Krishna Mining Co., Ud. v. Pan Islamic Steamship Co., Ltd
KRISHNA MINING CO., LTDV.
PAN ISLAMIC STEAMSHIP CO., LTD
COURT OF APPEALWEERASURIYA, J., ANDDISSANAYAKE, J.
CA NO. 798/88 (F)
DC COLOMBO NO. 89785/MDECEMBER 15, 2000
Charter Party Agreement – Demurrage – Liability of charterer to pay demurrage- Carrier's liability to pay demurrage to the Port?
The plaintiff-respondent Shipping Company sued the defendant-appellant for therecovery of a certain sum as demurrage, due to them on account of the shipchartered by the defendant-appellant, being delayed at Chittagong. The defendant-appellant denied liability to pay any demurrage and claimed in reconvention acertain sum being the value of 2000 MT of edible salt made unfit for humanconsumption, as a result of being contaminated with goods unlawfully stored onthe hatches of the ship. District Court entered judgment for the plaintiff as prayedfor and dismissed the claim in reconvention.
On appeal it was contended that demurrage is charged by the Ports Authority,and that the plaintiff-respondent had failed to prove that it was charged demurrageby the Chittagong Ports Authority and that the said demurrage was paid by theplaintiff-respondent.
On a charter-party agreement both carrier and the charterer agree in fixinga time for the purpose of loading and discharging the cargo, what is calledthe 'lay time'. When the cargo is booked on F.I.C.S. basis under the charterparty, loadinig and unloading of cargo is done by the charterers stevedores.If the lay time, is exceeded by the charterers, then the vessel is said togo on demurrage. (II)
(II)Demurrage agreed on a charter party is payable to the carrier in respectof the ship as against demurrage paid to the port. Eventually, the carrieris liable to pay the port demurrage for the delay in moving the ship outof the port.
Sri Lanka Law Reports
 2 Sri LR.
The liability of the charterer to pay demurrage to the carrier for delay thatis caused on his behalf in unloading the cargo from the ship on thecharter party is not dependent on the carrier's liability to pay demurrageto the Port.
Plaintiff-respondent is not obliged to produce documents to show thatthey have paid the port demurrage when they demand demurrage whichthe charterer was liable to pay under the charter-party agreement.
APPEAL from the judgment of the District Court of Colombo.
Romesh de Silva, PC with Hiran de Alwis for defendant-appellant.
Plaintiff-respondent absent and unrepresented.
Cur. adv. vult
May 11, 2001DISSANAYAKE, J.
The plaintiff-respondent, a shipping company, sued the defendant-appellant company for the recovery of a sum of Rs. 1,902,899.85,the equivalent of 82,448 American Dollars as demurrage due to themon account of their ship chartered by the defendant-appellantcompany – being delayed at Chittagong, for a period of 27 days 11hours 35 minutes.
The defendant-appellant company filed answer denying liability topay any demurrage and claiming in reconvention a sum ofRs. 1,876,000 being the value of 2,000 tons of edible salt made unfitfor human consumption, as a result of being contaminated with othergoods – unlawfully stored on the hatches of the ship.
The case proceeded to trial on 18 issues, and at the conclusionof the trial the learned District Judge by his judgment dated 1.11.1988entered judgment for the plaintiff-respondent company as prayed forin the plaint, and the learned District Judge dismissed the claim inreconvention of the defendant-appellant company.
It is from the aforesaid judgment that the defendant-appellantcompany preferred this appeal.
Krishna Mining Co., Ltd. v. Pan Islamic Steamship Co., Ltd(Dissanayake, J. )
When this appeal was taken up for hearing learned President'sCounsel who appeared for the defendant-appellant submitted that he 20is not pursuing the appeal in respect of the claim in reconvention.
The only contention of learned President's Counsel for the defenadantappellant was that demurrage is charged by the Ports Authority, andthat in this case the plaintiff-respondent has failed to prove that itwas charged demurrage by the Chittagong Ports Authority and thatthe said demurrage was paid by the plaintiff-respondent company.
The facts of this case briefly are as follows: The defendant-appellantentered into a Charter-party (P1) with the plaintiff-respondent company,for the carriage of 5,000 metric tonnes of edible salt in poly-propylenebags on board the plaintiff-respondent's vessel "M.S. Safina – E – 30Ismail" from Point Pedro to Chittagong, Bangladesh.
The charter-party was in standard Gencon Charter form, with Riderclauses 1 to 18. According to clause 18 of the Charter-party and Riderclause 5 the defendant-appellant was liable to pay demurrage to theplaintiff-respondent at the rate of US $ 3,000 per day in the eventlay time was exceeded at the point of loading and discharging.
Hashmi, who was the Commercial Manager, of the plaintiff-respondent company, gave evidence on behalf of the plaintiff-respondentin the lower Court. He sought to explain what was normally meantby demurrage, in relation to a Charter-party agreement in the shipping 40trade.
On a Charter-party agreement, both the carrier and the charterernormally agree in fixing a time for the purpose of loading anddischarging of cargo, which is called lay time. When the cargo isbooked on F.I.C.S. basis under the Charter party, like in this caseloading and unloading of cargo is done by the Charterer's stevedores.
If the "lay time" is exceeded by the charterers then the vessel is saidto go on demurrage.
Sri Lanka Law Reports
 2 Sri L ft.
Demurrage, is damages payable by the charterer for the delaycaused over and above the agreed time for discharging or loading, soIt is to be observed that the aforesaid charter party (P1) Gencon Rule6 and the Rider clause 3 entered into by the parties has laid downa specific laytime for the said cargo.
The demurrage agreed on a charter party is payable to the carrierin respect of the ship as against demurrage paid to the port. Eventually,the carrier is liable to pay the port demurrage for the delay in movingthe ship out of the port. The liability of the charterer to pay demurrageto the carrier for delay that is caused on his behalf in unloading thecargo from the ship on the Charter party, is not dependant on thecarrier's liability to pay demurrage to the port. It arises independently soon the Charter party.
In this case defendent-appellant has agreed by clause 18 of theCharter-party and Rider clause 5, to pay demurrage to the plaintiff-respondent at US $ 3,000 per day. According to the aforesaid clause18 of the Charter party and Rider clause 5, the plaintiff-respondentis not obliged to produce documents to show that they have paid theport demurrage, when they demand demurrage which the chartererwas liable to pay under the Charter-party agreement.
Therefore, it is to be observed that the defendant-appellant is liableto pay the demurrage to the plaintiff-respondent.70
Having examined the evidence and the judgment in this case Iam of the view that there is no basis for this Court to interfere withthe judgment of the learned District Judge.
The appeal of the defendant-appellant is dismissed without costs.WEERASURIYA, J. – I agree.
KRISHNA MINING CO., LTD v. PAN ISLAMIC STEAMSHIP COP., LTD