IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.11.2009 CORAM THE HON'BLE MR. JUSTICE V.PERIYAKARUPPIAH A.No.4752 of 2004 in C.S.No.292/1997 ORDER
This application has been filed by the defendant under Order VIII (A) of C.P.C r/w Order V (A) of original side rules to issue third party notice to the 3rd respondent herein and to permit the applicant to claim contribution from the 3rd respondent/ 3rd party by way of cross decree in their favour and against third party herein directing them to pay the applicant in favour of the defendant for a sum of Rs.59,60,842/- together with interest thereon at the rate of 18% p.a from the date of plaint till the date of realisation.
2. The reasons stated by the defendant/applicant for issuing notice to the third party under Order VIII (A) of C.P.C would be as follows:
(a) The plaintiffs have filed the above suit for a recovery of sum of Rs.59,60,842/- together with interest thereon at the rate of 18% p.a and for costs. The plaintiffs base their claim that the defendant had acknowledged entrustment of 1,60,000 bags of ordinary port land cement bags each weighing 5,800 metric tonnes for carrying through sea and to be delivered at Port Blair. Further case of the plaintiffs would be that the said cargo was discharged in a damaged condition resulting in pecuniary loss amounting to Rs.57,87,810/- and the 1st plaintiff had insured the said cargo with the 2nd plaintiff under the policy of insurance and had settled the claim of the 1st plaintiff at Rs.58,45,112/- based on the insured value. It is further stated by the defendant that he had chartered the motor vessel M.V.Raigad on a time charter basis dated 18.05.1995 fixture note in order to transport the said cement cargo to Port Blair with M/s. Garware Shipping Corporation Ltd, the third respondent/ 3rd party herein. The said time charter agreed to charter their vessel M.V.Raigad with an implied warranty that the said vessel was in a sea worthy condition and fit enough to carry any type of cargo including the bagged cement. Accordingly the vessel sailed from Kakinada after loading the entire cargo and arrived at Port Blair, on 30.11.1995 and discharge operations were commenced and were completed by 08.12.1995.
(b)The case of the plaintiffs is that while taking delivery due inspection was carried out which revealed extensive water damage to cement bags was resulted in number of bags and the cement were damaged. According to the plaintiffs the loss on account of water damage was as a result of un seaworthy condition of the vessel employed by the defendant for the purpose of carrying the cargo by sea to the port of discharge. The defendant had also sent a letter to the said M/s. Garware Shipping Corporation Ltd on 12.02.1995. The survey report of the plaintiff would also establish that the loss was predominantly of the un seaworthy condition of the vessel. Therefore the said damages have been caused due to extraordinary weather prevailing at the time of sea voyage and despite exercising due diligence the damages to cargo could not be averted and it had not arisen due to negligence or misconduct of the defendant. The said damages to the cargo and the loss can be arisen only due to negligence of the owner of the vessel namely M/s. Garware Shipping Corporation Ltd. In the event of holding that the defendant liable for the suit claim, the defendant is entitled to be indemnified by the owner namely M/s. Garware Shipping Corporation Ltd and a cross decree should be passed in the favour of the defendant as contemplated under the provisions of Order VIII (A) of the Civil Procedure Code. Since the 3rd party M/s. Garware Shipping Corporation Ltd is liable to indemnify the defendant in the event of this court holding with the loss in question was due to or had resulted by the carrying vessel M.V.Raigad Owner/chartered by the proposed third party being un seaworthy the defendant is entitled to obtained the decree against the said 3rd party for a sum of Rs.59,60,842/-. Therefore it has become necessary to order third party notice under Order VIII (A) r/w. Order V (A) of Original Side Rules and to permit the applicant/defendant to claim contribution from the 3rd party/ 3rd respondent for the aforesaid amount with interest and costs.
3. The respondents 1 and 2 would state in their counter that the applicant herein filed the written statement in which they have specifically mentioned the details of the 3rd respondent herein. The defendant in the suit was well aware about the details of the 3rd respondent even when the written statement was filed and much before when the cause of action for the suit which arose in the year 1995. There is no mention in the written statement about the pending claim with the owners of the vessel or even about their liability. It is evident that the petitioner herein has slept over the issue for a period of more than eight years and has now come up with an application for a cross decree against the 3rd respondent which is hopelessly barred by Law of Limitation and under the charter party of the Carriage of Goods by Sea Act. The applicant was aware of the details of the 3rd respondent ought to have filed the above application for cross decree immediately upon receipt of suit summons subject to Law of Limitation which they failed to do. The reasons for the delay in filing the above application are not set out in the affidavit filed in support of the above application and hence the application filed by the applicant is not maintainable and is liable to be dismissed.
4. The 3rd respondent would state in his counter that the present application is not maintainable both in law and as well as on facts. The 3rd respondent is not liable to pay any amount to the plaintiff. The defendant has to independently deal with the suit claim. The defendant cannot make up liable for the claim of the plaintiff. Without going into the merits of the suit in C.S.292 of 1997, it is suffice to state that the 3rd respondent is not in anyway liable to pay any amount either to the plaintiff or to the defendant.
(b) The allegations made by the plaintiffs that the said vessel M.V.Raigad was not sea worthy to transport the said cargo from Kakinada to Port Blair is false. The 3rd respondent cannot be asked to answer the contentions and the claim of the plaintiffs, especially when they do not have any privity of contract with the plaintiff. The 3rd respondent cannot be made responsible for the loss alleged to have been caused to the said cargo as the vessel was sea worthy which has been certified by recognized authorities before sailing and after reaching the destination during trading period. The plaintiff is not the recognized authority to certify the seaworthiness of our vessel their cannot be a conclusive proof for condition of our vessel. When they have taken a first stand in the written statement that the damage to any cargo was attributed to the extraordinary weather prevailing at the time of the sea voyage and that despite exercising due diligence the damage to cargo could not be averted for which the defendant was to be exempted from liability as per the privileges and immunities contained in Article IV Rule 2 (c) of the Hague Rules. Therefore in applying the same corollary, the present application alleging the 3rd respondent company vessel is responsible for the alleged damage to the cargo is itself not maintainable. We strongly object to the allegation that the damage caused to the cargo and such damage and loss can be attributed only to the negligence of the owner of the vessel, namely M/s. Garware Shipping Corporation Limited.
(c) The 3rd respondent also submit that there was an arbitration proceedings held between the defendant/applicants herein and ourselves, wherein the defendant herein raised various contentions against us before the Arbitration Tribunal consisting of M/s. K.P.Patel, V.K.Bhandari and S.D.Mehta. After, contest on 12.10.2000 the said Arbitrators were pleased to pass an award dated 17.10.2000. By virtue of the said award 3rd respondent was directed to pay Rs.7,22,446.82 plus interest. In pursuance to the said award the defendant also filed an execution application No.340 of 2001. In pursuance to the same, we paid Rs.11,38,714/- together with interest on principal sum of Rs.7,22,446.82/- in March 2002 itself. Hence the claim, if any, between the defendant and the company was already settled in 2002. Even at that time the defendant know about the suit and they did not make any effort to claim any amount from the 3rd respondent based on the plaintiff’s present claim. The present application is not only time barred but also hit by the principles laid down under Order 2 Rule 2 of C.P.C. The 3rd respondent therefore submits that they are unnecessarily dragged in to the present suit between the plaintiff and the defendant this will put to great loss and hardship and hence prays that the present application may be dismissed.
5. Mr.K.Bijai Sundar, the learned counsel for the applicant/defendant would submit in his argument that the suit claim was made by the plaintiff for the damages caused to the cement cargo, which was transported by the defendant from Kakinada to Port Blair, for a sum of Rs.59,60,842/- with subsequent interest and costs to which the defendant had contracted charterer M/.s Garware Shipping Corporation Ltd, the 3rd party herein and the said cargo were carried in their vessel M.V.Raigad with an implied warranty that the said vessel was in a sea worthy condition and fit enough to carry any type of cargo including the bagged cement, but it resulted in vast damage during the cargo was carried in the sea and this would clearly show that the charterer who was contracted by the defendant was also liable to pay the said damages as claimed by the plaintiff in the event of this court finding the plaintiff entitled for the suit claim. He would further submit that the damage was admittedly caused due to unseaworthy condition of the vessel and the report issued by the plaintiff’s would establish that the damages were caused due to un seaworthy conditions and therefore 3rd party M/s. Garware Shipping Corporation Ltd, against whom a cross decree can be passed in favour of the defendant as the 3rd party is liable to indemnify the defendant towards the suit claim launched by the plaintiff against the defendant.
6. Learned counsel would further stress in his argument that unless 3rd party notice is issued under Order VIII (A) of C.P.C the defendant would have to resort entire proceedings and it will take longer period for recovery of the said amount from the 3rd party and the said provision contemplated under Order VIII (A) C.P.C and therefore the 3rd party notice has to be ordered against the 3rd respondent/ 3rd party.
7. Learned counsel Mr.C.Umashankar for the 3rd party/ 3rd respondent would submit in his argument that the defendant had filed the written statement on 12.11.1998, and long after filing the written statement, he has filed the present application for passing cross decree against the 3rd party in the event, a decree has been passed in favour of the plaintiff which is not sustainable both in law and on facts. He would submit in his argument that after the filing of the suit by the plaintiff, the arbitration proceedings have been initiated by the defendant against the 3rd party at Bombay and the arbitrate award has also been passed on 17.10.2000 and it has become final and a sum of Rs.11,38,714/- was recovered form the 3rd party and all these facts have not been disclosed by the defendant in his affidavit and he has been dragged to the court for the 2nd occasion. If any award is passed for the claim of the defendant for Rs.59,60,582/- with subsequent interest and costs it would be amounting to a double claim. He would again submit in his argument that the 3rd party need not be proceeded in this application since because the defendant had not come with clean hands by disclosing the arbitration proceedings in the affidavit, despite he had filed the same in the year 2004. He would also submit that the claim against the 3rd party have been already barred by limitation and therefore the claim of the defendant in the 3rd party proceedings is not sustainable in law. He would also submit that the defendant and the 3rd party had entered into a time charter and in according to the time charter the dispute in between the defendant and the 3rd party should have been referred to arbitrator and accordingly the arbitrator has been appointed and he had also passed an award after giving opportunities to both parties to let in evidence and this court has no jurisdiction to adjudicate in between the defendant and the 3rd respondent and therefore the claim of the defendant against the 3rd party if any foubd liable through 3rd party proceedings cannot be maintainable. He would further submit that this court in an earlier occasion held in AIR 1961 MADRAS 367 in between Roy and Chatterjee v. Scindia Steam Navigation Co. Ltd and another, that for implementing a 3rd party notice under Order VIII (A) C.P.C the defendant should establish that the claim between the defendant and 3rd party was capable of adjudication by the court and was within the jurisdiction of that court. He would further argue that this court has no jurisdiction as the arbitration clause in the charter agreement would exclude the jurisdiction of this court and therefore the claim of the defendant against the 3rd party is not maintainable. He would further submit that the same claim has been made in this suit also and therefore the present 3rd party claim made by the defendant is not sustainable.
8. I have given anxious thoughts to the arguments advanced on either side. The claim was made by the defendant for initiating 3rd party proceedings against the 3rd respondent as the cause of action would disclose that the defendant along with the 3rd party are liable for the alleged damages caused to the cargo that was shipped on the fateful day. Factual aspects that the cargo was entrusted by the plaintiff to the defendant for being carried from the port of Kakinada to Port Blair and accordingly the defendant had entered into a charter agreement with 3rd party and had transported through sea and the said cargo was belonging to the 1st plaintiff and the cargo was damaged due to un seaworthy conditions and accordingly damages have been caused are not disputed. 1st plaintiff had claimed the said damages from its insurer/2nd plaintiff and the 2nd plaintiff had also paid to the 1st plaintiff and they filed the suit against the defendant under subrogation. The defendant’s plea was that there was an implied warranty from the charterer that the transport is undertaken from the Port of Kakinada to Port Blair with the vessel M.V.Raigad was in a sea worthy condition and the damages have been caused due to un seaworthy condition and the negligence of keeping the vessel in which cement cargo was spoiled by the water and it had been damaged during the transit and the damages caused to the cargo are being indemnified to be paid by the 3rd party.
9. The judgment of this court reported in AIR 1961 Madras 367 in between ROY AND CHATTERJEE (PRIVATE) LTD Vs. SCINDIA STEAM NAVIGATION CO. LTD AND ANOTHER would be thus:
“This rule clearly enables the third party to raise all grounds to the action as would be available to him as against the party defendant who seeks to bring him on record; that is to say, if the petitioner who is the third defendant in the suit, sued the third party in a separate action, such third party would be entitled to raise the question of the jurisdiction of the court is defence. Such a defence would also be open to the third party in this application to implead him as a party. It is that aspect of the matter that the learned Assistant Judge has canvassed.”
The aforesaid judgment would categorically show that the defence of the 3rd party could be considered in the application to initiate action against the 3rd party under Order VIII (A) C.P.C.
10. For the purpose of better understanding Order VIII (A) has to be extracted.
ORDER VIII-A
1.Third party notice:- Where a defendant claims to be entitled to contribution from or indemnity against any person not already a party to the suit (hereinafter called a third party), he may, by leave of the Court, issue a notice (hereinafter called a third party notice) to that effect sealed with the seal of the Court. The notice shall state the nature and grounds of the claim. Such notice shall be filed into Court with copy of the plaint and shall be served on the third party according to the rules relating to the service of summons.
2.Effect of notice:- The third party shall, as from the time of the service upon him of the notice, be deemed to be a party to the action with the same rights in respect of his defence against any claim made against him and otherwise as if he had been duly sued in the ordinary way by the defendant.
3.Default by third party:- If the third party desires to dispute the plaintiff’s claim in the suit as against the defendant on whose behalf the notice has been given, or his own liability to the defendant, the third party may enter appearance in the suit on or before the date fixed for his appearance in the notice. If he does not enter appearance he shall be deemed to admit the validity of the decree that may be obtained against such defendant, whether by consent or otherwise and his own liability to contribute of indemnify as the case may be, to the extent claimed in the third party notice provided always that a person so served and failing to appear may apply to the Court for leave to appear, and such leave may be given upon such terms, if any,as the Court shall think fit.
4.Procedure on default:- Where the third party does not enter appearance in the suit and the suit is decreed by consent or otherwise in favour of the plaintiff, the Court may pass such decree as the nature of the case may require, against the third party and in favour of the defendant on whose behalf notice was issued, provided that execution thereof shall not be issued without leave of the Court until after satisfaction by such defendant of the decree against him.
5.Third party directions:- If the third party enters appearance, the defendant on whose behalf notice was issued may apply to the court for directions and the Court may, if satisfied that there is a question to be tried as to the liability of the third party to make the contribution or pay the indemnity claimed, in whole or in part, order the notice, to be tried in such manner, at or after the trial of the suit, as the court may direct; and if not so satisfied may pass such decree or order as the nature of the case may require.
6.Leave to defend:- The Court may, upon the hearing of the application mentioned in Rule 5 give the third party liberty to defend the suit upon such terms as may be just, or to appear at the trial and take such part therein as may be just, and generally may order such proceedings to be taken, documents to be delivered or amendments to be made, and give such directions as appear proper for the most convenient determination of the question or questions, in issue, and as to the mode and extent in or to which the third party shall be bound or made liable by the decree in the suit.
7.Costs:- The Court may decide all questions of costs, as between the third party and the other parties to the suit, and may order anyone or more to pay the costs of any other, or others, or give such direction as to costs as the justice of the case may require.
8.Question between co-defendants:- Where a defendant claims to be entitled to contribution from or indemnify against any other defendant to the suit, a notice may be issued and the same procedure shall be adopted for the determination of such questions between the defendants as would be issued and taken, if such last mentioned defendant were third party; but nothing herein contained shall prejudice the rights of the plaintiff against any defendant in the suit.
9.Further parties:- Where any person served with a third party notice by a defendant under these rules claims to be entitled to contribution from or indemnity against any person not already a party to the suit, he may, by leave of the Court, issue a third party notice to that effect and the preceding rules as to the third party procedure shall apply mutatis mutandis to every notice so issued and the expressions ‘third party notice’ and ‘third party’ in these rules shall apply to and include every notice so issued and every person served with such notice respectively”.
The said provisions mentioned in all the rules would go a long way to show that those rules are enabling provisions for the purpose of preventing the same question being tried once again with possibly different results and to prevent multiplicity of actions to enable the court to settle the dispute between all the parties in one action. Therefore, it is clear that the idea behind the filing of this application seeking for 3rd party procedure under Order VIII (A) C.P.C by the defendant should have been for the purpose of avoiding multiplicity of proceedings.
11. Per contra, we could see that there was already an arbitration proceedings in between the defendant and the 3rd party which could be seen from the typeset filed by the 3rd party. Accordingly an award was passed on 17.10.2000 as seen from Pages 57 to 82 of the typeset. The said award was dealing with the total cost in reaching the Port Blair and other aspects. The consequential losses due to water seepage was estimated only at Rs.1,16,650/-. The entire damage in 19th column has been not allowed due to want of evidence. Now the claim has been made by the defendant on the basis of the decree likely to be passed upon the claim made by the plaintiff against him for which he has claimed that the 3rd party procedure to be adopted. The arbitration proceedings even though held in between the defendant and the 3rd party had untouched the liability of the 3rd party in respect of the contribution payable to the claim of the plaintiff. Therefore, the arbitration proceedings cannot be a bar for the defendant seeking to issue 3rd party notice to the 3rd respondent. It cannot be said that the 3rd party would be made liable to a double payment for the same cause of action. However it has to be decided only after a full fledged trial in the suit, as the 3rd party proceedings is also to be conducted to the suit,if opportunity is given to both parties for agitating their case.
12. As regards limitation point raised by the 3rd party is concerned, the liability towards contribution would normally be started on the fixation of liability against the defendant in this suit. Therefore, the procedure adopted after lapse of 8 years under Order VIII (A) C.P.C will not be a bar for the defendant to launch the claim against the 3rd party that could adjudicate defendant’s claim including the arbitrator’s decision in favour of defendant against the 3rd respondent as 3rd party in the said proceedings. The restriction of jurisdiction entered in between defendant and 3rd party for the jurisdiction of Bombay only is for the arbitration proceedings. Moreover it was a restriction only in between defendant and 3rd party. It will not bind the dispute interse between plaintiff, defendant and 3rd party. The cause of action for the 3rd party proceedings is arising out of the liability of the defendant to the plaintiff and therefore there is no impediment for the defendant to initiate 3rd party proceedings against the 3rd respondent in the plaintiff’s suit.
13. The judgment of this court is as cited by the learned counsel for the 3rd respondent reported in 2008 (3) CTC 823 in between Vestas RRB India Ltd. Vs. Dammar Lines was to the effect that the ousting of jurisdiction as entered into between parties will apply to the 3rd party proceedings also and such 3rd party proceedings cannot be maintained like that of the suits cannot be applied here, since the agreement in respect of restriction of jurisdiction was only for the appointment of arbitrators and not in respect of the liability to pay the contribution.
14. No doubt the 3rd party has every right as to the liability to contribute or indemnify the defendant in the said proceedings whenever the trial has been commenced. 3rd party is also entitled to step into shoes of the defendant and fight the case of the plaintiff with all the grounds available to the defendant and at the same time to raise the ground against the defendant that the said arbitration had already concluded the claim in between them which may bar the claim of the defendant. However, the arbitration award produced by the 3rd party has not disclosed the liability to the defendant, on contribution has not been discussed in the arbitration award.
15. Therefore, I am of the considered view that an opportunity should have been given to the defendant for launching the 3rd party proceedings against the 3rd respondent as contemplated under Order VIII (A) C.P.C which are the beneficial provisions for all the parties to raise their disputes without going for multiplication of the proceedings.
16. For the fore going reasons, I am inclined to allow the application filed by the defendant for launching 3rd party procedure. I direct to issue 3rd party notice as contemplated under Order VIII (A) C.P.C to the 3rd respondent/ 3rd party. Application is ordered accordingly. No costs.
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