Delhi District Court
Federation Of Indian Chambers Of ... vs M/S. Vishesh Films Pvt. Ltd on 14 August, 2018
BEFORE THE COURT OF SH. M.P. SINGH, ADDITIONAL
DISTRICT JUDGE03 (CENTRAL DISTRICT), TIS HAZARI
COURTS, DELHI
CS No. 81/16
New CS No.611617/16
In the matter of:
Federation of Indian Chambers of Commerce and Industry, (FICCI)
(A company registered under companies Act, 1956)
Having its registered office at:
FEDERATION HOUSE
Tansen Marg, New Delhi110001 ...Plaintiff
Versus
1. M/s. Vishesh Films Pvt. Ltd.,
36, Shubh Jivan, 4th Floor,
Gulmohar Road, JVPD Scheme
Mumbai 400 049
2. Sh. Vishesh Bhatt, Director
Vishesh Films Pvt. Ltd.
36, Shubh Jivan, 4th Floor
Gulmohar Road, JVPD Scheme
Mumbai 400 049
3. Sh. S.R. Bhatti
Assistant Commissioner of Customs, BI Batch,
Through Office of Commissioner of Customs,
Chhatrapati Shivaji International Airport,
Sahar, Mumbai ... Defendants
Suit instituted on - 01.09.2007
Date of decision - 14.08.2018
JUDGMENT
1. The instant suit is based on international commitments of FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 1 of 45respective Governments of the Member Countries through their authorized representative organizations (leading Chambers). Authorized representative organization on behalf of Government of India is the plaintiff in terms of a government notification dt. 15.03.1989 (Ex. P63). An internationally acceptable ATA Convention (Ex. P64) known as ATA Carnet system governs this. 'ATA' is an acronym of the French and English words 'Admission Temporaire/Temporary Admission'. Under this system, in order to promote business inter se the member countries duty free and tax free temporary import of certain goods/items is permissible for a period up to one year. ATA Carnet, an international customs document, works only amongst the member countries.
2. Facts are as follows: Plaintiff filed the present suit through its Secretary General Dr. Amit Mitra. On 25.10.2005 plaintiff issued two ATA Carnets to defendant no.1 (bearing nos. IN 118/2005/DE and IN 119/2005/DE) for carrying some film shooting equipments, shooting costumes material, make up material etc. (for short 'goods') to South Korea for shooting of a film. Defendant no.1, as per requirement, also submitted bank guarantee of Rs. 11,16,885/ covering the import duty etc. in South Korea for the goods covered under the two carnets. Total value of goods covered under the two Carnets was Rs. 46,35,000/ and Rs. 70,000/ respectively. Defendant no. 1, after its executives' return from South Korea, by returning the two used carnets requested the plaintiff to release the bank guarantee, which the latter refused as FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 2 of 45there were serious discrepancies and deficiencies in the used carnets. However, on lot of persuasion, plaintiff agreed to release the bank guarantee with the condition that defendant no.1 would furnish an indemnity bond that in case the former (plaintiff) receives any claim against the carnets, the latter would indemnify it against all claims, costs and expenses which it may incur for settling such claims. Defendant no.1 accordingly submitted an indemnity bond dt. 30.11.2005 to the plaintiff. Plaintiff submits that while acknowledging receipt of Indemnity Bond, it (plaintiff) had mentioned in the letter dt. 01.12.2005 that in case partner Chamber in ATA carnet chain raised any dispute/claim, it (plaintiff) reserved its rights to raise subsequent claim on defendant no.1 for which the indemnity bond already stood submitted.
3. Thereafter in May 2006 plaintiff received two separate letters (letter dt. 03.05.2006 qua carnet no. IN 119/2005/DE and letter dt. 08.05.2006 qua carnet no. IN 118/2005/DE) from Korean Chamber of Commerce and Industry (KCCI) informing that qua aforesaid two carnets Korean Customs Authorities had no evidence of re exportation of goods temporarily imported into Korea and requested the plaintiff (plaintiff being the national guaranteeing association for India) to send necessary evidence confirming re exportation of goods from Korea. Ms. Kumkum Saigal, executive producer of defendant no.1, on being informed about it, promised and assured to send the requisite documentary evidence to FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 3 of 45satisfaction of Korean customs. Plaintiff received reminders from KCCI on 23.06.2006 (qua carnet no. IN 119/2005/DE) and on 28.06.2006 (qua carnet no. IN 118/2005/DE). Once again Ms. Saigal was informed about it and she reassured to do the needful. Plaintiff received final reminders dt. 05.09.2006 and 06.09.2006 qua the aforesaid two carnets from KCCI. Defendant no.1, despite being given sufficient time and opportunity, failed to furnish documentary evidence evidencing reexportation of goods from South Korea to India. KCCI sent requests dt. 27.09.2006 to plaintiff for reimbursement of KRW 21,316,030/ for ATA carnet no. IN 118/2005/DE and KRW 99,700/ for ATA carnet no. IN 119/2005/DE. On being informed about it, Ms. Saigal informed that some more time would be required to send the documentary evidence showing reexportation from South Korea to India. KCCI sent reminders dt. 17.10.2006 to plaintiff seeking reimbursement of KRW 21,316,030/ for ATA carnet no. IN 118/2005/DE and KRW 99,640/ for ATA carnet no. IN 119/2005/DE.
4. Defendant no.1 finally vide its letter dt. 16.10.2006 sent photocopies of Air Waybill No. TIA001901 dt. 23.11.2005 and invoice dt. 23.11.2005 claiming thereby that it had reexported the goods from South Korea. Plaintiff avers that these documents nowhere identify that the goods claimed to have been reexported from Korea were the same as those covered under the two Carnets and that neither the Air WayBill nor the Invoice contain any Carnet number and further that they do not establish that the FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 4 of 45goods temporarily imported into Korea under the Carnets were re exported. However, just for the satisfaction of defendant no.1, plaintiff forwarded the said documents to KCCI for onward submission to Korean Customs as additional documentary evidence evidencing reexportation of goods covered under the two ATA carnets from Korea. On 27.10.2006 plaintiff received a message from KCCI insisting on settlement of the claim against the two ATA carnets as the documentary evidence furnished by defendant no.1 was found unsatisfactory by Korean Customs authorities. Having failed to obtain requisite documentary evidence from Ms. Saigal, plaintiff on 10.11.2006 wrote to Mr. Mukesh Bhatt, a director of defendant no.1 and also a signatory and executant of the indemnity bond, asking him pay KRW 21,415,730/ directly to KCCI. Plaintiff then received a letter dt. 30.11.2006 from defendant no.1 under the name of Mr. Mukesh Bhatt, but it miserably failed to provide any documentary evidence visàvis reexportation of goods to Korea. Vide this letter dt. 30.11.2006 Mr. Mukesh Bhatt also asked plaintiff to request KCCI to waive off its claim of KRW 21,415,730/.
5. On 15.12.2006 plaintiff sent a message to Ms. Saigal pointing out that there were considerable variations in the value of the carnets and the value of photocopy of documents sent by her, demanded KRW 21,415,730 (approximately US $ 23145) for settlement of claims in the shape of cheque/draft favouring KCCI. Defendant no.1, however, opted to directly approach the local office FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 5 of 45of Korean Tourism Organization, Mumbai by sending a message dt. 19.12.2006 seeking its intervention to sort out the problem. In response thereto, Ms. Simeron Ghei, Associate Director, Korean Tourism Organization, Mumbai confirmed that the documents of defendant no.1 were not valid and sufficient proof of reimportation of goods back to India. Ms. Simeron Ghei also advised defendant no.1 to treat the matter as most urgent and coordinate with plaintiff to ensure that Korean authorities receive the documents at the earliest and latest by 31.12.2006. Then on 21.12.2006 plaintiff explained to Ms. Saigal the reasons of the claim from KCCI. She was explained that the used ATA carnets submitted by her company did not bear the correct endorsement showing re exportation out of Korea and that the same could not be corroborated with the endorsement of Indian Customs at the time of reimportation back to India.
6. Defendant no.1 then vide letter dt. 03.01.2007 addressed to Additional Commissioner of Customs, CSI Airport, Mumbai requested for a certificate certifying reimportation of goods to India under ATA Carnets. Plaintiff avers that this was despite the fact that Indian Customs had no record of alleged reimportation of goods to India. Though the deadline given by KCCI to submit valid proof had expired, plaintiff managed to obtain some more time for the same. Plaintiff then sent a message dt. 22.01.2007 to defendant no.1 asking it to provide the requisite documentary evidence, lest pay KRW 21,415,730 (approximately US $ 23145). Vide its message FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 6 of 45dt. 24.01.2007 plaintiff apprised defendant no.1 that it had failed to provide the documentary evidence. Defendant no.1 was reminded that KCCI had invoked Article 7 (Regularization of ATA Carnets). Defendant no.1 was given time till 25.01.2007 to directly satisfy Korean Customs authorities about reexportation from Korea or to make payment of the requisite amount. Letter dt. 24.01.2007 in this regard was also sent to Ms. Saigal with a copy thereof to Mr. Mukesh Bhatt. Plaintiff again wrote to Ms. Saigal, with a copy thereof to Mr. Mukesh Bhatt, that the requisite documents had not been submitted despite several opportunities and that defendant no.1 had time till 29.01.2007 to settle the claim. The latest message dt. 25.01.2007 received from KCCI was also forwarded to defendant no.1. Thereupon, Mr. Mukesh Bhatt wrote a letter dt. 26.01.2007 informing the plaintiff that he would submit the certificate from the Indian Customs authorities. Together with this, he also sent copy of letter dt. 03.01.2007 addressed to Additional Customs Authorities, CSI Airport, Mumbai. Plaintiff vide its letter dt. 27.01.2007 to defendant no.1 emphasised that it (plaintiff) was only a facilitator in the carnet system and advised the latter to send one of its senior officers to Korea and sort out the dispute and that in case it (plaintiff) had to make the payment to KCCI then the latter would have to make reimbursements. On 29.01.2007 plaintiff informed defendant no.1 that KCCI had flatly refused to entertain any evidence of reexportation of goods from Korea at this belated stage as the evidence was not furnished within the stipulated time and the extensions thereafter, with 25.01.2007 being the last date. FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 7 of 45On 30.01.2007 plaintiff received a letter from Ms. Saigal seeking time till midFebruary 2007 for submission of necessary certificate from Indian Customs. Plaintiff responded saying that there was no possibility of any extension of time and that defendant no.1 had to reimburse the claim amount. Plaintiff also asked defendant no.1 to either send a demand draft of Rs. 10,12,401/ in favour of plaintiff, or alternatively send a demand draft for KRW 21,415,730 in favour of KCCI payable at Seoul. On 30.01.2007 defendant no.1 assured the plaintiff that the requisite certificate from Customs authorities at Mumbai would be sent within couple of days. On 01.02.2007 plaintiff sent a reminder to defendant no.1 demanding the claim amount of Rs. 10,12,401/ equivalent to KRW 21,415,730.
7. On 02.02.2007 plaintiff received a letter from defendant no.1 together with photocopy of letter No. F.No.:Aircus/2706/2006 AdmnTech dt. 01.02.2007 purportedly issued by defendant no.3 Mr. S.R. Bhatti, Assistant Commissioner of Customs, BI Batch in the office of Commissioner of Customs, CSI Airport, Sahar, Mumbai. Original of this letter dt. 01.02.2007 of the customs officer was never submitted to plaintiff, or to KCCI, or to the Korean customs. Plaintiff avers that this letter dt. 01.02.2007 of the Customs Officer nowhere mentions that the goods in question covered under ATA carnets were inspected at Customs in India or it ever passed through the Indian Customs in Mumbai at the time of its alleged reimportation into India. Plaintiff alleges that this letter dt. 01.02.2007 of the Customs officer seems to have been FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 8 of 45managed as it does not specify whether the goods said to have been inspected on 28.01.2007 were inspected within the customs bound area. Plaintiff avers that customs officer had no jurisdiction to issue such a certificate by inspecting goods at third place, beyond the customs officer's jurisdiction. Moreover, plaintiff goes on to aver, a customs officer cannot validly issue any such certificate. Further, as per the plaintiff, the said certificate/letter of customs officer does not certify all the items covered under the two carnets. It is further averred that it is not understood as to how customs officer on 28.01.2007 certified reimportation of goods under the two carnets when the complete set of used original ATA carnets was in plaintiff's possession. Plaintiff urges that the used original carnets nowhere bear the entry and/or endorsements of the Customs in India by the Customs Officer who had issued the letter/certificate dt. 01.02.2007. It further urges that the contents of the covering letter dt. 02.02.2007 sent by defendant no.1 to plaintiff contradict the contents of the socalled letter/certificate dt. 01.02.2007 of the Customs Officer. It is averred that in the covering letter dt. 02.02.2007 defendant no.1 claimed to have reimported all the goods covered under ATA Carnet No. IN/118/2005/DE dt. 25.10.2005, whereas the letter/ certificate dt. 01.02.2007 does not certify to be so. The socalled letter/ certificate dt. 01.02.2007 is alleged to be nothing, but the version of defendant company that does not corroborate with the documentary evidence i.e. there being no endorsements to this effect done by the Indian Customs authorities at Mumbai on the ATA Carnets.
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 9 of 458. Plaintiff urges that in terms of clause 9 printed on ATA Carnets, defendant company was bound to submit the carnets, in original, along with the goods covered under it to the Customs for examination at the time of departure from India. Similarly, the original carnets were to be submitted to the Customs in India with the goods at the time of reimportation into India, if at all the goods are reimported. It further urged that the requisite reexportation entries/endorsements to be made by Customs in Korea are also missing or not properly endorsed.
9. The scanned copy of the letter/certificate dt. 01.02.2007 of the Custom Officer, received from defendant no.1, was dispatched to Korean authorities, but the latter did not accept the same. It is alleged that Ms. Saigal while sending the scanned copy of the letter/certificate dt. 01.02.2007 of the Customs Officer had, on phone, told a lie to the plaintiff that she had dispatched the original of the same to it (plaintiff). It is averred that plaintiff vide its message dt. 02.02.2007, while forwarding the scanned copy of the certificate/letter dt. 01.02.2007, had made it very clear that it was defendant company's responsibility to satisfy the Korean Customs through additional documentary evidence about re exportation of goods from Korea. Defendant company despite specific demand allegedly did not send to the plaintiff the original certificate/letter dt. 01.02.2007 of the Customs Officer for its onward transmission to Korean Customs through KCCI. Vide message dt. 06.02.2007 plaintiff informed defendant company that FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 10 of 45the original letter/certificate dt. 01.02.2007 was required by Korean Customs officials. Vide this message dt. 06.02.2007 plaintiff made it clear to defendant no.1 that it was latter's responsibility to get itself discharged from the liability due to nonsubmission of acceptable proof of evidence, lest the latter would have to settle the claim of KRW 21,415,730 equivalent to INR 10,21,401/.
10. Vide message dt. 19.02.2007 plaintiff forwarded to defendant no.1 a message dt. 09.02.2007 received by it from KCCI informing that the additional documentary evidence was not found acceptable. Plaintiff once again requested defendant no.1 to settle the claim of INR 10,21,401/. Thereafter, several reminders/ letters/ messages (14.02.2007, 19.02.2007, 21.02.2007, 02.03.2007 and 05.03.2007) were sent to defendant company asking it to make the payment and also bringing to its knowledge that the letter/certificate issued by the Custom Officer was not found to be satisfactory. Thereafter, a meeting held between Sh. Mukesh Bhatt (a director of defendant company) and Sh. Nirankar Saxena (plaintiff's senior officer) at Mumbai. In this meeting, the defendant ratified the already agreed proposal to immediately settle the claim of US $ 105 against ATA Carnet No. IN/119/2005/DE. In the meeting Ms. Roshini, a lawyer of defendant company was also present and there was an assurance on behalf of the defendants that a solution would worked for settlement of the claim qua ATA Carnet No. IN/118/2005/DE.
11. Ultimately, plaintiff with the specific consent/approval of FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 11 of 45defendant company remitted 105 US $ to KCCI towards full and final settlement of the claim against Carnet no. IN 119/2005/DE and sought its reimbursement from defendant company by sending a message dt. 20.03.2007. Further, the final notice received by the plaintiff from KCCI seeking reimbursement of KRW 21,316,030 against ATA Carnet no. IN 118/2005/DE was also forwarded to defendant company. When plaintiff sought reimbursement of 105 US $, defendant no. 2 vide his message dt. 21.03.2007 blamed the plaintiff for the claim received from KCCI and refused to honour any KCCI claim. Then on 29.03.2007 plaintiff sent a reply explaining how the defendant company had failed to discharge its obligations resulting in the claim of KRW 21,415,730 equivalent to INR 10,12,401/. On 11.04.2007 plaintiff sent a reminder to defendant company, addressing it to Mr. Mukesh Bhatt, for settling the claim of KRW 21,415,730 equivalent to INR 10,12,401/, but no response was received. Vide letter dt. 16.04.2007 addressed to the plaintiff, defendant no. 2 flatly refused to settle the claim and also wished that the former should not correspond with him any further. On defendants' clear refusal to settle the aforesaid claim, plaintiff served a legal notice dt. 24.03.2007 to which no response was received. Plaintiff then finally remitted US $ 23097 on 18.05.2007 in full and final settlement of the claim qua ATA Carnet No. IN 118/2005/DE. Plaintiff avers that in terms of the indemnity bond dt. 30.11.2005 submitted by defendant company through its director Mukesh Bhatt, the latter is liable to reimburse it (plaintiff) a sum of Rs. 9,68,918/ as per the details below: FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 12 of 45 S.No. Claim Amount
1 Claim against ATA Carnet No. IN Rs. 4,686/
119/2005/DE (US $ 105)
2 Bank Charges Rs. 1684/
3 Claim against ATA Carnet No. IN Rs. 9,46,053/
118/2005/DE (US $ 23097)
4. Bank Charges Rs. 16,495/
Total amount to be reimbursed Rs. 9,68,918/
12. In response to plaintiff's legal notice, defendant no. 3 (S.R. Bhatti) vide his letter no. F.No.Aircus/2706/2006 AdmnTech dt. 07.06.2007 confirmed having issued letter/certificate dt. 01.02.2007. Plaintiff avers that defendant no.3, however, miserably failed to explain as to how he was empowered to issue such a letter/certificate for the goods beyond his jurisdiction and for which the Customs had no record.
13. Besides the aforesaid amount of Rs.9,68,918/ plaintiff also raises various other claims, which are noted hereunder in a tabular form.
S.No. Claim Amount
1 Claim against ATA Carnet No. IN Rs. 4,686/
119/2005/DE (US $ 105)
2 Bank Charges Rs. 1684/
3 Claim against ATA Carnet No. IN Rs. 9,46,053/
118/2005/DE (US $ 23097)
4. Bank Charges Rs. 16,495/
5. Commercial Interest @ 16% per Rs. 340/
annum with effect from 15.03.2007
on the amount of Rs. 6,370/
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16
New CS No. 611617/16 Page 13 of 45
6. Commercial Interest @ 16% per Rs.12,834/
annum with effect from 18.05.2007
on the amount of Rs. 9,62,548/
7. Compensatory Costs Rs. 5,000/
8. Litigation Expenses Rs. 30,000/
9. Court Fees Rs. 12,500/
Total Rs.10,49,592/
14. Plaintiff thus seeks to recover Rs. 10,49,592/ from defendants nos.1 and 2.
15. Defendants no.1 and 2 filed their written statement on 10.12.2007. They do not deny issuance of the two ATA Carnets in question. They also do not deny submission of bank guarantee of Rs. 11,16,885 to the plaintiff. They also do not deny return of this bank guarantee by the plaintiff to them. They also do not deny furnishing of an Indemnity Bond at the time of release of the bank guarantee. However, they take the following pleas in their defence. They state that the suit is not in conformity with Order XXIX Rule 1 and Order VI Rule 15, CPC; that plaintiff has no right or remedy qua the carnets as the carnets expired on 20.10.2005 when the goods were imported back to India and the plaintiff released the bank guarantee dt. 25.10.2005 of Rs. 11,16,885/; that release of bank guarantee determined the contract between the parties and the plaintiff is thus left with no further claim; that indemnity bond has no legal implications and the plaintiff cannot seek to derive any benefit out of it; that the indemnity bond was sought under coercion and as a condition precedent for release of the bank FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 14 of 45guarantee; that since plaintiff paid the amount to KCCI posing itself as a guarantor, section 145 of Indian Contract Act would come into play; that the act of the plaintiff in his supposed role as guarantor was not in conformity with section 145 of Indian Contract Act for the reason that contract between the parties had already expired at the time of payments to KCCI and also because the payment was not done rightfully under the guarantee; that defendants no.1 and 2 had already furnished certificate dt. 11.01.2007 issued by Assistant Commissioner of Customs whereby it was certified that the goods, subject matter of the carnets, mentioned in the certificate were duly verified and found to be in India, which in effect meant that the goods had been imported back to India and consequently, the plaintiff is entitled to no payment.
16. Defendants no.1 and 2 go on to submit that in terms of Article 8(2) of the Convention, if reexportation of the goods has not been certified by the Customs Authority of the country into which the goods were temporarily imported, Customs authority of the country of importation may, even if the period of validity of the Carnet has already expired, accept as evidence of reexportation of goods; that plaintiff itself has relied upon the certificate dt. 11.01.2007 issued by Assistant Commissioner of Customs before KCCI and having not challenged the same at any point of time, the same is final binding and sufficient evidence of reexportation and consequently any payment made beyond the terms of the Convention without properly pleading defendants' case estops the FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 15 of 45plaintiff from recovering the amounts; that plaintiff cannot seek any payment on the Letter of Indemnity for the reason that in terms of Indian Contract Act, contract of indemnity operates only between two parties and the same is clearly distinguishable from a contract of guarantee involving the parties; that there is conspicuous absence of the details of the authority before whom the Carnets were to be presented and certified; that plaintiff itself, a wrongdoer, cannot seek benefits of its own wrongful acts and omissions; that after the expiry of the alleged guarantee plaintiff itself defaulted to settle with KCCI and thus cannot seek recovery of any amount; that a bare perusal of Article 8(2)(b) of the Convention on ATA Carnets shows that it was contemplated at the time of formulation of ATA Convention that it was possible that a Carnet may not be properly endorsed and thus provision for accepting 'any other documentary proof that goods are outside that country' was made to discharge the Carnet; that defendants no.1 and 2 supplied various documents within the meaning and ambit of 'any other documentary proof that goods are outside that country'; that these documents furnished by them were in the nature of certificate issued by Customs Officer and various letters issued by different vendors from whom goods were taken on hire for the purpose of shooting and which goods were taken to Korea and subsequently returned to the respective vendors; that out of the aforesaid documents, the certificate issued by the Customs Officer was issued under the ordinary course of business by a government functionary and which certificate is presumed in law to be genuine FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 16 of 45in terms of section 114 of Evidence Act and consequently they (defendants no.1 and 2) discharged their obligation under the Carnets and any payment made by the plaintiff is thus not a bonafide one and in violation of the understanding between the parties.
17. Defendants no.1 and 2 go on to aver that ATA Conventions provide for recovery of import duties and other sums payable and also for imposition of penalties from the person using ATA Carnet to the contracting parties, however, while giving such remedy, the ATA Conventions categorically gave the precondition under which such a remedy could be invoked, which is only 'in the event of fraud, contravention or abuse' as defined under Article 15 of ATA Conventions; that plaintiff's case against defendants no.1 and 2 is that of irregularity and not based on fraud, contravention or abuse on the part of the latter and thus the former is not entitled to claim any amounts on account of recovery of import duties; that under Article 19 of the ATA Conventions a dispute between contracting parties is to be settled by way of negotiations, failing which a meeting shall be convened by the Secretary General of the Customs Cooperation Council; that in the present case, plaintiff failed to discharge its duties in terms of Article 19; that plaintiff unilaterally proceeded to make payment to KCCI without performing its duties; that defendants no.1 and 2 were not in a position to invoke jurisdiction of Secretary General, Customs Cooperation Council and which jurisdiction could only have been FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 17 of 45invoked by the plaintiff. On these averments, defendants no.1 and 2 seek dismissal of the suit.
18. Defendant no.3 Mr. S.R. Bhatti, after service of the summons, appeared before this Court through his counsel on 27.11.2007. He did not file his written statement. Vide Order dt. 18.12.2007 opportunity of defendant no.3 to file written statement stood closed.
19. Plaintiff filed its replication in response to the written statement of defendants no.1 and 2 reiterating its averments as set out in the plaint and refuting those of the latter set out in their written statement.
20. Issues framed on 24.11.2009 are as follows: (1) Whether the suit has been filed by plaintiff through authorized and competent person? OPP (2) Whether the suit is maintainable in its present form? OPP (3) Whether the plaintiff has locus standi to file the present suit? OPP (4) Whether the plaintiff has disclosed any cause of action to file the present suit? OPP (5) Whether the plaintiff is estopped by its act and conduct from filing the present suit? OPD (6) Whether defendants No.1 and 2 has failed to fulfill their obligations under the ATA Convention? OPP (7) Whether the used ATA No. IN 118/2005/DE and IN 119/2005/DE both dated 25.10.2005 submitted by the answering defendants to the plaintiff have proper endorsements by Customs Authority of India at the time of FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 18 of 45exportation of goods covered under the carnets and at the time of alleged reimportation of goods under the carnets and by customs in South Korea at Incheon Airport and at the time of importation of goods covered under the carnets at South Korea and at the time of reexportation of goods covered under the carnets from Incheon Airport? (OPP & OPD) (8) If the answer to issue No.7 above is negative then whether plaintiff has under the provision of ATA Conventions, bonafidely and validly made payment to KCCI on refusal by the answering defendants to pay the same, if so, its effect? OPP (9) Whether the plaintiff is entitled to reimbursement of payment made by it to KCCI and the incidental expenses in view of the ATA Conventions read with Indemnity Bond dated 30.11.2005 executed by the defendant Company through its Director in favour of plaintiff as claimed in the plaint? OPP (10) Whether the plaintiff is entitled for the recovery from the defendant? OPP (11) Whether the plaintiff is entitled for interest as claimed, if so at what and for which period? OPP (12) Relief
21. In plaintiff's evidence, following three witnesses were examined: PW1 Nirankar Saxena, director of plaintiff company.
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 19 of 45 PW2 Jai Prakash Tiwari, Sr. Manager, United Bank of India. He deposed that plaintiff remitted US $ 105 and US $23097 through United Bank of India to the account of KCCI at Hana Bank, Seoul.
PW3 S.R. Bhatti, retired customs officer. He deposed that he had issued the letter/certificate dt. 01.02.2007 (Ex. PW3/1) at the written request dt. 03.01.2007 of defendant no.1. He also deposed that he had not personally inspected the goods mentioned in Ex. PW3/1. In his crossexamination he stated that he was empowered to inspect the goods under notification no. 15/2002 (NT) issued under section 4, Customs Act, 1962.
22. Ms. Kumkum Saigal (DW1) was the sole witness in defendants' evidence.
23. Issue No.1 - The issue is whether plaintiff company filed the suit through an authorized and competent person, onus being on plaintiff to prove it. PW1 Nirankar Saxena in his evidence by way of affidavit deposed that Dr. Amit Mitra, being plaintiff's Secretary General and Principal Officer, was competent to sign/verify pleadings and institute suits/legal proceedings on its behalf. This witness in his deposition on 14.12.2010 stated that he had seen Dr. Amit Mitra writing and signing and he could identify his signature. He also identified Dr. Amit Mitra's signatures on the plaint and its supporting affidavit, on the replication and its supporting affidavit.
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 20 of 45He also exhibited in his affidavit plaintiff's Memorandum and Articles of Association (Ex. P65) and the copy of the Certificate of incorporation (Ex. P65A). Clause 43 of Ex. P65 under the head 'LEGAL PROCEEDINGS' reads, "Suits or legal proceedings by our against the Federation may be instituted or taken in the name of the SecretaryGeneral or the Secretary of the Federation for the time being." In terms of Order XXIX Rule 1, CPC in suits by or against a corporation, any pleadings may be signed and verified on behalf of the corporation by the secretary, or by any director or other principal officer of the corporation who is able to depose to the facts of the case. In Mahanagar Telephone Nigam Ltd. Vs. Smt. Suman Sharma, 2011 (1) AD Delhi 331, it was held that if a person who signs and verifies the plaint is a principal officer of the plaintiff company then it ought to be held that the suit is validly instituted in terms of Order XXIX, CPC. Dr. Amit Mitra was certainly a principal officer of plaintiff company being its Secretary General. It is, therefore proved and established that plaintiff filed the present suit through an authorized and competent person. This issue is thus answered in plaintiff's favour and against the defendants.
24. Issue No.2 - The issue is whether the suit is maintainable in its present form, onus being on plaintiff to prove it. Plaint is drafted in compliance with the provisions of Order VII Rules 1 and 2 of CPC and Order VI Rule 15 of CPC and is very much maintainable in its present form. Plaintiff is a company registered FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 21 of 45under Companies Act. It has already been held hereinabove that the plaint is signed and verified by plaintiff's authorized officer. The suit is thus held to be maintainable in its present form. This issue is thus answered in plaintiff's favour and against the defendants.
25. Issue No.3 The issue is whether plaintiff has locus standi to file the present suit, onus being on plaintiff to prove it. It is not in dispute that plaintiff is the guaranteeing association from India (in terms of government notification dt. 15.03.1989 Ex. P63). It is also not in dispute that defendant company had obtained two ATA carnets (IN 118/2005/DE and IN 119/2005/DE) on 25.10.2005 from the plaintiff for carrying goods to South Korea for a film shooting. It is also not in dispute that defendant no.1 had obtained the two carnets from the plaintiff in its capacity and role as the national issuing and guaranteeing association from India. Defendants no.1 and 2 do not deny that they had submitted bank guarantee of Rs. 11,16,885 to the plaintiff. They also do not deny return of this bank guarantee by the plaintiff to them. They also do not deny furnishing of an Indemnity Bond (Ex. P15A) to the plaintiff at the time of release of the bank guarantee. PW2 in his evidence deposed that plaintiff had remitted US $ 105 and US $23097 through United Bank of India to KCCI's account at Hana Bank, Seoul. From the evidence of PW1 it is quite evident that these two amounts that were remitted, as customs duty etc., were in relation to the carnets under use by defendant company. Given this, there FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 22 of 45can be absolutely no manner of doubt that it is none else, but the plaintiff which would have the locus standi to institute the present suit. This issue is answered in plaintiff's favour and against the defendants.
26. Issue no. 7 - The issue is whether the used ATA No. IN 118/2005/DE and IN 119/2005/DE both dt. 25.10.2005 submitted by defendants to the plaintiff have proper endorsements by Customs Authority of India at the time of exportation of goods covered under the carnets and at the time of alleged reimportation of goods under the carnets and by customs in South Korea at Incheon Airport and at the time of importation of goods covered under the carnets at South Korea and at the time of reexportation of goods covered under the carnets from Incheon Airport. Onus to prove was placed on both the parties.
27. A bare look at the two carnets itself would show that they lack proper endorsements of the Indian customs authorities as also the Korean customs authorities. That apart, there is also an admission on this count in the oral evidence of DW1 Ms. Kumkum Saigal. Both these aspects would be dealt separately. Firstly, to the two carnets. Front page of the carnet set clearly mentions in box 'H' at bottom left, 'CERTIFICATE BY CUSTOMS AT DEPARTURE'. In this box 'H' the two carnets bear no endorsement by the Customs in India. To facilitate use of the carnet by the Carnet holder, different colored pages are provided in the carnet set. Yellow colored carnet sheet is meant for use by the Customs at the time of FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 23 of 45exportation, which is written in bold letter on this sheet as - FOR USE BY CUSTOMS OF COUNTRY/CUSTOMS TERRITORY OF TEMPORARY EXPORTATION. Similarly, on the white sheet in the carnet sheet, it is clearly printed - FOR USE BY CUSTOMS OF COUNTRY/CUSTOMS TERRITORY OF TEMPORARY IMPORTATION. Blue colored sheets are meant for transit territories and on the blue sheet it is written - FOR USE BY CUSTOMS OF COUNTRY/CUSTOMS TERRITORY OF TRANSIT. Further, there are separate vouchers meant for customs record so that in case of any deficiency/discrepancy in endorsement(s) at any stage, the customs may issue a certificate based on its record by way of these vouchers. In the case at hand, yellow colored carnet sheets do not bear the endorsements of Indian customs authorities at the time of temporary exportation or importation. This would only mean that defendant no.1 (Carnet holder) did not produce the Carnets along with the goods covered therein either at the time of exportation and/or reimportation before the Customs in India. From the indisputable documentary evidence on record, it is evident that the used ATA carnets No. IN 118/2005/DE and IN 119/2005/DE both dt. 25.10.2005 submitted by defendant company to plaintiff is bereft of any endorsement by Customs Authority of India at the time of exportation of goods covered under the said carnets and at the time of alleged reimportation of goods under the carnets. As regards endorsements by Customs in South Korea on Carnet No. IN 118/2005/DE dt. 25.10.2005 endorsement on white sheet titled on the extreme left hand side as 'FOR USE BY FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 24 of 45CUSTOMS OF COUNTRY/CUSTOMS TERRITORY OF TEMPORARY IMPORTATION' in the IMPORTATION Column thereof at Sl. No.1 i.e. 'the goods described in the General List under Item No.(s)' it is filled as 1 - 3. This means that out of the items mentioned in the General List typed on the back side of the first (front) green colored sheet, items nos. 1 to 3 only were produced on 28.10.2005 before the Customs in Korea at Incheon Airport customs at the time of importation into Korea. RE EXPORTATION column on this white sheet on carnet no. IN 118/2005/DE is left blank. This in effect means that qua carnet no. IN 118/2005/DE carnet holder (defendant company) did not produce anything before the Customs at Incheon Airport for endorsement at the time of reexportation. As regards endorsement on Carnet no. IN 119/2005/DE, a bare perusal thereof would reflect that at the time of importation in Korea at Incheon Airport Customs on 29.10.2005 Carnet holder (defendant company) produced all the goods mentioned therein in the General List at serial nos. 1 to 4. However, at the time of reexportation on 22.11.2005 only goods at serial nos. 1 to 2 were produced before the Customs Officer at Incheon airport. In view of above indisputable facts as evident from the documentary evidence on record, it is clearly established that defendants (defendant Nos.1 and 2) failed to get proper endorsements on both the above carnets at the time of re exportation of goods from Incheon Airport in South Korea.
28. Now to the admissions of DW1 Ms. Kumkum Saigal in her FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 25 of 45evidence. She, by way of affidavit in paragraph 5 thereof, admitted that documents with regard to reimportation of goods into India were improperly endorsed. She stated, "I state that the ATA Carnets in question were taken to Korea and the same had been imported back to India but the documents with regard to the re importation of goods into India were improperly endorsed and thereafter, the plaintiff had released the bank guarantee dated 25.10.2005 for Rs. 11,16,885/, so submitted in lieu thereof thereby determining the alleged contract between the parties." In her cross examination DW1 Ms. Kumkum Saigal deposed, "It is correct that at the time of reexportation from Korea carnets exhibited as Ex.P 12 (No. 118/2005/DE) and Ex.P13 (No. 119/2005/DE) were not properly endorsed. Further stated that only one carnets Ex. P12 (No. 118/2005/DE) is not properly endorsed. Vol. When I went to the customs office at Seol to declare the goods and get an endorsement for return for all my equipment he put the date and the name of the airport in the form, but he did not stamp and he literally shoed me away and asked me to walk. There was no translator with us but there was a local line producer who was coordinating."
29. Bottom line therefore is that the two carnets, which are on the judicial record, themselves reveal that they are bereft of any endorsement of the Indian Customs authorities at the time of exportation from India and/or at the time of reimportation into India. They also reflect that endorsements thereon of the Korean FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 26 of 45Customs authorities, either at the time of importation into Korea and/or at the time of reexportation out of Korea was not proper as detailed hereinabove. Howsoever much DW1 Ms. Kumkum Saigal may assert proper endorsements on carnet No. 118/2005/DE, or for that matter on both the carnets, the fact of the matter is that a bare perusal of the two carnets themselves reveal that they are not properly endorsed. This issue is thus answered in plaintiff's favour and against the defendants.
30. Issue no.6 - The issue is whether defendants No.1 and 2 failed to fulfill their obligations under the ATA Convention, onus of proof being on the plaintiff. It is not in dispute between the parties that this case is entirely covered under the provisions of ATA Conventions (Ex. P64). Defendants in paragraph 7 of preliminary objections their written statement admit that 'ATA Conventions define rights and liabilities of the parties'. Further, defendants no.1 and 2 suggested to PW1 in his crossexamination that ATA Conventions (Ex. P64) is a 'selfcontained document containing all rules and procedures in relation to ATA Carnets'. Relevant extract of crossexamination of PW1 in this regard is as follows, "It is correct to suggest that the said convention is a selfcontained document containing all rules and procedures in relation to ATA Carnets. It is correct to suggest that the aforesaid convention contains procedure for settling the disputes between the contracting parties. It is correct to suggest that the aforesaid convention provides, contemplates, improper/defective/deficient endorsements FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 27 of 45on ATA Carnets." Having covered the ground thus, it would be expedient to take note of Article 6, 7 and 8 of the ATA Conventions, which read as follows:
CHAPTER IV Guarantee Article 6
1. Each guaranteeing association shall undertake to pay to the Customs authorities of the country in which it is established the amount of the import duties and any other sums payable in the event of noncompliance with the conditions of temporary admission, or of transit, in respect of goods introduced into that country under cover of A.T.A. carnets issued by a corresponding issuing association. It shall be liable jointly and severally with the persons from whom the sums mentioned above are due, for payment of such sums.
2. The liability of the guaranteeing association shall not exceed the amount of the import duties by more than ten per cent.
3. When the Customs authorities of the country of importation have unconditionally discharged an A.T.A. carnet in respect of certain goods they can no longer claim from the guaranteeing association payment of the sums referred to in paragraph 1 of this Article in respect of these goods. A claim may nevertheless still be made against the guaranteeing association if it is subsequently discovered that the discharge of the carnet was obtained improperly or fraudulently or that there had been a breach of the conditions of temporary admission or of transit.
4. Customs authorities shall not in any circumstances require from the guaranteeing association payment of the sums referred to in paragraph 1 of this FICCI vs. Vishesh Films Pvt. Ltd. & Ors.CS No. 81/16 New CS No. 611617/16 Page 28 of 45
Article if a claim has not been made against the guaranteeing association within a year of the date of expiry of the validity of the carnet.
CHAPTER V Regularisation of A.T.A. carnets Article 7
1. The guaranteeing association shall have a period of six months from the date of the claim made by the Customs authorities for the sums referred to in paragraph 1 of Article 6 of the present Convention in which to furnish proof of the reexportation of the goods under the conditions laid down in the present Convention or of any other proper discharge of the A.T.A. carnet.
2. If such proof is not furnished within the time allowed the guaranteeing association shall forthwith deposit, or pay provisionally, such sums. This deposit or payment shall become final after a period of three months from the date of the deposit or payment. During the latter period the guaranteeing association may still furnish the proof referred to in the preceding paragraph with a view to recovery of the sums deposited or paid.
3. For countries whose laws and regulations do not provide for the deposit or provisional payment of import duties, payments made in conformity with the provisions of the preceding paragraph shall be regarded as final, but the sums paid shall be refunded if the proof referred to in paragraph 1 of this Article is furnished within three months of the date of the payment.
1. Evidence of reexportation of goods imported under FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 29 of 45cover of an A.T.A. carnet shall be provided by the reexportation certificate completed in that carnet by the Customs authorities of the country into which the goods were temporarily imported.
2. If the reexportation of goods has not been certified in accordance with paragraph 1 of this Article, the Customs authorities of the country of importation may, even if the period of validity of the carnet has already expired, accept as evidence of reexportation of the goods:
(a) the particulars entered by the Customs authorities of another Contracting Party in the A.T.A. carnet on importation or reimportation or a certificate issued by those authorities based on the particulars entered on a voucher which has been detached from the carnet on importation or on reimportation into their territory, provided that the particulars relate to an importation or reimportation which can be proved to have taken place after the re exportation which it is intended to establish;
(b) any other documentary proof that the goods are outside that country.
3. In any case in which the Customs authorities of a Contracting Party waive the requirement of re exportation of certain goods admitted into their territory under cover of an A.T.A. carnet, the guaranteeing association shall be discharged from its obligations only when those authorities have certified in the carnet that the position regarding those goods has been regularized.
31. Further, point no. 9 under the head, 'NOTES ON THE USE OF A.T.A. CARNET' printed on the last sheet of the carnet set reads as under:
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.CS No. 81/16 New CS No. 611617/16 Page 30 of 45
"9. All goods covered by the carnet should be examined and registered in the country/Customs territory of departure and, for this purpose should be presented together with the Carnet to the Customs there, except in cases where the Customs regulations of that country/Customs territory do not provide for such examination."
32. It cannot be gainsaid that the defendants no.1 and 2 on their return from Korea was under an obligation to return the used carnets with proper endorsements thereon to the plaintiff. And this was more so, because once Korean authorities raised a claim for the first time, in terms of their letters dt. 08.05.2006 (for carnet IN 118/2005/DE) and 03.05.2006 (for carnet IN 119/2005/DE), the plaintiff in terms of Article 7.1 of the Convention was duty bound to furnish 'proof of reexportation under the conditions laid down in the Convention or of any other proper discharge of the ATA carnet'. It is very obvious that proof of reexportation or of any other discharge of the carnets could have only been provided by defendant no.1 and 2. In the discussion on issue no. 7, it was, inter alia, held that the two carnets do not bear proper endorsements of the Korean custom authorities either at the time of its importation or reexportation. To be precise, (a) as per endorsement on carnet no. IN 118/2005/DE items nos. 1 to 3 only, as per the General List, were imported into Korea and no items were reexported out of Korea; (b) as per the endorsement on carnet no. IN 119/2005/DE all its goods at serial nos. 1 to 4, as per the General List, were imported into Korea, and only goods at serial nos. 1 to 2 were re FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 31 of 45exported out of Korea. It is evident from Article 8.1 of the Convention that 'evidence of reexportation of goods imported under cover of an A.T.A. carnet shall be provided by the reexportation certificate completed in that carnet by the Customs authorities of the country into which the goods were temporarily imported.' Thus, in the case at hand 'evidence' of reexportation has to be the re exportation certificate completed in the carnet itself by the Korean customs authorities. Such ' ' of reexportation out of Korea evidence is missing, in terms of Article 8.1, in respect of all the goods of carnet no. IN 118/2005/DE and in respect of goods at sl. nos. 3 and 4 of carnet no. IN 119/2005/DE. It is worth noting here that the format of ATA Carnet is designed by International Chamber of Commerce (for short 'ICC') and universally all Member countries use the same format. No country can make alterations in the format, except printing their authorized Issuing and Guaranteeing Association's name at the appropriate place.
33. Defendants no. 1 and 2 placed very heavy reliance upon the certificate/ letter dt. 01.02.2007 of the Customs Officer (defendant no.3) at Mumbai as 'any other documentary proof' under Article 8.2
(b). It a matter of record that plaintiff had indeed forwarded the scanned copy of the certificate/ letter dt. 01.02.2007 of the Customs Officer (defendant no.3) to KCCI vide its email dt. 02.02.2007. To the Korean authorities this was 'not clear and enough evidence of reexportation of goods out of Korea' and also because of 'excess period of reexportation certificate'. Relevant would it be to note FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 32 of 45here that DW1 Ms. Kumkum Saigal in her crossexamination conceded, "It is correct that in each carnet there is a voucher meant for customs in which they keep corresponding record of exportation / reimportation and importation / reexportation. In case of any dispute, the concerned custom authorities issues certificate based on record available with them." Thus, DW1 concedes that customs could have issued the certificate only on the basis of record kept by it by way of vouchers of the carntes and in this event, it is difficult to comprehend as to how defendant's company insists on the letter / certificate dated 01.02.2007 of the custom officer at Mumbai. That apart, it is difficult to understand as to with what authority the customs officer (defendant no.3) issued the certificate/ letter dt. 01.02.2007 when the goods had purportedly moved out of the airport customs checkpoint and also the airport several months ago. PW3 S.R. Bhatti in his evidence states that 'he was empowered to inspect the goods' several months after it had already moved out of the airport in terms of 'notification no. 15/2002Customs (N.T.) issued under the section4 of the Customs Act 1962 Serial no.3'. This notification was not placed on record. Secondly, PW3 contradicts himself by stating in his examinationinchief that he had not personally inspected the goods and he had furnished the letter/certificate dt. 01.02.2007 on the basis of 'report submitted by his officer Rajinder Singh, Prevention Officer'. But the certificate/letter dt. 01.02.2007 makes no mention of the socalled 'report of Rajinder Singh, Prevention FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 33 of 45Officer'. That apart, Rajinder Singh, Prevention Officer did not step into the witness box to depose as regards his 'report'. It therefore remains a mystery as to who it was who had actually inspected the goods long after it had purportedly moved out of Mumbai airport.
34. Defendant no.1 also placed reliance upon airway bill dt. 23.11.2005, invoice, front page of carnet, importation counterfoil, reexportation counterfoil etc. It had submitted these documents to the plaintiff. The plaintiff had forwarded the same to Korean authorities, but the latter did not accept the same. Vide its final reminders dt. 05.09.2006 and 06.09.2006 (letters 'I') KCCI said that 'your produced evidence has not been accepted because all information indicated reexportation counterfoil was not enough for examination'. Importation counterfoil and reexportation counterfoil were found to have been not properly endorsed by KCCI and such not accepted.
35. It needs to be added here that in terms of Article 8.2 it was for the customs authorities of 'country of importation' (in the instant Korea Customs) to accept as evidence 'any other documentary proof' of reexportation of the goods. Going by Article 8.2 it was certainly not for the plaintiff or the Indian Customs authorities or even the Korean Chambers of Commerce (KCCI) to decide and accept as to what would be 'any other documentary proof'. Plaintiff was only the facilitator between KCCI and Carnet holder (defendant). And this is precisely what ICC in its reply dt. 31.01.2007 via email to the plaintiff observed, "Moreover, I would FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 34 of 45like to stress that it is the Customs authorities of the country of temporary importation (i.e Korean Customs) and NOT the national guaranteeing organization (i.e. KCCI) which are entitled to regularize the ATA Carnet and confirm their acceptance of 'any other documentary proof of reexportation' than the completion of the reexportation certificate in the ATA Carnet at stake in accordance with Article 8, paragraph 2 of ATA convention." This was reiterated by ICC in its email dt. 20.03.2007 that the term 'may' in Article 8.2(b) means that Korean customs are free to accept or reject the proof which has been submitted for the settlement of the claim on ATA Carnet no. IN 118/2005/DE.
36. On behalf of defendants no.1 and 2, it was argued that Mr. Nirankar Saxena (PW1) in his email dt. 02.02.2007 to KCCI had admitted that ATA carnets were reimported to Mumbai, India. I have gone through this email dt. 02.02.2007. I find no such admission on the part of Nirankar Saxena (PW1). This is what this email reads:
"Dear Mr HoKyum Kim, Further to our message dated 31st January 2007 sending sacn copy of AWB No. TIA009101 dated 23rd November 2005 regarding ATA Carnet No. 119/2005/DE. We are now sending a scanned copy of the Letter/Certificate dated 1st February 2007 issued by the Office of the Commissioner of Customs, CSI Airport, Sahar, Mumbai certifying the reimportation of the goods covered under ATA carnet No. IN 118/2005/DE. This has been issued by the customs after physical verification of the goods reimported into India from Korea.
The Customs officers have given detailed comments, FICCI vs. Vishesh Films Pvt. Ltd. & Ors.CS No. 81/16 New CS No. 611617/16 Page 35 of 45
wherever relevant. The certificate has been issued by the customs in India to Carnet Holder against the request made by them vide their letter dated 17 th January 2007. A scan copy of the same is sent herewith. We hope this will satisfy the customs officials at Seoul."
37. It is to be noted that vide this email plaintiff was only doing its duties as a facilitator between the carnet holder and KCCI and forwarding the 'evidence' put forth by the carnet holder to the KCCI for its consideration. It is no evidence of admission on the part of plaintiff that the goods had indeed been reimported to India and/or reexported out of Korea.
38. To conclude the discussion on this issue it is held that defendants no.1 and 2 failed to fulfill their obligations under the ATA Convention of furnishing requisite proof/evidence of re exportation of goods out of Korea. This issue is this answered in plaintiff's favour and against defendants.
39. Issue no.8 This issue is as follows: If the answer to issue no.7 is in the negative, then whether plaintiff has under the provision of ATA Conventions, bonafidely and validly made payment to KCCI on refusal by the answering defendants to pay the same, if so, its effect. Onus to prove is on the plaintiff. Under Article 6.4 limitation for lodging claim with the Guaranteeing Association is one year from the validity of the Carnet. The two carnets were valid till 24.04.2006, thus limitation for lodging claim in respect thereto was till 23.04.2007. Therefore, the claim was within time. Further, KCCI vide its letters 'A' dt. 03.05.2006 (Ex.
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 36 of 45PW1/7) and 08.05.2006 (Ex. PW1/8) relating to ATA carnet nos. IN/119/2005/DE and IN/118/2005/DE respectively sought evidence of reexportation of goods temporarily imported into Korea. On no evidence being furnished, KCCI sent letters 'C' (reminder) dt. 28.06.2006 and 23.06.2006 in respect of ATA Carnets IN/118/2005/DE and IN/119/2005/DE respectively. Plaintiff vide its two separate letters both dt. 28.6.2006 (Ex. PW1/9 and Ex. PW1/10) regarding carnets IN/118/2005/DE and IN/119/2005/DE respectively sent to KCCI copies of the relevant pages of used carnets returned by defendant company. These pages were (a) front page of the carnet, (b) importation counterfoil, and (c) re exportation file. Not satisfied with such evidence, KCCI sent letter 'I' (final reminder) dt. 05.09.2006 and 06.09.2006 qua ATA carnet nos. IN/118/2005/DE and IN/119/2005/DE respectively. KCCI then sent letters 'G' (request for reimbursement) dt. 27.09.2006 seeking remittance of KRW 21,316,030/ as claim against carnet IN/118/2005/DE and KRW 99,700/ against carnet IN/119/2005/DE. Defendant company then vide its letter dt. 16.10.2006 sent copies of some documents (Air Waybill and Invoice), which were not in compliance of ATA Convention. Plaintiff then vide its letter dt. 10.11.2006 demanded claim amount from defendant company with a request to get the cheque in the name of KCCI. In response to this defendant company sent to the plaintiff a reply dt. 30.11.2006 detailing therein its version. With this letter defendant also submitted certain documents from private source to justify and establish that the goods were reexported from Korea and were re FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 37 of 45imported into India. None of the 'evidences' produced by the defendant company along with this letter were admissible evidence as per ATA Convention. Defendant company in paragraph 20 of this letter also made a request for complete waiver of KCCI's claim. Defendant company also tried to get it settled through Korean Tourism Organization, Mumbai directly but all in vain.
40. The record would also reflect that the plaintiff had also approached ICC via emails dt. 26.01.2007 and 31.01.2007 seeking its intervention in the matter and sought some more time enabling carnet holder to arrange the requisite certificate from Customs. But ICC in its response via email dt. 26.01.2007 advised the plaintiff and KCCI to strictly abide by the provisions of Articles 6, 7 and 8 of ATA Convention. Plaintiff's efforts to buy some more time for the carnet holder (defendant company) to submit further proof of reimportation through the certificate from Indian Customs went waste and ICC further advised that all the parties must comply with the provisions of ATA convention. As regards carnet holder, ICC commented, "It is also worth stressing that it is of the utmost importance for Carnet holders to obtain the correct Customs verification and certification in their Carnets upon entry and exist from each foreign country visited." It bears repetition to state that ICC in its response via email dt. 31.01.2007 wrote to the plaintiff that it was for the "Korean Customs and not KCCI to regularize the ATA Carnet and take a call as to what would amount to 'any other documentary proof of reexportation' under Article 8.2 of ATA FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 38 of 45convention." Faced with such situation, it is quite obvious that plaintiff had no option other than to request the carnet holder to pay the amount asked by KCCI which it had indeed done via e mails dt. 27.01.2007 and 29.01.2007. And given the fact that defendant company (carnet holder) did not pay the due amount, plaintiff kept on corresponding with KCCI on the basis of information/documents provided by defendant for onward submission to KCCI from time to time. When KCCI did not get reimbursement of the amount it paid to Korean Customs, it brought the matter to the notice of ICC which sent an email dt. 02.03.2017 to plaintiff saying that it was 'very concerned that the overdue payment was still pending despite repeated requests for reimbursements'. It has come in the evidence of PW1 Nirankar Saxena that he even visited Mumbai office of defendant company where the matter was discussed in detail with the director of defendant company in the presence of their lawyer and their other officials and the outcome of this meeting was that it was unanimously resolved with defendant company that plaintiff should settle the claim qua carnet No. IN 119/2005/DE (US $ 106) with KCCI, which shall be reimbursed by defendant and further that plaintiff should keep on persuading KCCI to drop its claim qua carnet No. IN 118/2005/DE, which was for a bigger amount of KRW 21,316,030/ equivalent to US$ 23097/ approx.
41. Plaintiff, accordingly, remitted US$ 106 on behalf of defendant company to KCCI and demanded reimbursement of the FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 39 of 45same from defendant vide its email dt. 20.03.2007. Defendant company however made no reimbursement to plaintiff and shot back a letter Ex. P53 to which the plaintiff replied vide its reply dt. 29.03.2007 Ex P55. Even then the plaintiff demanded from defendant company vide its emails dt. 11.04.2007 and 16.04.2007 the amount due. Defendant company vide its letter dt. 16.04.2007 Ex. P58 flatly refused to pay any money qua the claims against Carnet Nos. IN 118/2005/DE and IN 119/2005/DE. Under such circumstance plaintiff, as an Issuing and Guaranteeing Association of India, had no option but to settle the claim against Carnet No. IN 118/2005/DE also.
42. It is thus clear that defendant company refused to honour the settlement of KCCI's claims despite clear violation by it of the ATA Convention, but also breached their specific commitment made to plaintiff vide the Indemnity Bond dt. 30.11.2005. In this indemnity bond, the defendant company had specifically agreed to indemnify the plaintiff against all claims in respect of the two carnets which may be incurred by the plaintiff in settlement of the claims.
43. Given the aforesaid circumstances, there can be no manner of doubt that plaintiff had bonafidely and validly made payment to KCCI on refusal of defendant company to pay the same. The effect of this is that the plaintiff is entitled to claim reimbursement from the carnet holder. Needles to say, in such matters involving international commitments, the national prestige is also at stake. This was more so when ICC vide its several emails to the plaintiff FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 40 of 45had expressed its 'concerns' over the amount not being paid. Steadfast refusal on the part of the plaintiff to pay the amount to KCCI would have reflected very poorly on India. It was not only a matter between the plaintiff and the defendants, but of international commitments involving national prestige. This issue is thus decided in plaintiff's favour and against defendants.
44. Issue no.5 - The issue is whether the plaintiff is estopped by its acts and conduct from filing the present suit, onus to prove being on the defendants. None of plaintiff's act throughout has estopped it from filing the present suit against defendants. It was the argument of defendants no.1 and 2 that plaintiff did not invoke Article 19 of the Convention for settlement of the dispute through negotiations. This argument is of no avail. To invoke Article 19 the dispute must be in relation to 'interpretation or application of the Convention'. The plaintiff on its part had not only written to KCCI but also the ICC regarding the dispute. However the ICC vide its various emails advised the plaintiff to send messages directly to KCCI and that it was for the Korean customs authorities to take a call as to whether the evidence of reexportation was sufficient or not. Further, when the payment was not made within the stipulated time ICC in its emails to plaintiff expressed its 'concerns'. Given this it cannot be said that the plaintiff failed in its duty in taking the case of defendant company with ICC or with KCCI. That apart, it does not appear to this Court that the dispute involved 'interpretation or application of the Convention' as the FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 41 of 45interpretation of the Article 8 was quite clear as also its application to the case at hand. Further, as already stated hereinabove, in such matters involving international commitments it is the national prestige that is involved. Whether it would have been wise enough to take a stand not to pay, come what may, and instead insist on invoking Article 19 was a call, which was for the plaintiff, being the Issuing and National Guaranteeing Association for India, to take. This is more so when the amount involved was not too great (approximately Rs 910 lacs). This Court, or for that matter defendant(s), cannot substitute its own wisdom in such matters involving national prestige. This Court is thus of the view that defendants failed to discharge the onus of proving this issue.
45. Issue No.9 - The issue is whether plaintiff is entitled to re imbursement of payments made by it to KCCI and the incidental expenses in view of the ATA Conventions read with Indemnity Bond dt. 30.11.2005 executed by the defendant company through its director in plaintiff' favour as claimed in the plaint, onus to probe being on the plaintiff. Under Article 6.1 of ATA Convention, both Guaranteeing Association (plaintiff) and the Carnet holder (defendant company) are jointly and severally liable for payment of customs duty and penalty etc. in case of contravention of ATA Convention by the carnet holder (defendant company). Further, at the time of release of bank guarantee from the plaintiff, defendant company by submitting an Indemnity Bond categorically in unambiguous terms agreed as under, "In consideration of your FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 42 of 45having released the Security Deposit vide Bank Guarantee no. GU905125 dated 25.10.2005 for Rs.11,16,885/ (Rupees Eleven Lakh Sixteen thousand Eight hundred Eighty fie only) valid till 30.11.2005 submitted by us through our Bankers ALLAHABAD BANK against ATA Carnet No. IN118/2005/DE and ATA Carnet No. IN119/2005/DE dated 25.10.2005 which was issued by you to us for SOUTH KOREA, we hereby agree to indemnify you against all claims in respect of above ATA Carnet and against all costs and expenses which may be incurred by you in respect of settling the claim(s) against the above carnet, if any." Director Mukesh Bhatt had executed this Indemnity bond on behalf of defendant company.
46. It was the argument that Indemnity Bond was taken under coercion. This self serving ipse dixit of defendants no.1 and 2 can be of no avail. The mere fact that Indemnity Bond was taken in lieu of release of bank guarantee will not establish coercion. The bank guarantee was released only for the benefit of defendant company. Release of the bank guarantee was certainly not to the benefit of plaintiff. It was also argued that the carnets as also the bank guarantee had expired and as such the contract between the parties was no longer in existence. This argument is noted only to be rejected. Under Article 6.4 claim in respect of carnets could be raised within a year of the expiry of its validity. Further, defendant company was bound by the terms of Indemnity Bond.
47. Plaintiff is certainly entitled to reimbursement of payment made by it to KCCI and the incidental expenses in view of the ATA FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 43 of 45Conventions read with Indemnity Bond dt. 30.11.2005. This issue thus stands answered in plaintiff's favour and against the defendants.
48. Issue No.10 - The issue is whether plaintiff is entitled for the recovery of money from the defendants, onus to probe being on the plaintiff. Discussion on the aforesaid issues inevitably entail that plaintiff is entitled to recovery of the payments made by it to KCCI and other incidental expenses. Defendant no.1 company, which is a separate legal entity under the law, is therefore liable to pay a sum of Rs. 9,68,918/ to the plaintiff.
49. Issue No.11 - The issue is whether plaintiff is entitled for interest as claimed, if so at what rate and for which period, onus to prove being on the plaintiff. Plaintiff in its relief (in the plaint) claimed no interest. However it claimed interest at the rate of 16% per annum on the amount paid by it only till the filing of the suit. Under Order VII Rule 7 court may grant such general reliefs, although not specifically claimed, as it may deem fit and appropriate. The transaction in question is a purely commercial transaction. Considering this, it is fit and appropriate that plaintiff be awarded interest @16% per annum with effect from 18.05.2007 till the full and final payment.
50. Issue No.4 - The issue is whether plaintiff has disclosed cause of action to file the present suit, onus being on plaintiff to prove it. Discussion on the aforesaid issues would reflect that there FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16 New CS No. 611617/16 Page 44 of 45was certainly cause of action available with the plaintiff to file the instant suit. This issue is thus decided in plaintiff's favour and against the defendants.
51. Relief - This suit of the plaintiff stands decreed against defendant no.1 M/s. Vishesh Films Pvt. Ltd. in the sum of Rs. 9,68,918/ together with interest thereon at the rate of 16% per annum with effect from 18.05.2007 till its actual realization. Costs of the suit is awarded to the plaintiff. Decree sheet be drawn up. File be consigned to record room.
ANNOUNCED IN THE OPEN MURARI
PRASAD
Digitally signed
by MURARI
PRASAD SINGH
COURT ON 14.08.2018 SINGH
Date: 2018.08.14
16:37:56 +0530
(M. P. SINGH)
ADJ03 (CENTRAL)
TIS HAZARI COURTS
DELHI
FICCI vs. Vishesh Films Pvt. Ltd. & Ors.
CS No. 81/16
New CS No. 611617/16 Page 45 of 45