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The Union of India Represented by the Regional Director (Food) Vs. Cheyenna Compania Naviera S.A. Represented by Its Agent Panagotis A. Lemas and Associates Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Reported in(1974)1MLJ1
AppellantThe Union of India Represented by the Regional Director (Food)
RespondentCheyenna Compania Naviera S.A. Represented by Its Agent Panagotis A. Lemas and Associates Ltd. and a
Cases ReferredS.S. Chella v. S.S. Volturno
Excerpt:
- .....ammonium sulphate short-landed by the first defendant which is a shipping company. the plaintiff imported ammonium sulphate from the port of houston, texas, u.s.a., to madras by 'dr. antonis lemos' the ship of the first defendant company. exhibit p-1 dated 3rd june, 1965 is the charter party between the plaintiff and the first defendant. 'dr. antonis lemos' is the vessel which had been chartered and it was in that vessel the consignment of ammonium sulphate was shipped from the port of houston. exhibit p-2 dated 7th july, 1965 is the bill of lading issued by the first defendant. it was a bulk cargo and the vessel carried only the said cargo and nothing else. the manifested quantity of the cargo, namely, ammonium sulphate is 10,491.686 m.t. which is equal to 11,564.986 short tons. the.....
Judgment:

N.S. Ramaswami, J.

1. The Union of India, represented by the Regional Director (Food), Southern Region, Madras, has filed the suit for the recovery of a sum of Rs. 1,16,995.50 said to be the value of 24.7.071 M.T. of Ammonium Sulphate short-landed by the first defendant which is a shipping company. The plaintiff imported ammonium sulphate from the Port of Houston, Texas, U.S.A., to Madras by 'Dr. Antonis Lemos' the ship of the first defendant company. Exhibit P-1 dated 3rd June, 1965 is the charter party between the plaintiff and the first defendant. 'Dr. Antonis Lemos' is the vessel which had been chartered and it was in that vessel the consignment of ammonium sulphate was shipped from the Port of Houston. Exhibit P-2 dated 7th July, 1965 is the bill of lading issued by the first defendant. It Was a bulk cargo and the vessel carried only the said cargo and nothing else. The manifested quantity of the cargo, namely, ammonium sulphate is 10,491.686 M.T. which is equal to 11,564.986 short tons. The ship arrived at the Madras Port on 24th August, 1956. The discharge of cargo commenced on 29th August, 1965 and was completed on 8th September, 1965. The plaintiff had been taking delivery which was completed on 9th September, 1965, that is, just a day after the completion of the discharge. According to the plaintiff, the total quantity of ammonium sulphate discharged by the vessel Was only 10,244.615 M.T. while the manifested quantity is 10,491.686 M.T. Thus, there was a shortage of 247.071 M.T. According to the plaintiff, the first defendant, the shipping company, which is the carrier, is bound to pay the value of the above-said short-landed ammonium sulphate, because the shortage Was due to the fact that the first defendant neglected and failed to exercise due care and diligence in respect of the said cargo in its loading, handling, carrying etc. The value of the abovesaid 247,071 M.T. at 47.65 dollars per metric ton is said to be 11,772.93 dollars. To this, the freight and 1% insurance is added thus making a total of 15,599.40 dollars. The plaintiff claims the abovesaid amount in its rupee equivalent at Rs. 7.50 per dollar and thus, the suit amount of Rs. 1,16,995.50 is arrived at. The second defendant is the Madras agent of the first defendant. It is stated in the plaint that the second defendant is also liable to pay the above-said amount.

2. The first defendant in its written statement has put the plaintiff to strict proof regarding the actual quantity of ammonium sulphate shipped in the vessel. It denied that the ship short-landed at Madras Port 247.071 M.T. of ammonium sulphate. The plaintiff's case that the shortgage was due to the negligence or want of due care and diligence etc., on -the part of the first defendant is specifically denied. It is pointed out that as per the terms of the charter party, the entire handling operations, namely, loading, stowing, trimming, and discharging the cargo were carried out only by the plaintiff or their agents and that the first defendant had no part in such operations and that it merely carried the cargo from the Port of Houston to Madras. It is stated that the shortgage, if any, is therefore, due to the negligence of the plaintiff or its agents, stevedores and servants. It is further claimed that the first defendant's liability as carrier ceased once the cargo is off the ship's side and that the first defendant cannot be held liable for any loss or damage to the cargo after landing and before weighment. The written statement further proceeds to say that before the cargo was discharged, a hatch survey was held at Madras Port, and it was found by that survey that the plaintiff's cargo was intact in the holds of the ship and that therefore, the defendant cannot be held liable for the shortage. Then it is stated that the shortage, if any, might be due to inherent vice in ammonium sulphate, as it has a tendency to disintegrate (watered down) in damp atmosphere. According to the first defendant its vessel experienced rough and heavy weather during the voyage and on account of that it was possible that a portion of the cargo might have watered down resulting in loss in weight. The first defendant also claimed the immunities provided under Section 4, Rule 2 (c), (m) and (q) of the U.S. Carriage of Goods by Sea Act, 1936.

3. The further case is that even if the plaintiff is entitled to the value of the alleged short-landed cargo, it cannot claim the rupee equivalent of the C.I.F. value of the cargo at the exchange rate as on the date of suit, but only at the exchange rate as on the date of discharge of the cargo. It may be noted that the Indian rupee was devalued in June, 1966. This transaction was in 1965. So it is stated that the exchange rate which was then prevailing, namely, Rs. 4.50 per one U.S. dollar should be the one that is applicable and, that therefore in any event the plaintiff would not be entitled to the amount claimed which is on the basis of the present exchange value, namely, Rs. 7.50 per U.S. Dollar.

4. The second defendant, namely, the Madras agents of the first defendant has filed a similar statement as that of the first defendant and added that it cannot be held liable for the suit claim as it had only acted as the agent of the first defendant.

5. The following issues were set for trial:

1. What was the actual quantity of cargo of the plaintiff that was shipped at the Port of Houston by the first defendant's vessel?

2. Was there a short-landing of 247.07 M.T. of ammonium sulphate by the first defendant's vessel at Madras?

3. What is the value of the cargo short-landed?

4. Did the defendants' liability cease once the cargo was off the ship's side?

5. Is the shortage due to any negligence of the plaintiffs themselves or due to the inherent nature of the cargo?

6. Does the charter-party agreement dated 3rd June, 1965 form part of the contract of carriage between the plaintiff and the first defendant and are the parties bound by its terms and conditions?

7. Is not the subject contract of carriage governed by the U.S. Carriage of Goods by Sea Act, 1936 ?

8. Are the defendants entitled to rely on the immunities provided under Section 4, Rule 2 (c) (m) and (q) of the U.S. Carriage of Goods by Sea Act, 1936 in defence of the suit claim?

9. Is not the plaintiff entitled in law to claim only the rupee equivalent of the C.I.F. value of cargo at the exchange rate which prevailed at the time the alleged breach (short delivery) occurred (i.e.) at the exchange rate of Rs. 4,50 per U.S. dollar?

10. Are the defendants liable for the suit claim and if so, to what extent ?

11. To what relief, if any, are the plaintiffs entitled?

6. From the evidence on record. I find no difficulty in holding that 10,491.686 M.T. of ammonium sulphate was received by the first defendant on board the ship 'Dr. Antonis Lemos' at the Port of Houston on 7th July, 1965. Exhibit P-2 the bill of lading shows the weight of the cargo as declared by the shipper, namely, the plaintiff and that is given as 10,491.686 M.T. and 11,564.985 short tons. The bill of lading says that the goods were shipped in apparent good order and condition by India Supply Mission (who acted for the plaintiff) on board the ship 'Dr. Antonis Lemos'. It further says that the goods were to be delivered in like good order and condition at the Port of destination in India as per the terms of the charter-party. Then further down in the bill of lading there are printed conditions. Condition No. 3 says '3. Shipper's weight, quantity and quality unknown'. Because of this, the contention on behalf of the defendants is that this document, namely, the bill of lading is not even prima facie evidence regarding the quantity that was shipped. It is not seriously disputed by the learned Counsel for the plaintiff that the bill of lading in this case would not help in proving the actual weight of the ammonium sulphate shipped in the vessel. But two other documents are relied on by the plaintiff in order to show that 10,491.686 M.T. were actually shipped in the vessel at the Port of Houston. Exhibit P-17 is the mate's receipt issued to the plaintiff as soon as the shipping company took charge of the cargo. That gives the weight of the ammonium sulphate shipped in each of the five holds of the ship, the total of which is shown as 11,564.985 short tons. It cannot be disputed that this document is prima fade evidence regarding the weight of the cargo shipped in the vessel.

7. In Nippon Yusen Kaisha v. Ramjiban Serowgee (1938) A.C. 429. the question was regarding the ownership of the goods shipped in a particular vessel, because the sellers of the goods had retained the mate's receipt in their capacity as unpaid vendors. In dealing with this question, it was observed by the Privy Council at page 445, thus:

The mate's receipt is not a document of title to the goods shipped. Its transfer does not pass property in the goods, nor is its possession equivalent to possession of the goods. It is not conclusive, and its statements do not bind the shipowner as do the statements in a bill of lading signed within the master's authority. It is, however, prima facie evidence of the quantity and condition of the goods received, and prima facie it is the recipient or possessor who is entitled to have the bill of lading issued to him.

The observation that the mate's receipt is prima facie evidence regarding the quantity and condition of the goods received is worth noting. In Carver's British Shipping Laws (Vol. 2, page 87 note 89) it is stated that a shipowner is not estopped from denying the truth of statements in a mate's receipt, even apparently though they relate to the condition and not to the quantity, of the goods shipped. This note further quotes the observation of the Privy Council in the above reported case. Therefore, it is clear that a mate's receipt is prima facie evidence regarding the quantity of the goods received by the ship owner. Of course, it is not conclusive evidence and the shipowner would certainly be entitled to deny the truth of the statement made in the mate's receipt in which event the ship-owner has to lead evidence rebutting the prima facie evidence provided by the receipt itself. This position is not seriously disputed by the learned Counsel for the defendants.

8. There is yet another document on which the plaintiff places reliance and that is Exhibit P-5 dated 8th July, 1965, which is a certificate given by Shilstone Testing Laboratory showing the weight of the cargo as given by the certified weight master. This certificate shows that the weight of the cargo was 10,491.686 M.T. This is also a document which would come under the Commercial Documents Evidence Act (XXX of 1939). Section 3 (b) of that Act says that the Court may presume, in relation to documents included in Part II of the schedule, that it had been duly made as purported to have been made in the document and that the statements contained therein are accurate. Item 6 of Part II of the schedule to that Act, refers to certificate or receipt showing the weight or measurement of a consignment issued by the official measurer of the Conference Lines, or by a sworn or licensed measurer or by a recognised Chamber of Commerce'. That Shilstone Testing Laboratory which had issued the receipt Exhibit P-5 is an international body has not been disputed by the defendants. All that is stated in the written statement is that such certificate is not binding on the defendants. No doubt the certificate would not bind the defendants. But the point is whether it cannot be relied on by the plaintiff as prima facie evidence regarding the weight of the cargo shipped in the vessel. I am quite clear that this document can also be relied on by the plaintiff regarding the weight. Even apart from this document, there is the mate's receipt Exhibit P-17 which was already referred to and that is certainly prima facie evidence regarding the weight. Therefore, the fact that the bill of lading is not helpful to the plaintiff as evidence regarding the weight of the cargo shipped does not mean that the plaintiff has no evidence to prove the weight. No doubt the mate's receipt provides only prima facie evidence regarding the weight. But in the absence of any evidence contra I see no reason why the Court should not act upon that document. It is significant to note that the defendants have not let in evidence either oral or documentary. Surely, the fact that there is a printed clause in Exhibit P-2, the bill of lading that 'shipper's weight quantity and quality unknown' would in no way affect the value of the mate's receipt. As a matter of fact, the learned Counsel for the defendants does not contend that Exhibit P-17, the mate's receipt is not even prima facie evidence. Under these circumstances, I have no hesitation to hold that 10,491.686 M.T. of ammonium sulphate (11,564.985 S.T.) was shipped in the vessel.

9. Then the question is whether there was short-landing, if so, to the extent of 247.07 M.T. as claimed by the plaintiff. R. Srinivasan, District Manager, Food Corporation of India, who was then the Assistant Director in the office of the Regional Director (Food), Southern Region, Madras, was in charge of clearance of the suit cargo, and he has given evidence as P.W.2. David Mathan P.W.1 was the shed-master in the west quay of the Madras Port during the relevant period and it was in that quay the suit cargo was discharged. This witness as well as P.W.2 have spoken about the manner in which the cargo was discharged and ultimately taken delivery of by the plaintiff. Exhibit P-18 is the import application with certificate. This gives the details of the cargo discharged and taken delivery of by the plaintiff. Exhibit P-12 is the out-turn statement given by the Port Trust. This shows that the quantity manifested was 10491.686 M.T. and the quantity delivered was only 10,244.615 M.T. It is pointed out by the learned Counsel for the defendants that the outturn statement is not a statutory document and therefore, that cannot be relied on in the same way as tally sheets prepared at the time of the discharge of cargo. In this case no tally sheet was prepared because it is bulk cargo and only out-turn statement was given by the Port Trust. It is true that the preparation of the tally sheet is statutory obligation on the part of the Port Trust; but it is not so with regard to the out-turn statement. But in this case apart from the out-turn statement, the plaintiff has filed the import application with its certificate (Exhibit P-18) which shows the details of the goods discharged and taken delivery of. The evidence of P.W.s. 1 and 2 goes to show that the entire goods discharged from the vessel had been weighed by the Port Trust before the same was delivered to the plaintiff. Under these circumstances, there is no reason to disbelieve the plaintiff's case that only 10,244.615 M.T. was delivered.

10. It is suggested on behalf of the defendants that even in the process of discharge of the cargo from the vessel, there was chance of spillage and that might have resulted in the shortage. Even assuming that there would be some spillage, it is not possible to hold that 247 M.T. of ammonium sulphate would have been lost by such spillage.

11. There is also nothing to show that after the goods were discharged from the vessel and before the same was taken delivery of by the plaintiff, there was any loss. This is not a case where the goods were allowed to lie in the sheds of the Madras Port Trust for any length of time. The process of taking delivery of the goods was going on as the goods were being discharged from the vessel and as a matter of fact the delivery of the goods to the plaintiff was completed almost simultaneously with the discharge of the goods. The evidence discloses that while the discharge was completed on 8th September, 1965, the plaintiff took delivery of the entire quantum that was discharged by 9th September, 1965. Though it had been stated in the written statement that once the goods are off the ship's side, the liability of the carrier ceases, that was not the case put forward at the time of the trial. At the time of the trial it was not even suggested that there might have been any loss or damage to the cargo after it was landed and before: it was weighed by the Port Trust.

12. There is nothing to show that the shortage was due to any inherent vice in the goods. Even as per the averments in the written statement the cargo, namely, ammonium sulphate is likely to disintegrate only in damp atmosphere. It is not stated in the written statement that in any event the cargo is likely to disintegrate after a particular period. The written statement further suggests that it was possible that a portion of the cargo had disintegrated (watered down) due to the fact that it was exposed to dampness as a result of heavy weather experienced during the voyage. In this statement there is an admission that during voyage the cargo became damp and that might be the reason for the shortage. It is certainly a reason for the shortage. It is certainly the duty of the carrier to see that the cargo is not exposed to dampness. Of course, if such dampness is as a result of perils of sea or act of God, the carrier can escape liability. But there is nothing on record to show that this exposure of the cargo to dampness was as a result of circumstances beyond the control of the carrier. Though it is stated in the pleadings that there was heavy weather during voyage and that a protest to that effect had been made by the Master of the ship, no attempt has been made to prove this averment. Further, I am of the view that heavy weather cannot be equated to perils of sea or act of God because that is only a normal incident of sea voyage. Under these circumstances, I think even on the defendants' own showing it must be, held that the cargo had been exposed to damp atmosphere during voyage. The averment in the written statement that on the ship being berthed at Madras Port and before the cargo was discharged there was a hatch survey and that revealed that the holds of the ship were intact has again not been proved. For reasons best known to themselves the defendants have not chosen to file the hatch survey report. Therefore, one does not know whether the holds had been properly and securely closed during voyage and whether they were intact when the ship berthed at Madras Port. As pointed out by Carver, the common law with regard to the liability of a public carrier of goods, is strict, and apart from express contract he is, with certain exceptions, absolutely responsible for the safety of the goods while they remain in his hands as carrier. Lord Wright, delivering the judgment of the Privy Council in Paterson Steamships v. Canadian Wheat (1934) A.C. 538. said:

At common law, he was called an insurer, that is, he was absolutely responsible for delivery in like order and condition at the destination of the goods bailed to him for carriage. He could avoid liability for loss or damage only by showing that the loss was due to the act of God or the King's enemies.

Even when the carrier can plead one or other of the exceptions he will not be exonerated from losses arising from any of these excepted causes when there has been any neglect on his part to take all reasonable steps to avoid them; or to guard against their possible effects or to arrest their consequences. In a case where a cargo was damaged by water escaping from a boiler pipe cracked by frost, it was held that the loss was occasion' ed by the negligence of the master in leaving the boiler full on a cold night, and that the common law exception of act of God did not therefore avail the cargo owner.

13. As observed by Carver at page 227 (note 267) if the goods-owner proves that the goods have not been delivered or have been damaged after shipment, the onus shifts on to the carrier to bring the cause of damage specifically within Article 4, Rule 2. In the present case the U.S. Carriage of Goods by Sea Act, 1936 is applicable. Though at the time of the framing of the issues, there seems to have been a dispute it is now conceded by the plaintiff that the parties are governed by the U.S. Carriage of Goods by Sea Act, 1936, as stated by the defendants. Section 4, Rule (2) in that corresponds to Article 4 (2) referred to above. The defendants rely on the immunities provided under Section 4, Rule (2) (c) (m) and (q) of U.S. Carriage of Goods by Sea Act. Section 4 (2) says that neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from.

(c) Perils, dangers, and accidents of the sea or other navigable waters;....

(m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods;....

(q) Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

14. I have already pointed out that there is no evidence regarding the perils of the sea having been responsible for the damage to the goods. I have also indicated that there is nothing to show that the damage is due to inherent vice in the goods. It may be that ammonium sulphate is likely to disintegrate if it is exposed to damp weather. Even so, it is for the defendants to show that such exposure was not due to their fault. Therefore, Clause (m) is also not available to the defendants. Under Clause (q) the burden of proof would be on the defendants in this case, if they claim the benefit of that exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. Further this clause can have no application because it is not shown that the damage was due to any other cause arising without the actual fault and privity of the carrier.

15. The learned Counsel for the defendants contends that the vessel having been chartered to carry only the plaintiff's goods it had no necessity to discharge any cargo at any other port and that, therefore, there was no chance of pilferage or interference with the said cargo en route. But this fact, namely, that the ship carried only the suit cargo and nothing else and there was no cargo to be discharged at any other port, would not help the defendants. When it is proved that the shortage is during voyage it is the defendants' duty to plead and prove any of the exceptions available to them. I do not believe that any of the exceptions is applicable in this case. On the contrary, the court would be justified in inferring that the damage to the goods should have been due to negligence on the part of the defendants because there is an admission by the defendants that the goods had been exposed to dampness during voyage.

16. Under the above circumstances, the first defendant, namely, the carrier, would certainly be liable to make good the shortage. However, the second defendant, who is only the Madras agent of the first defendant cannot be made liable.

17. Though the plaintiff has claimed the value of the shortage at the present exchange value of the U.S. dollar, it is not seriously disputed that the exchange which prevailed in 1965, that is, at the time of the short delivery, would alone be applicable. Then one U.S. dollar was equal to Rs. 4.50. It was at that rate the plaintiff originally made its claim in Exhibit P-14, dated and March, 1966. The claim then was for a sum of Rs. 70,927.84 towards the value of the 247.071 M.T. of ammonium sulphate S.S. Chella v. S.S. Volturno (1921) 2 A.C. 544. is an authority for the proposition that the exchange rate at the date of the breach alone should govern.

18. Lastly, the question is whether the plaintiff would be entitled to the value of the entire 247.071 M.T. of ammonium sulphate short-landed, or only to something less. On a careful scrutiny of the evidence of P.W. 1 the Shed Master of the Port Trust, it is seen that there might have been some spillage at the time of the discharge of the goods. But such spillage could have been only of a small quantity. I am of the view that to be on the safe side 25 per cent, of the short landed goods may be omitted from calculation of the plaintiff's damages, on the ground that there might have been some spillage or wastage of the goods during the process of discharge and delivery as well as in the process of loading the cargo in the U.S. Port.

19. I hold, therefore, on issue 1 that the actual quantity of cargo shipped at Port of Houston was 10,491.686 M.T. as claimed by the plaintiff;

on issue 2, that there was short-landing of 247.071 M.T.;

on issue 3 that the value of the cargo short-landed is Rs. 70,927.84;

on issues, 4 and 5 against the defendants;

on issues, 6 to 8 in favour of the defendants as conceded by the plaintiff;

on issue 9 that the exchange rate has to be taken as one dollar is equal to Rs. 4.50;

on issue 10 against the plaintiff; and on issue 11 that the first defendant alone is liable to pay Rs. 53,195.88 to the plaintiff.

20. In the result, there will be a decree in favour of the plaintiff, against the first defendant alone for the recovery of a sum of Rs. 53,195.88 with proportionate costs. The suit is dismissed as against the second defendant, without costs.


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