.;: ..

[2010] 4 S.C.R. 927

M/S. DIL~WARI EXPORTERS

M/S. ALITALIA CARGO & OR$. (Civil Appeal No. 8699 of 2002)

APRIL 16, 2016

[D.K. JAIN AND T.S. THAKUR; JJ.)

Contract Act, 1872 - ss. 186, 187, 188 and 237 - Agent's

act - Whether binding on the Principal - Exporter/consigner C entering in contract of shipping consignment with shipper, who was an agent of carter - Complaint by consigner against the carter as well as shipper - Complaint dismissed by National Consumer Commission holding that there was no privity of contract between the consigner and the carter - Hed: The o Principal is bQy, nd by the acts or obligation$ of the agent, if the agent has by 1his words or conduct induced third persons to believe that such acts were within scope of hi~ authority - The onus to prove that the act of agent was within scope of his authority, is on the person claiming against the Principal E

- On facts, it is proved that shipper was the agent of the carter

- Carter is bound by the acts of its agent i.e. shipper- Matter remitted to Commission to decide on merits - Evidence -

Onus to prove - Carriage Act, 1865 - s. 4;11 Schedule, rr. 5,6, 10 and 11.

The appellant obtained an export order, it handed over the consignment to respondent No. 3 (Cargo clearing agent of respondent No. 1) for onward dispatch.

For this, House Air Waybill! was prepared by respondent G No. 3. Simultaneously respondent No. 1 prepared Master Air Waybill.

Since the consignment did not reach the destination 927 H

A by the stipulated date, the importer cancelled the order.

The appellant filed complaint before National Co; isumer Dispute Redressal Commission alleging deficiency in service on the part of the respondents, in particular by respondent No.1. The Commission dismissed the B complaint on the preliminary ground that the appellant had no locus standi to file the complaint against respondent No. 1 as there was no privity of contract between the appellant and respondent No. 1.

C Allowing the appeal and remitting the matter to National Consumer Dispute Redressal Commission, the Court

HELD: 1. In the light of s. 4 of the Carriage Act 1865 D and rr. 5, 6, 1 O and 11 of the Second Schedule to the Act, the Commission was right in saying that the "air waybill" is prima facie evidence of the conclusion of the contract; of the receipt of the cargo and of the conditions of carriage. However, the Commission has failed to examine E the question in regard to the capacity in which respondent No.3 was operating and had collected the cargo from the appellant for being shipped, i.e. the nature of relationship between respondent No.3 and respondent

F No.1. [Paras 9 and 10) [938-E-G; 939-A-C]

2. Section 186 of the Contract Act, 1872 lays down that the authority of an agent may be expressed or implied. As per Section 187 of the Contract Act, an authority is said to be express when it is given by words G spoken or written, and an authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, which may be accounted

.DILAWARI EXPORTERS v. ALITALIA CARGO & ORS. 929

circumstaoces of the case. Section 188 of the Contract A Act prescribes that an agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act. Section 237 of the Contract Act provides that when an agent has, without authority, done acts or incurred obligations to third B persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's C authority. There is no gainsaying that onus to show that the act done by an agent was within the scope of his authority or ostensible authority held or exercised by him is on the person claiming against the principal. This, can be shown by practice as well as by a written instrument. 0 [Para 11] [939-D-G]

3. Respondent No.3 had an express authority to receive the cargo for and on behalf of respondent No.1.

This is manifest from the Master Air Waybill issued and E signed by respondent No.3 on the Air Waybill printed by respondent No.1. But for the said authority, respondent No.3 could not use the Air Waybill proforma printed by respondent No.1. Though it is true that in the said Air Waybill the name of the Shipper has been mentioned as F that of respondent No.3 but the said Air Waybill has also been signed by respondent No.3 as the agent of the carter - respondent No.1. The other relevant particulars

like, the name of the consignee, the number of the House Air Waybill; etc. tally with the House Air Waybill issued by G respondent No.3 to the appellant clearly showing the name of the consignor as that of the appellant. From the said documents, it would, appear that respondent No.3 was, in fact, acting in dual capacity - one as a Shipper H

A on behalf of the appellant and the other as an agent of respondent No.1. That being so, respondent No.1 was bound by the acts of their agent, viz. respondent No.3, with all its results. While holding that there was no privity of contract between the appellant and respondent No.1, B this vital aspect of the matter escaped the attention of the Commission thus, vitiating its order. [Para 13] (940-C-G]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8699 of 2002.

From the Judgment & Order dated 15.4.2002 of the National Consumer Disputes Redressal Commission, New Delhi in Original Petition No. 156 of 1995.

Arvind Kumar Gupta for the Appellant.

Sanjay Gupta, Nina Gupta, lshita Sehgal, Akshat Goel, Bina Gupta for the Respondent.

The Judgment of the Court was delivered by

D.K. JAIN, J. 1. Challenge in this appeal under Section 23 of the Consumer Protection Act, 1 ~86 (for short "the Act") is to the order dated 15th April, 2002 passed by the National Consumer Disputes Redressal Commission (for short "the F Commission") in Original Petition No. 156 of 1995. By the impugned order, the Commission has dismissed appellant's complaint alleging deficiency in service on the part of M/s Alitalia Cargo, respondent No.1 in this appeal, on the ground that there was no privity of contract between the appellant and G respondent No.1. Respondent Nos. 2 and 3 in this appeal are M/s Omni Marg Travels (Pvt.) Ltd., General Sales Agents and M/s Fourways Movers (P) Ltd., Cargo Clearing Agents of respondent No.1 respectively.

2. The salient facts giving rise to the present appeal are A as follows:

The appellant is engaged in the business of export of readymade garment$ and handicrafts. They obtained an order from one M/s 0.0. Sales, a concern based in New York, USA B for supply of 2050 pairs of Cotton Gents Dhotis, 150 sets of .

Cotton Ladies Ghagra-Choli, 150 pieces of Dupatas, etc. As per the agreement between the appellant and the said concern of New York, USA, these artides had to reach New York, USA before 10th of October, 1994. Accorµingly, the appellant C handed over the consignment of the said. articles to respondent No.3 - M/s Fourways Movers (P) Ltd. on 4th October, 1994 for . onward dispatch to New York, for which a House Air Waybill

No. FMPL 0841 was prepared by respondent No.3. For the sake of ready reference, the said Bill is reproduced hereunder: D

"Shippers Name and Address:

Mis. DILWARI EXPORTERS Not Negotiable

HAWB

NO.

1-8 JANGPURA-8,

FMPL 0841

MATHURA ROAD, E NEW DELHl-14 INDIA

HOUSE AIR WAYBILL

FOURWAYS MOVERS PVT. LTD.

3916-7A, COMMUNITY CENTRE

EAST OF KAILASH, NEW DELHl-110065 F

Consignee's Name and Address MIS D.D. Sales, 110-53

62ND DRIVE, FOREST HILLS N.Y.

11375, U.S.A.

Issuing Carter's Agent (Name and City)

FOURWAYS MOVERS P. LTD.

Accounting Information

NEW DELHI

"FREIGHT : PREPAID"

A Agent's IAT A CODE

14-3-3775

Airport of Departure (Addr. Of first Carter) MASTER AWB NO.

NEW DELHI I AZ 055 - 2342 9276

B By First Carter Routing & Destination

NYC p; z

Airport of Destination Currency Declared Value Declared for Customs Value for c Customs

NEW YORK

INR

NVD

US$29441. 70 Amount of Insurance Rs.1012706-00 The landing information

NOTIFY: SAME AS ABOVE. PLS. INFORM CONSIGNEE D

IMMEDIATELY ON ARRIVAL OF SHIPMENT AT DESTINATION.

TEL. NO. (718)- 896-0575. ORIGINAL VISA (3 SETS) COPY OF

INVOICE (3 SET) PACKING LIST (3 SET), ALL INDIA

HANDICRAFT BOARD CERTIFICATE AND DECLARATION TO

ACCOMPANY WITH THE SHIPMENT.

Carter CommOdity Chargeable Ratel Total Nature and Quantity Weight Item No.

Weight Charge of Goods {Incl.

POWERLOOM COTTON

GENTS DHOTIES & INDIA

ITEM GARMENTS HAND/

EMDI PRINTED/ ZARI/

APPLIQUE/

BEAD/

MIRROR

WORK {PIL COTTON

LADIES CHOU GHAGRA

SET & DUPTATTAS)

AS PER INV. NO.

DE/EXP/358194-95 Dt. 28-9-94 RBI : DD : 008597

1360-0K

1360-0K 85.00 115600-00

IEC:NC:05880 0952 Prepaid Weight Collect Other Charges Charge 215600-00

AWB: 60-00 HAWB: 150-00 SB: 175-00

CTG: 500-00 APT: 545-00

INS: 2886-00

Total other charges Due Agent

1230-00

Total other Charges Due Carter 2886-00

FOURWAYS MOVERS PVT. LTD., NEW DELHI

Total' prepaid

119716-00 4/10/94

NEW DELHI INDIA v.k.

Signature of Issuing Carter or its Agent

055 - 2342 9276

ORIGINAL 3 (FOR SHIPPER)"

Simultaneously, a Master Air Waybill on a numbered (055 - 2342 9276) proforma printed by "ALIT ALIA" - respondent No.1 was prepared. The said Air Waybill, containing relevant particulars, is also reproduced. herein below:

"DEK 2342 9276 Shippers Name and Address: Mis. FOURWAYS MOVERS P. LTD.

39/6, 7-A COMMUNITY CENTRE,

EAST OF KAILASH, NEW DELHl/INDIA

Consignee's Name and Address

MIS D.D. Sales, 11053

62ND DRIVE, FOREST HILLS N.Y.

11375, U.S.A.

Not Negotiable Air Way Bill

Issued by Alltalia S.p.A.

055- 2342 9276

ALITALIA

Issuing Carter's Agent (Name and City)

FOURWAYS MOVERS P. LTD.

Accounting Information

NEW DELHI

Agent's IATA CODE

14-3-3775 Account No. 73279

"FREIGHT : PREPAID"

Airport of Departure (Addr. Of first Carter) and requested Routing

NEW DELHI I AZ.

By First Carter Routing & Destination

NYC AZ

A Airport of Destination Currency Declared Value for Declared Value for Customs Customs

NEW YORK

NVD

Amount of Insurance Rs.1503101-00

US$ 43698.60

B The landing information

NOTIFY: SAME AS ABOVE. PLS. INFORM CONSIGNEE IMMEDIATELY ON ARRIVAL OF

SHIPMENT AT DESTINATION. TEL. NO. (718)-896-0575. ONE ENV. CONTG. DOCS ATID.

ORIGINAL VISA (3 SETS) COPY OF INVOICE (3 SET), PACKING LIST, MALL INDIA

HANDICRAFT BOARD CERTIFICATE AND DECLARATION TO ACCOMPANY WITH THE

SHIPP.ENT

C Carter Commodity Chargeable Rate/ Total Weight Item No.

Weight Charge Nature and Quantity of Goods (Incl.

POWERLOOM COTTON

GENTS DHOTIES & INDIA

D 48

1993-0KQ

1993-0K 85.00

ITEM GARMENTS 169405-00 GRl:AG:493861

493995, 493896

HAWS NO: 0841, 0842 Prepaid Weight Collect Other Charges Charge E 169405-oo

AWB: 60-00 HAWB: 300-00 SB: 250-00

CTG: 500-00 APT: 800-00 INS:4284-00

INS: 2886-00 Total other charges Due Agent 2010-00 Total other Charges Due Carter 4284-00 F

FOURWAYS MOVERS

4/10/94

NEW DELHI INDIAv.k.

Signature of lssui ng Carter or its Agent 055 - 2342 9276

ORIGINAL 3 (FOR SHIPPER)"

On 6th October, 1994, a carting order was prepared by "ALITALIA AIRLINES" handing over the consignment to AAI, Cargo Terminal (NITC), IGI Airport, New Delhi-110037 for shipment by Flight AZ-1905. The carting order bore the

are ad idem that the said House Air Waybill as also the Master A Air Waybill were issued under the seal and signatures of Mis Fourways Movers (P) Ltd - rpspondent No.3. It is pertinent to note at this juncture itself that House Air Waybill No'.0841 had the Master Air Waybill No.055 - 2342 9276, the running Bill number printed on ALITALIA's printed bill book. Similarly, the 8

House Air Waybill No.0841 was recorded on the Master Air Waybill.

3. Since the consignment did not reach New York by the c stipulated date, Mis. D.D. Sales, the importer, cancelled the order on or around 16th October, 1994 and claimed damages from the appellant. The consignment reached the destination only on 20th October, 1994.

4. Alleging deficiency in service on the part of the respondents, in particular by respondent No.1, the appellant filed a complaint before the Commission claiming Rs.22.46 lakhs towards the value of the consignment along with interest

at the rate of 18% per annum thereon and Rs.15 lakhs as E special damages.

5. The complaint was contested by respondent No.1, repudiating the claim mad.e by the appellant. In the counter F affidavit filed by respondent No.1, while denying any negligence on their part resulting in deficiency in service, by way of a preliminary objection, it was pleaded that there was no privity of contract between them and the appellant and, therefore, the complaint was liable to be dismissed on that short ground. The G stand of respondent No.1 before the Commission was that the Air Waybill No.055 2342 9276 dated 4th October 1994, which was issued by respondent No.3 "on behalf of respondent No.1" did not mention the flight number and the date in the column

A provided for the same, since airlifting of cargo was always subject to load/space. It was reiterated that House Air Waybill No.0842 dated 4th October 1994 was neither issued by respondent No.1 nor on its behalf. Both the parties led evidence before the Commission by way of affidavits. Upon consideration B of the evidence on record, the Commission dismissed the complaint on.the afore-stated ground, namely, the appellant had no locus standi to file the plaint against respondent No.1. While holding so, the Commission observed thus:

"It is not disputed by the parties that Air Waybill (sic) alone is a contract between the parties. Firstly we see that part Ill Chapter II of Schedule II of the Act does not even remotely refer to any otherdocument except Air Waybill (sic). We find that on the Air Waybill (sic) which happens to be prima facie evidence of conclusion of contract of the receipt of Cargo and the conditions of Carriage, the name of the Shipper is shown as Fourway Movers Pvt. Ltd., O.P.

No. 3, and not that of the Complainant nor is there any evidence/indication of any such capacity of the Respondent No.3 on the Air Waybill (sic). Therefore, it will not be possible to reach in the Air Waybill (sic) what is not set out or indicated therein. It is for this reason that we tend to agree with Respondent No.1 and accept its plea that the complainant has no locus-standi to file the present complaint against Respondent No.1, the Airline. Things would have been different if at the time of booking the cargo the Respondent No.3 had issued a communication to Respondent No.1 that it was acting as agent of the complainant."

The Commission, thus, declined to go into the merits of

the complaint though it did observe that there was a lot that A could be said on merits of appellant's case.

6. Being aggrieved, the appellant - claimant is before us in this appeal.

7. Mr. Arvind Kumar <;7upta, learned counsel appearing on behalf of the appellant, submitted that the Commission committed a serious error of law and on facts in dismissing the complaint on the sole ground that the appellant had failed to c prove any privity of contract between them and the carrier i.e. respondent No.1. According to the learned counsel, it is clear from the House Air Waybill as also the Master Air Waybill No. 055 2342 9276, that both the bills were prepared contemporaneously by rspondent No.3 as respondent No.1 - D carter's agent when the consignment was handed over to them, and since the House Air Waybill records the appellant as the Shipper and respondent No.3 as the Issuing Carter's Agent, the mention of respondent No.3 as the Shipper as well as the

Issuing Carter's Agent in the Master Air Waybill is of no E consequence. It was strenuously urged that from the said Air Waybills, it is clear that respondent No.3 was acting as an agent of respondent No.1 and, therefore, the said respondent, as principal, was bound by all the acts of omission and commission of his agent. It was asserted that the Commission failed to apply its mind on t.his aspect of the matter and, therefore, erred in holding that there was no privity of contract between the appellant and respondent No.1.

8. Mr. Sanjay Gupta, learned counsel appearing on behalf of respondent No.1, on the other hand, supported the decision of the Commission and submitted that since the Master Air Waybill is the only contract of carriage between the Consignor

A and the Carter and in the said Bill, respondent No.3 having been nG.1!1ed as the Shipper and Mis D.D. Sales of New York as the consignee, respondent No.1 had no liability towards the appellant, notwithstanding the fact that the appellant had been named as the Shipper in House Air Waybill No. 0841. It was B submitted that since as per Part Ill of Chapter II of the Second

Schedule to the Carriage by Air Act, 1972 (for short "the Carriage Act"), it is the consignor who is required to make out the Air Waybill and handover the same to the carrier, it was the C responsibility of the consignor to see that all the particulars and

details of the cargo inserted in the Air Waybill are correct. It was thus, argued that respondent No.1 not being a party to the contract of carriage vis-a-vis the appellant, the said respondent cannot be held to be liable for any delay in delivery of the

0 consignment in question.

9. There is no quarrel with the proposition that as per Section 4 of the Carriage Act. Rules contained in the Second Schedule govern the rights and liabilities of carriers, E consignors, consignees, etc. Rules contained in the Second Schedule apply to all international carriage ot persons, baggage or cargo performed by aircraft for reward. Chapter II of the said Schedule enumerates the documents of carriage.

Rule 5 of Part Ill of the said Chapter stipulates that every carrier F of cargo has the right to require the consignor to make out and hand over to him a document called as "air waybill"; every consignor has the right to require the carrier to accept this document. Rule 6 provides that the air waybill shall be made out by the consignor in three original parts and be handed over G with the cargo in the manner prescribed therein. Rule 1 O makes the consignor responsible for the correctness of the particulars and statements relating to the cargo which he inserts in the air waybill. As per Rule 11, the air waybill is prima facie evidence H of the conclusion of the contract, of the receipt of the cargo and

of the conditions of carriage. In the light of these provisions, we A agree with the Commission that the "air waybill" is prima facie evidence of the conclusion of the contract; of the receipt of the cargo and of the conditions of carriage.

10. However, the question which, in our view, the Commission has failed to examine is in regard to the capacity

in which respondent No.3 was operating and had collected the cargo from the appellant for being shipped to New York. In other words, what was the nature of rlationship between respondent C No.3 and respondent No.1?

11. Section 186 of the Indian Contract Act. 1872 (for short "the Contract Act") lays down that the authority of an agent may be expressed or implied. As per Section 187 of the Contract D Act, an authority is said to be express when it is given by words spoken or written, and an authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, which may be accounted circumstances of the case. Section 188 of E the Contract Act prescribes that an agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act. Section 237 of the Contract Act provides that when an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope

of the agent's authority. There is no gainsaying that orus to G show that the act done by an agent was within the scope of his authority or ostensible authority held or exercised by him is on the person claiming against the principal. This, of course, can be shown by practice as well as by a written instrument.

12. Thus, the questior:lfor consideration is whether on the evidence obtaining in

1the instant case, can it be said that respondent No.3 had an express or implied authority to act on behalf of respondent No.1 as their agent~ If respondent No.3 had such an authority, then obviously respondent No.1 was B bound by the commitment respondent No.3 had made to the appellant.

13. Having examined the question in the light of the two C afore-extracted "air waybills", which, according to both the contesting parties, are determinative of terms and conditions of contract between them, we are of the opinion that respondent No.3 had an express authority to receive the cargo for and on behalf of respondent No.1. This is manifest from the Master Air D Waybill No.055 - 2342 9276 issued and signed by respondent No.3 on the Air Waybill printed by respondent No.1. But for the said authority, respondent No.3 could not use the Air Waybill proforma printed by respondent No.1. Though it is true that in the said Air Waybill the name. of the Shipper has been E mentioned as that of respondent No.3 but the said Air Waybill

has also been signed by respondent No.3 as the agent of the carter - respondent No.1. The other relevant particulars like, the name of the consignee, the number of the House Air Waybill ·(0841 ), etc. tally with the House Air Waybill issued by F respondent No.3 to the appellant clearly showing the name of the consignor as that of the appellant. From the said documents, it would, appear that respondent No.3 was, in fact, acting in dual capacity - one as a Shipper on behalf of the appellant and the other as an agent of respondent No.1. That being so, G respondent No.1 was bound by the acts of their agent, viz. respondent No.3, with all its results. We are of the opinion that while holding that there was no privity of contract between the appellant and respondent No.1 this vital aspect of the matter

escaped the attention of the Commission thus, vitiating its A order.

14. In view of the afore-going discussion, we have no option but to allow the appeal and set aside the impugned order.

We order accordingly and remit the matter back to the B Commission for fresh adjudication of the claim preferred by the appellant on merits. However, in the facts and circumstances of the case, there will be no order as to costs.

K.K.T.

Appeal allowed.