Pannalal Jankidas vs Mohanlal And Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 71 of 1949

Decision Date: 21 December, 1950

Coram: Hiralal Kania (C.J.), M. Sastri, Patanjali Das, Sudhi Ranjan

The matter was titled Pannalal Jankidas versus Mohanlal and Another and was decided by the Supreme Court of India on the twenty-first day of December, 1950. The judgment was authored by Justice Hiralal J. Kania, who sat as Chief Justice, and the bench was comprised of Justice Hiralal J. Kania, Justice M. Sastri, Justice Patanjali Das and Justice Sudhi Ranjan. The case can be cited as 1951 AIR 144 and 1950 SCR 979. The principal statutory provisions that framed the dispute were found in the Indian Contract Act of 1872, specifically section 212, and in the Bombay Explosion (Compensation) Ordinance, 1944, sections 14 and 18, which dealt with compensation for damage caused by explosion.

The plaintiffs, who acted as commission agents, had purchased certain pieces of goods in accordance with instructions given by the defendants. Acting on those instructions, the plaintiffs stored a portion of the goods in a godown situated in Bombay while awaiting the issuance of a government permit that would allow the consignments to be forwarded to the defendants. Before the goods could be dispatched, a large explosion occurred in Bombay Harbour, and the stored goods were destroyed either by the ensuing fire or by the explosion itself. Several months after the incident, the Governor-General promulgated the Bombay Explosion (Compensation) Ordinance, 1944. That ordinance provided, among other things, that the Government would pay fifty per cent of the loss for goods that were uninsured and would pay the full loss for goods that were insured. The ordinance also declared that no person would ever have, except under the ordinance, any right in contract, tort or otherwise to claim compensation for damage or loss of property arising out of the explosion, and that no suit for such compensation could be maintained in any civil court.

Because the goods had not been insured, the plaintiffs received fifty per cent of the value of the destroyed goods from the Government under the ordinance. The plaintiffs then sued the defendants, contending that, as their agents, they were entitled to be indemnified by the defendants for the remaining fifty per cent of the value of the goods. The defendants, relying on the facts established during the trial, argued that they had directed the plaintiffs to insure the goods and that the plaintiffs had agreed to do so but had failed to procure an insurance policy. The defendants claimed that, had the goods been insured, they would have been entitled to receive the full amount of compensation from the Government under the ordinance, and therefore they were entitled to set off or counter-claim the value of the goods as damages caused by the plaintiffs’ neglect or breach of duty in failing to insure the goods as instructed.

The Court, speaking through Chief Justice Kania and Justice Das, held that full compensation under the ordinance was payable on proof of the existence of a fire-insurance policy irrespective of the terms of the policy, and that the non-recovery of half the value of the goods from the Govern-

In the majority view, the Court observed that full compensation under the Ordinance could be awarded only if a fire-insurance policy existed; consequently, the loss suffered by the defendants arose directly from the plaintiffs’ neglect or breach of duty to insure the goods, a duty the plaintiffs had been instructed to perform and had expressly agreed to fulfill. The Court held that the Ordinance’s intervention did not interrupt the causal chain linking the plaintiffs’ failure to the defendants’ loss, nor did it render the loss remote or indirect. The Ordinance was described as a mechanism that merely quantified the amount of damages; it did not create any new liability for the plaintiffs. Moreover, the fact that the Ordinance was not in force at the time of the explosion and could not have been contemplated by the parties was deemed irrelevant to the question of liability. The Court further concluded that the defendants’ plea was not barred by the Ordinance because their cause of action was founded on the plaintiffs’ misconduct in the conduct of their agency business. That cause of action was completed by the allegation that there was a duty or agreement to insure the goods, that the plaintiffs failed to perform that duty, and that such failure caused damage to the defendants. The Court emphasized that the quantum of the damages was not a component of the cause of action itself, and therefore the Ordinance could not preclude the defendants from pursuing their claim.

In dissent, Justice Patanjali Sasri offered a contrasting analysis. He argued that the defendants’ inability to recover the full value of the goods from the Government under the Ordinance did not arise directly and naturally from the plaintiffs’ failure to insure, but instead resulted from a series of independent and disconnected events. These events included the Government’s compensation scheme embodied in the Ordinance, the agreement with insurance companies concerning contribution, and the resultant discrimination by the Government between insured and uninsured goods. Justice Patanjali Sasri held that the Ordinance did not displace the ordinary legal rules relating to the remoteness of damage, nor did it amend or abrogate any terms of the fire-insurance policies. He found it difficult to conceive how an Ordinance enacted several months after the explosion could enlarge the right to damages. The broad principle of restitutio in integrum, which underlies the assessment of the quantum of damages, must be qualified by the rule of remoteness. Further, the Court noted that the bar imposed by the Ordinance was based not on the nature of the cause of action but on whether the damage or loss was “due to or in any way arising out of” the explosion. The claim of the defendants was therefore clearly barred. Justice Patanjali Sasri warned that the defendants could not simultaneously argue that the loss of the goods was explosion damage to invoke section 14 of the Ordinance, while contending that the loss did not arise from the explosion in order to evade the bar under section 18. He cited authorities such as In re an Arbitration between Polemis and Another and Furness Withy & Co. Ltd. [1921] 3 K.B. 560, Weld-Blundell v. Stephens [1920] A.C. 983, Monarch Steamship Co. Ltd. v. Karlshamns Oljefabriker [1949] A.C. 196, and Hadley v. Baxendale (9 Ex. Livingstone v. Rawyards Coal Co. (1880) 5 App. Cas. 25, British Westinghouse Electric and Manufacturing Co. Ltd. v. Underwood Electric Railways Co., London [1919] A.C. 673, Liesbosch (owners) v. Edison (owners) [1933] A.C. 449, Smith Hogg & Co. Ltd. v. Black Sea and Baltic General Insurance Co. Ltd. [1940] A.C. 997, Standard Oil Co. of New York v. Clan Line Steamers Ltd. [1924] A.G. 100—as guiding precedents on issues of remoteness and causation.

The Court noted that the authorities cited earlier included the cases of Hadley v. Baxendale, Livingstone v. Rawyards Coal Co. (1880) 5 App. Cas. 25, British Westinghouse Electric and Manufacturing Co. Ltd. v. Underwood Electric Railways Co., London [1919] A.C. 673, Liesbosch (owners) v. Edison (owners) [1933] A.C. 449, Smith Hogg & Co. Ltd. v. Black Sea and Baltic General Insurance Co. Ltd. [1940] A.C. 997, and Standard Oil Co. of New York v. Clan Line Steamers Ltd. [1924] A.G. 100. The matter before the Court arose on appeal numbered Civil Appeal No. 71 of 1949. The appeal challenged a judgment and decree of the High Court of Judicature at Bombay dated 11 April 1947, delivered by Sir Leonard Stone C.J. and Justice Chagla in Appeal No. 39 of 1946. That judgment had reversed an earlier judgment and decree of Justice Bhagwati dated 27 March 1946 in Civil Suit No. 1373 of 1944, which had been decided by the same High Court in its original jurisdiction. Counsel for the appellants consisted of a senior advocate together with a junior, while the respondents were represented by a senior advocate assisted by two juniors. The judgment was pronounced on 21 December 1950, with Justice Kania C.J. delivering the opinion.

In describing the factual background, the Court stated that the appellants were a firm of commission agents operating in Bombay, and the respondents were the constituents of that firm. The parties had prepared and settled their accounts for all transactions up to 30 October 1943. After that date, the appellants continued to purchase piece-goods and yarn and to consign them to the respondents’ joint family firm. One bale of piece-goods was bought and dispatched in November 1943. In January 1944, the government imposed a restriction that prohibited the consignment of piece-goods or yarn outside Bombay by rail unless a prior permit had been obtained from the Textile Commissioner at Bombay. Around 8 February 1944, a representative of the respondents’ joint family firm, identified as Mohan Lal, visited Bombay, and the appellants purchased on his behalf 278 bales of piece-goods. Of these, 94 bales were dispatched in accordance with the respondents’ instructions. Following further instructions, the appellants applied for and secured permits to consign additional bales, and those bales were dispatched on 14 February 1944 to destinations specified by the respondents. On 10 April 1944, after obtaining the necessary permits, the appellants dispatched further bales as directed by the respondents. The dispute that gave rise to the present proceedings concerned the remaining 92 bales, which had been stored in Godown No. 424, Baroda Street, Argyle Road, Bombay, while awaiting permits for consignment. On 14 April 1944, a large explosion occurred in the Bombay harbour, destroying numerous immovable properties and godowns that contained movable property across a wide area near the port. The explosion also ignited fires that caused extensive damage to both movable and immovable property. The 92 bales held by the appellants on behalf of the respondents were among the items destroyed either by the fire or by the explosion.

The plaintiffs sued the defendants for the price of ninety-two bales of piece goods that had been stored in godown No. 424, Baroda Street, Argyle Road, Bombay, and that were destroyed either by the fire or by the explosion that occurred on 14 April 1944. The plaintiffs based their claim on the agent’s right to indemnity. The defendants asserted first that the plaintiffs were their pucca adatiyas, that title to the goods had not passed to the plaintiffs, and that the defendants could not be held liable for the price until the goods had been delivered to them. In the alternative, and in paragraph 4 of their written statement, the defendants claimed that when Mohanlal of the defendants’ firm was in Bombay and the plaintiffs said that the goods could not be railed until permits were obtained, the parties agreed that the defendants would pay annas four per bale per month to the plaintiffs as insurance charges, and consequently the goods were to remain insured until they were dispatched according to the defendants’ directions. In paragraph 21 of their written statement, the defendants contended that if their claim that the plaintiffs were pucca adatiyas was rejected and the plaintiffs were held to be commission agents, the plaintiffs had been guilty of negligence and misconduct in the agency business because, despite specific instructions and the alleged agreement, they had failed to insure the goods. Because of that alleged negligence and misconduct, the defendants argued that the plaintiffs were not entitled to the indemnity they claimed. In the alternative, the defendants maintained that the plaintiffs were liable to compensate the defendants for the loss caused by the failure to insure the bales, and that the defendants were entitled to set off that loss against the plaintiffs’ claim for price. The defendants also filed a counter-claim for the same amount if the set-off was not permitted.

At trial, numerous witnesses were examined and the issue before the Court was the defendants’ plea that the plaintiffs were negligent and had misconducted themselves by not insuring the ninety-two bales, as well as the resulting counter-claim. After assessing the demeanor of the witnesses and hearing their evidence, the trial judge concluded that the plaintiffs’ witnesses were unreliable except where they were supported by documentary evidence, and he did not accept the defendants’ evidence. The trial judge held that the agreement to insure the goods had not been proved and therefore entered a decree in favour of the plaintiffs. On appeal, however, the appellate court departed from the trial court’s view. The appellate court held that Mohanlal had given instructions to insure the goods and that the agreement was proved. While the appellate court recognised the well-established principle of giving full weight to the trial judge’s observations about witnesses, it found that, based on the documents, the trial judge’s conclusion was not correct. In reaching this conclusion, the appellate court relied principally on the statements of account that the plaintiffs had sent to the defendants concerning the bales purchased in February 1944 and subsequently dispatched, and on the fact that the plaintiffs had charged the defendants insurance premiums at the rates specified in the defendants’ written statement. The appellate court rejected the plaintiffs’ explanation that those entries had been made out of cupidity, an explanation that the trial judge had accepted. Consequently, the appellate court set aside the trial decree and held that the evidence supported the existence of an insurance agreement between the parties.

The Court noted that the earlier records showed a transaction involving a lot of two hundred seventy-eight bales, for which the plaintiffs had charged the defendants insurance premiums at the rates specified in the defendants’ written statement. The trial judge had accepted the plaintiffs’ explanation that these entries were made out of cupidity by the plaintiffs, but the appeal court rejected that explanation. After a brief discussion in which this point was strongly urged before the Court, the counsel for the plaintiffs did not adequately dispute the conclusion reached by the appeal court. The Court was of the opinion that, given the documentary evidence, the finding of the appeal court was correct. Consequently, the remaining issue for determination was the quantum of damages to which the respondents were entitled.

Before the appellate court in Bombay, the respondents’ counsel conceded that the insurance to be effected by the appellants under the agreement was on the usual terms of fire-insurance policies prevailing in Bombay. Clause 7 of the standard policy, inter alia, provided that “Unless otherwise expressly stated in the policy, this insurance does not cover … (h) any loss or damage occasioned by or through or in consequence of explosion but loss or damage by explosion of gas used for illuminating or domestic purposes in a building in which gas is not generated and which does not form part of any gaswork will be deemed to be loss by fire within the meaning of this policy.” The appellants argued that, even assuming they were in default for failing to insure the goods in accordance with the instructions or the agreement, the respondents could not recover any amount for the damage caused by the explosion because, had a fire-insurance policy been taken out, it would not have entitled the respondents to the sum they claimed. In support of this argument, the appellants relied on a passage from Mayne on Damages (11th ed., p. 592) which states: “Therefore if an agent is ordered to procure a policy of insurance for his principal and neglects to do it, and yet the policy, if procured, would not have entitled the principal, in the events which have happened, to recover the loss or damage, the agent may avail himself of that as a complete defence.”

The Court observed that, following the explosion, extensive discussion had taken place concerning the liability of the insurance companies under their fire-insurance policies and the liability of the Government for alleged negligence in unloading high-explosives from a ship at the docks. It further noted that on 1 July 1944 the Governor-General promulgated the Bombay Explosion (Compensation) Ordinance, 1944. The preamble to that Ordinance declared: “Whereas an emergency has arisen which makes it necessary to provide for and regulate the payment of compensation for … damage to property due to, or arising out of, the explosions and fires which occurred in the Bombay Docks on the 14th April, 1944, to restrict litigation in connection with …”

In this case the Court explained the operative provisions of the Bombay Explosion (Compensation) Ordinance, 1944. The preamble of the Ordinance stated that an emergency had arisen which required provision and regulation of compensation for damage to property caused by the explosions and fires that occurred in the Bombay Docks on 14 April 1944, and that it was necessary to restrict litigation in connection with those explosions and fires and to make certain other provisions. The Ordinance defined “uninsured property” as property that was not covered, either wholly or partially, by any fire, marine or miscellaneous insurance policy at the time of the explosion. The Ordinance then prescribed a procedure for claims. Claims were to be presented to a Claims Committee established under the Ordinance, and parties were entitled to appeal and to seek review of the Committee’s decision.

Section 14 of the Ordinance provided, subject to the other provisions, that the Central Government would pay compensation for explosion damage to property in two categories. First, where the damage was caused by fire to property that was insured, whether wholly or partially, against fire risk under a policy (excluding marine insurance), or where damage was caused by blast without fire to property that was insured, whether wholly or partially, under a policy (excluding marine insurance) covering fire and explosion risks, the compensation would be an amount equal to the proved loss and would be paid to the holder of the insurance policy, or if the holder was deceased, to his legal representatives. Second, where the damage was caused by blast without fire to property that was insured, whether wholly or partially, against fire under a policy (excluding marine insurance) that did not cover explosion risk, the compensation would be an amount equal to eight and three-quarter per cent of the proved loss, again payable to the policy holder or his legal representatives.

Section 15 dealt with the contribution that insurers were required to make toward the amounts payable under the Ordinance. Section 18 contained further restrictions. Sub-section (1) clarified that the Ordinance did not prevent a person from recovering compensation for death or personal injury under the Workmen’s Compensation Act, 1923, or under any life-insurance policy, personal-accident contract, or any other scheme providing such compensation, and that it also did not affect claims under any marine or miscellaneous insurance policy for damage to property. Sub-section (2) stated that, except as provided in sub-section (1), no person could claim any right, whether in contract, tort, or otherwise, to compensation or damages for death, personal injury, or loss of property arising out of the explosion, and that no suit or legal proceeding for such compensation could be maintained against the Crown, the Trustees of the Port of Bombay, the Municipal Corporation of the City of Bombay, their servants or agents, or any other person. Sub-section (3) further barred any suit, prosecution, or legal proceeding against any person for any act done in good faith to combat or mitigate the effects of the explosion, or for any act done in good faith in pursuance of the Ordinance or any rules made thereunder.

The Ordinance declared that no person could be deemed to have acted unlawfully for any act or omission that caused or contributed to the explosion, and that any such act or omission would be considered lawful. It further provided that no suit, prosecution, or any other legal proceeding could be instituted against any individual for actions taken in good faith to combat or mitigate the effects of the explosion, or for actions undertaken in good faith pursuant to the Ordinance or any rules or orders made under it.

The parties agreed that, with respect to merchandise that was not insured, the Ordinance required payment of fifty percent compensation. The appellants had already obtained that fifty percent amount and had consented to credit the same to the respondents. The remaining dispute concerned the other fifty percent of compensation.

Both sides acknowledged that, had the goods been insured, section fourteen of the Ordinance would have allowed the appellants to recover the full amount of compensation, which would then have become payable to the respondents. The appellants advanced a two-fold argument. First, they asserted that even if they had insured the goods, the ordinary fire-insurance policy would not have covered the risk that materialised; consequently, although they admitted a breach of the agreement or negligence in their duties as agents, they argued that they should not be required to pay any additional amount to the respondents. In an alternative line of reasoning, they contended that the enactment of the Ordinance by the Government could not increase or add to the appellants’ liability arising from a breach of contract or breach of duty, and therefore they should not be liable for the compensation that the respondents might have received had the goods been insured.

The second contention advanced by the appellants was that the respondents’ counter-claim was barred by section eighteen, sub-section two of the Ordinance. They relied on the Indian Contract Act, specifically sections two hundred eleven and two hundred twelve, which outline the consequences when an agent acts contrary to his duty toward the principal. Section two hundred eleven provides that when an agent conducts the principal’s business in a manner contrary to the principal’s directions, the agent must compensate the principal for any loss incurred and must account for any profit that accrues. The Court cited the decision in Smith v. Lascelles, where it was held that an agent who was instructed to insure goods but failed to do so was liable to the principal for the value of those goods if they were lost.

Section two hundred twelve of the Indian Contract Act was quoted in full: “An agent is always bound to act with reasonable diligence and use such skill as he possesses; to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill or misconduct.” These statutory provisions made clear the legal position regarding the agent’s liability for direct versus indirect consequences of negligence or misconduct.

In this matter, the Court explained that when an agent is negligent, the agent must compensate for damage that arises directly from the neglect, but is not liable for loss that is only indirectly or remotely caused by such neglect or misconduct. Consequently, the Court needed to determine whether the respondents’ claim, founded on the alleged neglect or misconduct, could be characterized as a direct consequence of that neglect, or whether it was merely an indirect or remote result. Two alternative legal positions could be derived from the alleged neglect of the appellants. The first position would treat the appellants as if they were insurers themselves, while the second position would view them as having undertaken only an agreement to keep the goods insured under a recognized insurer on the ordinary terms of a fire-insurance policy.

To illustrate the first position, the Court referred to the decision in Tickel v. Short, where the Lord Chancellor expressed the equitable rule that when a principal instructs a factor to obtain insurance and the factor charges the principal as though the insurance had been effected, the factor is deemed to be the insurer even if the insurance was never actually procured. Applying that principle, the Court observed that if, as alleged in the present case, the appellants were instructed to insure the goods and subsequently charged the respondents as though the insurance had been obtained, equity would impose upon the appellants the liability of an insurer, placing them in the same position as if an actual fire-insurance contract had been created covering the goods. Under that view, the Court would be entitled, in equity, to proceed on the premise that insurance had been effected and that the goods were therefore covered by a fire-insurance policy, and any consequences flowing from that premise would be enforceable against the appellants.

Proceeding on the basis of section 14 of the Ordinance, the Court noted that the only issue to be examined is whether the goods were covered by a fire-insurance policy; the specific terms of any such policy are not material to the enquiry. Accordingly, if the appellants are regarded as having acted as insurers and are prevented from asserting that no fire-insurance policy existed, the loss caused by the absence of such coverage would be a direct result of their neglect, obligating them to make good the loss claimed by the respondents. Conversely, if the appellants are held not to be insurers but merely to have promised to keep the goods insured through a recognized insurer on standard fire-policy terms, the Court must decide whether the damages claimed by the respondents flow directly from the appellants’ failure to fulfill that duty by producing a fire-insurance policy. The Court further indicated that an instructive judgment, cited as In Re Arbitration between Polemis and another and Furness Withy and Co. Ltd., provides a clear distinction between direct and remote damages, and that judgment would assist in resolving the issue.

In this case, the Court referred to the discussion found in the judgment of Banks, a learned judge, in the matter of Polemis and Furness Withy and Co. Ltd. (1). He highlighted observations made by Lord Sumner in Weld-Blundell v. Stephens (1) [1921] 3 K.B. 560, quoting Lord Sumner at length: “What are natural, probable and necessary consequences? Everything that happens, happens in the order of nature and is therefore natural. Nothing that happens by the free choice of a thinking man is necessary except in the sense of pre-destination. To speak of probable consequences is to throw everything upon the jury. It is tautologous to speak of effective cause or to say that damages too remote from the cause are irrecoverable, for an effective cause is simply that which causes, and in law, what is ineffective or too remote is not a cause at all. I still venture to think that direct cause is the best expression… What a defendant ought to have anticipated as a reasonable man is material when the question is whether or not he was guilty of negligence, that is, of want of due care according to the circumstances; this however goes to capability, not to compensation.” After presenting these remarks, Banks L.J. observed further, stating: “Under these circumstances I consider that it is immaterial that the causing of the spark by the falling of the plank could not have been reasonably anticipated. The appellants' junior counsel sought to draw a distinction between the anticipation of the extent of damage resulting from a negligent act, and the anticipation of the type of damage resulting from such an act… I do not think that the distinction can be admitted. Given the breach of duty which constitutes the negligence, and given the duty damage as a direct result of that negligence, the anticipations of the person whose negligent act has produced the damage appear to me to be irrelevant.” The Court then turned to the broader question of remoteness of damages in negligence, noting that it had been examined in detail in a recent House of Lords decision, Monarch Steamship Co. Ltd. v. Karlshamns Oljefabriker (2) [1949] A.C. 196. In that case, the issue arose because a ship, rendered unseaworthy, was delayed and, following an order from the British Admiralty during wartime, was instructed to discharge its cargo at Glasgow instead of proceeding to the Swedish port for which it was originally chartered. The cargo owners, holding the bills of lading, were forced to arrange neutral vessels to retrans ship the goods from Glasgow to Sweden. The charterparty contained a war-risks clause that exempted the vessel’s owners from liability if they complied with governmental orders concerning destination. The holders of the bills of lading claimed the additional transport charges incurred for the Glasgow-to-Sweden leg, arguing that these charges were too remote a consequence of the original breach. The House of Lords rejected that argument, and in Lord Wright’s speech the relevant authorities were reviewed and the governing principle articulated.

The holders of the bills of lading demanded payment for the additional transport costs incurred in moving the cargo from Glasgow to the Swedish destination. They argued that those additional costs were too remote to be recoverable as damages under the principle of remoteness. The House of Lords rejected that argument and held that the claim was not barred by remoteness. In the leading speech of Lord Wright, the court examined the authorities that had been cited and identified the operative legal principle. Lord Wright referred to the classic decision in Hadley v Baxendale and quoted the judgment of Alderson B, who articulated the rule in two alternative forms. Alderson B stated that where a contract is broken, the injured party should receive damages that either arise naturally from the breach. He added that damages may also be recoverable if they were within the parties’ contemplation as a probable result when the contract was made. Lord Wright explained that this formulation embodies the broad rule that a party injured by breach is entitled to compensation placing him in the position he would have occupied but for the breach. He illustrated the rule by citing Lord Blackburn’s declaration in Livingstone v Rawyards Coal Co. Lord Blackburn required the assessors of damages to approximate the sum that would restore the injured party to the condition he would have enjoyed absent the wrong.

The rule articulated by Alderson B has been consistently accepted by the courts as the correct test for recoverable damages. The principal difficulty that courts have faced is the practical application of that rule to the facts of each case. The distinction that arises is between damages that arise naturally, meaning they follow the ordinary course of events. It also separates damages that depend on special or extraordinary circumstances beyond what the parties could reasonably foresee. English law normally describes this separation as the difference between general damages, which flow from the breach itself, and special damages, which depend on additional circumstances. Special damages are those that, if not communicated to the defendant, would be unfair to impose because the defendant could not be expected to contemplate them as likely consequences of the breach. Viscount Haldane, in the case of The British Westinghouse Electric & Manufacturing Co Ltd v The Underground Electric Railways Co of London, observed that expressions concerning the principles governing the measurement of general damages may initially appear contradictory. He added that such apparent discrepancies are mainly the result of the varying nature of the specific questions presented in each case.

In this matter the Court observed that determining the amount of damage is essentially a factual enquiry, and the law can only offer general principles that sometimes give only limited assistance when applied to specific cases. Judges who assist juries must consider the particular nature of each case and adapt the wording of those general principles to suit the type of claim before them, a process that can create an appearance of ambiguity. The Court noted that it was necessary to balance the interests of loss and gain, and that no simple solution could be found. The House of Lords, speaking in Liesbosch (Owners) v. Edison (Owners), had held that it is impossible to create a universal formula for assessing damages; the prevailing rule is the principle of restitutio in integrum, and any subsidiary rules are permissible only when they give effect to that principle. In the case of Smith, Hogg & Co. Ltd. v. Black Sea & Baltic General Insurance Co. Ltd., the loss of a vessel was attributed to the master’s negligence while the ship was already unseaworthy from the beginning of the voyage. The Court treated the loss as caused by a breach of the warranty of seaworthiness and allowed recovery on that basis, while also recognising an exception for negligence. The judgment on page 1005 stated that no distinction could be drawn between situations where the master’s negligent conduct is a cause and those where an alternative cause, such as a peril of the sea, acts as a cooperating cause. A negligent act is considered a cooperating cause if it is a cause at all, just as an act that is not negligent may be a cooperating cause. The emphasis, therefore, was that a voluntary act of a human agent—whether negligent or not—generally does not constitute an independent new cause that breaks the chain of causation, thereby excluding the effect of the vessel’s unseaworthiness. In that case the unseaworthy condition created instability in the ship, and when combined with the master’s negligence it resulted in the loss; no new legal rule was established. A similar principle was applied in The Standard Oil Co. of New York v. Clan Line Steamers Ltd., where a vessel capsized because the master, lacking instructions from the owners about the specific dangers of a turret ship, handled the vessel in a way that caused capsizing. Although the immediate cause of the loss was the perils of the sea that overwhelmed the vessel, liability for those perils was excluded, and the dominant cause was held to be the ship’s unseaworthiness, as the master, though otherwise competent, was not aware of the special danger. The Court observed that all authorities cited agree on this point and embody the same rule, and that, under the familiar general rule, a shipowner is barred from relying on the specific exception when the breach of the warranty of seaworthiness operates as a direct and dominant cause of loss.

The Court observed that the shipowner’s breach of duty could not be excused by invoking the specific statutory exception. Even if the unseaworthiness of the vessel was not apparent until the accident occurred, the breach of the warranty functioned as a direct and, indeed, a dominant cause of the loss. The Court emphasized that legal causation does not hinge on the remoteness or the temporal distance between the breach and the damage. This reasoning directly countered the appellants’ argument that the Government Ordinance, by intervening to fix the amount of damages, broke the chain of causation or rendered the loss remote. The Court noted that the statement of law cited from Mayne on Damages merely reproduced the principle enunciated by Lord Blackburn in Livingstone v. Rawyards Co-operative Company. Applying that established principle, the Court concluded that the appellants were obliged to insure the goods according to the agreement they had entered into. Whether misconduct was admitted or proved, the fact that the Ordinance did not exist at the time of the parties’ agreement was irrelevant to the question of liability. Liability arose solely from the breach of the duty to insure, and the appellants thereby made themselves liable to pay compensation. The measure of compensation was the loss suffered by the respondents because the goods remained uninsured. The Court then turned to the effect of the Ordinance on the appellants’ liability. The relevant provisions of the Ordinance, as previously noted, were designed to provide and regulate compensation, to prevent litigation, and to replace the rights of parties that might otherwise arise under an insurance policy or on the ground of negligence against the Government. The legislation’s validity was not contested, and Section 18 gave it retrospective effect. Consequently, the Ordinance introduced a new basis for assessing compensation, payable upon proof that a fire-insurance policy existed, irrespective of the policy’s terms. The respondents’ failure to recover half of their claim from the Government under the Ordinance, because no fire-insurance policy was in place, directly resulted from the appellants’ neglect to insure the goods as they had been instructed to do and as they had represented they had done. The Court held that this failure was neither indirect nor remote.

In this case, the Court observed that the argument claiming the assured could not recover any compensation for loss caused by fire due to an explosion was not sustainable. The Court noted that this contention, based on clause 7 of the standard insurance form, had never been raised before the trial court, nor had any issue or supporting argument been presented at that stage. The claim appeared for the first time in the appellate judgment delivered by Justice Chagla, and the Court considered that assuming clause 7 automatically prevented any insurer from paying the loss was neither necessarily true nor compatible with the provisions of the Ordinance, and therefore could not be conclusively determined. Consequently, the Court found no justification for treating the matter as if an adverse interpretation of the policy had been made against the respondents and, on that basis, relieving the appellants of liability for the failure to recover half the value of the goods, which could have been recovered had the goods been insured as the appellants had agreed to do.

The Court further explained that when the relationship between the parties is that of principal and agent, and the agent is found to have breached his duty, a narrow view of the situation is inappropriate. The appellant-agent had deliberately opted not to insure the goods while still demanding the agreed premium on the premise that the goods were covered by insurance. Accordingly, the Court held that the appellant must bear the consequences of his default. The argument that the appellant’s liability as an agent should be determined as of the date of the explosion did not answer the respondents’ claim. The Court illustrated the hypothetical position that, assuming the appellants had obtained a standard fire-insurance policy, the respondents could either have demanded an assignment of that policy or could have sued the insurer, alleging that the fire—not the explosion—was the cause of loss and thus covered under the policy. Before the Court could resolve the parties’ rights, the Governor-General’s Ordinance intervened, preventing a final decision on the dispute, while the Government undertook to pay the loss on the basis that the policy covered the risk.

The Court concluded that the appellant’s misconduct created liability to compensate the respondents and to place them in the position they would have occupied had the goods been properly insured. On behalf of the appellants, it had been argued that the Government’s issuance of the Ordinance introduced a new basis of liability. The Court rejected this contention, holding that the appellants’ liability arose from the existence of a fire-insurance policy, which they had been instructed to obtain and had represented they had obtained, and from their breach of duty in failing to insure the goods—an act independent of the Ordinance. The Ordinance merely quantified damages that would otherwise be unliquidated, providing a yardstick for assessing compensation under various circumstances, including the present failure to insure. Accordingly, the Ordinance did not create any new liability, and the appellants’ argument on that point was dismissed.

In this case, the Court observed that an insurance policy was supposed to exist because the appellants had been instructed to insure the goods and had represented that they had done so. The Court explained that the appellants’ liability did not arise from the Ordinance but from their breach of duty in failing to insure, an act that occurred independently of the Ordinance and was not affected by it. The appellants could at most argue that the scale of liability resulting from their misconduct was not foreseen when they agreed to perform the duty; however, the Court held that such a claim does not constitute a legal defence when the damages flow directly from the breach. The Court further noted that the Ordinance merely quantifies damages rather than leaving unliquidated damages to be assessed in the usual manner. It provides a formula for fixing damages under various circumstances, covering all alternative situations, and therefore the liability for failure to insure must now be measured according to this new basis. The Court stressed that the Ordinance does not create any new liability, and consequently the appellants’ contention on that point was rejected. The only other argument raised before the Court concerned the construction of section 18 of the Ordinance. The appellants contended that, apart from recoveries permitted under clause (1) of section 18, the Ordinance extinguished every right, whether in contract, tort, or otherwise, to any compensation or damage for loss of property arising out of the explosion, and that no suit or legal proceeding for such compensation could be maintained against the Crown or any other person, except as expressly provided. They further argued that the respondents, in establishing their claim, would have to plead a right to recover an amount due to the explosion, which they claimed was barred by section 18(2). The Court found this contention unsound. The Court observed that the appellants had instituted the suit to recover the price of the goods on an indemnity basis. The respondents answered that the appellants were not entitled to indemnity because they had breached their agency duty. The respondents asserted that they would be liable to pay for the goods only if the appellants delivered the goods according to the respondents’ instructions, and they counterclaimed that, if the appellants could not deliver the goods, the appellants should pay the value of the goods. In defence of the counter-claim, the appellants argued that the goods were destroyed by fire caused by the explosion without any neglect on their part, and therefore they were not liable. The respondents replied that they had asked the appellants to insure the goods and that, had the appellants not failed in that duty, the respondents would have been reimbursed. The appellants then maintained that even if they had insured the goods, the respondents could not have recovered anything from the

The respondents argued that the appellants’ obligation to recover money from an insurance company under a standard fire-insurance policy was irrelevant, because the respondents could have recovered the sum under the Ordinance regardless of the policy terms. Consequently, the respondents did not seek recovery from the appellants except under section 18(1) of the Ordinance. Their claim was based on the alleged misconduct of the agent in the agency business, which the Court distinguished from a claim for compensation arising from the explosion. The respondents had contended that damages formed part of their cause of action in the counter-claim, and that section 18(2) therefore barred their claim. The Court rejected that contention, holding that the cause of action was complete once the respondents alleged a duty or agreement to insure, the failure to perform that duty, the loss suffered because of that failure, and consequently the appellants’ liability for breach of duty. The Court noted that the quantum of damages was not a component of the cause of action but rather a matter for the Court to determine according to established legal principles. Accordingly, the appeal was dismissed with costs awarded against the appellants.

Justice Patanjali Sastri expressed regret that he could not agree with the majority judgment. He observed that the facts of the case were fully set out in the judgment and therefore needed no repetition. He identified the central issue as the amount of damages the appellants should pay for failing to insure the respondents’ goods, which were destroyed by fire caused by the large explosions at the Bombay Docks on 14 April 1944. The goods had been purchased by the appellants in Bombay acting as commission agents for the respondents and were stored in the appellants’ warehouses awaiting dispatch. The appellate bench below had found that the appellants had agreed to keep the goods insured against fire while in their custody and had recorded insurance charges in the respondents’ books. Although counsel suggested that the appellants might have acted as insurers themselves, the appellate findings made clear that the appellants’ obligation was to obtain a regular fire-insurance policy subject to its usual conditions. This was further confirmed by the respondents’ counsel, who conceded that the reliance was only on the agreement to insure the goods against fire under an ordinary policy.

It was agreed by both parties that the insurance to be obtained for the goods was to be an ordinary fire-insurance policy. The standard clauses of such a policy expressly excluded loss or damage caused by explosion. Relying on this exclusion, the appellants argued that even if they had complied with the agreement and procured the fire-insurance policy, the loss of the goods caused by the explosion-induced fire would not have been covered, and consequently the insurer would have been unable to pay any compensation. The appellants therefore contended that the respondents were entitled only to nominal damages for the alleged failure to insure, because no substantive loss could have been recovered from the insurer. This argument was accepted as correct. In support of the position, the Court referred to a passage from a respected legal treatise on damages, which stated that when an agent can demonstrate that, under any circumstances, obedience to the principal’s instructions could not have produced any benefit, the principal suffers no real injury and the agent may rely on this as a complete defence. Accordingly, if an agent was instructed to procure insurance and failed to do so, yet the insurance, even if obtained, would not have released the principal from the loss that actually occurred, the agent’s failure did not give rise to liability.

A further complication arose from the promulgation of the Bombay Explosion (Compensation) Ordinance, No 32 of 1944, which became operative on 1 July 1944. The preamble of the Ordinance explained that an emergency existed which required the establishment of a scheme for compensating damage to property caused by the explosions and subsequent fires at the Bombay Docks on 14 April 1944, and that the purpose was also to restrict litigation relating to those events. Section 2 defined “the explosion” as the explosions that occurred at the Bombay Docks on that date and the fire that followed, and defined “explosion damage” as any damage that occurred, whether accidental or not, as the direct result of the explosion. The term “uninsured property” was defined as property that was not covered, either wholly or partially, by a policy of fire, marine, or miscellaneous explosion insurance. Section 14 stipulated that the Central Government would pay compensation for explosion damage to property, including damage caused by fire to property that was insured, wholly or partially, against fire at the time of the explosion, the amount being equal to the proven loss. Section 15 required contribution to the Government by insurance companies, while Section 16 provided for compensation to owners of uninsured property on a scale set out in that section. Section 18(2) further limited any contractual, tortious, or other claims for compensation arising from the explosion, precluding suits against the Crown, its servants, agents, or any other persons, and deemed any act or omission that caused or contributed to the explosion to have been lawfully done. The Court noted that the appellants had already received compensation from the Central Government under Section 16, amounting to approximately one-half of the value of the destroyed goods, and that this amount had been credited to the respondents’ accounts.

The Ordinance contains a provision, which the Court notes, stating that, except for the limited exceptions that are not relevant here, no person shall ever acquire, nor be considered to have ever possessed, any right—whether arising under contract, in tort, or otherwise—to claim compensation or damages for any loss or injury to property, rights, or interests that arise, directly or indirectly, from the explosion. The same provision declares that no suit or other legal proceeding seeking such compensation or damages shall be maintainable in any court against the Crown, against any servant or agent of the Crown, or against any other person, except as expressly provided in the Ordinance. Moreover, the Ordinance declares that no act or omission that caused or contributed to the explosion shall be treated as unlawful. The Court records that it is admitted that the appellants obtained from the Central Government, under Section 16 of the Ordinance, a sum equal to nearly one-half of the value of the goods that were destroyed by fire while in the appellants’ custody. This sum was paid as compensation for the loss of the respondents’ goods, and the appellants have subsequently credited the respondents for the amount received in their accounts. The present dispute concerns the respondents’ claim for the remaining balance of the value of those goods, claimed as damages because the appellants failed to insure the goods in accordance with the agreement between the parties. The respondents argue that had the goods been insured against fire, the full value could have been recovered from the Government under Section 14, without regard to any excluded risk. The Court observes that the purpose of the Ordinance appears to have been to spare the Government from having to defend numerous lawsuits for compensation arising from alleged negligence of its officers in connection with the explosion. Instead, the Ordinance provides that the Government would pay an amount equal to the proved loss where the goods were insured against fire, and a reduced amount where the goods were uninsured, thereby extinguishing all rights to compensation or damages arising from the explosion and barring any further suits or legal actions on that basis. Relying on these provisions, counsel for the respondents contended that, because the appellants failed to keep the goods insured, they were legally obligated to place the respondents, who suffered the loss, in the position they would have been in had the appellants performed their contractual obligations or complied with the respondents’ instructions. The respondents’ counsel based the claim on the appellants’ neglect of duty as commission agents carrying out the instructions of their principals, and invoked Section 212 of the Indian Contract Act, which provides that an agent must compensate the principal for the direct consequences of the agent’s neglect, lack of skill, or misconduct, but not for loss or damage that is merely indirect.

The respondent’s counsel relied on section 212 of the Indian Contract Act, which provides that an agent must compensate the principal for loss or damage that is the direct consequence of the agent’s own neglect, lack of skill, or misconduct, but not for loss or damage that is indirectly or remotely caused by such neglect, lack of skill, or misconduct. The appellant, however, argued that the appropriate test should be the one provided in section 73 of the same Act, which deals with breach of contract. Section 73 states that when a contract is broken, the injured party is entitled to receive compensation from the party that broke the contract for any loss or damage that naturally arose in the ordinary course of events from the breach, or for loss or damage that the parties knew at the time of contracting was likely to result from the breach. The provision further clarifies that compensation is not payable for loss or damage that is remote or indirect. In the Court’s view, whether the appellant’s failure is characterised as a breach of a contractual obligation between two parties or as a neglect of duty by an agent acting for his principal does not substantially affect the assessment of general damages. Although the Act supplies separate sections for each situation, the rule governing the measure of damages remains the same: the party in breach must compensate only for the direct consequences flowing from the breach and not for loss or damage that is indirectly or remotely caused. This principle aligns with the rule found in English common law.

The underlying principle behind this rule is the doctrine of restitutio in integrum, which seeks to place the injured party, as far as monetary compensation can, in the same position he would have occupied had the breaching party performed his contractual obligations or fulfilled his duty. The Court illustrated how this principle can be stretched to absurdity by citing an old English case referred to by Justice Willes in British Columbia Saw-Mill Co. v. Nettleship. In that case, a man traveling to marry an heiress lost his horse because a blacksmith performed a repair negligently, causing the horse to become lame; consequently, the bride married another, and the blacksmith was held liable for the loss of the marriage. The learned judge warned that without a commonsense limitation, liability could become absurd. Lord Wright expressed a similar view in Liesbosch, Dredger v. Edison S.S. (Owners), stating that the law cannot consider every consequence of a wrongful act because some subsequent matters must be excluded as being beyond the scope of legal judgment. This commonsense approach emphasizes that liability should be confined to those consequences that are reasonably related to the breach, thereby maintaining a pragmatic balance between full compensation and practical limits on legal responsibility.

In this case, the Court explained that the law cannot be expected to assess every cascading result of a wrongful act; it must limit liability to consequences that are relevant for practical reasons. For example, a ship that is lost because another vessel collides solely due to its fault may cause the shipowner to go bankrupt, which might then affect his family’s education or opportunities, but such secondary losses are not recoverable from the wrongdoer. The Court therefore said that the legal system must abstract certain consequences as pertinent, not on the basis of pure logic but because of practicality. This approach has led courts to develop qualifying rules of remoteness, which limit the broad principle of restitutio in integrum to situations that satisfy those rules. Applying those principles to the facts before the Court, the respondents’ goods were destroyed by fires that followed an explosion that was apparently caused by negligent conduct of Government officers or servants at the docks. Even if the appellants had purchased a standard fire-insurance policy, that policy would not have covered loss caused by fire resulting from an explosion, which is an excluded peril. Consequently, the appellants’ failure to keep the goods insured did not produce a direct legal ground for claiming damages. It is true that, had the appellants obtained a fire policy that covered the goods, the respondents might have been able to recover the full value of the goods from the Government. However, the Court found that the respondents’ inability to obtain that full value did not arise directly or naturally from the appellants’ failure to insure. The loss was the result of several independent and disconnected events: the Government’s compensation scheme embodied in the Ordinance, the agreement with insurance companies regarding their contributions, and the statutory distinction drawn between insured and uninsured property when providing compensation. The Court illustrated the point with a hypothetical: if a private individual’s negligence caused the explosion, the respondents could sue that individual for damages. Even if that individual were insolvent, the respondents’ failure to recover would not be a direct consequence of the appellants’ failure to insure, because the appellants’ insurance would not have placed the respondents in a better position. In the present case, the Government, apparently satisfied or at least convinced that the explosion was due to the negligence of its servants, enacted the Ordinance that provided compensation on specified terms and simultaneously extinguished all other rights to recover compensation, barring any suits or other proceedings. Because any claim for compensation against the Government must be based on the negligence of its servants, the Government took

The Government did not insert any clause exempting particular risks in the fire-insurance policies and it assumed full liability to pay compensation for all property that was covered by those policies. This approach was adopted because, under an arrangement with certain insurance companies, the Government was entitled to receive a proportionate contribution as authorised by section 15 of the Ordinance. Even though, on the hypothesis that the damage arose from negligence of its servants, the Government’s legal liability would have been the same for both insured and uninsured property, it nevertheless chose to guarantee payment for the insured portion.

If the Ordinance had prescribed only partial compensation for both insured and uninsured property—an outcome that likely would have occurred had the insurance companies not consented to participate in the scheme with their contributions—the respondents would have had no right to claim the remaining balance from the appellants. This would have been the case even though a direct causal link between the appellants’ failure to insure the goods and the loss suffered by the respondents might still have existed. In reality, however, no such causal connection existed. The inability of the respondents to recover the balance of the value of their goods, which were destroyed by fire, stemmed from the specific provisions of the Ordinance. Those provisions distinguished between insured and uninsured property for the purpose of compensation for explosion damage and expressly barred the exercise of rights and remedies under the general law in relation thereto.

The Court held that this inability could not be regarded as a natural or direct consequence of the appellants’ default. It was suggested that the Ordinance displaced the ordinary rules of law concerning remoteness of damage because section 18(2) purported to extinguish, retrospectively from the date of the explosion, all rights and remedies available under the general law for obtaining compensation for explosion damage, and to substitute the rights provided by the Ordinance. The substituted right to compensation, as far as the Government and insured property were concerned, was not subject to any restrictive conditions contained in the insurance policies. Consequently, it was argued that the measure of damages should be assessed without regard to the clause that excluded “explosion” from the scope of the standard fire-insurance policy.

The Court found that argument to be more ingenious than sound. The short answer, according to the Court, was that the Ordinance did not intend to displace or supersede any rule of law relating to the measurement of damages, nor did it amend or abrogate any terms of the insurance policies. Nothing in the Ordinance indicated that the clause excluding explosion, which appeared in the fire-insurance policies issued in Bombay, should be regarded as null and void. As already noted, the Government’s acceptance of liability for explosion damage was not predicated upon those policy exclusions; its liability did not arise out of the policies themselves. Because certain insurance companies had agreed to contribute a specified proportion, the Government undertook to pay full compensation for loss of insured property irrespective of the insurance terms, which were irrelevant to the liability it assumed. To suggest, under these circumstances, that the clause exempting explosion risk in all standard fire policies issued in Bombay had been legislatively abrogated was, in the Court’s view, an extravagant and far-fetched proposition.

The Court observed that the suggestion that the relevant clause had been legislatively abrogated was, in its view, an extravagant and far-fetched proposition. The factual background was that the respondents’ goods were completely destroyed when an explosion occurred on the fourteenth day of April in the year 1944. On that very date the respondents were left with no recovery except, at most, a token amount for the appellants’ failure to insure the goods as they had previously agreed to do. The Court found it difficult to understand how, by virtue of the Ordinance that was enacted more than two months after the explosion, the respondents’ claim against the appellants – a claim which the respondents themselves insisted was in no way affected by the provisions of the Ordinance – could be enlarged or altered in any manner. The next issue raised on behalf of the appellants concerned the maintainability of the respondents’ counter-claim. The appellants relied upon section eighteen, sub-paragraph two of the Ordinance, which provides that “no suit or other legal proceedings for any such compensation or damages” – that is, compensation or damages for any damage to or loss of any property, rights or interests due to or in any way arising out of the explosion – “shall, save as aforesaid … be maintainable in any court against the Crown … or against any other person …”. The learned Chief Justice of the lower court had made no reference to this contention in his judgment. However, Justice Chagla addressed and rejected it. Justice Chagla explained that, in his opinion, the defendants’ claim did not arise out of the explosion and was not in any way due to the explosion. He stated that the plaintiffs had instituted the suit as agents on an indemnity, and that the defendants’ answer was that they were entitled to set-off against the amounts due to the plaintiffs because the plaintiffs, acting as the defendants’ agents, had failed to carry out the defendants’ instructions. He further observed that if the plaintiffs’ claim on the indemnity did not arise out of the explosion, then equally the defendants’ set-off could not be said to arise out of the explosion; the defendants’ cause of action was simply the plaintiffs’ failure to follow their instructions, which had nothing to do with the explosion. With due respect, the Court found this reasoning difficult to follow. The Court noted that the appellants’ claim on the indemnity indeed did not arise out of the explosion, for the appellants alleged that they had purchased the goods on the respondents’ instructions and that they sought to recover the price paid notwithstanding the destruction of the goods by fire, a fire for which the appellants asserted they bore no responsibility. However, the basis of the respondents’ counter-claim was fundamentally different. The respondents contended that, had the appellants insured the goods in accordance with the agreement, the respondents could have recovered the full value of the goods from the Government under section fourteen of the Ordinance. Because the appellants had failed to insure the goods, the respondents argued that the appellants were liable to pay, as damages, the shortfall between the full value and the amount recoverable from the Government. The Court expressed that it was difficult to see how it could be said that the respondents’ claim “does not arise out of the explosion nor is it in any way due to the explosion”.

The Court observed that the respondents’ assertion that their claim “does not arise out of the explosion nor is it in any way due to the explosion” could not be accepted. It explained that the prohibition contained in section 18 was not dependent on the nature of the cause of action of the suit or proceeding that was barred, but was triggered by the fact that the damage or loss of property was “due to or in any way arising out of” the explosion. The Court noted that the respondents were placed in a dilemma on this point. In order to be entitled to claim the full value of the goods from the Government under section 14, they would have to affirm that the damage to the goods constituted “explosion damage to property, being damage caused by fire to property insured whether wholly or partially at the time of the explosion against fire under a policy covering fire risk”. The Court held that without such a statement no claim could be made against the Government under section 14, and consequently the foundation of the respondents’ claim against the appellants – that but for the appellants’ neglect the respondents could have recovered the full value of the goods from the Government – would collapse. Conversely, if the respondents described the loss as explosion damage within the meaning of section 14, the Court found that they would fall within the bar created by section 18(2). The Court therefore concluded that the respondents could not simultaneously claim that the loss was explosion damage for the purpose of invoking section 14 and at the same time contend that the loss was not “due to or in any way arising out of the explosion” in order to evade the bar of section 18. It emphasized that both section 14 and section 18 were concerned with the physical cause of the loss or damage to the property for which compensation was sought, not with the cause of action against a particular defendant. Accordingly, the Court held that the respondents could not be permitted to adopt inconsistent positions to bring themselves within one provision while escaping another. On this basis, the Court allowed the appeal and dismissed the counter-claim. The judgment was concurred by the Chief Justice, and the appeal was dismissed. The agents for the parties were recorded as Mohan Behari Lal for the appellants and N. Shroff for the respondents.