Delhi High Court
Harjit Kaur Dhingra vs Pan American World Airways & Anr. on 6 August, 2010
Author: Anil Kumar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No.3457 of 1992
% Date of Decision: 6.08.2010
Harjit Kaur Dhingra .... Plaintiff
Through Mr.H.L.Tikku Sr. Advocate with Ms.
Yashmeet Kaur Advocate.
Versus
Pan American World Airways & anr. .... Defendants
Through Mr.Amir Z. Singh Pasrich Advocate with
Mr. Kalyan Arambam Advocate for
Defendant no.2.
CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR
1. Whether reporters of Local papers may be
allowed to see the judgment?
2. To be referred to the reporter or not?
3. Whether the judgment should be reported in
the Digest?
ANIL KUMAR, J.
*
1. The plaintiff has filed this suit for recovery of Rs.7,42,005/- for
value of goods, Freight Charges, Post Shipment Benefits, interest at the
rate of 18.5% from 21st October, 1990 till 7th September, 1992 and for
loss of profit and business against the Defendants. The suit was initially
filed against Pan American World Airways, Defendant no.1. Later on
Defendant no.2 Delta Airways was impleaded as party to the suit
pursuant to the application for amendment filed by the plaintiff which
was allowed by order dated 2nd November, 1994. The defendant no.1
had already proceeded ex-parte and the Court had allowed the
application of amendment of the plaintiff being IA no. 3457 of 1992
without notice to the defendant no.2 and without observing that the
defendant no.2 is deemed to be sued from the date of institution of the
suit on 14th September, 1992.
2. Brief facts to comprehend the disputes between the parties are that
the plaintiff alleged that he is carrying on a business in the name and
style of „Gurav International‟ and is engaged in manufacture and
exporting of readymade garments. For exporting its garments, the
plaintiff through his agent, M/s continental carriers, New Delhi
entrusted to PAN American World Airways, defendant no.1 (hereinafter
also referred to as PAWA) for carriage 25 packages containing
readymade high fashion cotton gent‟s shirts from New Delhi to New
York. The plaintiff averred that defendant No.1, PAN American World
Airways was made aware that the shipment had ordered goods which
were meant for immediate sale and as such were urgently to be
delivered at the place of destination.
3. The plea of the plaintiff is that the PAN American World Airways
checked the quantity, value and nature of goods and accepted the
shipment and assured to carry and deliver the same immediately upon
payment of freight charges of Rs.26,319/-. The freight charges were
paid and defendant No.1 issued an Airways Bill bearing No.026-1044-
2212 dated 22nd October, 1990 in the name of plaintiff. The consignee
disclosed in the Airways Bill was FIBI (Switzerland) Ltd. and the party
which was to be notified an arrival of the shipment at destination was
"Crime Wave Limited" 1466, Broad-Way, New York.
4. The allegation of the plaintiff is that after the shipment was
booked, repeated inquiries were made from PAWA with regard to the
status of the shipment pursuant to which the plaintiff was informed by
PAWA by letter dated 3rd December, 1990 that shipment was delivered
to consignee, "Crime Wave Limited" on 8th November, 1990.
5. According to the plaintiff since the payment was not received, he
advised PAWA that consignee bank "FIBI Bank" had not issued any
release order, and therefore, delivery by PAWA to alleged "Crime Wave
Limited" was unauthorized and illegal. In the circumstances, it was
contended that the plaintiff has suffered loss of the value of the
shipment and another benefits and therefore, the plaintiff demanded a
sum of Rs.4,64,037/- from defendant No.1, "PAWA".
6. The plaintiff also demanded the consignee bank release the order
through her banker who advised the plaintiff that the letter was a forged
document, as it was neither the letter head of the consignee bank, nor
had been signed by any officer of the bank, nor did the named
consignee authorize the delivery of the shipment.
7. Thereafter, the plaintiff issued a legal notice dated 9th April, 1991,
claiming an amount of Rs.4,64,037/- together with interest at the rate
of 18% per annum. The PAN American World Airways, defendant No.1
by its letter dated 31st October, 1991 addressed to the plaintiff also
sought a letter from her banker without specifying as to what letter
from the plaintiff‟s bank Standard Charter should contain. According to
the plaintiff, thereafter defendant No.1 did not respond properly and
kept on assuring the plaintiff that as soon as defendant No.1 at its New
York Office settles the plaintiff‟s claim, it will remit the amount. In the
circumstances, the plaintiff has asserted that defendant No.1 acted with
gross negligence leading to mis-delivery of the consignment in question,
and defendant No.1 acted carelessly. It was also alleged that defendant
No.1 deliberately, dishonestly, negligently, carelessly and with ulterior
and fraudulent motives did not disclose the details of release of
shipment, as defendant No.1 intended to forestall claims being lodged
by the plaintiff. In the circumstances, the plaintiff claims that defendant
No.1 is liable to make good the loss for mis-delivery of goods and losses
suffered by the plaintiff and claimed a total amount of Rs.7,42,005/-
comprising of Rs.3,87,718/- as value of goods; Rs.26,319/- as freight
charges; Rs.25,000/- as post shipment benefits; Rs.1,52,968/- as
interest at the rate of 18% per annum from October 21, 1990 till 7th
September, 1992 and Rs.1,50,000/- as loss of profit and business.
8. During the pendency of the suit PAN American World Airways was
served by substituted service by publication and no one appeared on
behalf of the said defendant No.1. Thereafter the plaintiff filed an
application being I.A.No.9616 of 1994 under Order XXII Rule 10 read
with Order I Rule 10 of the Code of Civil Procedure for substituting
Delta Airways Lines in place of PAN American World Airways or to allow
the plaintiff to add Delta Airways Lines having its Office amongst other
at Chandralok, 36 Janpath, New Delhi.
9. The Court allowed the application being I.A.No.9616 of 1994 under
Order XXII Rule 10 read with Order I Rule 10 of the Code of Civil
Procedure by order dated 2nd November, 1994 and permitted Delta
Airlines to be joined as defendant No.2 in the suit. Consequent thereto,
defendant no.2, M/s Delta Airlines was impleaded as party instead of
substituting M/s Delta Airlines in place of defendant No.1, PAN
American World Airways.
10. Consequent to impleadment of M/s Delta Airlines as defendant
No.2, an amended plaint was also filed by the plaintiff contending,
inter-alia that defendant No.1 has amalgamated and/or taken over by
defendant No.2, and all the business, assets, liabilities, rights, title and
interest of PAN American World Airways have been assigned vested
and/or devolved upon defendant No.2 who is the successor of
defendant No.1 and therefore, the plaintiff is entitled to maintain the
suit and recover the her claim amount from defendant No.2.
11. The suit of the plaintiff has been contested by defendant No.2 who
filed a written statement, contending, inter-alia that suit of the plaintiff
is barred by time under the provisions of Limitation Act, 1962 against
defendant No.2. The dismissal of the suit was also sought on the
ground that it does not disclose any cause of action against defendant
no.2, as there is no relationship between defendant No.2 and the
plaintiff.
12. Relying on the original plaint by the plaintiff before the defendant
no.2 was impleaded as party, it is alleged that cause of action arose on
22nd October, 1990 and the limitation would commence from the date
the goods ought to have been delivered. The defendant no.2 also
contended that while amending the plaint on impleading defendant
No.2, certain changes were carried out by the plaintiff in the plaint
which could not have been carried out without specific permission of
the Court and consequently, the plea of the plaintiff that cause of action
had arisen on 22nd October, 1990 could not have been omitted in the
plaint. The defendant no.2 asserted in the circumstances that if the
cause of action had arisen on 22nd October, 1990, the relief against
defendant No.2 became barred by time on 21st October, 1993 whereas
the application for impleadment under Order I Rule 10 and Order XXII
Rule 10 of the Code of Civil Procedure was allowed without notice to
defendant No.2 on 2nd November, 1994.
13. Defendant No.2 also asserted that the plaint does not disclose any
cause of action against defendant No.2, as no document has been filed
to show that defendant No.2 has taken over and/or amalgamated with
defendant No.1. It was also pleaded that nothing has been produced by
the plaintiff to show that all the business, assets, liabilities, rights, title
and/ or interests of defendant No.1 have been assigned vested and/or
have devolved upon defendant No.2. Defendant No.2 also pleading that
even no provision of law has been disclosed under which it can be held
that defendant No.2 is the successor of defendant No.1 and has taken
over its liabilities. The Delta Airlines Inc., defendant No.2 categorically
asserted that it has no connection with the alleged transaction and/or
any alleged correspondence or documentation. Defendant No.2 also
denied that he had any contractual obligation to the plaintiff and that it
has failed to discharge its obligations. Liability to pay Rs.7,42,005/- or
any other amount was also denied.
14. During the pendency of the suit defendant No.2 was directed to
furnish security of Rs.4,65,000/- by order dated 17th November, 1995
in I.A.No.11467 of 1995. By order dated 13th March, 1996, defendant
No.2 was directed to furnish the bank guarantee for the entire amount
of Rs.7,42,005/- claimed by the plaintiff. Pursuant to the orders of the
Court, the bank guarantee was furnished by defendant No.2 which has
been renewed from time to time.
15. No replication was filed by the plaintiff to the written statement of
defendant no.2 refuting certain pleas and contentions taken by the said
defendant in its written statement. On the basis of pleadings of the
parties the issues were framed on 12th May,1997. However, the issues
were amended pursuant to an application by Defendant no.2 being I.A
No.742 of 2002 by order dated 24th January, 2002. The issues as were
reframed by the Court on 24th January, 2002 are as under:
I. Whether the defendants carried and released the shipment
in accordance with the terms and conditions of contract?
OPP
II. Whether the written statement of defendant No. 2 is signed
and verified by duly authorized and competent person?
III. Whether the defendant No. 2 is the successor in interest of
Defendant No. 1 and has taken over the assets and
liabilities of Defendant No. 1, and to what effect?" OPP
IV. To what amount and on what accounts, if any, the plaintiff
is entitled to recover? OPP
V. To what rates of interest, if any, the plaintiff is entitled to
recover? OPP
VI. Whether the suit is barred by time?
VII. Whether the plaint discloses any cause of action against
Defendant No. 2? OPP
VIII. Relief
16. After framing of issues the parties led evidence and on behalf of
plaintiff, the deposition of Mr. Sharad Sharma who had been working as
officer, Trade Services in Standard Chartered Bank; Sh. Gurvinder
Singh Dhingra, Attorney of the plaintiff were examined. Statement of
Sh. C.K. Chandi, Assistant Manager, Reserve Bank of India regarding
permission granted to Delta Airlines under Section 29(1)(A) of Foreign
Exchange Regulation Act and Sh. Pranava Priyadarshi, working in the
Reference Department of Times of India were also recorded. The
defendant No. 2 examined Sh. K.P. Maggon, Dy. Director of Directorate
General of Civil Aviation; Ms. Katherine Snyder, an employee of
defendant No. 2 in its law department; Mr. B. K. Srinivasan, Manager of
defendant No.2 who had also signed and verified the written statement
on behalf of defendant No. 2 and Mr. Dieter Hofele in whose favor a
power of attorney by Gragory Al Riggs was executed by Vice President
and Dy. General Counsel and Assistant Secretary of defendant No. 2,
which was exhibited as Ex. DW-6/1.
17. The plaintiff has claimed the decree for recovery of money jointly
and severally against the defendants. The defendant no.1 was served by
publication and had proceeded ex parte as none had appeared on his
behalf. The suit is contested by defendant no.2. The issue number II
`whether the written statement is signed and verified by a duly
authorized person on behalf of defendant no.2 is dealt first.
18. Issue no. II. The written statement which is filed on behalf of the
defendant no.2 is signed by Shri K.Srinivasan, Senior Sales Manager of
Defendant no.2 who verified the written statement stipulating that he is
authorized and competent to verify the contents of the written
statement to the best of his knowledge and on the basis of records.
According to plaintiff, the sales manager of the defendant could not be
principal officer and no authorization in favor of the said official has
been filed by the said defended and consequently the written statement
on behalf of said defended has not been signed and verified by a duly
authorized person.
19. The contesting defendant has contended that there is no plea in
the plaint that the written statement has not been filed by a duly
authorized person. This contention is not acceptable. There could not
be such a plea in the plaint as the written statement was filed after the
amended plaint was filed by the plaintiff. This however, has not been
contradicted by the plaintiff that she could have contradicted this plea
by filing a replication and taking a plea that the written statement has
not been signed and verified by a duly authorized person on behalf of
the defendant no.2. The contesting defendant has relied on a power of
attorney which has been proved as Exhibit DW 6/1 which was executed
pursuant to the resolution of the Board of defendant no.2. The
contesting defendant has also relied on the depositions of DW-6 and
DW-5, namely Mr. Dieter Hofele and Mr. K Srinivasan. Mr. Srinivasan
deposing that the written statement was drafted by the counsel under
his instructions and under the instructions of Mr. John E. Parkerson,
Attorney of Delta Air Lines Inc. He stated that he was responsible for
the Delhi station and was the last employee of Delta Air Lines in New
Delhi after the airline closed down their operations here in 1995. In his
capacity as Sales Manager and otherwise as the senior-most employee
of Defendant No. 2 in Delhi, he was authorized to sign and execute
various documents on behalf of Delta Air Lines Inc. He also deposed
that he signed and verified the Written Statement filed in this case in
November, 1995 and stated that the contents are based on facts
derived from the records of the company and some of the facts he is
personally aware of. The said Written Statement had been approved by
Delta‟s Law Department through Mr. John E. Parkerson, who was then
Delta‟s Senior Attorney in Atlanta, Georgia, USA.
20. Mr. Dieter Hofele, DW-6 in his deposition stated that he confirms
and ratifies the Written Statement filed which was duly authorized by
Delta‟s senior management. He confirmed that Mr. John E. Parkerson,
Senior Attorney in Delta‟s Law Department, duly approved the Written
Statement. It was issued under the authority of the company. He
stated that the facts contained in the said Written Statement were
derived from records of this case and records of the company. According
to him to the best of his knowledge, the said Written Statement does not
contain any statements which are false, misleading or otherwise
contrary to Delta Air Lines Inc.‟s documentation. The person who
signed this Written Statement was working under him previously and
was authorized by Delta Air Lines, Inc. to sign that document. A power
of attorney has also been filed on behalf of defendant no.2. Clause 8 of
the said attorney allows DW 6 to act as an agent of the Company
generally before any Court, to answer interrogatories, to sign
statements, affidavits etc. The Exhibit accompanying that document i.e.
Notarised Certificate of Resolution shows that a Resolution was passed
for delegation of powers by the Board of Directors of Delta Air Lines, Inc
on 25th October 1990 and the powers consequently devolved upon Mr.
Gregory L. Riggs, Vice President - Deputy General Counsel and
Assistant Secretary of Delta Air Lines to authorize him to issue the
relevant Power-of-Attorney. The attorney is attested by the Indian Vice
Consul Shri D.B. Bhati, Consulate General of India, Houston, USA and
notarized by Notary Public of State of Georgia, Natalie Miles. Pursuant
to the said Power granted and ratified by the Company, the Written
Statement as verified by the signatory has been duly confirmed and
ratified on behalf of Defendant No. 2 company i.e. Delta Air Lines, Inc.
Mr. Sriniwasan in his cross examination had also deposed that he had
a power of attorney at the relevant time which has been misplaced by
him as the office of the contesting defendant had been closed. No
suggestion was given to him that he was not authorized to sign and
verify the pleadings on behalf of contesting defendant or that power of
attorney was not executed in his favor. No suggestion was even given in
the cross examination of Mr. Dieter Hoefele that no power of attorney
was executed in favor of Mr. Srinivasan.
21. In support of plaintiff‟s contention that the written statement has
been signed and verified by a duly authorized person, defendant No. 2
has also relied on United Bank of India Vs. Naresh Kumar & Ors., AIR
1997 SC 3 and M/s. Kalpana Exports Vs. Kerala Financial Corporation,
AIR 1990 Kerala 84 holding that where pleadings have been signed by
one of the officers of the Corporation, it can ratify the said action of its
officer in signing the pleadings. In United Bank of India (supra) it was
held by the Apex Court that reading of Order 6 Rule 14 together with
Order 29 Rule 1 of the Code of Civil Procedure reveals that even in
absence of any formal letter of authority or power of attorney being
executed, a person, referred to under Order 29 Rule 1, by virtue of the
office which he holds, can sign and verify the pleadings on behalf of
Corporation. It was also held that a company is a juristic entity and
consequently, it can duly authorize any person to sign the plaint or
written statement on its behalf and this would be regarded as sufficient
compliance with the provisions of Order 6 Rule 14 of the Code of Civil
Procedure. The Apex Court had held:
10. It cannot be disputed that a company like the
appellant can sue and be sued in its own name. Under
Order 6 Rule 14 of the Code of Civil Procedure a pleading is
required to be signed by the party and its pleader, if any. As
a company is a juristic entity it is obvious that some person
has to sign the pleadings on behalf of the company. Order
29 Rule 1 of the Code of Civil Procedure, therefore, provides
that in a suit by or against a corporation the Secretary or
any Director or other Principal Officer of the corporation
who is able to depose to the facts of the case might sign and
verify on behalf of the company. Reading Order 6 Rule 14
together with Order 29 Rule 1 of the Code of Civil Procedure
it would appear that even in the absence of any formal
letter of authority or power of attorney having been
executed a person referred to in Rule 1 of Order 29 can, by
virtue of the office which he holds, sign and verify the
Pleadings on behalf of the corporation. In addition thereto
and dehors Order 29 Rule 1 of the Code of Civil Procedure,
as a company is a juristic entity, it can duly authorise any
person to sign the plaint or the written statement on its
behalf and this would be regarded as sufficient compliance
with the provisions of Order 6 Rule 14 of the Code of Civil
Procedure. A person may be expressly authorised to sign the
pleadings on behalf of the company, for example by the
Board of Directors passing a resolution to that effect or by a
power of attorney being executed in favour of any individual.
In absence thereof and in cases where pleadings have been
signed by one of its officers a corporation can ratify the said
action of its officer in signing the pleadings. Such ratification
can be express or implied. The court can, on the basis of the
evidence on record, and after taking all the circumstances of
the case, especially with regard to the conduct of the trial,
come to the conclusion that the corporation had ratified the
act of signing of the pleading by its officer.
22. In M/s. Kalpana Exports (Supra) one of the Bench of Kerala High
Court had held that expression "principal officer" is not defined in the
Code of Civil Procedure and consequently, it cannot be said that Order
29 is exhaustive of persons or officers who can sign and verify the
plaint. In this case, a Dy. Legal Manager had signed and verified the
petition, who was duly authorized to do so by the Board as per the
resolution and it was held that the Dy. Legal Manager was competent
officer to file the writ petition before the District Judge.
23. Considering the entirety of evidence on this aspect especially the
power of attorney Ex Dw 6/1 in favor of Mr. Dieter Hofele and his
statement along with the statement of Mr. Srinivasan who has ratified
what has been pleaded on behalf of the contesting defendant in the
written statement, it cannot be held that the written statement was not
signed and verified by a duly authorized person on behalf of the
defendant no.2. The defendant no.5 had deposed that a power of
attorney was issued in his favor which however, has been lost on
account of closure of the office of the defendant no.2 which fact has not
been denied by the plaintiff in the cross examination of said witness nor
it has been suggested to him that no power of attorney was executed in
his favor. The plea taken in the written statement on behalf of the
defendant no.2 that it has been signed and verified by a duly authorized
person on behalf of the defendant no.2 was not refuted by filing
appropriate pleadings after taking permission from the Court in
accordance with provision of Code of Civil Procedure. Dw6 in any case
has ratified the pleadings on behalf of the defendant no.2 which is
express. Supreme Court in Union Bank of India (supra) had held that in
cases where pleadings have been signed by one of the officers of a
corporation, it can ratify the said action of its officer in signing the
pleadings and such ratification can be express or implied. The court
can, on the basis of the evidence on record, and after taking all the
circumstances of the case, especially with regard to the conduct of the
trial come to the conclusion that the corporation had ratified the
act of signing of the pleading by its officer. In the circumstances the
only probable inference is that the written statement had been signed
and verified by a duly authorized person on behalf of the defendant
no.2.
The issue is accordingly decided in favor of Defendant no.2.
24. Issue no. III & VII are taken up together. Issue no.3 is whether
the defendant no.2 is the successor in interest of Defendant no.1 and
has taken over the liabilities and assets of the defendant no.1 and issue
no. 7 is whether the plaint discloses any cause of action against the
defendant no.2.
25. The allegation against the contesting defendant is that defendant
no.1 had amalgamated and/or had been taken over by contesting
defendant and the other international carrier, defendant no.1, and all
its business assets and liabilities, rights, titles and interest had been
assigned, vested and/or devolved upon contesting defendant and he is
the successor of defendant no.1. The allegation made in para 2 of the
plaint by the plaintiff is refuted by the defendant no.2 in his written
statement contending that there is no contractual relationship between
the plaintiff and contesting defendant. It was pleaded that all the
documents relied on by the plaintiff in support of her claim relates to
defendant no.1. It was asserted that the defendant no.2 has at all times
continue to function independently of defendant no.1. The contesting
defendant denied that defendant no.1 had amalgamated with defendant
no.2. It was denied by the contesting defendant that it was the
successor of the defendant no.1 in any manner. The contesting
defendant denied that it had taken over the liabilities of the defendant
no.1 or its business. It was clarified that defendant no.1 had only sold
certain assets to contesting defendant. It was contended on behalf of
the defendant no.2 that it had set up completely independent
operations in India and it is an independent entity.
26. The learned senior counsel for the plaintiff, Mr. Tikku has relied on
certain documents to drive the plea of the plaintiff that defendant No. 2
is the successor of defendant No. 1 and has taken over its assets and
liabilities. Reliance has been placed on an envelope Ex.PW 2/16 which
is of defendant No. 1 and allegedly used by defendant No. 2. The
learned counsel has also referred to a certified copy of a District Court
judgment in Suit No. 637/2002, where a decree was passed against
Delta Airlines and Pan American World Airways as defendants. The
learned senior counsel has also relied on Asset Purchase Agreement,
which is exhibited as Ex. DW4/2. The plea of the plaintiff is that the
Asset Purchase Agreement is not for mere purchase of Aircrafts and
some other assets as has been contended and projected on behalf of
defendant no. 2, because defendant No. 1 was purchased by defendant
No. 2 as a going concern and it included purchase of contracts; ground
support equipment; permit and licenses; documents; data books;
records etc.; trademarks; routes and slots; employment records and
even employees and has referred to various clauses of the Asset
Purchase Agreement. The emphasis was also laid on the fact that
defendant No.2 operated from the same building from which defendant
no.1was operating which is 36 Janpath, New Delhi. The fact that DW-5
Sh. K. Srinivasan was taken over by defendant No. 2, was also relied on
and reliance was placed on AIR 1963, SC 1489.
27. Mr. Tikku, learned counsel for the plaintiff has also referred to the
statement of the Attorney of the plaintiff deposing that he had read the
news item in Economic Times that Pan American World Airways was
taken over by Delta Airlines, defendant No. 2. It was also emphasized
that in the cross examination, he had denied that defendant No. 2 was
not the successor of defendant No. 1 and he had categorically denied
the suggestion of the counsel of defendant No. 2 that there was no
material on record to show that defendant No. 2 is the successor of
defendant No. 1. The reliance was also laid on the denial of the
suggestion on behalf of plaintiff that defendant No.2, Delta Airlines was
not responsible for the liabilities of defendant No.1.
28. Mr. Pasrich, learned counsel for defendant No. 2 has laid emphasis
on the Asset Purchase Agreement, which has been established and
proved, according to him, as Ex. DW4/2. The learned counsel has
referred to paragraph 2.4 of the Agreement which according to him
categorically incorporates that it was expressly understood between
defendant No. 1 and defendant No. 2 that the defendant No. 2 was not
to be considered as a successor to defendant No. 1 by reason of any
theory of law or equity. Relying on the Order and judgment dated 12th
August, 1991, which was proved as Ex. DW 4/1 of United States
Bankruptcy Court, the learned counsel for defendant No. 2 contended
that defendant No. 2 did not pursuant to Asset Purchase Agreement or
related instruments or otherwise assumed and agreed to perform to
pay, discharge or indemnify debtors against or otherwise having any
responsibility for any liabilities or obligations of the debtors of
defendant No. 1. According to learned counsel, the Order of United
States Bankruptcy Court dated 12th August, 1991 is an order of
competent jurisdiction and reliance was placed on Section 14 of the
Code of Civil Procedure. According to him, there is no challenge to the
said order and the conditions set out under Section 13 of the Code of
Civil Procedure are satisfied and therefore, the reliance can be placed
on the same. He also relied on the newspaper cuttings dated 4th
September, 1996, 3rd May, 1998 and 1st July, 1998, which had been
proved as EX. DW1/1, DW1/2 and DW1/3 by DW1 Mr. Pranava
Priyadarshi, Official of the Reference Department of Times of India
demonstrating that the defendant No. 1 had been functioning in the
United States even up to 1998. The learned counsel also relied on Ex.
DW 2/1 which is ECD permission dated 19th October, 1991 under
Section 29(1) (A) of Foreign Exchange Regulation Act and Ex. DW 2/1
which is a copy of the license obtained by defendant No. 2 to deal in
foreign currency dated 31st October, 1991 and Ex. DW 3/1, copy of
operating permit dated 1st November, 1991, issued to defendant No. 2
by Directorate General of Civil Aviation.
29. The learned counsel for defendant No. 2 also relied on the orders
passed in EA 40/1996 in Execution Case No. 156/91 in Indira
International Vs. Pan American World Airways and Ors; order dated
24th August, 2001, M/s. Varuna Exports Corporation Vs. M/s. Dera
Imports Limited and Ors; order of a consumer dispute redressal forum
dated 19th December, 1997 titled Jagmohan Kumar Vs. Delta Airlines
and an order dated 5th August, 2002 passed in a matter titled as Jaipal
Nandwani Vs. M/s. Pan World Incorporation. On behalf of defendant
No. 2, reliance was also placed on the deposition of Ms. Snyder, Dw4,
who had deposed that defendant No. 2 had neither dealt in any capacity
with the plaintiff nor had any kind of relationship with the plaintiff.
The said witness, according to defendant No. 2, has categorically
deposed that defendant No. 2 has not ever been the successor of
defendant No. 1 and did not undertake any liability of defendant No. 1
in any form or manner. Reliance was also placed on the testimony of
Mr. K. Srinivasan, DW-5, Senior Sales Manager, who deposed that
defendant No. 2 is not a successor in interest of Pan American World
Airways and it had not taken over the liabilities of defendant No. 1 on
any account and has not taken over any liability in relation to claim
made by the plaintiff in the instant case. Mr. Pasrich, learned counsel
for defendant No. 2 also referred to the deposition of Mr. Dieter Hofele
categorically deposing after ratifying pleas and averments made on
behalf of defendant No.2, which was signed and verified by Sh.
Srinivasan, Senior Sales Manager deposing that defendant No. 2 is not
a successor in interest of Pan American World Airways nor defendant
No. 2 took over the liabilities of defendant No. 1 on any account and has
not taken over alleged liability of the plaintiff in the present suit.
30. Ex. Dw 4/2 Asset Purchase Agreement in clause 2.4 categorically
lays down that under the agreement, buyer does not have any
responsibility or liability or obligation of the seller. Clause 2.4 of the
said agreement is as under:
"2.4. Assumption of Liabilities. (a) Except as otherwise
expressly provided in this Agreement or the Related
Instruments, Buyer does not pursuant to this
Agreement or the Related Instruments or otherwise
assume, agree to perform, pay, discharge or indemnify
Sellers against or otherwise have any responsibility for,
any liabilities or obligations of Sellers, fixed, contingent
or otherwise, known or unknown, relating to or arising
out of the Purchased Assets or the Excluded Assets,
whether arising prior to, on or after any Closing. It is
expressly understood that the parties intend that Buyer
shall not be considered a successor to Sellers by reason
of any theory of law or equity and that Buyer shall have
no liability except as otherwise provided in this Agreement
or the Related Instruments for any obligation of Sellers.
Without limiting the generality of any of the foregoing, but
except as otherwise expressly provided in this Agreement or
in any of the Related Instruments, Buyer does not pursuant
to this Agreement or the Related Instruments or otherwise
assume any of the following liabilities or obligations: (i)
liabilities or obligations associated with any of the
Purchased Assets incurred or arising out of events, any act
done or omitted, or alleged to have been done or omitted, or
any state of facts existing, or alleged to have been existing,
on or prior to the Closing Date in respect of such Purchased
Assets, whether or not such liabilities or obligations were
known at the date hereof or at a Closing, including, without
limitation, claims related to the destruction of Pan Am
Flight 103 in December of 1988, (ii) liabilities or obligations
to the extent they were incurred or relate to performance on
or prior to the date of the Closing under the terms of any
Contract or Aircraft Lease that is assumed by Buyer, iii)
liabilities or obligations arising out of or relating to any
employees or former employees of Sellers or any of their
Affiliates, or any Employee Benefit Plans or similar
arrangements as have been maintained by Sellers or any of
their Affiliates, including without limitation, liabilities for
accrued wages and payroll, withholding and employment
taxes for any period prior to the Closing, and liabilities
related to retirement and welfare benefits (including any
and all claims related to any under funding of pension
plans, unpaid contributions to or withdrawal liability from
any Multiemployer Plan and any liability to the PBGC
related thereto, and any post-retirement medical and other
post retirement benefits) any claims arising under collective
bargaining agreements to which either Seller or any of their
Affiliates is or was a party and any and all other claims,
grievances, charges, actions, complaints or proceedings
(whether asserted or unasserted or pending or threatened)
of any nature whatsoever, by or on behalf of employees or
former employees of Sellers or any of their Affiliates or
beneficiaries of any of Sellers or any of the above (whether
or not such persons are employed by Sellers or any of their
Affiliates on the date hereof, the Closing Date or any other
time) which related to said employees‟ employment by
either Seller or any of their Affiliates or (iv) liabilities or
obligations with respect to any Environmental damage
relating to the Purchased Assets to the extent such
Environmental Damage is associated with any condition, or
based on any fact or circumstances, that occurred or
existed on or prior to the Closing Date, whether or not such
liabilities or obligations were known on the date hereof or at
the Closing.
(b) Notwithstanding subparagraph (a) immediately
above, Buyer shall assume and have responsibility for all of
the following liabilities and obligations, fixed, contingent or
otherwise (collectively, the "Assumed Liabilities"): (i) all
liabilities and obligations arising out of the ownership, use,
control or operation of any of the Purchased Assets by
Buyer or its Affiliates subsequent to the Closing in respect
of such Purchased Assets; (ii) all liabilities and obligations,
to the extent they are incurred or require performance
subsequent to the Closing under the terms of any Contract
or Aircraft Lease that is assumed by Buyer hereunder or
under any of the Related Instruments (other than liabilities
and obligations arising out of a breach of any Contract or
Aircraft Lease by Sellers or others prior to the Closing,
except as provided in Section 5.20); and (iii) all other
liabilities and obligations expressly assumed by Buyer
under this Agreement or any of the Related Instruments".
31. Learned counsel for the plaintiff has referred to various clauses of
the Assets Purchase Agreement in order to drive his plea that the assets
purchase agreement is in fact an agreement by which not only the
assets but the liabilities of defendant No.1 Pan American World Airways
has been taken over by defendant No.2. Referring to Clause 5.9, it was
contended that even six thousand employees of defendant no.1 were
agreed to be employed by defendant No.2 which included approximately
700 Pilots besides purchasing other assets including Air Craft etc. of
defendant No.1.
32. The learned counsel has also referred to Clause 2.1 under which
buyer has purchased and taken over defendant No.1 or seller‟s rights,
title and interest if any and, subject to seller‟s compliance with their
obligation under Section 5.2 to the extent existing on the closing date.
Reliance has also been placed on Clauses 5, 13, 22, 32 & 36. Under
Clause 5 of the agreement and its Sub Clauses the agreement
stipulated operation of purchases assets prior to closing; insurance;
access to assets; delivery of schedules; confidentiality etc. Perusal of
these clauses however, reveal that none of these clauses can be
construed to mean that liabilities had been taken over by defendant
No.2. Perusal of other Clauses of the agreement also do not reflect
taking over any of the liability specifically by defendant No.2. Rather
Clause 2.4 of the said agreement is very specific and clear stipulating
that except as otherwise expressly provided, defendant No.2 does not
pursuant to this agreement or related instrument or otherwise assumed
or agreed to perform, pay, discharge or indemnify sellers against or
otherwise any liabilities or obligation of the sellers, fixed, contingent or
otherwise known or unknown. In the circumstances, on the principles
of simple construction of a document, it cannot be inferred that
defendant No.2 had taken over any liabilities of defendant No.1 in terms
of Clause 2.4 in any manner. Even the plea of plaintiff that defendant
No.2 is the successor of defendant No.1 is repelled by specific
stipulation to this effect in Clause 2.4 whereby it was categorically
agreed between defendant No.1 and defendant No.2 that defendant No.2
shall not be considered as a successor to defendant No.1 by reason of
any theory of law or equity.
33. The witness of the plaintiff, her attorney Mr.Gurvinder Singh
Dhingra has deposed that since he read in the Economic Times that
defendant No.1 has been taken over by defendant No.2, therefore,
defendant No.2 is the successor of defendant No.1 and in further
support of this plea, it was deposed that his lawyer had informed him
that a letter was sent by defendant No.2 in the envelop of defendant
No.1. He was categorically in his cross examination that apart from the
news in the Economic Time he did not have any other material or
document regarding the fact that defendant No.2 had taken over the
assets and liabilities of defendant No.1. Even the envelope Ex.PW2/16
on which reliance has been placed was not addressed to him, but was
addressed to his counsel Sh.H.L.Tikku, Advocate. He admitted that on
the said envelope postal endorsement or stamp is not discernable.
About other letter which was exhibited as Ex.PW2/17, he deposed that
the original letter was issued to Gaurav International with a copy to his
counsel, however, he was unable to recall whether envelope of the letter
Ex.PW2/17 was with defendant No.2 or not.
34. In view of the specific stipulation in the assets purchase Ex.DW4/2
that defendant No.2 shall not be considered as a successor to defendant
No.1 by reason of any theory of law or equity, merely on the basis of a
envelope Ex.PW2/16, it cannot be held by stretch of any argument that
defendant No.2 is successor of defendant No.1.Even the plaintiff did not
implead defendant No.2 as the successor of defendant No.1. The
plaintiff himself has treated defendant No.2 as a separate entity while
impleading defendant No.2 through an I.A.No.9616 of 1994, which was
allowed on 2nd November, 1994. The notice was not issued to defendant
No.2 while allowing the said application by order dated 2nd November,
1994.
35. The learned counsel for the plaintiff has not disclosed any rule or
law to demonstrate that if substantial assets of any company are
purchased, the buyer/ purchaser will become the successor despite the
specific stipulation in the agreement for purchase that the buyer shall
not be considered a successor to seller by reason of any theory of law or
equity. While buying certain assets from defendant No.1, if it was
stipulated that six thousand employees of defendant No.1 shall also be
employed by defendant No.2 including pilots as the defendant No.2 had
purchased Aircrafts of defendant No.1, that will also not make
defendant No.2 as a successor of defendant No.1 as contemplated
under law so as to be liable for the liabilities of defendant no.1.
36. The reliance by the plaintiff on a decision in suit No.637 of 2002 by
which Judgment and Decree were passed against defendant No.2 and
defendant No.1 is also misplaced as defendant No.2 has categorically
disclosed that the said decree was set aside as the same was passed ex
parte and the summons of the suit on defendant No.2 was served on the
wrong address as defendant No.2 never had any office at Kanakchangha
building Janpath lane. It is asserted by Mr.Pasrich, learned counsel for
defendant No.2 that in any case, the said ex parte decree was set aside.
The judgment and decree in the suit No.637 of 2002 cannot be
construed to be a judgment in rem holding that defendant No.2 is
successor of defendant No.1.
37. The learned counsel for the plaintiff has relied on Workman of
Brahmputra Tea Estates (Supra) to support its plea that defendant No.2
is the successor of defendant No.1. The learned counsel also relied on
the decision of the Supreme Court in the case of Anakapalla
Cooperative (1963) Supp. SCR 730. Perusal of the judgments relied on
by the plaintiff reflected that they are distinguishable and on the basis
of the ratio of the said cases neither it can be held that defendant No.2
is a successor of defendant No.1 nor it can be held that the defendant
no.2 shall be liable for the alleged liability of defendant No.1.
38. In Anakapalla Co-Operative Agricultural and Industrial Society
Limited (Supra) cane growers formed a cooperative society and
purchased a mill which was suffering losses and terminated the
services of the employees and paid retrenchment compensation. Some
of the workers of the old mill who had not been absorbed challenged the
decision and the matter was sent for adjudication and the Tribunal by
an award directed the society to re-employ such workers with continuity
of service. The society which had purchased the mill had contended
that it was not a successor-in-interest and, therefore, the claim for re-
employment was not sustainable and in any case the employment had
been terminated upon payment of compensation under Section 25 FF
and, therefore, no claim could be made against the transferee company.
The Supreme Court had repelled the contention of the society holding
that the society was the successor-in-interest of the company. It was
held that if the purchaser purchased the whole of the business as a
going concern and if the business carried on, is the same or similar as
that carried on by the seller and at the same place without a
substantial break in continuity and if the goodwill had been purchased
then it will be a successor-in-interest. It was further held that the
decision of the question whether a buyer is a successor or not would
depend upon the evaluation of all the relevant factors and such a
decision cannot be reached by treating any one of the factor as of over-
riding or conclusive significance. The Supreme Court had held that the
claim of the employees for reinstatement was not sustainable. The said
precedent is in view of the provisions of the Industrial Dispute Act. The
said act cannot be extrapolated to the sale between the defendant No.1
to defendant No.2. In any case merely on the reading of some of the
clauses it cannot be held that the entire business has been sold to
defendant No.2. In view of the specific stipulation in the Asset Purchase
Agreement exhibit DW.4/2 that the defendant No.2 shall not be
considered as a successor to defendant No.1 by any reason of any
theory of law or equity, it cannot be negated on the basis of the ratio of
Anakapalla (Supra). The decision relied on by the plaintiff is clearly
distinguishable. The plaintiff has also relied on Workman of
Brahmputra Tea Estate (supra) in which only the equity of redemption
in a part of the assets of the tea company was purchased in which the
official liquidator continued to function. The purchaser of equity of
redemption was held not to be successor in interest of the tea company.
The said precedent relied on by the plaintiff is clearly distinguishable.
39. Besides the Asset Purchase Agreement the decision by United
States Bankruptcy Court dated 12th August, 1991 which has also been
proved and exhibited as exhibit DW.4/1 cannot be modified or altered
in view of the decision of the Supreme Court in Anakapalla Cooperative
(Supra). In the said order dated 12th August, 1991 it was specifically
held that the defendant No.2 does not pursuant to Asset Purchase
Agreement or the related instrument or otherwise assume, agree to
perform, pay, discharge or indemnify debtors against or otherwise have
any responsibility or any liability or obligation of debtors. Relevant
paragraph (L) of the judgment dated 12th August, 1991 is as under:-
"L. Except as otherwise expressly provided in the
Asset Purchase Agreement or the Related Instruments or as
provided in paragraphs J, K and N herein, Delta does not
pursuant to the Asset Purchase Agreement or the Related
Instruments or otherwise assume, agree to perform, pay,
discharge or indemnify Debtors against or otherwise
have any responsibility for, any liabilities or obligations
of Debtors, fixed, contingent or otherwise, known or
unknown, relating to or arising out of the Assets or the
Excluded Assets, as defined in the Asset Purchase
Agreement, whether arising prior to, on or after any
Closing. Delta is not a successor to any of the Debtors by
reason of any theory of law or equity and Delta shall have
no liability except as otherwise expressly provided in the
Asset Purchase Agreement or the Related Instruments for
any obligation of the Debtors. Without limiting the
generality of any of the foregoing, but except as otherwise
expressly provided in the Asset Purchase Agreement or in
any of the Related Instruments, Delta does not pursuant
to the Asset Purchase Agreement or the Related
Instruments or otherwise assume any of the following
liabilities or obligations: (i) liabilities or obligations
associated with any of the Assets incurred or arising out of
events, any act done or omitted, or alleged to have been
done or omitted, or any state of facts existing, or alleged to
have been existing, on or prior to the Closing Date in
respect of such Assets, whether or not such liabilities or
obligations were known at the date hereof or at Closing,
including, without limitation, claims related to the
destruction of Pan Am Flight 103 in December of 1988, (ii)
liabilities or obligations to the extent they were
incurred or relate to performance on or prior to the
date of the Closing under the terms of any Contract or
Aircraft Lease that is assumed by Delta, (iii) liabilities or
obligations arising out of or relating to any employees or
former employees or Debtors or any of their Affiliates, as
defined in the Asset Purchase Agreement, or any Employee
Benefit Plans, as defined in the Asset Purchase Agreement,
or similar arrangements as have been maintained by
Debtors or any of their Affiliates, including, without
limitation, liabilities for accrued wages and payroll,
withholding and employment taxes prior to the Closing, and
liabilities related to retirement and welfare benefits
(including any and all claims related to any underfunding of
pension plans, unpaid contributions to or withdrawal
liability from any Multiemployer Plans and any liability to
the PBGC related thereto and any post-retirement medical
and other post retirement benefits), any claims arising
under collective bargaining agreements to which the
Debtors or any of their Affiliates is or was a party and any
and all other claims, grievances, charges, actions,
complaints or proceedings (whether asserted or unasserted
or pending or threatened) of any nature whatsoever, by or
on behalf of employees or former employees of Debtors or
any of their Affiliates or beneficiaries of any of the above
(whether or not such persons are employed by Debtors or
any of their Affiliates on the date hereof, the Closing Date or
any other time) which relate to said employees‟ employment
by either the Debtors or any of their Affiliates or (iv)
liabilities or obligations with respect to any Environmental
Damage relating to the Assets to the Extent such
Environmental Damage is associated with any condition, or
based on any fact or circumstances, that occurred or
existed on or prior to the Closing Date, whether or not such
liabilities or obligations were known on the date hereof or at
the Closing." (emphasis supplied)
The learned counsel for the plaintiff is unable to satisfy this Court
as to how this judgment of United States Bankruptcy Court would not
determine whether the defendant No.2 is only a purchaser of some of
the assets and not a successor in interest of defendant no.1.
40. The other points which have been canvassed on behalf of
defendant No.2 are that defendant No.1 had been functioning in the
United States even after defendant No.2 was alleged to had become
successor of defendant No.1. It is asserted that PAN American World
Airways was functioning until 1998 and reliance has been placed on
exhibit DW.1/1; DW.1/2 and DW.1/3 which are the newspaper
cuttings. Although the probative value of such news papers report
would not be much, however, these documents have not been rebutted
by and on behalf of plaintiff and nothing has been produced by the
plaintiff to show that after the assets of defendant No.1 had been
purchased pursuant to United States Bankruptcy Court‟s order the
defendant no.1 had stopped functioning. This has also been established
by defendant No.2 that it obtained independent licenses and permission
from the concerned authorities. Had the defendant No.2 been a
successor of defendant No.1 instead of obtaining the independent
licenses and permissions, it would have got them transferred in its
name which is not the case. Nothing contrary to the pleas and
contentions of the defendant no.2 has been established by the plaintiff.
The defendant No.2 has produced and proved ECD permission dated
19th October, 1991 under Section 29(1)(a) of Foreign Exchange Act
which was exhibited as exhibit DW.2/1 and the copy of the license to
deal in foreign currency dated 31st October, 1991 and the certified copy
of operating permit dated 1st November, 1991 exhibited as DW.3/1.
These permissions and licenses are in the name of defendant no.2 as an
independent entity and not as successor in interest of defendant no.1.
41. Though the defendant No.2 has also relied on the decision of this
Court in EA No.40/1996 in Execution No.156/1991 dated 17th
September, 1999 Indira International v. PAN American World Airways,
however, the plaintiff was not a party to the said execution petition and
it cannot be held that the decision is binding on the plaintiff. It is no
doubt true that in Indira International (Supra) it was held that the sale
of assets to M/s.Delta Airlines was through the Bankruptcy Courts with
a view to attain and realize the maximum value of the assets to meet
the liabilities of the creditors of M/s.PAN American World Airways and
merely use of the assets purchased by the defendant No.2 would not
create any liability being accepted of any other creditor.
42. The witnesses of the defendant No.2 including Ms.Snyder (DW.4)
categorically deposed that defendant No.2 had never been the successor
of defendant No.1 except the transactions contained in DW.4/2 the
Asset Purchase Agreement and as set out in DW.4/1 and there is no
legal relationship between defendant No.2 and defendant No.1 and
defendant No.2 at no stage undertook any liability of plaintiff against
defendant No.1 nor is a successor in interest of defendant no.1. The
said witness also deposed that defendant No.2 has not purchased the
name and goodwill of defendant No.1 and is an independent legal entity
and has no connection whatsoever with defendant No.1. It has also
been disclosed that defendant No.1 is continuing in Florida and has
various websites. For the foregoing reasons it is inevitable to infer that
defendant No.2 is not a successor of defendant No.1 and by purchasing
the assets of defendant No.1 pursuant to Asset Purchase Agreement
exhibit DW.4/1 and by virtue of the judgment dated 12th August, 1991
of United States Bankruptcy Courts exhibit DW.4/1 the defendant No.2
does not become liable for any alleged liability of plaintiff against
defendant No.1. In the circumstances it is also apparent that the plaint
does not disclose any cause of action against defendant No.2 and thus
issues Nos.3 & 7 are decided in favor of defendant No.2 and against the
plaintiff.
43. Issue No.VI This issue is whether the suit is barred by time. In
the circumstances, whether the suit is barred by time or not, the onus
would be on the defendants. Since it has been held that defendant No.2
was not a successor of defendant No.1, therefore, what is to be
considered is whether the suit which was instituted on 14th September,
1992 but where defendant no.2 was impleaded as a party pursuant to
order dated 2nd November, 1994 will be within time against defendant
No.2.
44. The suit has not been contested on behalf of defendant No.1 and
this Court has since held while deciding the issue no.3 that defendant
No.2 is not the successor in interest of defendant No.1. Therefore, it will
be more of an academic exercise whether the suit of the plaintiff is
barred against defendant No.2 as since the defendant no.2 is not a
successor in interest of defendant no.1, it will not have any liability in
any case.
45. The defendant No.2 has contended that it was impleaded in 1994.
While impleading defendant No.2 the order passed was as under:-
" 02.11.1994
Present: Mr.B.L.Wali for the plaintiff.
None for the defendant.
Suit No.3457/1992
This is an application seeking amendment in the plaint.
Since the suit is at a preliminary stage, amendment is
allowed. Delta Airlines is permitted to be joined as
defendant No.2 in the suit. Defendant No.1 is already ex-
parte.
Let amended memo of parties be filed.
Summons in the suit shall issue to defendant No.2 on
payment of process fee within a week.
IA disposed of.
To be listed on 21st March, 1995.
November 02, 1994 sd/-
46. Perusal of the said application, however, reveals that this is an
application under Order 22 Rule 10 and Order 1 Rule 10 read with
Section 151 of the Code of Civil Procedure contending inter-alia that
Pan American World Airways defendant No.1 is amalgamated and/or
taken over by Delta Airlines and all the right, power and interest of the
said carriers have devolved upon defendant No.2 and in the
circumstances allow the plaintiff to substitute Delta Airlines in place of
PAN American Airways or in the alternative allow the plaintiff to add
Delta Airlines having its office amongst others at Chanderlok, 36,
Janpath in the array of defendants. By allowing this application the
defendant No.2 was not substituted in place of defendant No.1 but was
rather impleaded as independent party. This order was not challenged
by the plaintiff and the addition of defendant no.2 independently and
not in substitution of defendant no.1 was not challenged by the
plaintiff. Though the amendment was not sought in the application,
however, the order was passed allowing the amendment. This cannot be
disputed that under the High Court rules while seeking amendment, a
party is to disclose specifically what amendments are to be carried out.
47. In the original plaint filed by the plaintiff the claim was from
October 21, 1990 till the date of payment. Though the amendment was
not sought for deletion of these words, however, pursuant to order
dated 2nd November, 1994 the said words were deleted by the plaintiff.
The learned counsel for the plaintiff has not been able to explain as to
how the portion of the pleading could be deleted without specific
permission from the Court and without seeking specific amendment. In
the circumstances, though the amended plaint does not seek relief from
21st October, 1990, however, it has to be taken into consideration that
the cause of action had lastly arose on 21st October, 1990.
48. The learned counsel for the plaintiff Mr,Tikku on a query by this
Court contended that the suit would be within time only if defendant
No.2 is held to be successor of defendant No.1. Since the defendant
No.2 is not the successor of defendant No.1 and the defendant No.2 had
purchased the assets by agreement dated 27th July, 1991, therefore, the
application dated 28th October, 1994 impleading defendant No.2 for the
alleged claim on the basis of transaction between defendant No.1 and
the plaintiff shall also be barred by time.
49. The learned counsel for the defendant No.2 has contended that in
order to determine whether the suit is barred by time the provisions of
the Carriage by Air Act and the Limitation Act, 1963 have to be
considered. The Carriage by Air Act, 1972 under Rule 29 contemplates
that right to damages shall be extinguished if an action is not brought
within two years, reckoned from the date of arrival of goods at the
destination, or from the date on which the aircraft ought to have arrived
or from the date on which the carriage stopped. According to the
allegations of the plaintiff the consignment was shipped on 20th
October, 1990 and though it ought to have been delivered within 3 to 4
days, however, even if the time taken for delivery is construed to be one
week, it ought to have been delivered by 27th October, 1990. In the
circumstances, the suit should have been filed by 27th October, 1992
according to Rule 92 of the First Schedule of the Carriage by Air Act,
1972. It is further asserted that under the Limitation Act since the
plaintiff has claimed interest from 21st October, 1990, three years
period as contemplated under the Limitation Act under the relevant
Article shall be up to 20th October, 1993. Since the defendant No.2 was
impleaded on 2nd November, 1994, therefore, the claim neither under
the Carriage by Air Act, 1972 First Schedule Rule 29 nor even under the
Limitation Act, 1963 is within time as under the Limitation Act the
Effect of Substituting or adding a new defendant is contemplated under
Section 21 of the Act. The Suit as regards the new defendant is deemed
to have been instituted as against him "when such a newly added
defendant is so made a party". The learned counsel for the defendant
no.1 has also relied on M/s Sailesh Textile Industries vs. British
Airways & Anr.2003 IV AD (DELHI) 276 holding that the provisions of
the Carriage by Air Act and the schedules thereto are clear and
unambiguous and provide for a period of limitation within which a suit
is to be filed to claim damages for loss of goods, whether it be loss to the
goods or whether loss to the owner. Reliance was also placed on
Rajasthan Handicrafts Emporium v. Pan-American World Airways AIR
1984 Delhi 396 holding that that there is no scope for the application of
Article 10 & 11 of the Limitation Act in regard to carriage by air in view
of R. 30 of the Second Schedule which operates to extinguish the right
to damages if action is not brought within two years from the accrual of
the cause of action as spelt out therein. It was held that Article 10 & 11
of the Limitation Act would apply to suits for compensation for loss,
damage, non-delivery of or delay in delivering goods against the carriers
generally but will not apply to suits relating to carriage by air which is
specifically covered by the provisions of the The Carriage by Air Act,
1972 and the Second Schedule thereto. The learned counsel for the
plaintiff has not been able to satisfy that the provision of The carriage
by Air Act, 1972 will not be applicable to present facts and
circumstances. In the circumstances the suit of the plaintiff for
damages regarding the carriage of goods by air is barred by time and
the issue is accordingly decided in favour of the defendant no.2.
50. Issue No.I is whether the defendants carried and shipped the
consignment in accordance with the terms and conditions of the
contract. The contract of carriage is with defendant No.1 only that is
PAN American World Airways which is exhibit PW.2/2. There is no
contract of carriage with defendant No.2, Delta Airlines nor defendant
No.2 is successor-in-interest of defendant No.1. In the circumstances
what is to be determined is whether defendant No.1 carried and shipped
the shipment in accordance with the terms and conditions of the
contract. PW.1 witness of the plaintiff, has deposed that PW.1/1 is the
document through which Standard Chartered Bank had sent the
documents of the plaintiff in negotiation to the consignee in New York
for collection of amount from FIBI Bank and the party to be notified was
Crime Wave Ltd. He deposed that since the money was not received the
documents were sent back. The said witness has also proved the telex
exhibit PW.1/2 from FIBI Bank, Switzerland intimating that on enquiry
it had transpired that documents used for getting the consignment
released from the defendant no.1 were forged documents. In the cross
examination the said witness who appeared on behalf of plaintiff
clarified that there was no letter of credit of the company and it was an
export collection on the basis of non L.C between the Standard
Chartered Bank and customer on whose behalf documents were
submitted and, therefore, the risk was to be borne by the customer in
case the payment was not received. He admitted that apart from the
telex message received from the FIBI Bank there was no other material
with Standard Chartered Bank to infer that the documents were forged.
51. Mr.Gurvinder Singh Dhingra, attorney and husband of the plaintiff
deposed that when the goods were ready for export the consignment
was booked with defendant No.1 under Airways Bill dated 20th October,
1990 which was exhibited as PW.2/2. Freight payment was made to
defendant No.1 through Continental Carriers, the consignee of the
Airways Bill was FIBI Bank, Switzerland and party to be notified was
Crime Wave Ltd, New York. According to the attorney of the plaintiff on
non receipt of payment when the enquiries were made, it transpired
that the goods were released against the bank release order which was
intimated to the plaintiff by letter dated 3rd December, 1990. According
to the said witness since FIBI Bank had not issued any release order,
therefore, the claim was lodged with PAN American for illegally
delivering the goods to Crime Wave Ltd. The attorney of the plaintiff also
admitted that the bill relating to consignment was discounted by the
Standard Chartered Bank and plaintiff had received 100% payment
under the facility with the Standard Chartered Bank. The amount of the
consignment was later debited in the plaintiff‟s account with interest at
18% as the payment was not received. According to said witness the
value of consignment was Rs.414034 C&F. The said witness in the
cross examination admitted that the claim of Rs.21,000/- in respect of
cash incentive, duty drawback has not been substantiated but the
plaintiff is entitled to it as a statutory benefit. He also admitted that the
value of goods shown in para 19A of the plaint as Rs.387718/- does not
reflect the complete profit of the plaintiff as the price was quoted after
taking into consideration duty drawback. The attorney, however,
admitted that no calculation regarding the loss of Rs.1,50,000/- as loss
of profit in business was disclosed nor details as to how this loss of
profit was computed has been given. The witness of the plaintiff though
stated initially that goods were sent through L.C but on re-examination
it was clarified by him that the goods were not sent on L.C but on D.A
basis. The averments made by the plaintiff against defendant No.1 have
not been rebutted. Neither any written statement was filed nor there is
any deposition on behalf of the defendant no.1. Still since the onus of
this issue is on the Plaintiff, it is to be established by her. Air cargo bill
exhibit PW.2/2 reveals the terms and conditions for carrying the goods
by defendant no.1 which also stipulates that carrier‟s liability shall not
exceed US$ 20 or the equivalent per kilogram of goods lost, damaged or
delayed unless a higher value is declared by the shipper and
supplementary charge paid. The plaintiff in the circumstances has to
establish that the goods have been lost on account of any act on the
part of the defendant no.1 or attributable to defendant no.1.
52. In order to determine whether the defendant No.1 released the
shipment in accordance with the terms and conditions of the agreement
what is to be determined is under what circumstances the goods were
to be released. The agreement exhibit PW.2/2 contemplates that the
goods had to be delivered to the consignee FIBI Bank, Switzerland. The
party who had to be notified and which produced the documents of the
consignee was disclosed and if the consignee and the party for whom
the goods were sent are disclosed and are not impleaded as parties then
to what extent shall be the liability of the carrier, defendant No.1 in
case there is any fraud or in case the documents of the consignee are
forged. In the notice exhibit PW.2/9 on behalf of plaintiff it has been
asserted that the consignee bank had advised the plaintiff that the
release order is a forgery, as the letter head of the release order is not
theirs nor it is signed by the authorized representative of FIBI Bank.
53. To substantiate this allegation of the forgery, the plaintiff has
produced a telex which is exhibit PW.1/2 alleged to be from FIBI Bank
intimating that the release order is not on their letterhead nor bears the
signatures of any authorized representative. The evidence on behalf of
plaintiff regarding this document is the statement of the official of
Standard Chartered Bank who has simply exhibited the said document
as PW.1/2. The said document is not even the original telex received by
Standard Chartered Bank nor there is any evidence to prove that this
telex was received from FIBI Bank, Switzerland. Neither the FIBI Bank
is a party to the suit nor any effort has been made to prove this
document. This is no more res integra that mere exhibition of the
document is not the proof of the document. In Narbada Devi Gupta Vs
Virendra Kumar Jeswal & ors, (2003) 8 SCC 745, the Supreme Court
had held that mere production and marking of a document as exhibit is
not enough as execution of a document has to be proved by admissible
evidence. In AIR 1971 SC 1865, Sait Tarajee Khimchand & Others Vs
Yelanaarti Satyam & ors referring to Order XIII Rule 4 of the Code of
Civil Procedure, it was held that mere marking of a document as an
exhibit does not dispense with its proof. A single Judge of this Court in
Sudhir Engineering Co. Vs Nitco Roadways Ltd. (1995) Rajdhani Law
Report 286 had held with reference to the Original Side Practice
Direction 3/74 that when a document is produced in evidence and is
marked as an exhibit, then it is only for identifying the documents and
is not its proof as proof of the contents of the documents must be
proved and established by independent evidence. Perusal of the
testimony of PW1 reveals that the document has been merely marked as
exhibit and there is no evidence of its proof. In the circumstances it
cannot be held that the alleged telex intimating the Standard Chartered
Bank that the documents were forged has not been proved. No other
documents have been produced by the plaintiff to establish that the
documents on the basis of which the consignment was released by
defendant no.1 were forged.
54. The air carrier, defendant No.1 had to deal with the documents
alone to release the consignment. The defendant no. 1 only had to see
that the documents were from the consignee FIBI Bank. If on the face of
the documents, there was no discrepancy, it was not expected of the
defendant No.1 to carry out enquiries or investigate about the
documents whether they are genuine or not. As already held whether
the documents on the basis of which the goods were released from
defendant No.1 were forged or fabricated has not been established and
in the circumstances the plaintiff has not been able to establish
existence of any fraud. The release order on the basis of which
defendant No.1 has released the goods ought to have been established
as being forged and fabricated. If the fraud has been committed by
Crime Wave Ltd in getting the goods released by allegedly forging the
documents of M/s.FIBI Bank, consignee, the plaintiff ought to have
impleaded the consignee and the Crime Wave Ltd as parties to the suit
and should have sought to recover the price of consignment from the
said parties. The learned counsel for the plaintiff is unable to explain
satisfactorily that if a fraud is committed by Crime Wave Ltd then how
the liability can be imputed solely to the defendant No.1 when there is
neither any averment nor any evidence of collusion of defendant No.1 in
the alleged fraud under which the goods were released from defendant
No.1 by allegedly fabricating the documents of the consignee M/s.FIBI
Bank allegedly by M/s.Crime Wave Ltd. The plaintiff has not even made
out or has made any allegation of any negligence on the part of plaintiff
in releasing the consignment on the basis of the documents of the
consignee which on the face of it does not appear to be forged.
55. This Court does not find any justification in making the carrier
liable for the frauds committed by the foreign buyer especially since no
satisfactory explanation has been rendered by the plaintiff as to why
recovery has not been sought or initiated against the consignee and the
foreign buyer also. The learned counsel for the plaintiff has also not
explained satisfactorily any duty of the carrier to investigate the
genuineness of the signatures or the genuineness of the documents, if
on the face of it they purport to be of the consignee and is on the letter
head of the consignee. This is not the case of the plaintiff that there was
some doubt about the release order being forged or some irregularity
committed by the foreign buyers and any apprehension or caution being
communicated to the defendant No.1. The release order PW.1/1 dated
5th November, 1999 is a photocopy of the release order which appears to
be on the letter head of FIBI Bank Ltd, consignee and is also alleged to
be signed by LC department advising defendant No.1 that airways bill
No.026-1045-2212 amounting to 25 cartons be released to the
customer Crime Wave Ltd, 1466, Broadway, New York. The terms and
conditions of Airways cargo bill also do not stipulate that before
releasing the goods on receipt of the release order, the defendant No.1
had to counter check from the plaintiff or her banker about the release
order so that they could get it checked from the consignee. In any case
the documents were sent through the banker of the plaintiff
M/s.Standard Chartered Bank and no such duty was cast upon
defendant no.1. Even the bank deals with documents alone and in case
there is any forgery, no liability can be imputed to them without
impleading and without taking any action against the forgers also.
56. The issue is thus decided against the plaintiff holding that
defendant no. 1 had carried and released the shipment in accordance
with the terms and conditions of the contract.
57. Issues No.IV & V:- These issues are as to what amount and on
what account plaintiff is entitled to recover from the defendants and
what interest the plaintiff is entitled to recover. This Court has already
held that defendant No.2 is not successor-in-interest of defendant No.1
nor there is any contract between defendant No.2 and the plaintiff.
Consequently, the defendant No.2 is not liable for any amount to
plaintiff. Therefore, the defendant No.2 is also not liable for any interest
to plaintiff for any period and at any rate.
58. This Court has also held that the defendant No.1 had carried and
released the shipment in accordance with the terms and conditions of
the contract and no liability can be imposed against defendant No.1 in
the facts and circumstances. Neither the defendant No.1 has breached
the terms of agreement nor there has been any negligence on the part of
the defendant No.1 in releasing the goods on the basis of the documents
allegedly of M/s.FIBI Bank submitted to defendant No.1. In the
circumstances the defendant No.1 is not liable for Rs.3,87,718/- on
account of value of goods nor the defendant No.1 is liable for freight
charges of Rs.26,319/-. Defendant No.1 is also not liable for
Rs.25,000/- on account of post shipment benefits nor is liable for
Rs.1,50,000/- for alleged loss of profit in business. In the
circumstances, defendant No.1 is also not liable for Rs.1,52,968/- on
account of interest at the rate of 18.5% per annum from 21st October,
1990 till 7th September, 1992 or for any other period. The defendant
No.1, therefore, is not liable for the suit amount of Rs.7,42,005/- nor is
liable for any interest and, therefore, the issues are decided in favor of
defendants and against the plaintiff.
59. By order dated 17th November, 1995 on an application of the
plaintiff defendant No.2 was directed to furnish a security of
Rs.4,65,000/-. By order dated 30th November, 1995 on the
representation of defendant No.2, instead of security, bank guarantee
for a sum of Rs.4,65,000/- was ordered to be furnished. On another
application of the plaintiff seeking direction to the defendant No.2 to
furnish a bank guarantee for an amount of Rs.7,42,005/-, suit amount,
by order dated 13th March, 1996 the defendant No.2 was directed to
furnish bank guarantee for Rs.7,42,005/-. Consequent to the orders of
this Court two bank guarantees for a total sum of Rs.7,42,005/- were
furnished. The bank guarantees furnished by the defendant No.2 were
extended from time to time and have remained valid during the
pendency of the present suit. Since the plaintiff has failed to establish
any liability of defendant No.2, the bank guarantee No.4764 dated 15th
December, 1995 for Rs.4,65,000/- furnished by Citibank N.A,
Parliament Street, New Delhi and bank guarantee No.4821 dated 15th
May, 1996 for a sum of Rs.2,77,000/- issued on behalf of defendant
No.2 by Citibank N.A, 3, Sansad Marg, New Delhi are discharged. Since
the bank guarantees are discharged the bank guarantees be returned to
the bank through defendant No.2 in accordance with rules.
In the entirety of facts and circumstances the suit of the plaintiff
against the defendants is dismissed, however, parties are left to bear
their own cost. Decree Sheet be drawn.
August 6th , 2010 ANIL KUMAR J.
„Dev‟
