Ramesh Exports Pvt. Ltd. v. Coffee Board Vidhana Veedi

The Judgment of the Court was delivered by

1. The appellant is the plaintiff who deals in export of coffee. Sale of coffee during the year 1982 was regulated by several regulations. A portion of coffee grown was to be given to the defendant by the growers. The defendant used to sell the coffee in public auction. The purchasers of coffee at auction were entitled to sell the same to foreign buyers by export. The sale to foreign buyers was also regulated by a Consortium of States having a mutual agreement that the coffee sold to the foreign buyer should be accompanied by a Certificate of Origin given by the International Coffee Organization (I.C.O) and also export permit and I.CO stamps.

2. It is the contention of the appellant-plaintiff that he purchased 230.4 tons of coffee in public auction on 21.7.1982 and 18.8.1982 On account of paucity of I.C.O stamps the exporters were not getting the stamps in time for taking effecting steps for export. The respondent taking note of the difficulties of the exporters, had issued Circular dated 10.1.1980 (Ex. P4) to the effect that the exporter could take all effective steps for effecting export by producing the export permit and Certificate of Origin before the customs authorities. In the meantime, the respondent would furnish I.C.O Stamps for completing the export formalities.

3. The plaintiff says that it is because of the said Circular instructions, the documents needed for export were submitted for customs authorities for clearance, who has cleared the consignment for export. The defendant did not furnish the stamps. The goods sailed to the destination port. Because of want of stamps, the goods were not released at the destination port and they had to be brought back for want of ICO stamps. Therefore, because of the mistake of the defendant in not supplying the stamps, the plaintiff has unnecessarily suffered freight charges both to and fro It is said that the plaintiff has paid Rs. 4,92,399.63 towards the freight charges. The plaintiff had to farther pay total damages of Rs. 3,26,727.50 to the foreign buyers for late shipment and delivery. Further the plaintiff has suffered Rs. 75,668.00 towards foreign exchange loss on account of delayed shipment. Therefore, the plaintiff claimed the above amounts with interest at 19%.

4. The defendant has filed the written statement admitting the fact that the plaintiff is the purchaser of coffee at auction. The contention that the circular instructions as per Ex. P4 permitted the export without I.CO stamps is held to be incorrect because the said Circular was issued in ignorance of the I.CO Rules. Therefore, the subsequent Circular is issued dated 22.12.1980 that the export cannot be permitted without the I.CO Stamps. It is further stated that the defendant had issued Circular at Ex. P5 that the coffee purchased in auction on 18.8.1982, the export to be effected within 31.8.1982, for which the defendant undertook to provide stamps, the plaintiff however did not effect export of the coffee within 31.8.1982 The shipment of coffee is done in between 1.9.1982 and 3.9.1982 Therefore, the export being beyond the cut off date under Ex. P5, the defendant had not guaranteed to supply the stamps for the period beyond 31.8.1982 The export made by the plaintiff was done in haste without the needed I.C.O Stamps. Whatever the loss the plaintiff has sufiered is on account of his haste and negligence and that the defendant is not answerable to the loss suffered by the plaintiff.

5. The trial court on consideration of the disputed factual contentions has framed the following issues:

(i) Whether plaintiff proves that he has suffered damages of Rs. 11,70,446.39 due to Arbitrary act of defendant as per para 10 of the plaint?

(ii) Whether plaintiff proves that defendant has committed breach in agreement?

(iii) Whether defendant is liable to pay damages as per para 10 of the plaint?

(iv) Whether defendant proves that there is no breach of contract?

(v) Whether defendant prove that this is barred as per para 14(c) of the written statement?

(vi) Whether suit is not maintainable for non-payment of proper Court fee?

(vii) Where there is cause of action to this suit?

(viii) Whether plaintiff is entitled for the interest?

(ix) Whether plaintiff is entitled for the suit reliefs as prayed?

(x) If so under what order or decree?

6. The trial court has found that there is no breach of contract on the part of the defendant. The defendant is not answerable to the loss suffered by the plaintiff and has dismissed the suit. Aggrieved by which judgment and decree, the present appeal is filed.

7. On consideration of the disputed facts and in the light of documentary and oral evidence adduced, the following points arise for consideration:

(1) Whether the plaintiff is entitled to benefit under Ex. P4 which provided taking necessary steps to effect export without ICO stamps?

(2) Whether the plaintiff has conducted effective export in terms of Ex. P5 which assured the exporters of providing ICO stamps if export is conducted within 31.8.1982 in respect of coffee sold at auction on 18.8.1982?

(3) Whether the loss suffered by the plaintiff is on account of breach of terms of contract and the circular instructions, if so, what is the amount the plaintiff is entitled towards suit claim?

8. In this appeal, the appellant along with the application under Order 41 Rule 27 filed four documents of custom clearance certificate in respect of 138 tons of coffee for export. The said documents are the public documents issued by the customs authorities. The counsel for the respondent also does not dispute about the genuineness and correctness of the documents. In that view, the said documents have been received as additional evidence. The said documents are marked as Ex. P23 to P26.

9. The defendant has taken up the contention that the suit is barred under Order 2 Rule 2 CPC. The plaintiff had filed another suit in O S No. 3151/85 seeking damages from the defendant herein for non supply of stamps within time as a result there was enhancement in customs duty. Therefore, based on Ex. P5 herein the plaintiff filed a suit that the defendant should compensate towards the payment of enhanced custom duty. The said suit is decreed. The defendant has also paid the amount under the decree. In that context, it is submitted that the claim in this suit should have been claimed in O S No. 3151/85 and filing of separate suit is untenable. The defendant has not produced the pleadings in O S No. 3151/85 to know the subject matter of the case and nature of the claim. The said claim obviously refers to a different consignment, which was subject matter of export on a different date. The present claim does not have any relevance with the subject matter in the suit O S No. 3151/85. In that view of the matter, the finding of the trial court that the suit is barred under Order 2 Rule 2 of CPC is bad in law.

10. On a thorough consideration of the facts and disputed contentions, it emerges that the defendant had issued circular at Ex. P4 for effecting export with all necessary documents even without ICO stamps. It is the contention of the defendant that they found that the circular instructions issued is contrary to the ICO Rules. Therefore, the said circular instructions have been ignored. The plaintiff relies on Ex. P4 to contend that because of circular instructions he transported the goods to Cochin Port and got the customs clearance without ICO Stamps. The goods have been shipped at the destination port. The goods could not be unloaded because the consignment was not supported by ICC stamps. Therefore, the goods had to be brought back. It is not in dispute that the plaintiff has spent freight charges to and fro, but it is the contention of the defendant that the practice of permitting export by the custom authorities without ICO stamps was contrary to the ICO Rules. Therefore, the said circular has been withdrawn. However, it is pertinent to note that the crucial document in this case appears to be Ex. P5, which reads as follows:

“Regarding issue of Coffee export Stamps. Issue of stamps will be regulated as per rules/conditions laid down in this behalf by the board. Stamps will be made available by the board for stocks with exporters including purchase in auction dated 18th August 1982 upto ninety percent of purchases for export to member countries subject to the conditions that are effected by 31st August 1982. Unutilised stamps, if any, on 3 September 1982 should be returned to the docrno Mangalore on 4 September 1982.

Issue of stamps thereafter will be on priority basis depending upon the shipments schedules subject to availability of stamps. In any case shipment for stamps issued shall be completed by 15 September 1982.

We wish to reiterate that stamp will not be issued by docmo to such of the exporters who have on hand stamps unutilised that who do not furnish details of certificates of origin, name of vessel BTC, in respect of such unutilised stamps including stamps tendered to customes.

In respect of sales to new markets under rebate scheme for which permission has been given by the board on tenth august 1982 stamps will not be issued till 1st October 1982.

Exporters are again requested to forward certificates of origin with customs stamping vrithm three days after shipment positively.

Addressed to Registered exporters except Assadi & Azico and reptd docmo mangalore for strict complaince.”

11. In Ex. P5 the defendant categorically undertakes to supply I.CO stamps in respect of export of coffee effected on or before 31.8.1982 In respect of export subsequent to 31.8.1982, no assurance is given regarding supply of stamps. It is stated that on priority basis on first come first serve basis, the stamps would be supplied.

12. The custom clearance certificates disclose that in respect of 138 tons of coffee clearance is given on 30.8.1982 It is the contention of the plaintiff that the exporter's obligation to do further formalities of export would cease when once the customs clearance is given. The responsibilities of the goods would be upon the port authorities and the concerned ship to get the consignment loaded. Therefore, it is argued that when once the customs clearance is given in respect of 138 tons, the plaintiff has discharged its obligation of effecting export as required in Ex. P5. In this regard, the decision of the Supreme Court in Union of India v. Asian Food Industries, reported in 2006 (204) E.L.T 8 (S.C) is relied upon. In paragraphs 34 to 36, the following observations are made:

“34. It furthermore lays down that although actual export had not taken place but in the event goods are handed over to the custom authorities before expiry of the export obligation period but actual export takes place after expiry thereof, the same shall be considered within the export obligation and taken towards fulfillment of such obligation.

“35. Section 51 of the 1962 Act, therefore, does not say that unless and until the shipment crosses the international border, the notification imposing prohibition shall be attracted.

“36. Different stages for the purpose of the said Act would, therefore, be different. For interpretation of the provision of the 1992 Act and the policy laid down as also the procedures framed thereunder vis-a-vis the provisions of the 1962 Act, the rate of custom duty has no relevance. What would be relevant for the said purpose would be actual permission of the proper officer granting clearance and loading of the goods for exportation. As soon as such permission is granted, the procedures laid down for export must be held to have been complied with.

13. On a thorough consideration of the facts and material and in the light of the decision of the Supreme Court, the contention of the appellant that he had effected export of 138 tons of coffee on or before 31.8.1982 and for which the defendant should have supplied the stamps is sound and proper. The customs clearance for rest of the consignment which is granted after 31.8.1982 would not get the benefit of Ex. P5.

14. The plaintiff has sought for damages for entire consignment of 230.4 tons of coffee. Towards to and fro freight charges, the plaintiff is said to have spent Rs. 4,92,400.33. In respect of 138 tons, the freight charges is in a sum of Rs. 3,06,175.00. To that extent, in view of Ex. P5, the defendant is liable to pay the freight charges.

15. The plaintiff states that he has paid Rs. 3,26,727 towards damages to the foreign buyers for delayed shipment and supply which is for the entire quantity of 230.4 tons. In respect of 138 tons, the damages comes to Rs. 1,95,695.85 (3,26,727÷230.4 tons × 138 = Rs. 1,95,695.85) rounded of to Rs. 1,95,696/-.

16. The plaintiff has not produced any material to show that it has suffered loss of Rs. 75,668/- towards foreign exchange loss. Therefore, the plaintiff is not entitled for the said amount.

17. Therefore, the plaintiff would be entitled to a sum of Rs. 5,01,871/- payable with interest at 12% from the date of suit till payment.

The appeal is partly allowed. The suit O.S No. 4763/1986 is decreed in part for Rs. 5,01,871/- payable with interest at 12% from the date of suit till payment.