National Consumer Disputes Redressal
Greenseas Shipping Company Pvt. Ltd vs Chairman & Managing Director, Indian ... on 23 November, 2001
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO. 264 OF 1996 M/s. Greenseas Shipping Company Pvt. Ltd., through its Executive Director/Claimant, Smt. Chitra Devi, D/o G. Pasupathy, 43, Kensington High Street, London W8 5ED United Kingom, temporarily residing at 13D, Grahalakshmi Apartments, 640-643, T.H. Road, Tondiarpet, Madras -600 081 Complainant Vs. 1. Chairman & Managing Director, Indian Bank, Madras 2. B.B. Shetty, Formerly Executive Director, Indian Bank, Madras 3. K. Subramanian, Chairman & Managing Director, Indian Overseas Bank, Madras 4. M.B.N. Rao, General Manager, Indian Bank, Aadras 5. S. Veeraghavan, General manager, Indian Bank, Madras 6. Ernst & Young, Singapore 7. K. Poobalasingam, C/o K.P. Law Associates, Colombo 12 (S.L.) 8. Haridas HO & Partners, Singapore-0104 9. Bounty Navigation S.A., 80 Broad Street, Monrovia, Liberia Opposite Parties BEFORE: HONBLE MR. JUSTICE D.P. WADHWA, PRESIDENT HONBLE MR. JUSTICE J.K. MEHRA, MEMBER. MRS. RAJYALAKSHMI RAO, MEMBER. MR. B.K. TAIMNI, MEMBER (i) Complainant company wound up -official liquidator takes charge of the affairs of the company - complaint by a director not maintainable. (ii) Forum non conveniens - Court at Singapore best to adjudicate the disputes. (iii) Section 1(2) of the Consumer Protection Act - Jurisdiction of National Commission not barred if relief can be granted and that can be enforced. For the complainant : Mr. V.R. Venkataraman, Senior Advocate and and Ms. Asha Jain madan and Mr. Shanmugam, Advocates with him. For the opposite parties 1-5 : Mr. G.L. Sanghi, Senior Advocate and Mr. Hari Shankar & mr. B.R. Narang, Advocates with him. ORDER
Dated the 23rd November, 2001 PER JUSTICE D.P. WADHWA, (PRESIDENT).
Complainant a limited company under the laws of Singapore, has filed this complaint on 27.11.96 against the opposite parties numbering nine for recovery of US$ 36,638,884.00. There is a claim also of interest @ 24% per annum from the date of the complaint till payment.
This complaint was earlier dismissed by this Commission holding that it did not disclose any consumer dispute. On appeal filed by the complainant before the Supreme Court matter was remanded to this Commission requiring reasons to be given and with a further direction that each claim should be dealt separately and reasons given. When the matter came up before us on 9.4.2001 it was stated by Mr. B.R. Narang learned counsel for the opposite parties Nos. 1 to 5-Bank and its officials that this Commission may first decide certain preliminary issues which go to the root of the matter. At that time it was mentioned that these issues would be as regards the (i) jurisdiction of this Commission and
(ii) locus standi of the complainant as complainant company has been ordered to be wound up by the order of the Singapore High Court. Thereafter, opportunity was granted to the parties to file their affidavits in support of or against the issues. At the time of hearing of the arguments it was submitted that other preliminary issue regarding limitation be also decided as that arises out of the pleadings and no further evidence is required on this issue. With the consent of learned counsel for the parties we heard arguments on three issues:
(i) Whether the National Commission has jurisdiction to try this complaint?
(ii) Whether complainant could proceed with this complaint after winding up order of the complainant by the Singapore High Court?
(iii) Whether complaint is barred by limitation?
Complainant purchased a ocean going vessel M.V. Vegnesswara for which the Singapore branch of the opposite party-Bank advanced a loan of US$ 3.6 million. This amount was to be repaid by the complainant within four years from 2.7.90 under eight equal yearly instalment of US $ 450,000.00. An agreement to this effect was entered into on 2.7.1990 at Singopore between the complainant and the Bank having its place of business in the Republic of Singapore. M.V. Vignesswara was mortgaged by the complainant to the Bank to secure the payment of the loan.
It is not necessary for us to give further details regarding vessel M.V. Vignesswara except to note that for some dues of another party the vessel was detained in Colombo and ultimately sold on 10.7.92 under the orders dated 19.5.92 of the High Court of Republic of Sri Lanka. The vessel was purchased in auction by M/s.
Bounty Navigation S.A. of Liberia who is impleaded as ninth opposite party in these proceedings. After the vessel was detained, it would appear that M/s.
Ernst & Young were appointed as receiver by the High Court of Sri Lanka. Mr. K. Poobalasingam of K.P. Law Associates, was advocate for the Bank in the proceedings before the Sri Lankan High Court. M/s. Haridas HO & Partners were chartered accountants. All these three persons are respectively opposite parties Nos. 6,7, & 8 before us. Then as noticed above, opposite parties 2 to 5 are officers of the Bank.
It is certainly not clear to us as to why the officers of the Bank should be impleaded and certainly why the receiver, advocate, chartered accountant and purchaser of the ship should have been made parties to these proceedings. Complaint has to be based on consumer dispute.
It is not clear to us as to how it could be said complainant is a consumer qua opposite parties 2 to 9 and particularly 6,7, 8 and 9. Complainant has been unable to throw any light on this aspect of the matter.
It would further appear that the Bank instituted proceedings before the Sri Lankan High Court on account of default having arisen and decree has been entered in favour of the Bank for a sum of US$ 3,862,192.71 with interest and costs. This action is against the vessel M.V. Vignesswara. Bank also intervened in the proceedings before the Sri Lankan High Court as well because the vessel was mortgaged with it. Bank had interest in the action before Sri Lankan High Court as first prefer mortgage and judgement creditor, so it was prayed that Bank be permitted to intervene in the action before the Sri Lankan High Court in respect of the aforesaid vessel M.V. Vignesswara.
As stated above, vessel M.V. Vigneswara had since been sold in auction on 10.7.1992 under the supervision of Sri Lankan High Court. It is not disputed that the said vessel was registered at Panama and was having a Panama flag.
As to how claim of US$ of 36,638,884 in this complaint has been made against a loan of US $ 3.6 million which the complainant took from the Bank, we may refer to the relief as claimed:
Amount (US$)
1. Failing to provide bank guarantee to the High Court in Singapore for US $ 3 600,000 for Rem Action 659 of 1990 when the company at the time had a US$ 800,000 fixed deposits with them.
Instead of furnishing the bank guarantee they caveated the vessel, thus cuasing the company loss of 1,500,000.00
2. Suspension of payment in respect of the claim from hull and machinery policy from Frank B Hall in respect of the collision of the vessel Melten Moac on the MV Vignesswara disbursement by the underwriters was stopped due to the Indian bank placing the Company under receiver ship. Loss incurred 1,200,000.00
3. Crew salaries paid out due to the negligence of the Indian Bank for not signing off the crew after they became the intervention party to the Loss incurred 718,735.00
4. Indian Bank and their receivers failed to claim for the damages incurred to the vessel due to sabotage by the crew members at Colombo Port while the ship was under the Indian Banks custody Loss incurred 2,000,000.00
5. Mismanagement by the Indian banks representative at Colombo by not taking action after report was made by the harbour security police through the Chief Steward of the vessel whilst the ship was under the protective custody of the harbour master and the Indian Bank loss of articles thrown into the sea and stolen by the crew members Loss incurred 1,300,000.00
6. Tickets for repatriation of 167 passengers from the vessel to Instanbul. This resulted due to the Indian Bank caveating the vessel and becoming the intervention party in Action in Rem 14/94 (see exhibit Invoice GSS/03/5/91) Loss incurred 143,128.00
7. Marshall of the High Court expenses at Colombo loss incurred 150,000.00
8. Loss of the revenue from one year charter party contract with Batu Tourism Instanbul at US$ 400,000 per month (for 12 months) Loss incurred 4,800,000.00
9. Loss of Charter Income of Revenue on shipss earning at US$ 8,000 per day for 5 years from charterer M/s. Shipping Corporation of Pakistan Loss incurred (365 days x 12 months x 5 years) 14,000,000.00
10. Loss incurred in respect of the sale made by Indian bank without consultation with the owners/ guarantors for a sum sum of US$ 3.0 million whereas the appraised value of the Colombo High Court was US $ 3.6 million Loss incurred 600,000.00
11. Loss of reputation, goodwill, mental agony and financial losses to the directors and shareholders of the Company Loss incurred 5,000,000.00
12. Temporary repairs carried out on M.V. Vignessawara during collision with Melton Moac on 28.12.90 see exhibit Fina invoice Loss incurred 97,902.00
13. Bank guarantee expenses incurred from Bangkok Bank limited (see para 4 of deficiency report) loss incurred 300,000.00
14. Goods supplied to M.V. Vignesswara as per invoice No. GSS 016/2/91 which was paid by Mrs. P Mangalaeswaree see exhibit Loss incurred 142,910.00
15. Salary due to crew member for Cadet Officer Mr. Santhana Gopal, Indian Bank still disputing claim the sum of US$ 120,000 is kept at Colombo High Court see exhibit , Salary due 86,209.00
16. MID East Maritime (UK) Ltd. offered to purchase the ship M.V. Vignesswara for US $ 7.0 million along with 48% shareholding for M/s. Greenseas Shipping Co.
PTE Ltd. along with a charter from Pakistan Shipping Corporation for five years. This offer was rejected by the Indian Bank who manipulated the sale of the ship to their advantage for the sum of US $ 3.0 MILLION.
Thus the loss to the company in respect of the unauthorised Sale, Loss incurred 4,000,000.00 US$ 36,638,884.00 Under Section 24A of the Consumer Protection Act, 1986 (Act, for short) which was introduced w.e.f.
18.6.1993, there is limitation of two years for filing a complaint from the date on which cause of action arose. Assuming there is any deficiency in service on the part of the Bank or any other parties, Mr. Venkataraman, learned senior advocate for the complainant has been unable to satisfy us as to how the present complaint is within limitation.
At best it could be said that cause of action arose when the vessel was sold which was in July, 1992. This complaint as noted above was filed on 27.11.1996. It is nowhere stated as to how the complaint is within limitation. Complainant has given the date of sale of the vessel 9.6.1993. Even from that date complaint would be barred by limitation.
We have been referred to agreement dated 2.7.90 under which loan was advanced by the Bank to the complainant. Again Mr. Venkataraman has been unable to state as to which clause of the agreement has been breached by the Bank entitling him to raise consumer dispute before us. Then clause 23.1 of the agreement rather stipulates that the agreement shall be governed and construed by in all respects in accordance with the law of Singapore.
The agreement was entered into at Singapore where it is governed by the laws of Singapore. Complainant was incorporated as Company under the laws of Singapore. The branch of the Bank which advanced loan is based in Singapore. As we see hereinafter proceedings for winding up of the complainant took place in Singapore.
All the other opposite parties are also in Singapore. Applying the principles of forum non-conveniens , we must relegate the complainant for its reliefs as claimed in this complaint to a court in Singapore. Forum non conveniens [Latin an unsuitable court] is defined as under:
The doctrine that an appropriate forum - even though competent under the law-may divest itself of jurisdiction if, for the convenience of the litigants and the witnesses, it appears that the action should proceed in another forum in which the action might originally have been brought. [Blacks Law Dictionary, Seventh Edition] Complainant has been unable to satisfy us as to why it could not get reliefs claimed in the present complaint from a Court of competent jurisdiction in Singapore and whether there is no law in Singapore to settle consumer disputes and why it is more convenient to approach the Consumer Forum established under the Act.
On this ground as well we hold that this National Commission would have no jurisdiction in the matter.
It is submitted by the Bank that this complaint which has been filed by the complainant, a limited company under the Companies law of Singapore through its Executive Director, could not lie or in any case could not be proceeded with since the complainant has been wound up by order of the Court. This allegation has been made supported by affidavit of an officer of the Bank. A copy of the order of the winding up dated 14.8.1998 by the High court of Republic of Singapore has been filed. The order states that:
(1) GREENSEAS SHIPPING CO PTE LTD be wound up by the Court under the provisions of the Company Act (Cap 50);
(2) The Official Receiver be appointed as Liquidator of the Company; and (3) The costs of the winding up proceedings be taxed and paid by the Liquidator out of the assets of the Company to your Petitioner.
It has not been disputed by Mr. Venkataraman that compainant has been wound up.
We have not been shown Companies law of Singapore. But we take notice of the fact that Singapore is a common law country like India and that though there may be different procedure for incorporation and winding up of a company under the laws of Singapore, the basic fact as to what is the effect of company being incorporated and its subsequent winding up would not be any different in Singapore than India or even in England.
A company which is incorporated constitutes a distinct and independent person in law and is endowed with special rights and privileges. It is unlike a partnership firm. A company which is incorporated has perpetual succession and remains in existence until it is wound up. An order of winding up puts and end to the existence of the company. It is a liquidator who steps in to completely wind up the affairs of the company as per law. No director of the company which has been wound up has a right to continue any proceedings on behalf of the company. The liquidator appointed by the High Court of Singapore has not chosen to continue these proceedings. Whether liquidator can himself continue such proceedings is a question which we need not go into. The complaint therefore cannot be proceeded with.
Arguments have been addressed that this National Commission even otherwise has no jurisdiction to decide this complaint. Whether this Commission has jurisdiction in the matter or not we have to refer to the provisions of the Consumer Protection Act, 1986, principles of conflict of laws and principles regarding comity of nations.
With consumer awareness spreading all over the world various international organisations have come up in their respective fields bestowing their utmost consideration for protecting the rights of the consumers. These organisations are instrumental in advancing the consumer movement, educating them of their rights and how to seek redressal of their grievances. United Nations taking into consideration the interest and needs of the consumer in all the countries laid certain guidelines for the consumer protection having the following objectives:
(a) to assist the countries in achieving or maintaining adequate protection for their population as consumers;
(b) to facilitate production and distribution patterns responsive to the needs and desires of consumers;
(c) to encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers;
(d) to assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers;
(e) to facilitate the development of independent consumer groups;
(f) to further international co-operative in the filed of consumer protection; and
(g) to encourage the development of market conditions which provide consumers with greater choice at lower prices.
Our Act has been enacted keeping in view all these factors. While trying a complaint where the agreement has been entered into in a foreign country, in exercise of our jurisdiction we have various questions to consider like : (i) relevant clauses of the contract,
(ii) law of the country where contract was entered into, (iii) choice of law, (iv) any law existing in the foreign country safeguarding the interest of consumers; (v) if the case satisfies the definition of complaint with reference to any of the clauses in the definition and also that of consumer as defined in the Act and (vi) Relief which is granted can be enforced.
It was submitted that a Consumer Forum constituted under the Act is a Tribunal of limited jurisdiction, though it may have all the trappings of a Civil Court, and it must not bring into its operations principles of International Law and extend its jurisdiction. Argument was that since the Act is applicable to whole of India except the State of Jammu & Kashmir, everything must happen within the territory of India except the State of Jammu & Kashmir for this Commission to exercise its jurisdiction. We are however, unable to except such an argument.
Keeping these parameters in view when the dispute falls within the four corners of the Act and relief can be granted which can be enforced we see no reason not to exercise our jurisdiction.
Opposite parties Nos. 6 to 9 are foreigners, residing outside India.
It was submitted before us that for the complaint to be maintainable under clause (b) of sub section (2) of Section 11 of the Act either permission of the Commission is to be given or opposite parties have to acquiesce in institution of such a complaint. Mr. Venkataraman contended that since the opposite parties in spite of service of notice did not appear in these proceedings to contest it must be held that they have acquiesced in the institution of this complaint. We do not think that that is the correct principle to apply in the present case. We, however, do not think that clause (b) of Section 11(2) has any application when a complaint is instituted before the National Commission.
Under principles of Private International Law, a court cannot entertain an action against a foreigner resident outside the country or a foreigner not carrying on business within the country, unless he submits to the jurisdiction of the court here. This principle applies to actions in personam. The presence of a foreign defendant who appears under protest to contest jurisdiction, cannot be considered as conferring jurisdiction on the court to take action.
Unless a foreign defendant either resides within jurisdiction or voluntarily appears or has contracted to submit to the jurisdiction of the court, it is not possible to hold that the court will have jurisdiction against a foreign defendant. [World Tanker Carrier Corporation Vs. SNP Shipping Services Pvt. Ltd. & Ors. - (1998)5 SCC 310] In the treatise Ansons Law of Contract in the Chapter Conflict of Laws while giving introduction it is stated:
A contract may be connected with several territorial jurisdictions because the parties to it reside in different countries, or because the contract is made in one country but is to be performed in a different country or concerns subject-matter which is situated in a different country, or for other reasons. In such cases it may become necessary to determine which legal system is to govern the contract or a particular aspect of it, i.e. to determine what is the law applicable to the contract. (Para30-001).
Under the English Common Law doctrine of Proper Law was applied to a contract. That involved three possible situations:
If the parties have made an express choice of law in the contract itself, then subject to certain limitations, the law that they have chosen will govern. If there is no express choice, the court must examine all the facts surroundings the contract to determine whether there was an inferred or implied choice of law by the parties. in the absence of any choice, express or implied, the court ceases to look for the intention of the parties (since they are presumed to have no intention on the point) and proceeds, on the objective grounds, to determine and apply the system of law with which the transaction has the closest and most real connection. (Para 30-004) However, this common law doctrine in England has given way to Rome (EC) Convention on the Law Applicable to Contractual Obligations 1980 (the Rome Convention). England is a member of the European Convention. In fact Article 5 of the Rome Convention provides: a choice of law made by the parties shall not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the country in which he has habitual residence, if one of the three specified conditions stated in the Convention is satisfied. It is not necessary for us to advert to those conditions and examine in detail the Rome Convention.
This Convention demonstrates the protection a consumer gets in the countries of European Union.
We therefore hold all the issues against the complaintant: (i) complaint is barred by limitation, (ii) complaint cannot be proceeded with in view of the order of the winding up of the complainant a limited company; and (iii) National Commission will not entertain this complaint on the principles of forum non conveniens. This complaint therefore fails and is dismissed with costs which we assess at Rs.10,000/-.
.J. (D.P. WADHWA) PRESIDENT ..J. (J.K. MEHRA) MEMBER ..
( RAJYALAKSHMI RAO) MEMBER ..
( B.K. TAIMNI) MEMBER