- 1 - - 1 - - 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.1127 OF 2005 FIRST APPEAL NO.1127 OF 2005 FIRST APPEAL NO.1127 OF 2005 Reliance Industries Limited, a company incorporated under the Companies Act, 1956, having its registered office at Maker Chambers IV, Nariman Point, Post Box 11717, Bombay-400 021. ..... ... Appellants. (Orig. Plaintiffs ) Versus 1. P & O Containers Limited, a body corporate having its office at 12000 Ford Road, suit 235, Dallas, TX 75234, U. S. A 2. P & O ( India Agencies) Private Ltd., a company incorporated under the provisions of the Companies Act, 1956 having its Registered Office at Hamilton House, J. N. Heredia Marg, Ballard Estate, Bombay -400 038. .. Respondents (Orig. Defendants ) ------- Shri. Milind Sathe with Shri. Paritosh Jaiswal, i/b M/s Puranand and Co., for the Appellants- Original Plaintiffs. Shri. V. R. Rambhadran, Advocate, for Respondents Nos. 1 and 2. ----------- CORAM: S.B.MHASE & CORAM: S.B.MHASE & CORAM: S.B.MHASE & S.R.SATHE,JJ. S.R.SATHE,JJ. S.R.SATHE,JJ. DATE : DATE : DATE : 12th August 2005 12th August 2005 12th August 2005. - 2 - - 2 - - 2 - ORAL JUDGMENT (PER S.B.MHASE,J): ORAL JUDGMENT (PER S.B.MHASE,J): ORAL JUDGMENT (PER S.B.MHASE,J): 1. This appeal is directed against the order passed by Civil Judge, Senior Division, Panvel on 21/3/1998 below Exhibit-16 in Special Civil Suit No.61/95, rejecting the Plaint under Order-VII, Rule 11 of the Code of Civil Procedure, 1908 since the claim made by the appellants-plaintiffs for the recovery of Rs.15,67,230.72/- with future interest at the rate of 24 per cent per annum from the respondents was/is time- barred. 2. Special Civil Suit No.61/95 has been filed by the appellants on 20/06/1995 before the Civil Judge, Senior Division, Panvel for the recovery of an amount of Rs.15,67,230.72 ps. and further interest at the rate of 24 per cent per annum on Rs. 3,89,760/- from the date of the filing of the suit till realisation. The appellants carry on business as manufacturers of Purified Therpthlic Acid (P.T.A.). One of the essential ingredients required by the appellants for the manufacture of P.T.A. is Hydrobromic Acid. In August 1993, the appellants had placed an order for the purchase of a total quantity of 32.48 metric tons of Hydrobromic Acid with one M/s First - 3 - - 3 - - 3 - Intercontinental Corporation, Irving, Texas 7506,U.S.A. for a total price of US$ 24360. In view of the said order, the said M/s. First Intercontinental Corporation shipped two container-load of Hydrobromic Acid containing 112 drums amounting to total 32.48 metric tons of Hydrobromic Acid through respondent no.1 and/or ship line of respondent No.1 and/or the vessel of respondent no.1. According to the appellants, the aforesaid two containers were shipped and carried on respondent No.1’s vessel "S.S.Orient Triump". Respondent No.1 issued Bill of Lading dated 16th July 1993 and accordingly respondent assured the responsibility and liability of the said delivery of the aforesaid two containers to the appellants. The appellants have paid a sum of US $ 24360 to M/s. First International Corporation, being the purchase price of the said Hydrobromic Acid. According to the appellants, it was the responsibility and duty of the respondents to prepare Import General Manifest (IGM ) correctly and to ensure that all the relevant details pertaining to the cargo and the containers were properly stated in their IGM. According to the appellants, the said vessel S.S.Orient Trump carrying the said two containers containing Hydrobromic Acid arrived at Nhava-Sheva Port on 24/08/1993. However, as the IGM prepared by the Respondents did not correctly state the - 4 - - 4 - - 4 - details pertaining to the containers, the said containers were attached by the Customs Department since there was a manifest violation of the provisions of the Customs Act. It is alleged that the IGM did not disclose two containers, but it only disclosed one container and therefore, the containers were seized . The Appellants have stated that the appellants learnt about the fact of the containers being seized by the Customs Authorities, and therefore, on 14th September 1993 and 9th October 1993, the appellants requested the respondents to take immediate steps in clearance of the said two containers from the custody of the Customs Authorities and informed the Respondents that the delay in clearance would result in production loss to the appellants for which the Respondents would be held responsible and liable. The Appellants further have stated that with considerable efforts on the part of the appellants and the clearing agents, one container of Hydrobromic Acid was released by the Customs Authorities on 31/12/1993. However, the Customs Authorities did not release the second container of Hydrobromic Acid. The Customs Authorities initiated proceeding for the confiscation of the other Container. The appellants desired prompt clearance of the second container. Therefore, by a letter dated 12th January 1994 and by various telexes dated 28.2.1994, 01/03/1994 - 5 - - 5 - - 5 - and 11/03/1994 and by another letter dated 12/3/1994, the appellants repeatedly requested the Respondents to release the container. It is alleged by the appellants that by the fax message dated 23.3.1994, Respondent No.1 admitted the negligence on their part in not manifesting one of the containers in the IGM. On the date of the suit, the second container is still in the custody of the Customs Authorities, and therefore, the suit for recovery of the price of Hydrobromic Acid from the second container amounting to Rs.3,89,760/-. Further amount of Rs.15,67,320/-, being the aggregate of the purchase price of the said Hydrobromic Acid, the production loss suffered and the interest thereon as per the particulars of claim annexed at Exhibit ‘M’ to the plaint. 3. According to the Appellants, Respondent No.1 carries on business as ship charterers, carriers, freight -forwarders and container operators. Respondent no. 2 is an agent in Bombay office of respondent No. 1, and both the respondents are liable to see that the consignment is delivered properly. Thus both are liable. 4. Upon service of the summons, the respondents have submitted the application at Exhibit 16 raising a preliminary objection under Order VII, Rule 11 of the - 6 - - 6 - - 6 - Code of Civil Procedure to the effect that the suit is barred by law, that is to say, by the Law of Limitation. The Respondents relied upon the facts as pleaded by the appellants and stated that the claim of the appellants is based against the respondents on the Bill of Lading issued by Respondent no.1 and thereby the privity of contract between the Appellants and the Respondents is through the Bill of Lading, which is subject to the various terms and conditions printed on the face of Bill of Lading and also on the reverse thereof. The said Bill of Lading is subject to the provisions of the Hague Rules. The Respondents raised the contention that Article III, Rule 6 Article III, Rule 6 Article III, Rule 6 of the Hague Rules provides : "In any event the carrier and the ship "In any event the carrier and the ship "In any event the carrier and the ship shall be discharged from all liability in shall be discharged from all liability in shall be discharged from all liability in respect of loss or damage unless suit is respect of loss or damage unless suit is respect of loss or damage unless suit is brought within one year after delivery of brought within one year after delivery of brought within one year after delivery of goods or of the date when they should have goods or of the date when they should have goods or of the date when they should have been delivered.’’ been delivered.’’ been delivered.’’ The respondents claimed that the vessel having been admittedly arrived at Port Nhava-Sheva on or about 24.8.1993, and goods having been despatched on or about the same date, the suit ought to have been filed on or - 7 - - 7 - - 7 - before 24.8.1994; and the suit which has been filed on 20/6/1995 is beyond the period of one year, and therefore, barred by Law and the same be dismissed. 5. The Civil Judge, Senior Division, Panvel, after hearing both sides and considering Article III, Rule 6 of Article III, Rule 6 of Article III, Rule 6 of the Hague Rules and the provisions of the Indian Carriage the Hague Rules and the provisions of the Indian Carriage the Hague Rules and the provisions of the Indian Carriage of Goods by Sea Act, 1925 and equally AIR 1990 Bombay of Goods by Sea Act, 1925 and equally AIR 1990 Bombay of Goods by Sea Act, 1925 and equally AIR 1990 Bombay High Court in the matter of K.S. Abdul Sattar & Anr. High Court in the matter of K.S. Abdul Sattar & Anr. High Court in the matter of K.S. Abdul Sattar & Anr. Vs. Issak Adam and Anr, Vs. Issak Adam and Anr, Vs. Issak Adam and Anr, came to the conclusion that since the goods were not delivered on the due date, that is to say, when the vessel came to Nhava-Sheva Port on 24.8.1993, and since the Suit was not instituted within a period of 12 months from the said date, the respondents stand discharged from the liability in respect of the loss or damage. The trial Court relied on AIR 1972 AIR 1972 AIR 1972 S.C.1405 in the matter of American Export Isbrandtsen S.C.1405 in the matter of American Export Isbrandtsen S.C.1405 in the matter of American Export Isbrandtsen Lines Inc. and another Vs. Joe Lopez & another Lines Inc. and another Vs. Joe Lopez & another Lines Inc. and another Vs. Joe Lopez & another and ultimately rejected the suit under Order VII, Rule 11 of the Code of Civil Procedure allowing the application at Exhibit 16. 6. Learned Counsel for the appellants raised the first contention that the lower Court committed an error in relying upon the provisions of the Indian Carriage of - 8 - - 8 - - 8 - Goods by Sea Act, 1925, and Article III, Rule 6 reflecting the Rules provided in the Schedule of the said Act. Learned Counsel submitted that the said Act is not applicable for import. Even though the said Act has been passed to incorporate the Rules of International Conference on Maritime Law held at Brussels in 1922, known as "Hague Rules", yet it does not apply to the import of goods. It applies in connection with the carriage of goods by sea in ship carrying goods from any Port in India to other Port whether in or outside India. Thus, he submitted that error has been committed by the lower Court in applying the Hague Rules, which have been given the statutory effect by the Indian Carriage of Goods by Sea Act,1925. Learned Counsel submitted that the suit of the appellants is governed by Article 11 of the Indian Limitation Act, and the period of limitation is 3 years as provided in Article 11 and submitted that the suit filed by the appellants is within limitation. 7. The submission of learned Counsel for the appellants to the effect that the provisions of the Indian Carriage of Goods by Sea Act , 1925 are not applicable to the import of goods, though opposed by the respondents, is found to be valid in view of 1990(48) 1990(48) 1990(48) E.L.T. page 481 (S.C.) in the matter of British India E.L.T. page 481 (S.C.) in the matter of British India E.L.T. page 481 (S.C.) in the matter of British India - 9 - - 9 - - 9 - Steam Navigation Company Limited Versus Shanmughavilas Steam Navigation Company Limited Versus Shanmughavilas Steam Navigation Company Limited Versus Shanmughavilas Cashew Industries. Cashew Industries. Cashew Industries. It is observed in para 47 as under; "None of the parties having repudiated the bills of lading in this case, the High Court ought not to have accepted the submission of the first respondent that clause 4 of the bills of lading offended the provisions of the Carriage of Goods by Sea Act, 1924 and therefore, bad. The Carriage of Goods by Sea Act of 1924 of England was on the Hague Rules which were amended by Brussels Protocol 1968 which is now embodied in the Carriage of Goods by Sea Act 1971 which came into force in 1977. The Indian Carriage of Goods by Sea Act, 1925 (Act XXVI of 1925) which is an Act to amend the law with respect to the carriage of goods by sea was passed after the International Conference on Maritime Law held at Brussels in October 1922 and Brussels meeting in October 1923. Under Section 2 of that Act which deals with application of rules it is provided:‘‘Subject to the provisions of this Act,the rules set out in the Schedule (hereinafter referred to as ‘‘the Rules’’) shall have the effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in India to any other port whether in or outside India.’’ To apply the Rules to a case, the port of origin has to be an Indian Port. Unless the starting point or the port of loading is a port in India the Rules - 10 - - 10 - - 10 - are inapplicable. These Rules have no application when goods are not carried from any Indian Port. As in the instant case goods were shipped in Africa and carried to Cochin, this Act obviously was not applicable." . Thus, we accept the submission of learned Counsel for the appellants that the lower Court committed an error in applying the provisions of the Indian Carriage of Goods by Sea Act, 1925. 8. However, learned Counsel for the Respondents submitted that admittedly the contract between the Appellants and the Respondents is governed by the Bill of Lading, and the Bill of Lading incorporates the Hague Rules as a part of the contract. He submitted that the unamended Hague Rules are applicable. He relied upon the definition of "Hague Rules" from Term No. 1 of the terms and conditions of the Bill of Lading and, further relying upon the Term No. 5 of the Bill of Lading, submitted that the Hague Rules as amended in 1968 and 1979 are not applicable to the present contract, but the Hague Rules as were accepted in 1924 are applicable. Relying upon this, he submitted that Rule No. 6 of Article III of the Hague Rules will apply, and since the suit has not been brought within one year after the delivery of the goods or the date when the goods should have been delivered, - 11 - - 11 - - 11 - the respondents - carriers and shippers stand discharged from all liabilities in respect of the loss or damage. 9. Learned Counsel appearing for the Appellants submitted that the relationship of the Appellants and the Respondents is governed by the Bill of Lading, and thus, he accepted that the contractual relationship arising between the Appellants and the Respondents is on the basis of the Bill of Lading. He submitted that the Hague Rules, which were framed in 1924, have been amended by the Protocol signed at Brussels on 24.2.1968 and by the Protocol signed at Brussels on 21.12.1979 and thus he invited our attention to the amendment carried out in paragraph ( 3) of Rule No. 6 of Article III of the Hague Rules wherein the following words were added. "Period may be extended if party so agrees "Period may be extended if party so agrees "Period may be extended if party so agrees after the cause of action." after the cause of action." after the cause of action." Relying upon this part of the amended Rules, learned Counsel for the Appellants submitted that by the implied agreement between the parties, the period is extended and the suit filed by the plaintiffs-Appellants is within limitation. Alternatively, learned Counsel for the Appellants submitted that the unamended Hague Rules as provided in Rule 6 of Article III of the 1924 Hague Rules is void and inapplicable in India in view of the - 12 - - 12 - - 12 - provisions of section 28 of the Indian Contract Act. In view of the rival submissions made by learned Counsel for both sides, the following questions arise for our consideration. i) How the transaction and the relationship of the Appellants and the Respondents is to be regulated, ii) Whether the Hague Rules as amended by the Protocol signed at Brussels on 23.2.1968 and the Protocol signed at Brussels on 21.12.1979 are compulsorily applicable in India. iii) Whether the unamended Hague Rule No.6 of Article 3 is void and inapplicable in view of the provisions of section 28 of the Indian Contract Act. 10. The answer to point No. 1 can be recorded by concession, namely, both learned Counsel have submitted that the transaction between the Appellants and the Respondents is to be covered by the contractual relationship based on the Bill of Lading which, according to them, is an international contract. Apart from that, - 13 - - 13 - - 13 - we find from para 48 of the ruling in the case of British British British India Steam Navigation Co. Ltd. v. Shanmughavilas India Steam Navigation Co. Ltd. v. Shanmughavilas India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries, 1990 (48) E.L.T. 481 ( S. C.) Cashew Industries, 1990 (48) E.L.T. 481 ( S. C.) Cashew Industries, 1990 (48) E.L.T. 481 ( S. C.) while observing in respect of the Bill of Lading as an international contract, the Apex Court has observed as under: "There is nothing to show that the "There is nothing to show that the "There is nothing to show that the charterprty was by way of demise, Pacta charterprty was by way of demise, Pacta charterprty was by way of demise, Pacta dant legem contractui - the stipulations dant legem contractui - the stipulations dant legem contractui - the stipulations of parties constitute the law of the of parties constitute the law of the of parties constitute the law of the contract. Agreements give the law to the contract. Agreements give the law to the contract. Agreements give the law to the contract. Clause 4 having been a contract. Clause 4 having been a contract. Clause 4 having been a stipulation in the contract evidenced by stipulation in the contract evidenced by stipulation in the contract evidenced by the bills of lading the parties could not the bills of lading the parties could not the bills of lading the parties could not resile therefrom." resile therefrom." resile therefrom." 11. Thus, we conclude that the relationship and the dispute between the parties, namely, the appellants and the respondents, will have to be decided on the basis of the terms and conditions as incorporated in the Bill of Lading only. 12. This takes us to the point No. 2 because the Bill of Lading makes a reference to the Hague Rules. The - 14 - - 14 - - 14 - question is whether the Hague Rules as were framed in 1924 shall only apply or the Hague Rules as amended in 1968 and 1979 shall apply, because the Appellants rely upon the amended Hague Rules in order to maintain their suit within the limitation. As against that, the respondents are relying upon the unamended Hague Rules so as to show that the suit filed by the appellants is barred by limitation. In order to analyse the controversy, we put up the provisions, the terms and conditions as disclosed from the Bill of Lading relevant for our purpose. The Hague Rules have been defined in term No.1 as follows : "Hague Rules" "Hague Rules" "Hague Rules" means the provisions of the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on 25th August 1924 and includes the amendments by the Protocol signed at Brussels on 23rd February, 1968, but only if such amendments are compulsorily applicable to this Bill of Lading. ( It is expressly provided that nothing in this Bill of Lading shall be construed as contractually applying said rules as amended by said - 15 - - 15 - - 15 - Protocol). Term No. 5 is as follows : "The Carriers’ responsibility- port- to- port shipment:- If carriage is port- to- port, the liability ( if any) of the Carrier for loss of or damage to the goods occurring from and during loading onto any sea-going vessel upto and during discharge from that vessel or from another sea-agoing vessel into which the goods have been transhipped shall be determined in accordance with any national law making the Hague Rules compulsorily applicable to this Bill of Lading, or in any other case, in accordance with the Hague Rules, Articles 1 - 8 inclusive." The Carrier shall be under no liability whatsoever for loss of or damage to the Goods, howsoever occurring, if such loss or damage arises prior to loading onto or - 16 - - 16 - - 16 - subsequent to discharge from the vessel. Notwithstanding the above, in case and to the extent that any applicable compulsory law provides to the contrary, the Carrier shall have the benefit of every right, defence, limitation and liberty in the Hague Rules as applied by this clause during such additional compulsory period of responsibility, notwithstanding that the loss or damage did not occur at sea." . Article III, Rule 6 of the Hague Rules unamended as per 1924 Rules is as follows: "Article III, Rule 6 : Unless the notice of loss or damage and a general nature of such a loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods in to the custody of the person entitled to the delivery thereof under the contract of carriage, or - 17 - - 17 - - 17 - if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the Bill of Lading. The notice in writing need not be given if the state of tahe goods goods has, at the time of their receipt, been the subject of a joint survey or inspection. In any event, the carrier and ship shall be discharged from all liability in respect of the loss or damage unless the suit is brought within one year after the delivery of the goods, or the date when the goods should have been delivered. In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. " 13. This rule was amended by the 1968 and 1979 rules by the Protocol signed at Brussels. Paragraphs 1, 2 and 4 - 18 - - 18 - - 18 - of the said Rules remained unchanged. However, paragraph (3) remained as it is, but at the end of the said paragraph, the folioing portion was added. " This period may, however, be extended if " This period may, however, be extended if " This period may, however, be extended if the parties so agree after the cause of the parties so agree after the cause of the parties so agree after the cause of action has arisen." action has arisen." action has arisen." 14. Since the appellants are trying to take the benefit of this latter amended portion of paragraph (3)