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PETITIONER: KUCHWAR LIME AND STONE CO.

       Vs.

RESPONDENT: M/S.  DEHRI ROHTAS LIGHT RAILWAY CO.  LTD. & ANR.

DATE OF JUDGMENT: 15/07/1968

BENCH: SHAH, J.C. BENCH: SHAH, J.C. BHARGAVA, VISHISHTHA

CITATION:  1969 AIR  193            1969 SCR  (1) 359

ACT: Railway  freight and demurrage--consignment booked  ’freight to  pay’- Whether consignee liable to pay after refusing  to accept  consignment.- Railway not unloading consignment  for seven  months-if  entitled to demurrage for full  period  or obliged  to unload and claim demurrage only  for  reasonable period.

HEADNOTE: A quantity of coal was booked by a Colliery to the appellant Company  carriage  to  Banjari  station  on  the  respondent Railway’s line and the freight on the consignment was to  be paid by the appellant Company.  The Company declined to take delivery of a part of the consignment which reached  Banjari on November 12, 1954.  After some correspondence between the parties  as  well as with the Coal Controller,  the  Railway sold the coal on June 2, 1955, after serving a notice on the appellant.   It thereafter filed a suit against the  Company claiming  demurrage for 202 days during which six wagons  in which the coal was loaded were detained and ’sought a decree for  Rs.  17,625/14/-  after giving credit  for  the  amount realised from the sale of the coal.  The trial court granted ’a decree for about Rs. 1,620/- with interest, but in appeal the High Court decreed the Railway’s claim in full. In the appeal to this Court by certificate, it was contended on  behalf  of the appellant (i) that the  Company  being  a consignee  of the goods booked by the Colliery there was  no privity of contract between the Company and the Railway  and no claim for demurrage or freight lay at the instance of the Railway against the Company; and (ii) that in any event  the Railway  ought to be awarded demurrage for only 22 days  out of the total period for which the wagons were detained. HELD  :  (i) At the material time the sale and  delivery  of coal were controlled under the Colliery Control Order  1945; the supply of the coal in the present case was sanctioned by the  Deputy  Coal Commissioner to be made to  the  appellant Company  and an order was also made by him in favour of  the Company  for priority supply of wagons to carry the coal  to Banjari.   In these circumstances it would be reasonable  to infer that the Colliery acted as an agent for the Company in entering into the contract of consignment and the  liability for payment of freight and of demurrage charges for  failure

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to take delivery of the goods lay upon the Company. [361  E- F, 363 D-E] There  was  no force in the contention that it  is  only  in those  cases  where  delivery  of  goods  is  taken  by  the consignee that the liability to pay demurrage may be imposed upon him.  Even where the consignee does not ultimately take delivery, if the wagon is detained for his benefit, normally the  Railway  would  be  entitled to  hold  him  liable  for demurrage. [363 G] (ii)The High Court was in error in holding that the  Company was liable to pay demurrage for the full period of 202 days. As  the  wagons  containing  the  coal  reached  Banjari  on November  12, 1954 and before that date and  thereafter  the Company had declined to take delivery of 360 the coal, the Railway could have exercised its power to sell the  coal under s, 56 of the Railways Act.  The Railway  was in the position of a bailee qua the Company and was bound to minimise  the  loss : it could not unreasonably  detain  the wagons  and claim demurrage.  Even assuming that in view  of the  Colliery Control Order, the Railway could not sell  the coal without the Coal Commissioner’s sanction, it could have unloaded the coal from the wagons and put the wagons to use. After the wagons were unloaded the consignee could be liable only for wharfage. [363 H-364 C] On the facts in the present case the respondent Railway  was entitled  to demurrage for the detention of wagons for  only one month.

JUDGMENT: CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 987 and  988 of 1965. Appeals from the judgment and decree dated July 25, 1962  of the  Patna High Court in Appeals from Original  Decree  Nos. 210 and 230 of 1968. S.   V.  Gupte, and P. K. Chatterjee, for the appellant  (in both the appeals). R.   Gopalakrishnan,  for  respondent  No. 1  (in  both  the appeals). K. K. Sinha, for respondent No. 2 (in both the appeals). The Judgment of the Court was delivered by Shah, J. The East Keshalpur Colliery-hereinafter called ’the Colliery’  booked,  in  the months of  July-August  1954,  a consignment of steam coal at the Kusunda railway station  on the  Eastern  Railway for carriage by rail  to  the  Banjari station  on  the Dehri Rohtas Light Railway.  The  coal  was consigned  to the Kuchwar Lime &  Stone  Company-hereinafter called  ’the  Cornpany’-and  the  company  was  to  pay  the freight.   Out  of  the five wagons in which  the  coal  was loaded  three reached Banjari and coal was delivered to  the Company,  and no dispute arises with regard to  those  three wagons in these appeals.  The contents of the remaining  two wagons  weighing  60  tons were reloaded  enroute  into  six smaller wagons of the Dehri Rohtas Light Railway hereinafter called  ’the  Railway’.   The  consignment  reached  Banjari railway station on November 12, 1954.  The Company  declined to accept the consignment.  There was thereafter  correspon- dence   between   the  Railway  Administration,   the   Coal Controller,  the Colliery and the Company.   Ultimately  the Railway Administration served a notice on April 28, 1955. on the Company and the Colliery that they intended to sell  the coal  of which delivery was not taken, and on June 2,  1955, the  coal  was  sold for Rs. 1,050.  Claiming  that  it  was

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entitled  to demurrage for 202 days during which its  wagons were  detained  at the rate of Rs. 90 per day,  the  Railway filed an action against the Colliery and the Company in  the Court  of the Subordinate Judge, Sasaram, for a  decree  for Rs. 17,625/14 being the charges for demurrage and 361 freight payable in respect of the consignment less Rs. 1,050 realised from sale of the coal.  The suit was decreed by the Subordinate Judge against the Company for Rs. 1,620/10  with interest  thereon at the rate of 6% per annum from  December 19, 1957 till realization and proportionate costs.  The suit was dismissed against the Colliery. Against the decree, the Company and the Railway appealed  to the High Court of Patna.  The High Court modified the decree passed  by  the  Trial Court and decreed the  claim  of  the Railway  against  the  Company in  full.   With  certificate granted by the High Court under Art. 1 3 3 ( 1 ) (c) of  the Constitution  these two appeals have been preferred  by  the Company which have been consolidated for trial. Two contentions are raised in support of these appeals.               (1)   that  the Company being a  consignee  of               the goods booked by the Colliery there was  no               privity  of contract between the  Company  and               the  Railway  and no claim  for  demurrage  or               freight  lay  at the instance of  the  Railway               against the Company; and               (2)that in any event the Railway ought to be               awarded    demurrage  for only 22 days out  of               the  total  period for which the  wagons  were               detained. At the material time coal was a controlled commodity  supply and delivery of coal could be made only under orders  issued by  the  Coal Controller.  Sale and delivery  of  coal  were governed  by the Colliery Control Order, 1945  issued  under Rule  81 of the Defence of India Rules and  continued  under the Essential Supplies (Temporary Powers) Act, 1946, and the Bihar  Coal Control Order, 1947.  It was common ground  that coal  could not be sold by a Colliery except under an  order of  the Coal Commissioner or his Deputy.  On July 13,  1954, the Deputy Coal Commissioner (Distribution) issued an  order addressed to the Divisional Superintendent, Eastern Railway, sanctioning the supply of 110 tons of steam coal by the East Keshalpur Colliery to the Company.  By that order a priority supply  of  wagons  was also sanctioned  in  favour  of  the Company  for  transport  of  coal  to  the  Banjari  railway station.   It  was  also  recorded in  the  order  that  the quantity of coal mentioned in the order "had been sanctioned on  the-  account  of the Company"  and  that  sanction  for priority  supply of wagons had also been accorded,  and  the Company  was advised to instruct the Colliery to indent  for wagons accordingly and to quote the sanction number given in the order when so indenting.  Copies of the order were  sent to the Colliery and the Company.  Pursuant to the  allotment of  coal  an order was placed on July 14, 1954 by  the  Coal Suppliers  Ltd. acting on behalf of the Company, for  supply of steam coal to the Com- 362 pany  at  Banjari  railway  station.   In  July  and  August forwarding notes were submitted by the Colliery for dispatch of  steam coal III-B to the Company.  The  Company  received three  wagons of coal sometime in August 1954.  The  Company was  not  satisfied with the quality of coal  supplied,  and made  complaints  in that behalf to the  Colliery  by  their letters  dated August 18, 1954 and September 1,  1954.   The balance  of the consignment reached Banjari on November  12,

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1954,  but  the  Company  declined  to  take  delivery   and intimated the Colliery and the Railway by their letter dated November 23, 1954 that it was not liable for loss  resulting from  the  detention of wagons.  On November  30,  1954  the Company  wrote  a  letter to the  Deputy  Coal  Commissioner (Distribution)  requesting that the Coal Controller,  Bihar, be moved to sanction disposal of coal of which delivery  was not  taken.  A copy of the letter was sent to  the  Company. On  January  24, 1955 the Railway wrote to  the  -Coal  Area Superintendent, Eastern Railway, intimating that the Company had  refused  to  take  delivery  of  coal,  and  asked  for immediate instructions of the Colliery for its disposal.  On February  21, 1955 the Railway again wrote to the Coal  Area Superintendent  stating  that  the goods  will  be  sold  by auction  if nothing heard from him within a  fortnight  from that  date.   On April 28, 1954, the  Railway  informed  the Company that they had decided to dispose of the  consignment of coal under the Indian Railways Act by public auction  and claimed  that  they  were entitled to  demurrage  which  had accrued due till then.  On May 13, 1955, the Coal Controller Bihar, advised the Railway to dispose of the coal lying  un- delivered "according to prevailing railway rules" by  public auction.   The  Railway thereafter sold the  consignment  of coal on June 2, 1955. The Colliery Control Order, 1945, was issued in exercise  of r.  81  of  the Defence of India  Rules  and  was  continued thereafter  under the Essential Supplies (Temporary  Powers) Ordinance, 1946 which was replaced by the Essential Supplies (Temporary Powers) Act, 1946.  By cl. 5 of the Order it  was provided  that  no colliery owner, and no person  acting  on behalf  of a colliery owner, shall sell, agree to  sell,  or offer  to  sell, coal at a price different  from  the  price fixed  in  that  behalf  under cl. 4. By  cl.  6(1)  it  was provided  that where a colliery owner has signified  to  the Deputy  Coal  Commissioner  (Distribution)  in  writing  his willingness to sell direct to consumers and an allotment  is made  by  the Deputy Coal Commissioner (Distribution)  to  a consumer  with  his consent for such direct sale,  the  coal shall be delivered to the consumer at the price fixed  under clause.  4 Clause 8 of the order provides that  the  Central Government may from time to time issue such directions as it thinks fit to any colliery owner in regulating the  disposal of  his stocks of coal or of the expected output of coal  in the colliery during any period including direc- 363 tions as to the person or class or description of persons to whom  coal shall or shall not be disposed of, the  order  of priority to be observed in such disposal, and the staking of coal  on Government account.  The order issued by  the  Coal Controller  was in exercise of the power under cl. 8 of  the Colliery  Control  Order.   No  reference  to  any  specific provision  of  the Bihar Coal Control Order  need  be  made, because counsel have placed no reliance thereon. Having  regard, however, to the circumstances in  which  the goods  were  loaded by the Colliery, there can be  no  doubt that the Colliery was acting as an agent of the Company  for the purpose of arranging for transport of coal in which  the property  had  under  the orders of  the  Coal  Commissioner passed  to the Company.  The Colliery arranged -to load  the coal  at the Kusunda Railway station pursuant to  the  order for  supply of coal sanctioned by the Coal  Commissioner  to the  Company  in  the wagons allotted  to  the  Company  for transporting coal to Banjari.  It is clear that the Colliery supplied coal in pursuance of the "sanction order" in favour of  the Company and arranged to transport it to  Banjari  in

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wagons which were allotted for that purpose by order of  the Deputy  Coal Commissioner.  Under the forwarding  notes  the freight  was  made  payable by the  Company.   In  the  cir- cumstances,  it  would  be  reasonable  to  infer  that  the Colliery acted as an agent for the Company in entering  into the contract of consignment and the liability for payment of freight  and  of  demurrage  charges  for  failure  to  take delivery of the goods lay upon the Company. Normally the liability for payment of demurrage charges lies upon  the  consignee  for whose  convenience  the  wagon  is detained.   As  stated in Halsbury’s Laws  of  England,  3rd Edn., Vol. 31, at p. 724 :               "The   party  primarily  liable  to  pay   the               demurrage  is the party for whose  convenience               the wagons are detained." We are unable to accept the argument of Mr. Gupte on  behalf of the Company that it is only in those cases where delivery of goods is taken by the consignee that the liability to pay demurrage may be imposed upon him.  Even where the consignee does not ultimately take delivery, if the wagon is  detained for  his benefit, normally the Railway would be entitled  to hold him liable for demurrage.  We are unable, therefore, to hold that the Company that it was not liable to pay  freight or demurrage charges, because the Colliery had entered  into the contract of consignment with the Railway. But in our view the High Court was in error in holding  that the Company was liable to pay demurrage for the full  period of 364 202 days.  The six wagons containing 60 tons of coal reached Banjari  railway station on November 12, 1954.  Before  that date  and  thereafter  the  Company  had  declined  to  take delivery of the coal.  The Railway had undoubtedly power  to sell the consignment of coal under s. 56 of the Railways Act after  serving notice upon the owner.  But the Railway  was, after  expiry of a reasonable period which may be  necessary for  taking  delivery,in the position of a  bailee  qua  the company  and was bound to minimise the loss : it  could  not unreasonably  detain the wagons and claim  demurrage.   Even granting  that  in  view of  the  Colliery  Control  Orders, without  the sanction of the Coal Commissioner, the  Railway could  not  sell  coal,  (on that  question  we  express  no opinion)  the Railway could have unloaded the coal from  the wagons and put the wagons to use.  After the wagons were un- loaded  the  consignee could be liable  only  for  wharfage. Under Part 1 of the Coaching Tariff r. 108 provides for  the treatment and disposal of unclaimed articles.  Under cl. (2) of r. 108 it Is provided that for unclaimed booked articles, wharfage  of two annas per maund or part of a maund  for  24 hours  or  part of 24 hours with a minimum  charge  for  one maund  is  levied,  if they are  not  removed  from  railway premises  within  48  hours  from midnight  of  the  day  of arrival.  By cl. (8) it is provided :               "Public  sales  by auction will be  held  from               time to time of all unclaimed or lost property               which  has remained in the possession  of  the               railway for the period mentioned below :-               (i)   unclaimed  or lost property  other  than               foodgrains   which   has   remained   in   the               possession  of  the  railway  for  over  three               months;                (ii) unclaimed foodgrains which have remained               in  the  possession  of the  railway  for  two               months.               At  least  5  days  previous  notice  of  each

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             auction  will be given by advertisement  in  a               newspaper."               Clause  20  in  Part 11 of  the  Goods  Tariff               provides               "(a)  On  all goods brought on  to  a  railway               station  and waiting for despatch without  any               forwarding note tendered for the same and  all               goods  not  removed  from  a  railway  station               although the same is available for delivery  a               wharfage  charge is made on the  Dehri  Rohtas               Light Railway at the following rate :"               (Then  follows a schedule of rates,  which  is               not material.) The  Railway  apparently  made  a  claim  of  demurrage  for detention  of  wagons for 202 days on the footing  that  the coal  was not unloaded from the wagons until it was sold  by public auction.  It was, however, the duty of the Railway to minimise the loss by 365 unloading the coal after expiry of a reasonable period after arrival  of the consignment and to take early steps to  sell the coal.  The Company had given intimation that it will not take delivery of the goods and therefore it was the duty  of the  Railway  to sell the goods by  public  auction  without delay.  The value of the coal was not more than Rs. 500  and the freight payable was approximately Rs. 500.  When sold in the  month  of  June 1955 the coal  fetched  Rs.  1050.   In failing  to  take any action for a period of more  than  six months, in our judgment, the Railway did not act reasonably. We  are of the view that the Railway, having regard  to  all the circumstances, is entitled to demurrage for detention of the wagons for one month only.  On that footing the  Railway is entitled to Rs. 2700 as demurrage and Rs. 495/14 which is payable by the Company as freight less Rs. 1050 realized  by sale  of  coal.  The Railway is accordingly  entitled  to  a decree for Rs. 2,145/14. We  accordingly modify the decree passed by the  High  Court and  decree the claim of the Railway for Rs.  2,145/14  with proportionate  costs throughout.  The Railway will  pay  the costs  of the Company proportionate to the amount for  which its  air  has been dismissed in all the three  Courts.   The order  passed by the Trial Court in favour of  the  Colliery directing  the  Railway  to pay. the  costs  is  maintained. There will be one hearing fee in this Court. There  will be no order as to costs of the Colliery in  this Court. R.K.P.S.                                              Decree modified. L 12 Sup/68-9 366