Railways Not Liable for Short Delivery in ‘Owner’s Risk’ Consignment Without Proof of Negligence: Supreme Court Dismisses Bajaj Trading’s Appeal

The Supreme Court has ruled that when goods are transported under the "owner's risk" category, the Railways cannot be held liable for shortage in delivery unless negligence or misconduct by railway authorities is established. Upholding the decisions of the Railway Claims Tribunal and the Gauhati High Court, the Court dismissed the appeal filed by M/s Bajaj Trading Company over the alleged short delivery of a salt consignment.

Background of the Case

The dispute arose from the transportation of 40,444 bags of salt from Chirai Junction in Gujarat to Dharmanagar in Assam in November 2009. On arrival, only 38,702 bags were reportedly delivered, resulting in an alleged shortage of 1,742 bags.

Following the issuance of a shortage certificate by the Railway Authorities, Bajaj Trading sought compensation of ₹3,48,400. However, the Railway Claims Tribunal rejected the claim after examining the transshipment records, finding inconsistencies in the number of bags found in different wagons during transit. The Gauhati High Court later affirmed that decision, noting that the goods had been loaded by the consignor's employees without railway supervision and that the railway receipt carried the remark "said to contain."

Court's Observations

A Bench comprising Justice Sanjay Karol and Justice Vipul M. Pancholi examined the scope of Sections 65, 93, 97 and 99 of the Railways Act, 1989.

The Court explained that while Section 93 generally makes the Railways responsible for loss or non-delivery of goods, Section 97 creates a special rule for consignments booked at the owner's risk rate.

The bench observed,

"The non obstante clause contained in Section 97 would exclude the general obligations cast on the Railway by Section 93."

It held that in such cases, liability can arise only if negligence or misconduct on the part of the Railways or its employees is proved.

The Court also clarified that merely producing a shortage certificate does not automatically establish railway liability. It stressed that where railway staff had not verified the quantity of goods at the time of loading, the burden of proving the actual quantity loaded remained with the consignor under the proviso to Section 65(2) of the Railways Act.

Burden of Proof Not Discharged

Examining the evidence, the Supreme Court found that Bajaj Trading had failed to produce records showing the exact number of bags procured, processed and loaded for transportation.

The bench observed,

"The burden of proof as per the proviso to Section 65(2) was not discharged."

It further noted that unless this burden was first met, the question of holding the Railways liable for negligence under Section 97 did not arise.

Decision

Finding no legal error in the concurrent findings of the Railway Claims Tribunal and the Gauhati High Court, the Supreme Court dismissed the civil appeal and disposed of all pending applications.

Case Title: M/s Bajaj Trading Company v. Union of India