2000 PLP 1892' (CLC)

"Article

2. Subject to the provisions of Article 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 hereafter set forth. " The above definition would clearly show that the carrier of the consignment does not have to be the owner of the vessel and it is the carrier who is responsible for any loss or damage to the consignment since he is responsible for the cargo from the time of loading till discharging of the cargo. When a vessel arrives at Karachi and the consignee manages to retire A the Bill of Lading from the Bank, it is only then that the consignee has the opportunity to learn the identity of the carrier i.e. the one who issues Bill of Lading. Occasionally the name of the carrier is mentioned in the letterhead of the Bill of Lading, but more often than not it bears the name of either the charterer or the managing agents of the owners or charterers. If the consignment is shortlanded or is damaged then obviously the consignee has a claim against the carrier but when he or his underwriter chooses to initiate I legal proceedings against carrier, the only person he knows definitely to be connected with the carrier/vessel is the shipping agent who enters the vessel in Port of Karachi and who issues the delivery order for the consignments. If A the Bill of Lading indicates the name of a party in the letterhead then he invariably impleads him as a defendant in the proceedings and then by way of abundant caution and also in view of the provisions of section 55 of Customs Act, 1969, he impleads the local Shipping Agents as well. In their anxiety not to leave out the person who would be liable for the claim, often the consignees or their subrogees decipher names of same party or the other from the shipping documents whom they regard to be the owner and thus implead them as well. It is obvious that this leads to proliferation of defendants and yet consignee is not sure as to who is truly responsible for the alleged loss. If the assumptions of the consignee in this regard are wrong, it gives an opportunity to the parties so impleaded to deny their liability. All this unnecessarily burdens the Court because notices have to be served on parties who are unconcerned with the carriage and usually operate from tax havens and have no fixed address and thus, initial service is delayed unnecessarily. Seemingly this is an exercise in futility because the fact remains that it is the Shipping Agent who enters vessel in the port and then comes forward to defend the vessel, as instructed by the principal, who is the person actually responsible for the consignments. I, therefore, feel that once a vessel reaches the port with the cargo and delivery order is issued by the Ship Agent the actual identity of the carrier becomes irrelevant in so far as the Consignee/Subrogee is concerned. In the final analysis it is not the ship Owners/Charterers who contest the claim. It is in fact the protection and Indemnity Clubs popularly known as P&I Clubs, who are akin to, but not quite, an insurance company and insure the third party liability of ship owner/carrier, that contest the claim behind the scenes on behalf of the ship owners/charterers. Thus, true identity of the carrier is of no concern to the B consignees for his claim is against the carrier, whosoever it might. Since invariably the carrier is the principal of the ship agent who enters the vessel in the port I hold that it would be sufficient if the consignee/subrogee while suing the carriers merely mentions as primary defendant "The carrier carrying the consignments on board MV , to be served through the ship agent (who enters the vessel in port)" and the ship agent himself as the second defendant and thus service on the local agent would constitute service on the carrier also. Later the ship agent can be asked to disclose the identity of the principal/carrier as per law and then his name can be included in the title to the plaint. In view of this findings of mine as above, I feel there is no need to consider various objections raised in the written statement in two suits regarding the liability or otherwise on various defendants that have been named in the plaints in the two suits. Need it be said, the parties during the course of arguments never dwelt upon this issue. Issue No.3 The loaded, arrived on board quantities of oil and quantities discharged: into shore Tanks in the two suits are tabulated below:‑‑ Suit No.386 of 1982 As per Bill of Lading 25801.749 MT As per loading alleges 25862.600 MT As per arrival alleges . 25863.014 MT Quantity received in Shore Tanks 25557.657 MT Shortage as compared to Bill of Lading quantity 244.093 MT Suit No.781 of 1985 Kerosine Oil DSD Oil As per Bill of Lading 6,311.000 21,047.000 MT As per loading alleges 6,.359.700 21,297.839 MT As per arrival alleges 6,323.580 21,276.345 MT Quantity received in Shore Tanks 6,181.02 20,826.24 MT Shortage as compared to Bill of Lading quantity 129.98 220.76 MT Keeping in view the evidence of the surveyors and others that I have already touched upon it is clear that the quantities as above are determined as per methodology that I have explained above and are assessed jointly by surveyors representing cargo interest as well as the carriers/owners interests. Issue No.4 This is by far the most crucial issue. Before I proceed further to discuss this issue, it would be better if I first touch upon the question of liability of the carrier before determining whether any shortlanding had occurred or not. In order to do this it would be advantageous to quote certain relevant provisions of Hague Rules. "Article 3.2. Subject to the provisions of Article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. Article 3.4. Such a bill of lading shall be, prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraph 3(a), (b) and (c). Article 4.2(m). Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from: Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods." An examination of the above provisions of law and .their interpretation that has been well settled by now, would show that once the carrier loads consignments on board the vessel and issues in Bill of Lading, which is not caused in any way, then he is deemed to have certified that the goods that he has received are as described in the Bill of Lading and he undertakes to take care of the. good and also discharge the same at the port of discharge. This Bill of Lading, therefore, is a prima facie evidence of the goods as described in the Bill of Lading. In other words an estoppel is set up against the carrier. This is of course a rebuttable presumption inasmuch as it is for the carrier to show that. the goods were in fact not as described, in the Bill of Lading. If carrier is not able to rebut the presumption and if he is not able to deliver the consignments as described in the Bill of Lading he is liable for any shortage or any damage to the cargoes. This principle equally applies to dry cargo as well as oil. cargo and no distinction can be drawn between the liability of a carrier for one cargo or the other. The only latitude that a carrier has is that he can show that the cargo was not loaded in the same quantity or condition as described in the Bill of Lading. However, if he can show at the discharging point that the shortage or damage to the cargoes occurred while the goods were not in carrier's custody then he can escape liability. He can also escape liability if he can show that loss or damage falls within one or more exception described in Article 4 of Hague Rules. If the carrier takes these pleas then the consignee whose consignment has been lost or damaged can show that the vessel was not seaworthy or cargo worthy "before and at the beginning of the voyage". If this happens, then the carrier can assert that he exercised due diligence to make the ship sea worthy. The burden of proof thus, keeps shifting between carrier and the consignee/shipper. The above proposition is easy to adhere to in case of general dry cargo but difficulty arises with the mode of carriage is unusual, particularly if it is containerized cargo or if the cargo is of a different kind such as oil cargo. In case of containerized cargo, the carrier often resorts to clausing the Bill of Lading, that is endorsing it with some qualifying remarks regarding the cargo because the containers are received by the carrier in sealed condition and are discharged in the same condition and the carrier never becomes aware of its contents. The remarks that the carrier normally endorses on container Bill of Lading are "said to contain". "Shipper load stow and count" or "CY to CFS" etc. describing that the container has moved directly from container freight station (CFS) or container yard (CY) to a station or yard at the discharging port. In view of such clausing of the Bill of Lading; the carrier maintains that the bill of lading is not even a prima facie evidence‑of the goods as described in the bill of lading and thus, the carriers have no liability for any loss or damage to contents of container as long as the container is delivered in a sealed condition. This seems very simple but it is not, because the basic question involved here is one of estoppel, that is to say whether an estoppel is set up against the carrier or not.‑ There is plethora of case‑law on this subject but the case on which the foundation of the entire structure of law on this point rests is the Canadian ` Sugar case i.e. Canada and Dominion Sugar Company Ltd. v. Canadian National (West Indies) Steamship Ltd. (1947) AC ,

46. In that case it was held:‑‑ That if a statement relating to the apparent good order and condition of the goods is qualified by endorsement of remarks in Bill of Lading then the estoppel falls." Based on this case it is now universally accepted that if a container is loaded in a sealed condition and is discharged in the same condition and p the Bill of Lading is claused as stated above then the carrier is not liable for loss or damage to ‑the cargo. The proposition is now sanctified even in Pakistan by the case reported in PLD 1992 SC 291. 1 have indulged in brief diagression (sic) about the containerized cargo only to bring the point home that as per the law developed in the last thirty years while determining the liability of the carrier under a contract of carriage, it has become important to ascertain whether the carrier was in fact aware or in the knowledge of what was loaded in the receptacle or in case of oil cargo in the tanks and also whether the cargo so loaded was discharged directly into the custody of consignee/receiver or after the discharge there .was yet another intermediary custodian. Having dealt with the part relating to lack of knowledge of the carrier relating to the contents of receptacle, the question that comes to fore now is whether the carrier will be liable for any loss or damage to the cargo once it has left the custody/control .of the carrier. The question attains particular importance in case of carriage of oil cargo. This I shall deal with later in this discussion on this issue. Presently it needs to be considered whether any shortlanding did occur in those cases or not. The table, that I have given under Issue No.3 would show that the quantity of cargo discovered at the time of arrival of the vessel was in fact in excess of the quantity loaded and yet it is found that quantities actually discharged into shore tanks are lesser than the arrived quantity. What be ‑ the explanation of this? From the description of methodology of loading and discharging of oil cargo above, it is clear that there is considerable difficulty in ascertaining the true quantities of cargo loaded in the ship because of the presence of many variable factors. The Bill of Lading issued for the oil cargo, therefore, .usually conforms, to the quantities calculated from the dip taken in shore tanks at the port of loading. However, when a ship carrying the consignments reaches the port of discharge and the quantities calculated after taking ullages of ships tanks are found to be lesser than the quantity described in the Bill of Lading for whatever reasons, then there is no doubt that the burden will be on the carrier to explain the shortage. If on the other hand the arrived quantity is the same as the Bill of Lading quantity or is in excess (which can be explained as an outcome of the difference in the variable factors fed into the calculation) then the presumption would be that there was no shortage. To say this is to simplify the problem involved but it is obviously not as simple as that. The evidence brought on record clearly shows that it is not possible for the oil cargo to be discharged directly to the consignee. Perforce, the cargo has to be discharged into the shore tanks which are often situated at great distance from the .oil pier and the pipelines leading to shore tank pass through area which is not under continuous surveillance. This state of affairs prevails in most countries but in spite of this usually there is very little difference between the quantities that are found to be on board and the quantities that are eventually found to be in the shore tanks. The difference between the two quantities is minimum and rarely exceeds 0.5 % which occurs due to what may be called "transportation losses". So much so that this figure of 0.5 has by now become internationally accepted. Even the plaintiffs in Suit No.781 of 1985 have, of their own volition, made an allowance of 0.5 % while calculating shortage in the cargo received. Whenever shortages have occurred in most developed countries these are normally attributable to either theft by the ship's staff or spills and leakages. However, unfortunately the conditions that prevail are somewhat different. Here evidence, has been brought through independent witnesses that there are vide spread incidents of theft by organized gangs whereby they drill holes in the pipelines and siphon away great quantities of oil. Evidence has also been brought on record to the effect that thefts occur from the shore tanks as well and that shore tanks themselves are erected on land based on soil sand and hence the bottoms of tanks tend to cave in leading to errors in calculation. Hence it cannot be said with any degree of certainty that if the cargo is found to be short after discharge into shore tanks, such shortage is attributable to the carrier. Nevertheless the fact remains that there is no alternative to discharging of oil cargo into shore tanks. The ideal would have been to give direct delivery from the ship's manifold into some containers of the consignee but that is not feasible. Considering that the oil cargo must be discharged into shore tanks the question that comes to fore is at what stage is the delivery made to consignee because as emphasised by one of the amicus curiae Mr. Ghulam Mohammed Ebrahim, merely discharge of the consignment is not sufficient, the cargo ought to be also delivered to the consignees by the carriers. There is no doubt that Article 3.2 of Hague Rules only enjoins the carrier to discharge the goods and not to deliver these to the consignee. Discharge means merely the act of letting something go or in other words get rid of something. Would that mean that the carrier would fulfil his responsibility under the law by merely depositing the cargo on any .quay or barge upon reaching the port of discharge? Apparently not; because it is the contract of carriage which must be considered and not period of line. To this extent Mr. Ghulam Mohanrmed Ebrahim is right and the contrary argument .has been rejected in a passage from the case of Pyrene Co. Ltd. v. Scindia Navigation Co. Ltd. (1945) 2 QHD 402 which has been approvingly cited by the Honourable Supreme Court in the case of East & West Steamship Co. v. Hussain Brothers and others PLD 1968 SC 15 as under:‑‑ "In my judgment this argument is fallacious, the cause of the fallacy perhaps lying the supposition inherent in it that the rights and liabilities under the rules attach to a period of time. I think that they attach to a contract or part of A contract." It would, thus, appear that in carriage of goods by sea the law cannot be viewed in isolation with contract of carriage and to that extent discharge and delivery would be concomitant to each other. However, in case of oil cargo the question arises, whether the delivery is made when the last drop of oil cargo exits from the ship's manifold or is it made when it reaches the shore tank or is it made when the consignee takes delivery from the shore tank. Alongwith the question of delivery the question that attains prominence in order to determine liability is, in whose custody can the oil cargo be considered to be at these various stages? What then is the definition of delivery in case of oil cargo? The word "delivery" means "handing over", "giving to some other person", in other words it connotes the act of physical parting with something into the custody of another. The law coordinates of this phenomenon are (1) the act of proffering or discharge and (2) the incidence of passing into another's custody, whosoever it might be. To show as to how this happens in case of oil cargo, I would quote the following passage from American Jurisdiction reported in 1972 American Mariline Cases page 373 Centerchem Products, Inc. v. A/S Rederiet Odfjell and Skibs A/S Haseel and A/S Specialbank 1972 AMC 373. "It has been established that proper delivery occurs when a carrier‑‑ (1) separates goods from the general bulk of the cargo; (2) designates item; and (3) gives due notice to the consignee of the time and place of their deposit and a reasonable time for their removal. Tilanto, 131 Fed. 229 (2 Cir. 1904), Calcot Ltd. v. Isbrandtsen Co. 1963 AMC 1993, 318 F (2d) 669 (1 Cir. 1963). When the glyoxal entered the flexible hose supplied by Norfolk Oil Transit. It was thereby separated from the other cargo it had been designated to the particular consignee and proper notice had already been given. ' It is, therefore, the opinion of this Court that the defendant carrier had effected Proper delivery once the chemical had left the ship's RiVes and entered the flexible hose. Since the plaintiff was unable to show any loss of glyoxal prior to this delivery, there can be no judgment against the carrier'. " From another American jurisdiction case of Northeast Petroleum Corporation v. S.S. Praire Grove 1977 AMC 2139, wherein the same point was considered, I will quote the following passage to bring the point home: "The Court does not agree with plaintiff that the amount of cargo represented by the shore figures taken at the Masshusetts ports constitutes the amount of cargo 'delivered'. Here, as provided by the charter party delivery occurred upon passage of the cargo from the vessels permanent hose connections to connections provided for by plaintiff. Although the best evidence of the amount of cargo so delivered, i.e. passing through the permanent hose connections of the vessel would be the actual total of the count of each barrel as it passed from the vessel's connections to plaintiff's coupled with the 'Dry Tank Certificates' absent this total, the Court finds that the next best .evidence of the amount of cargo delivered to be those calculations taken by the Captain and the Sayboll representative based on the joint ullage leading to the vessels tank upon, arrival at each destination point. Thus comparison of the shore tank figures (at load port) relied in the bulk of loading issued of Corpus Christi with either the figure calculated by the Captain or the Sayboll representative in Massachsaella establishes that the vessel arrived with substantially all of the cargo which was loaded at Corpus Christi." This definition of delivery brought out in the above case would clearly show that the delivery would occur once oil cargo leaves ship's manifold, which is akin to the well‑understood expression ships rail used in case of dry cargo. This point of view is further supported by the evidence brought on record, according to which the shore tanks are arranged by the consignees/receivers under an agreement whereby the shore tanks accept liability for any shortages. Besides, the shore tanks forminal representatives has also brought on record that the pipes that lead from the ships manifold, particularly the portion that lies outside the Karachi Port Trust Area right up to the shore tanks is laid by the shore tank terminal operators and its security is also their responsibility. The following extract from one of the clauses of the agreement between consignees and Shore Tank Terminal Operator would show that the shore tanks do accept responsibility for any shortage in the oil stored by them or any theft or pilfered of the said cargo: "(vi) The Contractors (Terminal Operators) shall indemnify the Hague (Consignees) for any loss caused to them due to non‑performance of the terms of this agreement by the Contractors and due to any loss of oil by theft, pillferage or any other reason. The Contractors further undertake to compensate the Hirers for any such loss by making payment of the value of the lost oil and for any other expenses on demand by the Hirers. (13) The Contractors shall be responsible for any shortage in the quantity of oil stored in their land tanks and they shall have no lien or right of retainership on such oil." Moreover, it has come on record that in case of oil cargo there is almost negligible involvement of KPT in the process of preparation of outturn report or the final delivery to the consignees in complete contradistinction to the process followed in case of dry cargoes KPT's interest in all oil cargo, as brought out by the evidence of Deputy Traffic Manager, KPT, is only to the extent of collection of wharfage charges and assisting customs to complete their formalities. The outturn report prepared by KPT in case of oil cargo is also not a document that is prepared by any involvement on their side but is entirely based on the shore tank figures provided to them by the surveyors who measure the quantities in the shore tanks after completion of discharge of the cargo. Further, the final delivery to the consignee is also not on one occasion but piecemeal,' that is to say that the delivery to the consignees/receivers could extend over a period of a month or even longer. The question thus, arises, in whose custody does the cargo lie all this while after it is discharged from the ship's manifold. It is obvious that unlike the dry cargo, it is not in the custody of the KPT nor can it be said that it is in the custody of the ship inasmuch as once the cargo leaves ship's manifold it is a matter of fact that ship owner/carrier has no further control over it as they have nothing to do with shore tanks terminal operators. Indeed even if the ship owner/carrier wanted to keep any control over the passage of oil after it leaves the ship's manifold it would be impossible for him to do so. Here I may quote a passage from a case cited earlier i.e.. 1977 AMC 2139:‑‑ "In accord with Genterchem Product (supra), this Court finds that as a practical matter this is the only conclusion which could be reached, to require the carrier to inspect a maze of piping and storage tanks over which it had no control or expertise would be burdensome if not impossible." However, it was argued before me by one of the amicus curiae, Mr. I.A. Lari that cargo could be considered to be in the custody of the carrier even after its discharge from the vessel and for this he relied on PLD 1968 SC 15 where since the cargo ‑was discharged into barrages by the ship it was held that the cargo continued to be in the custody of the vessel owner even when it was stored in the barrage. But in that case, the barrages were arranged by the ship owner. On the contrary in case of oil cargo it is an admitted position that shore tanks are arranged by consignees/receivers and not by the ship owner under a separate and independent agreement. Obviously, therefore, once the cargo leaves ship's manifold it is in the custody of shore tank terminal operators and the rights and liabilities with regard to the oil cargo would be governed by the terms and conditions of the Agreement between shore terminal tanks operator and the consignees/ receivers. The shore tank terminal operator, thus, being agents of the consignees, the cargo could even be considered to be in the constructive custody of the consignees/receivers themselves but it obviously cannot be considered to be in the custody of carriers. In this connection one of the amicus curiae, Mr. Muhammad Jamil Khan referred to the case of Amoco Oil Co. v. Parpada Shippin Co. Ltd. (1989) 1 LLR

369. In this case the question before the Court was whether the ship's figures upon arrival were to be preferred over shore tanks figures or vice versa. The learned Judge Staughton, J., came to the conclusion that ship's figures were to be preferred to the shore figures but this judgment was reversed by the Court of Appeal, which though approving the general principle of Carrier's custody of oil cargo lasting only till the ship's manifold, held that Staughton, J. had arrived at the wrong conclusion on a point of fact, that is even though he had found the evidence of the Chief Officer of the ship regarding the defective ship's automatic ullage guage to be suspect, he had nevertheless held that the ship's figures were to be preferred. Consequently, the Court of appeal felt that in that particular case, the shore tanks figures were to be preferred. Here it is necessary to consider that in this case discharge of oil took place in England where the incidences of differences between arrived quantity of oil and shore tank figures are very rare and incidence of pilferage from pipelines or the shore tank have hardly ever been reported. Moreover, the shore tanks in England are usually part of the port complex and, unlike in Pakistan, there is no evidence of there existing any contractual relationship between the receivers/consignees and shore tanks terminal operators. Consequently, it would appear that this case turns on facts and had little relevance to the situation at Karachi Port where the entire question regarding delivery, custody and also loss attributable to theft etc. have to be considered. Nevertheless in this case too as a matter of rule the learned Judges did agree that the ship owner had no further responsibility with regard to the oil cargo once it left the ship's manifold. A relevant passage from the judgment in which Lord Denaidson in his speech approvingly paraphrases a portion of Staughton, J., judgment, is quoted below:‑‑ "(i) The responsibility of the ship owners begins when the oil passes into the ship on loading and ends when it leaves the ship upon discharge at the port of destination. Measurements of quantities of oil at any other points are merely means of determining quantities at these crucial points to which, for clarity rather than absolute accuracy. I can refer as 'ship's rail'." And again a question from Staughton, J. as approved by Lord Donahdson:‑‑ "(ii) Secondly, the defendants are responsible for loss only if it occurred between the time when the oil came on board the ship and the time when it left the ship. As there may be a considerable distance of pipeline between the shore tank and the ship, both at loading and discharge ports. It is important to remember that losses which may occur between a shore tank or meter and the ship are not the ship _owner's responsibility." Having, thus, dealt with the questions as to when the delivery takes place, and as ~ to which the custody of ship in case of carriage of oil cargo ends, we are now in a position to examine the kind of losses that occur in the carriage of oil cargoes and how the liability for such losses is to be determined and apportioned and as to on whom the burden of proof lies. In order to answer these questions one has to examine various different situations that occur in the discharging of oil from ships. ' First is the occasion when the arrived quantities of cargo are found to‑ be the same in Bill of Lading or are found to be in excess. The quantities in excess ought to be ignored as the consignees cannot be asked to take into account the excess quantity of the cargo as there is no agreement or contract of carriage with regard to this additional cargo between the carriers and the consignees. The second situation would be when the arrived quantities are found to be short as compared to the Bill of Lading quantities. In such an event it is obvious that the carrier would be liable for such shortages and then the burden would shift on the carrier to snow that the shortage was covered under the exception laid down in Article 4.2 Hague Rules. He could also show that the quantities were short shipped at the port of loading. For this purpose the master of the ship can rely on the mate's receipt and if he is bound to sign for the amounts in excess of the amount actually loaded, for instance because of certain binding term of charter party, then he could lodge a note of protest at the port of leading before sailing and if time does not permit him to do so, he could lodge such note of protest immediately upon arrival at the first port that the vessel touches. Such note of protest may be accepted in evidence to show that the quantities actually loaded on board were not the same as shown in the Bill of Lading. Now coming to the first situation i.e. the arrived quantity is either the same or in excess of the quantity mentioned in the Bill of Lading. If their discharge of the consignment from the ship and after issuance of Dry Tank Certificate shortage is discovered when the measurements are taken in the shore tanks into which cargo is discharged, then the burden will be on the consignee to show that either the arrived quantities were incorrect or that the cargo was lost due to the fault or negligence of the carrier between the ships manifold and the shore tanks. This could occur if there was an oil spillage exactly at the point of exit of the cargo from the ship's manifold or if the carrier had for some reason or the other expressly accepted the responsibility for the oil even after it had left ship's manifold. If the consignee is able to show the arrived quantities to be incorrect the burden will shift to the carriers to prove affirmatively that not only the information fed for calculation such as trim, list of the ship etc. was correct but also to show that the voyage was uneventful, that is to say, that there were no leakages or spills during the voyage. This could be shown amongst other things by bringing on record‑the ship's log book abstracts relating to the period of vessel's passage between port of loading and port of discharge. It is trite law that in a claim for short delivery the burden of proof shifts to and from between the consignee and the carrier, though it is undeniable that legal burden lies on the claimants. He who alleges must prove. In this connection a passage from an American case i.e. 1977 AMC 2137 quoted earlier is very pertinent:‑‑ "Evidence introduced by plaintiff as well as defendant supports this conclusion, e.g. the 'dry tank certificate' issued at Corpus Christi establishes that the defendant's vessels log reciting an uneventful voyage significantly reduces the probability that any cargo was lost at sea, the Captain's testimony explaining the oil splits rebuts assertions that the vessels tanks were leaking, the fact that the seals on the tank were intact upon arrival establishes that there were no unauthorized deliveries, and the dry tank certificate issued after discharge at each port establishes that all of the cargo on board was delivered. Taken as a whole, this evidence establishes that the defendant was free from fault in the loss if any of plaintiff's cargo. See Dow Chemical Co. (U.K.) (supra), 1970 AMC at 391, 297 F. Supp. at 708." Yet in another case of American Jurisdiction a similar point was considered i.e. Palmco Inc. and Fireman's Fund Insurance Company v. American Resident Lines Ltd. and others 1978 AMC 1715:‑‑ "Defendant's primary defence is that there was no actual shortage, only. 'paper' losses. By comparing the bill of lading weights and the shore tank gauging weights, I have determined that there was shortage. The only method applicable to this case by which the defendant can defeat the prima facie case is by showing that it exercised due diligence in making the vessel seaworthy. Defendant has not presented sufficient evidence to establish its due diligence for the full amount of the loss. Defendant has introduced evidence tending to show clean and tight holds on board the ships and has introduced the ship's logs to negate any possible oil splits.". Before concluding discussion on this issue it is necessary to touch upon yet another aspect of the loss of oil cargo. Basically two kinds of losses can occur when oil cargoes are carried. One may be termed as "transportation losses" and the other "Marine losses". The causes of transportation losses includes clingage, sedimentation and evaporation. To explain it a little further, losses due to clingage occur because of the. oil sticking to the side of the oil tanks and into pipes, while losses due to sedimentation occur because of formation of sediments in the oil which often happens in case of edible oil cargoes. On the other hand, the "marine losses" are caused by incidents such as collision, unseaworthiness of the ship or cargo spaces or lack of care of the cargo. Taking the "transportation losses", first, it is now universally accepted that certain percentage of oil cargo is waste loss during transportation by sea and such loss has been accepted to be up to 0.5 % of the total quantity loaded on board. This kind of loss has been amply explained in the following passage from a case from American Jurisdiction 1978 AMC 1715 that has been cited earlier:‑‑ "Although defendant cannot explain away the full amount of the loss, it also contends that a certain small percentage of a bulk shipment of oil is always lost despite the carrier's due diligence. This amount known as a 'fare', is the result of film of oil on the walls of the ships holds, plus normal retention in the pumping lines. Defendant contends that the normal fare for bulk oil is .5 % . Plaintiff contends that there is legal basis for deducting .5 % of the cargo unless provided for the bill of lading. However,, the carrier is not an insurer of the cargo, COGSA imposes liability only if the carrier fails to exercise due diligence 46 U.S. Code, Sec. 1304(1). Defendant's proof of an expected and normal loss of .5 % rebuts plaintiff's prima facie case of unseaworthiness for that amount. Defendant is not liable for any shortage of up to .5 % per shipment. This completely disposes of any claims for shipments 4, 5 and 6 and reduces the claims for the four other shipments. And again in the same case it has been held:‑‑ "It is true that plaintiff has not suffered any damages for the amount of the lost oil which was actually moisture and impurities. However, defendant's method of computing damages results in presuming that the full amount of moisture and impurities was in the lost oil. Actually, moisture and impurities would be evenly distributed throughout the bulk shipment. The amount of the loss constituting moisture and impurities would be .2 % (for the first shipment) of the net shortage, not .2% of the full 1,500 ton shipment." As is apparent from the passage quoted above transportation losses' to the extent of 0.5 % relate to inflammable oil cargo only. Where the losses attributable to evaporation amount to about 0.2 % to 0.25 % , while the balance 0.25 % losses are attributable to other factors and these relate to all oil cargoes, including edible oil cargo. In view of the overwhelming evidence of universal acceptance of transportation losses as above, I hold that in case of inflammable oil cargo the transportation losses would not exceed I 0.5 % and in case of edible oil cargo this will not exceed 0.25 % . Considering that it is permissible for a carrier to claim exception for wastage in bulk under Article 4.2(m), Hague Rules, I hold that the carrier can press this exception into service and thus, if arrived quantity of cargo is less than the bill of lading quantity the carrier will not be liable for shortage up to 0.5 in case of inflammable oil cargo and 0.25% in case of edible oil cargo. I am informed that Pakistan Custom also allows up to 0.25 % shortage while calculating customs penalty on shortlanded quantity of edible oil cargo based on arrived quantities. I find this to be in accord with the universally accepted figures. In these two cases that are before me, the arrived quantities were found to be in excess of the figures mentioned in the Bill of Lading and "Dry Tank Certificates" were issued indicating that the entire cargo had been discharged from the vessel. No evidence has been brought on record to show that such was not the case in the light of the above discussion, therefore, this would mean that there was no shortlanding of cargo in both the cases. Issue No.5 Since I have already held under Issue No.4 that there was no shortlanding in both cases no finding need be recorded on this issue. Issue No.6 This issue finds a place virtually in every case relating to cargo claims. This occurs because it is generally the underwriter who sues after being subrogated to the rights of the consignee, who, as is well‑settled by now, requires such right only upon paying consignees' claim, as has been well‑settled by now. Consequently, it is always the attempt of the carriers to prove that the underwriters, as the plaintiffs are not entitled to sue by showing that they have not paid the claim. This, in my view, is a mere technicality which wastes considerable time of the Court. It is inconceivable that a consignee would sign a Letter of Subrogation presented by the Insurance Company without having first received the claim amount. This can occur only in cases where a regular customer of the Underwirter is involved and there are many pending claims. A consignee may then sign a Letter of Subrogation without having actually received cargo claim on a promise of its being paid in future. However, since it is well‑settled that the subrogation rights arise only after payment of the claim, actual payment would be necessary. Consequently, if an underwriter is able to produce a receipt for payment from the consignee alongwith letter of subrogation and a duly signed copy of loss voucher or even a copy of a cheque made out in the name of the consignee, then no further evidence with regard to. rights of subrogation would be necessary. I find in this case necessary proofs have been provided for the payments made to the consignee by the plaintiff and hence my findings with regard to this issue is in the affirmative. Issue No.7 I have already recorded my findings to .the effect that the 'carrier is not liable for the short receipt of the consignment by the consignee. Now all that remains to be considered is what, if any, is the liability of the ship agent. In cargo claim cases as a rule the plaintiffs seek a decree against all the defendants jointly and severally and the list of defendants invariably includes the ship agent who enters the vessel in the port. While one can understand the impleading of shipping agents as party to such proceedings, no explanation is available as to why a decree is sought against the agent jointly and severally with carrier. As explained earlier in this judgment, the agent's liability,, if at all, arises from a general bond signed by the agent with the customs under the provisions of section 55(1)(d) and (e) of the Customs Act, 1969, which is akin to section 64‑D of Customs Act, 1878, and is reproduced below for ease of reference:‑‑ "Section 55 (1). Power to refuse port clearance to vessel or permission for departure to other conveyance.‑‑‑ The appropriate officer may refuse to give port‑clearnace to vessel or permission for departure to any other conveyance until‑‑‑ (a) (b) (c) (d) The agent, if any, delivers to the appropriate officer declaration in writing to the effect that he will be liable for any penalty imposed under clause 24 of the Table under subsection (1) of section 156 and furnishes security for the discharge of the same. (e) The agent, if any, delivers to the appropriate officer declaration in writing to the effect that such agent is answerable for the discharge of all claims for damage or short delivery which may be established by the owner of any goods comprise in the import cargo in respect of such goods. (2) An agent delivering a declaration under clause (d) of subsection (1) shall be liable to a penalty which might be imposed on the person in charge of such conveyance under clause 24 of the Table under subsection (1) of section 56, and an agent delivering a declaration under clause (e) of subsection (1) shall be bound to discharge all claims referred to in such declaration." " It is significant to note that such bond is not signed by agent on every occasion that a vessel is entered in the port by him. In fact signing of such a bond by the agent is one of the prequisites for obtaining a licence to act as a ship's agent from the Customs. A plain reading of section 55 would show that the bond is given only to ensure the issuance of port clearance by the Customs for the vessel for departure from the port. It is given also to ,ensure that after departure of the vessel some one remains available in Pakistan from whom custom penalty can be received. Section 55(1)(d), therefore, makes the agent liable for customs penalty. In complete contradistinction to it,, section 55(1)(e), which deals with damage or short delivery of cargo, does not make the agent liable but only "answerable for discharge of all claims for damage or short delivery". This distinction' between the liability or answerability of the customs penalty and cargo claim respectively carries over to section 55(2), which makes the agent liable for k payments of all custom penalties which may be imposed on Master of the ship under section 156(1) of Customs Act but merely binds the agent to discharge all cargo claims. What then is the significance of use of the word "liable" for custom penalty and "answerable" and "discharge" for cargo claim? There was nothing to prevent the law‑makers from using the same words for both but the fact they chose to use different words for the two clearly goes to show that they had intended the responsibility .for two types of claims to be different. This point has been considered in the case of Crescent Sugar Mills and Distillery Ltd. v. American Export Isbrandtsen Inc. PLD 1983 Kar. 29 relevant passage from it is quoted below:‑‑ "The effect of these declarations has been specified in section 55(2). The agent will be liable to pay all the penalties specified above and shall be also liable to satisfy the claims relating to short delivery and damage to import cargo as specified in the declaration Such satisfaction of the claim is, however, subject to condition specified in section 55(i)(e) that agent's liability will arise only after the damage or short delivery is established. The agent's liability is, therefore, not independent of his principal. It is coextensive with the carrier and unless the claim is admitted, before holding the agent liable the claimant should establish his claim for damage of short delivery against the carrier. In this regard reference can be made to Barjorjee Cowasjee v. Habib Insurance Co. PLD 1975 Kar. 194 in which section 64(d) of Sea Custom Act, 1878, was under consideration and it was held that a ship agent is not personally liable on his declaration given under section 64(d) of the Sea Customs Act before the claim is established against the carrier. Further reference can be made to Haji Shakoor Ghani v. Hindle & Co. Ltd. AIR 1932 Bom. 330, Haji Shakoor Ghani Firm v. Firm of Volert Bros. and another AIR 1931 Sind 124, AIR 193'7 Sindh 11 (judgment in appeal); British India Steam Navigation Co. Ltd. and another v. M.A. Wadud & Co. and another PLD 1968 Dacca 860." In this case the learned Single Judge has in effect held that the agent's liability is coextensive with that of the carrier and before agent can be made liable for the cargo claim, the claimant should establish his claim against the carrier. But the learned Judge did not proceed further to examine as to how is the cargo claim to be satisfied once the liability is finally established after the end of all proceedings including appeals as appeals are essentially continuation of suits. To determine this, it will be necessary to examine the distinction between the words "liable" and "discharge" used in section 55(2) for Customs generally and cargo claims respectively. According to Black's Law Dictionary the word "liable" means the following:‑‑ "Liable. Bound or obliged in law or equity; responsible; chargeable; answerable; compellable to make satisfaction, compensation or restitution. Obligated, accountable for or chargeable with condition of being bound to respond because a wrong. has occurred. Condition out of which a legal liability might arise." And the word 'discharge' means the following:‑‑ "Discharge. To release; liberate; annul; unburdon; disincumber; dismiss. To extinguish an obligation." A comparison of the meanings of the two words would show that there is a subtle difference between the two, that before highlighting the difference it may be appropriate to consider the background and nature of the two undertakings that are, given by the ship agent pursuant to section 55(1)(d) and (e) i.e. with regard to Custom penalty and cargo claims in so far as Customs penalty is concerned, its origin lie:. in the distant past when Masters owned their own ships and often disposed of cargoes surreptitiously even before entering . the port of call. Upon entering port they lodged cargo manifest with Customs and claimed any shortage in the manifested cargo to peril of sea etc. This enabled the consignee‑‑ to claim exemption from payment of duty on the shortlanded cargo. Since the vessel off the port seen thereafter it became responsible for the Customs to make investigation into the true cause of shortage that resulted in depriving the State of the customs duty. It is in order to ensure that some one was available within the country 'to explain the shortage and upon liability being established to pay the Custom penalty, that this .provision of section 55(1)(d) was introduced, whereby agent was made personally liable. Personally the consignees pay the full. duty on satisfied cargo but upon shortlanding occurring they claim refund of duty paid' on shortlanded cargo. After departure of the vessel the Customs issue a letter of call to the Ship Agent (not the carrier) to explain the shortage and if the agent is. unable to explain, Customs penalty as per Customs Act, 1969 is imposed on the ship agent. The ship agent, thus, becomes personally liable to the Customs for payment of Customs penalty. It may appear to be rather a harsh measure as the ship agent has no contractual relationship with the consignees whatsoever and has no responsibility for the carriage of the goods, but it is nevertheless necessary because otherwise unscrupulous consignee in collusion with errant ship owners can avoid customs duties on a large scale. The mischief, therefore, that is sought to be addressed by section 55(I)(d) is very much present and needs to be suppressed since it involves Government revenues. However, situation is entirely different in so far as cargo claims arising from shortlanding or damage to a consignment is concerned first of all it appears extraordinary that such a provision i.e. section 55(l)(e) has found place in the Customs Act, because a cargo claim has no nexus with, liabilities under the Customs Act. The only explanation for the presence of such a provision in the Customs Act is that in the earlier days giving of port clearance was the sole responsibility of Customs and hence Customs wanted to ensure that before giving of port clearance the interests of a consignee, who has suffered losses due to fault of ship owners, are protected. Need it be said that this is no more the case. The port clearance is now given after "No objection" is recorded by many departments and organizations including Customs but not including consignee. This provision, therefore, has now become an anachronism because as already explained P&I Clubs now take over the responsibility for shortage of damage to cargo on behalf of the carrier but they do so not directly, only from behind the scenes. Moreover, the consignees can always protect themselves by obtaining, security for the claim by seeking arrest of the vessels under Admiralty Jurisdiction of this Court and in the alternative accepting Letters of Undertaking from P&I Clubs, which are all reputable organizations. Nevertheless the fact remains that this provision will exist on the statute books and thus, has to be interpreted by giving natural meanings to the. words that it consists of. Now, therefore, reverting to the meanings of "liable" and "discharge" used in the context of customs penalty and cargo claims respectively it is easy to see that since the word "liable" connotes legal responsibility the use of it in the context of customs penalty appears to be in consonance with the intention and anxiety of law‑makers to prevent evasion of customs duties by consignees in collusion with ship owners. But the use of the word "discharge" in the context of cargo claims connotes nothing but an "act of paying off" by the ship agent not on his own but on behalf of his Principals. But why should the ship agent pay off the claim of the consignee when he has no contractual relationship with the consignee whatsoever. It would be understandable for this to happen if the ship agents were the exclusive agents of their Principals who would then deem to carry on their business in Pakistan through the agent but not when they are general ship agents, who offer their services to all and sundry: It would, therefore, appear that while law‑makers wanted to make the ship agent co‑extensively responsible with carrier for answering for cargo claim, they did not want the agent to be personally liable for payment of the claim. All they were contemplating was that once the liability of the carrier was ‑established the ship agent should discharge the cargo claims on behalf of their Principals. I am, therefore, inclined to hold that if the ship agents are required to discharge the cargo claims, they would do so on behalf of their Principals and beyond their liability to do so would be essentially secondary liability, that is to say, the liability of the guarantor as contrasted with that of strict surety. Consequently, it is only when the consignee is unable to recover from the carrier, either because of his 'refusal or avoidance or unavailability within the boundaries of Pakistan, that the consignees/underwriters may proceed to recover from the ship agent. It would, therefore, seem that the Courts should refrain from passing joint and several decrees in a cargo claim cases against the carrier and ship agents. In fact the interest of the consignees/underwriters Will be sufficiently protected if the decree is sought and granted generally against the carriers and in the alternative against the ship agents. ' Since I have already held that the carriers have no responsibility for the short receipt of the cargo by the consignees in both suits and the result of the discussion under the above issue would show that the liability of the ship agents is in any case secondary. . 1 find that none of the defendants have any liability in both the suits. I accordingly dismiss both suits with no orders as to costs. But before parting with these cases I would like to record my appreciation for the assistance provided to me by the amicus curiae appointed by the Court. H.B.T./N‑10/K Suits dismissed.