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E.i.D. Parry (India) Limited Vs. Far Eastern Marine Transport Co. Ltd. Reptd. by Its Local Agents Chowgule Bros. and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation;Contract
CourtChennai High Court
Decided On
Reported in(1988)1MLJ144
AppellantE.i.D. Parry (India) Limited
RespondentFar Eastern Marine Transport Co. Ltd. Reptd. by Its Local Agents Chowgule Bros. and ors.
Cases ReferredUnion of India v. S.S. Navigation Co. A.I.R.
Excerpt:
- .....and in respect of the second consignment covered by bill of lading no. pd/m21, 80 out of 1315 drums short-landed. the plaintiff was given by the port trust of madras the requisite short-landing certificates. the value of the goods short-landed is calculated by the plaintiff rs. 70,389 in respect of the first consignment and rs. 1,27,980 in respect of the second consignment aggregating to rs. 1,98,369 being the proportionate c.i.p. value. the plaintiff company lodged a claim with the first defendant on 28.11.1977 for the value of the shortages but in vain. hence the said sum of rs. 1,98,369 is due and payable by the first defendant. the third defendant insurer is equally liable for the loss sustained by the plaintiff on account of short-landing. the defendants are jointly and.....
Judgment:
ORDER

S.A. Kader, J.

1. This is a suit for damages of Rs. 1,98,369 with subsequent interest and costs for short-landing of goods. The Plaintiff is a body-corporate incorporated under the Indian Companies Act. The Plaintiff Company entered into a contract with M/s. Patel Holdings Limited Sdn/Bhd Malaysia for the import of Palm Olien Oil. In pursuance of the aforesaid agreement the Foreign Supplier shipped 1574 drums of the said Oil to Madras by the Vessel S.S. 'Sun Duex' belonging to the first defendant, whose local agent at Madras is the second defendant firm. The shipment of the goods was covered by the bills of lading bearing Nos. Pk/M20, dated 30.8.1977 covering 259 drums and Pk/M21, dated 30.8.1977 covering 1315 drums. The goods were insured against all risks including shortage with the third defendant-Insurance Company. The vessel arrived at Madras Harbour on 18.9.1977 and upon discharge of the cargo, it was found that in respect of the first consignment covered by Bill of Lading No. Pk/M20, 45 out of 259 drums-were short-landed and in respect of the second consignment covered by Bill of Lading No. Pd/M21, 80 out of 1315 drums short-landed. The plaintiff was given by the Port Trust of Madras the requisite short-landing certificates. The value of the goods short-landed is calculated by the plaintiff Rs. 70,389 in respect of the first consignment and Rs. 1,27,980 In respect of the second consignment aggregating to Rs. 1,98,369 being the proportionate C.I.P. value. The plaintiff company lodged a claim with the first defendant on 28.11.1977 for the value of the shortages but in vain. Hence the said sum of Rs. 1,98,369 is due and payable by the first defendant. The third defendant insurer is equally liable for the loss sustained by the plaintiff on account of short-landing. The defendants are jointly and severally liable to the plaintiff to the sum of Rs. 1,98,369 and hence this action.

2. The first defendant-Far Eastern Marine Transport Company has raised the following contentions: The plaint does not disclose how the Plaintiff-company is entitled to the goods covered by the suit consignment and how the suit is maintainable. This defendant is not aware of the contents of the drums or their value. It is denied by this defendant that there was any short-landing of goods and it is asserted that all the drums covered by the two bills of lading were fully discharged at the Port at Madras. Denying any knowledge of this short-landing certificates issued by the Port Trust of Madras, this defendant has averred that the loss if any must have occurred while the goods were in the custody of the Port Trust of Madras. The plaintiff was put to strict proof of the alleged short-landing and the value of the goods alleged to have been short-landed. This defendant's name has been subsequently added in the plaint and the suit against this defendant is hopelessly barred by time. This defendant has therefore prayed for a dismissal with costs.

3. The second defendant contends that it is only an agent of the first defendant-company and is not at all liable for the suit claim. In other respects, it has adopted the written statement of the first defendant.

4. The third defendant-Insurance Company has claimed that the primary liability is on the first defendant-carrier and only after exhausting the remedy against the carrier any proceeding can be taken against the third defendants The plaintiff is also put to strict proof of the loss having occurred due to the risk covered by the policy of insurance that the said risk occurred during the continuance of the policy, the factum of short-landing and the value of the goods that were short-landed.

5. In their additional written statement the third defendant-Insurance Company contends that if the first defendant-Carrier escapes liability on the ground that the liability of the Carrier became extinguished, the suit having been filed after one year from the date on which the goods ought to have been discharged, the suit against the third defendant must also be dismissed, inasmuch as the Plaintiff-Company has not diligently sued the Carrier and allowed the claim against the carrier to be extinguished, thereby completely and irretrievably jeopardising this defendant's right to recover any amount against the carrier. The plaintiff has thus violated the condition of the policy to keep the remedy against the carrier intact and has to be non-suited.

1. Is the short-landing of the Cargo true?

2. Whether the B Certificate issued by the Port Trust authorities is sufficient to prove the short-landing of the cargo?

3. Are the plaintiffs not entitled to maintain the suit for the reasons set out in the written statement?

4. Is the second defendant liable for the suit claim?

5. Are the defendants not liable to compensate the plaintiffs in the sum of Rs. 1,98,369?

6. Is the suit barred by limitation?

7. To what relief are the Plaintiffs entitled?

The following additional issue is framed in view of the additional written statement filed by the third defendant:

If the liability of the first defendant carrier is held to be extinguished, whether the suit against the third defendant ismaintainable?

6. Application No. 908 of 1983 : The Plaintiff has filed the above application under Section 21 of the Indian Limitation Act. It is averred that the suit was filed on 15.9.1978 against defendants 2 and 3. When the plaint was returned for complying with some defects, the counsel for the Plaintiff found that by mistake the first defendant-carrier whom they wanted to make a party to the suit was inadvertently omitted. The first defendant carrier was therefore added and the plaint was re-presented on 8.12.1978. This was a Bona Fide mistake and was made in good-faith. It is therefore prayed that the Court may be pleased to order that the suit against the first defendant be deemed to have been instituted on 15.9.1978 itself.

7. The respondents/defendants 1 and 2 resisted the application. The first defendant carrier has been added as a party only on 8.12.1978 and the suit was barred on that date. The allegation that by mistake the first defendant was omitted to be impleaded is denied. It is also pointed out that no application for impleading the first defendant has been filed or ordered by the Court. It is finally contended that the suit is governed by the Carriage of Goods by Sea Act and Section 21 of the Limitation Act has absolutely no application.

8. The point for consideration in this application is whether the suit may be deemed to have been instituted against the first defendant on 15.9.1978?

9. Issue No. 6 : In the suit and point in the application: This is a suit for short landing of goods. The plaintiff-company has placed orders with M/s. PateI Holding Limited Sdn/Bhd Malaysia for the import of 1574 drums of Palm Olien Oil and Ex.P1 Is the invoice. The goods have been shipped to Madras by S.S. 'Sun Duex' belonging to the first defendant Far Eastern Marine Transport Company, Ex.P2 is she Bill of lading for 259 drums and Ex.P3 is the Bill of Lading for 1315 drums. The ship arrived at Madras on 18.9.1977. The suit for damages for short landing of 44 drums under the first Bill of Lading and 80 drums under the second Bill of Lading has been instituted on 15.9.1973, within a period of one year as laid down under Clause (3) of paragraph 6 of Article III of the Schedule to the Indian Carriage of Goods by Sea Act of 1925 which runs thus:

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

At the time of the original institution of the suit defendants 2 and 3 alone were impleaded. According to the Plaintiff, by an inadvertant Bona Fide mistake the first defendant-carrier was omitted to be impleaded and was subsequently added when the plaint was re-presented on 8.12.1987. It is admitted on both hands that when the plaint was re-presented on 8.12.1978 after impleading the first defendant-carrier the claim was barred. It is therefore prayed by the Plaintiff that the Court may be pleased to direct that the suit may be deemed to have been instituted against the first defendant on 15.9.1978 itself by virtue of the proviso to Section 21 of the Indian Limitation Act of 1963.

10. Section 21 of the Limitation Act reads thus:

Effect of Substitution or Adding New Plaintiff or Defendant: (1) Where after the institution of a suit, new Plaintiff or defendant is substituted or added, the suits shall, as regards him, be deemed to have been instituted when he was so made a party:

Provided that where the Court is satisfied that the omission to include a new plaintiff or defendant was due to a mistake made in good faith it may direct that the suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date.

11. The learned Counsel for the Plaintiff relied on several decisions to which I shall now refer. In Ram Prasad Dasduram v. Vijay Kumar Motilal Mirahanwala and Ors. : AIR1967SC278 , the A Co-Plaintiff was impleaded after the period of limitation. The Supreme Court held that under Section 22 of the Limitation Act of 1908 which applied to the case, the suit must be regarded to have been instituted by the new plaintiff when she was made a party. The Supreme Court went on to observe that:

That rigour of this law has been mitigated by the proviso to Section 21(l) of the Indian Limitation Act, 1963, which enables the court on being satisfied that the omission to include a new plaintiff or a new defendant was due to a mistake made in good faith, to direct that the suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date. Unfortunately, the proviso to Section 21(l) of the Indian Limitation Act, 1963 has no application to this case, and we have no power to direct that the suit should be deemed to have been instituted on a date earlier than November 4, 1958. In Rajalakshmi Ammal v. R. Kannaiah : AIR1978AP279 , the suit was instituted against a person who was dead at the time of its institution. The legal representatives of the deceased defendant were sought to be brought on record after the period of limitation. It was held that the proviso to Section 21(l) of the Limitation Act applied and the legal representatives of the deceased defendant were deemed to have been impleaded as defendants on the date of the original institution of the suit. In a very recent decision of our High Court in Ramamurthi v. Karuppusami (1978) 1 M.L.J. 278 : (1979)92 L.W 41, a suit on a promissory note executed by the first defendant was filed on 14th November, 1974. As soon as he came to know of the death of the first defendant, the plaintiff filed I.A. No. 265 of 1975 to bring on record the legal representatives of the first defendant. It was held that the circumstances and the promptness with which the petitioner had taken action clearly showed that he had acted in good faith and the suit shall date back to the original presentation of the plaint in view of the proviso to Section 21(l) of the Limitation Act. In Mitchell v. Harris Engineering Co. Ltd. (1967) 2 All E.R. 682, the proper defendant was substituted after the period of limitation and it was held that there was a genuine mistake which had not mislead the defendant and accordingly the amendment was allowed to take effect from the date of the original institution. It is therefore contended by the learned Counsel for the plaintiff that by a Bona Fide mistake the first defendant-carrier was omitted to be impleaded when the plaint was originally presented and the Court is therefore entitled to treat the suit against the first defendant as having been instituted on the date of the original presentation itself. i.e., on 15.9.1978.

12. Thiru M.P. Subramanian, learned Counsel for defendants 1 and 2 does not dispute the proposition that under the proviso to Section 21(l) of the Limitation Act the Court is entitled to condone any Bona Fide mistake and treat the suit as regards the new plaintiff or defendant as having been instituted on any earlier date. But, according to him, Section 21 of the Limitation Act has no application at all in the instant case. It is contended by him that this suit for short-landing is governed by the Carriage of Goods by Sea Act, passed in accordance with the Code of Rules drawn up in 1921 by the International Law Association at the Hague in respect of which final agreement was reached at the International Conference of Martitime Law held in Brussels in October, 1922 and again in October, 1923. This International agreement was intended to remove uncertainty and introduced uniformity about the liabilities attached to the carrier by sea. in accordance with this International Agreement, the United Kingdom passed the Carriage of Goods by Sea Act 1924 and the Indian Act was passed in 1925. Clause (3) of paragraph 6 of Schedule III of the Indian Carriage of Goods by Sea Act, 1925, as already pointed out, lays down that the carrier and the ship shall be discharged from all liability in respect of the loss or damage unless the suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. Admittedly when the first defendant was impleaded, the period of one year had elapsed. It is therefore contended by the learned Counsel for defendants 1 and 2 that the right of the first defendant-carrier has become extinguished and cannot be revived by the application of the proviso to Section 21(l) of the Limitation Act. According to the learned Counsel, neither the Limitation Act of 1963 nor any of the saving provisions of the Act can have any application in the instant case. I am afraid the contention of the learned Counsel for the defendants has to be accepted.

13. In East and West Steamship Co. v. Ramalingam Chettiar : [1960]3SCR820 , the scope of Clause (3) of paragraph 6 of Article III of the Schedule to the Indian Carriage of Goods by Sea Act came up for consideration before their Lordships of the Supreme Court. One of the questions that arose for consideration before their Lordships was whether an acknowledgment of liability under Section 19 of the Limitation Act extended the period of one year laid down under Clause (3) of paragraph 6 of Article III of the Schedule to the Carriage of Goods by Sea Act. This is what their Lordships have stated:

On the next question whether the clause prescribes only a rule of limitation or provides for the extinction of a right to compensation, it will be observed that the Bombay High court has not discussed it at all, apparently because on the facts of the case before it, it would have mattered little whether the provision was one of limitation or of extinction of right. The question is however of some importance in the facts of the Madras case. For if the provision is one of limitation there would be some scope for argument on the facts of that case that the period was extended by acknowledgments of liability within the meaning of Article 19 of the Limitation Act. The question we have to decide is whether in saying that the ship or the carrier will be 'discharged from liability', only the remedy of the shipper or the consignee was being barred or the right was also being terminated. It is useful to remember in this connection the international character of these rules, as has been already emphasised above. Rules of limitation are likely to vary from country to country. Provisions for extension of periods prescribed for limitation would similarly vary. We should be slow therefore to put on the word 'discharged from liability' an interpretation which would produce results varying in different countries and thus keeping the position uncertain for both the shipper and the shipowner. Suits apart from this consideration, however, we think that the ordinary grammatical sense of 'discharged from liability' are more apt to mean a total extinction of the liability following upon an extinction of the right. We find it difficult to draw any reasonable distinction between the words, 'absolved from liability' and 'discharged from liability' and think that these words 'discharged from liability' were intended to mean and do mean that the liability has totally disappeared and not only that the remedy as regards the liability has disappeared. We are unable to agree with the learned Judge of the Madras High Court that these words merely mean that 'that even though the right may inhere in the person who is entitled to the benefits, still the liability in the opposite party is discharged by the impossibility of enforcement'. The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, through fine, is of great importance. The legislature could not but have been conscious of this distinction when using the words 'discharged from all liability' in an Article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense. It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgement of liability thereafter.

14. In a still more recent decision rendered by a bench of the Kerala High Court in Union of India v. S.S. Navigation Co. A.I.R. 1978 Ker. 136, the suit was originally filed before the City Civil Court, Madras and was subsequently re-presented in the court of Cochin finding that the court of Cochin had the jurisdiction. It was contended that the plaintiff Bona Fides believed that the suit was to be instituted in the City Civil Court, Madras and the plaintiff prayed under Section 14 of the Limitation Act for the exclusion of the time during which it was presenting the case with due diligence and in good faith. In the City Civil Court, Madras, which from defect of jurisdiction was unable to entertain it. It was held that once the liability of the carrier or the ship terminates under Clause (3) of paragraph 6 of Article III of the Schedule to the Carriage of Goods by Sea Act, there is no survival of the cause of action against them for claiming damages and there is no Limitation Act. The Bench went on to observe:

It may not be correct to say that the suit is barred if it is beyond the period of one year specified. It will be more appropriate to view it as a case where the suit has to fail for want of a subsisting cause of action on the date of suit.

15. I hold, therefore, that at the time the first defendant was added as party and the plaint was re-presented on 8.12.1978. The liability of the first defendant-carrier had become extinguished and there is hardly any scope for the application of the proviso to Section 21(1) of the Limitation Act and treating the suit as if it had been instituted against the first defendant at the time of the original presentation itself. The suit against the first defendant must therefore fail. The issue and the point are found against the plaintiff.

16. Issue No. 4 : The second defendant-partnership firm is the local agent of the first defendant carrier. Neither in the plaint nor in the argument advanced by the learned Counsel for the plaintiff has it been explained as to how the second defendant is liable for the suit claim. This contract of carriage by Sea has been entered into with the first defendant directly and in 'such a case, no liability can be attached to the agent. Section 220 of the Indian Contract Act comes into play only where the contract is entered into by the agent on behalf of the principal. The claim against the second defendant is therefore misconceived as rightly contended by its learned Counsel. This issue is also found against the plaintiff.

17. Issues 1 and 2 : It is the case of the plaintiff that out of 256 drums of Palm Olein Oil covered by Ex.P1 Bill of Lading there was a short landing of 44 drums and out of 1315 drums of Palm Olein Oil covered by Ex.P3 Bill of Lading 80 drams were short landed. The plaintiff relied upon Exs,P12 and P13. B certificate issued by the Madras Port Trust on 14.11.1977, the photostat copies of which have been marked as Exs.P4 and P5 respectively. Defendants 1 and 2 have denied short landing, Exs.P12 and P13 certificates have been issued only on 14.11.1977, more than one month and twenty six days after the arrival of the ship at the Port at Madras on 18.9.1977. On the other hand, we have the notice issued by the plaintiff Company to the second defendant under Exs.D1 and D2, dated 19.9.1977, a day after the arrival of the ship. In Ex.D1, which pertains to Ex.P2 Bill of Lading covering 259 drams of Palm Olein Oil. It is stated thus:

We find the undernoted packages have been landed in bad order and we shall be obliged, if you will please fix a date for the survey and send your representative to No. as early as possible to survey them

The particulars underneath give 132 drums with marks Pae-10/Sen Madras No. 1-182 and 127 drums with mark Sen-2/Patel/-Madras Nos. 1-127 total 259 which are the identical descriptions found in Ex.P3 Bill of Lading. In Ex.D2 notice which relates to Ex.P3 Bill of Lading covering 1315 drums. It is stated that:

The particulars underneath mention 263 drums with mark Pat-5/Sen Madras Nos. 1-263, 263 drums with mark Madras/Nos. 1-263 Pat-7/Sun, 263 drums with mark Madras Nos. l-263-Pat 8-Sen 263 drums with mark Madras/Nos. 1-623 Pat-9/Sen and 236 drums with mark Madras/Nos. 1-263, total 1315 which are identical with the particulars given in Ex.P3. The second defendant has replied under Exs.D3 and D4 denying the bad conditions of the packages and agreeing for a survey without prejudice. It is quite clear that the plaintiff in Exs.Dl and D2 has categorically admitted the landing of 259 drums under Ex.P2 Bill of landing and 1315 drums under Ex.P3 Bill of Lading. There is no whisper of any short-landing and the only complaint is that the packages were in bad order. In the light of these admissions it is not open to the plaintiff to turn round and say on the basis of Exs.P12 and P13 certificates issued on 14.11.1977, there is a shortage of 44 drums under the first consignment and 80 drums under the second consignment. These issues are answered against the plaintiff.

18. Issue No. 3 : The plaintiff has placed orders with M/s. Patel Holdings Limited, Malasiya for the import of 1574 drums of Palm Olien Oil and Ex.P1 is the invoice. The suit is for recovery of the value of the 124 drums short landed It is contended by the first defendant that the plaint does not disclose as to how the plaintiff is entitled to the goods covered by the consignment and the suit is not therefore maintainable. Ex.P1 invoice clearly establishes that the plaintiff is the consignee and the ownership of the goods has passed to the plaintiff. It is therefore entitled to maintain the suit. This issue is therefore answered in favour of the plaintiff.

19. Issue No. 5 : The plaintiff has claimed the value of 44 + 80 i.e., 124 drums as short landed and the value is fixed on the proportionate C.I.F. Madras valueof 80 drums as per Ex.P6 at Rs. 1,27,980 and 44 drums as per Ex.P7 at Rs. 70,389. Ex.P1 is the invoice which gives the value for a total of 1574 drums at Rs. 1,98,369. The amount claimed by the plaintiff is therefore in order. But, the plaintiff is not entitled to any compensation in view of my findings on the other issues.

20. Additional Issue: The third defendant is the insurer. The contention of the third defendant is that the plaintiff has allowed the liability of the first defendant carrier to become extinguished by its failure to file the suit within one year under Clause (3) of paragraph 6 of Article III of Schedule to the Carriage of Goods by Sea Act and hence the suit against the first defendant must fail. Ex.P11 is the policy of insurance. As is laid down in the policy of insurance, the insurer's liability is only to succeed to and not in any way supersede any claim which the insurer may be entitled to make on any carriers or their agents. It is also laid down therein that it is the duty of the assured and the agents in all cases to take measures as may be reasonable for the purpose of averting or minimising a loss and to ensure' that all the rights against the carriers, bailees or other third parties are properly observed and exercised. In particular, the assured or their agents are required to take these steps and failure to comply with this requirement may prejudice any claim under this policy. Under the law of Insurance, the right of the Insurer on payment of the loss to the assured is to be subrogated to the rights of the assured so as to enable the insurer to proceed against the third party and indemnify itself. It is therefore incumbent upon the assured to keep alive his remedies against the carrier or other third party and any default committed by the assured either by allowing the remedy to get timebarred or by abdicating or abandoning, his rights against the carrier or the third party will deprive the insurer of its remedies against the third party for indemnity. In such cases, it is open to the insurer to repudiate the liability under the policy, the loss is not paid to the assured or to lay a counterclaim against the assured for damages if it had paid the loss to the assured. The law is thus stated in MacGillivray & Parkington Insurance Law, seventh edition, paragraph 1172:

The assured is under an obligation not to deal with any claim he possesses, or will possess, against a third party in such a manner as to prejudice the insurer's rights of subrogation in relation to it. The insurer's remedy will be to repudiate liability on the policy, or to counterclaim for damages for the loss of, or diminution of their rights, depending on the circumstances. The position varies slightly depending on whether the insurer has paid for the loss.

In the instant case, the plaintiff by its failure to institute this action in time against the first defendant-carrier has lost its remedy against the carrier and consequently the third defendant-insurer is deprived of its right of indemnity against the carrier. It is therefore open to the third defendant insurer to repudiate the claim under the policy of insurance, and the suit against the third defendant must therefore fail. The issue is held in favour of the third defendant.

21. Issue No. 7 : In view of my findings on issues 1, 2 and 4 to 6, I hold that the plaintiff is not entitled to any relief.

22. In the result the suit fails and is dismissed with costs. Two sets.


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