National Consumer Disputes Redressal
M/S. Indair Carries Pvt. Ltd. vs M/S. Ragni Garments on 30 September, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI APPEAL NO. 789 OF 2007 (Against the Order dated 01/10/2007 in Complaint No. 40/2002 of the State Commission Tamil Nadu) 1. M/S. INDAIR CARRIES PVT. LTD. 29, K.B. DOSAN ROAD TEYNAPT, CHENNAI TAMILNADU- 600 018 ...........Appellant(s) Versus 1. M/S. RAGNI GARMENTS 1, KASIPALAYAM ROAD, TRIPUR, NALLURE, TAMILNADU - 641 606 ...........Respondent(s) APPEAL NO. 790 OF 2007 (Against the Order dated 31/10/2007 in Complaint No. 41/2002 of the State Commission Tamil Nadu) 1. M/S. INDAIR CARRIES PVT. LTD. 29, K. B. DOSAN ROAD, TEYNAMPET, CHENNAI, TAMILNADU - 600018 ...........Appellant(s) Versus 1. M/S. RAGNI GARMENTS 1, KASIPALAYAM ROAD, TIRPUR, NALLURE, TAMILNADU - 641606 ...........Respondent(s) APPEAL NO. 791 OF 2007 (Against the Order dated 31/10/2007 in Complaint No. 42/2002 of the State Commission Tamil Nadu) 1. M/S. INDAIR CARRIES PVT. LTD. 29, K.B. DOSAN ROAD, TEYNAMPET, CHEENAI TAMILNADU - 600 018 ...........Appellant(s) Versus 1. M/S. RAGNI GARMENTS 1, KASIPALAYAM ROAD, TIRPUR, NALLURE, TAMILNADU - 641 606 ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE D.K. JAIN, PRESIDENT HON'BLE MRS. M. SHREESHA, MEMBER For the Appellant : Mr. Arun Kr. Varma, Ms. Saniti Kachru and Ms. Priyanka Ghosh, Advocates with Mr. Abhishek Adlakha, A/R For the Respondent : Dr. R. Sunitha Sundar, Advocate Dated : 30 Sep 2015 ORDER M. SHREESHA, MEMBER These Appeals are preferred by the Opposite Party under Section 19 of the Consumer Protection Act (for short the "Act") against the common order dated 31.10.2007 of the State Consumer Disputes Redressal Commission, Chennai (for short the "State Commission"), in Original Petition Nos. 40, 41 and 42 of 2002. Vide its impugned order, the State Commission allowed the Complaints directing the Opposite Party to pay ₹6,22,952.81/-, ₹.15,67,907.81/- and ₹13,78,546.81/-respectively to the Complainant Company with interest @ 6% per annum from the date of filing of the Complaints and costs of ₹2,500/- in each Complaint.
2. Since all these Appeals deal with common facts, they are being disposed of by this common order.
3. The brief facts as set out in the Complaint are that the Complainant is a manufacturer and exporter of garments and on instructions of its buying agent, namely Knights Apparel LLC, 1010 Jorie Blvd, STE 333, Oak Brook, IL 60523 - 2241, U.S.A., engaged the Opposite party as its Freight Forwarders to arrange for air shipment of a consignment comprising of 100% Cotton Knitted Men's T. Shirts, from Chennai to Atlanta, USA. The particulars of carriage are as follows:-
Invoice No./ No. of Cartons/ Invoice value Invoice value HAWB No. & Date No. of pieces (in US Dollars) (in INR) Date 1. RG/USA(338)133 357/ 12,423.60 5,86,767/- 32364 dtd. 18.08.2001 4284 24.8.2001 2. RG/USA(338)132 794/9528 31,442.40 14,85,025/- 32363 dtd. 24.8.2001 3. RG/USA(338)131 794/9528 27,631.20 13,05,022/- 32363 dtd. 24.8.2001
4. The Complainant pleaded that they had specifically instructed the Opposite Party to prepare the Air Way Bill showing Union Planters Bank, N.A., USA, International Operations, 9700 NW 112th Avenue, Miami, FL 33178, U.S.A., as the "Consignee" and Tower Group International, One Clay Place, Atlanta, 30854, USA as the party to be notified and the freight as "Collect" since the terms between the Complainant and the Consignee were "F.O.B.". It was averred that the House Airway Bill (hereinafter referred to as "HAWB") No. 32364 dated 24.08.2001 was issued by the Opposite Party but the Master Airway Bill (hereinafter referred to as "MAWB") No. 085 8169 1746 was not handed over to them.
5. When the Complainant enquired from the Opposite Party as to the status of the consignment, it had received a Fax dated 24.09.2001 informing them that the consignment was delivered by Swiss Air on 30.08.2001. But subsequently on 9.10.2001, the Complainant had received an E-mail from Olympic Freight LLC claiming that the customer had not taken delivery of the consignment and claimed for payment of freight charges. As the Complainant did not have any contract with Olympic Freight LLC, they did not reply, but, however, asked for an explanation from the Opposite Party. At this juncture, the Opposite Party faxed to the Complainant a copy of the MAWB, in which the Opposite Party had shown itself as the "Consignor" and Olympic Freight LLC, as the "Consignee" and the freight was notified as "prepaid". By letter dated 30.11.2001, the Complainant was informed by its Banker that the customer had not made any payment to Union Planters Bank, USA.
6. The Complainant pleaded that as a result of the Opposite Party's wilful disregard of the Complainant's specific instructions the Complainant had sustained a total loss of the value of the consignment as the goods were seasonal in nature and have lost their value. A legal notice was issued on 20.12.2001 claiming an amount of ₹6,22,952.81/- with interest at 16.5%, for the business loss incurred for which there was no response.
7. Vexed with the attitude of the Opposite Party, the Complainant filed O.P. Nos. 40 of 2002, 41 of 2002 and 42 of 2002 in the State Commission, Chennai seeking the following reliefs:
"The Complainant therefore prays that this Hon'ble Commission may be pleased to pass an award against the Opposite Party for a sum of Rs. 6,22,952.81/-, Rs.15,67,907.81/- and Rs. 13,78,546.81/- together with interest at 16.5% per annum from the date of the Complaint till date of realisation and render justice".
8. The Opposite Party filed their written version stating that there is no privity of contract between the Complainant and them and that the Complaint is bad for non-joinder of necessary parties and that the Complainant is not a consumer as no consideration was paid to them.
9. The Opposite Party averred that M/s. Olympic Freight LLC had requested them to provide quotations of air freight for transhipment of a bulk consignment from Chennai to Atlanta by air. Likewise, they negotiated with various Airlines and procured the cheapest air freight charges to quote the same to their principal, M/s. Olympic Freight. As the rates offered by M/s. Olympic Freight were the lowest, M/s. Knight Apparel appointed M/s. Olympic Freight on 15th August, 2001 as their freight forwarder to tranship the consignment in question from Chennai to Atlanta. M/s. Olympic Freight requested the Opposite Party vide E-mail dated 16th August, 2001 to contact one Mr. Nanda to obtain the particulars of shipment, which was to be despatched. It is submitted that M/s. Indair Carrier was regularly in touch with one Mr. Nanda to obtain the necessary particulars. The shipment/goods were consigned to M/s. Olympic Freight on the MAWB on Prepaid basis.
10. The Appellant herein pleaded that the goods consigned by the Complainant to M/s. Knight Apparel were of poor quality and not as per the specifications of the importer which is apparent from the E-mail dated 27.9.2001 addressed to Mr. Dan of M/s. Olympic Freight, in which it is noted that the Complainant's son had inspected the goods and had agreed to make good the loss.
11. The Opposite Party further stated in their reply that the actual loss was suffered by them as the entire freight charges were paid by them on behalf of M/s. Olympic Freight and that they were never reimbursed which can be evidenced from the E-mails exchanged between them. They pleaded that the Complainant did not incur any loss as they could have asked for disposal of the said consignment in the local foreign market. The present proceedings are an afterthought to fasten the liability on the Opposite Party and to recover what had been lost in the export of goods which were of sub-standard quality.
12. The State Commission held that there was deficiency on the part of the Opposite Party as the consignee was allowed to take the delivery of consignment without making payment to the Bank and observed as follows:
"In the case of air freight using a house air way bill, just like in ocean freight using a house bill of lading (the freight forwarder's bill of lading), it was the freight forwarder's handling agent at destination, not the carrier, who notifies the consignee of the cargo arrival at destination. Having regard to what is stated above, there is no escape from the conclusion that the opposite party had committed deficiency in service and have rendered themselves answerable to the complainant.
Now coming to the quantum, it is to be noted that the value of respective consignments has not been disputed by the Opposite Party. The details have already been referred to. The complainant has also made a claim for interest paid to the bank @ 16.5% from 27.8.2001 to 20.12.2001. The complainant has also claimed a proportionate amount paid under Bill No. 8557 to the opposite party in a sum of Rs. 5,681.81. With regard to the quantum claimed, since there is no challenge made by the opposite party, we have to hold that the respective sums are liable to be paid by the opposite party to the complainant".
Consequently the complaints namely O.P. Nos. 40, 41 & 42 of 2002, shall stand allowed. There will be a direction to the opposite party to pay the following sums viz. Rs. 6,22,952.81, Rs.15,67,907.81 and Rs. 13,78,546.81 to the complainant. The amount shall be paid within a period of 12 weeks from the date of receipt of the order with interest at 6% per annum from the date of the complaints. The opposite party shall also pay Rs. 2,500/- in each complaint towards costs to the complainant. The complaints are disposed of accordingly".
13. Aggrieved by the said order, the Opposite Party preferred these Appeals.
14. The main issues that fall for consideration in this Appeal are:
Whether there was a privity of contract between the Appellant and the Respondent herein?
Whether the Complaint is bad for non-joinder of necessary parties?
Whether there was any deficiency of service on behalf of the Appellant and if the Complainant is entitled to the relief sought for in the Complaint?
(A) First we address ourselves to the issue whether there was any privity of contract between the Appellant and the Respondent/Complainant herein.
15. The learned counsel for the Appellant submitted that M/s. Indair Carriers Pvt. Ltd. was hired by M/s. Olympic Freight LLC, a Company registered in USA, for handling and forwarding consolidated export consignments, commencing from Chennai, to be terminated at Atlanta. As per arrangement of consolidation, the consignment had to be exported from Chennai in the name of the Appellant as a Consignor/shipper and aforesaid M/s. Olympic Freight LLC, as a Consignee, wherefrom the same was to be delivered to the buyer as per arrangement with the actual shipper. The MAWB was prepared showing the Appellant as a shipper and M/s. Olympic Freight LLC as the Consignee. The HAWB is generated giving all details of arrangement between the importer and exporter and all requisite details of the consignments.
16. The learned counsel drew our attention to the HAWB No. 32364, which was issued by the Appellant herein. For better understanding of the HAWB and the MAWB, these are being reproduced hereunder:
17. It is the main contention of the Appellant herein that they had acted only on behalf of M/s. Olympic Freight LLC as seen from the Airway Bill issued by the Carrier, M/s. SwissAir and therefore, if there was any discrepancy in the handing over of the consignment, they cannot be held liable for any act committed by their principal, M/s. Olympic Freight LLC. Learned counsel relied on the Judgment of the Hon'ble Apex Court in Prem Nath Motors Limited vs. Anurag Mittal, (2009) 16 SCC 274, in which the Hon'ble Supreme Court had discussed Section 230 of the Contract Act, and observed that an agent cannot be made liable for acts of a disclosed principal subject to a contract to the contrary.
18. Learned counsel for the Appellant contended that in the instant case the disclosed principal is M/s. Olympic Freight LLC and, therefore, the Appellant herein cannot be held liable for the acts of the principal as there is no such contract to the contrary. He submitted that an identical issue was considered by the Hon'ble Apex Court in the case of Marine Container Services South Pvt. Ltd. vs. Go Go Garments reported in AIR 1999 SC 80, in which a similar order was passed by the Hon'ble Apex Court under the Act, setting aside the order of the National Commission, holding that by virtue of Section 230, the agent cannot be sued when the principal had been disclosed.
19. He further contended that the 'FOB' contract was between the Complainant and the Consignee, M/s. Knight Apparels LLC and it was the Consignee who had hired M/s. Olympic Freight LLC, who in turn hired the services of the Appellant herein. Therefore, there is no privity of contract between the Appellant and the Complainant.
20. Learned counsel for the Respondent drew our attention to the definition of HAWB and MAWB as per the Industry Terminology provided by International Cargo Solutions detailed as under:
"Air Transport House Air Way Bill (HAWB) This is issued by a freight forwarder or principle contractual carrier and is the primary air transport document. It is evidence of the contract between the consignors and the freight forwarder and details, amongst other things, the goods, the weight and declared value of the goods (if applicable for Customs purposes) and shipment details. It will include any special handling instructions such as DO NOT FREEZE, or a temperature range for the goods to be carried within.
Example of House Airway Bill:
Master Airway Bill:
This document mirrors the House Airway Bill but is issued by the actual carrying Airline".
21. The learned counsel submitted that HAWB is not a document of a title of goods but only an evidence of the contract of carriage and hence, not negotiable. She submitted that the Respondent Company was assured by the Appellant that they would provide them with 100% visibility on the movement of their cargo. It is the Respondent's case that M/s. Olympic Freight LLC was nowhere in the picture and that they had entered into a contract vide HAWB No. 32364 only with Indair Carriers Pvt. Ltd. for the consignment to be delivered at Tower Group International Corporation through Union Planters Bank. It is the further case of the Respondent that the MAWB was never handed over to them and therefore, M/s. Olympic Freight LLC being the Consignee in MAWB, was not within their knowledge.
22. Learned counsel for the Respondent/Complainant vehemently argued that they were nowhere concerned with the MAWB issued by the Airline to the Appellant and it is only the HAWB which is the negotiable document on the basis of which, letter of credit should be opened by the Consignee. As far as HAWB and the consignment are concerned, it is the Appellant, which is the Carrier of the consignment.
23. With respect to privity of contract, we observe from the record that in the HAWB and the Export Bill issued by the Appellant the consignment was entrusted to the Appellant herein and their principal, M/s. Olympic Freight LLC is nowhere in the picture. The contract of carriage was entered into between the Respondent/Complainant and the Appellant only. As it was on 'FOB' basis, the question of consideration does not arise as the payment terms are understood to be paid by the buyer. It is not in dispute that the HAWB was issued by the Appellant herein prior to the MAWB and the HAWB principal as also mentioned in the MAWB issued by the Airlines. Any terms/negotiations entered into between the Appellant and M/s. Olympic Freight LLC does not bind the Respondent. On the face of record, there is no communication between the Respondent and M/s. Olympic Freight LLC. The entire communication and contract vis-à-vis HAWB was only between the Appellant and the Respondent. Therefore, we are of the considered opinion that as far as privity of contract is concerned, the HAWB establishes that there was a contract entered into between the Appellant and the Respondent Company as the HAWB was issued by the Appellant in their own capacity.
(B) Now we address ourselves to the issue raised by the Appellant that the complaint is bad for non-joinder of necessary party i.e. M/s. Olympic Freight LLC.
24. We observe from the record that there is an E-mail sent by M/s. Olympic Freight LLC to the Appellant herein on 10.08.2001, the last para of which reads as under:
"HELLO RAVINDER, 09-AUG-01
- WE WILL PROFIT SHARE WITH INDAIR ON 50/50 BASIS.
- MAWB ON PRE-PAID BASIS. HAWB ON CHARGES OLLECT BASIS / MARK WITH IATA RATE OR "AS AGREED".
- THE PURCHASING TERMS ARE ON FOB MADRAS BASIS. ALL LOCAL CHARGES FOR SHPR.
KNIGHTS ATHELETICS PAYS ONLY FOR AIR FREIGHT - NOTHING ELSE.
LOOK FORWARD TO RECEIVE YOUR "SHARP" QUOTATION AND ON GAINING THIS CARGO.
REGARDS / DAN"
25. The afore-mentioned E-mail substantiates that M/s. Indair Carriers Pvt. Ltd. is on a profit sharing basis with M/s. Olympic Freight LLC and, therefore, it cannot be conclusively construed that the Appellant herein is only an agent of M/s. Olympic Freight LLC. In their reply to the afore-mentioned E-mail on 10.8.2001, addressed to Dan Sevillia, the Appellant herein stated as follows:
DD) WE ARE GETTING THE NET NET RATE OF 83/- + FUEL SURCHARGE, YOU ADD ON THE RATE WHICH WILL BE OUR PROFIT SHARED AS 50%-50%.
26. In the light of this E-mail, we are of the view that Section 230 of the Contract Act, relied upon by the learned counsel for the Appellant, is not attracted in the instant case. Firstly, it is established by HAWB that the contract is between the Appellant and the Respondent/Complainant and secondly the communication between the Appellant herein and M/s. Olympic Freight LLC evidences that the terms entered into between them were on 50-50% profit sharing basis.
27. The learned counsel for the Respondent/Complainant relied on the Judgment of the High Court of Delhi reported in CS(OS)302/2010 between Vipin Kumar Jain vs. M/s. Freight Lines India Pvt. Ltd., in which the Hon'ble High Court in para 42 of its judgment observed as follows:
"42. In Ramesh Hirachand Kundanmal's case (supra), it is held that in deciding as to who is a necessary party each case has to be determined on its own facts [ See also Razia Begum vs. Sahebzadi Anwar Begum and Others, AIR 1958 SC 886 and V.N. Verma vs. Smt. Veena Mahajan, 2012 (127) DRJ 600]. In the case of Kasturi vs. Iyyamperumal and Others, (2005) 6 SCC 733 also, it is held that a plain reading of the expression ―all the questions involved in the suit‖ occurring in sub-rule (2) of Order I Rule 10 CPC makes it abundantly CS (OS) No.302/2010 Page 28 of 32 clear that the legislature clearly meant that ―the controversies raised as between the parties to the litigation must be gone into only ........... and not the controversies which may arise between the plaintiff- appellant and the defendants inter se or questions between the parties to the suit or a third party.‖ The Plaintiff in the suit is dominus litis and cannot be forced to add parties against whom he does not want to fight unless it is a compulsion of the rule of law. Adding parties in the case, which will enlarge the scope of the suit, add additional causes of action, attract collateral issues, widen controversies and embarrass the Plaintiff, is not the object and purport of Order I Rule 10.
28. As seen from the record, there is no privity of contract between the Respondent and M/s. Olympic Freight LLC, therefore, the question of arraying them as party in the present case does not arise.
(C ) The learned counsel for the Appellant contended that the goods were of sub-standard quality as can be seen from the E-mail addressed to Dan, which is reproduced hereunder:
"------Original Message-----
From : Joe Bozich (mailto:[email protected]) Sent:Thursday, September 27, 2001 8:42 PM To: Dan Sevillia-Olympic Freight Subject: Re: PAYMENTS DAN Sorry you could not reach me as I am traveling a lot. On a plane right now. Anyway yes Ragini is here in the USA because we have huge losses as a result of getting poor quality when we open the cartons. I have told the factory that they must pay the air freight if they want us to take these goods because we will find out that we have paid air freight for poor quality we cannot ship to anyone. The son flew back to India after seeing with his own eyes what we have received that we have paid for and he has confirmed that he will get his father to make good.
Joe".
29. We observe from the record that the instructions in the HAWB is clear that the document should be retired from the Bank for collection of consignment in question. It is not understood as to how the goods were inspected and the buyer had come to a conclusion that they were of sub-standard quality, without retiring the documents from the concerned Bank. There are conflicting stands taken by the Appellant herein. On one hand, they rely on the communication dated 24.9.2001 given by M/s. Swiss Air Cargo that the consignment was delivered on 30.8.2001. There are no details as to whom the consignment was delivered to. On the other hand, the Appellant herein had taken a stand that the consignment was not taken by the buyer as the goods were of inferior quality. Even if either of the situations were to be true, there was an act of deficiency of service as the documents were not collected through Bank and yet it is contended by the Appellant that the consignment was delivered/was found not confirming to the standards of quality of M/s. Knight Apparel. The Hon'ble Apex Court in Trans Mediterranean Airways vs. M/s. Universal Exports and Anr. (2011) 10 SCC 316, held that it was the duty of the Appellant Carrier to have delivered the consignment to the Consignee only and in case of any doubt the Appellant Carrier was required to enquire with the Consignor and not deliver the consignment to any other person other than the notified party. Therefore, it was held that there was a deficiency of service by the Appellant Carrier.
30. In case of loss of goods or delivery to a wrong person or delay in the delivery, presumption would be of negligence on the part of the carrier, as per the settled law. We refer to the observations made by the Hon'ble Apex Court in Patel Roadways Ltd. Vs. Birla Yamaha Ltd. (2000) 4 SCC 91:
"31. Coming to the question of liability of a common carrier for loss of or damage to goods, the position of law has to be taken as fairly well settled that the liability of a carrier in India, as in England , is more extensive and the liability is that of an insurer. The absolute liability of the carrier is subject to two exceptions: an act of God and a special contract which the carrier may choose to enter with the customer.
32. In Sarkar on Evidence (15th Edn., 1999), at p. 1724 under the heading "Negligence" it is stated:
"As a rule negligence is not to be presumed; it is rather to be presumed that ordinary care has been used. The rule does not apply in the case of common carriers, who on ground of public policy, are presumed to have been negligent if goods entrusted to their care have been lost or damaged or delayed in delivery (Ross v. Hill 2 CB 890; Jones s15). The law will conclusively presume that the carrier has been guilty of a negligence unless he can show that the loss or damage was occasioned by what is technically called the 'Act of God', or by King 's enemies" .
31. In the instant case, there is no doubt that the loss had resulted from the act of the Appellant as without there being the original Bank release note, the goods were delivered to some third party whose identity till date has not been disclosed. The carrier is expected to be cautious in delivering the goods and ought not to have delivered without ascertaining their identity and without the documents having been retired from the Bank inspite of clear cut instructions in the HAWB. In these set of circumstances, for the deficiency in service by the Appellant herein, we think it is equitable for the Appellant to make good the loss suffered by the Respondent/Complainant.
32. The HAWB which is the document of title had been negligently dealt with as the consignment was delivered without it being negotiated through the Bank and without the letter of credit being honoured. The Bank had stated that the Consignee declined to accept the letter of credit and however, M/s. Swiss Air, have by their own confirmation stated that the consignments have been delivered. With respect to the quantum of loss suffered by the Complainant, we are of the view that the invoice values of the respective consignments i.e. ₹5,86,767/-, ₹14,85,025/- and ₹13,05,022/- would also include an element of profit. Keeping in view the nature of the product exported viz., the garments, we feel that it would be just and expedient to take the profit margin @25% and deduct the same from each of the invoice values of the respective consignments. Accordingly, we direct the Appellant herein to pay to the Complainant the balance amounts towards the loss suffered by it on account of non-receipt of the remittances against the three invoices within four weeks from the date of receipt of this order, failing which the said amounts shall attract an interest at 6% per annum from the date of filing of the Complaint till realization.
33. In the result, the Appeals are allowed in part, modifying the order of the State Commission to the extent indicated above. We also award costs of ₹10,000/- to be paid to the Respondent.
......................J D.K. JAIN PRESIDENT ...................... M. SHREESHA MEMBER