Case: Jai Balaji Industries Ltd Vs. Pec Ltd

in the list seven weeks hence." 11. Aggrieved thereby, the Respondent No.1 herein preferred APOT No.235 of 2009 and APOT No.249 of 2009 before the Division Bench of the Calcutta High Court and the same were disposed of finally by the Appeal Court by its order dated 1st September, 2009, extracted hereinabove, whereby the order of the learned Single Judge was set aside and replaced by the said order. 12. As mentioned hereinbefore, these appeals are directed against the said order of the Division Bench of the Calcutta High Court. 13. On behalf of the appellants it has been contended that under the High Seas Sale Agreement, the Respondent No.1 was to endorse the Bill of Lading in favour of the appellant, but that the same was never done and the consignment of Manganese Ore was never made over to the appellant and has remained in the custody of the Respondent No.1 ever since it was discharged at Paradeep Port. It was also submitted that after having purchased 100 metric tonnes of the said ore for the purpose of testing, when it was found that the same was sub-standard material, the appellant had expressed its inability to accept the consignment. It was also submitted that without delivering the consignment, the Respondent No.1 was not entitled to encash the cheques, which had been made over to it by way of security deposit. 14. It was lastly contended that the appellant had no obligation to take delivery of the entire goods since the Agreement provided that the goods were to be delivered part-by-part. 15. The case made on behalf of the appellant was vehemently opposed on behalf of the Respondent No.1 on the ground that the High Seas Sale Agreement was merely a means of import of the said ore into India by the appellant and the Respondent No.1 was merely a facilitator for the said purpose. In fact, the role of the Respondent No.1 was to import the goods and, thereafter, to make over the same to the Appellant as it had no use for the Manganese Ore. In fact, the same would be evidenced by the Deed of Pledge, whereby the goods continued to be in the control and possession of the Respondent No.1 till the same were delivered to the appellant. It was also the case of the Respondent No.1 that the consignment of Manganese Ore had always been with the appellant in its own godown and that the Bill of Lading had also been endorsed in favour of the appellant, whereupon the title to the goods had passed to the appellant. 16. From the submissions made on behalf of the parties, it will appear that the appellant is aggrieved by the fact that besides having paid a sum of Rs.20,31,25,856/- by a postdated cheque to the Respondent No.1, the appellant had also been deprived of the goods, the value whereof had greatly diminished since it was received at Paradeep Port on or about 8th October, 2008. On the other hand, not only would the Respondent No.1 retain control over the consignment but it would also have unjustly enriched itself to the extent of the security provided by the appellant in terms of the order of the High Court impugned in these appeals. 17. In deciding these appeals, we have to keep in mind the fact that the suit is still pending before the Calcutta High Court and the rights and liabilities of the parties are yet to be worked out in the suit. The question whether the Bill of Lading had been endorsed in favour of the appellant or not by the Respondent No.1 is also a matter to be decided in the suit on evidence. Furthermore, the appellant has itself indicated that it was not willing to accept the consignment since it was of sub-standard quality and had deteriorated further since it was discharged at Paradeep Port. As has been pointed out by the learned Single Judge in her order of 12th June, 2009, the appellant in its undertaking had agreed to pay the balance amount in respect of the imported goods on their first demand without demur and protest and to honour the cheques issued in favour of the Respondent No.1 on their presentation on the dates indicated. Furthermore, a further undertaking was given not to intimate the bankers to stop the payment of the cheques delivered to the Respondent No.1 and also not to close the account without the permission of the Respondent No.1. 18. On a prima facie assessment of the terms and conditions of the Agreement entered into between the appellant and the Respondent No.1 on 7th August, 2008, the responsibility relating to the quantity and quality of the cargo was to be that of the appellant and Clause 8 of the said Agreement indicates that the Respondent No.1 would not be responsible for any shortage in the quantity and quality of the cargo at the loading point as well as at the delivery point. Nothing has come to our notice whereby the Respondent No.1 was prevented from encashing the cheques alleged to have been given by way of security. 19. In our view, it would not be proper for us to delve into the details of the matter at this stage since the order of the Division Bench in appeal protects the appellant, while granting liberty to the Respondent No.1 to encash the cheques and appropriate the amount upon furnishing a Bank Guarantee of the like amount which was to be kept renewed till the disposal of the suit. Furthermore, the goods in question are to be sold by the Receiver appointed by the Court and the sale proceeds have been directed to be handed over to the appellant herein. Balance claims, if any, will have to be decided in the suit filed by the appellant. Apart from the above, it has also to be kept in mind that the Respondent No.1 has already paid for the goods to the foreign buyer.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]16. From the submissions made on behalf of the parties, it will appear that the appellant is aggrieved by the fact that besides having paid a sum of Rs.20,31,25,856/by a postdated cheque to the Respondent No.1, the appellant had also been deprived of the goods, the value whereof had greatly diminished since it was received at Paradeep Port on or about 8th October, 2008. On the other hand, not only would the Respondent No.1 retain control over the consignment but it would also have unjustly enriched itself to the extent of the security provided by the appellant in terms of the order of the High Court impugned in these appeals17. In deciding these appeals, we have to keep in mind the fact that the suit is still pending before the Calcutta High Court and the rights and liabilities of the parties are yet to be worked out in the suit.The question whether the Bill of Lading had been endorsed in favour of the appellant or not by the Respondent No.1 is also a matter to be decided in the suit on evidence.Furthermore, the appellant has itself indicated that it was not willing to accept the consignment since it was ofd quality and had deteriorated further since it was discharged at Paradeep Port. As has been pointed out by the learned Single Judge in her order of 12th June, 2009, the appellant in its undertaking had agreed to pay the balance amount in respect of the imported goods on their first demand without demur and protest and to honour the cheques issued in favour of the Respondent No.1 on their presentation on the dates indicated. Furthermore, a further undertaking was given not to intimate the bankers to stop the payment of the cheques delivered to the Respondent No.1 and also not to close the account without the permission of the Respondent No.118. On a prima facie assessment of the terms and conditions of the Agreement entered into between the appellant and the Respondent No.1 on 7th August, 2008, the responsibility relating to the quantity and quality of the cargo was to be that of the appellant and Clause 8 of the said Agreement indicates that the Respondent No.1 would not be responsible for any shortage in the quantity and quality of the cargo at the loading point as well as at the delivery point. Nothing has come to our notice whereby the Respondent No.1 was prevented from encashing the cheques alleged to have been given by way of security19. In our view, it would not be proper for us to delve into the details of the matter at this stage since the order of the Division Bench in appeal protects the appellant, while granting liberty to the Respondent No.1 to encash the cheques and appropriate the amount upon furnishing a Bank Guarantee of the like amount which was to be kept renewed till the disposal of the suit. Furthermore, the goods in question are to be sold by the Receiver appointed by the Court and the sale proceeds have been directed to be handed over to the appellant herein. Balance claims, if any, will have to be decided in the suit filed by the appellant. Apart from the above, it has also to be kept in mind that the Respondent No.1 has already paid for the goods to the foreign buyer.