1988 (10) TMI 276 - HC - Companies Law

Summary

Issues Involved:
1. Recovery of money for goods and services supplied to a ship.
2. Agency relationship and liability under the contract.
3. Bar of limitation under the Limitation Act, 1963.
4. Application of Section 15(5) of the Limitation Act, 1963 to foreign corporations.

Detailed Analysis:

1. Recovery of Money for Goods and Services Supplied to a Ship:
The plaintiff filed a suit to recover money for goods and services supplied to a ship owned by the first defendant. The third defendant, acting as an agent for the first defendant, entered into the contract with the plaintiff. The court below found that the first defendant alone was liable under the contract, but the suit was dismissed as it was barred by limitation.

2. Agency Relationship and Liability Under the Contract:
The plaintiff's case was that the contract was made with the third defendant as the agent of the first defendant. Both defendants are corporations incorporated outside India. The court confirmed that the contract was indeed made by the third defendant as an agent of the first defendant, making the first defendant liable under it.

3. Bar of Limitation Under the Limitation Act, 1963:
The suit was filed in 1979, while the cause of action arose between May and June 1974. Prima facie, the suit was time-barred unless saved by Section 15(5) of the Limitation Act, 1963. Defendants 1 and 2 specifically pleaded the bar of limitation and furnished security to secure the release of the vessel.

4. Application of Section 15(5) of the Limitation Act, 1963 to Foreign Corporations:
The critical issue was whether the foreign corporations (defendants 1 and 3) were ever present in India to be considered absent for the purposes of Section 15(5) of the Limitation Act, 1963. The court examined whether these corporations carried on business in India.

The court referred to the Supreme Court decision in T.M. and Co. v. H.I. Trust Ltd., which held that Section 15(5) presupposes that the defendant was at one time present in India and later absent. A corporation is considered resident where its central management and control are exercised. The court concluded that neither the first nor the third defendant carried on business in India. They did not have a fixed place of business or central management and control in India.

The court cited various legal precedents, including De Beers Consolidated Mines, Ltd. v. Howe, and other cases, to emphasize that a corporation's residence is where its real business is carried on. The mere presence of a ship in Indian waters does not constitute carrying on business in India.

Since neither corporation had an office or carried on business in India, they were never present in India and thus never absent. Therefore, Section 15(5) of the Limitation Act, 1963, did not apply, and the suit was barred by limitation.

Conclusion:
The court dismissed the appeal, holding that the suit was barred by limitation and that Section 15(5) of the Limitation Act, 1963, did not apply as the foreign corporations were never present in India. The appeal was dismissed with no order as to costs.