General Commerce Ltd. vs National Insurance Co. Ltd. And ...
2003 Latest Caselaw 523 Del

JUDGMENT

J.D. Kapoor, J.

1. This is a suit for recovery of Rs. 6,24,830/- filed by the Managing Director of the plaintiff Company duly incorporated and registered under the Companies Act, 1956. The plaintiff carries on the business of manufacture and export of ready made garments. The Defendant No. 1 is an insurance Company which is engaged purely in the business of issuing various kinds of insurance policies and covers. The Defendant No. 2 is the Bombay Port Trust. The goods imported at the Bombay Port and otherwise are stored with the Bombay Port Trust before custom clearance. The Defendant No. 3 is a clearing agent for various kinds of goods imported and exported to and from India.

2. Certain negotiations took place between the plaintiff and M/S South East Piece Goods Co. Ltd having its office at 154-156, Yu Chau St. Shamshuipo, Kowloon, Hongkong in respect of the proposed import of fabric by the plaintiff. In pursuance to the agreement arrived at, an invoice was placed by the Hongkong party dated 10.3.1990 for import of 36,739.75 yards of the said fabric of about 65% rayon and 35% cotton of a total value of approx US $ 41,515.93 equivalent of which is Indian currency is Rs. 7,23,589.00 . Arrangements were made for shipment of the said goods comprising of 80 cartons by sea freight from Hongkong to Noida via Bombay Port. The goods were to be shipped in and around 9.3.1990.

3. The plaintiff approached the defendant no. 1 for issuing marine, cargo/Inland transit insurance policy covering the said shipment. In pursuant to the request of the plaintiff, defendant No. 1 issued two insurance policies as detailed in para 7 of the plaint. Initially two cover notes were issued on 13.2.1990 bearing No. 309820 and 309821 and subsequently the policies were issued on 11.4.90 in lieu of the cover notes. The payments for the total premium was made by the plaintiff vide cheque No. 267443 dated 12.2.90 for Rs. 12,395.00 drawn on Indian Overseas Bank, Parliament Street, New Delhi which was tendered to the defendant No. 1 on 12.2.90 itself.

4 The goods were shipped from Hongkong on 9.3.1990 and arrived at the Bombay Port on or about 16.4.90. The goods were kept in the custody of defendant no .2 and the plaintiff agreed to pay the wharfage.

5. The part of the goods consisting of 64 cartons were cleared from the customs on 11.7.1990 by defendant No. 3 the clearing agents for the plaintiff. It is averred that the goods were found to be in damaged condition, as the defendant No. 2 did not take due care and sufficient precautions for storage of the goods. Defendant No. 3 who was the clearing agents cleared the goods but did not inform the plaintiff about the damage to the goods. The plaintiff came to know of the said damage only when the goods arrived at Noida on 18.7.1990. The plaintiff immediately informed the defendants about the same and addressed a letter dated 19.7.90 to defendant No. 1 informing them that the goods had been damaged with the request to depute a surveyor for assessment of the loss. However, the defendant No. 1 did not depute the surveyor.

6. The plaintiff of itself got a survey made from 20.7.90 to 23.7.90 in respect of the said consignment by surveyors M/S Kaypsens surveyors. The remaining consignment of 16 cartons were cleared at Bombay on or about 9.10.1990. Since these cartons were also received in damaged condition information of the same was sent to defendant no. 1 on 17.10.90. The plaintiff got the said cartons surveyed by M/S Lloyd's through their agents M/S Tata Tea Ltd on 20.9.1990. These goods were also surveyed at Delhi by M/S Kaypsens.

7. The goods were found to be in a damaged condition because of wetting and staining. M/S Kaypsens insisted that the plaintiff could get the damaged material dyed to determine the extent of damage. The same was got done from M/S Birla Textile Mills in respect of 19,802.15 meters of damaged fabrics which was dyed at a cost of Rs. 79,445/- i.e. Rs. 4.012 per meter as against the original cost of Rs. 19.52 per meter. The loss was quantified at Rs. 4,22,183.00. According to the plaintiff all the defendants are jointly and severally liable for the amount of the damages of Rs. 4,22,183.00.

8. The plaintiff has also claimed interest on the said amount at the rate of 18% per annum which is prevailing market rate of interest.

9. While resisting the claim of the plaintiff the defendant in Written Statement has taken two legal preliminary objections namely that the suit is beyond the limitation period and that the cause of action if at all arose at Bombay and therefore this court has no territorial jurisdiction.

10. On being served with the summons of the suit, each defendant filed independent Written Statement. However, the common legal objections raised by all the defendants are firstly that as the plaintiff has already filed the complaint before the National Commission under the Consumers Protection Act, the present proceedings by way of parallel proceedings cannot continue and secondly that the suit is bad for mis-joinder of parties and the plaintiff has independent cause of action against the separate defendants and therefore, the claim of the plaintiff against all the defendants cannot be clubbed in one suit. In addition to it, the defendant no. 1 has in its WS stated that its liability to indemnify the plaintiff shall arose only after the actual loss and damage are ascertained against defdts. No. 2 and 3. The defdt. No. 1 in its WS relied upon the "Institute Cargo Clauses (A) which contained certain exclusion clauses by reason of which the defendant's liability is excluded under Clause 4.5 relating to the 'Delay" and Clause 8 'Transit Clause' relating to Duration of transit. These Clauses have been reproduced in para 4 of the Written Statement. Regarding other contentions raised in the plaint, the same have been denied for want of knowledge.

11. Defendant no. 2 in his WS has taken a preliminary objection that the suit is time barred by virtue of provisions of Section 120 of the Major Port Trusts Act, 1963 which specifies that no suit or proceedings can be instituted against the Port Trust after six months of the accrual of the cause of action and in the instant case the cause of action arose on 1.7.90 when the plaintiff took the delivery of the goods from defdt. No. 2 whereas the suit was filed on 12.7.93 and the same is ex facie time barred. Another objection taken by defdt. No. 2 is want of one months prior notice as required by the provisions of Section 120 of the Major Port Trust Act.

12. It is averred by defdt. No. 2 that the goods in question were imported in a Full Load. Container (in short FLC) from which they were not destuffed until the moment of delivery to the agents of the plaintiffs and bye laws 81 B of the Second Defendant prohibits the Second Defendant from accepting the custody or responsibility in any manner whatsoever, in respect of goods or cargo landed from a vessel in a container except when the goods are destuffed and directly received in a transit shed or warehouse. Further under Sections 42 and 43 of the Major Port Trust Act, the plaintiff would be entitled to claim damages only in respect of goods which have been taken charge of by the Authorities.

13. In the instant case the plaintiffs admit that they did not destuff the goods in question until delivery of the goods was taken by the third defendant, the agent of the plaintiffs. Therefore, it is ex-facie evident that the goods had not passed into the custody of the second defendants for safe keeping.

14. It is further averred that Bye law 93 requires notice of loss or damage to be given to the Second Defendant before the same are delivered and it also specifies that in the absence of any such notice the Second Defendants would not be liable for any loss or damage allegedly caused to the goods and in the instant case no intimation or notice of damage was received by the Second Defendants prior to the removal of the said goods from the docks on 11th July, 1990 and 8th October 1990. Defdt. No. 2 has also denied that they failed to take sufficient and due care of the container in which the goods were shipped and or of the goods.

15. Defdt. No. 3 has taken the stand that the goods were stored with Defdt. No. 2 who were duty bound to take all the due care of the goods as Bailee and with regard to the consignment consisting of 64 Cartons which were cleared from the customs. On 11.7.90 by defdt,. No. 3, the relevant landing remarks certificates issued by the Bombay Port Trust Authorities i.e. Defdt. No. 2 clearly disclosed that the consignment had landed in sound condition and that there were no remarks at all indicating shortage or damage to the container or goods. When the consignment was examined by the Customs authorities there was apparently no damage or deficiency noticed by them and the fact that goods were removed from the docks shows that the goods were absolutely in sound condition as and when they were delivered to the carriers for further transport of the same from Bombay docks to the plaintiff premises in Delhi.

16. As regards the consignment of 16 cartons it is admitted that the damages were due to wetting and staining because of rain water in Bombay which apparently entered the containers from gaps between the door and the flooring. According to defendant no. 3 the goods were however damaged as the defdt. No. 2 failed to take due care of the goods and did not take due and sufficient precautions for the storage of the goods despite owing a duty to the plaintiff to do so.

17. Defdt. No. 3 has also denied that while clearing the goods it never informed the plaintiff about the damage of goods and has also denied having failed to discharge their duties as clearing agents. As regards the consignment of 64 cartons, defdt. No. 3 has relied upon the landing remark certificate issued by defdt. No. 2 showing that the consignment had landed in sound condition and that there was no remarks at all and that the consignment was examined by the Custom Authorities and no damage or deficiency was noticed by them. However, as regards the consignment of 16 cartons, the custom authorities found slight damage due to seepage of rain water inside the container. Other facts pleaded by the plaintiff were denied for want of knowledge. However, the plaintiff in its replication reiterated its averments and fixed the joint and several liability of the defendants.

18. On the pleadings of the parties, following issues were framed vide order dated 12.2.96:

1. Whether the plaintiff proved that defendant No. 2 failed to take due care of the goods entrusted by the plaintiff as the Bailee thereof?

2. Whether the suit is barred by limitation?

3. Whether this court has no jurisdiction to try and entertain the suit against all or any of the defendants?

4. Whether the suit suffers for want of statutory notice under Section 120 of the Major Port Trust Act, 1963 against defdt. no. 2? If yes, what is its effect?

5. Whether the suit is maintainable against defdt no. 1 in view of the defdt. No. 3 having not been made party before the State Redressal Commission under the provisions of the Consumer Protection Act?

6. Whether the plaintiff is entitled to the damages on account of the destruction of the goods. If yes, from which of the defendant and to what extent?

7. Whether defdt. No. 1 proves for its liability is excluded under the policy of insurance vis-a-vis of the plaintiff?

8. Whether defdt. no. 3 is necessary or proper party?

9. Whether the plaintiff is entitled to the interest. If yes, at what rate?

10. To what relief, if any, the plaintiff is entitled to against all or any of the defendants?

11. To what order?

19. In support of its claim the plaintiff produced two witnesses PW 1 Yogeshwar Nath and PW 2 Vegar Ahmad, Laboratory in charge of GEA Fabric Testing Laboratory. On the other hand defdt. no. 2 examined K. Uthalya Kumar, Senior Assistant DOCS and Sh. Maitreya Patel appeared on behalf of defdt. No. 3. However, on behalf of defdt. No. 1, no witness was produced.

20. PW 1 produced and proved certified copy of Resolution authorising him to sign, verify and institute the suit and the relevant extract of the Minute Book. These are Ex. PW 1/1 and PW1/2. On merits, the testimony of the witnesses in brief reads as under:-

21. The total value of the goods produced by the plaintiff from its agents has been shown in the invoice Ex. PW 1/3 which is to the tune of US $ 41.515.93 equivalent the value of which at the relevant time was Rs. 8 lakhs. Testimony of PW 1 in brief is as under:-

"The goods were insured with defdt. no. 1 vide insurance cover notice Ex. PW 1/4 and Ex. PW 1/5 and Insurance Policies Ex. PW 1/6 and Ex. PW 1/7. The premium was paid by way of cheque dated 12.2.90. Defdt. no. 3 is clearing agent. The goods on arrival at Bombay port were stored with defdt. No. 2 on payment of charges and storage made by the plaintiff. Defdt. No. 2 was in charge and custodian of goods and as such had an obligation to take due care of the goods. All the consignment were cleared by the customs in two lots. Vide letter Ex. PW 1/8, defdt. No. 3 informed the plaintiff about the dispatch of the consignment through M/S Kay Cee Carriers on 12.7.90. Immediately on receiving the goods the plaintiff vide letter Ex. PW 1/10 dated 19.7.90 informed defdt. No. 1 that the goods have been received in damaged condition and a request was made for appointment of surveyor for assessment of loss. Vide letter Ex. PW 1/15 dated 17.10.90, the plaintiff informed defdt. no. 1 that the balance of 16 cartons of fabrics were also received in damaged condition and request was made for appointment of surveyor for assessment of loss. However, despite request of the plaintiff, defdt, no. 1 did not appoint the surveyor and as such the plaintiff got the goods surveyed by his own surveyor. The report is Ex. PW 1/12. This report was forwarded by the plaintiff to defdt. no. 1. Cover of its letter dated 22.4.91 is Ex. PW 1/13. That the attempts were made to re-process the goods. The job was entrusted to Birla Textile and the payment was made by the plaintiff. However, part of the material could not be rectified and was rejected on the information received by the plaintiff from Birla Textile vide communication Ex. PW 1/31."

22. However, in cross-examination the witness admitted that the goods were taken possession by defdt. No. 3 on its behalf as clearing agent after the goods were cleared by custom authority at Bombay and the plaintiffs came to know that the goods were deficient when they were received at Noida. The witness could not tell whether he had lodged any complaint before any authority at the time of taking delivery of 64 cartons at Bombay. On the basis of the remarks of the Transit Company on the GR, the goods were damaged, the witness presumed that these might have been damaged during transit from Hongkong to Noida. He admitted that a complaint in the Consumer Forum at Delhi had been filed in which defdt. no. 3 is not a party. According to him, the duty of clearing agent was only to clear the goods from the custom and take possession for delivery of the same. However, in cross-examination directed by defdt. No. 3, the witness had stated that the complaint with regard to the receipt of the goods in damaged condition was also sent to defdt. no. 3 but he could not locate the same from the record nor could he point out any document or letter sent to defdt. No. 3 regarding the conduct of defdt. no. 3. He admitted that 16 cartons were got surveyed by defdt. no. 3 from Tata Textile in October 1990 and the certificate/letters to the customs (Ex. PW 1/17) shows damage only in respect of 16 cartons and that too due to rain water. He denied the suggestion that the remaining goods were not in damaged condition till it landed on the port. He also denied the suggestion that a false claims have been made of 80 cartons whereas actual damage was in respect of 16 cartons because no export could be done to Russia at the relevant time. He also denied the suggestion that even the resolution authorising him to take action does not mean that he could have resorted to simultaneous remedies at two different forums. He also denied the suggestion that the payments were made even after Oct. 1990 because there was no fault on the part of defdt. No. 3 and it was after thought that the defdt. No. 3 was made a party.

23. PW 2 is in charge of GEA Fabric Testing Laboratory. They give report at the request of any exporter and in respect of the goods in question, testing was done through test laboratory on the fabrics. He proved on record the report Ex. PW 1/32(A), photocopy of which was proved as Ex. PW 1/32. Though the sample of the cloth was not found attached with PW 1/32 but the same was found attached with Ex. PW 1/32(A). The witness is in M. S. Textile and has an experience of 24 years. According to him the said report is submitted after verification in test laboratory and not by way of observing or visualizing or seeing the sample. However, the witness could not tell the date when the sample was received by him. However, the original report is not signed by this witness as he had joined the laboratory only on 14.6.93 wherein the report was given on 14.1.91. He has no personal knowledge about the signatures of the author of the report at Point C. He only deposed from the record of the laboratory that it was Mr. S. S. Satsangi who was in charge at the relevant time. However, the signatures of one Ramjilal Verma also appear on Ex. PW 1/33 and were identified by the witness as he has been seeing his writing. Admittedly, none of the documents namely PW 1/32, PW 1/32A, PW 1/33 were prepared and signed by him nor he was conversant with the signatures of S. S. Satsangi who was in charge at the relevant time.

24. However, perusal of the report shows that random sample was taken out of 80 cartons including 16 cartons received subsequently in damaged condition due to wetting and staining on account of entrance of the rain water in the container. This report is only in respect of fabric which lost its strength due to wetting and staining. However, perusal of the report also shows that the goods which were found in total damaged condition measured 7712.35 metres out of the total length of the cloth measuring 36739.75 yards.

25. Defendant no.2- Bombay Port Trust examined its Senior Assistant Dock's Manager Mr. K. Uthaya Kumar. He has given introduction as to what is full load container (FLC). According to him FLC means that the entire cargo in the containers pertains to one consignee and and FLC is never destuffed for storage in the port premises and is meant for direct delivery which means goods are taken directly to the lorries of the consignee. According to him the responsibility of the Port for the safety of the goods starts only if the goods are de-stuffed and taken in possession for storage in the port premises such as in the case of less container load (LCL) but not in the case of FLC as no material is taken in possession. Receipts are given in possession of the part in storage and in the instant case no such receipt was given. He also stated that as per records no complaint was filed with defendant no. 2 either by the clearing agent or by the owner while taking the delivery of 64 cartons. One has to lodge a complaint of any loss or damages or any sort of complaint of cargo before delivery is taken. According to him defendant no. 2 have taken normal care of the container as is required under the law by way of posting watchmen and police round the clock as the container are kept in open area. According to him custom examination of goods is made prior to delivery and if they are passed partly then part can be released even if fully passed.

26. In the instant case said delivery order was filed by defendant no.2 and the same is DW-2/X/1. In this order delivery of 64 cartons has been shown. Thus, according to him, the onus of testing is also on the consignee and not on the Port Trust. He also proved Bill of Entry issued by defendant no. 2 which is EX. DW-2/X/4 and the Cargo Declaration and General Declaration Form submitted to the port trust is EX. DW-2/5 and the computerized containers, billing worksheet is EX. DW-2/X/6 and the office order is EX DW-2/X/7. He also challenged the veracity of documents produced by defendant as this document was not in the custody of Shed Superintendent. If the customers had given orders of release of 80% of the goods pending test report, the Shed Superintendent could have released 80% of the goods.

27. However, to the suggestion that whenever goods are imported they can be released only after testing by the customs authority or obtaining the test report, witness submitted, testing in all cases is not required, however, release is required from customs where package is of doubtful nature or where consignee requests for the test that may be carried out by the custom. As far as Port Trust i.e. defendant no.2 is concerned only out of charge from the customs is required. However, according to him he was not aware that testing was required to be done by customs in this case or whether it was done at the instance of customs or at the request of the plaintiff. He denied that 16 cartons were damaged while they were stored with Bombay Port Trust as more than proper care was taken for their safety and protection. However, he admitted that after the ship docks the consignment never comes to the custody of the Port Trust but only the containers in case of FLC . The containers are opened by the vessel agents and the consignee in the presence of official of Port Trust and Customs. He denied that at the time of opening of containers by vessel agent the Port Trust verifies the conditions and quantity of the consignment. According to him only containers are in their custody and not the contents and therefore there is no system of verifying the status of containers. According to him at no stage representative of the Bombay Port Trust is a party to the custom inspection. The only obligation of Port Trust is that at the stage of beginning of the inspection its representative should be there to see when the containers are opened and remain there till container is locked. It is because of this reason that Port Trust takes special insurance for FCL. However, they admitted that any party can take delivery of goods prior to customs inspection but as far as FLC container is concerned the party or its representative can see the condition of the goods only in the presence of representative of Customs and Port Trust.

28. On behalf of defendant no.3, Mr. Maitreya Patel, partner of defendant no.3 was produced. According to him the consignment in question was in perfect condition when it arrived at Bombay. The consignment had come in an FLC container and on opening the customs gave clearance and passed the documents and permission of release of 80% of the goods namely 64 cartons was granted. According to him, the first inspection was carried out in July 19 in respect of 64 containers and no damage of any kind was witnessed. Even the customs also had no record of any damage in their examination report which is recorded on the reverse of Bill of entry. He further verified that 64 containers were taken from Port Trust by local trucks and all were in perfect condition. As regards remaining 16 cartons, these were released by Bombay Port Trust (BPT) on 8th or 10th of October, 1990 and when the containers were opened godds were found to be wet. The plaintiffs were informed as per normal procedure about the damages. The goods contained in 64 containers were found to be wet and stained. The plaintiff took steps for a joint survey as usual with the customs, insurance company, Bombay Port Trust and the steamer agents. M/s. Tata Tea ltd conducted the survey. The plaintiff wanted to file a claim in respect of 16 cartons and therefore they were handed over relevant papers. Exhibit PW 1/16 is the survey report and Exhibit PW-1/17 is the damage report in respect of 16 cartons. The witness also admitted the correctness of the documents issued from their office some of which are Ex. PW 1/X/D3. The witness has completely absolved defendant no.3 from any liability of any kind. According to him that was why the plaintiff had not even made it a party before the Consumer Forum. According to him they had the opportunity to see the goods for the first time when the customs allowed examination and the container was opened in the presence of BPT, Customs and steamer agents.

29. The aforesaid claim of the witness was admitted to be branded as false. I find that lorry receipt dated 12.7.1996 PW 1/11 for 64 cartons issued from Bombay by M/s. Kay Cee Carriers clearly states that all cartons were in torn condition and were wet due to seepage of rain water.

Issue No.1

30. Defendant no.2 is the Bombay Port Trust. Plaintiff has attempted to make it liable for the damage done to the goods mainly on the premise that defendant no.2 on receipt of containers did not take due care of the goods as a Bailee. Admittedly the material of the plaintiff came in FLC which means that the entire cargo in the containers pertained to one consignee only. It was a direct delivery which meant that the goods are not required to be stored in the port premises and taken directly to the lorries of consignee. Bye-law 81-B of Port Trust Act unsaddles defendant no.2 from holding custody or responsibility, in any manner whatsoever, in respect of goods or cargo that lands from a vessel in a FLC container except when the goods are destuffed and directly received in a transit shed or warehouse.

31. Admittedly the goods were neither destuffed nor handed over to the custody of defendant no.2. Plaintiff has failed to produce any documents or receipt in this regard whatsoever. Plaintiff rather admitted that they did not destuff the goods as these were directly transported in lorries to the place of destination. The clearing agent of the plaintiff also cleared the goods and did not file any claim for any loss or damage.

32. Apart from this, Bye-law 93 requires service of notice upon defendant no.2 in respect of loss or damage before goods are delivered and in the absence of any such notice, defendant no.2 is not liable for any loss or damage. Learned counsel for the plaintiff has failed to point out any provision of law or bye-law framed under the Port Trust Act which make defendant no.2 liable for any loss or damage in respect of material received in FLC. Admittedly the goods were neither liable to be stored by defendant no.2 nor were stored by defendant no.2. This itself shows that the cartons in the FLC containers is never presumed or considered to be in the custody of defendant no.2.

33. Even if it is presumed as alleged by learned counsel for the plaintiff that defendant no.2 mishandled the containers and did not take proper care still the fact remains that clearing Agent did not lodge any complaint of any loss or damage of the consignment before the delivery. Delivery orders show delivery of 64 cartons and there is no receipt that the material handed over to defendant no.2 remained in their possession. It is not the case that defendant no.2 on their own released part of consignment i.e 64 cartons out of 80 cartons. It was on the asking of the plaintiff and the option of the plaintiff to take delivery of 64 cartons out of 80 cartons and therefore the only possible inference that can be drawn with regard to damaged goods in 64 cartons is that these might have been received at the port in such condition as neither the containers were opened nor were part of the goods lying in each container released. The containers were put in lorries and transported to the destination in their original condition. In such a situation it cannot be said that the goods remained in the custody of defendant no.2 and due to negligence or carelessness of defendant no.2 in handling the containers any loss or damage was caused. Had it been so, nothing prevented the Clearing Agent or plaintiff to lodge a report before delivery as per bye-law 93 of the Port Trust Act. The suggestion of the plaintiff that whenever goods are imported it cannot be released after testing by the Custom authorities is meaningless as testing in all cases is not required, however, release is required from customs where packages are doubtful or where consignee requests for the test. So far as Port Trust only out of charge from the customs is required. Again to say that defendant no.2 verified the condition is not correct as only FLC is received and not the consignment. Again as far as FLC container is concerned a party or its representative can see the condition of the goods only in the presence of representative of customs and Port Trust and before delivery they would be present on the request of Agent or consignee and if during the custom examination, a party comes to know that goods are damaged or short, it can volunteer for inspection or survey.

33. Plaintiff has not been able to prove and show as to what kind of damage the goods contained in 64 containers was there and in what condition. Even it is presumed that Port Trust is liable for proper upkeep of the containers, still the plaintiff cannot be absolved from the onus to show that the goods got damaged because of mishandling or because of improper care of the containers. No such material has been produced by the plaintiff. The only material produced by the plaintiff is that it got the goods surveyed through its own surveyor. It does not prove or show or mean that defect was such which was directly result of negligence or carelessness of defendant no.2. Thus from any aspect we may examine the matter, defendant no.2 cannot be held responsible for any damage caused to 64 containers which were released on the request of the plaintiff and because of this being FLC the liability or responsibility of defendant no.2 was to the extent that damage should have been caused due to their negligence or mishandling. In the instant case no complaint was lodged for pretty long time now to shift the load of blame to defendant no.2 would be too much.

34. In view of the foregoing reasons, the findings of issue no.1 has to be returned in favor of defendant no.2 and against the plaintiff.

Issue No.2

35. This issue pertains to defendant nos.1 and 3. The instant suit is mainly a suit for compensation for breach of contract of insurance. The earliest date on which breach is alleged to have been committed by defendant no.1 is 19.7.1990. The present suit was filed on 12.7.1993. According to the he acquired the knowledge only on 16.7.1990 when the first consignment arrived and that defendant no.3 had concealed the factum of damage from the plaintiff and thus committed a fraud on the plaintiff.

36. Admittedly the consignment of 64 cartons was received on 16.7.1990 and within three days vide notice dated 19.7.1990 (Exhibit PW 1/10) claim was lodged with defendant no.1 and a notice dated 24.7.1990 (Exhibit 1/9) was served upon the Financial Advisor, Bombay Port Trust. The second consignment of 16 cartons was received sometime in the middle of October, 1990 and the request for appointment of surveyor was made to defendant no.1 vide letter dated 17.10.1990 (PW 1/15). On the failure of the defendant to appoint a surveyor, the plaintiff got the goods surveyed from its own surveyor Tata Tea Ltd. The survey report dated 26.12.1990 is Exhibit PW 1/16. However, this report confirmed that the damage was on account of seepage of rain water in the container. Article 55 of the Schedule appended to the Limitation Act provides a limitation of three years from the date of commission of breach. As is apparent from the aforesaid the suit is within limitation so far as defendant no.1 is concerned even if one ignores the date of knowledge about the damage of goods.

37. In view of finding on issue no.1 that defendant no.2 was not liable for any negligence etc, this issue is rendered redundant so far as defendant no.2 is concerned. Suit against defendant no.1 is well within limitation and as a consequence finding of this issue goes against defendant no.1 and in favor of plaintiff. This issue does not directly relate to defendant nos.2 and 3 and direct liability has been levelled against defendant no.1.

Issue no.3

38. Insurance was opened with the branch of defendant no.1 at Delhi and therefore the contract of insurance was entered at Delhi. The jurisdiction of this court against defendant nos.2 and 3 has been invoked solely on the basis of correspondence made by them with the plaintiff. The jurisdiction of this Court was rightly invoked in view of correspondence of the parties who were stationed at different places and had no subordinate or principal office in the place where the suit has been filed.

39. The finding of issue no.3 is returned against defendant no.3 alone and in favor of other defendants.

Issue No.4

40. Section 120 of the Major Port Trusts provides as under:-

"120: No suit or other proceeding shall be commenced against a Board of any member or employee thereof for anything done, or purporting to have been done, in pursuance of this Act until the expiration of one month after notice in writing has been given to the Board or him stating the cause of action, or after six months after the accrual of the cause of action."

41. As is apparent giving of one months' notice in writing is mandatory requirement of Section 120 before any suit can be instituted against defendant no.2. On the one hand, the plaintiff has alleged negligence on the part of defendant no.2 during the discharge of their official duty and on the other hand it says that act of defendant no.2 or its employees was not purported to have been done in pursuance of this Act. Since the plaintiff has not served one month mandatory notice upon defendant no.2 before instituting the suit, the same is barred by limitation so far as defendant no.2 is concerned. The outer limit of six months for filing the suit after accrual of cause of action is applicable only where one month's notice in writing has been given to defendant no.2. Let us assume that such notice was served but the fact remains that cause of action arose on 16.7.1990 whereas the suit was filed on 12.7.1993 and therefore from this reckoning also the suit is barred under section 120 of the Act.

42. In the result the finding of this issue goes in favor of defendant no.2 and against the plaintiff.

Issue Nos 5 and 8

43. The suit against defendant no.1 is very much maintainable as the liability of defendant no.2 is not contingent upon the liability of defendant no.3. So much so the plaintiff was at liberty to file suit alone against defendant no.1. No complaint is pending before the State Commission as on today as the plaintiff withdrew the complaint when the counsel for defendant no.3 pointed out before the Commission that the instant suit has been filed in the High Court.

44. As a result finding in respect of these issues goes in favor of the plaintiff.

45. At these issues are inter-connected and inter-dependent and therefore are being taken up together. Defdt no. 1 under the insurance policy undertook to indemnify the plaintiff for any losses that were suffered by it. The damage to the goods including the first consignment of 64 cartons though have been proved from the documents on record particularly the Bill of Lading of Kay Cee Carriers dated 12.7.96 (Ex. PW 1/11), Survey Report dated 18.4.91 (Ex. PW 1/12) yet in view of the finding on Issue no. 1 that the plaintiff is entitled for damages on account of the destruction of the goods in respect of the remaining 16 cartons which remained in the custody of defdt. No. 2. and were found to be damaged from seepage of water resulting in the damage of fabric the liability of defendant no. 1 will confine to 16 cartons only. The defdt. No. 1 has taken the resort under the Institute Cargo Clauses A and B which contain certain exclusion by reason of which the defendant seeks exoneration of his liability. These Clauses are Clause 4.5 relating to Delay and Clause 8 relating to duration of transit. These Clauses are as under:-

Clause 4.5 "Loss, damage or expense proximately caused by delay even though the delay be caused by a risk insured against (except expenses payable under Cause 2 above)"

Clause 8.1 "This insurance attaches from time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either. "

Clause 8.1(1) "On delivery to the Consignee's or other final warehouse or place of storage at the destination named herein"

Clause 8.1(3) "On the expiry of 60 days after completion of discharge overside of the goods hereby insured from the oversea vessel at the final port of discharge which ever shall first occur."

46. The two policies of insurance (Ex. PW 1/16 and Ex. PW 1/17) are nomenclatured as Marine Cargo/Inland Transit Policy. The transit policy which is to be covered under the insurance is from Hong Kong to Noida via Bombay Port. If the plea of the defendant no. 1 that the Institute Cargo Clause is applicable is accepted, the very object of the insurance policy would be defeated. It was never the intention of the parties. Mere reliance upon the printed format which are otherwise vague and incomplete cannot rests to defdt. no. 1. Under the policy of insurance, the service of defdt. No. 3 was engaged as clearing agent and his duty was only to get the custom clearance of the goods and not to test each and every articles lying in the container. The object of the clearing agent is only to notify the damages as he is a bailee or custodian of the goods or cartons. According to him he did not notice defect in respect of 64 cartons which were cleared from the customs and lading remarks certificates were issued by defdt. no. 2. This raises the presumption that the consignment is landed in sound condition. The goods were removed from the dock through lorry directly. As regards the consignment of 16 cartons, damages were due to wetting and staining because of the entering of the rain water in the container from the gap between the door and flooring. He immediately informed the plaintiff about the damage of the goods and to say that he failed to discharge his duty as clearing agent is not correct. It was for the plaintiff to come into action after defendant no. 3 had informed the plaintiff about the condition of the goods so much so that defendant no. 3 also got the goods certified by M/S Tata Tea Ltd immediately and obtained a survey report in order to enable the plaintiff to claim the compensation from the insurance company. Thus, to say that defendant no. 3 did not inform the plaintiff of the damages is factually incorrect. As a consequence defendant no. 3 cannot be held responsible for the damage including the goods received from the custom authorities without lodging a complaint or without informing the plaintiff about the same. However, the liability of defendant no. 1 alone can be fixed in respect of damage or loss of goods contained in 16 cartons in respect of which the defendant no. 1 did not care to even appoint a surveyor. The liability of defendant no. 1 flows from the policy of insurance. The Institute Cargo Clause A and B are not available to the defendant. As regards the amount of loss and damage to his cartons, the plaintiff has proved by way of following documents:-

(i) Invoice Ex. PW 1/3.

(ii) Bill of Entry- that the total value of 80 cartons is US $ 41515.93. As per the value of the goods shown in the Bill of entry Ex. PW 1/18 is Rs. 721212. The proposition cost of 16 cartons come to Rs. 1,44,000/- when the dollars are converted in equivalent Indian Rupees at the relevant date. The plaintiff is entitled to claim this amount from defendant no. 1.

Issue no. 3

47. However in view of the nature of transaction being commercial one as the plaintiff is an export house and has availed credit from the banks on payment of interest at Prima Lending Rate fixed by the banks, it is entitled to claim the interest at the rate of 18% per annum.

Issue no.10

48. In the result, the suit is decreed for Rs. 1,44,717.80 against defendant no. 1 alone with pendentelite and future interest at the rate of 18% till its realisation. Suit against defendants no. 2 and 3 is dismissed. Decree Sheet be drawn accordingly.