Full Judgment Text
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PETITIONER:
NATH BROS. EXIM INTERNATIONAL LTD.
Vs.
RESPONDENT:
BEST ROADWAYS LTD.
DATE OF JUDGMENT: 27/03/2000
BENCH:
D.P.Wadhwa, S.S.Ahmad
JUDGMENT:
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
M/s 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
appellant 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. 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 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 warehouse
from where it spread to the godown where the appellant’s
consignment 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 respondent
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
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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 M/s 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 of M/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 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 stored.
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.-
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Every such carrier may require payment for the risk
undertaken in carrying property exceeding in value 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. 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 value 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 such
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,
every 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 loss 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 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 non-delivery 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
carrying the goods. The only requirement is that the
carrier should have exhibited at the place of his business a
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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 non-delivery
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 would be liable in damages to the owner for the
goods bailed to him. 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 of bailment
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, IIIrd 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
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enemies or from the fault of the consignor, or inherent vice
in the goods themselves. He is, therefore, 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 loss 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 negligence, 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 Marine Insurance Co.
v. The Indian General Navigation and Railway Co. Ltd.,
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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 the Indian
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
which he is liable as an insurer, and the other for losses
for which he is liable under his obligation to carry safely.
Speaking generally, the first of these are insurable risks
from which the element of default is absent, the second are
risks of conveyance in which 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 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. & Anr. vs. Syam Sunder Tea Co.
Ltd., AIR 1955 Assam 65, wherein it was laid down as under :
"The common law of England regulating the responsibility of
common carrier was in force at the 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
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earlier decision of the Privy Council in Irrawaddy
Flotilla’s case (supra) was relied upon, it was held that
where loss 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. vs. 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." It was further held
as under : "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 & Anr. 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 a case, needed and the defendant has
to establish the exception. The Assam 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 vs. Kota Transport Co.
Ltd. AIR 1965 Raj. 200. In R.R.N. Ramalinga Nadar vs.
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.
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The extent of liability of a bailee under Ss. 151 and 152
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 Contract 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 of liability of a carrier. 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. vs. The Indian
General Navigation and Railway Co.Ltd. (supra), the Assam
decision in River Steam Navigation Co. Ltd & Anr. vs.
Syam Sunder Tea Co. Ltd. (supra), the Rajasthan decision
in Vidya Ratan vs. Kota Transport Co.Ltd. (supra), the
Kerala decision in Kerala Transport Co. vs. 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. In 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
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liability of the carrier is sought to be limited must be
signed by the owner of the goods, entrusted to the carrier
for carriage. 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. 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 warehouse 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 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 damage to the goods during
trans-shipment or carriage. These 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 Ll.L.Rep. 262; (1932) 1
K.B. 490. He considered the authorities in detail and
concluded : It is quite clear, in my judgment, on the
authorities as they now stand, that the words "at
charterers’ risk", standing alone and apart from any other
exception in the charter-party, do not excuse the shipowner
in the case of a loss due to the breach of warranty of
seaworthiness... I think that the words standing by
themselves have also to be read as limited to losses and
damages where there has been no negligence on the part of
the shipowner or his servants. He went on to consider the
charter-party terms in that case which also included an
exceptions clause, cl. 11. He held that that clause should
have its full effect whereas if "at charterers’ risk" had
included an exception of negligence, it might not have done
so. That judgment has been followed since 1932, for example
in The Stranna (1937) 57 Ll.L.Rep. 231; (1937) P.130 and
East & West Steamship Co. v. Hossain Brothers, (1968) 2
Lloyd‘s Rep. 145 (Supreme Court of Pakistan) and it has
not, so far as I am aware, been dissented from." In Mitchell
v. Lanc. & Y.R., 44 LJQB 107 = LR 10 QB 256, it was held
that "OWNER‘S RISK" only exempts the carrier from the
ordinary risks of the transit and does not cover the
carrier‘s negligence or misconduct. So also, in Lewis vs.
The Great Western Railway Company 3 Queen‘s Bench 195, the
words "OWNER‘S RISK", were held to mean, "at the risk of the
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owner, minus the liability of the carrier for the misconduct
of himself or servants." Thus the expression "at owner‘s
risk" does not exempt a carrier from his own negligence or
the negligence of his servants or agents. We may now
consider the facts of this case. The Consignment Note No.
52330 dated 11th March, 1994, through which the goods were
booked with the respondent says "AT OWNER‘S RISK". In the
column meant for insurance, again, the alphabets "OR" are
mentioned, which obviously mean "OWNER’S RISK". The terms
and conditions are printed at the back of the Consignment
Note. Condition No. 1, inter alia, reads as under :
"1......... The Company carries the goods at Owner‘s Risk
unless a special insurance of Rs.0.80 for every hundred
rupees of value declared by the sender having been charged
and paid. Payment of such Insurance charges, if made,
should be mentioned on the G.C. Note at the space provided
for the same." The name of the consignee indicated therein
is "Messrs Jeena & Co., Bombay." The address of the ultimate
consignee is mentioned as : "Sears Womenswear Limited, 1
Garrick Road, Hendon, London NW9 6AU, U.K.". It is further
indicated that the goods are to be loaded at Bombay. The
nature of the goods indicated in the invoice is "100%
Natural Silk Readymade Garments" consisting of 3672 pieces
of the value of GBP 48,470.40. The description of the goods
indicated in the Consignment Note was "Mulberry Raw Silk
Garments (Natural Silk Readymade Garments) comprising 77
packages. The contention of the learned counsel for the
respondent that since the goods were booked at "OWNER‘S
RISK" the respondent would not be liable for any loss to
those goods, is not acceptable to the appellant who contends
that before the liability of the carrier can be restricted,
there has to be an agreement in writing as contemplated by
Section 6 of the Act, which has to be signed by the owner of
the goods, and since the Consignment Note, even if it is to
be treated to be an agreement between the parties, is not
signed by the owner or the appellant, there was no contract
between the parties within the meaning of Section 6 of the
Act and, therefore, in spite of the mention in the
Consignment Note that the goods would be carried at "OWNER‘S
RISK", the liability of the carrier would not be restricted
and it would still be liable for the loss caused to the
undelivered goods at Bhiwandi by the outbreak of fire in the
godown where they were stored. When the goods were
entrusted to the carrier for delivery at Bombay to Messrs
Jeena & Co., the Consignment Note which was issued to the
appellant, mentioned that the goods were to be carried at
"OWNER‘S RISK." The appellant did not, at that stage, object
to the words "OWNER‘S RISK" being mentioned in the
Consignment Note. On 19th March, 1994, the respondent
informed the appellant that the goods were destroyed by
fire. In this letter, it was, inter alia, mentioned by the
respondent as under : "In the meantime, since the
consignment was booked at Owner‘s Risk basis, you are
requested to please take up the matter with your Insurance
Company." Although it was clearly mentioned that the goods
were booked at "OWNER‘S RISKS" in the aforesaid letter, the
appellant in his reply dated 26th March, 1994 did not
repudiate the assertion of the respondent that the goods
were booked at "OWNER‘S RISK." Even in his earlier letter
dated 21st March, 1994, the appellant did not say a word
about "OWNER‘S RISK." Thereafter, the appellant sent a
notice dated 22nd April, 1994 to the respondent through Mr.
S.K. Kaul, Advocate, but in that notice also the fact that
the goods were booked at "OWNER‘S RISK" was not repudiated.
Even in the subsequent notice dated 30th May, 1994, sent
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through Shri R.C. Gupta, Advocate, the appellant did not
say anything about "OWNER‘S RISK." Even in the Claim
Petition filed before the National Commission, the appellant
did not say anything about "OWNER‘S RISK." The respondent,
however, in para 4 of the Written Statement filed before the
Commission stated, inter alia, as under : "4. That the
Opposite party had carried the goods at the "Owner risk" as
offer to the complainant to get the goods insured by them
was declined. That the terms and conditions of the contract
of the carriage as incorporated in the Goods Consignment No.
52330 dated 11th March, 1994 under which the complainant
booked the goods with the opposite party for transportation
provides: 1. The Company (opposite party) carriages the
goods at owners risk, unless a special Insurance of Rs.0.80
for every hundred rupees of value declared by the vender,
having been charged and paid. Payment of such insurance
charges, if made, should be mentioned on the goods
consignment note at the space provided for the same. 2.
The Company (opposite party) shall not be responsible for
any loss or damage due to theft, fire explosion or accident,
unless the special insurance charges, as stated in clause 1
above is charged and paid. An affidavit duly attested by
Sukhbir Singh, the Booking Clerk of the opposite party, who
had booked the goods of the complainant on behalf of the
opposite party is annexed as Annexure A-1." It was then that
the appellant in his rejoinder, raised the question that
there was no agreement in writing between the parties so
and, therefore, the liability of the carrier would not be
restricted. The appellants pleaded in paragraph 4, as under
: "That the submissions made in para No. 4 of the
preliminary objection are not correct. The term "Owner‘s
risk" has not been defined in the Carriers Act. As per
Section 6 of the Carrier Act, a common carrier can limit his
liability not by means of public notice but by entering into
a special contract. If there is no special contract, the
liability of carrier remains absolute. It is not the case
of parties herein that they had entered into any special
contract or the consignment note bears the signatures of the
complainant in token of their acceptance that the goods were
booked at owner‘s risk. The agreement/contract becomes
binding when the parties so agree and execute such contract.
The complainant has not signed any document/contract wherein
the complainant has accepted the goods were booked at the
owner‘s risk. It is submitted that even where the goods
were carried at "Owner‘s Risk", the carrier is not absolved
from his liability for loss of or damage to the goods due to
his negligence or criminal acts. Section 9 of the Carriers
Act provides that the common carriers are liable for the
loss if any caused to the goods entrusted to the carriers
and it is the duty of the carriers to carry the goods to the
destination station. It is absolutely incorrect that the
opposite party made any offer to get the goods insured.
Section 8 of the Carriers Act deals with the liability of
the common carriers for loss or damage caused by the neglect
of the carriers or his agent. The opposite party is liable
to pay the damages to the complainant even if the goods are
not insured. Thus the question of insurance of goods is not
at all relevant. In any case, the opposite party could not
have asked for the payment of insurance charges as mentioned
by them in the reply i.e. 80 paisa per 100/- of value
because carriers cannot in law collect the premium for
insurance of goods and issue any valid receipt of Insurance
Premium. The opposite party cannot work in place of
Nationalised Insurance Companies who perform their duties by
virtue of statute, i.e. Insurance Act. The complainant
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could not have been asked to enter into an illegal contract.
As such the submissions made in para No. 4 of the written
statement are incorrect, hence denied. The affidavit
(Annexure I) to W.S.) is collusive and managed one. In any
case the contents of affidavit are false and denied. The
complainant submits herewith affidavit of its employee Shri
Puran Singh to establish that the opposite party brought
their truck to the factory of the complainant and loaded the
goods there for carrying the same to Bombay and the
representative of the opposite party issued consignment note
in the factory of the complainant and at no stage the
opposite party asked the complainant to get the consignment
insured. The affidavit of Shri Puran Singh is submitted
herewith as ANNEXURE-J to the rejoinder. [ Emphasis
supplied ] In view of the above, there did arise a
controversy between the parties whether there was any
special agreement between them which would have the effect
of restricting the liability of the respondent in carrying
the goods in question to Bombay for delivery to Messrs Jeena
& Co. This question has not been answered in clear terms by
the National Commission and a positive finding, whether or
not there existed a special contract between the parties
within the meaning of Section 6 of the Act, has not been
recorded. The Commission, after considering various
provisions of the Act came to the conclusion that EVEN IF
the goods were carried at "OWNER‘S RISK", the carrier would
not be fully absolved of his liability to pay compensation
if the loss was occasioned on account of his negligence or
the negligence of his servants and agents. The Commission,
to this extent, is right and, therefore, a positive finding
on the existence of a special contract is not insisted upon
but what is now questioned is the finding of the Commission
on the question of negligence. The Commission held that
since the goods were diverted to Bhiwandi by the consignee,
Messrs Jeena & Co., to whom the goods were to be delivered,
and they were destroyed by the fire which initially broke
out in the adjacent godown and subsequently spread to their
own godown, the respondent would not be liable as he had
taken all possible care which was expected of him as
carrier. This, we feel, is not the correct approach. There
was a serious dispute between the parties not only on the
existence of a special contract within the meaning of
Section 6 of the Act, but there also arose a dispute with
regard to the diversion of goods to be unloaded at Bhiwandi
instead of being delivered to Messrs Jeena & Co. at Bombay.
This question, namely, diversion of goods, has been decided
by the Commission without scrutinising the relevant
pleadings of the parties. The goods, according to the
learned counsel for the respondent, had reached the
destination, but when the consignee was informed that the
goods have arrived, the carrier was instructed by the
consignee, Messrs Jeena & Co., to unload the consignment at
Bhiwandi as the shipment of the 77 packages, which were
delivered to the carrier by the appellant, was to take place
at C.F.S. Kalamboli (Nhava Sheva Port). It is contended
that the consignee was the agent of the appellant and the
goods were to be delivered to him and if the consignee, on
information that the goods have arrived at Bombay, diverted
the carrier to Bhiwandi for unloading the goods there, the
carrier shall be deemed to have delivered the goods to the
consignee, namely, Messrs Jeena & Co. and the carrier
cannot be held liable for any loss caused to the goods after
delivery thereof to the consignee. Whether or not Messrs
Jeena & Co. had directed the respondent to unload the goods
at Bhiwandi, is a question of serious dispute between the
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parties. The respondent relied upon the letter dated 14th
March, 1994 from Messrs Jeena & Co. which reads as under :
"This has reference to the information given by you
regarding arrival of 77 packages at Mulund Check Post of M/s
Nath Brothers, Exim International Ltd., New Delhi, booked by
you under your G.C. No. 52330 dt. 11.3.94 Ex. Delhi to
Bombay. In this connection we hereby advise you to unload
the said consignment of 77 packages of the above party at
Bhiwandi as the shipment of the same will take place at CFS,
Kalamboli (Nhava Sheva Port)." The appellant disputed the
genuineness of this letter and contended that it was a
forged letter. It was contended that 14th March, 1994 was a
public holiday at Bombay on account of "Idul-Fitr" and the
offices of the banks including that of Messrs Jeena & Co.
were closed. It was also contended that Messrs Jeena & Co.
had addressed a fax message on 15th March, 1994 to the
appellant complaining of non-receipt of the goods. It was
contended that if the goods had arrived at Bombay and were
diverted by Messrs Jeena & Co. to Bhiwandi for being
unloaded there, they would not have issued the fax message
of 15th March, 1994 complaining of non-receipt of goods. It
is also pointed out that in none of the communications
earlier exchanged between the parties, respondent had
indicated about the letter dated 14th March, 1994 of Messrs
Jeena & Co. by which they had instructed the respondent to
divert the goods to Bhiwandi. It is also pointed out that
when a notice was issued by the appellant to the respondent,
the latter, namely, the respondent sent a reply through
their counsel on 27th June, 1994, but in that reply also
they did not mention about any written instructions from
Messrs Jeena & Co. for unloading the goods at Bhiwandi. In
the Claim Petition also, the appellant did not say a word
about diversion of goods at the instance of Messrs Jeena &
Co. But when the respondent filed his Written Statement and
pleaded that the goods had been diverted to Bhiwandi on the
express written instructions of Messrs Jeena & Co., the
appellant raised a dispute about that question in his
rejoinder. In para 10 of the Written Statement, the
respondent stated as under : "That para No. 10 of the
complaint as stated is wrong and denied, while it is not
denied that the booked consignment had to be delivered at
Bombay, but the same had to be taken to Bhiwandi and
unloaded of the opposite party godown as there was specific
instruction from the consignee and freight Forwarder M/s
Jeena & Company, Bombay. The opposite party had received a
letter dated 14.3.1994 wherein M/s Jeena and Company, on
receipt of the information from the opposite party about the
arrival of the consignment at Mulund Check post, directed
the opposite party to unload the said consignment at
Bhiwandi as the shipment of the same will take place from
C.F.S. Kalamboli (Nava Sheva Port). The letter dated 14th
March, is annexed as Annexure A-2. The true facts of the
case are that opposite party had booked the consignment of
77 boxes for delivery to their clearing, forwarding and
shipping agents M/s Jeena & Co. at Bombay under goods
consignment note No. 52330 dated 11th March, 1994 which is
Annexure B to the complaint. As per the instruction of the
complainants consignees at Bombay, M/s Jeena & Co.,
International Freight forwarders the consignment was to be
shipped from Nhava Sheva Port and not from Bombay Docks. As
soon as the consignment reached the Muland Check Post on
14th March, 1994, the said consignee vide letter dated
14.3.1994 which is Annexure A-2, directed the opposite party
to offload the cargo at Bhiwandi situated at the outskirts
of Greater Bombay where no octroi duty was payable and which
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was meant for despatch from the newly set-up port at Nhava
Sheva via the ship/vessel CMB Medal V-212, Rotation No.
405, which was expected to depart on any day immediately
after 16th March, 1994. Annexure A-3 is the map of the
Greater Bombay showing the location of the Mulund Check post
of the Greater Bombay, where Octroi duty is collected by the
Municipal Corporation on the entry of the goods, Bhiwandi on
the outskirts of the Greater Bombay and the situation of the
Bombay Docks and Nhava Sheva Port across the Creek of
Bombay. It is, therefore, not true that opposite party
wrongly unloaded the consignment at Bhiwandi, outside the
Bombay Octroi check post and hence it can easily be inferred
from the facts as stated above, that storing of the goods at
Bhiwandi instead of directly taking it to Bombay, does not
speak of any deficient and in-adequate service on the part
of the opposite party. The opposite party will further like
to add that complainant was bound to have complied with the
requirement and provision of the Bombay Municipal
Corporation Exemption from Octroi (Export) Promotion Rule
1976, copy of which is annexed as Annexure A-4, in respect
of the articles imported into Greater Bombay for the purpose
of export to foreign countries, as such registration as
exporters with the Municipal Corporation of Greater Bombay,
delcaration that cargo was to be shipped from Bombay Docks
and comply with all other procedure and formalities in this
particular case, the consignment was to be shipped from the
Port at Nhava Sheva, situated across the creek of Greater
Bombay and as such the consignment was intended to be
imported within the Octroi limits of the Greater Bombay
which would have attracted Octroi duty of 2% of the value of
the consignment, failing which the goods would have been
seized by the Municipal Corporation of the Greater Bombay at
Octroi check post. It is only when the consignee or their
forwarding agents desired this extra facility in respect of
the export cargo to save octroi that the opposite party take
this extra responsibility and incur expenditure, in
unloading which involves heavy labour charges. It is denied
that the complainant has suffered loss of goods including
profits as per price settled. It is denied that loss of
reputation has been caused to the complainant. As the
complainant was immediatley informed vide letter dated
19.3.1994 (which is annexure "E" in the complaint) about the
loss of the goods due to accidental fire and hence there was
no occasion for the complainant to have suffered huge
expenses on travelling. The complainants apprehension
regarding claims from foreign customers, at this stage, is
unfounded and pre-mature to be considered by the Hon’ble
Commission. In any case loss if suffered any is too remote
and indirect under section 73 of the Indian Contract Act and
could not be considered." The letter dated 14th March, 1994
from Messrs Jeena & Co. was filed with the Written
Statement as Annexure A-2. The appellant in his rejoinder
to the Written Statement of the respondent repudiated the
above pleadings of the respondent and stated in para 10
thereof, inter alia, as under : "Para 10 of reply is wrong
and false and, therefore, denied. It has been admitted by
the opposite party that the booked consignment had to be
delivered at Bombay. Thus it is not in dispute that there
was no agreement for carriage of goods to Bhiwandi or its
storage at Bhiwandi. It is not the case of opposite party
that complainant had directed them to change the destination
of goods from Bombay to Bhiwandi or to store them there. It
was further stated as under : 10(1) Without prejudice to
the above submissions it is stated that the letter
dt.14.3.94 purported to have been issued by Jeena & Co.
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(Annexure 2 to W.S.) relied upon by the opposite party to
justify the change of destination of consignment from Bombay
to Bhiwandi is totally false, collusive, an after thought,
managed one and mischievous in view of earlier fax of dt.
15.3.94 of Jeena & Co. (Annexure K) in which they informed
the complainant regarding 77 packages (Consignment in
question) "CARGO AWAITED". Furthermore, the opposite party
could not have informed Jeena & Co. on 14.3.94 and Jeena &
Co. could not have issued impugned letter dt. 14.3.94 on
that date itself as this day was a holiday under Negotiable
Instruments Act on account of Id-ul-Fitr when undoubtedly
Govt. Offices and Bank were closed in Bombay. To this
effect a telex confirmation dt. 29.4.95 issued by Indian
Overseas Bank R.O. (Metro) Bombay to Indian Overseas Bank,
Parliament Street, New Delhi (Bankers of the Complainant) is
enclosed herewith as Annexure L. Furthermore, the office of
Jeena & Co. itself was closed on 14.3.94 as certified by
them in the fax message dt. 22.4.95 which is enclosed
herewith as Annexure M. Furthermore, the opposite party had
not taken any plea based on the letter dt. 14.3.94 in their
first official communication being letter dt. 19.3.94
(Annexure 5 to W.S.). This proves that letter dated 14.3.94
is after thought. 10(2) In the above connection it is
further submitted that the veracity of claim of opposite
party that it changed the destination of goods on
instruction of Jeena & Co. is highly dubious for two more
reasons. .........
............................................". [ Emphasis
supplied ] It was further stated in paragraph 10(4) of the
rejoinder as under : "It is submitted that above facts
clearly show that the story of giving information of arrival
of goods at Bombay to Jeena & Co. and receiving
instructions from them to unload goods at Bhiwandi on
14.3.1994 is totally false and the opposite party stored the
goods at Bhiwandi of their own volition. The implantation
of letter dated 14.3.1994 is, therefore, only a crude
attempt to justify their unauthorised action of storing
goods at Bhiwandi." In view of the above pleadings, a
serious dispute had arisen between the parties as to the
genuineness of the letter dated 14th March, 1994, said to
have been written by Messrs Jeena & Co. to the respondent
to unload the goods at Bhiwandi instead of delivering the
consignment at Bombay. The National Commission did not
advert itself to these questions and disposed of the whole
matter observing, inter alia, as under : "The carrier has,
however, pointed out that they had taken the consignment, as
per the instructions of the petitioner, and informed the
consignee that the goods were ready for delivery at Bombay,
but the consignee directed them to unload the said
consignment of 77 packages at Bhiwandi. The diversion of
the consignment to Bhiwandi was thus made at the direction
of the consignee himself. In this regard, the Opposite
Party has produced a letter from M/s Jeena & Co., dated 14th
March, 1994 which reads as follows : "This has a reference
to the information given by you regarding arrival of 77
packages at Mulund Check Post of M/s Nath Brothers, Exim
International Ltd., New Delhi, booked by you under your G.C.
No. 42330 dt. 11.3.94 Ex. Delhi to Bombay. In this
connection we hereby advise you to unload the said
consignment of 77 packages of the above party at Bhiwandi as
the shipment of the same will take place at CFS, Kalamboli
(Nhava Sheva Port)." The argument of the Opposite Party, the
carriers, is that on these specific instructions from the
consignee and freight forwarder M/s Jeena & Co., Bombay, the
said consignment was unloaded and stored at Bhiwandi. That
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was done, according to them, since the consignment was to be
shipped from Nhava Sheva Port and not from Bombay Port and,
therefore, the consignee diverted the consignment from
Mulund Check Post to Bhiwandi, which was nearer to Nhava
Sheva Port, and at the same time also avoided the octroi
duty which had to be paid, had the delivery been taken at
Mulund Check Post when the consignment reached there. The
goods were stored at Bhiwandi in godown Nos. 5 & 6, Wadi
Compound, Anjur Village, Anjurphate, outside the octroi
limits of Greater Bombay along with other export
consignments, the total value of which, according to the
Opposite Party, was more than Rs. 2 crores and all of which
were to be shipped from Nhava Sheva port across the creek of
the Greater Bombay. All those goods were destroyed around
noon on 16.3.1994 because of a huge fire and explosion that
occurred in the adjoining godown No. 7 belonging to Shri
Rati Bhai were drums containing hazardous chemicals were
stored. The fire spread to the Opposite Party‘s godown Nos.
5 and 6 as well as other adjoining godowns. In spite of all
efforts by the fire fighting engines, the fire could not be
contained in time. The accidental fire was reported to the
Police Station, Bhiwandi, and an FIR was also lodged on the
16th March, 1994 itself. The Police prepared a Panchanama
in front of independent witnesses and the fire brigades of
Bhiwandi and Nizampur Nagar Parishad confirmed this
accidental fire. This fire was also reported in the
newspapers on 16th and 17th March, 1994. It is not the case
of the Petitioner that the carrier did not take adequate
precautions or steps to save the goods from the loss by the
fire. On the other hand, it has been successfully proved by
the carrier that the consignment of the Petitioner was
diverted from Mulund Check Post to Bhiwandi on the specific
instructions of the consignee and further that the loss was
caused by fire which was beyond their control. It has been
mentioned by them that they took due care, within their
capacity and now they have lodged a claim on the owner of
the adjoining godown from where the fire started." The above
will show that the National Commission acted upon the letter
dated 14th March, 1994 of Messrs Jeena & Co. without
deciding the question whether it was genuine and was at all
issued by Messrs Jeena & Co. as the appellant had contended
that the letter was forged or was procured collusively.
Since the above aspects have not been considered and decided
by the Commission, we cannot uphold the judgment of the
National Commission. The appeal is consequently allowed,
the impugned judgment dated 2.9.1996 passed by the National
Commission is set aside and the case is remanded to the
Commission for disposal afresh in the light of the
observations made above and in accordance with law.