VIRENDRA KHULLAR vs AMERICAN CONSOLIDATION SERVICES LTD.

THE complainant is a sole proprietor of M/s. Babusha International. On 23.12.1994, the complainant entrusted to opposite party 300 cartons containing men''s wearing apparels for carriage from Bombay to Norkfolk, VA USA vide cargo receipts bearing Nos. 34307, 34308 and 34309 dated 28.12.1994 through the opposite party American Consolidation Services Ltd. (ACS for short). THE consignee declared in the opposite party said cargo receipts was to the order of Central Fidelity Bank, Richmond, V.A. and the Notified Party was Zip Code Inc., Ports- mouth, V.A., USA. When the consignment did not reach the destination the complainant addressed a letter dated 2.3.1995 to the opposite party to enquire about the status of the shipment. It was not responded to. On 9.3.1995, the opposite party, re-faxed complainant''s letter dated 7.3.1995 with an endorsement "as per Carrier Hoegh Lines, cargo has been delivered." THE complainant made further inquiries from its concerned bank. THE bank informed that there is no remittance pertaining to the said shipment. Notice was given through Counsel seeking compensation and costs to the opposite party. THE claim was denied by the opposite party''s lawyers letter dated 24.4.1995. THE complainant filed complaint alleging deficiency in service for not delivering the goods in terms of the contract.

THE opposite party contested the claim of the complainant, inter alia, taking the plea 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, specifying, inter alia, the affiliate of the consignee as 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 consignee 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 indicates that the two shipments were to be shipped on 13.12.1994 and 20.12.1994. THE bill of lading indicates 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 filed at the time of final arguments 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 complainant (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 of service on the part of opposite party. We have heard the learned Counsels 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 Sh. H.L. Tiku and Associates dated 4th April, 1995, Counsel of the complainant, the opposite party has stated 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 consignment had not reached the inquiries with my clients to know the fate of the consignment. 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 Exhibit ''1'' by the opposite party. This indicated that the consignment was 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 receipt is dated 23.12.1994. 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, VA.

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. Since the cargo receipt dated 23.12.1994, 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 them 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 term and conditions of the cargo receipt. The relevant terms and conditions are as under : "(1) 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 tariffs 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 consignee 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 instruction 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.

(2) 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 transporter 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.

(3) 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 Dollars 35 per piece. For the purpose of the foregoing the term "true value" shall mean the CIF (FOB plus pro-portionate insurance and freight) value of the goods as verified by appropriate documentation.

(4) 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."

IF cargo receipt is dated 23.12.1994, the bill of lading could not be of 20.12.1994. The goods were also not sent in time in terms of letter of credit. It is not in dispute that the letter of credit was not got further extended. As regards the terms and conditions of the cargo receipt we have reproduced the terms and conditions and the responsibility undertaken by the agent of 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 had been exclusive custody of the goods". The goods of the consignments in question though it is pleaded by the opposite party ACS that they had delivered the goods to 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. Firstly, the bill of lading could not be of date prior than the date of cargo receipt. Secondly, 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 receipt indicated 100 cartons, Style No. 15575, Invoice No. B1-P/88/94-95 dated 23.11.1994, 43 cartons, Style No. 15575/15569, Invoice No. B1-P/87/94-95 dated 23.11.1994. Total 4800 pcs. The third cargo receipt was that of 28 cartons, Style No. 15566, 15569/15575, Invoice No. B1-P/88/94-95 dated 23.11.1994. Though, the opposite party rely on the 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. However, bill of lading as mentioned in Para 2.6 of the written submissions, was said to have been prepared on 19.12.1994 while the cargo receipt of 23.12.1994. It would not be possible to accept that bill of lading could be of 19th December, 1994. A photo copy of the bill of lading is at page 37, referred to in written submission of the learned Counsel for the opposite party. Bill of lading referred to 320 kgs. Moreover, the gross weight shown in three cargo receipts varies substantially. In the receipt one indicated that the first one is of 1478.40 kgs. and second were of 1487.40 kgs. and third one was also of weight of the same fashion while bill of lading indicated dated 19th December as 7301.80 kgs. 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. The number of packages were shown 300 while the packages were 320 as per bill of lading. Naturally, the bill of lading did not relate to the consignments delivered to the opposite party by the cargo receipts dated 23.12.1994. As was apparent the consignment under the cargo receipts in question were not handed over for shipment through the bill of lading relied upon by the opposite party. Since it was within the special knowledge of the opposite party it was for them to prove that they had handed over the consignment of the cargo receipt for shipment. In absence of any such proof they would continue to be liable as per terms of the cargo receipts. The learned Counsel for the opposite parties relied upon two judgments. 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 relies 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 as the goods are not shipped and remain 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 not the consignor they could not be said to be proper and necessary parties for the purpose of deciding the accountability of the opposite party for the consignment after receiving the goods under cargo receipt 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 on 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 & 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 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, complainant is entitled to get from the opposite party. According to the complainant the price of the consigned goods as per the invoice was US $ 67,190.40 @ Rs. 31/- per dollar i.e. Rs. 20,82,902.40. The complainant also claimed a sum of Rs. 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.

As regards the price of the consigned goods as per invoice the value has not been controverted by the opposite party by any cogent evidence. Only there is simple denial. Consequently, in view of the affidavit of the complainant the value of goods consigned is to be taken at Rs. 20,82,902.40 ps. As regards damage simple interest and compensation, we are not inclined to consider them separately for the interest would cover that aspect also. We feel it proper in the above mentioned circumstances to award interest @ 18% p.a. on the sum of Rs. 20,82,902.40 ps. on the above amount from the date of the complaint till payment. The complainant shall also be entitled to costs which is valued at Rs. 10,000/-. The complaint is disposed of accordingly. Complaint disposed of.