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The South Eastern Roadways v. The United India Insurance Co. Ltd. .
Structured Summary of the Judgment
Factual and Procedural Background
This appeal arises from O.S. No. 119 of 1978 on the file of the Court of Subordinate Judge, Kozhikode. The defendant in that suit is the appellant in this appeal. The suit was for damages arising from partial destruction of consignments of copra while in transit.
Brief chronology based on the opinion:
- The 2nd plaintiff (owner) entrusted three consignments of copra to the defendant (a public carrier) with consignment invoices (Exts. A4–A6 dated 31-4-1975 and 22-4-1975).
- While in transit, the vehicle caught fire at a place called Sinwar and part of the goods was damaged. A surveyor deputed by the 1st plaintiff (United India Fire and General Insurance Company Ltd.) inspected the goods and produced a survey report (Ext. A2 dated 23-8-1975).
- The 1st plaintiff settled the 2nd plaintiff's claim for Rs. 35,000/- and the 2nd plaintiff subrogated the claim by letter dated 27-7-1976 (Ext. A1). The survey report indicated total damage of Rs. 36,679.60, but settlement was for Rs. 35,000/-.
- The defendant refused to pay the claimed damages and contended that the goods were carried at owner's risk, resulting in the filing of the suit for recovery of damages.
- The lower court found that (a) a part of the cause of action arose at Calicut and therefore the court had jurisdiction, (b) the fire could not be held to be an act of God, and (c) under Section 6 of the Carriers Act the defendant could not escape liability by relying on the consignment-note clause claiming owner's risk.
- The defendant appealed challenging the findings of the lower court.
Legal Issues Presented
- Whether the condition printed on the consignment note that the goods were carried "at the owner's risk" or that the carrier would not be liable for loss by fire, can absolve a common carrier of liability in the absence of a special contract signed by the owner or his duly authorised agent (in light of S. 6 of the Carriers Act).
- Whether a clause in the consignment note conferring exclusive jurisdiction on the Calcutta courts (Condition No. 17 / related printed conditions) ousts the jurisdiction of the Calicut court and prevents suit being instituted elsewhere.
- Whether the fire that damaged the goods constituted an act of God, thereby absolving the carrier from liability.
Arguments of the Parties
Appellant's (Defendant's) Arguments
- The lower court lacked jurisdiction because the consignor (2nd plaintiff) had agreed that disputes arising from the contract would be subject to the exclusive jurisdiction of the courts in Calcutta City alone (relying on a clause printed on the consignment note).
- The consignment note contained a clause stating the carrier would not be liable for loss or damage caused by fire or similar accidents, and therefore the goods were carried at the owner's risk.
- The defendant had taken all necessary measures for safe transport; when the goods reached Indore they were entrusted for onward carriage to Jodhpur by another vehicle and while being carried the lorry caught fire at Sinwar.
- The loss was due to an act of God, and consequently the plaintiffs were not entitled to relief.
- Reliance was placed on the terms printed on the consignment note (including Condition No. 12 regarding primary liability to pay charges at Head Office in Calcutta and Condition No. 17 regarding jurisdiction) and on the Supreme Court decision in A.B.C. Laminart Pvt. Ltd. v. A.P Agencies (AIR 1989 SC 1239) concerning cause of action and forum.
The opinion does not contain a detailed account of the plaintiffs' separate legal arguments in adversarial form; the factual steps taken by the plaintiffs (survey, settlement by insurer, subrogation) are recorded but no separate, detailed pleading-based argument list for the plaintiffs is set out in the text of the opinion.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Orient Road Lines v. M.B. Mohammad Hassan Sahib & Co. (1988 (2) KLT 619) | Interpreted the nature of liability of a common carrier under S. 6 of the Carriers Act; held that in absence of any special contract signed by the owner or an authorised agent limiting liability, a common carrier cannot escape liability even if a printed condition purports to absolve it. | The court applied the same principle to the instant case and held that because neither the owner nor an authorised agent had signed any special contract limiting liability, the printed clause that goods were carried at the owner's risk could not absolve the carrier. |
| Economic Transport Organisation v. United India Insurance Co. Ltd. (1986 KLT 220) | Considered clauses conferring exclusive forum/choice of jurisdiction; held that a clause conferring exclusive jurisdiction must be clearly indicated and accepted—mere printed matter on a form not signed by the consignor will not readily constitute such an agreement. | The court relied on this reasoning to reject the appellant's contention that the printed Calcutta-exclusive jurisdiction clause in the consignment note ousted the jurisdiction of the Calicut court. |
| United India Insurance Co. Ltd. v. Associated Transport Corporation Pvt. Ltd. (1987 (1) KLT SN 46) | Followed the principle that consignment-note clauses printed by one party, not signed by the consignor or an authorised agent, do not automatically constitute an agreement ousting jurisdiction or creating an estoppel. | The court noted this decision as supportive of the view that the printed condition restricting jurisdiction to Calcutta did not bar suit in the lower court where the consignor had not signed the consignment note. |
| A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem (AIR 1989 SC 1239) | Defines "cause of action" and explains where a suit on contract may be instituted (place where contract was made or place of performance/breach); addresses the composition of the cause of action. | The court considered this Supreme Court decision but held that it was not applicable to the instant case because the question before the court was whether there was a special contract (signed acceptance) absolving the carrier or creating exclusive jurisdiction, not a general question of where a cause of action for breach arises. |
Court's Reasoning and Analysis
The court proceeded through the issues in a structured manner and applied binding/authoritative local precedents to the facts:
- Liability under Section 6 of the Carriers Act and printed consignment-note clauses:
- The court referred to the Division Bench decision in Orient Road Lines (which considered S. 6 of the Carriers Act) and reiterated the principle that a common carrier cannot escape liability by relying on a printed clause purporting to limit liability unless there is a special contract signed by the owner or a person duly authorised by the owner.
- In the instant case, there was no special contract signed by the owner or by any authorised agent. Therefore, the court held that the defendant could not rely on the consignment-note clause to contend that the goods were carried at the owner's risk and hence avoid liability.
- Jurisdiction and the printed exclusive forum clause:
- The court examined Condition No. 17 (and related Condition No. 12 concerning payment of transport charges at Calcutta) as printed on the consignment note and considered the line of authority in Economic Transport Organisation and United India Insurance Co. Ltd. v. Associated Transport Corporation.
- The court emphasized that an exclusive forum clause must be clearly spelled out and accepted by both parties; ouster of jurisdiction cannot be lightly presumed. Where the printed form is not signed by the consignor or an authorised representative, it is difficult to hold that there was consensus ad idem regarding the printed clause.
- The court noted transport charges were paid by the consignor at Calicut as evidenced by the consignment note (Exts. B1–B3), but found there was nothing beyond the mere printed condition to show the 2nd plaintiff had agreed to the conditions by signing the notes so as to constitute a special contract.
- The court therefore held that the printed condition restricting jurisdiction to Calcutta did not create a bar to the filing of the suit in the lower court at Calicut.
- Relevance of A.B.C. Laminart (Supreme Court decision) and "cause of action":
- The appellant relied on A.B.C. Laminart (which defines "cause of action" and explains where actions on contract may be instituted). The court reviewed the passages relied upon (paragraphs 12 and 15) but concluded that the Supreme Court decision was not applicable to the instant facts.
- The reason given was that the central question in the instant case was whether there was a special contract absolving the carrier or creating exclusive jurisdiction by agreement, not the general question of where a cause of action accrues for breach of contract.
- Act of God contention:
- The court below had held that the accident of fire could not be said to be an act of God; the appellate arguments did not persuade the court to accept the act-of-God defence. The opinion records the lower court's finding on this point and does not disturb it.
The court therefore applied established local precedents to conclude that (a) the carrier could not rely on the printed "owner's risk" clause in the absence of a signed special contract by the owner or authorised agent, and (b) the printed exclusive jurisdiction clause did not oust the local court's jurisdiction where there was no evidence of assent to that clause by signature or other clear acceptance.
Holding and Implications
Holding: The appeal is dismissed. (The opinion records "Appeal dismissed" and "No costs.")
Direct consequences and implications drawn from the opinion:
- The appellate court affirmed the lower court's findings that (i) the defendant could not avoid liability by relying on the printed consignment-note clause that purported to make carriage at the owner's risk in the absence of any special contract signed by the owner or an authorised agent (applying S. 6 of the Carriers Act and the decision in Orient Road Lines), and (ii) the printed clause conferring exclusive jurisdiction on Calcutta did not bar the suit in Calicut because there was no evidence that the consignor had accepted that clause as part of the contract.
- The court found no merit in the appellant's other contentions (including the act-of-God defence) and did not disturb the lower court's conclusions on those matters.
- No broader or novel legal principle was announced beyond the application and reliance on existing decisions of this Court and the Supreme Court; the decision applies the established principle that printed consignment-note clauses will not readily be allowed to oust liability or jurisdiction unless there is clear evidence of consensual adoption (e.g., a signed special contract).
- Direct effect on the parties: the appellant's challenge failed and the lower court's rulings stand; the suit for damages remains sustained against the defendant subject to the lower court's determinations and the settlement/subrogation facts already recorded in the record.
Appeal dismissed. No costs.
JUDGMENT
1. Defendant in O.S No. 119 of 1978 on the file of the Court of Subordinate Judge, Kozhikode, is the appellant. Suit was for damages.
2. Defendant, a public carrier was entrusted by the 2nd plaintiff for transport of three consignments of copra by invoices Exts. A4 to A6 dated 31-4-1975 and 22-4-1975. While in transit, the consignment caught fire at Sinwar and part of the goods was damaged. A Surveyor deputed by the 1st plaintiff the United India Fire and General Insurance Company Ltd., surveyed the goods with notice to the defendant and Ext. A2 dated 23-8-1975 is the survey report 2nd plaintiff who was the owner of the consignment issued a notice claiming damages for the loss sustained. Defendant sent a reply denying the liability mainly contending that the goods were booked at the owner's risk. On the basis of the survey report, the 1st plaintiff settled the claim of the 2nd plaintiff for a sum of Rs. 35,000/- and the 2nd plaintiff subrogated the same as per letter dated 27-7-1976. Ext. A1 is the letter of subrogation. Though the survey report indicated that the total damage amounted to Rs. 36,679.60 the claim of the 2nd plaintiff was settled for Rs. 35,000/-. As the defendant refused to pay the damages claimed, the suit was filed.
3. In the written statement filed by the defendant, the defendant contended that the lower court had no jurisdiction to try the suit inasmuch as the consignor 2nd plaintiff had agreed that all disputes arising out of the contract shall be subject to the exclusive jurisdiction of the courts in Calcutta City alone, that it was mentioned in the consignment note that the carrier would not be liable for any loss or damage caused to the goods due to fire or by any other similar accident, that defendant had taken all measures for the safe transport of the goods, that when the goods reached at Indore, they were entrusted for further transport to Jodhpur by another vehicle, that while the goods were thus being carried, the lorry caught fire at a place known as Sinwar resulting in the destruction of a portion of goods, that it was an act of God and that therefore the plaintiffs were not entitled to any relief.
4. The court below found that no part of the cause of action arose within the jurisdiction of the Courts at Calcutta and that as admittedly a part of the cause of action arose at Calicut, within the jurisdiction of the lower court, the court below had jurisdiction. The Court further found that it could not be said that the accident of fire was an act of God and that in view of S. 6 of the Carriers Act, it was not open to the defendant to contend that the goods were carried at the owner's risk.
5. In this appeal, learned counsel for the appellant has challenged the findings of the court below.
6. In Orient Road Lines v. M.B Mohammad Hassan Sahib & Co., (1988 (2) KLT 619), a Division Bench of this Court to which I am a party, had occasion to consider the nature of the liability of a common carrier S. 6 of the Carriers Act. In that case also on the reverse of the consignment note there was a condition to the effect that the Company shall not be liable for any loss or damage due to pilferage, theft, weather conditions, strikes, riots disturbances, fire, explosion or accident and based on this clause, learned counsel for the appellant argued that the goods were carried at the owner's risk and that the defendant was not liable for any in view of Condition No. 3. The Division Bench pointed out that in the absence of any special contract signed by the owner of the property, or by some person duly authorised by such owner limiting the liability a common carrier cannot escape the liability. Admittedly, neither the owner of the property nor any agent duly authorised by him had entered into any special contract signed by the owner or by some person duly authorised in that behalf by such owner, limiting the liability. In the instant case, also, the position is the same. Therefore, there is no substance in the contention that in view of the condition in the consignment note that the goods were carried at the owner's risk, the defendant was not liable to any compensation.
7. Learned counsel next contended that in view of Condition No. 17 that the Calcutta High Court alone had jurisdiction to try the case. Learned counsel also strongly relied on Cl. (12) of the Conditions on the consignment note to the effect that the consignor shall be primarily liable to pay the transport charges and all other incidental charges if any at the Head Office of the Company in Calcutta or at any other agreed place. On the basis of this, learned counsel argued that since the consignor was primarily liable to pay transport charges and other expenses if any of the Head office or the Company at Calcutta or at any other agreed place, part of the cause of action aroses in Calcutta. In Economic Transport Organisation v. United India Insurance Co. Ltd. (1986 KLT 220), this Court had occasion to consider a similar contention raised by the counsel. Bhat, J. observed in that case (at page 225, 1986 KLT):—
“17. When there is choice of forum, it is certainly open to the parties to agree on an exclusive forum for settlement of disputes. But such an agreement must be clearly spelled out either by express words or by necessary implication. Ouster of jurisdiction of Courts cannot be lightly assumed or presumed. If there is such a concluded agreement, it will certainly operate as estoppel against the parties to the contract. If it is merely a unilateral affirmation or statement made by one of the parties, as long as it is not shown that the statement has been accepted by the other party as a term or condition of the agreement, it cannot be held that there is an agreement to confer exclusive jurisdiction on any Court. Particular caution is necessary in regard to such a clause contained in a printed form, as in this case. Where the printed form is signed by both the parties or where a form printed by one party is signed by the other party and forwarded by the latter to the former and the printed form contains clear words conferring exclusive jurisdiction on a Court at any particular place or ousting jurisdiction of the Court at any other place, it may not be difficult to hold that the parties have agreed on such a term. Even in such cases, courts must remember that people often sign order forms containing a good deal of printed matter without caring to read what is printed. It cannot always be said that everything which is printed may be deemed to form part of the contract. Where a form printed by one party is signed only by that party and delivered to the other party, without anything more it will be difficult for the Court to hold that there has been consensus ad idem in regard to the particular clause. Of course, if there is some other material to indicate acceptance or consent of the party who received the printed form, then the Court is free to infer that the clause formed part of the agreement.
The above ruling was followed by a Division Bench of this Court to which Bhat, J. also was a party in United India Insurance Co. Ltd. v. Associated Transport Corporation Pvt. Ltd. (1987 (1) KLT SN 46). It was held in both the above decisions that since the consignor or any person duly authorised by him had not signed the consignment note, it cannot be assumed that there is an agreement which would constitute an estoppel creating a bar in maintaining a suit in any other Court than the Court mentioned in the consignment note. In the decision in Orient Road Lines' case (1988 (2) KLT 619) also this decision has been noted and it was held that the mere printing on the consignment note the condition would not constitute a contract absolving the carrier of the liability to the damages caused to the goods entrusted to the public carrier. In view of the above decisions I have no hesitation to hold that the condition restricting the jurisdiction to the Calcutta Court alone would not in any way create a bar to the filing of the suit in the lower Court. However, learned counsel for the appellant heavily relied on the decision of the Supreme Court in A.B.C Laminart Pvt. Ltd. v. A.P Agencies, Salem (AIR 1989 SC 1239). Learned counsel particularly invited my attention to paragraphs 12 and 15 of the judgment. The Supreme Court at page 1243, of AIR 1989 SC.
“12. A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some Act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but include all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action.
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In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made.”
In my view this decision has no application to the facts of the instant case. The question that has to be considered in this case is whether there is a special contract absolving the carrier of the liability to pay compensation for damages to the consignor for shortage or loss of goods entrusted to the former creating a bar to the filing of the suit in courts other than in Calcutta. In view of the decisions of this Court which I have referred to earlier, the mere printing on the consignment note will not constitute an agreement. Cl. (12) deals with only the primary liability of a consignor to pay transport charges and other incidental charges at the Head Office or in any other agreed place. In the instant case, transport charges were paid by the consignor at Calicut as evidenced by the consignment note evidenced by Exts. B1 to B3. Apart from the mere printing of the condition in consignment notes there is nothing to show that the 2nd party had agreed to those conditions by signing the notes so as to constitute a special contract.
No other point arises in the case. The appeal is devoid of merit and it is accordingly dismissed. No costs.
Appeal dismissed.
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