# NATH BROS. EXIM INTERNATIONAL LTD v. BEST ROADWAYS LTD

- **Citation:** [2000] 2 S.C.R. 538
- **Court:** Supreme Court of India
- **Decided:** 2000-03-27
- **Bench:** S. Saghir Ahmad, D.P. Wadhwa
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nath-bros-exim-international-ltd-v-best-roadways-ltd-17345
- **Pages:** 28

## Headnote

Carriers Act, 1865-Ss. 3, 4, 5, 6, 8 & 9-Liability of Common
Carrier-Goods' booked with Common Carrier at Owner's Risk for transportation-Consignment getting completely destroyed by .fire while being
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stored in .Respondent's warehouse-Carrier to take as much care as he would
have taken of his awn goods-Liable for damage or loss caused on account
of his own negligence or criminal Act or that of his agent-Even a special
contract under Sec. 6 cannot absolve the common carrier.
Words & Phrases-Owner's risk-Meaning of-In the context of CarriD
ers Act, 1865.
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Appellant booked certain goods with. the Respondent at "Owner's
Risk" for transportation from Noida (UP) to Bombay to be delivered to J &
·Co., the clearing agents of the appellant. Since the goods failed to reach
their destination, the appella~t complained to the Respondent. The Respondent informed that the goods while being stored at Bhiwandi were
completely destroyed by fire. The appellant filed a claim petition before the
National Consumer Disputes Redressal Commission alleging deficiency in
service. The National Commission dismissed the claim of the Appellant
holding the Respondent not liable as it had taken all possible care expected
of a carrier. Hence, this Appeal.
It was contended for the Appellant that the Respondent being a
'Carrier' within the meaning of Carriers Act, 1865 is liable for nondelivery of goods to the consignee at his destination; that the non-delivery is
indicative of negligence, and the National Commission was not justified in
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rejecting the claim petition on the ground that goods were destroyed by
fire; that the goods entrusted for delivery to Ms. J. & Co., at Bombay could
not have been diverted to Bhiwandi or stored there; that since the goods
were stored adjacent to another godown in which highly combustible
articles were kept; thus, the Respondent was clearly negligent; and that the
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goods were diverted at the instance of Mis J. & Co.
538
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NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. 539
It was contended for the Respondent that since the goods were
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booked at "Owner's Risk", it was not liable for their loss; that since the
goods were directed to be unloaded at Bhiwandi by the instructions of the
consignee, it could not be said that the Respondent was negligent.
Allowing the appeal and remanding the case to the National Consumer Disputes Redressal Comn'lission, the Court
B
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HELD : 1.1. The liability of carrier to whom the goods are entrusted
for carriage is that of an insurer and is absolute in terms, in the sense that
the carrier has to deliver the goods safely, undamaged and without loss at
the destination, indicated by the consignor. So long as the goods are in the
custody of the carrier, it is the duty of the carrier to take due care as he
would have taken for his own goods and he would be liable if any loss or
damage was caused to the goods on account· of his own negligence or
c~iminal act or that of his agents and servants. [553-A-B]
1.2. The provisions of Section 151 and 152 of the Indian contract Act,
1872, in effect, embody the English Common Law Rule as to the liability of
bailee. Under the English Common Law Rule, the measure of care required
of the person to whom the goods were bailed, was the same, as a man of
ordinary prudence would take of his own goods. In other words, it was a
mere matter of negligence on which the liability was hounded. If a person
was negligent and did not take as much care she would have taken of his
own goods, he would be liable in damages. [546-B-E]
Irrawaddy Flotilla Co. Ltd. v. Bugwandass, (1891) 18 lA 121, : ILR
(1891) 18 Cal. 620, referred to.
1.3. It is true that Section 158 of the Indian Contract Act speaks of
bailment of the goods for being carried on behalf of the bailor, but it is also
to be noticed that the bailment spoken of in that section in gratuitous as it
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is specifically provided that "the bailee is to receive no remuneration.
That apart, the definition of

## Text

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NATH BROS. EXIM INTERNATIONAL LTD.
v.
BEST ROADWAYS LTD.
MARCH 27, 2000
[S. SAGHIR AHMAD AND D.P. WADHWA, JJ.]
Carriers Act, 1865-Ss. 3, 4, 5, 6, 8 & 9-Liability of Common
Carrier-Goods' booked with Common Carrier at Owner's Risk for transportation-Consignment getting completely destroyed by .fire while being
C
stored in .Respondent's warehouse-Carrier to take as much care as he would
have taken of his awn goods-Liable for damage or loss caused on account
of his own negligence or criminal Act or that of his agent-Even a special
contract under Sec. 6 cannot absolve the common carrier.
Words & Phrases-Owner's risk-Meaning of-In the context of CarriD
ers Act, 1865.
E
F
Appellant booked certain goods with. the Respondent at "Owner's
Risk" for transportation from Noida (UP) to Bombay to be delivered to J &
·Co., the clearing agents of the appellant. Since the goods failed to reach
their destination, the appella~t complained to the Respondent. The Respondent informed that the goods while being stored at Bhiwandi were
completely destroyed by fire. The appellant filed a claim petition before the
National Consumer Disputes Redressal Commission alleging deficiency in
service. The National Commission dismissed the claim of the Appellant
holding the Respondent not liable as it had taken all possible care expected
of a carrier. Hence, this Appeal.
It was contended for the Appellant that the Respondent being a
'Carrier' within the meaning of Carriers Act, 1865 is liable for nondelivery of goods to the consignee at his destination; that the non-delivery is
indicative of negligence, and the National Commission was not justified in
G
rejecting the claim petition on the ground that goods were destroyed by
fire; that the goods entrusted for delivery to Ms. J. & Co., at Bombay could
not have been diverted to Bhiwandi or stored there; that since the goods
were stored adjacent to another godown in which highly combustible
articles were kept; thus, the Respondent was clearly negligent; and that the
H
goods were diverted at the instance of Mis J. & Co.
538
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NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. 539
It was contended for the Respondent that since the goods were
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booked at "Owner's Risk", it was not liable for their loss; that since the
goods were directed to be unloaded at Bhiwandi by the instructions of the
consignee, it could not be said that the Respondent was negligent.
Allowing the appeal and remanding the case to the National Consumer Disputes Redressal Comn'lission, the Court
B
'
HELD : 1.1. The liability of carrier to whom the goods are entrusted
for carriage is that of an insurer and is absolute in terms, in the sense that
the carrier has to deliver the goods safely, undamaged and without loss at
the destination, indicated by the consignor. So long as the goods are in the
custody of the carrier, it is the duty of the carrier to take due care as he
would have taken for his own goods and he would be liable if any loss or
damage was caused to the goods on account· of his own negligence or
c~iminal act or that of his agents and servants. [553-A-B]
1.2. The provisions of Section 151 and 152 of the Indian contract Act,
1872, in effect, embody the English Common Law Rule as to the liability of
bailee. Under the English Common Law Rule, the measure of care required
of the person to whom the goods were bailed, was the same, as a man of
ordinary prudence would take of his own goods. In other words, it was a
mere matter of negligence on which the liability was hounded. If a person
was negligent and did not take as much care she would have taken of his
own goods, he would be liable in damages. [546-B-E]
Irrawaddy Flotilla Co. Ltd. v. Bugwandass, (1891) 18 lA 121, : ILR
(1891) 18 Cal. 620, referred to.
1.3. It is true that Section 158 of the Indian Contract Act speaks of
bailment of the goods for being carried on behalf of the bailor, but it is also
to be noticed that the bailment spoken of in that section in gratuitous as it
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is specifically provided that "the bailee is to receive no remuneration.
That apart, the definition of 'bailment' as set out in section 148 of the
Indian Contract Act may be said to be wide enough so as to cover
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'entrustment of good' to a carrier for carriage. With the enactment of
Carriers Act, 1865, the extent of liability of the carrier has to be found in
that Act [548-B-C]
Konda Rm. Eswara Iyer & Sons v. Madras Banglore Transport Co.,
AIR (1964) Mad. 516 : (1964) 2 MLJ 181; Hussainbhai Mulla Fida Hussain
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[2000] 2 S.C.R.
v. Motilal Nathulal,. AIR (1963) Born. 208 : 65 Rom. LR 152; Vidya Ratan v.
Kota Transport Co. Ltd., AIR (1965) Raj. 200 : (1965) Raj. LW 247 : ILR
(1965) 15 Raj. 768 and R.R.N. Ramalinga Nadar v. Narayana Reddiar, AIR
(1971) Ker.197: (1971) Ker. LJ. 332: (1971) ACJ 298, approved.
Mors v. Slew, (1672) 1 Vent 190, 239 : 84 ER 601, 624, 638, cited.
1.4. Section 6 of the Carriers Act enables the common carrier to limit
his liability by a special contract. But special contract will not absolve the
carrier if the damage or loss to the goods, entrusted to him, has been caused
by his own negligence or criminal act or that of his ~gents or servants. In
that situation, the carrier would be liable for recovery of damages, the
burden of proof will not be on the owner or the plaintiff to show that the
loss or damage was caused owing to the negligence or criminal act of the
carrier as provided i~ Section 9. The carrier can escape liability only if it is
established that the loss or damage was due to an act of God or enemies of
the State. [552·A-C]
British & Foreign Marine Insurance Co. v. India General Navigation and
Rly. Co. Ltd., (1910-1911) 15 CWN 226=1LR 38 Cal. 28; River Steam Navigation Co. Ltd. v. Shyam Sunder Tea Co. Ltd., AIR (1955) Ass. 65; P.K. Kalasami
Nadar v. K. Ponnuswami Mudaliar, AIR (1962) Mad. 44 : ILR (1961) Mad.
1091; Vidya Ratan v. Kota Transport Co. Ltd., AIR (1965) Raj. 200 : (1965)
Raj. LW 247= ILR (1965) 15 Raj. 768; Kerala Transport Co. v. Kunnath
Textiles, (1983) KLT 480 and Associated Traders & Engineers ( P) Ltd. v. Delhi
Cloth & General Mills Ltd., ILR (1974) 1 Del. 790, approved.
2. "Owner's Risk" in the realm of commerce has a positive meaning.
It is understood in the sense that the carrier would not be liable for
damage or loss to the goods if it were not caused on account of carrier's
own negligence or the negligence of its servants and agents. (553-D]
Burton v. English, (1883] 12 QBD 218 : 53 LJQB 133 : 49 LT 768;
Wade v. Cockerline, (1905] 10 Comples 47; Svenssons v. Cliffe S.S. Co.,
(1932] 1 KB 490 : 101 LJKB 521 : 147 LT 12; Mitchell v. Lancashire and
Yorkshire Rly. Co., (1875] 44 LJQB : 10 QB : 256: 33 LT 161; Lewis v. Great
Western Rly. Co., (1877) 3 QBD 195 : 47 LJQB l31 : 37 LT 774; Exercise
Shipping Co. Ltd. v. Bay Maritime Lines Ltd. (The Fantasy), (1991] 2 Lloyd's
Rep. 391 (QBD); The Stranna, 1937 P 130 : [1937] 57 LI LR 231 and East &
West Steamship Co. v. Hussain Bros., (1968) 2 Lloyd's Rep. 145 Supreme
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD, I.]
541
Court of Pakistan, referred to.
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CIVIL APPJ;'.LLATE WRISDICTION: Civil Appeal-No. 1 of 1997.
From the Judgment and Order dated 2.9.96 of the National Consumer
Disputes Redressal Commission, New Delhi in O.P. No. 158 of 1994.
Sanjay Kishan Kaul and B. Chatterjee for the Appellant.
Mukul Rohtagi, S.K. Maniktala, Ejaz Maqbool, B.K. Mishra, Ms.
Aparna Jha, for M/s. Maqbool Mishra and Co. for the Respondent
The Jud~ment of the Court was delivered by
S. SAGHIR AHMAD, J. The appellant had booked a consignment of
77 packages of mulberry/natural silk garments with the respondent for being
carried from Noida (U.P.) to Bombay to be delivered to Mis Jeena & Co., who
were the clearing agents of the appellant. The consignment was to be exported
to the United Kingdom as the appellant had imported raw silk free of custom
duty for manufacture of garments, to be exported back to the United Kingdom.
The goods along with copies of Invoice No. NBI-7493 dated 9.3.1994 were
entrusted to the respondent who issued Consignment Note No.52330 dated
11.3.1994 to the appellant. Since the consignment was not delivered at
Bombay, the appellant wrote a letter to the respondent on 21st of March, 1994
mentioning the non-delivery of consignment. On March 24, 1994, the appel-·
lant received a letter dated March 19, 1994 from the respondent through which
he came to know that the consignment which was stored at a godown in
Bhiwandi was completely destroyed by fire. After serving legal notice on the
respondent and after considering its reply, the appellant filed a claim petition
before the National Consumer Disputes Redressal Commission, New Delhi
(for short, 'the National Commission'), for recovery of a sum of Rs.36,12,874.60
along with interest at the rate of 18 per cent per annum besides costs.
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The case was contested by the respondent who filed a written statement
in which it was pleaded that the goods, entrusted to them, were carried by them
with due care and were stored in a godown at Bhiwandi on the instructions · G
of the consignee, M/s Jeena & Co., who had indicated in their letter dated
14.3.1994 that since the shipment was to take place from C.F.S. Kalamboli,
the consignment may be unloaded at Bhiwandi. The respondent further
pleaded that there was no negligence on their part nor was there any deficiency
in service. It was stated that the fire had suddenly broken out in the adjacent
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[2000] 2 S.C.R.
warehouse from where it spread to the godown where the appellant's consign-
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ment was kept and, therefore, that consignment was also destroyed. The·
respondent also pleaded that the goods were carried at "OWNER'S RISK" and
since special premium was not paid, they were not responsible for the loss
caused by fire. The National Commission by the impugned judgment dated
September 2, 1996, dismissed the claim.
Learned counsel for the appellant has contended that the respondeni is
a 'carrier' within the meaning of Carriers Act, 1865 and, therefore, he is liable
for non-delivery of goods to the consignee at the destination indicated to them.
It is contended that non-delivery is indicative of the negligence on the part of
the respondent and, therefore, the National Commission was not justified in
rejecting the claim petition on the ground that the goods were destroyed by
fire .. It is also contended that the goods, having been entrusted to the
respondent, for delivery to Mis Jeena & Co. at Bombay, could not have been
diverted for being unloaded at Bhiwandi or stored there. In any case, since the
goods were stored in a godown which was adjacent to another godown in
which highly combustible articles were kept by a third person who owned that
godown, the respondent was clearly negligent in keeping the consignment in
question, which consisted of the silk garments, in that godown so as to expose
them to fire which ultimately engulfed not only the godown where the
combustible material was kept but also the adjacent godown where the
appellant's goods were negligently stored. The findings recorded by the
National Commission that the goods were diverted at the instance ofM/s Jeena
& Co. for unloading at Bhiwandi have also been assailed.
Learned counsel for the respondent has, on the other hand, contended
that the goods were entrusted to the respondent for being carried from Noida
(U.P.) to Bombay at "OWNER'S RISK" as the appellant had not agreed to
pay higher freight, as indicated in the terms of contract and was content with
the goods being carried at "OWNER'S RISK". It is contended that since the
goods were booked at"OWNER'S RISK", the respondent was not liable for
loss of those goods. It is contended that in his capacity as 'carrier', the
respondent had taken full care of the goods entrusted to him by the appellant
and since the goods were directed to be unloaded at Bhiwandi on the
instructions of the consignee, it could not be said that the respondent was
negligent in any manner. The goods were stored in the appellant's own
warehouse. It is another matter that in the adjacent godown, highly combustible articles were stored which suddenly caught fire resulting in the loss of
the appellant's goods. The outbreak of the fire was sudden and it could not
NATH BROS. EXIM INTERNATIONAL LTD. 1: BEST ROADWAYS LTD. [S. SAGHIR AHMAD, J.]
543
be controlled in spite of the services of the fire-brigade which were
requisitioned by the respondent who had duly informed the appellant not
only of the fact that the goods were diverted at the instance of consignee but
also that they were completely destroyed by fire in the adjacent godown
which had unfortunately spread to the godown where the appellant's goods
were ~tored.
Rights and liabilities of common carriers are indicated in the Carriers
Act, 1865 [for short, the "Act"]. The Preamble of the Act provides as under:-
"WHEREAS It is expedient not only to enable common carriers to
limit their liability for loss of or damage to property delivered to
them to be carried but also to declare their liability for loss of, or
damage to, such property occasioned by the negligence or criminal
acts of themselves, their servants or agents."
Section 3 of the Act provides that a common carrier would not be
liable for loss of, or damage . to, the property delivered to it if its value
exceeds one hundred rupees and it is of the description contained in the
Schedule to the Act, unless the person delivering such property to be carried,
expressly declares to such carrier the value and description thereof. That is
to say, if the value of the property, delivered to the common carrier, is of
more than hundred rupees, the person entrusting the property to the carrier,
must disclose and declare. to such carrier the value and description of that
property. The other Sections which are relevant for purposes of this case are
Sections 4, 5, 6, 8 and 9 which are set out below:-
"4. For carrying such property payment may be required at
rates fixed by carrier.- Every such carrier may require payment for
the risk undertaken in carrying property exceeding in v~lue one
hundred rupees and of the description aforesaid, at such rate of
charge as he may fix :
Proviso.
Provided that, to entitle such carrier to payment at a rate higher
than his ordinary rate of charge, he shall have caused to be exhibited
in the place where he carries on the business of receiving property
to be carried, notice of the higher rate of charge required, printed or
written in English and in the vernacular language of the country
wherein he carries on such business.
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5. The person entitled to recover in respect of property lost or
damaged may also recover money paid for its carriage. - In case of
the loss of or damage to property exceeding in value one hundred
rupees and of the description aforesaid, delivered to such carrier to
be carried, when the v·alue and description thereof shall have been
declared and payment shall have been required in manner provided
for by this Act, the person entitled to recover in respect of such loss
or damage shall also be entitled to recover any money actually paid
to such carrier in consideration of such risk as aforesaid.
6. In respect of what property liability of carrier not limited or
affected by public notice. - The liability of any common carrier for the
loss of or damage to any property (including container, pallet or
similar article of transport used to consolidate goods) delivered to him
to be carried, not being of the description contained in the schedule
to this Act, shall not be deemed to be limited or affected by any public
notice; but any such carrier, not being the owner of a railroad or
tramroad constructed under the provisions of Act XXII of 1863 (to
provide for taking land for works of public utility to be constructed
by private persons or Companies, and for regulating the construction
and use of works on land so taken) may, by special contract, signed
by the owner of s.uch property so delivered as last aforesaid or by
some person duly authorised in that behalf by such owner, limit his
liability in respect of the same."
8. Common carrier liable for loss or damage caused by neglect
or fraud of himself or his agent.- Notwithstanding anything
hereinbefore contained, eve~y common carrier shall be liable to the
owner for loss of or damage to any property (including container,
pallet or similar article of transport used. to consolidate goods)
delivered to such carrier to be carried where such loss or damage shall
have arisen from the criminal act of the carrier or any of his agents
or servants and shall also be liable to the owner for loss or damage
to any such property other than property to which the provisions of
section 3 apply and in respect of which the declaration required by
that section has not been made, where such Joss or damage has arisen
from the negligence of the carrier or any of his agents or servants.
9. Plaintiffs, in suits for loss, damage, or non-delivery, not
required to prove negligence or criminal act.- In any suit brought
.......
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD. J.]
545
against a common carrier for the loss, damage or non-delivery of
goods (including containers, pallets or similar article of transport used
to consolidate goods) entrusted to him for carriage, it shall not be
necessary for the plaintiff to prove that such loss, damage or nondelivery was owing to the negligence or criminal act of the carrier,
his servants, or agents."
Section 4 contemplates the rates fixed by the carrier for carrying the
property entrusted to it to the place indicated by the consignor. The Proviso
to this Section contemplates a still higher rate than the ordinary rate of charge
for carryi!1g the goods. The only requirement is that the carrier should have
exhibited at the place of his business a notice indicating the higher rate of
charge required for carrying the goods.
Section 5 provides that where the property entrusted to the carrier is lost
or damaged, then the owner thereof would be entitled not only to recover the
damages for the loss or damage to the property, but he will also be entitled
to recover any amount which might have been paid to the carrier as a
consideration for carrying the goods.
Section 6 speaks of unlimited liability of the common carrier in respect
- of goods, not being of the description contained in the Schedule to the Act.
It is provided that the liability shall not be deemed to be limited or affected
by any public notice.
Section 8 provides in specific terms that where any property is entrusted
to any carrier for being carried to the destination indicated by the owner
thereof, the carrier shall be liable for loss or damage caused by neglect or fraud
of the carrier or its agent.
Section 9 provides that in a suit for recovery of damages for loss or nondelivery of the goods, the burden of proof would not be on the plaintiff to
establish that loss or damage or non-delivery was caused owing to the
negligence or criminal act of the carrier, his servants or agents:
Learned counsel for the appellant has contended that under Section 151
of the Indian Contract Act, the carrier as a bailee is bound to take as much
care of the goods bailed to him as a man of ordinary prudence would, under
similar circumstances, take of his own goods. It is contended that if that
amount of care, which a person would· have taken of his own goods, is not
taken by the carrier, it would amount to deficiency in service and the carrier
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would be liable in damages to the owner for the goods bailed to him.
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Before analysing the submissions made by learned counsel for the
appellant, we may reproduce the provisions of Sections 151 and 152 of the
Indian Contract Act, 1872, hereinbelow :
"151.In all cases ofbailment the bailee is bound to take as much care
of the goods bailed to him as a man of ordinary prudence would,
under similar circumstances, take of his own goods of the same bulk,
quality and value as the goods bailed.
152. The bailee, in the absence of any special contract, is not
responsible for the loss, destruction or deterioration of ·the thing
bailed, if he has taken the amount of care of it described in section
151.".
These provisions, in effect, embody the English Common Law Rule as
to the liability of bailee. Under the English Common Law Rule, the measure
of care required of the person to whom the goods were bailed, was the same
as a man of ordinary prudence would take of his own goods. In other words,
it was a mere matter of negligence on which the liability was founded. If a
person was negligent and did not take as much care as he would have taken · •
of his own goods, he would be liable in damages. These principles of the
English Common Law Rule were also applied in this country as indicated in
the decision of the Privy Council in Irrawaddy Flotilla v. Bugwandas, (1891)
18 I.A. 121 = ( 1891) ILR 18 Cal. 620, in which, it was, inter alia, observed
as under:
"For the present purpose it is not material to inquire how it was that
the common law of England came to govern the duties and liabilities
of Common Carriers throughout India. The fact itself is beyond
dispute. It is recognised by the Indian Legislature in the Carriers' Act,
1865, an Act framed on the lines of the English Carriers Act of 1830."
The law· was also explained in Halsbury's Laws of England, Hird Edn.,
Vol. 4 at page 141 as under :
"A common carrier is responsible for the safety of the goods
entrusted to him in all events, except when loss or injury arises solely
from act of God or the Queen's enemies or from the fault of the
consignor, or inherent vice in the goods themselves. He is, therefore,
NATH BROS. EXIM INTERNATIONAL LTD. v. BEST ROADWAYS LTD. [S. SAGHIR AHMAD,!.]
547
liable even when he is overwhelmed and robbed by an irresistible
number of persons. He is an insurer of the safety of the goods against
everything extraneous which may cause loss or injury except the act
of God or the Queen's enemies and if there has been an unjustifiable
deviation or negligence or other fundamental breach of contract on
his part, he will be liable for loss or injury due to the Queen's enemies
or, it would seem, due to act of God.
This responsibility as an insurer is imposed upon a common
carrier by the custom of realm, and it is not necessary to prove a
contract between him and the owner of the goods in order to establish
liability. Failure on the part of the carrier to deliver the goods safely
is a breach of the duty placed upon him by the common law; and
therefore an action of tort lies against him for such breach, the owner
not being bound to prove any contract. Where, however, there is a
contract, liability may arise either at common law or under the
contract, and the contract may limit the carrier's responsibility.
A common carrier is liable for loss or injury caused wholly by
the negligence of other persons over whom he has no control; as
where the carrier's barge runs against an anchor wrongfully left in the
water by a stranger, or where the goods which he is carrying are
destroyed by accidental fire or by rats, or where they are stolen from
him, even though taken by force.
The general obligation of a common carrier of goods to carry the
goods safely whatever happens renders it unnecessary to import into
the contract for carriage a special warranty of the roadworthiness of
the vehicle or the seaworthiness of the vessel, for if the goods are
carried safely the condition of the vehicle or vessel is immaterial, and,
if they are lost or damaged it is necessary to inquire how the loss or
damage occurred; where however, a common carrier of goods is
seeking relief from liability by reason of one of the excepted perils
the condition of the vehicle or vessel is material in determining the
question of negligence, and if the carrier fails to prove a sufficient and
proper conveyance and los_s or damage results therefrom he will be
liable, it is unnecessary to inquire how the loss or damage occurred;
where however, a common carrier of goods is seeking relief from
liability by reason one of the excepted perils the condition of the
vehicle or vessel is material in determining the question of negliA
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gence, and if the carrier fails to prove a sufficient and proper
conveyance and loss or damage results therefrom he will be liable."
In the meantime, the Parliament intervened and the Carriers Act, 1865
was enacted with the result that the liability of a common carrier came to be
considered in the light of the provisions contained in that Act. It is true that
Section 158 of the Indian Contract Act speaks of bailment of the goods for
being carried on behalf of the bailor, but it is also to be noticed that the
bailment spoken of in that Section is gratuitous as it is specifically provided
that "the bailee is to receive no remuneration." That apart, the definition of
'bailment' as set out,in Section 148 of the Indian Contract Act may be said
to be wide enough so as to cover 'entrustment. of goods' to a carrier for
carriage. But as pointed out above, with the enactment of Carriers Act, 1865,
the extent of liability of the carrier has to be found in that Act.
The question of liability of a common carrier was considered by
various High Courts in subsequent decisions. In The British & Foreign
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Marine Insurance Co. v. The Indian General Navigation and Railway Co.
Ltd., Calcutta Weekly Notes (15) 226, the Calcutta High Court held that the
relative rights and liabilities of common carriers and those for whom they
carry are outside thelndian Contract Act and are governed by the principle
of the English Common Law as modified by the Carriers Act of 1865. A
common carrier, therefore, in India is subject to two distinct classes of
liability, the one for the losses for w~ich he is liable as an insurer, and the
other for losses for which he is liable under his obligation to carry safely.
Speakin,g generally, the first of these are insurable risks from which the
element of default is absent, the second are risks of conveyance in which
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that element is present. The Carriers Act of 1865 has in some degree
modified this position. The Court was also of the opinion that the effect of
Sections 6, 8 and 9 of the Carriers Act of 1865 is that the liability of a
common carrier for the loss of goods, not being of the description contained
in the schedule to the Act, may be limited by special contract signed by the
owner save where such loss shall have arisen from the negligence or criminal
a· act of the carrier or any of his agents or servants.
The extent of liability of a common carrier also came to be considered
by the Assam High Court in River Steam Navigation Co. Ltd. & Am: v. Syam
Sunder Tea Co. Ltd., AIR (1955) Assam 65, wherein it was laid down as
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"The common law of England regulating the responsibility of comA
mon carrier was in force at th\! time of the passing of the Carriers Act
(Act 3 of 1865) and is still in force in this country, being almost
unaffected by the provisions of the Indian Contract Act. Section 6
Carriers Act, to which I have referred earlier, enables the common
carrier to limit his liability by a special contract; otherwise the liability
which the common law imposes is there. Even the special contract
contemplated by S.6 would be of no avail where the loss or damage
has been caused by negligence or any criminal act on the part of the
carrier or his agents or servants. Where the loss or damage arises from
any criminal act of the carrier or any of his agents or servants, the
common carrier shall be liable to the owner for the loss or damage,
and S.9 of the Act relieves the plaintiff from the burden of showing
that the loss or damage or non-delivery was owing to any such
negligence or criminal act.
These sections, therefore, recognise the common law doctrine,
save in so far as the liability is limited by some special contract, as
provided by S.6. Therefore, even if it were found that the defendants
took as much care of the goods as a man of ordinary prudence would,
under similar circumstances, the defendants would be liable if the loss
was not occasioned by any act of God or the King's enemies, which,
in case of republican States, would mean the enemies of the State.
There is a third exception recognised where there is some intrinsic
vice or defect in the goods themselves or where they are of a
perishable nature. The liability of the 'carrier' is not that of a mere
bailee, as defined by Sections 151 and 152 of the Indian Contract Act.
The extent of his liability is very often described as the liability of
an insurer against all risks; but it is not a question of any contract to
insure and no contract of any insurance has to be made out. If,
therefore, the boat, ship or steamer sank on account of its having
struck upon some snag and the cargo was lost, that may be a mere
'peril of navigation', but not an act of God, and the steamer
companies would still be liable even if, under the circumstances, they
were found to have acted with reasonable care and prudence."
In P.K. Kalasami Nadar v. K. Ponnuswami Mudaliar & Ors., AIR
(1962) Madras 44, in which the earlier decision of the Privy Council in
Irrawaddy Flotilla's case (supra) was relied upon, it was held that where loss
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SUPREME COURT REPORTS
[2000) 2 S.C.R.
has occurred to cotton bales in transit, cotton being one of the goods not
mentioned in the schedule to the Carriers Act, 1865 and in respect of which
the liability of the common carrier is not limited by a special contract, the
owner of the goods in a suit against the common carrier for loss, damage,
or non-delivery of articles or goods entrusted to the carrier is not required
to prove negligence; the reason is that the liability of a common carrier is
that of an insurer. It, therefore, follows that, notwithstanding the fact that
there is no negligence on the part of the common carrier, he is liable to
compensate the owner of goods for the loss of the goods that occurred during
the transit thereof by the lorry belonging to the carrier.
In another Madras decision in Messrs Konda Rm. Eswara Iyer & Sons,
Madurai & Ors. v. Messrs Madras Bangalore Transport Co., Madurai &
Ors., AIR (1964) Madras 516 it was held as under :
'The liability of a common carrier is not limited only to negligence.
In the case of loss or damage he cannot plead that he has exercised
all reasonable diligence and care. He must be 'liable in spite of taking
all due care and precautions. As Chief Justice Hale observed in Mors
v. Slew, [1672) 1 Vent 190 at p.239 -
"And if a carrier be robbed
by a hundred men, he is never the more excused." Thus the general
principle of the common law is a common carrier is insurer of goods
which he contracts to carry and he is liable for all loss of, or injury
to those goods while they are in the course of transit unless such loss
or injury is caused by the act of God or by the State enemies or is
the consequence of inherent vice in the thing carried or is attributable to consignor's own- fault."
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It was further held as under :
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"The law is the same in India. The Carriers Act No. III of 1865 is
framed on the same lines of the English Carriers Act of 1830."
The Bombay High Court in Hussainbhai Mulla Fida Hussain v. Motilal
Nathulal & Am:, AIR (1963) Bombay 208, held that the liability of common
carriers under the Common Law and the Carriers Act, 1865 is not affected by
the provisions of the Contract Act and by law common carriers are liable as
insurers of goods and they are responsible for any injury caused to the goods
delivered to them, howsoever caused except only by act of God or action of
alien enemies. The Court further held that no proof of negligence is, in such
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a case, needed and the defendant has to establish the exception. The Assam
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and Madras decisions as also the Privy Council decision referred to above
were relied upon.
To the same effect is the decision of the Rajasthan High Court in Vidya
Ratan v. Kota Transport Co. Ltd., AIR (1965) Raj. 200.
In R.R.N. Ramalinga Nadar v. V. Narayana Reddiar; AIR (1971)
Kerala 197, it was held as under:
"A common carrier is not a mere bailee of goods entrusted to him.
He is an insurer of goods. He is answerable for the loss of goods even
when such loss is caused not by either negligence or want of care on
his part, act of God and of King's enemies excepted. 'This arises
because responsibility attached to the public nature of the business
carried on by him. He holds out as a person who has the expertise
and the facilities to conduct the business of transport; consequently
he is treated as an insurer of the goods and is answerable for its loss.
This concept as to the liability of a common carrier has been applied
in India uniformly. The rule of the Roman law as to the liability of
a carrier is different. It does not conceive of an absolute liability as·
in the English Common Law and the rule of the Roman Law has been
adopted by many States in the continent.
The extent of liability of a bailee under Ss. 151 and tS2 of the
Indian Contract Act, 1872, is different from the extent of liability of
a common carrier. A bailee is only bound to take proper care of the
goods and for loss beyond his control he is not answerable. But the
provisions of the Indian Contract Act do not govern the liability of
a common carrier nor do they override the provisions of the Carriers
Act, 1865. This question was considered by the Privy Council in
( 1891) ILR 18 Cal.620 (PC) and it was· held that notwithstanding the
provisions of the Indian Contr~ct Act, the liability of a common
carrier continues to be absolute subject to any special contract entered ·
into by him."
This decision was followed by the Kerala High Court in Kerala
Transport Co. v. Kunnath Textiles, (1983) Kerala Law Times 480.
A perusal of the decisions referred to above would indicate the extent
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of liability of a carrier.
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SUPREME COURT REPORTS
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We have already reproduced the provisions of Sections 6, 8 and 9
above. Section 6 enables the common carrier to limit his liability by a special
contract. But the special contract will not absolve the carrier if the damage
or loss to the goods, entrusted to him, has been caused by his own negligence
or criminal act or that of his agents or servants. In that situation, the carrier
would be liable for the damage to or loss or non-delivery of goods. In this
situation, if a suit is filed for recovery of damages, the burden of proof will
not be on the owner or the plaintiff to show that the loss or damage was
caused owing to the negligence or criminal act of the carrier as provided by
Section 9. The carrier can escape his liability only if it is established that
the loss or damage was due to an act of God or enemies of the State (or the
enemies of .the King, a phrase used by the Privy Council). The Calcutta .
decision in The British & Foreign Marine Insurance Co. v. The Indian
General Navigation and Railway Co.Ltd., (supra), the Assam decision in
River Steam Navigation Co. Ltd & Anr. v. Syam Sunder Tea Co. Ltd., (supra),
the Rajasthan decision in Vidya Ratan v. Kata Transport Co.Ltd., (supra), the
Kerala decision in Kerala Transport Co. v. Kunnath Textiles (supra), which
have already been referred to above, have considered the effect of special
contract within the meaning of Sections 6 and 8 of the Carriers Act, 1865
and, in our opinion, they lay down the correct law.
In the Madras decision in P.K. Kalasami Nadar v. K. Ponnuswami
Mudaliar & Ors. (supra), it was held that an act of God will be an
extraordinary. occurrence .due to natural causes, which is not the result of any
human intervention, but it was held that an accidental fire, though it might
not have resulted from any act or omission of the common carrier, cannot
be said to be an act of God. Similarly, in Kerala Transport Co. v. Kunnath
Textiles (supra), it was held that the absolute liability of the carrier was
subject to two exceptions. One of them is a special contract that the carrier
may choose to enter into with the customer and the other is the act of God.
It was further held that an act of God does not take in any and every
inevitable accident and that only those acts which can be traced to natural
causes as opposed to human agency would be said to be an act of God. ln
Associated Traders & Engineers Pvt. Ltd. v. Delhi Cloth & General Mills
Ltd. & Ors., ILR Delhi 1974 (1) 790, a fire which broke out in a bonded
warehouse where the goods were kept was held not to be an act of God and,
therefore, the carrier was held liable. This Delhi decision has been relied
upon by the learned counsel for the appellant on another question also to
which we shall presently come, to show that the agreement by which the
liability of the carrier is sought to be limited must be signed by the owner
of the goods, entrusted to the carrier for carriage.
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From the above discussion, it would be seen that the liability of a
carrier to whom the goods are entrusted for carriage is that of an insurer and
is absolute in terms, in the sense that the carrier has to deliver the goods
safely, undamaged and without loss at the destination, indicated by the
consignor. So long as the goods are in the custody of the carrier, it is the duty
of the carrier to take due care as he would have taken of his own goods and
he would be liable if any loss or damage was caused to the goods on account
of his own negligence or criminal act or that of his agent and servants.
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Learned counsel for the respondent contended that the goods were
booked at "OWNER'S RISK" and, therefore, if any loss was caused to the
goods, may be on account of fire, which suddenly engulfed the neighbouring
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ware~ouse and spread to the godown where the goods in question were stored,
the carrier would not be liable.
"OWNER'S RISK" in the realm of commerce has a positive meaning.
It is understood in the sense that the carrier would not be liable for damage
or loss to the goods if it were not caused on account of carrier's own
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negligence or the negligence of its servants and agents. In Burton v. English,
[1883] 12 Q.B.D. 218 and again in Wade v. Cockerline, [1905] 10 Com.Cas.
47, it was held that in spite of the goods having been booked at "OWNER'S
RISK", it would not absolve the carrier of its liability. and it would be liable
for the loss or dll.IIlage to the goods during trans-shipment or carriage. These
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decisions granted absolute immunity to the carrier, but they have lost their
efficacy on account of subsequent decisions in Svenssons v. Cliffe S.S. Co.,
[1932] 1 K.B. 490, which was considered in Exercise Shipping Co. Ltd. v. Bay
Maritime Lines Ltd. (The Fantasy), [1991] 2 Lloyd's Rep. 391 [Queen's
Bench Division], in which it was observed as under ~
"The question whether words such as "at charterer's risk" can
operate as an exemption clause in favour of a party otherwise liable
for negligence was decided by Mr. Justice Wright (as he then was)
in Svenssons Travaruaktiebolag v. Cliffe Steamship Co., {1931] 41
UL.Rep. 262; [1932] 1 K.B. 490.