Delhi High Court
Runway Logistics Pvt. Ltd. vs Paras Imports Pvt. Ltd. & Ors. on 16 April, 2019
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 16th April, 2019
+ CS(COMM) No.37/2019
RUNWAY LOGISTICS PVT. LTD. .... Plaintiff
Through: Mr. Amit Gupta, Ms. Mansi Kukreja
& Ms. Vidhi Goel, Advs.
Versus
PARAS IMPORTS PVT. LTD. & ORS. ......Defendants
Through: Mr. Randhir Jain, Mr. Dhananjay Jain
& Mr. Utkarsh Mudotiya, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA No.1077/2019 (of the plaintiff under Order XXXIX Rules 1&2 CPC)
IA No.1078/2019 (of the plaintiff under Order XL Rule 1 CPC)
IA No.3631/2019 (of the defendants under Order VII Rule 11 CPC)
IA No.4206/2019 (of the defendants under Order XXXIX Rule 4 CPC)
1. The plaintiff has sued defendant no.1 Paras Imports Pvt. Ltd. and its
Directors defendants no.2 and 3 viz. Mr. Paras Verma and Mrs. Anita
Sharma, for (a) mandatory injunction to furnish the original Bills of Lading
or in the alternative, return all the goods, to the plaintiff which were
imported vide consignments mentioned in the plaint; (b) directing the
defendants to pay Rs.13,29,632.36 paise to the plaintiff; and, (c) directing
the defendants to reimburse the plaintiff with an amount of USD 3000,
pleading that (i) the plaintiff is in the business of freight forwarding and
international logistics; (ii) the plaintiff inter alia handles consignments that
are imported from China to India by its clients; the plaintiff provides services
to its clients in getting the goods released from shipping line / Customs and
delivered to their destinations; (iii) the defendant no.1 imports and sells
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several items for infants, toddlers and children such as toys and toy cars, toy
bikes, strollers etc.; (iv) the plaintiff has been providing services to the
defendant no.1 which is run by and under active management of defendants
no.2 and 3; (v) the defendant no.1 was importing goods from Chinese
vendors on Free on Board (FOB) basis; (vi) the plaintiff was providing their
services and handling the consignments of the defendant no.1; (vii) Chinese
forwarders, acting on behalf of the plaintiff company, would pick up
consignments from the Chinese sellers and arrange for shipments for
delivery to Indian destinations; the plaintiff company would then process the
documents for release of the consignments from the shipping lines and
deliver it to the defendants; the invoices were generated by the plaintiff on
the defendants, which would be inclusive of ocean freight and other
destination charges along with charges for services provided by the Chinese
forwarders; (viii) over the last two years, there were constant dealings
between the plaintiff and the defendants and several times the plaintiff would
release consignments on the assurance of the defendant no.2 that the
documentation was in order; till the year 2018, when the goods would be
delivered by the plaintiff company, the defendant no.2 would furnish the
original Bill of Lading to the plaintiff within a short span of time; (ix) on
behalf of the defendants and on instructions of the defendants, the plaintiff in
the months of July and September, 2018 handled several consignments
particulars whereof are given in the plaint, of the total value of USD 313,910
approximately equivalent to Rs.2,19,73,700/-; (x) in respect of the aforesaid
consignments, Shanghai Evertrans International Forwarder Co. Ltd. and
Shenzhen Lucky Logistics Ltd. were the Chinese forwarders of the goods
who had acted on behalf of the plaintiff and took delivery of the goods from
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Chinese sellers viz. Shenzhen GBC Glory Business Corporation Ltd. and
Tianjin Free Trade Service Co. Ltd. / Hebei Satune Toys Company Ltd. and
dispatched the same; (xi) at the time of delivery of the aforesaid goods, the
defendant no.2 wrongly informed Mr. Kunal Kumar, Director of the plaintiff
that he had made all payments for such consignments to the sellers i.e.
Shenzhen GBC Glory Business Corporation Ltd. and Tianjin Free Trade
Service Co. Ltd. / Hebei Satune Toys Company Ltd.; the defendant no.2 also
wrongly conveyed that the original Bills of Lading had been received by
him, the same were in his office and that he would handover the same to the
plaintiff as and when requested; (xii) the defendants were otherwise not
entitled to delivery and possession of the consignments till they had made
the entire payment to the Chinese sellers, obtained the original Bill of
Ladings and handed over the original Bill of Lading to the plaintiff; (xiii)
later the plaintiff was informed by Shenzhen GBC Glory Business
Corporation Ltd. and Tianjin Free Trade Service Co. Ltd. / Hebei Satune
Toys Company Ltd. as well as Chinese forwarders i.e. Shanghai Evertrans
International Forwarder Co. Ltd. and Shenzhen Lucky Logistics Ltd. that the
defendants had not made any payment for the said consignments and had got
the same released from the plaintiff by making wrong statements; (xiv)
goods were supposed to be taken by the defendants from the plaintiff only
after making payments; (xv) the defendants, inspite of repeated requests and
reminders of the plaintiff did not resolve the issue; (xvi) the defendant no.2,
though kept on assuring that monies will be sent but has not done so; (xvii)
the defendant no.2 vide his e-mail dated 8th December, 2018 informed the
suppliers that the goods of which he had taken delivery of were in his
warehouse and will shortly pay the price thereof; (xviii) though the
CS(COMM) No.37/2019 Page 3 of 16
defendant no.2 was called upon to return the goods subject matter of the said
consignments but has not done the same also; (xix) Shenzhen Lucky
Logistics Ltd., vide their e-mails dated 11th December, 2018 and 19th
December, 2018 called upon the plaintiff to make payment and the
shipments of the plaintiff have also been put on hold by Shenzhen Lucky
Logistics Ltd. until the said controversy is resolved; and, (xx) the defendant
no.2 vide his e-mail though has been promising payments but has not made
the payments.
2. The suit came up first before this Court on 24th January, 2019 when
the entitlement of the plaintiff to the relief of direction to the defendants, to
hand over to the plaintiff the original Bill of Lading or in the alternative to
return of goods, was enquired observing that from the averments in the plaint
it appeared that the plaintiff neither had title to the Bill of Lading nor to the
goods of which delivery was sought and thus could not maintain the suit.
Though the counsel for the plaintiff referred to Section 3 of (The Indian)
Bills of Lading Act, 1856 but it was prima facie not found to be applicable.
It was further enquired from the counsel for the plaintiff that even if the
plaintiff had title, how was a suit for mandatory injunction maintainable and
whether not the appropriate remedy would be to sue for recovery of price of
the goods. Subject to the same, summons / notice of the suit were ordered to
be issued and till further orders the defendants restrained from alienating,
encumbering or parting with possession of the goods subject matter of
consignments of which the defendants had taken delivery of.
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3. The defendants, besides filing their written statement have filed
applications under Order VII Rule 11 and under Order XXXIX Rule 4 of the
CPC.
4. The arguments on all the applications aforesaid were heard on 20th
March, 2019 and order reserved.
5. The defendants seek rejection of the plaint inter alia on the same
grounds on which query was made from the counsel for the plaintiff on 24th
January, 2019 when the suit had first come up before this Court. It is the
contention of the counsel for the defendants that the plaintiff cannot maintain
a suit for the relief of mandatory injunction, being only a freight forwarder,
having no title to the goods qua which mandatory injunction is claimed. It is
also contended that the claim of the plaintiff, of the defendants by
misrepresentation having received delivery of goods, is belied from the
documents filed by the plaintiff itself.
6. Per contra, the counsel for the plaintiff, besides the Bills of Lading Act
has drawn attention to the decision of the Federal Court of Ottawa, Ontario,
in Westwood Shipping Lines Inc. Vs. Geo International Inc. 1998 Can Lll
7984, Dhian Singh Sobha Singh Vs. Union of India AIR 1958 SC 274 and
J.V. Gokal & Co. (Private) Ltd. Vs. Assistant Collector of Sales-Tax
(Inspection) AIR 1960 SC 595.
7. While hearing the counsel for the plaintiff, I perused the provisions of
the Indian Contract Act, 1872 and drew attention of the counsel for the
defendants to Sections 151 and 180 thereof under Chapter IX titled "Of
Bailment". It was enquired from the counsel for the defendants whether not
the position of the plaintiff is as of a bailee, as the counsel for the plaintiff
CS(COMM) No.37/2019 Page 5 of 16
had contended, and if so, then under Section 151, a bailee is a bound to take
as much care of the goods bailed out to him as a man of ordinary prudence
would, under similar circumstances, take of his own goods and under Section
180, if a third person wrongfully deprives the bailee of the use of possession
of goods bailed, or does them any injury, the bailee is entitled to use such
remedies as the owner might have used as if no bailment had been made and
either the bailor or the bailee may bring a suit against a third person for such
deprivation or injury. It was thus enquired from the counsel for the
defendants that if the plaintiff is the bailee, why is the plaintiff not entitled to
maintain the suit.
8. The counsel for the defendants drew attention to the Bill of Lading at
pages 2 and 6 of the plaintiff‟s documents and contended that it is not
negotiable and is to order, meaning thereby that the plaintiff, irrespective of
the payment made by the defendants was required to deliver the goods to the
defendants and has so delivered the goods.
9. On enquiry as to how the payment was to be made by the defendants
for the goods, delivery whereof has been taken by the defendants from the
plaintiff, the counsel for the defendants stated that the payment was to be
made by telegraphic transfer and in that context drew attention to pages no.3
and 8 of the defendants documents.
10. It was further enquired from the counsel for the defendants on 20th
March, 2019 that if the defendants had not paid for the goods, whether the
plaintiff, if a bailee, was still under Sections 151 and 180 supra entitled to
maintain the suit.
CS(COMM) No.37/2019 Page 6 of 16
11. The counsel for the defendants contended that if the defendants have
taken delivery of goods from the plaintiff, without making payment thereof,
it is only the seller who can sue the defendants and not the plaintiff.
12. On pointed query to the counsel for the defendants as to what is the
stand of the defendants qua payment i.e. whether the defendants claim to
have made the payment or not, the counsel for the defendants was unwilling
to make a categorical statement of having made payment for all goods and
could not show any plea also to the said effect in the written statement.
13. The written statement of the defendants was not on record on 20 th
March, 2019 and due to which order could not be pronounced on that date.
The written statement has since been called for and the pleaded case of the
defendants is found to be that, (i) the claim of the plaintiff for
Rs.13,29,632.36 paise, being charges for services rendered by plaintiff, is
wrong because the plaintiff is also claiming ocean freight when the same is
pre-paid by the Chinese supplier; in fact now the defendants have been put to
enquiry and have realized that the plaintiff even in the earlier bills raised on
the defendants has also been claiming ocean freight from the defendants
which it was not entitled to and has recovered an excess amount of
Rs.64,32,126/- from the defendants; (ii) the Bill of Lading was drawn with
foreign supplier as consignor and the defendant as consignee; such goods
were meant to be supplied to the defendants straightaway; there was neither
any stipulation of obligation nor a practice to submit the Bill of Lading to the
plaintiff at the time of taking delivery of the goods from the plaintiff; (iii) the
plaintiff has no concern with the dealings and transactions between the
Chinese supplier and the defendant company and which is an independent
CS(COMM) No.37/2019 Page 7 of 16
contract between a supplier and a purchaser; (iv) the plaintiff as a freight
operator has no connection with the shipments / consignments apart from
being entitled to receive its freight as per services rendered by it; (v) the
defendants have been negotiating the deals with the supplier of the goods
independently and without any involvement of the plaintiff; (vi) handing
over Bill of Lading for delivery of goods is not even a condition of
commercial terms between the supplier and the defendants; (vii) in the past,
the defendants have been making payments directly to the suppliers and
there is no condition of handing over the Bill of Lading to the plaintiff; (viii)
"the defendants have been insisted upon with delivery of goods by the
Chinese supplier with a clear understanding that the goods do not have much
marketability in India as on date and the payments would be made in
deferred manner as and when the market opens up to which Chinese supplier
has happily consented and the plaintiff has no concern with the same. The
goods have been purchased on credit on mutual arrangement arrived at
between the buyer and seller without any reference to the plaintiff"; (ix)
there are unresolved issues between the defendants and the Chinese suppliers
and with which the plaintiff has no concern; and, (x) the claim of the plaintiff
against the defendants can at best be for Rs.13,29,632.29 paise being the
charges claimed to be due to the plaintiff for the services rendered by the
plaintiff and which claim is below the minimum pecuniary jurisdiction of
this Court.
14. As would immediately become evident, the outcome of these
applications is dependent upon the right of the plaintiff to maintain the claim
for mandatory injunction. If on the basis of averments made in the plaint
CS(COMM) No.37/2019 Page 8 of 16
itself it can be said that the plaint does not disclose any right, the plaint,
insofar as for the relief of mandatory injunction, will be rejected and the
plaintiff relegated to approach the Court of appropriate pecuniary jurisdiction
for the remaining claims. Even if from pleadings, documents and law,
though not from averments in the plaint alone, it is found that the plaintiff
has no right for the relief of mandatory injunction, the suit for the said relief
will be dismissed. Conversely, the entitlement of the plaintiff to interim
reliefs claimed shall be considered.
15. The pleaded case of the plaintiff is of the defendants being entitled to
take delivery of goods from the plaintiff only after producing the Bill of
Lading and having taken delivery of goods by misrepresentation and the
Chinese suppliers and the Chinese forwarders claiming the value of the
consignment from the plaintiff. It thus cannot be said that the plaint, on a
reading thereof does not disclose any cause of action to be rejected. The Bill
of Lading at pages 2 and 6 referred to by counsel for the defendants of
Evertrans International Forwarder Co. Ltd. shows, (a) Shenzhen GBC Glory
Business Corporation Ltd., China as the consignor; (b) defendants as the
consignee; (c) Shanghai Evertrans International Forwarder Co. Ltd. as the
forwarding agent; (d) the plaintiff as the outstation agent; (e) an endorsement
that "whether the Bill of Lading is non-negotiable the carrier may give
delivery of goods to the named consignee upon reasonable proof of identify
and without requiring surrender of an original Bill of Lading. Where the Bill
of Lading is negotiable, the merchant is obliged to surrender one original,
duly endorsed, in exchange of goods" and that "the carrier accepts a duty of
reasonable care to check that any such document which the merchant
CS(COMM) No.37/2019 Page 9 of 16
surrenders as a Bill of Lading is genuine and original. If the carrier complies
with this duty, it will be entitled to deliver the goods against what it
reasonably believes to be a genuine and original Bill of Lading, such
delivery discharging the carrier‟s delivery obligations"; and, (e) containing
endorsement at the top "not negotiable unless consignee to order."
16. Before proceeding further, I may record that the plaintiff has filed only
photocopies of the face of Bill of Lading and which is found to refer to
"conditions on the reverse hereof". The plaintiff has not bothered to file the
original Bill of Lading or photocopy of the reverse thereof.
17. The plaintiff has also filed photocopies of the invoices which against
the column "Payment" contain "T/T".
18. The plaintiff, besides Bills of Lading at pages 2 and 6 to which
attention was invited by counsel for the defendants, has also filed copies of
four other Bills of Lading issued by the same Evertrans International
Forwarder Co. Ltd., of consignments of Shenzhen GBC Glory Business
Corporation Ltd. at pages 12, 16, 20, 24 as well as two other Bills of Lading
at pages 34 and 41 of Shenzhen Lucky Logistics Ltd. and which show (i)
Shenzhen GBC Glory Business Corporation Ltd. and Shenzhen SEG Hi-
Tech Industrial Co. Ltd. to be the shipper; (ii) defendant no.1 to be the
consignee; (iii) for combined transport or port to port shipment; and, (iv) of
accepting responsibility of transport with liberty to sub-contract and
containing a term that one of the „Bs/L‟ must be surrendered duly endorsed
in exchange for the goods or delivery order.
CS(COMM) No.37/2019 Page 10 of 16
19. The counsel for the defendants, during the hearing emphasized on the
endorsements aforesaid on the Bill of Lading first described above in para
no.15 of Shenzhen GBC Glory Business Corporation Ltd. to contend that the
role of the plaintiff was only to deliver the goods to the defendants and there
was no mandate to the plaintiff to insist upon Bill of Lading. The counsel
for the defendants did not draw attention to the Bills of Lading issued by
Shenzhen GBC Glory Business Corporation Ltd. for consignments through
Shenzhen Lucky Logistics Ltd. referred to above in para no.18 and which
have been noticed while dictating this judgment.
20. The Bills of Lading issued by Shenzhen Lucky Logistics Ltd. do
indeed show the obligation of the plaintiff as sub-contractor of Shenzhen
Lucky Logistics Ltd. to deliver the goods to the defendants only against
surrender of duly endorsed Bill of Lading. An issue may however arise
whether the said obligation attaches only to the Bills of Lading of Shenzhen
Lucky Logistics Ltd. or also to other Bills of Lading which are found to be
different and do not contain any such clause and on the contrary contain
endorsement of being not negotiable unless consignee to order and all the
obligation of the plaintiff being restricted to only proof of identity of the
consignee. However, copies of the e-mails filed by the plaintiff before this
Court show the consignors / suppliers as well as the Chinese forwarders to be
demanding payment of the value of the consignments alternatively from the
plaintiff. It thus cannot be said at this stage that on the basis of pleadings
and the documents, the plaintiff has no cause of action for the relief of
mandatory injunction. The provisions of the Bills of Lading Act relied upon
CS(COMM) No.37/2019 Page 11 of 16
by the counsel for the plaintiff are however not found to be of any assistance
in this context.
21. In Westwood Shipping Lines Inc. supra relied upon by the counsel for
the plaintiff also, the Federal Court of Ottawa, Ontario, Canada held a
shipper to be in the position of a bailee and further held that as against a
wrongdoer, possession is title. Finding in that case also that the goods had
been taken delivery of without submitting the original Bill of Lading, the
shipper was held entitled to maintain an action against the consignee.
22. In Dhian Singh Sobha Singh supra also, it was held by the Supreme
Court that the supplier of goods is entitled to sue the bailee who has parted
with wrongful possession of the goods in favour of a third person. J.V.
Gokal & Co. (Private) Ltd. supra also relied upon by the counsel for the
plaintiff is however not found to be apposite in this context.
23. Section 148 of the Contract Act defines a "bailment" as "the delivery
of goods by one person to another for some purpose, upon a contract that
they shall, when the purpose is accomplished, be returned or otherwise
disposed of according to the directions of the person delivering them." It
further provides that the person delivering the goods is called the "bailor"
and the person to whom the goods are delivered is called the "bailee".
Section 149 provides that delivery to the bailee may be made by doing
anything which has the effect of putting the goods in the possession of the
intended bailee or of any person authorized to hold them on his behalf.
24. It is not in dispute that the goods of the subject consignments came
into custody of the plaintiff as sub-contractor of the Chinese forwarders to
CS(COMM) No.37/2019 Page 12 of 16
whom the goods were entrusted by the Chinese supplier for delivery to the
defendants. One set of Bills of Lading as aforesaid clearly provide for the
delivery of goods thereunder to be against an endorsed Bill of Lading;
though the other set of Bills of Lading are not found to so provide but it is
not clear and cannot be decided without evidence as to whether the plaintiff
was to give delivery of goods with submission of endorsed Bills of Lading or
merely on the asking of the defendants. The emphasis of the counsel for the
defendants on the endorsement "T/T" on the invoices does not in my view, at
this stage show that the plaintiff was to give delivery of the consignment
without the defendants submitting the endorsed Bill of Lading. It is well
nigh possible that on the defendants telegraphically transferring the money to
the Chinese supplier, the Chinese supplier was to forward the endorsed Bill
of Lading to the defendants to be exchanged against taking delivery of goods
from the plaintiff. The demand of the Chinese supplier and the Chinese
forwarder for value of consignments from the plaintiff is indicative of them
treating the plaintiff as liable.
25. All these are matters of evidence and which cannot be decided at this
stage.
26. A Five Judges Bench of the Supreme Court in Carona Sahu Co.
Private Ltd. Vs. State of Maharashtra AIR 1966 SC 1153 held that, (i) it is
well established that in the case of a contract for sale of unascertained goods,
the property does not pass to the purchaser unless there is unconditional
appropriation of the goods in a deliverable state to the contract; (ii) in the
case of such a contract, delivery of the goods by the vendor to the common
carrier is an appropriation sufficient to pass the property; (iii) but there is a
CS(COMM) No.37/2019 Page 13 of 16
difference in the legal effect of delivering goods to a common carrier on the
one hand and shipment on board a ship under a Bill of Lading on the other
hand, where goods are delivered on board of a vessel to be carried, and a
Bill of Lading is taken, the delivery by the seller is not delivery to the buyer,
but to the captain as bailee for delivery to the person indicated by the Bill of
Lading; (iv) the seller may therefore take the Bill of Lading to his own order;
(v)the effect of this transaction is to control the possession of the captain and
make the captain accountable to deliver the goods to the seller as the holder
of the Bill of Lading; (vi) the Bill of Lading is the symbol of property, and
by so taking the Bill of Lading the seller keeps to himself the right of
dealing with property shipped and also the right of demanding possession
from the captain, and this is consistent even with a special term that the
goods are shipped on account of and at the risk of the buyer; (vii) the English
cases, however, on which the Sale of Goods Act was founded seem to show
that the appropriation would not be such as to pass the property if it appears
or can be inferred that there was no actual intention to pass it; (viii) if the
seller takes the Bill of Lading to his own order and parts with it to a third
person, not the buyer, and that third person, by possession of the Bill of
Lading, gets the goods, the buyer is held not to have the property so as to
enable him to recover from the third party, notwithstanding that the act of the
seller was a clear breach of the contract; and, (ix) Sections 23 and 25 of the
Indian Sale of Goods Act are identical in language to the corresponding
provisions of the English Sale of Goods Act.
27. This Court, in Sardar Carbonic Gas Co. Vs. Sher-i-Punjab Tading
Co. 15 (1979) DLT 129 held, (a) that where the bailee is merely a bailee
CS(COMM) No.37/2019 Page 14 of 16
during pleasure, as is the case in any gratuitous bailment, or a carrier, the
bailor may, by reason of his property, sue for the conversion of the chattel a
third party who wrongfully takes it out of the bailee's possession, for the
property draws to itself the right of possession as an end has in fact been put
to the bailment; (b) that as the bailor can at any moment demand the return
of the object bailed, he may be said to have possession, throughout the
continuance of the bailment, for he has the right to immediate possession and
by reason of this right can exercise those possessory remedies which are
available to the possessor; (c) that where the bailee, by a wrongful dealing
with the chattel, has determined the bailment, he is liable to the bailor, unless
protected by the Law; and, (d) however, where the bailee has been given
authority to sub-bail the chattel to a third party, the said Act will not
constitute a tort as against the original bailor.
28. Mention, in addition to the judgments cited by the counsel for the
plaintiff, may also be made to Ramanath Gagoi Vs. Pitambar Deb Goswami
AIR 1916 Cal 788 (DB), Ramji Karamsi Vs. The Unique Motor and
General Insurance Co. Ltd. AIR 1951 Bom 347, Purshottam Das Banarsi
Das Vs. The Union of India AIR 1967 All 549 (DB), Umarani Sen Vs.
Sudhir Kumar Datta AIR 1984 Cal 230 (DB) and Karnataka Electricity
Board Vs. Halappa AIR 1987 Kar. 261 (DB).
29. I am therefore of the view that no case for summary dismissal of the
suit is made out. IA No.3631/2019 is dismissed.
30. I have next considered the interim relief.
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31. The admitted position is that the goods which defendants have taken
delivery of have not been paid for and the Chinese forwarders and the
Chinese suppliers are making a claim for price thereof against the defendants
and alternatively against the plaintiff. It is further the admitted case of the
defendants in their written statement that delivery of the subject goods on the
defendants was insisted on by the Chinese suppliers even though at present
there is no demand therefor in India and for this reason only the Chinese
supplier had agreed to deferred payment by the defendants of the said goods.
Once this is the position, I see no reason why the ex parte interim order
should be vacated.
32. Accordingly, IA No.1077/2019 is allowed confirming the ex-parte
order dated 24th January, 2019 and IA No.4206/2019 is dismissed.
33. That brings me to the application of the plaintiff for appointment of a
receiver.
34. Considering the nature of the goods and further considering the stand
of the defendants in their written statement that there is no market of the
goods in India, the defendants should either return the goods or agree to
immediate sale thereof. However, since this aspect has not been heard, it is
deemed appropriate to post the proceedings for hearing on the said limited
aspect.
RAJIV SAHAI ENDLAW, J.
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