Partly allowed

M.N.Nagaraju v. M/S.K.S.Distillery

Kerala HC9 Aug 2019CO/5/2015

Case brief

AI extract

What is this about?

The High Court allowed the appeal and cross objection in part. It upheld the liability of the consignee/third defendant for demurrage charges due to a labour strike, framed a reasonable daily rate for three lorries, fixed total damages at Rs.5,75,000 after deducting an ex-gratia payment, and dismissed the application for additional evidence regarding the Managing Director's illness.

What did the court decide?

Third defendant directed to pay Rs. 5,75,000 with 6% annual interest from decree date. Application for additional evidence dismissed. Deduction of Rs. 1,75,000 ex-gratia payment made.

M.N.Nagaraju Vs M/S.K.S.Distillery — Contract and Commercial Disputes | Kerala HC (2019)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE SATHISH NINAN

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FRIDAY, THE 9TH DAY OF AUGUST 2019 / 18TH SRAVANA, 1941

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RFA.No.83 OF 2009

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AGAINST THE JUDGMENT AND DECREE IN OS 126/2007 DATED 31-10-2008 OF PRINCIPAL S.C., THALASSERY

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APPELLANT/3RD DEFENDANT:

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M/S.K.S.DISTILLERY, VARAM, KANNUR, REP. BY ITS MANAGING DIRECTOR, SHRI. K.SREEDHARAN.

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BY ADV. SRI.DINESH R.SHENOY

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RESPONDENTS/PLAINTIFF & DEFENDANTS 1 AND 2:

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1 M.N.NAGARAJU, S/O LATE M.R. NARASIMHA RAJU, PROPRIETOR OF ARJUN BULK CARRIERS, 104/10, 3RD FLOOR, SWASTIK COMPLEX S.C. ROAD, BANGALORE 560 020.

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2 THE UGAR SUGAR WORKS LTD., UGAR KHURD - 591316, 416, BELGAM, KARNATAKA (REP. BY ITS CHAIRMAN & MANAGING DIRECTOR)

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3 D.C. JOHAR & SONS (P) LTD., PO BOX NO.1022, MARKET ROAD, ERNAKULAM, COCHIN 682 011.

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(REPRESENTED BY ITS, MANAGING DIRECTOR)

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BY ADVS. SRI.K.R.AVINASH (KUNNATH)- R1 SRI.ABDUL RAOOF PALLIPATH - R1 SMT.LATHA KRISHNAN - R2 & R3 SRI.K.ANAND (SR.) - R2 & R3

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THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 07-08-2019, ALONG WITH CO.5/2015, THE COURT ON 09-08-2019 DELIVERED THE FOLLOWING:

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE SATHISH NINAN

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FRIDAY, THE 9TH DAY OF AUGUST 2019 / 18TH SRAVANA, 1941

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CO.No.5 OF 2015 IN RFA. 83/2009

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CROSS OBJECTIONER/1ST RESPONDENT

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M.N.NAGARAJU, S/O.LATE M.R. NARASIMHA RAJU, PROPRIETOR OF ARJUN BULK CARRIERS, 104/10, 3RD FLOOR,SWASTIK COMPLEX, SC ROAD, BANGALORE - 560020.

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BY ADV. SRI.K.R.AVINASH (KUNNATH), ABDUL RAOOF P.

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RESPONDENTS/APPELLANT & RESPONDENTS 2 & 3:

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1 M/S.K.S.DISTILLERY, VARAM, KANNUR, REPRESENTED BY ITS MANAGING DIRECTOR, SHRI. K. SREEDHARAN.

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2 THE UGAR SUGAR WORKS LIMITED, UGAR KHURD - 591316, 416, BELGAM, KARNATAKA (REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR)

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3 D.C. JOHAR AND SONS PRIVATE LIMITED,

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P.O. BOX NO. 1022, MARKET ROAD, ERNAKULAM, COCHIN - 682 011, (REPRESENTED BY ITS MANAGING DIRECTOR)

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BY ADV. SRI.DINESH R.SHENOY - R1 SMT.LATHA KRISHNAN K. ANAND - R2 & R3

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THIS CROSS OBJECTION HAVING BEEN FINALLY HEARD ON 07-08-2019, ALONG WITH RFA.83/2009, THE COURT ON 09-08-2019 DELIVERED THE FOLLOWING:

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SATHISH NINAN, J.

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= = = = = = = = = = = = = = = = = = RFA No.83 of 2009 & Cross Objection No.5 of 2015

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= = = = = = = = = = = = = = = = = = Dated this the 9^th day of August, 2019

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J U D G M E N T

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The suit for damages was decreed as against the third defendant. Challenging the same, the third defendant is in appeal. As against the denial of interest, the plaintiff has preferred the cross objection.

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The plaintiff is doing business in carriers. The first defendant is engaged in the business of manufacturing and supply of spirit. The second defendant is the agent of the first defendant in Kerala. The third defendant is engaged in the business of distillery.

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The third defendant, as per Ext.A37 dated 10.01.2006, placed orders with the first defendant for the supply of Extra Neutral Alcohol (ENA). The first defendant hired three tanker lorries of the plaintiff for transportation of the ENA required by the third defendant. The tanker lorries reached the

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 2 :-

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premises of the third defendant on 15.01.2006. Since there was a labour strike going on at the third defendant company, ENA could not be unloaded. The tankers were held up at the premises of the third defendant for 278 days. The suit is filed for realisation of damages, under the head of demurrage charges.

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Defendants 1 and 2 denied their liability. It was contended that the detention of the vehicle occurred consequent to the strike in the factory of the third defendant. The quantum of damages claimed was also challenged.

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Third defendant contended that they are not responsible for the strike. Every efforts were taken by them to have the goods brought into the factory premises and to have the same unloaded. Damages, if any, caused to the plaintiff is not on account of any action or inaction of the third defendant. The quantum of damages claimed was also disputed.

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The trial court held that the detention was

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 3 :-

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caused due to the strike at the establishment of the third defendant and that defendants 1 and 2 cannot be made responsible for the same. They were accordingly, absolved. A decree was granted against the third defendant.

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Heard learned counsel on either sides.

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Ext.A3 series permits issued by the Excise

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Department evidences that the third defendant is the consignee and licensee of the goods (ENA). The fact that the tanker lorries were detained at or near the factory premises of the third defendant consequent on a labour strike, is beyond dispute. Ext.A36 is a notice dated 24.12.05 regarding the strike proposed to be held from 10.01.2006 onwards. It is in spite of the said notice and the commencement of the strike thereafter, that Ext.A7 supply order was placed by the third defendant with the first defendant. There is no case that the factum of strike was made known to the first defendant. It is accordingly that arrangements were made by the first defendant to have the goods

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 4 :-

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delivered at the premises of the third defendant. This resulted in the confinement of the vehicles. As rightly held by the trial court neither the first or second defendants could be made answerable for the same. Though the learned counsel for the third defendant-appellant would contend that the cause of strike was something beyond their control and was by the security staff, on the face of Ext.A36 those contentions are insignificant. The third defendant in spite of being aware of the strike, required delivery of the goods. The Court below was right in holding the third defendant liable for damages.

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Though the learned counsel for the

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appellant-third defendant would contend that the third defendant only acts as an agent of the first defendant and that the liability, if at all any, is on the first defendant, I find that there is not even such a plea for the third defendant. It is the action or inaction on the part of the third defendant which resulted in the detention of the

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 5 :-

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vehicle and the third defendant is responsible and liable for the same. If the third defendant claims that it is an agent of the first defendant, the agent has statutory remedies against the principal. The contention is only to be turned down.

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Though the plaintiff claimed demurrage charges for 278 days, the trial court found that the period of detention is only 250 days. It is not attempted to be demonstrated before me that the said finding is not correct. Regarding the demurrage charges, the trial court has fixed the

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same at `1,500/- per day, per vehicle. To arrive at the said figure, the trial court took into consideration the monthly repayments being made towards loan for purchase of the vehicle, the permit charge, tax, insurance premium etc. I do not subscribe with the mode adopted by the trial court for fixation of the demurrage charges. According to the learned counsel for the appellant, the

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demurrage charges could only be `500/- per day in respect of each vehicle. No correct data regarding

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 6 :-

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demurrage charges is available before the court. In the plaint, the plaintiff has claimed damages at the rate of 1,000/- per lorry for each day, for seven days and thereafter at 2,000/- per tanker per day. The suit being of the year 2007, I do not think it just and proper to have the case remanded for adjudication regarding the demurrage charges since it would not be in the interest of both sides. In view of the contention of the appellant

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that the demurrage charges could only be `500/-

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whereas the plaintiff claims at 2,000/-, I deem it just and reasonable to have the amounts fixed at 1,000/- per lorry, each day; ie: `3,000/- per day in total, for the three lorries.

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Learned counsel for the appellant would submit that it is the basic principle in a claim for damages that, the person who suffers damages should make every endeavour and attempt for mitigation/reduction of damages. Neither the plaintiff nor defendants 1 and 2 took any steps for mitigation of damages, and therefore, they are not

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 7 :-

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entitled to sustain the claim, submits the counsel. As noticed first above, the third defendant is the licensee and consignee. The goods involved being ENA, any person other than the licensee cannot take any steps. It is seen that Ext.A1 order dated 01.08.06 was issued by the Commissioner of Excise permitting transport of the consignment from the third defendant's premises to the premises of one M/s SDF Industries Ltd. at Thrissur. The said order was passed on the request of the third defendant. Immediately thereafter, the plaintiff approached this Court in W.P.(C) No.19044/2006 and this Court directed grant of adequate police protection to the plaintiff to have the goods removed in terms of Ext.A1. Though the learned counsel for the appellant would submit that no instructions were given by the first defendant to have the goods delivered elsewhere, since the third defendant is the licensee, it is for them to take appropriate action. Moreover, the incident having occurred at the premises of the third defendant, it is only the

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 8 :-

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third defendant and its officers who will be aware of the situation at the spot. So also, there is no case for the third defendant-appellant that they made a request to the first defendant to have the goods transported elsewhere which was turned down by the first defendant. Therefore, the contention of the appellant does not hold good.

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The learned counsel for the appellant would submit that, at the time of the trial of the suit, the Managing Director of the third defendant company was hospitalised consequent to which the third defendant could not effectively take part in the trial; necessary and relevant documents with regard to the transaction could not be produced consequent thereto. In this appeal, the appellant has filed an application under Order XLI Rule 27 CPC seeking production of additional documents. The documents sought to be produced are the agreements between defendants 1 and 3, between the third defendant and its security agency, and also documents to show that the Managing Director of the

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 9 :-

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third defendant was suffering from illness. As regards the medical records, one document produced is a certificate dated 01.08.08 issued by a Cardiologist. The certificate states that Sri.K.Sreedharan (the Managing Director) is under treatment by the said Doctor for Coronary artery disease, diabetes mellitus, hypertension, peripheral vascular disease and osteoarthritis; that the patient had an episode of unstable angina and requires rest for four months. Pertinently it does not state that the patient was admitted at the hospital and treated. The trial in the suit commenced by examination of PW1 on 13.08.08. If the certificate was issued on 01.08.08, the same could have very well been produced before the trial court. It was not produced before the trial court though it was available with the appellant. The other two medical records available are discharge summary reports which are dated 18.02.03 and 05.04.03. No records after the said date have been produced to show that he is suffering from any

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 10 :-

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illness. Therefore, the medical records produced will not in any manner help the appellant to justify his absence during trial. That apart, PW1 was cross-examined at length by the counsel for the third defendant. A witness list was filed on behalf of the third defendant. Two witnesses were cited by him; one of them have been examined as DW2. The other witness cited is the Joint Managing Director, who is none other than the son of the Managing Director. However, he was not examined. No explanation is forthcoming for his non-examination. So also, along with the witness list certain documents were also produced by the third defendant. Therefore, the contention of the appellant-third defendant that they did not get sufficient opportunity at trial, cannot be accepted. On the discussions supra, the documents sought to be produced as additional evidence are not of any significance in deciding the plaint claim. In view thereof, the application filed as IA 553/09 seeking production of additional documents

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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is only liable to be dismissed and I do so.

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Grant of interest could be made conditional on non-payment of the damages within the time being stipulated in this judgment. In such event the plaintiff shall be entitled to realise the decree amount with interest thereon from the date of the trial court decree. This, according to me, would be just and reasonable.

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Now, coming to quantification of the damages, as noticed by the trial court `1,75,000/has been paid by the first defendant, ex gratia, to the plaintiff towards damages. The said amount is liable to be deducted from the damages. Therefore,

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the plaintiff is entitled to realise 3,000 x 250 days - 1,75000 = `5,75,000/-.

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In the result, this appeal and the Cross Objection are allowed in part. The 3^rd defendant shall pay an amount of `5,75,000/- to the plaintiff within a period of two months from today. In the event of non-compliance within the time stipulated, the plaintiff shall be entitled to reaslise the

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RFA No.83 of 2009 & Cross Objection No.5 of 2015

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said amount with interest at the rate of 6% per annum from the date of trial court decree (31.10.08) till realisation, from the third defendant. Parties to bear their respective costs in the appeal.

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Sd/SATHISH NINAN JUDGE

kns/-

//True Copy//

P.S. to Judge

RFA No.83 of 2009 & Cross Objection No.5 of 2015

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:- 13 :-

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Vide order dated 29.10.2019 in IA No.1/2019 it is recorded in the judgment dated 9.8.19 in RFA No.83/2009 & Cross Objection No.05/2015 that 'The Demand Draft bearing No.015031 dated 30/09/2019 of the State Bank of India, Commercial Branch, Kannur, produced by the appellant, drawn in the name of the proprietary concern of the plaintiff is handed over to the counsel for the 1^st respondent/ plaintiff'.

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Sd/Deputy Registrar

M.N.Nagaraju v. M/S.K.S.Distillery

Case brief

What is this about?

What did the court decide?

M.N.Nagaraju v. M/S.K.S.Distillery

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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