Court of Appeal cannot indulge in fact-finding of first instance in any given case: Delhi High Court
It is undisputed that a court that acts under an appellate jurisdiction cannot indulge in the fact-finding procedure of trial courts. This accepted provision was reiterated by the bench of Rajiv Shakdher J. and Talwant Singh J. of the Delhi High Court in the case Hapag Lloyd India Pvt. Ltd. v Hotel Needs India [FAO (COMM) 51/2021] surrounding issues of agency and the right to lien.  The appellant no.1 is a Shipping Line, engaged in transporting goods through sea. The agent, appointed by respondent no. 1, had appointed Freight Forwarder/Agent, who in turn engaged the services of the appellant no.1. When the goods were loaded on the ship, the Bill of Lading dated 18.01.2020 was issued by the present appellant no.1 in the name of respondent. Since necessary certificates could not be produced by the Shipper and/or Consignee, the cargo was required to be re-shipped to its place of origin, i.e., India, and accordingly, it was loaded on board by the present appellant no.1 by issuing Bill of Lading dated 30.07.2020 and it reached in October, 2020 at JNPT Port, Uran, Raigad, India. The appellant company refused to issue delivery order of the cargo as well as refused to hand over the Bill of Lading to respondent no.1 till all its dues in respect of detention, demurrage and other charges at the port of destination as well as Indian port are cleared. It was clear to the bench upon the submissions of either parties that the Ld. Trial Court had failed to appreciate even one single argument of defendant while passing the impugned order. The said order, at its best, could be termed as an ex-parte order solely based upon the submissions of the plaintiff; passed without caring for the reply or the written submissions filed by defendant nos. 5 and 6, who had no option but to challenge the said order before this court by filing this appeal. It was also to be noted that merely stating in the impugned order by the Ld. Trial Court that plaintiff hadn’t been able to show a prima facie case in his favour therefore the balance of convenience was also in favour of the plaintiff and irreparable loss and injury would be caused to the plaintiff if interim injunction is not granted to him; does not satisfy the sacrosanct test of law and equity, where stand of the contesting defendants was totally ignored.  Since, no findings had been given by the Ld. Trial Court on the stand of the contesting defendants as detailed above, the bench refrained from arriving at any findings on the same s well, since a court of appeal cannot indulge in fact-finding of the first instances. The only option left was to remand the matter back to the Ld. Trial Court with a request to consider all the documents and pleadings qua the interim application as well as the written submissions filed by both the parties, and thereafter, decide the interim application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure, afresh by passing a detailed, reasoned order.
 IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 26thApril 2021 FAO51 2021& CM APPL. No. 31579 2020 HAPAG LLOYD INDIA PVT LTD & ANR. .....Appellants Through: Mr. M.S. Kalra Advocate. HOTEL NEEDS INDIA & ORS. .....Respondents Through: Mr. Sushil Tekriwal Advocate for R 1. Mr. Deepak Kumar Mishra for R 2 and 3. HON BLE MR. JUSTICE RAJIV SHAKDHER HON BLE MR. JUSTICE TALWANT SINGH TALWANT SINGH J.: The appellant no. 1 is a duly incorporated company and appellant no. 2 is its director. The appellants have preferred this appeal against the order dated 19.11.2020 passed by the learned District Judge Commercial Court South East District at Saket Delhi in Civil Suit No. 310 2020 titled Hotel Needs India vs. AVM Cargo Pvt. Ltd. & Ors. By way of the impugned order the learned District Judge was pleased to direct the present appellants who are defendant nos. 5 and 6 before the said Court as under: “In the facts and circumstances of the case defendant no. 5 and 6 are directed to release the delivery order as well as original Bill of Lading no. HLCUVAN20070919 of re import shipment to enable the release of the subject consignment in favour of the plaintiff subject to payment of invoice no. 2074601095 and 2074601097 by the plaintiff within 3 days from the date of the order.” FAO51 2021 2. The brief history of the case as per appellants is that the appellant no.1 is a Shipping Line engaged in transporting goods through sea. Respondent No. 1 herein is the plaintiff in the suit below who had appointed respondent nos. 2 and 3 as its Freight Forwarder Agent for the purpose of exporting a consignment of stainless steel utensils to its client in Canada who are respondent nos. 6 and 7 in the present appeal. The agent appointed by respondent no. 1 had further appointed Freight Forwarder Agent who in turn engaged the services of the appellant no.1. When the goods were loaded on the ship the Bill of Lading dated 18.01.2020 was issued by the present appellant no.1 in the name of respondent no. 1. The cargo reached its destination in Canada on 07.03.2020 but the necessary certificates i.e. Fumigation Certificate as well as Phytosanitary Certificate were lacking which were required as per applicable Canadian law and as per the appellants the said certificates ought to have been furnished by respondent no.1 or respondent no.6 the seller and buyer of the consignment respectively. Due to this reason the consignment remained uncleared at the Canadian Port and certain charges for demurrage detention customs and other incidental charges had been incurred which were duly billed by appellant no.1 vide invoices dated 23.07.2020 and 24.07.2020. These invoices were raised against respondent no.1 as well as respondent no.6 who are “Shipper” and “Consignee” of the consignment in issue. The said invoices were payable by “Merchant” and the definition of „Merchant‟ includes „Shipper‟ and „Consignee‟ both. Since necessary certificates could not be produced by the Shipper and or Consignee the cargo was required to be re shipped to its place of origin i.e. India and accordingly it was loaded on board by the present FAO51 2021 appellant no.1 by issuing Bill of Lading dated 30.07.2020 and it reached in October 2020 at JNPT Port Uran Raigad India. The appellant company refused to issue delivery order of the cargo as well as refused to hand over the Bill of Lading to respondent no.1 till all its dues in respect of detention demurrage and other charges at the port of destination as well as Indian port are cleared. Respondent no.1 herein filed Civil Suit No. 310 2020 along with an interlocutory applicationbefore the District Court praying for following reliefs: jointly severally & in general “(A) The defendants collectively and D5 and D6 in particular to release forthwith Delivery Order as well as original Bill of Lading No. HLCUVAN20070919 of reimport shipment enabling the release of subject consignment with subject articles in favour of the plaintiff or alternatively to pay the total consignment value of USD 34270 with all damages and losses caused to the plaintiff in the course to the extent of Rs. 40 lakhs interest excluded till its final realization jointly and severally. B) To declare the impugned communication of D5 and D6 null and void with respect to their illegal demands i.e. dated effects communications if any emanating out of the same. C) To grant injunction in favour of the plaintiff and against the defendants from keeping the subject consignment into illegal confinement by taking law into their hands wherein declaring that the Delivery Order as well as original Bill of Lading No. HLCUVAN20070919 of reimport shipment shall not be released by them unless impugned communication dated 29.10.2020 is being complied. D) To grant injunction in favour of the plaintiff and against the defen1dants from any further incurrence of demurrage and damage charges since the subject consignment is kept in to illegal confinement by defendants by taking law into their hands wherein declaring that the Delivery Order as well as original Bill of Lading No. HLCUVAN20070919 of reimport FAO51 2021 shipment shall not be released by them unless impugned communication dated 29.10.2020 is being complied. E) To pass any order or orders as this Hon‟ble Court may deem fit and proper in present facts and circumstances of the The present appellants were listed as defendant nos. 5 and 6 in the said suit. Summons in the suit and notices on the interim application were issued to the defendants. The present appellants filed a reply to the interim application on 10.11.2020 followed by detailed written submissions. Thereafter arguments were heard and the impugned order was passed which has been challenged by the appellants by filing an appeal before this Notices were issued to the respondents. Reply has been filed by the contesting respondent no.1. The appellants have also filed an additional affidavit listing out details of up to date amount due from respondent no.1 2019459837 23 07 2020 Destination Port 17 155.60 USD Date as under: Invoice 2019459943 24 07 2020 Demurrage at 23 759.00 USD Destination Port DL10135886 03 09 2020 Sea freight for re 1 33 750.41 FAO51 2021 Amount in 12 47 898.344 17 30 848 DL10135888 03 09 2020 Indian Port and 67 603 INR DL10159053 01 02 2021 Detention charges 5 26 566.16 DL10160536 09 02 2021 Detention charges 2 44 445 INR Not raised 1 06 912 INR ICD expenses At Indian ICD till 31st December at Indian ICD from 01 01 2021 to 31 01 2021 Detention from 1stFebruary 2021 Till 16 02 2021 @ Rs. 6682 per day. Total till 40 58 022.914 However in the reply filed by the present appellants before the trial court in paragraph no. 9 a reference was made to only first four bills but the bill numbers were inadvertently mixed up. In the chart above the last two bills one dated 09.02.2021 and other „Not Raised‟) were apparently not part of the reply before the trial court as the said reply was filed on 10.11.2020 and the last two bills above pertain to demurrage charges incurred at Indian port after the said date. Respondent no.2 and 3 have filed response affidavit to the additional affidavit filed by the appellants. As per them the suit before the trial court itself is not maintainable. They have also enclosed copy of the application filed before Ld. Trial Court under Order VII Rule 11 of Code of Civil FAO51 2021 Procedure. Respondent no.1 in its reply has denied the allegations made in the appeal and has supported the impugned order. We have heard the arguments in detail. We have also gone through the impugned order pleadings and documents filed on record by the parties. It is not in dispute that on the date when arguments on interim application were heard by the Ld. Trial Court the reply filed by the contesting defendant nos. 5 and 6 who are appellants before us was already on record but surprisingly in the impugned order not even one single sentence has been mentioned about the stand taken by the present appellants before the Ld. Trial Court and the impugned order dated 19.11.2020 was passed only on the basis of submissions made on behalf of the plaintiff without considering any argument advanced on behalf of the present appellants who were vehemently opposing defending the said interim application. During the arguments learned counsel for the appellants has relied upon the terms and conditions of Bill of Lading which contains the definition of “Merchant” as under: the booking party “Merchant: Includes shipper and consignee named on page 2 hereof holder receiver of the Goods or of this Bill of Lading and any person owning or entitled to the possession of the Goods or this Bill of Lading.” 10. As per the learned counsel for the appellants the “Merchant” includes the present respondent no. 1 who was the “Shipper” as well as the “Consignee” being present respondent nos. 6 and 7. He has also referred to Merchant‟s responsibility mentioned in Clause 12of the Bill of Lading and the same reads as under: “Merchant shall comply with all regulations or requirements of customs ports and or other authorities including but not limited to those relating to VGM and shall bear and pay all duties taxes fines imposts expenses or losses 51 2021 Freight for any additional Carriage) incurred or suffered by reason of any failure to so comply or by reason of any illegal incorrect or insufficient weighing marking number or addressing of the Goods or Containers or the discovery of any drugs narcotics stowaways or other illegal substances within Containers packed by Merchant or inside Goods supplied by Merchant or stamp duty imposed by any country and shall indemnify Carrier in respect thereof.” 11. Learned Counsel for appellants has also referred to the lien of the carrier as detailed in Clause 15 of the Bill of Lading which is reproduced here under: Carrier shall have a lien on the Goods and any documents relating thereto for all sums payable by Merchant to Carrier under this or any other contract and for general average and or salvage contributions to whomsoever due. Carrier may exercise its lien at any time and in any place at its sole discretion whether the contractual Carriage is completed or not. Carrier‟s lien shall extend to cover the cost and attorneys fees of recovering any sums due. Carrier shall have the right to sell the Goods at public or private sale at the expense and without notice to the Merchant. If the proceeds of this sale fail to cover the whole amount due Carrier is entitled to recover the deficit from Merchant.” 12. While going through the Bill of Lading it has also come to our notice that Clause 25 provides for the territorial jurisdiction of only the Courts at Hamburg Germany. The contract of shipping is to be governed by German law. It is worthwhile to mention that this Bill of Lading is available on the Ld. Trial Court‟s file and the same is relied upon by both the parties. The detailed written submissions filed by defendant nos. 5 and 6 running into 18 pages were also on record of the Ld. Trial Court in which specific reference has been made to the right of lien of the contesting defendants in respect of the goods and liability of the plaintiff FAO51 2021 to make payments of all invoices raised in respect of goods in question. Relevant portion of the written submissions is reproduced hereunder: “6. Now this Defendant will deal with the different aspects of the present matter under the following heads: a) Right of Lien of this Defendant in respect of the goods for payment of detention demurrage charges: i) Both the Bills of Lading issued by this Defendant no. 5 for carriage of the subject goods from India to Canada as well as from Canada to India unequivocally contain the terms and conditions of the carriage which includes the right to Lien and merchants‟ responsibilities Supp2 SCR 915” and in the case of “J.V. Gokal& Co. Ltd v s. The Assistant Collector of Sales Taxand Ors. AIR 1960 SC595”. ii) Under the provisions of Section 59 and 60 of the Major Port Trust Act 1963 this Defendant as well as the Port is entitled to exercise lien on the goods for “freight and other” charges and accordingly this right of lien is not only contractual but also statutory in nature and therefore this Hon‟ble Court ought not to pass any order in respect of Plaintiff‟s goods release as the same would be contrary to law and contractual arrangement between the parties. FAO51 2021 The right of shipowners lien and the right to charge detention demurrage charges is also upheld by the Hon‟ble Supreme Court of India in the case of “Shipping Corporation of India Ltd. v s. C.L. Jain Woolen Mills &Ors. 2001 ECR 6257577 2019 & CM No. 47877 2019 decided on 20 12 2019”. Also see “Mumbai Port Trust v s M s. Shri Lakshmi Steels and Ors. Etc. Civil Appeal nos. 9831 317 decided by the Hon’ble Supreme Court of India on 27thJuly 2017”. b) The Plaintiff is liable to make payments of all invoices in respect of the subject goods: i) It has been pointed out and contended by the Plaintiff that it is ready to deposit before this Hon‟ble Court the amounts due and payable in respect of invoices no. 2074601095 for an amount of Rs. 1 33 750.41 and invoice no. 2074601097 for an amount of Rs. 67 603 380 but he is not liable to pay or deposit amounts for invoice no. 2019459837 dated 23rd July 2020 for an amount of UD17 155.60 and invoice no. 2019459943 dated 24th July 2020 for an amount of USD23 795.00As against this this Defendant strongly states that it is absolutely false to state that the USD invoices are raised upon the Defendant no. 7 and not on the Plaintiff. A bare perusal of the said invoices at Annexure “A3” shall reveal that the invoice is not addressed to the Defendant no. 7 particularly. In fact the names of both the Plaintiff as well as the Defendant no. 7 are mentioned on the said invoices as Shipper and Consignee respectively. Thus the said invoices are not particularly addressed to a particular party but the amount therein is payable by either the Plaintiff or the Defendant no. 7. In order to understand this liability of both the parties it shall be necessary to see the clear and unambiguous terms and conditions of the Bill of Lading printed on the rear and FAO51 2021 the definition of the definition of annexed as Annexure “D4” along with the reply to I.A. A joint reading of clause no. 12 13 14 and 15 of the said terms and conditions would show that all the costs expenses freight charges losses liabilities and all monies due to the present Defendant no. 5 are payable “jointly and severally” by all persons coming under “MERCHANT”. Now “MERCHANT” given in the same terms state that “Merchant includes the booking party shipper and consignee named on page 2 hereof holder receiver of the Goods or of this Bill of Lading and any person owning or entitled to the possession of the Goods or this Bill of Lading”. Thus it can be seen that the Plaintiff cannot escape the liability to pay the costs and charges incurred at the Canada Port i.e. USD Bills as all the charges are payable by “Merchant” as per the terms of Bill of Lading and the Plaintiff being the consignor of the goods comes under the definition of the term “Merchant” as the BL. iii) Without prejudice to the above it is submitted by this Defendant that be that as it may it is even otherwise crystal clear from the above mentioned statues law judgments and terms and conditions of the Bill of Lading that this Defendant has a statutory as well as contractual right of lien on the goods for “freight as well as other charges” which undoubtedly include the expenses in respect of these goods at the Port of destination in Canada. Therefore this Defendant is well within its rights to hold the goods unless “All the charges” in respect of the said goods are paid to it either by the Plaintiff or by the Defendant no. 7. It has been held by the Hon‟ble Supreme Court of case of “M s. RasiklalKantilal& Co. v s. Board of Trustees of the Port of Bombay & Others Civil Appeal no. 59611 decided on 27 02 2017” that the right of lien in respect of goods for demurrage charges is enforceable against any person claiming goods even if he may be a complete stranger to the contract of carriage and that this right to hold the goods for demurrage charges should be protected. iv) Without prejudice to the above even otherwise it is apparent on the face of record that the goods belong to the Plaintiff the Plaintiff had a contract with the Defendant no. 7 for sale of goods the Plaintiff shipped the goods from India to Canada the necessary certificates were not provided by the FAO51 2021 Plaintiff for the said goods the Plaintiff shipped the goods from India to Canada the necessary certificates were not provided by the Plaintiff for the said goods the Defendant no. 7 who is the Plaintiff‟s customer failed to take delivery of the said goods in Canada demurrage and other charges have been imposed in Canada on the said goods the goods were returned to India on Plaintiff‟s account the present Defendant no. 5 has suffered expenses as the Port of destination because of the Plaintiff and his customers defaults and now the Plaintiff has come to claim delivery of the goods from this Defendant. Thus even as a matter of logical thinking it is only the Plaintiff who is responsible to pay the said charges suffered by this Defendant at the Port of destination and then claim the goods from this Defendant. Thus from all the above mentioned facts circumstances and legal propositions it would become crystal clear that this Defendant has a statutory as well as contractual lien on the subject goods of the Plaintiff and the Hon‟ble superior Courts of the country have time and again upheld the legality of the lien of Shipping Line and Ports over goods for payment of demurrage and other charges.” 13. Significantly there is no mention about any of the above arguments defenses taken by the present appellants before the Trial Court. The contesting defendants have also raised serious objection to the plaintiff classifying the stainless steel utensils as „Perishable‟. The said stand of the defendants is contained in paragraph 6 of the detailed written submissions and the same are reproduced hereunder: “c) The Plaintiff is not entitled to any relief from this Hon’ble Court as he has approached the Court with unclean hands and made false statements on oath in Plaint as well as I.A.: i) Without prejudice to the above it is most respectfully stated by the present Defendant that the Plaintiff has stated in para no. 30 and 33 of the Plaint that there is an extreme urgency in the present matter as the goods detained by this Defendant are “Perishable”. Moreover on the strength of these statements FAO51 2021 in and relying on this false contention before this Hon‟ble Court the Plaintiff filed the present Interim Application and prayed the present I.A. for urgent hearing and decision Unfortunately even the Ld. Counsel representing the plaintiff has strenuously argued before this Hon‟ble Court that the goods are of “perishable” nature and therefore relying on these statements this Hon‟ble Court was pleased to issue urgent notices of hearing to all Defendants on 5th November thereafter when the matter was heard on 9th November again the Ld. Counsel representing the Plaintiff strongly argued that the Plaintiff‟s goods are “Perishable” and likely to decay and again believing these statements this Hon‟ble Court was accordingly pleased to adjourn the matter for filing replies to I.A. and hearing on the very next day i.e. 10th November. This Defendant most respectfully stated that this is clearly gross abuse of legal process on the part of the Plaintiff. As per the Plaintiff‟s own declarations in Bill of Lading the goods are “Stainless Steel Utensils” and as per statement made in the Plaint and even in fact the said goods are on board for transportation from January 2020. It is pertinent to note that as peer the Plaintiff‟s own statements the goods claimed to be “perishable” have been transported from India to Canada and back from Canada to India from almost last 11 months. Firstly it is interesting to see the definition of the term “perishable” as per different dictionaries is as follows: “likely to decay or go bad quicky” “likely to perish subject to destruction or natural decay”. Now at no stretch of imagination Stainless Steel Utensils can be said to be “Perishable”. In fact stainless steel utensils are used in almost every house and it has never been heard of being decayed or destroyed.” 14. The present appellants have also referred to the lien of Port Authorities as well as the Ship Owner‟s lien in respect of the goods in terms of Sections 59 and 60 of The Major Port Trust Act 1963. The said sections are reproduced here under: “59. Board’s lien for rates: FAO51 2021 For the amount of all rates in respect of any cargo and for the rent due to the Board for any buildings plinths stacking areas or other premises on or in which any cargo may have been placed the Board shall have a lien on such cargo and may seize and detain the same until such rates and rents are fully paid. 2) Such lien shall have priority over all other lines and claims except for general average and for the ship owner‟s lien upon the said cargo for freight and other charges where such lien exists and has been preserved in the manner provided in sub section of section 60 and for money payable to the Central Government If the master or owner of any vessel or his agent at or before ethe time of landing from such vessel any cargo at any dock wharf quay stage jetty berth mooring or pier belonging to or in the occupation of a Board gives to the Board a notice in writing that such cargo are to remain subject to a lien for freight or other charges payable to the ship owner to an amount to be mentioned in such notice such cargo shall continue to be liable to such lien to such amount. 2) The cargo shall be retained in the custody of the Board at the risk and expense of the owners of the cargo until such lien is discharged as hereinafter mentioned and godown or storage rent shall be payable by the party entitled to such cargo for the time during which they may be so retained. 3) Upon the production before any officer appointed by the Board in that behalf of a document purporting to be a receipt for or release from the amount of such lien executed by the person by whom or on whose behalf such notice has been given the Board may permit such cargo to be removed without regard to such lien provided that the Board shall have used reasonable care in respect to the authenticity of such FAO51 2021 15. Surprisingly there is no mention of the above quoted sections or The Major Ports Act 1963 anywhere in the impugned order although this is one of the major defenses taken by the present appellants while opposing the interim application filed by respondent no. 1. 16. After going through the above it is clear that the Ld. Trial Court has failed to appreciate even one single argument of defendant nos. 5 and 6 while passing the impugned order. The said order at its best can be termed as an ex parte order solely based upon the submissions of the plaintiff passed without caring for the reply or the written submissions filed by defendant nos. 5 and 6 who have no option but to challenge the said order before this court by filing this appeal. 17. It is to be noted that merely stating in the impugned order by the Ld. Trial Court that “plaintiff has been able to show a prima facie case in his favour Balance of convenience is also in favour of the plaintiff and irreparable loss and injury would be caused to the plaintiff if interim injunction is not granted to him” does not satisfy the sacrosanct test of law and equity where stand of the contesting defendants was totally ignored. 18. We are conscious of the fact that even after discussing the stand of the defendants the Ld. Trial Court could have reached to the same conclusion as arrived in the impugned order but at least consideration of the stand of both the contesting sides is required to arrive at a reasoned 19. Since no findings have been given by the Ld. Trial Court on the stand of the contesting defendants as detailed above we also refrain from arriving at any findings on the same and the only option left for us is to remand the matter back to the Ld. Trial Court with a request to consider all the documents and pleadings qua the interim application as well as the FAO51 2021 written submissions filed by both the parties and thereafter decide the interim application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure 1908 afresh by passing a detailed reasoned order. We have been also informed that the written statement as well as replication are already on record which will help the Ld. Trial Court in crystallizing the dispute between the parties and to reach to a logical conclusion regarding the interim order to be passed in the facts and circumstances of the case after considering all the aspects of the matter equities applicable law and rival contentions of the contesting parties. 20. Both the parties shall appear before the learned Trial Judge on 12.05.2021. We request the Ld. Trial Court to make every endeavor to dispose of the interim application at the earliest after giving sufficient opportunity to the contesting parties to address arguments. Till that time impugned order dated 19.11.2020 shall remain suspended. 21. The trial court is at liberty to set aside rescind modify or re confirm the impugned order dated 19.11.2020 without getting influenced by anything stated in the order hereinabove as we have not expressed any opinion on the merits of the case. It has also come to our notice that the valuation of the suit has not been done as per The Suits Valuation Act 1887 and the appropriate court fees as per The Court Fees Act 1870 has not been paid on distinctive reliefs prayed for by plaintiff in the suit. Learned Trial Judge may give an opportunity to the plaintiff to value its suit properly by segregating every claimed relief and to pay the appropriate ad valorem fixed court fees on the said reliefs. FAO51 2021 23. Accordingly the appeal is disposed of. All the pending application(s) shall stand closed. TALWANT SINGH J. RAJIV SHAKDHER J. APRIL 26 2021 Click here to check corrigendum if any FAO51 2021 