Carriage by Air Act, 1972 (Act 69 of 1972)

Brought a uniform set of rules as signed under the Warsaw rules relating to international
carriage by air (1929), Hague Protocol (1955), and Montreal Convention (1999).

Essential components of a valid Contract are provided in Section 10 of the Contact Act.
These are as below.

(i) Competence of the parties to the agreement;

(ii) Free consent of the parties;

(iii) Lawfulness of consideration and object of the agreement; and

(iv) Absence of express declaration under the Contract Act rendering the agreement to be

void.

Section 23 of the Contract Act envisages that the object of an agreement will be unlawful, if -

(a) it is forbidden by law; or

(b) is of such a nature that, if permitted, it would defeat the provisions of any law; or

(c) is fraudulent; or

(d) involves or implies injury to the person or property of another; or

(e) the Court regards it as immoral, or opposed to public policy.

The section also expressly declares that every agreement of which the object in unlawful, is
void

Rule 22 of Carriage by Air Act, 1972.

22. (1) In the carriage of persons the liability of the carrier for each passenger is limited to the
sum of 200000 rupees. Where, in accordance with the law of the Court seized of the case,
damages may be awarded in the form of periodical payments the equivalent capital value of
the said payments shall not exceed 200000 rupees. Nevertheless, by special contract, the
carrier, and the passenger may agree to a higher limit of liability.
(2) (a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited
to a sum of 250 francs per kilogramme, unless the passenger or consignor has made, at the
time when the package was handed over to the carrier, a special declaration of interest in
delivery at destination and has paid a supplementary sum if the case so requires. In that case
the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that
that sum is greater than the passenger’s or consignor’s actual interest in delivery at
destination.

(b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any
object contained therein, the weight to be taken into consideration in determining the amount
to which the carrier's liability is limited shall be only the total weight of the package or
packages concerned. Nevertheless, when the loss, damage or delay of a part of the registered
baggage or cargo, or of an object contained therein, affects the value of other packages
covered by the same baggage check or the same air.

Rule 23

(1) Any provision tending to relieve the carrier of liability or to fix a lower limit than that
which is laid down in these rules shall be null and void, but the nullity of any such provision
does not involve the nullity of the whole contract, which shall remain subject to the
provisions of these rules.

(2) Sub-rule (1) of this rule shall not apply to provisions governing loss or damage resulting
from the inherent defect, quality or vice of the cargo carried

Rule 25

The limits of liability specified in rule 22 shall not apply if it is proved that the damage
resulted from an act or omission of the carrier, his servants or agents, done with intent to
cause damage or recklessly and with the knowledge that damage would probably result;
provided that, in the case of such act or omission of a servant or agent, it is also proved that
he was acting within the scope of his employment.
Judgments for the viva:
1. Indian Airlines v Madhuri Chaudhuri (1965) (Calcutta HC)
Judges: Justices PB Mukharji & Justice S Masud
Facts: Nagpur to Madras plane crashed and all passengers were killed. The family
of one of the victims, Sunil Baran Chowdhury, claimed damages. The family
claimed that the death was caused due to the negligence of the airlines. The
airplane ticket contained an exemption clause, absolving the airplane of all
liabilities in case of death, injury, loss, or damage caused due to neglect or
negligence of the Carrier. The clause indemnified against all claims, suits, actions,
proceedings, damages, costs, charges, and expenses in respect thereof arising out
of or in connection with such carnage or other services or operations of the
Carrier. The Carrier refused to pay the damages. The learned trial Judge held that
the exemption clause was illegal, invalid and void and he also held on the facts
that Captain Cartner, the pilot, was negligent and therefore, the defendant
corporation as the employer of Captain Cartner was liable in law.

Issues:
a) it is against Section 23 of the Indian Contract Act, although however he has
found that the agreement was not bad on the ground of unreasonableness;
(b) this exemption clause cannot deprive the heirs and legal representatives of the
deceased because they did not enter into this contract and, therefore, such an
exemption clause would be unavailing under the Fatal Accident Act under which
the present suit for damages has been brought;
(c) this exemption clause is bad on the ground that somehow or other broad
principles of the Warsaw Convention should be applied to India not as such but as
rules of justice, equity, and a good conscience which according to the learned
Judge this exemption clause violates.

Judgment:
 Indian Airlines Corporation v Keshavlal F Gandhi 
This Division Bench decision is a clear authority for the proposition that
the present appellant Indian Airlines Corporation is a common carrier and
that the relationship between the parties to the contract of carriage is to be
governed by common law of England governing the rights and liabilities
of such common carriers. This Division Bench decision proceeds to lay
down that the law permits common carriers totally to contract themselves
out of liabilities for loss or damage of goods carried as common carriers.
 Rukmand Ajitsaria v. Airways
pear to be, yet that seems to be the state of the law as recognised by the
common law of England and adopted by the Courts in India. Lastly this
decision of the Division Bench of the Assam High Court is an authority for
the proposition that the clause in a contract of carriage by air giving
complete immunity to the carrier from liability could not be impugned on
the ground that it was hit by Section 23 of the Indian Contract Act,
because the Contract Act had no application to the case nor could it be said
to be opposed to public policy. 
 The learned Chief Justice of the Assam High Court points out that
Exemption clauses of this nature have been upheld by the Courts and there
is no other statutory bar as provided under the Indian Carriers Act or under
the Indian Carriage by Air Act, which has no application to this case,
under the common law a contract of this nature was permissible.
 Any term in a contract for the conveyance of a passenger in a public
service vehicle negativing or restricting liability or imposing conditions as
to the enforcement of liability in respect of the death or bodily injury of the
passenger when being carried in or entering or alighting from the vehicle;
is void. That means that this exemption of liability may be prevented by
statute and if that is so the statute inter alia will prevail. But then the point
here in India is that no Act applies to internal carriage by air. The Warsaw
Convention does not apply.
 Madras High Court in Indian Airlines Corporation v. Jothaji Maniram, the
point is made clear beyond doubt. Where it is expressly stipulated between
the parties that the carrier is no" a common carrier, that conclusively
shows that the carrier is not liable as a common carrier. It was also
distinctly laid down by that decision that even assuming that the carrier
could be deemed to be a common carrier or held liable as such, it was open
to such a carrier to contract himself out of liability as common carrier, or
fix the limit of his liability.
 Statutory provisions in other statutes seem to indicate that the legislature in
its wisdom, has not up till now thought fit to legislate on this point about
internal carriage by air in India either to limit or exclude contract for
exemption for liability.
 If this Act itself does not apply its schedule cannot apply and these rules of
the Warsaw Convention cannot apply to the internal carriage by air in
India. To apply them to India as principles of justice, equity and good
conscience is to violate the statute. There is in this particular case no scope
for the introduction of vague and undefined rules of justice, equity and
good conscience because of the very specific provision of Section 4 of the
Carriage by Air Act, 1934 which provides as follows:
"'The Central Government may, by notification in the Official Gazette
apply the rules contained in the First Schedule and any provision of
Section 2 to such carriage by air, not being international carriage by air as
defined in the First Schedule, as may be specified in the notification,
subject, however to such exceptions, adaptations and modifications, if any,
as may be so specified."
 In my judgment, this express provision in Section 4 of this Act excludes
the application of the rules of Warsaw Convention to internal carriage by
air in India unless the Central Government chooses to apply it and that also
by proper publication in the Gazette and also with such exceptions,
adaptations and modifications as it thinks fit. That shows that it bars the
application of the rules of the Warsaw Convention to internal carriage by
air in India by judges through the back door of the vague conception of
justice, equity, and good conscience.
2. Airport Authority of India v. Ushaben Shirishbai Shah
Facts: A flight from Bombay to Ahmedabad crashed near Ahmedabad with 133 of
135 persons losing their lives. The widow and two sons of Shirishbai, who died
while travelling in an Indian Airlines flight, filed for compensation. The Indian
Airlines Corporation, Airport Authority of India, Union of India in the Ministry of
Civil Aviation, Director General of Civil Aviation.
Issues:
 Whether crash took place on account of acts or omissions on the part of
defendants or either of them?
 Did the accident occur on account of negligence by the pilot?
 Whether liability limited to 2 Lakhs?
 Composite negligence of Indian Airlines and Airport Authority?
 Whether plaintiffs are entitled to recover damages?

Judgment:
 Indian Airlines contends that its liability for damage sustained in the event
of death/ injury suffered is limited to a sum under Rules 17 & 22 of 2nd
schedule to the Carriage by Air Act, 1972 read with notification dated
5.7.1980 by Ministry of Civil Aviation & Tourism. The burden of proof is
on the plaintiff.
 The Court found that the pilots of the Corporation acted in a negligent
manner. The degree of negligence in this case was so high that it amounted
to being reckless, therefore, satisfying Rule 25 of Second Schedule.
 The Court found the Airports Authority of India to be negligent too and
they were held jointly liable.
 Damages of 753000 with 9% interest was allowed.

3. Central Inland Water Transport Corporation v. Brojo Nath Ganguly

Facts: Plaintiffs worked in a company which was dissolved by Court’s order and
they were then inducted into defendant Corporation upon latter’s T&C. After
years of serving Corporation, plaintiffs were arbitrarily kicked out of the
Corporation by virtue of Rule 9(i) of said T&C which provided for termination of
employees’ services on three months’ notice on either side upon which three
months’ salary to be paid by Corporation. Plaintiffs requested Court to quash Rule
9(i) on grounds of unconscionability.

Judgment:
 The word "unconscionable" is defined in the Shorter Oxford English
Dictionary, Third Edition, Volume II, page 2288, when used with
reference to actions etc. as "showing no regard for conscience;
irreconcilable with what is right or reasonable". An unconscionable
bargain would, therefore, be one which is irreconcilable with what is right
or reasonable.
 It is suggested that the judicial and legislative trend during the last 30
years in both civil and common law jurisdictions has almost brought the
 wheel full circle. Both courts and parliaments have provided greater
protection for weaker parties from harsh contracts. In several jurisdictions
this included a general power to grant relief from unconscionable
contracts, thereby providing a launching point from which the courts have
the opportunity to develop a modern doctrine of unconscionability.
 It would appear from certain recent English cases that the courts in that
country have also begun to recognize the possibility of an unconscionable
bargain which could be brought about by economic duress even between
parties who may not in economic terms be situate differently.
 Another jurisprudential concept of comparatively modern origin which has
affected the law of contracts is the theory of "distributive justice".
According to this doctrine, distributive fairness and justice in the
possession of wealth and property can be achieved not only by taxation but
also by regulatory control of private and contractual transactions even
though this might involve some sacrifice of individual liberty.
 Another theory which has made its emergence in recent years in the sphere
of the law of contracts is the test of reasonableness or fairness of a clause
in a contract where there is inequality of bargaining power.
 These adhesion/ standardized contracts are entered into by parties enjoying
much superior bargaining power with a large no. of people, hence, affect
people at large and if unconscionable, unfair and unreasonable are
injurious to public interest. These bargains therefore must be void on
account of being opposed to public policy (S.23). Further, if they were to
be merely voidable on account of undue influence (for in many cases,
superior party has ‘real or apparent authority over other party’ and hence,
uses that position to obtain unfair advantage over another as according to
S.16) it would compel each victimized party to go to Court to get the
contract adjudged as voidable which would lead to multiplicity of
litigations.
 In present case, plaintiffs had much less bargaining power as compared to
that of Corporation, for they did not have any meaningful choice while
assenting to the terms and conditions of their appointment in the
Corporation. If they would have refused to accept the said rule, it would
have led to their termination from service and exposed them to consequent
anxiety, harassment and uncertainty of finding alternative employment.
 Rule 9(i) was unreasonable and unfair to the extent of being
unconscionable for it gave arbitrary and absolute power to the Corporation
to dismiss its employees without providing any guidelines to that effect.
The rule was also violation of principle of natural justice-audi alteram
partem-for it neither provided for any inquiry to take place nor did it
provide for any opportunity to accused employee to be heard.