Calcutta High Court
Jaytee Exports vs Natvar Parikh Industries Limited & Ors on 19 April, 2018
Author: Soumen Sen
Bench: Soumen Sen
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN
C.S. No.481 of 2000
JAYTEE EXPORTS
VS.
NATVAR PARIKH INDUSTRIES LIMITED & ORS.
For the Plaintiff : Mr. Ratnanko Banerjee, Sr. Adv.,
Mr. Aniruddha Mitra, Adv.,
Mr. Sudipta Sarkar, Adv.,
Ms. Soma Rai, Adv.
For the Defendants : Mr. Jishnu Saha, Sr. Adv.,
Mr. Srenik Singhvi, Adv.,
Mr. Ishan Saha, Adv.,
Ms. Sananda Ganguli, Adv.,
Mr. Shubradipo Roy, Adv.
Hearing Concluded On : 09.02.2018
Judgment On : 19.04.2018
Soumen Sen, J.:- The plaintiff has filed a suit for recovery of a sum of
Rs.37,89,000/- against the defendants jointly and severally.
The defendants have contended that the claim in the suit is arising
out of a contract of carriage entered into between the plaintiff and the
defendant No.4 which contains a forum selection clause in the Bills of
Lading being Courts in Singapore and no other Courts inasmuch as the suit
is otherwise barred by limitation. In addition thereto, the suit is not
maintainable under Section 230 of the Indian Contract Ac, 1872 against the
defendant No.1 as it has acted as an agent of a foreign disclosed principal,
being the defendant No.4. The plaintiff on the other hand has pleaded and
contended that the cause of action of the suit arose in September, 1998
upon the plaintiff coming to know of the breach of contractual obligations by
the defendants. The defendants are guilty of the tort of negligence and/or
guilty of wrongful conversion. In such circumstances the forum selection
clause in the Bills of Lading is immaterial.
In the background of such claim and counter-claim, it is necessary to
briefly indicate the facts narrated in the Plaint and the Written Statement.
In the plaint, the plaintiff has stated that the plaintiff is, inter alia,
engaged in the business of manufacture and sale of hosiery goods and
fabrics. The plaintiff agreed to sell 100% cotton S (J) - 308 semi combed
fabric (hereinafter referred to as the "said goods") 13697.850 Kgs @ USD
3.55 per KG to DXB Knits LLC of Ajman, Dubai, UAE (hereinafter referred to
as the notified party).
The defendant No.1 is engaged in the business of container services
shipment. The plaintiff approached the defendant No.1 for shipment of the
said goods to Dubai. The defendant No.1 on 15th January, 1998 issued an
ocean Bill of Lading being No. COK/30312/DXB signed by it as an agent of
Natper Lines (PTE) Ltd. The defendant No.4, a company incorporated under
the appropriate laws of Singapore for shipment of 221 cartons worth USD
48,627 containing the said goods from the Port of Cochin, India to Dubai
Port. The freight under the Bill of Lading was paid by Defendant no. 1.
Simultaneous to the issuance of the said Bill of Lading, the defendant
No.1 also issued another Bill of Lading being No.COK/30313/DXB in
respect of the 49 cartons of similar goods. Both the consignments were
transported by the defendant No.1 in a single container. The notified party
for both the consignments was M/s. DXB Knits LLC.
In both the Bill of Ladings it is mentioned - "To order of Middle East
Bank, Al Riqa Branch, P.O. Box 5547, Dubai, UAE". As per usual practice
three numbers of original of each of the Bills of Lading were issued by the
defendant No.1.
Allahabad Bank, Park Street Branch, Kolkata under instruction from the
plaintiff has forwarded the Bills of Lading along with other documents
relating to title of the goods submitted by the plaintiff to the said Bank to
Middle East Bank, Dubai. The term of delivery and payment is "at sight". In
the letter issued by the Allahabad Bank as well as in the invoice, the terms
of the delivery and payment is clearly stated at sight. In view thereof, the
goods were to be delivered to the notified party by the defendant only upon
production of original Bill of Lading. The notified party was required to
make payment of the value of the goods to Middle East Bank and obtain the
original Bill of Lading.
The goods reached Dubai Port on 2nd February, 1998. The notified party
did not pay the price of the said goods to Middle East Bank. The notified
party did not take delivery of the original Bill of Lading being No.
COK/30312/DXB from the bank. The Defendant No.1 through the
Defendant no. 4 wrongfully, illegally and fraudulently delivered 221 cartons
of the goods covered under Bill of Lading being No. COK/30312/DXB to the
notified party without the original B/L being produced. The plaintiff did not
receive payment for the said goods.
As the notified party did not take delivery of the original Bill of Lading
being No. COK/30312/DXB, the Middle East Bank, Dubai returned the said
original Bill of Lading to Allahabad Bank, Kolkata, who in turn returned all
the said three copies of the original Bill of Lading being No.
COK/30312/DXB to the plaintiff.
On enquiry, the plaintiff found that the defendants without the
knowledge, authority and consent of the plaintiff had wrongly, illegally and
in breach of the conditions of carriage dealt with the said goods and
purported to deliver the same to the said overseas buyer, DXB Knits without
production of the original Bill of Lading. The plaintiff was informed by the
agent of the defendant No.4, M/s. Loyal Freight International Ltd., Dubai
that the said goods were delivered to the overseas buyer without production
of the Bill of Lading on the express instructions of the defendants. In the
alternative, the defendants have wrongfully converted the said goods, the
property of the plaintiff, for their own use and have wrongfully deprived the
plaintiff of the same. In the further alternative, the defendants have acted
negligently and in breach of duty owed to the plaintiff. The defendants acted
negligently, inter alia, in delivering or causing the said goods to be delivered
without production of the Bills of Lading.
The said goods covered under the said Bills of Lading have been
wrongfully discharged and delivered by the defendants thereby causing
financial loss and damage to the plaintiff at Calcutta. The plaintiff has
further stated that on the express representation of the defendants that the
goods had been delivered negligently by its agent at Dubai, the plaintiff was
induced and misled into filing a proceeding in the Court of the First
Instance, Dubai against the Loyal Freight. The defendant No.4 and the
Middle East Bank were subsequently added as parties to the proceeding.
The defendant No.4 did not enter appearance in the suit. The plaintiff,
however, subsequently came to learn that the contention of the defendants
herein that the Loyal Freight was negligent, is false and made with an
ulterior motive and the goods were delivered by the Loyal Freight without
production of the Bill of Lading on the express instructions of the
defendants. The Dubai Court held that proceeding against the Dubai agent
of the defendants was not maintainable according to the local law.
The defendant Nos.1 and 4 having issued the said Bill of Lading are
jointly and severally liable for the breaches. The defendant Nos.2 and 3
owned and controlled the defendant Nos.1 and 4 and caused delivery to be
made wrongfully and are also liable for the breaches. The plaintiff had
relied upon the representation made by Mr. Azad Parekh, since deceased,
and the defendant Nos.2 and 3 to the plaintiff that they would personally
liable for any claims that might arise in respect of the said transaction
entrusted the said goods to the said defendant No.1 and subsequently, on
January, 1998 paid the full freight for export of the cargo to the defendant
No.1. The defendant No.1 issued the Bill of Lading dated 15th January,
1998 at Calcutta covering the said consignment shipped on board the vessel
"Express Jaya" Voy, 763 at Coachin and also issued Freight Certificate.
The defendant No.1 on being put to enquiry with regard to the delivery of
the consignments at the port of discharge issued a Telefax dated 8th August,
1998 addressed to M/s. Loyal Freight International of Dubai being the
Steamer Agent of the said Vessel, sought confirmation with regard to the
status of the said consignment.
The plaintiff upon coming to know from the defendant No.1 that the
consignment was delivered against a delivery order issued by the
defendants, by its letter dated 17th August, 1998 addressed to the defendant
No.4 with a copy to the defendant No.1 requested the said defendant to
furnish proof of the date or time of receipt of the original Bill of Lading with
endorsement of the Middle East Bank, Dubai being the consignee under the
said Bill of Lading. In the said letter, the plaintiff has categorically
contended that if no such proof would be furnished relating to the receipt of
the original Bill of Lading from the said Bank consignee, the defendants
would be made liable for all costs, damage including freight.
The defendant No.1 by a letter dated 22nd August, 1998 replied to the
aforesaid letter in which the defendant No.1 had acknowledged that the
Singapore Office of the defendant No.1 has received the aforesaid letter but
denied its liability unless the plaintiff substantiates any monetary loss in the
transaction by production of relevant Banker's Certificates. The defendants
categorically stated that unless such certificate is produced, the claim of the
plaintiff on the defendant No.1 would not be valid.
Further the defendant No.1 in the said letter dated 22nd August, 1998
asserted its right to effect delivery to the notified party and/or consignee
upon taking a guarantee from them. The plaintiff contends that such
guarantee must have been taken by the defendant No.1 to indemnify the
defendant No.1 against any claim that may be made by the Bill of Lading
holder in future. The plaintiff as the holder the original Bill of Lading lodged
its claim on the defendant No.1 for the invoice value of the goods wrongfully
delivered by the said defendant or its duly authorized agent. The defendant
No.1 having acknowledged its liability and having protected itself by taking a
guarantee wrongfully refused to pay the dues of the plaintiff.
During the visit of the representative of the plaintiff at Dubai, it came to
the knowledge of the plaintiff that the defendant No.1 and/or its authorized
representative was responsible for the release of the delivery order with
regard to the said consignment without receipt of the original Bill of Lading
and without the knowledge or confirmation of the said local Steamer Agent
at Dubai, namely, M/s. Loyal Freight International. The said fact was also
communicated and/or was made known by Sri S. Khanna of the Steamer
Agent to the defendant No.1 by its Fax dated 22nd August, 1998. The said
fact would be corroborated from the fax message dated 29th August, 1998
from Loyal Freight, the Steamer Agent at Dubai to the defendant No.1.
Thereafter, the plaintiff issued a legal notice dated 9th September, 1998
to the defendant No.1 demanding payment of Rs.21,27,440/- being the
value of the said consignment together with interest at the rate of 18% p.a.
and damages. Along with the said letter, a Banker's Certificate was duly
sent to the defendant No.1. In spite of receipt of the said letter, the
defendant No.1, however, did not give any reply.
This was followed by another letter dated 13th October, 1998 in which
the plaintiff has made a categorical assertion that the consignment was
given to the defendant No.1 on the basis of the representation and
assurance mentioned aforesaid and in trust for onward delivery to the
consignee and since the same was delivered wrongfully without proper
release from the Bank consignee and/or without the original Bill of Lading,
the defendant No.1 would be personally liable for the value of the said
consignment and interest and costs.
The plaintiff in Paragraph 16 of the Plaint has given particulars of
conversion, fraud and misrepresentation. It is stated that in issuing the said
Bill of Lading, the defendant No.1 and/or the defendants and each of them
represented and/or assured that the goods would not be delivered without
production of the original Bill of Lading, without intending to honour the
said representation and/or assurance. The defendants induced the
plaintiffs to dispatch the said goods on the said representation and/or
assurance knowing fully well that the same would be delivered without the
original Bill of Lading. The defendant No.1 and the defendants released the
delivery order relating to the said goods without the knowledge or
information of the local agent at Dubai and suppressed the aforesaid facts
from the local agent at Dubai. The defendant No.1 and/or the defendants
entered into secret negotiations and/or transactions with the said DXN
Knits for delivery of the said goods without production of the Bill of Lading.
The defendants have acted in breach of their duty and thereby gained
advantage by misleading the plaintiff to its prejudice. The defendant Nos.2
and 3 have set up the defendant No.1 and 4 under a corporate veil to
defraud creditors and avoid payment of their legitimate dues including those
of the plaintiff. The defendant No.1 and/or the defendants have wrongfully
purported to insert clauses in the Bill of Lading to absolve transfer of
liability and to defeat its creditors. Upon lifting of the corporate veil it would
be found that the defendant Nos.2 and 3 are guilty of the aforesaid
fraudulent act.
The cause of action of the plaintiff against the defendant No.1 and/or
defendants is based, inter alia, upon fraud of the defendant No.1 and/or the
defendants and/or for tort of negligence and/or for tort of wrongful and
dishonest misappropriation and/or conversion and detention of the said
goods of the plaintiff having the right to the possession.
The defendants have filed a Written Statement in which the
defendants have denied the claim of the plaintiff.
The summary of the defence made out in the written statement is
stated below.
The defendant No.1 was engaged in providing agency service in Indian
Ports to shipping line.
The defendant No.1 has entered into a contract with the plaintiff at
Cochin as an agent of the defendant No.4 to ship the goods of the plaintiff to
Dubai wherefrom the delivery agent of the defendant No.4 at Dubai would
collect the goods and deliver the goods to the consignee. The defendant No.1
has not entered into the said contract in its own name and, therefore, is not
entitled to sue or sued on such contract. In the Bill of Lading, the name of
the delivery agent, namely, Loyal Freight International LLC (hereinafter
referred to as "Loyal Freight") has been clearly mentioned. The said Loyal
Freight International LLC is the agent of the defendant No.4 at Dubai and on
behalf of the defendant No.4 undertakes delivery of goods shipped from its
various agents from all over the world to Dubai. The said goods arrived at
Dubai on February 2, 1998. Loyal Freight issued a delivery order valid till
March 9, 1998. On March 7, 1998, Loyal Freight delivered the said
container to the notified party, namely, DXB Knits LLC Ajman UAE against
the Bill of Lading documents surrendered by the Consignee. The defendant
No.1 is not liable for any alleged wrongful delivery of the said cargo by the
Loyal Freight. The plaintiff has received the value of the said goods from the
said DXB Knits LLC, the notified party and has claimed and obtained duty
draw back from the Government of India to the extent of Rs.1,28,768/- by
cheque No.131669 dated 1st May, 1998. Under such circumstance, there is
no cause of action for filing the suit against the defendant No.1 inasmuch as
no part of the cause of action has arisen within the jurisdiction of this court.
The goods have been delivered by the plaintiff at Cochin and shipped to
Dubai.
Loyal Freight is a proper and necessary party in the suit. In absence
of Loyal Freight, the instant suit cannot be properly and effectively
adjudicated. The suit is bad for non-joinder of necessary party. The
plaintiff has also not made the consignee a party in this suit.
The defendant No.1 is a Public Limited Company and the
shareholding of the defendant No.1 is owned and controlled by the public at
large. The defendant No.4 is a company registered under the laws of
Singapore. The defendant No.3 is a Director of the defendant No.1 only with
effect from July, 1999 and was not a director of defendant No.1 at the
material point of time.
The plaintiff has shipped 16742.75 Kgs of goods under two shipping
bills in a sealed container said to contain 270 cartons weighing 16742.75
Kgs of Indian Origin, the value whereof, however, was not declared by the
plaintiff at the time of shipment of the said goods from Cochin to Dubai.
The plaintiff has suppressed that the container contains 49 cartons apart
from 221 cartons weighing 3044.900 Kgs to be delivered to the same
consignee and the consignee had taken delivery of both the consignments
with the knowledge of the plaintiff and with the connivance of delivery agent,
Loyal Freight.
The plaintiff became aware of the delivery of the goods to the notified
party as early as on March 9, 1998 since the consignment under Bill of
Lading No: COK-30313/DXB which was also dated January 15, 1998 and
shipped by the plaintiff in the same container, was taken delivery by the
notifying party on or about March 9, 1998 by payment to the bank against
the said Bill of Lading No: COK-30313/DXB. The plaintiff did not take any
interest in the status of the consignment covered in the Bill of Lading
Nos.COK-30312/DXB for more than 6 months i.e. from February, 1998
which to August, 1998, which itself shows that the delivery of consignment
was taken with the knowledge and connivance of plaintiff.
The said cargo was received by the defendant No.1 on the terms and
conditions contained in the bill of lading only for the purpose of shipment of
the said cargo from Cochin to Dubai and sea freight payment was in the due
course of routine business as in the case of non-payment of freight, the
defendant had no authority from the principal to accept any goods for
shipment. The defendant received the freight only in accordance with the
bill of lading and as an agent of the defendant No.4. Although, the
defendant had no obligation with regard to delivery of the said cargo only in
order to help the plaintiff, without realizing that the enquiry made by the
plaintiff was make-believe and sham, called upon the delivery agent of the
defendant No.4 to inform the defendant No.1 as to whether the said
consignment covered under the two bills of lading and contained in the
container Nos.TPHU-452101-8 were taken delivery of or not. The delivery
agent of the respondent No.4 in reply to the said tele fax message sent to the
Cochin office of the defendant No.1 informed that the consignee had obtained delivery orders on March 9, 1998 and took the containers from the port on March 10, 1998 and returned the empty containers on March 11, 1998. The tele fax along with the reply was handed over to the clearing and custom House agents of the plaintiffs, namely, Lesslie & Lesslie at Kochi who, it appears has forwarded the same to the plaintiff at Calcutta.
The goods were delivered on 9th March, 1998 and the suit has been filed on November 29, 2000. The suit is barred by limitation in view of Rule 6 of Article III of the Schedule to the Indian Carriage of Goods by Sea Act, 1925 as well as Clauses (f) and (g) of Clause VI of the Standard Trading Condition printed on the reverse side of the Bills of Lading. The carriage of goods by sea is governed by the Hague Visby Rules which clearly provides that definitions and limits of liability provided for in the Rules shall apply in any action against the carrier in respect of lost or damaged goods covered by contract of carriage where the action be found in contract or in tort.
On the basis of the pleadings and documents disclosed on 8th June, 2016 the following issues were settled for trial:
i. Does this Court has jurisdiction to try, determine and adjudicate the suit?
ii. Is the suit barred by the law of limitation?
iii. Is the plaintiff entitled to a sum of Rs.37,89,000/- along with interim and further interest thereon, as claimed in the plaint, against the defendants jointly and/or severally?
iv. Is the suit maintainable against the defendants no.1, 2 and 3?
v. Is the plaintiff entitled to any other relief and/or reliefs?
The issue nos.(i), (ii) and (iv) are inextricably connected and taken up together for consideration. The arguments made on behalf of the parties in respect of the aforesaid issues overlapped and that is why it is felt necessary to decide the said three issues together.
The defendants have not adduced any evidence. The defendants, however, has filed its affidavit of documents.
The plaintiff has examined two witnesses. The defendants have cross-
examined the said witnesses.
The objection with regard to the jurisdiction, limitation and maintainability of the suit against the defendant nos. 1, 2 and 3 if sustained would non-suit the plaintiff.
Mr. Jishnu Saha, the learned Senior Counsel representing the defendants have submitted that the Bill of Lading issued by the defendant no.1 as the agent of the defendant no.4 contains Jurisdiction and Law Clause which reads:-
"Jurisdiction and Law Clause: The contract evidenced by or contained in this bill of lading is governed by the law of Singapore and any claim or disputes arising hereunder or in connection herewith shall be determined by the Courts is Singapore and no other Courts.
All business is transacted only in accordance with the Singapore Freight Forwarder's Association Standard Trading Conditions (1996). Copy shall be furnished at request or may be inspected at our premises."
The plaintiff accepted the Bill of Lading containing the said Jurisdiction and Law Clause without any demur or protest. Having agreed to the Jurisdiction and Law clause contained therein, the plaintiff could not have brought the suit in this Court as it is clearly only the Courts at Singapore which will have jurisdiction over the subject matter of the suit, particularly as by agreement the parties agreed that the contract evidenced by or contained in the Bill of Lading would be governed by the law of Singapore.
In this context the defendants have relied upon the following decisions:-
(i) ABC Laminart (P) Ltd. & Anr. v. A.P. Agencies, Salem reported in (1989) 2 SCC 163;
(ii) Modi Entertainment Network v. W.S.G. Cricket PTE Ltd.
reported in (2003) 4 SCC 341;
(iii) Swastik gases Pvt. Ltd. v. Indian Oil Corporation Ltd.
reported in (2013) 9 SCC 32;
(iv) Unreported decision of the Hon'ble Delhi High Court in Gupta Pigments v. Natpar Lines (S) PTE Ltd. & Anr. in FAO no. 146 of 1999 decided on 09.12.2010.
Mr. Saha has referred to paragraph 2(i), paragraph 6 and paragraph 7 of the written statement and submitted that the defendant no.1 has categorically denied that it had issued a bill of lading at Calcutta or that payment of freight was made to it by the plaintiff at 39 Kali Krishna Tagore Street, Kolkata. The contention of the plaintiff in this regard is incorrect. In any event, in view of the forum selection clause in the bill of lading, the plaintiff could not have instituted the instant suit in this Court. In an attempt to wriggle out of the forum selection clause, the plaintiff has attempted to contend that as the original bills of lading were returned to it, the suit was not filed under the same and as such the forum selection clause contained therein could have no application. The contract between the parties is contained in the bill of lading. It is evident from paragraph 9(a) of the plaint that the plaintiff has first sued on an alleged breach of the contract contained in the bill of lading. In the circumstances, the plaintiff cannot, on the pretext of having got back the original bills of lading, avoid the forum selection clause contained in the same.
Mr. Saha has strenuously argued that the suit is barred by limitation. Mr. Saha has referred to paragraphs 6 and 8 of the written statement and submits that the plaintiff became aware of delivery of goods to the notified party as early as on March 9, 1998 since the consignment under the Bill of Lading No. COK - 30313/DXB which was also dated January 15, 1998 and which was shipped by the plaintiff in the same container was taken delivery by the notified party on or about March 9, 1998 by payment to the bank against the said Bill of Lading No.COK - 30313/DXB. The plaintiff, however, did not show any interest in respect of the consignment covered in the Bill of Lading No.COK/30312/DXB for more than six months, that is, from January, 1998 to August, 1998. This itself shows that a delivery of consignment was taken with the knowledge and connivance of the plaintiff.
Mr. Saha refers to Rule 6 of Article III of the schedule to the Indian Carriage of Goods by Sea Act, 1925 which provides that the carrier or the ship shall be discharged from all liabilities in respect of the loss or damages unless a suit is brought within one year after delivery of goods or within one year from the date when the goods should be delivered. The instant suit was, however, filed in November, 2000 beyond the period prescribed in the said Rule.
Mr. Saha refers to Clauses (f) and (g) of Clause (vi) of the Standard Trading Conditions printed on the reverse of the Bill of Lading providing for
(i) notice of loss to be given to the carrier or its representatives at the place of delivery before or at the time of removal of the goods, or if the loss or damage is not apparent, within 3 consecutive days thereafter and (ii) that the carrier would be discharged of all liabilities unless the suit is brought in the proper forum and written notice thereof is received by the carrier within 12 months after delivery of the goods or the date when the goods should have been delivered.
The said Clauses read:-
"Clause "f" - Notice of loss or damage:-
The carrier shall be deemed prima facie to have delivered the goods as described in this bill of lading unless notice of loss or damage to the goods indicating the general nature of such loss or damage, shall have been given in writing to the carrier or to his representative at the place of delivery before or at the time of removal of the goods into the custody of the person entitled to delivery thereof under this bill of lading or, if the loss or damage is not apparent within three consecutive days thereafter.
Clause "g" - Time bar- The carrier shall be discharged of all liability unless suit is brought in the proper forum and written notice thereof received by the carrier within 12 months after delivery of the goods or the date when the goods should have been delivered."
The Bill of Lading is governed by the Hague Visby Rules amended by the Protocol singed at Brussels on 23rd February, 1968. India is a signatory to the Hague Visby Rules and as such the Bill of Lading is an exclusive special contract. The Hague Visby Rules, inter alia, provides as follows:-
"The defences and limits of liability provide for in these Rules shall apply in any action against the carrier in respect of loss or damage to goods covered by a contract of carriage whether the action be found in contract or in tort".
The learned Senior Counsel has also referred to Rule 6, sub- paragraph 3 of Article III of the Schedule to The Indian Carriage of Goods by Sea Carriage Act, 1925 and submits that the said rule clearly provides that, in any event, the carrier and the ship shall be discharged from all liabilities in respect of loss or damage unless the suit is brought in within one year after the delivery of the goods or the date when the goods should have been delivered.
Mr. Saha also refers to Clause 6(g) of the Bill of Lading in question and submits that the said clause clearly provides that the Carrier shall be discharged of all liabilities unless the suit is brought in the proper forum and written notice thereof received by the carrier within twelve months after the delivery of the goods or the date when the goods should have been delivered.
The learned Senior Counsel has referred to question Nos. 290 to 298 in cross-examination of the first witness of the plaintiff and submits that in answer to such questions, the witness has admitted that the consignment under BL No.COK/30312/DXB and the consignment under the BL No. COK/30313/DXB was to be cleared and taken delivery "AT SIGHT" at the delivery port by the same consignee i.e. DXB knits, Dubai. The witness has also admitted in answer to question 288 and 296 in cross examination, that both the consignments reached the Dubai Port on February 2, 1998 and that M/s. Loyal Freight issued the delivery order dated February 2, 1998 valid upto March 9, 1998 for both the consignments. In the written Statement the defendant has stated that the consignee took delivery of both consignments on March 7, 1998 with the knowledge and consent of the plaintiff as would be evident from the fact that the plaintiff made no inquiry with regard to the delivery of the consignment covered under the BL No. COK/30313/DXB or with regard to the payment in respect thereof for more than five months. The plaintiff received payment against the invoice value of the consignment under the BL No. COK/30313/DXB dated January 15, 1998. The witness, however, deliberately refused to depose with regard to the date of receipt of such payment. Since both the consignments have reached on February 2, 1998 and as such ought to have been taken delivery on the said date, the period of limitation for the instant suit commenced on February 2, 1998 or at least on March 7, 1998 when the consignment under BL No. COK/30313/DXB was admittedly delivered.
Mr. Saha submits that the plaintiff has failed to prove its case. The plaintiff's allegations that delivery of goods has been made without the Bill of Lading and that the plaintiff has not received payment for such goods has been specifically denied by the defendant Nos.1 to 3 in paragraphs 2(v), 2(vi), 5, 8, 9, 10 and 14 of the written statement.
Mr. Saha submits that even if it is assumed for the sake of argument that the goods were, in fact, delivered without the Bill of Lading, the onus would still be on the plaintiff to prove that it did not receive payment for the same. This being the plaintiff's positive case, the burden of prove lies on the plaintiff. Mr. Saha has referred to Sections 102, 103 and 106 of the Indian Evidence Act, 1872 and referred to paragraphs 4.02 and 4.05 of Phipson on Evidence (4th Edition) and Queen's Bench decision reported in (1883) 11 QBD 440 at 457 (Abrath Vs. The North Eastern Railway Company) in which it is held that where an allegation, whether affirmative or negative, forms an essential part of a party's case, the proof of such allegation rests on him.
It is argued that there is neither any statutory presumption of non- payment following delivery of goods without production of the original bill of lading, nor has this been either pleaded or argued by the plaintiff. On the contrary, the plaintiff's own assertion that DXB and/or its banker wrongfully failed and neglected to accept the documents or make any payment, and ultimately returned the documents including original Bill of Lading, if taken in the absence of any explanation with regard to the steps taken for realisation of payment gives rise to the presumption that payment for the goods was in fact received by the plaintiff. This is because the normal course of commercial conduct would be to forthwith pursue the matter of wrongful rejection of the documents or refusal to accept the same, and to seek immediate return of the documents and the goods or to pursue the matter of payment of the price of the goods with the consignee or the notified party.
Mr. Saha refers to Sections 16 and 114(f) of the Indian Evidence Act, 1872 and Paragraph 5.04 of Phipson on Evidence (4th Edition) and submits that in absence of any step taken for realisation of the amount which a prudent businessman is expected to do raise a strong presumption that money has been received for the present consignment. The common sense and logic raises this presumption of fact. In this context, Mr. Saha has referred to the answer given by the plaintiff's first witness to Question No.310 in cross-examination and submits that the said witness in fact has admitted that the buyer had tendered the original Bill of Lading to the Middle East Bank. The plaintiff did not demand any payment either from DXB or the Middle East bank until August, 1998. This conduct of the plaintiff is against commercial prudence or normal commercial conduct. This in itself gives rise to an adverse inference against the plaintiff. Mr. Saha in this context has referred to the following decisions:-
(a) Gopal Krishnaji Ketkar v. Mohamed Haji Latif & Ors., AIR1968 SC 1413 (paragraph 5);
(b) Swaran Singh & Ors. v. State of Punjab, (1976)4 SCC 369 (paragraph 13);
(c) Union of India v. Ibrahim Uddin & Anr. (2012)8 SCC 148 (at paragraphs 12, 24 and 25).
Mr. Saha has submitted that in paragraph 9(a) of the plaint the plaintiff has alleged breach of contract. The plaintiff has also pleaded alternative cases of negligence and conversion. Notwithstanding the alternative cases pleaded by it, the plaintiff can succeed in its claim only if it succeeds in proving actual damage suffered. Injuria sine damno does not give rise to an actionable claim. The burden is on the plaintiff to prove loss or damage for non receipt of payment against goods delivered without production of the Bill of Lading as a consequence of conversion, negligence or breach of contract by the defendant.
It is submitted that although the plaintiff could have easily discharged its burden of proving non receipt of payment for the goods delivered, by disclosing its balance sheets, party wise ledgers, export ledgers, statutory returns that are required to be filed in connection with exports and its duty drawback registers and correspondences with its buyer on the alleged non- receipt of invoice value, it steadfastly refused to do so, and that too without any just cause.
Mr. Saha in this regard has referred to Chapter 6 of the Exchange Control Manual of the Reserve Bank of India, Clause 6.A.7 and Rule 8 under Foreign Exchange Regulation Rules, 1974 i.e. FERA Rules under the FERA Act, 1973 which provides that the time for realization of export proceeds is 6 months from the date of shipment, which can be extended only in accordance with the procedure stipulated under Clause 6.C.16 of Exchange Control Manual. The time limit stipulated under Clause 6 of the Exchange Control Manual is required to be adhered to, failing which as per Clause
6.C.14(1)(g), the exporter is required to write off the invoice value and to return the incentives received. Not only has the plaintiff not produced any proof of having applied to the Reserve Bank of India for extension of time for realization of invoice value or having written off the unrealized invoice value, upon being called upon to furnish such proof, the plaintiff's first witness deliberately refused to do so.
Mr. Saha has also referred to Rule 16A of the Amended Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 which provides for the recovery of the amount of duty drawback when export proceeds, is unrealized.
In the light of the obligations incumbent on an exporter, Mr. Saha has referred to Question Nos.146,148-150 and 337-350 of the plaintiff's first witness in cross-examination and submits that the witness during cross- examination has admitted receipt of duty drawback.
Mr. Saha submits that despite the plaintiff's statutory obligations as an exporter under the Custom, Central Excise Duties and Service Tax Drawback Rules, 1995 and the Exchange Control Manual of the Reserve Bank of India, even though the goods admittedly reached Dubai on February 2, 1998, the plaintiff admittedly made no demand for either return of the documents or for payment of the price of the goods from either DXB or the Middle East Bank, and even made no attempt to enquire as to why DXB Knits or the Middle East Bank had refused to accept the documents.
Mr. Saha has referred to the questions being put to Mr. Chandra Prakash Poddar during cross-examination in relation to the said documents, namely, Balance sheets for the years 1998-1998, 1999-2000 and 2000- 2001, Ledger accounts of the plaintiff's transactions with DXB Knits, Dubai for the years 1998-1999, 1999-2000 and 2000- 2001, Passport of Mr. Chandra Prakash Poddar, Duty Drawback Register maintained by the plaintiff, Guarantee Remittance Forms, Party Ledgers of export customers including DXB Knits, Plaint filed or the judgment passed in the Dubai suit filed by the plaintiff, Plaint in the Suit No. 496 of 1999 and submitted that although the said witness was asked to produce and disclose the said documents, the witness has refused to give any satisfactory reply for not disclosing the said documents. Mr. Saha submits that although the plaintiff is in possession of best evidence and is obliged to disclose the best evidence, the plaintiff has withheld such evidence. Mr. Saha submits that it is extremely unusual for the plaintiff for not taking any immediate steps for realization of the payments from the foreign buyer which the plaintiff alleged to have not been received. Realization of the export proceeds within the stipulated time would be in consonance with the common course of business in relation to export activity and as such, receipt of payment by the plaintiff for the goods delivered can be presumed under Sections 16 and 114(f) of the Indian Evidence Act, 1872. It is submitted that mere statement of the witness that the plaintiff has not received payment against goods delivered is not sufficient for the plaintiff to establish non-receipt of payment. In the circumstances, the onus did not shift on to the defendants, thereby obliging the defendants to lead evidence. Mr. Saha has referred to Section 60 of the Indian Evidence Act, 1872, and submits that the defendants could not have led any direct oral evidence to prove non-receipt of payment for the goods alleged to have been sold by the plaintiff. The defendants neither have nor could have any direct knowledge in this regard. Whether or not the plaintiff has received payment for the goods delivered and whether the plaintiff has repatriated the duty draw back incentives obtained by it are within the special knowledge of the plaintiff alone. The plaintiff has deliberately withheld such information which clearly gives rise to an adverse inference. Mr. Saha has referred to Sections 101 to 106 and 114(g) of the Indian Evidence Act and submits that it has been recognized by a long catena of decisions that if a party fails to produce evidence regarding facts especially within the knowledge of such person adverse inference is to be drawn against such person. Mr. Saha in this regard has relied upon the following decisions:-
a) Sri Rabindra Kumar Dey v. State of Orissa reported in AIR 1977 SC 170 (paras 7, 8, 19 and 25); and
b) Punit Rai v. Dinesh Chaudhary reported in AIR 2003 SC 4355 (paras 10, 14 and 15);
c) J. Harkishandas & Co. v. Lloyd Triestino & Anr., reported in (2006) SCC Online Bombay 778 (paragraphs 15 and 16);
d) Prithipal Singh & Ors v. State of Punjab & Anr., reported in (2012)1 SCC 10 (paragraphs 53 and 79);
e) State of Andhra Pradesh v. Y. Basavadevudu & Anr.
reported in (1992)3 SCC 30 (paragraph 12);
f) Sahara India Real Estate Corporation Ltd. & Ors. v.
SEBI & Anr. reported in (2013)1 SCC 1 (paragraphs 236 to 239);
g) Tomaso Bruno & Anr. v. State of Uttar Pradesh reported in (2015)7 SCC 178 at (paragraphs 21, 23, 27-30);
Mr. Saha submits that the burden of proving that the goods have been delivered without the production of the Bill of Lading and that the plaintiff has not received any payment for the goods are the positive assertions of the plaintiff which the plaintiff is required to discharge under Section 102 of the Indian Evidence Act, 1872. Moreover, the plaintiff is under an obligation to lead evidence to prove its claim. In view of failure to adduce the best possible evidence in support of a positive assertion made by the plaintiff, Mr. Saha submits that an adverse inference shall be drawn against the plaintiff. Withholding of the best evidence decreases the reliability of any other evidence that is produced and the version of the plaintiff's case needs to be disbelieved.
Mr. Saha in this regard has relied upon Union of India v. Ibrahim Uddin & Anr. reported in (2012) 8 SCC 148 (paragraphs 12, 24 and 25) and Swaran Singh & Ors. v. State of Punjab reported in (1976)4 SCC 369 (paragraph 13).
Mr. Saha submits that the claim is frivolous and collusive. The plaintiff is in collusion with the consignee. The plaintiff has been in business with DXB Knits LLC Amjan UAE for a long time and has concluded several transactions with them. The plaintiff remains closely associated with DXB Knits and has continued to transact business with them even after the dispute complained of in this suit. Mr. Saha has referred to Question Nos.134, 151 to 159, 162 to 168, 199 to 213, 233, 235 to 245 and 329 to 335 to substantiate his argument that course of conduct between the buyer and seller as emerged from the evidence leads to the inference that the plaintiff received payment in respect of the goods from DXB Knits and as such continued to be do business with it beyond the period 1998.
Mr. Saha submits that the scope of the defendant's cross-examination is to demolish the case of the plaintiff. It is immaterial and inconsequential whether the defendant has led any evidence. If in the course of trial, the defendant irrespective of evidence being led from its side is able to demolish the plaintiff's case through cross-examination that is sufficient. Mr. Saha has referred to Sections 138, 139, 147 and 148 of the Indian Evidence Act, 1872 and paragraphs 12.12 and 12.20 from Phipson on Evidence (4th Edition) and submits that submission made by him in this regard is supported by the observations made by the learned Author in his celebrated work on evidence. Mr. Saha has referred to the observations made by the learned Author in Paragraphs 12.12 and 12.20 which read:-
"12.12 The object of cross-examination is twofold - to weaken, qualify or destroy the case of the opponent; and to establish the party's own case by means of his opponent's witnesses. It is not confined to matters proved in chief; the slightest direct examination, even for formal proof, opens up the whole of the cross-examiner's case.
12.20 The credibility of a witness depends upon his knowledge of the facts, his intelligence, his disinterestedness, his integrity, his veracity. Proportionate to these is the degree of credit his testimony deserves from the court or jury.
Amongst the more obvious matter affecting the weight of a witness's evidence may be classed his means of knowledge, opportunities of observation, reasons for recollection or belief, experience, powers of memory and perception and any special circumstances affecting his competency to speak to the particular case - all of which may be inquired into either in direct examination to enhance, or in cross-examination to impeach the value of his testimony.
So, all questions may be asked in cross-examination which tend to expose the errors, omissions, inconsistencies, exaggerations or improbabilities of the witness's testimony."
Mr. Saha has raised doubts about the authenticity of the documents produced forming Exhibit-'O'. It is submitted that in the affidavit of documents, the plaintiff has disclosed only one of the original Bills of Lading. In the plaint also a copy of only one of the original Bills of Lading was annexed. However, Exhibit - 'C', being a diary lodged by the plaintiff with the Posta Police Station, the plaintiff has stated that the original Bills of Lading and the originals of the documents of shipment alleged to have been returned to the plaintiff by the Allahabad Bank under the cover of its letter dated September 1, 1998 was lost while the plaintiff was shifting its office. The plaintiff has offered no explanation whatsoever as to how or when the original Bills of Lading were once again found or as to why although three original Bills of Lading were found, the original documents of shipment including the original Packing List, the original Commercial Invoice, the original G.R. Form and other shipping documents were never found.
Mr. Saha submits that the copy of Form 32 (Exhibit- A) obtained from the ROC Singapore, Bills of Lading (Exhibits- E and F), copies of the packing list and commercial invoice and Bill of exchange are forged and fabricated. Mr. Saha in this regard has relied upon Question Nos.601-621 in cross-examination of Mr. Chandra Prakash Poddar in relation to Exhibit- A and submits that the said form, in any event, shows that the defendant No.3 became a director of the defendant No.1 only on July 2, 1999 and was not a director of the defendant No.1 in January, 1998 when the consignment was shipped.
Mr. Saha has referred to Question Nos.45-48, 354-360, 378-380, 447- 452 in cross-examination of Mr. Chandra Prakash Poddar in relation to Exhibits-E and F, Question Nos.364-376, 444-445 and 534-554 in cross- examination of Mr. Chandra Prakash Poddar in relation to copies of the packing list and commercial invoice and Question Nos.485-494 in cross- examination of Mr. Chandra Prakash Poddar in relation to Bill of Exchange and submits that the evidence would clearly show that the aforesaid exhibits are forged and fabricated.
Mr. Saha submits that the non-disclosure of the proceedings in the Court of Dubai in which the Loyal Freight and subsequently the Middle East Bank and the defendant No.4 were added, is again a vital omission for which the Court is expected to draw adverse inference. Mr. Saha submits that the plaintiff's witness refused to provide particulars of the suit or to furnish copies of either the plaint filed or the judgement delivered by the Dubai Court. Mr. Saha submits that it may be safely presumed that the Court in Dubai dismissed the plaintiff's suit upon finding that the goods had been duly delivered by the defendants or by the local agent of the defendant No.4 i.e. Loyal Freight. The attempt on the plaintiff's part to file a fresh claim in respect of such goods before this Court as such is clearly mala fide and an abuse of the process of law and of courts. The non-disclosure of the Dubai proceedings is a clear suppression of a very material fact, which must necessarily lead to the inference that the plaintiff could not establish any claim for wrongful delivery by Loyal Freight, the local agent of the defendant No.4.
Mr. Saha was quite critical about the claim of the plaintiff against the defendant no.1 on account of conversion of the goods. Mr. Saha submitted that the plaintiff's claim was a claim in tort and was as such not governed by the stipulations of limitation in either the bill of lading or in the Carriage of Goods by Sea Act is unfounded. It is first submitted that in view of the plaintiff's own case that DXB Knits and in the Middle East Bank wrongfully refused to accept the documents and to make payment in respect of the goods, there can be no question of conversion of the plaintiff's goods by the defendants. The plaintiff's first witness clearly admitted that the buyer had tendered the original Bill of Lading to the Middle East Bank. In view of such admission by the plaintiff that the original of lading had reached DXB Knits, it is only DXB Knits who could have sued for conversion of the goods covered by the bill of lading and not the plaintiff.
In this regard, Mr. Saha has relied upon the following decisions:-
a) Commissioners for the Port of Calcutta Vs. General Trading Corporation Ltd. & Anr. reported at AIR 1964 Cal 290 (para
69)
b) Charles Barber And Ors. Vs. William Meyerstein reported at 1870 LR HL 317 (at 332)
c) (1884) 10 App Cas 74.
Mr. Saha submits that the plaintiff in Paragraph 4 of the plaint has admitted that the bill of lading was issued by the defendant No.1 as the agent of the defendant No.4. The authority and obligation of the defendant No.1 as an agent of the defendant No.4 was limited to shipping the goods of the plaintiff to Dubai, from where the delivery agent of the defendant No.4 at Dubai was to collect the goods and deliver the same to the consignee.
The bill of lading itself would show that Loyal Freight International LLC was the agent of the defendant No.4. At no time was any instruction issued to by the defendant No.1 to the Delivery Agent Loyal Freight International LLC to deliver the goods either with or without the original of the bill of lading.
Mr. Saha submits that Section 230 of the Indian Contract Act, 1872 provides that an agent cannot ordinarily enforce or be bound by a contract entered into on behalf of the principal in the absence of a contract to that effect. The sub-sections to Section 230, however, provide for certain situations in which a contract to the contrary may be presumed. It is material to note that no contact to the contrary has been pleaded by the plaintiff.
While Sub-Section (1) of Section 230 provides that a contract to the contrary shall be presumed to exist "where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad", such presumption can be rebutted by showing that the contract reveals a contrary intent. The presumption is effectively rebutted if the contract itself reveals that the agent did not intend to be personally liable. Mr. Saha in this regard has referred to the King's Bench decision in the case of Miller Gibb & Amp. Co. v. Smith and Tyler Ltd. reported in (1917) 2 KB 141 (CA).
The plaintiff was at all material times well and fully aware that the defendant No.4 was the principal of the defendant No.1. This is clear from the answer given by the plaintiff's 1st witness to Q. 623 in cross examination. In the circumstances, there could be no question of the defendant No.1 being either responsible or liable for the alleged non-delivery of the goods without production of the original bill of lading. Even without pleading a contract to the contrary to bring its case within the exceptions under Section 230 of the Indian Contract Act, in an attempt to get around the bar under Section 230, the plaintiff has sought to allege that the defendant No.4 was a wholly-owned subsidiary of the defendant No.1 and that the defendant Nos.2 and 3 were interested in both the defendant No.1 and the defendant No.4. In view of the fact that the plaintiff clearly knew the connection between the defendant No.1 and the defendant No.4 at the time of making the shipment, and as even with such knowledge it entered into the contract with the defendant No.1 as the agent of the defendant No.4, such allegation is wholly irrelevant and is an attempt to mislead this Hon'ble Court.
The fact that the plaintiff was aware of the relationship between defendant No.1 and the defendant No.4 since the incipient stages of the contract, and the admitted fact that the defendant No.1 signed the Bill of Lading not in its own name, but as an agent of the defendant No.4 effectively rebuts the presumption of a contact to the country as envisaged in Sub- Section (1) of Section 230 of the Indian Contract Act, 1872. Mr. Saha in this connection has relied upon the following decisions:-
a) Midland Overseas v. M.V. "CMBT Tana" and Ors. reported in AIR 1999 Bom 401;
b) Jenkins v. Hutchinson reported in 13 QB 744;
c) Gadd v. Houghton reported in (1876)1 Ex D 357;
d) Deoki Nandan & Sons v. Ram Laq Qulak and Lockwood
Bros. reported in AIR 1923 Lah 296 ( paras 5, 6 and 7);
e) West Bengal Essential Commodities Supply Corporation
Limited v. Korean Foreign Transportation Co. & Anr. reported in AIR 2002 Cal 211;
f) Marine Container Services South (P) Ltd. V. Go Go Garments reported in (1998)3 SCC 247;
g) Vivek Automobiles Ltd. v. Indian Inc. reported in (2009)17 SCC 657;
h) Prem Nath Motors Ltd. v. Anurag Mittal reported at (2009)16 SCC 274.
It is submitted that Sub-Section (3) of Section 230 of the Indian Contract Act has no application as the disclosed principal, being the defendant No.4, could well have been sued by the plaintiff at the time of instituting the suit in November, 2000. It is only subsequently, in the year 2007 that the defendant No.4 has ceased to exist.
In view of the provisions of Section 230 if the Indian Contract Act, the defendant no.1 is clearly not liable under the bill of lading BL No. COK/30313/DXB having issued the same as an agent of a disclosed principal, ie. The defendant no.4. There is no pleading in the plaint that there was any contract to the contrary entered into by and between the plaintiff and the defendant no.1 to make it liable notwithstanding the fact that the defendant no.1 was acting as the agent of a disclosed principal. The plaintiff has accordingly also not led any evidence to prove the same.
Mr. Saha in this regard has relied upon the following decisions:-
a) West Bengal Essential Commodities Supply Corporation Limited v. Korean Foreign Transportation Co. & Anr, reported at AIR 2002 Cal 211;
b) Marine Container Services South (P) Ltd. v. Go Go Garments, reported at (1998) 3 SCC 247;
c) Vivek Automobiles Ltd. v. Indian Inc. reported at (2009) 17 SCC 657;
d) Prem Nath Motors Ltd. vs. Anurag Mittal, reported at (2009) 16 SCC 274.
The Bill of Lading was issued and the freight was accepted by the defendant No.1 clearly as the agent of the defendant No.4 and not in any personal capacity. The question of lifting of corporate veil can arise only when fraud is pleaded and proved. Although there is a vague pleading of fraud in the plaint, no attempt whatsoever has been made by the plaintiff to prove the same. In view of the plaintiff's knowledge of the relationship between the defendant No.1 and the defendant No.4, as is, inter alia, evident from the very names of the said two defendants, there could be no question of any suppression of such fact, or of the corporate veil being lifted or pierced to uncover the same. This is only a bogey raised by the plaintiff in an attempt to deflect the main issue. It is thus submitted that that the plaintiff has no cause of action against the defendant No.1 and the plaint filed in the suit does not disclose any.
Per contra, Mr. Ratnanko Banerjee, the learned Senior Counsel appearing on behalf of the plaintiff has submitted that the objection with regard to the jurisdiction of this Court is misconceived.
The instant suit has not been filed based on the Bill of Lading. The principal cause of action in the instant suit is conversion of the property of the plaintiff being the goods. The defendants have acted in breach of its duties in giving delivery of the plaintiff's goods to the notified party without the original Bill of Lading. As such the cause of action in the plaint is negligence/tortious liability on the part of the defendants, in giving delivery of the plaintiff's goods to the notified party without the original Bill of Lading. The plaintiff is not suing the defendants under the Bill of Lading.
The jurisdictional clause in the Bill of Lading will have no application on the question of jurisdiction because the jurisdiction of this Hon'ble Court is on the basis of the cause of action of the plaintiff which has arisen within the jurisdiction of this Hon'ble Court. Mr. Banerjee has referred to Paragraph 4, 5 and 10 of the Plaint and submits that the said paragraphs would show that this Court has jurisdiction to try and determine the suit. Bill of Lading could have been only handed over to the plaintiff at its place of business at 39, Kali Krishna Tagore Road, Kolkata, within the jurisdiction of this Hon'ble Court.
The plaintiff has suffered financial loss and damages in Kolkata at its office within the jurisdiction of this Hon'ble Court. The cause of action in the suit is also on the ground of conversion of the property of the plaintiff being the goods which were shipped on board the vessel. Since the original Bill of Lading remains with the plaintiff, the defendant No.1 cannot rely on a clause in the Bill of Lading (as he claims to be an agent of defendant No.4) to oust the jurisdiction of this Hon'ble Court. In this tortious claim of conversion, the contractual clause in the Bill of Lading would not be the clause which will govern the jurisdiction, but the jurisdiction of the court will depend on the place where the cause of action arises.
Moreover, freight has been paid by the plaintiff to the defendant No.1 at 39, Kali Krishna Tagore Road, Kolkata within the original jurisdiction of this Hon'ble Court. Freight Certificate was also issued by the defendant No.1, which is Exhibit- I. The defendants have wrongfully failed and neglected to pay to the plaintiff the sum of Rs.37,89,000/- or any portion thereof at the office of the plaintiff at 39, Kali Krishna Tagore Road, Kolkata within the ordinary original civil jurisdiction of this Hon'ble Court. The principal of "debtor seeks creditors" clearly applies in the instant case. As such the defendant being a debtor is obliged to pay the plaintiff its credit the money due and payable to the plaintiff at the plaintiff's place of business which is within the ordinary original civil jurisdiction of this Hon'ble Court.
Thus, it cannot be said that this Hon'ble Court has no jurisdiction to try, determine and adjudicate the instant suit.
On the question of limitation, Mr. Banerjee has submitted that the Bill of Lading being No.COK/30312/DXB was issued by defendant No.1 on 15th January, 1998. The defendant was required to transport the goods from the port of Cochin to Dubai Port by ship. The goods reached Dubai port on 2nd February, 1998.The goods were delivered to DXB Knits LLC, the notified party, by the defendants on 7th/9th March, 1998 without the original Bill of Lading being produced by the notified party.
This fact of delivery of the goods by the defendants to the notified party without production of the original Bill of Lading came to the plaintiff's knowledge in or about August/September, 1998 when plaintiff's banker informed the plaintiff about return of the original Bill of Lading by Middle East Bank, Dubai.
On or about 8th September, 1999 a suit being C. S. No.496 of 1999 was filed by the plaintiff before this Hon'ble Court which was subsequently withdrawn on 7th November, 2000 with a liberty to the plaintiff to file afresh on the self-same cause of action.
The instant suit was filed on 25th November, 2000. The cause of action of the instant suit arose in or about September 1998 upon the plaintiff coming to know of the act of breach of contractual obligations by the defendants and/or guilty of tort of negligence and/or guilty of wrongfully conversion and/or defaulter of the said goods and/or documents of title leading to the said goods have been lost to the plaintiff. As the notified party did not make payment to the Bank, the original Bill of Lading remained in the custody of the Bank. But the notified party took delivery of the goods from the defendants without the original Bill of Lading. Article III of Rule 6 of Indian Carriage of Goods by Sea Act, 1925 is not applicable in the instant case inasmuch as the said Article deals with goods "lost or damaged". The case herein does not relate to goods "lost or damaged". This is a case of tortious liability on account of negligence and act of fraud on behalf of the defendants.
Mr. Banerjee submits that Clauses (f) and (g) of the Standard Trading Conditions as printed on the reverse of the Bill of Lading which deals with "notice of loss or damage" and "time bar" are not applicable. The learned Senior Counsel submits that Clause (f) provides that notice of loss or damage of goods is required to be given at the place of delivery before or at the time of removal of the goods or if the loss or damage not apparent notice should be given within three consecutive days thereafter. Clause (g) deals with "time bar" - Carrier shall be discharged of all liabilities unless suit is brought within 12 months after delivery of the goods or the date when goods should have been delivered.
It is submitted that Clauses (f) and (g) are required to be read together. The provisions of the said clauses apply only in the event there is a loss or damage to the goods. The instant case is one of delivery of goods without the original bills of landing themselves and a case of conversion of the goods and therefore clause (f) and (g) are not applicable. In any event the time limit mentioned in clause (g) of Standard Trading Conditions is hit by Section 28 of the Contract Act, 1872, which says every agreement which limits the time within which any party may enforce his rights under any contract, by usual legal proceedings is void to that extent.
The instant suit has been filed well within the period of limitation of three years from the cause of action. Thus, it cannot be said that the instant suit claiming a money decree is barred by the laws of limitation.
Mr. Banerjee has referred to Paragraphs 23 and 24 of the Plaint and submits that the plaintiff in the said paragraphs had clearly averred and justified that the claim is not barred by limitation. Mr. Banerjee submits that the provisions of Hague Visby Rules mentioned in the Bill of Lading, has no manner of application. Mr. Banerjee has referred to Section 28 of the Contract Act and submits that the said Section clearly recognizes that an agreement which restricts time limit for enforcing a legal right of a party by a usual legal proceeding on expiry of a specific period is void. Accordingly, the time limit of one year as specified in the contract/agreement as per the Hague Visby Rules to file the suit and/or any proceeding is void under Section 28 of the Indian Contract Act. In this regard, the learned Senior Counsel has referred to two decisions of the Delhi High Court in O.M.P. 654/2008- M/s. Indian Oil Corporation Ltd. Vs. M/s. Ktl Mayfair Inc. & Anr. and O.M.P. 233/2009 - Ktl Mayfair Inc Vs. M/s. Indian Oil Corporation Ltd. and 2016 SCC Online Del 4582 {FAO (OS) 614/2010- Indian Oil Corporation Ltd. Vs. KTL Mayfair Inc.).
It is submitted that in any event, the defence of limitation under the Hague Visby Rules is not available to the defendant No.1. The defendant No.1 is neither the owner nor a charterer within definition of "Carrier" under Article 1(a) of the Indian Carriage of Goods by Sea Act, 1925.
Mr. Banerjee submits that Section 4 of the Indian Carriage of Goods by Sea Act, 1925 requires a Bill of Lading, if requires to be governed by the rules set out in the Schedule to the said Act, 1925 shall contain an express statement that the provisions of the said rules shall apply to such Bill of Lading. In the instant case, a Bill of Lading is silent with regard to any such express statement as to application of rules to be included in the Bill of Lading and, accordingly, the provisions of Indian Carriage of Goods by Sea Act, 1925 is not applicable. In this regard, Mr. Banerjee has referred to a decision of the Andhra Pradesh High Court in Far Eastern Steamship Co., Kakinada v. Koika Trading Co. Ltd. & Ors. reported at AIR 1978 AP
433. Mr. Banerjee has referred to Article IV(bis) of the Hague Visby Rules and submits that sub rule 4 clearly states that an agent of the carrier shall not be entitled to avail the provisions of this Article if it is proved that damage resulted from an act or omission of the agent done with intent to cause damage or recklessly and with knowledge that damage would probably result. The said rule reads:-
"4. Nevertheless, a servant or agent of the carrier shall not be entitled to avail himself of the provisions of this Article, if it is proved that the damage resulted from an act or omission of the servant or agent done with intent to cause damage or recklessly and with knowledge that damage would probably result."
As such the defence of limitation under the Hague Visby Rules is also not otherwise available to defendant No1. In the instant case the defendants have acted recklessly in parting with possession of the goods with the Bill of Lading.
Mr. Banerjee has referred to Exhibit-J being a letter dated 13th October, 1998 written by the plaintiff and submits that the said letter specially says that the goods were delivered by the representative of the defendant No.1 at Dubai without any instruction from the plaintiff. A fax message dated 22nd August, 1998 is also attached to the said letter. The said fax message was issued by the Dubai agent of defendant No.4 addressed to the defendant No.1 which says about the illegal action on the part of defendant No.1 to part with possession of the goods without Bill of Lading.
The defence of lack of jurisdiction the same is also not available to the defendant No.1. The defence of the jurisdiction clause mentioned in the Bill of Lading was available only to defendant No.4 being a company incorporated in Singapore.
The written statement though filed by the defendant No.1, Ram Chandra Jadav, the Accounts Officer of the defendant No.1, who has verified and affirmed the written statement on 21st July, 2007, has stated that he has been duly authorized by the defendant Nos.2 to 4 to make and affirm the written statement on behalf of the said defendants. Mr. Banerjee submits that under such circumstances, it has to be presumed that the written statement is filed on behalf of the defendants.
Mr. Banerjee submits that since the defendants have tried to bring out separate identity of each of the defendants which is no more tenable by reason of the agent of the defendant has, in fact, made all communications to the defendant No.1 treating the defendant No.1 as the main person inasmuch as having regard to the fact that the defendant No.4 has ceased to exist which fact has been conveniently suppressed, it is a perfect case to lift the corporate veil and/or pierce the veil of defendant No.1 and 4 to see the real transaction between the parties and to see the persons in control thereof. It is imperative to see that defendant No.4 and defendant No.1 are alter ego of one another. Both defendant Nos.1 and 4 are controlled by defendant Nos.2 and 3.
Mr. Banerjee submits that the defendant Nos.2 and 3 are the natural persons who control the business of defendant No.1 and defendant No.4. The statutory Form 32 being Exhibit-'A' as filed with Registrar of Companies by defendant No.1 showing defendant No.3 as a director of defendant No.1. An Information Slip obtained from Registrar of Companies Singapore being Exhibit - 'B' shows that the defendant No.2 is a director of defendant No.4. There is no contrary evidence on record. It is submitted that from the aforesaid disclosures, it is clear that the defendant Nos.2 and defendant No.3 control the affairs of defendant No.1 and defendant No.4.
The defendant Nos.2 and 3 and/or their family members are the persons in control of the affairs of defendant No.1 and 4. The defendant No.4 was a wholly own subsidiary of defendant No.1. The learned Senior Counsel in this regard has referred to Exhibit 'U' and Exhibit 'W' being Audited Accounts of defendant No.1 for the year ending 31st March, 1999 and 31st March, 2004 respectively. It is submitted that the affairs of defendant No.4 was fully controlled by defendant Nos.1, 2 and 3. The shareholders and directors of defendant Nos.1 and 4 are defendant Nos. 2 and 3 and/or their family members as would appear from the Exhibit 'U' and 'W' respectively.
The defendant No.2 and his brother Azad Parekh were directors of both defendant Nos. 1 and 4. The defendant No.4 was the company registered in Singapore. Plaintiff has obtained information of defendant No.4 from the official website viz. Accounting and Corporate Regulatory Authority, (ACRA), Government of Singapore. It is evident from the Exhibit Y being the information available from the website of Government of Singapore that the status of defendant No.4 is shown as "struck off". The date of such "struck off" was 5th July, 2007. From Exhibit Y it is also evident that the defendant Nos. 2 and 3 were the directors of defendant No.4. The defendant No.4 is the wholly owned subsidiary of defendant No.1. Thus defendant no.1 and 4 were companies owned and controlled by defendant Nos. 2 and 3 and/or their family members. It is, thus, clearly evident that the defendant No.1 is the principal company controlling the affairs of defendant No. 4. Since the year 2007 defendant No.4 does not exist having been struck off by the Registrar of Companies, Government of Singapore and as such the defendant no.4 presently cannot be sued. Accordingly, conditions of Section 230 of the Contract Act would be satisfied and that the suit as against the defendant Nos. 1, 2 and 3 would be maintainable and the defendant No.1 will have the liability for the conversion of goods under the Bill of Lading. Even if the contention of defendant No.1 is correct, the defendant No.4 is the principal, then also by reason of Section 230(3) of the Contract Act as the principal cannot be sued it will be presumed that the contract can be personally enforced against the agent being defendant No.1. In the alternative, this is a case of tort of conversion. It is submitted that Section 233 of the Contract Act is also relevant in this case as the plaintiff has made out a case where the defendant No.1 (assuming the defendant No.1 is an agent) is personally liable, being a person who itself has undertaken the obligation for delivery of the goods. The act of delivery of goods without production of original Bill of Lading amounts to tort of conversion making it personally liable. The defendant No.1 having been entrusted with the goods and having received the freight in respect of the goods. It was under an obligation to ensure that the goods under the Bill of Lading are delivered to the rightful authority. Having failed to fulfill such obligation, they are liable for all claims based on the tort of conversion of the said goods. In paragraph 5 of the plaint, it is specifically averred that the plaintiff has paid the freight to the defendant No.1 at 39, Kali Krishna Tagore Road, Kolkata by Allahabad Bank, Park Street Branch, Kolkata, within the aforesaid jurisdiction.
The further evidence disclosed by the plaintiffs clearly shows that the defendant Nos. 1 to 4 are all acting together. The defendant Nos. 2 and 3 are directors of defendant Nos. 1 and 4. The defendant No.1 is the holding company of defendant No.4. The defendant No.1 has been carrying on business through defendant No.4. Therefore, it can be safely concluded that the defendant No.1 is really principal who was using the arm of defendant No.4 in Singapore to carry on its shipping business. The mere fact that the shipping carrier is shown as defendant No.4 would not affect the liability of defendant Nos. 1, 2 and 3 for the safe keep of the goods under the Bill of Lading and for their delivery under the Bill of Lading.
Mr. Banerjee submits that it is a fit case where the Corporate Veil of defendant No.1 and 4 be lifted in order to ascertain the actual controlling factor between them. The defense taken by the defendants regarding maintainability of the suit as against defendant No.1, 2 and 3 is sham and malafide. The fact that defendant No.4 does not exist, since the year 2007 was never brought to the notice of the Hon'ble Court by defendant No.1.
There will be a failure of justice if the defendant Nos. 1, 2 and 3 are able to escape their liability in a clear case of conversion of the goods entrusted to defendant Nos. 1, 2 and 3. The plaintiff will be left remediless as defendant No.4 cannot be sued, the same being already struck off in 2007. The fact shows that defendant Nos. 1, 2 and 3 after obtaining the goods and permitting the same to be converted are now relying on the erstwhile corporate existence of defendant No.4 to try and avoid liability. As on date of decree, the defendant No.4 also does not exist having been struck off and, therefore, the plaintiff will be without remedy and will not be able to have satisfaction of its claim in a case where the goods have been clearly converted, having been delivered without any rightful authority and without original Bill of Lading. This liability is an absolute liability of defendant No.1.
The freight for the carriage of the goods has been paid to defendant No.1. The title of the goods still remain with the plaintiff because the Bill of Lading which is the document of title is with the plaintiff and therefore the defendant no. 1 and the other defendants are guilty of tort of conversion. Thus, it cannot be said that the instant suit is not maintainable against defendant no.1, 2 and 3.
Mr. Banerjee has relied upon an unreported decision of this Court in the goods of: Kamal Kumar Mitra and in the matter of: Taxation Services Syndicate Pvt. Ltd., GA No.533 of 2008, GA No.3908 of 2007, TS No.88 of 1993 where the concept of piercing the corporate veil was dismissed. Mr. Banerjee has relied upon the following observation made in the said judgment:-
"The concept of a company and the jurisprudence that follows it was alien in the Indian context. The sanctity of the structure attached to a corporate entity in English law may not always be applicable in the Indian context. As much as companies have been set up in India to carry any business venture, the corporate façade has been put up time and again to shield the humans behind it. Corporate jurisprudence is no longer in its initial stage for it to be regarded as a bride for the veil to be removed. Courts are more prone now than even before to disregard the veil and go straight at the controlling mind without stopping to question the propriety or necessity of piercing the veil."
Mr. Banerjee submits that as on date there is no existence of the defendant No.4 and as such the defendant No.4 could not be sued. The plaintiff could be rendered remediless. Moreover, the claim of the plaintiff against the defendant No.1 is on account of conversion as pleaded in Paragraph 9 (b) wrongly typed as 9(d) and Paragraph 15(a) of the plaint. Mr. Banerjee has referred to Question Nos.14,250,251 and 254 of examination of the first witness of the plaintiff and submits that the said evidence would show that the plaintiff has claimed damages on account of wrongful delivery of goods. The pleading as well as the evidence would show the entitlement of the plaintiff for wrongful delivery of goods. It is further submitted that the plaintiff has demonstrated entrustment of the goods to the defendant No.1 and the defendant No.1 as bailee has acted in a manner inconsistent with the rights of the owner of the goods, that is, delivery being affected to the notified party without the original Bill of Lading.
Mr. Banerjee has referred to two English decisions MOTIS EXPORTS LTD. V. DAMPSKIBSSELSKABET AF 1912 reported at 1999 (1) LLR 837 and THE STONE GEMINI reported at 1999 (2) LLR 255 and submits that in both the decisions it has been held that delivery without Bill of Lading is to be treated as case of conversion.
Mr. Banerjee submits that conversion has been defined in CONSOLIDATED COMPANY V. CURTIS & SON reported at 1892 (1) QBD 495 where a person without authority delivers another's goods in a manner adverse to the right of the person really entitled.
In respect of the plaintiff's entitlement to a sum of Rs.37,89,000/- along with interest against the defendants jointly and/or severally, Mr. Banerjee submits that it is clearly mentioned in the Bill of Lading being No.COK/30312/DXB dated 15th January, 1998 being Exhibit-'E' that "Consignee- To order of Middle East Bank, Alrioa Branch, P.O. Box 5547, Dubai -UAE" which in business parlance means "at sight" Bill of Lading. The fact that the Bill of Lading was "at sight" is an admitted position. Mr. Banerjee has referred to question Nos.290, 291, 292 and 293 in the cross- examination of the plaintiff's witness and submits that in answer to said questions the witness has clearly explained that the expression "at sight"
implies that after the concerned goods reaches the site, the buyer first makes the payment and then obtains the Bill of Lading on the basis of which it can get the goods released.
Mr. Banerjee has referred to the letter dated 21st January, 1998 issued by Allahabad Bank, Park Street Branch, Kolkata being Exhibit-'O' in which the bank forwarded the entire set of the original documents to Middle East Bank, Dubai. Mr. Banerjee has referred to Exhibit-'Q' and 'R' being the Invoice and Packing List in respect of the goods and submits that the terms of delivery and payment is "at sight".
Mr. Banerjee has referred to the invoice in respect of the goods in question, namely, Exhibit-'Q' which is same as Exhibit-'S' to show that the said invoice clearly mentions the price of the goods as 48,627 USD. This document has also been relied upon by Exhibit-I is a freight certificate issued by Defendant No. 1. Mr. Banerjee has also referred to a letter dated 24th August, 1998, being Exhibit-'M', issued by Middle East Bank, Dubai, in which the said bank has sought payment of 130 USD on account of handling charges.
Mr. Banerjee submits that he plaintiff has produced the three copies of the original Bill of Leading being No.COK/30312/DXB being stamped as First Original being Exhibit E, Second Original and Third Original both marked collectively as Exhibit F. The value of the goods was USD 48,627. The notified party was required to pay said sum in USD to Middle East Bank, Dubai. As on the date of the filing of the suit in November, 2000, the conversion rate of USD to INR was Rs.46.88 equal to Rs.22,79,633/-. The plaintiff has claimed a sum of Rs.22,12,000/- on account value of goods.
Exhibit -I is the freight certificate for Rs.42,780/- issued by defendant No.1. The said certificate relates to both the Bills of Lading carrying 270 cartoons (221+49). Accordingly, the proportionate freight charge for transportation of 221 cartons covered under the Bill of Leading being No. COK/30312/DXB is Rs.35,016/-. The plaintiff as claimed a sum of Rs.35,000/- on account of freight charge.
The transactions between the parties were commercial and not gratuitous. The plaintiff has not received payment of the goods covered under bill of Lading being No.COK/30312/DXB. The plaintiff has suffered loss and damages and is entitled to compensation from the defendant in view of the defendants acting in breach of contractual obligation and/or guilty of tort of negligence in respect of plaintiff's cargo in question and/or the documents of title relating thereto by handing over the cargo to the notified party without obtaining the original Bill of Lading. The original Bill of Lading remained in the custody of Middle East Bank Dubai. The notified party was required to pay the price of the goods to the Middle East Bank, Dubai and obtain the original Bill of Lading from the bank. It was thereafter, upon production of the original Bill of Lading the notified party was required to take delivery of the goods from the defendants. In the instant case the defendants delivered the goods to the notified party without the original Bill of Lading being produced the notified party. Thus the plaintiff suffered loss for breach of contractual obligations by the defendants.
Mr. Banerjee submits that the defendants are deliberately misconstruing the scope of the suit. The suit as against the defendant No.1 is not on the basis that it had signed the Bill of Lading as the agent of the defendant No.4, but it is also on the basis that he is bound as a principal. The defendant No.1 by reason of its wrongful, illegal and fraudulent representation as well as by reason of his negligence made itself liable to the plaintiff for delivery of the cargo without production of the original Bills of Lading. In this regard, Mr. Banerjee has relied upon Paragraphs 14, 15(a) and 16 of the Plaint. Mr. Banerjee submits that the foundational pleading to sustain its claim against the defendant No.1 has been clearly mentioned in the plaint. Mr. Banerjee submits that the plea taken by the defendant that payment has been received by the plaintiff for the goods which were shipped under the Bill of Lading. The plaintiff has denied receiving any such payment. The burden of proving such fact has to be on the defendant because in law the plaintiff cannot prove the negative. The defendant has not led any evidence and would have to accept the oral evidence of the plaintiff's witness, which is unimpeachable. The plaintiff has denied the fact of payment. Whether the plaintiff has a cause of action against DXB Knits or not, is not relevant here because DXB knits has not received the goods from the plaintiff. The defendants are liable to the plaintiff for conversion of the goods owned by the plaintiff. Property in the goods would still continue to be with the plaintiff as the original Bills of Lading are with the plaintiff. Therefore, dealing with the goods of the plaintiff would amount to conversion. The defendant No.1 has been entrusted with the goods and continues to be liable in tort as bailee of the goods to ensure that the goods are not delivered without production of the original Bills of Lading, which are the documents of title.
Mr. Banerjee refers to Section 230(3) of the Contract Act and submits that the said provision supports the submission made on behalf of the plaintiff that such a liability in the given circumstances is to be imposed on an agent assuming that the defendant No.1 has acted as an agent of the defendant No.4.
Further, the defendant Nos. 1 and 4 are sister concerns and are owned and controlled by the defendant Nos. 2 and 3. Defendant No.4 was the wholly owned subsidiary of defendant No.1. This fact has been proved in evidence and there is no credible cross examination on this issue at all. The defendant has not led any evidence at all.
Mr. Banerjee has referred to a decision of the Hon'ble Supreme Court in Linc International vs. Mandiya National Paper reported at AIR 2005 SC 1417 (Para-8) where the Hon'ble Supreme Court has held that agent would be personally liable for facilitating fraud in the matter of transaction on behalf of the principal. The particulars of fraud are specifically stated in paragraph 16 of the plaint.
Mr. Banerjee relying upon the decision of the English Court in SzeHai Tong Bank Ltd. And Rambler Cycle Co. Ltd. reported at 1959 Appeal Cases 576 and submitted that it is an accepted principle that goods cannot be delivered without original Bills of Lading being handed over.
The defendant no. 1 along with other defendants acting in collusion are guilty of the tort of conversion of the goods of the plaintiff. Therefore, the defendant no.1 is personally liable in tort also for the value of the goods to the plaintiff.
The defence of the defendant is that the plaintiff has received payment from DXB Knits LLC, the Dubai Buyer. There has been no denial to the fact that goods were delivered without production of original Bills of Lading. However, the defendant has failed to lead evidence to prove such defence as the onus of proving such defence (which is a positive fact) would be on the defendant. The plaintiff has denied the fact of receiving the payment from Dubai buyer and, therefore, there cannot be any negative burden on the plaintiff to disprove such fact. It is alleged in the written statement that the plaintiff had received payment from the notified party. The burden of proof is on the defendant to establish such fact. The defendants have not produced any evidence.
Mr. Banerjee concludes by submitting that the plaintiff has been able to establish its claim in the suit and the evidence of the witness of the plaintiff has remained unshaken.
The ship sailed from Cochin with the consignment to Dubai, the Port of Calling. The defendant No.1 after being entrusted with the goods had shipped the goods on the Vessel "Express Jaya". The plaintiff forwarded the original invoice, bill of exchange, packing list copy, bill of lading together with non-negotiable copies through its banker, Allahabad Bank for forwarding the same to the Middle East Bank, the banker of the foreign notified party for collection. The goods reached Dubai. The problem arose thereafter. The plaintiff claims that goods were released to the consignee without production of the original Bills of Lading. The original Bills of Lading along with other documents were returned to Allahabad Bank by the Middle East Bank, Dubai without payment. The local agent of the defendant No.4, Loyal Freight, has stated that goods have been released without the production of the original Bill of Lading. The letters dated 8th September, 1998 and October 13, 1998 being Exhibit- 'H' and 'J' shows that the goods have been delivered to the consignee without the production of the original Bills of Lading. Loyal Freight has blamed Natpar Lines for breach of contract.
In both the letters dated 8th September, 1998 and 13th October, 1998, the plaintiff has referred extensively to the information received from Loyal Freight and held that the defendant Nos.1 and 4 are responsible jointly and severally for delivering the consignment without production of the Bill of Lading. The letter dated 8th September, 1998 refers to a letter dated 22nd September, 1998 received from the defendant No.1 in which the defendant No.1 has taken a plea that unless the plaintiff is able to substantiate its claim with Banker's Certificate relating to non-payment in original, the defendant No.1 would not admit the claim of the plaintiff. The plaintiff in its letter dated 13th October, 1998 had referred to a letter and telephonic conversation with the defendant No.1 with regard to the Bill of Lading in question where the plaintiff had expressed its displeasure in the manner in which consignment was released on the basis of a guarantee furnished by the consignee. It appears from the tenor of the letter dated 13th October, 1998 that the goods were released on the basis of a guarantee given by the consignee which, however, is contrary to the terms of the contract and evoked discontent at the plaintiff's end. The plaintiff did not accept the contention of the defendant that the goods could be released against any guarantee or letter issued by the consignee. In fact in the said letter, the plaintiff has drawn attention to a facsimile message dated 22nd August, 1998 sent by Loyal Freight to the defendant No.1 at its Madras Office with kind attention of Mr. Azad Parekh where Loyal Freight had reiterated that the goods were released without authority and without the production of the Bill of Lading. The letter also refers to a communication made by Loyal Freight to Dubai Chambers of Commerce which reads:-
"In this case Natpar Lines are fully liable for the consequence as their representative has committed the mistake".
The plaintiff has also by that letter forwarded the Original Certificate issued by the Allahabad Bank certifying that payment in respect of captioned Bill of Lading has not been received by the bank till that date and further original documents including Original Bill of Lading has been received by the bank from Middle East Bank unpaid which is in possession of Allahabad Bank as on the date of certification.
The plaintiff has also relied upon a letter dated 17th August, 1998 being Exhibit-'L' in which the plaintiff has referred to a fax dated 8th September, 1998 sent by M/s. Loyal Freight to the defendant No.1, in reply to a query of the defendant No.1 from which it would appear that the Cargo covered under the relevant Bill of Lading was released to M/s. DXB Knits against a delivery order although the consignee is to the order of Middle East Bank, Alriqa Branch, P.O. Box - 5547, Dubai, U.A.E and not M/s. DXB Knits. The plaintiff, in fact, sought information and proof from the defendant Nos.1 and 4 as to when the defendant No.4 has received the Original Bill of Lading duly endorsed by the original consignee in favour of M/s. DXB Knits.
The first witness of the plaintiff has produced the original first, second and third copy of the Bill of Lading being COK/3012/DXB dated January 15, 1998. The said documents were marked as Exhibits-'E' & 'F' respectively without any objection. The first witness has also tendered during his evidence the legal notice dated 8th September, 1998 along with the postal receipts. The witness has also in his evidence relied upon a letter dated 13th October, 1998 signed by Mr. Pradip Kumar Todi, one of the partners of the plaintiff and has deposed that the said fax was sent by the plaintiff to the defendant No.4 on 20th August, 1998. The witness has also identified his signature. Similarly, the said witness has also referred to the letter dated 17th August, 1998 sent to the defendant No.4 with a copy marked each to the defendant No.1 and Loyal Freight. The plaintiff has produced a photocopy of the letter dated 24th August, 1998 issued by the Allahabad Bank certifying that the Allahabad Bank had not received payment. The plaintiff has also disclosed a letter written by Allahabad Bank on 13th October, 1998 stating that the Middle East Bank, Dubai has returned all the documents pertaining to the Bill USD 48627 and the bill amount has remained unpaid and all the documents along with the said bill are lying with the said bank. The objection seems to be that the said letters of Allahabad Bank are photocopies and unless the plaintiff satisfies that in spite of due diligence, the original letters could not be found and/or traced only then the Xerox copy of the said letters could be produced.
The witness has also stated that the defendants have represented to the plaintiff that they had an office in Singapore and also in Kolkata and are operating as shipping agents for Dubai and Middle East countries and they were in a position to transport the consignments at Dubai. The defendants convinced the plaintiff that the shipment would be delivered on time and the delivery of the Bills of Lading would be handed over only after the consignee makes the payment and, thereafter, the goods would be delivered to the consignee. It was on the basis of such assurance that the necessary documents were prepared and sent to Middle East Bank through Allahabad Bank. Middle East Bank was advised to deliver the documents only after the payment was received from the party. The defendants have wrongly delivered the goods to the party without proof of payment the present defendants appear to be in collusion with the consignee and have defrauded the plaintiff. In his cross-examination, he was asked questions with regard to the duty drawback and production of party ledger account as also the balance sheets for the financial years 1998-99 to 2000. The witness has said that he was not aware of the duty drawback and he would find out from the Chartered Account and balance sheets for the financial year 1998-99 to 2000. The suggestion that the payment has been received from the consignment has been denied by the witness. The witness in answer to question as to what steps the plaintiff had taken after it did not receive payment in respect of the goods covering B/L No.30312, has stated that the matter was followed up with the bank as in the normal course it is the banker of the plaintiff who would receive the payment against the shipment and in turn would intimate the plaintiff that the payment has been received. He has further stated that the plaintiff became aware that the DXB Knits had already got the goods released without making any payment against the same upon intimation being received from the Allahabad Bank that B/L No.30312 has been received by the Allahabad Bank from Middle East Bank but no payment has been received against the same. He has further deposed that from the agent of the defendant No.4, namely, Loyal Freight, the plaintiff came to know from the agent of the defendant No.4 in Dubai, Loyal Freight that the buyer had taken delivery of the goods from the shipping line and became confirmed about it when the Bill of Lading was returned to the plaintiff by Allahabad Bank.
The second witness of the plaintiff has deposed that the defendant No.4 is wholly owned subsidiary of the defendant No.1. He has produced the 12th Annual Directors' Report of defendant No.1 with audited accounts for the year ended on 31st March, 1998. The witness has tendered the company report of the defendant No.4 being documents issued by ACRA and the Annual Director's Report and balance sheets of the defendant No.1 as on 31st March, 2004 along with receipt dated 17th June, 2007 and other documents forming part thereof.
The witness has stated that according to the last available audited balance sheets accumulated losses of defendant No.4 exceeded its paid up capital, however, no provision has been made by the management at that stage since it did not consider this to be of a permanent nature. The defendant No.4 owed a sum of Rs.3,90,97,782/- to the defendant No.1. He has further deposed that the defendant No.4 was incorporated on 12th June, 1996 and the last account was made up to 31st March, 1998 and, thereafter, it remained virtually closed. The Company for all practical purposes was closed since 29th May, 2009. Apurva Natvar Parikh, is the director of two companies, namely, Natvar Lines PTE Ltd. appointed on 12th July, 1996 and Natvar Parikh Industries appointed on 3rd January, 1995. Azad Natvar Parikh is another director and he has also a family member of the defendant No.2. The witness has referred to a document issued by ACRA having the same status as ROC in India, ACRA stands for Accounting and Corporate Regulatory Authority. The said authority has issued a unique identity number of defendant No.4 wherefrom all the details were found, Sujan Azad Parikh is the Managing Director of the defendant No.1 and he is a family member of the defendant No.2. They both controlled and managed the defendant No.1 and defendant No.4. The witness has referred to the Director's Report and balance sheets of the defendant No.1 obtained from ROC by paying fees through online.
During his cross-examination, he has explained the manner in which the documents being Exhibits U, V, W were obtained. He has stated that the defendant No.4 is a shipping and forwarding agent as well as the defendant No.1 also carries on the same type of business. The principal activities of the defendant No.4 is that of shipping agencies (freight and freight forwarding, packing and trading services). The defendant No.1 was also involved in the shipping business. The Bill of Lading was signed by the defendant No.1 on behalf of the defendant No.4. The documents disclosed in this proceeding would show that the defendant No.4 is a wholly owned subsidiary of the defendant No.1 and the management of the shareholding are being controlled by the family members of the defendant Nos.2 and 3. The second witness was produced by the plaintiff to establish that the defendant Nos.1 and 4 are for all practical purposes one and the same entity and the defendant No.4 is an alter ego of the defendant No.1.
The defendants although had filed a written statement and affidavit of documents and had the opportunity to adduce evidence in support of its case has chosen not to lead any evidence and has restricted its right only to cross-examine the plaintiff's witnesses.
The defendants in the written statement have raised three principal defences.
Firstly, the question of jurisdiction, secondly, the defendant No.1 is merely an agent of the defendant No.4, the foreign disclosed principal and, hence, the suit is barred under Section 230 of the Indian Contract Act, and, thirdly, the suit is barred by limitation.
The objection to the jurisdiction of this Court is on the basis of the jurisdiction and law clause in the Bills of Lading which reads:-
"Jurisdiction and Law Clause: The contract evidenced by or contained in this bill of lading is governed by the law of Singapore and any claim or disputes arising hereunder or in connection herewith shall be determined by the Courts is Singapore and no other Courts.
All business is transacted only in accordance with the Singapore Freight Forwarder's Association Standard Trading Conditions (1996). Copy shall be furnished at request or may be inspected at our premises."
If the Court on the basis of the evidence arrived at a finding that an independent contract exists between the plaintiff and the defendant No.1 then the objection raised on behalf of the defendants as to jurisdiction and limitation must fail.
If one looks at the Bill of Lading and the printed jurisdiction and law clause in the Bill of Lading, one can easily assume that for all disputes concerning and connected with the said Bill of Lading would be tried and decided at Singapore in terms of the said jurisdictional clause. When the terms are reduced in writing, no amount of oral evidence can be allowed to alter the written terms. This only takes care of the defendant No.4. However, if there is an independent obligation of the defendant No.1 to discharge and there is no such jurisdictional clause then on the basis of the evidence it has to be ascertained if this Court has jurisdiction to receive, try and determine the lis between the plaintiff and the defendant No.1.
The plaintiff has clearly asserted that the plaintiff has entered into the contract with the defendants jointly and severally. The plaintiff has treated the defendant No.1 as the main person entrusted with the goods and responsible for due performance of the contract. The plaintiff has attributed knowledge to the defendants with regard to the delivery of the consignment to the consignee at Dubai only against the production of Bills of Lading. The plaintiff has disclosed documents to show that the defendant No.4 is wholly owned subsidiary of the defendant No.1. The plaintiff has been able to establish that there is no existence of the defendant No.4 after 5th July, 2007. However, the defendant No.4 has misrepresented in various proceedings including in a proceeding before the Delhi High Court in O.M.P. 654/2008- M/s. Indian Oil Corporation Ltd. Vs. M/s. Ktl Mayfair Inc. & Anr. and O.M.P. 233/2009 - Ktl Mayfair Inc Vs. M/s. Indian Oil Corporation Ltd. and 2016 SCC Online Del 4582 {FAO (OS) 614/2010- Indian Oil Corporation Ltd. Vs. KTL Mayfair Inc. that the said company is carrying on business and has relied upon the jurisdictional clause in the agreements entered into with the parties to the said proceedings in order to denude the Indian Courts of its jurisdiction to decide the disputes between the defendant No.4 and the respective claimants. The series of documents disclosing the composition of the defendant No.4 and the pattern of shareholding of the defendant No.1 and the defendant No.4 established beyond any doubt that the defendant No.4 is wholly owned subsidiary of the defendant No.1.
There is another interesting feature in this matter. It is significant to mention that the written statement has been filed by the defendants and not by the defendant No.1 alone. Mr. Ram Chandra Yadav claiming to be the Accounts Officer of Natvar Parikh Industries Ltd. has affirmed the written statement on behalf of the defendants. He has categorically stated in the affidavit that he has been duly authorized by the defendant Nos.2 to 4 to make and affirm the written statement on behalf of the defendants and he would crave leave to produce the original documents mentioned in the written statement at the time of hearing of the suit. The affidavit of documents was affirmed by one Mr. Tarak Datta on 26th April, 2011. He claimed himself to be the Executive of the defendant No.1 and authorized by the defendant Nos.2 and 3 to affirm the said affidavit. It is now obvious that Mr. Datta could not have affirmed the affidavit on behalf of defendant No.4 since the name of the defendant No.4 was struck off on 5th July, 2007. In the affidavit of documents, he has stated that the defendants are in possession of the following documents:-
a) Copy of Bill of Lading No.COK/30312/DXB dated 15th January, 1998.
b) Copy of Bill of Lading No.COK/30313/DXB dated 15th January, 1998.
c) Copy of Shipping Bill No.1166 dated 12th January, 1998 pertaining to Bill of Lading No.COK/30312/DXB dated 15th January, 1998.
d) Copy of Shipping Bill No.1168 dated 12th January, 1998 pertaining to Bill of Lading No.COK/30313/DXB dated 15th January, 1998.
e) Copy of Delivery Order valid till 9th March, 1998.
f) Copy of fax letter dated 20th August, 1998 sent by plaintiff to NPIL.
g) Copy of fax letter dated 19th August, 1998 sent by plaintiff to their C&F Agent M/s. Leslie & Leslie and copy of the same was marked to NPIL.
h) Copy of Form 32 filed with ROC in respect of appointment of Mr. Sujan Azad Parikh from 2nd July, 1999.
In the written statement, the defendants have specifically asserted in Paragraph 5 that the consignee with the knowledge of the plaintiff had taken delivery of the entire container from the delivery agent of the defendant No.4 at Dubai. The said assertion was repeated at Paragraphs 8, 9 and 13 of the written statement. It is the positive assertion of the defendants in the written statement that the plaintiff has received the value of the goods from DXB Knits and has claimed and obtained duty drawback from the Government of India to the extent of Rs.1,28,768 by Cheque No.131669 dated 1st May, 1998.
The defendants, however, did not come forward to lead any evidence in support of their positive assertions in the written statement. It is also significant to mention that the written statement was affirmed on 21st July, 2009 by which time the defendant No.4 ceased to exist which fact has been conveniently suppressed in the written statement. On the basis of the evidence that has now come to light, it has to be assessed whether the plaintiff has discharged the burden of proof and has been able to establish its claim in the suit.
The burden of proof under the common law jurisprudence is ordinarily on the party who asserts the existence of a fact and wants the Court to believe in its existence. The existence of such facts if proved would entitle a plaintiff to write a judgment in its favour. Even in a proceeding where the defendant has failed to enter appearance in the suit, the Court still has discretion to direct a party to prove any fact if required. However in a situation, where the defendant has filed a written statement but subsequently its defence is struck off, the Court would ordinarily permit the defendant to cross-examine the plaintiff's witness for the limited purpose of demolishing the plaint case by demonstrating that the plaintiff has failed to prove its case on the basis of its own pleadings and evidence.
The right of a party to cross-examine in such circumstances has been considered in Debendra Nath Dutt Vs. Sm. Satyabala Dasi & Ors. reported at AIR 1950 Cal 217.
In Debendra Nath Dutt (supra) a Division Bench of our Court was considering the right of a party who has not entered appearance in the suit to cross-examine the plaintiff during the hearing of the undefended suit. Their Lordships observed:-
"Chapter 8 Rule 6 of our Rules provides that if such appearance is not entered "the suit is liable to be heard ex parte", while Ch. 9 Rule 2 of our Rules provides that no written statement will be allowed to be filed if no appearance has been entered. Thus then there are two consequences of not entering appearance under the Rules. One is that the Suit is liable to be heard ex parte and the other is that no written statement can be filed. In that context, I am not inclined to impose more punishment than those two so explicitly stated by the Rules. Therefore I am of the opinion that a party subject to these handicaps imposed by the Rules can still appear under the Civil Procedure Code when the suit is called on for hearing from the undefended list, not only to cross- examine the witnesses of the plaintiff and demolish in such manner the plaintiff's case on evidence that the Court will not pass any decree in the plaintiff's favour but also to make such arguments and submissions on law and on such evidence as the plaintiff may have brought to the Court. These are, in my opinion, valuable rights under the Code which are not taken away by any Rules of the original side.
I have not been able to persuade myself to take the view that a suit can only be defended by filing a written statement or by "entering appearance" under the Rules. In my opinion filing of written statement is not the only way of defending a suit. A defendant in my judgment may ably and successfully defend a suit against him by cross- examination and arguments. The confusion that should be avoided in this context is that the expression "entering of appearance" under the original side Rules is not co-extensive in its signification and import with the word "appears" or "appearance" of Order 9 Civil P. C. Rules of the original side do not say that a defendant who has not "entered appearance" cannot in any way "defend" the suit. They punish default of entering appearance only in two ways that I have mentioned, and in no other.
In Modula India v. Kamakshya Singh Deo reported at AIR 1989 SC 162, the view of Debendra Nath Dutt (supra) was affirmed. It is stated:-
"We agree that full effect should be given to the words that defence against ejectment is struck off. But does this really deprive the defendant tenant of further participation in the case in any manner? While it is true that, in a broad sense, the right of defence takes in, within its canvass, all aspects including the demolition of the plaintiff's case by the cross-examination of his witnesses, it would be equally correct to say that the cross-examination of the plaintiff's witnesses really constitutes a finishing touch which completes the plaintiff's case. It is a well established proposition that no oral testimony can be considered satisfactory or valid unless it is tested by cross-examination. The mere statement of the plaintiff's witnesses cannot constitute the plaintiff's evidence in the case unless and until it is tested by cross- examination. The right of the defence to cross-examine the plaintiff's witnesses can, therefore, be looked upon not as a part of its own strategy of defence but rather as a requirement without which the plaintiff's evidence cannot be acted upon. Looked at from this point of view it should be possible to take the view that, though the defence of the tenant has been struck out, there is nothing in law to preclude him from demonstrating to the court that the plaintiff's witnesses are not speaking the truth or that the evidence put forward by the plaintiff is not sufficient to fulfil the terms of the statute.
To us it appears that the basic principle that where a plaintiff comes to the court he must prove his case should not be whittled down even in a case where no defendant appears. It will at once be clear that to say that the Court can only do this by looking the plaintiff's evidence and pleadings supplemented by such questions as the court may consider necessary and to completely eliminate any type of assistance from the defendant in this task will place the court under a great handicap in discovering the truth or otherwise of the plaintiff's statements. For after all, the court on its own motion, can do very little to ascertain the truth or otherwise of the plaintiff's averments and it is only the opposite party that will be more familiar with the detailed facts of a particular case and that can assist the court in pointing out defects, weaknesses, errors and inconsistencies of the plaintiff's case.
We, therefore, think that the defendant should be allowed his right of cross-examination and arguments. But we are equally clear that this right should be subject to certain important safeguards. The first of these is that the defendant cannot be allowed to lead his own evidence. None of the observations or decisions cited have gone to the extent of suggesting that, in spite of the fact that the defence has been struck off, the defendant can adduce evidence of his own or try to substantiate his own case.
Secondly, there is force in the apprehension that if one permits cross-examination of the plaintiff's witnesses by the defendant whose defence is struck off, procedural chaos may result unless great care is exercised and that it may be very difficult to keep the cross- examination within the limits of the principles discussed earlier. Under the guise of cross-examination and purported demolition of the plaintiff's case, the defendant may attempt to put forward pleas of his own. To perceive quickly the difference between questions put out to elicit a reply from the plaintiff which may derogate from his own case and questions put out to substantiate pleas in defence which the defendant may have in mind and to restrict the cross-examination to its limits will be not easy task. We think, however, that this is a difficulty of procedure, rather than substance. As pointed out by Ramendra Mohan Dutta, J. this is a matter to be sorted out in practical application rather than by laying down a hard and fast rule of exclusion.
A third safeguard which we would like to impose is based on the observations of this court in Sangram Singh's case (AIR 1955 SC 425). As pointed out therein, the essence of the matter in all such cases is that the latitude that may be extended by the court to the defendant in spite of his not having filed a written statement, should not cause prejudice to the plaintiff. Where the defendant does not file a written statement or where he does not appear to contest the case the plaintiff proceeds on the basis that there is no real opposition and contents himself by letting in just enough evidence to establish a prima facie case. Therefore, the court should ensure that by permitting the defendant at a later stage either to cross-examine the witnesses or to participate in the proceeding the plaintiff is not taken by surprise or gravely prejudiced. This difficulty however can be easily overcome in practice, because there is a wide discretion with the court and it is always open to the court, where it believes that the plaintiff has been misled, to exercise its discretion to shut out cross-examination or to regulate it in such manner as to avoid any real prejudice to the interests of the plaintiff."
The plaintiff has to prove its claim. The success of the plaintiff is not dependent upon the weakness of the defence. It is because of this, the Court is required to assess irrespective of the defendant's case, the merit of the case of the plaintiff.
"Proof", which is the effect of evidence led, is defined by the provisions of S.3 of the Evidence Act. The effect of evidence has to be distinguished from the duty or burden of showing to the court what conclusions it should reach. This duty is called the "onus probandi", which is placed upon one of the parties in accordance with appropriate provisions of law applicable to various situations; but, the effect of evidence led is a matter of inference or a conclusion to be arrived at by the court.
When a party adduces his evidence in proof of the fact in issue, then it has to be seen what the other side has to say on the matter which is called shifting of the burden of proof. However, the person on whose behalf the Judge wishes to hear evidence should offer none but content himself with giving his own observations and criticisms on the evidence already given by his opponent it will then be open to the Court to give judgment to either party. A presumption of law is an inference which the Court must draw as a matter of law, and is conclusive, unless the party against whom the presumption arises gives sufficient to rebut it.
In Kundan Lal Rallaram v. Custodian, Evacuee Property, reported at AIR 1961 SC 1316 the Apex Court has succinctly explained the phrase "burden of proof" in the following words:-
"The phrase "burden of proof" has two meanings - one, the burden of proof as a matter of law and pleading and the other, the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence i.e. oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact."
Presumptions of law differ from presumptions of fact in the following respects:-
(1) Presumptions of law derive their force from law, while presumptions of fact derive their force from common sense and logic. Though many of the former have intrinsic logical weight, being indeed derived from the latter, yet there are others which have none. Thus, after a person has been absent for six years 364 days there can be no presumption of death, yet the addition of one more day's absence will enable the presumption to be applied.
(2) A presumption of law applies to a class the conditions of which are fixed and uniform; a presumption of fact applies to individual cases, the conditions of which are inconstant and fluctuating.
Thus, the presumption of death arises whenever seven years' unexplained absence is proved; but when it is necessary to establish the time of death more precisely the question must be decided on the evidence adduced in each specific case.
(3) Presumptions of law are drawn by the court, and in the absence of opposing evidence are conclusive for the party in whose favour they operate; presumptions of fact are drawn by the jury, who may disregard them, however cogent. In practice, however, these distinctions are by no means easy to apply; and the line of demarcation, even when visible, is often overlooked. A presumption which is regarded by some judges and text-writers as one of law is treated by others as one of fact, or of missed law and fact; indeed, the same judges have not frequently placed the same presumption in different categories at different times." (Phipson on Evidence, 4th Edition) The phrase, burden of proof, has three meanings:-
(i) the persuasive burden, the burden of proof as a
matter of law and pleading the burden of
establishing a case, whether by preponderance of
evidence or beyond a reasonable doubt.
(ii) the evidential burden, the burden of proof in the
sense of adducing evidence.
(iii) the burden of establishing the admissibility of evidence. (See Phipson on Evidence, 4th Edition) Section 101 of the Act lays down the rule that "whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exits." In other words it is the same as saying that the burden of proof lies on the party who substantially asserts the affirmative of the issue and not on the party who denies it. The burden of proof in any particular case depends on the circumstances in which the claim arises. In general the rule which applies is Ei qui affirmat non ei qui negat incumbit probation. It is an ancient rule founded on considerations of good sense and should not be departed from without strong reasons," per Lord Maugham in Constantine Line v. Imperial Smelting Corporation (1942 A.C. 154). This rule is adopted principally because it is but just that he who invokes the aid of the law should be the first to prove his case; and partly because, in the nature of things, a negative is more difficult to establish than an affirmative. This is simply a rule of convenience which in the Roman Law is thus expressed, Ei incumbit probatio, qui dicit, non qui negat and is adopted in practice, not because it is impossible to prove a negative assertion but because the negative does not admit of the direct and simple proof which the affirmative is capable of.
The elementary rule in Section 101 is inflexible. In terms of Section 101, Evidence Act, 1872, ordinarily, the burden of proving the fact rests on the party who substantially asserts the affirmative of the issue and not on the party who denies it. The said rule may not be universal in its application and there may be exception thereto.
Under the Evidence Act there is an essential distinction between the phrase "burden of proof" as a matter of law and pleading and as a matter of adducing evidence. Under S.101 of the Evidence Act, the burden in the former sense is upon the party who comes to court to get a decision on the existence of certain facts which he asserts. That burden is constant throughout the trial; but the burden to prove in the sense of adducing evidence shifts from time to time having regard to the evidence adduced by one party or the other or the presumption of fact or law raised in favour of one or the other. (K.S. Nanji & Co. v. Jatashankar Dossa, AIR 1961 SC 1474, 1478: (1962) 1 SCR 492) There is an essential distinction between burden of proof and onus of proof. Burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. (A. Raghavamma v. A. Chenchamma, AIR 1964 SC 136: (1964) 2 SCR 933).
The suit will fail if both the parties do not adduce any evidence, in view of Section 102 of the Evidence Act. In terms of Section 102 the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same.
Burden of proof would mean that a party has to prove an allegation before he is entitled to a judgment in his favour. The one or the other of the contending parties has to introduce evidence on a contested issue. The question of onus is material only where the party on which it is placed would eventually lose if he failed to discharge the same. Where, however, parties joined the issue, led evidence, such evidence can be weighed in order to determine the issue. The question of burden becomes academic. (Bala Shankar Maha Shanker Bhattjee v. Charity Commr., Gujarat State, 1995 Supp (1) SCC 485: AIR 1995 SC 167) The tests that can conveniently be adopted for ascertaining on whom the burden of proof lies are first, to consider which party would succeed if no evidence were given on either side, and secondly to examine what would be the effect of striking out of the record the allegations to be proved; bearing in mind that the burden of proof must be on the party that would fail, if either of these steps were pursued.
Bowen, L.J., in the well-known case of Abrath v. N. E. Railway Co., 11 Q.B.D. 440 at 456, lays down the canons of this subject as follows:-
"Whenever litigation exists, somebody must go on with it; the plaintiff is the first to begin; if he does nothing he fails; if he makes a prima facie case, and nothing is done to answer it, the defendant fails. The test, therefore, as to the burden of proof or onus of proof, whichever term is used, is simply this; to ask oneself which party will be successful if no evidence is given, or if no more evidence is given than has been given at a particular point of the case, for it is obvious that, as the controversy involved in the litigation travels on, the parties from moment to moment may reach points at which the onus of proof shifts, and at which the tribunal will have to say that, if the case stops there, it must be decided in a particular manner. The test being such as I have stated, it is not a burden that goes on forever resting on the shoulders of the person upon whom it is first cast. As soon as he brings evidence which, until it is answered, rebuts the evidence against which he is contending, then the balance descends on the other side, and the burden rolls over until again there is evidence which once more turns the scale. That being so, the question of onus of proof is only a rule for deciding on whom the obligation of going further, if he wishes to win, rests. It is not a rule to enable the jury to decide on the value of conflicting evidence. So soon as a conflict of evidence arises it ceases to be a question of onus of proof."
A distinction exists between a burden of proof and proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is, which party is to begin. Burden of proof is used in three ways: (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter-evidence; and (iii) an indiscriminate use in which it may mean either or both of the others. (Anil Rishi v. Gurbaksh Singh, (2006) 5 SCC 558: AIR 2006 SC 1971 : (2006) 6 Mah LJ 280) To the general rule, i.e. that the burden of proof is on the person who substantially asserts the affirmative of the issue there are two exceptions. (1) When any fact is specially within the knowledge of a party, the burden of proving that fact is upon that party, (2) where there is a rebuttable presumptions of law in favour of an affirmative allegation, the party who supports the negative must call witnesses to rebut the presumption.
Mr. Saha has strenuously argued that the plaintiff has not received payment and the defendant no.1 is responsible for the performance of the contract. The further argument appears to be that the eight months delay in pursuing the claim is not an accepted human behaviour particularly when the plaintiff is engaged in commercial activities and the onus is on the plaintiff to clear such doubts. Mr. Saha refers to Smithwick v. The National Coal Board reported at 1950(2) KB 335 and submits that it has been the view of Lord Justice Denning that even if in a situation like this the defendant calls no evidence the burden to dispel such doubts always rests with the plaintiff.
In Smithwick (supra) the issue that came up for consideration is whether there has been statutory violation of Section 55 of Coal Mines Act, 1911. The said section speaks of dangerous part of machinery which requires exposed and dangerous parts of machinery used in or about a mine to be kept securely fenced. Is it the responsibility of the occupier to guard against all conducts which he can reasonably foresee. On the issue whether lack of fencing of an expose and dangerous part of machinery was shown by the plaintiff to be the cause of a workman's death it was observed:
"It is not accurate in these cases to speak of the burden being on the occupier to disprove causation. The legal burden is always on the plaintiff to prove that the lack of fencing caused the death; but when the plaintiff proves facts from which causation may legitimately be inferred, the occupier may well think it wise to call evidence in the hope of inducing the court not to draw the inference. In that sense there may be a provisional burden on the occupier raised by the state of the evidence, but that is all: it is not a legal burden, and, even if the occupier calls no evidence, at the end of the case the court must, in any event, make up its mind whether or not to draw the inference."
There cannot be any dispute with the proposition that the legal burden is always on the plaintiff and irrespective of any evidence being adduced by the defendants the court is required to make up its mind whether or not to draw any inference which in the instant case Mr. Saha perhaps would emphasise the non-production of ledger accounts and the balance sheets for the relevant years in relation to the overseas consignee. For the reasons I have indicated above and also discussed later I am unable to draw any adverse inference for non-production of such documents.
The defendants have made two positive assertions in the written statement. Firstly, that the goods have been delivered to the consignee with the consent of the plaintiff and the plaintiff, in fact, has taken the benefit of the duty drawback on the basis of such overseas export. The second assertion is that the defendant No.4 is a foreign disclosed principal and, accordingly, the defendant No.1 has no obligation to discharge other than an agent in view of Section 230 of the Indian Contract Act. The first assertion the defendant has to prove at the trial. The plaintiff has disclosed documents including the Allahabad Bank Certificate certifying that the Bill of Lading and documents have been returned by the Middle East Bank unpaid. The plaintiff has adduced evidence by bringing on record those documents showing that payments have not been received. The contents of the letters exchanged by and between the parties would show that the defendant No.1 has not denied delivery of the cargo without production of the Bill of Lading. Even in the written statement, the defendants have admitted that the goods were released without production of the Bill of Lading. The three original Bills of Lading are all exhibited without any objection. The three original Bills of Lading received by the plaintiff from the Allahabad Bank have been exhibited by the plaintiff without any objection. The contents of the letters would show that the defendant No.1 had contended that the goods released against a guarantee alleged to have been issued by the consignee. The defendants had also taken a stand that unless the plaintiff is able to demonstrate that the plaintiff has suffered any loss by reason of delivery being effected without the production of the Original Bill of Lading the defendant No.1 could not be held responsible. The plaintiff in the plaint as well as during evidence has specifically asserted that the defendant No.1 had accepted its liability provided the plaintiff is in a position to demonstrate that the consideration amount has not been received from the overseas buyer. The plaintiff in the letters disclosed in this proceeding and marked as exhibits without any objection have categorically stated that the original certificate issued by the Allahabad Bank certifying that the documents have been received without payment has been forwarded to the defendant No.1 so as to enable the defendant No.1 to release payment. The defendant No.1 has not disclosed any documents to show that there has been any contemporaneous denial on the part of the defendants or any of them that such documents were never received or that the defendant No.1 never agreed to compensate the plaintiff for the loss and damage suffered by reason of release of the cargo without the production of the original Bill of Lading. In the written statement, the defendants have contended that in order to help the plaintiff, the defendant No.1 had initiated some discussion and made correspondence with Loyal Freight which is not relevant nor does it create any liability to be discharged by the defendant no.1.
The very fact that the defendant No.1 had agreed to compensate the plaintiff provided the plaintiff is able to produce Banker's Certificate to the effect that the bills have remained unpaid clearly shows that the defendant No.1 has taken an obligation upon itself and agreed to be bound by the contract which postulates delivery only against production of the original Bill of Lading. Even if it is assumed that the defendant No.1 could not be sued by reason of Section 230(3) of the Indian Contract Act, Section 233 of the Indian Contract Act comes to the aid of the plaintiff in establishing its right against the defendant No.1 independently for the breach of contract. Moreover, the defendant No.4 is no more in existence as is evident from the documents disclosed in this proceeding. The defendant No.4 is defunct.
The plaintiff in Paragraph 15(a)(v) has asserted that the defendant No.1 in reply to the letter of the plaintiff dated 17th August, 1998 informed the plaintiff by its letter dated 22nd August, 1998 that the Singapore Office of the defendant No.1 has received the said letter of the plaintiff and that unless the plaintiff substantiated any monetary loss in the transaction by production of relevant Banker's Certificates, the claim of the plaintiff on the defendant No.1 would not be a valid one. The defendant No.1 further informed the plaintiff that it would contact its agent at Dubai to find out the actual details of the case. The defendants in the written statement in Paragraph 26 has not specifically denied the statement made in Paragraph 15(a)(v). The defendant acknowledged the receipt of the said letter. The defendants contended that the defendant No.1 in reply to the said letter informing that the Dubai Agent of the defendant No.4 had issued the delivery orders on the basis of a guarantee given by the notified party which is well within the duties of the carrier. The defendants pointed out that the claim on account of delivery of the consignment without collection of the original Bill of Lading was made nearly eight months after the deemed delivery had taken place and in the claim letter, the plaintiff has not stated clearly about the non-receipt of payment for the plaintiff's goods. The defendant contended that the claim made against the defendant No.1 was not valid. The defendants, however, did not disclose the letter dated 22nd August, 1998. The defendants in Paragraph 30 made an evasive denial of the acceptance of the original Banker's Certificate and tried to create a cloud with regard to furnishing of the Banker's Certificate on a complete misconstruction of the letters dated 8th September, 1998 and 13th October, 1998 respectively. The plaintiff in the letter dated 8th September, 1998 has forwarded a photocopy of the Banker's Certificate whereas on 13th October, 1998 the original certificate certifying that payment of the captioned Bill of Lading has not been received till date was forwarded to the defendant. The letter dated 13th October, 1998 was sent by fax. The said letters were marked as exhibits without objection. It is the specific case of the plaintiff in the letters exhibited in this proceeding that defendant No.1 had agreed to compensate the plaintiff provided the plaintiff is in a position to substantiate that the Bills have remained unpaid. On the basis of the evidence on record, the plaintiff has been able to substantiate its claim that the bills have remained unpaid. Once the original Bills of Lading were returned by Middle East Bank to Allahabad Bank, a strong presumption arises that the bills have not been paid. The Bills of Lading is the document of title to the goods. The defendants admitted that the goods were delivered without the production of the Original Bill of Lading. The defendants were in custody of the goods. The circumstances under which the goods were released are for the defendants to explain. The defendants although had stated that the goods were delivered with the consent of the plaintiff and the plaintiff had claimed duty drawback but the defendants have failed to adduce any evidence in this regard. The onus to prove these positive assertions are on the defendants.
Mr. Saha has laid much emphasis on the aspect of non-production of the ledger accounts for the relevant years and the balance sheet of the plaintiff. Mr. Saha has argued that the said documents if produced, would show that the plaintiff has received payments in respect of the captioned bill. Mr. Saha was critical about the delay on the part of the plaintiff to enquire about the non-payment of the bills which is almost eight months after the goods were dispatched as the common human experience would show that an unpaid vendor would not wait for so long when it had already received information about the delivery of the goods. The presumption, according to Mr. Saha, should be that the vendor has received payment from the seller and precisely for that did not enquire into the payment for almost eight months. It was in such conspectus, Mr. Saha has relied upon Sections 16 and 114(g) of the Evidence Act.
Before any adverse presumption can be drawn against a party, the Court has to arrive at a finding that the withholding of such evidence has been made purposely since the disclosure of such documents may jeopardize the claim of a party. The Court has also to see whether such documents are relevant and necessary for the trial and could have been the best evidence to decide the issue. If the documents are not relevant, withholding of such documents or non-production of such documents would not make any difference.
In Tomaso Bruno (supra) relied upon by the defendants relates to an unnatural death of the victim leading to the conviction of the appellant u/s. 302 read with Section 34 of the Indian Penal Code.
Although the prosecution was in possession of CCTV footage and call records and CCTV footage would have been the best evidence to prove whether the accused remained inside the room and whether or not they have gone out and the accused were responsible for the commission of the crime, the prosecution did not produce such evidence. CCTV footage was held to be a crucial piece of evidence and in view of failure to produce the best evidence the prosecution failed. The Apex Court observed:-
"27. .....Drawing of presumption under Section 114 Illustration (g) of the Evidence Act depends upon the nature of fact required to be proved and its importance in the controversy, the usual mode of proving it; the nature, quality and cogency of the evidence which has not been produced and its accessibility to the party concerned, all of which have to be taken into account. It is only when all these matters are duly considered that an adverse inference can be drawn against the party."
In the instant case, the plaintiff has discharged the burden of non- payment by production of the original Bill of Lading and the Banker's Certificate certifying non-payment. The ledger accounts for the relevant years are neither relevant nor necessary to prove the claim of the plaintiff. The very fact that the original Bills of Lading were returned to the Allahabad Bank by the Middle East Bank itself raises a strong presumption that payment has not been made. All the documents along with original copies of Bills of Lading were returned to Allahabad Bank by Middle East Bank. The defendants did not dispute that goods were delivered without production of the original Bills of Lading. The defendants, however, contended that the goods were released with the consent of the plaintiff. The onus shifts on the defendants to prove this fact. Once the defendants are able to establish that the goods are released to the consignee with the consent of the plaintiff and the plaintiff has claimed a duty drawback of such exports, the plaintiff could have been asked to produce the documents as put forth to the witnesses of the plaintiff.
Commissioners for the Port of Calcutta (supra), Charles Barber (supra) and (1884) 10 APP Cas 74 are all cited for the proposition that the Bill of Lading remains in force so long as the complete delivery and possession has not been given to some person having the right to such delivery and possession. The said decisions are not applicable in the instant case as the plaintiff at the trial able to establish that the defendant No.1 is equally responsible for delivery of the goods to the consignee against the production of the original Bill of Lading and thereby has caused loss and damage to the plaintiff. The suit is not for recovery of price of goods sold and delivered. Bill of Lading is a document of title. The Bill of Lading has been returned to the plaintiff and the plaintiff is now in possession of the same. The goods have not been returned to the plaintiff. The bills were the security for payment. The documents were handed over to the defendants on the basis that until acceptance of the documents which is possible only after payment is made they were to retain their character as security for moneys to be paid by the overseas consignee.
The first witness of the plaintiff during cross-examination has stated that the caption bill of lading namely the BL No.30313 was "At sight bill of lading". The witness explains the expression 'at sight' by stating that said explanation implies that after the concerned goods reached at sight the buyer first makes the payment and then obtains the bill of lading on the basis of which it can get the goods released. It is the obligation of the importer, first make the payment and thereafter obtain the bill of lading so that it can get the goods released on the basis of such bill of lading. It is significant to mention that the payment in respect of the other bill of lading namely COK/30313/DXB has been received by the plaintiff. The original bill of lading in respect of the said consignment has not been returned to the plaintiff. The defendant has not been able to establish that the goods were released in respect of the other consignment without the production of the original bill of lading. In absence of such evidence and failure on the part of the defendant to establish that the goods covered by the bill of lading COK/30312/DXB were released with the consent of the plaintiff and the plaintiff has claimed duty drawback the defendants cannot escape their liability on account of conversion and liable for loss and damage suffered by the plaintiff.
The defendants were under an obligation not to part with the goods without production of the original Bills of Lading. The plaintiff sues the defendant for this breach. The plaintiff has also specifically alleged conversion of goods. Conversion has been pleaded in the alternative on the basis of a plea that the original Bills of Lading have been returned by the Middle East Bank to the banker of the plaintiff without remittance of fund. The plaintiff claimed that the defendants jointly and severally were under the contract is obliged to deliver goods to the consignee only on the production of the original Bills of Lading which is possible only if the consignee deposited the entire consideration amount with the Middle East Bank and thereby release the said documents from its banker so as to enable the consignee to present the original Bills of Lading to the defendants for release of the goods covered under the Bills of Lading. The very fact that the original Bill of Lading have been returned to the banker of the plaintiff without payment and failure on the part of the defendants to return the goods or account for the goods, the defendants are guilty of conversion.
Any Act which is an interference with the dominion of the true owners of goods is a conversion. To constitute this tort there must be some act of the defendant repudiating the owner's right, or some exercise of dominion inconsistent with the right, the tort is committed where the defendant wrongfully asserts ownership or control of the goods in a manner inconsistent with the ownership or right of control of the plaintiff. Anyone who under of contract of sale hands over property in a manner adverse to the right of the person really entitled is guilty of conversion.
Conversion sometimes referred to as "trover" essentially means unauthorized dealing with the claims chattel so as to question or deny his title to it. Conversion can be of various kinds, the judicial authorities are unanimous that it is not possible to categorize exhaustively all modes of conversion. L.J. Bramwell in Hiort v. L & NWR (1879) 4 Ex.D.188 at 194 has confessed when he said: "I have frequently stated that I never did understand with precision what was a conversion". Lord Nicholls in Kuwait Airways Corp v. Iraqi Airways Co (Nos. 4 & 5) [2002] UKHL 19; [2002] 2 A.C. 883 at [39] echoed the same feeling when said: "Conversion of goods can occur in so many different circumstances that framing a precise definition of universal application is well nigh impossible." Nevertheless, the principal ways in which a conversion may take place have been pithily summarized in Clerk & Lindsell on Torts, 21st Edition, under the following headings:-
(a) when property is wrongfully taken or received by someone not entitled to do so;
(b) when it is wrongfully parted with;
(c) when it is lost by a bailee in breach of his duty to the bailor;
(d) when it is wrongfully sold, even without delivery, so as to pass good title to the buyer;
(e) when it is wrongfully retained;
(f) when it is wrongfully misused or destroyed; and
(g) when the defendant, without physically interfering with it, wrongfully denies access to it to the claimant.
The Act, however, cannot be "wrongful" for these purposes if done with the actual permission of the owner.
Intention to exercise dominion over the goods is an essential element of conversion. Anyone who deals with the goods in a manner inconsistent with the right of the true owner is prima facie guilty of conversion, provided there is an intention on the part of the person so dealing with them to negative the right of the true owner or to assert a right inconsistent therewith. A person who without authority actually delivers another's goods to a third party by way of sale or gift or otherwise in a manner adverse to the right of the person really entitled, is treated differently and is presumptively guilty of a conversion. (Martindale v. Smith (1841) 1 Q.B. 389) In Mortis Exports Ltd. (supra) Justice Tamberlin by dealing with plaintiff's claim for damages for conversion observed paragraph 27:
"27. Conversion has been described as an international exercise of control over goods which so seriously interferes with the right of another to control those goods that the person so acting may be required to pay its full value: see Fleming, The Law of Torts, 9th ed., 1998 at pp.60 ff. The test requires an intention to deal with the goods and to exercise dominion over them on behalf of someone other than the owner. It is not necessary that the person who converts the goods should be aware that there is interference with the rights of another. The emphasis is rather on an intentional act which has the effect of interfering with the rights of others. In order to succeed in conversion the plaintiff must be able to show an entitlement to possession or delivery of the goods as at the time of conversion."
A misdelivery by bailee may also amount to conversion. It is a duty of a bailee, such as a carrier or warehouseman, to deliver the goods with which he is entrusted to or to the order of his bailor. To deliver them to anyone else is prima facie a conversion. (See Paragraph 17-19 of Clerk & Lindsell on Torts, 21st Edition) The plaintiff is entitled to make alternative pleadings in the plaint. The person may rely upon one set of facts, if he can succeed in proving them, and he may rely upon another set of facts if he can succeed in proving them: and it appears to me to be far too strict a construction of this Order to say that he must make up his mind on which particular line he will put his case, when perhaps he is very much in the dark. "as observed in Re Morgan, Owen v. Morgan (1887) 35 Ch D 492 and Dhanpal Chettiar & Ors. vs. Govindaraja Chetty & Ors, reported at AIR 1961 Mad 262. It has been the consistent views of all courts that the court cannot go beyond the pleadings of the parties. The parties are required to state material facts and make proper pleadings and establish such facts by adducing evidence. It is axiomatic that as a rule relief not founded on the pleadings should not be granted. It is also a settled legal proposition that no party should be permitted to travel beyond its pleadings and the parties are bound to state all necessary and material facts in support of the case put forward by them. This is required for a fair trial and ensure that each side is fully alive to the questions that are likely to be raised and they may have an opportunity of placing the relevant evidence before the court for its consideration. The issues arise only when a material proposition of fact or law is affirmed by one party and denied by the other party. The plaintiff may rely upon several different rights which are in the alternative, although they may be inconsistent (See. Philipps v. Philipps (1878) 4 QBD 127) but then "as to each of those he ought to set out the facts upon which he would have to rely as facts to maintain that right. (See Firm Srinivas Ram Kumar v. Mahabir Prasad reported at AIR 1951 SC 177).
In the instant case as observed the plaintiff has relied upon several causes of action and made necessary pleadings in support of its claim for damages on account of conversion and had throughout the trial maintained that apparent is not the real state of things in view of the fact that the defendant nos.1 and 4 are one and the same carrying on same business and had jointly and severally made themselves liable for performance of the contract. The burden of proof in this regard has been ably discharged by the plaintiff. The plaintiff is successful in establish loss and damage against the defendants for conversion.
The claim on account of damages in the instant case is assessed with reference to the duty cast upon the defendants. While the function of damages in contract is to compensate for expectation losses, damages in tort seek to protect the "reliance" or "status co-interest" i.e. to put the plaintiff in a position as if the tort have not occurred. [Livingstone v. Rawyards Coal Co. (1880) 5 App Cas 25 at 39 per Lord Blackburn (HL)] The defendants were aware of the stipulation that the goods would be released only against the production of the original Bill of Lading and not otherwise. Still then the defendant admits to have delivered the goods to the consignee without the production of the original Bill of Lading. The original Bill of Lading has been returned to the plaintiff by its bankers. The defendants are unable to account for the goods. The defendants claimed to have delivered the goods to the consignee with the consent of the plaintiff has not been proved by the defendants at the trial. Under such circumstances the plaintiff can always claim for damages in tort.
It is no doubt a duty of the plaintiff to establish at any rate prima facie, that the suit is within the time and not barred by lapse of time. The plaintiff is able to establish that the claim against the defendant no.1 is not barred by limitation. Mr. Banerjee has relied upon in Far Eastern Steamship (supra) in which the immunity contained in Clause 3 of Paragraph 6 of Article 3 of the schedule to the act was considered. A similar objection raised in the said proceeding was negatived by the learned Judges and the ratio of the decisions could be found in paragraphs 12, 15 and 16 which reads:
"12. Thus the immunity contained in C. 3 of Para. 6 of Article 3 of the Sch. to the Act could be claimed by the carrier if two conditions are fulfilled:
1. The Bill of Lading must have been issued;
2. The Bill of Lading should contain an express statement that it was subject to the provisions of the Rules as applied by the Act.
15. A similar question arose before the Travancore - Cochin High Court in Muhammadui Steamship Co. v. Keserishik Vallabdas, AIR 1957 Trav Co. 133. In that case, as in this case, the Bill of Lading did not contain a statement as required by S. 4 of the Act. The learned Judges, relying upon the decision of the Madras High Court in Province of Madras' case (supra) held that the provisions of the rules embodied in the Schedule to the Act did not apply 'proprio vigore' to all contracts of carriage by sea, but only in cases where a bill of lading has been issued incorporating the provisions of the governed by Art. 10 of the Limitation Act for filing a suit for compensation of loss or injury occurs. If the Limitation Act of 1963 is applicable, then the suit is undisputedly in time.
16. The learned counsel placing reliance on a decision of the Supreme Court in East & West Steamship Co. v. S. K. Ramalingam, submits that Cl. 3 of Para 6 of Art. III to the Schedule of the Act is not merely a rule of limitation but a rule that provides for the extinction of the right to compensation and, therefore, the suit was not maintainable beyond the period prescribed in the rule. The Supreme Court, in that case 4, observed (at p. 1065):--
"The question we have to decide is whether in saying that the ship or the carrier will be "discharged from liability" only the remedy of the shipper or the consignee was also being terminated. It is useful to remember in this connection the international character of these rules, as has been already emphasised above, Rules of limitation are likely to vary from country to country. Provisions for extension of periods prescribed for limitation would similarly vary. We should be slow therefore to put on the words "discharged from liability" an interpretation which would produce results varying in different countries and thus keeping the position uncertain for both the shipper and the ship owner. Quite apart from this consideration however, we think that the ordinary grammatical sense of 'discharged from liability' does not connote "free the remedy as regard liability" but are more apt to mean a total extinction of the right. We find it difficult to draw any reasonable distinction between the words "absolved from liability " and "discharged from liability" and think that these words "discharged from liability" were intended to mean and do mean that the liability has totally disappeared and not only that the remedy as regards the liability has disappeared." This decision was again referred to and applied in American Export Isbrandtsen Lines Inc. v. Joe Lopez, AIR 1972 SC 1045. But I am unable to understand how these decisions are of any relevance to the facts of this case. As already noticed, the provisions of the Act are not applicable to the contract in this case."
Moreover the claim against the defendant no.1 is on account of conversion for which the period of limitation of three years and admittedly in the instant case the suit was filed within the period of three years from the date of shipment or alleged wrongful delivery whichever is later. The argument of Mr. Saha that the defendant no.1 is an agent of the foreign disclosed principle, defendant no.4, is also untenable as the plaintiff is able to establish that the defendant nos.1 and 4 have been jointly and severally undertaken to fulfil the terms of the contract.
Even if it is accepted that the plaintiff may not sue the defendant No. 4 on the Bills of Lading at Calcutta in view of the jurisdiction clause but on a wholesome reading and appreciation of evidence it can be safely concluded that the plaintiff is able to establish at the trial that the defendant No. 4 as is an alter ego of the defendant No.1 and the transactions have been internally arranged by the said defendants for their business convenience. The bill of lading cannot be used as a ruse to defeat the claim of the plaintiff against the defendants. Moreover, even if it is assumed that at the time of institution of the suit, this Court may not have jurisdiction as the defendant No. 4 is the disclosed principal of the defendant No. 1 by reason of subsequent events, the said defence is no more available to the other defendants as the defendant No. 4 ceases to exists after July, 2007. A reading of the entire written statement unmistakably gives an impression that the defendants have jointly filed the written statement. It is well-settled that where an artificial division is sought to be raised by two entities to defraud a creditor the Court can always lift the corporate veil in order to find out the real wrong doers. The Court always leaned towards lifting the corporate veil where a stratagem or a device is put forward to defeat a legitimate claim of the creditor. The written statement has deliberately omitted the fact that the defendant No. 4 is the wholly owned subsidiary of the defendant No. 1 and the defendant No. 4 is no more in existence after July, 2007.
Under Section 230 of the Indian Contract Act, 1872 as a general rule an agent is not entitled to personally enforce nor is bound by contract entered into by him on behalf of his principle. This is, however, subject to any contract to the contrary. The said section illustrates three cases in which law shall presume a contract to the contrary namely, (a) where the contract is made by an agent for the sale or purchase of goods for merchant resident abroad, (b) where the agent does not disclose the name of the principal and (c) where the principal, though disclosed, cannot be sued. The question whether an agent apart from the cases mentioned above is to be taken to have contracted personally or merely on behalf of the principal, depends on what appears to have been the intention of the parties, to be deduced from the nature and terms of the particular contract and surrounding circumstances. The word "as agent" appearing against the name of the defendant No.1 in the Bill of Lading would absolve such agent of liability unless it is proved that the agent has taken upon himself the liability. An agent may undertake joint liability on the main contract with the principle. Mr. Saha was quite emphatic to remind this Court that oral evidence is not admissible for the purpose of foisting a liability upon the defendant No. 1 who had signed the Bill of Lading as "an agent" of defendant No. 4.
In the instant case, the defendant No. 4 is the wholly owned subsidiary of the defendant No. 1 and even before the filing of the written statement has become defunct. The suit cannot proceed against the defendant No. 4. The bogey of defendant No. 4 as foreign principal is still canvassed to stave off a possible attack on the other defendants for realisation of the price of the goods entrusted to the defendants for delivery.
The plaintiff has led evidence to show that the defendant No. 1 has clearly represented that it would be the obligation of the defendant No. 1 to ensure delivery of the goods through the defendant No. 4. The said representation read with the evidence and surrounding circumstances makes it clear that the defendant No. 1 had an arrangement with the defendant No. 4 and had jointly undertaken to deliver the goods to the oversees consignee. Although it may be true that the defendant No. 4 was in existence at the time of entering the contract but subsequently the defendant No. 4 became defunct and at least made to look so to defraud its creditor and whenever proceedings were filed in India against the defendant No. 4 the said non-existent defendant through the defendant no.1 raised issue of jurisdiction by suppressing the fact that defendant No. 4 had ceased to exist since 2007 and for all intents and purposes the defendant No. 1, 2 and 3 are the real persons. The defendant no. 4 owes its existence to the defendant nos.1 to 3. It is apposite here to refer to decision of the Apex Court in reported at 1996 SC 2005 (1997) 89 Comp Cas 362 (Delhi Development Authority versus Skipper Construction Co. P. Ltd.) which reads as follows:-
"The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned."
The authorities on the subject has recognised that when the corporate personality is blatantly used as a cloak for fraud as improper conduct (See Gover Modern Company Law, 4th Edition page 137), or when the notices of legal entity is used to defeat public convenience, justify wrong, protect fraud, to defend crime, the law will regard the corporation as an association of persons (see Company Law of Pennington 5th Edition, 1985 page 53), or when the concept is used to defraud creditors, to evade an existing obligation, to circumvent a statute, to achieve or perpetrate monopoly, or to protect knavery or crime, the Courts will draw aside the web of entity, will regard the corporate company as an association of live, up and doing, men and women shareholders, and will do justice between real persons as observed by the American Professor I. Maurice Wormse in his article ' Piercing the veil of Corporate Entity'. These views have been approved in a fairly recent decision of the Apex Court in State of Karnataka vs. Jayalalitha reported at 2017(6) SCC 263.
Under the Indian Law the standard of proof required to establish such nexus is one of probability and may be established having regard to the relation of the parties alleged to be acting in concert that is to show their conduct and their own interest from which it may be inferred that they must be acting together. The preponderance of evidence in absence of any contrary evidence leads to the conclusion that the circumstance are such, as human experience would tell that it can safely be taken that the said defendants must be acting together. The defendant No.1 is holding 100% shares in the defendant No. 4 and it can be safely concluded that the said defendants are in the same business and their joint liabilities cannot be denied.
The chain of events following the contract has shown that although the defendant No. 4 appears to be the carrier but for all intents and purposes the defendant No. 1 also has assumed the responsibility of performing the contract.
Although in the written statement, defendant and defendants both are used singular and plural with regard to interchangeably describe the defendants, it is clear from the reading of the written statement that the said written statement has been filed to safeguard interest of the defendant No. 4 as well. The entrustment of goods upon the defendants are not denied and an artificial contrive to separate the defendants have failed as the evidence on record has clearly supported the stand of the plaintiff that the defendant No. 1 is jointly and severally liable under the contract. The defendants have not come forward with any contrary evidence.
Under such circumstances there shall be a decree for Rs.37,89,000/- against the defendant no.1 along with simple interest at the rate of 8% per annum from December, 2000 until realisation.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties on usual undertaking.
(Soumen Sen, J.)