Lawyers Directory Listing
Chat with us free on WhatsApp — tell us your city and legal matter and our team connects you with the right lawyer. No form, no fee.
Suit No. 77 of 1957, decided on 20th October 1961.
Art. 135‑Contract made on behalf of Central Government‑Suit on basis of contract by Govern ment‑Objection that person executing such contract had no authority to do so‑Cannot be taken if defendants had admitted in written statement that Government had entered into contract with them.
Art. 135 --‑ Contract executed in foreign country‑Objection that formalities mentioned in Art. 135 were not complied with‑Held, misconceived. < [if supportLineBreakNewLine]>
Dicey's Conflict of Laws, Rule 140 ref.
Ss. 2(g) & 65‑Contract found to be unenforceable or void' within meaning of S. 2(g)‑Aggrieved party can claim compensation under S. 65.
Dharmeswar v. Union of India A I R 1955 Assam 86 ref.
Charter‑party agreement --Endorsement in bill of lading that terms of charter apply to and govern rights of parties‑Terms of charter to govern bill of lading.
Scrutton on Charter‑parties (16th Ed.), p. 53 ref.
Discharging cargo‑Commence ment and ceasing of operation.
The operation of discharging cargo commences from the moment the goods are moved from the place where they are stowed for the purpose of discharging them, and ceases as soon as they are out of the gear which is used in that operation, and sometime while they are yet in it.
Goodwin, Ferreira & Co. v. Lamport & Holt (1929) All. E R Rep. 623 ref.
1936, Ss. 3(2) & 4(2)(i)‑Covenant, between shipper and carrier, lessening liability of carrier under S. 3(2)‑Duty to discharge goods becoming duty of consignee by terms of covenant‑Carrier would still be liable if loss of goods be occasioned by intervention on behalf of carrier in perfor mance of such duties of and by consignee‑Carriage of Goods by Sea Act (XXVI of 1925), Sch. Art. VI.
Under section 3(2) of the Carriage of Goods by Sea Act, (U. S. A.) 1936 the duty of the carrier was to "properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried" but by agreement between the parties the carrier had been exempted from the "risk and expense" of discharging them, Accepting this responsibility the consignee engaged stevedores and during the operation of discharging the cargo, the officers of the ship who could supervise the work of the stevedores to watch only that the lives on board and the ship were safe, did more than this and intervened In the operation of dis charging the cargo and thus created a situation which facilitated the theft of cargo occasioning loss to the shipper of goods. In a suit for damages brought by the shipper it was argued on behalf of the carrier that the contract of carriage being "free of risk and expense" of discharge, the carrier did not have to and did not engage the stevedores who were engaged and paid for by the consignee and as such the carrier could not be said to have caused the loss and were, therefore, not liable:
Held, that by a provision in contract of carriage that the shipper or consignee is to be responsible for loading or dis charge, a liberty to tranship, a stipulation as to the termini of the voyage, or a liberty to deviate, the carrier can be relieved from the liability for loss arising from negligence, fault or failure in the duties and obligations imposed by subsection (2) of section 3 of Carriage of Goods by Sea Act (U. S. A.) 1936 yet the carrier would be liable for loss if intervention on behalf of the carrier in the performance of the duties, which by contract had become the duties of the consignee, has contributed to the loss.
Canadian Trans. Co. v. Court Line (1940) 3 All. E R 112 and Carvers' Carriage of Goods by Sea (Tenth Ed.) p. 193 ref.
, 1936 S. 1(c) "Carriage of goods" and "contract of carriage" ‑-- Distinction-- Carriage of Goods by Sea Act (XXVI of 1925), Sch., Art. I, (b) & (e).
The term "carriage of goods" in section 1(c) of the Carriage of Goods by Sea Act (U. S. A.), 1936 covers the entire process from the moment loading commences to the completion of the discharge of cargo from the ship, but the term "contract of carriage" includes rights and obligations outside the scope of the term "carriage of goods". It brings within the application of the Act the obligation of the carrier to deliver the goods to the consi gnee in terms of the bills of lading.
"Stevedores"‑Defined.
The stevedores are professional men who exercise their pro fession under licences granted to them by the Port Trust. They are further governed by the contracts made by them with the Port Trust as well as the shipping companies for whom they usually work. Contracts are made with shipping companies because under the Hague Rules stevedores are ordinarily servants or agents of the ship-owners for loading and discharging the ship.
Sch. Art. IV, para 2‑General responsibility of ship owners in respect of goods entrusted to them for carriage‑Carrier to prove exception when loss or damage occurs after shipment and before delivery of cargo.
The general responsibility of ship owners is, in respect of the cargo entrusted to them for carriage, that if the goods‑owner proves that the goods have not been delivered or have been damaged after shipment, the onus shifts on the carrier to bring the cause of damage specifically within Article IV, para 2 of Schedule to the Carriage of Goods by Sea Act, 1925. If the cargo -owner wishes to defeat that plea by proving negligence, the onus is on him to do so.
It is not enough for the ship‑owners to show that the damage done was partly due to some cause for which he is excused if part of the damage is not so caused. He must show how much damage was due to the cause for which he is excused, because it is only In respect of that cause that he can claim protection. If he does not do so, he has failed to show to what extent in money his prima facie liability for the whole ought to be reduced.
Carver: Carriage of Goods by Sea, p. 186; Owners of Cargo City of Baroda v. Hall Line Ltd. (1926) 42 T L R 717 and Scrutton on Charter Parties (Sixth Ed.) pp. 486‑87 ref.
A. A. Zari for Plaintiff.
Permanand for Defendants 1 and 2.
Dorab F. Patel for Defendant 3.
Date of hearing : 16th September 1961.
The plaintiff claims Rs. 26,723‑12 as damages for the loss of 480 bags of sugar, jointly and severally, from defendants No. 1 who are the ship‑owners as well as the carriers of the cargo which was carried from Los Angles, California, U. S. A. by S S. "Hoosier Mariner" to the Karachi Port, from defendants No. 2 who are the agents of defendants No. 1 and from defendants No. 3 who were the ship's surveyors as well as the surveyors appointed by the plaintiff. The facts from which the claim has arisen are that the Embassy of Pakistan in U. S. A. chartered the ship on behalf of the plaintiff by an agree ment (Exh. 69) dated the 17th of April 1956 and entrusted to defendants No. 1 for carriage, 1,96, 259 bags of sugar and three bales of empty bags, in terms of a bill of lading (Exh. 67) and 112 bags of sugar in terms of another bill of lading (Exh. 68). The weight of this cargo is stated 9n the bills of lading. There was other cargo of the plaintiff on board the ship when it reached the Karachi Port but we are not concerned with it excepting to the extent that defendants No. 1 have explained that no loss occurred at the time of unloading that cargo. Exhs. 67 and 68 are clean bills of lading with an endorsement on Exh. 67 that‑----
"all the terms of the said charter (Exh. 69) apply to and govern the rights of the parties concerned in this shipment."
The charter contains Inter alia the following terms:
"Cargo to be discharged by consignee or assignee free of risk and expense to vessel . . . . ."
In terms of the bills of lading‑
"The cargo was to be transported to the port of discharge and there to be delivered."
After the arrival of the ship at the Karachi Port It firstly dis charged the other cargo with which we are not concerned. Then the discharge of the sugar bags commenced on the 7th of July 1956 until it was completed on the 16th of July 1956.
2. The plaintiff's case is that it was its practice in all imports to pack sweepings in hessian (or gunny) bags which used to be supplied by it in order to distinguish the bags of sweepings from the original bags and that the officers of the steamer had ordered that empty and torn bags be packed, along with the sweepings, in the gunny bags for discharging them. This procedure was followed and it was found at the end of the completion of the discharge of the sugar bags that the bags were landed as follows:
|
| Rs. |
| Sound bags | 1,94,890 |
| Torn bags | 896 |
| Empty bags | 105 |
| Shortage | 480 |
3. It will be useful to set out here the salient facts which explain the nature of the disputes. On the 17th of July 1956, defendants No. 2 wrote (Exh. 8) on behalf of the defendants No. 1 to the plaintiff that the plaintiff had departed from the standard practice and discharged a number of torn and empty bags after placing them in gunny bags and that this practice had rendered the tally count of bags unreliable. The plaintiff appointed defendant No. 3 as surveyors who confirmed vide their report described by them as "summary of survey sugar bags," dated the 21st of July 1956 (Exh. 70) that 480 bags had been "short received from ship". On the 23rd of July 1956 the surveyors, however, wrote to the plaintiff another letter (Exh. 9) as follows:
"On rechecking our figures, we find a discrepancy in the statement handed over to your Mr. Bari on Saturday the 21st instant. The statement may, therefore, be treated as can celled."
After a month of the above letter defendants No. 3 prepared two survey reports, one for the plaintiff and the other for defendants No. 2 (Exhs. 37 and 36 respectively) in which the number of sound, torn and empty bags is the same as in Exh. 70 but instead of showing 480 bags as "short received" they have stated in the survey report sent to the plaintiff (Exh. 37) as follows:
"During the process of unloading a number of non‑original hessian bags were found being landed and containing torn and empty original bags. We, therefore, consider the tally un reliable and are unable to account for the 480 bags not recorded in the tally."
In the report (Exh. 36) sent to defendants No. 2 they have stated as follows:
"From our examination of the vessels draught and the loading scales and other data on board we find that a quantity of 8900 tons gross was unloaded from the vessels.
During unloading a number of non‑original hessian bags were found being landed and containing torn and empty original bags.
We, therefore, consider the tally unreliable and are unable to account for 480 bags not recorded in the tally."
4. On the 21st of September 1956 defendants No. 2 repudia ted (Exh. 17) on behalf of defendants No. 1 the claim of the plaintiff, which the plaintiff had made for the loss of 480 bags, on the ground that the tally was found to be unreliable by the surve yors. The plaintiff was perturbed to find this development of the situation and almost openly accused‑defendants No. 3 (Exh. 19) on the 10th of October 1956 of acting for the benefit of defendants Nos. 1 and 2 to the detriment of the plaintiff at the instance of those defendants.
5. On the 18th of October 1956 defendants No. 3 expressed (Exh. 22) to the plaintiff their grievance at the allegation of bad faith made by the Plaintiff against them and inter alia explained the reason for resiling from their first report (Exh. 70) as follows:
"No report or statement issued by a surveyor is valid unless signed by the Principal Officer of the Firm or by a person to whom he has delegated the duty of signing on his behalf. We are, therefore, not going back on a statement but declining to accept an unauthorised signature."
This explanation has been described by counsel for the plaintiff as an "after thought" and untrue because the letter (Exh. 9) by which defendants No. 3 "cancelled" or withdrew their first report (Exh. 70) contained a positive assertion that discrepancies were found in the "figures" on rechecking."
6. The defendants have resisted the suit by taking as many defences as they could think of. Defendants 1 and 2 have sub mitted a common written statement through a common counsel but defendants No. 3 have submitted a separate written statement through a separate counsel. The defences which are common to all the defendants are that (i) the suit is not competent because‑
"The so‑called contracts between the parties relating to the sugar cargo in suit are not enforceable, such contracts not being in conformity with Pakistan Constitutional Law."
that (ii) the full quantity of 8900 tons of sugar had been unloaded from the steamer and that (iii) the first survey report (Exh. 70) was signed on behalf of defendants No. 3 without the authority to do so.
7. Many pleas have been raised on behalf of defendants No. I in addition to the three common pleas mentioned above. (i) In paragraph 5 of their written statement they have pleaded on the basis of the term of the charter reproduced above that they are not responsible for the risk that was involved in discharging the cargo. Consequently they have pleaded in paragraphs 7, 8, 11 and 12 that the whole cargo had been discharged (vide Exh. 46) and that the stevedores were the employees of the plaintiff and not subject to the control of defendants Nos. 1 and 2 excepting for the safety of the ship, its appliances and the lives of those who were on board, (ii) They have pleaded in paragraphs 8 and 10 in this connection that the tally was made by the staff employed by the plaintiff who did not follow the instructions of the ship's officers nor did they follow the usual practice which is that‑---
". . . . . the empty and torn bags being counted on the ship and slung ashore from the ship and counted again on the shore. Contrary to the normal practice the non‑original hessian bags containing sweepings and torn and empty cotton bags were taken ashore by the plaintiffs' stevedores without intimation to the defendants or the ship's officers."
Their stand further is that they are not aware of the plaintiff's usual practice, but the alleged practice is "unwarranted" because‑--
"stevedores employed by the plaintiffs swept and collected the sweepings and, without the knowledge and consent of the defendants Nos. 1 and 2 and/or the ship's officers, packed, con cealed and removed with the sweepings empty and torn bags in hessain bags which were not the original bags In order to a void discovery, detection and counting of empty and or torn cotton bags concealed."
This practice had made the tally corrupt and unreliable. (iii) In paragraph 6 they have pleaded that they had no knowledge of the actual weight of the contents of the bags. (iv) In paragraph 15(a) they have pleaded additionally that they "are not liable for loss in transit due to Inherent nature of goods". (v) In paragraphs 7 and 12 of their written statement they have taken the stand that the delivery of the cargo was accepted by the plaintiff before it was discharged from the vessel. They are, therefore, "not concerned with the tally" which was "made after the arrival of the goods." This stand is noteworthy because, as shall be found later, they became careless as soon as the discharge of the cargo commenced.
8. The main defence of defendants No. 2 is that they have acted as agents of defendants No. 1 and therefore are not respon sible personally. This was conceded by counsel for the plaintiff.
9. There is no material plea of defendants No. 3 in addition to the three common pleas mentioned above. The first of these defences is not within the scope of the answer of defendants No. 3 to the charge levelled against them by the plaintiff that they have acted in bad faith In withdrawing the first survey report nor is it within the scope of the stand taken by them that the tally is unreliable. Moreover, the first defence is not really open to defendants No. 3 because they were employed by Shakil & Co. to carry out the survey. The second defence sounds like an admission of defendants No. 3 in their own favour because as explained by them in para graph 7 of their written statement it is founded on their own report (Exh. 36) on the basis of their examination,
"of the vessel's draught and the loading scales and other data on board."
The third defence was for the first time raised by defendants No. 3 in their letter (Exh. 22) to justify the withdrawal of their first survey report.
10. The adoption of the third defence by defendants No. 1 and 2 can carry as much weight only as the facts and circum stances revealed by defendants No. 3 In their evidence can allow to be attached to It. Defendants Nos. 1 and 2 could not and have not produced any evidence in support of this defence. Defendants No. 3 have produced only one witness. He is John Johnston, their Managing Director. His importance for the defence of the suit as a whole is obvious, because he has provided the second and third of the three common defences and has identified himself with defendants No. 1 and 2 by adopting the first mentioned common defence.
11. 18 issues were framed by mutual consent of counsel for the parties on the 19th of May 1958 but 11 of them were deleted on the 14th of September 1961 because they agreed that the other issues only were material. The seven issues which are to be decided now are as follows:
(1) Are the contracts In conformity with law
(2) What were the terms of carriage between the plaintiff and defendants No. 1
(3) Was there shortage of 480 bags as alleged by the plaintiff
(4) Is the summary marked B correct authorise and/ or binding on defendants
(5) Are the survey reports issued by the defendants No. 3 inspired as alleged by the plaintiff
(6) Is the plaintiff entitled to any damages
If so, to what amount.
(Covers 15 of the W. S. of defendants No. 1 and 2.)
(7) General.
12. Before discussing the issues I may mention that pleas Nos. (iii), (iv) and (v) mentioned above which have been raised by defendants No. 1, and along with them by defendants No. 2, have no foundation and their counsel did not even refer to them in his address.
13. Issue No. 1 was pressed by Mr. Permanand. His conten tion was that the bills of lading (Exhs. 67 and 68) and the charter (Exh. 69) did not create binding contracts as they do not conform to the provisions of Article 135 of the Constitution of 1956. That article prescribes formalities and lays down that a contract made on behalf of the Central Government can be executed only by a person authorised by the President to do so. The objection of Mr. Permanand cannot be taken to relate to the authority to execute these documents because defendants No. 1 and 2 have admitted In paragraph 5 of their written statement that the A plaintiff made the agreement of Charter (Exh. 69). Moreover, Mr. S. M. Azizul Bari (P. W. 7) Deputy Director Sugar, Ministry of Food has stated that the Commercial Secretary of the Pakistan Embassy who signed the documents (Exhs. 67, 68 & 69) was authorised to do so and was not cross‑examined on this part of his statement. As an objection to the formalities of the contracts, it is misconceived because the documents were executed in the U. S. A., and as such the proper law to govern their formalities is the law of that country ; See Rule 140 Dicey's Conflict of Laws. Counsel for the parties did not think of this and Mr. Permanand pressed the objection without realizing that in the event of the contracts being found to be unenforceable, or, in other words being void' within the meaning of section 2 (g) of the Contract Act, the plaintiff could claim compensation in terms of section 65 of the Contract Act. See Dharmeswar v. Union of India (A I R 1955 Assam 86) without C being bound by the immunities granted to his clients by the above mentioned term of the charter, on which immunities Mr. Permanand has emphatically relied and which makes the carriage of cargo "free of risk and expense" Involved in its discharge. The issue is decided against the defendants and they are in some advantage for it.
14. Under the second issue Mr. Permanand has argued that the last‑mentioned term of the Charter governs the two bills of lading because in one of them (Exh. 67) this has been expressly made clear and because this is the sense of the three contracts taken together. He has supported this argument with the remarks at page 53 of Scrutton on Charter‑Parties (16th Ed.) This issue is decided accordingly in favour of the defendants.
15. Most of the evidence has been produced by the parties on the third issue. It is not a self‑evident issue and needs clarification, particularly because the emphasis in the evidence of the defendants is on the absence of their responsibility for the risk that was invol ved in discharging the cargo. The stand of the plaintiff is not that 480 bags were or were not on board the ship when it arrived at the Karachi Port and discharged the cargo, but that the bags were not delivered (para 10 of the plaint) to the plaintiff, and that all the defendants are responsible for this loss. This involves the question of the performance of the entire contract of carriage of goods. The precise issue should be taken to be as follows:
"Whether defendants No. 1 and 2 have failed, and defendants No. 3 have caused the failure, to deliver at the Karachi Port, in terms of the contract of Carriage 480 bags of the cargo that was entrusted to defendants No. 1 under two bills of lading."
16. The tally sheets, or Truck Notes, as they have been called, undoubtedly show a shortage of 480 bags. There must have been this shortage in the cargo which the plaintiff received because Capt. E. A. Cooper, who was the Master of the ship, and C. J. Mooler, the Chief Officer of the ship have stated in their statements recorded on commission that the stevedores "cut (empty) bags in the hatches and stole the (empty) bags", mishand led the bags of sugar and departed from the normal practice in putting empty and torn bags into "burlap bags", "thus by passing the tally count". John Johnston in his cleverly imperfect manner has tried to prove in his statement with the help of unused space of wagons that exactly 480 bags ought to have been missing.
17. Mr. Permanand has referred to the statements of S. M. Ahmad (P. W. 3) and Sheikh Masood (P. W. 4) to explain that shortage could have been caused by not tallying the bags which were kept aside on the wharf or returned to the hatches.
18. Along with the explanations of shortage, two arguments have been advanced to prove that full load was discharged from the ship. Firstly, John Johnston stated that the record of draught shows that there was full load in the ship when unloading com menced. His statement in this respect is entirely unreliable though full of ready wit.
Defence counsel have themselves discarded his conclusions as untrustworthy. Secondly, Mr. Permanand pressed the fact that the Port Trust had demanded a receipt from the plaintiff for full delivery of the cargo, and argued that this was a proof of full delivery. This fact is irrelevant just as the short landing certificate, alleged by the plaintiff to have been issued by the Port Trust (paragraph 4 of the plaint), has been considered irrelevant by defendants No. 3 (Paragraph 6 of their written statement).
19. Mr. Permanand saw the situation clearly when during the examination of S. M. A. Bari (P. W. 7) he stated on the 9th of March, 1961 that‑----
" . . . the fact that 480 bags were missing is not in question. The point is as to how this happened ( ), and who is responsible for it ( )"
20. He has emphasised that there was no shortage at the time when the goods were discharged from the vessel and that the defendants are not responsible for any shortage, which took place within the scope of the following words of the Charter:
"Cargo to be discharged by consignee or assignee free of risk and expense to vessel . . . . ."
The real question, therefore, is: whether the defendants are responsible for the shortage or not Essentially, the question should be taken to be further limited to the responsibility of defendants No. 1, because counsel for the plaintiff has conceded that defendants No. 2 being the agents of defendants No. 1 are not personally responsible and the responsibility of defendants No. 3 can be only secondary, if at all. It is unnecessary to here after refer to the responsibility of defendants No. 2.
21. Before discussing the responsibility of defendants No. 1, I should refer to the law which governs their contract. The parties have expressly made the Carriage of Goods by Sea Act, 1936 of the U. S. A. applicable to this transaction in terms of the bills of lading. There is no material difference between the rele vant provisions of that Act and the Carriage of Goods by Sea Act, 1925 of this country. The relevant provisions of the American Act are as follows
"Section L‑When used in this Act‑----
* * * * * * * * *
(b) The term contract of carriage' applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter‑party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.
* * * * * * * * *
(e) The term carriage of goods' covers the period from the time when the goods are loaded on to the time when they are discharged from the ship.
Section 2.‑Subject to the provisions of section 6, under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities here inafter set forth.
Section 3.‑
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause, shall be deemed to be a clause relieving the carrier from liability.
Section 4.‑
(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from‑
* * * * * * * * *
(i) Act or omission of the shipper or owner of the goods, his agent or representative ;
(q) Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage."
22. Mr. Permanand has relied on behalf of defendants No. 1 on section 4 (2) (i) because, he argued, the contract of carriage being "free of risk and expense" of discharge, the carriers did not have to and did not engage the stevedores who were engaged and paid for by the consignee and that they have caused the loss. They were not, according to counsel, under the control of the officers of the ship excepting for the safety of the ship and the lives of those who were on board. He has rightly presumed that there is no evidence that the loss occurred during the voyage to the Karachi Port or at the time of discharging the other cargo. This stand of Mr. Permanand is to be analysed and judged in the light of the contract, evidence and provisions of law.
23. Counsel for the plaintiff has not questioned the legality of the covenant by which the carrier has been relieved from the liability for loss arising from negligence, fault or failure in the duties and obligations imposed by subsection (2) of section 3 or by which covenant such liability has been lessened. The reason may be that the view of law is against it as stated at page 193 of Carver's Carriage of Goods by Sea (Tenth Ed.). The relevant passage is as follows:
"Since the object of the Rules is to define not the scope of the contract service but the terms on which that service is to be performed, provisions concerned only with the scope of the service will not usually be invalidated by Article 111, r. 8 e.g., a provision that the shipper or consignee is to be responsible for loading or discharge a liberty to trans‑ship, a stipulation as to the termini of the voyage, or a liberty to deviate."
I cannot, however, pass over this aspect without noting that the carrier would be liable for loss if intervention on behalf of the E carrier in the performance of the duties, which by contract had become the duties of the consignee has contributed to the loss (See Canadian Trans. Co. v. Court Line ((1940) 3 All. E R 112 p. 124).
24. I shall refer to this aspect later. Here let me examine the scope of the covenant on which Mr. Permanand has relied and see how far the defence is within its scope.
25. The term "carriage of goods" section 1(c) covers the entire process from the moment loading commences to the completion of the discharge of cargo from the ship, but the term) "contract of carriage" includes rights and obligations outside the scope of the term "carriage of goods". It brings within the application of the Act the obligation of the carrier to deliver the goods to the consignee in terms of the bills of lading.
26. Under the Act, the duty of the carrier was to "properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods" but by agreement the carrier has been exempted from the "risk and expense" of discharging them. Accepting this responsibility the consignee engaged stevedores. Although according to the defendants, the officers of the ship could supervise the work of the stevedores to watch only that the lives on board and the ship were safe. They have actually done more than this. The following questions put to the ship's officers and their answers will illustrate that they exceeded this limit:---
The Chief Officer:
‑Who amongst the ship's officers dealt with stevedores and clearing agents of the Government of Pakistan in regard to the discharge of the sugar cargo
‑The master of the vessel, myself and the other deck officers.
.‑Did you give any orders or instructions to the stevedores and clearing agents who discharged the sugar cargo to pack, torn and/or empty cloth bags together with sweepings 1n the hessian bags brought by them
.‑No Sir. I protested against them putting empty or torn bags into the burlap bags they themselves had brought abroad.
.‑Is it not a fact that these officers got the stevedores to pack the torn bags along with sugar sweepings into the gunny bags
.‑No Sir, we protested vigorously against the practice of doing that after we caught them.
The Master of the Ship
.‑Is it not a fact that the officers of the ship hustled the stevedores to remove the loose sugar and sugar sweepings as early as possible
.‑They didn't hustle them. They instructed them to sweep up the loose sugar so that they wouldn't be damaging it and they could also get the other bags underneath out without damage. It is a normal and proper procedure which their foreman didn't seem to understand."
27. These officers and Mr. Permanand have taken the stand that defendants No. 1 are not responsible for the loss caused by the stevedores because the officers had no control whatsoever over the stevedores during the performance of all of their acts but this Is neither correct legally nor in fact. The stevedores are professional men who exercise their profession under licences granted to them by the Port Trust. They are further governed by the contracts made by them with the Port Trust as well as the shipping companies for whom they usually G work. Contracts are made with shipping companies because under the Hague Rules [Section 4(2)(q) of (the United States) Carriage of Goods by Sea Act, 1936] stevedores are ordinarily servants or agents of the ship-owners for loading and discharging the ship. Moreover, some of their responsibilities are joint with the Masters of Vessels under bye‑law 34, which has been framed under the Karachi Port Trust Act, 1886. Further, In this case, defendants No. 1 appointed their own stevedores also from the 10th of July, 1956. Additionally, the officers of the ship had the right and were bound to intervene if the stevedores acted objectionably outside the scope of the operation of discharge of the cargo. The pro tests of the officers of the ship, therefore, cannot be said to have been without authority, nor were they without effect. The general effect has been described convincingly by Saeeuddin, the Managing Director of Shakil & Co., who were the clearing agents of the plaintiff. He has stated as follows:
"The Chief Officer of the ship was hurrying to unload the chartered goods so that the unloading of general cargo may start. He was making a fuss as a result of which the stevedores who were representing the consignee and those who were representing the steamship company hurried matters by placing empty bags into jute bags and discharged them. Ordinarily empty bags ought to have been discharged without placing them in jute bags."
The reason given by the witness for which the Chief Officer hurried the unloading is not correct, but it is irrelevant. He has stated further that;
"In this case the sling had landed on the platform and con tained the 32 bags. Sabzeali raised objections at that time. He was aware, as we were aware, that empty bags have been placed into jute bags on account of the hurly burly created by the fuss of the Chief Officer of the Ship. On the objection of Sabzeali the bags were removed from the platform and not placed into the wagons."
The impression of a confused situation conveyed by the witness is substantially correct because as stated by the Chief Officer the officers of the ship gave directions and insisted on them but the directions were not understood. The officers did not make them selves understood or were unable to do so.
28. The officers had a good reason to intervene to prevent malpractices outside the limits of the operation of discharge particularly because under the contract the ship‑owners are not exempt from the liability for loss outside the scope of the opera tion of "discharge". The operation commences from the moment the goods are moved from the place where they are stowed for the purpose of discharging them, and ceases as soon as they are out of the gear which is used in that operation, and sometime while they are yet in it‑See Goodwin, Ferreira & Co. v. Lamport & Holt ((1929) All E R Rep. 623).
29. The tally made at the time of placing the goods into the wagons was not a part of the operation of discharge'. It was the procedure that is usually adopted for keeping a record of the marks, numbers, weight, measurement and condition of the cargo that is discharged to be delivered or loaded for transportation. Cutting the bags or stealing them from the hatches or "by‑passing the tally count" were not acts falling within the operation of discharge, but the representatives of the ship‑owners were not clear in their minds as to the rights and obligations of their principals in this respect. This is why they neither participated in the tally for the first three days, nor did they take any step until the last day, except that the officers of the ship verbally "protested vigorously", or perhaps shouted at those who were around on board and added confusion, which situation is ordinarily helpful to thieves. Defendants Nos. 1 and 2 seem to have later realised the restricted scope of their immunity under the contract and, have, therefore, raised an unfounded defence that the goods had been delivered to the plaintiff before the commencement of discharge. If the representatives of the ship‑owners were clear about their principals' responsibility, which was to properly and carefully "keep and care for" all the goods before the operation of discharge actually commenced and similarly to "keep and care for" such goods during the operation of discharge as were not being actually discharged as well as to deliver the entire cargo in the condition in which it was entrusted to them, except for such damage or loss as was caused in virtue of the operation of discharge, they would have at the earliest participated in the tally and acted as they didon the 16th of July, 1956. Their action on the last day had the desired effect. Owing to it the exact situation of the bags to which the protest related became completely clear as is proved by the joint note (Exh. 60) of the representatives of the Karachi Port Trust the clearing agents the surveyors, the stevedores of both parties and the representatives of the Ministry of Food. They did not take proper steps earlier because in the language of Mr. Permanand, they did not "bother" themselves owing to their presumption that nothing untoward could happen for them because the stevedores had been appointed by the consignee. They became perturbed on the last day when shortage of the bags of sugar became a force-able certainty.
30. If sugar was, or bags of sugar were stolen by the steve dores of the plaintiff, defendants No. I are not responsible, provided they have not contributed to the situation which facilita ted the theft, but there is no proof of theft by the plaintiff's stevedores. The officers of the ship have referred to empty bags when they spoke of theft and not to the bags of sugar. The Chief Officer of the ship has said that the empty bags were the property of the plaintiff and he did not know "what they used them for'". This means that the objection is merely that disap pearance of the original empty bags was one of those circums tances which made the tally unreliable. This objection was useful until the trial was in its early stages, because during the trial, Mr. Permanand has taken the stand that his clients denied their responsibility for loss but not the loss itself. He had to take this stand because although there is no proof of actual theft a good deal has been brought on record to elucidate the circum stances in which theft was feasible, whereas there cannot be said to be any evidence on record to support the feasible contention that full delivery had been given on board the ship. I may point out here that corrupt tally is unreliable ; all the same a proof, in this case, that the cargo recorded in it was delivered, but it is no proof at all that the cargo which escaped it was also delivered. This shifts the burden of proof to the defendants who cannot be heard to say that they did not participate in the tally for three days.
31. The conclusion is that a certain amount of negligence of the representatives of the ship‑owners and the loss of 480 bags of sugar to the plaintiff is proved. There is no proof that the stevedores of the plaintiff or representatives of ship‑owners or officers of the plaintiff stole them. In these circumstances, the legal position of the ship‑owners is extremely weak. They have two responsibilities‑one is general and the other relates to the supposed theft.
32. Their general responsibility can be stated briefly in the words of Carver at page 186 of his book "Carriage of Goods by Sea" as follows:
"Accordingly, it is submitted, the true view is that if the goods‑owner proves that the goods have not been delivered, or have been damaged after shipment, the onus shifts on the carrier to bring the cause of damage specifically within Art. IV, r. 2. If the cargo‑owner wishes to defeat that plea by proving negli gence, the onus is on him to do so."
Defendants No. 1 have not proved the exception on which their counsel has relied section 4 (2) (i) but their negligence to a certain degree and confusing interventions are proved. Moreover, the allegation of theft made by them does not entitle them to the benefit of section 4 (2) (i) of the (United States) Carriage of Goods by Sea Act, 1936, for two reasons‑firstly, because it is not proved that the thieves were the servants and agents of the plaintiff; secondly, because theft raises the question of the vigilance of the ship‑owners and falls more appropriately under section 4 (2) (q) the category of "any other cause arising . . . . . . without the fault or neglect of the carrier or without the fault or neglect of the agents or servants of the carrier"‑See Owners of Cargo of City of Baroda v. Hall Line Ltd. ((1926) 42 T L R 717). The burden of establishing a cause within the terms of section 4 (2) (q) was on defendants No. 1.
"It is not enough for the ship‑owners to show that the damage done was partly due to some cause for which he is excused if part of the damage is not so caused. He must show how much damage was due to the cause for which he is excused, because .t it Is only in respect of that cause that he can claim protection. If he does not do so, he has failed to show to what extent in money his prima facie liability for the whole ought to be reduced." (Scrutton on Charter‑parties, pp. 486‑87, sixth edition).
They must fail owing to the inexplicable character of the evidence of theft and their confusing intervention.
33. Defendants No. 3 had no hand in the loss of the cargo to the plaintiff. They are, therefore, not liable under this (No. 3) issue, but their withdrawal of the first survey report (Exh. 70) preparation of two subsequent survey reports and the objection taken by John Johnston to Exh. 60 have been described by counsel for the plaintiff as "inspired" by the other defendants. This aspect of the suit falls for consideration under issues Nos. 4 & 5. I proceed to examine them and firstly take up issue No. 4.
34. As stated above, the first survey report (Exh. 70) contains the statement that 480 bags were "short received from ship". It was admittedly signed by D'Souza of defendants No. 3, and was cancelled by himself vide letter Exh. 9 on their behalf on the ground that "discrepancy" was found in the figures "on re‑checking". This ground for its cancellation was abandoned in their letter, Exh. 22, which is also signed by D'Souza, and a new ground was taken in which he took the stand on behalf of defendants No. 3 that "no report or statement issued by a surveyor is valid unless signed by the principal officer of the firm, or by an officer of the firm to whom he has delegated the duty of signing on his behalf". Another ground stated in the letter is that the tally is unreliable. I have already partly considered the effect of unreliable tally and shall later examine the nature of this objection. Here I shall examine the ground of absence of authority.
35. John Johnston, the Managing Director of defendants No. 3 has explained the action and status of D'Souza in his evidence recorded on the 10th of March 1961, as follows:
"On the 21st of July 1956, somebody from our office (admit ted by Mr. Patel, counsel for defendants No. 3 to be D'Souza) signed the summary survey Exh. 70. On the 23rd July 1956, we sent the letter, Exh. 9. It is signed by D'Souza, although he was not authorised to sign it. Exh. 9 was meant to cancel the summary Exh. 70. D'Souza had written and signed Exh. 9 under my orders. I did not want him to write a letter, but expected to go and bring back the summary survey, Exh. 70. Exh. 22, which is a letter dated the 18th of October 1956, was written to make it clear that nobody of our office was autho rised to sign, excepting the Director. At that time, D'Souza had become a Director, and therefore, he signed it, although he is not described as a Director in this letter. There are no rules of our organization, nor any written instructions, but we follow the rules of Lloyds, and they provide that for survey purpose nobody will sign except, Director or any senior Surveyor to whom a power‑of‑attorney is given. Those rules are with me in my office, which I shall produce. (They are to be exhibited as Exh.76 when produced)."
The rules were not produced as undertaken ; therefore on the 16th of September 1961, I drew the attention of Mr. Patel to the omission. I have recorded the proceedings, and the relevant part is as follows
" . . . . . the rules which according to Mr. Johnston were in his possession are in too torn a condition to be produced. He wrote to Lloyds, England, for fresh copies, but was not able to obtain them because no such rules have been found to be ' existing. He has, therefore, contacted the agents of Lloyds in Karachi, who are Mackinnon Mackenzie. They have written two replies to him, which he wants to produce. (They are taken on record with the consent of Mr. Zari and Mr. Permanand and exhibited as 'Z' and 'Z‑1'). Exh. "Z" refers to certain typescript copies without describing their nature. Mr. Patel says that they are also in too torn a condition to be produced. In Exh. 'Z‑1' it is stated as follows:
"We confirm that the survey report when issued by a firm of surveyors must be signed by a senior member of the firm, and not by a junior employee."
The statement of Johnston, however, in this Court was as follows:
. . . . we follow the rules of Lloyds, and they provide that for survey purpose nobody will sign except Director or any senior surveyor to whom the power‑of‑attorney is given.'
Mr. Patel says that he is not able to support this (foregoing) state ment (made in Court) of Johnston on the basis of any rules or on the basis of the letter Exh. 'Z‑1.'
36. It is obvious from the above that John Johnston, the Managing Director of defendants No. 3 has in this case attempted on false grounds to repudiate the summary survey report (Exh. 70) and has made several false statements to support the stand taken by him.
37. The conclusion, however, is not that Exh. 70 is binding on the defendants if they can show that it was erroneous: The defendants consider it erroneous because empty and torn bags were placed in the hessian bags which were supplied by the plaintiff, as a result of which they escaped the tally. John Johnston has explained the objection and the effect of the objectionable practice as follows:
"It is absolutely wrong that empty and torn bags were placed in gunny bags supplied by the consignee. The confusion that can be caused by this practice is that by placing a number of bags into gunny bags the number of the bags would be reduced at the time of counting because the bag containing the torn and empty bags will be reckoned as one."
Further:
"If the empty bags had been counted on the ship before they were placed in gunny bags, there could be no ground for objection."
This means that the objection in substance is not that original empty bags were not used, or that hessian bags were supplied by the plaintiff, but that empty bags were not counted on the ship before they were packed in hessian bags. The plaintiff has stated in paragraph 6 of the plaint as follows:
". . sugar was swept and packed in gunny bags provided by the plaintiffs. This fact was well known to defendants No. 2 and 3. By the orders of an officer of the ship, a number of empty and torn cotton bags were also packed along with the sugar into the gunny bags."
Considering the whole situation I am inclined to believe that no objection had been taken to the use of the gunny bags‑that were supplied by the plaintiff. The practice of packing empty and torn bags in gunny bags was, according to the plaintiff, the result of the orders of an officer of the ship. I have discussed this aspect of the evidence before and my conclusion is that the officers of the ship did not give such orders but that their directions were not understood by the stevedores, and the officers either did not or were not able to make themselves understood to them. If this conclusion is correct, they cannot object to the practices now because their dire6tions were no directions. More over, as stated above, objection was taken on the last day when it became practically certain that there was shortage, to the practice of packing torn and empty bags in hessian bags. As a result of that objection, effective steps were taken to check the bags that had been discharged in this manner on that date. The result of the checking is embodied In Exh. 60 and leaves no doubt that all chances of error in the tally on that account had been removed.
38. Mr. Permanand, for defendants Nos. 1 and 2, has not questioned the effectiveness of Exh. 60. John Johnston, on the other hand, has repudiated Exh. 60 also on the ground that it was signed by an employee of his company, namely, Mathew without the authority to do so. His statement in this respect is as follows
"The certificate Exh. 60 which is signed by my Assistant merely states that all bags were opened. I was present on board the ship when my Assistant was called to attend the opening of the bags but I was not. My Assistant told me of it afterwards. He did not tell me at that time, and I have a feeling that evidence against my report was being created."
This statement suggests complicity of the Assistant in the alleged creation of evidence. The witness was, therefore, cross‑examined with regard to the bona fides of D'Souza as well as Mathew, and his replies are as follows:
"Both of them are still in my service now. I have &t taken any action against them because I thought that they have acted in good faith sand did not inform me of it."
John Johnston has misrepresented the purport of Exh. 60, and I do not believe him that Mathew was not authorised to sign Exh. 60. If there were secret instructions or understanding between defendants No. 3 and Mathew or D'Souza, for that matter, not to sign documents, they are ineffective against the plaintiff.
39. Reverting to the terms of issue No. 4, the decision is that the summary survey report, Exh. 70, was signed with the authority of defendants No. 3. The document is not binding in the sense that the defendants could prove it to be erroneous, but they have not succeeded in doing so.
40. The attempt of defendants No. 3 to repudiate Exh. 70 and Exh. 60 is relevant for the decision of issue No. 5 because according to the plaintiff, defendants No. 3 had set their course from the moment they decided to repudiate Exh. 70 to do all they could to help defendants No. 1 to establish that the tally was unreliable, and that there was no shortage. In pursuance of this plan, they issue the survey reports, Exhs. 36 and 37. In Exh. 37, they have merely relied on the fact that "original torn and empty bags" were unloaded in a "number of non‑original hessian bags", in support of their conclusion that the shortage of 480 bags found in the tally was not accounted for but in Exh. 36, they have tried to discover evidence of full discharge of the load in the readings "of the vessels draught and the loading scales and other data on board." There is no other reference in the evidence to "the loading scales and other data on board." The officers of the ship apparently took up their cue from Exh. 36, and have stated explanation that full load had been discharged, merely by referring to the readings of the draught. The record has not been produced but oral explanations have been provided by John Johnston, and were found on cross‑examination to be so much unreliable that the defendants' counsel did not even attempt to use the material provided by him. I drew the attention of Mr. Permanand to this, and he conceded that he was not able to take his stand on it.
41. My assessment of the evidence, therefore, is that the survey reports, Exhs. 36 and 37 were not inspired by the influence of defendants Nos. 1 and 2, but that they have themselves provided an encouragement to those defendants and "inspired" them to resist the claim of the plaintiff. This is the decision of issue, No. 5.
42. This, however, does not mean that the plaintiff is entitled to recover damages from defendants No, 3 however, much the conduct of the defendants may be morally and professionally objectionable, but the liability of defendants No. 1 is satisfactorily established. Mr. Permanand contended that the liability to pay damages for the loss of 480 bags should be distinguished for purposes of issue No. 6 from the claim of the plaintiff to recover the customs duty paid by the plaintiff on the cargo, because the plaintiff has failed to mitigate the damages by claiming refund of the duty, which it ought to have claimed on the ground that 480 bags had not been received by it. That claim is barred by time now. The contention of counsel presumes that there were fair chances of the refund of duty. It may appear to counsel to be so now, but his clients had originally taken the stand that there was no shortage and they were supported in this stand by the surveyors, namely defendants No. 3. Moreover, the Port Trust had also demanded from the plaintiff a receipt for full load. In these circumstances, I do not think that the omission of the plaintiff can be reasonably said to have made any difference. There were practically no chances of the success of the plaintiff's claim for refund of duty.
43. In conclusion of the entire discussion of this case the decision of issues Nos. 6 and 7 is that the plaintiff is grunted a decree for Rs. 26,723‑12‑0 (Rupees twentysix thousand seven hundred and twenty three and twelve annas) with costs against defendants No. 1.
44. I direct that notice be issued to John Johnston, the Managing Director of G. B. Potts Co. Ltd. under section 476, Cr. P. C. to show cause why he should not be ordered to be prosecuted.
K. B. A.
Suit decreed.
Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.
🔍 Find a Lawyer