fourthly, it was pleaded that no interest should have been allowed for the period before the suit; and lastly, it was pleaded that the conduct of the railway administration was not negligent and, therefore, the railway was not bound to make good the loss4. On these pleas, five main issues relating to each of them were framed by the trial Court. The trial Court found that the Factory could maintain the suit and decided accordingly. It also found that in the case of five consignments by the Factory, delivery had been given before the fire broke out and therefore the railway was not responsible; in the case of the sixth consignment it held that there was no proof that delivery had been given before the fire broke out and that the railway would be responsible if negligence was proved. On the quantum of damages, the trial Court held that the damages had to be calculated at the market price on the date of the fire and not at the contract price between the buyer and seller. On the question of interest, the trial Court held that interest before the date of the suit should be allowed on equitable grounds. Finally, on the question of negligence, the trial Court held that there was negligence by the railway and it was, therefore, liable for loss and damage caused by the fire which broke out on March 8, 1943. As, however, the trial Court had held that delivery had been given in the case of five consignments, though the goods had not been removed, the railway was not responsible for the loss. It therefore, decreed the suit in part with respect to the sixth consignment about which it had found that there had been no delivery5. The same issues were raised in the suit by Ishwara Nand Sarswat. But there was one additional issue in that suit based on the contention of the Government of India that it had given notice to Ishwara Nand that the consignment had arrived on February 23, 1943, Ishwara Nand, however, did not come to remove the goods, till March 8, 1943 when the fire broke out; therefore, it was urged that the liability of the railway administration as carrier had ceased after the lapse of reasonable time after arrival of the consignment at the railway station. This reasonable time could not be beyond three days in any case and, therefore, the railway administration was not bound to make good the loss even if it had been occasioned on account of the negligence of the administration. As Ishwara Nand should have removed the consignment within three days of February 23, it was his failure to do so which resulted in the damage and loss;. The issues which were common to this suit and the suit by the Factory were decided on the same lines by the trial Court as in the suit by the Factory. On the further issue which arose in this suit as to the delay in the removal of goods after notice to Ishwaraa Nand, the trial Court held after reference to certain rules made by the railway administration that even if the railway administrations responsibility as carrier had ceased after the lapse of reasonable time, it was still liable as a baliee either as a warehouseman or as a gratuitous bailee. It, therefore, gave a decree for Rs. 76,000 and odd to Ishwaraa Nand6. Then followed three appeals to the High Court two in the suit by the Factory and one in the suit of Ishwaraa Nand. The appeal in the suit by Ishwaraa Nand was by the Government of India; one appeal in the suit by the Factory was by the Factory with respect to that part of the claim which had been dismissed, and the case of the Factory was that in fact no delivery had been made to it and it was entitled to the entire sum claimed as damages. The other appeal was by the Government of India with respect to the amount decreed by the trial Court and it raised all the contentions which had been raised before the trial Court7. The High Court dealt with the three appeals together. In all appeals the High Court confirmed the finding of the trial Court that there had been negligence on the part of the railway which resulted in damage to the goods. On the question whether the suit could be maintained by the plaintiffs, the High Court affirmed the finding of the trial Court that both the suits were maintainable. The High Court also affirmed the finding of the trial Court with respect to the rate at which damages should be calculated and on the question of interest before the date of the suit. Further in the suit by Ishwaraa Nand, the High Court held that even if the railway administration ceased to be responsible as a carrier after a reasonable time had elapsed after the arrival of the goods at Morar Road Railway Station, it was still responsible as a warehouseman. The appeal, therefore, of the Government of India in Ishwaraa Nands suit was dismissed. On the question of delivery in the Factorys suit the High Court disagreed with the finding of the trial Court that there had been delivery of five consignments. It held that there was no effective delivery even of these five consignments. In consequence, the appeal of the Factory was allowed while that of the Government of India was dismissed8. The followed applications to the High Court for leave to appeal to this Court in the Factorys suit. The High Court granted the certificate as the judgment was one of variance and the amount involved was over rupees twenty thousand. However, in the suit of Ishwaraa Nand, the High Court refused to grant a certificate as the judgment was one of affirmance and no substantial question of law arose. Thereupon the Government of India applied to this Court for special leave in Ishwara Nands suit and that was granted. The three appeals have been consolidated in this Court for as will be seen from what we have said above, the principal points involved in them are common.

Court's reasoning:
The mere fact that the consignee is different from the consignor does not necessarily pass title to the goods from the consignor to the consignee, and the question whether title to goods has passed to the consignee will have to be decided on other evidence. It is quite possible for the consignor to retain title in the goods himself while the consignment is booked in the name of another person. Take a simple case where a consignment is booked by the owner and the consignee is the owners servant, the intention being that the servant will take delivery at the place of destination. In such a case the title to the goods would not pass from the owner to the consignee and would still remain with the owner, the consignee being merely a servant or agent of the owner or consignor for purposes of taking delivery at the place of destination. It cannot therefore, be accepted simply because a consignee in a railway receipt is different from a consignor that the consignee must be held to be the owner of the goods and he alone can sue and not the consignor11. The contract between the Factory and the J. C. Mills was that delivery would be made by the seller at the godown of the J. C. Mills. The contract also provided that the goods would be despatched by railway on the sellers risk upto the point named above (namely, the godowns of the J. C. Mills). Therefore, the property in the goods would only pass to the J. C. Mills when delivery was made at the godown and till then the consignor would be the owner of the goods and the goods would be at its risk. Ordinarily, the consignments would have been booked in the name of "self" but it seems that there was some legal difficulty in booking the consignments in the name of self and, therefore, the J. C. Mills agreed that the consignments might be booked in the Mills name as consignee; but it was made clear by the J. C. Mills that the contract would stand unaffected by this method of consignment and all risk, responsibility and liability regarding these cotton consignments would be of the Factory till they were delivered to the J. C. Mills in its godowns as already agreed upon under the contract and all losses arising from whatever cause to the cotton thus consigned would be borne by the Factory till its delivery as indicated above. This being the nature of the contract between the consignor and the consignee in the present case we have no hesitation in agreeing with the Courts below that the property in the goods was still with the Factory when the fire broke out on March 8, 1943. Therefore, the ordinary rule that it is the consignor who can sue will prevail here because it is no proved that the consignor had parted with the property in the goods, even though the consignments were booked in the name of the J. C. Mills. We are, therefore, of opinion that the suit of the Factory was in view of these circumstances maintainable13. Thus there are concurrent findings of the two Courts below that Ishwaraa Nand was the owner of the goods and that was why the railway receipt was endorsed in his favour. In these circumstances he is certainly entitled to maintain the suit. The contention that the plaintiffs in the two suits could not maintain them must, therefore, be rejectedWe are of opinion that on the evidence the view taken by the High Court is correct. Though there was a token delivery as appears from the fact that railway receipts had been surrendered and the delivery book had been signed, there was no real delivery by the railway to the consignee, for the goods had not been unloaded and were still under the control and custody of the railway and Har Prashads evidence is that his permission had still to be taken before the goods could be actually removed by the consignee. The contention that the delivery had been made to be consignee before March 8, 1943 must, therefore, in the peculiar circumstances of this case fail15. It is next contended that damages should have been awarded at the rate of Rs. 38 per bale which was the contract price between the factory and the J. C. Mills.This contract was made in November 1942. The contract price is in our opinion no measure of damages to be awarded in a case like the present. It is well settled that it is the market price at the time the damage occurred which is the measure of damages to be awarded.It is not in dispute that the trial Court has calculated damages on the basis of the market price prevalent on March 8. In these circumstances this contention must also be rejectedThe position of law in India is slightly different from that in England, for here the railway is only a bailee in the absence of any special contract and it is only when it is proved that the railway did not take such care of the goods 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, that the railways responsibility arises. A warehouseman is also a bailee and, therefore, the railway will continue to be a warehouseman under the bailment, even if its responsibility as a carrier after the lapse of a reasonable time after arrival of goods at the destination comes to an end. But in both cases the responsibility in India is the same, namely, that of a bailee, and negligence has to be proved. In view of the rules to which we have already referred it is clear that the railways responsibility as a warehouseman continues even if its responsibility as a carrier comes to end after the lapse of a reasonable time after the arrival of goods at the destination. The responsibility as a warehouseman can only come to end in the manner provided by Ss. 55 and 56 of the Railways Act and the Rules which have been framed and to which we have already referred as to the disposal of unclaimed goods. In the present case under the Rules the goods had to remain at Morar Road Railway Station for a period of one month after their arrival there and Ishwara Nand came to take delivery of them on March 10 - well within that period. It may be that as he did not come within three days he has to pay wharfage or what is called demurrage in railway parlance, but the responsibility of the railway as a warehouseman certainly continued till March 10 when Ishawar Nand went to take delivery of the goods. As it is has been found that there had been negligence within the meaning of Sections 151 and 152 of the Indian Contract Act the railway would be liable to make good the loss caused by the fire.