ADONI FERTILISERS MANUFACTURERS Vs. UNION OF INDIA

JUDGEMENT

(1.) Defendants 6 to 13 in O. S. No. 31 of 1969 on the file of the Court of the Subordinate Judge, Adoni are the appellants in this appeal. The first respondent-plaintiff filed the suit to recover a sum of Rs. 17,892-05 said to be the amount due to the Railway Administration towards freight charges. The Administration of the Southern Railway was the plaintiff. The case as set out in the plaint was that defendants 1 to 4 booked 24 wagons of steam coal under 24 invoices and corresponding railway receipts on various dates between September and October, 1962. The wagons arrived at Adoni in October and November 1962. The consignee of the consignments was Messrs. V. N. Rajan and Co. Calcutta, the 5th defendant in the suit. Immediately after the arrival of the consignments the 6th defendant unloaded a part of the consignment and stocked them in the D. S. siding and long siding of the plaintiffs premises. Thereafter the 6th defendant did not unload the goods in the remaining wagons, nor did the 6th defendant remove what was already unloaded. The plaintiff wrote to the consignee, namely, Messrs. V. N. Rajan and Co., to remove the goods as lot of inconvenience was being caused to the normal working of the plaintiff. The 5th defendant replied stating that they were only acting as nominees of the Government of Andhra Pradesh and that the wagons were put in their name on account of the Director of Controlled Commodities. The Director of Controlled Commodities had asked them to endorse the railway receipts to the allottee, namely, the 6th defendant. That was done. The 6th defendant was the actual consignee who was liable to pay the freight charges. Thereupon the plaintiff wrote to the Government of Andhra Pradesh to clarify the position. The Government replied stating that they were not liable to pay the freight. Ultimately after observing all necessary formalities the plaintiff disposed of the goods by public auction. After giving credit to the sum realised by public auction the plaintiff sued to recover the balance of freight charges due. The plaintiff alleged that defendants 1 to 4 were liable as they were consignors. The 5th defendant was liable as they were the consignees. In regard to the 6th defendant it was stated,

(2.) The learned Subordinate Judge decreed the suit against all the defendants. In regard to defendants 6 to 13 the learned judge took the view that they were the real consignees and, therefore, they were bound to pay the freight charges to the Railway Administration. The learned Judge relied upon a decision of the Patna High Court in D. R. L. Railway Company v. E. K. Colliery, AIR 1963 Pat 46.

(3.) Before considering the question of the liability of defendants 6 to 13 it is just as well to know the correct position in law. The case of D.R.L. Railway Company v. E.K. Colliery (AIR 1963 Pat 46) on which reliance was placed by the learned Subordinate Judge went to the Supreme Court in appeal. We will, therefore refer to the decision of the Supreme Court which is reported in Kuchwar Lime and Stone Co. v. M/s. Dehri Rohtas L.R. and Co. AIR 1969 SC 193. The facts of the case were as follows : Coal was a controlled commodity at that time and its supply and delivery was regulated by orders issued by the Coal Controller. The Coal Controller issued an order sanctioning the supply of steam coal by the E.K. Colliery to Kuchwar Lime and Stone Company. Priority of Wagon supply was also sanctioned. Pursuant to the allotment order the Company placed an order with colliery for supply of steam coal to the company at Banjari Railway station. The Colliery despatched coal by railway. The wagons arrived at Banjari Railway station. The company declined to take delivery. Thereafter the railway sold the consignment of coal and sued the company for demurrage. The contention of the company was that it was only a consignee of the goods booked by the colliery, there was no privity of contract between the Company and the Railway and, therefore, the Railway could not claim demurrage or freight from the Company. The Supreme Court noticed hat the colliery supplied coal and arranged to transport it to Banjari Railway station in wagons pursuant to the sanction order issued by the Coal Controller in favour of the company and the wagon priority in favour of the consignee. Under the forwarding notes the freight was made payable by the company. In the circumstances, the Supreme Court held that it would be reasonable to infer that the colliery acted as the agent of the company in entering into the contract of consignment and, therefore, the liability for payment of freight and demurrage was upon the company. The Supreme Court also observed that the party primarily liable to pay demurrage was the party for whose convenience the wagons were detained, namely, the consignee. It is clear that in the case before the Supreme Court the allottee was himself the consignee of the goods and the circumstances showed that the consignor was acting as the agent of the consignee. There was no intermediary consignee who was required to accept the coal from the colliery and distribute it to the consumers. The consignee on whose behalf the consignor acted was, therefore liable for the freight charges. In Secretary of State v. Ganji Dosa, AIR 1929 Pat 265, the legal position has been clearly stated by Fazl Ali J. as follows: