On 16 April 1998, the plaintiff filed a suit, alleging that the first defendant carrier wrongly delivered 6 consignments of 100% cotton garments (the goods) to the Venezuelan Customs Authority, who controlled the release of the goods to the consignee, without obtaining the original bills of lading from the second defendant. The goods ultimately reached the second defendant, whether by way of the controversial letter of guarantee or not, but the third defendant, and consequently, the plaintiff, did not receive the amounts payable on the goods.

The plaintiff dropped its claim against the second defendant. The arrangement was that the second defendant was to route payment to the plaintiff through the Banco del Caribe (second defendant’s Venezuelan bank) and the third defendant. The goods were admittedly delivered to the second defendant whom the plaintiff appeared to have a contractual arrangement with, but the second defendant, the principal debtor, did not remit the funds. Apparently, the claim was dropped because the plaintiff could not serve the second defendant.

In addition, the plaintiff compromised and settled its claim against the third defendant. The only reason the Banco del Caribe did not remit the invoice value to the third defendant was because the second defendant had not transferred funds to the Banco del Caribe.

On the other hand, the plaintiff continued with the claim against the first defendant for not delivering the goods against the original bills of lading. For this reason, the plaintiff claims that the first defendant was liable for the outstanding amount on invoice value and in damages to the plaintiff. The plaintiff relied on an alleged oral contract to establish contractual privity between the plaintiff and the first defendant and an apparent nexus between the first defendant’s conduct and the losses allegedly suffered by the plaintiff. The first defendant resisted the claim, arguing that the plaintiff had no legal right to sue the defendants because they did not possess the original bills of lading and the plaintiff had no cause of action against the defendants. Moreover, the first defendant was merely an agent of P&O Nedlloyd (then P&O Containers Limited) and could be held liable in law by the plaintiff. Furthermore, the entire suit was already bound by limitation.

Article 3.6 of the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the Hague Rules), which discharges the carrier and the ship from all liability 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, is given effect in India via s 6 of the Indian Carriage of Goods by Sea Act 1925. Additionally, the Indian Limitation Act 1963 has a limitation period of 3 years from the cause of action. There was some uncertainty as to when the 6 consignments were delivered, but it appeared to be sometime between December 1993 and April 1994.

Held: The court held that the suit was already barred by limitation. Section 6 of the Indian COGSA 1925 did not permit any latitude. Even if the date of the delivery of the goods or the date on which the goods should have been delivered was dated sometime later than 13 April 1994, the suit still ought to have been filed in 1995. However, it was filed much later on 16 April 1998.

Additionally, the court was not convinced that there was an oral contract between the plaintiff and the first defendant and therefore there was no privity of contract. There was also no causality between the first defendant’s conduct and the losses allegedly suffered by the plaintiff. It was clear that the second defendant was aware of its liability, and simply failed or refused to pay. This was substantiated by evidence in which Banco Del Caribe in no uncertain terms confirmed the second defendant’s refusal to transfer funds and in fact accused the Venezuelan Customs Authority of complicity in the fraud concerning the bank guarantee. The first defendant was previously attempting to help the plaintiff recover its dues from the second defendant, but the plaintiff later sought to saddle the first defendant with that very liability.