The plaintiffs shipped cargo on board the defendant’s vessel pursuant to clean on board bills of lading. The cargo was received as damaged by port authorities who annotated the bills of lading as PBKN (Planks Broken) and CFO (Contents Falling Out). The plaintiffs argued that the damage was caused by the defendant’s failure to care for, carry and deliver the cargo in the same apparent good order and condition entrusted to it at the loading port. The defendant argued that the vessel arrived at the discharge port with the cargo intact. The defendant claimed that it was not liable for the damages that occurred due to the stevedores’ negligence. Its obligation under the contract of carriage was to transfer the cargo from one port to another port, and not from warehouse to warehouse. The stevedores were not impleaded as a party. The defendant sought to limit its liability to 3 SDR per package under art 4.5 of the Hague-Visby Rules.

Held: Claim dismissed. The court framed the relevant issues as follows:

1. Whether the defendant as an ocean carrier can be held liable for damage caused to goods by the stevedore.

The cargo damage was caused due to the stevedores’ negligence, who are not a party before the Court. There was no negligence on the defendant’s or their employees’ part.

2. Where does the defendant’s liability end?  

When there is no stipulation in the bill of lading that the contract is from warehouse to warehouse, the liability of the defendant extends only from the loading port to the discharge port. The consignment was brought safely to the discharge port by the defendant and the accident had occurred only after the cargo had been safely brought to the discharge port.

3. Whether the defendant is entitled to limit its liability under the Hague-Visby Rules or otherwise.

The defendant argued that, even if the cargo damage was caused when in its custody, it was entitled to limit its liability under the Hague-Visby Rules, arts 4.5.a and 4.5.e of which are as follows:

(a) Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier not the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding (666.67 units of account) per package or unit or (2 units of account per kilogram) of gross weight of the goods lost or damaged, whichever is the higher. …

(e) Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause damage, or recklessly and with knowledge that damage would probably result.’

The plaintiffs argued that the cargo’s value was declared in the invoice as USD 490,000 (and by extension onto the bill of lading) hence the defendant cannot rely on the limitation in the Rules. The court disagreed with the plaintiffs. The Rules clearly state that the bill of lading should contain the cargo’s value and description. The invoice is not a part of the bill of lading. The value of the goods is required to be stated on the bill of lading so as to enable the shipping concern to calculate the quantum of freight. It cannot, in the absence of any statutory provisions, be held to be incorporated therein by necessary implication or otherwise. (Shipping Corporation Of India Ltd v Bharat Earth Movers Ltd 2008 (2) SCC 79 (CMI894), applied in Board of Trustees of Madras Port Trust v National Engineering Industries Ltd 2011 (6) MLJ 817). In the absence of any evidence to show that the cargo value had been declared in the bill of lading, the defendant’s liability is limited to that under the Rules.