Kola Shipping Limited vs Shakti Bhog Foods Limited
2005 Latest Caselaw 1358 Del

ORDER

O.P. Dwivedi, J.

1. The petitioner, above named, has filed this petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the Act) seeking interim measures in the matter of discharge of 1,100 metric tons of Sorghum loaded by the respondent company on board the petitioner's vessel M.V. Kapitan Nazarev at Kakinada port Andhra Pradesh.

2. Briefly stated the facts leading to the petition are that an agreement (charter party) dated 18th July, 2005 was executed between the parties at New Delhi wherein the respondent agreed to load 13,500 metric tons of bagged Sorghum on board the petitioner's vessel (M.V. Kapitan Nazarev) at the port of Kakinada, Andhra Pradesh for carriage to and discharge at the port of Cotonou, Benin (East Africa). The said agreement provided for freight to be paid at the rate of US% 60.00 per metric ton and demurrage at the rate of US $8,000/- per day. Under the said agreement, all the disputes were to be referred to arbitration at London under the English Arbitration Act. The petitioner's vessel arrived at the port of Kakinada on 24th July, 2005. The respondents surveyors accepted the vessel for loading on 25th July, 2005. The respondent were to load the cargo within nine days failing which they were liable to pay demurrage at the rate of US$ 8,000 for every days delay beyond the said nine days. It is alleged that respondent loaded only 1,100 metric tons of bagged Sorghum on 6th August, 2005 as against the contractual quantity of 13,500 mt. On 24th August, 2005 the respondent sent a letter informing that they were not in a position to provide any further cargo and requesting the petitioner that they may be permitted to unload the said cargo of 1,100 mt and also agreed to pay compensation amount of US$ 90,000 to the petitioner. According to the petitioner, by that time, the demurrage had gong up to US$ 2,32,000 and the compensation offered by the respondent was totally inadequate and not acceptable. Under the terms of the charter party/agreement, petitioner shall have a lien on the cargo for recovery of freight, dead-freight, demurrage, damages for detention and all other amounts which may be found due. Accordingly, the petitioner's agents South India (Agencies) Limited addressed a letter dated 1st September, 2005 to the port and customs authorities at Kakinada seeking permission to discharge the cargo under lien and to store the same in a bounded warehouse or such other place as may be permitted. In the said letter, the petitioner's agents further confirmed that they would bear the cost of discharge and storage and requested the port and customs authorities to permit the petitioner to discharge the cargo and allow the vessel to sail from the Kakinada Port but the customs authorities at Kakinada port informed the petitioner by letter dated 6th September, 2005 that since the cargo was loaded by the respondent, the request for discharge of the cargo should come from the respondent. In the meantime, the respondent themselves sent a letter dated 5th September, 2005 to the Master of the vessel stating that they would make the necessary arrangement to discharge the cargo on board the vessel. Accordingly, the petitioner's agent addressed a letter dated 8th September, 2005 to the customs authorities at Kakinada Port informing that they had no objection to the discharge the cargo by the respondent at his own costs and risk subject to the respondent's surrendering the Mate Receipts and the original tally sheets to the Master of the vessel. This, according to the petitioner, was necessary because the cargo was not being carried by the vessel and consequently, the receipts issued by the Master of the vessel confirming receipt of the cargo on board the vessel was required to be returned to the Master and cancelled. Despite this, respondent took no steps for unloading the cargo as a result petitioner's vessel continues to remain at Kakinada port incurring demurrage and detention which aggregates to an amount in excess of US$ 737,577 till the date of filing the petition. It is alleged that the respondent has neither discharged the cargo nor has permitted the petitioner to discharge the cargo by putting in a written request for re-landing of the cargo to the port and customs authorities at Kakinada port as required by the said authorities vide letter dated 6th September, 2005. According to the petitioner, detention charges continue to accrue at the rate of US$12,346.30 per day. Petitioner has expressed its readiness to refer the dispute for arbitration in London in respect of its claim for freight, dead-freight, demurrage and damages for detention. In the meantime, petitioner has filed petitioner under Section 9 of the Act seeking direction to the the respondent to forthwith discharge the quantity of 1,100 mt of Sorghum loaded by the respondent on board at the petitioner's vessel. In the alternative, petitioner seeks a direction to the respondent to request the port, customs and other authorities at Kakinada port in writing to grant permission for unloading of respondent's cargo on board at the risk and cost of the respondent. Petitioner seeks further direction to the respondent to surrender to the Master of the vessel the mates receipts and all other export documents in respect of the cargo loaded at Kakinada port.

3. In the written reply filed by the respondent, respondent has admitted loading of 1,100 mt of Sorghum on board the petitioner's vessel. According to the respondent, they have been persistently requesting the petitioner to allow them to discharge the goods and even offered a sum of US$ 90,000 but the petitioner, in order to blackmail the respondent, came out with an unfounded, unrealistic and illegal claim of over 4.56 lac US $ as a pre-condition for the release of the goods to which the respondent did not agree. Not only that the petitioner has sent e-mails to all shipping lines warning them not to deal with the respondent without first contacting the petitioner. This, according to the respondent, amounts to defamation for which the respondent claims damages to the tune of US $ 3,00,000. As regards the agreement namely charter party, respondent's versions is that they have signed only fixture note and not any charter party/agreement. Respondent has further taken a preliminary objection regarding territorial jurisdiction of this Court to entertain this petition.

4. I have heard learned counsel for the parties and perused the record.

5. As regards the territorial jurisdiction of this Court, the submission of learned counsel for the respondent is that cargo in question was loaded at Kakinada, Andhra Pradesh. Thus the cause of action arose in Kakinada and the respondent is having its subordinate office at Kakinada also. So in view of the decision of the Supreme Court in the case of Patel Roadways Limited v. Prasad Trading Company , only courts at Kakinada will have territorial jurisdiction to entertain such a petition. In that case, facts were that goods were entrusted to the appellant at its subordinate office at Bodinayakanur in Tamil Nadu on hire to be delivered at Delhi. The appellant had its principal office at Bombay. The goods however, got destroyed and damaged. The respondent had filed a suit for recovery of damages at the Court within the local limits of whose jurisdiction the goods were entrusted to the carrier. Suit was defended by the carriers on the ground inter alia that under the terms of the contract, only Bombay Courts have jurisdiction to try the suit. Supreme Court held that since no part of cause of action had arisen at Bombay, parties could not confer jurisdiction on Bombay Courts just because the appellant had its head office there. This decision was followed by a Division Bench of this Court in the case of B.B. Verma v. National Projects Construction Corporation Limited 1999 IV AD (Delhi) 757. There is no dispute with this preposition of law. When a corporation/company has its subordinate office at the place where cause of action arose, only local courts will have jurisdiction to try the suit notwithstanding the fact that the corporation/company has its registered office somewhere else, where no part of cause of action arose. In the present case, petitioner's contention that Delhi Courts have jurisdiction to try the suit is based on sub-clause 'c' and not sub-clause 'a' of Section 20 of CPC. According to the petitioner, charter party was signed at Delhi. Respondent did not deny their signatures on the first page of charter party which shows that the agreement was signed at New Delhi and place of arbitration as London. Thus, a part of cause of action arose in Delhi where the principal office of the respondent is also situated. In this case there is no agreement between the parties excluding the jurisdiction of Delhi Courts. Therefore, Delhi Courts have jurisdiction to entertain the present petition.

6. It was next contended by learned counsel for the respondent that Section 2 of the Arbitration and Conciliation Act lays down that Part I thereof shall apply to cases where the place of arbitration is in India.

7. According to learned counsel for the respondent, implies that Section 9 of the Act which falls in Part I will not apply if the place of arbitration is not in India. This question has been specifically considered by three Judges Bench of the Supreme Court in the case of Bhatia International v. Bulk Trading S.A. and Anr. wherein the Supreme Court has observed in para 32 as under :-

To conclude, we hold that the provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India the provisions of Part I would compulsorily apply and parties are free to deviate only to the extent permitted by the derogable provisions of Part I. In cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any provision, in part I, which is contrary to or excluded by that law or rules will not apply."

8. While considering the question of grant of interim relief in suits wherein court's competence to try the suit itself is in issue, a Division Bench of this Court in the case of State Trading Corporation of India Limited v. Government of the Peoples Republic of Bangladesh (DB), in para 10, observed as under :-

"It is well settled that prima facie the jurisdiction has to be determined from the averments made in the plaint. If the jurisdictional facts are disputed, the Court could frame an issue thereon and having tried the issue may ultimately form an opinion either in favor of or against having territorial jurisdiction to try the suit. If the Court may form an opinion against the plaintiff the plaint shall be ordered to be returned for presentation to proper Court. However, by the time disputed jurisdictional facts come to be tried and determined the Court is not powerless to entertain a prayer for the grant of interim relief for by the time the issue relating to jurisdiction may come to be tried and decided,the plaintiff may have suffered irreparably; nay his suit may have been rendered infructuous. Thus, the jurisdiction to grant an interim relief is there, though the jurisdictional competence of the Court to try a suit may itself is be under challenge. The Court while hearing a prayer for the grant of ad interim injunction would certainly apply its mind to jurisdictional facts - whether prima facie - it appears to have jurisdiction to try the suit or not. However, the formation of such an opinion would be prima facie only because the issue is yet to be tried. Formation of such a prima facie opinion is an obligation cast on the Court so as to guard itself against likely misuse of its jurisdiction amounting to the abuse of process of the Court. Having formed such a prima facie opinion the Court may arrive at a finding that the territorial jurisdiction appears to vest in it or it is likely to have jurisdiction to try the suit and there is a likelihood of the plaintiff being able to substantiate all such averments on the basis whereof it proposes to invoke the territorial jurisdiction of a Court then the Court shall have the jurisdiction to pass interlocutory orders and granting interim relief so as to protect the interest of the parties."

9. Learned counsel for the respondent has referred to a decision of the Supreme Court in the case of Shreejee Traco (I) Pvt Ltd. v. Paperline International Inc. wherein it was held that "parties have the freedom to choose the law governing an international commercial arbitration agreement. Where there is no express choice of the law governing the contract as a whole, or the arbitration agreement in particular, there is, in the absence of any contrary indication, a presumption that the parties have intended that the proper law of the contract as well as the law governing the arbitration agreement are the same as law of the country in which the arbitration is agreed to be held." This was a decision on an application under Section 11(4) of the Act. As already observed the Full Bench decision in the case of Bhatia International (supra) specifically deals with the question of applicability of Section 9 of the Act to International Arbitration held out of India and therefore, the said decision of Full Bench would govern the case in hand.

10. On merits, not much needs to be said. Admittedly the respondent loaded only 1,100 metric tons of bagged Sorghum up to 9th August, 2005. Admittedly, they have also expressed their desire to unload the same as foreign buyer was not interested in taking the delivery. Not only that, they also offered to pay US$ 90,000 to the petitioner but the petitioner demanded much more. When the respondent refused to fulfilll the demands of the petitioner, petitioner sent e-mails to all shipping companies warning them not to deal with the respondent without first contacting the petitioner. This, according to the respondent, amounts to defamation. Both the parties are raising various claims/counter claims against each other. It is for the arbitrator to decided the claims/counter-claims on merits. Petitioner's vessel cannot be detained at Kakinada port indefinitely because of this stalemate between the parties. Accordingly this petition is allowed and respondent is directed to forthwith unload the quantity of 1,100 mt of bagged Sorghum loaded by them on board the petitioner's vessel at Kakinada. In the alternative, the respondent shall forthwith send a written request to the port, customs and other authorities at Kakinada port to grant permission for re-landing/unloading of the respondent's cargo on board the vessel M.V. Kapitan Nazarev at Kakinada port by the petitioner. Respondent is further directed to surrender the Mates receipts to the Master of the vessel and other export documents in respect of the cargo loaded on board the petitioner vessel at Kakinada port to the customs and port authorities for appropriate action. This will be done within one week. This will be without prejudice to the rights and contentions of the parties regarding their claims/counter-claims including the costs of unloading the cargo against each other which will be decided by the Arbitrator on merits.

11. With this direction, petition stands disposed of.

12. dusty to the counsel for both parties.