Tej Shoe Exporters (P) Ltd. vs Air India And Anr.
2006 Latest Caselaw 1889 Del

JUDGMENT

Pradeep Nandrajog, J.

1. Following 9 issues require adjudication:

1. Whether the suit is barred by limitation under Rule 30 of Schedule II Chapter III of Carriage by Air Act, 1972?

2. Whether the suit is valued properly for the purpose of court fees and jurisdiction or not?

3. Whether the plaint is signed, verified and suit instituted by the competent person in accordance with law or not?

4. Whether there is any privity of contract between the plaintiff and the defendant No. 2?

5. Whether the actions of defendants in delivering the goods to the ultimate consignee without receipt of payment was illegal without authority and if so to what effect?

6. Whether the defendants are jointly or severally liable and to what extent?

7. What are the losses which the plaintiff has suffered on account of wrongful delivery of its consignment by the defendants?

8. Whether in view of the insurance cover purchased by the plaintiff, is the present suit maintainable?

9. Whether the claim of the plaintiff stands satisfied in view of the payment already made as per limited liability under the carriage by Air Act, 1972?

2. Plaintiff is an exporter. Harnam Singh is stated to be its director. Plaint has been filed under authority of Shri Harnam Singh who has signed and verified the pleadings. Defendants are airlines, who, amongst others, are engaged in the business of transporting consignments by air.

3. Admitted case of the parties is that plaintiff hired services of defendant No. 1 to carry leather uppers to West Germany under airway bill No. 09857645545 dated 21.8.1990. Said airway bill constitutes the contract between the parties. Notifying party was Sparkassenaila Bank in West Germany. Goods were to be delivered at Nuremburg. First defendant carried the goods to Frankfurt and thereafter entrusted the same to defendant No. 2 for being air lifted to Nuremburg. Defendant No. 2 informed that the consignment had been delivered at Nuremburg on 30.8.1990. The delivery of consignment was not as per the airway bill. Consignment was delivered to the consignee without notifying the banker named. Since goods were not paid for, a claim was raised. Defendant No. 1, acknowledged wrong delivery of goods and offered to settle the claim by paying @US$ 20 per kg. Declared weight of shipment being 1989 kgs, US$ 39,780 were offered.

4. Plaintiff wanted DM 1,82,717.30 being invoice value of the goods. Defendant No. 1 stuck to its stand.

5. Plaintiff filed a complaint under Section 12 read with Section 21 of the Consumer Protection Act 1986 before the National Consumer Disputes Redressal Commission which was registered as OP No. 56/1992.

6. On 6.7.1993, the said petition was disposed of holding that plaintiff was free to take action as per law. It was noted that defendant No. 1 admitted liability to compensate plaintiff in sum of US$ 39,780. It was recorded that the payment would be made within 6 weeks.

7. Present suit claims a decree in sum ofRs. 48,86,784/- together with interest @25% per annum. Break-up ofRs. 48,86,784/- is as under:

  i.            The price of the consigned goods, as per           DM 84,264.90
               the invoice and the declaration in the
               Airway Bill DM 1,50,152.90 Less
              Rs. 12,51,877 received on 15.10.93 as per
               National Commission order. Thus, the
               balance invoice amount to be received by
               the plaintiff 

 ii.           The simple interest @25% on the said amount
               from Sept'90 to 13th Oct'93 (3 years)              DM 113,970.10
 
                                                     Total :     DM 1,98,235.00

                Equivalent to Indian Rupees (@Rs.19/- per DM)    Rs. 37,66,465.00

 iii)           Estimate loss of profits on CCS which the
                plaintiff would have earned                      Rs.  2,82,857

 iv)            Loss on account of Duty Draw Back which the
                plaintiff would have earned                      Rs.  1,00,749

 v)             Loss on profit on REP (Replenishment licenses)
                worthRs. 3,14,285/- @30% of the amount          Rs.    94,285

 vi)            Loss of additional benefits for export house
                amounting tors. 1,41,428 with profit @30% of
                that amount                                      Rs.    42,428

vii)            Loss of rebate in taxation which the plaintiff
                would have been entitled to on the export        Rs.   4,00,000

viii)           Legal expenses likely to be incurred in legal
                notice and prosecution of the complaint          Rs.    1,00,000

 ix)            Compensation for loss of time and energy in
                pursuing the claim                               Rs.    1,00,000
                                                                 -----------------
                                              Total :            Rs.    48,86,784

 

8. Defendant No. 1 defends by pleading that as per law its liability was to recompense plaintiff @US$ 20 per kg. Said claim has been satisfied. Suit had to be filed within 2 years of accrual of cause of action. That the suit is barred by limitation. Defendant No. 1 denies negligence but pleads that due to mistake on part of employees of defendant No. 2 which was the ultimate carrier, goods were wrongly delivered.

9. Apart from pleading defense of limitation defendant No. 2 has pleaded lack of privity between plaintiff and defendant No. 2. It denied that Harnam Singh had the requisite authority to institute the suit or verify the same qua defendant No. 2.

10. I propose to deal with the evidence led in context of the issues framed and hence I proceed to decide the suit as per issues framed.

11. Issue No. 3 reads as under:

3. Whether the plaint is signed, verified and suit instituted by the competent person in accordance with law or not

12. Harnam Singh appeared as PW-1. He deposed that in October 1998 a fire took place in the premises of the plaintiff and as a result thereof many documents got burnt. He stated that the minute book was destroyed in fire but stated that Ex.PW-1/5 was the board resolution empowering him to file the suit.

13. Ex.PW-1/5 reads as under:

Resolved that Shri Harnam Singh, director of the company is and hereby authorized to file the suit in the High Court against Air India and also authorized to sign all the papers and payments in this regard.

Further resolved that Shri Harnam Singh is also authorized to engage advocates for this case.

14. Cross examined by defendant No. 2, PW-1 admitted as under:

I signed the plaint on my lawyer's asking. It is correct that the plaintiff did not make any claim against Lufthansa. It is correct that no claim was made against Lufthansa since in fact we had no claim against this party. It is correct that we had declined to accept the offer made by Air India of US$39,780. It is correct that Ex.PW-1/5 is signed by me. It is correct that this resolution only authorizes the filing of the suit against Air India.

15. Learned Counsel for the plaintiff, Shri V.B. Andley, Sr. Advocate sought to urge that since suit has been filed against both defendants by a director of the plaintiff company, it must be presumed that Shri Harnam Singh had authority to institute the suit against defendant No. 2. Learned Counsel relied upon decision of the Supreme Court reported as AIR 1997 SC 3, Union Bank of India v. Naresh Kumar and Ors.

16. In view of Ex.PW-1/5, I have no hesitation in holding that suit has been validly instituted by a duly competent person, but only against defendant No. 1. As against defendant No. 2, in view of the language of Ex.PW-1/5 and the clear admissions of PW-1, there is no option but to hold that the suit has not been validly instituted against defendant No. 2 as Harnam Singh did not have the authority to do so.

17. Decision cited in Union Bank of India's case (supra) is clearly distinguishable. In said case, authority of the manager of the bank to institute the suit on behalf of the bank was not proved at all. Hon'ble Supreme Court held that rules of procedure are subservient to the substantive law. It was held that additional evidence ought to have been recorded. Hon'ble Supreme Court held that a juristic entity has to sue through a living person and where said living person is the director of a company or its principal officer, it would be safe to presume that he had the necessary authority.

18. But, unfortunately for the plaintiff, it is not a case where plaintiff has failed to lead evidence and in respect of authority of Shri Harnam Singh, a presumption can be drawn. Plaintiff has led positive evidence and has proved the authorization in question. Unfortunately for the plaintiff, plaintiff's evidence destroys the case of the plaintiff against defendant No. 2.

19. Admissions of a party are the best evidence of the opponent. Harnam Singh has admitted that he was not authorized to institute the suit against defendant No. 2.

20. I accordingly decide issue No. 3 by holding that the suit is validly instituted against defendant No. 1. I hold that the suit has not been validly instituted against defendant No. 2.

21. Issue No. 2 reads as follows:

2. Whether the suit is valued properly for the purpose of court fees and jurisdiction or not

22. I see no reason why the issue was framed for the reason suit seeks recovery ofRs. 48,86,784/-. Requisite court fee in sum ofRs. 50,040/- has been paid.

23. Objection appears to be that the suit amount is a sum total of different amounts claimed and therefore court fee payable would be in relation to the individual sums claimed.

24. I am afraid, if this was the intention to raise the objection pertaining to court fee, the objection is without merit for the reason amounts claimed under different heads pertain to the same cause. Money decree is prayed for. Ad valorem court fee has to be paid, which in fact has been paid. It is not a case where 2 independent transactions are being clubbed in one suit.

25. I accordingly decide issue No. 2 by holding that the suit has been properly valued for purposes of court fee and jurisdiction.

26. Issue No. 4 reads as under:

4. Whether there is any privity of contract between the plaintiff and the defendant No. 2

27. Learned Counsel for the parties did not dispute that there is no privity of contract between the plaintiff and defendant No. 2. In view of the concession of the learned Counsel for the parties, I decide issue No. 4 by holding that there was no privity of contract between the plaintiff and defendant No. 2. But that is neither here nor there for the reason as per sub rule 4 of Rule 1 of the IInd Schedule to the Carriage by Air Act 1972, carriage by successive air carriers is deemed to be one undivided carriage. Further, as per Rule 31 of said schedule, each successive carrier is deemed to be a contracting party to the contract of carriage insofar as the contract deals with that part of the carriage which is performed under its supervision.

28. Liability of successive carriers is therefore joint and several. Successive carriers are deemed to be contracting parties to the contract of carriage.

29. Issue No. 5 and 6 read as under:

5. Whether the actions of defendants in delivering the goods to the ultimate consignee without receipt of payment was illegal without authority and if so to what effect

6. Whether the defendants are jointly or severally liable and to what extent

30. Learned Counsel for the parties did not dispute that the action of employees of defendant No. 2 in delivering goods in violation of the terms of the airway bill was an illegal act. Consequences would be that the defendants would be jointly and severally liable as per law to the plaintiff.

31. The residual part of said issues as to what would be the extent of liability i.e. whether it would be limited to US$ 20 per kg or liability would be to recompense the actual loss suffered would be decided by me while dealing with issues No. 7 and 9 for the reason said issues require adjudication of the extent of liability of the defendants.

32. Issue No. 8 reads as under:

8. Whether in view of the insurance cover purchased by the plaintiff, is the present suit maintainable

33. As per testimony of PW-1, since consignment was insured, a claim was made to the insurance company which refuted liability to pay as per insurance policy, informing reason for rejection by and under Ex.PW-1/3, being letter dated 3.11.1992. Claim was rejected as it was a case of wrong delivery of consignment and was not covered by the policy taken out.

34. In view of Ex.PW-1/3 and the fact that the plaintiff has received no money under the insurance policy, I hold that notwithstanding insurance policy, the suit is maintainable.

35. Issue No. 1 reads as under:

1. Whether the suit is barred by limitation under Rule 30 of Schedule II Chapter III of Carriage by Air Act, 1972

36. Rule 29 under the 1st Schedule and Rule 30 under the IInd Schedule of the Carriage by Air Act 1972 are pari materia. Rule 29 reads as under:

29. The right of damages shall be extinguished if an action is not brought within two years reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

37. Dealing with the liability of the carrier under Chapter III, Rule 18 under the 1st Schedule and Rule 18 under the IInd Schedule, which are pari materia, read as under:

(1) The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.

(2) The carriage by air within the meaning of sub-rule (1) comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome in any place whatsoever.

(3) The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transhipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air.

38. The issue is no longer res integra. A learned Single Judge of this Court, in the report published as 2nd (1981) II Delhi 749, Vij Sales Corporation v. Lufthansa held that limitation prescribed under Rule 29 and Rule 30 of the 1st and IInd Schedule respectively of the Carriage by Air Act 1972 would apply where there is destruction, loss or physical damage to the goods. Further, the damage has to be caused to the consignment during transit. Learned Single Judge held that aforesaid interpretation flowed from a meaningful reading of Rule 18 under both schedules read with Rule 29 and Rule 30.

39. Noting two decisions of the Supreme Court under the Carriage of Goods by Sea Act 1925 being , East and West Steamship Co. v. S.K. Ramalingam Chettiar and , American Export Isbrandtsen Lines Inc. v. Joe Lopez, learned Single Judge noted that the articles under the Schedule to the Carriage of Goods by Sea Act 1925 referred to liability in respect of 'loss or damage'. It was further noted that the words 'loss or damage' in the Carriage of Goods by Sea Act 1925 were unqualified and had the implication of loss and damage suffered on any account by the shipper or the consignee. It was held that Rule 18 under both schedules to the Carriage by Air Act 1972 is not all embracing when it speaks of 'destruction or loss or of damage to goods'.

40. It was held that where it is a case of wrong delivery of consignment, limitation would not be governed by Rule 29 and Rule 30 of the 1st and IInd Schedule respectively under the Carriage by Air Act 1972 and limitation would be under the Limitation Act 1963 i.e. 3 years.

41. Learned Counsel for the parties were not at variance on the issue that if limitation was 3 years, suit is within limitation. Only issue on limitation which was debated was in context whether due to Rule 29 and Rule 30 of the 1st and IInd Schedule respectively limitation was 2 years.

42. I accordingly hold that the suit is within limitation.

43. Issue No. 7 and 9 and residual decision on issue No. 5 need to be decided together as they center around the same facts.

44. Issue No. 7 and 9 read as under:

7. What are the losses which the plaintiff has suffered on account of wrongful delivery of its consignment by the defendants?

9. Whether the claim of the plaintiff stands satisfied in view of the payment already made as per limited liability under the carriage by Air Act, 1972

45. The corollary of decision on issue No. 1 and reasons thereof has to be, as held by a learned Single Judge of this Court in M/s. Vij Sales Corporation's case (supra), that damages suffered by a party due to misdelivery of goods being not covered under Rule 18 of Schedule I and Schedule II to the Carriage by Air Act 1972, measure of loss has to be the money which plaintiff would have realized had goods been delivered as per airway bill.

46. The value of the consignment would thus be the measure of the damages.

47. As per the statement of witness of the plaintiff, except for stating that plaintiff suffered loss due to cash incentive, drawback, REP license, special license and income tax relief, no evidence in support was led.

48. Break-up of the sum claimed by the plaintiff as pleaded in the plaint has been noted in para 7 above.

49. Noting that interest claimed is 25% per annum and that no evidence has been led on the issue of interest, I hold that plaintiff would be entitled to receive from the first defendant DM 84,264.90. This amount has been awarded keeping in view value of the invoice as declared in the airway bill less amount received by the plaintiff. Pre suit interest @10% is awarded. The same comes to DM 25281. As per the plaint, converted in Indian rupees, each DM would have fetchedRs. 19/-. I therefore decree the suit in favor of the plaintiff and against defendant No. 1 in sum ofRs. 20,81,372.10. Pendente lite and future interest is awarded @10% per annum.

50. Plaintiff would be entitled to proportionate costs against defendant No. 1.