National Tobacco Co. of India Ltd. Vs. Indian Airlines Corporation - Court Judgment

U.C. Law, J.

1. On 15th September 1953 the plaintiff delivered to the defendant 20 cases of John Peel Magnum cigarettes for carriage by air from Calcutta to Madras for reward of Rs. 384.50 nP. which was duly paid to the defendant. By a consignment note No. 7072049 dated 15-9-1953 the defendant acknowledged receipt of the goods. At the back of the consignment note the conditions of carriage are set out which it appears were accepted by the plaintiff. It is not disputed that the goods were in perfect condition when they were handed over to the defendant for despatch. The plaintiff's Case is that on 17th September 1953 when the goods were, offered to them by the defendant at the destination they were found to be severely damaged and completely soaked in water so as to be beyond salvage and as the goods were a total loss they refused to take delivery. It is stated that the nature of damage to the goods was unusual in transactions of carriage by air and was caused by misconduct and/or negligence of the defendant and/or their servants as was apparent from the conditions of the goods when they reached Madras. The plaintiff claims that in the circumstances they have suffered damages, which they assess at Rs. 4547/- being the total of the value of the cigarettes Rs. 4,182-50 nP and freight paid Rs. 384-50 nP. and which they are entitled to recover but the defendant has failed to pay in spite of demands.

2. Apart from a general denial of the allegations in the plaint and denial of liability the main defence of the defendant is that under the agreed terms and conditions of the contract of carriage as contained in the consignment note the defendant was exempt from any liability under the law whether to the sender or to the consignee or to their legal representatives, in case of damage or loss or pilferage or detention from any cause whatsoever (including negligence or default of pilots, agents, flying, ground or other staff or employees of the carrier or breach of statutory or other regulations) whether in the course of journey or prior or subsequent thereto, and whether while the freight be on board the aircraft or otherwise.

2a. The following issues are raised:

1. Were the goods damaged as alleged in paragraph 4 of the plaint?

2. Were the alleged damages caused by reason of misconduct and negligence on the part of the defendant as alleged in paragraph 7 of the plaint?

3. (a) Is the defendant common carrier? If so, does the Carriers Act of 1865 apply?

(b) Under what law would the defendant, it found to be a common carrier, be governed?

(c) Is the defendant exempted from all liabilities by reason of Clause 3 of the conditions printed at the back of the agreement being consignment note Annexure A to the plaint?

4. Where the damages caused to the said goods beyond the control of the defendant and could not be foreseen or prevented by them by exercise of any reasonable amount of care and diligence?

5. To what relief, if any, is the plaintiff entitled?

3. The plaintiff has examined their Territory Manager who has clearly established that when the goods were offered to them for delivery at Madras they were severely damaged and were found to be completely soaked in water. They were beyond salvage and were a total to Sections The price of the goods and the amount of the freight charged are not challenged. I am satisfied with this evidence and so I answer the issue No. 1 in the affirmative.

4. The defendant examined their Chief Traffic Assistant. He knew the goods Were cigarettes and admitted that the outer covers of the packets were soaked (Question 169). His evidence as to the sudden rain at the time of the loading of the goods on to the aircraft is not very convincing. He admitted that it did not -look like rain on the night the goods were loaded on the plane. The night was clear but suddenly it rained heavily and the goods were soaked. I am unable to accept this uncorroborated oral evidence of this witness who was talking from memory only, at this distance of time. It is admitted by him that a log book was kept wherein entries were made by him as the plain could not be loaded in time due to rain. This log book was not produced to corroborate the witness. The only explanation offered was that due to shifting of office from here to there this log book was lost. It is difficult to accept this evidence. Further, the witness admitted that he did not verify from the records of the Meteorological Department that at about 2-30 a.m. in the morning of the 17th September 1953 there was heavy rain at Dum Dum Aerodrome. The records of the Meteorological Department were not called for also, although it could have been done very easily. The witness presumably was telling from memory after six or seven years which can hardly be accepted. So I hold that the defendant failed to discharge the onus and establish its case.

4a. I answer Issue No. 2 in the affirmative. (5) Re. Issue No. 4: I hold that the damages caused were not beyond control of the defendant and could have been foreseen or prevented by exercise of a reasonable care and' diligence.

5a. That leaves me with issue No. 3(a), (b), (c). This raises an important question of law concerning a carrier by air, the extent of its liability and as to how far it can limit its liability by contract. I shall be very brief in my judgment as I have the advantage of several recent judicial decisions on this very point to which reference wall be made presently.

6. It is admitted that the Warsaw Convention for Carriage of Passenger and Goods by Air which is still in force and to which India is a party and the Carriage by Air Act (XX of 1934) do not apply to this case. The question is what statute is to apply. There is no statute for internal air carriage in India.

7. Mr. Dey for the plaintiff contended that the Carriers Act (III of 1865) and the Indian Contract Act, 1872 should govern this case. Mr. Gouri Mitter, the Counsel for the defendant, however, contended that the common law of England as administered by the Courts in India is only applicable to this case and neither the Carriers Act 1865 nor the Indian Contract Act 1872 can be applied. He further contended that so far as carriage of goods by air inland is concerned, the defendant Indian Airlines Corporation is a common carrier as opposed to a private carrier but not a common carrier in the sense of the Carriers Act 1865; and applying the English common law, as a carrier its liability is almost absolute for any damage to the goods. It is in the position of an insurer but as a common carrier it can by agreement exempt itself from liability altogether or partially and in this case it has by agreement excluded itself from all liability.

8. As regards Carriers Act, 1865 the interpretation clause, Section 2 of the Act only refers to transportation for hire, property from place to place by land or inland navigation and does not refer to or include carriage by air. There is not much substance in Mr. Dey's argument that this case should be governed by Carriers Act of 1865 because the goods were partly carried by land in a lorry from Chittaranjah Avenue office to the Dum Dum Airport for an inclusive fare and further Air Corporation Act entitled the defendant to run a subsidiary transport for their purpose which they did. I cannot accept this contention because the Indian Airlines Corporation is a statutory body and the entire Act deals with air transport only. So I hold the Carriers Act, 1865 does not apply to this case.

9. The question is now reduced to whether the liability of the carrier is to be determined by the Indian Contract Act or by the English Common Law.

10. The question of applicability of the Contract Act, 1872 to common carriers was finally set at rest by the Privy Council decision in Irrawaddy Flotilla Co. v. Bugwan Das, 18 Ind App 121 (PC). In this appeal their Lordships considered this question which had given rise to a conflict of judicial opinion in India. In 1878 the High Court of Bombay in Kuverji Tulsidas v. The G. I. P. Railway Co., ILR 3 Bom 109 held that the effect of the Indian Contract Act, 1872 was to relieve common carriers from the liability of insurers answerable for the goods entrusted to them 'at all events' except in the case of loss or damage by act of God or the Queen's enemies, and to make them responsible only for that amount of care which the Act requires of all bailees alike in the absence of special contract. The same point was again brought before the High Court of Calcutta in 1883 and in the Full Bench case of Moothora Kant Shaw v. India General Steam Navigation Co., ILR 10 Cal 166 the Court came to the conclusion that the liability of common carriers was not affected by the Act of 1872. In the Privy Council case their Lordships had to determine which of these two High Courts in India had to be preferred. For the purpose of this action it would suffice if I merely quote a few passages from the speech of Lord Macnaghten where he formulates the law:

'The obligation imposed by law on common carriers has nothing to do with contract in its origin. It is a duty cast upon common carriers by reason of their exercising a public employment for reward. 'A breach of this duty', says Dallas C. J., Bretherton v. Wood, (1821) 3 B and B 54 at p. 62 is a breach of the law and for this breach an action lies founded on the common law which action wants not the aid of a contract to support it'.'

Their Lordships observed:

'it seemed that there are several considerations not all of equal weight but all pointing in the same direction which lead irresistibly to the conclusion that the Act of 1872 was not intended to alter the law applicable to common carriers'

and came to the conclusion that the Act of 1872 was not intended to deal with the law relating to common carriers and notwithstanding the generality of some expressions in the chapter of bailment they thought that common carriers were not within the Act, thus deciding in favour of the view of the High Court of Calcutta and against that of the High Court of Bombay. This question can now be taken to have been finally concluded by this Privy Council decision.

11. In the Full Bench case reported in Sheik Mahamad Ravuther v. British India Steam Navigation Co. Ltd., ILR 32 Mad 95 the same question was again brought before the Court. There the defendant carried certain bags of rice and other goods for the plaintiff consignee from Rangoon to Tuticorin under a bill of lading which, inter alia, provided that

'In all cases and under all circumstances the liability of the company shall cease absolutely when the goods are free of the ship's tackle and thereupon the goods shall be at the risk for all purposes and in every respect of the shipper or consignee'.

The defendant landed the cargo at the destination. Part of the cargo was destroyed by the municipal authorities after they had been landed on account of their damaged condition. The plaintiff alleged the damage was occasioned by the negligence of the defendant or their agents.

12. The majority of the learned judges constituting the Beach (Wallis J. dissenting) held that on construction of the bill of lading the defendant could not invoke in aid the general negligence clause in the body of the document and that they were not exempted from liability for negligence. The words 'in all cases and under all circumstances' in the last clause though as wide and general as possible will not cover the case of negligence which must be expressly provided for. Wallis J. however was of the view that the general condition in the bill will by itself limit the liability during the whole time he was in possession and will apply during the loading and discharge of the goods. The last clause cannot be considered as imposing on the defendant at that state, a liability for negligence, which had been already generally stipulated for. Although the learned Chief Justice and Sankaran Nair J. agreed in the ultimate decision it is important to note that they proceeded on different principles. The Privy Council decision 18 Ind App 121 (PC) referred to before, Was not expressly considered by the Chief Justice or Wallis J. in their respective judgments. It is only in the judgment of Sankaran Nair J. that a passing reference has been made of 18 Ind App 121 (PC) and who, it appears, held some doubt as to the soundness of the proposition enunciated by his learned brothers in their respective judgments. According to Sankaran Nair J. the rule of English Common Law which entitled the common carrier to exempt themselves from liability for negligence by express contract was not applicable to India inasmuch as it was inconsistent with the provisions of the Contract Act; and a contract limiting such liability would be opposed to public policy and void under Section 23 of the Contract Act, as it would be against the interest of the mercantile community and not in interest of the common carrier. In short the learned judge was of the opinion that Section 148 of the Contract Act included bailment for carriage and as such Sections 151 and 152 of the Act applied to common carriers which very point was decided differently by the Judicial Committee of the Privy Council as has been stated before. The Privy Council decision has since been uniformly followed in different cases and with due respect to the learned Judge I cannot, in the circumstances, persuade myself to adopt his view which undoubtedly is of great force.

13. British and Foreign Marine Insurance Co. v. India General Navigation and Rly Co. Ltd., ILR 38 Cal 28 decided that the rights and liabilities of the common carrier in India were outside Contract Act and were governed by the principles of the English Common Law as modified by the Carriers Act 1865. The Chief Justice Sir Lawrence Jenkins who delivered the judgment arrived at the conclusion independently of the earlier Calcutta decision reported in ILR 10 Cal 166 (FB) and the Privy Council decision in 118 Ind App 121 (PC) referred to above.

14. In Bombay Steam Navigation Co. Ltd v. Vasudev Baburao, AIR 1928 Bom 5 the Bombay High Court revised its earlier decision and adopted the principles formulated in 18 Ind App 121 (PC), and did not consider that there was any adequate reason to adopt the contrary view expressed by Sankaran Nair J. In Alfred William Ludditt v. Ginger Coote Airways Ltd. 51 Cal WN 498: (AIR 1947 PC 151) it was decided that a common carrier of goods was at common law free to limit his stringent obligations by special contract and could insist on making his own terms and refuse to carry except on those terms provided that there was no statutory condition limiting his rights. Nadar Transports, Tiruchirapalli v. State of Madras, : AIR1953Mad1 and River Steam Navigation Co. v. Shyam Sunder Tea Co., AIR 1955 Assam 65 followed the Privy Council decision in 18 Ind App 121 (PC) and also held that the Contract Act 1872 did not apply to common carriers. In a recent unreported case of the Assam High Court, being Second Appeals No. 76 of 1954 and No. 112 of 1955: (AIR 1960 Assam 71), Rukmanand v. Air Lines Corporation the learned Chief Justice Sarajoo Prosad considered this question in great detail and came to the same conclusion that the common law of England would apply to common carriers and not the Indian Contract Act 1872.

15. In the light of the above authorities I hold that the present case is governed by the English Common Law as administered by courts in India and that the Contract Act 1872 has no application.

16. The learned Counsel for the defendant admitted and it is well settled also, that if English Common Law was held to be applicable, the common carrier could exempt itself of all liabilities including its liability for negligence, but it was contended that in this case upon true construction of the conditions of carriage as appearing at the back of the consignment note the defendant did not in clear terms so exempt itself and as such it should be found liable for damages. This brings me to Clause 3 of the condition of carriage. It is argued that on proper construction the defendant only exempted itself from liability if the damage or loss was occasioned by cancellation, delay of the commencement or continuation of flight or alternation of stoppage place or deviation from the route and not otherwise. I am unable to accept this contention. In my opinion the language of the Condition 3, itself, is clear and unambiguous. There is hardly any room for construction at all. The words 'exempt from any liability', 'from any cause whatever' and 'including negligence or default of pilots etc. within brackets, clearly indicate that the defendant by their contract did exempt itself of all liabilities including liability for negligence and which contract the plaintiff agreed to and accepted in Writing on the consignment note itself.

17. So I answer the issues thus;

No. 3(a) The defendant is a common carrier and, that the Carriers Act 1865 does not apply to this Case.

3(b) The defendant is governed by the English Common Law as administered in India.

3(c) Yes.

18. In the result the suit is dismissed with costs.