1966 (3) TMI 88 - SC - Indian Laws

Shipowners Liable for Deceitful Misrepresentation Leading to Damages Upheld on Appeal

ELLERMAN AND BUCKNALL STEAMSHIP CO. LTD. Versus SHA MISRIMAL BHERAJEE

ELLERMAN AND BUCKNALL STEAMSHIP CO. LTD. Versus SHA MISRIMAL BHERAJEE - 1966 AIR 1892, 1966 (0) Suppl. SCR 92 Issues Involved:1. Basis of the respondent's cause of action: breach of contract vs. deceit.2. Shipowners' duty or obligation regarding the statement in the bills of lading.3. Nature of the bills of lading: clean or unclean.4. Appellant's liability in tort.5. Additional points raised by the appellant.Issue-wise Detailed Analysis:1. Basis of the respondent's cause of action: breach of contract vs. deceit:The appellant contended that the High Court granted relief based on deceit while the respondent's cause of action was founded on breach of contract. However, the court found that the respondent's claim against the shipowners was based on both contract and tort. The plaint alleged that the shipowners issued bills of lading without disclosing the true state of facts and inserted untrue statements, which constituted misrepresentation. The court held that the claim of misrepresentation was made in the plaint, denied by the appellant in the written statement, and argued in both lower courts. Therefore, the High Court did not make out a new case.2. Shipowners' duty or obligation regarding the statement in the bills of lading:The appellant argued that under common law or contract, they had no duty to state in the bills of lading that the drums were old, and the non-mention of that fact could not have misled the Bank. The court noted that a bill of lading serves as a receipt for the goods shipped, evidence of the contract for carriage, and a document of title. The shipowners' contract was to deliver the goods in the same condition as when shipped. The consignee incurred damages because the seller sent different goods, not due to any defect in the drums. Thus, the shipowners were not liable for breach of contract.3. Nature of the bills of lading: clean or unclean:The appellant contended that the bills of lading were clean, as the oldness or newness of drums had no real impact on the contents. The court explained that a clean bill of lading does not contain any reservation about the apparent good order and condition of the goods or packing. The shipowners issued clean bills of lading despite knowing the drums were reused, intending to enable the seller to obtain payment under the letters of credit. The court found that the shipowners' action constituted a misrepresentation and collusion with the seller, fulfilling the elements of deceit.4. Appellant's liability in tort:The court held that deceit involves a false statement made knowingly or recklessly with the intent that it be acted upon, causing damage. The shipowners knowingly issued clean bills of lading with the intent that the Bank would make payment based on them. The court found that the shipowners' representation was intended to enable the seller to operate upon the credit with the Bank, and all elements of deceit were present. The High Court's decision to hold the appellant liable for damages was upheld.5. Additional points raised by the appellant:The appellant raised three further points: (i) the shipowners were not bound by the representation made by the ship's mate; (ii) the bill of lading was governed by American law, not common law; and (iii) the plaintiff-buyer, having obtained a decree against the seller in the American court, could not maintain the present suit for damages. The court did not allow these points as they were not raised earlier or lacked sufficient material on record.Conclusion:The appeal was dismissed, and the High Court's decree holding the shipowners liable for damages was upheld. The court emphasized that the shipowners' misrepresentation and collusion with the seller constituted deceit, leading to the Bank making payments it otherwise would not have made.