Tuesday, February 17, 2015

How to prove ocean transit delay ? Recent Judgment on the liability of the carrier for ocean transit delay rendered by the Subordinate Judge’s Court, Kochi.


(V.M. Syam Kumar, Advocate, Kochi)
When can a shipment be termed as ‘time bound delivery shipment’? If no specific time period has been stipulated in the Bill of lading for delivery, is the carrier bound to deliver within a ‘reasonable’ time period? What would qualify as a reasonable time period and what should be the nature of the evidence to be tendered to substantiate the time period suggested as a “reasonable” one? Are the customary practises in the Liner trade relevant? Will the exemption clause in the bill of lading protect a carrier from the duty of delivering within the reasonable time period? When can such an exemption clause be invoked? In FCL/FCL cargo covered by a bill of lading with no delivery time requirement, can the carrier rely on the FCL clause to contend that the nature of the cargo being unknown to them, the time period and delay if any cannot be carriers concern?
Some of these questions came up for consideration before the Learned Subordinate Judge’s Court Kochi.  The judgment rendered thus assumes relevance.
The issue concerned a contract for supply of 100 metric tons CDJKL raw cashew crop from Mombasa to Kochi. Plaintiff alleged that the 1st defendant supplier with whom the contract was entered into had supplied inferior goods than what was contracted for and hence they are liable to the plaintiff in damages. The 1st defendant supplier resisted the suit on the ground that damage if any had occurred due to ocean transit delay on the part of the 5th defendant carrier.
The Court inter alia considered the liability of the carrier for ocean transit delay and the proof required for fixing liability on a carrier for such delay if any.   
After a detailed narration of the facts borne out during trial, the Learned Judge answers the question regarding liability of the carrier as follows:
“The question now to be considered is the reason for the physical damage to the cargo and the person who is responsible to make good of the loss sustained to the plaintiff. The contention of the plaintiff is that the cargo was damaged due to moisture condensation and there was fungus germination and the nuts were sprouted. It is also stated by PW1 that bad odour was emanating from the cargo. The plaintiff has no case that water has entered into the container during transit. There is no allegation that the container was damaged during transit and the damage to the cargo was caused due to any such reason. In Ext.A16 it is stated by the 3rd defendant that the cargo was damaged due to excess moisture/condensation as a result of ocean transit delay of 42 days. It is come out in evidence that if the cashew nuts are properly dried there is no chance of any condensation due to moisture and thereby causing damage even if it is kept in the container for a period of hundred days. In this case it is admitted that the cargo was delivered within 40 days of shipment. Though it is stated that only 15-20 days will be taken for transportation of the containers from Mombasa port to Cochin port, it is admitted by the plaintiff's counsel that the transportation was not a time bound one. There is no evidence to show that the carrier had undertaken to deliver the goods within a particular period. Shipment was on FCL/FCL basis and hence the carrier may not be aware of the quality of the articles stowed in the container, apart from the declaration made by the shipper. If the cargo is properly dried and sufficient protection is taken to absorb excess moisture, there is no chance of any condensation. In this case it is stated that the first defendant had kept papers and moisture absorbing chemicals to avoid condensation. But the evidence on record shows that the cargo was damaged due to condensation. It is admitted that the damage was caused as the cargo was wet. Since none of the parties have got a contention that water entered into the container during transit, it can be seen that the damage was due to excess moisture. In Ext.A6 it is reported that the moisture content was 8%. There is no material to suggest the normal or permitted moisture content limit in dried cashew. Anyhow, it is the duty of the supplier to take all possible steps to supply cargo of the assured quality and quantity. As stated above, in Ext.A2 it is clearly stated that the buyer has the right to re-inspect the quality and weight of the cargo. So, the primary responsibility to supply the cargo of the desired quality is on the seller. As stated above, if the seller had taken sufficient precautions, there was no chance of any damage due to delay in transit. As the carrier was not aware of the quality of the cargo inside the container and there was no stipulation to deliver the cargo within a particular period, it is not possible to find that the 5th defendant is liable for the loss sustained to the plaintiff, even if it is found that there was some delay in delivering the cargo.”

The Judgement was delivered in favour of the plaintiff fixing liability on the seller. The Learned Judge dismissed the suit as against the carrier by holding as follows:
“During my discussion in the above paragraphs I have already found that the damage was caused due to excess moisture/condensation. It is the duty of the seller to supply good quality materials to the buyer. The buyer has got every right to get the goods of the assured quality and quantity. As perExt.A2 contract buyer can reinspected cargo and the same suggest that the buyer has the right to accept or reject the cargo. It is admitted that as per the terms of the contract the buyer has paid 5% of the value of the articles in advance and remaining 95% was paid on 1.3.2005, on arrival of the cargo at Cochin port. The first defendant is not disputing the payments made by the plaintiff. Once the goods is found to of inferior quality or defective, the seller is liable to make good of the loss sustained to the buyer. Though the first defendant has taken a contention that the 5th defendant is answerable to the plaint claim, in my discussion in the foregoing paragraphs I have already found that the 5th defendant is not liable to make good of the loss sustained to the plaintiff. The claim in the suit is not covered by the insurance policy also. So the first defendant is liable to make good of the loss sustained to the plaintiff.”
The judgment rendered by Judge P.K. Mohandas assumes relevance in so far as the nature of evidence required to fix liability on the ocean carrier for transit delay has been a grey area. The Judgement rendered in this case inter alia sheds much needed light on the legal requirements in the said respect.

(Judgment  can be accessed from the links above)