1. ' SAEEDUZZAMAN SIDDIQUI, J.-This appeal under section 7 of the Admiralty Jurisdiction of High Courts Ordinance, 1980, has been filed against the order of a learned Single Judge of this Court dated 16-12-1981, whereby he ordered release of the ship "m. v. Alexander's Faith" upon furnishing security in the sum of Rs, 1,50,000 by the :respondent. The circumstances under which the present appeal is filed are as follows :- ' The appellant instituted a suit under the admiralty jurisdiction of this Court against the ship "m. v.
2. Alexander's Faith" on 7-12-1981 when the ship called on the Karachi Port. According to allegations made in the plaint, the appellant had opened an irrevocable letter of credit in favour of Messrs Marea Production B. V., Post Office Box No, 1165, 8000-BD, Retterdum Holland for a sum of D. M.
3. 580100 for import of sodium Hydroxide. Under the terms of the letter of credit the whole consignment was to be shipped latest by 30th October, 1981 It is an admitted position that the consignment was shipped to Karachi in three different lots out of which two were shipped within the period allowed in the letter of credit and payments therefor were received by the suppliers It is the case of appellant that the two consignments of Sodium Hydroxide received by them from the suppliers were found to be of substandard quality and therefore, they cancelled their order with regard to the remaining supply of goods and informed the supplier that they will not extend the validity of letter of credit. It is alleged by the appellant that the suppliers who were unable to ship the goods within the period of validity of letter of credit collusively managed to obtain a shipped bill of lading of the consignment from the defendant and thus were able to receive payment in the sum of Rs, 10,30,400 against the letter of credit from the bankers within its validity. It is an admitted position that under the terms of letter of credit payment could be obtained by the suppliers only against a 'shipped Bill of Lading.' It is also an admitted position that on the date the Bill of Lading was issued to the suppliers the ship `m. v. Alexander's Faith" was in the 'high seas' and had not even called on the Port of shipment. On these admitted facts there can be no doubt that the suppliers managed to obtain the payment of Rs, 10,30,400 under the letter of credit from the Bank on the basis of a Bill of Lading issued by the defendant which to say the least at this stage contained incorrect entries in so far it purported to be a "shipped Bill of Lading." The plaintiff in these circumstances instituted the suit and claimed damages to the tune of Rs, 29,10,485, which they allegedly suffered and this amount also included the sum of Rs, 10,30,400, withdrawn by the supplier under the irrevocable letter of credit established by the appellant in their favour, on the basis of aforesaid "shipped Bill of Lading" issued by the defendant. The ship was initially arrested on an interim application of appellant in the suit but the learned Single Judge ordered its release after hearing the parties upon furnishing security to the extent of Rs, 1,50,000, only. The learned Single Judge was persuaded to make the above order on the consideration that although it was alleged before him that the letter of credit was encashed by the supplier as a result of fraudulent entry made in the bill of lading, but the appellant did accept the goods on arrival at Karachi Port and therefore, apparently there was neither any case for damages nor for loss having been suffered by them. In spite of this conclusion by the learned Judge he ordered furnishing security by the respondent in sum of Rs, 1,50,000, only. It is, however, not indicated in the order of learned Single Judge that on what basis the amount of Rs, 1,50,000 was fixed by him as the security for release of ship. Mr. Muhammad Naeem the learned counsel for the respondent is also unable to tell us, when questioned, the reasons for fixing the amount of security of Rs, 1,50,000 for the release of the ship under arrest Mr. Makhdoom Ali Khan the learned counsel for the appellant on the other hand contends that the learned Single Judge should not have ordered release of ship until security was given to the extent of the amount claimed in the suit. The learned counsel placed reliance on rule 748 of the Sind Chief Court Rules (0. S.) framed under the Colonial Courts of Admiralty Act, to contend that the discretion of the Court to order release of the property arrested is limited and that release can be ordered only after the security has been furnished in the sum claimed in the suit.
4. The relevant rule relied by the learned counsel is as follows :- "748. When security shall have been given in the sum in which the suit has been instituted or such sums shall have been paid into Court and, if the suit be one to salvage, when the value of the property arrested shall have been proved to the satisfaction of the Judge in Chambers, he shall grant release for the property arrested, unless there be a caveat against the release thereof outstanding in the Caveat Release Book."
5. We are unable to accept the interpretation placed by the learned counsel on the above rule. The rule referred to above obviously relates to the stage where the property arrested is sought to be released before the application is finally heard and decided by the Court. This rule referred to above cannot override the power of Court to order release of the property arrested either unconditionally or upon such condition as it may deem fit in the circumstances of the case upon hearing the parties while disposing of the application for arrest of property finally. In the case before us the order of learned Single Judge finally disposed of the application for arrest of ship filed by the appellant and therefore, the rule relied by the Court had no application. The learned counsel for the appellant further contended that as a result of the fraudulent entry in the bill of lading, the supplier succeeded in getting the irrevocable letter of credit encashed to the extent of Rs, 10,30,400 and therefore, the learned Single Judge, while ordering release of the ship, should have at least ordered for furnishing of security to the extent of the amount which the appellant was deprived of as a result of the fraud committed by the respondent. In reply to the above contention Mr. Muhammad Naeem the learned counsel for the respondent contended that the action brought by the appellant was an action in rem against the 'ship' which on the face of it was misconceived, as there was no fraud committed by the owner of the ship. The learned counsel contended that the instant bill of lading was issued to the appellant by the party who had taken the ship on a charter from the owner. Therefore, the alleged fraud, if any, was committed by the Charterer of the ship and not the owner thereof. The learned counsel referred us the copy of bill of lading on record which is signed by Messrs Inter Asean Lines whose name appears on the top of the bill of lading.
6. The learned counsel contends that Messrs Inter Asean Lines do not own the ship "m. v. Alexander's Faith" but are only the charterer having taken the ship from its owner under a charter-party agreement. It is accordingly contended that the present suit instituted by the appellant is, not maintainable under Admiralty Jurisdiction of this Court as it did not involve any breach of an agreement of carriage of goods by the ship owner. At this stage while we are only considering an appeal from an interim order of release of ship passed in the suit it is not advisable to dwell upon the question touching the merits of suit which must be left to be dealt with at the trial of the suit when the B parties will place all the evidence in the suit and the Court will be in a position to conclusively determine the same in the light of evidence produced by the parties. For the present it is enough to say that on the face of bill of lading there is no indication to show that Messrs Inter Asean Lines who signed it had no authority to bind the owner of ship or that they signed it as Charterer of ship or as owner thereof. The respondent will be free to establish this contention at the trial of the suit. Prima facie the contention of appellant that the respondent is liable for the fraudulent entry in the bill of lading is supported by the following passage appearing at page 145 of the book titled as "Time Charters" by Michael Wilford Terence Coghlin Nicholas, J. Healy, Jr. Issued by Lloyd's of Ledon Press Limited 1978 Edn. :- "The authorities suggest that the latter interpretation may be the right one and, further, that the words, by implication, generally give the charterers or their agents authority to sign the bills of lading as agents for the master. With reference to these words, Brandon, J. In The Berkshire (1947) 1 Lloyd's Rep. 185, at page 188, said 'The effect of such a clause (Clause 8 of the New York Produce form) in a charter party is well settled. In the first place, the clause entitles the charterers to present to the master for signature by him on behalf of the ship-owners bills of lading which contain evidence of contracts between the shippers of goods and the ship-owners, provided always that such bills of lading do not contain extraordinary terms or terms manifestly inconsistent with the charter party and the master is obliged, on presentation to him of such bills of lading, to sign them on the ship-owners' behalf. In the second place, the charterers may, instead of presenting such bills of lading to the master for signature by him on behalf of the shipowners, sign them themselves on the same behalf. In either case, whether the master signs on the directions of the charterers, or the charterers short circuit the matter and sign themselves, the signature binds the ship-owners as principals to the contract contained in or evidenced by the bills of lading. Authority for the propositions set out above is to be found in 7i//matins & Co. v. S. S. Knutsford, (190i) 2 K. B. 385, (1908) A C 406. See also, as regards terms manifestly inconsistent with. The charterparty, Kruger & Co. Ltd. v. Meel Tryvan Ship Co. Ltd. (1907) A C 272 at pp. 278-8."
7. ' The above-quoted passage does support the contention of the appellant but this aspect of the case need not be gone into any further at this stage which will also be considered by the Court at the trial of the suit finally when all the evidence will be available before it. In the light of the above discussion we will now consider whether the order of learned Single Judge directing release of ship on furnishing security in the sum of Rs, 1,50,000 only was passed in proper exercise of discretion. We have already pointed out that the order of learned Single Judge gives no basis for fixing the amount of Rs, 1,50,000 as the security amount for release of ship nor the learned counsel for the respondent is able to tell us the reasons for fixing the above amount as security. Mr. Muhammad Naeem vehemently contended that in view of the fact that the appellant had accepted the delivery of goods, the order of learned Single Judge should not be interfered with. The delivery of the consignment was admittedly taken by the appellant after institution of suit by them and as such it could not amount to a waiver of claim. We also cannot ignore the fact that if the delivery of the consignment which had already arrived at the Port was not taken by the appellant it would have incurred heavy demurrage besides creating other legal complications for the appellant arising from refusal to accept delivery of the same. The appellant has claimed a sum of Rs, 29,10,485, as damages in the suit and had asserted that as a result of fraudulent entry in bill of lading issued by defendant the supplier managed to obtain payment in the sum of Rs, 10,30,400, against the letter of credit. Although the 'total amount claimed in the suit as damages does not prima facie appear to be the direct result of the fraud alleged against the respondent, but at least it facilitated the supplier to encash the amount of Rs, 10,30,400 which they otherwise would not have been entitled to receive under the letter of credit. We are, therefore, of the view that learned Single Judge while ordering release of ship should have fixed the amount of security at Rs, 10,30,400 which the appellant claimed was received by the supplier as a result of alleged fraudulent entry in the bill of lading. We accordingly modify the order of learned Single Judge and direct the respondent to furnish security in the sum of Rs, 10,30,400, to the satisfaction of the Nazir of this Court. Mr. Muhammad Naeem contends that the ship which was arrested and was ordered to be released against the security of Rs, 1,50,000 has already sailed out of the territorial water of Pakistan and therefore, this order will be of no effect. We may clarify that if the ship has already sailed out of the water of Karachi, it will be liable to arrest as and when it calls on Karachi Port, if the defendant failed to furnish security in the sum mentioned above within two months from the date of this order. Before parting with the case we may clarify that any observation made by us on the merits of the case during the course of above discussion was purely of a tentative nature for the purposes of consideration of the interim application of arrest of the ship and these observations will not in any way prejudice the parties at the trial of the suit. With these observations this appeal is allowed to the extent indicated above but will leave the parties to bear their respective costs.