Wallace Pharmaceuticals Pvt. ... vs M.V. Bunga Bidara And Ors.
2002 Latest Caselaw 1132 Bom

ORDER

1. In these proceedings, the Third Defendant has moved this Court in a Notice of Motion which is being disposed of by this Court by this order. The Third Defendant prays for a direction that the suit be dismissed as against it for want of jurisdiction.

2. The Plaintiff has instituted a suit for the recovery of an amount of U.S. Dollars 154,000 together with interest at the rate of 8% per annum from the institution of the suit until payment/realization. The amount which is claimed in the suit represents the CIF value of 40 Drums, 1000 BOU Lincomycin HCL BP (Oral Grade) weighing about 1184 Kg. alleged to have been short-landed. The case of the Plaintiff is that in February 2001, the Plaintiff imported from Shanghai to Mumbai the aforesaid consignment under an invoice dated. 16th February, 2001 of the shippers. M/s Sino Pharmaceuticals (HK) Ltd. The consignment was entrusted by the aforesaid shippers to the Third Defendant at Shanghai. The Third Defendant issued a Bill of Lading dated 22nd February, 2001 acknowledging receipt of the consignment on board a vessel by the name of M. V, Bunga Keart Voyage O13. The Bill of Lading reflected the port of loading as Shanghai and the port of discharge as Mumbai. The delivery agent named in the Bill of Lading issued by the Third Defendant was Liberty Marine Syndicate Private Ltd. whose business address is shown at a location in Sakinaka. Andheri (East), Mumbai. The case of the plaintiff is that the Third Defendant, instead of shipping the container containing the consignment on board the vessel M. V. Bunga Keart, decided to ship the consignment on board the First Defendant vessel. The consignment was stated to have been carried on board the First Defendant vessel from Shanghai to Singapore where the First Defendant terminated her voyage. The consignment was thereafter trans-shipped on board another vessel M.V. Kota Raja, stated to have "owned and/or chartered and/or operated" by the

Fourth Defendant. M. V. Kola Raja was expected to arrive at Mumbai on 14th March. 2001 and did arrive on that date. The consignment of the Plaintiffis stated as having appeared at Item No. 27 of the Port General Manifest filed by the vessel with distinct identification marks. However, the clearing agents of the Plaintiff were informed that upon destuffing, the consignment of the Plaintiff was out turned as short-landed, as a result of which the consignment was not delivered to the Plaintiff. According to the Plaintiff, the Mumbai Port Trust has issued a Landing Remark Certificate dated 1st June, 2001 certifying that the said 40 Drums of the consignment belonging to the Plaintiff did not appear in the Landing Remark sheet. The Port Trust is also stated to have issued a short landing certificate dated 14th June. 2001 certifying that the entire consignment of 40 Drums had been out turned as short-landed. According to the Plaintiffs, the agents of the Third Defendant had informed them by a letter dated 10th January. 2002 that their consignment had been stuffed into a container and after sealing had been handed over by the Third Defendant to the Fourth Defendant for carriage from Shanghai to Mumbai and that the consignment must have missing after it was handed over to the fourth Defendant. The Plaintiff has brought this action in rem against the First Defendant vessel, the vessel in which the container was stated to have been shipped. The Second Defendant as owners of the First Defendant have also been impleaded as parties to the suit. Apart from these two Defendants, the Third Defendant has been impleaded as a party together with Pacific International Lines (Pte) Ltd. to whom the Third Defendant is alleged to have entrusted the consignment for carriage from Shanghai to Mumbai.

3. The jurisdiction of this Court in rem was Invoked upon the arrest of the First Defendant vessel which was effected in pursuance of an order dated 4th March. 2002 passed by this Court. On 5th March. 2002. the owners of the First Defendant vessel moved the Court for the release of the vessel and the vessel came to be released, subject to the owners depositing security in the amount of Rs.77 lacs to the satisfaction of the Prothonotary & Senior Master.

4. The Third Defendant stated before this Court on 10th July. 2002 that it was going

to apply for dismissal of the suit and/or rejection of the Plaint as against it and in pursuance of that statement, this Notice of Motion was instituted on 20th July, 2002. In support of the application that the suit be dismissed as against the Third Defendant, Counsel appearing on behalf of the Third Defendant has adverted to the averments contained in paragraphs 17, 20 and 21 of the Plaint. Counsel contended that the jurisdiction as against the First Defendant is a jurisdiction in rem and the owners of the First Defendant upon furnishing security to secure the release of the vessel submitted to the jurisdiction of the Court in personam. However, it was urged that in so far as the Third Defendant is concerned, it is a foreign company which does not carry on any business in India and that consequently, this Court would have no jurisdiction to exercise jurisdiction in personam over the Third Defendant. Moreover, it was sought to be contended that the Bill of Lading contains an express provision to the following effect :

"The contract evidence by or contained in this Bill of Lading is governed by the law of Hong Kong and any claim or dispute arising thereunder or in connection therewith shall be determined by the Courts in Hongkong and no other Court."

On this basis, it was urged that this Court would have no Jurisdiction since parties by a contract embodied in the Bill of Lading conferred exclusive Jurisdiction on the Courts in Hong Kong.

5. In considering the application which has been made on behalf of the Third Defendant for the dismissal of the suit at this stage, reference must be made at the outset to the settled principle of law which has been enunciated in the judgment of the Supreme Court in M. V, Elisabeth v. Harwan Investment & Trading . In so far as an action in rem is concerned, it is settled law that it is by means of an action in rem that the arrest of a ship is secured by a Plaintiff. The Supreme Court has held that an action in rem is directed against the ship itself to satisfy the claim of the Plaintiff out of the arrest. In order to found an action in rem. it is necessary that the ship has to be within the jurisdiction at the time when the proceedings are initiated. If the owner of the ship, upon the arrest of the vessel

submits to the jurisdiction of the Court and obtains a release of the ship by depositing security, he can be proceeded against in personam, subject to the jurisdiction of the Court. A personal action can be brought against a defendant either if he is present in the country or submits to its jurisdiction. That is how, the foreign owner of an arrested ship who furnishes security for the release of the ship, is deemed to have submitted himself to the jurisdiction of the Court. These principles which have been enunciated in the judgment of two learned Judges of the Supreme Court in M. V. Elisabeth, have also been elaborated upon in a subsequent judgment of the three learned Judges of the Supreme Court in World Tanker Carrier Corporation v. SNP Shipping Services Pvt. Ltd. . The judgment of the Supreme Court in World Tanker Corporation arose out of an action for the limitation of liability. However, while reviewing the law on the subject, the Supreme Court reiterated the settled principle in Private International law, that the Court cannot entertain an action against a foreigner resident outside the country or a foreigner not carrying on business within the country, unless he submits to the jurisdiction of the Court here. This principle, the Supreme Court noted, applies to an action in personam. Mrs. Justice Sujata Manohar while delivering the judgment of the Supreme Court held that the presence of a foreign defendant who appears under protest to contest jurisdiction cannot be considered as conferring jurisdiction on the Court to take action. Unless a foreign defendant either resides within jurisdiction or voluntarily appears or has contracted to submit to the jurisdiction of the Court, it is not possible to hold that the Court will have jurisdiction against the foreign defendant. The attention of the Court has been drawn to a recent judgment of a learned single Judge of this Court. F. I. Rebello. J., in Kohinoor Carpet Manufacturers v. Forbes Gokak Ltd. in which these principles have been reiterated in holding that before a foreign defendant can be sued in this country, he must either be resident and/or must carry on business in the country. The only exception is if he has submitted to the jurisdiction of this Court. In that case, the defendant did not carry on any

business within the jurisdiction of this Court and it was accordingly held that the suit was liable to be dismissed.

6. In so far as the invocation of the jurisdiction of this Court is concerned, in paragraph 1 of the Plaint it has been averred that the Third Defendant is carrying on business as carriers of goods and is represented in Mumbai by an authorized agent, Liberty Marine Syndicate Pvt. Ltd., having its office in Mumbai at Arihant Industrial Estate. Sai Vihar Road, Sakinaka, Andheri (E), Mumbai 400 059. Then in paragraph 17 of the Plaint. it has been averred that the Plaintiffs are proceeding against the First Defendant vessel in rem and against the Second, Third and Fourth Defendants in personam for the recovery of their claims before this Court in its admiralty jurisdiction. In paragraph 20 of the Plaint, it has been averred that the First Defendant vessel was "presently lying" at JNPT, Nhava Sheva. Mumbai. within the admiralty jurisdiction of the Court. It has also been averred that this Court has jurisdiction under Section 6 read with Section 35 of the Admiralty Courts Act. 1864. In reply to the Notice of Motion, it has been stated in paragraph 14 that the Third Defendant carries on business in Mumbai through its agent, Liberty Marine Syndicate Pvt. Ltd., who has its office at Mumbai which is apparent on the face of the Bill of Lading.

7. The question as to whether this Court would have jurisdiction may conveniently be considered both independent of. and alternately, in the context of the ouster clause contained in the Bill of lading. In the present case, the Third Defendant had issued a Bill of Lading for carriage of a consignment belonging to the Plaintiff from Port Shanghai to Mumbai. The consignment was to be shipped on the vessel Bunga Keart. The Bill of Lading refers to the delivery agent situated at Mumbai. There can be no doubt that in view of the settled position in law, the in personam jurisdiction of this Court in so far as the Third Defendant is concerned can only exist subject to the Third Defendant either carrying on business within the jurisdiction or submitting itself to the jurisdiction. The Third Defendant has not submitted to the jurisdiction and the question that would arise is as to whether the Third Defendant does carry on business within the jurisdiction of the Court, This is a matter in

which, in my view, it would be inappropriate for this court to express a final opinion at the interim stage without an opportunity being given to the parties to adduce evidence in support of their respective cases. The case of the Plaintiff as set out in the reply to the Notice of Motion is that the Third Defendant is carrying on business within the jurisdiction of this court, through its agent. Liberty Marine Syndicate Pvt. Ltd. In this regard it would be necessary to advert to a judgment of a Division Bench of this court in Shiv Bhagwan Moti Ram Saraogi v. Onkarmal Ishar Dass . Chief Justice M. C. Chagla speaking for a Division Bench of this court held that the test of carrying on business is that the man who carries on business must be in a position to contract debts in relation to that business so as to make himself personally liable; liable in such a way that he can be personally sued on those debts which he has contracted. In that context, the learned Chief Justice held as follows :

"He may carry on the business through an agent; but even so, the agent through whom he carries on the business must be such an agent as to be in a position to contract debts on behalf of his principal which would make the principal personally liable for those debts. It has also been said that, if business is carried on through an agent, the agent must be a special agent who attends exclusive to the business of the principal and carries it on in the name of the principal and not a general agent who does business for any one that pays him."

In a case such as the present therefore, it will be a matter to be decided on the basis of evidence adduced before the Court at the trial of the suit as to whether a party in the position of the Third Defendant who contracts to enter into an arrangement for the international transportation of goods to be delivered from a foreign port to a port within the jurisdiction of this court through an agent, the terms of the agency are such as would lead to the inference that the Third Defendant is, in fact, carrying on business within the jurisdiction of this curt. That issue cannot be determined on a priori considerations or on the basis of affidavits adduced in support of and in reply lo a Notice of Motion. This is an issue on which an opportunity has to be given to the respective parties -- to the Plaintiff to establish

that the Third Defendant does in fact carry on business within the jurisdiction of the Court through the instrumentality of the delivery agent and for the third Defendant lo defend the case, as it seeks to do, by contending that the delivery agent is only a general agent.

8. Now in so far as a clause relating lo the ouster of jurisdiction is concerned, the Supreme Court held in British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries , that the parties to a contract should be bound by the jurisdiction clause to which they have agreed unless there is some strong reason to the contrary. Parties to a contract in international trade or commerce may agree in advance on the forum which will have jurisdiction to determine the disputes that may arise between them. The chosen court may be a court in the country of one or both the parties, or it may be a neutral forum. In so far as the ouster clause is concerned, the plaintiff contends, in reply filed to the Notice of Motion, that the clause in the Bill of Lading conferring exclusive jurisdiction on the Courts at Hong Kong ought not to be held to oust the jurisdiction of this court and that this Court should exercise its discretion to permit the Plaintiff to prosecute the suit in this Court in view of the following circumstances :

(i) Hong Kong is not connected at all with disputes that have arisen under or in connection with the contract evidenced by or contained in the Bill of Lading, The consignment was entrusted al Shanghai for carriage on board the first Defendant, vessel and was to be delivered to the Plaintiff as a consignee under the Bill of Lading at Mumbai. The consignment was short landed at Mumbai; the short landing has been certified by Mumbai Port Trust which issued a short landing certificate at Mumbai; witnesses to prove the short landing and the loss suffered by the Plaintiff are available at Mumbai and the entire evidence on issues of fact is available within the jurisdiction of this court in Mumbai. The issues between the parties are thus more closely connected with Mumbai than Hong Kong;

(ii) If the plaintiff is directed to invoke the jurisdiction of the court at Hong Kong it would cause immense hardship and a financial drain on the plaintiff;

(iii) The contract of carriage, as evidenced by the Bill of Lading is subject to rules which are deemed to have been incorporated in the said contract. These rules prescribe a limitation of one year for commencing an action and if the Plaintiffs were to commence proceedings in Hong Kong the claim would be barred by limitation;

(iv) The third Defendant has not contended that the action which has been commenced by the Plaintiffs is vexatious, oppressive or an abuse of the process of the Court;

(v) The Third Defendant does not desire a trial in Hong Kong but has instituted the Notice of Motion only order to gain a procedural and tactical advantage despite the fact that evidence is more readily available in Mumbai than in Hong Kong and that no part of the cause of action has arisen in Hong Kong;

(vi) Hong Kong is an alien forum which has absolutely no connection with the contract of carriage of the plaintiffs consignment; and

(vii) The balance of convenience lies in favour of the plaintiff and Hong Kong would be a forum non convenience.

9. At this stage, it would be sufficient for this court to note that the precedents on the subject are such as to enable the Court to form the view that the contention of the Plaintiff will merit serious consideration at trial. A similar question arose before a learned single Judge of this Court (Smt. Justice K. K. Baam) in Suresh Exports v. Orient Shreyas (Notice of Motion No. 2285/ 99 in Admiralty Suit No. 59/95) (Reported in ). In the case before the learned single Judge, a clause in a Bill of Lading provided that the contract would be governed by British Law and all disputes would be triable solely by the British courts. The Bill of Lading was issued to the Plaintiff which had its office in India. The consignment was to be dispatched to a consignee at Dubai. Goods were loaded on board a vessel at Mumbai and were despatched to Dubai. Payments were to be received in Mumbai. The contention of the Plaintiff was that no part of the cause of action arose in London which would warrant the Invocation of the Jurisdiction of the court at London. Moreover, it was contended that the Third Defendant who had Issued the Bill of Lading was located in Mumbai and represented the First and second Defendants at Mumbai. Though the Second Defendant was a company incorporated in London, the contention of the Plaintiff was that this was only a mailing address. The learned single Judge held that no part of the cause of action had arisen in London and it was not open to the parties by agreement to confer jurisdiction upon a Court which otherwise had no connection with the issue. The learned single Judge also held that in each individual case, the Court would have to consider the hardship involved and determine where the balance of convenience would lie. This judgment was carried in appeal. The Division Bench in appeal, while dismissing the appeal, clarified that the view which had been taken by the learned single Judge in regard to the ouster clause in the Bill of Lading was a prima facie view and would not come in the way of the trial of the suit. The Division Bench also clarified that evidence would have to be led before the Trial Court in order to establish whether any of the Defendants reside or carry on business within the jurisdiction of the English courts.

10. Counsel for the plaintiffs has relied on several judgments of the Courts in England in which, notwithstanding the existence of an ouster clause in a Bill of lading, it has been held that it would be appropriate not to relegate the Plaintiff to the remedy of a foreign Court or to subject the action which has been instituted by the plaintiff to an order of stay, where the reasons are such as would justify the assumption of jurisdiction by the English courts. These judgments include the judgments in (i) the Aratra Potato Co. Ltd. v. Egyptian Navigation (1980) 1 Lloyd's Rep 390; (ii) "Atlantic Song" (1983) 2 Lloyd's Rep 395; (iii) The Al B Attani (1993)2 Lloyd's Rep 219; (iv) Citi March Ltd. v. Neptune Orient Lines Ltd., Q.B. (Commercial Ct.) (1997)1 Lloyd's Rep 72; and (v) Spiliada Maritime Corporation v. Cansulex Ltd. (1987)1 Lloyd's Rep 1. In these cases the issue has been essentially regarded as Involving the question as to whether as a matter of discretion the Plaintiff should be permitted to invoke the jurisdiction of the English Court notwithstanding his having contracted to refer all disputes to a foreign Court. This would depend upon whether England, as distinguished from the contractual forum is the place where the interests

of justice and of all the parties to the disputes lead to the view that a strong cause is shown for a trial in England. In the Citi-March case (1997)1 Lloyd's Rep. 72, the Court held that it may in a given case excuse the English plaintiff from the burdensome requirement of having to pursue a litigation in a foreign forum in order to preserve the bar of limitation. Therefore, in each case it is essentially a question of whether the ends of Justice would require that a party should be relieved of the contractual condition of pursuing its claim in a foreign forum. In the case of the Spiliada which was decided by the House of Lords, the Trial Judge had come to the conclusion that the convenience of witnesses, the likelihood of a multiplicity of proceedings and the existence of a similar litigation to which the Defendants were already a party in England would warrant the continuation of proceedings in England. The judgment of the Trial Court was reversed in appeal by the Court of Appeal which came to the conclusion that the party should be relegated to pursue proceedings in British Colombia. The House of Lords reinstated the judgment of the Trial Court and reversed the Court of Appeal. The House of Lords held that the Plaintiffs had acted reasonably in commencing proceedings in England and had not acted unreasonably in failing to commence proceedings in British Colombia before the period of limitation expired there.

11. In the present case, I am of the view that the Plaintiffs are justified in contending before this Court that the interests of justice and the balance of convenience warrant that they should not be relegated to pursuing the claim in a Court in Hong Kong. The Third Defendant issued a Bill of Lading for the carriage of goods from Shanghai to Mumbai. Under the Bill of Lading the goods were to be shipped on board the vessel Bunga Keart. The case of the Plaintiff is that the Third Defendant thereafter entrusted the goods to the Fourth Defendant for carriage of the consignment and that the consignment was carried on board the First Defendant vessel to Singapore, whereupon it was transshipped to another vessel M. V. Kota Raja. The contention of the Plaintiff is that though the consignment was duly reflected in the port General Manifest filed by the vessel, it was eventually not delivered at Bombay Port and was out turned as short

landed. The material evidence upon which the Plaintiff relies including the Landing remark certificate of the Port Trust and Short Landing certificate have all been issued at Mumbai. The evidence on these issues is situated at Mumbai. within the Jurisdiction of this Court. There is merit in the contention of the plaintiff that it will be subject to immense financial hardship if it were to be relegated to the course of instituting proceedings in Hong Kong. In these circumstances, the plaintiff cannot be stated to have acted unreasonably in not instituting proceedings in the Courts of Hong Kong in order to save the bar of limitation as applicable there. In the judgment of the Queens Bench Division in The Atlantic Song (1983) 2 Lloyds Rep 395. Mr. Justice Sheen held that the question was whether the Defendant genuinely desired that the Plaintiff move for a trial in Sweden or whether the Defendant was only seeking a procedural advantage. The Court held that the Defendant was merely attempting to seek or gain a tactical advantage. The same is the position in the facts of this case. Therefore, having regard to the facts and circumstances of this case, I am of the view that there are sufficient reasons why at the interim stage, the relief which has been prayed for in the Notice of Motion should not be granted. However, I am of the view that the Third Defendant should given a full opportunity of contesting the jurisdiction of this Court to entertain and try an action in personam. Consequently, it will be open, to the parties at the trial of the suit to urge their respective contentions on whether this Court would have the jurisdiction to maintain an action in personam as against the Third Defendant. All the rights and contentions of the parties are kept open in that regard. Finally, it would also be necessary to record that it was sought to be urged on behalf of the plaintiff that the Third Defendant ought not to be permitted to challenge the jurisdiction of this court at the present stage before filing the written statement. I was not inclined to accede to that submission. However, in the view which I have taken it is not necessary to pursue that question any further. In the circumstances, the Notice of Motion is dismissed.