Oehri International Trading Co v Donald & McArthy

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 26 June 1998
• Neutral Citation: [1998] SGHC 212
• Docket Number: Suit No 1951 of 1993
• Date: 26 June 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: Jimmy Yim SC and S Sivananthan (Drew & Napier)
• Citation: [1998] SGHC 212
• Defendant Counsel: Abdul Rashid bin Abdul Gani and Timothy Tan (Khattar Wong & Partners)
• Court: High Court (Singapore)
• Subject Matter: Commercial Transactions,Whether caused by blacklisting of supplier,Contract for supply of goods for delivery in Bombay,Whether breach of warranty of quiet possession,Detention of goods by Indian customs authorities,s 12(2) Sale of Goods Act (Cap 393),Sale of goods

Judgment:

CHAO HICK TIN J

The plaintiffs, Oehri International Trading Co Establishment (Oehri), are a company incorporated in November 1992 under the laws of Liechtenstein. The defendants, Donald & McArthy Pte Ltd (D&M), are a private limited company incorporated in Singapore. One Mr Vinod Kumar Didwania (DW1) holds all but one of the five million paid up shares (each of $1 value) of D&M. The one share is held by his wife.

2.By this action Oehri claimed for reliefs for breach of contract under two contracts entered into with D&M for the supply of copper wire rods (in eight containers) and copper wire bars respectively, for delivery at Bombay and which were not delivered. At the commencement of the trial, Oehri abandoned their claim in respect of the contract for the copper wire bars as the bars were released by the Bombay Customs authorities and delivered to Oehri`s sub-purchaser though with a slight delay of some 20 days only. Oehri said as their loss as a result of that delay was small, they no longer wished to pursue that claim. The only remark I would make here is that the claim should have been withdrawn earlier. It will affect the question of costs.

3.The bases of Oehri`s claim in respect of the copper rods contract for which they paid $333,993.53 are two-fold. First is that D&M by their past conduct, namely, wrongful or tortious acts in schematically defrauding the Indian authorities, had put the shipment of the copper rods in serious danger of detention/confiscation and the copper rods were so detained/confiscated by the Indian authorities. This is the blacklisting point. Second, damages for breach of s 12(2) of the Sales of Goods Act in that Oehri`s quiet possession of the goods was disturbed by the lawful acts of third parties, ie the Indian Customs authorities.

4.With regard to the first basis, what Oehri sought to show to the court is that D&M were in the habit of shipping goods to `benami` (meaning non existent) companies in India with a view to defrauding Indian Customs, as was done in this particular transaction. The shipment of eight containers of copper rods was destined for such a company - CMG Insulators (CMG) - before Oehri came into the picture.

5. Background facts

On 1 July 1993 Oehri agreed to sell to Hindustan Transmission Products (HTP), a public listed company in India, approximately 200 metric tons of `Electrolytic Continuous Cast Copper Rods in Coils 8 mm dia ASTM ... of Zambian origin`, at the consideration of a premium of US$180 above the official London Metal Exchange (LME) price per metric ton, with delivery `not later than by end of July 1993.` HTP were and are in the business of manufacturing copper winding wires and the raw material for that is copper wire bars and copper wire rods.

6.From 23 to 26 July 1993, one SK Jajodia, a son of the Chairman of HTP, negotiated with D&M for the purchase of the copper rods. Jajodia informed D&M that the documents should specify HTP as the notify party, and Oehri as purchaser. On 26 July 1993 Oehri signed the formal contract with D&M for the purchase of approximately 168 metric tons (+-5%) of copper wire rods to be shipped in eight containers. Later, on presentation of the shipping documents, Oehri duly paid for the shipment. On the evidence it is clear to me that as between Oehri and HTP, the former was effectively the financier of the latter in the purchase.

7.To facilitate the speedy delivery of the copper rods upon the vessel`s arrival in Bombay, Oehri requested D&M for copies of the bills of lading to be sent over first by fax. The vessel on which the goods were shipped was `SOCOL 5`. On 18 August 1993, Oehri received by fax 16 bills of lading dated 31 July 1993 (there being, as requested, two bills of lading [B/L] for each container of goods) with `To Order of Swiss Bank Corporation, 6 Battery Road, Singapore` as consignee and `HTP` as notify party. (This fax version of the 16 B/L is hereinafter referred to as `the fax B/Ls`). Oehri in turn faxed them over to HTP. Although on these fax B/Ls HTP appeared as the notify party, Oehri said that what, in fact, appeared as `notify party` on the B/L proper was CMG and D&M had, without authority, altered it to read HTP before faxing it over to Oehri. It was clear from each fax B/L that there are different type faces on it. However, DW1 asserted that that was the exact form he received from Inshimbi, the producers from Zambia. DW1 also claimed that the original documents involving Inshimbi were in a briefcase which he lost in a taxi.

8.The amended B/L with HTP as the notify party was only sent out by the shipowners on 23 August 1993 after the first set of B/Ls was returned to them by the bankers of D&M. It seems to me that the first set of B/Ls could not have `HTP` as the notify party. So the question is who made the alteration to the fax B/Ls. It was suggested that perhaps what D&M faxed to HTP was a draft which it received from Inshimbi: see the fax of 18 August 1993 (p 225 of DW1`s affidavit of evidence-in-chief) between the shipping agents in Ndola and Antwerp, where a draft amended B/L was checked by the shipping agents in Ndola. Much has been made of this alteration. I do not think even if the amendments were unilaterally made by D&M that that shows any fraudulent intention on D&M`s part as goods may only be delivered against an original B/L or an amended B/L. No payment would be made except against an original B/L or amended B/L. No delivery could be obtained based on a fax copy, unless a valid indemnity is given. As early as the date (26 July 1993) on which the deal was struck between Jagodia and D&M, Jajodia had already instructed D&M to specify HTP as the notify party in the B/Ls. Though the authenticity of a fax from Inshimbi (on p 236 of the affidavit of evidence-in-chief of DW1) is not admitted by Oehri it seems to show that the instruction of Jajodia was carried out. I cannot see any reason why that instruction would not be carried out by D&M.

9.The shipment of copper rods arrived in Bombay on or about 21 August 1993 (para 10 of the amended statement of claim). On 30 August 1993 Oehri enquired of D&M why the original documents in respect of the shipment had not arrived at Oehri`s bankers and expressed concern about the demurrage charges which were accumulating. On 1 September 1993 D&M forwarded to Oehri 16 unsigned `non-negotiable bills of lading` (the unsigned B/L) and a `no-objection certificate` addressed to the ship`s agents in Bombay, CMB Transport, giving authority to the agents to release the cargo of copper rods to the consignee against an indemnity. D&M also explained to Oehri that the certificate from D&M should suffice to obtain the release of the cargo because D&M had already paid the Swiss Bank and in turn the documents had been endorsed in favour of D&M. On 7 September 1993 D&M advised Oehri that they would pay the demurrage charges.

10.On 10 September 1993, HTP informed Oehri that they could not file the bill of entry with the Indian Customs because the import general manifest (IGM) showed that the notify party was not HTP but CMG.

11.On 13 September 1993, 16 B/Ls were received by Oehri`s bankers (`the second set`). The second set of B/Ls is different from the fax B/Ls, and among the differences are these (i) in the second set the consignee was stated `to order` and (ii) unlike the fax version, the font of the entire document (of the second set) was the same. Following the receipt of the second set of B/Ls, Oehri authorized their bankers to pay D&M.

12.Shortly after payment was made, Oehri was informed by HTP that the copper rods had been detained by the Customs Department and the Central Economic Intelligence Bureau of India because D&M`s principal shareholder, Vinod Kumar Didwania (DW1), his family and CMG had been blacklisted by the Indian Customs. Oehri belatedly tried to stop the payment to D&M but without success.

13.Following the seizure of the goods, on 16 September 1993, CMB Transport filed an application with the Indian Customs to amend the Customs manifest so that HTP would be the notify party rather than CMG. On 17 September 1993 Mr SK Bothra, the Chief Executive of HTP, spoke to a Customs Officer and was told that the goods would not be released because the shipper, D&M, had been blacklisted and were under investigation by the Customs Intelligence Unit (CIU) due to various Customs related offences. A few days later Bothra saw an officer of the CIU and was similarly told of the position. Of course, this aspect of Mr Bothra`s evidence is hearsay.

14.Because of the Indian Customs` delay in dealing with the application to amend, HTP filed Writ Petition 2388/93 in the Bombay High Court praying for an order to direct the Indian Customs to grant the application to amend the IGM and release the goods. The High Court gave an order requiring the Indian Customs to consider the application.

15.On 29 December 1993, an Assistant Collector of Customs, one Mr Guale, having considered the application to amend, refused it and in his grounds he stated, inter alia, the following:

Investigations, documents/statements tendered by the steamer agents ... reveal that the goods in question were originally shipped by (D&M) to one M/s Star Wire and Cable Industries, Delhi, which was later amended to M/s CMG Insulators (Indian), Culcutta, whose name is also mentioned in the IGM filed by the steamer agents; that in respect of these goods originally bills of lading dated 31.7.93 showing the name of M/s CMG Insulators ... as the `Notify Party` were issued by the steamer agents, which the shippers subsequently requested to amend in favour of HTP and others and that a second set of bills of lading was issued after filing of the IGM, but showing the date 31.7.93, showing the names of these parties as notify party.

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I have carefully gone through the case records and submissions made by the parties. The issue involved in this case is the amendment in the

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