w w w . L a w y e r S e r v i c e s . i n



Vippy Solvex Products Ltd. v/s State Trading Corporation (I) Ltd. & Another

    CS. (OS). No. 1727 of 1992

    Decided On, 06 April 2018

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE RAJIV SAHAI ENDLAW

    For the Plaintiff: Jitender Ratta, Advocate. For the Defendants: D1, Rohit Jain, Advocate.



Judgment Text

1. The plaintiff has instituted this suit for recovery of Rs.1,16,33,378/- with interest from defendant no.1 State Trading Corporation of India Ltd. (STCIL) only, (defendant no.2 is Madhya Pradesh Export Corporation) pleading i) that M/s National Des Aliments Du Betail Algeria (Foreign Buyer) intended to purchase huge quantity of Indian Toasted Pure Yellow Soyameal through defendant no.1 and several contracts were entered into between the Foreign Buyer and the defendant no.1 for said purchase; ii) that in subsequent contracts, after first one (lead contract), for the said purchase, only the terms relating to time of delivery, price and quantities were stipulated with the other terms remaining the same as in the first contract; iii) the defendant no.1 was also entering into contracts with several agencies like the plaintiff for procurement of the goods to be sold and supplied to the Foreign Buyer; iv) the defendant no.1 approached the plaintiff and the defendant no.2 for procurement of the supply under the contract entered into by the defendant no.1 with the Foreign Buyer, for supply of 50,000 metric tons (MT) of Soyameal and a Contract dated 19th December, 1985 was arrived at between the parties to the suit and in which the defendant no.2 was entitled to 1% commission of the contract price from the defendant no.1; v) that under the Tripartite Contract dated 19th December, 1985, the plaintiff agreed to supply 2000 MT of Indian Toasted Pure Yellow Soyameal with 500 MT in jute bags and 1500 MT in bulk supply, between December, 1985 and April, 1986; vi) that the other terms and conditions of the lead contract between defendant no.1 and the Foreign Buyer were an integral part of the Tripartite Contract dated 19th December, 1985; vii) that the plaintiff made goods available as per the schedule stipulated in the Tripartite Contract dated 19th December, 1985; viii) that the responsibility to make the vessel and space available therein for loading of shipment of the goods to Foreign Buyer, was of the defendant No.1; ix) owing to the omission and negligence of the defendant no.1 in not making available the vessel and space available therein for shipment of the goods, the goods of the plaintiff could not be shipped within the agreed time; x) the vessel was made available on 15th march, 1986 instead of January, 1986, causing a delay of 36 days; similarly, for the second shipment, vessel was made available after 78 days and for the third shipment, vessel was made available after 114 days and for the fourth and fifth shipments, the vessel was made available after 149 and 119 days respectively; xi) that the plaintiff became entitled to recover the amount of US$ 486 as per Article 20 of the lead contract, terms whereof were applicable to the parties to this suit also; xii) thus, the plaintiff is entitled to a sum of Rs.23,57,602/-, being carry-over charges, from the defendant no.1 in respect of the Tripartite Contract dated 19th December, 1985; xiii) that as per the Tripartite Contract dated 19th December, 1985, the defendant no.1 and the plaintiff were to equally share the excess of, the price agreed to between the plaintiff and the defendant no.1 on the one hand and the defendant no.1 and the Foreign Buyer on the other hand and it was fixed at US$ 9 for the goods supplied in bulk and US$ 4 for the goods supplied in bags; xiv) the defendant no.1 received full payment for the supply made to the Foreign Buyer and therefore the plaintiff is entitled to its 50% share from the defendant no.1 on account of such excess and a sum of Rs.94,678.87 paise is due to the plaintiff from the defendant no.1 on this account; xv) another Tripartite Contract dated 23rd June, 1986 was executed between the parties to the suit with respect to another contract of the defendant no.1 with the Foreign Buyer of April, 1986; xvi) that under the Tripartite Contract dated 23rd June, 1986, the plaintiff agreed to supply 2,000 MT of Indian Toasted Pure Yellow Soyameal; xvii) with respect to Tripartite Contract dated 23rd June, 1986 also, though the plaintiff delivered the goods within the stipulated time but there was delay on the part of the defendant no.1 in shipment and the plaintiff is entitled to Rs.7,33,291/- as carry-over charges thereunder; xviii) a third Tripartite Contract dated 30th September, 1986 was entered into between the parties to the suit whereunder the plaintiff agreed to make supply of 4,000 MT of Indian Toasted Pure Yellow Soyameal and though the plaintiff supplied the goods subject matter thereof within the stipulated time but there was delay in shipment by the defendant no.1 and the plaintiff became entitled to recover a sum of Rs.16,11,402/- from the defendant no.1 towards carry-over charges with respect thereto; xix) thus a total sum of Rs.47,02,295/- is due from the defendant no.1 to the plaintiff towards carry-over charges under the three Tripartite Contracts; xx) that under all the three Tripartite Contracts, the defendant no.1 was obliged and bound to establish Letter of Credit (LC) in favour of the plaintiff, as soon as the Foreign Buyer established LC in favour of defendant no.1; xxi) the difference on account of fluctuation in foreign exchange rates, from the date of billing to the date of actual receipt, was to enure to the benefit of the plaintiff and the plaintiff became entitled to a sum of Rs.10,56,165.14 paise on this account from the defendant no.1; xxii) the plaintiff is also entitled to duty drawback in the sum of Rs.56,574/- from the defendant no.1 on the gunny bags in respect of the three Tripartite Contracts; xxiii) the plaintiff is also entitled to recover a sum of Rs.85,318.60 paise from the defendant no.1 on account of demurrage wrongly deducted by the defendant no.1 from the dues of the plaintiff; xxiv) the plaintiff is also entitled to recover Rs.3,09,249.05 paise from the defendant no.1 on account of bank charges in respect of all the three Tripartite Contracts; xxv) the defendant no.1 has also wrongly debited costs, of Rs.1,77,428.85 paise, of slings to the plaintiff and the plaintiff is entitled to recover the said amount also; xxvi) the plaintiff is thus entitled to a total sum of Rs.64,81,708.91 paise from the defendant no.1; xxvii) that the defendant no.1, from time to time paid Rs.3,58,878.17 paise with the last of such payments being by cheque dated 25th April, 1989, without specifying under which heads the payments were being made, leaving the balance amount due to the plaintiff from the defendant no.1 of Rs.61,22,830.74 paise; and, xxviii) the plaintiff is entitled to interest at 18% per annum on the aforesaid amount, from 1st April, 1987 till the date of institution of the suit. Hence, the suit for recovery of Rs.1,16,33,378/-.

2. The plaintiff, in para 38 of the plaint, has pleaded that it is entitled to extension of limitation on account of part payment in writing as aforesaid and that the defendant no.1 has also admitted the amount due to the plaintiff in terms of statement of account prepared by defendant no.1, though certain amounts have been illegally debited therefrom.

3. The plaintiff, in para no.41 of the plaint has also pleaded having made a request to the Indian Council of Arbitration for adjudicating upon the dispute but which request was subsequently withdrawn.

4. The defendant no.1 contested the suit pleading i) that the defendant no.1 had negotiated with the defendant no.2 for procurement of goods and service charges of 1.5% and not 1% were paid by the defendant no.1 to the defendant no.2; ii) that under the Tripartite Contracts, the defendant no.1 had entrusted to defendant no.2 the performance of all obligations, responsibilities and liabilities towards the Foreign Buyer and the defendant no.2 had agreed thereto and the defendant no.2 and the plaintiff were to jointly and severally perform and observe all the obligations/covenants and agreements which the defendant no.1 had undertaken to perform vis--vis the Foreign Buyer and which included shipment of goods in conformity and in accordance with the lead contract and in terms of the LC to be established by the Foreign Buyer in favour of the defendant no.1; iii) denying that under the Tripartite Contracts, the plaintiff became entitled to all benefits and entitlements of the contract of the defendant no.1 with the Foreign Buyer; iv) Sub-Clause (b) of Article 20 of the lead Contract of the defendant no.1 with the Foreign Buyer relied upon by the plaintiff to claim carry-over charges does not apply at all in cases of delay in shipment of goods and is of no relevance in determination of rights and obligations of the parties to the present suit; v) the Tripartite Contracts were back to back to the contracts of the defendant no.1 with the Foreign Buyer and the defendant no.2 stepped into the shoes of the defendant no.1 and in the event of delay in making any shipment, it was not the defendant no.1 but the plaintiff who was to be liable; vi) the defendant no.1 cannot be held liable for any default in loading schedule; vii) that under the lead contract of the defendant no.1 with the Foreign Buyer, it was the duty of the Foreign Buyer to nominate a vessel for loading and the plaintiff has not alleged any default on the part of the Foreign Buyer and the reliance on Article 20(b) is misconceived; viii) that the shipment schedule pleaded by the plaintiff are contrary to the Tripartite Contracts; ix) denying that the plaintiff made available the goods at the port as per schedule; x) the responsibility to make the vessel available was not of the defendant no.1 and the vessel was to be arranged and nominated by the Foreign Buyer; xi) that the plaintiff delayed furnishing of Performance Bank Guarantee (PBG) and which resulted in change of the delivery schedule; xii) notwithstanding such delay on the part of the plaintiff, the defendant no.1, without receiving the PBG from the plaintiff, furnished the PBG to the Foreign Buyer and whereafter the Foreign Buyer established a non-operative LC and as soon as the non-operative LCs were made operative, the defendant no.1 established the LC in favour of the plaintiff; xiii) the defendant no.1 was not obliged to open the LC in favour of the plaintiff till the foreign LC acceptable to the defendant no.1 was received; xiv) the requisite slings for the cargo were not available in the country and were to be imported by the suppliers including the plaintiff; the defendant no.2 requested the defendant no.1 to import the slings on behalf of the plaintiff and the defendant no.2 agreed to make payment for the slings to the defendant no.1; however no payment was made by the defendant no.2 to the defendant no.1 and on the contrary, the defendant no.2 requested the defendant No.1 to open the LC in favour of the foreign supplier of slings and it was represented that the plaintiff would retire the documents as and when the same would be received by the bankers of the defendant No.1 against payment by draft; xv) the defendant no.1 immediately opened the LC and though the slings were received by the plaintiff, the plaintiff delayed making payment thereof and which also led to delays in delivery; xvi) that the delivery details were changed to accommodate the plaintiff and other Indian suppliers; xvii) the plaintiff is not entitled to any amount from the defendant no.1 on account of delayed shipments; xviii) denying that the plaintiff is entitled to recover Rs.16,11,402/- as carry-over charges; xix) denying that the plaintiff is entitled to any amount from the defendant no.1 on account of fluctuation in exchange rate; xx) denying that the plaintiff is entitled to recover any amount on account of demurrage charges; xxi) the defendant no.1 has rightly recovered the sum of Rs.3,09,249.05 paise from the plaintiff in terms of the contract whereunder all bank charges outside Algeria were to be borne by the supplier i.e. the plaintiff; xxii) the slings were imported on behalf of the plaintiff and on the basis of promise of the plaintiff to pay for the same and the plaintiff is not entitled to recover Rs.1,77,428.85 paise on this account; xxiii) that the statement of account furnished by the defendant no.1 to the plaintiff shows the heads under which the sum of Rs.3,58,878.17 paise was paid; and, xxiv) denying that any amount is due from the defendant no.1 to the plaintiff.

5. A replication was filed by the plaintiff to the aforesaid written statement but the need to refer thereto is not felt.

6. On the pleadings of the parties, the following issues were framed in the suit on 16th April, 1996:

'1. Whether the plaint has been instituted, signed by a duly authorized person? OPP

2. Whether under article 20 of the ONAB Contracts, read with the Tripartite Contracts, any liability can be imposed on the defendant No.1 on account of any alleged delay in shipment? OPP

3. If issue no.2 is answered in affirmative, whether there was any delay on the part of defendant no.1 in the shipment of the contracted Cargo? OPP

4. Whether the plaintiff is entitled to recover damages as per Annexure A, C and D to the plaint from the defendants on account of delayed shipments? OPP

5. Whether the plaintiff is entitled to difference of exchange rate from defendant No.1 in respect of all three Tripartite Contracts as per Annexure E to the plaint? OPP

6. Whether the defendant is liable to share the excess price of goods with the plaintiff in respect to 1st Tripartite Contract in terms of Annexure B to the plaint? OPP

7. Whether the plaintiff is entitled to duty draw back from defendant No.1 with regard to all three Tripartite Contracts as per para 29 of the plaint? OPP

8. Whether the plaintiff is entitled to recover demurrage from the defendant No.1 in respect of all three Tripartite Contracts as per para 30 of the plaint? OPP

9. Whether the plaintiff is entitled to recover Bank Charges from defendant No.1 in respect of all three contracts as per para 31 of the plaint? OPP

10. Whether defendant no.1 wrongly recovered a sum of Rs.1,77,428.85 paise being the value of the slings on account of all three Tripartite contracts from the plaintiff? OPP

11. Whether the plaintiff is entitled to recover interest @18% p.a. and if so, on what amount and for what period? OPP

12. Relief.'

7. Vide order dated 9th August, 2001, consequent to change in name of the plaintiff from ‘Vippy Solvex Products Ltd.’ to ‘Vippy Industries Ltd.’, the said change was recorded in the suit.

8. No evidence whatsoever was recorded in the suit till 24th May, 2007, when commission was issued for recording of evidence. Only part evidence was recorded before the Commissioner till 1st October, 2012 when the Commissioner was substituted.

9. The suit was listed before this Court on 2nd November, 2016, on receipt of report dated 24th October, 2016 from the Commissioner that recording of evidence stood completed and finding the suit to be of 1992 vintage, was posted for final hearing on 3rd November, 2016. On 3rd November, 2016, both counsels sought adjournment and hearing was adjourned to 21st November, 2016.

10. On 21st November, 2016 also, neither counsel was ready to argue and granting liberty to the counsels to file written arguments, orders were reserved in the suit.

11. Written arguments have been filed by the counsel for the plaintiff as well as by the counsel for the defendant no.1.

12. I may mention that though the counsel for the defendant no.2 had appeared in response to the summons but no written statement was filed by the defendant no.2 and though vide orders dated 17th January, 1994, 18th August, 1994 and 15th March, 1995 of the Joint Registrar the suit was ordered to be listed before Court on 21st April, 1995 but on 21st April, 1995, the defendant no.2 was not proceeded against ex parte and whereafter issues were framed in the suit. Since there is no order proceeding ex parte against the defendant no.2, the defendant no.2, for whom none has appeared for long, is now proceeded against ex parte.

13. As would be obvious from the state of pleadings, adjudication of the various claims of the plaintiff against the defendant no.2 is dependent upon interpretation of the Tripartite Contracts and the lead contract between the defendant no.1 and the Foreign Buyer.

14. The relevant Clauses of the Tripartite Contract dated 19th December, 1985 between the parties and in which the plaintiff is referred to as the ‘Supplier’ and the defendant no.1 as ‘STC’ and defendant no.2 as ‘MPEC’, are as under:

'WHEREAS the STC has agreed to entrust to the MPEC and the supplier, the performance of all obligations, responsibilities and liabilities of the STC under or by virtue of the export contract and fulfil the said obligations, responsibilities and liabilities so far as the export of 2000 MT of Soyabean Extraction + 10% at foreign buyer’s option is concerned, (hereinafter called ‘the goods’) on the terms and conditions mentioned hereinafter.

THIS Agreement is being concluded for the purpose of implementation of the said Export Contract.

NOW, therefore, this Agreement witnesseth and the parties hereto agree and declare as follows:

The MPEC and the supplier shall jointly and severally perform and observe all obligations covenants and agreements as the STC has undertaken to perform under or by virtue of the Export Contract which would include any additions, modifications or amendments thereto as may be agreed to between the foreign buyer and STC in consultation with convenants and agreements so undertaken by the supplier would include shipment of the goods in conformity with and in accordance with the export contract and in terms of the letters of credit to be established by the foreign buyer in favour of STC.

SHARING OF EXCESS

The excess of the prices agreed to between the STC and the foreign buyer on the one hand over the prices agreed between STC and the supplier on the other, viz. US$9.00x1500 MT for goods in bulk and US$4.00x500 MT for goods in new gunny bags of 50Kgs each nett, both FOB stowed Kandla (hereinafter called the excess) shall, upon realization of the export proceeds, and subject to the stipulations mentioned below, be shared equally between the STC and the supplier provided the supplier has fulfilled all its / his obligations under or by virtue of this contract. The share of the supplier in the excess shall be drawable by the supplier under STC’s internal L/C upon production of a certificate from a General Manager of STC to the effect that the bank may release the supplier’s share in the excess to the supplier (hereinafter called ‘the said certificate). STC shall be entitled to apply suppliers share of the excess, wholly or in part, towards satisfaction of any claim that may be lodged by the foreign buyer on the ground of breach or default in respect of the export contract in regard to the quantity, or quality of the goods or shipment thereof or any claim for demurrage irrespective of the fact whether the foreign buyer’s claim has arisen on the ground of any breach or default on the part of the supplier for purposes of fulfillment of STC’s obligations under or by virtue of the export contract. Subject to the foregoing, STC shall be liable to issue the said certificate only after the supplier has fully performed all its / his obligations under or by virtue of this contract and after the definitive acceptance of the goods by the foreign buyer and release of STC’s bank guarantee by the foreign buyer.

PAYMENT TERMS:

Payment of the price shall be effected by means of an internal L/C to be opened by STC in favour of the supplier only after the receipt by STC of L/C(s) from the foreign buyer acceptable to the STC as per the export contract and receipt by STC of the suppliers performance bank gurantee mentioned hereunder. Payment under STC’s above L/C shall be available to the supplier against the documents that are stipulated in the export contract and the documents that may be stipulated by the foreign buyer in the foreign L/C in so far as they relate to the goods covered by this contract and such other documents and upon fulfillment of such other conditions by the supplier as may be stipulated in STC’s aforesaid internal L/C. In the event of non-receipt of foreign L/C(s) by STC or on receipt of a defective foreign L/C, STC shall not be liable to open an internal L/C in favour of the supplier and this contract shall become void without STC incurring any liability to the MPEC and / or the supplier.

PERFORMANCE BANK GUARANTEE

The supplier shall, within 15 days from the date of the signing of the contract, furnish to STC a guarantee in the form attached hereto as annexure ‘D’ from a Bank acceptable to STC for 10% of the value of the quantity of the goods covered by this contract, such value being calculated @US$ 185 PMT FOB stowed Kandla for goods in bulk and US$ 205 PMT FOB stowed Kandla for goods in the new gunny bags of 50 kg. each net. Receipt by STC of the above Bank Guarantee from the supplier shall be a condition precedent for the establishment of STC’s internal L/C in favour of the supplier. This guarantee shall in no way operate or be construed to limit the supplier’s liability. Further, this guarantee shall be without prejudice to any other right of the STC against the MPEC and the supplier.

INDEMNITY

MPEC and the supplier hereby jointly and severally indemnify the STC and shall at all times keep it fully indemnified against any actions, claims, losses, demands, expenses or costs that it may incur and / or suffer on account of any default on the part of the MPEC and / or the supplier in the discharge of their obligations under this contract, including but not restricted to claims of the foreign buyer on account of quality, quantity, packing, delay in shipments, load port demurrage and other circumstances. In case, MPEC and / or the supplier fails / failed to ship the goods in time, or if the STC in their sole discretion consider that the supplier is not in a position to fulfill its / his obligations, the STC may, without being obliged to do so and without prejudice to any of its other rights, cancel this contract and procure the contract goods at the cost and risk of the MPEC and the supplier from alternative sources.

SHIPPING DOCUMENTS

As required under the export contract and the foreign L/C, in so far as they relate to the goods covered by this contract and / or as may be stipulated in STC’s internal L/C.

OTHER CONDITIONS

All other terms and conditions as per the export contract and the foreign L/C to be established by the foreign buyer in favour of STC.

All taxes and levies which are imposed by the Central Government and / or State Government and / or local authorities would be borne and payable by the suppliers.

All benefits, if any, under the Government’s Export Promotion Scheme will accrue to the supplier fully and STC/MPEC will not ask for any share therein.'

15. The terms of the other two Tripartite Contracts are identical to aforesaid terms.

16. The relevant terms of the lead contract between the defendant no.1 and the Foreign Buyer and in which the Foreign Buyer is referred to as the ‘Buyer’ and the defendant no.1 as the ‘Seller’ are as under:

'ARTICLE 10 WRAPPING AND PACKING:

The product must be delivered to the BUYER in perfect condition and in perfect state for use. The SELLER undertakes to send the said product duly packed and / or with proper protection necessary, and in conformation with the nature of the product, means of transport, as well as keeping in view the vicissitudes arising from the dispatch from the factories of the SELLER upto the different Ports of Shipment and unloading. The supply of the said packings / wrappings is at the exclusive cast of the SELLER who alone will be responsible in case of damages caused to the product by a fault and / or insufficient protection or design of the wrappings.

The packings, protections and wrappings must conform to the conditions laid down in annexure VI of the present contract.

ARTICLE 13 TERMS OF PAYMENT

The currency of invoicing of the present contract will be U.S. dollars. The payment will be made for each delivery of the products by opening an irrevocable and confirmed documentary credit with the State Bank of India, latest thirty (30) days before the period of shipment of the goods.

The credit will be converted into cash by the SELLER with the Bank against deposit of the following documents:

ARTICLE 20 PENALTIES FOR DELAY

In case the seller does not abide by the delivery schedule laid down under the terms of the present contract (Article 14 plus Annexure III), the buyer will apply, with full rights, the penalties for delay against the State Trading Corporation of India on the following basis:-

- Three percent (3%) of the cost and freight value of the lost to be shipped in case of a delay of seven (07) to fifteen (15) days on temporal prorata.

- Seven (7%) of the cost and freight value of the lot to be shipped if the dispatch is carried out with a delay between 16 and 30 days (16 and 30 days).

- Ten (10%) of the cost and freight value of the lot if the delay exceeds 30 days and is upto 45 days. This provision does not exempt the SELLER from paying damages and interest in proportion with the actual damage sustained for which the buyer reserves the right.

b)- In case of non-abidance by the buyer of the loading schedule mentioned in the present contract (Annexure III), the SELLER will apply by full right penalties for delay against the buyer against a grace period of seven (07) calendar days, beyond this period of shipment, at 1 (one) dollar per M.T. per day.'

17. Both, plaintiff and the defendant, in their evidence examined one witness each. Though the witness of the plaintiff is numbered as PW2 but owing to having been substituted for the earlier witness whose testimony could not be completed and is not to be read. The affidavit by way of examination-in-chief of witness of the plaintiff is found to be a replica of the plaint. The said witness however filed an additional affidavit to prove some more documents. The witness of the plaintiff, in his cross-examination inter alia stated i) that the role of defendant no.2 is of a channelizing agency between plaintiff and defendant no.1 and the communication between the defendant no.1 and the plaintiff was routed through the defendant no.2 but at times the plaintiff and the defendant no.1 would communicate directly; ii) that the date on which the plaintiff furnished the PBGs to the defendant no.1 were a matter of record and he could not recollect if the plaintiff was to furnish the bank guarantee on 30th June, 1986 but furnished the same on 1st August, 1986; iii) that it was difficult to recollect after a span of 27 years if the vessel for the first shipment arrived on 12th September, 1986 and the loading could commence only on 22nd September, 1986; iv) that he did not know the dates of arrival at the port of the vessel for the third shipment; v) that he similarly could not state the date of submission of PBGs for the other two Tripartite Contracts; vi) that it was correct that meetings were held from time to time with respect to change of dates of delivery schedule; and, vii) that it was correct that the defendant no.1 was to open LC in favour of the plaintiff only after receiving PBG from the plaintiff.

18. Though the counsel for the plaintiff is found to have done extensive cross-examination of the witness of the defendant No.1 but the counsel for the plaintiff in the written arguments has not referred to any part of the said cross-examination and the same is not found by me also to be relevant. Rather, from the written arguments also, it transpires that all the issues framed in the suit are to be decided on the interpretation of the contracts aforesaid only.

19. As far as issue no.1 is concerned, neither counsel in his written arguments has addressed on the same. PW2 is however found to have proved the extract of the Resolution of the Board of Directors of the plaintiff authorizing the signatory of the plaint to institute the suit and recognizing his signatures. The counsel for the defendant no.1 is not found to have cross-examined PW2 on the said aspect. The issue no.1 is thus decided in favour of the plaintiff and against the defendant no.1.

20. As far as the other issues are concerned, I may first take up the aspect of interpretation of the Tripartite Contract between the parties, the relevant clauses whereof are already set out hereinabove and on which interpretation, decision of the other issues is dependent.

21. Under the said Tripartite Contract, to which the plaintiff and the defendant no.1 were parties, i) the defendant no.1 agreed to entrust to the defendant no.2 and the plaintiff, the performance of all obligations, responsibilities and liabilities of the defendant no.1 qua the Foreign Buyer and the defendant no.2 and the plaintiff accepted the said obligations, responsibilities and liabilities; ii) the defendant no.2 and the plaintiff agreed to jointly and severally perform and observe all obligations/covenants and agreements which the defendant no.1 had undertaken to perform vis--vis the Foreign Buyer including the obligation of shipment of goods in accordance with the agreement between the defendant no.1 and the Foreign Buyer and in terms of LC to be established by the Foreign Buyer in favour of the defendant no.1; iii) the defendant no.1 was entitled to apply the plaintiff’s share in the ‘excess’, wholly or in part towards satisfaction of any claim that will be lodged by the Foreign Buyer on the ground of breach of the agreement between the Foreign Buyer and the defendant no.1 in regard to quantity, quality or shipment or any claim for demurrage irrespective of the fact whether the Foreign Buyer’s claim had arisen on the ground of breach or default on the part of plaintiff for purpose of fulfillment of defendant no.1’s obligation; iv) the defendant no.1 was to open the LC in favour of plaintiff only on receipt by defendant no.1 of LC from Foreign Buyer acceptable to the defendant no.1 and receipt by defendant no.1 of the PBG from the plaintiff and defendant no.1 was not liable to open the LC in favour of the plaintiff till then; and, v) the defendant no.2 and the plaintiff were to jointly and severally indemnify the defendant no.1 against all claims on account of any default on the part of the defendant no.2 and/or the plaintiff including qua the performance of obligations of the defendant no.1 to the Foreign Buyer including of failure to ship the goods in time.

22. Once the plaintiff had undertaken all such obligations qua the defendant no.1, I am at a loss to understand the basis of any of the claims of the plaintiff in the suit against the defendant no.1.

23. Nowhere from the Tripartite Contract can any obligation of the defendant No.1 for arranging for the vessel or for shipment of the goods as per the schedule of delivery stipulated in the Tripartite Contract, can be deciphered. Though it is the plea of the defendant no.1 that the vessel was to be nominated by the Foreign Buyer but even if it was to be not so (inasmuch as the lead contract between the defendant no.1 and the Foreign Buyer is not found to contain any condition to the said effect), once the plaintiff along with defendant no.2 had unequivocally undertaken all obligations of the defendant no.1, it was for the plaintiff and the defendant no.2 to arrange for the vessel.

24. With respect to Article 20(b) of the lead contract, I may notice that it is not the case of the plaintiff that the defendant no.1 has received from the Foreign Buyer any monies thereunder. The clause in the Tripartite Contract, that all other terms and conditions as per the contract between the defendant no.1 and the Foreign Buyer also form a condition of the Tripartite Contract, can by no stretch of imagination be interpreted as making the defendant no.1 liable for any amount to the plaintiff without the said liability having been incurred by the Foreign Buyer to the defendant no.1. It is not the case of the plaintiff that the plaintiff, at any time informed the defendant no.1, that the Foreign Buyer was liable under Article 20(b) and that the defendant no.1 should make a claim therefor against the Foreign Buyer and to which claim the plaintiff would have been entitled to and the defendant no.1 has neglected to make such a claim against the Foreign Buyer. Once the plaintiff, in the Tripartite Contract, had agreed to take over all obligations, responsibilities and liabilities of the defendant no.1 under its contract with the Foreign Buyer, the plaintiff cannot have an independent claim against the defendant no.1. The claim of the plaintiff subject matter of issue no.2 is thus contrary to the agreement of the plaintiff with the defendant no.1. The counsel for the plaintiff, in his written arguments also, has not said anything in addition to the plaint, in this context.

25. Issues no.2 to 4 are thus decided against the plaintiff and in favour of defendant no.1.

26. As far as the claim of the plaintiff under issue no.5 is concerned, again there is no basis therefor in the Tripartite Contract governing the relationship of the plaintiff and the defendant no.1. Even otherwise, the plaintiff has utterly failed to prove that the plaintiff submitted the PBGs which it was required to submit and that there was any delay thereafter on the part of the defendant no.1 in opening the LC in favour of the plaintiff.

27. Issue no.5 is thus decided against the plaintiff and in favour of the defendant no.1.

28. As far as issue no.6 is concerned, though it is not controverted that the excess price was to be shared but the plaintiff has failed to prove any amount on this account to be due to it. The computation of the plaintiff, of excess price, does not take into account the quality rebate availed of by the Foreign Buyer or of its entitlement to a su

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m of Rs.94,678.87 paise on this account. 29. The issue no.6 is thus decided against the plaintiff and in favour of defendant no.1. 30. The plaintiff, under the Tripartite Contract, was not entitled to any duty drawback and the claim therefor is misconceived. The plaintiff has failed to prove any duty drawback having been received by the defendant no.1. Without the defendant no.1 having drawn the same, the defendant no.1 cannot be liable to plaintiff therefor. 31. Issue no.7 also, is thus decided against the plaintiff and in favour of defendant no.1. 32. Issue no.8 is covered by the discussion on issue no.2. As aforesaid, once the plaintiff had undertaken the obligations and liabilities of the defendant no.1, the plaintiff cannot be entitled to any demurrage from the defendant no.1. 33. Issue no.8 also, is thus decided against the plaintiff and in favour of the defendant no.1. 34. That leaves the aspect of bank charges. The defendant no.1 admits having recovered Rs.3,09,249.05 paise as bank charges from the plaintiff. It is however the contention of the counsel for defendant no.1 that the export contracts were on FOB basis and bank charges were incurred by defendant no.1 on account of delay in payment from the Foreign Buyer and which delays were attributable to the defendant no.1. The same is again not in consonance with the Tripartite Contract, whereunder the plaintiff had undertaken all obligations of the defendant no.1 to the Foreign Buyer. The liability for the delay in receipt of monies from the Foreign Buyer by the plaintiff is thus attributable to the plaintiff and the plaintiff is liable to recompense the defendant no.1 therefor. 35. Issue no.9 also, is thus decided against the plaintiff and in favour of defendant no.1. 36. Issue no.10 is also covered by the discussion under issue no.2. It is not the case of the plaintiff that the sum of Rs.1,77,428.85 paise was not incurred by the plaintiff towards price of slings required for shipment of goods and which shipment was the responsibility of the defendant no.1. The liability for the price of slings was thus clearly of the plaintiff. 37. Issue no.10 is thus decided against the plaintiff and in favour of defendant no.1. 38. The counsel for the plaintiff, in his written arguments, has referred to DW1/67 and DW1/76 to contend that the defendant no.1 therein admitted the liability to the plaintiff for difference in exchange rate, payment of excess rate, demurrage, carry-over charges, bank charges etc. Reliance is placed on A.E.G. Carapiet Vs. A.Y. Derderian AIR 1961 Calcutta 359 to contend that the defendant no.1 has not rebutted the said unequivocal evidence. 39. DW1/67 is a note of discussions held on 27th June, 1986 on a reading whereof I am unable to find defendant no.1 to have made any such commitment. Similarly, DW1/76 is a letter written by defendant no.2 to 'All Supply Associates For Third Algerian SBM Contract' informing of discussion with 'Onab Algeria' of lay days for 2nd & 3rd shipments against '3rd Algerian Contract' and requesting the addressees to arrange movement of cargo accordingly. Neither is the said letter of the defendant no.1, to contain any admission of liability by defendant no.1 to the plaintiff, nor does it relate to the matter, qua which ‘admission’ is urged. Rather, it falsifies the plea of plaintiff of defendant no.1 being liable for arranging shipments. 40. Once the plaintiff is not found entitled to any amounts, the question of the plaintiff being entitled to any interest thereon does not arise. 41. The suit thus fails and is dismissed. 42. The defendant no.1 shall also be entitled to costs of the suit from the plaintiff. 43. Decree sheet be drawn up.
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