Bhagwandas B. Ramchandani Vs British Airways (Supreme Court)
Held that right to damage itself is extinguished, provisions of the Limitation Act have no application.
Facts-
Carriage by Air Act, 1972, incorporates international air traffic conventions of Warsaw, 1929, Hague Protocol, 1955, and Montréal Convention, 1999 in the First, Second, and the Third Schedules of the Act. Rule 30 of the Second Schedule, which incorporates the Hague Protocol, provides that the right to damages will be extinguished if an action is not brought within a period of two years from the dates mentioned in the Rule. Sub-rule (2) of Rule 30 provides that the method of calculating the period of limitation shall be determined by the law of the Court seized of the matter. As Limitation Act, 1963 is the law applicable to the Courts in India, it is contended on behalf of the consumers of the Airlines that the exclusion of periods of limitation provided in the Limitation Act shall apply for computation of the period of two years mentioned in Rule 30 (1).
Two substantial questions of law have arisen for our consideration. The first relates to the applicability of the Limitation Act when the right itself is extinguished, as against a barring of remedy, as in the case of Section 3 of Limitation Act. The second question is whether the provisions of the Carriage by Air Act, 1972 expressly exclude the Limitation Act, 1963 as provided in Section 29.
Conclusion-
Rule 29 speaks about judicial remedy for initiating an action for damages, Rule 30 uses the expression right to damages. It is in the context of right as against a remedy that the purpose, object and meaning of Rule 30 is to be understood. Further, Rule 30 also uses the expression “extinguishment” as against “bar”, which is generally used in the context of a remedy. Therefore, the extinguishment is of right, that is, the right to damages is the subject matter of Sub-Rule (1) of Rule 30. The expressions, ‘right’ and ‘extinguished’ employed by the Convention as adopted and incorporated by the Parliament in Rule 30 of the Second Schedule clearly establishes the intention of the law-giver that the right to damages would not subsist after the expiry of the period mentioned therein.
Once the right to damages is extinguished upon the expiry of two years reckoned from the three alternative dates mentioned in the Rule itself, nothing would remain for enforcement. Section 3 of the Limitation Act only bars the remedy, but when the right itself is extinguished, provisions of the Limitation Act have no application. For this reason, in The East and West Steamship Co., this Court held that once the right of liability is extinguished under the clause, there is no scope of acknowledging the liability thereafter.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Leave granted.
2.1 Carriage by Air Act, 1972, incorporates international air traffic conventions of Warsaw, 1929, Hague Protocol, 1955, and Montréal Convention, 1999 in the First, Second, and the Third Schedules of the Act. Rule 30 of the Second Schedule, which incorporates the Hague Protocol, provides that the right to damages will be extinguished if an action is not brought within a period of two years from the dates mentioned in the Rule. Sub-rule (2) of Rule 30 provides that the method of calculating the period of limitation shall be determined by the law of the Court seized of the matter. As Limitation Act, 1963 is the law applicable to the Courts in India, it is contended on behalf of the consumers of the Airlines that the exclusion of periods of limitation provided in the Limitation Act shall apply for computation of the period of two years mentioned in Rule 30 (1).
2.2 Two substantial questions of law have arisen for our consideration. The first relates to the applicability of the Limitation Act when the right itself is extinguished, as against a barring of remedy, as in the case of Section 3 of Limitation Act. The second question is whether the provisions of the Carriage by Air Act, 1972 expressly exclude the Limitation Act, 1963 as provided in Section 29.
2.3 On the first question, we have resolved the apparent conflict between Sub-rule (1) and Sub-rule (2) of Rule 30 by referring to the legislative history of the conventions as provided in the Vienna Convention on the Law of Treaties, 1969. The travaux preparatoires leading to the formation of the Convention establishes that the Convention sought to exclude any interruption in the period of two years specified in the Article. We have also followed the well-recognized principle that while interpreting municipal laws giving effect to International Conventions, Courts must endeavor to maintain uniformity in the interpretation in order to sub-serve the very purpose of the Conventions. Having examined the judgments of various jurisdictions, we are satisfied that they are in consonance with the interpretation that we have adopted in construing Sub-rule (2) of Rule 30. Sub-rule (2) in our opinion does not derogate from the intent of Sub-rule (1) excluding the applicability of the Limitation Act but merely empowers the Court to determine the period of two years.
2.4 On the second question, after examining the provisions of the Carriage by Air Act, 1972, we have held that Rule 30 expressly excludes the Limitation Act as provided in Section 29.
Facts and Proceedings:
3. The Appellant is a sole proprietary concern engaged in the business of imports and exports. The Appellant sent a cargo containing fruits and vegetables from Mumbai to Canada via London by employing services of British Airways1 on 04.01.2010. However, on 06.01.2010 due to bad weather conditions in London the flight could not depart to Canada, as a result the fruits and vegetables were damaged and were consequently destroyed. The Appellant lodged a claim for ₹1,70,221.56/- with the Respondent. On 30.06.2010, the Appellant once again sent a similar cargo containing fruits and vegetables from Mumbai to Canada. Yet again, the cargo could not be sent due to packaging and other issues and, as a consequence, the cargo had to be destroyed. The Appellant raised a claim dated 20.07.2010 for ₹4,27,922/-. Acknowledging the receipt of the notice, the Respondent sent a mail on 02.11.2010 offering to settle the matter at 50% of the claim amount.
4. It is in the above-referred background that the Appellant instituted a suit being OS No. 5164/2012 on 15.09.2012 before the City Civil Court, Mumbai for recovery of the amount of ₹9,17,642.56/-, with interest at the rate of 21% per annum2. The Respondent filed written statements stating inter alia that the suit is barred by limitation.
Before the Trial Court:
5. The Trial Court framed a preliminary issue on the ground of limitation and by its judgment dated 05.02.2014 held that the suit is not barred by limitation as the period prescribed in Rule 30 of the Second Schedule to the Carriage by Air Act, 19723 could be calculated from 28.10.2010, that is, the date when the Respondent had acknowledged a proposed settlement of the claim at 50% of the demand. For this purpose, the Trial Court relied on Section 18 of the Limitation Act by taking it for granted that the said Act is applicable to proceedings under the Air Act.
6. Aggrieved by the decision of the Trial Court on the preliminary issue, Appellant filed a Writ Petition No. 6647/2014 before the High Court of Bombay. By the judgment impugned herein, the High Court allowed the Writ Petition holding that the suit is barred by limitation. The reasoning adopted by the High Court is that the Air Act, 1972 being a later and a special statute, will have an overriding effect over the earlier and the general statute, being the Limitation Act, 1963.
Before the High Court:
7.1 The High Court relied on the decisions of the High Court of Madras in M.R.F. Ltd. v. M/s Singapore Airlines Ltd.4, M/s Air India Bombay Airport and Another v. M/s Asia Tanning Co. and Anr.5, The Shipping Corporation of India Ltd., Bombay and Anr. v. Union of India6, The East and West Steamship Company, Georgetown, Madras v. S.K. Ramalingam Chettiar7, Air India Ltd. v. Tej Shoe Exporters P. Ltd. and Anr.8 and Gulf Air Company v. Nahar Spinning Mills Ltd. and Others9 which took the view that Carriage by Air Act, 1972 excludes the applicability of Limitation Act. The High Court observed that: –
“30. Thus, consistent view taken by the Apex Court and also by various High Courts is that the Carriage by Air Act 1972, being a special statute, enacted to give effect to the international convention, the provisions thereof will have an overriding effect. In view thereof, section 18 of the Limitation Act, which is a general enactment, cannot have any application in the present case to extend the period of limitation, which is prescribed in Rule 30 of Schedule II of the Act.”
7.2 As a consequence of such a decision, the High Court set aside the decision of the Trial Court on the preliminary issue and held that the suit is barred by limitation and dismissed the same.
Submissions:
8.1 Shri Vinay Navare, Senior Advocate, appearing for the Appellant submitted that Section 29(2) of the Limitation Act provided that unless the Limitation Act is expressly excluded, its provision applies to any law prescribing a distinct period of limitation. He submitted that Rule 30 of the Second Schedule of the Air Act, 1972 has not expressly excluded the applicability of the Limitation Act. He further submitted that Rule 30 (2) explicitly enables “method of calculating the period of limitation” based on the law of the Court seized of the case. On this basis, he urged that the provisions of the statutes are complementary to each other and must be read harmoniously. He fairly brought to our notice the judgment of the Court of Appeal in the United Kingdom in Laroche v. Spirit of Adventure (UK) Ltd.10 and the judgment of the Second Circuit of the United States Court of Appeals in Fishman v. Delta Airlines11. In these cases, the Courts have taken the view that the municipal laws governing the period of limitation are not to be applied for claims made under the statutes based on international conventions. Shri Navare distinguished these judgments on the ground that the statutory position based on Section 29(2) of the Limitation Act read with correct interpretation of Rule 30 of Second Schedule of the Air Act,1972 would stand on a different footing, and therefore these judgments are distinguishable.
8.2 Ms. Ritu Singh Mann, Advocate for the Respondent-Airlines, primarily contended that the exclusion under Section 29(2) can be implied from the provisions of the Air Act,1972. The Learned Counsel relied on the judgment of this Court in Hukumdev Narain Yadav v. Lalit Narain Mishra12. In the written submissions, for the first time, the Respondent sought to argue that it is Rule 35 of the Third Schedule and not Rule 30 of the Second Schedule of the Air Act, 1972 which will be applicable to the case at hand13. Our attention was also drawn to the judgments of the Courts in United Kingdom (Sidhu v. British Airways14, Philips v. Air New Zealand15), the United States of America (Fishman v. Delta Airlines16, Kahn v. Trans World Airlines17) and Australia (Bhatia v. Malaysian Airline System Berhad18) to buttress the submissions.
Issues:
9. In view of the rival submissions, the following issues arise for consideration:
1. Does Limitation Act, 1963 apply to the period specified in Rule 30 of the Second Schedule of the Carriage by Air Act, 1972?
2. Whether the Air Act, 1972, particularly Rule 30 of the Second Schedule expressly excludes the applicability of the Limitation Act, 1963?
Issue No.1:
Does Limitation Act, 1963 apply to the period specified in Rule 30 of the Second Schedule of the Carriage by Air Act, 1972?
10. It is to be noticed that matters concerning the international carriage of persons, baggage, or cargo performed by aircraft for reward are the subject matter of International Conventions. These are incorporated into our laws through the Schedules to the Air Act, 1972. Section 319 of the Air Act, 1972 incorporates the Warsaw Convention, 192920 into the First Schedule and specifically provides that it shall have the status of law in India. Section 421 incorporates the Hague Protocol dated 28.09.1955 and provisions it in the Second Schedule and gives it the status of law in India. Similarly, Section 4A22 brought into force in 2009 for giving effect to the Montréal Convention, performing the carriage.”
11. Chapter III of the Second Schedule relates to, ‘Liability of the Carrier’, which recognizes the principle of International Law of lex fori, as per which suits and proceedings in the judicial fora of the member nations are to be governed by the law of the Court in which the proceeding is instituted24. This principle is recognized by Rule 29(2) of the Second Schedule itself;
“Rule 29. (1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the Court have jurisdiction at the place of destination.
(2) Question of procedure shall be governed by the law of the Court seized of the case.”
12. The procedural law governing the institution and adjudication of civil suits in India includes the Civil Procedure Code,1908 as well as the Limitation Act, 1963. The Limitation Act is a branch of adjectival law, and applies to all proceedings which it governs from the date of its enactment. There is however a well-established principle, which states that when the right itself is extinguished, the provisions relating to limitation have no application. A direct example where the right itself is extinguished, can be evidenced in Section 1125 as well as Section 2726 of the Limitation Act, 1963. Section 11 deals with suits filed in India with respect to contracts entered in foreign countries. Following the Principle of lex fori, the Section provides that rules of limitation provided in a foreign jurisdiction are not applicable. However, the exception to this Rule is provided in Section 11 (2)(a), when the Contract i.e., the right itself expires. Similarly, Section 27 also recognizes the principle of extinguishment of Right to Property being an exception to the applicability of the Limitation Act, 1963.
13.1 The distinction between barring a remedy as exception is well established, as can be seen in the following precedents. The extinguishment of the right and its effect on limitation is well recognized by courts of law. We may refer to some of the important precedents.
13.2 A similar issue as in the present case, arose for consideration in The East and West Steamship Company v. S.K. Ramalingam Chettiar27, where this Court had to consider 3rd Clause of Para 6 of Article III in Schedule to the Indian Carriage of Goods by Sea Act, 192528 wherein, while interpreting the expression discharge from the liability, this Court held as under: –
“….The question we have to decide is whether in saying that the ship or the carrier will be “discharged from liability”, only the remedy of the shipper or the consignee was being barred or the right was also being terminated. It is useful to remember in this connection the international character of these rules, as has been already emphasized above. Rules of limitation are likely to vary from country to country. Provisions for extension of periods prescribed for limitation would similarly vary. We should be slow therefore to put on the word “discharged from liability” an interpretation which would produce results varying in different countries and thus keeping the position uncertain for both the shipper and the shipowner. Quite apart from this consideration, however, we think that the ordinary grammatical sense of “discharged from liability” does not connote “free from the remedy as regards liability” but are more apt to mean a total extinction of the liability following upon an extinction of the right. We find it difficult to draw any reasonable distinction between the words “absolved from liability” and “discharged from liability” and think that these words “discharged from liability” were intended to mean and do mean that the liability has totally disappeared and not only that the remedy as regards the liability has disappeared. We cannot agree with the learned Judge of the Madras High Court that these words merely mean that “that even though the right may inhere in the person who is entitled to the benefits, still the liability in the opposite party is discharged by the impossibility of enforcement. “The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, though fine, is of great importance. The Legislature could not but have been conscious of this distinction when using the words “discharged from all liability” in an article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense. It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgment of liability thereafter.”
13.3 In RM. AR. AR. RM. AR. Ramanathan Chkttiar and others v. K.M.CL.M. Somasundaram Chettiar and Ors.29, it was held as follows: –
“It is a well-accepted rule of International Law that all matters of procedure will be governed by the law of the country in which the Court where any legal proceeding is initiated is situate. Statutes of limitation in so far as they prescribe periods within which claim should be enforced, whereby the remedy alone is barred, are regarded as merely procedural.
But there may be provisions in such statutes which extinguish the rights of the parties. S. 28 of the Indian Limitation Act is an instance where on the remedy being barred the right to property also stands extinguished. In such a case, that is, where there is no right alive by reason of its extinguishment by a statute there could obviously be nothing to be enforced in that country or in any foreign country. Provisions of that kind cannot be regarded as merely procedural as they create or destroy substantive rights of parties. This principle has been recognised in a statutory-form in S. 11 (2) of the Indian Limitation Act.”
13.4 In Punjab National Bank and others v. Surendra Prasad Sinha30, this Court held:
“5. …The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act 36 of 1963, for short “the Act” only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation is that the right itself is destroyed.
For example, under Section 27 of the Act a suit for possession of any property becoming barred by limitation, the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. Though, the right to enforce the debt by judicial process is barred under Section 3 read with the relevant article in the schedule, the right to debt remains. The time barred debt does not cease to exist by reason of Section 3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What Section3 refers is only to the remedy but not to the right of the creditors. Such debt continues to subsist so long as it is not paid….”
13.5 The principles laid down in the above referred precedents are consistently followed in decisions of this Court in Khadi Gram Udyog Trust v. Ram Chandraji Virajman Mandir31, State of Kerela and Ors. v. V.R. Kalliyanikutty and Anr. 32 and also in Prem Singh and Ors. v. Birbal and Ors.33.
14. In view of the well-established position of law relating to Lex Fori in International Law, with the equally well-established exception arising out of the extinguishment of the right or the liability itself, we will now examine the position in India as per Rule 30 in the Second Schedule of the Air Act, 1972 relating to liability of the carrier. Rule 30 is of the Air Act, 1972 is extracted as under: –
“30. (1) The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.
(2) The method of calculating the period of limitation shall be determined by the law of the Court seized of the case.”
Analysis of Sub-Rule (1) of Rule 30:
15.1 While Rule 29 speaks about judicial remedy for initiating an action for damages, Rule 30 uses the expression right to damages. It is in the context of right as against a remedy that the purpose, object and meaning of Rule 30 is to be understood. Further, Rule 30 also uses the expression “extinguishment” as against “bar”, which is generally used in the context of a remedy. Therefore, the extinguishment is of right, that is, the right to damages is the subject matter of Sub-Rule (1) of Rule 30. The expressions, ‘right’ and ‘extinguished’ employed by the Convention as adopted and incorporated by the Parliament in Rule 30 of the Second Schedule clearly establishes the intention of the law-giver that the right to damages would not subsist after the expiry of the period mentioned therein.
15.2 Once the right to damages is extinguished upon the expiry of two years reckoned from the three alternative dates mentioned in the Rule itself, nothing would remain for enforcement. Section 3 of the Limitation Act only bars the remedy, but when the right itself is extinguished, provisions of the Limitation Act have no application. For this reason, in The East and West Steamship Co.34, this Court held that once the right of liability is extinguished under the clause, there is no scope of acknowledging the liability thereafter.
15.3 This is the position of law is obtained from the plain language of Sub-Rule (1) of Rule 30. The position is however very different when we proceed further to consider Sub-Rule (2) of Rule 30.
Sub-Rule (2) of Rule 30:
16.1 Sub-Rule (2) is extracted as under: –
“(2) The method of calculating the period of limitation shall be determined by the law of the Court seized of the case.”
16.2 In its plain and simple language, Sub-Rule (2) seems to adopt the applicability of the Limitation Act, 1963 as Courts in India exercise jurisdiction. ‘The method of calculating the period specified in Sub-rule (2) naturally relates to the period’ specified in Sub-rule (1). Sub-Rule (1) identifies and fixes two incidents. The period of limitation and the date of commencement of the said period (the three specified dates). Therefore, when the period of limitation, as well as the date of commencement of the said period, are already given, the method of calculation of the period of limitation contemplated under Sub-Rule (2) must relate to some other factor. However, without specifying the variable to which the method of calculating the period, is to apply, Sub-rule (2) merely provides that it “shall be determined by the law applicable to the Court seized of the case.” This has caused uncertainty about the intent of the lawmakers, be it the Convention or Rule 30 of the Second Schedule of the Act.
16.3 Further, the expression in Rule 30(2) calculating the period of limitation is synonymous to the expression computation of period of limitation provided in Part-III of the Limitation Act, 1963. Part-III which relates to the exclusion of certain time periods is to sub-serve a just cause based on public policy which recognizes human vulnerabilities. Broadly, these periods relate to (i) the date from which the period is to be reckoned (Section 12); (ii) the time taken for seeking to contest as a pauper, (Section 13); (iii) the bona fide period involved in the perusal of a remedying the wrong Court (Section 14); (iv) fraud (Section 17); (v) acknowledgment of debt (Section 18); (vi) admitted payments on account of debt (Section 19); (vii) continuous breach etc. These are the periods that can be excluded while computing the period of limitation under the Limitation Act, 1963.
17.1 It is in the above-referred context that Shri Navare, learned counsel appearing on behalf of the Appellant has emphasized the affirmation of the Limitation Act to proceedings under the Air Act, 1972 as per the plain language of Rule 30(2) and submitted that the expression, ‘method of calculating limitation period’ in Rule 30(2) is akin to the expression ‘for the purpose of determining any period of limitation’ provided in Section 29(2) of the Limitation Act. He contends that the Sub-Rule (2) of Rule 30 specifically incorporates Limitation Act into the legal regime of the Air Act, 1972.
17.2 On the other hand, Ms. Ritu Singh Mann, relied on Section 29(2) of the Limitation Act to submit that the provisions of the Limitation Act are expressly excluded by the special law of the Air Act, 1972. The written submissions emphasized the purpose and object of the International Conventions, which provided for ‘collective State action for further harmonization and codification of certain rules governing international carriage by Air’. It is then submitted that if courts of every signatory state were to interpret the provisions of the Convention in their own way, then the very purpose of achieving uniformity in application of the Conventions would be lost. For the first time in the written submissions, the Respondent has taken a plea that it is Rule 35 of the Third Schedule and not Rule 30 which will be applicable. However, on consideration we do not find any notable difference between the two and hence, we would proceed to refer Rule 30 of the Second Schedule in our further analysis.
18. The rival submissions surface due to an apparent conflict between Sub-Rule (1) and Sub-Rule (2) of Rule 30 of the Second Schedule. While Sub-Rule (1) extinguishes the right itself upon the expiry of the period of two years, after which nothing would remain for enforcement, Sub-Rule (2) seems to suggest that the Court seized of the case can apply the law of limitation applicable to its proceedings and entertain the suit of the proceedings. We will now analyze and interpret Rule 30 of the Second Schedule.
19.1 However, before we proceed to interpret Rule 30, it is necessary to clear certain doubts about the applicability of the correct Schedule. While the suit was instituted on the assumption that it is Rule 30 of the Second Schedule adopting the Warsaw Convention, 1929 as amended by the Hague Protocol, 1955 would be applicable to the proceedings, the Trial as well as the High Court and even the parties assumed that this is the correct Rule that would apply to the facts of the case. It is for the first time in the written submission that the Respondent stated that it is Rule 35 of the Third Schedule of the Montréal Convention, 1999 that will apply to the facts of the case. The change in the stand is apparently due to the deletion of two words “of limitation” occurring in Sub-Rule (2) of the Second Schedule from the same provision introduced under Rule 35 of the Third Schedule. Based on this minor change the Appellant advanced an argument in the written submission that the conscious deletion of the expression “of limitation” clarifies the position that Sub-Rule (2) only relates to a period of two years and has got nothing to do with “a period of limitation” and therefore, the Limitation Act has no application.
19.2 A comparative statement of the Third Schedule relatable to the Warsaw Convention, 1929, Warsaw Convention as amended by Hague Protocol, 1955, and the Montréal Convention of 1999 is reproduced herein for ready reference: –
