State Trading Corporation Of ... vs Govt. Of People’S Republic Of ...
2018 Latest Caselaw 664 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          CS(OS) No. 805/1996

%                                                   30th January, 2018

STATE TRADING CORPORATION OF INDIA LTD. ..... Plaintiff
                 Through: Mr. Adarsh B. Dial, Sr. Adv.
                          with Ms. Sumati Anand,
                          Advocate.
                           versus

GOVT. OF PEOPLE'S REPUBLIC OF BANGLADESH & ORS.
                                            ..... Defendants
                   Through: Mr. Jai Bansal, Advocate for D-
                            2.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1.

Plaintiff/State Trading Corporation of India Ltd. has filed

this suit for recovery of USD18,68,572 equivalent to

Rs.6,35,31,549.22 against defendant nos.2 to 4. There were other

reliefs claimed of detention of a ship belonging to defendant nos. 3

and 4 or for defendant no.3 to restore to the plaintiff 6500 MT and 524

MT of Non Basmati Par Boiled Rice but such reliefs are now not

pressed on behalf of the plaintiff. The only relief which is pressed is

for recovery of money as against defendant nos. 2 to 4.

2. Defendant no.1 in the suit is the Government of the

People's Republic of Bangladesh. Defendant no.1 was the buyer of

Non Basmati Par Boiled Rice from the plaintiff totaling to 50,000 MT

(+-5%). Out of this contracted quantity of 50,000 MT, the plaintiff

had entered into a "Back-to-Back Contract" with defendant

no.2/Doon Valley Rice Ltd so that the defendant no.2 will perform the

contract of plaintiff with the defendant no.1 to the extent of 10,500

MT (+-5%) of Non Basmati Par Boiled Rice. This contract between

the plaintiff and defendant no.2 is dated 11.11.1995. Defendant no.3

is the shipping company through whom defendant no.2 contracted to

deliver rice to the defendant no.1. Defendant no.4 is the Indian agent

of the defendant no.3 shipping company.

3. At this stage itself it is noted that the plaintiff has no

privity of contract with the shipping company being defendant no.3

nor the plaintiff has any privity of contract with the defendant no.4

who is the shipping agent of defendant no.3. Since there is no privity

of contract of plaintiff with these defendant nos. 3 and 4, hence there

is no liability of defendant nos. 3 and 4 towards the plaintiff because

these defendant nos. 3 and 4 were only the shippers and agent

respectively of the defendant no.2 for performing of the contract of

defendant no.2 of supply of 10,500 MT of Non Basmati Par Boiled

Rice, and which rice was to be supplied by the defendant no.2 to the

defendant no.1 and on behalf of the plaintiff. Accordingly, no relief

can be granted, and therefore, the suit will stand dismissed as against

defendant nos. 3 and 4.

4. That leaves us with only the claim of the plaintiff against

defendant no.2, inasmuch as already stated above, no money decree is

claimed against the other defendant nos. 5 to 7 and who were

essentially the port authorities at New Mangalore and the bank which

had issued the performance guarantee on behalf of the defendant no. 2

to the plaintiff, and which bank guarantee could not be encashed by

the plaintiff.

5. In terms of the contract dated 11.11.1995 of the plaintiff

with the defendant no.2, plaintiff was to get USD 4 PMT as service

charge and USD 4 PMT as agent's commission. This amount was to

be deducted from the Letter of Credit (LC) which the defendant no.1

got assigned upon in favour from the plaintiff, and this LC which was

assigned by the plaintiff to the defendant no.2 was got issued by

defendant no.1 in favour of the plaintiff under the contract of the

plaintiff with the defendant no. 2 for supply of Non Basmati Par

Boiled Rice. The balance of the amount of LC after paying USD 8

PMT to plaintiff was to be received by the defendant no.2 for

performing by the defendant no.2 of its obligations with the plaintiff

for supplying of 10,500 MT of Non Basmati Par Boiled Rice to the

defendant no.1 on behalf of the plaintiff.

6. The shipper being the defendant no.3 transported a

quantity of 6500 MT rice on the Ship known as "M.V. Yanmit", from

Kakinada Port in Andhra Pradesh to Chittagong Port in Bangladesh.

At this stage, there were some issues with respect to discharge of the

stock of rice not at Chittagong Port but at Mongla Port up-stream, and

while this issue was being sorted out, there were disturbances in

Bangladesh and resultantly defendant no.3 in the night of

26/27.2.1996 fled from the port of Chittagong and since then has

remained untraceable. The result was that 6500 MT of rice which was

on the ship M.V. Yanmit of defendant no.3 could not be delivered to

the defendant no.1. Also, there were a short quantity of 524 MT under

the earlier shipment of rice delivered to the defendant no.1 which was

loaded on the ship M.V. Lewant. Defendant no.1, on account of not

receiving the rice and having already paid for the same in terms of the

LC opened in favour of the plaintiff and which LC was assigned by

the plaintiff to defendant no.2, therefore claimed a sum of

Rs.6,35,31,549.22 from the plaintiff, and this amount was recovered

by the defendant no.1 from the plaintiff from the other amounts of the

plaintiff lying with the defendant no.1, hence the present suit is filed

by the plaintiff seeking a money decree against the defendant no.2

inasmuch as defendant no.2 had encashed the LC issued by the

defendant no.1 in favour of the plaintiff and which was assigned by

the plaintiff to the defendant no.2, and because the defendant no.2 had

received amount of the LC without supplying the rice to defendant

no.1 in terms of the contract of defendant no.2 with the plaintiff.

7. In this suit the defendant no. 2 had appeared and filed its

written statement. Defendant no. 2 however thereafter did not appear

and hence was proceeded ex-parte on 18.5.2004. Defendant no. 2

thereafter moved I.A.No.2165/2006 for setting aside ex-parte

proceedings and which application was disposed of on the statement

being made by counsel for defendant no. 2 that the defendant no. 2

does not press for setting aside of the ex-parte proceedings but only

sought the relief of being heard at the time of arguments and

application accordingly was disposed of reserving such right to the

defendant no.2 to be heard at the time of arguments.

8. Plaintiff has filed affidavits by way of evidence of three

of its witnesses. The first affidavit is of Sh. R.K. Sharma who has

deposed as PW-1. The second affidavit which has been filed is of Sh.

Bhim Sain who has deposed as PW-2 and the third affidavit which is

filed is of Smt. Vinod Kalra who has deposed as PW-3. These

witnesses have proved the case of the plaintiff by deposing in terms of

the averments made in the plaint. Contract of plaintiff with defendant

no. 2 has been proved and exhibited as Ex.PW1/2. Contract of plaintiff

with defendant no. 1 has been proved and exhibited as Ex.PW1/1.

PW-1 has deposed that defendant no. 2 recovered the entire amount of

LC but failed to deliver the contracted quantity of rice to defendant

no.1. This witness has also deposed as to the defendant no. 3 running

away with the ship M.V. Yanmit from the port of Chittagong at

Bangladesh. PW-2 has also deposed in terms of the averments made

in the plaint. PW-2 has also deposed with respect to defendant no. 1

making a claim on the plaintiff and which letter dated 21.4.1996 has

been proved as Ex.PW2/1. Defendant no.1's another letter making a

claim against the plaintiff of the suit amount has been proved as

Ex.PW2/2. Yet another letter dated 12.5.1996 issued by the defendant

no.1 making a claim against the plaintiff as proved as Ex.PW2/3. One

more letter dated 11.6.1996 from the defendant no.1 to the plaintiff

making the claim has been proved as Ex.PW2/4. The Minutes Of

Meeting dated 18.2.1997 between the defendant no.1 and the plaintiff

have been proved as Ex.PW2/5. PW-2 has accordingly deposed, as did

the PW-1, that the defendant nos.2 to 4 have failed to perform the

contract and failed to discharge 6500 MT of Non Basmati Par Boiled

Rice to the defendant no.1.

9. PW-3 has deposed with respect to the loss of the original

Minutes Of The Meeting dated 18.2.1997 and thus for allowing

leading of secondary evidence being copy of the Minutes of Meeting

dated 18.2.1997. Reason given for loss of the original is a loss of this

document by the plaintiff's earlier counsel Mr. Vivek. There is in my

opinion no reason to disbelieve the deposition of PW-3 for taking on

record the secondary evidence with respect to Minutes of Meeting

dated 18.2.1997. In any case, in my opinion the plaintiff has otherwise

proved through the evidence of PW-1 and PW-2 the factum with

respect to the defendant no.2 receiving the entire amount of the LC

which was assigned by the plaintiff to the defendant no.2 and which

LC was received by the plaintiff from the defendant no.1, and that

defendant no.1 had given this LC to the plaintiff for the rice which

was to be supplied by the plaintiff to the defendant no.1 under the

contract Ex.PW1/1. PW-1 and PW-2 have also deposed with respect

to rice not being supplied by the defendant no.2 to the defendant no.1

in terms of the contract Ex.PW1/2 of the plaintiff with the defendant

no.2.

10. Learned counsel for the defendant no.2 argued that liability

of the defendant no.2 under its contract dated 11.11.1995/Ex.PW1/2 was

only to ship the rice and since the defendant no.2 shipped the rice to the

defendant no.1 through the defendant no.3, therefore the defendant no.2

cannot be held to be liable. I cannot agree with this argument urged on

behalf of the defendant no.2 as the last para at page 1 of the contract

dated 11.11.1995/Ex.PW1/2 clearly shows that the defendant no.2 under

its contract with the plaintiff had agreed to perform all obligations which

the plaintiff had to perform qua the defendant no.1 for the supply of

10,500 MT of rice, and therefore, the issue is not only of shipping of the

rice but also of the actual delivery of the rice to the defendant no.1, and

which delivery has been found not to be made as the defendant no.3 had

run away with the stock from the Chittagong Port at Bangladesh.

11. In view of the above discussion, since defendant no.2 has

already received consideration of goods without having delivered the

goods to the defendant no.1 as required under the contract dated

11.11.1995 of the defendant no.2 with the plaintiff, therefore, defendant

no.2 is liable to refund the suit amount to the plaintiff, and which was the

amount recovered by the defendant no.2 under the LC assigned by the

plaintiff in favour of the defendant no.2.

12. In view of the above discussion, suit of the plaintiff is

decreed for a sum of Rs.6,35,31,549.22/- as prayed. Plaintiff is also

entitled to interest pendente lite and future at 7 ½% per annum simple.

Plaintiff is also entitled to costs. Decree sheet be prepared.

JANUARY 30, 2018 ib/AK/Ne                      VALMIKI J. MEHTA, J