1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALTY & VICE ADMIRALTY JURISDICTION ADMIRALTY SUIT NO. 27 OF 1999 Geetanjali Woollen Pvt. Ltd., .. Plaintiffs. vs. m.v. X-Press Annapurna & Ors. .. Defendants. Mr. Pradeep Sancheti with P.S. Gidwani S. Deshmukh and Ms. Bhatia for plaintiffs. Mr. S.K. Shah with N. Lal and Ms. N.S. Sumnani i/by Bhatt and Saldhana for Defendant Nos. 1 and 4. Mr. G. Desai with M.V. Thakkar i/by Bootwala & Co. for Defendant No. 2. Mr. R.S. Jaisinghani with Ms. R. Tanna i/by S.K. Legal Assoc. for Defendant No. 3. CORAM : S.U.KAMDAR, J. CORAM : S.U.KAMDAR, J. CORAM : S.U.KAMDAR, J. DATE : 9th DATE : 9th DATE : 9th August, 2005. ORAL JUDGMNT : . This suit is filed in the admiralty jurisdiction of this Court by the plaintiff for the recovery of US Dollars 57,860.00 with further 2 interest at the rate of 18% per annum on the principal amount of US Dollars 50,000/- as per the particulars of claim which is annexed at Exhibit F to the plaint. The said particulars of claim indicates that a sum of US Dollars 45,065.00 is claimed towards the value of the goods in respect of Container No. 106397(O) and further claim for other charges of US Dollars 6,309.10 recoverable towards D.E.P.B. and interest for the period from 14.4.1998 to 27.12.1998. 2. Some of the material facts of the present case briefly enumerated are as under :- 3. In respect of the contract for export, the plaintiff was required to export the goods to one M/s. Asfeha Tewolde K/Yesus (East African Blanket Plant, Ethiopia) and for the said export the Commercial Bank of Ethiopia, Addis Ababa, Ethiopia established an irrevocable letter of credit in favour of the plaintiff. Under the said letter of credit, it was inter alia provided that the shipment which was required to be effected not later than 20.4.1998. The said shipment was to be effected from any Indian Port to Assab Port, being the port of destination. The plaintiff thereafter approached the 3rd defendant who was acting as an agent of the 2nd defendant and was booking the cargo on the 1st defendant ship of which the 4th defendant is the 3 owner. The plaintiff and the defendant no. 3 who was acting as an agent of the 2nd defendant who in turn was acting on behalf of the first and the fourth defendants for hire of the cargo on the said ship. Pursuant thereto, two containers bearing No. LMCU 106397 (O) and LMCU 106410 (7) were handed over to the plaintiffs for the purpose of stuffing. The plaintiff thereafter stuffed the goods i.e. 36 bales of yarn and binding ribbon in each container. Thus, the total goods in respect of the said two containers were around 72 bales of yarn and binding ribbon therein. M/s. Jupiter Shipping Agency was appointed as a clearing and forwarding agent who processed all the documents and other requirements as provided under the provisions of various statutes. A shipping bill was prepared for export of the said goods to the customs. After inspection the said goods were sealed by the Customs Authorities and the containers were handed over to the 3rd defendant for the purpose of shipping the same on the 1st defendant vessel on 7.4.1998. On receipt of the said container the 3rd defendant issued three mate receipts bearing no.2905, 2906 and 2907 all dated 1.4.1998. The plaintiff also obtained a duly certified shipping bill indicating the shipment of the said goods on the 1st defendant vessel. After obtaining the mate receipt the plaintiff prepared various documents such as invoice containing the said container numbers, packing list, 4 and other documents for the purpose of forwarding the same to the buyer to negotiate the same for clearing of the goods. One of the documents which was required for the purpose of taking delivery of the goods by the buyer at the port of destination was the bill of lading which was required to be issued by the 3rd defendant. 4. It is the case of the plaintiff that the plaintiff approached the 3rd defendant for release of the bill of lading covering the shipment of the two containers against the mate receipt. However, defendant no. 3 insisted on payment of the charges firstly of outstanding arrears and secondly in respect of the suit consignment. It is the case of the plaintiff that pursuant thereto, the plaintiff issued two bankers’ cheques one for Rs. 4,53,560/- covering the outstanding dues which were due and payable by the plaintiff to the 3rd defendant and another bankers’ cheque for Rs. 1,52,700/- being the freight payable in respect of the shipment of the suit consignment. After handing over the said two drafts as also the mate receipts which were issued by the 1st defendant vessel for the said two containers, the 3rd defendant was required to hand over the bill of lading evidencing the shipment of the goods by the said ship which were to be forwarded to the port of destination for the purpose of taking delivery of the said goods by the buyer. 5 The aforesaid fact the plaintiff recorded in their letter dated 13.4.1998 addressed to the 3rd defendant. 5. Further in the meantime, the vessel sailed to the port of destination. Thus, the goods which were loaded in the vessel were on the voyage to the port of destination. However, the 3rd defendant in spite of obtaining the necessary payments from the plaintiff both in respect of the outstanding arrears as well as in respect of the suit consignment, did not issue the bill of lading. He inter alia contended that there were some other outstanding due and payable by one Deepak Woollen Mills Ltd. With the result, the goods though landed at the port of destination delivery thereof could not be taken in the absence of the bill of lading. In spite of the repeated requests, the 3rd defendant did not issue the bill of lading and in the meantime the letter of credit lapsed and the value of the consignment has been lost. The plaintiff is neither able to recover the said goods nor the payment thereof. By a letter dated 24.7.1998 the plaintiff informed the defendant that the validity of the letter of credit has expired and whereabouts of the goods are also not known though the said goods were loaded on the 1st defendant vessel for discharge of the same to the port of destination. The plaintiff also called upon the defendant no. 3 that inspite of making payment 6 and complying with all obligations on their part, the defendant no. 3 had defaulted by not issuing the bill of lading as required as an obligation of the shipper and thus the plaintiff will be entitled to their claim as mentioned in the invoice. Another notice was also given on 11.8.1998. However, in reply thereto the 3rd defendant denied their liability by a letter dated 13.8.1998. Ultimately, a further advocate’s notice was given on 24.9.1998 and the present suit is filed for recovery of the aforesaid amount. 6. It is the case of the plaintiff that under the provisions of Carriage of Goods by Sea Act the bill of lading being the document evidencing the title is required to be issued by defendants and an obligation is cast upon the carrier/ operator/ agent to issue the bill of lading or some other document certifying therein that the said goods are shipped on board and that they will deliver the same to the holder thereof on the presentation of the same to them. It is the further case of the plaintiff that the defendant cannot withhold the said bill of lading particularly when the entire charges for the carriage of the goods have been paid. In the aforesaid circumstances, the plaintiff claims in the present suit the aforesaid amount towards the goods lost by virtue of inaction on the part of the defendant no. 3 to issue the bill of lading. The 7 plaintiff has also sued the defendant no. 2 who is admittedly the principal of defendant no. 3 and thus liable in respect of the present goods. The plaintiff has also sued the defendant nos. 1 and 4 because according to the plaintiff, the defendant no. 1 is the vessel on which the said goods were shipped. The defendant no. 4 is the owner of the ship and under a chartered party agreement, he has chartered the vessel through third party who has in turn chartered the vessel to the 2nd defendant permitting the 2nd defendant through his agent the 3rd defendant to book the cargo on the ship. It is the case of the plaintiff thus that in respect of the said goods which is lost in the course of the aforesaid transaction, all the defendants are jointly and severally liable for making payment of the value of the goods and consequent interest for non-receipt of the said payment. 7. The defendant nos. 1 and 4 have filed their written statement inter alia denying their liability. In the written statement it is their case that they are not party to the transaction which is the subject matter of the suit. It has been contended that there is no privity of contract between the plaintiff and the defendant no. 4 who is the owner of the vessel. Consequently the defendant no. 1 being the asset of the 4th defendant cannot be sued for the recovery of the 8 said claim. It is further case of the defendant no. 1 and 4 that the vessel of the defendant no. 4 was wrongfully arrested and by virtue of such arrest the defendant nos. 1 and 4 were forced to give security for expeditious release of the 1st defendant vessel and, therefore, the suit of the plaintiff should be dismissed. It has been contended that unless the defendant no. 4 is liable the 1st defendant cannot be held liable because before a claim can be made in rem it must first lie in personam against the owner of the vessel. It is further contended that in so far as the defendant no. 1 and 4 are concerned, by virtue of taking the cargo from port of loading in India to the port of discharge at Assab Port, they have already discharged their obligation and thus they are not liable for any claim of the plaintiff herein. It is further contended that the liability to issue bill of lading is not that of the 1st and the 4th defendant but only of 2nd and 4th defendants and thus, there is no breach of any obligation on their part. It has been contended that it is no doubt true that the 2nd and 3rd defendants were liable to issue the bill of lading but they have not issued the same because there is a dispute and for which defendant nos. 1 and 4 cannot be held liable. In view of the aforesaid contention it has been contended that the suit is liable to be dismissed. 8. The defendant nos. 1 and 4 have thereafter 9 filed a supplemental written statement in which they have inter alia denied the valuation of the claim by the plaintiff in the present suit. 9. The second defendant who is the principal of the 3rd defendant has also filed a written statement. They have contended that in so far as the act on the part of the 1st defendant is concerned of not issuing the bill of lading, the 2nd defendant is not liable because the 3rd defendant has acted on their own and without any prior consent/permission/instructinos from the 2nd defendant in the matter of shipment of cargo. It has been further contended that the 2nd defendant is not liable for the so called act on the part of the 3rd defendant because it was not within the scope of agency and/or not done with any prior knowledge or consent or permission of the 2nd defendant. It has been contended that even if the act of the 3rd defendant is illegal, then the 3rd defendant alone is liable for such an act or omission and the 2nd defendant as a principal cannot be saddled with the said liability. In so far as the merits of the case is concerned, the 2nd defendant has supported the 3rd defendant by contending that it is unbelievable that the plaintiff would take the risk of suffering loss of US$ 57,860.00 for non-payment of small amount of Rs. 3,86,915/- which was demanded by the 3rd defendant and thus the present suit of the 10 plaintiff must be dismissed. The rest of the written statement of the 2nd defendant proceeds on the basis of denials. He has further contended that the plaintiff should have paid the said amount demanded by the 3rd defendant of Rs. 3,86,915/- at least under protest so as to save the cargo and the value of the goods which is otherwise lost. 10. The written statement of the 3rd defendant which is the priority responsible party in the present case by non-issuance of a bill of lading inter alia contends that the suit as against the 3rd defendant should be dismissed because they are acting on behalf of the disclosed principal i.e. the 2nd defendant. It has been further contended that the present suit is liable to be dismissed because of suppression of material facts. In the written statement the defendant has put up an oral agreement. 11. It is the case of the 3rd defendant that Mr. Deepak Goel, Mr. Pandey and Mrs. Lobo were entrusted on behalf of the plaintiff to look after the export of cargo on behalf of the plaintiff and the Group companies of the plaintiff. Deepak Woollens Ltd., was also, according to them, a group company of the plaintiff, The said Deepak Woollens Ltd., is under common management of Mr. Surendra Goel, Mr. Virendra Goel and Mr. Deepak Goel who 11 are the directors of both the companies and belong to the Goel family. It is their case that even for shipment of cargo Deepak Goel requested the 3rd defendant to provide to the plaintiff and Deepak Woollens Ltd., credit for payment of freight and other charges in respect of shipment of export cargo. Pursuant to the said arrangement, the credit facility was provided for a period of 12 to 20 days. Though the initial payments were made on time subsequently there were defaults on the part of the plaintiff as well as Deepak Woollens Ltd,. According to the plaintiff as on the February/March, 1998 i.e. just prior to the shipment, large amount was due and payable both by the plaintiff and said Deepak Woollens Ltd., It is their case that on 13.3.1998 when the plaintiff approached the defendant no. 3 for shipment of the goods under the two containers to Assab an understanding was arrived at that outstanding amount of the plaintiff as well as of the Deepak Woollens Limited would be paid along with charges for the suit consignment. According to defendant no. 3, the said arrangement was arrived at with Surendra Goel and under that arrangement the 3rd defendant accepted the consignment. Though the plaintiff paid the outstanding dues towards their own outstanding by a demand draft, the second demand draft for Rs. 1,52,770/- which was the exact freight of the ship consignment was in fact paid not towards the suit 12 consignment but towards the outstanding payable by Deepak Woollens Ltd., According to the defendant no. 3, therefore, there is no payment made of the freight charges of the suit consignment and also a part of the dues is still outstanding as due and payable by the plaintiff to the 3rd defendant towards the liability of Deepak Woollens Ltd., It is under these circumstances the plaintiff did not issue the bill of lading unless they receive the entire payment. 12. It is the case of the 3rd defendant that thus the 3rd defendant is not liable because they were not liable to issue the bill of lading under the oral arrangement till and until they received the entire outstanding dues of Deepak Woollens Ltd., also and, therefore, they are justified in withholding the said bill of lading. It is the case of the defendant no. 3 that consequently they have filed a summary suit being Summary Suit No. 2752 of 2002 against Deepak Woollens Ltd., in respect of the outstanding dues. It is, therefore, the case of the 1st defendant that in the aforesaid circumstances, the plaintiff has failed to get the bill of lading released and, therefore, it is a breach on the part of the plaintiff of such an oral arrangement and thus the defendant no. 3 be exonerated from any liability towards the suit claim. 13 13. On the aforesaid pleadings, the issues were framed which read as under :- 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., who had entered into a further charter with Shreyas Shipping Ltd., who in turn had a connecting 14 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 Bill 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 15 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? 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 16 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 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? 17 25. What reliefs? 14. After the issues were framed, the matter was referred to the Commissioner for recording evidence. The said order appointing the Commissioner has been passed on 18.7.2002 by the learned Single Judge of this Court. The idea of appointment of the Commissioner was to expedite the hearing of the suit because once the evidence is recorded the matter can be heard expeditiously. However, the said Commissioner returned the papers as his term expired on 23.3.2003 without completing the said evidence. Thus, because of non-cooperation of the parties the Commissioner could not conclude the evidence. When the matter was placed before me on 9.6.2005, I once again extended the time directing the Commissioner to complete the evidence by 30.6.2005. Inspite of the extension granted though the plaintiff has concluded their evidence, the 3rd defendant did not make himself available for recording the evidence. With the result, the said time of 30.6.2005 also expired without recording any evidence whatsoever before the Commissioner. An application was made before me by the 3rd defendant for extension of time before the Commissioner which I declined and thereafter I myself recorded the evidence of the 3rd defendant after imposing cost against the 3rd defendant. The aforesaid features of the present case are not 18 isolated to this case but I find that in most of the suits where the Commissioner is appointed under Order 26 Rule 4 of the Code of Civil Procedure, which has been introduced with an intention to expedite the trials of the suits, the evidence is not progressing before the Commissioner for years together. Parties after obtaining the orders to record evidence before the Commissioner do not further act with the result one or two witnesses are also not examined even after the expiry of 2-3 years. In my opinion, this act on the part of the advocates results in further delaying the suit rather than expediting the same. Once the suit goes out of the purview of the Court by virtue of the appointment of Commissioner I also find that there is no monitoring by the Court in respect of the recording of the evidence on Commission. In most of the cases, extensions are granted as a matter of course with a view to see that parties do not get affected. Further, the parties taking advantage of such a justice oriented approach by the Court in fact does not diligently proceed with the matter and co-operate with the Commissioner in recording the evidence. The parties are saddled with all cost, charges and expenses of the Commissioner. Adjournments are frequently sought before the Commissioner on the ground of availability or non-availability of the witnesses and are mechanically granted apart from the fact that before the Commissioner objections of all sorts are raised 19 which ultimately lengthens the procedure. I am not at any point suggesting that the mechanism of recording evidence by the Commissioner should be dispensed with because it is now well known fact that burden on Courts has become so huge that to record evidence in respect of each of the suit is very difficult if not almost impossible. I am of the opinion that appropriate mechanism be innovated for monitoring the conduct