Resource International Vs. MV Sargodha and others.

Resource International (Plaintiff)


MV Sargodha and others (Defendants)


Supreme Court

High Court Division

(Admiralty Jurisdiction)


Md. Awlad Ali J

Judgment dated : February 20, 2001.

Case Referred To-

FFUI Co. Ltd Vs. American President Lines, PLD 1992 (SC) 291.

Lawyers Involved:

Dr. M. Zahir with AKM Fazlul Haque, Advocates— For the Plaintiff.

Muhammad Ohiullah with SK Siddique, Md. Al Amin Sarker Advocates—For the Defendants.

Admiralty Suit No. 11 of 1995.


Md. Awlad Ali J.- The plaintiff has brought the suit claiming Taka 25,22,897.91 for damages and late delivery of cargo. Initially, the plaintiff laid the claim for Taka 45,00,962.00 on account of damages for non delivery and or late delivery of cargo. The amended claim is for the aforesaid amount for damages and compensation under different heads as detailed in paragraph 6(c) of the plaint.

2. The plaintiff’s case, in brief, is that the plaintiff is the importer of rice and other goods. The defendants Nos.1-3 are the carriers of various goods including rice. Their local agent is defendant No.4, Karnaphuli Shipping Corporation. By the bill of lading No. 47 dated 30-3-95, issued by ‘MV Sargodha’ the defendant Nos.1-3 contracted to carry 296.910 tons of rice from Karachi to Chittagong and loaded the goods on ‘MV Sargodha’. It is averred that the plaintiff forward sold the entire quantity of rice to Messers Lokman and Hafiz Enterprise at a price of Taka 14.00 per Kg and a total price of Taka 41,56,740.00. The ship ‘MV Sargodha’ arrived at Chittagong Port on 21-4-95 but did not have the cargo on board to deliver them to the plaintiff. The plaintiff believed that the containers were unloaded somewhere between Karachi and Chittagong and that the plaintiff apprehended that with the coming of Boro season when the price of rice will come down the ship owner may offer to deliver the rice depriving the plaintiff of the profit. It is revealed from the report of the clearing agent and surveyor that the consignment against the bill of lading had not arrived at Chittagong by ‘MV Sargodha’. The plaintiff claimed C&F price of Taka 33,41,707.00 plus loss of profit of Taka 11,59,255.00 and in total Taka 45,00,962.00. That after filing of the suit the defendants have delivered damaged cargo by another ship and the plaintiff received damaged and inferior cargo to the extent of 1002 bags out of 3,299 bags and that there was short delivery and torn bags in total 18.90 and the plaintiff has lost 1020.90 bags of rice worth of Taka 11,86,182.91 including duty, tax, port and clearing charges. The survey was conducted on 6th and 8th June, 1995 and the defendants refused to nominate their surveyor on flimsy pretext. The defendant’s loaded and unloaded cargo several times from one ship to another ship causing damage. The entire claim of the plaintiff on account of damage and compensation according to the amended pleadings is as follows:

“1. Damaged” 1002 bags x 90 Kgs = 90,180 Kgs x 12.91 (cost price) Taka


2. Torn 338 bags: 5% Lost i.e. 16.9 bagsx90= 1521Kgs x 1291.


3. Short received 2 bags (180) Kgs=


4. Loss due to fall in price of rice with the inflow of New Crop on 2,96,910 Kgs Taka 2.50 =


5. Additional Bank Interest due to delayed shipment


6. Post Landing Survey charges due to delay.


7. Compensation to the party.


8. Loss of Business Continuity.


Total Taka


3. The defendant Nos.1-4 to resist the claim of the plaintiff have filed written statement and denying the material allegations the defendants contended that the suit is not maintainable under the Admiralty Jurisdiction and that the plaintiff has no cause of action against the vessel ‘MV Sargodha’ and the vessel Sargodha was not liable to be arrested. The further claim of the defendants is that the suit having been filed against the vessel ‘MV Sargodha’, which did not carry the cargo; the security obtained from the vessel is not legal as the alleged damaged cargo was carried by another vessel ‘MV Lanka Mohapola’. The defendants further pleaded that the plaintiff instituted the suit for non delivery of the cargo of 296.910 metric tons of rice which the defendants contracted to carry by vessel ‘MV Sargodha’ from Karachi to Chittagong but due to vessel’s instability the cargo could not be carried by ‘MV Sargodha’ and thereafter the cargo was carried by ‘MV Lanka Mohapola’ in the FCL containers and the C&F agent of the plaintiff Messers Trade Point International received the cargo of the plaintiff on 7-6-95. The bill of lading clearly stipulated that the containers have been carried under FCT/FCL basis which means the shippers packed the cargo into the containers and sealed it at their risk, responsibility and cost at their yard and similarly, the consignee unsealed the containers and unpacked the goods from the containers at their own risk, cost and expenses. The containers were discharged from the vessel with seal intact and the said seal was broken in presence of the representative of the Customs, Port Authority and the consignee’s C&F agent and thus the defendants are not responsible for the alleged damage as claimed by the plaintiff. It is the case of the defendants that the containers in question were discharged by the carrier at the port of Chittagong with the seal intact. The defendant No.1 discharged their contractual obligations by delivering goods to the plaintiff at Chittagong Port against the original bill of lading. The plaintiff took the containers without serving any notice to the carrier for the survey of the ship within the stipulated period from its discharge which proves that the suit consignment has been delivered to the plaintiff in sound condition and no shortage and damage took place while it was in the custody of the carrier. It is contended that the ship owners under the compelling circumstances had to furnish Bank Guarantee for immediate release of the vessel, the suit is liable to be dismissed and the Bank Guarantee dated 6-5-1995 furnished by the defendants for the claim amount issued by the Banque Indosuez is to be returned to the defendants. In the written statement the defendants have also made counter-claim for the loss suffered by the defendants due to illegal detention of the vessel on account of the charter hire for 14 days and financial expenses and bunker cost upto the time of departure of the vessel from Chittagong Port and loss of earning for US $ 60,000 @ US 4355 per day for illegal detention of the vessel for 14 days, US $ 22,400 @ US $ 1600 per day on account of financial losses and US $ 7,070 for consuming additional bunkers. The defendants claim that for the loss they suffered the defendants are entitled to a decree for US $ 90,440 equivalent to Taka 36,17,600.00.

4. Upon the pleading of the parties the following issues were framed to adjudicate upon the dispute:

“i) Is the suit maintainable under the Admiralty Jurisdiction?

ii) Has the plaintiff any cause of action against the vessel ‘MV Sargodha’?

iii) Is the suit bad for misjoinder and non joinder of parties?

iv) Was the cargo of the plaintiff carried into the containers under FCT/FCL basis?

If so, will it affect the liability of the defendants?

v) Are the defendants responsible for the claim of the plaintiff. If so, to what extent?

vi) Is the counter-claim maintainable in the admiralty jurisdiction? If so, to what extent the defendants are entitled to a decree/relief, if any.”

5. The plaintiff has examined 2 witnesses and also adduced documentary evidence to prove the claim. The defendants examined Md. Hadis as the only witness and also adduced documentary evidence.

6. Mr. Ohiullah, the learned Counsel appearing for the defendants, has contended that the vessel ‘MV Sargodha’ did not carry the goods and the goods were carried by the vessel ‘MV Lanka Mohapola’ and, consequently, the plaintiff has no cause of action against the vessel ‘MV Sargodha’ and the vessel is liable to be released. He has further contended that the plaintiff originally made their claim on account of non delivery of the goods, as the cargo was delivered by ‘MV Lanka Mohapola’ the cause of action against the vessel ‘MV Sargodha’ for the alleged damages ceased to exist. He has argued that the cargo having been delivered according to the bill of lading at the port of discharge the defendants have no further liability. He has pointed out that the plaintiff has based his claim on the joint survey report Exhibit A which is not binding upon the defendants as no notice was given in writing to the defendants or their agent at the port of discharge within 72 hours from the date of discharge of the consignment as contemplated under Article III rule 6 of the Carriage of Goods by Sea Act 1925 and the goods having been removed from the port area without the knowledge of the carrier no liability could be fixed upon the carrier for the alleged damage. His contention as regards claim on account of loss due to fall in price of rice, additional bank interest due to delay in shipment, post landing survey charges, compensation to the party, loss of business continuity as made in item Nos. 4, 5, 6, 7 and 8 of paragraph 6c of the plaint is that those claims have not been proved by any evidence and, as such, those claims are liable to be dismissed. It is also contended that PW 1 Md. Shahidul Huq who is an associate of the plaintiff Resource International is not competent to depose before the Court as he had no power of attorney from the plaintiff while deposing and his deposition is unauthorised and should not be used as evidence.

7. The issue relating to the maintainability of the suit in Admiralty Jurisdiction and that whether the plaintiff has any cause of action against the vessel ‘MV Sargodha’ having been raised and has been decided by this Court indirectly in an interlocutory application made by the defendants for vacating the order of arrest of the vessel by judgment and order dated 7th May 1995. The question whether the plaintiff has cause of action against the vessel ‘MV Sargodha’ is dependent on the Bill of Lading which is the prima facie evidence of contract to carry the goods. The suit is maintainable under section 6 of the Admiralty Courts Act, 1861 as the Bill of Lading was issued by ‘MV Sargodha’. So, the issue is decided in favour of the plaintiff.

8. As regards the liability of the carrier which is related to issue Nos. 4 and 5, Mr Ohiullah has contended that the cargo was delivered at the port of discharge in sealed containers and the goods were stuffed in containers by the shipper in their yard and the sealed containers were delivered to the plaintiff in presence of their agent and the Port Authority and the Customs, the defendants discharged their liability having discharge the same containers which they took on board the vessel. Reliance has been placed upon a decision in the case of FFUI Co. Ltd. Vs. American President Lines reported in PLD 1992 (SC) 291 where it has been stated that the law has given choice to the carrier to enter the particulars declared by the shipper or not to enter them and further protects the carrier by making shipper liable for compensation for misrepresentation taking into consideration the commercial nature of the bill of lading which is a negotiable document it is necessary that where COGSA or Hague Rules as enacted, apply, they must be followed. Therefore, if the number of packages and the nature of goods are mentioned in the bill of lading then the words “said to contain” or “particulars furnished by the shipper” Cy/Cy and similar notation will not permit the carrier to dispute the prima facie character of the bill of lading issued in the prescribed manner. It has further been held that a bill of lading with notation like Cy/Cy CFS a SLC is a prima facie evidence as provided by law but its rebuttal by the carrier becomes easier and the burden becomes much lighter than in other cases. Such or similar notations on the bill of lading have gained currency and their meaning is well understood in shipping, commercial and banking circles to mean that the carrier was not associated with the stuffing of the container which was exclusively done by the shipper. In the face of such bill of lading the carrier need not prove these facts unless rebutted. It has only to establish that such sealed container was properly and carefully loaded, handled, stowed, carried, kept-cared for and discharged. The burden will then shift to the shipper to prove that the numbers of packages or goods as shown in the bill of lading were stuffed in it. Without such proof the claim for loss or damage cannot succeed. Whether the bill of lading is in respect of container without describing the goods contained in it, the words “apparent order and condition” will refer to the apparent condition of the container.

9. Ohiullah pointing out the notation Cy/Cy on the bill of lading exhibit. B contends that the notation indicates and it prima facie proved that the containers were stuffed exclusively by shipper in their container yard and the containers were fully discharged with the seal in tact and therefore the defendants have incurred no liability as alleged by the plaintiff.

10. Dr. Zahir, the learned Counsel representing the plaintiff, has contended that the suit is in rem against ‘MV Sargodha’ under section 6 of Admiralty Court Act 1861 which provides a remedy for consignee of bill of lading. The bill of lading in the instant case was admittedly issued by ‘MV Sargodha’. The owners of the ship Sargodha offered to deliver the goods by ‘MV Lanka Mohapol’ the plaintiff received the goods to mitigate the loss it was suing to recover. He has contended that the defendants had failed to deliver the goods by the vessel ‘MV Sargodha’ which admittedly arrived at Chittagong Port on 21-4-95. The plaintiff instituted the suit claiming Taka 45,00,962.00 for non delivery of cargo and on the prayer of the plaintiff the vessel ‘MV Sargodha’ was arrested. When the goods were delivered by another ship of the owner the plaintiff made the amended claim for Taka 25,22,897.00 and the plaintiff made the claim for damage for damage cargo, short delivery and compensation after the cargo was discharged by ‘MV Lanka Mohapola’. The survey was conducted between 6th and 8th July, 1995 and notice had been given to the defendants but they failed and or refused to nominate their surveyor for making joint survey. The survey report exhibit A revealed that in the discharged cargo there were damaged rice and there were also torn bags for which damage was calculated at the rate of 5% and there was shortage of 2 bags. The survey report having been accepted in evidence without any objection the same is a valid evidence in support of the claim of the plaintiff. The defendants having failed to carry the goods as per contract they cannot avail of the protection of law. He has further argued that Lanka Mahapola did not issue any bill of lading, so no suit lies against ‘MV Lanka Mohapola’ and the liability arose from the bill of lading issued by ‘MV Sargodha’, the defendants are liable to give an account of the goods which was taken on board ‘MV Sargodha’ but failed to carry by the said vessel to the port of discharge. He has chiefly argued that the defendants are liable for fundamental breach of the contract of carriage as the defendants contracted to carry the goods by ‘MV Sargodha’ which they failed to do, and he referred to “Four corners” rule as recited in rule 299 of Carver Carriage by Sea Vol-1 (part one) which is to the following effect “if you undertake to do a thing in a certain way, or to keep a thing in a certain place, with certain conditions protecting it, and have broken the contract by not doing the thing contracted for in the way contracted for, or not keeping the article in the place in which you have contracted to keep it, you cannot rely on the conditions which were only intended to protect you if you carried out the contract in the way in which you had contracted to do it.”

11. Dr. Zahir has further argued that the defendants contracted to carry the cargo by ‘MV Sargodha’ but had not done so and the goods were delivered late and the defendants thus committed fundamental breach for which the defendants cannot rely on the conditions incorporated in the bill of lading which were intended to protect them. For fundamental breach of the contract the defendants are liable to deliver the consignment in the order and conditions in which the goods were stuffed in the containers and were received by them on board the vessel. Admittedly defendants failed to carry the goods by vessel ‘MV Sargodha’ for its instability and thereby breached the contract and so the defendants cannot escape the liability of discharging the goods in the order and condition in which the goods were stuffed in the containers. Since the defendants are guilty of fundamental breach the burden is upon them to prove that at the point of discharge the goods were in the same order and condition in which they took on the vessel ‘MV Sargodha’. The defendants failed to establish that they carefully loaded, handled, stowed, carried, cared for and discharged the goods. There is no evidence adduced, by the defendants that in their presence the goods were delivered to the consignee in the order and condition in which the goods were received. The survey report Exhibit A although is not the result of joint survey but its veracity cannot be questioned, for, the defendants took no step to see the condition of the goods which the defendants could have done even after the goods were received by the plaintiff. In the written statement it is admitted that the goods were received by the plaintiff on 7th June, and the plaintiff’s case is that the survey was made between 6th and 8th June, 1995 and that the plaintiff requested the defendants to appoint joint surveyor by the fax message as it is evident from Exhibit C. The defendants were not careful to make any survey nor did they care to see whether the goods carried by ‘MV Lanka Mohapola’ was in the same order and condition in which it was received on the ship ‘MV Sargodha’. The contention raised by the learned Counsel of the defendants that the deposition of PW cannot be accepted, but it is seen that the PW 2 Zarre Omar, the proprietor of the plaintiff firm, himself deposed before the Court and stated in cross-examination that the cargo was discharged from the vessel ‘MV Lanka Mohapola’ and there was no bill of lading issued by ‘MV Lanka Mohapola’. There was one bill of lading for the cargo imported and there was no bill of lading issued by the second carrier and the cargo was surveyed within the port premises of the Chittagong Port. DW1 Md Hadis deposed that the cargo was booked for the vessel Sargodha but it was not carried by the vessel due to technical reasons. Therefore, considering the evidence both oral and documentary and also the principle as enunciated in the aforesaid ‘four corners’ rule it can be said that the defendants cannot escape the liability at least in respect of the damaged cargo to the extent of 1002 bags the price of which is Taka 11,64,223.80 and then damage for torn bags at the rate of 5% which comes to Taka 19,630.11 and for short delivery of 2 bags the price of which is Taka 2,323.00 and thus the defendants liability is assessed at Taka 11,86,176.91. It appears from the bill of lading that 2% discolored rice was there in the consignment which is not disputed and accordingly, the price of the said damaged rice which comes to Taka 23,723.54 should be excluded from the amount to be awarded to the plaintiff. The claim on account of loss due to fall in price of rice with the inflow of new crop could not be proved by any cogent evidence either oral or documentary. The price index of Consumers Association of Bangladesh Exhibit ‘Y’ which appears to be a Photostat copy cannot be accepted as valid evidence, for, that has not been proved by any officer of the Consumers Association. The claim in item Nos. 5, 6, 7 and 8 calculated under various heads are too remote and those are not supported by any evidence, as such, those are dismissed. Thus the plaintiff is entitled to a decree for Taka 11,62,453.40. The suit is accordingly, partly decreed with cost. The plaintiff shall realise the decretal amount by enchasing the bank guarantee furnished by the defendants and the remainder will be returned to the contesting defendants.

The vessel ‘MV Sargodha’ was arrested by this Court due to the default of the defendants and consequently, the counter-claim is not entertainable and the same is dismissed.



Source : 53 DLR (2001) 381