Delhi High Court
Harjit Kaur Dhingra vs Pan American World Airways & Anr. on 6 August, 2010
Author: Anil Kumar
Bench: Anil Kumar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No.3457 of 1992
% Date of Decision: 6.08.2010
Harjit Kaur Dhingra .... Plaintiff
Through Mr.H.L.Tikku Sr. Advocate with Ms.
Yashmeet Kaur Advocate.
Versus
Pan American World Airways & anr. .... Defendants
Through Mr.Amir Z. Singh Pasrich Advocate with
Mr. Kalyan Arambam Advocate for
Defendant no.2.
CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR
1. Whether reporters of Local papers may be
allowed to see the judgment?
2. To be referred to the reporter or not?
3. Whether the judgment should be reported in
the Digest?
ANIL KUMAR, J.
*
1. The plaintiff has filed this suit for recovery of Rs.7,42,005/- for value of goods, Freight Charges, Post Shipment Benefits, interest at the rate of 18.5% from 21st October, 1990 till 7th September, 1992 and for loss of profit and business against the Defendants. The suit was initially filed against Pan American World Airways, Defendant no.1. Later on Defendant no.2 Delta Airways was impleaded as party to the suit pursuant to the application for amendment filed by the plaintiff which was allowed by order dated 2nd November, 1994. The defendant no.1 had already proceeded ex-parte and the Court had allowed the CS(OS) 3457 of 1992 Page 1 of 48 application of amendment of the plaintiff being IA no. 3457 of 1992 without notice to the defendant no.2 and without observing that the defendant no.2 is deemed to be sued from the date of institution of the suit on 14th September, 1992.
2. Brief facts to comprehend the disputes between the parties are that the plaintiff alleged that he is carrying on a business in the name and style of „Gurav International‟ and is engaged in manufacture and exporting of readymade garments. For exporting its garments, the plaintiff through his agent, M/s continental carriers, New Delhi entrusted to PAN American World Airways, defendant no.1 (hereinafter also referred to as PAWA) for carriage 25 packages containing readymade high fashion cotton gent‟s shirts from New Delhi to New York. The plaintiff averred that defendant No.1, PAN American World Airways was made aware that the shipment had ordered goods which were meant for immediate sale and as such were urgently to be delivered at the place of destination.
3. The plea of the plaintiff is that the PAN American World Airways checked the quantity, value and nature of goods and accepted the shipment and assured to carry and deliver the same immediately upon payment of freight charges of Rs.26,319/-. The freight charges were paid and defendant No.1 issued an Airways Bill bearing No.026-1044- 2212 dated 22nd October, 1990 in the name of plaintiff. The consignee CS(OS) 3457 of 1992 Page 2 of 48 disclosed in the Airways Bill was FIBI (Switzerland) Ltd. and the party which was to be notified an arrival of the shipment at destination was "Crime Wave Limited" 1466, Broad-Way, New York.
4. The allegation of the plaintiff is that after the shipment was booked, repeated inquiries were made from PAWA with regard to the status of the shipment pursuant to which the plaintiff was informed by PAWA by letter dated 3rd December, 1990 that shipment was delivered to consignee, "Crime Wave Limited" on 8th November, 1990.
5. According to the plaintiff since the payment was not received, he advised PAWA that consignee bank "FIBI Bank" had not issued any release order, and therefore, delivery by PAWA to alleged "Crime Wave Limited" was unauthorized and illegal. In the circumstances, it was contended that the plaintiff has suffered loss of the value of the shipment and another benefits and therefore, the plaintiff demanded a sum of Rs.4,64,037/- from defendant No.1, "PAWA".
6. The plaintiff also demanded the consignee bank release the order through her banker who advised the plaintiff that the letter was a forged document, as it was neither the letter head of the consignee bank, nor had been signed by any officer of the bank, nor did the named consignee authorize the delivery of the shipment.
CS(OS) 3457 of 1992 Page 3 of 48
7. Thereafter, the plaintiff issued a legal notice dated 9th April, 1991, claiming an amount of Rs.4,64,037/- together with interest at the rate of 18% per annum. The PAN American World Airways, defendant No.1 by its letter dated 31st October, 1991 addressed to the plaintiff also sought a letter from her banker without specifying as to what letter from the plaintiff‟s bank Standard Charter should contain. According to the plaintiff, thereafter defendant No.1 did not respond properly and kept on assuring the plaintiff that as soon as defendant No.1 at its New York Office settles the plaintiff‟s claim, it will remit the amount. In the circumstances, the plaintiff has asserted that defendant No.1 acted with gross negligence leading to mis-delivery of the consignment in question, and defendant No.1 acted carelessly. It was also alleged that defendant No.1 deliberately, dishonestly, negligently, carelessly and with ulterior and fraudulent motives did not disclose the details of release of shipment, as defendant No.1 intended to forestall claims being lodged by the plaintiff. In the circumstances, the plaintiff claims that defendant No.1 is liable to make good the loss for mis-delivery of goods and losses suffered by the plaintiff and claimed a total amount of Rs.7,42,005/- comprising of Rs.3,87,718/- as value of goods; Rs.26,319/- as freight charges; Rs.25,000/- as post shipment benefits; Rs.1,52,968/- as interest at the rate of 18% per annum from October 21, 1990 till 7th September, 1992 and Rs.1,50,000/- as loss of profit and business. CS(OS) 3457 of 1992 Page 4 of 48
8. During the pendency of the suit PAN American World Airways was served by substituted service by publication and no one appeared on behalf of the said defendant No.1. Thereafter the plaintiff filed an application being I.A.No.9616 of 1994 under Order XXII Rule 10 read with Order I Rule 10 of the Code of Civil Procedure for substituting Delta Airways Lines in place of PAN American World Airways or to allow the plaintiff to add Delta Airways Lines having its Office amongst other at Chandralok, 36 Janpath, New Delhi.
9. The Court allowed the application being I.A.No.9616 of 1994 under Order XXII Rule 10 read with Order I Rule 10 of the Code of Civil Procedure by order dated 2nd November, 1994 and permitted Delta Airlines to be joined as defendant No.2 in the suit. Consequent thereto, defendant no.2, M/s Delta Airlines was impleaded as party instead of substituting M/s Delta Airlines in place of defendant No.1, PAN American World Airways.
10. Consequent to impleadment of M/s Delta Airlines as defendant No.2, an amended plaint was also filed by the plaintiff contending, inter-alia that defendant No.1 has amalgamated and/or taken over by defendant No.2, and all the business, assets, liabilities, rights, title and interest of PAN American World Airways have been assigned vested and/or devolved upon defendant No.2 who is the successor of CS(OS) 3457 of 1992 Page 5 of 48 defendant No.1 and therefore, the plaintiff is entitled to maintain the suit and recover the her claim amount from defendant No.2.
11. The suit of the plaintiff has been contested by defendant No.2 who filed a written statement, contending, inter-alia that suit of the plaintiff is barred by time under the provisions of Limitation Act, 1962 against defendant No.2. The dismissal of the suit was also sought on the ground that it does not disclose any cause of action against defendant no.2, as there is no relationship between defendant No.2 and the plaintiff.
12. Relying on the original plaint by the plaintiff before the defendant no.2 was impleaded as party, it is alleged that cause of action arose on 22nd October, 1990 and the limitation would commence from the date the goods ought to have been delivered. The defendant no.2 also contended that while amending the plaint on impleading defendant No.2, certain changes were carried out by the plaintiff in the plaint which could not have been carried out without specific permission of the Court and consequently, the plea of the plaintiff that cause of action had arisen on 22nd October, 1990 could not have been omitted in the plaint. The defendant no.2 asserted in the circumstances that if the cause of action had arisen on 22nd October, 1990, the relief against defendant No.2 became barred by time on 21st October, 1993 whereas the application for impleadment under Order I Rule 10 and Order XXII CS(OS) 3457 of 1992 Page 6 of 48 Rule 10 of the Code of Civil Procedure was allowed without notice to defendant No.2 on 2nd November, 1994.
13. Defendant No.2 also asserted that the plaint does not disclose any cause of action against defendant No.2, as no document has been filed to show that defendant No.2 has taken over and/or amalgamated with defendant No.1. It was also pleaded that nothing has been produced by the plaintiff to show that all the business, assets, liabilities, rights, title and/ or interests of defendant No.1 have been assigned vested and/or have devolved upon defendant No.2. Defendant No.2 also pleading that even no provision of law has been disclosed under which it can be held that defendant No.2 is the successor of defendant No.1 and has taken over its liabilities. The Delta Airlines Inc., defendant No.2 categorically asserted that it has no connection with the alleged transaction and/or any alleged correspondence or documentation. Defendant No.2 also denied that he had any contractual obligation to the plaintiff and that it has failed to discharge its obligations. Liability to pay Rs.7,42,005/- or any other amount was also denied.
14. During the pendency of the suit defendant No.2 was directed to furnish security of Rs.4,65,000/- by order dated 17th November, 1995 in I.A.No.11467 of 1995. By order dated 13th March, 1996, defendant No.2 was directed to furnish the bank guarantee for the entire amount of Rs.7,42,005/- claimed by the plaintiff. Pursuant to the orders of the CS(OS) 3457 of 1992 Page 7 of 48 Court, the bank guarantee was furnished by defendant No.2 which has been renewed from time to time.
15. No replication was filed by the plaintiff to the written statement of defendant no.2 refuting certain pleas and contentions taken by the said defendant in its written statement. On the basis of pleadings of the parties the issues were framed on 12th May,1997. However, the issues were amended pursuant to an application by Defendant no.2 being I.A No.742 of 2002 by order dated 24th January, 2002. The issues as were reframed by the Court on 24th January, 2002 are as under:
I. Whether the defendants carried and released the shipment in accordance with the terms and conditions of contract? OPP II. Whether the written statement of defendant No. 2 is signed and verified by duly authorized and competent person? III. Whether the defendant No. 2 is the successor in interest of Defendant No. 1 and has taken over the assets and liabilities of Defendant No. 1, and to what effect?" OPP IV. To what amount and on what accounts, if any, the plaintiff is entitled to recover? OPP V. To what rates of interest, if any, the plaintiff is entitled to recover? OPP VI. Whether the suit is barred by time?
VII. Whether the plaint discloses any cause of action against Defendant No. 2? OPP VIII. Relief CS(OS) 3457 of 1992 Page 8 of 48
16. After framing of issues the parties led evidence and on behalf of plaintiff, the deposition of Mr. Sharad Sharma who had been working as officer, Trade Services in Standard Chartered Bank; Sh. Gurvinder Singh Dhingra, Attorney of the plaintiff were examined. Statement of Sh. C.K. Chandi, Assistant Manager, Reserve Bank of India regarding permission granted to Delta Airlines under Section 29(1)(A) of Foreign Exchange Regulation Act and Sh. Pranava Priyadarshi, working in the Reference Department of Times of India were also recorded. The defendant No. 2 examined Sh. K.P. Maggon, Dy. Director of Directorate General of Civil Aviation; Ms. Katherine Snyder, an employee of defendant No. 2 in its law department; Mr. B. K. Srinivasan, Manager of defendant No.2 who had also signed and verified the written statement on behalf of defendant No. 2 and Mr. Dieter Hofele in whose favor a power of attorney by Gragory Al Riggs was executed by Vice President and Dy. General Counsel and Assistant Secretary of defendant No. 2, which was exhibited as Ex. DW-6/1.
17. The plaintiff has claimed the decree for recovery of money jointly and severally against the defendants. The defendant no.1 was served by publication and had proceeded ex parte as none had appeared on his behalf. The suit is contested by defendant no.2. The issue number II `whether the written statement is signed and verified by a duly authorized person on behalf of defendant no.2 is dealt first. CS(OS) 3457 of 1992 Page 9 of 48
18. Issue no. II. The written statement which is filed on behalf of the defendant no.2 is signed by Shri K.Srinivasan, Senior Sales Manager of Defendant no.2 who verified the written statement stipulating that he is authorized and competent to verify the contents of the written statement to the best of his knowledge and on the basis of records. According to plaintiff, the sales manager of the defendant could not be principal officer and no authorization in favor of the said official has been filed by the said defended and consequently the written statement on behalf of said defended has not been signed and verified by a duly authorized person.
19. The contesting defendant has contended that there is no plea in the plaint that the written statement has not been filed by a duly authorized person. This contention is not acceptable. There could not be such a plea in the plaint as the written statement was filed after the amended plaint was filed by the plaintiff. This however, has not been contradicted by the plaintiff that she could have contradicted this plea by filing a replication and taking a plea that the written statement has not been signed and verified by a duly authorized person on behalf of the defendant no.2. The contesting defendant has relied on a power of attorney which has been proved as Exhibit DW 6/1 which was executed pursuant to the resolution of the Board of defendant no.2. The contesting defendant has also relied on the depositions of DW-6 and DW-5, namely Mr. Dieter Hofele and Mr. K Srinivasan. Mr. Srinivasan CS(OS) 3457 of 1992 Page 10 of 48 deposing that the written statement was drafted by the counsel under his instructions and under the instructions of Mr. John E. Parkerson, Attorney of Delta Air Lines Inc. He stated that he was responsible for the Delhi station and was the last employee of Delta Air Lines in New Delhi after the airline closed down their operations here in 1995. In his capacity as Sales Manager and otherwise as the senior-most employee of Defendant No. 2 in Delhi, he was authorized to sign and execute various documents on behalf of Delta Air Lines Inc. He also deposed that he signed and verified the Written Statement filed in this case in November, 1995 and stated that the contents are based on facts derived from the records of the company and some of the facts he is personally aware of. The said Written Statement had been approved by Delta‟s Law Department through Mr. John E. Parkerson, who was then Delta‟s Senior Attorney in Atlanta, Georgia, USA.
20. Mr. Dieter Hofele, DW-6 in his deposition stated that he confirms and ratifies the Written Statement filed which was duly authorized by Delta‟s senior management. He confirmed that Mr. John E. Parkerson, Senior Attorney in Delta‟s Law Department, duly approved the Written Statement. It was issued under the authority of the company. He stated that the facts contained in the said Written Statement were derived from records of this case and records of the company. According to him to the best of his knowledge, the said Written Statement does not contain any statements which are false, misleading or otherwise CS(OS) 3457 of 1992 Page 11 of 48 contrary to Delta Air Lines Inc.‟s documentation. The person who signed this Written Statement was working under him previously and was authorized by Delta Air Lines, Inc. to sign that document. A power of attorney has also been filed on behalf of defendant no.2. Clause 8 of the said attorney allows DW 6 to act as an agent of the Company generally before any Court, to answer interrogatories, to sign statements, affidavits etc. The Exhibit accompanying that document i.e. Notarised Certificate of Resolution shows that a Resolution was passed for delegation of powers by the Board of Directors of Delta Air Lines, Inc on 25th October 1990 and the powers consequently devolved upon Mr. Gregory L. Riggs, Vice President - Deputy General Counsel and Assistant Secretary of Delta Air Lines to authorize him to issue the relevant Power-of-Attorney. The attorney is attested by the Indian Vice Consul Shri D.B. Bhati, Consulate General of India, Houston, USA and notarized by Notary Public of State of Georgia, Natalie Miles. Pursuant to the said Power granted and ratified by the Company, the Written Statement as verified by the signatory has been duly confirmed and ratified on behalf of Defendant No. 2 company i.e. Delta Air Lines, Inc. Mr. Sriniwasan in his cross examination had also deposed that he had a power of attorney at the relevant time which has been misplaced by him as the office of the contesting defendant had been closed. No suggestion was given to him that he was not authorized to sign and verify the pleadings on behalf of contesting defendant or that power of attorney was not executed in his favor. No suggestion was even given in CS(OS) 3457 of 1992 Page 12 of 48 the cross examination of Mr. Dieter Hoefele that no power of attorney was executed in favor of Mr. Srinivasan.
21. In support of plaintiff‟s contention that the written statement has been signed and verified by a duly authorized person, defendant No. 2 has also relied on United Bank of India Vs. Naresh Kumar & Ors., AIR 1997 SC 3 and M/s. Kalpana Exports Vs. Kerala Financial Corporation, AIR 1990 Kerala 84 holding that where pleadings have been signed by one of the officers of the Corporation, it can ratify the said action of its officer in signing the pleadings. In United Bank of India (supra) it was held by the Apex Court that reading of Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure reveals that even in absence of any formal letter of authority or power of attorney being executed, a person, referred to under Order 29 Rule 1, by virtue of the office which he holds, can sign and verify the pleadings on behalf of Corporation. It was also held that a company is a juristic entity and consequently, it can duly authorize any person to sign the plaint or written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 of the Code of Civil Procedure. The Apex Court had held:
10. It cannot be disputed that a company like the appellant can sue and be sued in its own name. Under Order 6 Rule 14 of the Code of Civil Procedure a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order 29 Rule 1 of the Code of Civil Procedure, therefore, provides CS(OS) 3457 of 1992 Page 13 of 48 that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the Pleadings on behalf of the corporation. In addition thereto and dehors Order 29 Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 of the Code of Civil Procedure. A person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual.
In absence thereof and in cases where pleadings have been signed by one of its officers a corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, especially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer.
22. In M/s. Kalpana Exports (Supra) one of the Bench of Kerala High Court had held that expression "principal officer" is not defined in the Code of Civil Procedure and consequently, it cannot be said that Order 29 is exhaustive of persons or officers who can sign and verify the plaint. In this case, a Dy. Legal Manager had signed and verified the petition, who was duly authorized to do so by the Board as per the resolution and it was held that the Dy. Legal Manager was competent officer to file the writ petition before the District Judge. CS(OS) 3457 of 1992 Page 14 of 48
23. Considering the entirety of evidence on this aspect especially the power of attorney Ex Dw 6/1 in favor of Mr. Dieter Hofele and his statement along with the statement of Mr. Srinivasan who has ratified what has been pleaded on behalf of the contesting defendant in the written statement, it cannot be held that the written statement was not signed and verified by a duly authorized person on behalf of the defendant no.2. The defendant no.5 had deposed that a power of attorney was issued in his favor which however, has been lost on account of closure of the office of the defendant no.2 which fact has not been denied by the plaintiff in the cross examination of said witness nor it has been suggested to him that no power of attorney was executed in his favor. The plea taken in the written statement on behalf of the defendant no.2 that it has been signed and verified by a duly authorized person on behalf of the defendant no.2 was not refuted by filing appropriate pleadings after taking permission from the Court in accordance with provision of Code of Civil Procedure. Dw6 in any case has ratified the pleadings on behalf of the defendant no.2 which is express. Supreme Court in Union Bank of India (supra) had held that in cases where pleadings have been signed by one of the officers of a corporation, it can ratify the said action of its officer in signing the pleadings and such ratification can be express or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, especially with regard to the conduct of the trial come to the conclusion that the corporation had ratified the CS(OS) 3457 of 1992 Page 15 of 48 act of signing of the pleading by its officer. In the circumstances the only probable inference is that the written statement had been signed and verified by a duly authorized person on behalf of the defendant no.2.
The issue is accordingly decided in favor of Defendant no.2.
24. Issue no. III & VII are taken up together. Issue no.3 is whether the defendant no.2 is the successor in interest of Defendant no.1 and has taken over the liabilities and assets of the defendant no.1 and issue no. 7 is whether the plaint discloses any cause of action against the defendant no.2.
25. The allegation against the contesting defendant is that defendant no.1 had amalgamated and/or had been taken over by contesting defendant and the other international carrier, defendant no.1, and all its business assets and liabilities, rights, titles and interest had been assigned, vested and/or devolved upon contesting defendant and he is the successor of defendant no.1. The allegation made in para 2 of the plaint by the plaintiff is refuted by the defendant no.2 in his written statement contending that there is no contractual relationship between the plaintiff and contesting defendant. It was pleaded that all the documents relied on by the plaintiff in support of her claim relates to defendant no.1. It was asserted that the defendant no.2 has at all times continue to function independently of defendant no.1. The contesting CS(OS) 3457 of 1992 Page 16 of 48 defendant denied that defendant no.1 had amalgamated with defendant no.2. It was denied by the contesting defendant that it was the successor of the defendant no.1 in any manner. The contesting defendant denied that it had taken over the liabilities of the defendant no.1 or its business. It was clarified that defendant no.1 had only sold certain assets to contesting defendant. It was contended on behalf of the defendant no.2 that it had set up completely independent operations in India and it is an independent entity.
26. The learned senior counsel for the plaintiff, Mr. Tikku has relied on certain documents to drive the plea of the plaintiff that defendant No. 2 is the successor of defendant No. 1 and has taken over its assets and liabilities. Reliance has been placed on an envelope Ex.PW 2/16 which is of defendant No. 1 and allegedly used by defendant No. 2. The learned counsel has also referred to a certified copy of a District Court judgment in Suit No. 637/2002, where a decree was passed against Delta Airlines and Pan American World Airways as defendants. The learned senior counsel has also relied on Asset Purchase Agreement, which is exhibited as Ex. DW4/2. The plea of the plaintiff is that the Asset Purchase Agreement is not for mere purchase of Aircrafts and some other assets as has been contended and projected on behalf of defendant no. 2, because defendant No. 1 was purchased by defendant No. 2 as a going concern and it included purchase of contracts; ground support equipment; permit and licenses; documents; data books; CS(OS) 3457 of 1992 Page 17 of 48 records etc.; trademarks; routes and slots; employment records and even employees and has referred to various clauses of the Asset Purchase Agreement. The emphasis was also laid on the fact that defendant No.2 operated from the same building from which defendant no.1was operating which is 36 Janpath, New Delhi. The fact that DW-5 Sh. K. Srinivasan was taken over by defendant No. 2, was also relied on and reliance was placed on AIR 1963, SC 1489.
27. Mr. Tikku, learned counsel for the plaintiff has also referred to the statement of the Attorney of the plaintiff deposing that he had read the news item in Economic Times that Pan American World Airways was taken over by Delta Airlines, defendant No. 2. It was also emphasized that in the cross examination, he had denied that defendant No. 2 was not the successor of defendant No. 1 and he had categorically denied the suggestion of the counsel of defendant No. 2 that there was no material on record to show that defendant No. 2 is the successor of defendant No. 1. The reliance was also laid on the denial of the suggestion on behalf of plaintiff that defendant No.2, Delta Airlines was not responsible for the liabilities of defendant No.1.
28. Mr. Pasrich, learned counsel for defendant No. 2 has laid emphasis on the Asset Purchase Agreement, which has been established and proved, according to him, as Ex. DW4/2. The learned counsel has referred to paragraph 2.4 of the Agreement which according to him CS(OS) 3457 of 1992 Page 18 of 48 categorically incorporates that it was expressly understood between defendant No. 1 and defendant No. 2 that the defendant No. 2 was not to be considered as a successor to defendant No. 1 by reason of any theory of law or equity. Relying on the Order and judgment dated 12th August, 1991, which was proved as Ex. DW 4/1 of United States Bankruptcy Court, the learned counsel for defendant No. 2 contended that defendant No. 2 did not pursuant to Asset Purchase Agreement or related instruments or otherwise assumed and agreed to perform to pay, discharge or indemnify debtors against or otherwise having any responsibility for any liabilities or obligations of the debtors of defendant No. 1. According to learned counsel, the Order of United States Bankruptcy Court dated 12th August, 1991 is an order of competent jurisdiction and reliance was placed on Section 14 of the Code of Civil Procedure. According to him, there is no challenge to the said order and the conditions set out under Section 13 of the Code of Civil Procedure are satisfied and therefore, the reliance can be placed on the same. He also relied on the newspaper cuttings dated 4th September, 1996, 3rd May, 1998 and 1st July, 1998, which had been proved as EX. DW1/1, DW1/2 and DW1/3 by DW1 Mr. Pranava Priyadarshi, Official of the Reference Department of Times of India demonstrating that the defendant No. 1 had been functioning in the United States even up to 1998. The learned counsel also relied on Ex. DW 2/1 which is ECD permission dated 19th October, 1991 under Section 29(1) (A) of Foreign Exchange Regulation Act and Ex. DW 2/1 CS(OS) 3457 of 1992 Page 19 of 48 which is a copy of the license obtained by defendant No. 2 to deal in foreign currency dated 31st October, 1991 and Ex. DW 3/1, copy of operating permit dated 1st November, 1991, issued to defendant No. 2 by Directorate General of Civil Aviation.
29. The learned counsel for defendant No. 2 also relied on the orders passed in EA 40/1996 in Execution Case No. 156/91 in Indira International Vs. Pan American World Airways and Ors; order dated 24th August, 2001, M/s. Varuna Exports Corporation Vs. M/s. Dera Imports Limited and Ors; order of a consumer dispute redressal forum dated 19th December, 1997 titled Jagmohan Kumar Vs. Delta Airlines and an order dated 5th August, 2002 passed in a matter titled as Jaipal Nandwani Vs. M/s. Pan World Incorporation. On behalf of defendant No. 2, reliance was also placed on the deposition of Ms. Snyder, Dw4, who had deposed that defendant No. 2 had neither dealt in any capacity with the plaintiff nor had any kind of relationship with the plaintiff. The said witness, according to defendant No. 2, has categorically deposed that defendant No. 2 has not ever been the successor of defendant No. 1 and did not undertake any liability of defendant No. 1 in any form or manner. Reliance was also placed on the testimony of Mr. K. Srinivasan, DW-5, Senior Sales Manager, who deposed that defendant No. 2 is not a successor in interest of Pan American World Airways and it had not taken over the liabilities of defendant No. 1 on any account and has not taken over any liability in relation to claim CS(OS) 3457 of 1992 Page 20 of 48 made by the plaintiff in the instant case. Mr. Pasrich, learned counsel for defendant No. 2 also referred to the deposition of Mr. Dieter Hofele categorically deposing after ratifying pleas and averments made on behalf of defendant No.2, which was signed and verified by Sh. Srinivasan, Senior Sales Manager deposing that defendant No. 2 is not a successor in interest of Pan American World Airways nor defendant No. 2 took over the liabilities of defendant No. 1 on any account and has not taken over alleged liability of the plaintiff in the present suit.
30. Ex. Dw 4/2 Asset Purchase Agreement in clause 2.4 categorically lays down that under the agreement, buyer does not have any responsibility or liability or obligation of the seller. Clause 2.4 of the said agreement is as under:
"2.4. Assumption of Liabilities. (a) Except as otherwise expressly provided in this Agreement or the Related Instruments, Buyer does not pursuant to this Agreement or the Related Instruments or otherwise assume, agree to perform, pay, discharge or indemnify Sellers against or otherwise have any responsibility for, any liabilities or obligations of Sellers, fixed, contingent or otherwise, known or unknown, relating to or arising out of the Purchased Assets or the Excluded Assets, whether arising prior to, on or after any Closing. It is expressly understood that the parties intend that Buyer shall not be considered a successor to Sellers by reason of any theory of law or equity and that Buyer shall have no liability except as otherwise provided in this Agreement or the Related Instruments for any obligation of Sellers. Without limiting the generality of any of the foregoing, but except as otherwise expressly provided in this Agreement or in any of the Related Instruments, Buyer does not pursuant to this Agreement or the Related Instruments or otherwise assume any of the following liabilities or obligations: (i) liabilities or obligations associated with any of the CS(OS) 3457 of 1992 Page 21 of 48 Purchased Assets incurred or arising out of events, any act done or omitted, or alleged to have been done or omitted, or any state of facts existing, or alleged to have been existing, on or prior to the Closing Date in respect of such Purchased Assets, whether or not such liabilities or obligations were known at the date hereof or at a Closing, including, without limitation, claims related to the destruction of Pan Am Flight 103 in December of 1988, (ii) liabilities or obligations to the extent they were incurred or relate to performance on or prior to the date of the Closing under the terms of any Contract or Aircraft Lease that is assumed by Buyer, iii) liabilities or obligations arising out of or relating to any employees or former employees of Sellers or any of their Affiliates, or any Employee Benefit Plans or similar arrangements as have been maintained by Sellers or any of their Affiliates, including without limitation, liabilities for accrued wages and payroll, withholding and employment taxes for any period prior to the Closing, and liabilities related to retirement and welfare benefits (including any and all claims related to any under funding of pension plans, unpaid contributions to or withdrawal liability from any Multiemployer Plan and any liability to the PBGC related thereto, and any post-retirement medical and other post retirement benefits) any claims arising under collective bargaining agreements to which either Seller or any of their Affiliates is or was a party and any and all other claims, grievances, charges, actions, complaints or proceedings (whether asserted or unasserted or pending or threatened) of any nature whatsoever, by or on behalf of employees or former employees of Sellers or any of their Affiliates or beneficiaries of any of Sellers or any of the above (whether or not such persons are employed by Sellers or any of their Affiliates on the date hereof, the Closing Date or any other time) which related to said employees‟ employment by either Seller or any of their Affiliates or (iv) liabilities or obligations with respect to any Environmental damage relating to the Purchased Assets to the extent such Environmental Damage is associated with any condition, or based on any fact or circumstances, that occurred or existed on or prior to the Closing Date, whether or not such liabilities or obligations were known on the date hereof or at the Closing.
(b) Notwithstanding subparagraph (a) immediately above, Buyer shall assume and have responsibility for all of the following liabilities and obligations, fixed, contingent or otherwise (collectively, the "Assumed Liabilities"): (i) all CS(OS) 3457 of 1992 Page 22 of 48 liabilities and obligations arising out of the ownership, use, control or operation of any of the Purchased Assets by Buyer or its Affiliates subsequent to the Closing in respect of such Purchased Assets; (ii) all liabilities and obligations, to the extent they are incurred or require performance subsequent to the Closing under the terms of any Contract or Aircraft Lease that is assumed by Buyer hereunder or under any of the Related Instruments (other than liabilities and obligations arising out of a breach of any Contract or Aircraft Lease by Sellers or others prior to the Closing, except as provided in Section 5.20); and (iii) all other liabilities and obligations expressly assumed by Buyer under this Agreement or any of the Related Instruments".
31. Learned counsel for the plaintiff has referred to various clauses of the Assets Purchase Agreement in order to drive his plea that the assets purchase agreement is in fact an agreement by which not only the assets but the liabilities of defendant No.1 Pan American World Airways has been taken over by defendant No.2. Referring to Clause 5.9, it was contended that even six thousand employees of defendant no.1 were agreed to be employed by defendant No.2 which included approximately 700 Pilots besides purchasing other assets including Air Craft etc. of defendant No.1.
32. The learned counsel has also referred to Clause 2.1 under which buyer has purchased and taken over defendant No.1 or seller‟s rights, title and interest if any and, subject to seller‟s compliance with their obligation under Section 5.2 to the extent existing on the closing date. Reliance has also been placed on Clauses 5, 13, 22, 32 & 36. Under Clause 5 of the agreement and its Sub Clauses the agreement CS(OS) 3457 of 1992 Page 23 of 48 stipulated operation of purchases assets prior to closing; insurance; access to assets; delivery of schedules; confidentiality etc. Perusal of these clauses however, reveal that none of these clauses can be construed to mean that liabilities had been taken over by defendant No.2. Perusal of other Clauses of the agreement also do not reflect taking over any of the liability specifically by defendant No.2. Rather Clause 2.4 of the said agreement is very specific and clear stipulating that except as otherwise expressly provided, defendant No.2 does not pursuant to this agreement or related instrument or otherwise assumed or agreed to perform, pay, discharge or indemnify sellers against or otherwise any liabilities or obligation of the sellers, fixed, contingent or otherwise known or unknown. In the circumstances, on the principles of simple construction of a document, it cannot be inferred that defendant No.2 had taken over any liabilities of defendant No.1 in terms of Clause 2.4 in any manner. Even the plea of plaintiff that defendant No.2 is the successor of defendant No.1 is repelled by specific stipulation to this effect in Clause 2.4 whereby it was categorically agreed between defendant No.1 and defendant No.2 that defendant No.2 shall not be considered as a successor to defendant No.1 by reason of any theory of law or equity.
33. The witness of the plaintiff, her attorney Mr.Gurvinder Singh Dhingra has deposed that since he read in the Economic Times that defendant No.1 has been taken over by defendant No.2, therefore, CS(OS) 3457 of 1992 Page 24 of 48 defendant No.2 is the successor of defendant No.1 and in further support of this plea, it was deposed that his lawyer had informed him that a letter was sent by defendant No.2 in the envelop of defendant No.1. He was categorically in his cross examination that apart from the news in the Economic Time he did not have any other material or document regarding the fact that defendant No.2 had taken over the assets and liabilities of defendant No.1. Even the envelope Ex.PW2/16 on which reliance has been placed was not addressed to him, but was addressed to his counsel Sh.H.L.Tikku, Advocate. He admitted that on the said envelope postal endorsement or stamp is not discernable. About other letter which was exhibited as Ex.PW2/17, he deposed that the original letter was issued to Gaurav International with a copy to his counsel, however, he was unable to recall whether envelope of the letter Ex.PW2/17 was with defendant No.2 or not.
34. In view of the specific stipulation in the assets purchase Ex.DW4/2 that defendant No.2 shall not be considered as a successor to defendant No.1 by reason of any theory of law or equity, merely on the basis of a envelope Ex.PW2/16, it cannot be held by stretch of any argument that defendant No.2 is successor of defendant No.1.Even the plaintiff did not implead defendant No.2 as the successor of defendant No.1. The plaintiff himself has treated defendant No.2 as a separate entity while impleading defendant No.2 through an I.A.No.9616 of 1994, which was allowed on 2nd November, 1994. The notice was not issued to defendant CS(OS) 3457 of 1992 Page 25 of 48 No.2 while allowing the said application by order dated 2nd November, 1994.
35. The learned counsel for the plaintiff has not disclosed any rule or law to demonstrate that if substantial assets of any company are purchased, the buyer/ purchaser will become the successor despite the specific stipulation in the agreement for purchase that the buyer shall not be considered a successor to seller by reason of any theory of law or equity. While buying certain assets from defendant No.1, if it was stipulated that six thousand employees of defendant No.1 shall also be employed by defendant No.2 including pilots as the defendant No.2 had purchased Aircrafts of defendant No.1, that will also not make defendant No.2 as a successor of defendant No.1 as contemplated under law so as to be liable for the liabilities of defendant no.1.
36. The reliance by the plaintiff on a decision in suit No.637 of 2002 by which Judgment and Decree were passed against defendant No.2 and defendant No.1 is also misplaced as defendant No.2 has categorically disclosed that the said decree was set aside as the same was passed ex parte and the summons of the suit on defendant No.2 was served on the wrong address as defendant No.2 never had any office at Kanakchangha building Janpath lane. It is asserted by Mr.Pasrich, learned counsel for defendant No.2 that in any case, the said ex parte decree was set aside. The judgment and decree in the suit No.637 of 2002 cannot be CS(OS) 3457 of 1992 Page 26 of 48 construed to be a judgment in rem holding that defendant No.2 is successor of defendant No.1.
37. The learned counsel for the plaintiff has relied on Workman of Brahmputra Tea Estates (Supra) to support its plea that defendant No.2 is the successor of defendant No.1. The learned counsel also relied on the decision of the Supreme Court in the case of Anakapalla Cooperative (1963) Supp. SCR 730. Perusal of the judgments relied on by the plaintiff reflected that they are distinguishable and on the basis of the ratio of the said cases neither it can be held that defendant No.2 is a successor of defendant No.1 nor it can be held that the defendant no.2 shall be liable for the alleged liability of defendant No.1.
38. In Anakapalla Co-Operative Agricultural and Industrial Society Limited (Supra) cane growers formed a cooperative society and purchased a mill which was suffering losses and terminated the services of the employees and paid retrenchment compensation. Some of the workers of the old mill who had not been absorbed challenged the decision and the matter was sent for adjudication and the Tribunal by an award directed the society to re-employ such workers with continuity of service. The society which had purchased the mill had contended that it was not a successor-in-interest and, therefore, the claim for re- employment was not sustainable and in any case the employment had been terminated upon payment of compensation under Section 25 FF CS(OS) 3457 of 1992 Page 27 of 48 and, therefore, no claim could be made against the transferee company. The Supreme Court had repelled the contention of the society holding that the society was the successor-in-interest of the company. It was held that if the purchaser purchased the whole of the business as a going concern and if the business carried on, is the same or similar as that carried on by the seller and at the same place without a substantial break in continuity and if the goodwill had been purchased then it will be a successor-in-interest. It was further held that the decision of the question whether a buyer is a successor or not would depend upon the evaluation of all the relevant factors and such a decision cannot be reached by treating any one of the factor as of over- riding or conclusive significance. The Supreme Court had held that the claim of the employees for reinstatement was not sustainable. The said precedent is in view of the provisions of the Industrial Dispute Act. The said act cannot be extrapolated to the sale between the defendant No.1 to defendant No.2. In any case merely on the reading of some of the clauses it cannot be held that the entire business has been sold to defendant No.2. In view of the specific stipulation in the Asset Purchase Agreement exhibit DW.4/2 that the defendant No.2 shall not be considered as a successor to defendant No.1 by any reason of any theory of law or equity, it cannot be negated on the basis of the ratio of Anakapalla (Supra). The decision relied on by the plaintiff is clearly distinguishable. The plaintiff has also relied on Workman of Brahmputra Tea Estate (supra) in which only the equity of redemption CS(OS) 3457 of 1992 Page 28 of 48 in a part of the assets of the tea company was purchased in which the official liquidator continued to function. The purchaser of equity of redemption was held not to be successor in interest of the tea company. The said precedent relied on by the plaintiff is clearly distinguishable.
39. Besides the Asset Purchase Agreement the decision by United States Bankruptcy Court dated 12th August, 1991 which has also been proved and exhibited as exhibit DW.4/1 cannot be modified or altered in view of the decision of the Supreme Court in Anakapalla Cooperative (Supra). In the said order dated 12th August, 1991 it was specifically held that the defendant No.2 does not pursuant to Asset Purchase Agreement or the related instrument or otherwise assume, agree to perform, pay, discharge or indemnify debtors against or otherwise have any responsibility or any liability or obligation of debtors. Relevant paragraph (L) of the judgment dated 12th August, 1991 is as under:-
"L. Except as otherwise expressly provided in the Asset Purchase Agreement or the Related Instruments or as provided in paragraphs J, K and N herein, Delta does not pursuant to the Asset Purchase Agreement or the Related Instruments or otherwise assume, agree to perform, pay, discharge or indemnify Debtors against or otherwise have any responsibility for, any liabilities or obligations of Debtors, fixed, contingent or otherwise, known or unknown, relating to or arising out of the Assets or the Excluded Assets, as defined in the Asset Purchase Agreement, whether arising prior to, on or after any Closing. Delta is not a successor to any of the Debtors by reason of any theory of law or equity and Delta shall have no liability except as otherwise expressly provided in the Asset Purchase Agreement or the Related Instruments for any obligation of the Debtors. Without limiting the generality of any of the foregoing, but except as otherwise CS(OS) 3457 of 1992 Page 29 of 48 expressly provided in the Asset Purchase Agreement or in any of the Related Instruments, Delta does not pursuant to the Asset Purchase Agreement or the Related Instruments or otherwise assume any of the following liabilities or obligations: (i) liabilities or obligations associated with any of the Assets incurred or arising out of events, any act done or omitted, or alleged to have been done or omitted, or any state of facts existing, or alleged to have been existing, on or prior to the Closing Date in respect of such Assets, whether or not such liabilities or obligations were known at the date hereof or at Closing, including, without limitation, claims related to the destruction of Pan Am Flight 103 in December of 1988, (ii) liabilities or obligations to the extent they were incurred or relate to performance on or prior to the date of the Closing under the terms of any Contract or Aircraft Lease that is assumed by Delta, (iii) liabilities or obligations arising out of or relating to any employees or former employees or Debtors or any of their Affiliates, as defined in the Asset Purchase Agreement, or any Employee Benefit Plans, as defined in the Asset Purchase Agreement, or similar arrangements as have been maintained by Debtors or any of their Affiliates, including, without limitation, liabilities for accrued wages and payroll, withholding and employment taxes prior to the Closing, and liabilities related to retirement and welfare benefits (including any and all claims related to any underfunding of pension plans, unpaid contributions to or withdrawal liability from any Multiemployer Plans and any liability to the PBGC related thereto and any post-retirement medical and other post retirement benefits), any claims arising under collective bargaining agreements to which the Debtors or any of their Affiliates is or was a party and any and all other claims, grievances, charges, actions, complaints or proceedings (whether asserted or unasserted or pending or threatened) of any nature whatsoever, by or on behalf of employees or former employees of Debtors or any of their Affiliates or beneficiaries of any of the above (whether or not such persons are employed by Debtors or any of their Affiliates on the date hereof, the Closing Date or any other time) which relate to said employees‟ employment by either the Debtors or any of their Affiliates or (iv) liabilities or obligations with respect to any Environmental Damage relating to the Assets to the Extent such Environmental Damage is associated with any condition, or based on any fact or circumstances, that occurred or existed on or prior to the Closing Date, whether or not such CS(OS) 3457 of 1992 Page 30 of 48 liabilities or obligations were known on the date hereof or at the Closing." (emphasis supplied) The learned counsel for the plaintiff is unable to satisfy this Court as to how this judgment of United States Bankruptcy Court would not determine whether the defendant No.2 is only a purchaser of some of the assets and not a successor in interest of defendant no.1.
40. The other points which have been canvassed on behalf of defendant No.2 are that defendant No.1 had been functioning in the United States even after defendant No.2 was alleged to had become successor of defendant No.1. It is asserted that PAN American World Airways was functioning until 1998 and reliance has been placed on exhibit DW.1/1; DW.1/2 and DW.1/3 which are the newspaper cuttings. Although the probative value of such news papers report would not be much, however, these documents have not been rebutted by and on behalf of plaintiff and nothing has been produced by the plaintiff to show that after the assets of defendant No.1 had been purchased pursuant to United States Bankruptcy Court‟s order the defendant no.1 had stopped functioning. This has also been established by defendant No.2 that it obtained independent licenses and permission from the concerned authorities. Had the defendant No.2 been a successor of defendant No.1 instead of obtaining the independent licenses and permissions, it would have got them transferred in its name which is not the case. Nothing contrary to the pleas and CS(OS) 3457 of 1992 Page 31 of 48 contentions of the defendant no.2 has been established by the plaintiff. The defendant No.2 has produced and proved ECD permission dated 19th October, 1991 under Section 29(1)(a) of Foreign Exchange Act which was exhibited as exhibit DW.2/1 and the copy of the license to deal in foreign currency dated 31st October, 1991 and the certified copy of operating permit dated 1st November, 1991 exhibited as DW.3/1. These permissions and licenses are in the name of defendant no.2 as an independent entity and not as successor in interest of defendant no.1.
41. Though the defendant No.2 has also relied on the decision of this Court in EA No.40/1996 in Execution No.156/1991 dated 17th September, 1999 Indira International v. PAN American World Airways, however, the plaintiff was not a party to the said execution petition and it cannot be held that the decision is binding on the plaintiff. It is no doubt true that in Indira International (Supra) it was held that the sale of assets to M/s.Delta Airlines was through the Bankruptcy Courts with a view to attain and realize the maximum value of the assets to meet the liabilities of the creditors of M/s.PAN American World Airways and merely use of the assets purchased by the defendant No.2 would not create any liability being accepted of any other creditor.
42. The witnesses of the defendant No.2 including Ms.Snyder (DW.4) categorically deposed that defendant No.2 had never been the successor of defendant No.1 except the transactions contained in DW.4/2 the CS(OS) 3457 of 1992 Page 32 of 48 Asset Purchase Agreement and as set out in DW.4/1 and there is no legal relationship between defendant No.2 and defendant No.1 and defendant No.2 at no stage undertook any liability of plaintiff against defendant No.1 nor is a successor in interest of defendant no.1. The said witness also deposed that defendant No.2 has not purchased the name and goodwill of defendant No.1 and is an independent legal entity and has no connection whatsoever with defendant No.1. It has also been disclosed that defendant No.1 is continuing in Florida and has various websites. For the foregoing reasons it is inevitable to infer that defendant No.2 is not a successor of defendant No.1 and by purchasing the assets of defendant No.1 pursuant to Asset Purchase Agreement exhibit DW.4/1 and by virtue of the judgment dated 12th August, 1991 of United States Bankruptcy Courts exhibit DW.4/1 the defendant No.2 does not become liable for any alleged liability of plaintiff against defendant No.1. In the circumstances it is also apparent that the plaint does not disclose any cause of action against defendant No.2 and thus issues Nos.3 & 7 are decided in favor of defendant No.2 and against the plaintiff.
43. Issue No.VI This issue is whether the suit is barred by time. In the circumstances, whether the suit is barred by time or not, the onus would be on the defendants. Since it has been held that defendant No.2 was not a successor of defendant No.1, therefore, what is to be considered is whether the suit which was instituted on 14th September, CS(OS) 3457 of 1992 Page 33 of 48 1992 but where defendant no.2 was impleaded as a party pursuant to order dated 2nd November, 1994 will be within time against defendant No.2.
44. The suit has not been contested on behalf of defendant No.1 and this Court has since held while deciding the issue no.3 that defendant No.2 is not the successor in interest of defendant No.1. Therefore, it will be more of an academic exercise whether the suit of the plaintiff is barred against defendant No.2 as since the defendant no.2 is not a successor in interest of defendant no.1, it will not have any liability in any case.
45. The defendant No.2 has contended that it was impleaded in 1994. While impleading defendant No.2 the order passed was as under:-
" 02.11.1994 Present: Mr.B.L.Wali for the plaintiff.
None for the defendant.
Suit No.3457/1992 This is an application seeking amendment in the plaint. Since the suit is at a preliminary stage, amendment is allowed. Delta Airlines is permitted to be joined as defendant No.2 in the suit. Defendant No.1 is already ex- parte.
Let amended memo of parties be filed.
Summons in the suit shall issue to defendant No.2 on payment of process fee within a week.
IA disposed of.
CS(OS) 3457 of 1992 Page 34 of 48 To be listed on 21st March, 1995.
November 02, 1994 sd/-
46. Perusal of the said application, however, reveals that this is an application under Order 22 Rule 10 and Order 1 Rule 10 read with Section 151 of the Code of Civil Procedure contending inter-alia that Pan American World Airways defendant No.1 is amalgamated and/or taken over by Delta Airlines and all the right, power and interest of the said carriers have devolved upon defendant No.2 and in the circumstances allow the plaintiff to substitute Delta Airlines in place of PAN American Airways or in the alternative allow the plaintiff to add Delta Airlines having its office amongst others at Chanderlok, 36, Janpath in the array of defendants. By allowing this application the defendant No.2 was not substituted in place of defendant No.1 but was rather impleaded as independent party. This order was not challenged by the plaintiff and the addition of defendant no.2 independently and not in substitution of defendant no.1 was not challenged by the plaintiff. Though the amendment was not sought in the application, however, the order was passed allowing the amendment. This cannot be disputed that under the High Court rules while seeking amendment, a party is to disclose specifically what amendments are to be carried out. CS(OS) 3457 of 1992 Page 35 of 48
47. In the original plaint filed by the plaintiff the claim was from October 21, 1990 till the date of payment. Though the amendment was not sought for deletion of these words, however, pursuant to order dated 2nd November, 1994 the said words were deleted by the plaintiff. The learned counsel for the plaintiff has not been able to explain as to how the portion of the pleading could be deleted without specific permission from the Court and without seeking specific amendment. In the circumstances, though the amended plaint does not seek relief from 21st October, 1990, however, it has to be taken into consideration that the cause of action had lastly arose on 21st October, 1990.
48. The learned counsel for the plaintiff Mr,Tikku on a query by this Court contended that the suit would be within time only if defendant No.2 is held to be successor of defendant No.1. Since the defendant No.2 is not the successor of defendant No.1 and the defendant No.2 had purchased the assets by agreement dated 27th July, 1991, therefore, the application dated 28th October, 1994 impleading defendant No.2 for the alleged claim on the basis of transaction between defendant No.1 and the plaintiff shall also be barred by time.
49. The learned counsel for the defendant No.2 has contended that in order to determine whether the suit is barred by time the provisions of the Carriage by Air Act and the Limitation Act, 1963 have to be considered. The Carriage by Air Act, 1972 under Rule 29 contemplates CS(OS) 3457 of 1992 Page 36 of 48 that right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival of goods at the destination, or from the date on which the aircraft ought to have arrived or from the date on which the carriage stopped. According to the allegations of the plaintiff the consignment was shipped on 20th October, 1990 and though it ought to have been delivered within 3 to 4 days, however, even if the time taken for delivery is construed to be one week, it ought to have been delivered by 27th October, 1990. In the circumstances, the suit should have been filed by 27th October, 1992 according to Rule 92 of the First Schedule of the Carriage by Air Act, 1972. It is further asserted that under the Limitation Act since the plaintiff has claimed interest from 21st October, 1990, three years period as contemplated under the Limitation Act under the relevant Article shall be up to 20th October, 1993. Since the defendant No.2 was impleaded on 2nd November, 1994, therefore, the claim neither under the Carriage by Air Act, 1972 First Schedule Rule 29 nor even under the Limitation Act, 1963 is within time as under the Limitation Act the Effect of Substituting or adding a new defendant is contemplated under Section 21 of the Act. The Suit as regards the new defendant is deemed to have been instituted as against him "when such a newly added defendant is so made a party". The learned counsel for the defendant no.1 has also relied on M/s Sailesh Textile Industries vs. British Airways & Anr.2003 IV AD (DELHI) 276 holding that the provisions of the Carriage by Air Act and the schedules thereto are clear and CS(OS) 3457 of 1992 Page 37 of 48 unambiguous and provide for a period of limitation within which a suit is to be filed to claim damages for loss of goods, whether it be loss to the goods or whether loss to the owner. Reliance was also placed on Rajasthan Handicrafts Emporium v. Pan-American World Airways AIR 1984 Delhi 396 holding that that there is no scope for the application of Article 10 & 11 of the Limitation Act in regard to carriage by air in view of R. 30 of the Second Schedule which operates to extinguish the right to damages if action is not brought within two years from the accrual of the cause of action as spelt out therein. It was held that Article 10 & 11 of the Limitation Act would apply to suits for compensation for loss, damage, non-delivery of or delay in delivering goods against the carriers generally but will not apply to suits relating to carriage by air which is specifically covered by the provisions of the The Carriage by Air Act, 1972 and the Second Schedule thereto. The learned counsel for the plaintiff has not been able to satisfy that the provision of The carriage by Air Act, 1972 will not be applicable to present facts and circumstances. In the circumstances the suit of the plaintiff for damages regarding the carriage of goods by air is barred by time and the issue is accordingly decided in favour of the defendant no.2.
50. Issue No.I is whether the defendants carried and shipped the consignment in accordance with the terms and conditions of the contract. The contract of carriage is with defendant No.1 only that is PAN American World Airways which is exhibit PW.2/2. There is no CS(OS) 3457 of 1992 Page 38 of 48 contract of carriage with defendant No.2, Delta Airlines nor defendant No.2 is successor-in-interest of defendant No.1. In the circumstances what is to be determined is whether defendant No.1 carried and shipped the shipment in accordance with the terms and conditions of the contract. PW.1 witness of the plaintiff, has deposed that PW.1/1 is the document through which Standard Chartered Bank had sent the documents of the plaintiff in negotiation to the consignee in New York for collection of amount from FIBI Bank and the party to be notified was Crime Wave Ltd. He deposed that since the money was not received the documents were sent back. The said witness has also proved the telex exhibit PW.1/2 from FIBI Bank, Switzerland intimating that on enquiry it had transpired that documents used for getting the consignment released from the defendant no.1 were forged documents. In the cross examination the said witness who appeared on behalf of plaintiff clarified that there was no letter of credit of the company and it was an export collection on the basis of non L.C between the Standard Chartered Bank and customer on whose behalf documents were submitted and, therefore, the risk was to be borne by the customer in case the payment was not received. He admitted that apart from the telex message received from the FIBI Bank there was no other material with Standard Chartered Bank to infer that the documents were forged.
51. Mr.Gurvinder Singh Dhingra, attorney and husband of the plaintiff deposed that when the goods were ready for export the consignment CS(OS) 3457 of 1992 Page 39 of 48 was booked with defendant No.1 under Airways Bill dated 20th October, 1990 which was exhibited as PW.2/2. Freight payment was made to defendant No.1 through Continental Carriers, the consignee of the Airways Bill was FIBI Bank, Switzerland and party to be notified was Crime Wave Ltd, New York. According to the attorney of the plaintiff on non receipt of payment when the enquiries were made, it transpired that the goods were released against the bank release order which was intimated to the plaintiff by letter dated 3rd December, 1990. According to the said witness since FIBI Bank had not issued any release order, therefore, the claim was lodged with PAN American for illegally delivering the goods to Crime Wave Ltd. The attorney of the plaintiff also admitted that the bill relating to consignment was discounted by the Standard Chartered Bank and plaintiff had received 100% payment under the facility with the Standard Chartered Bank. The amount of the consignment was later debited in the plaintiff‟s account with interest at 18% as the payment was not received. According to said witness the value of consignment was Rs.414034 C&F. The said witness in the cross examination admitted that the claim of Rs.21,000/- in respect of cash incentive, duty drawback has not been substantiated but the plaintiff is entitled to it as a statutory benefit. He also admitted that the value of goods shown in para 19A of the plaint as Rs.387718/- does not reflect the complete profit of the plaintiff as the price was quoted after taking into consideration duty drawback. The attorney, however, admitted that no calculation regarding the loss of Rs.1,50,000/- as loss CS(OS) 3457 of 1992 Page 40 of 48 of profit in business was disclosed nor details as to how this loss of profit was computed has been given. The witness of the plaintiff though stated initially that goods were sent through L.C but on re-examination it was clarified by him that the goods were not sent on L.C but on D.A basis. The averments made by the plaintiff against defendant No.1 have not been rebutted. Neither any written statement was filed nor there is any deposition on behalf of the defendant no.1. Still since the onus of this issue is on the Plaintiff, it is to be established by her. Air cargo bill exhibit PW.2/2 reveals the terms and conditions for carrying the goods by defendant no.1 which also stipulates that carrier‟s liability shall not exceed US$ 20 or the equivalent per kilogram of goods lost, damaged or delayed unless a higher value is declared by the shipper and supplementary charge paid. The plaintiff in the circumstances has to establish that the goods have been lost on account of any act on the part of the defendant no.1 or attributable to defendant no.1.
52. In order to determine whether the defendant No.1 released the shipment in accordance with the terms and conditions of the agreement what is to be determined is under what circumstances the goods were to be released. The agreement exhibit PW.2/2 contemplates that the goods had to be delivered to the consignee FIBI Bank, Switzerland. The party who had to be notified and which produced the documents of the consignee was disclosed and if the consignee and the party for whom the goods were sent are disclosed and are not impleaded as parties then CS(OS) 3457 of 1992 Page 41 of 48 to what extent shall be the liability of the carrier, defendant No.1 in case there is any fraud or in case the documents of the consignee are forged. In the notice exhibit PW.2/9 on behalf of plaintiff it has been asserted that the consignee bank had advised the plaintiff that the release order is a forgery, as the letter head of the release order is not theirs nor it is signed by the authorized representative of FIBI Bank.
53. To substantiate this allegation of the forgery, the plaintiff has produced a telex which is exhibit PW.1/2 alleged to be from FIBI Bank intimating that the release order is not on their letterhead nor bears the signatures of any authorized representative. The evidence on behalf of plaintiff regarding this document is the statement of the official of Standard Chartered Bank who has simply exhibited the said document as PW.1/2. The said document is not even the original telex received by Standard Chartered Bank nor there is any evidence to prove that this telex was received from FIBI Bank, Switzerland. Neither the FIBI Bank is a party to the suit nor any effort has been made to prove this document. This is no more res integra that mere exhibition of the document is not the proof of the document. In Narbada Devi Gupta Vs Virendra Kumar Jeswal & ors, (2003) 8 SCC 745, the Supreme Court had held that mere production and marking of a document as exhibit is not enough as execution of a document has to be proved by admissible evidence. In AIR 1971 SC 1865, Sait Tarajee Khimchand & Others Vs Yelanaarti Satyam & ors referring to Order XIII Rule 4 of the Code of CS(OS) 3457 of 1992 Page 42 of 48 Civil Procedure, it was held that mere marking of a document as an exhibit does not dispense with its proof. A single Judge of this Court in Sudhir Engineering Co. Vs Nitco Roadways Ltd. (1995) Rajdhani Law Report 286 had held with reference to the Original Side Practice Direction 3/74 that when a document is produced in evidence and is marked as an exhibit, then it is only for identifying the documents and is not its proof as proof of the contents of the documents must be proved and established by independent evidence. Perusal of the testimony of PW1 reveals that the document has been merely marked as exhibit and there is no evidence of its proof. In the circumstances it cannot be held that the alleged telex intimating the Standard Chartered Bank that the documents were forged has not been proved. No other documents have been produced by the plaintiff to establish that the documents on the basis of which the consignment was released by defendant no.1 were forged.
54. The air carrier, defendant No.1 had to deal with the documents alone to release the consignment. The defendant no. 1 only had to see that the documents were from the consignee FIBI Bank. If on the face of the documents, there was no discrepancy, it was not expected of the defendant No.1 to carry out enquiries or investigate about the documents whether they are genuine or not. As already held whether the documents on the basis of which the goods were released from defendant No.1 were forged or fabricated has not been established and CS(OS) 3457 of 1992 Page 43 of 48 in the circumstances the plaintiff has not been able to establish existence of any fraud. The release order on the basis of which defendant No.1 has released the goods ought to have been established as being forged and fabricated. If the fraud has been committed by Crime Wave Ltd in getting the goods released by allegedly forging the documents of M/s.FIBI Bank, consignee, the plaintiff ought to have impleaded the consignee and the Crime Wave Ltd as parties to the suit and should have sought to recover the price of consignment from the said parties. The learned counsel for the plaintiff is unable to explain satisfactorily that if a fraud is committed by Crime Wave Ltd then how the liability can be imputed solely to the defendant No.1 when there is neither any averment nor any evidence of collusion of defendant No.1 in the alleged fraud under which the goods were released from defendant No.1 by allegedly fabricating the documents of the consignee M/s.FIBI Bank allegedly by M/s.Crime Wave Ltd. The plaintiff has not even made out or has made any allegation of any negligence on the part of plaintiff in releasing the consignment on the basis of the documents of the consignee which on the face of it does not appear to be forged.
55. This Court does not find any justification in making the carrier liable for the frauds committed by the foreign buyer especially since no satisfactory explanation has been rendered by the plaintiff as to why recovery has not been sought or initiated against the consignee and the foreign buyer also. The learned counsel for the plaintiff has also not CS(OS) 3457 of 1992 Page 44 of 48 explained satisfactorily any duty of the carrier to investigate the genuineness of the signatures or the genuineness of the documents, if on the face of it they purport to be of the consignee and is on the letter head of the consignee. This is not the case of the plaintiff that there was some doubt about the release order being forged or some irregularity committed by the foreign buyers and any apprehension or caution being communicated to the defendant No.1. The release order PW.1/1 dated 5th November, 1999 is a photocopy of the release order which appears to be on the letter head of FIBI Bank Ltd, consignee and is also alleged to be signed by LC department advising defendant No.1 that airways bill No.026-1045-2212 amounting to 25 cartons be released to the customer Crime Wave Ltd, 1466, Broadway, New York. The terms and conditions of Airways cargo bill also do not stipulate that before releasing the goods on receipt of the release order, the defendant No.1 had to counter check from the plaintiff or her banker about the release order so that they could get it checked from the consignee. In any case the documents were sent through the banker of the plaintiff M/s.Standard Chartered Bank and no such duty was cast upon defendant no.1. Even the bank deals with documents alone and in case there is any forgery, no liability can be imputed to them without impleading and without taking any action against the forgers also. CS(OS) 3457 of 1992 Page 45 of 48
56. The issue is thus decided against the plaintiff holding that defendant no. 1 had carried and released the shipment in accordance with the terms and conditions of the contract.
57. Issues No.IV & V:- These issues are as to what amount and on what account plaintiff is entitled to recover from the defendants and what interest the plaintiff is entitled to recover. This Court has already held that defendant No.2 is not successor-in-interest of defendant No.1 nor there is any contract between defendant No.2 and the plaintiff. Consequently, the defendant No.2 is not liable for any amount to plaintiff. Therefore, the defendant No.2 is also not liable for any interest to plaintiff for any period and at any rate.
58. This Court has also held that the defendant No.1 had carried and released the shipment in accordance with the terms and conditions of the contract and no liability can be imposed against defendant No.1 in the facts and circumstances. Neither the defendant No.1 has breached the terms of agreement nor there has been any negligence on the part of the defendant No.1 in releasing the goods on the basis of the documents allegedly of M/s.FIBI Bank submitted to defendant No.1. In the circumstances the defendant No.1 is not liable for Rs.3,87,718/- on account of value of goods nor the defendant No.1 is liable for freight charges of Rs.26,319/-. Defendant No.1 is also not liable for Rs.25,000/- on account of post shipment benefits nor is liable for CS(OS) 3457 of 1992 Page 46 of 48 Rs.1,50,000/- for alleged loss of profit in business. In the circumstances, defendant No.1 is also not liable for Rs.1,52,968/- on account of interest at the rate of 18.5% per annum from 21st October, 1990 till 7th September, 1992 or for any other period. The defendant No.1, therefore, is not liable for the suit amount of Rs.7,42,005/- nor is liable for any interest and, therefore, the issues are decided in favor of defendants and against the plaintiff.
59. By order dated 17th November, 1995 on an application of the plaintiff defendant No.2 was directed to furnish a security of Rs.4,65,000/-. By order dated 30th November, 1995 on the representation of defendant No.2, instead of security, bank guarantee for a sum of Rs.4,65,000/- was ordered to be furnished. On another application of the plaintiff seeking direction to the defendant No.2 to furnish a bank guarantee for an amount of Rs.7,42,005/-, suit amount, by order dated 13th March, 1996 the defendant No.2 was directed to furnish bank guarantee for Rs.7,42,005/-. Consequent to the orders of this Court two bank guarantees for a total sum of Rs.7,42,005/- were furnished. The bank guarantees furnished by the defendant No.2 were extended from time to time and have remained valid during the pendency of the present suit. Since the plaintiff has failed to establish any liability of defendant No.2, the bank guarantee No.4764 dated 15th December, 1995 for Rs.4,65,000/- furnished by Citibank N.A, Parliament Street, New Delhi and bank guarantee No.4821 dated 15th CS(OS) 3457 of 1992 Page 47 of 48 May, 1996 for a sum of Rs.2,77,000/- issued on behalf of defendant No.2 by Citibank N.A, 3, Sansad Marg, New Delhi are discharged. Since the bank guarantees are discharged the bank guarantees be returned to the bank through defendant No.2 in accordance with rules.
In the entirety of facts and circumstances the suit of the plaintiff against the defendants is dismissed, however, parties are left to bear their own cost. Decree Sheet be drawn.
August 6th , 2010 ANIL KUMAR J.
„Dev‟
CS(OS) 3457 of 1992 Page 48 of 48