Kuchwar Lime and Stone Co. v. Dehri Rohtas Light Railway Co. Ltd. and Anr.

Kuchwar Lime & Stone Co. v. Dehri Rohtas Light Railway Co. Ltd. & Anr.

1969 AIR 193

(Implied Agency)


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 on account of inferior quality of the coal. After some correspondence between the parties as well as with the Coal Controller, the Railway sold the coal by public auction on June 2, 1955, after serving a notice on the appellant. It thereafter filed a suit against the Company claiming outstanding amount of freight and demurrage charges for 202 days during which six wagons in which the coal was loaded were detained and ‘sought a decree for Rs. 17,625/14/- after giving credit for the amount realized from the sale of the coal.


  1. Whether consignee liable to pay after refusing to accept consignment?
  2. If railway entitled to demurrage for full period or obliged to unload and claim demurrage only for reasonable period?


Trial court: The trial court granted a decree for about Rs. 1,620/- with interest, but in appeal the High Court decreed the Railway’s claim in full.

High Court: The High Court modified the decree passed by the Trial Court and decreed the claim of the Railway against the Company in full.




(i) The Company being a consignee of the goods booked by the Colliery there was no privity 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;

(ii) 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.

(iii) 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.

J.C. Shah, J.

It is clear that the Colliery supplied coal in pursuance of the “sanction order” in favour of the Company and arranged to transport it 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 these circumstances, it would be reasonable to infer that the Colliery was acting as an agent of the Company in entering into the contract of consignment and the liability for payment of freight and of demurrage charges for failure to take delivery of the goods lay upon the Company.

The High Court erred in holding that the Company was liable to pay demurrage for the full period of 202 days. Railway was entitled to demurrage for the detention of wagons for only one month and cannot claim the entire amount. The Railway was in the position of a bailee qua the Company and was bound to minimize the loss. It could have sold off the coal under s, 56 of the Railways Act. Even assuming that in view of the Colliery Control Order, the Railway could not sell the coal without the Coal Commissioner’s sanction, it could have unloaded the coal from the wagons and put the wagons to use. Hence, the consignee could be liable only for wharfage.

(w.r.t 3rd contention of the company) 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.

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