M/S.Caravel Logistics Pvt. Ltd vs Ini Farms Pvt. Ltd
2023 Latest Caselaw 9179 Mad

                                                                      Arb.O.P (Com.Div.) No.124 of 2023

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                DATED: 28.07.2023

                                                      CORAM

                                  THE HON'BLE Mr. JUSTICE ABDUL QUDDHOSE

                                         Arb.O.P (Com.Div.) No.124 of 2023


                     M/s.Caravel Logistics Pvt. Ltd.,
                     No.511, 5th Floor, BSEL Tech Park,
                     Plot Nos.39/5 & 39/5A, Sector-30A,
                     Vashi, Navi Mumbai – 400 703.                    ... Petitioner

                                                     Versus

                     1.INI Farms Pvt. Ltd.,
                       A-102, Boomerang Building,
                       Chandivali Farm Road,
                       Chandivali, Andheri (East),
                       Mumbai – 400 072.

                     2.Intercont Agencies,
                       Agent of INI Farms Pvt. Ltd.,
                       C/o.Gopalkrishnan,
                       205, 2nd Floor, M.K.Bhavan,
                       300, Shahid Bhagat Singh Road,
                       Fort. Mumbai – 400 001.                        ... Respondents


                     Prayer: Arbitration Original Petition (Commercial Division) filed under
                     Section 11(6) of the Arbitration and Conciliation Act, 1996 (Amended) to
                     appoint a sole Arbitrator to adjudicate upon the dispute arisen between the
                     petitioner and the respondents.

                     1/16



https://www.mhc.tn.gov.in/judis
                                                                              Arb.O.P (Com.Div.) No.124 of 2023

                                        For Petitioner     : Ms.Abitha Banu

                                        For respondent-1 : Mr.Adarsh Ramanujam

                                        For respondent-2 : No appearance


                                                             ORDER

The issue that arises for consideration is whether a Consignee under a

Bill of Lading who has not taken delivery of the goods due to a dispute with

the Shipper is bound by the Arbitration Clause contained in the Bill of

Lading. The petitioner claiming to be the Carrier which has issued the Bill of

Lading to the Shipper at Iran is claiming demurrage against the respondents,

who is a Consignee under the Bill of Lading but has admittedly, not taken

delivery of the Cargo due to a dispute with the Shipper in Iran. It is also an

admitted fact that the original Bill of Lading was never delivered by the

Shipper to the Consignee due to the dispute and transfer of title of the cargo

in favour of the Consignee never took place.

2.Based on an Arbitration Clause contained in the terms and

conditions of the Bill of Lading, this petition has been filed under Section 11

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No.124 of 2023

of the Arbitration and Conciliation Act seeking for appointment of an

Arbitrator by this Court.

3.The dispute between the parties arises out of a Bill of Lading dated

14.03.2021. According to the petitioner, the demurrage charges arising out

of the said Bill of Lading has not been paid by the respondents. According to

the petitioner, since there is an Arbitration clause in the Bill of Lading dated

14.03.2021, the present petition is maintainable. The petitioner has also

invoked Arbitration in accordance with the Arbitration clause by sending a

notice to the respondents on 14.02.2022. The said notice has also been

replied by the respondents disputing the applicability of the Arbitration

clause to the respondents. In the Bill of Lading dated 14.03.2021, the first

respondent has been disclosed as Consignee and also as the Notify Party. In

the Bill of Lading dated 14.03.2021, the shipper is Saeid Sahebolzamani,

Iran. The first respondent has contended that due to poor quality of cargo

which had arrived by the subject vessel named in the Bill of Lading dated

14.03.2021, the first respondent did not take delivery of the cargo and

further it is their contention that the original Bill of Lading was never given

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No.124 of 2023

to them by the shipper and they are not aware of the terms and conditions of

the Bill of Lading, which includes the Arbitration clause. The respondents

also contend that since the transfer of title of the cargo has not taken place,

they are not bound by the terms and conditions of the Bill of Lading, which

includes the Arbitration Clause.

4.Apart from raising the contention that there is no valid Arbitration

agreement, the first respondent has also questioned the maintainability of

this petition filed by the petitioner as they claim that they are only an agent

of a Foreign Disclosed Principal. According to them, if the foreign disclosed

principal is the party making the claim, the present petition under Section 11

of the Arbitration and Conciliation Act is not maintainable, as the dispute

will amount an International Commercial Arbitration and therefore, this

Court will not have jurisdiction and only the Hon'ble Supreme Court will

have jurisdiction to entertain an application seeking for appointment of an

Arbitrator. The first respondent has also questioned the territorial

jurisdiction of this Court as the place of delivery of cargo under the Bill of

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Lading dated 14.03.2021 is Nhava Sheva and therefore, according to them,

Mumbai Courts alone will have the jurisdiction to entertain this petition.

5.In respect of the second and third objections raised by the first

respondent, namely, a)jurisdiction of this Court and b)claim made by an

agent of a Foreign Disclosed Principal which amounts to International

Commercial Arbitration are concerned, the said objections may not require

this Court's consideration if the respondents are able to establish that there is

no Arbitration Agreement between them and the petitioner.

6.Learned counsel for the petitioner drew the attention of this Court to

the Bill of Lading dated 14.03.2021 and pointed out that the first respondent

has been shown as the Consignee in the said Bill of Lading and she would

also submit that it is the responsibility of the respondents to empty the

containers and return it back to the petitioner at discharge Port, namely, the

Port of Nhava Sheva. Learned counsel for the petitioner also drew the

attention of this Court to the Arbitration clause contained in the terms and

conditions of the Bill of Lading, which is extracted hereunder:

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“21. Jurisdiction and Law Clause The contract evidenced by or contained in this Bill of Lading is governed by Law of Hong Kong / Law of India and any claim or dispute arising hereunder or in connection herewith shall be determined by the Courts in Hong Kong / Chennai, India and no other Courts. The jurisdiction and Law will be decided by the Carrier. The Merchant waives its right to decide the jurisdiction and completely submits to the jurisdiction opted by the Carrier.

Dispute / differences arising out of the contract and / or in connection with the interpretation of its clauses shall be settled by reference to a sole arbitrator appointed by the Carrier whose decision will be binding on the both the parties according to the Arbitration and Conciliation Act, 1996.”

7.Relying upon the Arbitration clause and upon the contents of the

Bill of Lading, the learned counsel for the petitioner would submit that the

respondents are bound by the Arbitration Clause as per Clause 21 of the

terms and conditions of the Bill of Lading dated 14.03.2021. She would also

submit that the petitioner denies that it is an agent of a Foreign Disclosed

Principal, as according to her the claim is payable only to the petitioner and

not to the Foreign Disclosed Principal.

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

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

Shipping Services Private Limited Vs. Premier Sea Foods Exim Private

Limited reported in (2019) 11 SCC 461, in particular, she referred to

paragraphs 7 and 8 of the said judgment. According to her, as seen from the

said judgment, it is clear that an arbitration agreement need not be signed by

the respondents, since the name of the first respondent is disclosed in the

Bill of Lading and the first respondent had also paid the initial freight

amount to the petitioner, which will infer that the respondentss are bound by

the arbitration clause contained in the Bill of Lading.

9.However, the submission of the learned counsel for the petitioner

was disputed by the learned counsel for the first respondent, who would

submit that the aforesaid Hon'ble Supreme Court judgment is not applicable

to the facts of the instant case, as in that decision, the dispute was between a

Shipper and a Carrier and not between a Consignee and a Carrier. Learned

counsel for the first respondent has also relied upon the following

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authorities in support of his submission that there is no arbitration

agreement between the petitioner and the respondents:

(i) NTPC Ltd. vs. M/s.SPML Infra Ltd. (Civil Appeal No.4778 of 2022).

(ii)Interglobe Aviation Limited vs. N.Satchidanand reported in (2011) 7 SCC 463

(iii) Ravi Ranjan Developers Pvt. Ltd. vs. Aditya Kumar Chatterjee reported in 2022 SCC OnLIne SC 568

(iv) Judgment of Delhi High Court in the case of Aarka Sports Management Pvt. Ltd. vs. Kalsi Buildcon Pvt. Ltd. (Arb.P.662 of 2019)

(v) Bill of Lading Law Lexicon extract

(vi) Owners and Parties Interested in the Vessel M.V.Polaris Galaxy vs. Banque Cantonale De Geneve reported in 2022 SCC OnLine SC 1293

10.Amongst the aforesaid decisions, in particular, he relied upon a

judgment of the Hon'ble Supreme Court in the case of Owners and Parties

Interested in the Vessel M.V.Polaris Galaxy vs. Banque Cantonale De

Geneve reported in 2022 SCC OnLine SC 1293. In the aforesaid decision,

in particular, relying upon paragraphs 38 and 45, he would submit that it is

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clear that the contract of Bill of Lading serves as an evidence of the terms of

the contract of affreightment only between the immediate parties to the

contract, namely the carrier and the shipper and it is also clear that only on

the delivery the original Bill of Lading to the consignee (respondents herein),

the respondents are bound by the terms and conditions of Bill of Lading

dated 14.03.2021. He would submit that since the original Bill of Lading

was never delivered to the respondents, as there was a dispute between the

respondents and the shipper, the Arbitration clause found in the Bill of

Lading is not binding on the respondents.

Discussion:

The following are the undisputed facts:

(a) the original Bill of Lading dated 14.03.2021 was

never received by the respondents from the shipper, namely,

Saeid Sahebolzamani, Iran.

(b) There is a dispute between the respondents and the

shipper with regard to the cargo, which is the subject matter of

the Bill of Lading dated 14.03.2021.

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(c)There was no transfer of title of the cargo in favour of

the respondents as the original Bill of Lading dated 14.03.2021

was never delivered to them by the Shipper due to the dispute.

(d)The respondents never took delivery of the cargo

which is the subject matter of the Bill of Lading dated

14.03.2021 from the carrier (petitioner).

11. Section 7 of the Arbitration and Conciliation Act, 1996 defines an

arbitration agreement and the same reads as follows:

“Section 7. Arbitration Agreement

(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication

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through electronic means] which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.”

12.In the instant case, admittedly, the respondents have not taken

delivery of the cargo and were never in receipt of the original Bill of Lading.

Unless and until the arbitration clause contained in the Bill of Lading was

made known to the respondents by the petitioner in explicit terms which was

agreed upon by them, the question of binding the respondents to the

arbitration clause will not arise. Section 7 of the Arbitration and Conciliation

Act, 1996, which defines Arbitration Agreement also makes it clear that

there must be an agreement to submit for Arbitration. There must be

consensus ad idem between the parties for arbitration. In the instant case, it

is not so, as admittedly, the respondents have not received the original Bill of

Lading and they have also not taken delivery of cargo from the petitioner.

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Therefore, the contention of the petitioner that there was a valid arbitration

agreement between the petitioner and the respondents under the Bill of

Lading has to be rejected by this Court, as it does not satisfy the

requirements of Section 7 of the Arbitration and Conciliation Act, 1996. The

decision relied upon by the learned counsel for the petitioner in the case of

Caravel Shipping Services Private Limited Vs. Premier Sea Foods Exim

Private Limited does not apply to the facts of the instant case as the said

decision arises out of a case involving a shipper, who has received the Bill of

Lading from the carrier, whereas the case on hand involves a claim made by

the carrier (petitioner) against the Consignee (first respondent), who has not

received the original Bill of Lading from the shipper and has also not taken

delivery of the cargo due to a dispute with the Shipper.

13.In the decision relied upon by the learned counsel for the first

respondent in the case of Owners and Parties Interested in the Vessel

M.V.Polaris Galaxy vs. Banque Cantonale De Geneve reported in 2022

SCC OnLine SC 1293, the Hon'ble Supreme Court has held in paragraph 38

that the Bill of Lading serves as an evidence of the terms of the contract of

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affreightment. It has held as follows:

“38. A Bill of Lading serves also as evidence of the terms of the contract of affreightment. As between the immediate parties to that contract, namely the carrier and the shipper, the evidence provided by the bill is not conclusive and may be supplemented or even overridden by extraneous evidence. Once the bill has been transferred however, the bill provides conclusive evidence as between the carrier and the new holder, as to the terms of the contract of affreightment. In this sense the bill may be said to “contain” the contract.

45. Delivery of goods covered by a Bill of Lading are ordinarily to be made on presentation of the bill. The carrier may be liable to the person lawfully in possession of such a Bill, if he wrongly delivers the goods to anyone else. Whether the delivery of the goods to anyone other than the holder of the Bill of Lading, is wrongful or not, would depend on the facts and circumstances of the case.”

14.Admittedly, the respondents can take delivery of cargo from the

carrier (petitioner) only on presentation of the original Bill of Lading, which

contains the terms and conditions of the contract of affreightment. When the

respondents are not in possession of the original Bill of Lading, which

contains the terms and conditions of the contract of affreightment, the

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respondents cannot take delivery of the cargo from the carrier (petitioner) as

per the Bill of Lading dated 14.03.2021. The Hon'ble Supreme Court has

also made it clear that as between the immediate parties to the Bill of

Lading, namely, the carrier and the shipper, the evidence provided by the

Bill of Lading is not conclusive and may be supplemented or even

overridden by extraneous evidence. In the case on hand, when it is an

admitted position that the respondents have not received the original Bill of

Lading from the shipper and they have not taken delivery of the cargo and

there has been no transfer of title of the cargo in favour of the respondents,

the respondents cannot be bound by the arbitration clause contained in the

Bill of Lading. They are neither the immediate parties to the Bill of Lading

nor parties in whose favour the Bill of Lading has been endorsed by way of

transfer of title of the cargo by the Shipper.

15.Since there is no Arbitration Agreement between the petitioner and

the respondents, this Court is of the considered view that this petition is not

maintainable. If at all the petitioner is having a claim arising out of the Bill

of Lading dated 14.03.2021 for non payment of freight and demurrage by

the respondents, the petitioner will have to seek redressal by filing a Civil

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Suit.

16.Since this Court has held that the Arbitration Clause in the Bill of

Lading dated 14.03.2021 is not binding on the respondents, there is no

necessity for this Court to adjudicate the other objections raised by the

respondents with regard to the maintainability of this petition on the grounds

of a)claim filed by the petitioner is not maintainable as they claim that they

are an agent of a foreign disclosed principal; and b)lack of jurisdiction of

this Court to decide this petition, since the place of delivery of the cargo is at

Nhava Sheva, Mumbai and the Courts at Mumbai alone has got jurisdiction.

17.For the forgoing reasons, there is no merit in this petition and

accordingly this petition is dismissed. No costs.

28.07.2023

Index:Yes/No rsi/vga

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No.124 of 2023

ABDUL QUDDHOSE, J.

rsi/vga

Arb.O.P (Com.Div.) No.124 of 2023

28.07.2023

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