1 NMS-3639-08.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.3639 OF 2008 IN SUIT NO.1729 OF 2002 Henry R. Garg and anr. ..Plaintiffs Vs M/s.Arab Shipping Co. (LLC), Dubai and ors. ..Defendants -- Mr.S.P.Kanuga with Ms.S.S.Dwivedi i/b.P.N.Sadarangani, for plaintiffs. Mr.Vishal Sheth i/b.Ruben Farnandes, for defendant no.3. -- CORAM : R.G.KETKAR, J. RESERVED ON : 7 th JULY, 2011 PRONOUNCED ON : 5 th AUGUST, 2011 JUDGMENT: By consent of the parties, Notice of Motion is heard finally. Defendant no.3 – M/s.Galaxy Multimodel Systems Pvt. Ltd. has taken out this Motion for rejecting the plaint against third defendant under Order VII Rule 11(a) of the Code of Civil Procedure, 1908 (for short “C.P.C.”) as the same does not disclose any cause of action qua third defendant as also for rejecting the 2 NMS-3639-08.odt plaint under Order VII Rule 11(d) of C.P.C. as the suit is not maintainable in view of Section 230 of the Indian Contract Act, 1872 (fort Short “The Act”). 2] The plaintiffs have instituted suit No.1729 of 2002 against the defendants for recovery of Rs.2,92,448/- with interest thereon @ 18% per annum from the date of filing of the suit till realisation. The case of the plaintiffs is that plaintiff no.1 had imported 3,500 bags (174.892 M.T.) of Green Mung Beans (Pedeshwewar) 2001 (for short “the suit consignment”) from Yangon, Myanmar to Mumbai. The suit consignment was entrusted to defendant no.1 M/s.Arab Shipping Co. (LLC) at port of Yangon, Myanmar in good order and condition as also in properly and securely packed condition for carriage by sea from the Port of Yangon, Myanmar to Mumbai. On receiving the suit consignment, the defendant issued Bill of Lading No.11/MUM dated 20 th March, 2001 acknowledging receipt of the suit consignment in good order and condition and in securely and packed condition and undertook to safely and properly carry and deliver the suit consignment to the plaintiffs in the like good order and condition at the Port of Mumbai. 3] It is further case of the plaintiffs that the defendants under 3 NMS-3639-08.odt the provisions of the Carriage of the Goods by Sea Act were statutory duty bound to load, keep, carry, handle and discharge the suit consignment while in transit and to deliver the same in the sound condition and to the plaintiffs at the Port of destination. The plaintiff claimed that at the destination the suit consignment was delivered short, damaged and in contaminated condition. The suit consignment was surveyed by the Shipping Surveyor of the Cargo Controllers Corporation and issued their Survey Report dated 8 th May, 2011. Plaintiff no.1 by their letter dated 8 th June, 2001 duly lodged the claim with the defendants as required under the provisions of Carriers Act. Though the defendants received the said letter, neither the defendants replied the said letter not settled the plaintiffs’ claim. The said letter is annexed at exhibit “B” to the plaint. 4] The plaintiffs alleged that the defendants failed and neglected to load, deliver and give delivery of the suit consignment properly to Mumbai Port. The shortage, damage and contamination of the suit consignment was caused due to negligence and/or misconduct and/or misfeasance and/or malfeasance and/or nonfeasance and/or criminal breach of trust on the defendants or their servants and agents. It is on these 4 NMS-3639-08.odt assertions, the plaintiffs instituted the suit for recovery of Rs. 2,92,448/- together with interest. 5] In support of this Notice of Motion, Capt. Piyush Pal Singh, Managing Director of the third defendant has made affidavit. In paragraph 4 of the affidavit, it is asserted that the averments in paragraph 1 of the plaint are to the effect that the third defendant is agent of the first defendant (wrongly typed as fourth defendant). Nowhere in the plaint, the plaintiffs averred as to how the third defendant is involved in the transaction referred to in the plant apart from being agent of the first defendant. No averment exists in the plaint explaining how defendant no.3 is either concerned or responsible for the alleged shortage of the suit consignment and consequent loss which forms basis of plaintiffs’ claim in the suit. The said consignment was never, at any stage, either entrusted to defendant no.3 or transported by the third defendant and thus, there is no question of third respondent being responsible in alleged loss. Defendant no.3 was never entrusted any consignment or shipment or otherwise and consequently, cannot be held liable. In paragraphs 3, 4 and 12 of the plaint, the plaintiffs have averred that plaintiff no.1 entrusted the consignment to the first defendant. The only reference to the third defendant is that the third defendant 5 NMS-3639-08.odt is agent of first defendant and thus, even on a demurrer, the plaint, as framed, fails to disclose a cause of action against the third defendant. It is in these circumstances, it is prayed that the plaint is liable to be rejected qua third defendant having regard to the provisions Order VII Rule 11(a) of the C.P.C. for non disclosure of cause of action. 6] In so far as the maintainability of the suit is concerned, in paragraph 5 of the affidavit, it is averred that the third defendant is disclosed as agent of the first defendant. Thus, admittedly, the third defendant is agent of a disclosed Principal and consequently, the third defendant cannot be held liable for any alleged shortage of the suit consignment having regard to Section 230 of the Act in as much as an agent cannot be held liable for the contract entered into by its Principal. The contract of carriage is entered into by the first defendant who is admittedly a disclosed Principal of the third defendant, therefore, the plaintiffs cannot proceed against the third defendant in view of Section 230 of the Act. It is, therefore, submitted that the plaint is liable to be rejected under Order VII Rule 11(d) of the C.P.C. 7] I have heard Mr.Vishal Sheth, learned counsel for defendant 6 NMS-3639-08.odt no.3 in support of this Notice of Motion and Mr.Kanuga with Ms.S.S.Dwivedi, learned counsel for the plaintiffs. 8] Mr.Sheth has contended that no cause of action is disclosed qua defendant no.3. The only averment to be found in the plaint is that defendant no.3 is the agent of defendant no.1. It has not been pleaded as also explained as to how the third defendant is either concerned with or is responsible for the alleged shortage of the suit consignment. The suit consignment was not entrusted to the third defendant. It was also not transported by the third defendant and consequently, the third defendant is not responsible for any alleged losses. He therefore submitted that the plaint is liable to be rejected under Order VII Rule 11(a) CPC. 9] On the other hand, Mr.Kanuga submitted that apart from asserting that the suit consignment was entrusted to the first defendant, it is further asserted that the third defendant is the agent of the first defendant. After the suit consignment was delivered, the suit consignment was surveyed by the Ship Surveyer Cargo Controllers Corporation who issued survey report dated 8 th May, 2011. Plaintiff no.1 by letter dated 8 th June, 2001 lodged claim with defendants. The copy of said letter is at exhibit B to the 7 NMS-3639-08.odt plaint. Perusal of this letter would indicate that the same is addressed to defendant no.3 herein by Shivam Enterprises who have been appointed as claim reference consultant by plaintiff no.1. It is further set out in the letter that out of 3500 bags imported by plaintiff from Yangon to Mumbai, they have received 870 bags in slack/torn condition. Being a Carrier it was their responsibility to carry and to discharge the cargo in original/sound condition, but, they have failed to do so. Due to this, plaintiffs received shortages of 14,267 kgs valued Rs.2,92,448/-. Along with that letter, copies of documents were also enclosed. Despite receipt of this letter, defendant no.3 neither replied the said letter nor settled the plaintiffs’ claim. 10] In paragraph 12 of the plaint, it is asserted that the defendants failed and neglected to load, deliver and to give incharge of the said consignment properly to Mumbai Port. The said shortages, damages and contamination of the suit consignment was caused due to negligence and/or malfeasance and/or nonfeasance and/or criminal breach of trust of the defendants and/or their servant or agent. It is in these circumstances, the plaintiffs instituted suit for recovery of Rs. 2,92,448/- together with interest at the rate of 18% per annum from 8 NMS-3639-08.odt the date of filing of suit till realisation. 11] The expression “Cause of Action” has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in `cause of action’. `Cause of action’ consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. 12] The plaintiffs have asserted that they have entrusted the suit consignment to defendant no.1 at the Port Yangon in good order and condition and in properly and securely packed condition for carriage by sea from the Port of Yangon, Myanmar to Mumbai by the ship “M.V.Arab Glory”. It is averred that defendant nos.2 and 9 NMS-3639-08.odt 3 are agents of defendant no.1 in Singapore and India. After the suit consignment was delivered at the destination, it was delivered short, damaged and in contaminated condition. The suit consignment was surveyed and M/s.Cargo Control & Service Corporation issued Survey Report dated 8 th May, 2001. Plaintiff no.1 addressed letter dated 8 th June, 2001 to defendant no.3 and lodged claim. It is not disputed by defendant no.3 that it is not agent of defendant no.1. It is also not disputed by defendant no.3 that it has not received letter dated 8 th June, 2001. It is also not disputed that defendant no.3 neither replied the said letter nor settled the claim. In these circumstances, in my opinion, the plaint cannot be rejected for non-disclosure of cause of action against defendant no.3 under Order 7 Rule 11(a) of C.P.C. I, therefore, do not find substance in the submissions advanced by Mr.Sheth that the plaint is liable to be rejected in for the non-disclosure of cause of action under Order 7 Rule 11(a) of C.P.C. 13] In so far as the rejection of plaint under Order 7 Rule 11(d) of C.P.C. is concerned, Mr.Sheth has relied upon Section 230 of the Act which reads as under :- “230.Agent cannot personally enforce, nor be 10 NMS-3639-08.odt bound by, contracts on behalf of principal.- In the absence of any contact to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Mr.Sheth has also relied upon the following judgments; (i) Midland Overseas Vs. M.V. “CMBT Tana” & ors, 2000(1)Bom. C.R.618; (ii) National Agricultural Cooperative Marketing Federation of India Ltd. Vs.M/s.Ansagida Urunleri Pazsan Ve Tic Ltd and ors., decided by Hon’ble Mr. Justice D.B.Bhosale on 18 th June, 2009; (iii) Prem Nath Motors Ltd. Vs. Anurag Mittal, decided by the Apex Court in Civil Appeal arising out of SLP (C) No.19515 of 2004. 14] On the other hand, Mr.Kanuga has relied upon the order 11 NMS-3639-08.odt dated 10 th December, 2009 passed by Division Bench of this Court in Appeal No.454 of 2009 in Notice of Motion No.1052 of 2009 in Suit No.1759 of 2000. 15] Section 230 of the Act provides that, as a general rule, an agent cannot be made liable for a contract entered into by such agent for and on behalf of his principal. There are three exceptions to this general exemption from liability. The first exemption is that if the principal is abroad then the agent could be sued and be made liable on a contract entered into by such agent on behalf of such principal. The second exception deals with the case of an undisclosed principal and the third with the case where the principal’s name though disclosed, cannot be sued by reason of any disability, as observed by the Apex Court in the case of Cochin Frozen Food Exports (P) Ltd. Vs. Vanchinad Agencies and others, (2004)13 SCC 434. 16] Now the question that arises whether in the facts and circumstances of the present case, defendant no.3 can invoke Section 230 of the Act. In paragraph 5 of the affidavit in support of Notice of Motion, defendant no.3 has specifically asserted that the contract of carriage was entered into by the first defendants, who 12 NMS-3639-08.odt are admittedly the disclosed principals of the third defendants. This, it is not the defendants’ case that defendant no.3 being agent of defendant no.1 has entered into contract on behalf of his principal. Section 230 of the Act provides that an agent cannot be made liable for the contract entered into by such agent for and on behalf of his principal. Thus, on defendants’ own showing no.3 has not entered into the contract as an agent for and on behalf of defendant no.1. In view of the judgment of the Apex Court in the case of Kochin (supra), in my opinion, since defendant no.3 has not entered into the contract as agent for and on behalf of his principal namely, defendant no.1, Section 230 of the Act itself is not attracted. 17] In the case of Midland Overseas (supra), plaintiffs have averred in paragraph 3 of the plaint that the goods were entrusted to the third defendants at Bombay and the said goods were accepted by the third defendants on behalf of the second defendants. The third defendant impleaded because they were shipping agent for and on behalf of the second defendant. In paragraph 2 of the plaint, it was averred by the plaintiffs that the third defendant – a private limited company are doing business as shipping agents at Bombay for and on behalf of the second 13 NMS-3639-08.odt defendant. Thus, it was a case where third defendant entered into contract as agent of second defendant being principal with the plaintiff. It is in these circumstances, this Court held that since the contract was entered into by the third defendant being agent of defendant no.2 – principal, the agent cannot be sued when the principal is disclosed. In my opinion, this judgment does not apply to the present case. 18] As far as the reliance placed on the decision in the case of National Agricultural (supra) is concerned, paragraph 3 of the order set out the pleadings qua defendant no.3. Defendant no.3 was impleaded as agent for and on behalf of defendant no.4. Nowhere in the plaint, the plaintiffs averred as to how defendant no.3 was involved in the transaction referred to in the plaint apart from being agent of defendant no.4. There was no averment to the effect as to how defendant no.3 is either concerned with or responsible for the alleged shortage of suit consignment and consequent loss which formed the basis of plaintiff’s claim in the suit. It was further observed that from the averments in the plaint it did not appear that the suit consignment was ever entrusted to defendant no.3 nor was transported by them. It is in the backdrop of these pleadings, the Court came to the conclusion that the Section 230 of the Act is 14 NMS-3639-08.odt applicable relying upon the judgment of this Court in the case of Midland Overseas (supra). 19] So far as the facts and circumstances in the present case are concerned, I have already narrated earlier that the plaintiff has specifically averred that the suit consignment was entrusted to defendant no.1 and defendant no.3 is the agent of defendant no.1. After arrival of the consignment at Mumbai, it was found short, damaged and in contaminated condition. The suit consignment was surveyed by the Shipping Surveyor of the Cargo Controllers Corporation and issued their Survey Report dated 8 th May, 2011. It is in these circumstances, letter was addressed to defendant no.3 on 8 th June, 2001 alleging therein that defendant no.3 being Carrier, it is its responsibility to carry and discharge the cargo in original / sound condition, but, defendant no.3 has failed to do so and and discharged 870 bags in slack/torn condition. In view thereof, I am of the opinion that the facts obtaining in the case of National Agricultural (supra) and the facts obtaining in the present case are materially different. Reliance placed by the learned counsel for the plaintiff on that judgment is misconceived. 20] Mr.Sheth also relied upon the judgment of the Apex Court in 15 NMS-3639-08.odt the Case of Prem Nath Motors (supra). In that case, an international car manufacturing company namely M/s.Automobiles Peugeot of France had entered into a joint venture agreement with manufacturers of Premier Cars in India. M/s.Pal Peugeot Limited gave advertisement in various newspapers inviting application for priority-cum-registration of Peugeot 309 cars. The individuals who were interested in purchasing the said car, applied to M/s.Pal Peugeot Limited at Kalyan Shil Road, Manpada, Dombivli, District Thane. Respondent no.1 submitted their application at Prem Nath Motors Limited with a cheque of Rs.25,000/- in the name of Pal Peugeot. The appellant before the Apex Court – Prem Nath Motors was dealer of Pal Motors with whom the Peugeot Company had entered into an agreement. Respondent no.1 had nothing to do with the advertisement, in response to which individuals had applied. The individuals who were interested in purchasing the said car had given cheque in the name of Pal Peugeot Limited and the appellant had no other role except to send the cheque to Pal Peugeot. Respondent no.1 who had applied for Peugeot 309 car did not get its delivery. Respondent no.1, therefore, asked for refund of booking amount of Rs.25,000/-. As the amount was not refunded, respondent no.1 filed a claim petition under Section 12-B of the Monopolies and Restrictive Trade Practices Act, 1969 on the 16 NMS-3639-08.odt ground that failure on the part of respondents to refund the said amount. The case of the appellant was that it was only an agent/dealer of the said party and the agent is not liable for acts of a disclosed principal subject to a contract of the contrary as per Section 230 of the Act. It was held that by virtue of Section 230 the agent could not be sued when the principal had been disclosed. 21] In the instant case, it is nobody’s case that the contract was entered into by defendant no.3 on behalf of a disclosed principal namely, defendant no.1 with plaintiff. On the other hand, in the affidavit-in-reply in support of the Notice of Motion, defendant no. 3 has specifically averred in paragraph 5 that the contract of carriage has been entered into by the first defendant, who is admittedly a disclosed principal of the third defendant. Mr.Sheth contended that in the present case, the plaintiffs have not pleaded contract contrary as contemplated under Section 230 of the Act. It is also undisputed that the name of the principal is disclosed and therefore, defendant no.3 being agent cannot be sued and cannot be held personally liable. However, the basic requirement for applicability of Section 230 of the Act is that the contract has to be entered into by the agent on behalf of his principal, then alone 17 NMS-3639-08.odt Section 230 of the Act can be attracted. In the circumstances of the present case, admittedly, defendant no.3 has not entered into contract on behalf of defendant no.1 with the plaintiff. In view thereof, the judgment of the Apex Court in the case of Prem Nath (supra) is not applicable. 22] In the case of M/s.United Liner Agencies of India (Pvt.) Ltd. Vs. Tata Chemicals Ltd. and anr, decided on 10 th December, 2009, the Division Bench of this Court recorded that the suit was not for specific performance of agreement, but it was for damages for the alleged breach of the contract. So far as the damages are concerned, the plaintiffs will have to prove his case on the basis of evidence. In view thereof this Court observed that it cannot be said that the agent is not a necessary party to the proceedings. The appellant (agent) can certainly lead appropriate evidence in the suit to point out that he is not required to pay any damages and no decree can be passed against him in view of the provisions of Section 230 of the Act. All these aspects can be decided in the suit itself and consequently, it was not a case in which the plaint can be straightway rejected against the defendant no.2. I am, therefore, of the opinion that the plaint cannot be rejected under Order VII Rule 11(d) of C.P.C. 18 NMS-3639-08.odt 23] In view of above, I do not find any substance in any contentions advanced in support of this Notice of Motion. Notice of Motion fails and the same stands dismissed with no order as to the costs. [R.G.KETKAR, J.]