- 1 - IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION SUIT SUIT SUIT NO.1818 OF 1989 NO.1818 OF 1989 NO.1818 OF 1989 The Board of Trustees of the Port of Bombay ...Plaintiffs vs. 1. Hongkong & Shanghai Banking Corporation 2.Shipping Corporation of India Limited ...Defendants Mr.U.J.Makhija a/w Mr.Kaneez Munjee i/b Motiwalla & Co.for the plaintiffs Ms N.S.Sumnani i/b Bhatt & Saldhana for the defendant No.2 Mr.Mayur Khandeparkar i/b Kanga & Co. for the defendant no.1 CORAM CORAM CORAM: A.S.OKA,J. A.S.OKA,J. A.S.OKA,J. DATE DATE DATE : OCTOBER 16 and 18,2008 : OCTOBER 16 and 18,2008 : OCTOBER 16 and 18,2008 ORAL JUDGMENT: ORAL JUDGMENT: ORAL JUDGMENT: 1. The submissions of the learned counsel appearing for the parties were heard on the last date. It will be necessary to refer to the facts of the case in brief. The plaintiffs (the board of trustees of the Port of Bombay) have filed the present suit claiming a decree in the sum of Rs.1,13,010/- with further interest on the sum of Rs.1,12,685.84 at the rate of Rs.15% p.a. The case of the plaintiffs is that the first defendant are the importers/owners/consignees of the consignment which is subject matter of the suit. The second defendant is a limited company which carries on business. According to the plaintiff the second defendant company was the agent of vessel Vishwa Tej. According to the plaintiffs the second defendant are the owners within the meaning of section 2(O) of the Major Port Trust Act,1963 being the agents - 2 - of the vessel m.v.Vishva Tej. The plaintiffs are the owners of the docks at Bombay. Under the provision of the said Act of 1963, the plaintiffs are required to take charge of the goods landed from the ships coming to the Port of Bombay. The plaintiffs are entitled to charge and levy wharfage demurrage and other charges in respect of the goods landed and stored by the plaintiffs in the docks at Bombay according to the scale of rates duly prescribed and published as per the provisions of the said Act of 1963. 2. In or around June 1984, the first defendant imported a consignment of 4 containers containing loose white marbles. The said consignment was manifested at item No.188 of the Import General Manifest No.520 dated 23rd June 1984 of the vessel m.v. Vishwa Tej. The consignment was discharged by the said vessel into the docks at Bombay. The general landing date and the last free day of the cargo of the said vessel were 14th July 1984 and 18th July 1984 respectively. The said consignments were sold under lot No.T/845 on 27th January 1986. According to the plaintiffs, the weight of the said consignment was approximately 84,000 kgs. The plaintiffs filed earlier suit bearing No.407 of 1989 in this court for recovery of the deficit in the sale proceeds arising out of the said sale. Subsequently, it was found that the auction purchaser cleared only 79,720 kilograms leaving a balance of about 5000 kgs. According to the plaintiffs the said quantity - 3 - of 5000 kgs of the said consignment was sold on 5th May 1986 under lot No.T/845-A. The present suit relates to the sale of quantity of 5000 kgs out of the said consignment. The case of the plaintiffs is that the defendants have neglected to clear the said consignment which remained in the custody of the plaintiffs. Reliance has been placed on the letters dated 11th May 1985 addressed to the 1st and 2nd defendants by the plaintiffs informing the said defendants that the consignment was lying for more than two months from the date of landing thereof and that the same was not cleared on the payment of accrued charges within 10 days from the date of receipt thereof. The consignment was decided to be sold by a public auction under section 61 and 62 of the said Act. By a letter dated 23rd December 1985, The 1st and 2nd defendants were informed that if they failed to clear the consignment within 10 days, the same will be sold by public auction to be held on 6th January 1985 or on any other subsequent date without notice. According to the plaintiffs, the list of packages to be sold including the said consignment was published in Maharashtra Government Gazette dated 26th December 1985 and also in daily Times of India and Indian Express in its issue dated 23rd December 1985. according to the plaintiffs pursuant to the sale made on 27th January 1986, the auction purchaser cleared only a quantity of 79,720 kgs. and the remaining quantity was sold on 5th May 1986 for the price of Rs.33,310.60. The case of the plaintiffs is that they - 4 - incurred the expenditure of sale in the sum of Rs.9,412.43. The port trust charges accrued on the said consignment amounted to Rs.1,12,685.84 and the customs duty amounted to Rs.28,496.03. The plaintiffs claimed that the I.T.C. fine amounted to Rs.4,20,000/- and wharfage/demurrage charge of the said consignment was Rs.1,12,685.84. However, in the present suit, the plaintiffs have not claimed I.T.C. fine amount and balance custom duty and therefore the claim of the plaintiffs is restricted to Rs.1,12,685.84 being the deficit port trust charges with interest thereon at the rate of Rs.15% from the date of demand notice till filing of the suit. 3. The suit is contested by the 2nd defendant the Shipping Corporation of India Limited. It is contended in the written statement that the earlier suit No.407 of 1989 was filed on the same cause of action for claiming a sum of Rs.5,37.283.70 with interest @ 15% per annum being the sale deficit relating to the same consignment. It is contended that the said suit was filed on the same cause of action which was unconditionally withdrawn by the plaintiffs under the an order dated 13th December 2002. It is submitted that in view of unconditional withdrawal of the earlier suit, this suit is not maintainable. It is contended that as a leave under sub rule 3 of rule 2 of Order II of the Code of Civil Procedure,1908 was not obtained, the suit is not maintained. - 5 - 4. It was contended that there was no cause of action as against the 2nd defendant. It was contended that only connection which the 2nd defendant had with the said consignment was with respect to its carriage into India on board of one of its vessel "m.v.Vishva Tej". It was contended that the connection of the 2nd defendant with the consignment ceased and determined after the consignment being discharged from the vessel at the Port of Bombay. It is contended that the plaintiffs Port Trust has not rendered any services to the 2nd defendant. It was contended that if at all any cause of action was available, the same as against the 1st defendant. 5. It was contended that once the consignment was handed over to the Port Trust by the shipowner or its agent, the responsibility of the shipowner comes to an end. It is submitted that under the provision of of the said Act of 1962, the liability of the payment of wharfage/demurrage and other charges is of the owner of the goods. It was contended that though the plaintiffs were entitled to sell the consignment after expiry of two months after the goods passed in their custody, the goods were belatedly sold and that also without notice to the 2nd defendant. The case of the 2nd defendant is that the suit was barred by limitation. The 1st defendant has not filed written statement. 6. The issues were settled on 22nd November 2007. The - 6 - settled issues read thus : (1) Whether the suit against these defendants which is not maintainable for reasons averred in paragraph 1(a) of the 2nd defendants’ written statement ? (2) Whether the suit is liable to be dismissed for want of leave under Order II Rule 2 and 3 of the Code of Civil Procedure,1908 as averred in paragraph 1(b) of the 2nd defendant’s written statement ? (3) Whether the suit is liable to be dismissed against the 2nd defendants for want of cause of action, as averred in paragraph 1(c) of the 2nd defendants written statement ? (4) Whether the suit against the 2nd defendants is barred by law of limitation as averred in paragraph 1(d) of the 2nd defendant’s statement ? (5) If answer to issue No.4 is in the negative, whether the plaintiffs’ claim for demurrage beyond six months from the date of landing of the goods is barred by the law of limitation, as averred in paragraph 1(e) of the 2nd defendant’s written statement ? (6) Whether the plaintiffs prove that the 2nd defendants wee the owners of the suit consignment within the meaning of - 7 - section 2(O) of the Major Port Trusts Act,1963 as averred in paragraph 2 of the plaint ? (7) Whether the 2nd defendants prove that the Defendant No.1 being the sole owner/importer/consignee of the suit consignment, is alone liable for the plaintiffs’ claim as averred in paragraph 3 of the 2nd defendants’ written statement ? (8) Whether the plaintiffs prove that the 2nd defendants’ were the bailors consignees or agents for the custody of the suit consignment, as averred in paragraph 5 of the plaint ? (9) Whether the 2nd defendants prove that they not being the owners of the suit consignment, they could not have cleared the consignment from the custody of the Port Trust as averred in paragraph 7 o the 2nd defendants’ written statement ? (10) What reliefs, if any ? (11) Generally ? The plaintiffs examined one Mr.Santosh Vasant Dighe by filing his affidavit in lieu of oral evidence. The plaintiffs - 8 - produced several documents. The said witness was cross-examined by the learned counsel for the 2nd defendant. The 2nd defendants have not adduced any evidence. 7. The learned counsel for the plaintiffs has taken me through the pleadings, documents on record and notes of evidence. He invited my attention to the relevant portion of the provisions of the said Act of 1963. He invited my attention to clause (O) of the section 2 of the said Act of 1963 which defines the terms of "owner". He also invited my attention to the provisions of section 61 and 62 of the said Act of 1963. He submitted that the said provisions enable the Port Trust to take recourse to sale of goods after lapse of period of two months if the goods remained uncleared. He submitted that there is no outer limit for sale. Inviting my attention to section 63 of the said Act of 1963, he submitted that after applying sale proceeds in the order provided under the said section, the plaintiffs Port Trust are entitled to file a suit for recovery of the deficit amount. He also invited my attention to section 131 of the said Act of 1963. He submitted that without prejudice to their right of taking action under sections 61 and 62, the plaintiffs can always file a suit for recovery of wharfage, demurrage and other charges. He submitted that in case of sale of the goods forming part of consignment, after making adjustment as provided in the statute, the plaintiffs can always file a suit - 9 - for recovery of balance charges. 8. He invited my attention to the earlier suit filed by the plaintiffs. He submitted that the earlier suit was for recovery of deficit after sale of consignment on 27th January 1986. He submitted that after the sale of the said consignment on 27th January 1986, it was found that quantity of 5000 kgs was not lifted by the auction purchaser and therefore the same was required to be sold and accordingly, the same was sold on 5th May 1986. He submitted that in view of section 131 of the said Act of 1963, the cause of action is available to file a suit for claiming the deficit amount in the case of sale. He submitted that the cause of action arose for filing the suit on the basis of the sale effected on 5th May 1986. He submitted that the present suit was maintainable. He submitted that the decree must follow against the 1st defendant as admittedly the 1st defendant is the owner of the consignment. He submitted that in view of clause (o) of section 2 of the said Act of 1963, the decree must follow against the 2nd defendant. 9. The learned counsel for the 2nd defendant invited my attention to the cross examination of the witness examined by the plaintiffs. She submitted that there is no evidence on record to show that the auction purchaser under the sale effected on 27th January 1986 did not clear the entire cargo. - 10 - She submitted that in the cross examination the witness came out with a new case that the quantity of uncleared cargo was 11,030 kg instead of 5000 kg as pleaded in the plaint. It is submitted that there is nothing on record to show that the goods sold on 5th May 1986 were part of the consignment of the 1st defendant. She submitted that there is no evidence on record to show that there was an auction conducted on 5th May 1986 and that the plaintiffs received sale price only 33,310.60. She submitted that apart from the fact that the claim in the earlier suit was for recovery of deficit as regards the entire consignment and in the earlier suit it is not stated that the claim was based on sale of quantity of only 79,720 kgs, there is no advertisement placed on record by the plaintiffs as regards the illegal sale effected on 5th May 1986. She submitted that even a notice was not issued before effecting alleged sale on 5th May 1986. She submitted that the earlier suit was lodged on 25th January 1989 and the present suit was lodged on 4th May 1989. She pointed out that the earlier suit was admittedly unconditionally withdrawn. She also pointed out that the leave under sub rule 3 of rule 2 of Order II of the said Code of 1908 was not obtained in the earlier suit. Lastly, she submitted that the 2nd defendant is not at all liable as the goods discharged in the port were admitted owned by the 1st defendant. I have heard the learned counsel for the 1st defendant. - 11 - 10. I have carefully considered the submissions. I have also perused the plaint, the written statement, documents on record and deposition of the witnesses. It will be necessary to refer to the averments made in the earlier suit filed by the plaintiffs in this Court. In the said suit no.407 of 1989, reliance has been placed on the same notices which are relied upon by the plaintiffs in this suit. Admittedly, both the suits relate to the same consignment. It will be necessary to refer to what is averred in the paragraph no.7 of the plaint in the earlier suit: "As the said consignment had not been cleared for over 2 months from the date of landing thereof, the same was put up for sale by public auction. The list of packages to be sold including the said consignment was published in the Maharashtra Government Gazette dated 26th December 1985 and also in the newspaper - Times of India in its issue dated 23rd December 1985 as required under the provisions of the said Act. The said consignment was thereafter sold on 27th January 1986 under Lot No.T-845 for Rs.8,01,186/-. The plaintiffs state that the sale of the said consignment has resulted in a deficit of Rs.9,66,874.08. The plaintiffs state that the Port Trusts charges accrued on the said consignment amounted to Rs.8,13,274.70, Customs Duty amounted to Rs.4,30,716.47 expenses of sale amounted to - 12 - Rs.1,04,068.91 and I.T.C. Fine amounted to Rs.4,20,000/-. The sale price of Rs.8,01,186/- was adjusted by the plaintiffs against the expenses of sale, customs duty, Port Trust charges and I.T.C. Fine as follows :- . Expenses of sale - Rs.1,04,068.91 . Customs Duty - Rs.4,30,716.47 . Port Trust Charges - Rs. 72,496.78 . I.T.C. Fine - Rs.1,93,903.84 leaving a deficit of Rs.7,40,777.92 towards Port Trust charges and Rs.2,26,096.16 towards I.T.C. Fine which the Defendants are bound and liable to pay to the Plaintiffs. The Plaintiffs are not claiming the balance of I.T.C. Fine." 11. Thus, what is claimed is that the entire consignment covered by lot T-845 was sold on 27th January 1986 and the sale of the consignment has resulted in deficit. It must be noted here that the plaint in the said suit appears to have been lodged in January 1989. The claim in the earlier suit is founded on the sale of the entire consignment of the first defendant and the suit is for recovery of deficit. The - 13 - present suit appears to have been lodged in May 1989. In paragraph 4 of the present suit, a reference has been made to the sale conducted on 27th January 1986. The case sought to be made out is that the auction purchaser cleared approximately 79,720 Kgs and did not lift the balance approximately weighing 5,000 Kgs. Though the earlier suit was lodged in January 1989, surprisingly it is not disclosed in the said earlier suit that the auction purchaser who purchased the consignment on 27th January 1986 did not clear a part of the same weighing 5,000 Kgs. As stated earlier, the present suit relates to a part of the same consignment which was the subject matter of the earlier suit. In the earlier suit, a case was not made out that the purchaser did not purchase the entire consignment. In fact, the case made out in the earlier suit was that the entire consignment was sold and the price thereof was received. There is one more important aspect which needs to be noted. Assuming that the case made out by the plaintiffs in the present suit is correct, before effecting sale of uncleared part of the earlier consignment on 5th May 1986, there is no notice issued by the plaintiffs to any of the parties. There is no record produced to show that the purchaser of the consignment did not clear the entire consignment which was sold to him on 27th January 1986. There is no evidence adduced to show that what was sold on 5th May 1986 under the lot T-845A was the part of the same consignment which was put to auction on 27th January 1986. - 14 - 12. On this aspect, it will be necessary to refer to the evidence of the only witness examined by the plaintiffs. In paragraph no.3 of the affidavit in lieu of evidence, the witness specifically stated that the consignment having manifested weight of approximately 84,000 Kgs was sold on 27th January 1986 and the auction purchaser cleared approximately 79,720 Kgs of goods leaving a balance of 5,000 Kgs. The attention of the witness was invited to a xerox copy of the plaint in the earlier suit and he admitted that it was a copy of the suit filed by the plaintiffs. In paragraph 22, the witnesses admitted that the consignment and goods involved in the present suit were involved in the suit no.407 of 1989 and that an auction was for entire consignment of 84 mt and that it was auctioned. Though the witnesses admitted that the auction sale related to consignment of 84,000 Kgs, he denied the correctness of the suggestion that the auction purchaser continued to be the owner of the balance goods which were allegedly not cleared by him. In paragraph 24, the witness specifically stated that after auction sale of goods, the plaintiffs realised that the unlifted or uncleared cargo was not 5,000 Kgs., but was 11,030 Kgs. In paragraph 25, he has reiterated that when the cargo was lifted by the auction purchaser, the plaintiffs realised that he did not clear entire cargo. At this juncture, it must be noted that it is not at all the case of the plaintiffs that the auction - 15 - purchaser of the cargo in auction held on 27th January 1986 did not pay the full price of the cargo having manifested weight 84,000 Kgs. In fact, the case is that the entire cargo was sold to the auction purchaser. As pointed out in earlier part of the Judgment, there is a categorical assertion in the earlier plaint that what was sold to the auction purchaser was the entire cargo under the lot T-845. Thus, the auction purchaser who purchased the cargo on 27th January 1986 became the owner of the entire cargo forming part of lot T-845. Admittedly, the plaintiffs did not call upon the auction purchaser to lift the cargo which was allegedly uncleared. 13. Apart from all this, it is pertinent to note that admittedly the plaintiffs did not issue a notice before allegedly effecting the sale on 5th May 1986. All this become relevant in the context of admission in paragraph no.26 of cross-examination that in this suit no record is produced by the plaintiffs to show that the balance cargo was not lifted by the auction purchaser. There is further categorical statement that the earlier suit was withdrawn since the second defendant had paid/ satisfied the entire suit liability.In paragraph no.26 the witness came out with the new case the earlier suit was in respect of 79,720 Kgs of the cargo which was lifted by the auction purchaser. 14. Thus, going by their own case, immediately after the - 16 - purchaser who purchased the cargo on 27th January 1986 lifted the cargo, the plaintiffs had realised that there was a some uncleared cargo. All this has happened in January 1986. Apart from the fact that all this is suppressed in the earlier suit, the plaintiffs could have incorporated the claim made in the present suit in the earlier suit filed in January 1989. Secondly, it is not the case of the plaintiffs that the auction purchaser who purchased the cargo on 27th January 1986 became the owner of only a part of cargo having weight of 79,720 Kgs. In paragraph 7 of the earlier suit, the specific case is that the entire cargo under lot No.T-845 was sold on 27th January 1986. The notices at Exhibit ‘P-2’ to Exhibit ‘P-5’ relate to lot T 845. The description of the cargo in the said notices is "four containers white marble slabs". The white marble slabs were stocked in the four containers is the description of the cargo in the Gazette publication at Exhibit ‘P-6’. Even in the plaint in the present suit, the plaintiffs have not come out with the case that the auction purchaser under the auction held on 27th January 1986 purchased only a part of the cargo approximately bearing 79,720 Kgs. Even in the affidavit in lieu of examination-in-chief, the specific statement is that the consignment was initially sold under the lot T 845 on 27th January 1986 and the manifested weight of the said consignment was 84,000 Kgs. The specific case made out in affidavit in lieu of examination-in-chief is not that only a part of the cargo was purchased by the auction - 17 - purchaser on 27th January 1986. The case is that while clearing the cargo, the purchaser cleared the cargo having approximately 79,720 Kgs by leaving uncleared the balance 5,000 Kgs. out of the said consignment and that the said balance of 5,000 Kgs was re-listed for sale under the lot T 845-A. The further case made out on oath is that at the time of giving delivery of the balance quantity to the new auction purchaser, it was noticed that the