Gujarat High Court
Phaethon International Co.S.A vs M V Americana on 22 June, 2015
Author: Vipul M. Pancholi
Bench: Vipul M. Pancholi
O/AS/17/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
ADMIRALITY SUIT NO. 17 of 2015
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PHAETHON INTERNATIONAL CO.S.A.....Plaintiff(s)
Versus
M V AMERICANA....Defendant(s)
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Appearance:
MR SN SOPARKAR, SENIOR COUNSEL WITH MS PAURAMIB SHETH,
ADVOCATE for the Plaintiff(s) No. 1
MR MIHIR JOSHI, SENIOR COUNSEL WITH MS RUJUTA R OZA, ADVOCATE
for the Defendant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI
Date : 22/06/2015
ORAL ORDER
1. This suit is filed by the plaintiff, whereby the admiralty jurisdiction of this Court is invoked since the defendant vessel is in Indian Waters and within jurisdiction of this Court. The plaintiff has initiated the action in rem with respect to dispute amounting to maritime claim arising out of the agreement for hire and use of the vessel under Charter Party as per the International Convention Relating to the Arrest of SeaGoing Ships, Brussels, 1952, inter alia, seeking decree against the defendant vessel in all for a sum of USD 141812.99 and for arrest of defendant vessel.
2. The plaintiff has prayed for the following relief:
"a. That the defendants be ordered and decreed to pay to the plaintiff a principal sum of USD 122,528.77 along with interest thereon, calculated at the rate of 12% p.a. from the date of the suit till its realization together with interest and cost of these proceedings aggregating USD 141,812.99 as per particulars of claim hereto annexed and marked as Exh. I as Page 1 of 37 O/AS/17/2015 ORDER security for satisfaction of the plaintiff's claim and interest and costs:
b. That the defendant vessel M.V.AMERICANA, together with hull, engine, gears, tackles, bunkers, machinery, apparel, plant, furnitures, fixtures, appurtenances and paraphernalia, at present lying at the Port and Harbour of Hazira, or wherever she is within the territorial waters of India, be arrested by a Warrant of Arrest of this Hon'ble Court for securing the Plaintiff's claim in Arbitration and the same be condemned in respect of the Claim herein and be ordered to be sold along with her hull, engines, gears, tackles, bunkers, machinery, apparel, plant, furniture, fixtures, appurtenances and paraphernalia and the net sale proceeds thereof be ordered to be applied to the satisfaction of the plaintiff's claim in the suit;
c. that pending and hearing and final disposal of the suit this Hon'ble Court be pleased to order and direct the arrest of the Defendant Vessel M.V.AMERICANA along with her hull, engines, gears, tackles, bunkers machinery, apparel, plant, furnitures, fixtures, appurtenances and paraphernalia at present lying at the Port and Harbour of Hazira or wherever she is within the territorial waters of India and also restrain her from filing Bill of Entry, beaching and breaking and kept under the order of this Hon'ble Court as security for Plaintiff's claim in arbitration, costs;"
3. This matter was listed on board on 12.06.2015 at 2:30 p.m. On that day, the defendant vessel has been directed to be arrested so that this Court assumes jurisdiction. However, at that time, learned Senior Counsel Mr. R.J.Oza appeared with learned advocate Ms. Rujuta Oza for the defendant and made a statement that the vessel is likely to get the berth on 17.06.2015 and shall remain in Indian Waters till 20.06.2015 and will not sail away. Thus, on the request/statement made by the learned Senior Counsel for the defendant, the implementation and execution of the arrest order was suspended till the next date of hearing i.e. up to 18.06.2015. The suspension of implementation of arrest order has been further extended till 22.06.2015.
Page 2 of 37O/AS/17/2015 ORDER
4. On 18.06.2015, learned Senior Counsel Mr. Mihir Joshi appeared with learned advocate Ms. Rujuta Oza for the defendant vessel and orally raised two preliminary contentions; firstly, that this Admiralty Suit before this Court is not maintainable in view of Clause 71 of Charter Party dated 07.12.2013 by which the plaintiff and the owner of the defendant vessel have agreed to refer the dispute to the High Court of England and Wales. Secondly, learned counsel for the defendant contended that the plaint is required to be dismissed for want of full and complete details in the plaint. He referred to the averments made in para 3 of the plaint and thereafter referred to the averments made in para 5 and 6 of the plaint and mainly contended that plaintiff has not disclosed the full details nor has produced any documentary evidence in support of its averments and even after six days of filing of the suit no further details are produced. Therefore, there is no prima facie case in favour of the plaintiff and hence on this count also the suit is required to be dismissed. Learned counsel Mr. Joshi further submitted that at this stage any application or reply is not filed by the defendant before this Court.
5. To substantiate the aforesaid preliminary contentions, learned counsel Mr. Joshi for the defendant argued at length and referred to the various provisions of law as well as various decisions. The main contentions of learned counsel Mr. Joshi are as follows:
(a) Learned counsel Mr. Joshi referred to Clause 71 of the terms and conditions of Charter Party entered into between the parties on 7th December 2013, which reads as under:
"Clause 71. Arbitration Clause:
All disputes from time to time arising out of the Contract shall be referred to the High Courts of England and Wales."Page 3 of 37
O/AS/17/2015 ORDER Learned counsel Mr. Joshi submitted that plaintiff is aware about the aforesaid clause and it is not in dispute that the parties have agreed that all the disputes from time to time arising out of the contract shall be referred to the High Court of England and Wales. Thus, when the parties to the contract have agreed for resolving their disputes before the High Court of England and Wales, this Court has no jurisdiction to entertain the dispute between the parties. He further contended that if two Courts have jurisdiction to try the suit, parties can choose one of the Courts by entering into an agreement. For the said contention learned counsel has placed reliance upon the decision rendered by the Hon'ble Supreme Court in the case of A.B.C.Laminart Pvt. Ltd. & Anr. v. A.P.Agencies, Salem [AIR 1989 SC 1239]. The Hon'ble Supreme Court, in para 16 of the said decision, observed as under "16. So long as the parties to a contract do not oust the jurisdiction of all the courts which would otherwise have jurisdiction to decide the cause of action under the law,it cannot be said that the parties have by their contract ousted the jurisdiction ofthe court. Where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law, their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agree to submit to would not otherwise be proper, jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. Would this be the position in the instant case?"
The Hon'ble Supreme Court, in para 18 of the said decision further observed as under:
"18..............Thus it is now a settled principle that where there may be two or more competent Courts which can Page 4 of 37 O/AS/17/2015 ORDER entertain a suit consequent upon a part of the cause of action having arisen there within, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by sections 23 and 28 of the Contract Act. This can not be understood as parties contracting against the Statute. Mercantile Law and Practice permit such agreements."
Learned counsel Mr. Joshi therefore submitted that in view of Clause 71 of terms and conditions of Charter Party dated 7th December 2013 and in view of the above decision rendered by the Hon'ble Supreme Court in the case of A.B.C.Laminart Pvt. Ltd. (Supra), the admiralty jurisdiction of this Court is barred and therefore this suit is not maintainable.
(b) Learned counsel Mr. Joshi thereafter referred to the International Convention Relating to the Arrest of SeaGoing Ships Brussels, 1952. He referred to Articles 2 and 3(1), which read as under:
"ARTICLE 2 A SHIP FLYING THE FLAG OF ONE OF THE Contracting States may be arrested in the jurisdiction of any of the Contracting States in respect of any maritime claim, but in respect of no other claim; but nothing in this Convention shall be deemed to extend or restrict any right or powers vested in any governments or their departments, public authorities, or dock or habour authorities under their existing domestic laws or regulations to arrest, detain or otherwise prevent the sailing of vessels within their jurisdiction.
ARTICLE 3 (1) Subject to the provisions of para. (4) of this article and of article 10, a claimant may arrest either the Page 5 of 37 O/AS/17/2015 ORDER particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship, even though the hip arrested be ready to sail; but no ship, other than the particular ship in respect of which the claim arose, may be arrested in respect of any of the maritime claims enumerated in article 1, (o), (p) or
(q)."
After referring to the said articles, learned counsel submitted that there cannot be any contract with the vessel but it has to be with the owner of the vessel. Article 3(1) suggests that there has been nexus between the owner and the vessel.
(c) Learned counsel Mr. Joshi has placed reliance upon the decision rendered by the Hon'ble Supreme Court in the case of BHARAT ALUMINIUM COMPANY v. KAISER ALUMINIUM TECHNICAL SERVICES INC. [(2012) 9 SCC 552] wherein the Hon'ble Supreme Court has held that an inter partes suit simply for interim relief pending arbitration, even if it is limited for the purpose of restraining dissipation of assets would not be maintainable. It was further held that pendency of the arbitration proceedings outside India would not provide a cause of action for a suit where the main prayer is for injunction. Such a suit would not be maintainable because an interlocutory injunction can only be granted during the pendency of a civil suit claiming a relief which is likely to result in a final decision upon the subject in dispute. In the facts of the said case, the Hon'ble Supreme Court held that the only relief that could be asked for would be to safeguard the property which the plaintiff may or may not be entitled to proceed against. The plaintiff's only claim would dependant on the outcome of the arbitration proceedings in a foreign country over Page 6 of 37 O/AS/17/2015 ORDER which the Courts in India would have no jurisdiction. The cause of action would clearly be speculative and therefore there would be no existing cause of action. Therefore, it was held that the plaint itself would be liable to be rejected under Order VII Rule 11.
Learned counsel Mr. Joshi thereafter has placed reliance upon the decision of Bombay High Court in the case of Rushab Ship International LLC v. M.V. African Eagle and the Freight due for transportation [(2014) 4 Bom CR 269]. Learned counsel has mainly relied on the observations made in para 21, 22, 23, 25 and 26 of the aforesaid decision, which read as under:
"21. Therefore, I am in agreement with Mr.Ramabhadran's submissions that Golden Progress case is not applicable in the present facts of the case as there is no prayer for decree or substantial relief in this case. In Golden Progress the suit itself was primarily for a claim and for decree against the defendants therein. The Full Bench, in my view, has not considered a situation like in the present as to whether a suit seeking a final relief at the interlocutory stage is maintainable or not.
22. Therefore, we will have to consider whether this suit itself can be proceeded with or the plaint should be rejected in the light BALCO (Supra) judgment.
23. In the BALCO (supra) judgment, the Apex Court has in no uncertain terms held that an inter parte suit simply for interim reliefs pending arbitration would not be maintainable. The Apex Court held that in order to claim an interim relief, the existence of a pending suit is necessary. The Apex Court opined that pendency of the arbitration proceedings outside India would not provide a cause of action for the suit where the main prayer is for interim relief and in a suit where it is only for interim relief as security pending arbitration, interlocutory reliefs and the final relief would be identical and such a suit would not be maintainable because an interlocutory injunction can only be granted during the pendnecy of the suit, claiming the relief which is likely to result in a final decision upon the Page 7 of 37 O/AS/17/2015 ORDER subject in dispute. The Apex Court further held that the suit would be maintainable only on the existence of a cause of action, which would entitle the plaintiff for the substantive relief claimed in the suit and the interim relief must be a part of the substantive relief to which plaintiff's cause of action entitled him. The Court further said that these ingredients will be missing in a suit claiming only interim relief during pendnecy of the arbitration proceedings outside India. Since the dispute is to be decided by the arbitration, no substantive relief concerning the merits of the arbitration could be claimed in the suit and the plaintiff's only claim would depend on the outcome of the arbitration proceedings in a foreign country over which he Courts in India would have no jurisdiction. The cause of action would clearly be contingent/speculative. There would be no existing cause of action and the plaint itself would be liable to be rejected under Order 7 Rule 11(a) of the Civil Procedure Code. What in effect the Court said was no interim relief could be granted unless it is in aid of as an auxiliary to the main relief that may be available to a party on final determination of rights in a suit.
25. Mr. Sancheti's argument that BALCO judgment is not applicable and it is applicable only in a civil suit and not admiralty suit cannot be accepted. Code of Civil Procedure is applicable to all suits whether filed in the original jurisdiction or in admiralty jurisdiction. The Code of Civil Procedure applies to proceedings on the admiralty side as well of the High Court. This has been so held by our Court in the matter of The Bombay and Persia Steam Navigation Company Ltd. v. Shepherd and Haji Ismail Hossein, which has been approved by the Apex Court in the judgment of M.V.A.L. Quamar v. Tsavliris Salvage (International) Ltd. All suits are liable to be rejected if they do not disclose cause of action. Therefore, it is immaterial if the suit is a civil suit or an admiralty suit.
26. In the circumstances, as the Apex Court has held that an interparte suit simply for interim relief pending arbitration outside India will not be maintainable and unless the dispute is decided by the arbitrator cause of action will clearly be contingent and speculative and there will be no existing cause of action, the plaint if bound to be rejected under Order 7 Rule 11(a). In my opinion, the Court's jurisdiction to arrest a ship in an action in rem should not be exercised for the purpose of Page 8 of 37 O/AS/17/2015 ORDER providing security of an award, which may be made in arbitration proceedings that is maintainable because the purpose of the exercise of the jurisdiction is to provide security in respect of the action in rem, and not to provide security in some other proceedings like an arbitration proceeding. If the plaintiff invokes the jurisdiction of the Court to obtain the arrest of the ship as security for an award in an arbitration proceeding, the Court should not issue a warrant of arrest."
Relying upon the aforesaid two decisions, learned counsel Mr. Joshi submitted that the jurisdiction of the Court to arrest the vessel in an action in rem should not be exercised for the purpose of providing security. He further submitted that the suit is liable to be rejected as it did not disclose the cause of action.
(d) Learned counsel Mr. Joshi thereafter placed reliance on the decision of the Hon'ble Supreme Court in the case of M.V.Al QUAMAR v. TSAVLIRIS SALVAGE (INTERNATIONAL) LTD. & ORS. [(2000) 8 SCC 278] and mainly submitted that under the said case the Hon'ble Supreme Court held that the provisions of Code of Civil Procedure are applicable to admiralty jurisdiction whether original or appellate.
Learned counsel Mr. Joshi further placed reliance upon the decision of the Hon'ble Supreme Court rendered in the case of MAYAR (H.K.) LTD. & ORS. v. OWNERS & PARTIES, VESSEL M.V. FORTUNE EXPRESS [(2006) 3 SCC 100]. In the said case Clause 3 of Bill of Lading provided for the jurisdiction, which reads as under:
"3. Jurisdiction. Any dispute arising under the Bill of Lading shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply except as provided elsewhere herein."Page 9 of 37
O/AS/17/2015 ORDER In the said decision, in para 6, the Hon'ble Supreme Court has observed as under:
"6. Aggrieved by the said order of the learned Single Judge, an appeal was preferred before the Division Bench of the Calcutta High Court by the defendants which was allowed by order dated 23.8.2004 The Division Bench of the High Court has held that under the forum selection clause (Clause 3) of BOL any dispute arising therefrom shall be decided in the country where the carrier has its principal place of business governing the law of such country and, thus, the Singapore Court alone will have jurisdiction to entertain the suit. Some interesting findings have been arrived at by the Division Bench which have material bearing in deciding the present appeal and, therefore, they are referred herein. The Division Bench has said that the vessel (Fortune Express) having sailed into the Calcutta Port and the claim being of an admiralty nature the Court had jurisdiction by the laws of India in the same manner as it would have jurisdiction if a Singapore trader happened to open up a place of business within the local limits of the ordinary original civil jurisdiction of the Court. The issue is not one of possession of jurisdiction but of its exercise. If the parties have chosen a particular forum and a particular set of laws in the world to govern them, then they are, in the large majority of ordinary cases, to be held to their bargain and not to be allowed to depart therefrom only because one party finds it convenient and, therefore, chooses to do so. The finding as regards the chosen forum of Singapore Court and to be governed by the laws of Singapore has been arrived at by the Division Bench only on the basis of the plaintiffs mentioning that defendant No. 2 Trustrade Enterprises PTE Ltd. is a company incorporated under the appropriate laws of Singapore and is carrying on its business at Singapore. The Court has also observed that the Singapore law with regard to the discharge of liability is quite different. According to the Singapore Act, the Hague Rules have been somewhat amended. For voyages which start from ports of Singapore or even the goods which are first shipped from there, the Act seems to include even deck cargo as goods. There is not a single line in the plaint Page 10 of 37 O/AS/17/2015 ORDER stating either that the Singapore law is the applicable law or that by reason of the application thereof the goods are not deck cargo. As regards the liability of the defendants, the Court has found that admittedly the goods were carried on the deck and there is no liability of the carrier if the deck cargo is lost. The Court has further held that the defendants by submitting the bank guarantee before the Court did not submit to the jurisdiction of the Court, particularly so when the order dated 12.4.2000 passed by the learned Single Judge specifically mentioned that the order was being passed without prejudice to the rights and contentions of the owners of the vessel that the suit is not maintainable. As regards the submission of the plaintiffs that compelling the plaintiffs to file a suit for damages at this late stage at Singapore Court would be most unjust because the application by the defendants for treating the plaint off the record of the Court had been filed on 7.7.2001 when the order for arrest of the vessel was passed on 27.3.2000 and particularly the plaintiffs' right would be jeopardized because under Article 3(6) of the Hague Rules, 1924 the carrier and the ship had been absolved of all liability in respect of the loss or damage if suit were not brought within one year after delivery of the goods or the date when the goods should have been delivered, the Court has opined that under Article 3, Clause 6 of the Hague Rules, 1924, the limitation had been with respect to the goods. However, Article 1(c) of the Hague Rules, 1924 mentioned that the cargo which had been carried on deck would not come under the definition of 'goods'. Except 135 logs, all others were described in BOL as deck cargo and thus the limitation prescribed for filing of the suit would have no application. The Court has further observed that though the law of Singapore on the point had been different in the sense that even the deck cargo would be considered under the definition of 'goods' , but the plaintiffs had not mentioned a single word in their plaint regarding the applicability of the Singapore law. It was further held that the plaintiffs, from the very outset of the suit, were aware of the fact regarding the appropriate forum and hence now at this stage they could not plead to reap the benefit from their own fault. The Court held that the plaintiffs' plaint suppressed the forum selection clause relating to the law governing the contract and approached a wrong court to get an ex parte arrest order against the defendants' vessel. It has been Page 11 of 37 O/AS/17/2015 ORDER observed that the suppression of fact regarding forum selection was of serious nature and that would be sufficient to dismiss the suit filed by the plaintiffs.
In para 19, the Hon'ble Supreme Court has further observed that:
"19. The allegations in the plaint are to the effect that the parties have entered into a contract on 7.1.2000 to carry on board the vessel M.V. Fortune Express under the six split bills of lading 642 logs from the port of Sarawak, Malaysia for discharge at the port of Calcutta, India. As per stowage plan, 578 logs were lying on the deck of the vessel. At the time of the discharge of the cargo lying on the deck of the vessel, it was found that 456 logs out of 578 logs were missing and had been shortlanded. The plaintiffs claimed a decree for the proportionate value of 456 logs, port and other charges, custom duty and proportionate insurance payment. As per the plaintiffs' allegation, the logs, which were to be carried on the vessel owned by the defendants, had not been delivered at the port of destination. Thus, all the material facts on the basis of which the plaintiffs claimed the decree are alleged in the plaint. As the logs were not delivered at the port at Calcutta, the port of destination, the part of cause of action arose within the jurisdiction of the Calcutta Court and, thus, the suit filed by the plaintiffs at Calcutta was maintainable although it may be pleaded by the defendants in their written statement that the Calcutta High Court has no jurisdiction on account of Clause 3 of BOL. For the purpose of the cause of action, it was not necessary for the plaintiffs to plead the ouster of the jurisdiction of the Calcutta Court. In fact, it was for the defendants to plead and prove the ouster of the jurisdiction of the Calcutta Court and conferment of the jurisdiction in the Singapore Court alone. On a bare reading of Clause 3 of BOL, it is clear that any dispute arising under the BOL shall be decided in the country where the carrier has its principal place of business and the law of such country shall apply except as provided elsewhere in the BOL. Therefore, the exclusion clause refers to the jurisdiction of a court where the carrier has its principal place of business. Unless and until it is established that the defendantcarrier has its principal place of business at Singapore, the exclusion Page 12 of 37 O/AS/17/2015 ORDER clause has no application. Simply because in the cause title of the plaint, the plaintiffs have described defendant No. 2 Trustrade Enterprises PTE Ltd. to be carrying on business at Singapore, would not ipso facto establish the fact that the principal place of business of defendant No.2 (respondent herein) is/was at Singapore to exclude the jurisdiction of the Calcutta Court which admittedly has the jurisdiction to try the suit. Therefore, absence of reference of Clause 3 of BOL in the pleadings cannot be said to be suppression of the material fact as the question of jurisdiction would be required to be adjudicated and decided on the basis of the material placed on record at the trial."
Relying upon the aforesaid decisions rendered by the Hon'ble Supreme Court, learned counsel Mr. Joshi for the defendant submitted that once the parties have agreed that the dispute arising out of the contract between the parties is to be referred to the High Court of England and Wales and therefore when the parties have ousted the jurisdiction of this Court, it is not open for the plaintiff to invoke the admiralty jurisdiction of this Court by filing present suit and admiralty action in rem would not be maintainable. Therefore the present suit is not maintainable before this Court.
(e) Learned Senior Counsel Mr. Joshi further submitted that while passing an order of injunction or arrest of the vessel, this Court is required to see whether the plaintiff is having any prima facie case or not. For such purpose, the averments made in the plaint are required to be seen. He submitted that from the averments made in the plaint, plaintiff is unable to demonstrate that there is any prima facie case in its favour and therefore even assuming without admitting that this Court is having jurisdiction to try the suit then also the plaintiff is not entitled to claim any interim relief as prayed for i.e. for arrest of the defendant vessel. No documents Page 13 of 37 O/AS/17/2015 ORDER are produced with a view to substantiate the averments made in the plaint. The plaintiff is not having any arguable case and therefore in absence of adequate materials and in absence of proper pleadings in the plaint, the suit itself is liable to be dismissed.
(f) Learned counsel Mr. Joshi further submitted that the decision rendered by the Hon'ble Supreme Court in the case of M.V.Elisabeth & Ors. v. Harwan Investment & Trading Pvt. Ltd., [1993 Supp (2) Supreme Court Cases 433] relied upon by the learned counsel for the plaintiff is not applicable in the facts of the present case as there was no dispute before the Hon'ble Supreme Court in the said case with regard to the jurisdiction of the High Court and there was no such clause ousting the jurisdiction of the High Court.
Learned counsel Mr. Joshi further relied upon the decision rendered by the Division Bench of this Court in the case of Croft Sales and Distribution Ltd. v. M.V.Basil and 17 Ors., [MANU/GJ/0136/2011]. Learned counsel has mainly relied upon para 29 of the said decision and submitted that for the purpose of interim order requirement of prima facie case was to be satisfied by the plaintiff coupled with aspect of balance of convenience and irreparable injury. In absence of the aforesaid, this Court would not grant the interim relied in favour of the plaintiff.
6. In response to the preliminary objections raised by the learned senior counsel for the defendant, learned Senior Counsel Mr. S.N.Soparkar appearing for the plaintiff at the outset submitted that though the defendant is served with the copy of the plaint and the order passed by this Court on 12.06.2015, up to 18.06.2015 the defendant has Page 14 of 37 O/AS/17/2015 ORDER not filed any written statement/reply denying the averments made in the plaint. No application for dismissal of suit has been filed by the defendant and therefore in absence of denial by the defendant on affidavit this Court may not consider the oral submissions made on behalf of the learned counsel for the defendant.
7. Learned counsel Mr. Soparkar has mainly raised the following contentions:
(a) That the defendant has no locus standi today to make any arguments whatsoever. Under Chapter I of Part III of the Bombay High Court Original Side Rules, which are applicable to this Court, the vessel has no right of audience unless security, as contemplated under Rules 29 and 32 thereof, is placed. Learned counsel Mr. Soparkar submitted that on this short ground the oral submissions canvassed on behalf of the defendant need to be rejected. Learned counsel Mr. Soparkar submitted that no reply is given by the defendant to this submission. Rules 29 and 32 of the Bombay High Court Original Side Rules read as under:
"29. Caveat Warrant Book. A party desiring to prevent the arrest of any property, may cause a caveat against the issue of a warrant for the arrest thereof to be entered in the Registry.
32. Party entering caveat to give security on filing of plaint. Within three days from the filing of the plaint, the party on whose behalf the caveat has been entered shall, if the sum in which the suit has been instituted does not exceed the amount for which he has undertaken, give security in such sum or pay the same into the Registry, or if it exceeds that amount, give security in the sum in which the suit has been instituted or pay the same into the Registry."
(b) Learned counsel Mr. Soparkar submitted that Clause 71 of Charter Page 15 of 37 O/AS/17/2015 ORDER Party is the contract between two private parties for referring dispute to some other court/jurisdiction, which does not take away the inherent jurisdiction of this Court. He further submitted that the whole dispute based on Clause 71 is wholly misconceived because the plaintiff has sued the vessel in rem. There is no agreement with the vessel. Therefore, the Clause of the agreement is irrelevant. In a proceedings in rem the terms of the underlying contract is wholly irrelevant. Learned counsel Mr. Soparkar further submitted that the plaintiff has filed the suit against the defendant vessel with whom there has been no such agreement for referring the matter to some other jurisdiction and hence the agreement between the plaintiff and the owner will have no bearing for invoking action in rem in Admiralty Jurisdiction for exercising the right accrued to the plaintiff under Convention.
(c) Learned counsel Mr. Soparkar submitted that this Court derives jurisdiction by virtue of Clauses 32 and 33 of the Letters Patent and thus this Court is having inherent jurisdiction to entertain the proceedings/action in rem under admiralty jurisdiction upon presence of the Vessel in Indian Territorial Waters and the defendant vessel presently at Hazira and within Indian Territorial Waters. The jurisdiction of this Court cannot be curtailed by any agreement between two private persons. Clauses 32 and 33 of the Letters Patent read as under:
"32. Civil. And We do further ordain that the said High Court of Judicature at [Madras], [Bombay], Fort William in Bengal shall have and exercise all such civil and maritime jurisdiction as may now be exercised by the said High Court as a Court of Admiralty, or of ViceAdmiralty, and also such jurisdiction for the trial and adjudication of prize causes and other maritime questions arising in India as may now be exercised by the said High Court.Page 16 of 37
O/AS/17/2015 ORDER
33. Criminal. And We do further ordain that the said High Court of Judicature at [Madras], [Bombay], Fort William in Bengal shall have and exercise all such criminal jurisdiction as may now be exercised by the said High Court as a Court of Admiralty, or of ViceAdmiralty, or otherwise in connection with maritime matters, or matters of prize."
(d) Learned counsel Mr. Soparkar submitted that as per clause 1(d) of Article 1 of International Convention Relating to the Arrest of Sea Going Ships Brussels, 1952, "Maritime Claim" means a claim arising out of agreement relating to the use or hire of any ship whether by charter party or otherwise. The plaintiff is under Charter Party agreement and the plaintiff has thus a maritime claim.
(e) Learned counsel Mr. Soparkar submitted that as per the decision of the Hon'ble Supreme Court rendered in the case of M.V.Elisabeth & Ors. v. Harwan Investment & Trading Pvt. Ltd., [1993 Supp (2) Supreme Court Cases 433], this Court is having inherent jurisdiction as well as admiralty jurisdiction. Therefore, this Court can exercise the powers with respect to maritime claim as defined in Brussels Convention of 1952. Learned counsel has mainly relied upon the observations made by the Hon'ble Supreme Court in the aforesaid decision in para 44, 45, 47, 48 to 50, 56, 58, 66, 71, 74, 82, 88 and 89, which read as under:
"44. "The law of admiralty, or maritime law, .... (is the)corpus of rules, concepts, and legal practices governing... the business of carrying goods and passengers by water." (Gilmore and Black, The Law of Admiralty, page (1). The vital significance and the distinguishing feature of an admiralty action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship, irrespective of the nationality of the ship or that of its owners, or the place of Page 17 of 37 O/AS/17/2015 ORDER business or domicile or residence of its owners or the place where the cause of action arose wholly or in part.
"..... In admiralty the vessel has a juridicial personality, an almost corporate capacity, having not only rights but liabilities (sometimes distinct from those of the owner) which may be enforced by process and decree against the vessel, binding upon all interested in her and conclusive upon the world, for admiralty in appropriate cases administers remedies in rem, i.e., against the property, as well as remedies in personam, i.e., against the party personally...". (Benedict, The Law of American Admiralty, 6th ed. Vol. I p.3.)
45. Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed against the owner. The arrest of the ship is regarded as a mere procedure to obtain security to satisfy judgment. A successful plaintiff in an action in rem has a right to recover damages against the property of the defendant. 'The liability of the shipowner is not limited to the value of the res primarily proceeded against ... An action .... though originally commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability'. (Roscoe's Admiralty Practice, 5th ed. p.29)
47. Merchant ships of different nationalities travel from port to port carrying goods or passengers. They incur liabilities in the course of their voyage and they subject themselves to the jurisdiction of foreign States when they enter the waters of those States. They are liable to be arrested for the enforcement of maritime claims, or seized in execution or satisfaction of judgments in legal actions arising out of collisions, salvage, loss of life or personal injury, loss of or damage to goods and the like. They are liable to be detained or confiscated by the authorities of foreign States for violating their customs regulations, safety measures, rules of the road, health regulations, and for other causes. The coastal State may exercise its criminal jurisdiction on board the vessel for the purpose of arrest or Page 18 of 37 O/AS/17/2015 ORDER investigation in connection with certain serious crimes. In the course of an international voyage, a vessel thus subjects itself to the public and private laws of various countries. A ship travelling from port to port stays very briefly in any one port. A plaintiff seeking to enforce his maritime claim against a foreign ship has no effective remedy once it has sailed away and if the foreign owner has neither property nor residence within jurisdiction. The plaintiff may therefore detain the ship by obtaining an order of attachment whenever it is feared that the ship is likely to slip out of jurisdiction, thus leaving the plaintiff without any security.
48. A ship may be arrested (i) to acquire jurisdiction; or
(ii) to obtain security for satisfaction of the claim when decreed; or (iii) in execution of a decree. In the first two cases, the court has the discretion to insist upon security being furnished by the plaintiff to compensate the defendant in the event of it being found that the arrest was wrongful and was sought and obtained maliciously or in bad faith. The claimant is liable in damages for wrongful arrest. This practice of insisting upon security being furnished by the party seeking arrest of the ship is followed in the United States, Japan and other countries. The reason for the rule is that a wrongful arrest can cause irreparable loss and damages to the shipowner; and he should in that event be compensated by the arresting party. (See Arrest of Ships by Hill, Soehring, Hosoi and Helmer, 1985)."
49. The attachment by arrest is only provisional and its purpose is merely to detain the ship until the matter has been finally settled by a competent court. The attachment of the vessel brings it under the custody of the marshal or any other authorized officer. Any interference with his custody is treated as a contempt of the court which has ordered the arrest. But the marshal's right under the attachment order is not one of possession, but only of custody. Although the custody of the vessel has passed from the defendant to the marshal, all the possessory rights which previously existed continue to exist, including all the remedies which are based on possession. The warrant usually contains a monition to all persons interested to appear before the court on a Page 19 of 37 O/AS/17/2015 ORDER particular day and show cause why the property should not be condemned and sold to satisfy the claim of the plaintiff.
50. The attachment being only a method of safeguarding the interest of the plaintiff by providing him with a security, it is not likely to be ordered if the defendant or his lawyer agrees to "accept service and to put in bail or to pay money into court in lieu of bail". (See Halsbury's Laws of England, 4th edn. Vol. 1, p. 375 etc.).
56. It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff. He does not sue the owner directly and by name; but the owner or any one interested in the proceedings may appear and defend. The writ is issued to "owners and parties interested in the property proceeded against." The proceedings can be started in England or in the United States in respect of a maritime lien, and in England in respect of a statutory right in rem. A maritime lien is a privileged claim against the ship or a right to a part of the property in the ship, and it "travels" with the ship. Because the ship has to "pay for the wrong it has done", it can be compelled to do so by a forced sale. (See The Bold Buccleaugh, (1851) 7Moo. PC 267). In addition to maritime liens, a ship is liable to be arrested in England in enforcement of statutory rights in rem (Supreme Court Act, 1981). If the owner does not submit to the jurisdiction and appear before the court to put in bail and release the ship, it is liable to be condemned and sold to satisfy the claims against her. If, however, the owner submits to jurisdiction and obtains the release of the ship by depositing security, he becomes personally liable to be proceeded against in personam in execution of the judgment if the amount decreed exceeds the amount of the bail. The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court.
58. The real purpose of arrest in both the English and the Civil Law systems is to obtain security as a guarantee for satisfaction of the decree, although arrest in England is the basis of assumption of jurisdiction, unless the owner has submitted to jurisdiction. In any event, once the arrest is made and the owner has entered appearance, the proceedings continue in personam. All actions in the civil Page 20 of 37 O/AS/17/2015 ORDER law whether maritime or not are in personam, and arrest of a vessel is permitted even in respect of non maritime claims, and the vessel is treated as any other property of the owner, and its very presence within jurisdiction is sufficient to clothe the competent tribunal with jurisdiction over the owner in respect of any claim. (See D.C.Jackson, Enforcement of Maritime Claims, (1985) Appendix 5). Admiralty actions in England, on the other hand, whether in rem or in personam, are confined to well defined maritime liens or claims and directed against the res(ship, cargo and freight) which is the subjectmatter of the dispute or any other ship in the same beneficial ownership as the res in question.
66. The High Court in India are superior courts of record. They have original and appellate jurisdiction. They have inherent and plenary powers. Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers. (See Naresh Shridhar Mirajkar and Ors., v. State of Maharashtra and Anr., [1966] 3 SCR
744. As stated in Halsbury's Laws of England. 4th edition, Vol. 10, para 713 :
"Prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court."
71. It is well recognised in international law that a merchant ship, though generally governed by the laws of the flag State, subjects itself to the jurisdiction of a foreign State as it enters its waters. The Geneva Convention on the Territorial Sea and Contiguous Zone, 1958 and the Law of the Sea Convention, 1982 affirm that the sovereignty of a State extends over its internal and territorial waters.
74. All foreign merchant ships and persons thereon fall Page 21 of 37 O/AS/17/2015 ORDER under the jurisdiction of a coastal State as they enter its waters. Subject to the right of 'innocent passage', the coastal State is free to exercise jurisdiction over such ships in respect of matters the consequence of which extend beyond the ships. Such ships are subject to the local jurisdiction in criminal, civil and administrative matters. This jurisdiction is, however, assumed only when, in the opinion of the local authorities, the peace or tranquillity of the port is disturbed, when strangers to the vessel are involved or when the local authorities are appealed to. Questions which affect only the internal order and economy of the ship are generally left to the authorities of the flag State. Coastal States are entitled to assume jurisdiction in respect of maritime claims against foreign merchant ships lying in their waters. These ships are liable to be arrested and detained for the enforcement of maritime claims. The courts of the country in which a foreign ship has been arrested may determine the cases according to merits, provided they are empowered to do so by the domestic law of the country or in any of the cases recognised by the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952.* The maritime claims in respect of which the power of arrest is recognised in law include claims relating to damage caused by any ship either in collision or otherwise; claims relating to carriage of goods in any ship whether by charterparty or otherwise, loss of or damage to goods etc. These principles of international law, as generally recognised by nations, leave no doubt that, subject to the local laws regulating the competence of courts, all foreign ships lying within the waters of a State, including waters in ports, harbours, roadsteads, and the territorial waters, subject themselves to the jurisdiction of the local authorities in respect of maritime claims and they are liable to be arrested for the enforcement of such claims.
82. The admiralty jurisdiction of the High Court is dependent on the presence of the foreign ship in Indian waters and founded on the arrest of that ship. This jurisdiction can be assumed by the concerned High Court, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, Page 22 of 37 O/AS/17/2015 ORDER and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action.
88. Admiralty jurisdiction is an essential aspect of judicial sovereignty which under the Constitution and the laws is exercised by the High Court as a superior court of record administering justice in relation to persons and things within its jurisdiction. Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them.
89. All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law. The power to arrest a foreign vessel, while in the waters of a coastal State, in respect of a respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty. This power is recognised by several international conventions.* These conventions contain the unified rules of law drawn from different legal systems. Although many of these conventions have yet to be ratified by India, they embody principles of law recognised by the generality of maritime States, and can therefore be regarded as part of our common law. The want of ratification of these conventions is apparently not because of any policy disagreement, as is clear from active and fruitful Indian participation in the formulation of rules adopted by the conventions, but perhaps because of other circumstances, such as lack of an adequate and specialised machinery for implementation of the various international conventions by coordinating for the purpose the concerned Departments of the Government. Such a specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation. It is appropriate that sufficient attention is paid to this aspect of the matter by the concerned authorities. Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence, as is the position in England, can Page 23 of 37 O/AS/17/2015 ORDER render valuable help in this regard. Delay in the adoption of international conventions which are intended to facilitate trade hinders the economic growth of the nation."
Relying upon the aforesaid decision, learned counsel Mr. Soparkar submitted that the High Courts in India are superior Courts of record. They have original and appellate jurisdiction and they have inherent and plenary powers.
(f) Learned counsel Mr. Soparkar further submitted that the plaintiff has reasonably arguable case in law and on facts and the plaintiff's claim cannot be said to be frivolous and vexatious and there is no reason not to allow the plaintiff to proceed for trial. Learned counsel has relied on the decision of the Hon'ble Supreme Court in the case of VIDESH SANCHAR NIGAM LTD. v. M.V.KAPITAN KUD AND OTHERS [(1996) 7 SCC 127]. He mainly relied on the observations made in para 13 to 15 of the aforesaid decision, which read as under:
"13. In Schwarz & Co. [Grain] Ltd. v. St. Elefterio EX Arion [Owners]. [(1957) Probate Division 179], Willmer, J. considering the scope of prima facie case held at page 185 that "it has not been suggested that the proceedings are frivolous or vexatious, so as to call for the exercise of the court's inherent jurisdiction to halt such proceedings in limine. The defendants argument is founded on the proposition that section 3 [4] of the Act of 1956 introduced a new restriction on the right to proceed in rem and that a plaintiff cannot arrest a ship under that subsection unless he can prove and prove at the outset that he has a cause of action sustainable in law. In my judgment that proposition rests upon a misconception of the purpose and meaning of section 3 [4]".Page 24 of 37
O/AS/17/2015 ORDER It was held that the scope of the Act was to enlarge the jurisdiction of admiralty court but not to restrict its jurisdiction. At page 187 it was held that "it is possible [these things have been known to happen] that a higher court might take a different view; but in the meantime the shop, which is a foreign ship, has been freed from arrest, has gone, and may never return to this country. It might be that in those circumstances the plaintiffs would have lost their right for ever to entertain proceedings in rem in this country. The remedy for the defendants is to release their ship is to be put in appeal. The action will then by tried at the appropriate time when all the facts have been ascertained due consideration will be given to the arguments at law which the defendants desire to advance."
Accordingly the motion for release of the ship was dismissed.
14. In The Moschanthy [(1971) 1 Lloyd's Law Reports 37 at 42] where the question was whether the admiralty action was vexatious, following the ratio of Willmer, J. in St. Elefterio [supra] it was held that action could not be successful. It was held that courts should only stay the action on the ground when the hopelessness of the plaintiff's claim is beyond doubt. If it is not beyond doubt but on the contrary the plaintiff has arguable, even though difficult, case even in law the action would be allowed to proceed to trial. The application for stay was accordingly rejected.
15. The admiralty action is an action in rem. The Division Bench found that the claim was not vexatious but is triable. There is strong evidence to show that at the relevant time the respondentvessel was within the vicinity of the damaged cable. The Division Bench declined to interfere on the ground that the Captain of the vessel filed an undertaking that the vessel belonged to the Black Sea Shipping Company which is wholly owned by the Ukrainian Government. The undertaking given by the Captain of the vessel that in the event of the suit being decreed they would Page 25 of 37 O/AS/17/2015 ORDER honour the decree, was accepted by the Court and it directed the release of the vessel. We think that neither the approach of the Division Bench of the High Court nor the finding of the learned Trial Judge on the admiralty jurisdiction that no prima facie case is made out, is right. It is seen that there is strong triable case for the reasons stated earlier. The ship is a foreign ship and if it leaves the shores of Indian territorial waters it is difficult to get hold of it and it may not return to the jurisdiction of Indian courts. The claim thereby, even if sucessful, would remain unexecutable or land in trouble in private international law in its enforcement. Under these circumstances, we are of the firm opinion that the vessel may be released on the certain conditions, viz., [i] the respondent shall deposit a sum of Rs.10 crores; [ii] the Ukrainian Government shall give an undertaking through its accredited authority, more particularly may be its Ambassador attached to its Embassy in India in writing duly undertaking that in the event of the suit being decreed they would comply with the decree without reference to the execution; [iv] the undertaking should be for balance amount of Rs.18 crores and towards costs and other expenses roughly put at Rs.25 crores. It would be open to them to comply with these directions at any time. We are not fixing any time limit because it would be open to them to comply with it at any time and until then the ship shall remain arrested and shall not leave the shores of the Indian territorial waters. On deposit of Rs.10 crores and on furnishing of undertakings to the satisfaction of the Division Bench of the High Court, as stated above, the High Court would give appropriate direction for releasing the vessel in accordance with law."
In response to the decision of the Hon'ble Supreme Court in case of Bharat Aluminium Company (supra) and the decision of the Bombay High Court in case of Rushab Ship International LLC (Supra), learned counsel Mr. Soparkar has submitted that these decisions have no applicability in the present case as the plaintiff has sought the decree against the defendant and not come solely for security pending arbitration as interim measure like Section 9 of Arbitration Act application. The suit of the plaintiff is for Page 26 of 37 O/AS/17/2015 ORDER substantive relief whereas in both the aforesaid cases, the issue was only with respect to security pending arbitration. As such the Bombay High Court has categorically held that Full Bench decision of Bombay High Court in Golden Progress case is not applicable in the facts of that case as there was no prayer for decree or substantial relief in the said case whereas in the case of Golden Progress the suit itself was primarily for a claim and for decree against the defendants therein. Since the plaintiff has claimed money decree against the defendant in the present case and not sought relief of procuring security pending arbitration, the said decision has no applicability in the facts of present case.
(g) In response to the decision rendered by the Hon'ble Supreme Court in the case of Mayar (H.K.) Ltd. & Ors. (Supra) and relied upon by the learned counsel for the defendant, learned counsel Mr. Soparkar for the plaintiff submitted that the said judgment is being read in the wrong context. He further submitted that the said judgment did not involve the controversy as projected by the defendant and therefore it has no application at all. He further submitted that even if the parties have agreed to a particular jurisdiction, that ipso facto, would not oust the jurisdiction of other competent court having jurisdiction. In absence of the use of the phrase "only", "exclusively" or the like, it is for the Court to decide on the issue of ouster of jurisdiction. In any case it is a matter of discretion rather than inherent jurisdiction. Learned counsel further submitted that the aforesaid decision is mainly on suppression of facts being jurisdiction clause and the choice of law clause and with respect to dispute regarding deck cargo and it no where suggested that the jurisdiction of Calcutta High Court was ousted on account of jurisdiction clause in agreement. As such in Page 27 of 37 O/AS/17/2015 ORDER the said decision, the Hon'ble Supreme Court did not question the dismissal of the application of the defendant taken out under Order VII Rule 11 of CPC of rejection of plaint and disapproved dismissal of the plaint partly on alleged suppression and partly on the alleged lack of merits.
(h) Learned counsel Mr. Soparkar further referred to the correspondence which had taken place between the plaintiff and the owner of the defendant vessel and statement of account which is produced at page 50 and thereafter referred to the averments made in the plaint and the relief prayed for in the suit. Learned counsel therefore submitted that the plaintiff is having prima facie case on merits as such the balance of convenience is also in favour of the plaintiff and if interim relief as prayed for is not granted, plaintiff will suffer irreparable loss which cannot be compensated in terms of money. The plaintiff is having arguable case on merits and in absence of any denial on the part of the defendant or in absence of any application for dismissal of the plaint, plaintiff is entitled for the interim relief of arrest of vessel as prayed for in the suit.
8. Heard learned Senior Counsel Mr. Mihir Joshi with learned advocate Ms. Rujuta Oza for the defendant and learned Senior Counsel Mr. S.N.Soparkar with learned advocate Ms. Paurami Sheth for the plaintiff.
9. Before I deal with the contentions/preliminary objections raised by the learned counsel for the defendant, it is required to be noted that in view of Rules 29 and 32 of the Bombay High Court Original Side Rules and Forms, which are also applicable to this Court, the defendant has no right of audience unless security as contemplated in the said Page 28 of 37 O/AS/17/2015 ORDER Rules is placed. Learned counsel for the defendant has not made any submission with regard to the aforesaid aspect. Therefore, the defendant is not required to be heard. However, the oral submissions canvassed on behalf of the learned counsel for the defendant on two preliminary objections are taken into consideration on merits in the interest of justice.
10. The first contention of the learned counsel for the defendant is that in view of Clause 71 of Charter Party entered into between the plaintiff and the owner of the defendant vessel, jurisdiction of this Court is ousted and therefore the present admiralty suit before this Court is not maintainable. This contention of the learned counsel is not required to be accepted on the ground that as per Clause 32 and 33 of Letters Patent, this Court has inherent jurisdiction to entertain the proceedings/action in rem under admiralty jurisdiction upon presence of the Vessel in Indian Territorial Waters. The defendant vessel is presently at Hazira and within the Indian Territorial Waters. The jurisdiction of this Court, therefore, cannot be curtailed by any agreement between two private parties. The contract between two private parties for referring the dispute to some other Courts does not take away the inherent jurisdiction of this Court. The Hon'ble Supreme Court in the case of M.V.Elizabeth (Supra) has held that the High Courts in India are superior courts of record. They have original and appellate jurisdiction. They have inherent and plenary powers. Learned counsel Mr. Soparkar has rightly relied upon the observations made by the Hon'ble Supreme Court in the above cited paragraphs of the said judgment. Further, the claim of the plaintiff is under Charter Party agreement which can be said to be a maritime claim within the meaning of Clause 1(d) of Article 1 of the Brussels Convention of 1952. Thus, this Court can exercise the powers with respect to maritime claim as defined in the aforesaid Page 29 of 37 O/AS/17/2015 ORDER Convention. Learned counsel Mr. Soparkar for the plaintiff is also right in contending that the plaintiff has filed the suit against the defendant vessel with whom no agreement has been entered into for referring the matter to some other Courts. Hence, the agreement between the plaintiff and the owner will have no bearing for invoking the action in rem in Admiralty Jurisdiction for exercising the right accrued to the plaintiff under Convention.
11. Learned counsel for the defendant has placed reliance upon the decision rendered by the Hon'ble Supreme Court in the case of A.B.C. Laminart Pvt. Ltd. (Supra). There is no dispute with regard to the proposition laid down by the Hon'ble Supreme Court in the said decision. However, if the said decision is carefully seen, it emerges that in the said case an agreement was entered into between the plaintiff and the defendant wherein Clause 11 of the said agreement provided that "Any dispute arising out of this sale shall be subject to Kaira jurisdiction". The dispute arose between the parties out of the contract and therefore the plaintiff filed a suit before the Court of Subordinate Judge at Salem for the recovery of money. The defendant took the preliminary objection that the Court at Salem had no jurisdiction to entertain the suit as parties by express contract had agreed to confer exclusive jurisdiction in regard to all disputes arising out of the contract on the Civil Cout at Kaira. The Civil Court, Salem held that it had no jurisdiction to entertain the suit in view of the aforesaid Clause. Accordingly, it had returned the plaint for presenting it before the appropriate Court. The defendant, therefore, preferred an appeal before the High Court of Madras against the order passed by the Civil Court, Salem. The High Court of Madras allowed the said appeal and set aside the order passed by the Civil Court at Salem and thereby remanded the matter back to the Civil Court at Salem to take the plaint on file and Page 30 of 37 O/AS/17/2015 ORDER dispose of the suit on merits on other issues. The defendant, therefore, preferred Special Leave Petition before the Hon'ble Supreme Court. The Hon'ble Supreme Court discussed the provisions of Section 23 and Section 28 of the Contract Act, 1872 and observed that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen there within, if the parties to the contract agreed to vest jurisdiction in one such Court to try the dispute which might arise as between themselves the agreement would be valid. However, thereafter the Hon'ble Supreme Court held in para 20 to 22 as under:
"20. When the Court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause properly. Often the stipulation is that the contract shall be deemed to have been made at a particular place. This would provide the connecting factor for jurisdiction to the Courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other Courts. Thus, in Salem Chemical Industries v. Bird & Co., A.I.R. 1979 Madras 16 where the terms and conditions attached to the quotation contained an arbitration clause provided that: "any order placed against this quotation shall be deemed to be a contract made in Calcutta and any dispute arising therefrom shall be settled by an Arbitrator to be jointly appointed by us", it was held that it merely fixed the situs of the contract at Calcutta and it did not mean to confer an exclusive jurisdiction on the Court at Calcutta, and when a part of the cause of action had arisen at Salem, the Court there had also jurisdiction to entertain the suit under section 20(c) of the Code of Civil Procedure.
21. From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction. As regards construction of the ouster clause when Page 31 of 37 O/AS/17/2015 ORDER words like 'alone', 'only', 'exclusive' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alterius'expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed.
22. Coming to clause 11 we already found that this clause was included in the general terms and conditions of sale and the order or confirmation No. 68/59 dated 2.10.1974 with the general terms and conditions was sent from Udyognagar, Mohmadabad, Gujarat to the respondent's address at 12 Suramangalam Road Salem, Tamilnadu. The statement made in the Special Leave Petition that Udyognagar, Mohamadabad, Gujarat is within the jurisdiction of the Civil Court of 13 Kaira has not been controverted. We have already seen that making of the contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus Kaira court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for Court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11 it would not absolutely oust the jurisdiction of the Court and, therefore, would not be void against public policy and would not violate sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause 'any dispute arising out of this sale shall be subject to Kaira jurisdiction' ex facie we do not find exclusive words like 'exclusive', 'alone', 'only' and the like. Can the maxim 'expressio unius est exclusio alterius' be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which Court otherwise had jurisdiction under law through connecting factor of delivery of goods there at was expressly excluded. We Page 32 of 37 O/AS/17/2015 ORDER accordingly find no error or infirmity in the impugned judgment of the High Court."
12. Thus, the Hon'ble Supreme Court in the aforesaid decision held that "while connecting factor with Karia jurisdiction was ensured by fixing the situs of the contract within Karia, other jurisdiction having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which Court otherwise had jurisdiction under law through connecting factor of delivery of goods there at was expressly excluded. We accordingly find no error or infirmity in the impugned judgment of the High Court." The Hon'ble Supreme Court, therefore, dismissed the appeal preferred by the original defendant and held that the Court at Salem has also jurisdiction. In the present case also, if Clause 71 of the Charter Party is carefully seen, it is similar to that of Clause 11 of the aforesaid decision. Thus, this Court is of the opinion that the aforesaid decision rendered by the Hon'ble Supreme Court is helpful to the plaintiff rather than the defendant. Thus, it can be said that when this Court is having admiralty jurisdiction as well as inherent jurisdiction, this Court can exercise the powers and try the present admiralty suit.
13. Learned counsel for the defendant also relied upon the decision of the Hon'ble Supreme Court in the case of Mayar (H.K.) Ltd. (Supra), which, in the opinion of this Court, is not helpful to the defendant in the facts of the present case. In the said case, after referring to the decision of A.B.C. Laminart Pvt. Ltd. (Supra), the Hon'ble Supreme Court recognized that the Calcutta High Court would also have jurisdiction. Further even if the parties have agreed to a particular jurisdiction that ipso facto, would not oust the jurisdiction of other competent Court Page 33 of 37 O/AS/17/2015 ORDER having jurisdiction. In absence of the use of the phrase "only", "exclusively" or the like, it is for the Court to decide on the issue of ouster of jurisdiction. Thus, in any case it is a matter of discretion rather than inherent jurisdiction. Further, the said decision of the Hon'ble Supreme Court is mainly on suppression of facts with regard to jurisdiction clause and the choice of law clause and with respect to dispute regarding deck cargo and no where it suggested that the jurisdiction of Calcutta High Court was ousted on account of jurisdiction clause in the agreement. As such in the said decision, the Hon'ble Supreme Court did not question the dismissal of the application of the defendant taken out under Order VII Rule 11 of CPC of rejection of plaint and disapproved dismissal of the plaint partly on alleged suppression and partly on the alleged lack of merits.
14. In the case of Bharat Aluminium Company (supra), the Hon'ble Supreme Court has observed in para 172 to 175 as under:
"172. It appears to us that as a matter of law, an inter parte suit simply for interim relief pending arbitrations, even if it be limited for the purpose of restraining dissipation of assets would not be maintainable. There would be number of hurdles which the plaintiff would have to cross, which may well prove to be insurmountable.
174. The provisions with regard to the temporary injunction and interlocutory orders are contained in Order 39 and Order 40. In order to claim an injunction the existence of a pending suit is a pre requisite. It is in this background that one has to examine as to whether an inter parte suit for interim relief during the pendency of arbitration proceedings outside India would be maintainable.
175. In our opinion, pendency of the arbitration Page 34 of 37 O/AS/17/2015 ORDER proceedings outside India would not provide a cause of action for a suit where the main prayer is for injunction. Mr.Sundaram has rightly pointed out that the entire suit would be based on the pendency of arbitration proceedings in a foreign country. Therefore, it would not be open to a party to file a suit touching on the merits of the arbitration. If such a suit was to be filed, it would in all probabilities be stayed in view of Sections 8 and 45 of the Arbitration Act, 1996. It must also be noticed that such a suit, if at all, can only be framed as a suit to "inter alia restrain the defendant from parting with property." Now, if the right to such property could possibly arise, only if the future arbitration award could possibly be in favour of the plaintiff, no suit for a declaration could obviously be filed, based purely only on such a contingency. All that could then be filed would, therefore, be a bare suit for injunction restraining the other party from parting with property. The interlocutory relief would also be identical. In our view, such a suit would not be maintainable, because an interlocutory injunction can only be granted during the pendency of a civil suit claiming a relief which is likely to result in a final decision upon the subject in dispute. The suit would be maintainable only on the existence of a cause of action, which would entitle the plaintiff for the substantive relief claimed in the suit. The interim injunction itself must be a part of the substantive relief to which the plaintiff's cause of action entitled him. In our opinion, most of the aforesaid ingredients are missing in a suit claiming injunction restraining a party from dealing with the assets during the pendency of arbitration proceedings outside India. Since the dispute is to be decided by the Arbitrator, no substantive relief concerning the merits of the arbitration could be claimed in the suit. The only relief that could be asked for would be to safeguard the property which the plaintiff may or may not be entitled to proceed against. In fact the plaintiff's only claim would depend on the outcome of the arbitration proceeding in a foreign country over which the courts in India would have no jurisdiction. The cause of action would clearly be contingent/speculative. There would be no existing cause of action. The plaint itself would be liable to be rejected under Order VII Rule 11(a). In any event, as noticed above, no interim relief could be granted unless it is in aid of and ancillary to the main relief that may be available to a party on final determination of rights in a suit. This view will find Page 35 of 37 O/AS/17/2015 ORDER support from a number of judgments of this Court."
15. Relying upon the decision rendered by the Hon'ble Supreme Court in the case of BALCO (Supra), the Bombay High Court in the case of Rushab Ship International LLC (Supra) held that the Court's jurisdiction to arrest a ship in an action in rem should not be exercised for the purpose of providing security of an award, which may be made in arbitration proceedings that is maintainable because the purpose of the exercise of the jurisdiction is to provide security in respect of the action in rem. If the plaintiff invokes the jurisdiction of the Court to obtain the arrest of the ship as security for an award in an arbitration proceeding, the Court should not issue a warrant of arrest.
16. The aforesaid two decisions relied upon by the learned counsel for the defendant, in the opinion of this Court, are not applicable to the facts of the present case as rightly argued by learned counsel for the plaintiff that in the present case the plaintiff has sought the decree against the defendant as prayed for in para 24(a) of the plaint for principal sum of USD 122,528.77 along with interest thereon. The plaintiff has not come solely for security pending arbitration as interim measure like an application under Section 9 of the Arbitration Act. From the record it is clear that the suit of the plaintiff is for substantive relief, whereas, in the aforesaid two decisions relied upon by the learned counsel for the defendant, the issue was only with respect to security pending arbitration. Thus, the plaintiff is able to show the cause of action for filing of the suit.
17. From the averments made in the plaint and from the documents produced on record, it can be said that the plaintiff is having prima facie and arguable case on merits. The balance of convenience is also in Page 36 of 37 O/AS/17/2015 ORDER favour of the plaintiff and if the interim relief as prayed for is not granted, the plaintiff would suffer irreparable loss which would not be compensated in terms of money. Since, till date the defendant has not filed any reply/written statement or produced any documents on record to suggest that the averments made by the plaintiff in the plaint are not correct, this Court is of the opinion that the plaintiff is entitled to claim interim relief as prayed for during the pendency of this admiralty suit. Thus, the decision relied upon by the learned counsel for the defendant in the case of Croft Sales and Distribution Ltd. (Supra) is not applicable in the facts of the present case.
18. In view of the aforesaid facts and circumstances of the present case and in view of the observations made hereinabove, the preliminary contentions/objections orally taken by the learned counsel for the defendant are not required to be accepted and the same are not accepted. Thus, the order passed by this Court on 12.06.2015 whereby the order of arrest of the defendant vessel has been passed, is ordered to be executed and implemented forthwith and thereby the Registry is directed to issue the warrant of arrest of the defendant vessel forthwith.
The hearing of the suit is adjourned on 20th July 2015. Direct service today.
(VIPUL M. PANCHOLI, J.) Jani Page 37 of 37