Delhi District Court
M/S J. K. Tyres & Industries Ltd vs Airport Authority Of India on 28 February, 2013
1
IN THE COURT OF SHRI MANMOHAN SHARMA
ADDITIONAL DISTRICT JUDGE (CENTRAL)1
TIS HAZARI COURTS, DELHI
C.S. No. 103/2009
Unique Case ID No. 02401C1250232008
M/s J. K. Tyres & Industries Ltd.
(Earlier known as
M/s J. K. Industries Ltd.)
A company incorporated
Under the companies Act, 1956
Having its registered office at
7Council House Street,
Calcutta
And Administrative Office at
3, Bahadurshah Zafar Marg,
New Delhi110 002
......Plaintiff
V E R S U S
1. Airport Authority of India
through its General Manager Cargo
Cargo Complex,
Indira Ghandhi International Airport
New Delhi
2. The Customs Authority of India
Through Commissioner of Customs (Imports)
New Customs House, Near Cargo Terminal,
Indira Gandhi International Airport,
New Delhi110 037
.....Defendants
CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 1 of 39
2
Date of institution : 25.09.2003
Date of reserving judgment : 20.02.2013
Date of pronouncement : 28.02.2013
JUDGMENT
This is a suit for recovery of Rs.19,76,500/ in which the plaintiff has propounded its cause of action on the following bundle of facts: Plaint
(i). What the Plaintiff is: The plaintiff is a company incorporated under the Companies Act, 1956 having its Registered Office at 7 Council House Street, Calcutta, engaged, ineralia in the business of manufacturing and selling of automobile, tyres and tubes. The plaint has been signed and verified and the suit has been instituted by Sh. S. C. Arora, Legal Advisor of the plaintiff company who is duly authorized to sign, verify and institute the present suit by virtue to Power of Attorney dated 09.11.1998 executed by the plaintiff/Board of Directors in his favour and he is well conversant with the facts and circumstances of the present case.
(ii). What the defendant are: The defendant no. 1 is a public sector corporation engaged in the business of providing warehousing facilities in respect of goods imported or to be exported from the country. The defendant no. 2 is a public sector organization whose CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 2 of 39 3 powers includes prohibition of import and export of goods, detention of goods illegally imported and prevention thereof, prevention/detention of illegal export of goods, levy/exemption of customs duties etc. The defendant no. 2 also provides warehousing facility for imported/exported goods.
(iii). Genesis of Plaintiff's Claim: The plaintiff had imported spare parts for Bead Winding Machine for its actual use valued at Rs. 12,10,835/. The said consignment arrived at Delhi on 09.12.1996 and the bill of entry was filed on 17.12.1996. However at the time of examination of goods by the defendant no.2 i.e. customs authorities, the same were found excessive, in as much as, the supplier also included in the said consignment an item for different order and for both the orders only one invoice was forwarded. Hence the defendant no. 2 raised an objection in this regards and the clearance of the consignment got delayed. However, after desperate follow ups/visit of the plaintiffs' officials and on the basis of personal hearing and discussions with the Additional Collector of defendant no. 2, the said dispute was settled. The bill of entry showing value of goods as Rs. 12,10,835/ was approved by the defendant no. 2. Accordingly, after receiving the customs clearance and payment of Rs.8,13,165/ towards the customs duty, the out of charge was given by the defendant no. 2 CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 3 of 39 4 for clearing the said goods on 01.11.1997. Thereafter, the plaintiff paid warehouse charges amounting to Rs.1,37,825/ to the defendant no.1 and were issued Gate Pass No. 4080035 dated 18.11.97.
(iv). Cause of Action: When the plaintiffs approached the defendant no.1 for clearing the said goods, the defendant no. 1 failed to deliver the aforesaid goods. The plaintiff was informed that the said consignment had been misplaced by the defendant no. 1's staff. Despite repeated efforts, the delivery of the consignment was not made to the plaintiff and the plaintiff was advised to file its claim for reimbursement/compensation which was lodged by the plaintiff vide its letter dated 27.02.1997, wherein it claimed the cost of the goods in question, as well as other charges and expenses incurred by the plaintiff, amounting to Rs.23,78.010/ with the defendant no. 1.
(v). Correspondence, Notice etc.: The plaintiff sent various letters to defendant no.1 which were not responded to. Finally a letter was sent on 28.08.1998 which was duly served and was replied vide letter dated 08.09.1998 by the defendant no.1 but nothing materialized. The plaintiff was constrained to serve a legal notice dated 04.03.1999 however to no avail.
(vi). Civil Writ Petition: The plaintiff instituted a civil writ petition no. 2060/1999 in the Hon'ble High Court of Delhi. After certain CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 4 of 39 5 proceedings the Hon'ble High Court of Delhi vide its order dated 29.04.2003 allowed the plaintiff to withdraw the said writ petition with liberty to initiate suit or appropriate proceedings in accordance with law. It was also directed to defendant no.1 to pay a sum of Rs. 1,88,136.50 minus Rs. 2,811.50 which was accepted by plaintiff without prejudice. The plaintiff accordingly received a payment of Rs.1,85,325/ which included Rs.1,37,825/ towards the warehouse charges and a meager amount of Rs.47,500/ towards the value of consignment.
(vi). Present Claim: The above payment is not in satisfaction of the claim of the plaintiff. As such, the defendants are liable to pay Rs. 21,92,685/ jointly and severally. However, the plaintiff is not claiming the amount of Rs.2,16,185/ towards incidental charges incurred and foregoing the same. Hence, the claim of plaintiff is Rs. 19,76,500/ which comprises of CIF value of consignment at Rs. 11,63,335/ and duty and other levies paid to custom of Rs.8,13,165/. The plaintiff is also entitled to interest @18% p.a.
2. The notice of suit was sent to the defendant who put a contest to the suit by filing their respective written statements. Written Statement of Defendant No. 1
3. In its written statement the defendant no.1 refuted the claim of CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 5 of 39 6 plaintiff.
4. Preliminary Objections: The defendant no. 1 has raised preliminary objections as to misjoinder citing non privity of contract; non joinder of necessary parties i.e. the Carrier and Customs Authorities; no liability of AAI in view of various provisions of Airports Authority of India Act 1994 more specifically Section 12, 42, 43 etc.; obligations being of the Customs Authorities; the liability of defendant at the most being of a bailee subject to regulation VIII of International Airports Authority (storage and processing of goods) Regulations 1993; the defendant having adequate security and surveillance through CCTV etc. and thus no negligence; on the failure of plaintiff to clear the consignment within the statutory period the goods were auctioned in accordance with Section 48 of the Customs Act after publishing insertions in Hindustan Times, Navbharat Times, Delhi and Time of India and Navbharat, Bombay; three packages were untraced and the claim was made with the underwriters who admitted a claim of Rs.47500/.
5. On merits, the material averments of written statement were denied in the above terms and the defendant no.1 denied any liability as claimed by the plaintiff.
Written Statement of Defendant No. 2 CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 6 of 39 7
6. Preliminary Objections: The defendant no. 2 challenged the suit by filing its written statement. It took up the preliminary objections of the suit being bad for misjoinder claiming that defendant no. 2 was not a necessary party; suit liable to be dismissed in view of Section 155 of the Customs Act 1962; suit being without any cause of action and suit being not instituted by an authorized person.
7. On merits, the material averments on which the plaintiff has fastened liability against the defendant no. 2 are denied in above terms and it is submitted that the defendant no. 2 is not liable on any account.
Replication
8. Replication to the respective written statements have been filed by the plaintiff in which it denied the material averments of the respective written statements and reiterated the averments of plaint.
Issues
9. With the available pleadings, the following issues have been framed vide minutes of proceedings dated 11.05.2009: Issue no.1 Whether the suit is bad for non joinder and misjoinder of parties? If so, its effect.
OPD
CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 7 of 39
8
Issue no.2 Whether plaintiff is entitled for decree
for suit amount? OPP
Issue no.3 Whether plaintiff is entitled for
pendentelite and future interest on decree amount?
If so, at what rate. OPP
Issue no.4 Relief
Witnesses Examined
10. The plaintiff has examined Sh. S. C. Arora, its Legal Adviser as PW1 as its sole witness. The defendant no. 1 has examined Sh. Raj Kumar Sharma, Senior Manager Cargo as DW1. Defendant no. 2 has examined Sh. Shokat Ali, Assistant Commissioner (Legal) as DW2.
Arguments
11. I have heard Sh. Anupam Srivastava, Ld. Counsel for the plaintiff; Shri Neeraj Kumar, Ld. Counsel for defendant no. 1 and Sh. Shailash Tiwari, Ld. Proxy Counsel for main counsel Ms. Sonia Sharma for defendant no. 2. The plaintiff and the defendant no. 1 have also filed their respective written submissions.
12. Ld. Counsel for the plaintiff has argued that section 148 of the Contract Act deals with the bailment and by virtue of the explanation the person already in possession, that is the defendant no. 1 in this CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 8 of 39 9 case, becomes the Bailee and the owner of the goods becomes the Bailor. Further reliance has been placed upon section 151 and 160 of the Act regarding obligations of Bailee and the return of goods on the accomplishment of purpose.
13. Ld. Counsel for the plaintiff submitted that the reliance on Section 48 of the Customs Act 1962 by the defendant no. 1 is misplaced as it has not carried out the obligations which have been mandated under the provisions. These are:
(i). Inform the importer i.e. the plaintiff in the present case; and,
(ii). Seek permission of the competent office i.e. the custom office.
14. It is submitted that the above conditions precedent have not been complied with by the defendant no. 1 and thus it has no recluse. Ld. counsel for the plaintiff has read the evidence of DW1 to argued that his case stands proved through this witness itself.
15. On the aspect of limitation it is submitted on behalf of the plaintiff that the suit is within limitation as the payments were received amounting to acknowledgement. It is also available for the reason that a remedy was being prosecuted by way of a writ petition and the plaintiff is entitled to benefit of Section 14 of the Limitation CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 9 of 39 10 Act.
16. The plaintiff has relied upon The New India Assurance Co. Ltd. & Another vs. The Delhi Development Authority and Others AIR 1991 Delhi 298 to cite that 'It is clear case of bailment and the defendants as bailee having failed to show having exercised reasonable care as man of ordinary prudence are liable for the loss of the truck. I must say their negligence is further compounded by the fact that they failed to reply to the notices sent by the plaintiffs. There is nothing on the record to show if any enquiry was set a foot by the defendants as to how the loss of the truck occurred after they were duly apprised of the loss from the parking center.'
17. Ld. Counsel for the plaintiff has further relied upon N. R. Srinivasa Iyer Vs. New India Assurance Co. Ltd. Madras & Ors. AIR 1983 SC 899 to cite as under:
"No one was examined on behalf of the subbailee. The burden was on them to establish to the satisfaction of the court as to what degree of care was taken in respect of the damaged car. Plaintiff has led some evidence in this behalf as to the careless manner in which the car was kept in the workshop where inflammable material was kept. Without doubt the burden being on the bailee and the subbailee and the same having not been discharged, the ld. trial judge was perfectly CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 10 of 39 11 justified in accepting the evidence of the plaintiff and in recording the finding that bailee and the subbailee had not taken such care of the car as was expected of the prudent man in respect of his own goods of the same quality and value. Therefore, the bailee is liable for the loss suffered by the plaintiff the bailor."
18. The plaintiff has cited State of Bombay (now Gujarat) Vs. Memon Mohomed Haji Hasam' AIR 1967 SC 1885 on the following pronouncement: "Bailment is dealt with by the Contract Act only in cases where it arises from the contract but is not correct to say that there cannot be a bailment without an enforceable contract. As stated in 'Possession in the Common Law" by Pollock and Wright, p 163, "upon the whole, it is conceived that in general any person is to be considered as a bailee who otherwise then as a servant either receives possession of a thing from another or consents to receive or hold possession of a thing for another upon an understanding with the other person either to keep and return or deliver to him the specific thing or to (convey and) apply the specific thing according to the directions antecedent or future of the other person".
"Bailment is a relationship sui generis and unless it is sought to increase or diminish the burdens imposed upon the bailee by the very fact of the bailment, it is not necessary to incorporate it into CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 11 of 39 12 the law of contract and to prove a consideration".
19. Ld. Counsel for the defendant no. 1 has argued that there was neither a privity of contract between the plaintiff and the defendant nor the defendant was bound to discharge my contractual obligation visavis the plaintiff under any contract between the parties in respect of the aforesaid goods belonging to the plaintiff. The privity of contract lies between the plaintiff and carrier under the Airways Bill executed by the plaintiff and the carriers is necessary and proper party to these proceedings. The issues between the parties cannot be fully determined in their absence.
20. Next it is submitted on behalf of the defendant no.1 that it is a body corporate constituted under the Airports Authority of India Act 1994. Functions of the Authority are specified in Section 12 of the Act and sub section (1) provides that, subject to the rules, if any, made by the Central Government, it shall be the function of the Authority to manage the Airports efficiently. Sub section (2) casts an obligation or duty on the Authority to provide air traffic service and air transport service at the Airports, and within certain specific functions or duties under subsection (3) the Authority may, among others, establish warehouses and cargo complex at the airports for the storage or processing of goods as stated in clause (g) thereof. CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 12 of 39 13
21. On behalf of defendant no. 1 it is next submitted that the IGI Airport, New Delhi is the Customs Airport for the unloading of imported goods as appointed under section 7 of the Customs Act, 1962 and the Authority is the person approved custodian under Section 45 of the Customs Act in whose custody all imported goods shall until they are cleared for consumption or are warehoused. Section 45 subsection (2) clause (b) provides that the Authority as the person having custody of imported goods in a customs area.
22. Ld. Counsel for the defendant no. 1 then submitted that on the own showing of the plaintiff, the consignment in question was unloaded from the aircraft on 09.12.1996 and the petitioner paid the customs duty and obtained 'out of charge' from the customs almost after one year thereafter on 18.11.1997. After that it approached the defendant for clearing the consignment.
23. Next, it is submitted by the defendant no. 1 that the responsibility of the defendant for loss or destruction or deterioration of the goods, which come in its custody or which it has taken charge of, is clearly that of a bailee, subject of course to the modifications or reservations provided by regulation 8. Even thought there was no contractual bailment either according to the averments in the suit or on the wording of Regulation 8 of the responsibility of the defendant of CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 13 of 39 14 the nature aforesaid, was that of a bailee of the consignment in question.
24. Ld. Counsel for the defendant no. 1 further submits that it is well settled that the essence of bailment is possession and a bailment may arise, as in this case, even when the owner of the goods has not consented to their possession by the bailee at all. It is sufficient if that possession is within the knowledge of the person concerned ands that is certainly the case herein. The defendant no. 1 as a bailee took due and proper care of cargo as expected from a person of ordinary prudence for his own goods of same bulk and nature. On the other hand, the plaintiff failed to clear the aforesaid consignment within the statutory period, the defendant no. 1 in exercise of jurisdiction/power vested in under section 48 of the Customs Act, 1962 auctioned two packages for the value of Rs.5,623/. It has not been able to trace the other three packages. It raised a claim to their underwriters for the loss of the packages belonging to the plaintiff. After detailed examination the Underwriters of admitted an amount of Rs.47,500/ against the claim of the lost packages. The defendant no 1 had vide letter dated 30.08.2001 settled the claims of the plaintiff at Rs.1,88,836.50, out of the said amount, an amount of Rs.2,811.50 out of sale proceeds of two packages is lying with the Customs Authority and will have to be CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 14 of 39 15 remitted by the Customs Authority.
25. Ld. Counsel for the defendant no. 2 argued that the suit is barred by the limitation. The loss of the goods and demand/payment of the customs duty took place in year 1997 and the suit was filed on 25.09.2003, which is clearly beyond of the prescribed period of limitation.
26. Ld. Counsel for the defendant no. 2 further argues that the relief sought by the plaintiff by way of the present suit against the defendant no. 2 is baseless as the plaintiff has never served statutory notice under Section 155(2) of the Customs Act and under Section 80 of the Code of Civil Procedure upon the answering defendant, which is a mandatory requirement of law. The suit is thus nonest against the defendant no. 2.
27. It is next submitted on behalf of the defendant that the defendant no. 1 is stated to be the bailee of the defendant no. 2 and therefore, the two are alleged to be jointly liable to pay the balance. The custodian is the bailee of the importer and not of the Customs Department and therefore the department cannot be saddled with its dues.
28. Ld. Counsel for the defendant no. 2 further submitted that the independent position of the custodian has been recognized by the CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 15 of 39 16 Hon'ble Supreme court in the matter of International Airport Authority Vs. Grand Slam International, AIR 1995 SCW 1802:
(1995)3 SCC151 on this aspect.
29. Defendant no. 2 further relied upon Hon'ble Supreme Court judgment titled Trustees Port of Madras Vs. M/s K.P. V. Sheikh Mohd Rowther & Co. Pvt. Ltd. AIR 1995 SC 1922 to cite that, "the position cannot be different merely because the Customs Authorities have intervened. The position of the Port Trust is the same as that of a warehouseman whose responsibility to the goods is also said to be a bailee. It cannot be said that the steamer or its agents have undertaken any responsibility for the custody of the goods after the transit has come to an end and after the bill of lading has been duly endorsed or a delivery order issued. Ld. Counsel submitted that Court also relied upon International Airport Authority Vs. Grand Slam International AIR 1995 SCW 1802: (1995)3 SCC 151 in the above judgment.
30. Ld. Counsel for the defendant next submitted that that the said judgment has also been followed by the Hon'ble High of Delhi in 'Commissioner of Customs & Ors. Vs. M/s Agrim Sampada Ltd. & Ors. LPA no. 519/2004 date of decision:13.12.2012 holding that 'under a statute even if is the custodian of the imported goods because CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 16 of 39 17 of the provision of the Customs Act, 1962, would be entitled to charge demurrage for the imported goods in its custody and make the importer or consignee liable for the same even for the period during which he/it was unable to clear the goods from the customs area, due to default on the part of the Customs Authorities or other authorities who might have issued detention certificate owing such fault.'
31. Ld. Counsel for the defendant no. 2 concluded by saying that the defendant no. 2 is not responsible for the loss of goods from the custody of the custodian, i.e. Airport Authority of India. The Airport Authority of India is a separate and independent legal entity and his own rights, liabilities and powers.
32. No other point has been argued or urged. No other case law has been settled.
Appreciation, Findings and Reasons
33. I have considered the submissions made and the material on record. My findings on various issues are as under: Issue no.1 Whether the suit is bad for nonjoinder and mis joinder of parties? If so, its effect?
34. The defendant no. 1 has taken an objection to to misjoinder citing non privity of contract. The defendant no. 2 has pleaded itself CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 17 of 39 18 being not a necessary party, thus objection of misjoinder.
35. As the position of law stands, a necessary party is one in whose absence the suit cannot be effectively adjudicated upon. A party is a necessary party if it ought to have a right to audience before passing any order or fixing any obligation upon it or it has to be bound with certain terms of the judgment. Thus it must be heard under the principles of natural justice crystallized in the rule of 'audi alteram partum'.
36. As far as the objection of defendant as to nonimpleadment of Customs Authorities is concerned the question of nonjoinder on this aspect fades into insignificance.
37. As far as the Carrier is concerned, his obligation is only to deliver the goods on the port to the consignee. Once that has been done and the defendants are holding the goods on the part of the plaintiff as custodians the obligation of the Carrier ceases. The plaintiff has not imputed any allegations of damage to goods or negligence on the part of the Carrier and no averments have been made in the written statement about any role of the Carrier and thus there is no question of its being a party in the suit.
38. As far as the Customs Authorities is concerned, liability against it is claimed jointly and severally by the plaintiff. Thus it has a vested CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 18 of 39 19 right of audience along with AAI. Whether the liability is ultimately established against it is a different matter altogether. Hence it cannot be said to be misjoined as a party.
39. The finding on this issue is returned in negative. Issue no.2 Whether plaintiff is entitled for decree for suit amount?
40. It is seen from record that a specific objection has been taken as to limitation during the course of arguments. Before ascertaining the entitlement, if any, of the plaintiff as to the claim pressed into service, the question of limitation has to be considered. Of course, no specific issue has been framed regarding the limitation. However it is the duty of the Court to examine this legal aspect notwithstanding the fact that no issue has been framed. Court is obliged to ascertain this aspect even no objection as to limitation has been taken.
41. As per the plaint the consignment arrived at Delhi on 09.12.1996; bill of entry was filed on 17.12.1996; plaintiff filed its claim towards the cost of goods on 27.12.1997; writ petition was filed in the Hon'ble High Court of Delhi vide no. 2060/99; the writ petition was disposed off vide order dated 29.04.2003. Copy of which order is Mark 1/24 (page no. 369 to 371) wherein the plaintiff is permitted to withdraw the writ petition with liberty to institute a proceedings in CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 19 of 39 20 accordance with law for recovery of the balance amount. The suit has been thereafter instituted on 25.09.2003.
42. The plaintiff has taken shelter under Section 14 of the Limitation Act 1963. It reads as under: "14. Exclusion of time of proceeding bona fide in court without jurisdiction --(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceedings, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like na ture, is unable to entertain it.
(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first in stance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of subsection (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order, where such permission is granted on CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 20 of 39 21 the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature.
Explanation.-- For the purposes of this section, --
(a)in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted;
(b)a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding;
(c)misjoider of parties or of causes of action shall be deemed to be a cause of a like nature with de fect of jurisdiction."
43. From the material on record, it is very much apparent that the plaintiff was diligently prosecuting the Writ Petition from 1999 to 2003. The payments were made by the defendant no. 1 during this period, thus even otherwise keeping the cause of action and limitation alive When the Writ Petition was withdrawn on 29.04.2003, the limitation was very much available and the plaintiff was also afforded the leave by the Hon'ble High Court of Delhi to institute appropriate proceedings and the suit therefore instituted on 25.09.2003 is very much within the limitation when the exclusion of time during the pursuance of remedy by way of Writ before the Hon'ble High Court of Delhi is considered. These facts have been duly founded in the plaint and thus the requirements of Order VII Rule 6 CPC are also satisfied. Thus from consideration of the entire material, the suit is within CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 21 of 39 22 limitation.
44. PW1 has deposed in terms of the plaint in examination in chief. His evidence is contained in his affidavit which is Ex. P1. He has relied upon Power of Attorney, copy of which is Ex.PW1/2. He has further relied upon various documents which are Ex.PW1/1 to Ex. PW1/17.
45. The witness PW1 has been duly was cross examined. His major cross examination is on the part of his authority to institute suit.
46. On this aspect PW1 stated in his cross examination that he was working with the plaintiff company since 1980; he was then employed with the plaintiff company as a Legal Adviser and he volunteered to state that even prior he was working as Legal Adviser and he was then a full time employee of the plaintiff company. He stated that he retired in the year 2005. He denied the suggestion that he was not employed with the plaintiff company after the year 2005 as a Legal Adviser. He admitted that there was a document on record which showed that he was working with the plaintiff company after the year 2005 and he volunteered to state that he had filed an affidavit of facts in the year 2009 which contained true facts. He stated that Mr. V. K. Mathur was the VicePresident (Commercial) of the plaintiff company. He admitted the suggestion that neither the affidavit Ex.P1, CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 22 of 39 23 nor the affidavit filed on 13.07.2006 had any documents showing his reengagement with the plaintiff company and he volunteered to state that there was no need to file any documentary evidence because Power of Attorney granted to him was valid till his employment with plaintiffcompany in whatever capacity.
47. PW1 admitted the suggestion that as per the plaint he has been authorized to file, verify, sign and institute the present case on the basis of Power of Attorney dated 09.11.1998 executed by the Board of Directors. He denied the suggestion that he has not filed any Power of Attorney and stated that the same is in fact Ex.PW1/2.
48. In his further cross examination PW1 admitted the suggestion that Ex.PW1/2 did not bear the signatures of Board of Directors of the plaintiff company and he volunteered to state that the procedure is that the Board passes the resolutions in a particular meeting and authorizes one of the directors of the company to grant power of attorney on behalf of the Board and the Power of Attorney granted in his favour shows the details of the Board meeting in which such power was granted to one of the directors to give him the Power of Attorney and the same has been complied with and Mr. S. C. Sethi whose signatures are on power of attorney also affixed the common seal of the company which is also embossed/affixed on the original CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 23 of 39 24 Power of Attorney. He admitted the suggestion that there is no document on record showing the existence of the procedure as set out by him in his volunteered statement. On this aspect he further volunteered that the said procedure is as per the Companies Act. He denied the suggestion that the Power of Attorney Ex.PW1/2 does not refer to any Board resolution and stated that the said fact is mentioned on page 3 of the Power of Attorney.
49. A company is a creature of law and has no living existence. It has to essentially discharge its functions through a human agency. The law on this aspect is well settled in the judgment of United Bank of India vs. Naresh Kumar & Others (1996) 6 SCC 660 wherein it has been held that Court can render its findings about the ratification on the basis of evidence on record and circumstances.
50. In fact in this case there is nothing to dispute the authority to sign, verify and institute the suit. In the present case there is a resolution propounded by the witness PW1, in his favour and he has been given a Power of Attorney on the basis of the same. The said witness namely is also a signatory to the plaint; he has sworn an affidavit filed with the plaint; has signed the replication; has appeared in the witness box; court fee has been paid on behalf of the plaintiff and so many other acts and deeds like engagement of Advocates etc. CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 24 of 39 25 have been done. There is nothing to suggest that PW1 is a busybody who is squandering his time and money on fruitless chores. If the company succeeds in the case no laurels are going to fall into his hands. Thus the facts and circumstances on record suggest he has been appearing in this case, signing and verifying the pleadings and giving evidence only for the reason that he has been so authorized to act for and on behalf of the plaintiff company. Thus the circumstances suggest his due appointment on preponderance of probabilities. No other inference by any reasoning seems to be flowing.
51. I will now consider the various provisions of statutory law and the case law cited by the parties.
52. Section 148 of the Contract Act defines bailment etc. and reads as under: "148. `Bailment', `bailor' and `bailee' defined.
--A `bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of accounting to the directions of the person delivering them. The person delivering the goods is called the `bailor'. The person to whom they are delivered is called the `bailee'.
Explanation. --If a person is already in possession of the goods of other contracts to hold them as a bailee, he thereby becomes the bailee, and the CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 25 of 39 26 owner becomes the bailor of such goods, although they may not have delivered by way of bailment."
53. Section 149 of the Contract Act deals with as to how the deliv ery is to be made to bailee and it reads as under: "149. Delivery to bailee how made. --The deliv ery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf."
54. Section 151 of the Contract Act lists the care to be taken by the bailee and section 160 about the return of the goods to the bailor in the following terms: "151. Care to be taken by bailee. --In all cases of bailment the bailee is bound to take as much care of the goods bailed to himself as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.
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160. Return of goods bailed, on expiration of time or accomplishment of purpose.--It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished."
55. Section 45 of the Customs Act reads as under: CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 26 of 39 27
45. Restrictions on custody and removal of import ed goods.--(1) Save as otherwise provided in any law for the time being in force, all imported goods, unloaded in a customs area shall remain in the cus tody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transshipped in accordance with the provisions of Chapter VIII.
(2) The person having custody of any imported goods in a customs area, whether under the provi sions of subsection (1) or under any law for the time being in force,--
(a) shall keep a record of such goods and send a copy thereof to the proper officer;
(b) shall not permit such goods to be removed from the customs area or otherwise dealt with, ex cept under and in accordance with the permission in writing of the proper officer.
(3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in subsection (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried.
56. Section 155 of the Customs Act goes as under: CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 27 of 39 28 "155. Protection of action taken under the Act.-- (1) No suit, prosecution or other legal proceedings shall lie against the Central Government or any of ficer of the Government or a local authority for anything which is done, or intended to be done in good faith, in pursuance of this Act or the rules or regulations.
(2) No proceeding other than a suit shall be com menced against the Central Government or any of ficer of the Government or a local authority for anything purporting to be done in pursuance of this Act without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause there of, or after the expiration of three months from the accrual of such cause."
57. The provisions of the Customs Act or the Airport Authority of India Act and the rules framed there under do not absolve the authori ty viz. the defendant no. 1 absolutely from any liability. Section 48 of the of the Customs Act 1962 as relied upon by the defendant no. 1 stipulates certain safeguards which have not been complied with by the defendant no. 1 in letter and spirit by the defendant no. 1, as notice to the plaintiff is conspicuous by absence. The law pronounced in The New India Assurance Co. Ltd. & Another vs. The Delhi Develop ment Authority and Others AIR 1991 Delhi 298; State of Bombay (now Gujarat) Vs. Memon Mohomed Haji Hasam' AIR 1967 SC CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 28 of 39 29 1885; International Airport Authority Vs. Grand Slam Interna tional, AIR 1995 SCW 1802: (1995)3 SCC 151; Trustees Port of Madras Vs. M/s K.P. V. Sheikh Mohd Rowther & Co. Pvt. Ltd. AIR 1995 SC 1922 clearly bring out the situation as to the legal lia bility of the defendant no. 1, who has stepped into the shoes of a bailee in view of the statutory provisions under the Contract Act.
58. Thus legal liability of the defendant no. 1 towards the plaintiff for loss of the goods is well enunciated in the statutory and case law and its position well recognized as that of a bailee. Now the factual position as to its default is to be recognized.
59. PW1 has stated in his cross examination that after the filing of the suit the plaintiff had amended the suit only to the extent foregoing the amount of the miscellaneous expenses of about Rs. Two lac. He admitted the suggestion that his signatures at point X and Y on the amended plaint Ex. PW1/D1. He denied the suggestion that para 1 A of the Ex.PW1/D1 is at variance with para 3 of his affidavit. He ad mitted the suggestion that Ex.PW1/4 to Ex.PW1/9 are neither the doc uments of the plaintiff company nor do they bear the signatures and stamp of the plaintiff company. He stated that in para 10 of my affi davit it was he who had advised the plaintiff company to file its claim for reimbursement/compensation after consultation with advocates. CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 29 of 39 30 He denied the suggestion that during the year 199798 Sh. V. K. Mathur was not the vicepresident (Commercial) of plaintiffcompa ny. He denied the suggestion that the sum of Rs.1,85,325/ as paid by the defendant no.1 on 02.06.2003 was towards the full and final settle ment of the plaintiff accounts. He denied the suggestion that vide let ter dated 30.08.2001 the defendant no.1 settled the claim of plaintiff at sum of Rs.1,88,136.50. He also denied the suggestion that the plaintiff was aware of the auction notices or that the said auction notices pub lished by the defendant no. 1 in Times of India, Hindustan Time, Nav Bharat Times were in the knowledge of plaintiff. He stated that he did not remember, again said that he could not say for sure that consign ment in question was not insured.
60. PW1 in his cross examination had denied the suggestion that the plaintiff was aware of the fact that the underwriters had valued the lost consignment at Rs.47500/ and volunteered to state that in fact the plaintiff was not aware as to whether or not any underwriter was appointed in the instant case. He admitted the suggestion that the plaintiff has become aware of the reliance placed by the defendant no. 1 upon section 48 of the Custom Act in 2001 and volunteered to state that in 2001 when the Hon'ble High Court directed both parties to set tle it among themselves and thereafter only it was an after thought in CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 30 of 39 31 the mind of AAI to take the shelter under this provision and get ab solved for it liability.
61. DW1 is Sh. Raj Kumar Sharma Senior Manager (Cargo) with Airport Authority of India. His examination in chief is contained in his affidavit which is Ex. DW 1/A. He was cross examined by plaintiff.
62. DW1 admitted in his cross examination that the consignment arrived in Delhi on 09.12.1999. He also admitted that on arrival the consignment was in the custody of defendant no. 1. He admitted that the defendant no. 1 was appointed custodian by the Custom Authority. He stated that the fact whether the carrier of the goods had any liability or not once the consignment has landed is subject to the terms of agreement between the cosigner and carrier. He also stated that there is no privity of contract by implication between defendant no. 1 and the plaintiff.
63. The DW1 was asked whether the value of the consignment when it landed was Rs.12,10,835/ to which he replied that he could answer this question after referring to the records. He referred to record and after seeing the documents Ex.PW1/4 to Ex.PW1/9 he stated that the documents depicts what is written therein but the values have been stated in pound sterling and that the same is correct. CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 31 of 39 32 He admitted the suggestion that the gate pass was issued on 18.11.1997. He also admitted that sum of Rs.1,37,825/ was given to Air Port Authority as warehouse charges on 18.11.1997.
64. DW1 stated in his cross examination that he would have to refer to records to answer if the plaintiff lodged his claim on 27.12.1997. He admitted the suggestion that the five packets were handed over to defendant no.1. He stated that out of those five packets three were misplaced while in the custody of defendant no.1. He stated that he may have to check the record if the claim to the underwriter has been placed in judicial file or not and after seeing the record he stated that the captioned documents are not on record. He denied the suggestion that same have not been put on record as the calculation was much higher. He also denied the suggestion that the claim at Rs.47,500/ is under valued and does not cover the market price on loss of goods. He denied the suggestion that defendant no. 1 has not engaged a professionally trained security agent. He stated that the list of employees engaged in the security has not been placed on judicial file nor any documents to show that the security agents were professionally qualified.
65. DW1 stated that he did not remember exactly what was the storage cargo area at the relevant time when the goods were CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 32 of 39 33 misplaced. In response to question as to how many security personal were employed on an average per square feet of cargo area he stated that there was no such criteria. DW1 stated that the security rosters/security attendance register has not been filed on record. He denied the suggestion that the above documents have not been filed on record for the reason that it would have exhibited that there was no round the clock security of average hundred personnel. He denied the suggestion that there is no CCTV on the movement of cargo as well as persons in the cargo area. He stated that he had to refer to records to answer if the CCTV footage was checked to find out the movement of misplaced goods. He stated that no action has been taken against the security agency for misplacement of goods. He denied the suggestion that the goods were illegally removed by defendant no.1. He also denied that there was negligence on the part of defendant no. 1 in handing of storage of the goods. He also denied the suggestion that the defendant did not take care of the cargo befitting a reasonable and prudent person.
66. DW1 further stated that the two consignments were auctioned in 20.03.1998 but he was not sure about the date, however it was in the month of March 1998. He stated that the auction was organized under the policy of defendant no.1 which was followed in this case. CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 33 of 39 34 The notice was given to the plaintiff before auction by publishing in newspaper and he volunteered to state that it was a disputed case and as per the customs notifications the shipment arrived upto March 1997 were to be auctioned by October 1998 positively and that the Customs was obliged to same to AAI of the disputed cases. He denied the suggestion that no notice was published prior to auction and volunteered to state that he had stated so in his affidavit but the copy of publication has not been filed on judicial record.
67. Further in his cross examination DW1 denied the suggestion that the same has not been filed on record for the reason that it was never published. He denied the suggestion that the policy for auction of goods were not followed. He admitted that the goods were in custody of defendant no. 1 prior to 27.12.1997. He also admitted that the defendant no. 1 auctioned the goods after the plaintiff approached it with the gate pass dated 18.11.1997. He stated that he would have to check the records to answer if the defendant advised the plaintiff to lodge a claim after approached with the gate pass dated 18.11.1997. He admitted the suggestion that the goods were auctioned after the plaintiff has approached with the gate pass for release of consignment and volunteered that the goods were not identified. He stated that he could not state if the bids which were received in the auction has been CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 34 of 39 35 placed on record or not. He denied the suggestion that the bids have not been placed on record by defendant no.1 for the reason that no proper notice of auction was given or the policy was not adhered to while auctioning. He denied the suggestion that the sum of Rs. 1,85,325/ paid on 02.06.2003 is not towards full and final settlement of the claim of the plaintiff.
68. DW2 is Sh. Shaukat Ali, the then Asst. Commissioner (Legal), Customs (I&G) Commissionerate, New Customs House, New Delhi, presently posted as Asst. Commissioner (ICD), Muradabad. His examination in chief is contained in his affidavit which is Ex. DW 2/A.
69. In his cross examination DW2 has admitted that the consignment arrived in Delhi on 09.12.1996. He also admitted that the consignment on delivery was in custody of defendant no. 1, Air Port Authority of India (AAI). He further admitted that the defendant no. 1 was the custodian of the goods for the plaintiff. He also admitted that the AAI is the custodian of the goods for defendant no. 2 also if the consignment is directed to be withheld by the order of defendant no. 2. DW2 stated that he could not answer if the carrier of the goods has no responsibility after goods have landed. He admitted the suggestion that defendant no. 1, AAI, had misplaced the consignment CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 35 of 39 36 and therefore the same could not be handed over to the plaintiff for a period of one year. He admitted the suggestion that the value of the consignment was Rs. 12,10,835/. He also admitted that the plaintiff paid custom duties amounting Rs. 8,13,165/. He further admitted that the gate pass to clear the goods were issued on 18.11.1997. He admitted the suggestion that a sum of Rs. 1,37,825/ was paid to AAI as warehouse charges.
70. Thus the legal as well as the factual situation is quite clear. Legally the defendant no. 1 is the bailee and liable for all the obligations as such. Factually the defendant no. 1 has failed to discharge the onus that it had taken all the reasonable care to safeguard the goods. On the other hand, the evidence is against it. It has failed to bring the relevant evidence, which was in its power and possession, thus inviting adverse inference as well. The case law of N. R. Srinivasa Iyer Vs. New India Assurance Co. Ltd. Madras & Ors. AIR 1983 SC 899 is also attracted in the facts and circumstances of the matter.
71. Thus the finding on this issue is returned in affirmative and it is held that it is the defendant no. 1 who is liable to meet the claim of the plaintiff.
Issue no.3 Whether plaintiff is entitled for pendentelite and CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 36 of 39 37 future interest on decree amount? If so, at what rate.
72. The plaintiff has claimed pendetalite and future interest @ 18% per annum. In the cross examination of PW2 it has been admitted by the witness that there is no written agreement in respect of rate of interest @ 18% per annum.
73. However interest is an essential element of principles of restitution and a logical corollary of the dictum that no one can be permitted to unjust enrich itself at the cost of the other. Hon'ble Supreme Court of India in South Easterm Coalifields Ltd. Vs. State of M.P. AIR 2003 SC 4482, has held that the doctrine of restitution of enshrined in section 144 CPC is to ensure complete justice between the parties, so that due to the orders of the court one or the other party may not gain any undue advantage or unjust enrichment.
74. When the issue of liability has been held in affirmative, the interest is a logical corollary. However, it is the duty of the Court to balance the rights of the parties and while considering rate of interest, a pragmatic approach being sinequanon. The rate of interest must be commensurate with the contemporary market conditions. The concept of 'opportunity cost' i.e. the cost of next best alternative as prevalent in economics is a handy tool. What the money is capable of CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 37 of 39 38 earning in the other alternative investments avenues is a very good yardstick. Other factor to be kept in mind is that interest awarded should not be too high so as to become punitive and should not be too low so as to create a vested benefit in delaying the payment by the other party.
75. In my view taking stock of the rate of interest offered by the banks, Prime Lending Rates prevalent in the banking industry and also considering the element of risk involved while dealing in business with private persons and other attendant trade risks, simple interest @ 9% per annum appears to be just and proper in the facts and circumstances of the case. In the facts and circumstances of the case, interest @ 9% per annum appears to be reasonable keeping in view the nature of transaction and the rate of interest prevalent in the contemporary business economic milieu.
76. As the principal liability is against the defendant no. 1, the liability of interest is also its obligation.
77. This issue is answered in affirmative in the above terms.
Relief
78. In view of my findings on the above issues the suit of the plaintiff is decreed in the following terms:
(i). A decree for Rs. Rs.19,76,500/ (Rupees CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 38 of 39 39 Nineteen Lakhs Seventy Six Thousand Five Hundred Only) is passed in favour of the plaintiff and against the defendant no. 1 with pendetalite and future simple interest @ 9% (Nine Percent Only) per annum from the date of institution of suit viz. 25.09.2003 till the final realization of the decreetal amount. The suit against the defendant no. 1 is dismissed.
(iii). The plaintiff is also awarded the costs of the suit against the defendant no. 1.
79. Decree sheet be drawn accordingly.
80. After necessary compliance, the file be consigned to the Record Room.
Announced in the Open Court On this 28th day of February 2013 (MAN MOHAN SHARMA) ADJ (Central)01, Delhi CS No. 103/2009 J. K. Tyre & Inds. Ltd. vs. Airport Authority of India & Anr. Page 39 of 39