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 NOTICE OF MOTION NO. 1529 OF 2005 IN SUIT NO. 1571 OF 2004 S.K. Networks Company Ltd. ... PLAINTIFF V/s. M/s. Amulya Exports Ltd. & Ors. ... DEFENDANTS None for plaintiffs Mr. V.K. Rambhadran for defendant Nos. 3 & 4. Ms. N. Sumnani i/b. M/s. Bhatt and Saldhen for defendant No. 5. CORAM CORAM CORAM : ANOOP V. MOHTA, J. : ANOOP V. MOHTA, J. : ANOOP V. MOHTA, J. DATED DATED DATED : 24th March, 2006 : 24th March, 2006 : 24th March, 2006 P.C. . This Notice of Motion has been taken out by the applicants, original defendant Nos. 3 & 4 and prayed as under :- Clause (a) - That the above suit be dismissed for want of jurisdiction against the third and fourth Defendants. Clause (b) - In the alternative the suit be dismissed as the same is barred by law of limitation. 2. By an order dated 24th January, 2006 in Chamber Summons No. 1391 of 2005 taken out by defendant Nos. 3 & 4 for revocation of leave granted by an order dated 24-04-2004 under Clause XII of Letters Patent was dismissed and observed as under :- "5) Firstly according to defendant No. 3 & 4 themselves there is no privity of contract between the plaintiff and defendant Nos. 3 and 4 based on this bill of lading. In the circumstances, the above clause regarding jurisdiction cannot operate between ( 2 ) the Plaintiff and Defendant No. 3/Defendant No.4." "7) The plaintiff’s case inter-alia is that false boarding dates had been deliberately put on the bill of lading issued by defendant No. 3 and 5 with respect to the said consignment to avoid their obligations to the plaintiff. As a result thereof, according to them, they were unable to negotiate a letter of credit. The buyers in China refused to make payment under the letter of credit as the date of the shipment was beyond the date specified in the letter of credit. With the merits of this contention, I am not concerned at this stage. What is relevant is that the Plaintiff has expressly pleaded that the dates were falsely put on the bill of lading and that the defendants jointly and severally connived in perpetrating the fraud and had also committed breach of trust." 3. In view of this and as the submission are made in respect of prayer clause (b) only, the matter proceeded accordingly. 4. The plaintiff and respondents have filed the present suit against defendants, basically for the damages on account of late delivery of the goods and also for additional losses incurred by the plaintiff because of revocation of contracts with the Chinese buyer. The respondents have raised claims against respective defendants separately as well as jointly. This prayer clauses of the plaint are as under :- a) This Hon’ble Court be pleased to order and decree the Defendants jointly and severally for the sum of USD 506, 635.93 equivalent to INR 2,22,91,980/- along with interest @ 12% for the period 21st April, 2003 to 21st April 2004 amounting to USD 60,796 equivalent to INR 26,75,024/- as per particulars of claim being Exh. "P". ( 3 ) b) this Hon’ble Court be pleased to order and decree the Defendant Nos. 1 and 2 for the sum of USD 506,635.93 equivalent to INR 2,22,91,980/- as per particulars of claim being Exhibit "P". c) this Hon’ble Court be pleased to order and decree the Defendant Nos. 3 and 4 for the sum of USD 229,931.99 equivalent to INR 1,01,17,007/- as per particulars of claim being Exhibit "P". d) this Hon’ble Court be pleased to order and decree the Defendant No. 5 for the sum of USD 276,704.14 equivalent to INR 1,21,74,982/- as per particulars of claim being Exhibit "P". e) this Hon’ble Court be pleased to order and decree the Defendants for the sum of USD 50,663 equivalent to INR 22,29,172/- as per particulars of claim Exhibit "L". f) this Hon’ble Court be pleased to order and decree the Defendants for the sum of USD 50,000 equivalent to INR. g) this Hon’ble Court be pleased to order and decree the Defendants for the sum of USD 25,000 equivalent to INR 11,00,000/- as per particulars of claim Exhibit "O". f) for such other and further reliefs as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case. g) for costs of the suit. 5. The sequence of events that lead to filing of the suit are as under :- (1) "Plaintiff is a well known and reputed company incorporated in and under laws of Korea having its registered office at Seoul. The plaintiff is in the business of import and export and deals with steel and other such related raw materials. The plaintiff ( 4 ) company was earlier known as S.K. Global Company Limited and now changed as S.K. Network Limited. In first week of January, 2003, the negotiations took place between the plaintiff and defendant Nos. 1 & 2 for export of 4000 M.T. Cold Rolled Steel Sheets in Coils from defendant No. 1 to the plaintiff. An offer was accordingly made on 9th January, 2003. Based on that defendant No. 1 sent their proforma invoice under the cover of letter dated 15th January, 2003 to the plaintiff. The entire description of the goods was worth a total amount of US$ 1,938,400. The said proforma invoice recorded J.N.P.T. (Mumbai) as port of loading and Shanghai as port of discharge and final destination. The time was the essence of contract. As per the plaintiff, said goods were procured for a buyer in Shanghai, China and therefore the port of discharge was stated to be Shanghai instead of port in Korea. Some of the details of the terms and conditions of contract as mentioned in proforma invoice are as follows" :- Prices - C & F Shanghai Shipment - Material shall be shipped from any Indian Port before March, 2003 after receipt of L/C. Partial shipment and transshipment to be permitted. However, a direct B/L shall be provided. Delivery ( 5 ) subject to the availability of Vessel/Force Majeure conditions (Break bulk or in containers). Payment terms - By a confirmed and irrevocable letter of credit, without recourse to the drawers, payable at sight in favour of AMULYA EXPORTS LTD. Unrestricted for negotiation, L/C should be valid up to 31.03.2003 for shipment and further 21 days for negotiation. All bank charges, outside India are to be on buyer’s account. Validity - This Proforma Invoice is valid for establishment of L/C up to 20.01.2003. 6. The plaintiff subsequently opened letter of credit dated 20th January, 2003 with the Korea Exchange Bank, Business Division for an amount of US$ 1,938,400 in favour of defendant No.1. As per the plaintiff, defendant Nos. 1 & 2 were aware that the goods were meant to be further sold to a buyer in China by the plaintiff and therefore, defendant No. 1 instructed defendant Nos. 3 to 5 to directly transport the goods to Shanghai. As per the said letter of credit, goods were to be put on Board from any Indian port for transportation to Shanghai, China and last date for such shipment was 31st March, 2003. In the meanwhile, defendant No. 1 & 2 made arrangements to transport 1045 M.T. of cold rolled steel sheets worth USD 506,635.93 to Shanghai in ( 6 ) partial fulfilment of the proforma invoice/contract dated 15th January, 2003 which was for 4000 MT cold rolled steel sheets amounting to total USD 1,938,400. Defendant No. 1 & 2 decided to divide the entire consignment between two ships. One ship namely Tower Bridge carrying goods worth USD 229,931.99 and the other ship being L.B. Shastri carrying goods worth USD 276,704.14. 7. Defendant Nos. 1 & 2 therefore hired services of defendant No.3 as forwarding agent with respect to transportation of one consignment being to the tune of USD 229,931.99 abroad the vessel, Tower Bridge and the same was actually to be performed by defendant No. 3 which was its agent in India. 8. Defendant No. 3 as alleged liable for the acts of its agent, namely the defendant No.4. Defendant No. 5 was hired as shipper by defendant No. 3 in respect of the said consignment worth of USD 229,931.99. The other consignment worth of USD 279,704.14 was entrusted directly to the Shipping Corporation of India, defendant No. 5 herein to be transported to Shanghai. 9. As referred above and as per the terms of the letter of credit dated 20th January, 2004, the consignment of Steel goods was to be put on Board by ( 7 ) defendant No. 1 & 2 latest by March 31, 2003 and plaintiff was to be intimated about the same latest by 7th April, 2003. The plaintiff, however, received no information regarding the boarding of the consignment even after 7th April, 2003. There was no communication whatsoever received from defendant Nos. 1 & 2 inspite of the repeated efforts by the plaintiff. 10. The China buyer, therefore, with whom plaintiff had entered into a separate contract to sell the said steel goods, ultimately, as no information was forthcoming, rescinded the contract. The plaintiff, therefore, terminated the contract with defendant No. 1 & 2 vide E-mail dated 14th April, 2003 addressed to defendant No.2. The plaintiff called upon defendant No. 1 & 2 to take steps to dispose of the cargo and indemnify the losses incurred to them. 11. Surprisingly, on 21st April, 2003 the consignment of steel goods arrived in Shanghai and the plaintiff received the shipping advice and other documents from its Bank. On enquiry, the plaintiff discovered that as per the Bill of Lading issued by defendant No. 5, said goods were put on board on 31st March, 2003 itself. As a result of the said date on ( 8 ) the Bill of Lading (for short "BOL") the plaintiff could not deny payment to defendant No.1. The plaintiff as per the letter of credit could not stop payment to the negotiating bank of defendant. That resulted into huge losses to the plaintiff, who had to make good the contracted amount to the issuing bank. The plaintiff had also suffered additional losses on account of cancellation of the order of the Chinese buyer. 12. The plaintiff later on discovered that the boarding date on the BOL issued by defendant No. 5 i.e. Shipping Corporation of India Ltd. was false and that the goods had left the Indian port much after 31st March, 2003. Therefore, there was no question of plaintiff’s goods having been loaded on 31st March, 2003. As per plaintiff the vessel L.B. Shastri arrived at the loading port on 1st April, 2003 and left the port to sail for Shanghai on 4th April, 2003. Thus, Terminal Departure Report of the vessel Tower Bridge reflected that said vessel had arrived at Mumbai port on 8th April, 2003 and left the port for sailing to Shanghai only on 10th April, 2003. Therefore, as alleged, there was no possibility of the goods being put on board on 31st March, 2003. 13. The plaintiff upon discovery of these ( 9 ) discrepancy in the shipping documents and in the BOL, wrote a letter dated 19th May, 2003 to defendant No. 1 & 4 and informed about the various breaches of contract and the loss suffered. 14. The plaintiff, based on this foundation of fraud and forging of documents has filed present suit dated 4th May, 2004 which was declared at Delhi on 4th May, 2004. The leave in the present suit was obtained on 5th May, 2004. 15. In this background, applicants-defendant Nos. 3 & 4 have taken out the present Notice of Motion. None appeared for the plaintiff. Heard learned Counsel for defendant Nos. 3 & 4 and defendant No. 5. Perused the affidavit and documents filed by all the parties. THE RELEVANT PROVISION :- 16. The (India) Carriage of Goods by Sea Act, 1925 (Sea Act) has been relied on by the learned Counsel appearing for defendant Nos. 3 & 4, in support of the Notice of Motion as a legal foundation. This Act deals with the carriage of goods by sea. Undisputedly, the provisions of Sea Act is applicable to the facts of this case. This Act has a foundation of the International Conference of Maritime Law held at Brussels in October, 1922 for unification of ( 10 ) certain rules relating to the bills of lading. Said rules were amended from time to time. The provisions of this Act have a force of law with a view to establishing the responsibilities, liabilities, rights and immunities attaching to carriers under bills of lading. It is extended to whole of India. 17. The relevant Section/Provision as relied & referred in the Appendix B - Schedule - Rules relating to bill of lading, Article III - (Clause 6) is as follows :- In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. [Thus period may, however, be extended if the parties so agree after the cause of action has arisen: Provided that a suit may be brought after the expiry of the period of one year referred to in this sub-paragraph within a further period of not more than three months as allowed by the court]. In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. THE SUBMISSIONS :- 18. Relying on this, the learned Counsel for the ( 11 ) applicant submitted that in the present case as admittedly the leave was obtained on 5th May, 2004 and suit itself was declared at Delhi on 4th May, 2004 and as admittedly the cause of action arose based on the BOL on 21st April, 2004, the present suit is time barred. He further contended that as the transaction based on the International practice of BOL, such provisions need strict interpretation. Therefore looking to the international characteristic of the provisions, it should be construed strictly. He relied on AIR 1960 Supreme Court, 1050 - East & West AIR 1960 Supreme Court, 1050 - East & West AIR 1960 Supreme Court, 1050 - East & West Steamship Steamship Steamship Co. Georgetown, Madras V/s. S.K. Co. Georgetown, Madras V/s. S.K. Co. Georgetown, Madras V/s. S.K. Ramlingam Ramlingam Ramlingam Chettiar. Chettiar. Chettiar. He further contended that in view of provisions of Order VII Rule 11 of the Civil Procedure Code, 1908 (CPC) and as observed by the Apex Court in Saleem Bhai & Ors. V/s. State of Saleem Bhai & Ors. V/s. State of Saleem Bhai & Ors. V/s. State of Maharashtra, Maharashtra, Maharashtra, 2003, 2006(5) Bom. C.R. 454 2003, 2006(5) Bom. C.R. 454 2003, 2006(5) Bom. C.R. 454, it is necessary to decide this issue before any direction for filing the written statement by the defendants, as it goes to the root of the matter. He therefore pressed for the hearing of this Notice of Motion before passing any further order or direction to file written statement. 19. In the case of Saleembhai (Supra), in view of Order VII Rule 11 of C.P.C. the Apex Court has ( 12 ) observed that it is necessary for the Court to frame issues on law and facts arising out of pleadings. The Trial Court should record its findings on the preliminary issues in accordance with law before proceeding to try the suit on facts. In the facts and circumstances of a case, the Court may consider the very nature of the relief claimed after considering the issues involved in the suit and pass order on application under Order VII Rule 11 of C.P.C. Therefore, it is necessary for a Court to decide the application under Order VII Rule 11 of CPC, based on the allegations in the plaint without insisting for filing of written statement by the contesting defendants. 20. He further contended that the defence of any sort in the written statement would be wholly irrelevant in view of the averments in the plaint itself. Therefore, there is no question of filing written statement without deciding the application under Order VII Rule 11. The insistence on filing the written statement without deciding application under Order VII Rule 11 of CPC would be procedural irregularity touching the exercise of jurisdiction by the Trial Court. The Apex Court in Saleembhai’s case (Supra) remanded the matter back to decide the ( 13 ) application under Order VII Rule 11 on the basis of the averments in the plaint. Both the Courts had rejected said application under Order VII Rule 11 of CPC and directed the parties to file the written statement. 21. In view of this, as the averments in the plaint are germane and sufficient to consider the case of defendant No. 3 & 4 that the suit is barred by the Law of Limitation. 22. A BOL is well defined, interpreted and recognized term in any sort of trade, commerce and business at national or international level. 23. The Transportation of Goods Act, 1993 (Act 28 of 1993) came into force on 16th October, 1992 which provides for regulation of the multimodal transportation of goods from any place in India to a place outside India, on the basis of multimodal transport contract and for a matter connected there with. This Act of 28 of 1993 deals with mode of transport including carriage of goods by road, rail, in-land, water way or sea. This further deals with the term multi modal transportation, which means carrier of goods by two more modes of transport from the place of acceptance of the goods in India to a place of delivery of the goods outside India. By this ( 14 ) Act, amendment has been made to the Indian Carriages of Goods by Sea 1925 (26 of 1925) in part 2. The relevant amendment is underlined while reproducing clause 6 of the rules of bill of lading. This Act further provides and deals with multimodal transport contract and transport operator and determine also along with other Sea Act and other Acts. The liability and responsibility is of multimodal transport operators for loss of damage to the goods. It further simplifies the procedure with a view to reducing and eliminating interpretation in the continuous movement of the goods from the original to the ultimate destination as also reducing cost and delays and improving the quality of transport services. The liability and responsibility of the multimodal transport operator who provides service under a single document need to be acknowledged in the international trade. The present transaction and issue therefore need to be considered based on these two Acts. 24. Looking to the aims and objects it is necessary to interpret and consider the provisions of the Sea Act. Keeping in mind the principles of trade and commerce of national & international level and/or standard, in such transactions/contracts. A strict ( 15 ) interpretation must be given. The mandate of such Act, if worded clearly, interpretation which support the scheme of the Act needs to be given. The international trade and commerce need to be governed by uniform standard and practice. An uncertain & vague interpretation & practice will hamper free flow of trade and business at national or international level. 25. The learned Counsel for defendant Nos. 3 & 4 relied on the Apex Court’s decision (East and West (East and West (East and West Steamship Steamship Steamship Co. Georgetown, Madras V/s. S.K. Co. Georgetown, Madras V/s. S.K. Co. Georgetown, Madras V/s. S.K. Ramlingam Ramlingam Ramlingam Chettiar) Chettiar) Chettiar) a part of which is quoted below:- The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, though fine, is of great importance. The Legislature could not but have been conscious of this distinction when using the words "discharged from all liability" in an Article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense. It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgment of liability thereafter. We have therefore come to the conclusion that whatever be the proper mode of ascertaining the date when delivery "ought to be made" under Art. 31 of the Limitation Act - whether that be the reasonable time for delivery in the ( 16 ) circumstances of the case or the date when after correspondence the carrier intimates its inability to deliver or the date of the final repudiation of the claim on the claim for compensation having been made or in the case of part delivery the date when the bulk of the consignment was delivered - the date when the goods should have been delivered for the purpose of the Third Clause of the 6th paragraph of Art. III of the Act is the date when the ship by which the goods were contracted to be carried has left the port at which delivery was to be made. Though the additional defence raised by the shipping companies must therefore fail, the main defence, as we have already found, succeeds. None of the suits were brought within a year from the date when the ship carrying the goods left the port of discharge. We therefore dismiss with costs and Civil Appeals Nos. 91 and 92 of 1958 and confirm the order of dismissal made by the Bombay High Court. One set of hearing costs will have to be paid. we have to consider the facts and averments made in the present case. 26. The plaintiff in his reply affidavit has raised a specific defence and made an allegations of fraud being played by defendant No. 1 by putting false date on BOL and presented the Letter of Credit (LOC) and obtained payment at Mumbai on the basis of such antedated BOL. The plaintiff further disputed the jurisdiction clause as mentioned in the BOL of defendant Nos. 3 & 4 and further contended that BOL ( 17 ) including the jurisdictional clause is vitiated by fraud. He further contended in the affidavit that ships that carried the respective goods were not actually in India on the relevant date i.e. 31st March, 2003. He therefore denied a period of one year for bringing a claim as applicable or relevant in the facts and circumstances of the case. The plaintiff further submitted that the claim is not under the bill of exchange but in respect of BOL on the basis that it was fraudulently issued with false date. The main emphasis of the plaintiff is on the three years period of limitation mentioned under the Limitation Act, 1963, as per entry 10 part II of the schedule and other provisions. It has been further contended that the suit has been filed within limitation from the date of knowledge of act as found committed by the defendants, after verifying the documents and particularly BOL and shipping advice upon received by them from the bank on 25th April, 2003. Hence, he further contended that the limitation period started from the date on which the plaintiff came to know about the fraud. THE REASONING :- 27. It is mandate of the act that the carrier and the ship shall be discharged from all liabilities in ( 18 ) respect of loss or damage unless suit is brought