R.F.A. No. 27 of 2005

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE C.S. SUDHA WEDNESDAY, THE 18[TH] DAY OF OCTOBER 2023 / 26TH ASWINA, 1945** **RFA NO. 27 OF 2005** **AGAINST THE JUDGMENT AND DECREE DTD.31/03/2004 IN OS 37/2004 ON THE FILE OF SUB COURT, CHERTHALA** ## **APPELLANTS/DEFENDANTS 1 TO 3:** - **1 M/S.AMEENA ENTERPRISES, AP X/154a, CHANDIROOR, ALAPUZHA, REPRESENTED BY APPELLANTS 2 AND 3.** *** 2 V.B.ABDUL AZEEZ, MANAGING PARTNER M/S.AMEENA ENTERPRISE, RESIDING IN, VELIMPARAMBIL HOUSE, CHANDIROOR, CHERTHALA, ALAPUZHA. * (DIED LRS IMPLEADED) 3 V.A.SUHRA, PARTNER, DO. DO. (DEFENDANTS 1 TO 3 IN OS 37/97) ADDITIONAL A4 TO A6 IMPLEADED ADDL.4 SAJEENA, D/O (LATE) V.B. ABDUL AZEEZ, KOLLIYIL HOUSE, RID TALE BRANCH ROAD,FORT KOCHI, ERNAKULAM682501. ADDL.5 SULFIKAR V.A. S/O.(LATE) V.B.ABDUK AZEEZ, AMEENA HOUSE, CHANDIROOR, ALAPPUZHA, PIN 688547. ADDL.6 SUMAIZE V.A. S/O.(LATE) V.B.ABDUK AZEEZ, AMEENA HOUSE, CHANDIROOR, ALAPPUZHA, PIN 688547.** **THE LEGAL HEIRS OF DECEASED 2ND APPELLANT ARE IMPLEADED AS ADDITIONAL APPELLANTS 4 TO 6, VIDE ORDER DATED 3.10.16 IN I.A.2362/16.** **BY ADVS.SRI.V.SATHEESH SRI.A.KRISHNAN** ## **RESPONDENTS/PLAINTIFFS & 4TH DEFENDANT:** - **1 PROCESSOR AND EXPORTER OF FROZEN CANNED FOODS, M/S.M.K.FISHERIES,PALLURUTHY, KOCHI,REP. BY C.P.PRABHA, MANAGING PARTNER, M/S.AMEENA ENTERPRISES, R/A MIG 408,PANAMPALLY NAGAR, KOCHI FROM M.P.MANDIRAM, CHAVARCODE, PARIPPALLY,KOLLAM.** 2 ## **R.F.A.No. 27 of 2005** - **2 C.HAREENERA JOY, PARTNER, DO. RESIDING IN XLIII/1396, ST.BENEDICT ROAD, KOCHI FROM DO. DO.** - **3 MS.ADANI EXPORTS LTD., REPRESENTED BY ITS MANAGING DIRECTOR, ASIA HOUSE, NEAR SWASLIKCHAR RASTA, NAVARANGPURA, AHMEDABAD.** **BY ADVS.SRI.ELVIN PETER P.J. SRI.JOSEPH MARKOSE (SR.) SRI.MATHEWS K.UTHUPPACHAN SRI.S.RAMESH** **THIS REGULAR FIRST APPEAL HAVING COME UP FOR FINAL HEARING ON 13.10.2023, THE COURT ON 18.10.2023 DELIVERED THE FOLLOWING:** **R.F.A.No. 27 of 2005** 3 ## **C.S.SUDHA, J.** **--------------------------------------R.F.A.No. 27 of 2005 -----------------------------------------** ## **Dated this the 18[th] day of October, 2023** ## **J U D G M E N T** This appeal under Order XLI Rule 1 CPC has been filed by defendants 1 to 3 in O.S.No.37/1997, a suit for damages, on the file of the Subordinate Judge's court, Cherthala. The trial court by the impugned judgment dated 31/03/2004 partly decreed the suit. The respondents herein are the plaintiffs and the 4[th] defendant. The parties will be referred to as described in the suit. 2. The case of the plaintiffs in brief is - the first plaintiff is a partnership firm established in the year 1970. The Firm enjoys very high reputation among overseas buyers of processed fish and other fish products. The Food and Administration Authority of the United States of America has given the plaintiff Firm, 'A' certificate and thereby the products processed and packed in the plant of the Firm gets automatic clearance from the customs department in the US. The first defendant is also a partnership firm engaged in the business of exporting fish products. Defendants 2 and 3 are **R.F.A.No. 27 of 2005** 4 the partners of first defendant Firm. The 4[th] defendant Company is an exporter. On 14/01/1991, the plaintiffs and the first defendant entered into an agreement whereby the former agreed to process and pack food belonging to the first defendant Firm in the plant of the plaintiffs. The initial period of the agreement was from 17/01/1991 to 16/01/1992. Thereafter the period of agreement was extended, which was to expire on 14/09/1994. Though the period of the agreement was to expire on 14/09/1994, processing and packing of the goods of the first dependent for export, was undertaken by the plaintiff's plant upto 21/05/1994 only. After the termination of the contract, in pursuance of a purchase order obtained by the defendant, the first defendant on 30/09/1994, shipped several cartons of frozen shrimp to USA. Pursuant to the purchase order, the goods were processed by the first defendant in the processing facility belonging to the first defendant. It was packed in the plant belonging to the first defendant. However, in order to make unlawful gain for themselves and to tarnish the image and reputation the plaintiffs, the first defendant shipped frozen marine items unworthy of human consumption after making a wrong entry in the packing list that it was the plaintiff Firm who was the processor and packer. The goods shipped by the first defendant was inspected by the Food and Drug Administration of USA and during random checking, it was found that the goods contained **R.F.A.No. 27 of 2005** 5 Salmonella, a poisonous and deleterious bacteria. Therefore the US customs on 23/01/1995 refused entry of the goods. The first defendant thus committed an offence of cheating. On the mistaken impression that the consignment had been packed in the plant belonging to the plaintiff, the plaintiff's name was removed from the 'A' list of the Food and Administration USA on 14/03/1995. The reputation and goodwill earned by the plaintiff Firm by honest dedicated work for a quarter of a decade was thus lost. A criminal complaint was also preferred by the plaintiffs against the aforesaid act of cheating by the defendant. Due to the loss of reputation and name, the plaintiff Firm has sustained considerable loss in the business. Hence, the plaintiffs sent a lawyer notice claiming damages. In the reply notice, the first defendant has claimed that 325 master cartons shipped under purchase order No.KPSC 111/94-95 dated 01/09/1994 had been processed and packed in the plaintiffs' plant at Palluruthy which is incorrect and false. Under normal conditions, the plaintiffs would have exported goods worth ₹5,00,00,000/and out of the same, 40% would have been sent to USA. The plaintiffs had been regularly exporting fish products on the basis of 'A' status facility to M/s.Oriental Foods INC, Los Angeles U.S.A. and M/s.Terry Harris Foods INC, Newyork, U.S.A. Thus, the plaintiff could have earned a profit of ₹50,000/- in the year 1995. The plaintiff could have earned an amount of ₹11 **R.F.A.No. 27 of 2005** 6 lakhs as profit during the year 1996. Due to loss of reputation, the plaintiff could not earn the expected profits and the loss of future profits is estimated at ₹10 lakhs. The plaintiffs were removed from 'A' list due to a wrong declaration made by the defendant. Thus a claim for damages to the tune of ₹20 lakhs with interest was made against the defendants. 3. Defendants 1 to 3 filed written statement denying the plaint allegations. The goods belonging to the defendants were processed and packed at the plaintiffs' plant. The disputed shipment contained goods which were processed in the plaintiffs' plant. It is the defendants who are entitled to get damages from the plaintiffs for the low quality of processing done by them. 4. The fourth defendant filed separate written statement disputing the plaint allegations and contending that they have no liability to pay the plaint claim. 5. On completion of pleadings, necessary issues were framed by the trial court. PWs.1 to 3 were examined and Exts.A1 to A23 were marked on the side of the plaintiffs. Dws.1 and 2 were examined and Exts. B1 to B14 were marked on the side of the defendants. Exts.X1 to X4 were also marked. On an appreciation of the oral and documentary evidence and after hearing both sides, the trial court by the impugned judgment, partly decreed **R.F.A.No. 27 of 2005** 7 the suit by which defendants 1 to 3 have been held liable to pay the plaintiffs an amount of ₹25,000/- with interest at the rate of 6% per annum from the date of suit till realization and costs from defendants 1 to 3 and their assets. Aggrieved, defendants 1 to 3 have come up in appeal. 6. The only point that arises for consideration in this appeal is whether there is any infirmity in the findings of the court below calling for an interference by this Court. 7. Heard both sides. 8. The plaintiffs in the suit claimed damages to the tune of ₹20,00,000/- with interest at the rate of 12% per annum and in the event of non payment to pass a decree for an amount of ₹20,00,000/- with future interest at the rate of 12% per annum from the assets of the first defendant and its partners and also from the person of the partners. The trial court held that injurious falsehood has been proved. Due to the injurious falsehood, there was a temporary loss of reputation to the plaintiff which was thereafter restored and hence the plaintiffs has been held entitled to general damages for the mental agony suffered by its owners during the interregnum period when they lost 'A' status due to the injurious falsehood committed by defendants 1 and 2. Nominal general damages of ₹25,000/- for the loss of reputation for a short period of time has been awarded. A decree for **R.F.A.No. 27 of 2005** 8 realisation of an amount of ₹25,000/- with interest at the rate of 6% per annum from the date of suit till realisation and costs from defendant 1 to 3 and their assets has been granted. 9. In the appeal memorandum though challenge to the entire impugned judgment has been made, at the time of the arguments the challenge has been confined to only the costs awarded by the trial court. According to the defendants/appellants the plaintiffs sought for a decree for ₹20,00,000/-, but was awarded only ₹25,000/- and hence the plaintiff is entitled to proportionate costs only and so the trial court ought not to have granted the entire costs. On the other hand, it was submitted by the learned counsel for the plaintiffs/respondents that they are entitled to realise the entire costs of the proceedings from the defendants and their assets. In support of this argument reference is made to the decisions in **Uflex Ltd. v. Government of Tamil Nadu, 2021 (5) KLT Online 1015 (SC** ), **Crompton Greaves Ltd v. Icon Integrated Industries and Software Ltd., 2021 (3) KLT 377 (DB)** , **Sanjeev Kumar Jain v. Raghubir Singh saran Charitable Trust, 2011 (4) KLT 966 (SC)** and **Salem Advocate Bar Association, T.N. v. Union of India, 2005 (6) SCC 344** . 9.1. The learned counsel for defendants 1 to 3/appellants on the other hand drew my attention to order dated 04/07/2005 of this Court which reads 9 ## **R.F.A.No. 27 of 2005** thus - _“This is a petition for granting permission to the appellants/petitioners to deposit Rs.50,000/- and to modify the condition for furnishing security for the entire amount challenged in the appeal. We notice that the trial court has granted a decree only for Rs.25,000/- and the balance amount represents the cost portion of the decree which is Rs.1,49,892.50. As the trial court should not have granted the entire cost as the decree itself was only for Rs.25,000/- and the plaintiff is entitled only for proportionate cost, we modify the order and direct the appellant to deposit Rs.50.000/- before the execution court. On such deposit the liability to furnish collateral security for the balance amount will stand vacated.”_ Reference was also made to the dictums in **Precious Blood Missionaries v. Nishanth Luize** , **2022 (5) KHC 317** and **N.S.S. Medical Mission Hospital** ## **v. Sulbeth Beevi, 2009 (2) KHC 111** . 10. In the decisions relied on by the learned counsel for the plaintiffs/respondents, it has only been held that normally, costs should follow the event and the successful party is entitled to costs unless there are good grounds for depriving him of that right. In none of the decisions, it has been held that even if the plaintiff succeeds only partially the defendant would be liable for the entire costs of the litigation incurred by the plaintiff. On the other hand, in **Precious Blood Missionaries** _(Supra_ ) relied on by the defendants/appellants, it has been held that it is settled law that costs should 10 ## **R.F.A.No. 27 of 2005** follow the event and that it should be proportionate to the success or failure of the parties. Relying on the decision in **Malabar Motor Transport Cooperative Society v. Amu, 1985 KLT 107** and several other decisions, it has been held that costs received or given should be in proportion to the success or failure in respect of the suit claim by the respective parties. That being the position, the plaintiffs would be only entitled to proportionate costs as the suit has only been partly decreed. In the result, the appeal is partly allowed. The decree of the trial court granting damages to the tune of ₹25,000/- with interest @6% per annum from the date of the suit till realization and costs is confirmed. It is made clear that the plaintiffs would be entitled only to proportionate costs. Interlocutory applications, if any pending, shall stand disposed of. Sd/- **C.S.SUDHA** **JUDGE** ami/