1 ADMIRALTY SUIT-111-97 IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN ITS ADMIRALTY & VICE ADMIRALTY JURISDICTION ADMIRALTY SUIT NO. 111 OF 1997 1.Unique Pharmaceutical Laboratories 2.The Oriental Insurance Co. Ltd.,..Plaintiffs Versus 1. M.V. “Contship Atlantic” 2. Contship Container Lines Ltd., 3. Samrat Shipping & Transport Systems Pvt.Ltd., .. Defendants Shri Desai learned Senior Advocate for the Plaintiffs Shri Nichani learned Advocate for the defendants CORAM : S.R. SATHE,J. DATED : 08/02/2007 JUDGEMENT :- 1. Plaintiffs have filed this suit against the defendants for recovery of the amount of Rs. 27,17,806/- together with future interest on the said amount at the rate of 18% p.a. from the date of filing of the suit till the date of realization. 2. The Plaintiff's case in brief is that Plaintiff No.1 is a Public Limited Company engaged in the manufacture of pharmaceutical products and having its registered office at Mumbai. 2 ADMIRALTY SUIT-111-97 3. The first defendant vessel M.V.“Contship Atlantic” is a merchant vessel flying a foreign flag which at the material time was owned by second defendant who are having their head office at Petersburg, Russia. The third defendant are doing business as Shipping agent at Mumbai for and on behalf of second defendant and having their office at Bandra- Kurla Complex, Bandra, Mumbai. 4. On 28/10/1996, Plaintiff No.1 shipped to their buyers State Enterprise Pharmacy Warehouse N1, Moscow, Russia, the cargo consisting of 631 cartons containing various pharmaceutical products. It was shipped under 4 invoices bearing Nos. 5278 dated 13/09/1996, 5352 & 5353 dated 11/10/1996 & 5317 dated 24/09/1996. The said cargo was valued at US $ 75,709/-. The cargo was well packed and accepted by the third defendant on behalf of second defendant for carriage and safe delivery ex-JNPT Nava Sheva to flexistowe for onward carriage therefrom to Moscow being the final destination. The said cargo which stuffed into F.C.L. Container No. TRIU 217035-4 was entrusted to the third defendant and the third defendant issued a clean 'on board' bill of lading bearing No. EUACSAMBBYT 43516 dated 28/10/1996, at Mumbai on behalf of second defendants. 3 ADMIRALTY SUIT-111-97 5. The first defendant vessels reached the designated port and thereafter the FCL Container containing the plaintiff's cargo was transported by road to Moscow for delivery to the consignees' warehouse. The said container was entrusted to “ZAO MCT Transit Service” by the second defendant for onward carriage. However, the driver of the truck carrying Plaintiff's container failed to deliver the same to consignee and instead mis-delivered it to persons proclaiming themselves to be the consignees. The driver and the firm were penalized for violation of the local statute in Russia. The information was reflected in the decision of “THE STATE CUSTOMS COMMITTEE OF THE RUSSIAN FEDERATION DECISION”. 6. On 09/04/1997 the Plaintiff No.1 lodged their monetary claim with third defendant for their failure to deliver the container to the consignee at Moscow. The defendants, however, failed and neglected to settle the claim. According to Plaintiff No.1, they were the owners and shippers of the aforesaid cargo. Due to non delivery of the same to the consignee, Plaintiff remained unpaid vendor to the extent of entire value of their cargo. Hence, Plaintiff No.1 filed the present 4 ADMIRALTY SUIT-111-97 suit for recovery of loss of US $ 77,651.60/- equivalent to Rs. 27,17,806/-. 7. On 9th July, 2002, the original Plaintiff Unique Pharmaceutical Laboratories amended the plaint and joined Oriental Insurance Company Limited as Plaintiff No.2 and averred that Plaintiff No.1 had obtained insurance policy from Plaintiff No.2 on 28/10/1996 in respect of the suit consignment. For value of the consignment of 631 cartons non delivery at the destination, the Plaintiff No.2 Insurance Company settled the claim of the Plaintiff for a sum of Rs. 30,29,732/-. The Plaintiff No.1 thereafter in pursuance of the settlement of their claim executed a letter of subrogation and special power of attorney in favour of Plaintiff No.2 Insurance Company. Thus, by virtue of the said letter of subrogation and special power of attorney, Plaintiff No.2 became entitled to recover the said amount but the Plaintiff No.1 continued as party to the suit by way of abundant care and caution. The Plaintiff therefore claimed that Plaintiff No.2 is entitled to recover the amount of Rs.27,17,806/- together with future interest at the rate of 18% p.a. from the defendant. 5 ADMIRALTY SUIT-111-97 8. The defendant Nos. 1 and 2 filed their Written Statement and resisted the suit claim on several grounds. Firstly, they contended that this Court has no jurisdiction to try the suit because on the date of filing of the suit first defendant vessel was neither birthed at JNPT Nava Sheva nor it was within territorial waters of India. Besides this, they contended that admittedly no part of the cause of action has arisen within the jurisdiction of this court. Even according to Plaintiff, the consignment was stolen or wrongly delivered when it was in the custody of the road carriers. According to defendants, mere loading of the consignment at Mumbai would not give cause of action to Plaintiff because even according to Plaintiff the consignment was stolen or mis-delivered at Moscow. The defendant also contended that even if it is assumed that part of cause of action has arisen within the jurisdiction of this Court, no leave under clause-12 of the Letters Patent has been taken by the Plaintiff particularly when these defendants carry out business outside India and third defendants are not special agents of these defendants in India. Hence, the defendant Nos. 1 & 2 contended that this Court has no jurisdiction. 6 ADMIRALTY SUIT-111-97 9. Secondly, the defendant contended that as per clause-18 of the bill of lading it was necessary to refer the dispute in question to arbitration in London. Hence on this ground also the suit is not tenable. 10. Thirdly, the defendants contended that Plaintiffs' claim is barred by law of limitation in view of section 24 of Multi Model Transportation of Goods Act, 1993 which requires the Plaintiff to bring action within 9 months from the date, consignment ought to have been delivered to the Consignee. 11. Fourth contention taken by the defendant is that even according to Plaintiff's, consignment was stolen while in the custody of the Road Carriers i.e.“ZAO MCT Transit Service” but the said transport company or carriers have not been joined as defendant and suit is bad for non-joinder of necessary party. 12. The 5th contention taken by the defendant is that as per clause-4(A)(i) of the said bill of lading issued by the defendant, the defendants are discharged from liability once the consignment is discharged from the vessels rails. So, defendants are not liable to pay any amount, as alleged loss has taken place after the 7 ADMIRALTY SUIT-111-97 consignment was discharged. Not only that but as per clause-4(B)(ii) r/w. Clause-7 of the bill of lading, the defendant Nos. 1 and 2 are not liable to pay to Plaintiff for the alleged loss, unless they have recovered any sum from the Road carriers or third party to whom the said defendants had entrusted the consignment for further carriage. As defendant Nos. 1 and 2 have not recovered any amount from the road carriers i.e. M/s.“ZAO MCT Transit Service”, they are not liable to pay any amount to Plaintiffs. 13. The defendants also contended that they and third defendant are exonerated from any liability in view of the terms and conditions embodied in the bill of lading. 14. The defendants also contended that they were not aware whether Plaintiff had shipped to their buyer cargo consisting of 631 cartons containing various pharmaceutical products and that the value of the same was US$ 75,709/- particularly when on the reverse of the bill of lading there was specific endorsement that particulars declared by the Shipper not checked by the carrier and weight, measures, marks, numbers, quantity, condition, contents and value of the goods are unknown 8 ADMIRALTY SUIT-111-97 to the carriers. The defendant also contended that they carried out their duty in proper way and their responsibility ceased when they handed over the consignment to M/s.ZAO MCT Transit Service. The defendants also denied that they failed in their contractual obligation. The defendants therefore contended that they are not liable to pay the amount claimed by the Plaintiff. 15. The defendant No.3 filed their Written Statement and took similar contentions. Besides this, the defendant No.3 contended that they have acted as agents for a disclosed foreign principles and in view of section 230 of the Contract Act, 1872. They are not personally liable to pay the amount claimed by the Plaintiff. They neither carried the consignment nor they were ballies of the said consignment so according to them, the suit is bad in law. The defendant No.3 therefore prayed for the dismissal of the suit. 16. The defendant Nos. 1 to 3 filed their additional Written Statement to the amended plaint and contended that Plaintiff No.2 have not been subrogated to the rights and remedies of the Plaintiff No.1 against defendants over the alleged non delivery of 9 ADMIRALTY SUIT-111-97 consignment of 631 cartons. They also contended that if the Plaintiff No.1 have assigned, transferred and abandoned their rights in respect of the suit consignment, they are not entitled to file the present suit. They also denied that by virtue of letter of subrogation cum power of attorney, the Plaintiff No.2 are entitled in law to sue the defendants for recovery of the amount as alleged by the Plaintiff. They also contended that letter of subrogation is not properly stamped and it has to be impounded. They therefore contended that suit is liable to be dismissed against both the Plaintiffs. 17. On these pleadings following issues have been framed by the Court (CORAM : D.K.DESHMUKH,J). I have given my findings as mentioned against the same :- POINTS FINDINGS 1. Whether the Plaintiffs prove that this Hon'ble Court has jurisdiction to entertain, try and dispose of this suit ? Yes. But only against Defendant No.3 2. In absence of the 1st defendant's vessel being within the jurisdiction of this Hon'ble Court at the time of institution of the suit, whether the suit as against the 1st defendant vessel is liable to be dismissed ? Yes 10 ADMIRALTY SUIT-111-97 3. Whether the Plaintiffs prove that the suit is not barred by the law of limitation ? Suit filed by Plaintiff No.1 is in time. Suit filed by Plaintiff No.2 is time barred, as No.2 is joined as plaintiff after about 4 years from the cause of action. 4. Whether the Plaintiffs prove that they have title to sue the defendants? Yes but only upto 27/12/97 5. Whether the 2nd defendants prove that they are discharged from liability upon discharge of the suit consignment from the vessel? No 6. Whether the 2nd defendants prove that they were only acting as forwarding agents after the discharge of cargo from the vessel ? No 7. Whether the suit is bad for non- joinder of parties due to non-joinder of the Road Carriers viz ZAO MCT Transit service as co-defendants to the suit ? No 8. Whether the Plaintiffs prove that the description, quantity and value of the suit consignment that was loaded in the container for carriage by sea ? Yes 11 ADMIRALTY SUIT-111-97 9. Whether the plaintiffs prove that the suit consignment was delivered to the wrong person/ party as alleged in the plaint? Yes 10. Whether the Plaintiffs prove that the driver and road carriers have been penalized for violation of a local statute in Russia as alleged in para 4 of the plaint ? Yes 11. Whether the Plaintiffs prove that the alleged non-delivery of cargo was due to the negligence of the defendants ? Yes 12. Whether the 3rd defendants who are admittedly the agents of a disclosed principle can be held personally liable to meet or answer the plaintiff's claim? No 13. Whether the Plaintiffs are entitled to a decree in the sum of Rs. 27,17,806/- together with further interest at 18% p.a. from the date of filing the suit till payment ? No 14. What order ? As stated in the final order 15. What relief ? No relief. 18. In order to prove the suit claim on behalf of Plaintiff No.1, affidavit of their General Manager B.S. Avari was filed. Plaintiff No.2 filed affidavit of their Dy. Manager Chandrashekhar and affidavit of M.S. 12 ADMIRALTY SUIT-111-97 Shrinivasan. However, M.S.Shrinivasan was not presented for cross-examination and as such his affidavit of evidence can not be considered. On behalf of defendants, affidavit of Deonel Goveas, documentation manager of the third defendant was filed. So also affidavit of one Harendra Dalal was filed on their behalf. The Plaintiffs produced several documents including the photocopies of invoices of the goods contained in the cargo as well as the photocopy of bill of lading dated 28/10/1996 issued by defendant No.3 after the 631 cartons containing various pharmaceutical products were shipped. The Plaintiffs also produced copy of the order passed by the State Custom Committee of the Russian Federation, Moscow, Russia in respect of the consignment in question and copy of the notice issued by the Plaintiffs to the third defendant on 09/04/1997. Plaintiffs also produced the letter of subrogation and special power of attorney dated 27/12/1997 executed in favour of Oriental Insurance Company Limited i.e. plaintiff No.2. 19. As against this, defendants have not produced any document. 20. Learned Advocate for the defendants strongly 13 ADMIRALTY SUIT-111-97 objected for the production of the documents submitted by the Plaintiff as the said documents were photocopies and not the originals. So far as four invoices are concerned, Plaintiffs witness has stated that the goods have been sent to State Enterprise Pharmacy Warehouse, Moscow, Russia under the above mentioned four invoices and as the originals were sent alongwith the bill of lading the copies have been produced. The contents of the same are duly proved by the Plaintiff. These are the invoices prepared in the office of Plaintiffs. So the said invoices are admitted in evidence. 21. Learned Advocate for the defendants strenuously argued before me that the original bill of lading is not produced by the Plaintiff and no satisfactory explanation for not producing the original is given by the Plaintiff. However, it has come on record that the original bill of lading was sent to the bankers and thereafter, it was returned by the bankers to Plaintiff but the same was lost and hence, the Plaintiff filed the photocopy of the same. Firstly, it must be noted that Plaintiff has given satisfactory explanation as to why secondary evidence is being adduced. Besides this, it must be noted that it is in fact not disputed by the defendants that on 28/10/1996 cargo in question was 14 ADMIRALTY SUIT-111-97 shipped on the suit vessel i.e. defendant No.1 through defendant No.2. It is also not in dispute that in the said transaction defendant No.3 acted as an agent of defendant No.2. The defendant No.3's witness has also clearly admitted that Plaintiff company had shipped their goods as mentioned in the plaint and bill of lading was issued. The defendants have referred the said document in cross-examination. So having regard to all these facts, I have no hesitation to accept the said photocopy of bill of lading in evidence. 22. It is in fact not disputed that the Plaintiff company had shipped 631 cartons of various pharmaceuticals on the vessels i.e. defendant No.1. Admittedly, the said consignment was addressed to State Enterprise Pharmacy Warehouse, Moscow, Russia. Not only that but it is in fact not in dispute that the first defendant vessel reached the designated port and thereafter, FCL container containing the Plaintiff's Cargo was to be transported by road to Moscow for delivery at the consignee's warehouse. For that matter, the cargo was entrusted to 'ZAO MCT Transit Service' by the second defendant for onward carriage by road. However, it is Plaintiff's case that the said cargo was not accordingly delivered to the consignee and it was 15 ADMIRALTY SUIT-111-97 mis-delivered to some unknown person by the driver of truck who was carrying the Plaintiff's container and thus, ultimately, the consignee did not receive the goods and the Plaintiff No.1 did not receive the price of the same. These facts are in fact not disputed. The main question is whether the Plaintiffs are entitled to recover the loss that has been caused to them by non- delivery of the goods to consignee, in this suit. ISSUE NOS.1 AND 2 23. It is the contention of defendant Nos.1 and 2 that this Court has no jurisdiction to try the present suit because so far as defendant No.1 vessel is concerned, on the date of the filing of the suit, the vessel was not birth within the territorial waters of India and so far as defendant No.2 is concerned it is a foreign company carrying on business in Russia. They are not doing any business in India nor they are having office in India and as such this Court has no jurisdiction to try the suit against the defendant Nos. 1 and 2. 24. Shri Desai, learned Senior Advocate for the Plaintiff submitted that in the instant case Plaintiff has not asked for the arrest of the ship. When goods 16 ADMIRALTY SUIT-111-97 were loaded on the vessel, it was within the territorial waters of India. The defendants had agreed to deliver the goods of Plaintiff company to the consignee by carrying it through defendant No.1 vessel to Petersburg and then by road to the consignee's warehouse. The contract between the Plaintiffs and defendants has taken place at Mumbai and as such this Court has jurisdiction to try the present suit. 25. On the contrary, Shri Nichani learned Advocate for the defendants submitted that as on the date of filing of the suit the defendant No.1 vessel was not arrested and as such no action in rem will lie against the vessel. Shri Desai learned senior advocate has placed reliance on a case M.V. Elizabeth V/s. Harwan Investment and Trading Pvt. Ltd.,Goa AIR 1993 Supreme Court 1014 to support his proposition. However, careful reading of the said authority shows that the Apex Court has not at all laid therein that if the Plaintiff has not prayed for arrest of the vessel then suit will lie against the vessel, if on the day when the contract was entered into with Plaintiff for carrying the goods by particular vessel. On the contrary, in the above cited ruling the Apex Court has observed :- “ An action in rem is directed against the 17 ADMIRALTY SUIT-111-97 ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person. Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the Plaintiff in personam. It is, however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started. A decree of the court is such an action binds not merely the parties to the writ but everybody in the world who might dispute the Plaintiff's claim.“ 26. In fact there are various authoritative pronouncements in which similar view has been taken and as such I have absolutely no hesitation to hold that under the circumstances of the case this Court has no jurisdiction to try the present suit against the defendant No.1. 27. So far as the defendant No.2 is concerned admittedly it is a foreign company and they are not 18 ADMIRALTY SUIT-111-97 having business in India and in Bombay. Merely because they have appointed defendant No.3 as agent and defendant No.3 agreed to ship the material of Plaintiff on the defendant No.1 vessel through defendant No.2, we can not jump to the conclusion that this Court has jurisdiction to try the present suit against the defendant No.2. It must be noted that admittedly the defendant No.2 has not submitted themselves to the jurisdiction of this Court. On the contrary, they have raised contention that this Court has no jurisdiction. In World Tanker Carrier Corporation V/s. S.N.P. Shipping Services Pvt. Ltd. and others 1999(1) Bombay Cases Reporter (SC) 196, the Apex Court has made following observations. “The presence of a foreign defendant who appears under protest to contest jurisdiction, can not be considered as conferring jurisdiction on the Court to take action. Unless a foreign defendant either resides within jurisdiction or voluntarily appears or has contracted to submit to the jurisdiction of the Court, it is not possible to hold that the Court will have jurisdiction against a foreign defendant.” See in this connection (R. 19 ADMIRALTY SUIT-111-97 Vishwanathan V. Rukh-ul-Mulk Sayed Abdul Wajid), 1996(3) S.C.R. 22 : AIR 1963 S.C. 1 (Rajendra Sardar Moloji Nar Singh Rao Shitole V. Shankar Saran), 1963(2) S.C.R. 572 : AIR 1962 S.C. 1737. 28. In this very ruling, it has been specifically mentioned that under the principles of Private International Law, a Court can not entertain action against foreigner resident outside country or the foreigner not carrying on business within the country, unless he submits to the jurisdiction of the Court here. So, merely because the contract between defendant No.2 and Plaintiff has taken place through defendant No.3 at Mumbai, we can not jump to the conclusion that suit against foreign company having no business in Mumbai is maintainable in this Court under the circumstances of the case. So, I have answered point Nos. 1 and 2 accordingly. ISSUE NO.4 29. It is the contention of the defendant that the bill of lading having been endorsed in favour of the consignee, the Plaintiff No.1 has no right, title and interest in the goods and as such Plaintiff is not 20 ADMIRALTY SUIT-111-97 entitled to file the present suit. Learned Advocate for the defendant strenuously argued before me that while answering question No.50, even PW-1 has categorically admitted that upon negotiating document through a bank for payment title in the goods passed in favour of the buyer. However, it must be noted that the said witness was in fact asked a legal question and he may not have properly understood the meaning of the said question and correct legal position and as such might have given such answer but that by itself is not at all sufficient to hold that on the date of the filing of the suit, Plaintiff had in fact no right, title and interest in the cargo that was shipped and agreed to be delivered to the consignee by the defendant No.2. In order to substantiate his proposition, he has placed reliance on a case Kohinoor Carpet V/s. Forbes Gokak Ltd. 2002 (4) BOM.C.R.295 I have carefully gone through the said ruling. The facts of the said case and the facts of the case in hand are quite different. In that case, the bill of lading was endorsed in favour of the consignee and consignee had accepted the bill of lading but deferred the payment. So, by accepting the said bill of lading the title in the goods had in fact transferred to the consignee and as such it was held that the Plaintiff was not entitled to file the suit. However, 21 ADMIRALTY SUIT-111-97 in the instant case, it is amply clear that though the bill of lading was endorsed to consignee it was not at all actually received by the consignee. On the contrary, the evidence is that the consignee neither received the goods nor the bill of lading and the accompanying document. So, taking into consideration these peculiar facts, it can not be held that in the instant case Plaintiff's right, title and interest had come to an end by endorsing bill of lading in favour of consignee. So, considering these peculiar facts, I am not inclined to accept the proposition of the learned advocate for the defendant in this behalf.