Kerala State v. General Manager

K.K Mathew, J.:— This appeal has been referred to a Full Bench for an authoritative pronouncement on the question of law arising for consideration in the case.

2. The plaintiff in the case is the State of Kerala and the defendant, the Southern Railway, represented by its General Manager. The suit was to recover damages on account of short delivery. The plaintiff booked 2000 tons of rice in 21310 bags from Bareilli Railway Station on “Railway Risk” for being transported to Trivandrum Central Station. It was alleged that rice delivered at the Trivandrum Central Railway Station was short by 79378 lbs and that out of the quantity delivered 327 bags were found to be damaged. The plaintiff claimed Rs. 28,208.70 nP. as damages. The defendant contended that the suit was not maintainable as the Union of India was not made a party to the suit and that a suit by a State against the Union of India could be instituted only in the Supreme Court of India under Article 131(a) of the Constitution. The other contentions of the defendant need not be mentioned here as they are not necessary for the disposal of this appeal. The trial Court raised 9 issues and on the basis of a petition put in by the defendant for hearing certain issues as preliminary issues the Court below has heard arguments on those issues and entered findings on them.

3. Issue No. 3 is as follows: “Will the suit lie in this Court? Is the suit barred by the provisions of the Constitution of India?” On this issue the Court below found that since the Union of India has not been made a party to the suit, clause (a) of Article 131 of the Constitution has no application and therefore the suit was not liable to be dismissed on that ground. On Issue No. 1 which runs: “Is the suit maintainable? Can a decree be passed against the defendant as now impleaded?” the Court below found that the Union of India was a necessary party to the suit and that since the Union of India has not been impleaded as a party, the suit was incompetent. On the strength of this finding the Court below dismissed the suit and this appeals filed by the plaintiff from the decree.

4. The learned Advocate General appearing for the appellant submitted that the view of the. Court below that the Union of India is a necessary party to the suit is not correct as under the relevant provisions of the Indian Railways Act, 1890, hereinafter referred to as the Act, a suit can be maintained against the Southern Railway represented by its General Manager. He referred to Ss. 77, 80 and 140 of the Act and submitted that a suit can be instituted against a railway administration without the Union of India being made a party to it, as each railway administration is a legal entity capable of being sued.

5. Section 3(6) of the Act defines “railway administration” as follows:

“‘Railway administration’ or ‘administration’ in the case of a railway administered by the Government means the Manager of the railway and includes the Government and, in the case of a railway administered by a railway company, means the railway company.”

6. In the Act of 1879 the word ‘Manager’ alone occurred because most of the railways in those days were managed and administered by the railway companies and therefore the managers of those companies or the railway companies themselves represented the railway administrations. The word with reference to “Government” was introduced in the Act of 1890 with a view to enlarge the definition of “railway administration” so as to include the Government owning the railway. The words “railway administration” must be deemed as comprehending not only such things as they signify according to their natural import but also those things which the definition clause declares that they shall include. Looking at the definition of “Railway administration”, it is clear that it includes the Government also.. Therefore a suit against a railway administration is in substance and in reality a suit against the Government or the State owning the railway. Section 79 of the CPC says that in a suit by or against the Government the authority to be named as plaintiff or defendant, as the case may be, shall be in the case of a suit by or against the Central Government, the Union of India, and in the case of a suit by or against the State Government, the State. In the case of a railway administration owned by the Union of India, the Union of India represents the railway administration and must be made a party to the suit. In other words, a suit against a railway administration owned by the Central Government, must be instituted against the Union of India, and not against the Manager of the particular railway administration.

7. That the suit must be against the Government appears to be clear from the reasoning in Sukhanand Shamlal v. Oudh and Rohilkhand Rly., AIR 1924 Bom 308. In that case a preliminary objection was raised that the Oudh and Rohilkhand Railway was owned and worked by the Government and therefore the Secretary of State for India in Council should have been the person against whom the suit should have been instituted. The plaint though amended, merely showed “The Oudh and Rohilkhand Railway Administration by its Manager and Agent” as party defendant to the suit, and it was contended for the plaintiff that the suit was maintainable against the railway administration in that form and that the Secretary of State for India in Council need not have been sued. In repelling the contention the Court observed;

“Mr. Munshi's main contention is that the Indian Railways Act 9 of 1890 clearly contemplates a State Railway Administration being sued by its Manager, and that this special enactment is not affected by the subsequent general enactment contained in Section 79 of the CPC 1908 that suits by or against the Secretary of State for India in Council.

In my opinion, the Indian Railways Act of 1890 contains no clear indication that a suit against a State Railway can be brought against the Manager, and on the contrary, the definition ‘railway administration’ in the case of a railway administered by the Government, as including the Government suggests that a suit like this should be brought against the Government. On this point, I entirely agree with the view taken in the Oudh case relating to this same railway: Traffic Superintendent, E.R and E.I & O. & R. Rlys v. Hafiz Abdul Rihman (1901 Ind. Rly. Cases 2nd Edn.), I adopt the arguments given in the report of the Court's judgment at pp. 814, 815. I may add that the Statement of: Objects and Reasons appended to the Bill which became Act 9 of 1890 clearly shows that the inclusion of the Government or State in the definition of ‘railway administration’ was proposed for the purposes of Chap. 7 of the Act relating to the responsibility of Railway Administrations as carriers. But apart from that, the Act itself shows that must have been the object. It is difficult to see what other intention could have led to this alteration of the previous definition contained in Section 3 of the Indian Railways Act of 1879.

Mr. Munshi drew my attention to Ss. 72-77, 97, 140 and 145 of the Act of 1890; but there is nothing in these which indicates that the Manager, and not Government should be sued in the case of a State Railway. Sections 72-77 use the general words ‘railway administration’ which under the definition in the Act, includes Government. Section 97 applies only to a railway company and not to a State Railway; so, there is nothing incongruous in the provision that the plaintiff in the suit contemplated, shall be the Secretary of State for India in Council; and it cannot be said that this in any way suggests that the Manager, and not Government, is to be sued in the case of a State railway. Section 140 relates to notices like those provided for in S. 77, and not to suits; it is also purely permissive in its terms. Section 145, so far as it relates to Civil Courts merely contains provisions corresponding to those in O. 27 R. 2, so as to avoid the necessity of personal attendance by the Manager, as chief representative of the railway……It certainly cannot be read as implying that the Manager can be sued as sufficiently representing as State Railway.”

8. It was therefore held that the Secretary of State for India in Council being the properietor of the railway was the proper defendant to the action.

9. The above decision was followed in Hirachand Succaram v. G.I.P Rly. Co., AIR 1928 Bom 421. In that case the learned Judges observed that under S. 3(9) of the Act ‘railway administration’ would include the Government, and that since the Secretary of State was the proprietor of the railway and since the revenues of the Government of India were liable to pay the damages awarded to the plaintiff, the suit must be brought against the Secretary of State for India in Council. To the same effect are the ruling in Elahi Bakhsh v. E.I Rly. Administration, AIR 1931 Pat 323, N.W Rly. Co. v. Dwarka Ram Srikishun Ram, AIR 1931 Pat 393, and Ramoo Textiles…* v. Union Of India…., AIR 1960 Kerala 257.

10. The learned Advocate General relied on Dominion of India v. Firm Museram Kishun Prasad, AIR 1950 Nag 85, and submitted that the railway administration is an entity and is capable of being sued. In that case certain goods were consigned from Raiahmundry Station on the M.S.M Railway to be delivered at Howbagh Station on the B.N Railway, When the wagon containing the goods was received, at Howbagh some of the goods were found missing. The plaintiff after serving a notice upon the Secretary to the Central Government Commerce and Railway Department instituted the suit for recovery of damages. The defence was that the loss did not occur on the B.N Railway. It was also contended that no notice had been served on the M.S.M Railway to which the goods were consigned, nor was that railway made a party to the suit. It had not been proved that the loss occurred on the B.N Railway. The finding was that there was no proof of any loss at all. On these facts the suit was dismissed.

11. There are some general observations in that judgment to the effect that the railway administration as such should be made a party to the suit. The learned Advocate-General relied upon the following observations:

“Further, merely suing the Governor-General as representing the entire State-owned railways (at least before the Indian Independence Act was passed which is the case here) is not a proper form of suit because that would render S. 80 otiose and meaningless……

It was argued that the definition of Railway Administration includes Government and therefore the plaintiff could sue Government alone. This is not correct. The scheme of the Act requires the plaintiff. So sue a particular railway administration. In the case of State Owned Railways the notice to a railway administration would include Government. Similarly a suit against a railway administration would also include Government but not vice versa. This suit was filed before the recent amendment of the Code of Civil Procedure, and whatever may be the position after the Indian Independence Act it is clear that the suit as laid ought to have been against one or the other railway administration or both. Suing the Governor-General would not make the railway administration a party as it is not only contrary to the scheme of the Act but would also make S. 80 of the Act inoperative.”

12. In Narayanaswami v. Union of India, AIR 1980 Mad 58 the question was whether notice under S. 77 of the Act to the General Manager of one of the Government railways concerned in the route over which through traffic passed will be sufficient as all the railways over which the traffic passed are owned by the Central Government. It was held that in the absence of any specific provision either is S. 77 or in S. 140 indicating the particular General Manager to whom notice is to be given in a case of through traffic carried over more than one zonal unit of the Government railways, notice to any one of such General Managers is sufficient compliance with these sections. In considering the question the learned Judges quoted the observations in AIR 1950 Nag 85 referred to above, and said:

“In our opinion, this approach lost sight of the fundamental difference between the conditions which, existed before 1948 and the conditions which came into existence after 1948. Section 80 was a creation of the statute to lay down a rule of law governing liability, irrespective of the contract between the parties. At the time when the rule was laid down the Government as such was not liable for the loss of goods on through traffic; but the different railway systems or companies were so liable. To say that rule must apply even where through traffic is carried exclusively over Government railways and the liability for loss on such traffic is that of one individual the Government seems to us to ignore a material difference.”

13. Considering ‘the historic back ground and purpose of S. 80, we do not think that the observations in AIR 1950 Nag 85 were warranted. The material portion of S. 80 runs as follows:

“Notwithstanding anything in any agreement purporting to limit the liability of a railway administration, a suit for compensation for loss, destruction or deterioration of goods may be brought either against the railway administration to which, the goods were delivered by the consignor thereof, or against the railway administration on whose railway the loss, destruction or deterioration occurred.”

14. This section is intended to provide for the liability of different railway systems in connection with what is called through traffic. In 1890 when the section was enacted the different railways in the country were owned by different railway companies and administered by them. Traffic through the railway of one or more of such different railway companies gave rise to claims for compensation. The contracting railway wherein the traffic originated was in the habit of inserting a clause in the agreement called ‘risk rules’ limiting its liability when the loss or destruction of goods took place in another railway through which through traffic had to pass. Differences in judicial opinion arose as to the liability of the respective railways over which the traffic passed and also as to the necessity of giving notice to all these railways under S. 77 of the Act. In order to give a quietus to the controversies the legislature enacted S. 80. The purpose of the section was to indicate the persons who could be sued in the case of through traffic. The section provides that the owner of the goods lost or destroyed in the case of a through traffic could sue either the contracting railway or the railway on which the loss or destruction of the goods occurred. But the learned Advocate General said that the fact that the section was retained even after 1948, when all the major railway systems of the country were owned and run by the Government, shows that each railway administration is a separate entity capable of being sued. In our view, this inference would not follow. Even after 1948, there were a few railway systems working in this country which were not owned and run by the Government, and that accounts for the retention of S. 80 in the Act. Even now it is necessary to provide for the respective liability of the several railway administrations in the case of through traffic, where such traffic is carried on not only over the Government run railway but also over the other private railways.

15. In Chandra Mohan v. Union of India, AIR 1953 Assam 193 a Full Bench of the Assam High Court held that the Union of India must be made a party when a suit is instituted for compensation for loss or damages against a railway administration owned by the Union of India and that a suit against a railway administration represented by its Manager when the said railway is owned by the Central Government is not competent and that the suit must in all such cases be against the Union of India.

16. It was also held that if the Union of India is made a defendant to the suit the particular railway administration is adequately represented and that it is not necessary that the particular railway administration through its Manager should also be made a party defendant to the suit. The Court said:

“This section, therefore, males it imperative that where the suit is against the Central Government, the Union of India must be made a party to the suit. I have already held that in the case of a railway administration owned by the Union of India, the Union of India represents the railway administration and is to be sued within the meaning of Section 80 of the Indian Railways Act. That being so, the suit in such a case must be brought against the Union of India, and not against the Manager of the Railway Administration. If the Manager of the railway administration is impleaded as a party defendant to the suit, it will not vitiate the action, but he would be merely an unnecessary party whose presence on the record was not required by the law. In this view of the matter, there is no difficulty in applying the law. The suit can be brought against the Union of India or the Government concerned which owns the offending railway or the railway administration liable for the loss or damage. Rut the plaint must clearly indicate, in order to establish a cause of action, the facts on which the liability is sought to be fastened on the Union of India. Otherwise the suit will have to be dismissed for want of a cause of action.”

17. The learned Advocate General also relied upon the following observations in C.I Chemicals (P.) Ltd. Sehore v. Union of India, AIR 1962 Madh Pra 301 to show that a railway administration is an entity and must be impleaded as a party to a suit.

“It is, therefore, no answer to state that the Union of India having been impleaded the non-joinder of one or more railway administrations is immaterial; it is a statutory requirement based on sound principles. It may be that in the present circumstances, the first clause of this section called for adaptation in 1950; but we have to apply the statute as it stands; as far as we were concerned here, that clause is not of any effect…………………………………. The choice given by S. 80, is not between suing one or more railway administrations, and not suing any of them at all; it is between suing this or that out of two or more administrations involved. Not only is the section worded clearly, but also is the position in this regard cleared by authority, for example, in AIR 1950 Nag 85”.

18. In the above case the Union of India was a party to the suit. We do not think it necessary for deciding this case to resolve the controversy whether besides the Union of India, the appropriate railway administration also is a necessary party to the suit. We hold that the lower court was right in its conclusion that the suit was not maintainable as the Union of India was not made a party to the suit.

19. The plaintiff has put in an application in this Court for impleading the Union of India as a party to the suit. We do not think that any useful purpose will be served by allowing this application. If the application is allowed and the Union of India made a party, the suit must be dismissed as under Article 131(a) of the Constitution of India a suit by one State against the Union of India can only lie in the Supreme Court of India. We therefore dismiss the petition. In the result, the decree of the court below is confirmed and the appeal dismissed with costs.

H.I/R.G.D

20. Appeal dismissed.