BURJORJEE COWASJEE & CO Versus HABIB INSURANCE CO. LTD.

This revision is directed against the judgment and decree passed by the Judge, Small Causes Court, Karachi, dated 22‑2‑1969 decreeing the suit of the respondent in the sum of Rs. 2,915 with costs.

2. The applicants, Messrs Burjorjee Cowasjee & Co., a Karachi firm carry on business as shipping agents, cargo agents. clearing and forwarding agents, and at the material time, acted as shipping agents for the vessel m.v. ARSENAL which was on charter to the China National Chartering Corpora tion. The owner of the vessel was a Greek Company. The applicants will be referred to hereinafter as "Ship's Agents". The respondent, Habib Insurance Company Ltd., insured a consignment of 173 sets of tyres and tubes shipped from Shanghai to Karachi on the said vessel for Messrs Kasamali Khimji, Karachi, under Bill of Lading No. 721, dated 15th September 1967. The ship arrived at Karachi on 31‑10‑1967 but 11 sets of tyres and tubes were short landed. The consignee lodged a claim for Rs. 1,166 being the C & F value of the goods shortlanded but the applicants declined to entertain it and forwarded it to the owner of the vessel in Greece. The consignee then preferred a claim to the respondent for Rs. 2,915 as for the proportionate insured value of the shortlanded goods. The respondent paid the claim against a Deed of Subrogation and thereafter filed a suit (No. 646/68) in the Court of Small Causes, Karachi for the recovery of the said amount from the applicants as subrogees. It was pleaded in the plaint of that suit that the applicants, as Ship's Agents had delivered a declaration in writing under section 64(d) of the Sea Customs Act, 1878 to the Collector of Customs whereby they undertook to discharge all claims for damage or short delivery which may be established by the owner of the goods.

3. The applicants filed a written statement pleading that the suit was bad for non joinder of the carriers and that unless the claim is established against the carriers they, as Ship's Agents, are not personally liable. In the alternative, it was pleaded that the respondent was not entitled to recover anything more than the C & F value of the said goods. Accordingly, they prayed that the suit be dismissed.

4. When the suit came up for hearing, counsel for the parties submitted a joint statement that the suit may be decided on the basis of documents on the sole point whether the suit was maintainable against the Ship's Agents without the carriers being joined as party defendant.

5. The learned Judge. therefore, framed only one issue viz. "whether the suit is not maintainable ?". He held that by executing the declaration as Ships Agents under section 64(d) of the Sea Customs Act, 1878, the applicants personally assumed the liability of the carriers and stepped into their shoes and became party to the contract of carriage viz. the Bill of Lading. That therefore, it was not necessary to join the carriers as party defendant. In the result, as there was a valid subrogation, he decreed the suit of the respondent. The applicants have, therefore, come up in revision against the said judgment and decree.

6. The submission of Mr. A. R. Akhtar, learned counsel for the applicants is that the learned Judge misconstrued section 64 (d) of the Sea Customs Act. The opinion of the Judge was that by executing the declaration as Ship's Agents the applicants assumed a personal liability for the loss of the goods independent of the liability of the carriers under the Bill of Lading. According to the counsel this interpretation is erroneous and the true construc tion of that subsection is that the personal liability of the Ship's Agent does not arise until after the claim for short delivery has been established by the owner of the goods against the carrier under the bill of lading. Unless such claim is admitted by the carrier, it must be established by adjudication in a Court of law by filing a suit against the carrier as principal defendant under the Bill of Lading. The carrier may rely on the terms of the Bill of Lading and set up several defences to the claim by the owner of the goods for damage or short delivery, which the Ship's Agents would not be entitled to raise in the absence of privity of contract with the owner. In support of the contention that a Ship's Agent is not answerable until the claim is established,. Mr. A. R. Akhtar referred to Haji Shakoor Gany v. H.E. Hinde & Co. Ltd. (A I R 1932 Bom. 330). The facts of that case were that the plaintiff as holder of a Bill of Lading brought a suit for damages for short delivery of sugar at the port of Bombay, against the carrier (defendant No. 1) and the Ship's Agents (the defendant No. 2). The suit against the carrier was barred by limitation as it was filed more than one year after the delivery of the goods. However, as far as the suit against the Ships Agents, the defendant No. 2, was contended on behalf of the plaintiff that as the Ship's Agents had signed a declaration under section 64 (d) of the Sea Customs Act, 1878, they had incurred statutory liability independent of the contract contained in the Bill of Lading and that the plaintiff was not affected by the provision in the Bill of Lading (Incorporat ed by Art. 3, Cl. 6 of the Carriage of Goods by Sea Act, 1925) that the carrier and the ship is discharged from liability unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. The contention was that once the plaintiff can show that it had a claim for short delivery at the time when the goods were short delivered, it had an enforceable claim against the Ship's Agents under the Customs declara tion and could sue the agents within six months under Art, 120, Limitation Act. This contention was rejected by Blackwell, J. who observed that

"In my opinion this argument of the plaintiffs is unsound. By virtue of Ss. 64 and 85, Sea Customs Act, and the declaration made thereunder, defendants 2 are answerable for the discharge of all claims for damages or short delivery which may be established by the owner of any goods comprised in the import cargo in respect of such goods. It is to be observed that until a claim is established, defendants 2 are not answerable. Unless a claim is admitted, it must be established in a manner recognized by law, that is, by a suit, and that suit might be resisted upon a number of grounds."

He therefore held that as the plaintiff had not established its claim against the carrier at the date of the suit because the suit itself was barred, the liability of the Ship's Agent under the customs declaration cannot arise. He further observed that the liability of the Ship's Agent under the customs declaration is no greater than that upon the carrier under the Bill of Lading. Otherwise, it would lead to the startling result that whereas a claim might not be established against the carrier by reasons of the provisions of the Bill of Lading, it could nevertheless be established against the Ship's Agent by reason of the customs declaration, which could not be the intention of the Legislature in enacting section 64 of the Sea Customs Act, 1878, the object of which was to authorise the Customs Collector to release a ship provided there was some one within the jurisdiction to answer for such claims as either the ship or the carrier would have been answerable for, if they had been within jurisdiction. He accordingly dismissed the suit against the Ship's Agents under the declara tion. This opinion of Blackwell, J. was approved of in a case between the same parties arising out of a short delivery of sugar carried by the same ship shortlanded at the port of Karachi, reported in Haji Shakoor Gany Firm v. Firm of Volkart Brothers and another (A I R 1931 Sind 124 ), Rupchand, A. J. C. who likewise dismissed the suit against the Ship's Agents and observed

"I can find nothing in the Sea Customs Act, the rules framed thereunder, and the indemnity bond executed by the Ship's Agents, to suggest that they are bound to satisfy claims in respect of which the plaintiffs have no cause of action against their principals In my opinion, the liability of the Ship's Agents for acts of the ship is, and can only be, co‑extensive with that of the ship, specially when there is no allegation that the ship's Agents have done any acts subsequent to the landing of cargo which has caused the loss, and for which they are liable irrespective of the liability of their principals."

The decision was upheld in appeal in Haji Shakoor Firm v. Volkart Brothers' Firm and another (A I R 1937 Sind 11).

7. Mr. A. R. Akhtar's submission is further supported by the decision in British India Steam Navigation Co. Ltd. and another v. M.A. Wadud & Co. and others (P L D 1968 Dacca 860 ). On the interpretation of section 64 (d) of the Sea Customs Act, the learned Judge observed that "before the agent can be made liable for any claim, the owner must establish the claim, that is to say, there must be an adjudication on the claim, where the claim is not admitted." As the claim in that case was not admitted, the learned Judge held that the owner of the goods, the plaintiff, must first obtain an adjudication from a Court in England (on the view he held that the Pakistan Court had no jurisdiction, a view now held to be erroneous by the Supreme Court) before the question of maintainability of the suit against the agent could be considered.

8. Mr. Anwer H. Pasha, the learned counsel for the respondent relied on the decision in Messrs Pakistan Industrial Chains Company v. American Oriental Lines Inc., New York and others (P L D 1968 Kar. 89). In which the Ship's Agents were held liable on the Customs declaration given by them under section 64(d) of the Sea Customs Act. That case in my view, is distinguishable on the ground that the carriers themselves were sued as defendant No. 1 and they admitted their liability. Therefore, the Ship's Agents were held liable for the admitted claim, o n the declaration given under section 64 (d) of the Sea Customs Act, which though it was a general and continuous one for all ships, was held to be valid. Therefore, this ruling is not of assistance. I cannot, therefore, accept the submission of Mr. Pasha that a Ship's Agent is personally A, liable on his declaration given under section 64 (d) of the Sea Customs Act, before the claim is established against the carrier under the Bill of Lading.

9. It was next contended by Mr. Pasha that the claim in suit stands admitted by the applicants who have admitted the short delivery and also having signed the declaration. As far as the value of the shortlanded goods is concerned, Mr. Pasha's submission is that the documents filed by the respondent in the trial Court, including the consignee's claim bill, were exhibited without objection by applicants' counsel. This submission is misconceived. The applicants have not only denied the claim but also their authority as Agents to accept any claim of the consignee on behalf of the carrier, vide paragraphs 5 and 9 of the written statement. In any case, the admission was for the limited purpose of the discussion on the issue as to maintainability of the suit.

10. Finally Mr. Pasha's further submissions are that the Customs Declaration signed by a Ship's Agent is a statutory guarantee and has been taken in the interest of the consignees, who as beneficiaries may sue the agent personally under section 230 of the Contract Act without also suing the carrier as principal. In my view, both submissions are misconceived. In the first place, the declaration in terms is not a guarantee. Nor can therein, be a guarantee in the absence of a principal debtor. In the second place, as the consignee is not a party to the declaration there can be no question of it being a contract under which the agent is presumed to be personally bound to him under section 230, Contract Act.

11. I am, therefore, of the view that the impugned judgment is erroneous in law which cannot be supported. Accordingly, I would allow the revision and set aside the judgment and decree with costs.

K. B. A. Petition accepted.