http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: M/S.  NEW INDIA ASSURANCE CO. LTD.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT20/01/1995

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) BHARUCHA S.P. (J) PARIPOORNAN, K.S.(J)

CITATION:  1995 SCC  (2) 417        JT 1995 (1)   550  1995 SCALE  (1)292

ACT:

HEADNOTE:

JUDGMENT: J.S. VERMA, J.: 1.   The  suit giving rise to this appeal was filed  by  the appellant-New India Assurance Co. Ltd. and Respondent No. 3- NGEF  Ltd.  against  the Union  of  India  representing  the concerned railway administrations impleading the Bihar State Electricity Board as a proforma defendant to recover the sum of Rs 1, 97,864/- together with interest as compensation for loss  of  goods  during transit by  rail.  The  trial  court decreed the suit against the Union of India for recovery  of Rs.  1.97,864/-  together  with interest at the  rate  of  6 percent per annum from the, date of suit till payment.   The first  appeal  filed  by  the Union  of  India  against  the plaintiffs has been allowed by the Karnataka High Court  and the  judgment  and decree of the trial court  decreeing  the suit  have  been set aside.  Hence this  appeal  by  Special Leave. 2.   The  Bihar  State Electricity Board (Defendant  No.  3) placed  an  order with NGEF Limited (Plaintiff  No.  2)  for supply of one 20 M.V.A. Transformer with accessories.   NGEF Limited  (Plaintiff  No.  2)  tendered  the  consignment  on 15.6.1977  to  the railway administration at  Bangalore  for carriage  to, and delivery at Hajipur in Bihar,  naming  the Bihar   State  Electricity  Board  (Defendant  No.   3)   as consignee.  The consignment was covered by an open insurance policy issued by New India Assurance Company (Plaintiff  No. 1) under which insurer was liable to reimburse the consignor NGEF Ltd. (Plaintiff No. 2) for non-delivery or loss of  the consignment during transit by rail.  The consignment reached the  destination on 31.7.1977 but was found to  be  damaged. It appeared that the damage was caused to the consignment in transit during its transshipment from a broad gauge wagon to a  meter gauge wagon.  Open delivery of the consignment  was given  by  the  railway an 31.8.1977 and  a  certificate  of damage   to   this  effect  was  issued   by   the   railway

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

administration.   The damage caused to the  consignment  was also  surveyed and the surveyor gave his  report  estimating the loss at Rs. 1,96,849/The claim made by the Plaintiff No. 2NGEF  Ltd., the consignor, under the insurance  policy  was settled  by the insurer by payment of Rs.  1,96,849/-.   The consignor, plaintiff No. 2-NGEF Ltd. had written a letter in favour  of the insurer plaintiff No. 1  New India  Assurance Co. Ltd. authorising the insurer to recover the damages from the railway administration.  After the statutory notice, New India  Insurance Company Ltd. as the insurer filed the  suit for recovery of the said amount impleading the consignor  as Plaintiff No. 2 and the consignee as the proforma  Defendant No.  3. The consignee-Defendant No. 3 remained ex-parte  and did not 552 contest the suit.  The suit was contested only by the  Union of India representing the railway administrations. 3.   The  defence  of the railway administrations  was  that ownership   of  goods  was  in  the  consignee-Bihar   State Electricity  Board  (Defendant No. 3)  and,  therefore,  the plaintiffs  i.e. the insurer and the consignor had no  right to sue.  The liability for payment of compensation was  also denied. 4.   It  is  significant that the  Bihar  State  Electricity Board  (Defendant  No.  3)  whose title  to  the  goods  was asserted by the railway administration, apart from, not con- testing   the   suit   had  also   intimated   the   railway administration by a letter that it had no right or  interest in the goods and, therefore, it had no objection to recovery of   the   amount  by  the  plaintiffs  from   the   railway administration.   The letter Ex.  P-9 dated 09.12.1978  sent by  the  consignee (Defendant No. 3) was  addressed  to  the railway  administration  and countersigned  by  the  Station Master of the destination station at the time of giving open delivery  of the goods.  There was thus no dispute of  title to  the  goods  or right to sue between  the  consignor  and consignee. 5.   The  trial court accordingly rejected this  defence  of the  railway  administration  and held  that  the  consignor (Plaintiff No. 2) had title to the goods and, therefore, was entitled  to  maintain the suit It was also  held  that  the damage  to  the  goods  was caused  during  transit  by  the negligence  of  the railway administration.   The  loss  was assessed  at  the sum of Rs. 1,97,000/-.   Accordingly,  the suit was decreed in favour of the plaintiffs for recovery or Rs.  1,97,864/- with interest at the rate of 6 percent  from Defendants  1  and 2, the Union of  India  representing  the concerned’ railway administrations. 6.   In  the first appeal filed by the Union of  India,  the High  Court  has  reversed the trial  court’s  judgment  and decree.   The High Court affirmed the finding of  the  trial court  that  the loss during transit was occasioned  by  the negligence  of  the  railway  administration.   However,  it further  held that the property in goods had passed  to  the consignee  (Defendant No. 3-Bihar State  Electricity  Board) when the consignment was booked on F.O.R. basis and the con- signor (Plaintiff No. 1) had not cause of action against the railway  administration  to make the claim for loss  to  the consignment  during transit.  The High Court held  that  the right  to  sue  was  only  in  the  consignee  (Bihar  State Electricity  Board-Defendant No. 3).  For this reason  alone the appeal was allowed resulting in dismissal of me suit 7.   We have no doubt that the judgment of the High Court is erroneous.  Irrespective of the general rule relating to the consignor’s  right  to sue the  railway  administration  for

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

recovery  of  damages where the railway  receipt  names  the consignee also, in the facts of the present case the plea of the  railway administration to resist the consignor’s  right to sue is wholly untenable.  Admittedly, there is no dispute between  the consignor and consignee about the ownership  of goods  or  the  right to sue.  The  letter  Ex.   P-9  dated 09.12.1978 of the consignee bearing the counter signature of the  Station  Master of the destination station  and  handed over  to the railway administration at the time of the  open delivery   of  the  consignment  stated  clearly  that   the consginee (Bihar State Electricity 553 Board) had no right or interest in the consignment and  that it  had  no  objection  to recovery  of  the  claim  by  the consignor from the railway administration.  In such a  situ- ation  there was no scope or occasion for the High Court  to record a finding that the consignee had title to the  goods. For this reason alone the finding of the High Court that  it was the consignee alone, and not the consignor, who had  the right to sue, is against the admitted facts and the relevant pleadings.   The  view taken by the High  Court  is  clearly tenuous. 8.   In  Union of India v. West Punjab Factory (AIR 1966  SC 395) a Constitution Bench of this Court held that ordinarily it  is the consignor who can sue if there is damage  to  the consignment  since the contract of carriage is  between  the consignor and the railway administration- the mere fact that the  consignee  is different from the  consignor,  does  not necessarily  pass title to the goods from the  consignor  to the  consignee, and the question whether title of goods  has passed to the consignee has to be decided on other evidence. In  short,  whether  title  to goods  has  passed  from  the consignor  to  the consignee is a question of fact  in  each case.   The ordinary rule indicated was that  the  consignor who  enters  into  contract of  carriage  with  the  railway administration can sue.  It is difficult to appreciate  how, in the present case, the High Court could have dismissed the consignor’s suit particularly when the consignee had clearly intimated  to the railway administration in writing that  it did not claim any right or title in the goods. 9.   Consequently  the appeal is allowed.  The judgment  and decree  passed by the High Court are set aside and  that  of the trial court decreeing the suit arc restored. The plaintiffs would get the costs throughout from the Union of India representing the railway administration  (Defendant Nos.  1 and 2). 554