Andhra HC (Pre-Telangana)
Globe Transport Corporation vs National Insurance Co. Ltd. And Anr. on 16 September, 1988
Equivalent citations: 1990ACJ310
JUDGMENT P. Kodandaramayya, J.
1. The defendant is the appellant. The sole question raised in this appeal is whether the suit is maintainable under the Carriers Act, 1865 (hereinafter called 'the Act') at the instance of the purchaser of the goods when the goods were transported through the public carrier under the self-drawn consignment in the name of the vendor.
2. The suit is laid by two plaintiffs, the insurance company, being the first plaintiff and the purchaser of the goods M/s. Solvent Chemicals, the second plaintiff, stating that the goods were transported by M/s. Indian Drugs and Pharmaceuticals Ltd., Hyderabad through the defendant M/s. Globe Transport Corporation, a public carrier, after effecting insurance under open policy system. The goods were delivered to the second plaintiff in leaking condition, after weighment 723 kg. of material was found short for which the defendant carrier issued a shortage certificate but denied the liability to reimburse the loss and the first plaintiff reimbursed the same and hence the suit for recovery of the amount.
3. The defendant contested the claim stating that under condition No. 9 of the consignment bill, the defendant is not liable for leakage or breakage in transit and the certificate issued by it is only for purpose of enabling the plaintiffs to get the reimbursement from the insurance company and the suit at the instance of the second plaintiff is not maintainable and the consignor is a necessary party and they also put the plaintiffs to proof for the loss sustained by them stating that they carried the goods with all care, diligence and without any negligence on their part.
4. On this controversy, the court below framed issues as found in paragraph 5 and held that the defendant-carriers are liable for the loss of the consignment and there is a statutory liability on their part and they have not proved that they have taken due care and caution when the goods were in transit and the plaintiff has cause of action to file the suit and on the strength of the survey report and also on the strength of the certificate issued by the defendant showing the deficiency, and decreed the suit claim for Rs. 24,540.10. Against the said judgment and decree, the present appeal is filed.
5. Mr. A. Satyanarayana Rao, the learned counsel for the appellant, though initially contended that the plaintiffs failed to prove that the loss had been caused due to negligence and there is no proof of actual damage, in view of Section 9 of the Act casting burden on the carrier without plaintiff proving the negligence of the carrier raised the question that the suit is not maintainable at the instance of the plaintiffs with whom there is no privity of contract by the carrier. He amplified his submission stating that under Section 8 of the Act, the owner alone is entitled to sue for the loss and damage caused by the negligence of the carrier or of his agents, and inasmuch as the goods were transported under 'self-drawn' consignment bills by the owner, the consignor alone can sue for the damage or non-delivery of the goods, but not the purchaser of the goods who has become the owner of the property subsequent to the occurrence of the loss. This is refuted by the learned counsel for the plaintiffs stating that once the goods are appropriated towards the contract as contemplated under Section 19 of the Sale of Goods Act, the title is passed to the purchaser and he is the owner within the meaning of Section 8 of the Act. He further contended that under the terms of invoice, the vendor collected the insurance premium and directed that the goods are transported at the purchaser's risk and the purchaser should put forward the claim to the carrier in the event of any loss or damage to the goods and consequently he has got necessary right and interest to file the suit. He alternatively contended that once the goods are delivered under the consignment note to him, he is the owner entitled to sue the carrier in the event of any loss or damage to the goods. So, broadly two questions arise for consideration.
(1) When did the title pass to the purchaser under the present contract?
(2) Whether the purchaser can sue the carrier when the title did not pass to him when the damage occurred during the transit of the goods?
6. Both the counsel, I may state, did not question the quantum of damages arrived at by the court below but the debate proceeded on the question whether the suit is maintainable at the instance of the plaintiffs as there is no privity of contract between them and the carrier.
7. On the first question learned counsel for the plaintiffs laid stress under Section 19 of the Sale of Goods Act which speaks of appropriation of specific or ascertained goods as the test for passing of the title. He contended that once the goods are specific or ascertained goods, the title passes to the purchaser. He referred to NencyKasi Viswanatham v. Gadigay Sanna Lingappa Dakappa and L.G. Lakshmana Iyer v. S. Pachiappa Mudaliar AIR 1961 Madras 343. The first case is not a case where the R.R. was taken in the name of the vendor. But the goods were despatched to the defendant after receiving some price and the balance of price should be collected from the bank. The second case is positively a case where the consignor took the R.R. 'self but endorsed in the name of the purchaser and despatched the goods. Hence those two cases are of no assistance to the plaintiff.
8. On the other hand, in State of Madras v. VuppalaPeda Venkatramanaiah and Sons , a Division Bench of this court held that when the railway receipt which is a document of title is taken out in the name of the seller, he manifests his intention to remain the owner and to retain control over the goods till the buyer makes the payment through the bank. This is followed subsequently in a number of judgments and hence the appropriation of the goods towards the contract and handing over the goods to the carrier for transport are not decisive when the railway receipt or the way bill is taken in the name of the vendor, the title cannot pass to the purchaser till he pays the money and takes the endorsement in his name. Hence I hold that the title did not pass to the second plaintiff till he paid the amount to the bank and obtained the endorsement enabling him to take delivery under the way bills, Exhs. B-l and B-2.
9. This leads to the second question that when the damage occurred during transit, can he sue the carrier and rely on the rule of burden of proof under Section 9 of the Act without independently proving the negligence of the carrier. It is true there is no independent evidence of negligence except factual deficiency proved by the survey report Exh. A-6 and the shortage report issued by the defendant under Exh. A-5. The main controversy is whether the second plaintiff who has become owner of the property can maintain action as Section 8 speaks of right of the owner alone to sue for damages, or for non-delivery. It is necessary to look to Section 8 of the Act. Section 9 is also relevant as this controversy mainly rests upon the claim that the plaintiff can rely upon the rule embodied under Section 9 without proving the negligence on the part of the carrier. If the statutory liability under the Act is attracted, there is no need for the plaintiffs to prove negligence on the part of the carrier and hence it is necessary to look to Sections 8 and 9 together which read as follows:
Section 8. Notwithstanding anything hereinbefore contained, every common carrier shall be liable to the owner for loss of or damage to any property delivered to such carrier to be carried where such loss or damage shall have arisen from the criminal act of the carrier or any of his agents or servants and shall also be liable to the owner for loss or damage to any such property other than property to which the provisions of Section 3 apply and in respect of which the declaration required by that section has not been made, where such loss or damage has arisen from the negligence of the carrier or any of his agents or servants.
Section 9. In any suit brought against a common carrier for the loss, damage or non-delivery of goods entrusted to him for carriage, it shall not be necessary for the plaintiff to prove that such loss, damage or non-delivery was owing to the negligence or criminal act of the carrier, his servants or agents.
10. It is true that Section 8 used the expression 'owner' and the carrier is made liable to the owner, for the loss of or damage to any property delivered to the carrier. This court had occasion to examine this question on several occasions. The earliest judgment is D.P. Narasa Reddy v. Ellisetti China Venkata Subbayya , that of a plaintiff who is himself a public carrier entrusted the goods in his turn to the other public carrier. The question arose whether the suit by such plaintiff-public carrier is maintainable. Construing Section 8 the learned Judge held that the suit is not maintainable. However, it was held by the learned Judge that the claim is based on the ground that the plaintiff is the owner as per the provisions of the Contract Act but not on any special contract. A similar question arose in Savani Transport (P) Ltd. v. C. Ahmed Sharif Saheb 1981 ACJ 98 (AP), where Madhava Reddy, J., (as he then was) held that the provisions of the Carriers Act do not prohibit the parties from entering into a contract, nor does it absolve a common carrier from the liability undertaken by him under such contract, if any. He observed:
In fact, the Carriers Act makes the carrier liable to the owner for loss or damage even if there be no specific contract between them and even if the goods were not entrusted to the carrier by the owner. In fact, this is an exception to the general rule relating to contracts that unless there is privity of contract, no claim for damages for loss lies.
11. However, in K. Venkata Rao v. Commercial Goods Firm, Vizianagaram 1982 (1) ALT 273, PA. Choudary, J., specifically dissented with the view of Satyanarayana Raju, J. and held:
The question of right to sue the carrier has to be considered and answered by the general provisions of law and not by reference to the Carriers Act which, in my opinion, has nothing to say upon that question. Now under the general law the right to sue belongs only to a person whose civil rights are injured. In the now familiar legal parlance it is only the person aggrieved that can bring a suit. In conceivable cases a person other than an owner can also be aggrieved.
12. Thus it is seen in all the three cases that the plaintiff is a transport company himself without being the owner, but his claim was sustained in the two later cases. Madhava Reddy, J., distinguished the earlier case of Satyanarayana Raju, J., on the ground that the claim can be sustained on the basis of a contract apart from the provisions of the Carriers Act. PA. Choudary, J. held that there is no such need and the right to sue cannot be denied to the plaintiffs once the goods were entrusted to him by the carrier. Now it is seen the learned counsel for the defendant has to concede that in view of the preponderance of authority that the person who entrusted the goods can maintain the suit even though he is not the owner of the property and he proceeded to state that the consignor can sue but not the consignee who has not become the owner of the property when the goods are in transit. In this context it is necessary to bear in mind that the function of a public carrier is that of a public employment. In fact as observed by Otto Kahn-Freund in his book The Law of Carriage by Inland Transport, 4th Edn., at page 194 that:
...this duty of the carrier to deliver the goods safely is, mainly for historical reasons, at common law considered to exist quite apart from any contract. It is imposed upon him by the law not only because he has contracted to carry and deliver the goods but because he has been put in possession of another person's goods. In legal language this is expressed by saying that the carrier is a bailee, who, in certain circumstances still to be discussed, is liable to the bailor if he fails to deliver the goods intact. As a matter of history, the law of bailment was, in this country, developed long before the law of contract.
13. The earlier judgment of the Madras High Court in Kariadan Kumber v. British India Steam Navigation Co. ILR 38 Madras 941, states:
The duties and liabilities of a common carrier are governed in India by the principles of the English Common Law on that subject (except where they have been departed from, in the cases of some classes of common carriers, by the Carriers Act, 1865 or by the Railway Acts of 1878 and 1890), and that notwithstanding some general expressions in the Chapter on Bailments, a common carrier's responsibility is not within the Indian Contract Act, 1872.
14. That is why a recently pronounced judgment in British India Steam Navigation Co. Ltd. v. T.P Sokkallal Ram Salt AIR 1953 Madras 3, also states that in respect of the cases governed by the Carriage of Goods by Sea Act, the law applicable in India before the Act was Common Law of England as applicable to common carriers and not the provisions of the Contract Act relating to bailment. The reason is that the duty of a public carrier based on public employment is greater than contemplated under Section 151 and 152 of the Contract Act where a bailee will be absolved from liability for the loss or destruction of the goods if he takes reasonable care of the goods bailed. No doubt if statutory provision is found, the common law is abrogated. The Carriers Act has twofold purposes: one is restricting the liability of the common carrier and other is disabling the common carrier in absolving itself from negligence or misconduct by entering into a contract. The Carriers Act, 1865 is framed on the same lines of English Carriers Act, 1830 and as held by Lord Macnaughten in Irravaddy Flotilla Co. v. Bhagwan Das ILR 18 Calcutta 620, the Contract Act, 1872 is not intended to deal with law relating to common carriers. The Act enables a common carrier to limit his liability under special contract in the case of certain goods but he cannot get rid of the liability for negligence by entering into contract. The Supreme Court in M.G. Brothers Lorry Service v. Prasad Textiles 1983 ACJ 507 (SC), upheld the view of this court that a contract restricting the liability of a common carrier in contravention of Section 10 of the Act is void being opposed to the public policy under Section 23 of the Contract Act.
15. Hence the question to be examined in this case is what is the meaning to be ascribed to the word 'owner' occurring in Section 8. Even though the word 'owner' is used in Section 8 we cannot bring consignor in its purview simply because there is contract between himself and the carrier. There are several occasions where a party has to enter into contract and entrust the goods to the carrier without being the owner of the property. For instance, an agent on behalf of the principal may transport the goods even though he is not the owner of the goods. Sometimes, the consignor may send the goods through a carrier without transferring the title in the property. If the consignee or a person who becomes the owner of the property after purchasing the goods when they are in transit, he can demand delivery of the goods by the carrier and the carrier cannot investigate the title of the consignee as he is bound to deliver the goods.
16. Similarly, can a carrier refuse to deliver the goods to the seller who has got a right of lien on the goods for the unpaid purchase money notwithstanding the fact that the property in the goods has passed to the buyer.
17. A question arose before the House of Lords in United States Steel Products Company v. Great Western Railway Company 1916 AC 189, where the vendor claimed lien on the unpaid purchase money on the goods and wanted delivery of the goods by the carrier to them. The carrier claimed general lien on the goods in respect of the amounts due to him as per condition No. 7 in the consignment note which enabled the carrier to claim general lien for any money due to them from the owners of such goods. In view of the fact that due to endorsement of bill of lading, the buyers have become owners of the goods the carrier refused to deliver the goods to the vendor and claimed lien on the ground that the purchaser has to pay certain amounts to him though unconnected with the consignments. The trial court held such claim of the carrier is untenable. The appellate court reversed it, in view of condition No. 7 which enabled them to claim lien due to them from the owners of the goods. House of Lords in an unanimous judgment restored the judgment of the trial court and reversed that of the appellate court. The whole things rested upon the meaning of the word 'owner' occurring in condition No. 7 which enabled the carrier to withhold the goods. Lord Buckmaster, LC, observed.
...the phrase 'the owners of such goods' seems to me plain, but they are not the only people who answer to the description, I entirely agree with Pickford, J., that the phrase covers all persons who under the contract and the bill of lading were entitled to go to the railway company and receive the goods.
Lord Atkinson also held that the word 'owners' cannot be given its ordinary meaning. Lord Parker of Waddington took the view that "the expression 'owners' in the clause may well be used to denote the person entitled to the delivery of the goods, whoever such person may be, and does not necessarily refer to the person who at the date of the contract or at any other time may have the legal property in the goods."
18. This dicta of House of Lords though occurring while construing the words under a contract furnishes a good guide in construing the word 'owner' occurring in Section 8.
19. It is pertinent to refer to a passage in Chitty on Contracts, 23rd Edn., Vol. II, para 519 at page 519:
Who can sue the carrier. If goods are lost or damaged during transit, the question arises who can sue the carrier for breach of the contract of carriage. The general rule is that the owner of the goods is the proper person to sue, because the goods are at his risk. But a bailee may be able to do so at any rate if he is responsible to his bailor for the safety of the goods. And the general principle that the owner is the proper plaintiff may be varied by special agreement between the consignor and consignee (e.g. that the risk is to remain with the former) or between the consignor and the carrier.
20. It is also useful to refer to a passage from Halsbury's Laws of England, 4th Edn., wherein it is held in para 454:
Special agreements: The general principle that the owner is the proper person to sue may be varied by special agreement between the parties. Thus by agreement between the consignor and the consignee the risk of the goods may remain with the consignor until delivery, and, by agreement between the consignor and the carrier, the carrier may be liable to the consignor. Further, if the consignor has made a special contract with the carrier for the carriage of goods, or if the consignor has delivered them to the carrier as agent for the consignee, the consignee is the person to sue, even though the property in the goods has not passed to him...
21. When the goods are transferred during transit, the purchaser becomes the owner of the property and the carrier is bound to deliver the goods to the purchaser on production of the document of title, be it a railway receipt or a way bill. It is indisputable that the contract of carriage comes to an end when the delivery takes place.
22. If the title is transferred before the delivery takes place, the purchaser is entitled to demand delivery and hence I am of the opinion that the word 'owner' occurring in Section 8 must be construed as referring not to the persons who are in law having title in the property but those who are entitled to demand delivery of the goods from the carrier. The test in this case is not the passing of ownership and the rules relating to passing of title in the goods under the Sale of Goods Act are not relevant. The criterion is whether a person can demand delivery from the carrier. If so, he is entitled to sue the carrier in respect of his breach of public employment for loss of goods or non-delivery.
23. Let us apply this principle to the facts of this case. The invoices Exhs. A-l and A-2 clearly disclose two conspicuous factors, (1) the consignor collected the premium paid to the insurance company as part of the price of the goods; and (2) it is further stated in Exhs. A-l and A-2 that, Once the consignment has been despatched in good condition against clear documents, our responsibility for any leakage, damage, loss, pilferage, contamination etc., will cease immediately. Claims, if any, should be lodged with carriers direct.
24. In this case, the second plaintiff paid the invoice price and took delivery of the way bill and obtained delivery of the goods from the carrier. Thus it is seen his right to sue the carrier can be based on two grounds. Firstly, he has become the owner of the goods by transfer before the contract of carriage came to an end. Secondly, once the liability of the carrier is not contract but public employment, he is liable to the person who obtained right to take delivery of the goods. Hence under the terms of Exhs. A-l and A-2, the second plaintiff is entitled to demand delivery of the goods from the carrier and he did obtain delivery from the carrier as per the terms of the contract Exhs. A-l and A-2 and the right to demand delivery of the goods was assigned by the consignor to the purchaser on payment of the price. Thus the suit by the second plaintiff who has become the owner of the property and who is entitled to take delivery under the terms of the contract under Exhs. A-l and A-2 is clearly maintainable. I see no infirmity in the view of the trial court. In view of this finding, it is unnecessary to go into the question of right of subrogation relied on by the first plaintiff, the insurance company.
25. In the result, the appeal fails and the same is dismissed. I make no order as to costs.
26. I place on record the assistance given by Mr. C. Trivikrama Rao to the court.