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Tuesday, August 16, 2016

Agent of Consignee is not liable to pay compensation for deficiency of service = Sec.230 of Indian Contract Act - ACS is acting as agent only for the consignee - Since Respondent No. 1 was simply acting as an agent of Coronet Group Inc, as such, in view of Section 230 of the Indian Contract Act, 1872 it cannot be held personally liable to enforce the contract entered between its principal and the appellants. This Court, in its order dated September 10, 2009, has accepted the plea of Respondent No. 1 that Respondent No. 1 is not a consignee, but only an agent of the intermediate consignee. That being so, Respondent No. 1 cannot be held to be liable in respect of claim made by the appellants.in Marine Container Services South Pvt. Ltd. v. Go Go Garments[1], this Court has already made clear that defence under Section 230 of Indian Contract Act, 1872 is available in the cases under Consumer Protection Act, 1986 by the agents of the principal with whom the complainant had the agreement.- As far as liability of Respondent No. 2 Central Fidelity Bank and that of Respondent No. 4 is concerned, we agree with the NCDRC that Respondent No. 4 had carried the consignment and delivered the same as per Bill of Lading and there is no contract between the appellants and Respondent No. 4. Also Respondent No. 2 Bank cannot be held liable for the deficiency of service, as the amount was not collected from the consignee, as such there was no question of remitting it to the appellants/complainants by the Bank. In the circumstances, respondent No, 3 Zip Code Inc, which is subsidiary to Coronet Group Inc, the consignee named in the cargo slips, is the only party which can be held liable for taking delivery without depositing the price of the goods with the Bank. For the reasons discussed above, we find no infirmity in the impugned order passed by the NCDRC and, as such, these appeals are liable to be dismissed. Accordingly, both the appeals are dismissed.

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 4861 OF 2012

Virender Khullar                              … Appellant

                                   Versus

American Consolidation Services Ltd. & ors.  …Respondents

WITH

                        CIVIL APPEAL NO. 9217 OF 2012







                               J U D G M E N T


Prafulla C. Pant, J.


      These appeals are directed against common  judgment  and  order  dated
March 22, 2012, passed by National Consumer Disputes  Redressal  Commission,
New Delhi (for short “NCDRC”) in Original Complaint Nos. 89 of 1995  and  90
of 1995,  whereby  the  Commission  has  dismissed  the  complaints  of  the
appellants, filed under Section 23 of the Consumer Protection Act, 1986,  as
against Respondent Nos. 1, 2 and 4.  However, the complaints were  partially
allowed as against respondent No. 3 M/s.  Zip  Code,  2615,  Elmhurst  Lane,
Portsmouth, VA 23701, USA, for an amount of  Rs.20,82,902.40  in  favour  of
appellant Virender Khullar,  and  Rs.15,27,461.76  in  favour  of  appellant
Girish Chander, with interest at the rate of 12% per annum with effect  from
April 01, 1995 till the date of payment.



Brief facts of the  case  are  that  the  appellants-complainants  entrusted
consignments  containing  men’s  wearing  apparels  in  December   1994   to
Respondent No. 1 American Consolidation Services Ltd., Akruti Trade  Centre,
402, 4th Floor, Andheri (East), Mumbai (hereinafter referred to  as  “ACS”),
and cargo receipts were issued to them by Respondent  No.  1.   As  per  the
cargo receipts so issued, the consignments were to the order  of  Respondent
No. 2 Central Fidelity Bank, Richmond VA, USA.   Respondent  No.  1  on  its
part handed over the consignments to respondent No. 4 M/s. Hoeg Lines,  Lief
Hoegh & Co., A/S Oslo, Norway/M/s. American President Lines  Limited,  Tarde
Plaza 2nd Floor, 414 Veer Savarkar Marg, Prabhadevi,  Mumbai,  for  delivery
of the consignments at the port of destination.  It is alleged that  in  the
Bill of Lading issued by  the  shipping  carriers,  name  of  consignee  was
changed from Central Fidelity Bank  to  Coronet  Group  Inc.  besides  there
being several other changes in the name and description of  the  shipper  as
Cavalier Shipping Co.  When payment was not received till March,  1995,  the
appellants/  complainants  made  enquiry  about  the  consignments.    After
servicing legal notice, appellant Virender Khullar filed a complaint for  an
amount of  Rs.35,31,601.15  in  respect  of  300  cartons  containing  men’s
apparels through cargo receipt Nos. 34307, 34308 and  34309,  and  appellant
Girish Chander filed the complaint for an amount of Rs.29,17,844.76 for  220
cartons containing men’s apparels sent through  cargo  receipt  Nos.  34116,
34117 and 34118, before NCDRC, New Delhi.  Initially complaints  were  filed
only as against Respondent No. 1, i.e. American Consolidation Services  Ltd.
(ACS).


Respondent No. 1 contested the complaints and pleaded that Respondent No.  1
received the complainants’ goods on behalf of the buyer/consignee, i.e.  Zip
Code Inc. which was part of Coronet Group Inc. as its agent.  It is  further
pleaded that there was no payment made by the appellants/  complainants  for
the service provided by  Respondent  No.  1,  nor  there  was  any  contract
between the complainants and Respondent No. 1 for  shipment  of  the  goods.
The receipt, custody and forwarding of the goods of  the  complainants  were
governed by the provisions of bailment agreement as mentioned in  the  cargo
receipts.  The bailment agreement provided that from and after the  delivery
by Respondent No. 1 to a carrier in accordance with the instructions of  the
consignee or other cargo owner, the sole responsibility  and  liability  for
the care, custody, carriage and delivery of goods was that of the  concerned
carrier.  Respondent No. 1 was under no liability whatsoever in  respect  of
any failure on the part of the consignee or any other party.   According  to
Respondent No.1, complainants’ claim, if any, can lie only  as  against  the
principal, i.e. buyer/consignee who appears to have not made payment to  the
complainants for the value of the cargo.  Since Respondent No. 1 acted  only
as an agent of the consignee, i.e. Zip Code Inc., a  subsidiary  of  Coronet
Group Inc, and acted only as a consolidator and forwarder (not  a  carrier),
it has no liability as provided in Section 230 of the Indian  Contract  Act,
1872, on behalf of the principal.  The carrier of the goods in question  was
Respondent No. 4 Hoegh Lines/American President  Line  Limited,  who  issued
the relevant Bills of Lading covering the goods.  The appellants  were  duly
informed by Respondent No. 1 about the delivery of  consignment  to  Coronet
Group Inc on surrendering of all the original Bills of Lading.   Lastly,  it
is pleaded that it is not a case of negligent act or  careless  handling  of
the shipment by Respondent No. 1.

After hearing the  parties,  the  NCDRC,  vide  its  separate  orders  dated
January  20,  2004,  accepted  both   the   claims   (to   the   extent   of
Rs.20,82,908.40 of appellant Virender Khullar and claim  to  the  extent  of
Rs.15,27,461.76 of appellant Girish Chander) and directed the amount  to  be
paid by Respondent No. 1 with interest.


However,  above  orders  dated  January  20,2004,  passed  by  NCDRC,   were
challenged by Respondent No. 1 in Civil Appeal Nos. 2079 of  2004  and  2080
of 2004, before this Court and the same were disposed of  vide  order  dated
September 10, 2009, as under: -



      “Heard learned counsel for the parties.

      These appeals have been filed against the  impugned  Judgment  of  the
National Consumer Disputes Redressal Commission, dated 20th  January,  2004.
By that judgment, certain amount has been decreed against the appellant.

       Mr. R.F.Nariman and Mr. P.H.Parekh, learned senior counsel  appearing
for the appellant, contended that the appellant was only  an  agent  of  the
consignee, Zip Code Inc., which is part of the Coronet  Group.   It  appears
that the grievance of the claimants  (respondents  in  this  case)  is  that
certain cartons, which were to be shipped to a party in USA, were  allegedly
not delivered there.  A claim was made for damages in that respect.

       Mr. Nariman has contended that the appellant is only an agent of  the
consignee and not the consignee himself.  We agree with the contention.   In
our opinion, the claimants should have impleaded the consignee  as  well  as
the carrier as parties in the claim  petitions  apart  from  impleading  the
appellant.  The rules of natural  justice  require  that  necessary  parties
have to be impleaded, which appears not to  have  been  done  in  this  case
before the National Commission.

        For the reason given above, we set aside the  impugned  judgment  of
the National Commission and remand the matters to  the  National  Commission
with liberty to the respondents-claimants to implead the consignee  as  well
as the carrier in their claim petitions. Notice will be issued to the  newly
impleaded parties and case  will  be  decided  by  the  National  Commission
preferably within six months from the production of a copy of this order.

        We   make   it    clear    that       we   have    not     expressed
any opinion on the merits of the case.  All  points  of  law  and  fact  are
expressly left open to the parties.

        The amount deposited here by the  appellants  will  be  refunded  to
them with accrued interest.

        The appeals are accordingly disposed of.

        No order as to costs.”

In the light of  above  order,  Respondent  No.  2  Central  Fidelity  Bank,
Respondent No.  3  Zip  Code  and  Respondent  No.  4  Hoegh  Lines/American
President Lines Limited) were impleaded and the case proceeded  and  decided
afresh by the NCDRC.  The case against Respondent No. 3 M/s.  Zip  Code  and
Respondent No. 4 Hoeg Lines/American  President  Lines  Limited  appears  to
have proceeded ex parte as they  failed  to  turn  up  in  response  to  the
notices sent to them.  There was no relief sought as against Respondent  No.
2 Central Fidelity Bank.  In the impugned order dated  March  22,  2012,  it
has been held by NCDRC that it is  only  Respondent  No.  3  Zip  Code,  the
intermediary consignee of the cartons in question mentioned in cargo  slips,
who received the delivery of the consignments without making payment to  the
bank or the complainants, and, as such, liable to pay  the  compensation  to
the appellants, and accordingly  directed  Respondent  No.  3  to  make  the
payment of Rs.20,82,902.40 in  favour  of  appellant  Virender  Khullar  and
Rs.15,25,461.76 in favour of appellant Girish Chander, with interest at  the
rate of 12% per annum with effect from April 01, 1995.

Respondent  No.  3  has  not  challenged  the  above  order.   Rather,   the
complainants  have  challenged  the  fresh  decision  of  NCDRC   as   other
respondents are held not liable to make the payment.  Respondent Nos. 3  and
4, even after service of notice, have not turned up to contest the  appeals.



Learned counsel for the appellants argued before us that  it  is  Respondent
No. 1 who changed the name of consignee and the name of Coronet  Group  Inc.
was inserted in the Bill of Lading depriving realization of damages  by  the
complainants.  It is further contended that Respondent No.  1  accepted  the
goods from the complainants to be delivered to the order of  Respondent  No.
2 by engaging a carrier, but it caused the goods to be delivered to  Coronet
Group without getting payment realized through  the  bank.   It  is  further
submitted that in the cases other than Letter of Credit when the  goods  are
sent on collection basis, the same are consigned to bank, and foreign  buyer
is named as party to be notified.  As such, the  delivery  of  goods  should
not have been allowed to be made without getting realized payment  of  goods
through Respondent No. 2 Bank.  It is also contended that  Section  2(d)  of
the Consumer  Protection  Act,  1986,  came  into  force  with  effect  from
15.3.2003, and prior to that there was no  exclusion  regarding  service  of
commercial purposes under  the  Act.   Lastly,  it  is  submitted  that  the
appellants have nothing to do with the consolidation procedure said to  have
been agreed between Respondent No. 1 and Coronet Group Inc.


On behalf of Respondent No. 2 Central Fidelity  Bank,  now  known  as  Wells
Fargo Bank, it is submitted that there is no relief  sought  against  it  by
the appellants/complainants in their complaints.  It  is  further  submitted
that Respondent No. 2 was only a consignee as per the records of  the  case,
i.e. it was the consignee as set out in the cargo receipts  and  the  notify
party/intermediate consignee was Zip  Code  Inc.  (respondent  No.  3).   As
such, it was Respondent No. 3 who was the actual buyer and  who  was  to  be
notified by Respondent No. 1 once the consignment arrived in  Norfolk,  USA.
In turn, Respondent No. 3 was to inform  Respondent  No.  2,  subsequent  to
which Respondent No. 3 was to pay for the goods  and  obtain  a  certificate
from Respondent No. 2 to show that such  payment  has  been  made.   It  was
subsequent to this process that Respondent No. 2 was to  release  the  goods
to Respondent No. 3.  It is further submitted that it is  also  an  admitted
fact that  no  shipment  was  ever  delivered  to  Respondent  No.  2.   The
appellant himself submits that  the  “shipment  was  not  delivered  to  the
consignee name in the cargo receipts”.  As such,  there  was  no  obligation
whatsoever upon Respondent No. 2, that it had to discharge.


We have considered the arguments advanced on behalf of  the  appellants  and
that of Respondent No. 2 and perused the record.   Copies  of  cargo  slips,
which are on record, disclose  that  notified  party/intermediary  consignee
was Respondent No. 3 Zip Code, 2615 Elmhurst  Lane,  Portsmouth,  VA  23701,
USA.  In the column of name of consignee “To order of Central Fidelity  Bank
Richmond VA” is mentioned.   Cargo  slips  further  disclose  that  (Vessel,
Voyage) Hoegh Clipper/Eagle Prestige was export carrier.


Admittedly, the goods in question were handed  over  by  the  appellants  to
Respondent No. 1 as pleaded.  But there is neither any  pleading  nor  proof
that the appellants paid any sum for transportation or any other service  to
Respondent No. 1 at the time the goods were handed over to it or  subsequent
there to.  It has been shown on behalf of Respondent No. 1  that  Respondent
No. 1 was simply an agent of the buyer with whom the appellants had  entered
into contract.  It is nobody’s case that the goods  were  lost  in  transit.
Rather it is a case where it has come on record  that  the  consignment  was
received by Respondent No. 3 Zip Code Inc, a part of Coronet Group Inc.


At this stage, we think it just and proper to reproduce relevant  additional
terms and conditions attached with the cargo slips, which read as under: -


      “ACS undertakes to receive the goods on behalf of the consignee,  hold
the  same  as  an  agent  and  deliver  or  forward  them  to  carriers   or
transporters in accordance with the instructions of the consignee  or  other
cargo owners for subsequent transportation by water or air carrier  and  for
distribution and ultimate delivery to the consignee.

            xxx              xxx             xxx

      In receiving the goods and pending the consolidation services  covered
by this agreement, ACS is acting as agent only for the  consignee  named  on
the face hereof and not  as  carrier,  transporter  or  distributor  of  the
goods.

            xxx              xxx             xxx

      The shipper hereby acknowledges that  ACS  acts  solely  as  agent  on
behalf of the consignee and  shall  be  under  no  liability  whatsoever  in
respect of any failure by the consignee or any other party to do any act  or
pay any amounts due in respect of the  cargo  received  hereunder  including
but not limited, to the purchase  price  of  such  cargo,  freight,  storage
charges insurance premium, lighterage changes, demurrage salvage charges  or
general average contribution.”


Since Respondent No. 1 was simply acting as an agent of Coronet  Group  Inc,
as such, in view of Section 230 of the Indian Contract Act, 1872  it  cannot
be held personally liable  to  enforce  the  contract  entered  between  its
principal and the appellants.  This Court, in its order dated September  10,
2009, has accepted the plea of Respondent No. 1 that  Respondent  No.  1  is
not a consignee, but only an agent  of  the  intermediate  consignee.   That
being so, Respondent No. 1 cannot be held to be liable in respect  of  claim
made by the appellants.  We think  it  relevant  to  mention  here  that  in
Marine Container Services South Pvt. Ltd. v. Go Go Garments[1],  this  Court
has already made clear that defence under Section  230  of  Indian  Contract
Act, 1872 is available in the cases under Consumer Protection Act,  1986  by
the agents of the principal with whom the complainant had the agreement.

As far as liability of Respondent No. 2 Central Fidelity Bank  and  that  of
Respondent No. 4 is concerned, we agree with the NCDRC that  Respondent  No.
4 had carried the consignment and delivered the same as per Bill  of  Lading
and there is no contract between the appellants and Respondent No. 4.   Also
Respondent No. 2 Bank cannot be held liable for the deficiency  of  service,
as the amount was not collected from the consignee, as  such  there  was  no
question of remitting it to the appellants/complainants  by  the  Bank.   In
the circumstances, respondent No, 3 Zip Code Inc,  which  is  subsidiary  to
Coronet Group Inc, the consignee named in  the  cargo  slips,  is  the  only
party which can be held liable for taking delivery  without  depositing  the
price of the goods with the Bank.


For the reasons discussed above, we find no infirmity in the impugned  order
passed by the NCDRC and, as such, these appeals are liable to be  dismissed.
 Accordingly, both the appeals are dismissed.  There shall be  no  order  as
to costs.



                                                              ………………………………J.
                                                              [R.K. Agrawal]



                                                              ………………………………J.
                                                          [Prafulla C. Pant]
New Delhi;
August 16, 2016.

-----------------------
[1]    (1998) 3 SCC 247


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