The Punjab and Haryana High Court has dismissed an appeal filed by The Oriental Insurance Co. Ltd., affirming the Railway Claims Tribunal's decision to reject its compensation claim over a shortage in a copper scrap consignment transported from Lahore to Amritsar. The Court held that the insurer failed to establish that the loss occurred while the goods were in the custody of Indian Railways.
Background of the Case
The dispute arose from a consignment of 106 bags of copper scrap dispatched from Lahore, Pakistan, on 4 May 1989. When the shipment reached Amritsar, railway authorities found that nine bags were missing, several others were open, and the cargo was short by 1,104 kilograms. A shortage certificate was issued on 31 May 1990.
Since the consignment had been insured, The Oriental Insurance Co. Ltd. compensated the consignee with ₹36,732. After obtaining a letter of subrogation and a special power of attorney, the insurer sought recovery from the Railways. When the claim was rejected, it approached the Railway Claims Tribunal, which also dismissed the claim.
Justice Pankaj Jain noted that the consignment had been booked before the Railways Act, 1989 came into force. Therefore, the case was governed by the provisions of the Indian Railways Act, 1890, particularly Section 76(E), which deals with goods transported between India and foreign countries.
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The Court observed,
"It was incumbent upon the appellant to prove that the loss occurred on the railway of Indian Railways."
It further recorded that the wagon had reached India with its original seals intact, and this finding was not disputed by the insurer during the hearing.
The Bench explained that under Section 76(E), liability cannot be imposed on Indian Railways unless the claimant proves that the loss, damage, or shortage occurred while the goods were on the Indian railway network. Since such evidence was absent, the statutory requirement remained unmet.
Finding no error in the Railway Claims Tribunal's reasoning, the High Court dismissed the appeal. It concluded that The Oriental Insurance Co. Ltd. had failed to prove that the shortage arose during transportation under the administration of Indian Railways, leaving no ground to interfere with the Tribunal's order.
Case Details:
Case Title: The Oriental Insurance Co. Ltd. v. Union of India
Case Number: FAO-1539-1992
Judge: Justice Pankaj Jain
Decision Date: 29 May 2026
