2022 (11) TMI 1361 - SC - Indian Laws

Compensation for mental agony and harassment - Quantum of compensation that the appellant is entitled to receive from the respondents - judgment and order of the National Commission calls for any interference or modification by this Court or not - appellant herein had acted as a beneficiary of the services rendered by respondent Nos.1 and 2 and as such is a consumer within the meaning of Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 - Letter of Credit was not honoured by respondent No.4 and therefore the appellant had to suffer loss due to negligence of the respondent Nos. 1 and 2. HELD THAT - The State Commission had awarded compensation of Rs.13,79,901/- towards loss suffered by the appellant plus Rs.50,000/- towards compensation for mental agony and harassment plus Rs.10,000/- towards cost of litigation. The National Commission, on the other hand, reduced the compensation to Rs.10,000/- only along with an interest at the rate of 9% per annum from the date of filing the complaint till the date of payment - It is also undisputed that the Letter of Credit was for a specific period of time i.e., till 28.02.1999 and was extended till 06.03.1999. The appellant has brought the extension letter to our attention. In the meantime, the documents including the FCR were submitted by the appellant to its bank, namely, Canara Bank for collection of the proceeds from respondent No.4 Bank. In the instant case, the sale of goods was through a FOB contract. FOB contract means a contract Free on Board . By such a contract the seller is to put on board at his own expenses which means this is a contract for sale of goods to be delivered free on board a ship. The buyer must name the ship upon which they are to be delivered and the seller must put them safely on board, meet the cost of doing so and for the buyer s protection, give possession of them to the ship only upon the terms of a reasonable and ordinary bill of lading or other contract of carriage; there the contractual liability of the seller as seller ceases and delivery to the buyer is complete as far as he is concerned. The goods are then at the risk of the buyer, he is responsible for the freight, and subject to the seller reserving the right of disposal, the property passes to the buyer. The price being payable against the bill of lading, they are at the risk of the buyer and he must pay the price on presentment of the bill of lading even if the goods have been lost. Undoubtedly, the appellant herein availed services provided by the respondent Nos. 1 to 3 and respondent No. 4 is a beneficiary of such services, therefore the appellant would fall under the definition of a consumer as is under Section 2(1)(d)(ii) of the Act of 1986. The National Commission in the impugned order has held that it is an admitted position that a mistake was committed by the respondent No.1 while issuing the FCR to the appellant. The State Commission has based its decision on the said reasoning. When it is admitted that a mistake was committed by the respondent No.1, it is not correct to say that the said mistake was not noticed by the appellant while forwarding the documents to its bank and that the appellant should have been more vigilant. It would be incorrect to now say that the appellant should have exercised due diligence in that regard. The National Commission has categorically held that there was deficiency in rendering services by the respondent No.1, therefore, the National Commission ought not have reduced the compensation payable to the appellant herein. The National Commission was not right in setting aside the judgment and order passed by the State Commission and therefore, the impugned judgment and order passed by the National Commission is liable to be set aside - Appeal allowed.

Summary

Issues Involved:
1. Quantum of compensation the appellant is entitled to receive from the respondents.
2. Deficiency in service by the respondents.
3. Justification of the National Commission's reduction of compensation.

Detailed Analysis:

Quantum of Compensation:
The primary issue in the appeal revolves around the quantum of compensation. The State Commission had initially awarded the appellant Rs. 13,79,901/- for the loss suffered, Rs. 50,000/- for mental agony and harassment, and Rs. 10,000/- towards litigation costs. The National Commission, however, reduced this amount to Rs. 10,000/- with an interest of 9% per annum from the date of filing the complaint till payment.

Deficiency in Service:
The appellant, a private limited company, had entered into a contract with the consignee for exporting goods. The shipment was to be made from New Delhi to Baltimore under an FOB contract. The respondents, acting as forwarding agents, issued a Forwarder Cargo Receipt (FCR) incorrectly mentioning the port of loading as JNPT, Bombay instead of FOB, New Delhi. This error led the consignee's bank to refuse the Letter of Credit, citing discrepancies. The appellant contended that this mistake constituted a deficiency in service, causing them to suffer financial loss and mental agony.

Justification of National Commission's Reduction:
The National Commission justified its reduction of compensation by arguing that the appellant should have noticed the mistake in the FCR before forwarding the documents to its bank. It also stated that the refusal of the Letter of Credit could have been due to late shipment or other reasons, not necessarily the mistake in the FCR. The National Commission further suggested that the loss might have been due to the connivance between the consignee and the consignee's bank, rather than the error in the FCR.

Court's Findings:
1. Deficiency in Service: The Court found that the respondents' admitted error in the FCR constituted a deficiency in service. The appellant had given clear shipping instructions, which the respondents failed to follow, leading to the refusal of the Letter of Credit and subsequent financial loss.

2. Quantum of Compensation: The Court disagreed with the National Commission's reduction of compensation. It held that the National Commission erred in not holding the respondents fully accountable for their admitted mistake. The Court restored the State Commission's original award of Rs. 13,79,901/- for the loss suffered, Rs. 50,000/- for mental agony and harassment, and Rs. 10,000/- towards litigation costs.

3. Justification of National Commission's Reduction: The Court found that the National Commission's reasoning was flawed. The appellant should not be penalized for not noticing the mistake in the FCR, as the error was solely due to the respondents' negligence.

Conclusion:
The Supreme Court set aside the National Commission's judgment and restored the State Commission's order. The respondents were directed to pay the compensation as assessed by the State Commission within two months. If the respondents fail to comply, the appellant is at liberty to seek further legal remedies. Any amount already deposited by the respondents pursuant to the State Commission's order is to be withdrawn by the appellant.