Railways Not Liable For Short Delivery Of Owner’s Risk Consignment Unless Consignor Proves Quantity And Negligence: Supreme Court

The Court was hearing an appeal against the concurrent rejection of a claim by the Railway Claims Tribunal, Guwahati Bench, and the Gauhati High Court, arising from the alleged short delivery of bags of salt transported from Gujarat to Assam.

A Bench of Justice Sanjay Karol and Justice Vipul M. Pancholi observed: “The proviso to Section 65(2) which we have reproduced above provides that when the particulars of a consignment being loaded are not verified by the Railway employees, burden of proof in regard thereto shall apply on the consignor, consignee or endorsee. For it to be established that the Railway authorities were negligent, it has to be shown that they had a duty of care. Had they, at any stage been involved in the noting, counting or weighing of goods, thereby being actively aware of the amount being transported by them, then, it could be said that they had duty to ensure that the total amount that they have counted or weighed, was the amount they ought to safely transit to the end destination. This was not the case.

The Bench further added: The learned Single Judge has correctly observed that the appellant has not provided any documents to show that a particular number of bags were procured and processed and then were being further sent for iodisation. In other words, the burden of proof as per the proviso to Section 65(2) was not discharged. Once this burden had been discharged, only then could we come to the question of there being any negligence/misconduct on part of the Railways or its employees if liability was to be fastened upon them despite the fact that the same had been booked in the “owner’s risk” category.”

AOR Gunjan Kumar appeared for the appellant, while ASG Archana Pathak Dave appeared for the Union of India.

Background

The appellant claimed that it had entrusted a shipment of salt bags to the Railways for carriage from Gujarat to Assam. According to the appellant, the consignment contained 40,444 bags, but delivery at the destination recorded only 38,702 bags, resulting in an alleged shortage of 1,742 bags.

The Railway authorities issued a shortage certificate, after which the appellant filed a claim for compensation at the rate of Rs. 200 per bag.

The Railway Claims Tribunal rejected the claim. It relied on transhipment tallies and found that the appellant’s case regarding loading could not be accepted. The Tribunal held that it was not possible to conclude that there was a short delivery.

The appellant then filed a statutory appeal before the Gauhati High Court under Section 23 of the Railway Claims Tribunal Act, 1987. The High Court noted that the goods were loaded directly by the consignor’s employees, that the loading was not supervised by railway staff, that the sender’s weight was accepted, that packing conditions were not compliant, and that the railway receipt carried a “said to contain” remark. The High Court dismissed the appeal.

Before the Supreme Court, the appellant argued that even if the goods were booked at owner’s risk, the Railways’ general obligation under Section 93 of the Railways Act could not be avoided. It also argued that loading was required to be supervised by a Goods Clerk and that Section 97 made the Railways liable for negligence even in owner’s risk bookings.

The Union of India contended that the shortage certificate was not an admission, that Section 65(2) placed the burden of proof on the consignor where the goods were not checked by railway staff, and that Sections 93 and 97 did not assist the appellant unless negligence or misconduct was proved.

Court’s Observations

The Court first examined Section 65(2) of the Railways Act, 1989, which treats a railway receipt as prima facie evidence of weight and number of packages, but shifts the burden where railway servants do not check wagon-load or train-load consignments.

The Court noted that the appellant could not cross this threshold because railway employees had not undertaken the loading, counting and weighing of the goods.

The Court then considered the relationship between Sections 93 and 97 of the 1989 Act. It was observed that Section 93 casts a general responsibility on the Railways for loss, destruction, damage, deterioration or non-delivery in transit, while Section 97 deals specifically with goods carried at the owner’s risk.

The Court held: “Section 93 casts a responsibility upon the Railways for loss, destruction, damage, deterioration, non-delivery of goods arising from transit. While certain exceptions are listed, the Section also places a responsibility on the Railways itself to demonstrate that the exceptions are applicable and further to prove that reasonable foresight and care had been employed in the carriage of goods. Section 97 talks about the scenarios in which goods are loaded onto the wagons at owner’s risk. It absolves the Railways of liability except in cases of negligence and misconduct of the railway employees being proved. A burden of proof for negligence/misconduct lies on the person making the allegations.”

The Court also discussed the effect of the non obstante clause in Section 97, referring to Aswini Kumar Ghose v. Arabinda Bose (1952), Madhav Rao Scindia v. Union of India (1971), and Chandavarkar Sita Ratna Rao v. Ashalata S. Guram (1986).

It held: “In view of the above discussion, the non obstante clause contained in Section 97 would exclude the general obligations cast on the Railway by Section 93. Since, in the present case the goods were booked at ‘owner’s risk’, if liability is to be fastened on the authorities, it can only be done if negligence or misconduct on its part or its employees.”

The Court then considered the concept of negligence because the appellant had alleged broken seals or open carriages at the transhipment point. It referred to Poonam Verma v. Ashwin Patel (1996), Rajkot Municipal Corpn. v. Manjulben Jayantilal Nakum (1997), and Jay Laxmi Salt Works (P) Ltd. v. State of Gujarat (1994).

The Court quoted Rajkot Municipal Corpn. v. Manjulben Jayantilal Nakum (1997), observing: “The elements of tort of negligence, therefore, consist in (a) duty of care; (b) duty owed to the plaintiff; and (c) it has been carelessly breached. Negligence does not give rise to liability unless the law fastens the duty of care in given circumstances. Duty is an obligation recognised by law to avoid conduct brought with unreasonable risk of damage to another. The question whether duty consists in a particular situation involves determination as a question of law.”

Applying this principle, the Court held that the Railways could be said to owe a duty in respect of a particular quantity only if its employees had been involved in noting, counting or weighing the goods. Since that was not the case, the appellant could not establish the necessary foundation for fastening liability.

The Court accepted the High Court’s view that the appellant had not produced documents showing that a particular number of bags had been procured, processed and sent for iodisation.

It held that only after the burden under Section 65(2) was discharged could the Court examine whether negligence or misconduct by the Railways or its employees had been established.

Since the goods were booked under the owner’s risk category and the appellant failed to prove the quantity loaded through acceptable material, the Court found no basis to interfere with the concurrent rejection of the claim.

Conclusion

The Supreme Court dismissed the appeal and upheld the rejection of the appellant’s claim for compensation for the alleged short delivery of salt bags.

The Court held that the appellant had failed to discharge the burden under the proviso to Section 65(2) of the Railways Act, 1989, and that liability could not be fastened on the Railways under Section 97 without proof of negligence or misconduct. Pending applications were disposed of.

Cause Title: M/S Bajaj Trading Company v. Union of India (Neutral Citation: 2026 INSC 711)

Appearances

Appellant: Gunjan Kumar, AOR, with Advocates Divyam Rathi, Divyansh Rathi and K.P. Maheshwari

Respondent: Archana Pathak Dave, ASG, with Advocates Ankita Choudhary, Kamal Digpaul, Alankar Gupta, Vaishnav Kirti Singh, Raghav Sharma and Amrish Kumar, AOR

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