Kashiram Agarwalla vs Dominion of India

G.K. Mitter, J.—This is a suit for recovery of the sum of Rs. 6,236-0-3 from the Dominion of India as compensation for loss of goods despatched by rail. There is no dispute that the goods were sent from a railway station now situate within the territory of the Union of India, their destination being a place in Eastern pakistan. The Defendant disputes its liability to meet the Plaintiff''s claim on various grounds.

A preliminary point was taken in defence as to whether the Defendant had any liability at all under the contract in suit. The relevant provision of law contained in Article 8 of the Indian Independence (Rights, Property and Liabilities) Order reads as follows:

(1) Any contract made on behalf of the Governor-General in Council before the appointed day shall, as from that day,

(a) if the contract is for purposes which as from that day are exclusively purposes of the Dominion of Pakistan, be deemed to have been made on behalf of the Dominion of Pakistan instead of the Governor-General in Council; and

(b) in any other case, be deemed to have been made on behalf of the Dominion of India instead of the Governor-General in Council;

and all rights and liabilities which have accrued or may accrue under any such contract shall, to the extent to which they would have been rights or liabilities of the Governor-General in Council, be rights or liabilities of the Dominion of Pakistan or the Dominion of India, as the case may be.

It is now well settled that in order to find out which of the two dominions is liable, an artificial test has to be put, i.e., one must either consider the liability of the respective dominions treating both of them in existence at the time when the contract was made or in the alternative find out which of the two would be liable treating the contract as having been entered into, on August 15, 1947, when both the dominions had sprung into existence.

I have held in the case of Hari Trading Company v. Dominion of India Unreported decision in Suit No. 1927 of 1948 decided by G.K. Mitter J. that in a case like this-

It would be proper to consider the end or object with which the contract was entered into and that, in my view, can be nothing other than the making of the goods available at a place in Pakistan.

Mr. Sethia, Learned Counsel for the Plaintiff, urged that the, purpose of the contract was the carriage of the goods and this being spread over not merely a portion of the territory of Pakistan, but also over a part of the Dominion of India, it could not be said that the carriage of the goods was exclusive to the Dominion of Pakistan. He also suggested that so far as the Governor-General in Council was concerned the whole object with which it entered into the contract was to earn freight or to make profit by transporting the goods from one place to another and the freight having to be divided in a ease like this between the two dominions the purpose ought not to be held to be exclusive to any one dominion. In my view this is not the proper test by which to judge the purpose of a contract. One has got to find out which of the two dominions would be benefited by. the contract and as the primary object of the contract in this case was to have the goods transported to Pakistan for being made available there, the purpose of the contract was exclusive to the Dominion of Pakistan; as such, the Union of India ought not to be held liable under Article 8, paragraph 1, Sub-paragraph (b) of the Indian Independence (Rights, Property and Liabilities) Order. If a manufacturer like the Tata Iron and Steel Company Ltd. had entered into a contract before August 15, 1947, for fabricating steel joists to be used in the erection of a hospital at Dacca I have no doubt that the purpose of such a contract should be held to be exclusive to Pakistan although the contract might incidentally benefit a large number of persons working for gain in India or involve the payment of large sums of money to the Dominion of India by way of royalty on coal or iron ore extracted from mines belonging to the said Dominion or by way of payment of excise duty, if leviable on the pig iron produced in the manufacturer''s foundry.

This view has been taken by a Division Bench of this Court in Krishna Ranjan Basu, Ray v. Union of India (1954) 59 C.W.N. 99. Mr. Sethia drew my attention to the judgment in the case of Dominion of India v. Puran Chand AIR (1955) All. 2668. This was a case converse to that before me. The despatching station was in Pakistan and the destination station was in India and their Lordships of the Allahabad High Court came to the conclusion that the liability fell under Clause (b) of Paragraph 8(1) and was that of the Union of India. No reasoning was given but if the test, which I have formulated above, is put, the answer will be the same. In the Allahabad judgment there is reference to two other cases, one being reported in Union of India (UOI) Vs. Loke Nath Saha, . 140. A judgment of Roxburgh J. which has been dissented from in various cases. I myself have dissented from it in other cases and I do not think it will be useful to take any note of that decision. The other judgment referred to in the Allahabad judgment is the case of Assam Supplies Ltd. v. Union of India and Ors. AIR (1952) Ass 88. There, too, the despatching station was situate an the North Western Railway in Pakistan and the destination station was situate within the territories of the Union of India, and the Assam High Court came to the conclusion that the liability was of the Union of India. So far as the purpose of the contract was concerned there is no discussion in the judgment, but the learned Judges seemed to proceed on the assumption that it could not be exclusive to the Dominion of Pakistan.

I am not able to accept the contention put forward on behalf of the Plaintiff as, in my view, the purpose of the contract was exclusive to the Dominion of Pakistan and as such the Plaintiff''s suit must fail. It will, therefore, be dismissed on the preliminary ground with costs assessed at 30 gold mohurs.