P L D 1968 Supreme Court 15 (PLP)

FAZLE‑AKBAR, J.‑The facts in this appeal by special leave are not seriously in dispute, but they give rise to questions which are of general importance to the shipowners operating in the ports, of this country. The plaintiff, Hossain Brothers, hereinafter called the con signee, was the holder of bills of lading Nos, 28 and 29 dated 9th September 1953, in respect of 115 bales of cotton which were shipped under them at Karachi for carriage to and delivery at Chittagong Port on board the vessel ss. "FAtakada" belonging to the defendant East and West Steamship Company hereinafter called the shipowners. When "Fatakada" reached Chittagong the said cargo was discharged into a lighter engaged by the ship owners and then carried to the landing jetty. On taking delivery of the goods the consignee found that some 33 bales had been damaged by rain water. On survey by the Lloyds the damage was assessed at Rs. 13,025‑9‑9 inclusive of survey fees. The consignee also claimed Rs. 776 as interest at the rate of 6 per cent. on the said amount. Thus, the consignee laid his claim for damages at Rs. 13,801‑9‑

9. The shipowners disclaimed all liability relying on the conditions subject to which the bills of lading were expressed to be issued. In other words, according to them, they were protected by the exceptions contained in the bills of lading. The Subordinate Judge decreed the suit for Rs. 13,025‑9‑

9. As the consignee had already received Rs. 12,658‑7‑0 from defendant No. 4, Messrs Queensland Insurance Company Ltd., and executed a letter of subrogation in their favour, the Subordi nate Judge directed that the decree would be for the benefit of the said Insurance Company to the extent of the amount paid by them, i.e., Rs. 12,658‑7‑

0. On appeal, the judgment and decree of the Subordinate Judge were upheld by the High Court. The case has been argued before us on agreed facts, namely, that there was no damage caused to the goods either during the time they were in the ship's hold or at the time of their discharge at the outer anchorage and that the goods were actually damaged by rain water when they were in the lighter. The only question which has been pressed before us is whether the shipowners are completely protected by the terms and con ditions mentioned in the bills of lading. Both the bills of lading contain similar terms. It will therefore be necessary to set out the relevant provisions of the bill of lading. There is a paramount clause the opening words of which are: "All the terms, provisions and conditions of the Indian Carriage of Goods by Sea Act, 1925, and the Schedule thereto are to apply to the contract contained in this bill of lading.". It further provides: "The said goods, to be carried and delivered subject to the terms and conditions of this Bill of lading in the like good order and condition at the port of Chittagong unto Order or his or their assigns." It then says: "In all cases and under all circumstances the Company's liability shall absolutely cease when the goods are free of the vessel's tackle and thereupon the goods shall be at the risk for all purposes and in every respect of shippers or consignees." The above provisions are in the printed part of the bill of lading, and the following clauses are typed thereafter:‑-- "(a) All general cargo will be discharged at Chittagong at outer anchorage owing to deep draft of the vessels. Under the circumstances all general cargo other than rapeseeds in bags is accepted for shipment on the distinct understanding that the ship will not be responsible for any damage sustained by such cargo due to its being discharged at outer anchorage into lighters nor will the ship be responsible for shortage of packages and/or its contents partially or wholly due to any reason including pilferage." "(b) Discharging of Cargo at Chittagong anchorage will be carried out at shipper's risk and ship and/or lighterage department will not be responsible for the loss and/or damage, etc. in Cargo." There is also the following rubber stamp endorsement on the bill of lading: "Discharging of Cargo at Chittagong anchorage will be carried out at shipper's risk and ship and/or lighterage department will not be responsible for the loss and/or damage etc. in Cargo." Thus the paramount clause shows that the bill of lading is subject to the provisions of The Hague Rules which have been incorporated in the Schedule to the Carriage of Goods by Sea Act, 1925. In order to appreciate the contentions raised by the parties it will be convenient at this stage to set out the relevant provisions of The Hague Rules. Rules (b) and (e) of Article I: "(b) `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) `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." Article II: "Risks.‑Subject to the provisions of Article VI, 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 hereinafter set forth." Rules 2 and 8 of Article III: "

2. Subject to the provisions of Article IV, 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 goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability." On behalf of the shipowners it was contended that the obligations they undertook werefulfilled by discharge of the goods in the lighter and that at any rate their liability ceased when the goods were once "free of the ship's tackle". In support of this contention reliance was also placed on rule (e) of Article I which defines "Carriage of goods". In other words, it was argued that as soon as the goods were put into the lighter the sea transit was over and the terms and conditions of the bill of lading were attracted. Further, according to the learned counsel, "carriage of goods" covered the period from the time when the goods were loaded on to the time when they were discharged from the ship. It was; therefore, argued that as the damage to the goods occurred outside the aforesaid period, the company was not liable for the damage. The meaning and effect of Article I (e) was considered in the case of Pyrene Co. Ltd. v. Scindia Navigation Co. Ltd. ((1954)2QBD402) and Devlin, J. while repelling the contention "that if the casualty does not fall within the period covered by this last definition (I

‑e) the rules do not apply to it" observed at page 415 as follows: "In my judgment this argument is fallacious, the cause of the fallacy perhaps lying in 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." While elucidating his view the learned Judge says:‑

"It is not intended to specify a precise moment of time. Of course, if the operation of the rules began and ended with a period of time a precise specification would be necessary. But they do not. It is legitimate in England to look at section 1 of the Act, which applies the rules not to a period of time but "in relation to and in connection 'with the carriage of goods by sea.' " The rules themselves show the same things. The obligations in Article 3, rule 1, for example, to use due diligence to make the ship seaworthy and man and equip her properly are independent of time. The operation of the rules is determined by the limits of the contract of carri age by sea and not by any limits of time." The above observations, with which I respectfully concur, are sufficient to repel the contention of the learned counsel that the carriage of goods covered the period from the time when the goods were loaded to the time when they were discharged from the ship. I now turn to the clause in the bill of lading providing for cesser of liability. It says that "the Company's liability shall absolutely cease when the goods are free of the ship's tackle." A somewhat similar clause, namely, "the responsibility of carrier whether as a carrier or as custodian or bailee of the goods shall be deemed to commence only when the goods are loaded on the ship and to cease absolutely after they are discharged therefrom" came up for consideration in the case of Sze Hai Tong Bank Ltd., v. Rambler Cycle Co., Ltd. ((1959)3Al1ER182(PC)) before the Privy Council and Lord Denning observed at page 185:‑-- "The exemption, on the face of it, could hardly be more comprehensive and it is contended that it is wide enough to absolve the shipping company from responsibility for the act of which the respondents complain, that is to say, the delivery of the goods to a person who, to their knowledge, was not entitled to receive them. If the exemption clause, on its true construction, absolved the shipping company from an act such as that, it seems that, by parity of reasoning, they would have been absolved if they had given the goods away to some passer‑by or had burnt them or thrown them into the sea. If it bad been suggested to the parties that the condition exempted the shipping company in such a case, they would both have said: 'Of course not.' There is therefore, an implied limitation on the clause, which cuts down the extreme width of it; and as a matter of construction, their Lordships decline to attribute to it the unreasonable effect contended for. But their Lordships go further. If such an extreme width were given to the exemption clause, it would run counter to the main object and intent of the contract. For the contract, as it seems to their Lordships, has as one of its main objects, the proper delivery of the goods by the shipping company, 'unto order or his or their assigns', against production of the bill of lading. It would defeat this object entirely if the shipping company was at liberty, at its own will and pleasure, to deliver the goods to somebody else, to someone not entitled at all, without being liable for the consequences. The clause must, therefore, be limited and modified to the extent necessary to enable effect to be given to the main object and intent of the contact: see Glynn v. Margetson & Co. G. H. Renton & Co. Ltd. v. Palmyra Trading Corporation of Panama. In my opinion the legal position has been correctly stated in the above case. Now, it cannot be disputed that one of the objects and intent of the contract in the instant case was that the ship owner would discharge the goods carried "properly and carefully" as laid down in Article III, rule 2, of The Hague Rules which have been incorporated in the Carriage of Goods by Sea Act. Carver while dealing with this rule 2 in his book "Carriage of Goods by Sea", 9th Edition, at page 186 correctly points out that this rule is "one which defines the scope of the contract of service rather than the terms on which that service is to be performed." The words "shall properly and carefully . . . discharge the goods carried" have been interpreted by Lord Morton in the case of G. H. Renton & Co. Ltd. v. Palmyra Trading Corporation of Panama (1957 A C 149) in these words:‑

"I construe the words 'shall properly and carefully carry and discharge the goods carried' as meaning that the carrier must perform the duty of carriage and discharge imposed upon him by the contract in a proper and careful manner." In other words, the ordinary discharge of goods should be accompanied by the ordinary duties of avoiding negligence. Hence it was the duty of the shipowners to see that the lighter was seaworthy in the ordinary sense of the word, that is to say, it was structurally fit for reception and carriage of particular goods. Now, the evidence has established that the lighter had no fixed cover to protect the cargo from rain and that she used tarpaulin for the purpose if and when necessary. It has also been proved that the cargo was discharged on 1‑10‑53 and the goods were water‑stained by rain on the next day, i.e., on 2‑10‑

53. As the cargo consisted of valuable goods it was the bounden duty of the shipowner or his agents before discharging the cargo, to be satisfied if the lighter was properly equipped for the purpose. This, they did not do. It is not even pretended that any care was taken in the election of the lighter. Thus, there was lack of due diligence on the part of the shipowners or their servants or agents in discharging the cargo on a lighter which was not properly fitted for reception of the goods. The case of Goodivin Perreira & Co. Ltd. v. Lamport and Holt Ltd. reported in Aspinall's Maritime Law Cases, Vol. XVIII, page 38, on which the learned counsel has relied, has no bearing on the facts of this case in that case the Court on the evidence came to the conclusion that "the accident happened through another cause which arose without the actual fault or privity of carriers or without fault or neglect of the agents or servants of the carriers" and hence held that as there was no negligence or fault of the shipowners or their agents or servants, the consignee was not entitled to get any damage. I therefore, conclude the first stage of argument by saying that the shipowners were under a contractual obligation of care in discharging the cargo, that they committed a breach of it, that the consignee thereby suffered damage and that the consignee was entitled to recover damage unless it was shown that there were other intervening facts which would preclude recovery of damage. In order to escape the consequences of damage, the learned counsel has relied on the exception clauses in the bill of lading. They areas follows:‑

(i) The second part of cesser of liability clause provides that after the goods are free of the ships tackle "the goods shall be at the risk for all purposes and in every respect, of shippers or consignee". Furthermore, typewritten clauses (a) and (b) which have been set out in the earlier part of the judgment say:‑-- (a) "that the ship will not be responsible for any damage sustained by such cargo due to its being discharged at outer anchorage into lighters. (b) "discharging of Cargo at Chittagong anchorage will be carried out at shipper's risk and ship and/or lighterage department will not be responsible for the loss and/or damage, etc. in Cargo." Carver in his book on "Carriage of Goods by Sea", 9th Edition, while dealing with the question as to what extent the use of the words "at shipper's risk" in the bill of lading, would relieve the shipowner of his liability for loss or damage, summed up his conclusion thus:‑-- "It is now well‑settled that the words `at shipper's risk', or `at charterer's risk' in contract of carriage by sea do not exempt the shipowner from liability for negligence, although they do not of course prevent him from relying on a specific exception in the contract which relieves him from such a liability." I may now refer to some of the English decisions on this point. The leading case on this question is that of The Galileo (1915 A C 199). In that case the bill of lading contained a clause that the goods to be transhipped at ship's expense and shipper's risk. During S its transhipment the machinery was placed in an unattended lighter of which the planking was rotten. It therefore sank v and the machinery was damaged. Bargrave Deane, J. held that the shipowners were liable for the damage on the ground that the words "at shipper's risk" did not cover their negli gence in placing the machinery in an unseaworthy lighter. , The Court of Appeal affirmed the decision on the ground that those words did not cover the breach by the shipowners of the fundamental obligation in respect of seaworthiness. The House of Lords also affirmed that decision on the ground that the words did not exempt the shipowners from liability for the negligence in placing the machinery in an unseaworthy lighter. Lord Shaw in his speech said at page 205:‑

"In principle, my Lords, there is no difference between the case of a man pretending to fulfil his obligation of tranship ment by putting goods into an unseaworthy lighter and the case of a man pretending to fulfil his obligation of tranship. ment by putting the goods into the sea. For all purposes in law and in fact these goods are just the same as if they had been negligently dropped by the shipowner, in the course of what is called transhipment, into the bottom of the dock. That being so, my Lords, I do not think that there was any duty of transhipment performed here in any sense which a Court of law could affirm. Upon that ground I hold that liability attaches to the shipowners." In the case of C. Wilh Svensons Travaruakttesolag v. Clife Steamship Company ((1932) 1 K B 490) a similar question arose with regard to "charterer's risk" and Wright, J. observed at page 498:‑ "It is quite clear, in my judgment, on the authorities as they now stand, that the words `at charterers' risk', standing alone and apart from any other exception in the charterparty, do not excuse the shipowner in the case of a loss due to the breach of warranty of seaworthiness. That, if it needed autho rity, is clearly laid down by the Court of Appeal in The Galileo, and I do not find any reason to qualify that conclusion by anything that I find in the decision of the same case in the House of Lords. The words `at charterers risk' would clearly also not apply to damage occurring after a deviation. These limitations on the apparent generality of the words are, I think, too clear to need further discussion, and I think that the words, standing by themselves, have also to be read as limited to losses and damage where there has been no negligence on the part of the shipowner or his servants. This is clearly stated by Bankes and Scrutton L. J. J., sitting as a Divisional Court in Mersey Shipping and Transport Co. v. Rea Ltd., and is deduced from the principles well established and laid down in the Court of Appeal in Price & Co. v. Union Lighterage Co." Now, the exception clauses on which the counsel has relied do not expressly excuse shipowner in the case of loss or damage due to negligence. In other words, the clauses standing by themselves do not exempt the shipowner from liability for damage for negligence. Hence, it must be read as limited to losses or damages where there is no negligence on the part of the ship owners. In this connection, reference may be made to the following observations in Price & Co. v. Union Lighterage Company ((1904) 1 K B 412): "Accordingly, in Grill v. General Iron Screw Collier Co., an exception in a bill of lading of "accidents of whatever nature or kind soever' was held not to cover a collision caused by negligence of master and crew; see also Phillips v. Clark, Czech v. General Steam Navigation Co. `It is the duty of the ship owner by himself and his servants to do all he can to avoid the excepted perils; the exception, in other words, limits the liability, not the duty'. I understand the meaning of this to be that an exemption, in general words, not expressly relating to negligence, even though the words are wide enough to include loss by the carrier's servants must be construed as limiting the liability of the carrier as assurer, and not as relieving him from the duty of exercising reasonable skill and care. If the carrier desires to relieve himself from the duty of using by himself and his servants reasonable skill and care in the carriage of goods, he must do so in plain language and expli citly, and not by general words." For the reasons stated above I hold that the exception clauses do not exonerate the shipowners from liability for negligence. I may also point out that if there was a clause in the bill of lading exempting the shipowners from liability for loss or damage resulting from negligence in discharging the cargo even than it would not have helped them because the same would be null and void by reason of Article III of The Hague Rules. Rule 2 of Article III imposes on the carrier certain obliga tions in relation to those matters which the shipowner agrees to perform under the contract of affreightment. Further, the obligations set out therein must be carefully carried out by the shipowner. Article IV gives him certain rights and immunity, in relation to those obligations which are mentioned in Article III, Rule

2. Rule 8 of Article III invalidates any provision in the bill of lading by which the carrier seeks to relieve himself from liability for loss or damage to or in connection with goods otherwise than as provided in Article IV. Once the goods are loaded on the ship, the shipowner can free himself from the obligation by bringing himself within the exception mentioned in Article IV. Rule 2 of Article III has already been cited. It is directed to the manner in which the obligations entered into are to be carried out. No doubt, rule 2 of Article III is subject to Article 1V. But exceptions mentioned in Article IV do not cover a case of failure to discharge the goods "properly and carefully". Hence, the exception clauses will not protect the shipowners in this case against the consequences of negligence. I would, therefore, hold that the shipowners committed a breach of the obligation contained in the bill of lading and as such the consignee was entitled to recover damages in a case like this. The quantum of damage awarded by the Courts below has not been challenged before us. For all these reasons I would dismiss the appeal with costs. A. R. CORNELIUS, C. J.‑I agree. HAMOODUR REHMAN, J.‑I agree. MUMAMMAD YAKUB ALI, J.‑I agree. S. A. RAHMAN, J.‑I agree but would add that even if the contract of carriage by sea could be said to have ended with the discharge of goods from the ship into a lighter engaged by the shipowners, the latter would not be absolved from liability as bailees of the goods till they were handed ,over to the consignees or their agents or assignees. Negligence as a bailee would have sufficed to sustain the claim against the Shipping Company and here there was clear negligence resulting in damage to the goods. S. Q. Appeal dismissed.