J.K.M. Yacob Rowther Sons, Mettypalayam vs Union of India

S. Ramachandra Iyer, C.J.

(1) On 13-10-1959 the petitioner, a merchant at Mettupalayam doing business in green vegetables, sent by the railway sixteen bags of cabbage for

delivery at Howard to one K. K. Banerjee and Bros. The consignment reached Howrah on 20-10-1959, seven dais after its despatch; the normal

time for transmit being four days. On arrival at Howard a considerable part of the gods was found to be damaged. The damage, it has now been

found--a finding which has not been challenged--was entirely due to neglect on the part of the railway in not convenying the goods in time. The

petitioner, the consignor, filed a small cause suit the lower court for recovery of Rs. 214 as damages from the respondent. The court found that the

damage attributable to the misconduct of the railway was Rs. 139-20 nP., but it dismissed the suit on the ground that the consignor could not

maintain the suit as the loss was that of the consignee.

(2) This civil revision petition filed against that decree came up first before Venkatadri J., who found a conflict of judicial opinion with respect to

the law applicable. The learned Judge has therefore referred the petition for consideration by a Bench.

(3) There is no controversy in this case as to the nature and extent of the liability of the railway for non-delivery, loss or deterioration of goods

entrusted to it for carriage.

(4) In England, Railway Companies were regarded as common carriers, and, where there was no express contract to the contrary, were liable as

insurers. That implies a higher standard of liability than what prevails in this country, where the railway is not regarded as common carrier. Its

liability here is statutory. Section 72 of the Indian Railways Act provides that the measure of responsibility of the Railway administration for the

loss, destruction or deterioration of animals of goods delivered to it for carriage, will be that of a bailee under Ss. 151, 152 and 161 of the Indian

Contract Act.

(5) But the question in the present case is not so much as to the liability of its extent--as they are conceded--but as to who is entitled to sue the

Railway administration for enforcing that liability. Where a consignment is delivered to the railway the consignor, except where he is acting as the

agent of another, can be regarded as the party to the contract of carriage. Prima facie, he can also be treated as the bailor; where he is acting as an

agent, his principal can be regarded as the bailor so far as the railway is concerned. But there may be cases, to which we shall make reference

presently, where the bailor will be the consignee.

(6) Mr. V. C. Veeraraghavan appearing for the petitioner, however, has contended that the consignor alone should be regarded as the bailor and

that it would be incompetent to the railway, which received the goods from him, to show that anybody else was the bailor. Reliance has been

placed to support of this contention upon the well-established doctrine of a bailee being estopped from denying the title of the bailor. There can

really be no doubt on that principle. As the court of Appeal observed in Rogers Sons and Co. v. Lambert and Co. 1891 1 QB 318, a bailee of

goods could never avail himself of the title of a third person to the goods as a defence to an action by the bailor. But difficulties do arise in the

application of that rule. Even in that case it was recognised that a bailee could show that he had already delivered to a person authorised by the

bailor or plead and prove paramount title in a third party, defending the action on that third party''s behalf. Biddle v. Bond, (1865) 122 ER 1179 is

an instance where it was held that the estoppel against a bailee from disputing the title of his bailor and setting up a just turtle had ceased when the

bailment on which the estoppel was founded had been determined by what would be equivalent to an eviction by title paramount. We need not,

however, pursue that matter.

(7) For, the present one is not a case of the bailee disputing the bailor''s title. The contention of the railway is that the bailor is the consignee. It is

settled law that we under a contract of sale, goods are delivered by the seller to the railway for carriage, in order to effect delivery the railway is

ordinarily treated as the agent of the buyer to receive the goods from the seller. As has been stated in Benjamin on Sales, 8th Edn., page 737, it

was well-established as common law that delivery in a common carrier, and a fortiori to one specially designated by the buyer, would be delivery

to the buyer himself; the carrier being, in contemplation of law, the bailee of the person to whom, not of the person by whom the goods are sent.

(8) This principle is embodied in S. 39 of the Indian Sale of Goods Act. Therefore, it can be taken that where property in the goods had passed to

the buyer, on delivery to the railway, the latter should have to be regarded as bailee to the owner of the goods, namely, the consignee.

(9) In The M.S.M. Ry. Co. Ltd. Vs. K. Rangaswamy Chetty and Another, Phillips J. held that only the consignee could sue for loss caused by the

non-delivery of the goods after the goods have been delivered to the railway for delivery to him. The learned Judge observed:

If the property had passed from plaintiffs they have sustained no loss by the non-delivery of the gods and consequently no damages. Dawes v.

Peck (1799) 4 RR 675 is authority for holding that consignee alone can sue to such a case...............

Implicit in the passage quoted above, is the acceptance of the principle that where property in the goods had not passed to the buyer or the

consignee, the consignor could sue the railway for non-delivery, or for deterioration or loss of goods caused by the negligence of the railway. The

Patna High Court in Sri Ram Krishna Mills, Ltd. Vs. Governor-General in Council, while accepting the above decision, also affirmed the latter

principle. In that case the consignment was to ""self"" and the person who sued as the consignee was not named in the railway receipt; not was there

even an endorsement of the receipt in his favour. It was held that the consignee could not sue. A later judgment of the same Court in Thakur

Prasad Vs. Union of India (UOI) and Another, applied the same rule while holding that where the consignee was merely a commission agent of the

consignor, the latter alone could sue.

(10) In Chunna Lal Vs. Governor General in Council, the case was one where the consignee was merely a commission agent and the property in

the goods had not passed to the consignee. It was recognised that a suit for damages for non-delivery could be maintained by the consignor. But

this view was not accepted by the Full bench of that court in Dominion of India as owner of Dominion of India as owner of G.I.P. Rly. and

Another Vs. Gaya Pershad Gopal Narain, which held that consignee who was not the owner--a commission agent--could sue for loss, though the

loss was not his. In so holding the learned Judges adverted to the fact that a railway receipt was a document of title to the goods which entitled the

endorsee or the person named in it to give completely discharge to the railway. With great respect to the learned Judges that view. A railway

receipt will no doubt entitle the person who is named in it as the consignee or an endorsee to receive the goods; by the terms of the contract of

bailment such a person could even relieve the railway of all liability. But where he has not so done and where the question of suing for loss arises,

he principle must be that he who sustains the loss must sue. By way of example, we may cite the case of an agent duly authorised who can give a

discharge of a liability due to his principal; but the person to enforce the liability will be the principal only.

(11) The other extreme view has been taken in AIR 1947 169 (Bom.) . Bhagwati J. observed that title to the goods could not be held to be

transferred to the person named in the railway receipt, and a consignor alone could sue for loss and that even in a as where property had passed to

the consignee, the consignor could be regarded as his agent and in that capacity be held entitled to sue. In Chhangamal Harpaldas and Another Vs.

Dominion of India and Another, a Bench of he Bombay High Court extended hat principle and held that the consignor''s right of action to recover

compensation for loss of or damage to goods, could be sustained on the basis of his title as well as of his contract with the railway; it was also

accepted that a consignee who was the owner could also sue; but a bare consignee without title could not. In Union of India (UOI) Vs. Dayabhai

Laxman, Rajkot, did not accept that a bare consignee without title to the goods could sue; on the other hand, it held that S. 72 of the Railways Act

would vest the consignor with the right of suit.

(12) We are, however, unable to share either of the extreme views. Except in cases where the consignor is named, a consignor ordinarily can be

regarded as the owner of the goods. Even if the railway receipt, is issued or endorsed in favour of another, the consignor can show that title to the

goods continues to vest in him. In such a case, he would be the person incurring the loss and as the bailor and a party to the contract, could

institute the suit. But where under a contract of sale, the property in the goods has passed on delivery to the railway, the latter receives it as the

agent of the buyer. The bailor will then be deemed to be the buyer himself. That fact that the contract of carriage has been entered into by the seller

or consignor, would not in that case disentitle the consignee tousle, as in this country a third party for whose benefit the contract had been made,

could sue on it.

(13) with great respect to Bhagwati J. AIR 1947 169 (Bom.) we are unable to accept the view that in a case where the property in the goods had

passed to the consignee, he consignor could still sue as his agent, for, an agent cannot sue in his own name except in certain cases. Equally with

respect, we cannot agree that both the consignor and the consignee can sue; the acceptance of such a principle will create considerable difficulty;

the railway would be exposed to two actions.

(14) It can be inferred from the nature of the liability cost on the railway by S. 72, that it will only be answerable to the bailor, except in cases

where they have been made to deliver over t a paramount claim. Only one among them, consignor and consignee, can be the bailor. The question

in each case, thereof, will be as to who has title to the goods. In this connection, we are of opinion that the decision of Phillips J. in The M.S.M.

Ry. Co. Ltd. Vs. K. Rangaswamy Chetty and Another, lays down the correct rule. If the consignor who had parted with the title to the goods is

held nevertheless to be entitled to sue for damages caused to the goods, it would mean that he having obtained the full price for the goods sold to

the buyer, would still be enable to obtain further amount by way of damages from the railway-an amount to which he would not be legitimately

entitled.

(15) We have, therefore, to see whether the petitioner in the instant case continued to be the owner of the goods after their delivery to the railway

on 18-10-1959, and at the time when they were received at Howard. Significantly enough, there is nothing in the plaint to show hat the petitioner

was the owner of the goods. Ex. A. 16 is a copy of the petitioner''s ledger with reference to his transactions of Calcutta. There is nothing in it to

indicate that the sale was on commission basis or that the consignee was the agent of the petitioner. On 1-11-1959, the consignee wrote the letter

Ex. A. 2 to the railway administration stating:

We request you to make the payment of any kind of compensation of the above quoted receipt to Messrs. J.K.M. Yacob Rowther Sons. We

have foregone all our rights as a consignee in their favour.

This letter does not suggest that the consignee was merely an agent. As the lower court has pointed out, it amounts to an assignment of a right to

claim damages. P. W. 1 in the course of his evidence, however, stated that the consignee was a mere commission agent. But no invoice had been

produced to show that it was so. Under the circumstances, particularly in the absence of any pleading to that effect, we cannot regard the

consignee as a mere agent of the petitioner. The property in the goods must, therefore, be held to have passed on to the consignee on the date

whom they wee delivered over to the railway. Thereafter the petitioner had no right in the goods, which would entitle him to sue for damages.

(16) The civil revision petition therefore fails and is dismissed with costs.

(17) Petition dismissed.