Notes On Law of Carriages

NOTES ON
LAW OF CARRIAGE
For
9th Semester BBA LLB(Hons.)
Collaborated By on 23/06/2018
SRUTHI DAS & AJAY RATNAN
9/5 BBA LLB(Hons.)
GOVERNMENT LAW COLLEGE, KOZHIKODE
CONTENTS
Title Page No.
MODULE 1 2-21
MODULE 2 22-29
MODULE 3 30-64
MODULE 4 65-91
MODULE 5 92-131
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NOTES ON LAW OF CARRIAGE
MODULE 1
Common Carriers – Carriers Act, 1865, Public Carriers – Distinction with Private Carriers –
Common Law Liability of Carriers – Exemption from Liability.
COMMON CARRIERS – CARRIERS ACT, 1865
Carrier
A carrier engages in the business of transporting goods or persons or both. A carrier of goods
is a Bailee because a carrier charges a fee for such service, the bailment exists for the mutual
benefit of both parties.
According to Section 2 of the Carriers Act, "common carrier" denotes a person, other than the
Government, engaged in the business of transporting for hire property from place to place, by
land or inland navigation, for all persons indiscriminately:
Person. – A per S.3 (42) of the General Clauses Act, 1897 "person" includes any association
for body of persons, whether incorporated or not.
The definition is based upon the English common law. “The common law in England
developed from quite early times to make the profession of common carriers a kind of public
service, or as stated by Lord Holt in an early case “a public trust”. It is where such a public
trust has been undertaken as distinct from a private contract that a carrier ceases to be a private
carrier and becomes a public carrier or as English law calls him “a common carrier”. Explaining
the distinction between a mere carrier and a common carrier, Alderson B said in Ingate v
Christie: Everybody who undertakes to carry for anyone who asks him, is a common carrier.
The criterion is, whether he carries for a particular person only, or whether he carries for
everyone. If a man holds himself out to do it for everyone who asks him, he is a common carrier;
but if he does not do it for everyone, but carries for you and me only, that is a matter of special
contract.
Features of a common carrier

• Applies to carrier of goods by land /inland waters.
• They are common carriers and not carriers of persons.
• The Common Carrier may be an individual or a firms or company.
• A person who carries goods free of charge would not be a common carrier.
• A common carrier is not bound to refuse the goods of any person.
Consequences of rejection: Once a person qualifies as a common carrier within the meaning
of this definition, he becomes bound to accept the type of goods which he professes to carry
on his routes. Any refusal by him is an offence ’or which a civil as well as a criminal action
lies.
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Sruthi Das & Ajay Ratnan Page | 2
Refusal when justified

• If there is no adequate space.
• If the goods are not of type that he professes to carry.
• If the goods are not meant to be carried on his customary route.
• If the goods are dangerous to carry and it involves high risk.
• If the goods are not offered at reasonable time or manner.
• If the consignor is not prepared to pay a reasonable amount as an advance.
• If the goods are inadequately packed.
• If the consignor refuses to disclose the name of consignee.
• A consignment can also be refused if it is offered too much before the time of departure
or where the destination can be reached [only] through areas of disturbance.
Where no exception of this kind was available a carrier was held liable for his refusal to accept
goods even though the person offering the goods was himself a carrier and was undercutting
the defendants’ freight rates. (Edwards v Sherratt, (1801)).
Common carriers are not required to transport.

• Any person which requires unusual attention, such as an invalid, unless accompanied
by a caretaker.
• Any person with intent to harm or injure the carrier or passenger.
• Any passenger that may be offensive to other passengers, such as an intoxicated person.
Private Carriers
Characteristics
The Characteristics of a private carrier are stated in Halsbury’s Laws of England:
“A private carrier is a person, who in the course of business or occasionally, undertakes the
carriage of passengers or of other people’s goods, but who does not hold himself out as
exercising the public employment of a common carrier. A carrier, who, while inviting all and
sundry to employ htm, reserves to himself the right of accepting or rejecting their offers of
goods for carriage, whether his vehicles are full or empty, being guided, in his decision by the
attractiveness or otherwise of a particular offer, and not by his ability or inability to carry
having regard to his other engagements, is a private carrier.”
The position, therefore, seems to be that if a person does not qualify as a common carrier, as
explained in the foregoing pages, he is to be regarded as a private carrier. Carriers of passengers
are more readily regarded as common carriers and those carrying goods by road under road
licenses are regarded as common carriers. Indian Railways are common carriers to the extent
to which they occupy that position under the provisions of the Railways Act.
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Obligations of private carrier

A private carrier occupies the position of a bailee and, therefore, his duty and liability are
regulated by Sections 151 and 152, Contract Act, 1872.
The duty of a bailee under Section 151 is to exercise reasonable care. So is the duty of a private
carrier. He becomes liable when loss or damage is due to his negligence. Since burden lies on
him to account for the goods, any loss or damage is prima facie evidence of negligence. The
onus of proving that the loss occurred without negligence is on the private carrier as a bailee.
The burden of proof is on the bailee to show that he was exercising reasonable care and if he
can prove this he will not be liable. Thus, where the railway administration was not able to
explain how the barge carrying the plaintiff’s goods sank and was lost, negligence was pre-
sumed making the railway liable. (UOI vs. Sugauli Works Pvt. Ltd.)
Contract to the contrary

It is still debatable whether a bailee can contract himself out of the duty prescribed by Section
151, or whether a contract of bailment can exempt the bailee from his liability for negligence?
The argument is built chiefly on the ground that Section 152 opens with the remark: “in the
absence of any special contract”. This may show that the legislative intent was to permit him
to reduce the scope of his liability. Judicial thinking on this line is in evidence in a Punjab and
Haryana decision. The court said that the words “in the absence of special contract as used in
Section 152 show that a bailee can contract himself out of the obligation under Section 151.
The court cited the following observation from a Bombay decision in the case of Bombay
Steam Navigation Co. Ltd vs. Vasudev Baburao Kamat. It was held that it was open to a bailee
to contract himself out of the obligation imposed by Section 151. The Act does not expressly
prohibit contracting out of Section 151 and it could be a startling thing to say that persons sui
juris is not at liberty to enter into such a contract of bailment as they may think fit. Contracts
of bailment are very common although they are not always called by their technical name.
There is no reason why a man should not be at liberty to agree to keep property belonging to a
friend on the terms that such property is to be entirely at the risk of the consumer and that the
man who keeps it is to be under no liability for the negligence of his servants in failing to look
after it.
Gratuitous Carrier. When a person carries goods of another free of charge, he is a gratuitous
carrier. Similarly, a person may give lift in his transport to another person voluntarily without
any compensation. Thus, a gratuitous carrier may carry not only goods but persons also free of
charge.
Responsibility of Common Carrier and Bailee. We know that a bailee is responsible only
when the goods entrusted to him are lost or damaged due to his fault or negligence. But the
responsibility of a common carrier is more onerous; he is to deliver the goods safely. Therefore,
in the case of a common carrier, it is immaterial whether the loss or damage to the goods is due
to his or someone else’s negligence.
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Private carrier's insurable interest: A person who is in possession of the goods of another
person as a bailee has an insurable interest in those goods because he is under an obligation to
return the goods to the person entitled to them and is liable for any loss of or damage to the
goods. He is entitled to insure them for his own interest as well as for that of the owner. If the
insurance becomes a claim because of loss of or damage to the goods, the carrier who receives
the insurance money can keep the amount which represents his interest and is a constructive
trustee of the consignor for the rest of the amount. (Hepburn v. A. Tomlinson (Hauliers)
Ltd.)
Common Carrier Private carrier
He carries the goods as a regular business to He carries the goods occasionally.

earn money.
He carries the goods without any He carries the goods of particular persons
discrimination.
He declares schedule of service. He has no schedule of service.
He cannot refuse to accept the goods without He has the option to accept or refuse to carry
any reasonable cause. goods.
He is governed by the carriers act. He is governed by the laws relating to
bailment
COMMON LAW LIABILITY OF CARRIERS
Liabilities of a Common Carrier: The liability of a common carrier of goods is laid down in
the Carriers Act, 1865. For this purpose, the Act has classified the goods into two categories:
(i) Scheduled goods and (ii) non-scheduled goods.
The scheduled goods are those which are enumerated in a Schedule to the Act. They are
valuable articles like gold, silver, precious stones and pearls, bills and hundis, currency and
bank notes, glass, china silk, articles of ivory, time pieces, musical and scientific instruments,
etc. All other goods are non-scheduled.
For scheduled articles exceeding Rs. 100 in value, the carrier is liable for loss and damage only:
(i) if the value and the description of the goods are disclosed by the consignor to the carrier; or
(ii) if the loss or damage is due to a criminal act of the carrier, his agent or servant.
In the case of Indian General Navigation & Railway Co. Ltd vs. Gopal Chandra Guin
before the Calcutta High Court six packages of matka silk thread were made over to the carrier
as undeclared luggage. The steamer had gone only about two and a half miles that it caught fire
and the goods were lost. The company resisted the claim on the ground that the nature and
value of the goods, being scheduled articles, were concealed from the company, and also higher
charges were not paid on them. The court held that Section 3 is subject to the declaration in
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Section 9 which holds the carrier liable where the loss is due to his negligence. The loss in this
case being due to the carrier’s negligence and he was held liable.
“Had the matka silk thread been lost otherwise than through it negligence of the company, they
would not have been liable for loss as the value and description of the property had not been
declare as provided by Section 3 and as there was no payment of a special rate as provided by
Section 4. But as the property was lost owing to the negligence of the company, we are of
opinion that they are liable for the loss although the value and description of the property were
not declared and a higher charge was not paid for them and that in such a case Sections 3 and
4 of Act III of 1865 do not afford any protection to the carrier”
The court also rejected the contention that because the goods were booked as luggage and not
as general merchandise there should be no liability for the loss of general merchandise. Section
8 speaks of liability for “property delivered” whose words would include “luggage as well as
goods”
The declaration has to be made by the consignor for the purposes of the Act. A declaration
made for any other purpose, e.g., for customs purposes, may not serve the purposes of the Act,
even if the carrier comes to know of such a declaration. (Hirschel & Meyer vs. Great Eastern
Railway Co.)
Right to payment of charges: The carrier is entitled to insist upon full payment of his charges
along with the acceptance by him of the consignment. But if he accepts the goods without
demanding payment of freight in advance, he cannot afterwards claim payment until he has
carried the goods to their destination. (Barnes vs. Marshall)
The charge should be reasonable and should be accepted from whatever source its payment is
arranged. He is also entitled to customer as well as price preference provided that his conduct
in the circumstances is reasonable. Where his demand of freight is exorbitant and it is paid
under protest, he would have to refund the extra portion of the charge. (Baxendale vs. London
& South Western Railway Co.)
Extra charges [S. 4]: Section 4 is supplementary to the provision in Section 3. It enables the
carrier to charge extra for the risk in respect of the scheduled articles. Such extra charges must
be exhibited at the place of booking in English as well as the language of the place. Sections 3
and 4 would not be attracted where the goods in question do not come within the schedule.
In the case of Alopati Suryanarayanan vs. Puvvada Pullayya before the Andhra Pradesh
High Court, the question was whether “Leno” was within the schedule. The only clause to
which it came near states: “clothes and tissues embroidered with the precious metals or of
which such metals form part.” The court held that “Leno” which according to the Concise
Oxford Dictionary means “kind of cotton gauge for caps, veils, curtains etc.” could not “by any
stretch of imagination be brought within the ambit of this term.” If the goods have been
declared by the consignor, he has done his duty and the failure of the carrier to charge extra on
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the basis of the declaration will not make any difference as to the carrier’s liability. (Budhu
Nath Poddar vs. Secy of State for India-in-Council)
Right to recover back charges [S. 5]: If the value and nature of the goods have been declared
as required by Section 3 and the carrier has levied special charges, the consignor will be entitled
to recover in case of loss of such goods, not merely the value of the goods, but also the charges
paid by him in respect of the special risk.
The carrier can charge extra for carrying scheduled articles, but he cannot limit his statutory
liability by any special agreement.
Limitation of Liability by Special Contract. (S. 6)
As regards non-scheduled articles, a common carrier can limit his liability by special
agreement with the consignor. But even in this Section case he will be liable under 8 of the
Act.
The Liability for the loss of goods not falling within the schedule cannot be limited by public
notice but can be limited by special contract made with each consignor. The clauses of the
contract by which liability is limited must be brought to the notice of the other party.
Limiting clauses are strictly construed and against the party who inserted them. One of the
protections is contained in the section itself which requires that the contract containing such
clauses should be signed by the owner of the property or by his duly authorised agent. In the
case of Vidya Ratan vs. Kota Transport Co. Ltd. before the Rajasthan High Court the carrier
pointed out to one of those attending loading of cotton on a gas plant truck that it was
exceptionally risky and he agreed to take it. the carrier was never the less held liable when the
gas plan materialized the risk by putting the truck with its load of cotton on fire.
In a similar case of Orient Road Lines vs. M.B. Mohammed Hassan Sahib. before the Kerala
High Court on the reverse side of the consignment note there was a condition to the effect that
the company shall not be liable for any loss or damage due to pilferage, theft, weather
conditions, strikes, riots, disturbances, fire, explosion or accident. The Court did not permit the
carrier to escape liability under this clause unless there was signature showing an agreement to
that effect. In the case of Indian Roadways Corpn v Unneerikutty, the Court held that a
statement in the consignment note that the goods are being carried at owner’s risk does not
constitute a special contract.
Discharge from Liability: The liability of the carrier comes to an end not on actual unloading
of the goods but when the entire cargo in good condition is handed over to the person producing
documents at the port of destination. Mere unloading of the goods and handing them over to
the Port Authority does not amount to an effective discharge. In the case of National Textile
Corpn. Vs. Pakistan, National Shipping Corporation, the shipowner handed over the goods
to the Port Authority at the destination and the consignee while removing them in stages found
that the last lot was in damaged state. The carrier contented that the goods were discharged at
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the port in good condition and the damage might have happened at the port. The carrier was
held liable.
Liability as Common Carrier [Ss. 7-9]
The provisions relating to the liability of the common carrier for the loss of or damage to the
goods entrusted to him for carriage are to be found in section 7 8 and 9. the main provision is
in Section 8. Section 7 extends the liability stated under Section 8 to the operators of railroads
or tram roads under Act XXII of 1863. Section 8 renders the carrier liable for loss or damage
when it is due to negligence or criminal act on his part or on the part of those working for him,
and section 9 says that it shall not be the responsibility of the consignor to prove negligence or
criminal act on the part of the carrier. All that he has to prove is loss or non-delivery.
Commencement of Liability
The liability as a common carrier commences from the moment of acceptance of goods either
by him or through his authorized agent or employee. An implied acceptance takes place when
he permits the goods to be placed at the usual place for carriage. In Governor General of
India in Council vs. Jubilee Mills Ltd., where with the consent of the station master goods
were stored on a railway company’s platform, wagons being not available, the company was
held liable when they were damaged by fire caused by a spark emitted by a passing engine.
Where the carrier’s agent receives the goods without authority or in excess of authority or in
breach of instructions, the carrier is not bound by such receipt unless it can be shown that he
was holding out that person for that purpose. In John Rigby Ltd. vs. Reliance Marine
Insurance Co. Ltd., where a lorry driver took a note from the carrier which enabled him to
collect the goods from the consignor, the carrier became liable when the lorry driver
disappeared with the goods.
Duration of Liability
On the acceptance of the goods for carriage, the carrier becomes charged with the responsibility
of carrying them in safety to the destination and of discharging them at that place also in safety.
He has to fulfil this responsibility even if the route has become expensive and unprofitable to
him on account of an alteration in circumstances over which he might have had no control.
The responsibility begins with the receipt of the goods and not on commencement of carriage
and continues up to the delivery to the consignee, actual or constructive, and not merely up to
arrival at the destination [Chapman vs. Great Western Railway Co.]. Unless the carrier has
undertaken to deliver the goods at the consignee’s place, his responsibility ends by carrying
the goods to their place of destination and giving the consignee a reasonable time for taking
away his goods. What is reasonable time is, of course, a question of fact is each case, but the
consignee cannot prolong the transit by not taking away the goods within reasonable time after
becoming aware of their arrival. [Mitchell vs. Lancashire & Yorkshire Railway Co.]
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Delivery
Whether the carrier’s responsibility is to deliver the goods by taking them to the consignee’s
place or to carry them only up to his own station or a designated port, depends upon the terms
of the contract and the goods would have to be delivered accordingly. The place of delivery
may also depend upon the usual course of the carrier’s business. If the goods are deliverable at
the consignee’s house, a delivery at that place is good whoever might receive them. Where the
goods are accepted by the carrier with knowledge that he can carry them only a part of the way
and for the rest he would have to handover to another carrier and if he does not limit his liability
only to the part to be performed by him, the whole route would be his responsibility.
Misdelivery
Misdelivery means delivery to a person not authorized to receive them. This would obviously
make the carrier liable. A refusal to deliver the goods to the person entitled to them would make
the carrier liable for conversion even if the refusal is on the ground that the goods belong to a
third person. Delivery to the consignee in the ordinary course of things and without notice that
the consignee is not entitled to possession discharges the carrier from his liability. He would
also be discharged if delivery is affected to a person on his demand out of the ordinary course,
but who was entitled to possession. The carrier may in such cases retain possession till he is
able to ascertain the true position and in case of doubt may wait for a court order in an
interpleader suit.
Refusal by consignee to receive
If the consignee either refuses to receive the goods or if the consignee is not traceable at the
address provided by the consignor, the absolute liability of the carrier comes to an end. He
would then be converted into an ordinary bailee to be liable only for negligence. On refusal by
the consignee, the carrier should inform the consignor. This is necessary for mutual
convenience though there is no such obligation. Nor is the carrier bound to return the goods at
once to the consignor. He should wait for a reasonable period for instructions of the consignor.
Position of carrier at end of transit
At the end of the transit when the goods are waiting for consignee to take them away and
reasonable period has expired since their arrival, the carrier ceases to be liable as carrier and
becomes converted into an ordinary custodian. His position is then akin to a warehouse keeper,
who is a bailee and as such, not absolutely liable, but under a duty to assure safety of the goods
to the extent to which reasonable care and caution can do so.
The burden of proving that there was no negligence on his part rests upon the carrier. The
carrier may recover by way of demurrage his charges for keeping, but not so if he is exercising
his right of lien for unpaid freight. After transit ceases a carrier is certainly liable for negligent
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loss or damage if he charges for warehousing. If he does not, then for a reasonable time he is
probably liable for loss or damage caused by his negligence or wrongdoing.
Burden of proof [S. 9]
When the goods are not delivered at the destination, there is a presumption that they must have
been lost due to the negligence or some other fault of the carrier. The consignor has to prove
nothing except this that the goods have not been delivered at the destination. Burden lies upon
the carrier to prove that there was no negligence or fault on his or his servants’ part. The loss
of goods is an evidence of negligence which the carrier will have to disprove.
Carriage at owner's risk
Where goods insured were being carried at owner’s risk and they were damaged, a decree
against the carrier which was passed without proof of negligence on his part was set aside.
Section permits goods to be carried at owner’s risk. In such cases it has to be proved that loss
or damage was due to negligence of the carrier or his staff.
The Madras High Court has questioned the very validity of the clause which gives the carrier
a liberty to carry the material at the owner’s risk.
It posed the question, whether the defendant as a common carrier can avoid his liability to the
plaintiffs based on the special contract containing a clause that the goods are carried at owner’s
risk? The court answered these questions as follows:
“As far as issue (a) is concerned it should not detain this Court even for a minute more than it
is required. This issue is covered by wo judgments of this court in Thiruppathi
Venkatachalapathy Lorry Service vs. New India Assurance Co Ltd and New India
Assurance Co Ltd v Murugan. In these cases, a similar argument had been raised and this
Court had repelled the argument of the common carrier and held that the liability of the
common carrier is absolute. Therefore, this issue goes against the defendant.”
Hence, it is clear that the liability of the defendant, as a common carrier, under the Carriers Act
was that of an insurer with regard to the goods of the first plaintiff entrusted to and the
defendant was liable for the loss and damage caused to the goods of the first plaintiff. These
principles were applied by the Madras High Court with emphasis that a public carrier is not
entitled to plead that transported goods at owner’s risk.
Notice of loss [S. 10]
Notice of loss should be given to the carrier before the action is brought and the notice should
be given within six months from the date on which the plaintiff first learned of the loss. Notice
has to be given even where the carrier knows of the loss, but if the carrier does not raise any
objection on that ground, that is a waiver. A notice given to the local agent is sufficient. The
Kerala High Court has held that an omission to mention the fact of service of notice in the
plaint does not render the suit for damages as incompetent.
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It is not necessary that actual proceedings should be commenced within six months. The section
prescribes only the notice period, A suit may then be filed within the period permitted by
Article 10 of the Limitation Act, 1963. This Article says that the period of limitation against a
carrier for compensation is three years and it runs from the date when the loss or injury occurs.
RIGHTS OF COMMON CARRIER
1) Right of reward- It has a right to charge a reasonable amount for his services.
2) Right to retain the goods-If the charges are not paid to him, he can refuse to deliver
the goods until the payment is made.
3) Right to advance payments-He has also right to demand advance payments before he
accepts the goods.
4) Right to Recover Damages-If the goods carried are in dangerous nature and cause any
damage then he has a right to recover such damage.
5) Right of selling- He has a right to sell the perishable goods after getting the instruction
from the consigner, if consignee refuses to accept the delivery.
6) Right to recovery expenses-If the consignee refuses to accept the delivery. Due to this
refusal he bears some expenses. These expenses can be recovered by the common
carrier.
7) Right to limit liability-He has also a right to limit his liability by the special contract
with consignor.
8) Refusal right-In some special cases he can also refuse to carry the goods.
9) Right to recover goods-If a common carrier delivers the goods wrongfully to any
person. He has a right to recover the goods or its value from that person.
10) Recovery of Loss Caused by Concealing-sometimes consignor conceals the facts
about the goods. Due to this common carrier suffers a loss. This loss can be recovered
by him the consignor.
DUTIES OF COMMON CARRIER
1.) Duty to accept and carry: Liability arises out of breach of duty. The carrier owes two
duties. He owes the duty to accept and carry the goods according to his public profession and,
secondly, he owes the duty to deliver the goods safely at the destination. “A common carrier is
one who holds himself out as being prepared to carry for reward for all and sundry without
reserving the right to refuse the goods tendered.” He undertakes to deliver the cargo in the same
condition at the destination in which it was delivered to him. A wrongful refusal may arise
from the fact that he was demanding an unreasonable charge or was trying to impose
unreasonable conditions. A learned author has presented the following list of cases in which
refusal is justifiable:
The common carrier cannot refuse to accept goods except where
a) they fall outside the categories specified by him as usual in the course of his business
and so unreasonable;
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b) they are dangerous or exceptional in character, for example, too large exposing the
carrier to undue risk or too valuable disproportionate to the safety measures he usually
commands;
c) that the goods were tendered at an unreasonable time before the carrier was ready for
his journey;
d) the goods were inadequately packed;
e) there was no room for the particular goods in his vehicle;
f) the consignor refused to pay the freight in advance when so requested.
2.) Duty in emergency: A carrier is justified in disposing of the cargo, indeed he is under a
duty to do so if that is the only way of saving the cargo from total loss. The law bestows upon
the carrier the agency of necessity for that purpose. In the case of Sims & Co. vs. Midland
Railways Co, a railway company was held justified in disposing of the consignment of butter
because delay was being caused by workers’ strike and the butter was rapidly deteriorating.
3.) Duty to follow instructions of consignor: A carrier is under a duty to carry out the
instructions of his consignor, for example, the duty to stop goods in transit on receiving notice
from the consignor. This is his statutory duty also. Any other instructions which have been
accepted by the carrier would also make him dutybound to obey them. [Streeter vs. Horlock].
The carrier is under duty to deliver the goods at the place designated by the consignor; in case
the consignee requires the delivery of goods at another place, he may deliver them according
to the orders of the consignee. If there was a right between the consignor and consignee to
change the place of delivery, the carrier on receiving notice must take the goods to the new
destination if it is within the area of his operations.
4.) Duty to deliver within reasonable time: A carrier is under duty to carry the goods and to
deliver them at the appointed destination either within the stipulated time or. if no time was
agreed upon, within a reasonable period of time. [ Raphael vs. Pickford] “Reasonable time"
would mean the time which would be necessary to cover the distance involved if the carrier
works with due diligence. The time which is necessary in the ordinary way of his business is
available to him to complete the carriage and after that time, unreasonable delay begins. Delays
caused by extraordinary events which are beyond his control do not make him liable because
he is not bound to fight with such events at extraordinary expense or effort. [Hawes & Sons
vs. South Eastern Railway Co.]
5.) Duty not to deviate: A carrier is under a duty not to deviate from the agreed route. Any
such deviation, being a breach of contract, the carrier will not be heard to say that there was no
negligence on his part, nor he can claim the protection of contract clauses. A deviation means
departure from normal commercial practices or routes.
In Mayfair Photographic Supplies (London) Ltd. Vs. Baxter Hoare & Co. Ltd., a carrier
who was carrying a customer’s cameras loaded certain other goods on the lorry and went to
deliver them first, thus deviating from the direct route. The court found that what was done was
a normal commercial practice. It was not a breach of the contract. The carrier was held not
liable for a theft occurring without his negligence.
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Where a common carrier contrary to terms of the contract deviates the route, he cannot claim
the benefits of the terms of the contract. He is then answerable for the loss, damage or
deterioration of the goods. Deviation increases the risk, it is deemed to displace the contract.
The undertaking not to deviate has the effect of a condition or warranty and the carrier cannot
plead any exemption clause when he has not fulfilled the condition precedent of non-deviation.
[Blower vs. Great Western Railway Co.]
6.) Duty to deliver against documents only: The carrier is under a duty not to deliver goods
except on production of original documents. He will not be liable where goods have been deliv-
ered as against original documents though they were produced by an unauthorized person and
there is nothing in the circumstances to show lack of authority. [Amin & Co. vs. Southern
Roadways Ltd.]
Warranty of roadworthiness
A carrier by land, as opposed to that by sea, does not give a warranty of roadworthiness of his
vehicle. Road vehicles have to obtain certificate of fitness under the Motor Vehicles Act, 1988.
But the fact that the vehicle was not roadworthy would be a material evidence of negligence.
PRINCIPLE OF ABSOLUTE LIABILITY
The liability for loss or damage arises in respect of the failure to deliver the goods intact at the
destination. The carrier may fail to deliver the goods because they might have been lost en
route or he may deliver them in a damaged condition. In either case he is liable.
The principle of English law is that the carrier is absolutely liable for any loss or destruction of
the goods. He undertakes the liability of an insurer. He should either deliver the goods or pay
compensation for their loss or destruction.
“By the custom of the realm a common carrier of goods was at common law bound to answer
for the goods at all events. The law charges this person thus entrusted to carry goods against
all events but acts of God and of the enemies of the King.” It is observed in Halsbury’s Laws
of England that “he is liable even when overwhelmed and robbed,” or when he had no control
over persons causing loss or damage.
The common law with regard to the liability by a public carrier of goods is strict. Apart from
express contract, he is, with certain exceptions, absolutely responsible for the safety of the
goods while they remain in his hands as carrier. By a recognized custom of England, every
shipowner who carries goods for hire in his ship, whether by inland navigation, or coastways,
or abroad, undertakes to carry them at his own absolute risk, the act of God or of the Queen’s
enemies alone excepted, unless by agreement between himself and a particular freighter, on a
particular voyage, or on particular voyages, he limits his liability by further exceptions. Thus,
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the only exceptions to liability were where the loss was due to King’s enemies, an act of God,
inevitable accident, defective packing or inherent vice of the goods.
Liability not contractual: The liability that arises under the Carriers Act is not contractual.
The provisions of the Contract Act relating to the liability of a bailee are not applicable, for a
carrier is not a mere bailee. This was categorically so stated by the Privy Council in Irrawaddy
Flotilla Co Ltd v Bugwandas.
Thus, the liability of the carrier arises by virtue of the law and not by virtue of the contract
which he has made with the consignor. And what is the legal obligation. The carrier is liable to
account for the goods in any case and at all events just like an insurer of goods. He must either
deliver up the goods or stand to be liable for their loss or destruction.
There have been many instances of absolute liability. Thus, a shipowner was held liable for
loss when his barge ran into an anchor wrongfully left in the water by a stranger and to which
no buoy appeared to be fastened [Trent & Mersey Navigation Co. vs. Wood]; where the
goods were destroyed by an accidental fire, the court said that “a carrier is in the nature of
insurer [Forward vs. Pittard]; where the goods were damaged by rats, notwithstanding that
he had kept cats on board, that being the only protection available against rats at that time
[Laveroni vs. Drury]; where the goods were stolen by a forcible robbery while the ship was
lying in the river Thames, the court said: “a common carrier must make good a loss though
even robbed” [Gibbon vs Paynton].
An important early case on the issue was Riley v Horne. There Best CJ made clear that such
carrier for reward was not only required to take “all reasonable care of (the property)” but also
liable as “an insurer”.
POSITION IN INDIA SAME EXCEPT AS MODIFIED BY STATUTE
The position of the carrier in India is the same except as modified by the Carriers Act. This
was recognized by the Supreme Court in Nath Bros Exim International Ltd v Best
Roadways Ltd. The court said that the liability of the carrier to whom goods are entrusted for
carriage is that of an insurer and is absolute in terms, in the sense, that the carrier has to deliver
the goods safely in an undamaged state and without any loss at the destination indicated by the
consignor. So long as the goods are in the custody of the carrier, it is his duty to take as much
care as he would have taken of his own goods. He would be liable if any loss or damage was
caused to the goods on account of his own negligence or criminal act or that of his agents or
servants.
The consignor filed a consumer complaint before the National Commission for deficiency in
service under the Consumer Protection Act, 1986. The goods were booked in this case at the
owner’s risk. They were destroyed by a fire while they were stored in a godown. The National
Commission dismissed the complaint taking the view that the carrier was not liable as all
possible care was taken by it. The Supreme Court said that this was not correct approach and
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remanded the case for fresh disposal. The court observed that Sections 151 and 152, Contract
Act, 1872 embody the same rule as to duty of a bailee as is applicable under English common
law. But the liability of the carrier has to be seen under the Carriers Act, 1865 and not under
the Contract Act, 1872. The carrier is liable unless it can show that there was no negligence or
criminal act on his own part or on the part of his agent or servant and this will be irrespective
of the fact whether the carriage is under a special contract or at owner’s risk. [Followed in
South Eastern Carriers (P) Ltd. Oriental Fire & General Insurance Co. Ltd]
Since the great case of Irrawaddy Flotilla Co Ltd v Bugwandas, it is well settled that the duties
and obligations of a common carrier are governed by the English common law as modified by
the provisions of the Indian Carriers Act.”
In the Privy Council case of Irrawaddy Flotilla Co Ltd v Bugwandas certain bales of cotton
were delivered to a carrier for carriage to Rangoon by a ship. A fire broke out suddenly and
was not due to any negligence on the part of the servants; all precautions were taken on the
night of the fire; when the fire was once detected, everything possible was done to stop it, but
its progress was so exceedingly rapid that nothing could be saved. That is how the goods were
destroyed.
The carrier pleaded that he had accepted the goods on the terms and conditions that he would
be bound to take only such care of the goods as is defined in Section 151, Contract Act, namely,
the bailee’s duty of reasonable care and he, having taken that degree of care, should not be held
liable.
Thus, the question was whether the liability of the common carrier in India was to be governed
by the Carriers Act or by Section 151, Contract Act. The question had already excited
controversy between the High Courts in India, for the Bombay High Court had taken the view
in Kuverji Tulsidas vs. Great Indian Peninsular Railway Co that Section 151 being
applicable to “all cases of bailment” and a delivery of goods for carriage being also a bailment,
the section would apply to carriers, and the Calcutta High Court in Moothora Kant Shaw v
India General Steam Navigation Co had held that this was not so and Section 8, Carriers Act
must govern the question of the carrier’s liability.
After considering these cases, Lord Macnaghten, who delivered the opinion of the Board,
concluded:
These considerations lead their Lordships to the conclusion that the
Contract Act, 1872 was not intended to deal with the law relating to
common carriers, and notwithstanding the generality of some
expression! in the chapter on bailments, they think that the common
carriers are not within the Act, they are therefore compelled to decide
in favour of the view of the High Court of Calcutta, and against that of
the High Court of Bombay.
The reason why their Lordships so held was that the Carriers Act was in force at the time when
the Contract Act was passed and there is nothing in it to show that it intended to repeal the
Carriers Act.
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The position of the common carrier in India is that he is liable for the loss or damage of the
goods just like an insurer except where the loss falls within any of the admitted exceptions. His
liability is absolute except as modified by the Carriers Act.
The modification is that he is permitted by making a special contract with each consignor and
not by a general public notice, to limit his absolute liability in any way he likes except that he
cannot exclude his liability for negligence or criminal act. Ordinarily he is absolutely liable; he
may limit his liability by a special contract, but he will always be liable for his own or his
servant’s negligence or criminal act. Accordingly, in Transport Corpn of India Ltd. vs.
Indian Rayon Corpn where there was no special contract, it was no defence to show that there
was no negligence on the part of the carrier. For example, in G.M Roadways Co vs. P.G.
Industries copper wires were handed over to a transport company at Calcutta to be conveyed
to Tatanagar. The contract provided that the goods were received wholly at the risk of the
owner. A part of the consignment was stolen en route probably with the connivance of the
drivers. This being a criminal act on the part of the carrier’s servants, the carrier was held liable
notwithstanding that he had agreed to carry the goods only at the owner’s risk.
EXEMPTIONS FROM LIABILITY.
That being the general principle of liability, exceptions have been admitted. Just as the principle
of absolute liability is a tradition, the exceptions are also a part of the same tradition. These
exceptions do not have the statutory force in India because they are not stated in any section of
the Carriers Act. But they have become a part of our law by virtue of the frequent declarations
by the courts, including the Supreme Court, that English common law applies to common
carriers in India with all its exceptions except as modified by the Carriers Act. The exceptions
are as follows:
1.) Act of God and inevitable accident
A carrier is not liable for any loss or destruction of the goods where such loss or destruction is
due to an “Act of God” occurring without the intervention of human forces.
In Nugent vs. Smith, the defendant, a common carrier by sea from London to Aberdeen,
received from the plaintiff a mare to be carried to Aberdeen on hire. In the course of the voyage
the ship encountered rough weather and the mare received such injuries that she died. The jury
found that the injuries were caused partly by more than ordinary bad weather, and partly by
conduct of the mare herself by reason of fright and consequent struggling. It was held that the
defendant was not liable for the death of the mare. “The carrier does not insure against the
irresistible act of nature, nor against defects in the thing carried itself; if he can show that either
the act of nature or the defect of the thing itself, or both taken together, formed the sole, direct
and irresistible cause of the loss, he is discharged.
In order to show that the cause of the loss was irresistible it is not necessary to prove that it was
absolutely impossible for the carrier to prevent it, but it is sufficient to prove that by no
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reasonable precaution under the circumstances it could have been prevented. Even where the
damage has been caused by an excepted peril, the carrier would have to show that there was no
subsequent aggravation of the damage by his negligence.
The Court further held that a common carrier is not liable for any accident as to which he can
show that it is due to natural causes, directly and exclusively, without human intervention, and
that it could not have been prevented by any amount of foresight and pains and care reasonably
to be expected from him.
Even where the damage has been caused by an excepted peril, the carrier would have to show
that there was no subsequent aggravation of the damage by his negligence.
The Kerala High Court faced a problem of this kind in R.R.N. Ramalinga Nadar vs. V.
Narayana Reddiar. The plaintiff booked 18 bags of green gram with the defendant for
transportation from Kanyakumari to Quilon in one of his lorries. The lorry was waylaid by a
jatha while it was just only 1 ½ miles from Quilon and the unruly mob which formed the jatha
robbed the goods. The jatha was being taken out as a part of the food agitation. The agitators
needed food and they jumped upon the lorry which carried it. The carrier stood as a silent
spectator to see the irresistible happening. The defendant being common carrier by road, he
could be protected from liability only if the exception relating to act of God applied. Holding
the carrier liable, Poti J refused to agree that “all inevitable accidents must be taken as acts of
God,”. He said: “Some of the well-known instances of acts of God are the storms, the tides and
the volcanic eruptions... Accidents may happen by reason of the play of natural forces or by
intervention of human agency or by both. ...But it is only those acts which can be traced to
natural forces and which have nothing to do with the intervention of human agency that could
be said to be acts of God.”
In the subsequent case of Orient Road Lines v M.B. Mohammad Hassan Sahib & Co, the
same High Court relied heavily upon this case to hold that a road accident is generally out of
the category of things happening on account of natural forces. Accordingly, it was no act of
God that a speeding bus coming from the opposite direction dashed against the lorry head on.
It was pointed out by Lord Mansfield in Forward v Pittard, that all causes of inevitable
accident— fortuitus—may be divided into two classes— (1) those which are occasioned by the
elementary forces of nature unconnected with the agency of man or other cause, and (2) those
which have their origin either in the whole or in part in the agency of man, whether in acts of
commission or omission, of nonfeasance or of misfeasance, or in any other cause independent
of the agency of natural forces. It is obvious that it would be altogether incongruous to apply
the term ‘Act of God’ to the latter class of inevitable accident. It is equally clear that storm and
tempest belong to the class to which the term ‘act of God’ is properly applicable.
In Halsbury’s Laws of England, Act of God is discussed as:
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An act of God in the legal sense of the term, may be defined as an extraordinary occurrence or
circumstance which could not have been foreseen and which could not have been guarded
against; or, more accurately, as an accident due to natural causes, directly and exclusively
without human intervention, and which could not have been avoided by any amount of
foresight and pains and care reasonably to be expected of the person sought to be made liable
for it, or who seeks to excuse himself on the ground of it.
The occurrence need not be unique, nor need it be one that happens for the first time; it is
enough that it is extraordinary, and such as could not reasonably be anticipated. The mere fact
that a phenomenon has happened once, when it does not carry with it or import any probability
of an occurrence (when in other words, it does not imply any law form which its recurrence
can be inferred) does not prevent that phenomenon from being an act of God. It must, however,
be something overwhelming and not merely an ordinary accidental circumstance, and it must
not come from the act of man.
In General Traders Ltd v Pierce Leslie (India) Ltd, a Full Bench had occasion to consider
the plea of the defence of act of God, in a suit for damages due to shortage of property carried
by ship. A defence of act of God was raised on the ground that goods had to be jettisoned due
to sudden deterioration of weather. It was not made out that the tempest or gale in the sea was
so heavy or so unprecedented that sailors could not have taken precautionary measures with
reasonable foresight and in those circumstances the court held that it was not established that
loss was caused as a result of “act of God”.
Where damage was done to a cargo by water escaping through the pipe of a steam boiler, in
consequence of the pipe having been cracked by frost, it was held that this was not an act of
God, but negligence on the part of the captain in filling his boiler before the time for heating
it, although it was the practice to fill overnight when the vessel started in the morning. [Siordet
vs. Hall]
Where the goods were put in a boat which was towed by steam vessel to a pier to take in
passengers and had to be twice stopped for another vessel to leave the pier and in the second
stoppage, the tide overturned it, it was held that the damage was not caused by the act of God
and the carrier was liable. “The act of God means something overwhelming, and not merely an
accidental circumstance."[Oakley vs. Portsmouth & Ryds Steam Packet Co.]
2.) National enemies
The second defence available to a carrier is the act of the hostile foreign enemies. A carrier is
not liable for loss or damage caused by alien enemies, whether they be persons belonging to an
enemy country or the enemy state itself. This kind of risk usually materializes during times of
war. If, for example, a ship or a lorry on its way is torpedoed or bombarded the carrier will not
be liable for the consequences.
But if the war intervenes on account of something wrong on the part of the carrier himself, he
will not be allowed this defence. For example, in James Morrison & Co Ltd v Shaw, Savill
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and Albion Co Ltd, a ship touched a port which was not on its customary route so that the
deviation increased the voyage by about fifty miles and when it was just only seven miles away
from its destination it was torpedoed by a German submarine and sank with her cargo. The
carrier was not permitted to plead the defence of King’s enemies. Swinfen Eady LJ said: “The
question is whether the defendants are protected from liability as carriers by the fact that the
loss occurred through the King’s enemies. If they, as carriers, were duly performing their
contract of carriage, they would not be liable for loss occasioned by the King’s enemies. But
they were breaking their contract. They are quite unable to show that the loss must have
occurred in any event, whether they had deviated or not.”
3. Inherent vice or defects
A common carrier is not liable for an injury to goods caused by an inherent defect or vice in
the goods themselves. Thus, in Blower vs. Great Western Railway Co., where a bullock was
consigned with a railway company and it escaped by its own exertions and not due to any
negligence and was killed, the railway company was held not liable.
In Lister vs. Lancashire and Yorkshire Railway Co., a railway company contracted with the
plaintiffs to carry for him an engine from his yard to a neighbouring town on their railways.
The engine was on wheels and fitted with shafts to allow of its being drawn by horses. While
the defendants were drawing the engine with their horses to the railway station one of the shafts,
owing to its being rotten, broke, the horses took fright and upset the engine, which was
damaged. The defective condition of the shaft was not known to either party, and could not
have been discovered by any ordinary examination. It was held that as the engine was not in
fact fit to be carried in the way in which it was intended to be carried, and the damage resulted
in consequence of that unfitness, the defendants were excused.
For the same reason, a carrier was held not liable when he was carrying wine in pipes and one
of them burst owing to the wine being already on the ferment, this being an inherent
development in the goods themselves. [Farrar vs. Adams].
4.) Improper or bad packing
If the goods are lost or damaged on account of improper, insufficient or defective packing, the
carrier is not liable. Where goods are delivered to a common carrier for carriage insufficiently
packed and are damaged in the course of the transit, the carrier’s knowledge of their condition
at the time of their receipt will not preclude him from setting up as a defence that the damage
was due to the insufficient packing.
This was pointed out in Gould v South Eastern and Chatham Railway Co, a glass show case
was consigned with a railway company. The case was not packed in a manner that the brittle
nature of the goods demanded, and though the company knew this, it was not held liable when
the case was damaged solely on account of its insufficient packing.
5.) Justified Delay
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A common carrier of goods is not, in the absence of a special contract, bound to carry within
any given time, but only within a time which is reasonable, looking at all the circumstances of
the case, and he is not responsible for the consequences of delay arising from causes beyond
his control.
For example, in Sims & Co. v Midland Railway Co., perishable goods were consigned, no
time for delivery being fixed. During the transit, a general strike of railway workers, including
the defendants’ workers, broke out and the defendants were unable to forward the goods to
their destination. The goods becoming deteriorated, the defendants sold them. The carrier was
held not liable. The delay was caused by factors beyond their control and the delay caused the
deterioration.
In the case of Taylor vs. Great Northern Railway Co., delay was caused by an obstruction
caused by the conduct of another company which carried power lines over the railway line, the
railway company was held not liable.
6.) Misconduct or default of consignor.
It is the duty of the consignor to disclose to the carrier the true nature, quality and value of the
goods so that he may take precautions accordingly. The consignor is under a duty to disclose
the dangerous or unsafe nature of the goods. A formal disclosure may not be needed where the
goods are showing their nature by themselves or if the carrier is already aware of that fact. A
consignor who does not perform this duty may become liable to the carrier for damage to him
or to others whose goods are lost along with those of the negligent consignor.
Where the consignor’s address given by the consignor in the documents is wrong or defective
and delay is causing in advising him of the arrival, the carrier incurs no liability for such delay.
A carrier is relieved of his responsibility to take care of the cargo if the consignor undertakes
to protect his goods himself. Such an undertaking does not arise from the mere fact that the
cargo owner is himself accompanying the goods. Where a defect in packing is discovered en
route, it becomes the carrier’s duty to rectify the defect so as to prevent further damage to the
goods and if the goods were meant for forwarding they should not be forwarded in that
condition. [Beck vs. Evans]
Any loss or damage due to the consignor’s failure in this respect will not render the carrier
liable. It is, however, not the duty of the consignor in every case to disclose the contents of his
goods, particularly where the goods are not dangerous or are not within the Schedule.
If a box with money be delivered to a carrier, he is bound to answer for it, if he be robbed,
though it was not told to him what was in it. It is immaterial that the sender told the carrier of
some things in the box and not all, for he need not tell the carrier all the particulars in the box.
[Kenrig vs. Eggleston]
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The consignor should not commit any fraud upon the carrier. A consignor concealed money in
a consignment of tea. The money was stolen. The carrier was held not liable. The loss was due
to the consignor’s fraudulent practice. [Bradley vs. Waterhouse]
Goods of dangerous nature
Where the goods are of dangerous nature, that fact ought to be disclosed. For example, In Great
Northern Railway Co. vs. LEP Transport & Depository Ltd., where carboys of corrosive
fluid were consigned without disclosure and they leaked causing damage to other goods, the
sender was held liable.
Carriers do not profess to carry goods which are dangerous to persons or property. The
consignor warrants that the goods are safe to be carried in the ordinary way. The duty of
disclosure is owed by him unless the carrier is already aware of the fact. The liability of the
consignor to compensate the carrier for loss caused by dangerous goods would be there whether
or not the consignor himself was aware of the dangerous propensity of the goods. [C. Burley
vs. Stephen Corpn]. The expression “dangerous goods” would include goods which are
dangerous to the carrier’s vehicle or to other goods in the vehicle.
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MODULE 2
Carriage by Road – International Convention for Carriage of Goods by Road – C.M.R. –
Convention 1956 – Indian Carriers Act.
CARRIAGE BY ROAD
The Carriage of Goods by Road is regulated by the Carriage by Road Act, 2007. It came in
to force on March 1, 2011 superseding the erstwhile Carriers Act, 1865.The Carriage by Road
Rules, 2011 came in to force on the same day.
This act provides for the regulation of common carriers, limiting their liability and declaration
of value of goods delivered to them to determine their liability for loss, or damage to, such
goods occasioned by their negligence or criminal acts, their servants or agents and for
incidental matters. This act does not apply to the government or private carriers.
As per Section 2(a), a ‘common carrier’ is defined as “a person engaged in business of
collecting ,storing, forwarding or distributing goods to be carried by goods carriages under a
goods receipt or transporting for hire of goods from place to place by motorized transport on
road, for all persons undiscriminatingly and includes a goods booking company, contractor,
agent, broker and courier agency engaged in the door to door transportation of documents,
goods or articles utilizing the services of a person ,either directly or indirectly ,to carry or
accompany such documents ,goods or articles but does not include the government.”
Private carrier-A private carrier is distinct from a common carrier as it has the discretion to
refuse to sell its services. A Private carrier does not make a general offer to carry goods and
enters into a contract with other parties to carry goods on mutually agreed terms.
Under Sec.8, Every consignor is required to issue a goods forwarding note’ which would
declare interalia value and nature of the consignment. Consignor is responsible for the
correctness of the particulars in the goods forwarding note and is liable to indemnify the
common carrier for any loss or damage suffered by him by reason of incorrectness or
incompleteness of the particulars on the note.
As per section 10 of the act, the liability of a common carrier for loss of, or damage to any
consignment, shall be limited to ten times freight paid or payable (as per rule 12 of the Carriage
by road rules, 2011) having regard to the value, freight and nature of goods, documents or
articles of the consignment, unless the consignor or any person duly authorized in that behalf
has expressly undertaken to pay higher risk rate fixed by the common carrier, under Section
11.
As per section 10(2), for any delay in delivery up to the mutually agreed period, the liability is
limited to the freight charged.
Under Section 12, a common carrier is liable to the consignor for the loss or damage to any
consignment, where such loss or damage has arisen on account of any criminal act of the
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common carrier, or any of his servants or agents. The plaintiff does not bear the onus to prove
such negligence or criminal act.
Sec 15 provides for common carriers right to sell the goods in case of consignor’s default to
take delivery of the goods. In case of nonperishable goods, a prior notice of 30 days is required
before the common carrier can exercise his right to sell.
Section 16 provides that a prior notice by the consignor to the common carrier for loss or
damage is mandatory for instituting any suit or other proceedings, such notice should be served
with in a period of 180 days from the date of booking the consignment.
Under section 17 of the Act, a common carrier is responsible for the loss, destruction, damage
or deterioration in transit or non-delivery of any consignment entrusted to him for carriage,
arising from any cause except acts of god, war, riots and civil commotion, arrest, restraint or
seizure under legal process, or an order, restriction, or prohibition imposed by the government.
However, even in above cases, common carrier is required to exercise due diligence and care
to avoid such loss, destruction, damage or deterioration.
INTERNATIONAL CONVENTION FOR CARRIAGE OF GOODS BY ROAD –

C.M.R. – CONVENTION 1956
The CMR Convention (full title Convention on the Contract for the International Carriage
of Goods by Road) is a United Nations convention that was signed in Geneva on 19 May
1956. It relates to various legal issues concerning transportation of cargo by road. It has been
ratified by the majority of European states. As of February 2017, it has been ratified by 44
states.
"CMR" is an abbreviation of the French title of the convention: Convention relative au contrat
de transport international de marchandises par route.
Based on the CMR, the International Road Transport Union (IRU) developed a standard
CMR waybill. The CMR waybill is prepared in three languages. On the back is the text again
in three languages. This aids the waybill in being accepted and recognised throughout Europe.
Checked by customs and police, a transport document must be present when the shipment is
transported. The document itself is not prescribed; there is a minimum of information required
on the CMR. If hazardous substances are being shipped, some additional information is
required, as described in ADR.
This consignment is completed by the sender. The consignment should only be completed with
a ballpoint pen, typewriter or computer. The driver who uses the consignment should be
familiar with the consignment, and with the waybill, able to inform the recipient about the
importance of the various topics on the waybill.
As of the 27th of May 2008, according to an additional protocol to the CMR-convention, it is
also possible to use an updated electronic consignment note – eCMR. As of February 2017,
several solutions are available. ITD, Trade association for the Danish road transport of goods
has developed a solution; the eCMR waybill. The eCMR is also available on the market in
France, Spain and the Netherlands.
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First cross-border usage of eCMR took place on 19 January 2017, between Spain and France
supported by ASTIC (Asociación de Transporte Internacional por Carretera) and FNTR
(Fédération Nationale des Transports Routiers).
On 24 February 2017, UN reaffirmed its support to eCMR.
The CMR consignment consists of the following parts:
1. red printing for sender

2. blue printing for receiver
3. green imprint on carrier
4. black print on second carrier (if present)
CMR, officially entitled the Convention on the Contract for the International Carriage of Goods
by Road, was devised by the United Nations Economic Commission for Europe (ECE) and
agreed on May 19, 1956, becoming operative on July, 1961 and effective in the UK on October
19, 1967 under the Carriage of Goods by Road Act 1965.
The convention applies to every contract for the carriage of goods by road in vehicles for
reward when the place of taking over the goods and the place of designated delivery are situated
in two different countries of which at least one is a contracting party.
CMR would not apply (exemptions) in the following cases:
1. Postal despatch;
2. Funeral consignments;
3. ''Furniture'' removals (generally accepted to mean household removals);
4. Movement of own goods;
5. UK-Channel Islands traffic (the Channel Islands are not separate countries for CMR
purposes).
Criteria for application of the CMR Convention to carriage of goods

Cumulative conditions (Article 1): • At least one of the two countries (country of taking over
of the goods or the country designated for delivery of the goods) must be a signatory party to
the CMR Convention • The place of taking over of the goods and the place designated for
delivery must be two different countries • The carriage of goods must be performed for a person
other than the carrier (i.e. carriage for financial reward) • At least one portion of the transport
must be carried out by a road vehicle • These conditions are not applicable to funeral
consignments, postal carriage or furniture removals.
Application to other modes
If the vehicle containing the goods is transported over part of the route by rail, sea or inland
waterway (or technically by air as well) and the goods are not unloaded from the road vehicle,
the CMR will continue to apply to the entire transit. However, if the goods are lost, damaged,
or delayed while the vehicle is being carried by the other mode of transport by an event which
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could only occur through use of that other mode, the liability of the road carrier will be
determined by any national or international mandatory law applicable to that other mode. If
there is no such mandatory law, the terms of the CMR will continue to apply. Any journey
from the UK by road at present necessarily involves a sea or rail journey. The CMR continues
to apply nonetheless. It is, however, arguable that there is no mandatory law applicable to car
ferry operators (because there is no bill of lading issued under Hague-Visby Rules) and that
the road carrier's liability would, therefore, be determined according to the CMR and not
maritime law. However, this has still not been in the courts and it is often the practice to allow
road carriers to rely on Hague-Visby Rules provisions in relation to losses occurring at sea.
As per Art 2 it applies to combined transport where either Rail or inland waterways is taken as
another mode of transport. CMR convention shall only be applied when the loading unit is
separated from the lorry.
Application to containers The CMR applies to carriage by road in "vehicles". "Vehicles"

include motor vehicles, articulated vehicles, trailers and semi-trailers but not containers. An
ISO container constitutes "goods" and not a vehicle, and the CMR will not always apply to the
movement of containers between the UK and the Continent. If the container remains "on
wheels" throughout the transit, the CMR will apply, but if it is lifted off at a port or rail terminal
and carried separately by rail or sea this will break the connection with the CMR. It should be
noted, however, that even where the CMR does not apply by law, the parties can agree to apply
its terms by contract and this is done by some operators.
Vicarious responsibility of the carrier

As per Art 3 the carrier shall be responsible for the acts of omission of his agents and servants
and other persons of whose services he makes use for the performance of the carriage, when
such agents, servants or other persons are acting within scope of their employment.
Goods Consignment Note

The goods Consignment Note (GCN) is prepared on the basis of Forwarding Note. The owner/
consignor who intends to transport the goods by road is required to execute a document called
forwarding note.
If the freight rate and others is acceptable by consignor than forwarding note is accepted by the
carrier and contract is deemed to have been concluded.
Documentary requirements: the CMR consignment note
The CMR states that the contract must be confirmed by the making out of a consignment note.
However, the absence or loss of such a note will not prevent the Convention provisions from
being applied. Certain information must be shown in the note.
There is no specific format for the note, but it is usual to use an aligned note on sale from
various sources. The CMR does not state clearly who must make out the note and in practice it
is often made out by the road carrier. However, most of the information relates to the exporter,
who is made responsible for the accuracy of that information, and there is much to be said for
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the exporter making out the note. This also prevents the common but extremely undesirable
practice of the note being made out well after the goods have started on their journey and
sometimes by someone who is not the CMR first carrier. Where the carrier does enter the
information, he does so as agent for the sender, who will be liable for any inaccuracies in the
information shown.
Number of copies The CMR states that the note must be made out in three original copies.
The first is for the exporter, the second accompanies the goods and the third is retained by the
carrier. The CMR note is not a document of title but it has great value as evidence and copies
of the note should ideally be retained for at least one year.
Reservation by the carrier When the carrier takes over the goods he should check:
• The accuracy of the statements in the CMR consignment note as to the number of
packages in the consignment and their marks and numbers; and
• The apparent condition of the goods and their packaging.
Where he has no reasonable means to check, he must protect himself by noting reservations on
the consignment note. He should also note anything which is apparently suspect about the
goods. If the carrier fails to make such reservations, it will be presumed, unless the contrary is
actually proved, that the number of packages was accurately stated and that the goods appeared
to be in good condition.
Responsibilities of the exporter/importer
The exporter will be responsible for:
• Accuracy of the particulars in the consignment note. The exporter is legally liable to
indemnify the carrier if the particulars shown are inaccurate. He should, therefore,
always either make out or supervise the making out of the note.
• Defective packaging of the goods. The exporter is legally liable for all consequences of
defective packing unless the defect was apparent or known to the carrier when he took
over the goods and he failed to make reservations.
• Making available any documents required for Customs.
• Making claims within set time-limits. In the case of apparent damage, notice must be
given (preferably by the importer); where damage is non-apparent notice must be given,
in writing, within seven days of delivery, not counting Sundays and public holidays. If
notice is not given in time, the onus of proving that the carrier damaged the goods will
shift to the exporter/importer. In the case of delay, notice must be given within 21 days.
There is an absolute time bar on all claims not brought to court within one year (three
years if wilful misconduct is alleged).
Dangerous Goods The exporter must inform the carrier of the exact nature of the danger and
precautions to be taken in carrying the goods, and this information should normally be shown
in the CMR note. The note must also show the generally recognised description of the goods.
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If the exporter fails to notify the carrier so that he is unaware of the dangerous nature of the
goods he may unload, destroy or render the goods harmless without liability, and the exporter
becomes responsible for all loss, damage or expense arising from carriage of the goods.
Responsibility of the shipper for complete for customs clearance

Art 11 for the customs or other formalities which have to be completed before delivery of the
goods, the sender shall attach the necessary documents to the Consignment Note or place them
at the disposal of the carrier and shall furnish all the information which he requires.
Right of the Consignor to change the place of delivery or the consignee

As per Article 12 the consignor can change the place of delivery. The right cease to exist when
the second copy of the Consignment Note is handed to the consignee or when the Consignee
exercises his right under Article 13.
Right of the Consignee

After arrival of the goods at the place designated for delivery, the consignee shall be entitled
to require the carrier to deliver to him, against a receipt, the second copy of the Consignment
Note and goods.
Procedure of settling the claims

CMR provides the wide jurisdictions for settling such claims.
1. A claim must be filed be in writing within stipulated time (Seven days of delivery)
2. In case of non-delivery, the claim shall be filed within stipulated time (60 days after
reasonable time for effecting delivery)
3. Suits shall be filed in appropriate courts in stipulated time (nine months from the date of
notice in writing by the carrier)
Limits of Liability
Limits of liability is 8.33 Special Drawing Rights per Kg of the goods lost or destroyed and the
even of delay freight charges payable for the goods delayed.
Liabilities of the road carrier under the CMR
The carrier is liable for loss, damage or delay to the goods between the time when he takes
charge of them and the time they are delivered. He is also generally liable for the acts of his
servants, agents and subcontractors.
There are, however, a number of excepted perils which, if proven, provide the carrier with a
defence to a claim:
1) Wrongful act or neglect of the claimant.

2) Instructions of the claimant given otherwise than as the result of the carrier’s own
wrongful act or neglect.
3) Inherent vice of the goods.
4) Circumstances which the carrier could not avoid and the consequences of which he was
unable to prevent.
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A collision entirely without fault on the part of the carrier might come within the exception,
but adverse weather conditions or theft would be unlikely to do so as these perils can be guarded
against even if the cost of doing so is high. The defectiveness of a vehicle would never come
within the exception.
There are some further defences which apply only in special circumstances. If the carrier
establishes that the loss or damage could have been caused by one of the circumstances set out
below, it will be presumed that it was so caused unless the exporter or importer proves
otherwise:
1) Use of open un-sheeted vehicles if their use has been expressly agreed and mentioned
in the consignment note.
2) Lack of, or defective condition of, packing.
3) Handling, loading, stowage, or unloading of the goods by the exporter, the importer or
their agents.
4) The nature of certain goods which particularly exposes them to loss or damage through
breakage, rust, desiccation, leakage, normal wastage or the action of moths or vermin
(this defence cannot, however, be invoked where vehicles are specially fitted for
temperature-controlled operations).
5) Insufficiency or inadequacy of marks or numbers on the packages.
6) The carriage of livestock (provided the carrier shows he took all normal precautions
and followed any special instructions given to him).
The carrier will be liable for delay when:
1) The goods are not delivered within an agreed time-limit; or

2) If there is no agreed time-limit, when the time taken exceeds the time it would be
reasonable to allow (in the case of Groupage, time will be allowed for the making up
of a full load).
Compensation payable under the CMR
Compensation is calculated in relation to the value of the goods at the time and place at which
they were accepted for carriage and the value is based either on the commodity or market price
or, where there is no such price, the normal value of similar goods. Most Western European
states have ratified a protocol to the CMR which introduces compensation limits based on 8.33
Special Drawing Rights per kilo of gross weight of the goods lost or damaged. The value of
the SDR against sterling and other major currencies is set out each day in the Financial Times.
The value of 8.33 SDRs is currently (as of June 2018) around Rs. 798.28 or £ 10.06.
In addition to compensation for loss or damage, the carriage charges, customs duties and other
charges incurred in respect of the transit are refundable in full, in the case of total loss or pro
rata in the case of partial loss.
Where the exporter or importer proves that he has suffered loss through delay, an amount not
exceeding the carriage charges may be recovered.
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Higher compensation is possible under the Convention if the exporter makes a declaration of
value, but the carrier is entitled to require a higher freight rate. The declaration must be shown
in the consignment note. It is also possible to declare a special interest in delivery (to cover
consequential losses where goods are not available at destination as agreed), but again the
carrier is entitled to require a higher rate.
If the goods are not delivered within 30 days of an agreed time-limit, or in any other case within
60 days, a claimant can treat the goods as lost and claim compensation. Although the limits set
out above apply both to claims made in contract or in tort, the carrier will lose the benefit of
the CMR defences and limits of liability if the loss is caused by wilful misconduct. There is a
case where an accident caused by a driver who had grossly exceeded EU drivers’ hours rules’
limits was held to be attributable to wilful misconduct.
Aspects of the CMR of particular concern to freight forwarders
A freight forwarder who agrees to move a consignment to the Continent by road as a principal
(even if he does not intend to carry it himself) is almost certain to be found to be the first carrier
under the CMR, and, therefore, may be sued with full CMR liabilities. It is not clear whether
the CMR confers a lien, and if it does it is only a very limited one. It is, therefore, advisable to
trade under general conditions which confer a general lien as is the case, for example, under
the 2000 BIFA Conditions.
If cash on delivery work is accepted under the CMR, the carrier is absolutely liable if money
is not paid over. It is extremely ill-advised for a forwarder who does not control the entire
operation to accept such obligations.
If a written claim is submitted to a carrier, it suspends the running of time until it is formally
rejected in writing. Forwarders should note that it does not, therefore, always pay to "sit" on
claims. The forwarder will be the first carrier under the CMR. A successive carrier may well
be responsible for loss or damage which occurs, but he becomes liable only if he has accepted
the goods and the CMR consignment note. If there is no CMR note it would appear that no
rights can be enforced against successive carriers. In these circumstances the forwarder, as first
carrier, could bear the entire loss even though he was not responsible for its occurrence. It is,
therefore, of vital importance to ensure that a CMR note is made out and that the name or stamp
of all successive carriers appears in the note in the box provided. It is also extremely important
that any obligations which the forwarder has accepted, such as an increase in the limit of
liability, should be recorded in the CMR note as they will otherwise not bind any successive
carrier although they might be enforceable against the forwarder.
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MODULE 3
Carriage by Rail – Railways Act – Liability of Railway Company for Loss of Goods –
Exemption from Liability – Railway Claims Tribunal – Role of Consumer Courts.
CARRIAGE BY RAIL
The Railway Act, 1989 came into force on July 1, 1990 superseding the erstwhile Indian
Railway Act, 1890. Carriage of Goods has been dealt with in inter alia Chapter IX of the Act
The Act provides for inter alia responsibilities, duties and liabilities of the Indian railway
administration as a carrier of goods, provision for rates and procedure required to be complied
with and redressal mechanism for grievances related to carriage of goods.
The Railway Claims Tribunal Act, 1987 provides for the establishment of a Railway Claims
Tribunal for enquiring into and determining claims against a railway administration for loss,
destruction, damage, deterioration or non-delivery of animals or goods entrusted to it and
connected matters.
This Act has an overriding effect. Section 15 read with Section 13 of the Railway Claims
Tribunal Act, 1987 bars the jurisdiction of civils courts.
By virtue of the above sections read with Section 11 of the Commercial Courts Act, 2015,
Commercial Courts will not have jurisdiction over disputes arising out of carriage of goods by
railway administrations.
Summary of More Important Provisions The carriage of goods by rail is regulated by the
Railways Act, 1989. Some of the more important provisions contained in the Act are
summarised below:
1. Maintenance of rate books, etc., for carriage of goods (Section 61). Every railway
administration shall maintain, at each station and to such other places where goods are received
for carriage, the rate books or other documents which shall contain the rate authorised for the
carriage of goods from one station to another and make them available for the reference of any
person during all reasonable hours without payment of any fee.
2. Provision of rate risks (Section 63). Where any goods are entrusted to a railway
administration for carriage, such carriage shall, except where owner’s risk rate is applicable in
respect of such goods, be at railway risk rate. Any goods, for which owner’s risk rate and
railway risk rate are in force, may be entrusted for carriage at either of the rates and if no rate
is opted, the goods shall be deemed to have been entrusted at owner’s risk rate.
3. Forwarding note (Section 64). Every person entrusting any goods to a railway
administration for carriage shall execute a forwarding note in such form as may be specified
by the Central Government. The consignor shall be responsible for the correctness of the
particulars furnished by him in the forwarding note. He shall indemnify the railway
administration against any damage suffered by it by reason of the incorrectness or
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incompleteness of the particulars in the forwarding note.
4. Railway receipt (Section 65). A railway administration shall issue a railway receipt in such
form as may be specified by the Central Government:
(a) in a case where the goods are to be loaded by a person entrusting such goods, on the
completion of such loading; or
(b) in any other case, on the acceptance of the goods by it.
A railway receipt shall be prima facie evidence of the weight and the number of packages stated
therein.
Where the goods have to be loaded by the party, on the completion of such loading and, in
other cases, on acceptance of the goods, the railway administration has to issue a railway receipt
in such form as may be specified by the Central Government.
Implied acceptance of goods as bailee

Where a station master allowed a consignor to place his goods on the railway premises without
telling him that he was doing so at his own risk, neither did he ask him to take away his material,
it was held that there was an implied acceptance of the goods constituting to railway as a bailee.
[Munna vs. EI Railway]
Railway receipts to be prima facie evidence

A railway receipt is prima facie evidence of the weight and the number of packages as stated
in it. [Mahavir Traders vs. Divl Railways Manager] But where the consignment is in wagon
load or train load and the weight or the number of packages is not checked by an authorized
railway servant and a statement to the effect is recorded in the railway receipt, the burden of
proving the weight or the number of packages would be on the consignor, consignee or the
endorsee.
Delivery of goods against railway receipt or otherwise [S. 76]
The railway administration is under a duty to deliver the consignment on the surrender of the
relevant railway receipt. Where, however, the railway receipt is not forthcoming and the person
who is claiming the goods is able to convince the railway administration that he is entitled to
the goods, the goods may be delivered to him in the prescribed manner.
5. Carriage of dangerous or offensive goods (Section 67). No person shall take with him on
a railway or require a railway administration to carry such dangerous or offensive goods, unless
(i) he gives a notice in writing of their dangerous or offensive nature to the railway servant
authorised in this behalf; and (ii) he distinctly marks on the outside of the package containing
such goods their dangerous or offensive nature.
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What goods are dangerous or offensive
Where the goods belong to any category of dangerous or offensive goods as may be prescribed
under the Act, every person is charged with the duty of not carrying with him or to require the
administration to carry such goods unless the procedure prescribed by the section is complied
with.
Notice of dangerous nature
A person carrying dangerous or offensive goods with him is under an obligation to give a notice
in writing to an authorized person of the nature of the goods. Similarly, a person handing over
goods to the railway for carriage has to mark on the package that the goods are of dangerous
or offensive nature and also to give a similar notice in writing. If any railway man has reason
to believe that the goods contained in a package are of dangerous or offensive nature but notice
of that fact has not been given, he may cause such package to be opened for the purpose of
ascertaining their contents. Such goods may be stopped in or removed from transit if notice of
their dangerous character was not given.
The requirements of this section are not to be construed to derogate from the provisions of the
Indian Explosives Act, 1884 or rules or orders made thereunder or goods carried by soldiers,
etc., under Government orders.
Goods declared to be offensive in nature. —For purpose of the Act, the follow] ing goods
shall be the goods of offensive nature, namely: —
1) Dried Blood;
2) Corpses;
3) Carcasses of dead animals;
4) Bones excluding bleached and cleaned bones;
5) Municipal or street sweepings or refuse;
6) Manures of any kind including Mycelium except chemical manures;
7) Rags, other than oily rags;
8) Any decayed animal or vegetable matter;
9) Human Ashes;
10) Human Skeletons;
11) Parts of human body.
6. Liability of railway administration for wrong delivery (Section 80). Where a railway
administration delivers the consignment to the person who produces the railway receipt, it shall
not be responsible for any wrong delivery on the ground that such person is not entitled thereto
or that endorsement on the railway receipt is forged or otherwise defective.
7.) 81. Open delivery of consignments. —Where the consignment arrives in a damaged
condition or shows signs of having been tampered with and the consignee or the endorsee
demands open delivery, the railway administration shall give open delivery in such manner as
may be prescribed.
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Remedy against refusal of open delivery
Under Section 72 (1890 Act) (prior to its amendment in 1961) a consignee could not demand
open delivery. If he refused delivery on the ground that open delivery was not given, his claim
for damages for non-delivery was not sustainable. Onus was on the plaintiff to prove quantum
of damages. Reading Sections 72 and 74-D (1890 Act) (prior to Amendment in 1961) where
goods in transit got damaged, but plaintiff did not call for disclosure of facts relating to transit,
there was no duty cast on the bailee to disclose as to how the consignment was dealt with during
transit. In the absence of duty to disclose, no penalty lay for non-disclosure nor there was any
scope for drawing adverse inference against the railway under Section 114(g) Evidence Act,
1872.
In another case the railway receipt had a clause that the claimant in case of loss or damage to
goods should at the earliest time give in writing information about the nature of the missing or
damaged articles. But on this account, he could not claim open delivery. The railway may well
refuse such open delivery. Where it gave gratuitously an open delivery, they could not be held
liable for delay in granting this gratuitous open delivery. It was not, however, the plaintiff’s
case here, that the damage was due to the period of delay.
8.) Railway's general lien [S. 83]

Lien for freight or any other sum due. — (1) If the consignor, the consignee or the endorsee
fails to pay on demand any freight or other charges due from him in respect of any consignment,
the railway administration may detain such consignment or part thereof or, if such consignment
is delivered, it may detain any other consignment of such person which is in, or thereafter
comes into, its possession.
(2.) The railway administration may, if the consignment detained under sub-section (1) is—
• perishable in nature, sell at once; or
• not perishable in nature, sell, by public auction, such consignment or part thereof, as
may be necessary to realise a sum equal to the freight or other charges:
Provided that where a railway administration for reasons to be recorded in writing is of the
opinion that is not expedient to hold the auction, such consignment or part thereof may be sold
in such manner as may be prescribed.
(3) The railway administration shall give a notice of not less than seven days of the public
auction under clause (b) of sub-section (2) in one or more local newspapers or where there are
no such newspapers in such manner as may be prescribed.
(4) The railway administration may, out of the sale proceeds received under sub-section (2),
retain a sum equal to the freight and other charges including expenses for the sale due to it and
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the surplus of such proceeds and the part of the consignment, if any, shall be rendered to the
person entitled thereto.
A general lien has been granted to railways under this section. The goods in respect of which
the charges are due may be held under this right or, if they have been delivered, lien may be
exercised on any consignment belonging to the person in default.
Where delivery of the goods was withheld on the ground that re-weighment en route showed
that the goods were under weighed, it was held that the retention was not proper because the
re-weighment was not shown to have been done in accordance with applicable Rules. The
Railways were directed to deliver the consignment (iodized salt) and if it had been sold, to
refund the sale proceeds to the owner.
Sale of goods held under lien

A consignment held under this power may be sold at once if it is of perishable nature. In other
cases, it has to be sold by public auction. The sale should be of any such part of the consignment
as should be sufficient to realise the sum due. Where a public auction cannot be conveniently
organised, the goods may be sold in accordance with the prescribed rules.
If a public auction is to be held, the fact of it should be announced through one or more local
newspapers. If there are no such newspapers, announcement should be made in accordance
with prescribed rules. The railways should retain out of the sale proceeds the amount due
including the expenses of organizing the sale and handover the rest of the sale proceeds and
the rest of the goods to the person entitled to them.
9.) Unclaimed consignments [S. 84]
An unclaimed consignment includes goods of which delivery has not been claimed by any
person or a consignment which has been released from lien or which is the remaining part of
the goods after sale of the other part for releasing charges.
Power is given to the railway administration to dispose of a perishable consignment at once. In

other cases, a notice should be served upon the consignee if his name and address are known
and, if not, the notice should be given to the consignor. He should be required to remove the
goods within a period of seven days from the date of the receipt of the notice. Where such
notice cannot be served or there is no response from the side of the person on whom the notice
has been served, the goods may be sold by public auction announcing it in one or two local
newspapers or, if there are no such newspapers, with such publicity as has been prescribed
under the rules.
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RESPONSIBILITY OF A RAILWAY ADMINISTRATION AS A CARRIER OF

GOODS.
The responsibilities of the railway administration as carriers of goods and passengers are
defined by the Indian Railways Act, 1989. The provisions of Chapter XI which runs from
Sections 93 to 112 deal with the matter of responsibility.
Execution of forwarding notes [S. 64]
The section requires forwarding notes to be executed in all cases except in reference to goods
in respect of which it may be declared that no forwarding note shall be executed. The consignor
is charged with the responsibility of assuring correctness of the particulars and indemnifying
the administration against any damage caused by incorrect or incomplete particulars disclosed
in the forwarding note.
The section requires forwarding notes to be executed in certain cases. Such cases are grouped
under two categories in the section, namely, (1) where the goods or animals are to be carried
by a train meant only for carriage of goods; and, (2) where the goods are to be carried by any
other train and they are either to be carried at the owner’s risk or they are of perishable nature,
(or mentioned in the Second Schedule, of the old Act) or they are in a defective condition or
defectively packed, or they are explosives or other dangerous goods.
The railway administration with the approval of the Central Government can impose any
conditions and require such particulars to be disclosed as may be considered necessary. At
present three kinds of forwarding notes are in use:
• one for general merchandise;
• second for dangerous goods and
• third for the rest of the goods mentioned in the Second Schedule.
Burden of proof in cases of risk notes
These Risk Notes B and Z provided that where goods were carried at owner’s risk on specially
reduced rates, the owner agreed or undertook to hold the railway administration, “harmless and
free from all responsibility for any loss, deterioration or destruction or damage to all or any
such consignment from any cause whatever, except upon proof that such loss, destruction,
deterioration or damage arose from the misconduct on the part of the railway administration or
its servants.” This complete immunity for the railway is however subject to the proviso in the
risk note.
a) Non-delivery of the whole of a consignment packed in accordance with the instruction

laid down in the tariff or where there are no instructions protected otherwise than by
paper or other packing readily removable by hand and fully addressed where such non-
delivery is not due to accidents to train or to fire.
b) ... the railway administration shall be bound to disclose to the consignor how the
consignment was dealt with throughout the time it was in its possession or control and,
if necessary, to give evidence thereof before the consignor is called upon to prove
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misconduct, but if misconduct on the part of the railway administration or its servants
cannot be fairly inferred from such evidence, the burden of proving such misconduct
shall be upon the consignor.
Such a Risk Note came up for consideration before the Privy Council in Surat Cotton Spg &
Wvg Mills vs. Secy of State for India in Council, and the law was thus declared as to clause
(b) above noted: “In their Lordships’ opinion this obligation arises at once upon the occurrences
of either of case (a) or (b) and is not confined to the stage of litigation. Clearly one object of
the provision is to obviate, if possible, the necessity for litigation. On the other hand, the closing
words of the obligation clearly apply to the litigious stage. As to the extent of the disclosure, it
is confined to the period during which the consignment was within the possession or control of
the Railway Administration; it does not relate for instance to the period after the goods have
been removed from the premises. On the other hand, it does envisage a precise statement of
how the consignment was dealt with by the administration or its servants. The character of
what is requisite may vary according to the circumstances of different cases, but if the
consignor is not satisfied that the disclosure has been adequate* the dispute must be judicially
decided. As to the accuracy or truth of the information given, if the consignor is doubtful or
unsatisfied and considers that these should be established by evidence, their Lordships are of
the opinion that evidence before a court of law is contemplated and that as was properly done
in the present case, the railway administration should submit their evidence first at the trial.
The above declaration of the law by the Privy Council was accepted by the Supreme Court in
Union of India vs Mahadeolal Prabhu Dayal. Wanchoo J, delivering the unanimous opinion
of the court said: “With respect we are of opinion that this exposition of the law relating to Risk
Note B applies also to Risk Note Z and we accept it as correct.... We are of opinion that such
disclosure is necessary only where the consignor specifically asks the Railway to make such
disclosure. If no such disclosure is asked for, the administration need not make it before the
litigation. In the present case, there is no proof that any disclosure was asked for in this behalf
by the consignor at any time before the suit was filed. Therefore, if the railway did not disclose
how the consignment was dealt with throughout before the suit was filed it cannot be said to
have committed breach of this term of the contract. The disclosure envisages a precise
statement of how the consignment was dealt with by the railway or its servants. If the disclosure
is asked for before the litigation commences and is not given or the disclosure is given but it is
not considered to be sufficient by the consignor, the dispute has to be judicially decided and it
is for the court then to say if a suit is brought whether there has been a breach of the term of
the contract.”
In Juggilal Kamlapat Oil Mills vs. Union of India, a tank of oil was consigned under Risk
Note 2 from Kanpur to Calcutta where Health Authorities seized the oil as adulterated under
High Court orders and destroyed the same. There was thus no misconduct on the part of
railways and as such they could not be held liable for the loss under Risk Note 2. The seizure
was a statutory act. The consignor was aware of the seizure and was also a party to the
proceedings before the court for the destruction of the oil. No prejudice was caused to him by
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the failure of the Administration to give him notice of the seizure. Further, the question of lack
of notice was for the first time raised only before the Supreme Court.
GENERAL RESPONSIBILITY [S. 93]
The general principle of liability for loss or destruction of goods is laid down in Section 93.
The section runs as follows:
93. General responsibility of a railway administration as carrier of goods, —Save as

otherwise provided in this Act, a railway administration shall be responsible for the loss,
destruction, damage or deterioration in transit, or non-delivery of any consignment, arising
from any cause except the following namely: —
a) act of God;
b) act of war;
c) act of public enemies;
d) arrest, restraint or seizure under legal process;
e) orders or restrictions imposed by the Central Government or a State Government or
by an officer or authority subordinate to the Central Government or a State
Government authorised by it in this behalf;
f) act or omission or negligence of the consignor or the consignee or the endorsee or the
agent or servant of the consignor or the consignee or the endorsee;
g) natural deterioration or wastage in bulk or weight due to inherent defect, quality or
vice of the goods;
h) latent defects;
i) fire, explosion or any unforeseen risk:
Provided that even where such loss, destruction, damage, deterioration or non-delivery is
proved to have arisen from any one or more of the aforesaid causes, the railway administration
shall not be relieved of its responsibility for the loss, destruction, damage, deterioration or non-
delivery unless the railway administration further proves that it has used reasonable foresight
and care in the carriage of the goods.
Liability as common carriers
The general principle of liability laid down in the section is that the administration is liable for
any loss, destruction, damage, deterioration in transit or non-delivery of the goods arising from
any cause whatsoever. Thus, subject to the exceptions listed in the section, such as the act of
God, the administration has accepted the principle of absolute liability. The railways have been
equated with common carriers for the purposes of liability. They are liable to account for the
goods at all events unless they are able to prove that the loss falls within any of the exceptions
mentioned in the section. Even in such cases they will be liable unless they can prove that they
used reasonable foresight and care in the carriage of the animals or goods. [Punjab National
Bank vs. Beniprasad Maheshwari]
Prepared By
In Gwalior Rayon Silk Mfg (Weaving) Co. Ltd. vs. Union of India., where a consignment
of liquid caustic soda was lost in an accident to the goods train occurring because of a defective
wagon and the administration was not able to show when the train was last checked or what
caution or foresight was exercised to prevent the happening, they were held liable. Their burden
of proving that the accident occurred not on account of their negligence, but on account of
some unforeseen risk was not effectively discharged.
The responsibility imposed upon the railways is in respect of loss, destruction, damage,
deterioration in transit or non-delivery. Thus, the section exhaustively covers all types of
happenings with the goods while they are in transit. “Loss” means “disappearance” or the
failure of the railways to account as to what has happened to the goods and it is immaterial
whether it has been due to misappropriation, theft, misdelivery or any other cause whatsoever.
[Union of India vs. Meghraj]
The word “destruction” should also mean more or less the same thing, for loss may also be due
to destruction as much as it may be due to disappearance or wrong delivery. [G.I.P. Railway
Co. vs. Jitan Ram]
“Deterioration” should ordinarily mean “a change for the worse” in the goods themselves. But
there is a distinct cleavage of judicial opinion, one stream of which attempts to impute wider
meaning to the term “deterioration” so as to include loss or depreciation in the market value of
the goods due to delayed delivery. But this seems to be an unnatural extension. For, if the goods
are intact and the market value has been lost on account of the delay, the action should be for
loss caused by delay rather than for deterioration. Goods may, however, deteriorate in terms of
intrinsic value on account of delay.
This controversy was set at rest by the Supreme Court by its decision in Union of India vs.
Steel Stock Holders’ Syndicate. Here there was delay causing depreciation in terms of market
value but none in intrinsic value of the goods. Fazal Ali J adopted the natural meaning of the
word “deterioration” and said;
Having regard to the background and setting in which the word
“deterioration" occurs in Section 76 [now Section 95 of the Act of 1989)
of the new Act it seems to us that the Parliament intended that the word
should be (understood as it is) used in (the) ordinary parlance and in a
restricted sense so as to include within its ambit the actual physical act
of deterioration, i.e., the physical part of it, namely, the change for the
worse in the thing itself.
The principle of liability contained in this section was wholly recasted by the amendment of
1961 and that section has been reproduced in the form of the present Section 93 except for the
addition of the words “in transit”. Prior to this amendment the position of the railways was that
of a bailee under the Indian Contract Act, 1872 and the railways were, therefore, liable to take
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only reasonable care of the goods as defined in Section 151 of that Act. Liability would arise
only if there was proof of negligence. But now this position has been wholly reversed.
The railways must either deliver up the goods or be liable for their loss unless they are able to
prove that the circumstances of the loss fall within any of the exceptions mentioned in the
section and that it was not due to their negligence that those exceptional circumstances came
into operation.
Damages for fall in market price
The Kerala High Court in Union of India v P.K. Parameswaran held that the plaintiff is
entitled to damages based on the fall in market price between the due date of arrival and the
actual date of delivery. It is a direct damage for which the railway administration is liable under
Section 73 of the 1890 Act. Earlier the Patna High Court had held in Union of India vs Madan
Lal, that the bar of claim for damages “for loss of particular market” in clause (d) of Section
78, Railways Act [now S. 102(8) of the Act of 1989] does not relate to a claim for damages on
the ground of fall in market price. The plaintiff has, however, to prove the extent of loss.
Damage was caused to a load of cotton by fire and water. In such cases, the court said, the
assessment of loss is bound to be somewhat arbitrary and speculative.
Where the goods were lost on account of the negligence of employees and no evidence was let
in by the consignor at the destination about the market value of the goods, he was held entitled
to freight paid beside the cost price of the consignment. [Union of India vs. Radhakisan]
In another case, a consignment of bales of cotton was unloaded by the workers of the consignee
company; they were stacked outside the goodshed where there were guarded by the consignee’s
watchmen. The bales caught fire after 13 days of unloading. The court held that there was no
negligence on the part of the railways and the doctrine of res ipsa loquitur and Section 114,
Evidence Act, 1872 were not applicable. [UOI vs. United India Fire & General Insurance
Co. Ltd.]
Loss by theft, looting
A case which illustrates liability for loss by theft is the decision of the Supreme Court in Union
of India v Udho Ram &Sons though the case arose before the amendment of 1961 and the
railways were held liable for their failure to take the care of a bailee under Section 151, Contract
Act. The facts of the case are: A goods train which left Howrah was waiting at a signal at
Chandanpur which was somewhat notorious for railway thefts. During the 14-minute halt at
the signal at midnight one of the middle wagons was attacked by looters who removed a part
of the consignment. The wagon was properly riveted and sealed at Howrah and the train was
escorted by the railway protection police who were with the guard and therefore, did not know
what was happening to the rest of the train. The railways contended that the loss was due to
circumstances beyond their control.
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Holding the railways liable, Raghubar Dayal J observed: There is no evidence on record that
the railway protection police which escorted the train was adequate in strength for the purpose
of seeing that the goods were not interfered with in transit.... It may be true that any precautions
taken may not be always successful against loss in transit on account of theft, but in the present
case there is no evidence with respect to the extent of the precautions taken and what the
protection police itself did at the place where the train had to stop.
Shortage in consignment
Loading was done in a case on claimant’s site. Seals were put on top and bottom of tanker
wagons by the staff of claimant. Dip measurement was taken collectively by railway’s and
claimant’s staff. Transit risk became that of railways. Section 94 was not applicable as both the
seals were found to be broken. This spoke of railway negligence. The railways were held
responsible to pay compensation for loss to the complainant. [UOI vs. Indian Oil Corpn.]
Criminal misappropriation by employees

It has been held that the words “loss or destruction”, etc. also included loss occasioned by
criminal misappropriation of the consignment by an employee who was in charge of it.
[Balaram Harichand vs. Southern Maharata Railway Co. Ltd.]
Loss by wet in transit
An instance of responsibility for loss by wet in transit is to be found in Piramal Banwarilal

vs. Union of India. The facts of the case are: The consignment was of certain bags of dry
chillies. On arrival at the destination about 2/3 of the bags were found to be damaged by water.
The consignment was put in a leaky wagon. It was a cloudy day when the wagon was loaded
and, therefore, it was tested by a train examiner, but either he or his method was incompetent
so that the leaks which were visible at the destination could not be detected at the starting point.
The goods were booked at the owner’s risk and in such cases the railways are liable only upon
proof of negligence or misconduct. Holding the railways guilty of negligence, D. Pal J pointed
out that the use of the wagon to carry dry chillies without taking necessary and reasonable
precautions as to its watertight condition particularly when the weather was cloudy amounts to
serious negligence.
The learned judge cited the earlier decision of the Calcutta High Court in Moolji Sickka vs.
Dominion of India, where the use of a wagon to carry tobacco leaves during the monsoon
without taking necessary precautions was held to be negligence of a grave character and the
fact that water was entering into the wagon in large quantities was considered to be a case
amounting to misconduct.
In Union of India v Hukumchand, it was pointed out that the mere fact of rainwater entering
the wagon and causing damage could not fix the liability on the railways under Section 72,
Railways Act, 1890 as a bailee under Sections 151, 152 and 161, Indian Contract Act. The
Railways are not in the position of an insurer or common carrier. The duty of the Railways was
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to exercise proper care as is defined in Section 151. So, when the damage is due to natural
causes by percolation of rainwater during a long journey, the Railway is not liable in the
absence of proof that the wagon was defective and that the Railway servants were negligent.
Wider base of liability under the amended section
A case which seems to justify the statement to Parliament on the introduction of the amendment
of 1961 that by reason of the amendment the railways would become liable in many cases in
which it would not be liable before, is the decision of the Patna High Court in Union of India
v Chotelal Shewnath Rai though no liability arose on the peculiar facts of the case.
Oil was consigned in a tanker wagon. The plaintiff alleged that on arrival at the destination, the
groundnut oil was shorter by about half the quantity, and that the railway authorities, being not
cooperative, he had to estimate the loss by taking depth measurement of the tank. He proved
that the tank was leaking on arrival at the destination.
The court did not allow him to recover for the shortage. The court insisted that he should prove
what quantity he had loaded and that there was negligence on the part of the railways. His
statement as to quantity on the consignment form and the booking clerk’s acceptance of it on
the railway receipt were not considered to be sufficient proof of the quantity loaded. In
reference to the leakage it was held that the tanker was alright when loaded and that it
developed leaks on the way and that was on negligence on the railways’ part. In regard to the
plaintiff’s contention that he could prove negligence only when the railways showed as to how
they had handled the consignment in its transit, the court said that it being not a case of non-
delivery of the whole of the consignment, there was no burden of disclosure on the railways.
To the same effect is the decision of the Madhya Pradesh High Court in Mahabir Kirana
Bhandar v Union of India, where the goods were loaded on a wagon by the consignor himself,
the railway-men doing no checking. The railways was held not liable for shortage shown at the
destination.
Weight and contents mentioned in railway receipt
Where the railway receipt shows the contents and weight of the goods, the railways will not be
allowed to say afterwards that the receipt was issued recklessly. They will be accountable for
the acknowledged contents and weight unless they can show that there was fraud in connivance
with the consignor. [Mohan Lal vs. Union of India]
Right to sue
Ordinarily the right to sue lies in the consignor. But where the consignee has acquired interest
in the consignment, he too gets the right to sue. Railway receipt is a document of title. It is
transferable as such. The bona-fide transferee for valuable consideration gets all the rights
enshrined in the railway receipt. An example in point is the decision of the Delhi High Court
in Lalchand Madhav Das vs. Union of India. The facts of the case are:
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The plaintiff was the consignee of 564 baskets of mangoes. Reasonable time for transit and
delivery was five days. Railways consumed longer time than this. The consignment was
damaged. Railway authorities certified the damage as to the extent of 26 per cent. He sued for
this. The railways contended that he was a mere consignee and, therefore, had no right to sue.
The court found that the plaintiff was not a mere consignee. He had advanced money to the
consignor against the railway receipt and was his agent to sell on commission. Thus, he was
not a consignee simpliciter but had an interest in the consignment.
A railway receipt being a mercantile document of title, its endorsee gets a valuable right. He
can, not only take delivery of the goods covered by the receipt, but he can also give a complete
discharge. It follows that he is also competent to file a suit to recover damages in respect of the
loss of or damage to the goods. Thus, a commission agent consignee has been allowed to sue,
so also a wholesaler fruit agent who was an endorsee for valuable consideration.
In such a case the consignor may lose the right to sue, but he can sue if the property in the
goods has not passed to the consignee. The mere circumstance of the Railway Administration
admitting that damage had occurred would not entitle the consignee to obtain a decree for
compensation without proof of actual loss. The mere fact that the consignor is different from
the consignee does not necessarily pass title to the goods from the consignor to the consignee
and the question, whether the title to the goods has passed to the consignee has to be decided
on other evidence. [UOI vs. Parthasarathy Chetty]
Under Section 2(4), Sale of Goods Act, 1930, a railway receipt is a “document of title to
goods”. It is a document useful for proving title. But actual title does not pass by endorsement
as a railway receipt is not a negotiable instrument. Unless there is proof that title has passed to
the endorsee by terms of the contract, the consignee cannot sue the railway for any loss. It is
only the consignor who can sue. [Ibrahim Isaphai vs. Union of India]
Where a person consigns his own material in the name of some other person, the latter becomes
the ostensible owner and he alone becomes entitled to the consignment and not the real owner.
The claim against the railway should have nothing to do with the relationship between the
owner and consignor inter se. [UOI vs. Tolaram Hariram]
Railway receipt in name of consignee but not endorsed—Consignee cannot sue for loss
Where there is negligence and consequent loss of the consigned goods, the railway as bailee is
liable to account for the loss to the bailor, the consignor or his representative. The title is with
the consignor even when the Railway Receipt is in the consignee’s name unless it is endorsed
to him by the consignor, no title can pass in the goods to him. The statutory obligation on the
part of the railway vis-a-vis the bailor can be discharged only when the losses are paid to the
bailor through the court or outside the court, either to the bailor or to his representative. So, a
suit by the consignee for loss cannot be sustained unless the Railway Receipt had been endorsed
to his name. [Gudur Krishna Reddy vs. UOI] If the railways deliver the goods to a person
who produces the Railway Receipt but not duly endorsed to him by the consignee, it is liable
for the misdelivery. [UOI vs. Ramji Lal]
Prepared By
Right of pledgee of railway receipt to sue
A pledgee of railway receipts gets special interest in the goods. He can enforce delivery of
goods against the railway receipts. Delivery of documents of title which would enable the
pledgee to obtain possession, is equally effective to create a pledge. This right of the pledgee
was recognised by the Supreme Court in Morvi Mercantile Bank Ltd v Union of India.
The facts of the case are: Certain goods were consigned with the railways to “self” from
Bombay for transit to Okhla. The consignor endorsed the railway receipts to the appellant bank
against an advance of Rs 20,000. The goods having been lost in transit, the bank as an endorsee
of the railway receipts and pledgee of the goods sued the railways for the loss of the goods
which were worth Rs 35,500. The trial court rejected the action. The Bombay High Court
allowed recovery up to Rs 20,000 only. There were cross-appeals against this decision.
The Supreme Court was called upon to decide whether a railway receipt could be equated with
the goods covered by it for the purpose of constituting delivery of goods. Subba Rao J
(afterwards CJ), who delivered the majority opinion, held, that delivery of railway receipts
was the same thing as delivery of goods; the pledge was, therefore, valid and the pledgee was
entitled to sue for the loss. The Court also held that the pledgee was entitled to recover the full
value of the goods lost and not merely the amount of his advance.
Commission agent's right to sue
A commission agent who had paid an amount in advance to secure for himself the selling rights
for a consignment of fruits was allowed to sue for loss caused by damage to fresh fruits.
[Brijmohandas vs. Punjab National Bank]
In Union of India v B. Prahlad & Co, the Court considered the effect of the decision of the
Supreme Court in Union of India v West Punjab Factories Ltd, and several other cases and
held that a consignee can if he is a commission agent institute a suit for compensation against
the railways if he is able to show that the goods represented by the railway receipt had been
transferred to him or sufficient interest therein had been created in his favour. The court noted
this observation of Viscount Simon LC in Luxor (Eastbourne) Ltd v Cooper that contracts
with commission agents do not follow a single pattern and the primary necessity in each
instance is to ascertain with precision what are the express terms of the particular contract.
In Union of India v West Punjab Factories Ltd it was contended before the Supreme Court
that the consignee and not the consignor had the right to sue. The court held that ordinarily it
is the consignor who can sue because the contract of carriage is between the consignor and the
carrier. It, therefore, follows that where the person suing is neither consignor nor the owner of
the goods and say is a consignee, he will in order to establish his claim to compensation have
to show that he had interest in the goods by virtue of purchase or pledge or otherwise or some
special agreement or that the consignor had despatched the goods as his agent. The right to
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receive the goods must be coupled with an interest so as to entitle the consignee to claim
compensation.
Right of insurer to sue
An insurer who has paid off the sender is subrogated to the sender’s right and, therefore, gets
the right to sue. [UOI vs. Orissa Textiles Mills Ltd.]
New provision as to discharge from liability [S. 108]
A new provision brought into the Railways Act, 1989 discharges the railway from any further
complication as to liability if payment is made to consignee or endorsee who produces the
railway receipt.
The railway administration is discharged from all liability if compensation is paid to the
consignee or endorsee who produces the railway receipt. The effect of this statutory discharge
is that no application can be made either to the Claims Tribunal or in any other court by way
of legal proceeding on the ground that the consignee or the endorsee was not legally entitled to
receive such compensation.
Sub-section (2), however, makes it clear that this discharge of the railway would not affect the
rights of any person having any interest in the goods to enforce the same against the consignee
or endorsee who has collected the compensation money.
Period of limitation
In case of short delivery of goods, the period of limitation begins from the date of delivery of
goods. In this case the consignee had already paid a part of the price of the goods so that he
was a part owner of the goods. His claim for short delivery was paid off by the insurer who
claimed from the railways. The railway delivery register showed date of delivery to be 23
March 1973. Taking that to be the date of delivery and counting the period from that date, the
suit which was instituted on 18 March 1976 was held to be within the period of limitation.
[National Insurance Co. Ltd. vs. UOI]
The delay in filing a suit was caused due to an attempt at a negotiated settlement which failed.
This was not recognized as a sufficient cause for extending the period of limitation. [Oswal
Traders vs. UOI]
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Goods carried at owner's risk [S. 97]
Section 97 deals with the responsibility of the railways where the goods are consigned at
owner’s risk.
All goods or animals are presumed to be consigned at the consignor’s risk unless the consignor
agrees to pay in writing the railway risk rate in which case he will be given a certificate to that
effect. Where the goods are consigned at the owner’s risk, the railway company is liable only
if the loss etc. “was due to negligence or misconduct on the part of the railway administration
or any of its servants”. In such cases the consignor has to prove negligence. But as the goods
are in the hands of the carrier and only he knows how the goods were dealt with in its course,
the railways will have to show this, failing which negligence may be presumed. This was
pointed out by the Calcutta High Court in Suraj Nath v Union of India.
If the defendant (railways) withhold any important or material evidence, the railways must
suffer due to the presumption under Section 114(g) of the Evidence Act.
In a Scottish case of Bastable vs. North British Railway Co., a switchback plant of a huge
size was delivered to a railway company. The employees loaded it without taking note of its
dimensions. It was hit by a bridge and damaged. The company was held to be guilty of willful
misconduct.
Where the wagons containing the goods were traced at a station which was not a part of the
route, it was regarded as a sufficient proof of negligence on the part of railways. [Gopiram
Chetram vs. UOI]
Section 97 of the new Railways Act of 1989 also clearly provides that where the whole of the
consignment or the whole of any package forming part of the consignment is not delivered and
the railway has not proved that the non-delivery was due to any fire or accident to the train or
where the consignment was so packed that its covering or protection was not easily removable
by hand and it has been pointed out to the railway that any part of the consignment or package
has been pilfered in transit, the railway administration would be bound to disclose as to how
the consignment was dealt with. Where such disclosure does by itself give rise to an inference
as to negligence or misconduct, the claimant would have to prove negligence or misconduct.
The section provides that where the whole of the consignment booked is at the owner’s risk
and whole or any package of such consignment is not delivered and the non-delivery is not
proved to be due to fire or accident to the train or where in the case of a covered consignment
covering of which is not easily removable by hand and it is shown that the package has been
pilfered in transit, the railways will be bound to disclose how the consignment was dealt with
in its course. When such circumstances are laid bare before the court and they give rise to as
inference of negligence or misconduct on the part of the railway servants, the liability of the
railways becomes obvious. But if the circumstances do not create any such inference, the
consignor shall have to prove that that was negligence or misconduct on the part of the railways.
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Where the railways do not disclose the manner in which the consignment was dealt with, a
presumption of negligence arises. In a consignment of oil in tins, five tins were delivered empty
and 21 were leaking. The railways failed to produce any record as to the circumstances in which
the consignment was dealt with. They only showed that packing was defective and that this
fact was noted on the way-bill. Even so the court said that loss could have been due to other
causes as well. The railways were under a duty to disclose the relevant circumstances and not
to have done so created a presumption of negligence. [UOI vs. Rameshwar Prasad]
English Law
Chitty in his book on Contracts explains the position as follows:111 “Where merchandise or
livestock are carried at owner’s risk, the Board’s liability for loss or damage is for willful
misconduct only, the onus of proof being on the owner. Willful misconduct means something
a great deal more than negligence, even gross or culpable negligence; and the onus of proving
it is a very heavy one. For the House of Lords has held that the carrier is entitled to take up the
latitude of refusing to give any explanation of how the loss or damage occurred. [H.C. Smith
Ltd. vs. Great Western Railway] On the other hand) proof beyond reasonable doubt is not
required. Thus, if it is proved some of the contents of a package must have been stolen during
transit and the owner can show that no members of the public, but only servants of the carrier
had access to the package during transit, the court may infer that the misconduct was committed
by the carrier’s servant. [H.C. Smith vs. Midland Railways]
It must be borne in mind that owing to the doctrine of fundamental breach the Board may be
liable even though the conduct of their servants falls far short of wilful misconduct, for
instance, if they unjustifiably deviated (even by only a few yards) from the agreed routes.
[Mallet vs. Great Eastern Railway Co.] The doctrine produces some surprising anomalies as
may be seen by contrasting two cases decided by the House of Lords in 1922. It seems
unfortunate that the doctrine of fundamental breach was ever applied to carriage by rail where
it is apt to upset the delicate commercial balance between owner’s risk and Board’s risk rates.
Carriage of luggage [S. 100]
The railway is liable for the loss only of the booked luggage. The principle of liability is the
same, namely, liable at all events subject only to the exceptions stated in Section 93. The only
additional formality is that the luggage should have been handed over to a railway servant who
should have given a receipt for the same. Where the passenger keeps the luggage in his own
custody, the railway would be liable only if it is proved that the loss in question was due to
negligence or misconduct.
Any material entrusted by a travelling passenger to the railway for carriage in the same train
falls in the definition of luggage. It is not a consignment. Section 100 becomes applicable.
There were seven bags of luggage. One of them was lost and could not be delivered at the
destination. The passenger produced positive evidence to show the value of articles in the bag.
No payment was being made on that basis because the passenger had not noted the weight of
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the lost bag. This was held to be not proper. The passenger was allowed value of articles lost
in the bag. [Rajan Hukumchand Jain vs. UOI]
Responsibility for delay or detention [S. 95]
For any loss or damage arising out of delay or detention, the railway is liable, unless it proves
that the delay or detention arose without negligence or misconduct. Section 95 provides for the
same.
Prima facie the railway is liable for losses arising out of delay or detention and if it wants to
escape liability, burden lies upon it to prove that there was no negligence or misconduct on its
part. Although the section imposes the whole of the burden of proof upon railways, the plaintiff
will at least have to prove that the loss in question was caused by the delay or detention. The
decision of the Madras High Court in Union of India v C.A. Akhthar & Co. is an illustration
of the plaintiff’s initial burden. The Facts of the case are:
Certain bundles of dry salted cow hides were consigned from Shillong to Salt Cotarus at
Madras. The goods reached destination only about two and a half months after the date of
booking and they were found to be deteriorated. Although there was no evidence on either side
as to what was the normal routine time between Shillong and Madras, although there is no
railway line up to Shillong and the goods had to be brought up to Guwahati by trucks and
although transhipment from meter to broad gauge was involved en route, even so the court held
that 2 ½ months time was too long for the purpose and that unexplained delay had taken place
and that was sufficient evidence of negligence.
The railways were, however, held to be not liable for the deterioration which had in fact taken
place. The loss could have been due to the delay as well as due to inherent vice in the goods,
namely, the nature of the goods was such that they could not have been preserved for more
than six of seven weeks from putrefactive damage. It had, therefore, to be proved that the goods
were fresh when booked. The plaintiff was not able to prove this and therefore, the court
dismissed his suit.
Liability for deviation [S. 69]
Under the ordinary principles of the law of carriage, if the carrier deviates from the agreed
route or from the customary or usual route, he will be absolutely liable for any loss or
destruction of the goods. So is true of railways. But sometimes deviation may be quite justified.
For example, if an accident has blocked a railway line, the traffic may have to be diverted to
other lines. In order, therefore, to protect the railways from the consequences of such justified
deviations, Section 69 has been enacted.
The section provides that where due to a cause beyond the control of the railway or due to
congestion in the yard or other operational reasons, goods are carried over a route other than
the route by which such goods are booked, that will not amount to a breach of contract. Thus,
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the railway would not be absolutely liable, but would be liable only if the liability would have
arisen even otherwise, that is, if no diversion had taken place.
Responsibility for wrong delivery [S. 80]
On the production of the original railway receipt, the railway is entitled to deliver the goods to
the person who produces the railway receipt. The railway will not be responsible to the person
entitled to the goods only on the ground that the person to whom the goods were thus delivered
was not entitled to them or that the indorsement on the receipt was forged or otherwise
defective. This exemption is conferred on the railways by Section 80. While the railways have
thus freed themselves from such wrong delivery, the person to whom the goods are so delivered
will hold the goods on trust for the true owner and the true owner can recover the goods from
him. [UOI vs. Ramji Lal]]
Delivery on production of bogus tampered railway receipt
Where goods were delivered to a wrong person on his producing a bogus railway receipt, the
court said that it was a case of negligence on the part of the authorities in not taking proper care
and caution. The consignor and the insurance company were entitled to claim loss with interest
and costs. [UOI vs. Shree Emporium]
Where the consignor sent the railway receipt to the consignee after due endorsement, but the
endorsement was obliterated with two pieces of paper pasted on it and a stranger obtained
delivery on producing the tampered railway receipt, the railway was held liable. The delivery
clerk was guilty of gross negligence. He had not even taken an indemnity bond from the
stranger. [K.S.M. Mani & Bros. vs. UOI]
Termination of responsibility [S. 99]
The responsibility of the railway administration as a carrier terminates with the termination of
the transit. Transit terminates with the arrival of the goods at the destination and the termination
of the free days allowed for clearing away the goods without payment of demurrage. While the
liability as carrier terminates with the termination of the transit, the liability as bailee begins
and continues up to seven days thereafter. [Brijmohandas vs. UOI] During this period of
seven days the railways will remain liable as bailees under Sections 151, 152 and 161 of the
Contract Act. They will be bound to take as much care of the goods as a reasonable person
would have taken of his own goods of the same bulk and value and under similar circumstances.
They will be liable if the care bestowed by them falls below this standard and they will also be
liable for the consequences of their failure to deliver the goods to the owner.
The Kerala High Court faced a claim under this section in Union of India v Haji S. Umbichi
Koya. Facts of the case are: Forty-three bags of betel nuts were consigned and on their arrival
at the destination they were unloaded and stored in a shed. Before the free time for clearing the
goods had expired, a fire started in the adjoining shed which spread and damaged a greater part
of the plaintiff’s goods also. The fire started in the bales of aloe fibre stacked in the other shed
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and before it could be put out it had caused extensive damage. The cause of the fire, however,
remained unknown.
Thus, the damage had taken place before the transit ended. Section 73 applied and this section
provides that the liability of the railways is absolute except in the nine cases stated in the
exceptions. The last among them is “fire, explosion or any unforeseen risk.” The loss had thus
taken place due to an excepted peril. Even in such cases the railways are liable unless they are
able to prove that they used reasonable foresight and care. B. Eradi J noted that in cases falling
within the exceptions the liability of the administration is that of a bailee, “namely, it would be
liable for the loss, unless it proves that it has used reasonable foresight and care to prevent the
cause and the consequent loss.” The learned judge found from the material placed before him
by the administration as to what they usually do to prevent fires and what they did in this case
to control it, that the administration had used such foresight or care as the section required and
consequently it was not held liable.
Defective condition or defective packing [S. 98]
Where the goods are in a defective condition or they are not packed in accordance with railway
orders, if any, and by this reason they are liable to damage, deterioration, wastage or leakage,
and if the consignor himself has noted this fact on the note, there is no liability except upon
proof of negligence or misconduct in handling the goods. [Sarjug Prasad Iswar Purbey vs.
UOI]
The section will not protect railways from liability unless it can be shown that the loss was
directly due to defective packing. In this case, the forwarding note and the railway receipt
mentioned that the planks used for packing cases were weak and loose. It was found at the time
of delivery that the cases were broken and re-nailed. The railway administration could not show
how it came about. The court said that since the damage could not be connected to defective
packing, the railways were liable. [Virat Pal vs. UOI]
In cases of short delivery and damage due to pilferage, the railways are liable in damages. They
could not plead defective packing as the forwarding note which was supposed to contain an
entry as to defective packing was not produced to the court. [Bihar State Coop Mktg Union
vs. UOI] Even if the goods were defectively packed the liability for negligence was there as
the railways did not affix the caution label at the wagon concerned, which they were duty-
bound to do. [UOI vs. Chabildas Manikdas & Bros]
Short delivery
This raises the question whether cases of short delivery would be within the section in the sense
that if the section otherwise applies and the case is for short delivery, whether the
administration would be protected. The expression “non-delivery" does not occur in the
section.
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In Shiv Saran Dass v Union of India, it was held by the Delhi High Court that Section 77-C
(now S. 98J) of the Act does not refer to loss or non-delivery of goods as it only refers to
damage, deterioration, leakage or wastage and as such the railway administration in order to
get itself absolved from its liability for damage must prove that defective packing was not
brought to the notice of the railway administration at the time of the delivery of goods for
carriage and in absence thereof Section 77-C (now S. 98J) does not absolve the railway
administration from its responsibility for short delivery of goods.
Non-delivery
Non-delivery entails a claim for damages because it is a prima facie proof of loss. Under
Section 160, Contract Act, 1872 there is a duty cast upon the railway to return the goods at the
destination. Any default on this score renders the Railway liable under Section 161. In that
event it is not open to the railway to plead that it had taken all possible care of the goods during
the transit. When non-delivery is not properly explained by the railway, it is prima facie
evidence of default. Consequently, on proof of non-delivery, the plaintiff is entitled to damages.
[UOI vs. Motilal]
Exoneration from responsibility [S. 102]
This section confers exoneration from responsibility in certain cases. One of the cases as
specified in clause (c)(ii) is “riot”. This word has been held to include damage caused by an
irresistible mob of rioters. [A.P. Paper Mills vs. UOI] The court said: Therefore, the acts of
the agitators do constitute rioting. Therefore, it comes within the fold of Section 78(c)(ii) [now
Section 102 (c)(ii)] of the Act. It is also a civil commotion because several people pulled down
the driver from running trains from the engine; assaulted the crew and set fire to several
wagons. Therefore, it comes definitely within the meaning of civil commotion. It is proved as
a fact that the goods were destroyed as a result of setting ablaze goods wagons and accordingly
the loss or damage to the goods has been occasioned on account of civil commotion committed
by the unlawful assembly of the agitators. Accordingly, Section 78(c) [now Section 102(c))
absolves the railway administration from liability on account thereof.
Burden of proof as to value [S. 110]
In case of any loss etc., of the goods, the burden of proof that the loss in question comes within
any of the exceptions and, therefore, the railways should not be liable, is upon the railways,
failing which they will be absolutely liable for the loss. But the claimant has to prove the value
of the articles or animals he has lost. Thus, the burden of proving value lies on him. Section
78-A [now S. 110] accordingly provides that the value of the animal, or the higher value
declared under Section 77-A t S. 110], or if the animal has only been injured, the extent of
injury has to be proved by the claimant.
In case of any parcel or packaged value of which has been declared under Section 77-B [there
is no parallel section in the new Act], or in case of articles mentioned in the second Schedule,
not contained in any package or parcel, and the value of which was declared, in either case the
burden of proving that the declared value was the real value is upon the claimant. Thus, he has
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to prove the extent of his loss and in case the value was declared, that the declared value is the
real value. The section concludes with the remark that the claimant will not have to prove how
the loss etc. had taken place.
A compensation suit was filed against railways for short delivery of goods. The claims were
based on railway receipts under the category of “said to contain”. This meant that the quantity
and quality of goods booked by the claimant were as per their declaration unilaterally made.
The railway employee did not verify the correctness or otherwise of such declarations. The
goods were directly loaded into the wagon or luggage carrier of the train by the consignor from
their trucks. It was mentioned in the railway receipt that the booking was under the category of
"said to contain”. It was accordingly held that the burden of proving the loaded quantity was
on the consignor. He did not do so. Instead, the Tribunal was requiring the railways to produce
the booking documents. The railways did not do so and therefore the judgment went against
them. This was set aside. [UOI vs. P.P. Enterprise]
In the Madras case of Narasimhaswami v Muthukrishna Iyengar, the defendant failed to

discharge the onus on him to demonstrate that the loss of the jewels in his custody occurred
despite all reasonable care which he took as an ordinary prudent man. The court found against
him and awarded damages for the loss sustained by the plaintiff. Where, however, both parties
have tendered evidence, the issue of onus appears immaterial as the court can draw its own
conclusions from the evidence and all the attendant circumstances. Damages are assessed
according to the market value of the goods lost.
Notice of loss [S. 106]
A notice of claim should be lodged with the railway concerned within six months from the date
of booking, not from the date of loss etc. If notice is not given within this time, the right to
refund of overcharge, if any, or compensation for loss etc., shall be lost. This section lays down
the statutory limit of period for the making of a claim.
Notice to be within six months of consignment: Notice should be given within six months of
the date of consignment, i.e. from the date of entrustment of the goods. It should be given to
the railway administration to which the goods were delivered for carriage, or on whose railway
the destination station lies or on whose railway the goods were actually lost or damaged.
In a case where the goods were not delivered and the person entitled to them made an inquiry
about them, that was considered as sufficient notice for this purpose. [Jetmull Bhoraj vs.
Darjeeling Himalayan Railway Co. Ltd.] The court said that “if a person says that his
consignment has not been delivered as it should have been delivered according to the contract
between him and the railway administration, it must be regarded as making it clear that he
would be holding the railway administration to its contractual engagement which necessarily
involves the payment of damages.” Following this it was held by the Guwahati High Court that
a letter to the proper person apprising him of the whole situation and indicating the intention
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to hold the railways responsible was a sufficient notice. [UOI vs. Rawatmal Bhairondas
Kundalla]
Notice under Section 80 of the Civil Procedure Code: Section 80 CPC requires notice to be
given to the State before instituting any proceedings against it and Section 78-B [now S. 106]
requires notice to be given to the railway administration sought to be made liable. This
requirement of twin notices may, however, be fulfilled by a single notice, Accordingly, the
Bombay High Court held that a notice in respect of compensation given to the general manager
and thereafter on its basis a suit filed against the Union of India would be competent. Such
notice is proper and not open to be challenged on the ground that it had not been given to the
Union of India. [Bharat Kumar vs. UOI]
Responsibility to pay freight
A contract of carriage is generally made with the sender of goods and, therefore, the
responsibility to pay or arrange payment of freight belongs to him. This will be so even if the
goods are consigned on the basis that freight would be paid by the sendee of the goods.
Liability to pay demurrage or wharfage [S. 99]
A consignee who wants delivery has to pay demurrage. He cannot insist upon open delivery.
Under Section 77(4) [now S. 99], the consignee has liability to pay demurrage or wharfage so
long as the goods are not unloaded from the wagon or removed from the railway premises. As
the consignee has no right to demand that the goods shall be opened and inspected in the
railway premises before he can be called upon to take delivery, he cannot leave the consignment
at the railway premises or in the wagon and call upon the railway officials to re-weigh the
consignment and contend that as there was shortage as found out on re-weighment, he is not
liable for wharfage. [Govt. Pleader vs. M.C. Cherian]
Refund of demurrage or wharfage. —The Tribunal has not been conferred with jurisdiction
to entertain claims for refund of demurrage and wharfage. Claims before the Tribunal have to
relate to, inter alia, refund of freight or fines. No jurisdiction has been conferred on the Tribunal
to entertain claims of refund of wharfage or demurrage. The charge towards freight is a
contractual charge for carriage of goods, while both demurrage or wharfage are in the nature
of a penalty or damages to be paid to railways for breach of the consignee’s obligation to clear
the van containing the goods and railway siding within the permissible time. Freight cannot
therefore be equated with wharfage or demurrage. Refusal by the Tribunal to exercise such
jurisdiction was held to be proper. [TISCO Ltd. vs. UOI]
Jurisdiction of Tribunal [S. 13]
A claim arose out of damage caused to consignment of claimants due to carelessness and
negligence on the part of railway administrations. The consignment in question was booked
with a company for carriage. The agreement between the company and claimant clearly stated
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that though the company was a non-government railway it was working with the railways under
the agreement. The court said that the company came to be included in the definition of railway
administration as contained in Section 2(32), Railways Act, 1989. The Tribunal therefore had
the jurisdiction to decide the claim petition. The Tribunal has jurisdiction, powers and authority
to decide claims for compensation in relation to the responsibility of railway administration as
carriers. The containers provided by the company to the claimant for purposes of carriage of
their consignment which were damaged was a kind of rolling stock coming within the
definition in Section 2(31), Railways Act, 1989. A decision as to this was also within the
powers of the Tribunal. [Mangalam Cement Ltd. vs. UOI]
Claim against Railways before Consumer Forum —A claim for loss or misplacement of a
consignment was filed against Railways before a Consumer Forum. It was held that only
Railway Claims Tribunal had jurisdiction to entertain such claim, Forums created under the
Consumer Protection Act, 1986 had no jurisdiction in such matters particularly in view of the
fact that Railway claims Tribunal Act, 1987, was enacted subsequently to the Consumer
Protection Act. [ UOI vs. State Consumer Commission]
RAILWAY CLAIMS TRIBUNAL
The Railways Act, 1989 came into force from 1st July, 1990. Broad features of this Act are
that Railways were re-constituted in zones with a General Manager for each zone. Central
Government had power to fix the rates of carriage of passengers and goods. Provision for
compensation by Railways on account of loss, damage of goods etc. and also due to accidental
deaths and injury was maintained. Special provisions were introduced regarding monetary
liability of railways as carriers of goods etc. The Railway Claims Tribunal Act, 1987 was
enacted to provide speedy disposal of claims against the Railway Administration.
Although Railway Administration made a way to compensate the consignor/consignee of

goods etc. and also for compensation for loss of lives yet people were not often satisfied and
they went to Courts, which took very long time to decide the claims and litigation was
protracted for indefinite period. Therefore, the necessity was felt to expedite the disposal of
claims at the earliest, which resulted in establishment of the Claims Tribunal, which would
exclusively deal with such claims and speedily dispose of the same. As a result, the burden of
Courts was reduced and speedy relief was made available. Even the refund of fares and freights
was also brought within the purview of Tribunal.
The RCT Act is to provide for the establishment of a Railway Claims Tribunal for inquiring
into and determining claims against a Railway Administration for loss, destruction, damage,
deterioration or non-delivery of animals or goods entrusted to it to be carried by railway or for
the refund of fares or freight or for compensation for death or injury to passengers occurring
as a result of railway accidents or untoward incidents and for matters connected therewith or
incidental thereto.
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The scheme of the Act shows that it made provisions for establishment of Tribunal, its Benches,
officers and staff, their term, eligibility, the jurisdiction, powers and authority of Tribunal, its
procedure, execution of its orders and appeals. In this way, the Act is a self-contained Act,
which has solved the problems of public at large.
AIM: The substantive liability of the railway administration for loss, destruction, damage, non-
delivery or deterioration of goods entrusted to them for carriage and for death or injuries or
loss to a passenger in a railway accident or untoward incident is laid down in The Railways
Act 1989. The consignor/consignees and passengers or their representatives prefer claims for
compensation for loss of and damage to, booked goods and are not satisfied with the decisions
of the railway administration, file suits in courts of law. Claims for compensation for death of
or injury or loss etc to passengers in train accidents are at present settled by claims
commissioners. As the litigation in the courts of law and before the claims commissioners is
very protracted, it has been decided to set up a specialised Tribunal for speedy adjudication of
such claims. The setting up of such a claims Tribunal with Benches in different parts of the
country, and with judicial and technical members, will provide much relief to the rail users by
way of expeditious payment of compensation to the victims of rail accidents and to those whose
goods are lost or damaged in rail-transit.
As per Section 3 of the Railway Claims Tribunal Act, 1987 the Central Government shall by
notification establish a Claims Tribunal, to be known as the Railway Claims Tribunal, to
exercise the jurisdiction, powers and authority conferred on it.
Composition of the Railway Claims Tribunal [S. 4]
The Claims Tribunal shall consist of

a) a Chairman,
b) four Vice-Chairmen and
c) such number of judicial Members and Technical Members as the Central Government
may deem fit and, subject to the other provisions of this Act, the jurisdiction, powers
and authority of the Claims Tribunal may be exercised by Benches thereof.
A Bench shall consist of one judicial Member and one Technical Member.
The Chairman—
a) may, in addition to discharging the functions of the Judicial Member or the Technical
Member of the Bench to which he is appointed, discharge the functions of the Judicial
Member or, as the case may be, the Technical Member, of any other Bench;
b) may transfer a Vice-Chairman or other Member from one Bench to another Bench;
c) may authorize the Vice-Chairman or the Judicial Member or the Technical Member
appointed to one Bench to discharge also the functions of the Vice-Chairman or, as the
case may be, the Judicial Member or the Technical Member of another Bench.
It shall be competent for the Chairman or any other Member authorized by the Chairman in
this behalf to function as a Bench consisting of a single Member and exercise the jurisdiction,
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powers and authority of the Claims Tribunal in respect of such classes of cases or such matters
pertaining to such classes of cases as the Chairman may, by general or special order, specify:
Provided that if at any stage of the hearing of any such case or matter, it appears to the Chairman
or such Member that the case or matter is of such a nature that it ought to be heard by a Bench
consisting of two Members, the case or matter may be transferred by the Chairman or, as the
case may be, referred to him for transfer, to such Bench as the Chairman may deem fit.
Qualifications for appointment as Chairman, Vice-Chairman or other Member.
A person shall not be qualified for appointment as the Chairman unless he—
a) (a)is, or has been, a Judge of a High Court; or
b) (b) has, for at least two years, held the office of a Vice-Chairman.
A person shall not be qualified for appointment as the Vice-Chairman unless he—
a) is, or has been, or is qualified to be, a Judge of a High Court; or
b) has been a member of the Indian Legal Service and has held a post in Grade I of that
service or any higher post for at least five years; or
c) has, for at least five years, held a civil judicial post carrying a scale of pay which is not
less than that of a Joint Secretary to the Government of India; or
d) has, for at least five years, held a post under a railway administration carrying a scale
of pay which is not less than that of a Joint Secretary to the Government of India and
has adequate knowledge of rules and procedure of, and experience in, claims and
commercial matters relating to railways; or
e) has, for a period of not less than three years, held office as a Judicial Member or a
Technical Member.
A person shall not be qualified for appointment as a Judicial Member unless he—
a) is, or has been, or is qualified to be, a Judge of a High Court; or
b) has been a Member of the Indian Legal Service and has held a post in Grade I of that
service for at least three years; or
c) has, for at least three years, held a civil judicial post carrying a scale of pay which is
not less than that of a Joint Secretary to the Government of India.
A person shall not be qualified for appointment as a Technical Member unless he

a) has, for at least three years, held a post under a railway administration carrying a scale
of pay which is not less than that of a Joint Secretary to the Government of India and
b) has adequate knowledge of rules and procedure of, and experience in, claims and
commercial matters relating to railways.
The Chairman, Vice- Chairman and every other Member shall be appointed by the President.
No appointment of a person as the Chairman shall be made except after consultation with the
Chief Justice of India.
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Term of office. —The Chairman, Vice-Chairman or other Member shall hold office as such
for a term of five years from the date on which he enters upon his office or until he attains, —
a) in the case of the Chairman, the age of sixty-five years; and
b) in the case of the Vice-Chairman or any other Member, the age of sixty-two years,
whichever is earlier.
Resignation and removal. —(l)The Chairman, Vice-Chairman or other Member mav, by
notice in writing under his hand addressed to the President, resign his office:
Provided that the Chairman, Vice-Chairman or other Member shall, unless he is permitted by
the President to relinquish his office sooner, continue to hold office until the expiry of three
months from the date of receipt of such notice or until a person duly appointed as his successor
enters upon his office or until the expiry of his term of office, whichever is the earliest.
The Chairman, Vice-Chairman or any other Member shall not be removed from his office
except by an order made by the President on the ground of proved misbehaviour or incapacity
after an inquiry made by a Judge of the Supreme Court in which such Chairman, Vice-
Chairman or other Member had been informed of the charges against him and given a
reasonable opportunity of being heard in respect of those charges.
The Central Government may, by rules, regulate the procedure for the investigation of
misbehaviour or incapacity of the Chairman, Vice-Chairman or other Member referred to in
sub-section (2).
Jurisdiction, powers and authority of Claims Tribunal. [S.13]
(1) The Claims Tribunal shall exercise, on and from the appointed day, all such jurisdiction,
powers and authority, as were exercisable immediately before that day by any Civil Court or a
Claims Commissioner appointed under the provisions of the Railways Act, —
(a) relating to the responsibility of the railway administrations as carriers under Chapter VII of
the Railways Act in respect of claims for—
i. compensation for loss, destruction, damage, deterioration or non-delivery of animals or
goods entrusted to a railway administration for carriage by railway;
ii. compensation payable under section 82-A of the Railways Act or the rules made
thereunder; and 134)
(b) in respect of the claims for refund of fares or part thereof or for refund of any freight paid
in respect of animals or goods entrusted to a railway administration to be carried by railway.
[(1-A) The Claims Tribunal shall also exercise, on and from the date of commencement of the
provisions of section 124-A of the Railways Act, 1989 (24 of 1989), all such jurisdiction,
powers and authority as were exercisable immediately before that date by any Civil Court in
respect of claims for compensation now payable by the railway administration under section
124-A of the said Act or the rules made thereunder.]
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(2) The provisions of the Railways Act, 1989 (24 of 1989) and the rules made thereunder shall,
so far as may be, be applicable to the inquiring into or determining, any claims by the Claims
Tribunal under this Act.
COMMENTS
In regard to the matters other than matters covered by S. 13(1), the Civil Court will have
jurisdiction to entertain a civil suit: Ratnakar Tanbaji Itankar v. Union of India
Filing of writ petitions before the High Court straightaway for refund of the excess freight
charges collected by the railway administration, without seeking the relief before the Claims
Tribunal was not maintainable: Syed Muneer Raza v. Chairman, Railway Board
S. 15. Bar of jurisdiction. —On and from the appointed day, no Court or other authority shall
have, or be entitled to, exercise any jurisdiction, powers or authority in relation to the matters
referred to in [sub-sections (1) and (1-A)] of section 13.
S. 16. Application to Claims Tribunal. --(1) A person seeking any relief in respect of the
matters referred to in sub-section (1) 4[or sub-section (IA)I of section 13 may make an
application to the Claims Tribunal.
(2) Every application under sub-section (1) shall be in such from and be accompanied by such
documents or other evidence and by such Tee in respect of the filing of such application and
by such other fees for the service or execution of processes as may be prescribed.
Provided that no such fee shall be payable in respect of an application under sub clause (ii) of
clause (a) of sub-section (1) 1[or, as the case may be, sub-section (IA)I of section 13.
S. 17. Limitation--(l) The Claims Tribunal shall not admit an application for any claim--
(a) under sub-clause (i) of clause (a) of sub-section (1) of section 13 unless the application is
made within three years from the date on which the goods in question were entrusted to the
railway administration for carriage by railway;
(b) under sub-clause (ii) of clause (a) of sub-section (1) 2[or, as the case may be, subsection
(1A)I of section 13 unless the application is made within one year of occurrence of the accident
(c) under clause (b) sub-section (1) of section 13 unless the application is made within three
years from the date on which the fare or freight is paid to the railway administration:
Provided that no application for any claim referred to in sub-clause (i) of clause (a) of sub-
section (1) of section 13 shall be preferred to the Claims Tribunal until the expiration of three
months next after the date on which the intimation of the claim has been preferred under section
78B of the Railways Act.
(2) Notwithstanding anything contained in sub-section (1). an application may be entertained
after the period specified in sub-section (i') if the applicant satisfies the Claims Tribunal that
he had sufficient cause for not making the application within such period.
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S. 18. Procedure and powers of Claims Tribunal. --(1) The Claims Tribunal shall not be
bound by the procedure laid down by the Code of Civil Procedure, 1908, (5 of 1908) but shall
be guided by the principles of natural justice and, subject to the other
provisions of this Act and of any rules, the Claims Tribunal shall have powers to regulate its
own procedure including the fixing of places and Limes of its inquiry.
(2) The Claims Tribunal shall decide every application as expeditiously as possible and
ordinarily every application shall be decided on a perusal of documents, written representations
and affidavits and after hearing such oral arguments as may be advanced.
COMMENTS: When the Railway Claim Tribunal is approached by an indigent person for
compensation on account of the wrong done to him, the tribunal cannot refuse to exercise
jurisdiction merely because he does not have the means to pay the fee. In such a situation the
ends of justice require that the Tribunal should follow the procedure laid done in Order 33 of
the Code of Civil Procedure 1908 (5 of 1908), to do justice for which it came to be established;
A.A. Haja Muniuddin v. Indian Railway
(3) The Claims Tribunal shall have, for the purposes of discharging its functions under this
Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5
of 1908), while vying a suit, in respect of the following matters, namely: -
a. summoning and enforcing the attendance of any person and examining him on
oath;
b. requiring the discovery and production of documents;
c. receiving evidence on affidavits;
d. subject to the provisions of sections 123 and 124 of the Indian Evidence Act,
1872 (1 of 1872), requisitioning any public record or document or copy of such
record or document from any office;
e. issuing commissions for the examination of witnesses or documents:
f. reviewing its decisions;
g. dismissing an application for default or deciding it ex parte, (h) setting aside
any order of dismissal of any application for default or any order passed by it
ex parte;
h. any other matter which may be prescribed.
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ROLE OF CONSUMER COURTS
(Courtesy: Marisport. A, Assistant Professor of Law, Gujarat National Law University)

Generally, the claims which have been raised against the railway by the railway customers are
decided by the railway claims tribunal through “Railway Claims Tribunal Act 1987. Before
this Act, all railway claims were dealt by civil courts and consumer forums respectively. After
the enactment of RCT Act and Indian railways Act 1989 all railway claims, including consumer
claims also dealt by the Railway claims tribunal. (The consumer protection Act is a general
Act for the protection of all types of consumers whereas, the railway claims tribunal Act is a
special Act which is focused only on railway claims).
Consumer forum’s jurisdiction towards railway consumer’s claims: “Service” means service
of any description which is made available to potential users and includes the provision of
facilities in connection with banking, financing, insurance, transport, processing, supply of
electrical or other energy, board or lodging or both housing construction, entertainment,
amusement or the purveying of news or other information, but does not include the rendering
of any service free of charge or under a contract of personal service .
The term “transport” includes railway transport. So, the person who is availing the railway
services is considered as “consumer”. Provided, he must come within the definition of
“consumer”.
Section 3 provides that the provisions of the Act shall be in addition to and not in derogation
of the provisions of any other law for the time being in force. (The consumer protection Act
1986.) On the above said provisions were giving the powers to the consumer forum to hear the
railway consumer disputes which is relating to “deficiency in service”.
"Deficiency in service” means any fault, imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance, which is required to be maintained by or under any
law for the time being in force or has been undertaken to be performed by a person in pursuance
of a contract or otherwise in relation to any service. [Section 2(g)]
In Deputy Chief Commercial Manager, Eastern Railways & Anr. vs. Dr. K. K. Sharma
& Ors., the consumer forum held that Existence of remedies provided by Sections 13 and 15
of the Railway Claims Tribunal Act, 1987 did not take away the jurisdiction of the consumer
courts to decide the question of deficiency of service. The consumer courts cannot sub-plant
the jurisdiction of the Railway Tribunal or any other judicial or quasi-judicial body but can
supplement the jurisdiction of these bodies in appropriate cases. It provides an additional
remedy to a consumer.
RCT’s jurisdiction towards the railway customer’s claim:
The RCT is having the jurisdiction to hear the following disputes, -
(a) Relating to the responsibility of the railway administrations as carriers under Chapter-VII
of the Railways Act in respect of claims for-
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(i) Compensation for loss, destruction, damage, deterioration or non-delivery of

animals or goods entrusted to a railway administration for carriage by railway;
(ii) Compensation payable under section 82A of the Railways Act or the rules made
thereunder; and
(b) In respect of the claims for refund of fares or part thereof or for refund of any freight paid
in respect of animals or goods entrusted to a railway administration to be carried by railway.
(c) the accident claims which have been made against the railway under section 124.
Overlapping jurisdictional issues with reference to certain disputes
Consumer forums generally having the jurisdiction to hear the disputes between railway
consumers and the railway authorities in respect of “deficiency in service”. Whereas, the
railway claims tribunal is having the jurisdiction to hear the claims which have been made
against the railway by the railway customers/users. RCT Act has been enacted by the
parliament after the enactment of the consumer protection Act. It is an indication that the
legislature clearly intended to give special jurisdiction to RCT hear the railway disputes.
Section 15 of the RCT expressly bar the jurisdiction of civil courts and other courts or
authorities.
(a). Accident claims

In Chairman, Thiruvalluvar Transport Corporation vs. Consumer Protection Council, a
person was travelling in the omnibus concerned sustained a serious head injury and ultimately
succumbed to such injury owing to certain application of brakes by the driver of the said
omnibus. SC held that the accident that occurred had nothing to do with the services provided
to the deceased and that the complaint in the said case could not be said to be in relation to any
services hired or availed of by the consumer because the injury sustained by the consumer had
nothing to do with the service provided or availed of by him; the fatal injury was the direct
result of the accident; So, consumer forums are not having the jurisdiction to hear such claims.
Based on the earlier case, In General Manager, Eastern Railway, Kolkata & Ors Vs Shri
Apurba Konar, A person who had decided to cross railway track to reach the platform for
catching his train fell down and got leg injuries. The district consumer forum had admitted the
petition and, held that railway is liable to pay compensation to the injured person. However,
The Kolkata HC held that the district consumer forum did not have the jurisdiction to entitle
such claims. There is no deficiency in service involve in this case and, RCT is having the
special jurisdiction to hear railway accident claims. Wherein Kolkata HC reiterated the same
decision of Thiruvallur case.
(b). Untoward incidents

Section 124-A of the Railways Act, 1989 provides compensation on account of untoward
incident. As per Section 123 (c) of the Act, “untoward incident” means—(1)
(i) the commission of a terrorist act within the meaning of sub-section (1) of section 3
of the Terrorist and Disruptive Activities (Prevention) Act, 1987 (28 of 1987); or
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(ii) the making of a violent attack or the commission of robbery or dacoity; or

(iii) the indulging in rioting, shoot-out or arson, by any person in or on any train
carrying passengers, or in a waiting hall, cloak room or reservation or booking office
or on any platform or in any other place within the precincts of a railway station; or
(2) the accidental falling of any passenger from a train carrying passengers.
In Union of India Vs Ashok Shankar Sarkale and Ors., the Bombay HC held that the
consumer forums are not having the jurisdiction to hear claims or deficiency in services related
cases which have occurred due to some “untoward incident”. In this case, some unknown
goondas entered into the train, and they were quarrelling with the passengers and, they had
thrown out two passengers and, those passengers were found dead because of run over by a
train. The legal representatives of the passengers were filed case before the district forum and,
the forum had awarded compensation to them.
(c) Loss of personal luggage of the passenger

There is no express provision for the loss of personal luggage of a passenger in either RCT Act
or railways Act. Though the term “untoward incident” has been defined in railways Act, the
compensation for the personal belongings or luggage hasn’t included under section 124 A.
because of this, RCT doesn’t have the jurisdiction to decide these claims. Under the Railways
Act, 1989, 'goods' and 'luggage' are two different things defined separately under Clauses (19)
and (23) respectively of Section 2 of the said Act.
A plain reading of these clauses show that the word 'luggage' means baggage carrying personal
belongings of passengers. Further luggage can be either carried by the passenger himself or
entrusted to the railway administration for carriage. 'Goods' means containers, pallets or some
articles of transport used to consolidate goods and, animals. It appears that 'goods' connotes
material in the/nature of merchandise and does not include personal effects or provisions under
Section 13(1)(a) of the Railway Claims Tribunal Act.
The Tribunal has jurisdiction to try disputes relating to the responsibility of railway
administration as carrier in respect of claims of compensation for loss, destruction, damage or
non-delivery of animals or goods entrusted to the railway administration carried by the
Railways. The words used by the Legislature in Section 13(1)(a)(i) are "goods" and has
expressly and specifically included "luggage". Thus, under the above section, the Railway
Claims Tribunal has jurisdiction to try and entertain the claim for loss, etc. only of 'goods
entrusted' to a railway administration for carriage by the Railways. Hence, in the absence of
entrustment of luggage, the Railway Claims Tribunal has no jurisdiction to try and entertain
the dispute and, consumer forum is having the jurisdiction to hear this dispute.
In the case of Union of India and Ors. v. Sanjiv Dilsukhrai Dave and Anr., the passenger
who had travelled the train in sleeper class and, he had lost his luggage due to the unknown
miscreants who had entered into that compartment and, they had taken the luggage of the
passenger.
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In G.M., Eastern Railway & Anr. v. Smt. Malti Gupta the state commission held that loss
of three suitcases of the passenger in the train is amongst to deficiency in service and, the
railway is liable to pay the compensation to the passenger who had lost his suitcases.
In Sumatidevi M. Dhanwatay vs Union of India (UOI) and Ors., SC held that not providing
adequate securities to the passengers is amongst to deficiency in service and, the consumer
forum is having the jurisdiction to hear this dispute. In this case, a passenger had lost her
valuables, including diamonds and pearl due to some mob entered into the train compartment
and, attacked the passengers. The state had awarded compensation to the passenger, whereas,
the national commission had reversed the order.
(d). Cleanness and water facilities

There is no express provision in the RCT Act so, the consumer can invoke the jurisdiction of
the consumer forum to decide his claim. Section 13 of the RCT Act gives the jurisdiction to
the RCT to decide the claims which have been arisen out of the service rendered by the railway
as a “carrier”.
In South Eastern Railway vs. Yeshwant Tiwari & Ors, not providing water for cleaning
purposes to the reserved compartment passengers is amongst to deficiency in service and,
consumer forum is having the jurisdiction to hear this dispute.
(e) Loss or destruction of “goods”

RCT Act expressly declares that in case any loss or destruction goods by the railway as the
“carrier” then, that claims must be made before the RCT only.
In Union of India and another vs B.M. Electric Press and another, the Allahabad High
Court held that, as per section 15 r/w section 13 of RCT Act after the establishment of RCT,
no Court or other authority had or is entitled to exercise any Jurisdiction, power or authority in
relation to the claim for compensation for loss, destruction. Damage, deterioration, non-
delivery of animals or goods entrusted to a railway administration for carriage by railway. In
this case, a district consumer forum had awarded compensation to a consumer for the loss of
his goods.
In Union of India vs. M. Adair Kalam H. the National Consumer Disputes Redressal
Commission held that it had no jurisdiction to entertain complaints of loss, destruction, damage
or non-delivery of goods by railway on account of deficiency in service since such claims
would fall under the railway Claims Act.
Comparison between the RCT & the consumer forum
(1). Limitation period: The claim relates to the goods which have been entrusted to the railway
for carriage then, the claim must be made within 3 years from the date of the loss or destruction
has taken place. If the claim is related to fare or freight then, that dispute also filed within 3
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years from the date of the dispute which has arisen. In case of accident claims, the claims must
be made within 1 year from the date of occurrence of the accident. The above said all claims
application time period must be calculated after excluding 3 months from the date in which the
initial claim has been made to the railway authority. (Section 17 of RCT Act 1987.)
According to the consumer protection Act if a consumer wants to file his dispute before the
consumer forum, then, he must file such case within 2 years from the date of the cause of action
arisen. (The consumer protection Act section 24-A).
(2). Complainant: The person who is seeking the claim can file his claim application to the
RCT by himself or his authorized agent or, legal practitioner. In case of accident claims of a
diseased person, his legal representative can file such claim application. Apart from this, no
other persons are not allowed to file the claim application on behalf of the person who is entitled
to claim. (RCT rules 1989 rule 5).
According to the consumer protection Act the complaint can be filed by (a). The person who
has suffered loss or injury due to the deficiency in service or, fault in goods; (b). The legal
representative of that person; (c). the consumer interested organization; (d). The state or Union
government; and, (e). In case many consumers have suffered the loss or injury on the same set
of deficiency, on behalf of all, any one or some consumers can file the complaint before the
appropriate forum. (Section 12 of the consumer protection Act 1986.)
(3). Accessibility of the forum: The claims against the railway must be before the RCT which
is having territorial jurisdiction. There are about 19 RCT benches have been established by the
government. As per the RCT rules the claimant may file his claim application with regards to
the goods or animals to the RCT bench, which having the territorial jurisdiction of the (a). place
the goods or animals have been delivered to the railway; (b). the place of destination of the
goods or animals; (c) the place in which the goods or animals were suffering loss or destruction
Claims relating to the fare or freight must be made before the RCT bench, which having the
territorial jurisdiction of the place (a). Where the fare or freight has paid; (b). the place of
destination. (RCT rules 1989 rule 9.)
If the claim is related to either accident or untoward incident, then the claim must be made
before the RCT bench, which is having territorial jurisdiction of the place (a) in which the
passenger has purchased his ticket; (b). Where the accident or the untoward incident occurred;
(c). the destination place; (d). where the claimant resides. (RCT rules 1989 rule 8.)
Whereas the initiation of the dispute under consumer protection is subject to pecuniary as well
as territorial jurisdiction. Upto 20 lakhs worth claim the district forum is having the pecuniary
jurisdiction and, upto 1 crore the state commission is having pecuniary jurisdiction and, above
1 crore the national commission is having the pecuniary jurisdiction to hear the dispute.
(Section 11, 17 & 21 of the consumer protection Act 1986.)
In accordance with the pecuniary limits the claimant may file his claim to the district forum as
well as state commission, which is having the territorial jurisdiction of the place (a). Where the
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defendants or defendant resides or any one of the defendant resides or, where the main or
branch business office is functioning or where the cause of action has arisen.
(4). Fee: As per RCT Act as well as RCT rules, the claimant must pay prescribed fee for the
filing of the application except the claims which are related to the death or injury of the
passenger (Railway claims tribunal rules rule 6 & RCT Act section 16.). The applicant must
pay rupees 10 for sending the summons to each respondent (Railway claims tribunal rules 1989
rule 10-A.) except the claims relating death or injury of the passenger. Whereas, the consumer
is no need to pay high fees for the proceedings. He needs to pay the nominal fee only.
Disadvantages to the consumer because of RCT jurisdiction:
Because of RCT the railway consumer is having the following disadvantages
1) The railway consumer need to travel the place where in which the bench of the RCT
has been established. Though RCT allows to file the claim application through post
still, the claimant need to travel long distance to take part in the proceedings.
2) The fee for filing of the claim application and other charges are higher than the
consumer forums.
3) In case of RCT proceedings, the claimant himself or his legal representative or his
authorized agent or his authorized legal practitioner only allow to file the claim
application and, represent on behalf of the claimant. Whereas, on behalf of consumer
an NGO or government or other consumer can file the dispute before the consumer
forums.
4) The aggrieved claimant can appeal the RCT bench’s order in the High court which is
having the territorial jurisdiction over that RCT bench. Whereas, consumers can file an
appeal against the order of the lower forums in the higher forums. In case of a national
commission’s order, the consumer can file the appeal before the supreme court.
5) Consumer Forums are presided by the judicial personalities along with two other
(common persons) qualified members whereas RCT is preceded by judicial members
or technical members (who were the previous employees of Railways) which increase
the chance of bias in awards.
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MODULE 4
Carriage by Air – Warsaw Convention 1929 – Hague Protocols – Carriage by Air Act 1972 –
Compulsory Documents of Carriage – Airway Bill – Liability of Airlines – Limitation of
Liability.
INTERNATIONAL CARRIAGE BY AIR -

GENERAL OVERVIEW OF THE INTERNATIONAL LIABILITY FRAMEWORK
The domestic and international law regulate air carriage. Law of carriage of goods by air is
considerably more complicated than the law in relation to carriage of goods by sea or rail and
possibly also by road. This is so because the law differs depending upon whether the carriage
is domestic or international and because there is no single international regime governing all
international carriage. The determination of which regime applies depends on the countries of
departure and destination.
The act of carrying goods by air, which is normally under a contract between the consignor and
a carrier. International carriage has been the subject of several international conventions:
Warsaw (1929), The Hague (1955), Guadalajara (1961), Guatemala (1971), and Montreal
(1975).
I. WARSAW CONVENTION, 1929
The first international air convention, the "Convention for the Unification of Certain Rules
relating to International Carriage by Air", was signed in Warsaw, Poland in 1929
(hereinafter referred to as "Warsaw Convention 1929"). As its title suggests, the convention is
aimed at unifying the rules on international carriage by air. According to Article 1 (1) the
Warsaw Convention 1929 "applies to all international carriage of persons, luggage or goods
performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft
performed by an air transport undertaking."
The Warsaw Convention 1929 was negotiated at a time when commercial aviation was at its
infancy. Two major considerations shaped the liability regime laid down by the Warsaw
Convention 1929. On the one hand, it was seen necessary to protect air carriers (which at the
time were mainly state-owned) from open-ended liability in case of damage to or loss of cargo
or baggage and injury or death of passengers. On the other hand, shippers and passengers
needed to be reassured that if something went wrong they would have an effective remedy
against the carrier and be compensated.
The Warsaw Convention 1929 entered into force on 13 February 1933 and as of 2015 it has
been adopted by 152 States. To date, it is thought to be one of the most widely adopted
international conventions.
The Warsaw Convention 1929 provides a comprehensive framework of a unified liability
regime applicable to claims arising out of international air transport, irrespective of the
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domicile of the parties, the place of loss or injury, or the venue of the trial. The major areas in
which the Warsaw Convention 1929 achieves uniformity may be summarised as follows.
The Convention:
a) standardises particulars to be included in the documents of carriage;
b) creates a penalty for non-compliance with the particulars to be included in the
documents of carriage, (carrier loses monetary cap limiting his liability);
c) sets out rules whereby the claimant does not need to prove the fault of the carrier, or his
agents, in respect of a loss;
d) specifies a limited number of defences to liability for the benefit of the air carrier;
e) fixes a monetary cap limiting the liability of the air carrier;
f) defines the circumstances in which the carrier may lose the benefit of the monetary cap
limiting his liability;
g) sets out rules as to time limitation and jurisdiction;
h) provides for the exclusive application and mandatory effect of the rules laid down.
The Warsaw Convention 1929 provides for a monetary cap limiting the carrier's liability in
relation to both passengers and their luggage, and cargo. At the same time, it creates a
presumption of fault on the part of the carrier. In other words, the claimant does not need to
adduce evidence to prove that the carrier was at fault. The burden is on the carrier to prove that
he was not at fault by using one of the limited defences available to him. Under certain specified
circumstances, the conduct of the carrier is considered so reprehensible that the claimant may
"break" the monetary cap limiting the carrier's liability, with the result that the carrier loses the
right to the limitation and is liable in full. However, such circumstances are strictly limited.
The Warsaw Convention 1929 also contains specific rules, which determine who a claimant
may sue (i.e. the appropriate party), when (i.e. the time limitation within which a claimant may
bring an action) and where (i.e. before which national courts a claimant may bring an action).
The provisions of the Warsaw Convention 1929 are of exclusive application and have
mandatory effect. This means that in circumstances where the Warsaw Convention 1929
applies to a particular claim, a claimant can only rely on the liability rules of the Warsaw
Convention 1929 and may not rely on any other relevant national law. Moreover, the carrier,
in the contract of carriage, may not seek to exclude, or limit his liability, or otherwise derogate
from the mandatory rules laid down in the Warsaw Convention 1929.
In this context, it is worth noting that the contract of carriage is not individually negotiated
between the parties but is carried out on the carrier's standard terms of contract as typically
contained in or evidenced by a transport document issued by the carrier. Therefore, one of the
underlying aims of the Warsaw Convention 1929 - and this is common to all existing
international liability regimes in the field of transport - is to reduce the potential for abuse in
the context of contracts of adhesion, used where parties with unequal bargaining power contract
with one another. By establishing minimum standards of liability, which apply mandatorily
and may not be contractually modified, international liability regimes seek to ensure the
protection of cargo interests with little bargaining power against unfair contract terms
unilaterally introduced by the carrier in its standard terms of contract.
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As was stated above, one of the major provisions of the Warsaw Convention 1929 concerns
the monetary cap limiting the air carrier's liability. This was fixed by reference to the monetary
unit of the French or Poincaré franc, which was in circulation in France at the time and
consisted of a specified quantity of gold defined by the Warsaw Convention 1929 (Art. 22 (4)
Warsaw Convention 1929) (hereinafter referred to as "gold franc"). The monetary cap is
125,000 gold francs (about US$ 5,000 at the rates of exchange prevailing in 1929) () for
passenger injury or death, 250 gold francs (about US$ 10) per kilogram for loss or damage to
cargo or registered baggage and 5,000 gold francs (about US$ 200) per passenger for
unregistered baggage. (Art. 22 (1)-(3) Warsaw Convention 1929.)
However, dissatisfaction in some countries with the level of the monetary limitation of the air
carrier's liability, especially for passengers, and the erosion of the value of the gold franc
standard after the Second World War, led to calls for change. The Warsaw Convention 1929
contains a provision for its review through convening of an international conference. (Art. 41
Warsaw Convention 1929). On this basis, a series of revisions of the Warsaw Convention 1929
have been agreed, with the result that there are several amended versions of the Warsaw
Convention 1929, in addition to the original Warsaw Convention 1929.
In the convention there is a provision of successive carriage and a combined carriage partly by
air and partly by other modes of transport as well.
In particular, the Warsaw Convention:
• Defines "international carriage" and the convention's scope of applicability

• Sets rules for documents of carriage
• Sets rules for the air carrier's liability and limitations thereof
• Sets rules for legal jurisdiction
• Mandates carriers to issue passenger tickets;
• Requires carriers to issue baggage checks for checked luggage;
• Creates a limitation period of two years within which a claim must be brought (Article 29);
and
• Limits a carrier's liability to at most:
• 250,000 Francs or 16,600 Special Drawing Rights (SDR) for personal injury;
• 250 Francs or 17 SDR per kilogram for checked luggage and cargo, or US$20 per
kilogram for non-signatories of the amended Montreal Convention;
• 5,000 Francs or 332 SDR for the hand luggage of a traveller.
The sums limiting liability were originally given in gold francs (defined in terms of a particular
quantity of gold by article 22 paragraph 5 of the convention). These sums were amended by
the Montreal Additional Protocol No. 2 to substitute an expression given in terms of SDRs.
These sums are valid in the absence of a differing agreement (on a higher sum) with the carrier.
Agreements on lower sums are null and void.
A court may also award a claiming party's costs unless the carrier made an offer within 6
months of the loss (or at least 6 months before the beginning of any legal proceedings) which
the claiming party has failed to beat.
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The Warsaw Convention provides that a plaintiff can file a lawsuit at his or her discretion in
one of the following forums:
1. The carrier's principal place of business

2. The domicile of the carrier
3. The carrier's place of business through which the contract was made
4. The place of the destination
According to Clauses 17 and 18 of the Warsaw Convention, airline companies are liable for
any damage that occurs to passengers or their belongings during in-flight. However, airline
companies will not be held responsible if the damage results from the passenger's own fault or
one of their temporary servants such as doctors assisting ill passengers on their own initiative
(Clause 20). To be covered by air carriers, doctors should respond to the captain's call when it
comes to assisting ill passengers. In such cases, doctors are considered an airline's temporary
servants who acted on the airline's instructions. Major airlines are all covered by insurance to
meet such contingencies and to cover doctors who act as their temporary agents.
Between 1948–51 it was further studied by a legal committee set up by the International Civil
Aviation Organization (ICAO) and in 1952 a new draft was prepared to replace the convention.
However, it was rejected and it was decided that the convention be amended rather than
replaced in 1953. The work done by the legal committee at the Ninth Session was presented to
the International Conference on Air Law which was convened by the Council of the ICAO and
met at The Hague from 6 to 28 September 1955. The Hague Conference adopted a Protocol
(the Hague Protocol) for the amendment of the Warsaw Convention. Between the parties of
the Protocol, it was agreed that the 1929 Warsaw Convention and the 1955 Hague Protocol
were to be read and interpreted together as one single instrument to be known as the Warsaw
Convention as amended at the Hague in 1955. This was not an amendment to the convention
but rather a creation of a new and separate legal instrument that is only binding between the
parties. If one nation is a party to the Warsaw Convention and another to the Hague Protocol,
neither state has an instrument in common and therefore there is no mutual international ground
for litigation.
The Montreal Convention, signed in 1999, replaced the Warsaw Convention system.
II. THE HAGUE PROTOCOL, 1955
The Hague Protocol, officially the Protocol to Amend the Convention for the Unification
of Certain Rules Relating to International Carriage by Air, is a treaty signed on September
28, 1955, in The Hague, Netherlands. It serves to amend the Warsaw Convention. While
officially the Hague Protocol is intended to become a single entity with the Warsaw
Convention, it has only been ratified by 137 of the original 152 parties to the Warsaw
Convention. The binding version of the treaty is written in French, but certified versions also
exist in English and Spanish. The official depository of the treaty is the Government of Poland.
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There were multiple reasons as to why the Hague Protocol was added as a provision to the
Warsaw Convention. Firstly, as the original Convention was written in 1929 and with the
advance of technology and law the original treaty had to be updated. Secondly, and perhaps
more importantly, the Hague Protocol limited the liability that commercial airliners would have
to take on in the event of an accident.
The Hague Protocol 1955 doubles the monetary cap on the carrier's liability in respect of
passenger injury or death from 125,000 to 250,000 gold francs. However, the Hague Protocol
1955 does not change the financial limitation of the carrier's liability in respect of cargo and
registered baggage (which remains at 250 gold francs), or in respect of unregistered baggage
(which remains at 5,000 gold francs per passenger).
Some other innovations of the Hague Protocol 1955 include the following. The Protocol:
1) simplifies the particulars to be included in the documents of carriage, however,
maintains the penalty for non-compliance with the particulars to be included in the
documents of carriage (carrier loses monetary cap limiting his liability);
2) specifies that legal costs are excluded from a claimant's award of damages; (Art. XI
Hague Protocol 1955)
3) introduces an incentive for out of court settlements. (It provides that the court may make
an award that the claimant's costs be paid by the carrier, unless the amount awarded to
the claimant in damages, excluding costs, does not exceed the amount the carrier
offered in writing to settle to the claimant within six months from the date of the
occurrence causing the damage, or within six months before the commencement of the
action if that is later. This provision provides an incentive to the carrier to settle a claim
to avoid litigation expenses and other costs.)
The Hague Protocol 1955 expressly provides that if a State becomes a Contracting State to the
Hague Protocol 1955 but is not a Contracting State to the Warsaw Convention 1929, this "shall
have the effect of adherence" to the "Warsaw Convention as amended at The Hague, 1955.
(Arts. XXI (2), and XXIII (2) Hague Protocol 1955).
The Hague Protocol 1955 entered into force on 1 August 1963 and has been adopted by 137
States.
III. GUADALAJARA CONVENTION 1961
The large increase in charter and other flights, brought about the practice of code-share
agreements, whereby a "contracting" carrier would substitute his own performance of part of
the carriage with that of another carrier, without the agreement of the consignor. The "actual"
carrier, however, is not a party to the contract of carriage with the consignor. In order to extend
the contracting carrier's rights and liabilities under the Warsaw Convention 1929 to any non-
contracting "actual carrier", a further convention was adopted in 1961 in Guadalajara. It is
officially called “Convention supplementary to the Warsaw Convention for the Unification of
Certain Rules relating to International Carriage by Air Performed by a Person Other than the
Contracting Carrier, Signed in Guadalajara on 18 September 1961.”
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The Guadalajara Convention 1961 is supplementary to either the Warsaw Convention 1929,
or the Warsaw-Hague Convention 1955, depending on which one is applicable in a given case.
The Guadalajara Convention 1961 entered into force on 1 May 1964 and has been adopted by
84 States.
IV. GUATEMALA CITY PROTOCOL 1971
In 1971, agreement was reached in Guatemala City on a protocol to amend the Warsaw-Hague
Convention 1955. The Guatemala City Protocol 1971 further raises the monetary cap on the
carrier's liability in respect of passengers and their luggage but does not change the relevant
provisions in relation to cargo. The Protocol has, however, never entered into force.
As is apparent from this brief overview over the original Warsaw Convention, adopted in 1929,
its amended versions and the Guadalajara Convention 1961 (hereinafter collectively referred
to as "Warsaw-system conventions"), the international legal framework evolved from a
comprehensive framework of a unified liability regime to what has been described as a "legal
labyrinth … in which even a highly proficient lawyer could easily become lost."45 The net
result of this evolution is that there are a considerable number of international legal instruments
in force, all based on the Warsaw Convention 1929, which may be potentially applicable to a
claim arising out of a contract of international carriage of goods by air
V. MONTREAL CONVENTION 1999
Against this background and in order to unify the fragmented liability regime of the Warsaw-
system conventions, the "Convention for the Unification of Certain Rules Relating to
International Carriage by Air" (Montreal Convention 1999) was adopted in Montreal on 28
May 1999.
Art. 55 of the Montreal Convention 1999 provides that it "shall prevail over any rules which
apply to international carriage by air" as between Contracting States to the Montreal
Convention 1999, which are also Contracting States to one or more of the Warsaw-system
conventions. Thus, as between States which are Contracting States to any one of the Warsaw
system conventions and the Montreal Convention 1999, the Montreal Convention 1999 takes
precedence.
The cardinal achievement of the Montreal Convention 1999 is that it consolidates all the
various Warsaw-system conventions in one single text. It therefore provides certainty as to the
applicable international air convention and the contracting parties' corresponding rights and
obligations. As a result, it creates greater international uniformity of legislation and reduces
the need for costly litigation as to the applicable legal regime.
The Montreal Convention 1999 reflects changes to the Warsaw-Hague Convention 1955 which
had been effected by MAP 4 1975, in relation to the carriage of cargo. It also clarifies the
obligations of carriers engaged in code-share or similar operations, by incorporating the
provisions of the Guadalajara Convention 1961 on the liability of "actual" carriers.
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In addition, the Montreal Convention 1999 introduces some substantive changes in relation to
the carriage of passengers and their luggage. The most notable features of the Montreal
Convention 1999 in relation to passengers and their baggage are the following:
1) for damage in excess of 100,000 SDR arising from injury or death of passengers the
monetary cap limiting the carrier's liability is removed; however, the carrier may still
be wholly or partly exonerated from liability if he proves that he was not negligent or
that there was contributory negligence by the passenger;
2) there is strict liability (i.e. liability independent of fault) for proven damages up to
100,000 SDR for injury or death of passengers and the carrier may not exclude or limit
his liability;
3) the liability of the carrier for delay to passengers is limited to 4,150 SDR;
4) the liability of the carrier for loss, damage or delay to baggage is limited to 1,000 SDR
for each passenger;
5) an action for damages in respect of injury or death of passengers may also be brought
before the courts of a Contracting State in which, at the time of the accident, the
passenger had his principal and permanent residence.
Damages
Under the Montreal Convention, air carriers are strictly liable for proven damages up to
100,000.00 special drawing rights (SDR), a mix of currency values established by
the International Monetary Fund (IMF) equal to roughly $150,000 USD. Where damages of
more than 100,000.00 SDR are sought, the airline may avoid liability by proving that the
accident which caused the injury or death was not due to their negligence or was attributable
solely to the negligence of a third party. This defence is not available where damages of less
than 100,000.00 SDR are sought. The Convention also amended the jurisdictional provisions
of Warsaw and now allows the victim or their families to sue foreign carriers where they
maintain their principal residence, and requires all air carriers to carry liability insurance.
The Montreal Convention was brought about mainly to amend liabilities to be paid to families
for death or injury whilst on board an aircraft.
The Convention refuses to pay any compensation for psychiatric injury or damage unless
inextricably linked to the physical injury. Purely psychiatric injury is not eligible for
compensation which has been criticised by people injured in plane accidents, legal experts and
their families.
Lost baggage
The Montreal Convention changes and generally increases the maximum liability of airlines
for lost baggage to a fixed amount 1,131 SDR per passenger (the amount in the Warsaw
Convention is based on weight of the baggage). It requires airlines to fully compensate
travellers the cost of replacement items purchased until the baggage is delivered, to a maximum
of 1,131 SDR. At 21 days any delayed baggage is considered lost, until the airline finds and
delivers it.
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The Montreal Convention 1999 entered into force on 4 November 2003 and has, to date, been
adopted by 120 States. The fact that such a large number of States have adopted the Montreal
Convention 1999 in a relatively short period of time illustrates the need for greater uniformity
in the field of air law; it also suggests that the Convention has achieved the right balance
between the conflicting interests of the different parties involved in air transportation.
CARRIAGE BY AIR - CARRIAGE BY AIR ACT 1972
The Indian Carriage by Air Act, 1972, applies to international carriage of goods and
passengers. There is no Act in force relating to home carriage by air, though Section 4 of the
Act empowers the Central Government to extend by Notification the provisions of the Act to
carriage by air which is not international carriage. Such Notification was issued on 17
December 1963 and the provisions of the Carriage by Air Act of 1934 have since then also
become applicable to home carriers by air in India.
The Carriage by Air Act, 1972 replaced the original Act of 1934. This became necessary to
incorporate the Hague Protocol which made certain changes in the Warsaw Convention in the
interest of uniformity of rules. The principal change, of course, is that the liability of the carrier
for each passenger is increased to a maximum of 250,000 francs. Some of the major
amendments are as follows:
1) The documents of carriage have been simplified.
2) The liability in respect of passengers has been doubled; it is raised from 1,25,000 gold
francs to 2,50,000 per passenger.
3) The carrier would be liable where damage is caused by an error in piloting or in the
handling of the aircraft or in navigation.
Prefatory Note—Statement of Objects and Reasons. — India is a signatory to the Warsaw
Convention of 1929, which is an International Agreement governing the liability of the air
carrier in respect of international carriage of passengers, baggage and cargo by air. Under that
Convention “international carriage" means any carriage in which according to the contract
made by the parties, the place of departure and the place of destination, whether or not there be
a break in the carriage or a transhipment, are situated either within the territories of two High
Contracting Parties, or within the territories of a single High Contracting Party, if there is an
agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or
authority of another Power, even though that Power is not a party to the Convention.
The Convention provides that when an accident occurring during international carriage by air
causes damage to a passenger or a shipper of cargo, there is a presumption of liability of the
carrier. The carrier, however, is not liable if he proves that he or his agents had taken all
necessary measures to avoid the damage or that it was impossible for him or them to take such
measures. The Convention balances the imposition of a presumption of liability on the carrier
by limiting his liability for each passenger to 1,25,000 gold francs [now 2,50,000]. There is no
limitation of liability if the damage is caused by the willful misconduct of the carrier, or by
such default on his part as, in accordance with the law of the court seized of the case, is
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equivalent to willful misconduct. The Convention also contains detailed provisions regarding
documents of carriage.
An international convention for the unification of the law relating to international carriage was
held at Warsaw in 1929 in which a number of countries, including India, participated. The
convention adopted certain rules defining the liability of the carrier for injury or death of
passengers or loss of or damage to goods. The rules are to become binding upon the countries
which ratify them. For India, the rules were found to be suitable and the Act of 1934 was passed
adopting the convention to India,
This Act has now been replaced by the Act of 1972. Section 3 of the Act declares that the rules
of the convention as stated in the First Schedule to the Act shall have the force of law in
India in respect of all international carriage by air, irrespective of the nationality of the aircraft
performing the carriage.
Liability in case of death [S. 5]
Section 5(1) declares that in the event of death of a passenger, the liability of the carrier shall
be determined in accordance with the provisions of the First and Second Schedules and not by
the Fatal Accidents Act, 1855 or any other law for the time being in force.
The liability is enforceable for the benefit of such of the members of the passenger’s family as
sustain damage by reason of his death. The explanation appended to sub-section (2) says that
the expression “member of a family” means wife or husband, parent, step-parent, grandparent,
brother, sister, half-brother, half-sister, child, stepchild and grandchild. The sub-section further
says that in deducing any such relationship an illegitimate person and adopted person shall be
treated as the legitimate child of his mother and the reputed father or of the adopter, as the case
may be.
An action to enforce the liability can be brought by the personal representatives of the
passenger or by any person for whose benefit the liability is enforceable. Only one action can
be brought in India in respect of a passenger. An action brought by any one of the persons
entitled shall be deemed to be for the benefit of all the persons mentioned above who are
domiciled in India or who, not being domiciled, express a desire to take the benefit of the
action.
The amount recovered, after deducting the expenses, shall be divided among the persons
entitled to it in such proportion as the court may direct [(sub-s. (4)]
The court before whom an action is brought is entitled, at any stage of the proceeding, to make
any order which may be just and equitable in keeping with the limits of liability in the First and
Second Schedules and in respect of any proceeding that may be brought outside India concern-
ing the same passenger.
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Under Section 5, Carriage by Air Act as amended in 2009, compensation has to be paid to legal
heirs. For payment of compensation up to one lakh rupees/the Special Drawing Right Act, SDR
and its Rules do not prescribe that compensation be worked out according to age, earning
capacity, loss of future prospects, loss of prospects of marriage, or such other grounds as are
available under the common law.
All the victims are to be treated on equal basis in respect of “loss of life or property. For
claiming compensation beyond lakh rupees, the claimant has to justify his claim. The carrier
would also get the right to justify his defence like absence of negligence, and lack of means to
pay any higher amount than one lakh rupees. Provisions of the Fatal Accidents Act, 1855 or
any other enactment for the time being in force are not to apply. For the SDR amount of one
lakh rupees no difference is to be made between rich and poor because as all of them pay the
same ticket money. [S. Abdul Salam vs. Union of India]
Suits against high contracting parties [S. 7]
If any High Contracting Party who have not availed of the Additional Protocol is sued in India
in accordance with the schedules, it shall be deemed to have submitted itself to the jurisdiction
of that court and shall be regarded a “person” for the purposes of the Civil Procedure Code.
The High Courts have been given the power to make expedient rules of procedure for disposing
of such suits. But the section does not authorize any court to attach or sell the property of any
High Contracting Party.
Where the service is being operated by a foreign national, and though there is no provision for
sovereign immunity under the Act, it has been held by the Delhi High Court that provisions of
Section 86, Civil Procedure Code, 1908 would apply and permission of the Central
Government would be necessary. [Deepak Wadhwa vs. Aeroflot]
Meaning of international carriage [Sch. I (1)]
The rules apply to all international carriage of persons, luggage or goods performed by aircraft
for reward. They also apply to such carriage when performed gratuitously by an air transport
undertaking. The rules bind the “High Contracting Parties” which means countries which are
parties to the convention.
The expression “international carriage” means any carriage in which the place of departure
and the place of destination fall in two different countries who have adopted the convention.
Where the two places are in the same-country, but there is a stop en route in another country,
that will also be an international carriage even if that country is not a high contracting party.
[Parsram Perumal Dabrai vs. Air India Ltd.]
A carriage without a stopping place in a different country shall not be deemed to be an

international carriage. A carriage by several successive air carriers is also regarded as an
international carriage even if one part or portion of the journey is to be performed within the
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territory of a single country. This rule will apply when the parties "regard such carriage as a
single operation.
In a case before the Gujarat High Court, the passenger purchased air tickets from Zambia to
Ahmedabad. The place of departure was to be from Nairobi and destination Ahmedabad, with
a break at Bombay. This was held to be an international carriage. They were treated as inter-
national passengers. Rule 1 of the Second Schedule applied for loss of luggage because of the
tort of negligence. Under Rules 17 and 22(1) as applicable to passengers governed by the Hague
Protocol, the amount of compensation was Rs 2,50,000 [gold francs provided under R. 22(1)]
as maximum and not a minimum or a fixed liability. The claimants had to prove their loss and
difficulties and expenses in proving the loss were not payable. [Navanitlal Purshottamdas
Barot vs. Indian Airlines]
A plane crashed near the airport. There was failing visibility, but still the Airport Authority did
not provide “Runway Visual Range”. That was a breach of duty of care which contributed to
the accident. But there was also negligence on the part of the pilot-in-command who was
looking out for the runway instead of concentrating on the instruments. The co-pilot also failed
to provide proper feedback which was also negligence on his part. The pilot descended below
500 feet without sighting the runway. The court applied Rule 25 of the Second Schedule which
requires that the act must have been done “recklessly and without knowledge that what damage
would probably result.” The Indian Airlines and Airport Authority were held jointly and sev-
erally liable in the ratio of 90:10 respectively. The deceased was of 56 years. The multiplier of
9 was applied. The court followed the principles laid down in Sarla Verma v DTC. The report
of the court of inquiry appointed under the Aircraft Act was held to be relevant. The doctrine
of res ipsa loquitur applied because the accident was clearly the result of human error. [Airport
Authority of India (AAI) vs. Ushaben Shirisbhai Shah]
DOCUMENTS OF CARRIAGE
Documents of carriage [Sch. I, Chap. II]
Passenger ticket [Pt. 1, R. 3]

The carrier is required to deliver to the passenger a ticket containing the particulars stated in
Part I of Rule 3.
For the carriage of passengers, the carrier must deliver a passenger ticket which shall contain
the following particulars: -
a) the place and date of issue;
b) the place of departure and of destination;
c) the agreed stopping places, provided that the carrier may reserve the right to alter the
stopping places in case of necessity, and that if he exercises that right, the alteration
shall not have the effect of depriving the carriage of its international character;
d) the name and address of the carrier or carriers;
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e) a statement that the carriage is subject to the rules relating to liability contained in the
Schedule.
The absence, irregularity or loss of the passenger ticket does not affect the existence or the
validity of the contract of carriage, which shall none the less be subject to these rules.
Nevertheless, if the carrier accepts a passenger without a passenger ticket having been
delivered he shall not be entitled to avail himself of those provision of the Schedule which
exclude or limit his liability.
Luggage ticket [Pt. II, R. 4]
Excepting the small personal objects which a passenger may keep with himself, ticket must be
issued for his every other object of luggage. The other rules shall be the same as stated above
in reference to passenger ticket. The information which the luggage ticket has to contain is set
put in the rule.
The particulars are:

(3) The luggage ticket shall contain the following particulars—
a) the place and date of issue;
c) the name and address of the carrier or carriers;
d) the number of the passenger ticket;
e) a statement that delivery of the luggage will be made to the bearer of the luggage
ticket;
f) the number and weight of the packages;
g) the amount of the value declared in accordance with Rule 22(2);
h) a statement that the carriage is subject to the rules relating to liability contained in this
Schedule.
These particulars constitute prima facie evidence of the conclusion of the contract and of the
fact of the receipt of the goods, the conditions of carriage, and of all particulars about the goods
stated above. Statements relating to volume, quantity and condition are evidence against the
consignor only if the Air Consignment Note (ACN) states that these things were checked in
the presence of the consignor or that they related to the apparent condition of the goods.
Air Consignment Note [Pt.III, Rr. 5-16]
The carrier can require the consignor to prepare an ACN in accordance with the provisions. If
no such note is prepared or the note prepared does not state all the requisite particulars, the
carrier will not be entitled to the advantages of the limitation of liability as stated in the rules.
If the consignor supplies incorrect particulars, he will be responsible for the consequences. The
carriers have the right to ask the consignor to make out separate consignment notes when there
are more than one packages. The prescribed particulars are stated in Rule 8 which are as
follows:
The air consignment note shall contain the following particulars. —
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a) the place and date of its execution;

c) the agreed stopping places, provided that the carrier may reserve the right to alter the
stopping places in case of necessity, and that if he exercises that right the alteration
shall not have the effect of depriving the carriage of its international character;
d) the name and address of the consignor;
e) the name and address of the first carrier;
f) the name and address of the consignee, if the case so requires;
g) the nature of the goods;
h) the number of the packages, the method of packing and the particular marks or
numbers upon them;
i) the weight, the quantity and the volume or dimensions of the goods;
j) the apparent condition of the goods and of the packing;
k) the freight, if it has been agreed upon, the date and place of payment, and the person
who is to pay it;
l) if the goods are sent for payment on delivery, the price of the goods, and if the case so
requires, the amount of the expenses incurred;
m) the amount of the value declared in accordance with Rule 22(2);
n) the number of parts of the air consignment note;
o) the documents handed to the carrier to accompany the air consignment note;
p) the time fixed for the completion of the carriage and a brief note of the route to be
followed, if these matters have been agreed upon;
q) a statement that the carriage is subject to rules relating to liability contained in this
Schedule.
Consignment note as prima facie evidence [Sch. I, Pt. III, R. 11]
The ACN is prima facie evidence of the conclusion of the contract, of the receipt of the goods
and of the conditions of carriage. The statements in the note relating to weight, dimensions and
packing of the goods are also prima facie evidence of the facts stated. But statements relating
to quantity, volume and condition of the goods do not constitute evidence against the carrier
unless they have been checked by him in the presence of the consignor or relate to the apparent
condition of the goods.
Goods at sender's disposal during carriage [Sch. I, Pt. III, R. 12]
During the period of the carriage the goods remain subject to the orders of the consignor. He
may withdraw them from carriage, either at the aerodrome of departure or destination, or may
stop them in transit or may ask the carrier to deliver them to any person other than the consignee
or may ask for the goods to be brought back to the place of departure. Should the carrier find
it impossible to carry out the instructions of the consignor, he should inform him accordingly.
While putting the goods at the disposal of the consignor, the carrier should ask for the
consignment note to be delivered to him, otherwise he may become liable to the person who
had lawfully obtained the note and had thereby acquired the right to the goods, though the
carrier can recover his indemnity for the same amount from the consignor. This is so because
the rights of the consignor cease when those of the consignee begin. But if the consignee refuses
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to accept the goods or the note or, if he cannot be contacted with, the rights of the consignor
become restored.
Consignee's right to receive delivery [Sch. I, Pt. III, R. 13]

The consignee is entitled on arrival of the goods at the appointed destination to require the
carrier to hand over to him the air consignment note and to deliver the goods to him. The carrier
is obliged to do so on payment of the charges due and on compliance with the conditions of
carriage set out in the air consignment note. It is the duty of the carrier to give notice to the
consignee as soon as the goods arrive but he can stipulate otherwise. If the carrier admits loss
of the goods, or if the goods have not arrived at the expiration of seven days after the date on
which they ought to have arrived, the consignee becomes entitled to put into force his rights
against the carrier under the contract of carriage.
Enforcement of rights by consignor and consignee [Sch. I, Pt. III, R. 14]

The rights stated above can be enforced either by the consignee or consignor and either in his
own interest or. in the interest of the other provided that he fulfils the obligations imposed upon
him under the contract. These rules do not affect the position as between the parties or as
between them and third persons. The provisions of Rules 12,13 and 14 can be varied by express
provisions in the consignment note.
Consignor's duty to furnish documents [Sch. I, Pt. III, R. 16]

The consignor has to furnish to the consignee such information and such documents with the
consignment note as are necessary to enable the consignee to meet the formalities of customs,
octroi or police before the goods can be delivered to the consignee. If the carrier suffers any
damage on account of any irregularity in such documents the consignor is liable
LIABILITY OF CARRIER
Liability of carrier [Sch. I, Chap. Ill, R. 17]

The liability of the carrier is spelled out under Rules 17 to 30 of the Third Chapter.
Passengers
In reference to passengers, the liability arises if the death or injury was caused by an accident
which took place on board the aircraft or in the course of any of the operations of embarking
and disembarking. The provision in Article 17 of the Warsaw Convention, 1929, as amended
at the Hague. 1955 and set out in Schedule 1 to the Carriage by Air Act, 1961 (English),
imposed liability on the carrier for damage sustained in the event of death or wounding of a
passenger or any other “bodily injury”.
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In Morris vs. K.L.M. Royal Dutch Airlines, the question before the House of Lords was
whether “body injury” would include purely mental injury. Their Lordships negatived liability
and explained the position as follows: Where a mental injury or illness lacked a physical cause
or origin, it could not constitute a “bodily injury” within the meaning of Article 17 of the
Convention but the term did cover physical manifestations of a mental injury and also
psychiatric disorders arising from injury to the brain or nervous system.
The use of the adjective “bodily suggested that Article I7 was not intended to cover everything
that might possibly be described as an injury to the passenger sustained on board the aircraft
or in the course of embarking or disembarking.
In the case of R vs. Bristow Helicopters Ltd. on the point the New York Court of Appeal
observed: “As read Article 17, the compensable injuries must be ‘bodily’ but there may be an
intermediate causal link which is ‘mental’ between the cause—the ‘accident’ and the effect—
the ‘bodily injury’. And once that predicate of liability—the ‘bodily injury’ is established, then
the damages sustained as a result of the ‘bodily injury’—are compensable including mental
suffering”.
In the case of Kotasambasis vs. Singapore Airlines Ltd. the New South Wales Court of
Appeal observed that if an accident causes mental injury or illness which in turn causes adverse
physical symptoms, such as strokes, miscarriages, or peptic ulcers, the threshold requirement
of bodily injury under the Convention would also be satisfied.
In the case of Rosman vs. Trans World Airlines Inc. before the New York Court of Appeal,
the passengers were not struck, or personally assaulted by any of the hijackers, but they claimed
to have suffered severe psychic trauma during the ordeal. The airliner was held liable for the
plaintiff’s palpable, objective bodily injuries including those caused by the psychic trauma of
the hijacking and for the damages flowing from those bodily injuries, but not for the trauma as
such or for the non-bodily or behavioral manifestations of the trauma. The relationship between
the mind and the body was a difficult issue. It was not the one that the court had to decide.
Therefore, the ordinary, natural meaning of “bodily injury” has to be taken that connotes
palpable, conspicuous physical injury and excludes mental injury with no observable “bodily”,
as distinguished from “behavioral” manifestations. If the accident, hijacking caused severe
fright, which in turn manifested itself in some objective bodily injury, then, the court would
conclude that the Convention’s requirement of the causal connection was satisfied.
The first case before the Supreme Court of the US on this issue was Eastern Airlines Inc v
Floyd. The passengers on an aircraft which narrowly avoided crashing during a flight between
Miami and the Bahamas claimed damages solely for mental distress arising out of the accident.
The Supreme Court held that Article 17 did not allow recovery of what it described as mental
or psychic injuries unaccompanied by physical injury or physical manifestation of injury.
This case was followed in El Al Israel Airlines Ltd v Tsui Yaun Tseng. The passenger
claimed that she had sustained psychic or psychosomatic injuries as a result of an intrusive
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body search but accepted that there had been no bodily injury. The claim was rejected by the
Supreme Court. The Federal Courts in the US have further developed judicial thinking: In Jack
v Trans World Airlines Inc, there was a crash and fire following an aborted take-off. The
court distinguished three different kinds of injury: “Impact injuries” refer to the bodily injuries
(such as bruises, lacerations and broken bones) that passengers suffer during an airplane
accident. “Physical manifestations” refer to those bodily injuries or illnesses (such as skin
rashes and heart attacks) that result from the distress one experiences during or after an
accident. “Emotional disturbance” refers to the psychic trauma that one experiences either
during or after the accident.
The court held that the emotional distress recoverable was limited to the distress about the
physical impact or manifestation, i.e. bodily injury, but that recovery was not to be allowed for
the distress about the accident itself.
In Weaver v Delta Airlines Inc, a passenger brought an action to recover damages for chronic
post-traumatic stress disorder which she attributed to terror which she felt during an emergency
landing of the aircraft. The court said that she had met her burden of showing that the
emergency landing physically impacted on her brain. There was an affidavit from her doctor
which stated that the impact of the event included biochemical reactions which had physical
impacts upon her brain and neurological system.
In Air Crash, Little Rock, Arkansas, Re, the passenger suffered from smoke inhalation, knee,
leg and ankle injuries in a crash and her subsequent escape from the aircraft. But her primary
claim was for emotional and psychological injuries consisting of serious chronic post-traumatic
stress disorder and major depression. The court said that once the threshold of liability was
crossed by proving physical injury, then all damages available under the passenger’s domicile
are recoverable. The court held in favour of the passenger.
Accident: A culpable act or omission which does not amount to an unusual or unexpected
event of happening has been held to be not in itself an “accident” within the meaning of Article
17 of the Warsaw Convention. A culpable act or omission, however, could not necessarily be
described in itself as an unusual or unexpected event or happening. In the instant case, the
agreed factual matrix did not reveal any such event of happening, and accordingly did not
disclose a claim under Article 17. The claimants in this case were passengers on international
flights. Each of them suffered a deep vein thrombosis resulting in serious injury or death. They
alleged that the disease was caused by cramped seating conditions and no warning for
protection against the danger. The suffering of the passengers was held to be not due to any
accident. [Deep Vein Thrombosis and Air Travel Group Litigation]
Luggage or goods [R. 18]

In reference to loss or damage of registered luggage or goods, the liability arises if the event
causing the loss took place during the carriage by air. “Carriage by air” for this purpose means
the period during which the goods are in charge of the carrier, but does not extend to carriage
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by sea, river or land performed outside an aerodrome, except when it takes place for the
purposes of loading, delivery or transhipment.
Where the loss of the goods in question occurred not during actual carriage but from the office
of the carrier at the destination where they were lying for delivery purposes, the loss was held
to be one which could not be regarded to have occurred “during carriage by air. [Parsram
Parumal Dabrai vs. Air India Ltd.] This case presents some contrast to the case in which the
carrier in his own interest took away the gold consignment from the bank and stored it in the
strong room of the aerodrome from where it was stolen by breaking open its door and the court
did not agree with the contention that at the time of the loss the carriage by air had not begun.
[Westminster Bank Ltd. vs. Imperial Airways Ltd.]
In Bharathi Knitting Co. vs. British Airways, the air carrier was held liable for misdelivery
of the consignment in a consumer action. The consignment was of a quantity of knitted cotton
ladies’ pullovers to be delivered in the UK. The consignment was to be airlifted on 24
December 1992 but it was taken away contrary to the airway bill one day before. That day the
consignor wanted to change the name of the consignee but that proved to be too late. The
consignment happened to be delivered to a wrong consignee and that too without bank release
orders. The consignor had the right to change the consignee under Rule 12 framed under the
Carriage by Air Act, 1972. The carrier was held liable to pay full value of the consignment
with 12 per cent interest. The carrier delayed giving information about the fate of the
consignment for 2 years from the date of complaint and 4 years from the incident.
Liability for delay [R. 19]

The carrier is liable for damage occasioned by delay in the carriage by air of passengers,
luggage or goods. It has been held that sending of a consignment by air carries an implied
connotation of urgency. It is reasonably expected that such consignment would reach within
two days. Regulation 6 does not prescribe any time limit for completion of carriage. The
implied object of promptitude cannot be defeated by an argument that there was no such
requirement in the applicable provisions. There are consignments of which utility vanishes if
they are not delivered on time.
Liability for cancellation of flight, when delay becomes cancellation

A long delay in the departure of a flight may become equivalent to cancellation. The passengers
were of a flight which was scheduled to depart from an airport in Canada to one in Germany.
They were informed by the defendant carrier after check-in that the flight was cancelled and
that the departure board displayed an announcement to that effect. Their luggage was returned.
They spent the night at a hotel before checking-in the next day at another airliner’s counter.
They arrived at the destination some 25 hours after the originally scheduled arrival time. The
claimant passengers sought compensation under Articles 5 and 7 of European Parliament and
Council Regulation (EC) No. 261/2004. The claim was based on the footing that the original
flight was cancelled within the meaning of Article 2(1) which defined “cancellation” as “the
non-operation of a flight which was previously planned and on which at least one place was
reserved.” The claim was resisted on the ground that the flight was only delayed and not
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cancelled and there was no provision for compensation for delay. The second lot of passengers
were informed that the first leg of the flight has been cancelled owing to a technical breakdown
in the aircraft. They were taken by another liner the next day. They reached destination some
22 hours late. It was held that passengers whose flights were delayed to the extent that arrival
at the final destination was three hours or more after the originally scheduled arrival time were
entitled to compensation as set out in Article 7(1) of Regulation No. 261/2004 subject to
reduction of 50 per cent in certain circumstances in accordance with Article 7(2). Such a delay
would not entitle passengers to compensation if the carrier could prove that the long delay was
caused by extraordinary circumstances which could not have been avoided even if all
reasonable measures had been taken, namely circumstances beyond the actual control of the
carrier. A technical problem in an aircraft which led to cancellation or delay of a flight is not
an “extraordinary” circumstance within the meaning of Article 5(3) unless the problem
stemmed from events which, by their nature or origin, were not inherent in the normal exercise
of the carrier’s activity and were beyond its actual control. [Sturgeon vs. Condor Flugdinest]
When not liable [Rr. 20 and 21]
1) The carrier is not liable if he proves that he and his agents had taken all necessary
measures to avoid the damage or that it was impossible for him or them to take such
measures. The carrier is liable unless he can disprove negligence. [Chisholm vs. BEA]
2) In the carriage of goods and luggage, the carrier is not liable if he proves that the damage
was occasioned by negligent pilotage or negligence in the handling of the aircraft or in
navigation and that, in all other respects, he and his agents have taken all necessary
measures to avoid the damage.
3) If the carrier proves that the damage was caused by or contributed to by the negligence
of the injured person, the court may exonerate the carrier wholly or partly from his
liability.
These rules shift the burden of proof wholly upon the carrier. It is for the carrier to show that
he is not liable. The rules also, however, favour him by imposing a limit upon his liability.
Limit of liability [R. 22]
In the case of passengers, the limit of liability is 2,50,000 francs. In the case of registered
luggage and goods it is 250 francs per kilogram. A special contract for exceeding these limits
of liability is allowed. In the case of goods, the sender may declare the value of his goods and
may pay supplementary fare if so required, in which case the carrier will become liable for the
declared value, unless it is provided by the carrier that it was greater than the real value of the
goods.
As regards the objects of which the passenger takes charge himself the liability of the carrier
is limited to 5000 francs per passenger.
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Under the Montreal Convention, 1999, the amount specified per passenger is 1000-franc
special drawing rights. [Arts. 17.2,22.2]. It has been held that the amount so specified includes
both material damage and non-material damage. There is nothing in the Montreal Convention
to indicate that the contracting states intended to attribute a special meaning and therefore
injury includes damage whether material or moral.
Provisions relieving carrier of liability or lowering same, void [R. 23]
Any contract by which the liability is sought to be reduced below these limits shall be void to
that extent but the rest of the contract shall be valid and shall be subject to the provisions of the
Schedule.
Persons entitled to sue [R. 24]
In cases involving injury or death of a passenger, the right to sue can be exercised by the
persons indicated in the schedule but the schedule causes no prejudice to the questions as to
who the persons are who have the right to bring the suit and what are their respective rights.
This was necessary to save any dependants of the injured or deceased persons from being
deprived of their respective rights. In the case of damage to any luggage or goods, the liability
is incurred only to those who come within the clauses of the Schedule.
In the Regalite case goods were delivered at destination by the air carrier to the notify party
(their intended buyer), contrary to the seller/consignor’s instructions to deliver only to the
named consignee, the buyer’s bank (Bank of America), In a detailed judgment, Mr Recorder,
Chan said that the decision in the Cordial case was surprising and had given rise to great
inconvenience in cases of goods consigned to banks under letters of credit or on cash (or
acceptance of draft) against payment terms, On the facts before him, he found a special contract
between the consignor and air carrier, enabling the former to sue for its loss, whether or not it
was owner. He also held that the consignor had retained ownership.
Limits not applicable where misconduct involved [R. 25]
The carrier cannot avail himself of these limits if the loss is due to his or his agent’s misconduct
acting within the scope of his employment, or such default as is in the opinion of the Court
equivalent to misconduct. Some explanation of the meaning of the expression “misconduct”
occurs in Horabin v British Airways Corpn. The plane in question was diverted several times
until it crashed. The case ended in a compromise and the judgment was in the shape of
instructions to the jury. The defendants admitted crash by accident and their liability to pay
within the specified limits. But the plaintiff claimed that those limits were not applicable
because there was willful misconduct on the part of the crew provided by the carrier. The
plaintiff was personally injured and his goods were damaged.
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“It means misconduct to which the will is a party, and it arises when the person concerned
appreciates that he is acting wrongfully, or is wrongfully omitting to act, and yet persists in so
acting or omitting to act regardless of the consequences or acts or omits to act with reckless
indifference to what the results may be. The same act may constitute negligence in the absence
of any intention to do something wrong, but wilful misconduct if that intention is present. In a
civil action the jury are entitled to look at the whole of the facts, to draw an inference from
them as to the state of mind and intentions of the person responsible for an act, and to decide
on the balance of probabilities whether the act is mere negligence or wilful misconduct, wilful
misconduct not being established if there are equal degrees of probability.
The mere fact that an act was done contrary to a plan or to instructions, or even to the
standards of safe flying, to the knowledge of the person doing it, does not establish wilful
misconduct on his part, unless it is shown that he knew that he was doing something contrary
to the best interests of the passengers and of his employers or involving them in a greater risk
than if he had not done it. A grave error of judgment, particularly one apparent as such in the
light of other events, is not wilful misconduct if the person responsible thought he was acting
in the best interests of the passengers and of the aircraft.”
Effect of receipt of goods without complaint and time for complaint [R. 26]
Receipt by the person entitled to delivery of luggage or goods without complaint is prima facie
evidence that the same have been delivered in good condition and in accordance with the
documents of carriage.
Complaints should be made immediately or at the most in three days in the case of luggage and
seven days in the case of goods.93 If there is any cause of delay the maximum period of
fourteen days may be allowed. Failing such complaint, no action lies except where the carrier
is guilty of fraud. Complaint should be in writing upon the document of carriage or by separate
notice in writing dispatched within the times specified.
Death of person liable [R. 27]
In the case of the death of the person liable an action lies against those who represent his estate.
Jurisdiction [R. 28]
An action can be brought at the place where the carrier is ordinarily resident or has his principal
place of business or has an office for the purpose of making contracts or at the place of
destination.
Jurisdiction under Council Regulations. —The claim was by a passenger after cancellation of
flight which was from one-member state to another with carrier established in a third member
state. It was held that the place of performance of the airline’s relevant obligations under the
transport contract, will be the place whose court will have jurisdiction to hear the claim.
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Extinction of right to damages [R. 29]
The right of action is extinguished if no action is brought within two years, running from the
date of arrival of the destination, or from the date on which the aircraft ought to have arrived
or from the date on which the carriage stopped.
For calculation of time period, Part 3 of the Limitation Act, 1963 has been included by virtue
of Rule 30(2) of the Second Schedule of the Carriage by Air Act, 1972. Sub-rule (2) says that
the method of calculating the period of limitation is to be determined by the law of the court
which is seized of the case.
Carriage by successive airlines [R. 30]
In case of carriage by successive airlines, the action should be brought against the carrier who
performed the carriage during which the accident or delay occurred. The first carrier may be
sued if he agreed to be responsible for the whole carriage. In case of loss of luggage, the
consignor may sue the first and the consignee the last carrier, though the carrier so sued will
have the right to sue the carrier who performed the carriage during which the loss occurred.
Second Schedule: This Schedule is the result of the Hague Protocol. Its provisions supersede
those of the First Schedule in reference to a country which has accepted the Protocol. The
definition clause remains the same.
Baggage check: Some change has been made in respect of baggage. Part II of Chapter II, Rule
4 provides that in respect of the carriage of registered baggage, a baggage check shall be
delivered, containing the particulars prescribed. The check shall constitute prima facie evidence
of the registration of the baggage and of the conditions of the contract of carriage. If the check
is not delivered the carrier cannot avail himself of the beneficial provisions of the Schedule.
AIRWAY BILL
The carrier has been given the right to require the consignor to make out a document called an
“air waybill” and the consignor also has the right to ask the carrier to accept it. This will
constitute the contract and the existence of the contract shall not be affected by the absence,
irregularity or loss of the way-bill.
The consignor has to make the way-bill in three original parts. The first shall be marked “for
the carrier” and shall be signed by the consignor; the second part “for the consignee,” and
signed by the consignor and shall accompany the cargo; the third part has to be signed by the
carrier and handed back to the consignor after the acceptance of his consignment. The carrier
shall sign prior to the loading of the cargo on board the aircraft. The signature of the carrier
may be stamped; that of the consignor may be printed or stamped. If, at the request of the
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consignor, the carrier makes out the air waybill, he shall be deemed, subject to proof to the
contrary, to have done soon behalf of the consignor.
The carrier has the right to require the consignor to make out separate waybills when there is
more than one package. The Air way bill should contain:
a) indication of the place of departure and destination;

b) an indication that there is a stoppage in another country;
c) a notice to the consignor that if the destination is in a different country or there is a stop
in another country, the amended convention may be applicable.
If no way-bill is made or if the notice stated above is not included in the waybill, the carrier
shall not be able to avail himself of the limits of liability stated in the Schedule.
The consignor is responsible, for the correctness of the particulars and also for liability, if any,
arising out of incorrect particulars. The waybill is prima facie evidence of the contract and of
the receipt of the cargo. The statements relating to weight, dimensions and packing and number
of packages are prima facie evidence of the facts stated. But statements relating to the quantity,
volume and condition of the cargo do not constitute evidence against the carrier unless he has
seen them or they relate to the apparent condition of the cargo.
Consignor's right over cargo: Subject to his liability under the contract of carriage, the
consignor has the right to dispose of the cargo by withdrawing it at the point of departure or at
any subsequent stop or by requiring it to be delivered at the destination to any person other
than the consignee or by requiring it to be returned to the aerodrome of departure. If the carrier
finds that it is impossible to comply with any such direction, he should inform the consignor
forthwith. If the carrier obeys the order without production of the waybill he will become liable
to the lawful custodian of the waybill for his loss, if any.
The rights conferred on the consignor cease as soon as those of the consignee (as stated below)
begin. But if the consignee does not accept the waybill or the cargo, the rights of the consignor
again revive. Rule 12(4) further provides that if the consignee declines to accept the goods, the
consignor regains his right of disposal irrespective of the fact that the consignee’s right had
commenced in the meantime. But the consignor cannot exercise his right in such a manner as
to prejudice the interest of the carrier or of other consignors.
Consignee's right to demand possession: On arrival at destination the consignee has the right
to demand possession on production of the waybill and payment of outstanding charges, if any.
If the carrier admits that the consignment has been lost or if the goods are not delivered within
a week, the consignee can enforce his rights. The rights can be enforced by the consignor or
the consignee.
Position of owner who is neither consignor nor consignee: This rule has given rise to the
question whether the owner of the goods who is formally neither a consignor nor consignee
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can enforce the contract? This was in effect the question in Gatewhite Ltd v Iberia Lineas
Aereas de Espania SA. The case involved a consignment of chrysanthemums. The ownership
in the goods passed to the plaintiff upon delivery of the consignment to the carrier. The
consignment arrived at Heathrow some four or five days late and in a damaged condition. The
carrier contended that the plaintiff was precluded by the Warsaw Convention as amended at
the Hague and as implemented by the Carriage by Air Act, 1961 from bringing an action since
he was neither the consignor nor the consignee of the goods. The Common Law permits an
owner to sue in such cases. The question, therefore, was whether the Convention would
supplement the common law or be self-exhaustive. In addition to other provisions, Article 30(3)
sets out the various circumstances in which the consignor and the consignee, and they alone,
have a right of action in the case of carriage performed by successive carriers.
A recent decision in this area was that of Prichard J in the New Zealand High Court in Tasman
Pulp and Paper Co Ltd v Brambles J.B. O’ Loghlen Ltd where the restrictive approach was
rejected. Though the decision was not final, but it touched a very important point inasmuch as
it refused to reject at the instance of the carrier a claim by the owner about whom the court said
that he had an arguable case against the carrier under the Convention. Taking this opinion into
account along with dissenting opinions expressed in Bart and Pan American and also the
silence of the Convention on a matter where it could easily have made a provision, led
Gatehouse J to the conclusion that it was intended to exclude the right of the owner of the goods
to bring an action. “It should be recognised that in practice the consignee will often be a
forwarding agent or the buyer’s bank; it would be undesirable that the buyer’s remedy should
depend upon the ability and willingness of the actual consignee to bring an action against the
carrier.”
Position of different carriers
In Anil & Co v Air India, the plaintiff booked certain goods with Air India for carriage to a
New York buyer. A New York bank was named as consignee in the air waybill. Air India
carried the goods up to Paris and there entrusted them to the Trans World Airlines for carriage
to New York. The latter wrongly delivered the goods to the buyer without obtaining payment.
The carrier was held liable when its agent delivered the goods directly to the consignee instead
of, as directed, to the bank for collecting payment of the goods.
In the case of Rajasthan Handicrafts Emporium vs. Pan American World Airways, before
the Delhi High Court, goods were sent from Delhi for delivery in the US. The goods were
forwarded to another carrier because the first carrier was not operating up to the delivery point.
The second carrier delivered the goods in violation of instructions. The consignor could not
recover the price. The first carrier contended that because he had forwarded the consignment
in its right state to the second carrier, he was not liable. But the court said this was not so. The
contract of carriage in question was a single operation. The liability of all the carriers is joint
and several. Therefore, the plaintiff’s suit against the first carrier cannot be dismissed because
of misjoinder or non-joinder of parties.
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Liability of carrier in the Second Schedule [Chap, III]
The principles relating to liability are the same, but the extent of liability has been enhanced.
In the carriage of passengers, the liability of the carrier for each passenger is limited to the sum
of 2,50,000 francs. Where, in accordance with the law of the court before which a claim is
pending, damages may be awarded in the form of periodical payments, the equivalent capital
value of the said payments shall not exceed 2,50,000 francs. Nevertheless, by special contract,
the carrier and the passenger may agree to a higher limit of liability.
In the carriage of registered baggage and of cargo, the liability is limited to 250 francs per
kilogram, unless the contract envisages, on payment of extra charges, higher limit. In such a
case the carrier will be liable to pay the declared value unless the carrier proves that the declared
value is more than the real value. As regards the objects of which the passenger takes charge
himself the liability is limited to 5000 francs per passenger. The meaning of the expression
“registered luggage” came up for consideration in Collins v British Airways Board. The usual
practice of airlines is that they receive a customer’s luggage, an identification card is tagged to
the luggage and a part of it is delivered to the customer. There is nothing beyond this, no record
and no register. The question was whether the luggage so delivered becomes a registered
luggage.
The county court judge held that they were not so entitled, but the Court of Appeal, with one
dissent, reversed this decision. The court described this as an “amazing omission” that the
convention did not say what the expression “registered baggage” means. But the history of the
convention showed that at no time did the drafting committee think there was any difference
in meaning between baggage that was checked and baggage that was registered. The court,
therefore, treated the baggage as registered baggage, despite the doubts expressed by Lord
Denning by reason of the total absence of any record of the baggage in a book or other register
kept by the airline. “Indeed, in the context of civil aviation, it is reasonably arguable that
check-in procedures, as universally followed, amounts to registration.”
INTERNAL/ DOMESTIC CARRIAGE BY AIR
The Carriage by Air Act, 1972, applies to international carriage of goods and passengers by
air. There is no Act in force relating to home carriage by air. But Section 8 of the Act
empowers the Central Government to extend the provisions of the Act to carriage by air in
India which is not international carriage. Such notification was issued on 17 December 1963
and, therefore, the provisions of the Indian Carriage by Air Act, 1972 became applicable to
internal air carriage also. The Government has the power to issue such notification under the
1972 Act. Such Notification was issued on 30 March 1973. The whole of the Act thus became
applicable.
Before the extension of the Act to the home air carriage, such carriage was wholly a contract
carriage. The consequences of a contract carriage as shown by some of the court decisions, and
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which now being of historical interest only, may be briefly noted. The position and liability of
the internal carrier by air in India was discussed in a lengthy judgment by P.B. Mukherji J
(afterwards CJ) in Indian Airlines Corpn v Madhuri Chowdhuri
The plaintiff’s (respondent here) husband was killed when a Dakota aeroplane crashed soon
after it took off from Nagpur for Madras. The plaintiff brought an action against the corporation
for damages for the benefit of the representatives of the deceased. She had to face the following
wide and sweeping exemption clause contained in the passenger’s air ticket:
The carrier shall be under no liability whatsoever to the passenger (or his
representatives) for death, injury or delay to the passenger, or loss, damage,
detention or delay to his baggage or personal property arising out of the carriage or
any other services or operation of the carrier whether or not caused or occasioned
by the act, neglect, or negligence or default of the carrier or of the pilot, flying,
operational or other staff or employees or agents of the carrier or otherwise
howsoever.
The inquiry into the cause of the crash revealed that it was wholly due to defective supervision
and checkup. The port engine of plane failed after getting airborne and revived again and the
pilot instead of landing back tried to push ahead. It failed again and now even forced landing
could not take place because of some defects in the warning instruments. The result was the
crash and the death of the plaintiff’s young businessman husband.
Desperate efforts were made on the plaintiff’s behalf to get over the exemption clause. It was
contended that a clause which exempts a carrier from liability for negligence is against public
policy and should be declared to be void under Section 23, Contract Act; that the term which
excluded liability for “neglect, negligence or default” was unreasonable. The trial judge held
that the exemption clause was illegal, invalid and void and also that a party guilty of negligence
in the performance of his contractual duty should not be permitted to shelter behind such
unreasonable exclusion clauses. But the Calcutta High Court reversed this judgment. The first
point that the court had to resolve was which law governs the liability of the internal carrier by
air. The court found that the Indian Carriers Act, 1865 is not applicable because this Act, by its
own declaration confines itself to carriage of only goods and not passengers and that too by
land and sea and not air. The Indian Carriage by Air Act, 1934, also had no application because,
it had not been extended to internal air carriage at the time.
The court felt that by virtue of the above Privy Council decision the courts in India were bound
to hold that only the common law of England would apply to carriers by air in India and that
law, while, on the one hand, imposing the liability of an insurer on the carrier, permits him, on
the other, to reduce his liability by special contract to zero, and in this respect, there was no
difference whether he is a carrier of goods or of passengers.
The Act of 1972 was extended to internal carriage by air on 30 March 1973. When the goods
are actually in charge of the carrier in an aerodrome or on board an aircraft, it would constitute
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a carriage by air. Handing over the consignment to a person who is not the carrier does not
constitute a carriage because until actual carriage by air commences, there can be no carriage
by air by attracting the special provisions contained in the first and second schedule of the Act.
The consignment in this case was lost while it was in the custody of the third respondent before
it was handed over to the airlines for carriage. The claimant had accepted the position of the
third respondent as being not the carrier. He was only the recognized agent of the International
Air Travel Association (IATA). The carrier was not liable because there was still no
entrustment to the carrier at the time of loss. [Burlington Air Express India (P) Ltd. vs. MRF
Ltd.]
CONSUMER CASES ON AIRLINE SERVICES
1.) Cancellation of flight
a) In Air India Ltd. vs M.K. Abdul Majeed, A flight was cancelled when the passengers
had already waited for three hours after boarding. The flight could not be operated
because of the absence of the pilot. No arrangement was made for an alternative pilot.
The passengers were left to take care of themselves. The airliner was held liable to pay
compensation, taxi charges and costs of litigation.
b) Indian Airlines vs. Femina Zai, even where the right to cancel or reschedule a flight
was reserved by the airliner, it was held that it was the bounding duty of the carrier to
inform each affected passenger about the same well in advance so as to enable them to
make an alternative arrangement. Airliners always secure contact numbers of
passengers for this purpose. But the company in this case did not use it. It amounted to
deficiency in service.
2.) Discomfort in business class
a) In U.S. Awasthy vs. Gulf Air, the complainant paid higher rate for travelling in
business class, but a fixed seat, not reclinable, was provided to him. This caused him
considerable discomfort, the flight being of long duration. He was allowed refund of
extra rates with 9 per cent interest, compensation of Rs 1,00,000 and costs of Rs 10,000.
It was immaterial that the cause of action had arisen at a place out of India. If the case
comes within the four corners of the Act liability would follow even if the operative
causes occurred outside India.
3.) Death on board

a) In S. Subramanium vs. K.L.M. Royal Dutch Airlines, the complainant’s husband
died while travelling by a flight from Delhi to Amsterdam. Evidence indicated that there
was a history of heart problem and death was due to heart attack. Some delay was there
on the part of the airliner in informing relatives, but the. Indian Embassy and the World
Bank where the deceased was employed were promptly informed. Thus, no case of
compensation was made out for any deficiency in service.
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4.) Loss of tickets
a) In, Jadav Chakraborty vs. Modiluft, complainants lost their tickets by theft. They
duly informed the airliner. They were not allowed journey without purchase of fresh
tickets and with fresh seat allotment. This was held to be an unfair trade practice
within the meaning of Section 2(1)(r), Consumer Protection Act, 1986. The Rules on
the airliners’ ticket which prohibited refund in case of loss of ticket were equally
unfair.
b) In Indian Airlines Ltd. vs. N.N. Kini, tickets were lost and the airliner expressed
disability to refund unless the tickets were produced, the National Commission
described this practice as archaic.
5.) Arrangement for alternative flight
a) In Arun Jain vs. Thai Airways International Ltd., boarding card could not be
issued to a reserved passenger because there was overbooking and the plane was
already full with passengers who had reported earlier. An alternative flight was
arranged for next morning and free accommodation was provided for the night. A
complaint seeking compensation of huge amount of Rs 35 lakh was dismissed.
b) In Air India Ltd. vs. Prakash Singh., The notice on air ticket stipulated that a
passenger breaking journey for more than 72 hours would have to reconfirm onward
reservation. Reservation for the onward journey was cancelled without any intimation
to the passenger. The telephone and e-mail attempts of the passenger failed to
generate any response. The airliner was held liable to refund the money taken by it for
up gradation of the ticket.
6.) No flight on booking date
a) In Mobinderjit Singh Sethi vs. Indian Airlines., confirmed tickets for a flight were
issued even when there was no flight that day. The defence of the airliner that the
confusion was due to change in time table did not work because the timetable had been
Limitation. Rule 30 of Second Schedule provides that the right to damages becomes
extinguished if no action is taken within two years.
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MODULE 5
Carriage by Sea – Affreightment Contracts – Charter Party and Bill of Lading – Types- Hague
Rules – Visby Rules & Hamburg Rules – Carriage of Goods by Sea Act, 1925 – Multimodal
Transportation of Goods Act, 1993.
CARRIAGE BY SEA – AFFREIGHTMENT CONTRACTS
A contract for the carriage of goods by sea is called the “contract of affreightment”. Ordinarily
a carrier by sea is a common carrier, liable absolutely, like all others, for the loss of the goods
subject only to a few exceptions. But carriage by sea, being a hazardous job, the carrier usually
makes a special contract and, in order to emphasize this special nature of the contract, it is
called, not the contract of carriage, but the contract of affreightment. Freight means the charges
for which the carrier agrees to carry the goods.
A contract of affreightment may take one of the two forms, namely, it may take the form of a
charter-party, or a bill of lading. In a charter-party the ship itself is hired and in a bill of
lading the goods are delivered to the shipowner for carriage and he issues a bill of lading as a
document of title for the goods.
Implied Undertakings
In every contract of affreightment, whether it be by charter-party or by bill of lading, certain
undertakings on the part of the carrier are implied.
1.) Seaworthiness:
The first and the most important of such undertakings is that the ship shall be seaworthy. This
means that the ship shall be fit for the journey and also fully equipped for the type of cargo that
it contracts to carry.
In Elder, Dempster & Co Ltd v Paterson, Zochonis & Co. Ltd., the consignment was of
some casks of oil. It was towed on board the ship and, there being no deck above them, the
other cargo, which consisted of a quantity of palm kernels, was placed on them. The casks were
consequently crushed by the weight and much of the oil was lost. The House of Lords held that
the damage was due, not to unseaworthiness, but to improper stowage. The vessel was
unquestionably fit to receive and carry the cargo in question. She was a well built and well-
found ship and lacked no equipment necessary for the carriage of palm oil and the damage
arose because placed upon them was a weight which no casks could be expected to bear. There
being an exception in the contract for loss due to bad stowage, the shipowner was held not
liable.
Before the Carriage of Goods by Sea Act, 1925 came into force, the obligation of the shipowner
to provide a seaworthy ship was considered to be an absolute one, that is, he was bound to
assure a seaworthy ship and not merely that he made an honest effort to do so. Whether the
contract was in the shape of a bill of lading or any other form there was a duty that the ship
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shall be fit for its purpose. The shipowner warranted the fitness of the ship when she sailed,
and not merely that he had loyally, honestly and bona fide endeavored to make her fit.
But now Rule 1 of Article III of the Act provides that the shipowner is bound before and at the
beginning of the voyage to exercise due diligence to make the ship seaworthy. The Act applies
only to contracts of affreightment which are comprised in a bill of lading. It does not apply to
charter-parties and, therefore, in a charter-party the obligation to assure seaworthiness is still
an absolute one. The practical difference is that in the case of an absolute obligation, if the ship
is in fact unseaworthy, liability follows, even if the best care was taken to make it seaworthy.
In the other case, if due diligence is taken, there would be no liability, even if the ship was still
unseaworthy. The difference in effect can be illustrated by Riverstone Meat Co Pty Ltd v
Lancashire Shipping Co Ltd.
The ship in question was repaired by a reputed firm, but their fitter secured certain covers so
unevenly that the nuts became loose when the ship was encountering rough weather. The water
entered and damaged the cargo.
The House of Lords felt that the defect was impossible of detection and although the shipowner
had taken the care of getting the ship checked by the best firm, he was still liable for the
unseaworthiness. Viscount Simonds pointed out that the Act makes a “difference of great
importance, as it avoids responsibility for latent and undiscoverable defects”. But even in case
of charter-parties the court may not hold the shipowner liable, for example, for material fatigue
or where he appointed qualified staff but they turned out to be incompetent. [Adamastos
Shipping Co. vs. Anglo-Saxon Petroleum Co.]
Cargoworthiness: Seaworthiness being a relative term, the obligation is to provide a ship fit
both for the particular voyage and the particular cargo. For, seaworthiness also means
cargoworthiness. In Tattersal vs. National Steamship Co. Ltd., a shipowner contracted to
carry animals on the condition that he would not be liable for death or injury by disease. He
did not disinfect the ship after a previous voyage and consequently the cattle were infected with
mouth and foot disease. He was held liable. The infection was caused by uncargoworthiness
which disentitled him from relying upon the exception clause.
In Ciampa v British India Steam Navigation Co Ltd., lemons belonging to the plaintiff were
loaded on the defendants steamship at Naples for carriage to London under a bill of lading
which excepted “restraints of princes,” and “any circumstances beyond the shipowner’s
control.” The ship had come from Mombassa which was plague contaminated port and,
therefore, in accordance with a decree of the French Government, when she touched a French
port was subjected to a disinfecting process, called deratisation. The natural consequence of
this was that the lemons arrived at the destination in a damaged condition. The shipowner was
held liable for the loss.
In Hang Fung Shipping & Trading Co. Ltd. vs. Mullion & Co. Ltd., it was held that a ship
is not seaworthy if it is not fitted with requisite loading and unloading equipments, or if its
crew is incompetent or inexperienced.
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Seaworthiness at commencement of each stage: Where a voyage has to run through several
stages, the ship should be seaworthy at the commencement of each stage. In the Vortigern
Case, a ship from Philippines to Liverpool had to touch Colombo and Suez en route. It could
not carry coal for the whole of the journey and had, therefore, to be replenished at different
stages. At Colombo the engineer failed to point out to the master that the coal was running out.
Consequently, the stock was not replenished. A lot of cargo had to be burnt to enable the ship
to reach Suez. The shipowner had excluded liability for negligence of the staff.
But even so he was held liable. The court pointed out that the warranty of seaworthiness is a
flexible one and has to be adjusted to the requirements of each voyage. This voyage was to be
divided into stages for the purpose of refuelling. When the ship left Colombo without adequate
supply of coal to reach Suez it was not seaworthy from that stage. The loss having been caused
by unseaworthiness, the exclusion clause could not be relied upon.
Exclusion clauses and unseaworthiness: The shipowner can rely upon an exclusion clause
where the damage in question has not been caused or contributed by unseaworthiness, but only
by the excepted peril operating independently.
In The Europa Case, a charter-party excluded liability for collision. The ship arrived with its
cargo of bags of sugar safely at the port of discharge but there she struck the dock wall. Water
closet pipes were broken. Water entered into the tween decks and damaged the sugar-bags
stowed there. The water would not have gone further down into the hold but for the fact that
some holes there, were imperfectly plugged. This defect existed even at the commencement of
the voyage and to that extent the ship was unseaworthy. Thus, the sugar in between decks was
damaged by the collision and that in the hold by unseaworthiness. The shipowner was held
liable only for the damage caused by the unseaworthiness and for the damage caused by the
collision the exception clause protected him from liability.
Liability for seaworthiness can be excluded by clear words. If the exception clause is not
capable of bearing a definite meaning, it will operate against the shipowner. A charter-party
agreement provided that the shipowner would not be liable for any loss which was capable of
being covered by insurance. The cargo of frozen meat was damaged by unseaworthiness
because the ship was not fully equipped for such cargo. The shipowner was held liable. [Nelson
Line Ltd vs. James Nelson & Sons Ltd.] The exclusion clause either meant everything or
nothing.
2.) Reasonable despatch
In all contracts by charter-party, where there is no express agreement as to time, it is an implied

condition that there shall be no unreasonable delay in commencing the voyage. The voyage
must be commenced within a reasonable time. This is so because in all seagoing business
expedition is important, for, by delay, the whole object of the voyage may be defeated. This
has been the principle since long and is evidenced by M’Andrew vs. Adams.
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Here a ship, instead of sailing, as agreed, from Portsmouth to St Michaels for loading a cargo
of fruit for London, she went on an intermediate port and came to St Michaels only after about
a month from the date of sailing. The charterer was held entitled to sue for the breach of the
implied warranty of reasonable despatch. Where there is a delay it is incumbent on the party to
account for it. In many cases it may be difficult to say what is a reasonable or an unreasonable
time for commencing a voyage. The intention of the parties is to be looked at with reference to
the trade in which they are engaged. Looking at the charter-party in this case, the court
entertained no doubt as to the intention of the parties, that the voyage should be commenced
with all reasonable expedition.
3.) No deviation
The third important implied warranty is that the ship should follow the agreed or the customary
route. Any departure from such route is called deviation and this may operate as a breach of
the contract making the shipowner absolutely liable like a common carrier and disentitling him
from relying on the exception clauses, if any. “Unjustifiable deviation displaces the bill of
lading contract and with it any exceptions included therein; accordingly, shipowners are liable
for damage which happens after deviation though not caused by it.” [Joseph Thorley Ltd. vs.
Orchis Steamship Co. Ltd.]
Deviation to save life, permitted but Not Property: There are, however, cases in which
deviation is justifiable. Common law permitted deviation to save life, but not, of course, to save
property as held in Scaramanga & Co. Stamp. The defendants’ ship was chartered by the
plaintiffs to carry a cargo of wheat from Cronstadt to Mediterranean, the usual perils of the sea
excepted. While on her voyage she sighted and went to the assistance of a vessel in distress,
and the master, in consideration of £ 1000, agreed to tow her into the Texel, which was out of
his direct course. While so doing the defendants’ vessel was stranded, and, ultimately, with her
cargo, was totally lost. The jury found that towing was not necessary to save the lives of those
on board the vessel in distress and was necessary only to save her and her cargo. The defendants
were accordingly held liable. Those whose cargo was thus lost were entitled to hold the
shipowner liable.
Statutory permission for deviation: Where a contract of affreightment is in the form of a bill
of lading and, therefore, the Carriage of Goods by Sea Act applies, Article IV [R. 4] of the Act
provides that “any deviation in saving or attempting to save life or property at sea, or any
reasonable deviation shall not be deemed to be an infringement or breach of these rules of the
contract of carriage, and the carrier shall not be liable for any loss or damage resulting there-
from,” Thus deviation is now allowed for saving both life and property and also where
reasonably necessary.
Deviation for recognized purposes and unseaworthiness: Deviation for these recognized
purposes is justified even when the need for the deviation was created by unseaworthiness of
the ship. It is the presence of the peril and not its causes which justify deviation. This was
pointed out by the House of Lords in Kish v Taylor Sons & Co.
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The charterers of a ship having failed to load a full cargo as required by the charter-party, the
master, to minimize the loss, procured a cargo from the other sources and overloaded the deck
to such an extent as to render the ship unseaworthy. In consequence of her unseaworthiness the
ship was obliged to deviate from her course in order to put into a port of refuge for repairs,
without which the life of the crew would have been in danger. After repairing, she completed
the voyage in safety. The shipowner claimed under the contract “dead freight” and retained the
cargo until payment. The charterer contended that on account of the deviation the contract was
avoided and the shipowner should not have the advantage of its terms.
But the deviation was held to be justified. “Dead freight” is in reality a compensation for
underloading. The contract of affreightment is not put to an end by a breach of the warranty of
seaworthiness or by a deviation which is in fact necessary for the safety of the ship and crew
but the necessity for which is caused by unseaworthiness.
Contract clauses for deviation: Contracts of affreightment usually provide for the right of
deviation, but such right should not be used so as to defeat the very purpose of the contract.
The Court of Appeal laid down this principle in Leduc & Co vs. Ward.
The bill of lading, which contained the usual exception of sea perils, stated that the goods were
shipped for delivery at Dunkirk on board a vessel lying at Fiume and bound for Dunkirk, with
liberty to call at any port in any order. The ship, instead of proceeding direct for Dunkirk,
sailed for Glasgow, and was lost with her cargo, off the mouth of the Clyde, by perils of the
sea. The shipowners were held liable. The bill of lading imported a voyage direct from Fiume
to Dunkirk, subject to the liberty to call at any ports of call substantially within the course of
such voyage; Glasgow, being altogether out of the course of such voyage, was not such a port;
and the vessel was therefore lost while deviating from the voyage contracted for, and the
excepted perils clause did not exonerate the defendants from their liability.
Thus, though the goods were destroyed by an excepted peril, the shipowner was nevertheless
liable, because the peril operated when the ship was out of its course. The liberty to call at any
port does not mean that the ship can leave the named voyage. It only means that while confining
itself to the contracted voyage, it may touch any ports which will be passed on the named
voyage. Any departure from the contracted voyage is a breach which will disentitle the
shipowner from the exception clauses. The House of Lords held in Ham Steamship Co Ltd v
Tate and Lyle Ltd. that even where a shipowner delivers goods safely after a deviation, he
will not be able to recover the freight for the voyage. Lord Atkin considered deviation to be a
serious matter.
4.) Not to load goods liable to cause danger or delay to ship
There is an obligation on the part of the shipper not to load the ship with dangerous goods or
goods likely to cause delay to the ship. He should not ship goods likely to involve unusual
danger or delay to the ship without communicating to the shipowner facts which are within his
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knowledge indicating that there is the risk, provided that the shipowner does not and could not
reasonably know those facts.
In Brass vs. Maitland, where a shipper delivered casks of what he described as bleaching
powder, but they in fact contained corrosive contents which, due to defective packing, escaped
and caused damage, the shipper was held liable.
In the case of Bamifield vs. Goole & Sheffield Transport Co. Ltd., the goods were described
as general cargo. They were packed in casks and consisted of a chemical known as “ferro
silicon" which was always liable to be dangerous by giving off poisonous gases. The shipper
knew what the goods were but did not know that they work dangerous and, therefore, gave no
information to the shipowner. The goods gave off poisonous gases in consequences of which
one man on board died and another suffered from serious illness. The defendants were held
liable.
Goods which are likely to cause delay or detention of the ship are also in the same category.
This was pointed out in Mitchell, Cotts & Co vs. Steel Bros & Co Ltd. The shippers of a
cargo of rice upon a vessel they had chartered for a voyage to Piraeus, knew that the rice could
not be discharged there without the permission of the British Government, although they
thought that they might obtain the permission. In fact, they were unable to procure it and the
ship was in consequence delayed. The shipowner did not or could not possibly have known
that the permission was necessary. It was held that the delay arose from a breach of the
shippers’ obligation. Atkin J took occasion to lay down that “there can be no question but that
the shipment of goods upon an illegal voyage, i.e., upon a voyage that cannot be performed
without violating the law of the flag of the country or the law of the place where the goods are
to be carried to—a shipment of goods which would involve the ship in consequence either of
forfeiture or delay—is precisely analogous to a shipment of dangerous goods which might
cause the destruction of. the ship…”
TYPES OF CONTRACT OF AFFREIGHTMENT
A contract of affreightment may take one of the two forms, namely, it may take the form of a
(1) Charter-Party or (2) Bill of Lading.
(1) CHARTER-PARTY
A charter party is a contract of affreightment entered into for hiring the whole ship or a principal
part thereof to carry goods from one port to another. It also refers to the formal written
document in which the contract of hiring of the whole or part of the ship for the conveyance of
goods is expressed. The person hiring the ship or a part of it is called the 'charterer'.
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Kinds of Charter Party:
A Charter Party may be either:
1. Voyage Charter: When the vessel is chartered for a particular voyage is called the voyage
charter.
2. Time Charter: When the vessel is hired for a specified period of time, irrespective of the
number of voyages performed. Time Charter Party is also known as Charter Party by Demise.
Charter by demise: In the case of hiring the whole ship, the terms of the charter party may
sometimes amount to a lease or demise of the ship, whereby the possession of the ship comes
under the absolute control of the charterer who becomes temporarily the owner of the ship and
the captain and the crew become his servants. This is called a 'charter by demise'. Charter
without demise: Generally, a charter party is without a demise or lease of the ship where, like
a simple contract of carriage, the charterer only gets the right to have his goods conveyed by
the ship and the captain and the crew do not become his servants and the possession and control
of the ship remain with the shipowner. In such a case it is called a 'charter without demise'.
In Sandeman v Scurr. a ship was chartered for a voyage from Oporto to the United Kingdom.
It was to load a full cargo of wine from the charterer’s agents and the captain was to sign the
bill of lading for the same. The ship reached Oporto and was put up there as a general ship
without any intimation that she was under charter. The wine was stowed by a stevedore whom
the master paid. The wine leaked from improper stowage and the question of liability arose.
Where the charter-party is by demise, the charterer becomes the owner for the time being not
only of the ship but also of the crew and their negligence falls on him. The charterer becomes
responsible for the consequences of bills of lading signed by the master. Where the master
signed bills of lading without proper care and consequently the owner was not able to recover
general average contribution from cargo-owners, the charterer was held liable to be the owner
under an “indemnity clause.” [Milburn & Co. vs. Jamaica Fruit Importing & Trading Co.
of London Ltd.]
Where on the other hand, it is an ordinary charter-party, the crew remain the employees of the
shipowner and he is as much liable for their negligence.
In Baumwoll Manufactur von Carl Scheibler vs. Furness, the owner of a ship let her by a
charter-party for a term of four months. The charter-party provided that the captain, officers
and crew should be paid by the charterer, that the captain should be under the orders of the
charterer as regards employment, agency or other arrangements; that the charterer should
indemnify the owners for all liabilities arising from the captain signing bills of lading. The only
obligation on the owners was to maintain the ship and pay for its insurance. The charterer took
possession and appointed the captain and other crew, but the chief engineer was appointed by
the owners. The charterer sent the ship to New Orleans where cotton was loaded on it for which
the bills of lading were signed by the captain. The ship was filled with water on the voyage
owing, as was alleged, to the unseaworthiness of the ship. The cargo owner sued the shipowner
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also. The House of Lords held that the captain not being the servant of the owner, the owner
was not liable. This is so because the owner who has parted with the possession and control of
a ship under a charter-party is no longer the employer of the crew and is not liable for their
acts. Lord Watson emphasized that at the time when the bills of lading were signed and also at
the time when the goods of the appellant suffered damage, the ship was in the possession and
under the control of the charterers, who employed their own master and crew in her navigation.
Cancellation clause in voyage charter-party: A voyage charter-party usually carries a

cancellation clause which gives the charterer the right to cancel the charter if the ship is not at
his disposal at the port of loading at the specified time. The charterer would have to fix a
cancelling date before exercising this right. The right is in addition to the ordinary right of
rescission. If the ship is not able to reach because of a supervening impossibility, both parties
arc relieved and neither can be sued for breach.
Safe ports under time charter: A time charterer can carry the ship only to a safe port, which
is a question of fact in each case. In 1915 a ship was carried to Newcastle at a time when the
German Government had, just two days before, threatened the destruction of all merchant ships
in the waters round Great Britain. The Court of Appeal laid down that a safe port means a port
which is safe physically as well as politically. An action either of nature or war may render a
port unsafe but held on the facts that Newcastle was a safe port at the time. [Palace Shipping
Co. vs. Gans Steamship Line]
Payment of hire: Timely payment of hire of the ship is an essential requirement of a charter-
party. The shipowner gets the right to withdraw the ship if there is no punctual payment. Where
the payment falls due on a holiday or Sunday, it should be made a day before. Payment on the
next working day would be too late. The shipowner would be justified in withdrawing the ship.
[Mardorf Peach CO. Ltd. vs. Attica Sen Carriers Corpn of Liberia] However, a charter-
party can contain a clause known as “anti-technicality clause” requiring the shipowner to give
at least a short notice before withdrawing the ship. Such notice must be given after payment
has become due.
Anti-technicality clause: The “anti-technicality clause” requires the owner to give a short
notice, say, for example, 48 hours on hire becoming due, reminding the charterer of the fact
that if payment is not received during the grace period, the ship would be withdrawn. Any such
notice before the hire becomes due is of no effect. [Afovous Shipping Co. SA vs. R. Pagnam]
Port, berth or dock charter-party: A charter-party which simply states the port at which the
ship shall be made available, is called “port charter-party”. Where the ship is to be made
available at the specified loading spot in a port or dock, it is called berth or dock charter-party.
In such a case the obligation clearly is to bring the ship at the specified berth or dock. If that
place is not in a position to receive the ship owing to congestion or some other cause, the
waiting period would go to the shipowner’s account. The ship becomes an “arrived ship” if it
reports at the customary place of anchorage within the port.
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In the case of a port charter-party, it is enough for the shipowner to bring the ship to the area
of the port where ships usually wait for a berth and from where it can be put at the disposal of
the charterer. Such area is designated as the commercial area of the port. The waiting period
after the arrival of the ship in that area is at the account of the charterer. [Lenois Steamship
Co. vs. Rank Ltd.]
There have been difficulties in identifying the commercial area of a port. But beginning with
the decision of the House of Lord in The Hellow the emphasis has been not on distance from
the loading place but upon the fact that the ship should be effectively at the disposal of the
charterer. In the Leonis case the ship was regarded as an arrived ship when it was just only a
few ships’ length from the awaited berth.
In the Aello case the ship was 22 miles away from the loading port, it was held to be not an
arrived ship not because of the distance, but because it was not effectively at the disposal of
the charterer. For this purpose, the vessel has to be at least at the usual waiting place within the
port. “Commercial area” is no longer the exclusive test.
In The Johanna Oldendroffe, Lord Reid emphasized that before a ship can be treated as an
arrived ship she must be within the port and at the immediate and effective disposition of the
charterer and her geographical position is of secondary importance. The ship in this case was
at a distance of 17 miles from the loading area. She was within the legal environs of the port
and was waiting for the charterer’s nomination for a berth. The ship was at his disposal. The
shipowner had fulfilled his responsibility. It was immaterial that it took 18 days for the
charterer to secure a berth.
Usual clauses of charter-party
It is open to the parties to include in a charter-party or contract of affreightment any lawful
terms. But many such terms have now become more or less stereotyped and are known as the
usual clauses of a charter-party. Some of such terms operate as conditions and others as
warranties. Whether it is one or the other depends upon its relative importance. Only some of
such terms may be noted here.
1.) Ready to load: A charter-party usually contains a statement as to the position of the ship.
Such a statement may, in circumstances, become a condition of the contract any breach of
which entitles the charterer to repudiate the contract. For example, in Bentsen vs. Taylor Sons
& Co, a charter-party dated 29 March, described the ship “as now sailed or about to sail to the
United Kingdom,” and that the ship, after discharging homeward cargo, shall proceed to load.
But, in fact, she sailed to the United Kingdom on 23 April. The parties then entered into
correspondence. The ship arrived and the charterers refused to load. It was held that the
description of the ship as “now sailed or about to sail,” was of the substance of the contract;
it was a condition precedent and not a mere warranty and the defendants were entitled to
repudiate the contract. But their correspondence amounted to a waiver of such right to repudiate
and they were liable for the freight subject to their right to recover such damages as they could
prove that they had sustained by reason of the breach of the condition.
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Where, on the other hand, the clause provided that the “ship is expected ready to load” at a
given date, it was held that this did not mean that the ship must be in such a position. It only
means that there must be an honest belief, founded on reasonable grounds, that she will be able
to load at that date. In fact, the tune at which such a representation was made, there was no
reasonable ground for making and the ship was not ready to load until a long rime afterwards
there was a breach of condition. [Sanday & Co. vs. Keighley, Maxted & Co.]
Similarly, any statement as to the position of the ship may operate as a condition. For example,
the words that the "ship was now in the port of Amsterdam," were held to be a warranty or
condition precedent. In Behn vs. Burness, a statement by the owner that the ship is "expected
ready to load under this charter about 1 July 1965" has been held to be a condition.
2.) Fit for voyage: Charter-parties usually provide that the ship shall be "tight, staunch and
strong and every way fitted for the voyage". It has been admitted by the Court of Appeal in
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, that whether such a
stipulation is a condition or a warranty is not easy to classify. A charter-party provided that the
vessel was to be "in every way fitted for ordinary cargo service". The experience on the voyage
was, however, otherwise as she kept breaking down from time to time. This was due to the
incompetence and inadequacy of the engine-room staff, for which reason she was unseaworthy.
But even so it was held that the statement in the agreement as to seaworthiness was not a
condition and the charterers were not entitled to repudiate the charter-party.
3.) Full and complete cargo: “Full and complete cargo” clause means that the charterer
undertakes to supply the agreed cargo lest the ship owner may suffer loss of freight. Where a
charterer refused to load more than 2673 tons, whereas a full and complete cargo would have
been 2950 tons, it was held that the charterer ought to have loaded a full and complete cargo
and freight was payable accordingly. [Heathfield Steamship Co. Ltd vs. Rodenacher]
A marginal variation would be covered by the rule de minimus non curat lex which means
that the law has always regarded a contract to deliver or load a specified quantity of goods as
satisfied if that quantity has been delivered within the margin of error which is not
commercially practicable to avoid. The rule is simple, though difficulties do arise in borderline
cases on particular facts. One such case was where out of 12,600 tons which had to be loaded,
the charterer delivered only 12,588 tons 4 cwt. The shortage was that of 11 tons and 16 cwt. It
was held that the margin of error rule was not a defence in this case. On the facts of the case it
was commercially practicable to get very much closer to the full and complete cargo of 12,600
tons. [Margaronis Navigation Agency Ltd. vs. Henry W. Peabody & Co. of London Ltd.]
4.) King's enemies and restraints of princes: Charter-parties often provide that the shipowner
would not be liable in certain events, for example, that no liability would arise if the goods are
lost due to an “act of God” or of “national enemies”. Such perils are then known as excepted
perils.
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The words “King’s enemies” mean the enemies of the sovereign of the person who made the
bill of lading and “restraints of princes and rulers” include all cases of restraint or interruption
by lawful authority, leaving, of course, the case of pirates to be ranked with other dangers of
the sea. Where it became probable that a ship passing through Turkey would be seized because
of a war between Greece and Turkey and, therefore, the shipowner would not be able to perform
his contract, a refusal by the charterer to load the ship was held to be justified, and it made no
difference that a portion of the cargo had already been loaded. [Embiricos vs. Reid & Co.] In
this case war had already been declared. But where there is no such declaration and there is a
mere apprehension of seizure, that will not be sufficient to enable the shipowner or the charterer
to repudiate the contract. There must be such a declaration of war as to cause an actual restraint
of princess.
Where on account of infection to animals the government of the country of destination did not
allow the livestock to be landed there, that was held to be restraint of princess. [Miller vs. Law
Accident Insurance Co.] Where a ship had to be diverted to Britain instead of going to a
German port because of the war, that was within the exception. [British & Foreign Marine
Insurance Co. vs. Samuel Sydney & Co.]
5.) Perils of sea: Charter-parties also contain exception in favour of “perils of the sea”, namely,
if the goods are lost on account of a peril of the sea the shipowner would not be liable. The
term “perils of the sea” does not cover every accident or casualty which may happen to the
subject-matter. It must be a peril “of” the sea. “These words do not protect, for example, against
that natural and inevitable action of the winds and waves which results in what may be
described as wear and tear. There must be some casualty, something which could not be
foreseen as one of the necessary incidents of the adventure. [Wilson, Son & Co. vs. Xanthos,
The Xantho] In this case the damage to the cargo was due to the collision of the ship with
another vessel and the House of Lords held that the collision was a peril of the sea within the
meaning of the exception.
Another example is Hamilton, Fraser & Co v Pandorf & Co, Rice was shipped under a
charter-party and bills of lading which excepted “dangers and accidents of the seas.” During
the voyage rats gnawed a hole in a pipe on board the ship, whereby seawater escaped and
damaged the rice, without neglect or default on the part of the shipowners or their servants.It
was held that the damage was within the exception and the shipowners were not liable. It was
suggested by the House of Lords that the idea of something fortuitous and unexpected is
involved in both words “peril” or “accident”.
Whether shipowner released by happening of excepted peril: Where a ship is damaged by
an excepted peril, the shipowner remains bound by the contract and should continue the voyage
after getting the ship repaired. It is not a discharge by itself. But he can show that it was
impossible to go further or that it would be unreasonable to expect this form him. [Schenker
& Co. vs. S.S. Bessie Morris Co. Ltd.]
Clause paramount: If a charter-party contains a clause “paramount” it becomes bound by the

provisions of the Carriage of Goods by Sea Act. These provisions are designed for bills of
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lading, but the parties to a charter may also at their option invite their application by an express
declaration to that effect.
Lawful trades and safe ports: The charterer has to use the ship for lawful trades and to carry
the ship only to safe ports. The concept of a “safe port” is that it is safely usable by the ship for
arrival, departure and loading and unloading. The port should be safe from political and
structural point of view and also weather conditions. Where a port did not warn the ship of
tides, nor informed it that there was no such system there and the ship must use its own
instruments, the port was held to be not safe entitling the shipowner to recover his loss form
the charterer. [Tage Burglund vs. Montoro Shipping Corpn, The Dagmar]
Indemnity clauses: Since the ship is at the disposal of the charterer and the master of the ship
has to carry out his instructions, the charterer has to indemnify the shipowner against the
consequences of his instructions being carried out. For all operational matters, however, the
master is under the control of the shipowner. [The Berkshire Case]
Cancellation clauses: A clause in a charter-party entitling the charterer to cancel the contract
is generally an absolute right and not subject to exception clauses. Explaining the effect of a
clause like this in Smith vs. Dart & Son. The fact of the case was that the vessel arrived two
days before the day so fixed, but communication with the shore being impossible on account
of the state of the sea and the weather, she was not, on the day fixed, free of pratique
(Pratique is the license given to a ship to enter port on assurance from the captain to convince
the authorities that she is free from contagious disease) there, and in consequence of this the
charterer exercised the option of cancelling the charter-party, which he understood that the
clause in question gave him. It is with this that the [shipowner’s] ...contention has to do. There
is, he points out, in the earlier part of the charter-party the usual clause excepting, amongst
other things, all dangers and accidents of the seas, rivers, and steam navigation of what nature
and kind whatsoever during the said voyage, and he contends that, inasmuch as the vessel was
off the port before the day fixed, and was only prevented from being free of pratique there on
the day fixed by reason of the dangers of the seas excepted in the clause I have mentioned, the
charterer’s option to cancel the clause did not arise by reason of the operation of that clause.
The question, therefore, for the decision of the Court is, whether the stipulation that the vessel
should be at the port in question, free of pratique and ready to load, is an independent stipulation
overriding the whole of the charter-party, or whether it is subject to the operation of the clause
excepting the dangers of the seas. I have come to the conclusion that it is an independent
stipulation, and that it overrides the whole of the charter-party, and that, as the steamer did not
arrive in time to be at the port free of pratique on the day fixed, the charterer had the option of
cancelling the charter-party.”
There cannot be an anticipatory cancellation. A ship was to report at Calcutta by 6 p.m. on
10 May 1957. On 9th evening owners informed the charterers that she would be delivered on
10th morning. But owing to an inspector ordering fumigation, she was free to be delivered at
midnight between 10th and 11th. At 8 a.m. on 10th, the charterers purported to cancel the
contract. They were held guilty of breach. “in my judgment,” said Roskill J “both as a matter
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of construction of the charter-party and as a matter of authority, it is clear law that there is no
contractual right to rescind a charter-party under the cancelling clause unless and until the date
specified in that clause has been reached. There is no anticipatory right to cancel under the
clause.” The court, however, conceded that the right of rescission was exercisable on the failure
of the owners to keep the date of delivery.” [The Madeleine Case]
Frustration of charter-party: Frustration of a maritime adventure puts an end to the charter-

party releasing both sides from further responsibility. Thus, where a ship was not allowed to
leave a Russian port on account of a war between Germany and Russia, it was held by the Court
of Appeal that the delay was of indefinite nature; the adventure was completely frustrated and
the charterers were not liable for payment of hire. [Admiral Shipping Co. Ltd. vs. Weidner,
Hopkins & Co.] Where a ship was chartered to load a cargo but, on the day, before she could
have proceeded to her berth, an explosion occurred in the auxiliary boiler, which made it
impossible for her to undertake the voyage at the scheduled time, the House of Lords held that
frustration had, in fact, occurred in the circumstances. [Joseph Constantine Steamship Line
Ltd. vs. Imperial Smelting Corpn.]
Discharge: The charterer should nominate a safe port for discharge. In Leeds Shipping Co
Ltd vs Societe Francaise Bunge, the court held a port to be unsafe where there was a lack of
shelter and liability to a sudden onset of a high wind which could cause the anchor to drag. The
port was also near rocks and shallows which permitted limited anchorage.
(2) BILL OF LADING
A 'bill of lading' is a document issued by the shipowner or by the master or captain of the ship
or other agent in exchange of Mate's Receipt after the goods have been placed on board of the
ship for being carried to a specific destination. It is used when the goods shipped form only a
part of the cargo of a 'general ship'. In the case of hiring an entire ship, a charter party is drawn
up.
The Carriage of Goods by Sea Act, 1925 applies only when the contract of affreightment is
evidenced by a bill of lading. The definition in Article 1 of a “contract of carriage”, says that it
applies only to contracts of carriage covered by a bill of lading or any similar document of title.
The definition also includes any bill of lading or similar document issued under or pursuant to
a charter-party from the moment at which it regulates the relations between the shipowner and
the holder of the bill of lading.
There is no definition in the Act of the document called “bill of lading.” In Halsbury’s Laws
of England, it is stated that a bill of lading is a document of title signed by the shipowner or by
the master, or other agent of the shipowner which states that certain specified goods have been
shipped upon a particular ship and which purports to set out the terms on which the goods have
been delivered to and received by the ship. It has been stated by the Courts in India that this
definition has been generally accepted.
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The bill of lading has to be issued after the issue of mate’s receipt which symbolizes on behalf
of the master of the ship that goods have been received on board the ship. On production of the
mate’s receipt by the shipper, bill of lading has to be issued without delay. It being a statutory
duty, its denial or default or delay in issuance of it creates liability. If the shipper has suffered
any loss because of the delay, the carrier and its agent are jointly and severally liable.
Mate's receipt: Bill of lading should be distinguished from mate’s receipt. When goods are
put on board a ship, a receipt is issued acknowledging receipt of the goods and on production
of this receipt the bill of lading is issued. If there is any defect in the goods, it is mentioned on
the receipt, otherwise it is a clean receipt. Mate’s receipt is not a negotiable instrument, but
even so in the interest of safety, the master should issue the bill only when the receipt is
surrendered. A local custom making the mate’s receipt negotiable would not bind the goods
elsewhere. The mate’s receipt is not normally a document of title. By local custom it may have
that character but not if it is marked “non-negotiable”.
If the mate’s receipt is produced by any person other than the actual shipper, the master would
be entitled as also bound to issue the bill to only the actual shipper. So, it was held by Bacon
VC in Hathesing v Laing. It was stated that the endorsement of the mate’s receipt did not
transfer a property which overrode that given by the indorsement of the bill of lading, which
had been issued without production of the mate’s receipt.
1. Prima Facie Evidence of Receipt of Goods
Article 3, Rule 4 provides that a bill of lading shall be prima facie evidence of the receipt by
the carrier of the goods as therein described. Thus, it operates as a certificate that the goods
have been received. This may constitute an estoppel against the shipowner in the sense that he
may not afterwards be permitted to deny the truth of the matter. At any rate, the burden will lie
upon him to show that no goods were received, and that the bill was obtained from him by
fraud, or in connivance with his agents. The shipowner is liable for non-delivery or short
delivery to the holder of a bill of lading, unless he can show that his agent signed the bill
without the goods being put on the board. The whole burden of proof lies upon the shipowner.
[Bennet & Young vs. John Bacon Ltd.]
Conclusive evidence in reference to consignee or indorsee: The effect of a bill of lading as

an acknowledgement of the receipt of the goods is two-fold. As against the shipper, it is only
a prima facie evidence and, as against the consignee or indorsee, the bill is a conclusive
evidence, so that if such person has suffered loss by reason of acting on the bill, he can hold
the person signing the bill liable.
In Malabar Steamship Co vs. Central Bank of India, certain bags of food-stuffs were put in
a lighter for transhipment to a ship which was expected to arrive the next day. The ship did not
arrive as expected and, in anticipation of her arrival, the shipper obtained from the manager of
the shipping company bills of lading duly filled in. The shipper pledged the bills with a bank
and obtained Rs 5000 and disappeared. The seller of the foodstuff had not yet been paid and,
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therefore, he had the goods seized. The ship sailed away without the consignment. The banker
sued the shipping company. The banker being an indorsee of the bill, the shipping company
was held to be bound by an estoppel and liable to the banker for his loss.
Estoppel of shipowner: Explaining this in Silver and Leyton vs. Ocean Steamship Co Ltd,
Scrutton LJ observed: “It has been decided in Compania Nainera Vasconzada v Churchill
& Sim and affirmed by the Court of Appeal in Brandt v Liverpool, Brazil and River Plate
Steam Navigation Co Ltd, that the statement with regard to ‘apparent good order and con-
ditions estops as against the person taking the bill of lading for value the shipowner from
proving that the goods were not in apparent good order and condition when shipped and,
therefore, from alleging that there were, at shipment, external defects in them which were
apparent to reasonable examination. Article III, Rule 4 which says that the bill shall be
conclusive evidence not prima facie evidence only, liable to be contradicted can hardly have
been meant to render the above decision inapplicable.
Statutory duty in preparing bill and clean bill of lading: The statutory duties of the
shipowner in preparing the bill are prescribed by Rule 3 of the Article. One of them is that he
should state in the bill the apparent order and condition of the goods. Where the contents
indicate no defect in the goods or their packing, that is known as a clean bill of lading. If the
goods were not really clean, the shipowner would be liable to those for their loss, if any, who
have been dealing with it as a clean bill.
In a case before the Madras High Court certain drums consigned with a ship were described as
“reused” and then this word was deleted at the request of the shipper and in consequence the
bill became a clean bill. This enabled the shipper to secure credit which he would not have
been able to get if the word “reused” was there. The drums were in fact “reused”. The
shipowner was held liable.
2. Bill of Lading as Evidence of Contract of Affreightment
The bill of lading is not the contract of affreightment in itself, but it is the evidence of the
contract. The terms of the contract of carriage are no doubt to be found in the bill, but since the
bill is only an evidence of the contract, and not the contract by itself, there can be other terms
also. For example, in S.S. Ardennes (Cargo Owners) v S.S. Ardennes (Owners), the bill of
lading gave liberty to the shipowner to proceed to any route, though the ship was bound for
London. Instead of proceeding to London it went first to Antwerp, with the result that it arrived
in London so out of time that higher import duty had to be paid. In order to recover this loss,
the shipper sought to prove that the shipowner had promised that the ship would go directly to
London, and only then the bill of lading was issued.
If the bill of lading is a contract by itself, such a promise as that could not have been proved.
But since it is only evidence of the terms it contains; other terms can be proved by other
evidence. So, the shipper was allowed to prove the promise of direct despatch though it was
not embodied in the bill.
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In case of a conflict between the terms used in the bill of lading and the charter-party, the terms
of charter-party prevail. The bill of lading cannot be used as a subsequent contract to change
the terms of the charter-party. [Rodocanachi vs. Milburn] In the hands of the charterer, the
charter-party is the governing document even when a bill of lading has been issued to a shipper
other than the charterer and later indorsed to the charterer. [President of India vs. Metcalfe
Shipping Co. Ltd.]
3. Bill of Lading as Document of Title
A bill of lading is a document of title; it is a symbol of the goods; it represents the goods
themselves. It is a symbol of the right to property in the goods specified in the bill. Its
possession is equivalent to the possession of the goods themselves, and its transfer being a
symbolic delivery of the goods themselves has by mercantile usage the same effect as an actual
delivery.
The Delhi High Court held in Rudnap Export – Import vs. Eastern Associates Co, that
property in the goods, i.e. the two dumpers, passed to the defendants. The defendants neither
paid the price nor returned the bill of lading. They were therefore liable to pay the price of these
two dumpers.
Delivery of bill to buyer is delivery of goods: One effect of the bill of lading being regarded
as a symbol of property or as document of title is that when the bill is delivered to the buyer of
the goods, for example, in a Cost, Insurance and Freight (CIF) contract, it is considered to be
equivalent to the delivery of the goods and the buyer has to pay in the same way as if the goods
themselves have been delivered to him. In a case where under a CIF contract the bill was
tendered to the buyer and he refused to pay until the arrival of the goods, he was held to be
wrong. [E. Clement Horst Co. vs. Biddell Bros]
CIF stands for Cost, Insurance and Freight – it’s a legal incoterm term which is used in
international shipping for the delivery of goods to a port. In this case, the seller must pay for
the delivery of goods, and their export, including insurance, and has responsibility of the goods
right up until they’re loaded on the ship.
Negotiability of bill of lading: The second important effect of the bill of lading being a
document of title is that though it is not a negotiable instrument, it has this characteristic of a
negotiable instrument that property in the goods represented by the bill passes to the person to
whom it is transferred. In the case of a negotiable instrument a bona fide transferee is not
affected by any defect in the title of his transferor, but a bill of lading passes property subject
to all previous defects in title. This principle is now incorporated in Section 1, Bills of Lading
Act, 1856. The heading of the section is that “rights under bills of lading to vest in consignee
or indorsee."
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The transfer of the bill of lading transfers the right to the possession of the goods in transit, to
which the bill relates, from the transferor to the transferee. [Evans vs. Martell]
Under the common law, upon the transfer of a bill of lading, only the property in the goods
passed, but not the contract of carriage. The contract still remained to be with the shipper and
he alone was liable under it. Under this provision, however, if the indorsement has the effect
of passing property to the indorsee, then the indorsee will become liable under the contract to
the same extent as if the contract of affreightment had been made with him. But this effect will
follow only if the indorsement has the effect of passing property.
The rights of an indorsee of a bill of lading were considered by the Kerala High Court in New
India Assurance Co Ltd v San Jose Maritime Ltd. The contract was for carriage of 8750
bags of Tanzanian raw cashew nuts from Dar-Es-Salaam to Cochin. It was found on arrival
that 1115 bags were torn and in mouth-burst condition and the shortage was that of 26,442 kgs.
The loss was due to the negligence of the carrier. The goods were imported by the Cashew
Corporation of India and they had indorsed the bill of lading in blank to the claimant. The
question was of the endorsee’s right to sue. The court held that the indorsee had the right to
sue. The corporation had allotted the goods to him and handed them under the bill of lading
and under their blank indorsement. This had the effect of passing the property to him. The right
of suit quite naturally accrued to him.
Bills of lading in sets: Sometimes bills of lading are made in sets of three or more. One or two
of them are sent to the consignee and the rest are kept by the consignor himself so that he can
protect his interest in case it becomes necessary. This practice sometimes gives rise to
difficulties. A type of such difficulty was experienced in Glyn, Mills & Co vs. East and West
India Dock Co. Goods were consigned to C & Co. The shipmaster signed a set of three bills
of lading marked “first”, “second” and “third”, respectively, and stating that when one of the
bills is used in obtaining delivery, the others would stand void. The first bill was pledged by C.
& Co. with a bank and with the second they obtained delivery of the goods and sold them to
diverse customers. The pledgee sued for his loss. It was held that the delivery was made bona
fide and without knowledge or notice of the pledge and hence the bank should sue the party
who committed fraud on them and not the warehouse-keeper.
Pledgees should insist upon delivery of whole set: Pledgees of documents of title should
safeguard themselves against such risks by insisting on obtaining the complete set of bills. But
in the case of the consignee it has been held that he cannot insist that all sets should be tendered
to him.
The case was Sanders Bros v Maclean & Co. The cargo was that of iron rails. The buyer
refused to pay for it because only two out of a set of three bills of lading were tendered to him.
The Court of Appeal held that the tender of only one would have been sufficient and the buyer
was wrong in not accepting the two.
Purchaser's claim under law of tort: A purchaser of goods in transit who has neither become
the holder of the bill of lading nor the owner of the goods at the time of loss, has obviously no
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right of action against the carrier under the contract or carriage. Does he have the right to sue
in tort if the goods are lost due to negligence. Tort actions have also been considered untenable
because the buyer is neither the owner of the goods nor he has any contractual relationship with
the carrier. The fear of the courts was that if non-contracting parties were permitted to sue
carriers for any breach of duty, it would open a flood-gate of litigation against carriers by
anyone who might suffer some economic loss by reason of the breach. But while care has to
be taken to protect carriers from such catastrophe, the interest of CIF purchaser to whom risk
passes but not ownership, also deserves consideration.
Delivery of goods: Delivery of goods can be refused to a person who does not produce
documents of title, namely, the bill of lading. In such circumstances the shipowner is not merely
justified but is also under a duty to refuse delivery. "According to English law and the English
mode of conducting business, a shipowner is not entitled to deliver goods to the consignee
without the production of the bill of lading. The shipowner must take the consequences of
having delivered these goods to the consignee without the production of either of two parts of
which the bill of lading consisted.” The consignor in this case had sent a copy of the bill of
lading to his agent to enable him to deliver it to the consignee against payment. But the
shipowner delivered the goods without the production of the bill of lading and consequently
was held liable for the consignor’s loss. [The Stettin Case]
Delivery at the place of destination to the consignee is the sine qua non of performance of the
contract. The Privy Council was of the opinion that a bill of lading could not be said to be spent
or exhausted until the goods covered by it were placed under the absolute domination and
control of consignee and that the landing agents were intermediaries in their duties to both
parties, agents of the shipowners as long as the contract remained unexhausted and agents for
the consignee as soon as the bill of lading was produced with the delivery order duly endorsed.
[Chartered Bank of India Australia & China vs. British India Steam Navigation Co. Ltd.]
Short delivery: Where the goods were loaded and carried from a port outside India and
discharged at a port within India, the provisions of the Carriage of Goods by Sea Act, 1925
were held to be not applicable. The goods in this case were short landed and a suit for damages
was filed against the foreign principal. It was held that the Indian agent was automatically
discharged of his liability because under Section 230, Indian Contract Act, 1872 both the
principal and the agent could not be sued.
In the suit for damages for short landing the consignee was able to prove the fact of short
landing. The defendant was not able to prove full and complete discharge of the cargo from the
vessel. The short landing certificate was also a conclusive document to prevail over any other
records and documents. The discrepancy regarding the date of the short landing certificate was
held by the court to be immaterial. The plaintiff’s claim of damages was allowed. The burden
of proving short delivery is on the claimant. [Amoco Oil Co. vs. Parpada Shipping Co. Ltd.]
Place of delivery: The normal obligation of the shipowner is to deliver goods over the ship’s
side. Where the consignee provided lighters at the ship’s side but not sufficient men to work
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them, he was held liable for the consequential delay in unloading. [Petersen vs. Freebody &
Co.]
Unless there is a custom or agreement to the contrary, goods must be delivered to the consignee
or his agents. Certain goods were to be delivered to the shipper or his agent. The ship arrived
but the consignees were not aware of its arrival. Consequently, they were not present at the
wharf to take delivery. The goods were discharged at the wharf. Within 24 hours they were lost
in an accidental fire. The shipowner was held liable for the loss. Reasonable time must be given
to the consignee to come for the goods. [Bourne vs. Gatliffe]
INTERNATIONAL RULES APPLICABLE FOR CARRIAGE BY SEA
HAGUE RULES
The Hague Rules of 1924 (formally the "International Convention for the Unification of
Certain Rules of Law relating to Bills of Lading, and Protocol of Signature") is an international
convention to impose minimum standards upon commercial carriers of goods by sea.
Previously, only the common law provided protection to cargo-owners; but the Hague Rules
should not be seen as a "consumers' charter" for shippers because the 1924 Convention actually
favoured carriers and reduced their obligations to shippers.
Hague Rules, in maritime law, international code defining the rights and liabilities of a carrier.
Introduced at the International Law Association meeting in Brussels in 1921, they were adopted
first as clauses in bills of lading and after 1923 as the Brussels Convention on Limitation of
Liability.
The Hague Rules represented the first attempt by the international community to find a
workable and uniform way to address the problem of shipowners regularly excluding
themselves from all liability for loss or damage to cargo. The objective of the Hague Rules was
to establish a minimum mandatory liability of carriers.
Under the Hague Rules the shipper bears the cost of lost/damaged goods if they cannot prove
that the vessel was unseaworthy, improperly manned or unable to safely transport and preserve
the cargo, i.e. the carrier can avoid liability for risks resulting from human errors provided they
exercise due diligence and their vessel is properly manned and seaworthy. These provisions
have frequently been the subject of discussion between shipowners and cargo interests on
whether they provide an appropriate balance in liability.
The Hague Rules form the basis of national legislation in almost all of the world's major trading
nations and cover nearly all the present international shipping. The Hague Rules have been
updated by two protocols, but neither addressed the basic liability provisions, which remain
unchanged.
The Hague Rules were slightly amended (beginning in 1931, and further in 1977 and 1982) to
become the Hague-Visby Rules. In addition, the U.N. established a fairer and more modern
set of rules, the Hamburg Rules (effective 1992). Also a more radical and extensive set of rules
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is the Rotterdam Rules, but as of November 2015, only 3 states have ratified these rules, so
they are not yet in force.
HAGUE-VISBY RULES
The Hague–Visby Rules is a set of international rules for the international carriage of goods by
sea. They are a slightly updated version of the original Hague Rules which were drafted in
Brussels in 1924.
The premise of the Hague–Visby Rules (and of the earlier English common law from which
the Rules are drawn) was that a carrier typically has far greater bargaining power than the
shipper, and that to protect the interests of the shipper/cargo-owner, the law should impose
some minimum affreightment obligations upon the carrier. However, the Hague and Hague–
Visby Rules were hardly a charter of new protections for cargo-owners; the English common
law prior to 1924 provided more protection for cargo-owners, and imposed more liabilities
upon "common carriers".
The official title of the Hague Rules the "International Convention for the Unification of
Certain Rules of Law relating to Bills of Lading". After being amended by the Brussels
Amendments (officially the "Protocol to Amend the International Convention for the
Unification of Certain Rules of Law Relating to Bills of Lading") in 1968, the Rules became
known colloquially as the Hague–Visby Rules.
A final amendment was made in the SDR Protocol in 1979. Many countries declined to adopt
the Hague-Visby Rules and stayed with the 1924 Hague Rules. Some other countries which
upgraded to Hague-Visby subsequently failed to adopt the 1979 SDR protocol.
Implementing legislation
The Hague–Visby Rules were incorporated into English law by the Carriage of Goods by Sea
Act 1971; and English lawyers should note the provisions of the statute as well as the text of
the rules. For instance, although Article I(c) of the Rules exempts live animals and deck cargo,
section 1(7) restores those items into the category of "goods". Also, although Article III(4)
declares a bill of lading to be a mere "prima facie evidence of the receipt by the carrier of the
goods", the Carriage of Goods by Sea Act 1992 section 4 upgrades a bill of lading to be
"conclusive evidence of receipt".
Under Article X, the Rules apply if “(a) the bill of lading is issued in a contracting State, or (b)
the carriage is from a port in a contracting State, or (c) the contract (of carriage) provides
that(the) Rules ... are to govern the contract". If the Rules apply, the entire text of Rules is
incorporated into the contract of carriage, and any attempt to exclude the Rules is void under
Article III (8).
Carriers' duties
Under the Rules, the carrier's main duties are to "properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods carried" and to "exercise due diligence to ... make
the ship seaworthy" and to "... properly man, equip and supply the ship". It is implicit (from
the common law) that the carrier must not deviate from the agreed route nor from the usual
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route; but Article IV (4) provides that "any deviation in saving or attempting to save life or
property at sea or any reasonable deviation shall not be deemed to be an infringement or breach
of these Rules".
The carrier's duties are not "strict” but require only a reasonable standard of professionalism
and care; and Article IV allows the carrier a wide range of situations exempting them from
liability on a cargo claim. These exemptions include destruction or damage to the cargo caused
by: fire, perils of the sea, Act of God, and act of war. A controversial provision exempts the
carrier from liability for "neglect or default of the master ... in the navigation or in the
management of the ship". This provision is considered unfair to the shipper; and both the
later Hamburg Rules (which require contracting states to denounce the Hague–Visby Rules)
and Rotterdam Rules (which are not yet in force) refuse exemption for negligent navigation
and management.
Also, whereas the Hague–Visby Rules require a ship to be seaworthy only "before and at the
beginning" of the voyage, under the Rotterdam Rules the carrier will have to keep the ship
seaworthy throughout the voyage (although this new duty will be to a reasonable standard that
is subject to the circumstances of being at sea).
Shipper's duties
By contrast, the shipper has fewer obligations (mostly implicit), namely:
i. to pay freight;
ii. to pack the goods sufficiently for the journey;
iii. to describe the goods honestly and accurately;
iv. not to ship dangerous cargoes (unless agreed by both parties); and
v. to have the goods ready for shipment as agreed; ("notice of readiness to load").
None of these shippers' obligations are enforceable under the Rules; instead they would give
rise to a normal action in contract.
Criticism
With only 10 Articles, the Rules have the virtue of brevity, but they have several faults. When,
after 44 years of experience, the 1924 Rules were updated with a single minor amendment,
they still covered only carriage wholly by sea (thereby ignoring multi-modal transport), and
they barely acknowledged the container revolution of the 1950s. Also, UNCTAD felt that they
had actually diluted the protection to shippers once provided by English common law, and
proposed instead the more modern Hamburg Rules of 1978, which were embraced by many
developing countries, but largely ignored by ship-operating nations. The modern Rotterdam
Rules, with some 96 articles, have far more scope and cover multi-modal transport but remain
far from general implementation.
HAMBURG RULES
The Hamburg Rules are a set of rules governing the international shipment of goods, resulting
from the United Nations International Convention on the Carriage of Goods by Sea adopted
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in Hamburg on 31 March 1978. The Convention was an attempt to form a uniform legal base
for the transportation of goods on oceangoing ships. A driving force behind the convention was
the attempt of developing countries' to level the playing field. It came into force on 1 November
1992.
The first of the international conventions on the carriage of goods by sea was the Hague
Rules of 1924. In 1968, the Hague Rules were updated to become the Hague-Visby Rules, but
the changes were modest. The convention still covered only "tackle to tackle" carriage
contracts, with no provision for multimodal transport. The industry-changing phenomenon
of containerization was barely acknowledged. The 1978 Hamburg Rules were introduced to
provide a framework that was both more modern, and less biased in favour of ship-operators.
Although the Hamburg Rules were readily adopted by developing countries, they were shunned
by richer countries who stuck with Hague and Hague-Visby. It had been expected that a
Hague/Hamburg compromise might arise, but instead the more extensive Rotterdam
Rules appeared.
Article 31 of the Hamburg Convention covers its entry into force, coupled to denunciation of
other Rules. Within five years after entry into force of the Hamburg Rules, ratifying states must
denounce earlier conventions, specifically the Hague and Hague-Visby Rules.
A long-standing aim has been to have a uniform set of rules to govern carriage of goods, but
there are now five different sets: Hague, Hague-Visby, Hague-Visby/SDR, Hamburg and
Rotterdam. (The Rotterdam Rules are not yet in force). Only an optimist would expect such
uniform adoption within the foreseeable future.
ROTTERDAM RULES
The "Rotterdam Rules" (formally, the United Nations Convention on Contracts for the
International Carriage of Goods Wholly or Partly by Sea) is a treaty proposing new
international rules to revise the legal framework for maritime affreightment and carriage of
goods by sea. The Rules primarily address the legal relationship between carriers and cargo-
owners. As of October 2015, the Rules are not yet in force as they have been ratified by only
three states.
The aim of the convention is to extend and modernize existing international rules and achieve
uniformity of International trade law in the field of maritime carriage, updating or replacing
many provisions in the Hague Rules, Hague-Visby Rules and Hamburg Rules. The convention
establishes a comprehensive, uniform legal regime governing the rights and obligations
of shippers, carriers and consignees under a contract for door-to-door shipments that involve
international sea transport.
Main provisions
The following are critical provisions and law changes found in the Rotterdam Rules:
1) The Rules apply only if the carriage includes a sea leg; other multimodal carriage
contracts which have no sea leg are outside of the scope of the Rules.
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2) It extends the period that carriers are responsible for goods, to cover the time between
the point where the goods are received to the point where the goods are delivered.
3) It allows for more e-commerce and approves more forms of electronic documentation.
4) It increases the limit liability of carriers to 875 units of account per shipping unit or
three units of account per kilogram of gross weight.
5) It eliminates the "nautical fault defence" which had protected carriers and crew from
liability for negligent ship management and navigation.
6) It extends the time that legal claims can be filed to two years following the day the
goods were delivered or should have been delivered.
7) It allows parties to so-called "Volume Contracts" to opt-out of some liability rules set
in the convention.
8) It obliges carriers to keep ships seaworthy and properly crewed throughout the
voyage. The standard of care is not "strict", but "due diligence" (as with the Hague
Rules).
Entry into force and ratifications
The Rotterdam Rules will enter into effect a year after 20 countries have ratified that treaty. As
of 9 August 2011, there were 24 signatories to the treaty.
Upon entry into force of the convention for a country, it should denounce the conventions
governing the Hague-Visby Rules as well as the Hamburg Rules as the convention does not
come into effect without such denouncements.
MULTI MODAL TRANSPORTATION OF GOODS
With the changing economic scenario, factors such as globalisation of markets, international
economic integration, and removal of barriers to business and trade and increased competition
have enhanced the need of transportation. It is one of the most important infrastructure
requirements, which is essential for the expansion of opportunities and plays an important role
in making or breaking the competitive positioning.
The cargo industry is still an expanding market. The need for a comprehensive logistics system
in transportation, communications and information sector, continues to grow. Freight
forwarding services alone are no longer sufficient, special deals are to be initiated on regular
intervals to lure the customers to maintain them on permanent status, especially to cater to the
increasing needs of seasonal vendors.
Therefore, the cargo market demands a global solution and network linking all four modes of
transportation i.e. (a) Air (b) Road (c) Rail (d) Sea. The combination of these modes is defined
as `multimodal transport system' A worldwide network linking airlines, roadways, railways
and shipping lines in one chain with a motive of better quality of service to customers with the
most economical costing and dependable schedule.
Multimodal transportation is the movement of cargo from the point of origin to the final
destination, by using two or more modes of transport. In its essence Multi Modal
Transportation of goods means transportation of cargo from the premises of the shipper to those
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of the consignee, by more than one mode of transportation, under a single contract which has
its evidence in form of a single multimodal transport contract.
In India Multi-Modal Transportation of Goods is regulated by, Multi-Modal Transportation
of Goods Act Of 1993, which stands amended by, the Multi-modal transportation of goods act
of, 2000.
MULTIMODAL TRANSPORTATION OF GOODS ACT, 1993
The Multimodal Transportation of Goods Act, 1993 was introduced to facilitate the exporters
and give them a sense of security in transporting their goods. Multi-modal transportation
reduces logistics costs of exporter and makes products more competitive in the international
market. The concept of door-to-door delivery, which is Multimodal Transportation is all about,
is catching up fast in international trade.
Reduction of logistics costs is one of the important aspects of Multimodal Transportation,
thereby reducing the overall cost to the exporter and making his products more competitive in
the international market. It is in this context that the Government of India thought it necessary
to codify the rules and regulations governing Multimodal Transportation and enacted the
Multimodal Transportation of Goods Act, 1993 based on the UNCTAD/ICC (United Nations
Council for Trade and Development/ International Council for Commerce) rules which have
gained widespread acceptance.
The Multimodal Transportation Act lays down the standard terms and conditions governing
this activity. Under the provision of the Act only those companies who are registered by the
competent authority which has been notified to be the Director General of Shipping, can carry
out Multimodal Transportation. This requirement of registration has been imposed by the
government to ensure that only such companies which have the necessary expertise
infrastructure and financial capability are allowed to undertake Multimodal Transportation so
that the interests of shippers are fully protected.
The Multimodal Transport of Goods Act, 1993 is divided into five chapters under the heads
(1) Preliminary aspects (2) Regulation of Multimodal transportation (3) Multimodal Transport
Document (4) Responsibilities and liabilities of the Multimodal Transport Operator (5)
Miscellaneous aspects.
A schedule is also attached to the Act which brings in certain amendments to (1) The Carriers
Act,1865 (2) The Indian Carriage of Goods by Sea Act, 1925 (3) The Sale of Goods Act, 1930.
‘Multimodal transportation’ as defined by Section 2(k) of the Act means carriage of goods by
two or more modes of transport from the place of acceptance of the goods in India to a place
of delivery of the goods outside India.
So, a transport to be a multimodal transport, 3 conditions has to be satisfied:
1) the goods are to be carried by two or more modes of transport
2) the place of acceptance of the goods should be in India.
3) the place of delivery of the goods should be outside India.
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Section 2(j) precisely defines what are the modes of transport sought after by the Act. They
include carriage of goods: 1) by road 2) by air 3) by rail 4) by inland waterways, or 4) by sea.
As per the MMTG Act three categories of companies are eligible to be registered as Multimodal
transport operators (MTO). They are (1) shipping Companies (2) Freight Forwarding
Companies (3) Companies which do not fall in either of the above two categories.
In the case of Shipping Companies (which own and operate vessels) as well as Freight
Forwarding Companies it must have a minimum annual turnover of Rs 50 Lakh, during the
immediately preceding financial year or must have an annual average turnover of Rs 50 Lakh,
during the preceding three financial years.
In the case of a company falling under third category above, the Subscribed share Capital of
the company should be Rs 50 lakh or more or aggregate balance in its capital account or that
in the capital account of its partners or proprietor should not be less than Rs 50 Lakhs.
In addition, the applicant company should have offices/agents/representative in at least two
other countries.
Objective of the Act: An Act to provide for the regulation of the multimodal transportation of
goods, from any place in India to a place outside India, on the basis of a multimodal transport
contract and for matters connected therewith or incidental thereto.
Registration for Multi Modal Transportation: No person shall carry on or commence the
business of Multimodal transportation unless he is registered under this Act; Provided that a
person carrying on the business of multimodal transportation immediately before the
commencement of this Act, may continue to do so for a period of three months from such
commencement; and if he has made an application for registration within the said period, till
the disposal of such application. Such a requirement is mandatory, thus in absence of
compliance with the requirements of registration, a non- registered multi-modal transport
operator would not be permitted to carry on the business of multi-modal transportation.
Section-3, 4, 5&6 of Multi-Modal transportation of goods act deal with the law regulating
various aspects such as registration, cancellation and appeal against such registration or
cancellation of registration of multi-modal transport operator. Any person may apply for
registration in the prescribed form accompanied by a fee of ten thousand rupees to the
competent authority to carry on or commence the business of multimodal transportation. On
receipt of the application, the competent authority shall satisfy that the applicant fulfils the
prescribed conditions, A Registration certificate granted shall be valid for a period of three
years and may be renewed from time to time for a further period of three years at a time.
Multi Modal Transport Operator (MTO) "multimodal transport operator" means any person
who—
(i) concludes a multimodal transport contract on his own behalf or through another person
acting on his behalf;
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(ii) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier
participating in the multimodal transportation, and who assumes responsibility for the
performance of the said contract;
Responsibilities and Liabilities of the Multimodal Transport Operator
Basis of liability of multimodal transport operator. The multimodal transport operator shall be
liable for loss resulting from-
(a) any loss of, or damage to the consignment;
(b) delay in delivery of the consignment and
(c) any consequential loss or damage arising from such delay,
However, a multi-modal transporter shall be liable only in instances where such loss, damage
or delay in delivery of consignment took place at a time when the consignment was in the
charge of such multi-modal transport operator. The multimodal transport operator shall not be
liable if he proves that no fault or neglect on his part or that of his servants or agents had caused
or contributed to such loss, damage or delay in delivery:
Moreover, the multimodal transport operator shall not be liable for loss or damage arising out
of delay in delivery including any consequential loss or damage arising from such delay unless
the consignor had made a declaration of interest in timely delivery which has been accepted by
the multimodal transport operator.
Limits of liability when the nature & value of the consignment have not been declared &
stage of transport where loss or damage occurred is NOT known. Where a multimodal
transport operator becomes liable for any loss of, or damage to, any consignment, the nature
and value where of have not been declared by the consignor before such consignment has been
taken in charge by the multimodal transport operator and the stage of transport at which such
loss of damage occurred is not known, then the liability of the multimodal transport operator
to pay compensation shall not exceed two Special Drawing Rights per kilogram of the gross
weight of the consignment lost or damaged or 666.67 Special Drawing Rights per package or
unit lost or Damaged, whichever is higher.
Limits of liability when the nature & value of the consignment have not been declared
and stage of transport where loss or damage occurred is known. Where a multimodal
transport operator becomes liable for any loss of, or damage to, any consignment, the nature
and value whereof have not been declared by the consignor before such consignment has been
taken in charge by the multimodal transport operator and the stage of transport at which such
loss or damage occurred is known, then the limit of the liability of the multimodal transport
operator for such loss of damage shall be determined in accordance with the provisions of the
relevant law applicable in relation to the mode of transport during the course of which the loss
or damage occurred and any stipulation in the multimodal transport contract to the contrary
shall be void and unenforceable. Provided that the multimodal transport operator shall not be
liable for any loss, damage or delay in delivery due to a cause for which the carrier is exempted
from liability in accordance with the applicable law".
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Multi Modal Transport Document (MTD)

Increased containerization has resulted in Multimodal Transport of Goods under a single
transport document covering all modes of transport from the exporters premises to the
consignee's premises such Multimodal Transportation under a single document has a number
of advantages like reduction in overall transport cost reduction in delays, smoother and quicker
movement of and improvement in quality of services.
"Multimodal transport document" means a negotiable or non-negotiable document evidencing
a multimodal transport contract and which can be replaced by electronic data interchange
messages permitted by applicable law; Issue of multimodal transport document.
Section -7 of the Multi Modal Transportation of Goods Act deals with the issuance of a Multi-
Modal Transport Document. Where the consignor and the multimodal transport operator have
entered into a contract for the multimodal transportation and the multimodal transport operator
has taken charge of the goods, he shall, at the option of the consignor, issue a negotiable or
non-negotiable multimodal transport document. However, the multimodal transport operator
shall issue the multimodal transport document only after obtaining, and during the subsistence
of a valid insurance cover. The multimodal transport document shall be signed by the
multimodal transport operator or by a person duly authorised by him.
Multimodal transport document to be regarded as document of title. Every consignee
named in the negotiable or non-negotiable multimodal transport document and every endorsee
of such document, as the case may be, to whom the property in the goods mentioned therein
shall pass, upon or by reason of such consignment or endorsement, shall have all the rights and
liabilities of the consignor. Nothing contained in the negotiable or non-negotiable multimodal
transport document shall prejudice or affect the right of the multimodal transport operator to
claim freight from the consignor or enforce any liability of the consignee or endorsee by reason
of his being such consignee or endorsee. Ingredients of the Multi Modal Transport Document
The multimodal transport document shall contain the following particulars, namely: -
(a) general information • the general nature of the goods, • the leading marks necessary for
identification of the goods, • the character of the goods (including dangerous goods), • number
of packages or units and • the gross weight and quantity of the goods as declared by the
consignor;
(b) apparent condition of the goods;
(c) the name and principal place of business of the multimodal transport operator;
(d) the name of the consignor;
(e) the name of the consignee, if specified by the consignor;
(f) the place and date of taking charge of the goods by the multimodal transport operator;
(g) the place of delivery of the goods;
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(h) the date or the period of delivery of the goods by the multimodal transport operator as
expressly agreed upon between the consignor and the multimodal transport operator;
(i) whether it is negotiable or non-negotiable;
(j) the place and date of its issue;
(k) freight payable by the consignor or the consignee, as the case may be, to be mentioned only
if expressly agreed by both the consignor and the consignee;
(l) the signature of the multimodal transport operator or of a person duly authorised by him;
(m) the intended journey route, modes of transport and places of transhipment, if known at the
time of its issue;
(n) terms of shipment and a statement that the document has been issued subject to and in
accordance with this Act; and
(o) any other particular which the parties may agree to insert in the document, if any such
particular is not inconsistent with any law for the time being in force.
However, the absence of any of the particulars listed above shall not affect the legal character
of the multimodal transport document
Evidentiary effect of the multimodal transport document. In all cases except those in which
a reservation has been made in multi-modal transport document
(a) the multimodal transport document shall be prima facie evidence of the fact that the
multimodal transport operator has taken charge of the goods as described in the document; and
(b) no proof to the contrary by the multimodal transport operator shall be admissible if the
multimodal transport document is issued in negotiable form and has been transmitted to the
consignee or transferred by the consignee to a third party, if the consignee or the third party
has acted in good faith relying on the description of the goods in the document.
CARRIAGE OF GOODS BY SEA ACT, 1925
The Indian Carriage of Goods by Sea Act was enacted on 21st September 1925. The Act
extends to whole of India. Provisions made under this Act are referred as “Rules” and such
rules shall have effect in connection with carriage of goods by sea in ships, which are carried
from one port of India to foreign ports (outside India). Act covers various definitions like
“Carrier, Contract of Carriage, Carriage of goods, Goods and Ship”. For the act “Goods are
those which covers not only live animals but also containers, or pallets or any similar articles of
transport or packing supplied by the consignor, regardless of whether such property is to be or
is carried on or under deck” and “Ship is that vessel which is used to carry goods by sea from
one place to another”. Any contract made for carrying of goods by sea carrier whether it could
for loading, carriage, handling etc, is governed under rules like “responsibilities and liabilities”
and “rights and immunities” by this act.
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At the start of the journey carrier is bound to take proper care and diligence such as ship is
made safe to go in sea, properly equip the ship, see whether the refrigeration, and other cooling
parts in ship are proper and in good working condition. In other words, the ship should be
properly loaded with all due diligence and other conditions in favour of sea so that ship is
properly taken from one place to other. After the ship is loaded the shipper can ask for bill of
lading. That bill of lading will show weight, quantity, pieces of goods that are loaded, necessary
marks that are given to identify goods, time that the ship will reach the destination, insurance
covered for any loss or damages if to occur. As the carrier has to take care and diligence there
are certain rights and protection to them.
Ship or the carrier is not responsible for any loss which can be happen due to sea, act of god,
act of war, any riots and civil disturbance, segregated restriction act of public enemies, saving
or trying to save life of property at sea, insufficiency in packing, insufficiency or not exact
marking on goods, latent defects not discoverable by due diligence, if there is any fire caught
to ship or carrier. But this act will not immune the shipper or carrier if such loss or damage is
caused purpose or if there is any negligence while doing so. Good which are explosive and
dangerous in nature and is not in knowledge or not assented about nature to carrier or master
may at any time before discharge be landed at any place or destroyed by the carrier without
compensation then the such shipper will be liable for all damages expenses directly or
indirectly arising out of or resulting from such shipment. Even the shipper or carrier is not
responsible for any act or mistake which has done by their servant or agent.
Thus, main purpose for lading the Bill by the Legislature so that rules which are mentioned in
act will bring uniformity and stability and importantly assure that goods that are loaded will be
taken to the given point carefully and in proper manner which guarded with rules i.e., with
legal foundation.
The Act applies only to contracts of carriage of goods by sea which are in the form of a bill of
lading or any other similar document of title. The contract should contemplate the issue of the
bill of lading. If this is so the Act applies even although no bill was for the time being issued.
Particulars of bills of lading [Art. III, R. 3]

After receiving the goods into his charge, the carrier has to issue, on demand by the shipper, a
bill of lading which should show among other things the following particulars:
1) The leading marks necessary for identification of the goods as the same are furnished
in writing by the shipper before loading his goods, provided that the shipper has
stamped such marks on the goods themselves if they are uncovered or on cases or
coverings in such a manner as should remain legible until the end of the voyage.
2) Either the number of packages or pieces, or the quantity or weight, as the case may be,
as furnished in writing by the shipper.
3) The apparent order and condition of the goods.
The carrier, however, will not be bound to show any such marks, number, quantity or weight,
if he has a reasonable ground for suspecting that they do not accurately represent the goods, or
if he has no reasonable means of checking. However, the shipper is deemed to guarantee the
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accuracy of his statements and is bound to compensate the shipowner for any loss caused by
any inaccuracy in such particulars. The carrier is not bound to state both quantity and weight.
If the quantity is stated, it may be stated that the weight is unknown and this will have full
force. This is known as disclaimer as to weight.
Duty to demand bill of lading [S. 2, Art. 3(3)]
A duty has been cast upon the shipper to demand the bill of lading. If the shipper fails to do so,
the carrier is under no obligation to deliver without demand. If the goods are lost and therefore
not delivered, the shipper, who has no bill of lading in his hand, cannot claim anything. Where
the shipper had not claimed all the reliefs to which he was entitled and sought to add the claim
subsequently by amendment at a time when filing of the claim had become time birred, it was
not entertained. No decree could be passed on the basis of such claim.
Declaration of value in bill of lading
The contention of the shipper (respondent) that the value of the goods had been declared in the
bill of lading about which the court found that it was based on the premise that the bill of fading
referred to the invoke for value. The court said that it could not be accepted. Invoice is not a
part of the bill of lading. The value of the goods is required to be stated on the bill of lading so
as to enable the shipping concern to calculate the quantum of freight. It cannot, in the absence
of any statutory provisions, be held to be incorporated in the bill of necessary implication or
otherwise. [Shipping Corpn of India vs. Bharat Earth Movers Ltd.]
Responsibilities and liabilities [Art. III, R. 1]

Apart from the responsibility of issuing a bill of lading, Rule 1 of Article III provides that the
carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to:
1) make the ship seaworthy;
2) properly man, equip and supply the ship;
3) make the holds, refrigerating and cool chambers, and all other parts of the ship in
which goods arc carried, fit and safe for their reception, carriage and preservation.
It is the responsibility of the shipowner to exercise "due diligence" to assure a seaworthy ship.
Where the shipowner got his ship repaired from a competent and reputed firm of repairers, but
a fitter of the firm negligently misplaced some inspection covers, which caused water to enter
and damage the cargo, the shipowner was held liable. [Riverstone Meat Co. Pty. Ltd. vs.
Lancashire Shipping Co. Ltd.] The House of Lords pointed out that the shipowner’s
obligation of due diligence demands due diligence in the work of repair by whomsoever it may
be done.
Modification of responsibilities and liabilities [Art. III, R. 8]
Clauses contrary to the responsibilities and liabilities stated in the third article become “void
clauses”. For example, the Act provides in Rule 6 of Article III that the carrier will be
discharged from liability unless the suit is brought within one year. Any clause in the bill of
lading reducing such time shall be void.
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An illustration in point is the decision of the Kerala High Court in Goverdhandas Kalidas vs.
New Dholers Steamships Ltd. The Act provides in Rule 2 of Article III that “subject to the
provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep,
care for and discharge the goods carried”. One of clauses in the bill of lading in this case
provided that the company’s liability was to absolutely cease when the goods would be free of
steamer’s tackle and thereupon they would be at the shipper’s risk. The goods were lost from
a warehouse where they had been kept after discharge from the ship. It was held that the bill of
lading remains in force up to the time that the goods are delivered to the party entitled and,
therefore, the above clause being contrary to the obligation to deliver goods to the consignee,
was void.
A clause enabling the shipowner to unload at the port of loading would not be void. In G.H.
Renton & Co Ltd vs. Palmyra Trading Corpn of Panama, a cargo of timber was loaded at
a Canadian port for delivery at London. The bill of lading incorporated Hague Rules and
provided that if unloading was not possible at the port of discharge because of strike, the master
may discharge at the port of loading or any other safe or convenient port. The port of London
was strike bound at the material rime. The ship was carried to Hamburg and the timber was
discharged there. The House of Lords held that the clause was valid. There was nothing in the
clause against the responsibility of the shipowner imposed by the Rules. The responsibility to
discharge at proper port cannot mean that the goods cannot be discharged at any port other than
the port of destination under any circumstances whatsoever.
Care of cargo [Art. III, R. 2]
It requires the carrier to take proper care of the cargo. The amount of care depends to a certain
extent upon the nature of the goods.
In a Calcutta case of A.S. Navigation Co. vs. Jethalal, more than 3500 tobacco bags were
stacked in one place going right up to the ceiling of the hold with a slight gap. They were
stacked in 12 or 14 layers deep so that it was beyond all doubt a deep stowage. The cargo on
arrival at the destination appeared as a charred mass and, in fact, steaming. This was due partly
to the heat generated by the pressure of deep stowage and partly due to placing the bags against
engine room. The carrier was held liable. He failed to take the type of care which could be
described as “proper” in reference to the nature of the goods.
Starting point of limitation: The time limit for filing a suit is one year from the date of cause
of action. If by the time ship leaves the port, the goods shipped or any part thereof had not been
delivered, it will be a case of non-delivery of the goods on the date when goods should have
been delivered. The last date for filing the suit for *loss or damage” is one year from the date
the ship left the port. The cause of action for filing the suit for “loss or damage” is one year.
Quite clearly, the claim in respect of short delivery is barred by time.
Proceedings under Consumer Protection Act: The above-stated limitation provisions are
applicable when a suit is filed. The appellant in this case did not file any suit. He filed a
complaint before a Consumer Forum. The word “suit” has a technical meaning. All legal
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proceedings are not suits. Petitions, complaints, applications before tribunals or authorities are
not suits. A complaint before a Consumer Forum is not a suit. The limitation provision of the
Carriage of Goods by Sea Act, 1925 is not applicable to such a complaint.
Special Act prevails over general (Limitation): Article III, Rule 6 is a part of the Carriage of
Goods by Sea Act. This being a special Act, the period of limitation prescribed by it prevails
over the period prescribed by the Limitation Act, 1963 which is a general enactment. Hence,
one-year period would apply to claims under the Act.
Rights and immunities [Art. IV]
Conditions of liability and burden of proof [Art. IV, R. 1]: Rule 1 of Article IV lays down
the conditions of liability and a provision about burden of proof. It says: Neither the carrier
nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless
caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to
secure that the ship is properly manned, equipped and supplied, and to make the holds,
refrigerating and cool chambers and all other parts of the ship in which goods are carried fit
and safe for their reception, carriage and preservation in accordance with the provisions of
paragraph 1 of Article III.
Whenever loss or damage has resulted from unseaworthiness the burden of proving the
exercise of due diligence shall he on the carrier or other person claiming exemption under this
section.
Excepted perils [Art. IV, R. 2] (IMPORTANT)
Rule 2 of Article IV specifies cases in which the shipowner incurs no liability. They are perils
excepted by the Act itself and against which the shipowner would not be held liable. The rule
says:
Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting
from—
a) Act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the
navigation or in the management of the ship;
b) Fire, unless caused by the actual fault or privity of the carrier;
c) Perils, dangers, and accidents of the sea or other navigable waters;
d) Act of God;
e) Act of War;
f) Act of public enemies;
g) Arrest or restraint of princes, rulers of people, or seizure under legal process;
h) Quarantine restrictions;
i) Act or omission of the shipper or owner of the goods, his agent or representative;
j) Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether
partial or general;
k) Riots and civil commotions;
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l) Saving or attempting to save life or property at sea;

m) Wastage in bulk or weight or any other loss or damage arising from inherent defect,
quality or vice of the goods;
n) Insufficiency of packing;
o) Insufficiency or inadequacy of marks;
p) Latent defects not discoverable by due diligence;
q) Any other cause arising without the actual fault or privity of the carrier, or without the
fault or neglect of the agents or servants of the carrier, but the burden of proof shall be
on the person claiming the benefit of this exception to show that neither the actual fault
or privity of the carrier nor the fault or neglect of the agents or servants of the carrier
contributed to the loss or damage.
Wastage In bulk, weight, Inherent vice etc [Cl. (m)]
In A.S. Navigation Co. vs. Jethalal where bags of tobacco were reduced to ashes by excessive
heat, one of the questions was whether the loss in question was within the meaning of clause
(m) due to inherent defect, or quality or vice of the goods, P.B. Mukharji J, explained that the
carrier can avail of this defence when he eliminates all charges of ill-treatment of the goods.
“When all other causes during the voyage have been eliminated, so far as the acts of the carrier
are concerned, it is then and then alone that an inference of inherent vice can be attributed to
the goods."
Similarly, where a consignment of wet salted fish was, on arrival at the destination, found to
be in a damaged condition due to reddening, which was due to a bacterial contamination
rendering the goods to be unmerchantable, the damage was held to be due to inherent vice.
[Albacora SRL vs. Westcott & Laurance Line Ltd.]
Theft by stevedores [Cl. (q)]
Where the cases containing the goods were broken into and pilfered by labourers employed by
the stevedores, the shipowners could not claim the protection of the last clause, because, though
it was not due to their actual fault, the clause also covers the fault of their agents or servants.
[Brown & Co. Ltd. vs. Harrison]
But where at a mid-port the stevedores stole a storm value cover plate during loading and
unloading and that caused damage by sea water, the shipowner was held not liable as the
removal of the cover plate was in no way incidental to loading and unloading. [Leesh River
Tea Co. Ltd. vs. British Indian Steam Navigation Co. Ltd.]
If a complete stranger had entered the hold unobserved and removed the plate, para (q) would
apply if the shipowner could prove that it was a stranger who removed the cover, and
reasonable care had been taken to prevent strangers getting on board the ship and due diligence
generally had been exercised. In the present case, the act of the thief ought to be regarded as
the act of a stranger. The thief in interfering with the ship and making her unseaworthy was
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performing no duty for the shipowners at all, neither negligently nor deliberately nor
dishonestly. He was not, in fact, their servant.
Barratry [CIs. (a) and (l)]

Paras (a) and (l) refer to one of the commonly excepted perils which goes by the name
“barratry”, and which means any intentional or fraudulent breach of duty on the part of the
crew to the prejudice of the shipowner or cargo owner.
In the case of Collis Line (P) Ltd. vs. New India Assurance Co. Ltd., before the Kerala High
Court, the cargo was discharged (12934 bags of chemicals) mid-stream into lighters hired for
the purpose by the consignees. Discharge of the bags was effected by means of the ship’s
derricks. During the discharge 92 bags fell overboard because the sling struck against the
gunwale of the ship. The rest of the cargo was duly delivered into the lighters. Some ocher hags
suffered damage and loss of weight.
Under the Act, discharge of the cargo is part of the carriage of goods as defined in Article 1
and responsibilities and liabilities of the carrier continue till discharge. It was contended from
the side of the carriers that they were protected by clauses (a) and [c). The court did not agree.
Fire [Cl. (b)]

Para (b) refers to fire and says that the shipowner will not be liable unless the fire was caused
by his actual fault or privity. Where a fire was caused by unseaworthiness of the ship even there
the shipowner was allowed to rely upon this exemption. The facts were that the ship was sent
to sea with bad bunker coal. The coal caught fire. A part of the cargo was damaged before the
fire could be controlled at a port of refuge. The Court of Appeal had already considered a case
of this kind with a unanimous conclusion that under the statute, liability for fire would not arise
even if it was due to unseaworthiness. The House of Lord did not disturb the position taken by
the Court of Appeal because not only the decisions were right but also, they had ruled the
conduct of shipping for seventeen years. [Louis Drefus & Co. Ltd. vs. Tempus Shipping Co.
Ltd.]
If the carrier is a shipping company, the exemption would be available only on showing that
the fire was not due to the conduct of any person who could be regarded as the “directing mind”
of the company. In Lennard's Carrying Co v Asiatic Petroleum Co the ship was
unseaworthy. It stranded and the cargo of petroleum was destroyed by fire. The shipowner was
a company of which Lennard was a director. He was taking active part in the management of
the ship. The company was held liable. The director was at fault and his fault was the fault of
the company. He was the alter ego of the company and not a mere servant.
Arrest, restraint or seizure [Cl. (g)]
The expression in clause (g) “arrest or restraint of princes” was explained in Nobel's
Explosives Co v Jenkins, a ship en route from England to Japan was at Hong Kong when war
broke out between Japan and China. The captain unloaded at Hongkong such part of the cargo
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as was contraband. If those goods had been carried on any further course it would have exposed
the ship to a real danger of seizure. The restraint of princes was held to be a good defence for
the failure to deliver those goods in Japan.
Act of God [Cl. (d)]

Para (d) refers to “act of God”. The scope of the expression was considered by a Full Bench of
the Kerala High Court in General Traders Ltd vs Pierce Leslie (India) Ltd. Thomas J
explained the meaning of the expression in reference to the facts of the case in the following
words: “The case law thus supports the principle that mere erratic peculiarities of the sea or
even a gale or tornado resulting from the fury of the sea may not by itself amount to act of God
unless the fury is of such a degree or dimension that no human foresight can provide against
and of which human prudence is not bound to recognise the possibility.
It is not enough for the defendants merely to state in the written statement that the jettisoning
of cargo was a consequence of act of God. Defendants have not shown that the tempest or gale
in the sea was so Heavy or so unprecedented that the sailors could not have taken precautionary
measures with reasonable foresight.”
Any other cause [Art. IV, Cl. [(q) and R. 3]
Rule 3 provides that the shipper shall not be responsible for loss or damage sustained by the
carrier or by the ship arising or resulting from any cause without the act, fault or neglect of the
shipper, his agents or his servants. Where the goods were stolen by the men employed by steve-
dores, the shipowner was held liable because stevedores are engaged by the shipowner to fulfil
his responsibility of discharging the goods. They were, therefore, his agents or servants. He
may not be held liable for an act of stevedores if he can show that they were independent
contractors. This should be contrasted with case in which a consignment of tea was booked
with the ship The Chyebassa from Calcutta to Rotterdam. The bill of lading incorporated the
Hague Rules. The cargo was stowed with other goods in the hold of the ship. When the other
cargo was taken out at an intermediate port, the stevedores stole the cover plate of a storm
valve. Consequently, in the course of the further voyage, sea water damaged the tea. There was
no negligence on the part of the officers and the crew in supervising the stevedoring operations.
This was held to be an example of a damage brought about by “any other cause” without the
actual fault of the shipowner or his servants. The theft by stevedores was outside the authority
granted to them as the shipowner's agents.
Deviation (Art. IV, R. 4)
Rule 4 deals with deviation and provides that deviation for the purpose of saving life or property
shall not operate as a breach of the contract. The deviation has to be reasonable and
reasonableness depends upon circumstances. In Stag Line Ltd v Foscolo, Mango & Co Ltd.
the vessel deviated from the contractual route in order to enable some engineers to alight who
had been testing her fuel-saving apparatus. While coming back to the contractual route it struck
a rock and was lost. The House of Lords held that the deviation was not reasonable within the
meaning of Article 4, Rule 4.
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Declaration of nature and value of cargo [Art. IV, R. 5]
According to Rule 5, the carrier is not liable beyond £100 unless the nature and value of the
goods was declared before shipment and inserted in the bill of lading. Any such declaration
embodied in the bill of lading shall only operate as a prima facie evidence but shall not be
binding or conclusive on the carrier. The carrier can show that the goods were not as they were
declared to be. The above figure of maximum liability can be increased by a contract but cannot
be reduced. The carrier would be totally free of all liability if the nature and value of the goods
has been knowingly misstated by the shipper in the bill of lading. Under Article IV(5)(e) the
shipowner cannot rely on the limits of liability if he is personally guilty of intentional or
reckless misconduct. Where a clause of the contract limited the claim to the invoice value of
the goods, the Exchequer Court of Canada held that the clause was repugnant to the Hague
Rules, Article III, Rule 8 and therefore, void. [Nabob Foods Ltd. vs. Cape Corso]
Inflammable, explosive or dangerous goods [Art. IV, R. 6]
According to Rule 6, if the goods are of inflammable, explosive or dangerous nature which the
carrier has not consented to carry, the carrier may at any time before discharge land them or
destroy them or render them innocuous without any compensation to the shipper. On the
contrary, the shipper shall be liable to compensate the carrier for damages and expenses directly
or indirectly arising out of or resulting from such shipment. [Effort Shipping Co. Ltd. vs.
Linden Management SA.]
Waiver of privilege by carrier and increasing liability [Art. V]: Article V permits the carrier
to surrender or waive the rights, privileges and immunities conferred on him by the Act or to
increase in any way his responsibilities and liabilities.
Scope for special contracts [Art. VI]
Article VI permits special contracts to be made but not in respect of ordinary commercial
shipments made in the ordinary course of trade and only where the character and condition of
the property to be carried or the circumstances, terms and conditions under which the carriage
is to be performed are such as reasonably to justify a special contract.
There is a fundamental obligation of a shipowner to carry goods and deliver them to the
consignee.
Jettison and general average
A ship has sometimes to face in the course of its voyage such dangers that a part of the cargo
has to be sacrificed by throwing overboard or jettisoned as it is usually called, to save the ship
and the rest of the cargo / from the danger. The party whose cargo is so sacrificed is entitled to
recover from those whose cargo is thereby saved an average contribution to recoup his loss.
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“The principle of general average, namely, that all whose property has been saved by the
sacrifice of the property of another shall contribute to make good his loss, is of very ancient
date, and of universal reception among commercial nations”. Johnson v Chapman, The
Shooting Star is an early and instructive illustration: The ship “Shooting Star” sailed with a
cargo of timber, namely, deals and staves. She was broken adrift in consequence of stormy
weather. This impeded the navigation and safety of the vessel. A part of the cargo was
jettisoned to lighten the ship and to save the adventure.
It was held that the cargo-owner whose cargo was thus lost was entitled to claim general
average for his loss as against the shipowner whose ship was thereby saved.
Conditions:
(1) Danger to be real and not merely Imagined

There must be a real danger and not merely one imagined or thought to exist. In one of the
cases, under a mistaken assumption of fire the captain of a ship caused steam to be turned into
the hold to extinguish the supposed fire and so damaged the plaintiffs’ goods. On a claim by
them for a general average loss against defendants, it was held that the “peril” being in fact
non-existent, there was no general average loss. [Watson (Joseph) & Son Ltd. vs. Firemen’s
Fund Insurance Co.]
In the above-noted Shooting Star case the cargo was carried on deck and ordinarily general
average cannot be claimed by the owner of a deck cargo. But in that case that was the only
cargo and, therefore, his right was secured.
In another case of deck cargo plaintiff shipped certain cattle as a deck cargo on board
defendant’s vessel: during the voyage a storm arose and owing to stress of weather the master
jettisoned the deck cargo by throwing the cattle overboard. The act of jettison was proper and
necessary on the part of the master for the safety of the defendant’s vessel. The plaintiff was
not allowed to recover from the defendants a general average contribution for the loss of the
cattle. [Wright vs. Marwood]
(2) Sacrifice to be real
The second condition is that there must be real sacrifice. Where the property jettisoned has
already become a wreck before it is thrown overboard, it is no real sacrifice. In an old case
Shepherd vs. Kottgen a vessel met with a storm, which caused parts of the rigging to give
way: the mainmast in consequence began to lurch violently and was cast away by the captain’s
orders; if the mast had not been cast away, it would, in all probability have fallen overboard in
a few minutes and in so doing might have torn up the decks and caused the vessel to founder.
The vessel outlived the storm, was repaired and carried the cargo in safety to destination. The
shipowner's action against the cargo owner for general average contribution was lost. He had
made no real sacrifice, the man having already become a wreck and valueless before it was cast
away.
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Demurrage and lay days
“Lay days” means the time allowed to the cargo-owner to remove the goods after arrival of the
ship at the port of destination, after which, if he does not do so, he would have to pay rent,
called “demurrage” for the space his goods occupied during the extra days. Lay days are
described in charter-parties in various occupied during the extra days. Lay days are described
in charter-parties in various different ways and may also be stipulated and calculated in various
different manners.
Where bill of lading silent about time
Where a bill of lading is silent as to the time within which the consignee is to discharge ship’s
cargo, his obligation is to discharge within reasonable time. That obligation is performed if he
discharges the cargo within a time which is reasonable under the existing circumstances,
assuming that those circumstances, in so far as they involve delay, are not caused or contributed
to by him.
Freight
Freight is the reward which the law gives for carrying goods; it arises on a contract for the
conveyance of merchandise; it is said to be in its nature an entire contract; so that, as a general
rule, subject to some exceptions and to special agreement, until the contract is completed by
the delivery of the goods at the place of destination, nothing can be demanded for freight.
Lump freight
Where freight is payable not according to quantity or weight of the goods, but as one fixed
sum, it is called lump freight. The whole of the amount so agreed becomes payable if a part of
the goods are delivered at the port of destination though the rest of them have been lost due to
excepted perils. The House of Lords laid down this principle in Thomas (William) & Sons v
Harrowing SS Co.
Plaintiff chartered their ship to the defendants to toad a cargo of timber and carry it to a named
port for a specified lump sum as freight, payable on right delivery of the goods. The charter-
party contained the usual exception of perils of the sea. The ship arrived with her cargo on
board outside the port of discharge, when owing to heavy weather, she was driven ashore and
became a total loss. Part of the cargo was washed ashore and was afterwards collected on the
beach by the directions of the master and deposited on the dock premises, the residue being
lost by the perils of the seas.
In an action to recover payment of the lump sum freight, it was held that the plaintiffs having
delivered so much of the cargo as they were not excused by the excepted perils for not
delivering, had performed their contract and earned their freight, notwithstanding that the ship
had not completed her voyage and that the portion of the cargo delivered had been so delivered
otherwise than by the ship stipulated for.
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Advance freight
Where there is an agreement that the party who is to be entitled to freight shall be paid the
whole or any part of it in advance, that is, before the completion of the voyage, that is called
“advance freight”. The mere fact that the cargo-owner is required to make payments in advance
does not always mean that the payment is “advance freight”. Such payment may be a mere loan
of money.
Dead Freight: This freight is payable by the charterer for failure to produce or load the agreed
amount of cargo.
Freight Pro-rata: If part of the original contract of charter party is performed by the ship
owner and if at a point short of destination, the goods are accepted by the charterer or his agent
in such a manner that further carriage is dispensed with, a contract to pay proportionate
compensation for the benefit actually received i.e. for the voyage actually performed arises
which is called "freight pro-rata".
Dead freight: “Dead freight” means compensation, liquidated or unliquidated, for the loss
suffered by the shipowner by the failure on the part of the charterer to supply a full cargo and
the amount payable in respect thereof. Where it is unliquidated, it is such reasonable amount
as the shipowner would have earned, after deducting such expenses as he would have incurred
if a full cargo had been shipped. It is a sort of compensation for short loading, “Dead freight is
an expression having a well-known signification, viz., the freight which would have been
payable for that part of the vessel which has not been occupied by merchandise, but ought to
have been. There is no right of lien on the cargo for dead freight unless the agreement so
provides. Dead freight is not freight at all properly so called but is in reality damages for breach
of contract, and was, therefore, held to be recoverable even where the master overloaded the
ship to unseaworthiness with other cargo.”
Back freight: A duty is cast on the master in many cases of accident and emergency to act for
the safety of the cargo, in such manner as may be best in the circumstances in which it may be
placed; and as a correlative right he is entitled to charge its owner with the expenses properly
incurred in so doing. If such circumstances make it necessary for the master to bring back the
cargo home, he will be entitled to recover the freight for the return voyage also and that is
called “back freight.”
Primage: Primage means a reward payable to the captain for his case and attention. Now a
days no extra payment is made to the captain but it is usually included in the amount of agreed
freight.
Bottomry and Resondentia: This is a transaction in which the master of a ship pledges the
ship or cargo by means of a bond in order to raise money for the benefit of the ship. "Bottomry
bond" is an instrument in writing executed by the master binding him to repaid the money
advance with in a limited time after the safe arrival of the ship at its destination. When,
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however, the money is raised only against cargo as a security, the contract is called
"resondentia".
Right to sue for loss or damage
One of the effects of Section 1, cited above, is that the right to sue the shipowner or insurer for
loss or damage becomes vested in the indorsee or consignee to whom the property in the goods
has passed, and a corollary of this effect is that the charterer loses the right to sue. Even where
this Act is not applicable and the shipper is not prevented from enforcing the claim for loss or
damage, he would be holding the amount recovered under a constructive trust for the consignee
to whom the property goods had passed.
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NOTES ON

GOVERNMENT LAW COLLEGE, KOZHIKODE

COMMON CARRIERS – CARRIERS ACT, 1865

Features of a common carrier

Refusal when justified

Common carriers are not required to transport.

Obligations of private carrier

Contract to the contrary

Common Carrier Private carrier

He carries the goods as a regular business to He carries the goods occasionally.

COMMON LAW LIABILITY OF CARRIERS

Liability as Common Carrier [Ss. 7-9]

Refusal by consignee to receive

Burden of proof [S. 9]

Carriage at owner's risk

Notice of loss [S. 10]

RIGHTS OF COMMON CARRIER

DUTIES OF COMMON CARRIER

PRINCIPLE OF ABSOLUTE LIABILITY

POSITION IN INDIA SAME EXCEPT AS MODIFIED BY STATUTE

EXEMPTIONS FROM LIABILITY.

In Halsbury’s Laws of England, Act of God is discussed as:

2.) National enemies

3. Inherent vice or defects

4.) Improper or bad packing

5.) Justified Delay

6.) Misconduct or default of consignor.

Goods of dangerous nature

INTERNATIONAL CONVENTION FOR CARRIAGE OF GOODS BY ROAD –

1. red printing for sender

CMR would not apply (exemptions) in the following cases:

Criteria for application of the CMR Convention to carriage of goods

Application to containers The CMR applies to carriage by road in "vehicles". "Vehicles"

Vicarious responsibility of the carrier

Goods Consignment Note

Documentary requirements: the CMR consignment note

Responsibilities of the exporter/importer

The exporter will be responsible for:

Responsibility of the shipper for complete for customs clearance

Right of the Consignor to change the place of delivery or the consignee

Right of the Consignee

Procedure of settling the claims

Liabilities of the road carrier under the CMR

1) Wrongful act or neglect of the claimant.

The carrier will be liable for delay when:

1) The goods are not delivered within an agreed time-limit; or

Compensation payable under the CMR

Aspects of the CMR of particular concern to freight forwarders

incompleteness of the particulars in the forwarding note.

Implied acceptance of goods as bailee

Railway receipts to be prima facie evidence

Delivery of goods against railway receipt or otherwise [S. 76]

What goods are dangerous or offensive

Remedy against refusal of open delivery

8.) Railway's general lien [S. 83]

Sale of goods held under lien

9.) Unclaimed consignments [S. 84]