Delhi High Court
M/S. Ssangyong Corporation vs The State Trading Corporation Of ... on 7 May, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No.345/2004 & RFA No.347/2004
% 7th May, 2012
1. RFA No.345/2004
M/S. SSANGYONG CORPORATION ...... Appellant
Through: Mr. Sanjeev Anand with
Mr. Abhas Kumar, Advs.
VERSUS
THE STATE TRADING CORPORATION OF INDIA LIMITED
...... Respondent
Through: Ms.Sumati Anand, Adv.
&
2. RFA No.347/2004
M/S. SSANGYONG CORPORATION ...... Appellant
Through: Mr. Sanjeev Anand with
Mr. Abhas Kumar, Advs.
VERSUS
THE STATE TRADING CORPORATION OF INDIA LIMITED
...... Respondent
Through: Ms.Sumati Anand, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? Yes.
RFA No.345/2004 & RFA No.347/2004 Page 1 of 19
VALMIKI J. MEHTA, J (ORAL)
1. This Regular First Appeal filed under Section 96 Code of Civil
Procedure, 1908 (CPC) impugns the judgment of the Trial Court decreeing
the suit of the respondent/plaintiff for recovery of monies paid under a
mistake to the appellant/defendant. The mistake on the basis of which
amounts were found to be payable to the respondent/plaintiff was that in the
Charter Party Agreement, the benefits of certain charges, being the despatch
charges, were to be paid to the respondent/plaintiff calculated on "All Time
Saved" basis (in short „ATS‟) and not "Work Time Saved" basis (in short
„WTS‟) and on which latter basis the payments due were calculated. „ATS‟
unit is a larger unit than the „WTS‟ unit, and therefore when „ATS‟ basis is
taken there would be a higher amount of despatch charges payable to the
respondent/plaintiff by the appellant/defendant instead when the despatch
charges are calculated on „WTS‟ basis. The expressions of "All Time
Saved" basis and "Work Time Saved" basis are used with respect to the time
taken towards discharge of cargo (being cement in this case), from the hold
of the ship to the vessel on the port/dock. For the sake of completeness I
must state that in fact two suits of the respondent/plaintiff were decreed by
the impugned judgment, however since most of the facts and issues are
RFA No.345/2004 & RFA No.347/2004 Page 2 of 19
identical in both the suits, for the sake of convenience I am referring to the
facts of the suit which is the subject matter of RFA No.347/2004.
2. The facts of the case are that the respondent/plaintiff was
appointed by the Cement Controller of India (now re-designated as DCCI,
Ministry of Industry) as the importer for importing cement in the country.
The respondent/plaintiff therefore entered into contracts with various sellers
of cement, one such seller being the appellant/defendant. In the present
case, the contracts which were entered into between the parties are the
contracts dated 18.11.1977 and 30.11.1977 (two in number), which are
identical in terms except the difference in quantity and the period of
shipments. Under these agreements, the respondent/plaintiff had contracted
to purchase from the appellant/defendant ordinary grey portland cement.
The delivery period was from December, 1977 to January, 1978 under the
agreement dated 18.11.1977 and during December, 1977 to February, 1978
under the agreement dated 30.11.1977.
3. The appellant/defendant was to arrange the vessels for
transportation of the cement to a port in India. The cargo was to be
discharged/unloaded from the ship/vessel by the respondent/plaintiff in a
fixed time which was agreed to between the parties and called as "laytime".
RFA No.345/2004 & RFA No.347/2004 Page 3 of 19
If extra/additional time was taken for discharge by the respondent/plaintiff
then, the respondent/plaintiff was to pay demurrage charges to the
appellant/defendant, but if the discharge was completed at an earlier date,
the respondent/plaintiff would earn despatch moneys. The charges for
demurrage were double the charges for despatch, i.e. the demurrage charges
were fixed at US$3,000 and the despatch was at US$1,500/-. Under the first
contract dated 18.11.1977, 97600/- MT cement was to be supplied to the
respondent/plaintiff, and under the contracts dated 30.11.1977, 158900 MT
and 83650 MT of cement was to be supplied. The amount of difference on
account of mutual mistake of fact which was committed by both the parties
by calculating the despatch amount on „WTS‟ basis instead of „ATS‟ basis
came to US$14,052.10 under the contract dated 18.11.77, and under the
contracts dated 30.11.1977 the same came to US$12,369.80 and
US$20,618.75. The relevant contractual Clauses in this case are Clauses 8,
9 and 10 which read as under:-
8.DISCHARGING RATE:
Cargo to be discharged by Buyer for their time, risk and
expenses at an average rate of 1,000 metric tons (One
Thousand) at Bombay & 800 metric tons (Eight
Hundred) at Cochin per weather working day of 24
consecutive hours. Sunday and Holiday excepted unless
used, if used working time to count as laytime.
RFA No.345/2004 & RFA No.347/2004 Page 4 of 19
9. LAYTIME:
Laytime at discharging port to commence at 1 p.m. if
Notice of Readiness is given before noon and at 8 a.m.
next working day if Notice of Readiness is given during
office hours in afternoon, unless sooner commenced,
whether in berth or not, time lost in wait for berth to
count as laytime. The vessel should be in free pratique.
In case the Buyer or his Agent refuses to accept the
Notice of Readiness served in the customary manner, it
shall be deemed to have been served and accepted by the
Buyer of his Agent if it is served through the local
telegraph/postal office by cable and/or by Registered
Post.
10.DEMURRAGE AND DESPATCH:
Demurrage money to be paid by Buyer to Seller at the
rate of US$3,000 (Three Thousand Only) per day or pro-
rate for all time lost. Despatch money to be paid by
Seller to Buyer at the rate of US$1,500 (One Thousand
Five Hundred Only) per day or pro-rata for all time
saved. Demurrage and despatch payment shall be settled
within one week from the date of discharging completion
according to time sheet and statement of fact signed by
ship master, vessel agent and receivers at discharging
port. Buyer shall issue a guarantee for weekly settlement
of demurrage in favour of Indian Shipping or other
Indian Company nominated by "Seller".
4. The appellant/defendant laid a two-fold defence. Its first
defence was that there was agreed modification of the original agreements
between the parties whereby it was agreed that calculation of despatch will
not be on the „ATS‟ basis but will be on „WTS‟ basis. The second defence
was that the suit was barred by limitation inasmuch as the
RFA No.345/2004 & RFA No.347/2004 Page 5 of 19
respondent/plaintiff could have discovered the mistake with due diligence
and therefore the respondent/plaintiff was guilty of negligence and not
mistake. Once the case is of negligence and not of mistake, the
respondent/plaintiff, it was pleaded by the appellant/defendant, cannot take
the benefit of Section 17(1)(c) of the Limitation Act, 1963.
5. After the pleadings were completed, Trial Court framed the
following issues:-
"1. Whether the pltf. is entitled to the suit amount? OPP
2. If so rate of interest to which the plaintiff is entitled?
3. Whether the suit is not barred by limitation? OPD
4. Whether the suit is bad for misjoinder of cause of action?
5. Whether there is no cause of action in view of the fact and
that accounts between the parties have been finally
settled as stated in preliminary objection no.3 of the WS
filed by the defendant? OPD
6. Whether this court has no territorial jurisdiction to try the
present suit?
7. Relief."
6. The aspect as to whether there was a settlement between the
parties for the respondent/plaintiff to take despatch money on „WTS‟ basis
and not on „ATS‟ basis, has been dealt with by the Trial Court qua issue no.5
RFA No.345/2004 & RFA No.347/2004 Page 6 of 19
and while dealing with this issue the Trial Court has held and observed as
under:-
"7. It has been alleged in the written statement that at
the time of settling the accounts and even at the time of
computation of time sheets it was mutually agreed
between the parties that the basis for computing the
despatch money would be on WTS band not on ATS. It
has however, been admitted in the written statement that
the contracts between the parties provided for
computation of despatch money on ATS basis.
8. The plaintiff is a company fully owned by Govt.
of India and is a large corporation. Admittedly, the terms
and conditions settled between eh parties were reduced
into writing. Admittedly, the written contract between
the parties, provided for computation of despatch money
on ATS basis. Therefore, it cannot be accepted that
there was a subsequent oral agreement between the
parties whereby written term of the contract as to basis
for computing the despatch money was modified. Had
there been any such modification, the modified term
would definitely have been reduced into writing,
particularly when the plaintiff is a Govt. company. Had
there been any modification of the terms of the contact,
the defendant would definitely have insisted upon
reducing it into writing instead of taking the risk of the
plaintiff denying the modification at a later date.
9. It has been alleged in the written statement that at
the time of computation of despatch money and then at
the time of settling the accounts, it was mutually agreed
between the parties that the basis for computing the
despatch money would be WTS and not ATS.
Admittedly, computation of time-sheets took place much
earlier than the alleged settlement of accounts. There is
RFA No.345/2004 & RFA No.347/2004 Page 7 of 19
no evidence that the officials of the Plaintiff Company
and defendant company had nay joint meeting before
computation of time sheets. The written statement does
not disclose on which date and at which place the parties
agreed to compute time sheets on WTS basis instead of
ATS basis. Written statement does not disclose which
official of the plaintiff company agreed to calculate the
desptach money on WTS basis instead of ATS basis.
DW-1 Hyeume Jin Choe is the only witness produced by
the defendant. In his affidavit also he has not given
these particulars. In these circumstances, I have no
hesitation in holding that there was no agreement
between the parties at the time of computation of time
sheet that the basis for computing the despatch money
would be on WTS basis instead of ATS.
10. Admittedly a meeting took place between the
officials of the plaintiff company and defendant
company at New Delhi during October-November‟1984.
According to DW-1 during discussions, the parties had
copies of contracts before them and after discussions, it
was agreed that a net amount of USD 73775.05 was to
be paid by the defendants to the plaintiff in full and final
settlement of all claims and counter claims w.r.t
demurrage and despatch accounts in respect of 5
contract. He has further stated in his affidavit that at the
time of settling the accounts it was agreed that despatch
money shall be computed on WTS basis. On the other
hand PW-2 Sh. A.S.Dutta, who admittedly attended
these meetings have specifically stated that there was no
discussion in the meeting and only calculations were
available before them. He denied that the parties had
contacts with them during discussions in October-
November‟84 and they knew the terms of contract and
took a conscious decision for calculating the despatch on
WTS basis. The letter written by the plaintiff company
to the defendant on 6.11.84 does not give any indication
RFA No.345/2004 & RFA No.347/2004 Page 8 of 19
that the parties had consciously agreed to calculate
despatch money on WTS basis instead of ATS basis.
There is no contemporaneous document either from the
defendant or the plaintiff, stating therein that parties had
consciously agreed, in the meeting held at New Delhi in
October-Novemeber‟84, to calculate despatch money on
WTS basis. Therefore, I am not inclined to believe DW-
1 on this part of his affidavit.
11. Another important aspect in this regard is that if
the parties had already agreed at the time of computation
of time sheets, to calculate despatch on WTS basis as
alleged in the written statement there would have been
no occasion for them to take a similar decision in the
meeting held in October-Novemebr‟84. In my view this
is yet another circumstance which falsifies the plea
taken by the defendant in this regard.
12. I have gone through the correspondence between
the parties. None of the letters suggest that there was a
conscious agreement between the parties to modify the
written terms of the contract and to calculate despatch
money on WTS instead of ATS basis. Had there been
any such agreement, either at the time of computation of
time sheets or at the time of meetings which took place
in October-Novmeber‟84, some indication of that would
have been found in correspondence between the parties.
In fact when the plaintiff sent revised calculations to the
defendant, on ATS basis after discovering the mistake,
the plea taken by the defendant was altogether different.
Therefore, I hold that there was no oral agreement
between the parties to calculate desptach money on
WTS basis instead of ATS basis.
.........
.........
The issue is decided against the Defendant and in
favour of plaintiff." (underlining added)
7. A reference to the aforesaid paragraphs shows that the Trial
Court arrived at the following salient conclusions to hold that there was no
settlement as was urged by the appellant/defendant:-
i) If there was a modification of the contract, considering that the
respondent/plaintiff is a Government Company, the modification
would surely have been reduced in writing. In fact, even the
appellant/defendant instead of taking risk would have insisted for the
modification to be reduced in writing.
ii) The written statement does not disclose the date and place
where the agreement was entered into to show that the despatch
moneys will be calculated on „WTS‟ basis and not on „ATS‟ basis.
The written statement also did not disclose which official of the
respondent/plaintiff agreed to calculate the despatch money on „WTS‟
basis and not on „ATS‟ basis.
iii) The correspondence between the parties do not suggest any
conscious agreement to reduce the calculation of despatch charges
from „ATS‟ basis to „WTS‟ basis.
8. I do not find any absurdity, perversity or illegality in the
aforesaid findings and conclusions of the Trial Court. Surely, when the
consequences of a modification would run into lacs of rupees, the
respondent/plaintiff being a public sector undertaking, none of its officers
would have taken the risk of giving monetary benefit to the
appellant/defendant by calculation of despatch money on „WTS‟ basis
instead of „ATS‟ basis without bringing the modification of the contract into
writing and more so without the necessary sanction of the appropriate higher
authorities. I am therefore of the opinion that there was no settlement as
alleged by the appellant/defendant to make payment of despatch money on
„WTS‟ basis instead of contractual „ATS‟ basis.
9. On the issue as to whether the suit was barred by time, the Trial
Court has held that it cannot be said that the suit is time barred in view of the
provision of Section 17 of the Limitation Act, 1963 inasmuch as the mistake
was such which could not have been discovered earlier than 6.2.1985. Trial
Court has held that in every mistake there is always some built-in amount of
negligence, however, the negligence so as to be such to take the case out of
„lack of due diligence‟, is not found in the facts of the present case for it to
be held that the respondent/plaintiff cannot be entitled to the benefit of
Section 72 of the Contract Act, 1872. The Trial Court has held that the
actions of the respondent/plaintiff amount to mistake in the facts of the
present case and the mistake committed by the respondent/plaintiff was
discovered only when the letter dated 6.2.1985, Ex.P-1 was sent to it by the
office of the Cement Controller, Government of India. If the period of
limitation is computed from 6.2.1985, the suit having been filed within 3
years thereafter i.e. on 27.1.1988, the same would be within limitation.
Trial Court has also referred to the fact that merely because the accounts of
the respondent/plaintiff are audited cannot mean that in every case a mistake
must necessarily be discovered. Finally, the Trial Court has concluded that
there is no evidence that the respondent/plaintiff could have discovered the
mistake before the receipt of letter dated 6.2.1985 from the Cement
Controller, Govt. of India.
10. Sitting as a First Court of Appeal, I am entitled to reappraise
both findings of fact and law of the Court below. I have examined the
evidence which was led in this case in the form of lay-day sheets, statements
of facts and time sheets, and which are documents drawn up on the
completion of discharge from the vessel. It is thereafter that the facts and
figures were/are calculated and the same were sent by the
appellant/defendant to the respondent/plaintiff. These documents have been
exhibited in the Trial Court as exhibit PW2/51 to PW2/63. When we look at
the time sheets which have been sent by the appellant/defendant to the
respondent/plaintiff, the same show that the calculations have been shown to
be made on „ATS‟ basis, although in reality it was on „WTS‟ basis without
so being mentioned. The final calculation specifically refers to only „ATS‟
basis and not „WTS‟ basis. In the time sheets sent by the
appellant/defendant to the respondent/plaintiff, there is absolutely no
narration of calculation on „WTS‟ basis. The contract provided for
calculation of despatch charges on „ATS‟ basis, and once time sheets are
prepared by the appellant/defendant stating the same to be on „ATS‟ basis,
and not on „WTS‟ basis, surely, there may be some amount of overlooking
or an implied trust of the respondent/plaintiff in taking the „ATS‟ figures
contained in time sheets as „ATS‟ figures only and not „WTS‟ figures which
they actually were, however, the same would be a mistake and not
negligence for it to be argued that there is a lack of due diligence on behalf
of the respondent/plaintiff. The position would have been different if the
time sheets had shown both the calculations on „WTS‟ basis and on the
„ATS‟ basis, but the final figures of despatch thereafter would have been
shown only payable on „WTS‟ basis, and in which circumstances it could
have been open to the appellant/defendant to contend lack of due diligence
because the contract specifically provided for calculation of despatch money
only on „ATS‟ basis but the time sheets in that theoretical case would be
showing payment of despatch money on „WTS‟ basis and not „ATS‟ basis,
in which case the negligence would have writ large on the face of the record,
however, that theoretical position has not emerged in actual fact. On the
contrary what has happened in this case is that there is a single calculation
on „ATS‟ basis and therefore its consequent acceptance on behalf of the
respondent/plaintiff as the contract provided for „ATS‟ basis and surely this
is therefore only a mistake because the respondent/plaintiff accepted the
time sheets as they were presuming that calculations made therein are
actually on „ATS‟ basis and which is the basis of calculation as per the
contract and not on „WTS‟ basis on which the calculations were made
although the heading was „ATS‟ basis. Once the basis of calculation was as
per the contract on „ATS‟ basis, surely, a mere mistake in not ensuring to
check that actually the figures were on „WTS‟ basis and not on „ATS‟ basis
as apparently stated, in my opinion, is definitely not such position for it to be
called lack of due diligence as per S.17(1) of he Limitation Act. In fact, as
held by the Trial Court, some amount of negligence is always implicit when
a mistake is committed, however, the negligence must be of that order so as
to take the case out of the concept by lack of due diligence. In the facts of
the present case, considering the fact that the time sheets were prepared by
the appellant/defendant on „ATS‟ basis, and which is the calculation as per
the contract which provided for calculation on „ATS‟ basis, I hold that there
is no negligence on behalf of the respondent/plaintiff so as to decline it the
benefit of Section 72 of the Contract Act, 1872. The mistake cannot be
called such that it could have been discovered with „due diligence‟ as per
Section 17 of the Limitation Act, 1963.
11. Learned counsel for the appellant/defendant has sought to rely
upon the Division Bench judgment of this Court in the case of Life
Insurance Corporation vs. Raghunath Prasad Almal & Ors., 44(1991)
DLT 521 to argue that once there is negligence i.e. lack of due diligence, the
respondent/plaintiff should not be entitled to the benefit of Section 17 of the
Limitation Act, 1963. In fact this judgment was also cited before the Trial
Court and which has distinguished the said judgment on facts. All I need to
say is that the law with respect to whether an act is a mistake or negligence,
i.e. lack of due diligence necessarily has to be facts specific. Whereas the
facts in one case may show that there is only a mistake, facts in another case
may show that the mistake could have been discovered due to due diligence
and therefore the mistake is not a mistake as is known to the law but is in
fact gross negligence. In the facts of the present the factual context was that
the time sheets which were provided by the appellant/defendant to the
respondent/plaintiff mentioned calculation of despatch money on „ATS‟
basis and it was this „ATS‟ basis which was the unit to be applied in terms of
the contract causing the respondent/plaintiff to commit mistake by taking he
figures as „ATS‟ calculations, where in reality, though shown as „ATS‟
calculations, they were in fact „WTS‟ calculations. As already stated
hereinabove, and reiterated herein, if the time sheets would have specified
two methods of calculation on „WTS‟ basis and „ATS‟ basis and thereafter
the „WTS‟ calculations were claimed, then, the respondent/plaintiff may
have been guilty of negligence and lack of due diligence, however, once
only one basis of calculation of despatch money viz „ATS‟ basis is given in
the time sheets, there resulted an implied trust and acceptance thereof by the
respondent/plaintiff, and which can only be termed as a mistake and
definitely not negligence.
12. A civil case is decided on balance of probabilities. The balance
of probabilities in this case makes it more than abundantly clear that the
appellant/defendant is seeking to take advantage of unjust enrichment and
retaining moneys with it which were not due to it. The appellant/defendant
took up a case of an alleged agreed modification, and which the Trial Court
has for valid reasons held that there was no such agreement for modification
of the contract for acceptance of despatch money on „WTS‟ basis instead of
on „ATS‟ basis. An Appellate Court will not interfere with the findings and
conclusions of the Trial Court, unless the conclusions of the Trial Court are
illegal or perverse. In addition to the reasoning given by the Trial Court, I
have given an additional reasoning, and which I am entitled to do so under
Order 41 Rule 24 CPC, the additional reasoning being based on the time
sheets which have been sent by the appellant/defendant itself to the
respondent/plaintiff.
13. In view of the above, I do not find any merit in the appeal
which is accordingly dismissed, leaving the parties to bear their own costs.
RFA No.345/2004
14. The facts of this case and the issues in this case are more or less
identical with the facts of RFA No.347/2004 which has been disposed of by
me above. There may be some difference in facts and figures qua this case,
however, the basic issues decided in both the cases are the same. The only
additional argument urged on behalf of the appellant in this case is that
between the parties there were arbitration proceedings and in which
arbitration proceedings, it was held that there was an agreement between the
parties to make payment on „WTS‟ basis and not on „ATS‟ basis and which
Award has been upheld by this Court even including at the stage of appeal
and thus it must be held that there was an agreement for „WTS‟ basis. I may
state that unfortunately law with respect to challenge of an Award is
different than law as applicable when I am sitting as an Appellate Court
under Order 41 CPC. Ordinarily, Courts do not interfere with an Award,
once reasons are given in the Award, unless the Award is in violation of the
public policy under Section 34 of the Arbitration and Conciliation Act, 1996,
A Court which hears objections under Section 34 of the said Act ordinarily
does not interfere with an Award. If the original Court does not interfere
with the Award, the Appellate Court hearing appeal against the judgment
dismissing the objections, has further limited scope. Therefore, I do not
think any judgment in arbitration proceedings between the parties, can have
any bearing on the result of this appeal, as my jurisdiction sitting as an
Appellate Court under Section 96 of CPC (with other relevant provisions)
read with Order 41 CPC is different. The present appeal is also therefore
dismissed leaving the parties to bear their own costs.
VALMIKI J. MEHTA, J
MAY 07, 2012
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