Contship
Container Lines Ltd. Vs. D.K. Lall & Ors. [2010] INSC 206 (16 March 2010)
Judgment
IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICITION CIVIL APPEAL NO. 3245 OF
2005 Contship Container Lines Ltd. ...Appellant Versus D.K. Lall & Ors.
...Respondents (With C.A. No.6232 of 2004 and C.A. No.8276 of 2003)
T.S.
THAKUR, J.
1.
These three cross appeals arise out of an order passed by the
National Consumer Disputes Redressal Commission, New Delhi (hereinafter
referred to as the `National Commission') whereby it has dismissed the
complaint filed 2 by the respondent Shri D.K. Lall, proprietor of M/s Lall
Enterprises against respondent-National Insurance Company Ltd. while granting
relief in part to the complainant against Contship Container Lines Ltd., the
shipping company to whom the consignment in question was entrusted for delivery
to the consignee in Barcelona, Spain. The facts giving rise to the controversy
may be summarised as under:
2.
M/s D.K. Lall Enterprises, a sole proprietary concern, claims to
have received an order for export of iron furniture and iron handicraft items
from M/s Natural Selection International, a Spanish purchaser of those items. A
similar order for export of miniature paintings is also said to have been received
by the said concern from M/s Pindikas another concern located in Spain. The
case of M/s D.K. Lall Enterprises (hereinafter to as the `Exporter') is that
all the items meant for export in terms of the above orders were packed in 122
different cartons for shipment to the purchasers in Spain. According to the
exporter while miniature paintings were packed in one carton meant for 3 export
to M/s Pindikas, the iron furniture items meant for export to M/s Natural
Selection International were packed in 121 other cartons. These packages were,
according to the Exporter, checked and cleared by the Customs Authority at
Jodhpur and finally stuffed in one simple container, for which purpose the
exporter hired the services of M/s Samrat Shipping & Transport System Pvt.
Ltd. through its local agent who forwarded the container to Bombay where it was
put on board CMBT Himalaya, a vessel belonging to M/s Contship Container Lines
Ltd.-appellant in C.A. No.6232 of 2004. It is noteworthy that the exporter had
obtained a Marine Cargo/Inland transit insurance policy to cover risks
enumerated in the policy.
3.
The case of the exporter is that the consignment reached
Barcelona, Spain on 1st March, 1997 and that while 121 cartons had been duly
received by M/s Natural Selection International, one carton marked for M/s
Pindikas comprising miniature paintings was not so delivered to the consignee.
The claim for payment of compensation on 4 account of the alleged deficiency of
service having been denied by the Shipping Company as also by the Insurance
Company the exporter filed O.P. No.272 of 1997 before the National Consumer
Disputes Redressal Commission, New Delhi, claiming compensation to the tune of
Rs.39,23,225/- representing the value of the miniature paintings with interest
pendente lite and till realization. The respondents contested the claim made
against them, inter alia, on the ground that the petitioner was not a consumer
and that the case involved complicated questions of fact and law, which could
not be determined in summary proceedings before the Consumer Commission. It was
also alleged that the exporter had never stuffed/exported the carton containing
miniature paintings and that the claim made by the exporter to that effect was
false. Reference was made to the Bill of Lading according to which the
particulars declared by the shipper/exporter had not been checked by the
carrier. It was also alleged that under clause 17 of the Bill of Lading and
Article IV Rule 5 of The Indian Carriage of Goods by Sea 5 Act, 1925 the liability
of the carrier was limited to 2 SDRs per kg of weight, which came to 400 SDRs
for the loss of the undelivered package weighing 200 kgs. equivalent to
Rs.21,428/- only. The respondents further alleged that the cartons had not been
properly marked with the result that the same could not be segregated before
being delivered to the consignee concerned.
4.
The Insurance Company also filed a separate reply, alleging that
the exporter was in collusion with the buyers trying to perpetrate a fraud on
them with a view to making an undeserved & unjust financial gain. The
company alleged that the valuation indicated in the policy was C.I.F. + 10%
whereas the invoice FOB (Free on Board) and the Bill of Lading was clean. The
company asserted that the liability of the seller came to an end no sooner the
consignment was loaded on to the ship leaving the exporter with no insurable
interest in the consignment.
5.
The Commission received three affidavits as evidence one filed by
the exporter, the second by Carrier while the third was filed by Mr. Ramesh
Goyal, Senior Branch Manager of the Insurance Company. By its order dated 14th
July, 2003 the Commission held that the Insurance Policy had been obtained on
the representation that the transactions between the exporter and the
purchasers were on C.I.F. basis whereas the consignment had in fact been sent
on FOB basis which absolved the Insurance Company of any liability for the
failure of the insured to maintain utmost good faith essential for a marine
insurance policy. The Commission noted that in the declaration of the
consignment sent to the insured no details of the conditions of shipment were
mentioned. There was thus, in the opinion of the Commission, absence of good
faith on that account also. The Commission further held that the policy covered
risks only at sea and "that ware house to ware house" coverage was
limited to risk arising from inland transit alone. The terms of the policy did
not according to the Commission cover the 7 risk till delivery was made to the
consignee. The Commission on that basis held that there was no deficiency of
service on the part of the Insurance Company.
6.
In so far as the claim against the carrier was concerned, the
Commission recorded a finding that the service provided by them was deficient
but held that the liability of the carrier for payment of compensation to the
consignee was limited by the provisions of the Indian Carriers of Goods by Sea
Act, 1925. The Commission noted that since no value of goods was given in the
Bill of Lading the only amount which the exporter was entitled to was a sum
equivalent to 1800$ in Indian rupee as per the then prevailing rate of exchange
with interest @ 9% from 1.7.1998 till the date of payment with costs of
Rs.10,000/-.
The
complaint, so far as M/s Samrat Shipping & Transport System Pvt. Ltd. was
concerned, was dismissed on the ground that it was acting only as an agent of
the carrier. A review petition filed against the said order by Mr. D.K. Lall 8
having been dismissed by the Commission by its order dated 29th October, 2003,
the appellants have filed the present appeals to assail the correctness of the
orders passed by the Commission.
7.
Two distinct issues fall for our consideration, one touching the
liability of the Insurance Company and the other concerning the liability of
the carrier. On behalf of the insurance company a two-fold submission was
advanced before us. Firstly, it was contended that since the transaction
between the exporter and the purchaser in Spain was on FOB basis, the exporter
had no insurable interest in the goods once the same were delivered to the
carrier. It was argued that in a FOB transaction the property in goods stands
transferred to the purchaser no sooner the goods are entrusted to the carrier
or at least when the same cross the customs barrier for shipment. This implies
that all the risks relating to such goods are that of the purchaser who alone
could sue the carrier or insurance company if there was an insurance cover
obtained by him for such goods. The terms 9 of the transaction between the
shipper and the purchaser did not in the instant case reserve in favour of the
shipper any right or interest in the goods so as to constitute an insurable
interest within the meaning of Section 7 of the Marine Insurance Act, 1963.
8.
Secondly, it was contended that a contract of insurance was based
on utmost good faith not only by reason of the general principles governing
such contracts but also by reason of Section 19 of the Marine Insurance Act,
1963. The shipper had not, however, observed utmost good faith while obtaining
the insurance cover from the respondent-insurance company inasmuch as the
shipper had taken out an insurance policy from the company on the
representation that the goods were being dispatched on CIF (cost insurance and
freight basis) while in reality the goods had been sent by the shipper on FOB
basis which constituted a material non-disclosure hence failure of utmost good
faith by him within the meaning of Section 19 of the Act aforementioned.
9.
Section 3 of the Marine Insurance Act, 1963
defines marine insurance to mean an agreement whereby insurer undertakes to
indemnify the assured, in the manner and to the extent thereby agreed, against
marine losses, that is to say, losses incidental to a marine adventure. Section
4 of the Act provides that a contract of marine insurance may, by its express
terms, or by usage of trade, be extended so as to protect the assured against
losses on inland waters or on any land risk which may be incidental to any sea
voyage.
Section 5
permits every lawful "marine adventure" to be the subject matter of a
contract of marine insurance. The expression "marine adventure" is
defined by Section 2(d) in the following words:
"2(d):
"marine adventure: includes any adventure where - (i) any insurable
property is exposed to maritime perils;
(ii) the
earnings or acquisition of any freight, passage money, commission, profit or
other pecuniary benefit, or the security for any advances, loans, or
disbursements is endangered by the 11 exposure of insurable property to
maritime perils;
(iii) any
liability to a third party may be incurred by the owner of, or other person
interested in or responsible for, insurable property by reason of maritime
perils".
10.
The expression "maritime perils" referred to in Section
2(d) supra is defined in Section 2(e) as under:
"2(e)
: "maritime perils" means the perils consequent on, or incidental to,
the navigation of the sea, that is to say, perils of the seas, fire, war
perils, pirates, rovers, thieves, captures, seizures, restraints and
detainments of princes and people, jettisons, barratry and any other perils
which are either of the like kind or may be designated by the policy".
11.
Section 7 of the Act stipulates that subject to the provisions of
the Act every person interested in a marine adventure has an insurable
interest. It reads:
"Section
7: Insurable interest defined - (1) Subject to the provisions of this Act,
every person has an insurable interest who is interested in a marine adventure.
12 (2) In
particular a person is interested in a marine adventure where he stands in any
legal or equitable relation to the adventure or to any insurable property at
risk therein, in consequence of which he may benefit by the safety or due
arrival of insurable property, or may be prejudiced by its loss, or by damage
thereto, or by the detention thereof, or may incur liability in respect
thereof".
12.
What is noteworthy is the use of the words "interested in a
marine adventure" appearing in Section 7 of the Act.
The
expression "interested" has not been defined in the Act although
sub-section (2) to Section 7 gives an indication of what would constitute
`interest' in a marine adventure. The question is whether a seller of goods on
FOB basis like the complainant in the present case can be said to be
`interested in marine adventure' within the meaning of Section 7. If the answer
be in the affirmative, the complainant would have an insurable interest but not
otherwise.
13.
The provisions of Marine Insurance Act, 1906 enacted by the
British Parliament are in pari materia with those contained in the Indian Act.
The former is in fact a precursor 13 to the latter. The definition of
`insurable interest' given in the English legislation is the same as the one
given in Section 7 of our enactment. Judicial pronouncements by English Courts
would, therefore, be both relevant and helpful in understanding the true
purport of the expression `insurable interest'.
14.
Halsbury's Laws of England, Fourth Edition has, while dealing with
the expression "insurable interest" under the Marine Insurance Act,
1906 prevalent in that country, explained the purport of the expression
"interest" in a marine adventure in the following words:
"A
person may be said to be interested in an event when, if the event happens, he
will gain an advantage, and, if it is frustrated, he will suffer a loss, and it
may be stated as a general principle that to constitute an insurable interest
it must be an interest such that the peril would by its proximate effect cause
damage to the assured, that is to say cause him to lose a benefit or incur a
liability.
15.
Halsbury's refers to the decision of House of Lords in Lucena V.
Craufurd (1806) 2 Bos & PNR 269 as to the meaning of the expression
"insurable interest":
"A
man is interested in a thing to whom advantage may arise or prejudice happen
from the circumstances which may attend it;...and whom it importeth that its
condition as to safety or other quality should continue.
Interest
does not necessarily imply a right to the whole or part of the thing, nor
necessarily and exclusively that which may be the subject of privation, but the
having some relation to, or concerning the subject of the insurance; which
relation or concern by the happening of the perils insured against, may be so
effected as to produce a damage, determent or prejudice to the person insuring.
And where a man is so circumstanced with respect to matters exposed to certain
risks and dangers as to have a moral certainty of advantage or benefit but for
those risks and dangers, he may be said to be interested in the safety of the
thing. To be interested in the preservation of a thing is to be so
circumstanced with respect to it as to have benefit from its existence,
prejudice from its destruction."
16.
Dealing with the question whether the seller of goods retains any
insurable interest, Halsbury explains:
15
"When, however, the property which is the subject matter of the contract
of sale has completely passed from the seller to the buyer or when it has under
the contract of sale become completely at the buyers' risk, the seller ceases
to have any insurable interest, and the buyer acquires one. Thus, a contract
for the sale of goods to be supplied on board, a particular vessel may be so
framed that the property in them and the risk of their loss do not pass to the
buyer until a complete cargo has been loaded, in which case the buyer has no
insurable interest until the complete cargo has been loaded; or the contract
may be so framed that the property in and the risk as to any part of the goods
passed to the buyer on shipment, in which case the buyer acquires an insurable
interest on any part of the goods then shipped."
(emphasis
supplied)
17.
Reference may also be made by us to Macgillivray on Insurance Law.
While dealing with insurable interest under contracts for the Sale of Goods,
the author has the following to say:
"The
unpaid seller of goods who has parted with property in them has no insurable
interest in them unless either they remain at his risk or he has a lien, charge
or other security interest over them for the price. So 16 long as the risk
remains with him, he has an interest whether the property has passed or not,
and the measure of his interest is the purchase price or the actual value of
the goods, whichever is the greater.
Even when
risk and property have both passed, the seller retains an insurable interest in
the goods while he still possesses them because, if he is unpaid in whole or
part on account of the buyer's insolvency or for other reasons, he has an
interest in respect of his lien for the purchase money.
His
possession of the goods would also permit him to insure on the buyer's behalf
if his intention is clear and the policy does not forbid it."
(emphasis
supplied)
18.
We may now refer to the provisions of the Sales of Goods Act, 1930
relevant to the transfer of the property in goods to the purchaser specially in
a FOB-transaction like the one in the instant case. Section 19 of the said Act
provides that in a contract for the sale of specific or ascertained goods, the
property in them is transferred to the buyer at such time as the parties to the
contract intend it to be transferred and that for the purpose of ascertaining
the 17 intention of the parties regard shall be had to the terms of the
contract, the conduct of the parties and the circumstances of the case.
Sections 20 to 24 of the said Act prescribe rules for ascertaining the
intention of the parties as to the time at which the property is to pass to the
buyer.
One of
the said rules is that in unconditional contracts for the sale of specific
goods in a deliverable state, the property in the goods passes to the buyer
when the contract is made irrespective of the fact that the time of payment of
the price or the time for the delivery of the goods or both are postponed. Yet
another rule contained in Section 23 of the Act is that where contract for the
sale of uncertained or future goods by description are unconditionally
appropriated to the contract either by the seller with the assent of the buyer
or by the buyer with the assent of the seller, the property in the goods passes
to the buyer. So also where the seller delivers the goods to the buyer or to a
carrier or other bailee for the purpose of transmission to the buyer and does
not reserve the right of disposal, he is deemed to 18 have unconditionally
appropriated the goods to the contract. Section 23(2) which stipulates that
rule reads:
"Delivery
to carrier. - Where, in pursuance of the contract, the seller delivers the
goods to the buyer or to a carrier or other bailee (whether named by the buyer
or not) for the purpose of transmission to the buyer, and does not reserve the
right of disposal, he is deemed to have unconditionally appropriated the goods
to the contract."
19.
Section 25 provides that where there is a contract for the sale of
specific goods or where goods are subsequently appropriated to the contract,
the seller may, by the terms of the contract or appropriation, reserve the
right of disposal of the goods until certain conditions are fulfilled. In such
a case, notwithstanding the delivery of the goods to a buyer or to a carrier or
other bailee for the purpose of transmission to the buyer, the property in the
goods does not pass to the buyer until the conditions imposed by the seller are
fulfilled.
Section
26 of the Act provides that unless otherwise agreed, the goods remain at the
seller's risk until the property 19 therein is transferred to the buyer but
when the property therein is transferred to the buyer, the goods are at the
buyer's risk whether delivery has been made or not. Section 26 may at this
stage be extracted:
"Section
26: Risk prima facie passes with property - Unless otherwise agreed, the goods
remain at the seller's risk until the property therein is transferred to the
buyer, but, when the property therein is transferred to the buyer, the goods
are at the buyer's risk whether delivery has been made or not:
Provided
that, where delivery has been delayed through the fault of either buyer or
seller, the goods are at the risk of the party in fault as regards any loss
which might not have occurred but for such fault:
Provided
also that nothing in this section shall affect the duties or liabilities of
either buyer or seller as a bailee of the goods of the other party."
20.
Section 39, inter alia, provides that delivery of the goods to a
carrier whether named by the buyer or not, is prima facie deemed to be delivery
of the goods to the buyer. Sections 46 and 47 deal with unpaid seller's rights and
lien and, inter alia, provide that unpaid seller shall, 20 subject to the
provisions of the Act and of any law for the time being in force, have a lien
on the goods for the price while he is in possession of them and that the
seller can retain the possession of the goods until payment or tender of the
price in situations where the buyer has become insolvent or goods have been
sold on credit, but the term of credit has expired. The lien, however, stands
terminated in terms of Section 49 of the Act when the goods are delivered to a
carrier for the purpose of transmission to the buyer without reserving the
right of disposal of the goods.
21.
Coming to the case at hand, the contract of sale was on FOB basis
even when the contract of insurance proceeded on the basis that the
transactions between the seller and the purchaser and meant to be covered by
the policy would be on CIF basis. The distinction between CIF (Cost Insurance
and Freight) and FOB (Free on Board) contracts is well recognized in the
commercial world. While in the case of CIF contract the seller in the absence
of any special contract is bound to do certain things like making an invoice of
the 21 goods sold, shipping the goods at the port of shipment, procuring a
contract of insurance under which the goods will be delivered at the
destination etc., in the case of FOB contracts the goods are delivered free on
board the ship.
Once the
seller has placed the goods safely on board at his cost and thereby handed over
the possession of the goods to the ship in terms of the Bill of Lading or other
documents, the responsibility of the seller ceases and the delivery of the
goods to the buyer is complete. The goods are from that stage onwards at the
risk of the buyer.
22.
It is common ground that the seller had, in the case at hand,
reserved no right or lien qua the goods in question.
In the
absence of any contractual stipulation between the parties the unpaid seller's
lien over the goods recognised in terms of Sections 46 and 47 of the Sale of Goods
Act, 1930 stood terminated upon delivery of the goods to the carrier.
The goods
were from that stage onwards held by the carrier at the risk of the buyer and
the property in the goods stood vested in the buyer. The principle underlying
transfer of title 22 in goods in FOB contracts was stated by a Constitution
Bench of this Court in B.K. Wadeyar V. Daulatram Rameshwarlal (AIR 1961 SC
311). The question as to the transfer of title in the goods arose in that case
in the context of a fiscal provision but the principle relating to the transfer
of title in goods in terms of FOB contract was unequivocally recognised. This
Court held that in FOB contracts for sale of goods, the property is intended to
pass and does pass on the shipment of the goods. The National Commission was,
therefore, right in holding that the seller had no insurable interest in the
goods thereby absolving the insurance company of the liability to reimburse the
loss, if any, arising from the mis-delivery of such goods.
23.
We consider it unnecessary to delve any further on this aspect of
the matter for in our opinion the claim made by the shipper against the
insurance company has been rightly rejected by the National Commission on the
ground that the shipper had not observed utmost good faith while obtaining the
insurance cover. The principle that insurance is a 23 contract founded on good
faith is of vintage value. In Carter V. Boehm (1766) 3 Burr 1905 one of the
earliest cases on the subject the principle was stated by Lord Mansfield in the
following words:
"Insurance
is a contract of speculation.
The
special facts upon which the contingent chance is to be computed lie most
commonly in the knowledge of assured only; the underwriters trusts to his
representation and proceeds upon confidence that he does not keep back any
circumstance in his knowledge to mislead the underwriter into a belief that the
circumstance does not exist. The keeping back such circumstance is a fraud, and
therefore the policy is void. Although the suppression should happen through
mistake, without any fraudulent intention, yet still the underwriter is
deceived and the policy is void; because the risqui run is really different
from the risqui understood and intended to be run at the time of the
agreement....The policy would be equally void against the underwriter if he
concealed......
Good Faith
forbids either party, by concealing what he privately knows, to draw the other
into a bargain from his ignorance of the fact, and his believing the
contrary."
24.
Section 19 of the Marine Insurance Act, 1963
grants statutory recognition to the above principle. It reads:
24
"19. Insurance is uberrimae fidei. - A contract of marine insurance is a
contract based upon the utmost good faith, and if the utmost good faith be not
observed by either party, the contract may be avoided by the other party."
25.
In United India Insurance Company Ltd. V. M.K.J. Corporation (1996
(6) SCC 428) this Court declared good faith as the very essence of a contract
of insurance in the following words:
"It
is a fundamental principle of Insurance law that utmost good faith must be
observed by the contracting parties. Good faith forbids either party from
concealing (non-disclosure) what he privately knows, to draw the other into a
bargain, from his ignorance of that fact and his believing the contrary. Just
as the insured has a duty to disclose, similarly, it is the duty of the
insurers and their agents to disclose all material facts within their
knowledge, since obligation of good faith applies to them equally with the
assured. The duty of good faith is of a continuing nature.
After the
completion of the contract, no material alteration can be made in its terms
except by mutual consent. The materiality of a fact is judged by the
circumstances existing at the time when the contract is concluded."
26.
To the same effect is the decision of this Court in Modern
Insulators Ltd. V. Oriental Insurance Co. Ltd.
(2000 (2)
SCC 734) where this Court observed:
"It
is the fundamental principle of insurance law that utmost good faith must be
observed by the contracting parties and good faith forbids either party from
non-disclosure of the facts which the parties know. The insured has a duty to
disclose and similarly it is the duty of the insurance company and its agents
to disclose all material facts in their knowledge since the obligation of good
faith applies to both equally."
27.
The National Commission has, in the instant case, recorded a clear
finding the correctness whereof has not been disputed before us that the
insurance cover obtained by the exporter envisaged goods being despatched on
CIF basis whereas the goods were, in fact, sent on FOB basis.
This was
a material departure which breached the duty of utmost good faith cast upon the
exporter towards the insurance company. If the proposal for insurance had
disclosed that the goods will be sent on FOB basis, the 26 question whether the
supplier had any insurable interest in the goods and if he had what premium the
company would charge for the same may have assumed importance. Be that as it
may, the duty to make a complete disclosure not having been observed by the
exporter, the National Commission was justified in holding that the insurance
company stood absolved of its liability under the contract and in dismissing
the petition qua the said company.
28.
That brings us to the question whether the National Commission was
justified in holding that the service rendered by the carrier was deficient,
and if so, whether it was right in awarding rupee equivalent of US$ 1800 by way
of compensation. The National Commission has on appreciation of the material on
record come to the conclusion that the consignment meant to be delivered to
Pindikas was misdelivered and what was offered to Pindikas did not actually
contain miniature paintings meant for the said consignee. That finding is, in
our opinion, justified on the material on record from which it is evident that
out of 27 122 cartons 121 cartons were delivered to M/s Natural Selection
International while the only remaining carton when checked in the presence of
the General Counsulate of India was found to contain steel furniture items. The
inference, therefore, is that the carton containing miniature paintings had
been misdelivered by the carrier who ought to have taken care to deliver the
same to the consignee concerned.
The
National Commission has rightly rejected the contention that the carton was not
properly marked making it difficult for the shipping company to separate the
same from other cartons which were meant for M/s Natural Selection
International. There is indeed, no room for us to interfere with the findings
of the National Commission. The question, however, is whether the National
Commission was justified in awarding rupee equivalent of US$ 1800 to the shipper
by way of compensation. There are two errors which are evident in the order by
the National Commission in that regard. Firstly, the National Commission has
instead of going by the number of packages entered in the Bill of 28 Lading
gone by the packages mentioned in the packing list.
The Bill
of Lading was the only document on the basis of which compensation could be
determined against the carrier in terms of the provisions of The Indian
Carriage of Goods by Sea Act, 1925 and the Schedule thereto. Section 2 of the
said Act provides that the rules set out in the Schedule shall have effect in
connection with the carriage of goods by sea in ships carrying foods from any
port in India to any other port whether in or outside India. Section 4 requires
that every Bill of Lading or similar document of title issued in India to which
Rules apply shall contain an express statement that it is to have effect
subject to the provisions of the said Rules as applied by the Act. In terms of
Rule 5 of Article IV neither the carrier nor the ship shall be liable for any
loss or damage to or in connection with goods in excess of the amounts
stipulated therein. Rule 5 of Article IV to the extent the same is relevant for
our purposes may be extracted at this stage:
29
"5. Neither the carrier nor the ship shall in any event be or become
liable for any loss or damage to or in connection with goods in an amount
exceeding 666.67 Special Drawing Rights per package or unit or two Special
Drawing Rights per kilogram of gross weight of the goods lost or damaged,
whichever is higher, or the equivalent of that sum in other currency, unless
the nature and value of such goods have been declared by the shipper before
shipment and inserted in the bill of lading.
Where a
container, pallet or similar article of transport is used to consolidate goods,
the number of packages or units enumerated in the bill of lading and as packed
in such article of transport shall be deemed to be the number of packages or
units for the purposes of this paragraph as far as these packages or units are
concerned.
Neither
the carrier nor the ship shall be entitled to the benefit of limitation of
liability provided for in this paragraph if it is proved that the damage
resulted from an act or omission of the carrier done with intent to cause
damage, or recklessly and with knowledge that damage would probably
result".
29.
A careful reading of the above would show that in cases where a
container, pallet or similar article of transport is used to consolidate goods,
the number of packages or units 30 enumerated in the Bill of Lading and as
packed in such article of transport shall be deemed to be the number of
packages or units for purposes of Rule 5 as far as these packages or units are
concerned.
30.
It is not in dispute that 122 cartons despatched by the shipper
were consolidated in a container, nor is it disputed that there was only one
package indicated in the Bill of Lading concerning the consignment meant for
Pindikas. The National Commission could not go beyond the Bill of Lading and
award compensation on the basis of the packing list which may have mentioned
several packages consolidated in one bigger package, delivery whereof was
acknowledged in the Bill of Lading. The Commission ought to have taken the
number of packages to be only one as mentioned in the Bill of Lading.
31.
The second error committed by the National Commission is equally
manifest. The Commission appears to have gone by the unamended provisions of
Rule 5 in which the amount of compensation was stipulated to be US$ 31 100 per
package. After the amendment to the Schedule in the year 1992 by Act 28 of 1993
the amount of compensation was to be paid in terms of Special Drawing Rights.
As noticed above the shipper would be entitled to the compensation of 666.67
Special Drawing Rights per package or two Special Drawing Rights per kilogram
according to the gross weight of the goods lost or damaged whichever is higher.
The single package meant for Pindikas weighed 200 kgs. The amount of
compensation payable by reference to the weight of the package would come to 400
Special Drawing Rights. The amount of compensation, actually payable would,
however, be 666.67 Special Drawing Rights being higher of the two amounts.
32.
It was next argued that the shipper would be entitled to the value
of the goods misdelivered which according to the shipper was not less than
Rs.39,23,225/-. There is no merit in that submission. We say so because
compensation by reference to the value of the goods lost or damaged can be
claimed only if the nature or the value of such goods has 32 been declared by
the shipper before shipment and inserted in the Bill of Lading. Even assuming
that the nature and the valuation of the goods had been declared by the shipper
before the shipment the requirement of `insertion of the same in the Bill of
Lading' was not satisfied in the present case. The Bill of Lading does not
mention either the nature or the value of the goods. That being so,
compensation of rupee equivalent of 666.67 Special Drawing Rights was the only
amount that could be awarded by the Commission to the shipper. In as much as
the Commission awarded US$1800 it committed a mistake that calls for
correction.
33.
In the result we dismiss C.A. No.8276 of 2003 but partly allow
C.A. Nos.3245 of 2005 and 6232 of 2004 to the extent that the amount of compensation
payable to the shipper shall stand reduced to the rupee equivalent of 666.67
Special Drawing Rights only. The order passed by the National Commission shall
stand modified to the above extent leaving the parties to bear their own costs.
......................................J. (MARKANDEY KATJU)
......................................J. (T.S. THAKUR)
New Delhi:
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