International Airport Authority v. Televista Electronics (Pvt.) Ltd.

Delhi High Court · 02 Aug 2011 · 2011:DHC:3874

Valmiki J. Mehta

RFA No.425/1999

2011:DHC:3874

civil appeal_dismissed Significant

AI Summary

The Delhi High Court upheld the liability of a sub-bailee handling lost goods under the Carriage by Air Act, rejecting defenses of non-joinder, lack of privity, and exemption under the Contract Act, and affirmed foreign currency conversion at judgment date.

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RFA No.425/1999 HIGH COURT OF DELHI RFA No.425/1999
2nd August, 2011 INTERNATIONAL AIRPORT AUTHORITY ...... Appellant
Through: Mr. Aruneshwar Gupta with Mr. Manish Raghav, Mr. Nikhil Singh & Mr. Garvit Chauhan, Advs.

VERSUS

TELEVISTA ELECTRONICS (PVT.) LTD. ...... Respondent
Through: Mr. Pawan Kumar Agarwal, Adv.

CORAM:

HON’BLE MR. JUSTICE VALMIKI J.MEHTA

JUDGMENT

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 is to the impugned judgment dated 25.2.1999 which has decreed the suit for recovery of money of the respondent/plaintiff against the appellant/defendant, on account of the appellant/defendant having lost the goods of the respondent/plaintiff which were in its custody. The suit has been decreed for Rs.33,060/- with interest. 2011:DHC:3874

2. The facts of the case are that the respondent/plaintiff booked a consignment of 2000 sets of integrated circuits via M/s. KLM Airlines from Singapore to Delhi. This consignment arrived in India on 22.11.1986 vide Airway bill No.074-7075 IG No.86/8326 in a sound condition. The said consignment was received by the appellant/defendant from the carrier M/s. KLM Airlines. This consignment was however subsequently found not traceable during the period, when the same was in the possession and custody of the appellant/defendant. The respondent/plaintiff on the failure of the appellant/defendant to pay the value of the consignment, filed the subject suit for recovery of the value of the consignment and which has been decreed.

3. All the aforesaid facts with respect to the consignment having been booked and carried by M/s.KLM Airlines, the same having been handed over to the appellant/defendant and thereafter being not traceable when the same was in the custody and possession of the appellant, are not disputed. Four main issues were however canvassed on behalf of the appellant in the Trial Court and before this Court. The first issue was that the respondent/plaintiff was bound to have made the Airlines, i.e. M/s. KLM Airlines as a party to the case and since M/s. KLM Airlines has not been made party to the suit, the suit was bad for nonjoinder of necessary party. The second issue argued was that there is no privity of contract of the appellant with the respondent and therefore the appellant is not liable to the respondent. The third issue urged was that the appellant took care of the goods as a prudent person and yet the same were lost and thus having duly performed the duties of a bailee the appellant was not liable. In support of this argument, reliance is placed on behalf of the appellant upon Sections 151 & 152 of the Contract, Act,

1872. The fourth issue which was urged on behalf of the appellant was that the exchange rate of francs which have been taken for compensating the respondent is the exchange rate of francs on the date of the judgment, whereas the exchange rate of francs should have been the exchange rate of francs on the date of the loss.

4. In my opinion, the appeal is wholly without merit and is therefore liable to be dismissed. So far as the issue as to whether M/s. KLM Airlines is a necessary party and the respondent could not sue the appellant because there was no privity of contract between them, the same has been dealt with by the Trial Court appropriately in paragraph 9 of the impugned judgment and which reads as under:-

“9. It is admitted fact that M/s. KLM was carrier to whom the consignment containing goods 2000 integrated circuits was entrusted for carriage to India from Singapore and that the defendant is handling agent of the said carrier vide Ex.DW1/1. There was no direct contract between the plaintiff and the defendant and on this ground, it has been urged that there exists

no privity of contract between the plaintiff and the defendant and as such the defendant is not liable for any loss/damage to the plaintiff in any manner. No tortuous liability can be fastened to the defendant. KLM company to who the consignment vide Ex.DW1/P[1] was entrusted is the bailee being the carrier while position of the defendant is that of a sub-bailee or agent of the defendant. In this regard, it would be appropriate to refer to commentary of Chitty on contract’s volume II Chapter 2 in paragraph 169 quoted in our own High Court’s decision reported in 1979(XV) DLT 129 wherein it is observed as under:

“169. “Sub Bailment ………………………. The Bailor may, however, have given the bailee actual or ostensible authority to sub-bail the chattels to the third person, in which case the mere facts that the third person has taken possession of the chattels under the sub bailment will not constitute a tort as against the original bailor, because the latter will be taken to have consented to the sub-bailment, such authority to sub- bail may be inferred from, the parties’ knowledge of ordinary commercial practices e.g. that a carrier who carries goods over a long distance may engage a sub contractor as his local delivery agent or that the post office may engage an airlines to carry air mail. Where there is such actual or apparent consent to the sub bailing their relationship of bailment may arise directly between the original bailor and the sub bailee, hence, it appear that the original bailor may take advantage of rules of bailment against the sub bailee, instead of relying on the ordinary rules of the law of tort. Thus, by relying on the fact that there a sub bailment, the original bailor need not prove a duty of case owned by the sub bailee under the ordinary tort if negligence, since the sub bailees will owe him all the duties of a bailee. Similarly if the original bailor sues the sub-bailee on detineue or for conversion he need prove only that the act of the sub bailee was wholly inconsistent with the sub bailee’s duties qua bailee or with his

contractual ties under the contract of sub-bailment i.e. he will not be obliged to prove conversion or detineue according to ordinary principles of the law of tort. Likewise, the sub bailee will presumably be stopped from denying the original bailor’s title to the chattel by pleading to jut tertee.” After referring and discussing the matter, it is observed in the said decision that from the above commentary it appears will settled that sub-bailment can arise even there is no contract and sub bailee is bound by the obligations of the bailee qua the bailor. The Contract Act is not exhaustive of all the cases of bailment. Only part of the law relating to bailment has been dealt with the by the law of contract. In any case, Section 167 has got no application whatsoever.” Moreover defendant has also admitted that the defendant is agent of M/s KLM carrier and being agent, the defendant has stepped into the shoes of M/s KLM carrier and cannot escape the liability if the goods has been lost while being handled by the defendant due to went of proper care. Thus, in this way objection of the defendant that there does not exist any privity of contract between the plaintiff and defendant it cannot be fastened with the liability of tort is untenable and on this similar ground, impleading of KLM carrier is also not necessary. Suit does not suffer from any infirmity on this ground for non-impleadment of the said carrier. It is also pointed out that the defendant is indemnified by virtue of agreement between the defendant and KLM Carrier vide Ex.DW1/D[1] as per clause 8(1)(b) and

(c) which shows: “8.[1] The carrier shall not make any claim against the handling company and shall indemnify if (subject to a hereinafter provided) against any legal liability for claims or suits including costs and expenses incidental thereto, or in respect of: (b) injury or death of any employee of the carrier and

(c) damage to or delay or loss of baggage, cargo or mail carried or to be carried by the Carrier; and” As per clause 8.1(c) the carrier shall not make any claim against the handling company and shall indemnify it against any legal liability for claims or suits including costs and expenses incidental thereto in respect of damages to or delay or loss of baggage, cargo or mail carried or to be carried by the carrier which means that this agreement is an agreement inter se the carrier KLM and the defendant and it does not exempt the defendant from any liability which it may incur as a sub-bailee or an agent irrespective of the fact that there does not exist any privity or contract between the plaintiff and defendant as mentioned above. Thus, all the above said issues are disposed of accordingly.”

5. I completely agree with the findings and conclusions of the Trial Court in the aforesaid paragraph. The law in this regard is clear that the bailor can directly sue the sub-bailee with respect to the value of the goods which have been lost. Further, there cannot be a defence that the appellant will not be liable because of a contract of the appellant with M/s. KLM Airlines, (Clause 8(1)(c) of the Contract) which provides that in case of any loss or damage the appellant will be indemnified by the carrier. The Trial Court has rightly held that the contract between the appellant and the carrier KLM Airlines will only operate inter se the appellant and the Airlines, and it cannot, in any manner, alter or take away the liability of the appellant towards the respondent whose consignment was lost. I therefore reject the argument that the suit was bad because of non-joinder of M/s. KLM Airlines or there was no privity of contract with the appellant and the respondent and therefore the appellant could not be sued and that the appellant could be exempted by virtue of Clause 8(1)(c) of its contract with M/s. KLM Airlines.

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6. In support of the third issue of denial of liability by having taken due care, learned counsel for the appellant had relied upon Sections 151 and 152 of the Contract Act,1872 which state that once bailee takes reasonable care as a prudent person with respect to the goods, the bailee is exempted. In my opinion, these Sections at the first blush may seem to apply however a deeper look shows that the Sections will not apply because when the bailment is to a carrier the contract of carriage is governed by the Carriage by Air Act, 1972. In the facts of the present case, the liability would have been either of the carrier, who is the bailee or of the sub-bailee, who is the appellant. Accordingly, since the liability of the original bailee will be governed by the Carriage by Air Act, 1972, the liability of the sub-bailee will also be in accordance with the said Act and not the Contract Act. If the same has to be otherwise then it would mean that a carrier can simply avoid its strict liability under various Acts pertaining to carriage of goods by simply making a subbailment, and this surely cannot be done because the same will defeat the intention of the Carriers Acts. I may note that liability of a carrier under various Acts pertaining to carriage such as Carriage by Air Act, 1972, Carriers Act, 1865, etc., is a strict liability more or less equal to that of an insurer and thus the normal law of bailor and the bailee can not apply to exempt a carrier who of course is a bailee, but will be governed by the special provisions of the Carriage by Air Act, 1972.

7. So far as the argument that the Trial Court while calculating the value of the package for awarding damages has taken the conversion rate of French francs as on the date of the judgment, and that in fact it should have taken the exchange rate on the date of booking of consignment, I do not find any illegality in the impugned judgment inasmuch as the Supreme Court in its decision reported as Forasol vs. ONGC 1984 Supp. SCC 263 has held that when the suit is filed for recovery of an amount of foreign currency, the conversion rate which has to be taken is one on the date of passing of the judgment. Various reasons have been given by the Supreme Court for taking the conversion rate of the foreign currency on the date of judgment and various alternative positions were examined by the Supreme Court such as the date of the arising of the claim, date of filing of the suit, date of passing of the judgment, the date of filing of the execution and the ultimate date of payment, however ultimately Supreme Court after weighing all the imponderables ultimately laid down the ratio that the amount which is payable for foreign currency will be converted to Indian rupees as on the date of passing of the judgment. I therefore also reject this argument on behalf of the appellant.

8. In view of the above, the appeal being without merit is accordingly dismissed leaving the parties to bear their own costs. The bank guarantee given by the respondent for releasing the amount in its favour stands discharged.

9. No other issue is urged before me.

AUGUST 02, 2011 VALMIKI J. MEHTA, J. ak

International Airport Authority v. Televista Electronics (Pvt.) Ltd.

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