The main legal point established in the judgment is that a transferee of a bill of lading acquires only such rights as the transferor had, and a bill of lading is not a negotiable instrument as defined in the Negotiable Instruments Act, 1881.

1. One Mathew without delivery of goods for shipment obtained from D. W. 2 four bills of lading. He endorsed two of them to the appellant-Bank in A. S. No. 192 of 1971 for a consideration of Rs. 60,000/-, and the remaining two, to the appellant-Bank in the connected appeal for a consideration of Rs. 40,000/-. The banks advanced the amounts in good faith and unaware of non-delivery of goods to the carrier by their customer, the pretended shipper D. W. 2 who signed the bills of lading, at the material time was the office manager of a Company doing business as agent of a shipping company. The question for consideration is as to whether the shipping company and the agent-company are liable on the tour bills of lading, either for the price of the goods as prayed for in A. S.192 of 1971 or for the amount advanced by the bank as sought for in the other case; are the companies estopped from proving the falsity of the bills of lading, as contended on behalf of the Banks.

2. The points of law that arise for examination are:-(1) What rights, if any, a pretended consignor, has on a false bill of lading; (2) Does the transferee of a false bill of lading acquire any greater right than the pretended shipper had.

3. A bill of lading is: (i) a receipt for goods entrusted for carriage by sea; (ii) evidence of the contract to carry them; and (iii) title deed for those goods. Ellerman and Bucknall Steamship Co. v. S M Bherajee (AIR. 1966 S. C.1892 at 1896: 1967 (1) M. L. J 81). As receipt it contains an admission of having received the goods mentioned therein. This admission, as any other admission, is not conclusive proof of the matter admitted, that is, of having received the goods, and can be proved to be erroneous, of course, subject to rules of estoppel. The pretended shipper knows that be has not delivered the goods and cannot, therefore, seek refuge under the doctrine of estoppel. In other words, as against the pretended shipper it can be proved that the admission contained in a bill of lading is false and erroneous, and that he did not in fact deliver goods. Once it is proved that goods were not entrusted by the shipper for carriage by sea, a bill of lading cannot also serve the purpose of evidence of the contract of carriage or of title deed.

4. Normally, a transferee acquires only such rights as the transferor has. Is the transferee of a bill of lading an exception to the above rule, is the next point for consideration. It should be borne in mind that the provisions of the Negotiable Instruments Act, 1881 are not attracted to a bill of lading since it is not a negotiable instrument as defined in S.13 of that Act.

5. S.1 of the Bills of Lading Act, 1856 which for the first time enabled an endorsee who is a stranger to the contract evidenced by the bill of lading and was therefore precluded by Law of Contracts from suing thereon, to sue on it, makes it clear that a consignee's or endorsee's right of suit on a bill of lading is 'subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself. In other words a consignee or an endorsee gets only such rights as his consignor or endorser had in respect of the goods mentioned in the bill of lading. The endorsee, even if he be a bonafide transferee for value, under this provision takes the bill of lading only subject to any defects in the title of his transferor. This means that the essential feature of a Negotiable Instrument, namely, that such a transferee obtains a title free from equities is lacking so far as a bill of lading is concerned. No doubt, even prior to the Act Law Merchant recognised its negotiability, that is to say, that property in the goods in respect of which it was treated as the title deed was capable of being transferred by endorsement and delivery thereof, but this is only one of the features of a Negotiable Instrument. Discussing the corresponding provision in the English Bills of Lading Act,