Albamer And Co. Ltd. vs Minerals And Metals Trading ...
2005 Latest Caselaw 1453 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The respondent charted a vessel of the petitioner known as Albatross in pursuance to a charter party dated 30.10.90 for carrying two parcels consisting of 3000 metric ton and 25,000 metric ton of bulk sulpher from Vancouver to India. The goods were off-loaded at two ports - Bhavnagar and Kandla.

2. The charter party contained clause 49 for settlement of disputes by arbitration in terms of the provisions of Arbitration Act, 1940 and since disputes arose between the parties regarding payments to be made by the respondent to the petitioner, the said clause was taken recourse to and two arbitrators were appointed " one by each party. The two arbitrators in turn appointed an umpire.

3. The claim of the petitioner before the arbitrators was for balance freight and discharge port demurrage of USD 52913.37 along with interest of eighteen per cent per annum on the said amount from 23.05.1991 till the date of realisation as also the costs of the arbitration proceedings. The respondent in turn made certain counter claims in respect of over age additional insurance premium, stamp duty, 50% custom over time and short delivery.

4. The arbitrators could not find unanimity amongst themselves in respect of the short landed quantity of cargo as claimed by the respondent, and thus, the matter came up before the umpire. The umpire made and published the award on 31.01.2002 and it is this award which is the subject matter of the objections filed by the respondent.

5. The umpire in the award has noticed that the learned arbitrators were at consensus that the claim of the petitioner towards balance freight is not in dispute and it is payable with interest to the ship owners. However no award was passed by the arbitral tribunal. The umpire agreed with this view and further held that the interest rate should be payable at the rate of seven per cent per annum. This rate of interest was arrived at as per the international landing rates (LIBOR) The umpire also agreed with the learned arbitrators regarding the owner's responsibility for refund of amount towards over age insurance. Insofar as the aspects of counter claims are concerned, the same have been dealt with by the umpire in various sub paras of para 11.

6. The submissions of learned counsel for respondent are three fold: 1) The umpire misconducted by not permitting adjustment for the short delivery of goods. 2) The umpire ought to have at least not granted the freight on such short delivery of goods and 3) The umpire should have made the award in rupees and not granted a dollar award with interest thereon as there has been considerable increase in the rate of dollar from making of the reference till the making of the award.

7. Insofar as the first aspect is concerned, it was not disputed by the learned counsel for the respondent that the respondent failed to file claim for compensation for any short delivery of goods within the stipulated period of time. In this behalf a reference may be made to Clause 3 para 6 of Article III of the schedule to the Indian Carriage of Goods by Sea Act, 1925 which reads as under:

6. Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.

The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.

In any event th carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods.

8. A reading of the aforesaid would show that a carrier and the ship is to be discharged from all liability in respect of loss or damage unless the suit is brought within a period of one year after the delivery of goods or the date when the goods should have been delivered. This was admittedly not done by the respondent.

9. Learned counsel for the respondent strenuously sought to contend that even if such a suit was not filed, the same did not preclude the respondent from making a counter claim or at least as a defense or adjustment in respect of any claim of the petitioner. I am unable to accept this plea of the learned counsel for the respondent. If there is stipulation provided by time within which such a claim ought to be made, there would be extinguishment of the right of the respondent to make such a claim on the failure to lodge the same within the stipulated period of time. What cannot be done directly cannot be permitted to be done indirectly. In this behalf the judgment of the apex court in The East and West Steamship company v. S K Ramalingam Chettiar; propounds the same view. It was held that the word 'loss' in clause 3 para 6 of Article 3 in the aforesaid schedule meant and included loss caused to the shipper or the consignee by reason of inability of the ship or the carrier to deliver part or whole of the goods to whatever reason such failure might be due. The words 'discharged from loss' were intended to mean and did mean that the liability had totally disappeared and not only that the remedy as regards the liabilites had disappeared. Thus a distinction was made between extinguishment of a remedy and estinguishment or a right. It was held that the right itself was extinguished.

10. I am thus of the considered view that not only the respondent would not be entitled to make a claim in this behalf in any proceeding, but would also not be entitled to claim any adjustment from any amounts which may be claimed by the respondent to be due to it from the petitioner.

11. The second aspect arises from the claim of the respondent that even after the first aspect is decided against the respondent, the petitioner cannot claim the freight on goods which have not been delivered. In this behalf learned counsel referred to a commentary in Halsbury's 'Laws of England' Volume 35 (3rd Edition) at page 494-495 under the heading of 'The amount payable'. These observations have been made in para 711 dealing with Shipping and Navigation. It has been observed that freight being, as a general rule, payable only on delivery, the amount to be paid is necessarily governed by the amount of the goods delivered to the consignee, unless the contract provides for payment of a lump freight. Learned counsel sought to rely upon the charter party where sub para D of para 18 provides as under:

Freight is deemed to be earned upon safe arrival of the vessel and the cargo at first or sole discharge port. The entire freight shall at all times be at the risk of the vessel's owners.

12. It is the submission of the learned counsel for the respondent that in view of the aforesaid condition in the charter party freight is deemed to be earned upon safe arrival of the vessel and the cargo at the first or sole discharge port.

13. In order to appreciate this contention, the factual matrix will have to be considered. The load port in the present case was Vancouver. Methodology of measurement was by draught survey. This draught survey is a methodology adopted whereby the measurement is made on the basis of displacement of water. The ship arrived initially at the Bhavnagar port where part of the goods were unloaded. There again the same methodology was adopted of draught survey. The balance goods were off-loaded at the Kandla port. There again initially draught survey methodology was adopted. However it was found that if the figure were tallied, the goods off-loaded would amount to a little more than what had been loaded. This was the reason why actual weighment took place at the stage of the time and it is the submission of the respondent that there is short delivery of goods on the said basis. It may be noticed that this excess delivery was to the tune of 374.676 metric ton against the quantity as per bill of lading of 28286.00 metric ton. The survey report of Ms Metcalf & Hodgkinson Private Ltd surveyors records that in respect of Kandla port the vessel had a minus constant of 494.592 metric ton in stead of normal constant of 300 to 400 metric ton. The surveyor was thus of the view that the draught survey was not reliable and reliance can be placed upon the quantity of sulpher discharged at the shore which was weighed on 100 per cent basis. The respondent had further supported this claim on the basis that the bill of lading is a prima facie evidence of receipt of cargo in good order and condition.

14. Learned counsel for respondent has once again referred to Halsbury's 'Laws of England' Volume 35 (3rd Edition) dealing with shipping and navigation and at para 473 where it has been observed that the bill of lading may be an express stipulation be made conclusive evidence of the quantity shipped and the ship owner is bound by the same and cannot escape liability by saying that the goods specified or some portion of them had not been shipped unless fraud is pleaded.

15. The aforesaid aspect has been considered by the learned arbitrators but has been linked with the issue of short delivery of goods.

16. Learned counsel for petitioner on the other hand contends that since the methodology of draught measurement had been adopted, there was no reason to do actual measurement even if the bill of lading provided for quantity since it is not in dispute that both the parties had accepted the concept of draught measurement when the goods were loaded at Vancouver.

17. In my considered view the objection of the respondent cannot be accepted for two reasons: The first is that the methodology of draught measurement was adopted at the load port itself and was further the basis while discharging goods at Bhavnagar port. Even if there was some discrepancy in the total which was arrived at Kandla port on draught measurement being made for the remaining goods, the petitioner cannot be deprived of the freight charges for the goods shipped as per the bill of lading on the basis that on actual measurement only at Kandla port, a different figure would be arrived at. The second aspect is that if the respondent was particular about the issue of short delivery of goods which itself would result in the plea of the respondent for non payment of freight charges on short delivery, the respondent would have taken recourse to legal proceedings to recover the amount. The respondent failed to take such recourse with the result that the respondent must be deemed to have accepted the delivery of goods by the petitioner as was so required to be done. Having failed to follow up its rights for the same, in my considered view, it cannot now be said that the freight charges payable on such alleged short delivery of goods, for which short delivery no claim was filed in accordance with law, an adjustment should be made.

18. The last aspect arises from the award of the amount in dollars. In this behalf learned counsel for the petitioner has pointed out by a reference to the judgment of the apex court in Forasol v. Oil & Natural Gas Commission; that the conversion rate would be applicable as on the date of the decree. It would be useful to reproduce the conclusion arrived at in para 53 which is as under:

This then leaves us with only three dates from which to make our selection, namely, the date when the amount became payable, the date of the filing of the suit and the date of the judgment, that is, the date of passing the decree. It would be fairer to both the parties for the court to take the latest of these dates, namely the date of passing the decree, that is, the date of the judgment.

19. A reading of the aforesaid leaves no manner of doubt that it is only on the date of decree that the conversion rate would be applicable. This is based on the principle that a party which has not been paid any amount or has suffered loss must be restituted to its original possession. Thus if amount had to be paid in dollars, it is the dollars which have to be paid to that party. If there is fluctuation in the rate, it is to the prejudice or the benefit of the party making the payment since the restitution has to take place in dollars.

20. Learned counsel for respondent sought to distinguish the judgment on the basis of the fact that it was an uncontested award and issue only arose at the execution stage. It is further submitted that the petitioner himself while making the claim in dollars has also given an amount in equivalent of Indian rupees. It is not disputed that this would be a mandatory requirement if a suit was to be filed since conversion into Indian rupees of dollar claim is necessary both for purposes of payment of court fee and pecuniary jurisdiction. Learned counsel however submitted that the present case is one of an arbitration claim. In my considered view, this would make no difference to the matter in issue as the claim has been made in dollars. If the amount was to be paid by the respondent on the date of the claim, the amount has been specified in Indian rupees for that purpose. The amount was not paid but contested. Thus the petitioner is entitled to restitution in dollars and that is what the learned umpire has done.

21. Learned counsel for the respondent even sought to contend that the interest rate was on the higher side. However as noticed by the umpire, same is not based on the rates of interest prevalent in India which would have been applicable if the award was in Indian rupees. The rate awarded is as per the International Lending Rates (LIBOR) of 7 per cent.

22. In the end, it must be noticed that the umpire is a man conversant with the trade. It is stated by learned counsel for the parties that he was in fact an advisor in the Ministry of Transport dealing with the subject matter. The object of such arbitration is that technical people conversant with the trade decide the matter in issue and merely because another view is possible should not be a ground to interfere with the award unless there is misconduct, legal or otherwise. In this behalf, I am fortified by the judgment of the Division Bench of this Court in DDA v. Bhagat Construction Co.(P) Ltd. and Anr. 2004 (3) Arb.LR 548 where it has been held that the arbitrator need not disclose the mathematical calculation of the award as long as the award shows an application of mind. The Division Bench took note of the fact that the Arbitrator was a retired Chief Engineer of CPWD who was well conversant with the matters of dispute on which he was adjudicating. The court is not to substitute its own view with that of an arbitrator even if the court comes to a different conclusion until and unless the decision of the arbitrator is manifestly perverse or has been arrived at on the basis of wrong application of law.

23. In view of the aforesaid, I find no merit in the objections and the same are dismissed.

CS(OS) 965A/2002

In view of the objections being dismissed, the award dated 31.01.2002 is made rule of the court. The petitioner will also be entitled to future interest at the same rate of simple interest of 7 per cent per annum. The petitioner shall also be entitled to costs of the proceedings.

Decree sheet be drawn up accordingly.