TaxTMI 
TaxTMI 
1981 (8) TMI 255
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.... follows - The first appellant company is a ship owner and carrier of goods and owned the ship S. S. Varunadevi. The second appellant company is the operating manager of the above said steamer. The third defendant (against whom the suit has been dismissed) is the steamer agent of appellants 1 and 2 at Tuticorin. As operating manager of the ship, s. S. Varunadevi, the second appellant received on board the ship at the Bangkok Port, Thailand, 96000 bags of Thailand boiled rice ( 15% broken ) packed in new single gunny bags, weighing 9681.000.388 metric tonnes gross and 9575.4.388 metric tonnes net, each bag thus weighing 100.844 kilograms gross and 99.744 kilograms net, with a tare weight of 1.100 kilograms per bag. The bags were all of uniform size and weight and the consignment was received on board the ship in good order and condition. The second appellant issued 34 clean onboard bills of lading at Bangkok acknowledging therein the receipt of the goods and also agreed to deliver the goods at Tuticorin, the port of discharge, in like good order and condition to the order of the respondent. The ship arrived at the Port of Tuticorin on 31.8.1969 and commenced discharge of the cargo o....
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....shortage of 87,686.040 metric tonnes even after adjustment of ship and shore sweepings. The clearing agents of the respondent preferred four claims against the third defendant as the steamer agent of the first appellant. The first claim under bill No. 1 was for Rs. 82,247.58 towards loss resulting from the slackness of 3000 bags after adjusting the weight of quantity recovered from ship and shore sweepings. The claim under bill No. 2 was for Rs.74,411.39, towards shortage in contents in 28,336 bags delivered to the State Government authorities. The claim under bill No. 3 was for Rs. 2338.64, towards cost of the 25 bags that were lost overboard when being transferred from the ship to the lighters. The last claim under bill No. 4 was for Rs. 503 paid towards survey fees. The third defendant did not settle the claim under any of the bills in spite of repeated demands by the respondent and, instead, repudiated the claim stating that over side delivery had been given and as such the ship owner and the operating agent were not responsible for any shortage. The stand taken by the third defendant is not a tenable one because, as per clause 30 of the Charter party agreement between the part....
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.... by the owners on board or ashore for whose acts they would, but for the clause, be responsible or from unseaworthiness of the vessel on loading or commencement of the voyage or at any time whatsoever. In the instant case the stowage was performed by the shippers, their stevedores, and servants and hence the appellants are not liable for the alleged shortage in the quantity of the consignment delivered at Tuticorin. There has been no breach whatever by the appellants of any of the provisions of clause 2 of the charter party. In any event, the second defendant (second appellant) and the third defendant are not liable for the plaint claim because the second appellant is only the operating manager of the first appellant and the third appellant is only the steamer agent of the first appellant and hence the second appellant and the third defendant are only agents of the first appellant. Clause 18 of the charter party provides that the loading and stowing of the vessel as well as discharge of the cargo will be free of risk and expenses to the defendants and consequently, the defendants are under no liability to deliver the cargo. On the other hand, it is the duty and responsibility of th....
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.... all done by or on behalf of the respondent. The respondent is not entitled to claim survey fees. As per clause 30 of the Charter party, the appellants will be liable to account only for the number of bags which were shipped and, viewed in that light, the appellants had performed their obligations in delivering the identical number of bags viz. 96000 bags. Since there is no breach of clause 2 of the Charter party, the appellants are not liable for the plaint claim in any manner. The respondent is not entitled to claim insurance charges as it has not taken out any insurance. The appellants do not admit the shortage of rice that is said to have occurred. Even if there is any shortage, it may have been due to drag which may be as high as 7-1/2 per cent during a normal voyage. On the basis of such defences, the appellants and the third defendant prayed for the dismissal of the suit filed by the respondent. 4. The learned Subordinate Judge set for consideration in the trial of the suit 16 issues as set out below- 1. Whether this court has no jurisdiction to try this suit? 2. Whether the defendants are not liable as per clause 2 of Charter party? 3. Whether ....
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....s the correctness of the judgment and decree of the Subordinate Judge, that is questioned by the appellants in this appeal. 6. Mr. Sampath Kumar, learned counsel for the appellants, assailed the judgment and decree of the trial court on various grounds and argued that on the terms of the Charterparty and in the light of the evidence that has been adduced in the case, the trial court should have held that the appellants were not liable to pay damages to the respondent for shortage of weight if any in the rice bags that were delivered at Tuticorin. The learned counsel argued that the vessel had been engaged on voyage charter and it had carried only the consignment of the respondent and none other, and the loading on board the vessel at Bangkok and the unloading of the vessel at Tuticorin had been undertaken and done by the respondent itself through its men and agents and as such the appellants were not responsible for any loss in the weight of goods. The counsel stated that the liability of the appellant would arise only if there had been any negligence in the shortage of the rice bags in the hatches etc., but no such negligence was noticed by the surveyor when he inspected the se....
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.... been test-checked with reference to the quality and weight by an independent agency vis., the Board of Trade of Thailand, the certificate obtained regarding the quality and weight and hence it would be taken that all the bags were of proper weight and quality when they were loaded on board the vessel. The fact that the vessel was engaged on a charterparty and the terms of contract were set out in the charterparty, will not absolve the appellants of their liability to deliver the exact quantity of rice that was loaded, could be seen from the fact that the appellants seen had issued clean bills of lading which among other things, contained clear recitals about the number of bags that were loaded and the quantity of rice contained in those bags. There had been no reference, in the bills of lading, to slackness of bags or shortage of weight contents and hence the appellants were estopped from setting up a different plea now. Even though the ship was engaged on charterparty, the appellants are statutorily liable for proper stowage, storage and handling of the goods and the mere fact that loading and unloading were done by the respondent's men will not absolve the appellants of thei....
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.... 4. Whether the appellants are liable to pay damages to the respondent for shortage of weight in the rice bags and if so in what sum? 5. Whether the appellants are liable to pay survey charges? and 6. If the respondent's claim for damages is sustained, whether the second appellants is also personally liable? 9. Point 6 : We will first take up this question for consideration, because it does not present any problem. The second appellant was undoubtedly the operating manager of the vessel belonging to the first appellant. In the plaint it is averred that the second appellant was the operating manager of the steamer S. S. Varunadevi, owned by the first appellant during the relevant period and that in its capacity as operating manager, the second appellant had issued clean on-board bills of lading in respect of the consignments received on board the vessel and expressly mentioned in the bills of lading that the consignment was received in good order and condition and the said goods were to be delivered in like good order and condition at the port of discharge. It is on this basis the second appellant is also sought to be made personally liable. However, in....
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....contentions, these defendants say that neither their operating manager nor their agent had any authority to make any admission about liability or the weight shipped." 10. In other portions of the written statement also, the first appellant had proceeded on the basis that it was not only the owner of the vessel, but it was also the party with which the charterparty had been entered into and hence it (the first appellant) was entitled to rely upon the terms of Ex. A. 1 and refute its liability to answer the plaint claim. Having regard to the categorical stand taken by the first appellant in its written statement there is no scope at all for respondent to contend or the Subordinate Judge to hold, that the second appellant is also an independent contracting party and is personally liable to answer the suit claim. The relevant section in the Indian Contract Act which will govern the situation is S. 230. The section reads as follows- "S. 230 : Agent cannot personally enforce, nor be bound by, contract on behalf of principal:- In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he pe....
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.... that the finding rendered by the Subordinate Judge, on the relevant issue, viz, issue No. 6 is not correct. 11. Points 1 and 2 : These two points may be conveniently taken up for discussion together, because the stand of the respondent is that even if the terms of Ex. A-1 protect the rights of the appellants, the bills of lading issued by the master of the vessel will estop them from refuting their liability to pay damages for shortage of weight in the rice bags. The facts which are not in controversy are as follows. Pursuant to an agreement entered into by the Government of India on behalf of the respondent, with the Government of Thailand for import of rice from Thailand to India, the Government of Thailand placed orders with rice millers in Thailand for supply of rice and the millers supplied 96,000 bags and its was these bags which were transported to the ship S. S. Varunadevi,. Ten per cent of the shipment weighed before loading at the mill or go down in Bangkok and on the basis of the average weight per bag ascertained, the Board of Trade of Thailand certified the weight of the entire shipment under Ex. A-447 to A-490. Upon receipt of the cargo on board the ship, the Mast....
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....nt was brought to the shore, 3000 slack bags were segregated and those bags were subjected to survey and a survey report, Ex. A. 595 was obtained. In the meantime, the rice bags allotted to the Collectors of Madurai and Ramnad districts, had to be handed over to the representatives of the respective Collectors. On the insistence of those representatives for the rice bags being weighed before delivery was effected, the rice bags were loaded into lorries and weighed at the lorry weigh bridge and the weight particulars were determined. Notice was given to the 3rd defendant to be present at the time of weighment of the bags at the lorry weigh-bridge but the 3rd defendant refused to attend the weighment and took the stand that the liability of its principals ceased as soon as overside delivery was effected. The weighment certificates obtained from the weigh-bridge authorities are Exs. A. 86 to A. 423. The shortage that was noticed in the 28336 bags came to 79,940.583 metric tonnes. 12. The question for consideration is whether the shortage in the rice bags is to be made good by the appellants. The appellants stand is that they are not liable because their liability is restricted unde....
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.... stowage of the goods, or by personal want of diligence on the part of the ship owner or their manager to make the vessel seaworthy and ensure its proper operation, the appellants would say that they cannot be held liable for slackage of the bags on for any loss of weight in the consignment of rice. The respondent would however, say that even though the loading and unloading had been done by men employed by it, yet the actual operations on board the ship had been done as per instructions given by the officers of the ship and in particular, the stowage operations were entirely looked after by the said officers and, in such circumstances, the appellants cannot disown their liability for the loss that had been occasioned to the respondent when the cargo was in transit. The further contention of the respondent is that in any event, clause 2 of Ex. A-1 will be subject to the overriding terms of cl. 30 which says that bills of lading would be conclusive evidence against the ship owners as to the number of bags shipped and the vessel would be responsible for the number of bags and contents short delivered in terms of the quantity noted in the bills of lading. 13. In the first place, we....
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....of the five caused mentioned above, in other words, that apart from special contract or statute every ship owner is under a liability akin to that of a common carrier, irrespective of whether the goods were shipped by a charterer or on a general ship. The absence of a binding decision of the point is, no doubt due, at least in part, to the fact that, in practice, goods are invariably shipped in pursuance of a contract the terms of which are set out in a bill of lading or in some other document. In such circumstances, the position at Common Law is of no more that academic interest. It has, however, been pointed out that in principle, there is no good reason for imposing upon the ship owner, whose ship carries the goods of one person, only a less strict liability with regard to those goods than he would have incurred had they been shipped by several persons; the reasoning applicable in the one case seems equally applicable in the other.: From the above passage it may be seen that in law a ship owner, whose ship is chartered, will not stand in the same position as a common carrier t the owner for any loss or damage caused to his goods when they were carried on the vessel. On ....
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....ed case the endorsement made by the Master of the vessel on each boat note that the ship was not responsible had been accepted without demur by the agent of the Food Corporation of India, but in the present case, the clearing agent had protested to the Master of the vessel about making such unwarranted endorsement in the boat notes. We fail to see how this circumstance will alter the situation and place the respondents on a better footing. The question of liability of the ship owner has to be determined with reference to the terms of the charterparty and not with reference to the terms of any endorsement made on the boat notes and whether the clearing agents accepted the endorsement made on the boat notes and whether the clearing agents accepted the endorsement on the boat notes without demur or under protest. Mr. Menon then argued that in any case, the ship owner is governed by the provisions of the Indian Carriage of Goods by Sea Act, and under Art. 3, clause (2) they are statutorily liable for proper loading, handling stowing etc. of the goods and such being the case, the first appellant cannot escape its liability merely on the ground that the loading and unloading were done by....
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.... against short delivery. For dealing with this argument, it is necessary to refer to the terms of the bills of lading. Since all of them are identical except with reference to the number of bags and their weight contents we will refer to the terms contained in Ex. A. 491. It is stated that all the terms, provisions and conditions of the Indian Carriage of Goods by Sea Act 1925, and the schedule thereto will apply to the contract in the bill of lading and if. anything contained in the bill of lading were inconsistent with the provisions of the said Act. the provisions in the bill of lading will stand cancelled to the extent of the inconsistency. The liability of the carrier prior to the loading and subsequent to discharge from the ship has been made subject to the conditions and exceptions contained in the bill of lading. The clauses inserted by way of exception need not detain us. because they are not relevant for consideration. In the `particular' column, the loading marks, the number of packages or pieces, the description of the cargo and the gross weight in kilograms are mentioned. There is an endorsement that the goods have been brought `in apparent good order and condition....
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....t, no carrier, master or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity or weight which he has reasonable grounds for suspecting not accurately to represent the goods actually received or which he has had no reasonable means of checking." 16. The learned Subordinate Judge has proceeded on the basis that a close read of cl. 18 of Ex. A. 1 will show that the stowage has been done by the shippers, that what was intended by the parties was that loading and stowage will be free of risk to the owners of the vessel only so far as payment to the workers and liability for accidental risk of workers during stowage is concerned and it will not mean that the ship owner will not be liable for loss or damage to the goods or for short delivery. He has then held that it has been alleged in the plaint that the ship owners and his agent had improperly and negligently performed the stowage of the cargo in the holds of the ship and this averment has not been controverted by the defendants-appellants by examining any of the officers or crew members and proving that there had been no negligence on their part. Even here, we may point out the mis....
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....uthorised to give the receipt for the goods for the express purpose of making evidence against the person, who received them and such being the case, the value or force or effect of the documents cannot be given up, though the party issuing the receipts can say that there was some mistake made in the receipt and adducing evidence to show that the goods were not received on board. In the view of Lord Halsbury, it was a question of fact and if there was no evidence to displace the evidence of the document. viz., the bill of lading, the particulars contained in the bill of lading should receive acceptance from courts. 18. The matter came to be considered more fully in New Chinese Antimony Co. Ltd. v. Ocean Steamship Co. Ltd., (1917) 2 KB 664. The facts were that the master of a steamship Tisntsin had to receive on board a quantity of antimony oxide ore shipped at the port of Hankow for conveyance to the port of London. The bill of lading signed by the master referred inter alia to the consignment of antimony oxide ore weighing 937 tons. In the margin of the bill of lading, the following typewritten clause was made, "No mark". A quantity said to be nine hundred and thirty seven tons....
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....lading, which is prepared by the shippers for acceptance by the defendant's agent, the agent accepts in the margin a quantity `said to be 937 tons' and in the body of the bill of lading there is a clause `weight & c, unknown', there is no prima facie evidence that 937 tons have been shipped. Sankey, J. in my judgment omitted to give proper effect to the words `weight & c. unknown'." 20. For reaching such a conclusion, Viscount Reading, C. J. relied upon two earlier decisions viz., Jessel v. Bath, (1867) LR 2 Ex 267 and Lebeau v. General Steam Navigation Co., (1872) LR 8 CP 88. 21. Pickford. L. J. in his separate judgment, stated ass follows- "It has been argued that that view (the view taken in Smith & Co. v. Bedouin Steam Navigation Co., (1896) AC 70 was right and that the word `weight & c unknown' have practically no effect. But I do not think that that is the right view. The bill of lading begins with the statement `shipped'. Below that appear the words `weight &c unknown'; it is true that they are in print, but they cannot be disregarded. And in this case they are not the only thing to be considered for in the margin is attached a docu....
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....sions previously referred to (New Chinese Antimony Co. Ltd. v. Ocean S. S. Co. Ltd., (1917) 2 KB 664)." 24. Thus, it may be seen that in this case, the Privy Council held that the ship owners would be bound by the number of the bags that were acknowledged in the bills of lading, but so far as weight, contents and values are concerned the particulars given by the shippers and noted in the bills of lading would not bind the shipowners, because of the endorsement that the weight, contents and value when shipped were not known. 25. We will now refer to some of the decisions rendered by the Indian High Courts. In Subramania Chetti v. British Indian Steam Navigation Co. Ltd., (1923) 17 MLW 363 : AIR 1923 Mad 523) it was held, following In re Anglo Russian Merchant Trades and John Batt & Co., London (1917) 2 KB 679, that where the bill of lading stated that `weight, contents and value when shipped unknown' the onus of proving the shortage in the goods is on the person loading the same. 26. In Hajee K. Assanar v. Malabar Steamship Co., AIR 1975 Ker 114 several English and Indian decisions were noticed and thereafter it was held that where a bill of lading is subject to the not....
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....d. v. Misrimal AIR 1966 SC 1892 . In this decision, the respondent placed reliance on a passage occurring at page 101 (of Supp SCR) : (at p. 1898 of AIR), which is as follows- "The words `like quality and measure unknown", found in Companies Naviers Vasconzada v. Churchil and Sim LR (1906) 1 KB 237 `weight, contents and value unknown' in the Peter der grosse (1876) 1 P 414; `weight, quality, condition and measure unknown' in the Tromp, (1921) P 337, were held to be not qualifying words. In the Restitution Steamship Co. Ltd. v. Sir John Pirie and Co., (1889) 5 TLR 641, it was held `if you insert in the margin of a bill of lading weights, quantities, or anything that is not contained in the bill of lading itself, that is not a clean bill of lading.' If such words found a place in the body of a bill of lading, they would not have the effect of making the bill an unclean one' we do not see how their mention in the margin would make a difference. But we need not express our final opinion thereon, as in the present case the words are found in the body of the bill itself." 31. On a reading of the judgment, we find that the observation of the Supreme Court has b....
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....only 1,01,048 bags were delivered in good condition. 1889 bags of rice were discharged in torn, cut and slack condition. It was further found that the cargo of rice in hatches Nos. 1 and 5 in the ship were contaminated by sulphur particles. No such circumstances existed in the present case. Hence, on facts this case is clearly distinguishable. 33. Thus, a review of the reported cases and the ratio laid down therein clearly goes to show that the statement in the bills of lading regarding the number of bags, tins or containers that are shipped would constitute sufficient evidence against the shipowner about the exact number of bags, tins or containers being shipped. But in so far as the weight, contents and value are concerned, if there is an endorsement that they are not known or if there is a qualifying remark indicating that the master of the vessel has entered those particulars in the bills of lading in accordance with the figures given to him by the shipper or consignor, then the statements in the bills of lading regarding those particulars would not be binding on the shipowner and it will be for the shipper or consignor to prove that the consignments loaded on board the ship....
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....of PW 10, the shipping manager of the respondent's clearing agent that the bags were discharged from the ship in the same condition in which they were loaded in the port of loading. In such circumstances the qualifying words `said to weigh' incorporated by the master of the vessel in the bills of lading besides the words of disclaimer in clause No. 5 would undoubtedly mean that the master bound himself under the bills of lading only for the number of bags that were loaded, but he did not guarantee the weight particulars entered in the bills of lading. In other words, it would mean that the particulars of weight entered in the bills of lading were in accordance with the figures given by the shipper; but so far as the master is concerned, he did not give any assurance that those particulars had been checked and found to be correct. Once such a conclusion is reached, then it follows that it is for the respondent to prove that the rice bags that were loaded at Bangkok were of the same weight as had been entered in the bills of lading. Only after such proof is adduced, the owner of the vessel can be called upon to account for the shortage. Since such proof has not been adduced b....