SEVENTH AVENUE EXPORTS (PVT.) LTD. vs KUWAIT AIRWAYS

THIS is a complaint filed under Section 17 of the Consumer Protection Act, 1986. The case of the complainant may be briefly stated thus: The complainant is a private limited Company carrying on the business of manufacture, sale and export of garments. The 1st opponent is an international airline and it has a branch office at Bombay, having its head office at Kuwait. The 2nd opponent is its agent at Bangalore.

A letter of credit was opened by M/s. Corm low Limited, a foreign buyer stationed at London through their banker M/s. Belgolaise S.A. One M/s. Elliot and Company Private Limited, Bangalore is the beneficiary of the letter of credit. They are the agents of the foreign buyer. Elliot and Company used to supply the letter of credit and place orders to local exporters in India. Elliot and Company placed two such purchase orders, one dated 7.2.1995 and the other dated 8.2.1995 on the complainant for garments. Canara Bank is the representative of the foreign banker Belgolaise and the said Bank transferred a portion of the amount by opening a letter of credit in favour of the complainant. The complainant dispatched the garments as per the purchase orders dated 7.2.1995 and 8.2.1995 to Belgolaise, J.K. and also as per letter of credit through the opponents on 1.7.1995 and 4.7.1995. Ex. C4 is the airway bill dated 1.7.1995 and Ex. C5 is the airway bill dated 4.7.1995.Exs. C4(1) and C5(1) are their originals.

The opponents were expected to inform to Belgolaise, S.A. London about the arrival of goods at the place of destination, viz., London. The carrier cannot deliver the goods without production of the original airway bill. The complainant, the consignor sent the original airway bills and other documents through its banker, and the consignee was expected to pay the amount mentioned in the bill and got the bill released from the complainant''s banker at London to enable him to get the goods consigned. The first consignment reached London on 6.7.1995 and the second consignment reached London on 9.7.1995. Original documents reached London on 19.7.1995. The complainant alleges that the opponents had already released the goods on 10.7.1995 and 11.7.1995 to the representative of the consignee. Zygo-an agent of the foreign buyer-consignee inspected the goods on or before 12.7.1995, and according to them the goods were not in accordance with the specifications agreed upon. Elliot and Company-an inspecting agent of the consignee (foreign buyer) had inspected the goods before they left Bangalore and that they had certified that they were in accordance with the agreed specifications after inspecting 5 per cent of the quantity. Exs. C9 and C10 are the copies of their certificates.

STATE Bank of India the complainant''s banker, had credited GBP 17975.50 as soon as the goods left India, at the exchange rate prevailing on 7.7.1995 which we are told comes to Rs. 8,97,337/-. As the foreign buyer rejected the goods after the goods were allowed to be inspected by their agents Zygo, the STATE Bank of India reversed the entry and debited the amount equivalent to GBP 17975.50 and also interest of Rs. 37,615/- to the account of the complainant. Later they also debited the complainant''s account a sum of Rs. 86,822/- being the fluctuating rates in foreign exchange between 7.7.1995 and 2.11.1995. The complainant has claimed GBP 3,084.89 as the interest @ 24% p.a., on GBP 17,975.50 from 12.7.1995 till the date of the complaint i.e. 28.3.1996. In addition he has claimed a sum of Rs. 5.00 lakhs towards mental tension, loss of reputation, etc. together with costs of the proceedings. The case of the opponents may be summed up thus: They do not dispute the entrustment of the goods as alleged in the complaint. They deny that there was deficiency on their part. According to them, M/s. Belgolaise S.A. was the consignee and the shipments have been delivered to their agents. The production of the airway bills was not necessary. According to their records, the clearing agents of M/s. Belgolaise approached them for delivery and the delivery order was issued to them. They do not admit that the consignments have been inspected by Zygo, London, who is said to be the approved inspecting agency of the consignee. They deny that they had illegally delivered the consignment to M/s. Corm low Limited. The consignee for the reasons best known to him did not take delivery of the documents from the Bank. Because the consignment were not taken delivery, the complainant has been incurring heavy demurrage on the consignment and in order to mitigate the loss thus suffered and in the face of the untenable and unreasonable attitude of the complainant in seeking to fasten the liability for alleged wrongful delivery and in the absence of further instructions as to the delivery of the consignment, the opponents were left with no alternative but to airfreight the consignment to Bangalore covered under airway bill and the complainant is liable to take re-delivery of the same after paying the expenses incurred by the opponents. The opponents have reserved their right to claim and recover such other expenses and costs incurred in this regard. Opponents have required the complainant to prove other allegations strictly. The 2nd opponent had adopted the verified statement of the 1st opponent.

FOLLOWING points would arise for consideration: (1) Whether the opponents have committed deficiency of service by releasing the goods without taking the original airway bills and other documents ? (2) Whether the opponents are liable ? If so, to what extent? Point No 1 :

The first point for adjudication is whether the 1st opponent had delivered the goods to the foreign buyer or its representative without production of the original airway bill and other documents. There can be no dispute that the carrier should have delivered the goods to the consignee only as against the airway bill, which is a document of title. This document of title will be available to the consignee only after he pays the amount towards the value of the goods to the nominated banker at London. In the version filed by the 1st opponent, which is adopted by the 2nd opponent, it is clearly admitted (in para 12) that the goods have been delivered to the agent of the consignee and that the production of the airway bills was not necessary. This admission on the part of the opponents is sufficient to show that the goods have been delivered to the consignee without the production of the airway bills. It is contended by the opponents that the goods are still with them. This defence cannot help them. They might have retrieved them later, but the fact that they had delivered the goods once without the production of the airway bills cannot be disputed. The complainant is, therefore, right in contending that this act on the part of the opponents has enabled the foreign buyer to inspect and reject the goods even without releasing the airway bills from the banker after paying the value of the goods. The complainant has relied on Ex. C8 dated 12.7.1995 a fax transmission by Zygo who are the inspecting agents of the consignee. This document shows that the officials of the Zygo inspected the goods at their bonded warehouse, and have rejected the goods for the reasons mentioned therein. The learned Counsel for the opponents contends that the inspection by Zygo as mentioned in Ex. C8 has not been proved. Inspection by Zygo has been clearly alleged in the complaint and in the version filed by the opponent, it is simply stated that the opponents do not admit that the consignments have been inspected by Zygo-London. This does not amount to specific denial. Further, nothing is stated in the affidavit of the opponents about Ex. C8 which is a xerox copy of the fax. We are not dealing with a criminal case where proof beyond doubt is required. This is also not a Civil Court where cases are required to be proved by mere preponderance of evidence. No doubt, the Consumer FORA discharge judicial functions, but they are not Courts in a technical sense. Consumer FORA are entitled to act on any materials which are logically probitive even though it is not evidence in a Court of Law. The rules of natural justice would have to be observed in all cases before it. In the light of these well-known principles, we do not find any reason to reject the case of the complainant that the goods were inspected by Zygo. Even otherwise there are other ample materials to show that the goods were handed over to the consignee or its agent. This itself is sufficient to show that there was deficiency of service on the part of the opponents. The subsequent taking possession of the goods, if any, will not condone their releasing the goods improperly. The facts are clear that the consignee has rejected the goods and the complainant''s banker at Bangalore had debited to his account a sum of Rs. 8,97,337/- which is equivalent to GBP 17,975.50. It is also clear that they have debited to his account a sum of Rs. 87,822/- being the fluctuation in the foreign exchange rate. These consequences would not have arisen, if the goods were not delivered without the production of the airway bills. No explanation is forthcoming from the opponents why the goods were delivered without the production of the airway bills. We, therefore, hold that there has been willful default on the part of the opponents. The first point is, therefore, is answered against the opponents. Point No. 2 : The learned Counsel for the opponents contends that the liability of the opponents is limited by the Carriage by Air Act, 1972. In particular, he relies on "Rule 22(2)" of Schedule 1, which reads thus: (2) In the carriage of registered luggage and of goods, the liability of the carrier is limited to a sum of 250 francs per kilogramme, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery. . . . . Rules 18(1), 19 and 20 may be relevant to understand the scope of Rule 22. Those rules read thus: . . . . 18(1) The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air. . . . . 19. The carrier is liable for damage occassioned by delay in the carriage by air of passengers, luggage or goods. . . . . . 20 (1) The carrier is not liable if he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures. (2) In the carriage of goods and luggage the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage. . . . . But, Rule 25(1) reads thus: . . . . 25(1) The carrier shall not be entitled to avail himself of the provisions of this Schedule which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as is in the opinion of the Court equivalent to willful misconduct. . . . .

IN the instant case, we have already come to the conclusion that there has been willful default on the part of the opponents. We, therefore, hold that Schedule 1 of the Carriage by Air Act, 1972 can be of no assistance to the opponents.

THE learned Counsel for the opponents also relied on Exs. C4 (1) and C5 (1) which are the original airway bills. On the back of those bills, there are identical printed conditions. Those conditions are drafted on the basis of the WARSAW CONVENTION. Carriage by Air Act, 1972 was also enacted to give effect to the rules laid down in the same convention. According to the learned Counsel for the opponents, Condition 5 of the contract and the limit of liability fixed there under, if at all, could be charged against the opponents. We have gone through the conditions printed therein. Limitation of liability therein will apply only to cases of loss, damage or delay. We do not think that we are concerned with a case of delay, loss or damage. This is case of the willful default on the part of the opponents. THEre fore the provisions of Air Act, 1972 nor the conditions printed on the backside of the airway bills will help the opponents. It is next contended by the opponents that the consignee should have been made a party to the proceedings and that the complainant has no justification to be compensated only by the opponents. This contention is put forth only during the course of the arguments. It has not been pleaded that the consignee should be a necessary party. Even otherwise, the complainant is complaining about the act of the opponents whom he has engaged for the service of transportation of goods from Bangalore to London. Only a consumer dispute can be adjudicated before a Consumer FORA. We, therefore, find that non-impleading of the consignee is not fatal to the complainant.

The next contention of the learned Counsel for the opponents is that the complainant should have mitigated the damages by accepting the goods, which the opponents have in their possession as at present. We take note of this fact. It is contended by the learned Counsel for the complainant that he is entitled for the portion of the relief in ponds. We are not able to appreciate this contention for the simple reason that the Canara Bank has credited and debited his account only in terms of Indian currency. It is clear in the complaint that a sum of Rs. 8,97,337/was debited to his account on 2.11.1995. It is also clear that a sum of Rs. 86,822/- was debited later on account of fluctuation in foreign exchange rates. He has claimed interest in pounds from 12.7.1995 @ 24% p.a. He has also claimed interest on Rs. 8,97,337/- from 7.7.1995 to 2.11.1995. Therefore, the complainant will be entitled to interest @ 13% p.a., on Rs. 9,84,159/- from 12.7.1995 till payment. The complainant has claimed damages for mental tension, loss of business, etc. in a sum of Rs. 5,00 lakhs. We are of the view that this is very high. Ends of justice will be met if we award damages at Rs. 50,000 / - and the complainant will be entitled to costs of this proceeding in a sum of Rs. 5.000/-. We are also inclined to give a rebate of 50 per cent on Rs. 9,84,159/- if the opponents deliver the goods entrusted to them in proper condition at their own costs at Bangalore to the complainant, within two months from this date.

IN the result, we pass the following order: ORDER (1) Opponents shall pay a sum of Rs. 9,84,159/- with interest @ 13% p.a., from 12.7.1995 till payment to the complainant. (2) Opponents shall pay a sum of Rs. 50,000/- towards damages. (3) Opponents also shall pay costs of this proceeding in a sum of Rs. 5,000/-. (4) If the opponents deliver the goods entrusted to them within two months from this date to the complainant at Bangalore, at their own costs, in proper condition, they are entitled to rebate of Rs. 4,92,079/- from the date of such delivery. The complaint is disposed of accordingly. Complaint disposed of.