Runway Logistics Pvt. Ltd. vs Paras Imports Pvt. Ltd. & Ors.
2019 Latest Caselaw 2066 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Date of decision: 16th April, 2019

+                          CS(COMM) No.37/2019
    RUNWAY LOGISTICS PVT. LTD.                      .... Plaintiff
                  Through: Mr. Amit Gupta, Ms. Mansi Kukreja
                            & Ms. Vidhi Goel, Advs.
                           Versus
    PARAS IMPORTS PVT. LTD. & ORS.            ......Defendants
                  Through: Mr. Randhir Jain, Mr. Dhananjay Jain
                            & Mr. Utkarsh Mudotiya, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

IA No.1077/2019 (of the plaintiff under Order XXXIX Rules 1&2 CPC)
IA No.1078/2019 (of the plaintiff under Order XL Rule 1 CPC)
IA No.3631/2019 (of the defendants under Order VII Rule 11 CPC)
IA No.4206/2019 (of the defendants under Order XXXIX Rule 4 CPC)

1.

The plaintiff has sued defendant no.1 Paras Imports Pvt. Ltd. and its Directors defendants no.2 and 3 viz. Mr. Paras Verma and Mrs. Anita Sharma, for (a) mandatory injunction to furnish the original Bills of Lading or in the alternative, return all the goods, to the plaintiff which were imported vide consignments mentioned in the plaint; (b) directing the defendants to pay Rs.13,29,632.36 paise to the plaintiff; and, (c) directing the defendants to reimburse the plaintiff with an amount of USD 3000, pleading that (i) the plaintiff is in the business of freight forwarding and international logistics; (ii) the plaintiff inter alia handles consignments that are imported from China to India by its clients; the plaintiff provides services to its clients in getting the goods released from shipping line / Customs and delivered to their destinations; (iii) the defendant no.1 imports and sells

several items for infants, toddlers and children such as toys and toy cars, toy bikes, strollers etc.; (iv) the plaintiff has been providing services to the defendant no.1 which is run by and under active management of defendants no.2 and 3; (v) the defendant no.1 was importing goods from Chinese vendors on Free on Board (FOB) basis; (vi) the plaintiff was providing their services and handling the consignments of the defendant no.1; (vii) Chinese forwarders, acting on behalf of the plaintiff company, would pick up consignments from the Chinese sellers and arrange for shipments for delivery to Indian destinations; the plaintiff company would then process the documents for release of the consignments from the shipping lines and deliver it to the defendants; the invoices were generated by the plaintiff on the defendants, which would be inclusive of ocean freight and other destination charges along with charges for services provided by the Chinese forwarders; (viii) over the last two years, there were constant dealings between the plaintiff and the defendants and several times the plaintiff would release consignments on the assurance of the defendant no.2 that the documentation was in order; till the year 2018, when the goods would be delivered by the plaintiff company, the defendant no.2 would furnish the original Bill of Lading to the plaintiff within a short span of time; (ix) on behalf of the defendants and on instructions of the defendants, the plaintiff in the months of July and September, 2018 handled several consignments particulars whereof are given in the plaint, of the total value of USD 313,910 approximately equivalent to Rs.2,19,73,700/-; (x) in respect of the aforesaid consignments, Shanghai Evertrans International Forwarder Co. Ltd. and Shenzhen Lucky Logistics Ltd. were the Chinese forwarders of the goods who had acted on behalf of the plaintiff and took delivery of the goods from

Chinese sellers viz. Shenzhen GBC Glory Business Corporation Ltd. and Tianjin Free Trade Service Co. Ltd. / Hebei Satune Toys Company Ltd. and dispatched the same; (xi) at the time of delivery of the aforesaid goods, the defendant no.2 wrongly informed Mr. Kunal Kumar, Director of the plaintiff that he had made all payments for such consignments to the sellers i.e. Shenzhen GBC Glory Business Corporation Ltd. and Tianjin Free Trade Service Co. Ltd. / Hebei Satune Toys Company Ltd.; the defendant no.2 also wrongly conveyed that the original Bills of Lading had been received by him, the same were in his office and that he would handover the same to the plaintiff as and when requested; (xii) the defendants were otherwise not entitled to delivery and possession of the consignments till they had made the entire payment to the Chinese sellers, obtained the original Bill of Ladings and handed over the original Bill of Lading to the plaintiff; (xiii) later the plaintiff was informed by Shenzhen GBC Glory Business Corporation Ltd. and Tianjin Free Trade Service Co. Ltd. / Hebei Satune Toys Company Ltd. as well as Chinese forwarders i.e. Shanghai Evertrans International Forwarder Co. Ltd. and Shenzhen Lucky Logistics Ltd. that the defendants had not made any payment for the said consignments and had got the same released from the plaintiff by making wrong statements; (xiv) goods were supposed to be taken by the defendants from the plaintiff only after making payments; (xv) the defendants, inspite of repeated requests and reminders of the plaintiff did not resolve the issue; (xvi) the defendant no.2, though kept on assuring that monies will be sent but has not done so; (xvii) the defendant no.2 vide his e-mail dated 8th December, 2018 informed the suppliers that the goods of which he had taken delivery of were in his warehouse and will shortly pay the price thereof; (xviii) though the

defendant no.2 was called upon to return the goods subject matter of the said consignments but has not done the same also; (xix) Shenzhen Lucky Logistics Ltd., vide their e-mails dated 11th December, 2018 and 19th December, 2018 called upon the plaintiff to make payment and the shipments of the plaintiff have also been put on hold by Shenzhen Lucky Logistics Ltd. until the said controversy is resolved; and, (xx) the defendant no.2 vide his e-mail though has been promising payments but has not made the payments.

2. The suit came up first before this Court on 24th January, 2019 when the entitlement of the plaintiff to the relief of direction to the defendants, to hand over to the plaintiff the original Bill of Lading or in the alternative to return of goods, was enquired observing that from the averments in the plaint it appeared that the plaintiff neither had title to the Bill of Lading nor to the goods of which delivery was sought and thus could not maintain the suit. Though the counsel for the plaintiff referred to Section 3 of (The Indian) Bills of Lading Act, 1856 but it was prima facie not found to be applicable. It was further enquired from the counsel for the plaintiff that even if the plaintiff had title, how was a suit for mandatory injunction maintainable and whether not the appropriate remedy would be to sue for recovery of price of the goods. Subject to the same, summons / notice of the suit were ordered to be issued and till further orders the defendants restrained from alienating, encumbering or parting with possession of the goods subject matter of consignments of which the defendants had taken delivery of.

3. The defendants, besides filing their written statement have filed applications under Order VII Rule 11 and under Order XXXIX Rule 4 of the CPC.

4. The arguments on all the applications aforesaid were heard on 20th March, 2019 and order reserved.

5. The defendants seek rejection of the plaint inter alia on the same grounds on which query was made from the counsel for the plaintiff on 24th January, 2019 when the suit had first come up before this Court. It is the contention of the counsel for the defendants that the plaintiff cannot maintain a suit for the relief of mandatory injunction, being only a freight forwarder, having no title to the goods qua which mandatory injunction is claimed. It is also contended that the claim of the plaintiff, of the defendants by misrepresentation having received delivery of goods, is belied from the documents filed by the plaintiff itself.

6. Per contra, the counsel for the plaintiff, besides the Bills of Lading Act has drawn attention to the decision of the Federal Court of Ottawa, Ontario, in Westwood Shipping Lines Inc. Vs. Geo International Inc. 1998 Can Lll 7984, Dhian Singh Sobha Singh Vs. Union of India AIR 1958 SC 274 and J.V. Gokal & Co. (Private) Ltd. Vs. Assistant Collector of Sales-Tax (Inspection) AIR 1960 SC 595.

7. While hearing the counsel for the plaintiff, I perused the provisions of the Indian Contract Act, 1872 and drew attention of the counsel for the defendants to Sections 151 and 180 thereof under Chapter IX titled "Of Bailment". It was enquired from the counsel for the defendants whether not the position of the plaintiff is as of a bailee, as the counsel for the plaintiff

had contended, and if so, then under Section 151, a bailee is a bound to take as much care of the goods bailed out to him as a man of ordinary prudence would, under similar circumstances, take of his own goods and under Section 180, if a third person wrongfully deprives the bailee of the use of possession of goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used as if no bailment had been made and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury. It was thus enquired from the counsel for the defendants that if the plaintiff is the bailee, why is the plaintiff not entitled to maintain the suit.

8. The counsel for the defendants drew attention to the Bill of Lading at pages 2 and 6 of the plaintiff‟s documents and contended that it is not negotiable and is to order, meaning thereby that the plaintiff, irrespective of the payment made by the defendants was required to deliver the goods to the defendants and has so delivered the goods.

9. On enquiry as to how the payment was to be made by the defendants for the goods, delivery whereof has been taken by the defendants from the plaintiff, the counsel for the defendants stated that the payment was to be made by telegraphic transfer and in that context drew attention to pages no.3 and 8 of the defendants documents.

10. It was further enquired from the counsel for the defendants on 20th March, 2019 that if the defendants had not paid for the goods, whether the plaintiff, if a bailee, was still under Sections 151 and 180 supra entitled to maintain the suit.

11. The counsel for the defendants contended that if the defendants have taken delivery of goods from the plaintiff, without making payment thereof, it is only the seller who can sue the defendants and not the plaintiff.

12. On pointed query to the counsel for the defendants as to what is the stand of the defendants qua payment i.e. whether the defendants claim to have made the payment or not, the counsel for the defendants was unwilling to make a categorical statement of having made payment for all goods and could not show any plea also to the said effect in the written statement.

13. The written statement of the defendants was not on record on 20 th March, 2019 and due to which order could not be pronounced on that date. The written statement has since been called for and the pleaded case of the defendants is found to be that, (i) the claim of the plaintiff for Rs.13,29,632.36 paise, being charges for services rendered by plaintiff, is wrong because the plaintiff is also claiming ocean freight when the same is pre-paid by the Chinese supplier; in fact now the defendants have been put to enquiry and have realized that the plaintiff even in the earlier bills raised on the defendants has also been claiming ocean freight from the defendants which it was not entitled to and has recovered an excess amount of Rs.64,32,126/- from the defendants; (ii) the Bill of Lading was drawn with foreign supplier as consignor and the defendant as consignee; such goods were meant to be supplied to the defendants straightaway; there was neither any stipulation of obligation nor a practice to submit the Bill of Lading to the plaintiff at the time of taking delivery of the goods from the plaintiff; (iii) the plaintiff has no concern with the dealings and transactions between the Chinese supplier and the defendant company and which is an independent

contract between a supplier and a purchaser; (iv) the plaintiff as a freight operator has no connection with the shipments / consignments apart from being entitled to receive its freight as per services rendered by it; (v) the defendants have been negotiating the deals with the supplier of the goods independently and without any involvement of the plaintiff; (vi) handing over Bill of Lading for delivery of goods is not even a condition of commercial terms between the supplier and the defendants; (vii) in the past, the defendants have been making payments directly to the suppliers and there is no condition of handing over the Bill of Lading to the plaintiff; (viii) "the defendants have been insisted upon with delivery of goods by the Chinese supplier with a clear understanding that the goods do not have much marketability in India as on date and the payments would be made in deferred manner as and when the market opens up to which Chinese supplier has happily consented and the plaintiff has no concern with the same. The goods have been purchased on credit on mutual arrangement arrived at between the buyer and seller without any reference to the plaintiff"; (ix) there are unresolved issues between the defendants and the Chinese suppliers and with which the plaintiff has no concern; and, (x) the claim of the plaintiff against the defendants can at best be for Rs.13,29,632.29 paise being the charges claimed to be due to the plaintiff for the services rendered by the plaintiff and which claim is below the minimum pecuniary jurisdiction of this Court.

14. As would immediately become evident, the outcome of these applications is dependent upon the right of the plaintiff to maintain the claim for mandatory injunction. If on the basis of averments made in the plaint

itself it can be said that the plaint does not disclose any right, the plaint, insofar as for the relief of mandatory injunction, will be rejected and the plaintiff relegated to approach the Court of appropriate pecuniary jurisdiction for the remaining claims. Even if from pleadings, documents and law, though not from averments in the plaint alone, it is found that the plaintiff has no right for the relief of mandatory injunction, the suit for the said relief will be dismissed. Conversely, the entitlement of the plaintiff to interim reliefs claimed shall be considered.

15. The pleaded case of the plaintiff is of the defendants being entitled to take delivery of goods from the plaintiff only after producing the Bill of Lading and having taken delivery of goods by misrepresentation and the Chinese suppliers and the Chinese forwarders claiming the value of the consignment from the plaintiff. It thus cannot be said that the plaint, on a reading thereof does not disclose any cause of action to be rejected. The Bill of Lading at pages 2 and 6 referred to by counsel for the defendants of Evertrans International Forwarder Co. Ltd. shows, (a) Shenzhen GBC Glory Business Corporation Ltd., China as the consignor; (b) defendants as the consignee; (c) Shanghai Evertrans International Forwarder Co. Ltd. as the forwarding agent; (d) the plaintiff as the outstation agent; (e) an endorsement that "whether the Bill of Lading is non-negotiable the carrier may give delivery of goods to the named consignee upon reasonable proof of identify and without requiring surrender of an original Bill of Lading. Where the Bill of Lading is negotiable, the merchant is obliged to surrender one original, duly endorsed, in exchange of goods" and that "the carrier accepts a duty of reasonable care to check that any such document which the merchant

surrenders as a Bill of Lading is genuine and original. If the carrier complies with this duty, it will be entitled to deliver the goods against what it reasonably believes to be a genuine and original Bill of Lading, such delivery discharging the carrier‟s delivery obligations"; and, (e) containing endorsement at the top "not negotiable unless consignee to order."

16. Before proceeding further, I may record that the plaintiff has filed only photocopies of the face of Bill of Lading and which is found to refer to "conditions on the reverse hereof". The plaintiff has not bothered to file the original Bill of Lading or photocopy of the reverse thereof.

17. The plaintiff has also filed photocopies of the invoices which against the column "Payment" contain "T/T".

18. The plaintiff, besides Bills of Lading at pages 2 and 6 to which attention was invited by counsel for the defendants, has also filed copies of four other Bills of Lading issued by the same Evertrans International Forwarder Co. Ltd., of consignments of Shenzhen GBC Glory Business Corporation Ltd. at pages 12, 16, 20, 24 as well as two other Bills of Lading at pages 34 and 41 of Shenzhen Lucky Logistics Ltd. and which show (i) Shenzhen GBC Glory Business Corporation Ltd. and Shenzhen SEG Hi- Tech Industrial Co. Ltd. to be the shipper; (ii) defendant no.1 to be the consignee; (iii) for combined transport or port to port shipment; and, (iv) of accepting responsibility of transport with liberty to sub-contract and containing a term that one of the „Bs/L‟ must be surrendered duly endorsed in exchange for the goods or delivery order.

19. The counsel for the defendants, during the hearing emphasized on the endorsements aforesaid on the Bill of Lading first described above in para no.15 of Shenzhen GBC Glory Business Corporation Ltd. to contend that the role of the plaintiff was only to deliver the goods to the defendants and there was no mandate to the plaintiff to insist upon Bill of Lading. The counsel for the defendants did not draw attention to the Bills of Lading issued by Shenzhen GBC Glory Business Corporation Ltd. for consignments through Shenzhen Lucky Logistics Ltd. referred to above in para no.18 and which have been noticed while dictating this judgment.

20. The Bills of Lading issued by Shenzhen Lucky Logistics Ltd. do indeed show the obligation of the plaintiff as sub-contractor of Shenzhen Lucky Logistics Ltd. to deliver the goods to the defendants only against surrender of duly endorsed Bill of Lading. An issue may however arise whether the said obligation attaches only to the Bills of Lading of Shenzhen Lucky Logistics Ltd. or also to other Bills of Lading which are found to be different and do not contain any such clause and on the contrary contain endorsement of being not negotiable unless consignee to order and all the obligation of the plaintiff being restricted to only proof of identity of the consignee. However, copies of the e-mails filed by the plaintiff before this Court show the consignors / suppliers as well as the Chinese forwarders to be demanding payment of the value of the consignments alternatively from the plaintiff. It thus cannot be said at this stage that on the basis of pleadings and the documents, the plaintiff has no cause of action for the relief of mandatory injunction. The provisions of the Bills of Lading Act relied upon

by the counsel for the plaintiff are however not found to be of any assistance in this context.

21. In Westwood Shipping Lines Inc. supra relied upon by the counsel for the plaintiff also, the Federal Court of Ottawa, Ontario, Canada held a shipper to be in the position of a bailee and further held that as against a wrongdoer, possession is title. Finding in that case also that the goods had been taken delivery of without submitting the original Bill of Lading, the shipper was held entitled to maintain an action against the consignee.

22. In Dhian Singh Sobha Singh supra also, it was held by the Supreme Court that the supplier of goods is entitled to sue the bailee who has parted with wrongful possession of the goods in favour of a third person. J.V. Gokal & Co. (Private) Ltd. supra also relied upon by the counsel for the plaintiff is however not found to be apposite in this context.

23. Section 148 of the Contract Act defines a "bailment" as "the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them." It further provides that the person delivering the goods is called the "bailor" and the person to whom the goods are delivered is called the "bailee". Section 149 provides that delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorized to hold them on his behalf.

24. It is not in dispute that the goods of the subject consignments came into custody of the plaintiff as sub-contractor of the Chinese forwarders to

whom the goods were entrusted by the Chinese supplier for delivery to the defendants. One set of Bills of Lading as aforesaid clearly provide for the delivery of goods thereunder to be against an endorsed Bill of Lading; though the other set of Bills of Lading are not found to so provide but it is not clear and cannot be decided without evidence as to whether the plaintiff was to give delivery of goods with submission of endorsed Bills of Lading or merely on the asking of the defendants. The emphasis of the counsel for the defendants on the endorsement "T/T" on the invoices does not in my view, at this stage show that the plaintiff was to give delivery of the consignment without the defendants submitting the endorsed Bill of Lading. It is well nigh possible that on the defendants telegraphically transferring the money to the Chinese supplier, the Chinese supplier was to forward the endorsed Bill of Lading to the defendants to be exchanged against taking delivery of goods from the plaintiff. The demand of the Chinese supplier and the Chinese forwarder for value of consignments from the plaintiff is indicative of them treating the plaintiff as liable.

25. All these are matters of evidence and which cannot be decided at this stage.

26. A Five Judges Bench of the Supreme Court in Carona Sahu Co. Private Ltd. Vs. State of Maharashtra AIR 1966 SC 1153 held that, (i) it is well established that in the case of a contract for sale of unascertained goods, the property does not pass to the purchaser unless there is unconditional appropriation of the goods in a deliverable state to the contract; (ii) in the case of such a contract, delivery of the goods by the vendor to the common carrier is an appropriation sufficient to pass the property; (iii) but there is a

difference in the legal effect of delivering goods to a common carrier on the one hand and shipment on board a ship under a Bill of Lading on the other hand, where goods are delivered on board of a vessel to be carried, and a Bill of Lading is taken, the delivery by the seller is not delivery to the buyer, but to the captain as bailee for delivery to the person indicated by the Bill of Lading; (iv) the seller may therefore take the Bill of Lading to his own order;

(v)the effect of this transaction is to control the possession of the captain and make the captain accountable to deliver the goods to the seller as the holder of the Bill of Lading; (vi) the Bill of Lading is the symbol of property, and by so taking the Bill of Lading the seller keeps to himself the right of dealing with property shipped and also the right of demanding possession from the captain, and this is consistent even with a special term that the goods are shipped on account of and at the risk of the buyer; (vii) the English cases, however, on which the Sale of Goods Act was founded seem to show that the appropriation would not be such as to pass the property if it appears or can be inferred that there was no actual intention to pass it; (viii) if the seller takes the Bill of Lading to his own order and parts with it to a third person, not the buyer, and that third person, by possession of the Bill of Lading, gets the goods, the buyer is held not to have the property so as to enable him to recover from the third party, notwithstanding that the act of the seller was a clear breach of the contract; and, (ix) Sections 23 and 25 of the Indian Sale of Goods Act are identical in language to the corresponding provisions of the English Sale of Goods Act.

27. This Court, in Sardar Carbonic Gas Co. Vs. Sher-i-Punjab Tading Co. 15 (1979) DLT 129 held, (a) that where the bailee is merely a bailee

during pleasure, as is the case in any gratuitous bailment, or a carrier, the bailor may, by reason of his property, sue for the conversion of the chattel a third party who wrongfully takes it out of the bailee's possession, for the property draws to itself the right of possession as an end has in fact been put to the bailment; (b) that as the bailor can at any moment demand the return of the object bailed, he may be said to have possession, throughout the continuance of the bailment, for he has the right to immediate possession and by reason of this right can exercise those possessory remedies which are available to the possessor; (c) that where the bailee, by a wrongful dealing with the chattel, has determined the bailment, he is liable to the bailor, unless protected by the Law; and, (d) however, where the bailee has been given authority to sub-bail the chattel to a third party, the said Act will not constitute a tort as against the original bailor.

28. Mention, in addition to the judgments cited by the counsel for the plaintiff, may also be made to Ramanath Gagoi Vs. Pitambar Deb Goswami AIR 1916 Cal 788 (DB), Ramji Karamsi Vs. The Unique Motor and General Insurance Co. Ltd. AIR 1951 Bom 347, Purshottam Das Banarsi Das Vs. The Union of India AIR 1967 All 549 (DB), Umarani Sen Vs. Sudhir Kumar Datta AIR 1984 Cal 230 (DB) and Karnataka Electricity Board Vs. Halappa AIR 1987 Kar. 261 (DB).

29. I am therefore of the view that no case for summary dismissal of the suit is made out. IA No.3631/2019 is dismissed.

30. I have next considered the interim relief.

31. The admitted position is that the goods which defendants have taken delivery of have not been paid for and the Chinese forwarders and the Chinese suppliers are making a claim for price thereof against the defendants and alternatively against the plaintiff. It is further the admitted case of the defendants in their written statement that delivery of the subject goods on the defendants was insisted on by the Chinese suppliers even though at present there is no demand therefor in India and for this reason only the Chinese supplier had agreed to deferred payment by the defendants of the said goods. Once this is the position, I see no reason why the ex parte interim order should be vacated.

32. Accordingly, IA No.1077/2019 is allowed confirming the ex-parte order dated 24th January, 2019 and IA No.4206/2019 is dismissed.

33. That brings me to the application of the plaintiff for appointment of a receiver.

34. Considering the nature of the goods and further considering the stand of the defendants in their written statement that there is no market of the goods in India, the defendants should either return the goods or agree to immediate sale thereof. However, since this aspect has not been heard, it is deemed appropriate to post the proceedings for hearing on the said limited aspect.

RAJIV SAHAI ENDLAW, J.

APRIL 16, 2019 „gsr/bs‟