New India Assurance Co. Ltd. Vs. Union
of India & Ors  INSC 79 (20 January 1995)
Jagdish Saran (J) Verma, Jagdish Saran (J) Bharucha S.P. (J) Paripoornan, K.S.(J)
J.S. Verma, J.:
1995 SCC (2) 417 JT 1995 (1) 550 1995 SCALE (1)292
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.
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.
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.
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 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
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.
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.
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.
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
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 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
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
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.
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.
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
plaintiffs would get the costs throughout from the Union of India representing
the railway administration (Defendant Nos. 1 and 2).