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2012 DIGILAW 1594 (MAD)

Owners and Persons interested in the Vessel M. v. GATI ZIPP Now lying at the Port of Chennai rep. by its Master VS Mars Petrochem Pvt. Ltd.

2012-03-29

C.NAGAPPAN, M.SATHYANARAYANAN

body2012
Judgment :- The appellant is the respondent in Application No.3209 of 2011 and the defendant in C.S.No.427 of 2011. The respondent/plaintiff filed the abovesaid application under Order XII Rule 6 of the Code of Civil Procedure praying for a judgment and interim decree for a sum of Rs.30,41,971/- together with interest @ 18% p.a. from the date of plaint till the date of realization. The learned Judge allowed Application No.3209 of 2011 after contest and granted judgment and interim decree for a sum of Rs.22,23,504/- will interest @ 18% p.a. and also granted liberty to the respondent/plaintiff to enforce the bank guarantee already furnished by the defendant for recovery of the Interim decree amount till date vide judgment and decree dated 29th Feb., 2012. The appellant, aggrieved by the said judgment and interim decree, preferred this appeal. 2. The respondent/plaintiff filed C.S.No.427 of 2011 under Order 42 Rules 2 and 3 of the Original Side Rules against the appellant/defendant praying for judgment and decree for a sum of Rs.30,41,971/- together with interest @ 10% p.a. from the date of plaint will realization, arrest and sale of the defendant’s vessel, namely, MV GATI ZIPP, together with engine, tackles, cranes, derricks, machinery and other articles found on board the said vessel, presently lying in the Indian waters at the Port of Chennai or wherever found within the territorial waters of India, direction to adjust the sale proceeds of the defendant’s vessel against the suit claim and for payment of costs and such other reliefs. 3. Pending disposal of the said suit, the respondent/plaintiff filed an application in A.No.3209 of 2011 under Order XII Rule 6 of the Code of Civil Procedure r/w Order XIV Rule 8 of the Original Side Rules praying for interim decree for the suit claim together with interest @ 18% p.a. from the date of plaint till the date of realization. 4. 4. In the affidavit filed in support of the abovesaid application, the authorized signatory of the respondent/plaintiff averred among other things that the defendants are the owners and parties interested in the motor vessel MV GATI ZIPP registered in India and is owned and managed by Gati Coast to Coast – the shipping division of M/s. Gati Ltd. It is further averred that the plaintiff supplied lube oil to the defendant’s sister vessel, namely, MV Gati Pride, MV Gati Prestige, MV Gati Majestic at the ports of Chennai, Mumbai, Kandla, Cochin, Kutch and Colombo, Sri Lanka and for the supplies effected, it is having a running account with the defendant. As per the contract entered into between the plaintiff and the defendant, in respect of supply of lube oil, the credit period is 7 to 15 days and in case of breach to make payment within the stipulated time, the defendant is liable to pay interest at the rate of 18% p.a. It is further stated by the respondent/plaintiff that when the vessel of the defendant or her sister vessels needs supply of lube oils, the owners/Managers/the vessel/agents of the vessel, place an order on the plaintiff either in the form of e-mail or in the form of a purchase order and on receipt of the same, the plaintiff used to supply lube oil to the defendant’s sister vessel and on receipt of the same, the Chief Engineer/Master of the vessel signs the material delivery receipt and acknowledge receipt of the same. At Colombo, Sri Lanka, the supplies were effected through their agent, namely, M/s. Diamond Shipping Services Pvt. Ltd., Colombo and it is the agent of the plaintiff. 5. The plaintiff effected supply of lube oils on various dated between 20th Jan., 2011 and 16th March, 2011, amounting to a sum of Rs.38,00,854.80 and for various invoices raised by the plaintiff on the defendant, the defendant admitted its liability and issued the following six cheques:- 6. The plaintiff further averred that till the date of filing of the suit, the defendant made part payment to the tune of Rs.8,03,838/- and failed to pay the balance amount due and payable under various invoices and since no further payments were forthcoming, it presented the abovesaid six cheques with their bankers, namely, HDFC Bank at Chennai and all the cheques were returned with the endorsements “insufficiency of funds”. The plaintiff further states that despite number of e-mails sent to the defendant, no reply has been received and they have also not chosen to make any payment and they are due and payable a sum of Rs.29,97,016.80 with interest at the rate of 18% p.a. It is further stated by the plaintiff that they moved an application for interim arrest of the defendant’s vessel, namely, MV GATI ZIPP vide application No.2898 of 2011 and this Court passed an order of interim arrest of the said vessel and, thereafter, the defendant furnished bank guarantee to the tune of Rs.30,41,917/- and the vessel was released on 30th June, 2011. 7. According to the plaintiff, the suit claim has been admitted by the defendant by accepting the cargo delivery, issuing cheques for part payment making RTGS payments and the six cheques issued by them have been returned with endorsement “insufficiency of funds” and, thereby, they admitted their liability to pay the dues, which inclusive of interest, amounts to a sum of Rs.30,41,971/- and, hence, prayed for judgment and interim decree with future interest. 8. On behalf of the respondent in the said application/defendant, counter affidavit was filed by the legal executive of M/s. Gati Ltd. – owner of the vessel, MV GATI ZIPP and it is averred among other things that the plaintiff did not render any services or supplies to the abovesaid vessel and the supply of lube oils does not give rise to a maritime lien and the plaintiff cannot sue the defendant’s vessel for alleged supply to her sister vessels. It is further averred in the counter that no written contract between the plaintiff and the defendant is in existence and the plaintiff also has not chosen to produce the books of accounts. The defendant also denied the invoices relied upon by the plaintiff and as regards the issuance of the six cheques, it took a stand that the cheques were handed over to the plaintiff only with a view to enable the plaintiff to secure supplies to the defendant at times of need on demand. However, the plaintiff did not supply necessaries as assured and, thereby, caused loss of time and the defendant was forced to arrange for alternate supplies at the eleventh hour. However, the plaintiff did not supply necessaries as assured and, thereby, caused loss of time and the defendant was forced to arrange for alternate supplies at the eleventh hour. The defendant further states that the plaintiff is not entitled to fill up the blank cheques handed over to them on trust and for security and they have also not chosen to launch criminal proceedings under Section 138 of the Negotiable Instruments Act. It is further stated by the defendant that the bank guarantee has been furnished for a sum of Rs.30,41,971/- for effecting the release of the vehicle and, hence, the claim made by the plaintiff in the suit has been fully secured. Hence, for the said reasons, the defendant prayed for the dismissal of the abovesaid application. 9. The learned Judge, after taking into consideration the petition and the counter affidavit and by placing reliance upon the judgment of the Hon’ble Supreme Court in M/s. V.K. Enterprises – vs – M/s. Shiva Steels (2010 (5) LW 14 (SC)) and Uttam Singh Dugal & Co. Ltd. – Vs – United Bank of India & Ors. (2001 (1) LW 250 (SC) held that there is a clear admission of part payment and there is no sufficient explanation offered is also evasive in nature. Citing the said reasons, the learned Judge ordered the application and granted interim decree for a sum of Rs.22,23,504/- with interest @ 18% p.a. and also granted liberty to the plaintiff to enforce the bank guarantee already furnished for recovery of the said sum. Challenging the vires of the same, the present appeal is filed by the respondent in the said application/defendant. 10. Learned counsel appearing for the appellant/defendant submits that to pass an interim decree, there must be a clear and unambiguous admission in writing in order to invoke Order XII Rule 6 of the Code of Civil Procedure and there is no clear and unambiguous admission on the party of the appellant/defendant admitting its liability to pay the amount ordered to be paid under the interim decree. Learned counsel appearing for the appellant further submits that the six cheques issued by the defendant were security for the supplies to be effected and in this connection drawn the attention of this Court to the e-mail message dated 17th Jan., 2011, wherein the plaintiff had admitted that the defendant has to issue the pre-deposit cheque as per the stand-by arrangement and after remitting the US Dollars, the cheques will be returned back. It is the submission of the learned counsel for the appellant that the said e-mail communication would show that it is the practice of the respondent/plaintiff to obtain signed blank cheques as security for the supplies effected by them and mere issuance of cheques cannot amount to clear and unambiguous admission on the part of the defendant to pay the amount and the said vital aspect has been completely overlooked by the learned Judge. 11. It is further contended by the learned counsel for the appellant that in the counter affidavit, the defendant took a tenable stand that there is no written contract between them and the respondent/plaintiff failed to produce the books of accounts relating to the running account and the defendant also does not admit the invoices relied on by the plaintiff and in view of the stand taken by the defendant, the learned Judge ought not to have granted the interim decree and, instead, should have directed the parties to put forth their case by letting in oral and documentary evidence at the time of trial. 12. Learned counsel for the appellant, in support of his submissions, placed reliance upon the judgment of the Hon’ble Supreme Court reported in Himani Alloys Ltd. – vs – Tata Steel Ltd. 13. Per contra, the learned counsel appearing for the respondent/plaintiff has drawn the attention of this Court to the various e-mail communications exchanged between the parties as well as the invoices and submits that in respect of the supplies effected, the Chief Engineer and Master of the vessels had signed it and as per the trade practice, the defendant has to issue cheques for the supplies effected and, accordingly, six cheques, admitting their liability to make payment were issued. Since inspite of repeated requests they failed to make payments, the respondent/plaintiff presented the cheques and the six cheques got dishonoured on account of insufficiency of funds and since the appellant/defendant admitted the delivery of lube oils and also issued cheques and also made part payments and, further, issued six cheques for the balance amount, it amounts to clear and unambiguous admission on their part and the learned Judge, taking into consideration of the same and also relying upon the judgments of the Hon’ble Supreme Court, rightly granted the interim decree and, therefore, interference may not be warranted at the hands of this Court in exercise of its appellate jurisdiction. 14. Learned counsel appearing for the respondent, in support of his submission, placed reliance upon the following judgments:- 1) 2001 (1) LW 250 (SC); 2) 2010 (5) LW 14 (SC); 3) 2002 TN Manu 104 (SB) ; and 4) 2004 (1) LW 54 (DB) ; 15. This Court bestowed its best attention to the rival submissions and also perused the typed set of documents and the judgments relied on by the learned counsel for the appellant and the learned counsel for the respondent. 16. In State Bank of India vs M/s. Midland Industries & Ors. (AIR 1988 Delhi 153), it has been held that in order to invoke the provision under Order XII Rule 6 of the Code of Civil Procedure, there must be unequivocal, unconditional and unambiguous admission by the defendant and the provision of Order XII Rule 6 is only discretion and it is not a matter of right on the part of the plaintiff to get a decree. It has been further held in the said decision that if a case involves questions, which cannot be conveniently disposed of on a motion under this rule, the Court is free to refuse exercise discretion in favour of the party invoking it and where the objections raised by the defendant go to the very root of the case, it would not be proper to exercise discretion and pass a decree in favour of the plaintiff. 17. Similar view has been taken in the decision reported in Union of India vs. M/s. Feroze & Co. ( AIR 1962 J&K 66 )” 18. 17. Similar view has been taken in the decision reported in Union of India vs. M/s. Feroze & Co. ( AIR 1962 J&K 66 )” 18. The plaintiff, in the affidavit filed in support of Application No.3209 of 2011, averred that for the supply of lube oils effected to the sister vessels of the defendant, a sum of Rs.38,00,854.80 is due and payable and for various invoices raised by them, the defendant admitted its liability to pay the same and issued six cheques aggregating to a sum of Rs.22,23,504/- and the said cheques, on presentation, got dishonoured for want of sufficient funds and since the said claim has been admitted by the defendant by accepting the cargo delivery, issuing cheques for part payments, making RTGS payments, interim decree has to be passed in their favour for a sum of Rs.30,41,971/-with interest @ 18% p.a. 19. However, the defendant filed counter stating among other things that there is no written contract between the plaintiff and the defendant with regard to the supply of lube oils and the plaintiff, who bases its claim on running account, has not chosen to produce the books of accounts to substantiate their claim and the cheques in question were handed over to them only for the purpose of security. It is further averred by the defendant that in the absence of any clear and unambiguous admission, the interim decree prayed for by the plaintiff cannot be granted at all. 20. It is the submission of the learned counsel for the respondent/plaintiff that the invoices and e-mail correspondence exchanged between the parties would clearly disclose that the plaintiff effected supply of lube oils and as per delivery terms, payment is secured by means of post-dated cheque advances and, accordingly, the defendant issued six cheques admitting their liability to the tune of Rs.22,23,504/- and the said cheques, on presentation, got dishnoured and it amounts to clear and unambiguous admission on their part and, therefore, learned single Judge was right in granting the interim decree. 21. In Himani Alloys Ltd. Vs. 21. In Himani Alloys Ltd. Vs. Tata Steel Ltd. relied on by the learned counsel for the appellant, the facts of the case would disclose that the respondent, namely, Tata Steel Ltd., filed a suit for recovery of Rs.2.02 Crores on the file of the Calcutta High Court for the supply of steel and pending disposal of the suit, filed an application praying for interim decree upon admission for Rs.74.57 Lakhs by stating that the appellant/defendant admitted liability as per the minutes of the meeting held on 9th Dec., 2000. The defendant contended that there was no such meeting on 9th Dec., 2000 and what transpired on 9th Dec., 2000 was only a tentative agreement to have the accounts verified and arrive at a final settlement or admission of liability. A learned single Judge of the Calcutta High Court granted interim decree for a sum of Rs.47.06 Lakhs, subject to furnishing bank guarantee for a sum of Rs.48 Lakhs. The defendant filed an appeal before the Division Bench of the Calcutta High Court challenging the interim decree and it was dismissed and the defendant, aggrieved by the same, preferred an appeal before the Hon’ble Supreme Court. The Hon’ble Supreme Court found that a specific case of admission putforth by the plaintiff in its application for interim relief was found to be incorrect and the minutes of the meeting do not also disclose as to the admission on the part of the defendant to pay the amount. In para-9 of the said judgment, the Hon’ble Supreme Court has considered its earlier decision in Uttam Singh Duggal’s case (supra), Karam Kapahi vs. Lal Chand Public Charitable Trust (2010 (4) SCC 753) and Jeevan Diesels and Electricals Ltd. Vs. Jasbir Singh Chadha ( 2010 (6) SCC 601 ) and held as follows:- “9. It is true that a judgment can be given on an “admission” contained in the minutes of a meeting. But the admission should be categorical. It should be a conscious and deliberate act of the party making it, showing an intention to be bound by it. Order 12 Rule 6 being an enabling provision, it is neither mandatory nor preemptory but discretionary. But the admission should be categorical. It should be a conscious and deliberate act of the party making it, showing an intention to be bound by it. Order 12 Rule 6 being an enabling provision, it is neither mandatory nor preemptory but discretionary. The court, on examination of the facts and circumstances, has to exercise its judicial discretion, keeping in mind that a judgment on admission is a judgmentwithout trial, which permanently denies any remedy to the defendant, by way of an appeal on merits. Therefore, unless the admission is clear, unambiguous and unconditional, the discretion of the Court should not be exercised to deny the valuable right of a defendant to contest the claim. In short, the discretion should be used only when there is a clear ‘admission’ which can be acted upon.” 22. In Uttam Singh Duggal & Co. Ltd. Vs. United Bank of India & Ors. (2001 (1) LW 250), relied on by the Learned counsel for the respondent/plaintiff, the facts of the case would disclose that in the balance sheet of the petitioner for the year ending 31st March, 1989, the minutes of the Board of Director’s meeting held on 30th May, 1990 and the letter dated 4th June, 1990, there was a clear, unambiguous and unconditional acknowledgment of the liability to pay the respondent Bank and taking into consideration of the same, the interim decree came to be passed and it was also confirmed by the Hon’ble Supreme Court in the above-cited decision. 23. In M/s. V.K. Enterprises vs M/s. Shiva Steels (2010 (5) LW 14), summary suit was filed for recovery of Rs.6,68,530/- and the defendant filed an application for leave to defend under Order XXXVII Rule 3 r/w Section 151 of the Code of Civil Procedure by contending that the cheques in question had been handed over by the petitioner to the respondent by way of security and not for presentation and there was a material alteration in the cheques. The Supreme Court, on consideration of the rival submissions and on examination of the photocopy of the cheques itself found that there is no sign of interpolation having been made on the cheques and the defence projected by the defendant cannot be accepted for the reason that the allegation relating to interpolation has been made without substance and the ledger accounts clearly demonstrate that such dues had been settled between the parties and the issuance of the cheques was also never disputed. The Hon’ble Supreme Court, taking into consideration the abovesaid facts, found that the defendant has no tenable defence and, therefore, upheld the order passed by the High Court. 24. In W.S. Nisha vs. Dr. K. Padmanabhan (MANU/TN/0104/2000 (SB), the facts of the case would disclose that the respondent/defendant voluntarily gave letter of undertaking and also the cheques and admitted his liability and, therefore, the single Bench set aside the order passed by the lower court and granted interim decree. 25. In NEPC Micon Ltd. Vs. M/s. Siemens Ltd. ( 2004 (1) LW 504 (DB), memorandum of compromise has been arrived at between the parties by way of a private arrangement, wherein the defendant undertook to make the payment and on such payment, the plaintiff agreed to withdraw the suit as having been settled out of court and since the payment has not been effected as per the compromise, application was moved under Order XII Rule 6 of the Code of Civil Procedure and it was ordered. Challenging the vires of the same, the defendant therein preferred the appeal and the Division Bench, on the facts of the case, found that the appellant/defendant therein admitted that a sum of Rs.76 Lakhs and odd is due and payable vide his letter dated 16th Sept., 1994 and also in the memorandum of compromise dated 29th Nov., 1995 as well as their letters dated 29th Dec., 1995 and 2nd Jan., 1996, followed by issuance of two cheques, which on presentation, got dishonoured. Therefore, on the facts and circumstances of the case, the Division Bench upheld the interim decree. 26. The plaintiff heavily relied upon the six cheques issued by the defendant, aggregating to a sum of Rs.22,23,504/- to support his claim that the defendant admitted its liability to pay the said sum and the cheques, on presentation, got dishonoured and, therefore, the defendant is bound to pay the said admitted sum. 26. The plaintiff heavily relied upon the six cheques issued by the defendant, aggregating to a sum of Rs.22,23,504/- to support his claim that the defendant admitted its liability to pay the said sum and the cheques, on presentation, got dishonoured and, therefore, the defendant is bound to pay the said admitted sum. The appellant/defendant, took a stand that there is no written contract between the parties and though the plaintiff placed reliance upon running account, failed to produce the books of accounts and the cheques in question have been issued as security in respect of the supplies to be effected and, therefore, it would not amount to admission on the part of the defendant to pay the amount. This Court, on a careful perusal of the plaint, affidavit filed in support of Application No.3209 of 2011 and the counter affidavit is of the view that there is no clear and unambiguous admission on the part of the defendant admitting its liability to pay the sum. 27. The presumption under Sections 118(a) and Section 139 of the Negotiable Instruments Act came up for consideration before the Hon’ble Supreme Court in the decision reported in K. Prakashan vs. P.K. Surendran (2007 (12) SCALE 96) and placing reliance upon its earlier decision reported in M.S. Narayana Menon @ Mani vs. State of Kerala & Anr. ( 2006 (6) SCC 39 ), it has been opined as follows:- “12. The Act raises two presumptions; firstly, in regard to the passing of consideration as contained in Section 118(a) therein and, secondly, a presumption that the holder ofcheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability. Presumptions both under Sections 118(a) and 139 are rebuttable in nature. Having regard to the definition of terms ‘proved’ and ‘disproved’ as contained in Section 3 or the Evidence Act as also the nature of the said burden upon the prosecution vis-à-vis an accused it is not necessary that the accused must step into the witness box to discharge the burden of proof in terms of the aforementioned provision. 13. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability.” 28. 13. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability.” 28. As per the above-cited decision, the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act are rebuttable in nature. Simply because the six cheques have been issued by the appellant/defendant, which got dishonoured, it cannot lead to a presumption that the defendant has admitted its liability. The appellant/defendant also projected his defence by contending that in the absence of written contract, in the absence of production of books of accounts coupled with the fact that they have not admitted the invoice and that the cheques in question have been handed over to the plaintiff to secure the supplies effected, it cannot be said there was clear and unambiguous admission on its part to pay the sum of Rs.22,23,504/-, due and payable under the dishonoured cheques. 29. A perusal of some of the purchase orders would disclose that the payment is secured by means of post-dated cheques and with regard to the supply of Lubes effected at Colomby for the vessel MV Gati Prestige, e-mail communication emanated from the plaintiff would read that the defendant has to issue post-dated cheques as per the stand-by arrangement and after remitting the US Dollars, the cheques will be returned back to them. 30. As per Order XII Rule 6 of the Code of Civil Procedure, admission on the part of the defendant should be clear, unambiguous, unconditional and unequivocal and the power to grant interim decree is a discretion vested in the Court and the plaintiff cannot claim interim decree as a matter of right. 31. This Court, on a careful consideration and appreciation of the materials placed before it is of the view that there is no clear, unambiguous, unconditional and unequivocal admission on the part of the appellant/defendant admitting its liability to the tune of Rs.22,23,504/-. Though six cheques issued for the abovesaid sum got dishonoured, the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act is a rebuttable one and it could be done only during the course of trial by letting in sufficient evidence. Though six cheques issued for the abovesaid sum got dishonoured, the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act is a rebuttable one and it could be done only during the course of trial by letting in sufficient evidence. This Court, therefore, is of the considered opinion that the reasons assigned in the impugned interim decree are unsustainable in the light of the abovesaid legal position. 32. In the result, the appeal is allowed and the judgment and interim decree dated 29th Feb., 2012, passed by learned Single Judge in Appln. No.3209 of 2011 in C.S.No.427 of 2011 are set aside. Consequently, connected miscellaneous petitions are closed. However, in the circumstances of the case, there will be no order as to costs. 33. The findings/observations made herein are only for the purpose of disposal of this appeal and it is always open to the parties to substantiate their claim/defence by letting in evidence during the course of trial.