Calcutta High Court
State Trading Corporation Of India Ltd. vs Owners And Parties Interested In The ... on 10 November, 1998
Equivalent citations: 1999(2)ARBLR327(CAL), AIR 1999 CALCUTTA 99, (1999) 2 ARBILR 327
ORDER
1. This is an application by the first and second defendants inter alia for reference of all disputes which are the subject-matter of the present suit to arbitration and for stay of all further proceedings.
2. Briefly the facts leading to the present application are staled hereinafter,
3. The second defendant is the owner of the vessel "M.V. Baltic Confidence" ("the said ship" for short). The third defendant is the charterer of the said ship under the Time Charter party Agreement entered into by and between it and the second defendant.
4. By five several Bills of Lading all dated 26th May. 1997 the defendants agreed and undertook to carry on board the said ship 11,433,510 metric tonnes of Canadien Yellow Peas ("the said peas" for short) from the Port of Vaneourver in Canada to the Port of Calcutta in good order and condition. The plaintiff is the holder and endorsee of each of the said Bills of Lading and the owners of the said peas.
5. It is the case of the plaintiff in this suit that the defendants had negligently and in breach of the contract of carriage and/or in breach of their duties as bailees; failed to deliver the said peas to the plaintiff in good order and conditions, the defendants delivered part of the said peas weighing 4910 metric tonnes damaged by sea water; and in consequence the plaintiff had suffered loss and damage at least in the sum of US $ 1,384.620/-being the value of the said damaged quantity. It is the further case of the plaintiff that it has suffered further loss and damages.
6. It was in these circumstances that the plaintiff has filed this suit in this Court.
7. On an application made by the second defendant in its suit being C.S. No. 289 of 1997 several orders have been passed from time to time to which it is not necessary to refer in the prevent case. The instant application of the first and second defendants is under Section 45 of the Arbitration and Conciliation Act, 1996 and purports to relate to the following arbitration clause :--
"Clause 62 -- This Charter Party shall be governed by and construed in accordance with English Law and any dispute arising out of this Charter Party shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force. Unless the parties agree upon a sole arbitrator, one arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint a third arbitrator, the decision of the three-men tribunal thus constituted or any two of them, shall be final. On the receipt by one party of the nomination in writing of the other party' arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall be final.
For disputes where the total amount claimed by either party does not exceed USD the arbitration shall be conducted in accordance with the Small Claims Procedure of the London Maritime Arbitrators Association."
8. The aforesaid Clause is contained in the rider clauses attached and forming part of the aforesaid time Charter Party. The copy of the time charter which is an annexure to the instant application states al its fool in bold letters as follows :--
"Clauses 29-61 as attached are deemed to be fully incorporated into this Charter Party", thereby expressly excluding the aforesaid Clause 62. It was pointed out by Mr. Mitra appearing for the plaintiff that the first and second defendants have on the basis of the aforesaid copy of the said Times Charter instituted its aforesaid suit being C.S. No 289 of 1997 in this Court against the third defendant and the plaintiff. This was not disputed by Mr. Sarkar appearing on behalf of the said defendants. The said suit of the said defendants is still pending. However, on the prayer of Mr. Sarkar leave was given to the first and second defendants to file a supplementary affidavit in support of his contention that the said Clause 62 forms part of the said Time Charter. By their supplementary affidavit further documents were disclosed by the said defendants to show that, the said Clause 62 was by agreement between them and the charterer, the third defendant incorporated in the said Time Charter.
9. It is the case of the first and second defendants that the terms and conditions of the said Ti me Charier were finally agreed upon by and between the said defendants and the third defendant on 14th May, 1997.
10. It is further staled in the said supplementary affidavit by the first and second defendants as follows :--
"10. In any event, without prejudice to the aforesaid I stale and submit that there is no material difference between Clause 17 of the document dated 7th May, 1997 (the said time charter) and Clause 62 as set out in paragraph 7 of the ......... (instant application)".
Clause 17 of the said time charter provides as follows :--
"That should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial men."
11. On a comparison of the aforesaid terms contained in Clause 62 and Clause 17 it would be clear that the said arbitration agreements are materially different. The Arbitration clause contained in Clause 17 clearly postulates that it is only in the case of differences and disputes arising between the owner and the charter that the said arbitration clause can be invoked by either party against the other. However the arbitration clause contained in Clause 62 is not subject to the aforesaid limitation.
12. Mr. Mitra for the plaintiff is also right in his submission that the contention of Mr. Sarkar appearing for the first and second defendants found on the aforesaid paragraph 10 of this petition cannot be accepted as the Court can only proceed where there is no dispute with regard to the arbitration agreement that can be said to be binding on the parties, unlike the present case.
13. Further, the instant application of the first and second defendants is in relation to the arbitration clause contained in the aforesaid Clause 62 and it is not open therefore to the first and second defendants to contend that instead of the said arbitration clause, the arbitration clause contained in the Clause 17 should be given effect to. The question that really arises in this application is whether or not the arbitration clause contained in the aforesaid Clause 62 can be said to have been incorporated in the Bills of Lading of which the plaintiff is the holder.
14. The conditions of carriage incorporated in the said Bills of Lading state as follows :--
"All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated."
No dale is specified on the overleaf. This omission is material inasmuch as if the said lime charter is said to be dated 7th May, 1977 then the same cannot include the said Clause 62 but if it is dated 14th May, 1997 then the said Clause 62 providing for arbitration can be said to be incorporated.
15. Having regard to the aforesaid and the stand taken by the first and second defendants that either Clause 17 or Clause 62 should be given effect to it follows that there is uncertainty as to the actual arbitration clause.
16. It is also significant that the arbitration agreement us contained in Clause 62 contains a blank as follows :--
"For dispute where the total amount claimed by either party does not exceed USD the arbitration shall be conducted in accordance with the Small Claims Procedure of the London Maritime Arbitrators Association."
17. It is obvious that the said arbitration clause is vague and uncertain. It follows therefore that the said arbitration clause cannot be given effect to. In this connection, see the judgment of S.B. Sinha J. in the case of 'Ganapatrai Gupta v. Moody Brothers Ltd.' reported in (1950) 85 Cal LJ 136. There further remains another insuperable difficulty in the way of the first and second defendants from maintaining the present application, it is this: the words of the arbitration clause contained in the aforesaid Clause 62 which run as follows :--
"This Charter Party .................... and any dispute arising out of this Charter Party shall be referred to arbitration ..........."."
Which to my mind can only apply to the said time charter and not to the Bill of Lading to which the plaintiff is a party. If I am right in my judgment then the said arbitration clause cannot be said to be binding on the plaintiff cargo owner. Mr. Sarkar submitted that the aforesaid words should be manipulated or adopted to include the Bill of Lading. For this proposition he relied on the judgment of the English Court of Appeal in the ease of 'Deval Aeiers Dusinor Et De Secilor and others v. Armarc S.R.I.' reported in 1996) I Lloyd's Law Reports I, in this English case in construing the following arbitration clause in the charter party :--
"That should any dispute arise between the Owners and the Charterers the matter in dispute should be determined in London. England, according to the Arbitration Acts, 1950 to 1979 and any amendments or modifications thereto and English law to govern".
Lord Justice Sevile held relying on the decision of Mr. Justice Brandon (as he then was) in the case of Rena K; (1978) 1 Lloyd's Law Report 545 that "when the parties to a bill of lading contract had expressly chosen to incorporate and arbitration clause from a charter party, they must have intended and agreed to arbitration in accordance with that clause as the means of resolving their disputes; from which it followed that to give effect to that intention and agreement the words of the clause must be manipulated or adapted so that they covered disputes arising under the bill of lading contract."
18. The aforesaid view taken in the said English case appears to me to run counter to the well-settled view of this Court that the arbitration clauses are to be construed strictly and that no manipulation or adaptation is permissible. Indeed, the learned Authors of Scrutton on Charier Parties (20th Edition) have expressed doubts on the view taken in the aforesaid English case where al page 79 they state as follows :--
"............ Where there is a specific incorporation it is not clear if verbal manipulation is permissible to make the clause fit the bill (Bill of Lading)."
19. The view that I have taken of the in applicability of the aforesaid arbitration clause is fortified by the decision of the Full Bench of this Court presided over by Sir Arthur Trevor Harrias Chief Justice in the case of 'Dwarkadas & Co. v. Daluram Goganmull: , where in paragraph 67 the Court cited with approval the English case of 'Hamilton & Co. v. Mackie & Sons' as follows (Para 67 of AIR) :--
"Correctly read all that these cases lay down is that the terms of a document can be incorporated by reference when they arc not inconsistent with the express terms of the incorporating document or are not repugnant to the transaction which that document represents. The general rule of construction is that a document should be construed according to the plain meaning of the words used. But if the literal construction leads to absurdity, repugnancy or inconsistency then the general rule should be modified to avoid such a result. Therefore the incorporation of a clause is excluded in the case of inapplicable or insensible conditions. Hamilton & Co. v. Mackie & Sons, (1889) 5 TLR 677 is an example of this principle. An action was brought by shipowners against the consignees of the cargo and the endorsee of the bill of lading for freight due under the bill of lading. The charter-party contained a clause "all disputes under this charter shall be referred to arbitration. "On the bill of lading the words were stamped "all other terms and conditions as per charter-party" It was held by Lord Esher M.R. that the arbitration clause in the charter-party did not apply to the dispute arising on him bill of lading. The rule in such a case is to read the conditions of the charter-party verbatim into the bill of lading as though they were there printed in extenso and then to disregard any conditions which if so read, are inconsistent with the bill of lading. This was really a case where the incorporation of the arbitration clause was excluded by the peculiar terms of the clause sought to be imported into the later contract."
20. The other point raised by Mr. Mitra appearing for the plaintiff that there has been gross delay on the part of the first and second defend-
ants in invoking the arbitration clause and as such the said arbitration clause stands frustrated. In support of the said contention he relied on the English Case of "Paal Wilson & Co. A/s. v. Partenreederei Hannah Blumenthal reported in (1982)3 WLR 49.
21. Il is not necessary for the purposes of the instant application to deal with this point as there has been no such gross delay and further having regard to my opinion that this application is not maintainable for the foregoing reasons.
22. It follows therefore that this application must fail and the same is accordingly dismissed. The interim order is vacated.
23. Cost costs in the cause.