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1916 Supreme(SC) 36
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKINSON, LORD PARKER OF WADDINGTON, SIR JOHN EDGE, AND MR. AMEER ALI.
RAMDAS VITHALDAS DURBAR - Appellant
Versus
S. AMERCHAND & CO. - Respondents
On Appeal from the High Court at Bombay.
Decided On : June. 22. 1916.
Solicitors for appellants :Hughes & Sons. Solicitors for respondents: T. L. Wilson & Co.
A railway receipt is an "instrument of title" under Section 103 of the Indian Contract Act if used in the ordinary course of business to prove possession or control of goods. Thus, an unpaid seller cannot stop goods in transit pledged to a bona fide pledgee without paying the advance.
Headnote:(A) Indian Contract Act, 1872 - Sections 102 and 103 - Transfer of Property Act, 1882 - Section 137 - Right of stoppage in transit - Instrument of title - Railway receipts - Whether a railway receipt constitutes an "instrument of title" under Section 103 of the Indian Contract Act - The test to determine if a document is a "document showing title" or "document of title" is whether it is used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by indorsement or delivery, the possessor of the document to transfer or receive the goods thereby represented - No significant distinction exists between the expressions "document showing title," "document of title," and "instrument of title" for the purposes of the Act - Where a bill of lading or other instrument of title is assigned by the buyer by way of pledge to secure an advance made specifically upon it in good faith, the seller cannot stop the goods in transit except on payment or tender to the pledgee of the advance so made.
(B) Interpretation of Statutes - Amending and Consolidating Acts - The Indian Contract Act is both an amending and consolidating Act - The legislature is not precluded from introducing legal reforms that differ from the English law existing at the time of the Act's enactment.
Facts of the case:
An unpaid seller of goods sent consignments via rail and sea. The buyer, having received the railway receipts, indorsed and delivered them to a third party as security for a monetary advance (pledge). The unpaid seller subsequently telegraphed the carrier to stop the goods in transit due to the buyer's indebtedness. The third party claimed the goods based on the pledged receipts.
Findings of Court:
The railway receipts in question were found to be used in the ordinary course of business as proof of possession or control of goods, thereby satisfying the test for being documents of title.
Issues: Whether a railway receipt issued to a consignor is an "instrument of title" within the meaning of Section 103 of the Indian Contract Act, and whether such a classification prevents an unpaid seller from stopping goods in transit without paying the bona fide pledgee.
Ratio Decidendi: The court held that the terms "document showing title," "document of title," and "instrument of title" are used interchangeably by the legislature. The determining factor is whether the document is used in the ordinary course of business to prove possession or control of goods or to authorize their transfer. Since railway receipts meet this criterion, they are "instruments of title" under Section 103. Consequently, the right of stoppage in transit is displaced in favor of a bona fide pledgee for value, unless the advance is paid or tendered to the pledgee.
Result: Appeals dismissed.
Consolidated Appeals from a judgment and decrees of the High Court (March 31, 1913) reversing judgments of Macleod J. and Beaman J. respectively.
The appellants were a firm of commission agents carrying on business at Bagalkote in the Bijapur district. In April, 1911, they were instructed by Chhaganlal Kalidas, who traded in cotton at Bombay, to purchase certain cotton at Bagalkote on his account, and after ginning and pressing it to deliver it to him at Bombay. The appellants were to be paid in account the purchase price together with a commission and their charges for ginning and pressing.
Law. Rep. 43 Ind. App. 164 ( 1915- 1916) Ramdas Vithaldas Durbar V. S. Amerchand & Co.
61
In July, 1911, the appellants handed to the Madras and Southern Maratha Railway Company at Bagalkote consignments of the cotton for delivery in Bombay to Chhaganlal Kalidas. The cotton was to be carried by rail to Marmagoa, and by sea by the Bombay Steam Navigation Company from Marmagoa to Bombay. In respect of each consignment the railway company issued to the appellants a receipt covering the whole transit to Bombay and in the following form —
" Receipt.
" From Bagalkote to Bombay. H. R. on B. S. N. Railway via M. R. H.
" Senders name Ramdas Vithaldas. To whom consigned Chhaganlal Kalidas."
Then followed a tabular statement of the goods, below which it was stated "These goods are accepted for conveyance subject to the conditions printed on the back herein."
Condition 3 was " That the railway receipt given by the railway company for the articles delivered for conveyance must be given up at destination by the consignee to the railway company or the railway company may refuse to deliver, and the signature of the consignee or his agent in the delivery book at the destination shall be complete evidence of delivery. If the consignee does not himself attend to take delivery he must indorse on the receipt a request for delivery to the person to whom he wishes it to be made, and if the receipt is not produced the delivery of the goods may, at the discretion of the railway company, be withheld until the person entitled in its opinion to receive them has given an indemnity to the satisfaction of the railway company."
The railway receipts were forwarded by the appellants to Chhaganlal Kalidas, who, on dates before August 5, 1911, indorsed and delivered two of them, covering 135 bales, to the respondents in the first appeal to secure an advance of Rs. 15,000, and indorsed and delivered one, covering 73 bales, to the respondents in the second appeal to secure an advance of Rs.8800. The indorsements consisted of the signature of the consignee and the words "please deliver the goods mentioned in this receipt to " the respective respondents by name.
On August 5, 1911, the appellants, in consequence of hundis drawn in their favour by Chhaganlal Kalidas in respect of his indebtedness to them not being met, telegraphed to the Bombay Steam Navigation Company, in whose possession the 135 and 73 bales still were, not to deliver them to the consignees, but to deliver to a named agent of the appellants. The respondents also claimed the bales in question from the Navigation Company, who instituted the present suits under Order xxxv. of the Civil Procedure Code, 1908, against the appellants, the respondents, and the consignees praying that the defendants might be ordered to interplead concerning their respective claims.
The first suit was tried by Macleod J. He held that the appellants had the rights of unpaid sellers to stop the goods in transit; he further held that the receipts were not " instruments of title " within the meaning of s. 103 of the Indian Contract Act, 1872, and that the appellants were consequently not bound to pay or tender to the respondents the amount advanced. The case was subsequently remanded to the learned judge for the trial of certain issues which he had not determined, and further evidence was adduced. In his judgment on remand the learn
