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PETITIONER:

NATH BROS. EXIM INTERNATIONAL LTD.

Vs.

RESPONDENT:

BEST ROADWAYS LTD.

DATE OF JUDGMENT: 27/03/2000

BENCH:

D.P.Wadhwa, S.S.Ahmad

JUDGMENT:

S.SAGHIR AHMAD, J.

The appellant had booked a consignment of 77 packages

of mulberry/natural silk garments with the respondent for

being carried from Noida (U.P.) to Bombay to be delivered to

M/s Jeena & Co., who were the clearing agents of the

appellant. The consignment was to be exported to the United

Kingdom as the appellant had imported raw silk free of

custom duty for manufacture of garments, to be exported back

to the United Kingdom. The goods along with copies of

Invoice No. NBI-7493 dated 9.3.1994 were entrusted to the

respondent who issued Consignment Note No.52330 dated

11.3.1994 to the appellant. Since the consignment was not

delivered at Bombay, the appellant wrote a letter to the

respondent on 21st of March, 1994 mentioning the

non-delivery of consignment. On March 24, 1994, the

appellant received a letter dated March 19, 1994 from the

respondent through which he came to know that the

consignment which was stored at a godown in Bhiwandi was

completely destroyed by fire. After serving legal notice on

the respondent and after considering its reply, the

appellant filed a claim petition before the National

Consumer Disputes Redressal Commission, New Delhi (for

short, `the National Commission'), for recovery of a sum of

Rs.36,12,874.60 along with interest at the rate of 18 per

cent per annum besides costs. The case was contested by the

respondent who filed a written statement in which it was

pleaded that the goods, entrusted to them, were carried by

them with due care and were stored in a godown at Bhiwandi

on the instructions of the consignee, M/s Jeena & Co., who

had indicated in their letter dated 14.3.1994 that since the

shipment was to take place from C.F.S. Kalamboli, the

consignment may be unloaded at Bhiwandi. The respondent

further pleaded that there was no negligence on their part

nor was there any deficiency in service. It was stated that

the fire had suddenly broken out in the adjacent warehouse

from where it spread to the godown where the appellant's

consignment was kept and, therefore, that consignment was

also destroyed. The respondent also pleaded that the goods

were carried at "OWNER`S RISK" and since special premium was

not paid, they were not responsible for the loss caused by

fire. The National Commission by the impugned judgment

dated September 2, 1996, dismissed the claim. Learned

counsel for the appellant has contended that the respondent

is a `carrier' within the meaning of Carriers Act, 1865 and,

therefore, he is liable for non-delivery of goods to the

consignee at the destination indicated to them. It is

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contended that non-delivery is indicative of the negligence

on the part of the respondent and, therefore, the National

Commission was not justified in rejecting the claim petition

on the ground that the goods were destroyed by fire. It is

also contended that the goods, having been entrusted to the

respondent, for delivery to M/s Jeena & Co. at Bombay,

could not have been diverted for being unloaded at Bhiwandi

or stored there. In any case, since the goods were stored

in a godown which was adjacent to another godown in which

highly combustible articles were kept by a third person who

owned that godown, the respondent was clearly negligent in

keeping the consignment in question, which consisted of the

silk garments, in that godown so as to expose them to fire

which ultimately engulfed not only the godown where the

combustible material was kept but also the adjacent godown

where the appellant's goods were negligently stored. The

findings recorded by the National Commission that the goods

were diverted at the instance of M/s Jeena & Co. for

unloading at Bhiwandi have also been assailed. Learned

counsel for the respondent has, on the other hand, contended

that the goods were entrusted to the respondent for being

carried from Noida (U.P.) to Bombay at "OWNER'S RISK" as the

appellant had not agreed to pay higher freight, as indicated

in the terms of contract and was content with the goods

being carried at "OWNER'S RISK". It is contended that since

the goods were booked at "OWNER'S RISK", the respondent was

not liable for loss of those goods. It is contended that in

his capacity as `carrier', the respondent had taken full

care of the goods entrusted to him by the appellant and

since the goods were directed to be unloaded at Bhiwandi on

the instructions of the consignee, it could not be said that

the respondent was negligent in any manner. The goods were

stored in the appellant's own warehouse. It is another

matter that in the adjacent godown, highly combustible

articles were stored which suddenly caught fire resulting in

the loss of the appellant's goods. The outbreak of the fire

was sudden and it could not be controlled in spite of the

services of the fire-brigade which were requisitioned by the

respondent who had duly informed the appellant not only of

the fact that the goods were diverted at the instance of

consignee but also that they were completely destroyed by

fire in the adjacent godown which had unfortunately spread

to the godown where the appellant's goods were stored.

Rights and liabilities of common carriers are indicated in

the Carriers Act, 1865 [for short, the "Act"]. The Preamble

of the Act provides as under:- "WHEREAS It is expedient not

only to enable common carriers to limit their liability for

loss of or damage to property delivered to them to be

carried but also to declare their liability for loss of, or

damage to, such property occasioned by the negligence or

criminal acts of themselves, their servants or agents."

Section 3 of the Act provides that a common carrier would

not be liable for loss of, or damage to, the property

delivered to it if its value exceeds one hundred rupees and

it is of the description contained in the Schedule to the

Act, unless the person delivering such property to be

carried, expressly declares to such carrier the value and

description thereof. That is to say, if the value of the

property, delivered to the common carrier, is of more than

hundred rupees, the person entrusting the property to the

carrier, must disclose and declare to such carrier the value

and description of that property. The other Sections which

are relevant for purposes of this case are Sections 4, 5, 6,

8 and 9 which are set out below:- "4. For carrying such

property payment may be required at rates fixed by carrier.-

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Every such carrier may require payment for the risk

undertaken in carrying property exceeding in value one

hundred rupees and of the description aforesaid, at such

rate of charge as he may fix : Proviso. Provided that, to

entitle such carrier to payment at a rate higher than his

ordinary rate of charge, he shall have caused to be

exhibited in the place where he carries on the business of

receiving property to be carried, notice of the higher rate

of charge required, printed or written in English and in the

vernacular language of the country wherein he carries on

such business. 5. The person entitled to recover in

respect of property lost or damaged may also recover money

paid for its carriage. - In case of the loss of or damage

to property exceeding in value one hundred rupees and of the

description aforesaid, delivered to such carrier to be

carried, when the value and description thereof shall have

been declared and payment shall have been required in manner

provided for by this Act, the person entitled to recover in

respect of such loss or damage shall also be entitled to

recover any money actually paid to such carrier in

consideration of such risk as aforesaid. 6. In respect of

what property liability of carrier not limited or affected

by public notice.- The liability of any common carrier for

the loss of or damage to any property (including container,

pallet or similar article of transport used to consolidate

goods) delivered to him to be carried, not being of the

description contained in the schedule to this Act, shall not

be deemed to be limited or affected by any public notice;

but any such carrier, not being the owner of a railroad or

tramroad constructed under the provisions of Act XXII of

1863 (to provide for taking land for works of public utility

to be constructed by private persons or Companies, and for

regulating the construction and use of works on land so

taken) may, by special contract, signed by the owner of such

property so delivered as last aforesaid or by some person

duly authorised in that behalf by such owner, limit his

liability in respect of the same." 8. Common carrier liable

for loss or damage caused by neglect or fraud of himself or

his agent.- Notwithstanding anything hereinbefore contained,

every common carrier shall be liable to the owner for loss

of or damage to any property (including container, pallet or

similar article of transport used to consolidate goods)

delivered to such carrier to be carried where such loss or

damage shall have arisen from the criminal act of the

carrier or any of his agents or servants and shall also be

liable to the owner for loss or damage to any such property

other than property to which the provisions of section 3

apply and in respect of which the declaration required by

that section has not been made, where such loss or damage

has arisen from the negligence of the carrier or any of his

agents or servants. 9. Plaintiffs, in suits for loss,

damage, or non-delivery, not required to prove negligence or

criminal act.- In any suit brought against a common carrier

for the loss, damage or non-delivery of goods (including

containers, pallets or similar article of transport used to

consolidate goods) entrusted to him for carriage, it shall

not be necessary for the plaintiff to prove that such loss,

damage or non-delivery was owing to the negligence or

criminal act of the carrier, his servants, or agents."

Section 4 contemplates the rates fixed by the carrier for

carrying the property entrusted to it to the place indicated

by the consignor. The Proviso to this Section contemplates

a still higher rate than the ordinary rate of charge for

carrying the goods. The only requirement is that the

carrier should have exhibited at the place of his business a

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notice indicating the higher rate of charge required for

carrying the goods. Section 5 provides that where the

property entrusted to the carrier is lost or damaged, then

the owner thereof would be entitled not only to recover the

damages for the loss or damage to the property, but he will

also be entitled to recover any amount which might have been

paid to the carrier as a consideration for carrying the

goods. Section 6 speaks of unlimited liability of the

common carrier in respect of goods, not being of the

description contained in the Schedule to the Act. It is

provided that the liability shall not be deemed to be

limited or affected by any public notice. Section 8

provides in specific terms that where any property is

entrusted to any carrier for being carried to the

destination indicated by the owner thereof, the carrier

shall be liable for loss or damage caused by neglect or

fraud of the carrier or its agent. Section 9 provides that

in a suit for recovery of damages for loss or non-delivery

of the goods, the burden of proof would not be on the

plaintiff to establish that loss or damage or non-delivery

was caused owing to the negligence or criminal act of the

carrier, his servants or agents. Learned counsel for the

appellant has contended that under Section 151 of the Indian

Contract Act, the carrier as a bailee is bound to take as

much care of the goods bailed to him as a man of ordinary

prudence would, under similar circumstances, take of his own

goods. It is contended that if that amount of care, which a

person would have taken of his own goods, is not taken by

the carrier, it would amount to deficiency in service and

the carrier would be liable in damages to the owner for the

goods bailed to him. Before analysing the submissions made

by learned counsel for the appellant, we may reproduce the

provisions of Sections 151 and 152 of the Indian Contract

Act, 1872, hereinbelow : "151. In all cases of bailment

the bailee is bound to take as much care of the goods bailed

to him as a man of ordinary prudence would, under similar

circumstances, take of his own goods of the same bulk,

quality and value as the goods bailed. 152. The bailee, in

the absence of any special contract, is not responsible for

the loss, destruction or deterioration of the thing bailed,

if he has taken the amount of care of it described in

section 151." These provisions, in effect, embody the

English Common Law Rule as to the liability of bailee.

Under the English Common Law Rule, the measure of care

required of the person to whom the goods were bailed, was

the same as a man of ordinary prudence would take of his own

goods. In other words, it was a mere matter of negligence

on which the liability was founded. If a person was

negligent and did not take as much care as he would have

taken of his own goods, he would be liable in damages.

These principles of the English Common Law Rule were also

applied in this country as indicated in the decision of the

Privy Council in Irrawaddy Flotilla v. Bugwandas (1891) 18

I.A. 121 = (1891) ILR 18 Cal. 620, in which, it was, inter

alia, observed as under : "For the present purpose it is

not material to inquire how it was that the common law of

England came to govern the duties and liabilities of Common

Carriers throughout India. The fact itself is beyond

dispute. It is recognised by the Indian Legislature in the

Carriers' Act, 1865, an Act framed on the lines of the

English Carriers Act of 1830." The law was also explained in

Halsbury's Laws of England, IIIrd Edn., Vol. 4 at page 141

as under : "A common carrier is responsible for the safety

of the goods entrusted to him in all events, except when

loss or injury arises solely from act of God or the Queen`s

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enemies or from the fault of the consignor, or inherent vice

in the goods themselves. He is, therefore, liable even when

he is overwhelmed and robbed by an irresistible number of

persons. He is an insurer of the safety of the goods

against everything extraneous which may cause loss or injury

except the act of God or the Queen`s enemies and if there

has been an unjustifiable deviation or negligence or other

fundamental breach of contract on his part, he will be

liable for loss or injury due to the Queen`s enemies or, it

would seem, due to act of God. This responsibility as an

insurer is imposed upon a common carrier by the custom of

realm, and it is not necessary to prove a contract between

him and the owner of the goods in order to establish

liability. Failure on the part of the carrier to deliver

the goods safely is a breach of the duty placed upon him by

the common law; and therefore an action of tort lies

against him for such breach, the owner not being bound to

prove any contract. Where, however, there is a contract,

liability may arise either at common law or under the

contract, and the contract may limit the carrier`s

responsibility. A common carrier is liable for loss or

injury caused wholly by the negligence of other persons over

whom he has no control; as where the carrier`s barge runs

against an anchor wrongfully left in the water by a

stranger, or where the goods which he is carrying are

destroyed by accidental fire or by rats, or where they are

stolen from him, even though taken by force. The general

obligation of a common carrier of goods to carry the goods

safely whatever happens renders it unnecessary to import

into the contract for carriage a special warranty of the

roadworthiness of the vehicle or the seaworthiness of the

vessel, for if the goods are carried safely the condition of

the vehicle or vessel is immaterial, and, if they are lost

or damaged it is necessary to inquire how the loss or damage

occurred; where however, a common carrier of goods is

seeking relief from liability by reason of one of the

excepted perils the condition of the vehicle or vessel is

material in determining the question of negligence, and if

the carrier fails to prove a sufficient and proper

conveyance and loss or damage results therefrom he will be

liable, it is unnecessary to inquire how the loss or damage

occurred; where however, a common carrier of goods is

seeking relief from liability by reason one of the excepted

perils the condition of the vehicle or vessel is material in

determining the question of negligence, and if the carrier

fails to prove a sufficient and proper conveyance and loss

or damage results therefrom he will be liable." In the

meantime, the Parliament intervened and the Carriers Act,

1865 was enacted with the result that the liability of a

common carrier came to be considered in the light of the

provisions contained in that Act. It is true that Section

158 of the Indian Contract Act speaks of bailment of the

goods for being carried on behalf of the bailor, but it is

also to be noticed that the bailment spoken of in that

Section is gratuitous as it is specifically provided that

"the bailee is to receive no remuneration." That apart, the

definition of `bailment' as set out in Section 148 of the

Indian Contract Act may be said to be wide enough so as to

cover `entrustment of goods' to a carrier for carriage. But

as pointed out above, with the enactment of Carriers Act,

1865, the extent of liability of the carrier has to be found

in that Act. The question of liability of a common carrier

was considered by various High Courts in subsequent

decisions. In The British & Foreign Marine Insurance Co.

v. The Indian General Navigation and Railway Co. Ltd.,

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Calcutta Weekly Notes (15) 226, the Calcutta High Court held

that the relative rights and liabilities of common carriers

and those for whom they carry are outside the Indian

Contract Act and are governed by the principle of the

English Common Law as modified by the Carriers Act of 1865.

A common carrier, therefore, in India is subject to two

distinct classes of liability, the one for the losses for

which he is liable as an insurer, and the other for losses

for which he is liable under his obligation to carry safely.

Speaking generally, the first of these are insurable risks

from which the element of default is absent, the second are

risks of conveyance in which that element is present. The

Carriers Act of 1865 has in some degree modified this

position. The Court was also of the opinion that the effect

of Sections 6, 8 and 9 of the Carriers Act of 1865 is that

the liability of a common carrier for the loss of goods, not

being of the description contained in the schedule to the

Act, may be limited by special contract signed by the owner

save where such loss shall have arisen from the negligence

or criminal act of the carrier or any of his agents or

servants. The extent of liability of a common carrier also

came to be considered by the Assam High Court in River Steam

Navigation Co. Ltd. & Anr. vs. Syam Sunder Tea Co.

Ltd., AIR 1955 Assam 65, wherein it was laid down as under :

"The common law of England regulating the responsibility of

common carrier was in force at the time of the passing of

the Carriers Act (Act 3 of 1865) and is still in force in

this country, being almost unaffected by the provisions of

the Indian Contract Act. Section 6 Carriers Act, to which I

have referred earlier, enables the common carrier to limit

his liability by a special contract; otherwise the

liability which the common law imposes is there. Even the

special contract contemplated by S.6 would be of no avail

where the loss or damage has been caused by negligence or

any criminal act on the part of the carrier or his agents or

servants. Where the loss or damage arises from any criminal

act of the carrier or any of his agents or servants, the

common carrier shall be liable to the owner for the loss or

damage, and S.9 of the Act relieves the plaintiff from the

burden of showing that the loss or damage or non-delivery

was owing to any such negligence or criminal act. These

sections, therefore, recognise the common law doctrine, save

in so far as the liability is limited by some special

contract, as provided by S.6. Therefore, even if it were

found that the defendants took as much care of the goods as

a man of ordinary prudence would, under similar

circumstances, the defendants would be liable if the loss

was not occasioned by any act of God or the King's enemies,

which, in case of republican States, would mean the enemies

of the State. There is a third exception recognised where

there is some intrinsic vice or defect in the goods

themselves or where they are of a perishable nature. The

liability of the `carrier' is not that of a mere bailee, as

defined by Sections 151 and 152 of the Indian Contract Act.

The extent of his liability is very often described as the

liability of an insurer against all risks; but it is not a

question of any contract to insure and no contract of any

insurance has to be made out. If, therefore, the boat, ship

or steamer sank on account of its having struck upon some

snag and the cargo was lost, that may be a mere `peril of

navigation', but not an act of God, and the steamer

companies would still be liable even if, under the

circumstances, they were found to have acted with reasonable

care and prudence." In P.K. Kalasami Nadar v. K.

Ponnuswami Mudaliar & Ors. AIR 1962 Madras 44, in which the

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earlier decision of the Privy Council in Irrawaddy

Flotilla's case (supra) was relied upon, it was held that

where loss has occurred to cotton bales in transit, cotton

being one of the goods not mentioned in the schedule to the

Carriers Act, 1865 and in respect of which the liability of

the common carrier is not limited by a special contract, the

owner of the goods in a suit against the common carrier for

loss, damage, or non-delivery of articles or goods entrusted

to the carrier is not required to prove negligence; the

reason is that the liability of a common carrier is that of

an insurer. It, therefore, follows that, notwithstanding

the fact that there is no negligence on the part of the

common carrier, he is liable to compensate the owner of

goods for the loss of the goods that occurred during the

transit thereof by the lorry belonging to the carrier. In

another Madras decision in Messrs Konda Rm. Eswara Iyer &

Sons, Madurai & Ors. vs. Messrs Madras Bangalore Transport

Co., Madurai & Ors. AIR 1964 Madras 516 it was held as

under : "The liability of a common carrier is not limited

only to negligence. In the case of loss or damage he cannot

plead that he has exercised all reasonable diligence and

care. He must be liable in spite of taking all due care and

precautions. As Chief Justice Hale observed in Mors v.

Slew (1672) 1 Vent 190 at p.239 -- "And if a carrier be

robbed by a hundred men, he is never the more excused." Thus

the general principle of the common law is a common carrier

is insurer of goods which he contracts to carry and he is

liable for all loss of, or injury to those goods while they

are in the course of transit unless such loss or injury is

caused by the act of God or by the State enemies or is the

consequence of inherent vice in the thing carried or is

attributable to consignor`s own fault." It was further held

as under : "The law is the same in India. The Carriers Act

No. III of 1865 is framed on the same lines of the English

Carriers Act of 1830." The Bombay High Court in Hussainbhai

Mulla Fida Hussain v. Motilal Nathulal & Anr. AIR 1963

Bombay 208, held that the liability of common carriers under

the Common Law and the Carriers Act, 1865 is not affected by

the provisions of the Contract Act and by law common

carriers are liable as insurers of goods and they are

responsible for any injury caused to the goods delivered to

them, howsoever caused except only by act of God or action

of alien enemies. The Court further held that no proof of

negligence is, in such a case, needed and the defendant has

to establish the exception. The Assam and Madras decisions

as also the Privy Council decision referred to above were

relied upon. To the same effect is the decision of the

Rajasthan High Court in Vidya Ratan vs. Kota Transport Co.

Ltd. AIR 1965 Raj. 200. In R.R.N. Ramalinga Nadar vs.

V.Narayana Reddiar AIR 1971 Kerala 197, it was held as under

: "A common carrier is not a mere bailee of goods entrusted

to him. He is an insurer of goods. He is answerable for

the loss of goods even when such loss is caused not by

either negligence or want of care on his part, act of God

and of King`s enemies excepted. This arises because

responsibility attached to the public nature of the business

carried on by him. He holds out as a person who has the

expertise and the facilities to conduct the business of

transport; consequently he is treated as an insurer of the

goods and is answerable for its loss. This concept as to

the liability of a common carrier has been applied in India

uniformly. The rule of the Roman law as to the liability of

a carrier is different. It does not conceive of an absolute

liability as in the English Common Law and the rule of the

Roman Law has been adopted by many States in the continent.

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The extent of liability of a bailee under Ss. 151 and 152

of the Indian Contract Act, 1872, is different from the

extent of liability of a common carrier. A bailee is only

bound to take proper care of the goods and for loss beyond

his control he is not answerable. But the provisions of the

Indian Contract Act do not govern the liability of a common

carrier nor do they override the provisions of the Carriers

Act, 1865. This question was considered by the Privy

Council in (1891) ILR 18 Cal.620 (PC) and it was held that

notwithstanding the provisions of the Indian Contract Act,

the liability of a common carrier continues to be absolute

subject to any special contract entered into by him." This

decision was followed by the Kerala High Court in Kerala

Transport Co. v. Kunnath Textiles 1983 Kerala Law Times

480. A perusal of the decisions referred to above would

indicate the extent of liability of a carrier. We have

already reproduced the provisions of Sections 6, 8 and 9

above. Section 6 enables the common carrier to limit his

liability by a special contract. But the special contract

will not absolve the carrier if the damage or loss to the

goods, entrusted to him, has been caused by his own

negligence or criminal act or that of his agents or

servants. In that situation, the carrier would be liable

for the damage to or loss or non-delivery of goods. In this

situation, if a suit is filed for recovery of damages, the

burden of proof will not be on the owner or the plaintiff to

show that the loss or damage was caused owing to the

negligence or criminal act of the carrier as provided by

Section 9. The carrier can escape his liability only if it

is established that the loss or damage was due to an act of

God or enemies of the State (or the enemies of the King, a

phrase used by the Privy Council). The Calcutta decision in

The British & Foreign Marine Insurance Co. vs. The Indian

General Navigation and Railway Co.Ltd. (supra), the Assam

decision in River Steam Navigation Co. Ltd & Anr. vs.

Syam Sunder Tea Co. Ltd. (supra), the Rajasthan decision

in Vidya Ratan vs. Kota Transport Co.Ltd. (supra), the

Kerala decision in Kerala Transport Co. vs. Kunnath

Textiles (supra), which have already been referred to above,

have considered the effect of special contract within the

meaning of Sections 6 and 8 of the Carriers Act, 1865 and,

in our opinion, they lay down the correct law. In the

Madras decision in P.K. Kalasami Nadar v. K. Ponnuswami

Mudaliar & Ors. (supra), it was held that an act of God

will be an extraordinary occurrence due to natural causes,

which is not the result of any human intervention, but it

was held that an accidental fire, though it might not have

resulted from any act or omission of the common carrier,

cannot be said to be an act of God. Similarly, in Kerala

Transport Co. v. Kunnath Textiles (supra), it was held

that the absolute liability of the carrier was subject to

two exceptions. One of them is a special contract that the

carrier may choose to enter into with the customer and the

other is the act of God. It was further held that an act of

God does not take in any and every inevitable accident and

that only those acts which can be traced to natural causes

as opposed to human agency would be said to be an act of

God. In Associated Traders & Engineers Pvt. Ltd. v.

Delhi Cloth & General Mills Ltd. & Ors. ILR Delhi 1974 (1)

790, a fire which broke out in a bonded warehouse where the

goods were kept was held not to be an act of God and,

therefore, the carrier was held liable. This Delhi decision

has been relied upon by the learned counsel for the

appellant on another question also to which we shall

presently come, to show that the agreement by which the

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liability of the carrier is sought to be limited must be

signed by the owner of the goods, entrusted to the carrier

for carriage. From the above discussion, it would be seen

that the liability of a carrier to whom the 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, undamaged and without loss at the destination,

indicated by the consignor. So long as the goods are in the

custody of the carrier, it is the duty of the carrier to

take due care as he would have taken of his own goods and 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 agent and servants. Learned counsel for the

respondent contended that the goods were booked at "OWNER`S

RISK" and, therefore, if any loss was caused to the goods,

may be on account of fire, which suddenly engulfed the

neighbouring warehouse and spread to the godown where the

goods in question were stored, the carrier would not be

liable. "OWNER`S RISK" in the realm of commerce has a

positive meaning. It is understood in the sense that the

carrier would not be liable for damage or loss to the goods

if it were not caused on account of carrier`s own negligence

or the negligence of its servants and agents. In Burton v.

English (1883) 12 Q.B.D. 218 and again in Wade v.

Cockerline (1905) 10 Com.Cas. 47, it was held that in spite

of the goods having been booked at "OWNER`S RISK", it would

not absolve the carrier of its liability and it would be

liable for the loss or damage to the goods during

trans-shipment or carriage. These decisions granted

absolute immunity to the carrier, but they have lost their

efficacy on account of subsequent decisions in Svenssons v.

Cliffe S.S.Co. (1932) 1 K.B. 490, which was considered in

Exercise Shipping Co. Ltd. v. Bay Maritime Lines Ltd.

(The Fantasy) (1991) 2 Lloyd`s Rep. 391 [Queen`s Bench

Division], in which it was observed as under : "The

question whether words such as "at charterer`s risk" can

operate as an exemption clause in favour of a party

otherwise liable for negligence was decided by Mr. Justice

Wright (as he then was) in Svenssons Travaruaktiebolag v.

Cliffe Steamship Co. (1931) 41 Ll.L.Rep. 262; (1932) 1

K.B. 490. He considered the authorities in detail and

concluded : It is quite clear, in my judgment, on the

authorities as they now stand, that the words "at

charterers' risk", standing alone and apart from any other

exception in the charter-party, do not excuse the shipowner

in the case of a loss due to the breach of warranty of

seaworthiness... I think that the words standing by

themselves have also to be read as limited to losses and

damages where there has been no negligence on the part of

the shipowner or his servants. He went on to consider the

charter-party terms in that case which also included an

exceptions clause, cl. 11. He held that that clause should

have its full effect whereas if "at charterers' risk" had

included an exception of negligence, it might not have done

so. That judgment has been followed since 1932, for example

in The Stranna (1937) 57 Ll.L.Rep. 231; (1937) P.130 and

East & West Steamship Co. v. Hossain Brothers, (1968) 2

Lloyd`s Rep. 145 (Supreme Court of Pakistan) and it has

not, so far as I am aware, been dissented from." In Mitchell

v. Lanc. & Y.R., 44 LJQB 107 = LR 10 QB 256, it was held

that "OWNER`S RISK" only exempts the carrier from the

ordinary risks of the transit and does not cover the

carrier`s negligence or misconduct. So also, in Lewis vs.

The Great Western Railway Company 3 Queen`s Bench 195, the

words "OWNER`S RISK", were held to mean, "at the risk of the

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owner, minus the liability of the carrier for the misconduct

of himself or servants." Thus the expression "at owner`s

risk" does not exempt a carrier from his own negligence or

the negligence of his servants or agents. We may now

consider the facts of this case. The Consignment Note No.

52330 dated 11th March, 1994, through which the goods were

booked with the respondent says "AT OWNER`S RISK". In the

column meant for insurance, again, the alphabets "OR" are

mentioned, which obviously mean "OWNER'S RISK". The terms

and conditions are printed at the back of the Consignment

Note. Condition No. 1, inter alia, reads as under :

"1......... The Company carries the goods at Owner`s Risk

unless a special insurance of Rs.0.80 for every hundred

rupees of value declared by the sender having been charged

and paid. Payment of such Insurance charges, if made,

should be mentioned on the G.C. Note at the space provided

for the same." The name of the consignee indicated therein

is "Messrs Jeena & Co., Bombay." The address of the ultimate

consignee is mentioned as : "Sears Womenswear Limited, 1

Garrick Road, Hendon, London NW9 6AU, U.K.". It is further

indicated that the goods are to be loaded at Bombay. The

nature of the goods indicated in the invoice is "100%

Natural Silk Readymade Garments" consisting of 3672 pieces

of the value of GBP 48,470.40. The description of the goods

indicated in the Consignment Note was "Mulberry Raw Silk

Garments (Natural Silk Readymade Garments) comprising 77

packages. The contention of the learned counsel for the

respondent that since the goods were booked at "OWNER`S

RISK" the respondent would not be liable for any loss to

those goods, is not acceptable to the appellant who contends

that before the liability of the carrier can be restricted,

there has to be an agreement in writing as contemplated by

Section 6 of the Act, which has to be signed by the owner of

the goods, and since the Consignment Note, even if it is to

be treated to be an agreement between the parties, is not

signed by the owner or the appellant, there was no contract

between the parties within the meaning of Section 6 of the

Act and, therefore, in spite of the mention in the

Consignment Note that the goods would be carried at "OWNER`S

RISK", the liability of the carrier would not be restricted

and it would still be liable for the loss caused to the

undelivered goods at Bhiwandi by the outbreak of fire in the

godown where they were stored. When the goods were

entrusted to the carrier for delivery at Bombay to Messrs

Jeena & Co., the Consignment Note which was issued to the

appellant, mentioned that the goods were to be carried at

"OWNER`S RISK." The appellant did not, at that stage, object

to the words "OWNER`S RISK" being mentioned in the

Consignment Note. On 19th March, 1994, the respondent

informed the appellant that the goods were destroyed by

fire. In this letter, it was, inter alia, mentioned by the

respondent as under : "In the meantime, since the

consignment was booked at Owner`s Risk basis, you are

requested to please take up the matter with your Insurance

Company." Although it was clearly mentioned that the goods

were booked at "OWNER`S RISKS" in the aforesaid letter, the

appellant in his reply dated 26th March, 1994 did not

repudiate the assertion of the respondent that the goods

were booked at "OWNER`S RISK." Even in his earlier letter

dated 21st March, 1994, the appellant did not say a word

about "OWNER`S RISK." Thereafter, the appellant sent a

notice dated 22nd April, 1994 to the respondent through Mr.

S.K. Kaul, Advocate, but in that notice also the fact that

the goods were booked at "OWNER`S RISK" was not repudiated.

Even in the subsequent notice dated 30th May, 1994, sent

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through Shri R.C. Gupta, Advocate, the appellant did not

say anything about "OWNER`S RISK." Even in the Claim

Petition filed before the National Commission, the appellant

did not say anything about "OWNER`S RISK." The respondent,

however, in para 4 of the Written Statement filed before the

Commission stated, inter alia, as under : "4. That the

Opposite party had carried the goods at the "Owner risk" as

offer to the complainant to get the goods insured by them

was declined. That the terms and conditions of the contract

of the carriage as incorporated in the Goods Consignment No.

52330 dated 11th March, 1994 under which the complainant

booked the goods with the opposite party for transportation

provides: 1. The Company (opposite party) carriages the

goods at owners risk, unless a special Insurance of Rs.0.80

for every hundred rupees of value declared by the vender,

having been charged and paid. Payment of such insurance

charges, if made, should be mentioned on the goods

consignment note at the space provided for the same. 2.

The Company (opposite party) shall not be responsible for

any loss or damage due to theft, fire explosion or accident,

unless the special insurance charges, as stated in clause 1

above is charged and paid. An affidavit duly attested by

Sukhbir Singh, the Booking Clerk of the opposite party, who

had booked the goods of the complainant on behalf of the

opposite party is annexed as Annexure A-1." It was then that

the appellant in his rejoinder, raised the question that

there was no agreement in writing between the parties so

and, therefore, the liability of the carrier would not be

restricted. The appellants pleaded in paragraph 4, as under

: "That the submissions made in para No. 4 of the

preliminary objection are not correct. The term "Owner`s

risk" has not been defined in the Carriers Act. As per

Section 6 of the Carrier Act, a common carrier can limit his

liability not by means of public notice but by entering into

a special contract. If there is no special contract, the

liability of carrier remains absolute. It is not the case

of parties herein that they had entered into any special

contract or the consignment note bears the signatures of the

complainant in token of their acceptance that the goods were

booked at owner`s risk. The agreement/contract becomes

binding when the parties so agree and execute such contract.

The complainant has not signed any document/contract wherein

the complainant has accepted the goods were booked at the

owner`s risk. It is submitted that even where the goods

were carried at "Owner`s Risk", the carrier is not absolved

from his liability for loss of or damage to the goods due to

his negligence or criminal acts. Section 9 of the Carriers

Act provides that the common carriers are liable for the

loss if any caused to the goods entrusted to the carriers

and it is the duty of the carriers to carry the goods to the

destination station. It is absolutely incorrect that the

opposite party made any offer to get the goods insured.

Section 8 of the Carriers Act deals with the liability of

the common carriers for loss or damage caused by the neglect

of the carriers or his agent. The opposite party is liable

to pay the damages to the complainant even if the goods are

not insured. Thus the question of insurance of goods is not

at all relevant. In any case, the opposite party could not

have asked for the payment of insurance charges as mentioned

by them in the reply i.e. 80 paisa per 100/- of value

because carriers cannot in law collect the premium for

insurance of goods and issue any valid receipt of Insurance

Premium. The opposite party cannot work in place of

Nationalised Insurance Companies who perform their duties by

virtue of statute, i.e. Insurance Act. The complainant

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could not have been asked to enter into an illegal contract.

As such the submissions made in para No. 4 of the written

statement are incorrect, hence denied. The affidavit

(Annexure I) to W.S.) is collusive and managed one. In any

case the contents of affidavit are false and denied. The

complainant submits herewith affidavit of its employee Shri

Puran Singh to establish that the opposite party brought

their truck to the factory of the complainant and loaded the

goods there for carrying the same to Bombay and the

representative of the opposite party issued consignment note

in the factory of the complainant and at no stage the

opposite party asked the complainant to get the consignment

insured. The affidavit of Shri Puran Singh is submitted

herewith as ANNEXURE-J to the rejoinder. [ Emphasis

supplied ] In view of the above, there did arise a

controversy between the parties whether there was any

special agreement between them which would have the effect

of restricting the liability of the respondent in carrying

the goods in question to Bombay for delivery to Messrs Jeena

& Co. This question has not been answered in clear terms by

the National Commission and a positive finding, whether or

not there existed a special contract between the parties

within the meaning of Section 6 of the Act, has not been

recorded. The Commission, after considering various

provisions of the Act came to the conclusion that EVEN IF

the goods were carried at "OWNER`S RISK", the carrier would

not be fully absolved of his liability to pay compensation

if the loss was occasioned on account of his negligence or

the negligence of his servants and agents. The Commission,

to this extent, is right and, therefore, a positive finding

on the existence of a special contract is not insisted upon

but what is now questioned is the finding of the Commission

on the question of negligence. The Commission held that

since the goods were diverted to Bhiwandi by the consignee,

Messrs Jeena & Co., to whom the goods were to be delivered,

and they were destroyed by the fire which initially broke

out in the adjacent godown and subsequently spread to their

own godown, the respondent would not be liable as he had

taken all possible care which was expected of him as

carrier. This, we feel, is not the correct approach. There

was a serious dispute between the parties not only on the

existence of a special contract within the meaning of

Section 6 of the Act, but there also arose a dispute with

regard to the diversion of goods to be unloaded at Bhiwandi

instead of being delivered to Messrs Jeena & Co. at Bombay.

This question, namely, diversion of goods, has been decided

by the Commission without scrutinising the relevant

pleadings of the parties. The goods, according to the

learned counsel for the respondent, had reached the

destination, but when the consignee was informed that the

goods have arrived, the carrier was instructed by the

consignee, Messrs Jeena & Co., to unload the consignment at

Bhiwandi as the shipment of the 77 packages, which were

delivered to the carrier by the appellant, was to take place

at C.F.S. Kalamboli (Nhava Sheva Port). It is contended

that the consignee was the agent of the appellant and the

goods were to be delivered to him and if the consignee, on

information that the goods have arrived at Bombay, diverted

the carrier to Bhiwandi for unloading the goods there, the

carrier shall be deemed to have delivered the goods to the

consignee, namely, Messrs Jeena & Co. and the carrier

cannot be held liable for any loss caused to the goods after

delivery thereof to the consignee. Whether or not Messrs

Jeena & Co. had directed the respondent to unload the goods

at Bhiwandi, is a question of serious dispute between the

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parties. The respondent relied upon the letter dated 14th

March, 1994 from Messrs Jeena & Co. which reads as under :

"This has reference to the information given by you

regarding arrival of 77 packages at Mulund Check Post of M/s

Nath Brothers, Exim International Ltd., New Delhi, booked by

you under your G.C. No. 52330 dt. 11.3.94 Ex. Delhi to

Bombay. In this connection we hereby advise you to unload

the said consignment of 77 packages of the above party at

Bhiwandi as the shipment of the same will take place at CFS,

Kalamboli (Nhava Sheva Port)." The appellant disputed the

genuineness of this letter and contended that it was a

forged letter. It was contended that 14th March, 1994 was a

public holiday at Bombay on account of "Idul-Fitr" and the

offices of the banks including that of Messrs Jeena & Co.

were closed. It was also contended that Messrs Jeena & Co.

had addressed a fax message on 15th March, 1994 to the

appellant complaining of non-receipt of the goods. It was

contended that if the goods had arrived at Bombay and were

diverted by Messrs Jeena & Co. to Bhiwandi for being

unloaded there, they would not have issued the fax message

of 15th March, 1994 complaining of non-receipt of goods. It

is also pointed out that in none of the communications

earlier exchanged between the parties, respondent had

indicated about the letter dated 14th March, 1994 of Messrs

Jeena & Co. by which they had instructed the respondent to

divert the goods to Bhiwandi. It is also pointed out that

when a notice was issued by the appellant to the respondent,

the latter, namely, the respondent sent a reply through

their counsel on 27th June, 1994, but in that reply also

they did not mention about any written instructions from

Messrs Jeena & Co. for unloading the goods at Bhiwandi. In

the Claim Petition also, the appellant did not say a word

about diversion of goods at the instance of Messrs Jeena &

Co. But when the respondent filed his Written Statement and

pleaded that the goods had been diverted to Bhiwandi on the

express written instructions of Messrs Jeena & Co., the

appellant raised a dispute about that question in his

rejoinder. In para 10 of the Written Statement, the

respondent stated as under : "That para No. 10 of the

complaint as stated is wrong and denied, while it is not

denied that the booked consignment had to be delivered at

Bombay, but the same had to be taken to Bhiwandi and

unloaded of the opposite party godown as there was specific

instruction from the consignee and freight Forwarder M/s

Jeena & Company, Bombay. The opposite party had received a

letter dated 14.3.1994 wherein M/s Jeena and Company, on

receipt of the information from the opposite party about the

arrival of the consignment at Mulund Check post, directed

the opposite party to unload the said consignment at

Bhiwandi as the shipment of the same will take place from

C.F.S. Kalamboli (Nava Sheva Port). The letter dated 14th

March, is annexed as Annexure A-2. The true facts of the

case are that opposite party had booked the consignment of

77 boxes for delivery to their clearing, forwarding and

shipping agents M/s Jeena & Co. at Bombay under goods

consignment note No. 52330 dated 11th March, 1994 which is

Annexure B to the complaint. As per the instruction of the

complainants consignees at Bombay, M/s Jeena & Co.,

International Freight forwarders the consignment was to be

shipped from Nhava Sheva Port and not from Bombay Docks. As

soon as the consignment reached the Muland Check Post on

14th March, 1994, the said consignee vide letter dated

14.3.1994 which is Annexure A-2, directed the opposite party

to offload the cargo at Bhiwandi situated at the outskirts

of Greater Bombay where no octroi duty was payable and which

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was meant for despatch from the newly set-up port at Nhava

Sheva via the ship/vessel CMB Medal V-212, Rotation No.

405, which was expected to depart on any day immediately

after 16th March, 1994. Annexure A-3 is the map of the

Greater Bombay showing the location of the Mulund Check post

of the Greater Bombay, where Octroi duty is collected by the

Municipal Corporation on the entry of the goods, Bhiwandi on

the outskirts of the Greater Bombay and the situation of the

Bombay Docks and Nhava Sheva Port across the Creek of

Bombay. It is, therefore, not true that opposite party

wrongly unloaded the consignment at Bhiwandi, outside the

Bombay Octroi check post and hence it can easily be inferred

from the facts as stated above, that storing of the goods at

Bhiwandi instead of directly taking it to Bombay, does not

speak of any deficient and in-adequate service on the part

of the opposite party. The opposite party will further like

to add that complainant was bound to have complied with the

requirement and provision of the Bombay Municipal

Corporation Exemption from Octroi (Export) Promotion Rule

1976, copy of which is annexed as Annexure A-4, in respect

of the articles imported into Greater Bombay for the purpose

of export to foreign countries, as such registration as

exporters with the Municipal Corporation of Greater Bombay,

delcaration that cargo was to be shipped from Bombay Docks

and comply with all other procedure and formalities in this

particular case, the consignment was to be shipped from the

Port at Nhava Sheva, situated across the creek of Greater

Bombay and as such the consignment was intended to be

imported within the Octroi limits of the Greater Bombay

which would have attracted Octroi duty of 2% of the value of

the consignment, failing which the goods would have been

seized by the Municipal Corporation of the Greater Bombay at

Octroi check post. It is only when the consignee or their

forwarding agents desired this extra facility in respect of

the export cargo to save octroi that the opposite party take

this extra responsibility and incur expenditure, in

unloading which involves heavy labour charges. It is denied

that the complainant has suffered loss of goods including

profits as per price settled. It is denied that loss of

reputation has been caused to the complainant. As the

complainant was immediatley informed vide letter dated

19.3.1994 (which is annexure "E" in the complaint) about the

loss of the goods due to accidental fire and hence there was

no occasion for the complainant to have suffered huge

expenses on travelling. The complainants apprehension

regarding claims from foreign customers, at this stage, is

unfounded and pre-mature to be considered by the Hon'ble

Commission. In any case loss if suffered any is too remote

and indirect under section 73 of the Indian Contract Act and

could not be considered." The letter dated 14th March, 1994

from Messrs Jeena & Co. was filed with the Written

Statement as Annexure A-2. The appellant in his rejoinder

to the Written Statement of the respondent repudiated the

above pleadings of the respondent and stated in para 10

thereof, inter alia, as under : "Para 10 of reply is wrong

and false and, therefore, denied. It has been admitted by

the opposite party that the booked consignment had to be

delivered at Bombay. Thus it is not in dispute that there

was no agreement for carriage of goods to Bhiwandi or its

storage at Bhiwandi. It is not the case of opposite party

that complainant had directed them to change the destination

of goods from Bombay to Bhiwandi or to store them there. It

was further stated as under : 10(1) Without prejudice to

the above submissions it is stated that the letter

dt.14.3.94 purported to have been issued by Jeena & Co.

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(Annexure 2 to W.S.) relied upon by the opposite party to

justify the change of destination of consignment from Bombay

to Bhiwandi is totally false, collusive, an after thought,

managed one and mischievous in view of earlier fax of dt.

15.3.94 of Jeena & Co. (Annexure K) in which they informed

the complainant regarding 77 packages (Consignment in

question) "CARGO AWAITED". Furthermore, the opposite party

could not have informed Jeena & Co. on 14.3.94 and Jeena &

Co. could not have issued impugned letter dt. 14.3.94 on

that date itself as this day was a holiday under Negotiable

Instruments Act on account of Id-ul-Fitr when undoubtedly

Govt. Offices and Bank were closed in Bombay. To this

effect a telex confirmation dt. 29.4.95 issued by Indian

Overseas Bank R.O. (Metro) Bombay to Indian Overseas Bank,

Parliament Street, New Delhi (Bankers of the Complainant) is

enclosed herewith as Annexure L. Furthermore, the office of

Jeena & Co. itself was closed on 14.3.94 as certified by

them in the fax message dt. 22.4.95 which is enclosed

herewith as Annexure M. Furthermore, the opposite party had

not taken any plea based on the letter dt. 14.3.94 in their

first official communication being letter dt. 19.3.94

(Annexure 5 to W.S.). This proves that letter dated 14.3.94

is after thought. 10(2) In the above connection it is

further submitted that the veracity of claim of opposite

party that it changed the destination of goods on

instruction of Jeena & Co. is highly dubious for two more

reasons. .........

............................................". [ Emphasis

supplied ] It was further stated in paragraph 10(4) of the

rejoinder as under : "It is submitted that above facts

clearly show that the story of giving information of arrival

of goods at Bombay to Jeena & Co. and receiving

instructions from them to unload goods at Bhiwandi on

14.3.1994 is totally false and the opposite party stored the

goods at Bhiwandi of their own volition. The implantation

of letter dated 14.3.1994 is, therefore, only a crude

attempt to justify their unauthorised action of storing

goods at Bhiwandi." In view of the above pleadings, a

serious dispute had arisen between the parties as to the

genuineness of the letter dated 14th March, 1994, said to

have been written by Messrs Jeena & Co. to the respondent

to unload the goods at Bhiwandi instead of delivering the

consignment at Bombay. The National Commission did not

advert itself to these questions and disposed of the whole

matter observing, inter alia, as under : "The carrier has,

however, pointed out that they had taken the consignment, as

per the instructions of the petitioner, and informed the

consignee that the goods were ready for delivery at Bombay,

but the consignee directed them to unload the said

consignment of 77 packages at Bhiwandi. The diversion of

the consignment to Bhiwandi was thus made at the direction

of the consignee himself. In this regard, the Opposite

Party has produced a letter from M/s Jeena & Co., dated 14th

March, 1994 which reads as follows : "This has a reference

to the information given by you regarding arrival of 77

packages at Mulund Check Post of M/s Nath Brothers, Exim

International Ltd., New Delhi, booked by you under your G.C.

No. 42330 dt. 11.3.94 Ex. Delhi to Bombay. In this

connection we hereby advise you to unload the said

consignment of 77 packages of the above party at Bhiwandi as

the shipment of the same will take place at CFS, Kalamboli

(Nhava Sheva Port)." The argument of the Opposite Party, the

carriers, is that on these specific instructions from the

consignee and freight forwarder M/s Jeena & Co., Bombay, the

said consignment was unloaded and stored at Bhiwandi. That

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was done, according to them, since the consignment was to be

shipped from Nhava Sheva Port and not from Bombay Port and,

therefore, the consignee diverted the consignment from

Mulund Check Post to Bhiwandi, which was nearer to Nhava

Sheva Port, and at the same time also avoided the octroi

duty which had to be paid, had the delivery been taken at

Mulund Check Post when the consignment reached there. The

goods were stored at Bhiwandi in godown Nos. 5 & 6, Wadi

Compound, Anjur Village, Anjurphate, outside the octroi

limits of Greater Bombay along with other export

consignments, the total value of which, according to the

Opposite Party, was more than Rs. 2 crores and all of which

were to be shipped from Nhava Sheva port across the creek of

the Greater Bombay. All those goods were destroyed around

noon on 16.3.1994 because of a huge fire and explosion that

occurred in the adjoining godown No. 7 belonging to Shri

Rati Bhai were drums containing hazardous chemicals were

stored. The fire spread to the Opposite Party`s godown Nos.

5 and 6 as well as other adjoining godowns. In spite of all

efforts by the fire fighting engines, the fire could not be

contained in time. The accidental fire was reported to the

Police Station, Bhiwandi, and an FIR was also lodged on the

16th March, 1994 itself. The Police prepared a Panchanama

in front of independent witnesses and the fire brigades of

Bhiwandi and Nizampur Nagar Parishad confirmed this

accidental fire. This fire was also reported in the

newspapers on 16th and 17th March, 1994. It is not the case

of the Petitioner that the carrier did not take adequate

precautions or steps to save the goods from the loss by the

fire. On the other hand, it has been successfully proved by

the carrier that the consignment of the Petitioner was

diverted from Mulund Check Post to Bhiwandi on the specific

instructions of the consignee and further that the loss was

caused by fire which was beyond their control. It has been

mentioned by them that they took due care, within their

capacity and now they have lodged a claim on the owner of

the adjoining godown from where the fire started." The above

will show that the National Commission acted upon the letter

dated 14th March, 1994 of Messrs Jeena & Co. without

deciding the question whether it was genuine and was at all

issued by Messrs Jeena & Co. as the appellant had contended

that the letter was forged or was procured collusively.

Since the above aspects have not been considered and decided

by the Commission, we cannot uphold the judgment of the

National Commission. The appeal is consequently allowed,

the impugned judgment dated 2.9.1996 passed by the National

Commission is set aside and the case is remanded to the

Commission for disposal afresh in the light of the

observations made above and in accordance with law.