2022 (9) TMI 1355 - HC - Customs

Suit for value of goods - wrongful delivery of goods by another agent of the disclosed principal - vicarious liability - breach of express term of contract of carriage by wrongfully and illegally delivering the consignments sans presentation of original Bills of Lading - failure to mitigate the loss - duty drawback claim. Whether the value of the goods consigned by the plaintiff is proved? - HELD THAT - The fact that immediately after the claim was lodged by the plaintiff defendant nos.3 and 4, went on to claim the amount from the person, whom they held liable, detracts materially from the defence now sought to be raised. Undoubtedly, the Bills of Lading contain a disclaimer as regards the quantity, contents and value of the goods consigned. However, the plaintiff s claim is not rested on the value of goods mentioned on the Bills of Lading only. Post disclosure of wrongful delivery of the goods, the plaintiff instantaneously alleged and firmly claimed damages commensurating with the value of the goods, as assessed by the plaintiff. In this view of the matter, the defendants cannot seek to draw any mileage from the fact that there is no evidence aliunde to establish the value of the goods. From this stand point, the learned Judge, City Civil Court committed no error in returning an affirmative finding in favour of the plaintiff. Is defendant no.3 liable for wrongful delivery of the goods by defendant no.4 to the consignee? - principal plank of the challenge to the impugned decree was that defendant no.3 being an agent of a disclosed principal i.e. defendant no.2, could not have been sued for the alleged wrongful delivery of the consignments by the another agent of defendant no.2 - HELD THAT - If the evidence is read as a whole, the inference which Mr. Shah wants the Court to draw does not commend itself. Defendant no.3 had both the authority and choice, to select the agent at the port of destination. Defendant no.3, in the totality of the circumstances, cannot be permitted to wriggle out of the situation by simply contending that defendant no.4 was an agent of defendant no.2 at the port of destination. The aspect of the liability of the defendants, in the case at hand, is required to be appreciated in the light of undisputed wrongful delivery of the goods, in breach of an express term of contract. Whether the plaintiff s alleged failure to mitigate the loss dis-entitles the plaintiff from seeking damages? - HELD THAT - The defence of rejection of goods by M/s. Universal is required to be considered in the backdrop of indisputable position of wrongful delivery of the goods to M/s. Universal. At the very moment of the wrongful delivery, the defendants were guilty of breach of contract. The plaintiff had already parted with the possession of the goods. There is no contemporaneous material to indicate that the alleged rejection of the goods by M/s. Universal was brought to the notice of the plaintiff. An abstract submission that the plaintiff ought to have taken steps to mitigate the loss in the light of these hard facts, is unworthy of acceptance. What consequences flow from the benefit of duty-drawback allegedly availed by the plaintiff? - HELD THAT - An inferential submission that availing of benefit of duty drawback implies receipt of consideration is simply far fetched. Conversely, from the perusal of the provisions contained in Section 75 of the Customs Act, 1962 such an inference cannot be said to be automatic. The second proviso to sub-section (1) of Section 75 envisages a situation where any duty drawback has been allowed but the sale proceeds in respect of such goods are not received by or on behalf of the exporter in India and empowers the Central Government to specify the procedure for recovery or adjustment of the amount of such drawback. An aspect, which, however, warrants consideration is the justifiability of the relief granted by the learned Judge, as regards the currency in which the damages are quantified and the rate at which interest has been awarded thereon. The claim for damages thus stood crystalized at Rs.29,87,795/- as of 14th September, 1996. In this view of the matter, a decree for damages on the basis of the value of the goods, as assessed by the plaintiff, ought to have been passed in Indian currency instead of US Dollar - Secondly, the award of interest at the rate of 24% also appears to err on the side of excessiveness. Undoubtedly, the underlying transaction was purely commercial. Yet, award of interest at the rate of 24% p.a. appears to be a little harsh and exorbitant. The appeal is allowed in part.

Summary

Issues Involved:
1. Jurisdiction of the Civil Court at Bombay.
2. Misjoinder of parties.
3. Liability of defendant no.3 as an agent.
4. Proof of the value of goods consigned.
5. Wrongful delivery of goods.
6. Plaintiff's alleged failure to mitigate loss.
7. Consequences of duty drawback availed by the plaintiff.
8. Currency and interest rate for damages.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Civil Court at Bombay:
The defendants contended that the Civil Court at Bombay had no territorial jurisdiction as they were not residing or carrying on business within its jurisdiction. However, the court found that the City Civil Court had jurisdiction to entertain, try, and dispose of the suit.

2. Misjoinder of Parties:
Defendant nos.1 and 2 argued that ACE Lines (defendant no.1) was not a legal entity but just a trade name of defendant no.2, and thus the suit was not tenable due to misjoinder. The court did not find this argument sufficient to dismiss the suit.

3. Liability of Defendant No.3 as an Agent:
Defendant no.3 claimed it was merely an agent of the disclosed principal (defendant no.2) and thus not liable for the wrongful delivery by defendant no.4. The court examined the relationship between the defendants and found that defendant no.3 had a controlling influence over defendant no.4, making it liable for the wrongful delivery.

4. Proof of the Value of Goods Consigned:
The plaintiff claimed the value of the goods was US$ 84,353.31, which the defendants contested. The court found that the value was effectively admitted by the defendants through their correspondence and actions, thus affirming the plaintiff's claim.

5. Wrongful Delivery of Goods:
It was undisputed that the goods were delivered without the production of the original Bills of Lading, constituting a breach of contract. The court held the defendants liable for this wrongful delivery.

6. Plaintiff's Alleged Failure to Mitigate Loss:
Defendant no.3 argued that the plaintiff failed to mitigate the loss after the goods were allegedly rejected by the consignee. The court found no contemporaneous evidence supporting the claim of rejection and held that the plaintiff was not required to mitigate the loss under the circumstances.

7. Consequences of Duty Drawback Availed by the Plaintiff:
Defendant no.3 suggested that the plaintiff had received the benefit of duty drawback and thus should not claim damages. The court found no evidence that the plaintiff had received the consideration for the goods and noted that availing duty drawback does not automatically imply receipt of payment.

8. Currency and Interest Rate for Damages:
The court modified the decree to award damages in Indian currency (Rs.29,87,795/-) instead of US Dollars and reduced the interest rate from 24% to 18% per annum, deeming the original rate excessive.

Conclusion:
The appeal was partly allowed. The court modified the decree to reflect the damages in Indian currency and reduced the interest rate. The appellant was ordered to pay the costs of the appeal to the respondent (plaintiff). The decree was to be drawn accordingly.