Owner’s Risk Railway Consignments: Section 97 Overrides General Carrier Liability and Requires Proof of Negligence
1. Introduction
The Supreme Court of India in M/S BAJAJ TRADING COMPANY v. UNION OF INDIA,
2026 INSC 711, considered the liability of the Railways for alleged shortage in delivery of goods booked
at “owner’s risk” and covered by a railway receipt containing a “said to contain” remark.
The appellant had booked 40,444 bags of salt from Chirai Junction, Gujarat to Dharmanagar, Assam.
On arrival, only 38,702 bags were delivered, resulting in an alleged shortage of 1,742 bags.
A shortage certificate was issued by the Railway Authorities, and the appellant claimed compensation of
Rs. 3,48,400/-. The Railway Claims Tribunal, Guwahati Bench rejected the claim, and the Gauhati High Court
dismissed the statutory appeal. The appellant then approached the Supreme Court.
The central legal issue was whether, despite the consignment being booked at owner’s risk and under a
“said to contain” railway receipt, the Railways could still be held liable for short delivery merely on
the basis of a shortage certificate or whether the consignor had to prove both the actual quantity loaded and
negligence or misconduct by the Railways.
2. Summary of the Judgment
The Supreme Court dismissed the appeal and upheld the concurrent findings of the Railway Claims Tribunal and
the Gauhati High Court.
The Court held:
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Section 97 of the Railways Act, 1989, which deals with goods carried at owner’s risk rate, begins with a
non-obstante clause and therefore overrides the general responsibility of the Railways under
Section 93.
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Where goods are booked at owner’s risk, the Railways is liable only if the claimant proves
negligence or misconduct by the Railways or its servants.
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Under the proviso to Section 65(2), where the weight or number of packages has not been checked by an
authorised railway servant and the railway receipt records that fact, the burden of proving the number of
packages lies on the consignor, consignee or endorsee.
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A “said to contain” railway receipt weakens the evidentiary value of the quantity stated in the receipt,
because the Railways has not verified the contents.
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The appellant failed to prove that 40,444 bags were actually loaded and also failed to prove negligence or
misconduct on the part of the Railways.
Accordingly, the claim for compensation was rejected.
3. Analysis
A. Precedents Cited
1. cargo ex sailing ship "Parchim" and Martineau v. Kitching
The Court referred to cargo ex sailing ship "Parchim", where Lord Parker discussed the relationship between
ownership, risk and loss of goods. The judgment quoted Martineau v. Kitching for the maxim
“Res perit domino”, meaning that the thing is lost to its owner.
This principle was relevant because the consignment in the present case was booked at owner’s risk.
The Court used this broader legal background to explain that risk allocation is a recognized legal concept:
the party who assumes risk cannot automatically shift liability to another party unless the statute or contract
permits it.
The Court relied on Irrawaddy Flotilla Co., Ltd. v. Bugwandass to trace the historical common law liability
of carriers. The Privy Council had observed that a common carrier’s obligation arises not merely from contract,
but from a public duty attached to carrying goods for reward.
The reference to Bretherton v. Wood reinforced that breach of a carrier’s duty is a breach of law and not
dependent solely on contract. However, the Supreme Court clarified that in the Indian railway context, the
statutory scheme of the Railways Act, 1989 governs liability. Therefore, while common carrier principles are
important, they must yield to specific statutory provisions such as Sections 65, 93 and 97.
This case was cited for explaining the function of a non-obstante clause. The Court reiterated that a
non-obstante clause gives overriding effect to the provision in which it appears, in case of conflict with the
provision referred to in that clause.
This was crucial because Section 97 begins with the phrase “Notwithstanding anything contained in section 93”.
Therefore, Section 97 overrides the general carrier responsibility under Section 93 when goods are carried at
owner’s risk.
4. A.G. Varadarajulu v. State of T.N., Madhav Rao Jivaji Rao Scindia v. Union of India, and Aswini Kumar Ghose v. Arabinda Bose
These cases were cited to explain how courts must interpret non-obstante clauses. The Court emphasized that
the scope of such a clause must be determined from the legislative intention and the text of the provision.
The Court applied this reasoning to Section 97 and concluded that Parliament intended owner’s-risk consignments
to be treated differently from ordinary consignments. Thus, the Railways would not be liable merely because
there was short delivery; negligence or misconduct had to be proved.
These decisions further clarified the legal effect of a non-obstante clause. The Court used them to confirm
that Section 97 must operate fully despite the general responsibility imposed by Section 93.
This case was cited to explain the meaning and types of negligence, including negligence per se. The Court used
the principle to identify what the appellant had to prove: a breach of duty by the Railways causing the shortage.
The Court relied on this case for the classic elements of negligence:
duty of care, breach of that duty, and resulting damage. This framework was then applied to determine
whether the Railways owed a specific duty to ensure delivery of the alleged number of bags.
This case was cited to show that negligence in the performance of a duty can give rise to liability, including
against public authorities. However, in the present case, the appellant could not establish the foundational
facts necessary to show negligence by the Railways.
B. Legal Reasoning
The Supreme Court’s reasoning rested on three connected statutory provisions: Sections 65, 93 and 97 of the
Railways Act, 1989.
i. Section 93: General responsibility of Railways
Section 93 makes the Railways responsible for loss, destruction, damage, deterioration or non-delivery of goods
in transit, subject to certain exceptions. Ordinarily, this provision imposes a broad carrier liability on the
Railways.
ii. Section 97: Owner’s risk consignments
Section 97 specifically deals with goods carried at owner’s risk rate. It states that, notwithstanding Section 93,
the Railways shall not be responsible for loss or non-delivery unless negligence or misconduct by the Railways
or its servants is proved.
The Court therefore held that Section 97 overrides Section 93 in owner’s-risk cases.
iii. Section 65(2): Evidentiary value of railway receipt
Section 65(2) provides that a railway receipt is prima facie evidence of the weight and number of packages
stated in it. However, the proviso says that where the consignment is in wagon-load or train-load and the
weight or number of packages has not been checked by an authorised railway servant, the burden of proving the
weight or number lies on the consignor, consignee or endorsee.
In this case, the receipt contained a “said to contain” remark. This meant that the Railways had not verified
the exact number of bags loaded. Therefore, the appellant had to prove that 40,444 bags were actually loaded.
iv. Failure to discharge burden of proof
The Court noted that the appellant did not produce sufficient documents to show that the alleged number of bags
had been procured, processed and loaded. Since the foundational fact of actual loading was not proved, the Court
held that the question of Railway negligence did not even properly arise.
Even allegations such as broken seals or open wagons were insufficient without proof of the actual quantity
loaded and without proof of a breach of duty by the Railways.
C. Impact of the Judgment
This judgment has important consequences for railway claims involving short delivery:
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Higher burden on consignors: Consignors booking goods at owner’s risk must maintain independent proof
of the quantity loaded.
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Limited evidentiary value of “said to contain” receipts: Such receipts do not conclusively prove the
quantity of goods loaded.
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Shortage certificate not enough: A shortage certificate may evidence shortage at destination, but it
does not by itself prove that the full claimed quantity was loaded or that the Railways was negligent.
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Section 97 strengthened: The decision confirms that owner’s-risk booking substantially limits Railway
liability unless negligence or misconduct is proved.
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Practical compliance lesson: Traders must ensure proper documentation, loading supervision, weighment,
tally records and preferably Railway verification where possible.
4. Complex Concepts Simplified
Owner’s Risk
When goods are booked at owner’s risk, the owner accepts a greater part of the risk of loss or damage during
transit. The Railways is not automatically liable unless negligence or misconduct is proved.
“Said to Contain” Railway Receipt
This means the Railways is not certifying the exact contents or quantity inside the wagon. It merely records
what the sender says the consignment contains. Therefore, the sender must prove the actual quantity loaded.
Non-obstante Clause
A non-obstante clause usually begins with “notwithstanding anything contained in...” It gives overriding effect
to that provision over another conflicting provision. Here, Section 97 overrides Section 93.
Burden of Proof
This refers to the responsibility to prove a fact. In this case, the burden was on the appellant to prove that
40,444 bags were loaded and that the shortage resulted from Railway negligence or misconduct.
Negligence
Negligence means failure to take reasonable care where a duty of care exists. The claimant must show duty,
breach and resulting loss.
5. Conclusion
The Supreme Court’s decision establishes that in railway consignments booked at owner’s risk, the general
liability of the Railways under Section 93 is displaced by Section 97. A claimant must first prove the quantity
actually loaded and then prove negligence or misconduct by the Railways.
The judgment is significant because it clarifies the combined operation of Sections 65(2), 93 and 97 of the
Railways Act, 1989. It also serves as a warning to consignors that “said to contain” receipts and shortage
certificates alone may not sustain a compensation claim. Proper proof of loading and proof of Railway fault
remain essential.