This appeal by the appellant, New Zealand Insurance Co Ltd, is directed against an appellate decree in favour of the respondent, Mr MA Rouf, the sole proprietor of a firm known as Upper India Trading Corp. The respondent imported some consignments of MS angles from Belgium to Chittagong. These were shipped from Antwerp on the SS Lemsterkerk belonging to the Holland Bengal Burma Line, whose local agent is MM Ispahani Ltd. The appellant was the underwriter who issued an insurance certificate covering the risk of loss of the goods. The Federation of Pakistan was said to be a bailee in respect of those goods and made a party to the suit as such.

Out of the goods imported by the respondent, 73 bundles of MS angles were not delivered. The respondent gave notices to all parties about the short delivery and brought a claim in the first Court of the Munsif at Chittagong for the price of the goods short landed and loss of profit. The suit was contested by all parties. The Court of first instance decreed the suit against the carrier and its local agent, but dismissed it against the other parties. On the question of limitation, the Munsif held that the limitation period was one year from the date of delivery of the goods or the date when the goods ought to have been delivered. He further held that limitation was to run from 7 March 1953, the date on which the short landing certificate was issued and that the suit, having been instituted within one year of this date, was within time. On appeal, the first Court of Subordinate Judge, Chittagong, decreed the suit only against the appellant, but dismissed it against the other parties. The Subordinate Judge dismissed the suit against the carrier and its local agent on the finding that under the contract of carriage the right of the plaintiff to claim from them the value of the goods short delivered was extinguished at the expiry of one year from the date of departure of the ship from the port of discharge, namely, Chittagong. However, the appellant underwriter was nonetheless liable for the loss under the contract of insurance. It is against that decision that the underwriter has come on appeal before this Court.

Held: The appeal is dismissed and the decree of the lower Appellate Court is confirmed.

The appellant's main argument is that the respondent's claim against the carrier and its local agent was not extinguished as held by the lower Appellate Court, and that the appellant was thus not liable to compensate for the alleged short delivery.

The International Conference on Maritime Law held at Brussels in October 1922 adopted a draft Convention for the unification of certain rules relating to bills of lading. In 1925, the Carriage of Goods by Sea Act (Central Act No XXVI of 1925), was enacted in British India, with a view to giving legal effect to the rules relating to bills of lading contained in the draft Conviction. Those rules are included in a Schedule to the Act and form part of that Act. Many countries, including England, made similar domestic laws giving effect to those rules. The Carriage of Goods by Sea Act 1925, as in force in Pakistan, applies to the carriage of goods by sea from any port in Pakistan to any other port whether in or outside Pakistan, but does not apply to the carriage of goods by sea from a foreign port to a port in Pakistan. Thus, the carriage of goods by sea between ports in Pakistan and from any port in Pakistan to any other port outside Pakistan is regulated by the provisions of the Act, including the internationally recognised Rules relating to bills of lading as contained in the Schedule to the Act; a bill of lading in respect of such carriage of goods by sea should be in conformity with the provisions of that Act and not in derogation thereof. As regards the shipment of goods from a foreign port in Pakistan, such shipment is governed by the conditions of the relevant contract of carriage, the Carriage of Goods by Sea Act 1925 not being applicable thereto.

Article 3.6 of the Rules relating bills of lading contained in the Schedule to the Act provides, among others, as follows: 'In any event the carrier and the ship shall be discharged 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'. Thus, art 3.6, forming part of a special law, namely, the Carriage of Goods by Sea Act 1925, prescribes a special limitation of one year within which a suit for relief against a carrier and a ship must be brought. In view of s 29 of the Limitation Act 1908, this period of limitation shall apply to such a suit instead of any period under the general law of limitation. Section 29 of the Limitation Act has rendered s 15 of that Act applicable for the purpose of determining any period of limitation prescribed by any special law. Therefore, in computing the period of limitation prescribed by the Carriage of Goods by Sea Act 1925 in art 3.6, the period of notice served under any other law shall be excluded.

Article 3.6 is perhaps capable of being Interpreted as providing not only a rule of limitation but also a substantive law, inasmuch as under the provision of this clause, the carrier and the ship are absolved from all liabilities unless the suit is brought before the expiry of the period mentioned in that clause. Such an interpretation cannot, however, affect the legal position that art 3.6, forming part of the Carriage of Goods by Sea Act 1925, prescribes a special limitation which shall be applicable under s 29 read with s 15 of the Limitation Act. Therefore, art 3.6 forming part of the said Act provides essentially a rule of limitation.

In the case of the carriage of goods by sea from a foreign port to a port in Pakistan the position is, however, different. As already said, the shipment of goods by sea from a foreign port to a port in Pakistan is governed by the conditions of the relevant contract of carriage. A bill of lading embodies the conditions of such a contract and usually contains a clause exactly in the words of art 3.6. The reason for the inclusion of such a clause in a bill of lading is the adoption by many countries of the Rules relating to bills of lading contained in the Brussels Convention mentioned before. Where a bill of lading in respect of shipment of goods from a foreign port to a port in this country contains such a clause, the claim against the carrier and the ship shall be extinguished in terms of the contract at the expiry of one year from the date of delivery of the goods or the date when the goods should have been delivered. In such a case, the bill of lading cannot be construed as providing a rule of limitation. A bill of lading is not a law; it embodies only the conditions of a contract of carriage. Thus, a bill of lading is not a special or local law within the meaning of s 29 of the Limitation Act and, as such, it does not prescribe any period of limitation like the Carriage of Goods by Sea Act 1925. Moreover, a bill of lading cannot be construed as prescribing a bar of limitation in the face of s 28 of the Contract Act, which forbids a contract limiting the time within which rights are to be enforced by suit. Section 28, however, does not hit a contract of carriage as embodied in a bill of lading containing a clause corresponding to art 3.6 for the reason that under that clause the claim against the carrier and the ship becomes extinguished in the event of nonfiling of a suit before the expiry of the period of one year mentioned therein. When the claim itself is extinguished under the clause, the question of a bar of limitation does not arise. In Holland Bengal Burma Line v Dawood Corp Ltd, PLD 1961 Dacca 39 (CMI851) the Court held that when a bill of lading in respect of shipment of goods from a foreign port to a port in Pakistan contains a clause corresponding to art 3.6 of the Hague Rules, the contract is not hit by s 28 of the Contract Act and that the carrier and the ship will be totally absolved from liability if the suit against them be not filed within one year.

This naturally raises a question as to the date from which the period of one year mentioned in art 3.6 should be calculated. In the words of art 3.6, the period is 'one year after delivery of the goods or the date when the goods should have been delivered'. According to art 1.e of the Hague Rules, carriage of goods covers the period from the time when the goods are loaded on to the time when they are discharged from the ship. Thus, a contract of affreightment comes to an end with the discharge of the goods. Therefore, the expression 'one year after delivery of the goods or the date when the goods should have been delivered' occurring in art 3.6 really means one year after discharge of the goods or the date when the goods should have been discharged. The word 'discharge' implies complete discharge of all the goods covered by the consignment. Hence, in a case where the goods are completely discharged, the period of one year shall be calculated from the date of discharge of the goods. If, however, the time for the discharge of the goods is spread over a number of days, the period shall be calculated from the date of completion of the discharge. In the case of non-delivery of or short delivery of goods by the carrier and the ship, time shall commence to run from the date when the goods should have been delivered, which implies the last date up to which the discharge of the undelivered goods can be expected. No discharge of cargo can be expected after the departure of the ship from the port of discharge. Therefore, in the case of non-delivery or short delivery, time shall commence to run from the date of departure of the ship from the port of discharge. The date of a certificate as to non-delivery or short delivery of the goods by the carrier or the ship is immaterial for the purpose of calculating the period of one year for the reason that the date on which the goods should have been delivered cannot, in the absence of a special promise or assurance by the carrier or the ship, extend beyond the date of departure of the ship. In the event of a promise or assurance by the carrier or the ship to deliver the goods subsequent to the departure of the ship, the date from which time shall begin to run will depend upon the nature of the promise or assurance in each case.

In the instant case, however, it is immaterial whether time commenced to run from the date of discharge of part of the cargo or from the date of departure of the ship, because the suit was brought beyond one year from either date. On these facts the respondent's claim against the carrier and its agent was extinguished in terms of the contract before the institution of the suit. As short delivery is expressly covered by the certificate of insurance, the appellant's liability for the goods delivered stands established by that certificate.