Sri G.Bhupal Reddy

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IN THE SPECIAL COURT FOR TRIAL AND DISPOSAL OF

COMMERCIAL DISPUTES :: VIJAYAWADA.

Present: G.BHUPAL REDDY,

Judge, Special Court for Trial and Disposal of

Commercial Disputes, Vijayawada.

Tuesday, this the Seventeenth [17th] day of March, Two Thousand Twenty Six [2026].

C.O.S. No. 21 of 2023

Between:

SAILORS EXPORTS LIMITED, 179/3 Pathar Mundla Road, Palda, Indore, Madhya Pradesh, Pin – 452 020, represented by Authorised Representative, Ramshankar Vishwakarma. Email Id: export@sailorexports.com …Plaintiff

And

1. SEAWAYS SHIPPING & LOGISTICS LTD, having their at 10-1-31, 5th Floor, Signature Towers, CBM Compound, Visakhapatnam, Andhra Pradesh – 530

003. Email id: feroz@seawaysindio.com, accts_line@seaways.com, sshukla@seaways.com

2. ADANI KRISHNAPATNAM PORT LTD., Krishnapatnam, Muthukar Mandal, Nellore District, Andhra Pradesh – 524 344. Email Id: ksnravi@adani.com

...Defendants

This Commercial Original Suit came before me on 30.01.2026 for final hearing, in the presence of M.S.Krishna, Advocate for the Plaintiff; Sistla Sreenivas, Advocate for 1st defendant and D.Satya Siva Darshan, advocate for 2nd defendant; and upon hearing the arguments on both sides; upon perusing the entire material available on record; and upon having been stood over for consideration till this day, this Court delivers the following –

// J U D G M E N T //

The suit is filed for recovery of the suit amount of ₹2,43,13,187/- with costs and interest against defendants 1 and 2, or in the alternative for an order of release of cargo of 782 metric tons of bagged rice stored in the warehouse of the 2nd defendant.

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The brief facts of the plaint:-

2) The plaintiff-Sailors Exports Limited, having its office at 179/3,

Pathar Mundla Road, Palda, Indore, Madhya Pradesh–452020, represented by its authorised representative, instituted the present suit against the defendants, namely Seaways Shipping & Logistics Ltd. (1st defendant)andAdani Krishnapatnam Port Ltd. (2nd defendant). The plaintiff is engaged in the business of manufacturing and exporting rice from India to various parts of the world. The 1st defendant is stated to be a shipping and logistics company, while 2nd defendant is a major port authority operating the port at Krishnapatnam and is the owner of warehouses situated within the port premises where goods meant for export and import are stored.

2.1) During July 2022, the plaintiff entrusted 1st defendant with a cargo consisting of 782 metric tons of bagged rice packed in 15,640 bags of 50 kilograms each, for the purpose of export. The value of the said cargo was Rs.1,91,06,950/-. The services agreed to be rendered by 1st defendant included customs clearance and loading of the cargo on board, a vessel for export. Although the cargo had been entrusted to the 1st defendant for export, the same was not loaded on any vessel and instead, it was stored in the Warehouse at Krishnapatnam Port, which is owned by 2nd defendant. The cargo has been lying in the said warehouse from July 2022 onwards.

2.2) The 1st defendant informed that storage charges were required to be settled in advance in order to initiate the process of release of the cargo. Acting upon such representation, the plaintiff paid a total sum of

Rs.19,68,179/-. The last payment was made on 19.01.2023 towards storage charges as per bills issued by 1st defendant. Despite receipt of the above amount, 1st defendant failed to load the cargo on board any vessel for export, thereby causing prejudice to the plaintiff. The plaintiff subsequently came to know that a dispute had arisen between

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Defendants 1 and 2 with regard to the alleged ground rent payable for storage of cargo at the warehouse owned by 2nd defendant.

2.3) The plaintiff is the lawful owner of the cargo and is not a party to any dispute or agreement between Defendants 1 and 2. Neither of the defendants has any legal right to detain the cargo of the plaintiff as security for the dues allegedly payable by 1st defendant or any other exporter. The cargo, which has been lying at the warehouse since July 2022, is perishable in nature and is gradually losing its value owing to the conduct of the defendants and their inter se disputes. Despite repeated requests made by the plaintiff, the 1st defendant has not taken any steps for its release. The plaintiff has been deprived of its cargo and has been compelled to bear detention, demurrage, and ground rent charges on a daily basis, though such charges have accrued solely due to the acts and omissions of the defendants and cannot be attributed to the plaintiff.

2.4) The 2nd defendant has unlawfully detained the cargo and is levying detention and demurrage charges on arbitrary and unjustifiable grounds. The conduct of 2nd defendant in withholding the cargo, amounts to abuse of power and an attempt to recover alleged dues of 1st defendant from the plaintiff under a false and baseless pretext. The 2nd defendant is attempting to extort money by levying unjustifiable charges on a day-to-day basis and by merging different transactions in order to settle its disputes with 1st defendant. There is no negligence or fault on the part of the plaintiff and that the defendants have no legal authority to presume that any dues are payable by the plaintiff.

2.5) The 2nd defendant has exercised a purported right of lien over the cargo, which is illegal and without authority of law. The 2nd defendant cannot legally detain the cargo belonging to the plaintiff as security for the alleged defaults of 1st defendant or other exporters. Since the defendants failed to release the cargo, the plaintiff was constrained to issue a legal notice dated 23.02.2023, demanding a sum of Rs.2,10,75,129/- together

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with interest at 18% per annum from 1st defendant. The plaintiff also issued a demand notice dated 21.03.2023 under the Insolvency and

Bankruptcy Code, 2016, alleging default in payment of the said amount.

The 1st defendant replied to the said notice on 04.04.2023, denying liability and stating that the cargo had been withheld by 2nd defendant.

2.6) The plaintiff is not a party to the agreement between the defendants and cannot be made to suffer due to disputes between the defendants. The plaintiff cannot be compelled to run from pillar to post owing to the inter se disputes between Defendants 1 and 2. The plaintiff is ready and willing to deposit the additional storage charges, without prejudice to its rights, in order to secure the release of the cargo. The plaintiff cannot be compelled to pay detention or storage charges pertaining to goods belonging to other exporters which were stored in the warehouse at the instance of 1st defendant.

2.7) The plaintiff has suffered substantial losses as a result of the cargo being wrongfully withheld by the defendants and reserves its right to claim damages for any loss or deterioration of the cargo. The agreement between the plaintiff and 1st defendant is oral and the 1st defendant kept the stocks with 2nd defendant and the transactions took place within the jurisdiction of this Court. The importer is not a necessary party to the suit.

2.8) There is every likelihood of 2nd defendant proceed to auction the cargo in order to recover the alleged dues of 1st defendant. The 2nd defendant has no authority in law to auction or sell the plaintiff’s cargo.

The plaintiff is entitled to recover a sum of Rs.2,10,75,129/-, together with interest calculated at 18% per annum from 01.08.2012 to 30.05.2023 which would become Rs.31,38,740/-. The plaintiff further claims legal expenses of Rs.1,00,000/-, making a total claim of Rs.2,43,13,187/-. In the alternative, the plaintiff seeks a direction for immediate release of the

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cargo consisting of 782 metric tons of bagged rice contained in 15,640 bags, presently stored in the warehouse of 2nd defendant.

3) On receipt of summons, the 1st defendant appeared before this

Court by engaging an Advocate, and filed written statement. The sum and substance of the written statement of 1st defendant is as follows.

3.1) The suit is not maintainable either in law or on facts and is liable to be dismissed with costs. The plaintiff has not established any contractual liability against the 1st defendant. The plaintiff has not placed any material to prove that there existed any written or enforceable contract between the plaintiff and 1st defendant under which 1st defendant undertook an obligation to export the cargo on behalf of the plaintiff.

3.2) The 1st defendant was only rendering logistics and facilitation services to the plaintiff as an agent, subject to the instructions issued by the plaintiff from time to time. The 1st defendant merely assisted the plaintiff in moving the cargo into the port premises of 2nd defendant for the purpose of export and acted only in accordance with the instructions given by the plaintiff. The 1st defendant did not assume any independent responsibility for exporting the cargo. The cargo in question was stored in the warehouse belonging to 2nd defendant at Krishnapatnam Port and 1st defendant does not own any warehouse or storage facility within the port premises. The plaintiff was fully aware that the cargo, after being brought into the port, would be stored in the warehouse of 2nd defendant and that such storage was subject to payment of storage charges, ground rent and other applicable charges.

3.3) The plaintiff had intended to export the cargo after identifying a suitable importer. However, the plaintiff failed to identify any importer and did not provide necessary instructions regarding the country of export, the vessel on which the cargo was to be shipped, or other details required for completing the export formalities. In the absence of such instructions and documentation, the 1st defendant could not proceed with the export of the

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cargo. Several communications were addressed to the plaintiff requesting payment of storage charges and other dues payable in respect of the cargo stored at the warehouse of 2nd defendant. Despite such communications, the plaintiff failed to clear the outstanding dues. Without payment of such charges, the cargo could not be released from the warehouse. The plaintiff suppressed material correspondence exchanged between the parties and filed the present suit making false allegations that the defendants had failed to export the cargo. The plaintiff remained inactive for a long period and did not take necessary steps either to export the cargo or to clear the outstanding dues.

3.4) The plaintiff itself created a situation whereby the cargo remained stored in the warehouse for a prolonged period. The plaintiff failed to perform its obligations, including furnishing the necessary export documentation, identifying the importer, selecting the vessel for shipment and paying the service charges and storage charges. The cargo was entrusted to 1st defendant for the purpose of export. There was no contract, either oral or written, whereby the plaintiff entrusted the cargo to the 1st defendant for export. The 1st defendant only facilitated the movement of the cargo into the port premises and did not assume custody of the cargo as an exporter. The plaintiff is a trader engaged in export business and was fully aware of the procedures involved in export operations, including the requirement of customs clearance, documentation, tax and duty payments, and other statutory compliances.

The plaintiff did not furnish the necessary information or documentation required for initiating export procedures.

3.5) The plaintiff had knowledge of the agreement between

Defendants 1 and 2 under which 1st defendant was authorized to utilize the services of 2nd defendant for handling cargo at the port. The plaintiff availed the services of 1st defendant with full knowledge of such arrangements. The plaintiff was repeatedly informed that the cargo could

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be released only upon payment of the outstanding service charges, storage charges and other dues. However, the plaintiff failed to clear such dues and therefore was not entitled to demand release of the cargo. The 1st defendant denies the allegation that the cargo was wrongfully detained by 2nd defendant for recovering dues payable by 1st defendant. The cargo was not detained for such purpose and that the plaintiff was aware that the cargo could not be released without payment of the applicable charges.

3.6) The valuation of the cargo as claimed by the plaintiff is not correct and the plaintiff is put to strict proof of the same. The plaintiff cannot claim that it was forced to bear detention charges or demurrage when the cargo remained in the warehouse due to its own inaction and failure to clear the charges payable. The 1st defendant denies the allegation of the plaintiff that the detention of the cargo by 2nd defendant was unlawful or arbitrary. The plaintiff is not entitled to seek a declaration that such detention is illegal or to seek release of the cargo without payment of the outstanding charges. The plaintiff is not entitled to recover the suit claim as prayed for. The cargo remained stored in the warehouse for a long period and lost its commercial value and that the plaintiff itself failed to identify a purchaser for the cargo. The plaintiff cannot claim interest at the rate of 18% per annum as claimed in the plaint, as there is no contractual or legal basis for such claim. The plaintiff alone is responsible for the consequences arising from its failure to clear the charges and complete the export formalities. The 1st defendant denies any liability to pay the suit amount or to compensate the plaintiff for the alleged loss. Finally, the 1st defendant prayed to dismiss the suit with exemplary costs.

4) The 2nd defendant appeared before this Court by engaging an

Advocate and filed its written statement denying the material averments

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of the plaint and contended that the suit is not maintainable against it. The sum and substance of the written statement of 2nd defendant is as follows.

4.1) The allegations made by the plaintiff essentially relate to an alleged oral contract between the plaintiff and 1st defendant. The 2nd defendant has no role in the export transaction allegedly undertaken between the plaintiff and 1st defendant. Even as per the plaint averments, the services relating to export of the cargo, including customs clearance and loading of the cargo onto a vessel, were to be rendered by 1st defendant. Therefore, the 2nd defendant had no involvement in the transaction relating to the export of the cargo and cannot be held liable to the plaintiff in any manner. The plaintiff is required to prove that the cargo allegedly entrusted to 1st defendant for export and the cargo allegedly stored in the warehouse of 2nd defendant is one and the same. The 1st defendant had failed to clear its contractual dues payable to 2nd defendant, and therefore the 2nd defendant became entitled to exercise its contractual rights, including the right of lien over the goods stored in its warehouse and to auction the said cargo for realization of the dues payable by 1st defendant.

4.2) The alleged communications and transactions referred to in paragraphs 5, 6 and 9 of the plaint were only between the plaintiff and 1st defendant, and 2nd defendant had no role in those transactions.

Accordingly, the plaintiff is required to prove the said averments. The 2nd defendant also denies the plaintiff’s assertion that it is the legal owner of the cargo stored in the warehouse and that the defendants cannot withhold the cargo as ransom for the dues of other exporters. Under the contract governing the storage arrangement, 2nd defendant possesses a valid right of lien and other contractual rights enabling it to auction the goods stored by 1st defendant in the event 1st defendant fails to discharge its contractual obligations and clear the dues payable to 2nd defendant.

The cargo stored in the warehouse was perishable in nature and that,

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upon failure of 1st defendant to clear the outstanding dues despite negotiations, 2nd defendant proceeded to auction the cargo in accordance with law. The 2nd defendant was not concerned with the communications between the plaintiff and 1st defendant and is therefore not in a position to admit or deny the contents of those communications. The plaintiff is therefore required to prove the same.

4.3) There was no contractual relationship between the plaintiff and 2nd defendant and that no transaction had taken place between them.

Consequently, no liability can arise against 2nd defendant in favour of the plaintiff. The 2nd defendant also disputes the allegation that there was no outstanding dues payable by 1st defendant. The 2nd defendant denies the allegations made by the plaintiff that it illegally detained the cargo or that it attempted to recover the dues payable by 1st defendant from the plaintiff. The 2nd defendant was dealing only with 1st defendant under the terms of the Cargo Handling Agreement (CHA) executed between them for storage of cargo. The 2nd defendant had no dealings whatsoever with the plaintiff.

4.4) The 2nd defendant also denies the allegations that it attempted to extort money from the plaintiff or that it merged different transactions to settle disputes with 1st defendant. The 2nd defendant never demanded any money from the plaintiff and that the dues sought to be realized were those contractually payable by 1st defendant. The 2nd defendant has not raised any claim against the plaintiff and therefore the allegation of the plaintiff against the 2nd defendant is baseless. The 2nd defendant also denies that the exercise of its right of lien over the cargo was unlawful or without authority. According to 2nd defendant, the right of lien exercised over the cargo stored by 1st defendant was valid and in accordance with the contract and the applicable law.

4.5) The 2nd defendant did not receive the legal notice dated 23.02.2023 referred to in the plaint. The office copy of the said notice filed

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along with plaint itself shows that the notice was addressed only to 1st defendant and not to 2nd defendant. The alleged notices and communications referred to in paragraph 18 of the plaint relate only to the plaintiff and 1st defendant, and that the 2nd defendant is not concerned with those communications. Thecargo stored by 1st defendant was not released to 1st defendant since the 1st defendant failed to clear the outstanding dues, thereby breached the terms and conditions of the CHA.

The plaintiff is not a party to the CHA between Defendants 1 and 2 and therefore the plaintiff cannot seek to hold that the 2nd defendant is liable for any alleged losses suffered by it. If the plaintiff has suffered any loss, the same is attributable solely to the conduct of 1st defendant, and the plaintiff may have remedies only against 1st defendant.

4.6) The 1st defendant had stored cargo belonging to several customers in the warehouse, and the cargo referred to in the plaint was not the only cargo stored therein. The agreement between Defendants 1 and 2 provided that in the event 1st defendant failed to clear the outstanding dues, the 2nd defendant was entitled to exercise a lien over the entire cargo stored by 1st defendant and to realize the dues through sale of the said cargo. Since the plaintiff had no contractual relationship with 2nd defendant and had not entered into any agreement with it, the plaintiff had no right to interfere with the cargo stored by 1st defendant in the warehouse of 2nd defendant. The cargo in question has already been auctioned by 2nd defendant in accordance with the terms of the contract and the applicable law. Therefore, the relief sought by the plaintiff for release of the cargo does not survive.

4.7) The 2nd defendant denies the plaintiff’s claim for recovery of

Rs.2,10,75,129/- with interest and the claim for legal costs of

Rs.1,00,000/-. The plaintiff is not entitled to any decree against 2nd defendant. The 2nd defendant also disputes the allegation that the plaintiff has suffered losses due to wrongful detention of the cargo. The plaintiff

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has not filed any appropriate application seeking damages and therefore cannot reserve such a right merely through a statement in the plaint. The present suit has been filed without complying with the mandatory requirement of pre-institution mediation under Section 12A of the

Commercial Courts Act, 2015. The alleged urgency pleaded by the plaintiff is artificial and was only raised to avoid the statutory requirement of pre-institution mediation. Therefore, the plaint is liable to be rejected under Order VII Rule 11(d) CPC, and the 2nd defendant prayed to dismiss the suit against 2nd defendant as not maintainable.

4.8) With the leave of the Court, the 2nd defendant filed an

additional written statement placing the following further facts on record

subsequent to the filing of its earlier written statement.

4.9) During the pendency of the suit, the 2nd defendant auctioned the cargo to recover its dues from the 1st defendant by following the required legal formalities. In pursuant to the common final order dated 14.12.2024 passed by the Hon’ble High Court in CMA Nos. 548, 549 and 550 of 2023, the successful bidder commenced the process of evacuating the unclaimed cargo (rice) lying at the port premises of 2nd defendant. The process of evacuation commenced on 05.01.2024 and continued until 16.02.2024. During this period, for every lot of cargo evacuated, 2nd defendant raised invoices on the successful bidder and the same were duly cleared by the successful bidder. 49 invoices were raised in total, amounting to a total value of Rs.3,15,28,000/-. The total quantity of cargo evacuated by the successful bidder is stated to be 1,516 metric tons. In adherence to the directions issued by the Hon’ble High Court, it deposited the entire sale proceeds in the State Bank of India as a fixed deposit in the name of 2nd defendant. The fixed deposit receipt was obtained on 13.03.2024.

5) Basing on the above pleadings, the following issues have been framed by this Court for trial.

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1. Whether the plaintiff entrusted cargo of 782 metric tons of rice contained in 15,640 bags of 50 kilograms each to defendant No.1 for the purpose of export?

2. Whether the defendant No.1 failed to load the cargo on board of the vessel for the purpose of export in time?

3. Whether the detention of cargo by the defendant No.2 is unlawful?

4. Whether the action of defendant No.2 auctioning the cargo during the pendency of the suit is unlawful?

5. Whether the suit is bad for mis-joinder of the parties?

6. Whether there is no privity of contract between plaintiff and defendant No.2?

7. Whether the plaintiff is entitled for recovery of an amount of Rs.2,43,13,187/- from both the defendants 1 and 2 with costs and interest as prayed for?, OR alternatively for release of the subject cargo to the plaintiff?

8. To what relief?

6) To substantiate the case of the plaintiff, Sunny Nagrani,

Authorized Representative of the plaintiff-company filed chief examination affidavit and he is examined as PW.1, and got marked Exhibits A1 to A78.

On behalf of 2nd defendant,Sidhartha Kumar Sarangi, Head of Marketing

Department of 2nd defendant-port filed chief examination affidavit and he is examined as DW.1 and got marked Exhibits B1 to B88 on its behalf.

The 1st defendant did not contest the matter after filing the written statement and failed to adduce any evidence on its behalf.

7) Heard both sides. Perused the written arguments filed by the counsel for plaintiff and 2nd defendant.

Issue Nos.1 and 2:

(Whether the plaintiff entrusted cargo of 782 metric tons of rice contained in 15,640 bags of 50 kilograms each to defendant No.1 for the purpose of export?)

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(Whether the defendant No.1 failed to load the cargo on board of the vessel for the purpose of export in time?)

8) Since these two issues are inter connected with each other, this

Court discuss these issues together to avoid repetition and for the sake of convenience.

8.1) The case of the plaintiff is that during July 2022 it entrusted a cargo consisting of 782 metric tons of bagged rice packed in 15,640 bags of 50 kg each to 1st defendant for export purposes. According to the plaintiff, the 1st defendant had undertaken to arrange customs clearance and loading of the cargo on board a vessel for export. The 1st defendant in its written statement did not deny the fact that the cargo of 782 metric tons of rice was entrusted to it by the plaintiff. Thus, the existence of the cargo and its storage through 1st defendant at the port warehouse is not in serious dispute. The documents filed by the plaintiff relating to invoices, storage payments and correspondence further support the contention that the cargo was entrusted to 1st defendant for export.

8.2) The plaintiff contends that despite entrustment of the cargo and payment of storage charges amounting to Rs.19,68,179/-, the 1st defendant failed to load the cargo onto a vessel for export. The 1st defendant has not produced any evidence to show that the cargo was not loaded onto a vessel because of the plaintiff’s inaction. According to 2nd defendant, the cargo remained stored in the warehouse for a considerable period and was eventually subjected to auction proceedings.

If the cargo had been exported as agreed, the question of continued storage and eventual auction would not arise.

8.3) The Hon’ble Apex Court in Vidhyadhar v. Manikrao & Anr. 1, held that when the defendant did not enter into witness box and depose about the facts of the case, the pleadings of the defendant cannot be considered and an adverse inference can be drawn against the party who 1 1999 AIR SC 1441

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did not adduce any evidence in support of his/her/its pleadings. The same principle was reiterated by the Hon’ble Apex Court in Chowdamma v.

Venkatappa 2.

8.4) In the present case also, the 1st defendant though filed its written statement making allegations against the plaintiff, neither cross examined the plaintiff’s witness nor adduced any evidence. Therefore, the principle held in the above said cases squarely applicable against the 1st defendant. Therefore, the version of 1st defendant in the written statement cannot be considered. As seen from the documents filed by the plaintiff and the evidence of PW.1, it is obvious that 1st defendant failed to perform its contractual obligation of exporting the cargo within the stipulated time. Accordingly, these two issues are answered in favour of the plaintiff and against the 1st defendant.

Issue Nos.3, 4 and 6:

(Whether the detention of cargo by the defendant No.2 is unlawful?) (Whether the action of defendant No.2 auctioning the cargo during the pendency of the suit is unlawful?) (Whether there is no privity of contract between plaintiff and defendant No.2?)

9) Since all these three issues are inter connected with each other, this Court discuss these issues together to avoid repetition and for the sake of convenience.

9.1) The plaintiff contends that 2nd defendant illegally detained the cargo even though the plaintiff was not a party to the dispute between

Defendants 1 and 2. However, the 2nd defendant has specifically pleaded that the 1st defendant had stored cargo in the warehouse of 2nd defendant. The 1st defendant failed to clear its contractual dues payable to 2nd defendant. Under clause 9 of the contract between Defendants 1 2 2025 INSC 1038 dated 25.08.2025

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and 2 (Ex.B1-Cargo Handling Agreement), the 2nd defendant had the right of lien over the cargo stored by 1st defendant. According to the said clause, the customer shall make the payments within 7 days from the date of invoice and/or if the customer fails to lift the entire cargo from the port, the port shall have the first lien over the cargo. It further says that if the customer fails to make payment within 90 days, the port shall be entitled to recover all such dues along with interest by way of selling the cargo.

9.2) It is also admitted by the plaintiff itself that the cargo was stored in the warehouse through 1st defendant. Therefore, the warehouse relationship existed between Defendants 1 and 2 and not between the plaintiff and 2nd defendant. In such circumstances, if 1st defendant defaulted in payment of warehouse charges, 2nd defendant would be entitled to exercise its contractual rights against the cargo stored by 1st defendant. In its written statement, the 1st defendant did not aver that it paid all the dues to the 2nd defendant; on the other hand, its contention is that no such charges were paid to the 2nd defendant. The 1st defendant made allegations against the plaintiff that the plaintiff could not clear the warehouse dues. Therefore, it can be safely concluded that the detention of the cargo by 2nd defendant cannot be termed unlawful.

9.3) The 2nd defendant has placed on record that the cargo formed part of unclaimed cargo lying in the port; the auction process was conducted in accordance with the terms of the contract and applicable law. The successful bidder evacuated the cargo during the period 05.01.2024 and 16.02.2024. The total sale proceeds amounted to

Rs.3,15,28,000/- were deposited in State Bank of India as a fixed deposit in compliance with the directions of the Hon’ble High Court. These facts have been specifically pleaded in the additional written statement and have not been effectively disproved by the plaintiff.

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9.4) The counsel for plaintiff in his written arguments mainly attacked the action of 2nd defendant i.e., detention of cargo and subsequent auction of the cargo. On this aspect, the counsel for plaintiff contends that the alleged dues are not pertaining to the Ex.B1, but they pertain to the period prior to Ex.B1 i.e., prior to 01.04.2022. He further contends that the plaintiff is not a party to the Ex.B1-CHA and therefore, the defendants cannot impose obligations on the plaintiff, which is a third person to the contract. About the said proposition, the counsel placed reliance on judgments (1) Rashtriya Ispat Nigam Limited v. Dewan Chand

Ram Saran 3, (2) M.C. Chacko v. The State Bank of Travancore 4. There cannot be any quarrel with the said proposition. In the present case, the 2nd defendant did not impose any obligation on the plaintiff. Therefore, the case laws cited by the plaintiff side are not applicable to the present case.

9.5) Further, the counsel for plaintiff relied on a decision in Board of

Trustees of the Trust of Bombay v. Sriyanesh Knitters 5, and contends that the 2nd defendant may retain the goods, but cannot sell them in view of

Section 171 of the Contract Act. On this aspect, he also relied on judgments in Cogoport Private Limited v. Strides Pharma Science

Limited 6, Joseph Antony v. The South India Bank Limited 7, Utair Aviation v. Jagson Airlines Limited 8, Dhian Singh Sobha Singh v. Union of India 9, and Ram Sarup Gupta v. Bishun Natain Inter College 10 .

9.6) Section 171 of Indian Contract Act speaks about right of general lien of Bankers, Factors, Wharfingers and Policy Brokers etc.

However, it says “unless a contract exists to the contrary”. In the present case, there is a contract between the defendants in the form of Ex.B1-

CHA. Therefore, the terms of the contract override Section 171 of the 3 (2012) 5 SCC 306 4 (MANU/SC/0008/1969) 5 1999 AIR SC 2947 6 (MANU/DE/6462/2023) 7 (MANU/KE/3359/2023) 8 (MANU/DE/2291/2012) 9 (MANU/SC/0010/1957) 10 (MANU/SC/0043/1987)

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Contract Act as seen from the Section itself. Hence, the counsel for plaintiff cannot rely on Section 171 of Contract Act and the above mentioned case law on the said Section, when the specific contract is existing between the 1st defendant and 2nd defendant. Hence, the case law relied upon by the plaintiff is not applicable to the present case.

9.7) The counsel for plaintiff contends that the handing over of cargo by the 1st defendant to the 2nd defendant is nothing but a ‘bailment’ within the meaning of Section 148 of Indian Contract Act. He further argues that the 2nd defendant may retain the cargo, but cannot sell the same, when the original owner of the cargo is the plaintiff. The said contention is not acceptable, since the plaintiff is a stranger to the 2nd defendant. The agreement is between the 1st defendant and the 2nd defendant. The 2nd defendant is empowered under the terms of Ex.B1-

CHA to have a lien over the cargo, and after 90 days of non-payment of dues, it can sell away the cargo. In the present case, the 2nd defendant contends that the period of 90 days was lapsed long back, but in spite of that, the 1st defendant did not pay the dues. Therefore, the 2nd defendant can exercise its right of lien and to sell the cargo to recover the dues. The plaintiff cannot question the 2nd defendant, and if the plaintiff had any grievance, it has to be against the 1st defendant only.

9.8) The pleadings clearly reveal that the plaintiff had dealings only with 1st defendant for the export of the cargo. The cargo came to be stored in the warehouse of 2nd defendant through 1st defendant. There is no evidence on record to show that any direct agreement or contractual arrangement existed between the plaintiff and 2nd defendant. Therefore, it is established that there was no privity of contract between the plaintiff and 2nd defendant.

9.9) Another argument of the plaintiff is that the validity period of

Ex.B1-CHA is from 01.04.2022 till 31.03.2023 and therefore, the sale of cargo beyond the period agreement is invalid. I am afraid that this

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contention is not tenable. Clause 4 of Ex.B1-CHA reads “….this agreement shall come into force on 01.04.2022 and shall remain valid until 31.03.2023 or till the clearance/loading of the entire cargo from the port under normal business circumstances in reasonable time for all ships/vessels that have completed unloading/loading and/or served notice of readiness (“NOR”) prior to 31.03.2023 subject however to extension or termination in accordance with the provisions of this agreement.”

Therefore, it cannot be said that the agreement period is only from 01.04.2022 to 31.03.2023. The 2nd limb of the said clause says the validity is till the clearance of the cargo and dues payable to the 2nd defendant. Hence, the contention of the plaintiff’s counsel on this point is not tenable. Therefore, the auction appears to have been conducted under lawful authority and pursuant to judicial directions. Hence, the

Court holds that the auction conducted by 2nd defendant cannot be treated as unlawful. Hence, the detention of the cargo by the 2nd defendant cannot be termed as unlawful. The plaintiff cannot make any claim against the 2nd defendant since, there is no privity of contract between them.

9.10) In the light of above discussion, all these three issues are decided against the plaintiff and in favour of the 2nd defendant, holding that the plaintiff cannot seek any relief against the 2nd defendant.

Issue No.5:

(Whether the suit is bad for mis-joinder of the parties?)

10) The 2nd defendant has contended that there is no direct contractual relationship between the plaintiff and 2nd defendant and therefore, the 2nd defendant cannot be a party to the suit. However, the cargo admittedly remained in the warehouse of 2nd defendant and the plaintiff has alleged illegal detention and auction of the cargo by 2nd defendant. Since reliefs were sought against 2nd defendant regarding detention and auction of the cargo, 2nd defendant is a proper party to the

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suit. Therefore, the suit cannot be said to be bad for mis-joinder.

Accordingly, this issue is answered in favour of plaintiff and against the 2nd defendant.

Issue No.7:

(Whether the plaintiff is entitled for recovery of an amount of Rs.2,43,13,187/- from both the defendants 1 and 2 with costs and interest as prayed for?, OR alternatively for release of the subject cargo to the plaintiff?)

11) The alternative relief of release of cargo has become infructuous because the cargo has already been auctioned, and the sale proceeds have been deposited pursuant to court directions.

11.1) There is no privity of contract between the plaintiff and 2nd defendant. The 2nd defendant acted under its contractual rights against 1st defendant. In view of my findings in issues 3, 4 and 6, the plaintiff cannot claim the suit amount from 2nd defendant.

11.2) The plaintiff produced several documents i.e., Exs.A1 to A78.

Ex.A1 to A15 are the invoices raised by the 1st defendant. Ex.A16 is the statement of payments made by the plaintiff to the 1st defendant in respect of the cargo. The weighment slips and supply bills further strengthens the case of the plaintiff against the 1st defendant. PW.1 stated that the plaintiff paid a total sum of Rs.19,68,179/- to the 1st defendant in two instalments towards storage charges payable to 2nd defendant. According to the plaintiff, the last payment was made on 19.01.2023 towards storage charges as per bills issued by 1st defendant.

There is no rebuttal evidence from the 1st defendant to discredit the version of the plaintiff. In these circumstances, the evidence of PW.1 coupled with Exs.A1 to A78 proves that the failure to export the cargo arose due to the conduct of 1st defendant, who was responsible to export logistics. Hence, it can be said that the claim of the plaintiff against 1st defendant is proved. However, for the reasons mentioned in preceding

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paragraphs, the claim against 2nd defendant cannot be sustained. This issue is decided accordingly.

Issue No.8: (To what relief?)

12) In view of the findings recorded in issues 1 to 7, the plaintiff is not entitled to any relief against 2nd defendant, but the plaintiff is entitled to recover the suit claim amount from the 1st defendant excluding the amount of Rs.1,00,000/- shown as legal expenses since this Court is going to decree the suit against 1st defendant with costs. Since the alternative relief of release of cargo had already become infructuous.

Therefore, the alternative relief cannot be granted.

13) In the result, the suit is decreed in part with proportionate costs, in favour of the plaintiff and against the 1st defendant for a sum of

Rs.2,42,13,187/- with interest @ 18% p.a from the date of suit till date of judgment and decree, and thereafter @ 12% p.a. from the date of judgment and decree till realization. The suit against 2nd defendant is dismissed with costs.

Typed to my dictation by the Stenographer of this Court, corrected and

pronounced by me, in the Open Court, on this the 17th day of March, 2026.

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

APPENDIX OF EVIDENCE

Oral Evidence

For Plaintiff: For (2nd) Defendant :

PW.1: Sunny Nagrani DW.1: Sidhartha Kumar Sarangi

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Documentary Evidence For Plaintiff:

Ex.A1 : Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0566, dt.11.11.2022. Ex.A2 : Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0567, dt.11.11.2022. Ex.A3 : Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0568, dt.11.11.2022. Ex.A4: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0569, dt.11.11.2022. Ex.A5: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0570, dt.11.11.2022. Ex.A6: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0571, dt.11.11.2022. Ex.A7: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0572, dt.11.11.2022. Ex.A8: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0573, dt.11.11.2022. Ex.A9: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0574, dt.12.11.2022. Ex.A10: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0575, dt.12.11.2022. Ex.A11: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0576, dt.13.11.2022. Ex.A12: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0577, dt.13.11.2022. Ex.A13: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0578, dt.13.11.2022. Ex.A14: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0579, dt.13.11.2022. Ex.A15: Tax Invoice raised by 1st defendant bearing No.SS32SCI2223/0583, dt.14.11.2022. Ex.A16: Statement of payments made by the plaintiff to 1st defendant for purchase of cargo. Ex.A17: Bill of supply by Deccan Trading Corporation bearing No.555, dt.01.02.2022. Ex.A18: Weighment Slip for 600 packages. Ex.A19: Bill of supply by Deccan Trading Corporation bearing No.191, dt.04.06.2022. Ex.A20: Weighment Slip for 500 packages. Ex.A21: Bill of supply by Deccan Trading Corporation bearing No.190, dt.04.06.2022. Ex.A22: Weighment Slip for 700 packages. Ex.A23: Bill of supply by Deccan Trading Corporation bearing No.198, dt.07.06.2022. Ex.A24: Weighment Slip for 500 packages. Ex.A25: Bill of supply by Deccan Trading Corporation bearing No.203,

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dt.08.06.2022. Ex.A26: Bill of supply by Deccan Trading Corporation bearing No.195, dt.06.06.2022. Ex.A27: Weighment Slip for 500 packages. Ex.A28: Bill of supply by Deccan Trading Corporation bearing No.193, dt.05.06.2022. Ex.A29: Weighment Slip for 620 packages. Ex.A30: Bill of supply by Deccan Trading Corporation bearing No.207, dt.08.06.2022. Ex.A31: Weighment Slip for 620 packages. Ex.A32: Bill of supply by Deccan Trading Corporation bearing No.201, dt.08.06.2022. Ex.A33: Weighment Slip for 500 packages. Ex.A34: Bill of supply by Deccan Trading Corporation bearing No.208, dt.09.06.2022. Ex.A35: Weighment Slip for 600 packages. Ex.A36: Bill of supply by Deccan Trading Corporation bearing No.209, dt.09.06.2022. Ex.A37: Weighment Slip for 500 packages. Ex.A38: Bill of supply by Deccan Trading Corporation bearing No.211, dt.10.06.2022. Ex.A39: Weighment Slip for 500 packages. Ex.A40: Bill of supply by Deccan Trading Corporation bearing No.213, dt.11.06.2022. Ex.A41: Weighment Slip for 640 packages. Ex.A42: Bill of supply by Deccan Trading Corporation bearing No.216, dt.12.06.2022. Ex.A43: Weighment Slip for 520 packages. Ex.A44: Bill of supply by Deccan Trading Corporation bearing No.221, dt.14.06.2022. Ex.A45: Weighment Slip for 500 packages. Ex.A46: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.399/2022-2023, dt.15.06.2022. Ex.A47: Weighment Slip for 700 packages. Ex.A48: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.404/2022-2023, dt.15.06.2022. Ex.A49: Weighment Slip for 700 packages. Ex.A50: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.405/2022-2023, dt.16.06.2022. Ex.A51: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.406/2022-2023, dt.17.06.2022. Ex.A52: Weighment Slip for 700 packages. Ex.A53: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.409/2022-2023, dt.17.06.2022. Ex.A54: Weighment Slip for 600 packages. Ex.A55: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.410/2022-2023, dt.18.06.2022. Ex.A56: Weighment Slip for 520 packages.

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Ex.A57: Bill of supply by Deccan Trading Corporation bearing No.228, dt.18.06.2022. Ex.A58: Weighment Slip for 500 packages. Ex.A59: Bill of supply by Deccan Trading Corporation bearing No.231, dt.19.06.2022. Ex.A60: Weighment Slip for 600 packages. Ex.A61: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.417/2022-2023, dt.20.06.2022. Ex.A62: Weighment Slip for 600 packages. Ex.A63: Bill of supply by Deccan Trading Corporation bearing No.235, dt.21.06.2022. Ex.A64: Weighment Slip for 600 packages. Ex.A65: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.488/2022-2023, dt.12.07.2022. Ex.A66: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.502/2022-2023, dt.17.07.2022. Ex.A67: Weighment Slip for 600 packages. Ex.A68: Bill of supply by Shri Basaveshwara Agro Rice Industries bearing No.503/2022-2023, dt.17.07.2022. Ex.A69: Weighment Slip for 700 packages. Ex.A70: Bill of supply by Deccan Trading Corporation bearing No.200, dt.07.06.2022. Ex.A71: Ledger Account maintained by plaintiff with Deccan Trading Corporation. Ex.A72: Ledger Account maintained by plaintiff with Shri Basaveshwara Agro Rice Industries. Ex.A73: Office copy of legal notice, dt.23.02.2023. Ex.A74: Office copy of demand notice, dt.21.03.2023. Ex.A75: Reply notice, dt.04.04.2023 issued by 1st defendant. Ex.A76 Auction letter, dt.28.04.2023 through e-mail. Ex.A77: Certified copy of Board Resolution of Authorization. Ex.A78: Certificate of Incorporation of the plaintiff.

For the (2 nd ) Defendant:

Ex.B1 : Office copy of Cargo handling Agreement dt.01.04.2022 Ex.B2 : Office copy of Invoice IAKPLSTR09220095 dt.30.09.2022 Ex.B3 : Office copy of Invoice IAKPLSTR09220096 dt.30.09.2022 Ex.B4: Office copy of Invoice IAKPLSTR09220097 dt.30.09.2022 Ex.B5: Office copy of Invoice IAKPLSTR09220098 dt.30.09.2022 Ex.B6: Office copy of Invoice IAKPLSTR09220099 dt.30.09.2022 Ex.B7: Office copy of Invoice IAKPLSTR092200100 dt.30.09.2022 Ex.B8: Office copy of Invoice IAKPLSPL10220071 dt.14.10.2022 Ex.B9: Office copy of Invoice IAKPLSPL10220075 dt.14.10.2022 Ex.B10: Office copy of Invoice IAKPLSTR10220027 dt.18.10.2022 Ex.B11: Office copy of Invoice IAKPLSTR10220034 dt.19.10.2022 Ex.B12: Office copy of Invoice IAKPLSTR11220074 dt.30.11.2022

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Ex.B13: Office copy of Invoice IAKPLSTR11220075 dt.30.11.2022 Ex.B14: Office copy of Invoice IAKPLSTR12220092 dt.31.12.2022 Ex.B15: Office copy of Invoice IAKPLSTR12220093 dt.31.12.2022 Ex.B16: Office copy of Invoice IAKPLSTR03230013 dt.13.03.2023 Ex.B17: Office copy of Invoice IAKPLSTR03230014 dt.13.03.2023 Ex.B18: Office copy of Invoice IAKPLSPL03230230 dt.29.03.2023 Ex.B19: Office copy of Invoice IAKPLSTR03230083 dt.31.03.2023 Ex.B20: Office copy of Invoice IAKPLSTR03230084 dt.31.03.2023 Ex.B21: Office copy of Invoice IAKPLSTR04230051 dt.21.04.2023 Ex.B22: Office copy of Invoice IAKPLSTR04230085 dt.30.04.2023 Ex.B23: Office copy of Invoice IAKPLMRN05230075 dt.12.05.2023 Ex.B24: Office copy of Invoice IAKPLSTR05230048 dt.31.05.2023 Ex.B25: Office copy of Invoice IAKPLSTR05230049 dt.31.05.2023 Ex.B26: Office copy of Invoice IAKPLSTR06230104 dt.30.06.2023 Ex.B27: Office copy of Invoice IAKPLSTR06230105 dt.30.06.2023 Ex.B28: Office copy of Invoice IAKPLSTR07230067 dt.27.07.2023 Ex.B29: Office copy of Invoice IAKPLSTR07230096 dt.31.07.2023 Ex.B30: Office copy of Invoice IAKPLSTR08230094 dt.30.08.2023 Ex.B31: Office copy of Invoice IAKPLSTR08230095 dt.30.08.2023 Ex.B32: Office copy of Invoice IAKPLSTR09230078 dt.30.09.2023 Ex.B33: Office copy of Invoice IAKPLSTR09230079 dt.30.09.2023 Ex.B34: Office copy of legal notice dt.15.04.2023 Ex.B35: Photo copies of emails exchanged between 1st defendant and 2nd defendant along with certificate u/s 65B of Indian Evidence Act Ex.B36: Office copy of legal notice dt.21.06.2023 Ex.B37: Office copy of Auction Notice dt.02.09.2023 Ex.B38: Photo copy of Auction Proceedings along with certificate u/s 65B of Indian Evidence Act Ex.B39: Certified copy of order in CMA.550/2023 of Hon’ble High Court of A.P, dt.14.12.2023 Ex.B40: Office copy of Invoice No.193700001126 given to Auction Purchaser dt.05.01.2024 Ex.B41: Office copy of Invoice No.193700001127 given to Auction Purchaser dt.05.01.2024 Ex.B42: Office copy of Invoice No.193700001128 given to Auction Purchaser dt.05.01.2024 Ex.B43: Office copy of Invoice No.193700001129 given to Auction Purchaser dt.05.01.2024 Ex.B44: Office copy of Invoice No.193700001130 given to Auction Purchaser dt.05.01.2024 Ex.B45: Office copy of Invoice No.193700001133 given to Auction Purchaser dt.05.01.2024 Ex.B46: Office copy of Invoice No.193700001134 given to Auction Purchaser dt.05.01.2024 Ex.B47: Office copy of Invoice No.193700001135 given to Auction Purchaser

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dt.05.01.2024 Ex.B48: Office copy of Invoice No.193700001137 given to Auction Purchaser dt.08.01.2024 Ex.B49: Office copy of Invoice No.193700001140 given to Auction Purchaser dt.09.01.2024 Ex.B50: Office copy of Invoice No.193700001141 given to Auction Purchaser dt.08.01.2024 Ex.B51: Office copy of Invoice No.193700001142 given to Auction Purchaser dt.09.01.2024 Ex.B52: Office copy of Invoice No.193700001143 given to Auction Purchaser dt.09.01.2024 Ex.B53: Office copy of Invoice No.193700001144 given to Auction Purchaser dt.09.01.2024 Ex.B54: Office copy of Invoice No.193700001145 given to Auction Purchaser dt.09.01.2024 Ex.B55: Office copy of Invoice No.193700001154 given to Auction Purchaser dt.10.01.2024 Ex.B56: Office copy of Invoice No.193700001156 given to Auction Purchaser dt.11.01.2024 Ex.B57: Office copy of Invoice No.193700001157 given to Auction Purchaser dt.11.01.2024 Ex.B58: Office copy of Invoice No.193700001159 given to Auction Purchaser dt.12.01.2024 Ex.B59: Office copy of Invoice No.193700001160 given to Auction Purchaser dt.12.01.2024 Ex.B60: Office copy of Invoice No.193700001190 given to Auction Purchaser dt.18.01.2024 Ex.B61: Office copy of Invoice No.193700001191 given to Auction Purchaser dt.18.01.2024 Ex.B62: Office copy of Invoice No.193700001193 given to Auction Purchaser dt.19.01.2024 Ex.B63: Office copy of Invoice No.193700001194 given to Auction Purchaser dt.19.01.2024 Ex.B64: Office copy of Invoice No.193700001195 given to Auction Purchaser dt.19.01.2024 Ex.B65: Office copy of Invoice No.193700001196 given to Auction Purchaser dt.19.01.2024 Ex.B66: Office copy of Invoice No.193700001197 given to Auction Purchaser dt.19.01.2024 Ex.B67: Office copy of Invoice No.193700001199 given to Auction Purchaser dt.20.01.2024 Ex.B68: Office copy of Invoice No.193700001200 given to Auction Purchaser dt.20.01.2024 Ex.B69: Office copy of Invoice No.193700001201 given to Auction Purchaser dt.20.01.2024 Ex.B70: Office copy of Invoice No.193700001204 given to Auction Purchaser dt.25.01.2024 Ex.B71: Office copy of Invoice No.193700001208 given to Auction Purchaser

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dt.31.01.2024 Ex.B72: Office copy of Invoice No.193700001209 given to Auction Purchaser dt.31.01.2024 Ex.B73: Office copy of Invoice No.193700001210 given to Auction Purchaser dt.31.01.2024 Ex.B74: Office copy of Invoice No.193700001211 given to Auction Purchaser dt.31.01.2024 Ex.B75: Office copy of Invoice No.193700001212 given to Auction Purchaser dt.31.01.2024 Ex.B76: Office copy of Invoice No.193700001214 given to Auction Purchaser dt.02.02.2024 Ex.B77: Office copy of Invoice No.193700001215 given to Auction Purchaser dt.02.02.2024 Ex.B78: Office copy of Invoice No.193700001216 given to Auction Purchaser dt.02.02.2024 Ex.B79: Office copy of Invoice No.193700001217 given to Auction Purchaser dt.02.02.2024 Ex.B80: Office copy of Invoice No.193700001218 given to Auction Purchaser dt.02.02.2024 Ex.B81: Office copy of Invoice No.193700001221 given to Auction Purchaser dt.02.02.2024 Ex.B82: Office copy of Invoice No.193700001222 given to Auction Purchaser dt.02.02.2024 Ex.B83: Office copy of Invoice No.193700001230 given to Auction Purchaser dt.12.02.2024 Ex.B84: Office copy of Invoice No.193700001232 given to Auction Purchaser dt.14.02.2024 Ex.B85: Office copy of Invoice No.193700001233 given to Auction Purchaser dt.14.02.2024 Ex.B86: Office copy of Invoice No.193700001234 given to Auction Purchaser dt.14.02.2024 Ex.B87: Office copy of Invoice No.193700001237 given to Auction Purchaser dt.16.02.2024 Ex.B88: Office copy of Invoice EAKPLSPL02140077 dt.29.01.2024

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

Page 1 of 23 COS.22/2023 Special Court for Trial and Disposal of Dt.17.03.2026 Commercial Disputes, Vijayawada.

IN THE SPECIAL COURT FOR TRIAL AND DISPOSAL OF

COMMERCIAL DISPUTES :: VIJAYAWADA.

Present: G.BHUPAL REDDY,

Judge, Special Court for Trial and Disposal of

Commercial Disputes, Vijayawada.

Tuesday, this the Seventeenth [17th] day of March, Two Thousand Twenty Six [2026].

C.O.S. No. 22 of 2023

Between:

SBG INDUSTRIES PRIVATE LIMITED, at Durga Chowk, Gondia, Maharashtra – 441 601, Rep., by Authorised Representative, Mr. Ankit Khandelwal, Email id: ankit@shribalajiglobal.com …Plaintiff

And

1. SEAWAYS SHIPPING & LOGISTICS LTD, having their at 10-1-31, 5th Floor, Signature Towers, CBM Compound, Visakhapatnam, Andhra Pradesh – 530

003. Email id: feroz@seawaysindio.com, accts_line@seaways.com, sshukla@seaways.com

2. ADANI KRISHNAPATNAM PORT LTD., Krishnapatnam, Muthukar Mandal, Nellore District, Andhra Pradesh – 524 344. Email Id:

ksnravi@adani.com ...Defendants

This Commercial Original Suit came before me on 30.01.2026 for final hearing, in the presence of M.S.Krishna, Advocate for the Plaintiff; Sistla Sreenivas, Advocate for 1st defendant and D.Satya Siva Darshan, advocate for 2nd defendant; and upon hearing the arguments on both sides; upon perusing the entire material available on record; and upon having been stood over for consideration till this day, this Court delivers the following –

// J U D G M E N T //

The suit is filed for recovery of the suit amount of ₹1,56,40,890/- with costs and interest against defendants 1 and 2, or in the alternative for an order of release of cargo of 500 metric tons of bagged rice stored in the warehouse of the 2nd defendant.

Page 2 of 23 COS.22/2023 Special Court for Trial and Disposal of Dt.17.03.2026 Commercial Disputes, Vijayawada.

The brief facts of the plaint:-

2) The plaintiff-SBG Industries Private Limited, at Durga Chowk,

Gondia, Maharashtra – 441601, Rep., by Authorised Representative, Mr.

Ankit Khandelwal, instituted the present suit against the defendants, namely Seaways Shipping & Logistics Ltd. (1st defendant)andAdani

Krishnapatnam Port Ltd. (2nd defendant). The plaintiff is engaged in the business of manufacturing and exporting rice from India to various parts of the world. The 1st defendant is stated to be a shipping and logistics company, while 2nd defendant is a major port authority operating the port at Krishnapatnam and is the owner of warehouses situated within the port premises where goods meant for export and import are stored.

2.1) During September 2022, the plaintiff entrusted 1st defendant with a cargo consisting of 500 metric tons of bagged rice packed in bags of 50 kilograms each, for the purpose of export. The value of the said cargo was Rs.1,08,56,400/-. The plaintiff incurred an amount of

Rs.13,22,100/- towards packaging and purchase of bags. Thus, the total value of the cargo is Rs.1,21,78,500/-. The services agreed to be rendered by 1st defendant included customs clearance and loading of the cargo on board, a vessel for export. Although the cargo had been entrusted to the 1st defendant for export, the same was not loaded on any vessel and instead, it was stored in the Warehouse at Krishnapatnam

Port, which is owned by 2nd defendant. The cargo has been lying in the said warehouse from September 2022 onwards.

2.2) The 1st defendant informed that storage charges were required to be settled in advance in order to initiate the process of release of the cargo. Acting upon such representation, the plaintiff paid the said amount towards storage charges as per bills issued by 1st defendant. Despite receipt of the above amount, 1st defendant failed to load the cargo on board any vessel for export, thereby causing prejudice to the plaintiff. The plaintiff subsequently came to know that a dispute had arisen between

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Defendants 1 and 2 with regard to the alleged ground rent payable for storage of cargo at the warehouse owned by 2nd defendant.

2.3) The plaintiff is the lawful owner of the cargo and is not a party to any dispute or agreement between Defendants 1 and 2. Neither of the defendants has any legal right to detain the cargo of the plaintiff as security for the dues allegedly payable by 1st defendant or any other exporter. The cargo, which has been lying at the warehouse since

September 2022, is perishable in nature and is gradually losing its value owing to the conduct of the defendants and their inter se disputes.

Despite repeated requests made by the plaintiff, the 1st defendant has not taken any steps for its release. The plaintiff has been deprived of its cargo and has been compelled to bear detention, demurrage, and ground rent charges on a daily basis, though such charges have accrued solely due to the acts and omissions of the defendants and cannot be attributed to the plaintiff.

2.4) The 2nd defendant has unlawfully detained the cargo and is levying detention and demurrage charges on arbitrary and unjustifiable grounds. The conduct of 2nd defendant in withholding the cargo, amounts to abuse of power and an attempt to recover alleged dues of 1st defendant from the plaintiff under a false and baseless pretext. The 2nd defendant is attempting to extort money by levying unjustifiable charges on a day-to-day basis and by merging different transactions in order to settle its disputes with 1st defendant. There is no negligence or fault on the part of the plaintiff and that the defendants have no legal authority to presume that any dues are payable by the plaintiff.

2.5) The 2nd defendant has exercised a purported right of lien over the cargo, which is illegal and without authority of law. The 2nd defendant cannot legally detain the cargo belonging to the plaintiff as security for the alleged defaults of 1st defendant or other exporters. Since the defendants failed to release the cargo, the plaintiff was constrained to issue a legal

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notice dated 03.02.2023 calling upon the 1st defendant to release the cargo at the earliest, but there was no response. The plaintiff further got issued another legal notice dated 17.02.2023, demanding a sum of

Rs.1,24,50,000/- (the value of the cargo as on the date of notice) together with interest at 18% per annum from 1st defendant. The 1st defendant replied to the said notice on 06.03.2023, denying liability and stating that the cargo had been withheld by 2nd defendant. The plaintiff also issued a letter dated 28.03.2023 to the 1st defendant as a reply to the reply notice

dated 06.03.2023.

2.6) The plaintiff is not a party to the agreement between the defendants and cannot be made to suffer due to disputes between the defendants. The plaintiff cannot be compelled to run from pillar to post owing to the inter se disputes between Defendants 1 and 2. The plaintiff is ready and willing to deposit the additional storage charges, without prejudice to its rights, in order to secure the release of the cargo. The plaintiff cannot be compelled to pay detention or storage charges pertaining to goods belonging to other exporters which were stored in the warehouse at the instance of 1st defendant.

2.7) The plaintiff has suffered substantial losses as a result of the cargo being wrongfully withheld by the defendants and reserves its right to claim damages for any loss or deterioration of the cargo. The agreement between the plaintiff and 1st defendant is oral and the 1st defendant kept the stocks with 2nd defendant and the transactions took place within the jurisdiction of this Court. The importer is not a necessary party to the suit.

2.8) There is every likelihood of 2nd defendant proceed to auction the cargo in order to recover the alleged dues of 1st defendant. The 2nd defendant has no authority in law to auction or sell the plaintiff’s cargo.

The value of the cargo had risen to Rs.1,32,50,000/- as on the date of filing the suit. Interest is calculated at 18% p.a. from 01.10.2022 to

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03.06.2023 on Rs.1,21,78,500/- which would become Rs.14,71,430/-.

The plaintiff adds legal expenses at Rs.9,19,460/-. Thus, the plaintiff is entitled to recover a sum of Rs.1,56,40,890/-, together with future interest.

In the alternative, the plaintiff seeks a direction for immediate release of the cargo consisting of 500 metric tons of bagged rice, presently stored in the warehouse of 2nd defendant.

3) On receipt of summons, the 1st defendant appeared before this

Court by engaging an Advocate, and filed written statement. The sum and substance of the written statement of 1st defendant is as follows.

3.1) The suit is not maintainable either in law or on facts and is liable to be dismissed with costs. The plaintiff has not established any contractual liability against the 1st defendant. The plaintiff has not placed any material to prove that there existed any written or enforceable contract between the plaintiff and 1st defendant under which 1st defendant undertook an obligation to export the cargo on behalf of the plaintiff.

3.2) The 1st defendant was only rendering logistics and facilitation services to the plaintiff as an agent, subject to the instructions issued by the plaintiff from time to time. The 1st defendant merely assisted the plaintiff in moving the cargo into the port premises of 2nd defendant for the purpose of export and acted only in accordance with the instructions given by the plaintiff. The 1st defendant did not assume any independent responsibility for exporting the cargo. The cargo in question was stored in the warehouse belonging to 2nd defendant at Krishnapatnam Port and 1st defendant does not own any warehouse or storage facility within the port premises. The plaintiff was fully aware that the cargo, after being brought into the port, would be stored in the warehouse of 2nd defendant and that such storage was subject to payment of storage charges, ground rent and other applicable charges.

3.3) The plaintiff had intended to export the cargo after identifying a

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suitable importer. However, the plaintiff failed to identify any importer and did not provide necessary instructions regarding the country of export, the vessel on which the cargo was to be shipped, or other details required for completing the export formalities. In the absence of such instructions and documentation, the 1st defendant could not proceed with the export of the cargo. Several communications were addressed to the plaintiff requesting payment of storage charges and other dues payable in respect of the cargo stored at the warehouse of 2nd defendant. Despite such communications, the plaintiff failed to clear the outstanding dues. Without payment of such charges, the cargo could not be released from the warehouse. The plaintiff suppressed material correspondence exchanged between the parties and filed the present suit making false allegations that the defendants had failed to export the cargo. The plaintiff remained inactive for a long period and did not take necessary steps either to export the cargo or to clear the outstanding dues.

3.4) The plaintiff itself created a situation whereby the cargo remained stored in the warehouse for a prolonged period. The plaintiff failed to perform its obligations, including furnishing the necessary export documentation, identifying the importer, selecting the vessel for shipment and paying the service charges and storage charges. The cargo was entrusted to 1st defendant for the purpose of export. There was no contract, either oral or written, whereby the plaintiff entrusted the cargo to the 1st defendant for export. The 1st defendant only facilitated the movement of the cargo into the port premises and did not assume custody of the cargo as an exporter. The plaintiff is a trader engaged in export business and was fully aware of the procedures involved in export operations, including the requirement of customs clearance, documentation, tax and duty payments, and other statutory compliances.

The plaintiff did not furnish the necessary information or documentation required for initiating export procedures.

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3.5) The plaintiff had knowledge of the agreement between

Defendants 1 and 2 under which 1st defendant was authorized to utilize the services of 2nd defendant for handling cargo at the port. The plaintiff availed the services of 1st defendant with full knowledge of such arrangements. The plaintiff was repeatedly informed that the cargo could be released only upon payment of the outstanding service charges, storage charges and other dues. However, the plaintiff failed to clear such dues and therefore was not entitled to demand release of the cargo. The 1st defendant denies the allegation that the cargo was wrongfully detained by 2nd defendant for recovering dues payable by 1st defendant. The cargo was not detained for such purpose and that the plaintiff was aware that the cargo could not be released without payment of the applicable charges.

3.6) The valuation of the cargo as claimed by the plaintiff is not correct and the plaintiff is put to strict proof of the same. The plaintiff cannot claim that it was forced to bear detention charges or demurrage when the cargo remained in the warehouse due to its own inaction and failure to clear the charges payable. The 1st defendant denies the allegation of the plaintiff that the detention of the cargo by 2nd defendant was unlawful or arbitrary. The plaintiff is not entitled to seek a declaration that such detention is illegal or to seek release of the cargo without payment of the outstanding charges. The plaintiff is not entitled to recover the suit claim as prayed for. The cargo remained stored in the warehouse for a long period and lost its commercial value and that the plaintiff itself failed to identify a purchaser for the cargo. The plaintiff cannot claim interest at the rate of 18% per annum as claimed in the plaint, as there is no contractual or legal basis for such claim. The plaintiff alone is responsible for the consequences arising from its failure to clear the charges and complete the export formalities. The 1st defendant denies any liability to pay the suit amount or to compensate the plaintiff for the

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alleged loss. Finally, the 1st defendant prayed to dismiss the suit with exemplary costs.

4) The 2nd defendant appeared before this Court by engaging an

Advocate and filed its written statement denying the material averments of the plaint and contended that the suit is not maintainable against it. The sum and substance of the written statement of 2nd defendant is as follows.

4.1) The allegations made by the plaintiff essentially relate to an alleged oral contract between the plaintiff and 1st defendant. The 2nd defendant has no role in the export transaction allegedly undertaken between the plaintiff and 1st defendant. Even as per the plaint averments, the services relating to export of the cargo, including customs clearance and loading of the cargo onto a vessel, were to be rendered by 1st defendant. Therefore, the 2nd defendant had no involvement in the transaction relating to the export of the cargo and cannot be held liable to the plaintiff in any manner. The plaintiff is required to prove that the cargo allegedly entrusted to 1st defendant for export and the cargo allegedly stored in the warehouse of 2nd defendant is one and the same. The 1st defendant had failed to clear its contractual dues payable to 2nd defendant, and therefore the 2nd defendant became entitled to exercise its contractual rights, including the right of lien over the goods stored in its warehouse and to auction the said cargo for realization of the dues payable by 1st defendant.

4.2) The alleged communications and transactions referred to in the plaint were only between the plaintiff and 1st defendant, and 2nd defendant had no role in those transactions. Accordingly, the plaintiff is required to prove the said averments. The 2nd defendant also denies the plaintiff’s assertion that it is the legal owner of the cargo stored in the warehouse and that the defendants cannot withhold the cargo as ransom for the dues of other exporters. Under the contract governing the storage

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arrangement, 2nd defendant possesses a valid right of lien and other contractual rights enabling it to auction the goods stored by 1st defendant in the event 1st defendant fails to discharge its contractual obligations and clear the dues payable to 2nd defendant. The cargo stored in the warehouse was perishable in nature and that, upon failure of 1st defendant to clear the outstanding dues despite negotiations, 2nd defendant proceeded to auction the cargo in accordance with law. The 2nd defendant was not concerned with the communications between the plaintiff and 1st defendant and is therefore not in a position to admit or deny the contents of those communications. The plaintiff is therefore required to prove the same.

4.3) There was no contractual relationship between the plaintiff and 2nd defendant and that no transaction had taken place between them.

Consequently, no liability can arise against 2nd defendant in favour of the plaintiff. The 2nd defendant also disputes the allegation that there was no outstanding dues payable by 1st defendant. The 2nd defendant denies the allegations made by the plaintiff that it illegally detained the cargo or that it attempted to recover the dues payable by 1st defendant from the plaintiff. The 2nd defendant was dealing only with 1st defendant under the terms of the Cargo Handling Agreement (CHA) executed between them for storage of cargo. The 2nd defendant had no dealings whatsoever with the plaintiff.

4.4) The 2nd defendant also denies the allegations that it attempted to extort money from the plaintiff or that it merged different transactions to settle disputes with 1st defendant. The 2nd defendant never demanded any money from the plaintiff and that the dues sought to be realized were those contractually payable by 1st defendant. The 2nd defendant has not raised any claim against the plaintiff and therefore the allegation of the plaintiff against the 2nd defendant is baseless. The 2nd defendant also denies that the exercise of its right of lien over the cargo was unlawful or

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without authority. According to 2nd defendant, the right of lien exercised over the cargo stored by 1st defendant was valid and in accordance with the contract and the applicable law.

4.5) The 2nd defendant did not receive any legal notice/s referred to in the plaint. The alleged notices and communications referred to in the plaint relate only to the plaintiff and 1st defendant, and that the 2nd defendant is not concerned with those communications. Thecargo stored by 1st defendant was not released to 1st defendant since the 1st defendant failed to clear the outstanding dues, thereby breached the terms and conditions of the CHA. The plaintiff is not a party to the CHA between

Defendants 1 and 2 and therefore the plaintiff cannot seek to hold that the 2nd defendant is liable for any alleged losses suffered by it. If the plaintiff has suffered any loss, the same is attributable solely to the conduct of 1st defendant, and the plaintiff may have remedies only against 1st defendant.

4.6) The 1st defendant had stored cargo belonging to several customers in the warehouse, and the cargo referred to in the plaint was not the only cargo stored therein. The agreement between Defendants 1 and 2 provided that in the event 1st defendant failed to clear the outstanding dues, the 2nd defendant was entitled to exercise a lien over the entire cargo stored by 1st defendant and to realize the dues through sale of the said cargo. Since the plaintiff had no contractual relationship with 2nd defendant and had not entered into any agreement with it, the plaintiff had no right to interfere with the cargo stored by 1st defendant in the warehouse of 2nd defendant. The cargo in question has already been auctioned by 2nd defendant in accordance with the terms of the contract and the applicable law. Therefore, the relief sought by the plaintiff for release of the cargo does not survive.

4.7) The plaintiff is not entitled to any decree against 2nd defendant.

The 2nd defendant also disputes the allegation that the plaintiff has

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suffered losses due to wrongful detention of the cargo. The plaintiff has not filed any appropriate application seeking damages and therefore cannot reserve such a right merely through a statement in the plaint. The present suit has been filed without complying with the mandatory requirement of pre-institution mediation under Section 12A of the

Commercial Courts Act, 2015. The alleged urgency pleaded by the plaintiff is artificial and was only raised to avoid the statutory requirement of pre-institution mediation. Therefore, the plaint is liable to be rejected under Order VII Rule 11(d) CPC, and the 2nd defendant prayed to dismiss the suit against 2nd defendant as not maintainable.

4.8) With the leave of the Court, the 2nd defendant filed an

additional written statement placing the following further facts on record

subsequent to the filing of its earlier written statement.

4.9) During the pendency of the suit, the 2nd defendant auctioned the cargo to recover its dues from the 1st defendant by following the required legal formalities. In pursuant to the common final order dated 14.12.2024 passed by the Hon’ble High Court in CMA Nos. 548, 549 and 550 of 2023, the successful bidder commenced the process of evacuating the unclaimed cargo (rice) lying at the port premises of 2nd defendant. The process of evacuation commenced on 05.01.2024 and continued until 16.02.2024. During this period, for every lot of cargo evacuated, 2nd defendant raised invoices on the successful bidder and the same were duly cleared by the successful bidder. 49 invoices were raised in total, amounting to a total value of Rs.3,15,28,000/-. The total quantity of cargo evacuated by the successful bidder is stated to be 1,516 metric tons. In adherence to the directions issued by the Hon’ble High Court, it deposited the entire sale proceeds in the State Bank of India as a fixed deposit in the name of 2nd defendant. The fixed deposit receipt was obtained on 13.03.2024.

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5) Basing on the above pleadings, the following issues have been framed by this Court for trial.

1. Whether the plaintiff entrusted cargo of 500 metric tons of rice contained in bag marked ‘yellow’ to the defendant No.1 for the purpose of export?

2. Whether the defendant No.1 failed to load the cargo on board of the vessel for the purpose of export in time?

3. Whether the detention of the cargo by the defendant No.2 is unlawful?

4. Whether the action of defendant No.2 auctioning the cargo during the pendency of the suit is unlawful?

5. Whether the suit is bad for mis-joinder of parties?

6. Whether there is no privity of contract between the plaintiff and defendant No.2?

7. Whether the plaintiff is entitled for recovery of an amount of Rs.1,56,40,890/- from both the defendants 1 and 2 with costs and interest as prayed for? OR alternatively for release of the subject cargo to the plaintiff?

8. To what relief?

6) To substantiate the case of the plaintiff, Chetan Sonwane,

Authorized Representative of the plaintiff-company filed chief examination affidavit and he is examined as PW.1, and got marked Exhibits A1 to A44.

On behalf of 2nd defendant,Sidhartha Kumar Sarangi, Head of Marketing

Department of 2nd defendant-port filed chief examination affidavit and he is examined as DW.1 and got marked Exhibits B1 to B40 on its behalf.

The 1st defendant did not contest the matter after filing the written statement and failed to adduce any evidence on its behalf.

7) Heard both sides. Perused the written arguments filed by the counsel for plaintiff and 2nd defendant.

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Issue Nos.1 and 2:

(Whether the plaintiff entrusted cargo of 500 metric tons of rice contained in bag marked ‘yellow’ to the defendant No.1 for the purpose of export?) (Whether the defendant No.1 failed to load the cargo on board of the vessel for the purpose of export in time?)

8) Since these two issues are inter connected with each other, this

Court discuss these issues together to avoid repetition and for the sake of convenience.

8.1) The case of the plaintiff is that during September 2022 it entrusted a cargo consisting of 500 metric tons of rice packed in bags of 50 kg each to 1st defendant for export purposes. According to the plaintiff, the 1st defendant had undertaken to arrange customs clearance and loading of the cargo on board a vessel for export. The 1st defendant in its written statement did not deny the fact that the cargo of 500 metric tons of rice was entrusted to it by the plaintiff. Thus, the existence of the cargo and its storage through 1st defendant at the port warehouse is not in serious dispute. The documents filed by the plaintiff relating to invoices, storage payments and correspondence further support the contention that the cargo was entrusted to 1st defendant for export.

8.2) The plaintiff contends that despite entrustment of the cargo and payment of storage charges amounting to Rs.13,22,100/-, the 1st defendant failed to load the cargo onto a vessel for export. The 1st defendant has not produced any evidence to show that the cargo was not loaded onto a vessel because of the plaintiff’s inaction. According to 2nd defendant, the cargo remained stored in the warehouse for a considerable period and was eventually subjected to auction proceedings.

If the cargo had been exported as agreed, the question of continued storage and eventual auction would not arise.

8.3) The Hon’ble Apex Court in Vidhyadhar v. Manikrao & Anr. 1, 1 1999 AIR SC 1441

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held that when the defendant did not enter into witness box and depose about the facts of the case, the pleadings of the defendant cannot be considered and an adverse inference can be drawn against the party who did not adduce any evidence in support of his/her/its pleadings. The same principle was reiterated by the Hon’ble Apex Court in Chowdamma v.

Venkatappa 2.

8.4) In the present case also, the 1st defendant though filed its written statement making allegations against the plaintiff, neither cross examined the plaintiff’s witness nor adduced any evidence. Therefore, the principle held in the above said cases squarely applicable against the 1st defendant. Therefore, the version of 1st defendant in the written statement cannot be considered. As seen from the documents filed by the plaintiff and the evidence of PW.1, it is obvious that 1st defendant failed to perform its contractual obligation of exporting the cargo within the stipulated time. Accordingly, these two issues are answered in favour of the plaintiff and against the 1st defendant.

Issue Nos.3, 4 and 6:

(Whether the detention of cargo by the defendant No.2 is unlawful?) (Whether the action of defendant No.2 auctioning the cargo during pendency of the suit is unlawful?) (Whether there is no privity of contract between the plaintiff and defendant No.2?)

9) Since all these three issues are inter connected with each other, this Court discuss these issues together to avoid repetition and for the sake of convenience.

9.1) The plaintiff contends that 2nd defendant illegally detained the cargo even though the plaintiff was not a party to the dispute between

Defendants 1 and 2. However, the 2nd defendant has specifically pleaded 2 2025 INSC 1038 dated 25.08.2025

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that the 1st defendant had stored cargo in the warehouse of 2nd defendant. The 1st defendant failed to clear its contractual dues payable to 2nd defendant. Under clause 9 of the contract between Defendants 1 and 2 (Ex.B1-Cargo Handling Agreement), the 2nd defendant had the right of lien over the cargo stored by 1st defendant. According to the said clause, the customer shall make the payments within 7 days from the date of invoice and/or if the customer fails to lift the entire cargo from the port, the port shall have the first lien over the cargo. It further says that if the customer fails to make payment within 90 days, the port shall be entitled to recover all such dues along with interest by way of selling the cargo.

9.2) It is also admitted by the plaintiff itself that the cargo was stored in the warehouse through 1st defendant. Therefore, the warehouse relationship existed between Defendants 1 and 2 and not between the plaintiff and 2nd defendant. In such circumstances, if 1st defendant defaulted in payment of warehouse charges, 2nd defendant would be entitled to exercise its contractual rights against the cargo stored by 1st defendant. In its written statement, the 1st defendant did not aver that it paid all the dues to the 2nd defendant; on the other hand, its contention is that no such charges were paid to the 2nd defendant. The 1st defendant made allegations against the plaintiff that the plaintiff could not clear the warehouse dues. Therefore, it can be safely concluded that the detention of the cargo by 2nd defendant cannot be termed unlawful.

9.3) The 2nd defendant has placed on record that the cargo formed part of unclaimed cargo lying in the port; the auction process was conducted in accordance with the terms of the contract and applicable law. The successful bidder evacuated the cargo during the period 05.01.2024 and 16.02.2024. The total sale proceeds amounted to

Rs.3,15,28,000/- were deposited in State Bank of India as a fixed deposit in compliance with the directions of the Hon’ble High Court. These facts

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have been specifically pleaded in the additional written statement and have not been effectively disproved by the plaintiff.

9.4) The counsel for plaintiff in his written arguments mainly attacked the action of 2nd defendant i.e., detention of cargo and subsequent auction of the cargo. On this aspect, the counsel for plaintiff contends that the alleged dues are not pertaining to the Ex.B1, but they pertain to the period prior to Ex.B1 i.e., prior to 01.04.2022. He further contends that the plaintiff is not a party to the Ex.B1-CHA and therefore, the defendants cannot impose obligations on the plaintiff, which is a third person to the contract. About the said proposition, the counsel placed reliance on judgments (1) Rashtriya Ispat Nigam Limited v. Dewan Chand

Ram Saran 3, (2) M.C. Chacko v. The State Bank of Travancore 4. There cannot be any quarrel with the said proposition. In the present case, the 2nd defendant did not impose any obligation on the plaintiff. Therefore, the case laws cited by the plaintiff side are not applicable to the present case.

9.5) Further, the counsel for plaintiff relied on a decision in Board of

Trustees of the Trust of Bombay v. Sriyanesh Knitters 5, and contends that the 2nd defendant may retain the goods, but cannot sell them in view of

Section 171 of the Contract Act. On this aspect, he also relied on judgments in Cogoport Private Limited v. Strides Pharma Science

Limited 6, Joseph Antony v. The South India Bank Limited 7, Utair Aviation v. Jagson Airlines Limited 8, Dhian Singh Sobha Singh v. Union of India 9, and Ram Sarup Gupta v. Bishun Natain Inter College 10 .

9.6) Section 171 of Indian Contract Act speaks about right of general lien of Bankers, Factors, Wharfingers and Policy Brokers etc.

3 (2012) 5 SCC 306 4 (MANU/SC/0008/1969) 5 1999 AIR SC 2947 6 (MANU/DE/6462/2023) 7 (MANU/KE/3359/2023) 8 (MANU/DE/2291/2012) 9 (MANU/SC/0010/1957) 10 (MANU/SC/0043/1987)

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However, it says “unless a contract exists to the contrary”. In the present case, there is a contract between the defendants in the form of Ex.B1-

CHA. Therefore, the terms of the contract override Section 171 of the

Contract Act as seen from the Section itself. Hence, the counsel for plaintiff cannot rely on Section 171 of Contract Act and the above mentioned case law on the said Section, when the specific contract is existing between the 1st defendant and 2nd defendant. Hence, the case law relied upon by the plaintiff is not applicable to the present case.

9.7) The counsel for plaintiff contends that the handing over of cargo by the 1st defendant to the 2nd defendant is nothing but a ‘bailment’ within the meaning of Section 148 of Indian Contract Act. He further argues that the 2nd defendant may retain the cargo, but cannot sell the same, when the original owner of the cargo is the plaintiff. The said contention is not acceptable, since the plaintiff is a stranger to the 2nd defendant. The agreement is between the 1st defendant and the 2nd defendant. The 2nd defendant is empowered under the terms of Ex.B1-

CHA to have a lien over the cargo, and after 90 days of non-payment of dues, it can sell away the cargo. In the present case, the 2nd defendant contends that the period of 90 days was lapsed long back, but in spite of that, the 1st defendant did not pay the dues. Therefore, the 2nd defendant can exercise its right of lien and to sell the cargo to recover the dues. The plaintiff cannot question the 2nd defendant, and if the plaintiff had any grievance, it has to be against the 1st defendant only.

9.8) The pleadings clearly reveal that the plaintiff had dealings only with 1st defendant for the export of the cargo. The cargo came to be stored in the warehouse of 2nd defendant through 1st defendant. There is no evidence on record to show that any direct agreement or contractual arrangement existed between the plaintiff and 2nd defendant. Therefore, it is established that there was no privity of contract between the plaintiff and 2nd defendant.

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9.9) Another argument of the plaintiff is that the validity period of

Ex.B1-CHA is from 01.04.2022 till 31.03.2023 and therefore, the sale of cargo beyond the period agreement is invalid. I am afraid that this contention is not tenable. Clause 4 of Ex.B1-CHA reads “….this agreement shall come into force on 01.04.2022 and shall remain valid until 31.03.2023 or till the clearance/loading of the entire cargo from the port under normal business circumstances in reasonable time for all ships/vessels that have completed unloading/loading and/or served notice of readiness (“NOR”) prior to 31.03.2023 subject however to extension or termination in accordance with the provisions of this agreement.”

Therefore, it cannot be said that the agreement period is only from 01.04.2022 to 31.03.2023. The 2nd limb of the said clause says the validity is till the clearance of the cargo and dues payable to the 2nd defendant. Hence, the contention of the plaintiff’s counsel on this point is not tenable. Therefore, the auction appears to have been conducted under lawful authority and pursuant to judicial directions. Hence, the

Court holds that the auction conducted by 2nd defendant cannot be treated as unlawful. Hence, the detention of the cargo by the 2nd defendant cannot be termed as unlawful. The plaintiff cannot make any claim against the 2nd defendant since, there is no privity of contract between them.

9.10) In the light of above discussion, all these three issues are decided against the plaintiff and in favour of the 2nd defendant, holding that the plaintiff cannot seek any relief against the 2nd defendant.

Issue No.5:

(Whether the suit is bad for mis-joinder of parties?)

10) The 2nd defendant has contended that there is no direct contractual relationship between the plaintiff and 2nd defendant and therefore, the 2nd defendant cannot be a party to the suit. However, the

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cargo admittedly remained in the warehouse of 2nd defendant and the plaintiff has alleged illegal detention and auction of the cargo by 2nd defendant. Since reliefs were sought against 2nd defendant regarding detention and auction of the cargo, 2nd defendant is a proper party to the suit. Therefore, the suit cannot be said to be bad for mis-joinder.

Accordingly, this issue is answered in favour of plaintiff and against the 2nd defendant.

Issue No.7:

(Whether the plaintiff is entitled for recovery of an amount of Rs.1,56,40,890/- from both the defendants 1 and 2 with costs and interest as prayed for? OR alternatively for release of the subject cargo to the plaintiff?)

11) The alternative relief of release of cargo has become infructuous because the cargo has already been auctioned, and the sale proceeds have been deposited pursuant to court directions.

11.1) There is no privity of contract between the plaintiff and 2nd defendant. The 2nd defendant acted under its contractual rights against 1st defendant. In view of my findings in issues 3, 4 and 6, the plaintiff cannot claim the suit amount from 2nd defendant.

11.2) The plaintiff produced several documents i.e., Exs.A1 to A44.

The said documents include Tax Invoices, Bank Statement of the plaintiff,

Payment Vouchers and the correspondence with the 1st defendant.

There is no rebuttal evidence from the 1st defendant to discredit the version of the plaintiff. In these circumstances, the evidence of PW.1 coupled with Exs.A1 to A44 proves that the failure to export the cargo arose due to the conduct of 1st defendant, who was responsible to export logistics. Hence, it can be said that the claim of the plaintiff against 1st defendant is proved. However, for the reasons mentioned in preceding paragraphs, the claim against 2nd defendant cannot be sustained. This issue is decided accordingly.

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Issue No.8: (To what relief?)

12) In view of the findings recorded in issues 1 to 7, the plaintiff is not entitled to any relief against 2nd defendant, but the plaintiff is entitled to recover the suit claim amount from the 1st defendant excluding the amount of Rs.9,19,460/- shown as legal expenses since this Court is going to decree the suit against 1st defendant with costs. Since the alternative relief of release of cargo had already become infructuous, the same cannot be granted. The plaintiff can get the cargo value as on the date of handing over i.e., Rs.1,21,78,500/-, though the plaintiff shown higher value of the cargo as on the date of filing of the suit. The plaintiff calculated interest at the rate of 18% p.a. from 01.10.2022 to 03.06.2023 on Rs.1,21,78,500/- which would come at Rs.14,71,430/-. Hence the plaintiff is entitled for the said cargo value and interest i.e.,

Rs.1,36,49,930/-.

13) In the result, the suit is decreed in part with proportionate costs, in favour of the plaintiff and against the 1st defendant for a sum of

Rs.1,36,49,930/- with interest @ 18% p.a from the date of suit till date of judgment and decree, and thereafter @ 12% p.a. from the date of judgment and decree till realization. The suit against 2nd defendant is dismissed with costs.

Typed to my dictation by the Stenographer of this Court, corrected and

pronounced by me, in the Open Court, on this the 17th day of March, 2026.

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

APPENDIX OF EVIDENCE

Oral Evidence For Plaintiff: For (2nd) Defendant :

PW.1: Chetan Sonwane DW.1: Sidhartha Kumar Sarangi

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Documentary Evidence For Plaintiff:

Ex.A1 : Tax Invoice raised by Parameshwari Poly Sacks bearing No.1209, dt.13.10.2022. Ex.A2 : Tax Invoice raised by Parameshwari Poly Sacks bearing No.1210, dt.13.10.2022. Ex.A3 : Tax Invoice raised by Parameshwari Poly Sacks bearing No.1208, dt.13.10.2022. Ex.A4: Bill of supply by Shirdi Saibaba Traders bearing No.22, dt.03.09.2022. Ex.A5: Bill of supply by Shirdi Saibaba Traders bearing No.23, dt.04.09.2022. Ex.A6: Bill of supply by Shirdi Saibaba Traders bearing No.24, dt.05.09.2022. Ex.A7: Bill of supply by Shirdi Saibaba Traders bearing No.25, dt.07.09.2022. Ex.A8: Bill of supply by Shirdi Saibaba Traders bearing No.26, dt.08.09.2022. Ex.A9: Statement of Account of the plaintiff issued by Bank of India for the period from 01.09.2022 to 30.12.2022 in respect of payments to Shirdi Saibaba Traders. Ex.A10: Payment Voucher issued by the plaintiff to Shirdi Saibaba Traders No.873, dt.03.12.2022. Ex.A11: Payment Voucher issued by the plaintiff to Shirdi Saibaba Traders No.727, dt.21.10.2022. Ex.A12: Payment Voucher issued by the plaintiff to Shirdi Saibaba Traders No.710, dt.19.10.2022. Ex.A13: Payment Voucher issued by the plaintiff to Shirdi Saibaba Traders No.510, dt.08.09.2022. Ex.A14: Bill of supply by Shree Manjunadha Rice Traders bearing No.25, dt.05.09.2022. Ex.A15: Statement of Account of the plaintiff issued by Bank of India for the period from 01.09.2022 to 30.12.2022 in respect of payments to Shree Manjunadha Rice Traders. Ex.A16: Payment Voucher issued by the plaintiff to Shree Manjunadha Rice Traders No.700, dt.18.10.2022. Ex.A17: Payment Voucher issued by the plaintiff to Shree Manjunadha Rice Traders No.875, dt.03.12.2022. Ex.A18: Payment Voucher issued by the plaintiff to Shree Manjunadha Rice Traders No.748, dt.04.11.2022. Ex.A19: Bill of supply by Subrahmanyeswara Rice Mill bearing No.21, dt.02.09.2022. Ex.A20: Bill of supply by Subrahmanyeswara Rice Mill bearing No.22, dt.02.09.2022. Ex.A21: Bill of supply by Subrahmanyeswara Rice Mill bearing No.23, dt.07.09.2022. Ex.A22: Bill of supply by Subrahmanyeswara Rice Mill bearing No.24, dt.07.09.2022. Ex.A23: Bill of supply by Subrahmanyeswara Rice Mill bearing No.25, dt.08.09.2022. Ex.A24: Bill of supply by Subrahmanyeswara Rice Mill bearing No.26,

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dt.08.09.2022. Ex.A25: Statement of Account of the plaintiff issued by Bank of India for the period from 01.09.2022 to 30.12.2022 in respect of payments to Subrahmanyeswara Rice Mill. Ex.A26: Payment Voucher issued by the plaintiff to Subrahmanyeswara Rice Mill No.874, dt.03.12.2022. Ex.A27: Payment Voucher issued by the plaintiff to Subrahmanyeswara Rice Mill No.747, dt.04.11.2022. Ex.A28: Payment Voucher issued by the plaintiff to Subrahmanyeswara Rice Mill No.699, dt.18.10.2022. Ex.A29: Payment Voucher issued by the plaintiff to Subrahmanyeswara Rice Mill No.508, dt.08.09.2022. Ex.A30: Bill of supply by Shree Sai Balaji Rice Mill bearing No.67, dt.05.09.2022. Ex.A31: Bill of supply by Shree Sai Balaji Rice Mill bearing No.68, dt.06.09.2022. Ex.A32: Bill of supply by Shree Sai Balaji Rice Mill bearing No.69, dt.06.09.2022. Ex.A33: Bill of supply by Shree Sai Balaji Rice Mill bearing No.70, dt.09.09.2022. Ex.A34: Statement of Account of the plaintiff issued by Bank of India for the period from 01.09.2022 to 30.12.2022 in respect of payments to Sai Balaji Rice Mill. Ex.A35: Payment Voucher issued by the plaintiff to Shree Sai Balaji Rice Mill No.876, dt.03.12.2022. Ex.A36: Payment Voucher issued by the plaintiff to Shree Sai Balaji Rice Mill No.749, dt.04.11.2022. Ex.A37: Payment Voucher issued by the plaintiff to Shree Sai Balaji Rice Mill No.701, dt.18.10.2022. Ex.A38: Office copy of demand notice dt.03.02.2023. Ex.A39: Office copy of demand notice dt.17.02.2023. Ex.A40: Reply notice dt.06.03.2023 by the 1st defendant. Ex.A41: Office copy of the letter, dt.28.03.2023. Ex.A42: Copy of email dt.17.05.2023 issued by 1st defendant regarding Auction of Cargo. Ex.A43: Certified copy of Board Resolution Letter of Authorisation. Ex.A44: Certificate of Incorporation of the plaintiff.

For the (2 nd ) Defendant:

Ex.B1 : Office copy of Cargo handling Agreement dt.01.04.2022 Ex.B2 : Office copy of Invoice IAKPLSTR09220095 dt.30.09.2022 Ex.B3 : Office copy of Invoice IAKPLSTR09220096 dt.30.09.2022 Ex.B4: Office copy of Invoice IAKPLSTR09220097 dt.30.09.2022 Ex.B5: Office copy of Invoice IAKPLSTR09220098 dt.30.09.2022 Ex.B6: Office copy of Invoice IAKPLSTR09220099 dt.30.09.2022 Ex.B7: Office copy of Invoice IAKPLSTR092200100 dt.30.09.2022

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Ex.B8: Office copy of Invoice IAKPLSPL10220071 dt.14.10.2022 Ex.B9: Office copy of Invoice IAKPLSPL10220075 dt.14.10.2022 Ex.B10: Office copy of Invoice IAKPLSTR10220027 dt.18.10.2022 Ex.B11: Office copy of Invoice IAKPLSTR10220034 dt.19.10.2022 Ex.B12: Office copy of Invoice IAKPLSTR11220074 dt.30.11.2022 Ex.B13: Office copy of Invoice IAKPLSTR11220075 dt.30.11.2022 Ex.B14: Office copy of Invoice IAKPLSTR12220092 dt.31.12.2022 Ex.B15: Office copy of Invoice IAKPLSTR12220093 dt.31.12.2022 Ex.B16: Office copy of Invoice IAKPLSTR03230013 dt.13.03.2023 Ex.B17: Office copy of Invoice IAKPLSTR03230014 dt.13.03.2023 Ex.B18: Office copy of Invoice IAKPLSPL03230230 dt.29.03.2023 Ex.B19: Office copy of Invoice IAKPLSTR03230083 dt.31.03.2023 Ex.B20: Office copy of Invoice IAKPLSTR03230084 dt.31.03.2023 Ex.B21: Office copy of Invoice IAKPLSTR04230051 dt.21.04.2023 Ex.B22: Office copy of Invoice IAKPLSTR04230085 dt.30.04.2023 Ex.B23: Office copy of Invoice IAKPLMRN05230075 dt.12.05.2023 Ex.B24: Office copy of Invoice IAKPLSTR05230048 dt.31.05.2023 Ex.B25: Office copy of Invoice IAKPLSTR05230049 dt.31.05.2023 Ex.B26: Office copy of Invoice IAKPLSTR06230104 dt.30.06.2023 Ex.B27: Office copy of Invoice IAKPLSTR06230105 dt.30.06.2023 Ex.B28: Office copy of Invoice IAKPLSTR07230067 dt.27.07.2023 Ex.B29: Office copy of Invoice IAKPLSTR07230096 dt.31.07.2023 Ex.B30: Office copy of Invoice IAKPLSTR08230094 dt.30.08.2023 Ex.B31: Office copy of Invoice IAKPLSTR08230095 dt.30.08.2023 Ex.B32: Office copy of Invoice IAKPLSTR09230078 dt.30.09.2023 Ex.B33: Office copy of Invoice IAKPLSTR09230079 dt.30.09.2023 Ex.B34: Office copy of legal notice dt.15.04.2023 Ex.B35: Photo copies of emails exchanged between 1st defendant and 2nd defendant along with certificate u/s 65B of Indian Evidence Act Ex.B36: Office copy of legal notice dt.21.06.2023 Ex.B37: Office copy of Auction Notice dt.02.09.2023 Ex.B38: Photo copy of Auction Proceedings along with certificate u/s 65B of Indian Evidence Act Ex.B39: Certified copy of order in CMA.548/2023 of Hon’ble High Court of A.P, dt.14.12.2023 Ex.B40: Office copy of Invoice EAKPLSPL02140077 dt.29.01.2024

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

Page 1 of 22 COS.25/2023 Special Court for Trial and Disposal of Dt.17.03.2026 Commercial Disputes, Vijayawada.

IN THE SPECIAL COURT FOR TRIAL AND DISPOSAL OF

COMMERCIAL DISPUTES :: VIJAYAWADA.

Present: G.BHUPAL REDDY,

Judge, Special Court for Trial and Disposal of

Commercial Disputes, Vijayawada.

Tuesday, this the Seventeenth [17th] day of March, Two Thousand Twenty Six [2026].

C.O.S. No. 25 of 2023

Between:

SHALEEN OVERSEAS, a Sole Proprietorship Concern at 48, Sajan Nagar, near Navalaka Square, Indore, Madhya Pradesh – 452 001, Rep., by its Constituted Attorney, Mr. Shaleen Khandelwal, Email id: …Plaintiff ankit@shribalajiglobal.com

And

1. SEAWAYS SHIPPING & LOGISTICS LTD, having their at 10-1-31, 5th Floor, Signature Towers, CBM Compound, Visakhapatnam, Andhra Pradesh – 530

003. Email id: feroz@seawaysindio.com

2. ADANI KRISHNAPATNAM PORT LTD., Krishnapatnam, Muthukar Mandal, Nellore District, Andhra Pradesh – 524 344. Email Id:

ksnravi@adani.com ...Defendants

This Commercial Original Suit came before me on 30.01.2026 for final hearing, in the presence of M.S.Krishna, Advocate for the Plaintiff; Sistla Sreenivas, Advocate for 1st defendant and D.Satya Siva Darshan, advocate for 2nd defendant; and upon hearing the arguments on both sides; upon perusing the entire material available on record; and upon having been stood over for consideration till this day, this Court delivers the following –

// J U D G M E N T //

The suit is filed for recovery of the suit amount of ₹1,05,11,864/- with costs and interest against defendants 1 and 2, or in the alternative for an order of release of cargo of 160 metric tons of bagged rice stored in the warehouse of the 2nd defendant.

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The brief facts of the plaint:-

2) The plaintiff- Shaleen Overseas, a Sole Proprietorship Concern at 48, Sajan Nagar, near Navalaka Square, Indore, Madhya Pradesh – 452 001, Rep., by its Constituted Attorney, Mr. Shaleen Khandelwal, instituted the present suit against the defendants, namely Seaways

Shipping & Logistics Ltd. (1st defendant)andAdani Krishnapatnam Port

Ltd. (2nd defendant). The plaintiff is engaged in the business of manufacturing and exporting rice from India to various parts of the world.

The 1st defendant is stated to be a shipping and logistics company, while 2nd defendant is a major port authority operating the port at

Krishnapatnam and is the owner of warehouses situated within the port premises where goods meant for export and import are stored.

2.1) During August 2022, the plaintiff entrusted 1st defendant with a cargo consisting of 400 metric tons of bagged rice packed in bags of 50 kilograms each, for the purpose of export. Out of the above mentioned 400 metric tons of rice, 160 metric tons of rice is withheld by the defendants at the warehouse of 2nd defendant. The value of the said cargo was Rs.33,12,000/-. The services agreed to be rendered by 1st defendant included customs clearance and loading of the cargo on board, a vessel for export. Although the cargo had been entrusted to the 1st defendant for export, the same was not loaded on any vessel and instead, it was stored in the Warehouse at Krishnapatnam Port, which is owned by 2nd defendant. The cargo has been lying in the said warehouse from August 2022 onwards.

2.2) The 1st defendant informed that storage charges were required to be settled in advance in order to initiate the process of release of the cargo. Acting upon such representation, the plaintiff paid the said amount towards storage charges as per bills issued by 1st defendant. Despite receipt of the above amount, 1st defendant failed to load the cargo on board any vessel for export, thereby causing prejudice to the plaintiff. The

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plaintiff subsequently came to know that a dispute had arisen between

Defendants 1 and 2 with regard to the alleged ground rent payable for storage of cargo at the warehouse owned by 2nd defendant.

2.3) The plaintiff is the lawful owner of the cargo and is not a party to any dispute or agreement between Defendants 1 and 2. Neither of the defendants has any legal right to detain the cargo of the plaintiff as security for the dues allegedly payable by 1st defendant or any other exporter. The cargo, which has been lying at the warehouse since August 2022, is perishable in nature and is gradually losing its value owing to the conduct of the defendants and their inter se disputes. Despite repeated requests made by the plaintiff, the 1st defendant has not taken any steps for its release. The plaintiff has been deprived of its cargo and has been compelled to bear detention, demurrage, and ground rent charges on a daily basis, though such charges have accrued solely due to the acts and omissions of the defendants and cannot be attributed to the plaintiff.

2.4) The 2nd defendant has unlawfully detained the cargo and is levying detention and demurrage charges on arbitrary and unjustifiable grounds. The conduct of 2nd defendant in withholding the cargo, amounts to abuse of power and an attempt to recover alleged dues of 1st defendant from the plaintiff under a false and baseless pretext. The 2nd defendant is attempting to extort money by levying unjustifiable charges on a day-to-day basis and by merging different transactions in order to settle its disputes with 1st defendant. There is no negligence or fault on the part of the plaintiff and that the defendants have no legal authority to presume that any dues are payable by the plaintiff.

2.5) The 2nd defendant has exercised a purported right of lien over the cargo, which is illegal and without authority of law. The 2nd defendant cannot legally detain the cargo belonging to the plaintiff as security for the alleged defaults of 1st defendant or other exporters. Since the defendants failed to release the cargo, the plaintiff was constrained to issue a legal

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notice dated 03.03.2023 calling upon the 1st defendant to release the cargo at the earliest, but there was no response. The plaintiff further got issued another legal notice dated 17.03.2023. The 1st defendant replied to the said notice on 04.04.2023, denying liability and stating that the cargo had been withheld by 2nd defendant. The 2nd defendant issued reply notice dated 13.03.2023 and another reply notice dated 23.03.2023 denying its liability.

2.6) The plaintiff is not a party to the agreement between the defendants and cannot be made to suffer due to disputes between the defendants. The plaintiff cannot be compelled to run from pillar to post owing to the inter se disputes between Defendants 1 and 2. The plaintiff is ready and willing to deposit the additional storage charges, without prejudice to its rights, in order to secure the release of the cargo. The plaintiff cannot be compelled to pay detention or storage charges pertaining to goods belonging to other exporters which were stored in the warehouse at the instance of 1st defendant.

2.7) The plaintiff has suffered substantial losses as a result of the cargo being wrongfully withheld by the defendants and reserves its right to claim damages for any loss or deterioration of the cargo. The agreement between the plaintiff and 1st defendant is oral and the 1st defendant kept the stocks with 2nd defendant and the transactions took place within the jurisdiction of this Court. The importer is not a necessary party to the suit.

2.8) There is every likelihood of 2nd defendant proceed to auction the cargo in order to recover the alleged dues of 1st defendant. The 2nd defendant has no authority in law to auction or sell the plaintiff’s cargo.

The value of the cargo had risen to Rs.44,80,000/- as on the date of filing the suit. Interest is calculated at 18% p.a. from 01.09.2022 to 14.06.2023 on Rs.33,12,000/- which would become Rs.77,92,000/-. The plaintiff adds damages of Rs.52,00,000/- and legal expenses at Rs.3,63,193/-. Thus,

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the plaintiff is entitled to recover a sum of Rs.1,05,11,864/-, together with future interest. In the alternative, the plaintiff seeks a direction for immediate release of the cargo consisting of 160 metric tons of bagged rice, presently stored in the warehouse of 2nd defendant.

3) On receipt of summons, the 1st defendant appeared before this

Court by engaging an Advocate, and filed written statement. The sum and substance of the written statement of 1st defendant is as follows.

3.1) The suit is not maintainable either in law or on facts and is liable to be dismissed with costs. The plaintiff has not established any contractual liability against the 1st defendant. The plaintiff has not placed any material to prove that there existed any written or enforceable contract between the plaintiff and 1st defendant under which 1st defendant undertook an obligation to export the cargo on behalf of the plaintiff.

3.2) The 1st defendant was only rendering logistics and facilitation services to the plaintiff as an agent, subject to the instructions issued by the plaintiff from time to time. The 1st defendant merely assisted the plaintiff in moving the cargo into the port premises of 2nd defendant for the purpose of export and acted only in accordance with the instructions given by the plaintiff. The 1st defendant did not assume any independent responsibility for exporting the cargo. The cargo in question was stored in the warehouse belonging to 2nd defendant at Krishnapatnam Port and 1st defendant does not own any warehouse or storage facility within the port premises. The plaintiff was fully aware that the cargo, after being brought into the port, would be stored in the warehouse of 2nd defendant and that such storage was subject to payment of storage charges, ground rent and other applicable charges.

3.3) The plaintiff had intended to export the cargo after identifying a suitable importer. However, the plaintiff failed to identify any importer and did not provide necessary instructions regarding the country of export, the

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vessel on which the cargo was to be shipped, or other details required for completing the export formalities. In the absence of such instructions and documentation, the 1st defendant could not proceed with the export of the cargo. Several communications were addressed to the plaintiff requesting payment of storage charges and other dues payable in respect of the cargo stored at the warehouse of 2nd defendant. Despite such communications, the plaintiff failed to clear the outstanding dues. Without payment of such charges, the cargo could not be released from the warehouse. The plaintiff suppressed material correspondence exchanged between the parties and filed the present suit making false allegations that the defendants had failed to export the cargo. The plaintiff remained inactive for a long period and did not take necessary steps either to export the cargo or to clear the outstanding dues.

3.4) The plaintiff itself created a situation whereby the cargo remained stored in the warehouse for a prolonged period. The plaintiff failed to perform its obligations, including furnishing the necessary export documentation, identifying the importer, selecting the vessel for shipment and paying the service charges and storage charges. The cargo was entrusted to 1st defendant for the purpose of export. There was no contract, either oral or written, whereby the plaintiff entrusted the cargo to the 1st defendant for export. The 1st defendant only facilitated the movement of the cargo into the port premises and did not assume custody of the cargo as an exporter. The plaintiff is a trader engaged in export business and was fully aware of the procedures involved in export operations, including the requirement of customs clearance, documentation, tax and duty payments, and other statutory compliances.

The plaintiff did not furnish the necessary information or documentation required for initiating export procedures.

3.5) The plaintiff had knowledge of the agreement between

Defendants 1 and 2 under which 1st defendant was authorized to utilize

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the services of 2nd defendant for handling cargo at the port. The plaintiff availed the services of 1st defendant with full knowledge of such arrangements. The plaintiff was repeatedly informed that the cargo could be released only upon payment of the outstanding service charges, storage charges and other dues. However, the plaintiff failed to clear such dues and therefore was not entitled to demand release of the cargo. The 1st defendant denies the allegation that the cargo was wrongfully detained by 2nd defendant for recovering dues payable by 1st defendant. The cargo was not detained for such purpose and that the plaintiff was aware that the cargo could not be released without payment of the applicable charges.

3.6) The valuation of the cargo as claimed by the plaintiff is not correct and the plaintiff is put to strict proof of the same. The plaintiff cannot claim that it was forced to bear detention charges or demurrage when the cargo remained in the warehouse due to its own inaction and failure to clear the charges payable. The 1st defendant denies the allegation of the plaintiff that the detention of the cargo by 2nd defendant was unlawful or arbitrary. The plaintiff is not entitled to seek a declaration that such detention is illegal or to seek release of the cargo without payment of the outstanding charges. The plaintiff is not entitled to recover the suit claim as prayed for. The cargo remained stored in the warehouse for a long period and lost its commercial value and that the plaintiff itself failed to identify a purchaser for the cargo. The plaintiff cannot claim interest at the rate of 18% per annum as claimed in the plaint, as there is no contractual or legal basis for such claim. The plaintiff alone is responsible for the consequences arising from its failure to clear the charges and complete the export formalities. The 1st defendant denies any liability to pay the suit amount or to compensate the plaintiff for the alleged loss. Finally, the 1st defendant prayed to dismiss the suit with exemplary costs.

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4) The 2nd defendant appeared before this Court by engaging an

Advocate and filed its written statement denying the material averments of the plaint and contended that the suit is not maintainable against it. The sum and substance of the written statement of 2nd defendant is as follows.

4.1) The allegations made by the plaintiff essentially relate to an alleged oral contract between the plaintiff and 1st defendant. The 2nd defendant has no role in the export transaction allegedly undertaken between the plaintiff and 1st defendant. Even as per the plaint averments, the services relating to export of the cargo, including customs clearance and loading of the cargo onto a vessel, were to be rendered by 1st defendant. Therefore, the 2nd defendant had no involvement in the transaction relating to the export of the cargo and cannot be held liable to the plaintiff in any manner. The plaintiff is required to prove that the cargo allegedly entrusted to 1st defendant for export and the cargo allegedly stored in the warehouse of 2nd defendant is one and the same. The 1st defendant had failed to clear its contractual dues payable to 2nd defendant, and therefore the 2nd defendant became entitled to exercise its contractual rights, including the right of lien over the goods stored in its warehouse and to auction the said cargo for realization of the dues payable by 1st defendant.

4.2) The alleged communications and transactions referred to in the plaint were only between the plaintiff and 1st defendant, and 2nd defendant had no role in those transactions. Accordingly, the plaintiff is required to prove the said averments. The 2nd defendant also denies the plaintiff’s assertion that it is the legal owner of the cargo stored in the warehouse and that the defendants cannot withhold the cargo as ransom for the dues of other exporters. Under the contract governing the storage arrangement, 2nd defendant possesses a valid right of lien and other contractual rights enabling it to auction the goods stored by 1st defendant in the event 1st defendant fails to discharge its contractual obligations and

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clear the dues payable to 2nd defendant. The cargo stored in the warehouse was perishable in nature and that, upon failure of 1st defendant to clear the outstanding dues despite negotiations, 2nd defendant proceeded to auction the cargo in accordance with law. The 2nd defendant was not concerned with the communications between the plaintiff and 1st defendant and is therefore not in a position to admit or deny the contents of those communications. The plaintiff is therefore required to prove the same.

4.3) There was no contractual relationship between the plaintiff and 2nd defendant and that no transaction had taken place between them.

Consequently, no liability can arise against 2nd defendant in favour of the plaintiff. The 2nd defendant also disputes the allegation that there was no outstanding dues payable by 1st defendant. The 2nd defendant denies the allegations made by the plaintiff that it illegally detained the cargo or that it attempted to recover the dues payable by 1st defendant from the plaintiff. The 2nd defendant was dealing only with 1st defendant under the terms of the Cargo Handling Agreement (CHA) executed between them for storage of cargo. The 2nd defendant had no dealings whatsoever with the plaintiff.

4.4) The 2nd defendant also denies the allegations that it attempted to extort money from the plaintiff or that it merged different transactions to settle disputes with 1st defendant. The 2nd defendant never demanded any money from the plaintiff and that the dues sought to be realized were those contractually payable by 1st defendant. The 2nd defendant has not raised any claim against the plaintiff and therefore the allegation of the plaintiff against the 2nd defendant is baseless. The 2nd defendant also denies that the exercise of its right of lien over the cargo was unlawful or without authority. According to 2nd defendant, the right of lien exercised over the cargo stored by 1st defendant was valid and in accordance with the contract and the applicable law.

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4.5) The 2nd defendant did not receive any legal notice/s referred to in the plaint. The alleged notices and communications referred to in the plaint relate only to the plaintiff and 1st defendant, and that the 2nd defendant is not concerned with those communications. Thecargo stored by 1st defendant was not released to 1st defendant since the 1st defendant failed to clear the outstanding dues, thereby breached the terms and conditions of the CHA. The plaintiff is not a party to the CHA between

Defendants 1 and 2 and therefore the plaintiff cannot seek to hold that the 2nd defendant is liable for any alleged losses suffered by it. If the plaintiff has suffered any loss, the same is attributable solely to the conduct of 1st defendant, and the plaintiff may have remedies only against 1st defendant.

4.6) The 1st defendant had stored cargo belonging to several customers in the warehouse, and the cargo referred to in the plaint was not the only cargo stored therein. The agreement between Defendants 1 and 2 provided that in the event 1st defendant failed to clear the outstanding dues, the 2nd defendant was entitled to exercise a lien over the entire cargo stored by 1st defendant and to realize the dues through sale of the said cargo. Since the plaintiff had no contractual relationship with 2nd defendant and had not entered into any agreement with it, the plaintiff had no right to interfere with the cargo stored by 1st defendant in the warehouse of 2nd defendant. The cargo in question has already been auctioned by 2nd defendant in accordance with the terms of the contract and the applicable law. Therefore, the relief sought by the plaintiff for release of the cargo does not survive.

4.7) The plaintiff is not entitled to any decree against 2nd defendant.

The 2nd defendant also disputes the allegation that the plaintiff has suffered losses due to wrongful detention of the cargo. The plaintiff has not filed any appropriate application seeking damages and therefore cannot reserve such a right merely through a statement in the plaint. The

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present suit has been filed without complying with the mandatory requirement of pre-institution mediation under Section 12A of the

Commercial Courts Act, 2015. The alleged urgency pleaded by the plaintiff is artificial and was only raised to avoid the statutory requirement of pre-institution mediation. Therefore, the plaint is liable to be rejected under Order VII Rule 11(d) CPC, and the 2nd defendant prayed to dismiss the suit against 2nd defendant as not maintainable.

4.8) With the leave of the Court, the 2nd defendant filed an

additional written statement placing the following further facts on record

subsequent to the filing of its earlier written statement.

4.9) During the pendency of the suit, the 2nd defendant auctioned the cargo to recover its dues from the 1st defendant by following the required legal formalities. In pursuant to the common final order dated 14.12.2024 passed by the Hon’ble High Court in CMA Nos. 548, 549 and 550 of 2023, the successful bidder commenced the process of evacuating the unclaimed cargo (rice) lying at the port premises of 2nd defendant. The process of evacuation commenced on 05.01.2024 and continued until 16.02.2024. During this period, for every lot of cargo evacuated, 2nd defendant raised invoices on the successful bidder and the same were duly cleared by the successful bidder. 49 invoices were raised in total, amounting to a total value of Rs.3,15,28,000/-. The total quantity of cargo evacuated by the successful bidder is stated to be 1,516 metric tons. In adherence to the directions issued by the Hon’ble High Court, it deposited the entire sale proceeds in the State Bank of India as a fixed deposit in the name of 2nd defendant. The fixed deposit receipt was obtained on 13.03.2024.

5) Basing on the above pleadings, the following issues have been framed by this Court for trial.

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1. Whether the plaintiff entrusted cargo of 160 metric tons of rice contained in bag having the brand name ‘Hello’ to the defendant No.1 for the purpose of export?

2. Whether the defendant No.1 failed to load the cargo on board of the vessel for the purpose of export in time?

3. Whether the detention of cargo by the defendant No.2 is unlawful?

4. Whether the action of defendant No.2 auctioning the cargo during the pendency of the suit is unlawful?

5. Whether the suit is bad for mis-joinder of the parties?

6. Whether there is no privity of contract between the plaintiff and defendant No.2?

7. Whether the plaintiff is entitled for recovery of an amount of Rs.1,05,11,864/- from both the defendants 1 and 2 with costs and interest as prayed for? Or alternatively for release of the subject cargo to the plaintiff?

8. To what relief?

6) To substantiate the case of the plaintiff, Deepak Khatri,

Authorized Representative of the plaintiff-company filed chief examination affidavit and he is examined as PW.1, and got marked Exhibits A1 to A16.

On behalf of 2nd defendant,Sidhartha Kumar Sarangi, Head of Marketing

Department of 2nd defendant-port filed chief examination affidavit and he is examined as DW.1 and got marked Exhibits B1 to B40 on its behalf.

The 1st defendant did not contest the matter after filing the written statement and failed to adduce any evidence on its behalf.

7) Heard both sides. Perused the written arguments filed by the counsel for plaintiff and 2nd defendant.

Issue Nos.1 and 2:

(Whether the plaintiff entrusted cargo of 160 metric tons of rice contained in bag having the brand name ‘Hello’ to the defendant No.1 for the purpose of export?)

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(Whether the defendant No.1 failed to load the cargo on board of the vessel for the purpose of export in time?)

8) Since these two issues are inter connected with each other, this

Court discuss these issues together to avoid repetition and for the sake of convenience.

8.1) The case of the plaintiff is that during August 2022 it entrusted a cargo consisting of 400 metric tons of rice packed in bags of 50 kg each to 1st defendant for export purposes. Out of the said rice, 160 metric tons of rice is withheld by the defendants. According to the plaintiff, the 1st defendant had undertaken to arrange customs clearance and loading of the cargo on board a vessel for export. The 1st defendant in its written statement did not deny the fact that the cargo of 160 metric tons of rice was entrusted to it by the plaintiff. Thus, the existence of the cargo and its storage through 1st defendant at the port warehouse is not in serious dispute. The documents filed by the plaintiff relating to invoices, storage payments and correspondence further support the contention that the cargo was entrusted to 1st defendant for export.

8.2) The plaintiff contends that despite entrustment of the cargo and payment of storage charges, the 1st defendant failed to load the cargo onto a vessel for export. The 1st defendant has not produced any evidence to show that the cargo was not loaded onto a vessel because of the plaintiff’s inaction. According to 2nd defendant, the cargo remained stored in the warehouse for a considerable period and was eventually subjected to auction proceedings. If the cargo had been exported as agreed, the question of continued storage and eventual auction would not arise.

8.3) The Hon’ble Apex Court in Vidhyadhar v. Manikrao & Anr. 1, held that when the defendant did not enter into witness box and depose about the facts of the case, the pleadings of the defendant cannot be 1 1999 AIR SC 1441

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considered and an adverse inference can be drawn against the party who did not adduce any evidence in support of his/her/its pleadings. The same principle was reiterated by the Hon’ble Apex Court in Chowdamma v.

Venkatappa 2.

8.4) In the present case also, the 1st defendant though filed its written statement making allegations against the plaintiff, neither cross examined the plaintiff’s witness nor adduced any evidence. Therefore, the principle held in the above said cases squarely applicable against the 1st defendant. Therefore, the version of 1st defendant in the written statement cannot be considered. As seen from the documents filed by the plaintiff and the evidence of PW.1, it is obvious that 1st defendant failed to perform its contractual obligation of exporting the cargo within the stipulated time. Accordingly, these two issues are answered in favour of the plaintiff and against the 1st defendant.

Issue Nos.3, 4 and 6:

(Whether the detention of cargo by the defendant No.2 is unlawful?) (Whether the action of defendant No.2 auctioning the cargo during the pendency of the suit is unlawful?) (Whether there is no privity of contract between the plaintiff and defendant No.2?)

9) Since all these three issues are inter connected with each other, this Court discuss these issues together to avoid repetition and for the sake of convenience.

9.1) The plaintiff contends that 2nd defendant illegally detained the cargo even though the plaintiff was not a party to the dispute between

Defendants 1 and 2. However, the 2nd defendant has specifically pleaded that the 1st defendant had stored cargo in the warehouse of 2nd defendant. The 1st defendant failed to clear its contractual dues payable 2 2025 INSC 1038 dated 25.08.2025

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to 2nd defendant. Under clause 9 of the contract between Defendants 1 and 2 (Ex.B1-Cargo Handling Agreement), the 2nd defendant had the right of lien over the cargo stored by 1st defendant. According to the said clause, the customer shall make the payments within 7 days from the date of invoice and/or if the customer fails to lift the entire cargo from the port, the port shall have the first lien over the cargo. It further says that if the customer fails to make payment within 90 days, the port shall be entitled to recover all such dues along with interest by way of selling the cargo.

9.2) It is also admitted by the plaintiff itself that the cargo was stored in the warehouse through 1st defendant. Therefore, the warehouse relationship existed between Defendants 1 and 2 and not between the plaintiff and 2nd defendant. In such circumstances, if 1st defendant defaulted in payment of warehouse charges, 2nd defendant would be entitled to exercise its contractual rights against the cargo stored by 1st defendant. In its written statement, the 1st defendant did not aver that it paid all the dues to the 2nd defendant; on the other hand, its contention is that no such charges were paid to the 2nd defendant. The 1st defendant made allegations against the plaintiff that the plaintiff could not clear the warehouse dues. Therefore, it can be safely concluded that the detention of the cargo by 2nd defendant cannot be termed unlawful.

9.3) The 2nd defendant has placed on record that the cargo formed part of unclaimed cargo lying in the port; the auction process was conducted in accordance with the terms of the contract and applicable law. The successful bidder evacuated the cargo during the period 05.01.2024 and 16.02.2024. The total sale proceeds amounted to

Rs.3,15,28,000/- were deposited in State Bank of India as a fixed deposit in compliance with the directions of the Hon’ble High Court. These facts have been specifically pleaded in the additional written statement and have not been effectively disproved by the plaintiff.

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9.4) The counsel for plaintiff in his written arguments mainly attacked the action of 2nd defendant i.e., detention of cargo and subsequent auction of the cargo. On this aspect, the counsel for plaintiff contends that the alleged dues are not pertaining to the Ex.B1, but they pertain to the period prior to Ex.B1 i.e., prior to 01.04.2022. He further contends that the plaintiff is not a party to the Ex.B1-CHA and therefore, the defendants cannot impose obligations on the plaintiff, which is a third person to the contract. About the said proposition, the counsel placed reliance on judgments (1) Rashtriya Ispat Nigam Limited v. Dewan Chand

Ram Saran 3, (2) M.C. Chacko v. The State Bank of Travancore 4. There cannot be any quarrel with the said proposition. In the present case, the 2nd defendant did not impose any obligation on the plaintiff. Therefore, the case laws cited by the plaintiff side are not applicable to the present case.

9.5) Further, the counsel for plaintiff relied on a decision in Board of

Trustees of the Trust of Bombay v. Sriyanesh Knitters 5, and contends that the 2nd defendant may retain the goods, but cannot sell them in view of

Section 171 of the Contract Act. On this aspect, he also relied on judgments in Cogoport Private Limited v. Strides Pharma Science

Limited 6, Joseph Antony v. The South India Bank Limited 7, Utair Aviation v. Jagson Airlines Limited 8, Dhian Singh Sobha Singh v. Union of India 9, and Ram Sarup Gupta v. Bishun Natain Inter College 10 .

9.6) Section 171 of Indian Contract Act speaks about right of general lien of Bankers, Factors, Wharfingers and Policy Brokers etc.

However, it says “unless a contract exists to the contrary”. In the present case, there is a contract between the defendants in the form of Ex.B1- 3 (2012) 5 SCC 306 4 (MANU/SC/0008/1969) 5 1999 AIR SC 2947 6 (MANU/DE/6462/2023) 7 (MANU/KE/3359/2023) 8 (MANU/DE/2291/2012) 9 (MANU/SC/0010/1957) 10 (MANU/SC/0043/1987)

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CHA. Therefore, the terms of the contract override Section 171 of the

Contract Act as seen from the Section itself. Hence, the counsel for plaintiff cannot rely on Section 171 of Contract Act and the above mentioned case law on the said Section, when the specific contract is existing between the 1st defendant and 2nd defendant. Hence, the case law relied upon by the plaintiff is not applicable to the present case.

9.7) The counsel for plaintiff contends that the handing over of cargo by the 1st defendant to the 2nd defendant is nothing but a ‘bailment’ within the meaning of Section 148 of Indian Contract Act. He further argues that the 2nd defendant may retain the cargo, but cannot sell the same, when the original owner of the cargo is the plaintiff. The said contention is not acceptable, since the plaintiff is a stranger to the 2nd defendant. The agreement is between the 1st defendant and the 2nd defendant. The 2nd defendant is empowered under the terms of Ex.B1-

CHA to have a lien over the cargo, and after 90 days of non-payment of dues, it can sell away the cargo. In the present case, the 2nd defendant contends that the period of 90 days was lapsed long back, but in spite of that, the 1st defendant did not pay the dues. Therefore, the 2nd defendant can exercise its right of lien and to sell the cargo to recover the dues. The plaintiff cannot question the 2nd defendant, and if the plaintiff had any grievance, it has to be against the 1st defendant only.

9.8) The pleadings clearly reveal that the plaintiff had dealings only with 1st defendant for the export of the cargo. The cargo came to be stored in the warehouse of 2nd defendant through 1st defendant. There is no evidence on record to show that any direct agreement or contractual arrangement existed between the plaintiff and 2nd defendant. Therefore, it is established that there was no privity of contract between the plaintiff and 2nd defendant.

9.9) Another argument of the plaintiff is that the validity period of

Ex.B1-CHA is from 01.04.2022 till 31.03.2023 and therefore, the sale of

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cargo beyond the period agreement is invalid. I am afraid that this contention is not tenable. Clause 4 of Ex.B1-CHA reads “….this agreement shall come into force on 01.04.2022 and shall remain valid until 31.03.2023 or till the clearance/loading of the entire cargo from the port under normal business circumstances in reasonable time for all ships/vessels that have completed unloading/loading and/or served notice of readiness (“NOR”) prior to 31.03.2023 subject however to extension or termination in accordance with the provisions of this agreement.”

Therefore, it cannot be said that the agreement period is only from 01.04.2022 to 31.03.2023. The 2nd limb of the said clause says the validity is till the clearance of the cargo and dues payable to the 2nd defendant. Hence, the contention of the plaintiff’s counsel on this point is not tenable. Therefore, the auction appears to have been conducted under lawful authority and pursuant to judicial directions. Hence, the

Court holds that the auction conducted by 2nd defendant cannot be treated as unlawful. Hence, the detention of the cargo by the 2nd defendant cannot be termed as unlawful. The plaintiff cannot make any claim against the 2nd defendant since, there is no privity of contract between them.

9.10) In the light of above discussion, all these three issues are decided against the plaintiff and in favour of the 2nd defendant, holding that the plaintiff cannot seek any relief against the 2nd defendant.

Issue No.5:

(Whether the suit is bad for mis-joinder of the parties?)

10) The 2nd defendant has contended that there is no direct contractual relationship between the plaintiff and 2nd defendant and therefore, the 2nd defendant cannot be a party to the suit. However, the cargo admittedly remained in the warehouse of 2nd defendant and the plaintiff has alleged illegal detention and auction of the cargo by 2nd

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defendant. Since reliefs were sought against 2nd defendant regarding detention and auction of the cargo, 2nd defendant is a proper party to the suit. Therefore, the suit cannot be said to be bad for mis-joinder.

Accordingly, this issue is answered in favour of plaintiff and against the 2nd defendant.

Issue No.7:

(Whether the plaintiff is entitled for recovery of an amount of Rs.1,05,11,864/- from both the defendants 1 and 2 with costs and interest as prayed for? Or alternatively for release of the subject cargo to the plaintiff?)

11) The alternative relief of release of cargo has become infructuous because the cargo has already been auctioned, and the sale proceeds have been deposited pursuant to court directions.

11.1) There is no privity of contract between the plaintiff and 2nd defendant. The 2nd defendant acted under its contractual rights against 1st defendant. In view of my findings in issues 3, 4 and 6, the plaintiff cannot claim the suit amount from 2nd defendant.

11.2) The plaintiff produced several documents i.e., Exs.A1 to A16.

The said documents include Bills of Supply, Weighment Slips, Payment

Vouchers and the correspondence with the 1st defendant. There is no rebuttal evidence from the 1st defendant to discredit the version of the plaintiff. In these circumstances, the evidence of PW.1 coupled with

Exs.A1 to A16 proves that the failure to export the cargo arose due to the conduct of 1st defendant, who was responsible to export logistics. Hence, it can be said that the claim of the plaintiff against 1st defendant is proved.

However, for the reasons mentioned in preceding paragraphs, the claim against 2nd defendant cannot be sustained. This issue is decided accordingly.

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Issue No.8: (To what relief?)

12) In view of the findings recorded in issues 1 to 7, the plaintiff is not entitled to any relief against 2nd defendant. The plaintiff though claimed Rs.52,00,000/- towards damages, but could not explain as to how the said amount is arrived and basis for it. Therefore, the plaintiff is not entitled for the said damages. The plaintiff is not entitled for legal expenses as claimed, since this court is going to decree against 1st defendant with costs. Hence, the plaintiff is entitled to recover the actual value of the cargo as on the date of entrustment with interest from the 1st defendant. The alternative relief of release of cargo had already become infructuous. Therefore, the alternative relief cannot be granted. As stated above, the plaintiff can get the cargo value as on the date of handing over i.e., Rs.33,12,000/-. The plaintiff calculated interest at the rate of 18% p.a.

from 01.09.2022 to 14.06.2023 at Rs.4,68,671/- and the total would become Rs.37,80,671 /-.

13) In the result, the suit is decreed in part with proportionate costs, in favour of the plaintiff and against the 1st defendant for a sum of

Rs.37,80,671/- with interest @ 18% p.a from the date of suit till date of judgment and decree, and thereafter @ 12% p.a. from the date of judgment and decree till realization. The suit against 2nd defendant is dismissed with costs.

Typed to my dictation by the Stenographer of this Court, corrected and

pronounced by me, in the Open Court, on this the 17th day of March, 2026.

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

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APPENDIX OF EVIDENCE

Oral Evidence

For Plaintiff: For (2nd) Defendant :

PW.1: Deepak Khatri DW.1: Sidhartha Kumar Sarangi

Documentary Evidence For Plaintiff:

Ex.A1 : Bill of Supply No.2667 along with weighment slip, dt.03.05.2022 Ex.A2 : Bill of Supply No.2728 along with weighment slip, dt.23.05.2022 Ex.A3 : Bill of Supply No.2733 along with weighment slip, dt.25.05.2022 Ex.A4: Bill of Supply No.2666 along with weighment slip, dt.03.05.2022 Ex.A5: Bill of Supply No.2724 along with weighment slip, dt.21.05.2022 Ex.A6: Bill of Supply No.2737 along with weighment slip, dt.26.05.2022 Ex.A7: Letter dt.10.02.2023 addressed by 1st defendant to the 2nd defendant Ex.A8: Office copy of legal notice dt.03.03.2023 issued on behalf of plaintiff to both defendants Ex.A9: Office copy of legal notice dt.17.03.2023 issued on behalf of plaintiff to both defendants Ex.A10: Reply notice dt.04.04.2023 issued by 1st defendant Ex.A11: Reply notice dt.13.03.2023 issued by 2nd defendant Ex.A12: Reply notice dt.23.03.2023 issued by 2nd defendant Ex.A13: Office copy of purchase order dt.14.06.2023 Ex.A14: Copy of email dt.18.05.2023 addressed by 1st defendant to plaintiff along with Certificate under section 65-B Evidence Act Ex.A15: Power of Attorney dt.11.05.2023 executed by Dinesh Khandelwal in favour of Shaleen Khandelwal Ex.A16: Certificate of Registration in respect of Plaintiff Firm dt.28.06.2017

For the (2 nd ) Defendant:

Ex.B1 : Office copy of Cargo handling Agreement dt.01.04.2022 Ex.B2 : Office copy of Invoice IAKPLSTR09220095 dt.30.09.2022 Ex.B3 : Office copy of Invoice IAKPLSTR09220096 dt.30.09.2022 Ex.B4: Office copy of Invoice IAKPLSTR09220097 dt.30.09.2022 Ex.B5: Office copy of Invoice IAKPLSTR09220098 dt.30.09.2022 Ex.B6: Office copy of Invoice IAKPLSTR09220099 dt.30.09.2022 Ex.B7: Office copy of Invoice IAKPLSTR092200100 dt.30.09.2022 Ex.B8: Office copy of Invoice IAKPLSPL10220071 dt.14.10.2022 Ex.B9: Office copy of Invoice IAKPLSPL10220075 dt.14.10.2022 Ex.B10: Office copy of Invoice IAKPLSTR10220027 dt.18.10.2022 Ex.B11: Office copy of Invoice IAKPLSTR10220034 dt.19.10.2022 Ex.B12: Office copy of Invoice IAKPLSTR11220074 dt.30.11.2022 Ex.B13: Office copy of Invoice IAKPLSTR11220075 dt.30.11.2022 Ex.B14: Office copy of Invoice IAKPLSTR12220092 dt.31.12.2022

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Ex.B15: Office copy of Invoice IAKPLSTR12220093 dt.31.12.2022 Ex.B16: Office copy of Invoice IAKPLSTR03230013 dt.13.03.2023 Ex.B17: Office copy of Invoice IAKPLSTR03230014 dt.13.03.2023 Ex.B18: Office copy of Invoice IAKPLSPL03230230 dt.29.03.2023 Ex.B19: Office copy of Invoice IAKPLSTR03230083 dt.31.03.2023 Ex.B20: Office copy of Invoice IAKPLSTR03230084 dt.31.03.2023 Ex.B21: Office copy of Invoice IAKPLSTR04230051 dt.21.04.2023 Ex.B22: Office copy of Invoice IAKPLSTR04230085 dt.30.04.2023 Ex.B23: Office copy of Invoice IAKPLMRN05230075 dt.12.05.2023 Ex.B24: Office copy of Invoice IAKPLSTR05230048 dt.31.05.2023 Ex.B25: Office copy of Invoice IAKPLSTR05230049 dt.31.05.2023 Ex.B26: Office copy of Invoice IAKPLSTR06230104 dt.30.06.2023 Ex.B27: Office copy of Invoice IAKPLSTR06230105 dt.30.06.2023 Ex.B28: Office copy of Invoice IAKPLSTR07230067 dt.27.07.2023 Ex.B29: Office copy of Invoice IAKPLSTR07230096 dt.31.07.2023 Ex.B30: Office copy of Invoice IAKPLSTR08230094 dt.30.08.2023 Ex.B31: Office copy of Invoice IAKPLSTR08230095 dt.30.08.2023 Ex.B32: Office copy of Invoice IAKPLSTR09230078 dt.30.09.2023 Ex.B33: Office copy of Invoice IAKPLSTR09230079 dt.30.09.2023 Ex.B34: Office copy of legal notice dt.15.04.2023 Ex.B35: Photo copies of emails exchanged between 1st defendant and 2nd defendant along with certificate u/s 65B of Indian Evidence Act Ex.B36: Office copy of legal notice dt.21.06.2023 Ex.B37: Office copy of Auction Notice dt.02.09.2023 Ex.B38: Photo copy of Auction Proceedings along with certificate u/s 65B of Indian Evidence Act Ex.B39: Certified copy of order in CMA.549/2023 of Hon’ble High Court of A.P, dt.14.12.2023 Ex.B40: Office copy of Invoice EAKPLSPL02140077 dt.29.01.2024

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

IN THE SPECIAL COURT FOR TRIAL AND DISPOSAL OF

COMMERCIAL DISPUTES :: VIJAYAWADA.

Present: G.BHUPAL REDDY,

Judge, Special Court for Trial and Disposal of

Commercial Disputes, Vijayawada.

Wednesday, this the First [1st] day of April, Two Thousand Twenty Six [2026].

C.O.S. No. 11 of 2023

(O.S.No.239/2016 on the file of V Addl. District Judge, Tirupati)

Between:

N.Janardhan Rao, S/o Narayana, Hindu, aged about 55 years, Contractor, Residing in Plot No.106, Mothi Nagar, …Plaintiff Erragadda, Hyderabad-500 018.

And

1. The State of Andhra Pradesh, Rep. by its Collector, Chittoor, Chittoor District.

2. The Municipal Corporation of Tirupati, Rep. by its Commissioner, Tirupati, Chittoor District.

3. The Municipal Engineer, Municipal Corporation,

Tirupati. ...Defendants

This Commercial Original Suit came before me on 24.03.2026 for final hearing, in the presence of M.Ramanadh, Advocate for the plaintiff; S. Purnachandra Rao, Addl. Government Pleader for defendants 2 and 3; the 1st defendant remained ex parte; and upon hearing the arguments on both sides; upon perusing the entire material available on record; and upon having been stood over for consideration till this day, this Court delivers the following –

// J U D G M E N T //

1) The suit is filed for damages in respect of contract work for construction of 360 Houses under the agreement dated 16.02.2009 between the plaintiff and the 2nd defendant to a tune of ₹3,77,50,125/- with costs and interest @ 18% p.a from the date of suit till the date of realization.

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1.1) Initially, the suit is filed before the III Additional Judge, Tirupati (Numbering Court) and the same is numbered as O.S.239/2016 and made over to V Additional Judge, Tirupati for disposal according to law.

The case of the plaintiff, in brief, is as follows:

2) The plaintiff is a contractor. The 2nd defendant – Municipal

Corporation of Tirupati, invited tenders for construction of 360 houses in 15 blocks in Sy.Nos.448/2, 489/1, 490/1 and 490/2 of Avilala village

Phase-II Package-1, including infrastructure facilities such as water supply, roads and sewerage works. The plaintiff participated in the tender process and emerged as the lowest bidder. Consequently, the 2nd defendant entered into an agreement with the plaintiff vide Agreement

No.571/2008-09 dated 16-02-2009 for execution of the said work valued at Rs.8,26,59,030/-. The plaintiff furnished the required Bank Guarantee and commenced the work, by engaging labour, machinery and construction materials on hire, in accordance with the terms of the agreement.

2.1) While the work was in progress, certain residents of Avilala village including one J. Hymavathi and others filed W.P. No.7454 of 2009

before the Hon’ble High Court of Andhra Pradesh on 08-04-2009

challenging the construction of houses over land in Sy.No.499/3 of Avilala village, and for a direction to dispose of the appeal filed before Revenue

Divisional Officer against the orders of Tahsildar, Tirupati Rural dated 14-03-2006. The Hon’ble High Court directed the Revenue Divisional

Officer to dispose of the statutory appeal. After disposal of the said appeal, the Tahsildar resumed possession of the land of Ac.3.26 cents in

Sy.No.499/3 of Avilala village by cancelling the earlier assignment in favour of N. Krishnaiah. In the said writ proceedings the petitioners therein obtained interim orders resulting in stoppage of the execution of the contract work. In view of the said developments, the 2nd defendant

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issued notice dated 28-10-2009 directing the plaintiff to stop the work immediately. The plaintiff accordingly stopped the work and submitted representation dated 30-10-2009 explaining the losses incurred on account of labour, machinery and materials kept idle at the site. The defendants directed the plaintiff to retain the infrastructure and machinery at the site till restoration orders were passed.

2.2) Due to stoppage of work, the plaintiff incurred substantial expenditure towards wages of labourers, salaries of technical and non- technical staff, hire charges of machinery such as concrete mixers, vibrators and tractor trailers, centering materials, casuarina ballies, construction of sheds for storage of cement and labour accommodation, formation of temporary approach road and laboratory equipment for testing materials. The plaintiff also claims that he suffered loss of expected profit on the remaining value of work.

2.3) The defendants delayed payment of running account bills (RA

Bills), because of which the plaintiff had to incur additional financial burden and interest liability. Subsequently, the 2nd defendant permitted the plaintiff to resume the work through proceedings dated 27-10-2010, and the plaintiff restarted the work on 29-10-2010. The plaintiff requested extension of time for completion of the work and the 2nd defendant granted extension up to 15-02-2012 vide Proceedings dated 26-08-2011.

2.4) The plaintiff filed W.P. No.20646 of 2012 before the Hon’ble

High Court seeking directions to the defendants to consider his representations dated 22-06-2012, 28-05-2012 and 18-04-2012 to release the amounts due. The Hon’ble High Court directed the defendants to pay the undisputed amount of Rs.1,61,06,351/-. Since the said amount was not immediately paid, the plaintiff initiated contempt proceedings, after which the said amount was released. The plaintiff addressed a letter dated 15-11-2012, demanding the defendants to pay

Rs.3,97,42,000/- towards interest on delay in account books, damages

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due to stoppage of the work for one year, loss of profit for the balance value of the work and the security guards charges up to June 2012.

2.5) Although the liability period of the work ended in August 2013, security guards were continued at the request of the 2nd defendant until the final bill was paid in July 2015, and therefore the expenses of

Rs.4,95,000/- incurred towards security guards (from September 2013 to

July 2015) are also liable to be reimbursed by the defendants. The defendants terminated the contract with plaintiff on 19-09-2014 and entrusted the remaining portion of the work worth Rs.1,75,00,000/- to another contractor without considering the request of the plaintiff to complete the work, resulting in loss of profit at 15% to the plaintiff which comes to Rs.25,50,000/-. Since the defendants withheld the payments for bills, the plaintiff was compelled to enter into a supplemental agreement

dated 11-11-2014, which resulted in reduction of cement component rate

and consequent loss of Rs.3,68,767/- to him.

2.6) The defendants had to pay balance of Further Security Deposit (FSD) amounts of Rs.17,88,752/-, but they made payment of

Rs.15,37,100/-. The defendants deducted Rs.2,51,652/- towards damages in February 2016, and Rs.10,950/- towards damages. The defendants illegally withheld an amount of Rs.3,40,375/- towards service tax. The plaintiff is entitled to get back the said amount with interest at 24% from 15-01-2013 to 09-09-2016 which comes to Rs.2,98,171/-. The defendants further illegally withheld an amount of Rs.33,708/- towards testing charges, and also Rs.3,97,521/- towards Income

Tax Deducted at Source (TDS). The plaintiff is entitled to get back the said amounts with interest.

2.7) The defendants paid the final bill amount of Rs.6,68,557/- on 30-06-2015. The plaintiff received the same under protest claiming that he is entitled for interest from 20-08-2011 to 30-06-2015. Since the plaintiff received the final bill amount on 30-06-2015, the suit is within

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limitation. The defendants are well aware of the plaintiff’s claims in view of their contest in WP.No.20646 of 2012 and the said writ petition amounts to statutory notice under Hyderabad Municipal Corporation Act, even if, it is required by law.

2.8) Finally, the plaintiff prayed to grant the following claims with subsequent interest at 18% per annum, costs of the suit and such other reliefs.

S.No. Nature of claim Amount

1 Damages due to stoppage of work from Rs.2,61,45,000/- 28-1-2009 to 27-10-2010 2 Interest on delayedpayments Rs.88,00,402/- (Rs.68,62,345/- + Rs.19,38,057/-) 3 Expenses towards security Rs.4,95,000/- 4 Loss on account of reduction in cement Rs.3,68,767/- component under supplementary agreement dated 11-11-2014 5 Recovery of withheld amount towards Rs.2,51,652/- damages in February 2016 6 Interest due to delay in making payment of Rs.6,19,529/- final bill 7 Recovery of withheld amount of Rs.6,38,546/- Rs.3,40,375/- towards service tax with interest of Rs.2,98,171/- 8 Recovery of withheld amount towards Rs.33,708/- testing charges. 9 Amount withheld in the final bill Rs.3,97,521/- Total: Rs.3,77,50,125/-

The averments of written statement in brief, are as follows:

3) The 1st defendant did not appear before the Court on receipt of summons and remained ex parte. The 2nd defendant filed written statement.The 3rd defendant filed a memo adopting the written statement of the 2nd defendant in all material aspects and prayed for dismissal of the suit. The sum and substance of the written statement is as follows:

3.1) The suit is not maintainable either in law or on facts and is liable to be dismissed in limine. Except the facts specifically admitted, all other averments made in the plaint are denied and the plaintiff is put to

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strict proof of the same. The plaintiff participated in the tender process and became the lowest bidder for construction of 360 houses in 15 blocks in Sy.Nos.448/2, 489/1, 490/1 and 490/2 of Avilala Village Phase-II

Package-1, including infrastructure facilities such as water supply, roads and sewerage works. It is also admitted that an agreement bearing

No.571/2008-09 dated 16-02-2009 was entered into between the plaintiff and the 2nd defendant and that the plaintiff furnished the required Bank

Guarantee. The defendant denies the allegation that the plaintiff had engaged labour, machinery and materials on monthly hire basis as alleged and puts the plaintiff to strict proof of the same.

3.2) While the work was in progress, Smt. J. Hymavathi and others filed W.P.No.7454 of 2009 before the Hon’ble High Court of Andhra

Pradesh challenging the action of the revenue authorities in cancelling the assignment of land in Sy.No.499/3 of Avilala village. The Hon’ble High

Court directed the Revenue Divisional Officer to dispose of the appeal within four weeks. Subsequently the writ petitioners filed Contempt Case

No.1407 of 2009, in which interim orders were passed resulting in stoppage of the work. In view of the said circumstances, the 2nd defendant issued a notice dated 28-10-2009 directing the plaintiff to stop the work temporarily. The plaintiff thereafter submitted a representation

dated 30-10-2009 claiming that the stoppage of work constituted breach

of contract and demanded compensation. The plaintiff’s claim of

Rs.3,24,00,000/- towards damages for stoppage of work is false and untenable. It is the responsibility of the contractor to procure labour, machinery and materials required for execution of the work and therefore the defendant is not liable for any alleged losses.

3.3) The plaintiff’s allegation regarding delay in payment of running account bills is incorrect. The sanctioned unit cost of the houses was

Rs.1,00,000/-, of which the Government of India share was Rs.64,000/-, whereas the estimate prepared for tendering was higher. Funds were

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released only as per the sanctioned project cost and payments were made accordingly. Due to lack of funds, the Municipal Corporation could not immediately release all payments, and revised estimates were prepared and submitted to the Government for approval. The permission was later granted to the plaintiff to resume the work through proceedings

dated 27-10-2010, and the plaintiff restarted the work on 29-10-2010. The

extension of time for completion of the work was granted up to 15-02- 2012.

3.4) The plaintiff filed W.P.No.20646 of 2012 before the Hon’ble

High Court seeking directions to the defendants to consider his representations and release the pending amounts. The Hon’ble High

Court directed payment of the undisputed amount of Rs.1,61,06,351/-. As there were financial constraints, the payment could not be made immediately, but after issuance of notice in the contempt proceedings the said amount was released to the plaintiff.

3.5) The plaintiff has falsely claimed an amount of Rs.3,97,42,000/- towards interest on delayed account bills, damages due to stoppage of work, loss of profit and security guard charges, though he is not entitled to such claims under the terms of the agreement. The security guards were not continued up to July 2015 and the defendants asked the plaintiff to continue the security guards. The contractor himself is responsible for engaging necessary personnel until completion and handing over of the work. It is not correct to say that the remaining portion of the work was entrusted to another contractor causing loss of profit to the plaintiff. The allegation that the plaintiff was compelled to enter into a supplementary agreement dated 11-11-2014 resulting in loss due to reduction of cement component is also denied.

3.6) The balance FSD amount and other bills were already paid in

July 2015, and therefore the plaintiff is not entitled to claim any further compensation or interest. With regard to service tax, the plaintiff, being a

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contractor, is liable to pay service tax to the Customs and Central Excise

Department and therefore the claim for reimbursement of service tax and interest thereon is untenable.

3.7) The work entrusted to the plaintiff was completed in August 2011 and the liability period ended in August 2013. During that period testing of works was conducted by third parties and the testing charges recovered are payable by the contractor himself. The amount of

Rs.3,97,521/- withheld towards income tax (TDS) was remitted to the

Income Tax Department and therefore the defendant is not liable to repay the same to the plaintiff. The plaintiff was paid the amount of

Rs.1,61,06,351/- on 12-11-2012 in compliance with the directions of the

Hon’ble High Court. The plaintiff had not raised any protest at the time of

receipt of the final bill. The suit is barred by limitation.

3.8) The plaintiff is not entitled to any damages, interest or compensation as there is no provision in the agreement permitting such claims. The agreement specifically says that the plaintiff is not entitled for interest on delayed payments. The claims made by the plaintiff are false, exaggerated and without legal basis. Finally the 2nddefendant prays to dismiss the suit with costs.

4) Basing on the above pleadings, the following issues were framed for trial on 24-01-2018 by the V Additional District Judge, Tirupati.

1. Whether the plaintiff is entitled for damages, interest and compensation to a tune of Rs.3,77,50,125/- together with interest at 18% p.a.?

2. Whether the suit is barred by limitation.

3. Whether the plaintiff is entitled to claim damages during the period of stoppage of work i.e., from 30-10-2009 to 29-10-2010 and if so, to what amount?

4. To what relief?

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5) On perusal of the issues, this Court is of the view that issues to be recast as they have not covered all the disputed issues. This Court is empowered to recast the issues under Order XIV Rule 5 CPC. Hence, the following issues are recast by deleting the issues framed on 24-01-2018 by the V Additional District Judge, Tirupati.

Recast Issues:

1. Whether the plaintiff continued the men and machinery during 28- 10-2009 to 27-10-2010 and if so, whether he is entitled to damages of Rs.2,61,45,000/- for stoppage of work?

2. Whether the plaintiff is entitled for Rs.88,00,402/- towards interest because of delay in making payments by the defendants?

3. Whether the plaintiff is entitled for Rs.4,95,000/- towards security charges?

4. Whether the plaintiff is entitled for Rs.3,68,767/- towards loss sustained on account of supplementary agreement dated 11-11- 2014?

5. Whether the plaintiff is entitled for Rs.2,51,652/- towards recovery of withheld amount towards damages in February 2016?

6. Whether the plaintiff is entitled for Rs.6,19,529/- towards interest due to delay in making payment of final bill?

7. Whether the plaintiff is entitled for Rs. 6,38,546/- towards recovery of withheld amount of Rs.3,40,375/- towards service tax with interest of Rs.2,98,171/-?

8. Whether the plaintiff is entitled for Rs. 33,708/- towards recovery of withheld amount towards testing charges?

9. Whether the plaintiff is entitled for Rs. 3,97,521/- towards the amount withheld in the final bill?

10. Whether the suit is not maintainable for want of statutory notice under Section 80 CPC and Section 685 of HMC Act?

11. Whether the suit is barred by limitation?

12. To what relief?

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6) To substantiate the case of the plaintiff, PWs.1 to 4 are examined on behalf of plaintiff and Exs.A.1 to A39 are marked. On behalf of defendants, DWs 1 and 2 are examined and Exs.B1 to B6 are marked.

7) Heard both sides. Perused the written arguments filed by the counsel for plaintiff and defendants. An opportunity was given to both the plaintiff and defendants 2 and 3 to adduce any further evidence and arguments on the recast issues. Both sides reported no further evidence on the recast issues since the evidence and arguments advanced by them covered all the recast issues as well.

Issue No.10: (Whether the suit is not maintainable for want of statutory notice under Section 80 CPC and Section 685 of HMC Act?)

Notice under Section 80 CPC

8) The defendants contended that the plaintiff failed to issue the mandatory statutory notice prior to institution of the suit. It is an admitted fact that no notice under Section 80 CPC was issued before filing the suit.

In Para-17 of the Plaint, the plaintiff sought to contend that the earlier writ proceedings would amount to statutory notice.

8.1) Section 80(1) CPC mandates that a notice must be served to the Government or Public Officer at least two months before filing a civil suit. Section 80(2) CPC says in cases requiring urgent relief, a suit may be instituted without serving such notice, with the leave of the Court.

8.2) The Hon’ble Supreme Court in Bihari Chowdhary vs State of

Bihar1, by referring the decision of 5-Judge Bench in Sawai Singhai Nirmal

Chand v. Union of India2, held that requirement under Section 80 CPC is mandatory and observed “It must now be regarded as settled law that a suit against the Government or a public officer, to which the requirement 1 AIR 1984 SC 1043 2 [1966] (1) SCR 956 (5-Judge Bench)

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of a prior notice under Section 80 CPC is attracted, cannot be validly instituted until the expiration of the period of two months next after the notice in writing has been delivered to the authorities concerned in the manner prescribed for in the Section and if filed before the expiry of the said period, the suit has to be dismissed as not maintainable”. Thus, it is clear that the Hon’ble Supreme Court held that the suit was to be dismissed even if the notice was issued, but the suit filed before the expiry of two months from the date of delivery of the notice to the concerned authorities. In the present case, the notice under Section 80

CPC was not at all issued.

8.3) The Hon’ble Supreme Court in Odisha State Financial

Corporation v. Vigyan Chemical Industries3, after referring its earlier judgments observed “a defect in jurisdiction vitiates the decree and renders it unenforceable. The Civil Procedure Code, though considered to be procedural law, encompasses within it, certain provisions that take away or circumscribe the right to sue, which are deemed to be substantive. One such provision is Section 80 CPC”. The Hon’ble

Supreme Court further observed that a decree passed without jurisdiction or in violation of mandatory statutory requirements is a nullity. Such a plea can be raised even at the stage of execution, and the executing court is bound to examine the same under Section 47 CPC.

8.4) In view of the above decisions of Hon’ble Apex Court, it is clear that the requirement under Section 80 CPC mandates a formal and explicit notice indicating the intention to institute a civil suit. In the absence of such notice, the decree can be nullified even by the Executing

Court. If a suit is filed after issuing notice under Section 80 CPC but

before expiry of two months, then also the suit is liable to be dismissed. In

the present case, admittedly the plaintiff did not issue notice under

Section 80 CPC. The plaintiff contends in Para-17 of the Plaint that the 3 Civil Appeal No.10047 of 2025 dt.05.08.2025

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earlier proceedings of writ petition amounts to compliance of Section 80

CPC.Mere knowledge of the claim or participation in earlier proceedings does not satisfy the statutory requirement. Therefore, the present suit suffers from a statutory defect of non-compliance with Section 80 CPC, and hence not maintainable.

Notice under Section 685 of HMC Act.

8.5) The present suit is filed not only against the Government, but also against the Tirupati Municipal Corporation and its Officer (D2 and

D3). The Tirupati Municipal Corporation is established under the A.P.

Municipal Corporations Act, 1994. In terms of Section 14 of the said Act, all the provisions of the Hyderabad Municipal Corporations Act, 1955 are made applicable mutatis mutandis to the Municipal Corporations constituted there under. Consequently, Section 685 of the Hyderabad

Municipal Corporations Act, 1955 squarely applies to the present case.

The said section mandates issuance of a statutory notice before institution of any suit against the Corporation or its officers in respect of any act done or purported to be done under the Act.

8.6) The requirement of notice under Section 685 of the HMC Act is not a mere procedural formality but a mandatory and imperative condition precedent for institution of a civil suit. The Hon’ble High Court of Andhra

Pradesh, in Bansilal v. Special Officer, Municipal Corporation of

Hyderabad 4 , categorically held that issuance of notice under Section 685 of the HMC Act is mandatory and that a suit instituted without such notice is not maintainable in law. In view of the clear statutory mandate and the settled legal position, this Court has no hesitation to hold that the suit is not maintainable for want of compliance with Section 685 of the HMC Act.

8.7) In the light of above discussion, this suit is not maintainable for non issuance of notices under Section 80 CPC and under Section 685 of 41981 (2) APLJ 470

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HMC Act. Accordingly, this issue is answered against the plaintiff and in favour of the defendants.

Issue No.11: (Whether the suit is barred by limitation?)

9) The limitation to file a suit involving damages and recovery of dues under a civil contract is primarily governed by the Limitation Act, 1963. Limitation for Suits Relating to Civil Contracts, the following articles of the Limitation Act generally apply:

Article 18: For work done where no time is fixed for payment: 3 years from when the work is done.

Article 55: For compensation for the breach of any contract: 3 years from the date when the contract is broken.

Article 113 (Residual Provision): For any suit for which no period of limitation is provided elsewhere: 3 years from when the right to sue accrues.

Generally, for a final bill or damages, the "right to sue" accrues when the work is completed and the final bill is either refused or not paid within a reasonable period, or from the date of the breach. The present Suit was filed on 12.09.2016. To determine if the claims are time-barred, we must compare the date of the "cause of action" for each head of claim against the suit filing date.

9.1) The plaintiff had a contract with 2nd defendant/Tirupati

Municipal Corporation on 16.02.2009. After entering into the said agreement, the plaintiff started work of construction of housing blocks.

While so, some third parties filed a writ petition in respect of the land that was being used for construction of the houses. Due to that writ petition, the corporation asked the plaintiff by way of notice dated 28.10.2009 to stop the work immediately. Thereafter, the plaintiff restarted the work on 29.10.2010 after removal of that obstruction. During this period, the plaintiff claims that he continued the men and machinery and labour, security guards, and claims ₹2,61,45,000/- towards damages.

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9.2) Cause of Action in respect of this claim of ₹2,61,45,000/- : The work was stopped on 28.10.2009 and restarted on 29.10.2010. The damages for the "idle period" accrued when the period ended in October 2010. A suit for these damages should have been filed by October 2013.

Hence this claim is time barred.

9.3) The plaintiff disputes the calculation of the bills approved by the corporation and approached the Hon’ble High Court by way of filing a writ petition. The Hon’ble High Court directed the Corporation to release the undisputed claim of ₹1,61,00,000/-. When there was no proper response from the corporation in releasing the said amount, the plaintiff filed a contempt petition and thereafter the corporation paid the said amount in August 2009. The plaintiff claims Rs.88,00,402/- towards interest on delayed payments.

9.4) Cause of Action for the said claim of Rs.88,00,402/- refers to the period before the Hon’ble High Court’s intervention. The Corporation paid the undisputed amount in August 2009 (after the contempt petition).

The payment was received in 2009. Any claim for interest on that delay should have been initiated within 3 years of receiving the principal (by

August 2012). Hence this claim is also time barred.

9.5) With regard to the remaining claims, it can be said that the claims are within the period of limitation, since the plaintiff and the

Corporation entered into a supplemental agreement in the year 2014. The final bill was approved in the year 2015. Accordingly this issue is answered partly against and partly in favour of the plaintiff.

Issue No.1: (Whether the plaintiff continued the men and machinery during 28-10-2009 to 27-10- 2010 and if so, whether he is entitled to damages of Rs.2,61,45,000/- for stoppage of work?)

10) According to the plaintiff, due to that writ petition file by third parties, the corporation asked him by way of notice dated 28.10.2009 to

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stop the work immediately. Thereafter, the plaintiff restarted the work on 29.10.2010 after removal of that obstruction. During this period, the plaintiff claims that he continued the men and machinery and labour, security guards and claims ₹2,61,45,000/- towards damages.

10.1) The burden lies on the plaintiff to prove that he maintained labour and machinery at site during the suspension period and incurred the alleged expenditure. No written instruction from the defendants directing such retention is produced. Further in his cross-examination dt.10.10.2023, PW.1 admitted that he did not file any document showing deployment of such labour during 28.10.2009 and 27.10.2010.

10.2) PW2/K.V. Subbarao, the alleged Labour Contractor in his cross-examination dt.11.10.2023 stated “I did not maintain labour register but head-mestry of the Labor maintains the labour register and he sends me the details. I took the registers and basing on it I made payment. I might be having the registers. I did not file the receipts issued by the labour about the payment of the wages. I did not issue any identity cards for the labor supplied by me. As the labourers are not permanent every month, I did not issue any identity cards”.

10.3) The plaintiff has not produced any corroborative evidence in support of this claim. The bald, unsubstantiated allegation that the 2nd defendant orally informed the plaintiff to keep men and machinery idle is contrary to ordinary commercial prudence. No reasonable contractor would incur Rs.90,000/- per day based on a mere oral instruction for an indefinite period. PW.1 himself admitted that the defendants did not issue any letter showing such direction. Hence, it can be safely concluded that the plaintiff failed to prove this claim. Accordingly this issue is answered against the plaintiff.

Issue No.2: (Whether the plaintiff is entitled for Rs.88,00,402/- towards interest because of delay in making payments by the defendants?)

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11) The defendant argues that the agreement specifically prohibits interest on delayed payments. The counsel for the defendants placed reliance on a decision of Division Bench of Hon’ble High Court of AP in

The State Of Andhra Pradesh v. M/s.Vyshno Constructions inWrit

Appeal Nos.461, 484, 491 and 497 of 2022 dated 02-12-2022. In the said case, the question that arises for determination was whether, despite there being a clause in the agreement disentitling the contractor to claim interest upon any guarantee fund or payments in arrears, the contractor is still entitled to get the interest. The Hon’ble High Court after referring several decisions, held that where the agreement specifically bars payment of interest on certain sums and the same has been agreed by the contractor, interest cannot be awarded. In Shin Satellite Public Co.

Ltd. vs. M/s. Jain Studios Ltd 5 , the Hon’ble Apex Court held that a Court cannot rewrite the agreement or create a new agreement establishing what the parties had meant by the language they had used.

11.1) The agreement executed between the parties is a lump sum

Contract. PW.1 in his cross-examination dt.10.10.2023 (under the head

Interest on delayed payments for Rs.88,00,402/-) admitted and stated “The work assigned was lump sum work.”Clause 43.1 (P.No.52, Volume-

I) of the agreement, which categorically provides as follows:

“No omission by the Engineer-in-charge or the sub-divisional officer to

pay the amount due upon certificates shall vitiate or make void the

contract, nor shall the contractor be entitled to interest upon any

guarantee fund or payments in arrears nor upon any balance which may,

on the final settlement of his accounts, be found to be due to him.”

This clause clearly states that the non-payment of bills based on any certificates does not entitle the contractor to any interest or compensation. In the light of above mentioned case law, the plaintiff is not entitled for any interest in view of express bar under Clause No.43.1 (P.No:52) of the Agreement.

5 (2006) 2 SCC 628

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11.2) In the light of above discussion, the non-payment of bills certified as due, cannot be treated as a breach of contract, and consequently, Section 73 of the Indian Contract Act cannot be invoked in such cases. Hence, this claim is unsustainable. Accordingly, this issue is answered against the plaintiff.

Issue No.3: (Whether the plaintiff is entitled for Rs.4,95,000/- towards security charges?)

12) There is no provision in the agreement towards this claim.

There is no evidence that the defendants instructed the plaintiff to provide security guards at site after completion of the work. PW.1 in his cross- examination dt.10.10.2023 admitted the following:

“There is no agreement for Security Guards with any Security Agency. It

is true that as per clause 83F, there is no provision for payment of

Security. The Security was for the period from September, 2013 to July,

2015. There is no documentary evidence showing that the department

sought for security services during the said period.”

Thus, it is clear the agreement does not specify anything about the arrangement of security, but still the plaintiff is claiming that he engaged security guards till July 2015. The plaintiff has not produced any evidence to show that he engaged security guards and that he incurred such expenditure under any contractual obligation or instruction. The claim is unsupported by records. Accordingly, this issue is answered against the plaintiff.

Issue No.4: (Whether the plaintiff is entitled for Rs.3,68,767/- towards loss sustained on account of supplementary agreement dated 11-11-2014?)

13) During the execution of the work the design mix for the concrete was revised and the quantity of Cement per Cubic Meter is reduced. A Supplemental agreement was concluded on 11.11.2014 with revised rates. The Plaintiff has made no protest while entering into the supplemental Agreement. PW.1 in his cross-examination dt.10.10.2023

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stated as follows:

“The plaintiff did not make any protest while entering into supplementary

agreement dated 11.11.2014 wherein the compound interest of cement

was reduced by Rs.90/- per cubic meter. The plaintiff never issued any

notice to the defendants that it is not interested in the supplementary

agreement dated 11.11.2014. The plaintiff did not file any writ in respect of

this claim. We approached civil court only. Supplementary agreement was

executed for the work done by that date.”

Therefore, it is obvious that the cement that was used in the work shall be as per the revised rates. It is not the case of the plaintiff that he was not paid for the quantity of cement used in the execution. Hence, it cannot be said that loss was occurred to the plaintiff on account of supplemental agreement.

13.1) In view of the above discussion, this claim is devoid of merits, legally untenable and accordingly, this issue is answered against the plaintiff.

Issue No.5: (Whether the plaintiff is entitled for Rs.2,51,652/- towards recovery of withheld amount towards damages in February 2016?)

14) According to the defendants, while taking over the work from the plaintiff, the defendants observed that certain items were missing in the work executed by the plaintiff (constructed houses). The cost of the missing items was assessed to be Rs.2,51,652/-. The same was informed to the plaintiff and accordingly the amount was recovered from the plaintiff towards damages for the missing items. The above deduction was never disputed by the plaintiff. No objection was raised while receiving the FSD.

PW.1 in his cross-examination dt.10.10.2023 deposed as under:

“The 2 nd defendant paid Rs.15,37,100/- out of Further Security

Deposit(FSD) of Rs.17,88,752/- in the month of February, 2016 and the 2 nd

defendant recovered Rs.2,51,652/- towards damages of property of the

defendants. After receipt of Rs.15,37,100/-, the plaintiff never addressed

any letter to the defendants seeking for Rs.2,51,652/- alleging that it was

illegal deduction.”

The plaintiff has not produced any material/evidence to show that the

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deduction was illegal. Therefore, it cannot be said that the recovery of

Rs.2,51,652/- towards missing items is illegal. Hence, the plaintiff is not entitled for the said amount. Accordingly, this issue is answered against the plaintiff.

Issue No.6: (Whether the plaintiff is entitled for Rs.6,19,529/- towards interest due to delay in making payment of final bill?)

15) The plaintiff is asking for interest on the final bill amount from 2011 to 2015. As seen from the record, the final bill was accepted without protest. There is no specific clause in the agreement to claim such interest on delayed payments. But, on the other hand, there is a specific bar to claim interest as per Clause 43.1 (P.No.52, Volume-I) of the agreement. The said clause was elaborately discussed in issue No.2

Hence, the plaintiff is not entitled for interest calculated at Rs.6,19,529/- on the final bill amount. Accordingly, this issue is answered against the plaintiff.

Issue No.7: (Whether the plaintiff is entitled for Rs. 6,38,546/- towards recovery of withheld amount of Rs.3,40,375/- towards service tax with interest of Rs.2,98,171/-?)

16) As per Part-II Schedule-A of the agreement, Service Tax @ 4.12% of the value of work done shall be made by the contractor to the

Customs & Central Excise Department. Accordingly, the defendants added Service Tax @ 4.12% for each bill. Therefore, practically there was no financial implication on the plaintiff in deducting the Service Tax. PW.1 in his cross-examination dt.10.10.2023 stated as follows:

“It is true that as per contract, the service tax is included in the payment

and later it would be recovered from the bill.” Witness adds that the

payments were not done inclusive of service tax.”

Though the witness claims that the payments were not done inclusive of

Service Tax, he failed to adduce any corroborative evidence in support of

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his contention. In view of the above discussion, this claim is untenable and accordingly, this issue is answered against the plaintiff.

Issue No.8: (Whether the plaintiff is entitled for Rs. 33,708/- towards recovery of withheld amount towards testing charges?)

17) According to the defendants, they conducted testing of the work after completion of the contract work. The defendants contends that the testing charges shall borne by the contractor/plaintiff. The plaintiff did not show any provision/clause in the agreement to the contrary. Moreover, this claim is not supported by any documentary evidence. No proof of wrongful deduction is placed. Accordingly, this issue is answered against the plaintiff.

Issue No.9: (Whether the plaintiff is entitled for Rs. 3,97,521/- towards the amount withheld in the final bill?)

18) As per clause 97 of the contract ‘Income Tax @ 2.24% of the value of the work to recovered from each bill. The defendants contend that an amount of Rs.3,97,521/- was recovered from the plaintiff towards

TDS in the final bill and the same was remitted to the IT Department.

PW.1 in his cross-examination dt.10.10.2023 admitted as follows:

“It is true that as per agreement, the department has to deduct the TDS on

the bills.”

The plaintiff made this claim on the pretext of non-payment of the deducted tax to the I.T. Department. However, PW.1 admitted as under:

“I have not filed any document to show that the department did not

deposit the deducted income tax to the I.T Department and or that the

plaintiff paid such amount to the Income Tax Department.”

The above admission clearly envisages that there is no proof on record that the plaintiff has paid additional tax for an amount of Rs.3,97,521/- apart from that was recovered from the bills. For the reasons stated

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above, this claim is untenable and accordingly, this issue is answered against the plaintiff.

Issue No.12: (To what relief?)

19) In view of the findings in foregoing issues, the present suit is not maintainable for want of statutory notices under section 80 CPC and

Section 685 of HMC Act; first two claims of the suit are barred by limitation; plaintiff failed to prove any of the monetary claims. Therefore, the plaintiff is not entitled to any reliefs and the suit is liable to be dismissed.

20) In the result, the suit is dismissed. However, considering the facts and circumstances, the parties shall bear their own costs.

Typed to my dictation by the Stenographer of this Court, corrected and

pronounced by me, in the Open Court, on this the 1st day of April, 2026.

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

APPENDIX OF EVIDENCE

Oral Evidence

For Plaintiff: For Defendants:

PW.1: A.Balaji DW.1: Bondalakunta Chandra Sekhar PW.2: K.V.Subba Rao DW.2: P. Thulasi Kumar PW.3: V.Rama Chandraiah PW.4: S.Veera Sekhara Reddy

Documentary Evidence For Plaintiff:

Ex.A1 : Copy of Agreement dt.16.02.2009. Ex.A2 : Copy of representation given by plaintiff to 2nd defendant dt.30.10.2009

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Ex.A3 : Copy of extension of time dt.26.08.2011. Ex.A4: Copy of representation given by plaintiff to 2nd defendant, dt.23.11.2009 Ex.A5: Copy of notice given by plaintiff to 2nd defendant for restoration of work dt.06.08.2010. Ex.A6: Copy of representation given by plaintiff to 2nd defendant dt.30.10.2010 Ex.A7: Copy of work order and supply order dt.21.02.2009. Ex.A8: Copy of representation given by plaintiff to 2nd defendant, dt.10.04.2012 Ex.A9: Copy of representation given by plaintiff to 2nd defendant, dt.18.04.2012 Ex.A10: Office copy of legal notice dt.28.05.2022 issued by plaintiff. Ex.A11: Copy of representation given by plaintiff to 2nd defendant, dt.22.06.2012 Ex.A12: Office copy of legal notice dt.22.09.2012 issued by plaintiff. Ex.A13: Copy of representation given by plaintiff to 2nd defendant along with interest calculation, dt.15.11.2012 Ex.A14: Copy of representation given by plaintiff to 2nd defendant towards service tax, dt.30.01.2013. Ex.A15: Notice given by plaintiff (to do balance agreement works with present SSR Rates), dt.21.02.2013. Ex.A16: Copy of representation (Reminder-I) given by plaintiff to 2nd defendant towards service tax, dt.11.03.2013. Ex.A17: Copy of representation (Reminder-II) given by plaintiff to 2nd defendant towards service tax, dt.30.03.2013. Ex.A18: Copy of representation given by plaintiff to 2nd defendant for damages dt.19.06.2013. Ex.A19: Copy of notice served on plaintiff, dt.31.08.2013. Ex.A20: Copy of reply to notice, dt.16.09.2013 Ex.A21: Copy of notice reminder given by plaintiff to 2nd defendant, dt.17.04.2014. Ex.A22: Supplemental Agreement (Copy Xerox), dt.11.11.2014. Ex.A23: Copy of representation given by plaintiff to 2nd defendant, dt.16.06.2015. Ex.A24: Copy of representation given by plaintiff to 2nd defendant, dt.08.11.2015. Ex.A25: Copy of representation given by plaintiff to 2nd defendant, dt.19.11.2015. Ex.A26: Copy of representation given by plaintiff to 2nd defendant, dt.05.03.2016. Ex.A27: Copy of representation given by plaintiff to 2nd defendant, dt.26.03.2016. Ex.A28: Copy of representation given by plaintiff to 2nd defendant towards service tax, dt.26.03.2016. Ex.A29: Statement of M25 concrete difference Cost & Bills and Vouchers Bunch (self prepared statement)

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Ex.A30: Wages paid vouchers (14 in number) towards 90 Nos skilled and 190 Nos unskilled. Ex.A31: Wages paid vouchers (91 in number) towards technical and non- technical. Ex.A32: Hire Charges paid vouchers (31 Nos) towards concrete mixers, vibrators and tractor trailers. Ex.A33: Hire Charges paid vouchers (3 Nos) towards steel and wooden column boxes. Ex.A34: Hire Charges paid vouchers (7 Nos) towards Casoria bellies. Ex.A35: GPA issued by N.Janardhana Rao in favour of A.Balaji Ex.A36:Certified copy of Writ Petition No.20646/2012 along with affidavit dt.05.07.2012. Ex.A37:Certified copy of orders in Writ Petition No.20646/2012 along with affidavit dt.13.07.2012. Ex.A38:Certified copy of final order in WP Nos.20181/2012, 20202/2012 and 20646/2012, dt.01.11.2016. Ex.A39:Registered letter addressed to Commissioner, Municipal Corporation, Tirupati by the plaintiff, dt.07.12.2012 along with postal receipts.

For the Defendants:

Ex.B1 : Attested copy of Memo No.10884(2)/UBS/2013 MA, dt.01.03.2014 of the Government permitting the defendants to close the contract. Ex.B2 : Attested copy of letter from defendants to plaintiff seeking consent for closure of contract vide ROC. No. Housing 4056/IHSDP/SE/TO/2014, dt.19.09.2014. Ex.B3 : Attested copy of plaintiff’s consent for closure of the contract, vide letter No.3876, dt.31.10.2024. Ex.B4: Attested copy of proceedings of Commissioner, Municipal Corporation, Tirupati, dt.17.06.2015 for closure of the contract for Rs.7,15,50,074/-. Ex.B5: Attested copy of release and discharge certificate issued by the plaintiff vide P.No.89 of MB No.76/10-11. Ex.B6: Attested copy of Final Order of the Hon’ble High Court, A.P., in W.P.No.20646/2012, dt.01.11.2016.

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

IN THE SPECIAL COURT FOR TRIAL AND DISPOSAL OF

COMMERCIAL DISPUTES :: VIJAYAWADA.

Present: G.BHUPAL REDDY,

Judge, Special Court for Trial and Disposal of

Commercial Disputes, Vijayawada.

Wednesday, this the Sixth [6th] day of May, Two Thousand Twenty Six [2026].

C.O.S. No. 19 of 2024

Between:

M/s. Bani Fisheries, a registered partnership firm, represented by its partner Baleswar Prasad S/o Meghlal Mahto, aged about 56 years, residing at D.No.14/168-C, NGOs Colony, Nehru Road No.11, Kaikalur, Eluru District, Mail ID: banifisheriesaccts@gmail.com Mobile: 99208 04558, represented by its authorised agent Kodati Venkata Subrahmanyam S/o Suryanarayana, aged about 50 years, resident of D.No.10-67, Brahmam gari Gudi Road, Near Ramana Mandir, Kaikalur – 521 333, Eluru District. Mail ID: subbukodati2@gmail.com Mob: 70133 66077. …Plaintiff

And

1. M/s. Clouds Wood Foodstuff Supply Services LLC, represented by its CEO/Director Sujith Davi, Post Box No.333823, Clover Bay, Office No.2002, Business Bay, Dubai, UAE. Mail ID:sujithdavis@yahoo.com Mobile Numbers 95399 55555 & 98465 90009.

2. Sujith Davis (Adhar No.566082358773), aged about 41 years, S/o Davis Paravarakath Chako, resident of Ambaranirappel P.O, Near Pala, Kottayam District, Kerala, Pin–686578, mail ID: sujithdavis@yahoo.com

...Defendants

Mobile Numbers 95399 55555 & 98465 90009.

This Commercial Original Suit came before me on 30.04.2026 for final hearing, in the presence of M.S.V.V. Ravi Kumar Raju, Advocate for Plaintiff; and the defendants 1 and 2 having set exparte; upon hearing the arguments of plaintiff side; upon perusing the entire material available on record; and upon having been stood over for consideration till this day, this Court delivers the following – 2 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

// J U D G M E N T //

The suit is filed for recovery of a sum of ₹8,02,64,466/- with interest and costs from the defendants towards export supply of frozen shrimp.

2) The case of the plaintiff, in brief, is that the plaintiff is a registered partnership firm having its office and fish procurement centre at Perikegudem, Mandavalli Mandal, Eluru District, and is engaged in fish trade and supply across the country. The 2nd defendant, an Indian citizen residing in Kerala, floated the 1st defendant company at Dubai and was carrying on seafood trading business in the name of the 1st defendant. The 1st defendant was floated by the 2nd defendant only with an intention to deceive Indian seafood exporters.

2.1) While endeavouring to commence prawn exports, the plaintiff had taken on lease a seafood processing unit by name

Aiswarya Impex Pvt. Ltd., situated near Kaikalur. Through the said seafood processing unit, one Kandasamy Natarajan joined in the plaintiff-firm as an in charge of the export business. Through the said

Kandasamy Natarajan, the plaintiff came into contact with the defendants. Said Natarajan represented that he knew one Suresh E., agent of the 2nd defendant, who was carrying on seafood trading business in Dubai through the 1st defendant. In the ordinary course of seafood export business, exports are executed against confirmed

Letters of Credit or against payment against shipment documents.

However, due to lack of knowledge in export business and owing to the conspiracy between the defendants, Suresh E., and Kandasamy

Natarajan, the plaintiff was induced to ship six containers of frozen seafood stocks to the 1st defendant situated at Dubai between 3 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

23.06,2020 and 03.08.2020. Kandasamy Natarajan persuaded the plaintiff to issue letters dated 22.07.2020 and 17.08.2020 for release of stocks without receiving payment, thereby causing loss to the plaintiff.

2.2) The total value of the six shipments exported to the defendants was USD 5,25,400/-. The defendants made only three remittances of USD 10,000/-, USD 15,000/- and USD 25,000/-, totaling USD 50,000/-, to the plaintiff’s account between 13.07.2020 and 20.07.2020. Thereafter, no further payments were made.

Consequently, a balance amount of USD 4,75,400/-, equivalent to approximately INR 3,56,00,000/- as per the prevailing exchange rate, remained unpaid. All the activities of the 1st defendant were being carried on by the 2nd defendant and that the 2nd defendant personally assured payment to the plaintiff. The 1st defendant company was only a shield used by the 2nd defendant for importing shrimp from exporters in Andhra Pradesh. When payments were delayed, the matter was reported to the Marine Products Exports Development

Authority (MPEDA), Government of India, and the plaintiff also made visits to Dubai. Subsequently, Kandasamy Natarajan informed the plaintiff that the 2nd defendant had suffered losses and proposed settlement of the dispute for ₹1.50 crores as full and final settlement.

The plaintiff accepted the said proposal having no alternative. But the defendants failed to pay the said Rs.1.50 crores as proposed by them.

2.3) Thereafter, on enquiry, the plaintiff came to know that the 2nd defendant was residing at Ambaranirappel village near Pala in

Kottayam District, Kerala. The plaintiff visited the 2nd defendant at

Kottayam on several occasions. During one such visit on 30.03.2022, the 2nd defendant agreed to pay ₹1.50 crores by issuing three post- 4 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

dated cheques of ₹50 lakhs each and further agreed that, if the cheques were dishonoured, the plaintiff would be entitled to recover the original amount of ₹3.56 crores together with interest. On 21.04.2022, the 2nd defendant issued three cheques bearing

Nos.000046, 000047 and 000048 drawn on ICICI Bank, Panampilly

Branch, Kochi, for ₹50 lakhs each, payable in April, May and June 2022 respectively. The plaintiff was compelled to sign a settlement agreement dated 21.04.2022 treating ₹1.50 crores as full and final settlement of the claim, with the hope that at least he would get that amount, though not the total due of ₹3.56 crores.

2.4) But, the said three cheques were dishonoured and returned unpaid vide return memos dated 11.07.2022 with the endorsement “funds insufficient”. Consequently, the plaintiff filed

C.C.No.741/2022 under Section 138 of the Negotiable Instruments

Act before the Court of the First Class Judicial Magistrate, Kaikalur.

The defendants and Kandasamy Natarajan had encashed the sale proceeds of seafood received in Dubai and brought the proceeds into

India through illegal hawala channels. A criminal complaint for cheating and breach of trust was also lodged against them.

2.5) The settlement agreement dated 21.04.2022 was entered into within two years from the date of contract and that the defendants, by issuing cheques and entering into the settlement agreement, acknowledged their liability. Hence, the suit is within limitation. The cause of action arose within the territorial jurisdiction of the Commercial Court at Vijayawada, as the shrimp was procured, processed, packed and dispatched from Kaikalur and Machilipatnam.

2.6) The particulars of the suit claim are as follows:-

i) Cost of frozen shrimps supplied under contracts/orders between 08.06.2020 and 15.07.2020 is ₹3,55,94,650/-.

5 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

ii) Interest at 24% per annum on Rs.3,55,94,650/- from 03.08.2020 to 02.08.2023 is ₹3,22,34,477/-.

iii) Further interest at 24% per annum on Rs.6,78,29,127/- from 03.08.2023 to 08.05.2024 is ₹1,24,35,339/-.

Thus, the plaintiff claimed a total suit amount of ₹8,02,64,466/-.

2.7) Hence, the plaintiff prayed for passing a decree directing the defendants jointly and severally to pay ₹8,02,64,466/- together with future interest at 24% per annum from 09.05.2024 till realization, costs of the suit, and such other reliefs as the Court deems fit and proper in the circumstances of the case.

3) After registration of the suit, this Court issued summons to the defendants. On 07.10.2025, one T.Mallikharjuna Rao, Advocate filed an offer memo expressing his intention to file vakalat on behalf of defendant Nos.1 and 2. However, the said Advocate did not turn up on the later dates and no Vakalat was filed on behalf of the said defendants.

3.1) Despite the offer memo by the said advocate, this Court ordered fresh summons to the defendants 1 and 2. The plaintiff filed

Postal Track showing that the summons of the 2nd defendant was served. The 1st defendant is the firm represented by the 2nd defendant. Despite service of summons, defendant Nos.1 and 2 failed to appear before this Court and accordingly they were set ex parte as per Docket Order dated 31.12.2025. Thus, there is no contest from the side of the defendants.

4) In order to substantiate the case of the plaintiff, the authorised agent of the plaintiff firm viz., Kodati Venkata

Subrahmanyam was examined as PW.1. Through PW.1, the plaintiff got marked Exs.A1 to A23.

6 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

5) Heard the counsel for the plaintiff. Perused the material papers.

6) Now, the point for consideration is –

Whether the plaintiff is entitled for recover of ₹8,02,64,466/- with interest and costsfrom the defendants, as prayed for?

Point:-

7) PW.1 reiterated the plaint averments in his chief- examination affidavit and deposed that the defendants purchased frozen shrimp from the plaintiff and failed to pay the consideration amount. He further deposed regarding execution of settlement agreement dated 21.04.2022 and issuance of cheques by the 2nd defendant. The evidence of PW.1 clearly discloses that the plaintiff supplied frozen shrimp to the defendants pursuant to the purchase orders/contracts dated 08.06.2020 and 15.06.2020 and exported the same to Dubai between 23.06.2020 and 03.08.2020.

7.1) The documentary evidence produced by the plaintiff also establishes that, though the total shipment value was USD 5,25,400/- the defendants made only part-payments aggregating to USD 50,000/- and failed to pay the balance amount. Exs.A5 to A10, being commercial invoices, purchase orders and bills of lading; clearly establish export of frozen shrimp consignments by the plaintiff to the defendants. Ex.A11 statement of account coupled with Ex.A12 certificate under Section 65-B of the Indian Evidence Act establish the outstanding liability due from the defendants. Ex.A13 settlement agreement further establishes acknowledgment of liability by the 2nd defendant. Ex.A14 consisting of dishonoured cheques and return memos substantiates the plaintiff’s case that the defendants failed to

honour their commitment. Exs.A17 to A20 issued by SBI Kaikaluru

7 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

Branch also corroborate dishonour of the cheques issued by the 2nd defendant.

7.2) The defendants remained ex parte and there is absolutely no rebuttal to either the oral testimony of PW.1 or the documentary evidence filed by the plaintiff. The evidence adduced by the plaintiff remained unchallenged and there are no circumstances to disbelieve the same. From the oral and documentary evidence available on record, this Court is satisfied that the plaintiff successfully established that the defendants are jointly and severally liable to pay the suit amount to the plaintiff. Though the plaintiff claimed interest at 24% per annum, this Court is inclined to grant interest at 12% p.a. from the date of suit till the till realization to meet the ends of justice.

8) In the result, the suit is decreed with costs in favour of the plaintiff and against defendant Nos.1 and 2 jointly and severally for a sum of Rs.8,02,64,466/- (Rupees Eight Crores Two Lakhs Sixty Four

Thousand Four Hundred and Sixty Six only) together with interest at 12% per annum from the date of filing of the suit, till realization of the entire decretal amount.

Typed to my dictation by the Stenographer of this Court, corrected and

pronounced by me, in the Open Court, on this the 6th day of May, 2026.

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.

APPENDIX OF EVIDENCE

Oral Evidence

For Plaintiff: For Defendants:

PW.1: Kodati Venkata Subrahmanyam -- None -- 8 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

Documentary Evidence

For Plaintiff:

Ex.A1: Non Starter Report issued by DLSA Krishna Ex.A2: Certified Copy of Partnership Firm Registration Certificate, dt.12.08.2016 of the plaintiff. Ex.A3: Copy of Partnership Firm Deed, dt.24.07.2013 of the plaintiff. Ex.A4: Letter of Authorization dt.01.04.2022 in favour of PW.1 Ex.A5: Office copy of Commercial Invoice dt.23.06.2020 along with purchase order and bill of lading. Ex.A6:Office copy of Commercial Invoice dt.30.06.2020 along with purchase order and bill of lading. Ex.A7:Office copy of Commercial Invoice dt.02.07.2020 along with purchase order and bill of lading. Ex.A8:Office copy of Commercial Invoice dt.06.07.2020 along with purchase order and bill of lading. Ex.A9:Office copy of Commercial Invoice dt.21.07.2020 along with purchase order and bill of lading. Ex.A10:Office copy of Commercial Invoice dt.03.08.2020 along with purchase order and bill of lading. Ex.A11:Statement of account of the defendant in the records of plaintiff for the financial year 2020-2021, 2021-2022 and 2022-2023. Ex.A12:Certificate under Section 65B of Evidence Act issued by PW.1 in support of Ex.A11. Ex.A13:Settlement of Agreement signed by plaintiff and 2nd defendant dated 21.04.2022. Ex.A14: Copies of cheques bearing Nos.000047, dt.31.05.2022; 000048, dt.30.06.2022 issued by 2nd defendant along with cheque return memos dt.07.07.2022 and 08.09.2022 in favour of plaintiff. Ex.A15: Undated Cheque bearing No.000046, issued by 2nd defendant in favour of plaintiff. Ex.A16:Copy of complaint made to Marine Products Exports Development Authority (MPEDA) by the plaintiff against the defendants. Ex.A17:Certificates issued by SBI Kaikaluru about return of cheque bearing No.000047, dt.31.05.2022. Ex.A18:Statement of account issued by SBI Kaikaluru, dt.07.07.2022 showing return of the cheque bearing No.000047, dt.31.05.2022.

9 COS No.19 of 2024 Special Court for Trial and Disposal of

Dated 06.05.2026 Commercial Disputes, Vijayawada.

Ex.A19:Certificates issued by SBI Kaikaluru about return of cheque bearing No.000048, dt.30.06.2022. Ex.A20:Statement of account issued by SBI Kaikaluru, dt.08.09.2022 showing return of the cheque bearing No.000048, dt.30.06.2022. Ex.A21:Certificate issued by the Auditor of the plaintiff confirming trade receivable balance for the financial year 2020-2021. Ex.A22:Audit report for the financial year 2020-2021. Ex.A23:Certified copy of complaint filed by the plaintiff against the defendants under Section 138 NI Act.

For Defendants: -- Nil --

Sd/- G.Bhupal Reddy

Judge, Special Court for Trial

and Disposal of Commercial Disputes, Vijayawada.