Madras High Court
Air India Ltd vs Neyveli Lignite Corporation on 21 September, 2017
S.A.No.186 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on: 22 .01.2024 Delivered on: 16 .02.2024
CORAM:
THE HONOURABLE MR. JUSTICE P.B.BALAJI
S.A.No.186 of 2018
and
C.M.P.No.4811 of 2018
Air India Ltd
(company incorporated under the Companies Act
carrying on business and having their office at )
Old address No.19, Rukmani Lakshmipathi Salai
Chennai-600 008
New Address Airlines House
Meenabakkam, Chennai-600 027 ...Appellant
Vs.
1.Neyveli Lignite Corporation
Registered under the Companies Act
A Government of India Enterprise
having their materials management
Complex and registered office at
Block 27, Dr.Rajendra Prasad road
Neyveli-670 807
rep by its Subrogee & Power Agents
M/s. National Insurance Company Ltd,
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S.A.No.186 of 2018
2. M/.s National Insurance Co., Ltd
having their registered office at
No.3, Middleton Street, Kolkata-700 071
and its Branch Office F-45,J.N.Salai,
Block-25, Neyveli-607 603
and service division at Chennai Divisional
Office-1, No.66, Greams Road, Chennai-600 006
rep by its Divisional Manager & Principal
Officer Mr.J.Subbaraman ...Respondents
PRAYER: Second Appeal filed under Section 100 of the Code of Civil
Procedure, against the Judgment and Decree dated 21.09.2017 in
A.S.No.101 of 2017, on the file of the 19th Additional City Civil Court at
Chennai, confirming the decree and judgment dated 12.01.2017 in
O.S.No.6383 of 2017, on the file of the 7th Assistant City Civil Court at
Chennai.
For Appellant : Mr.S.Satish Kumar
For Respondents : Mr.N.Nithianandam for R1
Mr.G.Guruswaminathan for
M/s.Nageswaran & Narichania for R2
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S.A.No.186 of 2018
JUDGMENT
The unsuccessful defendant, Air India Ltd is the appellant in the present Second Appeal.
2. The parties are described as per their litigative status before the Trial Court.
3. The plaintiffs filed a suit against the defendant in O.S.No.6383/2012 seeking a money decree to the tune of Rs.2,78,292/-, together with interest at 12% p.a.
4. The material facts that are necessary for deciding the Second Appeal are as hereunder:
The case of the plaintiffs is that the 1st plaintiff imported a consignment from Germany for a total value of Euro 4456.25, equivalent to Indian Rs.4,09,090/. The consignment was entrusted to the defendant vide Airway 3/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 Bill No.098-9164 3016 dated 10.02.2011. The defendant had undertaken to transport the consignment from Frankfurt Airport, Germany, to Chennai Airport and to deliver the same to the 1st plaintiff. The 1st plaintiff had insured the consignment with the 2nd plaintiff against all transit risks under a valid policy. The plaintiffs alleged that the defendant failed and neglected to deliver the consignment as promised and on 14.06.2011, the defendant informed the 1st plaintiff that the consignment had not landed at Chennai. The 1st plaintiff wrote to the defendant on 16.06.2011 and claimed Rs.4,09,090/- being the value of the consignment and as the defendant did not come forward to make the payment, the 1st plaintiff claimed loss under the policy with the 2nd plaintiff and the 2nd plaintiff settled a sum of Rs.2,78,292/- to the 1st plaintiff, upon which the 1st plaintiff executed a letter of subrogation and special power of attorney dated 20.12.2011 and thereby, the 2nd plaintiff became entitled to claim the money from the defendant. The suit has been filed for recovery of the said sum of Rs,2,78,292/-.
5. The defendant filed a written statement admitting the Airway Bill 4/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 (AWB) regarding the consignment from Frankfurt, Germany to Chennai Airport, through the defendant's airlines. However, the defendant has stated that the defendant was not a party to the insurance contract between the plaintiffs and despite best efforts undertaken by the defendant, the consignment was not traceable and did not reach Chennai.
6. The main contention of the defendant is that in the Airway Bill dated 10.02.2011, the 1st plaintiff had not declared the value of the consignment while booking the same at Germany and under such circumstances, the consignment was accepted as NVD shipment (No Value Declared) and therefore, citing the contract viz., the terms and conditions on the reverse of the AWB the defendant stated that they were liable to settle the loss of consignment only on weight loss basis and not as claimed by the plaintiffs.
7. Before the Trial Court, one G.Thirumal was examined as P.W.1 on the side of the plaintiffs and Exs.A1 to A11 were marked. On the side of the 5/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 defendant, one Mr.K.Venkatesan was examined and Exs.B1 to B14 were marked.
8. The Trial Court held that though the Airway Bill Ex.A5 did not mention the value of the consignment, Ex.A3 which was the Commercial Invoice had clearly mentioned the value of the consignment and the defendant was also admittedly having the said invoice with it, even before the preparation of the Airway Bill and therefore, the defendant cannot wriggle out of its liability by citing that the Airway Bill did not mention the consignment value. The Trial Court decreed the suit, as against which the defendant preferred A.S.No.101 of 2017, before the XIX Additional Judge, City Civil Court, Chennai.
9. The First Appellate Court, on independent appreciation of the oral and documentary evidence, confirmed the judgment and decree of the Trial Court, finding that the defendant cannot shirk its liability by merely stating that all attempts were made to trace the lost goods and that the defendant 6/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 cannot take refuge under restriction of liability clause and proceeded to dismiss the appeal.
10. At the time of the admission of the above Second Appeal on 07.12.2023, the following two substantial questions of law have been framed:
“a) Whether the judgment and decree of the Courts below are justified in allowing the suit claim when the value of consignment was not declared by Consignor in the Airway Bill (Ex.A5 & Ex.B5) issued by the appellant?
b) Whether the suit filed by the respondents is maintainable in the absence of any privity of contract between the appellant and 1st respondent/1st plaintiff?”
11. I have heard Mr.S.Satishkumar, learned counsel for the appellant and Mr.N.Nithyanandan, learned counsel for the 1st respondent for Neyveli Lignite Corporation and Mr.Guru Swaminathan for M/s. Nageswaran & Narichania, for the 2nd respondent viz., the Insurance company. I have also gone through the pleadings, oral and documentary evidence, as well as the judgments of the Trial Court and the First Appellate Court.7/18
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12. Learned counsel for the appellant would draw my attention to Art.22 of the Limits of liability, in relation to delayed baggage and also Cargo (Montreal Convention). Clause 3 of the said Article runs thus:
“ 3. In the carriage of cargo, the liability of the carrier in the case of destruction, loss, damage or delay is limited to a sum of 19 Special Drawing Rights per kilogramme, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the consignor's actual interest in delivery at destination.”
13. He would also refer to the conditions of the contract of the Airway Bill which is in line with Art.22. He would therefore state that the liability would be limited and determined only in accordance with the weight, as admittedly the Airway Bill did not contain the value of the consignment. Further, he would also refer to R.11 of the Carriage by Air (Amendment Act 8/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 2009) (Act 28 of 2009) with effect from 20.03.2009. He would place reliance on Rules 19 and 22 of the Amendment Act, which read as follows:
“ R.19. The carrier shall be liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Nevertheless, the carrier shall not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures.
.....
R.22. In the case of damage caused by delay as specified in rule 19 in the carriage of persons, the liability of the carrier for each passenger is limited to four thousand one hundred and fifty Special Drawing Rights.
14. Learned counsel for the appellant would further state that when the appellant had taken all steps to avoid the damage occasioned by delay and if the carrier had taken all reasonable measures to avoid damage and despite such measures being taken, it was impossible for the carrier to avoid the delay, the amount for which the defendant would be liable was only in terms 9/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 of R.22/- which would be limited to a sum of Rs.17/- special drawing rights per kilogram, unless the consignor had at the time of the package being handover to the carrier made a special declaration of interest in delivery and destination and had paid a supplementary sum, if so required, in which case the carrier shall be liable to pay a sum not exceeding the declared sum.
15. Per contra, the learned counsel for the insurance company/2nd respondent would draw my attention to R.22(6) which reads as follows:
(6) The limits prescribed in rule 21 and in this rule shall not prevent the court from awarding, in accordance with its own law, in addition, the whole or part of the court costs and of the other expenses of the litigation incurred by the plaintiff, including interest. The foregoing provision shall not apply if the amount of the damages awarded, excluding court costs and other expenses of the litigation, does not exceed the sum which the carrier has offered in writing to the plaintiff within a period of six months from the date of the occurrence causing the damage, or before the commencement of the action, if that is later.10/18
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16. He would therefore state that object of declaring the value of the consignment was only to keep the carrier informed about the value of the goods being imported. The fact that in the commercial invoice, the value of the consignment had been specifically mentioned and admittedly when the said commercial invoice was available with the defendant even before the Airway Bill was prepared, it would be sufficient to hold that the carrier was fully in the know of the actual value of the consignment being imported and they cannot wriggle out of liability by merely pointing to the absence of the consignment value being declared in the Airway Bill. He would refer to certain provisions in Chapter 3 of the Carriage by Air Act, 1972. R.17(2) renders the carrier liable for damages sustained in case of destruction or loss of the baggage as long as it was in charge of the carrier. R.19 only refers to delay and consequent liability on the carrier to pay damages. R.19 states that the carrier shall not be liable for damage occasioned due to delay, if it proves that the carrier had taken all measures reasonably required to avoid the damage or that it was impossible for the carrier to take such measures. As rightly pointed out by the learned counsel for the 2nd respondent, R.19 would 11/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 not apply to the facts of the present case because there is no claim towards damages on account of delay. This is a case where the consignment has not been delivered at all and thus this is a case of loss of the consignment and not damages claimed on account of delay. Next, he would place reliance on R.22(6) which entitles the Court to award any such sum not withstanding the limits prescribed in R.21. The next rule i.e., relied on by the learned counsel for the 2nd respondent is R.26. The same runs thus:
“ 26. Any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in these rules shall be null and void, but the nullity of any such provision does not involve the nullity of the whole contract, which shall remain subject to the provisions of these rules.”
17. In view of the mandate of R.26, the terms and conditions prescribing a lower limit would be null and void and he contended that the carrier, therefore, cannot take advantage of the terms and conditions set out in the Airway Bill, though it may be in line with the Montreal Convention. Learned counsel for the 2nd respondent would also place reliance on the 12/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 Division Bench judgment of this Court in Singapore Airlines Cargo Pvt. Ltd and another Vs. M/s. HCL Info Systems Ltd and another, reported in 2017 (4) TLNJ 180. The Division Bench of this Court, in the said case, placing reliance on Chapter 3 of the Carriage by Air Act, held that the liability of the carrier cannot be restricted to kilogram basis and when the negligence or willful misconduct of the carrier had been established to be the cause for the loss of damage of the consignment, the carrier cannot seek protection afforded under R.22 of the Act but instead, they would fall within the scope and ambit of Rs.25 dealing with willful misconduct.
18. Though the learned counsel for the appellant would state that the appellant has let evidence, oral and documentary with regard to all diligent steps taken to trace the consignment and therefore it cannot be a case of willful negligence or misconduct, I am unable to countenance the said submission for the simple reason that after the loss of consignment, the enquiries made by the carrier by sending World tracer messages would be of no avail. The carrier having undertaken to deliver the consignment as 13/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 promised is bound to the said primary contract between the parties and the loss of the consignment, admittedly has occasioned only when the consignment was under the control of the carrier and not otherwise. Thus, it is a clear case where the appellant is guilty of negligence and remedial measures attempted to be taken post loss of the consignment cannot be relied on by the carrier to state that they have taken adequate measures to trace the consignment, at which too they have been unsuccessful.
19. With regard to the non disclosure of consignment value in the Airway Bill Ex.A5, I find that in Ex.A3, Commercial Invoice No.9702-1350 dated 19.01.2011, which has been admittedly submitted to the Carrier, there is a clear mention of the value of the consignment. The details of nature and quantity of the imported goods and its description as found in the commercial invoice in Ex.A3 is incorporated in Ex.A5 Airway Bill. Moreover, the Airway Bill is issued only by the carrier and therefore, the appellant cannot take advantage of its own wrong and omission in mentioning the value of the consignment in the Airway Bill especially when it was fully aware of the 14/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 value of the consignment much earlier through Ex.A3-Commercial Invoice dated 19.01.2011. It is not the case of the defendant that they were not provided with a copy of the commercial invoice also. The 1st substantial question of law is answered against the Appellant.
20. With regard to the 2nd substantial question of law regarding privity of contract between the 2nd plaintiff and the defendant, the same does not arise for consideration as a substantial question of law. The law is well settled that under the Contract Act, 1872, the principle of subrogation is where the insurer can take over the policy holder's legal rights and recover the amounts paid to the policy holder. Thus, on payment of the amounts lost by the 1 st plaintiff, the 2nd plaintiff steps into the shoes of the 1st plaintiff and is entitled to make a claim against the defendant carrier. This principle is embodied in Sec.140 of the Indian Contract Act,1872 which reads thus:
“ 140. Rights of surety on payment or performance.— Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. ” 15/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018
21. Thus, there is no legal requirement that the insurance company should have a privity of contract with the carrier as in the instant case. Therefore, this substantial question of law is answered against the appellant.
22. Thus, in view of the above, I do not find both the substantial questions of law required to be answered in favour of the appellant. The Courts below have rightly discussed the pleadings, oral and documentary evidence adduced by the parties and arrived at concurrent findings, which are neither illegal nor perverse, warranting interference U/s. 100 of C.P.C.
23. In fine, the Second Appeal is dismissed. There shall be no order as to costs. Consequently, connected miscellaneous petition is closed.
16.02.2024.
Internet:Yes Index:Yes/No 16/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 Neutral Citation:Yes/No Speaking/Non-speaking order kpr To
1. The Judge, XIX Additional City Civil Court, Chennai,
2. The Judge,VII Assistant City Civil Court, Chennai P.B.BALAJI, J., kpr 17/18 https://www.mhc.tn.gov.in/judis S.A.No.186 of 2018 Pre-delivery Judgment in S.A.No.186 of 2018 and C.M.P.No.4811 of 2018 16.02.2024 18/18 https://www.mhc.tn.gov.in/judis