(delivering the Judgment of the Board): This appeal arises out of a claim by Chabbra Corporation Pte. Ltd. ("Chabbra") against the owners of the ship "Jag Dhir" ("the shipowners") for failure to deliver a cargo of salt carried by that ship from Tuticorin in India to Chittagong in Bangladesh in July 1977.

The claim was raised by an action in rem against the ship "Jag Shakti", a ship in the same ownership as the "Jag Dhir", begun in the High Court of Singapore on April 29, 1978 in accordance with the Admiralty jurisdiction conferred on that court by statute. The action was tried by Rajah J. who, by an order dated March 18, 1981, awarded Chabbra damages of S$389,117.62 with interest at 12% p.a. from July 27, 1977 and costs.

The shipowners appealed to the Court of Appeal of Singapore (Wee Chong Jin C.J., Chua and Lai Kew Chai JJ.) on the ground that the damages awarded were too high. Chabbra cross-appealed on the ground that they were too low. The Court of Appeal, by an order dated August 19, 1982, varied the award of damages made by Rajah J. by substituting for the amount awarded by him the lower amount of S$275,629.82 with interest at 12% p.a. from August 5, 1977. The Court of Appeal at the same time dismissed Chabbra's cross-appeal.

Chabbra now appeal, with the leave of the Court of Appeal, to this Board, contending that the judgment of the Court of Appeal reducing the amount of damages awarded to them by the learned trial judge should be set aside, and the award made by him should be restored. There is no cross-appeal to the Board by the shipowners.

Before their Lordships both sides accepted the facts of the case as found by the Court of Appeal. These facts, amplified to some extent by reference to the documents and to other findings by the trial judge also accepted by both sides, are as follows:

(1) By a written contract dated May 20, 1977 Indian Overseas Corporation of Calcutta, India, ("IOC"), agreed to sell Mumtazzudin & Sons of Dacca, Bangladesh, ("Mumtazzudin") 7,000 metric tons of edible salt at US$22 per metric ton C & F Chittagong/Chalna.

(2) The suppliers of the salt were Bihar Supply Syndicate also of Calcutta ("BSS"), who had contracted in writing to sell to IOC 21,000 metric tons of salt plus or minus 10% at US$22 per metric ton C & F Chittagong/Chalna by three shiploads of 7,000 metric tons per ship.

(3) The fact that IOC were not taking a profit on the sale was because they were permitted, by reason of the export of the goods, to import certain scheduled goods into India to the value of one-third of the value of the goods so exported.

(4) There was a business firm in Singapore called Atlas Enterprises ("Atlas") having two partners, one K.C. Sharma ("Sharma") and the other his wife. Sharma agreed with Mumtazzudin that Atlas would finance Mumtazzudin's contract of sale with IOC by causing transferable letters of credit to be opened by banks in Singapore in favour of IOC to pay for the salt bought by Mumtazzudin from the latter.

(5) Atlas subsequently caused two transferable letters of credit to be opened in favour of IOC. One was opened with the Singapore branch of the United Commercial Bank for US$30,800 to pay for 1,400 metric tons of salt at US$22 per metric ton. The other was opened with the Singapore branch of the Banque National de Paris for US$79,200 to pay for 3,600 metric tons at the same price.

(6) The total amount expended by Atlas in financing the purchase of the salt by Mumtazzudin from IOC, including the opening of the letters of credit, bank charges and premiums for the insurance of the salt in transit, amounted to S$275,620.82.

(7) Through the means of the two transferable letters of credit BSS were in due course paid for 5,000 metric tons of salt supplied by them to IOC. The payments were made by certain paying banks in India at the request of the opening banks in Singapore.

(8) BSS, pursuant to their contract with IOC, shipped 5,000 metric tons of salt on board the ship "