Research › Browse › Judgment

Calcutta High Court · body

1980 DIGILAW 429 (CAL)

Probity Shipping Corporation v. State Trading Corporation Of India

1980-12-09

PRATIBHA BONNERJEA

body1980
JUDGMENT (1.) The present application was taken out by the petitioner under section 34 of the arbitration Act of 1940 for stay of the pending suit No. 295 of 1978 filed by the respondent against the petitioner in this Court. The facts of this case shortly are that in January 1977 the petitioner had agreed to carry 19. 408 metric tones of rapeseed oil belonging to the respondent from Port of Vancohver, Canada, to ports of Kandla, Bombay, Madras and Calcutta in India. The goods were carried by the vessel M. T. Anatoli on terms and conditions contained in the chart emparty dated 27. 1. 77. This contract contains three arbitration clauses : cls. 20 and 8 - General Average) Arbitration at London (Page 21 and 28 of the petition) CI. 31. "arbitration. Any dispute arising from the making, performance or termination of this charter party shall be settled in New York, Owner and Characters each appointing an arbitrator, who shall be a merchant, broker or individual experienced in the shipping business, the two thus chosen if they cannot agree, shall nominate a third Arbitrator who shall be an Admiralty lawyer. Such arbitration shall be conducted in conformity with the provisions and procedure of the United States Arbitration Act and a judgment of the Court shall be entered upon any award made by said Arbitrators. Nothing in this clause shall be deemed to waive owner's right to lien on the cargo for freight, dead freight or demurrage." (Page 26 of Petn). (2.) IT is alleged in the petition that due to unusually heavy weather, turbulent seas and violent waves the gas pipe leading to the starboard Tanker No. 2 broke up and the goods in the tanker became damaged by mixing with sea water entering into the Tank through the broken ans pipe. According to the petitioner, it is not liable for this damage as there is an exemption clause in the contract. The respondent, however, filed the aforesaid suit on 10.5.78 in this Court claming Rs.91,669. 72 against the petitioner. Hence this application. According to the petitioner, it is not liable for this damage as there is an exemption clause in the contract. The respondent, however, filed the aforesaid suit on 10.5.78 in this Court claming Rs.91,669. 72 against the petitioner. Hence this application. In the affidavit-in -opposition filed on (behalf of the respondent through one Dwijesh Chandra Bhowmic, the respondent alleged that the arbitration clause 31 was not binding on the respondent inasmuch as all evidence in support of the respondents' case were available in Calcutta and the respondent was willing to go to arbitration provided the same could be held in Calcutta. Reading this affidavit as a whole, it appears that the respondent is not disputing the existence or validity of the arbitration agreement in clause 31 but considering the balance of convenience, the respondent thinks the arbitration should be held in Calcutta. The petitioner thereafter applied for the amendment of the clause title of the petition by inserting therein section 3 of the Foreign Awards (Recognition and Enforcement) Act 1961. That application was keenly contested by the respondent. The amendment was, however, allowed. The respondent did not file any additional affidavit-in -opposition dealing with the amended portion although liberty was given to the respondent to file the same. (3.) MR. T. K. Basu, appearing on behalf of the respondent, submits that the petition is not maintainable as it has been verified before a Notary Public in violation of the provisions ; in Chapter 15 rule 5 of the Original Side Rules. Mr. Roy Mukherjee, counsel for the petitioner, relied on the provision of section 139 of the Code of Civil Procedure which authorises any notary appointed under Notaries Act 1952 to -administer oath on affidavit. This question of maintainability of the application is new and was not taken at the time of amendment application when the respondent proceeded on the basis that the application was maintainable by waiving this objection,. I do not think that there is any defect in the petition. At best, there was an irregularity which was waived by the respondent at the earlier stage of this application. In my opinion, the respondent is not entitled to raise this objection at this stage after submitting the order amendment. The contention is, therefore, rejected. I do not think that there is any defect in the petition. At best, there was an irregularity which was waived by the respondent at the earlier stage of this application. In my opinion, the respondent is not entitled to raise this objection at this stage after submitting the order amendment. The contention is, therefore, rejected. (4.) THE second point urged by the respondent's counsel is that this Foreign Award (Recognition and Enforcement) Act 1961 has no application on the facts of this case. He submits that the provisions of this Act will only apply to an agreement between to parties one of whom is subject to the jurisdiction of Indian Courts and the other is a foreigner. If the foreigner carries on business in India he will come under the jurisdiction of Courts in India and this fact alone will exclude application of the Act of 1961. In the present case, the petitioner admittedly carries on. business in Calcutta. Therefore Arbitration Act 1940 will apply. In support of his contention he relied on Article 1 of the first schedule to Arbitration (Protocol and Convention) Act of 1937. He also relied on 1970 Lyod's Law Report, Vol II page 34 at pages 40-41 which dealt with English Arbitration Act 1950. The counsel for the petitioner pointed out that entire Act of 1937 was repealed by section 10 of Foreign Award (Recognition and Enforcement) Act of 1961. the present contract came into existence in January 1977 and is purely governed by 1961 Act. I do not find any provision in 1961 Apt supporting the aforesaid contention of Mr. Basu. 1970 Llyod's Law Report Vol 2 has no application on the facts of this case. I have no doubt in my mind that the parties are governed by Foreign Awards (Recognition and Enforcement) Act 1961 and not by Arbitration Act of 1940 as submitted on behalf of the respondent. The third point raised by the respondent's counsel is that section 3 of 1961 Act contemplates one arbitration agreement only. The present Charter Party contains three arbitration agreements and/or clauses and this fact will exclude the application of 1961 Act. Section 3 of this Act is set out below:-3. Stay of proceedings in respect of matters to be referred to arbitration. The present Charter Party contains three arbitration agreements and/or clauses and this fact will exclude the application of 1961 Act. Section 3 of this Act is set out below:-3. Stay of proceedings in respect of matters to be referred to arbitration. Not withstanding anything contained in the Arbitration Act, 1940 (10 of 1940) or in the Code of Civil Procedure, 1908 (5 of 1908), [if any party to a submission made in pursuance of an agreement to which the Convention set forth in the Schedule applies, or any person claiming through or under him commences any legal proceedings in any Court against any other party to the submission or any person claiming though or under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other step in the proceedings apply to the court to stay the proceedings and the court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings. " (5.) IN support of his contention the respondent's counsel relied on A 1978 Bom 106 at 116, paragraph 46 (Indian Organic Chemical Ltd v. Chemtex Fibres Ive.) Paragraph 47 of this report records that Exts. A, B and C to the plaint in that suit contained three Arbitration agreements - in two of them the agreement was that the sittings would be held in London and in one in India. On the basis of the complicated facts of that case, the learned Judge of Bombay High Court held in paragraph 47 : "these multifarious factors governing the adjudication of disputes and differences which constitute an indivisible metrix for determination, in my opinion, take the case outside the pale of section 3 of the 1961 Act (6.) THE facts of that case were not clearly set out in the report but it appears (that according to the learned Judge the disputes and differences between the parties were such that they constituted an indivisible metrics for determination. The facts of the present case are different. The arbitration agreements relate to two distinct and different types of disputes and differences and are divisible. The facts of the present case are different. The arbitration agreements relate to two distinct and different types of disputes and differences and are divisible. Clauses 8 and 20 relate to the disputes regarding "general average" and the other disputes excluding "general average" are covered by the arbitration agreement contained in clause 31. The present disputes are covered by clause 31 of the agreement. According to the petitioner's counsel, these Charter parties consist of standard forms" and those who are in the shipping business are well acquainted with these types of terms in Charter parties and these terms are quite common in the trade. Hence two or more arbitration clauses in one Charter party relating to different types of deputes will not create any confusion in their mind. In support of his contention he cited 1977 (2) Lloyd's Law Report Page 301 at 302 (Federal Commerce and Navigation Co. Ltd. v. Tradox Export S. A.). This is a decision by the House of Lords presided by Lord Diplock who observed :- "charter Parties are not notorious for stylistic elegance or easy intelligibility by those whose business does not lie in the freight market but to those who operate in that market a considerable degree of certainty as to the meaning and application of standard forms and clauses has been achieved by costly litigations over the years. " There is a great force in this submission of the petitioner's counsel. In my opinion, the complicated facts leading to an indivisible dispute which existed in fine Bombay case is absolutely absent in the present case. The arbitration clauses contained in the charter party before me clearly records which disputes are to be decided in London and which will be in New York. The disputes do not overlap. There is no dispute in existence in this proceeding regarding "general average". Hence clauses 8 and 20 of the Charter Party are not attracted. In this view of the matter I hold that A 1978 Bom 106 cited by the respondents' counsel is distinguishable and does not apply on the facts of this case. The present case clearly comes under section 3 of 1961 Act (7.) THE fourth point taken by the counsel for the respondent is that if the suit is now stayed, the claim in the suit will be barred by limitation. The present case clearly comes under section 3 of 1961 Act (7.) THE fourth point taken by the counsel for the respondent is that if the suit is now stayed, the claim in the suit will be barred by limitation. If the claim is barred, then the arbitration agreement becomes incapable of being performed within the meaning of section's of 1961 Act. The discharge of entire cargo was completed on 11.5.77 and cause of action arose on that date. Three years expired on 10.5.80 on which date suit was filed. Therefore the present suit cannot be stayed now. In reply Mr. Roy Mukherjee stated that the law of Limitation being a procedural law, lex fori would apply. The respondent did not produce the law of Limitation now prevailing in New York to satisfy the court that the claim in the suit would be barred if the suit would be stayed. The entire submission made on behalf of the respondent on this point is purely based on speculation and assumption which should be rejected. He however, gave an undertaking to Court on behalf of his client that if Court would stay the suit the point of limitation would not be raised by his client before the Arbitrators in New York. According to him if there is a question of Limitation in connection with a dispute to be referred to arbitration, the arbitration clause does not become unworkable. On the contrary it remains very much alive as it is for the arbitrators to decide whether the claim made before them is barred by limitation or not. The submission on behalf of the respondent' that the arbitration clause becomes incapable of performance within the meaning of section 3 of 1961 Act if the claim is barred has no substance. I accept this submission of the petitioner's counsel as it is a settled law that the Arbitrators are to decide the question of Limitation regarding the subject matter of the reference before them. (8.) THE last point which the counsel for the respondent urges is that in granting stay under section 3 of 1961 Act, the Court has to exercise its discretion judicially. (8.) THE last point which the counsel for the respondent urges is that in granting stay under section 3 of 1961 Act, the Court has to exercise its discretion judicially. He cited A 1978 Cal 386, 73 CWN 192, A 1979 C 224 and a few other cases but all are on section 34 of our Arbitration Act of 1940 where the statute has expressly preserved the discretion of Court in staying suits or proceedings. On careful consideration of the facts of this case, I find that all the conditions laid down for granting stay of suit under section 3 of 1961 Act are in existence in this case and as such I am bound to stay the suit. The court has no discretion in the matter. The language of section 3 of 1937 Act and section 3 of 1961 Act clearly point out that the provisions are mandatory. The construction put by me is supported by A 1959 Cal 8 at 16 and 1936 (2) AER 721. The counsel for the respondent points out that the balance of convenience is in favour of trial of suit at Calcutta. But the court can consider the question of balance of convenience only if it has any discretion left to staying or not staying the suit. In absence of such power, the question of balance of convenience becomes irrelevant. (9.) IN this view of the matter, there will be an order in terms of prayer (a) of the petition. The respondent will pay the cost of this application to the petitioner.