Union Of India, v. Shrimati Tara Rani And Others,

(1) This is a first appeal arising out of an order passed by Shri Chetan Dass Jain, Senior Sub-Judge, acting as a Tribunal under the Displaced Persons (Debts Adjustment) Act (Act No. 70 of 1951)--hereinafter referred to as the Act, in an application under S. 13 of the Act against the Union of India.

This appeal came up for hearing before Bishan Narain J. on 18-9-1956, and in view of the importance of the questions involved, it was referred to a Division Bench for decision.

(2) The facts giving rise to this appeal are short and simple. Amolak Ram Sethi was carrying on business of a fruit merchant as sole proprietor under the name and style of Laxmi Fruit Agency at Jammu Tawi (Kashmir) and Rawalpindi (now Pakistan). He booked three consignments of fruits and vegetables from Jammu Tawi to Delhi. One of these consignments the consignment in dispute in this appeal was booked on 12-8-1947, and the remaining two, not in dispute in this appeal, were booked on 27-8-1947. The goods never reached the destination and were neither delivered to the consignee nor to the consignor. Amolak Ram died in communal riots in Rawalpindi in September, 1947. His widow Smt. Tara Rani and his sons filed the application, which has given rise to this appeal under S. 13 of the Act.

The claim made in this application related to the three consignments and was made against the Union of India for a sum of Rs. 24,206-3-0. A number of preliminary objections were raised to this petition, and in this appeal only those out of them have been dealt with which were pressed by the learned counsel for the Union of India. On the merits, the principal contentions raised related to the liability of the Union of India and the quantum of that liability. All the preliminary objections were rejected by the Tribunal on 2-5-1953. On merits, the decision was given on 7-12-1953. The claim of the petitioners with regard to the two consignments of 27-8-1947 was rejected, but a decree was passed for the claim relating to the consignment dated 12-8-1947. Against this decision, the present appeal was filed by the Union of India and on a reference by Bishan Narain J. it has come up for hearing before us.

(3) At this stage, it will be proper to set out the contentions raised by the learned counsel for the Union:

1. That the claim in question is not a 'debt' as defined in S. 2(6) of the Act and consequently the Tribunal had no jurisdiction to determine the present controversy.

2. That the application under S. 13 of the Act was barred by time.

3. That the Act only confers benefit on the person, who actually was displaced from Pakistan and not on his legal representatives.

4. That the loss of goods was not due to any fault of the Railway and thus the Union of India is not liable for the price of the goods.

5. That there is no proof on the record to prove the price of the goods and thus no decree for Rs. 5,151-10-6 could be passed."

(4) I propose to take up each of the contentions of the learned counsel for the Union in the order in which they have been set out above.

(5) The first question that arises for determination is whether the claim in question is a debt or not as defined in S. 2(6) of the Act. Section 2(6) of the Act is in these terms:

"2(6): 'debt' means any pecuniary liability, whether payable presently or in future, or under a decree or order of a civil or revenue Court or otherwise, or whether ascertained or to be ascertained, which-

Iron and Hardware (India) Co. v. Firm Shamlal and Bros, AIR 1954 Bom 423, Karamchand Pessumal v. Madhavdas Savaldas, AIR 1956 Bom 669, Jogindra Singh v. Sardarni Chattar Kaur, 57 Pun LR 226, Milkha Singh v. Messrs. N. K. Gopala Krishna Mudaliar, AIR 1956 Punj 174, Gopi Chand Singh v. Union of India, F. A. O. 104 of 1958 decided on 28-8-1959, by a single Judge of this Court.

(6) It is beyond dispute that the liability of the Railway while carrying goods for hire is that of a bailee. Chapter VII of the Indian Railways Act (No. 9 of 1890) and the Indian Contract Act (No. 9 of 1872) deal with the liability of the Railway as a carrier. The relevant provisions in the Railways Act bearing on the matter in controversy are set out below:

"Section 72(1): The responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of this Act, be that of a bailee under Ss. 151, 152 and 161 of the Indian Contract Act, 1872.

* * * * * (3) Nothing in the common law of England or in the Carriers Act, 1865, regarding the responsibility of common carrier with respect to the carriage of animals or goods, shall affect the responsibility as in this section defined of a railway administration.

Section 76. In any suit against a railway administration for compensation for any delay loss, destruction, deterioration or damages, the burden of proving-

(a) in the case of animals, the value thereof, or the higher value declared under S. 73, and, where the animal has been injured, the extent of the injury; or

(b) in the case of any parcel or package the value of which has been declared under S. 75, that the value so declared is its true value, shall lie on the person claiming the compensation, but, subject to the other provisions contained in this Act, it shall not be necessary for him to prove how the delay, loss, destruction, deterioration or damage was caused."

The relevant provisions of the Indian Contract Act (No. 9 of 1872) are as under:

"Section 151. In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed."

Section 152. The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in S. 151.

Section 160: It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished.

Section 161: If, by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time."

Railways under the Indian Law while carrying goods are not liable as a common carrier, but they are liable as bailees. See Mohd. Ekram v. Union of Indian, ILR (1957) 37 Pat 1355: (AIR 1959 Pat 337) and Secy. of State v. Afzal Hussain, 56 Ind Cas 714: (AIR 1920 Oudh 70).

(7) Now coming to the decisions cited by the learned counsel, it will be appropriate to take them in the order in which they have been set out above.

1. In AIR 1954 Bom 423, the claim was for damages on a breach of contract, and while deciding that case Chagla C. J., observed as follows:

"Now, in order that there should be a debt there must be an existing obligation. The payment may be due immediately or it may be due in future, but the obligation must arise in order that the debt should be due. It may even be that the actual amount due in respect of the debt may require ascertainment by some mechanical process or by the taking of accounts. But even when the actual amount is to be ascertained the obligation must exist. It is well settled that when there is a breach of contract the only right that accrues to the person who complains of the breach is the right to file a suit for recovering damages. The breach of contract does not give rise to any debt and therefore it has been held that a right to recover damages is not assignable because it is not a chose in action. An actionable claim can be assigned, but in order that there should be an actionable claim, there must be a debt in the sense of an existing obligation. But inasmuch as a breach of contract does not result in any existing obligation on the part of the person who commits the breach, the right to recover damages is not an actionable claim and cannot be assigned.

The expression 'to be ascertained' may well apply to a case which I have indicated earlier where the pecuniary liability cannot be ascertained without accounts being taken or some other process being gone through. But the whole basis of a suit for damages is that at the date of the suit there is no pecuniary liability upon the defendant and the plaintiff has come to Court in order to establish a pecuniary liability. Now, whether the case falls under S. 2(6), clause (a), (b) or (c) at the date when the application is made, there must be an existing debt, or in other words, an existing obligation, and when the respondent firm filed its application for damages, there was no debt existing in respect of which an application could be made under the Act. If the intention of the Legislature was that a special tribunal set up under the Act should adjudicate not only upon debts, but also upon damages, nothing was easier than for the Legislature to have said so. But the Legislature advisedly uses the expression 'debt' and not 'damages', and the tribunal is set up for the adjustment of debts and not for the determination of pecuniary liability and the assessment of that pecuniary liability."

2. In AIR 1956 Bom 669, the dispute was between the partners inter se for taking partnership accounts of a dissolved partnership, and it was held that this type of claim is not a 'debt' within the meaning of S. 2(6) and the learned C. J., made the following observations:

"Therefore, in order that there can be a debt which can be adjusted or with regard to the recovery of which the special facility provided by this Act can be afforded to a displaced person, it must be not only any liability but a pecuniary liability and the pecuniary liability must be an existing obligation although it may not be payable 'in praesenti' and even though it may not be ascertained at the relevant date. But the emphasis that the Legislature has placed is upon the word 'pecuniary' which qualifies 'liability', thereby ruling out other kinds of liability which although based upon an existing obligation are not pecuniary in their nature."

3. In 57 Pun LR 226, the question that arose for determination was whether future maintenance is a 'debt' of not, and it was held that though arrears of maintenance is a debt as defined in the Act, future maintenance is not.

4. The claim in AIR 1956 Punj 174, arose in a contract relating to sale of goods on account of breach of warranty. It was held that such a claim could not be held to be a pecuniary liability, because the breach would only give rise to a right to recover damages depending on the determination of the initial question as to who is guilty of the breach, thus there being no existing liability till such determination had taken place. The decision in AIR 1954 Bom 423 was followed:

(8) Thus it will be seen that in all these cases, the pecuniary liability was not existing at the date when an application to the Tribunal was made. In the case of a breach of contract what has to be settled first of all is as to who is responsible for the breach and it is after this matter is settled it can be said that a pecuniary liability on the part of the person guilty of the breach arises to pay damages. Till then, there is no liability. It is difficult to predicate right away as to who out of the two contracting parties is guilty of the breach of contract. Thus it would be clear, that, what was sought to be determined by an application under the Act in all these cases, excepting one, was merely the question whether there was a breach of contract and not that on an existing pecuniary liability the tribunal was called upon to ascertain or determined the amount of that liability. It is not disputed that if the pecuniary liability exists and the tribunal has to determine its extent, it will be covered by the definition of 'debt' in S. 2(6) of the Act.

What is disputed is that there is no existing pecuniary liability. If the contention is that in all claims for compensation or damages, there is no existing pecuniary liability, I am afraid, I am unable to agree. The cases cited by the learned counsel merely deal with that type of a breach of contract where before a pecuniary liability could arise, the liability giving rise to that pecuniary liability had to be determined and till that was determined, there could be no pecuniary liability, and as such no existing liability. But there can be cases where on the breach of a contract the pecuniary liability is an existing liability; not depending on the determination as to who is guilty of the breach. The decisions do recognise the broad fact that to be a debt within the meaning of S. 2(6) of the Act, the pecuniary liability must exist as a fact and for its existence, it should not depend on determination of something else.

(9) In a contract for carriage of goods the pecuniary liability arises the moment the goods are not delivered when they ought to have been delivered. What has to be determined is merely the quantum of that liability.

(10) The only case where this question, directly arose is the unreported decision of R. P. Khosla J. in F. A. O. No. 104 of 1958, and the learned Single Judge has merely followed the Bombay and the Punjab decisions quoted above. As I have already stated, in the present case the liability arose immediately the goods were not delivered and it cannot be disputed, that, that liability was a pecuniary liability because what the plaintiff became entitled to was the price of the goods at the date of non-delivery. All that had to be ascertained was the price of the goods and the mere fact that the railway could avoid that liability on proof of certain fact which will be mentioned presently would not make it nonetheless a pecuniary liability.

Just as in a claim on a bond, the liability is there and it cannot be disputed that it is a debt, but a person may avoid that liability by saying that on the date he executed the bond, he was a lunatic, or that he was a minor or that the amount of the bond had been discharged by payment, or the bond was obtained by fraud or undue influence or coercion and thus there is no liability in fact. But all the same, the liability under the bond is there till any of the aforesaid facts are established. It is all the time an existing liability. Similarly, the Railway can prove that it took all the care of the goods that a prudent man would have taken of his won goods and in spite of that the loss occurred for reasons beyond its control. It will be absolved from the pecuniary liability not because that there is no such liability, but because on the facts proved, the Railway is absolved from it. Therefore with due respect to my learned esteemed brother R. P. Khosla J., I am constrained to hold that the decision in F. A. O. No. 104 of 1958 does not lay down the correct rule of law so far as the liability of a bailee for the non-delivery of goods is concerned.

(11) The second question that arises is whether the application under S. 13 is barred by time. The Act came into force on the 10th of December, 1951, and the petition under S. 13 of the Act was filed on the 2nd of August, 1952, i.e. within one year of the coming into force of the Act. Section 13 of the Act is in these terms:

"13. At any time within one year after the date on which this Act comes into force in any local area, any displaced creditor claiming a debt from any other person who is not a displaced person may make an application, in such form as may be prescribed, to the Tribunal within the local limits of whose jurisdiction he or the respondent or, if there are more respondent, than one, any of such respondents actually and voluntarily resides, or carries on business or personally works for gain, together with a statement of the debt owing to him with full particulars thereof."

There can be no manner of doubt that in view of the aforesaid provision, the present application is within time. Therefore, the objection of the learned counsel on this score is not tenable.

(12) As regards the third contention, it has also no substance. In the first instance, Amolak Ram Sethi died in Pakistan in September, 1947, and his widow and sons who were residing in Rawalpindi, would themselves be displaced persons, and as the right to the consignment arose on the death of Amolak Ram Sethi and it cannot be said to be a personal right, it survived to them and they are entitled to make an application under S. 13 of the Act. Thus there is no force in the third contention raised.

(13) As regards the fourth contention, the tribunal has found as a fact that the railway had failed to prove that the loss of goods was not due to any fault on their part. As a matter of fact in this case, there is no evidence that the goods were ever put on rails at Jammu Tawi or if they were put on rails what happened to them. The Railway would be liable in these circumstances. It cannot avoid its liability in this manner.

(14) The last contention has no force. The finding of the tribunal as to this matter is based on evidence which cannot be said to be either worthless or inadequate. It has been found as a fact by the tribunal that the price of the goods lost comes to Rs. 5151/10/6. It has based its decision on the account books of the dealers from whom Amolak Ram Sethi purchased the fruit and the vegetables in question, the account books of Laxmi Fruit Agency and the oral evidence given by the witnesses at the trial. Therefore, there is no force in this contention either.

(15) The respondent has filed cross-objections respecting the amount of the claim rejected by the tribunal. The learned counsel for the respondent did not serious press them, nor is there any merit in them.

(16) For the reasons given above, this appeal and the cross-objections fail and are dismissed with no order as to costs in this Court.

S.S. Dulat, J.

(17) I agree.

(18) Appeal and cross-objections dismissed.