What is Railway Receipt?

A Railway Receipt (R/R), like a bill of lading, is an acknowledgment of goods received by the Railway Authorities for carriage to a specified place of destination mentioned therein. The property in the goods covered by a railway receipt passes by endorsement and/or delivery.

The railway authorities are discharged by delivery of the goods to the consignee or the last endorsee on surrendering the railway receipt (R/R). The terms and conditions of carriage are generally painted on the back of the receipt.

What is railway receipt?

A railway receipt is a document of the title but not a negotiable instrument. As in the case of a bill of lading, every transferee who derives the title from the previous transferor takes it subject to the defects which the transferor himself had.

In other words, the transferee cannot get a better title than that of the transferor, since the instrument is not negotiable.

Precaution to be taken by a banker

  1. Bills only of well-established parties should be discounted inasmuch as the goods described in the R/R may be materially different from the actual contents.
  2. The bank should verify the particulars of the railway receipt with those appearing in the invoice such as description, weight, markings, destination, etc. Advances should be granted only against “Freight Paid” railway receipts. This is with a view to saving the freights when the banker is called upon to take delivery of goods by default.
  3. The banker should either be a consignee of the railway receipt or it should be endorsed to him by the consignor as the original owner.
  4. The banker should immediately give notice to the railway authorities of his interest in the goods as a pledge, so that the pledger may not take delivery of the goods by executing an indemnity bond.railway_receipt
  5. The goods evidenced by the railway receipt should be at the “railway risk” and the banker should strictly avoid granting credit where the goods are being carried at the owner’s risk because, in case of any loss, destruction, or deterioration of such goods, the railway administration shall not be responsible.
  6. The bank should verify the date of receipt. It contains the old date, in all probability goods, have reached the destination, and are incurring a demurrage charge. So, when an old receipt is produced, the banker should try to obtain an explanation from the pledger.
  7. In no condition, an advance should be granted where the paid receipt indicates that the goods are in defective condition or defectively packed.

The advances are granted against railway receipts for a very short period since the receipt is to be presented before the railway authorities at the destination for obtaining the delivery of goods. The consignor usually draws a bill of exchange on the consignee for the amount of the goods consigned and discounts the bill with the banks.

The railway receipt is attached to the bill of exchange to make it a documentary instrument. The banker releases the railway receipt to the consignee against acceptance or payment of the bill.

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