M/S Metal Udyog & Anr vs American Iron & Metal Company Inc.

                                                           Reported
      HIGH COURT OF DELHI : NEW DELHI

      I.A. No. 11451/09 in CS (OS) 1564/09

                       Date of Decision: September 15 , 2009

M/S METAL UDYOG&ANR.            ...    PLAINTIFFS
                 Through: Mr. Rahul Gupta with
                Aanchal Dhingra,Mr shekhar and
                Mr.Rajneesh,Advs.

                          Versus

AMERICAN IRON&METAL COMPANY INC... DEFENDANTS
               Through: Mr. Anshu Dhingra with Mr.
               Anubhav Mehrotra,Adv.for D-2

CORAM:
HON'BLE MR. JUSTICE S.L. BHAYANA

1.    Whether reporters of local papers may be allowed
      to see the judgment? Yes
2.    To be referred to the Reporter or not? Yes
3.    Whether the judgment should be reported in the digest
      or not? Yes

S.L. BHAYANA, J.

By this order, I propose to dispose of IA No.11451/09, thereby seeking vacation and modification of ex-parte order dated 25/08/2009 of this court by which applicant /defendant no.2 was restrained from delivering /releasing the goods (47.535MTs) as mentioned in the alleged Bill of Lading dated 27/06/2009 to any third person.

2. The instant suit has been filed by the plaintiffs /non-applicant against the defendants for recovery of money including the principal amount of Rs.4500000/-along with damages in the amount of IA No.11451/09 in CS(OS) 1564/09 Page 1 of 7 Rs.51,25,000 along with interest @18% pa upto the date of suit and future interest till recovery and realization.

3. To support vacation and modification of courts order by way of this application learned counsel for the applicant argued following grounds:

a) That there exists no privity of contract between plaintiffs and applicant, since original Bill of Lading was never handed over to the plaintiffs and the Bill of Lading bearing no. MSCUMO- 522983 issued by their Canadian counterpart for the consignment in question having „NINGBO ZHAN CI METAL INDUSTRY CO LTD" as consignee name and in view of the same plaintiff herein are neither a consignee nor an endorsee there under, there is absolute lack of any relationship between them, therefore applicant is not bound to deliver the goods to them as no title to the goods have devolved upon the plaintiff under the amended Bill of Lading.

b) The applicant only upon the instructions of the defendant no.1 "shipper" has cancelled the original Bill of Lading issued in favour of the plaintiff as a consignee.

c) That no cause of action has been disclosed in the plaint against the applicant, as the alleged breach of contract is alleged to have been committed by defendant no. 1 only and therefore Ex parte order dated 25/8/2009 against the defendant no. 2 is bad in law.

d) Bill of Lading relied upon by the plaintiff has already been cancelled by the defendant no.1 and therefore non est, is not enforceable under the law.

e) Lastly learned counsel of the applicant vehemently argued that since, consignment has already reached the destination at Ningbo, china and on account of Ex parte order of this court applicant could not delivered the same to the consignee at china even after title of the good having been already passed in their favour, the applicant shall be liable to face the unwarranted legal consequences.

4. On the other hand, to meet the arguments raised by the learned counsel for the applicant, learned counsel for the non- applicant/plaintiff raised following points:

a) That the present application is actuated with malafide intentions and filed by defendant no.2 in connivance with defendant no.1.

b) That defendant no.2, i.e., applicant is under an obligation to supply and deliver the goods to the plaintiff at port of destination Mundra (Gujarat) and thereafter at Tughlakabad , New-Delhi as per original Bill of Lading dated 27/6/2009 (No.MSCUMO-522983).

c) Further the alleged amendment /modification carried out in the Bill of Lading by inserting the new consignee is totally illegal and without any authority and sanction of plaintiffs. IA No.11451/09 in CS(OS) 1564/09 Page 3 of 7

d) That entire action on the part of applicant thereby modifying the Bill of Lading was in collusion with defendant No.1 Company is against the condition of contract and highly detrimental to the rights of plaintiffs‟ interest and not permissible in law therefore have no legal consequences.

e) That original Bill of Lading dated 27/6/2009 was initially issued in favour of plaintiff no.1 as consignee and the same was „non-negotiable" in nature and defendant no.1 has no authority to instruct the applicant to modify the same without plaintiffs permission therefore submissions made by learned counsel of applicant are without any basis and based on wrong facts that now title of the goods had been passed on to the alleged consignee in the china and he obliged to deliver the same to the new consignee.

5. I have heard learned counsel for the parties in detail and have also perused the record. It is an admitted fact that the plaintiffs had placed an order for supply of 50MT of non- ferrous scrap (aluminum) upon defendant no.1 company and towards this an advance payment of US$23660(approx Rs11.50/-) through swift facility from their bankers Bank of Rajasthan, New Delhi on 5/6/2009, had been made by plaintiffs, same is confirmed by contract note dated 4/6/2009, Bill of Lading dated 27/6/2009 and invoice dated 16/7/2009.

6. It is also apparent from the record that original Bill of Lading dated 27/6/2009 contains plaintiffs no.1 name as consignee and IA No.11451/09 in CS(OS) 1564/09 Page 4 of 7 defendant no.1 as consignor and the goods are shown to have been dispatched and started sailing on 27/6/2009 with place of delivery at Tughlakabad Inland Container Depot New Delhi, same is confirmed by defendant no.1 via communications dated 16/6/2009, 26/6/2009, 30/6/2009, 14/7/2009 and last Email dated 29/7/2009 confirmed by defendant no.2 that vide contract dated 4/6/2009 and Bill of Lading dated 27/6/2009 (No.MSCUMO-522983) goods in questions have been already loaded for New Delhi. But the same had been diverted to another location at Ningbo, China without any information and authority from plaintiffs.

7. Plaintiffs have alleged that this is a clear case of fraud, be that as it may but it is quite difficult to understand that how come a Bill of Lading having plaintiffs name as a consignee be suddenly diverted for another location. It is also the case of plaintiffs that international rate of non-ferrous scrap (aluminum) having increased substantially, defendant no.1 has become dishonest and therefore diverted some goods in question to Ningbo, China.

8. I am of the view that defendant no.1 & defendant no.2 together have caused problems for the plaintiffs by usurping and defrauding the plaintiffs at the advance amount paid by the plaintiffs and later by making modifications/amendment in the Bill of Lading in collusion with each other in impermissible and illegal manner.

9. Plaintiffs have made out a prima facie case of fraud and breach of contract on the part of defendant no1 along with applicant .The IA No.11451/09 in CS(OS) 1564/09 Page 5 of 7 balance of convenience also lies in favour of the plaintiffs as this is the only security they have to secure their advanced payment.

10. The conduct of the applicant is also under shadow of cloud as it made amendments/modification in the original Bill of Lading at the behest of defendant no.1 without any information/permission of the same to the original consignee on the face of it is illegal, mala fide and against the principles of contract /fairness and bona fide against the person who had made the advance payment towards the goods in question.

11. Judgments relied upon by the learned counsel of the applicant Dodsal Private Ltd VS Narmada Seaways Ltd, AIR 1989 BOM 96; Bhatinda Chemicala Ltd Vs X Press Nuptse And Ors., AIR2006 Bom 311 and The Mogu Liner Ltd VS Manl Printers & Publishers, AIR 1991 Ker 183 are not applicable to the present case in view of the peculiar facts and circumstances of this case.

12. No grounds for vacation of the order dated 25/8/2009 are made out by the applicant. Order dated 25/8/2009 shall continue to operate in respect of subject matter in the application.

13. Needless to say that the prima facie view taken in the present application made herein shall be treated as tentative in nature and shall not constitute any expression of final opinion on the issue involved in the matter and shall have no bearing on the outcome of the case.

14. Accordingly, application is dismissed.

CS (OS) 1564/09 List the suit on 6.10.2009, the date already fixed.

S.L. BHAYANA, J September 15, 2009 IA No.11451/09 in CS(OS) 1564/09 Page 7 of 7