1 IN THE HIGH COURT OF BOMBAY AT GOA. FIRST APPEAL NO. 173/2003. 1. M/s Amit Associates, Flat No. 2, 1st Floor, Firdaus Apartment, S. V. S. Road, Mahim (W), Mumbai – 400 016. 2. Mr. A. Aziz A. Latif, Flat No. 2, 1st Floor, Firdaus Apartment, S. V. S. Road, Mahim (W), Mumbai – 400 016. …. Appellants. vs. 1. M/s Sanghi Bros. (Indore) Ltd. by its Chief Executive A. Deshprabhu, having office at no. 7, Our Lady of Guia Bldg., Vasco da Gama, Goa. 2. Capt. Harsh Wahi, 301, Jyoti Niwas, 186 Block, Sher-e-Punjab Society, Nanakaddi Cave Road, Andheri (E), Bombay 93. … Respondents. (deleted as per order dated 13.3.07.) Mr. V. Menezes, Advocate for the Appellants. Mr. A. D. Bhobe, Advocate for Respondent No. 1. 2 Coram :- A. S. OKA F. M. REIS, JJ. Judgment Reserved on : 2 nd August, 2010. Judgment Pronounced on : 26.11.2010. JUDGMENT : (Per F. M. Reis, J.) The above Appeal challenges the Judgment and Decree dated 15th January, 2003, passed by learned Civil Judge, Senior Division at Vasco da Gama, in Special Civil Suit No. 142/1993/A. 2. The Appellants are the Defendant nos. 1 and 2 in the suit while the Respondents are the Plaintiffs in the suit. 3. The parties are referred in the manner as they appear in the cause title of the impugned Judgment and Decree. 4. The Plaintiffs filed the suit for recovery of money on the ground that they are owning a fleet of barges, some of which are operated for transporting goods such as iron and manganese ore and some of the barges are given for plying on hire under Agreements duly executed. It is further their case that the 3 Defendant no. 1 is functioning from their office in Mumbai and that the Defendant no.1 approached them for taking on hire two motor vessels or barges in November, 1991. It was agreed between the parties to take two barges namely M. V. Anjana and the other M. V. Sumitra pursuant to an Agreement executed on 25th November, 1991, whereby, the Defendant no.1 took on hire the said M. V. Sumitra. The vessel was hired for a period of two years commencing from 25th November, 1991. The hire charges were set out in the said Agreement. The Defendant no.1 furnished a Bank Guarantee of Rs.2,80,000/- as security towards discharge of the obligations and an amount of Rs.1,40,000/- for being appropriated in the event of default in the payment of hire charges of one month. It is further their case that the Plaintiffs on 31st December, 1991, also entered into another Agreement, whereby the motor vessel M. V. Anjana was taken on hire for a period of two years from 1st January, 1992. The terms and conditions of the said hire were stipulated in the said Agreement. The Defendant no.1 deposited security of Rs.2,70,000/- for the performance and a sum of Rs.1,35,000/- towards deposit for appropriating in the event of default of payment of hire charges of one month. It is further their case that the Defendant no.1 took possession of both the vessels and they were being plied at Port Bhavanagar/Jamnagar and in the vicinity of the said area 4 and hired by M/s. Associated Coast Lighterage and Co. Pvt. Ltd., which is an Associate Company of Defendant no.1. The Defendant no.2 is the Partner/Director of the said M/s. Associated Coast Lighterage and Co. Pvt. Ltd., which was plying the said Barges. The hire charges were being paid directly by said M/s. Associated Coast Lighterage and Co. Pvt. Ltd., for the suit Barges in terms of the two Agreements by cheques and drafts. Four cheques were issued by the said Company for a sum of Rs.8,86,310.80 being dated 21st December, 1992, 30th December, 1992, 10th January, 1993 and 20th January, 1993, which were dishonoured when the same were presented for payment. It is further their case that they were constrained to file Criminal proceedings on account of said dishonour of cheques but, however, by legal notice dated 27th May, 1993, to effect the payment of the said amount covered by the four cheques which were dishonoured. The amount in the meanwhile due and payable by Defendant no.1 had accumulated to Rs.38,33,083.80 as on 3rd May, 1993. It is further the case of the Plaintiffs that the said Barges were engaged by Defendant no.1 at Bhavanagar and Jamnagar at Gujarat and that the Chief Executive of the plaintiffs personally visited the said places and assumed possession of the suit Barge Anjana on 16th August, 1993 and of the suit Barge Sumitra on 18th August, 1993. It is 5 further their case that the cost involved for the repairs of the Barge amounted to Rs.18,00,000/- and on account of the expenditure towards employment of the employees to supervise the said repairs, the expenses on that ground have exceeded to Rs.2,00,000/-. The expenses incurred for transporting the said Barge to Goa were to the tune of Rs.1,50,000/-. It is further their case that the Defendants were liable to pay as per the terms of the said Agreement the freight charges of the suit Barges upto 31st October, 1993 at Rs.27,44,651.80 besides Rs.21,50,000/- on account of the said expenditure referred to above. It is further their case that accordingly, the Plaintiffs were entitled to receive a sum of Rs. 45,03,069.80. After deducting a sum of Rs.5,50,000/-, which the Plaintiffs were holding as security deposit, the Defendants are liable to pay the Plaintiffs a sum of Rs.45,03.069.80. The Defendants are also liable to pay interest from 1st April, 1993 till 31st October, 1993, and consequently the suit was filed to claim the said amounts together with interest at the rate of 18 percent per annum till actual payment. 5. The Defendants filed their written statement disputing the claim put forward by the plaintiffs. It is their case that the said Agreement dated 25th November, 1991, and 31st 6 December, 1991, were one sided Agreements prepared by the Plaintiffs and the same were signed by the Defendants under fraud, misrepresentation and undue influence. It is further their case that the clauses incorporated in the said Agreement which are unconscionable and which saddle the Defendants with payment obligations even without receiving anything in return are also penal in nature. It is further their case that the said Agreements are voidable at the option of the Defendants and that the same be declared as voidable. Specifically, the Defendants contend that Clauses 3 and 4 are not enforceable and that they are in a nature of penal clauses. It is further their case that part of the Agreement is without any consideration and are penal in nature. It is further their case that in fact a sum of Rs.2,80,000/- paid over to the Plaintiffs by the Defendants as and by way of advance and the same was paid by two Demand Drafts dated 13th November, 1991. The Bank Guarantee for Rs.1,40,000/- was however furnished by the Defendants to the Plaintiffs which was wrongly revoked by the Plaintiffs on 30th June, 1993. In respect of the Agreement dated 31st December, 1991, the Defendants contend that they also furnished a Bank Guarantee to the extent of Rs.1,35,000/-, which was wrongly revoked by the Plaintiffs on 3rd June, 1993. In April, 1993, the rate of hire charges of Barges had substantially increased and so 7 the Plaintiffs approached the Defendants for the return of the Barges in order that they may be hired out at higher rates. The Plaintiffs requested these Defendants to co-operate with them and return the Barges on a condition that they would give up the balance amount due from the Defendants till that stage and would also abide by the assurances and commitment not to charge the Defendants the hire charges for the balance period of two years as stipulated in the two Agreements. It is further their case that the Defendants also agreed to bear the charges of transporting the said Barges and would not charge the Defendants the expenses incurred thereon. It is further their case that the Plaintiffs persuaded the Defendants to give up the possession of the Barges and in return the Plaintiffs would give up their claims against the Defendants. It is further their case that the four cheques were issued as a co-lateral security and the said cheques were never meant to be presented for payment. It is further their case that the possession was not taken by the Plaintiffs but, on the contrary, the possession was handed over to the Plaintiffs by the Defendants in pursuant to the Agreement stated above. It was denied that the Barges had to be subjected for repairs. The contention that the Plaintiffs had to employ employees is also denied so also the liability to pay the charges from Bhavanagar to Goa. The payment of 8 freight charges and repairs of the Barges were also denied by the Defendants. It is further their case that they are entitled to a credit of Rs.9,60,000/- and not merely Rs.5,50,000/- is a false claim. It is further their case that they used the Barges up to July 1993, and they were not liable to pay any further amounts. It is further their case that at the most they are liable to pay a sum of Rs.23,84,853.80 and as against the figure, the Defendants are entittled to a sum of Rs.9,60,000/- as mentioned in para 11 and thus the total amount due till then stand reduced to Rs.14,24,853.80. It is further their case that when the Plaintiffs delivered the said Barges, M. V. Anjana to the Defendants, it was not in a fit condition to ply and, therefore, the Defendants could not ply the said Barges in January, 1992 and on that count, the Defendants will not be entitled to charges from January, 1992, amounting to Rs.1,35,000/-. It is further their case that the Plaintiffs would be liable to pay Rs.50,000/- on account of loss of profit and Rs.25,000/- as crew charges for the said Barges. On the basis of the calculation stated in the written statement, it is the case of the Defendants that the plaintiffs would still be liable to pay to the Defendants a sum of Rs.6,70,000/-. The Defendants claimed that they are not liable to pay any amount to the Plaintiffs. 9 6. After issues were framed and evidence brought on record, the learned Civil Judge, Senior Division, Vasco da Gama, by the impugned Judgment and Decree dated 15th January, 2003, decreed the suit of the Plaintiffs and directed the payment of a sum of Rs.31,98,691.30 with simple interest at the rate of 18 percent per annum from 1st November, 1993 till the date of actual payment to the Plaintiffs. 7. Being aggrieved by the said Judgment and Decree, the present Appeal has been filed by the Defendant nos. 1 and 2. 8. Shri V. Menezes, learned Counsel appearing for the Defendants/Appellants, has assailed the impugned Judgment and Decree and submitted that the Barges were delivered by the Defendants to the Plaintiffs in view of an understanding between them whereby the Plaintiffs had agreed not to recover any amount from the Defendants provided that the Barges were returned to the Plaintiffs and that as such the possession of said Barges were taken on 16th August, 1993 and 18th August, 1993 and as such as from that date, the Plaintiffs were not entitled to claim any hire charges from the Defendants. It is further his case that the Barges did not require any repairs and that the Plaintiffs have failed to establish that any repairs were made to 10 the Barges for the purpose of putting them in serviceable condition. He further submitted that the voucher produced by the Plaintiffs on account of expenses for the repairs have not been duly proved by the Plaintiffs and, as such, the Plaintiffs cannot rely upon the said document. He further submitted that the alleged expenses incurred for transportation of said Barges to the tune of Rs.1,50,000/- has not been established by the Plaintiffs by any material on record. He further took us through the evidence on record and demonstrated that there were inconsistencies therein which falsify the claim that amounts were payable by the Defendants to the Plaintiffs. He further submitted that in the plaint, no specification have been given about the claim put forward by the plaintiffs and, as such, the pleadings being vague, the question of awarding any amount to the Plaintiffs would not arise at all. He further took us through the Agreement at exhibit Pw.1/A dated 25th November, 1991, whereby the Defendants had agreed to pay to the Plaintiffs hire charges of Rs.16,20,000/- per annum by instalments of Rs.1,35,000/- each on specified dates. He further took us through the clauses of the Agreement and pointed out that the terms were unconscionable as the hire charges were to be paid irrespective as to whether the Barges were with the Defendants or not. He took us through the plaint and pointed out that 11 particulars of the amounts have not been specified in the plaint. He took us through the bills and stated that the same do not demonstrate that actually the amounts referred to therein have been paid by the Plaintiffs. He further pointed out that some amounts were alleged to have been paid during the pendency of the suit. He further pointed out that the main point for consideration is to ascertain as to whether the Plaintiffs would be entitled to any hire charges from the date of taking possession or whether they are entitled to any compensation of such default. 9. On the other hand, the learned Counsel Shri A. D. Bhobe, appearing for the Plaintiffs, has supported the impugned Judgment and Decree. He pointed out that there was evidence on record to show that as per the terms of the Agreement, the Defendants were liable to incur expenditure for the repair of the Barges. He further pointed out that the expenses for the transportation of the Barges to Goa were to be met by the Defendants. He also took us through the clauses in the Agreement and pointed out that irrespective as to whether the Barges were retrieved before the terms of the Agreement, the Defendants were liable to pay hire charges. He pointed out that the Plaintiffs were claiming the amount as per the said 12 Agreement in view of the default committed by the Defendants in payment of the freight charges. He further took us through the evidence of the witnesses of the Plaintiffs and pointed out that all the bills relied upon by the Plaintiffs have been duly proved. The expenses on account of the repairs of Barges have been established by the Plaintiffs by examining the repairers who have in fact carried out the said repairs at the instance of the Plaintiffs. He further submitted that the Defendants are liable to pay the amount as decreed by the Trial Judge and no interference is called for in the impugned Judgment. 10. Having heard the learned Counsel and on perusal of the records, we find that the following points arises for determination in the present Appeal : 1. Whether the Plaintiffs are entitled to a sum of Rs.1,50,000/- as transportation charges from Bhavanagar and Jamnagar at Gujarat to Goa of the said Barges? 2. Whether the Plaintiffs were entitled for the expenses incurred on account of the repairs of the suit Barges ? 3. Whether the Plaintiffs were entitled for the freight charges as claimed by them in the 13 suit ? 11. Dealing with the first point for determination as to whether the Plaintiffs are entitled to the said sum of Rs.1,50,000/- on account of transportation charges, we find that in the plaint, the Plaintiffs have pleaded at para 12 that they have incurred a sum of Rs.1,50,000/- on account of said transportation charges. In the written statements, the Defendants have disputed the payment of said amount at para 10. Pw.1 in his evidence has not produced any documentary evidence to the effect that actually a sum of Rs.1,50,000/- was paid on such count. No doubt, as per the terms of the Agreement, the Defendants were supposed to deliver the Barges to Goa and the Defendants were liable to pay the transportation charges but, however, no evidence has been adduced by the Plaintiffs on such count. The case of the Plaintiffs has been that they spent a sum of Rs.1,50,000/- as the Barges were to be returned in Goa. The fact remains that the Plaintiffs themselves went to Gujarat and took possession of the said Barges. As the Plaintiffs have failed to produce any evidence about actual payment of the said sum of Rs.1,50,000/- nor any independent evidence has been produced on that count, we find that the Plaintiffs have failed to establish that the Defendants are liable to pay a sum of Rs.1,50,000/- on account of said transportation 14 charges. The first point for determination as such is answered accordingly. 12. Dealing with the second point for determination as to whether the plaintiffs are entitled for an amount of expenditure incurred on account of repairs to the suit barge, we find that on perusal of the agreement at exhibit PW1/A dated 25.11.1991, executed between the parties, it inter alia provides that the defendant shall during the continuance of the agreement keep the said vessel in good working order and repairs at the hirer's cost. The agreement further provides that the defendants would be responsible and shall bear all expenses in connection with the annual survey of the vessel during the period of the contract and on expiry of the contract, the defendant shall hand over the vessel to the plaintiff in good working order and condition and that the defendant would ensure at the time of such delivery that the vessel is duly surveyed. It also provides that the defendant would satisfy the plaintiff regarding the vessel being in good order and condition particularly in respect of the condition of the engine. 13. The plaintiffs in their plaint at para 12 stated that when they had taken possession of the said barge, they had to carry out necessary repairs. The cost involved in such repairs 15 which were required to be done annually were exceeding Rs. 18,00,000/-. As such, the plaintiff had to deploy their employees for overhauling of all the engines of both the suit barges besides attending to the supervision of its repairs. The expenses incurred on this count were Rs. 2 lakhs. In the written statement the defendants have merely denied the said allegations at para 12. 14. P.w.1 in his deposition has stated that at the time of taking possession of said barge, they were under repairs unattended and that the plaintiffs carried out repairs at their own cost and spent sum of Rs. 18,00,000/- for hull repairs of the said barges and Rs. 2,00,000/- for engine repairs alongwith supervision charges. Further in his examination, pursuant to the order dated 24.4.2000, P.w.1 has produced the bills in respect of the said repairs to the said barge M. V. Anjana and M.V. Sumitra. In his cross examination he has stated that all the said bills which are at exhibit PW1/E and PW1/F colly were settled in the year 1994-1995. He has further stated that the bill of M/s Alleng Marine Ltd. Was settled in the year 1999-2000. He has further stated that finally the bill of M/s Alleng was settled for a sum of Rs. 6,00,000/- and odd. He has denied the suggestion that the said two bills at exhibit PW1/E and PW1/F 16 colly were not pertaining to the said two barges. 15. The next witness examined by the plaintiff is P.w.2, Kishor Tolani. He has stated in his deposition that in the year 1993 he had carried out the repairs of the barge Sumitra of the plaintiff at Jamnagar in Gujarat and also supplied some spare parts for the repairs of the said barge. The said witness has also shown the bills at exhibit PW1/F colly issued by M/s Kilito Enterprises. He has admitted that the said bills were issued by him and that they were paid by the plaintiffs. He was also shown the bills of M/s Kilito Marine Services which were at exhibit PW1/E and he has admitted that the same were issued by him for the supply of spare parts to the barge Anjana and the amounts were fully; paid by the plaintiffs. In the cross examination he has stated that the bills of M/s Kilito Enterprises and M/s Kilito Marine Enterprises were settled by plaintiff in March, 1994 and the amounts were paid without seeking any clarification. 16. The next witness examined is P.w.3, Mohun V. Moghe who has stated that he identifies the bills at exhibit PW1/A as having been given by him in respect of his business known as M/s Sangli Brothers. In his cross examination he has stated 17 that the said bills were paid to him by the plaintiff in March 1994. He has denied the suggestion that the said bills do not pertain to the spare supplied for the work of barge Anjana. 17. The next witness examined is P.w.4, Shri Debashish Bir who has stated that in the year 1993 his company had repaired the barge belonging to the defendants in his dock yard at Gujarat by the name of Anjana which was docked at the village known as 'Gogha' situated near Bhavnagar. He has further stated that all the bills at exhibit PW1/A produced by him were paid by the plaintiffs. In his cross examination he has stated that the barge had arrived at his yard on 6.4.1993 and the same remained at the year till 2.11.1993. He has further stated that the final payment was received from the plaintiffs on 12.10.1998 and that they had given a reduction in the final amount. He has further stated that initially the repairs were being done upon instructions of defendant No. 1. He has denied the suggestion that the bills produced by him are not in respect of the barge Anjana. He has also denied the suggestion that no repairs were conducted by him to the said barge Anjana. 18. In support of the case advanced by the defendants, Abdul Aziz has been examined as DW1. In his deposition he 18 has stated that for the purpose of repairs, of barge Anjana, the defendants had given 19 tones steel plates and an advance of Rs. 2,00,000/- for the purpose of said barge. He has further stated that the defendant No. 1 had paid Rs. 80,000/- to Mr. Shidhart to start the repairs of the said barge at Jamnagar. In his cross examination he has stated that presently he cannot say whether the said barge was sea worthy or not since he was not presently dealing with the barge at that time. He has further admitted in cross examination that it is provided under the terms of the agreement with the plaintiff that it would be their responsibility to maintain the barge during the period of the contract. He has further admitted that he has no documents to substantiate his statement that he spent Rs. 40,000/- to repair the barge Anjana. 19. The learned judge in the impugned judgment after perusing the evidence on record has come to the conclusion that the defendants were liable to pay a sum of Rs. 6,63,797.50 towards the repairs of the said barges. The evidence adduced by the plaintiff about the said payments stand corroborated by the bills which have been produced by the plaintiff. Apart from that the evidence of P.w.2, P.w.3 and P.w.4 in support of the bills submitted by them on account of such repairs further establishes 19 that the repairs in fact have been carried out by the plaintiff to the said barges. The agreement stipulates that such expenses would be met by the defendants. The witnesses have