The Supreme Court has held that airlines will be liable to compensate consumers for delayed delivery of goods and cannot escape responsibility where their agents have promised consumers to deliver goods by a certain time period.

The judgment of the Court was passed last week while deciding a consumer dispute from 1996 raised by the Rajasthan Art Emporium which had to face loss of reputation and business after its client in the United States did not receive 104 boxes of Indian handicrafts sent through Kuwait Airways. Although the agent, Daga Air Agents, who made the booking for urgent delivery had promised to get the job done in seven days, the consignment reached its destination at Memphis, US after one-and-a-half months.

A bench of justices AS Bopanna and Prashant Kumar Mishra said, “Once the agent has issued a time schedule for delivery of consignment, it cannot be said that there is no material indicating that there was no agreement for delivery of the consignment in time.”

The airlines had approached the top court against an order of the National Consumer Disputes Redressal Commission (NCDRC), which held Kuwait Airways guilty of negligence and directed it to deposit a compensation of ₹20 lakh as demanded by the consumer in his complaint.

Kuwait Airways claimed that no specific instructions were issued for timely delivery of goods and thus time was not the essence in the contract with the complainant. On the other hand, the art emporium argued that the handling agent while booking the consignment on July 24, 1996 had agreed for delivery by July 31, 1996.

The judgment written by justice Mishra said that so long as the airlines cannot prove that the handling agency in question was not its agent and that the agency had no authority to give the time schedule for delivery, it shall be bound to honour the commitment given by the agent.

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It said, “The airline (respondent 1) is bound by the promise held by its agent (respondent 2) that the goods shall be delivered within one week and when the time schedule expired and the goods were, in fact, delivered after one and a half month, there was negligent delay in delivery of consignment.”

The bench further added, “We are satisfied that the NCDRC has not committed any illegality or perversity in recording the finding that there was delay in delivery of consignment.” The airline had admitted that the consignment was delivered after one and a half months (from September 3 to 12, 1996).

Before the NCDRC, even the agent admitted that at the time of booking, the complainant was informed about the tentative date of arrival of goods at Memphis by July 31. The Court agreed with the finding of the Commission that the art emporium had paid air freight, which is 10 times more than the sea freight, only to ensure that the consignment reaches its destination within a week as sea cargo would have taken 25 to 30 days for delivery.

The Court also observed from the documents presented by the emporium that the buyer in Memphis was its largest customer and the delay in delivery of consignment “necessarily inflicted damage to the emporium” requiring the airline to pay the compensation under the relevant provisions of the Carriage by Air Act 1972.

The figure of ₹20 lakh was arrived under Rule 22 of the 1972 Act by multiplying the weight of the delayed consignment by US $ 20 per kg. This amount was directed to be paid by the NCDRC along with 9% interest from the date of the NCDRC order.

The emporium claimed that the NCDRC failed to award the full compensation as per this rule. In its appeal before the top court, it said that the total weight of the consignment was 2507.5 kg and on multiplying it with US $ 20, the amount US $ 50,070 would exceed the sum of ₹20 lakh. Though the Court agreed that the sum would be higher, the emporium was found to be at fault as in its complaint before NCDRC, it had only sought ₹20 lakh as compensation for loss of business and reputation.