Governor-General in Council vs Joynarain Ritolia

Meredith, J.—This is an application u/s 25, Small Cause Courts Act by the Governor-General in Council representing the East Indian Railway Administration and the G.I.P. Railway Administration as defendant in a suit in the Court of the Small Cause Court Judge at Dhanbad for recovery of Rs. 406 in respect of the loss of 14 tins of vegetable ghee out of a consignment of 1200 tins.

The consignment of 1200 tins was booked at Sion station on the G.I.P. Railway to Dhanbad on the East Indian Railway by the Vegetable Vitamin Food Co. Limited. The consignment was made to self, and Risk Notes A and B were executed. The consignor endorsed the railway receipt in blank on the back, and transferred it to Messrs, Mohammad Ibrahim Mohammad Zaffar & Company. The plaintiff, whose joint family trades under the name of Sheosamal Mansaram, purchased the railway receipt and the goods from Mohammad Ibrahim Mohammad Zaffar, who in their turn endorsed the railway receipt in blank and made it over to the plaintiff. The plaintiff then took delivery through his servent, and 14 tins were found short.

Two points were taken in defence before the learned Judge, and have also been taken before me. First, it is said that the plaintiff being neither the consignor nor the consignee, nor an endorsee of the railway receipt, has no right to sue. Reliance is placed on a decision of Beevor J. in Sri Ram Krishna Mills Ltd. v. Governor-General in Council AIR 1945 Pat. 387 wherein it was held that where goods have been delivered to the railway company for consignment, it is only the consignee or the persons to whom the railway receipt has been endorsed who can sue for non-delivery of the goods. Reliance is further placed on an unreported decision of Agarwala A.C.J. (civil Revision No. 141 of 1946) decided on 2nd April 1947, in which it was held that the plaintiff had no right to sue, because the consignment had'' been made to self and although the plaintiff was (in possession?) of the railway receipt it bore no endorsement in his favour.

The second point is that misconduct on the part of the Railway Administration was not established as required under the Risk Notes. There is nothing in this second point, as the learned Judge has held upon the evidence that misconduct was established and that the goods had been pilfered either by railway servants or by some one with the connivance of the railway servants. The learned Judge was fully entitled to come to this conclusion, and it cannot be interfered with in revision. Even if he based his conclusion on an inference from the defendant''s evidence and the circumstances disclosed therein, rather than on any positive evidence adduced by the plaintiff, that makes no diffeence. It is open to the plaintiff to establish misconduct by an inference from the railway company''s disclosure as to how the consignment had been dealt with as required under Risk Note B.

The first point, however, needs very careful consideration. The action being on contract, the plaintiff must show that he had become privy to the contract. This could be done in two ways, either by showing that he should be deemed an original party to the contract, or by showing that the rights under the contract had passed to him either by assignment or by operation of law.

Let us consider first whether the consignor can be said to have made the contract as agent of the plaintiff so as to make the plaintiff a party to the contract. This will depend on when the legal property in the goods passed to the plaintiff. If the property passed to the plaintiff on delivery to the railway company as carrier, then the consignor will be deemed to have contracted with the Railway Administration as agent of the purchaser, that is, the plaintiff. If the property had passed from the vendor on delivery to carrier then the vendor sustains no loss by the non-delivery, and obviously cannot sue. He has no cause of action: M.S. M. Ry. Co. Ltd. v. Rangaswamy Chetty AIR 1924 Mad. 517. See also Dawes v. Peck (1799) 101 E.R. 1417.

If the consignor of goods delivers them to a particular carrier by order of the consignee, and they be afterwards lost, the consignor cannot maintain an action against the carrier for the loss, although he paid for booking the goods; the action can only be brought by the consignee. Lord Kenyon, Ch. J. said:

The question must be governed by the consideration in whom the legal right was vested, for he is the person who has sustained the loss, if any, by the negligence of the carrier and whoever has sustained the loss is the proper party to call for compensation from the person by whom he has been injured.

The position in India is now governed by the Indian Sale of Goods Act, 1930. u/s 23(1) of that Act:

Where there is a contract for the sale of unascertained or future goods by description and goads of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.

Under Sub-section (2)

Where, in pursuance of the contrast, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, ho is deemed to have unconditionally appropriated the goods to the contract.

Therefore, unless there is something in the terms of the contract to show a contrary intention when the seller delivers the goods to the carrier for transmission to the buyer the property passes to the buyer, and the contract would be deemed to have been made as agent of the buyer. Nor does the fact that the seller intimates that he will not deliver, or refuses to deliver, except on payment of the price, of itself displace the presumption; for the right of the seller to retain possession of the goods until payment is quite consistent with the change of property. Obviously too once the property has passed to the buyer he can have no right of action against the seller for anything subsequently happening to it. The loss is his, and is remedy if any, is against the railway company.

The position is, however, different where the consignment is to self. u/s 25(1) the seller may reserve the right of disposal of the goods until certain conditions are fulfilled. In such case notwithstanding the delivery of the goods to the buyer, or to a carrier for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer, until the conditions imposed by the seller are fulfilled; and under Sub-section (2) where goods are shipped and by the Bill of Lading the goods are deliverable to the (order of the?) seller or his agent; the seller is prima facie deemed to reserve the right of disposal. Though this provision is expressed as relating to the shipment of goods, the same principle will apply to their transmission by rail; see Ugarchand v. Motiram AIR 1938 Sind 18, Ford Automobiles (India) Ltd. v. Delhi Motor and Engineering Co. AIR 1923 Bom 125 and Sundar Sing v. Gulab Singh AIR 1927 Lah. 269. In the last-mentioned case it was held that where, goods are sent by railway, the railway receipt being addressed to self to be delivered to the purchaser only on receipt of the price of the goods, the property in the goods does not pass to the purchaser till the price is paid.

It is clear that if the property in the goods has not passed to the buyer, the seller when he enters into the contract with the RailWay Administration cannot be acting as the buyer''s agent. In the present case, therefore, the plaintiff was not an original party to the contract.

There remains the question whether the contract had passed to him. I have already cited decisions where it has been held that an endorsee of the railway receipt has sufficient interest in the goods to maintain a suit against the Railway administration. Other cases are Dolatram Dwarkadas v. B.B. & C.I. Ry. Co. AIR 1914 Bom. 178 and Piari Lal Gopi Nath v. E.I. Ry. Co. AIR 1924 All. 574.

Therefore, the question merely is whether if an endorsement in favour of the buyer coupled with transfer of the railway receipt to him as owner of the goods operates as an assignment of the contract, will it make any difference if the endorsement in blank? In my opinion, it will not. u/s 2(4), Sale of Goods Act, a railway receipt is a document of title to goods. The same has been held by the Privy Council in several cases, AIR 1938 52 (Privy Council) . Official Assignee of Madras v. Mercantile Bank of India, Ltd. and Ramdas Vithaldas v. Amerchand & Co. AIR 1916 P.C. 7 . Moreover, if a railway receipt is not a negotiable instrument. Strictly speaking AIR 1938 52 (Privy Council) , it is still certainly negotiable after endorsement. In Official Assignee of Madras v. Mercantile Bank of India, Ltd. and AIR 1938 52 (Privy Council) , it was held that a pledge of the railway receipt operates an a pledge of the goods in transit giving the pledge a right to take delivery: Official Assignee of Madras v. Mercantile Bank of India Ltd. (34) 61 I.A. 416, was a case where the endorsement was in blank.

u/s 130, T.P. Act, the transfer of an actionable claim can be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent. But u/s 187, this does not apply to instruments which are for the time being by law or custom negotiable, or to any mercantile document of title to goods, and the expression "mercantile document of title to goods" is defined as including, inter alia, a railway receipt. The contract indicated by the railway receipt can, therefore, be transferred without a writing, and no particular form or method of transfer has been prescribed by law. It will be regulated by custom.

I see no reason, therefore, why such a transfer should not be made by endorsement in blank coupled with delivery of the document to the transferee. Of course, the intention must be to make an absolute delivery carrying with it a right to the goods. The railway receipt might be handed over only for a limited purpose. Here again, see AIR 1938 52 (Privy Council) . But in a case whore the railway receipt is handed over on payment of the price of the goods, as is the common practice under the V.P.P. system, and as happened in the present case, I clearly there has been an absolute transfer-both of the goods and of the right to take delivery under contract. Also it is clear that the property in the goods under the contract of sale passes to the buyer directly the latter pays the price and the railway receipt endorsed in blank is delivered to him.

It is unnecessary for me to express, any opinion as to the position which would arise should the railway receipt be transferred to the buyer for value without endorsement. Probably if the railway company chooses to make delivery to the buyer without any endorsement on the railway receipt by the consignee (that is, the consignor), then the railway company would not be heard to say that the buyer is not entitled to, sue, because by making delivery the railway company has accepted the plaintiff as a transferee in interest of the contract together with the goods. But I must, not be taken to have expressed any final opinion on this point, which does not arise in the present case.

In the result both points argued fail, It must be held that the learned Small Cause Court Judge rightly decreed the suit. This application, is, therefore, dismissed with costs, hearing fee three gold mohurs.