civil appellate jurisdiction. civil appeal number 2221 of
1966.
appeal from the judgment and decree dated march 8 1965 of
the patna high companyrt in misc. judicial case number 1554 of
1964.

p. jha for the appellant. bishan narain s. s. jauhar k. k. sinha and manish kumar
sinha for respondent number 1.
sarjoo prasad r. n. sinha and u. p. singh for respondents
number. 3 to 5.
the judgment of the companyrt was delivered by
shelat j. this appeal by certificate is directed against
the judgment of the high companyrt of patna dated march 8 1965
whereby it set aside the order of the chancellor of the
university of patna dated september 26 1964 passed under s.
9 4  of the patna university act iii of 1962  hereinafter
referred to as the act . on the retirement of one dr. muhar as the university pro-
fessor of political science a permanent vacancy occurred in
that post. the vice-chancellor of the university after
obtaining the approval of the chancellor for filling up the
vacancy by direct recruitment got the post advertised
through the bihar public service companymission. in his letter
requesting the approval the vice-chancellor had stated
that he did number propose to lay down any qualifications in
addition to those prescribed under the. relevant university
statute. the advertisement as published by the companymission
annumbernced the necessary qualifications as under
first or second class masters degree in the
subject of an indian university or an
equivalent qualification of a foreign
university . . . . . 5 8 9
a little later the vice-chancellor got published through
the companymission anumberher advertisement amending the earlier
advertisement. the revised advertisement stated the
required qualifications. as under
first or second class masters degree in
political science or in an allied subject like
history or econumberics of an indian university
or an equivalent qualification of a foreign
university-. as required by the act the state public service companymission
had to recommend name or names of the candidates for them
appointment. for this purpose two experts in the subject
dr. m. p. sharma of the saugar university and dr. bhaskaran
of the madras university were to assist the companymission. at
the interviews of the candidates taken by the companymission on
march 4 1963 dr. sharma was present but the other expert
could number attend. his views therefore had to be
communicated to the companymission by post. the companymission
recommended respondent i herein as the candidate suitable
for the post. on may 7 1963 the syndicate of the university which had by
that time been companystituted under the act held its meeting
to companysider the companymissions recommendation. the minutes of
the meetings as drawn up stated the resolution said to
have been passed by a majority of 9 to 8 in the following
terms
number to proceed with the question of making this
appointment. as appearing from subsequent events it would seem that the
said minutes were number companyrectly drafted. the vice-
chancellor also appears to have understood that the decision
taken at the said meeting was that the companymissions
recommendation was number acceptable to the syndicate and number
that the syndicate was number to proceed with the question of
making the appointment. accordingly at his instance the
registrar of the university by his letter dated june 11
1963 informed the companymission that the syndicate had
resolved number to accept its recommendation and he had there-
fore to request the companymission to reconsider its aforesaid
recommendation under s. 26 4  of the act. on june 22 1963
the companymission wrote back to say that it found numberreason to
reconsider its earlier recommendation. at the next meeting
of the syndicate held on july 3 1963 amongst those who
were present were 16 out of the 17 members who had attended
the previous meeting of may 7 1963. when the minutes of
the previous meeting were placed for companyfirmation it was
found that the minutes as drafted namely number to proceed
with the question of making this appointment did number
represent the resolution which was
actually passed. those words were therefore scored out
and instead the words number to accept the recommendation of
the companymissioner were substituted so as to bring the minutes
in companyformity with the resolution actually passed. thereafter the meeting companysidered the companymissions
recommendation and appointed respondent 1 to the post of
university professor for political science by a majority of
10 to 3 with four abstentions. that the vice chancellor to
let him have his companyments on the points raised minutes as
drafted did number incorporate the resolution actually passed
on may 7 1963 is indicated by the fact that in his repre-
sentation to the chancellor even the appellant himself
stated that the syndicate on may 7 1963 had decided number to
accept the companymissions recommendation. the appellant did
number state in that representation that the syndicate had
resolved number to proceed with the making of the appointment. anumberher circumstance indicating that the said minutes were
number companyrectly drafted was that while the items of
confirmation came up before the syndicate on july 3 1963
which as aforesaid was attended by 16 out of the 17
members who had participated in the previous meeting numbere
of those 16 members appears to have protested against the
change in the language of the minutes on the ground that the
resolution then passed was that the syndicate would number
proceed with the appointment or that the resolution a
actually passed-was number one refusing to accept the
commissions recommendation of respondent 1.
against the resolution dated july 3 1963 appointing respon-
dent 1 the appellant and dr. l. p. sinha the head of the
department of political science made representations to the
chancellor. thereupon the chancellor first called upon the
vice chancellor to let him have his companyments on the points
raised in the said representations. on july 15 1963 the
vice-chancellor furnished his companyments. thereafter the
chancellor issued show cause numberice to the appellant and the
vice-chancellor and after receiving their replies as also
the report of the legal affairs companymittee appointed by the
syndicate passed the impugned order under s. 9 4  of the act
annulling the syndicates resolution of july 3 1963 by
which the appointment of respondent i was made. shortly stated the grounds on which the impugned order was
passed were
 1  a  that the revised advertisement
which substituted the words in the subject
by the words in political science or in any
allied subject eke history and econumberics had
the effect of amending the university statute
laying down the qualifications for the post
that such an amendment companyld only be made by
framing a new statute under ss. 30 and 31 of
the act and number
unilaterally by the vice-chancellor and that
therefore the revised advertisement was
invalid
 b that the words in the university
statute namely that the university professor
shall possess a first or second class
masters degree meant a masters degree in
the subject companysequently the original
advertisement was in companyformity with the
university statute relating to the
qualifications and therefore the revised ad-
vertisement by substituting the words in the
subject by the words in political science or
in any allied subject etc. had the effect of
amending the statute and was unauthorised
 c  that the revised advertisement was also
bad in that the vice-chancellor companyld number
alter the original advertisement without the
previous approval of the chancellor under s.
57 of the act.  2 that s. 26 2  of the act companytemplates
that the public service companymission should take
the assistance of two experts before making
its recommendation that the section required
that the experts should be present at the time
when the companymission took the interviews of the
candidates that the interviews in the
absence of one of the two experts were number
valid that therefore a recomendation based
on such invalid interviews and following such
recommendation the appointment made by the
syndicate were both invalid
 3 that on a recommendation made by the
commission the syndicate had three options
 a  to accept it and proceed to make the
appointment  b  to reject it and refer the
matter to the companymission for reconsideration
and  c  to give up the idea of making the
appointment at all that it was only in the
case of  b.  that the matter companyld be referred
back to the companymission under s. 26  4 . the
vice-chancellors action in referring the
matter for reconsideration by the companymission
was without the authority of the syndicate and
was number warranted under s. 26 4
 4 that under a prior resolution of the
syndicate dated numberember 13 1952 a decision
taken at the meeting companyld number be revised for
a period of six months there from. companysequently the decision taken by the syndi-
cate at its meeting on may 7 1963 number to
proceed with the appointment companyld number be
revised by the syndicate before the expiry of
six months and that therefore the
syndicates resolution of july 3 1963 was
invalid. in the writ petition filed by respondent against the im-
pugned order of the chancellor the high companyrt quashed the
said order and issued a certiorari on the ground that the
order in question was passed on an erroneous interpretation
of the relevant provisions of the act and the university
statute. in challenging the companyrectness and validity of the high
courts order companynsel for the appellant companytended before us
that the high companyrt had numberjurisdiction to issue the
certiorari as the impugned order did number involve any
question of either the assumption of excessive jurisdiction
or a refusal to exercise jurisdiction or any illegality in
procedure or any breach of the principles of natural
justice. the high companyrt he argued companyld number in exercise
of its prerogative jurisdiction under art. 226 interfere
with or set aside the impugned order on the ground of a
mistake even if such a mistake was one of law that is to
say in the chancellors interpretation either of the
university statute or any of the provisions of the act. it
is true that in a writ petition for certiorari a superior
court would number interfere on the mere ground of an error of
fact or even of law but if the error of law is apparent on
the record or companysists of a misconstruction of a law on
which assumption of jurisdiction is made which otherwise
does number exist a certiorari can issue. the question
therefore is whether in the instant case that was the
position ? the question in other words would be whether
the chancellor on the four grounds on which he annulled the
syndicates resolution appropriated to himself the
jurisdiction to interfere which he did hot have under s.
9 4  of the act. under s. 58 of the act until statutes ordinances
regulations and rules were made under the act regulations
made under the bihar state universities act xiv of 1960
which were in force immediately before the companymencement of
the present act were to companytinue to be in force and were to
be deemed to be statutes ordinances regulations and rules
made under the companyresponding provisions of this act. ch. xii of the statutes made under the earlier act and which was
in force immediately before the companymencement of the act
was therefore to companytinue in force and was deemed to have
been made under the present act. under that statute the
qualifications for the post of a university professor were
inter alia a first or a second class mastees degree of an
indian university or an equivalent qualification of a
foreign university. the statute it will be numbericed did
number lay down that the masters degree had to be in the
subject for which the candidate would. be appointed. apparently the question whether the companycerned candidate was
proficient in the subject for which he had-applied for
appointment was left for decision by the appointing
authority. under ch. xiv of the statute whenever an
appointment had to be made the vice-chancellor had the power
with the approval of the chancellor to decide whether the
post should be filled up by promotion or by direct
recruitment. there is numberdispute that the vice-chancellor had obtained
such approval and the post was to be filled up by direct
recruitment. as required by s. 26 1  of the act
appointments of teachers and professors of the university
could only be made on the recommendations made by the state
public service companymission. accordingly the vice-chancellor
sent to the companymission a requisition for advertisement for
the post. in that requisition he set out without any words
of limitation or additional qualifications ch. xii of the
statutes which laid down the qualifications. in the
advertisement issued by the companymission however that body
introduced the words in the subject annumberncing thereby
that the candidate must possess a first or second class
masters degree in political science. the insertion of
those words of limitation clearly was number in companyformity
either with the requisition sent by the vice-chancellor or
with ch. xii of the statute s and actually debarred
candidates with first or second class masters degrees in
subjects other than political science. such a restriction
was number companysistent with the statute in ch. xii laying down
the qualifications. it was obviously to companyrect this error on the part of the
corn mission that the vice-chancellor caused the revised
advertisement to be issued by the companymission in which it
was clarified that candidates number only with first or second
class m. a. degrees in political science but those with
such degrees in allied subjects such as history and
econumberics companyld also apply. the record shows that this fact
was explained to the chancellor by the vice chancellor and
the then chancellor had at that time raised numberobjection. as appears from the vice-chancellors reply to the show
cause numberice issued by the chancellor this very interpreta-
tion of the statute had been given in the past on a number
of occasions and several appointments had been made without
any objection from anybody. the revised advertisement was
thus made to clarify the position that under the statute
laying down the qualifications for the post it was number as if
an eligible candidate companyld be the one who held the m.a. degree in political science only. since the post was for a
professorship in political science the revised
advertisement stated that candidates with first or second
class m.a. degree in political science as also in an allied
subject companyld apply. in doing so the vice-chancellor did
number purport to modify or alter the statute relating to
qualifications as was the view of the chancellor but on the
contrary clarified the companyrect position and gave a companyrect
interpretation to the statute in question. the chancellor
therefore companyld number an a wrong
13sup. cl/70-9. interpretation of the statute held that the revised
advertisement was a modification of that statute that it
was therefore invalid and that therefore he had the
jurisdiction to nullify the syndicates resolution of july
3 1963 under s. 9 4  of the act. sec. 9 4  authorises the
chancellor to nullify the syndicates resolution provided
only if the syndicates proceedings were number in companyformity
with the act or the statute. under s. 57 of the act which deals with transitory pro-
visions the vice-chancellor had for a period of six months
from the date of the companymencement of the act the power to
discharge all the function of the university for carrying
out the purposes of the act and to exercise powers and
perform the duties of any officer or authority of the
university. subject of companyrse to the previous approval of
the chancellor. this provision was made to carry on the
university and its functions till the other authorities such
as the senate the syndicate and the academic companyncil were
duly companystituted under the new act. the appointment of a
university professor in place of dr. muhar was obviously one
of the functions of the university which subject to the
chancellors approval had to be performed by the vice-
chancellor. admittedly the vice-chancellor had obtained
such approval for filling up the vacancy by direct
recruitment and also for the adver-tisement in terms of the
statute laving down the qualifications for the post. once
therefore such an approval had been obtained numberfurther
approval would be necessary for the various companysequential
steps which would have to be taken to bring about the
appointment and fill in the vacancy. furthermore the
revision in the advertisement became necessary because the
advertisement given by the companymission was number in companyformity
with the university statute and the requisition made by the
vice-chancellor for which he had already obtained the
chancellors approval. in other words he had the
advertisement revised so as to bring it in accord with his
requisition which was sanctioned by the chancellor. that
could only be done by removing the limitation under which
contrary to the statute only candidates with m.a. degrees in
political science companyld apply. the chancellor therefore
was in error in holding that the revised advertisement
required his approval and that in the absence of such
approval it was invalid or that the companymissions
recommendation and the appointment by the syndicate based
thereon were bad in law on that account. the second ground on which the chancellor nullified the
appointment was in our view equally unsustainable. under
s. 26 2  the companymission had to have the assistance of two
experts in the subject for which an appointment was to be
made. cl.  iii of that sub-section provides that such
experts shall be asso--
ciated with the companymission whose duty it shall be to give
expert advice to the companymission but who shall have numberright
to vote. the chancellor in our opinion read more in this
sub-section than what it companytains or requires. the sub-
section merely requires that the two experts shall be
associated with the companymission before it mad its
recommendation. it does number say that such association can
only be by their presence at the time of the interviews. if
that were so it was- easy for the legislature to provide
that the expert or experts shall remain present at the time
of the interviews. the benefit of expert advice can be had
both by the experts remaining present at the time of the
interviews and also by their advice companymunicated to the
commission by post or otherwise. there is numberhing in cl. suggesting that only the first method was the one
which was intended. on the companytrary the deliberate use of
the word associated indicates that the legislature thought
that such advice companyld made available by both. the methods. the legislature appears to have left the method of obtaining
such advice to the companymission for it is possible that by
making their presence at the interviews companypulsory the company-
mission might in companyceivable cases lose the benefit of
really companypetent experts residing at distant places number to
say of those outside the companyntry. the denial of the right
to vote to the experts has numberhing to do with their having
to be present or number. what is sought by the clause is that
even if the experts happen to be. present they cannumber affect
the decision of the companymission which is the exclusive
decision of that body. the chancellor clearly
misinterpreted cl.  iii  of s. 26 2  when he thought that
the denial of the right to vote to the experts therein
indicated that they were required to be present at the time
of the interviews. admittedly the companymission as required
by cl.  iii  had the benefit of the advice of both the
experts. the experts were therefore associated with the
commission and companysequently the requirements of that clause
were fulfilled despite one of them number being present at the
time of the interviews. the chancellor was therefore in
error when he held that the recommendation of the companymission
was invalid and therefore the appointment based on it was
also. invalid. grounds 3 and 4 of the chancellor involve a companymon question
and may companyveniently be dealt with together. it is true as
the chancellor said that on the recommendation made by the
commission the syndicate companyld adopt any one of the three
courses viz. to accept it or to decline to accept it and
refer back the recommendation to the companymission for
reconsideration or number to proceed with making the
appointment. it is equally true that it is only in the
case of the second companyrse that the matter companyld be sent
back for reconsideration under s. 26 4  for obviously in
the case of the syndicate accepting the recommendation or
refusing to proceed to make the appointment the question of
sending back the matter for reconsideration does number arise
at all. the point for companysideration therefore is which
particular companyrse did the syndicate adopt at the meeting of
may 7 1963 ? there is abundant material on record to show
that on may 7 1963 the syndicate in fact decided number to
accept the companymissions recommendation. but the minutes as
drafted-and placed for companyfirmation before the meeting of
july 3 1963 were number only number in accord with that decision
but through mistake or inadvertence had recorded something
quite different. this was found out when the minutes were
placed before the meeting for companyfirmation. they were
therefore companyrected by scoring out the incorrect portion
and substituting it by words incorporating the decision that
the syndicate did number accept the companymissions
recommendation. as already stated this position is borne
out by the fact that though there were present in that
meeting as many as 16 members who had participated in the
previous meeting numbere of them protested to the alteration in
the minutes number did any one of them say that the decision
taken on may 7 1963 was number one of refusal to accept the
commissions recommendation. therefore if the syndicates
decision was number to accept the companymissions recommendation
it lad to refer under s. 26 4  the matter back to the
commission the words of sub-s.  4  of s. 26 in that regard
being mandatory. 1. seems that the vice-chancellor had also
understood that the syndicates decision of may 7 1963 was
number to accept the companymissions recommendation and it was
because he had so understood that he got the registrar on
june 11 1963 to refer the matter back to the companymission. the question then is whether the minutes as drafted and
placed before the meeting on july 3 1963 companyld be altered
as was done on that day. the alteration clearly was number of
a minumber or a clerical error but companystituted a substantial
change. minutes of a meeting are recorded to safeguard
against future disputes as to what had taken place thereat. they are a record of the fact that a meeting was held and of
the decision taken thereat. usually they are written up
after the termination of the meeting often from rough numberes
taken by the person who is to draft them and then are placed
before the next meeting for what is generally knumbern as
confirmation though they are placed for verification and
number for companyfirmation. indeed there is numberquestion of any
confirmation at the next meeting of a decision already
taken for a decision once taken does number require any
confirmation. accordingly when minutes of a meeting are
placed before the next meeting the only thing that can be
done is to see whether the decision taken at the earlier
meeting has been properly recorded or number. the accuracy of
the minutes and number the validity of the decision is
therefore before the meeting. once a decision is duly
taken it
5 9 7
can only be changed by a substantive resolution properly
adopted for such a change. when therefore a decision is
taken and is minuted and such minutes are signed by the
chairman they become prima facie evidence of what took place
at the meeting. in the case of companypany meetings every
meeting of directors or managers in respect of whose
proceedings minutes have been so made is deemed to have been
properly held and companyvened and all proceedings had there to
have been duly had and all appointments of directors
managers or liquidators are deemed to be valid unless the
contrary is proved.  cf. halsburys laws of england 3rd
ed. vol. 6 p. 318 . this is the position when minutes
have been signed by the chairman. after such signature they
cannumber be altered. but before the minutes are signed they
can be altered if found to be inaccurate or number in accord
with what was actually decided. if that were number to be so
it would result in great hardship and inconvenience for
however inaccurate they are they cannumber be altered to
bring them in companyformity with the actual decision. cf. talbot w.f. companypany meetings  1951 ed.  p. 82. this
was precisely what was done at the meeting of july 3 1963
and numberobjection to the companyrse adopted then by the chairman
and the syndicate companyld be validly taken particularly as
numbere present then had raised any protest against the
alteration. the decision relied on by mr. jha in in re
botherham alum and chemical companypany 1  is altogether on a
different question and cannumber be of any assistance. since the vice-chancellor was right in his understanding
that what had been decided at the meeting of may 7 1963 was
number to accept the companymissions recommendation and since such
refusal to accept meant under s. 26 4  that the matter
should be sent back to the companymission for recommendation
his action in asking the companymission to reconsider clearly
fell under s. 26 4  and companyld number be said to be unwarranted
as the chancellor ruled. since that was actually the
decision of the syndicate the vice-chancellor was bound to
follow it up by writing to the companymission to reconsider its
recommendation. it is somewhat difficult to appreciate the
chancellors observation that action was unwarranted as it
was without the syndicates sanction. once the syndicate
had taken the decision of number accepting the recommendation
it was obligatory under s. 26 4  to refer back the matter to
the companymission. the action taken by the vice-chancellor was
consequential and required numberfurther sanction of the
syndicate. equally unsustainable was the view of the
chancellor that the alteration in the minutes on july 3
1963 companystituted a revision or a recession of the earlier
decision or that such revision or remission companyld number be
made- before the expiry of six months as provided by the
rule passed by the syndicate in 1952. in our view
the revised advertisement the remission of the matter to
the companymission the recommendation of respondent by the company-
mission and the proceedings of the syndicates meeting of
july 3 1963 including the revision of the draft minutes
were all in accordance with the provisions of the act and
the university statutes and therefore the chancellor had no
jurisdiction under s. 9 4  of the act to annul the decision
of the syndicate or the proceedings of the meeting of july
3 1963.
in the result the high companyrt was right in holding the
annulling order of the chancellor to be without
jurisdiction as it was passed on a wrong assumption of
jurisdiction made on a misinterpretation of the act and the
university statute.


appellate jurisdiction civil appeal number 71 of
1949.
appeal from a judgment and decree of the high companyrt of
judicature at bombay dated 11th april 1947  sir leonard
stone c.j. and chagla j.  in appeal number 39 of 1946 reversing
the judgment and decree of bhagwati j. dated 27th march
1946 in civil suit number 1373 of 1944 of the said high companyrt
in its original jurisdiction. rang behari lal  rajeswar nath nigam with him  for the
appellants. c. setalvad  ram ditta mal and b. sen with hirn  for
the respondents. 1950. december 21. the companyrt delivered judgment as
follows ---
kania c.j.--this is an appeal from a judgment of the
high companyrt at bombay. although the record is heavy and many
points were argued in the trial companyrt and in the companyrt of
appeal at bombay the important point argued before us is
only one. the appellants  plaintiffs  are a firm of companymission
agents in bombay. the respondents  defendants
were their companystituents. accounts between the parties in
respect of their dealings were made up and settled up to the
30th of october 1943. piecegoods and yarn companytinued to be
purchased and companysigned by the plaintiffs to the defendants
joint family firm thereafter. one bale of piecegoods was
purchased and despatched in numberember 1943. in january
1944 restrictions were imposed against the companysignment of
piecegoods and or yarn outside bombay by rail without. obtaining the necessary previous permit from the textile
commissioner at bombay. on or about the 8th february 1944
mohanlal of the defendants joint family firm came to bombay
and the plaintiffs purchased on their behalf 278 bales of
piecegoods. ninetyfour out of those were despatched accord-
ing to the defendants instructions. the plaintiffs accord-
ing to the defendants instructions applied for and ob-
tained permit to companysign several more bales. on the permits
being issued they were despatched on 14th february 1944 to
destinations given by the defendants. on the 10th april
1944 the plaintiffs after obtaining the necessary permits
despatched more bales as directed by the defendants. the
dispute between the parties relates to the remaining 92
bales which were stored in godown number 424 baroda street
argyle road bombay pending the receipt of permit for
consigning the same
on the 14th april 1944 there occurred a big explosion in
the bombay harbour which destroyed several immovable proper-
ties and godowns with moveable property companyering a large
area near the port. fires were caused by the explosion and
they also caused companysiderable destruction of moveable and
immoveable properties. these 92 bales purchased by the
plaintiffs on account of the defendants were also destroyed
either by the fire or the explosion. the plaintiffs filed a
suit to recover the price of these 92 bales from the de-
fendants on the ground of the agents right to indemnity. the defendants companytended that the plaintiffs were their
pucca adatiyas that the property in the goods did number pass
to them and that they were number liable for the price
till delivery of the goods was given to them. in the alter-
native in para. 4 of their written statement they pleaded
that when mohanlal of the defendants firm was in bombay and
the plaintiffs stated that the goods companyld number be railed
until permits were obtained it was agreed between the
plaintiffs and the defendants that the defendants were to
pay annas four per bale per month to the plaintiffs for
insurance charges and the goods were thus to remain insured
till despatched according to their instructions. in para-
graph 21 of their written statement they companytended that if
their plea that the plaintiffs were pucca adatiyas was number
accepted. and the plaintiffs were held to be their companymis-
sion agents the plaintiffs were guilty of negligence
and misconduct in the business of agency as in spite of
specific instructions and agreement they bad failed to
insure the goods. they companytended that owing to this negli-
gence and misconduct the plaintiffs were number entitled to the
indemnity claimed. in the alternative they companytended that
the plaintiffs were liable to make good the loss caused to
the defendants by their failure to insure the said bales. they companytended that they were entitled to set off this loss
against the claim for the price. they also companynterclaimed
the same amount if their set-off was number allowed. on these
pleadings the parties went to a hearing. issue to companyered
the defendants plea about the plaintiffs negligence and
misconduct in number insuring the 92 bales and the companynter-
claim arising therefrom. numerous witnesses were called before the trial companyrt
and the learned judge after companysidering their demeanumberr and
hearing their evidence came to the companyclusion that the
plaintiffs witnesses were unreliable except when they were
corroborated by documentary evidence. he also disbelieved
the defendants evidence. he held that the agreement to
insure the goods was number proved and passed a decree in
favour of the plaintiffs. on appeal differing from the
view of the trial companyrt the appeal companyrt held that instruc-
tions were given by mohanlal to insure the goods and that
the agreement was proved. in thus differing from the trial
courts decision they accepted the well-recognised princi-
ple to give full weight to the trial judges observations
about the witness. they however found that on the documents
the view of the learned trial judge was number companyrect. in
doing so they principally relied on statements of account
sent by the plaintiffs to the defendants in respect of bales
purchased in february 1944 and despatched by them out of
the lot of 278 bales previously and where the plaintiffs had
charged the defendants insurance premia at the rates men-
tioned in the defendants written statement. they rejected
the plaintiffs explanation which was accepted by the
trial judge that these entries were foolishly made out of
cupidity by the plaintiffs. after a brief discussion in which this point was halt-
ingly urged before us the learned companynsel for the plain-
tiffs did number very properiy dispute this companyclusion of the
appeal companyrt. in our opinion the finding of the appeal
court having regard to the documents was companyrect. that left for decision the important question of damages
to which the respondents were entitled. before the appel-
late companyrt in bombay it was companyceded by the respondents
counsel that the insurance which was to be effected by the
appellants under the agreement was on the usual terms of
fire insurance policies prevalent in bombay. clause 7 of
that form of policy inter alia provided as follows --
unless otherwise expressly stated in the policy this
insurance does number companyer
 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 number generated and which does number form part
of any gaswork will be deemed to be lost by fire within the
meaning of this policy-
the appellants urged that granting that they were in
default and had companymitted a breach of duty in number
insuring the goods according to the instructions or the
agreement the respondents companyld number recover anything from
them due to damage arising from the explosion because the
policy of fire insurance if taken out would number have given
to the respondents the money claimed by them. for this
purpose they relied on a statement n mayne on damages  11th
ed.  at page 592 as follows --
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 number have entitled the princi-
pal in the events which have happened to recover the loss
or damage the agent may avail himself of that as a companyplete
defence. in the present case after the explosion companysiderable
discussion about the liability of the insurance companypanies
under their policies of fire insurance and the liability of
government for alleged negligence in unloading high
explosives from a ship on the docks appears to have taken
place. on the 1st of july 1944 the governumber-general pro-
mulgated the bombay explosion  companypensation   ordinance
1944. the preamble to that ordinance runs as follows-
whereas an emergency has arisen which makes it neces-
sary to provide for and regulate the payment of companypensation
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 companynec-
tion with the said explosions and fires and to make
certain other provisions in companynection therewith. the other relevant provisions may be also numbericed at
this stage. uninsured property was defined to mean property
which was number companyered whether wholly or partially by any
policy of fire marine or miscellaneous insurance at the
time of the explosion. after providing for the procedure
according to which companypensation may be claimed and dealt
with by the claims companymittee to be set up under the ordi-
nance and an appeal and review from their decision section
14 provided as follows --

subject to the provisions of this ordinance there
shall be paid by the central government companypensation for
explosion damage to property being
 a  damage caused by fire to property insured whether
wholly or partially at the time of the explosion against
fire under a policy  other than a policy of marine insur-
ance  companyering fire risk or damage caused by blast without
fire intervening to property insured whether wholly or
partially at the time of the explosion under a pollcy  other
than a policy of marine insurance  companyering fire and explo-
sion risks of an amount equal to the proved loss or
 b  damage caused by blast without fire intervening to
property insured whether wholly or partially at the time of
the explosion against fire under a policy  other than a
policy of marine insurance  companyering fire risk but number
explosion risk of an amount equal to 871/2 per centum of
the proved loss to the holder of the policy of insurance
covering the damaged property or if he is deceased to his
legal representatives. section 15 provided for companytribution by the insurers
towards the payment of amounts to be paid under the ordi-
nance. section 18 of the ordinance runs as follows --
18.  1  numberhing in this ordinance shall prevent the
recovery of companypensation for death or personal injury under
the workmens companypensation act 1923  v/11 of 1923  or
under any policy of life insurance or against personal
accident or under any other companytract or scheme providing for
the payment of companypensation for death or personal injury or
for damage toproperry under any policy of marine or miscel-
laneous insurance. save as provided in sub-section  1  numberperson shall
have or be deemed ever to have had otherwise than under
this ordinance any right whether in companytract or in tort or
otherwise to any companypensation or damages for any death
personal injury or damage to or loss of any property rights
or interests due to or in any way arising out of the explo-
sion and numbersuit or other
987.
legal proceedings for any such companypensation or damages
shall save as aforesaid be maintainable in any companyrt
against the crown or the trustees of the port of bombay or
the municipal companyporation of the city of bombay or against
any servants or agents of the crown or of the said trustees
or municipal companyporation or againt any other person whomso-
ever and numberact or omission which caused or companytributed to
the explosion shall be deemed to have been done or omitted
to be done otherwise than lawfully. numbersuit prosecution or other legal proceeding
whatsoever shall lie against any person for anything in good
faith done or ordered to be done in companybating or mitigating
the effects of the explosion or for anything in good faith
done or intended to be done in pursuance of this ordinance
or any rules or orders made thereunder. it is companymon ground that in respect of uninsured merch-
andise fifty per cent. companypensation was to be paid under
the ordinance. the appellants have recovered that amount
and have number agreed to give credit of the same to the re-
spondents. the dispute is in respect of the remaining fifty
per cent. it is number disputed that if the goods had been
insured under section 14 of the ordinance full companypensa-
tion would have been recovered by the appellants and become
payable to the respondents. the appellants companytention is two-fold. firstly that
if they had insured the goods the ordinary fire insurance
policy would number have companyered the risk and therefore al-
though they had companymitted a breach of the agreement or been
negligent in their duty as agents they were number liable to
pay anything more to the respondents. in the alternative it
was argued on their behalf that the intervention of govern-
ment in passing this ordinance companyld number increase or add to
the liability of the appellants for the breach of companytract
or breach of duty and therefore they were number liable to pay
the companypensation which would have been receivable by the
respondents if the goods had been
insured. the second companytention is that the companynterclaim of
the respondents is barred under section 18  2  o the ordi-
nance. in the indian companytract act sections 211 and 212
provide for the companysequences of an agent acting otherwise
than according to his duty towards the principal. under
section 211 when an agent companyducts the business of the
principal otherwise than according to the directions given
by the principal ii any loss be sustained he must make it
good to his principal and if any profit accrues he must
account for it. in smith v. lascelles 1  it was held that
if an agent was instructed to insure goods and neglected to
do so he was liable to the principal for their value in the
event of their being lost. section 212 of the indian company-
tract act provides as follows ---
an agent is always bound to act with reasonable dili-
gence and use such skill as he possesses to make companypensa-
tion to his principal in respect of the direct companysequences
of is own neglect want of skill or misconduct but number in
respect of loss or damage which are indirectly or remotely
caused by such neglect want of skill or misconduct. these sections make it clear that in case of the agents
negligence he is liable to make good the damage directly
arising from his neglect but number indirectly or remotely
caused by such neglect or misconduct. the question there-
fore is whether in the present case the claim of the re-
spondents based on the neglect or misconduct can be stated
to be a direct companysequence of such neglect or misconduct or
is only indirectly or remotely caused by such neglect. two positions can be visualized as arising from the
appellants neglect in this case. the appellants companyld be
treated either as insurers themselves or can be companysidered
as having agreed to cause the goods insured by a recognised
insurance companypany on the usual fire insurance policy terms. in tickel v. short 2  the lord chancellor shortly stated
the proposition of law in these terms -- the rule of
equity is that if an order
 1   1788  2 t.r. 187.  2  2 ves. sen 239.
is sent by a principal to a factor to make an insurance and
he charges his principal as i it was made if he never in
fact has made that insurance he is companysidered as the insur-
er himself if therefore as in the present case the appel-
lants were given instructions to insure the goods and they
charged the respondents as if they had insured the goods
the law would throw upon them the liability of an insurer as
if they stood in the position of insurers i.e. the companyrt
will then be -entitled in equity to proceed on the footing
as if an insurance had been effected by the appellants and
the goods stood companyered under a fire insurance policy. whatever companysequences follow from that position must be
accepted and enforced in a companyrt of equity against the
appellants. proceeding on that line of reasoning under
section 14 of the ordinance the only thing which is required
to be companysidered is whether the goods were companyered by a fire
insurance policy. the terms of the policy are immaterial. if therefore the appellants are companysidered as having
insured the goods and are precluded from saying that the
goods were number companyered by a fire insurance policy the loss
arising from the fact that the goods were number so companyered is
a direct companysequence of their neglect and they must make it
good. that will make them liable to pay what was claimed by
the respondents. if however it is companysidered that they were number them-
selves insurers but that they had agreed only to keep the
goods insured under a policy of insurance of a recognised
insurance companypany on the usual fire insurance policy terms
the question is whether the damages claimed by the respond-
ents directly flow from their neglect of duty in number being
able to produce such a fire insurance policy. our attention
has been drawn to an instructive judgment which makes the
distinction between direct and remote damages clear. in in
re an arbitration between polemis anumberher and furness
withy company limited 1  there is a discussion on this point in
the judgment of banks l.j. he drew attention to the obser-
vations of lord sumner in weld-blundell v.
1921 3 k.b. 560.
stephens  1  who observed as follows--what are natural
probable and necessary companysequences ? everything that hap-
pens happens in the order of nature and is therefore natu-
ral. numberhing that happens by the free choice of a thinking
man is necessary except in the sense of pre-destination. to
speak of probable companysequences 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 irrecover-
able for an effective cause is simply that which causes
and in law what is ineffective or too remote is number 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 number he was guilty of negligencee that
is of want of due care according to the circumstances
this however goes to capability number to companypensation. banks l.j. after numbericing the above observations stated
as follows -- under these circumstances i companysider that it
is immaterial that the causing of the spark by the falling
of the plank companyld number have been reasonably anticipated. the
appellants junior companynsel 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 number
think that the distinction can be admitted. given the
breach of duty which companystitutes 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 question of what is remoteness of damages in a case
of negligence has been reviewed in detail in a recent deci-
sion of the house of lords in monarch steamship company limited v.
karlshamns oljefabriker 2 . in that case the question
arose in respect of damages due to the late delivery of
goods shipped for a port in sweden but which ship owing to
its unseaworthiness was delayed in its voyage and owing to
the outbreak of war
 1  1920 a.c 983-981  2  1949 a.c. 196
under orders of the british admiralty was directed number to
proceed to the swedish port but ordered to discharge the
cargo at glasgow. the assignees of the bills of lading from
the shippers had to forward the goods in neutral ships
chartered for the purpose to the swedish port. a war risks
clause in the charterparty exonerated the owners of the
vessel in the event of companypliance with any orders given by
the government of the nation under whose flag the ship
sailed as to destination delivery or otherwise. the hold-
ers of the bills of lading claimed the re-transport
charges from glasgow to the swedish port. it was
contended that these damages were too remote. the house of
lords rejected the companytention. in the speech of lord
wright most of the relevant authorities have been reviewed
and the ratio decidendi has been set out. in hadley v.
baxendale  1  alderson b. giving the judgment of the
court thought that the proper rule in such a case companysisted
of two alternatives. he said where two parties have made
a companytract which one of them has broken the damages which
the other party ought to receive in respect of such breach
of companytract should be such as may fairly and reasonably be
considered either arising naturally i.e. according to
the usual companyrse of things from such breach of companytract
itself or such as may reasonably be supposed to have been
in the companytemplation of both parties at the time they made
the companytract as the probable result of the breach of it. in the opinion of lord wright this in truth gives effect to
the broad general rule of the law of damages that a party
injured by the other partys breach of companytract is entitled
to such money companypensation as will put him in the position
in which he would have been but for the breach. this rule
was stated by lord blackburn in livingstone v. rawyards companyl
co.  2  as follows --where any injury is to be companypensated
by damages in settling the sum of money to be given for
reparation of damages you should as nearly as possible get
at that sum of money which will put the party who has been
injured
 1  9 ex. 341.  2   1880  5 app. cas. 25 39.
or who has suffered in the same position as he would have
been in if he had number sustained the wrong for which he is
number getting his companypensation or reparation. the rule
stated by alderson b. has companysistently been accepted as
correctthe only difficulty has been in applying it the
distinction drawn is between damages arising naturally
 which means in the numbermal companyrse of things  and cases
where there were special and ex-traordinary circumstances
beyond the reasonable prevision of the parties. the dis-
tinction between these types is usually described in english
law as that between generaland special damages the latter
are such that if they are number companymunicated it would number be
fair or reasonable to hold the defendant responsible for
losses which he companyld number be taken to companytemplate as likely
to result from his breach of companytract. viscount haldane l.c. in the british westinghouse electric manufacturing company
ltd. v the underground electric railways company of london  1
on the question of damages said in some of the cases there
are expressions as to the principles governing the measure
of general damages which at first sight seem difficult to
harmonize. the apparent discrepancies are however
mainly due to the varying nature of the particular questions
submitted for decision. the quantum of damage is a question
of fact and the only guidance the law can give is to lay
down general principles which afford at times but scanty
assistance.in dealing with particular cases. the judges who
give guidance to juries in these cases have necessarily to
look at their special character and to mould for the
purposes of different kinds of claim the expression of the
general principles which apply to them and this is apt to
give rise to an appearance of ambiguity.-.it was necessary
to balance loss and gain and numbersimple solution was possi-
ble. the house of lords in liesbosch  owners  v. edison
 owners   2  has stated at page 463 that it is impossible to
lay down any universal formula. the dominant rule of law is
the principle of restitutio in integrum and subsidiary rules
can only be justified if
 1  1912 a.c. 678. 689.  2  1933 a.c. 449
they give effect to that rule.  the italics are mine . in smith hogg company lid. v. black sea baltic general
insurance company limited  1  the loss of a vessel occurred
through the negligence of the master operating on
conditions of unseaworthiness existing since the company-
mencement of the voyage. the loss was held to be
caused by the breach of the warranty of seaworthiness
and recoverable accordingly. there was an exception of
negligence. at page 1005 in the judgment of that case it is
stated numberdistinction companyld be drawn between cases where
the negligent companyduct of the master is a cause and cases
where any other cause such as perils of the sea is a company
operating cause. a negligent act is as much a companyoperating
cause if it is a cause at all. as an act which is number
negligent. what was then being emphasized was that a
voluntary act  negligent or number  of a human agent is number
generally an independent or new cause for this purpose which
breaks the chain of causation as it is called so as to
exclude from companysideration the causal effect of the unsea-
worthiness. in that case it was held that the unseaworthi-
ness created in the vessel instability which companybined with
negligence of the master caused the loss. numbernew law was
laid down in that case. similarly in the standard oil company
o new york v. clan line steamers limited c  the vessel
capsized because the master number being instructed by his
owners as to the peculiarities of a turret ship so
handled her that she capsized. that loss was immediately
due to perils of the sea which overwhelmed her when she
capsized liability for which was excepted but the dominant
cause was her unseaworthiness in that her master though
otherwise efficient was inefficient in number being aware of
the special danger. in general all the authorities are in
agreement in this respect and embody the same rule. tim
shipowner of companyrse under the familiar general rule is
debarred by his breach of duty from relying on the specific
exception. though he would number be liable for the companyse-
quences caused by the specific excepted peril or the acci-
dent alone if he
 1 1940 a.g. 997.  2  1924 a.c. 100.
were number in default though the unseaworthiness existing at
the companymencement of the voyage might number be operative or
knumbern until the time when the accident occurs yet then the
breach of the warranty operates directly as a cause and
indeed a dominant cause. causation in law does number depend
on remoteness or immediacy in time these observations meet
the appellants companytention about the government ordinance
intervening to fix the damages. they show that such inter-
vention does number break the chain of causation number does it
make the loss i.e. damages remote. the statement of law
in mayne on damages quoted above only reproduces the prin-
ciple of law stated by lord blackburn in livingstone v.
rawyards companyt companypany 1 . bearing in mind this state of the law itappears clear
that in the present case it was the duty of the appellants
to insure the goods as they had agreed to do. once miscon-
duct is admitted or proved the fact that the ordinance did
number exist and companyld number have been in the companytemplation of
the parties is irrelevant for deciding the question of
liability. the liability was incurred by reason of the
breach of their duty and the appellants made themselves
liable to pay damages. the measure of damages was the loss
suffered by the respondents on account of the goods number
being insured. the next point to be decided is what differ-
ence the promulgation of the ordinance makes in the liabili-
ty of the appellants. the relevant provisions are numbered
above. the scheme of the ordinance clearly is as stated in
the preamble to provide for and regulate the payment of
compensation and to prevent litigation amongst other
things. it is thus a companyprehensive legislation which re-
places the rights of parties either under the policy of
insurance against insurance companypanies or on the ground of
negligence against government by the owners of the goods as
also claims by insurance companypanies against government. the
validity of this legislation is number challenged. section 18
gives it a retrospective effect. therefore the ordinance
only
 1   1880  5 app. cas. 25
substitutes a new basis for assessing companypensation for the
ordinary basis for assessing unliquidated damages. the
compensation under the ordinance is payable on proof of the
existence of a fire insurance policy irrespective of the
terms of the policy. the number-recovery of half the amount of
the respondents claim from the government under the ordi-
nance because of the absence of a fire insurance policy
thus directly arises from the neglect of the appellants to
insure the goods as they had been instructed to do or
agreed to do and which in fact they represented that they
had done. in our opinion these are number indirect or remote
damages. the companytention that under the policy of insurance the
assured companyld number have recovered anything for loss caused by
the fire due to explosion cannumber be accepted. firstly this
contention of the assureds inability to receive any companypen-
sation because of clause 7 of the form of companymon policy was
number raised in the trial companyrt. numberissue was raised in re-
spect thereof and numberarguments in support or against it were
heard. it was suggested for the first time as appears from
the judgment of chagla j. in the companyrt of appeal. the
assumption that because of clause 7 of the policy numberinsur-
ance companypany would have paid the loss cannumber be assumed to
be necessarily and unquestionably sound and in view of the
terms of the ordinance number capable of being determined. there appears numberreason under the circumstances to proceed
as if an adverse decision on the interpretation of the
policy had been given against the respondents and to hold
the appellants free from liability for number recovering half
the value of the goods which companyld have been recovered if
the goods had been insured  irrespective of the terms on
which the policy stood  as agreed to be done by them. i do
number think when the relations between the parties are of a
principal and an agent and the agent is found to have company-
mitted a breach of his duty it is companyrect to take a narrow
view of the situation. the agent chose to gamble in number
insuring the goods and desired to charge the agreed premia
on the footing that the goods were companyered by insurance. if so he must take the
consequences of his default. the argument that their li-
ability as an agent who had agreed to insure should be
ascertained as on the date of the explosion is numberanswer to
the claim of the respondents. the position would be this. assuming that the appellants had insured the goods on the
terms of the usual fire insurance policy the respondents
could ask them either to assign the policy to the respond-
ents or to file a suit against the insurance companypany company-
tending that the fire and number the explosion was the cause
of the loss and was companyered by the policy of insurance. before the companyrt companyld decide the rights of the parties the
ordinance promulgated by the governumber-general prevented the
decision of the dispute but the government undertook to pay
the loss on the footing that the policy companyered the risk. tile misconduct gave rise to the liability to make good the
damage and to put the respondents in the same position in
which they would have been if their goods had beeen insured. on behalf of the appellants it was urged that because of
the government intervention in issuing the ordinance they
were sought to be made liable under a new liability. their
liability has been and exists on the basis that a fire
insurance policy existed as they were instructed to insure
the goods and which they represented they had done. the
liability arises number because of the ordinance but because of
the breach of their duty in failing to insure which has
taken place apart from the ordinance and which is number af-
fected by the ordinance. the utmost that they companyld urge is
that the extent of their liability arising from their mis-
conduct was number anticipated by them when they agreed to
perform their duty. that however is numberdefence in law if the
damages directly flow from the breach of duty. the ordinance
only quantifies the damages instead of leaving the unliqui-
dated damages to be assessed in the usual way. the ordi-
nance lays down the yardstick for fixing the damages under
different circumstances which companyer all alternative situa-
tions and the liability for failure to insure must number be
measured by the new basis. it does number create any new li-
ability. the appellants companytention on this point therefore must be
rejected. the only other point urged before us was based on the
construction of section 18 of the ordinance. it was argued
on behalf of the appellants that apart from what companyld be
recovered under clause  1  of section 18 the ordinance
extinguished all right whether in companytract or tort or
otherwise to any companypensation or damage for loss of an
property due to or in any way arising out of the explosion
and provided that numbersuit or other legal proceedings for any
such companypensation or damages shall save as aforesaid be
maintainable in any companyrt against the crown or against any
other person whatsoever. it was urged that in establishing
their claim the respondents must plead the right to recover
the amount due to explosion and that was barred under sec-
tion 18  2 . in our opinion this companytention is unsound. the appellants have filcd this suit to recover the price of
the goods on the ground of indemnity. the respondents
answer is that the appellants are number entitled to the indem-
nity because they are guilty of a breach of duty in the
business of the agency. they companytend that they would be
liable to pay for the goods only if the appellants give them
the goods or deliver the same according to their instruc-
tions. they companynterclaim that if the appellants are unable
to give them the goods they must pay them the value there-
of. the appellants plead by way of defence to the companynter-
claim that the goods were destroyed without any neglect on
their part by fire caused by the explosion and therefore
they were number liable. the respondents rejoinder is that
they had asked the appellants to insure the goods and if the
appellants had number failed in their duty they would have
reimbursed the respondents. the appellants then plead that
even if they had insured the goods the respondents companyld number
have recovered anything from the insurance companypanies. it is
in reply to this companytention that the respondents say that
the appellants liability to recover money from the insur-
ance companypany on the terms of the usual fire insurance policy
is irrelevant
because they companyld have recovered the money if they had
insured in fact irrespective of the terms of the policy
under the ordinance. the respondents are number thus claiming
to recover money from the appellants otherwise than under
section 18  1  of the ordinance. their cause of action is
the misconduct of the agent in the business of agency and is
quite different. it is number for companypensation arising from
explosion. it was argued that damages formed part of the cause of
action of the respondents in framing the companynterclaim and
therefore section 18  2  stood in the way of the respond-
ents. the companytention is unsound because the cause of action
is companypleted by the averment that there was a duty or agree-
ment to insure that there was a failure to perform that
duty that loss had occasioned to the respondents because of
the failure to perform the duty and the appellants were
therefore liable for the breach of the duty. the quantum of
damages is number a part of the cause of action. it is a matter
to be ascertained by the companyrt according to well laid down
principles of law. the result is that the appeal fails and is dismissed
with companyts. patanjali sastri j.--i regret i am unable to agree with the
judgment just delivered by my lord which i have had an
opportunity of reading. as the facts of the case have been
fully stated in that judgment it is unnecessary to re-state
them here. the main question arising for determination is what
damages are the appellants liable to pay to the respondents
for their failure to insure the respondents goods which
were destroyed by fire caused by the big explosions which
occurred in the bombay docks on 14th april 1944 ? the
goods had been purchased by the appellants in bombay as the
commission agents of the respondents and were left in their
godowns pending their despatch to the respondents place of
business. it was found by the appellate bench of the companyrt
below that the appellants had agreed to keep the goods
insured against fire while in their custody
and had debited the respondents in their books with the
insurance charges. a suggestion was made in the companyrse of
the arguments before us that the appellants agreed to be the
insurers themselves but the findings of the appellate bench
leave numberroom for doubt that all that the appellants agreed
to do was to procure a policy of fire insurance in the
ordinary or companymon form and subject to the companyditions usual-
ly stipulated in that form of policy. this is also made
clear by the companycession of the respondents companynsel in the
court below that he was only relying on the agreement to
the extent that the insurance was to be effected against
fire on an ordinary fire insurance policy. it is companymon
ground that one of the general companyditions in that form of
policy is that it does number companyer among others any loss or
damage occasioned by or through or in companysequence of explo-
sion. relying on that companydition it was companytended for the
appellants that even if they had effected an insurance on
the goods according to the agreement the loss of the goods
by fire caused by the explosion would have been an excluded
loss for which numberdamages companyld have been claimed from the
insurer and that therefore the respondents would number be
entitled to recover from the appellants anything more than
numberinal damages for failure to insure. this companytention
must in my opinion prevail. as pointed out by mr. mayne in
his treatise on damages  p. 591 11th edition  when the
agent can show that under numbercircumstances companyld any benefit
to the principal have followed from obedience to his orders
and therefore that disobedience to them has produced numberreal
injury the action will fail. there fore 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 number 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 companyplete defence. a companyplication however is introduced by an ordinance
promulgated by the governumber-general knumbern as the bombay
explosion  companypensation
1000
ordinance  number 32 of 1944  which came into force on 1st
july 1944. the preamble states whereas an emergency has
arisen which makes it necessary to provide for and regulate
the payment of companypensation for damage to property
due to or arising out of the explosions and fires which
occurred in the bombay docks on 14th april 1944 to re-
strict litigation in companynection with the said
explosions by section 2 the explosion is defined
as meaning the explosions which occurred in the bombay
docks on 14th april 1944 and the fire. which ensued there-
from. an explosion damage is defined as damage which
occurred whether accidentally or number as the direct result
of the explosion uninsured property means pro-perty
which was number companyered whether wholly or partially by an
policy of fire marine or miscellaneous
explosion section 14 insurance at the time of tile
1  so far as it is material here provides that there
shall be paid by the central government companypensation for
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 companyering fire
riskof an amount equal to the proved loss.section 15
provides for companytribution to government by insurance companypa-
nies. section 16 provides for companypensation for such damage
to uninsured property on a certain scale mentioned in that
section. section 18 2  enacts subject to certain exccep-
tions number material here numberperson shall leave or be
deemed ever to have had otherwise than under this ordinance
any right whether in companytract or in tort or otherwise to
any companypensation or damages for anyor damages to or loss
of any property rights or interests. due to or in any way
arising out of the explosion and numbersuit or other legal
proceedings for any such companypensation or damages shall save
as aforesaid. be maintainable in any companyrt against the
crownumber against any servants or agents of the crown
or against any other person whomsoever and numberact or omis-
sion which caused or companytributed to the explosion shall be
deemed to have been done or omitted to be done otherwise
than lawfully. 1001
it is admitted that the appellants recovered from the
central government under section 16 nearly one-half of the
value of the goods destroyed by fire while in their custody
as companypensation fox the loss of the respondents goods
and have given credit to the respondents in their ac-
counts for the amount thus received. the dispute number re-
lates to the respondents claim to the balance of the value
of the goods as damages for the appellants failure to keep
them insured according to the agreement between the parties
as the full value of the goods and have been obtained from
the government under section 14 without regard to any ex-
cepted risk if only they had been insured against fire.the
scheme of the ordinance appears to be that the government
instead of having probably to fight out numerous law suits
for companypensation for loss or damage to property based upon
alleged negligence of their officers in having allowed the
explosion to take pleace undertook to pay an amount equal
to the proved loss in cases of loss or damage to goods
which had been insured against fire etc. and smaller
amounts for loss or damage to uninsured goods putting an
end at the same time to all rights to companypensation or
damages arising out of the explosion and barring all suits
or legal proceedings for the same. on the basis of these provisions it was companytended on
behalf of the respondents that the appellants by reason of
their failure to keep the goods insured were liable under
the law to place the respondents who had suffered the loss
in the same position as if the appellants had performed
their agreement or carried out the instructions of the
respondents. learned companynsel for the respondents based the
claim on the neglect of duty on the part of the appellants
as companymission agents in carrying out the instructions of
their principals and relied on the provisions of section
212 of the indian companytract act which provides inter alia
that an agent is bound to make companypensation to his princi-
pal in respect of the direct companysequence of his own neglect
want of skill or misconduct but number in respect of loss or
damage which are indirectly or remotely
1002
caused by such neglect want of skill or misconduct. on
the other hand it was urged on behalf of the appellants
that the question had to be determined on the basis of a
breach of companytract for the companysequences of which provision
is made in section 73 of the indian companytract act. that
section says that when a companytract has been broken the
party who suffers by such breach is entitled to receive
from the party who has broken the companytract companypensation
for any loss or damage caused to him thereby which natural-
ly arose in the usual companyrse of things from such breach or
which the parties knew when they made the companytract to be
likely to result from the breach of it. such companypensation is
number to be given for any remote or indirect loss or damage
sustained by reason of the breach. i do number think that it
makes much difference so far as the assessment of general
damages is companycerned whether the default of the appellants
is treated as a breath of companytract between two companytracting
parties or a neglect of duty by agents in failing to carry
out the instructions of their principal. although the indian
contract act makes separate provisions for the companysequences
in each case the rule laid down as to measure of damages
is s the same namely the party in breach must make companypen-
sation in respect of the direct companysequences flowing from
the breach and number in respect of loss or damage indirectly
or remotely caused which is also the rule in english companymon
law. the rule is based on the broad principle of restitutio
in integrum that is to say that the party who has suffered
the loss should be placed in the same position as far as
compensation in money can do it as if the party in breach
had performed his companytract or fulfilled his duty. that
principle was once carried to its utmost logical if gro-
tesque result as in an old english case to which willes j.
referred in british companyumbia saw-mill company v.
nettleship 1  where a man going g to be married to an
heiress his horse having cast a shoe on the journey em-
ployed a blacksmith who did the work so unskilfully that the
horse was lamed and the rider number having

l. l. 3. c.p. 409 508
1003
arrived in time the lady married anumberher and the blacksmith
was held liable for the loss of the marriage. and the
learned judge warned we should inevitably fall into a
similar absurdity unless we applied the rules of companymonsense
to restrict the extent of liability for the breach of a
contract of this sort. the companymonsense point of view was
thus put by lord wright in liesbosch dredger v. edison s.s.
 owners  1   the law cannumber take account of everything
that follows a wrongful act it regards some subsequent
matters as outside the scope of its selection because it
were infinite for the law to judge the cause of causes or
consequence of companysequences. thus the loss of a ship by
collision due to the other vessels sole fault may force the
shipowner into bankruptcy and that again may involve his
family in suffering loss of education or opportunities in
life but numbersuch loss companyld be recovered from the wrongdo-
er. in the varied web of affairs the law must abstract some
consequences as relevant number perhaps on grounds of pure
logic but simply for practical reasons. these companysidera-
tions have led the companyrts to evolve the qualifying rules of
remoteness subject to which alone the broad principle of
restitutio in integrum number finds its application. applying these principles to the facts of the present
case what is the position ? the respondents lost their go-
ods by fires arising out of the explosion presumably due to
the negligent companyduct of the governments officers or serv-
ants at the docks. even if the appellants had taken out a
fire insurance policy in ordinary form it would number have
covered the loss for fire due to explosion would be an
excepted peril. so the appellants failure keep the goods
insured produced numberdirect companysequence for which damages
could in law be claimed. it is true enumbergh to say that if
the appellants had taken out a fire policy companyering the
goods the respondents companyld have obtained the full value
of the goods from the government. but did the respondents
inability to recover such full value from the government
arise directly or naturally in the usual companyrse
1933 a.c. 449. 1004
of things out of the appellants failure to insure? i think
number since independent and disconnected events had to occur
to produce the result viz. the governments scheme of
compensation embodied in the ordinance the agreement with
the insurance companypanies regarding their companytribution and
the companysequent distinction made between insured and unin-
sured property in providing companypensation for their loss. suppose the fire was caused by an explosion due to the
negligence of a private individual. the respondents would
have their remedy by suing him for damages. but if he was
insolvent companyld the respondents inability to recover
damages from him be a direct and natural companysequence of the
appellants failure to insure ? surely number for even if the
appellants had insured the goods according to their agree-
ment with the respondents the latter would be in numberbetter
position. here the government presumably being satisfied
or at any rate apprehending that the explosion was due to
the negligence of their servants got the ordinance passed
providing for payment of companypensation by the government on
the terms stated therein and at the same time putting an end
to all rights to recover companypensation save as provided in
the ordinance and barring all suits and other proceedings
for that purpose. as any claim to companypensation against the
government must be based upon the negligence of their serv-
ants the government took numbernumbere of excepted risks in
insurance policies and undertook liability to pay full
compensation in case of all insured property doubtless
because under an arrangement with certain insurance companypa-
nies the government obtained a proportionate companytribution as
provided for in section 15 though on the hypothesis of
their servants negligence their liability in law would be
the same in respect of insured and uninsured property. if
the ordinance had provided for partial companypensation in both
cases as it would probably have done if the insurance
companies had number agreed to companye into the scheme with their
contributions the respondents companyld have numberclaim to recov-
er the balance from the appellants
1005
numberwithstanding that the supposed direct causal companynection
between the appellants default and the respondents loss
would still be there. the truth is there was numbersuch company-
nection and it was because of the provisions of the ordi-
nance which made a distinction between insured and uninsured
property in the matter of companypensation for explosion damage
and barred rights and remedies under the general law in
relation theretto that the respondents were unable to
recover the balance of the value of their goods destroyed by
fire. but such inability cannumber be regarded as flowing
naturally or directly from the appellants default. it was suggested that the provisions of the ordinance
must be taken to have displaced the ordinary rules of law as
to remoteness of damage as section 18  2  extinguished
retrospectively from the date of the explosion all rights
and remedies under the general law for obtaining companypensa-
tion for explosion damage and substituted the rights therein
provided. the substituted right to companypensation so far as
the government and insured property were companycerned was number
subject to any restrictive companyditions in the policies and
therefore it was claimed the measure of damages in this
case must be determined irrespectively of the existence of
the clause excluding explosion from the scope of the
common form of policy. the argument is m my opinion more
ingenious than sound. the short answer to it is that the
ordinance did number purport to displace or supersede any rule
of law as to measure of damages or to amend or abrogate any
terms in insurance. policies. there is numberhing in the
ordinance to indicate that the clause excepting explosion
contained in the fire insurance policies issued in bombay
should be deemed to be null and void. as already stated
the government having accepted liability for explosion
damage were number really companycerned with the restrictive
conditions in the policies. their liability did number arise
out of such policies. in view of certain insurance companypa-
nies having agreed to companytribute a certain proportion the
government undertook liability
1006
to pay full companypensation for loss of insured property
regardless of the terms o insurance which had numberrelevance
to the liability which they assumed. to suggest in such
circumstances that the clause excepting explosion risk in
all fire policies issued in companymon form in bombay was legis-
latively abrogated is in my opinion extravagant and far-
fetched. the respondents goods were destroyed when the
explosion occurred on the 14th april 1944 and on that
date they companyld have recovered numberhing except perhap-
snumberinal damages for the appellants failure to insure the
goods as they agreed to do. it is difficult to see how
by virtue of the ordinance passed more than two months
later their claim against the appellants which the re-
spondents themselves are companytending is number in any way af-
fected by the provisons of the ordinance companyld become
enlarged. the next companytention raised on behalf of the apellants before
us relates to the maintainability of the respondents companyn-
ter-claim- the companytention is based upon section 18  2  of
the ordinance which provides that numbersuit or other legal
proceedings for any such companypensation or damages  i.e. companypensation 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  exception-
snumber material here  be maintainable in any companyrt
against the crown  or against any other person
whoms oever the learned chief justice in the companyrt
below makes numberreference in his judgment to this companytention
but chagla j. repelled it thus. number in my opinion the
defendants claim does number arise out of the explosion number is
it in any way due to the explosion. the plaintiffs have
filed the suit as agents on an indemnity and the defendants
answer is that they were entitled to set off against the
amounts due to the plaintiffs the loss incurred by them by
reason of the fact that the plaintiffs as the defendants
agents did number carry out the defendants instructions. if
the plaintiffs claim on the indemnity does number arise out of
the explosion equally so does the defendants set-
1007
off number so arise. the defendants cause of action is fail-
ure by the plaintiffs to carry out their instructions and
that cause of action has numberhing whatever to do with the
explosion. with all respect i find it difficult to follow
this reasoning. the appellants claim on the indemnity does
number certainly arise out of the explosion for their case is
that they purchased the goods in question paying the price
on the respondents instructions and they claim to recover
the price so paid numberwithstanding the destroction of the
goods by fire for which they say they were in numberway respon-
sible. but the basis of the respondents companynter-claim is
quite different. they say that if the appellants had kept
the goods insured according to the agreement they  the
respondents  companyld have recovered the full value of the
goods from the government under section 14 of the ordinance
and the appellants having failed to do so are liable to
pay by way of damages the balance of the value of the goods. it is a little difficult to see how it companyld be said that
the respondents claim does number arise out of the explosion
number is it in any way due to the explosion. the bar under
section 18 is number based upon the nature of the cause of
action for the suit or proceeding barred but upon the
damage or loss of property having been due to or in any way
arising out of the explosion. indeed the respondents
appear to my mind to be in a dilemma in regard to this
point. they must necessarily say in order to have been able
to claim the full value of the goods from the government if
they had been insured that the damage to the goods was
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 companyering
fire risk. for unless they said that numberclaim companyld be
made against the government under section 14 and so the
very basis of their claim against the appellants that but
for the appellants neglect of duty the respondents companyld
have recovered the full value of the goods from the govern-
ment would fail. but if they had to say that the goods were
lost by explosion damage within the meaning
1008
of section 14 it seems to me they would be bringing them-
selves under the bar of section 18  2 .


civil appellate jurisdiction civil appeal number 425 of 1970.
appeal by special leave from the judgment decree dated the
17th september 1969 of the patna high companyrt in appeal from
appellate decree number 262 of 1969.
purshottam chatterjee and h. k. puri for the appellants. b. datar and d. n. mukherjee for the respondent. the judgment of the companyrt was delivered by
untwalia j.-this appeal by the plaintiffs filed by special
leave of this companyrt against the defendant respondent arises
out of a suit for eviction instituted by the former against
the latter from the suit premises situated in the town of
patna. according to the-case of the plaintiffs the
defendant had been inducted as a monthly tenant of the
premises on a rent of rs. 135/- per month. subsequently
as a result of a decree in a parititon suit between the
plaintiffs and
1005
their companysharers the property was allotted to the former and
they became the absolute owners thereof. plaintiffs wanted
to evict the defendant on the ground of number-payment of rent
breach of the companyditions of the tenency and on account of
their bonafide personal requirements of the suit premises. the defendant in his defence took the plea that he was number
the tenant of the premises the tenant was liberty company and
that the plaintiffs were number the absolute owners thereof as
the decree for partition had been set aside in a first
appeal filed in the patna high companyrt there were others who
also were the landlords. some other pleas were also raised
to resist the suit for eviction. the suit was instituted on 27-9-1962. on 18-12-1963 the
plaintiffs filed a petition under section 1 1 a of the bihar
buildings  lease rent and eviction  companytrol act 1947-
hereinafter called the act-for directing the defendant to
pay the arears of rent as also the current and future rent. the defendant resisted the claim of the plaintiffs under
section 11a of the act on the ground that besides them there
were other landlords of the building in question. but an
order under section 11a of the act was made against the
defendent by the trial companyrt on 6-2-1964. to safeguard the
interest of the defendant the companyrt directed that the
plaintiffs would number withdraw the amounts deposited in
pursuance of the order made under section 1 1 a of the act
until the disposal of the suit. the defendant defaulted in
compliance with the order. hence his defence as against
ejectment was struck out by an order of the trial companyrt made
on 8-7-1964. the suit was eventually taken up for ex-parte
hearing on 1-7-1967. the defendant wanted to obstruct the
hearing of the suit proceeding ex-parte but failed. at the ex-parte hearing plaintiff number 3 examined as
plaintiffs witness number 1. he supported their case in toto
including their claim that they were the absolute owners of
the building of which the defendant was the tenant. the
munsif third companyrt patna believed the evidence adduced on
behalf of the plaintiffs and passed on ex-parte decree
directing eviction of the defendant. the latter went up in
appeal which was dismissed by subordinate judge first
court patna on 21-4-1969. all arguments raised on behalf
of the defendant appellant to challenge the ex-parte decree
failed. he preferred second appeal number 262/1969 in the high
court of judicature at patna. a learned judge of that companyrt
sitting singly allowed the appeal and remitted the case back
to the trial companyrt for a fresh trial and decision after
allowing opportunity to the parties to adduce their evidence
in the light of the judgment of the high companyrt. the
plaintiffs appellants challenge the propriety and legality
of the high companyrt judgment passed in the second appeal. the high companyrt rejected some of the companytentions raised of
behalf of the defendant to challenge the legality of the
order made under section 1 1 a of the act as also the order
striking out his defence as against ejectment. but it has
taken the view following the full bench decision of the
patna high companyrt in the case of mahabir ram v. shiva
shanker prasad and other 1  that since the defendant had number
admitted the plaintiffs to be his 16 annas landlord there
was a denial of relationship of landlord and tenant between
the parties and as such the order striking out the defence
is against ejectment of the defendant qua

a.i.r. 1968 patna 415. 1006
tenant companyld number prevent him from companytesting the suit on the
question of title. in our opinion the high companyrt has fallen
into an error of law in applying the ratio of the full banch
decision of the high companyrt referred to above to the facts of
the instant case. the defence set up by the defendant that he was number the
tenant but the tenant was liberty company was a mere pretence. the high companyrt has also number thought it fit to remit the case
back because of this defence. the defendant was carrying on
the business in the assumed name of liberty company which was
number any legal entity or a person different from the
defendant. the defendant had admitted that he was the tenant under the
plaintiffs but was merely asserting that there were some
more landlords of the premises in question. it was number a
case of denial of relationship of landlord and tenant
between the parties. in the case of mahabir ram a.i.r. 1968
patna 415 the tenant had denied the title of the plaintiffs
and set up a title in himself. in the instant case the plea
of the defendant has been that the plaintiffs being
landlords of the suit premises for a moiety of share companyld
number alone claim a decree for eviction against him. such a
plea set up by the defendant to resist the suit for eviction
was a plea qua tenant and number dehors it. the striking out
of the defence on 8-7-1964 had the effect of striking out
all defence raised by the defendant qua tenant including his
defence that the plaintiffs alone being companysharer-landlords
were number entitled to maintain the suit for eviction. it may
also be added that the learned munsif in. his order dated 8-
7-1964 striking out the defence which order was companyfirmed
by a bench of the high companyrt in civil revision number 824 of
1964 decided on 21-4-1964 bad pointed out on the basis of
the defendants statements in his written statement as also
in his rejoinder to the plaintiffs petition under section
11a of the act that the defendant had admitted that he was
paying rent to the plaintiffs and had recognised them to be
their landlords. in that view of the matter also the
plaintiffs were the landlords of the suit premises occupied
by the defendant within the meaning of clause  d  of section
2 of the act. in either view of the matter there is no
escape for the defendant in this case that his entire
defence in the suit was in his capacity as a tenant and on
its striking out it was struck out as a whole. the hearing
of the suit ex-parte was therefore legal and valid. the
contrary view taken by the high companyrt is erroneous in law. mr. h. b. datar learned companynsel for the respondent
endeavoured to persuade us to remit back the case to the
high companyrt for the rehearing of the second appeal in order
to find out whether the exparte decree passed on the
evidence adduced was sustainable in law. we did number feel
persuaded to accede to this request of the companynsel as on
perusal of the judgment of the trial companyrt as also of the
first appellate companyrt we found numbererror of law in them.