LexELLERMAN & BUCKNALL STEAMSHIP CO. LID versus SHA MISRIMAL BHERAJEE
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
92
ELLERMAN & BUCKNALL STEAMSHIP CO. LID.
A
v.
SHA MISRIMAL BllERAJEE
March 29, 1966
IK. SunnA RAO A1'D V. RAMASWAMI, JJ.J
Mercantile Law-Deceit-Shipowner had knowledge matenals
ordered to be supplied in new drums-giving 'clean bill of lading'-
though packing in old drum-taking indemnit11 bond-whether liable
for deceit for loss caused to buyer-"Letters of Credit", "bil! of
lading", "clean bi!l of lading", considered.
B
The respondent entered into two contracts with the B Company
C
(sellers) of New York to purchase certain chemicals and in pursu-
ance of the contracLo; placed three indents for the material in Decem-
ber 1950 and January 1951. The indents specified that the materials
were to be packed in new fibre drums.
The respondent thereafter opened and
confirmed
irrevocable
letters of credit to be negotiated by his bankers' agents in New York.
These agents were authorised to make payment to the sellers
against "clean on board" bills of lading.
When the sellers shipped the goods by one of the appellant's ves-
sels. the Mate's receipt given to the sellers on the arrival of the goods
at the wharf described them as bemg packed in re-used drums. The
seilers then approached the appe!knt with a request to grant them
a clean bill of lading as <1gainst the reference in the Mate's receipt
to re-used drums. Upon the sellers furnishing the appellant with an
indemnity bond against any claims etc., the appcilant issued them
a clean bzll of lading which described the drums simpl)· as drums.
The sellers then negotiated the bills of lading against the letters
of c1·edit and obtained payment of the contract price. When the ship-
ment arrived in India it was discovered that the drums contained
on!y coal dust and not the chemicals ordered.
The respondent took appropriate proceedings aAainst the sellers
in the American Courts and rerovcre<l part of his loss. H(' then insti-
tuted the present suit against the bank and the appellant. The Trial
Court dismissed the claim against the appellant but decreed the suit
in part against the bank. Hov .. cver, the IIigh Court, on appeal, held
that the appellant, with the knowledge that the bills of
lading
\l,:ould be negotiated, gave at the request of the seller, clean bills
of lading though only unclean bills of lading should have been given.
It therefore held the ship-owners responsible for the loss caused to
the respondents and allowed a oO!Xlrate appeal filed by the bank.
On appeal to this Court it ''""' «or.tended on behalf of
the
rppcl1ants that \vhilc rcspondf'nt had based his cause of action
on a breach of contract, the High Court had given relief founded 0n
deceit. that under common law or contract the appellant had no dutv
or obligation to make a statement in !ht.· bills of lading that the
drums \\·ere 0ld ones; and that the bills of lading were c}{'an onl'S,
D
F
F
G
for the oldnes.c; or ne\vncss of drums hGd no real impart on the con-
tents thereof. as both \\•ere equally
suitable
containers
for
the
H
materials to be supplied.
•
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'
_,,._
,
A.
B
ELLERMAN & BuCKNALL W'D. v. MISRIMAL (Subba Rao, J.)
93
HELD: (i) There was no merit in the contentiOn that the High
Court gave relief founded on deceit whereas the respondents cause
of action was based on a breach of contract. It was clear from the
pleadings that a claim on the basis of. misrepre~entation was made
in the plaint, denied by the appellant m the written statement and
argued in the Courts below. [96 G-H]
(ii) The High Court was rfght in holding that the appellant was
liable in damages for the Joss incurred by the respondent.
It was one of the terms of the contract between the seller and
the buyer that the goods should be placed in new fibre drums. The
standard of good order and condition of the packages was agreed
upon by the parties to the contract. The shipowners knew that con-
dition as disclosed by the Mate's receipt, If the drums had been men-
tioned as old in the bill of lading, that bill would not have been a
C
clean bill. Though the apparent condition of the drums was old, the
shipowners made an assertion that they were not old drums, i.e.,
they gave a clean bill. This representation was obviously intended, in
collusion with the sellers, to enable them to operate upon the credit
with the Bank. This collusion was also apparent ;from the indemnity
bond they took from the sellers to guard themselves against the
consequences of the said reprExcerpt shown. Read the full judgment & AI analysis in Lexace.