PROVINCE OF NORTH-WEST FRONTRIER Versus S.M. JAFFER AND CO.
This is a suit for recovery of Rs.26,78,400 filed by the Province of North‑West Frontier, Peshawar as compensation for non‑delivery of imported consignment of 20 Road rollers, imported from China.
2. In December, 1974 plaintiffs placed an order with defendant No. l for the supply of 20 three‑wheeled Chinese Road Rollers and 20 sets of spare parts.
In pursuance of the contract plaintiffs through National Bank of Pakistan established a letter of credit in favour of defendant No.2 for Rs. three Million. According to the contract C & F value of 20 Road Rollers was Rs.26,78,400 while that of spare parts was Rs.3,21,600 in addition to commission at the rate of 5 % of the said C & F value payable in Pakistani currency to defendant No. l on production of documents.
3. In December, 1975 defendant No. l and/or 2 while using the services of defendant No.3 and/or 4 delivered to the defendant No.3 and/or 4, 20 Road Rollers for shipment to Karachi on board the vessel "Miss Papalios" in consideration whereof defendant No.3 issued its freight pre‑paid bill of lading on 25th December, 1975 without ensuring that the said vessel was seaworthy to undertake the voyage in question. It is further the case of the plaintiffs that the defendant No.1 vide its letter, dated 1st January, 1976 informed the plaintiff No.l that 20 Road Rollers had been shipped by a defendant No.2 on 25th December, 1975 per s.s. "Miss Paphos" whereas the shipping documents had been forwarded to the authorities concerned, on the basis whereof defendant No.2 encashed the said letter of credit. For the first time defendant No.l through its letter, dated 10th March, 1976 informed the plaintiff No. l that the vessel carrying the aforesaid consignment had run aground and that the same had been abandoned in the sea whereas the cargo in question was considered as a complete loss. In this letter plaintiff was asked to make the claim if necessary on defendant No.6 being the owners of the vessel. Thereafter, plaintiff No. l came to know that M/s Burjorjee Cowas Jee & Company, Karachi as agents of charterers i.e. defendant No.4 with reference to a cable advice dated 16‑4‑1976 received from defendant No.4 had given a notice to consignees that the vessel said to have been grounded on or about 2nd January, 1976 was refloated on 24th February, 1976 and was towed to Whampoa (a Chinese port). It was further stated that part cargo was jettisoned and/or sustained damage during the course of salvage advising the consignees and/or their ~underwriters to directly approach defendant No.6 for any further information. Accordingly plaintiff No. l through its letter dated 8‑6‑1976 requested defendant No.6 to inform it about the fate of their consignment but without any response.
4. Defendant No. l also through its letter dated 15‑6‑1976 advised plaintiff No. l to write directly to defendant No.6, therefore, plaintiff No. l through its letter dated 15‑7‑1976 again requested defendant No.6 to expedite the reply but to no avail. Although the defendant No. l through its letter dated 15‑7‑1976 enclosing therewith a circular letter from M/s. Burjorjee Cowasjee & Company advised plaintiff No. l to lodge the claim with the Insurance Company as all the cargo of the vessel was declared total loss, it is not ascertainable from the plaint whether any claim was lodged with the Insurance Company. It is maintained that on or about 9th September, 1976, plaintiff No.2 forwarded the claim documents to defendant No.6 requesting for consideration of the claim for the amount in suit and to make up the subject loss but this defendant did not even extend the courtesy of a reply.
5. In the meanwhile plaintiff No. l received a letter, dated 28th June, 1916 from M/s. Holman, Fenwick and Willan, Solicitors, London stating that as the costs of repairing of the vessel "Miss Papalios" would greatly exceed her value when repaired, the owners were compelled to treat the contract of carriage as frustrated and to give notice of abandonment of the voyage. It is averred in the plaint that defendant No.6 are the managers/operators of the vessel while from the perusal of 1975 record of the American Bureau of Shipping, it transpired that defendant No.5 is the registered owner of the vessel in Cyprus. According to plaintiffs they had reason to believe that the vessel was not seaworthy and was not capable of undertaking the voyage in question at the relevant time. It is, therefore, by way of abundant caution that the said defendants are also made parties to the suit.
6. In its written statement defendant No.l who acted as agent for defendant No.2 and placed the order of plaintiff No. l on the basis of written indent on latter challenged the maintainability of the suit as without cause of action, incompetent and not maintainable at law. On facts this defendant stated that under the contract defendant No. l was required to ensure the goods to be shipped, by defendant No.2. It is asserted that in pursuance of the contract, defendant No.2 shipped and delivered stores as required and fulfilled their obligations, therefore, the defendant was entitled to encash the letter of credit because with the shipment of the stores the contract was completed. Accordingly plaintiffs' bankers made payment in terms of the contract. It is strongly disputed that the vessel was not seaworthy or not capable of undertaking the voyage at the relevant time. All other allegations are denied.
7. Defendants Nos. 3 and 4 in a joint written statement denied that the bill of lading was issued by defendant No.3 asserting that it was issued by China Ocean Shipping Agency, Tientsin Branch on behalf of the Master of the Vessel under his authorization though they used the bill of lading form of defendant No.3. It is maintained that the defendant No.4 are the agents of the charterers of the said vessel under the contract of charter party, dated 4th December, 1975 and in no way liable for any loss or damage to the cargo for which the liability if any should rest with the owners of the vessel. Furthermore, the consignment in question was insured with Pakistan Insurance Corporation under the contract, dated 20th December, 1974 (in fact the consignment was not insured). According to the defendants in the event of contract of carriage having been frustrated and as a result of the vessel being declared as a total loss plaintiffs were required through public notice to register their claim under letter. of subrogation with their insurance company who would notify the same to salvors/Adjusters. Besides the Insurance Association of Pakistan had advised its members to provide full set of documents for enabling it to settle the claims of the consignees including the plaintiffs and recover from the salvors the agreed amount of 14.3 % of the invoice value. The defendants repudiated the claim of the plaintiffs and denied that the vessel in question was not seaworthy but properly manned and equipped to undertake the voyage in question. It is denied that there was any failure on the part of these defendants to exercise due diligence in fulfilling their obligations. While disputing the maintainability of the suit against these defendants it is maintained that the same is time‑barred.
8. Defendants Nos.2, 5 and 6 did not submit any written statement. On the pleadings of the parties following issues were settled:
ISSUE
(1) Whether the vessel "Miss Papalios" at the relevant time was seaworthy and capable of undertaking the voyage in question and if not, what is the effect?
(2) Whether defendant No. l and/or 2 have failed to give/effect the delivery of goods in question to the plaintiffs at Karachi as per terms of the contract and if so, what is the effect?
(3) Whether defendant No. l and/or 2 shipped the goods in question through a seaworthy vessel capable of undertaking the voyage in question, and if not, what is the effect?
(4) Whether the defendant No.2, under the circumstances, were entitled to appropriate and/or retain the C & F value of the goods in question, and if not, what is the effect?
(5) Whether the plaintiffs are entitled to the claim in suit or any other amount and if so, against which of the defendant or defendants?
9. In support of their case plaintiffs examined Abdul Wakeel, an officer in the Industries Department, defendant No. l examined its Manager Qamruddin, D.W.1 whereas Ayan Ahmed, D.W.2, Claims Officer was examined on behalf of defendants Nos.3 and 4.I have heard learned counsel for the parties and with their assistance gone through the relevant evidence on record.
REASONS:
Issues Nos. l and 3:
10. These issues are inter‑related and may be discussed together for the sake of convenience and in order to avoid repetition of reasons. Obviously the onus of proof of both the issues rests on defendants to show that the vessel s.s. "Miss Papalios" was seaworthy and capable of undertaking the voyage in question at the relevant time. Defendant No.3 who are charterers of the vessel and defendant No.4 as their agents have placed on record certified copy‑ of Certificate from Lloyd's Register of Shipping Exh.9/1 and Cargo Ship Safety Construction Certificate Exh.9/2 issued under the provisions of International Convention for the Safety of Life at Sea. 1960. In order to examine these documents, their legal effect, value and importance, it may suffice to observe that both the documents are relevant and admissible under sections 2 and 3 of the Commercial Documents, Evidence Act, 1939. For the sake of advantage and in order to comprehend the issues both these provisions of law may be reproduced as under:‑‑
"2. Notwithstanding anything contained in the Evidence Act, 1872, statements of facts in issue or relevant facts made in any document included in the Schedule as to matters usually stated in such document shall be themselves relevant facts within the meaning of that Act.
3. For the purpose of the Evidence Act, 1872, and notwithstanding anything contained therein, a Court‑‑
(a) shall presume, within the meaning of that Act, in relation to documents included in Part I of the Schedule, and
(b) may presume, within the meaning of that Act, in relation to documents included in Part II of the Schedule,‑‑ that any document purporting to be a document included in Part I or Part 11 of the Schedule, as the case may be, and to have been duly made by or under the appropriate authority, was so made and that the statement contained therein are accurate."
Both the certificates produced in this Court are included in Part I of the Schedule.
11. The certificate in respect of load line capacity of the ship Exh.9/1 indicates that the ship had been surveyed and the free‑boards had been assigned and load lines shown had been marked in accordance with the International Convention on Load Lines, 1966. It was issued at London on 24th December, 1974, valid until 7th June, 1978 with a further averment that Lloyd's Register of Shipping is duly authorised by the said Government to issue this certificate. Cargo Ship Safety Construction Certificate Exh.9/2 on the other hand issued under the authority of the Government of Republic of Cyprus, certifies that the survey of ship showed that the condition of the hull, machinery and equipments, as found in the above Regulation was in all respects satisfactory and that .the ship complied with the applicable requirements of Chapter II.
12. As observed hereinabove, both these documents are relevant to the issues and for the purpose of the Evidence Act, 1872 (since repealed) and substituted by Qanun‑e‑Shahadat, 1984, the Court shall presume in relation to the Lloyd's Register of Shipping that it has been duly made by or under the appropriate authority and that the statement contained therein is accurate. As this CLC presumption of law has not been rebutted and there is not an iota of evidence to establish the contrary, it is highly difficult to hold that the vessel in question was not seaworthy or that it was not capable of undertaking the voyage in question at the relevant time. As regards defendant No.2 having shipped the goods on board the vessel, there is no controversy and the fact that the defendant No.2 through defendant No. l forwarded the shipping documents to all concerned speaks for itself. Bill of Lading Exh.7/5 reflects the shipment of goods in unequivocal terms on board the vessel. Both the issues are answered accordingly.
Issue No.2:
13. As the liability of defendants Nos. l and 2 is confined to the shipment of the goods on board the vessel with defendant No.3 stationed at Tientsin, Peoples Republic of China, their obligation under the contract is over after they shipped the goods through s.s. "Miss Papalios". The issue appears to be improperly settled as these defendants under the contract are not by themselves obliged to deliver the goods at Karachi. Responsibility for the delivery of goods at Karachi would arise only against the carrier/owner of the ship. Indeed defendants Nos.3 and 4 as charterers and agents of the charterers respectively are under a contractual liability to effect the delivery of goods at Karachi. The issue is answered accordingly.
Issue No. 4:
14. It is not disputed that the defendant No.2 was entitled to appropriate the value of the goods in question under the letter of credit opened in their favour and once they shipped the goods on board the vessel their obligation stood duly performed. Under the law of contract they are entitled to receive and appropriate the value of the goods for the supply of goods which they received by encashment of letter of credit. Indeed they received payment through the bankers of the plaintiffs on the strength of shipping documents and according to C & F Value of the goods in question. No exception can be taken to this act on the part of these defendants and I am at loss to comprehend the logic behind the argument of the plaintiffs reflected in this issue which is otherwise redundant. The issue is answered accordingly.
Issue No.
15. In view of conditions of the Bill of Lading issued by defendant No.3 and in the event of non‑delivery of the consignment, defendant No.3 and their agents defendant No.4 would be ordinarily liable to make good the loss‑to plaintiffs. After the acceptance of the goods for shipment to the port of destination they cannot escape their liability under the contract as under Condition No.3 of the Bill of Lading responsibility of the carrier shall commence from the time when the goods are loaded on board the ship and shall cease when they are discharged from the ship. However, from the evidence adduced by the plaintiffs as well as defendants Nos.3 and 4 if transpires that the vessel in question went aground in the South China Sea and the plaintiffs were required by public notice to register their claim with their insurance company who would notify the same to the salvors but it is evident that the consignment was not insured by the plaintiffs with the consequence that they could not lodge their claim with the Insurance Company.
16. There is no denial of the fact that the vessel carrying the goods went aground South China Sea and Solicitors on behalf of the owners of the vessel vide letter, dated 28th June, 1976 Exh.7/15 notified to the plaintiffs Government that it may be interested in cargo laden on board the vessel "Miss Papalios". It was further pointed out that the costs of repairing the ship will greatly exceed her value when repaired, hence the owners were compelled to treat the contracts of carriage as frustrated and to give notice of abandonment of the voyage. Alongwith this letter solicitors, enclosed a formal notice to the owners of and those interested in the cargo on the vessel that the vessel was a commercial total loss and that contracts of carriage were accordingly frustrated. Besides on plaintiffs' own showing M/s. Burjorjee Cowasjee & Company, Karachi being the shipping agents for defendant No.3 issued a notice to consignees notifying to all concerned that the contracts of carriage in respect of cargo laden on m.v. "Miss Papalios" were frustrated and that the owners were compelled to abandon the voyage calling upon the owners of cargo to give their own instructions and make their own arrangements in regard to the cargo and provision of security to salvors. By this notice consignees were notified to take the matter of their claim with their underwriters immediately. Admittedly this circular letter was forwarded to the plaintiff‑Government by defendant No. l vide its letter, dated 15th July, 1976 Exh.7/12 but the plaintiffs were unable to lodge their claim with the insurance company as the goods were not insured.
17. Be that as it may, with regard to the frustration of contract of affreightment, a reference may be had to Scrutton on "Charter Parties and Bills of Lading", 17th Edition, 1964 in which vide Article 31 at page 95 the author writes as under:
"Even where there is no breach of contract on the part of either party to the contract of affreightment, circumstances which delay its performance or render its performance impossible may under a different principle from that discussed in Article 30 discharge the parties. This, in regard to charter parties, is commonly referred to under the phrase 'frustration of commercial purpose of the adventure', but is really a particular application of the more general principle that a contract which by supervening and unforeseen circumstances, arising without default on the part of either party becomes impossible of performance may cease to bind either party to it. If the frustrating event is proved, the onus of proving that it arose through the default of either party rests upon the party alleging such default.
The contract in such a case comes to an end not by reason of any absolving power in the Court but by virtue of an implied term in the contract itself."
18. Sir William R. Anson in his treatise on "Principles of the English Law of Contract", Twenty‑second Edition, Oxford University Press, 1964 under Chapter XV writes as under:,
"Most legal systems make provision for the discharge of a contract where, subsequent to its formation, a change of circumstances renders the contract legally or physically impossible of performance. In English Law, such a situation is provided for by the 'doctrine of frustration'. Originally, this term was confined to the discharge of maritime contracts by the 'frustration of the adventure', but it has now been extended to cover all cases where an agreement has been terminated by supervening events beyond the control of either party. This development is no mere linguistic accident, for it is not strictly necessary that performance should have become literally impossible, provided that it cannot be properly demanded in the fundamentally different situation which has unexpectedly occurred. "
19. Citing various instances of the doctrine of discharge by frustration, learned author on page 457 writes as under:‑‑
"We come to those cases concerning the commercial 'frustration of the adventure'. These are by far the most frequent and most important instances of the application of the doctrine. Here the question to which the Courts address themselves is whether supervening events have frustrated the object of both parties by so changing the circumstances in which a promise fails to be performed that to hold the promisor to it would be to hold him to something which, though it may not be impossible, is something different from that which he originally promised to do. In Nicoll v. Ashton, Edridge & Co. (1901) 2 KB 126) for example, a cargo sold by the defendants to the plaintiffs was to be shipped 'per steamship Orlando-----------during the month of January without default on the defendants' part the ship was so damaged by stranding as to be unable to load in January, and the Court held that in these circumstances the contract must be treated as at an end."
20. To my mind, since the contract of carriage was frustrated as a total loss and voyage was abandoned, none of the carriers or their agents can be held liable for payment of compensation. For the aforesaid facts and reasons, the suit must fail and is accordingly dismissed with no order as to costs.
A.A./P‑28/K Suit dismissed