GIRISH CHANDER vs AMERICAN CONSOLIDATION SERVICES LTD.

THIS complaint has been filed to seek compensation amounting Rs. 29,17,844.70 ps. for negligently delivering the consignment to wrong person on various counts.

THE complainant is a sole proprietor of M/s. Gallant Exports engaged in the business of manufacturing and exporting ready made garments. On 13.12.1994, the complainant entrusted to opposite party 220 cartons containing "short sleeve men''s knit shorts" for carriage from Bombay to Norkfolk, VA USA vide cargo receipts bearing Nos. 34116, 34117 and 34118 dated 13/20.12.1994 through the opposite party American Consolidation Services Ltd. (ACS for short). THEse cargo receipts are virtually acknowledgement of receipt of cargo to be consigned "for and on behalf of the consignee". THE consignee declared in the said cargo receipts was to the order of the Central Fidelity Bank", Richmond, V.A. and the Notified Party was "Zip Code Inc., Portsmouth, V.A. USA. When the consignment did not reach the destination, the complainant addressed notices and letters dated 2.3.1995 and 7.3.1995 to the opposite party to enquire about the status of the shipment. It was not responded to. On 11.4.1995, notice was sent. It was replied by the Counsel for the opposite party stating therein that they had handed over the consignments to the Carrier M/s. Hoegh Lines who had in turn delivered the cargo, consignment to the Coronet Inc. Group. THE opposite party was duty bound to deliver the goods only under the orders of the consignee Bank or under its orders to protect the interest of the complainant. THE opposite party and its employees and agents had acted in gross negligence. This amounted to deficiency in service. THE complainant has lost the consignment, its value and had been made to incur various expenses. Since the respondent denied the claim, the complainant filed complaint accordingly alleging deficiency in service for not delivering the goods in terms of the contract. Complainant seeks compensation of Rs. 15,27,461.76 (equivalent to $ 49,272.96 @ Rs. 31/- per dollar). Rs. 10,00,000/- as damages, Rs. 2,65,383.50 ps. as interest @ 21% on above sums. Rs. 50,000/- as legal expenses along with Rs. 75,000/- for loss of time for pursuing the claim. The opposite party contested the claim of the complainant, inter alia on the ground that the questions raised in the complaint were highly complex and disputed questions of fact. Therefore, at the best it would be proper to leave the matter for determination by a Civil Court. The opposite party is only an agent of the consignee, the buyer of the complainant as such there was no contractual relationship with the complainant. The goods were received on behalf of the consignee. No payment was made by the complainant to the opposite party. There was an agency agreement between the opposite party and the consignee viz. Coronet Group Inc., the affiliate of Zip Code Inc. The complaint was barred against them by the statutory provision of 230 of the Contract Act. The claim is based on cargo receipts indicating consignee by the order of Central Fidelity Bank in the cargo receipts. Subsequently, the name of the consignee was changed in the bill of lading dated 19.12.1994 from Central Fidelity Bank to Coronet Casuals Inc. The cargo receipt itself indicated that the bill was prepared at the instruction of Coronet Casuals Inc. The terms and conditions of the cargo receipt made it clear that the opposite party was to employ the Carrier as per instructions of the Cargo owners. This term not only included the shipper but also the consginee and any other person having interest in the goods also. Since bill of lading was executed prior to the cargo receipt Coronet Group was a party having interest in the goods. The letter of credit indicated that the two shipments were to be shipped on 13.12.1994 and 20.12.1994. The bill of lading indicated that the consignment was shipped on 13.12.1994. That bill of lading as well as cargo receipts were prepared after the shipment of the consignment when the complainant handed over the goods to the opposite party the agent of the buyer-Coronet Group Inc. The complainant was entitled to negotiate the letter of credit and receive payment as Central Fidelity Bank as was shown in the cargo receipt. The letter of credit indicated that it expired on 21.12.1994 for the last date of shipment was 30.11.1994 and the letter of credit was not got extended and the consignments were delivered to the complainant''s foreign buyer i.e. the Coronet Casuals Inc. The opposite party had the minor role of consolidating the various consignments on behalf of the buyer of the complainant i.e. Coronet Group Inc. The goods were handed over and delivered to the carrier Hoegh Shipping Line. It also involved the liability of the two Banks. The case could not be decided without bringing the aforesaid parties on record they being the necessary and proper parties. The buyer i.e. Coronet Casuals Inc. as well as both the issuing and advising Banks should have been made parties of the proceedings. The present case was not based on any kind of deficiency in service on the part of opposite party.

We have head the learned Counsel for the parties. There is no denial rather, there is admission of the fact in Para 12 that the opposite party received the goods on behalf of the consignee named in the cargo receipt ''for and on behalf of the consignee named in the cargo receipt (to the order of the Central Fidelity Bank). In response to letter of Mr. H.L. Tiku and Associates dated 4th April, 1995, Counsel of the complainant, the opposite party has stated in reply to the notice dated 24.1.1995 (should be 24th April, 1995) in Paras 2 and 3 at P. 23 as under : "The carriers of the goods in question are M/s. Hoegh Lines who have issued the relevant bills of lading covering the goods. My clients are only cargo consolidators and forwarders Central Fidelity Bank Richmond V.A. was named as the consignee in the cargo receipts on the express instructions of your clients themselves and their foreign buyer with reference to Paragraph 2, the documents, commercial invoice, packing and weight list, the single country declaration and the textile visa were despatched with the original bills of lading to the parties at the port of discharge at the time of shipment as instructed by the consignee. This is also stipulated in the cargo receipts. With reference to Paragraph 3 my clients deny that the consignments had not reached the inquiries with my clients to know the fate of the consignments. Your clients letter dated March 7, 1995 was a repetition of the contents of your clients earlier letter dated March 2, 1995. On receipt of your clients letter dated March 2, 1995 your clients were informed by my clients that the consignment was taken delivery of by your clients foreign buyer on surrendering the original bills of lading duly discharged to the carriers. Your clients, however, addressed their letter dated 7th March, 1995 purporting to repeat the contents of the earlier letter dated March, 2, 1995. My clients, thereafter, on receipt of your clients letter dated March 7, 1995 by their letter dated 9th March, 1995 faxed to your clients Babusha International P.W. Enterprises and Gallant Exports informed your clients that as per the carrier Hoegh Lines/American President Lines the cargo had been delivered. It is, therefore, false to the knowledge of your clients to allege that the status of the shipment was not made known to your clients and/or that my clients failed to respond".

THERE is no dispute about issuing of the cargo receipt Exhibits 1, 2 and 3, by the opposite party. These cargo receipts indicated that the consignments were to be delivered to order of Central Fidelity Bank and the Notified Party/intermediate consignee was Zip Code Inc., 2615, Elmhurst Lane, Portsmouth, VA 23701, USA and the receipts were dated 13.12.1994. It is not the case of the opposite party that the goods were delivered to Zip Code Inc. Again, it is not the case of the opposite party that the goods were delivered in accordance with the directions issued by the Central Fidelity Bank, V.A. The case which has been set up by the opposite party is totally different. According to them, the goods were delivered to Coronet Group Inc. The case of the opposite party is that the bill of lading was issued by shipper in the name of the buyer Coronet Group Inc. but they never obtained delivery of the goods at the port of delivery. But, the sequence of event as submitted by the opposite party demolish their case. If the cargo receipts dated 13/20.12.1994, undisputedly indicated that consignment was sent as per instructions of Coronet Group Inc. it would only mean that the Coronet Group Inc. at the most instructed the complaint on behalf of Zip Code Inc. to send the goods to Zip Code Inc. It would not make them consignee without the instruction of the Bank and that too without making payment.

HOWEVER, it is worthwhile to consider the terms and conditions of the cargo receipt. The relevant terms and conditions are as under : "(i) The receipt, custody, consolidation and forwarding of the goods are governed by the provisions of this bailment agreement and the provisions of any 8 applicable ACS tariff covering the performance of consolidation services by ACS. ACS tariffs are readily available for review and inspection at all, ACS offices and locations where cargo is received for consolidation upon reasonable notice and during normal business hours. ACS undertakes to receive the goods on behalf of the consginee hold the same as an agent and deliver or forward them to carriers or transporters in accordance with the instructions of the consignee or other cargo owners for subsequent transportation by water or air carriers and for distribution; and ultimate delivery to the consignee. If at any time the method and/or route of forwarding selected by the consignee shall become impossible to perform for any reason, ACS may use any other method available that their discretion and all charges and/or expenses incurred in using such method shall be for the consignee''s account. ACS shall so far as reasonably possible cause the goods to be consolidated with the goods of others in order to secure the transportation benefits and economics contemplated by the instructions of the consignee or other cargo owners. ACS shall be at liberty to employ agents, sub-contractors or third parties on such terms and conditions as it shall in its discretion think appropriate.

(ii) In receiving the goods and pending the consolidation services covered by this agreement, ACS is acting as agent only for the consignee named on the face hereof and not as a carrier, transporters or distributor of the goods. From and after the delivery by ACS to a carrier in accordance with the instructions of the consignee or other cargo owners, the consignee or the cargo owners agree that the sole responsibility and liability for the care, custody, carriage and delivery of the goods shall be that of the said carrier and not that of ACS. ACS is hereby authorised to, and ACS undertakes only to, forwarding goods and otherwise arrange for the shipment and transportation of the goods by water or air carrier as the agent of the consignee or other cargo owners. The consignee or other 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.

(iii) The responsibility and liability of ACS shall be limited to that period of time in which ACS, its employees, agents or sub-contractors have exclusive custody of the goods. To secure a due proportion between the charges it earns and the amount for which it may be responsible in the event of loss or damage of the goods. ACS has established its regular lower rates and charges for goods limited in value as hereinafter agreed. The cargo owners may, however, elect to pay an additional ad valorem charge of 6% by declaring the true value of the goods at or before the time of receipt by ACS in which case the liability of ACS for loss or damage to the goods or for delay shall be the true value of the goods, unless the cargo owners so declare the value of the goods and pay the ad valorem charge, the cargo owners are deemed to have elected the regular, lowest charge of ACS for and agree that for the purpose of computing any liability by ACS for loss of or damage to the goods or for any delay, the value of the goods shall be the lesser of (i) their true value, or (ii) US Dollar 500 per package, or in the case of goods not shipped in packages, US Dollar 500 per customary freight until or in the event of garments on hangers US Dollar 35 per piece. For the purpose of the foregoing, the term "true value" shall mean the CIF (FOB plus proportionate insurance and freight) value of the goods as verified by appropriate documentation.

(iv) The shipper warrants, (i) that the goods are properly marked and suitably packed for normal handling; (ii) that the weight and description of packages and cargo until furnished by the shipper are correct; (iii) that the nature and amount of any hazardous or dangerous cargo has been packaged and/or labelled in accordance with IMCO regulations and identified as such in accordance with such Regulations to ACS; at or before the time of receipt by ACS and (iv) that the goods do not require insulated refrigerated ventilated or other special storage or handling not disclosed to ACS at or before the time of receipt of the goods. The shipper and the owners of the goods shall defend, indemnify and hold harmless ACS in respect of any injury or death of any person, or damage to cargo or any other property, or any expense including legal fees caused by breach of any of the foregoing warranties. The shipper hereby acknowledges that ACS acts solely as agent on behalf of the consignee and shall be under no liability whatsoever in respect of any failure by the consignee or any other party to do any act or pay any amounts due in respect of the cargo received hereunder including but not limited the purchase price of such cargo freight, storage charges, insurance premium lighterage changes demurrage, salvage charges or general average contributions."

(Emphasis supplied) The cargo receipt was dated 13/20.12.1994. As regards the terms and conditions of the cargo receipt we have reproduced the terms and conditions and the responsibility undertaken by the opposite party American Consolidation Services Ltd. The aforesaid terms indicated that on issuance of the cargo receipt in terms of conditions thereof, particularly, the underlined portion of the above said terms and conditions there would be an independent liability of the ACS as well from the date of the receipt of the cargo till shipment. ACS undertook and accepted a limited responsibility and liability in respect of the "period of time in which ACS, its employee and sub-contractors have exclusive custody of the goods." Though it is pleaded by the opposite party ACS that they had delivered the goods to M/s. Hoegh Shipping Lines but the opposite party had failed to prove this fact for the bill of lading did not relate to the cargo shown in the cargo receipt. There is a vast difference between the quantities mentioned in the cargo receipt and the bill of lading relied upon by the opposite party. Three cargo receipts indicated in all 220 cartons. Vide Exhibits 1 and 2, 100 cartons and vide Exhibit 3, 20 cartons were delivered to the opposite party. According to the Exhibit 1, the Cargo Receipt 98 cartons of short sleeve mens knit shirts 100 percent cotton invoice No. GE/01/94-95 dated 23.11.1994, Style No. 15566/15569 total number of pieces 4800. Similarly, there were 100 cartons Invoice No. GE/02/94-95 dated 23.11.1994, Style No. 15571/15566 totalling 4800 pcs. But vide Exhibit 3 contains only 20 cartons of Short Sleeve Men''s knit shirts 100% cotton vide invoice No. GE/03/94-95 dated 23.11.1994. Style No. 15566 and it contains total 960 pieces. Though, the opposite party referred to bill of lading but the bill of lading has not been filed along with affidavit(s) nor the bill of lading has been referred to in the affidavit(s) by exhibiting the same. It would not be possible to accept that the bill of lading relating to 320 pkgs. could relate to these three consignments of three cargo receipts. This bill of lading does not indicate that the complainant was the consignor. Rather, it would indicate that the Coronet Group Inc. was the consignor. Opposite Party had not been able to prove that the consignment under the cargo receipts dated 13/20.12.1994 in question were handed over for shipment through the unproved bill of ladig referred to by the learned Counsel for the opposite party. Since the consignments were in the custody of the opposite party it was within the special knowledge of the opposite party and it was for them to prove that they had handed over the consignment of these cargo receipts for shipment. In absence of any such proof, they would continue to be liable as per terms of the cargo receipts. Learned Counsel for the opposite party submitted that the opposite party being agent only could not be sued in terms of Section 230 of the Contract Act and he relied upon the contract as well as judgment in Midland Overseas v. M.V. "CMBT Tana" & Ors., AIR 1999 Bombay 401. But we feel that in this case the opposite party had entered into a contract whereunder the opposite party undertook to be independently liable so long the goods were not shipped and remained in their exclusive custody. In view of totally independent contract with the respondent/opposite party in respect of period of exclusive custody of the consignments we think that Section 230 of the Contract Act is not attracted in the present case.

IN this regard since in absence of any proof of delivery of the consignment in terms of conditions of the agreement contained in the cargo receipt for shipment by the opposite party neither question of agent nor the question of impleadment of any other party like shipping line etc. would arise. Since Coronet Group INc. were neither the consignor nor the consignee they could not be said to be proper and necessary party for the purpose of deciding the accountability of the opposite party for the consignment after receiving the goods under the three cargo receipts before shipment.

THE proposition of law propounded in the judgment in Aliji Momonji & Company v. Lalji Mavji & Ors., (1996) 5 SCC 379 would also be of no help to the opposite party in view of the independent contract as mentioned hereinabove or one hand and no relief is being sought against others on the other hand and still further their interest is not being adversely affected in any manner. As regards the next objection relating to the complicated question of law and the submission that the matter should be left to be decided by the Civil Court in view of the judgment in Dr. J.J. Merchant and Ors. v. Shrinath Chaturvedi, III (2002) CPJ 8 (SC)=IV (2002) SLT 714=JT 2002 (6) SC 1, we think it would neither be proper nor desirable to do so. The judgment relied upon by the learned Counsel in the case decided by this Commission reported in M/s. Special Machines, Karnal v. Punjab National Bank & Ors., I (1991) CPJ 78 (NC), would also not be of any help for two reasons-firstly, in view of the judgment of Dr. J.J. Merchant & Ors. (supra), the view taken by this Commission in the aforesaid would not prevail. Secondly, in that matter the civil suit was already pending before the learned Sr. Sub-Judge, Karnal. It is not so in this matter. Accordingly we reject this contention.

Now coming to the question of amount of compensation according to the complainant, the complainant is entitled to get from the opposite party, the price of the consigned goods. As per the invoices referred to in cargo receipts it was US $ 49272.96 @ Rs. 31/- per dollar i.e. Rs. 15,27,461.76 ps. The price of the consigned goods as per invoices referred to in the Cargo Receipts the value has not been controverted by the opposite party by any cogent evidence. Simple denial is of no help to the opposite party. Consequently, in view of the affidavit of the complainant the value of the goods consigned is to be taken at Rs. 15,27,461.76 ps. The complainant is obviously entitled to get this amount.

THE complainant also claimed a sum of rupees 10.00 lakhs for the loss of damages, simple interest @ 21% on the aforesaid amount. Legal expenses amounting to Rs. 50,000/- and compensation for loss of time and energy in pursuing the claim amounting to Rs. 75,000/-. Insofar as damage, simple interest and compensation on other count, we are not inclined to consider them separately for the interest would cover all these three aspects as well. We feel it proper in the above mentioned circumstances to award interest @ 18% p.a., the rate of interest prevalent on business transaction those days on the sum of Rs. 15,27,461.76 ps. on the above amount from the date of the complaint till payment. THE complainant shall also be entitled to costs which is assessed at Rs. 10,000/-. THE complaint is accepted and compensation is awarded accordingly. Complaint allowed.