-Report by Arunima Jain

The Supreme Court on Monday, in the case of Essemm Logistics v. Darcl Logistics Limited& Anr., delved into the meaning and extent of Section 16 of the Carriers by Road Act, 2007read with the Order VII Rule 11 of the Civil Procedure Code (CPC). According to the court, no notice is required under Section 16 of the new Act for instituting any suit or legal proceedings, much less a counter-claim against the common carrier for recovering any loss other than the loss of or damage to the consignment.

FACTS

In the matter at hand, the appellant is a high-end carrier providing service, governed by theCarrier by Road Act, 2007. The first respondent had originally instituted a suit against theappellant for the acquisition of Rs.4,09,53,847/- with 18% interest until its realization,because the current appellant had failed to make payments due on 530 bills raised between November 14, 2011, and January 31, 2012. Accordingly, the first defendant/current appellant had filed a counterclaim of Rs. 13,03,00,000/- with 24% interest on the said amount till realization. This was majorly on three grounds:- Loss of business opportunity due to the diversification of cargo;- Loss of reputation;- Loss on account of idling of men, machines & overheads.

The present first respondent sought to dismiss the counterclaim of the first defendant on thegrounds that it was preferred without issuing the necessary notice, as mistakenly intended bySection 10 of the Carriers Act, 1865, but in fact by Section 16 of the new Act. The Court ofFirst Instance dismissed the plaint for failure to issue mandatory notice prior to thepresentation of the counter-claim, and the High Court upheld that decision. Accordingly, thefirst defendant has filed this appeal in the Supreme Court to allow the plea for a counterclaim.

JUDGEMENT

Upon giving due regard to the facts and law in the above-mentioned case, it is contended bythe Hon’ble Court that a simple reading of Section 16 of the new Carriage by Road Actindicates that it is only relevant in the event of a suit or legal procedure being institutedagainst a common carrier for any loss or damage to the consignment. The provision is inapplicable to any other type of loss or any suit or legal procedures brought to recover damages for loss of a different sort. In the court’s opinion, there was no violation of Section 16 and it was observed that the first courts have erred in their judgement by rejecting thecounterclaim under Order VII Rule 11 of the CPC as barred by Section 16 of the new Act. Hence, the impugned judgement and order have been repealed and the current appeal is allowed. The Court of first instance is directed to further allow the counterclaim.

READ FULL JUDGEMENT: https://bit.ly/3ns8J2E