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Judgment Summary — Mulla, J. (Revision from Court of Small Causes)

Factual and Procedural Background

The plaintiff is the proprietor of the firm Kishan Lal Matru Mal which owns an oil mill at Hathras. He consigned two separate consignments of 420 tins of mustard oil each to the B.B. and C.I. Railway Company on two dates: 15 August 1934 (to Narainganj) and 28 August 1934 (to Dacca). The consignments were accepted by the railway under risk-notes forms A and B, which allocated to the consignor the risk of loss except where loss was proved to result from misconduct by railway servants.

The ordinary route for these consignments was via Kasganj, Sitapur, Gorakhpur and Katihar, and the wagons used could, by gauge compatibility, have conveyed the consignments to destination without transshipment. However, owing to "breaches caused on the B.N.-W. line by Hoods" the consignments were diverted (from Sitapur or Gorakhpur) to Benares. The plaintiff was not informed of the diversion. At Benares both consignments were transferred from the four-wheeler wagons of the B.B. and C.I. to larger wagons of the East Indian Railway; again the plaintiff received no notice of this transfer.

On delivery at destination a shortage of 11 maunds, 7 seers and 4 chhataks in weight was recorded. The plaintiff sued for damages in the court of the Munsif (small causes side) at Hathras. The plaintiff had earlier dispatched nine other consignments to Bhairavbazar via the same route; eight of those consignments, which were diverted to Benares, similarly showed shortages and marks of cutting or boring, while one consignment detained at Sitapur and carried by the ordinary route showed no shortage. In the companion (regular) suit the learned Munsif gave decree for the plaintiff on the basis that shortage arose from misconduct of railway servants. In the suit that is the subject of this revision the learned Munsif held that the diversion of route deprived the railway of protection under risk-notes A and B but found that the railway's act of transferring the goods to larger wagons was not conduct beyond what a prudent person would do, and consequently dismissed that suit. The plaintiff then applied in revision to the High Court (Mulla, J.).

Legal Issues Presented

  1. Whether the diversion of route from the ordinary route (and consequential transfer of goods to larger wagons) deprived the defendants of the exemption from liability afforded by risk-notes forms A and B.
  2. Whether the diversion of route and the transshipment (transfer from small to bigger wagons) actually caused the shortage and, if so, whether the defendants acted negligently such that they are liable for the loss.

Arguments of the Parties

Defendants' Arguments

  • The defendants contended that the diversion to Benares was taken in good faith to fulfil their obligation to deliver the goods to destination in proper time; if they had failed to do so and delay caused loss, they would be liable, hence the diversion was made to avoid such liability.
  • Implicitly, the defendants argued that the diversion did not amount to a variation of the contract that would deprive them of the protection of the risk-notes when the diversion was made in good faith rather than by negligence or mistake.

Plaintiff's Arguments

  • The plaintiff contended that the goods were accepted on the understanding they would travel by the ordinary route and that the defendants could not divert the route or transfer the goods to a different class of wagon without the plaintiff's knowledge and consent.
  • The plaintiff alleged that the diversion and the transfer caused the shortage and that the railway failed to take packing precautions (such as surrounding tins with grass/bhusa) when transferring to larger wagons, thereby acting negligently.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Secretary of State for India v. Kesho Prasad Sheo Prasad (single Judge decision) That the exemption afforded to railways by risk-notes forms A and B operates only during transit on the ordinary route; once goods are diverted from the ordinary route the protection afforded by these forms ends, absent a clear stipulation to the contrary. The court accepted and applied this proposition: the contract evidenced by the risk-notes contemplated carriage by the ordinary route, and the defendants' diversion (which involved transshipment) varied an implied condition of the contract and thereby removed the risk-note protection.

Court's Reasoning and Analysis

The court addressed the issues in sequence:

  1. On diversion and the scope of risk-note protection: The court observed that acceptance under risk-notes A and B implied that the consignor contemplated transmission by the ordinary route and that the railway's protection under those forms applied during transit on that ordinary route. The court rejected the defendants' contention that a good-faith diversion made to avoid delay retained the protection of risk-notes. While the court recognized that a bailee is obliged to deliver goods in proper time and that non-performance due to circumstances wholly beyond human control (for example, breaches in the line by floods—referred to in the text as "breaches caused on the B.N.-W. line by Hoods") may not constitute default under section 161 of the Contract Act, it held a distinct principle applies where the bailee, without informing the bailor, adopts a different course that is attended with risk not contemplated in the contract. Such a variation of an important implied term (the ordinary route) without the consignor's knowledge or consent is at the carrier's risk.
  2. On causation and negligence: Having concluded that the railway could not rely on the risk-note exemption because of the unnotified diversion and transfer, the court considered whether the transfer to larger wagons caused the shortage and whether the defendants were negligent. The court accepted the lower court's factual finding that the undiverted solitary consignment detained at Sitapur suffered no shortage and treated that as strong evidence that diversion/transshipment led to loss. The court held that when the goods were transferred to larger wagons the defendants had a duty to ensure adequate packing to prevent tins striking against each other and against the sides of the wagon. It was admitted that the defendants took no steps to prevent that possibility and gave no notice to the plaintiff enabling him to take protective measures. The court therefore concluded that the defendants failed to act as an ordinary prudent person dealing with his own goods and were guilty of negligence.
  3. On the lower court's contrary finding: The lower court relied upon evidence that the plaintiff had not put grass or bhusa around tins when loading at Hathras; the High Court noted that absence of such packing at the initial small four-wheeler wagons did not justify the defendants' omission to take precautions upon transfer to larger wagons where greater movement and risk existed. The court also observed that one defendant (R.K. Railway) had, in the companion judgment, been held not liable because it had obtained a clear receipt; the same consideration applied in this suit.

Holding and Implications

Core Ruling: The application in revision is allowed; the decree of the lower court is set aside and the plaintiff's suit is decreed with costs and future and pendente lite interest at 3¼ per cent per annum against all defendants except R.K. Railway (defendant No. 3). As against R.K. Railway (defendant No. 3) the suit is dismissed with costs.

Implications and direct consequences:

  • The court held that an uncommunicated diversion from the ordinary route (which in this case involved transshipment to larger wagons) amounted to a variation of an implied contractual term and operated to remove the railway's protection under risk-notes A and B.
  • The court found the defendants negligent in failing to take packing or other precautionary steps when transferring the consignments to larger wagons and therefore liable for the shortage.
  • Concrete relief: the plaintiff obtains judgment (decree) with costs and interest (3¼% per annum) against all defendants other than R.K. Railway, against whom the suit is dismissed because of a clear receipt (as in the companion regular suit).
  • The opinion applies a previously stated proposition (Secretary of State for India v. Kesho Prasad Sheo Prasad) concerning the limited scope of risk-notes rather than purporting to create a novel principle; the decision enforces the consequence that an unnotified diversion that introduces new risks defeats the risk-note protection.

This summary is strictly confined to information contained in the provided opinion and does not add facts or inferences not present in the text.

    Kishanlal Matrumal v. B.B. And C.I. Railway

    Mulla, J.:— This is a plaintiff's application in revision from a decree of the court of small causes in a suit brought by him for damages for shortage in the goods consigned by him to a railway company. The plaintiff is the proprietor of a firm called Kishan Lal Matru Mal which owns an oil mill at Hathras. He loads tins of mustard oil in railway wagons at a siding in his own mill for being despatched to various places. In this case we are concerned with two consignments, of 420 tins of oil each, which he delivered to the B.B and C.I Railway company at Hathras on two different dates, one on the 15th of August, 1934, for being dispatched to Narainganj and the other on the 28th of August, 1934, for being despatched to Dacca. Each consignment occupied a four-wheeler wagon of the B.B and C.I Railway. These consignments were accepted by the railway under risk-notes forms A and B. The acceptance of goods under these forms implied that owing to the bad condition and defective packing of the goods the railway company was not prepared to take any responsibility for the condition in which they might be delivered to the consignee and for any loss arising from the same except upon proof that such loss arose from misconduct on the part of the railway administration's servants. It implied further that the railway company would not be responsible for any loss, destruction or deterioration of or damage to the consignment from any cause whatever except upon proof that such loss, destruction, deterioration or damage arose from the misconduct of the railway administration's servants.

    The ordinary route by which the two consignments in question had to be taken to their destination was ??? Kasganj, Sitapur, Gorakhpur and Katihar. The goods had consequently to pass in transit not only on the B.B and C.I line, but also on the B.N.W and R.K lines. It is to be noted that all these lines are merer gauge lines so that the two wagons containing the tins of oil despatched by the plaintiff could reach their destination without the necessity of the goods being transferred from one wagon to another at any place on the way.

    It must be presumed that when the plaintiff despatched the two consignments from Hathras and the railway company accepted the consignments, it was clearly understood between the parties that the ordinary route will be followed. In this case, however, there were breaches caused on the B.N-W. line by Hoods and hence the two consignments were diverted either from Sitapur or from Gorakhpur to a different route and were sent to Benares. It is admitted that no information of this diversion of route was conveyed to the plaintiff. At Benares both the consignments were transferred from the four-wheeler wagons of the B.B; and C.I to bigger wagons of the East Indian Railway. It is again admitted that the plaintiff was not given any information of this transfer of the consignments from one class of wagon to another. As the East Indian Railway wagons were bigger in size, the tins of oil were necessarily packed father loosely so that there was likelihood of the tins striking against each other and against the sides of the wagon. The consignments reached their destination and were unloaded in the presence of the railway authorities. A note was made at the time that there was a shortage of 11 maunds, 7 seers and 4 chhataks in weight. It was in order to recover damages for this shortage that the plaintiff brought the suit out of which this application in revision arises. The suit was brought in the court of the Munsif at Hathras on the small cause court side. It may be mentioned here that the plaintiff, had despatched nine other consignments on different dates to a place called Bhairavbazar. These consignments had also to be taken by the same route and they were also diverted to Benares with the exception of one which was detained at Sitapur. When these consignments reached their destination and the plaintiff's agents took delivery it was found that there was a shortage and the tins bore marks of having been cut or bored, with some pointed instrument. The consignment which had been detained at Sitapur reached its destination later on by the ordinary route, and it was found at the time of delivery that there was no shortage in it. The plaintiff brought a regular suit for damages in respect of the eight consignments in which there was a shortage. The learned Munsif disposed of both the suits by the same judgment. He gave the plaintiff a decree in respect of the eight consignments in the regular suit on the ground that the shortage was due to misconduct on the part of the railway servants. In the other suit out of which, this application arises he held that owing to the diversion of route without the plaintiff's knowledge the defendants could not claim any protection from liability under risk-notes forms. A and B and their liability had to be determined under the Contract Act but he found that in transferring the goods from a small wagon to a bigger one they had not done anything which a prudent man would not have done in the circumstances and hence they were not responsible for the loss. Upon this finding the suit has been dismissed and the plaintiff has come up in revision.

    Now the first question for consideration is whether the diversion of route in this case was or was not a circumstance which deprived the defendants of the exemption from liability afforded to them by the risk-notes forms A and B. The lower court has answered that question in the affirmative, but it has been contended on behalf of the defendants that in diverting the consignments to Benares the defendants only tried to fulfil their obligation to deliver the goods at their destination in proper time. It was suggested that if they had failed to do so and there had consequently been a delay in the delivery of the goods at their destination causing loss to the plaintiff, the defendants would have been held liable for that loss and hence they acted in good faith in diverting the consignments to Benares in order to save themselves from that liability. I do not find much force in that contention. It is true that the law places an obligation upon the bailee to deliver the goods consigned to him at their destination in proper time, but I do not think that he can be held to have committed a default within the meaning of section 161 of the Contract Act if he is prevented from fulfilling that obligation not by any mistake or negligence on his part but by some circumstance entirely beyond human control, as, for instance, a breach caused in the railway line by floods which happened in the present case. On the other hand, I think that if the bailee is unable to fulfil that obligation by some circumstance entirely beyond human control, and in order to do so he adopts some other course necessarily attended with risk, which is not contemplated in the contract between him and the bailor, without the latter's knowledge and consent, he does so at his own risk. In the present case it was necessarily implied in the contract between the plaintiff and the defendants that the consignments would be taken to their destination by the ordinary route. He had loaded and packed the consignments upon that clear understanding and he had taken the risk of loss or deterioration upon himself by executing risk-notes forms A and B. If the defendants had followed the ordinary route they would have been free from all responsibility for any loss, destruction or damage except upon proof of misconduct on the part of their servants. When they found that they could not take the consignments to their destination by the ordinary route, I think it was their duty to inform the plaintiff before diverting the consignments to another route, and especially so because the diversion necessarily involved a transfer of the goods from a small wagon to a bigger one which introduced a new factor for causing loss or damage. If the plaintiff had been advised of the intended diversion of route involving a transfer of the goods from a small wagon to a bigger one, he could have exercised his option either to direct the defendants to detain the goods at the point beyond which they could not be taken by the ordinary route or to take the necessary measures himself to prevent loss or damage which was likely to be caused by the transfer of the goods from a small wagon to a bigger one. In the course which the defendants adopted in the present case an important condition of the contract between the parties was varied without the plaintiff's knowledge and he was given no opportunity of safeguarding himself against any loss or damage likely to result from the change I am, therefore, of the opinion that the diversion of route and the transfer of goods from a small wagon to a bigger one constituted a breach of a necessarily implied term in the contract between the parties and the defendants cannot therefore claim any protection under the risk-notes forms A and B. This view is, I think, fully supported by a single Judge decision of this Court in the case of Secretary of State for India v. Kesho Prasad Sheo Prasad(1). The learned Judge of this Court who decided that case made the following observations relevant to the present case:

    “It appears to me that the exemption from liability afforded to the railway administration by the risk-notes forms A and B is operative and available to the railway administration only during the transit on the ordinary route, and once the goods are diverted from that route the protection afforded by these risk-notes ends. In the absence of a clear and unambiguous stipulation to the contrary the presumption is that the consignor at the time of consigning his goods contemplates that the goods would be transmitted across the ordinary route within a reasonable time and the railway administration must in such cases always be deemed to have accepted the goods for despatch by the ordinary route. The contract evidenced by risk-notes forms A and B does not contemplate the carrying of the goods otherwise than by the ordinary route, and if there is a diversion from the ordinary route—it does not matter for what distance—the railway administration cannot invoke to its aid the benefits of the said forms.”

    With these observations, which to my mind lay down a general proposition relating to the liability of railway companies, I entirely agree. The learned counsel for the defendants, however, argued that these observations must be deemed to be confined to a case where the diversion of route takes place owing to a mistake or negligence on the part of the railway company, but they cannot be applied to the present case where the diversion was deliberately made in good faith. I am unable to agree with that, contention, for to my mind the ratio decidendi of the case to which I have referred was the breach of contract involved in the diversion of route and not the mere fact that the diversion was due to some mistake or negligence on the part of the railway company. I am, therefore, of the opinion that the defendants in this case cannot invoke the protection initially given to them by the risk-notes forms A and B under which they accepted the two consignments in question.

    The next question for consideration is whether the diversion of route and the transfer of the goods from a small wagon to a bigger one did actually cause the loss or shortage in the present case. The lower court has answered that question in the affirmative, relying principally upon the indisputable fact that no shortage occurred in the solitary consignment which was detained at Sitapur instead of being diverted to Benare like the other consignments. That finding cannot but be accepted as correct, and all that remains for consideration is whether the defendants can be absolved of negligence and the consequent responsibility for the shortage. The, lower court has found that they did nothing which a prudent man would not have done in the circumstances, but I cannot agree with that finding. In my opinion, when the goods were transferred from a small wagon to a bigger one, it was the duty of the defendants to see that, they were so packed as to prevent the possibility of the tins striking against each other and the sides of the wagon. It is admitted that they took no steps to prevent that possibility. If they had informed the plaintiff he would have taken the necessary measures, but they did not convey any information to him. I cannot, therefore, hold that they acted like an ordinary prudent man dealing with his own goods and I find that they were guilty of negligence and are consequently liable for the loss caused to the plaintiff. The reason given by the lower court for arriving at a finding in favour of the defendants is that it was proved upon the evidence that the plaintiff himself had not put any grass or bhusa round the tins so as to prevent them from striking against each other and against the sides of the wagon. The plaintiff had made an allegation to that effect, but the lower court found that it had not been proved. That does not however, afford a ground for holding that the defendants were not guilty of negligence. It appears to me that the, lower court entirely ignored the fact that when the plaintiff loaded the consignments at Hathras, he did so in small four-wheeler wagons of the B.B and C.I Railway and it may not have been necessary to put any grass or bhusa round the tins having regard to the small space inside the wagon. That did not, however, afford any justification to the defendants for omitting to take that precaution when the goods were transferred from the small wagons to bigger ones. It appears from the judgment of the lower court in the regular suit that one of the defendants, namely the R.K Railway, could not be held responsible for any loss or shortage because it had obtained a clear receipt and that suit was accordingly dismissed against the R.K Railway. That consideration applies to the present case also. In the result I allow this application in revision and setting aside the decree passed by the lower court decree the plaintiff's suit with costs and future and pendente lite interest at 3¼ per cent per annum against all the defendants excepting R.K Railway, defendant No. 3. As against defendant No. 3 the suit is dismissed with costs.

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    Kishanlal Matrumal v. B.B. And C.I. Railway
    (Aug 8, 1938)