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2006 DIGILAW 1258 (DEL)

HARTLEY KNITS v. A. C. S. LOGISTICS

2006-07-31

PRADEEP NANDRAJOG

body2006
PRADEEP NANDRAJOG, J. ( 1 ) ON 8/12/2005 eight issues were framed. It was directed that issuesno. 1 and 8 would be treated as preliminary issues. Issue Nos. 1 and 8 read as under:" (1) Whether the plaint does not disclose any cause of action against the answering defendant and is liable to be dismissed on this ground- (OPD-2; (8) Whether defendant No. 1 is carrier as alleged in para 3 of the plaint (OPP)" ( 2 ) AT the hearing held on 28th July, 2006 learned Counsel for the parties conceded that reference to 'answering defendant' in issue No. 1 is reference to defendant No. 1 and the words 'opd-2' should be read as 'opd-1'. ( 3 ) INDEED, the 2 issues arise out of the defence taken by defendant No. 1. ( 4 ) BEFORE proceeding any further I may note that due to continuous non-appearance on behalf of the plaintiff on 3 consecutive dates, on 20/9/2005 the suit was dismissed for non-prosecution. Thereafter, plaintiff filed IA No. 8565/2005 praying for recall of the order dated 20/9/2005. ( 5 ) THE said application was listed on 25/10/2005. Counsel appeared for defendant No. 1 and stated that said defendant has no objection to the prayer being allowed. Accordingly, vide order dated 25/10/2005 the suit was restored without notice to defendants 2 and 3. Thereafter, on 8/12/2005, issues were framed in the absence of said defendants. ( 6 ) I would be dealing with the legal consequences of aforesaid towards the end of my present order. ( 7 ) REVERTING to the issues which are being decided by the present order, averments made in the plaint alone are to be looked into. Relied upon documents by the plaintiff would also be looked into for the reason said documents filed by the plaintiff in support of plaintiff s case would bind the plaintiff. ( 8 ) PLAINT starts with an averment that the plaintiff is an exporter of readymade garments. Defendant No. 2 was an agent through whom defendant No. 3 placed a purchase order for supply of readymade garments. That as per contract between plaintiff and defendant No. 3 who was acting through defendant No. 2, banker of defendant No. 3 opened irrevocable letters of credit in favour of the plaintiff through plaintiffs bank. Defendant No. 2 was an agent through whom defendant No. 3 placed a purchase order for supply of readymade garments. That as per contract between plaintiff and defendant No. 3 who was acting through defendant No. 2, banker of defendant No. 3 opened irrevocable letters of credit in favour of the plaintiff through plaintiffs bank. It was a term of letter of credit that the goods were to be transported 'free on board' through the nominated carrier viz. defendant No. 1. ( 9 ) IT is stated in para 3 of the plaint that, inter alia, letter of credit stipulated that-"original A. C. S. Logistics Ltd. cargo receipt consigned to applicant. The forwarders cargo receipt must have a signed statement that one original (including an original Bill of Lading) and two copies of the all required documents were received along with the cargo. " ( 10 ) PLAINTIFF further states that goods were dispatched through defendant No. 3 and plaintiffs bank forwarded to the bank of defendant No. 3 the documents for negotiations and remittance of the proceeds. ( 11 ) IT is stated in para 5 of the plaint and the goods were routed through defendant No. 2 under an agency agreement entered into between the plaintiff and defendant No. 2. ( 12 ) IN paras 6 and 7 of the plaint it is averred as under:"6. That as per shipping and transportation norms governing international transportation of goods, the transporter, be it a shipping line or a shipping agent, are not allowed to give delivery of the goods to the buyer at the other end without the written instructions and permission of the seller/supplier of the goods with furnishing of Forwarder Cargo Receipt (for short FCR) which is a negotiable instrument. This is a practice and norm which is mandatory and prima facie operates in order to the protect the interest of the seller/supplier against exploitation or misuse of the goods without payment having been remitted to the seller by the buyer. 7. That the plaintiff despatched the said goods through the defendant No. 1. The defendant No. 2 was the agent through whom the purchase order had been placed while defendant No. 3 is the ultimate buyer. The defendant is answerable to plaintiff as well in view of the mutual agency agreement with plaintiff. 7. That the plaintiff despatched the said goods through the defendant No. 1. The defendant No. 2 was the agent through whom the purchase order had been placed while defendant No. 3 is the ultimate buyer. The defendant is answerable to plaintiff as well in view of the mutual agency agreement with plaintiff. " ( 13 ) IN para 9 of the plaint it is averred as under:"9. That however, the defendant No. 1, in collusion with defendants 2 and 3, gave delivery of the goods to the defendant No. 3. This delivery was given to the defendant No. 3 by the defendant No. 1 even though admittedly, defendant nos. 2 and 3 have not remitted the consideration amount for the goods mentioned in the documents duly presented to the bank by the plaintiff. The employees of defendant No. 1 had assured the plaintiff at their office at New Delhi that the goods will not be delivered to the buyer unless she received the consideration of the goods and confirm it to them. Only thereafter would they deliver the goods to the buyer. " ( 14 ) STATING as aforesaid it is stated that defendant No. 1 has committed severe breach of legal and trading norms in releasing the goods in its possession without receipt of original FCR. ( 15 ) LEARNED Counsel for the plaintiff submitted during arguments that FCR means Forwarders Cargo Receipt. ( 16 ) THOUGH I am not to look at the defence of the defendant No. 1 for deciding the 2 preliminary issues, but for record I may note that the stand of defendant No. 1 is that it acted as a forwarding agent on behalf of defendant No. 3 and save and except assist in custom clearance, etc. and ensure that the goods are received by the shipper i. e. carrier, it had no other role. ( 17 ) MODE of shipment i. e. whether it was by air or by sea has not been pleaded in the plaint but documents filed by the plaintiff show that the goods were shipped by sea for the reason plaintiff documents refer to a bill of lading. It appears that some goods were sent by air for the reason at Page 38 of the list of documents filed by the plaintiff, an airway bill issued by Air France has been filed. It appears that some goods were sent by air for the reason at Page 38 of the list of documents filed by the plaintiff, an airway bill issued by Air France has been filed. ( 18 ) PLAINTIFF ought to have stated its case with clarity as to which goods were transported by air and which goods were shipped by sea. ( 19 ) THE reason is that for goods sent by air, shipment would be governed by the Carriage By Air Act, 1972 and goods shipped by sea would be governed by the indian Carriage of Goods by Sea, 1925. ( 20 ) IT could well be argued that in the absence of clear averments in the plaint as to the mode of shipment the plaint discloses no cause of action. The reason is that if goods were shipped by air, plaintiff, as the consignor of the goods would be liable as the author of the airway bill. Rule 6 of the Rules in the Second Schedule of the carriage by Air Act, 1972 stipulates that the airway bill shall be made out by the consignor. Rule 10 stipulates that the consignor is responsible for the correctness of the particulars inserted in the airway bill. Rule 11 states that the airway bill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo and the conditions of cargo. ( 21 ) ONE is left wondering as to which part of the consignment was shipped by sea and which part of the consignment was shipped by air. ( 22 ) AT Page 33 of the documents relied upon by the plaintiff, a photo-copy of the original cargo receipt has been filed. Inter alia, the said document stipulates as under:"4. In receiving the Goods and performing the consolidation and for-warding services covered by this agreement, ACS is acting as agent only for the Customer, and ACS is not as a carrier, transporter and distributor of the Goods. From and after the delivery by AC's to a carrier in accordance with the instructions of the Customer, the Customer agree the sole responsibility and liability for the care, custody, carriage and delivery of the Goods shall be that of said carrier and not that of ACS. From and after the delivery by AC's to a carrier in accordance with the instructions of the Customer, the Customer agree the sole responsibility and liability for the care, custody, carriage and delivery of the Goods shall be that of said carrier and not that of ACS. ACS does not undertake that they will be forwarded or transported from the place of receipt or will arrive at an intermediate or final destination by any particular date or time or to meet any particular market or for any particular use and shall have no liability for any damages caused by the delay or non-delivery of the Goods. In no event shall ACS be liable for special or consequent damages, including but not limited to loss of use or lost profits, resulting from delay, loss or damage. 6. The responsibility and liability of ACS shall be limited to that period of time in which ACS, its employees or agents have exclusive custody of the Goods, it is agreed that any claim or demand for delay, loss or damage which occurs once or after the Goods are in the custody of a carrier, such claim shall be only against the carriers, truckmen. Forwarders custom brokers, agents warehousemen or others in whose actual custody or control the Goods may be at the time of such delay, loss or damage. The customers cargo owners acknowledge that they shall be bound by the terms and conditions of the transportation agreement of the carriers into whose custody the Goods may be forwarded. 10. The shipper, on behalf of itself, the Customer and/or other cargo owners, warrants the following (i) that the Goods are properly marked and suitably packaged for normal handling, (ii) that the weight and descriptions for packages and cargo units furnished by the shipper are correct, (iii) that the nature and amount of any hazardous or dangerous goods hand packed and/or labeled in accordance with 1mco regulations and identified as such in accordance with such Regulations and identified as such in accordance with such Regulations to ACS at or before the time of receipt by ACS the Goods do not require insulated, refrigerated, ventilated or other special storage of handling not disclosed to ACS at or before the time of receipt of the goods. the customers and/or other cargo owners shall defend, indemnify and hold harmless ACS in respect of any injury or death of any person, or damage to the Goods or any other expense, including fines, penalties or legal fees, caused by breach of any of the foregoing warranties. The shipper hereby acknowledges that ACS acts solely as agent of the customer and ACS shall be under no liability whatsoever in respect of any failure by the Customer or any other party to do any act or pay any amounts due in respect of Goods received hereunder including but not limited to, the purchase price of such Goods, freight, storage charges, insurance premium, lighterage charges, demurrage, salvage or general laverage contributions. " ( 23 ) LEARNED Counsel for the plaintiff submitted that in para 3 of the plaint it has been categorically averred that defendant No. 1 was nominated carrier and therefore submitted that treating the said averment as correct, at this stage no finding can be arrived at based on appreciation of evidence that defendant No. 1 was not the carrier but was acting only as a forwarding agent. ( 24 ) EACH and every averment in the plaint has to be read to ascertain the cause of action. No doubt, in para 3, qua defendant No. 1 it is stated that defendant No. 1 was the nominated carrier, but in the same paragraph while referring to the letter of credit, it is stated that the cargo receipt issued by defendant No. 1 was to have a signed statement that the original bill of lading was received along with the cargo. ( 25 ) IN para 3 itself, plaintiff by referring to the 'forwarders cargo receipt' in relation to the defendant No. 1 has laid a trace that defendant No. 1 was a cargo forwarding agent. Further, in para 6 of the plaint, it has been categorically pleaded that as per shipping and transportation norms, the transporter, be it the shipping line or a shipping agent is not permitted to give delivery of the goods to a buyer without the written instruction and permission of the seller of the goods which would include furnishing of the forwarder cargo receipt. ( 26 ) MEANINGFULLY read, case of the plaintiff against defendant No. 1 shows that the plaintiff is referring to defendant No. 1 as the cargo forwarding agent. ( 26 ) MEANINGFULLY read, case of the plaintiff against defendant No. 1 shows that the plaintiff is referring to defendant No. 1 as the cargo forwarding agent. ( 27 ) THE loose and laconic pleadings have to be read in the context of the documents filed by the plaintiff for the said documents would clarify the case of the plaintiff. ( 28 ) IN para 22 above, 1 have noted some of the terms of the cargo receipt. Learned Counsel for the plaintiff did not dispute that the letters'acs' in the clauses referred to defendant No. 1 i. e. A. C. S. Logistics. ( 29 ) PERUSAL of Clause 4, 6 and 10 clearly evidence that defendant No. 1 was rendering forwarding services. Clause 4 clearly states that while rendering forwarding services covered by the forwarders cargo receipt, defendant No. 1 was acting as agent only for the customer. Clause 4 specifically records that ACS is not a carrier, or transporter of the goods. That after the delivery by ACS to a carrier in accordance with the instructions of the customer, the customer would be solely responsible and liable for the care, custody and carriage as also delivery of the goods. Clause 6 clearly stipulates that the responsibility and liability of ACS shall be limited to the period of time ACS has exclusive custody of the goods. Clause 10 clearly stipulates that ACS shall be under no liability whatsoever in respect of any failure by the customer or any other party to any act by a third party. ( 30 ) PHOTO-COPY of the original cargo receipt filed by the plaintiff at Page 34 records that the consignor is defendant No. 3. It further states that the statements in the original cargo receipt are in accordance with the instructions of defendant No. 3. The original cargo receipt relied upon by the plaintiff shows that defendant No. 1 was acting as the forwarding agent of defendant No. 3. This is evident from the contents of the original cargo receipt noted by me above which shows defendant no. 3 as the consignor and that defendant No. 1 was acting in accordance with the instructions of defendant No. 3. ( 31 ) IT is evident that defendant No. 1 was not acting as the carrier. Itwasacting as the forwarding and clearing agent. 3 as the consignor and that defendant No. 1 was acting in accordance with the instructions of defendant No. 3. ( 31 ) IT is evident that defendant No. 1 was not acting as the carrier. Itwasacting as the forwarding and clearing agent. Documents filed by the plaintiff show that defendant No. 1 was acting as the forwarding agent in accordance with the instructions of defendant No. 3. Original cargo receipt i. e. forwarders cargo receipt admitted in the plaint has been filed as a document by the plaintiff, terms thereof not only bring out that defendant No. 1 is not a carrier but was rendering only forwarding services, it also shows that responsibility of defendant No. 1 was to his principal i. e. defendant No. 3 and responsibility was to keep the goods while in its custody, free from any damage and upon delivery to the carrier i. e. the shipper responsibility of defendant No. 1 came to an end. ( 32 ) THERE are no averments in the plaint that defendant No. 1 did not deliver goods to the carrier i. e. the shipping line. ( 33 ) AVERMENTS in the plaint show that the goods reached the port of destination. Grievance is that goods were received without documents being cleared from the bank because original documents reached the hands of defendant no. 3. ( 34 ) PLAINTIFF may have a case against defendant No. 3 and against defendant no. 2 who acted as the agent of defendant No. 3. But no cause has been shown in the plaint to maintain any action against defendant No. 1. ( 35 ) I accordingly hold under issue No. 8 defendant No. 1 has not acted as the carrier as per the averments in the plaint which averments have to be read in light of the documents filed by the plaintiff. On issue No. 1, I hold that the plaint discloses no cause of action against defendant No. 1. ( 36 ) NAME of defendant No. 1 is accordingly deleted from the array of defendants. ( 37 ) PLAINTIFF to file amended memo of parties within a week from today. ( 38 ) AS noted above, suit was dismissed in default on 20th September. 2005. 1a 8565/2005 was filed and on the very first date, appearance was made on behalf of defendant No. 1. ( 37 ) PLAINTIFF to file amended memo of parties within a week from today. ( 38 ) AS noted above, suit was dismissed in default on 20th September. 2005. 1a 8565/2005 was filed and on the very first date, appearance was made on behalf of defendant No. 1. Since defendant No. 1 did not oppose the application same was allowed and was suit was restored. ( 39 ) SUMMONS in the suit post restoration have not been issued upon defendants 2 and 3. ( 40 ) FRESH summons in the suit be issued to said defendants returnable before the Joint Registrar on 6/11/2006. Learned Joint Registrar would list the matter in court after service is effected on said defendants. ( 41 ) IA No. 1601/2001 filed by defendant No. 1 under Order 7 Rule 11, CPC is dismissed as infructuous. Ordered accordingly.