Case: Union Of India Vs. Mahadeolal Prabhudayal

1. This is an appeal on a certificate granted by the Patna High Court. The respondent sued the Union of India as representing G. I. P. Railway, Bombay and E. I. R. Calcutta for recovery of damages for nondelivery of 31 bales of piece goods, out of 60 bales which had been consigned to Baidyanathdham from Wadibundar. This consignment was loaded in wagon No. 9643 on December 1, 1947. It is not in dispute that the consignment reached Mughalsarai on the morning of December 9, 1947 by 192 Dn. goods train. After reaching Mughalsarai, the wagon was kept in the marshalling yard till December 12, 1947. It was sent to Baidyanathdham by 214 Dn. goods train from Mughalsarai at 6-40 p.m. on December 12, 1947 and eventually reached Baidyanathdham on December 21, 1947. The respondent who was the consignee presented the railway receipt on the same day for delivery of the consignment. Thereupon the railway delivered 29 bales only to respondent and the remaining 31 bales were said to be missing and were never delivered. Consequently on August 31, 1948, notice was given under S. 80 of the Civil Procedure Code and this was followed by the suit out of which present appeal has arisen on November 20, 1948. The consignment had been booked under risk note form Z, which for all practical purposes is in the same terms as risk note from B. The respondent claimed damages for non-delivery on the ground that of the non-delivery was due to the misconduct of the servants of the railway, and the claim was for a sum of Rs.36,461-12-02. The suit was resisted by the appellant and a number of defences were taken. In the present appeal we are only concern with two defences. It was first contended that the suit was barred by S. 77 of the Indian Railways Act, No. IX of 1890, (hereinafter referred to as the Act), in asmuch as notice required therein was not given by the respondent. Secondly it was contended that the consignment was sent under risk note form Z and under the terms of that risk note the railway was absolved from all responsibility for loss, destruction or deterioration of goods consigned thereunder from any cause whatsover except upon proof of misconduct of the railway or its servants, and that the burden of proving such misconduct subject to certain exceptions was on the respondent and that the respondent had failed to discharge that burden. Further in compliance with the terms of the risk note, the Railway made a disclosure in the written statement as to how the consignment was dealt with throughout the period it was in its possession or control. The case of the railway it this connection was that there was a theft in the running train between Mughalsarai and Buxar on December 12, 1947 and that was how part of the consignment was lost. As the loss was not due to any misconduct on the part of the railway or its servants and as the respondent had not discharged the burden which lay on him after the railway had given evidence of how the consignment had been dealt with, there was no liability, on the railway3. On the first point, the trial Court held on the basis of certain decisions of the Patna High Court that no notice under, S. 77 was necessary in a case of non-delivery which was held to be different from loss. On the second point relating to the responsibility of the railway on the basis of risk note form Z, the trial Court held that it had not been proved that the loss was due to misconduct of the railway or its servants. It therefore, dismissed the suit4. Then followed an appeal by the respondent to the High Court. The High Court apparently upheld the finding of the trial Court on the question of notice under S. 77. But on the second point the High Court was of opinion that there was a breach of the condition of disclosure provided in risk note Z under which the consignment had been booked, and, therefore, the appellant could not take advantage of the risk note at all and the liability of the railway must be assessed on the footing of a simple bailee. It, therefore, went on to consider the liability of the railway as a simple bailee and held on the evidence that the railway did not take proper care of the wagon at Mughalsarai and that in all probability, the seals and rivets of the wagon had been allowed to be broken there and all arrangements had been completed as to how the goods would be removed from the wagon when the train would leave that station and this could only be done either by or in collusion with the servants of the railway at Mughalsarai. In this view of the matter the High Court allowed the appeal and decreed the suit with costs. As the judgment was one of reversal and the amount involved was over rupees twenty thousand, the High Court granted a certificate; and that is how the matter has come up before us.

Court's reasoning:
12. With respect we are of opinion that this exposition of the law relating to risk note B applies also to risk note Z and we accept it as correct. Thus the responsibility of the railway administration to disclose to the consignor how the consignment was dealt with throughout the time it was in its possession or control arises at once under the agreement in either of the cases (a) or (b) and is not confined to the stage of litigation. But we are not prepared to accept the contention on behalf of the respondent that this responsibility to make full disclosure arises immediately the claim is made by the consignor and if the railway immediately on such claim being made does not disclose all the facts to the consignor, there is immediately a breach of this term of the contract contained in the risk note. It is true that the railway is bound to disclose to the consignor how the consignment was dealt with throughout the time it was in its possession even before any litigation starts; but we are of opinion that such disclosure is necessary only where the consignor specifically asks the Railway to make the disclosure. If no such disclosure is asked for, the administration need not make it before the litigation. In the present case there is no proof that any disclosure was asked for in this behalf by the consignor at any time before the suit was filed. Therefore, if the railway did not disclose how the consignment was dealt with throughout before the suit was filed, it cannot be said to have committed breach of this term of the contract. The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its servants. If the disclosure is asked for before the litigation commences and is not given or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the Court then to say if a suit is brought whether there has been a breach of this term of the contract13. After this, comes the stage where the consignor or the consignee being dissatisfied brings a suit for compensation. At that stage evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation to the consignor or which might have been made in the written statement in reply to the suit. When the railway administration has given its evidence in proof of the disclosure and the plaintiff is not satisfied with the disclosure made in the evidence, the plaintiff is entitled to ask the Court to call upon the railway to fulfil its obligation under the contract and the railway should then have the opportunity of meeting the demands of the plaintiff before its case is closed. Thus in addition to the evidence that the railway may adduce on its own (and in doing so the railway has necessarily to keep in mind the provisions of S. 114 of the Indian Evidence Act) the plaintiff can and should draw the attention of the Court if he feels that full disclosure has not been made. In that case he can ask the Court to require the railway to make further disclosure and should tell the Court what further disclosure he wants. It is then for the Court to decide whether the further disclosure desired by the plaintiff should be made by the railway, and if the Court decides that such further disclosure should be made the railway has to make such further disclosure as the Court orders it to make on the request of the plaintiff. If the railway fails to take the opportunity so given to satisfy the demands of the plaintiff, endorsed by the Court, the railway would be in breach of its contractual obligation of disclosure. It is at this stage, therefore, that the railway can be truly said to be in breach of its contractual obligation of disclosure, and that breach arises because the railway failed to disclose matters which the Court on the request of the plaintiff asks it to disclose. The question then is what is the effect of this breach14. It is remarkable that the Privy Council did not lay down that as soon as the breach is made as above the risk note comes to an end and the responsibility of the railway is that of a bailee under S. 72 (1) of the Act. In the observations already quoted, the Privy Council has gone on to say that after this stage is over, the question may arise whether misconduct may be fairly inferred from the evidence of the railway. It seems to us, therefore, that even if there is a breach of the term as to full disclosure it does not bring the contract to an end and throw the responsibility on the railway as if the case was a simple case, of responsibility under S. 72 (1) of the Act; the case is thus not assimilated to a case where goods are carried at the ordinary rates at railway risk. The reason for this seems to be that the goods have already been carried at the reduced rates and the consignor has taken advantage of that term in the contract. Therefore, even though there may be a breach of the term as to complete disclosure by the railway the consignor cannot fall back on the ordinary responsibility of the railway under S. 72 (1) of the Act as if the goods had been carried at railways risk at ordinary rates, for he has derived the advantage of the goods having been carried at a specially reduced rates. The risk note would in our opinion continue to apply and the Court would still have to decide whether misconduct can be fairly inferred from the evidence of the railway with this difference that where the railway has been in breach of its obligation to make full disclosure misconduct may be more readily inferred and S. 114 of the Indian Evidence Act more readily applied. But we do not think that the conditions in the risk note can be completely ignored simply because there has been a breach of the condition of complete disclosure. The view of the Patna High Court that as soon as there is breach of the condition relating to complete disclosure the risk note can be completely ignored and the responsibility of the railway judged purely on the basis of S. 72 (1) as if the goods were carried at the ordinary rates on railways risk cannot, therefore, be accepted as correct15. We may point out that in Surat Cotton Spinning and Weaving Mills Ltd.s case, 64 Ind App 176: (AIR 1937 PC 152  ), the plaintiffs wanted the guard of the train to be examined and he was undoubtedly a material witness. Even so the witness was not examined by the railway. Finally, therefore, the Privy Council allowed the appeal with these observations at p. 189 (of Ind App): (at p. 157 of AIR):"While their Lordships would be inclined to hold that the respondent, by his failure to submit the evidence of Rohead, was in breach of his contractual obligation to give the evidence necessary for disclosure of how the consignment was dealt with, they are clearly of opinion that the failure to submit the evidence of Rohead, in the circumstances of this case, entitles the Court to presume, in terms of S. 114 (g) of the Evidence Act, that Roheads evidence, if produced, would be unfavourable to the respondent, and that, in consequence, misconduct by complicity in the theft of some servant or servants of the respondent may be fairly inferred from the respondents evidence."These observations show that even though there may be a breach of the obligation to give full disclosure that does not mean that the risk note form Z or form B can be ignored and the responsibility of the railway fixed on the basis of S. 72 (1) as a simple bailee. If that was the effect of the breach, the Privy Council would not have come to the conclusion after applying S. 114 (g) of the Evidence Act in the case of Rohead that misconduct by complicity in the theft of some servant or servants of the railway may be fairly inferred from the railways evidence. The appeal was allowed by the Privy Council after coming to the conclusion that misconduct by the servant or servants of the railway might be fairly inferred from the evidence including the presumption under S. 114(g) of the Evidence Act. It seems to us clear, therefore that even if there is a breach of the obligation to make full disclosure in the sense that the railway does not produce the evidence desired by the plaintiff in the suit even though the request of the plaintiff is endorsed by the Court, the effect of such breach is not that the risk note is completely out of the way, the reason for this as we have already indicated bring that the consignor has already taken advantage of the reduced rates and, therefore, cannot be allowed to ignore the risk note altogether. But where there is a breach by the railway of the obligation to make full disclosure the Court may more readily infer misconduct on the part of the railway or its servants or more readily presume under S. 114(g) of the Evidence Act against the railway. This in our opinion is the effect of the decision of the Privy Council in Surat Cotton Spinning and Weaving Mills Limiteds case, 64 Ind App 176 : (AIR 1937 PC 152  ). As we have already said we are in respectful agreement with the law as laid down there16. So far as the present appeal is concerned, there was no demand by the consignor for disclosure before the suit Even after the suit was filed there was no statement by the respondent at any stage that the disclosure made by the appellant in the evidence was in any way inadequate. The respondent never told the Court after the evidence of the railway was over that he was not satisfied with the disclosure and that the railway be asked to make further disclosure by producing such further evidence as the respondent wanted. In these circumstances it cannot be said in the present case that there was any breach by the railway of its responsibility to make full disclosure. In the circumstance, we are of opinion that the risk note would still apply and the Court would have to decide whether misconduct on the part of the railway can be fairly inferred from the evidence produced by it. If the Court cannot fairly infer misconduct from the evidence adduced by the railway, the burden will be on the respondent to prove misconduct. That burden, if it arises, has clearly not been discharged for the respondent led no evidence on his behalf to discharge the burden. We, therefore, turn to the evidence to see whether from the evidence produced by the railway a fair inference of misconduct of the railway or its servants can be drawn on the facts of this caseWe are, however of opinion that the evidence of the guard to the effect that the seals were intact when he left Mughalsarai with the train is sufficient to show that the wagon was intact with the original seals when it left Mughalsarai and, therefore, it is not possible to draw any adverse inference from then of the watch and ward staff or the seal book of Mughalsarai in the circumstances of this case. It would have been a different matter if the respondent had asked for the production of the seal book as well as the evidence of the watch and ward staff. But the respondent contended itself merely with the suggestion that a theft might have taken place at Mughalsarai which was denied by the guard and did not ask the Court to order the railway to produce this evidence. In these circumstances in the face of the evidence of the guard and the fact that one seal on the southern side of the door was of the original station, we do not think that it is possible to draw an adverse inference against the railway on the ground that the evidence of the watch and ward staff and the seal book at Mughalsarai were not produced. The seal book would have been of value only if the wagon had been resealed at Mughalsarai but there is, in our opinion, no reason to think that the wagon had been resealed at Mughalsarai after the evidence of the guard that he found the seals and rivets intact when he left Mughalsarai with the train. On a careful consideration of the evidence, therefore, we are of opinion that a fair inference cannot be drawn from the evidence of the railway that there was misconduct by the railway or its servants at Mughalsarai during the time when the wagon was there. If the evidence of the guard is accepted, and we do accept it, there can be no doubt that the loss of the goods took place because of theft in the running train between Mughalsarai and Buxar. There is no evidence on behalf of the respondent to prove misconduct and as misconduct cannot fairly be inferred from the evidence produced on behalf of the railway, the suit must fail.