Bombay High Court
Registered Office At Ispat Bhawan vs M/S.Mercator Lines Limited on 21 December, 2012
Bench: N.M. Jamdar
1/29 ARBP 942/2009
S.H.HADAP
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.942 OF 2009
Steel Authority of India Limited,
Central Marketing Organization T & S Dept.,
Ispat Bhawan,
40, Jawaharlal Nehru Road,
Kolkata.
And also:
Registered office at Ispat Bhawan,
Lodhi Road, New Delhi. ig .. Petitioner
V/s
M/s.Mercator Lines Limited,
Having its office at Suite 83-87,
Mittal Tower, B-Wing,
Nariman Point, Mumbai 400 021. .. Respondent
Mr.Vishal Sheth with Mr.Y.C.Naidu and Mr.N.P.Dalvi i/by
M/s.C.R.Naidu & Co.for petitioner.
Mr.Sunip Sen with Mr.Shivkumar Iyer and Mr.Amitava Majumdar
i/by Bose & Mitra & Co.for Respondent.
CORAM: N.M.JAMDAR, J.
Judgment Reserved on : 4th December 2012
Judgment Pronounced on : 21st December, 2012
JUDGMENT:
By this Arbitration Petition filed under Section 34 of the
Arbitration and Conciliation Act, 1996, the petitioner challenges
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the Award passed by the sole Arbitrator dated 14th May 2009. By
the impugned Award the Arbitrator has directed the petitioner to
pay an amount of Rs.89,62,656/- towards the claim of the
Respondent and an amount of Rs.85,000/- towards half of the
arbitration costs.
2. The petitioner - Steel Authority of India Limited (SAIL) is a
company incorporated under the Companies Act, having its office
at Kolkata and the registered office at New Delhi. The petitioner is
in the business of production of iron and steel, and for
transportation of cargo it takes vessels on charter. The
Respondent - Mercator Lines Limited (Mercator) is a company
incorporated under the Companies Act having its registered office
in Mumbai. Respondent owns several vessels and it is in the
business of letting the vessels on charter for freight at sea.
3. The dispute between the parties is regarding the payment of
demurrage charges to be paid by the petitioner to the Respondent.
According to the Respondent the petitioner did not discharge the
cargo within the stipulated period and is liable to pay demurrage
charges to the Respondent. While it is the case of the petitioner
that the discharge was delayed due to the reasons beyond control
of the petitioner, and if this period is to be excluded then the
petitioner is entitled to an incentive, and since the amount of
incentive is much more than the demurrage claimed by the
Respondent, the petitioner in fact is entitled to receive monies from
the Respondent.
3/29 ARBP 942/2009
4. On 19th May, 2005 an agreement was executed between the
petitioner and the Respondent for shipment of Cargo of 5 lakhs MT
(5% more or less at Charterer's option). The cargo was to be
shifted in parcels of 65-70000 MT (5% more or less at Owner's
option) from Queensland, Australia for discharge at the ports of
Vishakhapatnam/Paradip/Haldia in India. The agreement was on
Voyage Charter basis.
5. Before the facts of the case are dealt with further, it is
necessary to note the nature of contract between the parties. The
contract was a voyage charter. There are several modes of taking a
vessel on hire and the Voyage Charter is one of them. Voyage
Charter is an agreement for carriage of full cargo, not for a period
of time but for a voyage between two specified ports with charges
fixed as per the tonnage of cargo loaded. Under the Voyage
Charter the owner of the vessel is interested in expeditious
completion of the voyage. Certain grace period given to the
Charterer for loading and discharge of the cargo. If the voyage
exceeds beyond the stipulated period the owner is put to loss as
the vessel then cannot be let out on hire to other Charterers. Thus
for speedy completion of voyage the owner provides both, an
incentive as well as a deterrent. If the Charterer is not able to load
and discharge the cargo within the grace period, the Charterer has
to pay penalty to the owner in the form of demurrage. On the other
hand if the Charterer is able to complete the loading and discharge
before the grace period and frees the ship before the period agreed
under charter, the owner rewards the Charterer by paying an
incentive, termed as dispatch. The dispatch is payable both at the
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time of loading as well as discharge. The agreement may contain,
as in the present one, that the loading and discharge of cargo will
be done by the Charterer's agent and the port authorities will be
paid by the owner. When the vessel arrives in the port territory
and is ready to discharge, the owner intimates the charterer by an
advance notice so that the charterer can arrange for discharge of
the cargo. The intimation is called Notice of Readiness. The liability
of the charterer to unload the cargo begins when the notice of
readiness is received. Within this period certain agreed rate of
cargo has to be discharged. This is called laytime. The parties may
agree that in certain contingencies the period which has started
running when the notice of readiness is received, will be
suspended. Barring these exceptions agreed between the parties
the settled norm under the Voyage Charter is that the time period
for discharge of cargo begins to run from the time the notice of
readiness is received, subject to the conditions specifically agreed.
The disputes normally arises under Voyage Charter as to whether
the time period in which the Charterer could not load/discharge
the cargo, should be excluded or not. Clauses dealing with such
exclusions are also fairly settled in the shipping trade and their
meaning and purport are generally commonly understood.
6. Certain clauses of the present agreement need to be noticed.
Clause 3 specified that the vessel should have minimum discharge
capacity of 8000 MT per day. Clause 9 provided that for acts of
God and such other situations, the owners were not answerable,
so also the charterer was not answerable for negligence or default
or error in judgment of Trimmers or Stevedores employed in
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loading or discharging the cargo. As per Clause 34 Notice of
Readiness was to be given by the shipowners at the port of
discharge. The addresses of the petitioners at all three ports
viz.Visakhapatnam, Paradip and Haldia for service of notice were
specified. Clause 35 provided for time counting provision. As per
clause 35 time for discharge of cargo would commence 24 hours
after Notice of Readiness was served, on arrival of the vessel within
the port limits at port of discharge. Certain periods of time were to
be excluded if the Notice of Readiness was given in the beginning
of a weekend. Under clause 35 the time would start running for
discharge of cargo after 24 hours, subject to certain timings.
Clauses 36, 37, 38, 39 and 40 provided for contingencies where
the period for discharge would stop running. In clause 42 it was
provided that in case of war, rebellion, tumult, political
disturbances, insurrections, lockouts, strike, riots, epidemics,
intervention of sanitary customs and/or other constituted
authorities and any other causes beyond the control of the
charterer, the time lost at the discharge port was not to be counted
and the period would stop running. As per clause 43 of the
Charter party, daily discharge of 7000 MT at 24 hours working
day was stipulated, which was subsequently agreed at 8000 MT.
Clause 45 specified for Demurrage and Dispatch. As per Clause 50
the vessel was to be consigned to the Charterer's agents at loading
and discharging ports with owners paying and bearing all the port
charges. Clause 60 provided for Arbitration clause which stated
that the Arbitrator will be a commercial man. Clause 61 provided
for 'Force Majeure clause'. Some of the relevant clauses are
reproduced in later part of the judgment.
6/29 ARBP 942/2009
7. As per the agreement, vessel MV Prem Poorva was assigned
for the voyage. Vessel was loaded with 67996 MT of cargo at Hay
Point, Queensland, Australia, and sailed on 9 th October 2005. The
vessel completed discharge at 2nd port at Haldia on 22nd November
2005. Between these dates certain events occurred which have
led to the dispute between the parties.
8. The vessel arrived at Visakhapatanam on 28 th October 2005
and left the port limits on 12 th November 2005 and arrived at
Haldia. As far as the exact timings of the movement of the ship
between 28th October, 2005 and 13th November 2005, they are
recorded by the parties in their Statement of Facts and these are
admitted. When the the vessel arrived at Visakhapatanam on 28 th
October 2005 there was a waiting period from that date till
berthing on 4th November 2005. The vessel discharged cargo till 6 th
November 2005 when it was pulled out on 6th November 2005, and
it was reberthed on 12th November 2005. Further there was a
waiting period at Haldia between 14 th November 2005 and 18th
November 2005.
9. The dispute between the parties arose as the petitioner
exceeded the time limit allocated to it for discharge of cargo and
consequently, the Respondent asked for demurrage charges. The
occurrence of events itself are not in dispute but the reason for the
events is the dispute between the parties. Since the petitioner did
not pay the amount of demurrage charges, freight and amount
towards currency fluctuation, the Respondent invoked arbitration
7/29 ARBP 942/2009
clause contained in the agreement dated 19 th April 2008 by
making a reference to the Indian Council for Arbitration, New
Delhi.
10. The Indian Council for Arbitration forwarded three names of
Arbitrators to the petitioner and the petitioner gave consent for
Mr.H.M.Singh to be appointed as a sole Arbitrator. The Respondent
filed its statement of claim on 24th June 2008 and the petitioner
filed its reply and counter claim on 24 th October 2008. The
Respondent filed its rejoinder and defence to counter claim on 27 th
January 2009.
11. The claim of the Respondent before the Arbitrator was
towards demurrage for Rs.86,95,866/- and towards currency
fluctuation for Rs.18,19,485/-. The Respondent gave credit to the
petitioner for load port dispatch of Rs.1,49,600 and therefore the
final claim of the Respondent was of Rs.89,62,656/-. The
petitioner contested the claim of demurrage charges on the ground
that the vessel underperformed and since on arrival some of the
cranes were not functioning and the vessel was pulled out by the
Port Authorities, no liability arose pursuant to the Notice of
Readiness. The petitioner also claimed Dispatch of Rs.2,66,078/-
and further claim of Rs.25,00,000/- towards the breach of Charter
Party Agreement and after adjusting the amount towards freight
disbursement, the petitioner set up the counter claim for
Rs.3,27,678/-.
12. The Arbitrator held that the petitioner did not prove that it
8/29 ARBP 942/2009
suffered any handicap for the alleged under-performance and the
reasons set up by the petitioner for not unloading the cargo in the
specified time period because the vessel was pulled out by the port
authorities due to failure of the cranes, was an untenable ground.
The Arbitrator found that the phrase in clause 42(h) of the
agreement "causes beyond the control" on which reliance was
placed by the petitioner has is to be read in conjunction with other
sub-clauses appearing in the clause. The Arbitrator also found
that the claim of the petitioner that during one period on account
of poor performance of the cranes the port authorities pulled out
the vessel, is not borne out by the record. The reasons given for
another period, such as congestion at the port cannot be a ground
to exclude the period. The Arbitrator found that the claim towards
the currency fluctuation was justified. Accordingly Arbitrator
granted the claim of the Respondent and rejected counter claim of
the petitioner. The sole Arbitrator by his award dated 14th May
2009 awarded the sum of Rs.89,62,656/- to the Respondent
alongwith 50% of Rs.1,70,000/- viz.Rs.85,000/- towards the costs.
Petitioner has filed this Arbitration Petition under Section 34 of
the Act challenging the Award dated 14th May 2009.
13. I have heard Mr.Mr.Vishal Sheth, learned counsel for
petitioner and Mr.Mr.Sunip Sen, learned counsel for Respondent.
The learned counsel for the parties have also circulated their notes
of arguments.
14. Mr.Vishal Sheth, learned counsel on behalf of the petitioner
contended;
9/29 ARBP 942/2009
(a) As the present charter was Voyage Charter the concept
of free laytime, dispatch and demurrage would come into
play. The connotations of these concepts are settled under
the Maritime Law.
(b) Three periods viz.(a) 28th October 2005 to 4th November
2005; (b) 6th November 2005 to 12th November 2005 and (c )
14th November 2005 to 18th November 2005 need to be
excluded from the calculations as the reasons because of
which the cargo could not be discharged were beyond the
control of the petitioner. More particularly the period
between 6th November 2005 and 12th November 2005 when
the vessel was forcibly shifted out of the port by the
Visakhapatanam Port Authorities, as it falls under clause
42(h) of the Charter Party Agreement, being a reason beyond
the control of the petitioner.
(c ) The finding of the arbitrator that the petitioner will not
be entitled to benefit of clause 42(h) since the petitioner did
not prove that the vessel was shifted out by the port
authorities due to poor performance, was not the relevant
criteria for consideration.
(d) The Arbitrator has not considered that in the statement
of facts the Respondent-owner of the ship had endorsed that
the vessel was shifted out by the port authorities, and once
this fact was admitted, the case for exception under clause
10/29 ARBP 942/2009
42(h) of the Charter Party was made out.
(e) The fact that the vessel was shifted out by the port
authorities from 6th November 2005 to 12th November 2005
was an admitted position and even though the petitioner may
not have succeeded in showing that there was poor
performance of the vessel, that factor became irrelevant once
there was an action by the port authorities over which the
petitioner had no control.
(f) The Arbitrator has laid emphasis on finding out
whether the vessel under-performed as alleged by the
petitioner, when that fact was irrelevant as once it was an
admitted position that the port authorities shifted the vessel
forcibly, a ground for exception was made out.
(g) Clause 42 of the Charter Party lays down the general
exceptions operating independently and in different
situations than the clauses 36 to 41 which are specific
exclusions. If the clause 42(h) is to be read in ejusdem -
generis, then it strengthens the case of the petitioner as all
the exceptions set out in clause 42 deal with the situation
over which the petitioner can have no control. Clause 42(f)
provided for exclusion on the ground of action of the
constituent authority and there can be no doubt that the
port is a constituent authority.
(h) If the period between 6th November 2005 and 12th
11/29 ARBP 942/2009
November 2005 is excluded then the petitioner is not only
not required to pay the demurrage charges but is in fact
entitled to dispatch of Rs.2,66,072/- as claimed in the
counter claim.
(i) The Arbitrator has disregarded the pleadings and the
admitted position on record. The Arbitrator has completely
mis-understood the contract between the parties and based
its finding on irrelevant considerations.
(j) Though the interference under section 34 of the Act is
limited, this Court and the Apex court has held in the cases
where Arbitrators findings are perverse, contrary to the
contract and in non-consideration with the admitted facts,
the award needs to be set aside. Following cases are relied
upon in support of the this proposition;
i) Sikkim Subha Associates V/s.State of Sikkim, AIR
2001 SC 2062,
ii) ONGC V/s. Saw Pipes Limited, AIR 2003 SC 2629,
iii) Jagmohan Singh Gujaral V/s.Satish Sabnis, 2004 (1)
BCR 307,
iv) Arbitration Petition No.1283 of 2010 decided on 28 th
March 2011 in the matter of Sahyadri Earthmovers V/s.L
& T Finance Limited,
15. Mr.Sunip Sen, learned counsel on behalf of the Respondent
contended;
12/29 ARBP 942/2009
(a) The terms and conditions of the present Charter need
to be noticed. The present Charter provides for FIO ie. Free
In and Out, meaning that the loading and discharge of cargo
will be of free of risk to the vessel and the loading and
discharge were to be the obligations of the petitioner, as set
out in clause 46 of the Charter Party. Further, as provided in
clause 50 of the Charter Party, the Charterer's (petitioner's)
agent will handle loading and discharge of cargo at the ports.
Thus, the Respondent shipowners had no control over the
loading and discharge of cargo and berthing of vessel.
(b) The parties had agreed in the Charter that the time
limit would be set for loading and discharging the cargo by
providing a laytime, which was 7000 MT (subsequently 8000
MT) per day. Any time excess of this stipulated laytime was
to be compensated by the petitioner by paying the demurrage
charges. The laytime started 24 hours after tendering the
notice of readiness and it would stop subject to the
conditions and specific exclusions laid down in the Charter
Party Agreement.
(c ) The vessel berthed on 4th November 2005, started
discharging the cargo at 03.20 hours and by 06.00 hours on
5th November 2005 had discharged 11,050 MT, inspite of one
crane being out of order. Thus the vehicle performed much
above the stipulated rate.
13/29 ARBP 942/2009
(d) The brake down of crane and mal-functioning of other
machineries and their consequences are anticipated and
provided for in the Charter Party. The credit has been given
to the petitioner and in fact inspite of mal-functioning of the
crane, the vessel performed higher than the agreed rate.
(e) It was the petitioner who wanted to accommodate its
own other vessels and therefore started creating a case for
non payment of demurrage charges.
(f) Petitioner has not produced any record nor any letters
to show that the port authorities shifted the vessel forcibly
for the reason stated by it.
(g) The Charter Party specifically provided for time
counting provision and clause 42 is a general exception,
which speaks situations such as acts of war etc. Whenever
specific exclusion is to be provided, the parties have agreed
to such contingencies and in the absence of such
contingencies the main agreement about the time counting
provision, will continue to apply.
(h ) That the port authorities forcibly shifted the vessel and
that alone was a good enough ground for excluding the time
irrespective of any other fact to be proved, was not the case
of the petitioner before the Arbitrator.
(i) The pleadings of the petitioner will have to be read as a
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whole in which there is a specific case that the vessel was
shifted out by the port authorities because of the poor
performance of the vessel. The case being argued in the
petition was never argued before the Arbitrator.
(j) There is no admission by the master in the statement
of facts and the said comment has to be understood in the
context of allegations made by the petitioner.
(k) The Arbitrator has considered the case and the facts on
record and has come to the conclusion that the vehicle did
not under-performed as alleged, and the petitioner did not
produce any document, and therefore, according to the
learned counsel for the Respondent, the award of the
Arbitrator is correct.
(l) In a petition under section 34 of the Act there cannot
be re-assessment of facts and it is to be considered whether
the view of the Arbitrator was a possible view.
(m) Reliance is placed on -
(i) Commentary by John Schofield, M.A.,on Laytime
and Demurrage,
(ii) decision of Kings Bench Division in Thorman
V/s.Dowgate Steamship Company Limited-(1910) 1
K.B.410,
(iii) decision of the Queens Bench Division (Commercial
Court) in the case of Cero Navigation Corporation
15/29 ARBP 942/2009
V/s.Jean Lion & CIE - (2000) I LLoyds Law Reports 292,
(iv) decision of the Court of Appeal in Ellis Shipping
Corporation V/s.VOEST Alpine Intertrading - (1992)
Vol.2, LLoyds Law Reports 109.
16. As far as loading of cargo in Australia is concerned, there is
no dispute between the parties that the cargo was loaded before
the stipulated time and the petitioner was entitled to Load Point
Dispatch and accordingly such dispatch is already been given to
the petitioner.
17. Thus the dispute between the parties is regarding three
periods at the ports of discharge. They are -
(a) 28th October 2005 to 4th November 2005;
(b) 6th November 2005 to 12th November 2005 and
(c ) 14th November 2005 to 18th November 2005.
18. As far as period (a) at Visakhapatanam is concerned, the
case of the petitioner before the Arbitrator was that the vessel
arrived with more than 12.5 meters of draft which was breach of
the Charter and because of this breach, the petitioner lost an
opportunity to nominate Paradip as a port of discharge. The
Arbitrator held that if the petitioner wanted to nominate Paradip
as port of discharge they should have informed the Respondent.
Then the onus would have shifted on the Respondent. But the
petitioner did not communicate this fact to the Respondent. The
Arbitrator found that this ground was raised only during the
arbitration.
16/29 ARBP 942/2009
19. As far as period (c ) at Haldia is concerned, the delay in
waiting was due to congestion at the port. The Arbitrator found
that the vessels which were waiting ahead of 'Prem-Poorva' were
vessels chartered by the petitioner and the congestion and the
consequent delay was because of the vessels of the petitioner itself.
The Arbitrator rejected the contention of the petitioner that this
period needs to be excluded.
20. As far as above two periods viz. (a) and (c ) i.e.28 th October
2005 to 4th November 2005 at Visakhapatanam and 14th November
2005 to 18th November 2005 at Haldia are concerned, the findings
of the arbitrator are not seriously challenged by the learned
counsel for the petitioner during the course of the arguments,
except by stating that the said findings are perverse. Even
otherwise the findings of the Arbitrator in respect of the above two
periods are correct. The Arbitrator considered the facts on record
and found that the petitioner was not entitled to contend that they
were entitled to get these periods excluded. There is no reason to
interfere with the findings of the Arbitrator in respect of the
treatment of these two periods.
21. The main controversy is regarding the period (b) i.e. between
6th November 2005 to 12th November 2005 at Visakhapatanam.
The fact that the vessel was shifted out of the port and it re-
berthed on 12th November 2005, is not in dispute. The dispute is to
how this happened and whether incident falls within clause 42(h)
of the Charter Party Agreement. At this juncture it will be
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necessary to reproduce the clauses 34 to 42 of the Charter Party
Agreement:
34. "Notice of readyness at the port of discharge to be
served by Shipowners during normal office hours i.e.9.30
a.m.to 4.30 p.m.on working days (Mondays to Friday) and
9.30 a.m.to 12.00 noon on Saturday to Port Officers of
Charterers as per details given below ........ "
35. "Time Counting Provisions: At discharging port time to
count 24 hours after Notice of Readiness is served on arrival
of the vessel within port limits at port of discharge and
weather in berth or not and in free pratique and ready in all
respect to discharge the cargo. If turn time of 24 hours
expires on Saturday afternoon, laytime will commence at
08.00 hours on first working day. Time shall not count
between noon on Saturday and 8 a.m.on Monday nor
between 5 p.m. (noon if Saturday), on the last working day
preceding a Charter Party holiday and 8 a.m.on the first
working day thereafter, even if used, unless the vessel is
already on demurrage.
If the vessel is ordered to Haldia and is unable to give notice
of readiness by reason of congestion at Haldia, time shall
commence to count 24 hours after notice of vessel's arrival
off sandheads has been given by radio to charterers or their
agents and received by them during ordinary office hrs.
Whilst waiting off sandheads sundays, C/P Holidays and
saturdays after 12 noon until 8 A.M.Monday not to count
unless vessel is on demurrage. Time used n proceeding from
sandheads to Holdia not to count."
36. "Non weather working days declared by port authorities
and rain period if reported in SOF shall not be counted as
laytime, even if discharge operations are continued for some
part of day unless vessel is already on demurrage."
37. "Steaming time from anchorage to berth on arrival of
vessel at load/discharge port not to count, even if vessel is
already on demurrage."
18/29 ARBP 942/2009
38. "Charterers/Shippers have the option to
load/discharge vessel at a second safe birth, in which, case,
time used in shifting not to count as laytime and shifting
expenses to be for Owners account even if vessel already on
demurrage."
39. "Cost of opening and closing of hatches, gangway
placement, grab fixing to be for Owners account and time
used not to count as laytime even if vessel already on
demurrage."
40. "In the even of breakdown of gears/cranes and other
equipments of the vessel by reason of disablement or
insufficient power, etc., the period of such inefficiency shall
not count as laytime."
41. "Owners/Master/their Agents shall allow
representatives of Inspecting Agency nominated by
Shippers/Charterers on board to carry out draft survey and
to inspect/supervise at all stages of loading/storage/
discharging of cargo at loading/discharging ports. Time used
for survey/check at load/discharge ports to be for Owners
account even if vessel already on demurrage."
42. "At the discharge port, time lost by reason of all or any
of following causes shall not to be counted as discharge time
unless vessel is already on demurrage;
a) War, Rebellion, Tumult, Political Disturbances,
Insurrections;
b) Lockouts, Strike, Riots, Civil Commotions;
c) Epidemics, Quarantines, Landslips, Floods, Frost or
Snow, Bore Tides,Bad weather,
d) Stoppage of work whether partial or general by
workmen, Longshoremen, Tugboat men or other hands
essential to the working of the vessel or discharge of cargo
from the vessel;
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e) Accident at the Wharf;
f) Intervention of Sanitary customs and /or other
constituted authorities;
g) Stoppages whether partial or total on Rivers and
Canals;
h) Any other causes beyond control of the Charterers."
22. The above mentioned clauses, shorn of technical jargon, are
that when the vessel would arrive at the port of discharge, the
Respondent will give notice to the petitioner for discharge of the
cargo. It will be the responsibility of the petitioner to get the cargo
discharged and the period will start 24 hours after the receipt of
notice and 7000 MT (8000 MT) per day cargo would be discharged
whether in berth or not. The parties had agreed for certain
exceptions contained in clauses 36 to 39 which would not count
towards the lay time. The parties also agreed that in certain cases
such as war, rebellion etc. the lay time will not be counted. Thus if
due to any of these reasons the cargo could not be discharged,
then the petitioner will not be liable to pay demurrage charges.
23. The case of the petitioner before the Arbitrator as to why this
period needs to be excluded is to be found in paragraph 5, 12 and
14 of the reply, which read as under:
5. "The vessel berthed on 4.11.2005 and started
discharge. However, the Claimant failed to discharge the
Cargo as per the port authorities' norms and thereby the
performance of the said vessel was declared as poor by the
port authorities. It is further submitted that the discharge of
the cargo was also hindered due to the breakdown of the one
20/29 ARBP 942/2009
of the cranes. Therefore
on 7.11.2005 the vessel was shifted
to the roads by the port authority as it failed to perform
satisfactorily. The said action by the port authority was
beyond the control of the Respondents and therefore the
Respondent was not liable for the time loss for discharging
the cargo and it was specifically submitted that the same
wold not be counted as a lay time. Therefore in terms of
Clause 42 (h) of COA, the period during which the vessel was
at the roads was to be deducted from the lay time."
12. "Para under reply is a matter of record. However, it is
submitted that due to the poor performance of the vessel as
per the norms of port authorities as well as due to the
breakdown of the crane of the vessel, the vessel was sent at
the roads on 7.11.2005 and was reberthed again only on
12,11,2005, it is submitted that the said period between
7.11.2005 and 12.11.2005 is not to be calculated as a laytime
as it was due to the poor performance of the vessel. It is the
port authority who decides to send the vessel at the roads on
a particular vessel not performing as per the existing norms
of the Port. Moreover the characters had no control over the
said event and as such the sending of the vessels at the
roads is covered under clause 42(H) of the Charter Party
Agreement. Therefore, the said period cannot be counted for
calculating demurrage."
14. "The Claimant's laytime calculations for disports are
wrong and hence denied. It is submitted that at the
discharge port Vizag, one of the cranes was under break-
down for a long duration because of which the vessel's
performance got seriously affected and thereby delayed the
berthing of waiting vessels. Taking into the consideration
the delay in discharging/unloading, the vessel was shifted to
the roads by Port Authorities on 07.11.05. The vessel was
brought back to the berth on 12.11.05. Vide letter
dt.5.11.2005 & 9.11.2005 the Respondent informed the
claimant that the vessel may be shifted from the berth due to
poor performance in discharging the goods. Further it was
also informed that all losses including the consequential
losses were to be borne by the claimant. Copy of the letters
dated 5.11.05 & 9.11.05 and the SOF of Vizag are annexed as
21/29 ARBP 942/2009
Annexure R-3 (Colly.). Therefore in terms of Clause 42 (h) of
the CPA, the period of the vessel's stay at the roads was
deducted from the laytime. Clause 42 (h) is reproduced
herein below:
At the discharge port, time lost by reason of all or any of
following causes shall not to be counted as discharge time
unless vessel is already on demurrage;
.............
(h) Any other causes beyond control of the Charterers."
(emphasis supplied)
24. The case of the petitioner before the Arbitrator has to be
considered in total. The petitioner had alleged that the vessel
under-performed at Visakhapatanam because of brake down of
one of the cranes and it was shifted out. Both the cause and effect
of non performance of vessel was pleaded as a composite bundle of
facts before the Arbitrator. The case in unequivocal terms before
the Arbitrator was that due to unsatisfactory performance of a
crane the port authorities shifted the vessel.
25. The Arbitrator found that the vessel in fact did not under-
perform. The Arbitrator found that it was agreed between the
parties that the vessel should be capable of discharging 8000 MT
per day. As per clause 43 of the Charter party, daily discharge of
7000 MT (8000 MT) at 24 hours working day was stipulated. In
fact though the Crane No.3 was under repairs only for two hours
on 4th November 2005 and for nine hours on 5 th November 2005,
the vessel discharged total cargo of 11050 MT on 4 th November
2005 and 10560 MT on 5th November 2005. Thus the Arbitrator
found that there was no question of vessel under-performing. This
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is a finding of fact. The Arbitrator analysed the material on record
and came to the conclusion that there was no under-performance
of the vessel as alleged. In limited jurisdiction under section 34
this finding cannot be interfered with.
26. The learned counsel for the petitioner has contended that
even assuming the vessel did not under-perform, this is irrelevant
as it is an admitted position that the vessel was shifted out by the
port authorities. The learned counsel for the petitioner heavily
relied upon the comment of the Respondent below the statement
of facts, which stated that the vessel was forcibly shifted by the
port authorities for alleged non-performance. This statement,
according to the petitioner, itself entitled the petitioner for benefit
of clause 42(h). Firstly, it needs to be considered whether this
statement can be considered as an admission. As it is urged by the
learned counsel for the Respondent, this comment has to
understood in the context of the allegation made by the petitioner
in its comment below the statement of facts. The petitioner had
asserted that the port authorities shifted the vessel due to poor
performance of the vessel. The emphasis of the allegation was on
performance of the vessel. In reply thereto, the owner had stated
that it was an "alleged non-performance".
27. Apart from this position, the Arbitrator found that the
petitioner did not produce any material to show that there was any
communication from the port authorities that the vessel needed to
be shifted out. Nor any material is placed on record to demonstrate
as to what were the specific port norms in respect of the discharge
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of the cargo and what were the exact reasons for shifting the
vessel out of the port. The Arbitrator found that in the absence of
material on record, it cannot be concluded that the port
authorities shifted the vessel because of the non-performance of
the vessel. This conclusion of the Arbitrator cannot be faulted
with. The petitioner did not place on record any material, norms or
any correspondence from the port authorities directing that the
vessel be shifted out for non-performance. Nor it is seriously urged
that the vessel was shifted by the port authorities for some other
reason. That it in any case could not have been done as it was not
the case of the petitioner before the Arbitrator.
28. The Arbitrator is not expected to carry on an inquiry beyond
the scope of pleadings. The petitioner's pleadings were specific
regarding non performance of the vessel, which the Arbitrator
found as to be not true. Thus having faced with the findings of fact
that the vessel did not under-perform and that there was no
material to show that the port authorities shifted the vessel
because of non performance, the learned counsel for the petitioner
would urge that the Court should now consider only one fact, that
the vessel was shifted out by the port authorities. Thus the
petitioner now wants to abandon the entire case made out before
the Arbitrator and wants to concentrate on only one fact that the
vessel was shifted out by the port authorities. According to learned
counsel for the petitioner this ground will fall under clause 42(h) of
the Charter Party.
29. Clause 42 deals with the general exceptions. It speaks of
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grounds such as war, rebellion, lockouts, epidemics, accidents and
any other causes beyond control of the Charterer. Such clauses
are commonly employed in the Charter Party Agreement. Their
ambit and scope has also been widely understood. It is also an
established position of law that the phrase 'any other causes
beyond the control of the Charterer' is to be read ejusdum generis
with clauses preceding it. When certain instances are given
preceding the general words such as 'any other cause' then the
general words would take colour from the clauses preceding it. In
the commentary by John Schofield in Laytime and Demurrage 1, it
is noted that in the Charter Party Agreement, when final words of
such general clause include the word 'whatsoever' then, the clause
'any other causes beyond the control of Charterer' would be a
stand alone clause and ejusdum generis rule will not apply. Since
in the present agreement the final word of clause (h) are not
'whatsoever', the ejusdum generis rule would apply and sub clause
(h) will take its meaning from the sub clauses preceding it.
30. The examination of sub-clauses (a) to (g) of Clause 42 show
that the contingencies provided in the said sub-clauses arise
independently of the interplay of relations between the petitioner
and the Respondent. Both the cause and the effect leading to
these contingencies do not arise from the interplay of relations
between the petitioner and the Respondent. In fact, these clauses
have no connection with interaction between the parties. The
cause which leads to these contingencies does not arise out of any
action between the parties.
1 John Schofield, M.A., Laytime and Demurrage, Sixth Edition, Page 221 Para 4.112.
25/29 ARBP 942/2009
31. Learned counsel for the petitioner has emphasised on clause
42(f) to state that the intervention of the constituted authorities
will itself be enough to bring the case under the agreed exceptions,
as the port is the constituted authority. Thus it is his contention
that once the port authority took an action of shifting of vessel, it
was an action of the constituted authority and also a factor beyond
control of the petitioner. However, this contingency does not arises
independently of the interaction between the parties. Once the
petitioner came with a specific case that the cause of intervention
by the constituted authority was due to brake down of cranes, the
basic case itself was not of unconnected general exception. In the
arguments now that the case is sought to be changed to a general
exception.
32. When the parties entered into a Voyage Charter, the basic
agreement between the parties, and also a trade practice is that
the lay time would begin after the notice of readiness was given.
Whichever exceptions that were to be specifically provided for, were
provided for. If a particular exception was not provided, then the
general agreement of continuous running of lay time would apply.
In the decisions cited by the Respondent in the case of Cero
Navigation1 and Elise Shipping2, this position has been made
clear.
33. Once the petitioner came with a case that there was fault on
1 (2000) I Lloyds Law Reports 292.
2 (19920 Vol.2, Lloyds Law Reports 109.
26/29 ARBP 942/2009
the part of the Respondent which led to certain events, the
petitioner was claiming exception to the rule of continuous
running of lay time. Though it is sought to be urged now that the
emphasis was on the action of port authority alone, the entire
tenor of pleadings and correspondence would show the basic
reason to disown liability of demurrage was the alleged brake down
of crane which led to further events. It is during the arguments
that the shift is sought to be made from the specific exclusion to
the general exclusion.
34. The learned counsel for the Respondent urged that the
ground of port authorities shifting the vessel due to alleged non-
performance is itself doubtful, as the petitioner wanted to give
preference to its other ships, and therefore, it engineered shifting
of vessel out of the port. It is submitted that the petitioner wrote to
the Respondent on 5th November 2005 stating that the cranes are
not working and the petitioner was making out a case for payment
of demurrage in advance. However, the submission as regards
other vessels cannot be considered as this is not the finding of the
Arbitrator.
35. The approach of the Arbitrator cannot be termed as perverse
and it is based on strong commercial sense and prudence, being
well versed in the practices peculiar to this trade. The view taken
by the Arbitrator is a possible point of view. The Arbitrator has
considered clauses of the agreement and found that the claim of
the petitioner does not fall in any of the clauses. The Arbitrator is
entitled to take this view.
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36. The arbitration proceedings which are to be carried on by the
Arbitrator chosen by the parties, are not to be conducted like the
civil suit where manifold alternate defences can be taken. The
commercial disputes of such nature are to be resolved by the
Arbitrator who applies the relevant trade practices and resolves
the disputes as a commercial person would do. In the present case
the parties consciously chose a commercial man conversant in the
trade as their Arbitrator. If a party comes with a particular case
before the Arbitrator and fails to demonstrate certain basic facts,
and the Arbitrator using his broad common sense and trade
expertise arrives at certain conclusions, then those findings
cannot be challenged by creating subtle legal points and
introducing a case which was never presented before the
Arbitrator.
36. It is observed by the Apex Court in the case of Rashtriya
Ispat Nigam Limited V/s.Dewan Chand Ram Saran, (2012) 5
SCC 306 as under:
43. In any case, assuming that Clause 9.3 was capable of
two interpretations, the view taken by the arbitrator was
clearly a possible if not a plausible one. It is not possible to
say that the arbitrator had travelled outside his jurisdiction,
or that the view taken by him was against the terms of
contract. That being the position, the High Court had no
reason to interfere with the award and substitute its view in
place of the interpretation accepted by the arbitrator.
44. The legal position in this behalf has been summarized
in paragaph 18 of the judgment of this Court in Sail v. Gupta
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Brother Steel Tubes Ltd. (supra) and which has been
referred to above. Similar view has been taken later in
Sumitomo Heavy Industries Limited. v. ONGC Limited
reported in 2010 (11) SCC 296 to which one of us (Gokhale
J.) was a party. The observations in paragraph 43 thereof are
instructive in this behalf.
45. This paragraph 43 reads as follows: (Sumitomo case)
"43. ...The umpire has considered the fact situation and
placed a construction on the clauses of the agreement
which according to him was the correct one. One may at
the highest say that one would have preferred another
construction of Clause 17.3 but that cannot make the
award in any way perverse. Nor can one substitute one's
own view in such a situation, in place of the one taken by
the umpire, which would amount to sitting in appeal. As
held by this Court in Kwality Mfg. Corpn. v. Central
Warehousing Corpn - 2009 (5) SCC 142. The Court while
considering challenge to arbitral award does not sit in
appeal over the findings and decision of the arbitrator,
which is what the High Court has practically done in this
matter. The umpire is legitimately entitled to take the view
which he holds to be the correct one after considering the
material before him and after interpreting the provisions
of the agreement. If he does so, the decision of the umpire
has to be accepted as final and binding."
(emphasis supplied)
37. Thus under section 34 of the Act the scope is to find out that
whether the findings of the Arbitrator could be termed as perverse.
The petition is not to be treated as an appeal. Nor the case can be
considered as Court of first instance. The Arbitrator found that the
petitioner was not entitled to claim exceptions on the ground of
non performance of vessel and consequent shifting of the vessel by
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the port authorities, because both these facts needed to be proved.
If the Arbitrator had held that even though the petitioner failed to
prove that there was non-performance of the vessel still the
petitioner was entitled to exceptions under the general exceptions,
then he would have travelled beyond the scope of the pleadings.
The Arbitrator has confined himself to the specific case as pleaded
by the petitioner. There is nothing wrong with this approach. The
Arbitrator who was chosen by the parties was conversent with the
trade practices and interpretation of clauses which are commonly
found in the Charter Party Agreements.
38.
In view of the above discussion, there is no warrant to
interfere with the impugned award. Petition is accordingly
dismissed.
(N.M.JAMDAR, J.)
