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Judgment
S. Suryamurthy, J.—C.R.P. No. 2465 of 1980 has been preferred by the second defendant and C.R.P. No. 2160 of 1980 has been
preferred by defendants Nos. 3 to 5 against an order passed by the trial Court in favour of the first defendant on an application under Order 8-A,
Rule 8 and Section 151 of the Code of Civil Procedure, directing that the question of indemnity or contribution as between the petitioner, the first
defendant, and defendants 2 to 5 may also be tried in the same suit. The suit, O.S. No. 240 of 1978 has been instituted by Ramamurthy Metal
Decorating Industries (P.) Ltd., against the defendants. The first defendant placed an order with the plaintiff for the purchase of tin containers
manumactured by the plaintiff. The first defendant placed the order for supply of 2,000 numbers of 5 kilos Ravico Printed tin containers with lids
and capsules on 28th October, 1976. Subsequently a letter, dated 10th November, 1976 was sent to the plaintiff by way of reminder. The order
placed by the first defendant was accepted by the plaintiff at Sivakasi. The plaintiff had supplied tin containers to the first defendant on earlier
occasions also. All the supplies made by the plaintiff to the first defendant were only F.O R. Sivakasi. The lorry freight had been paid all along by
the first defendant. The plaintiff manufactured the containers and packed them in good condition and delivered them on 18th November, 1976 for
transport by a lorry bearing number MDT 7033. They were entrusted to the second defendant, who is a public carrier at Sivakasi, for transport
and delivery to the first defendant. The second defendant sent the containers by lorry bearing number MDT 7033 to Madras. An invoice drawn in
favour of the first defendant (No. 274, dated 18th November, 1976) was duly handed over to the driver of the lorry. The goods were delivered to
the driver in good condition and the vouchers Nos. 0761 and 0762 were obtained from the driver of the lorry. The plaintiff made out invoice No.
274, dated 18th November, 1976 for the goods supplied and sent the invoice to the first defendant for payment of Rs. 24,077-16. The goods
were delivered to the first defendant and the frieght payable for transport was paid by the first defendant to the driver of the lorry MDT 7033.
Subsequently, by a telegram, dated 22nd November, 1976, the first defendant informed the plaintiff that all the containers sent by the plaintiff
were found damaged and this was followed by up by a letter complaining that the containers sent by the plaintiff were all badly damaged. The
plaintiff was requested to send their representative to inspect the damaged goods. It was also alleged by the first defendant that the goods had not
been properly packed, that the packets had been badly handled by the carriers and that the packets had been dropped and lodged with heavy
materials over the top of them. As advised by the first defendant, the plaintiff lodged a complaint with the second defendant on 24th November,
1976 and a copy of the same was marked to the first defendant. The contention of the plaintiff is that the title in the goods had passed to the first
defendant and the plaintiff can in no event be held liable for any damage caused to the goods during transit. The goods were inspected on behalf of
the plaintiff and some of the containers were found to have been damaged. The, representative of the plaintiff advised the first defendant to pick out
the undamaged containers and use them and to proceed against the carriers for the damage. After the inspection by the representative of the
plaintiff, the first defendant sent a letter to the plaintiff on 24th Movember, 1976 requesting the plaintiff to lodge the insurance claim immediately.
The representative of the plaintiff told the first defendant that he would replace the damaged containers after consulting the Managing Director. The
carriers would appear to have written two letters, dated 8th December, 1976 and 10th December, 1976, contending that the first defendent is only
a consignee and that the plaintiff, as the consignor, is entitled to lodge the complaint with the carriers and claim damages.
The second defendant wrote a letter on 11th December, 1976 in reply to the letters of the plaintiff, dated 24th November, 1976 and 3rd
December, 1976 stating that the matter was receiving attention and that after perusing the records, a reply would be sent. However, no reply was
sent to the plaintiff till the date of institution of the suit. Meanwhile, the first defendant was requesting the plaintiff to take back the damaged
containers and replace them by fresh consignment. The plaintiff disowned liability and demanded payment from the first defendant. The first
defendant did not pay the amount due under the invoices. On 5th July, 1977 the first defendant returned the entire consignment by door delivery to
the plaintiff through M|s. S.R.M. Transport. The said S.R.M. Transport unloaded the goods in the factory premises of the plaintiff when there were
no responsible officers of the plaintiff''s company, and since, then the goods are lying in the factory of the plaintiff, as according to the plaintiff, the
goods of the first defendant. The first defendant also sent a letter to the plaintiff stating that he has returned 72 empty containers and 8 cartons of
lids and capsules as they were received in a damaged condition. Therefore, the claim has been put forward in the suit against the first defendant.
On 4th May, 1977, the plaintiff received a copy of a registered notice sent by the second defendant to defendants 3 to 5. The second defendant
entrusted the goods sent by the plaintiff to the first defendant to be transported in a 4orry belonging to defendants 3 to 5. The second defendant
made out vouchers bearing No. 0761 and 0762 and entrusted the goods to one A. Karuppiah, the driver of a lorry owned by defendants 3 to 5.
The said lorry met with an accident and the damage to the goods referred to above was a result of that accident. The contention of the plaintiff is
that if for any reason the Court is to come to the conclusion that the plaintiff has to look to the second defendant only for collecting the value of the
goods, the suit may be decreed as against the second defendant. It is further contended by the plaintiff that ""In view of the notice issued by the
second defendant to defendants 3 to 5, that it was through their public carrier the goods were transported by the second defendant, they were also
equally liable to pay the value of the goods to the plaintiff, or if it is held that the first defendant is not liable to pay the amount claimed in the plaint"".
Hence defendants 3 to 5 are added as parties to the suit.
The first defendant has filed a petition under Order 8-A, Rule 8 of the Code of Civil procedure. The contention of the first defendant is that if the
Court comes to the conclusion that at the time of the loss of the goods in the custody of the lorry, the property in those, goods had passed on to
the first defendant and that the first defendant would be liable to pay the suit amount, then the first defendant is entitled to get a cross decree for the
entire amount against defendants 3 to 5 as they are liable to indemnify, reimburse and/or contribute fully any amount that the first defendant-
company will be obliged to pay the plaintiff under the decree that may be passed by the Court.
This petition was opposed by respondents 2to 4, that is to say, defendants 3 to 5, inter alia on the ground that defendants 4 and 5 have nothing
to do so with the lorry of the third defendant, that there is no implied or express guarantee of indemnity, and, therefore no decree can be passed
against them, in case the first defendant is found liable to pay the damages claimed by the plaintiff.
The petition under Order 8-A, Rule 8, Civil Procedure Code, having been allowed, (his revision has been filed.
The question whether the lorry in which the containers were carried belonged to defendants 3 to 5 need not be gone into and cannot be gone
into at this stage. It is a matter for evidence and proof by the 1st defendant. The question to be considered is, whether defendants 3 to 5 are liable
to indemnify the first defendant if the containers consigned in the lorry belonging to defendants 3 to 5 were damaged in the course of transit.
common carrier is an insurer of goods which he contracts to carry and he is liable for all loss of, or injury to these goods, while they are in the
course of transit unless such loss or injury is caused by the act of God, or by the State enemies or is the consequence of inherent vice in the thing
carried or is attributable to consignor''s own fault. It is not the contention of defendants 2 to 5, that they are absolved of their liability as carriers, if
they are carriers, by reason of the fact that the damage was due to any act of vis major or inherent vice in the goods etc. If defendants 3 to 5 are
the owners of the lorry and carriers of the goods concerned, they had received the goods upon an implicit understanding to deliver them to the
consignee in the same condition in which the containers were taken delivery of by them. On their failure to do so, they are liable in damages.
The learned Counsel for the revision petitioner contends that there was no contract by which defendants 3 to 5 promised to save the first
defendant from loss caused to him by their conduct or by the conduct of any other person and that there, was no contract of indemnity. The
expression ""indemnity"" in Order 8-A, Civil Procedure Code, is not to be understood as confined to an indemnity arising out of a contract
contemplated by Section 124 of the Indian Contract Act. The right to indemnity may arise from a contract, express or implied.
In Eastern Shipping Company Limited v. Quash Beng Kee (1924) A.C. 177. The Privy Council has laid down that:
Though a right of indemnity generally arises by contract, express or implicit, it exists whenever the relation between parties is such that either in law
or in equity there is an obligation upon one party to indemnity another.
The facts of the case and the principles have been stated in the head note as follows:
The owners of a wharf granted the appelland company the right to berth their ships at it subject to payment and liability for any damage caused.
The respondent, who was managing director of the appellant-company, gave instruction, without the company''s authority, that a ship which he
himself had chartered for his own benefit should berth at the wharf. Owing to the unskilful way in which the ship was unloaded the wharf collapsed.
In an action by the owners of the wharf against the appellant company for damages, they served a third party notice upon the respondent, and
claimed that he should indemnify them against any damages for which they should be held liable. By the rules of Court applicable (as by R.S.C.
Order 16, Rule 48) third party procedure is available ''where a defendant claims to be entitled to contribution or indemnity over against a person:
Held, that the appellant company had a right of indemnity against the respondeat, and were entitled to join him as a third party and claim relief
against him.
It has been further laid down in the decision cited above that:
A right to indemnity generally arises from contract express or implied, but it is not confined to cases of contract. A right to indemnity exists where
the relation between the parties is such that either in law or equity there is an obligation upon the one party to indemnity the other. There are, for
instances, cases in which the state of circumstance, is such that the law attaches a legal or equitable duty to indemnity arising from an assumed
promise by a person to do that which, under the circumstances, he ought to do. The right to indemnify need not arise by contract, it may (to give
other instance) arise by statute, it may arise upon the notion of a request made under circumstance from which the law implies that the common
intention is that the party requested shall be indemnified by the party requesting him, it may arise to use Lord Eldon''s words in Waring v. Ward 7
Ves 332, 336, a case of vendor and purchaser in cases in which the Court will ''independent of contract raise upon his (the purchaser''s)
conscience an obligation to indemnify the vendor against the personal obligation of the vendor.
In S. Subulal Sahib Vs. N. Perianna Pillai, , Rajamannar, C.J., has laid down that the trial Judge:
was wrong in dismissing the application under Order 8-A, Rule 1 of the Code of Civil Procedure, on the ground that there is no privity of contract
between the plaintiff and the third party. Generally speaking, there will not be such a privity in a claim falling under Order 8-A which the defendant
sets up against a third party. If there was direct privity then the third party would have been a necessary party.
It has been laid down by Ramaswami, J., in In re, Thiruvannamalai Adhinam Sri Daivasigamani Arunachala Desika Pammackarya Swamigai
(1955) 68 L.W. 371 : AIR 1955 Mad. 3910 , that:
The third party procedure is applicable only to cases of contribution or indemnity. In effect, a claim to contribution is a claim to a partial indemnity.
Contribution is bottomed and fixed on general principles of justice and does not spring from contract, though contract may qualify it; A right to
contribution may be created by statute. A right to indemnity may arise; (i) from express contract; (ii) from som statute; or (iii) implied from some
principle of law.
A right to indemnity exists where there is an obligation either in law or in equity upon one party to indemnity the other, an insurer can be added as a
third in an action for personal injury in a road accident as the defendant is entitled to indemnity from that party.
in the instant case, defendants 3 to 5 as carriers are liable for all loss of or injury to the goods which had occurred while the containers were in
the curse of transit unless they could avoid their liability by reason of the loss or injury having been caused by the act of God, etc., referred to
above. The common carrier cannot obliterate or destroy its character as a common carrier, and defendants 3 to 5 if they are proved to be
common carriers, are liable to pay damages for loss of consignment, and hence liable by statute to indemnify the first defendant. The relief claimed
by the first defendant against defendants 2 to 5 is substantially the same as the relief claimed by the plaintiff.
In Commissioner of Income Tax, Madras Vs. C.S. Sastri, , Veeraswami, J. (as he then was), considered the case of a claim laid upon a
promissory note said to have been executed by the defendant, who resisted the suit on the ground that the promissory note was not supported by
consideration and also maintained that the plaintiff''s son had executed an agreement or varthamanam admitting that the promissory note was not
supported by consideration and that, in case, it was successfully enforced, he would indemnify the defendant. On the basis of these averments, the
defendant in that case took out an application under Order 8-A, Civil Procedure Code, for third party notice to the son of the plaintiff. The
application was dismissed by the Subordinate Judge, who relied on the ratio of Uthaman Ckettiar v. Thiagaraja Pillai (1955) 68 L.W. 810 : AIR
1956 Mad. 155:
In the circumstances, the learned Judge observed as follows:
With due respect to the learned Judge the limitation placed by him does not appear to be justified, by the language of Rule 1 of Order 8-A. The
order relates to third party procedure and the first rule says that where a defendant claims to be entitled to contribution from or indemnity against
any person, not already a party to the suit, he may, by leave of the Court, issue a notice, called a third party notice, to that effect. That simply
means that where in a suit the defendant in case the plaintiff succeeds, is entitled to indemnify from a third party, who has not been already brought
on record, he is entitled to ask for a third party notice, There is nothing in the rule suggesting that it has no application to suits on negotiable
instruments.
It is urged that the rule is applicable only to a claim of indemnity arising out of the same transaction or a transaction entered into simultaneously with
the transaction sought to be enforced in the suit. The answer is Rule 1 itself contains no such limitation. Nor does the reason of the rule demand
such a limitation. The rule is conceived for the benefit of a defendant who, if defeated in respect of a claim against him, is entitled to reimbursement
by way of indemnity. In such a case the policy of the rule, is that the defendant need not be driven to a fresh suit to put indemnity into operation.
That, in my view, should be the approach to the procedure for third party notice.
The further contention for on(c) of the respondents is that Order 8-A itself will be attracted only in cases where a defendant admits liability on the
main transaction sued upon. Support is sought to be derived, for this contention, from Rule 3 of Order 8-A. This rule only states that if the third
party desires to defend himself he may do so, but, if he does not enter appearance, he shall be deemed to admit the validity of the decree against
the defendant and his own liability to indemnity to the extent claimed in the third party notice. This does not mean that Rule 3 limits the scope of
Rule, 1 so as to make it applicable only to cases where the suit claim is admitted.
16.In K. Muniandi Vs. Selvarajan and Another, , Ramaprasada Rao, J. (as he then was), held that:
Order 8-A of the CPC (V of 1908) prescribed a special method by which a party-defendant could secure relief without independently filing a suit
against a third party to the suit, if he makes out a case that such third party is bound to indemnify him in connection with the, suit transaction.
Indemnity referred to in Order 8-A need not necessarily spring from, contract.
In K. Muniandi Vs. Selvarajan and Another, , Ramanujam, J., has taken a similar view, and has held that the liability to indemnify need not
arise from contract.
In the instant case, defendants 2 to 5 as carriers, if they are proved, to have been entrusted with the containers for transport, and if the
containers are, proved to have been damaged in the course of the transit, are liable in law and equity to make good the loss sustained by the first
defendant, if the ownership of the goods is found to have passed to the first defendant and if a decree is passed against the first defendant and in
favour of the plaintiff.
Therefore, the order of the Court below allowing the petition under Order 8-A, Rule 8, Civil Procedure Code, is perfectly correct and is
confirmed. These civil revision petitions are dismissed with costs. (Two sets).