Kambli 1 App.747, 749 & 750 of 2005 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ... APPEAL NO.747 OF 2005 IN ADMIRALTY SUIT NO.27 OF 1999 ... MV.x.press annapurana & anr. ...Appellants v/s. Gitanjali Woolens Pvt.ltd. & ors. ...Respondents WITH APPEAL NO.749 OF 2005 IN ADMIRALTY SUIT NO.27 OF 1999 ... Meridian Shipping Agency Pvt.Ltd. ...Appellants v/s. Gitanjali Woolens Pvt.ltd. & ors. ...Respondents ... WITH APPEAL NO.750 OF 2005 IN ADMIRALTY SUIT NO.27 OF 1999 ... Ignazio Messina & Co. ...Appellants v/s. Gitanjali Woolens Pvt.ltd. & ors. ...Respondents ... Me.Rahul Narichania with Mr.Kunal Shah i/b Bhatt & Saldhana for Appellant in Appeal No.747/05 (Original Defendants Nos.1 & 4) Mr.Ranjit Dharmadhikari i/b Ratnakar Singh for Respondent No.2 in Appeal No.747/05 & for Appellant in Appeal No. 750/05(Original Defendant No.2) Mr.Robin Jaisinghani i/b IC Legal for Respondent No. 3 in Kambli 2 App.747, 749 & 750 of 2005 Appeal No.747/05 and Appellant in Appeal No.749/05(Original Defendant No.3) Mr.Pradip Sacheti with Mr.Ashwin Shankar i/b P.S.Gidwani for Respondent No.1 .(Original Plaintiff) CORAM: D.K.Deshmukh & K.K.TATED, JJ DATED: 11th March, 2011 JUDGMENT: (PER D.K.DESHMUKH, J.) 1. All these three Appeals challenge the same order passed by the learned single Judge of this Court. Therefore, all these Appeals can be conveniently disposed of by a common order. 2. Admiralty Suit No.27 of 1999 was filed in March, 1999 by Gitanjali Woollens Pvt.Ltd. (hereinafter referred to as the “Plaintiff”) claiming following reliefs: (a) That the vessel “X-Press Annapurna” of the 1st Defendant be contemned in the sum of US $ 57,860.00 (United States Dollars Fifty Seven Thousand Eight Hundred Sixty only) together with interest on the principal sum of US $ 51,374.10 at the rate of 18% p.a. and/0r at such other rate as this Hon’ble Court may deem fit and for a further sum of US $ 50,000.00 towards damages as per particulars of claim at Exhibit `F’ to the Plaint; Kambli 3 App.747, 749 & 750 of 2005 (b) That this Hon’ble Court be pleased to grant Leave under Order II Rule 2 of the Code of Civil Procedure, 1980; (c) That this Hon’ble Court be pleased to grant an order that the Plaintiff is entitled to exercise a maritime lien on the 1st Defendants vessel along with the Hull, Engines, gears, tackles, bankers, machinery apparel plant, furniture, appurtenances and paraphernalia for the purpose of securing the claim of the Plaintiffs in the suit; (d) That this Hon’ble Court be pleased to order to issue a warrant for arrest of the Defendant No. 1’s vessel with orders for interim Sale to follow, if necessary; (e) That this Hon’ble Court be pleased to order that the 1st Defendants vessels be arrested and/or detained, by and under the orders and direction of this Hon’ble Court; since there is no other asset of 2nd defendant available to the Plaintiff in Italy, or elsewhere and with no other assets; (f) That by a mandatory order of injunction restraining the Defendants from in any manner whatsoever dealing with the 1st Defendants’ vessel “X-Press Annapurna”, till the due and adequate security is furnished to the satisfaction of this Hon’ble Court in the sum of the Plaintiffs’ claim in the suit; 3. It was claimed by the Plaintiff that the Plaintiff had Kambli 4 App.747, 749 & 750 of 2005 entrusted its cargo to Defendant No.3-Meridian Shipping Agency Pvt.ltd., who was acting as an agent of Defendant No. 2-Ignazio Messina & Co. for being carried from a Port in India to Assab Port, Ethiopia. According to the Plaintiff, the Plaintiff paid necessary charges for carraige of goods by sea to Defendant No.3, but the Defendant No.3 despite the demands made by the Plaintiff did not hand over the bills of lading to the Plaintiff. With the result, the goods were lost and the Plaintiff suffered loss. When the Plaintiff filed this suit, only prayers to be found in the plaint are quoted above. There was no prayer in the plaint claiming any relief or decree against other Defendants, except the first Defendant-vessel. The plaint was amended in January, 2004 and prayer clause (ai) was introduced, which reads as under: (ai) that this Hon’ble court be pleased to decree and order the Defendants No.1 to 4 jointly and/or severally to pay to the Plaintiff a sum of US $ 57,860.00 (United States Dollars Fifty Seven Thousand Eight Hundred Sixty only) together with interest on the principal sum of US $ 51,374.10 at the rate of 18% p.a. and/or at such other rate as this Hon’ble Court may deem fit and for a further sum of US $ 50,000.00 towards damages as per particulars of claim at Exhibit `F’ to the Plaint. Kambli 5 App.747, 749 & 750 of 2005 4. The case of the Plaintiff in principal is that the Plaintiff has maritime lien on first Defendant-vessel as the Defendant No.3 who was acting as an agent of the Defendant No.2 had wrongfully refused to issue bills of lading relating to the carriage of the suit consignment. The case made out in the plaint is that the suit consignment was entrusted to Defendant No.3 acting as an agent of the Defendant No.2, the consignment was loaded on Defendant No.1-vessel which is owned by Defendant No.4 and despite the fact that the freight for the said consignment was paid to Defendant No.3, the Bills of lading was not handed over to the Plaintiff. With the result, the Plaintiff could not realise export proceeds from their buyers in Ethiopia. 5. The suit was contested by Defendants No.2, 3 & 4 by filing written statement. The principal defence of the Defendants Nos. 1 & 4 was that there is no privity of contract between the Defendants Nos. 1 & 4 on one hand and the Plaintiff on the other hand. It was also claimed that suit in the admiralty jurisdiction could not have been filed against the Kambli 6 App.747, 749 & 750 of 2005 Defendant No.1-vessel, when the Defendant No.1-vessel admittedly is a vessel flying foreign flag and was not in Indian water. The principal defence of the Defendant No.3 was that there was an agreement between the Plaintiff and the Defendant No.3 that the Bills of Lading were to be delivered to the Plaintiff on the Plaintiff clearing all the liabilities of the Plaintiff as also its sister concern M/s.Deepak woollen Limited. This agreement was not abided by the Plaintiff and therefore the delivery of the Bills of lading was not claimed by the Plaintiff from the Defendant No.3 and therefore the Defendant No.3 is not at all liable. It is also claimed by the Defendant No.3 that the Defendant No.3 was admittedly acting as an agent of the Defendant No.2 to the knowledge of the Plaintiff, therefore, as the Defendant No.3 was agent of the disclosed principal the suit was not maintainable against the Defendant No.3. The Defendant No.3 also claimed that the suit as against the Defendant No.3 was barred by the law of limitation, as for the first time a prayer for decree against Defendant No.3 was made in the year 2004. The second Defendant also opposed the suit on the grounds similar to the Kambli 7 App.747, 749 & 750 of 2005 ones raised by Defendant No.3. 6. On behalf of the Plaintiff two witnesses were examined and on behalf of the third Defendant one witness was examined. No oral evidence was led on behalf of the Defendants No.1, 2 & 4. On the basis of the pleadings and the documents following issues were framed. I S S U E S 1.Whether the plaintiffs are entitled to receive a sum of US$ 57860 together with interest @ 18% p.a. as per the particulars of claim shown in Exhibit E to the plaint? 2. Whether the plaintiffs have become entitled to receive a sum of US$ 50,000 as damages? 3. Whether Defendant no. 1 and Defendant No. 4 prove that they are third parties to the suit transaction and that there exists no privity of contract between the plaintiffs and the Defendant no. 1 and defendant no. 4? 4. Whether the Defendant no. 1 and Defendant no. 4 prove that for the vessel to be proceeded against in rem, a claim must just lie against her owner in personam? 5. Whether the defendant no. 1 and Defendant no. 4 prove that the vessel was given on charter to Bengal Xpress Container Lines Ltd., Kambli 8 App.747, 749 & 750 of 2005 who had entered into a further charter with Shreyas Shipping Ltd., who in turn had a connecting carrier agreement with the 2nd Defendants? 6. Whether the plaintiffs prove that under the letter of credit, shipment was required to be effected on or before 20th April 1998? 7. Whether the Defendant no. 1 and Defendant no. 4 prove that by reason of the Mate receipt dated 1st April 1998 having been issued by the 3rd Defendants, the plaintiffs cause of action can only lie against the 3rd Defendants and/or the 2nd Defendants? 8. Whether the plaintiffs prove that it was the obligation of the Defendants to issue to the plaintiffs a Bills of Lading? 9. Whether the 2nd Defendants prove that the 3rd defendants acted on their own and without any prior consent, permission or instructions from 2nd Defendants in the matter of shipment of the cargo? 10. Whether the 2nd defendants prove that the plaintiffs were in arrears for payment of freight? 11. Whether the plaintiffs prove that the sum of Rs. 1,52,770/- was paid in respect of freight for the suit consignment? 12. Whether the 2nd Defendants prove that the 3rd Defendants acted on their own accord and their acts/omissions were not binding upon the second defendants? Kambli 9 App.747, 749 & 750 of 2005 13. Whether the 2nd Defendants prove that the third Defendants on their own adopted ways and means for recovery of the arrears? 14. Whether this Hon’ble Court has jurisdiction to try the suit? 15. Whether the suit is barred by limitation? 16. Whether the plaintiff discloses any cause of action against the 3rd Defendants when admittedly the 3rd defendants were acting as agents of a disclosed principal. 17. Whether the plaintiff proves that the plaintiff paid the freight in respect of the suit consignment to the 3rd defendants? 18. Whether the plaintiff proves that the 3rd Defendants have contravened the provisions of the Carriage of Goods by Sea Act or the Bills of Lading Act as alleged in paragraph 9 of the Plaint? 19. Whether the Plaintiff proves that the 3rd Defendants in any manner acted in collusion with Defendant nos. 1 and 2 or committed acts of malafide, malfeasance, non-feasance or tortious acts resulting in conversion of the suit consignments to their benefit and loss to the Plaintiff as alleged in paragraphs 9 and 11 of the plaint. 20. Whether the Plaintiff proves that the 3rd Defendants are in any manner liable to pay any amounts as claimed in the suit? 21. Whether the 3rd Defendants prove that the suit consignment were accepted and carried on the basis of the understanding set Kambli 10 App.747, 749 & 750 of 2005 out in paragraphs 4 to 7 of the written statement? 22. Whether the 3rd Defendants prove that they were acting within authority as agents of the 2nd Defendants. 23. Whether the 3rd defendants prove their claim in the counter claim filed by the 3rd Defendants. 24. What orders? 7. The learned single Judge decided the suit by his judgment dated 9th August, 2005. The learned single Judge decreed the suit in terms of prayer clauses (ai) and (c). He held that the Plaintiff is entitled to recover all the claims as decreed by him by enforcing the security furnished pursuant to the interim order dated 19-4-1999 to the Prothonotary & Sr.Master of this Court. He also saddled costs on Defendant No.3. 8. These three Appeals have been filed challenging that judgment by the Defendants. Appeal No.747 of 2005 is filed by Defendants Nos. 1 & 4, Appeal No.749 of 2005 is filed by Defendant No.3 and Appeal No.750 of 2005 is filed by Defendant No.2. We have heard the learned Counsel Kambli 11 App.747, 749 & 750 of 2005 appearing for the parties in detail. We have also perused the record carefully. 9. From the perusal of the record and hearing of the submissions made by the learned Counsel appearing for the parties, we find that the very basis of the Plaintiff’s claim against the Defendants is that the Plaintiff demanded the delivery of the Bills of lading from the Defendant No.3, but it was not given, therefore the buyer of the goods could not take delivery of the goods, as a result the Plaintiff suffered loss. For the purpose of deciding this controversy we can take following as admitted or established position. (i) The Plaintiff entrusted his corgo to the Defendant No.3, who to the knowledge of the Plaintiff was working as agent of the Defendant No.2 (ii) that cargo was loaded on the Defendant No.1-vessel. (iii)The Defendant No.1-vessel carried the cargo to the Port of destination and discharged it there. (iv)The letter of credit that was opened by the buyer of the cargo in favour of the Plaintiff with Bank of Ethopia was Kambli 12 App.747, 749 & 750 of 2005 admittedly valid till 5th August, 1998. (v)On the date on which the suit was filed in March, 1999, the Defendant No.1-vessel was not within the maritime jurisdiction of this court. (vi) Till the amendment in the plaint was granted by the order made by the Division Bench of this Court in the year 2004, there was no decree claimed by the Plaintiff against the Defendants Nos. 2 & 3. 10. There are three points of fact which are hotly disputed (i) According to the Plaintiff, it demanded from the Defendant No.3 the Bills of Lading , but the Defendant No.3 did not hand over the Bills of Lading to the Plaintiff. As a result of which, according to the Plaintiff, the buyer could not take delivery of the goods and the Plaintiff suffered loss. (ii) According to the Plaintiff, the Defendant No.3 demanded from the Plaintiff the carriage charges of the cargo in question and the previous Bill of the Plaintiff that was due to the Defendant No.3 and the Plaintiff paid those charges. iii) According to the Defendant No.3, the Plaintiff had agreed to pay to the Kambli 13 App.747, 749 & 750 of 2005 Defendant No.3 the carriage charges of the cargo in question as well as the previous balance dues of the Plaintiff as well as its sister concern M/s.Deepak Woollen Ltd. , but the Plaintiff though promised did not clear these dues. The Plaintiff did not also ask for delivery of the Bills of Lading because of its failure to pay the charges as agreed and therefore, the Plaintiff has no cause of action against the Defendants. 11. In our opinion, following points arise for consideration: (i) Whether the Plaintiff demanded the Bills of Lading from the Defendant No.3, after the cargo reached its destination (For deciding this question, the question whether on behalf of the Plaintiff any assurance was given to the Defendant No.3 to clear all the dues of the Plaintiff as well as its sister concern M/s.Deepak Wollen Ltd. will have to be decided.) (ii) Whether the claim made against Defendants Nos. 2 & 3 by amendment in the year 2004 was within the period of Kambli 14 App.747, 749 & 750 of 2005 limitation and therefore could not be decreed. (iii)Whether in the absence of any particulars given either in the plaint or in the oral evidence of the claim for damages, the learned Judge was justified in passing a decree for payment of damages) (iv)As admittedly on the date on which the plaint was presented in this court, the Defendant No.1 vessel was not within the maritime jurisdiction of this court. The suit was not maintainable. (For deciding this point, we will have to consider the question whether the defect in filling the suit in the Admiralty Jurisdiction, when the Defendant No.1-Vessel which is a foreign vessel was not within the Admiralty Jurisdiction of this Court, can be cured by the vessel entering the maritime jurisdiction of this court at a subsequent date.) (v)Whether, a suit in the Admiralty jurisdiction of this court against the Defendant No.4 was maintainable, without the Plaintif having any privity of contract with the Defendant No.4. (vi)As admittedly the third Defendant was agent of the Kambli 15 App.747, 749 & 750 of 2005 disclosed principal namely the Defendant No.2, the suit was maintainable for a decree against the third Defendant. 12. Of these points, if the first point is decided against the Plaintiff the entire suit has to be dismissed, because the entire cause of action of the Plaintiff as pleaded in the plaint is based on the alleged non-delivery of the Bills of Lading by the third Defendant to the Plaintiff. 13. So far as the first point is concerned, averments in paragraph 7 of the plaint are relevant. It reads as under:- “7. The clearing agent on behalf of the plaintiffs, accordingly, approached the third defendants for exchange and release of the Bills of Lading covering the shipment of the two containers per the first defendant vessel. Two bankers’ cheques for Rs.4,53,560 being the outstanding freight in respect of earlier bills of lading which were issued by the third defendants in respect of earlier shipments and which freight was payable on credit in terms and arrangement between the plaintiffs and the third defendants and Rs.1,52,700 being the freight that was payable in respect of the shipment that was effected per the first defendant vessel in respect of the two subject suit containers as stated above for carraige of Kambli 16 App.747, 749 & 750 of 2005 the containers from Port Bombay to Assab Port. The said agents handed over to the third defendants the said two Banker’s cheques as also the mate receipt which was issued by the first defendant vessel in respect of the said two containers. The plaintiffs crave leaves to refer to and rely upon their letter dated 13th April 1998 addressed to the third defendants recording the payment of the said two Banker’s cheques and requesting for issue of the Bills of Lading, when produced. The third defendants refused to issue the bills of lading in respect of the said two containers on the ground that there was some outstanding due and payable. This was based on no prior warning, and it involved two completely separate transactions. Therefore, the plaintiffs approached the third defendants on several occasions because, in the absence of the bills of lading, there was no possibility for the plaintiffs to fulfill with the terms contained in the letter of credit and consequently, the plaintiffs would not be in a position to realise the value of the consignments. The third defendants were accordingly addressed in the matter by the plaintiffs through correspondence. “(emphasis supplied) 14. Thus, according to the Plaintiff, delivery of the Bills of Lading was sought by the clearing agent of the Plaintiff, payment of the carriage charges was made, but the third Defendant did not deliver the Bills of Lading. The Plaintiff relies on a letter dated 13th April, 1998 in paragraph 7 to claim that the delivery of the Bills of Lading was sought. The Plaintiff also refers to other correspondence between the Plaintiff and Kambli 17 App.747, 749 & 750 of 2005 the Defendant on this question. In paragraph 8, the Plaintiff states thus: “8. Accordingly, by a notice dated 24th July 1998, a demand was made upon the third defendants since by then, the validity of the letter of credit had expired and the whereabouts of the goods were also not known although the first defendant vessel had carried the goods but had not fulfilled has obligations by issuing the relevant bills of lading as required having assumed the responsibility of the contract of affreightment..........” 15. Thus, according to the Plaintiff, on 24th July, 1998, the Plaintiff claimed damages, obviously therefore the Plaintiff gave up the demand for delivery of the Bills of Lading on or before that date. 16. So far as oral evidence on this point is concerned, there is only one witness examined on behalf of the Plaintiff namely Mr.Surendra Goel. What is stated in paragraphs 8, 9 & 10 of the examination-in-chief is relevant. It reads as under: 8. I state that the Plaintiffs thereafter attempted to procure from the Third Defendants, Bills of Lading, on the basis of the Mate Receipt, Kambli 18 App.747, 749 & 750 of 2005 which Bills of Lading were to be forwarded to Asfeha, alongwith the documentation elucidated in paragraph 6 of this Affidavit. II state that when the Plaintiffs approached the Third Defendants, they were informed that there was outstanding freight due and payable, in respect of consignments previously shipped by the Plaintiffs through the Third Defendants and consequently the Third Defendants would not issue the Bills of Lading until these outstandings were settled. Vide a facsimile transmission, dated 1st April 1998, addressed to the Plaintiffs, the Third Defendants quantified these outstanding sums at Rs.4,63,560. By a subsequent facsimile correspondence, dated 8th April 1998, the Third Defendants informed the Plaintiffs that Freight amounting to Rs. 1,52,770.00 was payable in respect of the present consignment shipped on board the First Defendant Vessel, for carriage to port Assab, Ethopia. I state that in accordance with the amounts quantified in these facsimile intimations, the Plaintiffs issued two bankers cheques, both dated 13th April 1998, bearing numbers 055975 and 055974 in the sums of Rs.4,63,560/- and Rs. 1,52,770/- respectively. These cheques were, under cover of a letter bearing number GWPL/98-99/13 dated 13th April, 1998, addressed by the Plaintiffs to the Third Defendants, handed over to Jupiter, who was entrusted with the task of forwarding these cheques to the Third Defendants and obtaining the Bills of Lading in accordance with the Mate Receipt. 9. I state that Jupiter forwarded the Bankers cheques, together with the Plaintiffs’ Kambli 19 App.747, 749 & 750 of 2005 covering letter to the Third Defendants, who accepted these cheques without any qualification and assured Jupiter that they would issue the Bills of Lading expeditiously. Moreover, the Third Defendants deposited these cheques and realised amounts under them, which realisation has been certified by the issuing Bank, vide a certificate dated 6th August, 1998. 10. I state that even after payment was made to them by the Plaintiffs, in accordance with their own quantification and inspite of being repeatedly called upon to do so by Jupiter, the Third Defendants refused to issue the Bills of Lading on the pretext that there were amounts still outstanding and due to them from Deepak Wollen Ltd. This alleged outstanding was clearly not of the Plaintiff’s company. I state that prior to this time, the Third Defendants had never claimed any amounts, other than the amounts reflected in the facsimile transmissions dated 1st April and 8th April 1998, as being due and payable to them by the Plaintiffs. The events which transpired between Jupiter and the Third Defendants, culminating in the refusal on the part of the Third Defendants to issue the Bills of Lading, citing patently false and untenable reasons, were recorded in a correspondence dated 5th October, 1998, bearing number JSA/GEN/98/6523 addressed by Jupiter to the Plaintiffs. (emphasis supplied) 17. According to the Plaintiff’s witness, thus, the third Defendant demanded from the Plaintiff a sum of Rs. Kambli 20 App.747, 749 & 750 of 2005 4,63,560/- and Rs.1,52,770/- as the amount of carriage charges for the consignment in question and previous transaction. According to the Plaintiff, both these amounts were paid on 13th April, 1998 by cheques. But still the third Defendant did hand over the Bills of Lading on the ground that the amounts payable to the third