Consumer Law; Virender Khullar Vs. American Consolidation Services Ltd. [Supreme Court of India, 16-08-2016]

Consumer Protection Act, 1986 – Ss. 2 (d) & 23 – Contract Act, 1872 – S. 230 – Agent cannot personally enforce, nor be bound by, contracts on behalf of principal – R1 is not a consignee, but only an agent of the intermediate consignee – that being so, R1 cannot be held to be liable in respect of claim made by the appellants – Since R1 was simply acting as an agent it cannot be held personally liable to enforce the contract entered between its principal and the appellants – R3 which is subsidiary to Coronet Group Inc, the consignee named in the cargo slips, is the only party which can be held liable for taking delivery without depositing the price of the goods with the Bank.




[R.K. Agrawal] and [Prafulla C. Pant] JJ.

August 16, 2016


Virender Khullar … Appellant


American Consolidation Services Ltd. & ors. …Respondents




Prafulla C. Pant, J.

These appeals are directed against common judgment and order dated March 22, 2012, passed by National Consumer Disputes Redressal Commission, New Delhi (for short “NCDRC”) in Original Complaint Nos. 89 of 1995 and 90 of 1995, whereby the Commission has dismissed the complaints of the appellants, filed under

Section 23 of the Consumer Protection Act, 1986

as against Respondent Nos. 1, 2 and 4. However, the complaints were partially allowed as against respondent No. 3 M/s. Zip Code, 2615, Elmhurst Lane, Portsmouth, VA 23701, USA, for an amount of Rs.20,82,902.40 in favour of appellant Virender Khullar, and Rs.15,27,461.76 in favour of appellant Girish Chander, with interest at the rate of 12% per annum with effect from April 01, 1995 till the date of payment.

2. Brief facts of the case are that the appellants-complainants entrusted consignments containing men’s wearing apparels in December 1994 to Respondent No. 1 American Consolidation Services Ltd., Akruti Trade Centre, 402, 4th Floor, Andheri (East), Mumbai (hereinafter referred to as “ACS”), and cargo receipts were issued to them by Respondent No. 1. As per the cargo receipts so issued, the consignments were to the order of Respondent No. 2 Central Fidelity Bank, Richmond VA, USA. Respondent No. 1 on its part handed over the consignments to respondent No. 4 M/s. Hoeg Lines, Lief Hoegh & Co., A/S Oslo, Norway/M/s. American President Lines Limited, Tarde Plaza 2nd Floor, 414 Veer Savarkar Marg, Prabhadevi, Mumbai, for delivery of the consignments at the port of destination. It is alleged that in the Bill of Lading issued by the shipping carriers, name of consignee was changed from Central Fidelity Bank to Coronet Group Inc. besides there being several other changes in the name and description of the shipper as Cavalier Shipping Co. When payment was not received till March, 1995, the appellants/ complainants made enquiry about the consignments. After servicing legal notice, appellant Virender Khullar filed a complaint for an amount of Rs.35,31,601.15 in respect of 300 cartons containing men’s apparels through cargo receipt Nos. 34307, 34308 and 34309, and appellant Girish Chander filed the complaint for an amount of Rs.29,17,844.76 for 220 cartons containing men’s apparels sent through cargo receipt Nos. 34116, 34117 and 34118, before NCDRC, New Delhi. Initially complaints were filed only as against Respondent No. 1, i.e. American Consolidation Services Ltd. (ACS).

3. Respondent No. 1 contested the complaints and pleaded that Respondent No. 1 received the complainants’ goods on behalf of the buyer/consignee, i.e. Zip Code Inc. which was part of Coronet Group Inc. as its agent. It is further pleaded that there was no payment made by the appellants/ complainants for the service provided by Respondent No. 1, nor there was any contract between the complainants and Respondent No. 1 for shipment of the goods. The receipt, custody and forwarding of the goods of the complainants were governed by the provisions of bailment agreement as mentioned in the cargo receipts. The bailment agreement provided that from and after the delivery by Respondent No. 1 to a carrier in accordance with the instructions of the consignee or other cargo owner, the sole responsibility and liability for the care, custody, carriage and delivery of goods was that of the concerned carrier. Respondent No. 1 was under no liability whatsoever in respect of any failure on the part of the consignee or any other party. According to Respondent No.1, complainants’ claim, if any, can lie only as against the principal, i.e. buyer/consignee who appears to have not made payment to the complainants for the value of the cargo. Since Respondent No. 1 acted only as an agent of the consignee, i.e. Zip Code Inc., a subsidiary of Coronet Group Inc, and acted only as a consolidator and forwarder (not a carrier), it has no liability as provided in

Section 230 of the Indian Contract Act, 1872

on behalf of the principal. The carrier of the goods in question was Respondent No. 4 Hoegh Lines/American President Line Limited, who issued the relevant Bills of Lading covering the goods. The appellants were duly informed by Respondent No. 1 about the delivery of consignment to Coronet Group Inc on surrendering of all the original Bills of Lading. Lastly, it is pleaded that it is not a case of negligent act or careless handling of the shipment by Respondent No. 1.

4. After hearing the parties, the NCDRC, vide its separate orders dated January 20, 2004, accepted both the claims (to the extent of Rs.20,82,908.40 of appellant Virender Khullar and claim to the extent of Rs.15,27,461.76 of appellant Girish Chander) and directed the amount to be paid by Respondent No. 1 with interest.

5. However, above orders dated January 20,2004, passed by NCDRC, were challenged by Respondent No. 1 in Civil Appeal Nos. 2079 of 2004 and 2080 of 2004, before this Court and the same were disposed of vide order dated September 10, 2009, as under: –

“Heard learned counsel for the parties.

These appeals have been filed against the impugned Judgment of the National Consumer Disputes Redressal Commission, dated 20th January, 2004. By that judgment, certain amount has been decreed against the appellant.

Mr. R.F.Nariman and Mr. P.H.Parekh, learned senior counsel appearing for the appellant, contended that the appellant was only an agent of the consignee, Zip Code Inc., which is part of the Coronet Group. It appears that the grievance of the claimants (respondents in this case) is that certain cartons, which were to be shipped to a party in USA, were allegedly not delivered there. A claim was made for damages in that respect.

Mr. Nariman has contended that the appellant is only an agent of the consignee and not the consignee himself. We agree with the contention. In our opinion, the claimants should have impleaded the consignee as well as the carrier as parties in the claim petitions apart from impleading the appellant. The rules of natural justice require that necessary parties have to be impleaded, which appears not to have been done in this case before the National Commission.

For the reason given above, we set aside the impugned judgment of the National Commission and remand the matters to the National Commission with liberty to the respondents-claimants to implead the consignee as well as the carrier in their claim petitions. Notice will be issued to the newly impleaded parties and case will be decided by the National Commission preferably within six months from the production of a copy of this order.

We make it clear that we have not expressed any opinion on the merits of the case. All points of law and fact are expressly left open to the parties.

The amount deposited here by the appellants will be refunded to them with accrued interest.

The appeals are accordingly disposed of.

No order as to costs.”

6. In the light of above order, Respondent No. 2 Central Fidelity Bank, Respondent No. 3 Zip Code and Respondent No. 4 Hoegh Lines/American President Lines Limited) were impleaded and the case proceeded and decided afresh by the NCDRC. The case against Respondent No. 3 M/s. Zip Code and Respondent No. 4 Hoeg Lines/American President Lines Limited appears to have proceeded ex parte as they failed to turn up in response to the notices sent to them. There was no relief sought as against Respondent No. 2 Central Fidelity Bank. In the impugned order dated March 22, 2012, it has been held by NCDRC that it is only Respondent No. 3 Zip Code, the intermediary consignee of the cartons in question mentioned in cargo slips, who received the delivery of the consignments without making payment to the bank or the complainants, and, as such, liable to pay the compensation to the appellants, and accordingly directed Respondent No. 3 to make the payment of Rs.20,82,902.40 in favour of appellant Virender Khullar and Rs.15,25,461.76 in favour of appellant Girish Chander, with interest at the rate of 12% per annum with effect from April 01, 1995.

7. Respondent No. 3 has not challenged the above order. Rather, the complainants have challenged the fresh decision of NCDRC as other respondents are held not liable to make the payment. Respondent Nos. 3 and 4, even after service of notice, have not turned up to contest the appeals.

8. Learned counsel for the appellants argued before us that it is Respondent No. 1 who changed the name of consignee and the name of Coronet Group Inc. was inserted in the Bill of Lading depriving realization of damages by the complainants. It is further contended that Respondent No. 1 accepted the goods from the complainants to be delivered to the order of Respondent No. 2 by engaging a carrier, but it caused the goods to be delivered to Coronet Group without getting payment realized through the bank. It is further submitted that in the cases other than Letter of Credit when the goods are sent on collection basis, the same are consigned to bank, and foreign buyer is named as party to be notified. As such, the delivery of goods should not have been allowed to be made without getting realized payment of goods through Respondent No. 2 Bank. It is also contended that