Union Of India Owning Western Railway v. Dayabhai Laxman

1. In Small Cause case No. 348 of 1958, a decree was passed in favour of the plaintiff firm, a consignee of goods, against the Union of India Owning the Western Railway for damages in respect of deterioration of goods booked Bilimora to Rajkot. The consignor did not file the suit, but the consignee, in whose name the railway receipt was prepared, filed a suit fr damages. Admittedly, damage was caused to the goods.

2. The only point urged in revision is that the lower Court has erred in passing a decree in favour of a bare consignee and that as the suit was not filed by the consignor who was a party to the contract of consignment, the suit should have been dismissed, as it was a suit filed by a bare consignee against the Railway. The contention is well founded. This is a case of bailment of goods to the Railway. The word "bailment" is thus defined in Section 148 of the Indian Contract Act :-

"A "bailment" is the delivery of goods by one person to another for some purpose upon a contract that they shall, when the purpose is accomplished, be returned or disposed of according to the directions of the person delivering them."

Under this section, therefore, if the conditions are satisfied, the Railway is responsible to the bailor, i.e. the consignor for any loss, destruction or deterioration of the goods. Under Order 7, Rule 5, Civil Procedure Code, the plaint shall show that the defendant is or claims to be interested in the subject matter, and that he is liable to be called upon to answer the plaintiff's demand. The plaint must show how the defendant is liable to be called upon to answer the plaintiff's demand. In the instant case, the consignor or the bailor has not filed the suit, but the suit has been filed by the consignee, under Section 161 of the Contract Act, in the case of bailment the bailee is responsible only to the bailor, and if a person, who is not a bailor, files a suit against the bailee for any loss, destruction or deterioration of goods, it is for him to show how he is entitled to sue when he is not in the position of a bailor.

3. In the instant case, in his evidence the plaintiff did not say how he was in a position to sue the Railway for the loss or deterioration of the goods bailed to the railway by someone else. But the plaintiff merely relies on the railway receipt where his name is shown as consignee. The Small Cause Court, however, relied on a Full Bench ruling in Dominion of India v. Messrs. Gaya Pershad Gopil Narain, (S) AIR 1956 All 338 (FB), where it was held as follows:

''A consignee who is not the owner of the goods but to whom the goods are consigned for the purpose of sale on commission basis, is entitled to maintain the suit for loss in respect of damage caused to the goods in transit." But the principle laid down in the Allahabad, case cannot be applied to the present case, because there is no evidence to show that the goods had been consigned Jo the plaintiff for the purpose of sale on commission basis. Ordinarily, it is only a party fa a contract who can sue upon the contract. But there are provisions in the law whereby persons who are not parties to the contract can sue upon the contract. For instance, Section 226 of the Contract Act provides that contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. Therefore, when a contract has been entered into by an agent, the principal can enforce the contract and sue upon the contract entered into by his agent. Rut, in this case it has not been suggested by the plaintiff in his evidence that the 'contract of bailment had been entered into by his agent.

4. I need not consider the case of assignment of a contract because in the instant case, the plaintiff does not claim that the contract has been assigned in his favour. Under Sections 94 and 95 of the Indian Trusts Act, there may be a constructive trust where a person having possession of property has not the whole beneficial interest therein, in such a case, the person having such an interest may be in the position of a beneficiary or a cestui que trust, as observed in Chhaganlal v. Dominion of India, 59 Bom LR 704 at p. 709 : ((S) AIR 1957 Bom. 276 at p. 280), where it was held as follows :-

"It is well settled that normally a person who is not a party to a contract cannot maintain an action for breach of that contract. That rule, it is true, is subject to certain well-recognised exceptions, e.g., a person who is not a patty to a contract can sue on it if he is claiming through a party to the contract, or if he is in the position of a cestui que trust or of a principal suing through an agent or if he claims under a family settlement. Sec National Patroleum Co. Ltd. v. Popatial Mulji, 38 Bom. LR 810 : ( AIR 1936 Bom 344). In this case, the plaintiffs do not fall within any of the excepted classes. Not being parties to the contract and not being owners of the goods covered by the railway receipt, in our judgment, the plaintiffs had no right to maintain an action fop compensation for loss of the goods,"

5. But, in the instant case, it has not been explained in the evidence of the plaintiff in what capacity or for what reasons he is in a position to call upon the railway to answer his demand, when he is not a party to the contract of bailment. The learned counsel for the opponent, however, relies on a Full Bench decision in (S) AIR 1956 All, 338. In this decision, the view has been taken that a consignee has a right to enforce the contract of bailment with the railway by the mere fact that he is a consignee. The learned Judges of the Allahabad High Court relied on Clause 3 of the rules framed by the Railway, and printed on the back of the railway receipt Under the heading "Notice" to consignors" and observed as follows :-

"Moreover the rule framed for the railways and printed on the back of the railway receipt as Clause 3 Under the heading "Notice to consignors" contemplates delivery to the consignee and provides that the railway receipt 'must be given up at the destination by the consignee to the railway company or the railway may refuse to deliver and that the signature of the consignee Or his agent in the delivery book at the destination shall complete evidence of delivery'.

The same clause also provides that 'If the consignee does not himself attend to tike delivery he must enderse on the receipt a re-quest for delivery to the person to whom he wishes it to be made....."'. It is difficult to see how this notice can be regarded as giving a right to the consignee to file a suit against the railway. The learned Judges of the Allahabad High Court also observed that it is well established in India that not only can parties to a contract sue upon it but also persons who are entitled to a benefit under it, or to whom the rights created by it have been transferred. As already observed generally it is only a party to a contract who can sue upon the contract. Certain other persons can also sue upon the contract, for instance, a principal can enforce a contract and sue upon it when the contract has been entered into by his agent. But in the case of a contract of bailment, under Section 72 of the Railways Act, which refers to Section 161 of the Contract Act, the bailee is responsible only to the bailor. In view of Section 72 of the Railways Act and Section 161 of the Contract Act, it is difficult to hold that any person other than the bailor is entitled to sue. I need not consider the question whether a consignee who is the owner of the goods, would be entitled to sue, because in the instant case, it is not suggested that the plaintiff consignee, has become the. Owner or that he was the owner of of the goods.

6. The learned counsel for the opponent has relied on the definition of ''document of title to goods'' in Section 2(4) of the Sale of Goods Act. In this clause "document of title to goods" is de-lined as follows :-

"Document of title to goods" includes a bill of lading, dock-warrant, warehouse-keeper's certificate, wharfinger's certificate, railway receipt, warrant or order for the delivery of goods and any other document 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 by delivery, the possessor of the document to transfer or receive goods thereby represented."

The section, which deals with definitions, is Section 2 of the Sale of Goods Act, and that Section provides that unless there is anything repugnant in the subject of context "document of title to goods" includes a railway receipt. In any section of the Sale of Goods Act the expression "document of title to goods" would include a railway receipt, unless there is something repugnant in the subject or context. The learned counsel for both sides have been unable to show any other section in the Sale of Goods Act where the expression "document of title to goods" has been used. "Document of title to goods" would include a railway receipt only when there is a reference to "document of title to goods" in any section of the Sale of Goods Act. Merely because the railway receipt is in the hands of a consignee, he cannot be said to be the owner of the goods. This question also need not be further pursued in view of the fact Section 161 or the Contract Act clearly provides that the bailee is responsible only to the bailor. It is not stated in Section 161 of the Contract Act that the bailee is responsible to the owner of goods bailed.

7. In any case, it is clear that in view of Section 72 of the Railways Act and Section 161 of the Contract Act, the Railway is responsible only to the bailor, that is the consignor, and this is not a case in which Section 226 of the Contract Act is sought to be applied, because it is not suggested by the plaintiff that the consignor was acting as his agent. The learned Small Cause Court Judge was, therefore, wrong in passing a decree in favour of the consignee, as the consignee did not establish in what way he was entitled to sue the Railway, he not being a party to the contract of bailment. The decree passed by the lower Court is, therefore, erroneous in law and is set aside, but -here will be no order as to costs.