TaxTMI 
TaxTMI 
2006 (1) TMI 600
X X X X Extracts X X X X
X X X X Extracts X X X X
....rated under the laws of Hong Kong and engaged in the business of export and import of timber logs. By and under a Charter Party Agreement entered into on 7.1.2000 between plaintiff No. 1-Mayar (H.K.) Limited and defendant No. 2-Trustrade Enterprises PTE Ltd., a company incorporated under the appropriate laws of Singapore and carrying on business, inter alia, at 101, Cecil Street 10-04 Tong. Eng. Building, Singapore (description given in the plaint) an owner on behalf of the vessel M.V. "Fortune Express" (hereinafter referred to as "the vessel"), a foreign vessel flying the flag of Singapore, the defendants agreed to carry on board the vessel a quantity of 5200 CBM Barawak Round logs or upto vessel's full capacity for discharge at the Port of Calcutta, India. In or about January 2000, A-1 purchased various quantities of Malaysian Barawak logs for the purpose of shipment to the Port of Calcutta and to sell the same to various third parties having their offices in West Bengal, India. Under five bills of lading dated 21.2.2000, 17.2.2000, 24.2.2000, 15.2.2000 and 18.2.2000, the defendants agreed to carry on board the said vessel 1638 pieces of logs of different quality measuring 53....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terest on the aforesaid sum at the rate of 24 per cent per annum until realization of the entire sum from the defendants. The plaintiffs have prayed for the arrest of the vessel along with her tackle, apparel and furniture. On 27.3.2000 itself, the learned Single Judge of the Calcutta High Court passed an order that it appears that the claim of the plaintiffs arises out of short-landing of the goods as mentioned in the affidavit of arrest amounting to a total sum of Rs. 1,30,19,688.44p. The vessel in question is a foreign vessel and does not have any assets within the jurisdiction of the Court. The said vessel is now lying at Kidderpore Dock and if the said vessel is allowed to ply from the said dock then the decree that may have been passed in the suit in favour of the plaintiffs will frustrate the proceedings, as the defendant-respondents have no assets within the jurisdiction of the Court and in view thereof the Marshall is directed to arrest the said vessel M.V. Fortune Express along with her tackle, apparel and furniture. It was made clear in the order that if the said vessel furnishes a bank guarantee for the amount mentioned in the order, with the Registrar, Original Side, H....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourt at a later stage. It was also held that for application of Clause 9 of BOL and exonerating the carrier from its liability and responsibility, it would be necessary to prove that the loss or damage is the result of any act, neglect or default on account of any servant of the carrier who is in the management of the deck cargo, which is a matter of evidence and cannot be ascertained at the preliminary stage. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 v....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cargo nature of the said balance number of logs and the admissions in the plaint are equally clear that the loss thereof occurred due to the actions or neglect of the defendants' servants. (vi) The plaintiffs suppressed the jurisdiction clause and the liability exclusion clause; arrest of the ship being obtained thereupon the Court should decline to proceed any further on the improper plaint, improperly proceeded with by the plaintiffs." The Court has, inter alia, recorded a finding that Order VII Rule 11 of the Code might not in terms be applicable as the plaint discloses the cause of action fully and wholly, but that by reason of the suppression contained in it, had the exclusion clause been inserted, the cause of action would be lost with regard to the lost cargo excepting for 135 logs. Again, under the said Rule the suit might not be held to be barred as such, because the Calcutta High Court does have the necessary admiralty jurisdiction to entertain the plaint and even cause arrest of the ship. The case is not so much on the terms of Order VII Rule 11 of the Code as upon the inherent jurisdiction of the Court, which it always possesses to reject or stay, a plaint by tre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the plaint as a whole under Order VII Rule 11 of the Code, but the rule does not justify the rejection of any particular portion of a plaint. Therefore, the High Court could not act under Order VII Rule 11(a) of the Code for striking down certain paragraphs nor the High Court could act under Order VI Rule 16 to strike out the paragraphs in absence of anything to show that the averments in those paragraphs are either unnecessary, frivolous or vexatious, or that they are such as may tend to prejudice, embarrass or delay the fair trial of the case, or constitute an abuse of the process of the court. In ITC Ltd. Vs. Debts Recovery Appellate Tribunal, (1998) 2 SCC 70, it was held that the basic question to be decided while dealing with an application filed by the defendant under Order VII Rule 11 of the Code is to find out whether the real cause of action has been set out in the plaint or something illusory has been projected in the plaint with a view to get out of the said provision. In Saleem Bhai and Others vs. State of Maharashtra and Others, (2003) 1 SCC 557, this Court has held that the trial court can exercise its powers under Order VII Rule 11 of the Code at any stage of the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which requires determination by the court, mere fact that in the opinion of the Judge the plaintiff may not succeed cannot be a ground for rejection of the plaint. In the present case, the averments made in the plaint, as has been noticed by us, do disclose the cause of action and, therefore, the High Court has rightly said that the powers under Order VII Rule 11 of the Code cannot be exercised for rejection of the suit filed by the plaintiff-appellants. Similarly, the Court could not have taken the aid of Section 10 of the Code for stay of the suit as there is no previously instituted suit pending in a competent court between the parties raising directly and substantially the same issues as raised in the present suit. It is contended by Mr. R F Nariman, learned senior counsel appearing for the defendant-respondents that the court has inherent discretionary jurisdiction to stay the proceedings in appropriate matters where the court thinks fit to do so. This jurisdiction of the court to stay the proceedings in appropriate cases is not limited to the jurisdiction conferred on the court in India under Section 10 of the Code. It is distinct from the jurisdiction conferred by the Code....
X X X X Extracts X X X X
X X X X Extracts X X X X
....process of the Court and, secondly, also that the stay will not cause any injustice to the plaintiff. " In Krishnan's case (supra), the Court laid down that if the ends of justice require or it is necessary to prevent the abuse of the process of the court, the court has jurisdiction to stay the trial of a suit pending before it, but the exercise of such power would depend upon the facts and circumstances of each case. For the sake of convenience, we may reproduce certain relevant clauses of the Bill of Lading (BOL) and provisions of the Indian Carriage of Goods by Sea Act, 1925 (hereinafter referred to as "the Act") as under : Bill of Lading "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." "9. Live Animals and Deck Cargo shall be carried subject to the Hague Rules as referred to in Clause 2 hereof with the exception that notwithstanding anything contained in Clause 19 the Carrier shall not be liable for any loss or damage resulting from any act, neglect or default of his servants in the m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; xxx (6) In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. *[This period may, however, be extended if the parties so agree after the cause of action has arisen: Provided that a suit may be brought after the expiry of the period of one year referred to in this sub-paragraph within a further period of not more than three months as allowed by the court]*. .. .. &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er at the place where the contract was made or at the pace where it should have been performed and the breach occurred. 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 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 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 properl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pal 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. In S.J.S. Business Enterprises (P) Ltd. vs. State of Bihar and Others, (2004) 7 SCC 166, this Court has accepted the principle that the suppression of a material fact by a litigant disqualifies such litigant from obtaining any relief. The rule has been evolved out of the need of the courts to deter a litigant from abusing the process of court by deceiving it. But the suppressed fact must be a material one in the sense that had it not been suppressed it would have had an effect on the merits of the case. It must be a matter which was material for the consideration of the court, whatever view the court may have taken. Reliance was placed on R. vs. General Commrs. for the purposes of the Income Tax Act for the District of Kensington, (1917) 1 KB....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly to this contract and if no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but if no such enactments are compulsorily applicable then the terms of the Convention shall apply, that is to say, in the absence of any enactment in the country of shipment or in the country of destination, the Hague Rules shall apply. Under Article 1, clause (c) of the Hague Rules , the goods shall include goods, wares, merchandise, and articles of every kind whatsoever except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried. Thus, the cargo which by the contract of carriage is carried on the deck would not be goods under the Hague Rules, whereas under Clause 9 of BOL deck cargo is also included for the purposes of the liability of the carrier if the loss or damage to the goods is not on account of the neglect or default of the servants of the carriage in the management. The question whether the cargo transported by the carrier would be governed by the Hague Rules on account of Clause 2 (General Paramount Clause) or by Clause 9 of BOL would be a question required ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its of the case could not have held that the plaintiffs would not be entitled to a decree on account of Clause 9 of BOL. Besides this, the Court will be required to give meaning to the words used in Clause 9 as to whether the term `loss' in the Clause has to be separately read or it has to be read and construed as having reference to, damage to deck cargo and whether it will cover the case of short landing of the goods and not to damaged goods. To get the order of stay of a suit on the ground of abuse of process, the applicant must show that plaintiff would not succeed but that he could not possibly succeed on the basis of the pleadings and in the circumstances of the case. In other words, the defendant would be required to show very strong case in his favour. The power would be exercised by the Court if defendant could show to the court that the action impugned is frivolous, vexatious or is taken simply to harass the defendant or where there is no cause of action in law or in equity. The power of the court restraining the proceedings are to be exercised sparingly or only in exceptional cases. The stay of proceedings is a serious interruption in the right, that a party has to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1993, has been extended to further period of three months if allowed by the court and can also be extended for a period till the filing of the suit if the parties to the suit agree after the cause of action has arisen. Under Article I of the Schedule, `goods' are defined and as per the substitution brought about by Act No. 44 of 2000, the goods shall include any property including live animals as well as containers, pallets or similar articles of transport or packaging supplied by the consignor, irrespective of whether such property is to be or is carried on or under the deck. By the amended definition, the deck cargo is also included in the definition of goods provided the deck cargo is in the form of containers, pallets or similar articles of transport or packaging supplied by the consignor. Therefore, on a first reading, the goods transported on a carriage, even if it is a deck cargo, could be subject to the limitation as provided in Clause (6) of Article III, but for Section 2 of the Act which specifies that subject to the provisions of the Act, the rules set out in the Schedule shall have the effect in relation to and in connection with the carriage of goods by sea in shi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l or juridical advantage which would otherwise have been available to him. The jurisdiction was nevertheless to be exercised with great caution. In Spiliada Maritime Corp Vs. Cansulex Ltd. [ (1986) 3 All ER 843], the House of Lords explained the ambit of the principle of forum non conveniens for issuing the order of stay and held: "(1) The fundamental principle applicable to both the stay of English proceedings on the ground that some other forum was the appropriate forum and also the grant of leave to serve proceedings out of the jurisdiction was that the court would choose that forum in which the case would be tried more suitably for the interests of all the parties and for the ends of justice (2) In the case of an application for a stay of English proceedings the burden of proof lay on the defendant to show that the court should exercise its discretion to grant a stay. Moreover, the defendant was required to show not merely that England was not the natural or appropriate forum for the trial but that there was another available forum which was clearly or distinctly more appropriate than the English forum. In considering whether there was another forum which was more appropriate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and obtain security here the action should be held as appropriately commenced. This is not the correct way to look at the case at all. If that were so, parties would be encouraged not to pay the attention to solemnly agreed clauses of forum selection and they would rush to the Admiralty Court even contrary to such a selection clause and obtain arrest, thereafter arguing, that the arrest was most convenient for them, that it produced a security from the shipper, and that if decree should be passed in their favour there would be no difficulty in its execution. xxx xxx xxx The factor for leaning heavily in favour of Singapore is that the parties have chosen Singapore law. We have not had any experts on Singapore law attending the proceedings before us and indeed this choice of law was also suppressed by the plaintiffs like the choice of Court. No doubt, arrest of a ship and the consequent obtaining of security would be of great advantage to a plaintiff if it were shown that the owners of the ship were difficult to trade or had to sue. Not so here. The owners have come forward. They can be sued in their country. There is nothing to show that they are so impecunious or that they are s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appropriate than the Indian Courts. The Court has not taken into consideration that the action commenced by the plaintiff-appellants in Calcutta Court founded on the facts which are most real and substantially connected in terms of convenience or expense, availability of the witnesses and the law governing the relevant transaction in the Indian Court. There is no averment in the application filed by the defendants that continuance of the action in Calcutta High Court would work injustice to them because it is oppressive or vexatious to them or would be an abuse of the process of the Court. There was no material before the Court how the trial at Singapore would be more convenient to the parties vis-`-vis the trial of the suit at Calcutta and that justice could be done between the parties at substantially less inconvenience and expense. Nor it has been shown that stay would not deprive the plaintiffs of legitimate personal or juridical advantage available to them. In the facts of the case, we are not satisfied that there is other forum having jurisdiction, in which the case may be tried more suitably for the interest of all the parties and for ends of justice. The Rules of the High ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 provides for caveat to be filed against the arrest warrant. The Court can issue the warrant for the arrest if the affidavit contains the particulars as required under Rule 4. Rule 6 permits the attorney of the defendant to ask for waiving of warrant of arrest by giving an undertaking in writing to appear and to give security. In the present case suit was instituted on 27.3.2000 and affidavit was filed for issuance of warrant of arrest of the vessel along with tackle, apparel and furniture as the same day the court directed for the arrest of the vessel. On 12.4.2000 letter of intention regarding furnishing guarantee on behalf of the Owners & Parties, Vessel M.V. Fortune was filed and on the same date the vessel was directed to be released. In the order of release dated 12.4.2000 the court has specifically mentioned that the order of release was passed without prejudice to the rights and contentions of the owner of the vessel that the suit is not maintainable. Thus, the maintainability of the suit filed by the plaintiff-appellants was the question raised before the court and the court was quite aware of the fact that the defendants are submitting to the jurisdiction of the court s....