Valency International Pte Ltd v JSW International Tradecorp Pte Ltd and others

JSW International Tradecorp Pte Ltd sold 55,000MT of coal to K.I. (International) Limited (Kamachi) and voyage chartered the MV Stella Cherise from Oldendorff Carriers GmbH & Co. KG to carry it to India. Valency International Pte Ltd financed Kamachi's purchase by opening a letter of credit in JSW's favour. The cargo was discharged at Krishnapatnam Port in late August 2018 without production of the bills of lading, which had been switched into 22 bills, and was landed into a bonded storage area. Kamachi, JSW and the discharge port agent, Unicorn Maritimes (India) Pvt Ltd, signed letters stating that the cargo would be released only against the bills or on Valency's instructions.

On 10 September 2018 Valency pledged the 22 bills to HSBC as security for a loan, and the next day took them back from HSBC under a trust receipt. On 13 September 2018 Oldendorff told Unicorn to release delivery orders, and on 17 September 2018 JSW did the same. Over about two months Unicorn issued delivery orders and Kamachi took the whole cargo; Valency was paid for only part of it. The pledge ended by 25 September 2018.

Valency sued JSW, Oldendorff and Unicorn in conversion in Suit No 297 of 2020. The High Court held Valency had no standing against JSW or Oldendorff because the bills were pledged at the relevant times, though it thought Oldendorff's instruction would otherwise have been a conversion. It allowed the claim against Unicorn in part. Valency appealed in Civil Appeal No 31 of 2025, and Oldendorff appealed against the finding about its instruction in Civil Appeal No 32 of 2025.

1. Whether the release instructions given by JSW and Oldendorff amounted to acts of conversion
2. Whether redelivery of the pledged bills to Valency under the trust receipt extinguished HSBC's pledge
3. Whether Valency had the immediate right to possession of the cargo needed to sue in conversion

The court held Valency to its case at trial that the conversions occurred when the instructions were given, but said the result would be the same on the longer period. Valency's counsel accepted that the instructions were inchoate until Unicorn acted on them, so Valency had to prove that they actually caused Unicorn to issue the delivery orders. It had not. Unicorn remained bound by its undertaking to Valency, later misstated the remaining cargo balance to Valency rather than blaming JSW, and had waited for Valency's instructions in earlier dealings. The timing of the first delivery order after JSW's instruction was not enough, Oldendorff's instruction came days earlier and did not on its face call for delivery without the bills, and the orders were released progressively over two months. The letters of indemnity were read as covering discharge, not delivery.

On standing, a claimant needs actual possession or the immediate right to possession at the time. Adopting the approach in Bassano v Toft, the court held a pledge ends only on a voluntary surrender of the pledgee's special interest, judged from the circumstances of redelivery, and an agency relationship is not a precondition. The trust receipt confirmed the pledge, required the cargo to be stored in HSBC's name and the proceeds held for it, and restricted Valency's dealings, so HSBC kept its interest; Valency in fact received the bills as HSBC's agent. Its physical holding of the bills therefore gave it no standing.

The Court of Appeal dismissed Valency's appeal in CA 31 and allowed Oldendorff's appeal in CA 32, holding that neither release instruction was an act of conversion and that Valency in any event lacked standing. JSW and Oldendorff were each awarded costs of $150,000 plus reasonable disbursements.