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2009 DIGILAW 2300 (MAD)

Sanco Trans Ltd. v. Addison & Co. Ltd. , Rep. by Power Agent, United India Insurance Company Ltd. & Others

2009-07-10

K.K.SASIDHARAN

body2009
Judgment :- 1. The Defendant in O.S. No.7524/2005 on the file of the I Assistant Judge, City Civil Court, Chennai is the petitioner in this Revision Petition. .Facts: .2. The Suit in O.S. No.7524/2005 was instituted by the respondents 1 to 3 against the revision petitioner praying for a Judgment and Decree directing them to pay a sum of Rs.4,41,739/- equivalent of Euro 7749.80 with interest arid cost. 3. In the Plaint in O.S. No.7524/2005, it was the case of the respondents that the first respondent is a manufacturer of High Speed Cutting Tools and during the course of their business, they sold the Second Respondent 60 packages of Cutting Tools packed in 4 crates valued at Euro 7749.80 as per the Invoice bearing No.EXP/113 dated 19. 2004 and it was intended to be delivered at Germany. The said consignment of Cutting Tools contained in 60 packages in 4 crates were entrusted with the revision petitioner for safe carriage by sea and for delivery at Germany. The revision petitioner after receiving the goods issued their Bill of Lading bearing No.SL/MAA/HAM/966 dated 29. 2004 wherein they have confirmed the shipment of the cargo on board the vessel TIGER CLOUD. The said crates were accepted by the revision petitioner at Chennai on LCL/LCL terms. However, the revision petitioner failed and neglected to deliver the cargo at Hamburg, the port of discharge. The revision petitioner ultimately informed the first respondent about the arrival of the carrying vessel at Hamburg on 310. 2004. However, they have pleaded inability to deliver the four crates entrusted with them for carriage and delivery at Hamburg. 4. The second respondent who retired the documents through Bank were entitled for delivery. However, they were deprived of the suit cargo by virtue of short landing and non-delivery. The suit cargo was insured with the third respondent and on receipt of the claim from the Second Respondent, as owners of the cargo through their claim settling agents, the third respondent indemnified the Second Respondent by paying Euro 7749.80 being the Invoice value. Accordingly, the respondents 1 and 2 permitted the subrogation to file and maintain the Suit for compensation against the revision petitioner under Section 79 of the Marine Insurance Act and by virtue of the Letter of Subrogation and Special Power of Attorney executed by the Second Respondent in their favour. Accordingly, the respondents 1 and 2 permitted the subrogation to file and maintain the Suit for compensation against the revision petitioner under Section 79 of the Marine Insurance Act and by virtue of the Letter of Subrogation and Special Power of Attorney executed by the Second Respondent in their favour. However, by way of abundant caution, the Suit has been instituted by all the respondents together even though the third respondent alone is entitled to get the amount from the revision petitioner. .5. The revision petitioner on receipt of Suit summons appeared before the Trial Court and filed an Application in I.A. No.6553/2006 invoking Section 8(1) of the Arbitration and Conciliation Act, 1996 to direct the respondent to refer the dispute for arbitration. 6. In the affidavit filed in support of the Application, it was the contention of the revision petitioner that as per the terms and conditions incorporated in the Bill of Lading and more particularly in Clause 25, it was stipulated that any difference of opinion or dispute there under can be settled by arbitration in India. In view of the Arbitration clause as found in sub-clause (25), the Suit filed by the respondents before the Court was not maintainable and as such, the respondents should be directed to resort to the process of Arbitration. .7. The Interlocutory Application was contested by the respondents. In the counter affidavit filed by the third respondent for and on behalf of all the respondents, it was contented that the Suit was not for any relief arising under any contract executed by the respondents with the revision petitioner as found in the Bill of Lading dated 29. 2004. According to the third respondent, the Bill of Lading was not evidence of any contract. Bill of Lading was only a proof of the entrustment of the ship cargo and acceptance of such entrustment for carriage and delivery at the destination. Therefore, the revision petitioner was not entitled to invoke the alleged Arbitration clause as found in the Bill of Lading dated 29. 2004. Accordingly, the third respondent prayed for dismissal of the Application. .Finding: 8. The learned Trial Judge considered Clause 25 of the Bill of Lading. According to the learned Trial Judge, when there was a dispute with respect to the Bill of Lading, the matter has to be referred to Arbitration. 2004. Accordingly, the third respondent prayed for dismissal of the Application. .Finding: 8. The learned Trial Judge considered Clause 25 of the Bill of Lading. According to the learned Trial Judge, when there was a dispute with respect to the Bill of Lading, the matter has to be referred to Arbitration. However, in the present case, the cause of action for filing the Suit was only the short delivery of goods. The owners of the goods was indemnified by the Insurance Company. Therefore, Subrogation Letter was given to the Insurance Company as provided under Section 79 of the Marine Insurance Act and accordingly, the amount given by the Insurance Company to the Insurer was sought to be recovered under the Letter of Subrogation. Therefore, the dispute to be decided has nothing to do with the Bill of Lading. The learned Trial Judge further observed that the entrustment of goods with the Master of the ship was not disputed and as such, there Petition for Arbitration: was no dispute with respect to the Bill of Lading so as to enable the revision petitioner to invoke Clause 25 of the Bill of Lading and refer the dispute to Arbitration. Accordingly, the Application was dismissed. It is the said order which is impugned in the Revision Petition. Analysis: 9. The contract in question was entered into between the revision petitioner and the first respondent. The Plaint proceeds on the basis that 60 packages of Cutting Tools in four crates were entrusted to the Revision petitioner and in token of acceptance of the said entrustment, the petitioner issued a Bill of Lading bearing No.SL/MAA/HAM/966 dated 29. 2004. Therefore, a binding contract was entered into between the revision petitioner and the first respondent. As per the said contract, the revision petitioner was bound to transport the consignment and deliver the cargo at Hamburg, the port of discharge. The revision petitioner has issued the Bill of Lading with certain conditions attached. The consignment was accepted by the revision petitioner as per the terms and conditions as contained in the Bill of Lading. Those terms and conditions are conditions governing Multimodal Transport document issued in accordance with the Multimodal Transportation of Goods Act, 1993. As per Clause 25 of the Bill of Lading, the contract in question shall be governed by and construed according to Indian laws. 10. Those terms and conditions are conditions governing Multimodal Transport document issued in accordance with the Multimodal Transportation of Goods Act, 1993. As per Clause 25 of the Bill of Lading, the contract in question shall be governed by and construed according to Indian laws. 10. Clause 25 of the Bill of Lading reads thus: 25. The contract evidenced hereby or contained herein shall be governed by and construed according to Indian laws. Any difference of opinion or, dispute there under can be settled by arbitration in India or a place mutually agreed with each party appointing an Arbitrator. 11. Therefore, the consignment was entrusted to the revision petitioner by the first respondent knowing fully well the terms and conditions of the Bill of Lading and as such, the first respondent is bound by the terms and conditions as stipulated in the Bill of Lading dated 29. 2004. 12. The learned Trial Judge proceeded on the basis that the cause of action for filing the Suit was only the short delivery of goods and the resultant right to recover the amount from the carrier. According to the learned Judge, the Suit is only for recovery of amount on the basis of Letter of Subrogation and as such, it has nothing to do with the Bill of Lading. While arriving at the said conclusion, the learned Trial Judge very conveniently omitted to note that the entire cause of action was on the basis of the Bill of Lading dated 29. 2004. 12-A. The course adopted by the respondents to indemnify the second respondent by the third respondent is a matter between the respondents, over which the petitioner has no role. It was only as per the terms and conditions of the Insurance taken by the second respondent, the third respondent being the Insurance Company processed the Application and indemnified the second respondent by paying Euro 7749.80 being the Invoice value of the consignment. Therefore, only on the basis of a contract of Insurance, the third respondent subrogated the second respondent. It was only in consideration of the amount paid by the Insurance Company, the third respondent was statutorily subrogated to the rights of respondents 1 and 2 so as to enable them to claim the amount from the revision petitioner. However, the third respondent has no independent right against the revision petitioner. The entrustment of consignment was by the first respondent. However, the third respondent has no independent right against the revision petitioner. The entrustment of consignment was by the first respondent. Therefore, the privity of contract was only between the revision petitioner and the first respondent. The revision petitioner is not answerable to the respondents 2 and 3. It was only on the basis of the Letter of Subrogation, the third respondent is entitled to claim the amount from the revision petitioner. However, the entire transaction was only on the basis of the Bill of Lading issued by the revision petitioner to the first respondent. When the Bill of Lading contains a clause for Arbitration, the third respondent would be entitled to claim the amount only by resorting to the provisions of the Arbitration Act. When the parties have agreed to take recourse to a particular procedure to resolve their disputes, they cannot be permitted to approach the Civil Court by-passing the remedies agreed to by them. .13. The learned Counsel appearing for the respondents contended that the original or the certified copy of the Bill of Lading was not produced before the Trial Court and as such, the revision petitioner was not entitled to refer the matter for Arbitration. The contention of the learned counsel with respect to the failure to produce the original or certified copy of the Bill of Lading dated 29. 2004 which contains a clause for Arbitration has no basis as the very same Bill of Lading was produced by the respondents themselves along with the Plaint as Document No.4. When the respondents themselves rely on the said document as the basis for their claim, it was not necessary for the petitioner to produce the original or a certified copy of the Bill of Lading dated 29. 2004 so as to enable them to refer the matter for Arbitration. 14. The learned counsel appearing for the respondent placed reliance on the Judgment of the Supreme Court in Shipping Corporation of India Ltd. v. M/s. Bharat Earth Movers Ltd. and another, AIR 2008 SC 728 . He also relied on the Judgment of the Supreme Court in Atul Singh & Others v. Sunil Kumar Singh and ors., 2008 (2) CTC 856 (SC): 2008 (2) LW 872. 15. He also relied on the Judgment of the Supreme Court in Atul Singh & Others v. Sunil Kumar Singh and ors., 2008 (2) CTC 856 (SC): 2008 (2) LW 872. 15. In M/s. Bharat Earth Movers Ltd. and another, AIR 2008 SC 728 , the issue before the Supreme Court was the Application of the Indian Carriage of Goods by Sea Act, 1925 vis-à-vis the Japanese Carriage of Goods by Sea Act, 1992. In the said case, the Supreme Court held that the Multimodal Transport of Goods Act was not applicable to the transaction in question as the mode of transport was by sea only and did not involve multimodal transport. The said decision was relied on by the learned counsel appearing for the respondents to substantiate his contention that the impugned transaction was not as per the Multimodal Transport of Goods Act, 1993 and as such, the revision petitioner was not justified in resorting to the provision for Arbitration as contained in Clause 25 of the Agreement. The said contention is factually wrong as the Multimodal Transport Document which is involved in the present matter clearly mentions about the mode of transport as by road/sea. Therefore, factual situation is different in the present case. 16. The decision in Atul Singh & Others v. Sunil Kumar Singh and Ors., 2008 (2) CTC 856 (SC): 2008 (2) LW 872, was relied in support of the contention that in order to satisfy the requirement of sub-section (2) of Section 8 of the Arbitration Act, the party should have filed the original arbitration agreement or a duly certified copy of the same. However, in this case, the very Agreement was produced by the respondent themselves to prove their contentions in the matter. .17. The learned counsel appearing for the petitioner has relied on the Judgment of the Supreme Court in Owners and Parties Interested in the Vessel M. V. Baltic Confidence and Another v. State Trading Corporation of India Ltd. and Another, AIR 2001 SC 3381 , as well as the decision reported in Pyrites, Phosphates and Chemicals Ltd. v. Sebilan Compania and Another, 2002 AIR SCW 2480, in support of his contention that the conditions of carriage as provided in the Bill of Lading has to be respected and the matter has to be referred to Arbitration. 18. 18. In Owners and Parties Interested in the Vessel M. V. Baltic Confidence and Another v. State Trading Corporation of India Ltd. and Another, AIR 2001 SC 3381 , the Honble Supreme Court considered the Arbitration clause with reference to the Bill of Lading in extenso and reiterated the legal position thus : "19. From the conspectus of the views expressed by Courts in England and also in India, it is clear that in considering the question, whether the Arbitration clause in a Charter Party Agreement was incorporated by reference in the Bill of Lading, the principal question is, what was the intention of the parties to the Bill of Lading? For this purpose the primary document is the Bill of Lading into which the arbitration Clause in the Charter Party Agreement is to be read in the manner provided in the incorporation Clause of the Bill of Lading. While ascertaining the intention of the parties, attempt should be made to give meaning to the incorporation Clause and to give effect to the same and not to invalidate or frustrate it giving a literal, pedantic and technical reading of the clause. If on a construction of the Arbitration clause of the Charter Party Agreement as incorporated in the Bill of Lading it does not lead to inconsistency or insensibility or absurdity then effect should be given to the intention of the parties and the Arbitration clause as agreed should be made binding on parties to the Bill of Lading. If the parties to the Bill of Lading being aware of the Arbitration clause in the Charter Party Agreement have specifically incorporated the same in the conditions of the Bill of Lading then the intention of the parties to abide by the Arbitration clause is clear. Whether a particular dispute arising between the parties comes within the purview of the Arbitration clause as incorporated in the Bill of Lading is a matter to be decided by the Arbitrator or the Court. But that does not mean that despite incorporation of the Arbitration clause in the Bill of Lading by specific reference the parties had not intended that the disputes arising on the Bill of Lading should be resolved by an Arbitrator." .19. But that does not mean that despite incorporation of the Arbitration clause in the Bill of Lading by specific reference the parties had not intended that the disputes arising on the Bill of Lading should be resolved by an Arbitrator." .19. In Pyrites, Phosphates and Chemicals Ltd. v. Sebilan Compania and Another, 2002 AIR SCW 2480, the issue was as to whether there was an Arbitration agreement between the parties on the basis of a clause in the Bill of Lading. In the said factual context, the Supreme Court observed thus: ."Furthermore, one of the conditions of carriage as provided in the Bill of Lading further stipulates that all terms and conditions contained in the Charter Party contains an Arbitration clause which provides that each party may appoint an Arbitrator out of a panel of Arbitrator maintained by the Indian Council of Arbitration and that disputes between the parties will be settled according to the provisions of the Arbitration agreement. The Courts below overlooked this aspect and came to an incorrect decision. We are of the opinion that there was a binding Arbitration agreement between the parties." .20. Therefore, I am of the view that the learned Trial Judge has proceeded under a misconception and rejected the Application without any basis. .To Conclude: 21. In the result, the order dated 4. 2008, made in. I.A. No.6553/2006 in O.S. No.7524/2005 is set aside and resultantly, the Application filed by the revision petitioner in I.A.No.6553/2006 is allowed. Accordingly, the Civil Revision Petition is allowed. No costs. Consequently, M.P. No.1/2008 is closed.