P L D 1995 Karachi 44 (PLP)

(5) The plaintiffs have not filed any affidavit as required by rules 731 and 773 of the Sindh Chief Court Rules. The first submission of r. Naim, with regard to the right of the plaintiffs to sue, is without merit. It is based on section 1 of the Bill of Lading Act, 1856, which provides-- "Every consignee of goods named in a bill of lading and every endorsee of a bill of lading to whom the property in the gods therein mentioned shall pass, upon or by reason of such consignment or endorsement, shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself." Now, a bill of lading is a contract for carriage and delivery of goods between a shipper and a carrier; and neither a consignee nor an endorsee is a party to such a contract. Therefore; even though the title to the goods represented by the bill of lading may pass to tire consignor or the endorsee, upon or by reason of consignment or endorsement, such consignee or endorsee would not, at common law, acquire any right to case on the contract of carriage viz. the bill of lading. It was to obviate, inter alia, this difficulty that the Bills of Lading Act was enacted as is made clear by the Preamble of the Act, relevant part whereof is-- "Whet gas by the custom of merchants a bill of lading of goods being transferable by endorsement, the property in the goods may pass to the endorsee, but nevertheless all rights in respect of the contract contained in the bill of lading continue in the original shipper or owner, and it is expedient that such rights should pass with the property . Section 1 of the Act, therefore, provides that every consignee named in a bill of lading and every endorsee of a bill of lading to whom the property in the goods shall pass shall have transferred to him all rights of suit as if the contract contained in the bill of lading had been made with himself. It is clear that section 1 of the Bill of Lading Act relates to cases when e a consignee or an endorsee sues upon a bill of lading as if he were himself a party thereto. The plaintiffs in the present case are not relying upon any right to sue by reason of being consignees or endorsees of the bill of lading in question. Their case is that they have suffered loss in consequence of the forged and fraudulent bill of lading issued by the defendants. Section 1, therefore, has no application to this case. For the purposes of the second submission of Mr. Muhammad Naim, it is a common ground between the parties that the claim of the plaintiffs falls within clause (h) of subsection (2) of section 3 of the Admiralty Jurisdiction of High Courts Ordinance, 1980. That being so, Mr. Naim submitted that no action in rem could have been brought against the defendant No.l because the bill of lading in question was issued by a charterer who did not, when the action was brought, have any beneficial interest in the vessel and also because the plaint does not disclose any claim in personam against the owners of the vessel. He relied on the provisions of section 4(4) of the Ordinance and the case of Messrs V.N. Lakhani & Co. v. The Ship Lakatoi Express 1994 CLC 1498. With regard to the bill of lading, Mr. Naim contended that it was issued by the Charter "As a Carrier" as indicated by the typewritten text on it whereas Mr. Baqar Maqbool contended that it was signed by the Charterer for the Master" and "As Agent" as shown by printed text above and below the signature. Clearly, Mr. Nairn is right because the typewritten text must be taken to have superseded the inconsistent printed text on the bill of lading. If, therefore, the owners of the vessel were not a party to the false bill of lading, it would be the Charterer alone who would be liable. Mr. Baqar Maqbool, however, submitted that the owner of defendant No.l and/or their agents were parties to false bill of lading as demonstrated by the fact that in the Import General Manifest filed by the defendant No.l with, the customs authorities under section 47 of the Customs Act, the bill of lading mentioned is the one question in this suit and not the three other bills of lading alleged to have been issued by the defendant. Mr. Nami sought to explain this fact away by submitting that the import General Manifest is filed only for customs purposes and that the mention of any particular bill of lading therein is of no significance the present contest; and that, in any tee, the b of lading was mentioned in the import General Manifest by the Karachi agents of the defendant No.l. He however, conceded that the Karachi agent of the defendant No.1 acted, in so doing, on the information received from the agent of the defendant No.1 at the port of lading. While it may be true that the Import General Manifest is filed for Customs purposes only, the fact that the particular frill of lading was mentioned therein by the Karachi agent of the defendant No.1 upon information received from the defendant's ,agent at the port of lading is not, the present context, without significance. It shows, prima facie, not only that the plaintiffs were aware of the bills of lading but that they ,acted on the basis that was the only bill of lading in eaten. If the defendant No.1 had sued slay other trill of lasting in respect of the consignment of the Plaintiffs, there appears to be no reason why those bills of lading were not mentioned in the I.G.M.; and none was advanced by Mr. Naim. It would, therefore, appear, prima facie, that the owners of the defendant No.1 were a privy to the issue of the false bill of lading. As or the allegations in the plaint, Mr. Bqar Maqbool pointed out that para. 18 of the plaint contains a specific allegation against the defendant No.

1. In the circumstances, it appears to me that the suit in rein against the defendant No. 1 is maintainable. Mr. Naim then submitted that the plaintiffs have suffered no loss cause they have disowned the bill of lading and other documents sent by the shipper under the letter of credit. Assuming that averments in the plaint and the documents attached thereto reflect a true and correct picture of what happened, a rather unusual course of events appears to have taken place in the negotiation of the documents. It appears that the defendant No.2 (the seller presented the documents to Baileys Bank (defendant No.3) who then wrote to the plaintiffs' bank on the 18th July, 1994 (Annexure `C' to the plaint) purporting to enclose the documents for acceptance, confirming that they were presented "within L/c time limits", and instructing the latter not to release the same to the plaintiffs "until you receive tested telex from this office". On the 21st July, 1994, defendant No.3 sent a telex (Annexure `C-1 to the plaint) stating that the request of the beneficiary i.e. the defendant No.2 "we are holding documents at our counter awaiting your response to this telex"; and inquiring how they were to obtain reimbursement. Thus, notwithstanding the letter of 18th July, 1994, the documents, at least until 21st July, 1994, were with` defendant No.3 and had not, till then been negotiated by them. On the 26th July, 1994, the defendant No.3, sent a telex (Annexure `C-2' to the faint stating that they had been advised that London branch of defendant No.4 will provide reimbursement, that the documents are being forwarded to defendant No-4 by DHL Courrier Service, and that the documents were not to released to the plaintiffs until "a tested telex merge received from this office". It appears to be quite likely that the documents were then received by defendant No.4 although there is nothing on the record to show when they were received. Meanwhile, the defendant No.4 sent a telex (Annexure-D to the plaint) to defendant No.3 on the 27th July, 1994, advising the latter to obtain reimbursement from United Bank, London, and stating, on the other hand, that we documents seemed to not conformity with the letter of credit and that "discussing/ negotiation car the said documents at your risk. It may be noted that on the 27th july, 1994, the documents had not yet been received by defendant No.4 and the only basis for apprehending that they were disctepart was that stun-negotiable documents, in terms of the letter of credit, had out yet been received by the plaintiffs. It appears that thereafter, the documents were received by defendant No.4 and the plaintiffs were asked to accept them. The plaintiffs, by their letter dated August, 1, 1994 (Annexure `E' to the plaint) refused to accept the documents on the ground that there were various discrepancies including:-- "Documents dispatch evidence dated 30th June, 1994 is bogus as invoice, packing list and other documents are dated 14-7-1994 and 15-7-1994. B/L not evidencing under which capacity Mediteriam Chartering and Trading Ins. sign B/L. 'Defendant No.4 in turn sent a telex (Annexure `F to the plaint) on the same date to defendant No.3 stating that due to the discrepancies, enumerated therein, the plaintiffs had refused to accept the documents which were being held at the latter's disposal. Notwithstanding this fact, it is elected defendant No.3 "secretly, surreptitiously and collusively with the seller obtained payment from the London Branch of United Bank Limited". It tray here be noted that the letter of credit provided for payment against the beneficiary draft on the plaintiffs "at 90 days B/L i.e. draft payable 90 days after the' date of the bill of lading, which in this case is the 30th June, 1994. It is not clear whether the defendant No.4 or its London branch accepted- the draft but, even if did so, payment would not have been due until the 28th September, 1994, when the period of 90 days from the date of the bill of lading will expire. It is, therefore, strange, to say the least, that the defendant No.3 or its London branch made payment to defendant No.2 before the date of maturity of the draft. However, in these circumstances, the plaintiffs do not claim any relief against the defendant No.4 "since in fact it has itself been defrauded by the foreign defendants." The case of the plaintiffs, thus, is that payment made to the defendant No.3 was not payment under the letter of credit because the terms and conditions thereof were not complied with and that, therefore, they are not concerned with such payment. Were the plaintiffs to accept that such payment was strictly in terms of the letter of credit, notwithstanding the underlying fraud, they could certainly have claimed the amount paid to the defendant No.3 as damages; but they have chosen not to do so and claim, instead damages as set out m para. 20 of the plaint and the statement of loss annexed to their affidavit in rejoinder. Para.20 of the plaint reads:-- "'That in the above facts and circumstances the plaintiff submits that it teas suffered serious and irreparable losses due to the illegal and mala fide conduct of the foreign defendants. Its banking lines of credit have been blocked by reason of the facts stated in the above. The amount involved is enormous. In the meanwhile the plaintiff is finding it very difficult to procure cotton from alternative sources and its entire auctioning has been imperiled and jeopardized. As is well knows, there is a cotton shortage in the market due to the cotton virus which led to the failure of last year's cotton crop. The plaintiff has had to shut down its mill from time to time due to the shortage of cotton. The locally available cotton towards the end of the season is of poor quality. The plaintiffs export shipments have been delayed in breach of contractual commitments and its reputation, prestige and standing abroad as well as domestically has suffered enormously. It has not been able to avail itself of letters of credit opened in its favour by its foreign buyers. The plaintiff tentatively estimates its losses at the figure of Rs.5 crores " Shorn of verbiage and embellishments, what para.20 of the plaint seems to mean . is that the plaintiffs have , suffered losses because, in the circumstances alleged in the plaint,-- (i) their "banking lines of credit have been blocked"; -(ii) due to shortage of cotton in the market, they have had to shut down their mill from time to time and their export shipments have been delayed in breach of contractual commitments and, consequently, their reputation, prestige and standing abroad and domestically has suffered; and they have not been able to avail of the letters of credit opened in their favour by foreign customers. The plaintiffs claim Rs.10 million for "Blockage of L/C Limits of Rs.30 million loss caused approx. 1/3rd"-- (see Annexure `B' to their affidavit in-rejoinder). "Blockage of L/C limits" as stated in Annexure B' to the rejoinder read with the allegation in para. 20 of the plaint that the plaintiffs' "banking lines of credit have been blocked" amounts to saying that the banks have refused to grant credit facilities to the plaintiffs against letters of credit for export. Assuming the allegation to be correct it is difficult to understand why, merely because the defendants Nos.2 and 3 have perpetrated a fraud as alleged, the banks, or the plaintiffs' bank, would refuse to grant further credit to them. That the bank might do so if it had demanded payment under the letter of credit in question in this suit, and the plaintiffs had refused to pay, can certainly be visualised; but that is not the plaintiffs' case. Th alleged loss on this amount cannot be said to be the result of any fraud by defendant No.1. As for the remaining heads of the alleged loss, they are based on the allegation that such loss was caused by non-availability of cotton in the market. Yet, according to the statement of losses (Annexure `B' to affidavit in rejoinder), the plaintiffs purchased "approximately 1 million lbs" of imported cotton as substitute for the cotton which was purchased under the contract in question in this suit. It may here by noted that this quantity is equal to the quantity of the Letter of Credit in question. Besides, according to the statements, they also purchased approximately one million pounds of local cotton during the same period. The claim, therefore, that the plaintiffs were unable, due to non-availability of cotton, to keep their mill running and to meet their export commitments, does not ring true. That leaves only the claim for the difference between the contract price and the price at which the plaintiff purchased imported cotton lay; and Mr. Naim submits, firstly, that the plaintiff cannot rely on the statement because it has been produced only with the affidavit-in-rejoinder so that the defendant had o opportunity to rebut it; and, secondly, that the statement has not been substantiated by any documentary or other proof: He appears to be right in these submissions. Mr. Naim then contends that, in any case, all the damages claimed by the plaintiffs are too remote. He relies on the case of Convell Laboratories Ltd. v. m.v. Alxander's Faith (FLIP 1983 Kar. 459) wherein a supplier had obtained payment of Rs.10,30,400 under a letter of credit by presenting a false "shipped Bill of Lading" and the plaintiffs had sued the vessel for damages amounting to Rs.29,10,

485. It was there held by a Division Bench of this Court:-- "Although the total amount claimed in the suit as damages does not prima facie appear to be the direct result of the fraud alleged against the respondent, but at least it facilitated the supplier to encash the amount of Rs.10,30,400 which they otherwise would not have been entitled to receive under the letter of credit." - In the circumstances, the vessel was directed to furnish security in the sum of Rs.10,30,400. r. Naim also cited the case of the "Saudi Crown" (1986) U.L.R. 261 where it was held that the plaintiff was entitled to claim for loss of opportunity to reject the bills - of lading by reason of fraudulent misrepresentation as to the date on which the cargo was shipped. Such loss would obviously be the amount of the letter of credit which the seller had obtained by misrepresentation. Faced with thus, Mr. Baqar Maqbool requested that security in the amount of the letter of credit be directed to be furnished by C the defendant No.1 That, however, cannot be done because, as stated above, the plaintiffs have expressly disowned the documents and the payment made to defendant No.3. The result is that though, admittedly, fraud has been committed, there is prima facie no evidence of any loss or damage cause to the plaintiffs; and fraud without damage gives no cause of action. The application is, therefore, liable to be and is, hereby dismissed. Consequently, the ad interim order dated the 25th August, 1994, stands vacated. AA./H-385/K Application dismissed.