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Union of India (Uoi) and anr. Vs. Chinoy Chablani and Co. - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtKolkata High Court
Decided On
Case NumberSuit No. 14 of 1975
Judge
Reported inAIR1976Cal467,80CWN819
ActsContract Act, 1872 - Section 230; ;Code of Civil Procedure (CPC) , 1908 - Section 86
AppellantUnion of India (Uoi) and anr.
RespondentChinoy Chablani and Co.
Appellant AdvocateH. Deb Burman and ;S. Sarkar, Advs.
Respondent AdvocateSubrata Roy Chowdhury and ;N.C. Roy Chowdhury, Advs.
DispositionApplication allowed
Cases ReferredUnion of India v. N.M. Bulgare
Excerpt:
- .....on behalf of the respondents to this application by virtue of sub-clause (3) of section 230 of the indian contract act. the said section provides as follows:--'230. in the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.such a contract shall be presumed to exist in the following cases:-- (1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;(2) where the agent does not disclose the name of his principal;(3) where the principal, though disclosed, cannot be sued.' therefore, in order to attract the provisions of the said section in my opinion, there must be a contract entered into by the agent on behalf of the.....
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. This is an application by Chinoy Chablani & Co., a firm carrying on business in Calcutta. The petitioner is the defendant in Suit No. 14 of 1975. The said suit was instituted by the Union of India as the first plaintiff and the Food Corporation of India as the second plaintiff against the petitioner. The said suit was instituted on or about the 14th of January, 1975, claiming a decree for Rs. 73,285/-. The case of the plaintiffs in the plaint is as follows:

(a) 81,986 bags of Urea and 820 empty spare bags were shipped from Odessa in the U.S.S.R. to any port in India on a vessel 'S.S. SUDGA' under a bill of lading issued by one Black Sea Steamship Co., the owner of the said vessel,

(b) The said Black Sea Steamship Co.. appears to be a concern of U.S.S.R.

(c) With regard to the said shipment there was a total short-landing of Urea of 94.785 m. t. which occurred due to the negligence and/or wrongful acts of the shippers and/or its employees and/or its agents.

(d) The petitioner is an agent of the said Black Sea Steamship Company.

(e) By reason of such short-landing the plaintiffs have suffered damages to the extent of Rs. 73,285.00. The particulars have been mentioned in the plaint. It is alleged in paragraph 10 of the plaint as follows:--

'The said Black Sea Steamship Company appears to be the concern of U.S.S.R. and as such cannot be sued in India. In the circumstances the defendant or its agent is liable and is sued as such.'

2. It has been alleged that the plaintiff No. 2 was acting on behalf of the Ministry of Agriculture, Government of India, in respect of importation of fertilisers and food-stuff and on the 31st October, 1973, one Mineral and Metal Trading Corporation of India Ltd., had shipped on behalf of the Ministry of Agriculture, Union of India, on board the said vessel 'S.S. Sudga' in an apparently good order and condition 81,986 bags of Urea of the total gross weight of 4181286 kg. and net weight of 4099300 kg. and further 820 empty spare bags from the port of Odessa in U.S.S.R. to be properly and safely carried to any port in India. A bill of lading was issued by the said Black Sea Steamship Company duly acknowledging the receipt of the said goods on board the vessel- 'S.S. Sudga' and agreeing to carry the same in accordance with the terms and conditions mentioned in the said bill of lading. The said vessel had discharged at Visakhapatnam 51933 bags of Urea of which 2242 were cut and torn bags and further 276 bags containing sweepings only. It is further alleged that the said vessel completed discharge of the goods on or about the 15th/ 16th January, 1974. The said vessel had discharged at the port of Calcutta 28747 bags of Urea of which 3201 were cut and torn bags and further 50 bags containing sweepings only. It is the case of the plaintiffs that the said loss occurred due to negligence and wrongful acts of the shippers and/or its employees and/or its agents. The plaintiffs in the premises had instituted the suit. This application is by the defendant in the suit for taking the plaint off the file and alternatively for dismissing the suit as this Court has no jurisdiction to entertain this suit and alternatively for stay of the suit.

3. The first question is, whether the plaint should be taken off the file because it does not disclose any cause of action. Under Order 7, Rule 11 of the Code of Civil Procedure the plaint should he rejected where the plaint does not disclose any cause of action. The grievance of the plaintiffs is against the Black Sea Steamship Company for their negligence. The cause of action against the defendant was sought to be justified in this case on behalf of the respondents to this application by virtue of sub-clause (3) of Section 230 of the Indian Contract Act. The said section provides as follows:--

'230. In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.

Such a contract shall be presumed to exist in the following cases:--

(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;

(2) where the agent does not disclose the name of his principal;

(3) where the principal, though disclosed, cannot be sued.'

Therefore, in order to attract the provisions of the said section in my opinion, there must be a contract entered into by the agent on behalf of the principal. If there is such a contract, then in cases mentioned in the second paragraph even in the absence of a contract to that effect an agent would be personally liable; but in order to make an agent personally liable the first pre-requisite is that there must be a contract entered into by an agent on behalf of the principal. In the instant case there is no allegation that any such contract was entered into by the defendant as agent on behalf of the principal. Therefore, the question of making the defendant as agent personally liable for that contract does not arise. The next aspect is that even if that condition? has been fulfilled, whether, in the facts) and circumstances of the case, it could be said that the principal cannot be sued. It had been alleged on behalf of the respondents and it was contended before me that the principal in this case was the Black Sea Steamship Co. which was a concern of U.S.S.R. My attention was drawn to article 6 of the Constitution (Fundamental Law) of the Union of Soviet Socialist Republics as amended and added to at the Second Session of the Supreme Soviet of the U.S.S.R. Fifth Convocation. The said Article 6 provides as follows:--

'The land, its mineral wealth, waters, forests, mills, factories, mines, rail, water and air transport, banks, communications, large state-organised agricultural enterprises (State Farms, machine and tractor stations and the like), as well as municipal enterprises and the bulk of the dwelling-houses in the cities and industrial localities, are State property, that is. belong to the whole people.'

On the basis of the said Article it was contended that the water transport concern was State property and, therefore, it belonged to the Soviet Government. Reliance was placed on Section 86 of the Code of Civil Procedure in aid of the submission that no suit can have been instituted against the Soviet Government in India. Speaking for myself personally I am of the opinion that read in the proper historical perspective in the light of the current development of the principles of private international law. Section 86 does not bar suits against foreign governments in this country specially when those governments carry on trade. I am inclined to think, speaking again for myself, that Section 86 does not cover that situation and I was right in my submission before the Division Bench of this Court in the case of United Arab Republic v. Mirza Ali, : AIR1962Cal387 . But this question is now concluded by the decision of the Supreme Court in the case of Mirza Ali Akbar v. United Arab Republic, : [1966]1SCR319 and the decision of this Court in the case of Royal Nepal Airlines Corporation v. Monorama Meher Singh Legha, : AIR1966Cal319 .

It must be held because of the said decisions that without the consent of the Central Government the suit against Black Sea Steamship Co., is not maintainable in view of the. provisions of Article 6 of the Soviet Constitution to which I have referred hereinbefore. In this connection reliance may also be placed on the decision of the Court of Appeal in the case of Krajina v. Tass Agency, (1949) 2 All ER 274. But even if Section 86 applies, the question is whether it can be said that the principal cannot be sued in the instant case in terms of Sub-section (3), 2nd paragraph, of Section 230 of the Indian Contract Act. Section 86 does not prevent absolutely the suit against a foreign government or a trading corporation operated by a foreign government. It makes such suit conditional upon consent and such consent is dependent upon fulfilment of certain conditions. Without necessary averment or evidence that such consent was not granted or that the conditions required for obtaining such consent were not fulfilled in the instant case, in my opinion, Sub-section (3), 2nd paragraph of Section 230 cannot ipso facto be attracted. Quite apart from that however, Sub-section (3) of Section 230 of the Contract Act only permits suit against an agent only where the principal cannot be sued. It does not permit suit against the agent if the principal cannot be sued in India only. It has not been averred that Black Sea Steamship Co. cannot be sued at all or there is any impediment of suing that concern in Soviet Union or before any other appropriate forum. If that is the position, then in my opinion, if cannot be said that the conditions required under Sub-section (3), 2nd paragraph, of Section 230 were fulfilled in the instant case. In the aforesaid view of the matter it must, therefore, be held that the plaint as filed does not disclose any cause of action against the defendant.

4. On behalf of the respondents it was contended that this question should be determined only after the written statement had been filed on behalf of the applicant or the defendant in this case. If in an appropriate case the defendant applies before the filing of the written statement, in my opinion, it would not be right and proper if the question can be adjudicated on the basis of the plaint as filed, to refuse to the defendant the right to have this question determined prior to the filing of the written statement. If, however, the question was dependent on certain other facts to be disclosed in the written statement, then in such a case other considerations might have applied but in this case on the averments made in the plaint itself I am of the opinion that the plaint for the reasons indicated above does not disclose any cause of action. The first point urged in support of this application must, therefore, be accepted.

5. It was then contended that this suit in the Original Side of this Court was incompetent and the suit should have been instituted on the Admiralty jurisdiction of this Court. In aid of this submission reliance was placed on two decisions of the Bombay High Court, namely, the decision in the case of Kamalakar Mahadev v. S. S. Navigation Co. Ltd., : AIR1961Bom186 as well as the decision of the Bombay High Court in the case of Sahida Ismail v. P.R. Salvejkov, : AIR1973Bom18 . My attention was also drawn to the decision of this Court in the case of Commrs. for the Port of Calcutta v. Alliance Jute Mills, (1975) 79 Cal WN 188. It was held in the case of National Co. Ltd. v. Asia Mariner (1968) 72 Cal WN 635 that the High Court as a Court of Admiralty was a court of prescribed jurisdiction and under Section 6 of the Admiralty Court Act, 1861, the High Court would have jurisdiction to entertain the claims arising out of a bill of lading for breach of contract of carriage or breach of duty in relation to the carriage. It was held in that case that Section 6 of the Admiralty Court Act, 1861, was attracted not only where the claim arose on account of the breach of contract of carriage but also where the claim arose on account of negligence, misconduct or breach of duty independently of the contract but whether the claim arose by reason of breach of contract or breach of duty or negligence or misconduct, the cause of action must relate to the goods carried or goods to be carried by the ship. On behalf of the respondents it was contended that this Court in the case of Commrs. for the Port of Calcutta v. Alliance Jute Mills, (1975) 79 Cal WN 188 was concerned with the question cf damages arising out of collision; the other observations of this Court about the jurisdiction under Clause 12 of the Letters Patent were, it was submitted, obiter. It was further urged on behalf of the respondents that in the instant case no suit could be instituted in the Admiralty jurisdiction in the facts and circumstances of the case because either it would have been a cause of action in rem against the ship which was not available or it could have been in personam against the shipowner who could not have been sued because of Section 86 of the Code of Civil Procedure. In any event in the view I have taken on the first aspect of the matter it is not necessary for me to decide this question.

6. It was, lastly, contended that the suit should be stayed because the choice of forum as indicated in the bill of lading was the U.S.S.R., the proper law of contract as suggested by the bill of lading was also the law of the Soviet Union. On this aspect of the matter relevant clauses were 25, 26 and 27 of the bill of lading which are to the following effect:

'25. General average shall be adjusted according to York-Antwerp Rules 1956 and the average adjustment shall be prepared in the U.S.S.R.

26. All claims and disputes arising under and in connection with this bill of lading shall be judged in the U.S.S.R.

27. All questions and disputes not mentioned in this bill of lading shall be determined according to the Merchant Shipping Code of the U.S.S.R.'

The principles upon which this question should be decided are now well settled. The choice of law in this case is not decisive. It is better to find out with what country the dispute is more closely concerned. See the observations of Lord Denning in the case of The Fehmarn, (1958) 1 All ER 333. Some of these principles were reviewed by me in the case of Union of India v. N.M. Bulgare, : AIR1973Cal526 . This question will arise if the ship owner takes the terms of the bill of lading as defence of the action. Therefore, in my opinion, at this stage in view of the facts and circumstances averred in the instant case it would be premature to decide this question.

7. In the view I have taken, however, on this first aspect of the matter as indicated above, this application must succeed and, therefore, there will be an order in terms of prayer (a). This decision will not in any way prejudice the rights of the plaintiffs to institute proceedings against appropriate parties including the defendant on proper cause of action in the appropriate forum.

8. In the facts and circumstances of the case each party will pay and bear its own costs.


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