1. GULZAR AHMED, J.---C.M.A. No.995 of 2006 is an application under rule 731 of the Sindh Chief Court Rules (0.S) for the arrest of the defendant No.1 Vessel "MV Annie Sierrs".
2. C.M.A. No.1010 of 2006 is an application under section 151, C.P.C. Wherein the plaintiff has prayed for direction to the defendants to arrange the discharge of plaintiffs cargo at Karachi immediately.
3. Defendants Nos.1 and 2 have filed two separate counter affidavits to both the applications. Plaintiff also has filed two rejoinder affidavits. Defendant No.3 has filed counter affidavit to the first mentioned application.
4. In brief, the plaintiffs case is that it has entered into Charterparty Agreement dated 20-11-2006 with the defendant No.2 the owner of the defendant No.1 vessel for carriage of 16000 MT +/- 5% MOLOO Bagged Rice SF 52 feet WOG from Port of Karachi to the Port of Free Town, Sierre Leone. Before loading the cargo on the vessel, the plaintiff has learnt of certain incidents with the vessel where it was arrested number of times and therefore, the plaintiff informed the defendant No.3 the agent of the vessel that it is not inclined to load the cargo on the vessel unless assurance is given that the vessel will not be arrested. It is alleged that the assurance was given to the plaintiff and the plaintiff started loading the cargo and loading was completed on 2-12-2006 whereupon Mate Receipt was issued to the plaintiff. It is alleged that under the Charterparty, the owner/master of the vessel was required to issue Bill of Lading but it failed to do so despite repeated requests of the plaintiff. In the meanwhile it was learnt that the defendant No.1 vessel was arrested on 1-12-2006 in Admiralty Suit No.25 of 2006 for a claim of US $1,565,329. This incident led the plaintiff to believe that its cargo would be misappropriated more so in view of the fact that the owner/master of the vessel had failed to issue Bill of Lading to the plaintiff. It is alleged that despite the vessel being arrested on 1- 12-2006, no attempt was made by the owner of the vessel or their Underwriters (P&I Club) to furnish bank guarantee for the claim to enable the vessel to sail and this indicates that the vessel is like y to stay in Karachi for a considerable long period which is likely to putrefy the cargo on the vessel. It is also alleged that even if the vessel eventually do carry the plaintiffs cargo to the discharge port it will take considerable long time. The Port Qasim Authority where the vessel is berthed is likely to move the vessel to outer anchorage in open sea whereupon the plaintiff will have no control on either the vessel or its cargo and the cargo will practically be lost to the plaintiff. It is alleged that the vessel is not likely to fulfil its obligation as contained in the clause 62 of the Charterparty to proceed directly to discharge port with utmost dispatch and the Charterparty is frustrated and the plaintiff can mitigate its loss by requiring the defendant to discharge its cargo at Karachi otherwise the plaintiff shall suffer great loss as its entire cargo will be lost which is valued at US $4,733,400. It is alleged that plaintiff has incurred cost of Rs.7,233,998 for loading of the cargo on the vessel and further cost of Rs.4,289,196 will be incurred by it for discharge of the cargo. Plaintiff has further alleged that it is likely to incur further consequential losses estimate of which has been made in the sum of Rs.11,653,380.00 and thus has filed this suit for recovery of Rs.23,177,084 arising from contract of carriage contained in Charterparty Agreement to which Section 3(2)(h) of the Admiralty Jurisdiction of High Court Ordinance, 1980 is attracted.
5. During the course of hearing it was agreed between the counsel for the parties that the facts are not much in dispute except that the case of the defendants Nos.1 and 2 is that it has issued the Bill of Lading which the plaintiff has not collected and thus dispatched to it. Mr. Shaiq Usmani learned counsel for the plaintiff has contended as follows:--
(1) That on loading of the consignment of the cargo it was mandatory upon the owner/master of the vessel to have issued the Bill of Lading to the plaintiff, which it has failed to do.
(2) That the Charterparty requires the defendants Nos.1 and 2 to carry the cargo with reasonable dispatch which the defendants Nos.1 and 2 are unable to fulfil.
(3) That the vessel has been arrested on 1-12-2006 and so far the defendants Nos.1 and 2 have done nothing to obtain its release and the P & I Club has also refused to come to the rescue of defendants Nos.1 and 2.
(4) That there is no likelihood of the defendant vessel leaving the port in near future as the plaintiff apprehends that vessel is likely to be arrested by other parties also and practically Charterparty stands frustrated.
(5) That no time is fixed in the Charterparty for payment of freight and that the freight is not earned until the cargo is carried and Charterparty does not provide for advance freight. Mr. Akbar H. Mirza learned counsel appearing for defendants Nos.1 and 2 has contended that:--
(1) That the Bill of Lading is issued on demand and as there has been no demand, no obligation to issue Bill of Lading has arisen.
(2) That in terms of the Charterparty the freight is to be paid within three banking days of the loading of cargo.
(3) The Bill of Lading was passed to the Chat en: r and freight is earned on issuing of mate receipt.
(4) The defendants Nos.1 and 2 are ready to complete the voyage and there is no case for discharge of cargo. Mr. Mustafa Lakhani learned counsel for the defendant No.3 has stated that the case of the defendant No.3 is only for payment of its commission. I have considered the submissions made by the learned counsel and have gone through record. The moot question that needs to be addressed at this stage of the proceeding is whether the facts and circumstances of the defendant No.1 vessel are such that it will not be able to undertake the voyage provided in the Charterparty and that the Charterparty practically is frustrated. The plaintiff claim is that circumstances with the vessel are such that the Charterparty has frustrated and is entitled to return of its cargo. The base provided for such frustration is that the defendant No.1 vessel has history of getting arrested and was arrested on 1-12-2006 in Admiralty Suit No.25 of 2006 for a claim in US $ 1.565,329 and till the hearing of this matter i.e. On 15-12-2006, the defendant No.1 vessel was unable to obtain its release even by providing security and that P&I Club, the underwriters have refused to come to the rescue of the defendant No.1 vessel and that there is no likelihood of the defendant No.1 being released from arrest in near future and the plaintiff even apprehends that there might be other claims against defendant No.1 vessel in which it may be arrested and this is despite categorical assurance of the vessel agent that the vessel is clean and will not be arrested.
6. This assurance is given in fax dated 20-11-2006 annexure to the plaint. On this assurance, the plaintiff started loading its cargo on the vessel on 24-11-2006 which was completed on 2-12-2006.
7. A day earlier i.e. On 1-12-2006 the vessel came to be arrested as already noted above. Up till 15-12- 2006 the vessel was not released and the P&I Club the underwriters have also not come to the rescue of the defendant No.1 vessel and this fact is not disputed by the counsel for defendants Nos.1 and 2. He however, asserts that the vessel will be got released and it will be able to undertake the voyage within 15 days. In the counter-affidavit, the defendants Nos.1 and 2 have taken the stand that they have instructed their counsel to prepare necessary documents for recalling the order of arrest. Thus, as is apparent, defendants Nos.1 and 2 are unable to furnish security to obtain release of the vessel so it may undertake voyage as per Chart.Trparty.
8. Scrutton on Charterparties and Bill of Lading 20th Edition in Article 52 has provided that the ship owner impliedly undertakes that his vessel shall be ready to commence the voyage agreed on and to load cargo to be carried' and shall proceed upon and complete the voyage agreed upon with all reasonable dispatch. This implied, undertaking is an in-nominate term of the contract. Hence if by a breach of this undertaking there is such delay, as goes to the root of the whole matter, deprives the Charterer of the whole benefit of the contract, or entirely frustrates the object of the charterer in chartering the ship, the charterer may refuse to perform his part of the contract altogether. The fact that the long detention of the cargo of rice on the vessel is likely to putrefy was not disputed by the counsel for the defendants Nos.1 and 2. This adds to the fact that the defendant No.1 vessel has decided to contest the claim in which it has been arrested to seek its release and though it is stated the voyage will commence within 15 days but it is not stated as to on what' basis this timeframe is worked out. It is more likely to be hunch rather than on actual fact. Now the cargo loading was completed on 2-12-2006 and until 15-12-2006 the vessel remained arrested. Until announcement of this order, I am not informed that the vessel is released and ready to undertake voyage. Thus the cargo is stuck on the vessel and there appears no reasonable basis to form an opinion that it will obtain its release within a reasonable time or within the time as stated by the vessel counsel. The charterer being an exporter of rice cannot justifiable be allowed to jeopardize its commercial venture just because the vessel in which cargo is to be carried decides to undertake the voyage at its own leisure and thus abandon its implied undertaking of completing the voyage with all reasonable dispatch. Thus, it can prima facie be inferred that the object of the charterer in chartering the vessel is entirely frustrated inasmuch as its cargo is likely to suffer on account of breach on the part of vessel of not fulfilling its implied undertaking of completing voyage with reasonable dispatch. Having discussed that there is- prima fade material for concluding frustration of the Charterparty, the next question that needs to be considered is as what is to be done with regard to the cargo that has been loaded on the vessel. The plaintiff counsel has stated that the plaintiff will dispatch the cargo through another vessel immediately on receiving the cargo from the defendant No.1 vessel. On the other hand the counsel for the defendants Nos.1 and 2 has pressed for payment of freight as he states that on loading of the cargo, the defendants Nos.1 and 2 became entitled to repayment of freight. Though Clause 28 of Charterparty provides for payment of freight within three banking days upon completion of loading and after signing/releasing bill(s) of lading marked "Freight payable as per charterpart". At the same time the clause further stipulates that if charter need bills of lading marked "Freight prepared" the owner will issue the same on presenting of swift copy of freight remitted to owners account. Now the copy or Bill of Lading attached with defendants Nos.1 and 2 counter-affidavit shows that it is marked "Freight prepaid" and it is also stated that it has been dispatched to the plaintiff. Though the plaintiff denies this, the very fact that it has been dispatched will mean that freight has been remitted to owners account. It is however, admitted that the freight is not paid. It is also not the case of defendants Nos.1 and 2 that plaintiff has shown its need for prepaid Bill of Lading. This only reflect upon the conduct of defendants Nos.1 and 2 that they have decided to issue prepaid Bill of Lading on receipt of freight and their plea of dispatch of such Bill of Lading cannot be accepted moreso in the face of the condition for issuing the same as contained in Charterparty. Besides, it also appears that defendants Nos.1 and 2 did not inform the plaintiff of arrest of the vessel on 1-12- 2006 and thereby putting the plaintiff to the choice of loading further cargo or not, as it is admitted fact that loading of cargo was completed on 2-12-2006. This fact in my view is also important vis-a-vis the bona fides of the defendants Nos.1 and 2. Thus, in my view, prima facie it is not entitled for payment of freight. In the case of Ex party Nvholm: Re Child (1873) 29 Law Times 634 cited by the counsel for the plaintiff, it was held that where on account of the charterer who has loaded its cargo on the ship and has failed to pay the advance amount of freight the vessel did not start her voyage as Bills of Lading were not signed by the charterer, the Lord Justices held that the ship never begin to earn freight. That it was prevented from doing so by the default of other party, entitled the owner for compensation for all the losses sustained thereby but the compensation is not freight and the nautical liens for freight does not extend for such compensation. Thus on the basis of this opinion of the Lord Justices, I am prima facie of the view that the defendants Nos.1 and 2 have hot earned the freight as the voyage never started and at best it may be entitled to payment of compensation for which no lien on cargo can be claimed The plaintiff has alleged that it has incurred a cost of Rs.7,233,998 for loading of the cargo and further cost of Rs.4,289,196 will be incurred by it for discharge of the cargo and that further consequential losses which it has estimated in the sum of Rs.11,653,380 total of Rs.23,177, 084 as the loss under the contract of carriage and thus has sought arrest of the vessel in terms of section 3(2)(h) of the Admiralty Jurisdiction of High Court Ordinance, 1980. Prima facie, there do appear to be a case against the defendants Nos.1 and 2 for the cost of loading and unloading of the cargo which amount comes to Rs.11,523,194.
9. Consequently it is ordered that the defendants Nos.1 and 2 will allow discharge of the plaintiffs cargo from defendant No.1 vessel at Karachi and that the defendant No.1 vessel is arrested for payment of compensation in the sum of Rs.11,523,194. The defendant No.1 vessel will be free to sail from the port provided it has deposited with the Nazir of this Court the said sum of Rs.11,523,194 or furnish equivalent security to the satisfaction of the Nazir provided also that the plaintiff cargo is discharged from the vessel at Karachi.
10. Both the applications in the above terms stand allowed.