IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ADMIRALTY SUIT NO.14 of 2002. ADMIRALTY SUIT NO.14 of 2002. ADMIRALTY SUIT NO.14 of 2002. Satnam Overseas Ltd., a Company incorporated under the Companies Act, 1956 and having its registered office at 201, Vipps Centre, 2 Community Complex. Masjid Moth, Greater Kailash II, New Delhi 110 048 ..Plaintiffs versus 1. m.v.OOCL ABILITY, a foreign flag vessel that had traded within the territorial waters of India together with her hull, tackle, engines, machinery, boats apparels and other paraphernalia as those interested in the 1st defendant vessel 2. m.v. KUO WEI, a foreign flag vessel that had traded within the territorial waters of India together with her hull, takcle, engines, machinery boats, apparel and other paraphernalia and those interested in the 2nd defendant Vessel 3. Any vessel/vessels that are sistership of the 1st and 2nd defendant vessels or any vessels belonging to the 4th, 5th, 6th, 7th, & 8th defendants 4. Orient Overseas Container Lines -2- a company organized under foreign laws and having its office at 31/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong and carrying on business through its agents. M/s. Volkart Fleming Shipping and Services Ltd. 4th floor, 19, J.N.Heredia Marg, Ballard Estate, Mumbai. 5. M/s. Volkart Fleming Shipping and Services Ltd. 4th floor, 19, J.N.Heredia Marg, Ballard Estate, Mumbai 400 001. 6. M/s.Kutch Shipping Agency Pvt. Ltd. a company incorporated under the Companies Act, 1956 and having its registered office at 19/20, Ajanti Comm. Centre, Gandhidham 370 201 Gujrat. 7. M/s. Dattar Lines, a division of M/s. Kutch Shipping Agency Pvt. Ltd. and having its office at 19/20, Ajanta Comm. Centre, Gandhidham 370 201 Gujrat and at 174, Kusum Vijay HOuse, 2nd floor, Room No.7, Modi Street, Fort, Mumbai 400 001. 8. M/s. Canadian Cereals Ltd., a foreign company having its office at Room No.2903 Admiralty Centre. Tower 1, 18 Harcourt Road, Hongkong and Flat A, 15F, Southernn Commercial Building, 11 Luard Road, Wanchai, Hongkong. ..Defendants Mr.Ashwin Shankar for the plaintiffs Ms.N. Sumnani with Mr.Rahul Narichania i/b. Bhat & Saldhana for the defendants 4 & 5 -3- Mr.Umesh Shetty with Ms.Yasmin Chandran i/b. Umesh Shetty & Co. for the defendants 6 & 7. CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. DATED : 3rd April, 2009. DATED : 3rd April, 2009. DATED : 3rd April, 2009. ORAL JUDGMENT. ORAL JUDGMENT. ORAL JUDGMENT. 1. The plaintiffs have filed the suit for recovery of US Dollars 84870/- along with interest at the rate of 12% per annum from the date of filing of the suit till realisation. By prayer clause (b) plaintiffs want that vessels, namely defendant No.1, defendant No.2 and defendant No.3 along with their hull, engine, tackle, machinery, boats, apparels and other paraphernalia be arrested till the plaintiffs’ claim to the extent of US Dollars 84870 along with interest is satisfied. By prayer clause (c) plaintiffs want that the aforesaid vessels namely defendant No.1 and defendant No.2 be detained condemned and sold and the sale proceeds thereof be applied towards plaintiffs’ claim in the suit. Plaintiffs have also sought costs in terms of prayer clause (h). Defendant No.1 is the vessel by name m.v.OOCL ABILITY, defendant No.2 is another vessel m.v.KUO WEI defendant No.3 is vessel/vessels that are sister ships of defendant No.1 or defendant No.2 or -4- any other vessels belonging to defendant Nos.4 to 8. Defendant No.4 is a company organised under the Foreign Laws and doing its business through its agent namely defendant No.5. Defendant No.5 is joined in its capacity as agent of defendant No.4. Defendant No.6 is a company who had issued Multimodal Transfer Document and according to the plaintiffs defendant No.6 was agent of defendant No.4. According to plaintiffs defendant No.7 is the division of Defendant No.6 and they have been joined in their capacity accordingly. Defendant No.8 is a foreign company with whom plaintiffs had entered into suit agreement as regards sale of sesame, more particularly set out in the invoices which are at Exhibits P-5 to P-8. 2. It is the case of the plaintiffs that pursuant to the sale contracts at Exhibit P-1 to P-4 plaintiffs agreed to sale sesame of various quantities as set out in the invoices which are at Exhibit P-5 to P-8 to defendant No.8. According to plaintiffs defendant No.4 issued mates receipts which are at Exhibit P-9 to P-12 and subsequently defendant No.6, in their capacity as agent of defendant Nos.4 and 5 are said to have executed Bills of Lading which are at Exhibit P-13 to P-15 -5- and one bill of lading in regard to invoice No.P-8 is executed by the Company by name Ever Trans Shipping Services Ltd. which bill of lading is at Exhibit P-16. 3. According to plaintiffs, the goods were to be delivered to the defendant No.8 at the address mentioned in the cause title and more particularly set out in the bills of lading at Exhibit P-13 to P-16. It is also the case of the plaintiffs that the bills of lading were to be routed through the bank and defendant No.8 were to pay the costs of the goods to the bank and get the bills of lading and retire the goods from the port. According to the plaintiffs Oriental Bank of Commerce was the bankers operating in India and the plaintiffs had forwarded the original bill of lading to the Oriental Bank of Commerce and that appropriate endorsements were passed on the documents at Exhibit P-33 to P-35 thereby showing that the endorsements were passed enabling the said bankers namely Bank of Communication, Hongkong Branch to receive monies on behalf of plaintiffs. The document at Exhibit P-33, P-34 and P-35 in the submission of the plaintiffs are the documents by which it is clear that Oriental Bank of Commerce -6- had passed necessary endorsement directing that money should be paid to the Bank of Communications and the Bills of Lading should be handed over to defendant No.8 upon payment of costs of the goods. It is the case of the plaintiffs that the plaintiffs Bankers returned the bills of lading at Exhibit P-13 to P-16 as unpaid bills of lading and thereafter plaintiffs made enquiries with the defendant No.8 and defendant No.8 accepted that they received the suit goods. It is the case of the plaintiffs that plaintiffs called upon the defendant No.8 to pay the costs of the goods and the defendant No.8 promised to pay the costs of the goods. Plaintiffs admit that no payment was ultimately made by the defendant No.8. It is the case of the plaintiffs that though Bills of Lading issued by defendant No.6 at Exhibit P-13 and P-15 and, the Bill of Lading at Exhibit P-16 issued by Evertrans Shipping Services Ltd., were lodged with the bank, on account of collusion between defendant Nos.4 to 8, and the goods came to be delivered to defendant No.8 without payment of costs of the goods and to that extent plaintiffs have suffered loss in terms of money. 4. I have perused the plaint. It is the -7- positive case of the plaintiffs that defendant.6 issued bills of lading at Exhibit P-13 to P-15 and Evertrans Shipping Services Pvt. Ltd. issued bill of lading at Exhibit P-16 in the respective capacity as agent of defendant Nos.4 and 5 and because mates receipts were issued by defendant No.4 they are liable to pay costs of the goods. According to the plaintiffs as Defendant No.6 issued Bills of lading they are liable to pay costs of suit goods. According to the plaintiffs defendant Nos.5 and 7 are also liable to pay costs of these goods as they acted as agents of Defendant Nos.4 and 6 respectively. The plaintiffs also expect defendant No.8 to pay costs of the goods as they had received the goods across the port. The writ of summons came to be served on the respective parties except defendant No.8. 5. Learned Counsel for the plaintiffs had to concede that till the stage of hearing of the arguments, defendant No.8 was not served. What is the consequence of this will be considered while delivering the reasons and appropriate order shall be passed hereunder. 6. It is seen that defendant Nos.1 to 3 have -8- been joined as formal parties, this being the suit instituted by the plaintiffs under the Admiralty and Vice Admiralty jurisdiction of this Court. In view of this even if the Court comes to the conclusion that defendant Nos.4 to 8 are liable to pay against the suit no decree is required to be passed against the defendant Nos.1 to 3. 7. Suit summons came to be served upon the defendant Nos.4 to 7 as stated earlier. The defendant No.4 have filed written statement. Defendant No.5 have also filed their written statement. Defendant Nos.6 and 7 have filed a common written statement. Since defendant Nos.8 were not served, there is no question of filing written statement by the defendant No.8. 8. Defendant No.4 have disputed the claim of the plaintiffs and have contended that there is no privity of contract between the plaintiffs and the defendant No.4. In fact, according to them there is no contract between the plaintiffs and the defendant Nos.4 and 5. According to them, the plaintiffs directly contacted defendant Nos.6 and 7 as defendant No.6 were the shipping agents as set out in the sale contract at Exhibit P-1 to P-4. -9- According to them, this defendant No.6 and 7 were never agents of defendant No.4 and that defendant No.5 were the agent of defendant No.4. It is the case of the defendant No.4 that defendant No.6 were Multimodal transport agents and those contracts were contract of affreighment between plaintiffs and defendant Nos.6 and 7. It is also the case of the defendant No.4 that they were not the owners of the vessels namely defendant Nos.1 and 2 and the vessels came in their custody on account of Charter Party Agreement. According to defendant No.4 Contract of Privity was between the plaintiffs on one hand the defendant Nos.6 and 7 and hence there was contract was between the plaintiffs and the defendant Nos.6 and 7. It is also the case of defendant No.4 that defendant No.5 had issued mates receipts but that does not constitute contract of carriage or impose duty of care upon the defendant No.4 to properly carry and deliver the said cargo. It is denied by the defendant No.4 that the plaintiffs had submitted to the bankers the documents. It is also denied by the defendant No.4 that defendant No.4 in collusion with the defendant Nos.6 and 7 delivered the goods to the defendant No.8 without making payment to the bankers. It is also denied by the defendant that defendant No.4 -10- caused losses to the plaintiffs. With these points, defendant No.4 have prayed for dismissal of the suit and have ofcourse prayed for costs. 9. Written statement was filed by defendant No.5. Defendant No.5 have contended that as defendant No.4 were principals of defendant No.5 and since that relationship was disclosed as between plaintiffs and defendant Nos.4 and 5, defendant No.5 being agents of disclosed principal defendant No.5 are not liable to pay damages in accordance with the provisions of Section 230 of the Contract Act. It is also contended by the defendant No.5 that there is no independent cause of action against defendant No.5 and hence defendant No.5 are not liable to pay suit claim. 10. Written statement came to be filed by defendant Nos.6 and 7. According to them, plaintiffs have in terms admitted that defendant Nos.6 and 7 were agents of defendant No.4 and hence that would disclose the case that defendant No.6 are the agent of the disclosed principal namely defendant No.4 and therefore the defendant Nos.6 and 7 are not liable. According to the defendant Nos.6 and 7 without the knowledge of defendant -11- Nos.6 and 7, Express Talent Holdings Ltd., Hongkong issued fresh set of bills of lading in respect of the suit goods to defendant No.8. According to the defendant Nos.6 and 7 Express Talent Holdings Ltd. were the delivery agents and hence issuance of bills of lading by Express Talent Holdings Ltd., was completely illegal and unauthorised and defendant Nos.6 and 7 are not bound by or liable for the action of the Express Talent Holdings Ltd. According to defendant Nos.6 and 7, on account of the bills issued by the Express Talent Holdings Ltd., the goods were delivered to defendant No.8 at Kaohsiung, Taiwan by said C.L. Taiwan Ltd., According to defendant Nos.6 and 7 Express Talent Holding Ltd., ought to have been joined as necessary party and thus suit is liable to be dismissed. 11. It is also the case of the defendant No.6 that the defendant No.6 were only shipping agents and that on learning about issuance of bills of lading by Express Talent Holding Ltd., they had warned plaintiffs accordingly and as such according to defendant Nos.6 the plaintiffs knew the entire transaction and therefore the defendant Nos.6 and 7 are not liable. The allegations of mis-delivery in -12- collusion with defendant Nos.4 and 5 are denied. The allegations of loss to the plaintiffs is also denied and subject to the aforesaid stand the defendant Nos.6 and 7 have denied allegations levelled against them. 12. On the basis of the pleadings as aforesaid, issues came to be framed and following are the issues on which the trial proceeded Issues Findings 1. Whether the plaintiffs In the affirmative prove that they are entitled to maintain the suit against all the defendants? 2. Whether the plaintiffs In the negative prove that the defendant Nos.6 & 7 have acted as disclosed agents / constituents on behalf of the defendant Nos.4 & 5? 3. If the answer to the Does not survive above is in the affirmative, whether the defendant NO.6 & 7 are liable for the alleged loss of goods or damage claimed by the plaintiffs in respect of the said alleged loss? -13- 4. Whether the plaintiffs In the negative prove that the defendant no.6 have made numerous misrepresentations to the plaintiffs as alleged? 5. If the answer to the Does not survive above is in the affirmative whether the plaintiffs prove that the plaintiffs were induced to enter into the contract with the defendant Nos.1, 2 and 4 on the basis of the alleged misrepresentation? 6. Whether the plaitniffs In the negative prove that the multimodal transport documents issued by the defendant No.7 were not in conformity with the plaintiffs requirments and trade and caused losses to the plaintiffs as alleged? 7. Whether the plaintiffs In the negative prove that the defendant No.7 issued the multimodal transport document in collusion and connivance with other defendants? 8. Do the plaintiffs prove In the negative that they have privity of Contract with the defendant No.4? In the absence of privity of Contract whether the plaintiffs prove that they have any cause of action against the defendant No.5? -14- 9. If the above issued is Does not survice in the affirmative, do the plaintiffs prove that the defendant No.4 as the principals of defendant Nos.6 & 7 empowered the defendant Nos.6 & 7 to issue the multimodal transport documents? 10. Do the plaintiffs prove In the negative that the defendant No.5 being the agent of a disclosed principal viz. defendant No.4 is liable to pay the plaintiffs claim? 11. Do the plaintiffs prove In the negative that the defendant Nos.4 and 5 are liable for breach of contract of carriage and duty of care? 12. Whether the plaintiffs In the negative prove that the issuance of the Mates receipt by the defendant No.5 either constitutes contract as between the plaintiffs and the defendant Nos.4 & 5 or imposes a duty of care upon the said defendants to properly carry and deliver the cargo? 13. Whether the plaintiffs In the negative prove that there was collusion and/or connivance between the defendants in misdelivering the cargo? -15- 14. Whether the plaintiffs In the negative prove that the defendants have misdelviered the cargo? 15. Whether the defendant In the affirmative Nos.6 & 7 prove that Express Talent Holdings Ltd., Hongkong are a proper and necessary party and hence their non joinder in the suit renders it non maintainable against the defendant Nos.6 & 7 ? 15A. Whether the defendant Does not survive Nos.6 & 7 prove that the claim of the plaintiffs should be against CLT Taiwan Ltd.? 16. Whether the plaintiffs In the negative prove their claim of US$ 84870? 17. Whether the defendant No.4 proves that this Court Does not survive has jurisdiction? 18. Whether the defendant No.4 proves that suit is Does not survive barred by limitation? 19. What Orders and what reliefs? As per order below 13. At the stage of recording of evidence, on behalf of the plaintiffs Mr.Yogesh Belani, -16- representative of the plaintiffs came to be examined as P.W.1, Mr.Suchir K. Saha, employee of Liladhar Passoo Pvt. Ltd. was examined as P.W.2. M/s. Liladhar Passoo Pvt. Ltd. were the forwarding agents in regard to the suit goods. On behalf of the defendant No.4 and defendant No.5, Mr. Rajendra Kurup, employee of the defendant No.5 came to be examined as D.W. No.1. Mr.K.V.Harindran, Assistant Manager of defendant No.4 was examined as D.W. No.2. Mr.Kiran Talwadekar Accounts Executive of the defendant No.5 was examined as D.W.3., Mr.Kunal Sen, Sales Executive as Defendant No.4 was examined as D.W.4. It is required to be mentioned that no evidence came to be placed before the Court on behalf of the defendant Nos.6 and 7. 14. Considering the entire record, following are the important exhibits which figure in the trial. Exhibits P-5 to P-8 are the sales contract between the plaintiff on one hand and defendant No.8 on the other and these sales contract disclose various terms and conditions and also the status of the defendant No.6 as Buyer’s Shipping agents and Oriental Bank of Commerce as bankers. Exhibit P-5 to P-8 are the invoices issued by the plaintiffs in the name of defendant No.8 and consignee to these -17- invoices were "To Order" i.e. to say specific name of defendant No.8 was not included as consignee, however, the person who was to pay the bill to the bank would be able to get delivery of the goods. Exhibit P-9 to P-12 are the mates receipts concerning the four consignments in regard to which invoices at P-5 to P-8 were received. P-13 to P-15 are the bills of lading issued by defendant No.6 in regard to suit goods. P-16 is the bill of lading issued by M/s. Evertrans Shipping Services Pvt. Ltd. in regard to part of the suit goods i.e. 1800 bags of sesame, and the notified party was defendant No.8 and consignee was To Order. P-17 onwards are the various documents which were required to be submitted for the purposes of complying with the various rules and regulations as regards export of the suit goods. P-33 to P-35 are the documents which indicate the costs of the goods, the person to whom the goods are to be sold, the bankers through whom the goods were to be attended to etc and in particular, on the reverse of these three documents, an endorsement is appearing executed by Oriental Bank of Commerce, thereby giving directions that the payment should be made to Bank of Communication, Hongkong. This endorsement is of relevance as monies were to be paid to Bank of Communication at -18- Hongkong so that the said monies could have been ultimately paid to the plaintiffs. Exhibit D-1(A) and D-2(A) are the two original bills of lading issued by defendant No.4 forming part of letter received by defendant No.4. Along with the bills of lading were enclosed the two letters which were issued by defendant No.6 in favour of defendant No.4 directing defendant No.4 to deliver the goods covered by these two bills of lading to CLT Taiwan Ltd. Defendant No.4 have not been able to produce the third bill of lading. However, in the evidence led on behalf of the defendant No.4 there is reference to that. D-1 to D-3 are the Xerox copies of the bills of lading issued by defendant No.4 wherein defendant No.6 is shown as shipper and consignee is seen as CLT Taiwan Ltd. D-4 and D-5 are the two letters received from defendant No.6, addressed to defendant No.4 directing defendant No.4 to deliver the suit goods covered by those two bills of lading to CLT Taiwan Ltd. Defendant NO.4 have not been able to produce the third bill of lading (Xerox copy) as also concerned letter said to have been issued by defendant No.6 in favour of defendant No.4 ordering defendant No.4 to deliver the suit goods covered by the said bill of lading to CLT Taiwan Ltd. D-9 collectively are the receipts -19- issued by defendant No.4 in regard to shipment charges paid to defendant No.4 and according to defendant No.4 these receipts clearly go to show that the shipment charges were paid by defendant No.6 as defendant No.6 were the buyer’s shipping agent. 15. It is required to be mentioned that the evidence in the present suit came to be recorded before the Commissioner. It must be mentioned that before the matter was referred to for recording of evidence, the various documents on which the respective parties wanted to rely upon were not marked as exhibit/ for identification and that is how the Commissioner proceeded with recording of evidence. It is at the stage of arguments respective learned Counsels went through the various documents and all the aforesaid documents and some other documents came to be marked as Exhibits and it must be specifically mentioned that all the aforesaid documents which have bearing on the decision of the matter were referred to by the respective counsels and therefore the same will be referred to while deciding the suit. 16. With the assistance of the learned Counsels -20- on both the sides, I have considered the rival submissions. In the first place, it may be convenient to deal with certain issues which do not really call for any detailed discussion. REASONS Issue No.17. Issue No.17. Issue No.17. 16. This reates to the questin as regards jurisdiction of the Court and the burden was on the defendant No.4 to deal with this issue. It must be mentioned that learned Counsel for the defendant No.4 had not pressed this issue at the stage of arguments and accordingly issue No.17 does not survive. Issue No.18. Issue No.18. Issue No.18. 17. So ar as this issue is concerned, learned Counsel for the defendant No.4 had not pressed this issue which pertains to the question of limitation and that is how the issue No.18 does not survive. Issues Nos.1 to 16. Issues Nos.1 to 16. Issues Nos.1 to 16. -21- 18. Keeping in view the facts of the case and evidence before the Court the issues at Serial Nos.1 to 16 can be discussed together. 19. At the outset it is required to be mentioned that defendant Nos.1 and 2 are not liable to pay the suit claim. Even if it is accepted for a moment that the plaintiffs case is proved against the other defendants no decree in terms of money can be passed and Defendant Nos.1 and 2 and the suit will have to be dismissed so far as defendant Nos.1 and 2. Same is the position as regards be dismissed so far as defendant No.3. 20. The plaintiffs have joined defendant No.8 in their capacity as purchaser of the suit goods. Plaintiffs have led evidence to show that the suit goods were delivered to defendant No.8. As defendant No.8 were joined as party defendant, it was the duty of the plaintiffs to serve defendant No.8. The record