Madras High Court
Kybele Ltd vs St.John Freight Systems Belgium Bvba on 12 October, 2017
Cont.P.No.1959 of 2019
in C.S.No.769 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 30.09.2021
PRONOUNCED ON: 08.10.2021
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
Cont.P.No.1959 of 2019
In
C.S.No.769 of 2017
KYBELE LTD.
198, Old Bakery Street
Valletta VLT 1455, Malta
Represented by its Power of Attorney Holder
Mr. Anil ShamraoJadhav
Residing at 147/151, Dr.M.G.Mahimtura Marg
3rdKumbharwada, 2nd Floor, Room No.9,
Girgaon, Mumbai-400004 ... Appellant/Defendant
Vs.
1.St.John Freight Systems Belgium BVBA
Rep. by MS Sundaram
A company incorporated under the appropriate
Laws of Belgium, having its registered office at
Italiciei 189, Ground Floor, 2000Anterpen, Belgium
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Cont.P.No.1959 of 2019
in C.S.No.769 of 2017
2.Johnson Thangiah,
An Indian national carrying on business at
7thFloor, Khivraj Complex II,No.480 Anna Salai,
Nandanam, Chennai 600035 and residing at 1065J/66,
Millerpuram, Tuticorin – 628008
3.Chandrasekar Ramsankar,
An Indian national intermittently residing at Handelaar,
Karrekieststraat 24,2400m MolBelgie, Belgium
4.M/s Sundaram
An Indian national, residing at S3 ShymsGokhulam,
Vivekananda Main Road, Kulathur, Chennai- 600099
... Respondents/Plaintiffs
PRAYER: Contempt Petition filed under Section 11 of the Contempt
of Courts Act, 1971 to punish the respondent for wilful breach of an
Undertaking dated 12th October 2017 in O.A.No.984 of 2017 in
C.S.No.769 of 2017 given to this Court by the respondents.
For Appellant : Mr.Aditya Krishnamurthy
for M/s Eswar, Kumar & Rao
For Respondents : S.Raghunathan for R.1
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Cont.P.No.1959 of 2019
in C.S.No.769 of 2017
ORDER
The contempt petition has been initiated by the petitioner/plaintiff stating that the contemnor has violated the undertaking given by him to this Court, pursuant to which this Court had passed an order dated 12.10.2017 in O.A.No.984 of 2017 in C.S.No.769 of 2017 wherein recording the undertaking the Court had withdrawn the order of arrest of the Cargo in the Ship MV KYBELE.
2. The contention of the petitioner is that the contemnor has willfully breached the said undertaking by not making the payment as undertaken by them in the affidavit of undertaking. It is the case of the petitioner that the Court had relied upon this undertaking to withdraw its earlier order of arrest. It is also their case that since parties were unable to arrive at an agreement on the quantum of demurrage, the 3/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 petitioner had filed application No.7331 of 2017 in the suit A.S.No.769 of 2017 under Section 45 of the Arbitration and Conciliation Act 1996 to refer the matter to arbitration situated at Singapore. The petitioner would further contend that by an order dated 02.02.2018 in the above application, this Court had referred to the petitioner and the contemnor No.1/St.John Belgium to arbitration situated in Singapore. It is also their case that while referring the parties to Arbitration this Court had recorded the undertaking. Therefore, it is the contention of the petitioner that the undertaking dated 11.10.2017 was kept alive.
3. By a final award dated 22.04.2019 the Arbitral Tribunal seated in Singapore had passed an awarding holding the contemnor No.1/St.John Belgium liable to pay a sum of USD 153,809.42/- as demurrage to the petitioner. The quantum of liability under the undertaking dated 11.10.2017 had therefore crystallised, pursuant to 4/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 the passing of the arbitral award. The contemnor has not honoured the said award by making the payment therefore they have committed a willful breach of the undertaking given by them to this Court as envisaged under Section 2(b) of the Contempt of Courts Act. Therefore, the petitioner has come forward with the above contempt petition.
4. A counter has been filed by the 1st respondent sworn to by one Mr. D.Wilson the authorized signatory of the 1st respondent company. The deponent at the outset, has tendered his unconditional apology and has stated that the 1st respondent holds the judiciary with utmost respect. In the counter affidavit it has been stated that the petitioner has deliberately chosen to suppress the fact that even prior to the filing of the suit the 1st respondent had paid a sum of USD 300,000/- on 04.10.2017. The claim made by the petitioner in the suit was also 5/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 disputed by the respondent/contemnor. The counter further states that the petitioner had suppressed the fact that the fixture note contained an arbitration clause and under clause 11 of the said fixture note the demurrage, if any, would be payable only after the completion of discharge and within 15 days thereof subject to the submission of the demurrages invoice with supporting documents duly signed by the master and vessels agents.
5. It was further stated that this Court after hearing the learned counsel was convinced that the payment had been made and 80% of the Cargo had been discharged. The Court therefore felt that the order of arrest of the cargo ought not to be continued. Therefore, the order dated 12.10.2017 came to be passed in O.A.No. 98 of 2017 in C.S.No.769 of 2017 in and by which the Court had held that since substantial amount has been paid the order of arrest is withdrawn and the advocate receiver 6/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 was directed to release the cargo forthwith to the respective assignee with the assistance of the 2nd respondent. Therefore, the release of the cargo was on account of the fact that the Court had acknowledged the fact that the substantial payment had been made and only 80% of the cargo had been discharged. The contemnor would further submit that the undertaking was given only to establish the fact that if amounts were payable by the 1st respondent after the quantum was arrived at by mutual agreement, it would be paid after the completion of the discharge.
6. Mr. Aditya Krishnamurthy, appearing on behalf of the petitioner would submit that the contemnor had given a categoric undertaking before this Court on 11.10.2019 and it was on the basis of this undertaking that the Court had ordered the release of the cargo. He would submit that a perusal of para 5 of the order dated 12.10.2017 7/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 would reflect the same. The learned Judge has therein ordered as follows:
The said undertaking is recorded. The order of arrest of the Cargo in the Ship MV KIBELE (IMO No.9217797)is withdrawn. Office if directed to communicate the order to the 9th respondent/ 9th defendant Port of Tuticorin Trust.
7. He would therefore, submit that the undertaking given has not been honoured by the contemnor despite the award being passed by the arbitral Tribunal. He would submit that originally by order dated 05.10.2017 this Court had directed the Advocate Receiver to take custody of the cargo and as it is pursuant to this order that the contemnor had given the undertaking, on the basis of which the cargo had been discharged.
8/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017
8. The learned counsel would contend that the contemnor has clearly violated the undertaking given by him thereby making himself liable for punishment for commiting an act of contempt. He would submit that by the said action the contemnor has violated the commitment given by him to the Court which formed the basis for the order dated 12.10.2017. He would rely upon the Judgments of the Hon'ble Supreme Court reported in 1990 (1) SCC, page 259, Noorali Babul Thanewala Vs. K.M.M. Shetty and others, in support of his contention that where a Court accepts an undertaking and passes an order based on the undertaking, any breach of the said undertaking would tantamount to misconduct amounting to contempt, and therefore, the filing of the instant contempt petition was very much in order. He would also rely upon the Judgment reported in 2004 (1) SCC page 360, Bank of Baroda Vs. Sadruding Hasan Daya and Another, which 9/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 also proceeds on the same lines.
9. Per contra, Mr.S.Raghunathan appearing on behalf of the contemnor would at the outset, inform the Court that the contemnor holds the court in highest esteem and respect and that if the Court where to come to the conclusion that there was an act of contempt, the respondent's unconditional apology be accepted. He would submit that it is necessary to explicate as to why the Respondent was pushed into giving the said undertaking.
10. The learned counsel would submit that days before the filing of the suit the sum of USD 300,000/- have been paid by the contemnor/respondent to the petitioner. However that payment has not been mentioned in the plaint. The petitioner has sought for recovery of USD 421,637/- under the heads of outstanding freight and demurrage 10/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 both at the port of loading and at the port of discharge along with interest. The learned counsel would submit that since the payment of a substantial amount had not been brought to the notice of the Court, this Court had passed an order directing the Advocate Receiver to seize the cargo and retain custody of the same. The cargo was to be delivered to several consignees who had started making their demands upon the respondents. In fact, cargo to the value of USD 17,940,344/- had been taken custody towards the claim of USD 421,637/- of which USD.300,000/- had already been paid. Therefore, what remained was only the payment of demurrage. Even as per the claim made by the petitioner/plaintiff a sum of USD 294,610/- was due towards outstanding freight, this amount was covered in the payment already made and the dispute remained as regard to the demurrage.
11. Therefore, since cargo of much higher value had been seized 11/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 for a lesser amount, the respondent had filed the undertaking which clearly stated that the said amount would be paid subject to the amounts being arrived at by mutual agreement and in accordance with the clause 11 of the fixture note dated 23.06.2017 and the principles followed in the shipping trade. The undertaking also qualified that the payment would be completed/paid only after the completion of discharge and within 15 days thereafter subject to mutual agreement.
He would submit that the undertaking was not an
unconditional/unqualified one but was a conditional/qualified
undertaking, where the contemnor/ respondent had undertaken to pay the amounts subject to the same being mutually agreed upon. He would submit that since the parties could not arrive at a consensus the mutual agreement had failed. The parties had gone before the Arbitral Tribunal, therefore, the undertaking had worked itself out. 12/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017
12. Further the Court recognising the payment made by the respondent/contemnor and taking note of the fact that 80% of 7,759.93 Mts. of cargo had been discharged, directed the Advocate Receiver to release the cargo forthwith. In this order the Court had just recorded the undertaking which had been filed on the said date. He would submit that a reading of the order dated 12.10.2017 would clearly indicate that the release of the cargo had been made only on account of the fact that substantial payment had been made by the respondent and as 80% of the cargo had been discharged and not on the basis of the undertaking. He would therefore submit that the contempt petition has to be dismissed.
13. Heard the learned counsels and perused the records. 13/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017
14. The gravamen of the charge against the respondent is the breach of the undertaking given by the 2nd respondent in the affidavit of undertaking dated 11.10.2017. The undertaking given reads as follows:
As regards the claim for demurrage, while I dispute the claim of USD 64,380/- allegedly accrued at the Port of Loading and the claim of USD 96,000/- allegedly accrued at the Port of Discharge, I undertake that the Second Respondent would apy the Applicant the demurrage, if any, payable both at the Port of Loading and the Port of Discharge subject to such demurrage amounts being arrived at by mutual agreement and strictly in accordance with Clause 11 of the Fixture Note dated 23rd June 2017 and as per the principles followed in the Shipping Trade. Such payment would be paid only after completion of 14/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 discharge and within 15 days thereafter subject to mutual agreement.
15. The suit has been filed by the petitioner for recovery of money, and one of the heads under which the recovery sought was towards demurrage. By an order dated 05.10.2017 in O.A.No.984 of 2017 in C.S.No.769 of 2017 the petitioner had obtained an order appointing an Advocate Receiver to take possession of the cargo and after securing possession to report before the Court on 10.10.2017. After the Advocate Receiver had taken possession of the cargo and the respondent had entered appearance in the said suit. The affidavit of undertaking came to be signed on 11.10.2017 and filed into Court on 12.10.2017. A reading of this affidavit of undertaking would indicate that the 2nd respondent had paid a sum of USD 300,000/- on 04.10.2017 even before the passing of the order of seizure dated 06.10.2017. 15/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 However, this substantial payment had not been brought to the notice of the Court and the Court had passed the order dated 06.10.2017.
16. The 2nd respondent had clearly stated that there was a dispute with reference to the demurrage charges. As per clause 11 of the fixture note dated 23.06.2017 demurrage charges was payable only after the completion of the discharge and within 15 days thereto subject to the receipt of the demurrage invoice with supporting documents duly signed by the master and the vessels agent. Further the claim of demurrage made in the plaint was inflated, therefore, the 2nd respondent had given the undertaking that they would pay the demurrage both at the port of loading and at the port of discharge subject to such demurrage amounts being arrived at by mutual agreement and in accordance with the clause 11 of the fixture note dated 23.06.2017 and the principles followed in the shipping trade. In the affidavit of 16/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 undertaking the deponent/2nd respondent had made it clear that the payment would be made only after the completion of the discharge and within 15 days thereafter subject to mutual agreement. Therefore, the undertaking given was not an unconditional undertaking.
17. The learned counsel for the petitioner would hold the 2nd respondent guilty of an act of contempt on the premise that the Court had withdrawn the arrest of the cargo only on the basis of the undertaking given by the 2nd respondent. However, a reading of paragraph 3 of the order dated 12.10.2017 passed in O.A.No.984 of 2017 would indicate that the release of cargo had been ordered on account of the fact that it was informed to the Court that 80% of the 7759.93 Mts. of cargo of raw cashew had been discharged and substantial amount has been paid. The said order is extracted herein below:
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https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 The learned counsel for the respondent/defendant has also emphatically stated that order dated 24.09.2017 would not survive. The cargo is being offloaded from the ship as per the directions issued to the Advocate Receiver. It is today informed that 80 per cent of the 7,759.93 MT of Cargo of raw cashew nuts has been discharged. Since substantial amount, has been paid, the order of arrest is withdrawn and the Advocate Receiver who is at Tuticorin is to release the cargo forthwith to the respective consignees with the assistance of the second respondent. For this purpose, the second respondent is also directed to assist the Advocate Receiver.
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18. The order withdrawing the arrest came to be passed since substantial payment had been made. The affidavit of undertaking had been filed on the said date, therefore, the court had simply recorded the undertaking. However, the release of the cargo is not on account of the undertaking. Further, the undertaking as such, was subject to the parties arriving at a consensus. Admittedly, such a consensus had not been arrived at and parties had proceeded to submit the dispute to arbitration and the arbitral tribunal has also passed the award. The learned counsel for the petitioner fairly submitted that they have already initiated proceedings for recovery of the amounts awarded by the Abritral Tribunal at Belgium.
19. Considering the fact that, the undertaking was a qualified undertaking and since parties have not reached a mutual agreement, the undertaking given works itself out. In the 2 Judgments cited on the side 19/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 of the petitioner the undertaking given to the Court was an unqualified undertaking which had been breached and therefore, the Hon'ble Supreme Court held the contemnor guilty of contempt, such is not the case in the instant petition. In the case on hand the order of arrest of the cargo had been withdrawn on the basis of the undertaking but only on account of the fact that the respondent had paid a substantial amount.
20. I hold that the 2nd respondent has not breached the undertaking signed by him in this Court dated 11.10.2017 and consequently not committed any act of contempt. The Contempt Petition is therefore dismissed.
08.10.2021 Index : Yes/No Internet : Yes/No shr 20/21 https://www.mhc.tn.gov.in/judis/ Cont.P.No.1959 of 2019 in C.S.No.769 of 2017 P.T. ASHA, J.
shr Pre Delivery order in Cont.P.No.1959 of 2019 In C.S.No.769 of 2017 08.10.2021 21/21 https://www.mhc.tn.gov.in/judis/