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Petitioner: TRADING CORPORATION OF PAKISTAN VS Respondent: INTERCONTINENTAL OCEANIC JUDGMENT
Court Name: Sindh High Court Judge(s): Muhammad Shaiq Usmani Title:TRADING CORPORATION OF PAKISTAN vs INTERCONTINENTAL OCEANIC
JUDGMENT
Reported As: 2000 CLC 1892 Result: Suits dismissed Judgment JUDGMENT ' By a common judgment I propose to dispose of Suit No,386 of 1982 and Suit No,781 of 1985 as the law involved in these suits is identical. However, as far as the facts are concerned, I will describe them separately for each suit because even though in substance they are similar there are 'nevertheless certain variations which need to be highlighted. Suit No,386 of 1982 ' Briefly the facts of this case are that a Vessel MT "Nitsa" brought a consignment of edible oil to Karachi on 5-10-1981. The consignment was consigned to plaintiff. The vessel was entered into the Port of Karachi by defendant No,2 who were the local agents of defendant No,1, the owners of the vessel. The plaintiffs claimed that the consignment upon arrival at Karachi was shortlanded by 228.092 metric ton valued at US $ 1,24,722.99 equivalent to Rs,15,25,362.29. The plaintiffs through this suit claim the value of the cargo shortlandeti. The defendants on the other hand, while admitting the Bill of Lading quantity, state that in fact there was excess shipment of 16.851 MT as according to them the quantity found in ship's tank determined upon taking ullages at the port of loading was 26,862.605 metric ton. The defendants contend that upon vessel's arrival at Karachi there was a joint on board survey conducted according to which the consignment was in fact excess landed by 61.265 metric ton. The entire quantity found on board, according to the defendants, was charged into the shore tanks. A Tank Dry Certificate was issued indicating that the entire cargo had been discharged from the vessels tanks and that nothing remained on board. The defendants, therefore, deny any short landing of the cargo and in fact aver that the cargo has been excess landed. The shortage, if any, according to them has occurred after the cargo had been discharged, and thus,
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they are rot liable for such shortage. Based on the pleading of the parties, following issues were settled:-- (1) Whether the plaintiffs have right to sue in respect of the consignment? (2) Whether the defendant No,2 have no privity of contract with consignee/plaintiffs and if so what is its effect? (3) Whether the suit is bad for non-joinder of parties? (4) Whether the defendants are liable for alleged shortlanding of 228.092 metric tons of Soya Beens oil in bulk and if so what was their condition quality, quantity and value? (5) What quantity of Soya Beens oil in bulk was found in ships tanks according to the ullages on completion of loading? (6) What quantity of Soya Been oil in bulk was found in ship's tanks according to the ullages before discharge at the Port of Karachi? (7) Whether the defendant No,1 had discharged 61.265 metric tons of Soya Been oil in bulk in excess of the Bills of Lading quantity and if so what is its effect? (8) Whether the surveyors issued their dry tank certificate in respect of ship's tanks after discharge of Soya Bean oil in bulk at Karachi and if so what is its effect? (9) What is the quantum of alleged loss suffered by the plaintiffs? (10) To what reliefs, if any, are plaintiffs entitled? ' The plaintiffs examined a representative of their Company as well as a representative of their Surveyors as their witnesses while defendants examined one of their Directors and a representative of their Surveyor. Suit No,781 of 1985 ' The facts of this case are that a Vessel MT "Sinoda" brought two consignments of Kerosene Oil and HSD Oil to Karachi on 28-10-1984 which was consigned to Kuwait Petroleum Company Liaison Office (Pakistan) for and on account of Ministry of Petroleum and Natural Resources, Karachi. The Shippers of this cargo were the defendant No,2. The Vessel was entered into Port of Karachi by defendant No,1 who were local agents of defendant No,2, who in turn were charterers of the said Vessel MT Sinoda. The plaintiffs maintain that the defendant No,3 were the owners of the said Vessel. The plaintiff themselves are an Insurance Company with which the consignment was insured and they have filed a suit in the capacity of alleged subrogees. The plaintiffs claim that the consignments were short delivered by 881 metric ton of Kerosene Oil and 1601 metric ton of HSD Oil. After allowing transportation losses allowance of 0.5%, the shortage amounts to 636.16 Kerosene Oil and 807.69 of HSD Oil. The plaintiffs claim the invoice value of the consignment shortlanded to be Rs,308,363 for Kerosene Oil and Rs,378,425 for HSD Oil totalling Rs,686,678. On the other hand the defendants, according to their written statement, claim that defendant No,3 are not the owners of the Vessel and in fact the owners are another Company, and thus, the suit is bad for non joinder of the owners. According to them the Vessel MT Sinoda was Time Chartered to Tradex Ocean Transportation S.A. Who in turn had voyage Chartered the said Vessel to defendant No,2, thus, it is the defendant No,2 who were the carriers of the consignment and thus, the owners have no liability in the matter whatsoever. Indeed, the defendant No,1 also have denied that they are the agents of defendant No,2. The defendants admit the Bill of Lading quantities described in the plaint but state that these were issued by defendant No,2 as the agents of Time Charterers. They have denied that the consignment was shortlanded. They state that upon vessel's arrival on board joint survey was conducted on behalf of all the interested parties and Survey Report showed that in fact the consignments were in fact excess landed by 12.58 metric ton of Kerosene Oil and 68.26 of HSD Oil. They claim that since this on board quantity was fully discharged into store tanks they have no further liability in the matter as the responsibility of the Vessel ended when the consignment left the ship's manifold. The shortages if any, are based on figures derived from shore tank on the basis
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of which KPT's certain Outturn Report was prepared and the defendants/carriers have no concern with that. Consequently they deny their liability for the plaintiffs' claim. Based on the pleadings of the parties, the following issues were framed:-- (1) Whether the suit as framed is maintainable? (2) Whether the suit is bad for non joinder of the proper party? (3) Whether the defendant No,2 or the defendant No,1 are bankers of the suit consignments? (4) What were the arrived on board quantities of Kerosene Oil and High Speed Diesel? (5) Whether any part of the consignments was shortlanded? (6) What is the extent and value of the loss if any, suffered by the consignee? (7) Whether the plaintiffs have paid the consignee's claim and have they any right to sue? (8) Whether the plaintiff is entitled to a decree, if so, against which of the defendant? ' The plaintiffs examined as a witness an official of their Company and a Surveyor who had surveyed the consignment. Whereas the defendants examined General Manager of their company only. Both parties filed the usual documents, namely, the Bills of Lading, Invoices, Survey Reports and Letters of Subrogation etc. The evidence of the plaintiff was, if I may say so, exceedingly slipshod and in fact the plaintiffs's witness P.W.1 had very little knowledge of the manner in which the consignment was discharged. He could not possibly have much knowledge of this inasmuch as this is a 13 ,years' old case and all evidence that was brought on record was based on office records of the plaintiffs and not on the personal knowledge of the plaintiff's witness. Similar was the case with the defendants' witness. However, it was rather unusual (since it almost never happens) to have a Surveyors' witness who had himself carried out the survey in shipping cases it often happen that by the time the cases come to trial first hand witnesses are not available and the facts brought out through evidence by the witnesses are as such the same as described in the pleadings. Indeed, I am of the view that oral evidence in shipping cases amounts to merely going through the motion of recording evidence and rarely does the evidence led by witnesses meet the stringent requirement of the Qanun-e-Shahadat (Evidence Act). Most evidence consists of production of Shipping documents which are standard documents and hardly ever vary. In all cargo cases the standard documents that are produced are as follows:-- (i) Copy of non-negotiation Bill of Lading; Invoice; (iii) Preliminary/final outtum report of KPT; (iv) Survey Reports/Inspection Report of sealed containers; (v) Shortlanding Report of KPT; (vi) Defective cargo list of KPT, if relevant; (vii) Excess landing report of KPT, if relevant; (viii)Charter parties, if relevant; (ix) Insurance policy; (x) Letter of Subrogation alongwith proof of payment by the insurance company to consignee; (xi) Customs general bond given by ship agents under section 55 of the Customs Act, 1969. ' ' Considering that none of the witnesses normally have personal knowledge about any of these documents and shipping cases as a rule are decided on the basis of above standard documents, oral evidence would be of little value. Considerable time of the Courts would, thus, be saved if copies of the aforesaid documents are filed alongwith the pleadings and the original thereof are filed in Court after settlement of issues and are exhibited at the time of trial through one witness, and thus, reduce oral evidence to barest minimum. This is not to say that the oral evidence in shipping matters is to be completely dispensed with but to say that it can be safely avoided and that oral evidence must only be recorded. If so required by the Court or by any of the parties to prove a particular point vital to their case which happens to be somewhat unusual or out of the
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ordinary. In my view, such need could arise for example, in respect of Survey Reports or Laboratory Reports when the Surveyors or Laboratory Personnel could be examined. ' Having heard the arguments of the learned counsel for the parties and having perused the evidence brought on record by them, I found that the cases of the plaintiffs were going by default. It appears that the plaintiffs were not conscious of the gravity of the legal issues involved and the facts that needed to be proved for their claim to succeed. The defendants' approach too, appeared to be somewhat lackadaisical and they relied complaisantly mainly on the well-known principle in the shipping field of Carrier's responsibility for the cargo extending to "ship's sail". This was so because it is perhaps the first case of its nature which deals with adjudication of cargo claim relating to oil cargo (in bulk) that has come before a superior Court. The importance of this case is apparent from the fact that I am informed that the entire shipping industry in Pakistan and also those concerned with, shipment of edible cargo to Pakistan are awaiting judgment in this case. I do hope the parties are not nonplussed by the results of the discussion herein particularly, because judging from the arguments advanced I fmd that the parties are attempting to view the legal and factual issues involved in this case in the same (sic) as in the carriage of "dry" cargo. ' There is no cavil with the proposition that once a cargo, be it "dry" or "bulk" cargo is loaded on board a ship and a Bill of Lading describing the quantities so loaded is issued then the ship owner/carrier is bound to deliver the same quantity at port of discharge. However, there are considerable differences when the nature of cargo is liquid as opposed to being "dry", this is so because in case of "dry" cargo it is easy to ascertain the quantities of cargo loaded on board and hence a priori, it is just as simple to determine as to what quantities have been discharged but when the cargo such as edible oil or other oil is loaded in bulk it becomes very difficult to determine the exact quantities loaded and hence the quantities discharged. Considering that the parties to the suits were unable to bring the required evidence or to advance plausible arguments in support of their contentions, as stated earlier, I found that such an important case was going by default. I, therefore, decided to act on my own and appoint three amicus curiae, namely, (i) Mr. Imtiaz Lari, Advocate (ii) Mr. Jamil Ahmed Khan. Advocate and (iii) Mr. Ghulam 'Muhammad Ebrahim, Advocate. I, in particular chose these gentlemen because of their experience in the field of oil cargo claims and also because they mostly represent either the cargo owners or their underwriters in such cargo claim cases. Finding that the evidence on record was insufficient for me to arrive at correct conclusion I chose to examine some experienced individuals in the concerned field as Court-witnesses. In this connection I examined (i) Deputy Traffic Manager, Karachi Port Trust, Rahim Bux Brohi, who primarily deals with' oil cargo, (ii) a representative of Shore Tank Terminals Mr. Muhammad Iqbal, (iii) Chief Executive of Messrs Oceanic Surveyor, Capt., Khalilur Rehman who is experienced in the field of oil cargo surveying. I even permitted the cross-examination of these witnesses by the parties even though as a rule Court-witnesses ought not to be cross-examined. ' From the evidence that was brought on record by the parties and through these Court-witnesses and the information that was derived from the arguments of the amicus curiae and through taking judicial notice myself the picture that emerges regarding methodology of the loading and discharging of oil cargo is as follows:-- ' The basic difference between the loading of oil cargo and the dry cargo at the port of shipment is that whereas the dry cargo is mostly kept in the shippers/Freight forwarders yards and is then transported by usual means such as by rail or motor vehicles to wharves for eventually loading on board a ship, in case of oil cargoes the cargo is initially stored in a shore tank often situated at considerable distance from wharves and is transported through pipelines to the ship's manifold leading to the ship's tanks to continue the comparison, while the quantities of dry cargo being transported for loading from the Yard is physically measured or counted and thereafter such description is reflected in the bill of lading issued by the carrier, the quantities of oil cargo in the
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shore tank are measured by taking dips of the shore tank to measure the depth of the oil in the tank. Thereafter the specific gravity of the oil and temperature is ascertained and then with the help of calibration charge of the tank the actual quantity of oil in the tank is calculated. Once this entire quantity is discharged through pipes into the carrying vessel it is presumed that the oil cargo loaded on board the vessel would be the same as was determined to be in the shore tank. The Bill of Lading issued by the carrier, or on his behalf by the agent, reflects the quantity as determined in the shore tank. However, the vessel too, conducts an on board survey to determine the actual quantities in the vessel's tanks at the time of loading. This is done by taking ullages of ship's tank and taking into consideration the temperature trim and list of the Vessel and then calculating the actual quantity on board with the help of calibration chart of the vessel prepared by its builders. I might explain in layman's terms that ullages are the measurement of the space above the level of the oil in the tank, whereas trim indicates, whether the vessel is down in water by the head or by the stern and the list indicates whether vessel is litled to one side or the other. ' Once the vessel sails, from load port to the port of destination then during the voyage often the need arises to shift oil from one tank to the other for the purposes of stability of the ship. Each of these tanks have also valves, which are used to shift or pump out the oil and leakage can occur from these valves. The tanks themselves can leak depending on the strength of hull of the tanks which in turn depends upon the age of the vessel. When the vessel arrives at the port of discharge, invariably and on board survey is carried out by various interests in cargo, namely, ship owner, shipper consignee etc. The purpose of this on board survey on arrival is to determine the arrived quantity of oil cargo. This too, is calculated by taking ullages and considering specific gravity and temperature of cargo and the trim and list of the vessel. As a rule, this arrived quantity of oil should be the same as on board quantity at the port of loading. However, occasionally, this is not the case and the reasons for this could be numerous. For example the cargo could be found to be Short, as mentioned earlier, due to leakages from valves of the tanks or tanks themselves or even oil spill but also because of the difference in trim and list and the human errors during the taking of ullages. On the other hand it could also be in excess because of the variable factors that are used for calculation of quantity and the difficulty in ascertaining exact trim and list particularly if the sea is rough. After on board survey, upon arrival of the vessel, the cargo is pumped out from ship's manifolds into shore tanks which are situated at times of considerable distance from the oil piers/jetties through pipelines which could be on surface or sub-surface. Once the cargo is discharged into the shore tanks the depth of the tanks is taken by a process known as Dip, which entails measuring the depth of oil in the tanks, and then after ascertaining specific gravity and temperature etc. Exact quantity in the shore tank is calculated using the calibration chart of the shore tank., Usually universally (not including Pakistan) it has been found that there is very little difference between the arrived quantity of cargo and the quantity pumped out in shore tanks. The difference, if any, does not exceed 0.5% of the total quantity found on board on arrival due to reasons that will be discussed later in this judgment. This is so because every effort is made by the Carrier to discharge every drop of the oil on board the vessel. In fact after the entire cargo is discharged from the vessel the ship's tanks are physically examined by the surveyors or the concerned parties to see whether any oil still remains on board. To ensure that no oil remains, oil squeezing gangs are employed for squeezing every remaining drop as fast as possible from the various crevices of the tank. Very rarely have shortages beyond 0.5% been discovered except when voyage of vessel has not been uneventful inasmuch as the vessel may have met some accident or leakage or spills had occurred. ' However, unfortunately, in Karachi, it is now usual for shortage beyond this figure of 0.5% to occur. Occasionally shortages much beyond this figure also occur which appear to be unexplained and hence it would be necessary to investigate the circumstances leading to such shortage. Here the
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evidence of the Court-witnesses has come in very handy. It appears that in so far as the ports in Karachi are concerned, that is to say the Port of Karachi and Port Qasim, the shore tanks are often situated at considerable distance from the oil pier which could be even a mile away. The pipelines leading to these tanks themselves are above surface as well as sub-surface and have various joints in them. These pipes, at least the larger portion beyond the KPT area are laid by Shore Tank Terminal Operators who are also responsible for their security and maintenance. The pipes run through an area that is not constantly under surveillance, consequently, liable to be tampered with leading to purloining of the oil from the pipes through drilling of holes in them by adventures. Indeed such thefts are fairly frequent and have been widely reported in the press. ' Presently the practice, at least in the Karachi Port, is that the vessel arrives and berths at oil pier and an on board survey is carried out by the surveyors representing the ship owner/P&I Club and shipper/consignee/ receiver and any other interested party and the arrived quantities on board are determined. It has also been brought on record that as per Central Board of Revenue Notification, dated 7-3-1992 the Customs compare this arrived on board figure with the Bill of Lading figure when calculating Custom penalty for shortlanding of cargo under section 55, Customs Act, 1969 and allow for an allowance of 0.25% for leakage and other loss of cargo. Thereafter, the cargo is discharged from the ship manifolds into the shore tanks through pipes. It has also been brought on record through Court-witnesses as well as the witnesses of the plaintiffs themselves that the shore tanks are in fact arranged by consignee through entering into an independent agreement with the shore tank operators. It is an admitted position generally that the ship owners have no contractual relationship, whatsoever with the tank operators. Once the entire cargo is discharged from the vessel the surveyors inspect the tanks physically and then issue what is known as "dry tank certificate" which means that there is no cargo left on board and by implication that the cargo that was determined to be the arrived quantity through a joint survey has been discharged in full. Thereafter cargo discharged into the shore tank is jointly surveyed by all aforesaid surveyors and dips and temperature are taken and by help of calibration chart the exact quantity of cargo in the shore tank is determined and this information is then conveyed to the Karachi Port Trust (KPT). Here there is a complete departure from the usual practice followed by KPT in respect of discharge of dry cargo on plinths. In case of dry cargo KPT themselves tally the cargo being discharged and hence arrive at an independent assessment of the quantities of cargo discharged which they reflect in a "Preliminary outturn report" thereafter based on it a final outturn report is issued and then in case of any shortages shortlanding certificate is issued by KPT. However, in case of oil cargo, KPT accepts the quantity determined by joint survey of short tank to be the quantities discharged from the vessel and based entirely on that, issues an outturn report and thereafter no further reports are issued by KPT. If the cargo received in the short tank from the vessel is short, such shortage would be reflected in the KPT outturn report without the KPT arriving at any independent assessm ent of their own. It follows that the same shortage would be reflected in the quantities received by various Receivers/Consignees since the delivery is given to them from the shore tanks based on the quantity of oil received therein. It is thus obvious and it has been so stated by KPT witness summoned by the Court, that while dry cargo is received in the custody of KPT prior to delivery to the consignees, the oil cargo is never received in the custody of KPT and stays throughout in the custody of Shore Tank Operators, who as we already know act as agents of the Consignees. Nevertheless it has been brought on record that KPT's only interest in the consignment is the collection of wharfage on the cargo landed and once the wharfage is paid and the custom documents are in order KPT issues a release order and then the consignees take delivery of their cargo from Shore Tank Terminal Operators directly without any intercession from KPT or the Ship owner/Carrier except that the ship agent issues the delivery order based on Bill of Lading quantities. The delivery itself is taken by the consignee piecemeal and not on one occasion.
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All this while the cargo stays in the custody of Shore Tank Operators, who as has already been stated, act as agent of the Receiver/Consignee under a separate and independent agreement. ' Having thus been armed with the evidence, which is truly impartial, regarding the methodology of loading and discharging of oil cargoes, I am now in a position to examine the issues involved in these suits. Even though the consignment in these suits are of different kind of oil cargoes, in so far as the question of rights and liabilities of the parties are these are similar. I have, therefore, recast the issues and have consolidated them so that both suits can be decided together. The consolidated issues are as follows:-- (1) Who is the carrier of the consignments? (2) Whether the suit as framed is maintainable? (3) What were the loaded, arrived on board quantities of cargo and as to what quantities were discharged into shore tanks? (4) Whether any part of the consignment was shortlanded? And if so, whether the carrier is responsible for such shortlanding? (5) What is the extent and amount of loss suffered by the…
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