Union of India v. Indian & Overseas Trading Company

In the High Court of Allahabad 
AIR 1987 All 196
Union of India (Railway Administration)
Indian and Overseas Trading Company
Decided on: 
February 7th, 1986
Justice D. Bagpai

Facts of the case:

  • The plaintiff firm was a partnership firm carrying on business in Bristless with its Head Office at Kanpur.
  • In pursuance of an order received by them from N. Wagman & Company incorporated, a Philadelphia based company; they had to supply 44 cases of Indian Dressed Bristless. 
  • In pursuance of the said order the plaintiff entrusted the Railway Administration at Kanpur Central Goods Shed with 44 eases of Indian Dressed Bristless under the Railway Receipt No. 163326 on 30th January, 1968 for carriage to Wadibunder of Bombay. 
  • The said consignment was consigned to the Chartered Bank, which was the beneficiary of the plaintiff at Kanpur and the endorsed consignees were Messrs. D. Abraham & Sons Pvt. Ltd., Bombay, who were the shipping agents of the said plaintiff. 
  • In transit the wagon in which the consignment of 44 cases was in transit was pilfered and as the plaintiffs’ shipping agents, Messrs. D. Abraham & Sons (P) Ltd., Bombay, went to take the delivery, the consignment was short by six cases.
  • A shortage certificate in this regard dated 15th February 1968 was issued by Railway Administration. 
  • The plaintiff made a claim of Rs. 49139.64 under Section 78B of the Indian Railways Act on 10th February 1968.
  • On failure of the Railway Administration to settle the claim, he served upon them a legal notice. 
  • After failing to get any response, the plaintiff instituted a suit. 
  • The second plaintiff in the suit was a limited liability company who were the insurer of the consignment sent by the plaintiffs. 
  • Many pleas were raised to resist the claim were many and the learned trial Court framed as many as 13 issues. 
  • The Trial court found that the plaintiff was a registered firm and there was no bar of Section 69 of the Indian Partnership Act.
  • It was found that the six cases of consignment were lost due to negligence and misconduct of the Railway Administration and that was due to lack of reasonable care in carriage. 
  • The Court also held that the suit could be filed by the plaintiffs based on the fact that the ownership of the goods in the consignment did not pass to the consignee that is N. Wagman & Company. 
  • Aggrieved by the judgment and decree of the Court, the Union of India filed the present First Appeal in this Court.

Contentions raised:

The learned counsel for the appellants argued that the suit was not maintainable because the plaintiff was the seller and it could only be maintained by the buyer as the interest in the property had passed the moment the goods were entrusted with the Indian Railways for carriage. It was contended that since the domain of the property was of the buyer, the seller had no interest left to sue for damages.

The council also urged that the damages awarded by the lower Court were excessive. 

Therefore at one stage, the counsel contended that there was no negligence on the part of the Railways, but the point was hardly materially pursued.

Provisions in question

  • Section 23 of the Sale of Goods Act states

23(1) “Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (Whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.”

  • Section 39 of the said Act goes as below:

39(1). “Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer.

(2) Unless otherwise authorized by the buyer, the seller shall make such contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do and the goods are lost or damaged in course of transit or whilst in the custody of the wharfinger, the buyer may decline to treat the delivery to the carrier or wharfinger as a delivery to himself or may hold the seller responsible in damages.

(3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in circumstances, in which it is usual to insure, the seller shall give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails so to do, the goods shall be deemed to be at his risk during such sea transit.”


The Honorable Judge referred to Section 73 of the Indian Railways Act which states that the responsibility of the Railway Administration in cases of loss, destruction, damage, deterioration, or non-delivery, in transit of animals or goods delivered to the administration is absolute and even in the cases of the exception contained in the said Section the onus to establish that the Railway Administration has used reasonable foresight and care in the carriage of the animals or goods would lie on the party trying to claim the benefit from the said exception. 

In the case at hand, none of the exceptions applied and the learned Civil Judge was right to find that there was a lack of reasonable care on the part of the defendants and that the six cases of consignment were lost due to the negligence of the Railway Administration.

The most pervading question to be considered in the case was whether under the provisions of Sub-section (2) of Section 23 of the Sale of Goods Act stating that where goods are delivered to a carrier for transmission to a buyer, the carrier is presumed to be the buyer’s agent not only to take delivery but to assent to the appropriation to the contract of the goods so delivered would be applicable in the case in hand. The learned counsel for the appellant cited the decision of the Supreme Court in the case of Mahabir Commercial Co. Ltd. v. CIT West Bengal. However, the verdict was decided to be situational and the learned Judge referred to the case Union of India v. W.P. Factories where it was stated that:

“Ordinarily, it is the consignor who can sue if there is damage to the consignment, for the contract of carriage is between the consignor and the railway administration. Where the property in the goods carried has passed from the consignor to someone else that other person may be able to sue.” 

Their Lordships also held that till the goods were actually unloaded and handed over to the consignee delivery wouldn’t happen; even surrendering the Railway receipt would only constitute taking delivery and would not amount to real delivery by the Railway to the consignee. 

The Court was pleased to hold that the responsibility of the Railway could not be cut down by any rule. 

Coming to the question of the amount of the award, it was found that the plaintiff had tendered evidence to indicate that the sum of Rs. 49139.64 covering the price of the six cases of lost Bristless plus replacement charges before the Trial court, and the claim was never repudiated by the defendants. The partner of the plaintiff Sri Sudershan Kumar gave witness stating that the actual costs incurred by the plaintiff in replacing Bristless contained in the six lost cases were nearly the same as indicated in the plaint. The appellants, in this case, had not produced any oral or documentary evidence to controvert this testimony. 

The judgment and decree of the Trial court were therefore upheld, and in appeal decreeing the suit in favor of the plaintiff-respondent was confirmed. 

Edited by: Purnima Ojha


  • Commercial Co. Ltd. v. CIT West Bengal, AIR 1973 SC 430

Union of India v. W.P. Factories, AIR 1966 SC 395

Sayandeep Chakraborty
Sayandeep is a student at KIIT School of Law, Bhubaneswar pursuing his BA LLB (Hons.) in the subject. He is an avid writer, public speaker, and debater who takes a keen interest in research and drafting. He has had his research pieces published in academic blogs and sites and does freelance content writing work for tech and academic firms.