Gujarat Urja Vikas Nigam Ltd. vs AIR INDIA LTD.

APPELLANT - Gujarat Electricity Board (in short the Board'') was the complainant before the State Commission. The Board had placed an order for purchase of 28 units of electrodes from its foreign manufacturer based at England. The value of these goods was 4704 i.e. equivalent to Rs. 2,40,187. The order was placed on 26.9.1994, and they were transferred by Air from London Heathrow Airport to Mumbai (Bombay). The Manufacturer Solartron Transducers Ltd. shipped the goods through Air India for transportation on 9.11.1994. The goods were transported by Air India Flight No. 102/09. The appellant received a telegraphic message to contact Air India Import Cell to collect the goods. When their clearing agent Babaji Shivram - Clearing and Carriers Pvt. Ltd., went to take the delivery of the goods, they were told that they have been mishandled or missing and the clearing agent was advised to lodge a claim. Air India offered a sum of US $ 120 as full and final satisfaction of the goods not delivered, which was refused by the complainant - Board. Subsequently, the complainant purchased these items from Bharat Heavy Electricals Ltd,. (BHEL) for Rs. 6,26,463.

ACCORDINGL Y , the Board filed complaint before the State Commission to pay: (a) Rs. 7,58,680 to the complainant Board as compensation for the monetary loss, it has suffered on account of deficiency of service

(b) To pay further interest of Rs. 6,32,213 @ 18% per annum since 10.11.1996 till payment (a) + (c) + (d) + (e) of paragraph No. 13)

(c) To pay Rs. 20,000, as compensation for the expenditure incurred in travelling and lodging and boarding.

(d) To pay Rs. 10,000, as compensation for future expenditure for travelling and lodging and boarding.

(e) To pay Rs. 10,000 as compensation for mental and physical harassment and agony.

THE Air India raised defence of limited liability in respect of loss of cargo under provisions of Rule 22(2) of Schedule II of the Carriage by Air Act, 1972. The complainant in this case had initially stated that the goods were lost by Air India. Subsequently they filed an amended complaint stating that goods were later on found and auctioned and were purchased by World Trade Corporation in August, 1998. The State Commission proceeded on the assumption that the goods were lost in transit. The State Commission relied upon Rule 22(2) of Schedule II to the Carriage by Air Act, 1972 and observed that in view of the well settled legal position, liability of Air India is limited to the extent specified under Rule 22(2) of Schedule II to the Carriage by Air Act, 1972. Admittedly the weight was 6 kgs. Therefore, the liability of Air India in any case cannot be beyond the sum of U.S. $ 120.

THE State Commission further observed that the Airway Bill has not disclosed the value of the subject goods in the column of declared value of cargo and declared value for customs was also written "NVD". Therefore, the complainant cannot claim the value of the goods. Accordingly, Air India is entitled to invoke Rule of limited liability.

THE State Commission further held that there was no conclusive evidence brought on record to show that goods were not lost in transit and were subsequently found. The State Commission discarded the request of the learned Counsel for Nigam to invoke Rule 25 of the Carriage Act, 1972 holding that in the absence of conclusive proof with regard to reckless negligence in handling of goods, this Rule cannot be invoked. Therefore, the complaint filed by the complainant was partly allowed and Air India was directed to pay $ 120 to the complainant together with interest at the rate of 6% from 14.12.1994 within a period of 30 days from the date of receipt of the order along with Rs. 1,000, as cost.

AGGRIEVED and dis -satisfied by the order of the State Commission, the Board/ Nigam has filed this appeal before us. Submissions of the learned Counsel for the Appellant

THE learned Counsel for the appellant, Mr. R.K. Mehta submitted that if the goods are lost in transit, the Carriage by Air Act and Rules are applicable. In this case the goods were not lost in transit but they were found after 4 years and World Trade Corporation had purchased them in an auction and offered the same to the complainant as they had found the complainant''s name and address on the package. Rule 22 of Carriage by Air Act is not applicable, as the complainant has given the invoice of the goods to be transported, which mentions in great detail the value of the goods.

AIR India Authorities did not ask the Board to pay higher charges for carriage of goods though full invoice value has been mentioned to Air India. An affidavit was filed by the complainant, extract of which is reproduced below: "I say that the short landing certificate issued by the opposite party is false since the consignment loaded on Air India on 9.11.1994 was landed at Mumbai by the opposite party. The complainant came to know of this from a letter dated 21.8.1998 of the World Trade Corporation (India) inter alia stating therein that they have received the said parcel belonging to the complainant in an excellent condition and that it was auctioned by the Customs at Mumbai since it was not claimed by the complainant. The said parcel was offered to the complainant by the World Trade Corporation (India) on terms and conditions contained in their letter dated 21.9.1998. I say that the complainant deputed Shri Mehta (Supdt. A/c.) to identify and inspect the said parcel and it was confirmed that the said parcel was the same as that which was despatched on Air India cargo on 9.11.1994. This is highly improper and irregular conduct on the part of the opposite party".

MR . Bipinkumar Dhanjibhai Mehta, Superintendent (Accounts) of the Board has stated in his affidavit, which is reproduced as under: "I say that the complainant had placed an order to purchase 28 units of electrodes for drum level hydra step for monitoring system (Part No. 459600201) (hereinafter referred to as "the said goods") from its foreign manufacturer viz. M/s. Solartron Transducers Ltd., Farn Borough, Victoria Road, Hampshire, GU 147 PQ England, under No. SP/1414/Solartron/IMP/1937/2655 dated 26.9.1994. The said goods were required for the Thermal Power Station at Gandhinagar (Gujarat). The value of the said goods was 4704 ( 4351.20 + 352.80 agent''s commission) equivalent to Rs. 2,40,187 in Indian currency. The said goods were to be transported by Air from London''s Heathrow Airport, U.K. to Mumbai on receipt of Invoice No. 18564.001 dated 12.10.1994 from the said company, the complainant established a Letter of Credit No. BAR : 86072 dated 17.10.1994 for 4351.20. Copies of the said invoice and the Letter of Credit were furnished to the opposite party by the said company while shipping the said goods at London. Agent''s commission was paid in Rupees. I crave leave to refer to and rely upon the said purchase order, invoice and the Letter of Credit, when produced. I say that in the said airway bill issued by the opposite party the particulars of the Letter of Credit were given and it was mentioned that it covered the full invoice value of despatches. I say that about two years after the above complaint was filed, the complainant received a letter dated 21.8.1998 from M/s. World Trade Corporation, 3/18, The Malad Co -operative Housing Society, Podar Park, Malad (E), Bombay -97, informing that they have received the consignment of the said goods belonging to the complainant in an excellent condition in auction sale from the Customs at Mumbai. I was deputed to visit Mumbai to identify and inspect the said parcel/consignment. I had visited the office of M/s. World Trade Corporation at 14.00 Hrs. on 21.9.98 for inspection where Mr. Sanjay Ajmera was present. I say that the said parcel received by the said Corporation was in a good condition and the label attached thereto gave the details of the shipper, complainant''s order No. and Date, item, quantity, airway bill and destination. I had verified and found that the packets contain in the aforesaid parcel was having the same materials i.e., Electrodes for which the Board had placed the order on M/s. Solartron.

ACCORDINGL Y , he submitted that Air India is reckless and committed gross negligence in handling their consignment. He further quoted from the affidavit filed by Superintending Engineer (Materials) of the GEB, Shri Ishwarbhai Laldas Patel, wherein he has stated as follows: "According to information available with the complainant before the consignment has safely landed Mumbai. It is due to the gross negligence and administrative drawbacks that the said consignment was sold out by way of an auction."

THE learned Counsel further quoted extracts from the written reply of Air India as under: "The opposite party repeats that the material was short landed. It is submitted that the opposite party did not conclude that the said goods were not claimed by the complainant. The opposite party further submits that it is not aware as to why the said goods to be received by World Trade Corporation were auctioned by the customs. The opposite party says that when an aircraft lands, the cargo is off -loaded and taken to the concerned warehouse, where it is physically tallied with the cargo manifest. If any particular consignment is not found, it is sought to be traced by making a physical search and also by sending tracer messages to other stations and even to other airlines if necessary. If the consignment still cannot be found, it is treated as lost or short landed and a short landing certificate is issued on request. The opposite party says that this procedure would have been followed in the present case as well, and since the complainant''s consignment could not be found, a short landing certificate was issued on request. Further, it is significant that the complainant states that it was informed by World Trade Corporation that the parcel allegedly belonging to the complainant was auctioned by the Customs in Mumbai. The opposite party says that from time -to -time the Customs Authorities direct the opposite party to round up unidentifiable and unclaimed/unconnected cargo and transfer the same to the Airport Authority of India (AAI) for the purpose of being auctioned under the control of the Customs Authorities. Therefore, unidentifiable or unclaimed/unconnected cargo is to be transferred for the purpose of auctioning. Hence, prior to auctioning, the cargo would be checked by both the opposite party and the AAI to confirm that it is unidentifiable or unclaimed/unconnected cargo. In the circumstances, it is very difficult to believe that neither the opposite party nor AAI were able to identify the alleged parcel received by World Trade Corporation as being the one belonging to the complainant, yet almost four years after the parcel is supposed to have landed in Mumbai, World Trade Corporation (ostensibly without knowing the background of the case) were able to clearly identify the parcel as being the one belonging to the complainant. Furthermore, under Section 48 of the Customs Act, the person having custody of imported goods is entitled to dispose off uncollected cargo after the expiry of 30 days from its arrival or within such longer time as the proper officer (of customs) may allow; after giving notice to the importer of the cargo and with the permission of the proper officer. Lastly, it is very strange that Shri Mehta (Supdt. A/c.) was allegedly able to confirm that the parcel offered by World Trade Corporation to the complainant was the same as that which was dispatched on 9th November, 1994, since obviously and admittedly neither said Shri Mehta, nor any one else in the complainant''s organization had ever seen the said parcel. The opposite party denies any negligence on its part".

THE learned Counsel submitted that there are three clear -cut errors in the judgment, i.e.: (i) We are inclined to proceed on the assumption that the subject goods were lost in transit;

(ii) It is material to note that in the Invoice the complainant had not disclosed the value of the subject goods in the column of declared value of cargo and declared value for customs the complainant has written "NVD". Therefore, the complainant cannot claim the value of the goods. O.P. is, therefore, entitled to invoke Rule of limited liability;

(iii) There is no conclusive evidence brought on record to show that goods were not lost in transit and were subsequently found. Submissions of the learned Counsel for the respondent.

THE learned Counsel for the respondent submitted that goods surfaced after four years. In this case Rule 22 alone is applicable and Rule 25 is not applicable. Loss of goods had taken place in 1994, which were recovered in 1998. He relied upon the judgment of the National Commission in the case of The Manager, Air India Ltd. and Anr. v. India Everbripht Shipping and Trading Co., II (2001) CPJ 32 (NC), wherein it was held that "in the absence of even allegation in the complaint that there was any wilful misconduct or the damage resulted from an act or omission of the Air Carrier (opposite parties) done with intent to cause damage or recklessly and with the knowledge the damage would probably result, it is difficult for us to hold that Rule 25 (of either the First Schedule or the Second Schedule) would apply. We may also refer to a few judgments cited at the Bar".

HE submitted that in a catena of judgments, it has been held that where the value is not indicated, the compensation payable by an Airline is limited to $ 20 per kg. It was the duty of the customs; if they had identified the luggage they should have informed the consignee. Findings:

IN this case, it is useful to look into the list of dates and events, most important of which are given below: Date Events 26.9.1994 Gujarat Electricity Board (predecessor of the Nigam) placed an order for purchase of 28 units of Electrodes for drum level, hydra -step for monitoring system from M/s. Solartron Transducers Ltd., England. The value of the said goods was UK 4704 equivalent to Rs. 2,40,187.

9.11.1994 M/s. Solartron Transducers Ltd. shipped the subject goods through Air India for Air transportation to Mumbai vide Airway Bill dated 9.11.94. At the time of booking of the said consignment with Air India, copies of invoice dated 12.10.1994 for UK 4704 and the Letter of Credit dated 17.10.94 for UK 4351.20 were duly made available to Air India. Even though the value of the goods was thus brought to the notice of Air India, Air India did not reflect the said value in the Airway Bill and instead mentioned "NVD" in the column "declared value for carriage".

14.12.1994 A telegraphic message was received by the Nigam from M/s. Solatron Transducers Pvt. Ltd. advising them to contact Air India Import Cell to collect the goods in question. The clearing agent was informed by Air India that the goods in question have been short -landed with Air India. Accordingly, the clearing agent lodged a claim before Air India for Rs. 2,40,187.

11.3.1995 Air India issued a certificate to the effect that the consignment in question has been short -landed at Mumbai ex -flight Al 102 dated 10.11.1994.

23.10.1998 Air India acknowledged the receipt and informed the Nigam.

21.11.1998 and GEB (Nigam) told Air India that it proposes 27.11,1998 to buy articles from World Trade Corporation as rates offered were competitive and requesting Air India to advise if it had any objection to the same.

21.12.1998 Air India responded stating that it is not in a position to do anything pending the litigation subsequently, GEB filed an amendment application.

THE controversy centers around Rule 22(2) of Schedule II and Rule 25 to the Carriage by Air Act, 1972, which are quoted below: "Rule 22(2). In the carriage of registered baggage and cargo, the liability of the carrier is limited to a sum of 250 francs per kg. 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 in 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. Rule 22(2)(b) in the case of loss, damage or delay of part of registered baggage or cargo, or any object contained therein, the weight to be taken into consideration in determining the amount to which to be taken into consideration in determining the amount to which the carrier''s liability is limited shall be only the total weight of package or packages concerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects the value of other packages covered by the same baggage check or the same Airway Bill, the total weight of such package or packages shall also be taken into consideration in determining the limit of liability".

"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."

THIS case is not a simple case of loss of goods in transit or short landing of goods. It is a case of wilful negligence on the part of Air India or its servants or agents. This is proved by the fact that after couple of years of scheduled date of arrival, the goods surfaced as they were bought in an auction by the World Trade Corporation, on the package of which Corporation found the name and address of the complainant on the baggage.

IN the column Nature and Quantity of Goods'', it is clearly mentioned as follows: "Covering full invoice value of despatches purporting to be spares for electrodes for drum level Hydrastep from U.K. Airport to Bombay (India) by Air."

THIS Airway Bill is not signed either by the Nigam or its authorized agents. Further, it is not disputed that the Air India were given copies of the invoices indicating full value of the goods transported. It is not the case of Air India that they had asked the complainant to pay any higher amount towards the transportation of these valuable goods. The affidavits filed on behalf of the complainant relating to this aspect as well as the fact of offer received from World Trade Corporation who on finding purchased the goods in an auction to be delivered by Air India to the complainant are not effectively rebutted or controverted by Air India.

FURTHER letter dated 21st August, 1998, addressed to the Board by World Trade Corporation (India) reads as follows: "I would like to inform you that we have received one parcel actually belonging to your organization. This particular parcel was not cleared by your organization and it has been auctioned by the customs at Mumbai. The parcel in excellent conditions and its details available as per the label attached to the Box and material inside is as follows: SHIPPER Solartron Transducers Ltd. 124, Victoria Road, Farnborough Hampshire, GUM 7PW, England. Item HYDRASTEP. Qty. 26 Pcs. Airway Bill No. 098 4627 6244 Burlington Air Express. Destination Bombay. As this parcel belongs to your company we would like to offer you first and in case if you have any interest in the same, please do not hesitate to call/fax to us and we shall be happy to deal with your esteem organization"

THE follow up letter by World Trade Corporation to SGEB dated 21st September, 1998, reads as follows: "This has reference to your letter No. SP/1/1414/Solartron 2842 dated 1.9.1998 and subsequent visit by your Mr. Mehta to our office we has identified and inspected the material shipped by M/s. Solar Transducers Ltd. UK. As requested by you please find enclosed our quotation for the same along with the terms and conditions - Sr. No. Particulars Quantity Total value Rs. 1. Shipped by: Solartron Transducers Ltd., 124, Victoria Road, Farnborough Hampshire,GUM 7PW, England one lot of 26 pcs. Item HYDRASTEP 2,30,000.00 Total 2,30,000.00 They had given quotation for Rs. 2,30,000 (copy of which is also kept in the file)."

IN this case the complainant has alleged that there was gross negligence on the part of Air India. In the original complaint, they have submitted that Air India was guilty of deficiency in service. The judgment in the case of The Manager, Air India Ltd. and Anr. v. India Everbright Shipping and Trading Company (supra), it was mentioned that as there was no specific allegation that there was wilful negligence on the part of the carrier with the intent to cause damage or recklessness, Rule -25 would not be applicable.

SUBSEQUENT LY , this Commission in Egypt Air v. Sai Leelavathi, II (2006) CPJ 43 (NC), it was held that there was a loss of baggage during transit and Schedule II Rule 22 of Carriage by Air Act, 1972 would be applicable. In Air France v. Sonali Arora and Anr., II (2008) CPJ 202 (NC), R.P. No. 2566 of 2003, this Commission has held as under: "Sonali Arora bought Air France air tickets on 27.4.1998 for herself and her two minor daughters from Air France World Ways Travels Private Ltd., Jalandhar who are the agents of Air France for going on a trip to France, England and USA. On her return journey to India starting on 30.6.1998, she first flew for London via Paris and landed at the Heathrow Airport in London. On her way back to India from London on 4.7.1998, the Air France staff at the airport did not allow her to carry one of her handbags inside the plane. She had carried this handbag, throughout her journey as it contained valuable articles like camera, photographs, souvenirs, etc. A complaint to the District Forum claiming Rs. 4,00,000, as compensation was dismissed on the ground of lack of jurisdiction to try in the District Forum since the cause of action did not arise in Jalandhar. On her appeal to the State Commission, it was held that not allowing the bag with valuables is deficiency in service and Air France was directed to pay Rs. 50,000 as compensation and Rs. 50,000 as damages along with Rs. 2,000 as cost. The State Commission returned the findings based on affidavits filed by both the parties and arrived at the conclusion that Sonali Arora, was not allowed to carry on handbag, which was within the stipulated weight inside the plane and had to leave it behind. Air France argued that their liability was limited to equivalent of USD 400 for hand baggage and that the State Commission wrongly awarded Rs. 1,00,000 to Sonali Arora.

THE National Commission dismissed the revision petition filed by Air France after observing that Sonali Arora could not hand over her bag to her friend at the airport as she had left by the time baggage was to be checked in. Compensation of Rs. 1,00,000 was given not only for the loss of the baggage; it was also for the rude behaviour meted out to Sonali Arora by the airlines staff and for the loss of souvenirs and photographs of which the value cannot be assessed in monetary terms. The Commission dismissed the revision petition of Air France. The Supreme Court also confirmed this decision.

ACCORDINGL Y , we hold that there was gross and willful negligence on the part of Air India. Therefore, we partly allow the appeal and set aside the order of the State Commission. The Air India shall pay Rs. 2,40,187 with 9%p.a. interest from 10.11.1996 till the date of payment along with Rs. 10,000 as cost to Gujarat Urja Vikas Nigam Ltd. Appeal partly allowed.