IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07.01.2011 CORAM: THE HONOURABLE MS.JUSTICE R.MALA Appeal Suit No.233 of 2007 1. M/s.Lucas TVS Ltd., Represented by Power Agent/Subrogee M/s.United India Insurance Company Ltd., No.6, Pattulos Road, Chennai-600 002, Represented by its Principal Officer/Divisional Manager. 2. M/s.United India Insurance Company Ltd., Divisional Office, No.392, I Floor, Opp. SBOA School, Anna Nagar West Extension, Chennai-600 101, (Cause Title accepted, vide order of Court, dated 18.1.2007 in M.P.No.1 of 2007 in A.S.S.R.No.134728 of 2004) .. Appellants/Plaintiffs Vs. M/s.Alitalia Airlines, No.548, Anna Salai, Teynampet, Chennai-600 018. .. Respondent/Defendants Appeal Suit (First Appeal) against the judgment and decree dated 10.7.2003 in O.S.No.4970 of 1997 on the file of VI Additional Judge, City Civil Court, Chennai. For appellants: Mr.G.Guru Swaminathan for M/s.Nageswaran & Narichania For respondent: Mrs.K.Bhuvaneswari for M/s.Paul and Paul JUDGMENT The First Appeal is filed against the judgment and decree, dated 10.7.2003 in O.S.No.4970 of 1997 on the file of the VI Additional Judge, City Civil Court, Chennai. 2. The averments in the plaint are as follows: (a) The first plaintiff purchased one smoke meter with inductive pulse pick-up from Gesellschaft fur https://hcservices.ecourts.gov.in/hcservices/ verbrennungskrafmaschinen and MeBtechnik mbH, Austria, as per their invoice bearing Nos.108950632 and 18950630, both dated 9.3.1995, value of which is ATS 148, 462, 56 and 4185,04 respectively. The said cargo packed in two cartons were entrusted to Panal Pina, an IATA, Consolidator under their Master Way Bill No.055-10337246, dated 10.3.1995. The said Consolidator in turn entrusted the said two cartons under House Air Way Bill of the defendant bearing No.322197 for carriage by air from Graz, Austria and delivery at Madras. (b) The defendant, operating their Flight AZ 980/14, carried the said consignment for delivery at Madras; the total weight of the two cartons entrusted to the air carrier according to the Master Air Way Bill is 54.5 Kgs. M/s.New Globe Air Services Ltd., by their letter dated 14.3.1995, informed the first plaintiff about the alleged arrival of the cargo and submitted their cargo arrival notice-cum-freight bill No.1019, claiming a total freight of Rs.9287/-. (c) The first plaintiff engaged their clearing and forwarding agents for clearing the cargo and the said clearing and forwarding agents filed a Bill of Entry on behalf of the first plaintiff in respect of one set of inductive pulse pick-up contained in one carton. Out of the two pieces under two cartons entrusted under the House Air Way Bill No.322197, the carton containing smoke meter weighed at 54 Kgs. gross, was short landed, which has been confirmed by the defendant's letter dated 24.4.1995 addressed to the said M/s.New Globe Air Services Ltd., the local agents of the Consolidator. The said Consolidator informed the fact of short landing and enclosed a copy of Short Landing Certificate issued by the defendant, vide their letter dated 25.4.1995. (d) The first plaintiff sent a notice claiming damages from the defendant-carrier. On 26.4.1995, a demand letter was also sent to the Consolidator's agent M/s.New Globe Air Services Ltd. The defendant-Company by their letter dated 5.12.1995, acknowledged the receipt of the claim and assured to revert after scrutiny of the whole case. On account of the short landing of the smoke meter, the first plaintiff sustained pecuniary loss amounting to Rs.4,84,698/-. (e) The short landing happened only on account of failure on the part of the defendant-air carrier to discharge their statutory obligation, coupled with the misfeasance and malfeasance and so, they are liable in law to make good the loss. (f) The suit consignment was insured with the second plaintiff under their policy of insurance bearing No.21/57/94 and as per the terms and conditions of the policy of insurance, the second plaintiff paid a sum of Rs.4,84,698/-. The first plaintiff executed a letter of subrogation-cum-special power of attorney dated 19.6.1996 in favour of the second plaintiff. Thus, the plaintiffs are entitled to file and maintain the suit. The plaintiffs have no objection to a decree being passed either in favour of the second plaintiff or in favour of both the plaintiffs. https://hcservices.ecourts.gov.in/hcservices/ (g) The defendant received the claim lodged by the plaintiffs and sent a letter dated 9.10.1996 admitting the liability, but restricted the liability to US $ 20 per Kg. of the freight lost and according to Indian Rupees, they offered a sum of Rs.38,718/- in full settlement of the claim. (h) This offer and an attempt on the part of the defendant-air carrier to limit their liability to US $ 20 per Kg. is illegal and not in consonance with the defendant's liability under the law governing their obligation viz., Carriage by Air Act. On the other hand, their liability as per the enactment governing such carriage by air is 250 Francs, which should be converted into local currency as provided in the said enactment. When this fact was pointed out to the defendant by the said recovery agents, vide their letter dated 12.10.1996, on 14.10.1996, the defendant forwarded a copy of notice concerning the carrier's limitation of liability which is printed on the reverse of Air Way Bill. After close scrutiny, the said recovery agents by their letter dated 5.11.1996, informed the defendant that their contention is illegal and demanded the entire value of the non-delivered consignment amounting to Rs.4,84,698/-. (i) Since the defendant failed and neglected to satisfy the demand, the plaintiffs have filed the suit for recovery of Rs.4,84,698/- with interest @ 18% per annum from the date of suit till the date of payment in full. 3. The gist and essence of the written statement filed by the defendant, are as follows: (a) The suit is not maintainable. The consignor and consignee are necessary parties. There is no privity of contract between the plaintiffs and the defendant, as the first plaintiff is neither the consignor nor the consignee of the consignment, according to the Master Airway Bill, which is the statutory document governing the carriage. (b) According to the Master Airway Bill issued on behalf of the defendant regarding the subject consignment, the consignor was M/s.Ponalpine Gcs MBH and the consignee was M/s.New Globe Air Services Pvt. Ltd. Inspite of all possible diligence on the part of the defendant, the cargo could not be traced on arrival of the Flight at Madras. Consequently, a cargo irregularity report dated 14.3.1995 was issued by the defendant to trace the said consignment. Subsequently, a Short Landing Certificate was also issued by the defendant. The plaintiff neither declared any value for carriage nor paid any supplements charges. The plaintiffs are not entitled to claim the alleged cost of the consignment. (c) The offer made by the defendant to settle the claim at US $ 20 per Kg. is admitted. The said offer is in consonance with the terms and conditions of carriage as found in the Airway Bill (Air Consignment Note) as well as accepted international convention and practice. The averment that the liability should be reckoned as per the Carriage by Air Act, according to the working given by the plaintiff, is incorrect and denied. The plaintiff is only entitled https://hcservices.ecourts.gov.in/hcservices/ to claim US $ 20 per Kg. Hence, the defendant prayed for dismissal of the suit. 4. The trial Court, after considering the averments in the plaint and in the written statement and upon hearing the arguments of both counsel, framed four issues and considering the oral evidence of P.W.1 and Exs.A-1 to A-19, decreed the suit only in respect of Rs.38,718/- with interest @ 18% per annum from 26.4.1995 to the date of decree and thereafter, @ 6% per annum till the date of realisation, with costs. Challenging the judgment and decree of the trial Court, the plaintiffs have come forward with the present First Appeal. 5. At the time of arguments, learned counsel for the respondent/defendant reported no instructions. 6. Heard the arguments of the learned counsel for the appellants/plaintiffs. 7. After considering the arguments of the learned counsel for the appellant, the following points are framed for determination in this First Appeal: (i) Whether the trial Court is correct in applying the terms and conditions of carriage in the Air Way Bill while awarding damages ? (ii) Whether the appellants/plaintiffs are entitled to damages as per Rule 22 of Chapter III of Schedule II of the Carriage by Air Act, 1972 ? (iii) Whether the judgment and decree passed by the trial Court are sustainable ? and (iv) To what reliefs the appellants/plaintiffs are entitled to ? 8. Points (i) and (ii): The admitted facts are as follows: The first appellant/first plaintiff is the owner of the consignment and the consignment has been entrusted to the respondent/defendant as an air cargo, i.e., two cartons, which were transported. It was short landed of one carton and that has been accepted by both sides. 9. The Airway Bill is marked as Ex.A-2. Ex.A-3 is the cargo arrival notice-cum-flight bill, dated 14.3.1995. Ex.A-4 is the Bill of Entry for Home Consumption. Ex.A-5 is the covering letter with Short Landing Certificate. On 24.4.1995, the respondent-defendant has given the said Short Landing Certificate that out of two pieces, one piece was not delivered to the consignee at the destination. So, the first plaintiff issued Ex.A-6 notice dated 26.4.1995 to the respondent/defendant and the acknowledgement card is marked as Ex.A-7. After receipt of Ex.A-6 notice, the respondent https://hcservices.ecourts.gov.in/hcservices/ issued reply notice (Ex.A-10) on 5.12.1995, in which they have stated that after scrutinising the whole case, they shall revert back to the first plaintiff at the earliest. The goods were insured with the second plaintiff. The first plaintiff issued a notice to M/s.New Globe Air Services Ltd., under Ex.A-8, which was received under Ex.A-9 acknowledgement card. The second plaintiff settled the amount to the first plaintiff and the first plaintiff issued a letter of subrogation and special power of attorney, which is evidenced by Ex.A-11, dated 19.6.1996. The disbursement (claims) voucher has been marked as Ex.A-12, which shows that Rs.4,84,698/- has been paid by the Insurance Company to the first plainitiff, by way of DD/Cheque. Ex.A-13 is the letter dated 14.9.1996, addressed by the appellant/plaintiff's counsel to the respondent-defendant, for non-delivery of the cargo and that has been received and the defendant sent a reply Ex.A-14 dated 9.10.1996. Ex.A-14 reply notice is not submitted by the trial Court inspite of call letter by this Court. But however, the contents had been referred to in Ex.A-15. Non-production of Ex.A-14 will not stand in the way of disposing of the case. The said V.N.C.Narichania P. Ltd., sent a rejoinder under Ex.A-15, dated 12.10.1996 to the respondent/defendant, in which it is stated as follows: " ... We disagree with your contention that your liability is restricted to rupee equivalent of USD 20 per Kg. On the other hand it is 250 Francs which should be converted into local currency which is much more than the invoice value of the consignment short landed. Hence your present offer is not acceptable. You are hereby called upon to settle the claim according to the Carriage by Air Act which incorporated the law governing your liability." The said letter dated 12.10.1996 had been received by the defendant and they issued reply Ex.A-16. Along with Ex.A-16, the defendant has sent the conditions of contract, and in Ex.A-16, the defendant stated that, "... since there was no declaration made with regard to the value of the goods at the time of booking the cargo we are liable to settle your claim only as per the Warsaw Convention." Then, the said V.N.C.Narichania P. Ltd., sent a reply to the defendant under Ex.A-17 in which it is stated that the defendant is liable to pay Rs.4,84,698/-. The invoices are Exs.A-18 and A-19. 10. The respondent-defendant admitted the short landing of one carton and also issued Short Landing Certificate. The weight of the cargos is 54.5 Kgs. The defence raised by the respondent/defendant is that the plaintiffs are entitled only to 20 US $ per Kg. of the goods consigned and so, the plaintiffs are entitled only to Rs.38,718/-. The transport of the cargo by airways is admitted. The short landing of one carton is also admitted. Issuance of Short Landing Certificate is also admitted. The only dispute is as to whether the appellants/plaintiffs are entitled to damages as per https://hcservices.ecourts.gov.in/hcservices/ the terms and conditions imposed in Air Way Bill (Air Consignment Note) or as per Rule 22 of Chapter III of Schedule II of the Carriage by Air Act, 1972. 11. As already stated, learned counsel for the respondent/defendant reported no instructions. 12. Learned counsel for the appellants/plaintiffs relied on Rules 22, 23 and 25 of Chapter III of Schedule II of the Carriage by Air Act, 1972 and submitted a decision of the Kerala High Court reported in AIR 2010 Kerala 85 (M/s.Indian Airlines Vs. Kurian Abraham). He further stated that even though as per Rule 22 of Chapter III of Schedule II of the Carriage by Air Act, 1972, the appellants/plaintiffs are entitled to more than the value of the goods consigned, the appellants/plaintiffs restricted their claim only in respect of the value of the goods consigned. Learned counsel for the appellants/plaintiffs also filed a Memo of Calculations. 13. As per Ex.A-2 Air Way Bill, the number of pieces RCP is 2 and gross weight is 54.5 Kgs.; chargeable weight is 76, but there are no terms and conditions of contrat on the reverse of the Air Way Bill-Ex.A-2. 14. It is pertinent to note that on 14.10.1996, the defendant sent Ex.A-16 reply to the plaintiffs' advocate and along with the reply, the defendant also enclosed a notice concerning the carriers' limitation of liability, indicating the conditions of contract, which is printed on the reverse of each Air Way Bill. As already stated, the Air Way Bill Ex.A-2 did not contain any terms and conditions, whereas, the enclosure contained in Ex.A-16, dated 14.10.1996 is the conditions of contract. Admittedly, the respondent/defendant has not filed any document to show that the consignment has been given after accepting the conditions of contract imposed by the carrier for transport of the cargo. In Clause 1 of the conditions of contract, enclosed with Ex.A-16, it is stated as follows: "1. As used in this contract "Carrier" means all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage. "Warsaw Convention" means the Convention for the Unification of certain Rules relating to International Carriage by Air, signed at Warsaw, 12 October 1929, at that Convention as amended at The Hague, 28 September 1955, whichever may be applicable and "French gold francs" means francs consisting of 65 ½ milligrams of gold with a fineness of nine hundred thousandths." This shows that the convention for the "Warsaw Convention" means the Convention for the Unification of certain Rules relating to International Carriage by Air, signed at Warsaw, on 12 October https://hcservices.ecourts.gov.in/hcservices/ 1929, at that Convention as amended at The Hague, on 28 September 1955, whichever may be applicable and "French gold francs" means francs consisting of 65 ½ milligrams of gold with a fineness of nine hundred thousandths." It is to be noted that the Carriage by Air Act, 1972 has come into force only from 15.5.1973. In such circumstances, I am of the view that there is no evidence to show that the conditions of contract enclosed by the respondent/defendant along with Ex.A-16 supersedes the Carriage by Air Act, 1972. As already stated, there is no evidence to show that the cargo has been handed over to the defendant and at the time, the consignor was aware of the conditions of contract mentioned in the enclosure in Ex.A-16. 15. On the side of the respondent/defendant, no one has entered into the box and no document has been produced before Court. After receipt of the notice from the plaintiffs' advocate, the defendant sent a reply, i.e. Ex.A-16 and along with Ex.A-16, the defendant enclosed the conditions of contract. Ex.A-2 Air Way Bill does not contain the terms and conditions of contract. 16. Before considering the decision relied upon by the learned counsel for the appellants/plaintiffs, it is appropriate to quote Rules 22, 23 and 25 of Chapter III of Schedule II of the Carriage by Air Act, 1972, as follows: "Rule 22: (1) In the carriage of persons the liability of the carrier for each passenger is limited to the sum of 2,50,000 francs. Where, in accordance with the law of the Court seized of the case, damages may be awarded in the form of periodical payments the equivalent capital value of the said payments shall not exceed 2,50,000 francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability. (2) (a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the passenger or 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 he proves that that sum is greater than the passenger’s or consignor’s actual interest in delivery at destination. (b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained therein, the weight to be taken into consideration in determining the amount to which the carrier’s liability is limited shall be only the total weight of the package or packages concerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage or cargo, or https://hcservices.ecourts.gov.in/hcservices/ of an object contained therein, affects the value of other packages covered by the same baggage check or the same air waybill, the total weight of such package or packages shall also be taken into consideration in determining the limit of liability. (3) As regards objects of which the passenger takes charge himself the liability of the carrier is limited to 5,000 francs per passenger. (4) The limits prescribed 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. 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. (5) The sums mentioned in francs in this rule shall be deemed to refer to a currency unit consisting of sixty- five and a half milligrams of gold of millesimal fineness nine hundred. These sums may be converted into national currencies in round figures. Conversion of the sums into national currencies other than gold shall, in case of judicial proceedings, be made according to the gold value of such currencies at the date of the judgement. Rule 23: (1) 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. (2) Sub-rule (1) of this rule shall not apply to provisions governing loss or damage resulting from the inherent defect, quality or vice of the cargo carried. Rule 25: The limits of liability specified in rule 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment." 17. The above Rules clearly mention as to what is the mode to be followed for assessing the loss to the consignor in any contract. As per Rule 23 quoted above, 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. So, I am https://hcservices.ecourts.gov.in/hcservices/ of the view that the enclosure contained in Ex.A-16 is void. 18. Furthermore, to prove Ex.A-16, no one has been examined. There is no evidence to show that the consignor was aware of the terms and conditions of the contract and accepted the same. Ex.A-2 Air Way Bill does not contain the terms and conditions. In such circumstances, I am of the view that the defence raised by the defendant that the terms and conditions imposed in the Air Way Bill, are binding the consignor, is unacceptable. 19. Now, it is appropriate to consider the decision relied on by the learned counsel for the appellants/plaintiffs, reported in AIR 2010 Kerala 85 (M/s.Indian Airlines Vs. Kurian Abraham), in which it is held by the Kerala High Court that once carrier receives cargo, obligation is on him to safely deliver the same and the burden is on the carrier to show that they had followed proper procedure and in spite of their best efforts, they could not prevent the loss or damage and in the absence of that evidence, it can be held that the carrier is guilty of wilful misconduct. 20. In the above citation of the Kerala High Court, it is held that the appellant therein, namely the Indian Airlines, has not let in any evidence to show that they have taken all precautions in the case and it was held that the respondent therein, namely Kurian Abraham, is entitled to damages under Rule 25(1) of Chapter III of Schedule I of the Carriage by Air Act, i.e. the value of the cargo. In the present case, the appellants/plaintiffs submitted that as per Rule 22 of Chapter III of Schedule II of the Carriage by Air Act, the appellants/plaintiffs are entitled to limited damages of 250 Francs. So, I am of the view that the above citation is not applicable to the facts of the present case. 21. It is worthwhile to notice the decision of the Delhi High Court reported in MANU/DE/1178/2008 = 153 (2008) DLT 228 (Surya Pharmaceutical Ltd. Vs. Air India Limited), wherein the Division Bench of the Delhi High Court held as follows: "12. ... a reference may be had in this regard to Section 103 from the Evidence Act which states as follows: 103: Burden of proof as to particular fact:- The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular provision. A plain reading of the above provisions shows clearly that in case the respondent desired the Court to believe that in the contract in question, there exists a clause limiting its liability to US $ 20 per kilogram, then it was for the respondent/defendant to prove this fact. The method of proving of facts is covered by Chapters IV, V https://hcservices.ecourts.gov.in/hcservices/ and VI of the Indian Evidence Act. In this context, reference may also be had to the Latin maxim, Ei incumbit prabatio qui dicit, non qui negat – the onus of proof lies on him who affirms and not upon him who denies the existence of any fact." 22. Thus, it is to be noted that the onus of proving that there exists terms in written contract between the parties limiting the liability to US $ 20 per Kg, is upon the person who pleaded the same. 23.