Legal Remedies for Complete Loss of Goods During Transit

On 14th February 2025, a shipment resulted in the complete loss of goods, leading to a commercial dispute. In such cases, Indian law provides specific remedies to address the situation.

1. Mandatory Pre-Institution Mediation

Before approaching the courts, it’s essential to initiate mediation:

• Legal Requirement: Section 12A of the Commercial Courts Act, 2015, mandates pre-institution mediation for commercial disputes not seeking urgent interim relief. This means parties must attempt to resolve the issue through mediation before filing a lawsuit. Ref scconline.com

• Procedure:

  • Initiation: As per Rule 3 of the Commercial Courts (Pre–Institution Mediation and Settlement) Rules, 2018, the aggrieved party serves a notice to the other party, initiating the mediation process.
  • Representation: Rule 6 allows parties to be represented by legal professionals during mediation sessions.
  • Mediation Process: Rule 7 outlines that a neutral mediator facilitates discussions between parties to reach a mutually acceptable solution.

• Jurisdiction and Timeframe: Section 13 of the Mediation Act, 2023, specifies that the mediation should occur within the territorial jurisdiction where the dispute arose. The process should be completed within three months, extendable by two months with mutual consent.

2. Seeking Compensation

If mediation doesn’t resolve the dispute, the aggrieved party can seek compensation through legal channels:

• Legal Provisions:

  • Indian Contract Act, 1872:

    • Section 73: Entitles parties to compensation for losses due to breach of contract.
    • Section 74: Provides for compensation when a contract specifies a penalty for breach.
    • Section 75: Allows a party who rightfully rescinds a contract to claim compensation.
    • Section 151: Mandates that a bailee (the party temporarily holding goods) must take reasonable care of the goods.

  • Carriage By Road Act, 2007:

    • Section 10: Holds common carriers liable for loss of goods during transit.
    • Section 12: Addresses conditions that limit or exempt the carrier’s liability.

  • Sale of Goods Act, 1930:

    • Section 16: Implies that goods sold are of acceptable quality and fit for the intended purpose.
    • Section 58: Allows for specific performance, compelling a party to fulfill contractual obligations.
    • Section 59: Provides remedies for breach of warranty.
    • Section 61: Permits claiming interest as damages.

• Jurisdiction and Limitations:

  • Territorial Jurisdiction: Since the other party resides in Delhi, the Delhi courts have jurisdiction.
  • Limitation Period: A lawsuit must be filed within three years from the date of breach, i.e., by 14th February 2028.
  • Pecuniary Jurisdiction: The claim’s value determines the appropriate court. For high-value claims, the Delhi High Court would preside.
  • Court Fees: Filing the suit requires a court fee of ₹534,849.60.

3. Specific Performance and Injunctions

In certain situations, the aggrieved party may seek specific performance or injunctions:

• Legal Provisions:

  • Specific Relief Act, 1963:

    • Section 39: Allows courts to issue mandatory injunctions, compelling a party to perform specific acts.
    • Section 40: Permits claiming damages in addition to or instead of an injunction.

  • Indian Carriage of Goods By Sea Act, 1925:

    • Article III: Outlines the responsibilities and liabilities of carriers by sea.
    • Article III(8): Invalidates contract clauses that exempt carriers from liability due to negligence.

  • Railways Act, 1989:

    • Section 93: Establishes the railway administration’s responsibility as a carrier of goods.
    • Section 98: Addresses issues related to goods in defective condition or inadequate packaging.
    • Section 104: Defines the extent of liability for goods transported in open wagons.

• Jurisdiction and Limitations:

  • Territorial Jurisdiction: Delhi courts have authority, given the other party’s residence.
  • Limitation Period: Legal action should commence by 14th February 2028.
  • Pecuniary Jurisdiction: High-value claims fall under the Delhi High Court’s purview.
  • Court Fees: The applicable court fee is ₹534,849.60.

Procedural Considerations

When pursuing legal remedies, consider the following procedural aspects:

• Indian Contract Act, 1872:

  • Section 73: Details compensation for breach of contract.

• Carriage By Road Act, 2007:

  • Section 10: Addresses carrier liability.
  • Section 12: Discusses conditions limiting carrier liability.
  • Section 16: Requires notice before instituting a suit.
  • Section 18: Specifies penalties for violations like non-registration or transporting hazardous goods.

• Sale of Goods Act, 1930:

  • Sections 56 & 57: