Calcutta High Court
Commodity Culture Pte Ltd vs The Owners And Parties Interested ... on 27 April, 2023
OCD-21 to 23
IN THE HIGH COURT AT CALCUTTA
Admiralty Jurisdiction
ORIGINAL SIDE
[Commercial Division]
IA NO. GA/1/2022
In AS/4/2022
COMMODITY CULTURE PTE LTD.
Vs
THE OWNERS AND PARTIES INTERESTED IN THE VESSEL
M. T. SEA GULL 9 (IMO NO. 9175092)
IA NO. GA/2/2022
In AS/4/2022
COMMODITY CULTURE PTE LTD.
Vs
THE OWNERS AND PARTIES INTERESTED IN THE VESSEL
M. T. SEA GULL 9 (IMO NO. 9175092)
IA NO. GA/3/2022
In AS/4/2022
COMMODITY CULTURE PTE LTD.
Vs
THE OWNERS AND PARTIES INTERESTED IN THE VESSEL
M. T. SEA GULL 9 (IMO NO. 9175092)
BEFORE:
The Hon'ble JUSTICE RAVI KRISHAN KAPUR
Date : 27th April, 2023
Appearance:
Mr. Prathamesh Kamat, Adv.
Mr. Ratul Das, Adv.
Mr. Dwipraj Basu, Adv.
Mr. S. Iyer, Adv.
Mr. A. Datta, Adv.
..for the plaintiff
Mr. K. Thaker, Adv.
Mr. Amitava Majumdar, Adv.
Mr. S. Mitra, Adv.
Mr. S. Kundu, Adv.
..for the Owners
The Court:-
1.
This suit has been filed by the plaintiff charterer claiming a decree
of USD 905,000/- (Rs.7,14,50,565/-) for losses and damages
suffered by the plaintiff caused due to the wrongful repudiation of
the charterparty by the Owners of the defendant vessel and also
claiming an additional USD 30,000/- (Rs. 23,68,527) as legal costs.
2. Upon filing of the suit, the plaintiff had sought for an order of arrest
of the defendant vessel which was docked at Haldia Port. By an
order dated 7 July, 2022, this Court had initially directed arrest of
the vessel. Thereafter, the Owners of the defendant vessel had
entered appearance and had without prejudice to their rights and
contentions as to the maintainability of the suit furnished security
for the entire sum of INR Rs.7,38,19,092/-, whereupon by orders
dated 14 July, 2022 and 18 July, 2022 respectively, the defendant
vessel stood released.
3. The agreement between the parties is evidenced by a clean fixture
recap for carriage of crude palm oil on board the defendant vessel.
By an e-mail dated 23 May, 2022, the parties agreed that the
"Special Conditions" providing for "ATTACHED CHRTR RIDER CLS
WITH AMENDMENT TO APPLY". Thus, the arbitration clause in the
Vegoilvoy charterparty form stood modified. The arbitration
agreement reads as follows:
"32. General Average/ Arbitration
General Average and Arbitration, if any, to be in Singapore
with English law to apply. York/Antwerp rules 1974 as
amended 1994 to apply."
4. It is contended by the defendant that on the basis of clause 32,
there is a valid and binding arbitration between the parties in
respect of the matters raised in this suit and the parties be referred
to arbitration under section 45 of the Arbitration and Conciliation
Act, 1996 (the Act).
5. On behalf of the plaintiff it is submitted that, the use of the words
"if any" in Clause 32 renders the same vague and unenforceable
and indicates only a possibility of referring the parties to arbitration
in the future. It is also contended that the subject matter of the
disputes between the parties are not arbitrable.
6. Section 45 of the Act provides as follows:
Power of judicial authority to refer parties to
arbitration.- Notwithstanding anything contained in
Part I or in the Code of Civil Procedure, 1908 (5 of 1908),
a judicial authority, when seized of an action in a matter
in respect of which the parties have made an agreement
referred to in section 44, shall, at the request of one of
the parties or any person claiming through or under him,
refer the parties to arbitration, unless it finds that the
said agreement is null and void, inoperative or incapable
of being performed.
7. The question which arises for consideration is whether the use of
the word "if any" in Clause 32 above detracts in any manner from
the fact that there is a valid, binding and enforceable arbitration
agreement between the parties or not.
8. The crux of any arbitration clause is an agreement to refer the
disputes or differences to arbitration which is expressly or impliedly
spelt out from the arbitration clause. What is of essence and
requires to be ascertained is the intention of the parties to settle
their disputes through arbitration. A contract ought to be
interpreted in a manner so as to give effect to the agreement of the
parties rather than invalidate it. A chaterparty being a commercial
document should be interpreted as commercial men would have
intended and should not be nullified nor thwarted by a pedantic or
legalistic interpretation. No party can be allowed to take advantage
of inartistic drafting of an arbitration clause in any agreement.
9. I find that the parties have consciously agreed to incorporate a
specific clause providing for arbitration in Singapore with English
Law to apply. The clause must be read in the context of an
international transaction for sale of oil. The words "if any" are at
best to be treated as surplusage or as a short form for the words "if
any dispute arises". Mere brevity in terminology used in the clause
cannot be a ground for refusing a reference to arbitration. There is
nothing which makes the clause optional i.e., an option for either of
the parties to decide if they wish to refer the matter to arbitration or
not. The clause does not require or contemplate any fresh consent.
The parties have agreed for reference to arbitration in Singapore
with English law to apply. The clear contractual intention of the
parties was to refer future disputes to arbitration. Any other
meaning would be contrary to the presumed intention of the parties
of having agreed to go to arbitration and would lead to absurdity.
The parties had made it quite clear that they are choosing
arbitration as the appropriate form of dispute resolution rather than
resort to the Courts. (Mangistaumunaigaz Oil vs. United World Trade
(1995) 1 Lloyd's Law Reports 617). In such circumstances, the
arbitration agreement is neither null nor void nor inoperative nor
incapable of being performed.
10. The decision cited on behalf of the plaintiff reported in Sara
International Ltd. vs. Golden Agri International PTE Ltd. & Anr. (2010)
118 DRJ 471 is inapposite to the facts of this case. In the said
decision, the Court found that there was no binding obligation to go
to arbitration. The clause was held to be vague and could not form
the basis for arbitration. Similarly, the reliance placed on the
decision in Jagdish Chander vs. Ramesh Chander (2007) 5 SCC 719
is also inapplicable. In the said decision, the arbitration clause read
as follows: "the parties shall be referred for arbitration if the parties
so determined". Thus, the parties were found not to have entered
into a valid arbitration clause. Similarly, in Gajulapalli Chenchu
Reddy vs. Koyyana Jaya Lakshmi 2009 (4) Arb L R 119, the Court
found that the words "they so desire" and "should consider" made
the arbitration clause inconclusive and uncertain.
11. It has also been contended that since this is an action in rem, the
arbitration clause cannot be invoked and the disputes between the
parties are not arbitrable. This argument is also untenable. The
Owners have entered appearance and furnished security to the
satisfaction of the Court. Thereafter, the vessel stood released from
arrest. Thus, the action ceases to be an action in rem and becomes
an action "in personam" against the Owners. The Owners having
entered appearance and provided security in terms of the orders of
Court, the right in rem is preserved and the right of the plaintiff to
satisfy its claim is retained and made available in the in personam
proceedings whether by way of arbitration or Court. Significantly,
the full security in the suit had been furnished in terms of the
orders of Court. In such circumstances, there is no merit in the
argument that full security has not been furnished and the action
continues to be an action in rem.
12. In M.V. Elisabeth vs. Harwan Investment and Trading (P) Ltd., 1993
Supp (2) SCC 433 at page 474, it has been held as follows:
"82. The admiralty jurisdiction of the High Court is dependent
on the presence of the foreign ship in Indian waters and
founded on the arrest of that ship. This jurisdiction can be
assumed by the High Court concerned, whether or not the
defendant resides or carries on business, or the cause of action
arose wholly or in part, within the local limits of its jurisdiction.
Once a foreign ship is arrested within the local limits of the
jurisdiction of the High Court, and the owner of the ship has
entered appearance and furnished security to the satisfaction
of the High Court for the release of the ship, the proceedings
continue as a personal action."
13. In this context, the judgments in Siem Offshore Redri AS vs. Altus
Uber (2018) SCC Online Bom 2730 and Owners and Parties
Interested in the Vessel M.V. Polaris Galaxy vs. Banque Cantonale De
Geneve (2022) SCC OnLine SC 1293 also do not advance the case of
the plaintiff. The decision cited in Angsley Investments Limited vs.
Jupiter Denizcilik Tasimacilik Mumessillik San. Ve Ticaret Limited
Sirketi 2023 SCC OnLine Bom 559 is also distinguishable. In this
decision, the defendant vessel had neither entered appearance nor
furnished security nor submitted to the jurisdiction of Court. The
vessel had not only jumped arrest and escaped from the port of
Kandla but had also failed to furnish security in terms of the orders
of Court. Accordingly, this decision is inapposite.
14. In such circumstances, the application stands allowed. There shall
be an order in terms of prayers (a), (b) and (c) of the application. It is
clarified that prayer (c) stands modified to the extent that both
parties shall be at liberty to seek modification of the security
amount which may be directed to be furnished by the defendant
Owner before the Arbitral Tribunal. The security furnished by the
defendant Owner pursuant to orders passed in this suit shall abide
by and be dealt with in accordance with any order which may be
passed by the Arbitral Tribunal.
15. Liberty is granted to both parties to make an appropriate
application before this Court if the circumstances so warrant in
respect of the security amount lying with the Registrar, Original
Side.
16. With the aforesaid directions, GA/3/2022 stands disposed of.
GA/1/2022
The orders dated 14 July, 2022 and 18 July, 2022
respectively providing security stands confirmed subject to any
order which may be ultimately passed by the Arbitral Tribunal.
In view of the order passed in GA/3/2022 granting liberty to
both the parties to approach the Arbitral Tribunal, nothing survives
in this application.
GA 1 of 2022 stands disposed of as infructuous.
GA/2/2022
In view of the liberty granted to both the parties in terms of
the order passed in GA 3 of 2022 to approach the Arbitral Tribunal,
nothing remains in this application.
GA 2 of 2022 stands disposed of as infructuous.
(Ravi Krishan Kapur, J.)
D.Ghosh
