1. 1
PROJECT REPORT ON
“Logistics laws”
CORPORATE GUIDE:
Mr.Hiranand Bhatia,
Manager,
Gati limited.
FACULTY GUIDE:
Prof. Sidharth Ghose
ASBM, BHUBANESWAR
2010
SUBMITTED BY:
BISHNUPADA MOHANTY
PGPLSCM/09/11/05
09668340710
PROJECT REPORT ON

2. PROJECT REPORT
ON
“LOGISTICS LAWS”
CORPORATE GUIDE:
MR. Hiranand Bhatia,
Manager,
Gati limited.
FACULTY GUIDE:
Prof. Sidharth Ghose
ASBM, BHUBANESWAR
SUBMITTED BY:
Bishnupada Mohanty
2

3. CONTENT
SL.
NO
PARTICULARS
PAGE
NO.
1. Certificate from the Organization.
2. Certificate by the faculty guide.
3. Declaration.
4. Acknowledgement.
5. Preface.
6. Methodology.
7. Scope.
8. Introduction.
9. Industry overview.
10. Carriage of goods by land,
(i) Carriage of goods by Road.
(ii) Carriage of goods by Railway.
11. Carriage of goods by Air.
12. Carriage of goods by sea.
13. Carriage Related Cases Study.
14. GST.
15. Right to Information Act, 2005.
16. Competition Act, 2002.
17. Recommendations and Conclusion
3

4. CERTIFICATE FROM THE ORGANIZATION
This is to certify that the project entitled, “LOGISTICS
LAWS” is a genuine Interim Report carried out by Mr. Bishnupada
Mohanty of ASBM, Bhubaneswar having Registration no-
PGPLSCM/09/11/05, for the partial fulfillment of Post Graduate
Programme in Logistics and supply chain Management 2009-2011.
Place: Bhubaneswar Mr. Hiranand Bhatia,
Date: Manager,
Gati Limited.
4

5. CERTIFICATE BY THE FACULTY GUIDE
This is to certify that the project titled, “LOGISTICS LAWS” is a genuine
Interim Report carried out by Bishnupada Mohanty having Roll No-
PGPLSCM/09-11/05. The report is an outcome of the extensive study for the
partial fulfillment of Post Graduate Programme in Logistics and supply chain
Management 2009-2011.
Place: Bhubaneswar Prof. Sidharth
Ghose
Date: (Faculty Guide)
5

6. DECLARATION
I hereby declare that this project report “LOGISTICS LAWS” is my
own work, to the best of my knowledge and belief. It has been submitted to
the “Gati limited” for the partial fulfillment of Post Graduate Programme in
Logistics and Supply Chain Management, 2009-2011. This is an original
work and has not been submitted earlier to ASBM in any form. The
project work was carried during 12th
April to 6th
June, 2010. The
data collected through survey in the catchments area are true to best
of my knowledge.
Date: Bishnupada Mohanty
Place: Roll No-PGPLSCM/09-
11/05
ASBM
Bhubaneswar
6

7. ACKNOWLEDGEMENT
I acknowledge my indebtness to Chief Legal officer Mr. N.K. Pandey
for providing the opportunity to work on this topic. I would like to thank
my company guide and my mentor Mr. Hiranand Bhatia, Manager, Gati
limited for guiding me in this esteemed organization, and helping me to
complete the project in a successful manner.
I am obliged to my Faculty guide Prof. Sidharth Ghose for providing
time, effort and most of all his patience in helping me for preparing this
project report. I am also thankful to all the faculty members of our
college for their kind cooperation with me to write this report.
I feel immense pleasure to express my deep sense of gratitude to all the
members of Legal Department as a guide whose expert guidance and
deep knowledge help me to complete my project in this short span of
time.
Last but not least I am thankful to my family members and friends for
providing me moral support to do this project successfully.
DATE:
PLACE BISHNUPADA MOHANTY
7

8. PREFACE
Summer Internship Program (SIP) is an essential part for every student of
PGLSCM for the completion of the course. Hence every student undergoes
this training program. The main objective of this is to expose the students to
the actual environment that prevails in to today’s organization. In this project
a student watches how the theories of a book are put into practice and how
much they are suitable and useful. As per the module is concerned, I
underwent my SIP training in GATI Limited, Secunderabad. The topic of my
research is “LOGISTICS LAWS”.
8

9. METHODOLOGY
While deciding about the method of date collection to be used for the study, the researcher
should keep in mind two types of data primary and secondary. The primary data are those
which are collected afresh and for the first time, and thus happen to be original in
character. The secondary data on the other hand, are those which have already been
collected by someone else and which have already been passed through statistical process.
Primary data- This information is collected by interviewing the employees of Legal
Department of GATI.
Secondary data- This data are collected from various books, news papers, journals,
past cases of Gati limited and websites on logistics and transportation
industry.
9

10. SCOPE
In the modern world the importance of carriage services cannot be overlooked. Indeed,
transport and carriage system is the backbone of modern national economy. In the absence
of carriage services, no one can think of the prosperity of a nation especially in modern
industrial world where carriers have became virtually indispensable to the survival of
society.
The development of science and modern technology to a great extent has also affected the
industrial and commercial activities. Consequently, to cope up the need of the industrial
and commercial concerns, there arose a need for a better and developed transport and
carriage system. Now-a-days there are various modes of transport and carriage by which
man, money and material are being transported from one place to another. Therefore, by
virtue of the contribution made by the carriage and transport system, it has assumed a great
importance in the national life and economy of the country.
Logistics is not confined to manufacturing operation alone. It is relevant to all enterprises.
The study of logistics is especially important for bulk raw materials, where substantial
outflow of freight is involved. The study of logistics is important t establish a lean supply
chain which would give an advantage to quick product change over, capability, excellent
short and long term forecast.
In order to transport material from one place to another logistics managers are using Road,
Rail, Air and Water line as the modes of Transportation. A logistics expert need to
understand the rules and regulations associated with these modes of transportation.
As a student of logistics and supply chain my aim is to work in a logistics industry in near
future. So the laws relating to carriage will be very helpful to me in my day to day
operation. As a manager of a logistics industry if I am aware about the laws relating to
carriage, It will help me to know about my rights and liabilities and work according to my
limitations, So that I will always keep the interest of my company at front when I am
negotiating with the other party.
10

11. INTRODUCTION
The term logistics is often misinterpreted to mean transportation. In fact, the scope of
logistics goes well beyond transportation. Logistics forms the system that ensures the
delivery of the product in the entire supply chain. This includes transportation, packaging,
storage and handling methods and information flow.
The industrial policies in India have prompted manufacturers to build plants in remote,
backward areas due to inexpensive land and tax benefits. This poses some serious logistical
problems. Apart from a poor road and transportation network, the existing communications
system in India leaves a lot to be desired by any international standard. It is in this context
that logistics has to be considered in India.
Logistics call for an understanding of the total supply chain, and elements of which include
inventories, packing, forwarding, freight, storage and handling. Logistics is responsible for
all the movement that takes place within the organization whether it is inbound logistics in
incoming, raw materials, or movement within the company or the physical distribution of
finishing goods, logistics encompasses all of these.
Typical logistics framework mainly consists of physical supply, internal operations and
physical Distribution of Goods and Services. To put it more simply, the material supply
logistics starts from the base level of “generation of the demand” through the “process of
purchase” and “supply of material from the vendor” right through to “final acceptance”
and “issue to the indenter” and has to be considered as a “one whole activity” with each
stage having an impact on price/cost of material supply.
Logistics is, in itself, a system, it is a network of related activities with the purpose of
managing the orderly flow of material and personnel within the logistics channel.
Travel and Transportation forms the backbone of infrastructure – the major sector of any
economy. Millions of people and business rely on an extensive, inter-related network. The
transportation industry is in an era of unprecedented change. Marked by unending demands
for increased services and severely limited budgets for infrastructure, the industry faces
continuous challenges.
On the other hand, 3 PL and Logistics provider industry that is heavily dependant on
infrastructure set by transportation has been embryonic to other greater scope and more
complex solutions. Expansion of networks through rapid globalization with merger and
11

12. acquisitions amongst logistics providers and need to fulfill complex global contracts call
for higher performance through greater and deeper end-to-end integration and state of the
art visibility tools.
INDUSTRY OVERVIEW (GATI LIMITED)
GATI completes twenty years of being, in the logistics industry, in 2009. A pioneer in the
segment, GATI has undertaken multitude of initiatives, many a first in the domain. Be it in
exploring ways to bring premium value to the customer or responding to the demands of
businesses, GATI has been in the forefront of innovation and setting benchmarks in quality
of service and customer satisfaction. It has invested heavily in infrastructure in order to be
able to efficiently manage operations today and take care of the requirements to tomorrow.
GATI started as a cargo management company in 1989, has grown into an organization
with more than 3500 employees and a turnover of INR630 crore in 2008-2009.
GATI is dedicated to quality service and this obsession has helped them reach new
milestones. With the initiation of GATI cargo management services in 1989, a new
revolution was started in the Indian Cargo Industry.
The advent of the internet has changed the way corporate do business. GATI has invested
in technology to get real time updates and data of its operations, in its effort to provide the
ultimate customer service experience.
Shipment tracking system: GATI has state of the art IT infrastructure to provide the latest
technological benefits to their customers. It provides means and modes for customers to
track their shipments from anywhere, anytime using multiple communication modes such
as Internet, e-mail, IVR, Mobile (SMS) and telephone/toll free number.
Automation of system: GATI has implemented a custom built ERP on Oracle Technology
to cover the entire cycle of operation from order to billing. This is centralized and
completely on-line and is being accessed by 400 locations across India and in APAC
countries where GATI has a presence.
GATI is truly multi-modal company. GATI can cater to every customized requirement of
businesses. GATI understands that no two requirements are the same, and hence have
customized solutions for all types of business needs. GATI reaches 603 out of 611 districts
of India, delivering unmatched reach, meeting the requirements of the customer across the
length and breadth of the country. With a fleet of more than 4000 vehicles, 94 refrigerated
trucks, 6 marine vessels and more than 2 million sqft. Of world class Mechantronic
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13. warehouse space, GATI’s multi-modal gives them an advantage over competition as it has
the capability operate on any mode from surface, air, rail and sea.
Milestones of GATI
Year ACHIEVEMENTS
1989-1995 • New concept of Door to Door service. A money back Guarantee was
given in case of delay in delivering shipments.
• Cash on Delivery (COD) started by GATI as a unique value added
service.
• Call free number introduced by GATI for the first time in the logistics
industry in India.
1996 Tied up with Indian Airlines to facilitate speedier delivery of
shipments.
1997 Introduced the concept of 3rd
party logistics
1998 • First logistics company in India to awarded ISO 9001 certification.
• Lunched courier service “suvidha” which was later called as IC Zipp
courier
1999 • GATI expanded to SAARC countries through tie-ups with the postal
departments of Bhutan and Maldives.
• The P.D. Agarwal Development centre was set up in pune exclusively
for employee training and development.
2001 • GATI launched the first exclusive cargo Train between Mumbai and
Kolkata in association with Indian Railways.
2003 • Bagged the voice of customer Award for “The Best Logistics
Company” a survey conducted by Frost & Sullivan.
• Launched India-centric distribution. Forayed into Singapore, the
international business hub.
2004 • Introduced mechanized racking system in the automated warehouse at
Panvel, Maharashtra.
2005 • State of the art Mechantronic warehouses with APL racking and
modern handling equipment in major cities across India.
• GATI was given the champion CIO award for less than Rs.1000 crore
category of the Enterprise connect Award-2005.
13

14. 2006 • Awarded the “Best logistics partner” by HCL info system.
• Awarded consumer super Brand status in the logistics category for
2006-07 nominated by NDTV.
• Launched GATI student express
• Online employee information system and performance management
system introduced.
•
2007 • Strategic alliance with china Railway Express International Logistics
Co. Ltd.
• Lunched a joint courier and Air cargo service with Air India.
• Opening of Mega state of the art mechantronic express distribution
centre in Bangalore.
• Introduced Vehicle Tracking system.
• Introduced a unique concept, an outlet offering a menu of services
DOD Direct (Draft on line) to reduce cycle time of customer
payments.
• Introduced 40ft container vehicle with German based double deck
system technology.
• GATI was awarded the Amity HR-excellence award in 2007.
2008 • Lunched the centralized call centre at Nagpur.
• Launched the millennium Parcel Express Train between KYN
(Mumbai) and Guwahati strategic Alliance with GLS (General
Logistics System).
• GATI was awarded the Amity excellence award in 2008.
2009 • Launched the mechantronic warehouse in Hyderabad.
• Lunched 10C, a solution for shipment delivery notification, real time.
• Launched GATI Academy.
• Introduced SQS (Service Quality Standardization).
• Won the CIO 100 Awards and Enterprise Connect Award 2009.
• GATI was awarded Amity HR-Excellency award in 2009.
14

15. Carriage of Goods
Carriage of goods from one place to another within a country or from one country to
another plays an important part in the commercial life of the modern world. The contract of
carriage of goods must of necessity from an important constituent of it. Goods may be
carried by land, sea or air. The person who carry goods, whether by land, sea or air, known
as carriers.
The law relating to carriage of goods in India is found in the following statues.
1. In case of carriage by land
(a) The Carriers Act, 1865 and new Road Act, 2007
(b) The Railways Act, 1989
2. Incase of Carriage by sea
(a) The Bills of Lading Act, 1856
(b) The Carriage of Goods by sea Act, 1925
(c) The Merchant shipping Act, 1958
(d) The Marine Insurance Act, 1963
3. Incase of Carriage of Air Act, 1972
(a) The Carriage by Air Act, 1972
15

16. CARRIAGE BY LAND
The law relating to carriage of goods by land is contained in Carriage by Road Act, 2007
which came in to being upon repealing Carriers Act, 1865 and the Railways Act, 1989. The
former deals with carriage of goods over land and inland waterways, the latter deals with
carriage of goods by railways.
Classification of Carriers
Carriers may be classified into common carriers and private carriers. There is also third
type known as gratuitous carriers.
Common Carrier: A common carrier is one who undertakes for hire to transport from
one place to another, either by land, sea or air, the goods of anyone who chooses to employ
him. The Carriers Act, 1865 defines a common carrier as any individual, other than the
Government, engaged in the business of transporting property under multimodal transport
document or of transporting for hire property from place to place, by land or inland
navigation, without discrimination between different consignors. Thus any person who
holds himself out as ready to carry for hire from one place to another the goods of any
person who chooses to employ him for the purpose is called a common carrier. He must do
so as a regular business for money. Anyone who carries goods occasionally or free of
charge is not a common carrier. A Common carrier cannot refuse to carry goods for anyone
if –
(1) The person asking him to do so in prepared to pay charges
(2) The goods are such as he professes to carry and,
(3) The place of destination is within the area in which he operates
Example
16

17. The concept was considered by the supreme court in River steam Navigation Co. ltd V/s
Shyam sunder Tea Co.
The defendant company was providing steamer service on the river Brahmaputra between
Dibrugarth and Calcutta, and was engaged mostly for carriage of tea chests. In this respect
the company admitted that it was a common carrier. In order to facilitate the transportation
of tea from the interiors to the main Ghats on the river, the company provided boats on
request for this service. The plaintiff delivered certain tea chests on board on the
company’s boat on a tributary point for transportation to the main Ghats and onward to
Calcutta. The boat sank owing to negligence. The company was accordingly sued and it
contended that it was not a common carrier on feeder lines and should, therefore, not be
held liable. But the court held that the company had become a common carrier even on the
feeder routes. It therefore, became obvious that they accepted goods wherever they were
available indiscriminately from all customers and brought them to the main routes. Thus it
regarded as a common carrier for that purpose.
License under Motor Vehicles Act: The legal requirement is the public profession
to carry goods for persons indiscriminately and not as a casual operation or for providing
the transport service to a particular individual or some individuals. It is on the basis that a
license is issued under the Motor Vehicles Act for the profession of public carrier.
Private Carrier: A private carrier is one who carries his own goods. Occasionally he
may carry goods for selected persons. He reserves the right to accept or reject requests for
carriage whether or not his vehicle is full. For him, carriage of goods is casual or non
regular occupation and therefore he may or may not carry goods for others. He does not
make a general offer, but restricts himself to working for particular persons with whom he
negotiates special terms.
A private carrier occupies the position of a bailee and, therefore, his duty and liability are
regulated by sections 151 and 152 of the contract Act, 1872.
Rights of a common carrier
1. Right to get remuneration: A common carrier is entitled to the agreed
remuneration. If any, for his work. He can demand payment in advance and if he is
not paid he may refuse to carry. If the charges have not been agreed he entitled to
reasonable charges.
17

18. 2. Right of lien: A common carrier has a lien on the goods carried for his charges
which he can enforce against both the consignor and the consignee, but as a rule
this lien is only a particular lien. He can refuse to deliver the goods until his
charges are paid.
3. Right to recover damages: He can recover damages form the consignor if the
goods are of a dangerous character or if the goods are not properly packed and the
carrier suffers injury there from.
4. Right to recover expenses: He can, if the consignee reuses to take delivery of the
goods, take all such steps as are reasonable under the circumstance. He can also
recover reasonable expenses from the consignor in such a case.
Example: A consignee delayed to take delivery of a horse at the station of
destination. As such the railway had to incur some expenses in keeping the horse.
Held, it could recover reasonable expenses. (Great Northern Rail Co. V Swaffield,
1874).
5. Right to refuse to carry goods. He is not bund to carry goods of all types under all
circumstances.
Duties of a Common Carrier
1. Duty to carry goods: A common carrier is bound to carry for hire goods of all
persons who choose to employ him for the carriage of goods. He is however not
bound to carry the goods if—
(a) His vehicle is already full;
(b) The consignor is not will to pay reasonable charges for the carriage of the
goods
(c) The goods are such as he is not accustomed to carry or cannot carry
(d) The goods are to be carried over a route which is not his regular route
(e) The goods are such as not properly packed
(f) The consignor refuses to disclose the nature of the goods offered for
carriage
2. Duty not to deviate: He must carry the goods by his customary route and must not
deviate from it unnecessarily. He must also take all reasonable precautions for the
safe carriage of the goods. Where a common carrier contrary to term of the contract
deviates the route, he cannot claim the benefits of the terms of the contract. He is
then answerable for the loss, damage or deterioration of the goods.
3. Duty to deliver the goods: Upon the completion of the transit, he must deliver the
goods as instructed by the consignor at the agreed time, if any, or within a
reasonable time. If the consignee refuses to take delivery of the goods when
tendered to him, he ceases to be liable as a common carrier, his only liability in that
case is that of a bailee. Delays caused by extraordinary events which are beyond his
18

19. control do not make him liable because his is not bound to fight with such events as
extraordinary expenses of effort.
4. Duty to follow instructions of consignor: A carrier under a duty to carry out the
instruction of his consignor, for example the duty to stop goods in transit on
receiving notice from the consignor. This is also called as statutory duty. The
carrier is under duty to deliver the goods at the place designated by the consignor.
5. Duty as insurer of goods: A carrier is an insurer of the goods in the sense that he
warrants to carry the goods safely and securely. A contract of carriage is not an
equation of a contract of bailment, not is the carrier liable as a bailee. On the other
hand, there is in build in such contracts the element of an insurance contract for it
could reasonably be said that the carrier is equitable to an insurer who undertakes
the carriage of the goods with all the attendant risks of such carriage.
Liabilities of Common carrier
According to English Common law a common carrier of goods is an insurer of the goods
carried. He is bound to make good to the consignor the loss of damage to the goods in the
course of carriage whether occasioned by is negligence or nor.
Example: A was a common carrier of goods. B’s goods were stored in A’s warehouse for
being loaded to the ship for carriage. Without any negligence on the part of A, the
warehouse was destroyed by fire. Held, A was strictly liable for the loss. (Forward V.
Pithard, 1715, ITR 27)
Exceptions: There are exceptions to this rule of strict liability. In these cases a common
carrier is not liable for any loss or damage if it is occasioned by—
1. An act of God: This is some unforeseen accident caused by the elementary forces
of nature, such as storm, earthquake etc. It is unconnected with human agency. The
occurrence of such a thing cannot reasonably be foreseen or predicted and therefore
the consequences cannot be prevented by human intervention or by reasonable
precautions.
Example: X, a common carrier, received from Y a mare to be carried from
Aberdeen to London. During the voyage the ship encountered rough weather and
the mare received injuries as a consequence of which she died. The death was due
partly to bad weather and partly to the struggling of the mare in fright. Held, X was
not liable. (Nugent V. Smith, 1876, C.D.P 422)
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20. Mere erratic peculiarities of the sea or even a gale or tornado resulting from the fury
of the sea may not by itself amount to an act of God unless the fury is of such a degree or
dimension that no human foresight can provide against and of which human prudence is
not bound to recognize the possibility.
Example: A suit for damages was occasioned due to short supply of goods carried by a
ship. A defense of act of God was raised on the ground that the goods had to be jettisoned
due to sudden deterioration of weather but it was not make out that the tempest or gale in
the sea was so heavy or so unprecedented that the sailor could not have taken
precautionary measures with reasonable foresight. Further there was want of pleadings of
facts necessary to constitute an act of God. Held the carriers were liable and the defense of
act of God. Held, the carriers were liable and the defense of Act of God would not be
available to them. (General Traders V. Pierce Leslie Ltd., A.I.R 1987).
2. Enemies of the State: A carrier would not be liable if the injury or damage to the
goods is caused by declared enemies of the state. The term enemies of the State
mean alien enemies at war with India. But loss or damage to the goods by strikes or
rebellions or during internal riots does not come within the scope of loss or damage
caused by the enemies of the state.
3. Inherent vice in the thing carried: A carrier is not liable for losses arising from
inherent vice in the goods carried over which he has no control and against which
he cannot guard. When, for example, liquids evaporate, the carrier is not liable.
Further, if any special care is required, the common carrier must be informed of this
otherwise he cannot be held liable for damage which would not have occurred but
for it.
Example: A delivered a bullock to a railway company for carriage. During the
journey it escaped and was killed. The escape was due to the exertion of the bullock
itself and not to the negligence of the railway company. Held, the railway was not
liable. (Blower V. Great Western Rail. Co., 1872)
4. Defective packing: The carrier is not liable if the loss is due to defective packing
or the goods, even if he knew he received the goods that the packing was defective.
Example: A consigned a glass show case by rail. Its packing was defective and
the railway company knew of this when it received the case. The case was
damaged in course of carriage. Held, the railway company was not liable.
(Gould V. South Eastern Railway and Chatham Rail, 1920)
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21. 5. Fault or Fraud of the Consignor: If the consignor is guilty of fraud, the carrier is
relieved of all liability for the loss or damage. The carrier is also not liable for loss
or damage arising from the act or omissions of the consignor or his agents.
Example: B hid money in a chest of tea which he gave to W, a common carrier,
for carriage. The chest was stolen. Held, W was not liable for the money lost as
he had brought this loss on himself by his own manner of conducting his
business. (Bradley V. Waterhouse, 1929)
Under sec.8 of the carriers Act, 1865 a common carrier is liable to the owner for loss or
damage to any property delivered to him where loss or damage has arisen from the
criminal act, of the carrier or from the negligence of the carrier or any of this agents or
servants. The burden of proof that there was no criminal act or negligence on the part of
the carrier or his agents or servants is upon the carrier. (Banwari Lal V. Road transport
Corporation, A.I.R 1984)
The Carriage by Road Act, 2007
Under this new Act, no person shall engage in the business of a common carrier, after the
commencement of this Act, unless he has been granted a certificate of registration.
• Any person who is engaged in this business shall apply for a registration within
ninety days from the date of such commencement.
• Stop such business on the expiry of one hundred and eighty days from the date of
such commencement unless he has applied for registration and the certificate of
registration has been granted by the registering authority.
 Section 4 of this act deals with application for grant or renewal of registration.
An application shall be made, to the registering authority having jurisdiction in the
area in which the applicant resides or has his principal place of business stating that
the application is for the main office, in such form of manner accompanied by such
fees payable to the registering authority as may be prescribed.
No application for the grant or renewal of a certificate of registration shall be
refused by the registering authority unless the applicant has been given an
opportunity of being heard and the reasons for such refusal are given in writing by
the registration authority within sixty days from the date of receipt of such
application. If such refusal not been communicated within sixty days of the date of
application, the registering authority shall grant or renew certificate of registration
within a period of thirty days.
 Section 5 deals with suspension or cancellation of registration.
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22.  Section 6 deals with appeal to the state Transport appellate Tribunal if any person
aggrieved by an order of the registering authority refusing to grant or renew a
certificate of registration or suspending or revoking a registration under this act.
 Section 7 states that the state Transport Authority shall submit annually to the
ministry or central Government dealing in road transport a consolidated annual
return giving the details of goods carried by the common carrier.
 Section 8 deals with execution of Goods forwarding note in such form and manner
as may be prescribed which shall include about the value of the consignment and
goods of dangerous or hazardous.
 Section 9 deals in issuing of goods receipt in case where the goods are to be loaded
by the consignor on the completion of such loading. The goods receipt shall be
issued in triplicate and the original shall be given ton the consignor. It is a prima
facie evidence of the weight or measure and other particulars of the goods and the
number of packages.
 Section 10 states about he liability of the common carrier for loss of, or damage to
any consignment, shall be limited to such amount as may be prescribed having
regard to the value, freight and nature of the goods, documents or articles of the
consignment, unless the consignor or any person authorized in that behalf have
expressly undertaken to pay higher risk rate fixed the common carrier.
 Section 11 deals with rates of charge to be fixed by common carrier for carriage of
consignment at a higher risk rate.
 Section 12 deals with conditions limiting exonerating the liability of the common
carrier. Every common carrier shall be liable to the consignor for the loss or
damage to any consignment in accordance with the goods forwarding note, where
such loss or damage has arisen on account of any criminal act of the common
carrier, or any of his servants or agents.
 Section 13 deals with provisions for carriage of goods of dangerous or hazardous
nature to human life.
 Section 14 deals with power of central Government to prohibit carriage of certain
class of goods.
 Section 15 states about the Right of common carrier in case of consignee’s default.
If the consignee fails to take delivery of any consignment of goods within a period
of thirty days from the date of notice given by the common carrier, such
consignment may be deemed as unclaimed. In case of perishable goods the period
thirty days shall not apply and consignment shall be deemed unclaimed after a
period of twenty four hours.
 Section 16 deals with notice for institution of a suit. No suit or other legal
proceeding shall be instituted against a common carrier for any loss or, or damage
to, the consignment, unless notice in writing of the loss or damage to the
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23. consignment has been served on the common carrier before the institution of the
suit or other legal proceeding and within one hundred and eighty days from the date
of booking of the consignment by the consignor.
 Section 17 states about the general responsibility of the common carrier.
 Section 18 speaks about punishment for contravention in relation to non
registration, carrying goods of dangerous or hazardous nature, or prohibited goods,
which shall be punishable for the first offence with fine which may extend to five
thousand rupees, and for
 The second or subsequent offence with fine which may extend to ten thousand
rupees.
 Section 19 deals with composition of offences.
 Section 20 states about the power of central Government to make rules.
 Section 21 speaks about the power of central Government to remove difficulties.
 Section 22 states that the Carriers Act, 1865 is repealed.
CARRIAGE BY RAIL
Carriage by rail in India is regulated by the Railways Act, 1989. Chapter IX of the
Railways Act, 1989 carries provisions on this subject.
CARRIAGE OF GOODS
Maintenance of rate -books, etc., for carriage of goods (Sec.61):
Every railway administration shall maintain each station and at such other place where
goods are received for carriage, the rate-books or other documents which shall contain the
rate authorized for the carriage of goods from one station to another and make them
available for the reference of any person during the reasonable hours without payment of
any fee.
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24. Conditions for receiving, etc., of goods (Sec.62):
A railway administration may impose conditions, not inconsistent with this Act or any
rules made hereunder, with respect to the receiving, forwarding, carrying or delivering of
any goods.
A railway administration shall maintain, at each station and at such other places where
goods are received for carriage, a copy of the conditions for the time being in force and
make them available for the reference of any person during all reasonable hours without
payment of any fee.
Provision of risk rates (Sec.63):
Where any goods are entrusted to a railway administration for carriage, such carriage shall,
except where owner’s risk rate is applicable in respect of such goods, be at railway risk
rate.
Any goods, for which owner’s risk rate and railway risk rate are in force, may be entrusted
for carriage at either of the rates and if no rate is opted, the goods shall be deemed to have
been entrusted at owner’s risk rate.
Forwarding note (Sec. 64):
Every person entrusting any goods to a railway administration for carriage shall execute a
forwarding note in such form as may be specified by central Government. The consignor
shall be responsible for the correctness of the particulars furnished by him in the
forwarding note. He shall indemnify the railway against any damage suffered by it by
reason of the incorrectness of the particulars in the forwarding note.
The section requires forwarding notes to be executed in all cases except in reference to
goods in respect of which it may be declared that no forwarding note shall be executed.
The consignor is charged with the responsibility of assuring correctness of the particulars
and indemnifying the administration against any damage caused by incorrect or incomplete
particulars disclosed in the forwarding note. At present three kinds of forwarding note are
in use: one for general merchandise, second for dangerous goods and the third for the rest
of the goods mentioned in the second schedule.
Railway receipt (Sec. 65):
Railway administration shall, --
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25. (a) In a case whether the goods are to be loaded by a person entrusting such goods on
the completion of such loading or
(b) In any other case on the acceptance of the goods by it, issues a railway receipt in
such form as may be specified by the Central Government
A railway receipt shall be prima facie evidence of the weight and the number of packages
stated therein.
Where the goods have to be loaded by the party, on the completion of such loading and, in
other cases, on acceptance of the goods, the railway administration has to issue a receipt in
such form as may be specified by the Central Government.
Power to demand description of goods (Sec. 66):
The owner or a person having charge of any goods which are brought upon a railway for
the purposes of carriage by railway, and the consignee or the endorsee of any consignment
shall, on the request of any railway servant authorized on this behalf, deliver to such
railway servant in writing signed by such owner or person or by such consignee or
endorsee, as the case may be, containing such description of the goods as would enable the
railway servant to determine the rate for such carriage.
For the purposes of calculation of the applicable rate for a particular carriage, the
consignor, consignee or the endorsee may be called upon to furnish a statement in writing
under his signature containing description of the goods. If he refuses or neglects to do so
and refuses to open any package, if so required, the administration gets the right to refuse
acceptance of such goods unless the person concerned pay for such carriage the highest
rate for any class of goods.
Carriage of dangerous and offensive goods (Sec.67)
No person shall take with him on a railway, or require a railway administration to carry
such dangerous or offensive goods, as may be prescribed, except in accordance with the
provisions of this section.
1. He gives a notice in writing of their dangerous or offensive nature to the railway
servant authorized in this behalf, and
2. The distinctly marks on the outside of the package containing such goods their
dangerous or offensive nature.
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26. 3. If any railway servant has reason to believe that goods contained in a package are
dangerous or offensive and notice as required as the case may be, in respect of such
goods is not given, he may cause such package to be opened for the purpose of
ascertaining its contents.
What gods are Dangerous or offensive:
Where the goods belong to any category of dangerous or offensive goods as may be
prescribed under the Act, every person is charged with the duty of not carrying with him
or to require the administration to carry such goods unless the procedure prescribed.
Goods declared to be offensive in nature are--
1. Dried Blood,
2. Corpses,
3. Carcasses of dead animals,
4. Bones excluding bleached and cleaned bones,
5. Municipal or street sweepings or refuse,
6. Manures of any king including Mycelium except chemical manures,
7. Rags, other than oily rags,
8. Any decayed animal or vegetable matter,
9. Human Ashes,
10. Human skeletons,
11. Parts of human body.
Animals suffering from diseases (Sec. 68)
A railway administration shall not be bound to carry any animal suffering from such
infectious or contagious disease as may be prescribed.
Carrying capacity of wagons (Sec. 72)
The gross weight of every wagon or truck bearing on the axles when the wagon or truck is
loaded to its maximum carrying capacity shall not exceed such limit as may be fixed by the
central Government for the class of axle under the wagon or truck. Every railway
administration shall determine the normal carrying capacity for every wagon or truck in its
possession and shall exhibit in words and figures the normal carrying capacity so
determined in a conspicuous manner on the outside of every such wagon or truck.
Punitive Charge for overloading a wagon (Sec. 73)
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27. Where a person loads goods in a wagon beyond its permissible carrying capacity as
exhibited, a railway administration may, in addition to the freight and other charges,
recover from the consignor, the consignee or the endorsee, as the case may be, charges by
way of penalty at such rates, as may be prescribed, before the delivery of the goods.
Provided that it shall be lawful for the railway administration to unload the goods loaded
beyond the capacity of the wagon, if detected at the forwarding station or at any palace
before the destination station and to recover the cost of such unloading and any charge for
the detention of any wagon on this account.
Delivery of goods against railway receipt or otherwise (Sec. 76)
Section 76 emphasized about surrender of railway receipt. The railway administration shall
deliver the consignment under a railway receipt on the surrender of such railway receipt.
The railway administration is under a duty to deliver the consignment on the surrender of
the relevant railway receipt. Where, however, the railway receipt is not forthcoming and
the person who is claiming the goods is able to convince the railway administration that he
is entitled to the goods, the goods may be delivered to him in the prescribed manner.
Power of railway administration to deliver goods or sale proceeds thereof in certain
cases:
Where no railway receipt is forthcoming and any consignment or the sale proceeds of any
consignment are claimed by two or more persons, the railway administration may withhold
delivery of such consignment or sale proceeds, as the case may be, and shall deliver such
consignment or sale proceeds in such manner as may be prescribed.
Delivery of consignments when the railway receipt is not forthcoming:
Where the railway receipt is not forthcoming, the consignment may be delivered to the
person, who in the opinion of the railway administration is entitled to receive the goods
and who shall receive the same on the execution of an Indemnity Note.
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28. Indemnity Note
(a) The General Indemnity note shall be executed on stamp paper of the appropriate
value applicable to the state in which delivery is made.
(b) Consignment is booked to self shall not be granted delivery on the basis of General
Indemnity Note.
(c) Where delivery of a consignment is taken on the basis of a General Indemnity
Note, the consignee should surrender the railway receipt within 10 days from the
date of taking delivery of such consignment.
(d) Where the consignee has not produced the railway receipt within the time limit
specified under clause (c), a separate Indemnity Note should be executed by the
consignee in respect of such consignment.
(e) If a consignee fails to surrender the original railway receipt or fails to execute a
separate Indemnity Note in respect of any consignment taken delivery on the basis
of the General Indemnity Note, Station Master may refuse to deliver further
consignment on the basis of the General Indemnity Note furnished by the
consignee.
(f) The railway administration shall have the right to demand the execution of a fresh
General Indemnity Note on expiry of three years from the date on which it was
executed.
Rechecking of consignment before delivery (Sec.78):
The railway administration may, before the delivery of the consignment, have the right to –
(i) Re-measure, re-weigh or re-classify and consignment;
(ii) Recalculate the freight and other charges; and
(iii) Correct any other error or collect any amount that may have been omitted to be
charged.
Weighment of consignment on request of the consignee or endorsee (Sec.79):
A railway administration may, on the request made by the consignee or endorsee, allow
weighment of the consignment subject to such conditions and on payment of such charges
as may be prescribed and the demurrage charges if any.
Provided that except in case where a railway servant authorized in this behalf considers it
necessary so to do, no weighment shall be allowed of goods booked at owner’s risk rate or
goods which are perishable and are likely to lose weight in transit. Further no request for
weighment of consignment in wagon-load or train load shall be allowed if the weighment
is not feasible due to congestion in the yard or such other circumstances as may be
prescribed.
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29. Charges of Weighment of wagons at the Destination
Description of Wagon Weighment charges
(i) Per B.G. 8 wheeled wagon
Per B.G. 4 wheeled wagon
(ii) Per M.G. 8 wheeled Wagon
Per M.G. 4 wheeled wagon
(iii) Per N.G. 4 wheeled wagon
Rs.3620/-
Rs.1450/-
Rs.1000
Rs.500/-
Rs.280/-
Partial Delivery (Sec.82):
The consignee or endorsee is obliged to take delivery of whatever part of the consignment
is ready for delivery. He cannot refuse to do so on the ground that a part of the
consignment has been damaged. In such cases, the railway administration has to give to the
endorsee a certificate of short delivery. If the partial consignment is refused, wharfage
charges would have to be paid.
Railway’s general lien (Sec. 83):
Lien for freight or any other sum due:
(1) If the consignor, the consignee or the endorsee fails to pay on demand any freight
or other charges due from him in respect of any consignment, the railway
administration may detain such consignment or part thereof or, if such consignment
is delivered, if may detain any other consignment of such person which is in, or
thereafter comes into, its possession.
(2) The railway administration may, if the consignment detained is—
(a) Perishable in nature, sell at once; or
(b) Not perishable in nature, sell, by public auction
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30. (3) The railway administration shall give a notice of not less than seven days of the
public auction in one or more local newspapers or where there are no such
newspapers in such manner as may be prescribed.
(4) The railway administration may, out of the sale proceeds received retain a sum
equal to the freight and other charges including expenses for the sale due to it and
the surplus of such proceeds and the part of the consignment, if any, shall be
rendered to the person entitled thereto.
Unclaimed consignments (Sec.84):
An unclaimed consignment includes goods of which delivery has not been claimed by any
person or a consignment which has been released from lien or which is the remaining part
of the goods after sale of the other part for releasing.
Power is given to the railway administration to dispose of a perishable consignment at
once. In other cases, a notice should be served upon the consignee if his name and address
are known and, if not, the notice should be given to the consignor. He should be required to
remove the goods within a period of seven days from the date of receipt of the notice.
Where such notice cannot be served or there is no response from the side of the person on
whom the notice has been served, the goods may be sold by public auction announcing it
in one or two local newspapers or if there is no such newspapers, with such publicity as has
been prescribed.
(a) At the goods shed;
(b) At the parcel office;
(c) At the lost property office, if any or
(d) At the premises where such is to be held.
Disposal of perishable consignments in certain cases (Sec.85)
If it is not possible to restore or divert traffic so quickly after a mishap as to be able to take
care of perishable goods, they may be sold in the manner of perishable goods. The sale
proceeds have to be handed over to the person entitled to the goods after retaining a sum
equal to the freight due and other charges including expenses of organizing the sale.
General Responsibility (Sec.93)
A railway administration shall be responsible for the loss, destruction, damage or
deterioration in transit, or non-delivery of any consignment, arising from any cause except
the following namely:
(a) Act of god;
(b) Act of war;
(c) Act of public enemies;
(d) Arrest, restraint or seizure under legal process;
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31. (e) Orders or restrictions imposed by the central Government or a State Government or
by an officer or authority subordinate to the central Government or a State
Government authorized by it in this behalf;
(f) Act or omission or negligence of the consignor or the consignee or the endorsee or
the agent or servant of the consignor or the consignee or the endorsee;
(g) Natural deterioration or wastage in bulk or weight due to inherent defect, quality or
vice of the goods;
(h) Latent defects;
(i) Fire, explosion or any unforeseen risk.
Damages for fall in Market price:
In this case, the Kerala High Court held in Union of India V P.K. parameswaran that the
plaintiff is entitled to damages based on the fall in market price between the due date of
arrival and the actual date of delivery. It is a direct damage for which the railway
administration is liable. Earlier the Patna High Court had held in Union of India V Madan
Lal that the bar of claim for damages “for loss of particular market” does not relate to a
claim for damages on the ground of fall in market price. Accordingly held;
That being so, an owner of the goods is entitled to claim damages from the
Railway administration for late delivery based upon the deterioration in their
value due to the fall in market price. Ordinarily, it will be difficult to visualize
cases where, an account of late delivery an owner of goods can claim damages
on any other basis.
The court cited-
A carrier who fails to deliver goods within the agreed time may also cause loss
of business profits to the consignee. The normal measure of damages is the
difference between the market value of the goods on the due date of arrival and
their market value on the actual date of delivery.
Loss by Theft, Looting:
A goods train which left Howrah was waiting at a signal at Chandanpur which was
somewhat notorious for railway thefts. During the 14 minute halt at the signal at midnight
one of the middle wagons was attacked by looters who removed a part of consignment.
The wagon was property riveted and sealed at Howrah and the train was escorted by the
railway protection police who were with the guard and therefore, did not know what was
31

32. happening to the rest of the train. The railway contended that the loss was due to
circumstances beyond their control.
Holding the railway liable the court observed that, there is no record that the railway
protection police which escorted the train was adequate in strength for the purpose of
seeing that the goods were not interfered with in transit. It may be true that any precautions
taken may not be always successful against loss in transit on account of theft, but in the
present case there is no evidence with respect to the extent of the precaution taken and
what the protection police itself did at the place where the train had to stop. It was the job
of its members to get down at every stoppage and to keep an eye at the wagons as best as
they could.
Loss by wet in transit:
An instance of responsibility for loss by wet in transit is to be found in Piramal
Banwarilal V Union of India.
The consignment was of certain bags of dry chilies. On arrival at the destination about 2/3
of the bags were found to be damaged by water. The consignment was put in a leaky
wagon. It was a cloudy day when the wagon was loaded and, therefore, it was tested by a
train examiner, but either he or his method was incompetent so that the leaks which were
visible at the destination could not be detected at the starting point. The goods were booked
at the owner’s risk and in such cases the railways are liable only upon proof of negligence
or misconduct.
Right to sue:
Ordinarily the right to sue lies in the consignor. But where the consignee has acquired
interest in the consignment, he too gets the right to sue.
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33. Example: An example in point is the decision of the High Court of Delhi in Lalchand
Madhav Das V Union of India. The plaintiff was the consignee of 564 baskets of
mangoes. Reasonable time for transit and delivery was five days. Railways
consumed longer time than this. The consignment was damaged. Railway
authorities certified the damage as to the extent of 26%. He sued for this. The
railway contended that he was a mere consignee and therefore, had no right to
sue.
The court found that the plaintiff was not a mere consignee. He had advanced
money to the consignor against the railway receipt and was his agent to sell on
commission. Thus he had an interest in the consignment. A railway receipt being
a mercantile document of title, he can, not only take delivery of the goods
covered by the receipt but also he can give a complete discharge. It follows that
he is also competent to file a suit to recover damages in respect of the loss of or
damage to the goods. Thus a commission agent consignee has been allowed to
sue.
Goods carried at owner’s Risk (Sec.97)
All goods or animals are presumed to be consigned at the consignor’s risk unless the
consignor agrees to pay in writing the railway risk rate in which case he will be given a
certificate to that effect. Where the goods are consigned at the owner’s risk, the railway
company is liable only if the loss etc. was due to negligence or misconduct on the part of
the railway administration or any of its servants. So the railway administration shall not be
responsible for any loss, destruction, damage, deterioration or non delivery in transit, of
any consignment carried at owner’s risk rate, from what ever cause arising, except upon
proof, that such loss, destruction, damage, deterioration or non delivery was due to
negligence or misconduct on its part or on the part of any of its servants.
Defective condition or Defective Packing (Sec.98)
Where the goods are in a defective condition or they are not packed in accordance with
railway orders, if any, and by this reason they are liable to damage, deterioration, wastage
or leakage, and if the consignor himself has noted this fact on the note, there is no liability
except upon proof of negligence or misconduct in handling the goods.
Carriage of Luggage (Sec.100)
The railway is liable for the loss only of the booked luggage. A railway administration
shall not be responsible for the loss, destruction, deterioration or non delivery of any
33

34. luggage unless a railway servant has booked the luggage and given a receipt. The only
additional formality is that the luggage should have been handed over to a railway servant
who should have given a receipt for the same. Where the passenger keeps the luggage in
his own custody, the railway would be liable only if it is proved that the loss in question
was due to negligence or misconduct.
Exoneration from Responsibility (Sec.102)
A railway administration shall not be responsible for the loss, destruction, damage,
deterioration or non-delivery of any consignment.
(a) When such loss, destruction, damage, deterioration or non-delivery is due to the
fact that a materiality false description of the consignment is given in the
statement delivered.
(b) Where a fraud has been practiced by the consignor or the consignee or the
endorsee or by an agent of the consignor, consignee or the endorsee or
(c) Where it is proved by the railway administration to have been caused by, or to
have arisen from—
(i) Improper loading or unloading by the consignor or the
consignee or the endorsee or by an agent of the consignor,
consignee or the endorsee.
(ii) riots, civil commotion, strike, lock-out, stoppage or restraint
of labour from whatever cause arising whether partial or
general; or
(d) Any indirect or consequential loss or damage or for loss of particular market.
Burden of Proof (Sec. 110)
This section provides that burden of proof regarding monetary loss in suits for
compensation for any loss, destruction, etc. lies on the person claiming compensation, but
subject to the other provisions contained in this Act, it shall not be necessary for him to
prove how the loss, destruction, damage, deterioration or non-delivery was caused.
Carriage by air Act, 1972
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35. An international convention for the unification of the law relating to international carriage
was held at Warsaw in 1929 in which a number of countries, including India, participated.
The convention adopted certain rules defining the liability of the carrier for injury or death
of passengers or loss of or damage to goods. The rules are to become binding upon the
countries which ratify them. For India, the rules are found to be suitable and the Act of
1934 was passed adopting the convention to India.
This Act has now been replaced by the act of 1972. The First schedule of the Act
determines the question of liability and the second, the person by whom and to whom the
liability is owed.
Meaning of International carriage (First Schedule)
International carriage means any carriage in which the place of departure and the place of
destination fall in two different countries who have adopted the Warsaw convention.
Where the two places are in the same country, but there is a stop en route I another country
that will also be an international carriage even if that country is not a high contracting
party. A carriage without stopping place in a different country shall not be deemed to be an
international carriage.
Documents of carriage
Passenger Ticket: The carrier is required to deliver to the passenger a ticket containing the
following particulars—
(a) The place and date of issue;
(b) The place of departure and destination;
(c) The agreed stopping places, provided that the carrier may
reserve the right to alter the stopping places in case of necessity,
and what if he exercises that right, the alternation shall not have
the effect of depriving the carriage of its international character;
(d) The name and address of the carrier or carriers;
(e) A statement that the carriage is subject to the rules relating to
liability contained in this schedule.
If the carrier accepts a passenger without ticket, he will not be entitled to avail himself of
the provisions of the schedule which exclude or limit his liability.
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36. Luggage Ticket: Excepting the small personal objects which a passenger may keep with
himself, ticket must be issued for his every other object of luggage. The information which
the luggage ticket has to contain is set out in the rule. The particulars are—
(a) The place and date of issue;
(b) The place of departure and of destination;
(c) The name and address of the carrier or carriers;
(d) The number of passenger ticket;
(e) A statement that delivery of the luggage will be made to the
bearer of the luggage ticket.
(f) The number of weight of the packages;
(g) The amount of the value declared;
These particulars constitute prima facie evidence of the conclusion of the contract and of
the fact of the receipt of the goods, the conditions of carriage, volume, quantity and
condition are evidence against the consignor only if the air consignment note states that
these things were checked in the presence of the consignor or that they related to the
apparent condition of the goods.
Air consignment Note (ACN): The carrier can require the consignor to prepare an air
consignment note in accordance with the provisions. If no such note is prepared or the note
prepared does not state all the requisite particulars, the carrier will not be entitled to the
advantages of the limitation of liability. If the consignor supplies incorrect particulars, he
will be responsible for the consequences. The carrier has the right to ask the consignor to
make out separate consignment notes when there is more than one package. The prescribed
particulars are—
(a) The place and date of its execution;
(b) The place of departure and destination;
(c) The agreed stopping places, provided that the carrier may
reserve the exercises that right the alternation shall not have the
effect of depriving the carriage of its international carrier.
(d) The name and address of the consignor;
(e) The name and address of the first carrier;
(f) The name and address of the consignee;
(g) The nature of the goods;
(h) The number of packages, the method of packing and the
particular marks or numbers upon them;
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37. (i) The weight, the quantity and the volume or dimensions of the
goods;
(j) The apparent condition of the goods and of the packing;
(k) The freight, if it has been agreed upon, the date and place of
payment, and the person who is to pay it;
(l) If the goods are sent for payment on delivery, the price of the
goods, and if the case so requires, the amount of the expenses
incurred;
(m)The amount of the value declared;
(n) The number of parts of the air consignment note;
(o) The documents handed to the carrier to accompany the air
consignment note;
(p) The time fixed for the completion of the carriage and a brief
note of the route to be followed;
(q) A statement that the carriage is subject to rules relating to
liability contained in this schedule.
The air consignment note is a prima facie evidence of the conclusion of the contract, of the
receipt of the goods and of the conditions of carriage. The statements in the note relating to
weight dimensions and packing of the goods are also prima facie evidence of the facts
stated.
Liability of Carrier
1. Passengers: In reference to passengers, the liability arises if the death or injury was
caused by an accident which took place on board the aircraft or in the course of any
of the operations of embarking and disembarking.
2. Luggage of Goods: In reference to loss or damage or registered luggage or goods,
the liability arises if the event causing the loss took place during the carriage by air.
Carriage by air for this purpose means the period during which the goods are in
charge of the carrier, but does not extend to carriage by sea, river or land performed
outside an aerodrome, except when it takes lace of the purposes of loading, delivery
or transshipment.
The Air carrier was held liable for misdelivery of the consignment in a
consumer action. The consignment was of a quantity of knitted cotton ladies
pullovers to be delivered in U.K. The consignment was to be airlifted on December
24, 1992 but it was taken away contrary to the airway bill one day before. That day
the consignor wanted to change the name of the consignee but heat proved to be too
late. The consignment happened to be delivered to a wrong consignee and that too
without bank release orders. The consignor has the right to change the consignee
under the carriage by air act, 1972. Here the carrier was held liable to pay full value
of the consignment with 12% interest.
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38. 3. Liability for Delay: The carrier is liable for damage occasioned by delay in the
carriage by air of passengers, luggage or goods.
When Not Liable
1. The carrier is not liable if he proves that he and his agents had taken all necessary
measures to avoid the damage or that it was impossible for him or them to take
such measures. The carrier is liable unless he can disprove negligence.
2. In the carriage of goods and luggage, the carrier is not liable if he proves that the
damage was occasioned by negligent pilotage or negligence in the handling of the
aircraft or in navigation, and that he and his agents have taken all necessary
measures to avoid the damage.
3. If the carrier proves that the damage was cause by or contributed to by the
negligence of the injured person, the court may exonerate the carrier wholly or
partly from his liability.
Limit of Liability: In the case of passengers the limit of liability is 250000 francs. In the
case of registered luggage and goods it is 250 francs per kilogram. In case of declared
goods, the sender may declare the value of his goods and may pay supplementary fare if so
required, in which case the carrier will become liable for the declared value, unless he
proves that it was greater than the real value of the goods. The objects of which the
passenger takes charge himself the liability of the carrier is limited to 5000 francs per
passenger.
Death of a person liable: In the case of the death of the person liable an action lies against
those who represent his estate.
Jurisdiction: An action can be brought at the place where the carrier is ordinarily resident,
or has his principal place of business or has an office for the purpose of making contracts
or at the place of destination.
Extinction of Right to Damages: The right of action is extinguished if no action is
brought within 2 years running from the date of arrival of the destination or from the date
on which the aircraft ought to have arrived or from the date on which the carriage stopped.
Carriage by successive airlines: In case of carriage by successive airlines, the action
should be brought against the carrier who performed the carriage during which the accident
or delay occurred. The first carrier may be sued if he agreed to be responsible for the whole
carriage. In case of combined carriage, partly by air and partly by any other modes, these
provisions will apply only to the air portion.
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39. Second Schedule
This schedule is the result of Hague Protocol. The limits set out by the Warsaw
Convention, particularly for death of passengers were the subject of criticism. Therefore
another convention was called in 1955 to suggest amendments to the Warsaw convention.
This is called the Hague Protocol. Apart from making certain improvements in the matter
of procedure, the protocol increased the liability for the death of a passenger to 250000
francs. The Government of India has accepted this by passing the Carriage by Air Act,
1972.
Meaning: These rules apply to all international carriage of persons, baggage or cargo
performed by aircraft for reward. They apply equally to gratuitous carriage by aircraft
performed by an air transport undertaking. The definition clause remains the same as it was
in the First schedule.
Documents of Carriage
1. Passenger Ticket: The definition and particulars of passenger ticket remains the
same as it was in the First schedule.
2. Baggage check: In respect of the carriage of registered baggage, a baggage check
shall be delivered, containing the particulars prescribed. The check shall constitute
prima facie evidence of the registration of the baggage and of the conditions of the
contract of carriage. If the check is not delivered the carrier cannot avail himself of
the beneficial provisions of the Schedule.
A notice to the effect that, if the carriage involves an ultimate destination or stop in
a country other than the country of departure, the amended convention may be
applicable and that the amended convention governs and in most cases limits the
liability of carriers in respect of loss, damage to baggage.
The baggage check shall constitute prima facie evidence of the registration of the
baggage and of the conditions of the contract of the carriage. The absence,
irregularity or loss of the baggage check does not affect the existence or the validity
of the contract of carriage which shall, none the less, is subject to these rules.
3. Airway Bill: Every carrier of cargo has the right to require the consignor to make
out and hand over to him a document called an “air waybill”, every consignor has
the right to require the carrier to accept this document. This will constitute the
contract and the existence of the contract shall not be affected by the absence,
irregularity or loss of the way-bill.
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40. The airway bill shall be made out by the consignor in three original parts and be
handed over with the cargo. The first part shall be marked “for the carrier”, and
shall be signed by the consignor. The second part shall be marked “for the
consignee’, it shall be signed by the consignor and by the carrier and shall
accompany the cargo. The third part shall be signed by the carrier and handed by
him to the consignor after the cargo has been accepted. The carrier has the right to
require the consignor to make out separate way-bills when there is more than one
package.
A way bill should contain—
(a) The places of departure and destination;
(b) An indication that there is a stoppage in another country;
(c) A notice to the consignor that if the destination is in a different country or there
is a stop in another country, the amended convention may be applicable.
The consignor is responsible for the correctness of the particulars and also for
liability, if any, arising out of incorrect particulars. The way-bill is prima facie
evidence of the contract and of the receipt of the cargo. The statements relating to
weight, dimensions and packing and number of packages are prima facie evidence
of the facts stated.
Consignor’s Right over Cargo: The consignor has the right to dispose of the cargo by
withdrawing it at the point of departure or at any subsequent stop or by requiring it to be
delivered at the destination to any subsequent stop or by requiring it to be delivered at the
destination to any person other than the consignee or by requiring it to be returned to the
aerodrome of departure. If the carrier finds that it is impossible to comply with any such
direction, he should inform the consignor forthwith.
Consignee’s Right to Demand possession: On arrival at destination the consignee has the
right to demand possession on production of the way-bill and payment of outstanding
charges, if any. If the carrier admits that the consignment has been lost or if the goods are
not delivered within a week, the consignee can enforce his rights. The rights can be
enforced by the consignor or the consignee.
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41. Liability
The principles relating to liability are the same as it was in Warsaw convention, but the
extent of liability has been enhanced.
1. The carrier is liable for damage sustained in the event of the death or wounding of a
passenger or any other bodily injury suffered by a passenger, if the accident which
caused the damage so sustained took place on board the aircraft or in the course of
any of the operations of embarking or disembarking.
2. The carrier is liable for damage sustained in the event of the destruction or loss of,
or of damage, to any registered baggage or any cargo, if the occurrence which
caused the damage so sustained took place during the carriage by air.
3. The period of the carriage by air does not extend to any carriage by land, by the sea
or by river performed outside an aerodrome. If however, such a carriage takes place
in the performance of a contract for carriage by air, for the purpose of loading,
delivery or transshipment, any damage is presumed, subject to proof of the
contrary, to have been result of an event which took place during the carriage by
air.
4. The carrier is liable for damage occasioned by delay in the carriage by air of
passengers, baggage or cargo.
5. The carrier is not liable if he proves that he and his servants or agents have taken all
necessary measures to avoid the damage or that it was impossible for him or them
to take such measure. If the carrier proves that the damage was caused by or
contributed to by the negligence of the injured person the court may, in accordance
with the provisions of its own law, exonerate the carrier wholly or partly from his
liability.
6. In the carriage of persons the liability of the carrier for each passenger is limited to
sum of 250000 francs. In the carriage of registered baggage and of cargo, the
liability of the carrier is limited to a sum of 250 francs per kilogram, unless the
passengers 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 able 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.
7. 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 packages or packages concern. As regards objects of which the
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42. passenger taken charges himself the liability of the carrier is limited to 5000 francs
per passenger.
The right to damages stands extinguished in an action is not brought within two years,
reckoned from the date on which the aircraft ought to have arrived, or from the date on
which the carriage stopped.
A case study: Collins and his wife were on a round trip. The tickets were plainly marked
“passenger ticket and baggage check”. On the outward journey the young lady at the desk
filled in the little space for “baggage check” with the figures ‘2/46’ meaning two pieces
weighing 46 kilograms. They reached safely with their baggage. They purchased a third
suitcase to carry home their foreign purchases. For their homeward journey they did not
arrive in time for their baggage to be put on the aircraft. They were told that it would be
send by the next aircraft. The space on the ticket for ‘baggage check” was left blank. The
baggage was delivered to them but the contents of the suitcase were stolen. They claimed
£2000. The British airways contended under the Warsaw convention as amended at The
Hague, 1955, they were entitled to limit their liability at £580.20.
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43. Carriage by Sea
A contract for the carriage of goods by sea is also called as “contract of affreightment”.
Carriage of goods by sea is carried out on the basis of a contract of carriage between the
consignor and the carrier. But the carriage by sea, being a hazardous job, the carrier usually
makes a special contract and, in order to emphasize this special nature of the contract, it is
called, not the contract of carriage, but the contract of affreightment. Freight means the
charges for which the carrier agrees to carry the goods.
A contract of affreightment may take one of the two forms, namely, it may take the form of
a charter-party, or a bill of lading. In a charter-party the ship itself is hired and in a bill of
lading the goods are delivered to the ship-owner for carriage and he issues a bill of lading
as a document of title for the goods.
Implied Undertakings
In every contract of affreightment, whether it is by charter-party or by bill of lading, certain
undertakings on the part of the carrier are implied.
1. Sea worthiness: The first and the most important of such undertakings is that
the ship shall be seaworthy. This means that the ship shall be fit for the journey and
also fully equipped for the type of cargo that it contracts to carry. Before the
carriage of goods by sea Act, 1925 came into force, the obligation of the ship-
owner to provide a seaworthy ship was considered to be an absolute one, that s, he
was bound to assure a seaworthy ship and not merely that he made an honest effort
to do so. Whether the contract was in the shape of a bill of lading or any other form
there was a duty that “the ship shall be fit for its purpose”.
Sea worthiness being a relative term, the obligation is to provide a ship fit both for
the particular voyage and particular cargo. A ship-owner contracted to carry
animals on the condition that he would not be liable for death or injury by diseases.
He did not disinfect the ship after a previous voyage and consequently the cattle
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44. were infected with mouth and foot disease. He was held liable. The infection was
caused by uncargoworthiness.
2. Reasonable Despatch: In al contracts by charter-party, where there is no
express agreement as to time, it is an implied condition that there shall be no
unreasonable delay in commencing the voyage. The voyage must be commenced
within a reasonable time.
3. No Deviation: The third important warranty is that the ship should follow the
agreed or the customary route. Any departure from such route is called deviation
and this may operate as a breach of the contract making the ship-owner absolutely
liable like a common carrier.
Deviation for the purpose of saving life is protected and involves neither forfeiture
of insurance nor liability to the goods owner in respect of loss which would
otherwise be within the exceptions of the “perils of the sea”. Where a contract of
affreightment is in the form of a bill of lading and, therefore, the carriage of Goods
by sea Act applies “any deviation in saving or attempting to save life or property at
sea, or any reasonable deviation shall not be deemed to be an infringement or
breach of these rules of the contract of carriage, and the carrier shall not be liable
for any loss or damage resulting there from”. Thus deviation is now allowed for
saving both life and property and also where reasonably necessary.
4. Not to load Goods liable to cause Danger or Delay to ship: There is an
obligation on the part of the shipper not to load the ship with dangerous goods or
goods likely to cause delay to the ship. He should not ship goods likely to involve
unusual danger or delay to the ship without communicating to the ship-owner facts
which are within his knowledge indicating that there is the risk, provided that the
ship-owner does not and could not reasonably know those facts.
CHARTER PARTIES
The contract of affreightment may be either in the form of bill of lading or charter –party.
A bill of lading is a pure and simple contract to carry the goods whereas a charter party
involves the complete hiring of the ship itself. In simple terms, if a ship is booked by a
shipper for his exclusive use for a voyage or a for certain period of time, that is called a
charter party
The term "charter party" stands for the contract between the owner of a vessel and the
charterer, which is the one that takes over the vessel for a certain amount of time or
voyage. When there is an agreement or contract to carry some goods or provide a ship for
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45. carrying the same, a document called charter party contains the contract of affreightment.
By this document the ship owner lets the ship for the purpose of carrying the cargo or
undertakes to carry the full cargo on the ship.
As defined in the Black’s Law Dictionary, “a charter party means a contract by which a
ship or a principal part of it, is lead by the owner especially to a merchant for the
conveyance of goods on a predetermined voyage to one or more places; a special contract
between the ship owner and charters, especially for the carriage of goods etc.”
Different Kinds of Charter
Charter parties can be broadly classified into two kinds, namely, Voyage charter parties
and Time charter parties. Time charter parties are also know as charter parties by demise
because the ship is leased out to the charterer for the time being. Whether a charter party is
voyage charter party or time charter party depends on the intension of the parties that will
be shown in their contract. There is yet another kind of charter party known as Port, berth
or dock - charter party.
(a) Voyage Charter party: Under a voyage charter the vessel is let out to the charterer
for a specific voyage. The ship owner will be paid ‘freight’ which will cover its
costs, including fuel and crew, as well as its profit. Legally, freight is a special type
of payment, as the usual rule of set off will not apply to it. A set time, ‘lay time’,
will also be provided for the loading and discharging operations. If these operations
exceed the permitted lay time, the ship owner will be compensated by ‘demurrage’
at the rate set down in the charter. For its part, the ship owner owes the charter the
duty of proceeding with reasonable dispatch on the charter party voyage, or
voyages, in the case of a consecutive voyage charter.
According to Black’s Law dictionary, a voyage charter is a charter under which the
ship owner provides a ship and crew, and places them at the disposal of the
charterer for the carriage of cargo to a designated port. The voyage charterer may
lease the entire vessel for a voyage or a series of voyage or may lease only a part of
the vessel.
A Voyage charter party usually carries a cancellation clause that gives the charterer
the right to cancel the charter if the ship is not as his disposal at the port of loading
at the specified time. The charterer would have to fix a cancellation date before
exercising this right.
(b) Time Charter Party: A time charter party is also known as charter party by
demise. Morgan defines time charter as “a contract for the hire of a ship or charter
party for a specified period of time”. The charter pays for the bunker fuel, fresh
water, port charges etc in addition to the charter hire.
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46. A charter by demise operates as a lease of the ship itself, to which the services of
the master and the crew may or may not be superadded. The charterer becomes for
the time being the owner of the vessel; the master and crew become his servants
and through them the possession of the ship is in him.
Under a charter not by demise the ship owner agrees with the charterer to render
services by his master and crew to carry the goods that are put on board his ship by
or on behalf of the charterer. In this case it was held that the ownership and also the
possession of the ship remained with the original owner through the master and
crew though the charterer has the temporary right to have his goods loaded and
conveyed in the vessel.
© Port, berth or Dock charter-party: A charter party that simply states the port at
which the ship shall be made available is called “port charter party”. Where the
ship is to be made available at the specified at the specified loading spot in a port or
dock, it is called berth or dock charter party. In such a case the obligation of the
charterer is to bring the ship at the specified berth or dock. If that place is not in a
position to receive the ship due to some congestion or some other cause, the
waiting period would go to the ship owner’s account.
In the case of a port charter party, it is enough for the ship owner to bring the ship
to the area of the port where ships usually wait for berth and from where it can be
put at charterer. Such area is designated as the commercial area of the port. There
have been difficulties in identifying the commercial areas of a port. But the house
of lord held that the emphasis has been not on distance from the loading place but
upon the fact that the ship should be at the disposal of the charterer.
Payment of Hire
Timely payment of hire of the ship is an essential requirement of a charter-party. The ship-
owner gets the right to withdraw the ship if there is no punctual payment. Where the
payment falls due on a holiday or Sunday, it should be made a day before. Payment on the
next working day would be too late. The ship-owner must give the notice before
withdrawing the ship. Such notice must be given after payment has become due. The
notice should not be given on Saturday, Sunday or public holiday. In this case payment
was due on a Friday, a notice given on that day was held to be invalid because it would not
come to the knowledge of the other party until Monday.
Usual clauses of Charter party
It is open to the parties to include in a charter party or contract of affreightment any lawful
terms. But many such terms have now become more or less stereotyped and are known as
usual clauses of a charter party. The use of these laws depends upon its relative importance
some of such terms are:
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47. 1. Ready to Load: A charter-party usually contains a statement as to the
position of the ship. Such a statement may, in circumstances, become a
condition of the contract any breach of which entitles the charterer to repudiate
the contract.
For example: In Bentsen v. Taylor sons and Co, a charter party dated march 29
descried the ship “as now sailed or about to sale to the United Kingdom”, and that
the ship after discharging homeward cargo, shall proceed to load. But in fact she
sailed to the United Kingdom on April 23. The parties then entered into
correspondence. The ship arrived and the charterers refused to load. The court went
on to hold that the main substance of the contract was the description of the ship as
“now sailed or about to sail”. The court then took a look into the subject and went
on to hold that the above said description is not a mere warranty and so the
defendants had the right to repudiate the contract.
1. Fit for Voyage: Charter-parties usually provide that the ship shall be “right,
staunch and strong and every way fitted for voyage.
Example: Diplock LJ in Bentsen v. Taylor sons & Co said that stipulation as to the
sea worthiness of a ship is of complex nature. He said that “The ship owners
undertaking to tender a seaworthy ship has, a result for numerous decisions as to
what can amount to unseaworthiness, become one of the most complex of
contractual undertakings. It embraces obligations with respect to every part of the
hull and machinery, stores and equipment and the crew itself. It can be broken by
the presence of trivial defects easily and rapidly remediable as well as by defects
which must inevitably result in total loss of the vessel.
2. Full and Complete Cargo: Full and complete cargo means that the charterer
undertakes to supply the agreed cargo lest the ship owner may suffer loss of freight.
In Heathfield Co Ltd v. Rodenacher, the charterer refuses to load more than 2673
tones. But the full and complete cargo would have been 2950 tones. The court held
that the charterer aught to have loaded full complete cargo and freight was payable
accordingly. In another case, the charterer agreed to load cargo not less than 6500
tones and not exceeding 7000 tones. The court laid down that the words ‘not less
than 6500 tones’ was a warranty given by the ship owner to the charterer that that
much quantity can be loaded and the words ‘not exceeding 7000 tones’ was a
binding condition preventing the ship owner from asking more quantity than 7000
tones. In this case the ship owner asked for more than 7000 tones and the charterer
was forced to bring than quantity. He brought that under duress and protest. Now
the ship owner claimed extra freight for that extra quantity. But the ship owner was
not allowed to recover the extra freight for that extra quantity.
The ship-owner is also bound to provide space for full and complete cargo. Thus
where the ship-owner loaded a larger amount of bunker coal than was required for
the chartered voyage with the result that the cargo had to be reduced, the ship-
owner was held liable for the expenses.
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48. 3. King’s enemies and restraints of Princes: The charter parties usually provide that
the ship owner would not be liable in certain events. For example there would be no
liability on events arising out of ‘act of god’ or because of ‘national enemies’. Such
perils or dangers are known as excepted perils. The words ‘King’s enemies’ mean
the enemies of the country or the sovereign of the person who made the bill of
lading. All restraints or interruptions made by any lawful authority are considered
as ‘Restraints of Princes’. The dangers from the sea pirates are not included in this
category. In a decided case a ship owner was justified in the non performance of a
contract which involved the voyage through turkey. It was obvious that the ship
would be seized because of the war between Turkey and Greece. In this case the
war has already been declared but if there was only a mere speculation that there
would be a war, the charterer cannot be justified if he repudiates the contract. A
voyage, which involved the risk of the ship being sunk by the German submarines,
was held to be one that involves the risk of seizure or capture. If the intervention of
the restraint is due to the negligence of the ship owner, he cannot avail the
exception of this clause.
4. Perils of Sea: Charter parties also contain an exception in favour of the dangers of
the sea, i.e., if the goods are lost or damaged on account of a peril of the sea, the
ship owner would not be held liable. The term peril of the sea does not cover every
accident or causality which may occur to the goods in the ship. It must be a peril
“of” the sea. The natural action of winds and waves is not considered as perils of
sea. There must be some causality, some which could not be foreseen as one of the
incidence of the adventure. For example the cargo in a chip was damaged due to the
collision of that ship with another ship which according to the House of Lords was
a peril of the sea.
Example: In Hamilton, Fraser & Co v. Pandorf & Co, rice was shipped under a
charter party which contained the exception for ‘the dangers and accidents of the
seas’. During the voyage some rats gnawed a hole in a pipe on board the ship which
resulted in the seepage of sea water and damaged the rice. Here the rice was
damaged without the neglect of the ship owner or the crew. The court held that
damage was within the exception of perils of sea and the ship owners were not held
responsible for the loss. In this case if rats directly damaged the rice then it would
have amounted to the neglect of the crew and they won’t be getting this exception
because there is no direct relation between sea and this accident. But here the sea
water damaged the rice and this was not a foreseeable accident.
Similarly a damage caused by the collision of two vessels due to the negligence of
either of the vessels will not be a peril of sea.
BILL OF LADING
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49. The carriage of Goods by sea Act, 1925 applies only when the contract of affreightment is
evidenced by a bill of lading. The greater numbers of contracts of carriage of goods by sea
are made in the form of bill of lading. This is so because the sender is either a merchant or
a manufacturer who wants to have the goods transported and is not interested not versed in
the management of ships.
If a lesser quantity of goods or individually packaged goods are shipped along with other
Cargo this is mostly done under a bill of lading or similar carriage document, which
evidences the contract of carriage. For ease of reference, in the following these contracts
are called ‘bill of lading contracts’. However, it needs to be noted that the ‘bill of lading
contract’ is concluded prior to the issue of the bill of lading. As between the shipper and
the carrier, this initial contract of carriage will prevail. The bill of lading only evidences
the terms of this contract that has already been partly performed by loading the goods.
Thus, a special term agreed in the contract, whether oral or in writing, may override the
general clause printed on the bill of lading.
Thus a bill of lading signifies the following things—
1. Prima facie evidence of receipt of Goods: Bill of lading shall be prima facie
evidence of the receipt by the carrier of the goods. Thus it operates as a certificate
that the goods have been received. This may constitute estoppels against the ship-
owner in the sense that he may not afterwards be permitted to deny the truth of the
matter. At any rate the burden will lie upon him to show that no goods were
received, and that the bill was obtained form him by fraud, or in connivance with
his agents. The ship-owner is liable for non-delivery or short delivery to the holder
of a bill of lading, unless be can show that his agent signed the bill without the
goods being put on the board. The whole burden lies upon the ship-owner.
A bill of lading is an acknowledgement of the receipt of the goods is two-fold. As
against the shipper, it is only a prima facie evidence and, as against the consignee
or indorsee, the bill is conclusive evidence, so that if such person has suffered loss
by reason of acting on the bill, he can hold the person signing the bill liable.
Example: Certain bags of good stuffs were put in a lighter for transshipment to a
ship which was expected to arrive the next day. The ship did not arrive a expected
and, in anticipation of her arrival, the shipper obtained from the manager of the
shipping company bills of lading duly filled in. The shipper pledged the bills with a
bank, and obtained Rs. 5000/- and disappeared. The seller of the foodstuff had not
yet been paid and, therefore, he had the goods seized. The ship sailed away without
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50. the consignment. The banker sued the shipping company. The banker being an
indorsee of the bill, the shipping company was held to be bound by an estopple and
liable to the banker for his loss.
2. Bill of lading as evidence of contract of Affreightment: The bill of lading is not
the contract of affreightment in itself, but it is the evidence of the contract. The
contract has come into existence before the bill is signed. The bill of lading is
signed by one party only and handed by him to the shipper, usually after the goods
have been put on board.
Where a bill of lading is issued in terms of the charter-party under which the ship is
hired and expressly incorporates those terms, they become the terms of the bill of
lading also and the ship-owner is entitled to their protection against holders of bill
of lading.
3. Bill of lading as Document of title: A bill of lading is a document of title; it is a
symbol of the goods themselves. It is a symbol of the right to property in the goods
specified in the bill. Its possession is equivalent to the possession of the goods
themselves, and its transfer being a symbolic delivery of the goods themselves has
by mercantile usage and the same effect as an actual delivery.
The High court of Delhi in a case before it that property in the goods, i.e. the two
dumpers, passed to the defendants. The defendants neither paid the price nor
returned the bill of lading. They were therefore liable to pay the price of these two
dumpers.
Under the common law, upon the transfer of a bill of lading, only the property in
the goods passed, but not the contract of carriage. The contract still remained to be
with the shipper and he alone was liable under it.
The Important effect of the bill of lading being a document of title is that though it
is not a negotiable instrument, it has this characteristic of a negotiable instrument
that property in the goods represented by the bill passes to the person to whom it is
transferred. In the case of a negotiable instrument a bona fide transferee is not
affected by any defect in the title of his transferor, but a bill of lading passes
property subject to all previous defects in title. So it says that rights under bill of
lading to vest in consignee or indorsee.
Mate’s Receipt
A shipper (consignor) is given by the master of a ship a document called mate’s
receipt when the goods are shipped on board the ship. It has no significance other
than an acknowledgement that the goods have been received on board the ship.
After the bill of lading is prepared, the master exchanges it with the mate’s receipt.
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51. Mate’s receipt is not a document of title to the goods shipped. It transfer does not
pass property in the goods, nor is its possession equivalent to possession of the
goods. It is not conclusive, and its statements do not bind the ship-owner as to
statements in bill of lading. It is prima facie evidence of the quantity and condition
of the goods received, and prima facie it is the recipient or possessor who is entitled
to have the bill of lading issued to him. If the mate’s receipt is produced by any
person other than actual shipper, the master would be entitled as also bound to issue
the bill to only the actual shipper.
Example 1: A number of bags of zinc ashes were shipped on board a vessel at
Buenos Aires for carriage to Liverpool. Some of the bags had been wetted by rain
before shipment and the upper layer of bags in one of the holds became heated. The
ship-owner gave a bill of lading stating that the bags were shipped in apparent good
order and condition. The master of the vessel fearing damage to the ship and other
cargo discharged most of the bags. They were booked after reconditioning with
another vessel at a cost of £ 748 and arrived three months late. In the meanwhile
the value of zinc ashes had fallen. The bill of lading, which was clean, had been
indorsed to the pledges, who, on the faith of it, made an advance. On arrival the
pledges paid the freight, received the goods and also paid under protest the freight
of £ 748. Subsequently they sued the ship-owner for the refund of the extra freight
and also for damages for delay.
It was held that the ship-owner being guilty of misrepresentation is giving a clear
bill, he was liable for the delay and also bound to refund the additional freight.
Example 2: The contract was for carriage of 8750 bags of Tanzanian raw cashew
nuts from Dar-Es-Salam to Cochin. It was found on arrival that 1115 bags were
torn and in mouth-burst condition and the shortage was that of 26442 Kgs. The loss
was due to the negligence of the carrier. The goods were imported by the Cashew
Corporation of India and they had indorsed the bill of lading in blank to the
claimant. The question was of the indorsee’s right to sue.
The court held that the indorsee had the right to sue. The corporation had allotted
the goods to him and handed them under the bill of lading and under their blank
indorsement. This had the effect of passing the property to him. The right of suit
quite naturally accrued to him.
Bill of lading in sets
Sometimes bills of lading are made in sets of three or more. One or two of them are sent to
the consignee and the rest are kept by the consignor himself so that he can protect his
interest incase it becomes necessary.
Types of Bill of Lading
51