Legal Status of Dematerialized Bills of Lading in India.
(By V.M. Syam Kumar, Advocate, Cochin.)
(Lecturer for Maritime Law, National University for Advanced Legal Studies, Kochi.)
(By V.M. Syam Kumar, Advocate, Cochin.)
(Lecturer for Maritime Law, National University for Advanced Legal Studies, Kochi.)
Bill of lading occupies a unique position among the documents used in international commerce. It is at the same time a receipt issued by the carrier for the goods received for carriage by sea, an evidence of the contract of affreightment and more importantly from the commercial point of view, it is a document of title to the goods, the assignment of which would pass the title from one person to another. These characteristics of the bill of lading complicates the task of dematerializing the same so as to meet the requirements of international shipping and at the same time accommodating it within the rights and duties regime of a legal system.
The rapid increase in trade and commerce had necessitated faster movement of goods across the globe. With around eighty five percent of the international commerce being carried out through ships plying the oceans of the world, the need to revamp the archaic shipping practices which governed the maritime transportation since centuries was direly felt. Innovations in marine sciences and ship technology provided faster and safer ships but that meant only half the job done. Documentation processes, which are an integral part of shipping and international commerce continued to be paper intensive and hence time consuming. The reliance on traditional paper documents, it was felt, can never be completely avoided since it provided the much needed feeling of tangibility and certainty regarding the rights and duties of the respective parties especially when it came to operations like banking, letter of credit transactions and for resolution of legal disputes before a court of law. In India as elsewhere, law has always lagged behind social developments and the courts continued to insist on the same evidentiary requirements as laid down in the Indian Evidence Act, 1872 which is traditionally based upon paper records and oral evidence. The law of evidence in India assumed the existence of paper based records and documents which should bear signature and authentication. Before a court of law it was easier to substantiate a fact, if the same had been written down and authenticated, but to prove the existence or non existence of a right or a duty which had not been clearly charted out in a paper document, remained an uphill task.
As regards dematerializing shipping documents are concerned, efforts made and trials conducted abroad in the said respect have revealed that it reduces paper work, speeds up the communications, improves the overall efficiency and reduces the administration costs. It also eliminates double handling of information and all risk of documentary transcription error.
The developments made in the electronic infrastructure revealed its astounding capacity to simplify the trade process diminishing the complications arising out of voluminous paper work. Digital technology made dramatic changes in the way we transacted business. Safeguards evolved in electronic devices also demonstrated that it was possible to ensure safety and certainty with dematerialized documents also. In 1990 the CMI published its ‘Rules for Electronic Bills of Lading’ which provided an elaborate though complex system for overcoming the problem of proving title to goods by electronic means. The swiftness with which transactions could be completed though electronic medium lead to its universal acceptance compelling the Indian Parliament to take note of the same and enact a law facilitating electronic commerce. Taking cue from the UNCITRAL adopted Model Law on Electronic Commerce, the Information Technology Act, 2000 was enacted in India with the said objective which brought into effect amendments to certain legislations including the Indian Evidence Act. By virtue of the said statute, legal recognition has been granted to electronic records and digital signatures.
By virtue of the provisions of the Information Technology Act, an electronic Bill of lading will be admissible in any legal proceedings without further proof or production of an original in paper format, provided the requirements as laid down under Sec. 65 B of the Indian Evidence Act are complied with. An ‘electronic’, ‘dematerialized’ or ‘system generated’ bill of lading clearly falls within the definition of an electronic record as defined in Sec. 2 (t) of the Information Technology Act. The said section defines an electronic record as data, record or data generated image or sound stored received or sent in an electronic form or micro film or computer generated micro fiche. Under the said Act, ‘electronic form’ with reference to information would mean any information generated, sent received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device. The Act also validates the use of digital signature to authenticate an electronic record subject to the stipulations therein. By virtue of the said provision, legal recognition has been accorded in India to electronic records and digital signatures which enable the conclusion of contracts and the creation of rights and obligations through the electronic medium. In view of Sec. 3 of the Act, a bill of lading retained as an electronic record, will be subject to further stipulations valid evidence when produced for inspection before the court of law.
Since the admissibility of an electronic bill of lading before a Court of Law in India would depend on the due compliance of the norms laid down in Sec. 65 B of the Evidence Act as included therein vide the amended in 2000, it would be worth while to make a closer examination of the said provision.
Sub clause 1 of sec. 65 B mandates that any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer (hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in the said section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
It is interesting to note the words “without further proof or production of the original, as evidence of any contents of the original” in the said sub clause. It is a moot point whether the said words presupposes the existence of an original in the traditional paper format, in which case the section would loose whole lot of its efficacy. Reading the same as a whole in the light of its objectives of its parent legislation viz., the Information Technology Act, 2000 the section is not capable of such a narrow interpretations as to mean that the same envisages only the electronically retained copies of the original paper document and does not envisage documents which exist only on electronic form.
Proceeding further with Section 65 B, Sub Clause 2 we find that safe guards have been laid down to ensure that the electronic records produced before the Court are genuine and not fabricated. And with the said objective it proceeds to enumerate the ‘conditions’ which are to be satisfied with respect to the ‘infomration’ and ‘computer’ as stated in Sub Clause 1. The conditions are that:
(a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;
(c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and
(d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.
Though the said conditions to be satisfied appear to be effective and comprehensive, from the practical point of view question remains as to how the genuineness of or compliance with the said conditions could be ensured and cross checked. Since the information and the computer would in the normal course be in the exclusive control and custody of the party producing the same and the conditions relate to matters earlier in point of time to the production of the electronic document, in the absence of any independent agency which could vouch safe for the genuineness of the conditions, the compliance thereof will have to be taken for granted.
So as to care of the situation where the information is generated or retained and is accessible through a combination or net work of computers, as is usually practiced in shipping companies, sub clause 3 of Sec. 65 B provides that all the computers used for that purpose during that period shall be treated for the purposes of the section as constituting a single computer, and references in the section to a computer shall be construed accordingly.
Another important provision form the procedural point of view is sub-clause 4 which mandates that in any proceedings where an electronic document is proposed to be produced as an evidence by invoking Sec. 65B a certificate purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate), identifying the electronic record containing the statement and describing the manner in which it was produced or giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer or dealing with any of the matters to which the conditions mentioned in sub-section(2) relate shall be produced. Such a certificate shall be evidence of any matter stated therein.
The party challenging the veracity of the electronic document produced would at this stage get an opportunity (apparently the only opportunity) to test the veracity of the claim for satisfactory compliance of the conditions mentioned above, by cross examining the person who issued the certificate while he appears in the witness box to depose in respect of the certificate issued by him.
Sub clause 5 is intended to bring within the ambit of the section various methods or manners by which information is supplied to a computer and the information could be retrieved there from. Thus a bill of lading being an evidence of contract of affreightment stating the terms and conditions subject to which the carriage of goods by sea is to be performed will be admitted in evidence in its electronic form in India subject to the satisfactory compliance of the mandates of sec. 65 B as stated herein above.
Unlike the other shipping documents, Bill of lading in its dematerialized form throws up certain issues. Shipping documents like way bills which are non negotiable can easily be dematerialized since it only requires the information to be sent through the computerized system. In its simplest form, a way bill empowers the carrier to deliver the cargo to the person named therein, after obtaining proof of address. Hence the dematerialization does not materially affect the rights and duties ensuing from a way bill. But it is not the same with a bill of lading especially if it is a negotiable one.
Towards better under standing the legal status of a bill of lading in India and the
The rapid increase in trade and commerce had necessitated faster movement of goods across the globe. With around eighty five percent of the international commerce being carried out through ships plying the oceans of the world, the need to revamp the archaic shipping practices which governed the maritime transportation since centuries was direly felt. Innovations in marine sciences and ship technology provided faster and safer ships but that meant only half the job done. Documentation processes, which are an integral part of shipping and international commerce continued to be paper intensive and hence time consuming. The reliance on traditional paper documents, it was felt, can never be completely avoided since it provided the much needed feeling of tangibility and certainty regarding the rights and duties of the respective parties especially when it came to operations like banking, letter of credit transactions and for resolution of legal disputes before a court of law. In India as elsewhere, law has always lagged behind social developments and the courts continued to insist on the same evidentiary requirements as laid down in the Indian Evidence Act, 1872 which is traditionally based upon paper records and oral evidence. The law of evidence in India assumed the existence of paper based records and documents which should bear signature and authentication. Before a court of law it was easier to substantiate a fact, if the same had been written down and authenticated, but to prove the existence or non existence of a right or a duty which had not been clearly charted out in a paper document, remained an uphill task.
As regards dematerializing shipping documents are concerned, efforts made and trials conducted abroad in the said respect have revealed that it reduces paper work, speeds up the communications, improves the overall efficiency and reduces the administration costs. It also eliminates double handling of information and all risk of documentary transcription error.
The developments made in the electronic infrastructure revealed its astounding capacity to simplify the trade process diminishing the complications arising out of voluminous paper work. Digital technology made dramatic changes in the way we transacted business. Safeguards evolved in electronic devices also demonstrated that it was possible to ensure safety and certainty with dematerialized documents also. In 1990 the CMI published its ‘Rules for Electronic Bills of Lading’ which provided an elaborate though complex system for overcoming the problem of proving title to goods by electronic means. The swiftness with which transactions could be completed though electronic medium lead to its universal acceptance compelling the Indian Parliament to take note of the same and enact a law facilitating electronic commerce. Taking cue from the UNCITRAL adopted Model Law on Electronic Commerce, the Information Technology Act, 2000 was enacted in India with the said objective which brought into effect amendments to certain legislations including the Indian Evidence Act. By virtue of the said statute, legal recognition has been granted to electronic records and digital signatures.
By virtue of the provisions of the Information Technology Act, an electronic Bill of lading will be admissible in any legal proceedings without further proof or production of an original in paper format, provided the requirements as laid down under Sec. 65 B of the Indian Evidence Act are complied with. An ‘electronic’, ‘dematerialized’ or ‘system generated’ bill of lading clearly falls within the definition of an electronic record as defined in Sec. 2 (t) of the Information Technology Act. The said section defines an electronic record as data, record or data generated image or sound stored received or sent in an electronic form or micro film or computer generated micro fiche. Under the said Act, ‘electronic form’ with reference to information would mean any information generated, sent received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device. The Act also validates the use of digital signature to authenticate an electronic record subject to the stipulations therein. By virtue of the said provision, legal recognition has been accorded in India to electronic records and digital signatures which enable the conclusion of contracts and the creation of rights and obligations through the electronic medium. In view of Sec. 3 of the Act, a bill of lading retained as an electronic record, will be subject to further stipulations valid evidence when produced for inspection before the court of law.
Since the admissibility of an electronic bill of lading before a Court of Law in India would depend on the due compliance of the norms laid down in Sec. 65 B of the Evidence Act as included therein vide the amended in 2000, it would be worth while to make a closer examination of the said provision.
Sub clause 1 of sec. 65 B mandates that any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer (hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in the said section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
It is interesting to note the words “without further proof or production of the original, as evidence of any contents of the original” in the said sub clause. It is a moot point whether the said words presupposes the existence of an original in the traditional paper format, in which case the section would loose whole lot of its efficacy. Reading the same as a whole in the light of its objectives of its parent legislation viz., the Information Technology Act, 2000 the section is not capable of such a narrow interpretations as to mean that the same envisages only the electronically retained copies of the original paper document and does not envisage documents which exist only on electronic form.
Proceeding further with Section 65 B, Sub Clause 2 we find that safe guards have been laid down to ensure that the electronic records produced before the Court are genuine and not fabricated. And with the said objective it proceeds to enumerate the ‘conditions’ which are to be satisfied with respect to the ‘infomration’ and ‘computer’ as stated in Sub Clause 1. The conditions are that:
(a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;
(c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and
(d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.
Though the said conditions to be satisfied appear to be effective and comprehensive, from the practical point of view question remains as to how the genuineness of or compliance with the said conditions could be ensured and cross checked. Since the information and the computer would in the normal course be in the exclusive control and custody of the party producing the same and the conditions relate to matters earlier in point of time to the production of the electronic document, in the absence of any independent agency which could vouch safe for the genuineness of the conditions, the compliance thereof will have to be taken for granted.
So as to care of the situation where the information is generated or retained and is accessible through a combination or net work of computers, as is usually practiced in shipping companies, sub clause 3 of Sec. 65 B provides that all the computers used for that purpose during that period shall be treated for the purposes of the section as constituting a single computer, and references in the section to a computer shall be construed accordingly.
Another important provision form the procedural point of view is sub-clause 4 which mandates that in any proceedings where an electronic document is proposed to be produced as an evidence by invoking Sec. 65B a certificate purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate), identifying the electronic record containing the statement and describing the manner in which it was produced or giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer or dealing with any of the matters to which the conditions mentioned in sub-section(2) relate shall be produced. Such a certificate shall be evidence of any matter stated therein.
The party challenging the veracity of the electronic document produced would at this stage get an opportunity (apparently the only opportunity) to test the veracity of the claim for satisfactory compliance of the conditions mentioned above, by cross examining the person who issued the certificate while he appears in the witness box to depose in respect of the certificate issued by him.
Sub clause 5 is intended to bring within the ambit of the section various methods or manners by which information is supplied to a computer and the information could be retrieved there from. Thus a bill of lading being an evidence of contract of affreightment stating the terms and conditions subject to which the carriage of goods by sea is to be performed will be admitted in evidence in its electronic form in India subject to the satisfactory compliance of the mandates of sec. 65 B as stated herein above.
Unlike the other shipping documents, Bill of lading in its dematerialized form throws up certain issues. Shipping documents like way bills which are non negotiable can easily be dematerialized since it only requires the information to be sent through the computerized system. In its simplest form, a way bill empowers the carrier to deliver the cargo to the person named therein, after obtaining proof of address. Hence the dematerialization does not materially affect the rights and duties ensuing from a way bill. But it is not the same with a bill of lading especially if it is a negotiable one.
Towards better under standing the legal status of a bill of lading in India and the
effects of its dematerialization, it would be necessary to examine the principal statutes governing the issuance and validity of bills of lading viz., the Carriage of Goods by sea Act, 1925, the Bills of Lading Act, 1855 and the Multimodal Transportation of Goods Act, 1993. Since Bills of Lading comes within the purview the Sale of Goods Act and the Indian Stamp Act, 1899 whether the provisions in the said statutes as they stand now can accommodate dematerialization will also have to be considered.
The Carriage of Goods by Sea Act (COGSA) incorporates in its Schedule, the Rules relating to Bills of Lading which are in pari materia with The Hague Rules evolved at the Brussels Convention. Certain Amendments had been carried out to the COGSA by the Multimodal Transportation of Goods Act, which speaks of another document possessing different but comparable attributes of a bill of lading namely, the Multimodal Transport Document commonly known as the Combined Transport Bill of Lading. The provisions in COGSA has been drafted keeping in mind the Bill of lading to be a tangible paper document and dematerialization had not been in the mind of the legislature at that earlier point of time. A reading of Rule 7 of Article III of the COGSA dealing with shipped bill of lading clearly reveals the same. It has been opined from some quarters that a demand by the shipper for a shipped bill of lading as envisaged in the said provision might create difficulties when it comes to dematerialization. But the difficulties if any regarding existence and content of such a document has been taken care of substantially by the enactment of the Information Technology Act. Moreover, the fear that the courts of law in common law countries as ours would not regard an electronic bill of lading as a document of title also stands alleviated by the coming into force of the said statute.
The Bills of Lading Act, 1855 is the enactment that directly concerns the negotiability, the attribute most profoundly affected by dematerialization of the bill of lading. As regards its character as receipt of the cargo and as a contract of affreightment, the dematerialization of the Bill of lading does not create as many problems as it does generate with its nature as a negotiable document. Negotiability being integral to a bill of lading, it cannot be removed or replaced without seriously affecting the international commerce because goods are sold and resold many times during the voyage. A bill of lading being a document of title to goods, it is highly necessary that any electronic replacement should also offer the advantages of a document of title. Doubts have been raised as to whether the vesting of rights under the bill of lading in the consignee or endorsee as provided in sec.1 of the Bills of Lading Act, 1855 would have effect in the absence of physical endorsement and transfer. Though due to the lack of judicial decisions on the point it is by no means fully certain that the Indian law would have recognized the electronic bill of lading as a document of title, there is nothing in the wordings of the said provision that necessitates actual physical endorsement. But the decisions on the point by the courts especially the decision of the Hon’ble High Court of Kerala in New India Assurance Co. Ltd. V. San Jose Maritime Ltd. pertaining to ‘indorsement in blank’, gives a contrary impression due to the emphasis given therein for the printed form of bill of lading and the clauses type written and incorporated by rubber stamp thereupon.
The Indian Stamp Act, 1899 in Schedule I stipulate the stamp duty to be paid with respect to a Bill of lading. A practical issue could arise as to how stamp duty could be levied in the case of an electronic document and the though Sec.6 of the Information Technology Act speaks about payment of fee or charges, the modalities of actual payment remains unclear.
Law has approved the commercially expedient practice of preparing and issuing bills of lading in a set of two or more though there are no specific statutory provisions in India mandating the same. To prevent negotiation of more than one bill of the set, one of them is usually marked “original” and sent to the consignee and the others are marked “duplicate” or “non-negotiable”. It is usual for bill of lading to contain a stipulation that “one of these bills of lading being accomplished the other shall stand void”. The said practice will have to be altered while using electronic bills of lading. As it is common in maritime practice to transfer the contractual rights and liabilities arising out of a contract of affreightment evidenced by the bill of lading, any electronic replacement for the bill of lading will have to provide its own means for the transfer of contractual rights and liabilities along with the documentation itself. Here too exists, as in the case of negotiability and title transfer, a gaping legal lacuna. At the port of discharge the carrier is bound to deliver the cargo to the person producing the original bill of lading who is presumed to be the bonafide purchaser. The cargo might have been sold and resold during the voyage. If the carrier refused to deliver to the eventual holder, he would certainly be in breach of contract. If he delivers to the wrong party also he will be accused of breach. The legal standard of care expected out of a prudent carrier will have to be stated afresh when electronic bills of lading are used. Any systems that are devised will also need to provide security equivalent to the document of title to goods.
The Multimodal Transportation of Goods Act, 1993 under Sec.9 lays down the mandatory contents of a Multimodal Transport Document (MTD or combined transport bill of lading). As per the same, such a bill of lading has to be signed by the multimodal transport operator or by a person duly authorized by him. Whether the document is negotiable or not has to be specifically stated on its face. The Act, after its amendment in 2000, provides under Sec.2 (la) that "multimodal transport document" means a negotiable or non-negotiable document evidencing a multimodal transport contract and which can be replaced by electronic data interchange messages permitted by applicable law.
The Carriage of Goods by Sea Act (COGSA) incorporates in its Schedule, the Rules relating to Bills of Lading which are in pari materia with The Hague Rules evolved at the Brussels Convention. Certain Amendments had been carried out to the COGSA by the Multimodal Transportation of Goods Act, which speaks of another document possessing different but comparable attributes of a bill of lading namely, the Multimodal Transport Document commonly known as the Combined Transport Bill of Lading. The provisions in COGSA has been drafted keeping in mind the Bill of lading to be a tangible paper document and dematerialization had not been in the mind of the legislature at that earlier point of time. A reading of Rule 7 of Article III of the COGSA dealing with shipped bill of lading clearly reveals the same. It has been opined from some quarters that a demand by the shipper for a shipped bill of lading as envisaged in the said provision might create difficulties when it comes to dematerialization. But the difficulties if any regarding existence and content of such a document has been taken care of substantially by the enactment of the Information Technology Act. Moreover, the fear that the courts of law in common law countries as ours would not regard an electronic bill of lading as a document of title also stands alleviated by the coming into force of the said statute.
The Bills of Lading Act, 1855 is the enactment that directly concerns the negotiability, the attribute most profoundly affected by dematerialization of the bill of lading. As regards its character as receipt of the cargo and as a contract of affreightment, the dematerialization of the Bill of lading does not create as many problems as it does generate with its nature as a negotiable document. Negotiability being integral to a bill of lading, it cannot be removed or replaced without seriously affecting the international commerce because goods are sold and resold many times during the voyage. A bill of lading being a document of title to goods, it is highly necessary that any electronic replacement should also offer the advantages of a document of title. Doubts have been raised as to whether the vesting of rights under the bill of lading in the consignee or endorsee as provided in sec.1 of the Bills of Lading Act, 1855 would have effect in the absence of physical endorsement and transfer. Though due to the lack of judicial decisions on the point it is by no means fully certain that the Indian law would have recognized the electronic bill of lading as a document of title, there is nothing in the wordings of the said provision that necessitates actual physical endorsement. But the decisions on the point by the courts especially the decision of the Hon’ble High Court of Kerala in New India Assurance Co. Ltd. V. San Jose Maritime Ltd. pertaining to ‘indorsement in blank’, gives a contrary impression due to the emphasis given therein for the printed form of bill of lading and the clauses type written and incorporated by rubber stamp thereupon.
The Indian Stamp Act, 1899 in Schedule I stipulate the stamp duty to be paid with respect to a Bill of lading. A practical issue could arise as to how stamp duty could be levied in the case of an electronic document and the though Sec.6 of the Information Technology Act speaks about payment of fee or charges, the modalities of actual payment remains unclear.
Law has approved the commercially expedient practice of preparing and issuing bills of lading in a set of two or more though there are no specific statutory provisions in India mandating the same. To prevent negotiation of more than one bill of the set, one of them is usually marked “original” and sent to the consignee and the others are marked “duplicate” or “non-negotiable”. It is usual for bill of lading to contain a stipulation that “one of these bills of lading being accomplished the other shall stand void”. The said practice will have to be altered while using electronic bills of lading. As it is common in maritime practice to transfer the contractual rights and liabilities arising out of a contract of affreightment evidenced by the bill of lading, any electronic replacement for the bill of lading will have to provide its own means for the transfer of contractual rights and liabilities along with the documentation itself. Here too exists, as in the case of negotiability and title transfer, a gaping legal lacuna. At the port of discharge the carrier is bound to deliver the cargo to the person producing the original bill of lading who is presumed to be the bonafide purchaser. The cargo might have been sold and resold during the voyage. If the carrier refused to deliver to the eventual holder, he would certainly be in breach of contract. If he delivers to the wrong party also he will be accused of breach. The legal standard of care expected out of a prudent carrier will have to be stated afresh when electronic bills of lading are used. Any systems that are devised will also need to provide security equivalent to the document of title to goods.
The Multimodal Transportation of Goods Act, 1993 under Sec.9 lays down the mandatory contents of a Multimodal Transport Document (MTD or combined transport bill of lading). As per the same, such a bill of lading has to be signed by the multimodal transport operator or by a person duly authorized by him. Whether the document is negotiable or not has to be specifically stated on its face. The Act, after its amendment in 2000, provides under Sec.2 (la) that "multimodal transport document" means a negotiable or non-negotiable document evidencing a multimodal transport contract and which can be replaced by electronic data interchange messages permitted by applicable law.
Thus at present none of the above said statutes which govern the issuance, validity and legal status of bills of lading in India envisages the situations arising out of dematerialization of the same. The amendment carried out in the Multimodal Transportation of Goods Act, 1993 has permitted the replacement of written document by an elctronic data interchange. But similar provisions are not seen in the other enacments pertaining to carriage by sea discussed above. The enactment of the Information Technology Act grants legal recognition to electronic documents and lays down broad contours for ensuring the genuineness and legal acceptability of electronic documents. The presence and content of an electronic document thus stands legally recognized and a bill of lading in electronic form which satisfactorily meets the stipulations in the statute regarding digital signatures, provisions for admissibility of electronic records etc. would be a valid piece of evidence before a court of law in India. But that will only mean regarding its existence and content. There exists an uncertainty in law as to whether certain peculiar facets of the bill of lading like its negotiability and capacity to pass on title to the holder is due course, would receive the same legal recognition in the courts of law as it presently commands, when it is dematerialized. There exists an urgent need to clear out the said uncertainties by incorporating specific provisions regarding electronic bills of lading in the legislations affecting carriage of goods by sea in India.
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