(Prayer: Plaint filed under Order IV Rule 1 of the Original Side Rules read with Order VII Rule 1 and Section 26 of the Code of Civil Procedure praying for a judgment and decree against the defendant holding the defendant liable and directing them to pay the second plaintiff's
(i) a sum of Rs.37,46,425/- with subsequent interest at 18% per annum from this date till payment in full, being a commercial cause.
(ii) costs of the suit.)
1. The suit is filed for recovery of money of Rs.37,46,425/- with interest.
2. The first plaintiff is a Private Limited Company dealing with manufacturing of Steel Forgings for the automobile industry having their factory in Bangalore. The second plaintiff is the General Insurer, a Public Limited Company, having its office in Chennai. The defendant is a Private Limited Company incorporated in Singapore, carrying on business in Chennai, through the Local Steamer M/s.A.S.Shipping Agencies Pvt. Ltd., Chennai.
3. The first plaintiff purchased from M/s.Chin Fong Machine Industrial Company Ltd., Taiwan, China, Chin-Fong Brand 1600 Ton Gear Drive Hot Forging Mechanical Press complete with standard SPEC and parts valued F.O.B, Taiwan, US Dollars 4,90,000.00, as per their commercial invoice dated 02.10.2000. The said mechanical forging press was packed in 10 different cases as per the packaging list dated 02.10.2000. The said cargo of 10 wooden boxes were shipped on board in the Vessel M.V.KAMNIK owned and chartered by the defendant herein, at Keelung Port, Taiwan, for safe carriage and discharge at Chennai, in the same apparent good order and condition. The defendant, who is the Sea Carrier also issued a clean on board Bill of Lading acknowledging the entrustment of the said cargo in the same apparent good order and condition, thereby undertaking to deliver the said cargo in the same apparent good order and condition.
4. The first plaintiff, the owner of the suit consignment at all relevant times were entitled to take delivery of the said cargo as the holder in due course as per the Bill of Lading dated 04.10.2000. The vessel M.V.KAMNIK arrived at the Port of Chennai on 18.10.2000 and commenced its delivery / discharge operations. The Chennai Port Trust took custody of the suit cargo, annotated them as PBKN (Planks Broken) and CFO (Contents Falling Out) thereby indicating the damage to the suit cargo, while in transit and prior to discharge into the custody of the Chennai Port Trust. The clearing and forwarding agent of the first plaintiff notified the defendant's legal agent on 21.10.2000 about the damaged condition of the package Nos.4, 6 and 9, which were lying in the wharf in South Quay II. The damaged cases were said to have been discharged into the custody of the Chennai Port Trust during the third shift on 20.10.2000. The clearing and forwarding agent also notified the surveyors of the defendant and that of the second plaintiff, namely the Insurer. A survey was conducted on 26.12.2000.
5. The case of the plaintiffs is that the damaged discharge of the suit cargo and the consequential loss sustained by the first plaintiff is only as a result of the failure on the part of the defendant's sea carrier, to care for, carry and deliver the suit consignment, in the same apparent good order and condition, in which, it was entrusted to them at the port of shipment. The plaintiffs claim that the damage and pecuniary loss to the plaintiffs' cargo was due to the failure on the part of the sea carrier. The wooden cases nos.4 and 9, out of the 10 cases shipped, were landed in a broken condition, with the contents extensively damaged. Though Case No.6 was landed in a damaged condition, its contents were safe. Case No.1 was damaged in a road accident enroute Bangalore and was repaired locally.
6. Based on the survey report, the first plaintiff claim that they had to incur US $ 99,000.00 towards replacement of the contents of case nos.4 and 9. The clearing and forwarding agents of the first plaintiff lodged claim with the defendant, vide letter dated 11.12.2000. But the defendant failed and neglected to comply with the same. However, the second plaintiff, as Insurer of the cargo, indemnified the first plaintiff, by paying a sum of Rs.37,46,425/-, as per the first plaintiff's claim letter dated 08.01.2001. The first plaintiff also had executed a letter of subrogation, special power of attorney, in favour of the second plaintiff, under Section 79 of the Marine Insurance Act. Therefore, the plaintiffs had made the suit claim praying for a judgment holding the defendant liable and directing them to pay the suit claim with interest.
7. Denying the facts leading to the cause of action in the plaint, the defendant claimed that the Vessel M.V.KAMNIK, which carried the cargo, reached the Port of Madras, with all the cargo intact. After arrival at the Port of Madras, while the cargo was being discharged, one of the packages (No.9) of Hot Forging Mechanical Press, when it was lifted from Hatch No.4, hit the Tween Deck and as a result, fell and came in contact with package nos.4 and 6, which were stowed in the same Hatch. Thereafter, the defendant lodged complaint against the Port Trust employees and sent them a notice, however, without a reply. In respect of the notice sent to the stevedores, M/s.Viking Shipping (Chennai) Pvt. Ltd., also rejected the claim on the ground that the damage did not occur due to the negligence of their employees, but occurred due to the malfunction of Jumbo Crane. The defendant claimed that the cargo was handled by them with due and diligent care and they were not liable for the damages that were occurred due to the negligence of the stevedores. According to the defendant, their liability is to transfer the cargo from one Port to another Port and not from warehouse to warehouse. Stevedores should have been impleaded as a party, but it is not done so. The defendant claims limited liability to the extent of three SDR per package, according to Order IV Rule 5 of the Hague Visby Rules.
8. Based on the above pleadings, the following issues were framed by this Court on 13.10.2014:
1. Whether the defendant as an ocean carrier can be held liable for damage caused to goods by the stevedore?
2. Whether the suit is bad for non joinder of necessary parties?
3. Whether the liability of the defendant is only from port to port and not warehouse to warehouse?
4. Whether the defendant is entitled to limit its liability as per Order 4 Rule 5 of the Hague Visby Rules?
5. Is the defendant claimed to limit their liability?
ISSUE NO.1: -
9. The bill of lading was marked as EX.P3, as an acknowledgment of entrustment of the cargo of ten cases, more particularly, set out in the packing list marked as Ex.P2. The cargo was Brand 1600 Ton Gear Drive Hot Forging Mechanical Press complete with the standard SPEC and parts valued at US $ 4,90,000.00 as per invoice marked as Ex.P1.
10. Admittedly, the vessel M.V.KAMNIK, owned by the defendant sea carrier, arrived at the Port of Madras on 18.10.2000 and commenced its discharge operation. The Chennai Port Trust, who took custody of the suit cargo, annotated them as PBKN and CFO indicating the damaged condition of number of cases at the time they took custody, thereby evidencing the damage to the suit cargo while in transit and prior to discharge into the custody of the Chennai Port Trust. Ex.P7 is the Landing Remarks Certificate issued by the Port Trust. The damaged cases were said to have been discharged into the custody of the Chennai Port Trust during the third shift on 20.10.2000.
11. The Customs House agent also sent a notice to the defendant carrier for the damage to the consignment, by their letter dated 21.10.2000, by seeking survey of the damage to the cargo. Another notice dated 11.12.2000 was also sent by the Custom House agent to the defendant intimating about the total loss suffered by the first plaintiff, due to the damage to the consignment, while the cargo was in the custody of the defendant before discharge. The said document was marked as Ex.P9 and the report of the surveyor, who represented the defendant, was marked as Ex.P12.
12. It is the persistent case of the plaintiffs that only due to the negligence of the defendant sea carrier, the package was continued to be hoisted, thereby causing the wire to sling to part and the package fell on the other packages and caused the damage. So, it is categorically contended that the damage to the consignment was occurred, prior to the discharge of the consignment from the custody of the carrier and into the custody of the port authorities.
13. The learned counsel for the defendant contended that the defendant cannot be held liable for the damage caused to the goods due to the negligence by the stevedores. After arrival at the Port of Chennai, while the cargo was being discharged by the stevedores, one of the packages of the hot forging mechanical press stuffed in package no.9, while being lifted from Hatch no.4, hit the tween deck, resulting the cargo falling on package nos.4 and 6, which were stored in the same Hatch No.4. This being so, the defendant submitted that it cannot be held liable, as the defendant was not in-charge of the cargo, by the stevedores. In fact, the defendant also lodged a complaint about the Port Trust employees as well as stevedores, who were responsible for handling and discharging the cargo. The Port Trust did not respond to the same. The reply from the stevedores, namely M/s.Viking Shipping (Chennai) Pvt. Ltd., Chennai, rejected the claim on the ground that their employees were not negligent, but it was due to the malfunction of the Jumbo crane causing a jerk to the wire resulting in the cargo falling to the tank top.
14. It was also contended by the learned counsel for the defendant that since the damage was caused due to the negligent handling of the stevedores, they should have been made as a party to the present action. The plaintiffs had deliberately omitted to add them as parties. The defendant is placing reliance on Ex.P7, which is the Port Trust's Landing Remarks Certificate annotation which clearly mentioned that PBKN, which means Planks broken. Therefore, it is submitted by the defendant that the Planks were broken, because it fell down, while the same was being lifted by the stevedores. The suit claim is for the damage that has arisen due to the falling of one package from the sling, while being hoisted by the signal man and driver. Under the stevedoring contract, it is the responsibility of the signal man to properly load the cargo and diligently discharge on the wharf, without damage to the cargo. As there was no sufficient supervision and the cargo was handled with negligence by the stevedores, the alleged damage had occurred.
15. In this regard, in the cross examination of P.W.1, it is admitted as follows:
...... The goods were discharged from the vessel by using the crane of the Port by the Port Authority. While the cargo was being discharged from the ship, some of the packets fell down and damaged. The goods were discharged using the Port's crane.
16. In Ex.P6, which is a joint survey report, it is specifically stated as follows:
It is learnt that during discharge operations of package No.9, when the stevedores lifted the package from hatch No.4 of the vessel, it hit the tween deck and fell into the hatch above Package No.4 and Package No.6. In the impact, Package No.4 and 9 have totally collapsed and the contents of these two packages spilled into hatch No.4. A portion of Package No.6 was crushed and planks broken.
17. Considering the above facts, there no negligence on the part of the defendant or their employees, but it is only due to the negligence on the part of the stevedores, who were not a party before this Court, the damage had been caused. Hence, issue no.1 is found against the plaintiffs.
ISSUE NO.2 :-
18. As held in the above issue, the negligence is only due to the stevedores and not of the defendant.
19. The learned counsel for the plaintiffs contended that admittedly the stevedores were engaged to discharge the cargo. While discharging the cargo, the Crane was not handled properly and due to the negligence of the Crane operator and the signal man, the package fell on the Hatch, where the other packages were stacked, thus resulting in damage to one of the packages. It is contended further by the plaintiffs' counsel that there is a contract between the stevedores and the defendant and the failure of the stevedores to properly supervise the discharge of the cargo, while co-ordinating with the Port employees. Though it is alleged in the written statement that complaints were lodged by the defendant against the Port Trust, with respect to the damage to the consignment, there is no evidence to that effect. Therefore, it is submitted that the suit cannot be dismissed for non-joinder of necessary parties, as the defendant had not let in any evidence, with respect to the negligence on the part of the stevedores.
20. On the contrary, the defendant submitted that the damage alleged in the plaint was not caused due to any negligence of the defendant, but only due to the negligence of the stevedores, who should have been made as a party to the suit. The plaintiffs were also aware of the fact that the stevedores are only solely responsible for the damage caused and for the reasons best known, they have not stated anything in the plaint or added them as a necessary party.
21. It is pointed out by the learned counsel for the defendant that Application No.4893 of 2004, under Order VIII-A of the Code of Civil Procedure was filed seeking a cross decree from the stevedores namely, M/s.Viking Shipping (Chennai) Pvt. Ltd. Though the plaintiffs ought to have filed the said application to implead the stevedores ironically they opposed the application filed by the defendant themselves on the ground of limitation. The said application was dismissed by this Court on 09.09.2009 and an appeal against that in O.S.A.No.375 of 2009 also confirmed the order of the learned Single Judge on 04.02.2010 on the ground that no proceeding against the Port Trust was initiated even after the expiry of six months and the same is barred by limitation under Section 120 of the Major Port Trusts Act, 1963.
22. As found in issue No.1, the Landing Remark Certificate - Ex.P7 dated 06.11.2000, specifically indicates that, out of the ten packages, three were badly damaged, with remarks content falling out (CFO) condition and one package was in planks broken (PBKN) condition. As the cargo was discharged using the Port Trust of Chennai's equipment and a certificate was issued by the Chennai Port Trust under Ex.P7, the Port Trust ought to have been made as a party.
23. In the light of the above facts, the stevedores and the Chennai Port Trust fall within the ambit of necessary parties and an effective and complete adjudication may not be possible in their absence. The plaintiffs had grievance only against the stevedores, who had handled the cargo negligently. Therefore, the stevedores should have been made as a party to the suit.
24. This Court, in S.KRISHNAN VS. RATHINAVEL NAICKER AND OTHERS [2006 (4) MLJ 593] has enumerated the tests to be applied for determining the right of a party to implead another, in a pending suit or other proceeding, which reads as follows:
a) If without his presence no effective and complete adjudication could be made;
b) If his presence is necessary for a complete and effectual adjudication of the dispute though no relief is claimed against him;
c) If there is a cause of action against him;
d) If the relief sought in the suit or other proceedings is likely to be made binding on him;
e) If the ultimate outcome of the proceedings is likely affect him adversely;
f) If his role is really that of a necessary witness but is sought to be camouflaged as a necessary party .
As per the above tests, both the Port Trust as well as the stevedores specified the conditions and they should have been added as necessary parties to the suit.
25. In the judgment of the Honourable Supreme Court in MUMBAI INTERNATIONAL AIRPORT PVT. LTD., VS. REGENCY CONVENTION CENTRE AND HOTELS PVT. LTD., AND OTHERS [AIR 2010 SC 3109] necessary party has been defined as a person who ought to have been joined as a party and in whose absence no effective decree could be passed at all by the Court. If a necessary party is not impleaded as a party, it would be fatal to the suit. Therefore, this Court has got no hesitation to hold that the suit is bad for non-joinder of proper and necessary party. Issue No.2 is answered accordingly.
ISSUE NO.3 :-
26. As per the Bill of Lading, the contract of the goods is only from Port to Port, that is, from the Port of loading to the Port of discharge. Though the cargo was safely brought to the Port of discharge, it was damaged only during the discharge of the same by the stevedores. It is contended by the learned counsel for the plaintiffs that there is nothing specified in the Bill of Lading that the contract is from Port to Port. Therefore, the liability of the defendant will not be absolved, as the material got damaged and the defendant failed to deliver the suit consignment, in good order and condition. It is contended further that the duty or the liability of the defendant / sea carrier ends only after proper discharge of the consignment, into the custody of the Port Trust, that is, Chennai Port Trust. As the defendant failed to deliver the consignment in good order and condition, and it was delivered with damage as evidenced by the Landing Remarks Certificate, the defendant is liable for the damages. On the contrary, when there is no stipulation in the Bill of Lading that the contract is from warehouse to warehouse, the liability of the defendant is only from Port to Port, that is, from Port of loading viz., Keelung Port, Taiwan to the Port of discharge namely Chennai Port Trust.
27. Admittedly, the consignment was brought safely to the Port of discharge by the defendant and the accident had occurred only after the goods have been safely brought to the Port of discharge. Therefore, the liability of the defendant is only from Port to Port (Issue No.3) is answered in favour of the defendant.
ISSUE NOS.4 AND 5:-
28. The Hague Visby Rules deals with Rights and Immunities of the carrier. Article IV Rule 5(a) and (e) of the Hague Visby Rules is usefully extracted hereunder:-
Rule 5(a) - Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier not the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding (666.67 units of account) per package or unit or (2 units of account per kilogram) of gross weight of the goods lost or damaged, whichever is the higher.
(e) Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause damage, or recklessly and with knowledge that damage would probably result.
29. As per the above article, the liability of the sea carrier can be restricted, if the nature and value of the consignment is not declared by the shipper and mentioned in the Bill of Lading. The Bill of Lading is a document which would reflect in the description of the cargo and the various details regarding the cargo, including the weight, value and other particulars like purchase order and letter of credit, etc. As claimed by the plaintiffs, the damage was caused to the consignment, while the same was in its custody and again reliance was placed on Ex.P7. Hence, the defendant is estopped from claiming limited liability by invoking the Hague Visby Rules to their advantage.
30. But it is the contention of the defendant that even assuming that the damage to the consignment was caused when the same was in the custody of the defendant, it has got only a limited liability, which is Special Drawing Right (SDR) conversion right for 666.67, which is equivalent to INR 63,759 per package, which has also been pleaded in paragraph No.7 of the written statement.
31. The Hague Visby Rules clearly states that the Bill of Lading should contain the value and description of the cargo. Though the plaintiffs contended that the Bill of Lading reflected all the particulars and the invoice reflects the value of the goods, the same is un-sustainable, as the invoice does not form part of the Bill of Lading. The said principle is laid down by the Honourable Supreme Court in SHIPPING CORPORATION OF INDIA LTD., VS. BHARAT EARTH MOVERS LTD., AND ANOTHER [2008 (2) SCC 79] which reads as follows:
19. A contention has been raised before us for the first time that the value of the goods had been declared in the Bill of Lading. It is based on the premise that Bill of Lading refers to the invoice. We cannot accept the said contention. Invoice is not a part of the Bill of Lading. The value of the goods is required to be stated on the Bill of Lading so as to enable the shipping concern to calculate the quantum of freight. It cannot, in absence of any statutory provisions, be held to be incorporated therein by necessary implication or otherwise.
The same has been reiterated by a Division Bench of this Court in BOARD OF TRUSTEES OF MADRAS PORT TRUST VS. NATIONAL ENGINEERING INDUSTRIES LTD., AND OTHERS [2011 (6) MLJ 817] as follows:
56. Even though, we have apportioned 50% liability to the 1st Defendant's Vessel, Japanese Act provides for limited liability i.e. Japanese % 100,000. To hold the vessel for unlimited liability, as per the terms of contract [ Ex.P3], the value of the goods must have been stated in the Bill of Lading so as to enable the shipping concerned to calculate the quantum of freight. There is nothing to indicate that the value of the goods has been stated/declared in Ex.P3-Bill of Lading so as so enable the shipping concerned to calculate the quantum of freight. Ofcourse, the value of machinery is stated in the Invoice [Ex.P1] at % 25, 220,000. As held by the Supreme Court in AIR 2008 SC 728 [Shipping Corporation of India Ltd. v. M/s.Bharat Earth Movers Ltd. and another], Invoice is not part of Bill of Lading. In the absence of any evidence to show that value of the goods has been declared in the Bill of Lading [Ex.P3], the liability of the 1st Defendant could only be limited to the extent of Japanese Yen %100,000.
32. As the invoice is not a part of the Bill of Lading and the value of the goods has not been stated in the invoice, in the absence of the value of the goods being declared in the Bill of Lading, the liability of the carrier could only be limited. Admittedly, the Hague Visby Rules is applicable, only if the nature and the value of the consignment is not declared by the shipper before the shipment and inserted in the Bill of Lading.
33. In the case on hand also, the value of the consignment does not find a mention in the Bill of Lading, which is marked as Ex.P3. Therefore, I have no hesitation to hold that in the absence of the value of the consignment in the Bill of Lading only the Hague Visby Rules are applicable and the defendant's liability would not extend more than three SDR per kg per package and the liability of the defendant would be much less than the amount claimed in the suit. Though in para 7 of the written statement, the defendant has set out the details which are only subject to getting indemnified by the stevedores as held earlier, when the stevedores are not made as a party in the suit, the question of indemnity does not arise. Hence, the claim of the plaintiffs has to be rejected. Accordingly, issue Nos.4 and 5 are answered against the plaintiffs.
34. In view of the above findings, the suit is dismissed. No costs.