REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  8699 0F 2002   

M/S DILAWARI EXPORTERS — APPELLANT

VERSUS

M/S ALITALIA CARGO & ORS. — RESPONDENTS

J U D G M E N T

D.K. JAIN, J.:

1.Challenge in this appeal under Section 23 of the Consumer  

Protection Act, 1986 (for short “the Act”) is to the order dated  

15th April,  2002  passed  by  the  National  Consumer  Disputes  

Redressal Commission (for short “the Commission”) in Original  

Petition  No.  156  of  1995.   By  the  impugned  order,  the  

Commission  has  dismissed  appellant’s  complaint  alleging  

deficiency  in  service  on  the  part  of  M/s  Alitalia  Cargo,  

respondent No.1 in this appeal, on the ground that there was no

privity of contract between the appellant and respondent No.1.  

Respondent Nos.  2 and 3 in this appeal are M/s Omni Marg  

Travels  (Pvt.)  Ltd.,  General  Sales  Agents  and M/s  Fourways  

Movers  (P)  Ltd.,  Cargo  Clearing  Agents  of  respondent  No.1  

respectively.   

2.The  salient  facts  giving  rise  to  the  present  appeal  are  as  

follows:

The  appellant  is  engaged  in  the  business  of  export  of  

readymade garments and handicrafts.  They obtained an order  

from one M/s D.D. Sales, a concern based in New York, USA for  

supply of 2050 pairs of Cotton Gents Dhotis, 150 sets of Cotton  

Ladies Ghagra-Choli,  150 pieces of Dupatas,  etc.   As per the  

agreement between the appellant and the said concern of New  

York, USA, these articles had to reach New York, USA before  

10th of October, 1994.  Accordingly, the appellant handed over  

the consignment of the said articles to respondent No.3 – M/s  

Fourways  Movers  (P)  Ltd.  on  4th October,  1994  for  onward  

dispatch to New York, for which a House Air Waybill No. FMPL  

0841 was prepared by respondent No.3.  For the sake of ready  

reference, the said Bill is reproduced hereunder:

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“Shippers Name and Address: M/s. DILWARI EXPORTERS  1-8  JANGPURA-B,  MATHURA  ROAD,  NEW DELHI-14 INDIA

Not Negotiable HAWB NO. FMPL         0841

HOUSE AIR WAYBILL FOURWAYS MOVERS PVT. LTD. 39/6-7A, COMMUNITY CENTRE EAST OF KAILASH, NEW DELHI- 110065

Consignee’s Name and Address M/S D.D. Sales, 110-53 62ND DRIVE, FOREST HILLS N.Y. 11375,  U.S.A.

Issuing Carter’s Agent (Name and City) FOURWAYS MOVERS P. LTD. NEW DELHI

Accounting Information “FREIGHT : PREPAID”

Agent’s IATA CODE 14-3-3775

Airport  of  Departure  (Addr.  Of  first  Carter)

MASTER AWB NO.

NEW DELHI / AZ 055 – 2342 9276 By First Carter Routing & Destination  NYC AZ Airport of Destination Currency Declared  Value  

for Customs Declared Value for  Customs

NEW YORK INR NVD US$29441.70 Amount of Insurance  Rs.1012706-00

The landing information NOTIFY: SAME AS ABOVE.  PLS. INFORM CONSIGNEE IMMEDIATELY ON ARRIVAL OF  SHIPMENT AT DESTINATION.  TEL. NO. (718)  – 896-0575.   ORIGINAL VISA (3 SETS)  COPY OF INVOICE (3 SET) PACKING LIST (3 SET), ALL INDIA HANDICRAFT BOARD  CERTIFICATE AND DECLARATION TO ACCOMPANY WITH THE SHIPMENT.

Carter  Weight  

Commodity  Item No.

Chargeable  Weight  

Rate/  Charge  

Total Nature  and  Quantity  of  Goods  (Incl. POWERLOOM  COTTON  GENTS  DHOTIES & INDIA  ITEM  GARMENTS  HAND/  EMD/  PRINTED/  ZARI/  APPLIQUE/  BEAD/  MIRROR  WORK  (P/L  COTTON  LADIES  CHOLI  GHAGRA  SET  &  DUPTATTAS)

AS PER INV. NO. DE/EXP/358/94-95

Dt. 28-9-94 RBI : DD  : 008597

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48 1360-OK 1360-OK 85.00 115600-00 IEC:NC:05880 0952

Prepaid Weight  Charge  

Collect Other Charges

215600-00 AWB: 60-00 HAWB: 150-00 SB: 175-00

CTG: 500-00  APT: 545-00 INS: 2886-00

Total other charges Due Agent 1230-00

Total other Charges Due Carter  2886-00

FOURWAYS MOVERS PVT. LTD., NEW DELHI

Total prepaid 119716-00 4/10/94 NEW DELHI INDIA v.k.

Signature of Issuing Carter or its Agent      055 – 2342 9276

ORIGINAL 3 (FOR SHIPPER)”

Simultaneously,  a Master Air Waybill  on a numbered (055 –  

2342 9276) proforma printed by “ALITALIA” – respondent No.1  

was  prepared.  The  said  Air  Waybill,  containing  relevant  

particulars, is also reproduced hereinbelow:

“DEK 2342 9276 055- 2342 9276 Shippers Name and Address: M/s. FOURWAYS MOVERS P. LTD. 39/6, 7-A COMMUNITY CENTRE,  EAST OF KAILASH, NEW DELHI/INDIA

Not Negotiable Air Way Bill

Issued by  Alitalia S.p.A.

                          ALITALIA

Consignee’s Name and Address

M/S D.D. Sales, 11053 62ND DRIVE, FOREST HILLS N.Y. 11375, U.S.A.

Issuing Carter’s Agent (Name and City)

FOURWAYS MOVERS P. LTD. NEW DELHI

Accounting Information

“FREIGHT : PREPAID”

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Agent’s IATA CODE 14-3-3775

Account No. 73279

Airport of Departure (Addr. Of first Carter) and requested Routing  

NEW DELHI / AZ By First Carter Routing & Destination  NYC AZ Airport of Destination Currency Declared  Value  

for Customs Declared Value for  Customs

NEW YORK INR NVD US$ 43698.60 Amount of Insurance  Rs.1503101-00

The landing information NOTIFY: SAME AS ABOVE.  PLS. INFORM CONSIGNEE IMMEDIATELY ON ARRIVAL OF  SHIPMENT AT DESTINATION.  TEL. NO. (718)  – 896-0575.   ONE ENV. CONTG. DOCS  ATTD.  ORIGINAL VISA (3  SETS)  COPY OF INVOICE (3  SET),  PACKING LIST,  M ALL  INDIA HANDICRAFT BOARD CERTIFICATE AND DECLARATION TO ACCOMPANY WITH  THE SHIPMENT

Carter  Weight  

Commodity  Item No.

Chargeable  Weight  

Rate/  Charge  

Total Nature and Quantity of  Goods (Incl. POWERLOOM  COTTON  GENTS  DHOTIES  &  INDIA  ITEM GARMENTS  

48 1993-OKQ 1993-OK 85.00 169405- 00

GRI:AG:493861 493995, 493896

HAWB NO: 0841, 0842 Prepaid Weight  

Charge  Collect Other Charges

169405-00 AWB: 60-00 HAWB: 300-00 SB: 250-00

CTG: 500-00  APT: 800-00   INS:4284-00 INS: 2886-00

Total other charges Due Agent 2010-00 Total other Charges Due Carter  4284-00

FOURWAYS MOVERS

4/10/94 NEW DELHI INDIA v.k.

Signature of Issuing Carter or its Agent      055 – 2342 9276

ORIGINAL 3 (FOR SHIPPER)”

On  6th October,  1994,  a  carting  order  was  prepared  by  

“ALITALIA AIRLINES” handing over the consignment to AAI,  

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Cargo  Terminal  (NITC),  IGI  Airport,  New  Delhi-110037  for  

shipment  by  Flight  AZ-1905.   The  carting  order  bore  the  

endorsement “Cargo accepted subject to space”. The parties are  

ad idem  that the said House Air Waybill as also the Master Air  

Waybill  were  issued  under  the  seal  and  signatures  of  M/s  

Fourways Movers (P) Ltd – respondent No.3.  It is pertinent to  

note at this juncture itself that House Air Waybill No.0841 had  

the Master Air Waybill No.055 – 2342 9276, the running Bill  

number printed on ALITALIA’s  printed bill  book.   Similarly,  

the House Air Waybill No.0841 was recorded on the Master Air  

Waybill.

3.Since  the  consignment  did  not  reach  New  York  by  the  

stipulated  date,  M/s  D.D.  Sales,  the  importer,  cancelled  the  

order  on  or  around 16th October,  1994 and claimed damages  

from the appellant.  The consignment reached the destination  

only on 20th October, 1994.

4.Alleging deficiency in service on the part of the respondents,  

in  particular  by  respondent  No.1,  the  appellant  filed  a  

complaint  before  the  Commission  claiming  Rs.22.46  lakhs  

towards the value of the consignment along with interest at the  

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rate  of  18%  per  annum  thereon  and  Rs.15  lakhs  as  special  

damages.  

5.The complaint was contested by respondent No.1, repudiating  

the claim made by the appellant.  In the counter affidavit filed  

by respondent No.1, while denying any negligence on their part  

resulting  in  deficiency  in  service,  by  way  of  a  preliminary  

objection, it was pleaded that there was no privity of contract  

between them and the appellant and, therefore, the complaint  

was liable to be dismissed on that short ground.  The stand of  

respondent  No.1  before  the  Commission  was  that  the  Air  

Waybill No.055 2342 9276 dated 4th October 1994, which was  

issued by respondent No.3 “on behalf of respondent No.1” did  

not  mention  the  flight  number  and  the  date  in  the  column  

provided  for  the  same,  since  airlifting  of  cargo  was  always  

subject to load/space.  It was reiterated that House Air Waybill  

No.0842  dated  4th October  1994  was  neither  issued  by  

respondent  No.1  nor  on  its  behalf.   Both  the  parties  led  

evidence  before  the  Commission  by  way  of  affidavits.   Upon  

consideration  of  the  evidence  on  record,  the  Commission  

dismissed  the complaint  on  the afore-stated  ground,  namely,  

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the  appellant  had  no  locus  standi  to  file  the  plaint  against  

respondent No.1.  While holding so, the Commission observed  

thus:

“It  is  not disputed by the parties that Air  Waybill (sic) alone is a contract between the  parties.  Firstly we see that part III Chapter  II of  Schedule II of  the Act does not even  remotely refer to any other document except  Air Waybill (sic).   We find that on the Air  Waybill  (sic)  which  happens  to  be  prima  facie  evidence  of  conclusion  of  contract  of  the receipt  of  Cargo and the conditions  of  Carriage, the name of the Shipper is shown  as  Fourway Movers  Pvt.  Ltd.,  O.P.  No.  3,  and  not  that  of  the  Complainant  nor  is  there  any  evidence/indication  of  any  such  capacity of the Respondent No.3 on the Air  Waybill  (sic).   Therefore,  it  will  not  be  possible  to  reach  in  the  Air  Waybill  (sic)  what is not set out or indicated therein.  It  is for this reason that we tend to agree with  Respondent  No.1  and  accept  its  plea  that  the complainant has no locus-standi to file  the  present  complaint  against  Respondent  No.1, the Airline.  Things would have been  different if at the time of booking the cargo  the  Respondent  No.3  had  issued  a  communication to Respondent No.1 that it  was acting as agent of the complainant.”

The Commission, thus, declined to go into the merits of  

the complaint though it did observe that there was a lot that  

could be said on merits of appellant’s case.   

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6.Being aggrieved, the appellant – claimant is before us in this  

appeal.

7.Mr.  Arvind  Kumar  Gupta,  learned  counsel  appearing  on  

behalf  of  the  appellant,  submitted  that  the  Commission  

committed a serious error of law and on facts in dismissing the  

complaint on the sole ground that the appellant had failed to  

prove any privity of contract between them and the carrier i.e.  

respondent No.1.  According to the learned counsel, it is clear  

from the House Air Waybill as also the Master Air Waybill No.  

055  2342  9276,  that  both  the  bills  were  prepared  

contemporaneously  by  respondent  No.3  as  respondent  No.1  -  

carter’s agent when the consignment was handed over to them,  

and since the House Air Waybill records the appellant as the  

Shipper and respondent No.3 as the Issuing Carter’s Agent, the  

mention  of  respondent  No.3  as  the  Shipper  as  well  as  the  

Issuing  Carter’s  Agent  in  the  Master  Air  Waybill  is  of  no  

consequence.  It was strenuously urged that from the said Air  

Waybills,  it  is  clear  that  respondent  No.3  was  acting  as  an  

agent of respondent No.1 and, therefore, the said respondent, as  

principal, was bound by all the acts of omission and commission  

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of  his  agent.   It  was asserted  that  the Commission failed to  

apply its mind on this aspect of the matter and, therefore, erred  

in holding that  there was no privity of  contract  between the  

appellant and respondent No.1.

8.Mr.  Sanjay  Gupta,  learned  counsel  appearing  on  behalf  of  

respondent No.1, on the other hand, supported the decision of  

the  Commission  and  submitted  that  since  the  Master  Air  

Waybill is the only contract of carriage between the Consignor  

and the Carter and in the said Bill, respondent No.3  having  

been named as the Shipper and M/s D.D. Sales of New York as  

the  consignee,  respondent  No.1  had  no  liability  towards  the  

appellant, notwithstanding the fact that the appellant had been  

named as the Shipper in House Air Waybill No. 0841.  It was  

submitted that since as per Part III of Chapter II of the Second  

Schedule  to  the  Carriage  by  Air  Act,  1972  (for  short  “the  

Carriage Act”), it is the consignor who is required to make out  

the Air Waybill and handover the same to the carrier, it was  

the responsibility of the consignor to see that all the particulars  

and details of the cargo inserted in the Air Waybill are correct.  

It was thus, argued  that respondent No.1 not being a party to  

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the  contract  of  carriage  vis-à-vis  the  appellant,  the  said  

respondent cannot be held to be liable for any delay in delivery  

of the consignment in question.   

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  

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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  

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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.   

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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  

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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.   

14.In view of the afore-going discussion, we have no option but  

to allow the appeal and set aside the impugned order.  We order  

accordingly and remit the matter back to the Commission for  

fresh adjudication of  the claim preferred by the appellant on  

merits.  However, in the facts and circumstances of the case,  

there will be no order as to costs.

……………………………. J.

(D.K. JAIN)

                              …………………………….J.  (T.S. THAKUR)

NEW DELHI; APRIL 16, 2010.

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