V.N. LAKHANI & CO. Versus SHIP LAKATOI EXPRESS

1. On the 26th January, 1994, I had, after hearing Mr. Muhammad Naeem, the learned Advocate for the defendant, dismissed the suit by a short order. The following are the reasons for that order.

2. The plaintiff has filed this suit for recovery of Rs.11,820,015 from the defendant in the facts and circumstances alleged in the plaint. Those facts and circumstances are as follows.

3. The plaintiff, a registered partnership firm, entered into a contract for import of goods from M/s. Schwendler & Company and established a letter of credit in their favour for a sum of U.S. $ 6,09,300. The goods in question were shipped on board the vessel `Commandante Revello' belonging to M/s. LIoyd Triestino and a bill of lading, dated the 11th March, 1986, was issued therefore for delivery at Karachi. During the course of the voyage, the consignment was transhipped at the port of Jebal Ali from the vessel 'Commandante Revello' to the vessel `Lakatoi Express', the defendant herein, although transhipment was prohibited. The vessel `Lakatoi Express' discharged its cargo at Karachi but the consignment of the plaintiff was not delivered. The plaintiff, in the circumstances, has claimed the amount mentioned above from the defendant by this suit in rein filed against the vessel `Lakatoi Express'.

4. The defendant, in its written statement, has objected that the owners of the defendant vessel have no liability in personam and, therefore, the suit in rein against the vessel is wholly misconceived and liable to be dismissed; and that the plaintiff being an unregistered partnership firm, the suit is barred under the provisions of section 69 of the Partnership Act, 1932. On merits, the case of the defendant essentially is that the shipper had shipped two containers for delivery at Karachi and that those two containers were delivered as shipped; and that the defendant is, therefore, not liable. The other allegations of facts contained in the plaint have been denied in the written statement.

5. On the above pleadings, the following issues were settled:‑

(1) Whether the above suit is maintainable under section 4(4) of the Admiralty Jurisdiction of the High Court Ordinance, 1980?

(2) Whether the plaintiffs are an unregistered partnership and the suit is barred under section 69 of the Partnership Act, 1932?

(3) Whether the plaintiffs have any title to the goods and have they any right to sue?

(4) What were the contents, quality, quantity and value of the goods at the time of shipment?

(5) Whether the suit consignment was offered for shipment in sealed containers and whether it was discharged at the destination Port Karachi with seals intact and if so what is its effect?

(6) Whether the shippers had knowingly and fraudulently made a misdeclaration of quantity, quality and description of goods in the relevant bill of lading at the time of shipment without any fault or privity on the part of carriers?

(7) Whether any part of the suit consignment was shortlanded and if so what is the maximum liability if any of the defendant?

(8) Have the plaintiffs obtained satisfaction of their claim from the cargo underwriters and if so what is its effect?

6. The plaintiffs have examined Mohamed Ahmed (P.W.1), Choudhry M. Aziz (P.W.2), Mazhar Ali Manghi (P.W.3) and SA. Qureshi (P.W.4); while the defendant has examined Sarfaraz Ahmed (D.W.1). I have examined the .record and proceedings and the testimony of the witnesses, and my findings on the issues are as follows.

7. ISSUE No. 1:‑ The consignment in question was admittedly shipped on board the vessel `Commandante Revello' owned by M/s. C.N.M. Compagnie Di Navigazione Merzario S.R.L. (hereinafter referred to as `Merzario'). Subsequently, it was transhipped on board the defendant vessel which admittedly belongs to M/s. Artemis Lines SA. According to the defendant's witness, Sarfaraz Ahmed, the vessel `Lakatoi Express' was, at the relevant time, on time charter to Merzario. A photostat copy of the time charter is Exh. 8/2. The same witness has also produced Slot Agreement, dated the 12th November, 1985 (Exh. 8/3) between M/s. Andrea Merzario S.P.A. of Milan (Italy) and M/s. Lloyd Triestino Di Navigazione.

8. Mr. Muhammad Naeem, the learned counsel for the defendant, contended that, in the circumstances outlined above, the suit in rem is, not maintainable and is liable to be dismissed. He referred to the provisions of the Admiralty Jurisdiction of High Courts Ordinance, 1980, and to the cases of Messrs Sun Line Agencies Ltd. v. Vessel m.v. "Psiloritis" and 2 others (1984 CLC 1553) and Messrs Arshad Corporation (Pvt) Ltd. v. The Ship Maersk Astro and 2 others (PLD 1988 Karachi 515). This Court has, in terms of' section 3(1) and clause (H) of subsection (2) of section 3 of the Admiralty Jurisdiction of High Courts Ordinance, 1980, jurisdiction in respect of "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship". The plaintiffs' claim in the present suit is stated to arise from an agreement relating to the carriage of goods in a ship and, therefore, to fall within clause (H) of subsection (2) of section 3 of the Ordinance. Provision for the mode of exercise of admiralty jurisdiction has been made by section 4 of the Ordinance, subsection (4) whereof is relevant for the present purpose and is reproduced below:‑

9. "In the case of any such claim as is mentioned in clauses (E) to (H) and (J) to (Q) of subsection (2) of section 3, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the admiralty jurisdiction of the High Court may whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against:‑

(A) that ship, if at the time when the action is brought it is beneficially owned as respects majority shares therein by that person, or

(B) Any other ship which at the time when the action is brought, is beneficially owned as aforesaid."

10. The effect of the above provision was considered in the case of Messrs Sun Line Agencies Ltd. v. Vessel m.v. "Psiloritis and 2 others (1984 CLC 1553), The plaintiff was the agent of defendant No. 2 at Karachi for handling all ships belonging to the defendant No. 2 which called at Karachi. The plaintiff made certain disbursements in connection with those ships of defendant No. 2 which called at Karachi and filed the suit for recovery of the amount of those disbursements against the vessel m.v. "Psiloritis" and the defendant No. 2. The vessel was arrested by an ad interim order and the arrest was opposed by ship through its Master on the ground that the ship belonged to a third party who had given it to the defendant No. 2 under a times charter. Saeeduzzaman Siddiqui, J. (as he then was) upon consideration of the English cases cited before him and of the provisions of section 4(4) of the Ordinance came to the conclusion that:‑

11. " .... before an action in rem against a ship is instituted under the aforesaid provisions of law, it must be shown that: (i) the claim in the suit falls in any one of the categories of cases mentioned in clauses (E) to (H) and (J) to (Q) of subsection (2) of section 3 of the Ordinance; (ii) the claim arises in respect of a ship; and (iii) on the date of accrual of cause of action the person who would be liable in an action in personam was either the owner or charterer or in possession or in control of the ship. If all the abovementioned three conditions are shown to exist, then such a claim is also enforceable in an action in rem against that ship or any other ship beneficially owned as respect the majority shares therein by that person on the date owned filling of the claim in rem irrespective of the fact whether the claim gives rise to a maritime lien on the ship or not under the Admiralty jurisdiction of this Court. A time charterer or a charterer by demise, however, in my opinion, do not fall in the category of a person who beneficially owned as respect majority shares of the ship, as they only beneficially possess the ship for the time being subject to the validity of the Charter party Agreement and by that reason they do not acquire any right of ownership in the majority shares of that ship."

12. In view of the above position and the admitted position in that case that the defendant No. 2 was only a time charterer of the ship and the fact that action in personam could not have been brought against the real owner of the ship, the order of arrest was recalled. Similarly in the case of Messrs Arshad Corporation (Pvt) Ltd. v. The Ship Maersk Astro and 2 others. (PLD 1988 Karachi 515), it was held that where a charterer did not hold any share in the ship, action in rem against the ship would not lie.

13. In the present case, the bill of lading has been signed by M/s. Lloyds Triestino who had entered into a SLOT charter agreement, dated the 12th November, 1985, with Mer7ario. The object of that agreement, is stated, in the agreement, as follows:‑"The slot charter agreement envisages the establishment of a regular shipping service with Ro‑Ro ships between the Italian ports of trieste, Venice and Revenna and/or possible other ports (which are generally termed 'as Adriatic ports) to be agreed upon and the ports of Mina Qaboos, ebal Ali, Damman, Kuwait, Bahrain, and/or possibly other ports to be agreed upon, sailing on,with feeder service, from and/or to ports of the Indian sub‑continent (currently arachi, Bombay, Kanola). The abovementioned cargo service will be carried out with the following ships (that elong to Merzario): ‑‑`Anderea Merzario'‑‑`Commandante Revello while the feeder service along he Gulf sub‑continent route will be carried out with the ships that Merzario will charter each single time."

14. It appears that the bill of lading was issued by M/s. Lloyds Triestino, in pursuance of the above agreement, as carrier; and that the consignment in question was carried first to Jebal Ali and thence transhipped to Karachi on board the defendant vessel which was then on Time Charter to Merzario as shown by the photocopy of the Time Charter which is Exh. 8/2. It is not necessary for the present purpose to.‑decide whether the contract of carriage was with Lloyds Triestino or Merzario because even assuming that Merzario was a party to the contract of carriage and thus liable in personam, it would still be necessary, in order to maintain action in rem against the present defendant, to show that, when the action was brought, it was beneficially owned by Merzario as respects majority of shares therein. That requirement is not satisfied because the Time Charter confers no beneficial interest in the defendant vessel on Merzario. The present action in rem against the defendant vessel is, therefore, not maintainable.

15. ISSUE No. 2:‑ Mr. Muhammad Naeem contended that the plaintiffs are admittedly a partnership firm but have not been shown to be registered; and that, therefore, the suit is not maintainable. He relied on section 69(2) of the Partnership Act which provides that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. The present suit, though in rem, is in respect of the claim arising out of an agreement relating to the carriage of goods, and, thus, is a suit to enforce a right arising from a contract. The plaintiffs admittedly are a firm but have not been shown to be registered. The suit by them is, therefore, not maintainable.

16. ISSUE No. 3:‑ It was contended by Mr. Muhammad Naeem that the plaintiffs have not paid for the goods and have, therefore, not acquired ownership thereof and are, consequently, not entitled to sue. He submitted that the endorsement of the bill of lading has to be for consideration in order to confer any title to the goods. However, there is no evidence that the plaintiffs did not pay for the goods or that they obtained the bill of lading, duly endorsed, without payment of consideration. In any event, the plaintiffs, being the holders of the bill of lading have title to the goods represented thereby.

17. ‑ISSUES NOS, 4. 5 AND 6:‑ These issues relate to the contents, quantity and value of the consignment when shipped, and the consignment discharged at Karachi and are, therefore, being considered together. It is clear from the pleadings of the parties that the two containers in question were stuffed by the shipper and were sealed before delivery to carrier at Ravenna (Italy). The defendant's witness has also confirmed this and his evidence has gone unchallenged. The receipt of the consignment is acknowledged by the carrier in the bill of lading in the following words:‑

18. "Received by the carrier from the shipper in apparent good order and condition (unless otherwise noted herein) the total number or quantity of containers or other packages or units indicated below stated by the shipper to comprise the cargo specified below... " and the consignment is described in the bill of lading as the two containers "said to contain" the cargo mentioned therein. The carrier did not have the opportunity to examine the cargo nor is it alleged to have done so. It is alleged in the plaint that the seals were tampered with and removed during the transit of the cargo but no evidence to substantiate the allegation has been offered by the plaintiff. On the contrary, the defendant's plea in the written statement is that Seals Nos. 304229 and 304310 were put on the container Nos. 220254/5 and 204658/0 respectively and those seals were intact when the containers were landed at Karachi. That plea has been substantiated by the evidence of the defendant's witness and by the tally sheets (Exhs. 6/2 and 6/3) produced by the plaintiff's witness during cross‑examination. The tally sheets confirm the numbers of the seals as mentioned in the written statement. It is common ground that the packages in the containers were found by the surveyors to contain hollow cement blocks instead of refractory material. The plaintiff seeks to hold the defendant liable on the ground that the seals were removed during transit but, as noted above, the seals were found intact. On the other hand, the plaintiff has alleged that the shipper made false and fraudulent declaration regarding the cargo; and in view of the fact that the containers were stuffed by the shipper and were sealed before being handed over to the carrier, it is not unlikely that the defendant's version is correct. What, then, is the liability, if any of the carrier? The bill of lading makes it clear that the carrier acknowledged the receipt only of the containers and not of the contents thereof. The carrier is, therefore, not bound by the description of the goods in the bill of lading. It is also clear that none of the goods received by the carrier were lost or stolen in transit or after receipt and that it delivered at Karachi all that it received from the shipper. It was for the shipper or the plaintiff to prove the quantity, quality and value of the cargo but they have given no evidence. There is, thus, no material on record to determine the quantity, quality or value of the cargo when shipped. In the circumstances, the carrier or the owner is not liable for the alleged failure to deliver the cargo.

19. ISSUES NOS, 6‑A AND 7:‑ There is no evidence' on record to determine the value of the two packages which are stated to have been short landed.

20. ISSUE NO. 8 :‑ No evidence, one way or the other, has been produced on this issue and no arguments were addressed by Mr. Muhammad Naeem.

21. In view of the findings on the issues, the suit was dismissed.

22. A.A/V‑31/K. Suit dismissed.