TMI Blog2022 (11) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also undisputed that the Letter of Credit was for a specific period of time i.e., till 28.02.1999 and was extended till 06.03.1999. The appellant has brought the extension letter to our attention. In the meantime, the documents including the FCR were submitted by the appellant to its bank, namely, Canara Bank for collection of the proceeds from respondent No.4 Bank. In the instant case, the sale of goods was through a FOB contract. FOB contract means a contract Free on Board . By such a contract the seller is to put on board at his own expenses which means this is a contract for sale of goods to be delivered free on board a ship. The buyer must name the ship upon which they are to be delivered and the seller must put them safely on board, meet the cost of doing so and for the buyer s protection, give possession of them to the ship only upon the terms of a reasonable and ordinary bill of lading or other contract of carriage; there the contractual liability of the seller as seller ceases and delivery to the buyer is complete as far as he is concerned. The goods are then at the risk of the buyer, he is responsible for the freight, and subject to the seller reserving the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 09.02.2009 passed by the State Commission, New Delhi. 3. The National Commission vide impugned order has reduced the amount of compensation to Rs.10,000/- (Rupees Ten Thousand) as against the amount granted by the State Commission to be paid to the appellant herein i.e., a sum of Rs.13,79,901/- (Rupees Thirteen Lakhs Seventy-Nine Thousand Nine Hundred and One), together with compensation of Rs.50,000/- (Rupees Fifty Thousand) and cost of litigation amounting to Rs.10,000/- (Rupees Ten Thousand). 4. The issue involved in the present appeal is in a very narrow compass and relates only to the quantum of compensation that the appellant is entitled to receive from the respondents. 5. The appellant herein- original complainant, a private limited company, filed a consumer complaint before the State Commission against the present respondents-opposite parties. Respondent No.1- UPS Freight Service (India) Pvt. Ltd. (formerly known as M/s Fritz Freight Forwarding India Pvt. Ltd.) and respondent No.2- M/s Fritz International are the subsidiaries and agents of respondent No.3- M/s Fritz Companies Inc. to administer, look after and carry out the business of respondent No. 3, in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 , for sake of convenience), the documents had been refused and that the Letter of Credit could not be honoured on account of discrepancies in the FCR issued to the appellant. The first discrepancy was late shipment. The second discrepancy was that respondent No.1 mentioned the port of loading to be Jawaharlal Nehru Post Trust ( JNPT , for short), Bombay instead of FOB, New Delhi on the FCR. 12. By letter dated 18.03.1999, respondent No.4 - Bank informed appellant s bank that they had approached respondent No.5 for approval to pay the sale consideration but Respondent No.5 was not willing to honour such request and thereafter the documents were returned to the appellant s bank i.e., the Canara Bank for further disposal. 13. On being notified by the appellant s bank of Respondent No. 5 s refusal to release the sale consideration, the appellant approached respondent No.1 herein in connection with the negligence on their part in mentioning the wrong point of loading in the FCR. Respondent No.1 then issued a letter/certificate dated 30.03.1999, rectifying the error and mentioning therein that the shipment was loaded from FOB, New Delhi and was effected from JNPT, Bombay. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole transaction was covered by Letter of Credit opened by respondent No.4 Bank and thus filing of bankruptcy application by the respondent No.5 had no effect on the payment that the appellant was entitled to receive. iv. that due to the negligence of the respondent Nos.1 and 2, the Letter of Credit was not honoured by respondent No.4 and therefore the appellant had to suffer loss due to negligence of the respondent Nos. 1 and 2. That more than ten years had passed and respondent Nos.1 and 2 have to make up for the loss suffered by the appellant herein. 17. The appellant herein filed an application seeking rectification of the typographical error in the judgment and order of the State Commission dated 09.02.2009 wherein the loss of amount towards loss was mentioned wrongly mentioned as Rs.79,901/- instead of Rs.13,79,901/-. The State Commission vide its judgment and order dated 17.03.2009 rectified the error and granted Rs.13,79,901/- (Rupees Thirteen Lakhs Seventy-Nine Thousand Nine Hundred and One) towards loss suffered by the appellant, Rs.50,000/- (Rupees Fifty Thousand) towards compensation for mental agony and harassment and Rs.10,000/- (Rupees Ten Thousand) towards c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce was produced by the appellant to prove that the return of documents was solely on account of mistake committed by respondent No.1 herein. iv. That the appellant herein did not lose the price of goods exported by it to the US on account of the mistake committed by respondent No.1 while issuing FCR. That it could be possible that the appellant lost its price of goods due to the connivance between the respondent No.4 and respondent No.5 as was contended by the appellant, as a result of the alleged endorsement made on the FCR which was later on concealed by putting ink on it. However, such conduct of Respondent No. 4 and 5, which may have resulted in loss in the price of the appellant s goods, could not be attributed to the mistake in the FCR. 19. Aggrieved by the reduction in the amount of compensation, the appellant-original complainant has approached this Court by way of the present appeal. 20. We have heard Sri Rajiv Garg, learned counsel for the appellant, Sri Sudhanshu S. Choudhari, learned counsel for respondent No.1 and Sri Vikas Kumar, learned counsel for respondent No.4 and perused the material on record. 21. Learned counsel for the appellant at the outset sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation. However, the fact of the matter is that the respondent Nos. 1 to 3 were appointed as the shippers, solely by the respondent No.5 the buyer/consignee of the goods as per an FOB contract. 21.7 That the delay in payment could not be attributed to the appellant herein since the Letter of Credit specified that the consignment had to be shipped in the month of March and the appellant herein on 11.02.1999 had informed the shippers to take the delivery. Any delay occasioned was only on account of the conduct of the shippers in taking delivery of the goods and not on the part of the appellant. 21.8 That the facts narrated above would demonstrate that the respondents acted in collusion with each other to deceive the appellant herein. The modus operandi was to issue a defective FCR and withhold the documents till the expiry of the Letter of Credit and thereafter, rectify the FCR and in the meanwhile, get the goods delivered without payment of consideration to the appellant. 22. Per contra, the learned counsel for the respondent No.1 supported the judgment and order passed by the National Commission and contended that the National Commission has rightly set-aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odification by this Court? (c) What order? 24. It is an admitted position that the goods in the consignment have been delivered to the respondent No.5 on 17.02.1999 and this fact has not been disputed any of the parties herein. The only issue before this Court is whether the compensation ought to have been paid to the appellant and as to what should be the quantum of the said compensation, if at all the same is to be allowed. 25. The State Commission had awarded compensation of Rs.13,79,901/- towards loss suffered by the appellant plus Rs.50,000/- towards compensation for mental agony and harassment plus Rs.10,000/- towards cost of litigation. The National Commission, on the other hand, reduced the compensation to Rs.10,000/- only along with an interest at the rate of 9% per annum from the date of filing the complaint till the date of payment. It is also noted that the National Commission directed the payment of such amount from the amount deposited by the respondent No.1 before the National Commission while filing the appeal and the remaining amount was directed to be refunded to respondent No.1 after deducting the amount payable to the appellant herein. 26. On a perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant could not be honoured. Further it was also alleged that there also has been negligence on the part of the respondent Nos. 1 to 3 in not filing the Bill of Entry with the Customs due to which their shipment was seized by the Customs. 29. It is also the case of the appellant herein that the respondents herein have acted in collusion with each other and have got the goods cleared based on the said FCR itself without paying the sale consideration to the appellant. It is alleged that the respondents put an ink blot on the endorsement to camouflage their misdeeds. Aggrieved by the non-payment of dues as well as the action of the respondents in getting the goods released, the consumer complaint was filed. 30. In the instant case, the sale of goods was through a FOB contract. FOB contract means a contract Free on Board . By such a contract the seller is to put on board at his own expenses which means this is a contract for sale of goods to be delivered free on board a ship. The buyer must name the ship upon which they are to be delivered and the seller must put them safely on board, meet the cost of doing so and for the buyer s protection, give possession of them to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ask the issuing bank to honour the letter of credit to his own bank (confirming bank) within a certain maturity date. The seller is required to produce certain documents regarding proof of delivery of goods, commercial invoice, bill of lading, insurance documents etc. before the confirming bank. On scrutiny the confirming bank would ask for advice of the issuing bank to confirm whether the documents produced by the beneficiary is compliant to the terms and conditions of the letter of credit. Once the issuing bank confirms the document, the confirming bank is obligated to pay to the beneficiary on demand, the credit amount and in turn recover the same from the issuing bank. 35. In Hindustan Steel Workers Construction Ltd. V G.S. Atwal Co. (Engineers) (P) Ltd. [ (1995) 6 SCC 76] this Court held that a letter of credit is independent of and unqualified by the contract of sale or underlying transactions. The autonomy of an irrevocable LOC is entitled to protection and as a rule, courts refrain from interfering with that autonomy. If courts interfere in such transactions, it would be prone to misuse by the applicant party to gain undue advantage leaving the issuing bank at peril i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e diligence in that regard. The National Commission has categorically held that there was deficiency in rendering services by the respondent No.1, therefore, the National Commission ought not have reduced the compensation payable to the appellant herein. 40. In view of the aforesaid discussion, we find that the National Commission was not right in setting aside the judgment and order passed by the State Commission and therefore, the impugned judgment and order passed by the National Commission is liable to be set aside. 41. In the result, the appeal filed by the appellant-complainant is allowed and the impugned judgment and order passed by the National Commission is hereby quashed and set aside and the judgment and order passed by the State Commission is restored. The respondents, being severally and jointly liable, shall make the payment of the amount as assessed by the State Commission within a period of two months from today. In the event the respondents fail to pay the said compensation within the stipulated time, the appellant shall be at liberty to seek remedy in accordance with the law. 42. If pursuant to the order of the State Commission, any amount has been deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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