1. ' This is a suit for the recovery of Rs, 5,96,252.78 on account of nondelivery of the cotton shipped from Karachi for Chittagong.
2. ' Messrs Mohomed Amin Mohomed Bashir Ltd. Despatched 100 bales (fully pressed) of raw cotton for carriage by sea per vessel s. s. Ocean Energy, belonging to defendant No, 1 Company, from Karachi to Chittagong. The defendant No, 2, are the agents of defendant No, 1 having their head office at Chittagong, and branch office at Karachi. The defendant No,
1. Issued the Bill of Lading No, 406 dated 3-3-1965. The aforesaid bills were insured with the plaintiff insurance company as per Insurance Policy No, HM/10396/ 3/65 dated 6-3-1965. The vessel reached Chittagong on or about 17th March, 1965 but the defendants failed to deliver the aforesaid cotton bales to the consignee and, therefore, Chittagong Port Trust authorities issued a short lading certificate dated 29th September, 1965. Subsequently, the plaintiff paid a sum of Rs, 53,895 as the price of the aforesaid bills to Messrs Mohomed Amin & Mohomed Bashir Ltd. And thereby subrogating all the rights.
3. ' The plaintiff and defendants are members of the Gold Clause Agreement and under that agreement and at the request of the plaintiffs the defendants by their telegram dated 6-3-1966 and letters dated 8-3-1966 and 10-3-1966 extended the time for delivery of the consignment and/or for filing suit by another year expiring on or about 10th March, 1967. Since the defendants failed either to deliver the cotton bales or pay the price the suit was filed claiming the amount which was paid to Messrs Muhammad Amin Muhammad Bashir Ltd.
4. ' The defendants contested the suit and filed written statements. The defendant No, 2 inter alia pleaded that they had acted as agent for defendant No, 1, and, therefore, the suit against them was not maintainable. They also claimed special costs under section 35 of the C. P. C. They further adopted the written statement filed by defendant No, 1, ' So far the written statement filed by defendant No, 1, is concerned it was admitted that 100 bales had been shipped but they were not aware of the contents of the bales, their condition, quality, quantity, weight and value. It was denied that all the bales clearly and legibly bore shipping marks or the marks were permanent enough to remain legible until the end of the voyage. It was also denied that the goods had been shipped in good order and condition. On the contrary there was a note in the Bill of Lading that the bales were tied with hoops and the whip was not responsible for the damage arising from rusty hoops. It was pleaded that on surrender of the original bill of lading the delivery order for the bales in question was issued to Messrs Asian Shipping Lines, being the final endorsee holder and presenters of the bill of lading and, therefore, the plaintiffs had no right to sue. They had no knowledge about the goods having been insured. It was admitted that the ship had reached Chittagong on 17th March, 1965 and had discharged the entire cargo including the full quantity belonging to the consignees Messrs Asian Shipping Lines but the bales were discharged partly under marks and partly under nil and/or wrong marks in custody of the Chittagong Port Trust and, therefore, they were not responsible or liable if any number of bales were short delivered to the consignees by the Chittaging Port Trust which was a necessary party had not been impleaded.
5. It was further pleaded that they had offered delivery of the bales under nil/wrong marks but the consignees persons acting on their behalf refused to take delivery of the bales for ulterior motive. It was also maintained that their responsibility ceased since the bales in question were free from ship tackle and thereafter the goods remained deposited in the custody of the Chittagong Port Trust at the request of goods owners. The alleged short landing certificate issued by the Chittagong Port Trust was denied and in any event the certificate was not conclusive evidence of short landing of the bales. It was not admitted that the plaintiffs had paid the sum of Rs, 53,895 being the value of 100 bales to Messrs Muhammad Amin Ltd. And the plaintiffs were put to strict proof. It was admitted that a notice of claim was received from the plaintiffs and they had rightly declined to make the payment. The suit was barred under Article 3 clause (6) of the Carriage of Goods by Sea Act of 1925. It was further contended that the extended time was solely to be utilised for referring the dispute to arbitration in London and the said extention did not amount to acknowledgement of the liability and, therefore, the suit was barred by limitation. The plaintiffs were not entitled to claim interest and, furthermore, the claim was exaggerated, speculative and extortionate. The defendant No,
2. Was wrongly impleaded. On the basis of these pleadings the following consent issues were framed : "(1) What were the goods shipped by Messrs Muhammad Amin Muhammad Bashir Limited per s. s. Ocean Energy from Karachi to Chittagong ?
(2) Whether the bales in question were accepted under the condition "Bales tied with hoops". Ship not responsible for damage arising from rusty hoops ? If so to what effect ?
(3) Whether Messrs Asian Shipping Lines were owners of the cargo in question and as such the plaintiffs have no right to sue in respect thereof ?
(4) Whether the entire cargo in question was discharged by the defendants ? If so, whether this cargo was discharged in marks and under Nil and/or wrong Marks ?
(5) Whether the defendants offered delivery of bales under Nil/Wrong Marks and the persons acting on behalf of Messrs Mohomed Amin Muhammad Bashir Ltd. And/or their clearing agents refused to take delivery of the Bales for ulterior motives ?
(6) Whether Messrs Muhammad Amin Muhammad Bashir Ltd. Were bound to take delivery of the goods under Nil and/or Wrong Marks ?
(7) Whether the Chittagong Port Trust Authorities is necessary party to the suit ?
(8) Whether the suit is barred under Article 3, clause 6 of the Carriage of Goods by Sea Act, 1925 ?
(9) Whether the suit is time barred and the extension granted by the defendants was only for referring the dispute to Arbitration in London ?
(10) Whether the suit against the defendant No, 2 is not maintainable and is liable to be dismissed ?
(11) To what amount the plaintiff is entitled to 7"
6. ' The plaintiffs examined two witnesses, namely, Shariful Hassan and Mohomed Kafiluddin Bhuyia at Chittagong on commission and three witnesses, namely, Muhammad Arshad, Syed Najmul Hassan and Syed Rashid Ahmed in this Court while the defendants examined two witnesses, namely Dilawar Hussain and Zainul Abdin Arif at Chittagong on commission. Several documents were also produced.
7. ' FINDINGS AND REASONS ' Issues Nos, 1 and 2.-At the time of arguments these issues were not pressed.
8. ' Issue No, 3.-In order to deal with this issue it is necessary to refer to the bill of lading Exh. D/1.
9. According to this the goods had been shipped by Messrs Muhammad Amin Muhammad Bashir Ltd.
10. By vessel s.s. Asian Energy to Chittagong to the order of the United Bank Ltd., Karachi, the freight was payable by the shipper with an endorsement "Notify Pakistan Commodities Ltd., Dacca" on the first page and another endorsement "please deliver to the order of Messrs Asian Shipping Lines" made by the United Bank Ltd. On the second page of the bill of lading. The goods had been sold to Pakistan Commodities Ltd., Dacca and the documents had to be delivered to the purchaser on payment of the price. Messrs Asian Shipping Lines were operating as clearing agents at Chittagong. From Karachi to Chittagong the goods were carried by the aforesaid vessel and from there the same had to be despatched to Dacca by railway. The goods had never reached Dacca as the short landing certificate was issued by the Chittagong Port Trust authorities. It is an admitted position that there was no trace of 50 bales. So far the remaining 50 bales are concerned it has been revealed by the evidence that some cotton in bags was discharged from the ship and some bales pertaining to some other consignment of other persons landed under Nil or defaced marks.
11. There were in all about 238 bales which were discharged in such condition. Subsequently connection procedure was adopted by the Custom authorities on the application of defendant No, 1, and the cotton contained in the bags was connected with 50 bales out of 100 bales despatched by Messrs Muhammad Amin Muhammad Bashir Ltd. Other tales landed in Nil or defaced marks were connected with the consignments of other persons.
12. ' It was urged by the learned counsel for the defendants that since the bill of lading was endorsed in favour of Messrs Asian Shipping Lines they had become the owners by virtue of section 1 of the Bill of Lading Act, 1856 and, therefore, the plaintiff had no right to file the suit. According to this section every consignee of the goods named in the bill of lading and every endorsee of bill of lading to whom the property in the goods were mentioned shall pass, upon or by reason of such consignment or endorsement shall have transferred to and vested in him all rights of Suit.
13. ' On the other hand, it has been contended by the learned counsel for the plaintiff that Messrs Asian Shipping Lines were simply the clearing agents and merely because they had been authorised to receive the goods, thereby, neither the property in the goods was transferred to them nor they had been vested with the rights of filing the suit.
14. ' On consideration of the contentions raised by the learned counsel for the parties I am of the opinion that there is no force in the plea taken on behalf of the defendants. It has been established by the evidence that Messrs Asian Shipping Lines were operating as clearing agents and they had been authorised to take the delivery of the goods as such. The appointment of the clearing agents is for the convenience of the parties and it becomes necessary when the goods are despatched to far off places by steamers. They are statutory agents as they are required by section 202 of the Customs Act and Custom House Agents (Licensing) Rules, 1965 to obtain a licence to act as agent for the transaction of any business relating to the insurance or clearance of any vessel or the import or export of any good or baggage in any Custom House. Section 203 requires that when any person applies to an officer of Customs for permission to transact any specific busines with him on behalf of any person he is required to produce a written authorit of that person and in default the permission can be refused. Thus, Messr Asian Shipping Lines acted as agents for the clearance of the goods and the question of the transfer of the property in the goods does not arise.
15. Consequently, section 1 of the Bill of Lading Act is not applicable. In this connection I may refer to the observation made by my learned brother Dorab Patel, in the case of Messrs Ameejee Waleeji & Sons vMessr American President Lines and others (1) to the effect that the names of the clearing agents are sometimes put on the bill of lading for the convenience of the parties to facilitate the clearance but it is a settled law that this does not make them the owner of the disputed goods shipped in the bill of lading. It was further observed that turning to the Sea Customs Act it is true that a clearing agent is empowered under the Statute to act on behalf of a owner of a cargo but this is only for the purpose of the statute and the clearing agent does not thereby become the owner of the cargo entrusted to him for clearance.
16. ' In the alternative the learned counsel for the defendants raised two pleas during the course of arguments, in case it was held that. Messrs Asian Shipping Lines acted as agents in clearing the goods from the custom. The first plea taken by him is that the moment the goods were delivered to the defendant No, 1 for being shipped to Chittagong, the property in the goods must be deemed to have passed to Pakistan Commodities Ltd. To which the goods had been sold. It may be pointed out that the issue, as it reads, does not cover this plea. Of course this plea was raised in the written statement but no issue to that effect was framed. Issues had been framed by consent and, therefore, it must be presumed that at the time of framing the issues the learned counsel did not intend to press this plea. Even otherwise this plea has no force.
17. ' In support of the plea reliance was placed upon section 23 of the Sale of Goods Act which roads as under :- "(1) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.
(2) Where, in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract."
(1) PLD 1973 Kar. 49 ' This is divided into two subsections. Subsection (1) requires unconditional appropriation by assent of either the seller or the buyer, either express or implied and may be given before or after the appropriation. Subsection (2) requires the delivery of the goods to any of the persons shown therein without reserving the rights of disposal and, thereby, it is deemed that the goods have been conditionally appropriated to the contract. The scope of this section has been fully explained in the case of Ramnivas v. Commissioner of Taxes (1). The relevant portion reads as under : "Subsection (1) of section 23 is wholly independent of subsection (2). Subsection (1) does not contemplate unconditional appropriation in pursuance of a contract ; it refers to unconditional appropriation with the assent of the parties, whereas in subsection (2), it is the delivery to a carrier in pursuance of a contract which operates as an unconditional appropriation, and is therefore, deemed to be unconditional appropriation, where, therefore, a party relies upon what must be deemed to be an unconditional appropriation within the meaning of subsection (2), he cannot be allowed to say that it was also without more, an unconditional appropriation within the meaning of subsection (1)."
18. ' Another section which is relevant for the purpose of this case is section 25 of the Sale of Goods Act and it reads as under :- "(1) Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract of appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.
(2) Where goods are shipped and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.
(3) Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading to the buyer together, to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honour the bill of exchange, and if he wrongfully retains the bill of lading the property in the goods does not pass to him."
19. ' This section deals with the case of conditional sale and conditional appropriation. Subsection (1) is of general application and applies to contracts for the sale of specific goods as well as to the subsequent appropriation of goods to contracts for sale of unascertained goods, and to contracts which do not involve sea transit as well as those which do, while subsections (2) and (3) relate to the Carriage by Sea.
20. ' Reading the two sections together, it is clear that mere delivery to the shipping company does not transfer the property in the goods to the buyer but there must be unconditional appropriation to the contract and the right of the disposal has not been reserved. The reservation of the right is indicated by the fact that the bill of lading lays down. The condition that the
(1) AIR 1962 All. 178 goods which have been shipped are deliverable to the order of the seller or his agent. These two sections were also dealt with in the case of Commissioner of Income-tax v. Mysore Choomite Ltd.
21. (1). The relevant observation reads as under :- "Section 23 of the Sale of Goods Act lays down that where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. The requirement of the section is not only that there shall be appropriation of the goods to the contract but that such appropriation must be made unconditionally. This is further elaborated by section 25 of that Act which provides that where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such a case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled."
22. ' Applying the aforesaid test to the present case it is clear that the contention raised by the learned counsel has no force. In the present case, the bill o lading was neither addressed to the buyer nor endorsed in their favour, but it was addressed to the order of the United Bank Ltd., Karachi, which acted as agent of the sellers. The bank was simply to notify Pakistan Commoditie Ltd. And after the full price was paid to the bank the documents had to b delivered to the buyers. The payment of full price by the buyers was a condition precedent and unless that amount was paid the property could not be said to have passed to the buyers. The observation made in to above Supreme Court case is a complete answer to the contention raised by the learned counsel. In that case the assessee-Company carrying on its business in India shipped the goods to American and European buyers etc. Under bill of lading issued in its own name and under the contract it was not obliged to part with the bill of lading until the bill of exchange drawn by it on the buyers Bank in London where the irrevokable letter of credit was opened, was honoured. It was held that till the bill of exchange was expired by the buyers bank in Landon and the documents were delivered by the assessee- Company's agent, the Eastern Bank Ltd. London, to the buyer bank, the property in the goods did not pass to the buyers.
23. ' It may be further stated that in the present case it was C. I. F. Contract which means contract for sale of goods upon cost, insurance and freight. This type of contract has certain peculiar features which distinguish it from ordinary contract for sale of goods. Although C. I. F. Contract does not fall outside the scope of Sales of Goods Act but there are certain provisions in the Act which are either wholly inapplicable to this class of contracts or when applied to it must be read subject to certain qualifications. Under this contract the property in the goods does not pass to the buyers until the documents are handed over to them. This type of contract was dealt with in the case of Arnbold Karberg & Co. v. Blythe Green Jourdein & Co. And
(1) AIR 1955 SC 98 #TBS (9) AIR 1959 Ker. 29 #TBE Theodor Shneeder & Co. v. Burgett & Newsam (1). The relevant observation appearing at page 388 reads as under :- "But I.Am strongly of opinion that the key to many of the difficulties arising in c. i. f. Contracts is to keep firmly in mind the cardinal distinction that a c. i. f. Sale is not a sale of goods, but a sale of documents relating to goods. It is not a contract that goods shall arrive, but a contract to ship goods complying with the contract of sale, to obtain, unless the contract otherwise provides, the ordinary contract of carriage to the place of destination, and the ordinary contract of insurance of the goods on that voyage, and to tender these documents against payment of the contract price.
24. The buyer then has the right to claim the fulfilment of the contract of carriage, or, if the goods are lost or damaged, such indemnity for the loss as he can claim under the contract of insurance. He buys the documents, not the goods and it may be that under the terms of the contracts of insurance and affreightment he buys no indemnity for the damage that has happened to the goods. This depends on what documents he is entitled to under the contract of sale." - ' There are several other authorities supporting the view that the property in the goods does not pass to the buyers until the full price has been paid and the documents are delivered. I would like to confine myself to some of them. One of them is the case of Ramnivas Satyanarayan and others v. Commissioner of Taxes (2), as already referred while others are Ford Automobiles India Ltd. v.
25. Delhi Motors & Engineering Company (3), Bank of Morvi Ltd. v. Baerkin Brothers (4), Gulab Rai Sagarmal v. Nirbal Ram Nagarmal (5), Sundarsingh Jagatsingh v. Gulab Singh Kalyan Singh (6), Balkishan Bisheshar Nath v. Fazal Illahi (7), N. S. Bilimoria v. Gauri Malnaraindas (8) and Haji P. K.
26. Moidoo Brothers v. State of Madras (9).
27. ' The second plea which was taken is that when the plaintiffs entered into correspondence with the defendants they did not pay anything to the sellers, namely, Muhammad Amin Muhammad Bashir Ltd. And, therefore, there was as no subrogation, with the result that the plaintiffs were not entitled t claim the amount. Again it may be pointe out that no such plea was taken in the written statement nor any issue was framed. Consequently, this plea cannot be entertained when raised for the first time during the course of arguments.
28. ' Even considering on merits it has no force. Section 135-A, Transfer of Property Act deals with the assignment of rights under the Policy of Marine Insurance with the consequence of subrogation., It reads as under "(1) Where a Policy of Marine Insurance has been assigned so as to pass the beneficial interest therein. The assignee of the policy is entitled to sue thereon in his own name and the defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was effected.
(1) (1915) 2 K B 379 (2) AIR 1952 Assam 178
(3) AIR 1923 Born. 128 (4) AIR 1924 Bona. 325
(5) AIR 1924 Lah. 739 (6) AIR 1927 Lah. 269
(7) AIR 1927 Lah. 391 (8) AIR 1928 Lah. 481
(2) Where the insurer pays for a total loss, either of the whole, or in the case of goods, of any apportionable part, of the subject-matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject-matter so paid for, and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of the subject-matter as from the time of the casualty causing the loss.
(3) Where the insurer pays for a partial loss, he acquires no title to the subject-matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss.
(4) Nothing in clause (e) of section 6 shall affect the provisions of this section."
29. ' In the present case subsection (2) will apply. In this connection reference may be made to the evidence. Firstly, the subrogation letter Exh. 11 is dated 14-2-1966 and although it was stated in this letter that an amount of Rs, 53,795 was received by Messrs Muhammad Amin Muhammad Bashir Ltd, from the plaintiffs but the evidence reveals that no such payment was made. The payment was actually made by cheque which was encashed on 8th or 9th September, 1966 and Matine claims voucher Exh. 51 dated 1st September, 1966 to that effect was issued by Messrs Muhammad Amin Muhammad Bashir Ltd. In favour of the plaintiffs. This document reads as under :- "Received from Premier Insurance Company of Pakistan Ltd. The sum of rupees fifty-three thousand eight hundred and ninety being the amount in full settlement and satisfaction of all claims present or future under Policy No, HM/10396/3/65 in respect of 100 Bales of Pak Raw Cotton per Exh. s. s. Ocean Energy, from Karachi to Congi via Chittagong (upto Mill Site at rongi).
30. ' It is further understood and agreed that I/we subrogate to the company all my/our right, title and interest in and to any salvage."
31. ' Thus it is clear that by this document and the payment made the plaintiffs subrogated to all the rights and remedies of Messrs Muhammad Amin Muhammad Bashir Ltd. The suit was filed on 23- 12-1966.` Thus at the time when the suit was filed the plaintiffs were entitled to enforce all the rights and remedies and were equally competent to file the present suit.
32. ' Issues Nos, 4, 5 and 6.-It is an admitted position that there were 100 bales which had been shipped and out of them 50 had remained untraced. Consequently, the dispute is with regard to the remaining 50 bales. It is not claimed that these 50 bales were discharged from the ship under the marks of the plaintiffs. There is also no evidence to show that these bales were discharged under Nil marks. Reliance was placed upon the custom connection report Exh. 56 dated 14-4-1966. The Custom connection report was made on 10-3-1966 and the connection was allowed on 14-5-1966.
33. This report is prepared under Circular No, 2, Chittagong, dated 7th June, 1958 issued under section 167(17), Sea Customs Act in order to relieve the master of the vessel from the penalty in case the goods which had been shipped are missing. According to this report some cotton was connected with the cotton bales in dispute and accordingly the outturn report was amended. No reliance can be placed upon this report as in the first place it was unilateral report prepared at the request of the defendant No, 2 'without any notice to either the plaintiffs or the seller or the buyers. Secondly, the custom authorities cannot be said to be expert in determining the variety of the cotton.
34. Admittedly there are various varieties of cotton and it is difficult for a person who is not expert to determine to which variety a particular cotton belongs. The evidence shows that about 400 bales under nill marks or defaced marks were despatched from six ships and the connection was made on the basis of the invoices alone. It is not known how such a connection is possible by persons who are not experts.
35. ' It was, however, contended that under section 35 of the Evidence Act the connection report was relevant and could be relied upon. I must say that relevancy is one thing and the value to be attached to such a document is another. The Custom Officer who had held the connection proceedings has not been examined so that his varacity may be tested. The possibility of the connection is also remote in view of the admission made by Dilawar Hussain examined on commission by the defendants. He stated that this consignment of 100 bags was discharged from the vessel. The cotton in dispute was never shipped by bags. In order to meet this it was urged by the learned counsel for the defendants that the word bags was a mistake for bales. I am unable to accept this explanation as the same witness had at another place stated that they accepted the custom connection of raw cotton of 50 bags. So the word bags has not been used at one place but at two places by the same witness. Consequently, there can be no question of any mistake. The other witness Zainul Abdin Arif examined on commission by the defendants stated in cross- examination that the goods were in loose condition. This is also supported by Exh.
54. Reliance was also placed upon section 114, Evidence Act in order to raise presumption in favour of the report. In this connection it may be restated that the connection report is prepared under section 167(17), Sea Customs Act in order to exonerate the master of the vessel from penalty and not for any other purpose. It cannot bind the third party when no notice for connection proceedings has been given. The learned counsel for the defendants, however, urged before me that a notice was given to the plaintiffs but they refused to join any custom connection proceedings. To support this reliance was placed upon report Exh. 25 dated 8th March, 1966 addressed by the defendant No, 2 to the plaintiffs but even this letter does not support the contention. The relevant portion of the letter reads :- "Further we would like to inform you that the Port Trust authorities have issued supplementary 0. T.
36. R. For 50 bales and we have removed the goods to sea shed and arrange for custom examination by Thursday next."
37. ' It is clear from this that the custom connection had already been made and it was, however, suggested to the plaintiffs to arrange for custom examination by Thursday next and not on Thursday as was contended by the learned counsel that it was a typing error. This letter was in reply to the telegram dated 2-3-1966 sent by the plaintiffs for extension of time as required by Gold Clause Agreement to which the plaintiffs and the defendants were parties. In this connection reference may be made to the entire correspondence between the parties and it is clear that the plaintiffs had suggested in letter Exh. 33 dated 11-10-1965 that they had no objection to accept the cargo offered by them in place of the one the consignee had imported from Karachi provided a joint survey to establish the extent of the loss was made. To this the defendants did not agree. It was all along being contended by the plaintiffs that the cotton which was being offered was in bags and not in bales and this was disputed by the defendants. But, as I have already pointed out, the witnesses examined by the defendants, on the contrary, supported the claim of the plaintiffs.
38. Thus the plaintiffs had every justification to refuse to accept the cargo offered in bags unless the defendants had agreed to the joint survey in order to determine whether the cotton which was being offered was the same which was despatched or of different category. The necessity for joint survey has also been provided by Article III, Clause 6 of Carriage of Goods by Sea Act. It lays down that in case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. Thus it was obligatory to hold joint survey to resolve the dispute and since the defendants declined to agree to it, they failed to comply with the statutory provision.
39. ' For the aforesaid reasons I answer these issues against the defendant.
40. ' Issue No, 7.-At the time of arguments this issue was not pressed.
41. ' Issues NM. 8 and 9.-Article 3 clause 6 of the Carriage of Goods by Sea Act, 1925 provides that the carrier of the ship shall be discharged from all liability in respect of loss or damage unless the suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered. Article 131 of the Limitation Act also provides the period of one year against a carrier for compensation for non-delivery of or delay in delivering the goods and the time begins to run from the date when the goods ought to be delivered. These two provisions of law came under review in the case of Abdul Jalil v. Muhammadi Steamship Co. (1) and it was observed that Article 31 of the Limitation Act was in almost identical terms with clause (6) of Article 111 of Carriage of Goods by Sea Act and there was no reason to place on this clause an interpretation different from that which had been placed on Article 31 and there were large number of decisions under Article 31 where in it had been held that limitation started only when the Railway authority either refused, or expressed its inability to give delivery, Commenting upon those decisions, it was observed that although those decisions did not explain the basis on which the conclusion could be reached but all those decisions could be shown to be correct on the ground that in those cases there was correspondence going on between the carrier and the consignee, and the carrier was willing to give and the consignee was willing to take, delivery, so that there was impliedly an extension of time till there was refusal to give delivery or expression of inability to do so.
42. ' Turning to the present case the ship reached Chittagong on 17th March, 1965 and the unloading was completed by 21st March, 1965. The short landing certificate for the 100 bales for which the present suit was filed was issued by the Custom Authority on 29th September, 1965. At the request of the defendants custom connection for the unmanifested goods was made on 10th March, 1966 and 14th April, 1966 and was allowed on 14th May, 1966 for 50 bales out of 100 bales and, therefore, supplementary out turn report was issued. Then there was correspondence between the parties.
43. The first letter Exh. 48 dated 7-10-1965 was written by Asian Shipping Lines to Messrs Lloyds Surveyors to make necessary arrangement fox' steamer survey for the aforesaid 50 bales which had landed in damaged condition and copy of this letter was sent to the plaintiffs as well as defendant No,
2. It is, however, not known what steps were taken in pursuance of this letter. It may be pointed out here that Asian Shipping Lines were the clearing agents, authorised by the bank to clear the goods. Another letter Exh. 33 dated 11-10-1965 was addressed by the plaintiffs to the defendants stating
(1) PLD 1961 SC 340 that they had learnt from the clearing and forwarding agents Messrs Asian Shipping Lines that the cargo was being offered under nil/wrong marks procedure from sea shed and half of the bales were partly burst from different places and they had no objection to accept cargo provided the joint survey was made to establish the extent of loss. No reply seems to have been received to this letter. At least none has been produced. Another letter Exh. 20 dated 14-2-1966 was written by the plaintiffs to the defendants claiming the amount of Rs, 51,328.39 on the basis of the short landing certificate and requesting for early settlement. Along with this letter invoice for that amount Exh. 21 was forwarded. To this a reply Exh. 27 dated 25-2-1966 was sent by the defendants to the plaintiffs stating that the bales in question landed under obliterated mark due to defective stencil marking on the container and the consignee's agents refused to take delivery either from the transit shed or from sea shed and it further appeared that the port authority had not yet produced the 71 bales and, therefore, they should prefer their claim for 71 bales to port authorities and arrange for delivery of the balance cargo from sea shed which were under custom supervision and control. It is not understood how the plaintiffs were asked to take delivery of the 71 bales from port authority and the remaining bales from the shed in view of the custom connection for 50 bales only.
44. Subsequently, the plaintiffs sent a telegram Exh. 23 asking for extension of time otherwise the suit would be filed. To the same effect letter Exh. 22 dated 2-3-1966 was addressed by the plaintiffs to the defendants. To this a reply was sent by telegram Exh. 24 and letter Exh. 25 dated 8-3-1966 allowing the extension for one year and offering 50 bales, subject to certain conditions. Another letter Exh. 26 dated 10-3-1966 was written by the defendants to the plaintiffs confirming the extension for one year with effect from 17-3-1966. Thereafter the plaintiffs addressed a letter Exh. 28 dated 11-4.1966 to the defendants that the cargo which was being offered was cotton waste in bags. To the same effect another letter Exh. 29 dated 3-5-1966 was written. To these letters reply Exh. 30 dated 12-5-1966 was given by the defendants asking the plaintiffs to send their representative to inspect the cargo. The plaintiffs, however, did not send any representative but wrote a letter Exh. 31 dated 13-6-1966 to the defendants asking for joint survey. To the same effect another letter Exh. 32 dated 23-6-1966 was written. It appears that no reply was received as none has been filed. The present suit was filed on 23-12-1966. Thereafter, a letter Exh. 46 dated 22-2-1967 was received by the plaintiffs from the defendants offering the delivery of 50 bales in sea shed and 12 bales from Port Trust, thereby admitted short landing for 38 bales only.
45. ' It is clear from the statement of facts recounted in the preceding paragraph that the suit had been filed beyond one year of the goods having been discharged from the ship and within one year of the extension letter Exh. 25 and custom connection. It is in evidence that cotton bales of various owners were discharged from five ships and 238 bales out of those consignments were found missing, having discharged under nil or defaced marks. Subsequently, connection proceedings were drawn by the custom authority-at the request of the shipping lines. As a result of these proceeding some 50 bales out of 100 bales in the present case were connected and deliver of the same was offered by the defendants. It, therefore, follows that till E then no delivery could be offered. The correspondence further reveals that neither the defendants refused to give the delivery not the plaintiffs refused to accept the deliver y but the defendants offered to give delivery as per custom connection while the plaintiffs agreed to accept the delivery subject to the claim for damages and by joint survey. So the parties were at dispute with regard to the identity of the cotton bales and the quality of the cotton' thus offered. It, therefore, cannot be said to be the case that the defendants either refused or expressed their inability to give the delivery. In view of these considerations, I am inclined to entertain the view that the principle laid by the Supreme Court in the aforesaid authority can be applied to the present case and the time for delivery of the goods was impliedly extended.
46. ' It was next contended on behalf of the pla'intiffs that extension was allowed under Gold Clause Agreement as established by the correspondence exchanged between the parties. I propose to confine myself to the telegram dated 2-3-1966 Exh. 33 and letter dated 2-3-1966 Exh. 22 from plaintiffs to defendants and a telegram dated 7-3-1966 Exh. 24 and letter dated 8-3-1966 Exh. 25 sent in reply by defendants to the plaintiffs, which read as under ' TELEGRAM Exit.
47. 22.
48. Reyyourlet Ongy.3-56137 Twentyfifth Ultimo Shortlanding one Hundred Bales writing to Consignees meantime extend Time Limit Subrogation Despatched Ourlet Nineteenth Ultimo Stop Extension Must Reach us Tenth Instant Alternately Filing Suit (Prinscop)
49. ' LETTER EXH.
50. 22.
51. "We have to thank you for your letter of the 25th Ultimo Ref: On GY/3-65/37. Whilst we have advised the contents of your letter to the consignee with a view to make the enquiries in this regard, we confirm having sent you our telegram of the date under: Reyourler Ongy/3-65/37 Twen Tyfifth Ultimo Shortlanding one Hundred Bales Writing to Consignees meantime extend Time Limit Subrogation Despatched Ourlet Nineteenth Ultimo Stop Extension must Reach us Tenth Instant Alternately Filing Suit ' Vide our letter TA/136/66 of the 19th Ultimo we had requested you to extend the time limit which presently expires on 17th instant and since a reply from the consignees may be delayed, we would appreciate if you will kindly let us have the extension by the 10th of this month, or alternately we shall be constrained to file the suit."
52. ' TELEGRAM EXH.
53. 24.
54. 'Oenergyarch 1965 Claim for Hundred Bales Lading 406 to 408 Extension Granted Under GCA Letter Follows ' LETIER EMI.
55. 25.
56. "We acknowledge receipt of your telegram dated 2nd instant in connection with the above claim and as desired, are pleased to grant you extension of time for one year from the date of expiry, subject to the terms and provisions of the Gold Clause Agreement. We quote hereunder the text of our telegram which had already been sent to you.
57. "Onegymarch 1965 for Hundred Bales Blading 406 to 408 Extension Granted Under GCA Letter Follows Birdship."
58. ' Further we would like to inform you that the Port Authority have issued a supplementary 0. T. R. For 50 bales and we have since removed the Goods to 'C Shed and arrange for Custom Examination by Thursday next.
59. ' In view of the above, we are endorsing a copy of this letter to the C & F. Agents for this consignment for their information.
60. ' Nothing in this letter is to be construed as or be taken as an admission of liability or an extension of the time at which delivery ought to be made or in any way modifying or varying or extending the terms of the Bill of Lading or in any way constituting a new agreement regarding the delivery of the goods covered by the Bill of Lading."
61. ' These documents leave no manner of doubt that extension was sought and allowed. In order to meet this it was urged by the learned counsel for the defendant that the extension referred to in the documents was granted for the purpose of arbitration under Gold Clause Agreement, to be held in England and not for the purpose of suit. There is no force in this contention. British Maritime Law Association Agreement of August, 1950, popularly known as the Gold Clause Agreement, embodies eight clauses. Clause 3 lays down, among other conditions that if the claim is such that the Courts of United Kingdom or any of them have jurisdiction or the contract of carriage provides for arbitration in the United Kingdom, the underwriters shall not seek to enforce the claim elsewhere. Clause 4 which deals with the extension of time reads as under:- "The shipowners will, upon the request of any party representing the cargo (whether made before or after the expiry of the period of twelve months after the delivery of the goods or the date when the goods should have been delivered as laid by The Hague Rules) extend the time for bringing suit for a further twelve months unless-,
(a) Notice of the claim with the best particluars available has not been given within the period of twelve months; or
(b) There has been undue delay on the part of consignees, receivers or underwriters in obtaining the relevant information and formulating the claim."
62. ' This is a complete answer to the contention that the extension under the Gold Clause Agreement was to be confined to arbitation and could not be extended to suits. The plaintiffs had sought the extension for the purpose of suit. There is nothing to the contrary in the correspondence exchanged between the parties. The learned counsel, however, referred to the last para. Of the letter Exh. 25 and attempted to canvass that this was intended to cover the suit as well. It is not possible to construe the letter as sought by him.
63. ' It was further contended on behalf of the defendants that the parties could not by contract alter the statutory period of limitation, nor they could alter the statutory point of limitation and such a contract would be void as was held in the case of 'Jawahar La! v. Mathura Prashad and another (1).
64. This authority has no application. In the first place Gold Clause Agreement permits the extension of time for filing the suit. Secondly, I can do no better than to refer to the principle fully laid down by the aforesaid authority of the Supreme Court reported in PLD 1961 SC 340. The relevant observations read as under:- "In the case of a contract of carriage of goods by sea, if there be in the contract a date fixed for delivery, that would be the terminus a quo
(1) AIR 1934 All. 661 for limitation. If, on the other hand, there be no date fixed reasonable time would have to be ascertained, and that would depend upon the particular circumstances of a case. However, the matter does not end there. The time for the performance of a contract is liable to be extended by the promisee as provided in section 63 of the Contract Act. This section does not say that the consent of the promisor is also needed for extension, but that is obviously essential for if the promisor was not prepared to give performance at all any extension would be meaningless.
65. However, the consent need not be express and may be implied. Similarly, extension by the promisee too may be only implied.
66. ' Therefore, in all cases of carriage of goods by sea the terminus a quo for limitation will be affected, if the promisee agrees to have performance at a date later than that originally fixed or later than that which constituted a reasonable time.
67. ' If a party continues to represent that it is prepared to perform a contract into which it has entered, after the expiry of the period fixed for the performance, it cannot be contend that it was not bound to perform the contract, in the absence of a legal bar which deprives the undertaking of all legal effect. There is nothing in the Carriage of Goods by Sea Act which prevents the parties from making fresh binding agreements. It would be quite open to the carrier in case, for instance, where the goods could not be found, to undertake to trace the goods and deliver them at such future date as may be agreed upon. Clause 6 is not intended to force the parties to come to Court. They can adjust their disputes in any manner they like and they can make fresh agreement in any difficult situation.
68. ' The carrier should be held to the representations which it makes and on which the consignee acted."
69. ' In that case, the contention that time started running when the goods were discharged from the ship, was rejected.
70. ' Lastly, it was contended by the learned counsel for the defendants that Messrs Muhammad Amin Muhammad Bashir Ltd. Were not party to the Gold Clause Agreement and they could not ask for extension of time and since the plaintiffs entered into correspondence and the extension was granted earlier than the subrogation they also could not ask for the extension, and, therefore, the extension which was granted was invalid. In the first place no such plea was taken in the written statement, and, therefore, it cannot be considered. Secondly, the defendants bad allowed the extension and prevented the plaintiffs from filing the suit and, therefore, they are estopped from disputing the legality of that extension.
71. ' In the circumstances, I hold that the suit is within time.
72. ' Issue No, 10.-At the time of arguments, the learned counsel for the plaintiffs did not press the claim against the defendant No, 2 on the basis of a decision of this Court in the case of Messrs Azam Agencies Ltd. And another Transoceanic Steamship Co. Ltd. Karachi and another (1) and the decision of the Dacca High Court. The learned counsel for the defendant, however, claimed special cost. In the aforesaid authority, Rs, 200 were awarded as special costs. I also allow the same amount.
(1) PLD 1971 Kar. 56 ' Issue No, 11.-The plaintiffs have claimed an amount of Rs, 59,625.78, consisting of two items i. e. Rs, 53,895, paid to Messrs Muhammad Amin Muhammad Bashir Ltd. And Rs, 5,757.78, as interest at the rate of 6% from 17th March, 1965 when the vessel had reached Chittagong up to the date of filing of the suit. I must say that the plaintiffs over paid the amount to Messrs Muhammad Amin Muhammad Bashir Ltd. As the invoice Exh.
6. Shows the amount of Rs, 51,328. This was also the amount claimed originally by letter Exh.
20. Consequently, I allow this amount.
73. ' So far the interest is concerned, it was urged by the learned counsel for the defendant that according to Interest Act XXXII of 1939, no interest could be allowed as no demand for interest was made. This Act has only one section and it reads as under:- "It is, therefore hereby enacted that, upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or if payable otherwise, then from the time when demand of payment shall have been made in writing so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term of payment: provided that interest shall be payable in all cases in which it is now payable by law."
74. ' This section has two parts. The first part allows interest if the amount is certain and is payable under a written instrument. This part apparently does not apply. The second part refers to the sum payable otherwise and no interest can be paid unless a demand for interest has been made. This, however, carries a proviso allowing the interest, if payable by law.
75. ' Reading the aforesaid provision of law, I find considerable force in the contention raised before me. The correspondence does not show that demand for interest was made. Reliance was, however, placed by the learned counsel for the plaintiff upon section 61 of the Sale of Goods Act but this section has no application as it applies to the seller and buyer inter se and not to a third person as in the present case. No other law has been pointed out allowing interest. So, the claim for interest for the period prior to the institution of the suit is clearly hit by the Interest Act.
76. ' In the alternative interest was claimed by way of damages. To support, this, three decisions reported in AIR 1930 All. 132, AIR 1933 Lah. 556 and AIR 1935 Lah. 685 were quoted. Indeed, it was laid down that interest could be allowed as damages but there were conflicting decisions of various High Courts in prepartition India and the conflict should be considered to have been set at rest by the authority of the Privy Council in the case of B. N. Railway v. Ruttlanji Ranji (1), rejecting the rule that interest could be allowed by way of damages. The rule which can be spelled out from the decision of the Privy Council is that in the absence of an express or implied contract to pay interest or a usage of trade, interest can be allowed only under the interest Act. In the present case there was no contract nor any usage was pointed out.
77. ' Apart from this the claim for interest be rejected on the ground that it was at the request of the plaintiff that extension was granted for one year.
(1) AIR 1938 P C 67 ' The plaintiff cannot be permitted to take advantage of their own action and derive double benefit.
78. ' In the result, I decree the suit against defendant No, 1 for Rs, 51328.39, with costs and interest at 6% from the date of filing of the suit till realisation while the suit against defendant No, 2 is dismissed with costs and special cost of Rs, 200.