Bombay High Court
Sealand Shipping & Export Pvt.Ltd vs Kin-Ship Services (India) Pvt. Ltd on 6 June, 2011
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
This Order is modified/corrected by Speaking to Minutes Order
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 178 OF 2007
Sealand Shipping & Export Pvt.Ltd., a Company
incorporated under the Companies Act, 1956
having its registered office at 301, Patani
Plaza Complex, Near Neelambag Circle,
Devbag, Bhavnagar. .... Petitioners
(Claimants)
Vs
Kin-ship Services (India) Pvt. Ltd.,
having their office at Kin-ship House,
Plot No. 1 & 6 CAT IV, Door No.CC 24/492,
Marar Road, Willingdon Island,
Cochin 682 003 .... Respondents
(Orig. Respondents)
ALONG WITH
ARBITRATION PETITION NO. 266 OF 2007
Kin-ship Services (India) Pvt. Ltd.,
having their office at Kin-ship House,
Plot No. 1 & 6 CAT IV, Door No.CC 24/492,
Marar Road, Willingdon Island,
Cochin 682 003. ...... Petitioners
(Orig. Respondents)
vs.
Sealand Shipping & Export Pvt.Ltd., a Company
incorporated under the Companies Act, 1956
having its registered office at 301, Patani
Plaza Complex, Near Neelambag Circle, Devbag,
Bhavnagar. .... Respondents
(Claimants)
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This Order is modified/corrected by Speaking to Minutes Order
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Mr. Rahul Narichania i/by M/s. Bhatt & Saldanha for the petitioners in
Arbitration Petition No.178/07 and for the Respondents in Arbitration
Petition No.266/07.
Mr. V. K. Rambhadran for the Respondents in Arbitration Petition No.
178/07 and for the Petitioners in Arbitration Petition No.266/2007.
CORAM : ANOOP V. MOHTA, J.
JUDGMENT RESERVED ON : APRIL 21, 2011
JUDGMENT PRONOUNCED ON: JUNE 06, 2011
JUDGMENT:
These are two Petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, "Arbitration Act"), by both the parties, against Award dated 4 January 2007, granting a part claim and a part counter claim by the sole Arbitrator in a dispute arising out a Charter Party Agreement dated 7 August 2001 between them.
2 Arbitration Petition No.178/2007 has been filed by the Petitioners/the claimants against the Respondents/original Opponents only against the grant of claim to the extent of `30,78,417/-, the rest of the Award has been accepted.
::: Downloaded on - 09/06/2013 17:18:17 :::This Order is modified/corrected by Speaking to Minutes Order 3 arbp-178-07gr.sxw 3 Arbitration Petition No.266/2007 has been filed by the original Respondents against the claimants only to the extent of grant of sum of `8,60,750/- towards the restricted charter hire charges and the bunkers cost.
4 By the impugned Award, the Arbitrator, subject to set off/adjustment, has directed the original claimants to pay to the original Respondents, the balance amount of `22,09,667/- and the interest thereon at the rate of 10% per annum from the date of the Award till payment.
FACTS 5 Both the parties at the relevant time were carrying on shipping related business regularly at their respective places since October 2000. By Charter Party Agreement dated 7 August 2001, the vessel, m.v. CONCORD, owned by the claimants, was chartered by the Respondents (original Respondents). On 1 October 2001, the cargo vessel which was plying in a west-coast in India sank into the sea near Dabhol Port. There arose dispute between the parties. Therefore, in view of the arbitration agreement, the sole Arbitrator was appointed, ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 4 arbp-178-07gr.sxw after making claims and counter claims, through the various notices.
6 The claimants before the sole Arbitrator on 24/02/2005 made various claims including of the freight and fuel charges (8 days x 6 hours) (22.09.2001 to 01.10.2001) (`90,000/- per day) of `18,32,000/-. The claims were also made towards the loss of profit on the foundation that the vessel would have plied for 750 days without repair if not sunk. Therefore 750 x `63,000/- per day = `7,72,50,000/- and thereby claimed `4,90,82,000/-. The original Respondents resisted the claims and filed a counter claim dated 25 April 2005 for the loss of freight receivable from the shippers/consignees of the cargo M/s.Gujrat Ambuja Cement Ltd.
(Gujrat Ambuja), i.e. `30,29,677/-, the owners expenses of `48,714/-, loss of revenue, loss incurred by alternative arrangement and thereby claimed a total sum of `85,45,650/-.
7 The original Respondents placed on record Consent Terms/award dated 18 September 2003, executed by them with Gujarat Ambuja, the owner of the cement bags for which the vessel was hired for transportation. By the said consent terms, they settled the matter with regard to the counter claim of Gujrat Ambuja at `30,29,677/- in their ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 5 arbp-178-07gr.sxw arbitration proceedings. The claimants were not the party to the said dispute.
8 The claimants filed a rejoinder and reply to the counter claim.
The parties filed their respective documents and led the evidence before the Arbitrator. They had also filed written submissions.
9The Arbitrator, after considering the points for determination which were framed on 19 November 2005, decided all the points by common reasonings and passed the impugned Award.
10 In view of the restricted grounds raised by the respective counsel, the submissions were also made accordingly. Therefore, the controversy in these Petitions is quite narrowed down.
THE CARGO VESSEL WAS UNSEAWORTHY- THE CLAIM OF LOSS OF FREIGHT.
11 The Merchant Shipping Act, 1958 (the Act) defines "unseaworthiness' of a ship as under :
"A ship is 'unseaworthy' within the meaning of this Act when the materials of which she is made, her ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 6 arbp-178-07gr.sxw construction, the qualifications of her master, the number description and qualifications of the crew including officers, the weight, description and stowage of the cargo and ballast, the conditions of her hull and equipment, boilers and machinery are not such as to render her in every respect fit for the purpose of voyage or service."
12 The relevant clauses 26 and 44 of the Charter Party Agreement dated 7 August 2001 read as under :
"26 Nothing herein stated is to be construed as a demise of the vessel to the Time-Charterer. The owners shall remain responsible for the navigation of the vessel, acts of pilots and tug boats, insurance, crew, and all other matters, same as when trading for their own account".
44 Notwithstanding anything contained in this C/P, Master will always be responsible for the stowage and the safety of the cargo and if for any reason cargo is lost, owners to remain liable with no risk to charterers."
13 The Arbitrator, after considering the facts and material on record along with the evidence led by the parties, the terms of the Contract and the provisions of law, rightly attributed the sinking of the vessel to the incompetency of the Master and the Chief Officer of the vessel as they failed to perform their legal obligation as contemplated under Section 334(5) of the Act. The holding of valid certificate of competency itself is not sufficient to overlook the factual defaults and ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 7 arbp-178-07gr.sxw negligence committed by the concerned person/officer at the relevant time, specially when the fact of sinking of the vessel is not in dispute.
14 The learned Arbitrator, based upon the material available on record, merely because the loading of the cargo in the said vessel was carried out under the supervision of ship officers and to the entire satisfaction of the Master of the said vessel which was also certified (a certificate dated 29 September 2001), cannot overlook the recommendation of the Inquiry Officer and the Director General of Shipping, Mumbai's letter dated 30 January 2002, whereby it is concluded that the vessel was lost due to negligence of the Master and the Chief Officer and directed to take actions under Section 363 of the Act in view of their incompetency. The Arbitrator has rightly taken note of the material on record that there were lapses on the part of the Master as he relied on Chief Officer for loading and stowage of the cargo.
15 The learned Arbitrator has rightly referred and relied upon the averments made in the admiralty suit filed by the claimants against Gujarat Ambuja, whereby the claimants have admitted that owing to the shifting of the cargo caused due to the vessel's rolling on account ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 8 arbp-178-07gr.sxw of heavy swell, experienced by her soon after sailing out of the Port of Muldwarka and because of subsequent heavy sea and swell conditions, the vessel sank off the Port of Dabhol.
16 In the present case, the Master of the vessel was not examined.
Therefore, the claimants' case, if any, against Respondent no.1's default or negligence or of M/s. Gujarat Ambuja's obligation of not providing loose bags to fill the gaps made the defence more feeble.
17 The learned Arbitrator has observed that it was the obligation of the Master of cargo vessel to navigate and proceed on stowage based on his expertise. He was responsible for the safety of the vessel and the cargo. The stowage of the cargo as per clause 44, was the responsibility of the Master. The claimants by not examining the Master of the cargo failed to discharge his burden and thereby failed to prove that the Master and related officers had performed contractual obligations and the vessel was seaworthy. The material, therefore, as placed on record by Respondent no.1 and as the claimants failed to bring contra material on record and as the learned Arbitrator appreciated the record and by the detailed reasoned order arrived at the conclusion that the vessel was lost due to the negligence ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 9 arbp-178-07gr.sxw of the Master and the Chief Officer. The claimants were bound and liable not only to supply the properly manned and but also seaworthy vessel, and as actually the ship sunk into the sea, therefore, the finding that the vessel was unseaworthy need no interference.
18 It is relevant to note, in the present facts and circumstances, as the vessel admittedly was sunk and, the claimants, being owner, ought to have justified the positive averments so made in the claim petition filed by them. The claimants ought not to have relied only on the certificate of competency. It was the responsibility of owner of the vessel to prove that he had provided physically seaworthy vessel/ship to enable the charterer to complete their respective obligations.
19 But in the present cases, this amount, the Respondents had claimed from Gujarat Ambuja, prior in point of time, but in view of their settlement, and the consent order, the original Respondents withdrew its claim for freight against Gujarat Ambuja. The original Respondent therefore, in my view, is not entitled to claim again the loss of freight in the present arbitration proceeding though the loss was caused because of defaults and breaches of the claimants. The Respondents cannot raise same claims based upon, one cause of ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 10 arbp-178-07gr.sxw action, at two separate proceedings, against two connected parties, arising out of the same agreements.
WHETHER THE LIMITATION ISSUE CAN BE RAISED AT ANY STAGE OF ARBITRATION PROCEEDINGS :
20 The Charter Party Agreement is dated 7 August 2001 between the parties. The vessel sunk on 1 October 2001. The arbitration clause was invoked by the Respondents by letter dated 7 October 2004.
Between this period, the parties had exchanged various related correspondences. By letter dated 14 September 2004, the claimants also, in view of clause 42 of the Charter Party Agreement, called upon the Respondents to pay `32,25,864/- in view of Charter Party Agreement and an outstanding dues at the foot of statement of account. The Respondents, in reply to the same, by letter dated 7 October 2004 while denying the liability raised counter claim as noted above. By this letter dated 14 September 2004 the claimants appointed even the Arbitrator. The Respondents resisted the same by letter dated 7 October 2004 and suggested three names for the Arbitrator and ultimately the sole Arbitrator was appointed by consent of the parties and the arbitration proceedings commenced accordingly, based upon the Arbitration Act. Before the Arbitrator, no specific issue ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 11 arbp-178-07gr.sxw with regard to the limitation was raised by the parties. Therefore, in the present facts and circumstances, as the parties had business dealing since 1999 and they maintained regular accounts and as ultimately, based upon the agreement, the claimants invoked the arbitration clause and as the Respondents resisted the dispute and also raised counter claim and as claimants failed to lead any evidence and/or raise any objection with regard to the limitation, the point still remains is whether the Award so passed by the Arbitrator is within limitation or not.
21 The plea of limitation though not specifically pressed/framed, but can be raised for the first time in a Petition under Section 34 of the Arbitration Act. Section 3 of the Limitation Act, 1963 (for short, Limitation Act) provides as under:
3 Bar of Limitation.- (1) Subject to the provisions contained in sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence.
(2) For the purposes of this Act, -
(a) A suit is instituted. -
(i) in an ordinary case, when the plaint is presented to the proper officer;
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(ii) in the case of a pauper, when his application for leave to sue as a pauper is made; and
(iii) in the case of a claim against a company which is being wound up by the Court, when the claimant first sends in his claim to the official liquidator;
(b) any claim by way of a set off, or a counter claim, shall be treated as a separate suit and shall be deemed to have been instituted -
(i) in the case of a set off, on the same date as the suit in which the set off is pleaded;
(ii) in the case of a counter claim, on the date on which the counter claim is made in Court;
(c) an application by notice of motion in a High Court is made when the application is presented to the proper officer of that Court.
22 Article 137 of the Limitation Act is reproduced as under :
Description of Period of limitation Time from which application period begins to run
137. Any other Three years When the right to application for which apply accrues.
no period of limitation is provided elsewhere in this division.
Though the plea of limitation was raised, it appears that the same was not pressed before the learned Arbitrator. There was no issue of limitation framed and/or not insisted upon by the parties. In ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 13 arbp-178-07gr.sxw the Award, there is no reference of any kind made in this regard.
23 Section 4 of the Arbitration Act provides as under:
4 Waiver of right to object . - A party who knows that -
(a) any provision of this Part from which the
parties may derogate, or
(b)
any requirement under the arbitration
agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
24 Section 5 of the Arbitration Act, unless provided under the Act, the Court's intervention in such arbitration proceeding is also discouraged. The point still remains, whether the parties can waive the issue of limitation before the Arbitrator, as it goes to the root of the matter. The Arbitrator, in view of settled law itself, is not empowered to award claim which is barred by law of limitation, ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 14 arbp-178-07gr.sxw specifically when there is no contra agreement to show that the parties are entitled to raise claim or counter claim inspite of such provisions.
25 The Apex Court, while dealing with Section 3 of the Limitation Act, in Kamlesh Babu and ors. v. Lajpat Rai Sharma and ors.,1 observed as under :
"16. Having considered the submissions made on behalf of the respective parties, the decisions cited by them and the relevant law on the subject, we are unable to accept Ms Srivastava's submissions mainly on two counts. Firstly, the facts disclosed clearly indicate that neither the first appellate court nor the High Court took notice of Section 3(1) of the Limitation Act, 1963, which reads as follows:
"3. Bar of limitation.- (1) subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed although limitation has not been set up as a defence."
Even in the decision of this Court in Darshan Singh Case (2004) 1 SCC 328, the said provision does not appear to have been brought to the notice of the Hon'ble Judges who decided the matter.
17. It is well settled that Section 3(1) of the Limitation Act casts a duty upon the court to dismiss a suit or an appeal application, if made after the prescribed 1 (2008) 12 SCC 577 ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 15 arbp-178-07gr.sxw period, although, limitation is not set up a defence.
18. In the instant case, such a defence has been set up in the written statement though no issue was framed in that regard. However, when the trial court had in terms of the mandate of Section 3(1) come to a finding that the suit was barred by limitation, it was the duty of the first appellate court and also of the High Court to go into the said question and to decide the same before reversing the judgment of the trial court on the various issues framed in the suit. Even though the various issues were decided in favour of the plaintiff, both by the first appellate court and the High Court, the same were of no avail since the suit continued to remain barred under Article 59 of the Limitation Act, 1963."
26 Under Code of Civil Procedure (CPC) also in view of the provisions of Order 7, Rule 11(d), if evidence is not required and the plea of limitation is apparent, the Court can pass appropriate order.
In a case where evidence is necessary at the final stage of the Suit along with other issues, the Court needs to consider the issue of limitation. Therefore, taking overall view of the matter, even the Arbitrator is bound to consider the aspect of limitation either at the initial stage if objection so raised and at least at the final stage of the arbitration proceedings based upon documents and material placed on record, whether plea was specifically pressed or not, to avoid further complication in the matter.
::: Downloaded on - 09/06/2013 17:18:17 :::This Order is modified/corrected by Speaking to Minutes Order 16 arbp-178-07gr.sxw 27 It is settled that the plea of limitation, prevent claiming the party from recovering the amount/claim though he has a right to claim the same. It debars the remedy and not the claim. Therefore, the Arbitrator under the Arbitration Act also bound to consider this aspect of limitation at least at the time of awarding the claim so raised by either of the parties, but within the limit of Limitation Act. In my view, there is no question of invoking doctrine of "waiver" and/or "no interference by the Court" as contemplated under Section 4 and/or 5 of the Arbitration Act, specially at the time of awarding/granting/passing the final Award. The arbitration proceedings and the power of Arbitrator with this regard, are not exceptional to that. The Arbitrator is bound to pass award within the framework of substantive as well as procedural laws.
28 In view of above, the decision in Indian Oil Corporation Ltd.
vs. Kverner Construction India Ltd.,1 renders no assistance in view of the facts and circumstances of the case itself and basically in view of the Supreme Court judgments as referred above with regard to the raising plea of limitation, though not pressed before the Arbitrator.
1 2000 (2) Bom. C.R. 871 ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 17 arbp-178-07gr.sxw Same is the position with regard to the decision in Union of India through Dy. Controller of Stores vs. MAA Agency & anr.,1 . The facts and circumstances were different in this case also. This case also in my view so far as the arbitration issue is concerned is not in conformity with the view expressed by the Supreme Court (supra) with regard to the plea of limitation.
THE CONDUCT OF THE PARTIES BEFORE THE ARBITRATOR OF NOT PRESSING THE ISSUE, AT THE RELEVANT TIME, BUT AGITATE THE SAME IN THE COURT UNDER SECTION 34 OR ANY OTHER TIME.
29 Strikingly, in the present case, though plea was raised and as events reflect the claim as well as counter claim so raised was not considered from the point of view of limitation. Even the issue was not framed though plea was raised. The arbitration proceedings based upon the other issues on merit proceeded and the parties led evidence accordingly. The claimants, however in Section 34 Petition, has raised specific plea of limitation, based upon the events as well as the documents available on the record. Both the Counsel made their respective submissions; supporting as well as opposing the plea of limitation. Even the respective authorities were cited to support their 1 2003 (4) Bom. C.R. 234 ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 18 arbp-178-07gr.sxw claim/counter claim. As per the settled law, if Court is under obligation, to consider the plea of limitation in view of Section 3 of the Act read with decisions of the Supreme Court as well as various other High Courts and as, if the limitation issue goes to the root of the claim/matter, there is no reason that the Court even in the Petition under Section 34, should not consider the same merely because the parties, for whatever may be the reason, had chosen not to press the point before the Arbitrator, but now agitating the issue in Section 34 Petition by raising specific ground to that effect. I am of the view that in view of the Supreme Court judgments, the Court is under obligation, to consider the plea of limitation so raised, though not pressed before the Arbitrator in a Petition under Section 34 and need to pass appropriate order accordingly in accordance with law.
30 I may add that not pressing the point of limitation which goes to the root of the matter, at the first given opportunity, can cause serious prejudice to the proceedings and the litigant. The party and the counsel are under obligation to get such plea decided at the earliest stage of the case. A waiver of such plea is unjust, unfair and cause hardship to all and, therefore, must be avoided.
::: Downloaded on - 09/06/2013 17:18:17 :::This Order is modified/corrected by Speaking to Minutes Order 19 arbp-178-07gr.sxw CONSENSUS FACIT JUS = Consent makes law.
31 This maxim cannot be read to mean that the parties can enter into any agreement which is contrary to law or illegal or against the public policy. Though in certain area like Arbitration, the parties agree to submit their differences to be settled by the Arbitrator or Mediator, subject to the agreed terms and conditions, they will be bound by such consent agreement.
32 The waiver and/or acquiescence plea, in my view, in such cases, cannot be invoked which ultimately results into injustice to the litigant and the public at large. Even otherwise, there is no question of waiver and/or acquiescence with regard to the statutory provisions and/or settled principles of law. The plea of limitation as settled is always a mixed question of law and fact. If case is made out, the Court and/'or the Arbitrator is bound to dismiss the claim or the Suit if barred by law. The parties cannot waive and/or condone the delay unless provided under the law and/or as per the provisions of the law.
IS COUNTER CLAIM OF THE RESPONDENTS WITHIN LIMITATION?
::: Downloaded on - 09/06/2013 17:18:17 :::This Order is modified/corrected by Speaking to Minutes Order 20 arbp-178-07gr.sxw 33 Maritime Law of Common Law countries is normally English Laws. In the present case, the Merchant Shipping Act/Admiralty Act is applicable. The limitation period as per the Indian Law of Limitation is 3 years, as submitted even by the parties.
34 The contract of affreightment with Gujarat Ambuja was executed on 26 July 2001. The Charter Party Agreement was executed on 7 August 2001. Two Bills of Lading executed in favour of the Gujarat Ambuja on 29 September 2001. The cargo vessel sunk into sea at Dabhol Port on 1 October 2001. The Respondents' claim of cargo loss and other losses raised on 8 October 2001 itself. The claimants claimed freight and fuel charges on 3 November 2001. A suit by Gujarat Ambuja against the claimants (Sealand) based upon the same agreement and for same cause of action filed on 27 September 2002. The claimants demanded outstanding freight charges and fuel amount of `18,32,000/- on 31 March 2003 and same was increased on 17 May 2003 upto `32 lacs. The claimants withdrew the subsequent Suit filed against the Gujarat Ambuja in Bombay High Court (33/2002) on 14 November 2003. The claimants invoked arbitration clause and suggested three names of Arbitrator on 14 September 2004. By a letter dated 7 October 2004 suggested the ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 21 arbp-178-07gr.sxw name of the Arbitrator. The Respondents consented for the appointment of the sole Arbitrator in question on 22 November 2004.
Therefore, based upon the Charter Party Agreement dated 7 August 2001 and the arbitration clause therein, a consent letter was issued on 3 December 2004 to the sole Arbitrator. The Arbitrator accordingly fixed preliminary hearing on 22 December 2004. The claimants filed claim statement before the sole Arbitrator covering the freight and fuel charges on 24 February 2005. The Respondents for the first time apart from resisting the claim of the claimants raised the counter claim before the Arbitrator on 25 April 2005 and basically towards the loss of cargo freight of `30,29,677/- along with other claimants. The claimants therefore resisted the counter claim by filing rejoinder-cum-
reply to the counter claim in June 2005. The settlement/consent terms of the Respondents with Gujarat Ambuja with regard to the equal amount as awarded by the Arbitrator in the present case, in no way sufficient to give fresh cause of action and/or cause of action to claim the said amount towards the loss of freight from the claimants.
Therefore, relevant date in the present case on the face of record is apart from the date of agreement a known sunk date of cargo i.e. 1 October 2001. The cause of action for claiming loss of freight if any arose on 1 October 2001 itself. The Respondents, as a contractor, ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 22 arbp-178-07gr.sxw issued notice on 8 October 2001 and forwarded the claim of cargo loss and other losses. There is nothing pointed out or shown from the record that the claimants acknowledged the said liability and expressed the willingness to pay the same at any further point of time.
The Suit filed by the Gujarat Ambuja and/or the counter suit filed by the claimants (Admiralty Suit No.32/2002) though based upon the same agreement and cause of action also in no way enlarge the scope and/or amounts to acknowledgment of the liability so far as the Respondents are concerned.
WHETHER THE CLAIMANTS (THE OWNER) ENTITLED FOR FREIGHT & FUEL CHARGES THOUGH THE CARGO/VESSEL SUNK:
35 The principle of "hook to hook" from "loading to discharge" unless exonerated or falls within the ambit of exception, the liabilities and obligations of owner/master remained intact, and therefore, need to be accepted as a basic condition of delivery of cargo from the stage of loading to discharge.
36 Any commercial contract means completion of reciprocal obligation of the parties. The claimants would have definitely entitled for the freight as well as fuel charges had the ship/cargo owner ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order
23 arbp-178-07gr.sxw perform its obligation of delivery of goods as agreed. In the present case, as already recorded by the Arbitrator, based upon the material available on record, the cargo sunk because of defaults/negligence of the master and its Officer. The claimants being owner therefore, as failed to perform its obligation by not providing seaworthy ship that resulted into the loss of cargo in question. The owner, therefore, being liable to pay the losses. In my view, in the present facts and circumstances, he is not entitled for the freight and/or the fuel charges as claimed in the present case. In my view, no such commercial documents/contract can be made or interpreted to mean that inspite of total loss of cargo because of defaults/negligence of the owner/Master the owner is entitled to claim freight and fuel charges, as per the agreement. There is a substance in the submission raised by the learned counsel appearing for the Respondents/Petitioners in Arbitration Petition No.266/07 that having once held by the Arbitrator that cargo was un-seaworthy and the cargo was lost because of negligence on the part of its Master and Officer, there was no question of payment of any freight and/or fuel charges even for eight days as claimed. The award of freight charges by the Arbitrator in my view is impermissible. As per the contract, due payment of hire charges is always subject to completion of the delivery of cargo as agreed. Such ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 24 arbp-178-07gr.sxw default or loss of cargo, just cannot be overlooked by the Arbitrator before awarding the hire charges.
37 The submission of the learned counsel appearing for the claimants that in view of the specific clause of the agreement and in view of the applicable Treaty in question, they are still liable to make the payment of the daily freight as well as fuel at least till the date of sunk of the vessel cargo. If the owner failed to perform its basic obligation by not providing seaworthy ship or cargo and the other parties lost the whole cargo and suffered damages of loss of freight as claimed because of negligence on the part of Master and Officer and as it is ultimately owner's responsibility and liability, still to insist for the freight charges and/or fuel charges is unacceptable, specifically when there is no dispute with regard to the fact of sunk of the cargo.
38 The claimants as noted in fact also withdrew the Suit based upon the same cause of action against the Gujarat Ambuja. The original Respondent also settled their claim/counter claim with Gujarat Ambuja.
NO SUPPORTING EVIDENCE TO CLAIM THE LOSS OF FREIGHT :
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39 There is a contract with carrier for the transportation of goods.
The agreement of affreightment is between the ship-owner and the freighter based upon the conditions which is well within the framework of law, treaties and recognized regulations of usage and conventions. The contract is between the ship-owner and the shipper.
The obligation of freight payment is usually subject to terms and delivery of goods at agreed place, by providing seaworthy ship and to proceed upon the voyage with reasonable dispatch. The ship-owner in a given case, has lien for the goods carried for the freight payable.
The ship-owners obligation to deliver the goods safely, as agreed may govern by the common law and/or agreed laws, subject to certain exceptions. We are not concerned with such exceptions in the present case. The signed documents called bills of landing means triple acknowledgment i.e. carriage contract, cargo receipt and the property title, again subject to the agreed terms. The charter party agreement and the affreightment agreement are two different types of agreements/ contracts. The ship-owner is always party to these agreements, which provides for various clauses covering the aspect of; Bunker, Seaworthy ship, negligence and the ready berth clauses exceptions etc. In the present case, the Respondents were party to ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 26 arbp-178-07gr.sxw both these agreements.
40 The learned counsel appearing for the Respondents have strongly relied on Mukund Limited vs. Hindustan Petroleum Corporation Limited . ,1 to say that the quantum of market price need not be proved in view of the material on record i.e. A consent decree/settlement between the Respondents and Gujarat Ambuja of `32 lacs and odd. Admittedly, the claimants were not party to the same. The claimants never admitted to pay the quantum of amount so claimed by the Respondents. There was no supporting material to justify the same on record. The loss of freight, if any, is nothing but the quantum of amount which ought to have been determined on the basis of date of breach committed read with the price prevailing on the market date of breach, but in the present case, no such material was brought on record, including no independent evidence to adduce the same/to support the same. Therefore, the judgment so referred is no assistance as, in my view, also the Respondents failed to prove the quantum so raised in the present facts and circumstances of the case.
The Arbitrator's finding to that effect that there was no dispute about the quantum, in my view, is also unacceptable. The amount can be 1 2005 (2) Bom. C.R. 21 ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 27 arbp-178-07gr.sxw awarded based upon such disputed material. It was not a case of admission of the amount or the quantum.
41 It is relevant to note that the importance of leading evidence to decide the quantum of amount of compensation/damages to be paid in any type of adjudication proceedings including the Arbitration. The Apex Court has observed in State of Rajasthan and Anr. Vs. Ferro Concrete Construction Private Limitation 1 in paragraph 55 as under:-
"55. While the quantum of evidence required to accept a claim may be a matter within the exclusive jurisdiction of the arbitrator to decide, if there was no evidence at all and if the arbitrator makes an award of the amount claimed in the claim statement, merely on the basis of the claim statement without anything more, it has to be held that the award on that account would be invalid. Suffice it to say that the entire award under this head is wholly illegal and beyond the jurisdiction of the arbitrator, and wholly unsustainable."
Therefore, any award if passed, based upon no material or evidence on record, the entire award can be stated to be illegal and unsustainable.
SECOND PROCEEDING FOR THE SAME RELIEF OR THE CLAIM AMOUNT BASED ON THE SAME AGREEMENT AND THE SAME CAUSE OF ACTION IS IMPERMISSIBLE :-
1 (2009) 12 SCC 1 ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 28 arbp-178-07gr.sxw
42 The finding given is that the vessel sunk, the claimants, are bound and liable to pay `30,29,677/-, for the freight not received under the Affreightment contract for transportation of the cement bags which the original Respondents had with Gujarat Ambuja dated 26 July 2001 from Muldwarka to Kochi and Vizhinjam.
43The Arbitrator has observed that the Respondents were entitled to receive the sum of `30,29,677/- from Gujarat Ambuja under their contract of freight. The Respondents would have received this amount had the vessel not sunk on 1 October 2001.
44 It is necessary and relevant even for the Arbitrator to consider while granting monetary claim, the parties/Plaintiff's conduct and the duty to take reasonable steps to mitigate the loss consequence of the breaches. Therefore, if the original Respondent has claimed and adjusted the same amount in different proceedings, though with other party, the counter claim, at such late stage, against the claimants in the present proceedings, disentitled him to claim the damages/compensation and/or freight charges again. It is impermissible.
::: Downloaded on - 09/06/2013 17:18:17 :::This Order is modified/corrected by Speaking to Minutes Order 29 arbp-178-07gr.sxw 45 In the present case also, in absence of any supportive evidence with regard to the claim so raised, the order of settlement of decree that itself cannot be the foundation for award in the claim against the claimants.
46 In view of the Supreme Court Judgment Mukund Limited (Supra) and on the facts itself, the reliance so placed by the learned counsel appearing for the Respondents on Mukund Limited (Supra), is also of no assistance. Here, there was no question of dispute with regard to the market price. The objection was with regard to the amount so claimed by the Respondents which was not supported by any further evidence on record.
47 Therefore also the Respondents' counter claims and the interest thereon as granted are unsustainable.
48 I would have in a given case remanded the matter on the point of limitation before the Arbitrator, as admittedly the same was not pressed and/or decided by the Arbitrator. However, considering the other reasoning so given with regard to the claims and the counter ::: Downloaded on - 09/06/2013 17:18:17 ::: This Order is modified/corrected by Speaking to Minutes Order 30 arbp-178-07gr.sxw claims so raised, I am of the view that there is no point in remanding the matter and to delay the Arbitration proceedings further.
49 In view of above reasonings, therefore, taking into consideration the material placed on record by the parties in support of the claims, as well as, the counter claim and apart from point of limitation so raised and decided in this Petition, I am of the view that both the parties are not entitled for any claim or compensation.
50 The reasoning so given by the Arbitrator in my view, cannot be stated to be a possible view of the matter, therefore, the award itself is contrary to the substantial provisions of law and liable to be quashed and set aside only with regard to the reasoning of grant of claims and the counter claims.
51 Resultantly, the claims and the counter claims are rejected and both the Arbitration Petitions are dismissed. The award dated 4th January, 2007, is quashed and set aside accordingly. No order as to costs.
(ANOOP V. MOHTA, J.) ::: Downloaded on - 09/06/2013 17:18:17 :::