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 AND VICE ADMIRALTY JURISDICTION ADMIRALTY AND VICE ADMIRALTY JURISDICTION ADMIRALTY AND VICE ADMIRALTY JURISDICTION ADMIRALITY SUIT NO.11 OF 2002 ADMIRALITY SUIT NO.11 OF 2002 ADMIRALITY SUIT NO.11 OF 2002 M/s.Anjani Enterprises Ltd, a Company ) incorporated under the Companies Act, ) 1956 and having its registered office at) 26, Church Road, Gopal Bhawan, ) Silliguri 734 401 and its branch office ) at "White Tower", 2nd Floor, 115 College) Street, Calcutta 700 012. )...Plaintiffs Versus 1. m.v.WAN HAI 303, a foriegn flag ) vessel presently at port JNPT ) within the territorial waters of ) India together with her hull, tackle,) engines, machienry, boats, apparel ) and other paraphemalia. ) 2. m.v.WAN HAI 213, a foreign flag ) vessel which trades in the ) territorial waters of India together ) with her hull, tackle, engines, ) machinery, boats, apparel and other ) paraphemalia. ) 3. Wan Hai Limited, Company organized ) under the foreign laws and having its) office at 10th Floor, 130 Sung Chiang) Road, Taipei, Taiwan, ROC and ) carrying on business through their ) agents Omega Shipping Pvt Ltd, ) Hansraj Damodar Trust Building, ) Ground Floor, 12/14 Goa Street, ) Estate, Mumbai 400 038. ) 4. M/s.Volkart Fleming Shipping and ) Services Limited, 4th Floor, 19, ) J.N.Heredia Marg, Ballard Estate, ) Mumbai 400 001. ) 5. M/s.Kutch Shipping Agency Pvt Ltd., ) a company incorporated under the ) Companies Act, 1956 and having its ) registered office at 19/20, Ajanta ) Comm. Centre, Gandhidham, ) Gujarat 370 201. ) ... 2 ... 6. M/s.Dattar Lines, a division of ) M/s.Kutch Shipping Agency Pvt Ltd., ) and having its registered office at ) 19/20, Ajanta Comm. Centre, ) Gandhidham, Gujarat 370 201, and ) at 174, Kusum Vijay House, 2nd Floor,) Room No.7, Modi Street, Fort, ) Mumbai 400 001. ) 7. M/s.Canadian Cereals Ltd., a foreign ) company having its office at Room ) 29003 Admiralty Centre, Tower 1, 19, ) Harcourt Road, Hongkong and at 15A, ) Southern Commercial Building, ) 11 Luart Road, Wanchai, Hongkong. )...Defendants --- Shri Sunip Sen and Ashwin Shankar i/by R.A.Fernandes for the Plaintiffs. Shri T.N.Subramaniam, Sr Advocate i/by V.Subramaniam for the Defendant Nos.1 to 3. Shri Rahul Narichania with Ms Sumani i/by Bhatt and Saldhana for the Defendant No.4. Shri Umesh Shetty for the Defendant Nos.5 and 6. --- CORAM : ABHAY S.OKA, J. CORAM : ABHAY S.OKA, J. CORAM : ABHAY S.OKA, J. DATE ON WHICH JUDGMENT DATE ON WHICH JUDGMENT DATE ON WHICH JUDGMENT IS RESERVED. : 04TH OCTOBER, IS RESERVED. : 04TH OCTOBER, IS RESERVED. : 04TH OCTOBER, 2007. 2007. 2007. DATE ON WHICH JUDGMENT DATE ON WHICH JUDGMENT DATE ON WHICH JUDGMENT IS PRONOUNCED. : 19TH NOVEMBER, IS PRONOUNCED. : 19TH NOVEMBER, IS PRONOUNCED. : 19TH NOVEMBER, 2007. 2007. 2007. --- JUDGMENT: JUDGMENT: JUDGMENT: 1. The plaintiffs have filed this suit for various reliefs including a decree against the defendants for a sum of US $ 36,180 as per the particulars of claim shown in Exhibit ‘A’ annexed to the plaint together with further interest thereon at the rate of 12% per ... 3 ... annum from the date of institution of the suit till realisation. 2. According to the case of the plaintiffs, the first defendant is the foreign flag vessel and at the time of institution of the suit the said vessel was in the port of JNPT within the territorial waters of India and the admiralty jurisdiction of this Court. The second defendant is also a foreign flag vessel. It is case of the plaintiffs that the first and second defendant vessels are owned by the third defendants. It is alleged that the second defendant is a sister ship of the first defendant. 3. According to the case of the plaintiffs the third defendants are a company incorporated under the laws of Taiwan having their registered office as shown in the cause-title of the plaint. It is stated that a mates receipt and bills of lading were issued by the fourth defendant company on behalf of the third defendants. According to the case of the plaintiffs the fourth defendants are a company incorporated under the Companies Act, 1956 and the said defendants have acted as agents on behalf of the second and third defendants and are empowered to issue bills of lading and mate receipts on behalf of their agents i.e the ... 4 ... third defendants. According to the plaintiffs, the fifth defendants are a company incorporated under the Companies Act, 1956 and have acted as multimodal transport operators jointly with the third and fourth defendants. It is alleged that the fifth defendants have been empowered by the third and fourth defendants to issue receipts/documents in the nature of bills of lading/multimodal transport documents in respect of cargo that may be carried and entrusted for shipment on the first and second defendant vessels. The plaintiffs have submitted in the alternative that the fifth defendants have acted as constituents on behalf of the third, fourth and sixth defendants. 4. It is alleged in the plaint that the sixth defendants are agents of the fifth defendants and the sixth defendants have issued multimodal transport documents. It is alleged that the sixth defendants are principles of the fifth defendants and that the sixth defendants have also acted as constituents on behalf of the first, second and third defendants. 5. According to the case of the plaintiffs, the seventh defendants placed an order upon the plaintiffs for shipment of sesame seeds. The contract of sale was duly confirmed by a confirmatory note dated 10th ... 5 ... August, 2001 and pursuant to the said contract, the plaintiffs sold various grades of sesame seeds to the seventh defendants. As per the terms of the sale contract, the plaintiffs were required to draw the invoices for the value of the cargo and full payment of invoice value was required to be made on presentation of the documents at site by the bankers of the seventh defendants. The plaintiffs’ bankers Oriental Bank of Commerce, Calcutta were required to forward the documents to the bankers of the seventh defendants. It is alleged that as per the terms of the contract, the sale was a "Free on Board" basis and therefore, the plaintiffs were responsible only to the extent of ensuring that the cargo containing the goods was loaded on board of vessel. 6. The seventh defendants had required the plaintiffs to contact the fifth defendants for the shipment of goods. The fifth defendants directed the plaintiffs to contact the third and fourth defendants who would be responsible for the carriage. The plaintiffs ascertained that the second defendant vessel was expected around the time when the plaintiffs were required to ship the goods. The plaintiffs were allegedly informed that the third and fourth defendants would be instrumental in protecting ... 6 ... the shipment by receiving, loading and discharging the cargo at the destination contracted for by the plaintiffs and by issuing requisite receipts/bills of lading. 7. The plaintiffs entrusted the containers after obtaining clearance of the custom authorities. The fourth defendants issued a mate receipt to the plaintiffs for rolled sesame seeds in 1800 bags. On the basis of the said mate receipt, the plaintiffs approached the fourth defendants for issuance of a bill of lading since the bill of lading was required for the purpose of receiving payments of the said consignment through the authorised channel of the plaintiffs bankers. Though the fourth defendants were obliged to issue bill of lading, on their directions the plaintiffs approached the fifth defendants. The fifth defendants accordingly issued the bill of lading in the nature of a multimodal transport documents as agents for the sixth defendants. In the said multimodal transport document, the plaintiffs were shown as the shippers. In the column of notified address, the name of the seventh defendant has been shown. According to the case of the plaintiffs, in the multimodal transport document in the column "consignee (or order)", the words "to the order" have ... 7 ... been shown. According to the plaintiffs, such multimodal transport documents protect the shippers and the goods become deliverable only upon production of the original set of bills of lading/multimodal documents which get endorsed by the bank in favour of the holder thereof for the value. According to the case of the plaintiffs, they continue to the entitled to the goods until the receipt of the payment which entitles the buyer to receive various documents with the endorsement that on presentation of the documents, the holder thereof is entitled to receive the goods for value as a buyer. 8. After receiving the multimodal transport documents from the fifth and sixth defendants, the plaintiffs submitted the same to the Oriental Bank of Commerce. The plaintiffs submitted invoice and packing list to the said bankers alongwith a certificate of origin, a certificate of weight and quantity etc. The said documents were submitted by the plaintiffs to enable their bankers in turn to forward the same to the seventh defendants’ bankers who became responsible for recovery of the payment from the seventh defendants and to have the said payment remitted to the plaintiffs’ bankers. The full set of documents could have been handed over to the ... 8 ... seventh documents only on the basis of payments thereby entitling the seventh defendants to clear and receive the consignment at the port of destination namely Kaohsiung in Taiwan. 9. According to the plaintiffs, as the payments were not forthcoming, they made enquiries and were shocked to learn that the defendants were responsible for misdelivery of the cargo to the seventh defendants in connivance and collusion with each other without the seventh defendants retiring the documents from their bankers against the value towards the payment of the invoices. The plaintiffs have stated that the fifth and sixth defendants were acting as constituents on behalf of the second and third defendants. It is alleged that there is another contract between the plaintiffs as a third party and the vessel/owners as principals where the fourth and fifth defendants acted as constituents. 10. It is alleged that further enquiries made by the plaintiffs revealed that in connivance with each other the fifth and sixth defendants and the second and third defendants have had some arrangement amongst themselves whereby the fourth defendants made it possible to give misdelivery of the consignments to ... 9 ... the seventh defendants by rendering the multimodal document issued by the fifth and sixth defendants nugatory. 11. The plaintiffs have alleged that the defendants have caused loss to them in the sum of US$ 36,180 being the value of the invoices raised by the plaintiffs. It is alleged that breaches were caused by various acts of omission, connivance, collusion, misfeasance and malfeasance of the second to seventh defendants. 12. The first to third defendants contested the suit by filing their written statement. According to the case made out by the said defendants, the second defendant vessel for and on account of Orient Overseas Container Line (hereinafter referred to as OOCL) for whom the fourth defendants were agents did safely carry and discharge the containers from the JNPT to the port of destination. It is stated that at the port of destination, the said OOCL took charge of the containers in the like order and condition that they had been loaded on board on second defendant vessel and on taking over of the said containers the role of the second defendant vessel came to an end. It is alleged that the third defendants have nothing to do ... 10 ... with the carriage or transaction which is subject matter of the suit. It is stated that the said first to third defendants did not have any contract and/or agreement with the plaintiffs. 13. The first to third defendants denied that the fourth defendants were their agents and that the fourth defendants had issued any mate receipt for and on behalf of the said defendants. The said defendants stated that they had not empowered the fourth defendants to issue any mate receipts and or bill of lading for and on their behalf. The first to third defendants denied that they were having any relationship with fourth and/or the fifth and/or the sixth defendants. The said defendants contended that they had never empowered the fifth defendants to issue any documents for any cargo that had been entrusted for shipment on the second defendant vessel. It is alleged that the fifth and sixth defendants are neither their constituents nor their agents. The said defendants have reiterated that the second defendant carefully loaded the containers and discharged the containers to the port of destination on account of and for on behalf of OOCL and the said defendants have nothing to do with the transaction subject matter of the suit. The said defendants contended that they ... 11 ... were not responsible for causing any loss to the plaintiffs and suit as against them was not maintainable. 14. The fourth defendants filed written statement opposing the claim of the plaintiffs. The contention of the fourth defendants is that the plaintiffs had a privity of contract only with the fifth and sixth defendants as evidenced by multimodal document dated 22nd September, 2001 issued by the fifth defendants as agents of the sixth defendants. The fourth defendants contended that there was no privity of contract between the plaintiffs and them. 15. The fourth defendants contended that at no point of time they have been agents of the third defendants and it appears that the plaintiffs were fully aware of the said fact. The fourth defendants contended that they are the agents in Mumbai for OOCL, Hongkong. The fourth defendants contended that they being agents of a disclosed principal namely OOCL Ltd, Hongkong the suit cannot lie against the said defendants in view of section 230 of the Indian Contract Act, 1872. It is the contention of the fourth defendants that the mate receipts issued by them does not establish privity of contract between ... 12 ... them and the plaintiffs. 16. The fifth and sixth defendants filed their written statement. In the said written statement they contended that the bills of lading were issued by the said defendants mentioning the delivery agents as the Express Talent Holding Ltd, HongKong. It is alleged that without knowledge of the fifth and sixth defendants and without their authority, the said Express Talent Holding ltd issued a fresh set of bills of lading in respect of plaintiffs goods to Canadian Cereals Ltd i.e seventh defendants. It is contended that the action of M/s.Express Talent Holding Ltd was completely illegal and therefore, the said defendants are not liable for the said action of M/s.Eastern Talent Holding Ltd. 17. The said defendants contended that they have not released the goods with the buyers at the port of destination and the goods were illegally released by the delivery agents by issuing authorised bills of lading. It is, therefore, submitted that M/s.Express Talent Holding Ltd were necessary and proper parties to the suit and the suit was not maintable on account of their non-joinder. The fifth and sixth defendants denied that the sixth defendants are the principals of ... 13 ... the fifth defendants. They reiterated that the fifth defendants were shipping agents. The said defendants submitted that no liability can be foisted against them. 18. The seventh defendants did not file any written statement though writ of summons was duly served to them. 19. The following issues were settled: "1. Whether the plaintiffs prove that they are entitled to maintain the suit and consequent claim against the defendants? 2. Whether the plaintiffs prove that they were entitled to arrest the defendant No.1 vessel? 3. Whether the plaintiffs establish a privity of contract and cause of action against the 1st, 2nd and 3rd defendants? 4. Whether the plaintiffs prove that the mates receipt establishes privity of contract against defendant No.4 and ... 14 ... imposes a duty of care as a carrier as alleged in the plaint? 5. Whether the plaintiffs prove that there was collusion and/or connivance between the defendants leading to allegation? 6. Whether the defendant Nos.1, 2 and 3 prove that the 1st defendant vessel was wrongfully arrested. If so, what damages are they entitled to? 7. Whether the 4th defendants prove that they are the agents of a disclosed principle in Mumbai named Orient Overseas Container Line Ltd, Hongkong and if so, they are not liable to the plaintiffs? 8. Whether the plaintiffs prove that the 4th defendants acted as agents of the 1st, 2nd and 3rd defendants? 9. Whether the plaintiffs prove that the 4th defendants were obliged to issue a bill of lading to cover the entire ... 15 ... consignment? 10. Whether the plaintiffs prove that the 4th defendants directed the plaintiffs to approach the 5th defendant for the bill of lading? 11. Whether the plaintiffs prove that the 4th defendants had some arrangement with the 5th defendants and the 3rd defendants? 12. Whether the plaintiffs prove that the 5th and 6th defendants have acted as constituents on behalf of the 1st, 2nd, 3rd and 4th defendants? 13. Whether the 5th and 6th defendants prove that Express Talent Holding Ltd, Hongkong are a necessary party and hence their non-joinder in this suit renders it as non-maintainable against defendant Nos.5 and 6? 14. Whether the plaintiffs prove their claim of US $ 36.180? ... 16 ... 15. Whether the defendant Nos.1 to 3 and 4 prove that this Court has jurisdiction? 16. Whether the defendant Nos.1 to 3 and 4 prove that the suit is barred by limitation? 17. What order and what relief"? 20. The plaintiffs examined two witnesses. The first witness was Mr.Sunilkumar Agarwala, a Director of the plaintiffs. The second witness examined by the plaintiffs is one Mr.Mahesh Josihar. The first to third defendants examined one Mr. Paul Lin as their witness. The fourth defendants examined Mr. Kiran Talawdekar as their witness. The fifth and sixth defendants did not examine any witness. As stated earlier the seventh defendants did not appear at any stage though they were served with the writ of summons. The exmaination-in-chief of the witnesses was in the form of affidavits and the cross-examination was recorded by Court Commissioner appointed by this Court. By a detailed order dated 10th August, 2007 this Court decided issue of admissibility and proof of the various documents ... 17 ... produced by the parties to the suit. 21. Mr. Sen, learned counsel appearing for the plaintiffs submitted that the seventh defendant has not entered appearance and therefore, a decree must follow as against the seventh defendant. He submitted that the fact that the goods agreed to be sold to the seventh defendant were verified by the Excise Department and were stuffed in containers has been proved by the evidence on record. He submitted that in view of the mate receipts admittedly issued by the fourth defendants, it is obvious that the plaintiff was the shipper of the goods. He submitted that the EGM filed by the first to third defendants shows that the said defendants were aware even prior to discharge of the goods that the plaintiffs were shippers. He submitted that the fifth defendants issued a multimodal transport document for carriage of the goods by the second defendant and the said document is signed by the fifth defendants as agents. He submitted that even with the knowledge that the plaintiffs were the shippers, the fourth defendant issued a bill of lading to the fifth defendants showing the fifth defendants as the shipper. He submitted that the plaintiffs were never aware that the fourth defendant was an agent of OOCL or OOCLL ... 18 ... (Company). 22. He submitted that it is an admitted position that second defendant carried the goods. He submitted that the third defendant has admitted to have carried the goods and had given delivery of the goods without production of the original bills of lading. He submitted that the third defendant has failed to produce a complete copy of the alleged operating Agreement between the third defendants and OOCLL and what has been produced is only part of the Agreement. He pointed out that the operating Agreement authorises OOCLL to book cargo for carriage by the third defendants’ ship and to issue bill of lading and mates receipt for carriage by the third defendants’ ship. The learned counsel submitted that OOCL and the fourth defendants were acting as agents under the authority given by the third defendants. He submitted that the witness examined by the first to third defendants in response to question No.75 admitted that the plaintiffs were the shippers. He submitted that the second and third defendants have admitted that they discharged the goods to the seventh defendants without their agents retiring the original documents. He submitted that it is an admitted position that the third defendants gave no notice to the plaintiffs that ... 19 ... cargo would be delivered without bills of lading. 23. He submitted that the fourth defendants claim to have acted for disclosed principals (OOCL) but no such disclosure was made till date. He submitted that the fourth defendants after issuing mate receipt ought to have issued bills of lading to the shipper. He submitted that liability of the fourth defendants is not excluded by section 230 of the Indian Contract Act. He submitted that the fourth defendants after knowing fully well that the plaintiffs were shippers could not have issued a bill of lading in favour of the fifth defendant. He pointed out that the fifth defendant surrendered bill of lading to the fourth defendant in Mumbai itself and therefore the fourth defendant must be in possession of the said bill of lading. He submitted that the delivery of the goods is given without production of the bill of lading. He therefore submitted that there was an arrangement between the fourth defendants and fifth defendants. He submitted that it is not even the case made out by any of the defendants that the plaintiffs had knowledge that fourth defendant had issued a bill of lading in favour of the fifth defendants and that the fifth defendants had surrendered the said bill of lading. ... 20 ... 24. The learned counsel for the plaintiffs submitted that the second and third defendants are certainly liable for the loss suffered by the plaintiffs due to non payment by the seventh defendants as the said second and third defendants admittedly carried the goods and delivered the same without production of bill of lading. He submitted that the fourth defendant is liable as admittedly the fourth defendant issued mate receipt acknowledging receipt of the goods. He submitted that the fifth defendant is liable as the fifth defendants had issued a multimodal transport document. 25. The learned senior counsel appearing for the first to third defendants has taken me through the oral evidence. He submitted that there is no privity of contract between the plaintiffs and first to third defendants as the plaintiffs have not dealt with the first to third defendants. He submitted that the second witness examined by the plaintiffs admitted that the plaintiffs were aware that the fourth defendant was acting for OOCL. He submitted that there is no material on record to show that the fourth defendant acted as agents of the first to third defendants or under an authority conferred by first to ... 21 ... third defendants. He submitted that the fifth and sixth defendants have no contractual relationship with the first to third defendants and in any event the plaintiffs have not established that fifth or sixth defendants acted as agents of the first to third defendants. he submitted that the record shows that the delivery of the goods was taken by M/s.Express Talent