Karnataka High Court
M/S Ajay Constructions vs The New India Assurance on 10 January, 2020
Equivalent citations: AIRONLINE 2020 KAR 514
Bench: Aravind Kumar, Suraj Govindaraj
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF JANUARY 2020
PRESENT
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
AND
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
R.F.A.NO.1246/2014
BETWEEN:
M/S AJAY CONSTRUCTIONS
NO.925, B/1, UNIQUE CHAMBERS
2ND FLOOR, F.C. ROAD, PUNE
REPRESENTED BY THE GENERAL
POWER OF ATTORNEY HOLDER
SRI. NARAYANA DAS JAJU
AGED ABOUT 55 YEARS
R/AT NO.18/1, 8TH MAIN, ST. CROSS
SBM COLONY, BRUNDAVAN NAGAR
MATHIKERE, BANGALORE - 560 054.
...APPELLANT
(BY SMT. POONAM PATIL, ADVOCATE)
AND:
1. THE NEW INDIA ASSURANCE
COMPANY LTD.,
5TH FLOOR, DJC BUILDING
(VOKKALIGARA SANGHA BUILDING)
HUDSON CIRCLE, BANGALORE - 560 027.
2. M/S SIDDHI FERROUS
NO.103/1/2, VILLAGE - FALANDI
SILVASSA, GUJRATH STATE
REPRESENTED BY AUTHORISED OFFICER.
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3. ROSE BELLE SUGAR MILLING CO. LTD.,
ROYAL ROAD, ROSE BELLE, MAURITIUS
REPRESENTED BY ITS MANAGIND DIRECTOR.
4. SRI. K. KANNAN
NEW NO.215, LINGHI CHETTY
STREET, CHENNAI - 600 001.
5. P & O UNALLOYED INDIA PVT. LTD.,
POTTY PLAZA, GROUND FLOOR
NO.77, NUNGAMBAKKAM HIGH ROAD
CHENNAI - 600 034
REPRESENTED BY ITS MANAGING DIRECTOR.
6. INSURANCE OMBUDSMAN
6-2-46, 1ST FLOOR, MOINT COURT
LANE, OPPOSTE SALEEM FUNCTION
PALACE, A-C, GARUDAS, LAKDIKA POOL
HYDERABAD - 500 004
REPRESENTED BY ITS MANAGER.
...RESPONDENTS
(BY SRI. R. JAI PRAKASH, ADVOCATE FOR R-1;
R-2, R-4 AND R-6 ARE SERVED;
R-3 V/C/O DATED:27.06.2016 SERVICE OF NOTICE IS D/W;
V/C/O DATED:11.09.2018 APPEAL DISMISSED AGAINST R-5)
THIS APPEAL IS FILED UNDER SECTION 96 R/W
ORDER 41, RULE 1 OF C.P.C. PRAYING AGAINST THE
JUDGMENT & DECREE DATED:03.05.2014 PASSED IN
O.S.NO.248/2008 ON THE FILE OF THE XIX ADDL. CITY CIVIL
AND SESSIONS JUDGE, BANGALORE (CCH-18), DECREEING
THE SUIT FOR RECOVERY OF MONEY.
THIS APPEAL HAVING BEEN HEARD AND RESERVED
COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS
DAY, ARAVIND KUMAR J., MADE THE FOLLOWING:
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JUDGMENT
This is a plaintiff's appeal challenging the correctness and legality of the judgment and decree passed in OS No.248/2008 dated 03.05.2013 by the XIX Addl. City Civil and Sessions Judge, Bengaluru, whereunder the plaintiff's suit for recovery of money has been decreed against defendant No.2 alone with future simple interest @ 12% p.a. from the date of suit till date of realization with costs, contending interalia it ought to have been decreed against third defendant.
The parties in this appeal are referred to as per the rank in the trial court.
BRIEF BACKGROUND OF THE CASE:
2. Plaintiff is a partnership firm carrying on the business of import and export of iron, steel alloy products i.e., scrap iron and steel products. The sugar plant established by third defendant in the year 1960 and same having become old and unproductive, resulted in said plant being closed. Plaintiff entered into an agreement of sale 4 with third defendant on 26.02.2004, whereunder plaintiff agreed to purchase the machinery and equipments, which had become scrap, for a total consideration of MUR 6.5 Million (Mauritius Rupees Six Million Five Hundred Thousand only).
3. Plaintiff entered into high seas sale contract on 10.03.2005 with second defendant agreeing thereunder to sell 110.00 metric tons out of 130.500 of MTS iron and non alloy steel shipped as per vessel "Tiger Sky Voy, 269".
Subsequently, on 18.04.2005 there was an agreement dated 18.04.2005 entered into between plaintiff and second defendant whereunder plaintiff had agreed to sell 131.500 MTS of iron and non alloy steel to second defendant. Plaintiff has further entered into a contract with second defendant on 25.04.2005 and had agreed to sell second defendant 110.000 MTS of said material on high seas sale basis subject to conditions agreed thereunder.
4. Plaintiff in order to transport the goods purchased from third defendant, had engaged the services 5 of fifth defendant and under bill of lading dated 18.02.2005 first consignment of 6 containers STC 130.500 tons of obsolete and condemned plant and machinery of cast iron and non allied steel and alloy steel came to be shipped. Subsequently, under bill of lading dated 01.03.2005 second consignment of 6 containers of STC 131.5000 of obsolete and condemned plant and machinery of cast iron and non allied steel and alloy steel came to be shipped. Likewise, on 08.03.2005 under consignment of 5 containers STC 110.00 tons of obsolete and condemned plant and machinery of cast iron and non allied steel and alloy steel was shipped.
5. It was contended by plaintiff that pre-shipment inspection was conducted and a pre-shipment inspection certificate issued in this regard by the port authorities. It was further contended by plaintiff that said goods came to be insured from "Port Louis" to "Port Chennai" with first defendant under an insurance policy dated 19.03.2004 covering the period commencing from 19.04.2004 to 18.03.2005 for a sum of Rs.2.23 Crores. It was contended 6 that said coverage of insurance was for the loss and damage to the goods contained in shipping during the period of assignment and the period of policy issued.
6. The grievance of plaintiff was that on arrival of goods it was found that there was a shortage of goods in all the three consignments received at Chennai Port and as such plaintiff got the legal notice issued and after exchange of correspondence fourth defendant being the clearing agent on behalf of second defendant and Chartered Engineer Certificate, submitted a report that there was shortage of materials in all the three consignments. On a complaint of plaintiff with first defendant a surveyor was appointed, who conducted a survey and submitted a report on 09.09.2005 stating that short shipment was ruled out as the overseas people have confirmed on correct quantities being shipped. The surveyor however further observed regarding pilferage in transit or during transshipment that there was no room to conclude in the affirmative as all the 17 containers reportedly landed with the original seals intact and bearing the same serial 7 numbers as manifested in the Bills of Lading. Therefore, the surveyor concluded that the cause of shortage is not determinable.
7. On service of suit summons, first defendant alone appeared and filed written statement. Defendant Nos.2 to 6 were placed ex-parte. First defendant specifically pleaded that signatory to the plaint was not an authorized power of attorney holder and as such sought for dismissal of the suit. Except to the extent expressly admitting the plaint averments, first defendant denied all other averments made in the plaint.
8. On the basis of pleadings of parties, trial court framed following issues:
1. Whether the plaintiff proves that defendants are liable to pay a sum of Rs.24,11,115.97 ps along with interest at the rate of 18% p.a.?
2. Whether the plaintiff proves cause of action?
3. Whether the defendants prove that suit is not maintainable as pleaded?8
4. Whether the plaintiff is entitled for the decree sought?
5. What order or decree?
9. The power of attorney holder of plaintiff got himself examined as PW1 and got marked 17 documents as Exhibits P-1 to P-17. One witness was examined on behalf of defendant and through him, insurance policy in question came to be marked as Ex.D-1. After considering the pleadings and after evaluating the oral as well as documentary evidence, by judgment and decree dated 03.05.2014 decreed the suit in part against second defendant and dismissed the suit against defendant No.1, 3 to 6.
FINDINGS RECORDED BY THE TRIAL COURT:
10. It is pointed out by both counsel that the trial court has mistakenly mentioned third defendant as second defendant in the judgment. Accepting the same, any reference made to second defendant would refer to third defendant and as such, the finding recorded by the trial 9 court are referred to in that manner. To that extent, judgment and decree passed by the trial court deserves to be modified.
11. It came to be held by the learned trial judge that there was no dispute with regard to three consignments having been insured under the insurance policy - Ex.D-1 covering the period from 19.04.2004 to 18.03.2005 for a sum of Rs.2.23 Crores and said consignments having been transported during the said period. It has been observed by the learned trial judge that survey report - Ex.P-4 in Column No.29 though clearly reveals there was a shortage of 118.21 metric tons of cast iron and steel alloy material, the weighments recorded by the custom departments are made available, which disclose that customs authorities were satisfied with the condition of seals on all the 17 containers being intact and there being no pilferage or leakage of materials during the transit. The correspondence exchanged between plaintiff 10 and defendant Nos.3 and 5 disclosed there was no allegation of pilferage in transit or during shipment.
12. It is further held by the learned trial Judge that port authorities at Port Louis had not weighed the said materials and it was only on the basis of declared weight given by the second defendant, entries came to be made in "Pre-Shipment Certificates" - Exs.P-15 to P-17 and as such there was no proof of actual weighment at Port Louis. It is also held that pilferage has not occurred in the transit or during shipment and thereby there was no room to conclude that shortage had occurred due to pilferage in transit or during shipment, by referring to the surveyor report - Ex.P.4. It was further held that authorities, who had issued Ex.P-15 to P-17, have not at all weighed the materials and they had taken the declared weight given by the exporter and risk of the policy would not cover the shortage of weight, which shortage was due to the mistake committed by the exporter i.e., second defendant. On the basis of said findings, trial court decreed the suit against 11 third defendant and dismissed the same against defendant Nos.1, 3 to 6.
13. We have heard the arguments of Smt. Poonam Patil, learned counsel appearing for plaintiff-appellant and Sri.Jayaprakash, learned counsel appearing for first respondent-first defendant.
14. It is the contention of Smt. Poonam Patil, learned counsel appearing for appellant that first defendant has refused to indemnify the claim on the ground of "unexplained loss", which is not a defence available to the insurer under the policy - Ex.D-1 to stave off its liability. She would contend that learned trial Judge has erred in not properly appreciating the evidence on record, particularly when surveyor appointed by the insurance company, after verification of containers having observed there was shortage in the goods received. She would contend that even according to surveyor, the cause of shortage was not determinable and as such insurance company is liable to indemnify the losses suffered on 12 account of shortage of goods. She would also contend that insurance policy covers all claims of shipment and as such for short receipt of material first defendant ought to have indemnified the claim. She would also submit when there is no dispute with regard to all the 3 shipments covered by the insurance policy was to found to contain materials less than it ought to have contained, first defendant ought to indemnify the claim. She would also amplify her argument by contending any kind of loss that occurs after the goods were handed over to customs authority for shipment till the same is received by the parties are covered by the policy and this aspect was totally ignored by the trial court.
Hence, by relying upon the following judgments, she seeks for decreeing the suit against first defendant.
(i) (2008) 10 SCC 626: NEW INDIA ASSURANCE COMPANY LIMITED vs. HIRA LAL RAMESH CHAND AND OTHERS
(ii) (2006) 12 SCC 673: PEACOCK PLYWOOD (P) LTD. vs. ORIENTAL INSURANCE CO. LTD.
(iii) (2003) 2 KLT 992: ALIAS vs. PAUL 13
15. Per contra, Sri. Jayaprakash, learned counsel appearing for first defendant would support the judgment and decree passed by the court below. He would submit that frame of suit itself is improper and signatory to the plaint being alleged power of attorney holder, was not empowered to institute the suit on behalf of partnership firm of plaintiff and power of attorney -Ex.P-1 relied upon by the plaintiff is not duly authenticated and there being no ratification by the plaintiff of the acts done by the agent
- PW1, suit has been rightly dismissed against the first defendant. Hence, he prays for dismissal of the appeal by relying upon the following judgments:
(i) AIR 1971 SC 761: JUGRAJ SINGH AND ANOTHER vs. JASWANT SINGH AND OTHERS
16. Having heard the learned Advocates appearing for parties and on perusal of entire records secured from trial court, by bestowing our careful and anxious consideration to the entire material, we are of the considered view that following points would arise for our consideration:
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(1) Whether judgment and decree passed by the trial court suffers from any material irregularity, either on account of non appreciation of available evidence or erroneous appreciation of evidence? (2) Whether finding recorded by the learned trial Judge on issue No.3 relating to non maintainability of suit, is liable to be affirmed or set aside or modified?
(3) What order?
RE. POINT NO.1:
17. Plaintiff claims to have entered into an agreement with third defendant for purchase of machinery and equipments of third defendant-sugar mill under the agreement dated 26.02.2004. However, for reasons best known said agreement has not seen the light of day. This assumes significance, for two reasons; (1) in the plaint at paragraph 4 plaintiff claims to have agreed to purchase the plant, machinery equipment with the third defendant under the agreement dated 26.02.2004 and this agreement 15 ought to have been produced by the plaintiff; (2) in paragraph 4 of the plaint plaintiff has submitted that plant and machinery which plaintiff purchased from the third defendant was as per the agreement dated 26.02.2004 and details of the material purchased is claimed to have been set out in the schedule to the agreement. Hence, at the cost of repetition it requires to be noticed that initial burden of proving the quantity of goods or description of goods together with its weight, which plaintiff claims to have purchased from third defendant, was on the plaintiff, which could have been easily discharged by producing the said agreement. Same having not been produced, necessarily adverse inference has to be drawn against plaintiff. Even otherwise, burden would be on the plaintiff to establish the goods or material purchased by the plaintiff under said agreement having reached Port Louis and exact extent of goods having been shipped through 17 containers under which shipments took place. This initial burden cast on plaintiff, has also not been discharged. On the other hand, plaintiff intends to rely upon the high seas 16 contract entered into between plaintiff and second defendant on 10.03.2005, 18.,04.2005 and 25.04.2005 to buttress its argument that plaintiff had purchased the iron and non alloy steel to the extent specified thereunder. In fact, these contracts have also not seen the light of the day.
18. Plaintiff has contended that as per the bill of lading - Exs-P-7, P-8 and P-9 dated 15.03.2005, 22.03.2005 and 01.04.2005, goods came to be shipped from Port Louis to Chennai Port in 3 batches of 6 containers in first 2 batches and 5 containers in the last batch by vociferously contending the invoice issued by third defendant disclosed the weight of goods shipped and as such short landing was required to be indemnified by first defendant as insurer of the goods. At this juncture itself it would be apt and appropriate to notice that Exs. P- 7, P-8 and P-9 are the office copy (of the plaintiff) relating to marine insurance declaration dated 28.02.2005, 18.02.2005 and 08.03.2005 respectively. Annexure to said marine declaration would indicate letter dated 28.02.2005 issued by the plaintiff declaring thereunder gross weight of 17 6 containers. Neither the port authorities nor any other statutory authority at Port Louis have certified the weightage. Exs.P-15 to P-17, which are pre-shipment inspection certificates issued by the authority and relied upon by the plaintiff to contend that there was certification with regard to weightage, requires to be considered for the purposes of outright rejection for reasons more than one. Firstly, certificate - Ex.P-15 is a certificate which as per the extant laws of Mauritius required to be statutorily issued by the exporter. Secondly, certificate so issued is on the basis of declaration made by the exporter and not after physical verification. Thirdly, said report itself would disclose that inspection having been carried out before and during stuffing of containers on a 100% basis for radio activity checks to confirm that product does not present level of radio activity above internationally acceptable limits of 0.06 micro Sv/h. Fourthly, there is no certification by the said authority with regard to having checked the weight. As such contention of plaintiff that first defendant is liable to indemnify the claim, cannot be accepted. The 18 trial court has observed that exhibits P15 to 17 have been issued on the basis of declared weight given by exporter. The consignment has not been weighed by the port authorities. Therefore, there is no available data to arrive at a conclusion as regards the weight of consignment at the port where goods in question came to be shipped.
19. As observed hereinabove, initial burden of proving the actual extent of goods in weight having been stuffed into the containers at the time of shipment from Port Louis having not been established, first defendant would not be liable to indemnify the claim of plaintiff for short landing.
20. Though Smt. Poonam Patil, learned counsel appearing for plaintiff-appellant has vehemently contended that under the policy-Ex-D-1 risk covered under ICC(A) including war and SRCC includes short landing, we are not inclined to accept the said contention for the simple reason that, initial burden of plaintiff of establishing the actual extent of goods (by weight) having been loaded to the 19 containers in question, having not been established, defence of first defendant to stave off its liability that plaintiff's claim would fall under "UNEXPLAINED losses", cannot be held as contrary to the contract entered into between plaintiff and first defendant. The trial court has rightly held that it is defendant No.3 (erroneously stated as defendant No.2) who is liable and it is for the plaintiff to recover the amounts from defendant No.3, if it so desires. Hence, we are of the considered view that point No.1 deserves to be in the negative i.e., against the plaintiff and in favour of first defendant.
RE. POINT NO.2:
21. Though on issue No.3 a passing reference has been made by the learned trial Judge in the course of judgment, there was no cause of action for the suit against first defendant vide paragraph 21, we supplant additional reasons for the proposition that suit as brought, is not maintainable for the reason that PW1 is not an authorized signatory on behalf of the plaintiff.
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22. Undisputedly, plaintiff claims to be a partnership firm. None of the partners of the firm have verified or affixed their signature to the plaint. The general power of attorney holder- PW1 has affixed his signature to the plaint and also has verified the contents of plaint on the strength of power of attorney executed by the partnership firm. Said document has been marked as Ex.P-1 through PW1. Power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him. The power of attorney in question Ex.P-1 would clearly indicate that it is not duly authenticated or verified. A plain reading of Section 85 of The Indian Evidence Act, 1872, would indicate that a presumption of a document being power of attorney can be raised in the event of same having been executed before, and authenticated by, a notary public, or any court, judge, magistrate, Indian consul or Vice-consul, or representative of the Central Government, was so executed and authenticated. The 21 power of attorney in question namely, Ex.P-1 having not been authenticated by a notary public, no presumption can be drawn as provided under Section 85 of The evidence Act. Hon'ble Apex Court in the case of JUGRAJ SINGH AND ANOTHER VS. JASWANT SINGH AND OTHERS reported in AIR 1971 SC 761 has held to the following effect:
"7. The short question xxxx it for registration. That power of attorney was not authenticated as required by Section 33 of the Indian Registration Act which in the case of an Indian residing abroad, requires that the document should be authenticated by a Notary Public. The document only bore the signature of a witness without anything to show that he was a Notary Public. In any event there was no authentication by the Notary Public (if he was one) in the manner which the law would consider adequate. The second power xxxxx Indian Registration Act."
23. In fact, in the instant case, none of the partners have deposed as a witness on behalf of plaintiff. There is no ratification of the acts done by P.W.1 by the plaintiff- firm. Hence, in the absence of there being power of 22 attorney granted by plaintiff-firm authorizing PW1 to institute the suit on its behalf and depose on its behalf, it has to be necessarily held the suit as brought by the plaintiff is not maintainable.
24. For the reasons aforestated, we proceed to pass the following;
JUDGMENT (1) Appeal is allowed in part.
(2) Judgment and decree passed in O.S.No.248/2008 dated 03.05.2014 by XIX Additional City Civil & Sessions Judge, Bengaluru, is hereby modified and it is ordered that plaintiff's suit is decreed against defendant No.3 with costs.
(3) Defendant No.3 is directed to pay to the plaintiff a sum of Rs.24,11,115.97/- with future simple interest @12% p.a. from the date of suit till date of realization.
23(4) Suit against defendant Nos.1, 2 and 4 to 6 stands dismissed.
(5) Registry is directed to draw the decree accordingly.
SD/-
JUDGE SD/-
JUDGE DR/RU