E.I.C.M. Export Ltd. vs South India Corporation (Agencies) Ltd.

THE above named complainant-a company registered under the Companies? Act 1956 and engaged in the business of Import & Export of readymade garments has filed this complaint claiming a compensation of Rs. 39,81,351/- alleging deficiency in service on the part of the opposite party-Shipping Lines and their agent in relation to two consignments of readymade garments, which, the complainant and its sister-concern, East India Knitwear company Ltd., had handed over to the opposite party No. 1 for its safe carriage and delivery to the National West Minister Bank, New York, USA or to its order. THE invoice value of the first consignment was US $ 34,885.25 and that of the other was US$ 12,383.25.

THE undisputed facts which we may notice first are that two consignments of readymade ladies and gents garments were to be supplied by the complainant to M/s. Wings Manufacturing Corporation, New York against an export order. THE consignments duly packed in 38 packages and 37 packages respectively were entrusted to the opposite party No. 1 vide Bills of Lading both dated 20.01.1995 for carriage and delivery at New York Port. THE name of the consignee mentioned in the Bill of Lading was National West Minister Bank and the notified party as the Wings Manufacturing Corporation. THE foreign buyer to whom the goods were to be supplied had specifically asked the complainant to ensure that the goods should be delivered not later than early third week of February, 1995. However, before the consignments could be put on board, vide a fax message dated 23.01.1995, the opposite party informed the complainant that due to unfavourable weather conditions, the Vessel ?Kota Mawar? on which the consignments were to be loaded could not be berthed at the port in time and therefore it was expected that the consignments would be loaded on another vessel ?Siraj? which was expected to be berthed on 25.01.1995 and sail on 28/29.1.1995 and was expected to reach the port of destination NYK Port on 25.02.1995. It is not in dispute that the consignments in fact were carried and reached the port of destination e.g. New York Port and discharged on 25.02.1995. However, the foreign buyer i.e. Wings Manufacturing Corporation refused to take delivery of the consignments on the ground that the consignments did not reach within the stipulated period i.e. early third week of February, 1995 and therefore, he could not sell them resulting into loss of credibility of his customers. THE complainant had forwarded the relevant documents i.e. Bills of Lading, Invoices etc., to the foreign Bank through its Banker-Oriental Bank of Commerce for collection of the payment against a L.C. already established with the said foreign Bank. In June, 1995, the foreign bank returned the documents without payment on the ground that the consignee refused to make the payment and retire the documents. Faced with this situation, the complainant in his bid to salvage the situation and minimize the loss found another buyer-Kotru Direct, who agreed to take delivery of the consignment, subject to certain conditions. Having received this commitment from the second buyer, the complainant approached the opposite party for effecting change in the name of the consignee from the above named foreign bank to ?Kotru Direct?. It would appear that it was at this stage that the opposite party entertained the request of the complainant and requested its counterpart in New York to do the needful. While the said request for change of the name of the consignee was pending, the opposite party informed the complainant that one of the two consignments had in fact been delivered to the consignee on 21.3.1995 while the second consignment was still available. THE complainant believing this representation informed the second buyer ?Kotru Direct? about this position who took a serious exception to this position and accused the complainant of so many un-business likely practices and wrong information and cancelled the supply order and threatened the complainant to recover certain damages from him. THE complainant also took up the matter with the first buyer i.e. Wings Manufacturing Corporation demanding the payment of the consignment which was reportedly delivered to them on 21.3.1995. THE said buyer not only denied having taken the delivery of the consignment on that date or on any other date but also slapped the complainant with a very nasty letter threatening the complainant to cancel all subsequent business dealings with the complainant. Subsequently, however, the opposite parties corrected their mistake and vide their last communication dated 12.1.1996 finally communicated to the complainant that both the consignments under two Bills of Lading had arrived New York on 25.2.1995 and they were sent to the Government?s Bonded Warehouse on 03.7.1995 and still the delivery was not taken off. Ocean freight is yet to be settled and the cargo was attracting demurrage/storage of an estimate of over US$ 5000. On receipt of this communication, the complainant issued a letter / notice dated 22.1.1996 claiming a penalty amount of US$ 6,703.00 equivalent to Rs. 2,09,602.81 or to furnish Bank Guarantee for payment of the said amount and also asked the opposite party as to how they proposed to compensate the complainant for the cost of the uncleared goods and loss incurred by the complainant. Having no response, the complainant has filed the present complaint. The complaint has been resisted by the opposite parties raising preliminary objections that the complaint was barred by time, inasmuch as the Bill of Lading was issued by the opposite party on 20.01.1995 and the goods were discharged at the Port of New York on 25.02.1995 and therefore the complaint filed as on 19.11.1997 was barred by limitation e.g. having been filed after a period of two years (prescribed) under Section 24 (A) of the Consumer Protection Act, 1986. It was also sought to be barred in view of the stipulations contained in Clause 26 of the Bills of Lading. It was pleaded that the opposite party had not assured the complainant about the delivery within any specific timeframe and in any case, the tentative timeframe of 25.02.1995 was strictly adhered to. It is denied that the opposite party has committed any deficiency in service either in carriage or delivery of the consignments. It is alleged that it was on account of the complainant?s own fault that its first foreign buyer refused to take delivery of the consignment and so the goods were shifted to bonded warehouse, which by no means can amount to deficiency in service on the part of the opposite party making them liable to pay any amount much less the amount claimed in the complaint. A plea was also raised that the opposite party No. 1 was only an agent of NY Line at the relevant time and since 1998 a NYK Tata is the agent of NY Line in India, who alone is responsible to answer the claim.

In the rejoinder, the complainant has controverted the objections raised by the opposite parties in their written version and has generally reiterated the averments and allegations made in the complaint.

THIS complaint was earlier decided by this Commission vide order dated 06.02.2003. The complaint was dismissed primarily on the ground that it was barred by limitation having regard to the provisions of Para 6 of Article 3 of the Schedule to the Indian Carriage of Goods by Sea Act, 1926 and also relying upon the Hon?ble Supreme Court?s decision in the case of NarandasMathuradas Narielwala Vs. Bharat Line Ltd., AIR 1960 SC 1058 by observing as under: "Clause 3 of paragraph 6 of Art. III in the Schedule to the Act provides for the extinction of the right to compensation and not merely a rule of limitation. In view of the international charger of the rules, court should be slow to put on the word "discharged from liability" an interpretation which would produce result varying in different countries and thus keeping the position uncertain for both the shipper and the ship owner. Quite apart from this consideration, however, the ordinary grammatical sense of "discharged from liability" does not connote "free from the remedy as regards liability" but are more apt to mean a total extinction of the liability following upon an extinction of the right. Once the liability is extinguished under this clause, there is no scope of any acknowledgment of liability thereafter."

The Hon?ble Supreme Court in the same judgment further dealt with the expression "date when the goods should have been delivered". For that, in the present case, there is no controversy because the expected date of arrival of goods according to the complainant was second week of February, 1995 and the date of off-loading of the goods is admittedly 25th February, 1995. Even assuming that some part of the cause of action survived until 12th January, 1996 and the limitation could be reckoned from that, then also all the rights of the complainant stood extinguish on 11.01.1997, whereas the present complaint was filed on 02.11.1997. The above view was reiterated by the Apex Court again in the case of American Export Isbrandtsen Lines Inc. Vs. Joe Lopez AIR 1972 SC 1405. The Carriage of Goods by Sea Act is a special legislation which will prevail and that the limitation prescribed under Section 24-A is not to be resorted to being a general law. Otherwise also the limitation should be reckoned under Section 24-A from 25th February, 1995 for two years? period had elapsed on 24th February, 1997. But, in view of the position of law set out above we have to consider limitation under Carriage of Goods by Sea Act. In the circumstances, we find that the claim of the complainant is barred by limitation. The original petition is, therefore, dismissed as barred by limitation." Aggrieved by the said order of this Commission, the complainant filed Civil Appeal No. 4290 of 2003 before the Hon?ble Supreme Court which was finally decided by the Supreme Court vide an order dated 21.07.2009. The Supreme Court on consideration of the provisions of Consumer Protection Act, 1986, in particular Section 24 of the said Act and that of Clause 6, Article 3 of the Schedule to Indian Carriage of Goods by Sea Act, 1926, took the view that since a complaint filed before the Consumer Fora is not a suit within the meaning of Civil Procedure Code, so the said article providing a limitation of one year for filing the suit in respect of any cause of action for mis-delivery/non-delivery of goods by sea carrier, was not applicable and it were the provision of Section 24-A, which provide a limitation of two years, which would govern the complaint filed before a Consumer Fora under the provisions of Consumer Protection Act,1986 by observing as under: "8. On a plain reading of the aforesaid provision, it is clear that the aforesaid provision will be applicable in the cases where a suit is filed. In the present case, the appellant did not file any suit but filed a complaint before the Consumer Forum. 9. The word "suit" has a technical meaning which denotes proceedings instituted under Section 9 of the Civil Procedure Code, 1908. All legal proceedings in the country are not suits. There are petitions/complaints/applications before various Tribunals or authorities but they are not suits as per Section 9 of the CPC. In our opinion, a complaint before Consumer Forum is not a suit, and hence, the Indian Carriage of Goods by Sea Act, 1926 is not applicable to the facts of the present case and the Consumer Protection Act, 1986 will only be applicable.

Learned counsel for the respondent contended that assuming that the Consumer Protection Act will be applicable to the facts of the case, even then the complaint is barred by limitation. 11. Section 24-A of the Consumer Protection Act reads as under:- "Section 24-A ? Limitation period ? (1) The District Forum, the State Commission or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen. (2) Notwithstanding anything contained in sub-section (1), a complaint may be entertained after the period specified in sub-section (1), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that he had sufficient cause for not filing the complaint within such period: Provided that no such complaint shall be entertained unless the National Commission, the State Commission or the District Forum, as the case may be, records its reasons for condoning such delay."

Sub-section (2) of Section 24-A, quoted above, clearly mentions that a complaint can be entertained by the District Forum, the State Commission or the National Commission, as the case may be,even after the prescribed period of two years if the complainant satisfies that he had sufficient cause for not filing the complaint within such period."

UNDER the above circumstances, the complaint was remitted to this Commission for deciding the complaint afresh in accordance with law. By applying Section 24-A, it would appear that after the remand of the matter to this Commission, the complainant moved a Miscellaneous application No. 1514 of 2009 seeking condonation of delay, if any. The said application was decided by this Commission vide an order dated 12th March, 2010. The Commission held the view that the complaint was filed within the stipulated period of two years. In any case, if there was any delay, it was condoned by observing as under: "Opposing the application, the submission advanced by Shri Nakul Mohta for the Opposite Parties was that- for the alleged delay/non-delivery of consignment, the cause of action to file complaint had arisen in second week/early third week of February, 1995 and the complaint filed on 21.11.1997 was barred by time. Further submission advanced was that the cause of action for instituting complaint on ground of furnishing wrong information by the letter dated 11.7.1995 had accrued on receipt of this letter by the complainant and the complaint filed on the said date too was barred by time. Application also does not disclose sufficient cause to condone the delay in question. Submission is, however, without any merit. Averments made in the complaint are to be read in its entity. Allegations of delay/non-delivery of consignment and giving wrong information vide letter dated 11.7.1995 cannot be read in isolation of the other averments made in the complaint. The cause of action lastly arose to the complainant on receiving the opposite party?s letter dated 12.1.1996 and complaint filed on 21.11.1997 is, thus, within limitation period of two years. Even if there is any delay, in the facts and circumstances of case, it deserves to be condoned and is hereby condoned. Application stands disposed of accordingly."

In support of their respective pleas, the parties have filed supporting affidavits. From the side of the complainant, affidavit of Mr. Arvind Kumar Lohia has been filed. Affidavit of Mr. N. Vijay Kumar, working as Sr. Manager-Documentation of the respondent, NYK Line (India) Ltd., has been filed on behalf of the opposite parties. Besides, the parties have largely relied upon the documents like invoices, bills of lading, correspondence exchanged between the parties also. We have heard Mr. Sukumar Pattjoshi, learned counsel representing the complainant and Mr. Nakul Mohta, learned counsel for the opposite parties and have considered their respective submissions. In view of the above noted factual position, the question which falls for our consideration is as to whether the opposite party has committed any deficiency in service as alleged by the complainant. In the case in hand, it is not in dispute that the consignments entrusted to the opposite parties through the bills of lading dated 20.1.1995 were duly carried to the Port of destination and reached there on 25.2.1995. In this way, the opposite party cannot be accused either for any delay in delivery or mis-delivery going by the voyage from Madras to New York. In any case, the opposite party had not assured the complainant of the delivery of the consignments by any fixed date and it had given the approximate schedule of arrival of the consignments at the NYK Port as 25.2.1995, which was in fact adhered to by the opposite party. According to the opposite party, once the consignment was discharged at the port of destination at New York, their obligation under the contract of carriage came to an end because after that it was, for the notified party to have taken the delivery of the consignments as per their convenience after complying with the instructions in the bill of lading. It not disputed that the foreign notified party i.e. Wings Manufacturing Corporation, New York refused to take delivery of the consignments on the premise that the consignment had not reached the NY by the early third week of February, 1995. It is also not disputed that the consignment, therefore, remained undelivered and the documents sent by the complainant to the foreign bank through its negotiating bank were returned back unpaid on 08.6.1995. The complainant could not possibly and has not alleged any deficiency in service on the part of the opposite party least for the refusal of the consignee to take the delivery of the consignment on the alleged ground.

LEARNED counsel for the complainant submitted that the complainant with a view to salvage the situation found out a second buyer-M/s. Kotru Direct, who placed a firm order on the complainant to purchase the said consignment. In view of this position the complainant made frantic efforts to find out the status of the consignment and requested the opposite party to effect the necessary change in the name of the consignee from the foreign bank to Kotru Direct by submitting the original documents i.e. the Bill of Lading etc., for taking necessary action. It is not in dispute that the opposite party took up the matter with the relevant quarters and it was at this stage that wrong information was passed on to the complainant that the one consignment was delivered to the first consignee on 21st March, 1995. The complainant then took up the matter with their previous buyer for not making the payment received for the goods received and to the subsequent buyer expressing their inability to supply the entire consignment. The question for consideration is as to whether this misleading information given by the opposite party due to which the complainant has to face the wrath both of the previous buyer and losing the second buyer can amount to deficiency in service on the part of the opposite party-Shipping Company.

FROM a perusal of the material brought on record, more particularly, the certificate dated 29.06.1995 the telefax messages dated 3rd July, 8th July, and 11th July, 1995 issued by the opposite party to their counterpart in NY, it cannot be denied that the opposite party had undertaken to change the name of the consignee and in that process that the opposite party has wrongly informed that the one consignment was custom cleared and the original bill of lading was surrendered and consignee took delivery of the cargo on 21st March, 1995. With this position,Mr. Pattjoshi submits that but for this misleading information he would not have suffered the loss and injury which he did. On the contrary, Mr. Mohta submits that the information given by the opposite party was of no consequence and has not resulted into any loss or injury because the complainant was well aware of the correct factual position that both the consignments had not been taken delivery of and were available for delivery and therefore, they cannot make out a grievance in that behalf. He additionally submits that the opposite party was under no obligation to change the name of the consignee or to give any information about the status of the consignment once the consignment had been carried to the destination and had been discharged at the port of destination as far back as on 25.2.1995. According to him, the contract of carriage and delivery had come to an end on 25.2.1995. He submits that the information given by the opposite party and the willingness of the opposite party to help the complainant to change the name of the consignee in the bills of lading should not be taken as service rendered or as a part of their obligation under the contract. In support of his contention Mr. Mohta has placed reliance upon two decisions of the Hon?ble Supreme Court. One in the case of National Insurance Co. Ltd., Vs. Bhogara Polyfab Private Ltd., (2009) 1 Supreme Court Cases 267 and other in the case of Saddler Shoes Pvt. Ltd. Vs. Air India & Others (2001) 8 Supreme Court Cases 390 besides placing reliance upon a decision of this Commission in the case of ShakumbhriExports Vs. Leif Heegh & Co. & Ors. (2004) CPJ 28 NC referred on relying upon the Supreme Court case?? In the first case i.e. National Insurance Co. Ltd., Vs. Bhogara Polyfab Private Ltd., (Supra), the Hon?ble Supreme Court has held as under: "When a contract has been fully performed, there is a discharge of the contract by performance, and the contract comes to an end. In regard to such a discharged contract, nothing remains ? neither any right to seek performance nor any obligation to perform. In short, there cannot be any dispute. Consequently, there cannot obviously be reference to arbitration of any dispute arising from a discharged contract. Whether the contract has been discharged by performance or not is a mixed question of fact and law, and if there is a dispute in regard to that question, that is arbitrable. Where both parties to a contract confirm in writing that the contract has been fully and finally discharged by performance of all obligations and there are no outstanding claims or disputes, courts will not refer any subsequent claim or dispute to arbitration. Similarly, where one of the parties to the contract issues a full and final discharge voucher (or no-dues certificate, as the case may be) confirming that he has received the payment in full and final satisfaction of all claims, and he has no outstanding claim, that amounts to discharge of the contract by acceptance of performance and the party issuing the discharge voucher/certificate cannot thereafter make any fresh claim or revive any settled claim nor can it seek reference to arbitration in respect of any claim. This is subject to the qualification that the agreement or discharge voucher in question must be validly and voluntarily executed. If the party which has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practiced by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any dispute raised by such party would be arbitrable. [The position would be the same if a civil court were to be faced with such a situation and the dispute would be subject to its adjudication.]"

Mr. Pattjoshi, learned counsel for the complainant contended that the said decisions cannot be applied to the facts of the present case which are different than in the cited cases. It is submitted that despite the fact that the consignment had reached the port of destination at NY Port on 25.02.1995 still it was the obligation of the opposite party/shipping line to have delivered the consignment to the consignee or to the order of the consignor/complainant. Going by the stipulation in the bills of lading, it cannot be denied that the obligation of the opposite parties was not simply to carry the consignment to the port of destination but also to deliver the consignments to the named consignee or to the order of the consignor. However, this obligation would extend and last only for some reasonable period after the consignment had reached the port of destination and could not continue till eternity. As the delivery of the consignment was admittedly not effected by the consignee uptil end of June i.e. for a period of four months after the discharge of the consignment at NYK Port, the opposite party would be deemed to have been discharged of its obligations under the contract of carriage, which was entered between the parties. However, since the matter did not rest there and on a request made by the complainant to change the name of the consignee, the opposite party had readily agreed to help the complainant, may not be as a part of their obligation under the contract but by way of courtesy and while doing so, they misled the complainant about the factual position and provided wrong information to the complainant about one consignment having already been custom-cleared and delivery taken of by the consignee as far back as on 21st March, 1995. Believing the same, the complainant not only wrote a harsh letter to the first foreign buyer complaining that he has not paid for the consignment which was taken delivery of but also suffered a wrath of the second buyer who held the complainant guilty of making wrong representations about the goods of both the consignments being available for sale to the second buyer. In fact, the second buyer slapped a claim of 5000 US $ on the complainant for making the incorrect representations in regard to the availability of the goods of both the consignments which the second buyer agreed to purchase. In this way the complainant had not only lost the important buyer but had a severe dent to its goodwill and reputation as an exporter in the foreign market. In our opinion this act of the opposite party clearly amount to deficiency in service.

HAVING held that the opposite parties cannot be held guilty of any deficiency in service so far as the timely carriage of the consignments is concerned and that the delivery of the consignment was not effected due to the complainant?s own reasons and that the only deficiency committed by the opposite party was in regard to furnishing wrong information to the complainant, the ultimate question which claims to consider is as to whether the complainant has suffered any loss or injury on account of the said deficiency in service and if so, what compensation we should award to the complainant. Learned counsel for the opposite parties has empathetically argued that the complainant has not suffered any loss or injury on account of the alleged deficiency in service. As per the complainant?s own showing he had not paid any amount to the second buyer/Kotru Direct although the said buyer had claimed 6,703 US$ from the complainant. It is not the case of the complainant that the complainant in fact paid a sum of 6,703 US$ equivalent to Rs. 2,39,967/- or any other amount to the said buyer as damages. Therefore, we treat that the claim made by Kotru Direct was nothing but a threat to recover some damages but he did not file any claim against the complainant nor the complainant paid any amount to him. In that sense it can be said that the complainant has not suffered any further monetary loss besides the loss towards the price of the goods on account of the buyer not taking the delivery of the consignment. However, we cannot loose sight of the glaring position in this case that the complainant was an exporter of readymade apparels and due to the representation based on the information supplied by the opposite parties, made by him to Kotru Direct the goodwill and reputation of the complainant must have received a severe dent amongst the foreign buyers. The complainant has claimed a sum of Rs. 10.00 lacs on account of loss of foreign buyer, mental agony and harassment, goodwill etc. No basis of this high claim is explained in the complaint or by means of any cogent evidence. However, having found that the goodwill and reputation of the complainant must have been affected adversely due to the above deficiency on the part of the opposite parties, we are of the view that it would adequately meet the ends of justice, if we award a lump sum compensation of Rs. 2,00,000/- (Rupees two lacs) to the complainant in that behalf.

IN the result the complaint is partly allowed and the opposite parties are jointly and severally directed to pay a sum of Rs. 2,00,000 (Rupees two lacs) to the complainant within a period of six weeks, failing which the amount shall carry interest @ 9% per annum with effect from the date of default in payment. IN the peculiar facts and circumstances of the case, the parties are left to bear their respective costs.