Author: Hansie Singh Nagpal, 4th year, VIPS affiliated to Indraprastha University, Delhi.
Citation: (1955) AIR All 338
Date of Decision: 9th February, 1955
Bench: Justice Kidwai, Justice V. Bhargava and Justice H.S. Chaturvedi
Issue in question:
- Whether a consignee is entitled to maintain a suit for loss with respect to goods which got damaged during transit?
Background of the case:
- Plaintiff-respondent being commission agent (consignee) had taken orders for delivery of a wagon of oranges which were to be transported by railway train from M.P. to Lucknow.
- On finding the oranges had deteriorated completely, they refused their procurement and instituted a suit. The appellant took defence of lack of maintainability of suit on behalf of the consignee.
Judgment of the Court
- The Court answered in affirmative to the question that the consignee can maintain a suit for damages for the loss in quality of goods during transit.
- In a consignment contract, the consignee is a party that is entitled to a benefit i.e., commission upon discharge of his duties.
- Section 160 of the Contract Act, 1872 mandates that in a contract of bailment the bailee (in this case the railway) has to return the goods so bailed to the bailor (the sellers) but also according to his directions. Under the rules framed for railways, the railway receipt for delivery of goods contains a clause that mandates that consignee to give it up at the destination before receiving the delivered goods otherwise, the delivery may be refused by the railway. Hence, the receipt is a mercantile document admissible as evidence. It indicates that the consignee or the person endorsed by the consignee has sufficient interest in it. Its surrender signifies the completion of contract under section 160.
- In this case, the amount to be paid as damages is equivalent to the value of the destroyed goods and the consignee can enforce this payment.
- Here, the consignee is not the owner of the goods. The title of the goods is transferred to him under the consignment; but only the possession of it and not the ownership.
- The consignee acts in two capacities in the present case. One in a legal relationship between the Principal (seller) and agent. And the other in the capacity of a consignee vis-à-vis the railways. In the present case, the agent cannot have the right to enforce the contract for the loss/deterioration of goods, for he himself has suffered no loss. However, under the bailment contract between the seller and the railway, the railways is liable for any damage caused to the goods during transit under section 72 of the Indian railways Act read with section 150, 151 and 162 of the Indian contract act, 1872. This confusion is cleared by the present case regarding the origin of liability of the railways.