Florens Containers Inc vs M/S.Ornate Multimodal Carriers ... on 23 August, 2012

Bombay High Court

Bench: R.D. Dhanuka

Kvm 1 SJ471_10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

SUMMONS FOR JUDGMENT NO. 471 OF 2010

SUMMARY SUIT NO. 367 OF 2008

Florens Containers Inc. ..... Plaintiff Vs.

M/s.Ornate Multimodal Carriers Pvt. Ltd. ..... Defendant Mr.Rahul Narichania alongwith Ms.Aarti Shah, i/b. Mulla & Mulla & CBC for the Plaintiff.

Mr.Krishnagopal S.Tripathi for the Defendant.

CORAM : R.D. DHANUKA, J.

RESERVED ON : 10th AUGUST, 2012

PRONOUNCED ON : 23rd AUGUST, 2012

P.C.

By this Summons for Judgment, the Plaintiff seeks judgment be entered for the Plaintiff in this suit against the Defendant for a sum of US $ 58,677.91. The suit is based on the written contract dated 30th December, 2002 and various invoices issued by the Plaintiff.

2. On 1st November, 2002, the Plaintiff entered into a Lease Agreement (Equipment Agreement) with the Defendant and leased various containers for its business operation on the terms and conditions setout in the said Kvm 2 SJ471_10 Agreement. The lease period was from 1st November, 2002 to 31st October, 2003. The agreed rental payable by the Defendant was setout therein. Clause 10(a) and (b) of the Agreement reads as follows :- "(a) If a unit of Leased Equipment is lost or destroyed, Lessee shall send a written declaration

of loss to Lessor as soon as the loss is known and

Lessee shall pay the Replacement Value ("RV") or

Depreciated Replacement Value ("DRV") for the unit as stated in the applicable Lease. If a unit is

returned to Lessor's designated depot and the repair costs for Lessee's account are higher than the applicable RV Or DRV Lessee shall pay the ,

applicable RV or DRV for the unit.

(b) A unit which is lost or destroyed and has not

been returned to Lessor's designated depot shall be

off-hired on the date of Lessee's declaration of loss,

provided that the applicable RV or DRV is paid within forty-five (45) calender days of the date of

Lessor's invoice. Otherwise, the unit shall be off-

hired on the date the invoice is paid."

Kvm 3 SJ471_10

3. According to the Plaintiff except 8 containers the Defendant returned all the containers to the Plaintiff. The Plaintiff's Agent vide its e- mail enquired with the Defendant regarding the whereabouts of the containers not returned by the Defendant and requested to return the same to the Plaintiff. By its e-mail dated 10 th September, 2004 the Defendant informed the Plaintiff's Agent that all the 8 containers were loaded for Kuwait and were being located. It was stated that said Defendant was taking legal action against its Kuwait Agent. In the meanwhile the Defendant requested the Plaintiff's Agent to advise the cost of each of the container. By e-mail dated 16 th October, 2004, Defendant reiterated that it had taken legal action against its Kuwait Agent and requested for the value of the containers.

4. By e-mail dated 19th October, 2004 to the Defendant, the Plaintiff's Agent attached the calculations of the depreciated value of the 8 containers. By e-mail dated 26th October, 2004, the Defendant informed the Plaintiff that they had given up 8 containers as lost by their Kuwait Agent and was in the process of taking legal action. The Defendant requested the Plaintiff to discontinue billing them their rentals from 10 th September, 2004. The Defendant requested the Plaintiff to deduct the cost price by 50% of the amount quoted by the Plaintiff. Kvm 4 SJ471_10

5. By e-mail dated 1st November, 2004, the Plaintiff's Agent declined to accept cost Depreciated Value (DV) of 8 containers and insisted that the Defendant shall pay DV of the containers as on 10 th September, 2004, as per the terms of the Agreement. On 11th November, 2004 the Plaintiff raised invoice against the Defendant for US$ 17,090.50 towards DV of 8 containers. The Defendant, however, failed to pay the said amount. The Plaintiff's Agent sent another e-mail to the Defendant making it clear that rentals would be continued to be billed until the DV were paid in full by the Defendant. On 23rd February, 2005, the Defendant by their e-mail informed the Plaintiff that the Defendant had initiated legal action against their Kuwait Agent for recovery/compensation for the lost containers. It is submitted that since the Defendant had not been using those containers, it would be contrary to normal business practice and not fair to pay rental for such containers so long as they were not recovered or compensated for. It is contended that the payment due from the Defendant would be only upto 10th September, 2004. It is submitted that the amount of deposit of Rs.4,00,000/- lying with the Plaintiff could be utilised towards the payment of rentals. The Defendant informed that the outstanding amount payable to the Plaintiff was US $ 5022.20 and the Defendants were prepared to make payment in Indian Rupees for those outstanding under a schedule which was mutually agreed.

Kvm 5 SJ471_10

6. The Plaintiff by its e-mail dated 26th October, 2004 informed the Defendant that it would take into consideration the amounts allegedly paid by the Defendant to the Plaintiff's erstwhile agent M/s. Container Terminal Services in order to allow the Defendant to recover the sum of Rs.4,00,000/- and remit the same to the Plaintiff by 28th February, 2005. The Plaintiff informed the Defendant that the Plaintiff would attend the office of the Defendant next day to collect the cheque in local currency amount equivalent to US$ 25000 and ask the Defendant to confirm. By Advocate's letter dated 10th May, 2005, the Plaintiff called upon the Defendant to re-deliver 8 containers and to make payment to the sum of Rs. US$ 35079.60 as lease rental accrued until 30th April, 2005. The Defendant by its letter dated 10th May, 2005 alleged that the Defendant had intimated the Plaintiff regarding the lost containers and it was decided between 10th September, 2004 as the cut off date for rental for those 8 containers. It was alleged that once the containers were lost and were not being utilised by the Defendant, the demand raised by the Plaintiff for rentals was contrary to the normal business practice. The Defendant denied to pay rentals for the containers which were lost according to them.

7. The Plaintiff through its advocate's letter addressed on 17th May, 2005 placing reliance on clause 10(b) of the Agreement made it clear that Kvm 6 SJ471_10 since the Defendant did not make payment of DV of 8 containers by due date, i.e. on or before 11th December, 2004, the rental charges would apply until such time the payment in full was made for such containers. The Plaintiff however made an offer that if the Defendant was willing to pay the invoice for the DV invoice and rental i.e. US $ 33,387.25, the Plaintiff would consider waiving the remaining outstanding rental invoices without prejudice to its rights and contentions. It was clarified that the said offer was open for a period of 10 days of the receipt of the said letter.

8. By letter dated 24th May, 2005 the Defendant after referring to clause 10(b) informed the Petitioner that as soon as the Defendant receive the compensation amount from their agents towards the settlement of their claims which they were pursuing legally and might take sometime, the Defendant would make the payment for the lost containers. The Defendant informed that the balance amount would be paid in Indian Rupees equivalent after deduction of Rs.4,00,000/- at the exchange rate prevailing. The Defendant requested the Plaintiff to bear with the Defendant for the delay in payment for the DV amount of the lost containers, until such time the Defendant receives the compensation amount from their Agents in Kuwait.

Kvm 7 SJ471_10

9. The Plaintiff by their advocate's letter dated 25th June, 2005 issued notice under Section 434 of the Companies Act, 1956. By letter dated 12th July, 2005 the Plaintiff through their Advocate stated that even assuming without admitting, the Defendant had paid a sum of Rs.4,00,000/- to the Kuwait Agents of the Plaintiff and credit was required to be given, the Defendant was still liable to pay a sum of US $ 26188.83 to the Plaintiff and liable to further lease rentals as setout in the notice dated 25th June, 2005.

10. By letter dated 5th April, 2006 the Plaintiff's advocate informed the Defendant that since the Defendant has not responded to the letter dated 12th July, 2005, the Plaintiff would be constrained to initiate winding up proceedings against the Defendant. The Plaintiff thereafter filed Company Petition (504 of 2006) against the Defendant seeking winding up of the Defendant. The Learned Counsel appearing for the Defendant informs that the said Petition has been dismissed recently. Copy of the order however is not available. It is therefore not clear as to whether the said petition is dismissed on merits or by default. The Plaintiff filed this suit for recovery of rental for the period 30th April 2003 to 31st December, 2007 and for interest.

Kvm 8 SJ471_10

11. The Learned Counsel appearing for the Defendant submitted that this Summons for Judgment is not maintainable and is barred by principles analogous to res judicata as the earlier Summons for Judgment (40 of 2008) filed by the Plaintiff came to be dismissed by an Order dated 21st September, 2010 passed by Mr.Justice R.Y.Ganoo. On the other hand, the Learned Counsel appearing for the Plaintiff submits that the Plaintiff had filed Summary Suit as well as Summons for Judgment on 17th January, 2008. He submits that it is true that Summons for Judgment could be filed only after vakalatnama was filed by the Defendant after service of Writ of Summons as required under Order 37 Rule 3 of the Code of Civil Procedure, 1908, the earlier Summons for Judgment was not dismissed on merits but due to this technical infraction of procedure. This Summons for Judgment is therefore maintainable and is not barred by res judicata or principle analogous thereto. In my view earlier Summons for Judgment is not dismissed on merits but due to technical infraction, this Summons for Judgment is not barred by principles analogous to res- judicata and is maintainable.

12. The Learned Counsel appearing for the Defendant submits that the Summons for Judgment has been taken out on 16th December, 2010, the Defendant had filed Vakalatnama in the month of March 2008. This Summons for Judgment has not been taken out within a period of six Kvm 9 SJ471_10 months from the date of the Defendant filing Vakalatnama. Summons for Judgment is, therefore, not maintainable. In the alternative, it is submitted that the Defendant is entitled to unconditional leave to defend the suit. The Learned Counsel appearing on behalf of the Plaintiff on the other hand submitted that Summons for Judgment No.40 of 2008 was taken out within a period of six months from the date of Defendant filing Vakalatnama, the said proceeding was rejected as not maintainable by an Order dated 21st September, 2010. Summons for Judgment is thereafter immediately filed and thus there is no delay in taking out this Summons for Judgment. The Learned Counsel placed reliance on the Judgment of this Court in the case of Bankay Bihari B.Agrawal & Others vs. Bhagwanji Meghji & Others1.

13. In my view the earlier Summons for Judgment was taken out within six months from the date of filing of Vakalantama, the same was however rejected not on merits but due to technical infraction of procedure. The earlier Summons for Judgment thereafter was taken out immediately after the earlier Summons for Judgment came to be rejected by Mr.Justice R.Y.Ganoo on 21st September, 2010. Since I have taken a view that the present Summons for Judgment is maintainable and in view of the fact that the Summons for Judgment was taken out within six months from the date of filing Vakalatnama, in my view there is no 1 2001(2) Bom.C.R.86

Kvm 10 SJ471_10 substance in the submissions made by the Defendant that there is any delay in taking out Summons for Judgment or that the same is not maintainable. Even otherwise the delay in taking out Summons for Judgment beyond the period of six months prescribed by Rule 227 does not automatically entitle the Defendant to unconditional leave to defend the suit; but it is a relevant factor to be considered in conjunction with the nature of the defence while granting conditional or unconditional leave to defend the suit or refusing the application for leave to defend.

14. The next submission of the Defendant is that the alleged Power of Attorney dated 12th May, 2006 has been signed and executed by Mr.Ding Weiming on behalf of Florens Container INC having its registered office at United Kingdom whereas the suit has been filed by Florens Containers INC, a company incorporated in California, USA. It is submitted that the Defendant has no privity of contract with company having its registered office at United Kingdom. It is submitted that such Power of Attorney relied upon by the Plaintiff has not been registered. On the other hand, the Learned Counsel appearing for the Plaintiff submits that the Agreement was between Florens Containers INC having its office at U.S. In the agreement the contact address of the Plaintiff at U.K. was provided. It is submitted that the contract which is not in dispute has been signed by the same person who had executed the Power of Attorney. It is submitted Kvm 11 SJ471_10 that the plaint has been admittedly filed by Florens Containers INC having its registered office at United State.

15. After perusal of the Power of Attorney and the Agreement between the parties and the cause title of the plaint it is clear that the suit has been filed by the same lessor who was party to the lease agreement. The plaint has been verified by Mr.Nilesh Parekh, one of the Constituted Attorney appointed by the Plaintiff which Power of Attorney was signed by the same person who has signed the lease agreement. I am therefore of the view that there is no substance in this defence raised by the Defendant. The Defendant has not raised any plea in the affidavit in reply that the said Power of Attorney was not stamped. Photocopy of the Power of Attorney filed by the Plaintiff shows that the same is stamped.

16. The Defendant through his Counsel submits that though containers have been auctioned by the Kuwait Authorities in the year 2004 to the knowledge of the Plaintiff, the Plaintiff has claimed for rental for the subsequent period till the date of filing of the suit which is against the equity and good conscience. The Learned Counsel appearing for the Plaintiff on the other hand submits that under Clause 10(b) of the Agreement, the Plaintiff is entitled to claim rental in respect of the containers not returned or in view of non-payment of depreciated value Kvm 12 SJ471_10 within 45 days of the date of Lessor's invoice till such return of containers or payment of DV. He submits that the claim made by the Plaintiff is as per agreed terms of the contract and is not against equity or good conscience. It is submitted that principles as well as liability under the invoice has not been disputed by the Defendant.

17. The Learned Counsel appearing for the Defendant then submitted that the claim made by the Plaintiff is not a liquidated claim. The containers are admittedly sold by the Kuwait Authorities. Depreciated value of the containers has to be decided at the time of trial and therefore summary suit is not maintainable. On the other hand, the Learned Counsel appearing for the Plaintiff submits that the claim for rental claimed till the date of filing of the suit is based on Clause 10(b) of the agreement and is not required to be proved.

18. The next submission of the defendant is that the period of suit agreement expired on 31st October, 2003. The Kuwait Port Authorities auctioned eight containers due to act of omission of the agent of the Defendant at Kuwait in the year 2003. Invoice raised by the Plaintiff is dated 11th November, 2004 whereas the present suit is filed by the Plaintiff on 17th January, 2008. It is submitted that the suit is thus barred by law of limitation. It is submitted that the letter dated 24 th May, 2005 Kvm 13 SJ471_10 addressed by the Defendant offering to pay the alleged dues of the Plaintiff cannot be relied upon by the Plaintiff as the said proposal was without prejudice and thus did not extend period of limitation. On the other hand, the Learned Counsel appearing on behalf of the Plaintiff submits that the suit is not for recovery of the amount under the invoice dated 11th December, 2004. The suit is for recovery of the rental for the period between 30th April, 2003 and 31st December, 2007. The defendant by letters dated 24th May, 2005 and 17th May, 2005 have acknowledged the liability with promise to pay the dues of the Plaintiff. It is submitted that various invoices have been issued from time to time till December 2007. The suit has been filed on 17th January, 2008. The Defendant has not claimed any privilege in the affidavit in reply in respect of those two letters though having been addressed without prejudice.

19. The Defendant has made personal allegations against the advocates representing the Plaintiff in various paragraphs of the affidavit in reply and also in the additional affidavit filed on 16th August, 2012. The Plaintiff has denied those allegations against the Advocates' appearing for the Plaintiff. I need not deal with such allegations made by the Defendant against the advocates of the Plaintiff at this stage.

Kvm 14 SJ471_10

20. In my view, the following pleas of the Defendant raise triable issues and go to the root of the matter :-

(i) Whether part of the claim made by the Plaintiff is barred by limitation? If so, the Defendant is entitled to unconditional leave ?

(ii) Whether letter dated 24th May, 2005 and other letters addressed by the Defendants offering

to pay the alleged dues of the Plaintiff which were

marked "without prejudice" can be considered as

acknowledgment of liability and would extend

period of limitation ?

(iii) Whether Plaintiff is entitled to make claim

for rental for the subsequent period after auction

of the containers or such claim is not a liquidated

claim ?

21. For the reasons aforesaid, I am of the view that aforesaid triable issues are raised by the Defendant and the same are substantial and can be decided only at trial of the suit. However, in the facts and circumstances of the case, interest and justice would be met with if hearing of the suit is expedited.

Kvm 15 SJ471_10

22. I, therefore, pass the following order :-

(a) Defendant is granted unconditional leave to defend the suit,

(b) Written statement is directed to be filed within eight weeks from the date of this order.

causes.

(d) Hearing of the suit is expedited. The parties are at liberty to apply for early hearing of

the suit.

(e) Office is directed to place the matter for framing issues after pleadings are completed.

(f) Summons for Judgment is disposed of

accordingly.

(g) There shall be no order as to cost.

[R.D. DHANUKA, J.]