The Supreme Court yesterday observed that the provision of Section 16 of the Carriage by Road Act, 2007 does not come into play vis à vis the condition of giving a notice in respect of claims for damages for the loss of reputation, business opportunity, etc. as such claims are not in connection with the damage or loss to the consignment.

A two-judge Bench of Justice V. Ramasubramanian and Justice Pankaj Mithal observed that "no notice under Section 16 of the Carriage by Road Act, 2007 was necessary for instituting any suit or legal proceedings much less counter claim against the common carrier for recovering the loss other than the loss of or damage to the consignment".

Advocate Nuli & Nuli appeared for the Appellant and Advocate V.D Khanna appeared for the Respondent.

In a brief background, the Appellant (ESSEMM – first defendant in the suit) had preferred the appeal challenging the rejection of its counterclaim in the exercise of power available under Order VII Rule 11 of CPC, 1908 by the Court of first instance which order was upheld by the High Court. On the other hand, the first Respondent (DARCL Logistics – plaintiff) instituted the original suit for recovery of a sum of Rs.4.09 Crores with interest at the rate of 18% till its realization, since the Appellant failed to make payments due as per 530 bills raised during the concerned period. In the said suit, the Appellant filed its written statement with a counter-claim of Rs.13 lacs with interest at the rate of 24% on the said amount till its realization.

After considering the arguments, the Apex Court found from the perusal of the Carriage by Road Act, 2007, that no suit or legal proceedings shall be instituted against a common carrier for any loss of, or damage to a consignment unless a notice in writing of such loss to the consignment has been served upon the carrier before the institution of the suit or the legal proceedings within six months from the date of booking of the consignment by the consignor.

"A close look at the provision would reveal that it not only bars the suit but also legal proceedings which were not included in the earlier provision of Section 10 of the Carriers Act, 1865," added the Court.

The Bench found from a perusal of Section 16 of the new Act that it is applicable only in respect of the institution of a suit or legal proceeding against a common carrier for any loss of, or damage to, the consignment.

The use of the word “Consignment” in the said provision is very material It denotes that the suit and legal proceedings in connection with the loss or damage to the consignment alone are covered by it for which purpose, a notice is mandatory. The said provision has no application in reference to loss of any other kind or the suit or legal proceedings instituted for recovery of instituted for recovery of damages in respect of loss of different damages in respect of loss of different nature”, added the Bench.

Accordingly, the Apex Court directed the Court of first instance to proceed with the suit as well as the counterclaim in accordance with the law.


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