Madras High Court
Banque Cantonale De Geneve vs Owners And Parties Interested In on 28 October, 2021
OSA (CAD) No.88 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.10.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE P.D.AUDIKESAVALU
OSA (CAD) No.88 of 2021
and CMP No.16921 of 2021
Banque Cantonale De Geneve
Case Postale 2251, 1211 Geneve 2,
Rep. by its Power of Attorney Agent,
V.Padmanabhan. ... Appellant
-vs-
Owners and Parties Interested in
the Vessel M.V.Polaris Galaxy,
having IMO 9339648, now lying at the outer
anchorage of the Port of Tuticorin
(V.O.Chidambaranar Port),
Tuticorin 628 004, rep. by its Master. ... Respondent
Appeal filed under Section 13(1) of the Commercial Courts Act,
2015 read with Order XXXVI Rule 1 of OS Rules against Judgment and
Order dated 24.09.2021 passed in Application No.1494 of 2021 in
C.S.No.96 of 2021 on the file of original side of this court.
For the Appellant : Mr.Zarir Bharucha
for Mr.S.Raghunathan
For the Respondent : Mr.Prasanth S.Pratap,
Senior Counsel
for Ms.Deepika Murali.
*****
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Page 1 of 19
OSA (CAD) No.88 of 2021
JUDGMENT
(Delivered by the Hon'ble Chief Justice)
The appeal arises out of an order in course of an application for
summary judgment under Order XIII-A of the Code of Civil Procedure,
1908 in an admiralty action to which the Commercial Courts Act, 2015
also applies.
2. A preliminary objection is taken by the defendant respondent
to the effect that the appeal is not maintainable in view of the
restricted scope of appeal in Section 13 of the Act of 2015 and in the
light of a recent judgment of this court reported at 2021 SCC OnLine
Mad 5428 (Hindustan Unilever Limited v. S.Shanthi). The defendant
asserts that since the order impugned has been passed under Order I
Rule 10 of the Code, which gives complete discretion to the trial court
to add or strike out any party, and such nature of order is not
recognised as appellable under Order XLIII of the Code, the appeal
cannot be pursued. It is the further submission of the defendant that,
at any rate, no decision on the merits of the plaintiff’s claim has been
made in the order impugned; the trial court only desires to adjudicate
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OSA (CAD) No.88 of 2021
the disputes in the presence of the added defendant.
3. The plaintiff appellant relies on Section 14 of the Admiralty
(Jurisdiction and Settlement of Maritime Claims) Act, 2017 which
provides as follows:-
“14. Appeal – Notwithstanding anything contained in any
other law for the time being in force, an appeal shall lie
from any judgment, decree or final order or interim order
of a single Judge of the High Court under this Act to a
Division Bench of the High Court.”
The plaintiff says that since the suit has been filed in the admiralty
jurisdiction pertaining to a maritime claim, it is the appeal provision in
the Act of 2017 which will hold sway over the appeal provision in the
more general statute that is the Act of 2015.
4. In support of the plaintiff’s contention that the present appeal
is maintainable as Section 14 of the Act of 2017 permits every interim
order to be amenable to appeal, the plaintiff has referred to an order
dated January 24, 2020 passed by the Calcutta High Court in APO
No.180 of 2019 (Rigveda Maritime Pte. Ltd vs. Sohom Shipping Pvt.
Ltd). In the short order, Section 13 of the Act of 2015 and Section 14
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OSA (CAD) No.88 of 2021
of the Act of 2017 were noticed before it was held, inter alia, as
follows:
“In view of the wide amplitude of Section 14 of the
Act of 2017 and the 2017 Act being later in point of time,
having the effect of overriding Section 13(2) of the Act of
2015, where both Acts are Acts of Parliament, there is no
impediment to receiving the present appeal arising out of
an order by which the court refused to immediately
conclude the sale of the vessel...”
5. The defendant contends that Section 13 of the Act of 2015
was substantially amended in 2018 and when such amendment was
introduced, the Act of 2017 was already in force. It is suggested that
since the amendment came to be operational in 2018, the overriding
nature of the provision in Section 13 of the Act of 2015 would hold the
field notwithstanding Section 14 of the Act of 2017. Apart from the fact
that an amendment to an existing statute may not be read in the
manner that the defendant suggests, there is a more fundamental
aspect to the matter. There can be no doubt that the present suit was
filed in the admiralty jurisdiction of this court and pertains to a
maritime claim. The cause of action of the plaintiff is the mis-delivery
of the goods by the carrier. The plaintiff is the consignee indicated in
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OSA (CAD) No.88 of 2021
the bill of lading and the defendant is the carrier.
6. When a suit has been instituted under the Act of 2017 by
invoking the admiralty jurisdiction in pursuance of a maritime claim,
the provisions of the Act of 2017 would continue to govern the action.
Here again, the defendant has suggested otherwise. According to the
defendant, the provision of the Act of 2017 would apply till the action
is in rem, but once the defendant appears and furnishes security, as
has been done in this case by the defendant, it becomes an action in
personam and the matter would no longer be governed by the Act of
2017. Such argument is exceptionable. In any event, between the Act
of 2017 and the Act of 2015, the Act of 2017 is the special statute and
the Act of 2015 is the more general statute and, as such, the right of
appeal in the present case will be governed by Section 14 of the
special statute rather than Section 13 of the more general enactment.
7. The plaintiff has also relied on a judgment rendered by the
High Court of Gujarat on October 21, 2020 in R/O.J Appeal No.4 of
2020 (Bulk Marine Pvt. Ltd vs. M.V.Silvia Glory) where same view has
been expressed as to the scope of appellability in the admiralty
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OSA (CAD) No.88 of 2021
jurisdiction.
8. On merits, the plaintiff submits that its claim in the present
case is on account of the defendant not delivering the goods covered
by the relevant bill of lading to the plaintiff or to the order of the
plaintiff. The plaintiff says that it holds the bill of lading and it is
nobody's case that the bill of lading was surrendered to the carrier at
the time of the recipient of the goods receiving the supply. According
to the plaintiff, the carrier is obliged to deliver the goods according to
the instructions of the consignee. The carrier in this case acted clearly
in breach of the terms and conditions of the bill of lading and the
general practice followed in such regard. The plaintiff says that it is in
such circumstances that the plaintiff has applied for summary
judgment since the defendant can have no manner of defence to the
claim.
9. The plaintiff refers to a letter of indemnity issued by one
Profitable Wealth Inc. to the defendant on May 24, 2020 that the
defendant has relied upon. The plaintiff demonstrates that as per the
relevant letter, Profitable Wealth Inc. required the plaintiff to deliver
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OSA (CAD) No.88 of 2021
the goods to Chevron Singapore Pte Ltd and has indemnified the
defendant harmless in respect of any liability, loss, damage or expense
of whatsoever nature that may be sustained by the defendant as a
consequence of making the delivery of the goods as per the
instructions of Profitable Wealth Inc.
10. The plaintiff asserts that since the plaintiff is the consignee
indicated in the bill of lading and the plaintiff had not authorised
Profitable Wealth Inc. to receive the goods or issue instructions as to
the delivery thereof, the plaintiff is not concerned with what
instructions may have been received by the defendant from Profitable
Wealth Inc. or any other party nor is the plaintiff concerned with the
manner in which the defendant acted on the basis of such instructions.
The plaintiff claims that the plaintiff was entitled to the goods and
since it appears to be the fairly admitted position that the goods have
not been delivered to the plaintiff or to its order, the plaintiff is entitled
to the value thereof or due compensation therefor.
11. The plaintiff refers to the judgment and order impugned
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OSA (CAD) No.88 of 2021
dated September 24, 2021 and submits that nothing in the eight terse
paragraphs contained therein indicates any legal or legitimate basis for
impleading Gulf Petrochem as a defendant to the proceedings. The
plaintiff says that the order impugned does not conclusively indicate
that the added party is either a necessary or a proper party and,
according to the plaintiff, no reasons for the presence of the added
party is indicated in the impugned order.
12. Indeed, the order impugned is spread over eight paragraphs.
The first five are the preliminary paragraphs. At the sixth paragraph,
it is recorded that the sole defendant delivered the goods at Singapore
based on a delivery order apparently issued by the customer of the
plaintiff and the defendant apparently acted on the basis of an e-mail
of May 21, 2020 issued by Gulf Petrochem. The trial court recorded
the defendant's contention that the plaintiff had financed the
transaction and that the plaintiff was not the owner of the cargo and
since the owner of the cargo was Gulf Petrochem which had not been
impleaded, the suit was liable to be dismissed.
13. Upon noting such contention, the trial court concluded as
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OSA (CAD) No.88 of 2021
follows in the only paragraph in support of the order:
“8. In the suit transaction, the Gulf Petrochem (GP),
who is the customer of the plaintiff, is the key player on
whose instructions, the goods have been delivered at
Singapore by the defendant. IOCL has sold marine fuel to
GP based on the LC issued by the plaintiff for USD
6,050,000. GP has engaged the defendant to transport the
cargo. As per the Bill of Lading, the cargo is supposed to
be delivered at Singapore. The defendant has discharged
the cargo at Singapore Port based on the letter of
indemnity dated 24.05.2020 given by Profitable Wealth
INC, Singapore. In the documentary credit opening (LC)
dated 12.05.2020 originated from the plaintiff there is a
clause which indicates cargo can be delivered on obtaining
indemnity in case of temporary non availability of original
Bill of Lading.”
14. It must also be recorded that the court observed at
paragraph 9 that from the documents and facts pleaded “Gulf
Petrochem (GP) who is the customer of the plaintiff, is the proper and
necessary party in the suit.” However, it was not indicated as to what
documents and what facts impelled the court to arrive at such
conclusion or the legal basis for discovering Gulf Petrochem to be
either a necessary or a proper party thereto. The plaintiff also seeks
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OSA (CAD) No.88 of 2021
to refer to the charter-party under which the defendant obtained time
charter of the vessel. According to the plaintiff, even such charter
party does not entitle the defendant to deliver the goods to any person
except upon the instructions being received from the consignee.
However, such aspect of the matter may be totally irrelevant in the
present context since a document to which the plaintiff is not a
signatory cannot be seen to deal with the plaintiff's property.
15. The defendant, quite fairly, accepts that ordinarily the
consignee named in a bill of lading would be the party entitled to
receive delivery of the goods covered by the relevant bill of lading.
However, the defendant submits that the facts of the present case
would indicate that the plaintiff was never intended to be the
consignee or the party to whom the goods had to be delivered,
notwithstanding the bill of lading indicating the plaintiff to be the
consignee thereunder. According to the defendant, Gulf Petrochem
obtained credit facilities from the plaintiff bank in respect of the
subject transaction and the plaintiff bank was to be paid after a period
of 60 days. The defendant asserts that since the goods had to be
delivered within such period of 60 days, it is inconceivable that the
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OSA (CAD) No.88 of 2021
plaintiff would be entitled to receive the goods since the plaintiff’s time
to receive repayment would not mature before the expiry of 60 days
from the date of its agreement with Gulf Petrochem in such regard.
The relevant agreement was entered into on or about May 8, 2020.
16. The defendant also refers to the case made out in the plaint,
particularly at paragraphs 10, 11 and 12 thereof:
“10. On 8 May 2020, one Gulf Petrochem FZC ("GP")
approached the Plaintiff seeking financing for a transaction
of purchase of fuel from Indian Oil Corporatioin Ltd.
("IOCL") and onward sale of marine fuel to Aramco
Trading Fujairah FZE ("Aramco"). The proposed
transaction was as follows:
a) GP would buy marine fuel from IOCL at USD
220.5880 per MT.
b) GP would sell on the marine fuel to Aramco at USD
246.726 per MT.
c) The load port for the cargo would be Kandla and the
discharge port would be Fujairah.
d) The Plaintiff would finance the purchase of the fuel
by GP from IOCL by way of letter of credit so as to
enable GP to procure the cargo and sell it onward to
Aramco. The purchase price for the onward sale
would be remitted by Aramco into GP's bank account
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OSA (CAD) No.88 of 2021
maintained with the Plaintiff.
11. The payment terms under the sale by GP to
Aramco were to be on open credit given that Aramco was
an Oil Major. In other words the Plaintiff would rely on the
name of Aramco as having never defaulted as security for
payment due from them. The relevant payment terms
expressed in the contract stated:.
"THE PAYMENT SHOULD BE MADE WITHIN
60(SIXTY) CALENDAR DAYS FROM THE DATE OF
INVOICE (INVOICE DATE - DAY 0) AGAINST
PRESENTATION OF THE SELLER'S INVOICE
ANDN COQ (Certificate of Quality)."
12. The understanding between the parties in relation to
this aspect of security, was as follows:
a) It was agreed that the original Bill of Lading
representing the cargo would be issued by the
shipowner to the order of the Plaintiff. The
title/property in the cargo of fuel financed and paid
for by the Plaintiff would vest with the Plaintiff.
b) Independent of the obligation to pay from Aramco,
the Plaintiff would remain the lawful holder of the
original Bill of Lading and would be entitled to
delivery of the cargo thereunder, the security for the
Plaintiff's claim was the cargo, i.e., the fuel itself.
However, until the Plaintiff received confirmation of
the onward sale to Aramco, the title/property in the
cargo of fuel would vest with the Plaintiff by virtue of
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OSA (CAD) No.88 of 2021
being the lawful holder of the original Bill of Lading."
(Emphasis in original)
17. The defendant says that if it is the plaintiff’s case that it
merely held the bill of lading as a security, it would not lie in the
mouth of the plaintiff to assert that the plaintiff was entitled to receive
delivery of the goods. The further point that the defendant makes is
that the plaintiff has not asserted that it remains unpaid in respect of
the plaintiff financing the acquisition of the goods by Gulf Petrochem
from Indian Oil Corporation Limited. The defendant points out that the
plaintiff agreed that the consignment would be sold by Gulf Petrochem
to Aramco and the plaintiff merely needed a confirmation of the
onward sale to Aramco, which confirmation has been received by the
plaintiff. As a consequence, the defendant suggests that the plaintiff
has no cause of action against the defendant as the carrier, and the
plaintiff has to look to its customer, Gulf Petrochem, in the event the
plaintiff remains unpaid.
18. The matter falls within a very short compass. The primary
document is not disputed. The plaintiff is the named consignee in the
bill of lading and it is also accepted by the defendant, in particular, that
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OSA (CAD) No.88 of 2021
ordinarily it would be the consignee who would be entitled to obtain
delivery of the goods covered by a bill of lading. In this case, it may
also be noticed that Gulf Petrochem is the notify party mentioned in
the bill of lading. In international trade, documents are of immense
value and courts must proceed on the basis of the letter of the
documents without seeking to ascertain the nature of the underlying or
any incidental transaction. If it is imperative that a carrier notifies the
party indicated as the notify party, what it implies is that notice of the
arrival of the vessel or the notice of readiness to discharge cargo must
be given to such party whereupon such party would produce the bill of
lading and obtain the discharge of the cargo. It is also possible that
the consignee may authorise the carrier to release the cargo in favour
of the notify party or to any other as the consignee is entitled to assign
its right to obtain delivery under the bill of lading to any party of the
consignee's choice.
19. What is of paramount importance is that it is the consignee
and the consignee alone which can issue instructions or authorise the
delivery of the goods covered by the bill of lading to any third party.
The carrier is not obliged to act as per the directions or instructions of
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OSA (CAD) No.88 of 2021
any third party as the bill of lading, in a sense, is the document of title
pertaining to the cargo and it is elementary that it is only the owner of
the goods who has the right to alienate the goods or transfer the
same.
20. Implicit in the letter of May 24, 2020 issued by Profitable
Wealth Inc. was that such entity required the carrier to do something
unusual or out of the ordinary, and, as such, exposing the carrier to a
risk in course of such deviation. As a consequence, to induce the
carrier to deviate from the usual practice, Profitable Wealth Inc.
indemnified the carrier harmless against any claim that may be made
against the carrier for the carrier acting according to the instructions of
Profitable Wealth Inc. The plaintiff had nothing to do with Profitable
Wealth Inc. or any instructions that Profitable Wealth Inc. or Gulf
Petrochem or even the Maharaja of Gaipajama may have issued to the
carrier. These instructions, whether issued by Gulf Petrochem or
Profitable Wealth Inc., were not backed by any authority of the
plaintiff. In such circumstances, what the arrangement between the
defendant and the third parties may have been may not be of any
relevance in the suit and in the context of the plaintiff’s claim herein.
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OSA (CAD) No.88 of 2021
21. As to the averments in paragraphs 10 to 12 of the plaint, it is
sometimes better not to say too much. However, the averments may
be seen as part of a narrative leading up to the claim of the plaintiff
and the plaintiff’s cause of action against the defendant. In the
scheme of the action and the particular claim of the plaintiff as the
consignee in the bill of lading against the defendant carrier, the
transactions between the plaintiff and Gulf Petrochem or those
between Gulf Petrochem and Indian Oil Corporation or even that
between Gulf Petrochem and Aramco are of no relevance. Till such
time that the plaintiff’s name appeared as the consignee in the bill of
lading, the defendant was obliged only to the plaintiff to deliver the
goods to the plaintiff or to the order of the plaintiff and the defendant,
in acting on the basis of instructions issued by others may not have
affected the right of the plaintiff or the plaintiff’s claim under the bill of
lading.
22. In such circumstances, Gulf Petrochem Inc., which may have
been financed by the plaintiff qua the subject transaction is neither a
necessary nor a proper party to the plaintiff's simple claim against the
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OSA (CAD) No.88 of 2021
carrier of the goods for the breach of the contract of carriage and in
the carrier's failure to deliver the goods to the plaintiff or to the order
of the plaintiff. It is not unusual in the industry for goods to be
released at the request of a stranger, but that is precisely why the
stranger indemnifies the carrier. It is more likely than not that the
entity that induced the defendant to discharge the goods in Singapore
may be beyond the defendant's reach; but that may not be an excuse
to resist the plaintiff's claim. It is equally possible that the plaintiff
may have acquiesced in the delivery instructions issued by Profitable
Wealth Inc., but when the plaintiff has not, it is only the indemnity
furnished by the entity that the defendant can chase.
23. The observations made herein must be understood to be in
the context of what was required to be considered and should not
unduly weigh with the trial court in course of the expeditious disposal
of the application for summary judgment that the plaintiff has filed.
24. The order impugned dated September 24, 2021 is set aside.
The trial court is requested to take up the application for summary
judgment and dispose of the same in accordance with law as
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OSA (CAD) No.88 of 2021
expeditiously as the business of the trial court permits.
OSA (CAD) No.88 of 2021 is allowed as above. The defendant
will pay costs assessed at Rs.1,50,000/-. CMP No.16921 of 2021 is
closed.
(S.B., CJ.) (P.D.A., J.)
28.10.2021
Index : yes
sra
To
The Sub Assistant Registrar
Original Side
High Court, Madras.
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OSA (CAD) No.88 of 2021
THE HON'BLE CHIEF JUSTICE
AND
P.D.AUDIKESAVALU, J.
(sra)
OSA (CAD) No.88 of 2021
28.10.2021
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