M/s Hanjin Shipping Co. Ltd (Plaintiff) VS M/s Arif Overseas Traders (Defendant)

MUNIB AHMED KHAN, J

IN

THE HIGH COURT OF SINDH AT KARACHI

Date of hearing 1 9. 1 0. 2 0 0 6.

Date of Judgment . 1 0. 2 0 0 6.

Plaintiff: M/s Hanjin Shipping Co. Ltd through Mr. Syed Fazal-ur-Rehman, Advocate.

Defendant: M/s Arif Overseas Traders through Mr. Agha Faqir Mohammad , Advocate.

J U D G M E

N T

MUNIB AHMED KHAN, J.- This suit has been filed for recovery of amount against the defendant. The gist of the dispute, as encompassed in the pleadings and evidence, is that the Plaintiff, M/s Hanjin Shipping Company Limited, transported consignments of fresh fruits of the defendant to different destination through its vessel, as per directions of the defendant. They also provided necessary facility including providing of Reefer box and Gen. set as they were required for export of fresh fruits. The Plaintiff has asserted that it has been dealing with the defendant for about three years and as per Understanding, the defendant used to surrender the original bill of lading and thereafter the Plaintiff used to issue release order to its agents at the port of destination for release of consignments to the named consignee while no amount of freight charges was paid and was to be paid after realization of the amount from the consignee of goods. According to the Plaintiff, this practice remained for some times but in 19 bills of lading payment was not made despite claims and legal notices.

On the other hand the defendant firstly has challenged the suit on the ground of mis-joinder, as M/s Inservey Pakistan (Pvt) Ltd, the local shipping agent of the Plaintiff, has not been joined as Plaintiff. Secondly, the defendant has denied the claim on the ground that all the payments were made at the time of surrendering the bill of lading with the Plaintiff and since the shipment involved fresh fruits, which are perishable items, therefore, to save the time, it was agreed that defendant will surrender original bill of lading with the Plaintiff at Karachi so they should immediately issue letter to their agent at the port of destination for release of goods to the consignee without any delay. Defendant has also pointed out copies of bill of lading where it has been mentioned “freight paid as arranged”. These copies of bill of lading have been exhibited. From the pleading of the parties, following issues were framed:

1.Whether the suit is bad for non-joinder of the local agent/forwarding agent M/s Inservey Pakistan (Pvt) Limited?

2.Whether the consignment stated at para-5 S.No.(1) is not shipped by the Defendant on the vessel of the plaintiff?

3.Whether the Defendant has pre-paid the freight to Plaintiff through M/s Inservey Pakistan (Pvt) Ltd, the local agent of Defendant and surrendered the bill of lading to the local agents for delivery of the consignment to the consignees concern?

4.Whether the Plaintiff is liable to claim any other alleged charges from the Defendant as claimed in the suit?

5.Whether the claim of the Plaintiff is time barred?

6.Whether Plaintiff issued B/L Surrender Certificates for the above shipments without actual payments of freights and other charges from Defendant in good faith?

7.Whether Defendant used to collect payments from his consignees abroad by surrendering original B/L at Plaintiff’s office and thereafter, was in habit of making payment of the freight and other allied charges to plaintiff as routine practice for about 2/3 years?

Whether defendant has misused business credit facility offered to him by Plaintiff malafidely by refusing to make payment of Rs. 4191590/-?

What should the decree be?

Evidence was recorded through Commission. The Plaintiff examined Dominic Fernandes, the Senior Manager of M/s Inservey Pakistan (Pvt) Ltd, who has also signed the Plaint. He has produced 47 exhibits which includes surrender notices, correspondence between the parties, authority letter to file the suit as well as photocopies of bill of lading. In reply, the defendant has examined its proprietor Mohammad Sadiq who has produced Exs D-2 to D-20. The said Exhibits have also been produced by the Plaintiff except Ex.D-2, which is letter of Plaintiff dated 19th December 2000 to the defendant.

After going through the evidence, the main contention, which is coming out, is that the Plaintiff are claiming their freight charges as per detail given in para 5 of the Plaint, but the defendant are denying on the ground that one of the shipment mentioned at serial No.1 in para No.5, was not sent by them, while for the rest of the shipments, payment was made and that they were paying amount through cash / cheque. To support the contention, the learned counsel for the Plaintiff has argued that it would have been very simple if defendant produces receipts for payment or at least cheques or pay order in respect to any of the shipment, mentioned in para No.5 of the plaint but they have failed. He further submits that the defendant’s objection to the non-maintainability of the suit has no force as it was not specifically raised in the plaint and the only ground that M/s Inservey Pakistan (Pvt) Ltd has not been made Plaintiff is of no legal importance as the suit has been filed by the Shipping Company through M/s Inservey Pakistan (Pvt) Ltd who is their agent and is also authorized to file the suit and according to the defendant itself all the dealings in respect to the shipment and payment was made through M/s Inservey Pakistan (Pvt) Ltd. The defendant, all along has accepted the said local company as agent of the principal and that the authority letter has been filed which has been exhibited as well in the shape of resolution as Ex.P-28 and that a statement was also filed on 30.06.2006, whereby the shipping company has further authorized M/s Inservey Pakistan (Pvt) Ltd to continue the suit. He has further submitted that in terms of section 196 of Contract Act, the Plaintiff is very much entitled to sue through its agent and authorized person while there is no dispute among them rather they are supporting each other. He has further submitted that issue framed in the suit are very clear and parties have led their evidence accordingly. He has submitted that Ex.P-2 to P-20 are surrender notices of original bill of lading and since no payment was made, therefore, even the copy of original bill of lading is not available with the defendant and all copies of bills of lading which have been produced as Exs. P-29 to P-47 are not the copies of original bill of lading but are photocopies of the copies which copies were not negotiable while the original bill of lading is negotiable document. Learned counsel has argued that although it is mentioned on these copies of bill of lading “freight paid as arranged” but actually no freight charges were paid but these words were only mentioned, as it was the requirement of State Bank of Pakistan that without payment of freight charges no bill of lading to be issued, therefore, to facilitate the defendant in terms of Understanding these copies were issued while the original bill of lading remained with the Plaintiff and a notice was sent to shipping agent at the port of destination to clear the goods to the consignee and that the defendant was required to pay freight charges after realizing of money from the consignee, but it failed to pay. The learned counsel, to counter the argument of defendant’s counsel, in respect to maintainability of the suit, by the Plaintiff through its authorized and Shipping Agent, has relied upon 1988 CLC 1381 and 2004 CLC 782.

The learned counsel for the defendant has challenged the suit as not maintainable on the ground that M/s Inservey Pakistan (Pvt) Ltd has no authority to file this suit as there is no Board Resolution of the Plaintiff to authorize M/s Inservey Pakistan (Pvt) Ltd to file the suit. He has relied upon PLD 1971 SC 550. On merit, the learned counsel has submitted that except one consignment mentioned at serial No. 1 para 5 of the plaint, all consignments were sent by the defendant and as mentioned in the Written Statement, the Plaintiff is not entitled to any money as all amounts have been paid in cash or cheque/pay order, while there is claim of the defendant against the Plaintiff, as consignment of fresh fruits was not provided proper back support, which was required for their freshness and on that account, the defendant had suffered losses and for the same it has filed a suit. He has pointed out Annexures B-3 to B-20 and has stated that all are copies of bill of lading and it is specifically mentioned in all these documents that “freight paid as arranged”. He has further argued that it is mandatory, as per directions of the State Bank of Pakistan that without realizing of the freight charges in Pakistan, no export is to be made, therefore, freight amount was paid by the defendant.

On the point of maintainability of the suit, in the absence of any Board Resolution, the learned counsel has relied upon unreported judgment in suit No.312 of 1998, Danakos Shipping Company v. KPT and others and PLD 1977 SC 55. He has further submitted that maintainability of the suit is question of law, therefore, irrespective of the facts whether it has been raised in the Written Statement or not, can be taken at any time and in this respect, he has relied upon the case of Nisar Mohammad v. Abdullah Khan, PLD 1965 SC 690 as well as Caltex Oil Pakistan v. Collector, Central Excise and Sales Tax, PTCL 2004 CL 494.

After taking into consideration the contentions of parties in their pleadings and their learned counsel, the main issue which is coming out of this suit for this Court, is to see whether the freight charges have been paid by the defendant to the Plaintiff or not. Secondly, whether the Plaintiff are authorized to file the suit. Taking second point first, it is observed that suit has been filed by M/s Hanjin Shipping Company Limited through its local authorized agent M/s Inservey Pakistan (Pvt) Ltd. During the course of proceedings, a resolution dated 07.02.2003 has also been exhibited as Ex.P-28 while another Authority Letter dated 17th March 2006 has been filed through a Statement. This letter is in the shape of Certificate, which admits that M/s Hanjin Shipping Company Limited has authorized M/s Inservey Pakistan (Pvt) to act on their behalf in legal matters. It is also to be seen that through these two letters/ resolution, it is being established that M/s Hanjin Shipping Company Limited authorized M/s Inservey Pakistan (Pvt) and that the witness and signatory to the plaint has been authorized by M/s Inservey Pakistan (Pvt) Ltd to present the case. It is also to be noted that the case remained pending for more than three years and all along, M/s Hanjin Shipping Company Limited has never challenged the authority of M/s Inservey Pakistan (Pvt) to file suit on its behalf rather it has provided support, and all the documents relevant to the case have come from the possession of the said Company. The above association shows that the suit has been filed with permission of shipping company by M/s Inservey Pakistan (Pvt) Ltd. Section 196 of the Contract Act also provide rectification to the acts of M/s Inservey Pakistan (Pvt) Ltd, as even at last such authority letter has been filed. On the basis of above finding as well as keeping in view that defendant did not raise any objection to the filing of the suit through M/s Inservey Pakistan (Pvt) Ltd as well as further keeping in view that the defendant itself wanted to implead M/s Inservey Pakistan (Pvt) Ltd as Plaintiff, such being reflected through Issue No.1, as according to Defendant, all dealings between the Plaintiff and defendant took place through M/s Inservey Pakistan (Pvt) Ltd. Had the defendant taken any objection in that respect at the earlier stage, the Plaintiff might have countered the said objection by producing a witness from M/s Hanjin Shipping Company Limited or adopting other alternate but since objection in that respect was never raised through Written statement, therefore, the material available on record is sufficient to prove that the suit is maintainable, and since it has been filed through M/s Inservey Pakistan (Pvt) Ltd, therefore, it is not necessary that M/s Inservey Pakistan (Pvt) Ltd be impleaded as a party to suit nor its presence in its own capacity is required for adjudication of suit. The authorities relied upon by the Defendant on maintainability are not attracted in the circumstances of the case.

The next point is in respect to the payment of freight charges for the goods shipped through Plaintiff. That point is being covered under issues Nos. 2 to 8 while Issue No.1 in respect to maintainability or non-joinder etc has been answered above. To answer the point of non payment of freight charges, issues Nos. 2 to 8 are taken seriatim as under:

ISSUE NO. 2:

The Plaintiff has mentioned in para 5 of the Plaint that the bill of lading No.HJ HCKHII- 81242806 was booked by the defendant and in support thereof it has given the number of Form “E” and has also filed original bill of lading, surrender notice as Ex. P/2 as well as photocopy of copy of bill of lading as Ex.29. These documents carry place of receipt of the goods, vessel number, port of discharge and country of origin as well as the name of exporter as defendant, therefore, in the absence of any rebuttal in the shape of documents from any authority controlling export for calling of any witness in that respect, it is observed that the said consignment was shipped by the defendant on the vessel of the Plaintiff.

ISSUES NOS. 3, 6, 7 AND 8:

These issues are taken together as they are relevant and are on the point that whether payment was made by the Plaintiff or credit facility was misused.

The Plaintiff has claimed that no payment has been made while the defendant has asserted that in the past, it has made payments through cash or cheque and receipts were issued by the Plaintiff but the defendant has failed to file any receipt or even single copy of cheque through which the it can be proved that payment has been made although it has admitted that all the consignments, except one, were transported by the Plaintiff. The defendant’s plea that payment was made as mentioned in the photocopies of bill of lading has been explained by the Plaintiff as firstly they are photocopies of the duplicate copies, which were never negotiable while the original bill of lading were never handed over to the defendant as due to Understanding they were kept by the Plaintiff under surrender notices and release letter was issued by them to their agent at the port of destination for release of the goods. The defendant was to make payment after realizing of the money from the consignee. It has further been explained by the learned counsel for Plaintiff that since no payment was made, therefore, no amount has been mentioned in the bill of lading and this was done to fulfill the requirement of State Bank of Pakistan as the bill of lading could not be negotiated nor bill of surrender can be accepted until payment is made locally. The practice between the parties regarding acceptance of bill of surrender without payment of freight charges may be contrary to the State Bank of Pakistan’s rules and regulation and subject to action in respect thereto but the Defendant cannot be allowed to take benefits from the short comings of the plaintiff and has to stand on its own footings. Here, in the issue of payment or non payment, it is material that not mentioning of any amount in it as well as non-production of any proof of payment through cheque or receipt in respect to all or any of the above consignment, it can be presumed that there was a credit facility from the Plaintiff to the defendant in terms of their Understanding and payment was to be made by the Defendant after realization of money from the consignee, which payment has not been proved by the defendant. As a rule of evidence it is a duty of a party to produce evidence and establish a fact which it wants that court should believe, this aspect is missing from the case. The defendant has also failed to produce even a single copy of original bill of lading which are normally negotiable, to show that it came into possession of such bill of lading at any time while the photocopies of the copies of bill of lading were handed over by the Plaintiff to the defendant only for record as these were not negotiable. In the circumstances, the out come of the above discussion is that the Defendant has not paid the freight charges and the Plaintiff is entitled to a sum of Rs.41,91,590/-, as has been specially suggested in a issue, proposed by the party and taken as Issue No.8, and not to the claim as raised in the suit.

ISSUE NO. 4:

The answer of Issue No.4 is also reflected in the above discussion and since the issue proposed by the Plaintiff itself and accepted by the Court toward its entitlement to Rs.41,91,590/-, therefore, it is held that the Plaintiff is entitled to an amount of Rs.41,91,590/- on which evidence was led and not to any other amount.

ISSUE NO. 5:

Parties have not led any evidence on the issue of limitation, therefore, this issue is left uncontested.

In the circumstances, keeping in view the findings on the above issues, the suit of the Plaintiff is decreed to the extent of Rs.41,91,590/- with mark-up at the rate of 10% per annum from the date of filing of the suit till realization of the amount. The cost of the suit is also to be born by the defendant.

J U

D G E

SAMIE .