Manibhardra Electromech Engineers Pvt. Ltd. vs Fluxtile Company Limited and Others

S. Ravindra Bhat, J.

I.A. Nos. 4974/2007 (Under Order 39 Rule 1 & 2), 6562/2007 (Under Order 39 Rule 1 & 2), 6563/2007 (Under Section 151 CPC), 7376/2007 (Under Order 39 Rule 1 & 2), 9161/2007 (Under Section 151 CPC - for destuffing of container), 9162/2007 (Under Section 151 CPC - for appropriate directions), 9742/2007 (Under Section 151 CPC) and 8944/2008 (Under Order 39 Rule 4)

Heard counsel for the parties. This order will dispose of all the applications. The undisputed facts emerging from the pleadings and materials on record are that the plaintiff entered into a contract for purchase of 82,500 Compact Fluorescent Lamp (CFL) units. In terms of the contract, the first defendant dispatched the goods, through the third defendant carrier, and loaded the goods on to the vessel on 08.03.2007. The Bill of Lading (BOL) was issued on 10.02.2007. The plaintiff was concededly named as the consignee; the first defendant/supplier was the consignor. For some reasons, the original Bill of Lading was retained by the consignor/Defendant No. 1. The vessel arrived at the port on 28.02.2007.

It is also not disputed that the purchaser had paid the consideration agreed upon for the goods, i.e. US$ 37,145/-, before their date of dispatch, i.e. 08.02.2007. The plaintiff''s grievance is that despite these conceded or agreed facts, the goods have not been released, and on the contrary, the first defendant buyer proceeded to transfer them, handing-over the Bill of Lading to the newly added fifth defendant. In these circumstances, the plaintiff seeks custody of the goods from the carrier (Defendant No. 3).

This Court had on 01.05.2007 made an ex-parte order restraining the defendants from releasing the consignments lying in Defendant No. 3''s container at the Tughlakabad Dry Port to any party except the plaintiff. A statement on behalf of the plaintiff in the event of contingent liability and responsibility to pay damages or other charges was also recorded by the Court.

The first defendant and third defendant have entered appearance and filed their written statements. The first defendant/buyer also applied for rejection of the suit; the application was dismissed by the order dated 12.01.2009. According to the supplier (first defendant), the plaintiff evinced a desire to resile from the transaction sometime in March 2007. It is submitted that on these grounds and in view of the plaintiff''s uncertain stand as to whether it would pick-up the goods, the supplier deemed it appropriate to sell it to the fifth defendant. The supplier significantly does not deny having received the entire amounts well before the date of shipment, i.e. 08.02.2007. It places reliance on certain correspondence, copies of which were placed on record on 05.07.2007 in the form of e-mails dated 20.03.2007 and 19.05.2007. Broadly, the contents of these communications are that the plaintiff requested the defendants not to divert the consignments earmarked to it (the plaintiff). It also mentioned about a settlement in respect of past transactions wherein the goods had been rejected. The Defendant No. 1 submits that due to the prevalent uncertainty, the goods were sold to the fifth defendant on 26.03.2007 and the original Bill of Lading handed-over to the said Defendant No. 5.

The fifth defendant also echoes the position of the first defendant; in addition, it relies upon copy of the invoice issued by the first defendant, in terms of which the consideration for the goods was Rs. 43,37,145/-. The third defendant''s position in its written statement is that it was bound in terms of the Customs regulations, to release goods to the holder of Bill of Lading, provided he was in a position to furnish other documentary evidence specifically, a No Objection from the original consignee, which, in this case, was the plaintiff. It is submitted that this stipulation could not be satisfied by the plaintiff, which resulted in the detention of the goods. The Customs authorities, who were impleaded as Defendant No. 4 have not filed any written statement so far.

It is unclear as to whether any charges that they may have imposed or which may be recoverable on account of goods being kept in bonded warehouse.

This Court, by its order dated 20.03.2008, stated as follows:

The plaintiff has filed this suit seeking a declaration that it is the owner of the consignment/cargo covered by Bill of Lading No. PUSTKD07000029 and Container No. 40 HC PCIU9935967 lying at Tughalakabad Dry Port, New Delhi.

Mr. Khanna, the learned senior counsel appearing on behalf of the consignor/Defendant No. 1 has objected to the release of the consignment in favour of the plaintiff being the consignee on the ground that since the consignment does not bear the ISI standard, the said consignment cannot be released in India. Strangely enough, the Court has been informed that Defendant No. 1 being the consignor has already delivered the original Bill of Lading to a third party M/s. Mohit Impex who has filed an application for its impleadment under Order 1 Rule 10 CPC. Mr. Trideep appearing on behalf of Defendant No. 3 says that he has no objection to the release of the consignment either in favour of the plaintiff or in favour of endorsee M/s. Mohit Impex but according to him the consignment will be released in favour of a party in whose favour the Court may direct such release. Even Mr. Sabharwal, the learned Counsel appearing on behalf of defendant No. 4 (Commissioner of Customs), says on instructions that his client has no objection to the release of the consignment provided the consignment meets the required standard. The consignment has not so far been checked whether it meets the required standard or not. The consignment is being held up only on the objector of the consignor (defendant No. 1) that the said consignment cannot be released in India as it does not bear the ISI specification. It is strange that in case the consignment could not be released in India then how the consignor has transferred the original Bill of Lading in favour of a third party M/s Mohit Impex. This prima-facie creates a doubt on the bonafides of the consignor. Defendant No. 1 is, therefore, called upon to explain on affidavit as to how and why it has delivered the original Bill of Lading in favour of a third party M/s. Mohit Impex permitting M/s. Mohit Impex to get release of the consignment particularly when defendant No. 1 has already received the entire payment of the consignment from the plaintiff. The affidavit furnishing requisite details in this regard be filed by defendant No. 1 within one week from today.

List the case for further hearing on 10.07.2008.

Pursuant to the order, the first defendant filed an affidavit; the material particulars of that affidavit are as follows:

AFFIDAVIT ON BEHALF OF DEFENDANT No. 1 IN TERMS OF ORDER DATED 20.03.2008

I, Hwal Lee S/o Mr. Jong Hak Lee, Director Fluxlite Company Limited, No. 502, Namdong Shibum Kongdan, 45B-6L, Namdong Industrial Complex# 435-6, Nonhyon-Dong, Namdong-Gu, Inheon City, Korea, do hereby solemnly affirm and state as under:

XXXX

I say that as submitted in the written statement/reply filed by the company, since the ISI norms were to be applicable in India w.e.f. 23.2.2007, the plaintiff had expressed his disinclination towards importing a shipment on the ground that it will not be possible for him to sell these CFLs in India. plaintiff vide its E-mail dated 20.3.2007 even asked for refund of his money. The company in view of the plaintiff withdrawing from the deal was a fix since the shipment had been booked. The company however did not get any definite feed back in the matter and in the meantime received offer from M/s. Mohit Impex for purchase of the goods which has been sent in the consignment. The company accordingly made an offer to M/s. Mohit Impex and on its acceptance, with the consent of the plaintiff herein who expressly desired to get refund of his money, handed over the original document for the shipment to M/s. Mohit Impex.

XXXX

The plaintiff''s claim is premised upon the following admitted facts:

(a) Payment of the full consideration to the first defendant before the date of dispatch of goods, i.e. 08.02.2007;

(b) The Bill of Lading, naming it as the consignee;

(c) Its being the consignee entitled to receive the goods;

(d) The Bill of Lading not being handed-over at the earliest opportunity or within reasonable time of the date of dispatch of the goods to it by the Defendant No. 1;

(e) In the absence of any clear order or indication, cancellation of the contract or its recession, the first defendant handing-over the Bill of Lading to the fifth defendant, who claims title to the goods and of their delivery.

A Bill of Lading is a document of title, issued by the carrier; in this case, the third defendant shipping company, evidencing the handing-over of goods in a delivered state and also indicating precisely the quality and quantity of the goods so consigned. The first defendant does not dispute these essential facts. Its position, however, is that the plaintiff, in a sense, was uncertain or prevaricated regarding the delivery of goods. Reliance is placed upon two communications, dated 20.03.2007 and 19.05.2007. Copies of those e-mails are on the record. Although the plaintiff, at one stage, does mention about one dispute about past repayment, there is no categorical or unequivocal cancellation or nothing signifying its (the plaintiff''s) intention not to take delivery of the goods. This Court cannot also infer such conduct or intention, having regard to the surrounding circumstances, particularly that the plaintiff had paid the consideration in advance, even before the goods were shipped. That the goods ultimately landed in Indian port on 28.02.2007 and the fifth defendant, claiming to be their owner, admitted to have them cleared is not a matter of dispute at all. The fifth defendant''s defence is largely confined on first defendant''s position. It claims to have paid exactly the same consideration to the first defendant, i.e. US $ 37,145/- towards the goods.

The plaintiff has also drawn to the notice of the Court, certain communications (e-mails dated 14.02.2007), issued by the first defendant and a tracking result print-out from the website of the courier agency, DHL, dated 23.04.2007. The first defendant''s e-mail, dated 14.03.2007 suggests that originally three Bills of Lading were dispatched, to the plaintiff. The tracking result document, however, suggests that no such consignment was dispatched through the concerned courier agency. That it was actually not dispatched cannot be doubted at all since the Bill of Lading was concededly handed-over to the fifth defendant.

Having regard to the overall circumstances, the Court is prima facie of the opinion that the plaintiff having paid for the goods, which were known to the parties, they were prima facie appropriated to the contract passed. Title, therefore, passed to the plaintiff when the Bill of Lading was issued, in which the plaintiff was shown as the consignee. In these circumstances, that the Bill of Lading was physically with the first defendant who merely held it either in trust or as implied agent of the plaintiff makes little or no difference. In no circumstances can he claim ownership, having received the entire consideration and dispatched it to the buyer. The subsequent transaction and explanations given by the first defendant, whereby he claims to have received another equal sum of US$ 37,145/- does not in any manner detract about the ownership position of the plaintiff, in respect of the goods.

The third defendant''s position that it could not have cleared the goods and handed-them over to the plaintiff in view of the Customs practices and regulations cannot be doubted; indeed it is not seriously disputed. As a carrier, it had a legitimate concern in ensuring that the goods were handed-over to someone authorized or entitled to receive it. Since the fifth defendant claims to be endorsee or subsequent purchaser, the carrier had to entirely satisfy itself as to the tenability of such claim and the said NOC from the plaintiff, which, under the circumstances, was not forthcoming.

In view of the above discussion, this Court is of the opinion that in order to secure the interests of all the parties is called for. The following directions are accordingly issued:

(1) The first defendant is directed to deposit Rs. 20 lakhs in this Court, within four weeks from today;

(2) Upon receipt of the said amount, it is open to the third defendant to apply for withdrawal of the said amount as is entitled to it, as claim towards handling/detention and other charges.

(3) The first defendant shall also bear the liability towards warehousing etc. which may be raised by the Customs Department in respect of the subject consignee.

(4) The plaintiff is directed to disclose and secure its assets in the sum of Rs. 30 lakhs through appropriate security, to the satisfaction of the Registrar General of this Court. This is towards securing the interests of the defendants in the event of the plaintiff not succeeding in the present action.

(5) The Defendant No. 1 is directed to disclose its assets in India and also give an appropriate undertaking to secure the interests of all the concerned parties, particularly, the third defendant and the Customs Department, having regard to charges that might be claimed by them.

The affidavit and undertaking to satisfy the claims of the concerned defendants shall be filed within eight weeks from today. The question of release of goods would be considered after the affidavits of third defendant and first defendant are filed pursuant to these orders. I.A. Nos. 4974/2007, 6562/2007, 6563/2007, 7376/2007, 9161/2007, 9162/2007, 9742/2007 and 8944/2008 are accordingly disposed of in terms of the above directions.

CS(OS) 789/2007

List before the Court on 09.03.2010.