Partly allowed

The Board of Trustees of the v. M/S Sun Export Pvt. Ltd.

Madras HC18 Nov 2016AS/351/2016

Case brief

AI extract

What is this about?

This was an appeal against a decree in a dispute regarding loss of raw silk due to fire in a port sales warehouse. The court held the suit was not time-barred, the fire resulted from negligence (electric short circuit), and the custom house was liable for damages but adjusted interest calculations based on the delay in filing the plaint.

What did the court decide?

Judgment and Decree of the trial Court modified; Plaintiffs entitled to interest at 18% p.a. from 31.08.2006 and 6% p.a. thereafter.

The Board of Trustees of the Vs M/S Sun… — Contract and Commercial Disputes | Madras HC (2016)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated : 18.11.2016

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CORAM:

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THE HONOURABLE MR.JUSTICE A.SELVAM and

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THE HONOURABLE MR.JUSTICE P.KALAIYARASAN

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A.S.No.351 of 2016 and C.M.P.Nos.7717, 12827 and 12828 of 2016

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The Board of Trustees of the Port of Madras, Rep. by its Chairman, Madras Port Trust, Rajaji Salai, Madras - 600 001.

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.. Appellant

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Vs.

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M/s. Sun Export Pvt., Ltd., Registered Office No.41/42, Atlanta, No.205, Nariman Point Bombay - 400 021, Represented by its Director Mr.B.P.Choudhury.

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M/s. Sun Export Pvt., Ltd., No.35, Annadanappa Lane, No.64, Avenue Road Cross, Bangalore.

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..Respondents

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Prayer : Appeal Suit filed under Section 96 of the Code of Civil Procedure r/w Order XLI Rule 1 of the CPC, against the Judgment and Decree, dated 08.09.2014 made in O.S.No.12776 of 2010 on the file of the II Additional District & Sessions Judge, City Civil Court, Chennai.

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For appellant : Mr.R.Karthikeyan

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For respondents : Mr.T.P.Sankaran

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JUDGMENT

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(Judgment of the Court was delivered by P.KALAIYARASAN, J )

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This Appeal Suit is directed against the Judgment and Decree, dated 08.09.2014 made in O.S.No.12776 of 2010 on the file of the II Additional City Civil Court, Chennai.

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The plaint averments are as follows :

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(i) The plaintiffs imported 219 bales of raw silk Gradeless

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from crown commercial house, Hongkong. Out of the total quantity of 219 bales imported, the plaintiffs are concerned with 132 bales. The said 132 bales of raw silk were shipped in vessel "Lanka Srimathi" at Hongkong under bills of lading. The said vessel arrived at the port of Madras on or about 27.01.1992 and discharged its cargo. The plaintiffs engaged M/s. International Implex Agency, Madras to act as their clearing agents at the Madras Port for clearing of the said bales. The plaintiffs were granted permission by the defendant to destuff the full container load and they were able to clear about 87 bales raw silk and the remaining 132 bales were in the custody of the defendant pending clearance.

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(ii) While the said goods were under the custody of the

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defendant, fire broke out on 31.08.1993 at the sales warehouse where the plaintiffs' goods were stored, as a result of which plaintiffs goods were destroyed / damaged / water soaked. The defendant informed the plaintiffs about the fire accident through its communication, dated 08.09.1993 and requested the plaintiffs to clear the goods after paying the dues. The plaintiffs instructed their clearing agent to take immediate action through their communication, dated 28.09.1993. The clearing agent addressed the defendant by making clear that due to fire in the warehouse, the plaintiffs have to suffer huge loss and they would be holding the defendant liable for the actual loss after conducting survey. The defendant was also requested to depute their surveyor / authorised representative to participate in the independent survey that was to be conducted on the consignments affected by fire at 3 p.m on 28.09.1993. They were also called upon to inform the clearing agents as to when it would be feasible for them to conduct a joint survey. Since there was no response from the defendant, the plaintiffs have to arrange for an independent survey on the goods affected by fire.

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(iii) The survey was conducted on 28.09.1993 at the sale warehouse of the defendant in the presence of officers of the clearing agency and the plaintiffs. The Surveyors submitted their report, dated 29.09.1993. As per the report, 38 bales of raw silk were found in the water soaked stained and partly charred condition. 34 bales were found lying inside the locker godown and the contents were found completely charred, loose ranks scattered all over and water soaked. The nett weight of raw silk in 34 bales which was considered total loss is 1122 kgs. The partly charred, stained water, soaked raw silks from 38 bales are beyond and reprocessing / repairing condition and the nett weight of those bales is 1254 kgs. The said quantity is of no use to the plaintiffs and it was also treated as total loss. The damaged silks have no scrap value. The total loss due to fire comes to 2376 kgs and the plaintiffs value the loss at USD 48,700/-, which is Rs.12,66,688.03/- in Indian currency.

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(iv) The fire broke out at the defendant's sales warehouse

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and caused damage and loss to the goods, for which they were incharge and custody and it occurred solely due to the negligence of the defendant. The plaintiffs caused a notice, dated 29.09.1993 to the defendant. The defendant sent a belated reply, dated

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07.12.1993. The defendant as bailee is bound and liable to take care of the goods while they were in their custody. Therefore, the suit has been filed for recovery of the amount towards damages.

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The averments in the written statement are as follows :

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(i) The suit is not maintainable either in law or on statement of facts. The suit itself is barred by limitation, as per Section 120 of the Major Port Trust Act, 1963, since the suit was not filed within six months from the date of accrual of the cause of action. The suit though seems to have been presented before the trial Court on 12.07.1994 in defective form and the same was finally represented only during the year 2006. Due to long lapse of delay, the defendant, a public undertaking has been seriously disabled from effectively putting forward their defence.

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(ii) The vessel "Lanka Srimathi" arrived at Chennai Port on 27.01.1992. The consignment of 201 packages (182 bales + 19 cartons) of raw silk was destuffed from container landed from the vessel. Out of 201 packages, 68 bales and 19 cartons were delivered and the remaining 114 bales were transferred and stocked in the 8th compartment of Sales warehouse. The clearing agents filed Import Application on 03.02.1992 for clearance of the

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consignments and cleared 87 bales. The plaintiffs were clearing the consignments in parts. The balance packages as per tally maintenance at the time of destuffing are only 114 packages. For the said packages, the consignee had not paid the Trust dues payable on them till date.

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(iii) The said packages are lying uncleared in the sea warehouse incurring heavy demurrage charges. Since the dues to the Trust were mounting and the goods were left uncleared, the defendant issued sale notice, dated 12.08.1992 to the consignee. But the consignee did not take any steps to clear the same. The Trusts warehouse are only transit sheds which could not be used as private godowns by the users and store their cargo for such a long period. The defendant cannot be attributed with any negligence or imprudence to the loss.

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(iv) There was an accident of a minor fire in one of the compartments of the sales warehouse on 31.08.1993. This was for reasons beyond the control of the defendant, despite all care taken to safeguard the goods. In the accident, some of the bales were damaged and the same was moved to the 7th compartment. Thereafter, M/s. International Impex Agency cleared some bales on

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08.06.1995. As per the destuffing particulars only 48 bales were available at Sales warehouse and the same was brought for sale through public auction. The claim of the plaintiffs appears to have been exaggerated.

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(v) The defendant had intimated to the plaintiffs about the

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said fire accident by letter, dated 08.09.1993 and asked them to clear the goods expeditiously on payment of the Trust's dues in full and also directed them to conduct survey by their own Surveyors in the presence of Customs officials. Thereafter, the agents of the plaintiffs wrote a letter to the defendant proposing the survey. Then the plaintiffs sent legal notice. The defendant also sent a suitable reply. Except the above facts, the averments made in the plaint are denied. Therefore, the suit is liable to be dismissed.

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The learned II Additional District Judge, City Civil Court, Chennai, framed necessary issues and after analysing both the oral and documentary evidence decreed the suit. Aggrieved by the Judgment and Decree, the defendant has preferred this appeal.

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The learned counsel appearing for the appellant / defendant contends that the suit ought to have been dismissed for

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long lapse of delay in representing the plaint in 2006 after first presentation in 1994; that the trial Court has not considered the non-payment of Trust dues by the plaintiffs; that the trial Court has not appreciated the serious lapses, omissions and defaults on the part of the plaintiffs in delayed clearance of consignments, that too in parts; that the plaintiffs instead of getting their goods properly insured against risks claimed against the appellant after almost abandoning the goods and that the respondents / plaintiffs has not issued statutory notice.

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The learned counsel appearing for the respondents per contra contends that the suit has been filed in time and the defendant being custodian or the goods is liable to pay damages, as admittedly, the loss to the goods occurred due to fire accident. It is contended that due to poor maintenance of the electric line in the sales warehouse by the defendant, fire broke out and the learned Additional Judge, after analysing the oral and documentary evidence has rightly decreed the suit and the same does not warrant any interference.

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There is no dispute that the plaintiffs imported 219 bales of raw silk Gradeless from Hongkong and when the shipment

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reached the defendant Port Trust on 27.01.1992, plaintiffs got permission from the defendant for destuffing and cleared 87 bales of raw silk out of 219 bales. The remaining 132 bales were in the custody of the defendant pending clearance and the same was kept in the sales warehouse in the Port Trust premises. While the said goods were under the custody of the defendant, fire broke out on 31.08.1993 at the sales warehouse where the plaintiffs goods were stored. The bales of raw silk of the plaintiffs kept in the sales warehouse were damaged. The fire accident was intimated by the defendant through their communication dated 08.09.1993 to the plaintiffs. The plaintiffs after duly informing the defendant engaged independent surveyor and got a report after inspection about the damages.

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The plaintiffs contends that fire broke out due to electric short circuit and therefore, damages to the goods was caused only due to negligence in maintaining the warehouse properly by the defendant. Therefore, the defendant is liable to make good the actual loss sustained by the plaintiffs. The appellant's / defendant's contention is that the accident occurred only due to act of God and because of the delayed filing of the suit, the defendant is handicapped in getting records and particulars.

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As per Section 120 of the Major Port Trust Act, 1963, suit against the Port Trust is to be filed within six months from the date of accrual of the cause of action. Here in this case, fire broke out on 31.08.1993 and the accident was informed by the defendant to the plaintiffs on 08.09.1993. The plaint was first presented in the Court on 28.02.1994. Therefore, the suit was filed well within the time. Though the plaint was first presented in time, the same was returned for compliance and finally it was represented and taken on file in the year 2006. The delay was condoned and suit was numbered. DW1 in his evidence says that the defendant had the entire records at the time of filing the written statement. Therefore, the contention of the appellant / defendant that the Port Trust was handicapped in getting the materials because of the long delay in filing of the suit is not acceptable. The above contention does not also hold good as the delay in representation was condoned and it became final as the defendant had not challenged the order of condonation of delay.

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The learned counsel appearing for the appellant cited the Judgment of this Court in Union of India, The v. Messrs. Cavalier Shipping Co ., reported in (1989) 2 LW 371 for the proposition that the condonation of long delay in representation

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without notice is not sustainable. The above Judgment was based on an application challenging the condonation of delay in representation. As already pointed out, the defendant has not challenged the order condoning the delay and he allowed the suit to be tried. Therefore, the above citation is not applicable to the facts of this case.

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The learned counsel appearing for the appellant contends that the defendant is not liable as it never took charge of the goods, as per Section 42(2) of the Major Port Trust Act, 1963. As per the above Section, the Board may, if so requested by owner take charge of the goods for the purpose of performing the service or services and shall give a receipt in such form, as the Board may specify. This is with respect to the taking of the goods of the entire ship for performance of service.

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Here in this case on hand, the bales of raw silk were left uncleared in the sales warehouse of the Port Trust. As per the evidence of D.W.1, the plaintiffs paid the demurrage charges for such storage. The goods in question were kept in the sales warehouse of the defendant pending clearance by paying the prescribed charges and therefore, the defendant is the custodian of the said goods.

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The only point that is to be decided is whether the fire

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broke out due to negligence on the part of the defendant or by act of God. It is case of the plaintiffs that due to electric short circuit fire broke out. The same has not been denied by the defendant. D.W.1 in his evidence does not deny the electric short circuit that broke out the fire, when it was specifically put to him during crossexamination.

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The defendant informed about the fire accident to the plaintiffs through its communication, in which it specifically stated to conduct necessary survey by the plaintiffs own Surveyor. After giving notice to the defendant, the plaintiffs engaged Surveyor and they inspected the site and gave a report about the loss. The Surveyor's Report as to the cause of loss reads thus :

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"In our enquiry, fire occurred due to electric short circuit in the godown."

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Therefore it is clear that fire broke out only due to electric short circuit in the godown and it is not an act of God. With respect to the maintenance of electric line in the godown, D.W.1 could not give any particulars. There is no material as to the age of electrification and about the regular maintenance on the part of the defendant. Therefore, the contention of the respondents / plaintiffs that fire

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broke out due to negligence on the part of the appellant / defendant is probable and acceptable.

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The Surveyor's Report assessed the actual loss by

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fixing the value as per the invoice, which reads thus :

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"Loss Assessment : The consignee had imported the Raw silk for sales to the manufacturer of Fabrics and Garments which was intended for the Export. The completely charred silk of quantity 34 bales nett weight 1122 kgs was a total loss. The partly charred, stained, water soaked / mould grown quantity of 38 bales nett weight 1254 kgs, in our opinion were beyond any reprocessing / repairable condition. The quantity of 1254 kgs silk will not have any usage to the importer and to be treated as total loss / scrapped. The damaged silk have no scrap value. Hence, in our opinion the importer had lost a quantity of 72 bales Nett of 2376 Kgs of Raw silk due to fire at the Sales warehouse, Madras Port.

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Value of 2376 Kgs of Raw silk

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Lost as per Invoice (CIF Cost)

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= US $ 48708

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= Rs.12,66,788.03 (USD 3.8450-Rs.100)

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Value of 2376 Kgs of Raw silk on the Assessable value basis works out to Rs.12,79,455.27/-.

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(Rupees Twelve Lakhs Seventy Nine Thousand Four Hundred Fifty Five and Paise Twenty Seven only).

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Therefore, the actual loss sustained by the plaintiffs due to fire at the Sales warehouse works out to Rs.12,79,455.27/- and the defendant does not dispute the value of loss arrived at by the Surveyor. The Surveyor Examined as P.W.2 has also spoken as to the damages and the Report.

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Yet another contention of the learned counsel for the appellant / defendant is that the suit was filed without statutory notice under Section 80 CPC and therefore, the suit is not maintainable. The object of serving notice under Section 80 CPC is to give the Government sufficient warning of the case proposed to be instituted, so that the Government if it so wishes can settle the claim without litigation or afford restitution without recourse to

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Court of law. The defendant having conducted trial before the trial Court has now come forward with this appeal. Therefore, nonissuance of statutory notice does not affect the case and the above argument is not sustainable.

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As far as the interest is concerned, the trial Court awarded interest at 18% p.a from the date of plaint till the date of decree and 6% p.a from the date of decree till the date of realisation. As rightly pointed out by the appellant / defendant, there was long delay that is about 12 years in final presentation of the plaint by the plaintiffs. Though the plaint was first presented on 28.02.1994, final presentation was made only on 31.08.2006. For this interregnum period, the plaintiffs are not entitled to any interest. Therefore, with respect to the interest alone, this Court is of the considered view that the plaintiffs are entitled to interest at 18% p.a from 31.08.2006, the date of final presentation of the plaint till the date of decree in this appeal and 6% p.a from the date of decree till the date of realisation. Excepting the interest portion, this Court does not see any reason to interfere with the Judgment of the trial Court and the same is confirmed.

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In fine, the Appeal Suit is partly allowed without Costs and the Judgment and Decree of the trial Court in O.S.No.12776 of 2006 dated 08.09.2014 are modified as follows only in respect of interest. The respondents / plaintiffs are entitled to get interest at 18% p.a from 31.08.2006, the date of final representation of the plaint till the date of decree and the subsequent interest is fixed at 6% p.a. Consequently, connected miscellaneous petitions are closed.

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(A.S.,J.) (P.K.,J) 18-11-2016

Index :Yes

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The II Additional District & Sessions Judge, City Civil Court, Chennai.

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A.SELVAM,J. AND P.KALAIYARASAN,J.

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tsvn

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Judgment in A.S.No.351 of 2016

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18-11-2016

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http://www.judis.nic.in

The Board of Trustees of the v. M/S Sun Export Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

The Board of Trustees of the v. M/S Sun Export Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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