# KUCHW AR LIME AND STONE CO v. M/S. DEHRI ROHTAS LIGHT RAILWAY CO. LTD. & ANR

- **Citation:** [1969] 1 S.C.R. 359
- **Court:** Supreme Court of India
- **Decided:** 1968-07-15
- **Bench:** J. C. Shah, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kuchw-ar-lime-and-stone-co-v-m-s-dehri-rohtas-light-railway-co-ltd-anr-4413
- **Pages:** 7

## Headnote

Railway freight and demurrage-consignment booked 'freight to pay'-
Whether consignee liable to pay after refusing to accept consignment.-
Railway not unloading consignment for seven months-if entitled to demurrage for full period or obliged to unload and claim demurrage on(y
for reasonable period.
A quantity of coal was booked by a Colliery to the appellant Company
carriage to Banjari station on the respondent Railway's line and the ·freight
on the consignment was to be paid by the appellant Company. The Company declined to take delivery of a part of the consignment which reached
Banjari on November 12, 1954. After some correspondence between the
parties as well as with the Coal Controller, the Railway sold the coal on
June 2, 1955, after serving a notice on the appellant. It thereafter filed
a suit against the Company claiming demurrage for 202 days during which
six wagons in which the coal was loaded were detained and
sought a
decree for Rs. 17,625114/- after giving eredit for the amount realised
from the sale of the coal. The trial court granted a decree for about
Rs. 1,620/- with interest, but in appeal the High Court decreed the
~μway's claim in full.
In the appeal to this Court by certificate, it was contended on behalf
of the appellant (i) that the Company being a consignee of the goods
booked by the Colliery there was no privily of contract between the Company and the Railway and no claim for demurrage or freight lay at the
instance of the Railway against the Company; and (ii) that in any event
the Railway ought to be awarded demurrage for only 22 days out of the
total period for which the wagons were detained.
HELD : (i) At the material time the sale and delivery of coal were
controlled under the Colliery Control Order 1945; the supply of the coal
in the present case was sanctioned by the Deputy Coal Commissioner to
be made to the appellant Company and an order was also made by him
in favour of the Company for priority supply of wagons to carry the
coal to Banjari.
In these circumstances it would be reasonable to infer
that the Colliery acted as an agent for the Company in entering into the
contract of consignment and the liability for payment of freight and of
dcmurrage charges for failure to take delivery of the goods lay upon the
Company. [361 E-F, 363 D-E]
There was no force in the contention that it is only in those
cases
where delivery of goods is taken by the consignee that the liability to pay
demurrage may be imposed upon him.
Even where the consignee does
not ultimately take delivery, if the wagon is detained for his benefit, normally the Railway would be entitled to hold him liable for demurrage.
[363 G]
(ii) The High Court was in error in holding that the Company was
liable to pay denmrrage for the full period of 202 days.
As the wagons
containing the coal reached Banjari on November 12, 1954 and before
that date and thereafter the Company had declined to take delivery of
360
SUPREME COURT REPORTS
[ 1969] J S.C.R.
1hc coal, !he Railway could have exercised its power to sell the coal under
s. 56 of t.he Railways Act. The Railway was in the position of a bailee
qua the (,ornpany ;ind \\·as bound to n1inimisc the h..1s~ : it could not un_rc;1;;?nahly detain t~c \\·agons and claim dcm11rragc.
Even a.'>sun1ing that
in view of !he Colliery Control Order, the Railway could not sell the coal
\\'1ihout the Coal Commissioner's sanction, it could have unloaded the
coal from the \Vagons and put the \Vagons to use.
After the wagons were
unloaded !he consignee could be liable only for wharfagc. (.163 H-364 CJ
On !be facts in the present case the respondent Railway was entitled
tu <lcmurragc for the detention of \\'agons for only one month.
Clv1L APPELLATE JURISDICTION : Civil Appeals Nos.
987
and 988 of 1965.
A
B
-
Appeals from the judgment and decree dated July 25, 1962
of the Patna High Court in Appcal1 from Original Decree Nos.
C
210 and 230 of 1968.
S. V. Guptc, and P. K. Chatterjee, for the appellant (in both
the

## Text

A
B
c
D
E
F
G
H
359
KUCHW AR LIME AND STONE CO.
v.
M/S. DEHRI ROHTAS LIGHT RAILWAY CO. LTD. & ANR.
July 15, 1968
[J. C. SHAH AND V. BHARGAVA, JJ.]
Railway freight and demurrage-consignment booked 'freight to pay'-
Whether consignee liable to pay after refusing to accept consignment.-
Railway not unloading consignment for seven months-if entitled to demurrage for full period or obliged to unload and claim demurrage on(y
for reasonable period.
A quantity of coal was booked by a Colliery to the appellant Company
carriage to Banjari station on the respondent Railway's line and the ·freight
on the consignment was to be paid by the appellant Company. The Company declined to take delivery of a part of the consignment which reached
Banjari on November 12, 1954. After some correspondence between the
parties as well as with the Coal Controller, the Railway sold the coal on
June 2, 1955, after serving a notice on the appellant. It thereafter filed
a suit against the Company claiming demurrage for 202 days during which
six wagons in which the coal was loaded were detained and
sought a
decree for Rs. 17,625114/- after giving eredit for the amount realised
from the sale of the coal. The trial court granted a decree for about
Rs. 1,620/- with interest, but in appeal the High Court decreed the
~μway's claim in full.
In the appeal to this Court by certificate, it was contended on behalf
of the appellant (i) that the Company being a consignee of the goods
booked by the Colliery there was no privily of contract between the Company and the Railway and no claim for demurrage or freight lay at the
instance of the Railway against the Company; and (ii) that in any event
the Railway ought to be awarded demurrage for only 22 days out of the
total period for which the wagons were detained.
HELD : (i) At the material time the sale and delivery of coal were
controlled under the Colliery Control Order 1945; the supply of the coal
in the present case was sanctioned by the Deputy Coal Commissioner to
be made to the appellant Company and an order was also made by him
in favour of the Company for priority supply of wagons to carry the
coal to Banjari.
In these circumstances it would be reasonable to infer
that the Colliery acted as an agent for the Company in entering into the
contract of consignment and the liability for payment of freight and of
dcmurrage charges for failure to take delivery of the goods lay upon the
Company. [361 E-F, 363 D-E]
There was no force in the contention that it is only in those
cases
where delivery of goods is taken by the consignee that the liability to pay
demurrage may be imposed upon him.
Even where the consignee does
not ultimately take delivery, if the wagon is detained for his benefit, normally the Railway would be entitled to hold him liable for demurrage.
[363 G]
(ii) The High Court was in error in holding that the Company was
liable to pay denmrrage for the full period of 202 days.
As the wagons
containing the coal reached Banjari on November 12, 1954 and before
that date and thereafter the Company had declined to take delivery of
360
SUPREME COURT REPORTS
[ 1969] J S.C.R.
1hc coal, !he Railway could have exercised its power to sell the coal under
s. 56 of t.he Railways Act. The Railway was in the position of a bailee
qua the (,ornpany ;ind \\·as bound to n1inimisc the h..1s~ : it could not un_rc;1;;?nahly detain t~c \\·agons and claim dcm11rragc.
Even a.'>sun1ing that
in view of !he Colliery Control Order, the Railway could not sell the coal
\\'1ihout the Coal Commissioner's sanction, it could have unloaded the
coal from the \Vagons and put the \Vagons to use.
After the wagons were
unloaded !he consignee could be liable only for wharfagc. (.163 H-364 CJ
On !be facts in the present case the respondent Railway was entitled
tu <lcmurragc for the detention of \\'agons for only one month.
Clv1L APPELLATE JURISDICTION : Civil Appeals Nos.
987
and 988 of 1965.
A
B
-
Appeals from the judgment and decree dated July 25, 1962
of the Patna High Court in Appcal1 from Original Decree Nos.
C
210 and 230 of 1968.
S. V. Guptc, and P. K. Chatterjee, for the appellant (in both
the appeals).
R. Gopa/akrishnan, for respondent No.
I
(in both the
appeals).
D
K. K. Sinha, for respondent No. 2 (in both the appeals).
The Judg1nent of the Court was delivered by
Shah, J.
The East Keshalpur Colliery-hereinafter called
'the Co!liery'--bookcd, in the months of July-August 1954, a
consignment of steam coal at the Kusunda railway station on the
Eastern Railway for carriage by rail to the Banjari station on the
Dehri Rohtas Light Railway.
The coal was consigned to the
Kuchwar Lime & Stone Company-hereinafter called 'the Company'-and the company was to pay the freight.
Oui of the five
wagons in which the coal was loaded three reached Banjari and
E
coal was delivered to the Company, and no dispute arises with
regard to those three wagons in these appeals.
The contents of F
the remaining two wagons weighing 60 tons were reloaded enroute into six smaller wagons of the Dehri Rohtas Light Railway
hereinafter called 'the Railway'.
The consignment reached Banjari railway station on November 12, 1954. The Company declined to accept 1he consignment. There was thcreaf1er correspondence between the Railway Administration, 1he Coal Controller,
the Colliery and the Company. Ultimately the Railway Administration served a notice on April 28, 1955, on the Company and
the Colliery that they intended to ~~u the coal of which delivery
was not taken, and on June 2, 1955, the coal was
sold
for
Rs. l .050.
Claimin.g that it was entitled to demurrage for 202
days during which its wa~ons were detained at the rate of Rs. 90
per day, the Railway filed an action against the Colliery and the
Company in the Court of the Subordinate Judge, Sasaram, for a
decree for Rs. 17,625/14 being the charges for demurrage and
G
II
A
B
~-
c
j
D
E
F
G
H
KllCHWAR LIMB v. M/S. DBHRI ROHTAS (Shah, J.)
361
freight payable in respect of the consignment less Rs.
1,050
realised from sale of the coal. The suit was decreed by the
Subordinate Jildge agamst the Company for Rs. 1,620/10 with
interest thereon at the rate of 6% per annum from December 1_9,
1957 till realization and proportionate costs.
The suit was dismissed against the Colliery.
Against the decr.ee, the Company and the Railway appealed
to the High Court of Patna. The High Court modified the d~cree
passed by the Trial Court and decreed the claim of the Railway
against the Company in full.
With certificate granted by the
High Court under Art. 13 3 (1 )( c) of the Constitution these two
appeals have been preferred by the Company which have been
consolidated for trial.
Two contentions are raised in support of these appeals.
( 1) that the Company being a consignee of the
goods booked by the Colliery there was no privily of
contract between the Company and the Railway and no
claim for demurrage or freight lay at the instance of the
Railway against the Company; and
(2) that in any event the Railway ought to be
awarded demurrage for only 22 days out of the total
period for which the wagons were detained.
At the material time coal was a controlled commodity :
supply and delivery of coal could be made only under orders
issued by the Coal Controller. · Sale and delivery of coal, were
governed by the Colliery Control Order, 1945 issued under Rule
81 of the Defence of India Rules and continued under the Essential Supplies (Temporary Powers) Act, 1946, and the Bihar Coal
Control Order, 194 7. It was common ground that coal could
not be sold by a Colliery except under an order of the Coal Commissioner or his Deputy .. On July 13, 1954, the Depnty Coal
Commissioner (Distribution) issued an order addressed to
the
Divisional Superintendent, Eastern Railway,
sanctioning the
supply of 110 tons of steam coal by the East' Keshalpur Colliery
to the Company.
By that order a priority supply of wagons was
also sanctioned in favour of the Company for transport of coal
to the Banjari railway station. It was also recorded in the order
that the quantity of coal mentioned in the order "had been sanctioned on the account of the Company" and that sanction for
priority supply of wagons had also been accorded, and the Company was advised to instruct the Colliery to' indent for wagons
accordingly and to quote the sanction number given in the order
when so indenting. Copies of the order were sent to the Collierv
and the Company.
Pursuant to the allotment of coal an order
was placed on July 14, 1954 by the Coal Suppliers Ltd. acting
on behalf of the Company, for supply of steam coal to fhe Com-
3 62
SUPREME COURT REPORTS
(1969] I S.C.R.
pany at Banjari railway station. In July and August forwarding
notes were submitted by the Colliery for despatch of steam coal
lll-B to the Company.
The Company received three wagons of
coal sometime in August 1954. The Company was not satisfied
with the quality of coal supplied, and made complaints in
that
behalf to the Colliery by their letters dated August 18, 1954 and
September I, 1954.
The balance of the c.onsignment reached
Banjari on November 12, 1954, but the Company declined to
take delivery and intimated the Colliery and the Railway by their
letter dated November 23, 1954 that it was not liable for loss
resulting from the detention of wagons.
On November 30, 1954
the Company wrote a letter to the Deputy Coal
Commissioner
(Distribution) reques!ing that the Coal Controller,
Bihar,
be
moved to sanction disposal of coal of which delivery was
not
taken.
A copy of the letter was sent to the Company.
On
January 24, 1955 the Railway wrote to the Coal Arca Superintendent, Eastern Railway, intimating that the Company had refused to take delivery of coal, and asked for immediate instructions of the Colliery for its disposal.
On February 21, 1955 the
Railway again wrote to the Coal Area Superintendent stating that
the goods will be sold by auction if nothing heard from him within a fortnight from that date.
On April 28, 1954, the Railway
informed the Company that they had decided to disp.ose of the
consignment of coal under the Indian Railways Act by publk
auction and claimed that they were entitled to demurrage which
had accrued due till then. On May I 3, 1955, the Coal Controller Bihar, advised the Railway to dispose of the coal lying undelivered "according to prevailing railway rules" by public auc·
tion.
The Railway thereafter sold the consignment of coal on
June 2, 1955.
Tue Colliery Control Order, 1945, was issued in exercise of
r. 81 of the Defence of India Rules and was continued thereafter
under the Essential Supplies (Temporary Powers) Ordinance,
1946 which was replaced by the Essential Supplies (Temporary
Powers) Act, 1946. By cl. 5 of the Order it was provided that
no colliery owner, and no person acting on behalf of a colliery
owner, shall sell, agree to sell, or offer to sell, coal at a
price
different from the price fixed in that behalf under cl. 4.
By cl.
6(1) it was provided that where a colliery owner has signified
to the Deputy Coal Commissioner (Distribution) in writing his
willingness to sell direct to consumers and an allotment is made
by the Deputy Coal Commissioner (Distribution) to a consumer
with his consent for such direct sale, the coal shall be delivered
to the consumer at the price fixed under clause. 4
Clause 8 of
the order provides that the Central Government may from time
to time issue such directions as it thinks fit to any colliery owner
in regulating the disposal of his stocks of coal or of the expected
output of coal in the colliery during any period including dirccA
n
..
c
. l
D
E
•
F
G
H
A
B
c
D
E
F
G
H
KUCHwAR LIME V, M/S. DEHRI ROHTAS (Shah, J,)
363
tions as to the person or class or description of persons to whom
coal shall or shall not be disposed of, the order of priority to be
observed in such disposal, and the staking of coal on Government account. The order issued by the Coal Controller was ill
exercise of the power under cl. 8 of the Colliery Control Order.
No reference to any specific provision of the Bihar Coal Control
Order need be made,
because counsel have placed no reliance
thereon.
Having regard, however, to the circumstances in which the
goods were loaded by the Colliery, there can be no doubt that
the Colliery was acting as an agent of the Company for th.e purpose of arranging for transport of coal in which the property had
under the orders of the Coal Commissioner passed to the Company.
The Colliery arranged to load the coal at the Kusunda
Rai[way station pursuant to the order for supply of coal sanctioned by the Coal Commissioner to the Company in the wagons
allotted to the Company for transporting coal to Banjari. It is
clear that the Colliery supplied coal in pursuance of the "sanction order" in favour of the Company and arranged to transport
it to Banjari in wagons which were allotted for that purpose by
order of the Deputy Coal Commissioner. Under the forwarding
notes the freight was made payable by the Company. In the circumstances, it would be reasonable to infer that the Colliery acted as an agent for the Company in entering into the contract of
consigmnent and the liability for payment of freight and of demurrage charges for failure to take delivery of the goods lay upon
the Company.
Normally the liability for payment of demurrage charges lies
upon the consignee for whose convenience the wagon is detained.
As stated in Halsbury's Laws of England, 3rd Edn., Vol. 31, at
p. 724:
"The party primarily liable to pay the demurrage
is the party for whose convenience the wagons are
detained."
We are unable to accept the argument of Mr. Gupte on behalf
of the Company that it is only in those cases where delivery of
goods is taken by the consignee that the liability to pay demurrage
may be imposed upon him. Even where the consignee does not
ultimately take delivery, if the wagon is detained for his benefit,
normally the Railway would be entitled to hold him liable for
demurrage. We are unable, therefore, to hold that the Company
that it was not liable to pay freight or demurrage charges, because the Colliery had entered into the contract of consigmnent
with the Railway.
But in our view the High Court was in error in holding that
the Company was liable to pay demurrage for the full period of
364
SUPREME COURT REPORTS
[1969j I S.C.R
202 days.
The six \1 agons containing 60 tons of coal reached
Banjari railway station on November 12,
1954.
Before
that
date and thereafter the Company had declined to take delivery
of the coal. The Railway had undoubtedly power to sell the consignment of coal under s. 56 of the Railways Act after serving
notice upon the owner.
But the Railway was, after expiry of a
reasonable period which may be necessary for taking delivery, in
the position of a bailee qua the company and was bound to minimise the loss : it could not unreasonably detain the wagons and
claim demurrage.
Even granting that in view of the Colliery
Control Orders, without the sanction of the Coal Commissioner,
the Railway could not sell coal, (on that question we express no
opinion) the Railway could have unloaded the coal from
the
wagons and put the wagons to use.
After the wagons were unloaded the consignee could be liable only for wharfage.
Under
Part I of the Coaching Tariff r. 108 provides for the treatment
and disposal of unclaimed articles.
Under cl. (2) of r. 108 it
is provided that for unclaimed booked articles, wharfagc of two
annas per maund or part of a maund for 24 hours or part of 24
hours with a minimum charge for one maund is levied, if they
arc not removed from railway premises within 48 hours from
midnight of the day of arrival. By cl. ( 8) it is provided :
"Public sales by auction will be held from time to
time of all unclaimed or lost property which has remained in the possession of the railway for the period mentioned below :-
(i) unclaimed or lost property other
than
foodgrains which has remained in the possession of
the railway for over three months;
(ii) unclaimed foodgrains which have remained in
the possession of the railway for two months.
At least 5 days previous notice of each auction will be given by
advertisement in a newspaper."
Clause 20 in Part II of the Goods Tariff provdies :
"(a) On all goods brought on to a railway station
and waiting for despatch without any forwarding note
tendered for the same and all goods not removed from
a railway station although the same is
available for
delivery a wharfage charge is
made on
the
Dchri
Rohtas Light Railway at the following rate : "
(Then follows a schedule of rates, which is not material.)
The Railway apparently made a claim of demurragc for
detention of wagons for 202 days on the footing that the coal was
not unloaded from the wagons until it was sold by public auction.
It was. however, the duty of the Railway to minimise the loss by
..
A
B
c
D
..
E
F
G
II
A
B
,.
•
c
D
E
..
KUCHWAR LIME V, M/S. DEHR! ROHTAS (Shah, J.)
365
unloading the coal after expiry of a reasonable period after arrival
of the consignment and to take early steps to sell the coal. The
Company had given intimation that it will not take delivery of
the goods and therefore it was the duty of the Railway to sell the
goods by public auction without delay.
The value of the coal
was not more than Rs. 500 and the freight payable was approximately Rs. 500. When sold in the month of June 1955 the coal
fetched Rs. 1050. In failing to take any action for a period of
more than six months, in our judgment, the Railway did not act
reasonably. We are of the view that the Railway, having regard
to all the circumstances, is entitled to denmrrage for detention of
the wagons for one month only. On that footing the Railway is
entitled to Rs. 2700 as demurrage and Rs. 495/14
which
is
payable by the Company as freight less Rs. 1050 realized by
sale of coal. The Railway is accordingly entitled to a decree for
Rs. 2,145/14.
We accordingly modify the decree passed by the High Court
and decree the claim of the Railway for Rs. 2,145/14 with proportionate costs throughout. The Railway will pay the costs of
the Company proportionate to the amount for which its claim
has been dismissed in all the three Courts. The order passed by
the Trial Court in favour of the Colliery directing the Railway
to pay the costs is maintained. There will be one hearing fee in
this Court.
There will be no order as to costs of the Colliery in this Court.
R.K.P.S.
Decree modified .
L I 2 Sup/68-9