May 3.

SUPREME COURT REPORTS [1960]

THE EAST AND WEST STEAMSHIP COMP ANY,

GEORGE TOWN, MADRAS

S. K. RAMALINGAM CHETTIAR. (And connected appeal) ( P. B. GAJENDRAGADKAR, IC N. W ANCHOO and K. c. DAS GUPTA, JJ.)

Carrier of goods by sea-Loss or damage, meanmg of-Liability of carrier-Delivery of goods-Time for-The Indian Carriage of Goods Act, r925 (XXVI of r925), Schedule, Art III, para: 6, cl. 3.

The appellant in the first case (C. A. No. 88/56) and the respondents in the other two cases (C. As. Nos. gr & 92 of 1958) were shipping companies carrying goods by sea from one port to another. They carried goods of the opposite parties by ships to their places of destination but failed to deliver the whole of the goods consigned. In the suits brought by the owners of the goods for compensation the main question related to the interpretatibn of the 3rd clause of para. 6 of Art. III in the Schedule to the Indian Carriage of Goods by Sea Act, 1925 (XXVI of 1925) which runs thus:-

"In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered ".

In the first case the Madras High Court expressed the opinion that the above clause did not provide for the extinction of the consignor's right to claim compensation but merely prescribed a rule of limitation. It also held that the term in the bill of Jading requiring that the claim for compensation should be made within one month from the date of arrival of the vessel was repugnant to Rule 8 to Art. III of the Schedule and was void. The Bombay High Court held that Art. III(6) dealt with all cases of loss or damage whether the loss or damage was caused by the deterioration of the goods or by their non-.delivery and further that the words " the loss or damage " included any loss or damage caused to the consignee in respect of his claim for compensation from the shipping company. It also held that the goods should have been delivered as soon as they were landed.

On appeal by special leave: Held, that the word "loss" in cl. 3, para. 6 of Art. III in the schedule to the Indian Carriage of Goods Act, 1925, meant and included any loss caused to a shipper or consignee by reason of the inability of the ship or the carrier to deliver part or whole of the goods, to whatever reason such failure might be due.

Spens and another v. The Union Marine Insurance Co. Ltd., 3 Common Pleas 427, .\iistinguished.

• --

Sandeman & Sons v. Tyzack and Brllnfoot Steamship Co. Ltd., [1913] A. C. 680, referred to.

The words "discharged from liability" were intended to mean and did mean that the liability had totally disappeared and not only that the remedy as regards the liability had disappeared.

The date when the goods should have been delivered for the purpose of cl. 3, para. 6 of Art. III of the Act was the date when the ship by which the gooas were carried left the port of delivery.

The stipulation in the bill of lading requiring claim for compensation being made within one month from the date of arrival of the ship was null and void.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 88 of 1956.

Appeal by special leave from the judgment and decree dated February 11, 1954, of the Madras High Court in Civil Revision Petition No. 921 of 1952, arising out of the judgment and decree dated November 2, 1951, of the Court of Small Causes, Madras, in Suit No. 4076 of 1950 (N. T. A. No. 113 of 1951).

With Civil Appeals Nos. 91 and 92 of 1958.

Appeals by special leave from the judgment and decree dated March 10, 1955, of the Bombay High

Court in Appeals Nos. 66/X and 67/X of 1954, arising out of the judgment and decree dated February 15, 1954, of the said High Court in Suits Nos. 1693 of 1949 and 105 of 1950, respectively.

B. Sen, S. N. Mukherjee and B. N. Ghosh, for the appellant (in C. A. No. 88 of 1956).

C.R. Pattabhiraman and Ganapathy Iyer, for respondent (in C. A. No. 88 of 1956).

C. K. Daphtary, Solicitor-General of India, S. N.

Andley, J.B. Dadachanji and Rameshwar Nath; for the appellants (In C. As. Nos. 91 and 92 of 1958).

Gopalakrishnan, for the respondent (In C. A.

No. 91/58).

A. V. Viswanatha Sastri and G. Gopalakrishnan, for the respondent (In C. A. No. 92 of 58).

1960. May 3. The Judgment of the Court was delivered by

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Seamship Co.

Ramglin gam

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East & West Steamship Co. v.

Ramalingam

Chettiar

Das Gupta].

. Das Gl'PTA, J.-These three appeals-Civil Appeal No. 88of1956, Civ; J Appeal No. 91of1958 and Civil Appeal No. 92of1958, of which one is from a decision of the High Court of Madras and the other two from decisions of the High Court of Bombay raise sori1e common questions of general importance to carriers of goods by sea and of shippers as regards tbe 3rd clause of paragraph 6 of Art. III in the Schedule of the Carriage of Goods by Sea Act (hereinafter called "the Act"). T.his clause provides that "in any event the carrier and the shipper shall be discharged from all liability in respect of loss or damage unless a suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered". In all the three appeals before us the carriers' main defence to claims of compensation by the owners of the goods was based on this clause and the courts had to consider whether this defence was available to the carrier.

The appeal from the Madras High Court was in respect of a consignment of 90 bundles of brass circles which were consigned to the respondent at Madras from Bombay to Madras per S. S. Fakira, a Steamer belonging to the East and West Steamship Co. The Ship arrived in Madras on August 1, 1948, and 78 out of the 90 bundles were delivered on August 25, 1948, to the appellant through his clearing agent, the second respondent. Five more bundles were delivered on September 25, 1948.

After some correspondence between the Shipping Company and the first respondent regarding the seven bundles not delivered the appellant company repudiated finally the respondent's claim on March 24, 1950. The first respondent brought the present suit on June 27, 1950, claiming Rs. 1,023-5-0 as compensation-Rs. 974-13-0 for the value of the undelivered goods and Rs. 48-8-0 as the profit of which he had been deprived. The claim for this amount of profit was given up at the Trial. The appellant's defence was: (1) that the suit having been filed beyond the period prescribed in cl. 6 of Art. 3 of the Act ;

(2) that the suit was also barred as no claim had been made within the period of one month from the date of

...

arrival of the vessel as stipulated in the bill of lading and (3) that the goods were insufficiently packed and therefore carrier was not liable for the alleged loss.

The learned Judge of the Small Causes Court who tried the suit as also the Judge who heard the matter on a new trial application held that the plaintiff's right to claim compensation was extinguished before the date of the suit.

As regards the second defence based on the stipulation in the bill of lading that notice has to be given within one month the Trial Court held that this term in the bill of lading was void and of no effect. The learned Judges who heard the new trial application disagreed with this and accepted the defence on this point also. In the result they dismissed the new trial application and confirmed the order of dismissal made by the learned Trial , Judge. Against this order the High Court of Madras was moved by the plaintiffs under s. 115 of the Code of Civil Procedure. The learned Judge held that the term in the bill of lading as regards one month's notice was repugnant to Rule 8 to Art. III of the Schedule to the Act and was void. He was also of opinion that the date.of the final repudiation of liability by the Shipping Company as regards the short delivery or non-delivery is the date "when the goods should have been delivered" within the meaning of the 3rd clause of the 6th paragraph of Art. III and so whether this clause provided for extinction of a right or only prescribed a rule oflimitation, the defence based on this clause of the Act could not succeed.

He expressed his own opinion, however, that this clause did not provide for extinction of the right but merely prescribed a rule of limitation. In view of his conclusions he set aside the decision of the lower courts and remanded the suit for further disposal to the trial court. After remand the trial court on May 4, 1954, decreed the suit for a sum of Rs. 974-13-0.

Against that decree no steps were taken by the Shipping Company. It was after that date that the Shipping Company applied for and obtained from this Court special leave to appeal on October 11, 1954. It has to be noticed that as the decree made in the suit has become final and unassailable, this appeal is really vf

East & West Steamship Co.

\(, Ramalingam Chettiar

Das Gupta].:

l?ast & West Steamship Co.

Ramalingam

Chettiar

Das Gupta].

academic interest. In view however of the fact that the main question of law raised, viz., as regards the scope and interpretation of the 3rd Clause of para. 6 of Art. III of the Schedule to the Act is being raised before us in the other two appeals from the Bombay High Court also we have heard the counsel for both sides in this appeal in full.

Of the two appeals from Bombay-the one Civil Appeal No. 92 of 1958 is in respect of some consignments at Bombay by S. S. Tweedsmuir Park, S. S.

Finnamore Hill and S. S. Ismalia-all vessels belonging to the first defendant, the British India Steam Navigation Company Ltd.

S. S. Tweedsmuir and S. S. Finnamore Hill arrived in the port of Bombay on or about September 10, 1948, and steamer Ismalia arrived in Bombay on September 6, 1948. The vessels discharged their cargoes alongside on to the docks belonging to the Trustees of the Port of Bombay. The plaintiffs took delivery of the goods packed in bags which bore their distinctive and identifying marks, but were unable to obtain delivery of 164 bags out of the consignment sent by Ismalia, 869 bags out of the consignment sent by Finnamore and 1,657 bags out of the consignment sent by Tweedsmuir Park. The suit was brought on a claim of Rs. 1,10,323·8-0 as compensation for the bags not delivered. The Trustees of the Port of Bombay were also made defendants. We are no longer concerned with them as after the suit was dismissed by the Trial Judge against both the defendants the plaintiffs did not prefer any appeal against the order of dismissal as against the Trustees.

The main defence of the first defendant, the Shipping Company, was that the company was discharged from all liability in , respect of the loss or damage alleged in the plaint by reason of the provisions of the Act inasmuch as the suit had not been brought within one year of the date ''when the goods should have been delivered". Another defence was that the company was not liable as no notice within 3 days after discharge and before goods were removed from the quay or ship's side or place of discharge had been given and so in view of Clause 20 of the bill of lading the company w<i.s free from all liability. The trial judge held that

,.._;- -

in view of the fact that S.S. Finnamore Hill completed discharging her cargo on 19th September, 1948, S.S.

Ismalia completed discharging her cargo on 25th September, 1948, and S.S. Tweedsmuir Park completed discharging her cargo on 2.7th September, 1948, the suit was clearly not brought " within one year" from the date" when the goods should have been delivered".

He held therefore that the defendants were discharged from all liability by reason of the provisions of the Act.

Accordingly he dismissed the suit. In appeal from this order of dismissal the plaintiffs contended that Art. III (6) did not deal with cases of loss or damage arising from non-delivery of goods ; in the alternative it was contended that the expression " loss or damage " in Art. III (6) must be limited to the loss or damage to the goods themselves and if the goods have not been lost this clause had no application. The learned judges of the High Court rejected both these contentions. They were of opinion that Art. III (6) deals with all cases of loss or damage whether the loss or damage is caused by the deterioration of the goods or is caused by the non-delivery of the goods and further that " the loss or damage" as used was

used by the Legislature to include any loss or damage caused to shipper or consignee in respect of which he claims compensation from the shipping company. The learned judges also held that so far as the shipping company was concerned the delivery of goods is given or ought to be given as .soon as the goods are landed and therefore in this case the goods with regard to the three ships having been cleared on September 19, 1948, September 25, 1948, and September 27, 1948, respectively. These were the dates on which the goods "should have been delivered" for the purposes of the application of the 3rd clause of paragraph 6 of Art. III.

Accordingly agreeing with the Trial Judge that the liability of the shipping company was discharged and the suit was not maintainable they dismissed the appeal.

The other appeal from the Bombay High Court; viz., Civil Appeal No. 91 of 1958 is in respect of a consignment of 6,000 bags of cocoanut from Cochin and 4,733 bags of copra and cocoa.nuts from Badagara

IQ60

East & West Steamship Co. v.

RamalintJam

Chettiar

Das Gupta].

East & West Steamship Co. v.

Ramalingam Cheftiar

Das Gupta].

826 SUPl'tEME COURT REPORTS [1960]

consigned to the plaintiffs for carriage to Bombay by the steamer "Bharatjal" belonging to the appellant, the Bharat Lines Ltd. The steamer arrived in Bombay Port some time in the middle of September, 1948. The plaintiffs however failed to obtain delivery of 596 bags from the Badagara consignment and 470 bags from the Cochin consignment. They brought the suit on December 5, 1949, against the shipping company, the

Bharat Lines Ltd., and also against the Trustees of the Port of Bombay on a claim of Rs. 1,05,726-1-6 on which Rs. 45,725-7-5 appear to have been claimed as compensation in respect of the bags not delivered and the remainder as compensation for damage to the goods in the bags of which delivery was taken.

We are no longer concerned with the second defendant, the Trustees of the Port of Bombay, as after the suit was dismissed by the Trial Court the plaintiffs did not pursue the claim against them.

The main defence of the first defendant, the shipping company, was that the suit was barred "by reason of the Indian Carriage of Goods by Sea Act". It was also urged that the suit was not maintainable as under the terms of the bill of lading the plaintiffs were .bound to notify to the defendants their .ilaim in writing about the alleged non-delivery within one month from the date of the arrival of the vessel which the plaintiffs had failed to do. It appears to have been conceded before the Trial Judge in the Bombay High Court that the suit had not been filed within one year after the delivery of the goods or the date on which the goods should have been delivered. The plaintiffs' counsel also appears to have conceded that cl. 6 of Art. III applied to the case. The learned Judge therefore held that the first defendant had been discharged from all liability in respect of the loss or damage alleged in the plaint and dismissed the suit. It appears however that in the appeal from this order of dismissal .the plaintiffs urged that Art. III (6) of the Act did not apply to the facts of the case and also the date on which the goods should have been delivered should be construed to mean the date "when the loss was finally ascertained " and the shipping company was in a

position to finally declare that they were or were not

-- '

in a position to deliver the goods in question.

In dismissing the appeal the learned judges of the High Court who heard the appeal did not give any separate reasons but stated that the appeal was being dismissed on the same ground as given in their judgment in Appeal No. 66 of 1954. This is the judgment from which Civil Appeal No. 92 of 1958 of this Court bas been preferred.

From what has been said above it is clear as we have already indicated that the main questions in this appeal are as regards the interpretation of the 3rd Clause of paragraph 6 of Art. Ill in the .Schedule to the Act.

The first and the most important of these questions is as regards the meaning of the word "loss" as used in the said clause.

Does it mean only such loss as occurs when one says "the goods have been lost" or does it include also such loss as is sustained by the owners of the goods-whether the shipper or the consignee-when the carrier fails to deliver the whole or part of the cargo shipped? The second question that arises for consideration is whether this clause only prescribes a rule of limitation or also provides for the extinction of the right to compensation after a certain period of time.

The next question is as regards the ascertainment of the date on which the goods not delivered "should have been delivered" for the purposes of this clause.

Apart from these questions as regards the interpretation of the 3rd clause of paragraph 6 of Art. III, it will be necessary to consider also whether the requirement in the bill of lading as regards the time within which the notice of claim "must be made in order that the carrier may be responsible is void as being against the 8th paragraph of Art. III. As has been mentioned in the preamable to the Act it was passed to give effect to the recommendation of the International Conference of Maritime Law at Brussels in October, 1922. The circumstances which led to the holding of the conference and were responsible for the recommendations have been stated by Scrutton on Charter Parties, 15th Edition, at p. 439, in these words:- •

East & West Steamship Co. v.

Ramalingam Chettiar

Das Gupta].

East&.· West Steamship Co. v.

Ramalingam

Chettiar

Das Gupta].

SUPREME COURT REPORT~ [l!l60)

"In recent years, as the terms of bills of lading became more diverse, the need for standardisation became more and more insistent and an increasing demand was made on the part of importers and exporters for the imposition by legislation, on the lines of the American Harter Act or the Australian

Sea Carriage of Goods Act, 1904, or the Canadian Water Carriage of Goods Act, 1910, of certain minimum liabilities on sea-carriers who issued bills of lading."

x x x " The movement in favour of legislation finally resulted in the decision of the delegates at the Diplomatic Conference on Maritime Law held at Brussels in October, 1922, to recommend to their respective Governments the adoption of the Hague Rules i:.-_ with slight modifications as a basis of legislation." Jt is this recommenda.tion which has been referred to in the preamble to the Indian Act. It is important to mention that apart from our own country, U. K., Australia, Canada, Ceylon, Newfoundland, New Zealand as well as Belgium, France and U. S. A. have given statutory effect-wholly or partially to the Hague l{ules. This international character of the provisions ' of law as incorporated in the articles to the schedule to the Act makes it incumbent upon us to pay more than usual attention to the normal grammatical sense of the words and to guard ourselves against being influenced by similar words in other acts of our Legislature.

It is helpful to remember in this connection the caution uttered by Lord Atkin in Stag Line Ltd. v. < Foscold (1) about the importance of giving words in these rules their plain meaning, and not to colour one's interpretation by considering whether a meaning otherwise plain should be avoided if it alters the previous law. After stating that this caution would be well founded if the Act merely purported to codify the law, he went on to observe:-

I""" " But if this is the canon of construction in regard to a codifying Act, still more does it apply to an Act like the present which is not intended •

(t) [1932] A.C. 328,

to codify the English law, but is the result (as expressed in the Act) of an international conference intended to unify certain rules relating to bills of lading.

It will be remembered that the Act only applies to contracts of carriage of goods outwards from ports of the United Kingdom; and the rules will often have to be interpreted in the courts of the foreign consignees. For the purpose of uniformity it is therefore important that the courts should apply themselves to the consideration only of the words used without any predilection for the former law ... ".

The House of Lords was in that case interpreting certain provisions of the English Carriage of Goods by Sea Act, 1924. Our own Act applies to contracts of carriage of goods outwards from the ports of India.

Section 2 states that the rules set out in the Schedule 8hall have effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in India to any other port whether in or outside India. Though in the appeals before us we are concerned with only contracts of carriage of goods from -0ne Indian port to another Indian port, it is necessary to remember that these rules will often have to be interpreted in the courts of the foreign consignees. That is an additional reason why we should be careful not to attach to the words used in the rules set out in the Schedule to the Act anything more or less than their normal meaning consistent with the context in which they appear and consistent with the scheme of the legislation.

Art. III of the Schedule with which we are specially concerned in the present case purports to mention the responsibilities and liabilities of the carriers. The first paragraph lays down the responsibilities and liabilities of the carrier in the matter of making ships seaworthy, properly manning, equipping and supplying the ship and making the holds and the different parts of the ship where goods are carried fit and safe for their reception, carriage and preservation. The second paragraph places on the carrier the duty of properly and carefully loading, handling, stowing, carrying, keeping, caring for and discharging the goods, subject to Art. IV. The 3rd paragraph provides for the issue of a bill of la, ding

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East & West Steamship Co.

Ramalingam Chettiar

Das Gupta].

I960

East & West Steamship Co. v.

Ramalingam

Ckettiat'

Dus Gupta].

to the shipper of the goods showing among other things the identifying marks, the number of packages or pieces or the quantity or weight as also the apparent order and condition of the goods.

Paragraph 4 provides that the bill oflading shall be the prima facie evidence of the receipt by the carrier of the goods as described in accordance with paragraph 3.

The fifth paragraph provides that the shipper shall be deemed to have guaranteed to the carrier the accuracy as regards the details of marks, number, quantity and weight as furnished by him. It provides further that the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from such inaccuracies. Then comes paragraph 6, the whole of which it is proper to set out :-

" Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. "

"The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. "

"In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered."

"In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. " The seventh paragraph contains provisions as regards issue of a shipped bill oflading.

The eighth paragraph is in these words:- " Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with

,.......,..,

goods arising from negligence, fault or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect.

A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability." It has to be noticed that before providing in the 6th paragraph an immunity to the carrier from "all liability in respect of loss or damage" in certain circumstances the Legislature had in the earlier paragraphs laid on the carrier the duty of making the ships seaworthy, properly manning, equipping and supplying the ship, and making the holds and.all other parts of the ship fit and safe for the reception, carriage and preservation of the goods; properly and carefully loading, handling, stowing, carrying, keeping and caring for and discharging the goods carried and provided that ordinarily the bill of lading should show the . quantity or weight of the goods or the number of packages or pieces. "Loss or damage" which paragraph 6 speaks of should therefore reasonably be taken to have reference to such loss or damage which may result from the carrier not performing some or all of the duties which had been mentioned earlier. One of those duties is to discharge the goods carried in accordance with the quantity or weight or the number of packages or pieces as mentioned in the bill of lading. The shipper and the consignee of goods are more concerned with the duty of the carrier to discharge the goods in proper order and condition and in full than anything else. Indeed the other duties cast on the carriers so far as the owners of the goods are concerned, are really incidental to this duty of discharging the goods in full and in good order and condition. When in the context of the previous paragraphs of Art. III the 6th paragraph seeks to provide an immunity to the carrier "from all liability in respect of loss or damage " after a certain time,· it is reasonable to think that it is loss or damage to the owner of the goods, be he shipper or the consignee, which is also meant, in addition to the " loss of the goods ", When

East & West Steamship Co. v.

Ramalingain

Chettiar

Das Gupta J.

East & West Steamship Co. v.

Ramalingam

Chettiaf'

Das Gupta j.

the goods themselves are lost, e.g., by being jettisoned, or by being destroyed by fire or by theft, there will be failure to discharge the goods in full and loss to the owner of the goods will occur.

Even where the goods are not lost the carrier may fail to discharge the goods in full or not in proper order and there also loss will occur to the owner of the goods. In such a case, even though there may not have been "loss of the goods" the goods are lost to the owner. The word "loss" as used in paragraph 6 is in our opinion intended to mean and include every kind of loss to the owner of the goods-whether it is the whole of the consignment which is not delivered or part of the consignment which is not delivered and whether such non-delivery of the whole or part is due to the goods being totally lost or merely lost to the owner by such fact of nondelivery there is in our opinion "loss " within the meaning of the word as used in paragraph 6.

It is worth noting in this connection that while paragraph 5 makes it clear that loss there means loss to the carrier and paragraph 6 speaks of loss or damage to or in connection with the goods, the Legislature has in the 6th paragraph of this Article left the words "loss or damage " unqualified. The object of the rule however being to give immunity to the carriers and the shippers from claims of compensation made by the owners of the goods in respect of loss sustained by them, it will be unreasonable to read the word "loss" in that paragraph as restricted to only loss "of the goods". When the object of this particular paragraph and the setting of this paragraph in the Article after the previous paragraphs are considered there remains no doubt whatsoever that the learned judges of the Bombay High Court were right in their conclusion that the loss or damage in this paragraph is a wide expression used by the Legislature to include any loss or damage caused to shipper or consignee in respect of which he makes a grievance and in respect of which he claims compensation from the shipping company.

The argument that loss due to failure to deliver the goods is not covered by this clause is merely to be mentfoned to deserve rejection. The very use of the

/ ·~ ..

3 S.C.R. SUPl-tEME COURT REPORTS 833

words "the date on which the goods should have been delivered" clearly contemplates a case where the goods have not been delivered. The clause gives the owner of the goods one year's time to bring the suitthe year to be calculated from the date of the delivery of the goods where the goods have been delivered and from the date when the goods should have been delivered where all or some of the goods have not been delivered. The fact that the first clause of the 6th paragraph speaks of removal of the goods may be an argument for thinking as the Bombay High Court thought that that clause has no application when goods are not delivered. It may be mentioned that some authorities (See Carver's Carriage of Goods by Sea, 10th Edition, p. 191) have suggested that the first clause of this paragraph appears to have little meaning. That is a matter which need not engage our attention. It is sufficient to mention that the fact that the rule of evidence provided in the first clause of the paragraph may have no application to cases of non-delivery is wholly irrelevant in deciding whether the third clause applies to cases of non-delivery. As we have already said the date when the goods should have been delivered necessarily contemplates a case where loss has arisen because goods have not been delivered.

Reliance was sought to be placed on behalf of the appellants in the two Bombay appeals on Spens v.

The Union Marine Insurance Go. Ltd. (1).

What had happened in that case was that cotton belonging to different owners was shipped in bales specifically marked, including 43 bales belonging to the plaintiffs.

In the course of the voyage the ship was wrecked ; all the cotton was more or less damaged, some of it was lost, some was so damaged that it had to be sold before reaching the port and marks on a very large number of the bales were so obliterated by sea water that none of the cotton that was lost or sold and only a portion of what was carried to the port could be identified as belonging to any particular consignment.

The plaintiffs had insured the goods with the defendant company against the usual risks. The question

{I) (I868) L.R. 3 C.P. 427.

East & West Steamship Co. v.

Ramalingam Ghettiar

Das Gupta .f.

:c960

East & West Steamship Co. v.

Ramalingam

Chettiar

Das Gupta].

arose whether there was a total loss of a part of each owner's cotton or whether there was a total loss of the plaintiffs' consignment. The court held that it could not be said that there was an actual total loss of the plaintiffs' consignment nor a constructive total loss of these, that the principle of proportion applied in cases of general average or jettison where it is not known whose goods are sacrificed should be properly applied to cases of thi8 nature where because of the bales of different shippers being undistinguishable by reason of the action of the sea and without the fault of the respective owners it becomes impossible to ascertain to whom the goods actually lost belonged.

This case it has to be noticed had to consider in view of the special terms of an insurance policy, whether there was a total or partial loss for the purposes of claims under the policy and the argument that there was a total loss within the meaning of the policy because it was impossible for the ship-owner to deliver the plaintiffs' own bales of cotton to them was rejected. This case is of no assistance in the interpretation of the word " loss " in the Articles of the Schedule.

In cases of such mixture of cargo of different owners it was pointed out by Lord Moulton in Sandeman & Sons v. Tyzack and Branfoot Steamship Go. Ltd.(') which was cited by the learned Solicitor-General himself:

"It may well be that they could assert the position of joint owners in the mixed cargo, and as such take action against any person who sought to get possession of it or convert it to his own use. But it does not follow that the ship-owners would have performed their contract of carriage. Their duty is to deliver the goods entrusted to them for carriage, and they do not perform that duty if all that the consignee obtains is a right to claim as tenant in common a mixture of those goods with the goods of other people. No doubt, if such a right is of some value, and the consignee avails himself of it, the shipowners are entitled to credit for whatever value the goods possessed if they were delivered

(I) (1913] A, C, 680, 697,

mixed up with some extraneous substance which lessened their value or compelled the consignee to go to expense in separating it out." There is nothing however to justify the conclusion that the consignee is bound to avail himself of the right to claim as tenant in common. The breach of contract remains and the claim for compensation for such breach is in no way affected. Neither authority nor principle therefore supports the contention of the learned Solicitor-General that where the goods are in existence but cannot be delivered because they have been mixed up with the cargo of other owners there has been -no " loss " within the meaning of the third clause of the 6th paragraph of Art. III.

On the first question, therefore, we have come to the conclusion that the word "loss " in the third clause of the 6th paragraph of Art. III to the Act means and includes any loss caused to a shipper or a consignee by reason of the inability of the ship or the carrier to deliver part or whole of the goods, to whatever reason such failure may be due.

On the next question whether this clause prescribes only a rule of limitation or provides for the e, xtinction of a right to compensation, it will be observed that the Bombay High°Court has not discussed it at all, apparently because on the facts of the case before it,

itwould have mattered little whether the provision was one of limitation or of extinction of right. The question is however of some importance in the facts of the Madras Case. For if the provision is one of limitation there would be some scope for argument in the facts of that case that the period was extended by acknowledgments of liability within the meaning of Art. 19 of the Limitation Act. The question we have to decide is whether in saying that the ship or the carrier will be "discharged from liability", only the remedy of the shipper or the consignee was being barred or the right was also being terminated. It is useful to remember in this connection the international character of these rules, as has been already emphasised above. Rules of limitation are likely to vary from country to country. Provi8ions for extension of periods prescribed for limitation would similarly vary.

East & West Steamship Co. v.

Ramalingam Chettiar

Das Gupta ].

East OS. West Steamship Co. v.

Ram1lingam

Chethar

Das Gupt• J.

We should be slow therefore to put on the word " discharged from liability " an interpretation which would produce results varying in different countries and thus keeping the position uncertain for both the shipper and the shipowner. Quite apart from this consideration, however, we think that the ordinary grammatical sense of "discharged from~ liability " does not connote " freed from the remedy as regards liability" but are more apt to mean a total extinction of the liability following upon an extinction of the right. We find it difficult to draw any reasonable distinction between the words "absolved from liability"

and "discharged from liability " and think that these words " discharged from liability " were intended to mean and do mean that the liability has totally disappeared and not only that the remedy as regards the liability has disappeared. We are unable to agree with the learned Judge of the Madras High Court that these words merely mean that " that even though the right may inhere in the person who is entitled to the benefits, still the liability in the opposite party is discharged by the impossibility of enforcement." The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, though fine, is of great importance. The Legislature could not but have been conscious of this distinction when using the words " discharged from all liability " in an article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense. It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgment of liability thereafter.

This brings us to the question as to how the date "when the goods should have been delivered" should be calculated. References were made at the Bar to some of the numerous decisions in the different courts in India as regards the interpretation of somewhat similar words in Art. 31 of the Limitation Act in respect. of suits for recovery of compensation for

non-delivery. Indeed the learned Judge in the Madras High Court himself has based his conclusion on this question on the view of law he had earlier expressed as regards Art. 31 of the Limitation Act that the starting point of limitation there is the final repudiation of the liability by the company. With great respect to the learned Judge, we are of opinion that the cases as regards the ascertainment of the date when the goods " ought to be delivered " as used in Art. 31 of the Limitation Act are of no assistance for our present purpose. Most, if not all of the cases which have considered the question of the ascertainment of the date when the goods "ought to be delivered" for the purpose of Art. 31 deal with cases of transport by Railways where no date has been or can be specified in the contract for carriage. We cannot however ignore the fact that the conditions of carriage of goods by ship are essentially different from contracts of carriage of goods by Railways in one respect, viz., that whereas in contracts of carriage of goods by Railways there is ordinarily no knowledge as to by which particular train the goods will be despatched nor is there any undertaking by the Railways as regards such trains, there is ordinarily in contracts of carriage of goods by sea a distinct arrangement that the goods will be shipped by a particular vessel.

Whether the bill of lading is in the older form beginning with the words " shipped on board the ...... " or in the form more recently employed by some shipping companies, beginning with the words "Received for shipment by ....... " (See Scrutton on Charter Parties, 15th Edition; p. 10) the name of the vessel is ordinarily indicated in the bill of lading itself. The duty of the carrier under the contract of carriage is to carry the goods by a particular ship and then to deliver the same on the arrival of the ship at the port. The manner in which the delivery will take place will depend on the particular terms of the bill of lading and on the custom of the port of destination. But whether the delivery has to be made to the consignee at the ship's side or is made on the quay side there can be little doubt that the carrier's duty is to start the delivery of goods as soon as the ship arrives at the

East &- West Steamship Co. v.

Ramalittgam

Chellir

Das Gupta].

I960

East So West Steamship Co.

. v.

Ramalingam

Chettia1

Das Gupta ].

port of destination and to complete the delivery before the ship leayes the port. In a particular case the carrier may not do his duty. That cannot however alter the fact of the existence of his duty to complete the delivery between the arrival of the ship at the port and the departure of the ship from the port. If as regards any particular goods this duty remains unperformed at the time when the ship leaves the port there can be no escape from the conclusion that the point of time when the ship leaves the port is the latest point of time by which the goods should have been delivered. On the records of both the Bombay appeals we find the bills of lading for these carriages of contract. Paragraph 10 of the bill of lading in Civil Appeal No. 92 of 1948 contains the terms as regards the discharge of cargo in these words:-

" 10.

Discharge of goods: The goods may be discharged as soon as the ship is ready to unload and as fast as she is able, continuously day and night. Sundays and holidays included, and if the consignee fails to take delivery of his goods immediately the ship is ready to discharge then the company shall be at liberty to land the said goods on to the wharf or quay or into warehouse, or discharge into hulk, lazaretto or craft or any other suitable place without notice and the goods may be stored ... ......................... The company shall have the option of making delivery of goods either over the ship's side or from lighter or store ship of hulk or custom house or warehouse or dock or wharf or quay at consignee's risk. In all cases the company's liability is to cease as soon as the goods are lifted from and leave the ship's desk ......... ".

In the Civil Appeal No. 91 of 1958 the terms of delivery are in paragraph 15 and is in these words:-

" 15.

The company is to have the option of delivering these goods or any part thereof, into receiving ship or board or craft or landing them at the risk and expense of the shipper or consignee as per scale of charges to be seen at the Agents Offices ....... " In these appeals we are not concerned with the facts of these terms of delivery of contract except that they

...

show that it is clearly understood between the parties to the contract that delivery is to commence as soon as possible after the arrival of ship at port and completed before the ship leaves the port. Indeed even if there were not definite terms in the bill of lading as regards the delivery it would follow necessarily from the very nature of the carriage of goods by ship that the delivery of the cargo carried by the ship should be made between the date of the arrival at the port and its departure from the port. For our present purpose it is unnecessary to consider whether delivery to the dock authority in any of these cases was or would have been equivalent to the delivery to the consignee. That would depend upon the custom of the port of discharge or on statutory provisions or express stipulations in the bill of lading. But whether the delivery is to be made to the consignee or to anybody else on his behalf the duty of the ship's master is to start the delivery as soon as possible after the ship's arrival at the port and to complete it before the date of departure from the port. Before the ship has actually left the port it is not possible to say that the time when delivery should be made has expired. Once however the vessel has left the port it cannot but be common ground between the carrier and the consignee that the time when delivery should have been made is over. It is this point of time, viz., the time when the ship leaves the port, which in our opinion sho.uld be taken as the time when the delivery should have been made. The fact that after this point of time correspondence started between the carrier and the consignee as regards the failure to deliver and at a later point of time the carrier communicates his inability to deliver cannot affect this question. Nor can the ultimate repudiation of any claim that may be made by the shipper or the consignee affect the ascertainment of the date when the goods should have been delivered. The arrival at port of the vessel by which the goods have been contracted to be carried being known and the departure being equally an ascertainable thing and the duty of the carrier being necessarily to complete the delivery before leaving the port, the date , by which the delivery should have been made is

East(;,, West Steamship Co.

v. Ramalingam Chettiar

Das Gupta ].

Ig6o

East c;. West Steamship Co.

Ramalingam

Chettiar

Das Gupta J.

$40 SUPREME COURT REPoRTS [1960] -----

already a fixed point of time and later correspondence, claims or repudiation thereof can in no way change it.

We have therefore come to the conclusion that whatever be the proper mode of ascertaining the date when delivery "ought to be made" under Art. 31 of the Limitation Act-whether that be the reasonable time for delivery in the circumstances of the case or the date when after correspondence the carrier intimates its inability to deliver or the date of the final . repudiation of the claim on a claim for compensation having been made or in the case of part delivery the date when the bulk of the consignment was delivered the date when the goods should have been deliveredfor the purpose of the third clause of the 6th paragraph of Art. III of the Act is the date when the ship by which the goods were contracted to be carried has left the port at which delivery was to be made.

Applying the above clause to the facts of the cases before us it is obvious that these suits for compensa. tion were not maintainable. It is hardly necessary therefore to consider the additional defence raised in all the three suits by the shipping companies, viz., that the claim for compensation not having been made within thirty days from the date of arrival of the vessel in accordance with the terms of the bill of lading no compensation is payable. The learned Judges of the Bombay High Court did not think it necessary to consider this additional defence as they accepted the defence based on the third clause of the 6th paragraph of Art. III which has been discussed above.

The learned Judge in the Madras High Court had however to consider this additional defence in view of his conclusions against the shipping company on the other defence. He held that the stipulation in the bill of lading that if no claim for compensation is made within thirty days from the date of arrival of the ship the shipping company will not be liable for compensation is void as it ofl:ends against para. 8 of Art. III. The relevant portion of this paragraph is in these words :-

" 8. Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection

' t

!'

with goods arising from negligence, fault or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect." It cannot be seriously disputed that the stipulation under consideration does directly offend against the provisions of the 8th paragraph. For it seeks at least to " lessen ", otherwise than provided in the rules in the Schedule the liability of the ship or carrier for loss or damage to goods or in connection with goods caused by the failure to deliver. This stipulation requiring claim for compensation being made within one month from the date of arrival of the ship is therefore null and void.

Though the additional defence raised by the shipping companies must therefore fail, the main defence, as we have already found,. succeeds. None of the suits were brought within a year from the date when the ship carrying the goods left the port of discharge.

We therefore dismiss with costs the Civil Appeals Nos. 91 and 92 of 1958 and confirm the order of dismissal made by the Bombay High Court. One set of hearing costs will have to be paid.

Civil Appeal No. 88 of 1956 is infructuous because of the fact, as already indicated, that after the order of. remand now appealed from was made by the Madras High Court the suit was heard in the Small Causes Court and a decree was passed and that decree has become final.

We therefore dismiss Civil Appeal No. 88 of 1956, as already ordered by this Court when giving leave to appeal; the appellant will pay the costs of the appeal to the respondent .

.A.:p:peals dismissed.

East & West Steamship Co. v.

Ramalingam Chettiar

Das Gupta j.

S. K. RAMALINGAM CHETTIAR

K. c. DAS GUPTA, JJ.

cl. 3

Madras High Court

Bombay High Court

cl. 3

cl. 3

February 15, 1954

B. Sen

S. N. Mukherjee

B. N. Ghosh

C.R. Pattabhiraman

Ganapathy Iyer

C. K. Daphtary

S. N.

Andley

J.B. Dadachanji

Rameshwar Nath

Gopalakrishnan

A. V. Viswanatha Sastri

G. Gopalakrishnan

Ramalingam

Chettiar

Das Gupta

Das Gl'PTA

High Court of Madras

High Court of Bombay

Madras

Bombay

S. S. Fakira

East and West Steamship Co.

August 1, 1948

August 25, 1948

September 25, 1948

March 24, 1950

June 27, 1950

cl. 6

Art. 3

s. 115

the Code of Civil Procedure

III of the Schedule to the Act

May 4, 1954

October 11, 1954

III of the Schedule to the Act

S. S. Tweedsmuir

S. S.

Finnamore Hill

S. S. Ismalia

S. S. Finnamore Hill

September 6, 1948

Finnamore

Tweedsmuir Park

Clause 20

S.S. Finnamore Hill

19th September, 1948

S.S.

Ismalia

25th September, 1948

S.S. Tweedsmuir Park

2.7th September, 1948

September 19, 1948

September 27, 1948

Cochin

Badagara

December 5, 1949

Bharat Lines Ltd.

Indian Carriage of Goods by Sea Act

cl. 6

Brussels

Scrutton

American Harter Act or the Australian

U. K.

Australia

Canada

Newfoundland

New Zealand

Belgium

France

U. S. A.

Atkin

United Kingdom

India

Section 2

Schedule 8

Indian

Das Gupta

East & West Steamship Co. v.

Ramalingam

Moulton

Bombay High°Court

Art. 19

Limitation Act

Art. 31

Limitation Act

Art. 31

Limitation Act

Art. 31

Limitation Act

Art. 31

Ramalingam

Ramalingam Chettiar

Art. 31

Limitation Act


1\.fay 4.

SUPREME COURT REPORTS

LUHAR AMRIT LAL NAGJI v.

. [1960]

DOSHI J A YANTILAL JETHALAL AND OTHERS.

(P. B. GAJENDRAGADKAR, K. N. W ANCHOO and K. c. DAS GUPTA, JJ.) Hindu Law-Father's anticedent debt-Pious obligation of sons to pay-Onus.

A Hindu father, speculating in gold and silver, lost heavily and sought to recoup by borrowing on a mortgage. The mortgagee obtained a decree and sought to execute it by sale of the mortgaged property. The sons and the wife sued for a declaration that the decree was not binding since the debt though antecedent was immoral (avyavaharik). The trial court found in their favour and on appeal the District Judge affirmed its decision. On second appeal the High Court held that it was for the plaintiffs to prove not merely that the antecedent debt was immoral but also that the mortgagee had notice of the said character of the debt and since they had led no evidence to discharge that onus, they were not entitled to a decree. The plaintiffs came up on appeal by special leave : Held, that the High Court took the correct view of the law and the appeal must fail. • Any attempt to test the correctness of the principles laid down by the Privy Council in the case of Suraj Bunsi Koer, which have held the field for more than three quarters of a century, purely in the light of ancient Sanskrit texts would now not merely be hit by the principle of stare decisis, which must inevitably come into operation, bnt would also be inexpedient and futile.

Suraj Bunsi Koer v. Sheo Proshad Singh, (r879) L.R. 6 I.A. 88 and Brij Narain v. M angla Prasad (r923) L.R. SI I.A. r29, applied.

The principles laid down in those two cases make no distinction between an alienation made for the payment of the father's antecedent debt and an alienation made in execution of a decree passed against him and in both cases the sons must j>rove not only the immoral character of the antecedent debt but also the know ledge of the alienee.

Case-law considered.

CrVIL APPELLATE JURISDICTION: Civil Appeal No. 121 of 1956.

Appeal by special leave from the judgment and order dated January 29, 1953, of the former Saurashtra High Court in Civil Second Appeal No. 82 of 1952, arising out of the judgment and decree dated April 29, 1952, of the District Judge, Rajkot, in Civil Appeal No. 4 of 1952. ·

W. S. Barlingay and A.G. Ratnaparkhi, for the 1960

appellant. · Luhar A111ritlal M. L. Jain, for respondent No. 1.

Nag; i

1960. May 4. The Judgment of the Court was v. delivered by Doshi ]ayantilal j ethalal GAJENDRAGADKAR, J.-This appeal by special _ leave raises an interesting q 11 uestion of H 1 . ind~ Law. dif Gajendragadkar J., a Hindu son wants to cha enge an a ienatwn ma e by his father to pay his antecedent debt is it necessary for him to prove not only that the said antecedent debt was immoral but also that the alienee had notice of the immoral character of the said debt ? The High Court has held that the son must prove both the immoral character of the debt and notice of it to the alienee; the correctness of that view is challenged before us by the appellants in the present appeal.

The appellants are two brothers, Amritlal and Mohanlal Nagji, and their mother, Bai Jakal Arjan.

The three appellants and respondent 2, Nagji Govind, the father of appellants 1 and 2 and the husband of appellant 3, constitute an undivided Hindu family.

Repondent 2 executed a mortgage deed in favour of respondent 1, Jayantilal Doshi, in respect of the joint. famil:y property for Rs. 2,000.

This document was executed on February 5, 1946. In 1950, respondent 1 sued respondent 2 on his mortgage, obtained a decree for sale and filed an application for execution' for sale of the mortgaged property. Sale was accordingly ordered to be held. At that stage the appellants filed the present suit on April 30, 1951, and claimed a. declaration that the decree passed in the mortgage suit (Civil Suit No. 589 of 1949) in favour of respondent 1 and against respondent 2 was not. binding in respect of the 3/4th share of the appellants in the mortgaged property ; they also asked for a perpetual injunction restraining respondent I from executing the said decree in respect of their share. To this suit the mortgagor, respondent 2, was impleaded as a party.

In their plaint the appellants have stated that respondent 2 had speculated in gold and silver and had thereby lost a large amount of money which he sought to make up by borrowing amounts from several creQ.itors.. One of such creditors was Dharsi Shami,

z960 to whom Rs. 2,000 were payable by respondent 2.

According to the appellants the impugned mortgage Luhar Amritlal h d b d b d .C h Nagji a een execute y respon ent 2 ior t e payment v. of the said debt of Rs. 2,000, and since the said debt Doshi Jayantilal was immoral or avyavaharik the appellants were not

fethalal bound by it.

The claim was resisted by both respondent I and Gajendragadk•• ]. respondent 2 who pleaded that the mortgage had been executed for the payment of debts which were binding on the family and that there was no substance in the plea of immoral debts raised by the appellants.

It was also alleged by them that the mortgaged property was not the property of the undivided Hindu family.

On these pleadings the trial court framed a, ppropriate issues. It found that the mortgaged property was the coparcenary property of the family, that the mortgage-deed in question had been executed to pay off a debt which was immoral and that in consequence the mortgage was not binding against the appellants.

According to the trial court the debt contracted by respondent 2 to pay the losses incurred by him in speculative transactions must be held to have been contracted for illegal and immoral purposes and as such the subsequent alienation for the payment of the said debt cannot bind the appellants. The trial court also observed that respondent I had not stepped into the witness box to give evidence to show that he had made any enquiries about the existence of any antecedent debts payable by respondent 2. In the result the suit filed by the appellants was decreed. Against the said decree respondent 1 preferred an appeal before the District Judge, but the District Judge agreed with all the findings made by the trial court and dismissed the said appeal. Respondent I then took the matter before the High Court of Saurashtra in second appeal.

The High Court agreed that the mortgaged property wa8 the property of the joint Hindu family and that respondent 1 had made no attempt to prove any enquiry on his part before he entered into the transaction. The High Court did not think it necessary to

conRider whether the antecedent debt due to Dharsi Sbamji, for the repaymeut of which. the impue; ned

...

mortgage was created, was in law immoral or illegal, 1960 it proceeded to deal with the appeal on the assumption 1-uhar A mritlal that the said debt was illegal or immoral. On that Nagji assumption the High Court considered the material v. principles of Hindu Law and held that it was for the Doshifayantilal appellants to prove not only that the antecedent debt 18!!:.~!al was immoral or illegal, but also that respondent I had Gajendragadkar 1. notice of the said character of the debt ; and since the appellants had led no evidence to discharge this onus they were not entitled to claim any relief against respondent I. On this finding the second appeal preferred by respondent I was allowed and the suit filed by the appellants was ordered to be dismissed. It is against this decree that the appellants have come to this Court by special leave.

On behalf of the appellants Dr. Barlingay has urged that the principles of Hindu Law do not justify the view taken by the High Court that the appellants had to prove the alienee's knowledge about the immoral character of the antecedent debt. He concedes that the judicial decisions on this point are against his contention; but he argues that there is paucity of caselaw on the subject, and that, having regard to the importance of the point raised by him, we should examine the true legal position by reference to the texts rather than by reference to judicial decisions .

J, et us then set out the appellant's argument based on the textual provisions of Hindu Law.

The doctrine of pious obligation under which sons are held liable to discharge their father's debts is based solely on religious considerations; it is thought that if a person's debts are not paid and he dies in a state of indebtedness his soul may have to face evil consequences, and it is the duty of his sons to save him from such evil consequences. The basis of the doctrine is thus spiritual and its sole object is to confer spiritual benefit on the father. It is not intended in any sense for the benefit of the creditor. As has been observed by the Privy Council in Sat Narain v.

Das (1 ) this doctrine "was not based on any necessity for the protection of third parties but was based on

(r) (1936) L.R. 63 I.A. 384, 395

x960

Luha,- Ani,-itlal

Nagji v.

Doshi ] ayantilal

]ethalal

Gajendragadkar J.

the pious obligation of the sons to see their father's debts paid."

This doctrine inevitably postulates that the father'R debts which it is the pious obligation of the sons to repay must be vyavaharik. If the debts are not vyavaharik or are avyavaharik the doctrine of pious obligation cannot be invoked. The expression 'avyavaharik' which is generally used in judicial decisions has been based on the text of Usanas which has been quoted by Mitakshara in commenting on the relevant text of Yajnavalkya (').

According to Usanas, whatever is not vyavaharik has not to be paid by the son. 'Na vya vaharikam' are the words used by U sanas, and put in a positive form they mean 'avyavaharik'. Colebrooke has translated these words as meaning "debt for a cause repugnant to good morals". These words have received different interpretations in several decisions.

Sometimes they are rendered as meaning "a debt which as a decent and respectable man the father ought not to have incurred": Darbar Khachar v. Khachar Hansar (2); or, "not lawful, usual or customary" : Chhakauri Mahton v. Ganga Prasad (3); or, "not supportable as valid by legal arguments and on which no.right could be established in a court of justice in the creditor's favour": Venugopala Naidu v. Ramanathan Chetty (').

But it appears that in Hemraj v. Khemchand(') the Privy Council has, on the whole, preferred to treat Colebrooke's translation as making the nearest approach to the real interpretation of the word used by Usanas; whatever may be the exact denotation of the word, it is clear that the debt answering the said description is not such a debt as the son is bound to pay, and so as soon as it is shown that the debt is immoral the doctrine of pious obligation cannot be invoked in support of such a debt.

In this connection, it has also been urged by Dr. Barlingay that the onus placed on the sons to prove the immoral character of the debt is already very heavy.

In discharging the said onus the sons are required to prove not merely that their father who

(I) Yajnavalkya, ii, 47.

(2) (1908) I.L.R. 32 Bom. 348, 351.

(3) (19II) I.L.R. 39 Cal. 86z, 868, 869. (4) (19I2) I.L.R. 37 M•d. 458, 46o.

(5) I.L.R. [1943j All. 727.

.----; .

contracted the impugned debt lived an extravagant or rg6o immoral life but they are required to establish a direct Luhar A mrillal connection between the immorality of the father and Nagji the impugned debt. If this onus is made still more v. onerous by requiring the sons to prove that the alienee Doshi /ayantilal had knowledge of the immoral character of the antece- Jeal' dent debt, it would virtually make the sons' taskGajendragadkar J. impossible, and notwithstanding the sprit underlying the doctrine of pious obligation the sons in fact would be compelled to pay the immoral or impious antecedent debt of their father.

That is why the rule which requires that the sons should prove the knowledge of the alienee is inconsistent with the basis of the doctrine of pious obligation. Thus presented the argument is no doubt simple and prima facie attractive. The question which we have to consider is whether we should attempt the task of examining the texts and determining the true effect of the original provisions of Hindu Law in spite of the fact that the point raised is covered by judicial decisions which have been treated for many years as laying down the correct law on the subject.

Before answering this question it is necessary to consider the relevant judicial decisions. In 1874, the Privy Council had occasion th consider this branch of Hindu Law inGirdhareeLal v. KantooLalandMuddun Thakoor v. Kantoo Lal (1). It appears that Kantoo Lal and his minor cousin had brought a suit to recover

possesion of certain properties belonging to their family which had been sold respectively by a private sale and at court auction. The private sale had taken place on July 28, 1856, and the deed had been executed by the fathers of the two plaintiffs.

The case of the plaintiffs was that they were not bound by the impugned transaction. The Principal Sudder Ameen dismissed the suit but the High Court set aside that decision and a warded Kan too Lal one-half of his father's share. The claim made by the other plaintiff was dismissed on the ground that he had not been born at the time of the impugned transaction.

The decree passed in favour of Kantoo Lal was challenged by the alienee before the Privy Council. Evidence showed that at the

(t} (1874) L.R. I I.A. 32x.

.r960

Luhar Amrillal

Nagji .v.

Doshi J ayantilal jethalal

Gajendragadkaf' j.

time when the sale deed was executed a decree had been obtained against Bhikharee Lal, the father of Kantoo Lal, upon a bond executed by him in favour of his creditor and an execution had issued against him upon which the right and share in the property had been attached. It was therefore thought necessary to raise money to pay the debt of Bhikharee Lal and get rid of the execution. It was on these facts that the Privy Council had to consider whether Kantoo Lal was justified in challenging the binding character of the sale transaction. In dealing with this point the Privy Council referred with approval to the rule which had been enunciated by the Board earlier in the case of Hunooman Persaud Panday v. Mussummat Babooee Munraj Koonweree (1). The rule of Hindu Law bad been thus stated by Lord Justice Knight Bruce in that judgment: "The freedom of the son from the obligation to discharge the father's debt, has respect to the nature of the debt, and not to the nature of the estate, whether ancestral or acquired by the creator of the debt".

Then the Privy Council held that if the debt of the father had been contracted for immoral purpose the son might not be under arty pious obligation to pay it ; but that was not the case before the Board. It' had not been shown that the' bond upon which the decree was obtained was for immoral purpose; and on the other hand, it a.ppeared that an action had been brought on the bond, a decree had been passed on it and there was nothing whatever to show thattbe debt was tainted with immorality. The Privy Council also noticed that Kantoo Lal bad brought the action probably at the instigation of the father, and, we may add, that is many times the feature of such litigation. On these facts the Privy Council set aside the decree passed by the High Court and held that Kan too Lal was not entitled to any relief. It would thus be seen that this decision merely shows that where any alienation has been effected by the father for the payment of his antecedent debt and the said antecedent debt is not shown to be immoral the .son cannot challenge the validity of the alienation. Since the antecedent debt was not shown to be immoral no question arose as to

(t) (1856) 6 M.I.A. 393, 421.

what would be the nature of the onus which the son r96o would have to discharge if the antecedent debt is in Luhar Amritlal fact shown to be immoral.

Nagji In regard to the auction sale which the plaintiffs v. challenged in that suit the Privy Council held that a Doshi Jayantilal

d . . l b d Jethalal purchaser un er an execut10n 1s sure y not oun to __ go back beyond the decree to ascertain whether the Gajend•agadk1Jr J. court was right in giving the decree, or having given it, in putting up the property for sale under an execution upon it. Evidence showed that the auction purchaser acted bona fide, had made enquiries and was satisfied that the decree had been properly passed and purchased the property at auction sale on payment of valuable consideration.

On these facts it was held that the plaintiffs were not entitled to any relief. This decision als0 was not concerned with the position that would arise if the antecedent debt had in fact been proved to be immoral.

That question arose before the Privy Council in Suraj Bunsi Kaer v. Shea Prashad Singh( 1). In that case an ex parte decree for money had been obtained against a Hindu governed by Mitakshara on a mortgage bond, the property .mortgaged being ancestral immoveable estate. Under the said decree the mortgaged property was attached amt· te decree-holder sought to bring the said property to sale. Prior to the execution sale, however, the judgment-debtor died and his infant sons and co-heirs filed a petition of objections; but they were referred to a regular suit. In the suit which they filed they challenged the binding character of the debt and claimed appropriate relief against the execution creditor and the purchasers. The Privy Council held that as between the infant sons of the judgmentdebtor and the execution creditor neither the sons nor the ancestral immoveable properties in their hands was liable for the father's debt; and as regards the purchasers, it was held that, since they had purchased after objections had been filed by the plaintiffs, they must be taken to have had notice actual or constructive thereof and therefore to have purchased with the knowledge of the plaintiffs' claim ana subject to the result of the suit to which they had been referred,

(I) (1879) L.R. 6 I.A. 88.

z96o The subordinate judge decreed the claim, set aside

Luhar Amritlal the mortgage bond, the decree thereon and the execu- Nagji tion sale thereof.

By this decision the mortgage, the v. decree and the execution sale in regard to the alienor's Doshi Jayantilal share had also been set aside. The High Court, howl ethalal d h d _ ever, reverse t at ju gment and dismissed the suit.

G•jendragadkar ]. The Privy Council partly allowed the appeal preferred by the plaintiffs, and held that the shares of the plaintiffs were not bound either by the mortgage deed, the decree or the execution sale. Thus it is clear that in that case the Privy Council held that the antecedent debt was for immoral purposes and that the auction purchaser had notice of it. But in dealing with the question of law raised before it the Privy Council had occasion to examine the relevant provisions of Hindu Law and the decisions bearing on them.

Amongst the decisions considered by the Privy Council was the case of Kantoo Lal (1 ). Sir James Col vile, who delivered the judgment of the Board, referred to the case of Kantoo Lal (1) and observed that "this case then, which is a decision of this tribunal, is undoubtedly an authority for these propositions : 1st. that where joint ancestral property has passed out of a joint family, either under a conveyance executed by a father in consideration of an antecedent debt, or in order to raise money to pay off an antecedent debt, or under a sale in execution of a decree for the father's debt, his

sons, by reason of their duty to pay their father's debts, cannot recover that property, unless they show that the debts were contracted for immoral purposes, and that the purchasers had notice that they were so contracted; and 2ndly, that the purchasers at an execution sale, being strangers to the suit, if they have not notice that the debts were so contracted, are not bound to make inquiry beyond what appears on the face of the proceedings ''. The first proposition which has been laid down in this judgment as deduced from Kantoo Lal's case (1) is clear and unambiguous. Where ancestral property has been alienated either under a conveyance executed by the father in consideration of an antecedent debt, or in order to raise money to pay off an antecedent debt, or under a sale in executic11 of

(I) (1874) L.R. I I.A, 321,

..._ ____ .. , ..... ~· _,___-·

...... .· a. decree for the father's debt; the sons have to prove .· 'roo not only that the antecedent debts , were immoral: but . also that the purchasers had notice that. they were SO LuAaivftr."1al contracted .. .,: -\Vith . respect, it : is open to argument . v. . whether the two propositions inevitably arise from the Doshi Jayattilal

. earlier . decision of ihe :Privy Council in Kantoo Lal's Jet1tarai case (1~ ; : bu~ since J8:79.when this proposition was thusGajendragadAar:f.' enunciated it has apparently been accepted by all the · courts in India as the correct statement of Hindu Law ··

) . on the point. : . ··.:. ·, ..: ;,, , ' :' ': ·:; ._. ,, : ... . :, ~: . , In Sat.Narain v~- Behari , Lal, (9) while .. dealing with :· the que_stion as"to wheher the ·.property of the joint r . family consisting of an insolvent Hindu father, and his ... sons does not, by vitue of the ' father's adjudication as insolvent; bcaina vested in the. official assignee, Sir J'ohn Edge, has incidentally referred to these two propositions with approval. No decision has been cited

... -. before us .. where the correctness . of these propositions has ever hE'.en doubted . or questioned ... \ . \ , _ ·. '. .. ; '. , .

_ .In this connection it may be relevant to recall: that soon after the Privy Council pronounced its.judgment

in .. the: case of Kantoo Lal (1) Bbttacha.ryya, :in his Tagore Law Lectures on the . '~ Law:· relating to Joint . . .·,' Hindu Family~, (pp. 549, 550), examined the said deci.

. ; ~--.. sion and_ obs_erved that "many in the profession think . ·,.·:·: that the case dealt a. death-blow'. to the institution of.

Hindu family, that it has done a.way with the essential ',' feature of that institution, 'that it .has rendered the ' . father independent of the control of his sons in dealing > with allcestral : property which ; had-:all along been looked upon. as a. common fund belonging. as much to the aans a.a to. the . father".·. Having thus _expressed --· .· his surprise at . the decision Mr. Bhattacharyya. also added that " _th~ shifting of the burden _of proof to the 'son . ..imposed _upon him, a , difficulty'._ which is almost : _ practically insuperable". Nevertheless, .. he ~. has not

failed to take notice of the fact that.the promulgation of the princ.iple which was adopted.by the Privy Coun cil had become almost a necessity to . put:an end.to serious abuse which had become rife in the !Iitaksha.ra. . districts ; . and. he has added that ~' in those places. the fathers _of families knowing well that ancestral -pro-· perties ·:were scure against the cis .. C?f th~4-... own '" - :-.• . •" •"

(1) (187-tl LR. l l.A. $2'•

(2) (1924) LR. $2 t.~~ 2i. ~·

. \

' -----·~.;,,;. ......-.. ~._...-·~~~~~~

.. - ·.·: . .:.. . .. ~· .

r960 creditors bad established almost a regular system of inveigling innocent persons of substance to lend Luhar Amritlal Nagjt . money to them and when a decree was obtained and v. properties were attached they used to put forward Do<hi ]ayantilal their sons to contest the creditor's claims". Accord- ] et halal • h b • b C _ mg to t e ant or the resuscitat10n y the Privy oun-

Gajendragadkar ;. cil of the forgotten rule of Hindu Law "served as a timely intervention to deal a death-blow to a revolting practice of systematic fraud".

These observations incidentally explain the genesis of the decision in Kantoo Lal' s case (1) and give us a clear idea as to the mischief which the Privy Council intended to check by laying down the said principles.

Whilst we are dealing with this question we may refer to the decision of the Privy Council in the case of Brij Narain v. Mangla Prasad(') where the vexed question about the powers of the manager and the father to bind the undivided estate was finally resolved by the Privy Council, and Lord Dunedin, who delivered the judgment of the Board laid down five propositions in that behalf in these words :

(1) The managing member of a joint undivided estate cannot alienate or burden the estate qua manager except for purposes of necessity ; but

(2) If he is the father and the other members are the sons, he may, by incurring debt, so long as it is not for an immoral purpose, lay the estate open to be taken in execution proceeding upon a decree for payment of that debt.

(3) If he purports to burden the estate by mortgage, then unless that mortgage is to discharge an antecedent debt, it would not bind the estate.

(4) Antecedent debt means antecedent in fact as well as in time, that is to say, that the debt must be truly independent and not part of the transaction impeached.

(5) There is no rule that this result is affected by the question whether the father, who contracted the debt or burdens the estate, is alive or dead.

Propositions 2, 3 and 4 with which we are concerned in the present appeal show that a mortgage created by the father for the payment of his antecedent debt

. (t) (1871) L.R. 1 I.A. ~2t.

'.'. \ ' . .

.would bind his sons ; so that, if the sons want to challenge the validity of the mortgage they would Luhar Amrillal have to show not only that the antecedent debt was Nagji immoral but that the alienee had notice of the imv. • moral character of the said debt. That would be the Dos!fi..Javantilal result of the first proposition laid down in the case of Jef!ialal Suraj Bunsi Kaer (1). Gajndrnadkar ].

Now the propositions laid down by the Privy Coan cil in the case of Brij Narain (2) as well as in the case of Suraj Bunsi Kaer (1) may be open to some objections based on ancient Hindu texts. As Dr. Kane has pointed out, for the words "antecedent debt" which were used for the first time by the Privy Council in the case of Suraj Bunsi Kaer (1) there is nothing corresponding in the Sanskrit authorities, and that the distinction made by the Privy Council in the case of Brij Narain (2) between a simple personal money debt by the father and the debt secured by the mort- . gage is also not borne out by the ancient texts and the commentaries alike (3).

So we go back to the question with which we began: Would it be expedient at this stage to consider the question purely in the light of ancient Sanskrit texts even though for more than three quarters of a century the decision in Suraj Bunsi Kaer's case (1) has apparently been followed without a doubt or dissent.

We have carefully considered this matter and we are not disposed to answer this question in favour of the appellants. First and foremost in cases of this character the principle of stare decisis must inevitably come into operation_. For a number of years transactions as to immovable property belonging to Hindu families have taken place and titles passed in favour of alienees on the understanding that the propositions of law laid down by the Privy Council in the case of Suraj Bunsi Kaer (1) correctly represent the true position under Hindu Law in that behalf. It would, we think, be inexpedient to reopen this question after such a long lapse of time. Besides it would not be easy to decide today what the relevant Sanskrit texts really provide in this

(1) (r879) L.R. 6 I.A. 88. f2) (19•3) L.R. ~I I.A. I2Q.

(3) "History of Dharmasastra "-By Dr. P. V. Kane, Vol, III, p. 450. ·

III

z96o matter. It is well.known that though the Smriti texts are given a place of pride among the sources of Hindu LuharAmritlal Law, int.he development of Hindu Law sadachar or Nagji v. approved conduct, which is another source, has played Doshi Jayantil•I an important part (1 ).

The existence of different fethalal schools of Hindu Law and sub-schools clearly brings

Gajend.agadkar ]. out the fact that during the ages Hindu Law has made changes so as to absorb varying customs and usages in different places from time to time. H is a remarkable feature of the growth of Hindu Law that, by a skilful adoption of rules of construction, commentators successfully attempted to bridge the distance between the letter of the Smriti texts and the existing customs and usages in different areas and at different times.

This process was arrested under the British Rule; but if we were to decide to-day what the true position under Hindu Law texts is on the point with which we are concerned, it would be very difficult to reconcile the different texts and come to a definite conclusion. In this branch of the law several considerations have been introduced by judicial decisions which have substantially now become a part and parcel of Hindu Law as it is administered ; it would, therefore, not be easy to dis-engage the said considerations and seek to ascer- -tain the true effect of the relevant provisions contained in ancient texts considered by themselves.

It is also well-known that, in dealing with questions of Hindu Law, the Privy Council introduced considerations of justice, equity and good conscience and the interpretation of the relevant texts sometimes was influenced by these considerations. In fact, the principle about the binding character of the antecedent debts of the father and the provisions about the enquiry to be made by the creditor have all been introduced on considerations of equity and fair-play.

When the Privy Council laid down the two propositions in the case of Suraj Bunsi Koer (') what was really intended was to protect the bona fide alienees (I) "The Sruti, the Smriti, the approved usage, what is agreeable to one's soul (or good conscience) and desire sµrung from due deliberation, are ordained the foundation of Dharma (law) "-Yajnavalkya, I. 7. "Whatever customs, practices and family usages prevail in a country shall be preserved intact when it comes under subjection by conquest"- Yajnavalkya, J_ 343 \2) (1879) L.tl. 6 LA. 88.

_._..

against frivolous or collusive claims made by the z960 debtors' sons challenging the transactions. Since the h Luhar Amritlal said propositions have been laid down with t e object Nagji of doing justice to the claims of bona fide alienees, we v. do not see any justification for disturbing this well- Doshi Ta.vantilal established position on academic considerations which .fethalal may perhaps arise if we were to look for guidance toGajendragadkar J. the ancient texts to-day. In our opinion, if there are any anomalies in the administration of this branch of Hindu Law their solution lies with the legislature and not with the courts. What the commentators attempted to do in the past can now be effectively achieved by the adoption of the legislative process. Therefore, we are not prepared to accede to the appellants' argument that we should attempt to decide the point raised by them purely in the light of ancient Sanskrit texts.

It now remains to consider some of the decisions to which our attention was invited. In Pulavarthi Lakshmanaswami & Ors. v. Srimat Tirumala Peddinti Tiruvengala Raghavacharyulu (1 ) the Madras High Court was dealing with the debt contracted by the father on a promissory note executed by him for the payment to his concubine for meeting the expenses of her grand-daughter's marriage. The sons had no difficulty in proving that the debt was immoral; but it was urged on behalf of the creditor that the sons could not succeed unless the creditor's knowledge about the immoral character of the debt had been established, and reliance was apparently placed upon the two propositions laid down by the Privy Council in the case of Suraj Bunsi Koer (2).

This plea was rejected by the High Court. Patanjali Sastri, J., as he then was, who delivered the judgment for the Court observed that "the remarks made by the Privy Council had reference to family property sold in execution of a decree obtained against the father as to which different considerations arise, the bona fide purchaser not being bound to go further back than the decree".

In other words, this dcision shows that the principles which apply to alienations made by a Hindu father to satisfy his antecedent debts cannot be extended and (I) A.T, R. IQ43 Mad. 202.

(3) (1879) L.R. 6 I.A, 88,

I96o invoked to cases where the sons are challenging the binding character of the debts which are not antece- Luha' Am.ii/al dent and are in fact immoral.

Nagji

The Allahabad High Court has had occasion to Doshi Jayantilal consider different aspects of this problem in several J ethalal cases, and different, if not somewhat conflicting, views -- appear to have been taken in some of the decisions.

Gajend•agadka• j. W 11 h s: t 1 t d · h. h e w1 , owever, re.er o on y wo ec1s1ons w 1c are directly in point. In Kishan Lal v. Garuruddhwaja Prasad Singh & Ors. (1), Burkitt, J., has observed that had it been proved that the debt had been contracted for immoral purpose and that the person who advanced the money was aware of the purpose for which it was being borrowed the son would not have beeu liable. This, however, isa bare statement of the law, and the judgment does not contain any discussion on the merits of the proposition laid down by the judge nor does it cite the relevant judicial decisions bearing on the point. In Maharaj Singh v. Balwant Singh (2) the same High Court was dealing with a mortgage by Sheoraj Singh to pay the antecedent debts of the father.

Maharaj Singh, the younger brother, also joined in the execution of the document. It was, however, found that at the material time Maharaj Singh was a minor and so the mortgage was, as regards his interest in the mortgaged property, absolutely void. This finding was enough to reject the mort-

.~ gagee's claim against the share of Maharaj Singh in the mortgaged property; but the High Court proceeded to consider the alternative ground urged by Maharaj Singh and held that it was not necessary for Maharaj Singh to prove notice of the immoral character of the antecedent debt because the ancestral property in question had not passed out of the hands of the joint family.

Maharaj Singh was defending his title; he was not a plaintiff seeking to recover property, but a defender of his interest in ancestral property of which he was in possession. These observations show that the High Court took the view that the propositions laid down in the case of Suraj Bunsi Koer (') would not apply to cases of mortgage but were confined to cases of purchase. Wedo not think that the distinction between a purchase and a mortgage ma.de in this (I) (1890) I.L.R. 2I All. 238,

(2) (1906) I.L.R. z8 All. 508. \3) (1879) L.)l. 6 I.A. 88.

- '

I,.

\ t

decision is well founded. The propositions in question r96o treated an alienation made for the payment of the Luhar Amritlal father:'s antecedent debt on the same footing as an Nagji alienation made in execution of a decree passed against v. him and in both cases the principle enunciated is that Doshi Jayantilal in order to succeed in their challenge the sons must Jealal prove the immoral character of the antecedent debtcajendragadkar J. and the knowledge of the alienee. Having regard to the broad language used in stating the two propositions, we do not think that a valid distinction could be made between a mortgage and a sale particularly after the decision of the Privy Council in the case of Brij Narain (1).

That is the view taken by the Nagpur High Court in Udmiram Koroodimal and Anr. v.

Balramdas Tularam & Ors. (2 ).

In the result the appeal fails, but in the circumstances of this case there will be no order as to costs.

Appeal dismissed.

THE VANGUARD FIRE AND GENERAL

INSURANCE CO. LTD., MADRAS

M/S. FRASER AND ROSS AND ANOTHER. (P. B. GAJENDRAGADKAR, K. N. W ANCHOO and K. c. DAS GUPTA, JJ.) Ins1Jrance-Company closing insurance business-Government's order directing investigation of company's affairs-Legality- " Insurer", meaning of-Insurer's liability after closing of business --Extent-" Liabilities not satisfied and not otherwise provided for" - General Clauses Act, I897 (IO of I897), s. I3-Insurance Act, I938 (4 of I938), SS. 2(9), 2D, 7, 9, 33

The appellant company had been carrying on various classes of insurance business other than life insurance after its incorporation in 1941, but in 1956 the shareholders of the company passed a resolution by which all its insurance business was to be closed.

Accordingly, on application made by the company to the Controller of Insurance, the certificate granted to it for carrying on insurance business was cancelled with effect from July l, 1957 In the meantime, complaints against the company were being received by the Government of India, who, thereupon, passed an order on July 17, 1957, under s. 33 of the Insurance Act, 1938, directing the Controller of Insurance to investigate the affairs of the company and to submit a report. The company challenged

(1) '1923) L.R. 51 I.A. 129. \2) I.L.R. [1955] Nag. 744

May 4.

LUHAR AMRIT LAL NAGJI

DOSHI J A YANTILAL JETHALAL AND OTHERS

P. B. GAJENDRAGADKAR

K. c. DAS GUPTA, JJ.

Suraj Bunsi Koer

L.R. 6 I.A. 88

W. S. Barlingay

A.G. Ratnaparkhi

M. L. Jain

Gajendragadkar

Amritlal

Mohanlal Nagji

Bai Jakal Arjan

Nagji Govind

Jayantilal Doshi

February 5, 1946

April 30, 1951

Dharsi Shami

Luhar Amritlal

Doshi Jayantilal

Gajendragadk••

Dharsi Sbamji

Doshifayantilal

Barlingay

(1936) L.R. 63 I.A. 384

Usanas

Mitakshara

Yajnavalkya

Colebrooke

Nagji

Doshi

taskGajendragadkar

Kantoo Lal

July 28, 1856

Sudder Ameen

Kan too Lal

Luhar Amrillal

Doshi J ayantilal jethalal

Gajendragadkaf

Bhikharee Lal

(1879) L.R. 6 I.A. 88

James Col vile

Doshi Jayattilal

J'ohn Edge

Bhattacharyya

Luhar Amritlal Nagjt

Dunedin

Luhar Amrillal

Jef!ialal Suraj Bunsi Kaer

Brij Narain

Suraj Bunsi Kaer

Kane

L.R. 6 I.A. 88

History of Dharmasastra

P. V. Kane

Doshi Jayantil•I

-Yajnavalkya

Yajnavalkya

Doshi Ta.vantilal

toGajendragadkar

Madras High Court

Patanjali Sastri

Allahabad High Court

Gajend•agadka•

Burkitt

Sheoraj Singh

Maharaj Singh

debtcajendragadkar

Nagpur High Court

General Clauses Act

Insurance Act

SS. 2(9), 2D, 7, 9, 33

July l, 1957

Government of India

July 17, 1957

s. 33

Insurance Act, 1938

L.R. 51 I.A. 129