Delhi High Court
Magnum International Trading Co. Ltd vs Export Credit Gurarantee Corporation ... on 27 January, 2009
Author: S.Ravindra Bhat
Bench: S. Ravindra Bhat
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS (OS) NO. 2422/1994
Reserved on 12th September,2008
Pronounced on 27th January, 2009
MAGNUM INTERNATIONAL TRADING CO. LTD. ..... Plaintiff
Through : Mr. Sanjeev Anand, Advocate
versus
EXPORT CREDIT GURARANTEE
CORPORATION OF INDIA LTD. ..... Defendant
Through : Mr. Sudhir Chandra, Senior Advocate
Mr. Jatin Zaveri, Advocate
CORAM:
Mr. Justice S. Ravindra Bhat
1
. Whether reporters of local papers may be
allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
Mr. Justice S. Ravindra Bhat
1.The plaintiff seeks a decree for Rs.2,71,18,467/- against the defendant with interest @ 22% p.a. pendente lite, as well as future, on account of foreign exchange fluctuation.
2. The facts are that the plaintiff was, at the relevant time, engaging itself in trading, manufacturing and export of varied commodities and goods. It secured an export order on 11.8.98 from "Sudo Import" Moscow for supply of 6 Ocean going vessels (2 Ice Breaking tugs CS (OS) NO. 2422/1994 Page 1 and 4 cargo vessels) for a contract value of Rs.1,033,968,000/-. The plaintiff was to deliver the vessels to the purchaser between the period of July 1990 to March, 1991. To fulfill its commitment, the plaintiff placed two separate orders, both on 20.8.98 on Jurong Shipyard Limited, Singapore; the latter were to design, equip and partially build all the vessels for a contract price of US $ 45,999,400/-. The shipyard was to deliver unfinished and incomplete vessels to India between 17-25 months i.e. January, 1990 to September, 1990; part-payments were to be made at different stages. The plaintiff proposed to get the steel hulls constructed in Singapore, tow them to India with major equipment bolted down for safety and subsequently finish as well as test them in an Indian Shipyard.
3. The contract with the Singapore shipyard was to be operative for 25 months and involved risk of fluctuation of foreign exchange. The plaintiff, therefore, sought to obtain exchange fluctuation risk cover. For this purpose, it approached the defendant, a Central Government Undertaking, specializing in, inter alia, exchange Fluctuation Risk Cover for certain export transactions. The plaintiff furnished a proposal, on 10.10.1998 to the defendant for the Exchange Fluctuation Risk Cover (hereinafter called "the Cover"), for fluctuation in the value of the US Dollars ($) in terms of Indian Rupees. After further correspondence by which clarifications were sought and given by the parties, the defendant, on 18.1.89 informed about acceptance of the proposal and stated about the offer of the risk cover - export linked import upon terms and conditions set out in the risk cover agreement which was to be executed. The defendant informed that the premium payable was Rs.41,77,748/-; the offer was valid for 30 days. This was accepted by the plaintiff by its letter dated 30.1.1989. Accordingly, the CS (OS) NO. 2422/1994 Page 2 defendant forwarded two sets of risk cover agreements dated 28.3.1989 signed by it (Ex.P/6). The plaintiff concurred and returned the said documents after signing them.
4. In terms of the document, the defendant agreed to cover up to a maximum liability of Rs.20,70,48,792/-. Clause 2.2 of the agreement provided that if for any payment, the exchange loss was more than 5 % of the reference amount, the plaintiff was to bear the loss equal to 5 % of such reference amount and the defendant agreed to pay to the plaintiff the loss in excess of 5 % but up to 35 % of the reference amount. The loss in excess of 35 % was to be borne by the plaintiff. Clause 3.1 stipulated that settlement of the exchange gain or exchange loss was to take place on the basis of statements of payment to be furnished by the plaintiff to the defendant, in the prescribed form separately for each payment for import and within 15 days of the date of payment. According to Clause 4.1, the cover granted was valid from 20.8.88 to 31.3.91 both days inclusive, and was applicable to the payments mentioned in Part-I of the schedule to the Agreement. The definitions in the agreement and Clause 5.1 are reproduced below. The definitions clause is as follows:
Definitions :
In this Agreement, unless the context otherwise requires :
"Reference Rate" shall mean the rate of exchange between the foreign currency and the Indian Rupee shown in Part I of the Schedule to this Agreement.
"Reference Amount" shall mean the amount in Indian Rupees which is obtained by converting a foreign currency amount into the Indian Rupee at the Reference Rate and which is shown in Part
-I of the Schedule to this Agreement.
CS (OS) NO. 2422/1994 Page 3
"Actual Amount" Shall
(a) in case of payment for an import transaction, mean the amount in Rupee obtained by
converting the foreign currency amount at the selling Rate of Exchange applied by the Exporter's bank for effecting the payment,
(b) in the case of adjustment of advance payment through exports, mean the amount in Rupees worked out by converting the foreign currency value of the export at the buying Rate of Exchange quoted by the Exporter's bank on the date of submission of export documents to the bank.
"Exchange Gain" shall mean the difference between the Actual amount and the relative Reference Amount where the Actual amount is smaller than the relative reference Amount. "Exchange Loss" shall mean the difference between the Actual amount and the relative Reference Amount where the Actual Amount is larger than the relative Reference Amount. Clause 5.1 of the agreement, inter alia, stated that: -
"5.1 Cover for delayed/accelerated payments:
If any payment for an import transaction is delayed or accelerated by a period exceeding three months, such payments shall fall outside the purview of this Agreement and the cover granted under this Agreement shall cease and this Agreement shall be null and void for such payments. If the period of delay or acceleration is not more than three months, settlement of exchange gain/loss relating to such payment shall take place as provided hereinbefore but the Actual Amount in Rupees, for the purpose of determining exchange gain/loss, shall be calculated as follows: A. Where exchange loss results:
in the case of payment for an import transaction, by converting the foreign currency amount at the Selling Rate of Exchange quoted by the Exporter's bank on the due date for the payment or the actual date of payment or on any date between the due date and actual date of payment, whichever yields the lowest amount in rupees;
B. Where exchange gain results:
in the case of payment for an import transaction, by converting the foreign currency amount at the Selling Rate of Exchange quoted by the Exporter's bank on the actual date of payment."
CS (OS) NO. 2422/1994 Page 4
5. Clause 12.1 of the Agreement cast a duty on the plaintiff to submit, within 15 days from the date of making payment, a statement (of such payment(s)) duly certified by its bankers particularizing the amounts remitted and also disclosing calculations regarding the amount of exchange loss or gain. The annexure to the schedule is extracted below; it set out the various due dates, with amounts, for which the defendant held itself liable, for exchange loss:
- " Annexure -"A"
Due Date Amount payable in Reference Rate Reference
Foreign Currency Per Rs.100/- Amount (Rs.)
January, 1989 1,33,95,000 US $6.665 20,09,75,243.81
April, 1989 75,20,900 - " - 11,28,41,710.42
October, 1989 5,75,550 - " - 86,35,408.85
December, 1989 2,78,870 - " - 41,84,096.02
February, 1990 2,78,870 - " - 41,84,096.02
April, 1990 34,88,330 - " - 5,23,38,034.50
July, 1990 38,98,580 - " - 5,84,93,323.33
August, 1990 8,81,850 - " - 1,32,31,057.76
September,1990 46,74,530 - " - 7,01,35,483.87
November,1990 16,57,800 - " - 2,48,73,218.30
December, 1990 30,16,730 - " - 4,52,62,265.56
January, 1991 30,16.730 - " - 4,52,62,265.56
February, 1991 16.57.800 - " - 2,48,73,218.30
March, 1991 16,57,800 - " - 2,48,73,218.30"
6. The plaintiff alleges having suffered fluctuation loss in its payment made to Jurong Shipyard Limited. It claims having filed statement of payments, issued in terms of the contract, furnishing particulars and the exchange gain/loss. It also contends that these particulars were CS (OS) NO. 2422/1994 Page 5 certified by the bankers. The plaintiff adverts to issuing several letters, communications and notices to the defendants in this regard.
7. The defendant by its letter dated 12.1.1992 admitted the plaintiff's claims to the extent of Rs.3,82,59,656/- under the risk cover Agreement. This was the final settlement offered by the defendant. According to the defendant, the plaintiff's claim for Rs.1,35,78,701.99/- towards the installment of US $ 30,16,734.96/- which fell due in January, 1991 was not admissible since payment was delayed by more than 3 months. The plaintiff contested the defendant's position through its letter dated 10.2.1992, and also disputed the exchange rates relied upon by the plaintiff. According to the plaintiff its claims were in the range of Rs.4,19,72,228/- excluding the loss of Rs. 11,97,866/- on payment of US $ 30,16,734.96 due in January, 1991. The plaintiff also alleged that it could not furnish payment in April, 1991 due to lack of remittance approval from the Reserve Bank of India and that the exclusion of remittance by the defendant was unjustified.
8. The defendant continued to reiterate its position about its liability being restricted to Rs.3,82,59,665/-. The plaintiff adverts to further correspondence exchanged between the parties and relies upon letters dated 4.8.92, 29.3.93 and telexes issued to the defendant on 23.4.93 and 17.6.93. In these circumstances, the plaintiff claims Rs.37,12,563/- for exchange loss; it additionally claims Rs.1,35,78,702/- as exchange loss on payment of US $ 30,16,734.96, which was dis-allowed by the defendant as time barred and a further amount of Rs.98,27,202/-. thus aggregating Rs.2,71,18,467/. The defendant, in its written statement, first objects to jurisdiction of the court to entertain and try the suit. According to the defendant as the CS (OS) NO. 2422/1994 Page 6 agreement dated 28.03.1989, on which the suit is based, was executed by them at Bombay (now Mumbai) and consideration for the contract was paid and received at Bombay and the performance of the contract was by payment made at Bombay, therefore this court has no jurisdiction to entertain and dispose of this suit.
9. On merits, the defendant admits the essential facts pertaining to contract formation concerning the Risk Cover Agreement, covering fluctuation in the value of the US dollar in terms of Indian rupees to cover losses on this account the premium paid, and the contract executed by the parties. However, it alleges that the plaintiff has approached this court with unclean hands and had suppressed material facts, it contends that in reply to the letter dated 30.1.1989 of the plaintiff (the defendant's offer was accepted, subject to reservations), the defendant, through its letter dated 9.2.1989, categorically declined to accept any such reservation and offered to the plaintiff insurance cover on the same conditions as was offered earlier. Further, the plaintiff replied to the letter dated 9.2.1989 by its letter dated 22.2.1989 stating that the offer had already been accepted by their letter dated 30.1.1989 and that the demand to change the reference rate was only a "request" and further requested the defendants to issue the cover, thus clearly implying that the offer had been accepted unconditionally.
10. The defendant admitted that by a registered letter dated 10.4.1989 it had sent to the plaintiff at New Delhi in two sets the Risk Cover Agreement dated 28.3.1989 duly signed by it. The plaintiff, after signing both copies, sent one back to the defendant and retained the other. It was admitted that the defendant agreed to cover a maximum liability of up to Rs.20,70,48,792/-. The defendant alleged that it had duly paid to the plaintiff the amounts due CS (OS) NO. 2422/1994 Page 7 under the Agreement dated 28.3.1989. It was denied that amount of Rs. 3,82,59,665/- was paid by the defendant as interim payment, as alleged by the plaintiff. According to the defendant, by letter dated 12.1.1992 the admitted the claim towards full and final settlement were made known as well as reasons for rejecting the claim of Rs. 1,35,78,701,99/-. The letter also forwarded a cheque for Rs. 3,82,59,65/- to bankers of the plaintiffs. The defendant further avers that the loss occasioned to the plaintiff in making payments with a delay of more than three months, admitted by the plaintiff were expressly excluded from the purview of cover in terms of clause 5.1 of the agreement. The defendant further denies the plaintiff's position explained in the plaintiff's letter dated 4.5.1992, where the latter had demanded a balance sum of Rs. 49,10,429/- at the earliest; it also denies that a sum of Rs. 11,97,866/- on a payment of US$ 3,016,734.96, was the correct position.
11. The defendant contends that the calculation for the purpose of determining exchange loss was made strictly in accordance with clause 5.1-A of the Risk Cover Agreement dated 28.3.1989. Relying upon the legal opinion of its senior advocate, which was supplied to them by the plaintiff along with their letter dated 29.3.1993, that when "due date" is expressed in terms of a calendar month, any day from the first day to the last day of that month could be construed as 'the due date', the defendant states that wherever there is acceleration or delay in remittance, for the purpose of arriving at the amount of exchange loss in terms of clause 5.1 of the Agreement, the rate quoted on whichever day between the first due date and the actual date of payment that yields the lowest amount in rupees is the rate to be reckoned. Further, the defendants posit that the plaintiff has no locus standi to insist that the term "any date CS (OS) NO. 2422/1994 Page 8 between the due date and the actual date of payment" in sub-para "A" of clause 5.1 of the Agreement should exclusively mean "any date between the last date of the due dates of payment and actual date of payment". Further, it states that since the spirit of clause 5.1 is to arrive at the least amount of exchange loss whenever the exporter had delayed or accelerated the remittance, the plaintiff could not be allowed to benefit from such delays or accelerations.
12. The defendants point out that any delayed remittance after, or acceleration of more than three months is entirely outside the purview of cover afforded under the Agreement - in terms of clause 5.1 - that it cannot be held liable for any losses or share the gains in respect of such remittance. Thus there is no cause of action for the plaintiff to have filed the present suit.
13. PW1 Sh. Rakesh Sareen, General Manager (Finance) and Company Secretary of the Plaintiff Company deposed having joined the plaintiff company in 1995 and that the transaction in the present case took place prior to his employment. He further stated that the plaintiff had received the letter, dated 12.1.1992 and the payment as mentioned in the said letter but denied the suggestion that the same was received towards full and final settlement of the claim against the defendant. He further stated that the amount of US$ 3.00 million was paid beyond a period of three months due to an RBI embargo and the same was paid with a delay of about a year. He agreed that there is no clause in the agreement, which would make the defendant liable to make the payment in case of an embargo by RBI and the payment is made beyond a period of three months. Here, he indicated that since there is no force majeure condition in the contract, it ipso facto meant that the defendant would be liable in case a payment was delayed due to unforeseen circumstances.
CS (OS) NO. 2422/1994 Page 9
13. DW1 Sh. Rohit Pandya, Regional Manager of the Defendant Corporation stated that the claim was paid through letter dated 12.1.1992 for an amount of Rs.3,82,59,665/- excluding the claim of Rs.1,35,78,701.99/- as the due date of payment was January 1991 and the payment was made in May 1991, which is beyond three months, and as per the clause 5.1 the payment was excluded. According to the witness, in case the payment was made on any day of the month mentioned in the Schedule, the due date was to be between the first day of the month to the last day of the month mentioned in the agreement; however, the rate of exchange would be taken on the actual date of payment, if the payment is made within the due date. In response to the suggestion that the defendant had not taken into account the rates certified by the Standard Chartered Bank while forwarding the payments to the plaintiff, he stated that the defendant settled the claim by taking the rates as per the agreement entered between the parties. On a second suggestion that the defendant has not taken into account the rates certified by the plaintiff's banker as given in exhibit D-22 for delayed payments, he stated that :
"the rates have been calculated by the defendant which has settled the claim and those records are available with the branch on the basis of which the rates have been taken"
and further added that "all the daily rates have not been given by the plaintiff in case of delayed payments." He also denied the suggestion that all calculations had been done by the defendant on the basis that the due date was from the first day of the due month.
14. On the basis of the pleadings by the parties the following issues were framed by order dated 7.12.2000:
CS (OS) NO. 2422/1994 Page 10
1) Whether the present suit has not been signed and verified and filed by a duly authorized person of the Plaintiff? OPD;
2) Whether the Defendant has made payment to the Plaintiff of the amount of exchange loss allegedly suffered by the Plaintiff as per the agreement dated 28.3.1989 after taking into consideration the exchange fluctuation? OPD;
3) Whether the Defendant paid Rs. 3,82,59,665/- to the Plaintiff in full and final settlement and whether it was accepted as such by the Plaintiff? OPD;
4) Whether the Plaintiff was unable to effect payment in April, 1991 to Jurong Shipyard Ltd. due to lack of remittance approval from the Reserve Bank of India and owing to an embargo imposed by the Reserve Bank of India? If yes, is the Plaintiff entitled to payment from the Defendant of the exchange loss suffered by it on the said payment? OPP;
5) Whether the Plaintiff is entitled to claim Rs. 2,71,18,467/- from the Defendant? OPP;
6) Whether the Plaintiff is entitled to claim any interest from the defendant? If yes at what rate and at what amount? OPP;
7) Relief.
The court proposes to analyze the materials on record, and render findings on the above issues, in the following part of the judgment.
Issue No. 1
16. Although this issue was framed at an earlier stage in the suit, during the hearing, the defendant, which had pleaded this preliminary objection, did not press it. Therefore, there is no need to rule on it.
Issue Nos. 3 and 5
17. These two issues are inter-related, and concern the core controversy between the parties. The plaintiff entered into a contract for supply for vessels; it entered into an CS (OS) NO. 2422/1994 Page 11 agreement with Jurong Shipyard, Singapore for the supply of tugs and other classes of vessels. The contract was for a consideration of US$ 4,59,99,400 which was spread over a period of time. The plaintiff requested the defendant for covering exchange fluctuation risk. The defendant, in its offer (Ex. P-3) dated 18-1-1989 agreed to cover the risk, stating, inter alia that:
" If any of the payments...is delayed or accelerated by you by a period not longer than three months, settlement of gain or loss shall take place either at the exchange rate prevailing on the due date or on the date of actual payment or on any date between the two dates mentioned above, the choice of the rate being left solely to the Corporation..."
The terms offered were acceptable to the plaintiff; it requested for the issuance of cover. In these circumstances, the Risk Cover Agreement (marked as Exh. P-5) was entered into between the parties on 28-3-1989. The essential features of the agreement were:
1) Exchange loss was ascertainable after payment of each installment by the plaintiff;
2) The defendant's liability was to cover exchange loss (in excess of 5% but upto 35% of the reference amount (Clause 2.2)
3) The defendant did not assume liability for any payment delayed, or accelerated (by the plaintiff) by a period exceeding 3 months, under Clause 5.1;
4) The rate of exchange, if the period of payment was within the prescribed band, was the selling rate quoted by the plaintiff's bank on the due date for the payment (of the bill) or the actual date of payment, or any date between the due date and actual date, whichever yielded the lowest amount in rupees.
18. The plaintiff claimed exchange losses on account of fluctuation in the currency value; it produced letters Ex. PW-7 to Ex. PW-9 and Ex. PW-1/6 series, in support. According to it, the CS (OS) NO. 2422/1994 Page 12 defendant's stand that only Rs. 3, 82, 59,656/- (which was paid) was payable was incorrect. The plaintiff's reckoning is that a further sum of US $ 30,16,734.96 (for which the claim of Rs.1,35,78,701.99 was made) was payable. This payment fell due in January, 1991. Concededly, it was paid to the shipbuilder at Singapore more than three months after the due date.
19. It is argued by the plaintiff that the expression "due date" with reference to the concerned month, is the last date of the month. The plaintiff contends that the schedule to the agreement does not specify any particular date, but refers to each month generally, which would mean that the last date would be the due date. On the other hand, the defendant contends that having regard to the nature of the agreement, which is one of limited indemnity of a particular type of risk, the parties were conscious that the "due" date was to be reckoned having regard to the contingencies provisioned for. The parties had expressly agreed that the cover would be for the band of 5% to 35% fluctuation, provided the plaintiff paid the bill or fulfilled its commitment to the Shipyard, within 3 months of due date of the concerned bill or invoice. Therefore, the date was always calculable having reference to the date when payment had to be made to the foreign supplier, i.e the Jurong Shipyard. If the payment was made beyond the period of three months, the plaintiff could not avail of the benefit of the policy.
20. Learned counsel for the plaintiff relied on a decision of the Bombay High Court reported as Mukunchand Rajaram Balia -vs- Nihalchand Gurmukhrai Vol XL 1916 (ILR) Bom 516 in support of his contention that the last date of the month would be the due date in such case. An examination of the facts in that case, shows that as an authority, it is hardly apt to support the plaintiff; the stipulation there was that the contracted goods were to be supplied between CS (OS) NO. 2422/1994 Page 13 15th March, and 25th March, of the concerned year. In this case, the contract provision is structured in an entirely different manner.
21. The general presumption in cases where parties enter into commercial contract, the terms of which have been negotiated is that having expressed some terms explicitly, the parties have expressed all conditions by which they intend to be bound under the instrument. (Aspdin Vs. Austin) 1944(5) QB 671. It was held in Luxor(Eastbourne) Ltd.-vs- Cooper 1941 AC 108 that there is a presumption against adding to terms in a contract or other instruments expressly drawn up containing several subject matters. It was held:
"the general presumption is that the parties have expressed every material term which they intended should govern the agreement, whether oral or in writing."
In Provash Chandra Dalui v. Biswanath Banerjee, 1989 Supp (1) SCC 487, it was held by the Supreme Court that:
"The best interpretation is made from the context. Every contract is to be construed with reference to its object and the whole of its terms. The whole context must be considered to ascertain the intention of the parties. It is an accepted principle of construction that the sense and meaning of the parties in any particular part of instrument may be collected 'ex antecedentibus et consequentibus;' every part of it may be brought into action in order to collect from the whole one uniform and consistent sense, if that is possible. As Lord Davey said in N.E. Railway Co. v. Hastings1:
"... the deed must be read as a whole in order to ascertain the true meaning of its several clauses, and... the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible...."
In construing a contract the court must look at the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little the court can do about it. In the construction of a written instrument it is legitimate in order to ascertain the true meaning of the words used and if that be doubtful it is legitimate to have regard to the circumstances surrounding their creation and the subject-matter to which it was designed and intended they should apply."
CS (OS) NO. 2422/1994 Page 14
22. In this case, since the document was negotiated between the parties, and is in a sense a contract of indemnity, its express terms are to be seen. Clause 5.1 talks says "If any payment for an import transaction is delayed or accelerated by a period exceeding three months" benefit of the cover would be unavailable. The schedule sets out the extent of cover for the periods mentioned. The due dates mentioned are entire months. Apart from asserting that the last day of the month should be the due date, for the purpose of construing the clause, the plaintiff has not indicated how it supports such interpretation. Had the parties intended it to be so, they would have said so more explicitly. That they did not do so, but expressed the whole month to be "due date" means that each day of the concerned month, with reference to the due date of payment (in the contract with Jurong Shipyard) could be the due date. Besides, if the argument of the plaintiff were to be accepted, the sanctity of the month would vanish. For example, if the payment were due as on 3rd November, according to the plaintiff the last due date under the contract with the defendant to qualify for fluctuation risk, would be 28 th February, which would be more than a month. Clearly, there is nothing in the agreement between the parties to support this contention.
23. The plaintiff's evidence, in the form of PW-1's statement, is clearly that payment in respect of the US$ 30,16,734.96 was made belatedly. In view of this admission, the plaintiff cannot claim the amount of 1,35,78,701.99. The issue is answered accordingly, against the plaintiff. Issue No. 2
24. This issue is concerned with the rate at which exchange loss was actually paid; the plaintiff complains being short changed, as regards the rate at which exchange admissible, was CS (OS) NO. 2422/1994 Page 15 calculated. As noticed above, in the narration part, the term governing the parties is clause 5.1. Since the plaintiff contended that there was exchange loss, the relevant part applicable is sub clause (A); it reads as follows:
"A. Where exchange loss results:
in the case of payment for an import transaction, by converting the foreign currency amount at the Selling Rate of Exchange quoted by the Exporter's bank on the due date for the payment or the actual date of payment or on any date between the due date and actual date of payment, whichever yields the lowest amount in rupees.."
The plaintiff, in its letter dated 10-2-1992, to the defendant, ( Ex. D-21) stated that:
" Based on the Standard Bank's rates the quantum of our claim works out to Rs. 4,19,72,228/- excluding the loss of Rs. 1,197,866/- on payment of US$ 3,016,734.96 due in January, 1991. We were unable to effect payment in April 1991 due to lack of remittance approval from Reserve Bank of India. The remittance under reference has been excluded by you which is totally unjustified, even though we were in a position to pay with funds received from our Customers and lying in our Bank Account we were unable to remit to Singapore in US Dollars owing to an embargo imposed by the RBI at the behest of Govt. of India, as the country was facing a severe foreign exchange crisis.
You are requested to kindly remit the balance of our claim of Rs. 49,10,429/- at the earliest, as a lot of time has passed in setting our claim."
The defendant's position is that wherever payment was made within three months of due date, the rate prevailing on due date, or actual date of payment, or the lowest rate for the three months duration, whichever is lower, had to be, and was considered. In answer to a query in cross examination, the defendant's witness DW-1 stated that:
"the rates have been calculated by the defendant which has settled the claim and those records are available with the branch on the basis of which the rates have been taken. (Volunteered) all the daily rates have not been given by the plaintiff in case.."
CS (OS) NO. 2422/1994 Page 16
25. In view of the above position, since the defendant had to take into consideration and make payment for the exchange loss, on the basis of the lowest of all the rates available, unless the foundational fact that the rate within the period was a specified one, had not been paid, and that the shortfall was a quantified one, were proved objectively, the question of the defendant having breached its obligations does not arise. For these reasons, this issue is answered against the plaintiff, and in favour of the defendant. Issue No. 4
26. This issue, in a sense goes into the root of the matter. The plaintiff contends that though the crucial payment for US$ 30,16,734.96 was made belatedly, yet the defendant is nevertheless liable to bear the exchange loss, to the extent contracted by it, as it (the plaintiff) was hindered from making payment due to circumstances beyond its control, i.e prevalence of exchange repatriation embargo in the form of a notification issued by the Reserve Bank of India (RBI).
27. A reading of the contract strikes one about absence of a force majeure condition. In these circumstances, even if it were open to the plaintiff to it as a plea justifying late payment, the onus upon it, to prove what was the nature of the restriction or embargo, had to be discharged. Even where such conditions are agreed upon by parties, the party asserting existence of such situations is bound to prove the essential facts, to avail its benefits (See State of U.P. v. Allied Constructions,(2003) 7 SCC 396 and Smita Conductors Ltd -vs- Euro Alloys Ltd 2001 (7) SCC 728).
CS (OS) NO. 2422/1994 Page 17
28. In the present case, although the plaintiff had at some stage moved an application to adduce evidence regarding notifications it sought to rely upon to support its case about the embargo by RBI, it ultimately did not produce any material, or document in support of the plea.
In these circumstances, this court is constrained to hold that the plea about a notification acting as an embargo, preventing the payment of consideration, within the period contracted, from the due date, to Jurong Shipyard, has not been proved. Consequently, this issue too is answered against the plaintiff.
Issue Nos. 6 and 7
29. This court holds that since the plaintiff has been unable to establish its case on merits, and is not entitled to any amounts, there is no question of any interest payable to it.
30. In view of the above discussion, and findings, the plaintiff is not entitled to any relief. The suit is accordingly dismissed; the plaintiff shall bear the costs. Counsel's fee is quantified at Rs. 55,000/-.
DATED: 27th January, 2009 S. RAVINDRA BHAT, J CS (OS) NO. 2422/1994 Page 18