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B.R. Herman and Mohatta (India) Private Limited Vs. Best and Co. Private Limited - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Reported in(1969)2MLJ436
AppellantB.R. Herman and Mohatta (India) Private Limited
RespondentBest and Co. Private Limited
Cases ReferredIn National Mercantile Bank v. Rymill
Excerpt:
- .....the earlier portion of the same paragarph clearly show that the first defendant could not be held liable in tort.6. the following passage from the judgment of blackburn, j., in the leading case hollins v. fowler (1875) l.r. 7 h.l. 757, is relevant for the present discussion:on principle, one who deals with goods at the request of the person who has actual custody of them in the bona fide belief that the custodian is the true owner or has the authority of the true owner, should be excused for what he does if the act is of such a nature as would be excused if done by the authority of the person in possession, if he was the finder of goods or entrusted with their custody.it is clear from page 272 of salmond on the ' law of torts ', thirteenth edition, that a carrier who merely receives and.....
Judgment:

R. Sadasivam, J.

1. The appellant who is the plaintiff in O.S. No. 2354 of 1958 on the file of the City Civil Court, Madras, imported 939 bundles of M.S. rounds in the ship S.S. Cha, owned by the second defendant Union Meridiana De Navigation S.A., and chartered by the third defendant Sendinavian Shipping Lines. The first defendant, Messrs. Best & Co., Private, Limited, is the agent of the other defendants. Though the ship arrived at the Madras Harbour in the first week of July, 1957, it could not get a berth till 20th July, 1957, owing to congestion in the harbour, and hence the unloading of cargo was completed only on 22nd July, 1957. On account of the delay in the unloading of the goods, the second defendant appeared to have claimed demurrage charges from the third defendant, which in turn sought to pass it on to the consignees. The first defendant gave a delivery order to the plaintiff only for 875 bundles of M.S. rounds and retained the remaining 64 bundles claiming a lien for the amount of demurrage. The plaintiff did not agree to pay the lien, or even to furnish a bank guarantee as it repudiated liability for the demurrage. Ultimately, on nth November, 1957 the plaintiff got a delivery order for the remaining 64 bundles, but it had to pay the port dues amounting to Rs. 11,698-50 and was able to get delivery only of 61 bundles as 3 bundles of the value of Rs. 1,800 were lost in the meanwhile. The plaintiff filed the suit in the lower Court to recover Rs. 11,698-50 with interest and Rs. 1,800, amounting in all to Rs. 14,848 from all the defendants. Subsequently, the plaintiff got the plaint amended by making an alternative claim against the first defendant on the ground that the action of the first defendant in not delivering the goods in time amounted to a tort. The suit was contested by the first defendant alone, as the other defendants remained ex parte. The plaintiff gave up his claim for Rs. 1,800 being the value of 3 bundles of M.S. rounds, as the claim in respect of the same was barred by limitation. The plaintiff got Rs. 990 from the Port Trust and the plaintiff gave credit for this amount. The learned First Additional City Civil Judge granted a decree for the amount of Rs. 11,597-61 with future interest only against the third defendant. Hence the plaintiff has preferred this appeal claiming a decree against the first defendant for the said amount.

2. Having regard to the principle of Section 230 of the Contract Act, the first defendant as the agent of the other defendants cannot be made personally liable for the suit claim based on a breach of contract. It is on account of this fact that the plaintiff amended his claim against the first defendant as one based on tort. Hence the only question for determination in this appeal is whether the action of the first defendant in not giving a delivery order immediately after the ship arrived at the Madras Harbour amounted to a tort. The contract between the plaintiff and the third defendant, governed by the terms of the Bill of Lading Exhibit B-1 (a), did not contain the usual clause that the contract was subject to the terms of the charter party between the owner of the ship and the charterer in which case alone the consignee of the goods will also be liable for demurrage charges for the ship caused by the delay in unloading. Hence the third defendant has been rightly held liable for the claim of the plaintiff based on the wrongful refusal to deliver the goods without payment of demurrage, or a bank guarantee, illegally demanded by the third defendant. The first defendant could issue the delivery order only on the instructions of his principal the third defendant. We fail to see how the mere act of the first defendant in refusing to issue a delivery order without having such instructions from the third defendant could amount to a tortious act. It should be noted that the first defendant did not have actual possession of the goods, which were with the Port Trust and the constructive possession of the goods was really with its principal, the third defendant under whose instructions alone the 1st defendant could issue a delivery order.

3. The learned Advocate for the appellant relied on the decision in Dhian Singh v. Union of India : [1958]1SCR781 , where a passage from the judgment of Denning, J., as he then was, in Beaman v. A.R.T.S., Ltd. (1948) 2 All E.R. 98, has been extracted showing the evolution of the modern causes of action for wrongful conversion and detention. But it is clear from that : passage that the cause of action in conversion is based on an unequivocal act of ownership by the defendant over goods of the plaintiff without any authority or right in that behalf, such as on act of acquiring, dealing with or disposing of the goods, which is consistent only with the rights of an owner as distinct from the equivocal acts of one who is entrusted with the custody or handling or carriage of goods. The cause of action in wrongful detention is based on a wrongful withholding of the plaintiff's goods and it depends on the defendant being in possession of the plaintiff's goods.

4. We shall, however, proceed to consider the claim even on the footing that the first defendant had possession of the goods and refused to deliver them on account of the instructions of his principal.

5. The learned Advocate for the appellant referred to the findings of the trial Court in paragraph 12 of its judgment that even though the first defendant had committed a tort, it did so on behalf of its principals and not on its personal liability and as such, the first defendant cannot be made personally liable for the plaintiff's claim even under the law of torts. He referred to the decision T.K. Musaliar v. Venkatachalam : [1956]29ITR349(SC) , where it has been held that the principal could, in no event urge that Ms agent should be allowed to function for him within the territories in a manner which was not warranted by law or had no justification in law and that it is expected that once the Court has declared the law the Investigation Commission would comply with it and not place its agent in the wrong by directing him to act contrary to the law so declared. The principle of the decision is that the agent could be prohibited from obeying the unlawful directions of his principal and even if the principal cannot be reached by reason of his being outside the territories, the arm of the law could certainly reach the agent who is guilty of having committed the wrong. If really the first defendant had committed a tort, it would be no defence for it to plead that it did so on the instructions of the third defendant. But the observations of the learned First Additional City Civil Judge in the earlier portion of the same paragarph clearly show that the first defendant could not be held liable in tort.

6. The following passage from the judgment of Blackburn, J., in the leading case Hollins v. Fowler (1875) L.R. 7 H.L. 757, is relevant for the present discussion:

On principle, one who deals with goods at the request of the person who has actual custody of them in the bona fide belief that the custodian is the true owner or has the authority of the true owner, should be excused for what he does if the act is of such a nature as would be excused if done by the authority of the person in possession, if he was the finder of goods or entrusted with their custody.

It is clear from page 272 of Salmond on the ' Law of Torts ', Thirteenth Edition, that a carrier who merely receives and delivers goods in the ordinary way is not liable in trover merely because the transaction was a conversion on the part of the consignor. In National Mercantile Bank v. Rymill (1881) 44 L.T. 767, the Court of Appeal held that an auctioneer 'with whom the goods of the plaintiff had been wrongfully deposited for sale was not liable for a conversion, although he had delivered them at the request of the vendor to a person to whom, as the auctioneer knew, the vendor had sold them by private contract. At page 273 of the same book the learned author has stated that if the decision is correct it is an authority for the principle that a bailee commits no conversion merely by re-delivering the goods to his bailor or to the order of his bailor, even with the knowledge that the transaction is a sale or other disposition of the title, provided that he has no notice of any adverse claim on the part of the plaintiff. The author has further pointed out that it is clearly otherwise, however, if the bailee has not merely delivered with knowledge of the sale, but has himself sold as well as delivered, even though he sells merely as an agent and without claiming any beneficial interest in the property for himself. It is clear from page 126 of the ' Law of Torts' by S. Ramaswamy Iyer, Sixth Edition, that a delivery or other intermeddling by an innocent agent or servant is not a conversion if it is made in pursuance of the orders of a person, who is the apparent owner and in ignorance of his want of title and is merely a 'ministerial dealing with goods', i.e., in the words of Lords Blackburn ' such a dealing as would be excused, if done by the authority of the person in possession, if he was a finder of the goods, or entrusted with their custody'.

7. The first defendant acting as the agent of the third defendant refused to issue a delivery order unless the plaintiff paid the demurrage charge, or gave a bank guarantee. If really the first defendant had possession of the goods and it refused to re-deliver the goods to the third defendant, it would be guilty of conversion by estoppel. There was no duty on the party of the first defendant to issue a delivery order to the plaintiff contrary to the instructions of the third defendant. It is true the case would be different if the first defendant had conspired with the third defendant, or abetted the act of the third defendant in committing a wrongful act. But that is not the case of the plaintiff-appellant.

8. For the foregoing reasons, the first defendant cannot be held liable in tort for the mere act of refusing to issue a delivery order without the instructions of his principal. The suit has been rightly dismissed against the first defendant and the appeal is, therefore, dismissed with costs.


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