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1962 (12) TMI 79 - SUPREME COURT

1962 (12) TMI 79 - SUPREME COURT - TMI - Civil Appeals Nos. 187 to 191 of 1962. - Dated:- 11-12-1962 - RAGHUBAR DAYAL, J M. C. Setalvad, Attorney-General for India, A. V. Viswanatha Sastri, R.Ganapathy Iyer, V. V. Raghasvan and G. Gopalakrishnan, for the Appellants. S. T. Desai and P. Ram Reddy, for the Respondents. JUDGMENT: The judgment of the Court was delivered by RAGHUBAR DAYAL, J.-The appellants, the Trustees of the Port of Madras, hereinafter called the Board, appeal against the order of .....

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h the sanction of the Central Government, made amendments to the Madras Port Trust Scale of Rates in 1958. By the amendment, scale 'E' was added under Chapter V. It was to come into force from March 1, 1958. The scale laid down charges to be paid by masters, owners or agents of vessels in respect of Port Trust labour requisitioned and supplied but not fully or properly utilised. The charges, for the sake of brevity, may be said to be on account of the labour of the Port Trust, Madras, re .....

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and also for working more than one hook simultaneously at the hatch. These amendments in the scale of rates were made by the Board in the exercise of its power under s. 42 of the Madras Port Trust Act, 1905 (Mad. Act 11 of 1905), hereinafter called the Act. This section empowers the Board to frame a scale of rates at which and a statement of the conditions under which any of the services specified in the various clauses of the section shall be performed by the Board or by a person to whom any s .....

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such charges must be borne by the consignee (II) s. 39 of the Act provided for -the performance of services by the Board and the other sections provided for the imposition and recovery of rates for the services performed for the vessel and services performed for the goods. Services in the former category are to be paid for on behalf of the carrier i. e., by the master, ship- owner or the steamer-agent, and the services in the latter category constitute a liability on the consignee ; (iii) the Bo .....

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landing charge' in addition to the freight. When the quays were constructed and cargo came to be landed there, the Board took over the landing of goods and collected quay dues instead of 'landing charges' which were wholly paid by I he consignees. These quay dues later on merged in the harbour dues' collected by the Board from the consignees; (v) usually, the steamer agent informs the Traffic Manager the probable date of arrival of the vessel under his agency, tonnage hatch-wise .....

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t the quay is described thus : After the Port Trust pilot brings the vessel to the berth alloted to her : "The stevedore labour supplied by the Madras Dock Labour Board, a statutory body, board the vessel, prepare the slings in the holds or hatches, work the ship's winches and the cargo is hoisted on the quayside. When the sling rests on the shore or in the barge in the case of discharge at moorings, the shore labour unsling the cargo and the Trust's Tally Clerk notes the items in a .....

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cation with the Trust for payment of Harbour dues and Bill of Entry with the Customs for the duty payable by him. On payment of the duty and the harbour dues by the. consignee the cargo is delivered to him by the Trust." (vii)The Board adopted the piece-rate scheme for the Dock workers in pursuance of the report of the jeejeebhoy Committee and the new scale E' rates are a part of such a scheme. (viii), Prior to March 1, 1958 the cost of shore- labour was met entirely by the Port Trust. .....

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of the scale 'E' rates and in respect of the signing of the requisition for shore labour is outside the authority conferred by law on the trustees of the Port of Madras and is illegal. Such an imposition whether as charges for services or as compensation for default of steamer agents is illegal and an unreasonable restriction on the fundamental right of the petitioners to carry on business as steamer agents and is inoperative in law. (xi) the Port Trust authorities receiving goods on the .....

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e A, Chapter II of the Scale of Rates, are payable on tonnage and include, beside overhead, a nominal rent for storage for a specified period etc., and the item of charges for porterage involved in moving the goods from the landing point to the storage or stacking point. (ii) It is not correct that the ship-owner has nothing to do with the import cargo after it has been landed by the stevedores at the landing point on the quay, as the ship-owner in each case by the bill of lading has to deliver .....

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oes not undertake the unloading of the goods from the ship to the quay. The ship-owner makes his own arrangements through the stevedores, though the Board is authorised to undertake such services on behalf of the ship-owner. It is a service to the ship-owner by the Board to give the ship-owner a receipt for the goods to keep them in custody and deliver to the consignee. The services undertaken in respect of the import cargo till they have been moved to the storage or stacking point are services .....

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a receipt to the master at the landing point is a mere matter of convenience for betokening the fact that the goods have been handed over to the Port Trust for removal, storage and delivery and does not in any way detract from the fact that the subsequent services are facilities and services rendered to the' ship-owner in respect of the goods which are the subject of contract of carri- age by the ship-owner. (vii) The past practice had been for the agents to inform the Board about the shore .....

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ree hooks simultaneously at a vessel's hatch. (viii) The proper utilisation of the time of the labour depends upon the steamer agents first giving a proper anticipation and shift at which they were to be put on the job being the time when the cargo will be ready for removal and, secondly, there giving a continuous supply of cargo for removal so that there is no gap in the work. (ix) The levy of multiple hook allowance against the steamer agents is a facility to the ship to discharge fast and .....

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ect of facilities afforded to and services undertaken on behalf of the ship- owner, master, agent by the Board in relation to the cargo which is under contract of carriage by them, in the same way as harbour dues. To understand the exact nature of the impugned charges, it is necessary to quote the scale 'E' charges to which objection is taken : SCALE E-Charges Against Masters, Owners, or Agents of Vessels in respect of Port Trust Labour requisitioned and supplied but not fully or properl .....

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: Idle time will be calculated as follows Charges Payable 64 nP. per mazdoor per hour in the case of 8 hr. shifts and at 80 nP. per hour in the case of 6-1/2 hr. shifts. item Classification for purposes no. of this Scale Any continuous stoppage of work of 15 minutes or under shall be ignored and any continuous stoppage in excess of 15 minutes and up to 30 minutes shall be counted as 30 minutes. If the said continuous stoppage continues in excess of 30 minutes the actual excess rounded off to th .....

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ances for working of ₹ 1.66 for each more than two hooks Madras Port Trust simultaneously at a vessel's Shore Mazdoor hatch. employed at the hooks. N. B.-One hour's clear notice in writing must be given of cancellation of labour requisitioned Charges Payable ₹ 5 per mazdoor per shift or part for work at hooks. If cancellation orders are not received in time, charges will be levied for the full period requisitioned. Note : The above amendment will take effect from the date of .....

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ent features of the scheme in respect of payment of wages to the workers show that, under the scheme, the worker is assured of a minimum daily wage and that, the actual earnings for a day really depend on his output per shift, they being linked with productivity. A gang of workers consists of one maistri and 14 workers. They handle the goods at a particular point, say a hook. Datum lines have been fixed for different kinds of cargo per hook per shift. 'Datum lines' means the 'standar .....

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the 100% of the datum tonnage and at 150% the worker gets twice his daily wage rate and at 200% the piece rate wage is thrice the daily wage rate. These features of the scheme sufficiently indicate the significance of 'idle time' for the workers. If, during a shift, the workers are not actually employed on the job for which they are engaged and have to remain idle, their output of work during that shift, on the basis of tonnage, is bound to be less and, consequently, their earnings would .....

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ging of ship's derricks. (iii) cargo not ready for shipment (iv) late arrival of vessels at the berth (v) completion of loading and/or unloading before the end of the shift (vi) actual rain-time during shift working hours, and (vii) any other reason beyond the control of the workmen except slow work on the part of the workmen covered by this scheme. Item No. I of scale 'E' charges makes the idle a1lowances, for reasons nos. (ii) to (v) and for breakdown of ship's winches mentione .....

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hatch, an equal number of gangs of workers will be employed to handle the goods. The result is that the output per gang is proportionately reduced and consequently its earnings are reduced. There may be further reduction in earnings if the cargo is discharged during half-shift. It is to compensate such losses that under the piece-rate scheme, the workers are paid hook allowance. The simultaneous working of more than one hook at the hatch of a ship helps the ship to discharge cargo fast and sail .....

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ent is for ultimate delivery of the goods to the consignees and that the service is rendered to the shipping agent even though the consignee also benefits by that service and it Was not necessary for imposing the liability that the shipping agent must exclusively benefit from the service rendered. On appeal, the appellate Bench reversed the order, allowed the petitions and issued a writ of mandamus as prayed. It held that the Board had no authority to introduce the new scale 'E' rates pa .....

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rendered to the consignee. The purpose of the requisition by the steamer agent was really to avoid delay and consequent congestion and, generally, for the convenience of the Board. The requisition must be treated as one on behalf of the consignees because it is not part of the duty of the steamer agents to take delivery. The contentions raised before us for the parties are the same as were urged in the Courts below and will be mentioned when dealt with later. Before we deal with the contentions .....

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e the following services:- (a) landing, shipping, or transhipping passengers and goods between vessels in the port and the wharves, piers, quays or docks in possession of the Board; (b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises; (c) carrying passengers by rail, tramway or otherwise within the limits of the port, subject to such restrictions and conditions as the Central Government may see fit to impose; and (d) receiving and .....

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under the provisions of clause (a) of sub- section (1) of section 41-A. (3) The Board shall, if required, take charge of the goods for the purpose of performing the service and shall give a receipt in the form and to the effect prescribed from time to time by the Central Government. After any goods have been taken charge of and a receipt given for them under this section no liability for any loss or damage which may occur to them shall attach to any person to whom a receipt shall have been give .....

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a bailee under sections 151, 152 and 161 of the Indian Contract Act, 1872, omitting the words 'in the absence of any special contract' in section 152 of the last- mentioned Act. Provided that, till the receipt mentioned in sub-section (3) of section 39-is given by the Board, the goods shall be at the risk of the owner. (2) The Board shall not be in any way responsible for loss of or damage to goods of which it has taken charge, unless notice of such loss or damage shall have been given .....

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rpose take charge of the goods and give a receipt in the form and to the effect prescribed from time to time by the Central Government. Section 42 which deals with the scale of rates, reads "The Board shall frame a scale of rates at which and a statement of the conditions under which any of the services specified hereunder shall be performed by itself or by a person to whom any service has been relinquished under section 41-A or partly by one and partly by the, other:- (a) Transhippingof pa .....

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for which fees are chargeable under the Indian Ports Act, 1908 (XV of 1908)." Section 44 provides that every scale and every statement of conditions framed by the Board under ss. 42, 43 or 43-A shall be submitted to the Central Government for sanction, and when sanctioned and published, will, have the force of law. Sections 45 and 46 provide for the enhancement of the rates by the Board and the Central Government, if the Board fails to do so, respectively. Section 50 provides that the rate .....

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ed. Section 52 provides for the priority of this lien of the Board over certain other liens and claims. Section 53 provides for the preservation of lien for freight or other char es including landing charges payable to the ship owner after the the Board. Section 54 provides for the retention of such goods in the custody of the Board at the risk and expense of the owners of the said goods until such lien is discharged and also provides that the godown or storage rent would be payable by the party .....

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d. It is to be applied in the payment of the expenses of sale in payment of the liens and claims excepted in s. 52 from the priority of the lien of the Board and in payment of the rates and expenses of landing, removing, storing or warehousing the same, and of all other charges due to the Board in respect thereof. goods are landed and the lien for frieght or charges takes priority over the aforesaid lien of The Board framed by-laws in exercise of the powers conferred by s. 95 of the Act. By-law .....

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mplete Import General Manifest before being permitted to break bulk. The manifest is to show full details of each consignment manifested, including litreage in the case of liquids in bulk and gross weight in kilos in other cases. Non-submission of such manifests within the stipulated time may result in the vessel concerned not being permitted to break bulk. By-law no. 4 provides that no goods maybe landed or shipped except at places appointed by the Port Trust for each class of cargo. By-law 4-A .....

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said cargo or goods or substance to be removed from the property of the Port Trust and, on the failure of such persons to have the goods removed, to have the removal effected by the Traffic Manager in such manner as he may think fit, or cause the same to be destroyed, and to demand the expenses incurred from the said consignee or the said master, owner or agent as the. case may be. By-law no. 5 provides that when the Port Trust undertakes the reception, removal, porterage or storage of cargo und .....

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f Rates, shall be paid before removal of the goods from the harbour premises. By-law no. 7 provides that all applications for permission to export or import goods shall be on approved forms and that such forms shall be filled in and signed by the shipper or consignee of the goods or by his agent. We may also refer to the Manual of Instructions issued by the Board for the Traffic Department. Mr. Desai has urged that the Manual should not be looked into as it is not part of the record. Strictly, t .....

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h notice. Instruction no. 3 states that the authority from the steamer agents as bailors to the Trust as bailee to deliver goods may take the form of an endorsement by the steamer agents on the bill. of lading and that a bill of lading presented without the steamer agent's endorsement cannot be accepted. Instruction no. 4 deals with the tally sheet and is in these terms "'The Form prescribed by the Local Government under section 39(3) of the Madras Port Trust Act for cargo landed in .....

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nderer and the Port Trust and contribute largely towards smooth working. Tally sheets are kept in the Traffic Sections for 28 days after the departure of a vessel and are then filed in the Application Section in the Office of the Assistant Traffic Manager (Shipping). x x x x x x x x Instruction No. 5 deals with receipting and provides "'As each tally sheet which is prepared in duplicate with carbon paper is completely filled-in, it should be signed by the Port Trust Tally Checker and th .....

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us provisions of the Act that they do not make it obligatory on the part of the Board to undertake the various services mentioned in s. 39 of the Act. Section 39, already quoted, empowers the Board firstly, to provide all reasonable facilities, according to its powers, for the services mentioned in the various clauses of sub-s. (1), and secondly, empowers the Board to undertake those services. The Board is thus enabled to undertake those services. Sub-section (1) does not make it a duty of the B .....

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spatching goods intended for carriage by neighbouring railways. Sub-section (3) again says that the Board is to take charge of the goods for the purpose of performing the services, if required to do so, and, in that case, the Board is to give receipt in the form and to the effect prescribed by the Central Government. It is therefore clear that the performance of any of the services mentioned in sub-s. (1) of s. 39 and the taking of charge of the goods are consequent on the Board being required t .....

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about the suitability of the berth for that ship, about the quantity and nature of the consignment and about the time the ship would like to be in the dock and consequently about the amount of shore-labour required in connection with the goods to be landed. It is for this reason that it is the steamer-agent who informs the staff of the Board about the arrival of the ship' who has to furnish the manifest giving details of the goods to be land- ed and who has to submit a requisition about the .....

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troduced in the Form because such payments were newly introduced and added to the charges which used to be collected by them on the basis of tonnage handled by the shore-labour and possibly also on account of the anticipated objection on the part of the steamer-agents to their liability to pay these charges. The liability to pay these charges, however, does not arise on account of the undertaking but on account of the sanctioned scale of rates at which and the conditions under which the Board wo .....

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rvices rendered, by the Board are therefore services to the ship and, cons- equently, charges for them are to be realised from the steamer-agents. It is also urged that the harbour dues are collected from the consignees as the Board is a bailee of the ship-owner who is a bailee of the shipper and who is bound by the contract to deliver the goods to the consignee or his nominee, on the presentation of the bill of lading, The Board's taking charge of the goods landed does not amount to its tak .....

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e workmen. We have already refer-red to the features of the piece-rate scheme showing the necessity for the payment of the idle allowance of the workers for labour rendered idle. Similar considera- tions justify the payment of that allowance when labour is sent away or not required after the shore work has commenced at the start of the shift. When more than one hook is worked at the same time, it necessarily means quicker unloading of the goods. This, again, is in the interest of the shipowner. .....

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r each consignee, in connection with the payment for idle allowance and the hook allowance when cargo is discharged with more than one hook working simultaneouly at the vessel's hatch. It is reasonable therefore to make the ship-owner liable for their payment. There is no doubt that the ship-owner is the bailee of the shipper, the consignor, and that he is responsible for the delivery of the goods to the consignee or a transferee according to the terms of the bill of lading. This duty the sh .....

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the contention for the respondents that the expression 'receiving' in cl. (b) of sub-s. (1) of s. 39 of the Act means receiving the goods on behalf of the consignee. The reception of the goods can be on behalf of the ship-owner also. The steamer-agent cannot ask the Board to receive the goods on behalf of the consignee. Sub-section (3) of s. 39 of the Act empowers the Board to take charge of the goods for the purpose of performing certain services which do not include the taking deliver .....

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ignee. The Board simply takes charge of the goods on being required by the steamer-agent to take charge of it. Section 40 speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which it has taken charge as a bailee under ss. 151, 152 and 161 of the Indian Contract Act. Section 148 of the Contract Act states that a bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accompli .....

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It cannot be the bailee of the consignee. It can be the agent of the consignee only if so appointed, which is not alleged to be the case, and even if the Board be an agent, then its liability would be as an agent and not as a bailee. The provisions of ss. 39 and 40, therefore, further support the contention that the Board takes charge of the goods on behalf of the ship-owner and not on behalf of the consignee, and whatever services it performs at the time of the landing of the goods or on their .....

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iage of goods' according to cl. (e) of this Article, covers the period from the time when the goods are loaded on to the time when they are discharged from the ship. Of course, once the goods are landed, they are no more "carried' by the ship and the expression "carriage of goods', could only cover the period up to the discharge of the goods from the ship. But that does not in any way affect the consideration of the questions before us. Further, Rule 6 of Article III provid .....

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that till the time of the removal of the goods into the custody of the person entitled to the delivery thereof under the contract of carriage, the carrier will not be deemed to have delivered the goods in accordance with the terms in the bill of lading. The responsibility of the carrier for the goods does not cease merely by the technical discharge of the goods from the ship but continues up to their delivery in accordance with the terms of the bill of lading. It is urged by Mr. Desai that unde .....

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harges which are incurred at the last stage of the process of landing of the goods and therefore prior to the actual landing of the goods. They are, even under the general law, for services rendered to the master of the ship whose liability for loss or of damage to the goods continues up to the placing of the goods on the quay and their receipt by the Board. The case Great Eastern Shipping Co. Ltd. v. Govindasamy I.L.R. [1957] Mad. 840, is not of much help. It was not disputed, in that case, tha .....

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t below to be of any direct authority on the question arising for decision in this case. It is stated at p. 684, in Carver's Carriage of Goods by Sea', 10th Edition, that generally speaking, the consignee of the goods or the charterer is bound to remove the goods from the ship's side, and to provide for that purpose a proper number of men and suitable appliances of the kind ordinarily used at the port, having regard to the manner in which the ship is to be discharged. It is stated at .....

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ase. The Court was considering the liability of the consignee for demurrage paid by the ship-owner, on account of the delay in the discharging of the cargo. The suit was between the ship owner and the consignee. The charter-party provided: "The discharging to take place in eight days... The cargo to be brought to and taken from alongside the ship at merchants' risk and expense. The ship to deliver the cargo with such dispatch that unnecessary delay can be avoided. The ship to discharge .....

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performed the principal part of his-obligation when he has put the goods over the rail of his ship; but I think he must do something more-he must put the goods in such a position that the consignee can take delivery of them. He must put them so far over the side as that the consignee can begin to act upon them; but the moment the goods are put within the reach of the consignee he must take his part in the operation. At one moment of time the ship-owner and the consignee are both acting-the one .....

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r the performance of the acts subsequent to his placing the goods in such a position that the consignee can get them, as contended for the respondents. The delivery contemplated in these observations, is not, in our opinion, equivalent to the landing of the goods at the quay as contemplated by the various provisions of the Act. We have already discussed that the landing of the goods by the ship-owner on the quay and placing them in charge of the Board does not amount to delivering them to the co .....

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Ses. Oases IV Series 968. the Board to engage the shore-labour. Further, in the above case, Lord justice Clerk said at p. 972 "The question of delivery is as much one of common-sense as of technical rules. The general rule is that goods are delivered when they are so completely in the custody of the consignee that he may do as he pleases with them." When the goods are placed in the charge of the Board, the consignee is not at liberty to do anything he likes with them and therefore, in .....

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r the goods to any such person. They are therefore liable for breach of contract unless there is some term in the bill of lading protecting them. And they delivered the goods, without production of the bill of lading, to a person who was not entitled to receive them. They are therefore liable in conversion unless likewise so protected." Clause 2 of the Bill of lading provided : "During the period before the goods are loaded on or after they are discharged from the ship on which they ar .....

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oods are loaded on the ship and to cease absolutely after they are discharged therefrom." It was held that this clause did not protect the shipowner in spite of the width of these expressions and its operation must be limited and modified to the extent necessary to enable the effect to be given to the main object and intent of the contract and at least so as not to permit the carrier deliberately to disregard his obligation as to delivery against the production of the bill of lading. In the .....

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he Board receives the goods as the agent of the consignee. The only reasonable conclusion in the circumstances can be that the place of delivery is shifted from the side of the ship to the warehouses where the Board stores the goods till the consignee appears to take delivery on the basis of the delivery order by the steamer-agent which is usually an endorsement on the bill of lading, and the quay be con- sidered a part of the ship. In Hamburg, it is so considered, as would appear from the follo .....

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ods over to the owner of the quay is tantamount to a receipt for the same on the part of the master; the goods discharged upon the quay are considered as still being in the possession of the master until the consignee has received them from the quay." . If the Board was an agent of the consignee, it was bound to deliver the goods to the consignee and should not have any rights of retaining the goods till the payment of the rates and other dues for which it had a lien on the goods. The provi .....

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