Appeal (Civil) – 210 and 230 of 1968


1969 AIR 193, 1969 SCR (1) 359






Colliery Control Order, 1945 – Clause 5, Clause 4, Clause 6(1), Clause 8
Coaching Tariff – Rule-108 – Clause (2), Clause (8)
Clause 20 in Part -III of the Goods Tariff
Essential Supplies (Temporary Powers) Act, 1946
Railway Act, Section 56


A quantity of steam coal was booked by Colliery to the appellant company (Kuchwar Lime & Stone Company) to Banjari Station on the Dehri Rohtas Light Railway. The Company accepted the delivery of one part of the consignment but refused the delivery of the other part on November 12, 1954, at Banjari Station.

After correspondence between the parties and the Coal Controller, the Railway Administration served the notice on the Company and Colliery on April 28, 1955. The Railway sold the unclaimed coal at public auction for Rs. 1,050 on June 2, 1955.

After this, the Railway filed a suit against the Company and the Colliery in the Subordinate Court claiming demurrage for 202 days during which six wagons were remained unloaded, detained, and sought a decree for Rs. 17,625/14 after giving credit for the amount realized from the sale of the unclaimed coal. The subordinate court granted the decree of Rs. 1,620, with interest. However, the High Court modified the decision of the trial court and granted the decree for the full period.


  1. Whether consignee (Company) is liable after refusing to take the delivery of the consignment.
  2. Is the Railway entitled to demurrage for a full period? Or is it obliged to unload and claim demurrage only for a reasonable period?


The Company contended that the Railway should be granted the demurrage only for 22 when the wagons were detained. The court observed that once the notice is served to the owner, Section 56 of the Railway Act empowers the Railway to sell the consignment after serving the notice to the owner. The six wagons reached Banjari Station on November 12, 1954, and before this, the Company had already denied accepting the goods. It was the duty of the Railway to sell the consignment. The Railway had delayed unloading the wagons and putting them to use after the expiry of the reasonable period.

It was further contended that the Company is not liable for the freight and demurrage to the Railway because there was no privity of contract between the Company and the Railway. Another contention was that the consignee is liable for the payment of demurrage charges as the wagon detained is for his convenience. However, the court said that if the wagon detained is for the benefit of the consignee. If he refuses to take the delivery, he could be held liable to pay for freight and demurrage by the Railway. Therefore, the Company is entitled to pay the freight or the demurrage. The court was unable to hold that the Company is not liable to pay the freight and the demurrage because the Colliery had entered into the contract with the Railway.


The Colliery acted as an agent for the Company in entering into the consignment contract. Therefore, the Colliery supplied the coal in pursuance of the sanction order proposed by the Deputy Coal Commissioner to transport to the appellant-Company in allotted wagons to Banjari Station. Hence, the liability to pay for the freight and demurrage charges lay upon the Company for refusing to accept the delivery. The court observed that the High Court was in error in holding the Company liable to pay the freight and the demurrage for 202 days.

The court further held that as the Company had declined the delivery, the Railway administration could have exercised their power under Section 56 of the Railway Act. The Railway administration was bound to minimize the loss. It was in the position of bailee qua for the Company. After the expiry of a reasonable time for the arrival of goods, the Railway authority should have unloaded the coal from the wagons and put them to use. Hence, the company was liable only for the wharfage. The railway did not act reasonably, as it failed to take action for more than six months. Therefore, the Railway is entitled to demurrage for the detention of the wagons for only one month. A decree for Rs. 2,145/14 was granted to the Railway.

The case analysis has been done by Gracy Singh, a 2nd-year law student from Mody University of Science and Technology, Lakshmangarh, Rajasthan.

Latest Posts


Leave a Reply

Your email address will not be published. Required fields are marked *