Madras High Court
Western Carriers vs Kec International Limited on 18 September, 2014
Author: Pushpa Sathyanarayana
Bench: Pushpa Sathyanarayana
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 18 09 2014 CORAM: THE HONOURABLE MRS. JUSTICE PUSHPA SATHYANARAYANA Second Appeal No. 980 of 2007 and M.P. No. 1 of 2007 Western Carriers No.88, N.S.C. Bose Road Sowcarpet Chennai 600 079 ... Appellant Vs. 1. KEC International Limited owning CETEX Petro Chemicals carrying on business at No.7, I Floor Wellington Estate, 24, Ethiraj Salai Chennai 600 105 rep. by Power agent/Subrogee The Oriental Insurance Company limited through D.O.No.V, Spencer Towers IV Floor, No.770-A, Anna Salai Chennai 600 002 2. The Oriental Insurance Company Limited through D.O.No.V, Spencer Towers IV Floor, No.770-A, Anna Salai Chennai 600 002 ... Respondents Second Appeal under Section 100 of the Civil Procedure Code against the judgment and decree of the Principal City Civil Court at Chennai dated 31-08-2006 and passed in A.S.No.596 of 2005 confirming the decree and judgment passed by the IV Assistant Judge, City Civil Court, Chennai dated 11-04-2005 passed in O.S.No.3102 of 2002 in so far with regard to the principal amount, on its file. For appellant :: Mr. K. Bijai Sundar For respondents :: Mr. Mageswaran Reserved on: 04-09-2014 JUDGMENT
The defendant, who has lost before the Courts-below, has filed this appeal against the judgment and decree in O.S.No.3102 of 2002 as confirmed in A.S.No.596 of 2005 confirming the decree and judgment passed by the IV Assistant Judge, City Civil Court, Chennai dated 11-04-2005 passed in O.S.No.3102 of 2002 in so far with regard to the principal amount, on its file.
2. The facts leading to the filing of this Appeal are as follows:-
2.1. The first plaintiff is one KEC International Limited dealing in petrochemicals. The first plaintiff as per invoice bearing No.910711, dated 06-01-2000 despatched a consignment of 7.968 MT of Methyl Ethyl Ketone to their consignee, M/s. Sultanchand Bimalprakash Limited at New Delhi on consignment sale basis. The defendant, Western Carriers at Chennai, in acknowledgement of the entrustment of the consignment in good order, issued the consignment note dated 06-01-2000. The defendant, who as a common carrier though duty-bound to deliver the goods in good condition, failed in discharging their duty, as 1.610 MTs of the consignment were found leaking. The said leakage was also quantified by an independent Surveyor and the loss was assessed. The Surveyor had also issued the report dated 30-01-2000. The plaintiff had contended further that the consignment was insured with the second plainff for transit risks and as per the policy of the Insurance and based on the Surveyor's report, the loss was quantified at Rs.92,543/- (Rupees Ninety two thousand five hundred and forty three only) and the same was indemnified by the second plaintiff to the first plaintff. On such settlement, the first plaintiff executed a Letter of Subrogation and a special Power of Attorney in favour of the Insurance Company, viz., the second plaintiff. Based on the strength of the Letter of Subrogation and the Power of Attorney, this suit is filed by the second plaintiff along with the first plaintiff for the recovery of the sum settled by the second plaintiff to the first plaintiff.
2.2. The suit was resisted by the defendant contending, interalia, that the leakage was caused not during the transit. But, it happened only at the consignee's end, as the consignment was booked on door delivery basis, the leakage could have happened during the unloading process. The defendant also contended that there was no notice as contemplated under Section 10 of the Carriers Act within the period of six months and also denied having received such notice. It was further contended by the defendant that the suit was bad for non-joinder of necessary party as the consignee was not made a party and prayed for dismissal of the suit.
2.3. One S. Mohan, Assistant Manager of the second plaintiff Company was examined as P.W.1 and Exs-A1 to A12 were marked on the side of the plaintiffs. The defendant did not examine any witness nor produced any documents on its side.
2.4. On a consideration of the facts and evidence available on record, the Courts below finding that the defendant-Carrier was negligent fixed the liability on them and decreed the suit filed by the plaintiffs. Aggrieved by the concurrent finding, this Second Appeal has been filed by the defendant-Carrier.
3. At the time of admission, the following substantial questions of law were correlated:
(a) Whether the Courts were correct in accepting the evidence of PW1, who is admittedly, an employee of the second respondent, who had no personal knowledge of the case in the light of the judgment reported in 2005 (2) SCC 217?
(b) Whether the Courts were correct in believing Ex.A.7, the survey report as true and correct in estimating the loss in the absence of the non-examination of the author thereof, in the light of the judgment reported in 1998 (8) SCC 541?
(c) Whether the Courts were correct in holding that the first respondent had a valid title and as "owner of the goods" entitled to file a suit under the provisions of the Carriers Act in the light of the provisions of Sections 8 and 9 of the Said Act read with the judgment reported in 2002 (1) LW 284 and 1963 Andhra Law Times Report 265?"
4. The learned counsel for the appellant/defendant raised the following contentions:-
4.1. The first contention raised by the learned counsel is as to the ownership of the goods after the entrustment of the same to the Carrier. The focus of the learned counsel was only with respect to Sections 8 and 9 of the Carriers Act.
4.2. For better appreciation of the case, Sections 8 and 9 of the Carrier Laws are re-produced below:-
"8. Goods forwarding note.-- (1) Every consignor shall execute a goods forwarding note, in such form and manner as may be prescribed, which shall include a declaration about the value of the consignment and goods of dangerous or hazardous nature.
(2) The consignor shall be responsible for the correctness of the particulars furnished by him in the goods forwarding note.
(3) The consignor shall indemnify the common carrier against any damage suffered by him by reason of incorrectness or incompleteness of the particulars on the goods forwarding note.
9. Goods receipt.--(1) A common carrier shall,--
(a) in case where the goods are to be loaded by the consignor, on the completion of such loading; or
(b) in any other case, on the acceptance of the goods by him, issue a goods receipt in such form and manner as may be prescribed.
(2) The goods receipt shall be issued in triplicate and the original shall be given to the consignor.
(3) The goods receipt shalll be prima facie evidence of the weight or measure and other particulars of the goods and the number of packages stated therein.
(4) The goods receipt shall include an undertaking by the common carrier about the liability under section 10 or section 11."
Therefore, it is clear that a common Carrier is responsible for the safety of the goods entrusted to him in all events.
4.3. The learned counsel for the appellant placed reliance on Ex-A3, invoice bearing no.910711 dated 06-01-2000. The terms and conditions as set out in Ex-A3 was relied on by the defendant/appellant. According to the learned counsel, Ex-A3 was a copy of the invoice, which was the "original for buyer". In the same document, after describing the goods and the quantity along with the price, it was mentioned as 'consignment sales' and in the bottom of the invoice, it was specifically stated as follows:
"Interest at 20% will be charged on goods, if payment is not received within the allowed credit period."
(Emphasis supplied) The learned counsel appearing for the appellant would contend that Ex-A3 was intended for the buyer and the interest clause printed at the bottom would indicate that the consignee would be the owner of the goods despatched.
4.4. It was contended further that once the goods are entrusted to the Carrier, the ownership of the consignor ceases and the consignee becomes the owner. This could be inferred from the penal clause indicated in the invoice. The learned counsel also pointed out that in paragraph No.3 of the plaint, it was specifically mentioned that the consignee, M/s. Sultanchand Bimalprakash Limited were the agents of the first plaintiff at New Delhi and the consignment was despatched to them, on consignment sale basis. However, in the proof affidavit filed by P.W.1, the consignee is not mentioned as an agent but only as a purchaser. Therefore, according to the defendant's counsel, it is the consignee, who is the owner of the goods once the consignor entrusted the goods to the Carrier. Hence, the suit as it is filed by the first plaintiff, is not maintainable as he is not the owner of the goods. Though in the plaint it has been specifically stated that they have received the compensation from the Insurance Company and had issued a Letter of Subrogation for the Insurance Company to sue and recover the same from the Carrier, the first plaintiff, who has been made a formal party, contends that the consignee at Delhi was their agent and it was not a sale. Therefore, the ownership continued only with the consignor. He has not examined anybody from the first plaintiff-Company.
4.5. P.W.1 is the Assistant Divisional Manager of the second plaintiff, Oriental Insurance Company. It was contended that the consignor has not examined anybody on their behalf to speak about the ownership of the goods, who will be the best person to speak about the same, which would also be vital to their case to make out the claim. P.W.1 is only an employee of the second plaintiff- Insurance Company, who has indemnified the loss to the first plaintiff cannot have any personal knowledge about the transaction. P.W.1 also has not stated that the consignee is only the agent of the first plaintiff. Therefore, according to the appellant, the suit is not maintinable at the instance of the consignor, as he seeks to be the owner of the goods immediately after entrustment of the goods to the appellant. In this regard, the appellant placed his reliance on AIR 1983 Calcutta 237 (The Great India Trading Co. Pvt. Ltd., Vs. Nowrangrai Ramniwas and another), wherein it has been held as under:
"It is the common case of the parties that the respondent No.1 was the owner of the goods when the same was despatched on board the barge bearing No.A/5214 in tow of ship M.V. Rampuria belonging to the appellant. On 3rd October, 1961 bill of lading was issued which shows that the respondent No.1 consigned the goods to self or to its agent at Calcutta. The respondent No.1 thereby retained the possession and reserved the right of disposal of the goods till the completion of the voyage. By reason of the premises, the burden of proving that the respondent No.1 was not the owner of the goods is on the appellant. (See Sec.110 of the Evidence Act, Sukul Brothers V. H.K. Kavrana, AIR 1958 Cal 730; Commrs. for the Port of Calcutta V. General Trading Co. Ltd., AIR 1964 Cal 290 at p.303)"
5. In turn, the learned counsel for the respondents placed his reliance on AIR 1957 Bombay 276(Chhangamal Harpaldas and another Vs. Dominion of India and another), wherein it was held thus:
"Two propositions appear to be well-settled. The right of action to recover compensation for loss or damage to the goods ordinarily vests in the consignor. Where the goods lost or damaged in transit are the subject-matter of a contract of sale, the owner of the goods may in the absence of a contract to the contrary sue the railway administration. Therefore, a consignee who is in possession of a railway receipt duly endorsed by the consignor may maintain an action for compensation for loss of the goods covered thereby, but he can do so not because he is the consignee but because he is the owner of the goods. A consignor may sue for compensation for loss relying upon the breach of contract of consignment. Any owner of goods covered by a railway receipt may sue for compensation relying upon his title, and the loss of goods by misconduct of the railway administration. But a bare conginee, who is not a party to the contract of consignment and who is not the owner of the goods, cannot maintain a suit for compensation for loss or damage to the goods. He has no cause of action ex contractu nor ex delicto."
6. From the materials available on record, it is seen that the first plaintiff had entrusted the goods to the Carrier to be handed over to the consignee. As seen earlier, the mere fact that the consignee is different from consignor does not necessarily pass title to goods from consignor to consignee. In this case, when the plaintiff has explained that the consignee was only his agent, it is quite possible for the consignor to retain the title in the goods for himself through the consignment is booked in the name of another person. Besides, there is privity of contract only by the consignor with the Carrier.
7. But, in this case, it has to be seen whether the plaintiffs have treated the consignee as an agent and according to them, the ownership was retained by the consignor himself. In normal circumstances, if the goods were not delivered to the consignee, he would not have suffered any loss as the ownership would continue to be only with the consignor. Whereas if the goods are delivered either in a damaged condition or as in the present case, where the entire quantity has not reached the destination, it could easily be said that consignee alone could file the suit for the loss suffered.
8. In so far as the present case is concerned, when the consignee is only an agent of the consignor where there was no sale of goods, the ownership continues to vest with the consignor only. Therefore, the suit laid as such, is maintainable.
9. Though the consignee may have several interests in the goods to entitle him to sue compensation for loss in transit, as the ownership has not been relinquished by the consignor, the consignor is entitled to maintain the claim. No doubt, the learned counsel for the respondent/consignor could not answer why there was a penal clause in the invoice that in the event of payment not received within the credit period, interest would be charged. Excepting the averment in the plaint, there is also no evidence from the plaintiffs to hold that the consignee was his agent.
10. From a casual reading of Ex-A3, it is seen that it is only a consignment sales and hence, CST not applicable and invoice has been issued by CETEX Petrochemicals on behalf of the first plaintiff. Therefore, it can be inferred that M/s. Sultanchand Bimal Parkas Ltd., the consignee is none other than the agent of the consignor and CST was not applied so far. Therefore, it is evident that the title having not passed on to the consignee, only the consignor is entitled to maintain the claim. The learned counsel for the appellant placed his reliance on 2002 (I) L.W. 284 (M/s. Deepak Transport Agency Vs. M/s. Transformers and Switch Gears Ltd. & others) and the relevant passage is usefully extracted below:
"It is now mainly contended that the plaintiffs are not the owner of the goods and therefore cannot maintain the suit for damages, as against the carriers viz., the first defendant, an attempt has also been made on behalf of the plaintiffs to contend that suit was not based on Carriers Act and the suit is filed on the strength of the original contract, as per which the first plaintiff entrusted the goods to the first defendant to be carried to its destination. But a reading of the plaint would definintely disclose that the suit was filed only against the carrier and the claim is also only under the Carriers Act. Therefore, we have to find out whether the first plaintiff not being the owner of the goods, can still claim damages caused during the course of the goods, being carried by the carrier."
The above case was also filed under the Carriers Act. The said Act restricts the power of the common carrier of exempting himself from the common law liability. Section 8 of the Carriers Act creates a liability and gives the benefit of the liability to the owner. Therefore, it is only the owner, who is entitled to the benefit of the Section.
11. In the case on hand, also it is clearly established from Ex-A3 that the consignment was entrusted with the appellant-defendant by the first plaintiff himself. Therefore, title in respect of goods continue to be only with the first plaintiff as there was no sale between the consignor and the consignee. Therefore, the question of law is answered in favour of the respondent-first plaintiff and answered accordingly.
12. In view of the above discussions, the challenge of the defendant does not find favour with him and the appeal fails and the judgment of the Courts-below are confirmed.
In the result, the second appeal is dismissed, confirming the judgment and decree of the trial Court dated 11-04-2005 in O.S. No. 3102 of 2002 as affirmed by the First Appellate Court by judgment and decree dated 31.8.2006 in A.S. No. 596 of 2005. No costs. Consequently, connected Miscellaneous Petition is closed.
18 09 2014 Index : yes Website : Yes glp / gri PUSHPA SATHYANARAYANA, J.
glp / gri Pre-delivery judgment in Second Appeal No.980 of 2007 Delivered on 18 09 2014