Holding

The consignor retains the right to sue the railway for damage unless it can be factually established that title has passed to the consignee, which was not shown in this case.

Summary

The Bihar State Electricity Board ordered a transformer from NGEF Ltd., which was shipped by rail and covered by an open insurance policy with New India Assurance. The consignment was damaged during transhipment, and the insurer, after reimbursing the consignor, sued the railway administration for recovery, impleading the consignor as plaintiff No.2 and the consignee as a pro forma defendant. The railway argued that title to the goods had passed to the consignee, so only the consignee could sue, but the consignee had expressly stated in writing that it had no interest in the goods and did not object to the consignor’s claim. The trial court held that the consignor retained title and could sue; the High Court reversed, holding title passed at booking. The Supreme Court allowed the appeal, restoring the trial court’s decree, and held that ordinarily the consignor can sue unless title has demonstrably passed to the consignee, which was not the case here.

Issues considered

Whether the consignor retains the right to sue the railway administration for damage to goods in transit when the consignee is different.
Whether title to the goods passes to the consignee at the time of booking, thereby extinguishing the consignor's cause of action.

Subjects

carriage of goodsrailwayconsignorconsigneeright to suetitle of goodsinsurancenegligencedamage in transit

Judgment

y

MIS NEW INDIA ASSURANCE CO. LTD. A
v.
UNION OF INDIA AND ORS.

JANUARY 20, 1995

[J.S. VERMA, S.P. BHARUCHA AND K.S. PARIPOORNAN, JJ.] B

Carriage of Goods-Railways--Damage to consignment during tran-
sit-Consignor's right to sue railway administration for recovery of
damages-No dispute between consignor and consignee about ownership of
goods or right to sue-Plea of railways to resist consignor's right to sue-Held C
untenable.

The Bi~ar State Electricity Board placed on order with Plantiff No.
2 for supply of Transformer with accessories. The plaintiff tendered the
consignment to the railway administration for carriage to Electricity
Board. The consignment was covered by an open insurance policy issued D
by Plaintiff No.1. The consignment reached the destination but was found
to be damaged. The damage was caused to the consignment in transit
during its transhipment. The claim made by the plaintiff, the consignor,
under the insurance policy was settled by the insurer. The consignor
authorised the insurer to recover the damages from the railway ad· E
ministration. The insurer filed the suit ~or recovery of damages impleading
the consignor as Plaintiff N;o. 2 and the consignee as the proforma Defen·
dant No. 3. The suit was contested only by the. Union of India representing
the railway administration. The Bihar State Electricity Board apart from
not contesting the suit had also intimated the railway administration that
it had no right or interest in the goods. There was thus no dispute of title F
to the goods or right to sue between the consignor and consignee.

It was alleged by the ra~lway administration that ownership of goods
was in the consignee and, therefore, the consignor had nQ right to sue. The
liability. for payment of compensation was also denied.· G
• The trial court decreed the suit and held that the consignor 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. On appeal, the High Court
reversed the Trial Court's judgment and decree. It was held that the H
507
508 SUPREME COURT REPORTS [1995) 1 S.C.R.

A property in goods had passed to the consignee when the consignment was
booked and the consignor had no 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.
However, the finding of the trial court that the loss during transit was
B occasioned by the negligence of the railway administration was confirmed.
This appeal had been filed against the judgment of the High Court.

Allowing the appeal, this Court

HELD : 1.1. Ordinarily it is the consignor who can sue if there is
C damage to consignment si~ce the contract of carriage is between the
consignor and the railway. 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 is a question of fact in each case and has to be
decided on other evidence. (511-F]
D
Union of India v. West Punjab Factory, AIR (1966) SC 395, relied on.
I

1.2. In the instant case, there "'s no dispute between the con~ignor
and consignee about the ownershjp,of goods or the right to sue. Letter of
E the consignee handed over to the railway administration at the time of the
open delivery of'the consignment clearly stated that the consignee 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 situation there was no scope or oc;casion to record a finding that
the consignee had title to the goods. The finding recorded that it was the
F consignee alone, and not the consignor, who had the right to sue, was
against the admitted facts and the relevant pleadings. (511-C-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5060 of
·1994.
G
From the Judgment and Order dated 16.6.93 of the Karnataka High
Court in R.FA. No. 153of1983.

Ashwini Kumar and R.N. Keshw~ for the Appellant.

H P .P. Malhotra and AK. Sharma for the Respondents.
NEW INDIA ASSURANCE CO. LID. v. U.0.1. [J.S. VERMA, J.] 509

The Judgmen~ of the Court was delivered by A

J.S. VERMA, J. 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 ad-
ministrations, impleading the Bihar State Electricity Board as a proforma B
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 C
and decree of the trial court decreeing the suit have been set aside. Hence
this appeal by Special Leave.

The Bihar State Electicity Board (Defendant No.3) placed an order
with NGEF Limited (Plaintiff No.2) for supply of one 20 M.V.A. Trans- D
former with accessories. NGEF Limited (Plaintiff No. 2) tendered the
consigment on 15.6.1977 to the railway administration at Bangalore for
carriage to, and deliery 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 Assurance Company (Plaintiff E
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
.J ~
was found to be damaged. It appeared that the damage was caused to the
consignment in transit, during its transhipment from a broad gauge wagon F
to a meter gauge wagon. Open delivery of the consignment was given by
the railway on 31.8.1977 and a certificate of damage to this effect was
issued by the railway administration. The damage cause 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. 2-NGEF Ltd., the
consignor, under the insurance policy was settled by the insurer by payment G
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.
authoritising the insurer to recover the damages from the railway ad-
ministration. After the statutory notice, New India Insurance Company
Lt.d. as the insurer filed the suit for recovery of the said amount impleading H
510 SUPREME COURT REPORTS [1995) 1 S.C.R.

A the consignor as Plaintiff No.2 and the con_signee as the proforma Defen-
dant No. 3. The consignee- Defendant No.3 remained ex-parte and did not
contest the suit. The suit was contested only by the Union of India repre-
senting the railway administrations.

The defence of the railway administrations was that ownership of
B 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.

It is significant that the Bihar State Electricity Board (Defendant
C No.3) whose title to. the goods was asserted by the railway administration,
apart from not contesting the suit had also intimat_ed the railway ad-
ministration 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 administra-
D tion and countersigned by the Station Master of the destination station at
the time to 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.

The trial court accordingly rejected this defence of the railway
E 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 1was decreed in favour of the plaintiffs for recovery of
F 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 administration~.

In the first appeal filed by the Union of India, the High Court has
revered 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
G 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.)lasis
and the consignor (Plaintiff No. 1) had no cause of action gainst the railway
administration to make the i::laim for loss to the consignment during transit.
H The High Court held that the right to sue was only in the consignee (Bihar
'(
I
NEW INDIA ASSURANCE CO. LID. v. U.0.1. [J.S. VERMA, J.] 511

State_ ElectricitYBoard-Defendant No. 3). For this reason alone the ~ppeal A
was allowed resulting in dismissal of the suit.

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 recovery of damages where the railway receipt B
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 C
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 consignee (Bihar State Electricity 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 situation
there was no scope or occasion for the High Court to record a finding that D
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 plead-
ings. The view taken by the High Court is clearly tenuous.
E
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 consignemnt 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 F
pass title to the goods from the consignor to the consignee, and the
question whether tme 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 G
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. H
.._
) '

512 SUPREME COURT REPORTS (1995) 1 S.C.R.
,
A 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 are restored, The plaintiffs would get the costs throughout from
the Union of India representing the railway administrations (Defendant
Nos. 1 and 2).
B A.G. Appeal allowed.

r