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1. This appeal, filed by the Union of India, as representing Northern and Central Railways, is directed against a decree of the Additional District Judge, Damoh, dated 27th April 1964, decreeing the plaintiffs' claim for damages due to non-delivery of goods occasioned by their alleged negligence and/or misconduct.

2. The relevant facts are these. M/s. H. R. Sugar Factory Ltd., Bareilly consigned 182 bags of crystal sugar Ex-Bareilly, on the Northern Railway, on 13th June 1955, for their carriage to Damoh, on the Central Railway, under R/R No. 355490, at Railway risk. The goods were consigned to self, and the railway receipt endorsed to the plaintiffs, being their purchasers for value. The consignment reached its destination on 28th June 1955, and was unloaded the same day, by the unloading Foreman in the presence of one of the plaintiffs. They found that some of bags were damaged by rain. Their immediate reactions were different. The plaintiffs, through their representative Gajrajsingh, served a notice on Station Master, Damoh, making a demand for open delivery after assessment alleging that all the bags of sugar were damaged by wet, while the Unloading Foreman in his Damage and Deficiency message stated that some of the bags were damaged. In consequence, the Assistant District Commercial Inspector, Sagar, as per Assessment Memo dated 10th July 1955, assessed the damages at Rs. 244.37 P. but the plaintiffs signified their non-acceptance of assessment and unwillingness to accept any delivery unless they were allowed to enter in the Delivery Register that all goods were drenched wet. The Assistant District Commercial Inspector, Sagar, then sent a letter dated 11th July 1955 asking the plaintiffs to take delivery within 3 days failing which the consignment was to be treated as lying at their risk subject to payment of wharfage. The plaintiffs did not favourably react to this. The District Commercial Superintendent reached Damoh a few days later, and after inspection of the goods, offered Rs. 450/- as damages to the plaintiffs but they did not accept this offer and, instead, served notices under Section 77 of the Railways Act, read with Section 80 of the Civil Procedure Code. The District Commercial Superintendent, made a re-assessment of damages at Rs. 655.50 P., as per Assessment Memo, dated 23rd September 1955. The plaintiffs, however, refused to accept this assessment, saying that all the bags were damaged by wet and that their loss was to the extent of Rs. 2000/- and made endorsements to that effect both in the original assessment memo and also on the copy delivered to them.

As a result, the Claims Inspector of the Central Railways, Bombay, came down to Damoh, for the sole purpose of effecting a settlement. Samples of both goods and damaged stuff were taken from the consignment lying in the Goods shed, Damoh. and shown to local merchants. It was found that good stuff would sell Rs. 30/- and damage stuff Rs. 20/- per Bengali maund. He accordingly made an offer of Rs. 1500/- as damages in full and final settlement of the claim but this offer was unreasonably turned down and his attempt to effect a settlement proved to be abortive. The plaintiffs, instead, remitted railway freight amounting to Rs. 777.78 P., to the General Manager, Central Railways, Bombay, by a bank draft, but the same was returned on the ground that it should have been made to the order of the Chief Cashier, Central Railway, Bombay, or paid to the Station Master, Damoh. After a further correspondence, the goods were ultimately despatched to the Unclaimed Goods Office, Wadi Bunder, for sale by auction, and they were eventually sold for Rs. 12,300/-on 20th March 1956.

The plaintiffs then served notices under Section 77 of the Railways Act, read with Section 80 of the Civil Procedure Code, on 24th and 26th April 1956, but their claim went unsettled. The Superintendent of Claims, Central Railway, by a notice of demand dated 1st June 1956, asked them to pay Rs. 14,497/- as freight and wharfage charges. On these facts, the plaintiffs claimed Rs. 19000/- as damages for non-delivery of the goods, which comprised of these items, namely price, loss of profits at 20%, interest and other charges. The Northern & Central Railways filed a joint written statement disputing the claim, The Railways alleged that the plaintiffs themselves were responsible for non-delivery of the goods as they were unreasonably insisting on their right to make an entry in the Delivery Register as regards their actual loss. They asserted that the plaintiffs should have withdrawn their claim to take open delivery, and instead, taken delivery without assessment after paying the freight due. The Railways claimed that the non-delivery was the result of plaintiffs' own wrongful conduct and they were, therefore, not entitled to claim any damages. As regards the proceeds of the sale of the unclaimed goods, it was asserted that Rs. 14.497/- were due to the Railways on account of (i) freight, from Bareilly to Damoh, Rs. 777.87 P., (ii) wharfage charges, Rs. 12,627.50 P., and freight, from Damoh to Wadi Bunder, Rs. 1,091.62 P., and after adjustment of these items, nothing was due and payable to the plaintiffs.

3. This Court had remanded the suit for a retrial after framing certain additional issues, in First Appeal No. 88 of 1958, dated 22nd September 1961. The findings now reached by the trial Court are these. (i) damage to the consignment was due to leakage of rain-water into the wagon during its transit from Bareilly, (ii) although the wagon in which the goods were loaded by the Northern Railway was certified to be "W.T.W.", it was, in fact, a leaking and not water-tight wagon, and there were openings in its roof through which water had leaked, (iii) that in certifying a defective wagon as water-tight, that railway administration was guilty of negligence and/or misconduct, (iv) its negligence lay in testing the wagon by a visual test and not in a shower room, (v) the plaintiffs were not justified in insisting upon their right to an open delivery after assessment of proper damages and in making an entry in the Delivery Register as regards the actual condition of the goods, (vi) the Central Railway was also not right in imposing a condition that delivery should be taken on acceptance of assessment as made by its servants, and, therefore, the non-delivery was due to its misconduct, (vii) the sale of the goods as unclaimed goods by auction, at Wadi Bunder, was in violation of the requirements of Sections 55 and 56 of the Railways Act and, therefore, invalid, (viii) no wharfage of Rs. 12,629.50 P. was payable due to want of a notice of demand nor was Rs. 1,091-62 P. payable as freight from Damoh to Wadi Bunder; (ix) plaintiffs were, however, liable to pay Rs. 777.87 P., on account of freight from Bareilly to Damoh. As a result of these findings the trial Court has decreed the plaintiffs' claim for Rs. 16,029.50 P., inclusive of profits at 12% on the total outlay as reasonable damages.