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Smart Summary

Structured Summary of the Opinion — Malik, C.J.

Factual and Procedural Background

Certain goods were consigned from Chandpur Ghat to Allahabad consignable "to self." The railway receipt was endorsed in favour of the plaintiff, who took delivery and discovered a shortage of 2 maunds and 7 seers, valued at Rs. 174/-. The plaintiff sued to recover that amount.

In his evidence the plaintiff stated that the consignor had kept the goods "into my 'arhat' to sell it and pay its price to him after deducting my commission." After the plaintiff examined himself no further evidence was given. The lower Court dismissed the suit on the ground that the plaintiff was not the owner of the goods and therefore had no right to sue.

A civil revision under Section 25 of the Court of Small Causes was filed in this Court challenging the lower Court's decision.

Legal Issues Presented

  1. Whether a transferee simpliciter (an endorsee) of a railway receipt can maintain a suit for the price of goods lost in transit.
  2. Whether the plaintiff's claimed interest (commission or potential commission) arising from being authorised to sell the goods confers a right to sue for the price of goods lost in transit.

Arguments of the Parties

Applicant's Arguments

  • The railway receipt had been endorsed in favour of the plaintiff, and therefore the plaintiff had sufficient interest in the goods to maintain the suit.
  • Alternatively, the plaintiff had a compensable interest because he would have earned commission on the sale of the goods; his interest was thereby diminished by the short delivery.

Defendant's Arguments

  • It was denied that the plaintiff was entitled to maintain the suit; implicitly the defendant relied on the contention that the plaintiff was not the owner of the goods and so lacked the right to sue for their price.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Dolatram Dwarkadas v. B.B. & C.I. Rly. Co., AIR 1914 Bom 178 Held that a railway receipt is a mercantile document of title and the endorsee has sufficient interest to maintain an action against the railway company for damages in respect of goods covered by the receipt. The Court accepted that the case supports the proposition that a duly endorsed railway receipt ordinarily gives the endorsee a right to take delivery and to sue for wrongful refusal of delivery; but noted that that case did not concern partial loss in transit for which the suit was for the price of missing goods.
Shamji Bhanji & Co. v. North Western Rly. Co., AIR 1947 Bom 169 Held by a learned single Judge that mere endorsement of a railway receipt, without more, may not transfer property and may only make the endorsee the agent of the consignee for taking delivery. The Court observed these remarks but cautioned they should not be taken to mean an endorsee must always be treated as a mere agent; the observations were described as limited to the peculiar facts of that case.
Ramdas Vithaldas v. Amerchand & Co., AIR 1916 PC 7 Tests whether a document is a "document of title": used in ordinary course of business as proof of possession/control or authorises the possessor (by endorsement or delivery) to transfer/receive the goods. The Court relied on this test and noted that railway receipts satisfy it; this supports treating railway receipts as mercantile documents of title for the purposes discussed.
Jalan and Sons Ltd. v. Governor General in Council, AIR 1949 EP 190 Held that an endorsee of a railway receipt may be different from an ordinary agent and, where the endorsee becomes the owner or has beneficial interest (e.g., commission on proceeds), he may be competent to sue in respect of the goods. The Court examined that decision and concluded it was fact-specific: in that case the endorsee had become owner and had beneficial interest; those facts were not present here and so the decision did not help the applicant.

Court's Reasoning and Analysis

The Court separated the applicant's two lines of argument and dealt with them sequentially.

  1. On the commission argument: The Court considered the claim for loss of commission to be remote and noted that the plaintiff did not claim commission but the price of the goods lost in transit. Accordingly, the commission argument was given little weight.
  2. On whether an endorsee of a railway receipt can sue for the price of goods lost in transit: the Court reviewed relevant authorities and statutory provisions.
    • The Court acknowledged that a railway receipt is a mercantile document of title and that endorsement of such a receipt can transfer title to the endorsee. It relied on the Privy Council decision (Ramdas Vithaldas) for the test of a "document of title" and pointed to Section 137 of the Transfer of Property Act (and its Explanation) which expressly includes a railway receipt as a mercantile document of title.
    • The Court accepted Dolatram Dwarkadas as authority that an endorsee, when recognised by the railway and entitled to take delivery, had sufficient interest to sue for wrongful refusal of delivery. However, that case did not concern recovery for goods partially lost in transit.
    • The Court considered Shamji Bhanji, in which a judge had held that mere endorsement might only make the endorsee an agent, but the present Court treated that view as limited to its facts and not a general rule that an endorsee never has a substantive interest.
    • The Court concluded from the statutory provision and authorities that a railway receipt being a mercantile document of title makes it possible, in principle, to transfer title by mere endorsement. Thus, the presumption should favour the endorsee as having interest in the goods, although other facts may rebut that presumption and show the endorsee acted merely as an agent.
  3. Applying these principles to the present facts, the Court emphasised the plaintiff's own testimony that the consignor retained ownership, that the plaintiff was authorised merely to take delivery and sell as an agent, and that the plaintiff's entitlement was limited to a commission on sale proceeds. Because the evidence admitted that the plaintiff was not the owner and was acting as agent, the presumption of ownership from endorsement was rebutted.
  4. The Court further analysed Jalan & Sons and observed that in that case the endorsee had become owner and had a beneficial interest; thus that decision was fact-specific and did not assist the applicant whose evidence showed only an agency/commission arrangement.
  5. On this basis, the Court held that the lower Court was correct to dismiss the suit and that the revision must fail.

Holding and Implications

Holding: Revision dismissed.

Implications:

  • The lower Court's dismissal of the suit is upheld; the plaintiff cannot recover the price of the goods lost in transit on the facts admitted by him in this case.
  • The Court reaffirmed that a railway receipt is a mercantile document of title and that endorsement generally gives the endorsee a prima facie interest in the goods; however, that presumption can be rebutted by evidence showing the endorsee was only acting as an agent and did not acquire ownership or substantial interest.
  • The decision is fact-specific: no broader new legal principle was announced beyond applying existing authority and statutory law; the direct effect is to dismiss the revision with costs and leave the lower Court's order intact.

Disposition in the opinion: "Revision dismissed." (with costs)

    Sheo Prasad v. Dominion Of India .

    Malik, C.J:— This case has been argued at great length but the point involved in the Civil Revision is a very short one: Certain goods were consigned from Chandpur Ghat to Allahabad. The consignment was deliverable to self. The railway receipt was, however, endorsed in favour of the plaintiff who took delivery of the goods and found that there was a shortage of 2 maunds and 7 seers. The value of the shortage was Rs. 174/-. The plaintiff filed a suit for recovery of the amount.

    2. On behalf of the defendant it was denied that the plaintiff was entitled to maintain the suit. The plaintiff, in the witness-box, stated that the consignor had sent the goods to him for sale. The exact words were as follows:

    “He (the consignor) kept the goods into my ‘arhat’ to sell it and pay its price to him after deducting my commission.”

    3. After the plaintiff examined himself no other evidence was given and the lower Court dismissed the suit on the ground that the plaintiff was not the owner of the goods and he had, therefore, no right to file the suit.

    4. Against the decision of the lower Court a civil revision under S. 25 of the Court of Small Causes has been filed in this Court.

    5. It is urged by learned counsel for the applicant that the railway receipt having been endorsed in favour of the plaintiff, the plaintiff had sufficient interest to maintain the suit. It has also been urged that, as the plaintiff would have earned a commission by the sale of the goods at a certain percentage of the sale price, his interest had suffered by reason of the short delivery and he had a right to bring an action.

    6. The second point is not worthy of very serious consideration as the claim based on the basis of the loss of commission must be deemed to be remote and the plaintiff has not claimed the loss of commission that he might have suffered but has claimed the price of the goods lost in transit.

    7. The first question, however, is of some importance, whether a transferee simpliciter of a railway receipt can maintain a suit for price of goods lost in transit. It can no longer be seriously contested that a railway receipt is a document of title and by endorsement of the railway receipt the title in the goods can be transferred to the endorsee. If the case stood merely at that there would be no difficulty in holding that the plaintiff was entitled to bring a suit, being the endorsee of the railway receipt and ‘prima facie’ the owner of the goods. The difficulty, however, has arisen by reason of the plaintiff's own statement that the goods were merely kept in his arhat for sale and after the sale the price less commission was to be paid to the person to whom the goods belonged.

    8. In — ‘Dolatram Dwarkadas v. B.B & C.I Rly. Co.’, AIR 1914 Bom 178 (A) it was held that a railway receipt was a mercantile document of title and the endorsee of the receipt had sufficient interest in the goods covered by it to maintain an action against the railway company for damages in respect of the goods covered by the receipt. The nature of the action, however, in that case was a little different from the one with which we are concerned. In that case, the endorsee of the railway receipt had gone to take delivery, the railway had accepted that he had the right to take delivery, he had signed the receipt book and paid freight and demurrage, he took delivery of 96 bags and claimed open delivery of 19 bags, the railway refused to give him open delivery and it was urged on behalf of the endorsee before the High Court of Bombay that the railway having chosen to accept the freight and demurrage from the plaintiff and having taken his signature in anticipation of the delivery to him, was not entitled to refuse delivery and that the defendant having by its acts recognised the plaintiff as the person entitled to take delivery was estopped from contending that it was not liable for failure to give delivery.

    9. The learned Judges allowed the revision holding that a railway receipt was a mercantile document of title and proceeded to say:

    “That being so, we think, it necessarily follows that the endorsee of such a railway receipt has sufficient interest in the goods covered by it to maintain an action of this kind.”

    10. It may, therefore, be accepted that it was decided in that case that if a railway receipt has been duly endorsed, the endorsee has a right to take delivery and that the wrongful refusal of the railway to give delivery entitles him to bring a suit.

    11. Prom the facts quoted in the report it does not appear that it was a case where a part of the consignment had been lost and the suit was filed for price of the goods lost. ‘Prima facie’ such a suit for loss of goods can be filed by the person to whom the goods belonged or who had a substantial interest in the same.

    12. In — ‘Shamji Bhanji & Co. v. North Western Rly. Co.’, AIR 1947 Bom 169 (B) the point came up for decision before a learned single Judge, Bhagwati, J., who held that even though a railway receipt was a document of title to goods a mere endorsement of a railway receipt was not by itself enough to transfer the property in the goods represented by the receipt to the endorsee thereof; that without anything more, the endorsement of the railway receipt only constituted the endorsee the agent of the consignee for the purpose of taking delivery of the goods, represented by the receipt, from the railway company. The facts of that case were peculiar and these observations must not, to our minds, be understood to mean that an endorsee of a railway receipt must always be deemed to be a mere agent who has no interest in the goods.

    13. The Privy Council in — ‘Ramdas Vithaldas v. Amerchand & Co.’, AIR 1916 PC 7 at p. 8 (C) has held as follows:

    “In their Lordships' opinion the only possible conclusion is that whenever any doubt arises as to whether a particular document is a “document showing title” or a “document of title” to goods for the purposes of the Indian Contract Act, the test is whether the document in question is used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or delivery, the possessor of the document to transfer or receive the goods thereby represented. In the present case, it has been found as a fact by both the Courts below, and is not and indeed cannot be disputed before this Board, that the railway receipts in question satisfy the test. It is, therefore, unnecessary to consider whether, apart from the evidence as to the ordinary course of business, the effect of Section 4 and 137 of the Transfer of Property Act would be conclusive on the point.”

    14. Chapter VIII of the Transfer of Property Act deals with transfers of actionable claims and how they are to be made. Section 137 of the Act, however, provides that

    “Nothing in the foregoing sections of this Chapter applies to stocks, shares or debentures, or to instruments which are for the time being by law or custom, negotiable, or to any mercantile document of title to goods:”

    and in the Explanation appended to the section the expression “mercantile document of title to goods” includes a railway receipt.

    15. A railway receipt, therefore; being a mercantile document of title to goods, it is possible to transfer the title in the goods, to the endorsee by mere endorsement. It is, therefore, not possible to accept the contention that a mere endorsement of a railway receipt was not by itself enough to transfer the property in the goods represented by the receipt and the endorsee has to prove ‘aliunde’ that he is the owner of the goods covered by the railway receipt endorsed in his favour.

    16. The presumption must be in favour of the endorsee though from other facts and circumstances it may be possible to hold that the goods had not been transferred to the endorsee and he was merely deputed to act as agent.

    17. Great reliance has been placed by learned counsel for the applicant on a judgment of the East Punjab High Court in — ‘Jalan and Sons, Ltd. v. Governor General in Council’, AIR 1949 EP 190 (D). The sixth and seventh paragraphs of the judgment no doubt lay down that the case of an endorsee of a railway receipt is altogether different from the case of an ordinary agent and that such an endorsee being in a position to take delivery of the goods covered by the railway receipt and give a complete discharge to the railway he is competent to bring a suit in respect of the goods, but in paragraph 8 of the judgment the learned Judges went on to hold that in the case before them the endorsee had become the owner of the goods and had beneficial interest in the same as he was entitled to earn a commission on the proceeds of the sale of the goods.

    18. If he had become the owner of the goods and the evidence on the point was accepted by the learned Judges, the fact whether he was entitled to a share in the sale proceeds may not have been of much importance for the purpose of the decision of the case. A trustee who has no beneficial interest in the goods but is the owner of the goods can always maintain a suit if the goods are lost or damaged.

    19. Learned counsel for the applicant has admitted that on the statement made by his client he cannot claim that the applicant became the owner of the goods but he has urged that he had a beneficial interest in the same as he was entitled to commission on the sale proceeds as ‘in the case of Jalan & Sons Ltd. (D)’. The learned Judges, however, did not hold that the mere fact that the plaintiff was entitled to get a commission was enough to entitle him to maintain the suit. They have laid stress on both the points that he was the owner of the goods and had considerable interest in the sale proceeds of the same. The learned Judges accepted the contention that a mere agent for taking delivery had no right to file a suit for damages for loss of goods and pointed out that in the case before them the plaintiff was not constituted a mere agent for the purpose of taking delivery but he was entitled to take delivery in his own right as owner to get possession of the goods and then to sell them as owner. It cannot, therefore, be said that the decision relied upon helps the applicant. The observations in the judgment must be read in connection with the facts of the particular case.

    20. In the case before us, it being admitted that the goods belonged to the consignor, that the consignor had merely authorised the plaintiff to take delivery of the goods and that the goods were kept at the shop of the plaintiff for the purpose of sale as an agent of the consignor, the plaintiff's right being only to get a share in the sale proceeds by way of commission, we do not think that the case is covered by the decision quoted. The judgment of the lower Court appears to be right. The revision must, therefore, fail and is dismissed with costs.

    V.S.B

    21. Revision dismissed.

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    Comments

    Sheo Prasad v. Dominion Of India .
    (Jan 11, 1954)