Ramchandraram Nagaram Rice and Oil Mills Ltd. vs Municipal Commissioners of Purulia Municipality and Others

Varma, J.—This is an appeal on behalf of the plaintiff whose suit for damages has been dismissed by the trial Court. The plaintiff is a company registered under the Companies Act, called Ramchandraram Nagaram Rice and Oil Mills Ltd. with its head-office in the town of Gaya. The Municipal Commissioners of the Purulia Municipality were impleaded as defendant 1, and defendants 2, 3, & and 5 are some of the Municipal Com. missioners sued by the plaintiff in their personal capacities.

The plaintiff company alleges that it has-been manufacturing oil and rice for the last 14 years and has been selling these articles at various places in the provinces of Bengal, Bihar, Grisa and Assam. The mustard oil manufactured by this company is sold in" canisters bearing the registered trade-mark "R.N. Bishnucharan." This brand of mustard oil began to be sent to Purulia and sold there for three years before the filing of the suit; it has a reputation for itself and has found a good market there. On 29th April 1938 the plaintiff despatched to Purulia in a cylindrical van belonging to the East Indian-Railway Co., pure mustard oil. This van is made especially for carrying mustard oil, and it has got the words "Mustard Oil Tank" inscribed in bold letters on it. This tank reached Purulia railway station on or about the 3rd May 1938. About 1000 canisters were filled with this oil and their mouths were metalled and metal discs were soldered at the mouths of these'' canisters. They were lying, at the Purulia railway station for delivery to'' the customers for whom they had been despatched in accordance with agreements entered into between them and the company.

On 4th May 1938 after about 400 tins had been delivered to the customers the defendants applied u/s 287, Municipal Act,, for the issue of a search warrant on the ground that the said oil had been brought in a crude oil or kerosene oil tank, and the oil was bad, contaminated with kerosene oil and emitted bad odour. The case of the-plaintiff is that these allegations were made without any just and probable cause; that at about 4 P.M. on the same day the Sanitary Inspector of the Purulia Municipality along with defendants 2, 3 and 4 went to the Purulia railway station yard to detain the mustard oil and in spite of the protests made by the plaintiff company''s agent that the oil was pure and meant foe human consumption they in conspiracy with one another detained the oil canisters. On the next day, i.e., the 5th May 1938 the sanitary inspector and defendant 5 ordered 613 tins of mustard oil, which was lying at the railway yard, to be carried in the municipal motor truck which is used for carrying rubbish, road-sweeping and other filthy matters and some of the tins of mustard oil, which were really meant for human consumption, were loaded in the motor truck by mehtars (sweepers). The plaintiff company further said that perhaps some of the municipal commissioners were the cause of the step3 taken against the company because the company believed they had oil business which had suffered by the introduction of the plaintiff''s oil in the market and that is why the municipal authorities acted in a capricious, arbitrary and malicious manner in order to injure the reputation of the plaintiff company and cause loss to it. On 5th May 1938 samples of the oil were taken and sent to the Government analyst at Patna, who found the oil to be genuine. The plaintiff alleges that the conduct of the defendants affected its business inasmuch as its customers refused to buy the said mustard oil and the plaintiff could not take delivery of it, and as the customers did not buy the mustard oil for some time the plaintiff had to reduce the price of the oil by four annas per maund. Prom 4th May 1938 to 3rd June 1938, when the Sub-divisional Magistrate informed the company of the result of the chemical analysis, the plaintiff suffered considerable loss in business. The plaintiff, therefore, claimed Rs. 39848-0 as price of the mustard oil and canisters seized at the instance of the defendants, Rs. 82-8-0 as interest and also Rs. 5928 for loss of business and damage to the company''s reputation, the total claim coming to Rs. 9995.

Separate written statements were filed on behalf of the defence but they contested the suit jointly. The defence was that the suit as framed was not maintainable in law and the plaintiff company had no cause of action for the same; that it is not a fact that the mustard oil was brought to Purulia railway station in a cylindrical van specially made by the East India Railway Company for carrying mustard oil as stated by the plain, a tiff; that on information received an application was made to the Deputy Commissioner of Manbhum for the issue of a search warrant mentioning therein the nature of the information received by the municipality; that the allegations made in the application for the issue of the warrant were bona fide and not false or fraudulent; that the defendants and the sanitary inspector did not act in conspiracy with one another in detaining the oil canisters; that the municipal truck was thoroughly cleansed and disinfected before it was sent to bring the tins of mustard oil from the railway station, and the loading was done by the municipal employees; that the municipal commissioners, who were made defendants, had no interest in any of the local mills which were closed about three years back, nor did they contemplate reopening of any of the oil mills; that simply because the chemical analyst did not find any impurities in the oil it does not give the plaintiff any ground for institution of a suit like this; that the plaintiff company could not suffer any loss on account of the actions taken by the defendants; that the price claimed for the mustard oil and the canisters was too high, and no damage was caused--to the reputation of the plaintiff company, nor any loss of business occurred to the plaintiff either directly or indirectly by any action of the defendants; that the actions were taken bona fide as the defendants had just and sufficient reasons for the steps taken by them, and those steps were taken in the interest of the public; that the vice-chairman took the action on the report of one of the municipal commissioners on whom he relied and who happened to be a respectable citizen of the town; that the action of the municipal commissioners was justified and in accordance with law, and they were not liable to any damages; that some of the loss suffered by the plaintiff company was due to the fact that in spite of the notice from the Court of the Sub-divisional Magistrate the company did not take away the oil, on the contrary filed an application before the Magistrate stating that it was contemplating to file a suit; that the plaintiff deliberately allowed the oil to be sold for a sum of Rs. 2055, which is still in deposit in Court to the credit of the plaintiff; that the municipal authorities acted only with a view to stop suspected food stuffs being placed in the local market for sale. The defence therefore pleaded that the plaintiff''s suit should be treated as vexatious and mala fide and should be dismissed with costs to them. The important issues that were framed are:

Issue 5.--Had the municipality just and reason, able cause in praying for the issue of search warrant for the seizure of the mustard oil and did it act in good faith? Issue 6.--Did defendants 2, 3 and 4 act in conspiracy with one another and detain the mustard oil on 4th May 1938 at the local railway yard, in spite of the protest of the plaintiff''s agent? Issue 7.--Did the plaintiff company suffer loss of business and reputation due to the arbitrary mala fide and malicious action of the defendants? Is the plaintiff entitled to damages, if so, how much? Issue 8.--What amount of damage, if any, the plaintiff company is entitled to get for its loss of business and reputation? Issue 9.--What amount the plaintiff company is entitled to get on account of the mustard oil and the canisters?

As I shall have to deal with these matters in the light of the arguments advanced before us, I shall content myself by giving a summary of the findings of the trial Court. The learned Subordinate Judge has held that the malice in fact as alleged in the plaint has not been substantiated and relied on by the plaintiff company. He held that the letter (Ex. G) written to the vice-chairman in the light of the register Ex. 42 was not unreliable. He did not accept the contention of the plaintiff that Section 287, Bihar and Orissa Municipal Act authorizes the Magistrate to grant a warrant only for entering upon the premises of the person in possession of the article which has become noxious or unfit for human consumption and that as the railway yard was not the premises of the plaintiff company, no warrant could be granted to the municipality for entering upon the railway yard and interfering with the property right of the plaintiff company there. He found that there was no trespass by the municipality upon the property right of the plaintiff and it was necessary for the plaintiff to prove that the action of the municipality was malicious and that there was no reasonable and probable cause for the same. The Court cannot treat as wrong that which the Legislature has authorized. He did not accept the allegations of the plaintiff that there was a conspiracy amongst the municipal commissioners and mill owners against the plaintiff company. He also found that although the action of the defendants might have been hasty, but there was nothing on the record to show that they wanted to injure the plaintiff''s business or the plaintiff''s reputation in any manner. He did not think that the plaintiff was entitled to any damage on account of loss of business and damage to reputation. He held that the loss on account of the sale was due entirely to the plaintiff''s conduct in refusing to take back the oil. He ultimately came to the finding that the suit e was not maintainable; but he granted only one set of costs to defendant 1, because the other defendants contested the suit jointly, and the contest was in fact only on behalf of the municipality. The Court found also that the price at which mustard oil was sold in those days was Rs. 14 per maund as alleged by the plaintiff, and it did not accept the contention of the defendants that the waggon had no inscription as mentioned by the plaintiff.

Although the suit was valued at Rs. 9995, this appeal is valued at Rs. 3012, made up of two items, Rs. 1000 for damages and Rs. 2012 for the deficit in the price. Before dealing with the points urged by Mr. Baldeva Sahay, appearing on behalf of the appellant, it is better to enumerate the facts about which there is no serious controversy now. The mustard oil waggon reached Purulia on 3rd May 1938, in the afternoon. In the night one Ganguly, a goods clerk, informed Mr. Karmakar about the nature of the oil. Mr. Karmakar took action upon that on 4th May 1988, by writing a letter (Ex. G) at 9-30 A.M. addressed to the vice-chairman. As the vice-chairman was not present in his office, the letter was left on his table and he attended to it when he arrived. At 11-10 A.M. the vice-chairman addressed a letter (Ex. 4) to the Deputy Commissioner and at the same time deputed a sanitary inspector and one Kishun Lal to see that the oil was not removed. Exhibit H is the report of the sanitary inspector, upon which warrant was issued at 1-20 P.M. The warrant was in the name of the officer-in-charge sanitary department, and the municipal commissioner Babu Kishun Lal Singhania. He started for the goods-shed at 2 P.M. and informed the agent of the plaintiff company. The vice-chairman received verbal report of the seizure at 3 P.M. on the same date. At 5 P.M. the vice-chairman went to the station. Hari Ram was present on behalf of the plaintiff. The waggon was inspected and the vice-chairman says that he did not find any bad odour in the oil and on inspection there appeared nothing which would lead him to suspect the genuineness of the oil. Upto the 4th the tins had not been soldered. On the morning of the 5th the sanitary inspector and defendant 5 went to the station. The agent of the plaintiff again protested and approached the Sub-divisional Officer with a tin of oil for analysis and to let the oil be stored in some safe place. Upon this there was an objection by the defendants and the application on behalf of the plaintiff was rejected. Then the various tins of oil were removed in a municipal cart. The case of the plaintiff is that they were removed in a cart meant for removing rubbish and filthy matters and loaded by sweepers.

Before proceeding any further with the case it is desirable to discuss what the law is on this subject. The trial Court has held that they were acting within the purview of the statute and the defendants were protected. Our attention has been drawn to a passage in Salmond on Law of Torts (6th Edn., at page 598) which runs as follows:

If any litigant executes any form of legal process which is invalid for want of jurisdiction, irregularity, or any other reason, and in so doing he commits any act in the nature of a trespass to person or property, he is liable therefore in an action of trespass, and it is not necessary to prove any malice or want of reasonable or probable cause. This is an application of the fundamental principle that mistake, however honest or inevitable, is no defence for him who intentionally interferes with the person or property of another. A supposed justification is no justification at all. A litigant who effects an arrest or seizes property must justify the trespass by pleading a valid execution of legal process, and any irregularity or error which has the effect, of making the process invalid will deprive him of all justification.

This principle is based upon the decision in Painter v. Liverpool Oil Gas Light Co. (1836) 3 A. & E. 433. Clerk and Lindsel on Torts (8th Edn., p. 373) say:

Even in cases in which the nuisance complained of is prima facie authorised by statute, the party causing it will be liable if he does not take reasonable precautions to prevent damage resulting therefrom. Though exempt from the absolute liability which would attach to a person not acting under statutory powers, he is still liable if he exercises his powers negligently or unreasonably.

Mr. Baldeva Sahay appearing on behalf of the plaintiff-appellant contends that the processes issued against his client were void from the very beginning, on reference to the terms of Section 287, Bihar & Orissa Municipal Act. He has drawn our attention to Sections 12, 24, 25 and 26 of the same Act, and has urged that the Sections contemplate action in such matters by the chairman, and he raised the question whether the vice-chairman was authorized to act on behalf of the chairman and whether he was right in addressing the letter to the Deputy Commissioner and not to the Sub-divisional Officer. Mr. Baldeva Sahay refers to the case in David Geddis v. Proprietors of the Bann Reservoir (1878) 3 A.C. 430. In that case by an Act of Parliament certain persons were incorporated for the purpose of securing regular and proper supply of water to mill-owners. These persons erected a reservoir, collected the waters of the different streams and sent them to the channel which they were authorized to use, but after a time they all neglected to cleanse the channel so that at times it overflowed its banks and did damage to the lands of the adjoining proprietors. It was held that under the words of the Act there was an obligation on the persons so incorporated to take care that the due execution of the works and operations intended by the Act should not be injurious-to the lands lying along the banks of the stream, and that the bed or channel of the stream must be cleaned and kept in a, proper state for the flow and re-flow of the water that had to pass through it. Lord Blackburn observed there as follows:

It is now thoroughly well established that no action will lie for doing that which the Legislature has authorized if it be done without negligence, although it does occasion damage to any one; but an action does lie for doing that which the Legislature has authorized, if it be done negligently.

In Mayor and Councillors of East Fremantle v. Annois (1902) 1902 A.C. 213, the above decision was referred to, and it was pointed out that the action of the defendants in that case was without any statutory authority. Lord Macnaghten observed in the case as follows:

If persons in the position of the appellants, acting in the execution of a public trust and for the public benefit, do an act which they are authorized by law to do, and do it in a proper manner, though the act so done works a special injury to a particular individual, the individual injured cannot maintain an action. He is without remedy unless a remedy is provided by the statute. That was distinctly laid down by Lord Kenyon and Buller J. and their view was approved by Abbott C.J. and the Court of King''s Bench. At the same time Abbott C.J. observed that if in doing the act authorized the trustees acted arbitrarily, carelessly or oppressively, the law in his opinion had provided a remedy.... As applied to the circumstances of a particular case, they probably create no difficulty. When they are used generally and at large, it is not perhaps very easy to form a conception of their precise scope and exact meaning. In simpler language Turner L.J. observed in a somewhat similar case that such powers are at all times to be exercised bona fide and with judgment and discretion.

Of the Indian decisions, reference has been made to the decision in Nagar Valab Narsi v. Municipality of Dhandhuka (88) 12 Bom. 490. There the plaintiff sued the municipality for refusing permission to him to raise a structure. Although their Lordships affirmed the order of the Court below dismissing the suit on the finding that the municipality had not acted beyond the scope of the authority, they observed as follows:

It does not follow that the commissioners could, therefore, exercise the authority thus given to them in a capricious, wanton and oppressive manner. Public authorities even acting within the defined limits of their powers must not conduct themselves arbitrarily or tyrannically: See Leader v. Maxon (1773) 2 W.B.l. 924 approved by Gibbs C.J. in Sutton v. Clark (1815) 6 Tau 43. But the case last cited shows that public functionaries, acting within the limits prescribed by the statute which gives them authority are not subject to a suit for thus discharging their duties according to their judgment. A public body must keep within its powers, and must use them considerately (See per Lord Blackburn in David Geddis v. Proprietors of the Bann Reservoir (1878) 3 A.C. 430 but so acting it is safe--Dixon v. The Metropolitan Board of Works (1881) 7 Q.B.D. 418 .

The next case referred to is Rup Lal Singh Vs. Secretary of State for India, , where Mullick A.C.J. observed as follows:

It is contended on behalf of the plaintiff that the Regulation could not have intended to empower the native officer to use means which were contrary to law and thereby encroach upon the liberty of the subject. But the answer to this is that when a statute confers a power it implies that the donee of that power shall be competent to do all that is needful for its exercise subject to the limitation that he cannot go beyond what is reasonable.

The principle of law that is deducible from these decisions can be shortly stated as follows: If a person is exercising his rights under a statute he is not liable unless it is proved that he acted unreasonably or negligently. Now, let us see how far the plaintiff has succeeded in proving that by the action of the municipality in doing the acts that it did, the case is covered by the principles laid down.

Steps were taken by the municipality on the letter Ex. G, sent by Mr. Karmakar (D.W. 3). From this letter it appears that it acted upon the report of a goods-clerk named A.M. Ganguly. Although according to this witness the information given to him about the quality of the oil, and the waggon in which it was sent, was unbelievable still as he knew Ganguly to be a trustworthy person, he took the action that he did. The clerk, A.M. Ganguly, has not been examined in this case. There is some controversy whether the waggon used on this occasion for sending mustard oil had the inscription ''Mustard Oil Tank'' on it. The vice-chairman (D.W. 1) and Shyam Kinkar Bhattacharji (D.W. 2), a municipal commissioner denied the presence of the inscription. But evidently it appears that they did not look for it carefully, because from the photograph of the waggon proved by the photographer (P.W. 1) it appears that the inscription was there. P.W. 2, who is the loading clerk at Gaya, proves that the waggon No. 37223 is a special type of waggon meant for mustard oil with the inscription in bold type on the body of the tank on both sides. He admits that the photographs Exs. 5 and 5(a) are correct photographs of the tank.

In cross-examination it was not suggested that there were no inscriptions on the waggon. Exhibit 6, dated 26th April 1938, a requisition by the plaintiff, Ex. 6(a) and Ex. 7, which is a loading advice, show that Mustard Oil Tank No. 37223 was the tank used on this occasion. That there is such a waggon will appear from Ex. 30(a), which is a letter from the Chief Operating Superintendent, East Indian Railway, to the Managing Director of the plaintiff firm, dated 14h June 1932. The failure of the defence witnesses to notice the inscription on the waggon may be due to the fact suggested by Mr. Bose on the other side, that Purulia people were not aware that cylindrical waggons were used for mustard oil. But the fact remains that the defendants in their alleged zeal to prevent beri-beri within the municipality acted very hastily in the matter, and in their haste they took steps which led to the seizure of the oil and the despatch of the oil from the station in a scavengers'' truck. There is some controversy on this point also, as to whether a scavengers'' truck was used for the purpose, and whether it was disinfected in the proper manner and also whether sweepers were employed to carry the canisters from the railway station to the store.

Now, the sanitary inspector says that he got the truck disinfected with bleeching powder lotion and that he took gang coolies with him for loading of the truck with the tins. It has been pointed out that it does not appear from his evidence that the disinfecting was done in his presence, and his report Ex. H does not show that any disinfecting was done, and there is a slight difference between his evidence and the evidence of the vice-chairman on the question of disinfection. The evidence of the vice-chairman shows that there is only one motor truck in the municipality which is in use for five or six years. It is used for the purpose of carrying rubbish, dirty road sweeping, rubbish of the drain and dead animals. The truck is also used for road watering. Sometimes when there is scarcity of water, drinking water is also carried on this truck. He says there were people in the station who used water carried on this truck five or six years before. It plies from morning till about 12 noon. There were sweepers attached to this truck, and if these sweepers were sent for other purposes they requisitioned the services of other sweepers. The truck is known as the ''Conservancy Truck.'' The fact of the use of mehtars, it may be noted, was mentioned in Para. 9 of the plaint. In reply to this statement we have got the statement in Para. 10 of the written statement, where the expression "municipal employees" is mentioned. The use of mehtars was not denied specifically. On the other hand, we have got the expression "gang coolies" used by the sanitary inspector. From these materials, it is difficult to get out of the fact that the scavengers'' truck was used for the removal of the oil and that mehtars were also used for the removal of the oil.

The question then arises as to whether the action of the municipality was unreasonable and negligent and caused loss to the plaintiff. On this point, we have got the evidence of Gobind Ram, a servant of the plaintiff company, who says that after the removal he inquired from the merchants of the locality if they would condescend to take the oil and they refused on the ground that the customers will not take the oil because it had been carried in the municipal truck. Ratan Lal, P.W. 5, who is Gomasta of the firm known as Thakur Das Badri Narayan of Purulia, corroborates Gobind Ram when he says that Gobind Ram asked his master to take the oil bat his master refused because it had been carried in a municipal truck, and that the plaintiff had to reduce the price of the oil by 4 annas per maund, and this witness''s master had to purchase oil from other sources. Madan Gopal Marwari, P.W. 6 says that Gobind Ram asked him to purchase the oil after the analysis but he refused to take it because it had been seized and people did not like to purchase that oil any more. Just before that he had mentioned that the oil was carried by the municipality on the truck on which rubbish is carried. On account of this incident the price of the oil had to be reduced by the plaintiff. Gobind Ram, P.W. 8, also says that those who purchased the tins at the court auction could not sell the oil at Purulia. Prom the evidence of these witnesses, it is clear that the oil was carried in a scavangers'' truck loaded by mehtars, as a result of which the plaintiff could not sell the oil at its proper price, which was admittedly Rs. 11 per maund on that date. The action of the municipality, if not actuated by malice or as a result of a conspiracy, was certainly very unreasonable and negligent. There were other methods available, by which the same object could have been attained. But the one which the municipality adopted does make them liable for the loss which the plaintiff suffered. The municipality is liable for the negligent acts of its agents.

The question then is, what should be the amount which should be allowed to the plaintiff. The appeal has been valued at Rs. 3012. So far as the question of damages is concerned for their loss of reputation and other things, I do not think any case has been made out, because their reputation, though it suffered slightly at the time, after the certificate of the chemical analyst, cannot be said to have been affected. But the plaintiff company is certainly entitled to the difference between the actual price and the price realized at the auction sale, and that amount is Rs. 2012. In this view of the matter the decree of the Court below is set aside, and the plaintiff will be allowed a decree for Rs. 2012, interest to run from this date till realization at the rate of 6 per cent, per annum. No previous interest is allowed as the plaintiff company themselves did not take delivery of the oil after the Sub-divisional Officer asked them to do so.

I would, therefore, allow the appeal to the extent indicated above, with costs proportionate to success here and also in the Court below. The plaintiff is entitled to withdraw the money that is in deposit in the company''s name.

Fazl Ali, J.

I agree.