The agent of a disclosed principal can be held liable for breach of contract. The duty to mitigate loss does not give a right to the party in default to avoid the claim for damages. Duty drawback does not imply receipt of consideration.

JUDGMENT :

1. This appeal is directed against a judgment and decree dated 18th October, 2014, passed by the learned Judge, City Civil Court, Bombay in SC Suit No.7175 of 1997 (the High Court Suit No.1861 of 1997).

2. For the sake of convenience and clarity, the parties are hereinafter referred to in the capacity in which they were arrayed before the trial Court.

3. Respondent no.1 (plaintiff) is a proprietary concern. It was engaged in the business of apparels. Respondent no.3 (defendant no.1) is an entity operated by respondent no.4 (defendant no.2), Allcargo Container Lines Ltd., a company registered under foreign laws. Appellant (defendant no.3) Allcargo Logistics Limited (Formerly known as Allcargo Movers (India) Pvt. Ltd.), is a company incorporated under the Companies Act, 1956. Respondent no.2 M/s. Walford Meadows Ltd. (defendant no.4) was the agent of defendant nos.1 to 3. The plaintiff asserted that defendant nos.1 to 3 are interrelated/sister companies and/or belong to and/or managed by the same group of companies.

4. In or about July, 1996, the plaintiff entered into contracts with M/s. Universal Apparel (EPZ) Ltd. Kenya (“M/s. Universal”) for the sale of Cotton Knitted fabrics and other allied accessories valued US$ 98,715.29. The plaintiff entrusted the goods to defendant nos.1 to 3 for carriage and delivery, from the Port of Bombay to Mombassa. Defendant no.3 issued six Bills of Lading. Each of those six Bills of Lading were made out, “TO ORDER” signifying that the delivery of the six consignments shipped thereunder was to be given only upon production and surrender of the original Bills of Lading to the defendants.

5. The ships carrying the consignments arrived at the Port of Mombassa. The plaintiff learnt that, in breach of express condition of the delivery of the consignments only upon production of the original Bills of Lading, two consignments shipped through “CMBT TANA” and “CMBT KILIMANJARO” were delivered to the consignee without production of the Bills of Lading. The plaintiff immediately called upon defendant no.3 to look into the matter and make amends as the delivery was effected in breach of express term of the Bills of Lading. The plaintiffs were given to understand that two of the rest of the consignments were under clearance. Defendant no.3 instructed defendant no.4, its agent at Mombassa, not to deliver the consignments without production of the original Bills of Lading. The plaintiff lodged a formal claim with defendant no.3 for damages in the sum of US$ 84,353.00 for wrongful delivery of the goods vide communication dated 14th September, 1996.

6. In the meanwhile, on 19th September, 1996, defendant no.4 addressed a communication to M/s. Universal, the consignee, inter alia, confirming that four consignments were delivered to the consignee without presentation of the original Bills of Lading. Thereupon the plaintiff’s addressed a legal notice on 30th September, 1996 to the defendant nos.2 to 4 calling upon them to pay a sum of US$ 1,00,000 being the damages suffered by the plaintiff on account of breach of the terms of contract. The defendants did not apprise the plaintiff about the fate of the rest of the two consignments as well. Thus, the plaintiff was constrained to presume that the rest two consignments were lost. In any event, the goods shipped under rest two consignments were an intergral part of, and complementary to, the four consignments, which were wrongfully delivered and, thus, the goods in the last two consignments had also lost their utility. The plaintiff avers the defendants took an incorrect stand that the plaintiff had advised M/s. Universal to re-deliver the goods to M/s. Fashionette Industries Ltd.

7. The plaintiff asserts the defendants were duty bound to deliver the consignments covered under the Bills of Lading only upon presentation of the original Bills of Lading under the