Calcutta High Court
Sinclair Freight And Chartering ... vs Fiel Traders on 24 November, 1986
Equivalent citations: AIR1987CAL201, 1988(15)ECC207, AIR 1987 CALCUTTA 201
JUDGMENT Sankari Prasad Das Ghosh, J.
1. The extent of duty of an agent for a consignor in the matter of preparation of air consignment note or air way-bill under the Carriage by Air Act, 1972 (hereinafter referred to as the Act), is the main point for determination in this appeal arising from a judgment and decree passed by the learned Judge, Eleventh Bench, City Civil Court, Calcutta, in Money Suit No. 772 of 1975. The money suit was dismissed on contest by the learned Judge.
2. The plaintiff-appellant is an authorised air cargo agent of the International Air Transport Authority (I.A.T.A.) representing all I.A.T. A. Air Lines and is also an authorised Customs House Agents. On the basis of an instruction from the defendant-respondent for collection, receipt and despatch of a consignment of 20 packages of finished leather (Industrial Globe Leather) in gunny to the consignee, M/s. Gutenstein and Company Inc. at 440, Frelinghuysen Avenue, New York (U.S.A.), the plaintiff prepared a shipping bill for customs purpose on the basis of the documents supplied by the respondent to the appellant. These documents included a Purchase Order dt 16-4-74 from the consignee for purchase of the consignment for the amounts mentioned in that purchase order. It was stated in the purchase order that payment was to be made against documents and that fifty per cent of the air freight was to be at the cost of the consignee. Three conditions were mentioned in that purchase order. These conditions related to mention of the number of the purchase order and other matters. In pursuance of this instruction by the respondent, the appellant prepared the shipping bill on the basis of invoice of the respondent and thereafter prepared the air way-bill on 9-8-74. On 9-8-74, the appellant issued a certificate that the consignment was booked for flight on 12-8-14. Subsequently, on 12-8-74, the appellant made over to the respondent several documents including the air way-bill with extra copies, purchase order No. 63363 dt. 16-4-74 from the consignee and the shipping bill (without mentioning the number and date of the shipping bill). On 14-8-74 there was a letter by the respondent to the Assistant Collector of Customs for Exports, Customs House, Calcutta, for amendment of the shipping bill and correction of the invoice due to erroneous mention of C and F value of the consignment in the shipping bill, due to mistake in calculation in the invoice. After the correction of the shipping bill, the consignment was sent by the British Airways on 19-8-74 from Calcutta to New York. The respondent sent necessary documents to the Chartered Bank of India, 14, Netaji Subhash Road, Calcutta, for collection of the value of the goods and the freight from the consignee. They received a reply oh 24-9-74 from the Chartered Bank of India at 14, Netaji Subhas Road, Calcutta, that the consignee had already taken delivery of the relative parcels and that the parcels did not contain the merchandise, which they ordered. As the bill was unpaid by the consignee at the New York office of the Chartered Bank of India, the original and duplicate documents were returned by the Chartered Bank to the respondent. Subsequently, the Money Suit was filed by the appellant for recovery of the freight and other charges pre-paid by them at the time of booking the consignment for delivery to the consignee at New York. The amounts were pre-paid as the appellant was entitled to 5% commission on the freight amount,
3. The case of the appellant was that the appellant performed their obligations on the basis of the instructions given by the respondent to collect, receive and despatch the consignment to New York as their agent and that, in spite of the respondent's undertaking to the appellant to pay the air freight and other charges, the respondent was not paying the freight and other charges already pre-paid by the appellant. As such, the claim was laid for recovery of Rs. 16,185/-already pre-paid by the appellant towards the freight and other charges, along with interest at the rate of 12% and further interest at the rate of 12% from the date of filing of the suit till the date of recovery. The total claim was laid at Rs. 18,261/- including interest up to the date of filing of the suit.
4. The defence was that due to negligence of the appellant in preparing the air way-bill, the respondent could neither recover the price of the goods sold and delivered to the consignee nor the freight and other charges from the consignee or 50% of the freight charges from the Government of India under the Export Promotion Scheme. It was alleged that it was the first export by the respondent to a firm in New York and that the respondent approached the plaintiff-appellant as they were expert in the line. It was further alleged that in spite of making over of all the relevant document by the respondent to the appellant, including the purchase order of the buyer, the original invoice and other necessary documents, the appellant prepared the air way-bill without consultation with the result that the goods had been delivered to the consignee without any payment whatsoever by the consignee towards the value of the goods or freight charges. It was further alleged that though the documents were received back from the appellant by the respondent on 12-8-74, the relevant documents could not be sent by the respondent to the Chartered Bank of India at Netaji Subhas Road, Calcutta, before the 20-8-74, as the shipping bill had to be amended in the meantime.
5. The plaintiff-appellant examined three witnesses. The respondent examined two witnesses including D.W. 1, who happened to be one of the partners of the respondent-firm. P.W. 1 was the Sales Officer of the appellant-company. On a scrutiny of the evidences of these witnesses and the documentary evidences on record, the learned Judge held that the respondent suffered badly on account of negligence on the part of the appellant and as such the appellant was not entitled to get any remuneration or to recover any freight charges or any other amount for effecting the shipment of the goods. The suit was, accordingly, dismissed. Being aggrieved, the present appeal has been filed by the plaintiff.
6. Mr. Ghosh, the learned Advocate for the appellant, has contended that in view of the instructions given by the respondent to the appellant for collection, receipt and despatch of the consignment to the consignee in New York, it was no part of the duty of the appellant to arrange for payment of the value of the goods or the freight. The respondent negotiated with the Chartered Bank of India for payment of the value of the goods, freight and other amounts. The contention of Mr. Ghosh is that under the instructions for booking the consignment, the appellant had no authority to collect any amount from (for ?) the respondent. The next contention of Mr. Ghosh is that, even if it is assumed for the sake of argument that the respondent authorised the appellant to arrange for payment of the value of the goods or freight from the consignee, on the basis of the purchase order dt. 16-4-74, the authority was revoked when the appellant made over all the relevant documents to the respondent on 12-8-74. The last contention of Mr. Ghosh is that, even if there was no revocation, there was ratification of the contract for despatch of the goods by air in the manner done by the appellant, as the respondent remained silent for more than one month after getting back all the relevant documents on 12-8-74, under a clean receipt.
7. Mr. Sana Roy, the learned Advocate for the respondent, challenges all these contentions of Mr. Ghosh. According to him, it was the duty of the appellant to insert the necessary particulars in the air way-bill, so that there could have been payment against the documents at destination by the consignee, before or at the time of taking delivery of the consignment.
8. In the instructions, Exhibit 9, issued by the respondent to the appellant, there is no direction to realise the value of the goods or the freight and other charges from the consignee at the time of delivery of the consignment. In the absence of any such direction in the instructions. Exhibit 9, Mr. Ghosh has contended that it was no part of the duty of the appellant to realise the value of the goods or the air freight or other charges from the consignee or to make any entry in this respect in the air way-bill. We are unable to accept this contention of Mr. Ghosh. This was a case of international carriage of goods by air. The Warsaw Convention dt. 12-10-29 is incorporated with some modifications in the First Schedule of the Act. This Convention, as amended by the Hague Protocol dt. 28-9-55, is mentioned with some modifications in the Second Schedule of the Act. Though Mr. Ghosh wanted to argue at first that the First Schedule of the Act did not apply to the present case, he did not subsequently insist in the matter in view of Section 3(1) of the Act. Mr. Ghosh contended, however, in course of his arguments that, though in view of Section 3(1) of the Act, the First Schedule of the Act could also be applied in the matter of preparation of air way-bill, mentioned in the Second Schedule of the Act, the First Schedule of the Act would apply to the extent, as amended by the Second Sch. of the Act. Mr. Ghosh has advanced such arguments because some of the particulars to be mentioned in the air consignment note (same as air way-bill mentioned in the Second Sch. of the Act) to be prepared under the First Schedule of the Act do not find mention in Rule 8 of the Second Schedule of the Act. Rule 8(k) of the First Schedule of the Act is to the effect that the air consignment note shall contain particulars of the freight, if it has been agreed upon, the date and the place of payment, and the person who is to pay it. Rule 8(1) of the First Sch. is to the effect that if the goods are sent for payment on delivery, the price of the goods, and if the case so requires, the amount of expenses incurred, are to be mentioned in the air consignment note. These particulars in Rule 8(k) and Rule 8(1) of the First Sch. of the Act, do not find mention in the particulars to be inserted in the air way-bill according to the Rule 8 of the Second Schedule of the Act. It is not, however, possible to accept the contention of Mr. Ghosh that the First Sch. of the Act will apply in the present appeal only to the extent, as amended by the Second Sch., so as to do away with any necessity on the part of the consignor or the agent of the consignor to mention in the air way-bill the amount of freight, the date and place of payment of freight, the person who is to pay freight, the price of the goods for payment on delivery and the amount of expenses, if any, for payment on delivery. The amended Convention (the Hague Protocol) was intended for limiting the liability of the carrier. In the present appeal, no question of liability of the carrier is involved. As such, there is no question, in this appeal of application of the First Sch. of the Act only to the extent, as amended by the Second Schedule of the Act. Under Clauses (k) and (1) to Rule 8 of the First Sch. of the Act, it was the duty of the consignor to mention in the air way-bill the particulars mentioned in these clauses. It is to be stated in this connection that, under Rule 6(5) of both the First and Second Sch. of the Act, if, at the request of the consignor, the carrier makes out the air consignment note or air way-bill, he shall be deemed, subject to proof to the contrary, to have done so on behalf of the consignor. In the present appeal, the appellant acted in three different capacities viz. in his capacity as I.A.T.A. air cargo agent, as Customs House agent, and as forwarding agent on behalf of the consignor, the respondent. At the request of the consignor, the appellant prepared the air way-bill. He was to prepare the air way-bill with the same amount of skill and diligence as was required of the consignor if the air way-bill was prepared by the Consignor. The air way-bill, Exhibits 3 and C, contains boxes to be filled up, including boxes relating to C.O.D., meaning "collect on delivery". The letters "C.O.D." import the carrier's liability to the consignor to collect the cost of the goods from the consignee, and, if not collected to return the goods to the consignor (see Black's Law Dictionary by Henry Campbell Black, 15th Edition (1979) at page 233). The box regarding C.O.D. is in the air way-bill. It was not filled up by the appellant, though there are boxes in the air way-bill to show the amounts to be collected as due to the carrier and as due to the agent. The non-insertion of any particulars relating to C.O.D. in the relevant boxes in the air way-bill shows the want of skill and rather negligence on the part of the appellant in preparing the air waybill. It has been contended that the condition of payment against documents, as mentioned in the purchase order, Exhibit B, could not have been mentioned in the air way-bill. To lend support to this contention, Mr. Ghosh has drawn our attention to one letter, Exhibit I, dated 6-4-78 from the Reserve Bank of India to the respondent to the effect that under the existing Exchange Control Regulations, payment terms stipulating inspection of goods at buyer's end were not permissible. Mr. Ghosh has contended that as, under the Exchange Control Regulations, inspection of goods at buyer's end was not permissible; it was no part of the duty of the appellant to insert in the air way-bill any particulars for payment by the consignee so that the consignee could make payment on inspecting the goods. This contention cannot be accepted. There is no provision in the purchase order for payment on inspection of the goods by the consignee. No doubt, the respondent made correspondence with the Chartered Bank of India at 14, Netaji Subhas Road, Calcutta-1, for realisation of the value of the goods, freight and other charges from the consignee. This is evident from the invoice dt. 31-7-73, Ext. I, as well as the respondent's letter to the Assistant Collector of Customs on 14-8-74 for correction of the shipping bill, Exhibit 3(a). This is also evident from the letter, Exhibit G, dt. 24-9-74 from the Chartered Bank of India to the respondent intimating delivery of the goods to the consignee at New York. The difficulty regarding payment by the consignee arose in this case because of late arrival of the relevant documents at the New York Branch of the Chartered Bank. As already stated, the flight was originally to take place on 12-8-74, vide Exhibit E For rectification of the shipping bill on the basis of the letter dt. 14-8-74 from the respondent to the Assistant Collector of Customs, Calcutta, Exhibit 3(a), the flight did not take place earlier than 19-8-74 and that too, not by Air India but by British Airways, vide the shipping bill. Exhibits 2 and A and a letter dt. 20/21-4-77 from the Assistant Cargo Manager, Air India to the appellant, Exhibit 10(a). If the relevant documents would have reached the New York Branch of the Chartered Bank in time, the Chartered Bank, New York, could have made arrangement for payment by the consignee against the documents before delivery of the goods from the carrier. The flight took place on 19-8-74. Under sub-rule (2) to Rule 13 of both the First and Second Sch. of the Act, the duty of the carrier was, unless otherwise agreed, to give notice to the consignee as soon as the goods arrived at destination. Under Rule 13(1) of both the First and Second Schedules of the Act, the consignee was entitled to require the carrier to hand over to him the air consignment note or air way-bill and to deliver the goods to him, on payment of the charges due and on complying with the condition of carriage set out in the air consignment note or air way-bill As there was no filling up of the boxes relating to C.O.D. in the air waybill in the present case, the consignee was within its right to take delivery of the consignment at New York on receipt of the notice from the carrier under Rule 13(2) of both the Schedules of the Act. Because the relevant documents did not reach the Bank at New York in time for asking the consignee to make payment to Bank, before taking delivery of the articles from the carrier, the appellant cannot avoid its responsibility in the matter of filling up properly all the boxes in the air way-bill relating to C.O.D. viz. the boxes in the air way-bill relating to C.O.D. viz. the boxes showing the charges to be collected as due to the carrier or as due to the agent. Not only these details remained not filled up by the appellant, but also the documents to be attached under Rule 16 of both the Schedules of the Act were not attached by the appellant at the time of preparing the air way-bill, in spite of a box, relating to documents attached, in the air way-bill. The signature of the consignor-respondent was not taken in the air way-bill at the time of submitting the air way-bill to the carrier. Under Rule 6 of both the Schedules of the Act, the air way-bill was to be prepared in three original parts, one part being marked "for the carrier", one part being marked "for the consignee" and the third part being for the consignor. The first part, meant for the carrier, is to be signed by the consignor. Though there is signature of the appellant in the air way-bill, Exhibits 3 and C, there is no signature of the consignor, the respondent, in the air way-bill. Mr. Ghosh has tried to wriggle out of this difficulty by contending that the air way-bills, Exhibits 3 and C, are extra copies and not originals. It is, however, difficult to accept the position that the first part of the air way-bill, meant for the carrier, was signed by the consignor, the respondent, in the absence of any evidence in the matter by any witness for the plaintiff-appellant, in spite of the case made out in the written statement that the air way-bill was not approved by the respondent. An agent is, under Section 211 of the Contract Act, bound to conduct the business of his principal according to directions given by the principal, or, in the absence of any such directions, according to custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any profit accrues, he must account for it. Section 214 of the Contract Act enjoins on the agent a duty to communicate with his principal It is the duty oi an agent, in case of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions. Mr. Ghosh has contended that as the service rendered by the appellant was not gratuitous, it was no part of the duty of the appellant to correspond with the respondent regarding mode of payment for the value of the goods or the freight and other charges by the consignee, specially when the respondent was itself arranging for payment through Bank, as per the invoice and the letter to the Assistant Collector of Customs, Exhibit 3(a). This contention cannot be accepted. No doubt, the respondent was corresponding with its Banker for getting payment for the value of the goods, freight and other charges. Even then, when the purchase order showed that the payment was to be against documents, it was the duty of the appellant to correspond with the respondent as to how payment could be made against documents and the relevant boxes relating to C.O.D. in the air way-bill were to be filled up. It is no explanation at all for the appellant to say, as stated by P.W. 1, that they did not go through the purchase order, as it was no part of their duty. P.W. 1 stated that it was the duty of the customs authority to go through the purchase order and tally the same with the shipping bill before processing the bill and granting necessary sanction. The shipping bill, Exhibits 2 and A, dt. 7-8-74 was prepared by the plaintiff-appellant on the basis of the invoice, Exhibit 1, dt. 31-7-74. It was after the shipping bill was processed by the appellant and checked by the customs for clearance that the shipping bill and other documents including the purchase order were returned by the appellant to the respondent on 12-8-74, vide Exhibit 10. If it was the duty of the customs authorities to go through the purchase order before granting sanction viz. customs clearance, was it not the duty of the appellant to place the purchase order along with the shipping bill, as prepared by them, before the customs authorities ? There is nothing to show that the purchase order was placed along with the shipping bill, as prepared by the appellant, to the customs authorities before 12-8-74 for getting clearance from customs. There is nothing to disbelieve the evidence of P.W. 1 that it was the case of first export by their company to New York. After the flight on 19-8-74, the respondent got the fetter from the Bank, Ext. G, on 24-9-74, informing them about delivery of the consignment to the consignee without payment by the consignee. Thereafter, on 7-10-74 the respondent enquired from the appellant whether the procedure of payment against documents was followed by them in the present case, vide Exhibit 5, It is to be stated, in this connection, that on 9-8-74, after arranging for flight on 12-8-74 (vide Exhibit E), the appellant sent a bill, Ext. 11, for Rs. 16,185/-, the amount claimed in the plaint, to the respondent for payment by them of the freight and other charges. The respondent wrote to their Bank at Netaji Subhas Road, for getting payment and sent the relevant documents to the Bank. On 24-9-74 the respondent got the reply from the Bank about the delivery to the consignee without payment. Thereafter on 7-10-74, the respondent enquired from the appellant if the procedure for payment against documents had been followed. The appellant denied any liability for arranging for payment by consignee by writing on 17-10-74 vide Exhibit 5(a) and thereafter, on 13-12-74, vide Exhibit F. How can the appellant deny any liability in the matter in face of the express provision in Section 214 of the Contract Act enjoining on the appellant the duty of corresponding with the respondent, in case any difficulty was experienced regarding the clause in the purchase order for payment against documents and not for payment by the consignee after delivery by the carrier ? Mr. Ghosh has contended that when the respondent got back the documents on 12-8-74, the respondent had the liberty of exercising its right of disposition under Rule 12 of both the Schedules of the Act and asking the carrier not to deliver the consignment to the consignee at New York. The contention is that once the respondent gets back the relevant documents including the air way-bill from the appellant, there can be no difficulty on the part of the respondent in understanding that no provision had been made in the air way-bill for payment on delivery and hence, it was the duty of the respondent to exercise its right of disposition by asking the carrier not to deliver the goods to the consignee at New York. This contention cannot be accepted. It is no doubt true that the respondent could have exercised its right of disposition under Rule 12 of both the Schedules of the Act The appellant was not, however, debarred for exercising equally the right of disposition conferred by Rule 12 of both the Schedules of the Act, on behalf of the consignor after taking approval of the respondent in the matter, the appellant being an agent of the consignor in the matter of despatch of the goods to the consignee at New York. Under Rule 14 of both the Schedules of the Act, the consignor and the consignee can respectively enforce all the rights given to them by Rules 12 and 13, each in its own name, whether it is acting in its own interest or in the interest of another. Though the appellant was acting not in its own interest but in the interest of the respondent and as agent of the respondent. Rule 14 of both the Schedules of the Act permitted equally the appellant to exercise the consignor's right of disposition by asking the carrier not to deliver the goods at destination to the consignee at New York, in the absence of payment by the consignee. In short, the provisions of Sections 211, 212 and 214 of the Contract Act, show that it was the duty of the appellant to exercise due skill and reasonable diligence in preparing the air way-bill and that the appellant did not exercise proper skill and diligence in preparing the air way-bill, inasmuch as the relevant boxes in the air way-bill relating to C.O.D. and collection of charges by the carrier remained not filled up by the appellant, the documents required to be attached with the air way-bill were not attached by the appellant and the approval of the respondent regarding the air way-bill was not taken by asking the appellant (respondent ?) to sign on the air way-bill The first contention of Mr. Ghosh thus fails.
9. There is no question of revocation of any authority to collect the amount from the consignee, as contended by Mr. Ghosh. There is nothing to show that at the time of receipt of the relevant documents from the appellant on 12-8-74, the respondent knew or understood that in the absence of filling up of all the relevant portions relating to C.O.D. in the air way-bill, the respondent would not ultimately get any payment for the value of the goods or for freight and other charges. There is also no question of ratification by silence for more than one month by the respondent, as contended by Mr. Ghosh. After the flight on 19-8-74, the respondent sent the relevant documents to the Bank at New York through the Bank in Calcutta. After getting the reply from the Bank on 24-9-74, the respondent enquired on 7-10-74 from the appellant if the procedure for payment against documents was followed in the present case. In the circumstances, there is no question of ratification by the respondent by remaining silent from 19-8-74, the date of the flight, till 24-9-74, the date of the letter from the Bank, Exhibit G, as contended by Mr. Ghosh.
10. All the contentions of Mr. Ghosh fait. The appeal is, accordingly, to be dismissed.
11. The appeal is dismissed. Parties to bear their own costs of the appeal.
12. Let the lower Court records be sent down as early as possible.
13. Let the name of the appellant be corrected as per the appellant's petition filed on 27-2-79, on the basis of this Court's order dt. 2-3-78.
Lilamoy Ghosh, J.
14. I agree.