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Saturday, April 15, 2017

liability of Railway Company for missing goods ! ~ interesting judgement

When processing a quote for Marine transit ~ the first Q of a Marine Underwriter is the mode of transit.  Generally, it is Road / Rail / Sea / Air – by Sea, it could be by Ship, sometimes by Sailing vessels and country crafts also.  Every Carrier upon receipt of goods issues document establishing entrustment and it is the basic duty of the Carrier to deliver the goods at destination, in the same state as they were entrusted to them.  Earlier there was Indian Railways Act 1890 replaced now by – The Railways Act 1989.  What happens when goods entrusted to Railways for transportation goes missing ?  How much is the Railways liable and what is the procedure (when Insured and when goods are uninsured) ~ something interesting from a Caselaw of Allahabad High Court pertaining to year 1923 !! is the subject matter of this post.
coils in transit in open Railway wagons .. 

Section 93 of the Act deals with the general responsibility of Railway Administration as carrier of goods: 

         A Railway Administration shall be responsible for the loss, destruction, damage or deterioration in transit or non-delivery of any consignment arising from any cause except the following namely: Act of God; Act of War;  Act of Public Enemies; Arrest, restraint or seizure under legal process; Order or restrictions imposed by the Central Government or a State Government;  Act of omission or negligence of the consignor or the consignee or the endorsee or the agent or servant of the consignor or the consignee or the endorsee;  Natural deterioration or wastage in bulk or weight due to inherent defect, quality of vice of the goods; Latent defects; Fire, explosion or any unforeseen risk, provided that even where such loss, destruction, damage, deterioration or non-delivery is proved to have arisen from any one or more of the aforesaid causes, the railway administration shall not be relieved of its responsibility for the loss, destruction, damage, deterioration or non-delivery unless the railway administration further proves that it has used reasonable foresight and care in the carriage of the goods.

There is another Section – Sec 103 that deals with the extent of monetary liability in respect of consignments entrusted.  The Act provides for declaration of value to the Railways.  If value is declared and prescribed fee paid, then the extent would the value of the cargo so declared and where the value of consignment is not declared,  the amount of liability of the railway administration for the loss, destruction, damage, deterioration or non-delivery of the consignment shall in no case exceed such amount calculated with reference to the weight of the consignment as may be prescribed, and where such consignment consists of an animal, the liability shall not exceed such amount as may be prescribed.

It is a case of Allahabad High Court against East Indian Railway Company in Nov 1923, an appeal on a decision of Small Cause Court. 

                        The plaintiff was the consignee of 126 bags, which were loaded at Kidderpur station and were despatched to Cawnpore. (Kanpur!)  The railway wagon arrived at Cawnpore on the 27thof December, 1921, and the seals on the wagon were found intact. As the railway company had many other wagons to unload, this wagon was put on a siding and remained there for two days.  Later it was reported that the seals on one side of the wagon were broken. When the contents were checked, it was discovered that six bags were missing. After a lengthy correspondence, which came to nothing, the plaintiff instituted  suit to recover damages for the loss of the bags.

Railway  company took several pleas in defence, but three main issues were framed by the trial court. The first was whether the risk-note absolved the defendant company of all liability or not. The second was whether the goods were stolen at Cawnpore yard and whether the risk-note (form B) applied and whether the defendant company was guilty of wilful negligence or not. And the third was to what money the plaintiff was entitled.

The learned Judge of the Small Cause Court found these issues in favour of the plaintiff and granted him a decree.  Railways went for revision urging that the findings of the lower court are quite insufficient and further that the burden lay on the plaintiff to prove that there was either a wilful neglect of the company or theft by or on account of the wilful neglect of its servants.

I am bound to concede that under the contract which took the shape of the risk-note (form B) a prima facie burden lay on the plaintiff to prove neglect or theft of the kind mentioned therein. I agree that a mere proof of the loss of the goods would not be sufficient to entitle the plaintiff to a decree. This was the view expressed by a Bench of this Court in the case of East Indian Railway Co. v. Nathmal Behari Lal (1917).  It is obvious that the evidence, if any, of wilfull neglect or negligence is within the special means of knowledge of the railway company, and it is ordinarily very difficult for a plaintiff to establish that the loss was due to the wilful neglect of the company. Nevertheless, I concede that under the terms of the contract the burden is prima facie on the consignee. But I am of opinion that where certain circumstances have been established, either by direct evidence produced by the plaintiff or by the cross-examination of the witnesses for the defendant, from which circumstances wilful neglect or negligence can be inferred, the burden must then be shifted to the defendant company. Such circumstances coupled with the patent fact that the packages have been lost, may justify a court to hold that the burden has been discharged.

                    It  is to be noted that the only circumstance which the plaintiff had there proved was the fact that the goods had been despatched and on arrival of the train in Cawnpore the seals of the doors of wagons were found to have been broken and six bags of sugar found missing. The learned Judges were doubtful whether it was not a case of theft from a running train.

 In a recent case decided by the House of Lords, namely, H.C. Smith Ld. v. Great Western Railway Co. (1922) 1 A.C. 178 (188), it was laid down that the burden of proving in the first instance that the loss sustained arose from the wilful misconduct of the company's servants was thrown upon the trader.

In the present case I find that the learned Judge of the Small Cause Court had before him a clear issue as to the wilful negligence of the company. In the course of his judgment he has pointed out that the yard where the wagon was kept was a very large one and that its wall on the jungle side was broken at several places at the time when the goods were stolen. He has commented on the fact that the railway company took two days to unload the goods after their arrival at the station. Having considered these circumstances, he remarks: "If the goods are lost on account of the railway company's not making proper arrangements, the railway company is liable." Further on, he remarks that it was clearly not a case of theft from a running train. In view of these findings I am unable to hold that the judgment of the learned Judge of the Small Cause Court is wrong. In view of this I am unable to interfere. The application is rejected.

One cannot judge the predicament of the consignor reading a case that occurred almost a century ago, .. .. yet, it is a case of short delivery of consignment, which Railway Company denied in first place, and the cargo owner had to go to Court and again appear on appeal made by Railway Company.

Interesting !!

With regards – S. Sampathkumar

13th Apr 2017.

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