Case: State of Kerala Vs. General Manager, Southern Railway, Madras

This appeal by special leave by the State of Kerala is against the Full Bench decision of the Kerala High Court affirming on appeal the judgment and decree of the trial court whereby the suit for recovery of Rs. 28, 208.70 filed by the appellant against the General Manager, Southern Railway respondent wasappellant booked 2,000 tons of rice in 21, 310 bags from Bareilli railway station for being transported to Trivandrum central railway station as per 10 railway receipts during the period from June 25 to July 5, 1950. According to the case of the appellant, the rice delivered at Trivandrum central railway station was short by 79, 378 lbs. It was also averred that the rice in 327 bags was found to be damaged. The appellants accordingly claimed Rs. 28, 208.70 as damages from therespondent resisted the claim of the appellant, inter alia, on the ground that the suit was not maintainable as the Union of India had not been impleaded as a defendant to the suit and that a suit by a State against the Union of India could be instituted only in the Supreme Court of India under article 131 of the Constitution. It is not necessary to set out the other pleas of the respondent. As many as nine issues were framed by the trial court. Two of the issues, namely, issue Nos. 1 and 3, were treated as preliminary issues and arguments were heard on those issues. Issue Nos. 1 and 3 read asIs the suit maintainable ? Can a decree be passed against the defendant as now impleaded ?2. Will the suit lie in this Court ? Is the suit barred by the provisions of the Constitution of Indiaissue No. 3 it was held by the trial court that since the Union of India had not been made a party to the suit, clause (a) of article 31 of the Constitution had no application. The suit was accordingly held to be not liable to be dismissed on that ground. On issue No. 1 the trial court held that the Union of India was a necessary party to the suit and as the Union of India had not been impleaded as a party, the suit was incompetent. As a result of its findings on issue No. 1 the trial court dismissed the suit. The decision of the trial court on issue No. 1 was affirmed in appeal by the High Court. An application was also filed at the hearing of the appeal before the High Court for impleading the Union of India as a party to the suit. The High Court rejected that application on the ground that no useful purpose would be served by allowing that application. It was observed that if the application was allowed and the Union of India was made a party, the suit would have to be dismissed as under article 131(a) of the-Constitution a suit by one State against the Union of India could only lie in the Supreme Court. In the result, the High Court dismissed the appeal filed by the appellant.In appeal before us Mr. Gupte on behalf of the appellant has invited our attention to t he definition of "railway administration" in section 3(6) of the Indian Railways Act, 1890 (Act 9 of 1890) (hereinafter referred to as the Act) which reads asadministration or administration in the case of a railway administered by the Government means the Manager of the railway and includes the Government and, in the case of a railway administered by a railway company, means the railway company,has further referred to sections 72, 74, 76 and 80 of the Act. According to section 72, the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to other provisions of the Act, be that of a bailee under sections 151, 152 and 16 1 ofthe Indian Contract Act, 1872. Section 74 absolves the railway administration of any responsibility for the loss, destruction or deterioration of any luggage belonging to or in charge of a passenger unless a railway servant has hooked and given a receipt therefore. Section 76 deals with burden of proof in suits for compensation against a railway administration for any delay, loss, destruction, deterioration or damage. Section 80 at the relevant time read asSuits for compensation for injury to through booked traffic.---Notwithstanding anything in any agreement purporting to limit the liability of a railway administration with respect to traffic while on the railway of another administration, a suit for compensation for loss of the life of, or personal injury to, a passenger, or for loss, destruction or deterioration of animals or goods where the passenger was or the animals or goods were booked through over the railway of two or more railway administrations, may be brought either against the railway administration from which the passenger obtained his pass or purchased his ticket, or to which the animals or goods were delivered by the consignor thereof, as the case may be, or against the railway administration on whose railway the loss, injury, destruction or deterioration occurred."

Court's reasoning:
The above argument has the quality of being ingenious, attractive and not lacking in apparent plausibility. A closer examination, however, reveals its infirmity and after giving the matter our earnest consideration, we find it difficult to accept it. The Act deals with and specifies, inter alia, the rights and liabilities which arise in case the goods consigned to the railways are not delivered to theAct no doubt makes provision for the liability of the railway ad ministration, but from that it does not follow that the railway administration is a separate legal entity having a juristic personality capable of being sued as such. The definition of "railway administration" in section 3(6) of the Act that it would mean the Manager of the railway does not warrant the inference that a suit against the railway administration can be brought against the Manager of that railway. We have to bear in mind the distinction between the owner of the railway, namely, the Union of India, and the authority which actually runs the railway and to whom duties have been assigned for this purpose by the Act. The manager of the railway under the Act is such authority. When, however, liability is sought to be fastened on the railway administration and a suit is brought against it on that account, the suit, in our opinion, would have to be brought against the Union of India because it is the Union who owns the railway and who would have the funds to satisfy the claim in case decree is awarded in suchclaiming a decree against the Union of India under the Act the plaintiff has got to specify the railway administration or administrations on ac count of which liability is sought to be fastened upon the Union of India, as contemplated by section 80 of the Act. The institution of the suit has to be preceded by service of notice under section 77 of the Act and section 80 of the Code to the appropriate authority which is the General Manager of the railway concerned. The requirement of clause (b) of section 80 of the Code that a notice in the case of a suit against the Central Government where it relates to a railway must go to the General Manager of the concerned railway or railways is also based upon the assumption that it is primarily the liability of the railway administration of the said railway or railways to satisfy the claim of the suitor in accordance with section 80 of the Act. The demarcation of the different State-owned railways as distinct units for administrative and fiscal purposes cannot have the effect of conferring the status of juridical person upon the respective railway administrations or their General Managers for the purpose of civilBombay High Court in two cases, Sukhanand Shamlal v. Oudh & Rohilkhand Railway (A.I.R. 1924 Bombay 306.) and Hirachand Succaram Gandhy & Ors. v. G.I.P. Railway Co. (A.I.R. 1928 Bombay 421.) has held that a suit against a State railway should be brought against the Government. Similar view was pressed by Patna High Court in Shaikh Elahi Bakhsh v. E.I. Railway, Administration (A-I.R. 1931 Patna 326.) and a Full Bench of Assam High Court in the case Chandra Mohan Saha & Anr. v. Union of India & Anr. (A.I.R. 1953 Assam 193.) The observations of a Division Bench of the Madras High Court in the case of P.R. Narayanaswami lyer & Ors. v. Union of India (A.I.R. 1960 Madras 58) also lend support to the above view. It may be stated that the reasoning employed in the eases mentioned above was different and not identical, but whatever might be the nature of that reasoning the fact remains that the learned Judges deciding those cases were all at one on the point that such a suit should be brought against the Government, which means in the present case the Union of India. Any contrary view would be against the well-established practice and procedure of law, as evidenced by various decisions of the High Courts, and as such, must be rejected.Submission has also been made on behalf of the appellant that the High Court should have allowed the appellant to amend the plaint. We agree with the High Court that the present is not an appropriate case in which permission to amend the plaint should have been granted.