Madras High Court
R.S.Ramanathan vs The C.I.T on 11 February, 2014
Author: R.S.Ramanathan
Bench: R.S.Ramanathan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11/02/2014 CORAM THE HON'BLE MR.JUSTICE R.S.RAMANATHAN APPLICATION Nos.6411 and 5499 of 2013 and ORIGINAL APPLICATION No.907 of 2013 in C.S.No.786 of 2013 APPLICATION No.6411 of 2013 --------------------------- P-1 MSC AGENCY INDIA PVT LTD 1ST FLOOR KGN TOWERS 62 ETHIRAJ SALAI CHENNAI 105 VS R-1 M/S. GLINTS GLOBAL PTE LTD 10 ANSON ROAD 14-01 INTERNATIONAL PLAZA SINGAPORE REP BY ITS POWER AGENT MR M KRISHNA SREETHAR R-2 PVM GOLDEN SHIPPING PRIVATE LTD 63-A R-3 EISA TRADING INC 588 MILLERWAY MILTON ONTARIO R-4 MEDITERRANEAN SHIPPING COMPANY UK LIMITED MEDITE HOUSE THE HAVENS IPSWICH SUFFOLK UNITED KINGDOM R-5 SURYADEV ALLOYS AND POWER PRIVATE LTD 2 AND 4 GOLDEN ENCLAVE 4TH FLOOR KILPAUK CHENNAI APPLICATION No.5499 of 2013 --------------------------- P-1 M/S. GLINTS GLOBAL PTE LTD 10 ANSON ROAD 14-01 INTERNATIONAL PLAZA SINGAPORE REP BY ITS POWER AGENT MR M KRISHNA SREETHAR P-2 PVM GOLDEN SHIPPING PRIVATE LTD 63-A VS R-1 EISA TRADING INC 588 MILLERWAY MILTON ONTARIO L9T 5G4 CANADA R-2 MEDITERRANEAN SHIPPING COMAPNY UK LIMITED MEDITE HOUSE THE HAVENS IPSWICH SUFFOLK IP3 9SJ UNITED KINGDOM R-3 MSC AGENCY INDIA PVT LTD 1ST FLOOR KGN TOWERS 62 ETHIRAJ SALAI CHENNAI 105 R-4 SURYADEV ALLOYS AND POWER PRIVATE LTD 2 AND 4 GOLDEN ENCLAVE 4TH FLOOR 184 PH ROAD KILPAUK CHENNAI 10 ORIGINAL APPLICATION No.907 of 2013 ----------------------------------- P-1 M/S. GLINTS GLOBAL PTE LTD 10 ANSON ROAD 14-01 INTERNATIONAL PLAZA SINGAPORE REP BY ITS POWER AGENT MR M KRISHNA SREETHAR P-2 PVM GOLDEN SHIPPING PRIVATE LTD 63-A VS R-1 EISA TRADING INC 588 MILLERWAY MILTON ONTARIO L9T 5G4 CANADA R-2 MEDITERRANEAN SHIPPING COMAPNY UK LIMITED MEDITE HOUSE THE HAVENS IPSWICH SUFFOLK IP3 9SJ UNITED KINGDOM R-3 MSC AGENCY INDIA PVT LTD 1ST FLOOR KGN TOWERS 62 ETHIRAJ SALAI CHENNAI 105 R-4 SURYADEV ALLOYS AND POWER PRIVATE LTD 2 AND 4 GOLDEN ENCLAVE 4TH FLOOR 184 PH ROAD KILPAUK CHENNAI 10 ORDER
APPLICATION Nos.6411 and 5499 of 2013 and ORIGINAL APPLICATION No.907 of 2013 in C.S.No.786 of 2013 R.S.RAMANATHAN, J O R D E R The applicants filed the suit C.S.No.786 of 2013 for declaration that they are the absolute owners with right, title and interest in the Cargo of 509.10 M.T. of steel scrap covered under the draft bills of lading Nos.MSCUFF288432 and MSCUFF288465 issued by the second respondent, which is in the custody of the respondents 2 and 3 at Chennai Port, pursuant to the Commercial Invoice of the first respondent, dated 07.10.2013 and consequentially, directing the respondents 1 to 3 to deliver to the applicants the Cargo of 509.10 M.T. of steel scrap covered under the aforesaid draft bills of lading and for permanent injunction restraining the respondents 1 to 3 from in anyway alienating, encumbering or delivering the said Cargo covered under the aforesaid draft bills of lading to the fourth respondent or its nominee.
2.The applicants also filed OA.No.907 of 2013 for interim injunction restraining the respondents 2 and 3 from delivering the Cargo of 509.10 M.T of steel scrap covered under the aforesaid draft bills of lading to the fourth respondent and also filed Application No.5499 of 2013 to deliver the said Cargo covered under the aforesaid draft bills of lading to the applicants.
3.The case of the applicants in brief is as follows:-
The first applicant agreed to purchase steel scrap from the first respondent under various shipments and an advance of US $ 60000 was paid by the first applicant to the first respondent on or about 4th April, 2013 pursuant to the proforma invoice No.SNG/SNG/786/13/017, dated 02.04.2013. The price, shipment period and other terms were revised and the revised agreement, dated 06.06.2013 was entered into between the first applicant and the first respondent. As per the revised agreement, dated 06.06.2013, the advance amount of US $ 60000 paid earlier was agreed to be adjusted towards payment of the shipment and a last shipment meant for the first applicant was under the commercial invoice, dated 07.10.2013, by which the first applicant agreed to purchase 509.10 M.T of steel scarp from the first respondent. The steel scrap herein-after referred to as 'Cargo', was loaded on board the Vessel M.V.Ernest Hemingway at the Port of Felixstowe in United Kingdom, owned by the second respondent and the second applicant was named as Consignee and the Receiver of the Cargo at the Port of Chennai. The second respondent, the owner of the Vessel, is operating its business in India through the third respondent.
4.The first respondent issued two draft bills of lading in respect of the Cargo and that numbers are MSCUFF288432 and MSCUFF288465 and in both the draft bills of lading, the notify party was the first applicant and the Consignee was the second applicant and the first applicant has paid the full price for the Cargo loaded in the ship as per the commercial invoice on 11.10.2013. Both the proforma invoice, dated 02.04.2013 as well as the commercial invoice, dated 07.10.2013 were sent by the first respondent to the first applicant. It is, therefore, contended that a concluded contract came into existence between the applicants and the first respondent and the first respondent received the entire consideration and loaded the Cargo in the ship owned by the second respondent. However, the first respondent did not deliver the original bills of lading to the first applicant and informed the first applicant that the first applicant was not willing to pay further sums to the first respondent, and therefore, the Cargo would be delivered to 3rd parties and the illegal demand of the first respondent was contrary to the earlier agreement. Further, the first applicant having paid the entire consideration for the purchase of the Cargo was entitled to get the delivery of the Cargo at Chennai Port. The first applicant has become the owner of the Cargo and therefore, the first respondent being the seller and the respondents 2 and 3 being the carrier are liable to deliver the goods to the applicants and they cannot deliver the Cargo to 3rd parties.
5.It is further stated that the first respondent colluded with the fourth respondent and issued the original bills of lading, having the same numbers referred to above by amending the name of the shipper from the first respondent to M/s.Global Metcrop Limited and the name of the Consignee was also altered into order and the notify party was also altered into the fourth respondent instead of the second respondent. On coming to know of the same, the first applicant sent a lawyer's notice, dated 25.10.2013 to the respondents 1 and 2 to deliver the original bills of lading to the first applicant to discharge of Cargo at Chennai to the second applicant and there was no reply by the first and second respondents. Therefore, the applicants sent another lawyer's notice, dated 12.11.2013 and called upon the respondents 1 to 3 to issue the original bills of lading Nos.MSCUFF288432 and MSCUFF288465 to the first applicant and also to issue delivery orders in favour of the second applicant for the Cargo immediately on arrival at the Port of Chennai. The applicants also sent another lawyer's notice, dated 13.11.2013 to the respondents 2 and 3 to ascertain whether the name of the Consignee has been changed from the second respondent to the fourth respondent and requested them not to deliver the Cargo to the fourth respondent.
6.The first respondent sent a reply notice, dated 14.11.2013 making a false claim in respect of the previous transactions, but did not dispute the sale of the Cargo by it in favour of the first applicant. The second and third respondents sent a reply, dated 14.11.2013 admitting that the draft bills of lading were issued in favour of the first applicant and thereafter, the first respondent directed the second respondent to change the name of the Consignee to order and the name of the notify party as the 4th respondent. The respondents 2 and 3 also stated in the reply that the first respondent, by its letter, dated 29.10.2013 requested the second respondent to change the name of the Shipper to M/s.Global Metcrop Limited, Middlesex, U.K and accordingly, the bills of lading were amended. It is contended that the respondents 2 and 3 cannot alter the bills of lading without notice to the first applicant, who is the Buyer of the Cargo and in whose favour the draft bills of lading were issued and by practicing fraud, the first respondent in collusion with the fourth respondent altered the names of the notify party and the Shipper and thereby committed breach of contract. The applicants, therefore, sent notice to the fourth respondent on 14.11.2013 stating that the fourth respondent is not entitled to take delivery of the Cargo and the fourth respondent sent a reply containing untenable allegations. Therefore, the suit was filed for the reliefs aforementioned and they have also prayed for temporary injunction as stated above.
7.The third respondent filed a counter affidavit for itself and on behalf of the second respondent. It is stated in the counter affidavit that the Cargo of 509.10 MT of steel scrap contained in 21 containers covered in the aforesaid draft bills of lading was loaded on board, the Vessel 'Ernest Hemingway' owned by the second respondent, who is the principal of the third respondent and in the said bills of lading, the fourth respondent is named as the Consignee. The third respondent also admitted that in the draft bills of lading, the notify party was the first applicant and the Consignee was the second applicant and those were prepared by the second respondent on the basis of the initial instruction of the shipper, namely the first respondent. It is also stated that the issuance of draft bills of lading will not make contract a concluded one only based on the final instructions given by the shipper, the final bills of lading were prepared. It is also stated that the draft bills of lading were both undated and unsigned and therefore, they did not constitute the concluded contract and the applicants cannot claim any right to the Cargo on the basis of the draft bills of lading.
8.It is also admitted that the Cargo was loaded on board the Vessel on 07.10.2013 and on 29.10.2013, the first respondent issued a letter transferring the bills of lading to one M/s.Global Metcrop Ltd., naming the said Company as shipper. Thereafter, the said M/s.Global Metcorp Limited, issued two letters, dated 30.10.2013 stating that the name of the shipper should be read as M/s.Global Metcorp Limited and the name of the notify party should be the fourth respondent and accordingly, the bills of lading referred to above were issued as per the direction of the shipper.
9.It is also stated that 21 containers covered by the bills of lading referred to above, were discharged at the Port of Chennai and transferred to the Container Freight Station. It is also stated that the respondents 2 and 3 are not concerned about the ownership of the Cargo and they are willing to deliver the Cargo to the party to whom the Court directs delivery and they have not committed any breach of contract.
10.It is also stated that the fourth respondent filed the bill of entry with the Customs Department on 18.11.2013 and requested for permission to carry 21 containers covered under in the bills of lading referred to above for de-stuffing to its factory at Gummidipoondi and also issued an Indemnity Bond, dated 19.11.2013 in favour of the third respondent. It is also stated that the respondents 2 and 3 were approached by the first respondent for movement of 21 containers of steel scrap from U.K to Chennai and according to them, the Consignee notify party was the fourth respondent. As a carrier, the respondents 2 and 3 performed their contractual obligation by carrying the Cargo mentioned in the bill of lading and delivered the same at the destination of Port at Chennai and therefore, they cannot be found fault with as having committed breach of contract. It is also admitted that the Cargo, which are now kept at CFS are subject to two kinds of charges, namely (i)detention and other charges payable to the respondents 2 and 3; and (ii)demurrage charges for parking the containers in the Container Freight Station. It is, therefore, stated that any person, who is desirous of obtaining delivery of containers from CFS has first to pay the charges to the respondents 2 and 3 and the detention and other charges and obtain a valid 'Delivery Order' and thereafter, CFS would calculate the demurrage charges till the date of presentation and on payment of the demurrage charges, the containers should be released to the persons as ordered by this Court. The carrier is the bailee with a possessory lien over the Cargo until all of its dues under the contract of carriage are paid in full. It is, therefore, stated that without paying the detention and other charges and demurrage charges, the goods may not be directed to be delivered to any party, otherwise the second and third respondents would be put to serious loss and hardship.
11.The fourth respondent filed a counter stating that there was no privity of contract between the fourth respondent and the applicants and they purchased the Cargo covered under the bills of lading issued by M/s.Global Metcrop Limited. They entered into a contract with M/s.Global Metcrop Limited, and obtained a proforma invoice, dated 05.11.2013. It is stated that M/.Metallen Gmbh, were the actual buyer of the Cargo and they have also given 'No Objection' to change the name of the shipper, consignee and notify party in the bills of lading and the shipper EISA TRADING INC, CANADA therein, namely the first respondent has also issued 'No Objection' for transferring the name of the shipper in the bills of lading to M/s.Global Metcrop Limited and accordingly, the fourth respondent was named as notify party in the bills of lading and as such, the fourth respondent is entitled to receive the goods. They also entered into a contract and the terms and conditions contained in the invoice No.GML/SAP/4068, dated 05.11.2013 and they also filed bills of entry with the Customs House on 18.11.2013. They have raised a plea that the proforma invoice produced by the first applicant contains a clause stating that any dispute would have to be filed in Canadian Court of Law in conformity with Canadian Commercial Arbitration Board Toronto, Canada and therefore, the present suit filed by the applicants before this Hon'ble Court was not maintainable and this Court has no jurisdiction to entertain the suit and therefore, the applications are also not maintainable.
12.It is also stated that the applicants are not in the custody of the original bills of lading and therefore, they are not entitled to claim delivery of the Cargo. It is also stated that the draft bills of lading do not constitute a complete contract and if at all, the first applicant has got any remedy, it has to work out only against the first respondent and they cannot claim any right or title over the Cargo as they are not the owners of the Cargo.
13.The first applicant filed a rejoinder to the counter affidavits filed by the respondents 3 and 4 wherein, it reiterated that the first respondent ceases to be the owner of the Cargo with effect from 11.10.2013 and therefore, it has no power to change the name of the shipper to M/s.Global Metcrop Ltd. Therefore, the first respondent has committed fraud in collusion with the fourth respondent and after having sold the Cargo to the first applicant, the first respondent cannot change the name of the shipper and the notify party after the Cargo was loaded into the ship. The Cargo was already ascertained and therefore, the first respondent has no right to change the name of the shipper. It is also stated that the fourth respondent has not paid any amount, whereas the first applicant had already paid the amount for the Cargo and that was also proved by documents and therefore, no prejudice would be caused, if the goods are delivered to the first applicant. The fourth respondent also filed another additional counter affidavit reiterating the same allegations. The first applicant also filed a common rejoinder reiterating the very same allegation made in the earlier.
14. Mr.Abdul Quddhose, learned counsel appearing for the applicants/plaintiffs submitted that the first applicant has become the absolute owner of the Cargo by paying the entire sale consideration on 11.10.2013 to the first respondent and therefore, the first respondent has no right to change the name of the consignee or notify the party or the shipper in respect of the Cargo after receiving the entire sale consideration from the first applicant. He also submitted that admittedly, two drafts bills of lading were issued in favour of the applicants and the Cargo was also loaded on Board the Vessel on 07.10.2013 and in the Proforma Invoice and in the Commercial Invoice, the name of the applicant is stated to be the consignee and therefore, having regard to the provisions of Section 20, 23(2) and 32 of the Sale of Goods Act, the first applicant became the absolute owner of the Cargo and therefore, entitled to claim that Cargo. He also submitted that the fourth respondent was fraudulently set up by the first respondent to prevent the applicant from taking delivery of the Cargo. Once the Cargo was loaded and the title passed to the first applicant, the first respondent has no right to change the bill of lading in favour of the fourth respondent as the consignee and even as per the bills of lading produced by the respondents 2 to 4, the name was changed in favour of the fourth respondent only after the Cargo was loaded into the Vessel and it also evident from the correspondence of the first respondent dated 29.10.2013 that the bills of lading were transferred to Global Metcorp Limited by naming the Global Metcorp Limited as shipper and there the name of the consignee was altered to order and the name of the notify party was also changed in the name of the fourth respondent only on 30.10.2013. Therefore, any change in the name of the shipper, notify party and consignee after the Cargo was loaded into the ship will not change the ownership of the Cargo and on payment of the entire sale consideration on 11.10.2013, the first applicant became the owner of the Cargo and the fourth respondent cannot claim any right over the Cargo on the basis of the bills of lading in his favour. The fact that the names of the shipper consignee mentioned in bills of lading were admittedly altered on 29.10.2013 as per the letter of the first respondent and that would also prove that the first respondent in collusion with the fourth respondent created the bills of lading in favour of the fourth respondent mentioning the fourth respondent as the consignee and therefore, on the basis of bills of lading, they cannot claim any right over the Cargo. He also submitted that the bills of lading filed by the third respondent and by the fourth respondent are two different sets of bills of lading having identical number and two bills of lading filed by the third respondent were issued on 18.11.2013 whereas bills of lading filed by the fourth respondent was issued on 11.11.2013. In the bills of lading dated 11.11.2013 produced by the fourth respondent, the consignee is "to order" and notify party the fourth respondent and the shipper is Global Metcorp Limited. In the bills of lading produced by the third respondent, the fourth respondent has been mentioned as the consignee and it is not the case of the third and fourth respondent that the bills of lading dated 11.11.2013 were surrendered and new bills of lading dated 18.11.2013 were issued. He also submitted that the third defendant issued bills of lading dated 18.11.2013 after receipt of lawyer's notice issued by the first applicant dated 25.10.2013, 12.11.2013 and 13.11.2013 and therefore, that would also prove collusion between the first respondent and the respondents 3 and 4. It is admitted by the first respondent that the first respondent was the shipper and in the draft bill of lading, the first respondent was named as the shipper. It is also admitted that the cargo was loaded into the ship by the first respondent and the first respondent received the entire sale consideration for the Cargo on 11.10.2013. Therefore, after receiving the payment for the entire Cargo, the first respondent cannot change the name of the shipper. He also submitted that the bills of lading is not a negotiable instrument but only a transferable document and the transferee of a bill of lading cannot claim any better title than that of the transferor and the transferor, namely, the first respondent, already ceased to be the owner of the Cargo by delivering the Cargo into the shipper. After receiving the entire sale consideration, he cannot transfer any better title to the fourth respondent. In short, the learned counsel for the applicants submitted that on receipt of payment of consideration for the entire Cargo from the first applicant and after loading the Cargo into the vessel by the first respondent, the first respondent has no control or right over the Cargo and the title of the Cargo passed on to the first applicant and thereafter, the first respondent cannot amend the bill of lading by changing the name of the shipper consignee and notify the party and the fourth respondent also cannot claim any right or title to the Cargo on the basis of the bills of lading in his favour. He relied upon the following judgments in support of his contention:-
(a) (1972) 2 SCC 704 (The Mahabir Commercial Co Ltd vs. The C.I.T., West Bengal, Calcutta)
(b) 1997 (III) CTC 423 (P.L.Palaniappan Vs. M/s. The Janakiram Mills Ltd.)
(c) (2010) 4 SCC 256 (Contship Container Lines Ltd Vs. D.K.Lall & Others.
(d) (1974) 4 SCC 739 (The Instalment Supply Ltd Vs. STO, Ahmedabad I & 2 Others)
(e) (2003) 1 SCC 281 (Escorts JCB Ltd Vs. the Commissioner of Central Excise, Delhi II)
(f) (2011) 4 SCC 705 (Hyderabad Engineering Industries Vs. State of Andhra Pradesh)
15. Mr.R.Thiyagarajan, learned Senior Counsel, appearing for the fourth respondent submitted that the suit filed by the applicants is not maintainable and admittedly, there is an arbitration clause in the agreement and the parties have agreed to solve the dispute before the Candian Court of Law and therefore, the present suit is not maintainable. The learned Senior Counsel also submitted that as per the revised agreement dated 6.6.2013, if the shipment were not completed within 30 days from the date of the agreement, the agreement would become void and admittedly, the shipment was made on 7.10.2013 which is beyond 30 days period and therefore, as per clause 4 of the revised agreement dated 6.6.2013, the agreement between the first respondent and the first applicant has become void and the first applicant cannot maintain any action on the void contract. The learned Senior Counsel further submitted that admittedly, no bills of lading were issued in favour of the first applicant and the first applicant is in possession of only draft fills of lading which will not confer any right or title over the goods and therefore, on the basis of the draft bills of lading, the first applicant cannot claim any right to the Cargo. He submitted that the bill of lading is the document of title to claim the goods and admittedly, the fourth respondent is named as the consignee and notify party in respect of the goods in the bills of lading and therefore, prima facie, the fourth respondent is entitled to claim the Cargo.
16. He also relied upon the following judgments in support of his contention:-
(a) (1999) 7 SCC 359 in the matter of The Board of Trustees of the Port of Bombay and others v. M/s.Sriyanesh Knitters
(b) AIR 1961 Mad 442 in the matter of The Ellerman and Bucknall ... vs. Sha Bhagajee Sonmull and Ors.
(c) (1972) 2 SCC 704 in the matter of the Mahabir Commercial Co Ltd vs. The C.I.T., West Bengal, Calcutta
(d) (1990) 3 SCC 481 in the matter of British India Steam Navigation Co.Ltd., v. Shanmugha Vilas Cashew Industries and others
(e) AIR 1966 SC 1892 in the matter of Ellerman and Bucknall Steamship Compay Ltd. vs. Sha Misrimal Bherajee
17. He also submitted that there is no collusion and fraud on the part of the fourth respondent and no fraud or collusion was pleaded against the fourth respondent and in the absence of such allegations, it is not open to the applicants to contend that by practising the fraud, the fourth respondent got the bills of lading in his favour. He also submitted that under Section 30 of the Sale of Goods Act, when a person obtains with the consent of the seller the documents of the tittle to the goods in good faith and without notice of any lien or other right of the original seller in respect of the goods, then he is entitled to claim the ownership of the Cargo on the basis of the documents of title, namely, bills of lading. Admittedly, the first respondent was having documents of title in respect of the goods and he agreed to amend the names of the shipper, consignee and notify party in the bills of lading and without knowing the previous contract between the shipper, namely, the first respondent and the first applicant, the fourth respondent got the documents of title in his favour and therefore, the fourth respondent became the owner of the goods. He also submitted that there is no allegation in the plaint or in the application that the fourth respondent did not get the documents of title in his name in good faith and it is not the case of the applicants that the fourth respondent is aware of the contract between the first respondent and the first applicant. He, therefore, submitted that the fourth respondent is a bona fide purchaser for value and under Section 30 of the Sale of Goods Act, he is entitled to claim title over the Cargo on the basis of the bills of lading issued in his favour. He also submitted that as per Section 23 of the Sale of Goods Act, unless the goods are unconditionally appropriated to the contract either by the seller with the assent by the buyer or by the buyer with the assent of the seller, the property in the goods will not pass to the buyer. In this case, it is not pleaded that the goods were unconditionally appropriated to the contract by the seller and therefore, even according to the case of the applicants, the title did not pass to the first applicant. Further, under Section 25 (2) of the Sale of Goods Act when the goods are deliverable to the order of the seller or agent, the seller is prima facie deemed to have reserved the right of disposal and admittedly, the applicants are not in possession of original bill of lading and therefore, they cannot claim that the goods were appropriated to the contract and the seller has no right thereafter to change the name of the consignee or notify party.
18. Mr. V. Aravamudan, learned counsel appearing for the third respondent in O.A.No.907 of 2013, submitted that the third respondent filed Application No.6411 of 2013 for receipt of additional documents which would throw light on the merits of the case and prayed for receipt of those documents. As the documents are related to the subject matter of the suit, the application was allowed and the documents are received. The learned counsel for the third respondent submitted that the bill of lading is the document of title to claim ownership over the goods and no bills of lading were issued in favour of the first applicant and the bills of lading were issued in favour of the fourth respondent naming the fourth respondent as the consignee and notify party. He also submitted that in U.K., there was no practice of issuing mate receipt as soon as the Cargo was loaded into the ship. On the other hand, booking confirmation would be given and as per the booking confirmation, the date of booking was 26.9.2013 and the name of the shipper is Global Metcorp Limited. He also submitted that the first respondent by his letter dated 29.10.2013, agreed for transferring the bill of lading to Global Metcorp Limited by making Global Metcorp Limited as shipper and the Global Metcorp Limited by letter dated 30.10.2013 changed the name of the consignee as to order and notify party, the fourth respondent. Thereafter, the name of the consignee was changed in favour of the fourth respondent and bills of lading dated 18.11.2013 were issued in favour of the fourth respondent and therefore, the fourth respondent became the owner of the goods and is entitled to claim the Cargo. He also submitted that the Cargo which is now available at CFS is subject to two kinds of charges, namely, detention charge and other charges payable to the respondents 2 and 3 and demurrage charges for parking container in CFS. He therefore submitted that the person who is entitled to claim goods as per the order of this Court may be directed to pay the aforesaid charges as the third respondent is entitled to retain the goods till the payment of the above charges.
19. Having regard to the submissions of the learned Senior Counsel appearing for the fourth respondent and counsel appearing for the applicants and the third respondent, the point for consideration in in the case is whether the title of the goods passed to the applicants as claimed by them.
20. Admittedly, the first applicant entered into a contract with the first respondent for the purchase of the Cargo and the first respondent also agreed to supply the required quantity for the price stated by him in his Proforma Invoice dated 2.4.2013 and as per the fund transfer dated 11.10.2013, the first respondent has paid the entire sale consideration for the Cargo agreed to be sold. It is also seen from the Commercial Invoice dated 7.10.2013 that the first applicant is named as the consignee and notify party and the first respondent agreed to transport the goods by shipper. It is also admitted that in draft bills of lading, the first respondent is named as shipper and the second applicant as the consignee and the first applicant as notify party. Admittedly, the original bills of lading was issued in favour of the fourth respondent making the fourth respondent as the consignee and notify party.
21. Therefore, we will have to see whether the applicants claim title to the goods sent by the first respondent on the basis that the title in respect of the goods passed on to the first applicant on receipt of payment by the first respondent and that was evidenced by the issuance of draft bills of lading.
22.To appreciate the same, we will have to understand the meaning of bills of lading. Justice T.K.Thommen, former Judge of the High Court of Kerala, in his Book, "Bills of Lading in International Law and Practice" stated about the bills of lading as follows:-
"In practice, however, the terms of the bill of lading govern the contractual relations between the ship owner and the shipper, and the booking notes generally state that the carrier's regular forms of bill of lading shall be used and all the terms thereof shall form part of the contract. The bill of lading assumes the character of conclusive evidence once it has passed into the hands of a consignee or endorsee, and evidence may not be given which varies or contradicts it. The position is, however, different when the ship is under charter and the stipulations in the charter party are expressly and clearly incorporated in the bill of lading. In such a case the bill of lading, even after it has passed into the hands of a consignee or endorsee, has to be read subject to the charter party stipulations. In the hands of a charter, the bill of lading is only a receipt and the charter party is the governing document as far as the ship owner and the charter are concerned.
.........
A bill of lading is regarded as the symbol of the goods mentioned in it. An endorsement of the bill of lading while the goods are in the hands of the carrier may confer upon the endorsee all the rights and liabilities of the shipper as if the contract evidenced by the bill of lading had been originally made with him. An endorsement and elivery of the bill of lading is a symbolic delivery of the goods entitling the holder of the bill to physical delivery of the goods at the port of discharge. By the custom of merchants internationally accepted, bill of lading is a document of title."
23. In the Judgment reported in (1990) 3 SCC 481 [British India Steam Navigation Co.Ltd vs. Shanmughavilas Cashew Industries and others, it is held as follows:-
"13. The Indian Bill of Lading Act, 1856 was based on the English Bills of Lading Act, 1855 (18 and 19 Vict. C. 111) (Act IX of 1856). Under section 1 of the Indian Bills of Lading Act, 1856 also every consignee of goods named in a bill of lading and every endorsee of a bill of lading to whom the property in goods therein mentioned shall pass, upon or by reason of such consignment or endorsement, shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself.
14. The bill of lading is the symbol of the goods, and the right to possess those passes to the transferee of the bill of lading. In other words, its transfer is symbolic of the transfer of the goods themselves and until the goods have been delivered, the delivery of the duly endorsed bill of lading operates as between the transferor or transferee, and all who claim through them, as a physical delivery of the goods would do. The bill of lading is a negotiable instru- ment in the sense of carrying with it the right to demand and have possession of the goods described in it. It also carries with it the rights and liabilities under the con- tract, where the property in the goods also is transferred. However, a bill of lading is not a negotiable instrument in the strict sense of the transferee deriving better title than the transferor. The transferee of a bill of lading gets no better title than the transferor himself had. Mere pos- session of the bill of lading does not enable the holder to sue a person at a place where the tranferor himself could not have done. Where the negotiation of a bill of lading is by the person who had a right to sue on it, mere possession of it does not enable the holder to sue any person who was not liable under it and not to sue another who was liable under it to make good the claim. He cannot also sue at a place not intended by the parties when intention has been expressed.
24. In the Judgment reported in AIR 1955 Supreme Court 98, Commissioner of Income Tax, Madras Vs. Mysore Chromite Ltd., which was relied upon in 1997 (III) CTC 423 in the matter of PL.Palaniappan vs. M/s.The Jankiram Mills Ltd., having its Registered office at Rajapalayam, the scope of Sections 24 and 25 of the Sale of Goods Act, 1930 were considered by the Hon'ble Supreme Court and held that unless the goods are appropriated to the contract unconditionally by the seller with consent of the buyer or by the buyer with consent of the seller, the goods are not transferred to the buyer, merely, by delivering on board the ship. In that judgment, it is also held that the bill of lading is a document of title to the goods.
25. Further in the judgment reported in AIR 1966 S.C.1153 in the matter of Carona Sahu Co v. State of Maharashtra, the Hon'ble Supreme Court dealt with the provisions of Section 23 of Sale of Goods Act as follows:-
"4. ...The law 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. 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. But there is a 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 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. 'The seller may therefore take the bill of lading to his own order. 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. 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."
26. In the Judgment reported in AIR 1961 Madras 216 in the matter of Arun (1953) (Private) Ltd., v. State of Madras, rep.by Commercial Tax Officer, North Madras, it is held that when the goods to be sold were unascertained, the buyers can claim title to the goods only at the point of delivery, because, only at the point of delivery to be given to the buyer, there was ascertainment of the goods sold to him.
27. In the Judgment reported in AIR 1961 Madras 442 in the matter of The Ellerman and Bucknall Steamship Co.Ltd. v. Sha Bhagajee Sonmull and others, it is held as follows:-
"21. A bill of lading is a writing signed by the owner of the ship, in which the goods are embarked, acknowledging the receipt thereof the conditions of carriage and an undertaking to deliver at the end of the voyage; it is a document of title, and a mere assignment thereof would pass the title of the assignor to the goods, and also amount to a constructive delivery of the same. Having regard to the nature of the document and its importance in international commerce, the ship owner would have an obvious duty to describe correctly therein the condition of the goods received by him, ..."
28. Under Section 23 of the Sale of Goods Act, unless the sale of unascertainment of goods in a deliverable state are unconditionally appropriated to the contract either by the seller with the consent of the buyer or by the buyer with the assent of the seller, the property in the goods will not pass to the buyer and as per Sub Clause (2) when the seller after delivering the goods to the carrier or either bailee for the purpose of transmission to the buyer and does not reserve right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
29. Bearing these principles in mind, we will have to see whether the first applicant is entitled to claim ownership over the goods.
30. As stated supra, the bills of lading mention the name of the fourth respondent as the consignee and notify party. It may be that the fourth respondent was named as the name of the notify party on 11.10.2013, after the Cargo was loaded into the ship on 7.10.2013. As per Section 23(2) when the goods are not unconditionally appropriated to the contract, the seller has got right of disposal over the goods and it is not the case of the applicants that the goods were unconditionally appropriated to the contract by the seller and according to me, that can be considered during trial. Therefore, the seller has got a right of disposal over the goods and initially, he agreed to change the name of the shipper to Global Metcorp Limited and name of the consignee to order and made the fourth respondent as notify party and later made the fourth respondent as the consignee. Therefore, when the bills of lading are in the name of the fourth respondent, prima facie, the fourth respondent is entitled to claim title to the goods. Though the first applicant claimed to have paid consideration for the Cargo agreed to be transported by the first respondent and drafts bills of lading were also issued in the name of the first respondent as the consignee, the first respondent cannot claim title on the basis of the drafts bills of lading. Further, as held by the Hon'ble Supreme Court in the Judgment reported in 1990 (3) SCC 481 supra, the right to possess the goods passes to the transferee of the bill of lading. The bill of lading is a negotiable instrument in the sense of carrying within the right to demand and to have possession of the goods described in it. In the said judgment, in Paragraphs 34, it is held that the bill of lading is evidence of the terms of the contract which can also be ascertained from the charter party where one exists. The Hon'ble Supreme Court also relied upon the passage in the Book, "Bills of Lading in International Law and Practice" by Justice T.K.Thommen, which has been referred above.
31. Therefore, in my opinion, having regard to the fact that the bill of lading was issued in the name of the fourth respondent and the applicants were not issued with bill of lading and having regard to Section 23 of the Sale of Goods Act, in the absence of any unconditional appropriation of the goods by the seller with the consent of the buyer or by the buyer with the assent of the seller, the property in the goods does not pass to the buyer and seller has got a right of disposal over the goods and in exercise of that right of disposal, the seller/first respondent has issued the bills of lading in the name of the fourth respondent and therefore, the fourth respondent acquires title to the property.
32. Further, as rightly submitted by the learned Senior Counsel, Mr.R.Thiyagarajan, under Section 30 of the Sale of Goods Act, a bona fide purchaser purchasing the goods in good faith is protected and in this case, it has not been pleaded that the fourth respondent is not a bona fide purchaser or receiver of the bills of lading in good faith and it is not the case of the applicants that the fourth respondent was aware of the contract between the first applicant and the first respondent. Therefore, as per Section 30 of the Sale of Goods act, the fourth respondent becomes the owner of the goods and entitled to claim delivery of the goods on the basis of bills of lading issued in its favour. Therefore, in my opinion, having regard to the facts stated above, the fourth respondent has made out a prima facie case on the basis of bills of lading issued in his favour and the balance of convenience is also in favour of the fourth respondent and prima facie, the applicants failed to prove that the title of the goods passed on to the first applicant by mere payment of consideration and having regard to the provisions of Section 23 and 30 of the Sale of Goods Act, the fourth respondent is entitled to claim title over the goods.
33. Further, as per the documents filed by the third respondent, the booking confirmation makes it clear that the Cargo was booked on 26.9.2013 and the booking client is Inbrit Logistics Ltd (Exports), Kensal Green, Greater London. It is further seen from the booking confirmation that Global Metcorp is mentioned as the person in whose favour the Cargo was loaded. It is also seen from the booking confirmation the customer is named as "Global Metcorp Limited". The booking confirmation also refers to the date of loading of the Cargo on 7.10.2013 and the booking confirmation was made on 26.9.2013 and Global Metcorp Limited is mentioned as the customer. By letter dated 14.11.2013, Global Metcorp Limited informed that the bills of lading will be collected by the consignee from the third defendant. The second defendant also sent a message to the Inbrit Logistics Ltd (Exports), on 29.11.2013 that bills of lading in respect of the Cargo along with supporting documents were duly surrendered by Global Metcorp Limited at their London Office on 14.11.2013 and two new sets of original bills of lading were subsequently issued by the third defendant. The documents filed by the third defendant would also prima facie establish that the fourth respondent is entitled to receive the goods as per the bills of lading.
34. Further, as rightly contended by the learned counsel for the third respondent, the fourth respondent is liable to pay demurrage and other charges as claimed by the third respondent and without making those payments, the fourth respondent is also not entitled to claim the goods. As the first applicant failed to prove that he has got title over the goods, he is not entitled to the relief prayed for in this Application.
35. I also make it clear that I have not touched upon the argument relating to jurisdiction and also the plea regarding Section 8 of the Arbitration and Conciliation Act as in my view those points are not relevant for the purpose of disposing of the Applications. I also make it clear that on the basis of the documents produced by the parties, I have taken this view and it is always permissible to adduce further evidence and substantiate their case during trial and finding given in this order is only for the purpose of the disposal of this application.
36. In the result, the Original Application No.907 of 2013 and Application No.5499 of 2013 are dismissed and the fourth respondent is prima facie declared as the owner of the goods, and entitled to take delivery of the goods subject to payment of charges as claimed by the third respondent as stated above. Application No.6411 of 2013 is allowed.
asvm