COMPENSATION FOR DELAY IN DELIVERY OF GOODS

[Mr. M. GOVINDARAJAN]

Section 19 of Carriage by Air Act, 1972 provides that the carrier is liable for damage occasioned by delay in the carriage by air of passengers, luggage or goods.  Section 13(3) of the said Act provides that if the carrier admits the loss of the goods, or if the goods have not arrived at the expiration of seven days after the date on which they ought to have arrived, the consignee is entitled to put into force against the carrier the rights which flow from the contract of carriage.

If there is a delay in delivery of the goods within the prescribed time then the consignor is entitled to claim compensation from the Airways along with air freight charges with interest.

In M/S. RAJASTHAN ART EMPORIUM VERSUS KUWAIT AIRWAYS & ANR. - 2023 (11) TMI 461 - SUPREME COURT, the appellant in this case is originally the complainant in the complaint filed before the National Commissioner Disputes Redressal Commissioner (‘NCDRC’ for short).  The appellant is an exporter of handicrafts to several countries including USA.  On receipt of an order from Williams Sonoma Inc. USA for supply of handicraft goods, the appellant sent three shipments of 1538 packages weighing 26859.5 kgs to the consignee on 22.07.1996.  The appellant insisted that the consignment should reach the consignee on the urgent basis within 7 days.  The second respondent in this appeal assured to deliver the goods at Memphis within 7 days to the consignee and the goods were to be delivered on 31.07.1996.

The goods were not delivered to the consignee on the stipulated date.  The respondent 1 expressed its inability to the appellant that the goods could not be delivered and a revised schedule of time was given to the appellants.  A revised schedule of time was given on 05.08.1996 with the assurance that the goods would be delivered on 06.08.1996.  The revised schedule was not complied with.  The consignee informed that appellant that the goods were not received by him in toto.  The respondent No. 1 could not tell where the cartons were.  On 30.08.1996 the respondent No. 1 addressed to respondent No.2 accepted the short delivery.

The appellant, on 07.09.1996, made a claim against the respondents for the refund of full freight.  The second respondent accepted the short delivery and he could not able to tell whether the other cartons.  Therefore the appellant issued a legal notice on 04.08.1997.  There is no response to this legal notice from the respondents. 

The appellant filed a consumer complaint before the NCDRC with the prayer that-

• the respondent No. 1 may be directed to refund Rs.24.48 lakhs being the charges for the consignments;
• to pay a sum of Rs. 20 lakhs as compensation for loss of business and reputation;
• to pay US$ 7042.00 being the value of the goods short delivered;
• to pay interest @ 18% as well as cost of litigation.

The NCDRC passed its order on 21.05.2003.  The NCDRC, in its order, held that there has been a short delivery of 104 pieces equal to 1822 Kgs. Therefore, in view of Rule 22 of Carriage by Air Act, multiplying this weight by US $ 20 per Kg., the amount payable work out to US $ 36440 which becomes payable by the respondent to the complainant for the loss of goods along with interest @ 9% from 01.10.1996.  The NCDRC further held that in the absence of any communication emanating from the respondent No.1-Kuwait Airways promising to deliver the goods by any particular date, the plea raised by the complainant regarding delay in delivering the goods is not sustainable.

The appellant challenged the above said order before the Supreme Court in Civil Appeal No. 8211 of 2003.  The Supreme Court allowed the appeal on 15.03.2011.  The Supreme Court observed that the issue concerning delay in delivery of goods has been decided by NCDRC without appreciating the material and evidence available on record.  The Supreme Court remitted the matter back to NCDRC for fresh consideration of the complainant case vis-à-vis delay in delivering the consignment.

In remand NCDRC observed that the evidence on record showed that the parts of the shipments were received at Memphis on 30.08.1996 as admitted by the respondent No.1 in its letter dated 24.09.1996. Referring to the documents showing business relation between complainant and his buyer, the NCDRC observed that the buyer was the largest customer of the complainant.   The complainant has suffered huge loss due to transaction and the goods were received in the first week of September, 1996.  The NCDRC, in its order dated 01.10.2012, held that there was delay in delivering the consignment on time for which the complainant is entitled to compensation of 25037.5 Kg. multiplied by US $ 20 Kg. each which comes to US $ 500750 which exceed the sum of Rs. 20 lakhs claimed by the complainant therefore the complainant was only entitled to have compensation of Rs. 20 lakhs along with interest @ 9% with effect from 31.07.1996 till its realization.  The NCDRC also directed to pay the litigation charges and compensation for harassment and mental agony in the sum of Rs. 5 lakhs.

Against the order of NCDRC, dated 01.10.2012, both the parties filed appeal before the Supreme Court.  The appellant/complainant submitted the following before the Supreme Court-

• The shipments booked by the appellant on 24.07.1996, which were to be delivered by 31.07.1996, were delivered to the handling agent of the Consignee only in the month of September, 1996 from 03.09.1996 to 12.09.1996 with delay of more than 40 days.
• Time is the essence of the contract between the parties since the consignments were assured to be delivered within 7 days from the date of booking.
• The respondent no. 1 has been highly negligent in rendering its services to the appellant.
• Once the NCDRC arrives at the conclusion that there is delay in delivery of consignment due to negligence of respondent no. 1, fair, just and reasonable compensation must be awarded in accordance with conditions of the contract and statutory provisions of the Carriage by Air Act, 1972.

The respondents submitted the following before the Supreme Court-

• There was no deficiency in service rendered by respondent no. 1 since all reasonable care in performing its duties under the contract of carriage were discharged diligently.
• There is no specific instructions were given by the appellant with regard to the time by which the consignments had to reach its destination.
• Therefore, time was not the essence of contract entered into between the parties.
• The appellant sent the consignment through Kuwait Airways, which has various stops over at Kuwait, Chicago and Memphis, which would consume a lot of time period to deliver the consignment.  Therefore the respondent no. 1 should not be held responsible for delay in delivery.
• The compensation awarded by the NCDRC is excessive, unjust and unfair and is based on the conjectures and surmises.

The Supreme Court heard the submissions of the parties to the present appeal.  On perusing the documents and facts of the case the Supreme Court was satisfied that the NCDRC has not committed any illegality or perversity in recording the finding that there was delay in delivery of consignment.  The Supreme Court observed that there was a delay of 40 days in delivering the goods.  The Supreme Court rejected the arguments of the respondent No. 2 that no agreement or promise by its agent that the consignment will be delivered in 07 days.  The NCDRC has rightly noted that the appellant has paid air freight which is ten times more than the sea freight only to ensure that the consignment reaches its destination within a week because sea cargo would have taken 25 to 30 days for delivery and the appellant has paid such huge freight charges for ensuring early delivery, hence, the delay in delivery of consignment has necessarily inflicted damage to the appellant which is liable to be satisfied by the respondent No.1 as provided under Section 19 and 13(3) of the Carriage by Air Act 1972.

The Supreme Court observed that the grievance of the appellant is that the NCDRC did not allow the entire claim for compensation.  The complainant/appellant has sought damages for Rs. 20 lakhs only as compensation for loss of business and reputation. It is a trite law that a party is not entitled to seek relief which he has not prayed for.  Therefore the Supreme Court found no ground to interfere with the order of NCDRC and dismissed the appeals filed by both the parties.