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Suit No. 220 of 1956, decided on 3rd September 1963.
Breach‑Suit for damages‑Jurisdiction of Court determined by contents of plaint and not by defence raised‑offer accepted conditionally at place D and condition accepted by other 'in, party at place K‑Contract, held, made partly at D and partly at K.
‑Word; "payment on account of debt"‑Means where an interim payment of debt is made‑‑Section 20(1) applicable only to cases where such payment is made‑Any payment made in relation to debt‑Does not renew period of limitation‑Debtor paying part of debt with clear state ment ". . . we have . . . settled your claim"‑Period of limitation not renewed.
N. A. M. Appasami Pillai v. Morangam Muthirian and another A I R 1935 Mad. 371 distinguished.
Noor Muhammad for Plaintiff.
K. A. Ghani for Defendant.
Dates of hearing: 26th, 27th, 28th, 29th, 30th and 31st August 1963.
This suit is for the recovery of Rs. 1,23,797‑9‑6, out of which Rs. 99,407‑9‑6, are claimed as damages and Rs. 24,390‑0‑0 as interest at the rate of 6 per cent. per annum from the 29th of May 1952, up to the date of institution of the suit.
2. The case of the plaintiff is that he entered into a contract with the defendants, vide his letter dated 26th January 1952, (Exh.8). He had undertaken to supply about 6,500 tons of Aden crushed sea‑salt and had chartered the ship s. s. "Tang Shan" for carrying that salt from Aden to Chittagong. The ship arrived at the outer anchorage of Chittagong on the 15th of April 1952, and proceeded to the berth on the 19th of May 1952, and commenced discharging the cargo on the same day. The discharge was completed on the 28th of May 1952. The cargo was actually discharged in about 9 days but the readiness of ship to discharge it had been notified on 15th of April 1952. From that date the ship had to be detained for 33 days 5 hours and 37 minutes, vide Exh. 16. The defendants have paid Rs. 77,251 as demurrage at the rate of .250 per day, vide their letter of the 4th of December 1952, (Exh. 21) for the detention of the ship in excess of the time that was agreed to be spent in discharging the cargo at the rate of 150 tons per hatch per day ; but have declined to pay the loss alleged to have been suffered by the Karachi Steam Navigation Company Ltd., during that time. The ground on which the plaintiff claims the loss suffered by the Steamship Company is clause (i) of the plaintiff's letter Exh. 8 read with the clauses 7 and 8 of the charter‑party agreement (Exh. 10) which was made by the plaintiff with the Steamship Company. Clause (i) of the letter is as follows :‑
"(1) The vessel being chartered on the usual GENCON charter‑party the terms of the charter‑party will be deemed to be transferred to the Buyers except that all payment of freight and all discounts will be for the Seller's account. A copy of the charter‑party will be supplied by the Seller to the Buyers immediately the same is received by the Seller."
Clauses 7 and 8 of the charter‑party agreement are as follows :‑
"7. Ten running days on demurrage at the rate of Pounds 250 per day or pro‑rata for any part of a day, payable day by day, to be allowed (sic) Merchants altogether at ports of loading and discharging. Dispatch half demurrage.
8. Owners shall have a lien on the cargo for freight, dead- freight, demurrage and damages for detention. Charterers shall remain responsible for dead‑freight and demurrage (including damages for detention), incurred at port of loading. Charterers shall also remain responsible for freight and demurrage (,including damages for detention) incurred at port of discharge, but only to such extent as the owners have been unable to obtain payment thereof by exercising the lien on the cargo."
The Steamship Company is said to have suffered a loss of .19,000 which are equal in Pakistani currency to Rs. 1,76,658‑9‑6, a part of which according to paragraph 13 of the plaint represents "the actual out‑of‑pocket expenses" incurred on behalf and at the request of the plaintiff for the maintenance of the ship and the rest of which according to paragraph 14 of the plaint represents damages caused by the delay in unloading the ship. Rs. 77,251 having been paid by the defendants, the balance is claimed with interest by the plaintiff, as explained above.
3. As there is a dispute between the parties to the suit with regard to the jurisdiction of this Court to try the suit and the bar of limitation, I reproduce paragraphs 16 and 17 of the plaint below :‑
"16. That the cause of action accrued on 28th May 1952. The defendants made part‑payment towards the claim of the plaintiff by cheque for Rs. 77,251 by their letter dated 4th December 1952, and finally upon defendants' refusal to pay the claim which was established by the conduct of the defendants, on or about 11th March 1953. The notice under section 80, C. P. C., was served on 28th July 1955, which would give further extension of a period of two months. The suit.. is therefore within time.
17. That as the contract was entered into at Karachi under the contract the money was to be paid by the defendants at Karachi, this Hon'ble Court has therefore the jurisdiction to try the suit and give the relief prayed for."
4. The defendants' case is that the plaintiff offered to supply the salt by his telegram dated the 23rd of January 1952, (Exh. 25) and that it was conditionally accepted by the defendants, vide their telegram dated 24th of January 1952, (Exh. 8/1). The con dition was "plaintiff should report . . . . . conform availability of ship", which was accepted by the plaintiff vide his telegram of 25th January 1952, (Exh. 8/ 2). On the 26th of January 1952, the plaintiff wrote the letter Exh. 8, and the defendants wrote the letter Exh. 9. These letters crossed each other. The plaintiff has no reason to contend that Exh. 8 is a contract because it was never accepted or confirmed by the defendants. The defendants had to pay demurrage at the rate of .250 per day in terms of the plaintiff's offer, vide Exh. 25, which payment has been made by the defendants and nothing more is due from them.
5. It is not necessary to set out the other pleas of the parties because they are fairly clear from the issues which were framed on the pleadings of the parties. The issues are as follows :‑‑
"(1) Is the suit barred by limitation
(2) Has this Hon'ble Court jurisdiction to try the suit
(3) Is the alleged contract rot in accordance with the pro visions of section 175(3) of Government of India Act 1935 If so what is the effect
(4) What were the terms of the contract between the plaintiff and the defendant
(5) Are the defendants liable to pay the increased demurrage charges as claimed by the plaintiff
(6) Is the plaintiff entitled to the claim in suit against the defendant on the basis of the alleged agreement between the plaintiff and the shipping company
(7) Did the defendants neglect to make arrangement for unloading the ship If so what is the effect
(8) At what rate the defendants were liable to pay the demurrage
(9) What amount has the plaintiff paid in respect of demurrage charges If so, is he entitled to claim the same from the defendant
(10) Was the amount of Rs. 77,251 paid by the defendants in part payment of their liability What is the effect of the defendant accepting this amount
(11) Is the defendant liable to the plaintiff for the claim in suit or any other sum
(12) Is notice under section 80, C. P. C., valid
(13) What should be the decree "
6. The first 2 issues and issue No. 10 might have been tried as preliminary issues but I am told that this could not be done because there were serious disputes between the parties with regard to the facts which are necessary to determine for their decision. Now that all the evidence on those facts has come on the record, I proceed to decide the first 2 issues and issue No. 10 on the decision of which, in my view, the suit can be disposed of.
7. I take up issue No. 2, relating to the jurisdiction of this Court, to begin with. The contention of Mr. Ghani on behalf of the defendants was that the telegram Exh. 25 was sent by the plaintiff from Karachi to Dacca and was accepted there ; therefore the contract was made at Dacca and not at Karachi. The payment was to be made in terms of the letter of credit opened by the defendants at Chittagong ; therefore, the payment was also to be made at Chittagong and not at Karachi. The Courts in Karachi, therefore, according to counsel, have no jurisdiction to try this suit.
8. Mr. Noor Mohammad has argued in reply that the defendants have omitted to produce the actual letter of credit and have merely relied on their own instructions to the bank; therefore it is not proved that the payment was to be made at Chittagong in terms of the letter of credit. Moreover, the offer of the plaintiff was accepted by the defendants conditionally, vide their telegram Exh. 8/1 which condition was accepted by the plaintiff at Karachi ; therefore, the contract was made partly at Dacca and partly at Karachi. The latter argument of Mr. Noor Mohammad had force in it. Additionally the jurisdiction of Court is determined by the contents of the plaint and not by the defence that may be raised against it. According to the plaint, the letter of the plaintiff Exh. 8 constituted the final contract. According to paragraph (2) of that letter, payment was to be made through the Eastern Bank Ltd., Karachi; therefore, this Court has the jurisdiction to try the suit, irrespective of the disputes raised by defendants and the ultimate decision of those disputes. The issue is, therefore, decided in favour of the plaintiff.
9. Issue No. 1 has placed the plaintiff in difficulties. This issue and issue No. 10 can be conveniently dealt with together. The plaintiff has rightly conceded in paragraph 16 of the plaint that the cause of action arose on the 28th of May 1952, when the cargo was fully discharged from the ship but has sought to extend the period of limitation. The plaint was presented on the 4th February 1956 ; therefore the plaintiff has attempted to explain the delay of y months and 5 days. His first explanation given in the said paragraph of the plaint is that the defendants had made a part‑payment. His further plea, contained in the said paragraph that his claim was finally repudiated by the defendants on the 11th of March 1953, is a formal statement which has no substance in it. The additional reference in the said paragraph to the notice under section 80 (Exh. 19) alleged to have been served on the defendants on the 28th of July 1955, extends the period of limitation by 2 months only and cannot help the plaintiff unless the plea of part‑payment succeeds. That plea is, therefore, to be examined carefully.
10. The following paragraph of the notice, (Exh. 19), is relevant
"By a letter dated 30th May 1952, the East Bengal Govern ment (defendants) accepted the liability for charges arising out of the waiting period of s. s. "Tang Shan."
The letter to which reference is made above is Exh. 20 and reads as under :‑
"As we have signed the time sheets of the ship, we are bound to pay the demurrage. But there are some difficulties in paying the demurrage every day ; so we propose to pay the charges on presentation of a bill after the completion of discharges of the cargo from the ship."
It is clear from the above letters that the defendants accepted no liability beyond the liability to pay demurrage which they have paid in full, I had put a direct question to the plaintiff when he was in the witness box to find out from him if there was any writing of the defendants to indicate that they had agreed to pay anything in addition to demurrage. He replied as follows :‑
"I am not able to think at present of any such document except that there is an agreement and the defendants' letter Exh. 21 to my Bankers."
I he relevant part of Exh. 21 is as follows :‑
"Sub :‑Your LBC 43/93 for Rs. 1,76,658‑9=.6 account Karachi Steam Navigation Co. Ltd. With reference to your letter No. 43/1282 dated 8‑9‑52, the undersigned is directed to send herewith a crossed cheque No. OC/2 47761 dated 3‑12‑52 for Rs. 77,251 (Rupees seventy seven thousand two hundred fifty one) in favour of the Karachi Steam Navigation Co. Ltd., towards the payment of the above bill."
On my further questions he explained as follows :‑.
"In Exh. 21, the amount of Rs. 1,76,658‑9‑6 is mentioned in the heading and then in the first paragraph of the letter there is a reference to it by the words "the above bill". That amount was claimed by the Steamship Navigation Company on account of the detention of the ship and the defendants paid Rs. 77,251 towards the payment of the above bill', which means that they made part payment of the bill."
The above reply given by the plaintiff makes a good sense but it is not sound because the words "towards the payment of the above bill" do not necessarily indicate that the liability to pay more was accepted. It was a bare statement of the fact that, as far as the bill was concerned, a smaller amount than the whole bill was paid. It was necessary to refer to the bill because the payment was made with regard to it. The word towards' means in the direction of and can convey the meaning of in relation to' as well as of part‑payment' when such intention can be gathered from the context. The expression on which the plaintiff has relied is, therefore, not enough to establish that the defen dants necessarily intended to convey the idea that the rest of the bill was to be paid. In respect of the intention of the defendants there can be no doubt owing to the contents of the letter Exh. 30 and the statement of the plaintiff himself. Exh. 30 was written by the Chittagong Office of the Karachi Steam Navigation Company to its head office at Karachi and the relevant part of it runs as follows :‑
"This is to inform you that the undersigned visited Dacca in connection with the passing of Timber Bills and pending "Tang Shan" demurrage case. During my stay I met the Director of Consumers Goods, Mr. Rahman and spoke to him ;;bout the progress of "Tang Shan" Bill. He thereupon informed me that the detention charges cannot be paid unless this case goes to Court, but I am prepared to pay Rs. 77,251 being the demurrage as per time sheet. Further he also told me that you are demanding Rs. 1,76,658 on total which is beyond our power. Then he personally took me to Mr. Rauf of Finance Department, whom I requested to pay all our claims of Rs. 1,90,000 but he says that they are prepared to pay Rs. 77,251 if you desire to take. As they did not ask for any undertaking or commitment from me, I requested them to send this cheque direct to you for the time being and on my request they took this case in‑hand immediately. A cheque for Rs. 77,251 was written and covering letter was drafted in your favour."
11. It is clear from the above quotation that the intention of the defendants by writing the words "towards the payment of the above bill" in Exh. 21 was merely to indicate as to in relation to which claim the amount of Rs. 77,251 was being paid. The plaintiff was able to see this when he stated in cross‑examination as follows :‑
"According to the contents of the letter Exh. 30, the amount of Rs. 77,251 paid by the defendants to the Steam Navigation Company on my instructions was in full settlement of the bill that was submitted on my behalf. I would like to add that the letter Exh. 30 makes a mention that the officer from whom the writer of the letter came to understand that the payment was made in full settlement had also said that I could go to Court to get my claim settled. To be frank, the attitude of the defendants in respect of not paying my claim for damages, apart from demurrage, has been consistent throughout, although I believe, and my stand is, that that attitude is erroneous."
The admission of the plaintiff in the above passage that the attitude of the defendants has been consistent throughout shows that he was in no doubt that the defendants did not mean to pay anything more towards the bill when they paid the amount stated in their letter Exh. 21.
12. The contention raised on behalf of the plaintiff in issue No. 10 is based on section 20 of the Limitation Act which is as follows :‑
"20. (1) Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period, by person liable to pay the debt or legacy, or by his duly authorised agent, a fresh period of limitation shall be computed from the time when the payment was made
Provided that, save in the case of a payment of interest made before the 1st day of January 1928, an acknowledgement of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.
(2) Where mortgaged land is in possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of subsection (1).
Explanation.‑Debt includes money payable under a decree or order of Court."
The words "where payment on account of a debt . . . . . is made", which occur in the beginning of the section, are to be noted. The expression "payment on account" means an interim payment and the expression "on account of" means "because of". As in the context the word "payment" cannot be separated from the words "on account", so that the words "on account of" may be read as a separate expression, the meaning of the whole phrase used in the section is "where an interim payment of a debt is made". The section, therefore, applies to those cases in which it is proved that an interim payment of a debt was made. Mr. Noor Mohammad contended that the words "on account of" meant "towards" or "in relation to" and that the sense of interim payment was not embodied in it. In support of his contention that any payment made in relation to a debt, renewed the period of limitation, he cited N. A. M. Appasami Pillai v. Morangam Muthirian and another (A I R 1935 Mad. 371). There are expressions in it which lend support to his contention but that is not the correct reading of the judgment. As pointed out by Mr. Ghani, such an interpretation would mean that limitation would be renewed C even when the debtor pays a part of a debt with a clear statement that he owes nothing more. This would reduce the meaning of[ the section to an absurdity. The intention of the debtor who) makes the payment is to be ascertained. In this case the intention of the defendants before drawing the cheque is proved by the letter of the Steamship Company Exh. 30, and their intention after it is proved by their letter Exh. 22. In the subsequent letter they have stated :
" . . . . . we have already settled your claim . . . . . ."
13. Mr. Noor Mohammad argued that Exh. 30 did not mean that the payment was being made in full and final settle ment of the claim, because the officer has, according to it, said that he had no "power" to issue a cheque for the full amount and advised that the plaintiff might go to Court. I pointed out to counsel that a challenge to a claimant to go to Court ordinarily means an emphatic refusal to meet the claim, and the word "power" in the context could be indicative of the helplessness of the officer in view of the decision of the defendants at a higher level than the officer not to pay more. Counsel then slipped into arguments which were so weak that I need not mention them.
14. The correct conclusion in my view is that no payment) was made to attract the application of section 20 of the Limitation Act and that the suit is barred by time. The suit is, therefore, dismissed with costs.
15. I have announced this decision at the close of the arguments on the 31st of August 1963 and may mention that 1 have not heard arguments ‑on the other issues.
K. B. A.
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