Pistis Companies Naviers, S.A. vs The Union of India (UOI)

Balasubrahmanyan, J.—This appeal involves an adjudication as to the liability of a ship-owner in respect of shortage in delivery of bulk cargo carried in its vessel under the terms of a charter party. The ship-owner is M/s. Pistis Companies Naviers, S.A. The charterer was the Union of India or rather its representative in the United States, the India Supply Mission. The ship in question is S.S. Tihi, A representative of the Union Government chartered the ship under charter party entered into with the vessel''s owner and executed in London on 5th August 1965, for carrying in bulk a. quantity of ammonium sulphate by sea from San Franchisee to a port in India. It was provided in the charter party that its terms shall constitute the contract of carriage. It was further provided that certain provisions of the United States Carriage of Goods by Sea Act shall regulate the rights and privileges of the carrier. Pursuant to the charter, the ship which was at the time in London, proceeded empty to San Francisco. There the agent of the Union Government loaded a consignment of ammonium sulphate in bulk in the ship''s holds. Before loading, the consignment was got weighed and the weight certified. This was done under the Public Weigh Master''s Certificate of Weight and Measure, Department of Agriculture, State of California. The Certificate was dated 3rd September, 1965. The weight, according to the certificate, was 21,606.240 1bs. The mate''s receipts were issued on the same day after the loading of the cargo in the vessel. Those receipts showed the same weight in pounds and their equivalent as 9,800-52 metric tonnes. The bill of lading, which was also, dated 3rd September, 1965 and issued at San Francisco by the Master of the ship described the goods as ammonium sulphate in bulk said to weigh 21,606,240 1bs, 9,800-52 metric tonnes.

The bill of lading further stated that the cargo was received in apparent good order and condition from the shipper. The ship arrived in Madras Port and berthed on 20th October 1965. It commenced discharge of the cargo on the same day and completed it on 30th October, 1965. The discharge was effected by workmen engaged by the regional office of the Feed Department of the Union Government. On taking charge of the consignment, the Assistant Director (Clearance) of the Food Department found that the ship had delivered only 9,735.768 metric tonnes of ammonium sulphate as stated in the out-turn statement issued by the Madras Port Trust. There was thus a shortage in the delivery of 64.751 metric tonnes. The officers of the Food Department then issued notice to the steamer agent of the shipping company demanding compensation for the shortage in delivery. This demand, however, was not complied with. The Union of India then sued the ship-owner as well as the steamer agent for damages valued at Rs. 26,548-50. The suit was file in the City Civil Court Madras.

The Defendant resisted the suit disclaiming any responsibility for the shortage. They pleaded that no liability attached to the ship on the terms of the charter party which, they maintained, constituted the contract of carriage in the case. They further pleaded that the cargo in question was bulk cargo and the responsibility for any shortage therein was to be suffered wholly by the shipper, particularly because he happened also to be the charterer of the ship. They claimed that the shortage might have occurred owing to defective handling at the time of discharge fey the workers employed by the consignee. They pleaded that the cargo was not weighed in the presence of the ship''s officers at the time it was loaded in the ship''s holds and that it bore the weighment certificate only from a third party. It was urged that in such cases and under the custom of the port of loading the carrier could not be rendered liable for any subsequent shortage in delivery at the port of discharge. They also plead d that even in the bill of lading the Master did not, in so many words, accept the weight given in the certificate. In any case they pleaded that ammonium sulphate was susceptible to shrink and the shortage in weight might well have been occasioned by such shrinkage.

At the trial of the suit, the parties marked the charter party, the bill of lading and other relevant documents by consent. The Plaintiff examined two witnesses on its side. But the Defendants made an endorsement at the trial stating that they were not calling oral evidence on their side. After perusing the documents and considering the oral evidence and after hearing arguments on either side the learned judge gave a decree in favour of the Union Government for the amount claimed in the suit. But the decree was given only as against the ship-owner, and the suit was dismissed as against the other Defendant, the steamer agent. The learned judge expressed the view that the second Defendant had been sued only as agent of a known principal, the carrier, and, accordingly, no relief could be granted against the agent as such, when the principal figured as a party in the suit. The ship-owner has now brought this appeal before this Court against the judgment and decree passed by the City Civil Court.

Learned Counsel arguing the appeal for the ship-owner raised more than one contention before us. He first urged that there was really no satisfactory evidence in the case of the exact weight of the cargo at the time it was shipped at San Francisco. He said that the bill of lading issued by Ship Master could not be held to be a clean bill of lading in regard to the weight of the cargo because the words employed by the Master in the bills of lading was said to weigh 9,800.52 metric tonnes. These words, in our, opinion, do not amount to saying that the Master did not accept that weight to have been correctly stated. Besides, in the Mate''s receipts issued both to the shipper and to the shipper''s forwarding agent immediately on loading'' the weight was acknowledged to be 9,800.52 metric tonnes without equivocation of any sort. The weighment under certificate had been made by an impartial and internationally-known institution just before the loading. It has not been suggested as to how this third party could have had any interest in inflating or overstating the weight of the cargo. We must, therefore, reject the argument that the weight of the cargo even at the loading point has not been proved, in this case.

Learned Counsel raised another contention relying en the provision of Section 11 of the United States Carriage of Goods by Sea Act, 1936. That section reads as under:

Where under the custom of any trade the weight of any bulk cargo inserted in the bill of lading is a weight ascertained or accepted by a third party other than the carrier or the shipper, and the fact that the weight is so ascertained or accepted is stated in the bill of lading, then, notwithstanding anything in this Act. the bill of lading shall not be deemed to be prima facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of lading and the accuracy thereof at the time of shipment shall not be deemed to have been guaranteed by the shipper.

Basing himself on the above provision learned Counsel argued that the certificate of weight issued in this case by take third party cannot constitute prima facie evidence of the cargo''s weight as against the carrier. He pointed out that by merely mentioning the third party''s figure in the bill of lading the shipper himself shall not be deemed to have guaranteed the accuracy of the weight.

We must however point out that in order to succeed in this argument based on Section 11 of the United States statute the ship-owner must establish two other things. He must establish (i) that the weight is ascertained by the third party under a trade custom prevalent in the loading port, and (ii) that the bill of lading itself should state that the weight has been so ascertained by the third party. As the learned trial Judge has remarked, there is no evidence in this case as to what the trade custom was in San Francisco in regard to weighment of bulk cargo generally and of ammonium sulphate in particular. Besides, the bill of lading signed by the Master did not say that the weight shown in the bill of lading was ascertained by a third party other than the chipper. Prima facie, the words stated to weigh occurring in the bill of lading are strictly neutral. They are not clear enough to invoke Section 11 of the United States Carriage of Goods by Sea Act.

Reference was then made to the charter party, and it was argued that, when the cargo was carried under a charter the bill of lading could not be looked at for ascertaining the terms of the contract of affreightment. Learned Counsel said that the shipper of the goods in this case was also the charterer of the vessel, and, that being so, the function of the bill of lading issued in this case was nothing more than to serve as a receipt issued by the ship''s Master for having received the shipment. Learned Counsel referred not only to the clear declaration in the charter party to the effect that it provided tie contract of carriage, but also to the express reservation in the bill of lading to the effect that it was being issued subject to all terms conditions and exceptions of the charter party, dated August 5, 1965 at London. These provisions, however, do not bear out the contention of the ship owner that the weight of the cargo mentioned in the documents signed by the ship''s officers themselves was not admittedly the correct weight of the cargo at the point of loading.

Learned Counsel then turned to the other defences pleaded by his client. One of them was based on the supposedly inherent tendency of ammonium sulphate to shrink. This contention was earlier dismissed by the learned trial judge as not prove. Learned Counsel did not tarry for long on this point. We have no intention of doing so either, but reject the argument as untenable.

It was then argued that in regard to carriage of bulk cargo, the law does not render the ship-owner liable at all for shortage on landing. This proposition, in our opinion, is much too widely stated for consideration, let alone acceptance. The United States Carriage of Goods by Sea Act, and similar statutes of other maritime nations do not lay down any special rules relating to liability of the carrier in regard to bulk cargo, excepting the provision which we had discussed in terms of Section 11 of the United States statute. But even that provision by no means enacts that the ship owner can under no circumstances be made liable for shortage in delivery of bulk cargo carried by his ship. On the contrary, the widely accepted position in law would seem to be that delivery of bulk cargo is governed in every case strictly by the terms of the contract of carriage, and, in their absence, by the custom of the port of discharge. The delivery at the port of discharge of bulk cargo usually takes the form of what is known as overside delivery or alongside delivery, whether the terms of the discharge are governed by contract or by custom of the port of discharge. But whatever the mode, the law does not absolve the carrier from all responsibility whatever for effecting overside delivery. As Scrutton says, the word alongside is not ambiguous the ship owner must deliver alongside, See Scrutton on Charter parties and Bills of Lading (sixteenth edition). Article 44, page 157. See also Halsbury (third edition), volume XXXV, page 45. For custom of the Madras Port in regard to overside delivery see the decision of a Division Bench of this Court to which, one of us was a party, in Original Side Appeal No. 45 of 1971, dated 13th July 1976 The Central Gulf Steamship Corporation v. The Union of India represented by the Regional director (Food) Southern Region.

We must observe that there is no need in the present case to invoke the custom of the port. For the charter party itself has provided for the two things (i) carriage in bulk and (ii) discharge by overside delivery. The very first operative clause in the charter expressly provides for the carriage of the cargo in bulk. And while the charter party distinctly provides that the loading and discharge of the cargo was to be by the charterer there is a clear indication that the contract between the parties did contemplate that the discharge of the cargo was to be overside delivery. This is implicit in the provision which requires the Master of the ship to grant to the charterer the free use of the ship''s gear, winches and derricks for effecting what is described in the relevant clause itself as overside delivery.

In the judgment under appeal we find a clear account of the actual mode of discharge adopted in this case. It shows that the delivery at the Madras Port Was by overside delivery. The evidence discloses that the cargo was unloaded from the ship with coir-mats, put in slings and taken from the vessel directly into the Hopper wagons standing alongside the ship. From these wagons the goods were transferred to gunny bags by means of chuters and thereafter, the bags were taken to the transshipment shed. This was what P.W. 2, the section Superintendent of the Madras Port Trust gave in evidence. It is true that the Port Trust itself in the normal course would take no part in the operation of overside delivery. It is not also any one''s case that the services of the Port Trust were specially requisitioned at any stage of the operations by the consignee. It was suggested to the witness in cross-examination that there was possibility of shortage occurring in this mode of transferring the cargo from the ship to the wagons alongside and of subsequently packing them in gunny bags. The witness, however, was emphatic that there could be little or no scope for any shortage as such occurring in this process, although he admitted that the goods might get spilled to some extent. He, however, added that such spillage as there was could never be completely lost, for they could be recovered by sweeping. The learned trial Judge accepted the evidence of P.W. 2 as to the mode of the overside delivery that took place in this case. He recorded the finding that the shortage of such a substantial quantity as 64.751 metric tonnes of ammonium sulphate did not occur while the consignee had been handling the cargo.

We must say that there is no clear evidence in this case as to from which stage of the operations of discharge the consignee had engaged his own labour. There is no indication that the consignee''s men got on board the steamer even for removing the ammonium sulphate from the holds. Nor is it clear whether any stevedores were at all engaged by the steamer agent and, if so, whether they undertook the task of removing the cargo from the ship''s holds, putting it on the slings, hoist it over the ship''s rails and lower it alongside the vessel. One thing, however, is clear. It is not the plea of the ship-owner that the consignee''s workmen entered the vessel and took charge of the operations on board the ship and themselves took the initial step of removing the cargo from the ship''s holds. In the circumstances, to the extent that there is evidence in the case relating to the overside delivery, we are unable to hold that the shortage had occurred while the consignee or its men had taken charge of the cargo. This leaves only one legitimate inference that could be drawn in the circumstances, namely that the shortage in the consignment had occurred before the process of discharge began. This would mean that even on the footing that the Food Department authorities had themselves undertaken the responsibility to unload the cargo at the Port, we must endorse the finding of the learned trial Judge that the shortage in the consignment had occurred even while it was under the custody of the ship and owing to want of care on the part of the ship-owner and its agents and servants.

Learned Counsel for the carrier is not in a position to challenge the other finding of the trial Court relating to the precise quantum of the shortage. He did not argue that the shortage was not 64.751 metric tonnes, but less. Nor has a ground been taken in the memorandum of appeal questioning the evaluation, in money terms, of the shortage. We are, accordingly, satisfied that there are no merits in this appeal. It is hereby dismissed and the trial Court''s judgment and decree are confirmed with costs.