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Judgment
Avadh Behari, J.—This appeal resurrects an old controversy. The controversy dates back to 1897. Since then judges have wrestled with the problem. The difference among them is marked by an expression of opposing views. On May 26, 1970, the plaintiff, National Small Industries Corporation Limited, brought a suit against the Union of India for the recovery of Rs. 1022.49.
These are the allegations on which the claim was made. In pursuance of an order placed by Hindustan General Electric Corporation Limited Calcutta for supply of 500 pieces of antenna rods, the plaintiff placed an order with National Physical Laboratory New Delhi for the supply of these goods to Calcutta. Accordingly a consignment containing 500 pieces of antenna rods of the value of Rs. 1022.49 was dispatched by National Physical Laboratory under railway receipt No. 960742 dated June 15, 1967, ex-Delhi to Howrah. The plaintiff was the consignee of the said railway receipt.
The railway receipt was sent to Hindustan General Electrical Corporation Limited Calcutta for taking delivery of the consignment. They did not take delivery. The plaintiff wrote a letter on June 30, 1967 to the Station Superintendent, Eastern Railway, Howrah to rebook the consignment to Delhi. The consignment was rebooked by railway by receipt No. 550179 dated July 7, 1967, ex-Howrah to New Delhi. The railway receipt was received by the plaintiff with a covering letter dated July 8, 1967.
The plaintiff forwarded the railway receipt received from Howrah to the National Physical Laboratory New Delhi by post with their letter dated July 22, 1967. They requested the National Physical Laboratory to take delivery of the consignment from the railway administration at New Delhi.
The National Physical Laboratory did not take delivery. They wrote to the plaintiff on February 24, 1969, that the railway receipt appears to have been lost in post and that they did not receive the same.
The plaintiff wrote a letter dated February 27, 1969, to the Station Superintendent Northern Railway New Delhi enquiring about the consignment in question. The Station Superintendent (Parcels) New Delhi informed the plaintiff by his letter dated March 5, 1969 that the consignment had been transferred to the Lost Property Office Delhi at Kishan Ganj, and that they should make further enquiries from that office, On further enquiry the plaintiff learnt that the suit consignment was disposed of by the Lost Property Office for a sum of Rs. 100/- on August 19, 1969.
The plaintiff lodged a claim for Rs. 1022.49 with the Superintendent (Claims) Northern Railway, Delhi for compensation. The claim was rejected on the ground that it was not lodged within six months from the date of the delivery of the parcel to the railway administration. The plaintiff brought the suit on May 26, 1970.
In the plaint the plaintiff made two important allegations. They are worthy of notice. It was said:
As no notice was received by the plaintiff from the Lost Property Office regarding the auction of the consignment and the auction was therefore illegal and in violation of the provisions of sections 55 and 56 of the Indian Railways Act.
Admittedly the plaintiff corporation did not serve a notice as required by section 78B of the Indian Railways Act (the Act). They said that it was not necessary. They made this other allegation in the plaint:
No notice u/s 78B of the Indian Railways Act is required in the present case as it is a case of wrongful disposal of the suit consignment by means of auction contrary to the provisions of sections 55 and 56 of the Indian Railways Act.
The Union of India raised a preliminary objection. They said that the suit was not maintainable without service of notice on them u/s 78B of the Act.
The trial court framed a preliminary issue on the question whether notice u/s 78B was required to be served or not.
The trial judge held that notice was necessary. He rejected the plaint on April 30, 1973. The plaintiff appealed. The Additional District Judge took a contrary view. He held that the plaintiff''s suit was in tort and therefore notice was not essential. He allowed the appeal and remanded the suit for decision on merits. Now there is an appeal to this court by the Union of India.
Indian Railways Act was enacted in the year 1890. Section 78B was inserted by Act 39 of 1961. The corresponding old section was 77. So far as it is material section 77 read as under:
A person shall not be entitled to....compensation for the loss, destruction, or deterioration of......goods delivered to be......carried unless his claim to......compensation has been preferred in writing by him or on his behalf with the railway administration within six months from the date of delivery of the........goods for carriage by railway.
New section 78B in so far as it is material reads as under:
A person shall not be entitled.........to compensation for the loss, destruction, damage, deterioration or non-delivery of......goods delivered to be so carried unless his claim to........compensation has been preferred in writing by him or on his behalf--
(a) to the railway administration to which......the goods were delivered to be carried by railway; or
(b) to the railway administration on whose railway the destination station lies, or the loss, destruction, damage or deterioration occurred,
within six months from the date of the delivery of the......goods for carriage by railway.
I have omitted the proviso as it is not material for this case.
The old section 77 has been the subject of a sharp controversy in the courts of this country for the last more than 75 years. The earliest decision extent in our law reports on the subject is a case of 1897 decided by the Chief Court of Punjab and reported as Changa Mal v. Bengal N. W. Railway Co. 6 P.R. 1897. The Lahore High Court overruled it in 1921 (See Hill Sawyers & Co. v. Secretary of State, AIR 1921 Lah 1 (F.B.).
Now section 77 has been replaced by a new section. But the controversy has not ceased. It still rages. The judges are deep in debate on the question whether a notice under the new section 78B is required in all cases or whether there are any exceptions to its uniform application.
What is the meaning of the term "loss" as used in section 77? Before the amendment there were two schools of thought. One school thought that where a claim for compensation is preferred on account of non-delivery of goods to the consignee notice was necessary in all cases whether it is a case of non-delivery or misdelivery or loss etc. This may be called the comprehensive view.
The other school thought that no notice need be given to the railway when a claim for compensation is in respect of non-delivery of goods, presumably as it was not one of the expressions used in the section which mentioned only loss, destruction or deterioration. This was the narrow view. Eminent judges ranged themselves on each side.
This conflict between the High Courts on the question whether non-delivery of goods carried by railway amounted to "loss" within the meaning of section 77 was resolved by the decision of the Supreme Court in Governor General in Council Vs. Musaddi Lal, . The Supreme Court held that failure to deliver goods is the consequence of loss or destruction and the cause of action for it is not distinct from the cause of action for loss or destruction and therefore notice u/s 77 is necessary in the case of non-delivery which arises from the loss of goods. This was also the view expressed in the Union of India (UOI) Vs. Mahadeolal Prabhudayal, .
In the case of Governor General in Council Vs. Musaddi Lal, Shah J. speaking for the court said:
Failure to deliver is the consequence of loss or destruction of goods......By the use of expression, ''loss'' destruction or deterioration, what is contemplated is loss or destruction or deterioration of the goods and the consequent loss to the owner thereof. If because of negligence or inadvertence or even wrongful act on the part of the employees of the railway administration, goods entrusted for carriage are lost, destroyed or deteriorated, the railway administration is guilty of failing to take the degree of care which is prescribed by S. 72 of the Railways Act.
And again:
We are unable......to hold that a suit for compensation for loss because of non-delivery of goods does not fall within S. 77.
Now the two decisions of the Supreme Court in 1961 and 1965 were rendered on the old section 77 as it stood before the amendment of the Act in 1961. The legislature has introduced two new words in the section. They are "damage" and "non-delivery". The use of these terms makes it clear that the intention of the legislature is that notice is necessary in all cases uniformly.
The counsel for the plaintiff says that his case is in tort as his goods have been disposed of without service of notice under sections 55 and 56 of the Act. The only issue in this appeal is whether in a case of sale of goods by auction by railway a notice is necessary where the plaintiff''s case is that the auction is in violation of the provisions of sections 55 and 56.
The first appellate court relied on Sundarji Shivji Vs. Secy. of State, , Secy. of State Vs. Simla Footwear Company, and Imperial Match Co. (India) Ltd. Vs. Union of India (UOI) and Others, in support of its conclusion that notice is not necessary since it was a case of non-delivery of goods and the basis of the claim was conversion in tort.
In addition to these rulings the counsel for the plaintiff relies on a recent decision of the Madras High Court in Union of India and Another Vs. M. Mariaprakasa Mudaliar Sons Karur, . This was a case where the consignment had been sold by a public auction without notice u/s 54 and 57 of the Act. The plaintiff complained that non-compliance of the requirement of these sections rendered the sale unlawful. He brought a suit for the value of the goods. The court held that notice u/s 78B was not necessary. A learned single judge (Ismail, J.) distinguished the two Supreme Court decisions on the ground that they were not concerned with a case where the goods had been sold by the railway administration. He said:
When the railway administration consciously sells the goods in its possession in exercise of its statutory powers under Sections 55 and 56 of the Railways Act, in my opinion, such a sale cannot come within the scope of the expression ''loss of goods''. Hence whatever else the expression ''loss of goods'' may mean, certainly it cannot mean the self deprivation of the goods by way of such sale by the railway administration. When the railway administration itself expressly and consciously in the purported exercise of its statutory powers under Sections 55 and 56 of the Railways Act, sells the goods, it certainly Cannot be said that the goods had been lost or there had been loss of goods.
In his opinion the word ''loss'' occurring in sections 73 and 78B of the Act after its amendment by the Central Act 39 of 1961 had to be construed narrowly and not as widely as was done prior to the amendment. He disagreed with the opposite view taken by a division bench in Sree Sai Baba Textiles Proprietor P. Anandan Vs. Union of India (UOI) and Another, .
With respect, I am unable to subscribe to the reasoning of the learned judge. The Supreme Court decisions clearly lay down the following propositions:
(a) loss means loss to the owner;
(b) loss would include loss to the owner by non-delivery.
Now there is no warrant for giving a restricted meaning to the word ''loss''. The amendment has clarified the meaning of promulgator of laws by adding two more words ''damage'' and ''non-delivery''. Therefore it seems to me that all that we are concerned with is to see whether there is non-delivery to the owner of the goods. We are not concerned with the cause of non-delivery. Non-delivery may be due to various reasons. Goods may not be traceable, there may be wrongful detention of goods or conversion or misdelivery or loss in transit or goods may have been looted on way or there may be a running train robbery or theft by railway''s own servants. The end result of all these causes is this. The goods are not forthcoming for delivery to the owner. Loss is caused to him. Case of non-delivery by reason of a sale made in purported exercise of power u/s 55 is not excluded from the purview of the terms ''loss'' and ''non-delivery''. The result is the same. The railways are unable to deliver goods to the owner. Such a case is comprehended within the meaning of the newly introduced word ''non-delivery''.
The decision of the Supreme Court in Governor General in Council Vs. Musaddi Lal, will even now govern the interpretation of the new section 78B though that was not the section before the court for decision. There Shah, J said:
The view we have expressed is supported by a large volume of authority in the courts in India.
The court approved of the following six decisions as laying down correct law:
The Madras and Southern Mahratta Railway Company Limited Vs. Haridoss Banmalidoss, , Hill Sawyers & Co. v. Secretary of State, AIR 1921 Lah. 1 (FB), The Assam Bengal Railway Co., Ltd. Vs. Radhika Mohan Nath , B. N. Rly. Co. v. Hamir Mull Chhagan Mull, AIR 1925 Pat. 727, Martab Ali Vs. Union of India, and Union of India Vs. Mitayagiri Pullappa, .
The court overruled two decisions: Jaisram Ramrekha Das Vs. G.I.P. Roy and Another, and Governor General in Council and Others Vs. Mahabir Ram and Another, .
If we turn to the rulings approved by the Supreme Court there can be no doubt that the case of sale by the railway in violation of sections 55 and 56 of the Act is not excluded from the scope of the words ''non-delivery'' and ''loss''.
In Martab Ali Vs. Union of India, Desai J. said:
The word ''loss'' as used here.........must in my opinion include loss arising from whatever cause.
A little later he said:
The suit is essentially for compensation or loss occasioned by non-delivery of goods at the destination, and in my opinion whether the claim is laid in contract or tort makes no difference. For all these reasons the conclusion I have reached is that the word ''loss'' in S. 77 does include the entire claim made by the plaintiff whether on the footing of non-delivery, or negligence, or wrongful detention or conversion on the part of the railway administration.
Similarly in Union of India Vs. Mitayagiri Pullappa, the Division Bench said:
The words are ''compensation for loss......''. They have to be given their plain and natural meaning. The words imply that the claimant would be entitled to compensation for the loss sustained by him whether such loss is occasioned by non-delivery on account of the tortuous conduct of the Railway or its servants or by conversion of the goods or by the goods being lost in transit.
The right to claim compensation from the Railway arises whether the cause of action is founded on contract or on tort. On a true construction of S. 77 loss means loss to the owner by whatever means.
Both these are approved decisions.
Therefore now it seems that it is not possible to take the view that if non-delivery is due to the wrongful sale of goods by the railway administration, notice is not necessary. A full bench of Allahabad High Court in Governor General in Council and Others Vs. Mahabir Ram and Another, had taken the view that in a case of "wrongful sale of goods, for example, where the railway administration wrongfully sells the goods on arrival at the destination" no notice was necessary, (see page 896). They held that loss means no loss to the owner but loss suffered by the railway administration. This view was positively disapproved by the Supreme Court. The court expressly overruled the full bench decision. The Allahabad High Court reiterated their view in Mutsaddi Lal Vs. Government-General in Council, , A fortiori that full bench case must also be held to have been overruled by the Supreme Court.
The validity of the Madras decision in Union of India and Another Vs. M. Mariaprakasa Mudaliar Sons Karur, can be criticised firstly on the ground that it follows the Patna view as expressed in Sundarji Shivji Vs. Secy. of State, . That was a case of a "tortious act". The Patna view was disapproved by the Supreme Court in Union of India (UOI) Vs. Mahadeolal Prabhudayal, where it was said:
There was a conflict between the High Courts on the question whether non-delivery of goods carried by railway amounted to loss within the meaning of S. 77. Some High Courts (including the Patna High Court) held that a case of non-delivery was distinct from a case of loss and no notice under S. 77 was necessary in the case of non-delivery. Other High Courts, however, took a contrary view and held that a case of non-delivery also was a case of loss. This conflict has now been resolved by the decision of this Court in Governor General in Council Vs. Musaddi Lal, , and the view taken by the Patna High Court has been overruled.
It is true that Sundarji Shivji Vs. Secy. of State, was not expressly overruled. But the Patna view was generally said to be wrong except that taken in Agent of the Bengal Nagpur Railway Co. Ltd. Vs. Hamir Mull Chagan Mull and Another, which was held to be rightly decided.
Secondly it has to be remembered that the section 78B now uses the word ''non-delivery'' which has made all the difference. The legislature has cast its net wide by using the term. Now it requires notice to be given in every case where goods are not delivered. The object of the notice is to prevent state claims, as was said by the Supreme Court in Governor General in Council Vs. Musaddi Lal, . It is to give to the railway an opportunity of settling claims, if possible, before any resort to the court. If there is non-delivery of goods arising from whatever cause a notice is a condition precedent to the maintainability of a claim for compensation for goods. Non-delivery may be due to a variety of reasons. There may be abstraction of a parcel by a stranger or by the carrier''s servant or by the carrier or his servants losing a parcel in its transit or mislaying it so that it cannot be found when it ought to be delivered.
Non-delivery may be the result of "a conscious act" of "self deprivation" as the learned judge put it or it may be the result of a "wrongful act" as the Supreme Court said. Assuming that the sale is wrongful the result is no different. There is failure of the railway administration to give delivery of the goods to the consignee or his assignee according to the contract. Non-delivery may be due to breach of a contractual engagement, or a wrong independent of contract or the non-observance of statutory provisions. This in my opinion will not make any difference. Non-delivery is resultant loss to the owner.
Thirdly the change of law brought about by the Amendment Act, namely, the Central Act 39 of 1961 which repealed sections 72, 72A, 73, 74A, 74B, 74C, 74D, 74E, 75, 76, 77 and 78 and replaced them by a new set of provisions will not make any difference in the construction of section 78B. Previously the notice was for the benefit of the bailee. Now it is for the benefit of the insurer. A court of construction is even now bound by the Supreme Court rulings.
Lastly, though the liability of the railway administration is sought to be founded on the plea that the provisions of sections 55 and 56 have not been observed the claim is essentially one for compensation for non-delivery of the goods.
The sum of this reasoning is that the view of Ismail J. in Union of India and Another Vs. M. Mariaprakasa Mudaliar Sons Karur, is the same as taken by the full bench of the Allahabad High Court in Governor General in Council and Others Vs. Mahabir Ram and Another, . But the Allahabad decision has expressly been held to be erroneous by the highest court of the land. It is no longer open to any judge in the High Court now to take that view. The two Supreme Court decisions bind us even in the interpretation of the new section 78B of the Act.
I am therefore of the view that the case of Sundarji Shivji Vs. Secy. of State, and Secy. of State Vs. Simla Footwear Company, and Imperial Match Co. (India) Ltd. Vs. Union of India (UOI) and Others, (which merely follows the Patna and Allahabad cases) which were relied upon by the first appellate court are no longer good law. They stand overfilled by the Supreme Court though not expressly. These decisions take what I have described as the narrow view. The Supreme Court approved of those decisions which have taken what I have called for want of a better term the comprehensive view. Divisions contrary to that view must be held to have been wrongly decided.
I think that the view taken in Union of India and Another Vs. M. Mariaprakasa Mudaliar Sons Karur, is no longer open to the judges in this country. I respectfully agree with the Division Bench in the case of Sree Sai Baba Textiles Proprietor P. Anandan Vs. Union of India (UOI) and Another, and a later single bench decision reported in The Union of India (UOI) Vs. The Jorhat Consumer Goods Wholesale Co-operative Ltd., .
I am of opinion that notice u/s 78B is mandatory. The lower appellate court, I think, was wrong in holding that such notice is unnecessary. I would therefore reverse the decision of the first appellate court and restore that of the trial court. I would allow the appeal and dismiss the plaintiff''s suit. The parties shall bear their own costs throughout.