Holding

Tribunals under the Consumer Protection Act cannot award damages that exceed the contractual limitation of liability agreed upon by the parties.

Summary

Bharathi Knitting Co. contracted DHL Worldwide Express to transport a cover containing export documents, which failed to reach the consignee in time, causing the buyer to pay a reduced amount and the appellant to claim a loss of Rs.4,29,392.60. The courier’s consignment note contained a limitation clause restricting liability to US$100 and excluding consequential damages, which the appellant argued should not limit the award under the Consumer Protection Act, 1986. The National Consumer Disputes Redressal Commission reduced the award to the contractual limit of US$100, and the appellant appealed to the Supreme Court. The Court held that when parties have expressly limited liability in a signed contract, consumer tribunals cannot award damages beyond that contractual ceiling. It further observed that where factual disputes are acute, the matter must be referred to a civil court, but a specific contractual term binds the parties. Consequently, the appeal was dismissed and the lower tribunal’s award upheld.

Issues considered

Whether a consumer forum under the Consumer Protection Act can award damages exceeding the limitation of liability stipulated in a signed contract.
Whether the limitation and exclusion clauses in a courier service contract are enforceable against a consumer under the Act.
Whether the tribunal may disregard contractual terms and assess liability on the basis of actual loss.

Legislation cited

Subjects

Consumer Protection Actdeficiency in servicelimitation of liabilitycourier servicescontract clausedamagesconsumer disputes redressal commission

Judgment

BHARATHI KNITTING COMPANY A
v.
DHL WORLDWIDE EXPRESS COURIER DIVISION OF
AIRFREIGHT LTD.

MAY 9, 1996
B
[K. RAMASWAMY, FAIZAN UDDIN AND G.B. PATTANAIK, JJ.]

Consumer Protection Act, 1986 :

Courier Service-Deficiency in service-Claim f01"---Liability for C
deficiency in service-&tent of-Directions to Tribunals under the Act to
follow the principle settled in this case for awarding the amount for deficiency
in service-Cover containing shipment documents not reached the consignee
in time-As a result heavy loss suffered by consigneJ-Claim against
Courier-Allowed by State Commissiolt-National Commission restricting D
the Claim for deficiency in service only to the extent of the liability undertaken
by the courier as contained in the receipt issued by the said Courie1--Held,
when the parties have contracted and limited their liabilities, relief for
damages cannot be given by the Tribunal under the Act in excess of the limits
prescribed under the contract-In appropriate cases where there is an/acute E
dispute of facts, necessarily the Tribunal has to refer the parties to civil court
to have the claims decided between the parties-But when there is a specific
term in the contract,_ parties .are bound by such tenn-National Commission
was right in limiting the liability under-taken in the contract entered into
. between the parties ai1d in awarding the amount for deficiency in se1vice to F
the extent of the liability undertaken by the party.

Contract Act, 1882 :

Notice of a printed clause-When a person signs a document which
contains certain contractual tenns, normally parties are bound by such con- G
tract-Wlten a party tq . a contract disputes binding nature of the signed
docunient, it is for him to p~oVe the temis in the contract or circunzstances in,
which he comes to sing the document.

Anson's Laws of Contract, 24th Edn. at page 152 referred to. H
653
654 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A CJVIL APPELLATE JURISDICTION : Civil Appeal No. 9057 of
1996.

From the .Judgment and Order dated 17.J.96 of the National Con-
sumer Disputes Redressal Commission, New Delhi in F.A. No. 317 of 1993.

B M.N. Krishnamani and K.K. Mani for the Appellant.

R.F. Nariman, Shri Narian and Sandcep Narain for the Respondent.

The following Order of the Court was delivered :

C Leave granted.

We have heard leave counsel on both sides.

This appeal by special leave arises from the appellant order of the
National Consumer Disputes Redrcssal Commission, New Delhi dated
D 17.J.1996 made in FA No. 317 of 1993 which in turn reversed the order of
the State Forum Commission, Madras in O.P. No. 364/93 dated June 9,
1993. The admitted facts arc that the respondcnt-plaintifl manufacturer
appears to haVL: an agrecn1ent with a (Jerman buyer for summL:r season,
1990 and consigned certain goods \Vith document~ ~ent in a cover on May
E 25, 1990 containing (1) invoice No. 32; (2) packaging list; (3) Original
Export Certificate and certificate of ori1o>in No. T/WG/001316 dated 24.5.90;
and (4) Original GSP From A NO. El. It would appear that the cover did
not reach the destination. Consequently, though the duplicate copies \Vere
subsequently sent by the date of receipt of the consignment, the season was
over. Resultantly, the consignee agreed lo pay only OM 35,000 instead of
F invoice value OM 56,469.63. As a result, the appellant laid the complaint
before the State Commission for the difference of the loss incurred by the
respondent in OM 21,469.63 equivalent to Rs. 4,29,392.60 which was or-
dered. The respondent carried the matter in appeal. The National Com-
mission in the impugned order held that since the liability was only of an
G extent of US$ 100 as per the receipt, the appellant is entitled for deficiency
of service only to that extent which is equivalent to Rs. 3,515 with interest
at 18% from May 25, 1990 till date of realisation with cost. Thns, this
appeal by special leave.

It is contended by Mr. M.N. Krishnamani, learned senior counsel
H appearing for the appellant that the Consumer Protection Act, 1986 (for
BHARATHI KNJTIJNG CO. ~. DHL \VORLDWIDEEXPRESSCOURiER DVN. OF AJRFRElGHTLTD. 655

short, the 'Act') is a beneficial legislation envisaged to accord expeditious A
and inexpensive relief to the consumer; when the Commission gave a
finding that there was a deficiency in service, the National Commission \Vas
wrong in law to reduce the liability of US $ 100 contained in the receipt.
There is no consensus ad idem between the appellant and the respondent
who is a courier vis-a-vis the appellant. Therefore, the National Commis-
B
sion was wrong in awarding deficiency amount only to the extent of US $
100. He seeks to contend that until there is an agreement by the appellant
by consensus ad idem with the respondent for carriage of the invoice with
limited liability, it must be presumed that in the event of non-delivery of
the cover thereof, the resultant damages musl be borne by the courier. The
State Commission would be entitled to award the difference of the damages c
to the appellant. The State Commission, therefore, was right in awarding
the damages. We find no force in the contention.

It i~ true that the Act is a protective legislation to make available
inexpensive and expeditious summary remedy. There must be a finding that
the respondent was responsible for the deficiency in service, the conse- D
quence of which would be that the appellant had incurred the liability for
loss or damages suffered by the consumer due to deficiency in service
thereof. When the parties have contracted and limited their liabilities, the
question arises : whether the State Commission or the National Commis-
sion under the Act could give relied for damages in excess of the limits E
prescribed under the contract ?

It is true that the limit of damages would depend upon the terms of
the contract and facts in each case. In Anson's Laws of Contract, 24th Edn.
at page 152, on exemption clause with regard to notice of a printed clause,
it was stated that a person who signs a docu1nent containing contractual F
terms is normally bound by them even though he has not read them, and
even though he is ignorant of their precise legal effect. But if the document
is not signed, being merely delivered to him, then the question arises :
whether the terms of the contract were adequately brought to his notice ?
The terms of the contract have elaborately been considered and decided.
G
The details thereof are not necessary for us to pursue. It is seen that when
a person sings a document which contains certain contractual terms, as
rightly poinLed out by Mr. R.F. Nariman, learned senior counsel, that
normally parties are bound by such contract; it is for the partly to establish
exception in a suit. When a party lo the contract dis pules the binding
nature of the singed document, it is for him to prove the terms in the H
656 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A contract or circumstances in which he came to sign the documents need to
be established. The question we need to consider is : whether the District
Forum or the State Commission or the National Commission could go
behind the terms of the contract ? it is true, as contended by Mr. M.N.
Krishnamani, that in an appropriate case, the Tribunal without trenching
upon acute disputed question of facts may decide the validity of the terms
B of the contract based upon the fact situation and may grant remedy. But
each case depends upon its own facts. In an appropriate case where there
is an acute dispute of facts necessarily the tribunal has to refer the parties
to original civil Court established under the CPC or appropriate State law
to have the claims decided between the parties. But when there is a specific
term in the contract, the parties are bound by the terms in the contract.
c The National Commission in the impugned order pointed out as under :

"We have considered the submissions of the counsel for the parties
on the facts of the case and having regard the earlier decisions of
this Commission. The consignment containing the documents sent
in the cover had been accepted by the Appellant and was subject
D
to the terms and conditions mentioned on the consignment note.
The Compfainant had signed the said note al the time of entrusting
the consignment and had agreed to and accepted the terms and
conditions mentioned therein. Clauses 5 and 7 of the terms and
conditions as also the important notice mentioned on the consign-
E ment note are reproduced below :

Clause 6 : "Limitation of liability : Without prejudice to clause 7
the liability of OHL for any loss or damage to the shipment, which
term shall include all documents or parcels consigned to OHL
under this Air bill and shall not mean any one document or
F envelope included in the shipment is limited to the lesser of

(a) US$ 100

(b) The amount of loss or damage to a document or parcel actually
sustained or
G
(c) The actual value of the document or parcel as determined
under Section 6 hereof, without regard to the commercial utility
or special value to the shipper.

Clause 7: Consequent damages excluded: OHL shall not be liable
H in any event for any consequential or special damages or other
BHARATii! KNITTING CO. •·. OHL \\'ORLDWIDE EXPRESS COURIER OVN. OF AIRFRE!Glff L1D. 657

indirect loss however arising whether or not DHL had knowledge A
that such damage might be incurred including but not limited to
loss of income, profits interest, utility or loss of market.

Important Notice : By the conditions set out below DHL andJts
servants and agents are firstly not to be liable al all for certain
losses and damages and secondly wherever they are to be liable B
the amount of liability strictly limited to the amount stated in
condition and customers arc therefore advised to purchase in-
surance cover to ensure that their interests arc fully protected in
all events. 11

Under clause 5 of the terms and conditions of the contract, the
c
liability of the Appellant for any loss or damage to the consignment
was limited to US $ 100. Clause 7 of the contract specifically
provided that the liability of the Appellant for any consequential
or special damages or any other indirect loss, that may occur
including the loss of market or profits etc. was excluded. It is also D
pertinent to note that despite the advice in the important notice,
the Complainant did not disclose at the time of consignment the
contents of the cover and also not purchased the insurance cover
to ensure that their interests are fully protected in all events."

In view of the above consideration and findings, we are of the opinion
E
that the National Commission was right in limiting the liability undertaken
in the contract entered into by the parties and in awarding the amount for
deficiency in service lo the extent of the liability undertaken by the respon-
dent. Therefore, we do not think that there is any illegality in the order
passed by the Commission. Shri Krishnamani has brought to our notice that F
there are number of judgment covering divergent views. In view of the view
we have expressed above, it is now settled law and the Tribunals would
follow the same. Lastly, it is contended that besides the amounts awarded
by the State Commission, liberty may be given to the appellant to pursue
the remedy available in law. It is needless to mention that the remedy
available at law would be pursued according to law. . G

The appeal is dismissed. No costs.

R.P. Appeal dismissed.