P L D 1974 Karachi 171 (PLP)

(b) Whether the liability of the defendants ceased on account of the acceptance of the delivery of the goods by the consignee after survey of the goods? (4) Whether the vessel aboard which the goods came to Karachi belonged to a third party? If so, what is the effect on the liability of the defendants? (5) Whether the plaintiff is entitled to bring the present suit. (6) To what amount the plaintiff is entitled to and against which of the defendants?

4. Issue No.1.--‑This issue is not pressed by Mr. Hafeez Lakho the learned counsel for the defendants in view of the decision of the Supreme Court of Pakistan in the case of M. A. Chowdhry v. Mitsui O. S. K. Line Ltd. (P L D 1970 S C 373).

5. Issues Nos. 2 and 3.‑--These two issues may be combined together. In so far as the 8 packages which were surveyed at the Port are concerned there is no dispute between the parties that the same were damaged. In so far as the remaining packages are concerned even according to the survey report of the consignee's surveyors Exh. 5/2, they were at the port externally sound. Therefore, 17 packages which were found externally damaged at the factory premises must have been damaged subsequent to their removal from port premises and the shipping company cannot, therefore, be held responsible for the damage to these 17 packages. As regards 8 packages which were found externally damaged, some attempt was made by Mr. Lakho to show that the damage was on account of defective or inadequate packing. The defen dants have however failed to prove this allegation, which was in any event sought to be inferred from circumstances only. Mr. Lakho argued that these packages could not have been damaged unless the packing was defective; that these packages were, according to Preliminary Outturn Report (Each. 7/1) and. Defective Cargo List (Exh. 7/ 2), intact, while on board, that there was no allegation of mishandling of packages during unloading by P. W. 5, the sur veyor of said Isharat & Co. As regards Exhs. 7/1 to 7/2, they remain unproved and while it is correct that P. W. 5 did not in so many words allege mishand ling, the admitted survey report Exh. 5/2 states the cause as "rough handling during discharge". Admittedly the entire consignment was received by the defendant No. 1 in apparent good order. Admittedly the damage was caused only to 8 packages out of total number of 726 packages. It is difficult to believe that out of such a large consignment only 8 packages were inadequa tely packed, as there is no complaint in relation to the rest. I, therefore, hold that the responsibility for damage to the 8 packages which were examined at the Port is squarely on the defendant No. 1.

6. As regards the survey reports we have in all three of them; two of them (Exhs. 7/3 and 5/2) relate to external damage found to the 8 packages at the port and they are substantially the same and are not disputed. The third survey report is by Isharat & Co., Exh. 5/1 dated 6‑10‑1968, subsequent to the survey of the entire consignment at the factory premises of the consignees. In so far as this survey report purports to give the damage to the contents of the 8 packages is concerned Mr. Hafiz Lakho accepts the same. As regards the contents of 17 other packages which were found damaged, it is irrelevant for it has not been established that the damage to these 17 packages was, caused by any act of omission or commission on the part of the defendant No.

1. In fact according to the final survey report of Isharat & Co. Exh. 5/2, all packages, other than 8, were found externally sound. I, therefore, hold that the liability of the defendants is confined to the damage caused to 8 packages only and the extent of the loss arising therefrom is to be ascertained from the survey report Exh. 5/1 given by Isharat & Co. In view of this finding, I need not discuss issue 3(b) which has only assumed academic importance.

7. Issues No. 4 & 5.‑These issues are not pressed by Mr. Hafiz Lakho and are, therefore, decided against the defendants.

8. Issue No. 6.‑Codsiderable arguments were addressed at the Bar on this issue. I must express my satisfaction at the fair and candid postures adopted by the learned counsel on both sides.

9. The claim in the suit is' for Rs. 1,62,931.07 but Mr. A. Rauf for the plaintiff conceded that he would be entitled to recover a sum of Rs. 38,375.00 only, being equivalent to D. M. 30,000, which is the sum, the insurers, the plaintiff; has paid to the consignees and no more in view of the provisions contained in section 135‑A of the Contract Act. In so far as the 8 packages are concerned there is no dispute between the parties as regards the extent of the damage. Mr. Hafiz Lakho filed a statement (marked for the purpose of identification) showing missing or damaged items in each of these 8 packages, its value in Dutche Marks and the liability of the defendants in pound sterling converted into Pakistani Rupees. Mr. A. Rauf accepts this statement, at least in so far as it shows the actual damage to the packages, loss to its contents and its value. Out of these 8 packages, according to the statement, there is no claim in respect of three packages. In the first package, the invoice value of the missing or damaged items in Dutche Marks is shown at D. M. 2924=(Rs. 3481.02) but the case of Mr. Hafiz Lakho is that the liability of the defendant is confined to the maximum of 100 per package, which will reduce the claim in terms of rupees from 3,481.02 to Rs. 1,142.83 being equivalent to

100. In relation to the second package, the invoice value of the missing and/or demaged parts is D. M. 235.25 equal to Pak. Rs. 280.07. In the third, package the value of the missing and/or damaged parts in Dutche Marks comes to 4874.00 equivalent to in Pakistan Rs. 5802.07 but according to Mr. Lakho the liability would be confined to maximum of 100 i.e. Pak Rs. 1,142.86. For the fourth package the value of the damaged or missing., parts is shown at D.M. 889 i.e. Pak Rs. 1,058.35. In the last package the value of the damaged or missing parts comes to D.M. 15600.00 and its equivalent in Pakistani rupees will be Rs. 18,571.00 but according to Mr. Hafiz Lakho the maximum liability of shipping company will be confined to 100 i.e. Pak Rs. 1,142.86. Thus total liability admitted by the defendants as per the said statement marked `X'comes to Rs. 4,787.00. Mr. Hafiz Lakho, however, stated,. for reasons appearing hereinafter, that the maximum liability per package should. be D.M. 1250 = 110 = Pak Rs. 1,488.12 which will increase the defendant's liability from Rs. 4,787.00 to Rs. 5,802.71. Mr. A. Rauf the learned counsel for the plaintiff contended that in so far as the Bill of Lading provided for the maximum liability at 100 per package or the shippers net invoice cost of damaged and/or missing parts whichever is less, the later part contravenes the Hague Rules. The argument was that for every damaged package the liability of the shipping company was 100 irrespective of the fact that the damage caused to its contents was according to the invoice value less than

100. In order' to appreciate this contention of Mr. A. Rauf, it is necessary to reproduce the, Clause Paramount and clause 24 of the Bill of Lading and rule 5 of the Article. IV of what are popularly known as the Hague Riles: "A. Clause Paramount.‑The contract evidenced by this Bill of Lading shall, in respect of so much of the carriage hereby covered as extend from the beginning to the end of the Hague Rules period, have effect (a) where the Port' of Loading whether local or otherwise as the case may be, is in territory where legislation giving compulsory effect to the International Convention concerning Bills of Lading of 25th August 1924 is in force (being Legislation having the like effect as the Carriage of Goods by Sea Act, 1924 of the United Kingdom, including., the rules .contained in the ‑Schedule thereto) subject to such legislation; and a in any other case as if the said Carriage of Goods by Sea Act 1924 of the United Kingdom (including the rules contained in the Schedule thereto other than Article IX thereof) applied and the Carrier shall be entitled to the benefit of all the privileges, rights and immunities conferred by the said Act and Rules, as if the same were herein specifically set out. Nothing herein contained shall be deemed to be a surrender by the Carrier of any of his privileges, rights or immunities or any increase of any of his responsibilities or liabilities under‑the said Legislation, Act. or Rules. If and to the extent that any provision of the Bill of Lading is rendered null and void by the said legislation, Act or Rules, this Bill of Lading shall in respect of the Hague Rules period have effect as if that provision bad never been inserted herein and that provision shall be void not only to the extent of such repugnancy or inconsistency and no further." "Clause

24. Claims.‑The liability of the carrier, in case of loss of, or damage to, or detention of, the goods in circumstances involving him in responsibility shall be calculated on, and shall in no case exceed, the Shipper's net invoice cost and disbursements, or 100 per package or unit, less all charges saved, whichever shall be least. In the case of' ad volorem charges Carrier's responsibility shall not exceed the value of the goods declared before the time of shipment and inserted in this Bill of Lading." Rule S Act IV. "Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding 100 per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the Bill of Lading. This declaration if embodied in the bill of lading shall be prima facie evidence, but shall not be binding or conclusive on the carrier. By agreement between the carrier, master or agent of the carrier and the shipper another maximum amount than that mentioned in this para graph may be fixed provided that such maximum shall not be less than the figure above‑named. Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with goods if the nature or value thereof has been knowingly misstated by the shipper in the bill of lading." The Clause Paramount makes applicable to the parties the law giving effect to the International Convention concerning bill of lading of 25th August 1924 (obviously a mistake for 15th August 1924) at the port of loading and in its .absence the Carriage of Goods by Sea Act, 1924 of the United Kingdom. That there is a law giving effect up to the said Convention at the port of load ing, namely, Bremen, West Germany is not disputed. Even otherwise, at least for the purpose of the present argument, we can safely rely on Article IV, rule 5 of the Hague Rules, which has admittedly been, in identical terms, incorporated both in German as well as U. K. Laws.

10. Mr. A. Rauf argued that under paragraph 3 of the said rule 5 of Article IV the liability provided for in para. 1, i.e. 100 per package, cannot be reduced by any agreement between the parties. He, therefore, went on to argue that in respect of every damaged package, irrespective of the actual loss 6 being less than 100, the plaintiff will be entitled to the maximum provide in paragraph 3, rule 5 of the said Article IV i.e. 100 per package, and that in so far as the clause 24 of the Bill of Lading purported to reduce this maximum, it was inconsistent with law applicable, namely, U. K. law or alternatively the German Law and, therefore, of no effect. The question therefore. that arises for consideration is whether there is any inconsistency between said rule 5 of Art. IV and clause 24 of the bill of lading. I am unable to come to the conclusion that under this rule, notwithstanding that actual loss in relation to a package is less than 100, the carrier would be liable for a non‑equivalent to

100. The argument was that in the present case by agree ment between the parties the maximum was fixed at actual net invoice cost or lost or damaged goods, which, if less than 100, would reduce the maximum envisaged by paragraph 3 of rule 5 of Article IV. The argument is untenable for more than one reason. The first paragraph of rule 5 expressly provides that the liability of the carrier for loss or damage to the goods will not exceed to 100 per package. In other words the paragraph clearly envisages loss of an amount less than equivalent to

100. Paragraph 3 of rule 5 no doubt mentions that the carrier and shipper may by an agreement fix liability for a sum other than 100, but it shall not be less than

100. Rule 5 must be read as a whole and in consonance with the general principles of law relating to damages. In my view it is not the intention of this paragraph to make the carrier liable for a loss not occasioned to the shipper. The learned counsel over looks that actual loss must precede liability and the compensa tion or liability cannot exceed what the law regards on actual loss. The consequence otherwise would be that the missing or damaged article may be of a very insignificant value and its deprivation would entitle the shipper to compensation several times larger than the actual loss i.e. cost of the missing or damaged article. There is no conflict between clause 24 of the Bill of lading and said rule 5 of Article 1V. Paragraph 1 of clause 5 itself envisages liability of less than 100 and paragraph 3 is to be read as an embargo on the carrier not to reduce its liability to less than 100 if the loss occasioned to the shipper exceeds this sum, and not as entitling the shipper to receive more than his actual loss.

11. Mr. A. Rauf invited my attention to two decisions, one of the Supreme Court of Pakistan reported as Messrs Karachi Steam Navigation Co. Ltd. v. Messrs Abdul Rahman Abdul Gani (P L D 1962 S C 90) and another being an unreported decision of this Court in Revision Application No. 276/1968. The facts of both these cases are entirely different. In the Supreme Court case the bill of lading fixed the liability of the carrier at Rs. 250 per package while the claim of the shipper was for an amount exceeding Rs. 250 but less than equivalent of 100, and the contention was that the clause in the bill of lading violated rule 5 of Article IV of the Carriage of Goods by Sea Act, 1924. In the Karachi case, the Court was not even called upon to examine the said Article IV. The facts were that two bags were short delivered by the carrier and while the carrier admitted liability to the extent of Rs. 970.05 the shipper claimed Rs. 1,792.37 and the difference arose on account of the controversy that in fixing the market rate of the short delivery of bags, its Bonus Voucher value should be ignored and the Court upheld the contention of the shipper.

12. I, therefore, hold that in relation to these packages where the invoice cost of missing or damaged parts was less than 100, the plaintiff would be entitled to its actual cost equivalent in Pakistani rupee.

13. In relation to those packages, the damaged or the missing parts of which exceeded in value 100, Mr. A. Rauf for the plaintiff admitted that the plaintiff would only be entitled to maximum of 100 per package but went on to argue that 100 must be taken equivalent to its gold value as provided for in Article IX of the Hague Rules as in force in United Kingdom. I must at once state that there is no evidence led in this case of equivalent of pound sterling in gold value. Be that as it may, in the present case, the bill of lading expressly provides that the law in force at the port of loading, in the present case in West Germany, is applicable and according to Carver, Germany adopted the Hague Rules on 1st Januarp 1940. Paragraph 1 of Article IX of Hague Rules undoubtedly provides that monetary units stated in Hague Rules are to be taken to be gold value and, therefore, 100 stated in rule 5 of Article IV must also be taken in gold value. But paragraph 2 of Article IX provides that those contracting States in which pound sterling is not a mone tary unit reserve themselves the right of translating the sums so indicated in pound sterling into terms of their own monetary system in round figures. Again according to Carver, Germany fixed equivalent to 100 stated in Article IV, rule 5, at DM 1250. Mr. Hafiz Lakho has also filed notarially certified .copy of the relevant provision of the German Law which confirms this position. Mr. A. Rauf, however, contended that the law applicable would be either Pakistani or English Carriage of Goods by Sea Act, which does not provide for conversion of pound sterling in local currency. In so far as application of Pakistan Law is concerned his argument was that the contract was substantially performed in Pakistan and, therefore, Pakistani Law should apply. The application of a law in relation to a contract is ordinarily to be governed by the terms of the contract between the parties and the question f whether one or the other law applies normally arises when the contract is silent. Reliance was sought to be placed on a case reported in flasham Ishaq v. Karachi Gas Co. Ltd. (P L D 1969 Kar. 109). In this case contract was silent as regards the application of law while the plaintiff relied on the Law in Kenya and the defendant's case was that Pakistani law was applicable and the Court held in favour of the plaintiff on the ground that contract was to be arbitrarily performed in Kenya with which the contract had the closest connection. More appreciable to the present case will be the following observation of the Privy Council in the case of Vita Food Products Incorporated V. Unus Shipping Co. Ltd. ((1939) A C 277) at page 289: --‑ "It will be convenient at this point to determine what is the proper law of the contract. In their Lordships opinion the express words of the bill of lading must receive effect, with the result that the contract is governed by English Law. It is now well settled that by English Law (and the Law of Nova Scotia is the same), the proper law of contract `is the law which the parties intended to apply'. That intention is objectively ascertained, and, if not expressed, will be presumed from the terms of the contract and the relevant surrounding circumstances. But as Lord Atkin, dealing with cases where the intention of the parties is expressed, said in Rex v. International Trustee for etc. Bondholders A. G. (1937) A C 500) a case which contains the latest enunciation of this principle), their intention will be ascertained by the intention expressed in the contract if any' which will be conclusive. It is objected that this is too broadly stated and that some qualifications are necessary. It is true that in questions relating to the conflict of laws rules cannot generally be stated in absolute terms but rather as prima facie presumptions. But were the English rule that intention is the test applies, and where there is an express statement by the parties of their intention to select the law of the contract, it is difficult to see what qualifications are possible, provided the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on the ground of public policy." As regards, the application of English law the argument of Mr. A. Rauf was that the defendants had at more than one place, in their pleadings, admitted, nay, urged application of English Law. Even if I were to assume is to be so, a party cannot be bound by a plea of law and it is for the Court to determine the law applicable. Law applicable according to the bill of lading is clearly the law of port of loading i.e. West Germany, according to which 100 in rule 5 of Article IV is to be read as DM 1250.00. The learned counsel did not advance any positive argument against application of the contracted German Law.

14. In calculating the damages on the above basis the amount due and payable by the defendants in Dutch Marks comes to D. M.4874.25 and its equivalent in Pakistani rupees at Rs. 5,872.21.

15. The result is that the suit is decreed for Rs. 5,802.71 with propor tionate cost. Decretal amount will carry an interest of 6 % per annum with effect from 6‑10‑1968 until payment. K. B. A. Suit decreed.