Spices (India) Ltd. vs Asiatic Steam Navlgation Company, Ltd.

Bachawat, J.—This is a suit for a declaration that the Plaintiff is entitled to immediate possession and delivery of certain goods, decree for delivery of the goods and for consequential reliefs.

Three hundred and fifty-five hags of turmeric were shipped from Maslipatam to Calcutta per steamship "Nurani" belonging to the Defendant under the bill of lading So. 6, dated June 5, 1952. Messrs. V.R.P. Vankatasaroa were the consignors and the Plaintiff was the consignee of the goods.

The original bill of lading and a copy thereof, both signed by the agent of the Defendant, were received by the consignors through their brokers on June 9, 1952. On the same date the consignors sent the original bill of lading to the Plaintiff by post. The original bill of lading was lost in course of transmission, and did not rench the Plaintiff. The goods arrived in Calcutta sometime in June. 1952. On receipt of a telegram from the Plaintiff, the consignors sent their Sales Manager, Radha Krishna Murthi, to Calcutta with the copy bill of lading. Sometime in the second or third week of June, 1952, the copy bill of lading was tendered to the Defendant by the Plaintiff through one Radhakissen who offered indemnity and a bank guarantee for three years to Mr. Fountain acting on behalf of the Defendant. Mr. Fountain refused to deliver the goods without an indemnity and hank guarantee for six years.

By letter dated July 3, 1952, Messrs. Fox and Mondal, attorneys for the Plaintiff, demanded from the Defendant delivery of the goods and referring to the above interview stated that the Plaintiff offered to sign an indemnity bond agreeing to indemnify the Defendant against all future claims in respect of the goods accompanied by bank guarantee but the Defendant refused to accept the offer and was wrongfully insisting that the bond and the guarantee should be for unlimited amount and for a period of six years. They added that the Plaintiff considered this to be very unreasonable as the claim could not possibly exceed the value of the goods and would be time-barred after one year. By letter dated July 5, 1952 the Defendant wrote to Messrs. Fox and Mondal stating that there was some misunderstanding as to the verbal talks and that the Defendants were agreeable to give delivery of the goods against an indemnity and bank guarantee for six years limited to the value of the goods. By letter dated July 9, 1952. Messrs. Fox and Mondal wrote to the Defendant stating that the Plaintiff was prepared to sign an indemnity limited to the value of the goods but that the Plaintiff did not see why a guarantee by a bank and that too for six years was required. By letter dated July 11, 1952, the Defendant wrote to Messrs. Fox and Mondal stating that the Defendant was not unreasonable and referring to the opinion of an English counsel to the effect that the period of limitation is six years. By letter dated July 21, 1952, Messrs. Fax and Mondal pointed out that the opinion based on English law had no application to India and stated that in order to get the goods quickly the Plaintiff was prepared to sign an indemnity bond for six years provided that there was no further question of obtaining a bank''s guarantee. By letter, dated July 27 1952, the Defendant wrote to Messrs. Fox and Mondal stating that the Defendant could not agree to forego the bank''s guarantee and that unless the Plaintiff agreed to sign a letter of guarantee for six years with a bank''s guarantee the Defendant would consider the correspondence closed. The suit was instituted on or about August 4, 1952. Notice of motion for appointment of Receiver of the goods was taken out on behalf of the Plaintiff on or about August 5, 1952. By an order dated August 13, 1952, this Court appointed a Director of the Plaintiff company Receiver of the goods subject to his furnishing security for Rs. 11,000 to the satisfaction of the Registrar and directing that upon the security being furnished the Defendant was to make over the goods to the Receiver and the Receiver was to sell the goods.

The following issues were raised at the trial:

Issues:

Was the Plaintiff at all material times the owner of the goods mentioned in paragraph 1 of the plaint?

Was the Plaintiff at all material times the holder for value of the bill of lading in respect of the said goods?

Did the Plaintiff produce a counterpart or duplicate of the said bill of lading as alleged in paragraph 4 of the plaint? If so, was the Defendant bound to deliver the said goods to the Plaintiff?

Was the Defendant guilty of breach of contract or breach of duty or of negligence in not delivering the said goods to the Plaintiff?

Was the Defendant bound to deliver the said goods to the Plaintiff on its furnishing reasonable indemnity? If so, did the Plaintiff furnish reasonable indemnity ?

To what reliefs, if any, is the Plaintiff entitled?

Issues Nos. 1 and, 2 must be answered in the affirmative. I. am satisfied that the Plaintiff was the owner of the goods and the holder of the bill of lading.

Issues Nos. 3, 4, 5 and 6.-The relevant clauses of the bill of lading are as follows: The opening part states:

Shipped in apparent and good order and condition by Meesrs. Vellopalli Raghaviah, Pothinani on the ship s.s. "Nurani" now lying at the port of Masulipatam 355 bags Turmeric to be delivered subject to the terms and conditions hereof at the Port of Calcutta or so near thereto as she may safely get unto Messrs. Spices (India) Ltd. or assigns.* * *

Clause 2 states that the carrier is not a common carrier.

Clause 12 provides that "one copy of this bill of lading is to "be given up in exchange for the goods or a delivery order "therefor."

The witnessing part states:

In witness whereof the Master or Agent of the said ship has affirmed to one Bill of Lading, all of this tenor and date, one of which being accomplished the others to stand void.

It is well-settled that the carrier is entitled to refuse delivery of the goods to the consignee if the bill of lading is not produced. See Glyn Mills Currie and Company v. The East and West India Dock Company (1882) 7 A.C. 591, 598. A bill of lading is a document of title transferable by endorsement and its transfer has the same effect as the delivery of the goods. The delivery of the floods to the consignee without product inn of the bill of lading does not discharge the carrier where the consignee is not the true holder of the bill of lading. The Stettin (1889) 14 P.D. 142.

Where a bill of lading is drawn in a set there is really one bill of lading though drawn in different parts. Where such bill of Jading contains a clause providing that one of the parts being accomplished the others are to stand void, delivery to a person presenting one part discharges the ship-owner acting in good faith without notice of any defect in his title. See Glyn Mills Currie and Company v. The East and West India Dock Company (supra) and tender of one part of the bill of lading is for certain purposes as effectual as tender of a Bill of lading.Sanders Brothers v. Maclean and Company (1883) 11 Q.B.D. 327 (C.A.).

Where a bill of lading is drawn in a set, two or three or four parts of it are made out and signed. Sometimes one part is marked original and others are marked duplicate. Sometimes the parts are numbered first, second and third consecutively. The number of parts made out is shown in the witnessing clause of the bill of lading.

By Article 14 of the first schedule of the Stamp Act, a bill of lading must he stamped and if a bill of lading is drawn in parts, the proper stamp therefore must be borne by each one of the set. In this case the original bill of lading is properly stamped but the copy bears no stamp.

The bill of lading No. 6, dated June 5, 1952, contains the clause "In witness whereof the Master or Agent of the said "ship has affirmed to one bill of lading all of this tenor and "date, one of which being accomplished the others to stand "void." The word "one" is typed and the rest of the clause is printed. The word "one" clearly shows that only part of the bill of lading was made out and that the bill of lading was not drawn in a set. The clause "all of this tenor and date, one of "which being accomplished the others to stand void", is strictly appropriate when the bill of lading is drawn in more than one part and must be treated as surplusage when only one part is drawn. Absence of stamp on the copy bill of lading also indicates that it is not a part of a bill of lading drawn in a set.

The Defendant, therefore, could not safely deliver, the goods to the Plaintiff on production of the copy of the bill of lading.

Clause 12 provides that one copy of the bill of lading was to be given up in exchange for the goods on as delivery order thereof. In my opinion, this provision is inserted for the protection of the ship-owner who is entitled to enquire delivery of one copy of the bill of lading in exchange of the goods. This clause does not entitle the holder of the bill of lading to obtain delivery of the goods on production of a copy of the bill of lading.

Refusal by the Defendant to deliver the goods was, therefore, not a breach of the contract nor was it a tortuous act. The Plaintiff must seek his remedy, if any, in the equitable jurisdiction of the court.

At common law, an action on a lost negotiable instrument was not maintainable even though an indemnity was tendered to the Defendant. See Hansard v. Robinson (1827) 7 B and C 90 : 108 E.R. 659. This rule was altered by statute. In this country, Order VII, Rule 16, of the CPC greens the court statutory power to grant relief to the Plaintiff suing on a lost negotiable instrument where an indemnity against claims on the instrument is given by the Plaintiff, to the satisfaction of the court. In a proper case the court may be satisfied with a personal indemnity only Kong v. Zimmerman (1871) L.R. 6 C.P. 466. Formerly, common law also gave no relief when an instrument under seal was lost but subsequently, production of the document in an action upon the instrument was dispensed with at common law. Equity, however, always gave relief in case of accidental loss of an instrument sued upon. Equity imposes suitable terms and if necessary requires an indemnity. The condition of relief varies with the nature of the instrument and the circumstance of the case. Thus, an indemnity is not required in equity if the lost instrument is an Insurance Policy England v. Lord Tredegar (1866) L.R. 1 Eq. 344. In King v. Zimmerman (supra), where no indemnity was offered before the commencement of an action on a lost negotiable instrument, the court required the Plaintiff to pay the costs of the action as a condition of relief u/s 87 of the Common Law Procedure Act, 1854, being a provision analogous to Order VII, Rule 16, Code of Civil Procedure. Where complete indemnity is offered before suit, the title of the Plaintiff to equitable relief may be complete.

Learned Counsel on both sides were unable to refer to any reported case in which the question of relief in the case of accidental loss of a bill of lading was discussed. My attention was drawn to Carlberg v. Wemyss Coal Company Ltd. (1915) S.C. 616, where the Court of Sessions in Scotland seems to have decided that if the consignee is unable to produce the bill of lading when the ship is ready to discharge, the refusal by the carrier to discharge the cargo may in certain circumstances disentitle the carrier from claiming demurrage. This case is referred to in Carver''s Carriage of Goods by Sea, 9th Ed. p. 726, Scranton on Charter Parties, 15th Ed., p. 328 and British and Empire Digest, Vol. 41, p. 513 foot-note, but the report of the case is not available.

A bill of lading is not a negotiable instrument and, therefore, Order VII, Rule 16 of the CPC has no application. The question whether the Plaintiff suing on a lost bill of lading is entitled to relief in equity and if so, on what terms, must be decided on general principles on which the Courts of Equity grant relief. Quite clearly, the holder of a lost bill of lading is entitled to relief in equity. At the same time, the carrier is entitled to complete protection and indemnity against adverse claims. A bill of lading is a document of title transferable by endorsement and delivery of the goods to a wrong person without its production does not discharge the carrier from liability to the true holder of the bill of lading. The carrier may, therefore, ask for an indemnity against adverse claims and may also demand that the indemnity be secured, e.g., by reasonable bank guarantee.

By Article 31 of the Indian Limitation Act, the period of limitation for a claim against a carrier for compensation for non-delivery or delay in delivery of the goods is one year from the date when the goods ought to be delivered. The article applies to all claims for compensation against the carrier for non-delivery and delay in delivery, whether the suit is founded on breach of contract or on tort. The carrier may reasonably ask for a bank guarantee for the period of one year from the date when the goods ought to be delivered. The carrier is protected by the Limitation Act from liability to third persons after the expiry of the period of limitation. Prima facie, it is not reasonable for the carrier to ask for a bank guarantee for six years.

The Plaintiff in this case was always ready and willing to give an indemnity. At the first interview between Sri Radha Kissen and Mr. Fountain, bank guarantee for three years was offered by the Plaintiff. By letter dated July 5. 1952. the Defendant demanded bank guarantee for six years. Messrs. Fox and Mondal by their letter dated July 9, 1952, enquired as to why the Defendant was demanding a bank guarantee and that too for six years and by letter dated July 21, 1952, enquired it there was any question of bank guarantee in view of the offer of indemnity for six years. By letter dated July 22, 1952, the Defendant unequivocally refused to deliver the goods without six years'' bank guarantee. The Defendant, relying upon the English law, contended that the period of limitation is six years. English law, of course, has no application and the period of limitation in this country is one year. In my opinion, the Defendant acted unreasonably in refusing to deliver the goods without a bank guarantee for six years.

The Plaintiff is the owner of the goods and the holder of the bill of lading. More than 29 months have expired since the date when the goods ought to have been delivered and the period of limitation for adverse claims has expired long ago. During this long period, there has been no adverse claim by a third party. Having regard to these circumstances, it is no longer necessary to require execution of a formal indemnity and a bank guarantee by the Plaintiff. The Plaintiff is entitled to a declaration that it is the owner of the goods. At the commencement of the trial, the Plaintiff''s counsel stated that the Receiver had taken possession of the entire goods. During argument it was stated by the Plaintiff''s counsel and admitted by Learned Counsel for the Defendant that seven bags of turmeric were still lying with the Defendant. It was then asserted by the Plaintiff''s counsel and denied by the Defendant''s counsel that the Defendant had refused to deliver the goods. If there was any refusal to deliver the goods, that question has not been investigated at the trial. It is too late for the Plaintiff to contend that the Defendant wrongfully refused to deliver seven bags of turmeric to the Receiver and is liable for consequential deterioration on account of such wrongful refusal. The Plaintiff is entitled to delivery of seven bags of turmeric in the condition in which they are now.

The Plaintiff claims damages for deterioration and demurrage and an enquiry into such damages. It was agreed by Learned Counsel for the Plaintiff that the quantum of damages will not form the subject matter of the investigation at the trial and that the court should order an enquiry as to damages if the court decides that the Plaintiff is entitled to damages. If I came to the conclusion that the Plaintiff is entitled to damages, I would have awarded to the Plaintiff damages for deterioration, if any, sustained and demurrage, if any, incurred between July 22, 1952 and August 13, 1952, In my opinion, the Plaintiff is not entitled to such damages.

The Plaintiff claims relief in equity. Equity, however, only gives an account of profits and does not award damages. In Halsbury Laws of England, 2nd Ed. Vol. 13, Article 76, p. 81, the law is stated thus:

The principle underlying relief at law is that the Plaintiff has suffered loss by the breach of contract or wrongful conduct of the Defendant, and dairages are awarded for the purpose of making good this loss. The principle underlying relief in equity is that the Defendant has improperly received or withheld property, or profits from property-such property or profits belonging to the Plaintiff-and he is required to restore the property, or to account for the profits. Thus at law the extent of the remedy is measured by the loss to the Plaintiff, and this is covered by the damages awarded ; in equity the extent of the remedy is measured by the gain to the Defendant, and this is ascertained by directing an account against him. These two measures may have quite different results.

The Defendant has not made and is not withholding any profits. The Plaintiff may have suffered loss on account of deterioration and demurrage but equity will not give him damages for such loss.

With regard to costs the Defendant acted unreasonably in asking for a bank guarantee for six years. The title of the Plaintiff to equitable relief was complete before suit and the litigation was caused by the unreasonable demand of the Defendant. The Defendant also unreasonably denied in the written statement that the Plaintiff was the consignee named in the bill of lading. It must at the same time be borne in mind that the Plaintiff has lost with regard to its claims regarding deterioration and demurrage. The justice of the case should be met by directing that the Plaintiff should get one half of the costs of the suit and also the costs, charges and expenses, if any, of the Receiver. I pass the following decree:

There will be a declaration that the Plaintiff is the owner of the goods mentioned in paragraph 1 of the plaint.

The Receiver appointed in this suit will be at liberty to pay to the Plaintiff the sale proceeds of the goods of which he has taken possession. The Receiver will be discharged subject to his filing final accounts. The Defendant is directed forthwith to deliver to he Plaintiff seven bags of turmeric belonging to the Plaintiff and now lying with the Defendant in the condition in which they are now. It is declared that the Plaintiff is not entitled to make any claim on account of deterioration of the said goods.

There will be a decree in favour of the Plaintiff for (a) one half of the costs of this suit and (b) costs, charges and expenses, if any, of the Receiver, including the costs, if any, of furnishing security.