* IN THE HIGH COURT OF DELHI AT NEW DELHI + % M/s SAWHNEY BROS. CS(OS) No.1/1982 7th March, 2018 ..... Plaintiff Through: Mr. Rajan Sabharwal, Advocate. versus HONGKONG SHANGHAI BANKING CORPORATION & ORS. ..... Defendants Through: Mr. Dalip Mehra and Ms. Shikha Mehra, Advocates for D-1. Ms. Sunita Dutt, Advocate for D-13 (Insurance Company). CORAM: HON’BLE MR. JUSTICE VALMIKI J.MEHTA To be referred to the Reporter or not?. VALMIKI J.
MEHTA, J (ORAL) 1. This is a suit filed by the plaintiff M/s Sawhney Brothers, a partnership firm, seeking recovery of Rs.70 lacs. There are a total of fourteen defendants in the suit. I need not narrate all the causes of action against all the fourteen defendants, inasmuch as, the counsel for the plaintiff seeks now a decree only against the defendant nos. 2 to 8 i.e the partnership firm of defendant no.2/M/s Orient Enterprises with its partners being defendant nos. 3 to 5, and the partnership firm of CS(OS) No.1/1982 Page 1 of 24 defendant no.6 known as M/s Bentrex & Company with its partners being defendant nos. 7 and 8.
2. I may note that this suit is one of the eight connected suits. Out of the eight suits, two suits being CS (OS) No.1417/1979 and CS (OS) No.672/1980 were disposed of earlier whereas the other five suits were disposed of in terms of the judgments passed by this Court on 16.2.2018 and 19.2.2018, with the main judgment being judgment dated 16.2.2018 in CS (OS) No.922/2004 titled as Metro Exporters Private Limited Vs. United India Insurance Company Limited. Paras 1 and 2 of the judgment dated 16.2.2018 in CS(OS) No.922/2004, and which also contain details of eight suits and the disposal of the two earlier suits read as under:-
""1. This suit being CS(OS) No.922/2004 is filed by the plaintiff Metro Exporters Pvt. Ltd. The sole defendant in the suit is United India Insurance Co. Ltd. By the suit plaintiff seeks a money decree for a total amount of Rs.79,38,613.02/-, i.e principal amount of Rs.76,70,056/- with interest at 18%. The present suit was originally filed in the Mumbai High Court but was thereafter transferred to this Court in terms of the order of the Supreme Court dated 23.1.2004 in Transfer Petition (Civil) Nos. 6 and 7 of 2001. This suit was transferred to this Court because the issues in this suit were connected with respect to various other suits which were pending in this Court. All the suits pertain to shipping of goods Ex-Singapore to different ports in India by two Ships OH DAI and MV AVERILLA. Both these ships allegedly sank, resulting in as per the plaintiffs in each of the suits, loss of the cargo. Therefore, various suits were filed by various owners/consignees of the goods which were shipped under the aforesaid two ships. The suits which are before this Court and which have come up for decisions are 8 in number, and details of the same are as under:-
"CS(OS) No.1/1982 Page 2 of 24 Sl. No.1. Case No.CS(OS) No.1408/1979 2.
3. 4.
5. 6.
7. 8. CS(OS) No.1409/1979 CS(OS) No.1417/1979 CS(OS) No.672/1980 CS(OS) No.738/1980 CS(OS) No.739/1980 CS(OS) No.1/1982 CS(OS) No.922/2004 Title Elephanta Oil Vanaspati Industries Ltd. Vs. The New India Assurance Co. Ltd. & Anr. Elephanta Oil & Vanaspati Industries Ltd. Vs. The New India Assurance Co. Ltd. & Anr. M/s. Jain Export P. Ltd. Vs. New India Assurance Co. Ltd. Indo Foreign Commercial Agency Vs. National Insurance Co. & Ors. Canara Bank & Anr. Vs. Oriental Insurance Co. Ltd. Canara Bank & Anr. Vs. Oriental Fire & General Ins. Co. Ltd. M/s. Sawhney Bros. Vs. Hong Kong Shanghai Banking Corpn. & Ors. Metro Exporters P. Ltd. Vs. United India Insurance Co. Ltd.
2. The two suits being CS(OS) No.1417/1979 titled as M/s. Jain Export P. Ltd. Vs. New India Assurance Co. Ltd. and CS(OS) No.672/1980 titled as Indo Foreign Commercial Agency Vs. National Insurance Co. & Ors., have been disposed of by this Court. CS(OS) No.672/1980, after arguments was withdrawn by the plaintiff and this Court passed a detailed order on 12.2.2018 giving liberty in accordance with law to the plaintiff in the said suit to seek adjustment against its bankers who had debited the plaintiff in that suit with respect to payment under the letter of credit issued by the plaintiff's banker in favour of the foreign seller. Suit being CS(OS) No.1417/1979 titled M/s. Jain Export P. Ltd. Vs. New India Assurance Co. Ltd. was dismissed in terms of the judgment dated 6.2.2018 noting that the basic document which was required to be filed by the plaintiff in the suit to seek the insurance claim against the insurance company was the insurance policy but the insurance policy containing the terms was not filed and only the cover note was filed, and consequently it could not be known as to what was the loss which was covered under the insurance policy in the said CS(OS) No.1417/1979 and therefore once it is not known as to what was the loss which was covered under the insurance policy, the suit claiming loss under the insurance policy could not succeed and hence was dismissed."
3. The suit CS (OS) No.922/2004 titled as Metro Exporters Private Limited Vs. United India Insurance Company Limited was dismissed in terms of the judgment dated 16.2.2018 holding that in fact goods were never shipped by the foreign seller/M/s Bentrex & CS(OS) No.1/1982 Page 3 of 24 Company (defendant No.6 in this suit) and in fact a fraud was sought to be played upon various persons including the insurance company. In the judgment dated 16.2.2018 in CS (OS) No.922/2004 this Court has given detailed findings observing that owners of M/s. Bentrex & Company and their conspirators were convicted by the court at Singapore. It has been held in that judgment dated 16.2.2018 that the insurance company is not liable because the goods which were subject matter of the contract, bill of lading etc never existed and were never brought into the docks of Singapore and were not further shipped on the two ships in question being MV AVERILLA and OH DAI. I am stating these facts only as a matter of narration in this suit because the judgment dated 16.2.2018 is a detailed judgment dismissing the suit by giving the appropriate findings under the relevant issues.
4. In the present suit, the plaintiff partnership firm is seeking relief against the defendant nos. 2 to 5, and from whom plaintiff had got assigned in its favour the contract which the defendant no.2 had entered into with the defendant no.6/M/s Bentrex & Company. The contract in question between the plaintiff and defendant no.2 (with partners of defendant no.2 firm being the CS(OS) No.1/1982 Page 4 of 24 defendant nos. 3 to
5) is dated 26.7.1979 and this contract was for supply of Cloves inasmuch as the original contract was also for supply of Cloves between the defendant no.6/seller and the defendant no.2/buyer. 5.(i) Two causes of action have been pleaded on the basis of which decree is claimed by the plaintiff against the defendant nos. 2 to 8. First head and cause of action against the defendant nos. 2 to 5 with whom the plaintiff firm had a contract was that in this contract dated 26.7.1979/Ex.PW1/1, it was the duty of the defendant nos. 2 to 5 that there in fact existed a valid contract of supply between defendant nos. 2 to 5 on the one hand as buyers and defendant nos. 6 to 8 on the other hand as sellers with respect to Cloves. Since the Cloves which were subject matter of the contract between defendant nos. 2 to 5 as buyers and defendant nos. 6 to 8 as sellers were never shipped, and shipment of which Cloves is an obligation of the defendant nos. 2 to 5 to the plaintiff under the contract dated 26.7.1979, therefore, the plaintiff seeks a money decree under the present suit against the defendant nos. 2 to 5 for breach of the contract of Cloves not being shipped and supplied by defendant nos. 6 to 8. The defendant nos. 2 to 5 are also CS(OS) No.1/1982 Page 5 of 24 sued on the second cause of action of their being involved in conspiracy with defendant nos. 6 to 8 for defrauding the plaintiff. This act of defrauding and cheating of the plaintiff is that defendant nos. 2 to 5 knew and were involved in a conspiracy with the defendant nos. 6 to 8 that in fact the subject goods being Cloves were never to be supplied and fake bills of lading etc were to be prepared showing shipment although no actual shipment of the Cloves took place. (ii) The cause of action of the plaintiff against the defendant nos. 6 to 8/sellers is that though these defendant nos. 6 to 8 have received monies in USD totaling to Indian rupees equivalent of Rs.40 lacs, but since the plaintiff has not received quid pro quo from the defendant nos. 6 to 8/sellers because no goods have been delivered to the plaintiff, therefore plaintiff seeks return of the consideration on account of the defendant nos. 6 to 8/sellers not supplying the goods/Cloves and still keeping the consideration received of the sum of Rs.40 lacs.
6. Defendant nos. 2 to 5 have contested the suit by filing their written statement. They have denied that they are guilty of breach of contract dated 26.7.1979/Ex.PW
entered into by the defendant CS(OS) No.1/1982 Page 6 of 24 no.2/partnership firm with the plaintiff partnership firm. Defendant nos. 2 to 5 have also denied that they are guilty of any fraud or conspiracy or collusion with the defendant nos. 6 to 8 because the goods in question were really never meant to be shipped under the subject contract firstly to the defendant no.2 and as assigned to the plaintiff as the assignee of the defendant no.2. Defendant nos. 2 to 5 have also denied that they are guilty of breach of contract dated 26.7.1979/Ex.PW
and therefore it is denied by defendants nos. 2 to 5 that plaintiff under the causes of action pleaded can get a decree in the present suit. I may note that though the defendant nos. 2 to 5 have led evidence, however none has appeared for the defendant nos. 2 to 5 at the stage of final arguments.
7. The following issues were framed in the suit on 1.4.2003:-
"“1. Whether this Court has jurisdiction to entertain the present Suit 2.
3. 4.
5.
6. against Defendant No.1?. OPP Whether the Suit is bad for multifarious-ness and misjoinder of parties as well as cause of action?. OPD Where there is any privity of contract between the Plaintiff and Defendant No.1?. OPP & OPD1 Whether the Plaintiff is a registered partnership firm?. If not, its effect?. OPP Whether the Suit is being instituted and the Plaint signed and verified by the person competent to do so?. If not, its effect?. OPP Whether the fraud alleged in the Plaint has been committed?. If so, by whom and to what effect?. OPP CS(OS) No.1/1982 Page 7 of 24 Whether any of the Defendants is guilty of negligence?. If so, to what extent and to what effect?. OPP Whether the documents were rejected by Defendant No.14 within the reasonable time and, if so, for valid reasons?. OPP & D-14 Whether the Letter of Credit could have been amended unilaterally by the Plaintiff or Defendant No.14?. If so, to what effect?. OPP7 8.
9.
10. What was the effect of the alleged unilateral amendment of the Letter of Credit and its subsequent withdrawal by Defendant No.14?. Onus on parties 11. Whether the goods as shown in the Mate‟s Receipt were not loaded on board the Vessel „ODHAI‟ as set out in the Mate‟s Receipt issued by the Chief Officer of the Ship?. OPP12 Whether the Policy of Insurance was not in full force and effect when the same became total loss by the perils insured against on account of the sinking of the vessel ODHAI?. OPD13 Whether the Insurance Policy is not valid for the reasons set out in 14. Whether the conviction of Defendant Nos. 2 to 5 and 6 to 11, as alleged by the Plaintiff, has any effect on the present Suit qua Defendant No.1?. If so, to what effect?. OPP15 Whether the Plaintiff has paid the appropriate Court Fee?. OPP16 Whether the Suit is barred by the principles of res judicata because of the dismissal of the Suit of Defendant No.14, being Suit No.509/80?. OPD Relief."
17. the Preliminary Objection No.1?. OPD8 I may note that the contest in the suit at the stage of final arguments is by the defendant no.1/Hong Kong Shanghai Banking Corporation and defendant no.13 which is Oriental Fire and General Insurance Company Limited. Counsel for the plaintiff however stated that plaintiff does not seek any decree against the defendant No.1 and 13 and the plaintiff now only prays for a decree against the defendant nos. 2 to 8, and as already recorded above. This Court therefore will have to decide only those issues so as to fasten liability upon the CS(OS) No.1/1982 Page 8 of 24 defendant nos. 2 to 8. Out of the issues framed, the issue nos. 4,5,6, 11 and 17 and other issues would either stand decided in favour of the plaintiff or would be held to be not pressed on behalf of the plaintiff. ISSUE NOS. 4 AND59. Plaintiff is a partnership concern. Plaintiff has filed its registration under Section 69 of the Partnership Act, 1932. Certificate of registration has been proved as Ex.PW1/55. Suit plaint is signed by Sh. T.S. Sahni who is the managing partner of the plaintiff firm and the name of Sh. T.S. Sahni (Sh. Trilok Singh Sahni) has been shown as a partner of the plaintiff firm in the registration certificate. Accordingly, issue nos. 4 and 5 are decided in favour of the plaintiff holding that the suit is validly filed. ISSUE NOS. 6, 11 AND1710. These issues are connected and are decided together. Under these issues the two heads of causes of action will be decided of entitlement of the plaintiff to the decree against defendant nos. 2 to 5 for breach of contract and also on account of defendant nos. 2 to 5 being guilty of collusion, and conspiracy with defendant nos. 6 to 8 for defrauding and cheating the plaintiff. The second cause of action of CS(OS) No.1/1982 Page 9 of 24 defendant nos. 6 to 8 being liable on account of having received moneys under the contract but not having supplied goods to the plaintiff under the contract will also be decided under these issues. In the present case, the alleged documents of shipment of the goods on the basis of which defendant nos. 6 to 8 claim shipment of the goods Ex-Singapore to Mumbai are the bill of lading (Ex.PW1/19), invoice (Ex.PW1/21) and weight certificate (Ex.PW1/20). These documents as per the case of the plaintiff are fake documents because goods were never shipped by the defendant nos. 6 to 8 Ex-Singapore to Mumbai. I may note that in this suit, common evidence with the other seven suits was led of the insurance company in terms of the order dated 23.1.2014 and this is recorded in para 3 of the judgment dated 16.2.2018 in CS (OS) No.922/2004 and this para 3 of that judgment reads as under:-
"“3. The present suit is the third suit out of the 8 suits which is being decided. I may note that in all the 8 suits there are a total of 4 Insurance Companies who have issued the insurance policies being United India Insurance Co. Ltd. (defendant in the present suit), New India Assurance Co. Ltd., Oriental Insurance Co. Ltd. and National Insurance Co. Ltd. All these four Insurance Companies had insured the goods which were shipped through the two ships OH DAI and MV AVERILLA. Out of the eight suits, the plaintiffs in the suits CS(OS) Nos. 1408/1979, 1409/1979 and 1417/1979 are all companies belonging to the Jain Shudh Vanaspati Group. Plaintiff in the present suit being Metro Exporters Pvt. Ltd. is the company which is not a part of the Jain Shudh Vanaspati Group and which companies of the Jain Shudh Vanaspati Group are owned by the Jain CS(OS) No.1/1982 Page 10 of 24 brothers Sh. Vinod Kumar Jain and Sh. Raj Kumar Jain. One another aspect which has to be noted is that an order was passed in all the suits on 23.1.2014 whereby evidence which was led on behalf of the insurance companies was to be treated as common evidence for all the eight suits. Suit CS(OS) No.1417/1979 was treated as a lead case in terms of the order dated 23.1.2014. As already stated above this suit CS(OS) No.1417/1979 already stands dismissed in terms of the judgment dated 6.2.2018. With the aforesaid preliminary statements let us turn to the facts of the present suit.” 11. Since the issue with respect to goods not having been shipped will be fully covered by the findings given in the judgment dated 16.2.2018 in CS(OS) No.922/2004, the said findings are reproduced below and adopted for the purpose of judgment in the present suit. Paras 8 to 22 of this judgment read as under:-
"“Issue Nos. 2,5,8,10 and 11 8. Issue nos. 2, 5, 8, 10 and 11 can be decided together inasmuch as all these issues pertain to whether insurance policies did not come into existence in the sense that no claim under the insurance policies can be filed because goods which were subject matter of the insurance policies never existed and were never shipped by the foreign seller M/s. Palmex Enterprises to the plaintiff. On behalf of the plaintiff, it is argued that plaintiff has proved the 9. factum of shipment of goods because the Bill of Lading dated 1.9.1979 bearing No.SB-15 has been proved and exhibited as Ex.PW1/31. It is argued that once plaintiff proves the Bill of Lading, plaintiff is said to have discharged its burden of proof of goods having been shipped by the seller M/s. Palmex Enterprises to the plaintiff/buyer. This argument is sought to be buttressed by the plaintiff by pleading that plaintiff has proved the Mate's Receipt of the shipping company of the ship OH DAI as Ex.PW1/14 and which shows that the said goods were received on board, the ship OH DAI for transportation to Mumbai. Reference by plaintiff is also invited to the Tally Sheets Ex.PW1/28 issued by the same agents of the shipping company Union Ocean Shipping (PTE) Limited so as to show that goods were shipped. It is argued that once these documents i.e Bill of Lading, Mate‟s Receipt and Tally Sheets are taken together, the plaintiff has to be held to have discharged the burden of proof of shipping of the CS(OS) No.1/1982 Page 11 of 24 goods. It is also argued on behalf of the plaintiff that the fact that the insurance policies refer to the fact that insurance policies cover the goods which have been shipped, therefore for this additional reason this Court must hold that the goods which are subject matter of contract between the plaintiff and M/s. Palmex Enterprises were shipped Ex-Singapore to Mumbai via the ship OH DAI. Plaintiff also draws the attention of this Court to the oral depositions made in the examination-in-chief of the plaintiff‟s witnesses with respect to shipping of the goods Ex-Singapore to Mumbai by the ship OH DAI under the subject Bill of Lading. It is also argued on behalf of the plaintiff that the defendant/insurance company has led no substantive evidence to show that goods were in fact not shipped or that the goods which were the subject matter of the policies did not come into existence and were not shipped, and it is argued that the onus had shifted upon the defendant/insurance company to prove that goods were not shipped by M/s. Palmex Enterprises to plaintiff once plaintiff had proved Bill of Lading, Mate‟s Receipt and Tally Sheets.
10. upon the following judgments:-
"On behalf of the plaintiff, in support of its case, reliance is placed 12 SCC673(i) Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd. (2006) (ii) Shaw Wallace and Company Limited Vs. Nepal Food Corporation and Others (2011) 15 SCC56 (iii)Ellerman and Bucknall Steamship Company Ltd. Vs. Sha Misrimal Bherajee AIR1966SC1892 Plaintiff has also placed reliance upon the provisions of the Indian Bills of Lading Act, 1856. On behalf of the defendant/insurance company, it is argued that the 11. entire arguments urged on behalf of the plaintiff are misconceived because existence of a Bill of Lading or a Mate‟s Receipt or Tally Sheets is not sufficient evidence to discharge the burden of proof upon the plaintiff of the shipment of goods because of the provisions of the Commercial Documents Evidence Act, 1939 (hereinafter referred to as „the Act‟) and that the facts of the present case show that grave fraud is sought to be perpetrated upon the defendant/insurance company. It is argued that the defendant/insurance company has led evidence of Captain Jose Varghese Paloccaran who was working at Palco Surveyors and Adjustors Limited and who has deposed with respect to Criminal Investigation Department Division of Singapore conducting investigations leading to the owners of the ship OH DAI and MV AVERILLA being convicted. Captain Jose Varghese Paloccaran has deposed with respect to making inquiries from the sellers M/s. Bentrex and Company and M/s. Palmex Enterprises and as to how he was stonewalled by the employees of these companies thereby arousing suspicion. Captain Jose Varghese Paloccaran also deposed that there was doubt with respect to sinking of the ships as all the employees of the ship were found to be residing in their houses. Captain Jose Varghese CS(OS) No.1/1982 Page 12 of 24 Paloccaran has also deposed with respect to the factum of non-receipt of the goods because of non-existence of the lorry/truck passes with respect to lorries/trucks containing goods entering the custom/port/dock area authority of Singapore. Captain Jose Varghese Paloccaran has also deposed of remaining in touch with the police personnel including Sh. Abu Bakar Moosa who has deposed as CW-2 on behalf of the defendant/insurance company. Captain Jose Varghese Paloccaran has deposed with respect to the lengthy trial taking place in the Singapore Court which heard the details of how the plan had been chalked out to play a massive fraud upon the insurance companies and banks thereby defrauding them of huge amounts running into crores of rupees and how the Singapore Court concluded with the accusations leveled against all the accused persons who were duly proved to be faking Bills of Lading, shipping documents without actual cargo, and so on showing that no goods were ever loaded on ships OH DAI and MV AVERILLA. Captain Jose Varghese Paloccaran also deposed with respect to yellow water being shipped instead of palm oil and rice bags being shipped as bags containing cloves of Zanzibar origin and that water drums and tins were passed off as brass scrap or copper scrap etc. I may note that in the present suit the goods are not of brass scrap 12. or copper scrap or palm oil or cloves because the goods in question which are subject matter of the present suit and insurance policy is 800 M.T. of PVC Resin Suspension Grade, however Captain Jose Varghese Paloccaran deposed with respect to palm oil, cloves, copper scrap, brass scrap which are subject matter of the other suits, and that Para 11 of the affidavit of Captain Jose Varghese Paloccaran specifically uses the expression „etc‟ after the words palm oil, copper scrap. On behalf of the defendant/insurance company it is argued that the deposition of Captain Jose Varghese Paloccaran is also with respect to the subject goods and which becomes clear from the question put by plaintiff itself in the cross- examination of Captain Jose Varghese Paloccaran on 25.7.2014 and which question when put by the plaintiff was replied by Captain Jose Varghese Paloccaran by specifically referring to 800 pallets of PVC resin and Captain Jose Varghese Paloccaran deposed that he had made enquiries with the port authorities itself with respect to 800 pallets of PVC Resin which is subject matter of the present suit.
13. On behalf of the defendant/insurance company, reliance is also placed upon the evidence led of Sh. Abu Bakar Moosa as CW-2. Sh. Abu Bakar Moosa was working in the capacity of the Deputy Head and later on Head of the Crime Division in the Criminal Investigation Department of Singapore during the years 1979 to 1983. Sh. Abu Bakar Moosa has deposed with respect to conspiracy hatched between Sh. Bhagwan Singh Aujla, Sh. Manmohan Singh Aujla of M/s. B.S. Aujla & Co. Pte. Ltd., M/s. Bentrex & Co. and M/s. Palmex Enterprises with respect to scuttling and sinking of the ships and preparing false documentation showing CS(OS) No.1/1982 Page 13 of 24 shipment of the goods which were in fact never shipped. Sh. Abu Bakar Moosa has referred to the investigations conducted by various persons including himself and thereafter submitting their investigation reports to the Public Prosecutor office in Singapore giving the entire details of the conspiracy, conspirators and co-conspirators. Sh. Abu Bakar Moosa has also deposed with respect to the proceedings in the Court at Singapore and as to how Sh. Bhagwan Singh Aujla, Sh. Manmohan Singh Aujla, Sh. Isaac Paul Retnam and Sh. Rethinasamy were handed over different sentences for their part of the conspiracy in terms of the judgment dated 31.3.1983. It is accordingly argued on behalf of the defendant/insurance company that merely because insurance policies were issued by it would not mean in the facts of the present case that plaintiff has been successful in proving that goods which are subject matter of the insurance policies were in fact shipped and once the goods which were subject matter of the insurance policies never existed and were never shipped, hence the insurance policies did not come into operation for plaintiff to be compensated for the alleged loss of goods which were subject matter of the insurance policies.
14. The crucial issue to be decided in the present case is as to whether the goods which are subject matter of the insurance policies ever came into existence and ever commenced their journey of shipment Ex-Singapore from M/s. Palmex Enterprises to Mumbai on the ship OH DAI. I may note that there is a statute called as the Commercial Documents Evidence Act. This Act has in its Schedule two parts. As per Section 3 of this Act with respect to documents which are subject matter of Part I of the Schedule, a Court „shall presume‟ that the documents stated in Part I of the Schedule were so made and the statements contained therein are accurate. With respect to documents which are stated in Part II of the Schedule instead of „shall presume‟ so far as Part I of the Schedule is concerned, it is only „may presume‟ so far as documents which are stated in Part II of the Schedule of the Act. The Bill of Lading, Mate‟s Receipt and Tally Sheets which are proved by the plaintiff will fall under Entries 15 and 18 of Part II of the Schedule of the Act i.e court „may presume‟ with respect to the validity of these documents. Therefore once Court has to only „may presume‟ the factum of the Bill of Lading, Mate‟s Receipt and the Tally Sheets having been issued by the appropriate authority and the Court may only presume accuracy of the contents of these three documents, in the facts of the present case this Court refuses to hold that the Bill of Lading, Mate‟s Receipt and the Tally Sheets should be taken as accurate with respect to statements contained therein. In fact if the plaintiff wanted some benefit of the Part II of the Schedule of the Act, then, the plaintiff should have filed documents which are subject matters of Entries 1, 3, 4, 5, 7, 14 and 16 of Part II of the Schedule because it is these documents stated in these entries which will show that goods in fact came within the dock area or port area or the customs area and coming of the goods in such areas CS(OS) No.1/1982 Page 14 of 24 to the custom/port/dock area is a pre-condition and sine qua non before loading the goods on to the ships and with respect to which loading a Bill of Lading is issued. In fact, the plaintiff was duty bound to file documents under Entry 19 in the Part I of the Schedule of the Act which talks of a receipt of payment of custom duty issued by the custom authorities and which would have shown that goods which are subject matter of the insurance policies and the shipment did come into existence because it is when custom duty is paid to the custom authorities would the goods have been shown to be entered the custom area in the concerned port at Singapore.
15. At this stage, it will be necessary to draw cross-reference to the deposition of Captain Jose Varghese Paloccaran who specifically deposed that as per the process in the port at Singapore, lorries/trucks which bring the goods from outside the said custom/port/dock area, then in such cases passes are issued with respect to the lorries/trucks showing entry into the custom/port/dock area and admittedly there are no documents before this Court in the form of those lorry/truck receipts to show that the goods which are subject matter of the insurance policies ever had reached the custom/port/dock area in the port at Singapore. There are also various very curious aspects and which this Court is 16. forced to note. It is surprising as to why the plaintiff/buyer has only sued the insurance company but has not sued the foreign seller M/s. Palmex Enterprises or the shipping company which owned the ship OH DAI. Counsel for the plaintiff argued that when the suit was filed no payment was made under the letter of credit to the foreign seller and therefore the foreign seller was not sued as a defendant in the suit but it is conceded that the foreign seller was in fact paid during the pendency of the suit but even thereafter the plaintiff did not amend the suit to add the foreign seller M/s. Palmex Enterprises as a defendant in this suit for seeking of the money decree against M/s. Palmex Enterprises on the ground that M/s. Palmex Enterprises has received the value of the goods but plaintiff has not received the goods. No other independent suit has also been filed by plaintiff against M/s. Palmex Enterprises. In fact besides the plaintiff ought to have sued the seller M/s. Palmex Enterprises, the plaintiff should also have sued the shipping company because now it is clear from the record that shipping company was also part of the fraud and conspiracy because the subject goods never came to be loaded on the ship OH DAI. Therefore it is indeed very curious, strange and suspicious as to why the plaintiff has chosen to file a suit only against the insurance company and the plaintiff has not sued the seller M/s. Palmex Enterprises who has received the price of the goods without delivering the goods and the plaintiff has also not sued the shipping company who has issued the Bill of Lading and which never shipped the goods.
17. Reliance placed on behalf of the plaintiff on the judgments of the Supreme Court is misconceived because in none of these judgments, the CS(OS) No.1/1982 Page 15 of 24 facts existed that with respect to the goods which were subject matter of the Bill of Lading never came into existence and that the Bills of Lading were fake/forged. In all the cases cited before this Court on behalf of the plaintiff the facts show that there was no quarrel with respect to genuineness of the Bills of Lading and shipping of the goods under the Bills of Lading in those cases. Therefore, any observations made by the Supreme Court in the facts of those cases would not assist the plaintiff because in the facts of the present case it is seen that the Bill of Lading is fake and false or putting it in other words in fact no goods were ever loaded on the ship OH DAI with respect to which the subject Bill of Lading was issued and which is proved as Ex.PW1/31.
18. Even the provision of Section 3 of the Indian Bills of Lading Act read with Preamble of the said Act does not in any manner assist the plaintiff because the Preamble and the provision of Section 3 of the Indian Bills of Lading Act with respect to bindingness of the contents of the Bill of Lading as to shipment of the goods is to be taken as final only between the shipping company and the consignees/endorsees and which is also held in the judgments of the Supreme Court referred to by the plaintiff, and it is noted that there is no provision in the Indian Bills of Lading Act nor any observations in any judgments of the Supreme Court cited on behalf of the plaintiff that merely because a Bill of Lading exists, then only for such reason the Court has to necessarily hold that goods which are subject matter of the Bill of Lading were in fact loaded on the ship and it must be held that the journey of shipment of goods commenced and thereby making such goods as being covered under the insurance policies with respect to those goods. I would also like to note that in fact reliance placed by the plaintiff 19. upon the Bill of Lading Ex.PW1/31 does not prove that in fact goods which were sold by the M/s. Palmex Enterprises being 800 pallets of PVC Resin were in fact loaded on the ship OH DAI because the Bill of Lading begins with the expression “said to contain goods”. Obviously such statements are normally found generally in the Bills of Lading because a shipping company does not physically inspect complete details of all the goods which are loaded on the ships which are written in the Bills of Lading. In fact, it is for this reason that normally there is bound to exist a survey report of the goods showing that an approved surveyor has inspected the goods which are subject matter of the consignment contained in the Bill of Lading and it is seen that the plaintiff in the present case has not filed and proved any survey report with respect to the 800 metric pallets of PVC Resin. Therefore in my opinion mere proving of the Bill of Lading etc, besides the fact that a Court only has to „may presume‟ the accuracy of the same, that therefore even if „may presume‟ presumption has to be drawn in favour of the plaintiff, yet in the absence of a surveyor‟s report with respect to the contents of the goods loaded on the ship which are subject matter of the Bill of Lading, it cannot be held that the 800 CS(OS) No.1/1982 Page 16 of 24 metric pallets of PVC Resin which were subject matter of the insurance policies were loaded on to the ship, were shipped or the journey/shipment of the goods which were subject matter of the insurance policies commenced at Singapore from the warehouse of the M/s. Palmex Enterprises firstly to the port then to the ship and thereafter in terms of the ship‟s voyage to the Mumbai port.
20. For all the aforesaid reasons, this Court rejects the case of the plaintiff that goods which are subject matter of the insurance policies were ever shipped by the seller M/s. Palmex Enterprises or that the goods ever at all came into existence which were owned by M/s. Palmex Enterprises and commenced their journey from the warehouse of the M/s. Palmex Enterprises firstly to the port, then to the ship and then via the OH DAI ship to Mumbai port.
21. The aforesaid conclusion with respect to the goods which are subject matter of the insurance policies not coming into existence and not being shipped also has to be held against the plaintiff because it is very curious that plaintiff has made no efforts to summon or seek from the seller M/s. Palmex Enterprises documents with respect to existence of the subject goods in the warehouse of M/s. Palmex Enterprises, then as to how those goods were transported to the port/dock and by which lorries/trucks to the port in Singapore, and as to where are those documents which are subject matter of Entry 19 of Part I of the Schedule of the Act or where are those documents which are covered in Part II of the Schedule of the Act in the Entries 1,3,4,5,7,14 and 16. This Court therefore has no doubt the whatsoever defendant/insurance the insurance policies defendant/insurance company under although the goods which are subject matter of the insurance policies never came into existence and were never brought into a port in Singapore and were never shipped much less through the Bill of Lading Ex.PW1/31.
22. Issue nos.2,5,8,10 and 11 are therefore decided in favour of the defendant/insurance company and against the plaintiff.” to be played upon from claiming the subject amounts that a fraud company by is sought 12. Accordingly, it is held in favour of the plaintiff that no goods were ever shipped by defendant nos. 6 to 8 which were subject matter of the subject bill of lading which has been proved in this case as Ex.PW1/19. CS(OS) No.1/1982 Page 17 of 24 13. In the contract Ex.PW
there is a clear Clause 6 whereby the defendant nos. 2 to 5 undertook to ensure that they would in fact give shipment of the goods from the defendant nos. 6 to 8 as per the contract entered into by defendant nos. 2 to 5 with the defendant nos. 6 to 8 and pursuant to which contract the plaintiff had entered into and got assigned itself rights under its contract dated 26.7.1979 Ex.PW
with the defendant nos. 2 to 5. This Clause 6 of the contract Ex.PW
reads as under:-
"That the 2nd party shall be responsible for the quality of the goods “6. shipped and that the 1st party shall not be in any way effected for short shipment, wrong merchandise, non-shipment and will be entitled for its service charges.” 14.(i) Though, it is contended on behalf of defendant nos. 2 to 5 in their written statement and evidence that defendant nos. 2 to 5 are not guilty of breach of contract however once goods have been found not to be shipped by defendant nos. 6 to 8, and the factum of shipment of goods was very much a contractual issue between defendant nos. 2 to 5 and the plaintiff in terms of Clause 6 of the agreement, therefore, the defendant nos. 2 to 5 are held guilty of breach of the agreement Clause 6 because goods in question were never shipped to the plaintiff. CS(OS) No.1/1982 Page 18 of 24 (ii) I may note that defendant No.2 is a partnership firm of which defendant nos. 3 to 5 are partners and once the defendant No.3 is liable and it is held to be liable through its partner Sh. Ramesh Suri, then every partner of the partnership firm defendant no.2 i.e defendant nos. 3 to 5 would also be liable as liability of the partnership firm as is the liability of the partners as a partnership firm is not a separate legal entity than the partners of the partnership firm. (iii) Therefore issue nos. 6, 11 and 17 are decided in favour of the plaintiff with respect to first cause of action of defendant nos.2 to 5 being guilty of breach of contract entered into with the plaintiff and therefore being liable to pay the decreed amount to the plaintiff and which suit amount is the amount paid by the plaintiff to the defendant nos.6 to 8 through their banker the defendant no.1/Hong Kong & Shanghai Banking Corporation Limited.
15. As regard the second part of the second cause of action as to whether defendant nos.2 to 5 can be held to be guilty of fraud, collusion and conspiracy with the defendant nos.6 to 8, this aspect has to be decided in favour of the plaintiff and against the defendant nos.2 to 5 inasmuch as the plaintiff has filed and proved on record as CS(OS) No.1/1982 Page 19 of 24 Ex.PW1/47 being the judgment dated 9.11.1998 passed by Sh. Dharmesh Sharma, MM, New Delhi convicting Sh. Ramesh Suri/defendant no.3 for fraud and cheating as against the present plaintiff. This judgment dated 9.11.1998 is final and Sh. Ramesh Suri in this suit led evidence in the year 2008 by filing his affidavit by way of evidence but no document has been filed by Sh. Ramesh Suri whose affidavit by way of evidence is Ex.DW2/A that the said judgment Ex.PW1/47 dated 9.11.1998 convicting Sh. Ramesh Suri has been set aside. Therefore once Sh. Ramesh Suri is liable and he admittedly was a partner of the defendant no.2 firm, and that in law a partner acts for and on behalf of the partnership firm, therefore it is held that defendant nos.2 to 5 are to be held guilty of fraud, collusion and conspiracy along with defendant nos.6 to 8 for defrauding and cheating the plaintiff by representing to the plaintiff that goods/Cloves will be shipped although such goods/Cloves were never intended to be shipped by the defendant nos.6 to 8 and that only fake documents such as bill of lading etc were prepared to defraud persons such as the plaintiff in the present suit. This aspect is therefore decided in favour of the plaintiff and against defendant nos.2 to 8 holding these CS(OS) No.1/1982 Page 20 of 24 defendant nos.2 to 8 guilty of fraud and cheating as against the plaintiff and being guilty of collusion and conspiracy for defrauding and cheating the plaintiff. Therefore both the causes of action of defendant nos.2 to 5 being liable on account of breach of contract being Clause 6 of Ex.PW
and defendant nos.2 to 5 being guilty of the defrauding and cheating the plaintiff in collusion and conspiracy with the defendant nos.6 to 8, are decided in favour of the plaintiff, and accordingly plaintiff will be entitled to the money decree given hereinafter in the relief para of this judgment.
16. The next aspect to be considered is as to whether the defendant nos.6 to 8 can be even independently liable even if they are not guilty of collusion and conspiracy with the defendant nos.2 to 5 in defrauding and cheating the plaintiff. The answer to this has to be in favour of the plaintiff because it is an undisputed fact emerging on record, and so confirmed by the counsel for the defendant no.1/bank who has appeared during the course of final arguments, that the defendant no.1 as the banker of the defendant nos.6 to 8 in Singapore received moneys from the plaintiff through its banker being Central Bank of India/defendant no.14 and such moneys of the plaintiff CS(OS) No.1/1982 Page 21 of 24 received by defendant no.1/bank were credited to the account of the defendant nos.6 to 8 through defendant no.1/bank. Therefore plaintiff has proved that plaintiff had issued a letter of credit and which was issued on its request by the defendant no.14/Central Bank of India and whereunder the amounts were paid to the defendant nos.6 to 8 through defendant no.1/bank which negotiated the letter of credit i.e received moneys under the letter of credit from the defendant no.14/Central Bank of India and which amount was thereafter credited by the defendant no.1 in the account of the defendant nos.6 to 8.
17. It has already been decided above that plaintiff has not received goods under the subject contract Ex.PW
and since it is held that defendant nos.6 to 8 have received moneys under the letter of credit, such moneys have been received by the defendant nos.6 to 8 without passing corresponding consideration to the plaintiff in the form of goods. Defendant nos. 6 to 8 have not even returned the moneys received by defendant nos.6 to 8 from the plaintiff. Accordingly in terms of Section 70 of the Indian Contract Act, 1872 the plaintiff is bound to be restituted by the defendant nos.6 to 8 with respect to the moneys received by them from the plaintiff without CS(OS) No.1/1982 Page 22 of 24 supplying goods for the moneys received by the defendant nos.6 to 8 from the plaintiff. Useful reference can also be drawn to Section 64 of the Indian Contract Act and which provides that whenever a contract has been validly rescinded then any benefit received from the rescinded contract by the guilty party to the contract must be restored to the person from whom benefit has been received under the rescinded contract. In the present case contract of the plaintiff with defendant nos.6 to 8 would stand rescinded on account of defendant nos.6 to 8 not having supplied the goods to the plaintiff, and in fact having defrauded and cheated the plaintiff with collusion and conspiracy with the defendant nos.2 to 5, and therefore it is held that the plaintiff is held entitled to a money decree as given below against the defendant nos.6 to 8. RELIEF18 In view of the above discussion and issues being answered in favour of the plaintiff, suit of the plaintiff is decreed for a sum of Rs.39,92,315/- as against defendant nos.2 to 8 jointly and severally being the amount of moneys paid under the letter of credit. In exercise of power under Section 34 CPC, this Court also orders that CS(OS) No.1/1982 Page 23 of 24 the defendant nos.2 to 8 will be liable to pay interest at 12% per annum simple pendente lite and future till payment to the plaintiff. Plaintiff is also held entitled to the costs of the suit as against defendant nos.2 to 8. Decree sheet be prepared. MARCH07 2018 Ib/Ne/AK VALMIKI J.
MEHTA, J CS(OS) No.1/1982 Page 24 of 24