Release of cargo without original Bill of lading and against indemnity

The ship agent took delivery of a container of nickel silver scrap valued at US$ 34,222.80 on arrival at Calcutta from Kaohsiung.  Shortly after arrival the consignee, a sole trader, called at the agent's office claiming to be the legal owner of the cargo and seeking a delivery order. 

He said the original B/L had been misplaced and offered to provide an indemnity in the usual form in which his bank would join.  The agent agreed to the request and provided and indemnity from in the shipping line's recommended wording for completion. 

The consignee returned later with the indemnity which appeared to be in order, and was given a delivery note to enable him to take delivery of the goods.  Shortly afterwards, the shipper informed the line that he had not received payment for the goods and that the original Bill of Lading remained in the possession of the Bank.  Thereupon the agent wrote to the consignee demanding immediate production of the original Bill of Lading and also wrote to the Bank requesting them to make payment to the shipper.  The consignee replied sending a copy of a letter he had sent to the shipper rejecting the cargo and alleging serious shortage and excessive quantities of plastic and dust in the scrap.

The Bank, in their reply, explained that the consignee had called at the Bank with the indemnity and asked an official to verify his signature on the document.  This was done and examination of the indemnity which the consignee had delivered to the agent revealed that the Bank had merely verified the signature and had not joined in the indemnity.  Subsequently the consignee had again called at the Bank and told them that he had already taken delivery of part of the cargo against the letter of indemnity whereupon the Bank requested him to pay the amount due in full for onward transmission to the shipper.  When he refused to do so, the Bank reported the matter to the local police authority.

Action was taken to block certain fixed deposit accounts of the consignee amounting to US$ 9,000 approx.  The shipper made a claim upon the carrier for US$ 37,185.80
which was paid and the agent immediately applied to the court for an order requiring the consignee to provide security for the amount of the shipper's claim and seeking attachment of bank accounts and other assets.

The Club's P&I representative and a lawyer in India were instructed to investigate and report to the Club but there was little that could be done other than to await the outcome of proceedings against the consignee who at the time could not be traced.  The claim against the Member was settled, less the deductible and the amount held in the blocked bank account.

This claim serves to remind Members of the "Recommended ITIC Guidelines for staff involved in the release of cargoes" which have been sent to all Members.