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A Dissertation on

Limitation of Liability
within Land, Sea, Air
and Multimodal

The following Dissertation is based on the doctrinal research methodology

and aims to provide a detailed analysis of the various aspects of limitation
liabilities arising out of contracts. Various legal sources such as Journals,
Websites and theses were referred into. Furthermore, it also provides a
comparative analysis of the law between different countries, their judicial
interpretation of the law and its implementations.

- Sharath Kanzal
3rd Year BA. LLB
Alliance University
Indian Carriage Law

In today’s modern world transport is no longer a personal affair. Carriers cater to the needs
of the general public for hire or reward. Almost no businessman or business enterprise can
carry out its business effectively without utilizing the services of carriers. Carriers transport
goods and are expected to carry them safely. Should there occur any damage to the goods,
Carriers are held responsible and are liable to pay compensation to the owner of the goods. In
order to enforce the liability against the Carrier for damage to goods, one has to seek the help
of law. Prior to the passing of the Carriers Act, 1865 there was no codified law governing
such liability in India. The liability of the Carrier was determined under English Common
Law as administered by the courts in India.

However English Common Law also provides for the Doctrine of Freedom1 of Contract by
virtue of which parties are free to contract or agree upon whatever terms are mutually
acceptable, subject to public policy. Thus by virtue of this Doctrine, carriers could contract
themselves out of all liability including liability for their own negligence or misconduct and
for the negligence or misconduct of their agents or servants. Carriers, being a very strong and
organized group, used to dictate terms to the customers who were left with no remedy.

Definition of a contract of carriage:-A contract of carriage of goods is a contract of bailment

for reward. It is something more than that because the liabilities of the carrier (i.e. the person
transporting the goods) are more than those of the bailee.

The transportation of goods plays an important role in commercial transactions, and

consequently in the economic development. For a long time now, past, practically from the
time the railway came into general use until to-day, the use of the public roads for the
carriage of goods has been in abeyance. 'But with the coming of the motor lorry, both steam
and petrol, a new vista of road utility has been opened out, the possibilities of which are as
yet hardly quite realized’. How far this would have been the case had the railways kept
themselves up-to-date and had taken advantage of 'modern methods for the handling of
goods, is a question not necessary to decide. Transport by road has again in the history of
civilization arrived. Its innumerable advantages over rail transport for many classes of goods
and in certain circumstances are admitted, and the future of this section of the transport
industry is bright indeed.
Indian Carriage Law

1. The doctrine freedom of contract was developed in the 19th century. It was the central
doctrine of the classical contract law.

The legal rights and duties of the persons or companies engaged in this work are very
important and, where the same are regulated by statute (e.g., Locomotive on Highways Act,
Motor Car Acts), are comparatively clear; it is, however, doubtful whether the law, relating
tonnage escarriage of goods is equally so 2.

Transport, being the arterial system of our economic life, it is not surprising to find that the
rights and duties of carriers have been considered by the courts and the legislature of the
present era, but even under the ancient systems of law, such as the Babylonian and the
Roman. From the latter, many legal concepts have been adopted from time to time. Carriers
by land fall for practical purposes into two classes: (i) Common carriers and (ii) private
carriers. Every road transport firm will, when they realize the respective duties of each class,
take care to keep themselves out of the former one. For the liability of a common carrier
towards his consignor is a very high one. It will, however, be difficult at times to say to
which class such a firm belongs, but, with care in the conduct of their business, no road
transport firm need take upon themselves the onerous liabilities of a common carrier.

In Indian law the term common carrier is used in a restricted sense. The Common Carriers
Act of 1865 3 defines a common carrier as any individual, firm; or company (other than the
government) who transport goods, as a business, for money, over land or inland waterways,
without discrimination between different consignors. As road transport increases and
becomes of more importance to the community, it is not to be expected that the courts will
confer upon the undertakings a more advantageous legal status than that of their competitors.
But, as the law stands at present, carriers by road can keep out of the class of common
carriers and be regarded as private carriers

Sources of Doctrinal research:

Ordinarily conventional legal sources are used in doctrinal research. Scholar undertaking
doctrinal research takes secondary data relevant to his proposition. His sources not only
include Statutes or enactments but also reports of committees; legal history, judgment etc.
Acts passed by state legislatures and parliament comes under this category of sources.
2. Mulla: Indian Contract Act, (1857) Lexis Nexus Publications, 2011
Indian Carriage Law

3. The concerned enactment being the Carriers Act, 1865 (Act no. 3 of 1865), was one
from the British ruling period in India. It received the assent of the Governor General
on 14th Feb, 1865

Judgments of Supreme Court and high courts also come under above mentioned sources.
They have primary authority. Text books, periodicals, commentaries also come under sources
of doctrinal research.

This research has been designed to fulfill certain underlying objectives, which could facilitate
in better understanding of the topic. These objectives could be classified as follows:

1. To study in detail the rules relating to carriage of goods by Road.

2. To study in detail the rules relating to carriage of goods by Sea
3. To study in detail the rules relating to carriage of goods by Air
4. To study in detail the rules relating to carriage of goods by Multimodal Transport
5. Comparatively analyzing the various Carriage Laws in different Countries
6. Providing a framework on Limitation of Liability under various Carriage acts.

Research Methodology:
The following dissertation is based on the Doctrinal method of research into Legal Rules,
principles, concepts or doctrines. It involves a rigorous systematic exposition, analysis and
critical evaluation of legal rules, principles or doctrines and their inter-relationship. It
arranges the existing law in order and provides thematic parameters for such an order. It also
concerns with critical review of legislations and of decisional processes and their underlying
policy 4. In a doctrinal research, a legal scholar takes one or more legal propositions as a
starting point as focus of his study. Dr.S.N.Jain observed that “Doctrinal Research involver’s
analysis of case law is arranging, ordering and systematizing legal proposition and study of
legal institution through legal reasoning or rational deduction”5

4. Prof (Dr.) Kushal Vibhute & Filipos Aynalem, Legal Research Methods, 2009
5. S.N.Jain, Doctrinal and Non-Doctrinal Legal Research, 14 J ILI 487 (1972)
Indian Carriage Law


1. Common Carriers or Public Carriers

1.1 Characteristic of Public Carriers
1.2 Is the Post Office a Common Carrier
1.3 Rights of a Carrier
1.4 Liabilities of a Carrier
1.5 Burden of Proof

2. Limitation of Liability
2.1 Position in England
2.2 Position in Australia
2.3 Position in China
2.4 Position in France
2.5 Position in Germany
2.6 Position in Malaysia
2.7 Position in UAE
2.8 Position in US

3. Carriage by Land
3.1 Carriage by Road Act, 2007

4. Carriage by Sea
4.1 Types of freight
4.2 The carrier’s (implied) responsibilities under a bill of lading
4.3 Functions of the Bill of Lading
4.4 Bill Of Lading Not Falling Within The Carriage Of Goods By Sea Act 1971

5. Carriage by Air
5.1 Carriage by Air Act 1970
5.2 Case Study : Mangalore Air Crash

6. Multimodal Carriage
Indian Carriage Law

7. Bibliography

1. Common Carriers or Public Carriers

The term “common carrier “is defined as:

“Common carrier denotes a person, other than the Government, engaged in the business of
transporting for hire, property from place to place, by land or inland navigation, for all
persons indiscriminately. Persons include any association or body of persons whether
incorporated or not.” 6

The essential features of a common carrier, according to English law, are that he is prepared
to carry the goods of anyone without discrimination. If a carrier reserves to himself the right
to reject an offer (even if there is accommodation in the carriage and the offeror is prepared
to pay the usual freight) he is not a common carrier. In the case of Belfast Rope work Co., v.
Bushell 7. In that case, the defendant was a haulage contractor. With the two buries he owned
and with others he hired when necessary, he carried sugar from Liverpool to Manchester. At
Manchester he invited offers of goods for all kinds, excepting machinery, for carriage to
Liverpool and other Places. These offers he accepted or rejected according as the rate, route,
and class of goods were or were not satisfactory. As such while transporting hemp under a
contract, a fire broke out. The rope company sued the defendant for the loss of a load of
hemp, which was being carried from Manchester to Liverpool by the fire. It was held that,
inasmuch as the defendant had reserved to himself the right of accepting or rejecting offers of
goods for carriage, he was not a common carrier and, consequently, everything pointed to
him being a common carrier except the fact that he did not carry for all indifferently

In the case of Scaife v. Farrant 8, the defendant had undertaken the removal of certain
furniture by road and, without any negligence on the part of the defendant, the furniture was
damaged by fire, and it was sought to make the defendant liable for the damage on the ground
he was a common carrier. As in the first case, the facts pointed to him being a common
carrier, but the parties had entered into an agreement that the carrier was only to be liable for
breakages, if any, to the extent of £5. It was, thereupon, held that this was a special contract
and consequently defendant was not liable for the loss
Indian Carriage Law

6. Section 2 of the Carriers Act, 1865

7. 1918 1KB 210,
8. (1875) LR 10 Ex. 358

Considered as an insurer of the goods. His undertaking is to carry and to deliver safely, "act
of God." and” king's enemies" being the exceptions. The question 'whether a carrier is a
common carrier or not is one of fact and, if he conducts his business in such a way that the
court can find as a fact that he is a common carrier, then he must be held to have accepted the
goods as such with the consequent with it. And, even if the facts do not show that he is a
common carrier, but that he warrants the safe arrival of the goods, he will be liable as such.
On the other hand, private carriers for hire are not under such heavy liabilities. They are
responsible only for losses arising from their own or their servants' negligence. It may be that
a carrier by road carries on such a business that he is bound, in the event of any dispute, to be
held to be a common carrier. In such case, he can limit his liability on certain classes of goods
under the Carriers' Act. In conclusion, it is submitted that the best way for road transport
concerns to conduct their business is under special contract, the terms of which is an
arrangement between the parties. This is of particular importance to the numerous small
businesses that have lately entered the haulage business.

In the case of Anil Kumar Chakraborty and Anr.Vs. Saraswatipur Tea Company
Limited 9 On 15th September, 1965 the appellant Anil Kumar, a Compounder with the first
respondent-company was dismissed by the Management after holding an inquiry and finding
him guilty of (i) having in cited laborers and workers to disrupt the administration and
working of the tea gardens and (ii) having indulged in trafficking in drugs and medicines
entrusted to him by the company for supply and distribution to the workers free of cost. The
Industrial Tribunal, before whom the validity of dismissal was challenged, held that the
inquiry, if at all one was held, was unfair and that the charges had not been proved by the
Management and, therefore, the dismissal was set aside and the appellant was directed to be
reinstated with full back wages. A learned Single Judge of the High Court confirmed the
Tribunal's Award, but in appeal the Division Bench reversed the decision of the Tribunal as
well as of the learned Single Judge holding the domestic enquiry held by the Management
was quite fair and proper and that Rs. 174-60 at the time of The Division Bench allowed the
appeal and set aside the Award.
Indian Carriage Law

9. AIR 1982 SC 1062

The Tribunal had in fact dealt with the case as if it were a Court of Appeal and not, only the
evidence had been meticulously assessed afresh but the adequacy of the evidence had also
been gone into and in doing so the Tribunal had exceeded its jurisdiction and substituted its
own evaluation of the evidence for the evaluation done by the domestic Court of Enquiry

The appellant as a Compounder was drawing a monthly salary of dismissal from service on
15.9.1965. His counsel has informed us that the total amount due to him calculated up to 31st
March, 1973 comes to Rs. 36,486/-. The present grade payable to a Compounder with the
Company is Rs. 550/- p.m. Having regard to these facts and the lapse of time involved till
now we direct the first respondent-company to make lump sum payment of Rs. 50,000/- to
the appellant Anil Kumar as just and fair compensation in full satisfaction of all his claims for
wrongful dismissal from service. Appeal disposed of accordingly with no order as to costs.

1.1 Characteristics of Common Carriers

The characteristics of a common carrier are as follows:-

1) The common carrier must be engaged in a regular business of transportation of goods. A

person who occasionally transports the goods is not a common carrier.
2) The common carrier must carry on his transportation business for money. A person, who
transports the goods free of charges, is not a common carrier.

3) The common carrier must transport the goods only.

4) The common carrier may be an individual, a firm or a company. But the government is not
considered as a person for this purpose. Thus, the post office is not a common carrier
although it may carry goods.

5) The term common carrier is applied to the transportation of goods by land and inland water
ways. It does not apply to carriage by sea or air.
Indian Carriage Law

6) If a common carrier reserves the right to refuse to transport the goods of some person, he is not a
common carrier.

7) The common carrier must transport the goods of all persons without any
indiscrimination10. As a matter of fact, a common carrier is bound to transport the goods of
any person provided there is space in the vehicle. If he refuses to transport the goods besides
there being space in the vehicle, then the carrier is liable to pay damages.11

1.2 Is the Post-Office a Common Carrier?

The post office is not a common carrier. It is not an agent of the sender to deliver a postal
article to the addressee. 1t is really a branch of the Public Service providing postal services
subject to the provisions of the Post Office Act and the rules made there under. The case of
Union of India v. Mohd Nazim 12 raises two rather interesting questions. Does the post
office when it accepts a postal article for transmission act as an agent of the sender of the
article? And where the postal article is sent from India to an addressee in a foreign country
does the government of that country act as a sub-agent for transmission of the article? A
resident of India sent value-payable article to an addressee in Pakistan and the Pakistan
Government, though realized the value of the article, and did not hand it over to the
Government of India. The Union of India in their written statement admitted that the
aforesaid articles were dispatched by the plaintiff as claimed and that their value was
recovered in Pakistan but the Union of India did not receive the sum from the Pakistan
Government as the money order service between India and Pakistan remained suspended
from September 19, 1949 and this was the reason why the sum could not be paid to the
plaintiff. The learned judges finally decided to allow the appeal, the judgment and decree of
the High Court were set aside and the suit was dismissed. In view of the order made on
February 26, 1969 the appellant will pay the costs of the respondent upon receiving the sum
from the Pakistani Government.
Indian Carriage Law

10. as used in section 2 of the Carriers Act, 1865

11. Crouch v London & North Western Rly Co., (1854) Ex 556

12. AIR 1980 SC 431


There are certain rights that a common carrier possesses. These are:-

1) Right to receive charges: A common carrier is entitled to receive the agreed charges
(remuneration) for his work i.e. for transportation of goods. If the charges for his work are
not agreed, then he is entitled to receive reasonable charges. It may also be noted that a
common carrier can also demand advance payment. But if he accepts the goods without
demanding payment of freight in advance, then he cannot afterwards claim payment until he
carried the goods to the destination.13

2) The carrier is also entitled to charge extra for the risk in respect of scheduled articles.
However, such extra charges must be displayed at the place of booking in English as well as
in the language of that place. 14

3) Right of particular lien: The right of lien means a person’s right to retain the goods until
the lawful charges due in respect of the goods are paid to him.


1) The liability of any common carrier for the loss 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 the Carriers Act, 1865,
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 tram road constructed under the provisions of Act 22 of
1863 15 maybe through a special contract, signed by the owner of such property so delivered
as last aforesaid or by some person duly authorized in that behalf by such owner, limit his
liability in respect of the same.
Indian Carriage Law

2) The liability of the owner of the railroad or tram road constructed under section 22 of 1863
is not limited by special contract. However, the owner of such railroad or tram road will be
held liable for loss to goods caused by negligence or criminal act on his part or by his agents.

13. Crouch v Great Northern Rly Co. (1856) 11 Exch 742

14. Section 4 of the Carriers Act, 1865

15. Section 2, Land Acquisition Act 1894

Thus, where any loss or damage of goods is caused by criminal acts of the carrier or his
servants or agents, the liability cannot be limited by special contract. 16

3) Common carrier liable for loss or damage caused by neglect or fraud of himself or his
agent: In simple words, a common carrier is liable to pay damages if loss/damage to the
goods is caused by fraud or negligent act of himself or his agent. But when damage to goods
takes place due to an accident taking place (example bursting of the tire of the vehicle) it will
not constitute negligence on the part of the driver and it cannot be said that the carrier did not
take proper care in maintaining tire of the vehicle. Thus, the carrier is not liable to pay
damages 17 carriers will also not be held liable if then consignment of goods is wrongly
delivered 18.

4) The measure of damages for delay for goods lost or damaged, is the difference between the
value of the goods at the time when they ought to have been delivered and at the time when
they were actually delivered. In the case of Union of India v. West Punjab Factories Ltd 19

There was a fire at a railway station in which certain goods& were destroyed. Two suits were
filed claiming damage for loss of goods by 'the said fire. The first suit was filed by a factory
which claimed to be owner of the goods as consignor. The other suit was filed by a
consignee in whose favour the relevant documents were endorsed. The Union of India
resisted both the suits. The trial court and the High Court concurrently held that the loss was
due to the negligence of the Railways. As it has been found that there had been negligence
within the meaning of ss. 151 and 152 of the Indian Contract Act, the railway would be liable
to make good the loss caused by the fire.


Indian Carriage Law

In any suit brought against a common carrier for the loss, damage or non-deliver of goods
(entrusted to him) for carriage, it is not necessary that the plaintiff prove the fault of the
carrier by showing the negligence or any other criminal act of the carrier, his servants or

16. Gaya Muzaffarpur Roadways Co. v Fort Gloster Industries Ltd., AIR 1971 Cal 494
17. State of Rajasthan v Mehta Transport Co., AIR2002 Raj 157
18. The Manager, Doars Transport (P) Ltd. V Canara Bank, AIR 1992 Mad 324
19. 1966 AIR 395

In other words, the burden of showing that the damage to goods was not caused due to the
negligent act of the carrier or his agents or servants would be entirely on the carrier.

2. Limitation of Liability

Limitation of liability in layman’s language means limiting once liability to an agreed

amount. It often happens that while performing a contract, the party might breach the contract
(not necessary wilfully). In such cases, it is not possible to pay the whole of the total damage
as it might lead to the party getting insolvent and bankrupt. To protect itself from such
situations, the clause of ‘Limitation of Liability’ is made. Such clauses limit one’s liability to
a certain amount that has been pre-decided by the parties which may be to the total cost of the
contract or as agreed upon between the parties.

Section 74 of the Indian Contract Acts 1872 deals with Limitation of Liability – “When a
contract has been broken, if a sum is named in the contract as the amount be paid in case of
such breach, or if the contract contains any other stipulation by way of penalty, the party
complaining of the breach is entitled, whether or not actual damage or loss or proved to have
been caused thereby, to receive from the party who has broken the contract reasonable
compensation not exceeding the amount so named or, as the case may be, the penalty
stipulated for.

Also Indian Contract Act 1872 expressly classifies liability arising by reason of death or
personal injury, fraud or gross negligence as unlimited liability.
Indian Carriage Law

2.1 Position in England

1. English law subjects limitation and exclusion clauses to a “reasonableness” test -

under “UCTA” (the Unfair Contract Terms Act 1977) where they are contained in a
supplier’s standard written contract or where the clause purports to limit or exclude
liability for negligence. In practice that means almost all limitations and exclusions
are subject to this test. UCTA goes on to specify the criteria to be taken into account
in assessing reasonableness.

2. Is there any ability to exclude liability for ‘gross negligence’?

English law does not recognise a formal distinction between negligence and gross
negligence. One can therefore exclude or limit liability for both subjects always to the
test of reasonableness

2.2 Australia

1. Under Australian law “consequential loss” has been used in many different ways
in a wide variety of judgements with the outcome that it has lost its legal meaning
and the concept has been largely replaced by the legal concept „pure economic
loss damages‟. Consequential loss is often taken to mean pure economic loss in
the Australian environment. That being said, there is a real risk that when
referring to consequential loss in a contract, the courts will take this to mean
indirect losses.
2. There is however, conflict in the decisions and in certain circumstances,
consequential loss can be legally interpreted to mean pure economic loss damages.
In all Australian jurisdictions, it has become increasingly important to be precise
about the exclusion of loss and damages that is agreed between the parties by
using words that achieve the desired outcome by their ordinary and natural
Indian Carriage Law

meaning, following on from the decision on the interpretation of exclusion clauses

of the High Court in Darlington Futures v Delco.
3. Is there any ability to exclude liability for ‘gross negligence’?

Generally, there is no concept of gross negligence in Australian law outside of

particular legislative utilizations of the phrase. Accordingly, it is possible to
exclude liability for gross negligence subject to clear language being used to
achieve this outcome.

2.3 China
1. In China, the law does not expressly prohibit supporting a claim for indirect
losses, however, in practice; it is quite hard to get any indirect losses to be
upheld by the court. So, the position is the same as English law, it excludes
2. When excluding main liabilities in a standard contract, the law requires that
the party providing the standard contract must remind the other party of the
exclusion or limitation. However, the law is silent on how to remind the other
party – there is no requirement to use bold type or capital letters, etc.
However, in practice, bold type is often used as such a reminder. If it is not a
standard contract, the law does not require such a reminder on the limitation or
exclusion of liabilities, however, in practice, such limitations or exclusion
clauses are often written in bold type.
3. Is there any ability to exclude liability for ‘gross negligence’?
Chinese laws do not recognize gross negligence or negligence as grounds to
exclude liability

2.4 France
1. In France, A limitation clause must not lead to depriving the contract
of its purpose, of the main undertaking. The French Supreme Court
entered into the “Chronopost” ruling in 1996
Indian Carriage Law

2. The Supreme Court decided that the clause by which this fast service
postal company was limiting its liability in case of late delivery (when
clients were paying extra for fast/express delivery) was to be
considered as not written (hence unenforceable.) It should be noted
that if such a clause is unenforceable, another legal set of rules may
automatically apply, providing for other types of indemnification

3. In the Chronopost matter, legal public rules applying to ground

transportation contracts applied and the parties were de facto bound by
the ceilings for such rules.

4. Is there any ability to exclude liability for ‘gross negligence’?

Exclusion/limitation clauses are excluded in cases of willful
misrepresentation (as contracts must be executed in good faith) and
gross negligence. Exclusion clauses apply to minor breaches.

2.5 Germany
1. Under the German law on damages it is basically irrelevant if damage
has occurred (directly) to the contractual object itself or (indirectly) to
other legally protected goods.
2. The crucial issue is the general obligation for compensation for all
adequately caused consequences of the damaging event – irrespective of
the question whether the damages are direct or indirect. Correspondingly,
German law actually does not have a distinct differentiation between direct
and indirect damages or direct/indirect and consequential damages or a
legal definition of these terms.
3. An exclusion of consequential loss would exclude a standstill of
production, recovery for loss of use, lost profits, expenses incurred for
Indian Carriage Law

supplementary labor, product recall as well as pure economic loss due to

third party claims.
4. is there any ability to exclude liability for ‘gross negligence’?
The limitation of liability is enforceable, unless the loss or damage was
caused intentionally or by gross negligence, which cannot be capped or
otherwise limited. Moreover limiting liability is also invalid in the case of
injury to life, body or health due to a negligent breach of duty.

2.6 Malaysia

1. The Malaysian Contracts Act 1950 contains no specific provision dealing with
exemption clauses. The Malaysian courts have followed English common law when
considering this aspect of the law.
2. Is there any ability to exclude liability for ‘gross negligence’?
An exemption clause however wide and general does not exonerate the party
claiming the use of it from the burden of proving that the damage caused was not due
to his negligence and misconduct. He must show that he had exercised due diligence
and care. However, the courts are less strict in construing a clause limiting liability in
negligence than a clause excluding liability altogether.

2.7 United Arab Emirates

1. By itself, it could exclude relatively little. The UAE courts exercise wide
discretion in their awards of damages. A party seeking compensation must prove
the actual losses incurred and the UAE courts do tend to be conservative when
assessing loss and require a close causal link between a breach and any
subsequent loss for that loss to be recoverable.
2. The issue is not really one of determining whether or not a limitation or exclusion
clause is reasonable (and hence effective) but rather a case of whether the party
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seeking to avoid the effect of such a clause can prove that the actual loss suffered
exceeds any limitation/exclusion and convincing the UAE court to exercise its
discretion to override such a clause.
3. Is there any ability to exclude liability for ‘gross negligence’?
It is not generally possible to exclude liability for gross negligence under UAE

2.8 United States

1. An exclusion of indirect, special, and consequential damages is often found in business
contracts, especially where the risk associated by such damages to one or both parties is
not warranted given the economics of the transaction. Such a provision (which can be
unilateral or mutual) usually excludes loss of profit or revenue or damages asserted by a
third party against the non-breaching party that may otherwise be recovered if it is
determined such damages were reasonably foreseeable or “within the contemplation of
the parties” at the time of contract formation.
2. Is there any ability to exclude liability for ‘gross negligence’?

It is rare to see a provision in a contract that excludes liability for liability based upon
negligence or gross negligence (meaning that a party would only be liable for its willful
misconduct). However, it is common to see a limitation of liability provision (limiting the
type of the damages recoverable, providing for liquidated damages or capping the amount of
damages available) which carves out willful misconduct and gross negligence. The difficulty
is determining what constitutes gross negligence. Gross negligence is defined as the lack of
any care or an extreme departure from what a reasonably careful person would do in the same
situation to prevent harm to oneself or to others.
Indian Carriage Law

3. Carriage By Land
Indian statutes relating to the law of carriage by land are mentioned below:
(i) The Common Carriers Act, 1865, which deals with - Common carriers of goods over land
and inland water ways.
- Repealed by Carriage by Road Act, 2007
(ii) The Railways Act, 1890, which deals with carriage by railways.

Contract of carriage is essentially a contract of bailment. The objective of Carriers Act

stipulates that it empowers a common carrier to limit and define its liability for the negligent
or criminal acts of servants. As such, the Carriers Act makes certain statutory limitations on
liability of the common carrier. As for example, sec. 3 insulates a common carrier from
liability for loss of certain goods if the value of the goods is more than Rs.100, unless the
person delivering the property declares the value and description of the goods. But Indian
Railways does not come under the definition of common carriers; therefore, the limitation of
its liability cannot be based on the Carriers Act. This is to be done within the parameters of
the Indian Railways Act, 1890. As for example, under sec. 72 of the Act, the sender is bound
to give such particulars as may be prescribed by the railway administration, in respect of
animals and other enlisted goods under sec. 6 delivered for carriage. Sec.73 limits the general
responsibility of the railway administration as carrier of animals & goods.
Indian Carriage Law

3.1 The Carriage by Road Act, 2007

The Carriage by Road Act, 2007 is an Act of the Parliament of India which provides for the
regulation of common carriers of goods by roads. The Act was published on 29th September
2007. It is basically an Act to provide for the regulation of common carriers, limiting their
liability and declaration of value of goods delivered to them to determine their liability for
loss of, or damage to, such goods occasioned by the negligence or criminal acts of
themselves, their servants or and for matters connected there with or incidental thereto.

This Act explains the relationship, responsibility and legal liability of common carrier,
Transport Company, goods booking agent, logistic firm with the consignor, trader in
transportation of goods by road against payment of freight to the common carrier by the
consignor or consignee in the country. Section 3(1) of the Act states that no person shall
engage in the business of common carrier, after the commencement of the Act, unless a
certificate of registration has been granted to him.

Persons engaged in the business of common carrier before the commencement of the Act,
were required to either apply for a registration within 90 days from the date of
commencement of the Act [IV] or [V] cease to engage in such business on the expiry of 180
days from the date of commencement of the Act.

The Act:

(A) Provides for registration of common carriers;

(B) Provides for execution of a goods forwarding note which describes goods, and goods

(C) Allows limits of liability of common carriers, except in case of loss caused by criminal

(D) Provides that consignor/consignee need not prove negligence; regulates the carriage of
dangerous and hazardous goods;

(E) Provides that no suit can be filed against a common carrier for loss, unless notice in
writing is given within 180 days from date of booking of the consignment.
Indian Carriage Law

In the case of Nagpur Golden Transport Co. vs. Nath Traders 20 Respondent No.3 booked
a consignment of monoblock pumps with the appellant for transportation from Coimbatore to
respondents No.1 and No.2 at Gwalior in March, 1997. While the appellant was transporting
the consignment in a truck, there was an accident and the monoblock pumps were damaged.
The respondents No.1 and 2 2, therefore, did not take delivery of the 198 damaged
monoblock pumps at Gwalior. In the circumstances, the appellant returned the 198 damaged
monoblock pumps to the respondent No.3.

20. CIVIL APPEAL NO. 3546 OF 2006

The respondents No.1 and 2 then filed Complaint No.101 of 1998 before the Consumer
Disputes Redressal Forum, Gwalior, and their case in the complaint was that they had paid
the price of the consignment to respondent No.3 and were entitled to Rs.3, 61,131/- towards
the price of the monoblock pumps and damages of Rs.70, 000/-, loss of profit Rs.14, 000/- as
well as cost of Rs.5, 000/- and interest @ 18% per annum on the amount claimed by them.

At the hearing of the appeal, learned counsel for the appellant submitted that the District
Consumer Disputes Redressal Forum should have directed the respondent No.3 to return the
198 monoblock pumps to the appellant when the appellant has been held liable for the price
of the monoblock pumps to the respondents No.1 and 2, who had paid for the same to
respondent No.3. He submitted that the appellant cannot be held liable to pay the price of the
monoblock pumps to respondents No.1 and 2 and at the same time not entitled to the return of
the 198 monoblock pumps from respondent No.3. The common carrier was to

It was held by the court that the common carrier be entitled to the value of the damaged
goods; else the consignee would stand unjustly enriched.

In Brakes India Ltd. & Ors. Vs. BIC Logistics Ltd 21 In the plaint, it is averred that the
first plaintiff has entrusted certain automobile spare parts to the defendant, who is a public
carrier within the meaning of Carriers Act, 1865 at Tamil Nadu. The same has to be
transported to M.V.Axles Ltd, Jamshedpur. The goods have been insured by the first plaintiff
with the second plaintiff (insurer). The goods have not been received by the consignee and
subsequently it is found that the driver and cleaner of the container have been murdered.
Since the defendant has failed to deliver the goods to the consignee, the defendant is liable to
Indian Carriage Law

pay the suit amount. Under the said circumstances, the defendant has not been able to deliver
the goods due to murder of driver and cleaner. The present suit has been instituted for the
relief sought therein. The learned counsel appearing for the appellants/plaintiffs has argued to
the effect that the goods in question have not been plundered by interstate enemies, thus
subject to the provisions of Sec 17 of the Carriage by Road Act, 2007.

21. O.S.A.No. 329 of 2010

In the instant case, as noted down earlier, as per Clause 17 of the Carriage by Road Act,
2007, if a loss has been occasioned by a public enemy, the common carrier is not liable.
Therefore, viewing from any angle, the contention put forth on the side of the
respondent/defendant is really having acceptable force.

On consideration of the evidence on record, it was held that the Defendant was not liable to
pay the amount claimed in the suit, as per Clause 17 of the Carriage by Road Act, 2007.
Indian Carriage Law

4. Carriage by Sea
The laws relating to carriage by Sea include

Carriage by Sea
(i) The Indian Bills of Lading Act, 1856.
(ii) The Carriage of Goods by Sea Act, 1925.

Carriage is frequently the final step in a contract for the sale of goods. The shipper is
often the vendor of the cargo. The ultimate consignee is often the buyer of the cargo. Risk
and title to the goods will often pass during the course of the contract of carriage. There is a
general presumption that title passes when risk passes but this is a rebuttal presumption. The
exact point at which risk and title pass depends on the terms of the contract of sale and the
intention of the parties.

Contract of Affreightment: A contract to carry goods by sea is called the “contract of

affreightment” and the consideration or charges paid for the carriage is called the “freight”. A
contract of affreightment may take either of the two forms, namely—
(i) a charter party, where an entire ship or a principal part of a ship is placed at the disposal of
merchant known as a charterer); a charter party may be for a particular period, or for a
particular voyage. In the former case it is called a time charter party and in the latter case, a
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voyage charter party has no specific form; the form varies from trade to trade depending on
the customs of the trade.

(ii) A bill of lading where the goods are to be carried in a general ship and the person
consigning the goods is known as a shipper.

There are three persons involved in a contract of affreightment. These are:-

1) Ship-owner: A person who is the owner of the ship and undertakes to transport the goods
is called a “ship-owner”. In other words, he is the carrier of the goods.

2) Charterer: A person, who hires the ship and delivers the goods to the ship-owner for
transportation, is called a charterer. In other words, he is the consignor of the goods and is
also known as a shipper.

3) Consignee: - A person to whom the goods are addressed and to whom the ship-owner
should deliver the goods is called a “consignee”.


1) Lump sum freight: - While freight is normally arranged according to weight,

measurement or value, the shipper may agree to pay a lump sum as freight for the use of the
entire ship or a portion thereof. In this case, the amount of freight payable by the shipper is
fixed and invariable and , if the ship-owner is ready to perform his contract, is payable
whether the shipper uses the hired space to full capacity, or loads below capacity or does not
load at all. Moreover, in the absence of agreement to the contrary, the whole lump sum
freight is payable if only part of the loaded cargo is delivered by the ship-owner at the port of
destination and the remainder is lost. However, the ship-owner cannot claim lump sum
freight if he is unable to deliver at least part of the cargo.

2) Pro rata freight: - It is the freight which is payable proportionate to the goods loaded on
the ship or to the use of carrying capacity of the ship. Sometimes, ship-owner agrees to load
the full cargo. But only loads and carries a part of it. In such cases also, he will be entitled to
pro-rata freight only unless there is an express agreement for the payment of the whole

3) Dead freight: - Where the shipper fails to load the cargo or the full cargo after arranging
with the ship-owner for its carriage, he is in breach of the contract of carriage and is liable to
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pay the agreed freight as damages (dead freight). But the ship-owner, who uses the freight
space which would have been taken up by the goods of the defaulting shipper, and carries
therein goods of other shippers, has to deduct the earned freight when claiming damages.

4) Back freight: - When the delivery of the goods has been prevented by events beyond the
control of ship owner or his master, the master is empowered to take steps in dealing with the
goods. The ship owner then becomes entitled to charge the shipper or the cargo owner back
freight to cover expenses incurred by the shipmaster.

5) Primage: - It is the extra freight which is payable, by an agreement, to the captain of the
ship. It is calculated at a fixed percentage on the ordinary freight. As a matter of fact, it is a
sort of reward to the captain of a ship for taking care of the cargo put on board the ship.
Nowadays, the payment of primage is not a common practice.



The common law implies three undertakings by the carrier into a contract of carriage by sea.
These terms may be excluded by express terms in the contract. The common law differs in
these matters from the Hague-Visby Rules. The three terms relate to the seaworthiness of the
vessel, to deviation from route and to delay.


When goods are to be carried by sea the fitness of the vessel which is to do so is obviously a
matter of concern to any person having an interest in the goods. At common law it is an
implied term of the contract of contract that the ship shall be seaworthy. A ship is not
seaworthy if it has a defect which a prudent owner would have required to be rectified before
sending the ship to sea. This requirement is absolute; the ship must be seaworthy and it is not
enough that every effort has been made to make it so.

The ship must be seaworthy in two respects. It must be fit to sail on the particular voyage or a
particular stage of the voyage and it must be fit to receive the particular cargo. As regards the
ship itself, unseaworthiness can take many forms. It may be a physical defect, such as
inefficient engines but it may also take the form of incompetence on the part of the crew. In
this respect the ship must be seaworthy when it sails and there is no breach of term if it is so
but becomes unseaworthy while on the voyage.
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e.g. The Maori King (Cargo owners) v Hughes22, a ship was held to be unseaworthy in
respect of a cargo of frozen meat because refrigeration equipment was defective. In this
respect the ship must be seaworthy when the cargo is loaded and there is no breach of the
implied term if it becomes unfit for the cargo after the cargo has been loaded.

The legal effect of a breach of the term will depend on the effect of the breach on the
contract. If the breach results in unseaworthiness which is such as to frustrate the commercial
purpose of the contract of carriage the cargo owner will be entitled to repudiate the contract.
If it is not so serious he must rely on the action for damages.

22. 191 U.S. 1 (1903

Under a contract for carriage in a general ship the cargo owner will normally be in the latter
position unless he is the shipper. Also, if there is a breach of the implied term, the carrier
cannot rely on a clause absolving him from liability for some cause of loss or damage unless
the loss/ damage was actually caused by the unseaworthiness.

On the other hand, under the Hague-Visby Rules, the carrier is liable before and at the
beginning of the voyage, to exercise due diligence to make the ship seaworthy, properly
man, equip and supply the ship and make the cargo spaces fit and safe for the reception,
carriage and preservation of goods. This is identical with the common law but in this case,
the burden on the carrier is only to exercise due diligence to make the ship seaworthy. It is
not absolute like that in common law. If due diligence has not been used to make the ship
seaworthy the carrier will be liable for any loss or damage resulting from the unseaworthiness
even though the primary cause of the loss of damage was one for which the carrier would not
otherwise be liable under the Rule.


There is an implied undertaking at common law in any contract for the carriage of goods by
sea that the vessel will at unreasonably deviate for the agreed route or, if there is no agreed
route, form the usual route or, if there is no usual route, from the direct route. Since the
undertaking is implied it can be excluded by an express term in the contract.
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There is no breach of the term if a ship deviates on reasonable grounds as, for example, to
avoid the dangerous weather or to save the life at sea, although deviation to save property at
sea is not a permitted deviation art common law as it is under the Hague-Visby Rules.22

The importance of the term for the cargo owner lies in the legal effect of a breach of the term
by the carrier. Any voluntary and unjustified deviation is a fundamental breach of the
contract of carriage. In consequence, the cargo owner is entitled to repudiate the contract and,
if he does so, the carrier will lose the benefit of any immunity in the contract protecting him
from liability for loss or damage except those available to a common carrier and even the
common carrier’s defenses will only be open to him if he can prove that the loss or damage
would have occurred even if there had been no deviation.

22. Rio Tinto Co v Seed Shipping Co (1926) 42 TLR 381

Example:-Joseph Thorley Ltd. V Orchis Steamship Co23.-A vessel carrying goods from
Cyprus to London deviated, at the beginning of the voyage, to ports of Eastern
Mediterranean. When the vessel arrived at London the cargo was damaged by the negligence
of the stevedores unloading it. When the cargo owner sued in respect of this damage the
carrier pleaded a clause in the contract absolving him from liability for any such damage. It
was held that because the vessel had deviated the cargo owner was entitled to repudiate the
contract of carriage and the carrier was not then entitled to the benefit of the community
unless he should show that the damage by stevedores in London would have occurred even if
the vessel had not deviated in the Eastern Mediterranean, a demonstration which clearly
presented some difficulties.

A cargo owner is not bound to repudiate the contract in these circumstances. He may waive
the breach of the undertaking either expressly or by implication. Any such waiver will not,
however, affect the rights of a subsequent indorse of a bill of lading who takes it without
knowledge of the deviation.

Under the Hague-Visby Rules any deviation in saving or attempting to save life or property
at sea or any reasonable deviation is not deemed to be an infringement or breach of the Rules
or of the contract of carriage and the carrier is not liable for any resulting loss or damage. The
Hague-Visby Rules are silent as to the legal effect of an unreasonable deviation on the
contract of carriage and the position will therefore be as at common law.
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A deviation, in addition to being a breach of the contract of carriage by sea, may amount to a
breach of a contract of sale by a seller who has agreed, expressly or by implication, that the
goods will be carried on a particular route. The legal effect of such a breach would, of course,
be a matter to be decided under the law on the sale of goods.


At common law there is an implied undertaking by the carrier that the voyage will be carried
on without undue delay. In many cases delay will amount to deviation. The Hague-Visby
Rules are silent on this matter. According to the Beaumont interpretation, which attempts to
define delay based on the common law rule, an express contract is a pre-requisite for
establishing liability of air carriers for delay.

23. [1907] 1 KB 660

The common law rule was applied to carriage by air in Panalpina International Transport
Ltd v Densil Underwear Ltd 24. In this case the court held that in the late delivery of cargo,
which led to the loss of Christmas trade, was in the circumstances an unreasonable delay.


The term “bill of lading” may be defined as a document acknowledging the shipment of the
goods, and containing the terms and conditions upon which the goods are to be transported by
the ship. It is signed by the ship-owner or his authorized agent or by the master of the ship. It
should also be stamped.

However, it must be observed that all countries do not follow the same form of legislation
globally. The broad categories may be stated as follows:
i. The Hague Rules.
ii. The Hague/Visby amendments.
iii. The Hamburg Code.
iv. Hybrid systems based on the Hague/Visby and Hamburg regimes


Indian Carriage Law

1. Bill of Lading as a Receipt: - The bill of lading will acknowledge the quantity of goods
put on board, their description and their condition. The bill of lading form will usually be
completed by the shipper or his forwarding agent and sent to the carrier. As the goods are
loaded they will be checked by tally clerks and if the particulars are found to be correct the
bill of lading will be signed for the carrier by his agent, the loading broker. However, the
evidentiary value of the bills in all these cases is not the same in all case and it depends upon
the circumstances of the case such as whether the bill falls within the Carriage of Goods by
Sea Act 1971 or not.

24. [1981] 1 Lloyd's Rep. 187

4.4 Bill Of Lading Not Falling within The Carriage of Goods by

Sea Act 1971

According to Common Law, a statement specifying quantity received is evidence of the

quantity shipped. The burden of proof lies on the carrier to prove that the cargo as specified
has not been shipped. This burden is an absolute one.
In the case of Smith v/s. Bedouin Steam Navigation Co25 [1896], the bill of lading stated
that 1,000 bales of jute had been shipped, whereas only 988 bales were delivered. It was held
that the carrier could successfully discharge the burden of proof only if he could show that
the goods were not shipped, not merely that the goods may not possibly have been shipped.

There may be endorsements on the bill of lading with statements such as weight and quantity
unknown and the courts recognize these, since information on quantity entered on a bill of
lading is based on statements made by the shipper and which does the carrier not normally
verify. However, when the statements is contained as ‘ quantity unknown’ alongside the
gross weight entered by the shippers for the purposes of Section 4 the weight entered is not a
representation that the quantity was shipped.
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Example: A bill of lading which states that 11,000 tons of cargo were shipped ‘ quantity
unknown’ means that the quantity is unknown and not that that amount of cargo was actually
shipped, this would be the meaning construed by the Courts.
According to the Hague/Visby Rules, the shipper can demand the carrier issue a bill of
lading showing ‘either the number of packages or pieces, or the quantity, weight etc. as
furnished in writing by the shipper’. Accordingly, the carrier may use any of these three
methods of quantifying cargo. However, he cannot acknowledge one kind and disclaim
knowledge of others.
In the case of Oricon v/s Integraan (1967), the bills of lading acknowledged the receipt of
2,000 packages of copra cake said to weigh gross 1, 05,000 Kgs for the purposes of
calculating freight only. It was held that while each of the bills of lading being Hague Rules
of bills of lading acknowledged the number of packages shipped as a prima facie evidence.
Regarding the evidentiary bill of lading is concerned; the Hague/Visby Rules serve as prima
facie evidence of the amount of cargo shipped.

25. (1896) A.C. 70

5. Carriage by Air

5.1 Carriage by Air Act, 1972

There is an international legal regime governing the liability of air carriers for injury or death
of passengers, for destruction or loss of or damage to baggage and cargo, and losses caused
by delay in international carriage of passengers, baggage and cargo. This regime is set out in
a number of international instruments. namely the Warsaw Convention1929, and the Warsaw
Convention as amended by The Hague Protocol1955.India has so far ratified only two
instruments, the same has been given effect to by the Carriage by Air Act 1972.For
uniformity and unification of international law in this field, the International Civil Aviation
Organisation (ICAO) finally adopted the Montreal Convention for the purpose of
modernizing as well as consolidating the various instruments comprising the Warsaw System.
The 1999 Montreal Convention unified the rules on international carriage by air and
modernized the provisions on limitation of liability for international air carriers

Key Features of the 1999 Montreal Convention

Indian Carriage Law

The Convention seeks to increase the compensation levels for international passengers in the
event of death or body injury and damage and delay to the passenger baggage and cargo.
While the compensation for death or bodily injury is proposed to be increased 7 times from
the existing levels of 20000 USD approximately to 140000 USD approximately, the
compensation for damage to the checked baggage is to increase from 20 USD per kg
approximately to1400 USD per passenger. The compensation for damage to cargo
is proposed to be increased from 20 USD per kg approximately to 24 USD per kg. The
Warsaw System allows at present four choices of jurisdiction for filing of a claim by the
passenger namely, place of issue of ticket, principle place of business of the carrier, the place
of destination of the passenger and the place of domicile of the carrier. Through the Montreal
Convention a fifth jurisdiction is added which is the place of domicile of the passenger,
provided the airline has a presence there. Therefore an Indian would be able to file claim in
India even if the journey was undertaken outside India.

The Montreal Convention was ratified by 86 countries, out of which 25have direct air links
with India, including routes having high traffic density such as UK, USA, UAE, Qatar,
Kuwait, Bahrain, Saudi Arabia,Japan, Austria, France, Germany, Netherlands and Italy.
Although a party to the earlier Warsaw regime (the Warsaw Convention1929 and the Hague
Protocol 1955), India has only recently acceded to the Montreal Convention.

Under Article 253, entries 13 and 14 of Union List as provided under Constitution of India,
Parliament is competent to make a law for implementing “any treaty, agreement or
convention with any other country or countries or any decision made at any international
conference, association or other bodying order to incorporate the convention's provisions into
Indian law, by amending certain provisions of the Carriage by Air Act, 1972 and to include
the text of the Montreal Convention to the said Act as the Third Schedule, the Carriage by Air
(Amendment) Act 2008 amending the Carriage by Air Act 1972 was enacted by Parliament
in February 2009and notified in March 2009.The Director General of Civil Aviation (India)
had deposited with International Civil Aviation Organization (ICAO) on 1 May 2009, the
Instrument of Accession by India to the Convention for Unification of Certain Rules for
International Carriage by Air done at Montreal.
Indian Carriage Law

The Carriage by Air (Amendment) Bill, 2009 received the assent of the President on the20th
March, 2009.Carriage by Air (Amendment) Act, 2009, which incorporates the provisions of
this Convention, came into force from 1st July, 2009

5.2 Case Study: Mangalore Air Crash

An overview of recent Mangalore Air Crash throws light on (issue of liability,
Compensation and the jurisdiction in claiming damages) all the above provisions. An Air
India Express flight from Dubai to Mangalore crashed while landing on 22nd of
May 2010, killing 158 of 166 people on board including crew. Investigation reports revealed
that it was due to the Captain's failure to discontinue an unstable approach despite three calls
from the First Officer and a number of warnings from the EGPWS 26.

26. Article 33 of MC99 16 (Enhanced Ground Proximity Warning Systems)

The Air India Express operated a Boeing 737-800 Quick Turnaround (QTA) Flight on sector
Mangalore-Dubai-Mangalore. Capt. Z Glusica and First Officer HS Ahluwalia, along with
4-cabin crew operated the flight. The outbound flight was uneventful. The accident was
caused by a chain of multiple errors that took place right from the top of descent. The captain
had slept for a considerable period of time during the cruise phase. On waking up, there was a
distinct possibility of his transiting into sleep inertia. The crew had failed to plan the decent
profile so as to arrive at correct altitude for positioning into ILS approach. The aircraft was
high on approach and touched down on the runway, much farther than normal. The aircraft
over short the runway including the strip of 60 metres and continued into the Runway End
Safety Area (RESA) of 90 metres. Soon after which, the right wing impacted the localizer
antenna structure located further at 85 meters from the end of the RESA. Thereafter, the
aircraft hit the boundary fence and fell into a gorge.

The injuries to the occupants were mainly due to the aircraft impacting the gorge and
subsequent fire. Most of the passenger had received fatal injuries. A large number of fatalities
Indian Carriage Law

were due to burns. Of the eight survivors, seven passengers had received serious injuries and
one had received minor injury. An action claiming compensation was brought in India
applying the fifth jurisdiction i.e., the principal and permanent residence of the passengers
and the domicile of Air India Express.

The compensation was settled in two parts-
Firstly, as interim compensation: It is important to know that the interim compensation of
Rs 10 lakh offered by the airline is their statutory duty to do so under section 28 of
Schedule III17. This amount will be deducted from the final compensation.

Secondly, final settlement: Consortium of insurance companies may want to settle as soon as
possible, individually with the families. They will offer compensation amounts depending on
the basis of calculation of the quantum of damages claimed. The important factors that
influence the offer which the airline/insurer will make are (i) age of the deceased passenger,
(ii) educational status, (iii) employment, (iv) last salary drawn, (v) marital status, (vi) general
economic status, (vii) number of dependents, (vii) the extent of dependency, among others.

The Prime Minister of India, Dr Manmohan Singh announced 2 lakh (US$3,990) or €3,390)
for the families of the dead and 50,000 (US$1,000) for the injured to be allocated from the
Prime Minister's National Relief Fun. The Civil Aviation Ministry announced Rs 10 lakh
each, compensation for families of the dead. Karnataka government also announced a
compensation of 2 lakh (US$3,990) to the families of the dead.

The Airline announced interim compensation of 10 lakh (US$19,950) for passengers above
12 years of age, 5 lakh (US$9,980) for passengers below 12 years of age and 2 lakh
(US$3,990) for every injured passenger. This compensation is over and above the
compensation announced by the Prime Minister. Additionally, Air India has said it would
offer jobs to the survivors.

The Kerala High Court issued notices to the Centre and Air India on a petition seeking
compensation of Rs 75 lakh each to the victims under the Montreal convention,
Air India was obliged to pay a minimum compensation of 100,000 SDRs (Special
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Drawing Rights) amounting to Rs 75 lakh. The version of the Court was that according to the
Montreal Convention, the air carrier is strictly liable to pay the said amount without the proof
of any fault.

Air India preferred appeal against this decision. The Division Bench of the Kerala
High Court comprising Justice C.N. Ramachandran Nair and Justice P.S.Gopinathan, while
setting aside the judgment of the single judge, observed that the third schedule to the Carriage
by Air Act, 1972, do not provide any minimum compensation for the death or injury of a
passenger. The carrier is liable to pay any actual damages proved by the Claimants in the case
of death or injury. The carrier can negotiate this sum through Settlement or in a civil court of
competent jurisdiction. The court further held that the Actual damages payable had to be
claimed and proved by the injured or the legal heirs of a person died in the air crash in a civil
court if no settlement was possible.

Thus the above judgment though has been challenged before Hon’ble Supreme
Court, it has raised a new debate regarding the amount of compensation under the Montreal
convention. Recently a city-based organization, ‘812 Foundation’, has filed criminal
petitions in the Supreme Court as well as the second JMFC court in the city, seeking
punishment for those who were responsible for the 2010 air crash tragedy. The
Organization has enclosed to its petition an investigation report prepared by it, to prove that
the death of 158 people is a homicide arising out of the negligence of Airports Authority of
India. In the petition, the organization has also held Air India responsible for
Not subjecting the ill-fated aircraft to mandatory annual check-up as required for its flight.
An organization set up by a Mumbai-based advocate, Yashwant Shenoy, city-based lawyer,
Nayana Pai, and a member of a family affected by the above tragedy capability. In fact, the
organization has said, this aircraft was not put through the annual tests for the last four to five
years. The petitioners have argued that the tragedy, which had occurred at Kenjar near the
airport on May 22, 2010, was not an accident, but murders resulting out of the negligence of
Indian Carriage Law

the entities concerned. The petition seeks stringent punishment to those responsible for the
tragedy. The main aim of these petitions is to ensure that those who were responsible for this
catastrophe are punished, rather than ensuring payment of compensation to the affected
persons. The organization has filed private complaints under section 200 of Criminal
Procedure Code. A total of ten organizations and individuals including Air India, Airports
Authority of India, and Director General of Civil Aviation, have been mentioned as
respondents in the case. Thus this has given a new outlook to the Montreal Convention and
there is a need to re look not only on the levels of compensation but also to punish those
persons responsible for this tragedy. There is a need to include the provision of liability for
negligence so as to punish the entities concerned.

Multimodal Carriers
“International multimodal transport” means the carriage of goods by at least two different
modes of transport on the basis of a multimodal transport contract from a place in one
country at which the goods are taken in charge by the multimodal transport operator to a
place designated for delivery situated in a different country.”

Thus, the main features of a multimodal transport are: the carriage of goods by two or more
modes of transport, under one contract, one document and one responsible party (MTO) for
the entire carriage, who might subcontract the performance of some, or all modes, of the
carriage to other carriers.1 The terms “combined transport” and “intermodal transport” are
often used interchangeably to describe the carriage of goods by two or more modes of
transport. The development of new transportation techniques, such as containerization and
other means of unitization of goods in the 1960s, also introduced a significant need for
Indian Carriage Law

modification of commercial and traditional legal approaches to transport. Goods stowed in a

container could be transported by different means of transport, such as ships, railway wagons,
road vehicles or aircrafts, from the point of origin to the final place of destination, without
being unpacked for sorting or verification when being transferred from one means of
transport to another. Gradually, more and more operators took responsibility for the whole
transport chain under one single transport contract. Shippers/consignees needed to pursue
one single operator, in the event of loss of, or damage to, the goods involved in multimodal
transport, who would be responsible for the overall transport, rather than against several
unimodal carriers involved. There was a need for an international legal framework for
multimodal transport of goods.

In spite of various attempts to establish a uniform legal framework governing multimodal

transport, no such international regime is in force. The MT Convention has failed to attract
sufficient ratifications to enter into force. The UNCTAD/ICC Rules for Multimodal
Transport Documents, which came into force in January 1992, do not have the force of law.
They are standard contract terms for incorporation into multimodal transport documents. The
rules, being contractual in nature, will have no effect in the event of conflict with mandatory

The lack of a widely acceptable international legal framework on the subject has resulted in
individual governments and regional/sub regional intergovernmental bodies taking the
initiative of enacting legislation in order to overcome the uncertainties and problems which
presently exist. Concerns have been expressed regarding the proliferation of individual and
possibly divergent legal approaches which would add to already existing confusion and
uncertainties pertaining to the legal regime of multimodal transport. A multimodal operation
is made up of a number of unimodal stages of transport, such as sea, road, rail or air. Each of
these is subject to a mandatory international convention or national law.

In the case of M/S.Carborandum Universal Ltd vs. M/S. M.G.International 27, the case of
the appellants / plaintiffs is that the first appellant herein imported a consignment of 'fused
Aluminum oxide' weighing 4032 kgs, gross and net 4000 kgs, from Germany as per Shipper's
Invoice, dated 11.05.1999. The said cargo was packed in 80 bags and palletized in four
Indian Carriage Law

pallets and was shipped at Hamburg on vessel “Hyundai Highness”, owned by the respondent
/ defendant Sea carrier for safe carriage and delivery at Chennai. The respondent / defendant
issued clean Bill of Lading, acknowledging entrustment in good order and condition. The
vessel Hyundai Highness presumably discharged the cargo in an intermediary port, which
resulted in the cargo being carried by another vessel by name “Tiger Sea” and arrived at the
Port of Chennai on 26.06.1999. The cargo of 4 pallets was de-stuffed from the container on
07.07.1999 in a highly damaged condition. The Madras Port Trust annotated the pallets as
badly damaged. The first appellant / first plaintiff's local agents demanded survey on

It is the case of the appellants / plaintiffs that the respondent / defendant have failed to
conduct the survey, resulting in removal of the cargo on 15.07.1999. The second appellant /
second plaintiff arranged for survey of the damaged bags by a licensed independent surveyor,
one M/s.Suvega Surveyors. The surveyor issued a detailed survey report, dated 29.09.1999
and established that the total loss, on account of damaged delivery was at Rs.1,85,575/-.
According to the appellant, the damage to the cargo and the consequential loss that had been
taken place in the custody of the defendant sea carrier, hence, the suit is filed against the
defendant, seeking damages from the respondent /defendant.

27. S.A. No.6 of 2008

Here in this case, there is no evidence to show that the alleged damage had occurred due to
the negligence of the respondent herein. Unless the insurance company establishes the
negligence or improper handling of the consignment, the insurance company would not be
entitled to claim damages from the carrier. In other words, if the loss or damage occurred to
the consignment, by way of any natural calamity, act of god or by any antisocial element, in
the name of Bandh, the carrier would not be liable to pay any damages to the insurance
company, the second respondent herein.

In the case of S.K. Networks Company Ltd vs. Amulya Exports Ltd and Ors 28, The
plaintiff’s case inter alia is that false boarding dates had been deliberately put on the bill of
lading issued by defendant Nos. 3 and 5 with respect to the said consignment to avoid their
obligations to the plaintiff. As a result thereof, according to them, they were unable to
Indian Carriage Law

negotiate a letter of credit. The buyers in China refused to make payment under the letter of
credit as the date of the shipment was beyond the date specified in the letter of credit. With
the merits of this contention. I am not concerned at this stage. What is relevant is that the
plaintiff has expressly pleaded that the dates were falsely put on the bill of lading and that the
defendants jointly and severally connived in perpetrating the fraud and had also committed
breach of trust.

In view of above observations of the Apex Court & in the facts and circumstances of the case,
the averments made in the plaint read with the third party notice negotiated by respondent
No. 5 and as the controversy revolver around the date of BOL, including the allegations of
fraud and misrepresentation. I am not inclined to consider the contentions as raised by
defendant Nos. 3 and 4 in support of their Notice of Motion and specifically prayer Clause
(b) to dismiss the suit as barred by law. Therefore, considering the tenure and terms of the
averments taken as a whole, the plaint cannot be dismissed by exercising power under Order
VII, Rule 11 of C.P.C. Taking all these into account, present Notice of Motion was

28. AIR 2007 Bom 15

1. India and the Montreal Convention-A New Perspective by Sridevi Krishna, Dr T.R
2. United Nations Conference on Trade and Development - Implementations of
Multimodal Transport Rules.
4. Air Carrier’s Liability in Cases of Delay by Arpad Szakal, LL.M
5. Maritime Practice In India- Shrikant Hathi (Dr), Binita Hathi (Mrs)
7. Letters of Indemnity & Bills of Lading, a precarious symbiosis by Peter Bernard
Sproston BSc (Hons), ACIB, MIEx (grad)
Indian Carriage Law