Essemm Logistics vs Darcl Logistics Limited

CIVIL APPEAL NO. OF 2023 (Arising out of SLP (C) No.24340 of 2019)

ESSEMM LOGISTICS …APPELLANT

VERSUS

DARCL LOGISTICS LIMITED & ANR. …RESPONDENTS

JUDGMENT

PANKAJ MITHAL, J.

1. Leave granted.

2. Heard Mr. Anand Sanjay M. Nuli, learned advocate appearing

for the appellant and Mr. Manu Beri, learned Advocate

appearing for the first respondent.

3. The appellant (ESSEMM Logistics), who was the first defendant

in the suit, has preferred this appeal against the rejection of its

counter-claim in exercise of power available under Order VII Signature Not Verified Digitally signed by NIRMALA NEGI Date: 2023.05.01 Rule 11 of the Civil Procedure Code, 1908 (in short “CPC”) by 16:23:18 IST Reason: 1 the Court of first instance which order has been upheld by the

High Court.

4. The first respondent (DARCL Logistics Limited) was the plaintiff

who instituted original suit No.79 of 2013 (DARCL Logistics

Limited Vs. ESSEMM Logistics & Anr.) for a recovery of sum of

Rs.4,09,53,847/- with interest at the rate of 18% till its

realisation, since the first defendant – appellant failed to make

payments due as per 530 bills raised during the period

14.11.2011 to 31.01.2012.

5. In the said suit, the first defendant – the appellant herein

entered appearance and filed its written statement with

counter-claim of Rs.13,04,00,000/- with interest at the rate of

24% on the said amount till its realization. The said counter-

claim was set up as under:

1. Loss of Business Opportunity Rs.3,50,00,000/-

due to diversification of the Cargo from Gangavaram Port to Paradeep Port

2. Loss of Reputation Rs.7,50,00,000/-

3. Loss on account of Idling of Rs.2,04,00,000/-

Men, Machine & Overheads

2 Total Rs.13,04,00,000/-

6. It may be noted that the plaintiff-first respondent is a common

carrier and is governed by the Carriage by Road Act, 2007 (new

Act) which came into force with effect from 20.07.2010 repealing

the Carriers Act, 1865.

7. The Carriers Act, 1865 vide Section 10 provided that no suit

shall be instituted against the common carrier for the loss of, or

injury to, goods including containers, pallets or similar articles

of transport entrusted for carriage, unless a notice in writing for

such loss of injury is given before the institution of the suit

within six months of the loss coming to the knowledge of the

plaintiff.

8. The above Section 10 of the Carriers Act, 1865 for convenience

sake is reproduced hereinbelow:

“No suit shall be instituted against a common carrier for the loss of, or injury to, goods [including containers, pallets or similar articles of transport used to consolidate goods] entrusted to him for carriage, unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff.” 3

9. The above Section 10 of the Carriers Act, 1865 bars the

institution of a suit only against a common carrier for the loss

of, or injury to, goods entrusted to the common carriage for the

purposes of carriage without giving a notice in writing of the

alleged loss within six months of the loss or injury first coming

to the knowledge of the plaintiff. In other words, only a suit for

recovering damages for the loss of or injury to the goods

entrusted to the common carrier for carriage is barred without

a legal notice, as aforesaid but not suits of other nature or for

recovery of any amount other than due loss or injury to the

goods entrusted for carriage.

10. The Carriage by Road Act, 2007 (new) which replaced the earlier

Act vide Section 16 provides as under:

“No suit or other legal proceeding shall be instituted against a common carrier for any loss of, or damage to, the consignment, unless notice in writing of the loss or damage to the consignment has been served on the common carrier before the institution of the suit or other legal proceeding and within one hundred and eighty days from the date of booking of the consignment by the consignor.”

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11. The aforesaid Section 16 of the new Act is more or less in pari

materia with the Section 10 of the Carriers Act, 1865 which has

been repealed. It also lays down that no suit or legal proceedings

shall be instituted against a common carrier for any loss of, or

damage to, a consignment unless a notice in writing of such loss

to the consignment has been served upon the carrier before the

institution of the suit or the legal proceedings within six months

from the date of booking of the consignment by the consignor.

A close look to the above provision would reveal that it not only

bars the suit but also legal proceedings which were not included

in the earlier provision of Section 10 of the Carriers Act, 1865.

The other deviation is by the use of word “consignment” in place

of “goods entrusted”. In other words, both the aforesaid

provisions though Section 10 of the Carriers Act stands repealed

and ceased to in force, provides for a notice before instituting

any suit/legal proceedings against a common carrier for any

loss or damage to the consignment. The aforesaid provision is

only in context of the institution of a suit or a legal proceeding

for the loss of or damage to the consignment and not in respect

5 of any other kind of loss or damage or claim other than to the

loss or damage to the consignment.

12. It is well recognized that in view of Order VIII Rule 6–A (4) CPC,

a counter-claim is a virtually a plaint and an independent suit.

It is also a settled proposition of law that a plaint which falls

within the teeth of the conditions laid down under Rule 11 of

Order VII CPC is liable to be rejected at the threshold for which

the plaint allegations alone are required to be considered and

nothing else.

13. It is in view of the aforesaid facts and circumstances, the

plaintiff-first respondent pressed for rejection of the counter-

claim set up by the appellant- first defendant under Order VII

Rule 11 CPC as it was preferred without issuing the mandatory

notice as contemplated mistakenly by Section 10 of the Carriers

Act, 1865 but in fact by Section 16 of the new Act.

14. The Court of first instance ordered for the rejection of the plaint

for want of issuance of mandatory notice before presentation of

the counter-claim which order has been affirmed by the High

Court.

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15. In assailing the impugned orders of the courts below, it was

submitted that the Courts have manifestly erred in not

appreciating the provisions of Section 16 of the new Act in its

clear literal sense. The said provision is applicable only where

the claim is for any loss of, or damage to, the consignment and

not in respect of any other claim of loss or damage. The counter-

claim of the appellant was not in respect of either the loss or

damage to the consignment rather for the loss of business

opportunity, loss of reputation and loss on account of idling of

men, machine and overheads etc.

16. A plain reading of Section 16 of the new Act reveals that it is

applicable only in respect of institution of a suit or legal

proceeding against a common carrier for any loss of, or damage

to, the consignment. The use of the word “Consignment” in the

said provision is very material. It denotes that the suit and legal

proceedings in connection with the loss or damage to the

consignment alone are covered by it for which purpose, a notice

is mandatory. The said provision has no application in reference

to loss of any other kind or the suit or legal proceedings

7 instituted for recovery of damages in respect of loss of different

nature.

17. A reading of the counter-claim clearly reveals that the damages

claimed are in respect of loss set up by the appellant-first

defendant in connection with the loss of business opportunity,

loss of reputation and loss on account of idling of men, machine

and overheads. It had not instituted any suit or legal

proceedings such as counter-claim for any loss or damage to

any consignment. The courts below have clearly lost sight of the

above aspect of the matter and without making any distinction

between the various kinds of claims otherwise arising other

than claims for loss or damage to the consignment, illegally

directed to reject the counter-claim.

18. The provision of Section 16 of the new Act does not come into

play vis-à-vis the condition of giving a notice in respect of claims

for damages for the loss of reputation, business opportunity etc.

as such claims are not in connection with the damage or loss to

the consignment.

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19. In view of the aforesaid facts and circumstances, we are of the

opinion that no notice under Section 16 of the new Act was

necessary for instituting any suit or legal proceedings much less

counter-claim against the common carrier for recovering the

loss other than the loss of or damage to the consignment and,

therefore, the courts below manifestly erred in rejecting the

counter-claim under Order VII Rule 11 CPC as barred by

Section 16 of the new Act.

20. Accordingly, the impugned judgment and orders dated

07.08.2019 and 21.9.2017 are set aside and the appeal is

allowed with the direction to the Court of first instance to

proceed with the suit as well as the counter-claim in accordance

with the law.

21. There will be no orders as to costs.

……………………………….. J.

(V. RAMASUBRAMANIAN)

……………………………….. J.

(PANKAJ MITHAL) New Delhi;

May 01, 2023.

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