10 leading Supreme Court decisions in March 2020

In the wake of the health crisis, all major institutions, including the Supreme Court, have shut down. We took this opportunity to get our act together and bring to you some premium content. Going in reverse order, we have cataloged 10 major decisions of the Supreme Court handed out in March 2020 in this post.

(1) Right to Information - Is is not pervasive 

In the case of Chief Information Commissioner v. High Court of Gujarat the Supreme Court (three-judge bench) has declared that every inconsistency between the RTI law and any other law as regards supply of information is not fatal. Therefore upholding the rules governing supply of information adopted by the High Court of Gujarat, the Supreme Court has opined that the High Court can imposed additional conditions for furnishing the information. In particular, the condition under the High Court Rules for filing affidavit and giving reasons as to why the information is required which, thought contrary to the RTI Act, has been upheld by the Supreme Court. The Supreme Court has also upheld the exclusion of the RTI Act, under the High Court rules, to the copies of judicial work of the High Court and the same can be sought only under the High Court rules and not under the RTI. [Civil Appeal No. 1966-1967/2020 dated 04.03.2020]

(2) Workers are also 'consumers' of Government Schemes

In this path breaking decision in the case of Joint Labour Commissioner and Registering Officer v. Kesar Lal the Supreme Court has expanded the scope of consumer laws to hold that even a worker who is denied benefit of Government schemes can successfully bring a case under the Consumer Protection Act, 1986. In this case the Respondent Worker had applied for grants under the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 for purpose of his daughter's marriage. This was rejected by the Officer of the Rajasthan Government citing that the paperwork was not complete and formalities were not complied. The worker complained against this rejection under the consumer law and this came was finally upheld by the Supreme Court. [Civil Appeal No. 2014/2020 dated 17.03.2020]

(3) Proceedings for removal of 'probationer' not entitled to strict judicial review compared to confirmed employees

In the case of Rajasthan High Court v. Ved Priya the Supreme Court was concerned with correctness of view of the High Court (on its administrative side) which has removed the Respondent probationer from services as a judge of the lower court. This proceeding was challenged by way of writ petition before the High Court. The Supreme Court in this decision exhaustively surveyed the earlier decisions regarding the right of probationers to be confirmed and the corresponding right of the employer to remove the probationers. Upholding the removal, the Supreme Court specifically observed that unsatisfactory performance is sufficient for removal in such cases and there is no necessity for a full-fledged inquiry at the end of probation period. [Civil Appeal No. 8933-8934/2017 dated 18.03.2020]

(4) Pension available even for employees who have opted for VRS scheme

Deciding the disputed question (on which even the earlier benches of the Supreme Court has a conflicting view), a three-judge bench of the Supreme Court in Assistant General Manager, State Bank of India v. Radhey Shyam Pandey has declared that even those employees opted for the Bank's Voluntary Retirement Scheme after 15 years are entitled to pension. The Court specifically concluded that the action of the Bank in denying the benefit of the pension scheme was unfair in this case and it should have considered its social obligation to its past employees as well. [Civil Appeal No. 2463/2015 dated 02.03.2020]

(5) Limitation period for execution of foreign decree has to be adopted from the foreign country

There is no limitation period under the Indian law for execution of a foreign decree. In this background in the case of Bank of Baroda v. Kotak Mahindra Bank Ltd. the Supreme Court has concluded that the limitation period for execution of foreign decree in the host country will apply even in India. For example if a decree of UK can be executed in UK only within 6 years, the same decree when sought to be executed in India, can also be executed within 6 years and after that it will be barred by limitation. The Supreme Court held that any other limitation period will imply that when the decree cannot be originally executed in its own country, it can still be executed in India, which will be an anamalous situation and cannot be accepted. [Civil Appeal No. 2175/2020 dated 17.03.2020]

(6) 5-judge bench clarifies the law on Land Acquisition

In 2013 a new land acquisition law replaced the earlier law of 1894. This 2013 law made specific provisions was lapse of a land acquisition i.e. situations where land cannot be acquired due to non-completion of conditions within the stipulated period. There were multiple proceedings before various High Courts in the country and also there were many contrary opinions in the Supreme Court itself on when do these conditions get satisfied. A five judge bench of the Supreme Court in the case of Indore Development Authority v. Manoharlal has declared the final position. This is a detailed decision running into over 300 pages with clear set of conclusions towards the end. [SLP(C) No. 9036-9038/2016 dated 06.03.2020]

(7) Same expression can have different meaning under different laws

Can the same term mean differently when used in different laws. The Supreme Court has answered in the affirmative. In the case of Commissioner of Central Excise, Nagpur v. Universal Ferro & Allied Chemicals Ltd. the Supreme Court considered the provisions of Central Excise Act, 1944 where the expression 'sale' is defined to cover a mere transfer of possession of goods in the course of business. Holding that it was possible for the law-makers to give a different definition which was contrary to the general meaning of the expression and once such a different definition was used, the meaning under this definition was to be applied. In other words, the general meaning of the expression 'sale' was not relevant. [Civil Appeal No. 848-852/2009 dated 06.03.2020] 

(8) Obligation of the vehicle owner for insurance claim purposes

In the case of Nirmala Kothari v. United India Insurance Co. Ltd. the Supreme Court has held that it is the obligation of the insured to verify the driving licence of the person to whom the vehicle is being given. If the driving licence looks genuine, that obligation is complete. There is no obligation to take up the matter with the RTO to seek confirmation. In such cases, the Insurance Company has to give the insurance claim and it cannot deny the liability even if the licence later turns out to be forged. [Civil Appeal No. 1999-2000/2020 dated 04.03.2020]

(9) RBI Ban on crypto-currency set aside.

The Supreme Court in the case of Internet and Mobile Association of India v. Reserve Bank of India has quashed the ban imposed by the RBI on crypto-currencies. Taking note of the legal position outside India and the fast changes happening elsewhere, according to the Supreme Court the decision of the RBI was disproportionate and unreasonable making it vulnerable to constitutional stipulations. [Writ Petition (Civil) No. 528/2018 dated 04.03.2020]

(10) Anyone can work as an architect. 

Holding that there is no legal requirement to get registered with Council of Architecture, the Supreme Court in the case of Council of Architecture v. Mukesh Goyal has held that the law only prohibits an unregistered individual from using the title of 'architect'. [Civil Appeal No. 1819/2020 dated 17.03.2020]

Lawyer not liable for 'professional misconduct' unless 'gross negligence': Supreme Court

Holding that 'human errors' are possible even by lawyers, the Supreme Court in a recent decision has declared that a lawyer cannot be hauled up for professional misconduct only on account of negligence unless it is shown that the error was a 'gross negligence' in his actions. While acknowleding that "nobility, sanctity and ethicality of the profession has to be kept uppermost in the mind of an Advocate", the Supreme Court declared the legal position on the yard-stick to be followed for adjudging the actions of a lawyer and whether they were beyond the permissible boundaries. 

In its decision entitled T.A. Kathiru Kunju v. Jacob Mathai - Civil Appeal No. 3860 of 2007, decision dated 16.02.2017 the Supreme Court was dealing with the correctness of the action taken by the Bar Council (the regulatory body of lawyers in India) in holding a lawyer"guilty of gross negligence in discharge of his professional service to the client and accordingly imposed the punishment of reprimand" and a fine. The facts leading to this punishment were that the lawyer did not proceed with the suggested course of action required by the client in prosecuting a debtor for default. Apparently the lawyer also lost a crucial piece of evidence given to his custody by his client. The lawyer challenged the guilty verdict of the Bar Council before the Supreme Court which accepted the challenge. 

The Supreme Court gave the following reasons in support of its ruling;

"10. On a plain reading of the aforesaid provision, it is clear as crystal what punishment is to be imposed in case of misconduct. In the case at hand, as we find, that a conclusion has been arrived at by the Disciplinary Authority that it is a case of gross negligence at the hands of the appellant. As urged by Mr. Parikh, it is only required to be seen whether it is a mere negligence or gross negligence.  

11. The Constitution Bench, in the matter of Mr. 'P' an Advocate, (supra) has ruled that mere negligence or error of judgment on the part of an advocate would not amount to professional misconduct. It has been further held therein that error of judgment cannot be completely eliminated in all human affairs and mere negligence may not necessarily show that the advocate who is guilty of it can be charged with misconduct. The Constitution Bench, as is demonstrable, has drawn a distinction between 'negligence' and the 'gross negligence'. We think it appropriate to reproduce the said passage. It is as follows:- 

“But different considerations arise where the negligence of the Advocate is gross. It may be that before condemning an Advocate for misconduct, courts are inclined to examine the question as to whether such gross negligence involves moral turpitude or delinquency. In dealing with this aspect of the matter, however, it is of utmost importance to remember that the expression "moral turpitude or delinquency" is not to receive a narrow construction. Wherever conduct proved against an Advocate is contrary to honesty, or opposed to good morals, or is unethical, it may be safely held that it involves moral turpitude. A willful and callous disregard for the interests of the client may, in a proper case, be characterised as conduct unbefitting an Advocate. In dealing with matters of professional propriety, we cannot ignore the fact that the profession of law is an honourable profession and it occupies a place of pride in the liberal professions of the country. Any conduct which makes a person unworthy to belong to the noble fraternity of lawyers or makes an Advocate unfit to be entrusted with the responsible task of looking after the interests of the litigant, must be regarded as conduct involving moral turpitude. The Advocates-on-record like the other members of the Bar Advocates are Officers of the Court and the purity of the administration of justice depends as much on the integrity of the Judges as on the honesty of the Bar. That is why in dealing with the question as to whether an Advocate has rendered himself unfit to belong to the brotherhood at the Bar, the expression "moral turpitude or delinquency" is not to be construed in an unduly narrow and restricted sense.”  

12. On a careful reading of the aforesaid passage, it is quite clear that concept of “gross negligence” cannot be construed in a narrow or a restricted sense. It is because honesty of an Advocate is extremely significant. The conduct of an Advocate has to be worthy so that he can be called as a member of the noble fraternity of lawyers. It is his obligation to look after the interest of the litigant when is entrusted with the responsible task in trust. An Advocate has to bear in mind that the profession of law is a noble one. In this regard, we may fruitfully refer to what has been stated in Sanjiv Datta Dy. Secy. Ministry of Information & Broadcasting, In re.:- 

“The legal profession is a solemn and serious occupation. It is a noble calling and all those who belong to it are its honourable members. Although the entry to the profession can be had by acquiring merely the qualification of technical competence, the honour as a professional has to be maintained by its members by their exemplary conduct both in and outside the court. The legal profession is different from other professions in that what the lawyers do, affects not only an individual but the administration of justice which is the foundation of the civilised society. Both as a leading member of the intelligentsia of the society and as a responsible citizen, the lawyer has to conduct himself as a model for others both in his professional and in his private and public life. The society has a right to expect of him such ideal behaviour. It must not be forgotten that the legal profession has always been held in high esteem and its members have played an enviable role in public life. The regard for the legal and judicial systems in this country is in no small measure due to the tireless role played by the stalwarts in the profession to strengthen them. They took their profession seriously and practised it with dignity, deference and devotion. If the profession is to survive, the judicial system has to be vitalised. No service will be too small in making the system efficient, effective and credible.” 

13. Slightly recently in Dhanraj Singh Choudhary v. National Vishwakarma, it has been observed:- 

“The legal profession is a noble profession. It is not a business or a trade. A person practising law has to practise in the spirit of honesty and not in the spirit of mischief-making or money-getting. An advocate’s attitude towards and dealings with his client have to be scrupulously honest and fair.” 

14. There can be no doubt that nobility, sanctity and ethicality of the profession has to be kept uppermost in the mind of an Advocate. Keeping that primary principle in view, his conduct has to be weighed. There the approach of appreciating the evidence brought on record and the yardstick to be applied, become quite relevant. A three-Judge Bench in P.D Khandekar (supra) while dealing with the scope of an appeal preferred under Section 38 of the Act, ruled that in an appeal under Section 38, this Court in a general rule, cannot interfere with the concurrent finding of fact by the Disciplinary Committee of the Bar Council of India and the State Bar Council unless the finding is based on no evidence or it proceeds on mere conjectures and surmises. The Court has further laid down that finding in such disciplinary proceedings must be sustained by a higher degree of proof than that required in civil suits, yet falling short of the proof required to sustain a conviction in a criminal prosecution; and there should be convincing preponderance of evidence. We must immediately note with profit that the said principle is absolutely significant. The Court has stressed upon the rule to be applied for acceptance or treating the finding defensible by the Disciplinary Committee of Bar Council. In this regard it is fruitful to reproduce the following passage from the said authority:- 

“There is a world of difference between the giving of improper legal advice and the giving of wrong legal advice. Mere negligence unaccompanied by any moral delinquency on the part of a legal practitioner in the exercise of his profession does not amount to professional misconduct. In re A Vakil, Coutts Trotter, C.J. followed the decision in re G. Mayor Cooke and said that: 

"Negligence by itself is not professional misconduct; into that offence there must enter the element of moral delinquency. Of that there is no suggestion here, and we are therefore able to say that there is no case to investigate, and that no reflection adverse to his professional honour rests upon Mr. M.', The decision was followed by the Calcutta High Court in re An Advocate, and by the Allahabad High Court in the matter of An Advocate of Agra and by this court in the matter of P. An Advocate. 

The decision was followed by the Calcutta High Court In re An Advocate [AIR 1955 CAL 484], and by the Allahabad High Court In the matter of An Advocate of Agra [AIR 1940 All 289] and by this Court In the matter of P. An Advocate [AIR 1934 Rang 33]” 

... 

17. On a studied scrutiny of the evidence in this context, the factual score, the act of the present appellant cannot be treated to be in the realm of gross negligence. It would be only one of negligence. The tenor of the impugned order, as we notice, puts the blame on the appellant on the foundation that he had not received the acknowledgment. He has offered an explanation that he had given the cheque to the police. There has been no delineation in that regard. That apart, there is no clear cut analysis on deliberation on gross negligence by the advocate. The Disciplinary Committee found the appellant guilty of gross-negligence as he had failed to get the acknowledgment from the complainant-respondent. The examples given by the Constitution Bench are of different nature. In the obtaining factual matrix, therefore, we are unable to accept the conclusion arrived at by the Disciplinary Authority of the Bar Council of India that the negligence is gross. Hence we are impelled not to accept the submission advanced by learned counsel for the respondent. 

18. Thus analysed, we are disposed to allow the appeal and accordingly, we so direct and the order passed by the Disciplinary Committee of the Bar Council of India is set aside. ..." 

Tax also a part of discount given by seller: National Consumer Commission

In its decision in Aero Club (Woodland) versus Rakesh Sharma [Revision Petition No. 3477/2016, order dated 04.01.2017] the National Consumer Disputes Redressal Commission [decision courtesy www.livelaw.in] has directed that when a seller gives flat discount, that discount element also covers the tax part and the seller cannot charge additional tax over and above the discount. This can be understood by way of the example which is noted in the order;

"4. On 26.01.2016, the Complainant purchased a ‘GMT Men Jacket’ from Petitioner’s outlet. The MRP shown on the sticker was ₹3,995/-. After deducing ₹1,598/- as discount @40% and adding to the discounted price, VAT @ 5%, amounting to ₹119.85, the Complainant was asked to pay ₹2,517/- as cost for the said Jacket. Since the amount, so demanded, resulted in a discount less than “Flat” 40% of the stated MRP, the Complainant protested. His complaint was rejected by the Petitioner on the ground that as per the terms and conditions (T & C) of the SALE, VAT had been charged extra as per the instructions of the parent company. Realizing that by advertising at large that the items in the store were being offered at a “FLAT” 40% discount, which in the final analysis was much less, the Consumers were being duped by the Petitioner by adopting such unfair trade practice, alleging deficiency in service on its part, the Complainant filed the Complaint..."

In other words, the seller gave a flat discount of 40% as promised on the MRP. However after giving the discount, the seller charged tax on the discounted price. In the version of the buyer the discounted price should have included tax and tax could not have been charged after giving the discount as it was a 'flat 40% discount on MRP'. The seller refused and this led to the dispute. Accepting the version of the buyer, the Commission declared the practice of the seller as unfair.The legal position was set out by the Commission in the following terms;

13. Explanation to the clause, defining “bargaining price”, leaves little scope for doubt that the advertisement offering “FLAT* 40%’’ off on the select merchandise was the bargaining price within the meaning of clause (2) of Section 2 (r) of the Act. In our view, any person who sees the advertisement would reasonably understand that these items are being sold at “FLAT* 40%” discount. Although it is true that the word “FLAT” has an asterisk, appended to it, purporting to be a pointer to an annotation or footnote, but a bare comparison of the font size of “40%” and the font size of the corresponding terms and conditions mentioned in the footnote, clearly shows that the goods in question were not intended to be sold at a discount of FLAT 40%, the offered bargain price. ...

14. In our opinion, the advertisement in the above form is nothing but an allurement to gullible Consumers to buy the advertised merchandise at a cheaper bargain price, which itself was not intended to be the real “bargaining price” and, therefore, tantamounts to unfair trade practice, as found by both the Fora below. Significantly, under Section 2(d) of the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2014, the “Maximum Retail Price” printed on the goods, a mandatory labelling requirement, at the relevant time, for pre-packaged goods, means “such price at which the consumer goods shall be sold in retail and such price shall include all taxes levied on the goods.” In that view of the matter, having seen the word “FLAT” in the advertisement, a consumer would be tempted to buy the goods under a bonafide belief that he would get a flat 40% off on the MRP. In our opinion, therefore, the defence of the Petitioners that they had charged VAT as per law is of no avail in so far as the issue at hand, viz. misleading advertisement, resulting in unfair trade practice, is concerned. We are in complete agreement with the Fora below that any discount falling short of “Flat 40%” on the MRP would amount to unfair trade practice, as defined in the Act.

This implies that when a seller gives a flat discount, the seller cannot charge additional tax above the discount. Such charge of additional tax would be a punishable act under the Consumer Protection Act, 1986, as the National Commission order declares.

Violation of interim order of consumer forum punishable: High Court

Holding that the service provider can be punished even for violating interim orders of a consumer forum, the Bombay High Court in a recent decision has declared that a service provider is liable to punishment for having acted in breach of the restraining order passed by the State Consumer Forum. The High Court was dealing with the complaint against a telephone service provider whose phone was disconnected dispute the Consumer Forum having directed that during the pendency of the determination of the complaint no disconnection would be carried out. The service provider had argued that since the order violated was an interim order, no question arose of any punishment. The High Court, however, disagreed and held that the law was required to be interpreted otherwise. 

In this context, the High Court made the following observations;

21. Do interim orders of District Forum, State Commission or National Commission lose their finality in respect of that part of the proceedings if they are challenged and the challenge is not upheld and/or if no appeal is preferred. This will have to be interpreted in the context that such interim orders can also be executed. Once an interim order is passed it must be obeyed. When a party is given notice of the proceeding for hearing of the application for interim relief and the concerned forum an order disposing off those proceedings after hearing both the parties or exparte, if the Respondent had notice of the hearing and did not participate that part of the proceedings stands disposed of. Thus the expression interim order would be the final disposal of the interim proceedings before the forum. It is now settled law that interim orders once passed unless there be subsequent events cannot be varied during the pendency of the complaint or the main proceedings. To that extent there is any element of finality to such orders. Such interim orders passed during the pendency of the proceedings can be executed in terms of Section 25. Once these orders are capable of execution under Section 25(1) because there is a finality to them and if the object of Section 27 is to penalise a trader or a person against whom complaint is made for failure to comply with the order, then why should these orders which can be executed be excluded from the purview of Section 27 which provision no doubt is penal in character. If such orders can be enforced by execution then why cannot they be the subject matter of a complaint like the final order. Why must then the expression “any order” in Section 27 be classified into orders passed at an interim stage or orders passed at final stage. Was it the intent of the Legislature to exclude a class of orders from the expression ‘any order’. Wherever the legislature prescribes a duty and a penalty for a breach of it, it must be assumed that the duty is prescribed in the interest of the community or some part of it and the penalty is prescribed as a sanction for its performance. In such matters a rational approach and not a technical approach is the mandate of law. In matters pertaining to consumer protection the law must be interpreted in favour of the consumer. Section 27 only provides what Order 39 Rule 2A provides under the C.P.C., with a provision for imprisonment if ultimately the offence is proved. No doubt the sentence of imprisonment may be harsh, but that the respondent must suffer for failure to comply with the orders. As the Supreme Court in Viswabharti House Building Coop. Society (supra) has noted that Section 27 is an additional power on the forums to execute its orders. 

In the matter of interpreting the provisions of Section 14(2A) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, Chandrachud C.J., said “considering the object and purpose of this provisions which is to ensure the welfare of workers, we find it impossible to hold that the offence is not of a continuing nature” See Bhagirath Kanoria vs. State of M.P. (1984) 4 SCC 222. All such orders are equally binding irrespective of the point of time or at a stage of the proceedings when they are made. The Legislature if that be its intention could have while conferring power to grant interim relief could have excluded such ‘interim order’ from the expression ‘any order’.

22. Does the Rule of construction of statues, exclude such interpretation. Penal and criminal statutes, statutes in derogation of common rights and of the common law, statutory grants, statutes authorizing summary proceedings, and most tax laws are among the enactments usually subject to strict construction. On the other hand, there are many statutes which will be liberally construed. Where this is the case, the meaning of the statute may be extended to matters which come within the spirit or reason of the law or within the evils which the law seeks to suppress or correct, although, of course, the statute can under no circumstances be given a meaning inconsistent with, or contrary to the language used by the legislators. But a liberal construction does not require that words be accorded a forced, strained, or unnatural meaning, or warrant an extension of the statute to the suppression of supposed evils or the effectuation of conjectural objects and purposes not referred nor indicated in any of the terms used. Whether a statute will be given a liberal or a strict construction will depend upon whether the court thinks a given “determinate” should be included or excluded from the statute’s operation, it is a factor of great importance. (See In Crawford’s Statutory Construction, Interpretation of laws 1998 Edition).

23. So viewed, in our opinion, merely because the expression “any order” under Section 27 specifically does not use the expression interim order, is irrelevant. Section 27 is an additional remedy to ensure that orders passed are not breached and the party who fails to obey the order has to suffer the penal consequences. It is in the nature of deterrence, to ensure that orders, interim or final are complied and that the consumer is entitled to specific relief. As the Supreme Court has observed in Vishwabarathi House Building Coop. Society (supra), Section 27 is another mode of execution of orders. It is no doubt true that the consequences being penal, the provisions must be strictly construed. At the same time Courts normally consider the literal interpretation of the language of the provisions unless that interpretation results in an absurdity or does not reflect the intent of the Legislature. If the object is to penalise for failure to comply with any order, we find no absurdity in applying the literal rule of construction. In Babaji Kondaji Garad vs. Nasik Merchants Coop. Bank Ltd. & Ors., (1984) 2 SCC 50:“

10. Before going in search of any external aids of construction, let us look at the language employed by the Legislature because no canon of construction can be said to be more firmly established than this that the Legislature uses appropriate language to manifest its intention.”

The law pertaining to Consumer Protection Act, 1986 as its object and reasons clause would show is meant for better protection of the interest of the consumers and as the statement of objects and reasons to the Amendment Act 2002 would show, that it is meant to provide a simple, inexpensive and speedy justice to the consumers, on complaints against defective goods, deficiency in service and unfair trade practice or the restrictive trade practice and conferring power of the Judicial Magistrate, First Class on the Consumer Dispute Redressal Agencies with a view to try the offences under the Act. It is a benevolent piece of legislation providing for an alternative system of consumer justice by a summary trial, See Charan Singh v. Healing Touch Hospital (2000) 7 SCC 668.

24. In our opinion, therefore, to give greater protection to the consumer and to make execution of orders more effective and less expensive which is the object of the Act and to provide for speedy justice, we see no reason as to why the provisions contained in Section 27 should be restricted only to final orders. We must also note that earlier there was power to impose lesser punishment in terms of the proviso to Section 27 as it then stood. This proviso was omitted by Act 62 of 2002. The object, therefore, is to make the Act more stringent and leave no discretion for imposing lesser punishment than the minimum what is prescribed under Section 27. Considering this object, in our opinion, the compliance by traders and other persons would be more effective if we read the benevolent legislation in such a manner so as to avoid delay, making it less burdensome on the consumer and give him speedy redressal of justice in a complaint which a forum finds to be just. 

25. We, therefore, have no hesitation to hold that Section 27 which uses the expression ‘any order’ must include within its sweep not only final orders, but all orders including interim orders which are also capable of execution under Section 25. Section 27 makes no distinction between order and final order, it involves any order. In our opinion, therefore, we cannot agree with the view expressed either by the Consumer Forum or by the State Commission.

Have a look at the decision.

Airlines liable for loss in transit: Supreme Court

Setting aside the decision of the National Consumer Disputes Redressal Commission the Supreme Court in a recent decision has held that an airlines is bound by an act of a shipping agent who has been authorized to enter into agreement for carriage of goods on behalf of the airlines. The airlines had succeed before the National Commission on the ground that since the agreement for carriage was entered into between the consignor and the shipping agent, there was no privity with the airlines and thus airlines could not be held responsible for the loss. The Supreme Court, however, disagreed. 

The Bench in M/S DILAWARI EXPORTERS v. M/S ALITALIA CARGO & ORS. declared the position of law as under;

9.There is no quarrel with the proposition that as per Section 4 of the Carriage Act, Rules contained in the Second Schedule govern the rights and liabilities of carriers, consignors, consignees, etc. Rules contained in the Second Schedule apply to all international carriage of persons, baggage or cargo performed by aircraft for reward. Chapter II of the said Schedule enumerates the documents of carriage. Rule 5 of Part III of the said Chapter stipulates that every carrier of cargo has the right to require the consignor to make out and hand over to him a document called as “air waybill”; every consignor has the right to require the carrier to accept this document. Rule 6 provides that the air waybill shall be made out by the consignor in three original parts and be handed over with the cargo in the manner prescribed therein. Rule 10 makes the consignor responsible for the correctness of the particulars and statements relating to the cargo which he inserts in the air waybill. As per Rule 11, the air waybill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo and of the conditions of carriage. In the light of these provisions, we agree with the Commission that the “air waybill” is prima facie evidence of the conclusion of the contract; of the receipt of the cargo and of the conditions of carriage.

10.However, the question which, in our view, the Commission has failed to examine is in regard to the capacity in which respondent No.3 was operating and had collected the cargo from the appellant for being shipped to New York. In other words, what was the nature of relationship between respondent No.3 and respondent No.1?

11.Section 186 of the Indian Contract Act, 1872 (for short “the Contract Act”) lays down that the authority of an agent may be expressed or implied. As per Section 187 of the Contract Act, an authority is said to be express when it is given by words spoken or written, and an authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, which may be accounted circumstances of the case. Section 188 of the Contract Act prescribes that an agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act. Section 237 of the Contract Act provides that when an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent’s authority. There is no gainsaying that onus to show that the act done by an agent was within the scope of his authority or ostensible authority held or exercised by him is on the person claiming against the principal. This, of course, can be shown by practice as well as by a written instrument.

12.Thus, the question for consideration is whether on the evidence obtaining in the instant case, can it be said that respondent No.3 had an express or implied authority to act on behalf of respondent No.1 as their agent? If respondent No.3 had such an authority, then obviously respondent No.1 was bound by the commitment respondent No.3 had made to the appellant.

13.Having examined the question in the light of the two afore-extracted “air waybills”, which, according to both the contesting parties, are determinative of terms and conditions of contract between them, we are of the opinion that respondent No.3 had an express authority to receive the cargo for and on behalf of respondent No.1. This is manifest from the Master Air Waybill No.055 – 2342 9276 issued and signed by respondent No.3 on the Air Waybill printed by respondent No.1. But for the said authority, respondent No.3 could not use the Air Waybill proforma printed by respondent No.1. Though it is true that in the said Air Waybill the name of the Shipper has been mentioned as that of respondent No.3 but the said Air Waybill has also been signed by respondent No.3 as the agent of the carter – respondent No.1. The other relevant particulars like, the name of the consignee, the number of the House Air Waybill (0841), etc. tally with the House Air Waybill issued by respondent No.3 to the appellant clearly showing the name of the consignor as that of the appellant. From the said documents, it would, appear that respondent No.3 was, in fact, acting in dual capacity – one as a Shipper on behalf of the appellant and the other as an agent of respondent No.1. That being so, respondent No.1 was bound by the acts of their agent, viz. respondent No.3, with all its results. We are of the opinion that while holding that there was no privity of contract between the appellant and respondent No.1 this vital aspect of the matter escaped the attention of the Commission thus, vitiating its order.

Have a look at the decision.

Air Travel, International Airlines and Liabilities

This week we have an article from an expert in the law relating to carriage by Air and grievance redressal as he has experience of bringing this part of aviation law in practice/litigation. Mr. Sumit Agrawal, has penned his thoughts on the issue relating to liability of international airlines in India in as much as it relates to loss or destruction or delay of baggage by the concerned airline. The author in particular has taken up the task of enumerating the changes brought about in law last year by the amendment carried out in the Carriage by Air Act which deals with such issues. Rightly so, we have tagged this post as one of our series on Expert's Corner.

Air Travel, International Airlines and Liabilities

Sumit Agrawal

Losing luggage on foreign land is a life-time experience. Especially when you are about to start a journey for 3 countries and you are told by an airline that everything (from your shoes to fancy hat, digital camera to mobile charger) you packed to enjoy a 2-week tour is not available. One will wonder that with all sorts of baggage check-ins, bar-coding, scanning, baggage-tickets, and security exit-checks, how an airline could separate you from your bag. Believe it or not, you will call yourself in this situation unfortunately unlucky and that airline as deficient service provider.

In that situation, you will be reminded of a law called Consumer Protection Act, 1986 which defines "Deficiency" broadly as instances of faulty, imperfect, or any inadequacy in services. In such cases, Consumer Disputes Redressal Forums and Commissions have authority and jurisdiction to award compensation for delayed, lost or damaged baggage including legal costs, compensation for mental trauma and interest. There is another law, in such cases on which customers should fall back and that is Carriage by Air (Amendment) Act, 2009 a newly passed law but hardly known by 'aam aadmi'.

It is interesting to note that India recently had become 91st country to have ratified Montreal Convention 1999 which throws-out the archaic system of "compensating by weight" and adopted the more progressive, more consumer friendly and internationally recognized "compensate by passenger" system in cases of delayed, lost, damaged or destructed baggage. Director General of Civil Aviation (India) had deposited with International Civil Aviation Organization (ICAO) on 1st May 2009, the Instrument of Accession by India to the Convention for Unification of Certain Rules for International Carriage by Air done at Montreal.

Under Article 253, read with Entries 13 and 14 of Union List of Schedule VII to the Constitution of India, Parliament is competent to make a law for implementing “any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.” In a quickly follow-up, the Carriage by Air (Amendment) Act, 2009 incorporating the provisions of this Convention come into force from 1st July, 2009. Under Schedule III, the liability of the carrier (airlines) in case of destruction, loss, damage or delay can go up to 1000 Special Drawing Rights (SDRs) for each passenger and in case the passenger has made special declaration of higher value at the time of check-in then the liability can go upto such declared sum. SDRs are a currency conversion measure available on the website of International Monetary Fund {have a look at these links [1] and [2]}, where currently 1 SDR values around Rs. 75. Hence, the airlines’ liability stands up to Rs. 75,000 per passenger for lost baggage if the values of items lost are within this limit and are allowed to be carried by law, say non-alcoholic, legitimate etc.

The new law also says that any provision tending to relieve the airlines of liability or to fix a lower limit than that which is laid down in statutory rules shall be null and void saving the contract itself. In terms of Rule 22, a court in addition to these limits can provide litigation costs and other expenses including interest. It is also interesting to note that this is applicable on airlines irrespective of nationality of aircraft provided the airline has a presence in India.

Until few years ago, Warsaw Convention was followed in India which provided for four choices of jurisdiction for filing of a claim by a passenger or his legal heirs under such cases, namely, (1) the place where the ticket was issued or the contract of carriage was made, (2) the principal place of business of the carrier, (3) the place of destination of the passenger, or (4) the place of the domicile of the carrier. But now, the Montreal Convention 1999 adds a fifth jurisdiction, i.e. the place of domicile of the passenger, provided the airlines has a presence there. Thus, this enables an Indian to file his claim in India even if the journey was undertaken outside India and ticket purchased outside India, provided the carrier has a presence in India.

Therefore, gone are the days when airlines could escape their obligations under the pretext of their kilo-based iron-clad legally drafted policy compensating 20 US dollars for a kilo or by including some other hidden conditions. By bringing the amendment, the Indian Parliament has not only brought Indian Carriage law in line with international regime but has also introduced a strict liability regime on airlines' dealing with customers belongings which they entrust to airlines with a duty to care.

Hopefully, the new law would act as a breather for harassed passengers from various tactics of high-headed airlines trying to bring compensation to the absolutely insignificant sum.

Parliament Has Done Its Duty, Now Let Airlines Do Theirs.

{The Author is an alumnus of National Law University, Jodhpur and associated with Securities and Exchange Board of India (SEBI) as Legal Officer in its Integrated Surveillance Department. Views expressed herein are his own. mailsumitagrawal [@] gmail [dot] com }

Supplement

P.S.: Since the purpose of this piece is to make more and more people aware, Shri V Umakanth, Formerly Partner, Amarchand & Mangaldas & Suresh A Shroff & Co has also posted on the author's request, this piece on his blog indiacorplaw.blogspot.com .

No compensation for disconnection of Telephone: Supreme Court

In this rather short decision, the Supreme Court has held that a person aggrieved by disconnection of telephone connection cannot by granted compensation to this regard by the Consumer Forum. The case arose in which manner; Mr. Krishnan had a telephone connection, which was disconnected by telephone department for non-payment of telephone bill. He approached the Consumer forum complaining against the disconnection. The Forum agreed and grated compensation to him. The Telephone Department challenged the order before the High Court and the High Court agreed with the Consumer Forum.

This is how the matter was before the Supreme Court. The Court observed that the decision of the lower authorities was incorrect as the provisions of the consumer law did not apply. It observed, "In our opinion when there is a special remedy provided in Section 7-B of the Indian Telegraph Act regarding disputes in respect of telephone bills, then the remedy under the Consumer Protection Act is by implication barred."

It was also observed that "Rule 413 of the Telegraph Rules provides that all services relating to telephone are subject to Telegraph Rules. A telephone connection can be disconnected by the Telegraph Authority for default of payment under Rule 443 of the Rules. It is well settled that the special law overrides the general law. Hence, in our opinion the High Court was not correct in its approach."

Thus in terms of the declaration of law to this effect, any grievance relating to disconnection of telephone etc. can be addressed only by way of arbitration under the Telegraph Act and the consumer forums cannot step in.

Have a look at the decision.