The appellant is a firm carrying on business at Chittagong. The appellant imported from Karachi 175 bales and 200 bales of cotton yarn both of Camel Brand count 20/1 (China origin) with leading marks 'ARAG' and 25 cases of cotton piece goods with leading marks 'H.T. ARAG MARKS CHITTAGONG' on board the SS Fir-Dausa belonging to the respondent carrier. After its arrival at Chittagong the goods were found in a damaged condition and the appellant went to the jetty to take delivery. The local agent of the respondent carrier was requested by the appellant, both verbally and writing, to make a steamer survey of the goods. On their failure to make any arrangement for the survey, the appellant had the goods surveyed by Lloyd's agents both at the jetty shed and at the appellant's premises. Of the 175 bales of cotton yarn, 148 bales were found to be damaged to the extent of 10 per cent, and out of the 200 bales 170 bales were found damaged to the extent of 20 per cent, and 30 bales were found damaged to the extent of 10 per cent. The damage was caused by coal and/or coal sweepings, and out of the 25 cases of cotton piece goods 8 pieces from one case were found missing. The appellant demanded compensation, but with no result.

The appellant served notice on the Federation of Pakistan, as it then was, and instituted a claim in the Court of Subordinate Judge Third Court, Chittagong, for recovery of the damage to and loss of the goods imported and also for loss of profit as a result of the negligence of the respondent carrier. The respondent contended that: the appellant had no cause of action; the suit was barred by limitation under the provisions of the Carriage of Goods by Sea Act; as the appellant gave no notice of claim to the respondent within the period stipulated in the bill of lading, the appellant was not entitled to get any relief; and no damage was caused to the appellant's goods so long as they were in the custody of the respondent carrier and its local agent. The damage, if any, caused to the appellant's goods occurred after the goods left the ship's tackle and while they were under the custody of the jetty authorities and of the appellant. Further, as the bales were packed with a single gunny cover, damage, if any, caused due to handling was ascribed to the shippers. It was, however, admitted by the respondent that the ship carried coal in addition to general cargo; but the general cargo, it was contended, did not come in contact with the coal in the ship. The goods were carried with proper care and caution and there was no negligence by the carrier.

The trial Court decided in favour of the appellant. On appeal, the High Court of East Pakistan in interpreting the clause in the bill of lading that 'in all causes and under all circumstances the Company's liability shall absolutely cease when the goods are free of the ships' tackle and thereupon the goods shall be at the risk for all purposes and in every respect of shippers and consignee' reversed and dismissed the appellant's suit. The High Court held that 'so far as the responsibility of the ship is concerned, according to the clause already quoted, it would appear to us to have ceased at the time that the general goods were disembarked at the outer anchorage from the ship on to a lighter vessel. The liability of loss or damage after the goods left the ship was clearly that of the plaintiff in accordance with provisions of the aforesaid clause.' The appellant appealed to the Supreme Court.

Held: Appeal allowed. The judgment of the High Court of East Pakistan is set aside and the judgment and decree of the trial Court are restored.

The question raised in this appeal is covered by a decision of the Supreme Court of Pakistan, namely East & West Steamship Co v Hossain Bros (1967) 19 DLR (SC) 530; PLD 1968 SC 15 (CMI846). In that case, although the agreed facts were that there was no damage caused to the goods either during the time they were in the ship's hold or at the time of their discharge at the outer anchorage, and that the goods were actually damaged by rain water when they were in the lighter, the question whether the shipowners were completely protected by a similar clause in the bill of lading was answered in the negative. In arriving at this conclusion the Supreme Court of Pakistan considered the Hague Rules which have been incorporated in the Schedule to the Carriage of Goods by Sea Act 1925.

The Trial Court concluded that there was simultaneous landing of coal cargo and general merchandise from the ship and, therefore, there was every possibility of the general cargo coming in contact with the coal. The Trial Court also mentioned that there was no evidence to show that the lighters into which the general cargo was discharged were clean and not dirty with coal sweepings. It appears, therefore, that the evidence has established that the damage to the appellant's goods occurred before they were landed at the jetty.

The conclusion would be that the respondent shipowner did not perform the duty of carriage and discharge 'properly and carefully' as is enjoined by the contract. When the ship was carrying coal in a large bulk from the port of Karachi, it was certainly its duty to ensure that the appellant's goods did not come into contact with the coal which the ship was carrying from there to Chittagong and also while discharging the goods into the lighter. It was also its duty to be satisfied that the lighter did not simultaneously carry coal and the appellant's goods. The respondent has not taken ordinary care and caution in carrying and discharging the goods in the condition they were received, thus leading to breach of the obligation imposed upon the shipowner by art 3.2 of the Hague Rules as incorporated in the bill of lading. The very fact that the damage was caused to the appellant's goods while in the shipowner's custody shows that there has been negligence on the part of the respondent, which shows that it cannot escape by relying on the exemption clause. Further, the expression 'free of the vessel's tackle' cannot be construed as exempting the respondent from its liability until the goods were delivered to the jetty authority for the appellants.