Madras High Court
Banque Cantonale De Geneve vs Owners And Parties Interested In The ... on 9 July, 2025
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
2025:MHC:1599
A.No.1494 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Orders Reserved on 23.04.2025
Orders Pronounced on 09.07.2025
CORAM
THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
A.No.1494 of 2021
in C.S. No.96 of 2021
Banque Cantonale De Geneve,
having its Office at Case Postale 2251,
1211 Geneve 2, represented herein by its
Power of Attorney Agent Mr.V.Padmanabhan ... Applicant/Plaintiff
vs.
1. Owners and Parties interested in the Vessel
MV Polaris Galaxy, having IMO:9339648,
now lying at the outer anchorage of the Port of
Tuticorin (V.O.Chidambaranar Port),
Tuticorin-628 004 represented by its Master.
2. Gulf Petrochem FZC,
Hamriyah Free Zone, P.O.Box No.41506,
Sharjah, United Arab Emirates.
(2nd respondent impleaded as per order dated
19.03.2025 passed in A.No.988 of 2025). ... Respondents/Defendants
1/59
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A.No.1494 of 2021
Prayer : Application is filed under Order XIV Rule 8 and Order XIIIA of the
Code of Civil Procedure as amended by the Commercial Courts Act, 2015
Read With Section 151 of the CPC, to order for a decree and judgment in
favour of the plaintiff and against the defendant vessel and the parties
interested in her by summary proceedings for the sum of USD 6,705,357.38
(approx. INR 48,94,91,089/- (Forty eight crores, Ninety four lakhs, Ninety
one thousand and eighty nine only) (calculated at 1 USD=73 INR) and
further interest at 12% (or whatever other rate this Court may deem fit) from
the date of filing of the suit until payment/realisation with costs.
For Applicant/Plaintiff : Mr. Zarir Bharucha, Senior Counsel
for Mr.S.Raghunathan
Mr.Chandrasekar Haridh
Ms.Sharanya Vaidhiyanathan
For R1/D1 : Mr.Prashant S. Pratap, Senior Counsel
for Ms.Deepika Murali
Mr.Ashutosh Tiwari
JUDGMENT
Background
The applicant/plaintiff, Banque Cantonale De Geneve ('BCGE'), is
engaged inter alia in trade finance. Gulf Petrochem FZC ('GP') requested
BCGE to finance the purchase of 27,000 to 28,000 Metric Tonnes (MT) of
0.5% marine fuel from the Indian Oil Corporation Limited ('IOCL') for
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onward sale to Aramco Trading Fujairah FZE ('Aramco'). As security for
financing the said cargo, the original bill of lading for the cargo was to be
made to the order of BCGE. BCGE also called upon GP to provide the sale
contract between GP and Aramco as a condition for financing the
transaction. GP confirmed to BCGE, by e-mail of 11 May 2020, that the
original bill of lading would be endorsed to the order of BCGE. The sale
contract was provided to BCGE on 12 May 2020 and BCGE opened letter
of credit of even date for a sum of USD 6,050,000 for the purchase of
marine fuel from IOCL. The letter of credit specified the required
documents, which inter alia included the full set of clean on board ocean
bills of lading signed by the Master and made out to the order of Banque
Cantonale de Geneve. Upon request by GP, the letter of credit was amended
on 18 May 2020 by substituting Fujairah with Singapore as the port of
delivery. In response to a request from BCGE, a copy of invoice dated 11
June 2020, issued by GP to Aramco, was sent to BCGE as an attachment to
email of 15 June 2020 from GP.
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2. On 21 May 2020, the Master of the vessel, MV Polaris Galaxy ('the
Vessel'), which was flying under a Liberian flag, issued three sets of the
original bill of lading marked “To the order of Banque Cantonale De
Geneve or order”. While the Vessel was at Kandla, Gujarat, GP wrote to the
carrier and instructed that the entire cargo be discharged at the Horizon
Terminal at Singapore. The charterer of the Vessel, Profitable Wealth
Inc.('Profitable Wealth'), a company registered in the British Virgin Islands
and operated by Wirana Shipping Corporation Private Limited, Singapore,
then instructed Polaris Marine Services LLC ('Polaris Marine'), the
Commercial Manager of the Vessel, acting on behalf of the registered
owner, Galaxy Marine Services Limited ('Galaxy Marine'), to deliver the
cargo to Chevron Singapore Private Limited ('Chevron') without production
of the original bill of lading by undertaking to indemnify Galaxy Marine
against any claims in respect of such delivery without the original bills of
lading. BCGE made payment of a sum of USD 5,985,084.28 to IOCL under
the letter of credit on 27 May 2020. On 31 May 2020, the Vessel arrived at
the Singapore Port. Between 9 June 2020 and 10 June 2020, the cargo was
delivered to Chevron without production of the original bill of lading on the
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instructions of Profitable Wealth on the basis of letter of indemnity dated
24 May 2020.
3. GP provided BCGE with invoice dated 15 June 2020 issued to
Aramco for a sum of USD 6,705,357.38. The due date for payment was
shown as 10 August 2020. In the factual context of such payment not being
received, BCGE issued notices to the Master of the Vessel, P & I Club of
the Vessel, and Galaxy Marine on 10, 11 & 13 August 2020 calling upon
them not to deliver the cargo without the written consent of BCGE. Galaxy
Marine did not reply to the notice. An admiralty action in rem was filed in
the circumstances seeking the arrest of the Vessel and for a decree in a sum
of USD 6,705,357.38 with further interest at 12% per annum on the
principal amount from the date of institution of the suit until payment. By
order dated 09 March 2021, a warrant for arrest of the Vessel was directed
to be issued. Thereafter, upon Galaxy Marine providing a bank guarantee
for a sum of USD 7,300,000, a warrant for release of the Vessel was issued.
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4. The present application was filed in these facts and circumstances
in March 2021. The affidavits in support of or in response to the application
consist of: affidavit of V.Padmanabhan dated 26 March 2021 on behalf of
BCGE; counter affidavit of Siddhesh Sham Kshirsagar dated 16 July 2021
on behalf of Galaxy Marine; rejoinder affidavit of V.Padmanabhan dated
23 August 2021 on behalf of Galaxy Marine; sur-rejoinder affidavit of
Siddhesh Sham Kshirsagar dated 18 March 2024 on behalf of Galaxy
Marine; and affidavit in reply to sur-rejoinder of V.Padmanabhan dated 20
March 2024 on behalf of BCGE. The contesting parties filed documents in
support of their respective positions.
5. By order dated 24 September 2021, this Court concluded that GP is
a proper and necessary party to the suit. The said order was challenged by
BCGE before the Division Bench and the Division Bench allowed the
appeal. Galaxy Marine carried the matter in further appeal before the
Supreme Court and the Supreme Court, by judgment dated 23rd September
2022, reversed the judgment of the Division Bench by holding that GP was
a proper party whose presence was necessary for the effective adjudication
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of issues raised in the suit. GP was impleaded as the 2 nd defendant in the
suit in those circumstances and the plaint was amended. Private summons to
GP was permitted and the envelope containing the summons was dropped at
the P.O. Box of GP on 29 December 2023. Eventually, after multiple efforts
to serve summons through regular modes, substituted service was permitted
by order dated 20 November 2023 and effected by publication in the 'Gulf
Times' on 27 November 2023. GP did not, however, enter appearance to
contest the suit.
6. After arguments in the summary judgment application were heard
in part, BCGE filed Application No.988 of 2025 to implead GP as a party to
the application. The said application was allowed on 19 March 2025 by
directing BCGE to carry out the consequential amendments in the affidavit
and Judge's summons on or before 26 March 2025. As directed, the
amendments were carried out on 26 March 2025. After dispatching notice to
GP, BCGE filed affidavit of service dated 28 March 2025 and enclosed
copies of notices issued to GP both directly and through the Chief Executive
Officer of the Ministry of Justice, United Arab Emirates. Relief is claimed
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both in the suit and the application only against Galaxy Marine and not
against GP.
Counsel and their contentions
7. Oral arguments on behalf of BCGE were advanced by Mr. Zarir
Bharucha, learned senior counsel, assisted by Mr.S.Raghunathan and
Ms.Sharanya Vaidhiyanathan, learned counsel. Oral arguments on behalf of
Galaxy Marine were advanced by Mr.Prashant S. Pratap, learned senior
counsel, assisted by Ms.Deepika Murali and Mr.Ashutosh Tiwari, learned
counsel. The 2nd respondent did not enter appearance. Both the contesting
parties filed written submissions.
8. Learned senior counsel for BCGE opened his submissions by
stating that both the suit and this application are in respect of mis-delivery
of cargo by Galaxy Marine without production of the original bills of
lading. Learned senior counsel submitted that the material facts are
undisputed. By referring to e-mail of 11 May 2020 from the Transaction
Manager, Commodity Trade Finance, BCGE to GP, he pointed out that
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BCGE requested for confirmation that the original bills of lading will be to
its order. By a response issued on the same date, he pointed out that
Mr.Mukul Agarwal, Treasurer, GCC of GP confirmed that the original bill
of lading will be issued to the order of BCGE. By further referring to the
letter of credit issued by BCGE, learned senior counsel pointed out that the
document provided for the full set of bills of lading to be made to the order
of BCGE.
9. With specific reference to the bill of lading, learned senior counsel
pointed out that it was drawn to the order of BCGE as agreed to. Thus, he
contended that Galaxy Marine was under an obligation not to deliver the
cargo without production of the original bills of lading. In this case, he
submitted that Galaxy Marine mis-delivered the cargo to Chevron on 09/10
June 2020 on instructions from Profitable Wealth against a letter of
indemnity dated 24 May 2020 from Profitable Wealth.
10. According to learned senior counsel, Galaxy Marine is,
consequently, liable for the loss caused by the mis-delivery. In view of
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Galaxy Marine admitting that it committed breach of the contract of
carriage, he contended that BCGE is entitled to summary judgment. Even
with regard to quantum of loss, Mr. Zarir Bharucha submitted that the value
of the cargo as on the date of intended delivery is the appropriate measure of
loss. The cargo was intended to be delivered to Aramco against payment of
a sum of USD 6,705,357.38. Therefore, the said invoice value constitutes
the fair value of goods at the time of intended delivery under the relevant
sales contract.
11. Learned senior counsel next contended that the defences raised by
Galaxy Marine are completely misconceived and not merely improbable. He
pointed out that Galaxy Marine has raised the defence that a trial is
necessary to consider the following counterfactual/hypothetical: whether
BCGE would have authorised delivery of cargo without production of the
original bills of lading. According to learned senior counsel, Galaxy Marine
has not specifically pleaded this line of defence. Even if pleaded, he
contended that such defence is inconsistent with Galaxy Marine's case of
being under an obligation to deliver the cargo to Chevron under the terms of
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the Charter-Party without BCGE's approval or consent against a letter of
indemnity. He further submitted that the admitted factual position is that the
cargo was delivered to Chevron and not Aramco by Galaxy Marine.
Therefore, in the absence of even prima facie evidence that BCGE would
have agreed to surrender its proprietary security by permitting delivery of
cargo to Chevron or any other third party without production of the original
bills of lading, he contended that any counterfactual inquiry of the nature
proposed by Galaxy Marine is totally unwarranted.
12. Since delivery instructions were issued to Galaxy Marine by
Profitable Wealth and not by GP, learned senior counsel contended that the
correct counterfactual inquiry, if any, would be whether BCGE would have
agreed to the delivery of cargo to Chevron or any other third party under
instructions from Profitable Wealth. If such counterfactual were to be
raised, he further submitted that the resounding answer would be that BCGE
would not have permitted such delivery. Consequently, he contended that
the defence raised by Galaxy Marine is wholly baseless and does not justify
the relegation of parties to a trial resulting in the disproportionate allocation
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of time and resources. By revisiting the e-mails of 8 May 2020, 11 May
2020, 12 May 2020 and 15 May 2020, learned senior counsel submitted that
these documents lead to the unequivocal conclusion that the defence raised
by Galaxy Marine is ex facie untenable.
13. Learned senior counsel distinguished the judgments relied upon
by Galaxy Marine on the ground that there was evidence of the bank's
express agreement or prior knowledge of delivery of cargo to the intended
recipient without production of the original bills of lading in those cases.
For instance, by referring to paragraphs 73, 74 and 83 of the judgment in
Unicredit Bank A.G. v. Euronav N.V. (The Sienna), (2022) EWHC 957
(Comm), learned senior counsel pointed out that the Court inter alia found
that delivery of cargo to approved sub-buyers without presentation of the
original bills of lading had been expressly authorised by the bank in that
case.
14. Likewise, by referring to paragraphs 20 to 23 and 26 to 32 of
Fimbank PLC v. Discover Investment Corporation (“The Nika”), (2020)
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EWHC 254 (Comm), learned senior counsel contended that the causation
defence succeeded therein inter alia because clause 2.3.4 of the stock
management agreement expressly contemplated delivery of cargo to the
bank's customer without presentation of the original bills of lading.
Similarly, by referring to paragraphs 8 & 50 to 51 of Standard Chartered
Bank (Singapore) Ltd. v. Maersk Tankers Singapore Pte Limited(“Maersk
Tankers”), (2022) SGHC 242 , learned senior counsel contended that
summary judgment was refused therein because the documents on record
reflected that the bank's letter of credit was opened on 4 May 2020, whereas
the cargo was to be delivered even prior thereto on 29 February 2020. In
those circumstances, he pointed out that the Court concluded that the bank
knew that the cargo would be delivered even prior to the financing and,
therefore, without the security in relation thereto.
15. By referring to the judgment of the Singapore High Court in
Oversea-Chinese Banking Corporation Limited v. Owner and/or Demise
Charterer of the Vessel “Yue You 902”(the Yue You), (2019) SGH 106, he
submitted that the Court held that the carrier's breach of the obligation to
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deliver cargo only upon presentation of the original bill of lading was a
fundamental breach of contract entitling the claimant to summary judgment.
He also relied upon the judgments of the Hong Kong High Court in Kai Min
Fashion (HK) Limited v. Fond Express Logistics Limited and another,
dated 28 September 2012 in Commercial Action No.20 of 2011 (Kai Min)
and Star Line Trades Limited v. Transpac Container System Limited and
another (Star Line),[2009] HKCU 1355 . He finally relied on the recent
judgment of the Singapore High Court in the Union Overseas Bank Limited
v. Owner and/or Demise Charterer of the Vessel “MAERSK
KATALIN”(“Maersk Katalin”), (2024) SGHC 282 for the proposition that
the onus was on the carrier to establish the likelihood of the bank
authorising delivery without presentation of the original bills of lading. He
further submitted in conclusion that the Singapore High Court held therein
that the bank takes security to protect itself against risk and an inference
that such security would be relinquished cannot be drawn in the absence of
commercial reasons justifying such relinquishment.
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16. Mr.Prashant S.Pratap responded to these contentions. He opened
submissions by pointing out that there are three parties to the transaction,
namely, GP, BCGE and the carrier. After further pointing out that BCGE
has not placed on record all material documents relating to the financing of
the purchase by GP from IOCL, he pointed out that the answer to the
following question may be elicited only in course of trial: whether BCGE
had anything to do with instructions relating to the delivery of cargo to
Chevron? By referring to paragraph 50 of the judgment of the Supreme
Court dated 23 September 2022 in the appeal before the Supreme Court
against the Division Bench judgment allowing the appeal against the order
directing BCGE to implead GP (Owners and Parties Interested in the
Vessel M.V.Polaris Galaxy v. Banque Cantonale De Geneve, 2022 SCC
OnLine SC 1293), learned senior counsel submitted that the Supreme Court
expressly held that it is necessary to examine the underlying transaction
between BCGE and GP. In view thereof, learned senior counsel submitted
that a trial is warranted to ascertain all material facts relating to the dispute.
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17. By referring to the sales contract between GP and Aramco,
learned senior counsel submitted that it is evident from the said document
that payment was to be made by Aramco 60 days after the date of invoice,
i.e. 60 days after delivery. Effectively, he submitted that this reveals that
production of the original bills of lading was not a pre-requisite for Aramco
to take delivery. In turn, he submitted that this leads to the reasonable
inference that original bills of lading were not treated as the security for the
financing of the purchase by GP for onward sale to Aramco. If so,
Mr.Prashant S. Pratap contended that the proximate cause of loss by BCGE
was not the delivery of cargo by Galaxy Marine without production of the
original bills of lading, but the nature of the financing agreement between
BCGE and GP, whereby delivery of cargo was permitted without production
of the original bills of lading.
18. With reference to paragraphs 6, 12 to 17, 22 to 28, 32, 35, 39, 40
& 45 to 56 of the judgment in Maersk Tankers, he contended that, in
substantially similar facts and circumstances, the Singapore High Court held
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that the bill of lading was not the security for the financing of the cargo.
Likewise, by referring to paragraphs 27, 103, 105 and 108 of The Sienna,
Mr.Prashant S. Pratap contended that the English Court of Appeal held that
it is inherent in the bank's transaction with the borrower that delivery of
cargo may be made without production of the original bills of lading. He
also relied on paragraphs 1 to 12, 18 to 24, 47 to 52, 73, 89, 92 and 120 of
the judgment of the single Judge in the same case. Relying upon the
judgment of the Delhi High Court in OCM Singapore Njord Holdings
Hardrada Pte. Ltd. & another v. Mr.Prerit Goel & others, dated 06.05.2024
in C.S.(Comm)No.54 of 2021, he contended that GP had adopted an
identical modus operandi and defrauded several banks and ship owners. He
also relied upon the judgment of the Division Bench of this Court in Syrma
Technology Private Limited v. Powerwave Technologies Sweden AD (in
bankruptcy) and another('Syrma Technology), 2020 SCC OnLine Mad
5737, particularly paragraphs 12 to 21 thereof, to contend that only a
conditional order is liable to be passed if it were possible that the defence
may succeed. After further pointing out that the suit claim has been secured
not only in respect of the principal sum but even in respect of interest, he
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submitted that it certainly cannot be concluded at this juncture that Galaxy
Marine does not even have a possible defence in respect of causation.
19. He distinguished the judgments relied upon by BCGE by pointing
out that no bank was involved both in Kai Min and Star Line and that
payment was to be made upon production of documents, including original
bills of lading. Even with regard to the judgment of the Singapore High
Court in the Yue You, Mr.Prashant S. Pratap contended that the said case did
not involve an onward sale financing without bills of lading. In order to
succeed in an action for damages, learned senior counsel submitted that it is
insufficient to prove breach of contract and loss. It is further necessary to
establish that such loss was caused by the breach and not by any other
factor. In the case at hand, he contended that it is necessary for BCGE to
establish that delivery of cargo to Chevron was the proximate cause of the
loss suffered by BCGE. In the absence of a trial, he submitted that it is not
possible to ascertain whether BCGE consented to or did not object to the
delivery of cargo to Chevron by GP without production of the original bill
of lading. According to learned senior counsel, the likelihood or possibility
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of GP informing BCGE of its intention to deliver the cargo to Chevron
cannot be ruled out. Without prejudice to the above contentions, he further
submitted that BCGE's claim should be limited to the value of the letter of
credit opened by BCGE to finance the purchase of cargo by GP from IOCL.
Put differently, if the Court were inclined to direct summary judgment, he
submitted it should be limited to the sum of USD 5.9 million and not extend
to the invoice value for onward sale by GP to Aramco.
20. By way of rejoinder, Mr.Zarir Bharucha submitted that BCGE had
sued the carrier for breach of the contract of carriage. The carrier, Galaxy
Marine, admits that it committed breach by delivering the cargo to Chevron
without the original bills of lading. In those circumstances, he submitted
that the onus was on Galaxy Marine to establish that the loss was not caused
by mis-delivery. As regards the contention that BCGE would have taken
trade credit insurance, he submitted that trade credit insurance was not taken
because Aramco was a strong counter party. By referring to the letter of
indemnity, Mr.Zarir Bharucha submitted that such indemnity was provided
by Profitable Wealth and not by GP.
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21. He also referred to clause 13(b) of the Time Charter-Party
between Profitable Wealth and Galaxy Marine to contend that the said
contract placed an obligation on Galaxy Marine to discharge the cargo even
without production of the original bills of lading against an indemnity from
Profitable Wealth. Thus, he contended that Galaxy Marine ran the risk of
discharging the cargo without production of the original bills of lading by
relying on the indemnity. Having done so, he further contended that it is not
open to Galaxy Marine to evade liability on the specious ground that BCGE
did not suffer loss on account of mis-delivery, but suffered loss on account
of the nature of the financing transaction between BCGE and GP. In all the
cases relied upon by Galaxy Marine, such as The Sienna and The Nika,
Mr.Zarir Bharucha contended that delivery was made to the buyer specified
in documents provided to the financing bank. By contrast, in this case, he
contended that the cargo was delivered not to Aramco but to Chevron.
22. By also relying upon the judgment in Piloo Dhunjishaw Sidhwa
v. Municipal Corporation of the City of Poona, 1970 (1) SCC 213, learned
senior counsel submitted that the market value of goods at the intended time
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of delivery is the appropriate measure of damages. The invoice issued by
GP to Aramco qualifies as the document evidencing the market value of the
goods at the intended time of delivery. Especially in the absence of any
evidence that such market value is incorrect, he submits that BCGE is
entitled to a summary judgment for such value. He also relied upon the
Standard and Poor Global Platts Report containing the Mean of Platts Price
of the cargo on 10 June 2020. If calculated on such basis, as on 10 June
2020, he submits that the price would be USD 246.726 per MT. For the total
contracted quantity, the market value would be USD 8,033,894.66 instead
of USD 6,705,357.38. Therefore, learned senior counsel submitted that the
lower amount has been claimed on the basis of the invoice issued by GP to
Aramco and that this qualifies as the appropriate and reasonable measure of
damages.
Discussion, analysis and conclusions:
23. The facts are largely undisputed. As stated at the outset, BCGE
financed the purchase of marine fuel by its customer, GP, from IOCL. The
e-mails of 11 May 2020 between BCGE and GP evince that BCGE insisted
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on the original bill of lading being to the order of BCGE. Such financing
was by opening a letter of credit for a sum of USD 6,050,000 on 12 May
2020. The beneficiary of the letter of credit was IOCL. Among the required
documents was the full set of (3/3 originals plus 3 non-negotiable copies)
clean on board ocean bills of lading with each original signed by the Master
and made to the order of BCGE. The bill of lading is on record and was
issued on 21 May 2020 by the Master of MT. Polaris Galaxy “to the order of
Banque Cantonale De Geneve or order”. The notify party mentioned therein
is GP. Also on record is Charter-Party dated 25 July 2019 between Polaris
Marine and the Charterer, Profitable Wealth. Clause 13(b) of the Charter-
Party provides as under:
“13(b) Notwithstanding the foregoing, Owners
shall not be obliged to comply with any orders from
Charterers to discharge all or part of the cargo
(i) at any place other than that shown on the bill of
lading and/or
(ii)without presentation of an original bill of lading
unless they have received from Charterers both written
confirmation of such orders and an indemnity in a form
acceptable to Owners.”
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After arriving at anchorage in the Singapore Port on 31 May 2020, it is
common ground that the cargo was discharged between 09 /10 June 2020 to
Chevron. Such discharge was admittedly made without production of the
original bill of lading on instructions from GP and Profitable Wealth and
against letter of indemnity dated 24 May 2020. With this preamble, I turn to
the principles governing an application for summary judgment.
24. When the Code of Civil Procedure, 1908 (the CPC) was amended
in respect of commercial disputes, provision was made for parties to apply
for a summary judgment under Order XIII-A thereof. Rule 3, which
stipulates the grounds for summary judgment, is as under:
''3. Grounds for summary judgment-The Court
may give a summary judgment against a plaintiff
or defendant on a claim if it considers that
(a) the Plaintiff has no real prospect of
succeeding on the claim or the defendant has no
real prospect of successfully defending the claim,
as the case may be; and
(b) there is no other compelling reason why the
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claim should not be disposed of before recording
of oral evidence.'
In Godaddy.com v. Puravankara Projects Limited, 2022 (91) PTC 440
(Mad), I had formulated the following principles for the adjudication of an
application for summary judgment :
'' (i)The applicant should discharge the burden
of establishing that the counter party has no real
prospect of succeeding on the claim, including a part
thereof, or successfully defending the claim, or a part
thereof, as the case may be. The adjective 'real' is used
to indicate that such prospect is not 'illusory',
'theoretical or statistical' or 'imaginary' or 'fanciful'.
(ii) Rule 6 of Order XIII-A confers wide latitude
on the court to pass a range of orders in an
application for summary judgment either on the whole
or part of the claim. The types of order specified in
Rule 6 are illustrative and not exhaustive.
(iii) If the Court concludes that the counter
party could probably succeed, as regards the whole of
the claim, the application is liable to be dismissed. If
the court considers the success of the counter party
probable as regards a part of the claim, or, in respect
of some of the reliefs claimed, but not the remainder,
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the application may be considered as regards the
remainder.
(iv) If the court concludes that it is really
possible but not probable that the counter party could
succeed, a conditional order may be passed. Although
Rule 7 of Order XIII-A uses the word 'possible', it does
not mean statistical or theoretical possibility but real
possibility.
(v) Once the applicant satisfies the requirement
of clause (a) of Rule 3 of Order XIII-A, it becomes
necessary for the court to consider whether there is
any other compelling reason to direct parties to
record oral evidence. Since the conjunction 'and' is
used between clauses 'a' and 'b' of Rule 3, the
requirements should be construed as cumulative.
(vi) The obligations imposed by Rules 4 and 5
on the parties to plead their respective cases and
produce all material evidence in relation thereto does
not shift the burden of proof. Instead, it is a
procedural device to enable the court to meaningfully
consider whether the whole or part of the suit claim
may be disposed of summarily.
(vii) The scope of Order XIII-A is wider than
Order XII, Rule 6 CPC, which is triggered only on the
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basis of admissions. It is also far wider than Order VII
Rule 11 CPC because the court goes well beyond the
plaint and examines all the evidence placed before it.
However, such application is maintainable in the
limited window after summons' are served but before
issues are framed.
(viii) In the ultimate analysis, Order XIII-A
facilitates fulfilment of two salient but often
undervalued objectives of a fair and just dispute
resolution system, namely, expeditious disposal and
equitable and proportionate allocation of the limited
resources of the public court system. It represents a
paradigm shift from a blinkered trial-is-the-only-
method approach to the adjudication of civil suits to a
more balanced approach, which preserves the trial
process wherever appropriate and necessary.”
25. While applying these principles to this case, the first question to
consider is regarding the nature, and implications, of the bill of lading. The
answer is self-evident and obvious. Since the original bill of lading is to the
order of BCGE, in effect, BCGE is the consignee. GP is referred to therein
as the notify party, thereby indicating that notice of arrival and notice of
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readiness to discharge cargo should be given to it. Given the nature of the
bill in this case, it is not a mere receipt and constitutes both a document of
title and evidence of a contract of carriage. Indeed, on perusal of both the
counter and subsequent affidavits in this application and the written
statement in the suit, it follows that discharge to Chevron without
production of the original bill of lading on instructions from GP and
Profitable Wealth and on provision of indemnity by Profitable Wealth is
admitted. Since cargo was delivered to Chevron without production of the
original bill of lading, according to BCGE, it was deprived of its security.
With this, I turn to the assertions of Galaxy Marine in its counter and
subsequent affidavits in this application.
26. At paragraphs 10 and 15 of counter affidavit dated 16 July 2021,
Galaxy Marine stated as under:
“10. It is relevant to note that at all times during
the pendency of the Charter-party, the Vessel was placed
at the disposal of and was under the orders and directions
of the Charterers. Further, the Charter party at Clause
13(b) provided that if the Charterers gave orders to
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discharge the cargo without presentation of the original
bills of lading, the Owners would be obliged to comply
with such orders upon receiving an indemnity from the
Charterers in the form as set out in the Appendix to the
Charter party. Accordingly, the Respondent herein was
under a duty to discharge the cargo even without
production of the original bill of lading, upon receiving a
Letter of Indemnity from the Charterers. It is submitted
that this is general trade practice and is widely accepted
as standard custom industry-wide. Letters of Indemnity
are accepted in normal course and this procedure is
always adopted by oil tankers when the original bill of
lading is not available at the discharge port, in order to
avoid delaying discharge, unnecessarily prevent
detaining the vessel and to reduce congestion at ports.”
“15. The Vessel thereafter sailed for the port of
discharge i.e. Singapore. Relevantly, during this entire
period, Gulf Petrochem was communicating with the
Vessel and providing voyage/discharge instructions to the
Vessel. In fact, on 21st May 2020 itself, Gulf Petrochem
provided the Vessel with discharge orders wherein it
advised that the entire quantity of the Cargo on board the
Vessel was to be discharged at the Horizon Terminal,
Singapore. It is relevant to note that the said discharge
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order clearly stated that the Receivers of the Cargo were
Chevron Singapore Pte Ltd. i.e. Chevron. The said
discharge order also directed the Vessel to send ETA
notifications to Gulf Petrochem, the Terminal and
relevantly Chevron (as Receivers). Presumably therefore,
the Plaintiff herein had been advised and/or was aware
and/or was deemed to and/or ought to have been aware
as far back as 21st May 2020 that the Cargo was being
sold by Gulf Petrochem to Chevron and not to Aramco.”
(emphasis added)
27. In paragraph 16, after stating that Profitable Wealth provided
letter of indemnity dated 24 May 2020 and that the letter of indemnity
clearly stated that the cargo was to be delivered to Chevron, significantly,
Galaxy Marine further stated as under:
“16. .... It is relevant to note that under the terms of
the Charter party, upon the LOI being provided, the
Respondent herein was obliged to deliver the Cargo as
per the instructions stated therein. ”
In paragraph 18, Galaxy Marine asserts that GP was in constant
communication with the Vessel from 31 May 2020 when the Vessel arrived
at the nominated discharge port of Singapore until 9 June 2020. After
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further stating that instructions to discharge at Horizon Terminal were
received on 09 June 2020, Galaxy Marine states that the discharge was
commenced on 09 June 2020 and completed by 8:54 hours on 10 June 2020.
Thereafter, at paragraph 21, it is stated, in relevant part, as under:
“21. .... It is apparent from the Sale Contract and
the Plaintiff's conduct that the Plaintiff was agreeable to
the cargo being delivered by Gulf Petrochem without
presentation of the original Bill of Lading.”
28. After asserting at paragraph 31(c) that BCGE informed Galaxy
Marine only on 10 August 2020 that it financed the cargo and that Galaxy
Marine should not proceed to unload or discharge the cargo without the
consent of BCGE, at paragraph 31(e), Galaxy Marine asserts that the facts
indicate that the bill of lading was never the plaintiff's security.
29. In sur-rejoinder affidavit dated 18 March 2024, Galaxy Marine
relied on the Supreme Court's observation that it is “difficult to accept that
the Court is not required to ascertain the nature of the underlying
transaction” as indicating that BCGE should adduce evidence regarding the
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underlying transaction. In paragraph 8 thereof, in relevant part, Galaxy
Marine stated as under:
“8. ....The Plaintiff never had any intention to treat the
Bills of Lading as security when it financed Gulf's
purchase of the Cargo from Indian Oil Corporation
Limited ('IOCL”). The Plaintiff had impliedly, if not
expressly, approved the discharge without production of
the bill of lading as it believed that Aramco was a solvent
entity. The payment term was open credit to Aramco and
the Plaintiff relied upon Aramco's name for security.”
At paragraph 9 (erroneously mentioned as paragraph 8), a new contention
that BCGE was not the owner of the cargo was raised, in relevant part, as
under:
“....The inaction of the Plaintiff in taking any action
against Chevron to whom the cargo was sold and
delivered by Gulf, indicates that the Plaintiff themselves
believed that Gulf had clean title to the Cargo which they
delivered to Chevron....The Plaintiff was never the owner
of the Cargo and the Defendant has delivered the Cargo
basis the instructions received from Gulf who were the
owners of the Cargo....”
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30. In paragraph 10 (erroneously written as paragraph 9), after stating
that English law governs the bill of lading, the legal defences are set out as
under:
“(1) The Claimant (Plaintiff) never regarded the Bills of
Lading as security when it provided the financing; (2) The
Claimant never intended to look to the Defendant for
delivery of the cargo if Gulf defaulted in its payment
obligations to the Claimant; (3) Claimants were aware
that the cargo would be delivered without the Bills of
lading as a part of the underlying trade financing
arrangement and acquiesced in the delivery of the cargo
without presentation of the Bills of Lading (4) the
Claimants have no title to sue under Spent Bills of Lading
(5) the purported misdelivery of the goods or breach is
not the effective or proximate cause of the Claimant's
purported loss....”
The averments in the written statement are substantially similar to those in
the counter affidavit.
31. Thus, from the affidavits and pleadings of Galaxy Marine, it
appears that its defences are the following:
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(i) Galaxy Marine was under an obligation to discharge the cargo
without production of original bills of lading, if a letter of indemnity were to
be provided by the Charterer. Such letter of indemnity was provided by the
Charterer on 24 May 2020.
(ii) The sale contract and BCGE's conduct disclose that BCGE was
agreeable to the cargo being delivered by GP without presentation of the
original bill of lading on account of the nature of the underlying financing
transaction. Evidence is required to be adduced at trial on this aspect and,
therefore, the matter cannot be decided by summary judgment.
(iii) The bill of lading was never BCGE's security and the claim was
made on the basis of the bill of lading as an afterthought because BCGE did
not receive payment from GP.
(iv) BCGE was, or, is deemed to be, aware that the cargo was being
sold by GP to Chevron and not Aramco.
(v) BCGE does not have the title to sue on a spent bill of lading and
the sale was effected by GP as the owner of the cargo.
(vi) The purported mis-delivery was not the proximate cause of
BCGE's purported loss.
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The letter of indemnity defence
32. The first defence set out above is on the basis of the Charter-Party
between Profitable Wealth and Galaxy Marine. The contention of Galaxy
Marine is that it was contractually obligated under the Charter-Party to
discharge the cargo without insisting on the original bill of lading if a letter
of indemnity were to be provided by the Charterer, as was done by
Profitable Wealth. Undoubtedly, BCGE is not a party to the Charter-Party
and contractual obligations thereunder cannot be set up as a defence to the
charge of breach of the contract of carriage. Such defence is patently
untenable.
The spent bill and the GP as the owner defences
33. The next defence that I turn to is the defence that BCGE does not
have title to sue on a spent bill of lading and that GP sold the cargo as the
owner thereof. On this issue, it is sufficient to advert to three documents.
The letter of credit opened by BCGE in favour of IOCL specifies the
required documents. One of the documents mentioned therein is the original
bill of lading signed by the Master and made to the order of BCGE. The
second document is the bill of lading executed by the Master of MT. Polaris
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Galaxy to the order of BCGE or its order. As noticed earlier, BCGE is the
consignee under the document. The third document being the letter of
indemnity issued by Profitable Wealth to Polaris Marine. The letter of
indemnity records, in relevant part, as under:
“The above cargo was shipped on the above ship
by INDIAN OIL CORPORATION LIMITED and
consigned to TO THE ORDER BANQUE CANTONALE
DE GENEVA for delivery at the port of SINGAPORE
but the bill of lading has not arrived and we,
PROFITABLE WEALTH CO, hereby request you to
deliver the said cargo to CHEVRON SINGAPORE PTE
LTD or to be acting on behalf of CHEVRON
SINGAPORE PTE LTD at SINGAPORE without
production of the original bill of lading.
In consideration of your complying with our above
request, we hereby agree as follows:
1. To indemnify you, your servants and agents and
to hold all of you harmless in respect of any liability,
loss, damage, or expense of whatsoever nature which you
may sustain by reason of delivering the cargo in
accordance with our request.
5. As soon as all original bills of lading for the
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above cargo shall have come into our possession, to
deliver the same to you, or otherwise to cause all original
bills of lading to be delivered to you, whereupon our
liability hereunder shall cease.”
(emphasis added)
34. Thus, the Charterer, Profitable Wealth, expressly recognised
BCGE as the consignee of the cargo, but instructed Polaris Marine to
deliver the cargo to Chevron at Singapore without production of the original
bill of lading by stating that such bill of lading had not arrived. A bill of
lading becomes spent if the obligations thereunder are fulfilled by making
delivery to the consignee or an endorsee thereof, but not by delivery of
cargo to a person not entitled thereto under the bill (See Standard
Chartered Bank v Dorchester LNG (2) Ltd (The “Erin Schulte”) [2015 1
Lloyd's Rep. 97). In the face of the documents discussed above, the
contention that the bill of lading was spent or that the cargo was delivered
on instructions from the owner, GP, is ex facie fallacious and untenable.
Other defences
35. The remaining defences in a nutshell are as follows: that the sale
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contract and BCGE's conduct show that BCGE was agreeable to the cargo
being delivered by GP without presentation of the original bill of lading;
that the bill of lading was not intended to be BCGE's security; that BCGE
was or is deemed to be aware that the cargo was being delivered to Chevron
and not Aramco; and that the purported mis-delivery was not the proximate
cause of purported loss. Since all these defences are inter-connected, they
are examined conjointly in the admitted factual context of the cargo being
delivered to Chevron and not to Aramco.
36. Rule 4 of Order XIII-A of the CPC deals with the procedure
relating to an application for summary judgment and Rule 5 thereof deals
with evidence. Sub-rule (3) of Rule 4 enables the respondent to such
application to file a reply disclosing all material facts and include all
documentary evidence in support of such reply. Sub-rule (3) is as under:
“(3) The respondent may, within thirty days of the
receipt of notice of application of summary judgment or
notice of hearing (whichever is earlier), file a reply
addressing the matters set forth in clauses (a) to (f)
mentioned hereunder in addition to any other matters that
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the respondent may deem relevant:—
(a) the reply must precisely––
(i) disclose all material facts;
(ii) identify the point of law, if any; and
(iii) state the reasons why the relief sought
by the applicant should not be granted;
(b) in the event the respondent seeks to rely upon
any documentary evidence in its reply, the respondent
must—
(i) include such documentary evidence in its
reply; and
(ii) identify the relevant content of such
documentary evidence on which the
respondent relies;
(c) the reply must state the reason why there are
real prospects of succeeding on the claim or defending
the claim, as the case may be;
(d) the reply must concisely state the issues that
should be framed for trial;
(e) the reply must identify what further evidence
will be brought on record at trial that could not be
brought on record at the stage of summary judgment; and
(f) the reply must state why, in light of the evidence
or material on record if any, the Court should not
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proceed to summary judgment.”
Rule 5 provides further, in relevant part, as under:
“5. Evidence for hearing of summary judgment.—
(1) Notwithstanding anything in this Order, if the
respondent in an application for summary judgment
wishes to rely on additional documentary evidence during
the hearing, the respondent must:—
(a) file such documentary evidence; and
(b) serve copies of such documentary evidence on
every other party to the application at least fifteen days
prior to the date of the hearing. ”
37. From the above provisions, it is evident that the respondent in an
application for summary judgment is provided an opportunity to file not
only a reply to the application, but to place all documentary evidence in
support of such reply on record. While the burden of proof does not shift,
especially in light of the admitted delivery by the carrier not to the
consignee or endorsee but to a third party, the onus to establish that the
above defences provide Galaxy Marine the real prospect of successfully
defending the action lies on Galaxy Marine. Effectively, on the facts of this
case, the question that arises is whether Galaxy Marine has placed on record
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any evidence to show, at least prima facie, that BCGE agreed to the cargo
being delivered by GP to Chevron without presentation of the original bill
of lading.
Whether BCGE agreed to delivery of cargo to Chevron without the
production of the original bill of lading
38. The documents filed by Galaxy Marine include Charter-Party
dated 25 July 2019 between Polaris Marine and Profitable Wealth. As
discussed earlier, Clause 13(b) thereof enables the owners to discharge
without presentation of the original bill of lading if a written confirmation
of the discharge order and an indemnity in a form acceptable to the owners
were to be received from the Charterer. Galaxy Marine has placed on record
e-mail of 21 May 2020 from Tajinder Singh Chawla of GP to Polaris Galaxy
with instructions to discharge the entire quantity on board to Chevron at the
Horizon Terminal, Singapore. This email mentions the ETA notifications
party list containing email addresses of persons representing the charterers,
receivers (Chevron) and the port (Horizon Terminal). BCGE is not copied
on the email or even mentioned as a party to be notified of arrival or
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discharge. Significantly, the email also does not even refer to BCGE or
contain anything indicating that BCGE was informed of or consented to the
discharge to Chevron instead of Aramco.
39. Similarly, the letter of indemnity dated 24 May 2020, which was
issued shortly thereafter by the Charterer, Profitable Wealth, to Polaris
Marine also does not indicate, expressly or implicitly, that BCGE was put
on notice either about the delivery instructions from GP or the provision of
the letter of indemnity in the context of non-production of the original bill
of lading. Indeed, it is evident that in order to persuade the owner to assume
such risk, in terms of clause 13(b) of the Charter-Party, Profitable Wealth
agreed to indemnify the owner against all losses in relation to delivering the
cargo in accordance with the request of the Charterer, and also agreed to
deliver the original bill of lading to the owners as soon as the same comes
into the possession of the Charterers. On examining these documents, the
conclusion that emerges is that BCGE was not informed about the
instructions from GP and Profitable Wealth to deliver the cargo to Chevron
without production of the original bill of lading. A fortiori there is no
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evidence at all of BCGE consenting to such course of action.
40. Strong reliance was placed on the Supreme Court judgment in
relation to the impleading of GP in the suit to contend that a trial is
necessary to ascertain whether BCGE had authorised the release of cargo in
favour of Chevron. In particular, the following findings of the Supreme
Court were relied on by Galaxy Marine:
“29. There is no doubt that in international trade,
documents are of immense value and that Courts must
proceed on the basis of the documents as held by the
Division Bench. It is, however, difficult to accept that the
Court is not required to ascertain the nature of the
underlying transaction....”
“47. ....Whether the consignee authorised release of the
cargo in favour of the notify party or any other party, can
also be effectively adjudicated in the presence of Gulf
Petrochem, shown as the notify party in the Bill of
Lading.”
“50. ....Whether the Respondent Bank had anything to do
with any instruction that Gulf Petrochem might have
given is to be decided in the suit....”
These findings were recorded by the Supreme Court in support of the
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conclusion that GP was at least a proper party to the suit. In compliance, GP
was joined as the 2nd defendant. As narrated earlier, in spite of service of
summons in the suit by substituted service, GP failed to participate in the
suit. Thereafter, GP was also joined as a respondent in this application and
notice was sent to GP. GP, however, failed to participate.
41. BCGE categorically denies authorising or permitting GP to
discharge the cargo to Chevron without production of the original bill of
lading. With regard to the underlying transaction, BCGE has submitted
inter alia the following: bid or tender document relating to the sale of
marine fuel by IOCL; the email chain relating to the request for and
acceptance of financing by BCGE on condition that the bill of lading be
made to its order; the letter of credit issued by BCGE and specifying the
required documents, including the original bill of lading to the order of
BCGE; the email chain relating to the request for change in the discharge
port and the acceptance thereof on receipt of confirmation that Aramco is
the buyer and that there is no change; and the invoice issued by GP to
Aramco. These documents strongly support BCGE's assertion. While it is
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noticeable that other documents relating to the underlying transaction, such
as the loan agreement, are unavailable, such documents are not material in a
suit against the carrier for mis-delivery. Thus, the conclusion that emerges is
that the assertion by Galaxy Marine that BCGE was agreeable to the cargo
being delivered by GP to Chevron without production of the original bill of
lading is totally unsubstantiated. Therefore, the discharge of cargo to
Chevron without the production of the document of title clearly constitutes
breach of the contract of carriage between BCGE and the carrier, as
evidenced by the bill of lading.
Whether the original bill of lading was BCGE's security and whether
BCGE was aware or is deemed to be aware of the delivery to Chevron
42. Whether the original bill of lading was intended to be BCGE's
security and whether BCGE was aware or is deemed to be aware of the
delivery to Chevron warrant consideration next. The sequence of key
events assumes significance in this context. BCGE relied on the following:
email of 8 May 2020 from GP to BCGE requesting for financing of the
purchase of marine fuel from IOCL; documents relating to the tender floated
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by IOCL for sale of marine fuel; the request by BCGE by email of 11 May
2020 to confirm that the original bill of lading would be to its order; the
email from Mukul Agarwal of GP of 11 May 2020 confirming that the
original bill of lading would be issued/endorsed to the order of BCGE; the
sales contract between GP and Aramco sent as an attachment to email of 12
May 2020 from GP to BCGE; the documentary credit issued on 12 May
2020 by BCGE; and the bill of lading signed by the Master of the Vessel
and made to the order of BCGE. Galaxy Marine has relied largely on the
contract between GP and Aramco to contend that it discloses that payment
was to be made by Aramco 60 days after the date of invoice. On that basis,
Galaxy Marine contends that it is implied that delivery was to be made
without the original bill of lading. In support of this proposition, Galaxy
Marine has relied on the judgment of the Singapore High Court in Maersk
Tankers.
43. In Maersk Tankers, the Standard Chartered Bank had provided
trade financing to its customer, Hin Leong Trading (Pte) Limited (HLT).
Under the contract, HLT was to purchase 750,000 barrels of gas oil 10 ppm
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sulphur from Winson Oil Trading (Pte) Limited (WOT). Delivery took place
without production of the original bills of lading and was completed on 21
February 2020. On 3 March 2020, HLT applied to the bank for a letter of
credit in favour of WOT and such letter of credit was opened. The Court
concluded that there was a triable issue as to whether the carrier's mis-
delivery had caused loss to the bank after noticing that the application for
issuance of letter of credit was made after the date of the discharge, and that
this was noticeable from the date of application for issuance of letter of
credit. Paragraphs 49 & 50, in relevant part, are as under:
“49. In my judgment, whether the plaintiff looked to
the Bills of Lading as security for its financing of HLT's
purchase of the Gasoil Cargo is a triable issue. In turn, at
least two triable issues of fact arise, which are material to
the question of whether the plaintiff looked to the Bills of
Lading as security.
(a) Whether the plaintiff had knowledge that the
Gasoil Cargo had already been discharged into HLT's
tanks at UT, at the time it accepted HLT's LC application;
and
(b) What the specific financial arrangements
between the plaintiff and HLT were.
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Whether the plaintiff had knowledge that the Gasoil
Cargo had already been discharged into HLT's tanks at
UT
50. The facts of this case are rather peculiar in that
this is not a typical situation where it is immediately
obvious that a bank has financed the purchase of goods,
and finds itself having to look to the goods as security
when its customer has failed to make payment of the loan.
Rather, it is certainly arguable that, by the time the
plaintiff agreed to finance the purchase of the Gasoil
Cargo from WOT, it knew, or at least ought to have
known, that the Gasoil Cargo was already in the custody
of HLT. ”
It is noticeable from the above paragraphs that the conclusion of the Court
turned largely on the fact that the letter of credit was opened subsequent to
the discharge and that, therefore, the case was atypical. By contrast, in the
case at hand, the bills of lading were made to the order of BCGE on 21 May
2020, which clearly preceded the date of discharge.
44. Galaxy Marine also relied heavily on the judgment of the Queen's
Bench Division and the Court of Appeal in The Sienna. In The Sienna, the
claim for damages was made by Unicredit Bank A.G. for alleged losses
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caused by mis-delivery by Euronav N.V., the owner of the vessel Sienna. In
that case, the bill of lading was issued by the owner of the vessel to BP Oil
International (BP), which was the Charterer of Sienna. The cargo was sold
by BP to GP. Between 26 April 2020 and 2 May 2020, the cargo was
discharged to another vessel by ship to ship transfer without production of
the original bill of lading. At the time of delivery, BP was the lawful holder
of the bill of lading, which was endorsed in favour of the Unicredit Bank
A.G. subsequently on 7 August 2020. In the factual context of the bank not
being the lawful holder of the bill of lading at the time of discharge, on the
basis of the evidence adduced, including particularly the evidence of
Ms.Diana Bodnya on behalf of the bank, the Court concluded that it was
inherent in the financing scheme that the financed cargo would be
discharged without production of the bill of lading.
45. Thus, in contrast to Maersk Tankers and The Sienna, in this case,
the letter of credit was opened by BCGE on condition that the original bill
of lading signed by the Master of the Vessel and made to its order should be
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submitted. The bill of lading was issued by the Master to the order of BCGE
and this was done clearly prior to the admitted dates of discharge of the
cargo. As discussed earlier, Galaxy Marine has failed to place on record
even prima facie evidence that BCGE was aware of the instructions from
GP and Profitable Wealth to discharge the cargo to Chevron at the Horizon
Terminal, Singapore, without production of the original bill of lading.
Indeed, the documents on record indicate that BCGE financed the purchase
of marine fuel from IOCL for onward sale to Aramco on condition that the
bill of lading would be made to its order, and would constitute security.
Whether the mis-delivery was the proximate cause of loss
46. All that remains to be considered is whether a counterfactual
inquiry by way of trial is warranted for purposes of assessing the proximate
cause of loss in the facts and circumstances and, if so, what could be the
scope of such counterfactual inquiry. If the cargo had been delivered to
Aramco without production of the original bill of lading, the counterfactual
inquiry could have been directed at ascertaining whether BCGE would have
consented to such discharge without production of the original bill of
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lading. Given the fact that BCGE undertook the financing with full
knowledge that the purchase by GP was for onward sale of the cargo to
Aramco on open credit of 60 days, there may have been an arguable case for
such counterfactual inquiry in that factual situation. The cargo was,
however, admittedly discharged to Chevron and not to Aramco. Therefore,
any counterfactual inquiry as to whether BCGE would have consented to
discharge the cargo to Aramco without production of the original bill of
lading would be meaningless.
47. Whether a counterfactual inquiry is warranted to assess the
potential response of BCGE if a request for discharge to Chevron without
production of the original bill of lading had been made is considered next.
Before proceeding further, it should be borne in mind that one of the objects
of Order XIII-A of the CPC is to allocate the resources of the public court
system proportionately by enabling cases to be disposed of summarily,
wherever appropriate, and by eschewing a blinkered trial-is-the-only-
method approach to the adjudication of commercial disputes.
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48. Some documents submitted by BCGE assume significance on this
issue. Immediately upon receiving a request from GP for a change in
discharge port, by email of 15 May 2020 from Tatiana Kokina, Transaction
Manager, BCGE to Bhavik Dedia of GP, BCGE stated, in relevant part, as
under:
“Please update us on this change of discharge port as we
have amended just this morning to read Fujairah.
Does the sale to Aramco cancelled?
We will not be able to proceed with any amendment prior
having all information and documents....”
(emphasis added)
By reply email of 15 May 2020 from Mukul Agarwal of GP to Tatiana
Kokina of BCGE, it was stated, in relevant part, as under:
“There is no change to the sales to Aramco.
As per request from the buyer, disport is being changed
from Fujairah to Singapore....”
(emphasis added)
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Thereafter, on receipt of the amended sales contract between GP and
Aramco with the changed discharge port, as an attachment to email of 17
May 2020 from Mukul Agarwal of GP to Tatiana Kokina of BCGE, the
amended letter of credit of 18 May 2020 was issued by BCGE. By email of
15 June 2020, Tatiana Kokina of BCGE requested for Aramco's invoice
and, by reply of even date from Mukul Agarwal of GP, invoice dated 11
June 2020 issued by GP to Aramco was provided to BCGE. All these
documents indicate that BCGE requested for and received confirmation
from GP that the onward sale was to Aramco notwithstanding the change in
the discharge port. In fact, as is evident, even the sales invoice to Aramco
was provided to BCGE and the correspondence relating thereto was
subsequent to the actual dates of discharge to Chevron.
49. Especially in the light of the above evidence, in order to justify
the conduct of a trial for purposes of a counterfactual inquiry, there should
be at least prima facie contra evidence that GP had informed BCGE that it
was intending to or had instructed Galaxy Marine to discharge the cargo to
Chevron without production of the original bill of lading. In spite of being
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provided an opportunity to place on record all material evidence, Galaxy
Marine has failed to place on record any evidence that BCGE was put on
notice directly or even indirectly in the form of a reference thereto in the
communications from GP or even Profitable Wealth to Galaxy Marine. In
the absence of even prima facie evidence in such regard, in my view, there
is no justification for such counterfactual inquiry. Put differently, there is no
real prospect of Galaxy Marine succeeding in such counterfactual inquiry
and the only reasonable inference is that BCGE would have answered
resoundingly in the negative, if requested for consent or permission in
relation to the discharge to Chevron without production of the original bill
of lading. Hence, the mis-delivery was the proximate cause of loss arising
out of the breach of contract of carriage, and no counterfactual inquiry is
warranted in this regard.
Previously furnished security and implication thereof
50. The next issue to be examined is whether the application is liable
to be rejected in view of security having been furnished previously. Under
Rule 7 of Order XIII-A CPC, the Court may make a conditional order if it is
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possible but improbable that the defence may succeed. Such conditional
order could be in the form of deposit of some money in Court, provision of
security and the like. For reasons discussed above, even the defence relating
to the necessity for a counterfactual inquiry as to whether, if requested prior
to delivery of cargo to Chevron, the applicant would have consented thereto
even without production of the original bill of lading is not tenable in light
of the pleadings and evidence on record. In other words, Galaxy Marine has
no real prospect or even possibility of successfully defending the claim.
Once such conclusion is drawn, unless it is established that there is a
compelling reason for the claim not to be disposed of without adducing oral
evidence, a summary judgment should follow as per Rule 3 of Order XIII-A
of CPC. Since Galaxy Marine has not placed even prima facie evidence to
justify a trial, as held in ICI Chemicals & Polymers Ltd v TTE Training Ltd
[2007] EWCA Civ 725, it is not enough to contend that something may
come up in trial as a defence in an application for summary judgment. The
contention of Galaxy Marine that the alleged consent or knowledge of
BCGE about discharge to Chevron may only be discovered in course of trial
is, effectively, a contention that a trial should be held because something
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may come up in course thereof, and this contention cannot be countenanced.
In this regard, it should also be noticed that the Division Bench of this Court
concluded in Syrma Technology that the onus lies on the respondent in a
summary judgment application to establish that there is a compelling reason
to lead oral evidence as per the second limb of Rule 3 of Order XIII-A CPC.
Hence, Galaxy Marine has also failed to establish that there is any other
compelling reason to permit evidence to be adduced with regard to the
alleged counterfactual issue.
Quantum of damages
51. In the facts and circumstances outlined above, BCGE is entitled to
summary judgment. This leads to the question of quantum. The documents
on record disclose that the applicant financed the purchase of marine fuel by
GP from IOCL by opening a letter of credit in favour of IOCL for a sum of
USD 6,050,000. Such financing was in relation to a purchase for onward
sale to Aramco. As a condition for financing, the invoice raised by GP on
Aramco was required to be provided to BCGE. The said invoice is dated 11
June 2020 for the value of USD 6,705,357.38. In an action for damages in
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respect of mis-delivery, the measure of damages would be the fair value of
the cargo at the time of intended delivery. Therefore, evidence of such fair
value would be a material consideration. The applicant has relied upon the
above mentioned invoice as indicative of the fair value of the cargo at the
relevant time.
52. In addition, BCGE has placed on record the Standard and Poor
Global Platts Report containing the mean of Platts Price as on 10 June 2020.
The mean of Platts Price is a daily index inter alia of the price of marine
fuel at the Port of Singapore and on 10 June 2020, the price was USD
246.726 per MT. If such unit price were to be the basis for computation for
the total quantity of cargo, the value would be USD 833,894.66. The sales
contract between GP and Aramco provided for a discount of US Dollar
13.50 per metric tonne on the mean of Platts price. Galaxy Marine has not
adduced any evidence with regard to the fair value of the cargo at the
relevant time. In that factual context, since the invoice value forming the
basis of the claim in this application is lower than the mean of Platts price
for the relevant period, the said invoice value forms an acceptable basis to
compute the measure of loss.
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53. Effectively, BCGE's suit claim is liable to be decreed by summary
judgment. As regards interest, in the absence of an agreed rate of interest, a
reasonable rate should be fixed. BCGE is a bank headquartered in Geneva,
Switzerland. The Swiss National Bank sets the benchmark interest rates.
Such benchmark interest rates have never exceeded 3.5% in the last 25
years. Even allowing for a reasonable net interest margin, interest at 6% per
annum would constitute a reasonable rate of interest. Therefore, nothing
further survives for adjudication. As the successful party, BCGE is entitled
to costs. BCGE paid a sum of Rs.49,11,961/- as court fees and Galaxy
Marine is liable to pay this sum. In addition, BCGE is entitled to reasonable
lawyer's fees and other expenses. Because the suit is being disposed of at
the pre-trial stage, this is capped at Rs.10,00,000/-. Thus, Galaxy Marine is
liable to pay an aggregate sum of Rs.59,11,961/- as costs to BCGE.
54. For reasons set out above, this application is allowed by issuing a
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decree on summary basis on the following terms:
(i) The 1st defendant is directed to pay the plaintiff the sum of USD
6,705,357.38 with further interest thereon at 6% per annum from the date of
filing of the suit until realization.
(ii) The 1st defendant is also directed to pay a sum of Rs.59,11,961/-
as costs to the plaintiff.
(iii) Subject to the right of the contesting parties to apply for payment
of the above amount from the proceeds of the bank guarantee, the 1st
defendant shall renew and keep alive the bank guarantee provided earlier as
security until the above amounts are realised by the plaintiff from the 1 st
defendant.
09.07.2025
Index : Yes/No
Internet : Yes/No
Neutral Citation : Yes/No
kj
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SENTHILKUMAR RAMAMOORTHY,J.
kj
Pre-delivery order in
09.07.2025
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