RESPONSIBILITY OF A RAILWAY ADMINISTRATION AS A CARRIER OF GOODS..pptx

law of carriage

1. RATHUL DEV S ASSISTANT PROFESSOR MARKAZ LAW COLLEGE RESPONSIBILITY OF A RAILWAY ADMINISTRATION AS A CARRIER OF GOODS.

2. Defined by the Indian Railways Act, 1989 Covered under Chapter XI (Sections 93 to 112) Deals with the matter of responsibility

3. Execution of forwarding notes [S. 64] Forwarding notes must be executed in all cases except where specifically exempted. Consignor's responsibility: Ensure correctness of particulars in the forwarding note. Indemnify the railway administration for any damage due to incorrect or incomplete details. Two categories requiring forwarding notes: Goods/animals carried by a goods train. Goods carried by other trains, when:

4. Carried at owner’s risk Of perishable nature In defective condition or defectively packed Are explosives or dangerous goods Railway administration (with Central Government approval) may: Impose conditions Require specific particulars to be disclosed Two types of forwarding notes in use: For general merchandise For dangerous goods

5. Risk Note B This note is used when consigning goods that are inherently susceptible to damage, loss, or deterioration during transit. It outlines the responsibilities of both the railway and the consignor (the party sending the goods) in such cases. Risk Note Z This note is specifically for the transportation of dangerous goods, including explosives, flammable substances, corrosive materials, etc. It highlights the stringent regulations and safety measures that must be followed to prevent accidents and ensure the safe handling of these materials. 

6. Surat Cotton Spg & Wvg Mills vs. Secy of State for India in Council , Disclosure obligation arises immediately when non-delivery or loss occurs Not limited to court proceedings To help avoid litigation by providing early clarity Railway administration must explain how the consignment was handled while in its possession or control Disclosure must be precise and factual – not vague or incomplete Must include actions of railway staff related to the goods If consignor is not satisfied with the disclosure: The adequacy and truth of the disclosure should be judicially assessed The railway must present its evidence first in court proceedings

7. Union of India v. Mahadeolal Prabhu Dayal Privy Council's ruling in Surat Cotton case accepted as correct Applies equally to both Risk Note B and Risk Note Z Disclosure obligation arises only when the consignor specifically demands it No general duty to disclose before litigation unless requested In this case, no evidence that consignor asked for disclosure before filing the suit Therefore, no breach of contract by railway

8. Nature of Disclosure must be a precise statement of how the consignment was handled If requested and: Not given, or Given but found unsatisfactory Then the matter must be judicially decided in court Court will decide whether the railway committed a breach of contract based on facts Clarified that railway's duty of disclosure is conditional, not automatic Balanced contractual rights and obligations of both parties Reinforced the importance of timely request by consignor to invoke duty of disclosure

9. Juggilal Kamlapat Oil Mills v. Union of India Oil was consigned from Kanpur to Calcutta under Risk Note Z On arrival, the Health Authorities seized the oil as adulterated, under orders of the High Court. Oil was later destroyed following court proceedings. No misconduct by the railway administration. The seizure was a statutory act carried out under court orders. The consignor was aware of the seizure and was a party to the court proceedings regarding the destruction. No prejudice caused by the railway's failure to issue notice of seizure. Plea of lack of notice was raised for the first time before the Supreme Court, not in earlier stages.

10. Juggilal Kamlapat Oil Mills v. Union of India Railways not liable for loss under Risk Note Z since: No misconduct by railway proved Seizure was done by legal authority Consignor had full knowledge and participation in the court process Affirmed the principle that Risk Notes limit liability unless misconduct is clearly established

11. GENERAL RESPONSIBILITY [S. 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: — act of God; act of war; act of public enemies; arrest, restraint or seizure under legal process; 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 authorised by it in this behalf; 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; natural deterioration or wastage in bulk or weight due to inherent defect, quality or vice of the goods; latent defects; fire, explosion or any unforeseen risk:

12. GENERAL RESPONSIBILITY [S. 93] Even if the railway administration proves that the loss, damage, deterioration, or non-delivery of goods was caused by natural causes or other uncontrollable events (like Act of God, war, riots, fire, etc.), they are not automatically free from liability.

13. Punjab National Bank vs. Beniprasad Maheshwari In this case, the Supreme Court held that even under Risk Note B, where the railway's liability is limited, the railway administration is still under an obligation to disclose how the consignment was dealt with during the period it was in their custody, especially in cases of non-delivery. The failure of the railway to make such a disclosure renders it liable for compensation, as it prevents the consignor from assessing whether the loss was due to misconduct. The Court reaffirmed that Risk Notes do not confer absolute immunity, and the burden to explain the handling of goods lies first with the railway. Only if misconduct cannot be inferred from this disclosure does the burden shift to the consignor. This judgment reaffirms the principle laid down in the Surat Cotton case, emphasizing transparency and accountability of the railway even under contractual risk notes.

14. Gwalior Rayon Silk Mfg. (Weaving) Co. Ltd. v. Union of India In this case, a consignment of liquid caustic soda booked under a Risk Note was lost due to an accident involving a defective wagon. The railway administration failed to show when the wagon was last inspected or what reasonable care or foresight was exercised to prevent the accident. The Supreme Court held the railway liable, stating that merely relying on the Risk Note was not sufficient to escape liability. The burden was on the railway to prove that the loss was caused by an unforeseeable risk and not due to its own negligence. Since the railway could not discharge this burden, it was held responsible for the loss. This judgment reinforced the principle that Risk Notes limit but do not eliminate railway liability, and the railway must prove due care to claim exemption under such contractual terms.

15. Union of India v. Meghraj In this case, the Court clarified the scope of railway responsibility under the Railways Act, stating that the responsibility covers loss, destruction, damage, deterioration, or non-delivery of goods while in transit. The Court emphasized that the section exhaustively includes all types of incidents that may happen to goods in transit. The term "loss" was interpreted broadly to mean disappearance of the goods or the railway’s failure to account for what happened to them. It is immaterial whether the loss is due to theft, misappropriation, misdelivery , or any other cause. Thus, as long as the railway cannot explain the fate of the consignment, it is considered a loss, and the railway can be held liable, regardless of the specific cause behind the disappearance.

16. G.I.P. Railway Co. v. Jitan Ram In this case, the Court observed that the term “destruction” in the context of railway liability must be interpreted in line with "loss", as used under the relevant provisions. The Court held that "destruction" includes total disappearance or rendering the goods unusable, and can arise from causes similar to those that result in loss, such as theft, misdelivery , or damage beyond recovery. The judgment clarified that loss and destruction often overlap, and both result in the railway administration being liable if they fail to account for what happened to the goods while in their custody during transit. This case affirms that railway liability is not limited to physical disappearance but also includes instances where goods are rendered valueless or unfit for delivery due to mishandling or other causes.

17. Union of India v. Steel Stock Holders’ Syndicate In this case, the Supreme Court addressed whether loss in market value of goods due to delay in delivery, without any physical damage, amounts to “deterioration” under the Railways Act. The consignment had lost market value because of delay, but its intrinsic nature remained unchanged. The Court, through Fazal Ali J, held that the term "deterioration" in Section 76 (now Section 95 of the Railways Act, 1989) must be given its natural and restricted meaning, referring only to actual physical deterioration. A physical change for the worse in the goods themselves, and not merely a drop in commercial or market value. The Court thus ruled that mere depreciation in price does not amount to "deterioration" unless the goods have physically changed or decayed.

18. Damages for fall in market price Union of India v Madan Lal (Patna HC): The bar for claiming damages for “loss of particular market” in Section 78(d), Railways Act (now S.102(8), Act of 1989), does not cover claims for market price fall. Plaintiff must prove the extent of loss. Assessment of loss may be arbitrary or speculative, especially when damage is caused by events like fire or water. Union of India v P.K. Parameswaran (Kerala HC): Plaintiff entitled to claim damages based on the fall in market price between due date of arrival and actual date of delivery. Such damages are considered  direct  and railway administration is liable under Section 73, Railways Act, 1890.

19. Damages for fall in market price Union of India v Radhakisan : If goods are lost due to employee negligence and consignor provides no evidence of market value at destination: Plaintiff entitled to recover the freight paid and the cost price of the consignment. UOI v United India Fire & General Insurance Co. Ltd.: Cotton bales caught fire after being unloaded and stored (outside goodshed , watched by consignee’s guards). Incident occurred 13 days after unloading. No railway negligence found; railway not liable. Res ipsa loquitur and Section 114, Evidence Act, 1872 did not apply.

20. Loss by theft, looting Union of India v. Udho Ram & Sons (SC) Goods train leaving Howrah stopped at Chandanpur , notorious for thefts. Halted 14 minutes at midnight—wagon attacked by looters, part of consignment stolen. Wagon was properly riveted and sealed at Howrah. Train had railway protection police, but they were with the guard and didn’t know about theft. Railways argued loss was beyond their control. Supreme Court held that Railways liable as bailee under Section 151, Contract Act. No evidence railway police escort was adequate or that right precautions were taken. Courts says that Taking precautions may not always avoid theft, but here no proof of sufficient action.

21. Loss by theft, looting UOI vs. Indian Oil Corporation Loading done at claimant’s (IOC) site. Top and bottom seals put on tanker wagons by claimant’s staff. Dip measurement taken by both railway and claimant’s staff. Transit risk became that of railways. Section 94 not applicable as both seals found broken at delivery. Broken seals showed railway negligence. Railways held responsible to pay compensation for loss.

22. Criminal Misappropriation by Employees Balaram Harichand vs. Southern Maharata Railway Co. Ltd. “Loss or destruction” includes loss by criminal misappropriation by employee in charge of consignment.

23. Loss by wet in transit Piramal Banwarilal vs. Union of India. The consignment was of certain bags of dry chillies. 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. Holding the railways guilty of negligence, D. Pal J pointed out that the use of the wagon to carry dry chillies without taking necessary and reasonable precautions as to its watertight condition particularly when the weather was cloudy amounts to serious negligence.

24. Loss by wet in transit Moolji Sickka vs. Dominion of India where the use of a wagon to carry tobacco leaves during the monsoon without taking necessary precautions was held to be negligence of a grave character and the fact that water was entering into the wagon in large quantities was considered to be a case amounting to misconduct.

25. Weight and contents mentioned in railway receipt Mohan Lal vs. Union of India Where the railway receipt shows the contents and weight of the goods, the railways will not be allowed to say afterwards that the receipt was issued recklessly. They will be accountable for the acknowledged contents and weight unless they can show that there was fraud in connivance with the consignor.

26. 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. Railway receipt is a document of title. It is transferable as such. The bona-fide transferee for valuable consideration gets all the rights enshrined in the railway receipt

27. Right to sue Lalchand Madhav Das vs. Union of India The plaintiff was the consignee of 564 baskets of mangoes. The reasonable transit and delivery time was five days. The Railways took longer than five days to transport the consignment. The consignment was damaged; railway authorities certified damage at 26%. Plaintiff sued the Railways for the damage. Railways argued the plaintiff, as a mere consignee, had no right to sue. The court found the plaintiff was not just a consignee: He had advanced money to the consignor against the railway receipt. He was also the agent of the consignor to sell the mangoes on commission. Therefore, the plaintiff had a special interest and the right to sue, not being a ‘consignee simpliciter ’.

28. Right of pledgee of railway receipt to sue Goods were consigned with the railway to “self” from Bombay to Okhla . The consignor endorsed the railway receipts to the appellant bank after receiving an advance of Rs 20,000 from the bank. The goods, valued at Rs 35,500, were lost in transit. As the endorsee and pledgee of the goods (through the railway receipts), the bank sued the railways for the full value of the goods. The trial court dismissed the bank’s suit. The Bombay High Court allowed recovery only up to the amount advanced by the bank (Rs 20,000), holding that as pledgee , the bank could recover only for loss of its security, not the entire value of the goods. The bank sought full recovery; the railways challenged any liability.

29. Right of pledgee of railway receipt to sue There were cross-appeals: the bank sought full recovery; the railways challenged any liability. The case addresses whether endorsement of the railway receipt constitutes a pledge of the goods and the extent of the endorsee’s right to sue for damages. SC held that delivery of railway receipts was the same thing as delivery of goods; the pledge was, therefore, valid and the pledgee was entitled to sue for the loss. The Court also held that the pledgee was entitled to recover the full value of the goods lost and not merely the amount of his advance.

30. New provision as to discharge from liability [S. 108] A new provision in the Railways Act, 1989 states: The railway is discharged from liability if compensation is paid to the consignee or endorsee who produces the railway receipt. Once payment is made to such a person, no further legal proceedings (including before the Claims Tribunal or any court) can be initiated against the railway on the ground that the consignee or endorsee was not legally entitled to receive the compensation. However: Sub-section (2) clarifies that this discharge does not affect the rights of any other interested person. Such interested persons can still enforce their rights against the consignee or endorsee who received the compensation.

31. Goods carried at owner's risk [S. 97] Section 97 deals with the responsibility of the railways where the goods are consigned at owner’s risk. Suraj Nath v Union of India (Calcutta High Court ) 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. In such cases the consignor has to prove negligence. But as the goods are in the hands of the carrier and only he knows how the goods were dealt with in its course, the railways will have to show this, failing which negligence may be presumed.

32. Goods carried at owner's risk [S. 97] Section 97 of the Railways Act, 1989 says that if a consignment or package is not delivered and the railway cannot prove it was due to fire or accident, or if pilferage is shown in securely packed goods, the railway must explain how the consignment was handled. If this explanation suggests negligence or misconduct, the railway is liable. If not, the consignor must prove negligence or misconduct.

33. Goods carried at owner's risk [S. 97] UOI vs. Rameshwar Prasad If the railways do not disclose how the consignment was handled, negligence is presumed. In the oil tins case, five tins were delivered empty and 21 were leaking. The railways failed to produce any records about how the consignment was dealt with. The only defense was that the packing was defective and this was noted on the way-bill. The court held that defective packing alone was insufficient to absolve the railway. The railways have a duty to disclose relevant circumstances regarding the consignment. Failure to disclose such information leads to a presumption of negligence against the railway.

34. Carriage of luggage [S. 100] Rajan Hukumchand Jain vs. UOI Railway is liable only for loss of booked luggage, subject to exceptions in Section 93. Luggage must be handed to a railway servant who gives a receipt for liability to arise. If passenger keeps luggage, railway liable only if loss is due to negligence or misconduct. Material given by passenger to railway for carriage in the same train is luggage, not consignment (Section 100 applies). In a case with seven bags, one lost; passenger proved value of contents but did not note bag’s weight. Despite no weight proof, passenger was allowed compensation for the value of lost articles.

35. Responsibility for delay or detention [S. 95] For any loss or damage arising out of delay or detention, the railway is liable, unless it proves that the delay or detention arose without negligence or misconduct. Union of India v C.A. Akhthar & Co Bundles of dry salted cow hides were consigned from Shillong to Madras and arrived after about 2.5 months. There was no evidence about normal transit time, but the court held that 2.5 months was unreasonably long given the route involved trucks to Guwahati and gauge transhipment. The unexplained delay was held sufficient to infer negligence by the railways. However, the railways were not liable for the deterioration of the goods because the nature of the goods meant they could not last more than 6-7 weeks without damage. The plaintiff failed to prove the goods were fresh at booking. Therefore, the plaintiff's suit was dismissed.

36. Liability for deviation [S. 69] Under the ordinary principles of the law of carriage, if the carrier deviates from the agreed route or from the customary or usual route, he will be absolutely liable for any loss or destruction of the goods. So is true of railways. But sometimes deviation may be quite justified. For example, if an accident has blocked a railway line, the traffic may have to be diverted to other lines. In order, therefore, to protect the railways from the consequences of such justified deviations, Section 69 has been enacted. The section provides that where due to a cause beyond the control of the railway or due to congestion in the yard or other operational reasons, goods are carried over a route other than the route by which such goods are booked, that will not amount to a breach of contract. Thus, the railway would not be absolutely liable, but would be liable only if the liability would have arisen even otherwise, that is, if no diversion had taken place.

37. Responsibility for wrong delivery [S. 80] On production of the original railway receipt, the railway can deliver goods to the person presenting it. The railway is not liable if the person receiving the goods is not entitled to them or if the receipt endorsement is forged or defective (Section 80). This exempts the railway from liability for wrongful delivery. The person who wrongfully receives the goods holds them in trust for the true owner. The true owner can recover the goods from that person. [UOI vs. Ramji Lal ]

38. Delivery on production of bogus tampered railway receipt UOI vs. Shree Emporium Where goods were delivered to a wrong person on his producing a bogus railway receipt, the court said that it was a case of negligence on the part of the authorities in not taking proper care and caution. The consignor and the insurance company were entitled to claim loss with interest and costs.

39. Termination of responsibility [S. 99] Brijmohandas vs. UOI Railway's liability as carrier ends when transit ends — that is, on arrival of goods at destination and after free days for clearance expire. After transit ends, railway’s liability continues for seven more days as bailee under Sections 151, 152 and 161 of the Contract Act. During these seven days, railways must take reasonable care of the goods as a prudent person would. Railways are liable if care falls below this standard or if they fail to deliver goods to the owner.]

40. Liability to pay demurrage or wharfage [S. 99] The consignee must pay demurrage or wharfage as long as goods remain unloaded in the wagon or on railway premises under S. 99 The consignee has no right to insist on opening or inspecting the goods on the railway premises before taking delivery. The consignee cannot leave goods at railway premises and request re- weighment to avoid paying demurrage or wharfage . [Govt. Pleader vs. M.C. Cherian ] The Railway Claims Tribunal does not have jurisdiction to refund demurrage or wharfage charges; it can only entertain refund claims related to freight or fines.

41. Liability to pay demurrage or wharfage [S. 99] Demurrage and wharfage are penalties/damages for breaching the consignee’s obligation to clear goods timely, unlike freight which is a contractual carriage charge. It is proper for the Tribunal to refuse jurisdiction over demurrage or wharfage refund claims. [TISCO Ltd. vs. UOI]

42. Defective condition or defective packing [S. 98] Sarjug Prasad Iswar Purbey vs. UOI If goods are defective or not packed per railway orders, causing damage, deterioration, wastage, or leakage, and the consignor notes this fact, the railway is not liable. Liability arises only if negligence or misconduct in handling the goods is proven.

43. Exoneration from responsibility [S. 102] Section 102(c)(ii) of the Railways Act exempts railway liability for damage caused by “riot.” “Riot” includes damage caused by an irresistible mob of rioters. In A.P. Paper Mills vs. UOI, court held agitators’ acts amounted to rioting and civil commotion. Evidence showed goods were destroyed due to wagons being set on fire by the mob. Such loss/damage falls under civil commotion caused by unlawful assembly. Accordingly, the railway administration is absolved from liability under the section.

44. Burden of proof as to value [S. 110] The burden to prove that a loss falls under exceptions absolving the railway of liability lies on the railway; if they fail, they are absolutely liable for the loss. The claimant must prove the value of lost animals or articles. For animals, the value or declared higher value (Section 110) or extent of injury must be proved by the claimant. For parcels/packages with declared value or certain scheduled articles, the claimant must prove the declared value is the true value.

45. Burden of proof as to value [S. 110] The claimant need not prove how the loss occurred. In a case of short delivery with railway receipts marked “said to contain,” the burden to prove loaded quantity lay on the consignor; failing that, the tribunal erred in requiring the railway to produce booking documents. This led to setting aside judgment against the railway. [UOI vs. P.P. Enterprise] In a case of jewel loss in custody, the defendant railway failed to show loss occurred despite reasonable care and was held liable; damages are assessed based on market value. [ Narasimhaswami v Muthukrishna Iyengar ] When both parties present evidence, the onus issue becomes less critical as courts decide based on the whole evidence and circumstances.

46. Notice of loss [S. 106] A claim notice must be lodged with the railway within six months from the date of booking (consignment), not from the date of loss. Failure to give notice within six months results in the loss of right to refund or compensation. Notice should be given to the railway where goods were delivered for carriage, or where the destination station lies, or where loss/damage occurred. Inquiry about non-delivery by the person entitled to goods is considered sufficient notice. [ Jetmull Bhoraj vs. Darjeeling Himalayan Railway Co. Ltd.]

47. Notice of loss [S. 106] A letter clearly stating the situation and intention to hold the railway responsible is adequate notice. [UOI vs. Rawatmal Bhairondas Kundalla ] Under Section 80 CPC and S.106 notice must be given before suing the State or railway; this twin notice requirement can be fulfilled by a single notice. Notice given to the railway general manager is valid for suing the Union of India and cannot be challenged for lack of notice. [Bharat Kumar vs. UOI]