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River Steam Navigation Co. Ltd., And Another v. Messrs Milapchand Hiralal Firm .
Factual and Procedural Background
The plaintiff, a firm carrying on business in cloth, yarn and bidis in Calcutta and Now-gong, Assam, and the sole agent for the sale and distribution of "Monkeyboy" brand bidis manufactured by C.J. Patel & Co., purchased 200 baskets of bidis and booked them in two consignments (invoices Nos. 371 and 372 dated 3-2-1948; 100 baskets each) from Jagannathghat to Silghat Steamerghat. The consignments were handed to the defendants (R.S.N. Co. Ltd. and I.G.N. Co. Ltd.) for carriage against freight.
On arrival at Silghat, there was a short delivery: 40 baskets missing under invoice No. 371 and 27 baskets under invoice No. 372. The plaintiff took open delivery on 24-3-1948 and endorsed the shortage. The plaintiff alleged the loss resulted from loss, tampering in transit or wilful misconduct/pilferage by the defendants' servants and served a demand notice claiming Rs. 10,720 (price of the lost goods) plus Rs. 1,000 as compensation, leading to the present suit for recovery.
The defendants admitted booking and short delivery but denied plaintiff's firm registration and contended that an accident had occurred during transit: the steamer(s) met with accidents causing damage to 67 baskets, which were thereafter destroyed on medical advice. A protest concerning the accident was lodged and a copy sent to the plaintiff. The trial court found for the plaintiff, holding the defendants had not satisfactorily proved the cause of the accident or the absence of negligence and had failed to establish that destruction was under proper medical advice; the trial court awarded a decree for a round sum of Rs. 11,000 (full price with reduced compensation). The defendants appealed.
Legal Issues Presented
- Whether the carrier (defendants) discharged the legal burden of proving that the loss/damage was caused by accident and that there was no negligence on the part of their servants.
- Whether the carrier was justified in destroying the damaged goods without obtaining instructions from the owner (plaintiff) — i.e., scope of the master/carrier acting as an agent of necessity in disposing of damaged cargo.
- If the carrier acted beyond its authority in destroying the goods, what measure of damages should the plaintiff recover (market value at the relevant time or full contract price)?
Arguments of the Parties
Appellants' (Defendants') Arguments
- They admitted the short delivery and booking but contended that the loss resulted from accidents to the vessels in transit and from medical advice that the damaged goods had to be destroyed; the damage was not caused by negligence on the part of their servants.
- They relied on evidence including seven witnesses and a protest documenting the accident and asserted they took reasonable care and were therefore exonerated from liability.
- They argued that they had no time to obtain instructions from the plaintiff regarding disposal and that destruction of the goods was justified under the circumstances (agent of necessity / emergency).
- They further contended that the trial court wrongly excluded the protest document from evidence.
Respondent's (Plaintiff's) Arguments
- The plaintiff alleged wilful misconduct or pilferage by the defendants' servants resulting in the shortage and claimed full value and compensation.
- The plaintiff maintained that the defendants did not give delivery nor pay for the short baskets despite repeated demands and that the defendants failed to prove absence of negligence.
- The plaintiff's evidence included a witness stating that the accident occurred due to negligence by the steamer company's servants and that no information about damage had been given before serving the claim notice.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kiver Steam Navigation Co. Ltd. v. Syam Sunder Tea Co. Ltd., AIR 1955 Assam 65 (A) | Explains that Section 6 of the Carriers Act, 1865 allows a common carrier to limit liability by special contract, but such limitation is not available where loss is caused by negligence or criminal act; Section 9 relieves owner from proving negligence. | The court relied on this authority to state the legal burden: the carrier must prove absence of negligence; sections 6 and 9 recognise the common law doctrine and the limits of contractual limitation. |
| Moothora Kant Shaw v. India General Steam Navigation Company, ILR 16 Cal 166 (B) | Authority indicating that in suits for damage to goods entrusted for carriage, it is for the defendant to plead and prove perils of the sea (or analogous accidents). | Used to support the proposition that defendants/carriers must plead and prove perils (accident) as a defence to liability. |
| The Irrawaddy Flotilla Co. v. Bugwandas, ILR 18 Cal 620 (PC) | Authority treating perils of the sea/accident and the carrier's obligation to prove such perils where relied on to avoid liability. | Cited together with other Calcutta authorities to underline that the burden to establish perils of navigation (or similar accidents) rests on the carrier. |
| Springer v. Great Western Railway Co., 1921-1 KB 257 (D) | Authority on the master's (or carrier's) power, in an accident/emergency, to enter into contracts binding cargo owners if bona fide and in their interest (agent of necessity doctrine). | Relied on to frame the limits of an agent-of-necessity's authority: that a carrier may bind owners only if the course adopted was reasonably necessary and communication was impracticable. |
| Sims & Co. v. Midland Railway Co., 1913-1 KB 103 (E) | Another authority on the extent of the master's/ carrier's emergency powers to make decisions binding on cargo owners. | Used to support the law that an agent of necessity may bind the owner only if the measures were reasonably necessary and communication with the owner was practically impossible. |
Court's Reasoning and Analysis
The court proceeded by first stating the governing legal burden: the carrier bears the onus to show that loss or damage was not due to negligence by its servants; absent such proof, liability follows. The court grounded this on cited authority (notably Kiver Steam Navigation) and the statutory framework (Sections 6 and 9 of the Carriers Act, 1865, as discussed in the opinion).
On the evidence, the appellate court reviewed the material produced by the defendants: seven witnesses and documentary protest evidence (although the trial court had found the protest inadmissible). While the trial judge had held that the defendants failed to establish the cause of the accident and thus had not discharged the onus of proving absence of negligence, the appellate bench examined the factual testimony concerning navigation and found that a submerged hard substance (a snag) striking the steamer's bottom reasonably explained the accident. The court therefore concluded that, prima facie, the defendants had discharged the burden of establishing that the damage was caused by accident and not negligence of their servants.
The court then turned to a distinct legal question: whether the defendants were justified in destroying the damaged goods without instructions from the plaintiff. It applied the agent-of-necessity principles (as summarized from Halsbury and Cheshire and supported by Springer and Sims), which the court characterised as permitting the carrier, in emergency, to enter into binding contracts or to sell goods if it was impossible to safely carry them and if it was reasonably impossible to obtain instructions from the owner.
Applying those principles to the factual timeline given by the defendants (voyage dates, accident dates and the arrival of damaged goods at Goalanda on 10/11 February and that a doctor took 5–7 days to examine the goods), the court found that the master had sufficient time to obtain instructions from the plaintiff before destroying the goods. No evidence was produced to show that any attempt was made to seek directions from the plaintiff. The court noted that the doctor's evidence did not state the damaged goods would contaminate other cargo and that the master could have sold the goods to minimise loss. Thus the defendants exceeded the authority of an agent of necessity by destroying the goods, rather than obtaining instructions or selling them.
On quantum, the court recognised that ordinarily wrongful conversion would attract liability for the market price of the entire goods. But because the court found the damage itself was caused by accident (i.e., defendants were not negligent in causing the damage) and the wrongful act was the unauthorised destruction, the proper measure of loss was the market value of the damaged goods at the time they arrived at Goalanda (10-2-1948). As that value could not be proved precisely, the court assessed damages on available materials: the doctor's opinion that goods were unfit for human consumption (defendants' argument there was no value) and the plaintiff's witness who stated leaves were wet but tobacco inside was not wet and that wet bidis had been sold in the market. Balancing these, the court assessed damages at half the price of the goods.
Holding and Implications
Holding (core ruling): The appellate court modified the trial decree. It held that although the defendants had prima facie established that the damage to the goods was caused by accident and not by negligence of their servants, they exceeded their authority by destroying the goods without obtaining instructions from the plaintiff or selling them. Consequently, the plaintiff was entitled to damages for the wrongful destruction.
DISPOSITION: The decree below was modified and the suit was decreed in favour of the plaintiff for recovery of Rs. 5,360/-. The suit as to the remainder was dismissed. The respondent (plaintiff) is entitled to full costs in the court below; the cost of this appeal was to be apportioned in proportion to success.
Implications: The decision (1) confirms the carrier's evidentiary burden to prove absence of negligence when alleging accident; (2) clarifies that a carrier acting as agent of necessity may, in an emergency, sell damaged goods where it is impossible to obtain instructions, but does not have an unfettered right to destroy cargo; and (3) where precise market value at the relevant time cannot be proved, the court may assess damages on the available materials. The opinion does not state that it establishes any new legal precedent beyond its application of these principles to the facts; its effects are set out as direct relief and costs between the parties.
G. Mehrotra, J.:— This is defendants' appeal arising out of a suit for recovery of Rs. 11720/- as damages. The plaintiff is a duly registered firm under the Indian Partnership Act, carrying on business in doth, yarn and bidis, both in Calcutta & at Now-gong, Assam. It is the sole agent for the sale and distribution of Monkeyboy brand bidis, manufactured and supplied by Messrs, C.J Patel and Co. of 3 Rupchand Street of Calcutta.
2. 200 baskets of Monkeyboy brand bidis were purchased from the aforesaid firm by the plaintiff and booked from Jagannathghat to Silghat Steamerghat under invoices Nos. 371 and 372 dated 3-2-1948; each of the two consignments contained 100 baskets of bidis. They were made over to the defendants-appellants R.S.N Co. Ltd. and I.G.N Co. Ltd. for carriage against the freight. When the consignments arrived at Silghat, it was found that there was a shortage of 40 baskets of bidis under the invoice No. 371 and 27 baskets under the invoice No. 372.
3. On 24-3-1948, the plaintiff took open delivery of the said bidi baskets, having duly endorsed the fact of the shortage in spite of the repeated demands, the delivery of the short baskets was not given to the plaintiff nor the value was paid. On these facts, it was alleged that the baskets appeared to have been lost or tampered with in transit or pilfered with due to the wilful misconduct of the servants of the defendants' Steamer Co. The demand notice was given to the defendants claiming Rs. 10,720/-, the price of the lost goods with Rs. 1000/- as compensation and the suit was thereupon filed fop the aforesaid amount. A joint written statement was filed by both the defendants and it was denied that the plaintiff's firm was a registered one. The booking of 200 baskets of bidis in two consignments, each containing 100 baskets for carriage to Sil-ghat as per S.S Mingin owned by defendant No. 2 was admitted.
4. The fact of short delivery is also admitted, but the main defence taken up was that S.S Page: 117Mingin carrying the consignments met with an accident on the way in the river with the result that 67 baskets out of the said consignments were found damaged and the contents were destroyed as per medical advice.
5. The detail of the accident was noted in the protest and a copy of which was duly sent to the plaintiff. That the loss was due to the negligence of the defendants' servants was denied and it was asserted that the damage was caused due to accident and the goods were destroyed on medical advice and that they took all reasonable care to protect the goods; as such they were exonerated from the liability. The amount of damage claimed was also denied.
6. The trial court decreed the suit on the finding that the defendants failed to prove satisfactorily the cause of the accident and as the onus was on the defendants to establish that there was no negligence on the part of their servants in the accident, the defendants were not protected and were liable to pay the damages.
7. It was also held by the court below that it was not established by the defendant that the goods were destroyed under proper medical advice. As regards the amount of damages, the finding is that the plaintiffs were entitled to the entire price claimed. The amount of compensation claimed was however reduced to Rs. 280/- and thus the suit was decreed for a round sum of Rs. 11,000/-.
8. In appeal, the points urged by the appellants before the court below have been reiterated. It is asserted that the defendants have fully discharged the burden and have established that there was no negligence on their part and the damage was caused to the bidis due to accident. It is also to be mentioned that the trial court has held that the document alleged to be a protest was not admissible in evidence.
9. It is not disputed that the burden is not, on the plaintiff to establish that the loss, damage or non-delivery was due to the negligence or criminal act on the part of the defendants' servants. The burden lies on the carrier to establish the absence of negligence. In the absence of any proof by the carrier, it will be liable to make good the loss.
10. In the case of Kiver Steam Navigation Co. Ltd. v. Syam Sunder Tea Co. Ltd., AIR 1955 Assam 65 (A), it has been held by this Court that section 6 of the Carriers Act, 1865 enables the common carrier to limit his liability by a special contract, otherwise the liability which the common law imposes is there. Even the special contract contemplated by S. 6 would be of no avail where the loss or damage has been caused by negligence or any criminal act on the part of the carrier or his agents or servants.
11. In such a case the common carrier shall be liable to the owner for the loss or damage, and Section 9 of the Act relieves the plaintiff from the burden of showing that the loss or damage or non-delivery was owing to any such negligence or criminal act. Sections 6 and 9 thus recognize the common law doctrine, save in so far as the liability is limited by some special contract, as provided by S. 6.
12. Even if the carrier took as much care of the goods as a man of ordinary prudence would, under similar circumstances, they would be liable if the loss was not occasioned by any act of God or the King's enemies, which, in case of republic State, would mean the enemies of the State. The liability of the carrier is not that of a mere bailee as defined by Sections 151 and 152 of the Contract Act.
13. Its liability is very often described as the liability of an insurer against all risks. In this case, it was further held that though the steamers may even sink on account of their having struck upon some snag and the cargo was lost that may be mere peril of navigation, but not an act of God and the company will be liable.
14. Reliance was placed in this case on an earlier decision of the Calcutta High Court in the case of Moothora Kant Shaw v. India General Steam Navigation Company, ILR 16 Cal 166 (B) and in the case of The Irrawaddy Flotilla Co. v. Bugwandas, ILR 18 Cal 620 (PC) (C). In a suit: for damage caused to the plaintiff's goods entrusted for carriage by the defendants' ship, it is for the defendant to plead and prove perils of sea.
15. If he makes out a prima facie case, it can, be rebutted by proving negligence. Each case I will, however, depend upon its own facts and circumstances & the facts of each case will have to be examined in order to determine if the burden has or had not been discharged by the carrier. The defendants, in order to establish the accident have examined seven witnesses ki court and one was examined on commission.
(After discussing the evidence for the defence their Lordships proceeded:)
16. This is the whole of the evidence produced on behalf of the defendants as regard the actual accident. The District Judge has come to the finding on consideration of this evidence that it cannot be said that the defendants had satisfactorily established the cause of the accident, and that they failed to discharge their onus in proving that there was no negligence on the part of their servants.
17. As we have already pointed out, the onus is on the defendant carrier to prove the absence of negligence on their part. But having considered the evidence, we are of opinion, that prima facie the burden has been discharged by the defendant-company that there was absence of negligence on the part of the company's ??? the time of the ???.
18. The steamer was following the usual route. The pilot was there constantly fathoming the water. The Nilgiri struck aground and under these circumstances it had to be left and the other flat had to be anchored at a safe place. There was no reason for them to have suspected strong current when they attempted to reconnect Palta. The snag striking against the bottom of the vessel was purely an accident.
19. It cannot be said that such snag could only come under the water if there was some unusual natural phenomenon. In our opinion, therefore, there was an accident due to some hard substance submerged under the water which struck against the bottom of the vessel which resulted in the damage to the hold No. 1 and the goods which were stocked in that hold were damaged by water. Attempt was made by the company to take back Mingin to Goalanda where the goods were unloaded. The question still remains whether the defendants were justified in destroying the goods of the plaintiff.
20. Two arguments have been advanced by the counsel for the respondents in this connection. Firstly it has been urged by him that there is no sufficient and reliable evidence produced by the defendants which establishes that the goods were unfit for human consumption and there was thus no justification for the opposite party to have destroyed these goods.
21. Secondly it was contended that even if it be accepted that the master of the vessel can be regarded as an agent of necessity due to emergency, still he had sufficient time to take instructions from the plaintiff about the disposal of the goods and the failure on his part to take an instruction makes the defendants liable for non-delivery of goods.
22. The law on this point has been summarised in Halsbury's Laws of England, Third Edition, Vol. IV, p. 139 para 379 thus:
“If in order to preserve the goods the carrier will be put to expense not contemplated by the parties when he undertook the carriage, he must incur such expense which he can recover from the owner. Where the goods carried get into such a condition that it is impossible for them to be safely carried to their destination, if it is not reasonably impossible to obtain instructions from the owner of the goods, it is the duty of the carrier to sell them forthwith, and he will not be liable for damages for breach of contract for failure to deliver the goods. If, on the other hand, the carrier fails to show the impossibility of obtaining instructions from the owner, he will be liable for damages for such sale.”
23. The binding force of the contract entered into, between the Master of the ship and a third party at the time of the accident and emergency on the owner of the cargo has been dealt with and summarised in the Law of Contracts by Cheshire at page 300 thus:
“It is well settled, however, that the master of a ship is entitled, in case of accident and emergency, to enter into a contract which will bind the owners of the cargo, notwithstanding that it transcends his express authority, if it is bona fide made in the best interest of the owners concerned. Probably the same power is possessed by a land carrier. A person who seeks to bind a principal on these grounds bears the onus of proving that the course adopted by the carrier was reasonably necessary in the circumstances, and also that it was practically impossible to communicate with the cargo owners.”
24. The law summarised above was laid down in the case of Springer v. Great Western Railway Co., 1921-1 KB 257 (D) and in the case of Sims and Co. v. Midland Railway Co., 1913-1 KB 103 (E).
25. On the finding that the accident did take place which resulted in the damage to the goods, the plaintiffs can legitimately argue that the carrier became, in the eye of law, an agent for the plaintiff-respondent in view of the emergency of the situation; but it will have to be considered on evidence how far the appellant has established that there was no sufficient time to take instructions from the plaintiff and that he acted in a manner which was the only reasonable course to be adopted by an agent under the circumstances.
26. Plaintiffs witness No. 1 has stated that the accident occurred due to the negligence on the part of the servants of the Steamer Company and that the plaintiff got no information about the damage of his goods before he served the claim notice. The appellant relied upon a letter sent to the plaintiff-respondent from the Superintendent dated 26-2-1948 — Ext. D on the record.
27. That was a letter which only mentioned that a copy of the protest lodged by the master of the Steamer from Goalanda on 17-2-1948 in connection with the accident was being sent to the plaintiff's firm and there is also in that letter an expression of regret and the denial of liability for the damages. Nothing has been shown by the defendants-appellants that any letter was sent to the plaintiff's firm seeking its direction as regards the disposal of the damaged goods. It is also not asserted by the appellants that any such letter was sent. It is contended that there was no time for the appellants to take instructions from the respondent.
28. According to the evidence of the defendant's witnesses, the vessel Mingin started from Jagannathghat on 2-2-1948 and arrived at Goar landa on 7-2-1948 and on the same day, it left for Assam. The accident to the Nilgiri happened in the early part of the 7th February. The accident to Mingin happened at 11-40 P.M on the 9th February. The damaged goods arrived at Goalanda on the 11th February at 10-15 hours.
29. It took 5 or 7 days for the doctor to examine the goods and thereafter the goods were destroyed. If the goods could be detained for 8 or 7 days for examination by the doctor, there is no reason why the master could not have in the meantime obtained instructions from the plaintiff as regards the disposal of the goods. That the goods were damaged due to accident was known to the master of the ship when the goods arrived at Goalanda.
30. Thereafter, what should be done with the goods had to be decided by the m-ster after obtaining the necessary instructions from the owner of the goods. The examination by the doctor of the goods would have been helpful only for two purposes. Firstly to ascertain if the goods could be sent in that damaged condition Page: 119without affecting other goods and secondly if they could be detained without any further deterioration. The doctor has not stated that if the goods were sent they were likely to damage the other goods.
31. He has stated that in his opinion they were not lit for human consumption. The defendants should have either taken instructions from the plaintiff before destroying them or should have at once sold them and thus minimised the damages. Defendants cannot be said to have acted as a prudent man in destroying the goods on the report of the doctor. The agent of necessity in the event of not having sufficient time to obtain instructions from the owner of the cargo as regards the disposal of the goods has only a right to sell the goods instead of sending them back to the party.
32. It gives him no right to destroy the goods. In some cases in order to avoid the vessel sinking, the carrier may have a right to throw the goods; but in the present case, even assuming that the doctor's evidence was correct that the goods were not fit for human consumption, the defendants may have been justified in not sending it back to the plaintiff, but they had no right to throw away the goods without taking instructions from the plaintiff.
33. In our opinion, however, the defendants have failed to prove that they had no sufficient time to take instructions from the owner and that in the circumstances, their authority; did not extend to throwing away the goods. The only right, under the circumstances, they possessed, was to sell the goods. Although, therefore, we are of opinion that the finding of the Judge that the defendants have failed to prove the absence of negligence resulting in the accident is not correct and that the defendants have prima facie discharged the burden and have established that the damage was caused by accident without any negligence on the part of the employees of the company, still we are of opinion that the defendants exceeded their powers as agents of necessity in destroying the goods and that they had sufficient time to take necessary instructions from the plaintiff. The plaintiff is thus entitled to get the damages.
34. The next question is — what should be the damage awarded to the plaintiff under the circumstances. The trial court has awarded to the plaintiff the full price of the goods as damages. It is contended by the counsel for the respondents that the defendants had acted in an unauthorised manner and having failed to deliver the goods to the plaintiff, are liable for damages to the extent of the entire value of the goods. It is further contended by him that no evidence has been adduced as to what was the value in the open market of the goods on the date when they arrived at Goalanda in a damaged condition.
35. Ordinarily, no doubt, if an agent is guilty of wrongful conversion and that the carrier fails to deliver the goods to the consignee, he is liable for the market price of the entire goods. But in the present case, on the finding that the defendants are entitled to protection in so far as the damage to the goods was concerned as the damage was caused due to accident, the liability of the defendants arises only as he filed to have instructions from the plaintiff as regards the disposal of the damaged goods.
36. The loss thus suffered by the plaintiff is the market value of the damaged goods on 10-2-1948, when they arrived at Goalanda. What was the value of the goods on 10-2-1948 cannot be definitely ascertained from the evidence on the record.
37. The only course, therefore, open to us is to send back the case to the court below for determining the value of the goods in the damaged condition after giving full opportunity to the parties to adduce further evidence. But as the matter is very old and it may not be possible to get evidence to establish the value of the goods on 10-2-48, we prefer to decide to assess the amount of damages on the materials such as there are before us. The counsel for the defendants has urged that according to the evidence of the doctor, the goods were not fit for human consumption and therefore they had no value.
38. The plaintiff's witness has however stated that the leaves of the bidis were wet, but not the tobacco inside. He further states as follows: “We have sold sometimes wet bidis.” This statement clearly suggests that even if the leaves of bidis had become wet, it could not be said that they could not be sold in the market and if sold, would have fetched no price. Having regard to all circumstances, therefore, we are of the opinion that the plaintiff is entitled to damages to the extent of Rs. 5360/-, half the price of the goods. He is entitled to no further compensation. In the result, therefore, we modify the decree of the court below to the extent that we decree the suit for recovery of Rs. 5360/-. The suit for the rest stands dismissed. The respondent will be entitled to his full costs in the court below; but the cost in this appeal will be in proportion to success.
39. Sarjoo Prosad, C.J:— I agree.
40. Decree modified.
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