IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:11.03.2011 CORAM THE HON'BLE MRS. JUSTICE R.BANUMATHI and THE HON'BLE MR. JUSTICE M.M.SUNDRESH O.S.A.NO.349 OF 2000 Board of Trustees of Madras Port Trust, represented by its Chairman, Madras – 600 001. ... Appellant Vs. 1.M/s.National Engineering Industries Ltd., Jaipur 2.The Nissan Fire Marine Insurance Company Limited, Japan Both are represented by Power of Attorney Agent Mr.A.Stewart as Director of M/s.Wilson & Co.Ltd., 739, Anna Salai, Madras – 600 002. 3.Mitsuit O.S.K.Lines Limited, Japan rep.by its Madras Agents M/s.International Clearing and Shipping Agency, 150, Linghi Chetty Street Madras – 600 001. .. Respondents Original Side Appeal is filed under Order XXXVI Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent against the Judgment and decree dated 2.11.1998 made in C.S.No.11 of 1990 on the file of this Court. For Appellants : Mr.R.Karthikeyan For Respondents : Mr.J.Sivanandaraj for RR.1 and 2 Mr.K.Bijai Sunder for R.3 https://hcservices.ecourts.gov.in/hcservices/ JUDGMENT R.BANUMATHI,J. Being aggrieved by the Judgment and Decree in C.S.No.11 of 1990 holding that Appellant – Madras Port Trust is liable to pay a sum of Rs.28,21,979/- and directing the Appellant to pay interest at the rate of 6% per annum from the date of suit till the date of realisation for the alleged damage caused to the consignment - Automatic Cycle Internal Grinder with extra toolings and spares, Madras Port Trust-2nd Defendant has preferred this Appeal. Since most of the facts are not in controversy, we are not elaborately referring to the pleadings as well as the evidence and we shall refer only to that part of the pleadings and the evidence to focus the points involved for decision in the Appeal. 2. The 1st Plaintiff is Public Limited Company having its Office at Jaipur and the 2nd Plaintiff is limited Insurance Company incorporated in Japan. A consignment consisting of two cases of Automatic Cycle Internal Grinder for Grinding Bore of Bearing Races with Extra Toolings and Spares was entrusted to the 1st Defendant – Mitsuit O.S.K.Lines Limited, Japan for safe carriage by sea. The consignment was sent in the vessel M.V. KARINA BONITA and the vessel arrived at Madras Port on 5.4.1989 and berthed on 6.4.1989. Vessel M.V. KARINA BONITA discharged two cases of Automatic Internal Grinder with spares on 9.4.1989. The Steamer Agent of 1st Defendant – M/s.International Clearing and Shipping Agency signed in the Import Tally sheet-Ex.D3. The consignment was in the custody of 2nd Defendant-Madras Port Trust as statutory agent. 3. Case of Plaintiffs is that at the time of taking delivery, the consignment was extensively damaged. Further case of Plaintiffs is that the 1st Plaintiff was informed by the 1st defendant / carrier that the said damages was due to hitting of wagons while shunting the consignment on 12.4.1989. Case of Plaintiffs is that the damage was due to the negligence/misconduct of the employees of the 2nd Defendant and the damage was surveyed. The damaged consignment was auctioned through auctioneer – Murray & Co., and after deducting salvage value of Rs.3,60,338.50ps, the loss comes to Rs.28,10,325/-. Adding other expenses, Plaintiffs claim total loss of Rs.28,21,979/-. According to Plaintiffs, 1st Defendant – carrier at Sea is legally bound to deliver to the 1st Plaintiff the consignment in good condition in which it was entrusted to it by the consignor at Japan and having failed to do so, the Sea carrier is liable to pay the loss. 4. It is the further case of Plaintiffs that the 2nd Defendant annotated the receipt of the consignment at the time of discharge from the vessel and trying to avoid the liability and the entire damage had occurred due to the negligence of the 2nd Defendant – Port Trust. The 1st Plaintiff is not in a position to pinpoint as to who would be liable for the above said damage and hence the suit has been filed against both the Defendants. The 2nd Plaintiff Insurer – a limited liability Company incorporated in Japan paid the insured value of the consignment and got subrogated to the rights of the 1st Plaintiff. To avoid any technical objection, both the Plaintiffs have joined and filed the suit. https://hcservices.ecourts.gov.in/hcservices/ 5. The 1st Defendant – Carrier at Sea resisted the suit inter alia contending as follows:- The cargo was carried by the vessel with due diligence and the ship arrived at the Port of Madras on 5.4.1989 and two cases were discharged from the vessel into the custody of the 2nd Defendant on 9.4.1989. At the time of discharge from the vessel, both the cases were in good order and condition. According to the 1st Defendant – Sea Carrier, even according to Tally Receipts issued by the 2nd Defendant, there was no damage to the contents of the two cases at the time of discharge from the vessel on 9.4.1989. As per Section 42 (7) of the Major Port Trusts Act, only the 2nd Defendant is liable for any loss or damages occasioned to the consignment after the discharge of the cargo from the vessel. Subsequent to the discharge of the cargo from the vessel and after the 2nd Defendant had taken charge of the same, one of the two cases was not removed to a Warehouse, but was shifted to the open road side of Jawahar Docks No.5 very close to the Railway track. During the first shift, on 12.4.1989, while the railway wagons carrying Cement were being shifted by the employees of the 2nd Defendant, it caused the wagon hit against the consignment resulting in extensive damage to case No.1. By letter dated 13.4.1989, local agents of the 1st Defendant brought it to the notice of the Traffic Manager of the Port Trust. According to the 1st Defendant, the alleged damage was caused only subsequent to the discharge of the cargo from the vessel and while the goods were in the custody of the 2nd Defendant and the plaintiffs' remedy, if any, can therefore be enforceable only against the 2nd Defendant and the suit against the 1st Defendant is misconceived. According to the 1st defendant, in any event, the 1st Defendant's principal place of business is in Japan and as the cargo was shifted from Port in Japan it is only the Japanese Carriage of Goods by Sea Act would govern the contract of carriage and under the provisions of the said Act, the maximum liability of the 1st Defendant cannot exceed Japanese ¥ 100,000 and the suit is liable to be dismissed as against the 1st Defendant. 6. The 2nd Defendant Port Trust resisted the suit contending that even at the time of discharge from the vessel S.S. KARINA BONITA on 9.4.1989, in the Import Tally Sheet, the consignment was annotated as "Planks Broken (PBKN)". The qualified receipt with annotation has been acknowledged and accepted by the 1st defendant without objection or demur and therefore having acknowledged receipt of the nature of the consignment, when it landed, the 1st Defendant is estopped from contending that the damage had occurred due to the negligence of the 2nd Defendant. 7. Case of 2nd Defendant-Port Trust is that the consignment already landed in a damaged condition as is evident from annotation in the Tally Sheet "PBKN". Further case of Port Trust is that Clearing Agent of the 1st Plaintiff applied for Port Trust's survey of the suit package only on 19.5.1989 after a lapse of more than one month and since the request for survey was made within time, Port Trust is not obliged to conduct the Survey in respect of goods ,which have been discharged in a damaged condition. The application for https://hcservices.ecourts.gov.in/hcservices/ survey was time barred under Section 43(2) of the Major Port Trusts Act, 1963. As there was heavy congestion of cargo already discharged, the suit consignment had to be stacked on the road side adjacent to the transit shed, where they are normally stacked when there is congestion. On 12.4.1989, during the course of railway wagon movement, the site of one of the wagons came into contact with already protruding broken planks of the suit package and thereby brushing its side planks. Case of Port Trust is that the impact of the wagon was not severe or direct. Case of Port Trust is that it has rendered service to the consignment in good faith and has taken all precautionary measures as is expected of a bailee. The survey report would show that the package of the suit consignment was insufficient for carriage by Sea and therefore, 2nd Defendant is not liable or answerable for the deficiencies or damages caused by insufficient packing under Regulation 32 of the Madras Port Trust General Regulations. M/s. South India Shipping Services (SISS) the Clearing Agent of the 1st Plaintiff filed Import Application No.31/251 dated 29.4.1989 but cleared the consignment only on 28.7.1989. According to the Port Trust, it was not a party to the alleged independent survey by the Plaintiffs and no notice was given to Port Trust on any such independent survey and such independent survey is not binding on the 2nd Defendant. According to the Port Trust, since the consignment discharged was PBKN and the extent of damage to the materials inside the package at the time of landing was not known, the 2nd Defendant cannot be made liable to the extent of alleged damage as provided under Regulation 31 of Madras Port Trust General Regulations. 8. On the above pleadings, before the learned single Judge, the following issues were framed: "1. Is the suit as framed not maintainable against the first Defendant? 2. What was the condition, quality and quantity of the cargo that was actually loaded on board the ship M.V. KARINA BONITA at the Port of shipment? 3. Did not the first defendant vessel discharge the two cases in good order and condition? 4. Did not the alleged damage to the two cases occur due to the negligence of and while in the custody of the second Defendant? 5. Did the plaintiffs suffer loss to the extent of Rs.28,21,979/- and if so are the plaintiffs entitled to claim the amount from this Defendant? 6. Is not the liability of the first Defendant restricted to ¥ 1,00,000 per package? 7. Whether the Plaintiff is entitled to a decree, if so, at what amount? - and - https://hcservices.ecourts.gov.in/hcservices/ 8. To what reliefs, if any, are the parties entitled?" 9. Before the learned single Judge, onbehalf of the plaintiffs, the Surveyor in M/s.Wilson & Company was examined as P.W.1 and Exs.P.1 to P.40 were marked. Onbehalf of the defendants, Operating Assistant in 1st Defendant's Steamer Agent was examined as D.W.1. The photographer, who took Ex.D.1 series of photographs was examined as D.W.2, an Assistant Traffic Manager of Madras Port Trust was examined as D.W.3 and Exs.D.1 to D.5 were marked. 10. Upon consideration of the oral and documentary evidence, referring to Ex.D.3 – Import Tally Sheet and observing that as against the Case weighing 4800 kgs no mark or annotation of "PBKN" was made, the learned single Judge held that the damages to the machinery – consignment has been caused only after landing and that the 1st Defendant – Sea Carrier cannot be held responsible for the damage caused to the consignment and accordingly answered Issue Nos.3 and 4. In so far as the 3rd Issue, the learned single Judge held that the 1st Defendant discharged the two cases in good order and condition and on Issue No.4, it was held that the alleged damage to the two cases occurred due to the negligence and while in custody of the 2nd Defendant. The learned single Judge rejected the 2nd Defendant- Port Trust defence plea that the damage was caused even before landing. Pointing out that there was serious lapse on the part of the employees of the 2nd Defendant in keeping the consignment in such a way as to get dashed against by the Railway Wagon movement, the learned single Judge observed that the legal aspects regarding Bailor and Bailee relationship pales into insignificance. Based upon Ex.P.15 – claim bill and other expenses, the learned single Judge held that after deducting salvage amount, the 2nd Defendant is liable to pay Rs.28,21,979/- and accordingly answered Issue No.5 and decreed the suit as stated in paragraph No.1 of this judgment. 11. Challenging the impugned judgment, the learned counsel for the Appellant Port Trust Mr.Karthikeyan interalia raised the following submissions: ●In documents Exs.P.10, P.11 and P.12 and Exs.D.3 and D.4, both the Cases were annotated as "planks broken" and those documentary evidence were not properly appreciated by the learned single Judge. ●The learned single Judge erred in holding that the annotation "PBKN" relates only to the Case weighing 2320 Kgs and not the Case weighing 4800 Kgs. In Ex.P.1 – Survey Report and Ex.D.3 – Tally Sheet it is clearly stated that the case containing 4800 Kgs was annotated as "Planks Broken" and the learned single Judge ought to have held that the inner machine might have been damaged even before landing in the Port. ●As per the auctioneer's opinion, the machinery is sophisticated and there was no precautionary note on https://hcservices.ecourts.gov.in/hcservices/ the consignment "to handle with care" and in the absence of any such precautionary note, Port Trust cannot be held liable. The Steamer Agent is a Bailor and Port Trust is the Bailee and in view of the annotation, "PBKN" recorded, the 1st Defendant is liable or in any event, there is a joint liability. ●Fixing the quantum of damages at Rs.28,29,979/- is without any basis. 12. Mr.Bijai Sunder, learned counsel for 3rd Respondent-vessel owner contended that the Cargo was carried by Vessel M.V. KARINA BONITA with due diligence and damage was caused subsequent to the discharge of the Cargo at Madras Port. Learned counsel would contend that the responsibility of the vessel owner is "tackle to tackle" i.e. "Port to Port" and once the goods are landed in Madras Port, no liability could be fastened to the ship owner. Learned counsel would further contend that in any event Japanese Carriage of Goods by Sea Act would be applicable and that the liability of 3rd Respondent-ship owner cannot exceed Japanese Yen 100,000. 13. Learned counsel for Respondents 1 and 2/Plaintiffs contended that as per Ex.D3-Import Tally Sheet, Cases containing the Automatic Cycle Internal Grinder was not annotated. Learned counsel for Respondents 1 and 2 mainly contended that the consignment was discharged in good condition and the damage caused to the consignment was not due to any defective packing but only due to the negligence of the employees of Port Trust. It was further contended that as per Sec.43 of Madras Port TrustS Act, the responsibility of the Port Trust is like that of Bailee under Sections 151,152 and 161 of Indian Contract Act and Port Trust is to exercise due care and prudence in taking care of the goods. But contrary to the responsibility cast upon the Port Trust, the Cargo was moved to the open yard and kept near the rail track and railway wagon dashed against the Cases and the Cargo was extensively damaged and upon analysis of oral and documentary evidence, learned single Judge has rightly held that Madras Port Trust-2nd Defendant is liable for the damage and directed payment of Rs.28,21,979/- with interest. 14. Upon analysis of the material on record, consideration of the impugned Judgment and the rival contentions, the following points arise for determination: "1. Whether as contended by the 1st defendant, the consignment was discharged in good condition or whether as contended by the appellant – Port Trust the consignment containing 4800 Kgs was discharged in "Planks Broken" (PBKN) condition? 2. Whether the damage to the goods occurred due to the negligence while in the custody of 2nd defendant? 3. Whether the learned single Judge was right in holding the 2nd defendant Port Trust exclusively liable to https://hcservices.ecourts.gov.in/hcservices/ pay damages of Rs.28,21,979/- along with interest? 4. Whether the Vessel owner (1st Defendant) and Madras Port Trust (2nd Defendant) are responsible for the damages caused to the consignment? If so, how the liability is to be apportioned amongst the Defendants 1 and 2? 5. To what relief, the parties are entitled to? 15. Point No.1:- The facts are not in dispute. Consignment of two Cases of Automatic Cycle Internal Grinder [One Case weighing 4800 Kgs. and another Case weighing 960 Kgs. with extra toolings and spares] were entrusted to the 1st Defendant for carriage by sea by 1st Defendant's Vessel M.V.KARINA BONITA. 1st Defendant's Vessel M.V. KARINA BONITA arrived at Madras Port on 05.04.1989 and discharged the consignment on 09.04.1989. Core question is whether 1st Defendant discharged two Cases in good condition or with annotation "PBKN". 16. Case of 1st Defendant is that Cargo was carried by the Vessel with due diligence and ship M.V. KARINA BONITA arrived at Madras Port on 05.04.1989 without disturbing storage at inter mediary Port. In his evidence, DW1-Ranganathan, employee of Steamer agent – International Clearing and Shipping Agency [ICSA] has stated that at the time of discharge from the Vessel, both the Cases were in good order and condition. Case of 1st Defendant is that even according to the Tally Sheet issued by the Port, there was no damage to the contents of two Cases at the time of discharge from the Vessel on 09.04.1989. Per contra, case of Madras Port Trust is that Case No.1 of the suit consignment which was manifested to contain Automatic Cycle Internal Grinder weighing 4800 Kgs was discharged from the above Vessel in "Planks Broken" condition on 09.04.1989. 17. Accepting the contention of 1st Defendant, learned single Judge held that the consignment was discharged in good condition and that the damage to the main machinery had been caused only after landing. Learned single Judge held:- (i) As per Ex.D3 – Import Tally Sheet, Case weighing 2320 Kgs had "Planks Broken" [PBKN] whereas against the Case weighing 4800 Kgs., no such remarks or annotation is made; (ii) on 09.04.1989 Vessel discharged the consignment in good condition and that the damage to the main machinery had been caused only after landing and 1st Defendant cannot be held responsible for the damage caused to the consignment by the Port. 18. In our considered view, learned single Judge was not right in holding that Case weighing 4800 Kgs. was not annotated as "PBKN". Finding of the learned single Judge that vessel discharged the consignment in good condition overlooks the clinching evidence showing that Case weighing 4800 kgs. was also annotated "PBKN". As per Sec.42(2) of Major Port Trusts Act, 1963, if so requested by the owner, the Board may take charge of the goods for the purpose of performing the service or services and shall give a receipt in such form as the Board may specify. https://hcservices.ecourts.gov.in/hcservices/ 19. As per the then Manual of Instructions of Madras Port Trust 4.9 - " Tally sheet is the document used for accounting of packages. Separate forms have been fixed (1) for tallying of Import Cargo (2) for tally of Cargo at the time of Shipment and (3) for tallying of Cargo other than at the time of landing and shipment. The Tally Sheet in the case of Import Cargo taken charge of by the Trust and of export Cargo taken charge of by the Trust for shipment are in the forms prescribed by the Government under Section 42(2) of the Major Port Trust Act, 1963." 20. As per then Manual of Instructions of Madras Port Trust 4.17 - "Each Tally sheet which is prepared in triplicate shall be signed by the port Trust Tally Clerk and the Steamer Agent's representative and duplicate copy shall be handed over to the latter on the spot. This constitutes the receipt under Section 42 (2) of the Major Port Trust Act, 1963." 21. Manual of Madras Port Trust Instructions 4.18 deals with annotation of packages which reads as under:- "4.18. The Trust is not liable for any package broken or otherwise damaged before landing. It is, therefore, vital to note down the actual condition of the package at the time of landing. To absolve the Trust from any liability for any broken or damaged packages, the Tally Clerks shall carefully note the actual conditions of the package and make an annotation in the following terms against the tally entry. Only the prescribed abbreviations as noted below shall be used uniformly:- Broken .. B Repaired .. R Leaky .. L Empty .. E Band Cut .. Bc Stained .. St Torn .. Tn Wet .. W 22. Ex.D3 is the Import Tally Sheet issued under Sec.42 (2) for discharge of the Cargo from Vessel M.V. KARINA BONITA on 09.04.1989. In Ex.D3, the entries of the suit consignment intended for the 1st Plaintiff-National Engineering Industries Limited is stated as under:- https://hcservices.ecourts.gov.in/hcservices/ Sling No. Time of Descri ption of packag es Marks and Number s Partic ualrs of Tally Total Weight T.Cwt. Qr Lbs or Kilos Remar ks Sling Landed Sling Cleare d Cargo Cleare d 36 1817 70 23 CASE NBC/MA DRAS #1 1 2320 Kg PBKN 37 1830 35 40 --do-- ---do- #1 1 4800 Kgs ~ Ex.D3-Import Tally Sheet has been signed by the Agent of the Ship/Representative of the Steamer Agent of Vessel and Port Trust Representative. Onbehalf of 2nd Defendant-Madras Port Trust, the Assistant Traffic Manager Port Trust was examined as DW3. In his evidence, DW3 has stated that " .... suit consignment was in a damaged condition, that is, 'planks broken condition". DW3 has further stated that "annotation therein is stated in Ex.D3-Import Tally Sheet and Ex.D3 is the receipt given under Sec. 42 (2) of Major Port Trust Act. Ex.D3 is signed by Steamer Agent as well as Port Trust representative". DW3 has further stated that annotation in Ex.D3 was acknowledged by the Steamer Agent. 23. Plaintiffs and 1st Defendant dispute the Case weighing 4800 Kgs. being annotated as "PBKN". Contention of Plaintiffs is that the remarks column stated as " ~ " ...... means 'NIL' and that Case weighing 4800 Kgs. has not been annotated. Learned counsel for Plaintiffs mainly relies upon the answers elicited from DW3 during the cross-examination. During his cross-examination, DW3 has stated that " ... one Case was annotated as 'PBKN' and in respect of another Case there is no annotation." Laying emphasis upon the evidence of DW3 and the mark " ~ " made in Ex.D3-Tally Sheet, learned counsel for Plaintiffs contended that the statutory document [Ex.D3] would prevail upon any other documents and much weight has to be attached to the evidence of DW3 who has stated that "one Case was annotated as 'PBKN' and in respect of another Case there is no annotation". We are unable to accept the above contention. Answers elicited from DW3 during his cross-examination has to be read as a whole and not in isolation. In his chief-examination, DW3 has clearly stated that suit consignment was discharged in 'Planks Broken condition'. In his cross-examination, DW3 has further clarified that " ..... according to the tally sheet both the packages have been annotated as 'PBKN' ". Evidence of DW3 that only one Case was annotated as "PBKN" and in respect of another Case, there was no annotation demonstrably does not reflect the pleadings and other evidence. 24. Admitting the annotation of the consignment, in Paragraph- 4 of the Plaint, Plaintiffs averred that "Second defendant annotated the receipt of the consignment at the time of discharge from the vessel and tries to avoid liability". In his evidence, DW1- https://hcservices.ecourts.gov.in/hcservices/ Ranganathan, employee of Steamer Agent [ICSA] has also stated that " ... In these two Cases it is PBKN. It means Planks Broken ". 25. South India Shipping Services [SISS] is the Clearing Agent of the Plaintiffs. Ex.P6 is the letter addressed by SISS to Madras Port Trust. In Ex.P6, SISS has clearly stated that " ... the package was annotated as PBKN ...". Ex.P10 [10.06.1989] is the Certificate issued by Madras Port Trust to SISS indicating that Case No.1 weighing 4800 Kgs.