Dawood Corp Ltd (Dawood) filed this claim against Holland Bengal Burma Line (HBB), the owners of the SS Laagkerk, HBB's local agent, MM Ispahani Ltd (MMI), and the Federation of Pakistan for recovery of PKR 1,108/8, being the value of one bale of cotton yarn short delivered to Dawood. The Federation of Pakistan and MMI contested the suit. The Federation of Pakistan contended that the bale in question was not landed from the vessel, and hence it was not liable for it. MMI argued that the entire consignments were landed; that under the terms of the contract they were not liable for any short delivery; that the courts of Pakistan had no jurisdiction to try the suit; and that Dawood's claim, if any, was barred by limitation.

The Munsif decided the question of jurisdiction against the defendants. He also found that the Federation of Pakistan was not liable for the short delivery, loss or damage. Being of the opinion that the claim was barred by limitation, he dismissed Dawood's suit. On appeal, the Subordinate Judge upheld the finding of the Munsif on the question of jurisdiction. He also agreed with him that the Federation of Pakistan was not liable. However, he held that Dawood's claim was not barred by limitation and decreed the suit for PKR 926, being the invoice value of the bale in question, against HBB and MMI. HBB and MMI appealed. The second appeal was heard by Chowdhury J. In view of the importance of the question involved in this case to the commercial community, the Judge referred the matter to a Division Bench.

Held: Appeal allowed. Judgment and decree of the lower Appellate Court set aside; judgment and decree of the Munsif restored.

In this case the bill of lading was expressly made subject to the Hague Rules 'unless otherwise provided for in the bill of lading'. The Carriage of Goods by Sea Act 1925 (the Act) gives statutory effect to what are known as the Hague Rules. Those Rules are set out in the Schedule to the Act. The provision relied upon by HBB and MMI is art 3.6 of the Schedule to that Act: 'In any event, the carrier and the ship shall be discharged from all liabilities in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered'.

As the port of shipment here was a foreign port, the Act is not applicable to this case. So the issue is, should art 3.6 be construed as an Act laying down a rule of limitation or simply as words occurring in the bill of lading? If the former, Dawood's claim is extinguished. If the latter, the contract term may be argued to contravene s 28 of the Contract Act, which forbids a contract limiting the time within which rights are to be enforced by suit, and may therefore be void. The case law favours the former interpretation. Section 28 of the Contract Act does not hit the contract as embodied in the bill of lading, nor does the bill of lading come within the meaning of a 'local or special law' referred to in s 29 of the Limitation Act. The only meaning which the words 'The carrier and the ship shall be discharged from liability in respect of loss or damage unless suit is brought within one year' are on the facts of the case capable of bearing is that under the contract they will be totally absolved from liability if the suit was not filed within one year.

However, if the port of shipment and port of discharge are in Pakistan, the Act will be applicable. In that event, the Act can be regarded as a 'local or special law' referred to in s 29 of the Limitation Act. In this case the port of shipment is a foreign port so the Act is not applicable, and hence s 29 of the Limitation Act is not attracted to it.

It is clear in this case that when the SS Laagkerk left the Port of Chittagong on 10 February 1952, it had delivered its cargo to the consignee within the meaning of art 3.6, and it is not open to Dawood to take advantage of a survey, which appears to have been unduly delayed, in order to extend the period of time. Here also, it is not Dawood's case that HBB or MMI had taken the plea that the goods were coming by some other ship. Dawood got delivery of its consignments except for one bale. The Port Authority informed Dawood that the one bale landed short. MMI, however, insisted that it had landed under 'nil' mark. Dawood then got a short-landing certificate on 14 February 1952. From this it is clear that both the Port Authority as well as HBB and MMI were denying their liability for this one bale from the very beginning. The letter from MMI dated 25 November 1952 cannot therefore give Dawood an extension of time. The delay in this case was solely due to the consignee itself, and hence no question of extension of time arises in this case. Such a suit should be brought within one year from the date on which the cargo is discharged.

Only in very special circumstances, namely, when a shipping company or its agent informs a consignee that the rest of the consignments are coming at a later date or that delivery will be given after some time, can the consignee claim an extension of time. Here, as the suit was not filed within one year from the date when the cargo was discharged at Chittagong Port, HBB and MMI were discharged from the liability of short delivery.