Damodar Savailal vs Bombay Steam Navigation Co. Ltd.

Chhatpar, J.—The above revision applications have been referred to the Full Bench by my order passed silting as a Single Judge, as I was of the opinion that the cases involved an important question and a decision of the learned Chief Justice of this Court in -- Western India Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co. Ltd. Civil Revn. Appln. No. 160 of 1950 (Sau.) on the same question was open to doubt.

The applicants had filed two suits against the opponent Steamship Company for recovery of compensation or damages for short delivery of goods carried under bills of lading containing similar conditions. The goods were shipped from Bombay and arrived at Bhavnagar by Steamship ''Kalavati'' on 04-02-49. The applicants are consignees of the goods. The bills of lading begin with the following clause:

All the terms, provisions and conditions of the Indian Carriage of Goods by Sea Act. 1925 and the Schedule thereto are to apply to the contract contained in this Bill of Lading, and the Company are to be entitled to the benefit of all privileges, rights and immunities contained in such Act. and the Schedule thereto as if the same were herein specially set out. If anything herein contained be inconsistent with the said provisions, it shall, to the extent of such inconsistency and no further, be null and void.

It is hereby expressly further agreed, in pursuance of the provisions of Article 7 of the Schedule to the said Act, that the carriers'' liability, prior to the loading on and subsequent to the discharge from the ships, shall be governed by the conditions and exceptions of this Bill of Lading.

Thereafter are provided the conditions under which the goods were received for shipment. Condition 19 reads as under:

In all cases not provided for by Clause 6, Art. III of Carriage of Goods by Sea Act XXVI of 1925, notice in writing of every claim of whatever kind or nature (including claims for refund of excess paid) shall be given to the Company within fourteen days of the date when the goods should have, been delivered. In default the Company shall be exempted from liability for such claim or claims.

One of the pleas raised by the Defendant Company in the two cases was that the Plaintiffs had failed to give notice of claim within fourteen days as required by condition 19 reproduced above and therefore the Company was exempted from liability. Now it is admitted by the Plaintiffs that notice of claim was not given within fourteen days. The trial Court tried the issue regarding want of notice as a preliminary issue and gave finding against the Plaintiffs and dismissed the suits. The Plaintiffs thereafter filed the revision applications which were referred by me to the Full Bench.

The Indian Carriage of Goods by Sea Act, 1925, was brought into force in the State of Saurashtra on 01-05-49, but it was applicable to the then Province of Bombay where and when the contract of shipment was made. It is therefore not disputed by the learned Advocates that the bills of lading would be governed by this Act. I have, therefore, to interpret condition 19 of the bills of lading and to what extent it is valid.

Under the common law, a ship owner who carries goods is in the same position as an insurer of their safety with certain exceptions such as against act of God, King''s Enemies, impossibility of performance etc. But the ship owner is entitled to contract out of these liabilities to any extent subject only to the general rules as to legality and public policy which are applicable to all contracts. Before the Carriage of Goods by Sea Act was applied, ship owners used to freely avail themselves of this right and introduce in the contracts of affreightment exceptions as to liabilities and stipulations for their benefit which were numerous and drastic. The Carriage of Goods by Sea Act was enacted consequent on the recommendations of the International Conference on Maritime Law which met at Brussels in 1922. The Act restricts the right of ship owners to contract themselves out of liabilities except as provided by the Act. Section 2 of the Indian Act reads as under:

Subject to the provisions of this Act, the rules set out in the Schedule (hereinafter referred to as the ''Rules'') shall have effect in relation to and in connection with the carriage of goods by Sea in ships carrying goods from any port in British India to any other port whether in or outside British India.

In the Schedule, to the Act are included the rules relating to the bills of lading under the heading "articles". The third article which is relevant to consider provides for responsibilities and liabilities. Rule 6 under this article reads as under:

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage or, if the loss or damage be not apparent within three days, such removal shall be prima facie evidence of the delivery by the carrier of goods as described in the Bill of Lading.

The. notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods.

And Rule 8 reads as under:

Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in these rules, shall be null and void and of no effect.

A benefit of insurance of similar clause shall be deemed to be a clause relieving the carrier from liability.

Article 4 lays down rights and immunities. Article 5 provides for surrender of rights and immunities by the carrier as also for increase of responsibilities and liabilities. Article 6 permits special conditions to be introduced in certain contracts of carriage and in such case a bill of lading is not issued but only a receipt is given containing the special conditions. Article 7 which is also relevant to consider, reads as under:

Limitations on the Application of the Rules: Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation or exemption as to the responsibility and liability of the carrier of the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by Sea.

The question involved is as to the. correct interpretation of the condition 19 in the bills of lading and its validity. It was argued on behalf of the Plaintiff''s that the condition was void in view of Rule 8 of Article 3, while the learned Advocate for the steamship Co., contended that it did not come within the prohibition of the Rule. A further contention was raised on behalf of the Steamship Co., that the condition came within Article 7. In support of his contentions the learned Advocate of the Company relied upon a judgment of this Court delivered by Shah C.J. sitting as a Single Judge in Western Indian Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co. Ltd. Civil Revn. Appln. No. 160 of 1950 (Sau.), wherein the meaning and the validity of the same condition in the bill of lading was considered. It was a case of damages for short delivery. The learned Chief Justice while holding that the Indian Carriage of Goods by Sea Act 1925 was applicable held that the condition was not inconsistent with Rule 8 of Article 3 and therefore valid. His observation on this point are as under:

The next contention urged for the applicant, and that is the main contention, is that condition 19 of the bill of lading was ultra vires inasmuch as it was repugnant to and contravened the requirements of Article III, Clause (6) of the Schedule to the Indian Carriage of Good by Sea Act. The said clause provides that unless notice of loss or damage and the general nature of such loss or damage is given in writing to the carrier or his agent, here the Defendant Company, at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading, and it further provides that in any event the. carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods, or which is important, the date when the goods should have been delivered. Clause (6) thus contemplates the giving of notice though it is not obligatory, and if the notice is not given before or at the time of taking delivery of the goods or if the loss or damage is not apparent within three days, the presumption will by that the goods were delivered in accordance with the bill of lading. That notice relates to the short delivery or damage to the goods and has no reference to the claim for the value thereof, and the notice not being obligatory the consignor or his agent could still sue for the value of the goods provided the suit is brought within one year of the date when the goods should have been delivered. Condition No. 19 of the bill of lading contains an altogether different provision, viz., that in all cases not provided for by Clause (6) of Article III of the Act, notice in writing of every ''claim'' of whatsoever kind or nature shall be given to the Company within fourteen days of the date when the goods should have been delivered, and in default the Company shall be exempted from liability for such claim. The notice under this condition relates to the making of a claim and is different from the notice under Clause (6) of Article III which relates to the loss as for instance short delivery or damage to the goods. Condition No. 19 has thus nothing to do with Article III Clause (6) and in fact it does not apply to cases provided for by the said clause, and no question of its being inconsistent with the said clause and on that account of its being ultra vires, therefore arises. The said condition does not also seek to exonerate the Company from liability altogether, but it merely prescribes the time limit within which the claim is to be made by way of notice. Such a provision is not inconsistent with Clause (8) of Article III which prohibits any agreement in a contract of carriage relieving the carrier from liability for loss or damage altogether, and says that such an agreement shall be null and void and of no effect. Condition No. 19 as I said does not attempt to relieve the Company from liability for loss or damage altogether, and it does not therefore contravene Clause (8) of Article III. It is open to the Company to prescribe the conditions under Article. VII of the Schedule as to the responsibility and liability of the Company for the loss or damage to the goods carried and as the conditions of the bill of lading have been framed in pursuance of the said Article VII of the Schedule, they are quite valid.

The learned Advocate also relied upon the last portion of the judgment of the learned Chief Justice above reproduced in support of his second contention that the condition 19 came within the purview of Article VII. On reading Article VII, it is quite clear that it applies only to cases where there is a question of liability for loss or damage to goods occurring prior to loading on and subsequent to the discharge from the ship. In the present cases, it is not pleaded by the. Defendant Company that the loss arose either before loading on or subsequent to the discharge from the ship. Therefore Article VII has no application.

The learned Advocate for the Company also relied upon a decision of the Travancore Cochin High Court in the case of -- Orient Ship Supply Co., Ltd. v. Kalamarsand Co. Steamship Co. AIR 1951 TC 1. In this case there was no question of interpretation of a condition 19 in the present bills of lading and evidently that case proceeded on the general principles of the law of Contract and has therefore no application to the circumstances of the present cases.

The learned Advocate for the applicants Plaintiff''s has strenuously argued that the condition. 19 contravenes Rule 8 of Article III inasmuch at it relieves the carrier or ship from liability for loss or damage otherwise than as provided in the rules. Rule 6 of Article III provides for giving of notice in certain events and states that the carrier or the ship will be discharged from all liability in respect ex loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. He argues that the curtailment of the liability by the want of notice of claim under condition 19 is a provision which is otherwise than as provided in Rule 6 of Article III and therefore is null and void and of no effect as specifically laid down by Rule 8 of Article III.

In my opinion, there is some confusion in the very reading of the condition 19. This condition begins with the words.

In all cases not provided for by Clause 6, Article III of Carriage of Goods by Sea Act XXVI of 1925, notice in writing etc., etc.

The opening words clearly exclude cases which fall within clause or Rule (6) of Article III from the application of the condition.

Now let us see whether the present cases of damages for short delivery fall within Rule (6). In my opinion they do. Article III lays down the responsibilities and liabilities of the carrier. Rule 1 of this Article enjoins the carrier to exercise due diligence to make the ship seaworthy and provide the necessary equipment etc.; Rule 2 lays down the duty of the carrier to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods subject to the provisions of Article IV. This rule is important, as it lays down the duties and responsibilities and in what cases the carrier can get immunities which are mentioned in Article IV. Rule 3 requires the carrier to issue a bill of lading with the particulars mentioned in the rule. Rule 4 makes the bill of lading prima facie evidence of the receipt of the goods by the carrier. Rule 5 refers to the guarantee given to the carrier by the shipper about the description of the goods and at the same time indemnifies the carrier from all loss or damages resulting from inaccuracies in the particulars given. Then follows the Rule 6 reproduced above laying down the necessity of a notice of loss or damage and consequences of failure to do so followed by the provision that the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. So that every case of loss or damage arising from failure to discharge the goods from the ship, to use the language of Rule 2, which in most cases would be failure to deliver goods would come within the purview of Rule 6 and would not, therefore, be governed by condition 19 of the bill of lading under consideration, which necessitates a notice of claim in cases not provided by Rule 6. The learned Advocate for the Company has argued that the present cases do not come within Rule 6, as there is no provision in the rules under Article III for giving a notice of claim as distinguished from notices of loss or damage. Therefore the condition 19 which makes such a provision cannot be excluded. In my opinion this argument is fallacious. What we have to consider is which are the cases excluded from the operation of the condition by its opening words "in all cases not provided for by Clause 6, Art. III" and whether the present cases do come within such excluded cases. Cases dealt with by Rule 6 are those of loss or damage while the goods are on board the ship and the procedure for giving notice etc., is specifically provided in this rule. All cases of loss or damage which are within the purview of Article III i.e., those, arising out of the failure to carry out the responsibilities and liabilities laid down particularly by Rules 1 and 2 must come within the applicability of Rule 6 of Article III. In short, all cases of loss or damage occurring after loading and before discharge come within Rule 6 and hence, excluded from the condition 19 which seems to apply to cases such as claims for refund of excess freight paid and claims for loss or damage occurring before loading or after discharge as to which the carrier is entitled to restrict his liability under Article VII. This interpretation is supported by the wording of the condition particularly the clause within parenthesis in the condition and the opening words of the bill of lading making reference to Article VII, I am therefore clearly of the opinion that the condition 19 has no application to the present cases under consideration.

On the assumption that the condition 19 applies to a case of loss or damage under all circumstances, then such a condition would be repugnant to the specific provision of Rule 8 of Article III reproduced above which prohibits any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability ''otherwise than as provided in these rules''. The rules provide for conditions under which the ship is discharged from liability in respect of loss or damage. The words "otherwise than" imply entire exclusion and any lessening of the liability by whatever method except as provided by the rule shall be null and void. As observed in Halsbury Laws of England Vol. 30 at p. 678, while referring to Rule 8, the Act and the rules contain certain exceptions and stipulations in favour of the owner which constitute his maximum protection. The learned Advocate for the Company has argued that what is contemplated by Rule 8 is an exemption or lessening of liability arising from negligence, fault or failure in the duties and the obligations imposed on the carrier in this Article do not embrace a clause which makes provision of giving notice of claim on the failure of which the liability is to cease. But an exemption of liability for want of notice is nevertheless a provision relieving the carrier from liability for loss or damage if the notice of claim relates to loss or damage. Therefore discharge from liability for want of notice would come within the prohibition of Rule 8 and therefore being otherwise than as provided in the rules is null and void and of no effect. I would, however, adhere to my first ground discussed above that the condition 19 of the bills of lading has no application to the present cases.

The result is that I set aside the orders of the lower Court in the two cases and remand the cases to the trial Court to dispose them in accordance with law. In my humble opinion, the case in -- Western India Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co. Ltd. Civil Rev. Appln No. 160 of 1950 (Sau.) was wrongly decided in holding that the condition 19 applied. The costs of these Revision Applications will abide by the result of the cases.

Shah C.J.

I have reconsidered the questions arising in these applications in the light of the arguments addressed to. us and have reached the following decision. Article III of the Schedule to the Indian Carriage of Goods by Sea Act prescribes the responsibilities and liabilities of the carrier and paragraph 2 thereof says that subject to the provision of Article IV the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. Article IV prescribes the rights and immunities of the carrier. The first clause of paragraph 6 of Article III says that unless notice of the loss or damage is given to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. The effect of the above clause is that if the notice contemplated therein is not given, it will be taken prima facie that the goods were duly delivered and the onus will lie on the party alleging the loss or damage to prove it. But the clause is not material for the purpose.

The third clause of the said paragraph, which is material, provides that in any event the carrier shall be discharged from all liability in respect of loss or damage unless a suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; which means that the duration of the carrier''s liability is limited to one year. Now the Defendant company has incorporated in the bill of lading condition No. 19 which says that in all cases not provided for by Clause 6, Article III of the Indian Carriage of Goods by Sea Act XXVI, notice in writing of every claim of whatsoever kind or nature (including claims for excess charges paid) shall be given within fourteen days of the date when the goods should have been delivered. In default the company shall be exempt from liability for such claim or claims. The question arising for consideration therefore is whether this condition will apply to the present case. The claim here is in respect of loss occasioned by short delivery, which is obviously provided for by paragraph 6 of Article III and that being so, by virtue of the opening words of condition No. 19 the case is taken, out of the operation of the said condition. It follows that to cases not provided for by paragraph 6 of Article III the said condition will apply. It will also apply to claims in respect of loss or damage to goods prior to the loading on and subsequent to the discharge from the ship, viz., cases governed by Article VII of the Schedule. If the company wished to rely upon condition No. 19 of the Bill of Lading, then it was for the company to allege and prove facts taking the case out of the ambit of paragraph 6 of Article III or to bring it within the pale of Article VII. The company has not pleaded any such case and the obvious conclusion therefore is that condition No. 19 does not apply to the present case and the omission to give a notice under the said condition will not vitiate the Plaintiff''s claim. It follows that the suit is not barred on that account.

In this view it is unnecessary to consider whether condition No. 19 is repugnant to the provisions of paragraph 8 of Article III, but since the point has been argued before us, I propose to deal briefly with it. Under the said paragraph 8 any clause, covenant or agreement in a contract of carriage relieving the carrier from liability for loss or damage to or in connection with the goods arising from negligence, fault or failure in the duties and obligations provided in Article III or lessening such liabilities otherwise than as provided in the Rules shall be null and void and of no effect. Therefore it is not open to the carrier, by an agreement etc., to either exempt itself from such liability or to lessen its liability, in respect of loss or damage arising in the manner above said and the protection sought in this way will be otherwise than as provided in the Rules. Condition No. 19 in so far as it exempts the carrier in the event of a notice not being given within fourteen days when the goods should have been delivered amounts to relieving the carrier of the liability otherwise than as provided for in the rules, and the said condition is therefore null and void and of no effect. However, where the loss or damage does not arise from negligence, fault or failure in the duties and obligations provided by Article III, paragraph 8 of Article III will not apply and in such cases any clause, covenant or agreement in the contract either relieving the carrier or lessening his liability will not be hit by paragraph 8. Then again, in cases covered by Article VII the carrier can by an agreement, condition etc., exempt himself from the responsibility and liability for loss or damage arising prior to the loading on and subsequent to the discharge from the ship and such an agreement or condition will not be hit by paragraph 8 of Article III. It is not the case of the company that the present case is governed by Art. VII or that the loss was not due to negligence etc., during carriage and they cannot therefore rely on condition No. 19 of the Bill of Lading.

For these reasons, therefore, I agree that these revision applications should be allowed and the suits remanded to the trial Court for disposal according to law. Costs of the applications to abide the result of the suits.

Baxi, J.

I agree with the order proposed by my learned brother Chhatpar, J.

Para 6 speaks of loss or damage to goods without specifying or qualifying the nature of the loss. Therefore loss by short delivery is prima facie included in this paragraph. But Art. VII enables the carrier to relieve himself from or otherwise limit his liability in respect of loss to goods prior to their loading and subsequent to their discharge by an agreement. To such cases condition 19 would apply and they will not be governed by para 6 of Art. III. But the carrier has to show that the loss occurred under circumstances mentioned in Art. VII.

In all other cases loss to goods by short delivery would be prima facie covered by para 6 of Art. III and it is the carrier''s duty to show how the loss is otherwise excluded from the provisions of this para. The Defendant Co. has not even alleged that their case is governed by Art. VII or that it is otherwise not provided for by para 6 of Art. III and therefore they are not entitled to rely on the condition.

I would prefer to confine my decision to the above ground alone. But the question of the validity of condition 19 of the bill of lading as repugnant to the para 8 of Art. III has been discussed and I shall make a few observations on this aspect of the case also. Para 8 will apply to loss occasioned by the failure on the part of the carrier to carry out his duties and obligations under Art. III. Now if the loss was occasioned under circumstances which brings the case within Art. VII, the carrier may by agreement limit his liability and such agreement is not hit by para 8. If the loss occurred in circumstances other than those mentioned in Art. VII prima facie it falls within para 6 of Art. III and the condition 19 of the bill of lading will not apply to it because that condition excepts cases falling within para 6. If however cases of loss of goods occurring under circumstances mentioned in para 8 of Art. III can be conceived which do not fall under Art. VII or para 6 of Art. III, the condition 19 of the bill of lading making the duration of the liability beyond 14 days conditional upon a notice would be hit by para 8 and would not be of any effect. But this question may well be considered after the Company proves the circumstances which bring the case under Art. VII or take it out of the provision of para 6. These circumstances will enable the Court to judge whether the condition is hit by para 8. In the cases before us the Defendant Co. has not shown how the Art. III applies to the case or how the case is not provided by Clause 6 of Art. III. Condition 19 therefore does not apply to it and it is not necessary to decide the abstract question of the validity of the condition in the absence of facts showing the circumstances under which the loss occurred.

I agree that the decision given in -- Western India Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co. Ltd. Civil Revn. Appln. No. 160 of 1950 (Sau.) that condition 19 of the bill of lading is valid because it is not inconsistent with para 8 of Art. III is not correct. An agreement which limits the duration of the carrier''s liability to 14 days unless notice is given is hit by para 8 of Art. III provided other conditions exist which attract the operation of that paragraph.