UNION OF INDIA Vs. ORISSA TEXTILE MILLS LTD

JUDGEMENT

(1.) Defendants -- the Union of India representing the Central Railway and the South Eastern Railway --have carried this appeal against the judgment and decree of the First Additional Siibordiate Judge at Cuttack decreeing plaintiffs' suit for damages.

(2.) The Orissa Textile Mills Limited (hereinafter referred to as the 'Company') is a public company having its registered office and factory at Choudwar, off Cuttack. A hundred bales of F. P. cotton procured by the Company were consigned in perfect condition from Shendurni, a station located on the Central Railway, to Charba-tia, a station on the South Eastern Railway, for being delivered to the Company under Invoice No. 1 and Railway Receipt No. 218917 dated 6-2-1968. During transit, the consignment was badly damaged by fire and water and open delivery was given to the Company on assessment basis on 11-5-1968 vide Ext. 8 indicating damage to the consignment in the following way: (i) damage to 7 bales at 50% (ii) damage to 55 bales at 40% (iii) damage to 38 bales at 12% Claim was lodged by the company as required under the provisions of the Railways Act. As the consignment had been insured with the London and Lanchashire Insurance Co. Limited (hereinafter referred to as the 'Insurer'), the Company claimed the damage from the Insurer and the same was amicably settled. The Insurer became subrogated to the rights and remedies of the Company and became entitled to recover the loss arising out of the damages. Notice under Section 80 of the Civil P. C. was given and the suit came to he filed on 23-7-1965 by the Company and the Insurer as plaintiffs.

(3.) The two Railways filed separate written statements but their defence was almost identical. According to them the Insurer had not been validly subrogated to the rights and remedies of the Company and had, therefore, no right of suit. In the absence of notice under Section 78-B of the Railways Act by the Insurer, the suit by it was not tenable. There was no negligence or misconduct on the part of the employees of the Railway Administration of both the Central and the South Eastern Railway in dealing with the consignment. It was conceded that the consignment had been booked at Railway risk. In course of transit, after the consignment left the station of booking, the same had been transhipped to a broad-gauge wagon at Pachora and the consignment was found to be in order. After the wagon carrying the consignment reached Cuttack Railway Station, it was being carried to the Company's Railway siding in a Down O. T. M. Pilot train on 19-12-1963 and in course of that movement while the train was passing the west cabin of the Nergundi Railway Station, fire was first noticed in the wagon. The train was stopped, the wagon was isolated and water was poured into the wagon to extinguish the fire, at the earliest opportunity. It was admitted that the cause of fire is not known and may have been due to some live sparks coming into the wagon carrying the consignment. Ext. 8 had been prepared on the basis of guess work and no actual assessment had been made. As such without actual proof of loss, plaintiffs were not entitled to the damages claimed.