Full Judgment Text
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PETITIONER:
UNION OF INDIA AND ORS.
Vs.
RESPONDENT:
SUGAULI SUGAR WORKS (P) LTD.
DATE OF JUDGMENT11/03/1976
BENCH:
RAY, A.N. (CJ)
BENCH:
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SINGH, JASWANT
CITATION:
1976 AIR 1414 1976 SCR (3) 614
1976 SCC (3) 32
ACT:
Indian Railway’s Act as it stood amended by Act 46 of
1959 and prior to 1961 amendment Ss. 72 and 74-Liability of
the Railway in respect of goods sent at Railways risk is the
same as that of a bailee under the Indian Contract Act 1872
Ss. 151, 152, 161-Enquiry under Sections 83 and 84 of the
Railways Act read with s. 2 of the Indian Railways Board Act
(4 of 1905) and rule 18 of the Railway Board Rules is a
Joint Enquiry, admissible under Ss. 5,7 and 9 of the
Evidence Act-Not covered, for claim of privileges, under s.
123 of the Evidence Act read with Art. 298 of the
Constitution-Correct measure of damages for purposes of
awarding damages for negligence under the Railways Act-What
is.
HEADNOTE:
The non-delivery of the goods booked by the respondent
on September 5, 1955 to several destinations under "Railway
Risk" due to the sinking of "Barge No. 6, carrying the
wagons containing the goods" led to the filing of four suits
which were dismissed by the Trial Court holding that the
accident was not due to the negligence of the Railway
employees. The High Court, accepting the appeal of the
respondent by its judgment dated April 13, 1966 held that
the sinking of Barge was not due to "inevitable accident"
but due to the serious negligence of the Railway employees
and their failure of duty to take due care which it was
required to take as a bailee as revealed by their own
Enquiry Committee held with reference to Ss. 83 and 84 of
the Railways Act read with section 2 of the Indian Railways
Board Act (4 of 1905) and rule 18 of the Railway Board
Rules. The High Court remanded the suits for determination
of the quantum of the decretal amount due to the respondent.
The trial court after remand gave decrees in favour of the
respondent on 10th September, 1966 without interest claimed
up to the date of filing of the suit and interest "pendent-
lite". The High Court, on appeal by the respondent by its
judgment dated 3-9-1968 allowed interest "pendent-lite" and
future interest at the rate of 4 1/2% per annum.
Dismissing the two sets of appeal by the Union, one by
Special Leave against the order dated 13-4-1966 determining
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the liability and another by certificate against the
judgment dated 3-9-1968 awarding interest the High Court.
^
HELD: (1) The liability of the Railway was that of a
bailee. The consignments were booked at Railway risk. The
onus of proving that the Railway employees took the
necessary amount of care and they were not guilty of
negligence rested on the Railway Authorities. The question
of onus is not important when the entire evidence is before
the court. In the instant case there was no legal evidence
to prove "inevitable accident" but suppression of important
documents and non production of important witnesses in
charge of the Barge. The Barge sank because of the serious
and gross negligence of the railway employees and the
railways did not take due care which it was required to take
as a bailee. [617B-D; 618F-G]
(II) The Enquiry Committee, in the instant case, is a
Joint Enquiry, under the rules and the report is admissible
under Ss. 5, 7 and 9 of the Evidence Act. The claim for
privilege is not admissible because no such claim was made
before the Courts below and there was no affidavit of the
Minister incharge or the Secretary of the Department to
support a claim for privilege. [616G-H]
(III) One of the principles for award of damages is
that so far as possible he who has proved a breach of a
bargain to supply what he has contracted to get is to be
placed as far as money can do it, in as good a situation as
if the contract had been performed. The fundamental basis
thus is compensation for the pecuniary loss which naturally
flows from the breach. Therefore,
615
the principle is that as far as possible the injured party
should be placed in as good a situation if the contract has
been performed. In other words, it is to provide
compensation for the loss which naturally flows from the
breach. The market rate is a presumptive test because it is
the general intention of law that in giving damages for
breach of contract, the party complaining should, so far as
it can be by money, be placed in the same position as he
would have been in if the contract had been performed. The
rule as to market price is intended to secure only an
indemnity to the purchaser. The market value is taken
because it is presumed to be the true value of the goods to
the purchaser. In the instant case, the High Court correctly
applied these principles and adopted the contract price in
the facts and circumstances of the case as the correct basis
of compensation. [619-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1562 to
1573 of 1971.
From the Judgment and Decree dated the 13-4-1966 and 3-
9-1968 of the Patna High Court in Appeals from Original
Decree Nos. 127-130, 246 and 247 of 1958.
S. P. Nayar for the Appellants.
P. K. Chatterjee and Rathin Dass for Respondents in C.
As. 1566. 1567, 1572 and 1573 of 1971.
A. N. Sinha and P. K. Mukherjee for Respondents in
C.As. 1562-65 and 1568-71 of 1971.
The Judgment of the Court was delivered by
RAY, C.J.-These appeals are by certificate from the
judgment and decree of the High Court at Patna dated 13
April, 1966 and 3 September, 1968.
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Four suits were filed by Sugauli Sugar Works Limited
for recovery of money on account of non delivery of
consignments. Two suits were filed by Majhaulia Sugar Works
for recovery of money on account of non delivery of two
consignments. The suits were filed in the Court of the
Subordinate Judge, Motihari in Bihar.
The plaintiffs are respondent. The case of the
respondents was that goods were booked on 5 September, 1955
to several destinations under railway risk. The goods did
not reach the destinations. The respondents alleged that non
delivery was on account of gross negligence and misconduct
on the part of the Railways.
The defence was that the wagons containing the goods in
suit along with other wagons were taken on Barge No. 6 from
Samaria Ghat to Mokamah Ghat on 7 September, 1955. There was
an accident. The Barge with all the wagons sank in the river
Ganges. The Railways contended that the employees were not
guilty of any negligence or misconduct.
The Subordinate Judge dismissed all the suits and held
that the accident was not because of the negligence of the
railway employees.
The High Court accepted the appeals filed by the
respondent. The High Court held that the consignments were
booked at railway risk and there was no explanation given
for the sinking of the Barge.
616
The High Court held that the Barge sank because of serious
negligence of the railway employees and it was not a case of
inevitable accident. The High Court also held that the
railway did not take the care which it was required to take
as a bailee. The High Court delivered the judgment on 13
April, 1966 and sent to the trial court for determination of
the issue: "What is the amount for which the plaintiffs are
entitled to a decree in this case?"
One group of appeals is against the judgment of the
High Court dated 13 April, 1966 which determined the
liability.
The Additional Subordinate Judge, Motihari, who tried
the issue on remand by an order dated 10 September, 1966
gave decrees in favour of the respondent. The High Court by
judgment dated 3 September, 1968 set aside the judgment and
decree of the trial court on remand. The High Court awarded
decrees in favour of the respondents.
The second group of appeals is by certificate against
the judgment of the High Court dated 3 September, 1968.
One of the contentions raised before the High Court and
repeated here is that the High Court should not have relied
on an enquiry report into the accident. The High Court held
that there was an enquiry under Rule 18 of the Rules made by
the Railway Board. The High Court referred to sections 83
and 84 of the Railways Act. Section 83 provides that if
there is any accident attended with loss of human life or
grievous hurt or with serious injury to property, notice
shall be given to various persons. Section 84 confers power
on the Central Government to make Rules for several purposes
including the purpose of prescribing the duties of railway
servants, police officers, inspectors and Magistrates on the
occurrence of an accident. Section 2 of the Indian Railway
Board Act authorises the Central Government to invest the
Railway Board with all or any of the powers or functions of
the Central Government under the Railways Act. The Central
Government authorised the Railway Board to make rules in
pursuance of section 84 of the Railways Act. Rule 18 of the
Railway Board Rules provides that whenever an accident has
occurred in the course of working a Railway, the Agent or
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Manager shall cause an enquiry to be promptly made by a
committee of railway officers (to be called a joint enquiry)
for the thorough investigation of the cases which led to the
accident. It is also provided in the rule that an enquiry
may be dispensed with in certain cases.
In the present case the enquiry was held by three
officers. The enquiry report which is marked as Exhibit 9
was contended by the respondent to be admissible under
sections 5, 7, 9 and 35 of the Evidence Act. The Railway
contended that the report was a privileged document and
further claimed that the enquiry was a private enquiry. The
High Court rightly rejected both the contentions. First, the
High Court held that no privilege had been claimed and there
was no affidavit of the Minister in charge or the Secretary
of the department to support a claim for privilege. The High
Court
617
also referred to the fact that the report was called for by
the Court of the Subordinate Judge at Gaya and the Railways
did not claim any privilege there. Second, the High Court
also rightly held that the enquiry report was admissible
under sections 5, 7 and 9 of the Evidence Act. The High
Court did not go into the question whether it was admissible
under section 35 of the Evidence Act.
The High Court further held that the Railways did not
examine important witness, viz., the Commander of the ferry
who was on the spot when the Barge was in trouble. The High
Court held that the Railways suppressed important documents
like the marine certificate and the stock register which
would have given the life history and the capacity of the
Barge. The High Court correctly drew adverse inference
against the appellants for non production of important
witness and important documents.
The liability of the railway was that of a bailee. The
consignments were booked at railway risk. The onus of
proving that the railway employees took the necessary amount
of care and that they were not guilty of negligence rested
on the Railway Authorities. The High Court held that it was
not a case of unavoidable accident and that the Barge sank
because of gross negligence of railway employees and the
railways did not take the amount of care which it was
required to take as a bailee.
The question of onus is not important when the entire
evidence is before the Court. The High Court found that
Rasul the Sarang of ’Chapra’ was responsible for the
accident because he had failed to exercise proper judgment
while manoeuvring his own vessel for the purpose of heaving
up the anchor of Barge No. 6 and he failed to exercise
initiative to save the barge by breaching it on the nearest
char, instead of taking it to the Simariaghat goods jetty.
The High Court also held that the Commander of the ferry
found that he visited the steamer ’Samastipur’ and Barge No.
6 when there was difficulty in heaving the anchor of the
barge and thereafter went away, leaving the matter entirely
in the hands of the sarang. The High Court held that these
officers were responsible for not staying on board until the
barge was out of trouble.
The High Court found that Barge No. 6 was very old. It
was built in 1897. It underwent heavy repairs in 1953. The
time of the accident was at about 2-20 p.m. on 7 September,
1955. "Samastipur" started towing the barge, went about a
mile when the radius rod of Samastipur broke down. Radius
rod is a part of the paddle by which a steamer is driven.
The radius rod of Samastipur was repaired in due course. It
then heaved up its anchor. The anchor of the barge could not
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be lifted. There was a danger whistle. Rasul, the Sarang of
"Chapra" came with his steamer to the aid of Samastipur. Two
officers Lall and Devia herein before mentioned left the
matter in the hands of the three sarangs. Lall, the
Commander of the Ferry was not examined. The Assistant
Mechanical Engineer was examined. The High Court found that
Rasul did not take the steamer and the barge to the Diara
but took them to Simarighat. The steamer and the
618
barge reached jetty at Simariaghat. When the barge was about
to be attached to the jetty, it sank.
The High Court found that the strength of the current
in the month of September was a known factor. The railway
employees were used to ply the steamer and the barge between
the two ghats during the month of September. The railway
employees were found to equip themselves with appropriate
appliances and necessary skill for the job of taking the
barge across. The High Court found that there was no
satisfactory explanation for the sinking of the barge. The
High Court also found that there was no explanation why the
anchor of the barge could not be lifted. According to the
High Court, this might have been due to defective or
insufficient appliance for haulage of the anchor. The High
Court also found that there was no evidence to show that
there was any unforeseen difficulty, by reason of which the
anchor could not be heaved up. The fact that the anchor
could not be lifted was held by the High Court to be on
account of the negligence of the railway employees.
The High Court also referred to the fact that the barge
developed a big hole and there was no explanation how this
happened. The High Court felt that this could be explained
by assuming that Chapra pulled the barge in such a way as to
make the anchor chain rub against the bottom plates of the
barge so as to create the hole. The High Court found no
other reasons because there is no suggestion that there was
any submerged tree or stone, and the hole was caused because
the barge accidentally struck against any such substance.
Since the creation of the hole could not be attributed,
according to the High Court to anything unforeseen, it was
due to the negligence of the railway employees.
The High Court further found that if the barge had been
towed to the Diara, it could not sink. The water near the
Diara must have been shallow so that the wagons upon the
barge could not be submerged in the water near it. On the
other hand, Rasul took the steamer and the barge to a much
longer distance and the passage must have taken a
considerable time. Besides, the water near the jetty was
undoubtedly deep and the wagons were also submerged.
The High Court on these findings correctly came to the
conclusion that the barge sank because of the serious
negligence of the railway employees and the railways did not
take the care which it was required to take as a bailee.
The High Court passed decrees awarding the respondents
price of sugar and costs of damages and interest pendente
lite and future interest.
The appellant contended that the contract price should
not have been awarded. The High Court said that the evidence
of plaintiff’s witness Gaya Prasad showed the selling rate
of sugar and there was no challenge to that evidence. The
High Court found that the goods were despatched on 4
September, 1955. The barge sank on 7th September, 1955, and,
therefore, the contract price would be the correct
619
measure of damages. The High Court on the facts and
circumstances of the case found that the contract price
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would also be the same as the market price at that time.
The market rate is a presumptive test because it is the
general intention of the law that, in giving damage for
breach of contract, the party complaining should, so far as
it can be done by money, be placed in the same position as
he would have been in if the contract had been performed.
The rule as to market price is intended to secure only an
indemnity to the purchaser. The market value is taken
because it is presumed to be the true value of the goods to
the purchaser. One of the principles for award of damages is
that as far as possible he who has proved a breach of a
bargain to supply what he has contracted to get is to be
placed as far as money can do it, in as good a situation as
if the contract had been performed. The fundamental basis
thus is compensation for the pecuniary loss which naturally
flows from the breach. Therefore, the principle is that as
far as possible the injured party should be placed in as
good a situation as if the contract had been performed. In
other words, it is to provide Compensation for pecuniary
loss which naturally flows from the breach. The High Court
correctly applied these principles and adopted the contract
price in the facts and circumstances of the case as the
correct basis for compensation.
For these reasons, the judgment of the High Court is
affirmed. The appeals are dismissed with one set of costs.
S.R. Appeals dismissed.
620