1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALTY AND VICE-ADMIRALTY JURISDICTION APPEAL NO. 271 OF 2004 IN ADMIRALTY SUIT NO.77 OF 1996 M.V.NIZURU, a motor vessel flying Panamamian flag, registered at the port other than one in India together with her hull, tackle, engine, machinery, boats, furniture all her paraphernalia and appurtenants and all interested in her presently lying and being in the port of Alang, ..Appellant Bhavnagar. (Ori.Defendant) Versus Forsythe Trading Services Ltd., a Company registered and incorporated under the laws of Cyprus, having its place of business at Julia House, 3 Themistocles, Dervis Str. ..Respondent Nicosia, Cyprus. (Ori.Plaintiff) Mr. Prashant S. Pratap with Mr. Manoj Khatri, Ms. Archana Reddy for the Appellant. 2 Mr.Janak Dwarkadas, Senior Advocate with Mr.Rahul Narichania, Ms.Guliani, Mr. Sandeep Sreekumar i/b Mulla & Mulla & Craigie Blunt & Caroe for the Respondent. CORAM : DR.S.RADHAKRISHNAN & ANOOP V. MOHTA,JJ. JUDGMENT RESERVED ON : 19TH MARCH, 2008 JUDGMENT PRONOUNCED ON : 17TH OCTOBER, 2008 JUDGMENT (PER : DR.S.RADHAKRISHNAN,J.) 1. The present appeal has been filed against the Judgment and decree dated 27th February 2004 passed by the learned Single Judge in Admiralty Suit No.77 of 1996 whereby a money decree has been granted. The facts of the case which have given rise to the present appeal are enumerated hereunder. The Respondent is a company registered and incorporated in Cyprus and it carries on trade and supply of bunkers. The Appellant is the vessel and which is registered at a port other than one in India. At the relevant time the Appellant vessel was “NIZURU” was owned by M/s. Karander Maritime Inc. The appointed agents of the said vessel were M/s.Zodiac Maritime Agencies Ltd. who were in charge of the operation of the vessel. The contract for supply of bunkers to the said vessel was placed by Zodiac Maritime (on behalf of owners of vessel) with Maritime Brokers Ltd. of UK who in turn transferred it to South Pacific Energy Trading who in 3 turn transferred it to WM Scollay and Co. which was further transferred to Forsythe International (UK) Ltd. who in turn transferred it to the Respondent. The Respondent placed the order with M/s.Petro Trade Services for supply of bunkers. The bunkers were accordingly supplied by M/s.Petro Trade Services to the Appellant vessel at Piraeus (Greece) on 15th January, 1996 and the necessary receipts were passed in that behalf. After effecting the supply M/s.Petro Trade demanded payment from the agents who in turn admitted to their liability to make the payment for bunkers but stated that since a number of intermediate parties were involved in the transaction it was necessary to secure assurances from other parties that they had no claims in respect of the supply. The agents later also stated that they had received a similar demand from the Maritime Brokers Ltd. and therefore before making payment it was necessary for an agreement to be reached as to who was entitled for payment. It appears that there was some correspondence regarding making payment into escrow and for providing for a guarantee. But ultimately no payment was made, therefore M/s.Petro Trade, physical supplier approached the Respondent because it was the Respondent who had ordered them to make the supply and therefore the Respondent made payment to M/s.Petro Trade. M/s.Petro Trade in their turn passed necessary receipts and also assigned their rights to receive payments for the supply in favour of the Respondent. As no payment was made the Respondent had filed a suit for recovery of the value of the bunkers with interest at the rate of 20% p.a. In the light of the issues 4 raised before the learned Single Judge, it was held that no objection could be raised against the deed of assignment executed in favour of the Respondent and the claim was actionable. Further it was also held that the value of the bunkers could be recovered at an interest rate of 8% p.a, this being subject to the condition that within a period of four weeks from the date of the order the Respondent would have to submit an undertaking to this court to indemnify the owners of the vessel against any claim made by anybody including the M/s.Petro Trade and the Maritime Brokers in relation to value of the bunkers, which was the subject matter of the suit. The said undertaking has been filed by the Respondent, pursuant to the above judgment and order of the learned Single Judge. 2. We have perused the impugned Judgment of the learned Single Judge, evidence on record and find that the following points arise for our consideration: a. Whether there was a privity of contract between the Respondent and Appellant vessel? b. Whether the Respondent proves that they had served the notice of assignment upon the Appellant? c. Whether filing of the above suit itself operates as a notice to the Appellant vessel regarding the assignment of debt? d. Whether the Respondent proves that the standard terms and conditions of M/s.Petro Trade are binding on the Appellant? e. Whether Respondent is entitled to US $ 2,60,257.89, along with interest ? 5 3. Aggrieved by the above judgment and order of the learned Single Judge, Mr.Pratap, the learned Counsel for the Appellant mainly contended that on the issue as to whether the Respondent had any right in law to recover the price from the owners of the Appellant vessel and submitted that there was no privity of contract between the Respondent and the owners of the Appellant vessel as also between M/s.Petro Trade and the owners of the Appellant vessel. The Appellant contends that the Respondent had no such right with respect to the Appellant vessel as it was the case of the Appellant that the Respondent could sue only Forsythe International UK with whom they had contracted. To further the said contention, Mr.Pratap drew a distinction between a maritime claim and a maritime lien relying on the Supreme Court’s judgment in the case Epoch Enterrepots Vs. M.V. Won Fu. 2003 (1) SCC 305. In the light of the above judgment, there is no dispute that the claim of the Respondent would not be a maritime lien, but only a maritime claim. Even the learned Senior Counsel for the Respondent does not dispute that it was only a maritime claim. 4. Mr.Pratap for the Appellant contended that it is indisputable that according to the Respondent the contract was between Forsythe International UK limited as a buyer and the Respondent as a seller and between the Respondent as a buyer and M/s.Petro Trade Management as sellers. The same was also pleaded in the plaint. 6 Therefore so far as the contract for supply of bunkers is concerned it was between the owner of the Appellant vessel and Maritime Broker Ltd. and not with the Respondent or the physical supplier M/s.Petro Trade Services Ltd. Consequently the learned Counsel Mr.Pratap contended that there was no privity of contract between the Respondent and the owners of the Appellant vessel. 5. Secondly, Mr.Pratap also submitted that the learned Judge had proceeded on a completely erroneous reading and interpretation of some correspondence between M/s.Petro Trade Management and London Solicitors of the owner of the vessel that took place in February/March 1996. It is urged that the representation made to M/s.Petro Trade by the owners’ Solicitors that they would make payment to M/s.Petro Trade creates no estoppel. All that Solicitors were saying was that the owners would honour their legal obligations and make a payment if required. It is also the case that the purported promise was made to M/s.Petro Trade. It is only M/s.Petro Trade who could sue on the promise and not a third party. The alleged promise cannot be assigned. 6. Thirdly it is also contended by the learned Counsel for the Appellant that the Learned Judge proceeded on a completely erroneous reading and interpretation of the English High Court proceedings between the owners of the various vessels including NIIZURU and Maritime Brokers Ltd. and in holding that since the details of the settlement of those proceedings are not on record and 7 not disclosed it is open to the Court to draw an inference against the Appellant that the settlement would have showed that Maritime Brokers gave up their claim against the owners of the vessel for the value of the bunkers or that Maritime Brokers Ltd. agreed that they are not entitled to recover the value from the owners because the supplier had not been paid by Maritime Brokers and therefore had made a claim against the owners of the vessels. 7. Mr.Pratap, the learned Counsel for the Appellant also contended that Respondent had to establish that it had a legal right against the Appellant vessel. This cannot be established by alleging that the settlement terms arrived at was not disclosed would show that the Appellant has not paid Maritime Brokers and hence the Appellant is liable to pay the Respondent. The Respondent must establish a maritime claim against the Appellant vessel and that can only be done if the Respondent has a privity of contract with the owners of the Appellant vessel. 8. Mr.Pratap, the learned Counsel for the Appellant also fourthly submitted that a cross objection was not filed by the Respondent which amounted to a waiver and the party then cannot be permitted to challenge any finding or any issue in an appeal filed by the opposite party. A reference was made to Order 41 Rule 22 of the CPC which gives a right to a party to file cross objection in respect of a finding on any issue although the decree was in his favour. The decision of the 8 Hon’ble Apex Court in Ravinder Kumar Sharma Vs. State of Assam (1999) 7 SCC 435 was relied upon in this regard. 9. Further Mr.Pratap, the learned Counsel proceeded to categorically deny the additional arguments of the Respondent on the issue of privity of contract raised for the first time in appeal. In view of the decision of the Hon’ble Apex Court in Dunichand Ratarai Vs. Bhuwalka Brothers AIR 1955 SC 182 the Appellant contended that the contract for supply of bunkers was a chain/string contract and demonstrated that delivery of bunkers by M/s.Petro Trade to the vessel was in implementation of their contract with Forsythe Trading. It was not delivery pursuant to any contract with the owners of the vessel nor did such delivery create any contract with the owners of vessel or make the owners of the vessel liable to pay the price. 10. Fifthly, Mr.Pratap placed reliance on an unreported judgment of Justice S.A.Bobde of this Court in the case of Scandinavian Bunkering A.S. Vs. M.V CHOPOL wherein it was held that creating a document unilaterally addressed to the master owner, operators, etc cannot create privity of contract to bind the other party. 11. The issue of admission was dealt with at great length by the learned Counsel for the Appellant. Reliance was placed on M.Manoharan Shetty & Ors. Vs. Naidu and Sons AIR 1980 Madras,212 from which it was contended that an admission has to be 9 a clear and conclusive statement with no doubt or ambiguity and it can be rebutted. Based on the above it was denied that there was an admission by the Appellant in the English proceedings, that the owners of NIIZURU are liable to pay M/s.Petro Trade. 12. Finally, Mr.Pratap contended that the Respondents are not unpaid sellers and they are not entitled to maintain the suit under the provisions of the Sale of Goods Act. It was contended that the remedy of an unpaid seller under Section 46 of the said act is to sue the buyer under the contract or exercise a lien on the goods if in possession or exercise the right of stoppage and transit. The only remedy in the present case is to sue the buyer who as regards the Respondent is Forsythe International UK Ltd. which is in liquidation. This does not entitle the Respondent to sue any other party. 13. It was also pointed out that Section 70 of the Contract Act has no application as the delivery of the goods was pursuant to the contract. It was submitted that the sole remedy of the Respondent was to sue Forsythe International and UK Ltd. with whom they had contracted. 14. Mr.Dwarkadas, the learned Senior Counsel for the Respondent pointed out that the Respondent had pleaded its cause of action on privity of contract on a two-fold basis namely, privity between M/s.Petro Trade and the Appellant( the Respondent is the assignee of 10 the M/s.Petro Trade’s claim), in the alternative and without prejudice direct privity between the Respondent and the Appellant, the Respondent relied on certain paragraphs of the plaint in addition to the evidence of the Appellant's witness to further the above contention. Reliance was placed on a Full Bench judgment of this Court in Jyotsna K. Valia v T.S.Parekh and Co. 2007(3) BCR 772, wherein it was held that supply of goods and issuance of an invoice constitutes a written contract. The deed of assignment which was introduced in evidence was marked as an exhibit without any objection from the Appellant, categorically refers to the invoice having been issued by the M/s.Petro Trade to the Appellant. At no point of time prior to the filing of the written statement, the privity of contract with Appellant was ever questioned. It was also submitted by Mr.Dwarkadas that the Appellant’s witness deliberately did not bring the voyage file of the vessel and by virtue of assignment by M/s.Petro Trade in its favour, the Respondent became entitled to sue the Appellant for the value of the bunkers. 15. It was contended by Mr.Dwarkadas, the learned Senior Counsel that it was the Appellant’s case in the English proceedings that M/s.Petro Trade had a title to the bunkers, only M/s.Petro Trade had the right to sell the bunkers to the Appellant and M/s.Petro Trade were required to be paid further value of the bunkers by the Appellant. Various Sections viz Section 2, 4, 18, 45 of the Sale of Goods Act were referred to highlight that the ship owner was the original buyer 11 and the physical supplier is the actual seller of the unascertained goods which goods are ascertained only upon delivery of the goods to the original buyer. Thus the property in the goods passes to the original buyer only when the goods are delivered. Alternatively, Mr.Dwarkadas submitted that once the Respondent had paid the price or was directly responsible for the payment of the price to the physical supplier, it too could maintain the suit as an unpaid seller, under Section 45(2) of Sale of Goods Act independent of the contract. Mr.Dwarkadas for the Respondent specifically argued that the judgments relied on by the Appellant wherein the Supreme Court had the occasion to consider the legal effect in regard to passing of title of the goods under what are described as chain contracts. It was submitted that the legal principle attempted to be relied upon by the Appellant had to be seen in light of contrary admissions made by the Appellant itself in the course of English proceedings wherein the Appellant attempted to defeat the claim of the first party in the chain i.e. Maritime Brokers on the ground that it was only M/s.Petro Trade that is the actual physical supplier who could have passed the title of the bunkers to the Appellant. By following this course of action, the Appellant succeeded in having the claim/ proceedings filed by the Maritime Brokers dropped/withdrawn. It was submitted by Mr.Dwarkadas, the learned Senior Counsel, that this was nothing but an attempt on the part of the Appellant to have a payment holiday. 12 16. It was also submitted by Mr.Dwarkadas that the Appellant did not deny any privity of contract with M/s.Petro Trade but merely stated that it had received a conflicting claim from Maritime Brokers and it did not want to make payment twice. Despite showing sincerity in making payment, the Appellant behind the back of the Respondent attempted to enter into an alleged settlement with Maritime Brokers under which it did not make payment of any amount to Maritime Brokers. This is why, the Appellant has steadfastly refused to produce the alleged settlement agreement as production of the same would expose their falsehood. By not making payment to Maritime Brokers, the non payment adversely affected the payments to be made down the chain. It was also contended by Mr.Dwarkadas, the learned Senior Counsel, that the adverse inference was drawn by the Single Judge and should also be drawn by this Court for non production of this settlement agreement. The Learned Single Judge had given the Appellant an opportunity to lead further evidence (even though the matter was on board for final arguments.) It appears that the Appellant had refused to lead further evidence in the matter. The relevant portion of the judgment of the learned Single Judge reads as under: “Therefore when the matter came up for hearing before me, I put it to the Learned Counsel appearing for the Defendant, that even at this late stage an opportunity can be given to the Defendant to prove the terms of settlement. The Learned Counsel sought time to take instructions and after taking instructions he stated before me that the Defendant is not willing to lead any further evidence to establish the terms of settlement.’ 13 17. The Appellant also however refused on the ground of confidentiality to disclose the particulars of settlement or the amount allegedly paid by the Appellant to Maritime Brokers. Reliance was placed on the decision of the Hon'ble Supreme Court in the matter of Gopal Ketkar Vs. Mohd Latif AIR 1968 SC 1413 wherein it was held that a party in possession of best evidence must produce it. The Court can draw an adverse inference against him notwithstanding that onus of proof does not lie on him. 18. With reference to filing of cross objections to challenge the finding of the Learned Single Judge regarding privity of contract, reliance was placed by Mr.Dwarakadas, the learned Senior Counsel on the decision of the Supreme Court in the matters of Ravindra Kumar Sharma Vs. State of Assam (1999) 7 SCC 435 and Banarsi Vs. Ram Phag 2003(9) SCC 606 wherein it was held that no cross objections are required to be filed where the decree in entirely in favour of the plaintiff though an issue has been decided against the plaintiff. These judgments squarely answer the point that cross objections were not required to be filed by the Plaintiff, still the Plaintiff can argue on the issues decided against the Plaintiff in an Appeal filed by the Defendant. 19. It was further contended by Mr.Dwarakadas, the learned Senior Counsel that the claim is maintainable by virtue of a quasi contract. A reference was also made to Section 70 of the Contract Act which 14 provides for the obligation of the person enjoying benefit of non gratuitous act. It was submitted that the bunkers were supplied by M/s.Petro Trade without intending to do so gratuitously. The vessel had consumed the bunkers and therefore it was liable to pay for the value thereof to the Respondent who is the assignee of M/s.Petro Trade’s claim. 20. It was submitted by Mr.Dwarkadas that there was a valid deed of assignment establishing that the assignment was made by M/s.Petro Trade in favour of the plaintiff for valuable consideration i.e. USD 237,815.20. Reference was made to Section 130 of the Transfer of Property Act which deals with Transfer of an Actionable Claim. With the support of the above, it was submitted that there can be a valid assignment of a claim with or even without consideration. 21. It was strongly urged by Mr.Dwarkadas that the pleadings filed by the Appellant before the English Court constitutes an admission which can be relied upon by this Court. It was submitted that this Court had considered the pleadings filed in another Civil Court to be an admission which can be relied upon by the Court. The relevant judgments quoted were those given in the cases of D.S.Mohite Vs. S.I.Mohite AIR 1960 Bom.153 and Jayprakash Vs. Lilabhai AIR 1963 Bom.100. Section 17 of the Indian Evidence Act, 1872 makes no distinction between an admission made by a party in a pleading and other admissions. Under the Indian law, admission made by a 15 party in a plaint signed and verified by him may be used as evidence against him in other suits. It was submitted by Mr.Dwarkadas that the Appellant’s submission is clearly false and misleading. It was submitted that admissions constitute evidence and consequently are not required to be pleaded. Reference was made to Order 6 Rule II of the CPC 1908 and various commentaries on the Code of Civil Procedure. Thus there was no need for the admission in English proceedings to be pleaded in the plaint. 22. Lastly it was submitted by Mr.Dwarkadas, the learned Senior Counsel that the Appellant was not taken by surprise as wrongly contended by them since they were the ones who introduced the English proceedings in evidence through their witness. In the absence of any explanation or rebuttal by the Appellant that the admission in England was erroneous or untrue, the admission is binding upon the Appellant. In light of the above admissions which are binding the Appellant cannot now approbate or reprobate with this Court by attempting to take a contrary position in the present suit. 23. Mr.Dwarkadas for the Respondent submitted that there was a privity of contract between M/s.Petro Trade and the Appellant. M/s.Petro Trade had assigned its claim to the Respondent and the Appellant had deliberately not produced the alleged settlement agreement and hence the appeal should be dismissed with costs. 16 24. After hearing the learned Counsel for both the parties, after perusal of the evidence on record, it is very clear that the Appellant's own case before the English Court proceedings was that only M/s.Petro Trade had the right to sell the bunkers to the Appellant. The Appellant had also categorically contended in the English Court Proceedings that the Appellant was liable to pay only M/s.Petro Trade, the value of the bunkers, as they were the physical suppliers of the said bunkers to the Appellant. It was also contended by the Appellant that the property in the goods passes to the original buyer when the goods are delivered. It is also clear from the evidence on record, that the Appellant was able to succeed in making Maritime Brokers withdraw their proceedings before the English Court, in the light of Appellant's stand before the English Court that the Appellant was liable to pay only M/s.Petro Trade, being the physical suppliers of bunkers to the Appellant. It is also pertinent to note that the Appellant did not deny the privity of contract with M/s.Petro Trade, but did not want to pay twice, as there was a conflicting claim of Maritime Brokers. 25. It is clear from the evidence that thee is a Deed of assignment made by M/s.Petro Trade in favour of the Respondent for a consideration of 237,815,20 $US. The said deed of assignment has been duly exhibited in the present proceedings without any objection by the Appellant. 17 26. In the light of the above, we answer points (a), (b) (c) & (d) mentioned in paragraph 2 hereinabove, in favour of the Respondent. 27. We are clearly of the opinion, that the burden was entirely on the Appellant to prove that as a result of settlement reached in English Court proceedings there is payment made to the Maritime Brokers, but the Appellant had categorically declined to divulge the terms of the settlement claiming that they are confidential. Therefore when the matter came up for hearing before us, even we put it before the Learned Counsel appearing for the Appellant that even at this late stage an opportunity can be