Under a bill of lading dated 25 December 1955, 1,500 bags of rice were shipped on the State of Madras, owned by Eastern Shipping (the defendant), for carriage from the port of Madras, India, to the port of Penang, Malaysia, for delivery to Thye Lam (the plaintiff). Article 3.6 of the Hague Rules, which requires claims to be brought within a year, applied to the bill of lading by virtue of the Indian Carriage of Goods by Sea Act 1925, to which the bill was subject, and cl 22 of the bill of lading reproduced the Hague Rules.

The cargo was delivered on 1 January 1956, but 283 bags were missing. The plaintiff sought recovery from the defendant but was unsuccessful. Although the plaintiff threatened legal proceedings several times, the writ of summons was only issued on 23 November 1957. The plaintiff claimed short delivery of 283 bags and sought damages for breach of contract and/or tort arising from the carriage of goods by sea. The defendant denied liability for the missing bags. It argued that they had never been shipped on the State of Madras and alleged fraud on the part of the shippers. The defendant also contended that the plaintiff's claim was time-barred.

The plaintiff submitted that the defendant was estopped from raising the time-bar defence. A letter dated 5 April 1956 written by the defendant's accredited agent in Penang (C K Joshi) constituted a valid and binding admission of liability. The plaintiff was also slow to start legal proceedings against the defendant because the defendant had on 25 August 1956 promised to investigate the short delivery. When communications resumed, the limitation period had already expired.

Held: Claim dismissed.

The Judge held that the limitation of action plea must succeed because the suit was not instituted within the period prescribed by the Hague Rules incorporated in the Indian Carriage of Goods by Sea Act 1925. The plaintiff was under a duty to enforce its threat of legal proceedings and protect its right of action by issuing a writ of summons before the expiry of the limitation period, but failed to do so. There was a lengthy delay in the settlement of the claim even if time was counted from 5 April 1956.