Union of India v. P K Parameswaran Pillai — 1985 DIGILAW 337 (KER)

JUDGMENT P.C. Balakrishna Menon, J. 1. The defendant, the Union of India represented by the General Manager,Southern Railway, appeals against the decree for damages passed by thelower court. The plaintiff had on 10-7-1975 booked 166 bags of Nepal rice atthe Jogibani Railway Station of the North Frontier Railway for consignment tothe Trivandrum Central Railway Station. The consignment is covered byinvoice No. 6. He had on the same day booked other consignments of Nepalrice as per invoices Nos. 1 to 5 and 7 to 9 in the same railway station forconsignment to Trivandrum. All the consignments except the one covered byinvoice No.6 were delivered at the Trivandrum Central Railway Stationbetween the dates 18-8-1975 and 3-9-1975. There was considerable delay inthe delivery of goods covered by invoice No. 6. The plaintiff issued a noticeExt. A2 dated 13-10-1975 to the Chief Commercial Superintendent,Thiruchirapalli informing him that the consignment of rice covered by invoiceNo. 6 had not been delivered at the destination, that there is steep decline inthe price of Nepal rice in the market and the loss that the plaintiff is likely tosuffer will have to be borne by the Railway administration. There was no replyto Ext. A2. The plaintiff thereafter sent a telegram Ext. A4 to the ChiefCommercial Superintendent on 20-10-1975 informing him that the railwayadministration will be responsible for the loss that the plaintiff may have toincur for non delivery or delayed delivery of the goods covered by invoiceNo.6. He issued a reminder Ext. A3 dated 6-11-1975 claiming damages tocover the cost of the rice as per the purchase bill Ext. A8, interest at 18 percent, bank commission and the loss of profit estimated at Rs. 4150/-. Therewas also no reply to Ext.A3. Thereafter on 18-11-1975 the plaintiff got deliveryof 163 bags of the rice covered by invoice No. 6. There was shortage of 3bags when the consignment reached the destination. The plaintiff filed the suitfor recovery of damages based on the fall in price of Nepal rice between23-8-1975 and 18-11-1975. He has also claimed interest on the amountcovered by Ext. A8 bill from 23-8-1975 to 18-11-1975. Since the consignmentscovered by invoices Nos. 1 to 5 and 7 to 9 were delivered at the destinationduring the period between 18-8-1975 and 3-9-1975, the plaintiff has taken23-8-1975 as the reasonable time within which the goods should have beendelivered. The price of Nepal rice in the Trivandrum market on that date wasRs. A8 bill from 23-8-1975 to 18-11-1975. Since the consignmentscovered by invoices Nos. 1 to 5 and 7 to 9 were delivered at the destinationduring the period between 18-8-1975 and 3-9-1975, the plaintiff has taken23-8-1975 as the reasonable time within which the goods should have beendelivered. The price of Nepal rice in the Trivandrum market on that date wasRs. 378-57 per quintal, the price on 18-11-1975 was only Rs. 315/- and thedifference due to the fall in price is claimed as damages. The plaintiff has notmade a separate claim in this suit for short delivery of three bags of rice. 2. The suit was resisted by the defendant Railway Administration raising thecontention that there is no time specified for the delivery of goods booked atJogbani Railway Station; the damages claimed fall within the scope ofclause.(d) of the Indian Railways Act and it cannot be decreed for the reasonof its remoteness and also for the reason that the loss of a particular marketcannot be the basis to sustain a claim for damages. They also resist theplaintiff's claim for interest on the amount covered by Ext. A8 bill. 3. The court below found that the plaintiff is entitled to damages for thedeterioration in value of the goods in the market for the reason of the delay indelivery at its destination. It was however found that the plaintiff is not entitledto interest on the price of the goods paid in addition to the damages referred toabove. The suit was accordingly decreed for recovery of Rs. 10,569-22. It isagainst this decree that the defendant has come up in appeal. 4. There is no dispute that there was delay in the delivery of the goods. Thegoods booked as per invoices Nos. 1 to 5 and 7 to 9 on 10-7-1975 at theJogbani Railway Station were delivered at the Trivandrum Central RailwayStation on the dates between 18-8-1975 and 3-9-1975. The goods booked onthe same day as per invoice No. 6 were delivered at the Trivandrum RailwayStation only on 18-11-1975. The price of Nepal rice in the Trivandrum marketon 23-8-1975 was Rs. 378-57 per quintal. The price came down to Rs. 315/-per quintal on 18-11-1975, the date on which the goods were delivered. Theclaim for damages is based on the fall in price of Nepal rice in the Trivandrummarket between these two dates. Exts. The price of Nepal rice in the Trivandrum marketon 23-8-1975 was Rs. 378-57 per quintal. The price came down to Rs. 315/-per quintal on 18-11-1975, the date on which the goods were delivered. Theclaim for damages is based on the fall in price of Nepal rice in the Trivandrummarket between these two dates. Exts. A13 to A16 counter foil bill booksproduced by the plaintiff show the price of Nepal rice in the Trivandrum marketduring the period 23-8-1975 to 18-12-1975. The price on 23-8-1975 was Rs.378/57 per quintal. It came down to Rs. 311/- on 9-12-1975 and there was afurther fall in price to Rs. 302/- per quintal on 12-12-1975 and subsequentdates. Ext. A12 day book produced by the plaintiff shows the price at which the163 bags of Nepal rice delivered to the plaintiff at Trivandrum on 18-11-1975were sold. Fifteen bags of rice were sold at Rs. 311-75 per quintal on9-12-1975 and the remaining bags were sold at Rs. 302/- per quintal on12-12-1975 and subsequent dates. P.W.1 examined on behalf of the plaintifffirm has proved Exts, A13 to A16 and the different entries in Ext. A12 daybook. The court below was perfectly right in accepting the plaintiff's case thathe had suffered loss of Rs. 10, 569-22 for the reason of the fall in price of ricein the Trivandrum market between the dates 23-8-1975 and 18-11-1975. Thegoods booked at Jogbani Railway Station on 10-7-1975 had been deliveredbetween the dates 18-8-1975 and 3-9-1975. The court below was also right inaccepting the plaintiff's case that the reasonable time for delivery of the goodsinvolved in the case was on or before 23-8-1975. Counsel for the appellantsubmits that the plaintiff is not entitled to claim damages for delayed deliveryon the basis of the fall in price in the market. Counsel relies on clause.(d) ofS.78 of the Indian Railways Act as per which the Railway Administration shallnot be responsible "for any indirect or consequential damages or for loss ofparticular market". The Supreme Court in the decision in Union of India v. TheSteel Stock Holders Syndicate, Poona ( AIR 1976 SC 879 ) has held that theliability of the Railway Administration as per S.73 of the Indian Railways Act asamended by Act 39 of 1961 is that of an insurer. The Supreme Court in the decision in Union of India v. TheSteel Stock Holders Syndicate, Poona ( AIR 1976 SC 879 ) has held that theliability of the Railway Administration as per S.73 of the Indian Railways Act asamended by Act 39 of 1961 is that of an insurer. It is stated at page 884: "Weare of the opinion that S.73 of the new Act, while converting the liability of therailway administration from that of a carrier to that of an insurer, has imposedheavier responsibility on the railway administration". It is further stated at page885: "It is well settled that the liability of an ordinary carrier even in the Englishcommon law does not extend to a damage which is in direct or remote. Loss ofprofit or loss of a particular market has been held by a number of decisions tobe a remote damage and can be awarded only if it is proved that the partywhich is guilty of committing the breach was aware or had knowledge thatsuch a loss would be caused. S.78(d), however, seeks to bar the remedy ofthis kind of damage." In the case before the Supreme Court there was no claim for damages basedon the fall in price of the goods in the market. The claim for damages was onlyfor interest on the value of goods for the period of delay due to the negligenceof the railway administration in delivering the goods to the plaintiff. The fall in price of goods due to delayed delivery does not fall under clause.(d) of S.78.It is a direct damage for which the railway administration is liable under S.73 of the Indian Railways Act. This position seems to be clear from the decision ofUntwalia J. in the Union of India v, Madan Lal (AIR 1968 Patna 94) Thelearned Judge has held that the bar of a claim for damages "for loss ofparticular market" in clause.(d) of S.78 of the Indian Railways Act does notrelate to a claim for damages on the ground of fall in market price. If the plaintiff had got delivery of the goods consigned in due time, he would havesucceeded in selling them at a higher price; in other words, the goods were more valuable at the time when they ought to have been delivered, but deteriorated in value due to fall in market price on the date on which the goods were actually delivered. The learned Judge accordingly held: "That being so, I think an owner of the goods is entitled to claim damages fromthe Railway Administration for late delivery based upon the deterioration intheir value due to the fall in market price. Ordinarily, it will be difficult tovisualise cases where, on account of late delivery an owner of goods will beentitled to claim damages on any other basis." Chitty on Contracts, 24th edn. states at volume 1 page 745 Para.1579: "Acarrier who fails to deliver goods within the agreed time may also cause loss ofbusiness profits to the consignee. The normal measure of damages is thedifference between the market value of the goods on the due date of arrivaland their market value on the actual date of delivery." The same view is expressed by Mc Gregor on Damages, 14th edn. at page 612 Para.892 and 893: "892. The normal measure of damages is the market value of the goods at theplace of delivery at the time they should have been delivered less their marketvalue there at the time they were in fact delivered...........................893. (a) Carriage by land. Where the carriage of the goods is by land and themarket price has fallen during the period of delay, the normal measure ofdamages applies and damages are given for the fall in the marketprice..............." The basis of the claim for damages in such cases is not the loss of profit or theloss of a particular market, such as a seasonal market, but the deterioration in value of the goods due to the delay in reaching the destination. We are of the view that the plaintiff is entitled to damages based on the fall inmarket price between the due date of arrival and the actual date of delivery. The appeal fails and is dismissed with costs. Appeal dismissed.