SHAW WALLACE & CO. LTD. (NOW UNITED SPIRITS LTD.) versus NEPAL FOOD CORPORATION & OTHERS

Citation: [2011] 15 S.C.R. 1181 · Decided: 13-10-2011 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Disposed off
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Judgment (excerpt)

[20>11] 15 (ADDL.) S.C.R. 1181 
SHAW WALLACE & CO. LTD. (NOW UNITED SPIRITS 
A 
LTD.) 
v. 
NEPAL FOOD CORPORATION & OTHERS 
(CIVIL APPEAL N0.7100 OF 2001) 
OCTOBER 13, 2011 
B 
[R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.] 
Carriage of Goods by Sea Act, 1925 - ss.2 and 4; and 
Article I, clause (b) and Article Ill, r.3 - Role of carrier's agent c 
and its liability - Contract for sale of parboiled rice between 
NFC and NHH - Vessel 'Pichit Samut' chartered by NHH for 
carrying rice to be shipped by NFC to NHH, from Calcutta to 
Penang, Malaysia - NFC filed suit against the owner of the 
vessel and its agent Shaw Wallace for recovery of damages 0 
on ground of wrongful delivery by the ship-owner to NHH without 
production of the necessary documents (bills of lading) and 
wrongful failure on part of the ship-owner and Shaw Wallace to 
furnish the bills of lading within the validity period of letter of 
credit, thereby preventing NFC from negotiating and 
recovering the amount due - Suit decreed by the High Court E 
- Held: As per the sale contract, the seller (NFC) was entitled 
to payment of the entire invoice value, at sight at the seller's 
bank, on presentation of the "on board Bills of Lading" 
supported by its commercial invoice - Mere fact that delivery 
was taken by the buyer (NHH) at Penang even without the bills 
F 
of Jading would not have caused any loss to the seller, if it had 
been issued the bills of lading to which it was entitled, without 
delay so that it could have realized the amount against the 
Jetter of credit which was valid and in force till 15. 1. 1979- NFC 
lost the value of goods on account of Shaw Wallace not 
G 
releasing the bills of lading before 15.1.1979, even though it 
was liable to issue the bills of lading on 17. 12. 1978 - The bills 
of lading were ultimately issued on 25.1.1979- By deliberately 
delaying the issue of the bills of Jading from 17.12.1978 to 
1181 
H 
1182 SUPREME COURT REPORTS (2011] 15 (ADDL.) S.C.R. 
A 25. 1. 1979, Shaw Wallace committed a breach of statutory duty 
cast under Article Ill (3) of the Schedule to the Act - It also 
acted negligently in performance of its legal duty in common 
law to issue the bills of lading on delivery of the mate's receipt, 
as the agent of the ship-owner - Thus it became liable to pay 
8 damages to make good the loss, namely the value of the 
goods covered by the bills of lading - If the issue of bill of 
lading is denied or delayed as a consequence of which the 
shipper suffers loss, the owner of the vessel and its agent will 
jointly and severally be liable to make good the loss by way 
of damages - Shaw Wallace alongwith the ship-owner was 
C jointly and severally responsible for the Joss caused to NFC 
- Judgment and decree of High Court affirmed. 
Carriage of Goods by Sea Act, 1925 - ss.2 and 4; and 
Article I, clause (b) and Article 1/1, r.3 - Role of carrier's agent 
0 and its liability - Contract for sale of rice between NFC and 
NHH - Vessel 'Eastern Grand' sub-chartered by NHH for 
carrying rice to be shipped by NFC to NHH, from Calcutta to 
Penang, Malaysia - Shaw Wallace was the agent of the owner 
of the vessel, at Calcutta - NFC filed suit against the disponent 
owner of the vessel (main charterer), the owner of the vessel, 
E Shaw Wallace and Owner's Protective Agent, for recovery of 
damages on ground of wrongful delivery by the disponent 
owner to the buyers and wrongful failure to furnish the bills of 
lading thereby preventing NFC from negotiating and 
recovering the amount due - High Court decreed the suit 
F against the disponent owner and Shaw Wallace - Held: In the 
instant case, the letter of credit expired on 15. 1. 1979 while the 
goods were cleared at Penang between 16. 1. 1979 to 19. 1. 1979 
- It was only on 19.1.1979, after the expiry of Jetter of credit 
and after the goods were delivered to NHH, that NFC tendered 
G the mate's receipts and requested for issue of bills of lading 
from Shaw Wallace - Even if Shaw Wallace had delivered the 
bills of lading on the day of de~and namely on 19. 1. 1979 itself, 
NFC could not have _realized the amount against the letter of 
credit - Shaw Wallace could be made liable only if it had 
committed breach of statutory duty or breach of any other legal 
H duty amounting to negligence causing loss to NFC - Having 
SHAW WALLACE & CO. LTD. (NOW UNITED SPIRITS 1183 
LTD.) v. NEPAL FOOD CORPN. 
regard to the fact, that the letter of credit had expired on A 
15.1.1979 long p
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