Bangalore District Court
Naha Blue Link Inc vs Freight Systems India Private Limited on 19 April, 2025
KABC170027162023
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.O.S.No.1282/2023
Dated on this 19th day of April 2025
Plaintiff/s NAHA BLUE LINK INC
A Partnership firm
Having its office at No.9,
9th Main, II Block, Jayanagar, Bengaluru-
560 011
Rep. by its Partner,
Rajesh Shah
(By Sri Sanjay H Sethiya, Advocate)
// versus //
Defendant/s FREIGHT SYSTEMS INDIA PRIVATE
LIMITED
A company incorporated under the
provisions of the Companies Act, 1956
having its registered office at Super A7,
Thiruvika Industrial Estate, 1st Floor,
Rathna Tower, Guindy,
Chennai-600 032,
Also having its Branch Office at No.506,
Oxford Towers, 4th Floor, No.139, Airport
Road, Kodihalli,
Bengaluru-560 008
Rep by its Managing Director
(By Sri Amit Sahukar, Advocate)
2
CT 1390_Com.O.S.No.1282-2023_Judgment.doc
KABC170027162023
Date of Institution of suit : 15/11/2023
Nature of the suit : Recovery of money
Date of commencement of : 17/12/2018
recording of the evidence
Date on which the : 19/04/2025
Judgment was pronounced.
: Year/s Month/s Day/s
Total duration
01 05 04
JUDGMENT
This is a suit filed by the plaintiff, which is a partnership firm, against defendant, which is a company, for recovery of sum of Rs. 7,01,600 along with interest and also for mandatory injunction. In this suit, the defendant has raised counterclaim for recovery of sum of Rs. 3,96,733 along with interest.
2. The case of the plaintiff in brief is that, the plaintiff is a partnership firm engaged in the business of manufacture and supply of household and electrical home appliances. The defendant is engaged in business of providing freight forwarding, logistics and related services. One MFM Traders of Sri Lanka approached the plaintiff for supply of table fans and issued purchase order dated 25/4/2016. To supply the 3 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 said material to MFM Traders to Sri Lanka at Port of Colombo, plaintiff engaged services of defendant to look after the shipping. In pursuance of the same, defendant sent container to the plaintiff's place and plaintiff loaded the container with the goods / table fans and the same was sealed and delivered to Custom Yard in Bangalore on 6/6/2016. On 8/6/2016, plaintiff realized that there was amendment to regulations brought in by Government of Sri Lanka which required quality certificate to accompany home appliances. Therefore, before shipping the table fans to Sri Lanka, it was necessary that the material should be inspected by certified agent and only after issuance of quality certificate and accompanied by such quality certificate, the goods had to be shipped to Sri Lanka. Since the same had not been complied with in respect of the shipment, the plaintiff immediately issued email dated 8/6/2016 to the defendant not to proceed with the shipment until further information. On receipt of the said email, the defendant assured the plaintiff that the consignment would not be shipped and would be retained to comply with the 4 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 quality check. The plaintiff arranged for inspection of the container by a certified agent, but it was found that shipping agent of the defendant had already shipped the containers on 8/6/2016 and therefore, the goods reached Sri Lanka on 17/06/2016, without compliance with the quality check regulations required by the Government of Sri Lanka. The Custom Authorities in Colombo, Sri Lanka, therefore refused to release the same without payment of penalty and in the case of non-payment of penalty, the demurrage charges were also threatened to be levied on the purchaser, namely MFM Traders. Therefore, left with no alternative, MFM Traders paid penalty and demurrage charges of Rs. 7,84,775, which is equivalent to (Sri Lankan currency) LKR 17,06,027. MFM Traders has debited the said amount from the account of the plaintiff, as a result of which the plaintiff has incurred a loss of Rs. 7,84,775. Apart from this, plaintiff has spent Rs. 33,093 towards travel expenditure to go to Colombo to sort out the issue. The total of said sums comes to Rs. 8,17,868. The shipment charges payable to defendant for the said transportation is Rs. 2,69,743, and 5 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 after deducting the same, the balance payable by the defendant to the plaintiff is Rs. 5,48,125, to which interest component of Rs. 1,53,475 for interest at 21% per annum from 9/8/2016 till 9/12/2017 has to be added. And hence, plaintiff is entitled to recover total sum of Rs. 7,01,600 from the defendant. Apart from this, it is pleaded that in respect of certain other shipments to Colombo through the defendant of aluminum pressure cookers, mixer grinders, etc., various documents as tabulated in the table at paragraph 16 of the Plaint have to be handed over by the defendant to the plaintiff. Hence, for recovery of the above sum of Rs. 7,01,600 along with interest and for mandatory injunction to direct the defendant to hand over all of the documents enumerated at paragraph 16 of the Plaint, the present suit has been filed against the defendant.
3. On issuance of suit summons, the defendant has entered appearance through counsel and admitted that the defendant was engaged to deliver the shipment of table fans to Colombo. It was also admitted that the sealed container containing the shipment of table fans was 6 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 delivered to the custom yard in Bangalore on 6/6/2016 and defendant also admitted the receipt of email dated 8/6/2016, whereby plaintiff requested the defendant not to proceed with the shipment in order to comply with the quality check regulations of the Government of Sri Lanka. However, the defense raised was that defendant has exercised due diligence by informing the carrier Safmarine to hold the container for quality check without guaranteeing the same to the plaintiff. And in order to help the plaintiff, defendant sent several mails to the Safmarine to hold the container. But since all the formalities were completed, Safmarine shipped the container to Colombo in spite of all efforts of the defendant. On this basis, Defendant denied any liability for paying the amount towards the penalty allegedly imposed by Government of Sri Lanka on MFM Traders. Instead, it was contended that it is the plaintiff who is liable to pay the invoice amount for shipping of Rs. 2,69,743 along with the interest component, the total whereof comes to Rs. 3,96,733. Accordingly, the defendant not only prayed for dismissal of the suit but also raised 7 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 counterclaim for recovery of Rs. 3,96,733 from the plaintiff, along with interest at 18% per annum from date of counterclaim till date of realization.
4. On the basis of the above pleadings, the following issues were framed:
(1) Whether the plaintiff company proves that it had engaged the service of defendant to deliver the shipment containing table fans and allied products at the Port of Colombo, Sri Lanka via container / OTL No. MRICU3298633/ML-IN2234425 and shipping bill No. 8097832 dated 06-
06-2016?
(2) Whether the plaintiff company proves that the defendant had handed over the documents and container to the shipping agent Safmarine on 8-6-2016 itself in spite of requests made to hold the container for quality check?
8
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 (3) Whether the plaintiff company proves that, due to inadvertence on the part of the defendant, the consignment reached Port of Colombo, Sri Lanka on 17-6-2016 without completion of quality check regulation as required by the Government of Sri Lanka?
(4) Whether the plaintiff company proves that its buyer, i.e., MFM Traders, had taken delivery of shipment by paying sum of Rs. 7,83,775 including demurrage and penal charges and debited the said amount to the account of the plaintiff and it has been penalized for the wrongful acts committed by the defendant?
(5) Whether the plaintiff company proves that it had incurred loss of Rs.
8,13,360 to resolve the mistake committed by the defendant and the 9 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 defendant is liable to pay the said amount to it?
(6) Whether the plaintiff company proves that the defendant has willfully and unjustifiably withheld the documents described in Para 16 of the plaintiff?
(7) Whether the plaintiff company is entitled to recovery of sum of Rs.
7,01,600 from the defendant?
(8) Whether the plaintiff company is entitled for interest at the rate of 21% per annum on Rs. 5,48,125 from the date of suit till realization?
(9) Whether the plaintiff company is
entitled for the relief of return of
documents from the defendant as
prayed for?
(10) Whether the defendant proves that it had provided shipment service to 10 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 plaintiff through invoices dated 14-7- 2016, 21-7-2016 and 23-7-2016 for the amount of Rs. 88,950, Rs. 90,656 and Rs. 90,137 respectively?
(11) Whether the defendant proves that plaintiff is liable to pay Rs. 3,96,733 to it?
(12) Whether the defendant is entitled for relief as prayed for in the counterclaim?
(13) What order or decree?
5. In the trial, the partner and attorney holder of the plaintiff is examined as PW1 and got marked Ex. P1 to P28. On behalf of the defendant, representative of the defendant is examined as DW1 and got marked Ex. D1.
6. After closure of evidence of both sides, I have heard the arguments of both sides and perused the records of the case.
11
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023
7. To complete the narration of facts, it is to be noted that initially the present suit was filed before the City Civil Court and numbered as OS 481 of 2018 and thereafter on the basis of memo filed by both parties, the Hon'ble City Civil Court, as per orders dated 26-10-2023, transferred the suit to the Commercial Court under Section 15(2) of the Commercial Courts Act, and thereafter the suit was proceeded from the stage which it had reached prior to the transfer, under Section 15 (3) of the Commercial Courts Act.
8. I have perused the records of the case.
9. My answer to the issues are as follows:
Issue No. 1 : In the affirmative, Issue Nos. 2 to 5 : As per finding, Issue No. 6 to 9: In the negative, Issue Nos. 10 to 12 : As per finding, Issue No. 13 : As per final order for the following :-12
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 REASONS.
Issue No. 1:-
10. The case of the plaintiff in brief is that, the plaintiff is a partnership firm engaged in the business of manufacture and supply of household and electrical home appliances. The defendant is engaged in business of providing freight forwarding, logistics and related services. One MFM Traders of Sri Lanka approached the plaintiff for supply of table fans and issued purchase order dated 25/4/2016. To supply the said material to MFM Traders to Sri Lanka at Port of Colombo, plaintiff engaged services of defendant to look after the shipping. In pursuance of the same, defendant sent container to the plaintiff's place and plaintiff loaded the container with the goods / table fans and the same was sealed and delivered to Custom Yard in Bangalore on 6/6/2016. On 8/6/2016, plaintiff realized that there was amendment to regulations brought in by Government of Sri Lanka which required quality certificate to accompany home appliances. Therefore, before shipping the table fans to Sri Lanka, it was necessary that the material should be 13 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 inspected by certified agent and only after issuance of quality certificate and accompanied by such quality certificate, the goods had to be shipped to Sri Lanka. Since the same had not been complied with in respect of the shipment, the plaintiff immediately issued email dated 8/6/2016 to the defendant not to proceed with the shipment until further information. On receipt of the said email, the defendant assured the plaintiff that the consignment would not be shipped and would be retained to comply with the quality check. The plaintiff arranged for inspection of the container by a certified agent, but it was found that shipping agent of the defendant had already shipped the containers on 8/6/2016 and therefore, the goods reached Sri Lanka on 17/06/2016, without compliance with the quality check regulations required by the Government of Sri Lanka. The Custom Authorities in Colombo, Sri Lanka, therefore refused to release the same without payment of penalty and in the case of non-payment of penalty, the demurrage charges were also threatened to be levied on the purchaser, namely MFM Traders. Therefore, left with no alternative, 14 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 MFM Traders paid penalty and demurrage charges of Rs. 7,84,775, which is equivalent to (Sri Lankan currency) LKR 17,06,027. MFM Traders has debited the said amount from the account of the plaintiff, as a result of which the plaintiff has incurred a loss of Rs. 7,84,775. Apart from this, plaintiff has spent Rs. 33,093 towards travel expenditure to go to Colombo to sort out the issue. The total of said sums comes to Rs. 8,17,868. The shipment charges payable to defendant for the said transportation is Rs. 2,69,743, and after deducting the same, the balance payable by the defendant to the plaintiff is Rs. 5,48,125, to which interest component of Rs. 1,53,475 for interest at 21% per annum from 9/8/2016 till 9/12/2017 has to be added. And hence, plaintiff is entitled to recover total sum of Rs. 7,01,600 from the defendant. Apart from this, it is pleaded that in respect of certain other shipments to Colombo through the defendant of aluminum pressure cookers, mixer grinders, etc., various documents as tabulated in the table at paragraph 16 of the Plaint have to be handed over by the defendant to the plaintiff. Hence, for recovery of the above 15 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 sum of Rs. 7,01,600 along with interest and for mandatory injunction to direct the defendant to hand over all of the documents enumerated at paragraph 16 of the Plaint, the present suit has been filed against the defendant.
11. In support of its case, the plaintiff has examined its partner and attorney holder as PW1 and got marked Ex. P1 to P28.
12. Ex. P1 is the power of attorney executed by one of the partners of the plaintiff partnership firm namely Karuna Rajesh Shah in favour of the other partner (PW1) who is none but her own husband, authorising him to represent the plaintiff partnership firm in the present suit. Ex. P2 is way- bill of Safmarine in respect of transportation of table fans which is the subject matter of the present suit. Ex. P3 is letter by MFM traders to the plaintiff giving details of the various penalty amounts which have been paid by MFM traders due to the table-fans shipment having reached Sri Lanka without quality check certificate, along with the enclosures to the said letter, which are the various receipts and bills in respect of payment of said penalty amounts. Ex. 16
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 P4 is multimodal transport document issued by the defendant in respect of earlier shipment of mixer grinders. Ex. P. 5 is the legal notice caused by the Plaintiff to Defendant dated 26-11-2016. Ex. P6 to P8 are the postal receipts and acknowledgement cards in respect of service of the said legal notice on the defendant. Ex. P9 and P10 are invoices raised by the Plaintiff against the purchaser (MFM Traders) in respect of the table fans which were shipped to Colombo. Ex. P11 is deed of partnership of the plaintiff partnership firm. Ex. P12 is the VAT Registration Certificate of the plaintiff. Ex. P13 is the CST commodities list. Ex. P14 is the Registration Certificate under VAT of the plaintiff. Ex. P15 is Certificate of Enrollment of the plaintiff under Karnataka Tax on Profession, Trades, Callings and Employment Act 1976. Ex. P16 is the Importer-Exporter Certificate of the plaintiff. Ex. P17 is another invoice raised by plaintiff in respect of earlier shipment of pressure cookers. Ex. P18 is bill of lading in respect of the shipment of table fans which is the subject matter of the present suit. Ex. P19 is commercial invoice and Ex. P20 is the packing list 17 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 raised by plaintiff against MFM traders in respect of shipment of table fans. Ex. P21 is pro forma invoice in respect of the same shipment. Exhibits P22 to P24 are invoices raised by defendant against the plaintiff towards freight charges. Ex. P25 is company master data of the defendant company. Ex. P26 are printouts of emails exchanged between the parties. Ex. P27 is 65B certificate in respect of the printout of emails. Ex. P28 is letter written by MFM traders to the plaintiff in respect of adjusting the penalty amounts towards the credit payment due to the plaintiff.
13. Per contra, the defence raised by the defendant is that, defendant has exercised due diligence by informing the carrier Safmarine to hold the container for quality check without guaranteeing the same to the plaintiff. And in order to help the plaintiff, defendant sent several mails to the Safmarine to hold the container. But since all the formalities were completed, Safmarine shipped the container to Colombo in spite of all efforts of the defendant. On this basis, Defendant has denied any liability for paying the 18 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 amount towards the penalty allegedly imposed by Government of Sri Lanka on MFM Traders. Instead, it is contended that, it is the plaintiff who is liable to pay the invoice amount of Rs. 2,69,743 (freight charges) along with the interest component, the total whereof comes to Rs. 3,96,733. Accordingly, the defendant not only prayed for dismissal of the suit but also raised counterclaim for recovery of Rs. 3,96,733 from the plaintiff, along with interest at 18% per annum from date of counterclaim till date of realization.
14. In support of its case, the defendant has examined its authorised representative as DW1 and got marked only one document i.e. Ex. D1, which is board resolution authorising DW1 to represent the defendant in the present suit.
15. Having considered the rival contentions of both sides and the oral and documentary evidence on record, at the outset, it is to be noted that there is no dispute that the plaintiff had engaged the services of the defendant to transport its shipment of table fans from India to Colombo for the purpose of sale of the said table fans by 19 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 the plaintiff to MFM traders. This fact is specifically pleaded at paragraph 5 of the plaint and in the written statement at paragraph 2, the averments at paragraph 3 to 5 are specifically admitted to be true and correct. Moreover, the defendant has raised the counterclaim for recovery of the invoice amount towards freight charges in respect of the selfsame shipment. Therefore, there is absolutely no dispute that plaintiff had engaged the services of defendant for transporting shipment of table fans from India to Colombo and accordingly, Issue No. 1 is answered in the affirmative.
Issue Nos. 2 to 5, 7 and 8:-
16. All these issues are framed with regard to the question whether, in spite of being intimated by the plaintiff to stop the shipment, defendant transported the container with table fans to Colombo and since the consignment reached Colombo without quality check certificate, the Sri Lankan authorities imposed penalty and demurrage charges of Rs. 7,84,775 which was paid by MFM traders and MFM traders has debited the plaintiff's account to the said sum, and on 20 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 this ground, whether plaintiff is entitled to recover the said sum along with interest from the defendant, and therefore all these issues require common discussion and hence considered together.
17. Briefly stated, the grievance of the plaintiff is that, after the plaintiff loaded the table fans to the container and entrusted the same to the defendant, the sealed container containing the table fans was deposited in Custom Yard in Bangalore on 6/6/2016. Only at that stage, the plaintiff realized that the Sri Lankan government has recently amended the quality check regulations and under the amended quality check regulations, the table fans had to be accompanied by quality check certificate. Therefore, to provide the quality check certificate, the table fans had to be physically inspected in India and the certified agent had to issue the quality check certificate which had to accompany the table fans to Sri Lanka and unless the table fans were accompanied by the quality check certificate, the Sri Lankan authorities would impose penalty and also demurrage charges till clearance of the penalty amount. 21
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 Therefore, to avoid such adverse consequences, it is the case of the plaintiff that on 8/6/2016, plaintiff requested the defendant not to proceed with the shipment but to hold it back in India till the table fans could be physically inspected and quality check certificate could be issued in India.
18. The grievance of the plaintiff is that, defendant, in email, assured the plaintiff that the shipment would be held back, but, when the plaintiff arranged for inspection of the table fans, the shipment could not be physically found and it was realized that the defendant, contrary to its undertaking to keep the shipment in abeyance, had handed over the documents and container to Safmarine on 8/6/2016 itself and Safmarine had transported the shipment to Sri Lanka and the consignment reached Sri Lanka on 17/6/2016 without quality check certificate. As a result of which, Sri Lankan authorities imposed penalty of Rs. 7,84,775 which includes penalty and demurrage charges which was paid by MFM traders and MFM traders has debited the said amount to the plaintiff's account. Thereby, the short case of the plaintiff is that, due to a breach of contract by the 22 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 defendant in keeping the shipment in abeyance (holding back the shipment), although it had assured to do so, the plaintiff has incurred loss of Rs. 7,84,775 and after deducting the freight charges and including the interest component, the plaintiff is entitled to recover a total sum of Rs. 7,01,600 and hence for recovery of the said amount the present suit is filed.
19. Per contra, the defence of the defendant is that in spite of all due diligence and in spite of informing Safmarine to hold the shipment in abeyance, Safmarine transported the shipment and therefore defendant cannot be held liable for the same.
20. To prove its case, the Plaintiff principally relies upon the emails exchanged between the parties to contend that, there is a breach of contract by the defendant in allowing the shipment to proceed to Sri Lanka, although defendant had specifically assured the plaintiff to keep the same in abeyance. In this regard, the printout of emails exchanged between the parties are collectively marked as Ex. P26. 23
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023
21. The perusal of Ex. P26 discloses that on the first page of Ex. P26, (running page 93), there is email dated 8/6/2016 written by the plaintiff to defendant to hold back the consignment in Bangalore since QC (Quality Check) test has not been completed. At running page 95 of Ex. P26, there is an email dated 10/6/2016 issued by the defendant to the plaintiff stating that the earlier email dated 8/6/2016 is noted and the shipment will not sail on the 13th vessel and to confirm to plan shipment for the 20th. This email purports to show that there was assurance by the defendant to the plaintiff that the consignment will not be shipped on the 13th but will be held back till further confirmation.
22. At Ink page 96, there is an email dated 15/6/2016 issued by defendant to the shipping agent namely Safmarine stating that the certified agent will inspect the goods and issue quality certificate and therefore the cargo should be physically available in India to inspect the goods and issue quality certificate. At ink page 97, there is a reply by Safmarine to the defendant on the same day i.e. 24 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 15/6/2016 stating that the consignment is already on the way to Colombo.
23. The reason for this fiasco is available in the email at running page 99, dated 14/6/2016, issued by Safmarine to the defendant, where it is stated as follows:
"Once the unit is gated in and units are moved, we have very limited chance of holding it. Even our team replied to your mail on 8th June, (Freight Systems), to amend the booking online till when you want to hold. It seems it was not actioned."
(Emphasis Supplied)
24. Therefore, it is clear that the reason why the consignment was not held back in India, but was allowed to be shipped to Colombo on 13/6/2016 is because the online booking was not amended.
25. When DW1 is asked why the online booking was not amended, his answer is at paragraph 11 of cross- examination dated 18-06-2024 as follows:
"If I am asked whether we have amended online booking as requested by third-party delivery agent in email dated 14-6-2016 at 5.40 p.m. at page 7 of Ex. P26, I say we have not amended online 25 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 booking since it was a time-consuming process and therefore we were in continuous touch with the liner."
(Emphasis Supplied)
26. Relying on the above material, it was the argument of learned counsel for the plaintiff that immediately after the container was entrusted to the defendant for transportation to Colombo, on 8/6/2016 itself, the plaintiff had intimated to the defendant to hold back the consignment and not allow it to go to Colombo without the quality check certificate. And the defendant had also assured in the email dated 10/6/2016 that the consignment will be held back and will be sent to Colombo only after further confirmation by the plaintiff. But in the meantime, the shipper, namely Safmarine, who is agent of the defendant, loaded the container to the ship on 13/6/2016 itself and the consignment reached Colombo without QC certificate on 17/6/2016 leading to imposition of penalty and demurrage charges and this occurred only because of the failure on the part of the defendant to amend the online booking. 26
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 Therefore, it was argued that there is a breach of contract and negligence on the part of the defendant and therefore the defendant is liable to indemnify the plaintiff for the loss and damage suffered due to the table fans reaching Colombo without a quality check certificate.
27. No doubt, at first blush, the said argument is attractive and appears to show negligence and breach of contract on the part of the defendant. However, having considered the overall facts of the case, I am of the view that the plaintiff is not entitled to the relief for recovery of the penalty and demurrage charges imposed on MFM Traders, from the defendant for the following reasons.
28. Firstly, from the above case put forward by the plaintiff, it is clear that it is the case of the plaintiff that there was breach of contract by the defendant in failing to hold on to the consignment in India, although specifically assured to do so in the email dated 10/6/2016. This is not a case seeking compensation for wrongful act, because, once the goods are entrusted to the freight forwarding agent, it is no part of the duty of the freight forwarding agent to hold 27 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 on to the goods. Therefore, the essence of the claim of the plaintiff against defendant is that, plaintiff intimated the defendant to hold on to the cargo (email dated 08-06-2016) and defendant assured to do so (email dated 10-06-2016) and thereafter failed to do so which shows that, essentially, this is a claim arising out of breach of contract by the defendant.
29. The plaintiff is a partnership firm. For the plaintiff to maintain any suit for recovery of damages for breach of contract, it is necessary for the plaintiff to show that the plaintiff is a registered partnership firm with the Registrar of Firms. Otherwise, the suit would be hit by Section 69(2) of the Partnership Act.
30. For ready reference, Section 69 of the Partnership Act is extracted below as follows;
69. Effect of non-registration.--(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. 28
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 (2) No suits to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect--
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; or
(b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner.
(4) This section shall not apply--
(a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which, by notification under Section 56, the Chapter does not apply, or
(b) to any suit or claim or set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in Section 19 of the Presidency Small Cause Courts Act, 1882 (15 of 1882), to outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or 29 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 other proceeding incidental to or arising from any such suit or claim.
(Emphasis Supplied)
31. Therefore, on plain reading of Section 69(2) of the Partnership Act, it is clear that a partnership firm which is not registered with the Registrar of Firms cannot maintain a suit to enforce any right arising from contract. Since this is a suit for recovery of damages for breach of contract by the defendant, certainly Section 69(2) of the Partnership Act is attracted. It is to be noted that, from the plaint at paragraph 2, it is clear that the plaintiff is a partnership firm, but neither is there any pleading nor is any document produced to show that the plaintiff is a registered partnership firm with the Registrar of Firms. It is precisely for this reason that, after the matter was initially reserved for judgment, by orders dated 7/3/2025, this court reopened the hearing, inter alia, for seeking the following clarification from counsel for the plaintiff:
"Firstly, the present suit is filed by the plaintiff partnership firm for recovery of money. Under Section 69 of the Partnership Act, in order to render the suit 30 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 maintainable, it is necessary for the plaintiff to prove that the plaintiff is a registered partnership firm, but no document is produced to show that the plaintiff is registered under the Partnership Act. Hence, counsel for plaintiff to clarify in this regard."
32. In spite of specifically reopening the hearing for the plaintiff to clarify in this regard, the plaintiff did not produce any document to show that the plaintiff is a registered partnership firm with the Registrar of Firms and instead, counsel for plaintiff filed written synopsis reiterating that the partnership deed is produced at Ex. P11. It is not sufficient to produce the partnership deed, but the plaintiff was expected to produce the extract of Registrar of Firms to show that the plaintiff is registered with the Registrar of Firms and the persons suing are shown as partners in the register of firms maintained in the Registrar of Firms' office. Having not done so, the suit for recovery of damages and also for return of documents which are essentially to enforce rights arising from contract is not maintainable since the plaintiff is unregistered partnership firm and 31 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 therefore the suit is barred under Section 69(2) of the Partnership Act and this is the first reason for dismissing the suit.
33. Secondly, it is to be noted that although the plaintiff seeks to put the blame on the defendant for failure to hold on to the consignment due to defendant not amending the online booking as directed by Safmarine, the fact remains that there was initial negligence on the part of the plaintiff in loading the table fans to the container and sealing the same without complying with the requirement of quality check certification.
34. In this regard, it is the specific case of the plaintiff that only after the table fans were loaded into the container, there was an amendment to the regulations brought in by the Government of Sri Lanka, requiring quality check certification. Therefore, the plaintiff seeks to contend that since the amendment of the regulations took place after the table fans were loaded in the container, immediately after coming to know about the amendment, 32 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 on 8/6/2016, the plaintiff intimated to the defendant to hold back the container in India.
35. Therefore, the date on which the amendment to the regulations was brought about by the Government of Sri Lanka requiring quality check certification becomes a relevant factor. The said regulations and the amendment thereto are not produced and brought on record. Therefore, there is no material to show on what date the amendment was brought into force requiring quality check certification for the table fans. In the cross-examination of PW1, at page 15 of the deposition dated 28/09/2022, when he is asked whether at the time of loading the table fans to the container, the defendant was informed that quality check certification has not taken place, he has said that quality check certification does not concern the plaintiff and it has to be looked after by the purchaser i.e. MFM Traders. At pages 17-18 of the same deposition of cross-examination, PW1 has stated that he does not know when the amendment of the regulations was brought into force by Sri Lanka. At page 18 of the same deposition, he says that 33 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 when the goods were in the Bangalore warehouse, he came to know about the amendment brought about by the Government of Sri Lanka. It is for this reason that in the order sheet dated 07-03-2025, while reopening the hearing, after initially reserving the matter for judgment, this Court also sought second clarification from the counsel for plaintiff as follows;
"Secondly, it is noted that as per the case of the plaintiff at paragraph 6 of the plaint, there was amendment to the regulations for quality check by the Government of Sri Lanka in respect of home appliances which necessitated plaintiff to issue email dated 8-6-2016 requesting the defendant not to proceed with the shipment. The date on which the regulations were amended by the Government of Sri Lanka is not brought on record. This is a relevant point because unless the plaintiff can show that the regulations were amended after the container was loaded with plaintiff's goods at the plaintiff's site, it will mean that there was also contributory negligence on the part of the plaintiff in loading the goods without obtaining the requisite quality certificate. Therefore, it is necessary for the plaintiff to prove the date on which the amendment of the regulations was brought in by the Government of Sri Lanka to show 34 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 that there is no contributory negligence on the part of the plaintiff in loading the goods into a container without obtaining the quality certificate."
36. In spite of this clarification specifically sought from the plaintiff, as already noted supra, the counsel for plaintiff has only filed written synopsis reiterating the contentions already taken. The date on which the amendment of the regulations was brought about by the Government of Sri Lanka is not brought on record.
37. Therefore, there is nothing on record to show that, plaintiff realized the requirement of quality check certificate only after the table fans were loaded in the container and entrusted to the defendant. This being the case, when the plaintiff itself has loaded the table fans to the container and entrusted the same to the defendant on 6-6-2016 itself, as pleaded in paragraph 6 of the plaint, the plaintiff could not have expected the defendant to hold on to the container. The plaintiff informed the defendant to hold on to the container only on 8/6/2016. It was the duty of the plaintiff to load the table fans after ensuring compliance with all the 35 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 requirements for exporting the goods. When the plaintiff has failed to prove that the amendments to the regulations were brought about subsequent to 6/6/2016, it means that, the initial negligence was on the part of the plaintiff itself in loading the table fans to the container and entrusting it to the defendant for shipment without quality check certification. Such being the case, the plaintiff cannot seek to impose liability on the defendant on the ground that, due to the negligence of defendant or breach of contract by the defendant, the plaintiff has suffered loss due to imposition of penalty by the Government of Sri Lanka.
38. Thirdly, as already noted above, in the cross- examination of PW1 at page 15 of the deposition, PW 1 has specifically stated that obtaining the quality check certification is the lookout of the purchaser and the seller, i.e., the plaintiff, is not concerned with the same. Such being the case, if any penalty or demurrage charges were imposed by the Government of Sri Lanka due to absence of quality check certification, it would be the lookout of the purchaser, i.e., MFM Traders, to pay the same and MFM 36 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 Traders could not have shifted the burden to the plaintiff by deducting the said amount from the credit amount payable to the plaintiff.
39. It is to be noted that, Issue No. 4 specifically places the burden on the plaintiff to prove that the sum of Rs. 7,83,775 has been debited to the account of the plaintiff by MFM Traders. The only document produced by the plaintiff to show that MFM Traders has debited the said amount to the plaintiff's account is Ex. P-28, which is produced belatedly and got marked on 19-10-2024 by recalling PW1 after the matter had reached the stage of final arguments.
40. The perusal of Ex. P-28 discloses that it is a letter by MFM Traders written to the plaintiff dated 10/10/2016 stating the details of the various penalties imposed and concluding as follows:
"These payments have been made on your behalf and the total amount will be adjusted against your outstanding payment. Please find the necessary payment receipt attached for your records. This is for your kind information. If you have any questions or require further 37 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 clarification, please do not hesitate to contact us."
41. This letter at Ex. P-28 is produced along with IA No. 5 only on 21/9/2024. And after the applications for recalling PW1 and seeking leave to produce additional document was allowed, this document is got marked on 19/10/2024. This letter at Ex. P-28 by MFM Traders has only expressed its intention to adjust the amount of the penalty and demurrage charges against outstanding payment payable to the plaintiff. Although Ex. P-28 is produced and got marked only in 2024, no document is produced to show that the said penalty and demurrage charges were actually adjusted against outstanding payment to the plaintiff.
42. In the cross-examination of PW1 dated 7/1/2025, at paragraph 11, he has stated as follows:
"If I am asked whether I have produced any document to show that in furtherance to Ex. P-28, MFM Traders have adjusted the amount shown as paid under Ex. P-28 against credit payments payable to the plaintiff, I say I have to check the records. Now, the entire P- series exhibits are given to witness and after going through all the documents, 38 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 the witness says the documents to show that MFM Traders have adjusted the payment against credit payment payable to the plaintiff is not there."
(Emphasis Supplied)
43. Therefore, firstly, PW1 has categorically admitted in earlier cross-examination that obtaining quality check certification is the lookout of the purchaser MFM Traders. Secondly, except the letter at Ex. P-28, no document is produced to show that the penalty and demurrage charges were actually adjusted to plaintiff's account by debiting the said amount towards credit payment payable to plaintiff. Thirdly, it is to be noted that as per Ex. P3, which is the letter written by MFM traders, giving the breakup of all the penalties and demurrage charges imposed on MFM traders by Government of Sri Lanka, the substantial amount is custom penalty charges of Sri Lankan Rs. 1,20,000/= but at serial No. 1 of the said letter (Ex. P. 3) itself, it is stated that there is no receipt for the same. Therefore, when according 39 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 to document of plaintiff, when there is no receipt for the substantial payment for custom penalty charges and when there is no document to show that MFM traders have actually deputed the said amount against credit payments payable to the plaintiff, even assuming that there was a breach of contract and negligence by the defendant in allowing the shipment to reach Colombo without quality check certification, the plaintiff, having not proved that plaintiff has incurred any loss or damage, is not entitled to claim for recovery of the penalty and demurrage charges amount from the defendant.
44. In conclusion, I hold that, firstly, the claim for the plaintiff arises out of contract and the plaintiff being an unregistered partnership firm cannot maintain the present suit. Secondly, there was negligence on the part of the plaintiff itself in loading the table fans to the container without quality check certification, and therefore the plaintiff cannot blame the defendant for allowing the shipment to reach Colombo. This is so because the plaintiff has failed to bring on record documents to show that 40 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 amendment to the regulations by the Sri Lankan Government requiring quality check certification was subsequent to 6/6/2016 when plaintiff loaded the table fans to the container. Thirdly, plaintiff has failed to prove that as a result of the table fans reaching Colombo without quality check certification, the penalty and demurrage charges were actually debited from the plaintiff's account by MFM Traders, and therefore plaintiff cannot claim to recover the said penalty and demurrage charges from the defendant, even assuming that the suit is maintainable and even assuming that there was breach of contract by defendant.
45. For all these reasons, I answer the above issues by holding that the plaintiff is not entitled to recovery of the suit claim of Rs. 7,01,600/= from the defendant.
Issue Nos. 6 and 9:
46. These issues are framed regarding the entitlement of the plaintiff to prayer No. iii of the plaint, i.e., to direct the defendant to hand over the documents stated at paragraph 16 of the plaint. However, in this regard, the plaintiff has 41 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 not produced any evidence to show that the defendant has willfully withheld the said documents. The documents enumerated at paragraph 16 are Exchange Control Shipping Bill and other documents. In the cross-examination of DW1, nothing is elicited from DW1 to show that the plaintiff is entitled to seek the above documents from the defendant or that the defendant is willfully withholding the above documents. Except for producing a multimodal transport document at Ex. P4, in respect of an earlier shipment of mixer grinders and an invoice at Ex. P. 17 in respect of sale of pressure cookers to a third party entity in Sri Lanka, no documents are produced to show that the documents sought for, are willfully withheld by the defendant. Therefore, the plaintiff is not entitled to the relief mandatory injunction directing the defendant to return the documents, and accordingly, I answer issue Nos. 6 and 9 in the negative.
Issue Nos. 10 to 12:
47. These issues are framed regarding the entitlement of the defendant to the counterclaim. The counter-claim of the 42 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 Defendant is essentially for recovery of the invoice amounts raised by the defendant against the plaintiff for shipping the table fans from India to Colombo. The principal amount of the invoices is Rs. 2,69,743, and after adding the interest component, the defendant is seeking recovery of Rs.
3,96,733. The fact that the plaintiff is liable to pay the principal invoice amount of Rs. 2,69,743 to the defendant towards freight charges for the consignment of table fans from India to Colombo is admitted in the plaint itself. In this regard, at paragraph 24 of the plaint, while computing the suit claim, the total outstanding of Rs. 8,17,868 is deducted by reducing Rs. 2,69,743, being the sum payable by the plaintiff towards shipment. After deducting the said sum, the principal suit claim of Rs. 5,48,125 is arrived at. Therefore, the plaintiff, in the plaint itself, categorically admits that the plaintiff is due to pay the principal counterclaim amount of Rs. 2,69,743 to the defendant towards shipment/freight charges. The only reason the plaintiff contends that, it is not liable to pay the said amount 43 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 is because the defendant is liable to pay the higher amount of Rs. 8,17,868 towards penalty and demurrage charges.
48. I have already held supra that the plaintiff is not entitled to recover penalty and demurrage charges from the defendant for the detailed reasons already discussed above. Such being the case, the plaintiff is not entitled to adjust the freight charges payable to Defendant against demurrage and penalty charges and therefore, the plaintiff is liable to pay the freight charges of Rs. 2,69,743 to the defendant.
49. Be it noted that, the bar under section 69 of the Partnership Act is only in respect of suit by unregistered firm and there is no bar for institution of suit or claiming counterclaim against unregistered firm. Therefore, the counterclaim against the plaintiff, although the plaintiff is an unregistered firm is maintainable.
50. Insofar as the interest on the invoice amount is concerned, the invoices raised by the defendant against the plaintiff, which are produced by the plaintiff itself (Ex. P22 to P24), do not contain any condition for imposing interest for delayed payment. No legal notice has ever been issued 44 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 by the defendant to the plaintiff putting the plaintiff on notice that Plaintiff liable to pay interest on the outstanding invoice amounts. Therefore, under section 3 of the Interest Act, 1978, the defendant is entitled to interest only from the date on which the counterclaim was raised. Accordingly, I answer issue Nos. 10 to 12 by holding that the defendant is entitled to recover the principal invoice amount for freight charges of Rs. 2,69,743, along with interest from the date on which the counterclaim was filed. Insofar as the rate of interest is concerned, considering that it is a commercial transaction between the parties, I am of the view that the defendant is entitled to interest at 9% per annum. Accordingly, I hold that the defendant is entitled to recover the invoice amount of Rs. 2,69,743, along with interest at the rate of 9% per annum from the date of the counterclaim (i.e., 2/3/2019) till the date of realization from the plaintiff.
Issue No. 13:
51. Having answered issue Nos. 1 to 12 as above, I proceed to pass the following :-
45
CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 ORDER.
The suit of the plaintiff is dismissed, with cost.
The counterclaim of the defendant is partly allowed, with cost and it is held that, defendant is entitled to recover sum of Rs.
2,69,743/= along with interest of the rate of 9% per annum from date of counterclaim. i.e. 02/03/2019 till date of realization, from the plaintiff.
Office to draw decree accordingly.
Office to issue soft copy of this
judgment to both sides, by email, if
furnished.
[Dictated using MacWhisper Pro 10.8.1, transcript revised, corrected, signed and then pronounced by me in open court on this the 19th day of April, 2025] SUDINDRA Digitally signed by SUDINDRA NATH S NATH S Date: 2025.04.22 18:02:28 +0530 (S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT, BENGALURU 46 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 ANNEXURE
1. List of witnesses examined on behalf of Plaintiff/s:
PW1 : Sri. Rajesh Shah
2. List of witnesses examined on behalf of
Defendant/s:
DW1 : A. Anthony Thinakaran
3. List of documents marked on behalf of
Plaintiff/s:
Ex.P1 : Original GPA dated 09.01.2018
Ex.P2 : Bill of lading dated 13.06.2016
Ex.P3 : Bill of lading
Ex.P4 : Bill of lading
Ex.P5 : Legal notice dated 28.11.2016
Ex.P6 & Two postal receipts
P7:
Ex.P8 : Postal acknowledgment
Ex.P9 & Two commercial invoice
P10 :
Ex.P11 : Original partnership deed dated 15.04.2023 Ex.P12 : Original VAT certificate dated 02.05.2015 Ex.P13 : Original CST Commodities Ex.P14 : Original dealers partners Ex.P15 : Original certificate of enrollment issued under Karnataka Tax on Profession, Trades, Callings and employments Act, 1976 Ex.P16 : Original certificate of importer/exporter code 47 CT 1390_Com.O.S.No.1282-2023_Judgment.doc KABC170027162023 Ex.P17 : Original Commercial invoice dated 06.07.2016 Ex.P18 : Original shipping bill dated 06.06.2016 Ex.P19 : Original commercial invoice dated 28.07.2016 Ex.P20 Original packing list dated 28.07.2016 Ex.P21 Original purchase order dated 25.04.2016 (Proforma Invoice) Ex.P22 Invoice dated 04.06.2016 Ex.P23 Invoice dated 13.07.2016 Ex.P24 Invoice dated 15.07.2016 Ex.P25 ROC extract of defendant company Ex.P26 Several e-mail communications between plaintiff and defendant.
Ex.P27 Certificate under Section 65B of the Indian Evidence Act pertaining to Ex.P25 and P26.
Ex.P28 Letter dated 10.10.2016
4. List of documents marked on behalf of
Defendant/s:
Ex.D1 Resolution of Board of Directors auhorising DW1.
(S. Sudindranath)
LXXXIII ACC & SJ,
(COMMERCIAL COURT), BENGALURU