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Andhra Pradesh High Court
Judges : A.R.LAKSHAMANAN, C.KONDAIAH
Central Warehousing Corporation - Appellant
Versus
Central Bank of India Ltd. - Respondent
Decided On : 02-16-72
WAREHOUSE RECEIPT - CAUSE OF ACTION - LIMITATION - NOTICE OF LOSS OR DAMAGE - FRAUD - NECESSARY PARTY - SCOPE OF AUTHORITY: 1. Cause of Action: The transferee of warehouse receipts can recover the value of the goods covered by the receipts from the warehouseman. 2. Limitation: The period of limitation for a suit to recover movable property deposited or pawned is three years from the date of refusal after demand under Article 70 of the Limitation Act, 1963. 3. Notice of Loss or Damage: The notice of loss or damage to goods stored in a warehouse required under Rule 16 of the Hyderabad Area Warehouses Rules, 1959 is directory and not mandatory. Failure to send a copy of the notice to the prescribed authority does not invalidate the claim against the warehouseman. 4. Fraud: The plea of fraud in obtaining warehouse receipts must be specifically pleaded and supported by evidence. 5. Necessary Party: An employee of the warehouseman who issued the warehouse receipts is not a necessary or proper party to a suit against the warehouseman for the value of the goods covered by the receipts. 6. Scope of Authority: The warehouseman is estopped from contending that he is not liable for the acts of commission or omission of his employee in issuing warehouse receipts within the scope of his authority.
Fact of the Case:
The plaintiff bank filed a suit against the warehouseman (defendant 2) to recover the value of goods covered by two warehouse receipts issued by the warehouseman to the depositor (defendant 1). The depositor had endorsed the receipts in favor of the plaintiff bank. The warehouseman resisted the suit, contending that there was no cause of action against it, the suit was barred by limitation, the suit was not maintainable for failure to comply with the provisions of Rule 16 of the Hyderabad Area Warehouses Rules 1959, there was fraud committed by the depositor on the warehouseman, and that the warehouseman's employee who issued the receipts was a necessary party to the suit.
Finding of the Court:
The court held that: 1. There was a cause of action against the warehouseman for the suit as framed by the plaintiff bank. 2. The suit was not barred by limitation. 3. The suit was maintainable and was not liable to be dismissed on the ground that Rule 16 of the Hyderabad Area Warehouses Rules, 1959 had not been complied with. 4. There was no fraud committed by the depositor on the warehouseman in obtaining the warehouse receipts. 5. The warehouseman's employee who issued the receipts was not a necessary or proper party to the suit.
Issues: 1. Whether there was cause of action against the warehouseman for the suit as framed by the plaintiff bank? 2. Whether the suit was barred by limitation? 3. Whether the suit is maintainable or is liable to be dismissed on the ground that Rule 16 of the Hyderabad Area Warehouses Rules, 19 has not been complied with? 4. Whether the suit is liable to be dismissed on the ground that fraud had been committed by the depositor on the then Warehouoseman in obtaining Exs. A. 53 and A. 54 without actually depositing the goods as specified therein? 5. Whether T. Rajagopalan is a necessary or proper party to the suit?
Ratio Decidendi: 1. The transferee of warehouse receipts can recover the value of the goods covered by the receipts from the warehouseman. 2. The period of limitation for a suit to recover movable property deposited or pawned is three years from the date of refusal after demand under Article 70 of the Limitation Act, 1963. 3. The notice of loss or damage to goods stored in a warehouse required under Rule 16 of the Hyderabad Area Warehouses Rules, 1959 is directory and not mandatory. Failure to send a copy of the notice to the prescribed authority does not invalidate the claim against the warehouseman. 4. The plea of fraud in obtaining warehouse receipts must be specifically pleaded and supported by evidence. 5. An employee of the warehouseman who issued the warehouse receipts is not a necessary or proper party to a suit against the warehouseman for the value of the goods covered by the receipts. 6. The warehouseman is estopped from contending that he is not liable for the acts of commission or omission of his employee in issuing warehouse receipts within the scope of his authority.
Final Decision: The appeal filed by the warehouseman was dismissed with costs.
( 1 ) THIS appeal by the Central Warehousing Corporation, the 2nd defendant, is directed against the judgment and decree, passed against it and in favour of the Central Bank of India in O. S. No. 14 of 1966 by the Chief Judge. City Civil Court, Hyderabad at Secundrabad for the recovery of a sum, of Rs. 54,311-13 p. with interest at 6 % from 1-7-1966.
( 2 ) THE Central Bank of India Ltd. , the 1st respondent herein, claimed the suit amount against the 1st defendant. Gali Krishnamurthi who borrowed certain sums of money on cash Credit Kev Loan Account. The 1st defendant has edorsed several warehouse receipts including Exs. A. 53 and A. 54 obtained by him from the appellant. The claim of the plaintiff against the 1st defendant is in respect of the sums borrowed by him from the bank and in so far as the 2nd defendant is concerned, the plaintiffs claim is based on the receipts Exs. A. 53 and A, 54 given by the Warehouseman to the 1st defendant. The right to claim the value of the goods covered by Exs. A. 53 and A. 54 has accrued to the plaintiff on account of the endorsements made by the depositor, the 1st defendant in its favour. The 1st defendant was ex parte in the trial court. The suit was resisted by the appellant contending inter alia that it was not maintainable for failure to issue the statutory notice, that there was no cause of action against it and that the suit was barred by limitation. The plaintiff examined its Chief Agent as P. W. I and P. Ws. 2, 3 and 4 and filed exs. A. 1 to 55 in support of its case. The 2nd defendant examined D. Ws. 1 to 4 and filed Exs. B. 1 to B. 9 to substantiate its defence. The trial court framed as many as about 9 issues. On a consideration of the entire material on record , it found in favour of the plaintiff on all the material issue and decreed the suit as prayed for. Hence, this appeal.
( 3 ) SRI Ramachandra Rao and Sri J. K. Hiranandani, the learned counsel for the appellant, passed upon us that there was no cause of action against the appellant that the suit was barred by limitation at least in so far as the claim on the basis of Ex. A. 54 is concerned, that the suit is not maintainable as it failed to comply with the provisions of Rule 16 of the Hyderabad area Warehouses Rules 1959, that there was fraud committed by the 1st defendant on T. Rajagopalan, then Warehouoseman at Hyderabad. That T. Rajagopalan is a necessary party and that suit, in any event, should be dismissed. This claim of the appellant has been resisted by Mr. Vaidyanathan, the learned counsel for the plaintiff-decree holder contending inter alia that there is no merit in any of the contentions raised by the appellant and the Court below has rightly decreed the suit against the defendants 1 and 2.
( 4 ) ON the facts and in the circumstances and upon the respective contentions of the parties, the following questions arise for determination:1. Whether there was cause of action against the 2nd defendant for the suit as framed by the respondent-plaintiff ? 2. Whether the suit was barred by limitation ? 3. Whether the suit is maintainable or is liable to be dismissed on the ground that Rule 16 of the Hyderabad Are Warehouses Rules, 19 has not been complied with ? 4. Whether the suit is liable to be dismissed on the ground that fraud had been committed by the 1st defendant on the then Warehouoseman in obtaining Exs. A. 53 and A. 54 without actually depositing the goods as specified therein ? 5. Whether T. Rajagopalan is a necessary or proper party to the suit ?
( 5 ) WE shall take up the questions seriatim.
( 6 ) THE contention of Mr. Hiranandini pertaining to cause of action against his client is three-fold: (I) that no cause of action had accrued to the plaintiff to sue the 2nd defendant for the recovery of the amount due and payable to it by the 1st defendant on account. (ii) that the plea as evident from paragraph 10 of the plaint is defective and therefore, the suit in so far as the 2nd defendant is concern
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