Partly allowed

M/s. Steel Authority of India Ltd., v. Central Road Lines Corporation

Telangana HC18 Jun 2013AS/1717/2003

Case brief

AI extract

What is this about?

The High Court disposed of five appeals involving a transport contract for oversize steel goods. While ruling out negligence, the Court held non-compliance of Section 10 notice requirement fatal for claims under Section 9. It allowed recovery of limited retrieval charges on equal sharing and enhanced interest rates.

What did the court decide?

A.S.No.161 partly allowed; A.S.Nos.1686, 1687, 1717 dismissed; A.S.No.6 allowed in part with interest enhanced to 9%.

M/s. Steel Authority of India Ltd., Vs… — Contract and Commercial Disputes | Telangana HC (2013)

¶1

THE HONOURABLE SRI JUSTICE L. NARASIMHA REDDY AND THE HONOURABLE SRI JUSTICE S.V.BHATT

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APPEAL SUIT Nos.161 of 1995, 6 of 2011 & 1686, 1687 & 1717 of 2003

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COMMON JUDGMENT:(Per the Hon’ble Sri Justice L.Narasimha Reddy)

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This batch of five appeals arises out of the same contract. Hence, they are disposed of through this common judgment.

¶5

For the sake of convenience, the parties are referred to, as arrayed in A.S.No.1717 of 2003.

¶6

The facts that gave rise to the filing of these appeals are as under:

¶7

The appellant, which is a Government of India undertaking, has steel factories at different parts of the country. For the purpose of expansion of its steel factory in Bhilai, it imported four over dimensional backup rolls (for short ‘the goods’) from Japan to the Visakhapatnam Port. From there, the goods were to be transported on surface to Bhilai. Tender notice was issued for this purpose in 1985. The 1^st respondent-Central Road Lines Corporation submitted its tender and quoted a sum of Rs.14.80 lakhs and the same came to be accepted. The Correspondence ensued between the parties in this regard.

¶8

After the contract was concluded, the 1^st respondent initially arranged three trailors for transporting three items of the goods. They have selected the route via Vijayawada, Hyderabad and Nagpur through National Highway No.9. When one of the vehicles was

¶9

crossing the bridge across Munneru rivulet, at Keesara village and after it crossed 12 spans, the 13^th span of the bridge made up of steel structure collapsed and the entire vehicle fell into the rivulet. The other vehicles, which were loaded with the goods, took a round about route and reached a place known as Nakrekal on the National Highway No.9. The 4^th item was still at Visakhapatnam.

¶10

The item, which fell into the rivulet, together with the vehicle had to be retrieved by the 1^st respondent and it was brought to the road.

¶11

On finding that it is no longer possible to take the goods through road transport, the appellant arranged for transporting the same by train. In the process, it procured the extra dimensional wagons from M/s. Tata Iron and Steel Company.

¶12

Ultimately, the goods were transported to Bhilai.

¶13

The correspondence ensued between the parties claiming the amounts one against the other.

¶14

The 1^st respondent filed O.S.No.111 of 1987 in the Court of Principal Subordinate Judge, Visakhapatnam, which came to be renumbered as O.S.No.36 of 1995, claiming a sum of Rs.22,68,093/-, which included the proportionate freight charges, detention charges for the trailors, unloading charges, sleeper charges etc. It has also filed O.S.No.108 of 1987, which is renumbered as O.S.No.35 of 1995, claiming refund of EMD amount of Rs.2,99,238.35 ps. Another suit filed by the 1^st respondent was O.S.No.101 of 1987, claiming a sum of Rs.13,50,219.28 ps. towards the retrieval charges.

¶15

The appellant, on the other hand, filed O.S.No.531 of 1987 in the Court of I-Additional Subordinate Judge, Visakhapatnam, which was re-numbered as O.S.No.54 of 1995, claiming a sum of Rs.37,73,710.66 ps towards the expenditure incurred by it for transportation of the goods to Bhilai.

¶16

On earlier occasion, the trial Court dismissed the suits being O.S.Nos.35 and 36 of 1995 and decreed the suit being O.S.No.54 of 1995, through a common judgment dated 23.08.1986. Aggrieved by that, the 1^st respondent filed the appeals being A.S.Nos.18, 377 and 582 of 1997. Though a judgment dated 10.07.2002, this Court has set aside common judgments and decrees and remanded the matter to the trial Court for fresh consideration and disposal. On remand, the trial Court decreed O.S.No.35 of 1995, partly decreed O.S.No.36 of 1995 and dismissed O.S.No.54 of 1995. A.S.Nos.1686 and 1687 of 2003 are filed against the judgments and decrees in O.S.Nos.35 and 36 of 1995 respectively by the appellant herein. Similarly, it filed A.S.No.1717 of 2003 feeling aggrieved by the judgment and decree passed in O.S.No.54 of 1995.

¶17

O.S.No.101 of 1987 was dismissed through a separate judgment dated 26.10.1994. Aggrieved by that, the 1^st respondent filed A.S.No.161 of 1995.

¶18

Sri V.Ravinder Rao, learned counsel for the appellant, advanced arguments on several aspects. He submits that it was squarely the responsibility of the 1^st respondent to transport the goods upto the destination in accordance with the conditions of the contract, and on account of its negligence and lack of proper care, not only the goods did not reach the destination, but also the appellant had to incur heavy

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expenditure, be it by arranging special wagons in the Railways or towards retrieval charges. He submits that it is not at all necessary for the appellant to prove negligence on the part of the 1^st respondent in view of the language employed in Section 9 of the Carriers Act, 1865 (for short ‘the Act’) and still adequate material was placed before the trial Court. Learned counsel further submits that the trial Court was not at all justified in decreeing the suits in their entirety or in part, once it has been established that there was lack of proper care on the part of the 1^st respondent. He has relied upon the judgments rendered by the Supreme Court in Patel Roadways Ltd. vs. Birla Yamaha Ltd .^[1] and Nath Bros. Exim International Ltd. vs. Best Roadways Ltd .^[2] .

¶20

Smt. N. Surya Kumari, learned counsel for the 1^st respondent, on the other hand, submits that every possible care was taken by her client for transporting the goods. She contends that though there was a nearer route to Bhilai via Jagadalpur, the 1^st respondent has chosen a longer route via Vijayawada, Hyderabad and Nagpur, so that the goods are carried safely and, despite that, accident to one of the vehicles occurred due to the weakness of the bridge. She contends that the very fact that the vehicle crossed 12 spans without any problem discloses that the defect, if at all, was only with the bridge. Learned counsel further submits that the trial Court ought to have awarded retrieval charges being Rs.13,50,000/-. She submits that O.S.No.54 of 1995 filed by the appellant, for recovery of damages, by invoking Section 9 of the Act, is not maintainable, since there was no compliance of Section 10 of the Act. She placed reliance upon M/s. Indian Drugs and Pharmaceuticals Ltd., Hyderabad, vs. M/s.

¶21

Savani Transport P. Ltd., Hyderabad^[3] .

¶22

It is observed at the threshold that the claim in the various suits arises out of the transport contract. The 1^st respondent was awarded a contract and, in the process of execution thereof, mishap occurred, which gave rise to almost termination of the entire contract. Having regard to the size and the nature of the goods, the appellant had to incur heavy expenditure in making alternative arrangements through rail transport. The trial Court framed the issues in all four suits as under:

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O.S.No.35 of 1995:

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(1) Whether the plaintiff is entitled to refund of security deposit of Rs.5,000/- in respect of Transport Contract No.TC (VZ)-1 (49)/85 ?

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(2) Whether the plaintiff is entitled to freight charges in respect of transport contract TC (VZ) – 1 (48)/85?

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(3) Whether the plaintiff is entitled to refund of security deposit of Rs.30,857/- in respect of transport contract TC(VZ) – 1 (48)/85 ?

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(4) Whether the plaintiff is entitled to over dimensional and over weight charges and if so to what amount?

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(5) Whether the plaintiff is entitled for transportation of 3 packages from Vizag to Bhilai freight as per Bill No.12165 dated 10.7.85 and if so to what amount ?

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(6) Whether the plaintiff is entitled for refund of earnest money deposit of Rs.10,000-00 in respect of transport tender No.TC(VZ)-1 (51)/85 contract not allotted to the plaintiff ?

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(7) Whether this suit is premature ?

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(8) Whether this suit is bad for mis-joinder of causes of action ?

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(9) Whether this suit is barred by order 2 Rule 2 C.P.C. ?

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(10) To what relief ?

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Additional Issues:

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(1) Whether the plaintiff is a registered partnership firm and whether the person who is representing the plaintiff in the suit is partner of the same ?

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O.S.No.36 of 1995:

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(1) Whether the plaintiff could not complete the contract due to Force Majeure without any fault of the plaintiff ?

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(2) Whether the plaintiff is entitled to proportionate freight charges and if so to what amount ?

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(3) Whether the plaintiff is entitled to the detention charges for the trailors and if so to what amount ?

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(4) Whether the plaintiff is entitled to the unloading charges and if so to what amount ?

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(5) Whether the plaintiff is entitled to Rent of sleepers to protect the rolls and if so to what amount ?

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(6) Whether the plaintiff is entitled to refund of earnest money deposit and security deposit ?

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(7) Whether the plaintiff is not entitled to the interest prayed for ?

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(8) Whether the plaintiff is entitled to the lien prayed for ?

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(9) To what relief ?

¶46

Additional Issue:

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(1) Whether the plaintiff is a registered partnership firm and whether the person who is representing the plaintiff in the suit is partner of the same ?

¶48

O.S.No.54 of 1995:

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(1) Whether defendants carried the plaintiff’s rolls at their own risk ?

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(2) Whether defendants holding necessary public carriers permit ?

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(3) Whether loss and damage was caused to plaintiff due to negligence and deliberate violation of the provisions of law and regulations by the defendants ?

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(4) Whether contract came to an end as contended by the defendants ?

¶53

(5) Whether defendants are liable to compensate the loss by way of damages of Rs.37,73,710.66 ps caused to plaintiff ?

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(6) To what relief ?

¶55

O.S.No.101 of 1987:

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(1) Whether the plaintiff completed the rescue work at a cost of Rs.14,41,463-05 ps and placed the load at a safe place on the river bank and packed it with packing material ?

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(2) Whether on the basis of the assurance given by the 1^st defendant that they would be paid their charges and that the claim bill would paid, the plaintiff had done major part of the work of retrieving the load from the river bed by spending their own money ?

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(3) Whether the plaintiff is entitled to Rs.13,50,219.20 ps from both the defendants jointly and severally ?

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(4) Whether the said amount of Rs.13,50,219.20 ps held by the 1^st defendant does not belong to them but belongs to the plaintiff so as to direct the 1^st defendant to deposit the same into court ?

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(5) Whether the plaintiff has got a first charge on the load of back up steel roll of the 1^st defendant ?

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(6) Whether the 2^nd defendant is not necessary party to this suit ?

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(7) Whether this court has no jurisdiction to entertain this suit ?

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(8) Whether the plaintiff is entitled to the interest prayed for ?

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(9) To what relief ?

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Additional Issue:

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Whether the plaintiff is registered partnership firm and whether the person who is representing the plaintiff in the suit is a partner of the same?

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The evidence was recorded with reference to O.S.No.54 of 1995. On behalf of the appellant, P.Ws.1 and 2 were examined and Exs.A1 to A28 were filed. On behalf of the 1^st respondent, DWs.1 and 2 were examined and Exs.B1 to B54 were filed. In addition to that, the Court has taken on record the evidence marked through third party as Exs.X1 to X21.

¶68

On hearing the learned counsel for the parties, we find that the following points arise for consideration in the appeals:

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A.S.No.161 of 1995:

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(a) Whether the 1^st respondent is entitled to recover a

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sum of Rs.13,50,219.28 ps towards retrieval charges?

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(b) Whether the appellant was entitled for restoration of the goods to it in the same condition in which it was entrusted to the 1^st respondent.

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A.S.No.1686 of 1995:

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(a) Whether the appellant was entitled to withhold the EMD in the absence of any termination of contract or imposition of penalty?

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(b) Whether the failure on the part of the 1^st respondent to transport the goods upto destination was on account of any force majeure factum or on account of any negligence on its part?

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A.S.No.1687 of 1995:

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(a) Whether the 1^st respondent is not entitled to actual proportionate freight charges?

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(b) Whether the appellant was entitled to deny the charges for detention of trailors to the 1^st respondent in spite of the fact that the goods have been transported to a considerable distance?

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A.S.No.1717 of 2003:

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(a) Whether the appellant complied with Section 10 of the Act before it filed O.S.No.54 of 1995?

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(b) Whether it is open for this Court to entertain the objection or ground as to the non-compliance of Section 10 of the Act though it was not raised before the trial Court?

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In a way, the discussion in relation to the points referred to above overlaps each other. Having regard to the controversies of the respective parties, we propose to undertake the common discussion,

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which in our opinion would cover the entire gamut of the appeals.

¶84

The appellant imported an item of steel, which is not only abnormal in size, but also in dimension. After it was imported from Japan through sea, arrangements were made for transporting it to Bhilai. Having regard to the volume of the contract and the specification of the job, tenders were invited and, on processing the same, contract was awarded to the 1^st respondent.

¶85

Hardly, there was any problem or complaint till one of the vehicles loaded with item met with a mishap. The appellant alleged that the mishap could have been avoided, had the 1^st respondent taken adequate care. After going through the voluminous oral and documentary evidence, we find that the 1^st respondent has taken every possible care and arranged the vehicles of suitable specifications. The same is evident from the fact that even the vehicle, which met with an accident, had crossed through 12 spans of the bridge, which was constructed way back in the year 1933, and it is only on account of the collapse of the 13^th span that the vehicle fell in the rivulet. The record is not clear as to whether the appellant has taken clearance from the concerned authorities of the National Highway. However, it is too difficult to hold that there is gross negligence on the part of the 1^st respondent in transporting the goods. This is fortified from the fact that the two other vehicles loaded with the same goods reached a place far ahead of about 100 kilometers away from the place of the accident and the further progress was hampered due to the objections raised by the authorities of the National Highway Department.

¶86

The effort made by the appellant was mainly to get back the goods and transport them to Bhilai. For this purpose, they have not only arranged for taking the goods to the nearby Railway Stations, but also to procure the specially designed wagons from M/s. Tata Iron and Steel Company. Naturally, this process involved a considerable expenditure.

¶87

There was no specific order, as such, passed by the appellant terminating the contract, alleging the acts of negligence on the part of the 1^st respondent. Even the 1^st respondent did not object for transporting the goods through other mode. As a matter of fact, none made an effort to outwit the other on account of the unfortunate incident. Therefore, the request made by the 1^st respondent for refund of the EMD cannot be said to be without basis. The trial Court decreed the suit for this purpose and we do not find any error or illegality in that.

¶88

Accordingly, A.S.No.1686 of 2003 is dismissed.

¶89

A.S.No.1687 of 2003:

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The 1^st respondent has not only claimed a sum of Rs.4,93,333/towards the proportionate freight charges incurred for transporting the goods, but also the charges for detention of trailors being Rs.13,13,760/-, unloading charges of Rs.2,00,000/- and sleeper charges of Rs.2,26,000/-. The trial Court decreed O.S.No.36 of 1995 only to the extent of Rs.5,28,333/-. We are of the clear view that there was every justification for the trial Court in decreeing the suit to the extent of proportionate freight charges and EMD. Similarly, it was also justified in denying the charges for detention of trailors. Such detention was not on account of act or omission on the part of the appellant. Just

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as the 1^st respondent has incurred loss on various accounts due to mishap, the appellant also suffered huge financial loss in transporting the goods through train. Therefore, we do not find any defect in the decree passed in O.S.No.36 of 1995.

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Accordingly, A.S.No.1687 of 2003 is dismissed.

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A.S.No.161 of 1995

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After the mishap occurred and the vehicle together with the item of goods fell into the rivulet, the efforts had to be made to retrieve the same to bring it to the road. Having regard to its size and weight, the sleepers had to be spread all through the way and heavy machinery had to be utilized to bring it to the surface without causing any damage to it. This naturally resulted in expenditure to an extent of Rs.13,50,219.28 ps. The appellant is said to have taken insurance for this. The 1^st respondent claimed the entire amount. We are of the view that since the 1^st respondent had also incurred heavy loss, it would be just and equitable to make them share the burden equally. The trial Court dismissed O.S.No.101 of 1995 in entirety. We decree the suit partly by awarding a sum of Rs.6,00,000/- to the 1^st respondent.

¶95

Accordingly, A.S.No.161 of 1995 is partly allowed.

¶96

A.S.No.1717 of 2003:

¶97

The suit was based on Section 9 of the Act. A sum of Rs.37,73,7.66 ps was claimed. This figure was arrived at by giving credit to Rs.14,80,000/- payable under the original contract and deleting the same from the total expenditure of Rs.52,53,710.66 ps

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said to have been incurred by the appellant.

¶99

The claims under the Act stand on a special footing. The principles of evidence also undergo some change in the adjudication of the claims. In Patel’s case and Nath’s case, the Supreme Court held that the owner of the goods does not have to plead or prove negligence on the part of the common carrier. Notwithstanding the strength of the claim of the appellant based on Section 9 of the Act, there is insurmountable hurdle for the appellant in maintaining the suit. The reason is that it did not comply with Section 10 of the Act.

¶100

Section 10 of the Act reads as under:

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“Notice of loss or injury to be given within six months- No suit shall be instituted against a common carrier for the loss of, or injury to, [goods (including container, pallet or similar article of transport used to consolidate goods) entrusted] to him for carriage, unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff.”

¶102

From a perusal of this, it becomes clear that a suit cannot be instituted by the owner of the goods unless a notice in writing in relation to loss or injury to the goods has been issued within six months from the time when the loss or injury came to knowledge. In the instant case, the mishap occurred on 14.05.1985. The suit was presented about two years thereafter. However, the appellant did not choose to issue notice as required under Section 10 of the Act. The absence of notice virtually leads to a situation where there does not exist any cause of action to file a suit at all. In M/s. Indian Drugs’s case, this Court took a view that the failure to issue notice is fatal to a suit filed invoking Section 9 of the Act. It is true that this ground was

¶103

not pleaded in the written statement filed in the suit. All the same, the question is compliance of one of the statutory provisions. It also has a bearing on Section 3 of the Limitation Act. Section 3 of the Limitation Act ensures that the suit is filed within the stipulated period of limitation. Therefore, apart from that, the trial Court, on merits, recorded a finding that no case is made out for claim.

¶104

Another aspect, which needs consideration, is that the claim is made by citing negligence. In the cases relied upon by the learned counsel for the appellant, there was total loss of the goods in the transportation. In the instant case, the goods were intact and they did not suffer any damage at all. It is difficult to apply the ratio in those judgments to the facts of the instant case.

¶105

A.S.No.1717 of 2003 is, accordingly, dismissed.

¶106

A.S.No.6 of 2011:

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This appeal is filed against the order, dated 20.09.2004, passed by the Court of the III Additional District Judge, Visakhapatnam, in I.A.No.1150 of 2004 in O.S.No.54 of 1995.

¶108

At one stage, the suit was decreed and in the appeal preferred by the appellant, this Court granted an order of interim stay by imposing a condition to the effect that the appellant shall deposit a sum of Rs.50,00,000/-. The condition, no doubt, was complied with. However, after the appeal against the decree was allowed and the matter was remanded, the appellant filed an application for refund of the said amount. After remand, the trial Court dismissed the suit. Thereafter, the 1^st respondent filed A.S.No.1717 of 2003. On application filed by the appellant, they were permitted to withdraw half

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of the amount without furnishing any security and remaining half with security. I.A.No.1150 of 2004 was filed with a prayer to award interest @ 6% per annum. Being aggrieved by that, the appellant filed A.S.No.6 of 2011.

¶110

It is not in dispute that the appellant parted with the amount on the basis of the decree passed in O.S.No.54 of 1995 and after remand, the suit was dismissed. The 1^st respondent had the advantage of retaining the amount all through. Though it is a commercial transaction, we are of the view that awarding of interest @ 9% per annum would meet the ends of justice.

¶111

Accordingly, A.S.No.6 of 2011 is allowed in part by enhancing the interest from 6% per annum to 9% per annum.

¶112

The miscellaneous petitions, if any, filed in these appeals shall stand disposed of. There shall be no order as to costs.

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_____________________ L.NARASIMHA REDDY,J

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________________ S.V.BHATT,J

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Note: Mark L.R. copy 18.06.2013 v v

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[1] (2000) 4 Supreme Court Cases 91