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Smart Summary

Judicial Summary: Order by Mohanlal Ujamshi Shah, C.J.

Factual and Procedural Background

The Bombay Steam Navigation Co. Ltd. (the defendant/opponent) contracted to carry fifty cases of medicinal castor oil from Bombay harbour to Bhavnagar on 13-9-1948 under a bill of lading booked by Swastik Oil Mills Ltd., Bombay. Of the fifty cases, forty-seven were delivered on 8-10-1948 and one case on 19-10-1948 to the plaintiff (who acted as agent of Swastik Oil Mills). Two cases were found missing.

The plaintiff sued to recover the value of the two missing cases after serving a notice on 10-11-1948. The defendant raised various technical objections; the trial judge overruled all but one objection: the trial judge found that condition No. 19 of the bill of lading required notice within fourteen days of the date when the goods should have been delivered and that this requirement had not been met. On that basis the trial court dismissed the suit with costs. The plaintiff sought revision of that decree; this opinion disposes of that revision/application.

Legal Issues Presented

  1. Whether the Carriage of Goods by Sea Act (XXVI of 1925) applied to the contract in question given that it was not made applicable to Saurashtra until 25-4-1949 (i.e., whether the parties could validly contract that the Act and its Schedule should govern their rights for a contract made before the Act's application to Saurashtra).
  2. Whether condition No. 19 of the bill of lading was ultra vires because it allegedly contravened Article 3, Clause (6) of the Schedule to the Indian Carriage of Goods by Sea Act (specifically, whether the fourteen-day notice requirement conflicted with the notice provisions of Clause (6)).
  3. Whether condition No. 19 was void as an agreement in restraint of legal proceedings under Section 28 of the Indian Contract Act.
  4. Whether a verbal promise by the defendant's agent to search for the missing cases and to ask the plaintiff to wait for twenty days could save the plaintiff's late written notice (i.e., whether such conduct tolled or extended the 14-day notice period under condition No. 19).

Arguments of the Parties

Applicant (Plaintiff) — arguments advanced by Mr. Mankad

  • That the Carriage of Goods by Sea Act, 1925, was not applicable to Saurashtra until 25-4-1949, and because the transaction occurred before that date the Act should not govern the parties' rights.
  • That condition No. 19 of the bill of lading was ultra vires as it was repugnant to Article 3, Clause (6) of the Schedule to the Act (i.e., the fourteen-day notice requirement conflicted with the Act's notice provisions).
  • That condition No. 19 operated as an agreement in restraint of legal proceedings contrary to Section 28 of the Contract Act and was therefore void.
  • That the defendant's representative had promised to search for the missing cases and asked the plaintiffs to wait twenty days, so the notice given on 10-11-1948 should be treated as within any required time limit.

Respondent (The Bombay Steam Navigation Co. Ltd.) — principal position

  • Relied on condition No. 19 of the bill of lading to contend that the plaintiff's failure to give written notice within fourteen days of the date when the goods should have been delivered (8-10-1948) exempted the company from liability for the claim concerning the two missing cases.
  • Raised technical objections to the plaintiff's claim generally (the opinion records several technical objections, most of which the trial court overruled except for the fourteen-day notice objection).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Orient Ship Supply Co. Ltd. v. Kalamarsand Co., A.I.R. 1951 Ker 1 Rejected a contention similar to the applicant's submission that the Act's non-application to a region prevented parties from contracting that the Act's provisions should govern their contract. Cited to support the rejection of the applicant's argument that the Carriage of Goods by Sea Act could not be made applicable by contract to a carriage contract entered into in Bombay before the Act's application to Saurashtra.
Haji Shakoor Gany… Plaintiff; v. H.E Hinde & Co. Ltd… Defendants, A.I.R. 1932 Bom. 330 Upheld the effect of a bill-of-lading clause discharging carrier's liability unless suit brought within one year; held that where the right is extinguished by such a clause Section 28 (Contract Act) does not assist a plaintiff. Used to demonstrate that time-limit clauses in bills of lading can extinguish substantive rights and therefore Section 28 does not render such clauses void as absolute restraints on legal proceedings in those circumstances.
Shakoor Gany Firm v. Firm of Volkart Bros, A.I.R. 1931 Sind 124 Discussed that duties and liabilities of common carriers by sea are governed by English principles and distinguished statutory terms imposed by Act's provisions from voluntary contractual terms; addressed the effect of clauses which extinguish rights. Quoted to explain the distinction between statutory provisions (which stand on a different footing) and voluntary contractual terms, and to support the analysis that a clause which extinguishes a right is not saved by Section 28.
Haji Shakoor Firm v. Volkart Bros, A.I.R. 1937 Sind. 11 Confirmed the decision(s) regarding time-bar clauses in bills of lading and their effect on rights and on Section 28 analysis. Cited as confirmation of the principle applied to show Section 28 did not assist the plaintiff in the present case.

Court's Reasoning and Analysis

The court conducted a step-by-step analysis of each principal contention raised by the applicant:

  1. Applicability of the Carriage of Goods by Sea Act:

    The court observed that the carriage contract was made in Bombay between parties resident in Bombay and the bill of lading expressly incorporated "all the terms, provisions and conditions of the Indian Carriage of Goods by Sea Act, 1925, and the Schedule thereto" and conferred on the company the benefits of that Act "as if the same were herein specially set out." The court held that such an express stipulation validly makes the terms of the Act govern the contract, so the applicant could not plead otherwise. The court relied on the earlier decision in Orient Ship Supply Co. Ltd. v. Kalamarsand Co. to reject the contention that the Act's later application to Saurashtra prevented the parties from contracting for the Act's terms to apply.

  2. Validity of condition No. 19 vis-à-vis Article 3, Clause (6) of the Schedule:

    The court parsed Article 3, Clause (6) and condition No. 19 carefully. Clause (6) contemplates written notice of loss or damage (and the general nature of such loss or damage) to be given to the carrier at the port of discharge before or at the time of removal, or within three days if the loss/damage is not apparent; if not given, removal is prima facie evidence of delivery; and in any event suit must be brought within one year after delivery or the date when the goods should have been delivered. The court concluded Clause (6) relates specifically to short delivery or damage and is not obligatory for all claims; it does not address the separate concept of a notice of "claim" for value.

    Condition No. 19, by contrast, required written notice of every "claim" of whatsoever kind within fourteen days of the date when the goods should have been delivered, and prescribed exemption from liability if not given. The court found that condition No. 19 deals with claims not covered by Clause (6) and therefore is not inconsistent with Clause (6). It also observed that Clause 8 (which prohibits agreements relieving carriers from liability altogether) was not contravened because condition No. 19 does not purport to relieve the company of liability absolutely but prescribes a time limit for notice of claims. The court concluded that condition No. 19 is a permissible contractual stipulation framed pursuant to Article 7 of the Schedule concerning responsibility and liability and is valid.

  3. Section 28, Indian Contract Act — whether condition No. 19 is void as a restraint on legal proceedings:

    The court explained Section 28 invalidates agreements that absolutely restrain a party from enforcing contractual rights. Condition No. 19 does not absolutely restrain enforcement; it only exempts the company from liability where notice is not given within the specified fourteen days. The court relied on precedents (notably Haji Shakoor Gany A.I.R. 1932 Bom. 330 and related authorities) where similar time-bar clauses in bills of lading were held to extinguish rights and thus Section 28 did not assist the plaintiffs. Applying that reasoning, the court found Section 28 did not aid the applicant and condition No. 19 was not invalid on that ground.

  4. Alleged promise by the company's agent to search and to wait twenty days:

    The court noted the allegation of a promise to search and an instruction to wait twenty days was not substantiated. More importantly, the court emphasized that condition No. 19 must be strictly construed and could not be extended by vague or indefinite pleas. The court interpreted "the date when the goods should have been delivered" as meaning the date on which the goods were due — in this case 8-10-1948 — and held notice given on 10-11-1948 was beyond the fourteen-day limit. Consequently, the company was exempted from liability under condition No. 19.

Holding and Implications

Holding:

The application (revision) is dismissed; the trial court's dismissal of the plaintiff's suit on the ground that condition No. 19 had not been complied with is upheld, and the defendant was exempted from liability. The dismissal is made with costs against the applicant.

Implications:

  • The direct effect is that the plaintiff's claim for the value of the two missing cases fails because the written notice required by condition No. 19 was not given within fourteen days of the date when the goods were due (8-10-1948), the notice having been served on 10-11-1948.
  • The court affirmed that parties may, by express stipulation in a bill of lading, make the provisions of the Carriage of Goods by Sea Act and its Schedule applicable to their contract even if the Act was not yet made applicable to the particular regional jurisdiction at the time of the carriage.
  • The court held that a contractual time-limit provision of the kind in condition No. 19 is not rendered void by Section 28 of the Contract Act simply because it extinguishes rights after the specified period; established authorities show Section 28 does not assist the plaintiff in such circumstances.
  • The opinion applies and relies on existing authority; it does not purport to establish a novel rule beyond the application of those authorities to the facts here.

This summary is confined strictly to the content and reasoning contained in the provided opinion and does not add any information that was not present in the opinion text.

Show full summary ...

    Western India Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co. Ltd.

    ORDER

    Mohanlal Ujamshi Shah, C.J.

    1. The opponent, The Bombay Steam Navigation Co. Ltd., had contracted to carry fifty cases of medicinal castor oil, ex-Bombay harbour to Bhavnagar on 13-9-1948 as per bill of lading of the same date, booked by the Swastik Oil Mills Ltd., Bombay. Of these, 47 cases were delivered on 8-10-1948 and one case on 19-10-1948 to the plaintiff, who is an agent of the Swastik Oil Mills, and the remaining two cases were found missing. The plaintiff sued to recover the value of the said two cases after giving a notice to the defendant company on 10 11-1948. The defendant company opposed the claim on various technical objections but all of these excepting one were overruled by the trial Judge. The one which was upheld was that the requirements of condition No. 19 of the bill of lading had not been complied with inasmuch as the notice had not been given within fourteen days of the date when the goods should have been delivered, and that the defendant company was consequently exempted from liability for the claim. The trial Court, therefore, dismissed the suit with costs and against this decree the plaintiff has come up in revision.

    2. Mr. Mankad for the applicant has urged at the outset that the Carriage of Goods by Sea Act (XXVI [26] of 1925) was not made applicable to Saurashtra until 25-4-1949 and that as the transaction in suit was of a date prior to the application of the said Act to Saurashtra, the rights of the parties will not be governed by the provisions of the said Act. The contention is not correct. The contract for the carriage of the goods had taken place at Bombay between the parties who were residents of Bombay, and it was subject to the conditions of the bill of lading, one of which was that all the terms, provisions and conditions of the Indian Carriage of Goods by Sea Act, 1925, and the Schedule thereto were to apply to the contract contained in the bill of lading, and the Company was entitled to the benefit of all privileges, rights and immunities contained in such Act and the Schedule thereto as if the same were herein specially set out. This obviously meant that the contract for the carriage of the goods in suit was to be determined by the terms, provisions and conditions of the said Act. Such a contract is perfectly valid, and the rights of the parties will, therefore, be governed by the provisions of the said Act. A similar contention urged in Orient Ship Supply Co. Ltd. v. Kalamarsand Co. A.I.R. 1951 Ker 1, was rejected. The contract here having been definitely entered into with an express stipulation that the provisions of the Indian Carriage of Goods by Sea Act of 1925 & the Schedule thereto were to apply to the contract, it is not open to the plaintiff, who is an assignee of the consignor, to plead to the contrary, and this contention must accordingly be rejected.

    3. The next contention urged for the applicant, and that is the main contention, is that condition No. 19 of the bill of lading was ultra vires inasmuch as it was repugnant to and contravened the requirements of Article 3, Clause (6) of the Schedule to the Indian Carriage of Goods by Sea Act. The said clause provides that unless notice of loss or damage and the general nature of such loss or damage is given in writing to the carrier or his agent, here the defendant company, at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or if the loss or damage be not apparent, within three days, such removal shall be prim a facie evidence of the delivery by the carrier of the goods as described in the bill of lading, and it further provides that in any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or, which is important, the date when the goods should have been delivered. Clause (6) thus contemplates the giving of a notice though it is not obligatory and if the notice is not given before or at the time of taking delivery of the goods or, if the loss or damage is not apparent within three days, the presumption will be that the goods were delivered in accordance with the bill of lading. That notice relates to the short delivery of or damage to the goods and has no reference to the claim for the value thereof, and the notice not being obligatory the consignor of his agent could still sue for the value of the goods provided the suit is brought within one year o the date when the goods should have been delivered. Condition No. 19 of the bill of lading contains an altogether different provision, viz. that in all cases not provided for by Clause 6, Article 3 of the Act, notice in writing of every 'claim' of whatsoever kind or nature shall be given to the Company within fourteen days of the date when the goods should have been delivered, and in default the company shall be exempted from liability for such claim. The notice under this condition relates to the making of a claim and is different from the notice under Clause 6 of Article 3 which relates to the loss as for instance short delivery or damage to the goods. Condition No. 19 has thus nothing to do with Article 3, Clause 6 and in fact it does not apply to cases provided for by the said clause, and no question of its being inconsistent with the said clause, and on that account of its being ultra vires, there fore arises. The said condition does not also seek to exonerate the Company from liability altogether, but it merely prescribes the time limit; within which the claim is to be made by way of notice. Such a provision is not inconsistent with Clause 8 of Article 3, which prohibits any agreement in a contract of carriage relieving the carrier from liability for facts or damage altogether, and says that such an agreement shall be null and void and of no effect. Condition No. 19, as I said, does not attempt to relieve the Company from liability for loss or damage altogether, and it does not, therefore, contravene Clause 8 of Article 3. It is open to the Company to proscribe the conditions under Article 7 of the Schedule as to the responsibility and liability of the Company for the loss or damage to the goods carried and as the conditions of the bill of lading have been framed in pursuance of the said Article 7 of the Schedule, they are quite valid.

    4. Mr. Mankad has urged that the condition exempting the Company from liability in case notice was not given within fourteen days of the date when the goods should have been delivered is an agreement in restraint of legal proceedings under Section 28, Contract Act, and was therefore void. That section provides that an agreement restraining a party absolutely from enforcing his rights under a contract is void, and it does not apply to cases where there is no absolute restraint against enforcing the rights. Condition No. 19 does not restrain a party from making a claim in a Court of law in respect of the loss or damage, but it only exempts the Company from liability in case a notice of the claim is not given within fourteen days from the due date. In Haji Shakoor Gany…Plaintiff; v. H.E Hinde & Co. Ltd.…Defendants. A.I.R. 1932 Bom. 330, the condition was as follows:

    In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered,

    viz., similar to one of the sub-clauses of Article III, and it was held that the effect of the incorporation of this condition in the bill of lading was that the rights of the plaintiff were extinguished in respect of the claim made after one year, and as the plaintiff had no rights to enforce there was no question of the remedy being barred and Section 28, Contract Act, did not assist the plaintiff. In. Shakoor Gany Firm v. Firm of Volkart BrOrs. A.I.R. 1931 Sind 124, it was observed:

    It is equally well settled that the duties and liabilities of a common carrier by sea are governed in India by principles of the English law, on that object, and that notwithstanding some general expression in the Chapter of 'Bailments a common carrier's responsibility is not within the Act 1872. Assuming therefore for the moment that the incorporation in a bill of landing of the conditions of the Carriage of Goods by Sea Act, 1924, in compliance with the mandatory provisions of Section 3 of that Act, stand on the same footing as a voluntary agreement between the parties, and that one of such conditions, namely, that referred to above, is contrary to the provisions of Section 28, Contract Act, the validity of such a condition would depend in this case upon the English Law in view of the principles stated above and not upon the provisions Section 28, Contract Act. This in itself in a sufficient answer to the first point. But there is no ground for making the assumption contended for. In the first place, a statutory provision declaring the terms on which the parties are deemed to have entered into a contract stands on quite a different footing than a term of a contract voluntarily agreed to by the parties. In the next place, the clause in question does not purport to limit the time within which the holder of a bill of lading may endorse his rights against; the carrier; but it goes much further. It extinguished the right itself which is there by not only not enforceable by the usual legal proceedings in the ordinary tribunals within the meaning of Section 28, Contract Act, but is irretrievably lost.

    This decision was confirmed in appeal: Haji Shakoor Firm v. Volkart Bros A.I.R. 1937 Sind. 11. Section 28. Contract Act, therefore, does not assist the plaintiff.

    5. Mr. Mankad has made a feeble attempt at showing that the defendant Company's man had promised to search for the missing two cases and had asked the plaintiffs to wait for twenty days, and that the notice given on 10th November was therefore within the time prescribed. Apart from the fact that this allegation has not been substantiated the contention cannot be entertained because the provisions of condition No. 19 must be construed strictly and they cannot be allowed to be extended by vague or indefinite arguments or pleas. The notice under the condition has to be given within fourteen days of the date when the goods should have been delivered, and this expression means the date on which the goods were due to be delivered. In the present case that was on 8-10-1948, and the notice was obviously beyond the fourteen days' limit. That being so, the Company was exempted from liability and its claim has been properly dismissed. The application fails and is dismissed with costs.

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    Comments

    Western India Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co. Ltd.
    (Apr 21, 1951)