The “Yue You 902” and another matter  SGHC 106
The Plaintiff had extended a loan to the buyer of the cargo, Aavanti Industries Pte Ltd (“Aavanti”) and took bills of lading as security for the loan. The Defendant is the owner of the vessel “Yue You 902” (the
“Vessel”). The Plaintiff claims against the Defendant for its failure to deliver to the Plaintiff the cargo to which the bills of lading in the Plaintiff’s possession relate.
FGV Trading Sdn Bhd (“FGV”) was the seller of the cargo as well as the voyage charterer of the Vessel. It issued a letter of indemnity to the Defendant, requesting the Defendant to deliver the cargo to the ultimate buyer without production of the original bills of lading.
Discharge of the cargo commenced on 27 April 2016 and was completed on 29 April 2016. In the meantime, on 26 April 2016, the Plaintiff received the bills of lading from FGV and requested payment instructions from Aavanti. Aavanti replied requesting financing by way of a trust receipt loan. On 29 April 2016, the Plaintiff granted the loan for the sum requested and effected payment of the purchase price. In other words, the cargo had been completely discharged from the Vessel before the Plaintiff remitted the purchase price.
After Aavanti defaulted on the loan, the Plaintiff proceeded to enforce its security over the bills of lading by demanding delivery of the cargo from the Defendant, which the Defendant failed to do.
The Plaintiff commenced proceedings against the Defendant and obtained summary judgment. The Defendant appealed.
The High Court dismissed the appeal and held, inter alia, as follows:
This decision once again highlights the settled law that a carrier who issued the bill of lading is obliged to deliver the goods only to the person in possession of the bill, whether as original shipper or as transferee of the bill by indorsement (where necessary) and delivery. Delivery of cargo (whether or not against a letter of indemnity) to persons not entitled does not cause a bill of lading to be spent.
This is another reminder to Members of the risks of delivering cargo other than against the presentation of the original bill of lading. Members are referred to Rule 2, Section 17 proviso c(ii) & (iii) of the UK Club’s Rules. Claims arising under proviso c are payable only at the discretion of the Members’ Committee.
 Section 2(2) of the Bills of Lading Act states “Where, when a person becomes the lawful holder of a bill of lading, possession of the bill no longer gives a right (as against the carrier) to possession of the goods to which the bill relates, that person shall not have any rights transferred to him by virtue of subsection (1) unless he becomes the holder of the bill – (a) by virtue of a transaction effected in pursuance of any contractual or other arrangements made before the time when such a right to possession ceased to attach to possession of the bill…”
 The proviso at the end of section 5(2) of the Bills of Lading Act states “… a person shall be regarded for the purposes of this Act as having become the lawful holder of a bill of lading wherever he has become the holder of the bill in good faith.”