Holding

A common carrier is liable for loss of goods unless a valid special contract, signed by the owner, limits liability; the "Owner's Risk" clause does not exempt the carrier from liability for negligence.

Summary

Nath Bros. Exim International Ltd. booked 77 packages of silk garments with Best Roadways Ltd. for carriage from Noida to Bombay, the contract stating the goods were carried "at Owner's Risk". The consignment was diverted to a warehouse in Bhiwandi on alleged instructions of the consignee and was completely destroyed by fire. The appellant claimed the carrier was liable for loss, arguing that "Owner's Risk" does not exempt a carrier from liability for negligence and that no valid special contract under Section 6 of the Carriers Act, 1865 existed. The respondent contended that the clause absolved it of liability and that the diversion was instructed by the consignee. The Supreme Court held that a common carrier’s liability is that of an insurer and is absolute unless limited by a duly signed special contract; the "Owner's Risk" clause does not shield the carrier from liability for loss caused by its own negligence. The Court found the National Consumer Disputes Redressal Commission’s finding on negligence unsound, allowed the appeal and remanded the matter for fresh determination.

Issues considered

Whether a carrier is liable for loss of goods booked "at Owner's Risk" under the Carriers Act, 1865.
Whether a special contract under Section 6 of the Carriers Act, 1865, limiting liability, was validly executed.
Whether the burden of proof of negligence shifts to the carrier under Section 9 of the Carriers Act.
Whether the diversion of the consignment to Bhiwandi was authorized by the consignee and, if so, whether it amounts to delivery.
Whether the fire that destroyed the goods constitutes an act of God or a negligent act attributable to the carrier.

Legislation cited

Carriers Act, 1865s. 3, s. 4, s. 5, s. 6, s. 8, s. 9
Indian Contract Act, 1872s. 151, s. 152, s. 158

Subjects

Carriers ActOwner's RiskCommon carrier liabilityNegligenceSpecial contractBailmentConsumer disputeFire lossBurden of proofDiverted consignment

Judgment

A NATH BROS. EXIM INTERNATIONAL LTD.
v.
BEST ROADWAYS LTD.

MARCH 27, 2000

B [S. SAGHIR AHMAD AND D.P. WADHWA, JJ.]

Carriers Act, 1865-Ss. 3, 4, 5, 6, 8 & 9-Liability of Common
Carrier-Goods' booked with Common Carrier at Owner's Risk for trans-
portation-Consignment getting completely destroyed by .fire while being
C stored in .Respondent's warehouse-Carrier to take as much care as he would
have taken of his awn goods-Liable for damage or loss caused on account -
of his own negligence or criminal Act or that of his agent-Even a special
contract under Sec. 6 cannot absolve the common carrier.

Words & Phrases-Owner's risk-Meaning of-In the context of Carri-
D ers Act, 1865.

Appellant booked certain goods with. the Respondent at "Owner's
Risk" for transportation from Noida (UP) to Bombay to be delivered to J &
·Co., the clearing agents of the appellant. Since the goods failed to reach
their destination, the appella~t complained to the Respondent. The Re-
E spondent informed that the goods while being stored at Bhiwandi were
completely destroyed by fire. The appellant filed a claim petition before the
National Consumer Disputes Redressal Commission alleging deficiency in
service. The National Commission dismissed the claim of the Appellant
holding the Respondent not liable as it had taken all possible care expected
F of a carrier. Hence, this Appeal.

It was contended for the Appellant that the Respondent being a
'Carrier' within the meaning of Carriers Act, 1865 is liable for non-
-
delivery of goods to the consignee at his destination; that the non-delivery is
indicative of negligence, and the National Commission was not justified in
G rejecting the claim petition on the ground that goods were destroyed by
fire; that the goods entrusted for delivery to Ms. J. & Co., at Bombay could
not have been diverted to Bhiwandi or stored there; that since the goods
were stored adjacent to another godown in which highly combustible
articles were kept; thus, the Respondent was clearly negligent; and that the
H goods were diverted at the instance of Mis J. & Co. ,.
538
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. 539
It was contended for the Respondent that since the goods were A
booked at "Owner's Risk", it was not liable for their loss; that since the
goods were directed to be unloaded at Bhiwandi by the instructions of the
consignee, it could not be said that the Respondent was negligent.

Allowing the appeal and remanding the case to the National Con-
sumer Disputes Redressal Comn'lission, the Court B
'
HELD : 1.1. The liability of 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
c
would have taken for 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
c~iminal act or that of his agents and servants. [553-A-B]

1.2. The provisions of Section 151 and 152 of the Indian contract Act, D
1872, 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 hounded. If a person
was negligent and did not take as much care she would have taken of his E
own goods, he would be liable in damages. [546-B-E]

Irrawaddy Flotilla Co. Ltd. v. Bugwandass, (1891) 18 lA 121, : ILR
(1891) 18 Cal. 620, referred to.

1.3. It is true that Section 158 of the Indian Contract Act speaks of F
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 in 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 G
'entrustment of good' to a carrier for carriage. With the enactment of

--
Carriers Act, 1865, the extent of liability of the carrier has to be found in
that Act [548-B-C]

Konda Rm. Eswara Iyer & Sons v. Madras Banglore Transport Co.,
AIR (1964) Mad. 516 : (1964) 2 MLJ 181; Hussainbhai Mulla Fida Hussain H
540 SUPREME COURT REPORTS [2000] 2 S.C.R.
A v. Motilal Nathulal,. AIR (1963) Born. 208 : 65 Rom. LR 152; Vidya Ratan v.
Kota Transport Co. Ltd., AIR (1965) Raj. 200 : (1965) Raj. LW 247 : ILR
(1965) 15 Raj. 768 and R.R.N. Ramalinga Nadar v. Narayana Reddiar, AIR
(1971) Ker.197: (1971) Ker. LJ. 332: (1971) ACJ 298, approved.

Mors v. Slew, (1672) 1 Vent 190, 239 : 84 ER 601, 624, 638, cited.
B
1.4. Section 6 of the Carriers Act enables the common carrier to limit
his liability by a special contract. But 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 ~gents or servants. In
c that situation, the carrier would be liable 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 i~ Section 9. The carrier can escape liability only if it is
established that the loss or damage was due to an act of God or enemies of
the State. [552·A-C]
D
British & Foreign Marine Insurance Co. v. India General Navigation and
Rly. Co. Ltd., (1910-1911) 15 CWN 226=1LR 38 Cal. 28; River Steam Naviga-
tion Co. Ltd. v. Shyam Sunder Tea Co. Ltd., AIR (1955) Ass. 65; P.K. Kalasami
Nadar v. K. Ponnuswami Mudaliar, AIR (1962) Mad. 44 : ILR (1961) Mad.
E 1091; Vidya Ratan v. Kota Transport Co. Ltd., AIR (1965) Raj. 200 : (1965)
Raj. LW 247= ILR (1965) 15 Raj. 768; Kerala Transport Co. v. Kunnath
Textiles, (1983) KLT 480 and Associated Traders & Engineers ( P) Ltd. v. Delhi
Cloth & General Mills Ltd., ILR (1974) 1 Del. 790, approved.

2. "Owner's Risk" in the realm of commerce has a positive meaning.
F 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. (553-D]

Burton v. English, (1883] 12 QBD 218 : 53 LJQB 133 : 49 LT 768;
Wade v. Cockerline, (1905] 10 Comples 47; Svenssons v. Cliffe S.S. Co.,
G (1932] 1 KB 490 : 101 LJKB 521 : 147 LT 12; Mitchell v. Lancashire and
Yorkshire Rly. Co., (1875] 44 LJQB : 10 QB : 256: 33 LT 161; Lewis v. Great
Western Rly. Co., (1877) 3 QBD 195 : 47 LJQB l31 : 37 LT 774; Exercise
Shipping Co. Ltd. v. Bay Maritime Lines Ltd. (The Fantasy), (1991] 2 Lloyd's
Rep. 391 (QBD); The Stranna, 1937 P 130 : [1937] 57 LI LR 231 and East &
H West Steamship Co. v. Hussain Bros., (1968) 2 Lloyd's Rep. 145 Supreme
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD, I.] 541
Court of Pakistan, referred to. A
CIVIL APPJ;'.LLATE WRISDICTION: Civil Appeal-No. 1 of 1997.

From the Judgment and Order dated 2.9.96 of the National Consumer
Disputes Redressal Commission, New Delhi in O.P. No. 158 of 1994.
B
Sanjay Kishan Kaul and B. Chatterjee for the Appellant.

Mukul Rohtagi, S.K. Maniktala, Ejaz Maqbool, B.K. Mishra, Ms.
Aparna Jha, for M/s. Maqbool Mishra and Co. for the Respondent

The Jud~ment of the Court was delivered by
c
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 Mis 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 D
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 appel-· E
lant 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 F
(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 · G
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 H
542 SUPREME COURT REPORTS [2000] 2 S.C.R.
A warehouse from where it spread to the godown where the appellant's consign-
ment 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.
B
Learned counsel for the appellant has contended that the respondeni 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 contended that non-delivery is indicative of the negligence on the part of
c 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 Mis 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
D 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
E appellant's goods were negligently stored. The findings recorded by the
National Commission that the goods were diverted at the instance ofM/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
F (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
G 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 combus-
tible articles were stored which suddenly caught fire resulting in the loss of
H the appellant's goods. The outbreak of the fire was sudden and it could not
NATH BROS. EXIM INTERNATIONAL LTD. 1: BEST ROADWAYS LTD. [S. SAGHIR AHMAD, J.] 543
be controlled in spite of the services of the fire-brigade which were A
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 ~tored.
B
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
c
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 D
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 E
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.- Every such carrier may require payment for
F
the risk undertaken in carrying property exceeding in v~lue one
hundred rupees and of the description aforesaid, at such rate of
charge as he may fix :

Proviso.
G
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. H
544 SUPREME COURT REPORTS [2000] 2 S.C.R.
A 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 v·alue and description thereof shall have been
declared and payment shall have been required in manner provided
B
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
c 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
D 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 s.uch property so delivered as last aforesaid or by
E 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, eve~y common carrier shall be liable to the
F 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
G 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 Joss 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 .......
H required to prove negligence or criminal act.- In any suit brought
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD. J.] 545
against a common carrier for the loss, damage or non-delivery of A
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."
B-
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 carryi!1g the goods. The only requirement is that the carrier should have
exhibited at the place of his business a notice indicating the higher rate of c
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 D
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. E

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.
F
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
G
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 H
546 SUPREME COURT REPORTS [2000] 2 S.C.R.
A 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 :

B "151.In all cases ofbailment 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
c 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
D 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
E 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
F 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, Hird Edn.,
G
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 enemies or from the fault of the
H consignor, or inherent vice in the goods themselves. He is, therefore,
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD,!.] 547
liable even when he is overwhelmed and robbed by an irresistible A
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
B
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 c
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.
D
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
E
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 F
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
G
proper conveyance and los_s 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 negli- H
548 SUPREME COURT REPORTS [2000] 2 S.C.R.
A gence, 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
B 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
'C 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
D Marine Insurance Co. v. The Indian General Navigation and Railway Co.
Ltd., 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 thelndian 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 w~ich he is liable as an insurer, and the
other for losses for which he is liable under his obligation to carry safely.
Speakin,g generally, the first of these are insurable risks from which the
element of default is absent, the second are risks of conveyance in which
F 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
a· 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. & Am: v. Syam
Sunder Tea Co. Ltd., AIR (1955) Assam 65, wherein it was laid down as
H under:
NATH BROS. EXIM INTERNATIONAL LTD. "· BEST ROADWAYS LTD. [S. SAGHIR AHMAD, J.] 549
"The common law of England regulating the responsibility of com- A
mon carrier was in force at th\! 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
B
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, c
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,
D
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. E
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 F
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 G
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 earlier decision of the Privy Council in
Irrawaddy Flotilla's case (supra) was relied upon, it was held that where loss H
550 SUPREME COURT REPORTS [2000) 2 S.C.R.
A 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
B
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.

c In another Madras decision in Messrs Konda Rm. Eswara Iyer & Sons,
Madurai & Ors. v. 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
D 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
E 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 attribut-
able to consignor's own- fault."

F 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
G Nathulal & Am:, 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
H alien enemies. The Court further held that no proof of negligence is, in such
NATII BROS. EXIM INTERNATIONAL LTD." BEST ROADWAYS LTD. [S. SAGHIR AHMAD, J.] 551
a case, needed and the defendant has to establish the exception. The Assam A
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 v. Kota Transport Co. Ltd., AIR (1965) Raj. 200.
B
In R.R.N. Ramalinga Nadar v. 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 c
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. D
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.
E
The extent of liability of a bailee under Ss. 151 and tS2 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
F
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 Contr~ct Act, the liability of a common
carrier continues to be absolute subject to any special contract entered ·
into by him." G

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. H
552 SUPREME COURT REPORTS [2000) 2 S.C.R.
A 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
B 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
c enemies of .the King, a phrase used by the Privy Council). The Calcutta .
decision in The British & Foreign Marine Insurance Co. v. The Indian
General Navigation and Railway Co.Ltd., (supra), the Assam decision in
River Steam Navigation Co. Ltd & Anr. v. Syam Sunder Tea Co. Ltd., (supra),
the Rajasthan decision in Vidya Ratan v. Kata Transport Co.Ltd., (supra), the
Kerala decision in Kerala Transport Co. v. Kunnath Textiles (supra), which
D 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
E 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
F 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. ln
Associated Traders & Engineers Pvt. Ltd. v. Delhi Cloth & General Mills
G 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
·f
which we shall presently come, to show that the agreement by which the
liability of the carrier is sought to be limited must be signed by the owner
H of the goods, entrusted to the carrier for carriage.
NATH BROS. EXIM INTERNATIONAL LTD.~ BEST ROADWAYS LTD. [S. SAGHIR AHMAD, l.J 553
From the above discussion, it would be seen that the liability of a 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
B
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 C
ware~ouse 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 D
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 dll.IIlage to the goods during trans-shipment or carriage. These E
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 ~
F
"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
UL.Rep. 262; [1932] 1 K.B. 490. He considered the authorities in
detail and concluded : G

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 H
554 SUPREME .COURT REPORTS [2000) 2 S.C.R.
A 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
B included an exception 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 LI.L.Rep. 231; (1937) P.130 and East & West
·C Steamship Co. v.
Hossain Brothers, (1968) 2 Lioyd's Rep. 145
(Supreme Court of Pakistan) and it has not, so far as I am aware, been
dissented from."

In Mitchell v. Lane. & Y.R., 44 LJQB 107 = LR 10 QB 256, it was held
D that "OWNER'S RISK" only exempts the carrier foom the ordinary risks of the
transit and does not cover the carrier's negligence or misconduct. So also, in
Lewis v. The Great Western Railway Company, 3 Queen's Bench 195, the
words "OWNER'S RISK", were held to mean, "at the risk of the owner, minus
the liability of the carrier for the misconduct of hirp.self or servants."

E 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
F 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 condi-
tions are printed at the back of the Consignment Npte. Condition No. 1, inter
alia, reads as under :
G "l. ....... .

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
H
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD. J.] 555
provided for the same." A
The name of the consignee indicated therein is "Messrs Jeena & Co.,
Bombay." Th.e address of the ultimate consignee is mentioned as : "Sears
Womenswear Limited, I 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 B
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
c
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 D
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
E
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." F
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 G
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 RISK~" in the aforesaid letter, the appellant in his reply dated H
556 SUPREME COURT REPORTS [2000) 2 S.C.R.
A 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 2 lst
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 respond-
ent 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
B
subsequent notice dated 30th May, 1994, sent 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
c 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
D 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 ru-
pees of value declared by the vender, having been charged and
E
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
F
special insurance qharges, as stated in clause 1 above is charged
and paid. An affidavit duly attested by Sukhbii Singh, the Book-
ing Clerk of the opposite party, who had booked.the goods of the
complainant on behalf of the opposite party is annexed as
Annexute A-1."
G
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 :
-·
H "That the submissions made in para No. 4 of .the preliminary
·'
I
NATH BROS. EXIM INTERNATIONAL LTD. i: BEST ROADWAYS LTD. [S. SAGHIR AHMAD, J.] 557

objection are not correct. The term "Owner's risk" has not been A
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. {f 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
B
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 C
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 D
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 E
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 F
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 could not have been asked to
enter into an illegal contract. As such the submissions made in para G
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 H
558 SUPREME COURT REPORTS [2000] 2 S.C.R.
A Bombay and the representative of the opposite party issued consign-
ment 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.

B [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
c 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
D 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
E 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 sprea~ to thei.J; own godown, the respond-
F an
ent would not be l.iable as he had takeJ!. 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
G 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
H reached the destination, but when the consignee was informed that the goods
NATH BROS. EXIM INTERNPJIONAL LID." BEST ROADWAYS LID. [S. SAGHIR AHMAD, J.] 559
have arrived, the carrier was instructed by the consignee, Messrs Jeena & Co., A
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
B
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 parties. The respondent relied upon the letter dated 14th March, C
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 Mis 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 D
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
E
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 & F
Co. to Bhiw.andi 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 G
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. H
560 SUPREME COURT REPORTS [2000] 2 S.C.R.
A 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 :
B
"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
c instruction from the consignee and freight Forwarder Mis Jeena &
Company, Bombay. The opposite party had received a letter dated
14.3.1994 wherein Mis. Jeena and Company, on receipt of the
information from the opposite party about the arrival of the consign-
ment at Mulund Check post, directed the opposite party to unload the
said consignment at Bhiwandi as the shipment of the same will take
D 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 Mis Jeena
& Co. at Bombay under goods consignment note No. 52330 dated
E 11th March, 1994 which is Annexure B to the complaint. As per the
instruction of the complainants consignees at Bombay, Mis 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 OR 14th
March, 1994, the said consignee vide letter dated 14.3.1994 which
F
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 was meant for despatch froin 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
G 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
H Docks and Nhava Sheva Port across the Creek of Bombay. It is,
l

NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD, J.) 561
therefore, not true that opposite party wrongly unloaded the consign- A
ment 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 B
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 c
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 D
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
E
cargo to save octroi that the opposite party take this extra responsi-
bility ·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 F
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 G
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. H
562 SUPREME COURT REPORTS [2000) 2 S.C.R.
A 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
B 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.
c 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.
(Annexure 2 to W.S.) relied upon by the opposite party to justify the
D change of destination of consignment from Bombay_ to Bhiwandi is
totally false, collusive, an after thought, managed one and mischie-
vous 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
E 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
F Overseas Bank, Parliament Street, New Delhi (Bankers of the Com-
plainant) is enclosed herewith as Annexure L. Furthermore, the office
of Jeena & Co. itself was closed on 14.3.94 as certified by them in
(fie 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
G 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.
H
NATH BROS. EXIM INTERNATIONAL LTD."- BEST ROADWAYS LTD. [S. SAGHIR AHMAD, I.] 563
A
[Emphasis supplied]

It was further stated in paragraph I 0( 4) of the rejoinder as under :

"It is submitted that above facts clearly show that the story of giving .B
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 unau-
thorised action of storing goods at Bhiwandi."
.c
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.
D
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 E
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 Mis Jeena &
Co., dated 14th March, 1994 which reads as follows : F

"This has a reference to the information given by you regarding
arrival of 77 packages at Mulund Check.Post of Mis Nath Broth-
ers, Exim International Ltd., New Delhi, booked by you under
your G.C. No. 42330 dt. 11.3.94 Ex. Delhi to Bombay. In this
G
connection we hereby advise you to unload the said consign-
ment of 77 packages of the above party at Bhiwandi as the ship-
ment of the same will take place at CFS, Kalamboli (Nhava
Sheva Port)."

The argument of the Opposite Party, the carriers, is that on these H
564 SUPREME COURT REPORTS [2000] 2 S.C.R.
A specific instructions from the consignee and freight forwarder Mis
Jeena & Co., Bombay, the said consignment was unloaded and
stored at Bhiwandi, That 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
B
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
c 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 aroun.d 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
D
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,
E 1994 itself. The Police prepared a Panchanama in front of independ-
ent 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
F 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
G 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
H whether it was genuine and was at all issued by Messrs Jeena & Co. as the
...
NATH BROS. EXIM INTERNATIONAL LTD. 1: Bl;ST ROADWAYS LTD. (S. SAGHIR AHMAD, J.] 565
appellant had contended that the letter was forged or was procured collu- A
sively. 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
B
and in accordance with Jaw.

S.S. Appeal allowed.