Supreme Court settles the applicability of the Limitation Act, 1963 in cases under the Carriage by Air Act, 1972: M/S Bhagwandas B . Ramchandani vs. British Airways (29 July 2022)

LEGAL ISSUE: Applicability of the Limitation Act, 1963 to the period specified in Rule 30 of the Second Schedule of the Carriage by Air Act, 1972.

CASE TYPE: Carriage by Air/Commercial Law

Case Name: M/S Bhagwandas B . Ramchandani vs. British Airways

Judgment Date: 29 July 2022

Date of the Judgment: 29 July 2022

Citation: (2022) INSC 649

Judges: K.M. Joseph, J. and Pamidighantam Sri Narasimha, J.

Does the Limitation Act, 1963, apply to claims under the Carriage by Air Act, 1972, specifically concerning the two-year limitation period for filing a suit? The Supreme Court of India recently addressed this crucial question, clarifying the interplay between domestic limitation laws and international air carriage conventions. This judgment resolves a conflict regarding whether the two-year period for initiating legal action under the Carriage by Air Act can be extended by provisions of the Limitation Act, 1963. The bench comprising of Justice K.M. Joseph and Justice Pamidighantam Sri Narasimha delivered the judgment, with the majority opinion authored by Justice Pamidighantam Sri Narasimha.

Case Background

M/S Bhagwandas B. Ramchandani, the appellant, is a sole proprietorship involved in import and export. On 04.01.2010, the appellant sent a cargo of fruits and vegetables from Mumbai to Canada, using British Airways (the respondent) with a stopover in London. Due to adverse weather in London on 06.01.2010, the flight to Canada was delayed, resulting in the spoilage and destruction of the cargo. The appellant claimed ₹1,70,221.56 from the respondent.

On 30.06.2010, the appellant again sent a similar cargo from Mumbai to Canada. This shipment was also destroyed due to packaging and other issues. The appellant submitted another claim of ₹4,27,922/- on 20.07.2010. The respondent acknowledged the claims and on 02.11.2010, offered to settle at 50% of the claimed amount.

Subsequently, the appellant filed a suit (OS No. 5164/2012) in the City Civil Court, Mumbai, on 15.09.2012, seeking ₹9,17,642.56 with 21% interest. The respondent argued that the suit was time-barred.

Timeline:

Course of Proceedings

The Trial Court initially ruled on 05.02.2014 that the suit was not barred by limitation, calculating the limitation period from 28.10.2010, the date the respondent acknowledged a proposed settlement. The Trial Court applied Section 18 of the Limitation Act, assuming its applicability to the Carriage by Air Act, 1972.

The High Court of Bombay, however, reversed this decision, holding that the suit was indeed barred by limitation. The High Court reasoned that the Carriage by Air Act, 1972, being a special statute, overrides the Limitation Act, 1963, which is a general statute.

Legal Framework

The case revolves around the interpretation of the Carriage by Air Act, 1972, which incorporates international air traffic conventions such as the Warsaw Convention, 1929, the Hague Protocol, 1955, and the Montreal Convention, 1999. These conventions are included in the First, Second, and Third Schedules of the Act, respectively.

Rule 30 of the Second Schedule, which incorporates the Hague Protocol, states:

“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.”

The Limitation Act, 1963, is a general law that governs the limitation periods for various legal actions in India. Section 29(2) of the Limitation Act states:

“29. (2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.”

The core issue is whether the two-year limitation period under Rule 30 of the Second Schedule of the Carriage by Air Act, 1972, is subject to the provisions of the Limitation Act, 1963, particularly regarding the exclusion of certain periods for calculating limitation.

Arguments

Appellant’s Arguments:

• The appellant argued that Section 29(2) of the Limitation Act, 1963, applies unless the Limitation Act is expressly excluded by a special law.
• The appellant contended that Rule 30 of the Second Schedule of the Carriage by Air Act, 1972, does not expressly exclude the applicability of the Limitation Act, 1963.
• The appellant submitted that Rule 30(2) explicitly allows the “method of calculating the period of limitation” to be determined by the law of the court, which in India, is the Limitation Act, 1963.
• The appellant argued that the provisions of both statutes are complementary and should be read harmoniously.
• The appellant distinguished the judgments of the Court of Appeal in the United Kingdom in Laroche v. Spirit of Adventure (UK) Ltd. and the judgment of the Second Circuit of the United States Court of Appeals in Fishman v. Delta Airlines 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.

Respondent’s Arguments:

• The respondent contended that the exclusion of the Limitation Act, 1963, can be implied from the provisions of the Carriage by Air Act, 1972.
• The respondent relied on the judgment of the Supreme Court in Hukumdev Narain Yadav v. Lalit Narain Mishra.
• The respondent argued that the Carriage by Air Act, 1972, being a special statute enacted to give effect to international conventions, its provisions should have an overriding effect over the general provisions of the Limitation Act, 1963.
• The respondent submitted that the purpose of the international conventions is to achieve uniformity in application, which would be lost if each signatory state interpreted the provisions differently.
• The respondent argued 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 hand.

Innovativeness of the argument: The respondent’s argument that the exclusion of the Limitation Act can be implied from the provisions of the Air Act, 1972, and the emphasis on the purpose of international conventions to achieve uniformity, is a notable point of argument.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Does the 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 Carriage by Air Act, 1972, particularly Rule 30 of the Second Schedule, expressly excludes the applicability of the Limitation Act, 1963?

Treatment of the Issue by the Court

Authorities

Cases and Books Relied Upon by the Court:

On the distinction between extinguishment of right and barring of remedy:

• The East and West Steamship Company v. S.K. Ramalingam Chettiar, AIR 1960 SC 1058, Supreme Court of India. The Court interpreted the expression “discharged from liability” in the context of the Indian Carriage of Goods by Sea Act, 1925, holding that it meant a total extinction of the liability, not just a bar to the remedy.
• RM. AR. AR. RM. AR. Ramanathan Chkttiar and others v. K.M.CL.M. Somasundaram Chettiar and Ors., (1964) 77 LW 399. The Court held that statutes of limitation that extinguish rights are not merely procedural but create or destroy substantive rights.
• Punjab National Bank and others v. Surendra Prasad Sinha, 1993 Supp (1) SCC 499, Supreme Court of India. The Court clarified that the Limitation Act generally bars the remedy but does not destroy the right, except in cases where the right itself is extinguished, such as under Section 27 of the Limitation Act.
• Khadi Gram Udyog Trust v. Ram Chandraji Virajman Mandir, (1978) 1 SCC 44, Supreme Court of India. The Court held that a time-barred debt remains a debt due, though not recoverable by action.
• State of Kerela and Ors. v. V.R. Kalliyanikutty and Anr., (1999) 3 SCC 657, Supreme Court of India. The Court reiterated that a statute of limitation generally bars the remedy but does not extinguish the right, except in specific cases.
• Prem Singh and Ors. v. Birbal and Ors., (2006) 5 SCC 353, Supreme Court of India. The Court affirmed that limitation is a statute of repose that bars the remedy but does not extinguish the right, except under Section 27 of the Limitation Act.

On the interpretation of international conventions:

• Fothergill v. Monarch Airlines, (1980) 2 All ER 696, House of Lords (UK). The House of Lords held that a purposive construction should be applied when construing statutes giving effect to international conventions, and reference could be made to the opinions of international jurists and travaux preparatoires.
• Morris v. KLM Royal Dutch Airlines, [2001] 3 WLR 351, House of Lords (UK). The House of Lords emphasized the need for a uniform policy and global approach in interpreting international conventions.
• Laroche v. Spirit of Adventure, (2009) EWCA Civ 12, Court of Appeal (UK). The Court examined the history of Article 29 of the Warsaw Convention and held that it provided a substantive time bar, not a procedural one.
• Fishman v. Delta Air Lines Inc, 938 F. Supp. 228 (1996), Second Circuit of the Court of Appeals (USA). The Court held that Article 29(2) did not incorporate the tolling provisions of the forum state.
• Narayanan v. British Airways, 2014 U.S. App. LEXIS 5173: 747 F.3d 1125, Court of Appeals for the Ninth Circuit (USA). The Court affirmed that the Montreal Convention’s limitation period operates as a condition precedent to suit.
• Kahn v. Trans World Airlines Inc, 82 A.D. 2d 696 : (1981) 443 NYS 2d 79, Supreme Court of New York (USA). The Court examined the history of Article 29 of the Warsaw Convention and found that the time limitation was intended to be absolute.
• Bhatia v. Malaysian Airline System Berhad, (2018) FCA 1471, Federal Court of Australia. The Court followed the judgments in Laroche and Kahn, holding that the local limitation law will not apply.

On the interpretation of Section 29 of the Limitation Act:

• Hukumdev Narain Yadav v. Lalit Narain Mishra, (1974) 3 SCR 31, Supreme Court of India. The Court held that even if a special law does not expressly exclude the provisions of the Limitation Act, it would be open to the Court to examine whether the scheme of the special law excludes their operation.
• Shanmugam v. Commissioner for Registration, [1962] 2 All E.R. 609, Privy Council. The Privy Council held that an express provision need not specifically mention the thing covered, as long as it is directly covered by the language.

High Court Decisions:

• M.R.F. Ltd. v. M/s Singapore Airlines Ltd., 2014 SCC Online Mad 247, High Court of Madras.
• M/s Air India Bombay Airport and Another v. M/s Asia Tanning Co. and Anr., 2002 SCC Online Mad 802, High Court of Madras.
• The Shipping Corporation of India Ltd., Bombay and Anr. v. Union of India, 2004 SCC Online Mad 489, High Court of Madras.
• Air India Ltd. v. Tej Shoe Exporters P. Ltd. and Anr., 2013 SCC Online Del 3749, High Court of Delhi.
• Gulf Air Company v. Nahar Spinning Mills Ltd. and Others, 1999 SCC On line P&H 915, High Court of Punjab and Haryana.
• Air India Ltd. v. Tej Shoe Exports P. Ltd., 2013 SCC Online Del 3749, High Court of Delhi.
• Sailesh Textile Industries v. British Airways & Anr., 2003 SCC Online Del 318, High Court of Delhi.
• Indian Airlines v. Angelique International Ltd. & Anr., 2014 SCC Online Del 6825, High Court of Delhi.
• Ethopian Airlines v. Federal Chemical Works Ltd., 2004 SCC Online Del 862, High Court of Delhi.
• National Aviation Company of India Ltd. v. Jatnadevi Tejraj Jain, 2011 SCC On line Guj 7601, High Court of Gujarat.

Legal Provisions Considered by the Court:

• Section 3 of the Limitation Act, 1963: Bars the remedy but does not destroy the right.
• Section 11 of the Limitation Act, 1963: Deals with suits on contracts entered into outside the territories to which the Act extends.
• Section 27 of the Limitation Act, 1963: Extinguishes the right to property at the determination of the prescribed period.
• Section 29(2) of the Limitation Act, 1963: States that the provisions of Sections 4 to 24 apply to special laws unless expressly excluded.
• Section 3 of the Carriage by Air Act, 1972: Application of Convention to India.
• Section 4 of the Carriage by Air Act, 1972: Application of amended Convention to India.
• Section 4A of the Carriage by Air Act, 1972: Application of Montreal Convention to India.
• Rule 30 of the Second Schedule of the Carriage by Air Act, 1972: Specifies the two-year limitation period for actions for damages.
• Article 29 of the Warsaw Convention, 1929: Provides the two-year limitation period for actions for damages.
• Article 31 of the Vienna Convention on the Law of Treaties, 1969: General rule of interpretation of treaties.
• Article 32 of the Vienna Convention on the Law of Treaties, 1969: Supplementary means of interpretation of treaties.

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed the principles laid down in The East and West Steamship Company v. S.K. Ramalingam Chettiar[AIR 1960 SC 1058], RM. AR. AR. RM. AR. Ramanathan Chkttiar and others v. K.M.CL.M. Somasundaram Chettiar and Ors.[(1964) 77 LW 399], Punjab National Bank and others v. Surendra Prasad Sinha[1993 Supp (1) SCC 499], Khadi Gram Udyog Trust v. Ram Chandraji Virajman Mandir[(1978) 1 SCC 44], State of Kerela and Ors. v. V.R. Kalliyanikutty and Anr.[(1999) 3 SCC 657], and Prem Singh and Ors. v. Birbal and Ors.[(2006) 5 SCC 353], to distinguish between the extinguishment of a right and the barring of a remedy.
• The Court relied on the judgments in Fothergill v. Monarch Airlines[(1980) 2 All ER 696], Morris v. KLM Royal Dutch Airlines[[2001] 3 WLR 351], Laroche v. Spirit of Adventure[(2009) EWCA Civ 12], Fishman v. Delta Air Lines Inc[938 F. Supp. 228 (1996)], Narayanan v. British Airways[2014 U.S. App. LEXIS 5173: 747 F.3d 1125], Kahn v. Trans World Airlines Inc[82 A.D. 2d 696 : (1981) 443 NYS 2d 79], and Bhatia v. Malaysian Airline System Berhad[(2018) FCA 1471], to emphasize the need for a uniform interpretation of international conventions and to hold that the two-year period is a substantive time bar, not merely a procedural one.
• The Court also relied on Hukumdev Narain Yadav v. Lalit Narain Mishra[(1974) 3 SCR 31], and Shanmugam v. Commissioner for Registration[[1962] 2 All E.R. 609], to hold that even if a special law does not expressly exclude the provisions of the Limitation Act, it would be open to the Court to examine whether the scheme of the special law excludes their operation.
• The court considered the various High Court judgments cited in the case, to determine the existing position of law and to arrive at a correct interpretation of the law.

Ratio Decidendi

The ratio decidendi of the judgment is that the two-year limitation period under Rule 30 of the Second Schedule of the Carriage by Air Act, 1972, is a substantive time bar that extinguishes the right to damages if a suit is not filed within the prescribed period. This period cannot be extended by the provisions of the Limitation Act, 1963. The Carriage by Air Act, 1972, is a special law that expressly excludes the applicability of the Limitation Act, 1963, in this context.

Obiter Dicta

The Court also made the following observations, which can be considered as obiter dicta:

• The Court emphasized the need for uniformity in the interpretation of international conventions to ensure that the object of the convention is achieved.
• The Court observed that the two-year limitation period is a condition precedent to suit, and the failure to adhere to it extinguishes the right to claim damages.
• The Court noted that the legislative history of the Warsaw Convention and the Hague Protocol indicates that the intention was to exclude any interruption in the two-year period.

Decision

In conclusion, the Supreme Court dismissed the appeal, upholding the High Court’s decision that the suit was barred by limitation. The Court held that the two-year limitation period under Rule 30 of the Second Schedule of the Carriage by Air Act, 1972, is not subject to the provisions of the Limitation Act, 1963.

Flowchart of the Decision-Making Process

Conclusion

The Supreme Court’s judgment in M/S Bhagwandas B. Ramchandani vs. British Airways is a significant ruling that clarifies the interplay between the Carriage by Air Act, 1972, and the Limitation Act, 1963. The Court’s decision establishes that the two-year limitation period under the Carriage by Air Act is a substantive time bar that extinguishes the right to damages if a suit is not filed within the prescribed period. This ruling emphasizes the need for strict adherence to the time limits set out in the Carriage by Air Act, 1972, and the importance of international uniformity in the interpretation of international conventions. This judgment provides a clear precedent for all cases involving air carriage claims in India.