Arbee and Company, Madras v. Govind Dall Mills Rep. By Its Partner, A. N. G. Ravindran and Others
2001-06-22
C.NAGAPPAN
body2001
DigiLaw.ai
Judgment :- C. NAGAPPAN, J. This appeal is preferred against the judgment and decree in O.S. No. 1482 of 1981 passed by the IX Assistant Judge, City Civil Court, Madras. The first defendant is the appellant herein. The plaint averments can be summarised as follows : Two thousand bags of Jumbo Black Matpe (Oorid) packed in new jute bags with 50 kgs. per bag and of the aggregate value of 1, 00, 000 kgs. net was booked by Thai Agro Export Company, Bangkok to Madras Port and was shipped via., European Liberty, a ship of which the first defendant are the shipping agents. M.V. European Liberty was classified as a Class I vessel. The plaintiff purchased the goods paying a price of 31500 U.S. Dollars and it was insured for Rs. 2, 52, 000. The consignment reached Madras on or about 23rd of February, 1980. The plaintiff took delivery of the consignment from the Madras Port between 14.3.1980 and 19.3.1980. At the time of taking delivery, it was found that out of the 2000 bags shipped, 203 bags were short landed and 'B' certificate was issued by the Madras Port Trust. Further on the survey of the remaining 1797 bags, G. R. Newman, Insurance Surveyor on 28.3.1980, found that there was a shortage of 7982 Kgs. of Oorid in the said 1797 bags. The bags are surveyed at Central Berth, Madras Port Trust and found to weight only 81993 kgs. as against the actual weight of 89979 kgs. The steamer Agents representative was not available at the time of survey but surveyed the bags and went away as per the Independent Surveyor's Report. The plaintiff preferred a claim to the first defendant claiming the value of 203 bags short landed and the value of 7982 kgs. being the shortage assessed by the Independent Surveyor with regard to the 1797 bags. The shortage in weight and the short landing of 203 bags had occurred while the consignment was in the custody of the ship and the first defendant, as the shipping agents, is liable to pay the plaintiff the value of it. The first defendant has negatived the claim of the plaintiff on the ground of delay in holding the survey. The consignment reached the Madras Port in a defective condition and the first defendant is liable for that.
The first defendant has negatived the claim of the plaintiff on the ground of delay in holding the survey. The consignment reached the Madras Port in a defective condition and the first defendant is liable for that. The second defendant, as insurer, is also liable to pay the plaintiff the value of it. The plaintiff has claimed in all a sum of Rs. 46, 272.64 representing the value of 203 bags short landed and 7982 kgs. being the shortage in weight and the survey fees with the defendants. The defendants received the notice, but have not complied with the demand. Hence the plaintiff has filed the suit for recovery of a sum of Rs. 46, 272.64 representing the amount due towards shortage and short landing and the survey from the defendants with interest and costs.The first defendant in its written statement contended that the suit has not been filed within the statutory period of one year and the suit is barred under Article III, Rule 6 of the Carriage of Goods by Sea Act. There is no privity of contract between the plaintiff and the first defendant. The first defendant is only the agent of a disclosed principal namely Goldstar Line Limited and hence under Section 230 of the Indian Contract Act, the first defendant is not personally liable and no decree can be passed against it. The first defendant has further stated that a consignment allegedly consisting of 2000 bags of Jumbo Black Matpe (URAD) was entrusted to the principals of the first defendant at the Port of Bangkok for the carriage by Sea to the Port of Madras through the vessel M.V. European Liberty, owned by the principal of the first defendant. The vessel carried the cargo with due care and diligence and arrived at the Port of Madras. The entire Bill of Lading quantity was discharged by the vessel into the custody of Madras Port Trust. There was no short landing of 203 bags of Cargo as contended by the plaintiff. The alleged loss of cargo must have been due to the loss in the custody of the Madras Port Trust for which the first defendant cannot be held liable. The 'B' certificate issued by the Port Trust was done without proper verification of records and it is not binding on the first defendant.
The alleged loss of cargo must have been due to the loss in the custody of the Madras Port Trust for which the first defendant cannot be held liable. The 'B' certificate issued by the Port Trust was done without proper verification of records and it is not binding on the first defendant. The plaintiff is put to strict proof of the quality, weight, order and condition of the consignment prior to loading at the Port of Shipment. The Bill of Lading was issued based on a declaration made by the consignor and the first defendant was not aware of the quantity, quality and other details. Under Section 42(7) of the Major Port Trusts Act, once the cargo is landed by the carrier and delivered into the custody of the Madras Port Trust, the liability of the carrier comes to an end. The plaintiffs must seek its remedy from the Port Trust of Madras or the second defendant. The plaintiff delayed the clearance of the cargo from the Madras Port Trust well beyond the free days period. Hence the first defendant cannot be held liable for any short-landing or shortage of the cargo. Though the vessel completed the discharge of the cargo on 7.3.1980 itself, the plaintiff obtained the Delivery Order for the cargo only on 12.3.1980 which is only after the expiry of free days period. The plaintiff cleared only a part of the cargo from the Port Trust and wrongfully refused to clear the balance inspite of the first defendant's request to do so. The plaintiff applied for survey of the cargo only on 13.3.1980 and the survey was granted as time barred. Hence the survey is not binding on the first defendant. The survey conducted by the second defendant's surveyors is not binding on the first defendant. The alleged loss occurred only when the cargo was in the custody of the Madras Port Trust due to bad handling, pilferage etc. and due to the negligence of the plaintiff in not clearing the cargo immediately on discharge. The first defendant denies the averment that the cargo arrived at the Madras Port was in a defective condition resulting in short landing and shortage of weight. The suit is bad for non-joinder of necessary party, namely, Port Trust of Madras.
and due to the negligence of the plaintiff in not clearing the cargo immediately on discharge. The first defendant denies the averment that the cargo arrived at the Madras Port was in a defective condition resulting in short landing and shortage of weight. The suit is bad for non-joinder of necessary party, namely, Port Trust of Madras. The first defendant is not liable to pay the suit claim.The second defendant in its written statement contended that the suit is not maintainable as against the second defendant, as the plaintiff has no cause of action to file the suit against it. The plaintiff has grossly failed in its duty to protect the rights and claim of recovery as stipulated and required under the terms and conditions of the contract of Insurance. Thus, the plaintiff had the only option to claim for the alleged loss against the first defendant alone and the suit is liable to be dismissed as against the second defendant in limine. The plaintiff had not submitted the necessary papers relating to the claim to the second defendant inspite of reminders and the second defendant had necessarily to dose the file pertaining to the claim after due notice to the plaintiff. The plaintiff was negligent and careless right from the arrival of the ship at Madras Port Trust and deliberately failed to discharge their obligation as per contract of Insurance. There is no contract or obligation on the part of the second defendant to pay interest as claimed by the plaintiff. The second defendant is not liable for the suit claim. The trial Court framed six issues and on a consideration of the matter, came to the conclusion that there was short-landing of 203 bags and the shortage in weight of 7982 kgs. was not proved and the first defendant, as agent and the second defendant, as insurer are liable to pay a sum of Rs. 25, 578 being the value of 203 bags and granted a decree for the above sum to the plaintiff against the defendants with subsequent interest at 6% per annum and proportionate costs. Aggrieved by the same, the first defendant has preferred the present appeal against the plaintiff and the second defendant.
25, 578 being the value of 203 bags and granted a decree for the above sum to the plaintiff against the defendants with subsequent interest at 6% per annum and proportionate costs. Aggrieved by the same, the first defendant has preferred the present appeal against the plaintiff and the second defendant. For the sake of convenience, in this judgment, the parties are described as arrayed in the suit.The points for determination in this appeal are : (1) Whether the suit is maintainable as against the first defendant ? (2) Whether the second defendant is liable for the suit claim ? (3) Whether there was short-landing of 203 bags of cargo and whether the 'B' certificate issued by the Port Trust is sufficient to prove it ? Points 1 and 2 : The undisputed facts are that the consignment consisting of 2000 bags of Jumbo Black Matpe was entrusted to the principal of the first defendant at the Port of Bangkok for carriage by Sea to the Port of Madras by the Ship M.V. European Liberty, owned by the principal of the first defendant and the consignment was sent to the plaintiff herein. According to the plaintiff, the vessel short landed 203 bags of cargo out of 2000 bags and there was also a shortage of 7982 kgs. of cargo in the remaining bags and the plaintiff has filed the present suit against the agent of the principal and the insurer. The first defendant mainly contends that it is only the agent of the disclosed principal Goldstar Line Limited and hence under Section 230 of the Indian Contract Act, it is not personally liable and the suit is not maintainable. The learned counsel for the appellant/first defendant contends that the first defendant is the local agent of the carrier and in the plaint, it has not been explained by the plaintiff as to how the first defendant is liable for the suit claim and the contract of carriage by Sea has been entered into with the principal directly by the plaintiff and in such case, no liability can be attached to the agent and he relies on some decisions in this regard.
The first division relied on in Union of India vs. Chinoy Chablani & Company 1982 AIR(Calcutta) 365), in which it is held as follows : "The statutory presumption of a contract between the agent and the third party by legal fiction cannot be extended to cover a case where the principal has entered into the contract directly. In Clause (3) the word "principal" has been used in relation to the agent and not otherwise. The expression "though disclosed" have reference to the agent's act, Section 230, Clause (3) does not cover a case where the principal has entered into the contract himself and not through the agent. If the principal would enter into the contract directly with the third party there could not be any question of the principal being required to be disclosed as a principal. In such event, the agent could not possibly come into the picture at all, and, as such, the agent could not be made liable by creating a legal fiction whereby a contract would be presumed to exist by and between the agent and the third party. If the agent has not done anything in the formation of the contract he could not be made liable without his knowledge and consent by statutory fiction contained in Clause (3). In such a case, the Legislature could not be said to have exonerated a principal who has himself entered into the contract by foisting his contractual liability on to the agent without his knowledge and consent by means of statutory presumption that a contract existed by and between the agent and the third party simply because the principal contracting party could not be sued." The second decision relied on is The Union of India represented by the Regional Director (Food), Southern Region, Madras vs. Cheyenna Companies Naviera S.A. represented by its Agent, M/s. Pengotis A. Lemas and Associates Ltd. and another, in which, a learned Judge of this Court held that the carrier would be liable to make good the shortage and agent of the carrier at Madras cannot be made liable.The next decision is E.I.D. Parry (India) Ltd. having its registered office at Dare House, Madras-I vs. Far Eastern Marine Transport Company Ltd., represented by its Local Agents, Chowgule Bros. and two others ( 1988 1 LW 320 ), in which, S. A. Kader, J. held as follows : "16.
and two others ( 1988 1 LW 320 ), in which, S. A. Kader, J. held as follows : "16. Issue No. 4 - The second defendant-partnership firm is the local agent of the first defendant carrier. Neither in the plaint nor in the argument advanced by the learned counsel for the plaintiff has it been explained as to how the second defendant is liable for the suit claim. This contract of carriage by Sea has been entered into with the first defendant directly and in such a case, no liability can be attached to the agent. Section 230 of the Indian Contract Act comes into play only where the contract is entered into by the agent on behalf of the principal. The claim against the second defendant is therefore misconceived as rightly contended by its learned counsel. This issue is also found against the plaintiff." In the above decisions, the Calcutta High Court as well as this Court have held that when the contract of carriage by Sea entered with the carrier directly, no liability can be attached to the agent and the claim against the agent is misconceived. In the present case also, the contract of carriage by Sea has been entered into by the plaintiff with the carrier directly and the suit has not been filed against the carrier, but only against the agent and in such circumstance, the claim against the first defendant agent is misconceived. The second defendant is the insurer and its contention is that the plaintiff had grossly failed in its duty to protect the rights and the claim of recovery as stipulated and required under the terms and conditions of the contract of insurance and it is not liable for the suit claim. Under the law of Insurance, the right of the Insurer on payment of the loss to the assured is to be subrogated to the rights of the assured so as to enable the insurer to proceed against the third party and indemnity itself. The assured has to keep alive his remedies against the carrier and any default committed by the assured by abandoning his rights against the carrier will deprive the insurer of its remedies against the carrier. In such case, it is open to the insurer to repudiate its liability under the policy.
The assured has to keep alive his remedies against the carrier and any default committed by the assured by abandoning his rights against the carrier will deprive the insurer of its remedies against the carrier. In such case, it is open to the insurer to repudiate its liability under the policy. In the instant case, the plaintiff by its failure to institute the suit against the carrier, has lost its remedy against the carrier and consequently, the second defendant - insurer is deprived of its right of indemnity against the carrier and in such circumstances, the second defendant is also not liable for the suit claim.Point No. 3 : The learned counsel for the appellant/first defendant contends that there was no short-landing of 203 bags of cargo as contended by the plaintiff and the 'B' certificate issued by the Port Trust to the plaintiff is doubtful and it is not sufficient to prove the short-landing and relies on some circumstances in this regard. Ex. A-14 is the 'B' certificate dated 27.3.1980 given by the Port Trust to the plaintiff. Ex. B-4 is the letter dated 4.8.1980 written by the first defendant to the Traffic Manager of Madras Port Trust. In the above letter, the first defendant has informed the Port Trust that the out-turn statement of the Port Trust showed short landing of 203 bags, whereas as per the tally of the Port Trust, it is found that an excess quantity of 154 bags than the manifested quantity landed and the first defendant mentioned the details of tally in the letter and it wanted the Port Trust to clarify. There is no clarification by the Port Trust in this regard. Exs. B-6 and B-7 are the notice and enclosure respectively dated 15.4.1981 sent by the Port Trust to the first defendant with regard to the suit consignment. In the enclosure in Ex. B-7, it is mentioned that 203 bags contents were filled in 91 gunny bags. Ex. B-8 dated 23.2.1980 is the out-turn statement issued by the Traffic Manager of the Port Trust, in which, it is stated that 203 bags of suit consignment were excess landed and the contents were filled in 91 gunny bags. The plaintiff had not added the Port Trust as a party in the suit. The very documents of the Port Trust reveal excess landing of 203 bags of the suit consignment.
The plaintiff had not added the Port Trust as a party in the suit. The very documents of the Port Trust reveal excess landing of 203 bags of the suit consignment. It is not known as to how the Port Trust has issued Ex. A-14, B certificate dated 27.3.1980 certifying the short-landing of 203 bags of cargo when its own documents reveal otherwise. The B certificate issued by the Port Trust in this case is not sufficient to prove the short-landing and the short-landing of cargo is not proved and the suit must, therefore, fail.In the result, the appeal is allowed and the judgment and decree of the trial Court are set aside and the suit is dismissed with costs. There shall be no order as to costs in this appeal.