Delhi District Court
Globe Express Services Pvt. Ltd. ... vs M/S Taxtiles Craft on 22 February, 2025
IN THE COURT OF SH. BRIJESH KUMAR GARG
DISTRICT JUDGE COMMERCIAL COURT-01, SHAHDARA,
KARKARDOOMA COURTS, DELHI
CS (Comm) No. 40/2023
CNR No. DLSH01-000489-2023
Globe Express Services Pvt. Ltd.
Having its office at
204, 205, 206, Anurag Business Centre,
Off Waman Tukaram Patil Marg,
Opp Amar Cinema, Chembur,
Mumbai - 400 071.
Through its Authorized Representative Mr. Shahnawaz Alam
.....Plaintiff
Versus
M/s Taxtiles Craft
Through its Proprietor Mr. Riyaz Ahmad
Having its office at :
F-229, First Floor, New Seemapuri,
Delhi East - 110 095.
.... Defendant
Date of Filing of the case : 24.01.2023
Date of conclusion of the final arguments : 04.02.2025
Date of judgment : 22.02.2025.
JUDGMENT
The present commercial suit for recovery of a sum of Rs.33,63,449/-, along with pendentelite and future interest @ 18% P.A. was initially filed on behalf of the plaintiff u/o XXXVII CPC, wherein it was stated that the plaintiff Company is enganged in the business of International Freight forwarding and on 25.05.2021, the defendant, through its Proprietor, placed an order for the shipment of goods from Xingang, BRIJESH China, to Digitally signed by BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 CS (Comm.) No.40/2023 page 1 of 22 GARG D.J.(Commercial Court)-01/Shahdara/KKD/Delhi 15:50:10 +0530 Mundra Port, India, against 'Bill of Lading' bearing No.BSG21050215A, with exporter Xinjiang Zhongtai Chemical Co. Ltd., Xingang, China.
2. It is further stated in the plaint that the plaintiff company has acted as a forwarding agent for the aforesaid shipment and for the services so provided, raised an Invoice dated 30.07.2021, for an amount of Rs.33,63,449/-.
3. It is further stated in the plaint that the Invoice dated 30.07.2021, prescribed the payment terms and as per the said Invoices, the payment was due on the same date against the said Invoices. The delivery of goods was to be taken at Port of delivery.
4. It is further stated in the plaint that despite the supply of services and raising of Invoice dated 30.07.2021, and despite repeated reminders, the defendant had failed to make the necessary payment of Rs.33,63,449/-.
5. It is further stated in the plaint that despite repeated requests and e-mails, the defendant has refused to pay the consideration and is illegally withholding the legitimate money of the plaintiff and despite requests and reminders, the defendant is avoiding the payment of the outstanding balance amount on one pretext or the other.
6. It is further stated in the plaint that due to the failure of the defendant in realizing the outstanding balance amount, the plaintiff has suffered huge business losses, and therefore, the plaintiff is entitled to recover the amount of Rs.33,63,449/- from BRIJESH Digitally by BRIJESH signed KUMAR KUMAR GARG Date: 2025.02.22 GARG 15:50:19 +0530 CS (Comm.) No.40/2023 page 2 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi the defendant, in terms of the Invoice dated 30.07.2021, along with pendente lite and future interest @ 18% p.a., till the date of realization.
7. After filing of the present commercial suit u/o XXXVII CPC, the summons for appearance in prescribed proforma were duly served upon the defendant. Thereafter, the defendant had filed his appearance, in accordance with law, and thereafter, the summons for Judgment, in prescribed proforma were also served upon the defendant. In compliance, an application for grant of leave to defend was filed on behalf of the defendant u/o XXXVII Rule 3 (5) r/w Section 151 CPC, on 09.08.2023 (I.A. No. 01/2023). The said application of the defendant was allowed by this Court, vide Order dated 05.06.2024 and an unconditional leave to defend was granted to the defendant and the defendant was directed to file its Written Statement.
8. In his Written Statement, the defendant has stated that there was no brevity of Contract between the plaintiff and the defendant, and therefore, the plaintiff cannot claim any amount from the defendant.
9. It is further stated in the Written Statement that the plaintiff has failed to file any document, authorizing him to collect money on behalf of its Principal.
10. It is further stated in the Written Statement that admittedly, the plaintiff was acting in the capacity of a forwarding agent and therefore, it can claim money, only from its Principal, and not from the defendant.
BRIJESH Digitally
by BRIJESH
signed
KUMAR Date: 2025.02.22
KUMAR GARG
GARG 15:50:27 +0530
CS (Comm.) No.40/2023 page 3 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi
11. It is further stated in the Written Statement that the defendant is neither the Exporter, nor the Booking Party of the shipment/consignment and the Invoice dated 30.07.2021, carries the name of one 'AJK General Trading LLC', to be notified.
12. It is further stated in the Written Statement that at no point of time, the defendant firm was responsible for the said consignment.
13. It is further stated in the written statement that raising of an Invoice does not give rise to any obligation, in the absence of any offer of acceptance, and, therefore, the plaintiff is not entitled to receive any money from the defendant. It has been specifically denied that the defendant had placed any order upon the plaintiff, for the import of any goods. The defendant has further denied any relationship between him and the plaintiff. It has been prayed that the suit of the plaintiff be dismissed with heavy cost.
14. Replication to the written statement of the defendant was also filed, on behalf of the plaintiff, wherein, the contents of the Written Statement were denied. The plaintiff has denied the fact that there was no contract between the plaintiff and the defendant.
15. It is further stated in the replication that the plaintiff is entitled to claim the whole amount, as claimed in the suit, and the Invoice, and the liability with respect to the Shipping Line for freight charges had already been cleared by the plaintiff by making the necessary payments to the Shipping Line.
Digitally signedBRIJESH by BRIJESH KUMAR GARG KUMAR Date:
GARG 2025.02.22
15:50:35 +0530
CS (Comm.) No.40/2023 page 4 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi
16. It is further stated in the replication that the case of blatant denial by the defendant, is patently bellied and falsified by the letter issued by the defendant to the CMA Lines, for waiver of detention charges for the shipment i.e. the subject matter of Bill of Lading.
17. It is further stated in the replication that no purchase order is necessary at the time of accepting an order for supply of services, as well the bill of lading clearly evidences this relationship. It has been prayed that the contents of the Written Statement may be rejected and the suit of the plaintiff be decreed.
18. After completion of pleadings, first case management hearing was conducted, on 14.08.2024, and from the pleadings of the parties, the following issues are framed as under :
1. Whether the plaintiff is entitled to claim/recover the amount of Rs.33,63,449/- from the defendant, as claimed in the plaint? OPP
2. Whether the plaintiff is entitled to claim interest from the defendant, as claimed in the plaint? If so, at what rate and for which period? OPP
3. Relief
19. Vide order dated 14.08.2024, with the consent of the parties, a Local commissioner was also appointed to record the evidence of the parties, and accordingly, the Ld. Local Commissioner recorded the evidence of the parties and submitted her report, alongwith record of evidence, in the court, on 28.09.2024.
BRIJESH Digitally by BRIJESH signed KUMAR Date: 2025.02.22 KUMAR GARG GARG 15:50:42 +0530 CS (Comm.) No.40/2023 page 5 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi
20. During the trial, the plaintiff has examined its Authorized Representative Sh. Shahnawaz Alam, as PW-1, whereas the defendant has examined himself Sh. Riyaz Ahmed, as DW1.
21. After completion of trial, final arguments were concluded by Sh. Shariq Reyaz, Advocate for the Plaintiff and Sh. Abhishek Singh & Sh. Tariq Ahmed, Advocates, for the defendant on 10.01.2025.
22. During the course of final arguments, the Ld. Counsel for the plaintiff has argued that the witnesses of the plaintiff have proved the case of the plaintiff. He has further argued that the plaintiff is a 'FORWARDING AGENT' and on the oral orders of the defendant, the plaintiff arranged the import of goods from China to Mundra Port, India, and as per the international conventions, pertaining to import and export, and the relevant rules, it paid the freight charges to the shipper/seller, at China, and thereafter, the defendant was required to pay the said freight charges to the plaintiff, and thereafter, the relvant documents were to be issued by the plaintiff to the defendant, to facilitate it to get the goods released from Mundra Port, India. He has further argued that the 'BILL OF LADING' mentions the name of the defendant as the 'CONSIGNEE' and it also mentions the name of the plaintiff as the forwarding agent responsible for collecting the freight. He has further argued that the defendant had amitted the fact of placing order with the plaintiff for import of goods from the shipper at China, on its behalf, and he also sent a letter to the 'MANAGER, CMA LINES, MUMBAI', on 17.02.2022, wherein, he admitted his liability and disclosed the BRIJESH Digitally by BRIJESH signed KUMAR KUMAR GARG Date: 2025.02.22 GARG 15:50:50 +0530 CS (Comm.) No.40/2023 page 6 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi fact that the defendant was transferring the goods to a new buyer. Vide letter dated 17.02.2022, the defendant also informed that the new buyer shall make the payment and release the containers. He has further argued that the said letter dated 17.02.2022, bears the number of bill of lading, and therefore, the defendant cannot shirk its liability. Therefore, the suit of the plaintiff may be decreed with interest and costs.
23. On the other hand, the Ld. Counsel for the defendant has argued that the plaintiff has failed to prove any document on record, including the bill of lading. But, he has admitted that the goods, as per the bill of lading No.DSG 21050215A, dated 25.05.2021, were booked by the defendant for import through the plaintiff, but the defendant was having no privity of contract with the plaintiff as the plaintiff was only a forwarding agent/commission agent, and was therefore, entitled for his commission only. But, the plaintiff has paid the freight charges to the shipper, of his own, for which, the defendant was not required to make any payment to the plaintiff. He has further admitted that the payments for the freight charges were to be made by the defendant and the same have not been paid by the defendant, till date. He has further admitted that the goods were still lying at Mundra Port, Mumbai.
24. The Ld. Counsel for the defendant has further argued that the plaintiff has failed to send any invoice or document, prior to shipment of goods, and therefore, the defendant was not liable to make any payment to the defendant. Therefore, the suit of the plaintiff may be dismissed with exemplary costs. BRIJESH Digitally signed by BRIJESH KUMAR GARG KUMAR Date:
2025.02.22 GARG 15:51:02 +0530 CS (Comm.) No.40/2023 page 7 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi
25. I have carefully perused the case file and I have also given my considered thoughts to the arguments addressed by the Ld. Counsels for the parties. My findings on the various issues are as under:
Issues No. 1Whether the plaintiff is entitled to claim/recover the amount of Rs.33,63,449/- from the defendant, as claimed in the plaint? OPP
26. The burden to prove this issue lies on the plaintiff. In support of its' contentions, the plaintiff has examined its' AR Sh. Shahnawaz Alam as PW-1. In his affidavit Ex.PW1/7, PW-1 Shahnawaz Alam has reproduced the entire contents of the plaint. It is reiterated in the affidavit that on 25.05.2021, the defendant placed an order for shipment of goods from Xingang, China, to Mundra Port, India, against bill of lading No. DSG 21050215A and the plaintiff company acted as forwarding agent for the said shipment and provided services and raised invoice dated 30.07.2021, for an amount of Rs.33,63,449/-. A copy of bill of lading dated 25.05.2021, has been placed on record, as Mark- PW1/3. This bill of lading was not denied by the defendant in his affidavit of admission/denial of the documents of the plaintiff, dated 18.07.2024. Furthermore, this bill of lading was also admitted by the defendant, as correct, during his cross- examination, on 20.09.2024. Therefore, the formal proof of this document is not required. The defendant has also admitted that the format of this bill of lading was correct. The copy of the computer generated invoice dated 30.07.2021, has been proved Digitally signed by BRIJESH BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 GARG 15:51:10 +0530 CS (Comm.) No.40/2023 page 8 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi on record as Ex.PW1/2.
27. Section 1 and 3 of 'THE INDIAN BILLS OF LADING ACT, 1856', are also reproduced below for ready reference :
"1. Rights under bills of lading to vest in consignee or endorse.- Every consignee of goods named in a bill of lading, and every endorsee of a bill of lading to whom the property in the goods therein mentioned shall pass, upon or by reason of such consignment or endorsement shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself xxxx xxxx xxxx xxxx
3. Bill of lading in hands of consignee, etc., conclusive evidence of the shipment as against master, etc.- Every bill of lading in the hands of a consignee or endorsee for valuable consideration, representing goods to have been shipped on board a vessel, shall be conclusive evidence of such shipment as, against the master or other person signing the same, notwithstanding that such goods or some part thereof may not have been so shipped, unless such holder of the bill of lading shall have had actual notice at the time of receiving the same that the goods had not in fact been laden on board:
Provided that the mater or other person so signing may exonerate himself in respect of such misrepresentation, by showing that it was caused without any default on his part, and wholly by the fraud of the shipper, or of the holder, or some person under whom the holder claims."
28. The Hon'ble Supreme Court of India has explained the purpose of the bill of lading, in case titled as, 'ARCADIA Shipping Ltd. vs. TATA Steel Limited and Ors.', reported as, 'MANU/SC/0341/2024', as under :
"8. In our opinion, the contention raised by Arcadia has no merit. The transactions are intrinsically intertwined and cannot be compartmentalized into watertight silos. The shipment of goods was linked and connected with the sale of goods by Bhushan Steel through, inter alia, the Bill of Lading. A Bill of Lading essentially serves a tri-fold purpose:
(a) it is receipt of the goods shipped and the terms on which they have been received; (b) it is evidence for the contract of Digitally signed by BRIJESH BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 CS (Comm.) No.40/2023 page 9 of 22 GARG D.J.(Commercial Court)-01/Shahdara/KKD/Delhi 15:51:20 +0530 carriage of goods; and (c) it is a document of title for the goods specified therein. Consequently, the release of goods by the shipper, Arcadia, hinged upon the presentation of the Bill of Lading by the receiver, TYO Trading at the point of receipt. However, the Bill of Lading necessitated proper endorsement by the Bank of Ethiopia since they were the issuers of the Letter of Credit. Bhushan Steel remained the owner of the goods. In this manner, the actions of Arcadia and the transactions were interconnected with each other.
Upon reading paragraphs 22, 29 and 30 of the plaint referred to above and after perusing the facts of the case, it is clear to us that a part of the cause of action had arisen in Delhi."
(emphasis supplied)
29. During the examination of PW-1, the Ld. Counsel for the defendant has taken an objection regarding the mode of proof of this document, on the ground that a copy of this document was never sent/dispatched to the defendant. Since the invoice Ex.PW1/2 is a computer generated invoice and the same has not been denied by the defendant in his affidavit of admission & denial of the documents of the plaintiff, dated 09.07.2024, the formal proof of this invoice is also not required.
30. In his affidavit Ex.PW1/7, it is further reiterated by PW-1 Shahnawaz Alam that the invoice amount, included the freight charges, were paid by the plaintiff company to the shipping line. But, despite supply of services and raising of invoice dated 30.07.2021, and despite reminders, the defendant has failed to make the payment of the amount of Rs.33,63,449/-. An email dated 20.06.2022, regarding demand of the invoice amount, alongwith a certificate u/s 65B of the Indian Evidence Act, has been proved on record as Ex.PW1/4.
31. It is further stated by PW-1 in his affidavit Ex.PW1/7, that the defendant had written a letter dated 17.02.2022, to the Digitally signed by BRIJESH BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 GARG 15:51:28 +0530 CS (Comm.) No.40/2023 page 10 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi concerned authorities, seeking waiver of detention charges, in respect to the bill of lading dated 25.05.2021. A copy of this letter has been placed on record as Mark-PW1/6. The defendant has admitted this letter during his cross-examination on 20.09.2024, being his own document.
32. During the trial, PW-1 Shahnawaz Alam was also subjected to a lengthy cross-examination on behalf of the defendant, wherein, this witness has admitted the suggestion of the Ld. Counsel for the defendant that the defendant company had placed the order for supply of goods, as detailed in the invoice dated 30.07.2021, with Xingjiang Zhongtai Chemical Company Ltd. and not with the plaintiff company. However, this witness has volunteered that oral instructions and requests were received from the defendant company for the shipment, and even in the past, the goods were booked on oral requests of the defendant. During his cross-examination, this witness has further stated that the plaintiff company was acting as a forwarding agent for the defendant. During his cross-examination, this witness has further stated that the letter dated 17.02.2022, Mark-PW1/6 (admitted by the defendant), mentions the name of the plaintiff company as forwarder.
33. During his cross-examination, this witness has categorically denied the suggestions that the plaintiff had filed the present suit with dishonest motive of extracting money from the defendant or for harassing him or that there was no privity of contract between the parties.
34. During the trial, in order to rebut the BRIJESH contentions of the Digitally signed by BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 CS (Comm.) No.40/2023 page 11 of 22 GARG D.J.(Commercial Court)-01/Shahdara/KKD/Delhi 15:51:37 +0530 plaintiff, the defendant has also examined himself as DW-1. In his affidavit Ex.DW1/1, he has also reproduced the contents of the written statement and has stated that there was not privity of contract between the parties, and therefore, the plaintiff cannot raise any claim against him.
35. During his cross-examination, the defendant has admitted that he was in the business of import and export of goods. But, he has denied the fact that he availed the services of the plaintiff for any import/export of goods. During his cross-examination, this witness has admitted all the material facts and documents and contents thereof and has therefore, demolished his entire defence. During his cross-examination, DW1 Riyas Ahmad has admitted the tax invoice Ex.PW1/2 and the bill of lading Mark- PW1/3, as correct. He has also admitted the letter dated 17.02.2022, Mark-PW1/6. During his cross-examination, he has further admitted that in the month of May, 2021, he placed orders for import of goods from China. However, he has not received the goods, for which he placed the orders in the month of May, 2021. He has volunteered that he placed orders for 3-4 shipments during the said period. But, he had not received the goods, as he had sold the imported goods on high Seas. He has further deposed that in and around the month of May, 2021, he had around 3 shipments for import, out of which, he had already sold the 2 shipments on high-Seas, and the one shipment, in respect of which the plaintiff was claiming the amount in the present suit, was stuck at custom clearance. He has also admitted that the letter dated 17.02.2022, Mark-PW1/6, was written by his firm, to Digitally signed BRIJESH by BRIJESH KUMAR GARG KUMAR Date:
GARG 2025.02.22
15:51:46 +0530
CS (Comm.) No.40/2023 page 12 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi the concerned authorities, against the bill of lading No. DSG 21050215A.
36. Since the defendant has himself admitted the letter dated 17.02.2022, Mark-PW1/6, the contents of the said letter have demolished the entire defence of the defendant. The scanned copy of the letter dated 17.02.2022, is reproduced below for ready reference, as under :
CS (Comm.) No.40/2023 page 13 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi
37. Perusal of the above letter dated 17.02.2022, shows that the defendant had written this letter, pertaining to the disputed bill of lading, dated 25.05.2021, Mark-PW1/3, wherein, he has admitted his liability and has informed the concerned authorities that a third party buyer has been involved by him to liquidate the goods and resolve the issues with all the parties, i.e., the shipping line, customs, CFS, forwarder and the shipper.
38. During his cross-examination, DW-1 Mr. Riyas Ahmad has also admitted that an email dated 09.02.2024, was received by his firm from the plaintiff company, regarding the clearance status of the disputed shipment. The said email has been placed on record as Mark-PW1/5. Since the defendant has himself admitted this email as correct, the formal proof of this email is also not required.
39. From the testimonies of the parties and material on record, it is therefore, clear that the plaintiff has acted as clearing and forwarding agent for the parties.
40. It was held by the Hon'ble Supreme Court of India, in case titled as, 'Coal Handlers Private Limited vs. Commissioner of Central Excise Range KOLKATA-I', reported as, 'MANU/SC/0552/2015', as under :
"3. The issue that arose for consideration was as to whether aforesaid services were liable to service tax under the provisions of the Act. By the said Act, Sub-section (25) was inserted in Section 65, which defines C & F Agent as under: (25) "Clearing and forwarding agent" means any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding BRIJESH Digitally signed by BRIJESH KUMAR GARG KUMAR Date: 2025.02.22 GARG 15:53:52 +0530 CS (Comm.) No.40/2023 page 14 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi operations in any manner to any other person and includes a consignment agent;' xxxx xxxx xxxx xxxx
7. It so happened that the ratio of the decision in Prabhat Zarda (supra) was doubted by another Bench of the Tribunal and the said Bench referred the matter to the larger Bench.
On reference being made, the Full Bench of the Tribunal decided the issue and on the aforesaid aspect decision in Prabhat Zarda (supra) has been overrules by it. The judgment of the Full Bench is known as Larsen & Toubro Ltd. v. Commissioner of Central Excise, Chennai 2006 (3) STR 321 (Tri-LB) : MANU/CE/0634/2006 : 2006 (110) ECC 634 :
MANU/CE/0634/2006 : 2006 ECR 63. Tri Delhi. It gets revealed from the decision of the larger Bench that after taking note of the definition of 'clearing and forwarding agent' (which has already been extracted above), the larger Bench observed that the service should be connected with clearing and forwarding operations. The 'clearing and forwarding' operations would be various activities having bearing on clearance of goods, which would involve documentary processes and arrangements for transfer of goods to their destination, which process may also involve clearance at subsequent stages during forwarding operations. In the opinion of the larger Bench, the procurer of orders on commission basis renders services which are not connected with such clearing and forwarding operations, which have bearing on the movement of goods. It also mentioned that normally a C&F Agent undertakes the following activities:
(i) receiving the goods from the factories or premises of the principal or his agents;
(ii) warehousing these goods;
(iii) receiving despatch orders from the principal;
(iv) arranging despatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal;
(v) maintaining records of the receipt and despatch of goods and the stock available at the warehouse; and
(vi) preparing invoices on behalf of the principal.
8. Since the appellant in that case was engaged only for procuring purchase orders for vendor on commission basis and was not engaged in any of the above activities, the larger Bench concluded that the services provided by the said appellant would not fall within the definition of 'clearing and forwarding agent' as contained in the Act. The detailed discussion on this aspect runs as follows: BRIJESH Digitally signed by BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 CS (Comm.) No.40/2023 page 15 of 22 GARG 15:54:02 +0530 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi "9.3 An agent engaged only for procuring purchase orders for the vendor on commission basis does not engage in any of the above activities, directly or indirectly. Commission agent engaged to procure orders and not entrusted with the work of clearing and forwarding of the goods would be a person who, in the ordinary course of business, makes contracts for sale or purchase of goods for others. The definition of "commission agent" in Section 2(aaa) of the Central Excise Act, 1944, would apply in relation to service tax as it applies in relation to duty of excise by virtue of Sub- section (121) or Section 65 of the Act. Services of commission agent are included in the definition of "business auxiliary service" under Sub- section (19) of Section 65 w.e.f. 1-7-2003, which includes service of a commission agent. As defined in Explanation (a) to Sub-section (19) of Section 65 commission agent is a person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for consideration, and includes any person who, while acting on behalf of another person: deals with goods or services or documents of title to such goods or services; or collects payment of sale price of such goods or services; or guarantees for collection or payment for such goods or services; or undertakes any activities relating to such sale or purchase of such goods or services. This clearly shows that the activity of mere procurement of purchase orders for the principal on commission basis of a commission agent is treated separately by the Parliament from the activities of a clearing and forwarding agent. Activity of procuring orders is thus independent of clearing and forwarding operations. The agents doing these activities can be different. Moreover, clearing and forwarding operations do not flow directly or indirectly from mere procurement of orders. There is no obligation on the person procuring orders as a commission agent for the principal, only by virtue of that agency, to carry out clearing and forwarding operations in respect of the goods which are to be supplied pursuant to the orders so procured.
10. It appears to us that the expressions "directly or indirectly" and "in any manner" occurring in the definition of "clearing and forwarding agent" cannot be isolated from the activity of clearing and forwarding operations. A person may undertake to provide service of procurement of orders as agent of the principal without agreeing to provide services of clearing and forwarding of the goods. Clearing and forwarding has a very specific connotation in the context of movement of goods from the supplier to their destination and agents undertaking clearing and forwarding operations may Digitally signed by BRIJESH BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 GARG 15:54:08 +0530 CS (Comm.) No.40/2023 page 16 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi never have been concerned with procurement of orders for the goods which are cleared and forwarded. A person entrusted with the work of commission agent for procuring orders for the principal cannot insist on also providing services as clearing and forwarding agent in respect of those goods and it would be open for the principal to engage some other person for the purpose of forwarding such goods. In cases where the buyer is under an obligation to take delivery of the goods from the vendor's premises, there would not be even any need on the part of the vendor to engage any forwarding agent, nor can a person engaged for the purpose of clearing and forwarding operations, insist on procuring orders for the principal in the absence of any stipulation to that effect.
11. We, therefore, hold that mere procuring or booking orders for the principal by an agent on payment of commission basis would not amount to providing services as "clearing and forwarding agent", within the meaning of the definition of that expression under Section 65(25) of the Finance Act, 1994, as has been held in the decision of the Tribunal in Prabhat Zarda Factory (Pvt.) Ltd. v. CCE Patna reported in 2002 (145) ELT : 2002 (50) RLT 326 (CEGAT-KOL.). The decision in Prabhat Zarda Factory (Pvt.) Ltd. stands overruled to the extent of the aforesaid ratio laid down thereunder. The reference is answered accordingly. All these appeals will now be placed before the concerned Division Bench for decision on merits in the light of this judgment and in accordance with law.
(Emphasis added)
9. Significantly, the Revenue accepted the aforesaid decision in the case of Larsen & Toubro (supra) and did not file any appeal there against. Even otherwise, we find that the larger Bench of the Tribunal in the said case has rightly interpreted the definition of 'clearing and forwarding agent' contained in Section 65(25) of the Act. Notwithstanding the aforesaid dicta of the larger Bench, learned senior counsel appearing for the Revenue submitted that judgment in Prabhat Zarda (supra) has not been overruled entirely, as is clear from the reading of para 11 of the judgment where the larger Bench has said that Prabhat Zarda (supra) 'stands overruled to the extent of the aforesaid ratio laid down thereunder'. His endeavour was to demonstrate that in the present case the Tribunal in the impugned judgment had rightly relied upon Prabhat Zarda (supra) and when the services rendered by the appellant are looked into, it would clearly fall within the definition of 'clearing and forwarding agent' contained in Section 65(25) of the Act. Digitally signed BRIJESH by BRIJESH KUMAR GARG KUMAR Date:
2025.02.22 GARG 15:54:16 +0530 CS (Comm.) No.40/2023 page 17 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi Let us, therefore, examine whether services rendered by the appellant would qualify it as C&F Agent?
10. It would be relevant to point out the definition of 'forwarding agent', as known in legal parlance, from Black's Law Dictionary (Seventh Edition), which is as under:
forwarding agent. 1. A person or company whose business is to receive and ship goods for others - Also termed freight- forwarder. 2. A freight- forwarder who assembles less-than- carload shipments 'small shipments' into carload shipments, thus taking advantage of lower freight rates." The Penguin Business Dictionary defines this expression in the following words:
Forwarding agent. A GENERAL AGENT who specializes in moving goods from a factory or port of entry to their proper destination. Such an agent normally owns the transport necessary for this work and often arranges FREIGHT and customs formalities for his principal." In Fourth Edition of Halsbury's Laws of England (Volume 5), the characteristics of 'forwarding agents' are narrated in the following manner:
442. Characteristics of forwarding agents. A forwarding agent is one who carries on the business of arranging for the carriage of gods for other people. It must be clearly understood that a forwarding agent is not, in general, a carrier: he does not obtain possession of the goods: and he does not undertake the delivery of them at the other end. All that he does is to act as agent for the owner of the goods to make arrangements with the people who do carry, such as shipowners, road hauliers, railway authorities and air carriers, and to make arrangements, so far as they are necessary, for the intermediate steps between the ship and the rail, the customs or anything else.
Although there is a clear distinction between a forwarding agent and a carrier, the same person may carry on both activities at once, and contract sometimes as one and sometimes as the other.
The fact that a person describes himself as a forwarding agent is not conclusive: and it is a question of fact to be decided according to the circumstances of each case whether a person normally carrying on business as a forwarding agent contracts solely as agent so as to establish a direct contractual link between his customer and a carrier (or possibly with several carriers, each undertaking a different part of the transit), or whether he contracts as principal to carry the goods, the customer appreciating that he will perform the BRIJESH Digitally signed by BRIJESH KUMAR KUMAR GARG Date: 2025.02.22 CS (Comm.) No.40/2023 page 18 of 22 D.J.(CommercialGARG Court)-01/Shahdara/KKD/Delhi 15:54:24 +0530 contract vicariously through the employment of sub- contractors. The nature of the carriage, the language used by the parties in describing the role of the person concerned, and any course of dealing between the parties will be relevant factors.
Persons properly described as shipping and forwarding agents frequently act as carriers themselves with respect to part of the carriage, for example, by performing collection and delivery services between the customers' premises, their own depots, and warehouses, docks and carriers' depots. In such cases they would have the rights and duties of carriers with respect to such carriage as they undertake personally, but the rights and duties of forwarding agents with respect to the remainder of the transit.
443. Rights and liabilities of forwarding agents. The rights and liabilities of a forwarding agent are governed by the general principles of the law of agency: and so he is entitled to be indemnified against all expenses incurred on behalf of his principal and to be paid his proper charges for his services. He is liable for failure to make proper arrangements for the carriage and for ancillary matters which he has undertaken, such as customs clearance. He is not liable for the failings of persons with whom he makes contracts on behalf of his principal, unless he know of those failings and ought to have taken action either to remedy them or at least to inform his principal so that damage might be avoided or mitigated: thus he is under no duty to supervise the actions of carriers whom he reasonably and properly expects to perform their normal obligations competently.
In ordinary transactions a forwarding agent is not liable for failing to insure the goods, in the absence of instructions from his customer to do so: but he may, in certain circumstances, be liable for not consulting his customer and advising him as to the proper transport and insurance arrangements which should be made for valuable goods. A forwarding agent is not normally personally liable to pay the charges of carriers whom he engages to carry the gods on behalf of his principal; but there is a custom of the London freight market that forwarding agents incur personal liability to shipowners for the payment of freight or of dead freight for booked space left unfilled.
A forwarding agent who tenders dangerous goods to carriers without warning them of their nature or of the precautions which should be taken in their carriage is personally liable to the carriers for any resulting damage through breach of the implied warranty that the goods are fit for carriage."
BRIJESH Digitally signed
by BRIJESH
KUMAR KUMAR GARG
Date: 2025.02.22
GARG 15:54:31 +0530
CS (Comm.) No.40/2023 page 19 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi
11. From the reading of the definition contained in the aforesaid provision, together with its dictionary meanings contained in Legal and Commercial dictionaries, it becomes apparent that in order to qualify as a C&F Agent, such a person is to be found to be engaged in providing any service connected with 'clearing and forwarding operations'. Of course, once it is found that such a person is providing the services which are connected with the clearing and forwarding operations, then whether such services are provided directly or indirectly would be of no significance and such a person would be covered by the definition. Therefore, we have to see as to what would constitute clearing and forwarding operations. As is clear from the plain meaning of the aforesaid expression, it would cover those activities which pertain to clearing of the goods and thereafter forwarding those goods to a particular destination, at the instance and on the directions of the principal. In the context of these appeals, it would essentially include getting the coal cleared as an agent on behalf of the principal from the supplier of the coal (which would mean collieries in the present case) and thereafter dispatching/ forwarding the said coal to different destinations as per the instructions of the principal. In the process, it may include warehousing of the goods so cleared, receiving dispatch orders from the principal, arranging dispatch of the goods as per the instructions of the principal by engaging transport on his own or through the transporters of the principal, maintaining records of the receipt and dispatch of the goods and the stock available on the warehouses and preparing invoices on behalf of the principal. The larger Bench rightly enumerated these activities which the C&F Agent is supposed to perform.
(emphasis supplied) In view of above discussion, this issue is decided in favour of the plaintiff and against the defendant.
Issue No.2 Whether the plaintiff is entitled to claim interest from the defendant? If so, at what rate and for which period? OPP
41. The burden to prove this issue also lies on the plaintiff.
Digitally signed BRIJESH by BRIJESHKUMAR GARG KUMAR Date: GARG 2025.02.22 CS (Comm.) No.40/2023 page 20 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi 15:54:41 +0530 The plaintiff has claimed the pendentelite and future interest @18% per annum. But, the claim of interest @18% appears to be highly excessive. Even the provisions of Section 34 of the CPC, provide the rate of interest only at a maximum of 6% per annum. However, as per the proviso to Section 34 CPC, the said rate of interest can exceed 6%, in case of commercial transactions.
42. It has been held by the Hon'ble High Court of Delhi, in case titled as, 'Mrs. Veena Jain vs. Sunil Sood', passed in, 'CS (OS) No.1177/2003', on 23.07.2012, as under :
"8. I am however not agreeable to grant the huge rate of 24% interest as claimed by the plaintiff. The Supreme Court in the recent chain of judgments reported as Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority and others, 2005 (6) SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd. and others, 2006 (11) SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd. v. G.Harischandra, 2007 (2) SCC 720 & State of Rajasthan Vs. Ferro Concrete Construction Pvt. Ltd (2009) 3 Arb. LR 140 (SC) has mandated that Courts must reduce the high rates of interest on account of the consistent fall in the rates of interest in changed economic scenario. In my opinion, plaintiff will be thus entitled to interest @ 9% per annum on the principal amount due of `27,84,947.50/-for the period prior to the filing of the suit i.e. from 10.5.2000 till the date of filing of the suit. Plaintiff will also be entitled to pendente lite and future interest till payment @ 9% per annum simple."
(emphasis supplied)
43. In these circumstances, I am of the considered opinion that the plaintiff is also entitled to claim pendentelite and future interest @9% per annum on the principal amount of Rs.33,63,449/-, till the date of its realization.
This issue is decided accordingly, in favour of the plaintiff BRIJESH Digitally by BRIJESH signed KUMAR KUMAR GARG Date: 2025.02.22 GARG 15:54:49 +0530 CS (Comm.) No.40/2023 page 21 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi and against the defendant.
Relief
44. In view of my findings on the various issues, as discussed above, the suit of the plaintiff is hereby decreed, in its favour and against the defendant, and a money decree is passed for an amount of Rs.33,63,449.90, rounded to Rs.33,63,450/-, alongwith pendentelite and future interest @9% per annum till its' realization.
The costs and expenses i.e. the fees of the Ld. counsel for the plaintiff, as provided under the High Court of Delhi, Rules, are also awarded in favour of the plaintiff and against the defendant.
It is ordered accordingly.
The decree sheet be prepared accordingly. File be consigned to record room, after due compliance.
Digitally signed
BRIJESH by BRIJESH
KUMAR GARG
Announced in the open Court KUMAR Date:
on this 22nd Day of February, 2025 GARG 2025.02.22
15:54:57 +0530
BRIJESH KUMAR GARG
District Judge (Commercial Court)-01
Shahdara Distt, KKD, Delhi
CS (Comm.) No.40/2023 page 22 of 22 D.J.(Commercial Court)-01/Shahdara/KKD/Delhi