Well Trans Logistics India Pvt. ... vs Mr.S.U.Sirajdeen
2023 Latest Caselaw 11529 Mad

                                                                        Arb.OP.(comdiv) No.321 of 2023

                                    IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                     DATED: 30.08.2023

                                                           CORAM

                                  THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE

                                             Arb.O.P.(Comm.Div.) No.321 of 2023


                     Well Trans Logistics India Pvt. Ltd.,
                     Rep. By the Assistant Manager/Authorised signatory
                           Mr.Sh.Ravish Chand Srivastava,
                     Flat No.306, 3rd floor, Real Enclave Building,
                     No.43/22, Josier Street, Nungambakkam,
                     Chennai – 600 034.                              ..           Petitioner

                                                              -vs-

                     Mr.S.U.Sirajdeen,
                     Proprietor of M/s.Gravity Ventures,
                     No.96-A, First floor, Sri Ganapathy complex,
                     A.K.Nagar, Saibaba Colony,
                     Coimbatore – 641 011.                                  ..    Respondent

                                  Petition under Section 34 of the Arbitration and Conciliation Act,
                     1996, has been filed seeking to set aside the arbitral award dated 24.02.2023
                     bearing Arbitration Case No.1 of 2022 passed by the learned Sole Arbitrator
                     (Shri.M.V.Swaroop) in its entirety.




                     1/13


https://www.mhc.tn.gov.in/judis
                                                                          Arb.OP.(comdiv) No.321 of 2023

                                              For Petitioner    : Mr.T.V.Suresh Kumar
                                              For Respondent    : Ms.S.P.Sri Harini
                                                                for Mr.Hari Radhakrishnan


                                                              ORDER

This petition has been filed under Section 34 of the Arbitration and

Conciliation Act, 1996, (in short “the Act”) challenging the impugned

arbitral award dated 24.02.2023 passed in Arbitration Case No.1 of 2022.

2. The petitioner is a clearing and forwarding agent. The respondent

is an importer. The petitioner had imported cargo from Vietnam for

delivery at the port of Chennai. The petitioner's agent at Hai Phong Port,

Vietnam issued the House Bill of Lading dated 11.03.2020 disclosing the

respondent as the consignee of the cargo. Since the cargo which arrived at

Chennai port was detained by the customs authorities, there was a delay in

the delivery of the cargo to the respondent. Pursuant to the orders passed by

this Court in a writ petition filed by the respondent, the respondent has also

taken delivery of the cargo after the issuance of delivery order by the

petitioner. Since there was a delay, M/s.COSCO-the ocean liner had

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demanded demurrage. Since the cargo was lying in the CFS (container

freight station) for quite some time, in view of the claim made by

M/s.COSCO against the respondent, the respondent initiated arbitration in

accordance with the clauses contained in the House Bill of Lading dated

11.03.2020 issued by the petitioner to the respondent.

3. Since there was no consensus with regard to the arbitration, the

respondent had filed an application under Section 11 of the Act seeking for

appointment of an arbitrator. By orders of this Court, a sole arbitrator was

appointed to adjudicate the dispute between the petitioner and the

respondent. Before the arbitrator, the petitioner had raised the following

grounds:-

(a) They have questioned the existence of the arbitration agreement

between the parties;

(b) They have categorically stated that they are not an agent of

M/s.COSCO and therefore, they are not liable to compensate the respondent

for demurrage claim made by M/s.COSCO.

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4. However, as seen from the impugned arbitral award, the sole

arbitrator appointed by this Court under Section 11 of the Act, has rejected

the contentions of the petitioner by holding that in case the petitioner fails to

deliver the cargo to the respondent, the petitioner may be called upon to pay

the value of the goods amounting to Rs.14,97,850/- along with interest.

Aggrieved by the said finding, the petitioner has challenged the impugned

arbitral award under Section 34 of the Act.

5. The learned counsel for the petitioner drew the attention of this

Court to the House Bill of Lading dated 11.03.2020 issued by the agent of

the petitioner at Vietnam, namely, M/s.STT Logistics Company Limited. In

particular, he drew the attention of the Court to Clause 2 of the reverse side

of the Bill of Lading dated 11.03.2020 and would submit that the clauses

contained in the reverse side of the Bill of Lading has no applicability to the

present contract. According to him, only in case where two or more modes

of transport from the place of acceptance of the goods in India to a place of

delivery of goods outside India exists, the clauses found in the reverse side

of the Bill of Lading are applicable. According to him, the present dispute

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arises out of a shipment made from Vietnam for delivery at Chennai by a

single mode of transport, namely, “by sea” and therefore, the clauses found

in the reverse side of the Bill of Lading has no applicability. The reverse

side of the Bill of Lading contains an arbitration clause, which is found at

Clause 25. According to the petitioner, the arbitration clause is not

applicable due to the reasons stated supra.

6. He would also submit that M/s.COSCO is not an agent of the

petitioner. However, according to him, under the impugned aribtral award,

by total non application of mind, the arbitrator has observed that

M/s.COSCO is an agent of the petitioner. He would also submit that neither

the petitioner nor the respondent in support of their claim have stated that

M/s.COSCO is an agent of the petitioner. Therefore, according to him,

without any pleading by any of the parties, arbitrarily and by total non

application of mind, the arbitrator has observed that M/s.COSCO is an agent

of the petitioner. Therefore, he would submit that the impugned arbitral

award is patently illegal as the award has been passed by giving perverse

findings. Hence, he would submit that the impugned arbitral award is liable

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to be set aside under Section 34 of the Act.

6. Per contra, the learned counsel for the respondent would rely upon

the clauses contained in the reverse side of the Bill of Lading dated

11.03.2020. In particular, she drew the attention of the Court to clause

3(2)(c) of the reverse side of the Bill of Lading and would submit that the

petitioner has accepted the responsibility for the acts and omissions of any

other person, whose services he uses for the performance of the contract

evidenced by the multimodal transport documents i.e., the House Bill of

Lading. According to her, having accepted the responsibility, the petitioner

cannot escape its liability to pay demurrage charges, if at all any claim for

demurrage is made by M/s.COSCO for the shipment imported by the

respondent.

7. The learned counsel for the respondent also drew the attention of

the Court to a judgment of the Hon'ble Supreme Court in the case of

M/s.Caravel Shipping Services Private Limited Vs. M/s.Premier Sea

Foods Exim Private Limited [Civil Appeal Nos.10800 and 10801 of 2018,

https://www.mhc.tn.gov.in/judis Arb.OP.(comdiv) No.321 of 2023

dated 29.10.2018], and in particular, referred to the paragraph No.11 of the

said judgment, which is extracted hereunder:-

“11. The fact that the stage of the present suit is that a particular witness is being examined would not come in the way of the Section 8(3) application being allowed inasmuch as the Section 8(3) application was filed in the same year as that of the suit. We may also add that we have not gone into the Multimodal Transportation of Goods Act, 1993 for the reason that whether the present Bill of Lading is governed by the provisions of the Act (Section 26 in particular) or not would not make any difference to the position that an arbitration clause forms part of an agreement between the parties, and would, therefore, be governed by Section 7 of the Arbitration Act.”

8. She would also submit that when an arbitration clause forms part of

an agreement between the parties, it can be inferred that there is a valid

arbitration agreement as per section 7 of the Act. Hence, the present dispute

between the parties is an arbitrable dispute. According to her, only in

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accordance with the terms and conditions of the Bill of Lading dated

11.03.2020, the arbitrator has passed the impugned arbitral award, as the

petitioner has accepted its liability to pay any claim that arises out of the

shipment from any party, whom the petitioner has engaged. Therefore,

according to her, the claim of M/s.COSCO, if any, will have to be paid only

by the petitioner and not by the respondent.

DISCUSSION:

9. Admittedly, the shipment has been effected not through

Multimodal Transportation. Admittedly, only one mode of transport was

involved i.e., through sea. The cargo was shipped at a port in Vietnam for

delivery at a port in Chennai. It is an undisputed fact that the customs had

earlier detained the cargo. It is also an undisputed fact that aggrieved by the

said detention, the respondent had filed a writ petition seeking for release of

the said cargo. Only pursuant to the orders passed by this Court in the writ

petition, the petitioner has issued delivery order to enable the respondent to

take delivery of the cargo. In accordance with the delivery order, the cargo

was also delivered to the respondent.

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10. M/s.COSCO is the ocean liner, which has carried the cargo from a

port in Vietnam to a port in Chennai, India. Several correspondence have

also been exchanged by the respondent with M/s.COSCO directly with

regard to demurrage claim made by M/s.COSCO in respect of the shipment

imported by the respondent. The respondent is also aware that the petitioner

is not an agent of M/s.COSCO, which is also admitted by the learned

counsel for the respondent during the course of her submissions. However,

the arbitrator, by total non-application of mind, has observed in the

impugned aribtral award that the petitioner is an agent of M/s.COSCO. The

petitioner is only a clearing and forwarding agent, who consolidates the

cargo from various importers/exporters and thereafter delivers the same to

the actual carrier. The container in which the shipment arrived at the port of

Chennai does not belong to the petitioner and it belongs to the ocean liner,

namely, M/s.COSCO.

11. It is also not established before the arbitrator that the demurrage

claim had arisen only due to the fault of the petitioner. The only reliance

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made by the respondent for making the petitioner liable is the clause found

in the House Bill of Lading dated 11.03.2020, wherein the petitioner has

accepted that they will be responsible for any claim made by any of the

parties whom they have engaged for the subject shipment. As observed

earlier, the petitioner is not an agent of M/s.COSCO, but, is an independent

business entity/service provider. They receive the cargo from various

clients and thereafter, on instructions of the clients, they arrange for the

export/import on behalf of their respective clients. They collect freight

charges from their customers and out of such freight charges received from

their customers, they pay the freight charges to the ocean liners. Therefore,

the petitioner cannot be held liable for the demurrage, that may be payable

by the importer to the ocean liner, who, in the instant case, is M/s.COSCO.

12. Further, the arbitrator has also not applied his mind to the fact that

the present shipment is not through Multimodal transport, but, is only

through a single transport, namely, through sea. As seen from Clause 2 of

the reverse side of the Bill of Lading dated 11.03.2020, it has been made

clear that the provisions set out and referred to in this Multimodal Transport

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Document shall apply, if the transport as described on the face of the

document is by two or more modes of transport from the place of

acceptance of the goods in India to the place of delivery of the goods

outside India. In the case on hand, admittedly, the goods have been shipped

at a port in Vietnam for delivery at a port in Chennai. Therefore, it is clear

that the conditions contained in the reverse side of the Bill of Lading dated

11.03.2020, which contains an arbitration clause in clause 25, has no

applicability for the subject shipment. The petitioner has categorically

disputed the existence of the arbitration clause in its additional written

submission filed before the arbitrator. Despite the same, the arbitrator has

not given due consideration to the same in the impugned arbitral award.

13. For the foregoing reasons, this Court is of the considered view

that the observation made by the arbitrator in the impugned arbitral award

that the petitioner may be called upon to pay the value of the goods in case

M/s.COSCO refuses to release the cargo on account of non-payment of

demurrage, is an absolute perverse observation. By total non-application of

mind, the arbitrator has made the aforesaid observation based on his

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erroneous finding that the petitioner is an agent of M/s.COSCO, which is

absolutely incorrect. Infact, subsequent to the detention order passed by the

customs authorities, the respondent has also taken delivery of the cargo by

virtue of the order passed by this Court in the writ petition filed by the

respondent. Therefore, the aforesaid observations of the arbitrator may not

be applicable now. In view of the perverse findings of the arbitrator and the

impugned arbitral award being patently illegal, the impugned arbitral award

has to be set aside and accordingly, it is set aside. In the result, this petition

is allowed. No Costs.

30.08.2023

rkm

https://www.mhc.tn.gov.in/judis Arb.OP.(comdiv) No.321 of 2023

ABDUL QUDDHOSE, J.

rkm

Arb.O.P.(Comm.Div.) No.321 of 2023

30.08.2023

https://www.mhc.tn.gov.in/judis