Adm.Suit No.06/2009

Date Order with signature of Judge

For Orders on CMA No.323/2009

13.04.2009

Mr. Agha Zafar Ahmed Adv.for the Plaintiff.

Mr. Noman Jamali Adv. for the Defendant.

Through listed application, Plaintiff has prayed for the arrest and detention of vessel M.V. VANCOUVER-II until bank guarantee in the sum of US dollars 424800/- or an amount equivalent in Pakistani rupees is deposited with the Nazir of this Court.

Learned counsel for the Plaintiff has contended that the Plaintiff initially agreed to sell 29100 metric ton of ordinary Portland cement to M/s Zat El Emad Industrial Company, Al-Sajanah Khartoum, Sudan (hereinafter referred to as the ‘buyer’) on cash against delivery terms. The buyer nominated the Defendant vessel for shipment from Port Qassim to Port of Sodan. The vessel reached Karachi in October 2008 for loading 29100 metric ton of cement. Meanwhile, the buyer requested for further quantity of 5900 metric ton of cement of the same specification which the Plaintiff agreed to sell on the same terms and conditions. The vessel, after loading cargo from Port Qassim, came to Karachi Port and further 5900 metric ton of cement was loaded, accordingly. The Plaintiff handed over bill of lading in respect of 29000 metric ton cement to the buyer but did not receive the full payment, however no grievance in respect of this transaction is pleaded in the instant suit.

The grievance of the Plaintiff is in respect of 5900 metric ton cement, loaded subsequently. Per Plaintiff the Defendant-Vessel handed over the consignment of 5900 metric ton of cement without presentation of original bill of lading which till date is in possession of the Plaintiff. Per Mr. Agha the Plaintiff has no claim on Defendant in respect of consignment of 29100 metric ton of cement but holds the Defendant liable for delivering 5900 metric ton of cement without bill of lading and the loss so caused to the Plaintiff is fully covered under clauses (g) and (h) of sub-section (2) of Section 3 of the Admiralty Jurisdiction of High Courts 1980, hereinafter referred to as the ‘Ordinance 1980’.

On the other hand, Mr. Noman Jamali Advocate for the Defendant, after inviting my attention to the bill of lading has pleaded that the bill of lading on the face of it reflects that it is to be used with charter party and in term of one of the clauses of Fixture Note dated 22.09.2008 the Defendant was well within its rights to discharge the cargo against charterer’s single Letter of Indemnity as per owner’s PNI Club Boarding. Learned counsel has further argued that the Plaintiff has deliberately not placed on record the complete Bill of Lading as terms and conditions available on the reverse side of the bill of lading which are now placed on record by the Defendants, also reflects that the bill of lading was to be used with charter party. Per Mr. Jamali, the buyer had admittedly nominated the Defendant-Vessel after executing a single voyage charter party and therefore the Plaintiff was fully aware that the cargo could be discharged against the Letter of Indemnity, but neither any protest nor any other instructions were issued restricting the vessel from discharging the cargo which took almost 60 day to carry and discharge. Per learned counsel, the claim of the Plaintiff, if any, is against the charterer who also happens to be the buyer and therefore no responsibility on the vessel can be imposed and therefore the instant application is liable to be dismissed and the vessel be released.

Per learned counsel shippers who obtain bill of lading from Master in ignorance of Charterer can not claim contract of afreightment against owner and at this juncture the Plaintiff has miserably failed to establish a contract of afreightment with the owner. In support of his contention learned counsel has placed reliance on the judgment of this Court in the case of M/S ARSHAD CORPORATION (PVT) LTD. Vs. THE SHIP MAERSK ASTRO AND 2 OTHERS (PLD 1988 Karachi 515).

In rebuttal, Mr. Agha initially denied the charterer party/fixture note for want of knowledge but subsequently contended that even if there was any charterer party between the buyer and the ship owner the clause regarding discharge of cargo without obtaining original Bill of Lading is against sub Article 8 of Article III of the Schedule annexed to Carriage of Goods by Sea Act 995 relating to Bill of Lading which declares the covenants relieving the carrier or the ship from liability for loss of damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this Article as null and void, therefore the ship owner cannot be relieved from its liability in discharging the cargo without obtaining original Bill of Lading.

I have heard the learned counsel for the respective parties and perused the record.

It appears that the Plaintiff in the instant suit has asserted its claim against the owner of the vessel (without impleading) under Section 3(2)(g) and 3(2)(h) of ‘the Ordinance, 1980’, and maintains against the Defendant vessel on the ground that the owner of the vessel who is liable on the claim in an action impersonam at the time of filing the instant suit is still beneficial owner of the vessel.

The scrutiny of record reveals that in the instant case the Plaintiff/shipper exported a consignment on FOB basis on a vessel arranged by the consignee and the Defendant vessel delivered the consignment to the consignee on the basis of Letter of Indemnity instead of Bill of Lading and the justification for such delivery advanced by the Defendant vessel is that it was chartered by the consignee and the charterer party contains a clause whereby the consignment could be delivered upon execution of the Indemnity instead of Bill of Lading. A minute perusal of Bill of Lading reflects that it was signed by Local Agent on behalf of the Master of vessel and contains remarks “TO BE READ WITH CHARTER PARTIES” and “FREIGHT PAYABLE AS PER CHARTER PARTY”. Though the Plaintiff/ shipper maintains that it was not aware about the charterer party and even if there was a charterer party it was not aware of the terms of such charterer party, therefore, the liability, if any, is of the owner of the vessel

In my opinion the only question which requires adjudication is to determine as to whether the contract of afreightment is with the owner of the vessel or charterer, in other words as to whether the Bill of Lading is a owner’s Bill of Lading or charterer’s Bill of Lading and in case it is found that the contract of afreightment is with the owner or the Bill of Lading is owner’s Bill of Lading then of course owner would be liable for the shipper’s claim in personam and therefore a claim against a vessel can be maintained in rem. On the other hand, if Court comes to the conclusion that the contract of afreightment is with the charterer or the Bill of Lading is the charterer’s Bill of Lading then the claim in personam would be against the charterer and no claim in rem would be competent against the vessel.

The very fact that the Bill of Lading on the face of it contains writing to the effect that it was read with the charterer parties or the freight payable as per charterer party indicates that the contract of afreightment lay in the charterer party and the defence of the shipper that he was not aware of the charterer party is of no consequence specially when the vessel was nominated by the consignee who happens to be the charterer and therefore it was for the shipper to have asked for a copy of a charterer party. A similar view was taken by this Court in the case of M/S ARSHAD CORPORATION (PVT) LIMITED vs. THE SHYIP MAERSK ASTRO AND OTHERS (PLD 1988 Kar 515) wherein it was held as under:

“In case where ship has been chartered and bill of lading has been issued by the charterer or his agent or the Master or under his authority, the question whether the Shipper has a contract with the charter or the owner is intriguing and difficult one. The learned commentators and Judges have devised rules to solve it but its solution depends upon the facts. The rules may differ according to the nature of the charter party and the person signing the bill of lading. A charter by demise is a charter-party under which the charterer gets the possession of the vessel with a right to use her carrying capacity and the Master is charterer’s Servant. In such cases if the bill of lading is issued by the Master or the charterer or his agent then the contract is between the shipper and the charterer.”

In view of this position, Bill of Lading issued by the Agent on behalf of the Master of the vessel under voyage charter appears to be nothing but a receipt of the goods and not an evidence of contract of carriage, therefore, the Bill of Lading remains charterer Bill of Lading and does not become owner’s Bill of Lading.

In view of what has been discussed above, since the Plaintiff has failed to establish contract of afreightment with the owner, therefore action in rem against the Defendant vessel would not lie. It is also important to note that since the Plaintiff has failed to implead the owner of the vessel as one of the Defendants against whom action in personam is claimed therefore on this premises too, consequential action in rem is incompetent against the Defendant Vessel. The application is dismissed and the interim order granted earlier for the arrest of the ship is hereby vacated.

Judge