Understanding Legal Remedies for Shipment Delays in India

On 7th February 2025, a significant shipment was delayed, leading to a dispute between the involved parties. In India, there are specific legal avenues to address such issues, primarily focusing on mediation, compensation, and specific performance.

1. Mediation

Before approaching the courts, it’s mandatory to attempt mediation, especially in commercial disputes. This process involves a neutral third party helping both sides reach a mutual agreement.

• Legal Framework:

  • The Commercial Courts Act, 2015: Section 12A emphasizes pre-institution mediation and settlement.
  • The Mediation Act, 2023: Section 5 focuses on pre-litigation mediation, Section 13 discusses territorial jurisdiction for mediation, and Section 29 addresses limitation periods.

• Procedural Details:

  • Initiating Mediation: According to Rule 3 of The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018, the mediation process begins when one party serves a notice to the other.
  • Representation: Rule 6 allows parties to be represented by authorized individuals during mediation.
  • Mediation Procedure: Rule 7 outlines the steps and guidelines to be followed during mediation sessions.

It’s crucial to note that if mediation isn’t initiated as required, any subsequent lawsuit may be dismissed. The Supreme Court of India has affirmed the mandatory nature of pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015.

2. Compensation

If mediation doesn’t resolve the issue, the aggrieved party can seek compensation for losses incurred due to the shipment delay.

• Relevant Laws:

  • The Indian Contract Act, 1872:

    • Section 73: Addresses compensation for losses resulting from a breach of contract.
    • Section 74: Deals with compensation when a contract specifies a penalty for breach.
    • Section 75: States that a party who rightfully cancels a contract is entitled to compensation.
    • Section 151: Mandates that anyone holding another’s goods (bailee) must take reasonable care of them.
    • Section 153: Allows the bailor to terminate the bailment if the bailee acts inconsistently with the contract’s terms.
    • Section 161: Holds the bailee responsible if they don’t return the goods on time.

  • The Railways Act, 1989:

    • Section 93: Outlines the railway’s responsibility as a carrier of goods.
    • Section 98: Addresses situations where goods are in defective condition or improperly packed.
    • Section 107: Provides guidelines for applying for compensation due to loss or damage of goods.

  • The Sale of Goods Act, 1930:

    • Section 16: Implies that goods sold should be of acceptable quality and fit for their intended purpose.
    • Section 57: Discusses damages for non-delivery of goods.
    • Section 58: Allows for specific performance, compelling a party to fulfill their contractual obligations.
    • Section 59: Provides remedies for breach of warranty.
    • Section 61: Covers interest and special damages in case of breaches.

• Jurisdiction and Limitations:

  • Territorial Jurisdiction: Since the other party resides in Delhi, legal proceedings should be initiated there.
  • Time Limit: A case must be filed within three years from the date of the breach, i.e., by 7th February 2028.
  • Court Jurisdiction: Given the claim amount, the case would fall under the purview of the District Judge.
  • Court Fees: The applicable court fee for this claim would be ₹34,161.60.

3. Specific Performance

In certain situations, instead of seeking monetary compensation, a party may request the court to compel the other party to fulfill their contractual obligations.

• Applicable Laws:

  • The Specific Relief Act, 1963:

    • Section 10: Pertains to specific performance of contracts.
    • Section 39: Deals with mandatory injunctions, directing a party to perform a specific act.
    • Section 40: Allows for damages in addition to or instead of an injunction.

  • The Indian Carriage of Goods by Sea Act, 1925:

    • Article III: Outlines the responsibilities and liabilities of carriers.
    • Article III(8): Invalidates any contract clauses that attempt to relieve the carrier of liability due to negligence.

  • The Carriage by Road Act, 2007:

    • Section 10: Defines the liability of common carriers for loss or damage to goods.

• Jurisdiction and Limitations:

  • Territorial Jurisdiction: Legal actions should be filed in Delhi, where the other party resides.
  • Time Limit: The suit must be initiated by 7th February 2028, within three years from the breach date.
  • Court Jurisdiction: The District Judge will preside over the case.
  • Court Fees: The fee remains ₹34,161.60.

Procedural Considerations

When pursuing legal remedies, it’s essential to follow