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IN THE HIGH COURT OF SINDH AT KARACHI

H.C.A. No.314 OF 2018

[ Terra-Marine Agencies (Pvt) Ltd., v. Syed Raza Haider Rizvi & another ]

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

Appellant : Through Mr. Aga Zafar Ahmed,

Advocate.

Respondent No.1 : Through M/s. Syed Ali Asif Naqvi and

Syed Arif Raza, Advocates.

Date of hearing : 24.08.2026

Date of Judgment : 01.09.2026

JUDGMENT

ARSHAD HUSSAIN KHAN J; This High Court Appeal is directed against the Judgment dated 02.07.2018 and Decree dated 02.08.2018 passed by the learned Single Judge of this court in Suit No.886 of 1999, whereby the suit for damages and compensation instituted by Respondent No.1 was decreed to the extent of US$16,000 (United States Dollars Sixteen Thousand only), or its equivalent in Pakistani Rupees at the prevailing exchange rate, together with mark-up at the rate of 10% per annum from the date of the decree until realization.

2. The essential facts giving rise to the instant appeal are that Respondent No.1/Plaintiff was employed as Second Officer aboard M.V. “Med Venice” pursuant to an Article/Agreement and Contract of Employment dated 08.10.1995, arranged through the Appellant, who was acting as an agent of the ship-owner, Respondent No.2. On 27.05.1996, while the vessel was at the Port of Abu Dhabi, Respondent No.1 sustained an injury to his left palm when a hydraulic line burst during cargo operations. He remained hospitalized in Abu Dhabi for about 27 days; however, according to him, despite not having fully recovered, his treatment was discontinued and he was repatriated to Karachi. Upon his protest and on the recommendation of the Protection and Indemnity (P&I) Club, Respondent No.1 was subsequently sent to the United Kingdom for further medical treatment, where he underwent a second surgical procedure at Black Health Hospital, followed by post-operative physiotherapy at United Park Hospital. According to Respondent No.1, the treatment was abruptly discontinued on 25.03.1997 on the instructions of the P&I Club, allegedly because the Defendants were unwilling to bear the expenses of further treatment. Feeling aggrieved, Respondent No.1 instituted Suit No.886 of 1999, seeking, inter alia, a declaration that he had suffered permanent disability to the extent of 25%-30% and recovery of Rs.11,700,000/- as damages and compensation on account of the Defendants’ alleged failure to provide proper and complete medical treatment in terms of the Contract of Employment. The learned Single Judge, vide the impugned Judgment dated 02.07.2018 and Decree dated 02.08.2018, partly decreed the suit in favour of Respondent No.1 for US$16,000 (United States Dollars Sixteen Thousand only), or its equivalent in Pakistani Rupees at the prevailing exchange rate, together with mark-up at the rate of 10% per annum from the date of the decree until realization. The said Judgment and Decree have been assailed by the Appellant through the instant High Court Appeal.

3. Learned counsel for the Appellant assailed the impugned Judgment and Decree primarily on the ground that the suit against the Appellant was barred by Section 230 of the Contract Act, 1872. He contended that the Appellant had acted merely as a licensed manning and crewing agent of the disclosed principal, Respondent No.2, M/s Gordon Shipping Co. Ltd., Malta, as expressly reflected in the Contract of Employment dated 08.10.1995 (Exh. P/2), a position also acknowledged by Respondent No.1 in the plaint and supported by the testimony of PW-3, Capt. Nasir Ahmed Tariq, Shipping Master. According to learned counsel, no “contract to the contrary” creating personal liability of the Appellant was either pleaded or proved, nor did any of the exceptions contemplated by Section 230 apply, particularly when the principal was expressly disclosed, impleaded and represented in the proceedings. Learned counsel further contended that the learned Single Judge erred in fastening liability of US$16,000 upon the Appellant on the basis of Exh. P/15, being an agreement entered into between the Collective Bargaining Agent (CBA) and the vessel owners, to which the Appellant was neither a party nor a signatory. In the absence of privity of contract or any independent undertaking by the Appellant, no liability arising out of Exh. P/15 could legally be enforced against it. He, therefore, prayed that the impugned Judgment and Decree, insofar as they fastened liability upon the Appellant, be set aside and the suit against the Appellant be dismissed. In support of his stance in the case, the counsel has relied upon the case of Overseas Marine Trading Agencies (Pvt) Ltd. v. Board of Trustees, EOBI [2005 PLC 175], Muhammad Anwar Iqbal v. Bangladesh Shipping Corporation [1987 CLC 1745], Ijaz Ul Haq v. Mrs. Maroof Begum Ahmed [PLD 2023 SC 653], Pakistan Insurance Corporation v. PKNSC [1994 MLD 667]. Lastly, counsel drew attention of this Court upon foreign authorities, including the House of Lords decision in Universal Steam Navigation Co. v. James McKelvie & Co. [(1923) AC 492], the Supreme Court of Canada decision in Chartwell Shipping Ltd. v. Q.N.S. Paper Co. Ltd. [(1989) 2 SCR 683), and the Indian Supreme Court ruling in Marine Container Services South (P) Ltd. v. Go Go Garments [(1998) 3 SCC 247].

4. Conversely, learned counsel for Respondent No.1 supported the impugned Judgment and Decree and, while relying upon the written objections filed on record, contended that the Appellant had failed to produce any documentary evidence or licence establishing that it was acting merely as a manning agent under the applicable Rules, nor, according to him, was such a plea adequately substantiated through the written statement or evidence. He further submitted that the Appellant had itself borne the medical expenses of Respondent No.1, which demonstrated its active role in relation to his employment and treatment and attracted the obligations arising under the Collective Bargaining Agreement (CBA) governing the seafarers. Learned counsel further contended that Respondent No.1 had suffered permanent functional disability to the extent of 20%-25%, which stood established through the assessment of the Medical Board and remained unrebutted during the trial. He maintained that the learned Single Judge had duly considered the pleadings, evidence and material available on record, including the objections relating to limitation and non-joinder of necessary parties, and had returned findings thereon while deciding Issue No.1. He, therefore, submitted that the impugned Judgment and Decree suffered from no legal or factual infirmity warranting interference in appellate jurisdiction and prayed for dismissal of the appeal.

5. We have heard learned counsel for the respective parties, perused the material available on record, and carefully examined the impugned Judgment in light of the objections filed by Respondent No.1. The principal controversy requiring determination in the instant appeal is whether, notwithstanding the admitted position that the Appellant acted as an agent of the disclosed ship-owner, Respondent No.2, any personal liability for payment of compensation could lawfully be fastened upon the Appellant.

6. Before examining the above question, it may be observed that certain material facts are substantially undisputed. Respondent No.1 was engaged as Second Officer aboard M.V. “Med Venice” under the Contract of Employment dated 08.10.1995 (Exh. P/2). During the subsistence of such employment, he sustained an injury to his left hand on 27.05.1996 while the vessel was at Abu Dhabi. He initially received medical treatment there, was subsequently repatriated to Karachi and was thereafter sent to the United Kingdom for further treatment, including surgery and rehabilitation. The expenses relating to his treatment and travel were borne/reimbursed on behalf of the employer and/or through the concerned P&I Club.

7. The learned Single Judge, upon appraisal of the evidence, did not find that the original accident had occurred on account of negligence attributable to the Defendants. Rather, it was found that Respondent No.1 himself had failed to take adequate precautions while inspecting the hydraulic pipes. The learned Single Judge, however, proceeded to hold the Defendants negligent in relation to the subsequent medical treatment on the premise that Respondent No.1's treatment in the United Kingdom had been discontinued before he had fully recovered.

8. The medical evidence discussed in the impugned Judgment shows that Respondent No.1 continued to suffer impairment of his left hand. Dr. Pervaiz Muhammad Hashmi (PW-2) assessed his functional disability initially at 18%-20% and opined that, notwithstanding further treatment, some permanent disability in the range of 10%-15% would remain. Other medical opinions produced in evidence assessed the disability between 20% and 25%. Although an earlier Medical Board had declared Respondent No.1 fit for duty, the subsequent material indicated that such fitness did not necessarily mean absence of functional disability. On reconciliation of the medical evidence, the learned Single Judge assessed the permanent partial disability at 20%. We find no sufficient basis, on the material brought before us, to disturb that factual assessment merely because Respondent No.1 had been declared fit for duty at one stage. Fitness for employment and the existence of a partial functional disability are not necessarily mutually exclusive.

9. The crucial question, however, is whether the compensation determined on account of such disability could legally be recovered from the present Appellant. In this regard, the nature and capacity in which the Appellant entered into the transaction assume considerable significance. The Contract of Employment dated 08.10.1995 (Exh. P/2), upon which Respondent No.1 himself founded his claim, identifies Respondent No.2, M/s Gordon Shipping Co. Ltd., Malta, as the principal/ship-owner, whereas the Appellant acted in the capacity of its local manning/crewing agent. This relationship was not only apparent from the contractual document but was also acknowledged in the pleadings of Respondent No.1. The evidence of PW-3, Capt. Nasir Ahmed Tariq, Shipping Master, further supports the position that such crewing agents execute employment arrangements on behalf of the concerned ship-owners.

10. Section 230 of the Contract Act, 1872 embodies the general rule governing the contractual liability of an agent and provides that, in the absence of a contract to the contrary, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. The provision further specifies the circumstances in which a contract to the contrary may be presumed. Thus, where an agent contracts on behalf of a disclosed principal, personal liability cannot ordinarily be imposed upon the agent unless the terms of the contract, the surrounding circumstances, or an independent undertaking bring the case within an exception recognized by law.

11. In the present case, Respondent No.2 was not an undisclosed or unidentified principal. Its identity was expressly disclosed in the Contract of Employment itself. Respondent No.2 was also impleaded as a party to the suit and participated in the proceedings. We have not been shown any clause in Exh. P/2 under which the Appellant independently undertook to pay compensation for injury or permanent disability suffered by Respondent No.1. Nor has any separate agreement, guarantee or undertaking been identified whereby the Appellant assumed the obligations of the ship-owner in its personal capacity.

12. The reasoning adopted in paragraph 26 of the impugned Judgment requires particular consideration. The learned Single Judge relied upon Exh. P/15, being correspondence containing disability provisions stated to have arisen from an arrangement between the Collective Bargaining Agent/International Transport Workers' Federation and the vessel owners. Clause 21 thereof was construed to provide compensation of US$16,000 for disability assessed at 20%. The learned Single Judge read the said provision together with Clause 13 of the Contract of Employment (Exh. P/2) and consequently awarded US$16,000 to Respondent No.1.

13. Even if Exh. P/15 is assumed to be applicable to the employment of Respondent No.1 and the assessment of US$16,000 thereunder is accepted, a distinction must necessarily be maintained between the existence and quantum of a contractual entitlement on the one hand and the identity of the person legally liable to discharge that obligation on the other. The former does not, by itself, establish the latter. Clause 21, as noticed by the learned Single Judge, places the obligation to compensate upon the “employer”. Similarly, the impugned Judgment itself, while discussing Clause 13 of Exh. P/2, refers to the liability of the “company” and identifies the ship-owner as the employer/principal. There was, therefore, a corresponding obligation upon the Court to determine how an obligation resting upon the employer/principal could additionally or alternatively be enforced personally against its agent.

This aspect, in our view, has not been satisfactorily addressed in the impugned Judgment. The principal circumstance relied upon for fastening liability upon the Appellant appears to be that it remained “actively involved in the entire episode” and that medical and travelling expenses of Respondent No.1 had been reimbursed through it. Such circumstances may establish that the Appellant was actively performing its functions as a local agent and facilitating the discharge of its principal’s obligations; however, in the absence of any independent contractual undertaking or other legal basis establishing personal liability, such conduct cannot transform the Appellant from an agent into a principal contracting party. Performance by an agent of acts falling within the scope of its agency cannot, by itself, constitute an independent assumption of the principal's contractual liabilities.

14. We are also unable to agree with the submission advanced on behalf of Respondent No.1 that failure of the Appellant to produce its licence as a manning agent is, by itself, sufficient to impose contractual liability upon it. The decisive consideration is not merely the nomenclature or regulatory status of the Appellant, but the capacity in which the contract was entered into and the obligations assumed thereunder. Where the contractual document itself discloses the principal and the surrounding evidence establishes that the Appellant acted on its behalf, absence of production of a particular licence cannot create a substantive contractual obligation which otherwise does not arise from the agreement.

15. Similarly, the mere fact that the Appellant arranged for or reimbursed the medical expenses of Respondent No.1 cannot, by itself, be construed as a “contract to the contrary” so as to attract personal liability under Section 230 of the Contract Act, 1872. Such acts were consistent with the Appellant’s role as an agent facilitating the discharge of its principal’s obligations. In order to depart from the general rule that an agent of a disclosed principal is not personally bound by the contract, there must be clear material demonstrating that the agent had independently undertaken or agreed to assume such liability. No term, covenant or undertaking to that effect is discernible from the Contract of Employment (Exh. P/2), Exh. P/15, or any other material available on record.

16. The impugned Judgment also does not record a finding that any of the statutory circumstances contemplated by Section 230 existed in the present case. The transaction was not one for the sale or purchase of goods for a merchant resident abroad; the principal was expressly disclosed; and there was nothing to suggest that the disclosed principal could not be sued. Indeed, Respondent No.2 was itself impleaded and represented in the proceedings. The ordinary rule embodied in Section 230, therefore, remained applicable insofar as the personal contractual liability of the Appellant was concerned.

17. There is yet another aspect of the matter. Exh. P/15, upon which the amount of US$16,000 was ultimately quantified, was not shown to be an agreement executed by the Appellant in its personal capacity. Even assuming that its disability provisions formed part of the applicable terms governing Respondent No.1's employment, liability thereunder would ordinarily attach to the employer/ship-owner unless an independent basis for extending such liability to its agent was established. No such basis has been demonstrated from the record.

18. We may clarify that the above conclusion does not require interference with the factual finding that Respondent No.1 suffered a permanent partial functional disability or that, on the basis adopted by the learned Single Judge, such disability was assessed at 20%. Nor does it absolve the employer/ship-owner of such liability as may otherwise arise under the Contract of Employment or the applicable disability provisions. The question before us is narrower: whether the Appellant, despite acting as an agent of a disclosed principal, could personally be made liable for the amount decreed. For the reasons discussed above, that question must be answered in the negative.

19. The learned Single Judge, therefore, fell into error in fastening the decretal liability upon the Appellant merely on account of its participation in arranging Respondent No.1's employment and medical treatment, without first identifying any contractual provision, independent undertaking or recognized exception to Section 230 of the Contract Act, 1872, rendering the Appellant personally liable. To that extent, the impugned Judgment and Decree cannot be sustained.

20. In view of the foregoing, the instant High Court Appeal is allowed. The impugned Judgment dated 02.07.2018 and Decree dated 02.08.2018 passed by the learned Single Judge in Suit No.886 of 1999 are set aside insofar as they fasten liability upon the Appellant for payment of US$16,000, or its equivalent in Pakistani Rupees, along with mark-up, and the suit against the Appellant is accordingly dismissed. As a consequence, the Bank Guarantee furnished by the Appellant and lying with the Nazir of this Court stands discharged. The Nazir is directed to return the original Bank Guarantee to the Appellant, or its duly authorized representative, after due verification and completion of the requisite formalities.

It is, however, clarified that this judgment shall not disturb the findings and liability, if any, under the impugned Judgment and Decree against Respondent No.2/ship-owner, which has not challenged the same before us and whose rights and liabilities are consequently not the subject matter of the present appeal.

The appeal stands disposed of in the above terms, with no order as to costs.

JUDGE

Naveed PA