A

B

BRITISH INDIA STEAM NAVIGATION CO., LTD.

v.

SHANMUGHA VILAS CASHEW INDUSTRIES AND ORS.

MARCH 13, 1990

[K.N. SAIKIA AND P.B. SAWANT, JJ.]

Indian Bill

of Lading Act, 1856: Bill of Lading-Negotiation a/­

Contract of affreightment need not be expressed in writing; agreed

jurisdiction

of a court and choice of law binding on the parties; no

submission

to the jurisdiction of another court if appearance only to

C protest.

D

The Indian Carriage of Goods by Sea Act, 1925 Contract of

affreightment-'Voyage charterparty' 'time charterparty'; responsibility

of the charterer vis-a-vis the owner to be ascertained from the charter­

party and the bill

of lading.

The

first respondent, M/s Shanmughavilas Cashew Industries,

shipped 4445 bags

of raw cashewnuts from East Africa to Cochin in the vessel Steliosm chartered by the appellant M/s British India Steam

Navigation Co. Ltd., incorporated in England, pursuant to a contract '!f

affreightment evidenced by three bills of lading. But only 3712 bags

E were delivered

at Cochin, there being thus short landing of 733 bags.

F

The

first respondent sued the appellant in the Court of the Sub­

ordinate Judge, Cochin, seeking. damages. The Subordinate Judge

decreed

the suit with interest. The appellant's appeal to the High Court

failed.

In the courts below the main contentions of the appellant were

-""(

that it was a mere charterer of the vessel; that there was a charterparty

executed between the first respondent and the agent of the owner in

London;

that as per clause 3 of the bill of lading the Court at Cochin had

no jurisdiction and only English Courts had jurisdiction; and that as

G

per the charterparty and clause 4 of the bill of lading the remedy of the

first respondent,

if any, was against the owner who alone was liable and

j

not against the appellant charterer of the vessel. JI

The first respondent had denied that the appellant was only a

charterer and not liable for the shortage. It had also denied that only

H English Courts had jurisdiction in the matter.

884

INDIA STEAM NA VIGATJON v. SHANMUGHA VILAS 885

Before this Court, on behalf of the appellant it was submitted that

the appellant was an English company registered in England carrying

on

business· iii England, and it did not carry on any business in India; a~

the carrier under clause 3 of the bill of lading, only the appellant had an

option either to sue

or be sued in England, or in Cochin, which was a

port of destination, but the shipper had no option to sue at Cochin; in its

written statement it was clearly stated that it had appeared under

pro­

test and without prejudice to the contention regarding jurisdiction

which contention it had also pressed

at the time of the argument, and,

therefore, it could not be said to have submitted to the jurisdiction

of

Cochin court as it never made any submission or raised any objection as

to the fact of short landing; and that the High Court has held clause 3 of

the bill of lading to be bad on two erroneous grounds, namely, that it

offends section

28 of the Contract Act and that it gives an unfair

advantage to the carrier which advantage

is not given to the consignee.

Allowing the appeal and remanding the case to the trial Court it

was,

HELD:

(1) A bill oflading

!s the symbol of the goods, and the right

to possess these passes to the transferee of the bill of lading, and the

right to sue passes with it. [893C]

Sewell v. Burdick, (1884] IO App. Cases 74 (85, 104), referred to.

(2) A bill of lading is intended to provide for the rights and

liabilities

of the parties arising out of the contract of affreightmeni. If a

consignee claims the goods under a bill of lading, he is bound

by its

terms. (904C]

A

B

c

D

E

(3) Tbe property in the cargo passes to the consignee or the F

endorsee

of the bill of lading but the contract whereunder the

con­

signment or endorsement is made has always to be taken into consi­

deration. Thus the consignee or endorsee gets only such rights as its

consignor

or endorser bad in respect of the goods mentioned in the bill

of lading.

(904C-DJ

( 4) The jurisdiction of the Court may be decided upon the parties

themselves on the basis of various connecting factors, and the parties

should be bound by the jurisdiction clause

to which they have agreed

unless

there is some strong reason to the contrary. (897B; 899F)

G

( 5) The first respondent is the consignee and holder of the bills of H

886 SUPREME COURT REPORTS [1990] I S.C.R.

lading alid ex facie should be bound by clause 3 thereof in regard to

jurisdiction. [892A]

( 6) If clause 3 of the bills of lading is held to be binding on the first

respondent the choice of Jaw by the parties would also be binding. [892C]

A

(7) In the event of the English Court alone having the jurisdic-B

ti on, the application of Indian statutes and the jurisdiction of the Indian

court would be, to that extent, inapplicable.

[892D]

(8) There may, however, be submission to the jurisdiction of an

Indian Court by litigating in India.

[896E]

Sirdar Gurdyal

Singh v. Rajah of Faridkote, [1894] AC 670 (684),

referred to.

(9) The question of jurisdiction in this case ought not to have been

determined by the High Court on the basis of the provisions of section

28

of the Indian Contract Act in the absence of a specific provision

making it applicable to transactions in international trade.

[895F]

(

10) Where the negotiation of a bill of lading is by the person

who had a right to sue on it, mere possession of it does not enable

c

D

the holder to sue any person who was not liable under it and not to sue

another who was liable under it, to make good the claim.

He cannot E

also sue

at a place not intended by the parties when intention has been

expressed. [893E-F]

(

11) Although a defendant who appears and contests the case on

its merits

will be held to have submitted to the jurisdiction, an

appea­

rance merely to protest that the court does not have jurisdiction will not F

constitute submission, even

if the defendant also seeks stay of

proceed­

ings pending the outcome of proceedings abroad. I 896F-G I

Williams & Glyn's Bank PLC v. Astro Dinamico Compania

Naviera S.A. & Anr. The Weekly Law Reports Vol. (I) 1984-438 and

Rein v. Stain,

[1892] 66 LT 469, referred to. G

(12)

In the instant case, in the Memo. of appeal before the lower

appellate court

no specific ground as to jurisdiction was taken though

there were grounds on non-maintainability of the suit. Even in the

Special Leave

Petition before this Court no ground oflack of jurisdiction

of the courts below has been taken. The appellant has, therefore, to be H

j

INDIA STEAM NAVIGATION v. SHANMUGHAVILAS 887

)-held to have either waived the objection as to jurisdiction or to have A

submitted to the jurisdiction, in the facts and circumstances of the case.

The defence that the suit was not maintainable in the absence of the

owner of the ship could in a sense be said to have been on the merits of

the case. [899B-C]

(

13) Clause 3 of the bills of lading also contains the selection of B

law made by the parties. The contract is governed by English law and

disputes

are to be determined according to English Law.

(8990 I

(14) As the law has been chosen, the proper law will be the

domestic law of England and the proper law must be the law at the time

when the contract

is

made, throughout the life of the contract, and

there cannot be a "floating" proper law. (9000 I

Gienar v. Meyer, [ 1796] 2 Hy B 1 603; Rex v. International Trustee

for the Protection of Bondholders AG, (1937] AG 500 (529); Vita Food

Products Inc.

v.

Unus Shipping Co. Ltd., (1939] AC 277 (289-90);

James Miller & Partners Ltd. v. Whitworth Street Estates (Manchester)

Ltd., (1970] AC 583 (603); Mackendar v. Feldia AG, (1966] 3 All E.R.

847;

Compagnie d'Armement Maritime

SA ·v. Compagnie Tunisienne

de Navigation SA, (1971] AC 572: (1970] 3 All E.R. 7I and Acrow

(Automation) Ltd. v.Rex Chainbe/t Inc.,

(1971] 3 All E.R. 1175,

refer­

red to.

(15) The bill of lading is not the contract of affreightment, for

that has been made before the bill of lading was signed and delivered,

but it evidences the terms of that contract. [90JB]

( 16) If certain clauses of the charterparty are referred to in the

bill of lading those should be referred to. in specific terms so as to bind

the shipper and the consignee. A general reference may not be sufficient

under all circumstances. [902E]

T. W. Thomas & Co. Ltd. v. Portsea Steamship Co. Ltd., [1912]

AC l; Vita Food Products, Incorporated v. Unus Shipping Co. Ltd.,

(1939] AC 277 and Rex. v. International Trustee for the Protection of

Bondholders, (1937] AC 500, referred to.

c

D

E

F

G

( 17) For the purpose of ascertaining the responsibility

of a

charterer in respect of the cargo shipped and landed, it would be neces­

sary to know not only the stipulations between the shipper i.e. the

owner of the cargo and the charterer evidenced.by the bill oflading, but H

888 SUPREME COURT REPORTS [ 1990) I S.C.R.

·also those between the charterer and the owner of the ship. If the

A

charter is by way of demise the problem would be simple inasmuch as

-1

the bill of lading will be purely between the shipper and the charterer.

B

c

In cases of a 'voyage charter' or a 'time charter' one has to find out the

actual terms of the charter to ascertain whether they operated as char-

ter by demise or made the charterer only as an agent of the shipowner,

and if so to what extent so as to ascertain the extent of privily / j

established between the shipper and the shipowner as stipulated in the '

bill of lading. l905G-H; 906A) -

(18) Whether a charterparty operates as a demise or not depends

on the stipulations of the charterparty. The principal test is whether the

master is the employee of the owner or of the charterer. [906G I

(19) It cannot be said that the bill of lading is not conclusive.

evidence

of its terms and the person executing it is not necessarily

bound by all its stipulations, nnless he repudiates them on the ground

that, as he did not know, .and could not reasonably be expected to know,

D

of their existence, his assent

to them is not to be inferred from his

. acceptance of the bill oflading without objection. [907D I

(20) Where there is a charterparty, . the bill of lading is prima

facie, as between the shipowner and an indorsee, the contract on which

the goods are carried. This is so when the indorsee is Ignorant of the

E terms of the charterparty, and may be so even if he knows of them.

F

G

As between the shipowner and the charterer the bill of lading may in

some cases have

the effect of modifying the contract as contained in

the charterparty, although,

In general, the charterparty will prevail

and the bill of lading will operate solely as an acknowledgement of

receipt. [907E-F)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 764

(N) of 1975.

From the Judgment and Decree dated 30.11.1973 of the Kerala

High Court in A.S. No. 365 of 1969.

R.F. Nariman, Mrs. A.K. Verma and D.N. Mishra for the

Appellant.

Ramamurthi (Not Present) for.the Respondents .

.

H The .Judgment of the Court was delivered by

INDIA STEAM NAVIGATION v. SHANMUGHAVILAS ISAIKIA, J.J 889

K.N. SAIKIA, J. The first respondent M/s. Shanmughavilas

·y Cashew Industries, Quilon purchased from East Africa 350 tons of raw

cashewnuts which were shipped

in the vessel

SS Steliosm chartered by

the appellant M/s. British India Steam Navigation Co. Ltd., incor­

porated in England, pursuant to a contract of affreightment evidenced

by 3 bills

of lading issued to the shipper for the 3 loads of cashewnuts. l Out of 4445 bags containing the nuts carried in the said vessel only

lo:-3712 bags were delivered at Cochin, there being thus short landing of

733 bags.

The first respondent sued the appellant in suit No. 0.S. 18/1965

in the Court of the Subordinate Judge, Cochin seeking damages for the

shortage

of 733 bags of raw cashewnuts amounting to Rs.44,438.03.

The suit having been decreed with interest @ 6% per annum from

17.7.1964, for the sum total

of Rs.46,659.93, the appellant preferred

J,,, therefrom appeal A.S. No. 365 of 1969 in the High Court of Kerala

which was pleased by its Judgments and decree dated 16.8.1973 and

30. 11.1973, to dismiss the appeal and affirm that of the Subordinate

Judge. Aggrieved, the appellant has preferred this appeal

by special

leave.

L .. ( In the courts below the main contentions of the appellant, inter

alia, were that it was a mere charterer of the vessel which was owned

by S. Matas & Compnay c/o Lucas Matas & Sons, Piraeus, Greece;

that there was a charterparty executed between the first respondent

and M/s. Victoria! Steamship Company as agents of the said owner of

~ the vessel in London on 27 .1.1964; that as per clause 3 of the bill of

"' lading the court at Cochin had no jurisdiction and only English courts

had jurisdiction; and that as per the charterparty and clause 4 of the

\.. bill of lading the remedy of the first respondent, if any, was against the

r: owner who alone was liable and not against the appellant charterer of

the vessel. Exhibit D 1

is the photostate copy of the charterparty con-

cluded in London on

27 .1.1964 and Exhibit

Pl to P3 are the 3 bills of

lading in the transaction. The first respondent denied that the appel­

lant was only a charterer and not liable for the shortage. It also denied

that only English Courts had jurisdiction in the matter.

Mr. R.F. Nariman the learned counsel for the appellant first

...--., submits that the appellant is an English company registered in England

carrying

on business .in England, and it does not carry on any business

A

B

c

D

E

F

G

in India. It is submitted, as the carrier under clause 3 of the bill of

lading, only the appellant has an option either to

sue or be sued in

England,

or in Cochin, which is a port of destination but the shipper H

A

B

c

D

E

F

G

H

890 SUPREME COURT REPORTS I 1990) 1 S.C.R.

had no option to sue at Cochin. In its written statement it

was clearly

stated that it had appeared under protest and without prejudice to the

'f

contention regarding jurisdiction which contention it had also pressed

at the time of the argument, and, therefore, it could not be said to have

submitted to the jurisdiction of Cochin court; and it never made any

submission

or raised any objection as to the fact of short landing.

According to counsel the High Court has held clause 3 of the bill of

lading to be bad on two erroneous grounds, namely, that it offends

section

28 of the Contract Act and that it gives an unfair advantage to

the carrier which advantage

is not given to the consignee. Section 28,

according to counsel,

is not applicable and clause 3

was not bad on the

ground of having given an unfair advantage to the carrier

in giving him

the option to sue or be sued either in England or at the port of destina­

tion and that even if it

was bad, only the offending portion could be

struck off, the rest of the clause would still be applicable and only the

English court would have jurisdiction.

Records show that in the written statement the appellant

as

defendant in para B stated that the contract evidenced by the bills of

lading

was governed by English law and the parties had agreed that the

disputes were to be determined

in England according to English law to

the exclusion of the jurisdiction of the courts of any other country and

that the institution of the suit at Cochin was in violation of that agree­

ment, and hence the Court had

no jurisdiction to try the suit and the

plaint should be returned for presentation to proper court.

In the Replication filed

by the plaintiff it was said:

"The objection regarding jurisdiction raised in clause B of

written statement

is not tenable. The cause of action for the

suit has arisen within the local limits of the jurisdiction of

-<\".

this Court. The defendant is also residing and carrying on

business within this court's jurisdiction.

It is now well set­

tled that the parties cannot be consent confer or oust the

jurisdiction

of a Court. The plaintiffs deny the agreement

mentioned in clause B and

no agreement can oust the

jurisdiction of the Court when the Court possesses the

jurisdiction."

Issue No. 1 was: "Whether the suit is properly filed in this

Court?" The trial court in its judgment dated 29.3. 1968 held:

"This issue has been considered by this Court on 28.2. 1966

•

.,

INDIA STEAM NAVIGATION v. SHANMUGHAV!LAS [SAIKJA, J.J 891

and it has been found that this Court has jurisdiction to try

the suit. The said finding has

b.een

cpnfifll)ed by the Hon­

'ble High Court on

6.4.1967 in

C.R.P. 977/66."

That judgment is not b.efore us. In the memo of appeal to the High

Court apart from the general grounds that the judgment .and decree.of

the Court below were wrong in law and fact; that the .Court below

should have hel!i that the suit was not maintainable in law and should

b.ave finally dismissed the suit as the owners of the vessel 'Steliosm' a

necessary party,

.as he alone was

liable, was not imp leaded and pro­

ceeded against, no specific ground about jurisdiction was taken and

consequently

we do not find any direct discussion on the point in the

High Court judgments.

Even so, this being a question of jurisdiction going to the root of

l.

the matter we allowed the app.eUant to make b.is submissions. The

appellant's submission that the

cou.rts at Cochin had no jurisdiction is

based on clause 3 of the Bills of Lading which reads as follows:

"3. JURISDICTION: The contract evidence by this bill of

lading shall be governed _by English law and disputes

determined in England or, at the option of the Carrier, at

the port of destination according to English law to the

exclusion of the jurisdiction of the Courts of any other

A

B

.C

D

country." E

If the above clause was binding on the first respondent, without any­

thing more, there could be no doubt that the suit claim arising out of

the contract of affreightment evidenced by the bills of lading will have

to be determined in England or, at the option of the carrier, that

is the

appellant, at the port of destination, that is, Cochin, to the exclusion F

of the jurisdiction of the courts of any other country. Is the first

respondent bound

by this clause of the Bill of Lading?

Clause

29 of both the bills of lading Exhibit

Pl and P2 runs as

follows:

"Finally in Accepting This Bill,gf lading. The shipper, Con­

signee, and Owner of the goods, and the Holders of this

Bill of Lading, expressly accept and agree

to all its stipula­

tions, exceptions, and conditions whether written, printed,

stamped or incorporated, as fully as if they were all signed

G

by snch Shipper, Consignee,

Owner or H.older." H

892 ·SUPREME COURT REPORTS I 1990] I S.C.R.

A The first respondent is the consignee and holder of the bills of

lading and

ex facie should be bound by this clause. No doubt the bills of

lading were issued to the shipper from

whom it was received by the

first respondent. There

is no evidence to show that the shipper has

repudiated the stipulations

in the bills of lading in any manner.

Under

these circumstances would it be open to the first respondent to

B repudiate clause 3 of the bills of lading?

c

D

E

F

G

H

It is a settled principle of Private International Law governing

bills of lading that the consignee or an endorsee thereof derives the

same rights and title

in respect of the goods covered by the bill of

lading

as the shipper thereof had. For the purpose of jurisdiction the

action

of the first respondent is an action in personam in Private Inter­

national Law. An action

in personam is an action brought against a

person to compel him to do a particular thing.

If clause 3 of the bills of

lading

is held to be binding on the first respondent the choice of law by

the parties would also be binding. English courts would perhaps use

their own Private International Law to decide the dispute.

In the event

of the English

Court alone having the jurisdiction, the application of

Indian statutes and the jurisdiction of the Indian courts would be, to

that extent, inapplicable.

Until the Bills of Lading Act, 1855 was passed in England the

endorsement of a Bill of Lading would not affect the contract

evidenced in it, and the endorsee could not sue or be sued on such

contract, though he

was the person really interested in goods, the

subject

of the contract. By section 1 of the Bills of Lading Act, 1855, in

England

"every consignee of goods named in a Bill of Lading, and

every endorsee of a Bill of Lading to whom the property of goods shall

pass, upon

or by reason of such consignment or endorsement shall

have transferred to and vested

in him all rights of suit and be subject to

the same liabilities in respect of such

goods as if the contract contained

in the Bills of Lading had been made with himself." In Sewell v.

Burdick, [1884] 10 App. Cas. 74 (85, 104) it is held that section 1 is to

be given effect in any proceeding in the English Court regardless of the

proper law governing the transfer of the bill of lading. The property

passes by reason of consignment

or endorsement and the right to sue

passes with it. The consignee or endorsee

may lose his right or liabiHty

under the Act by such further endorsement of the bill of lading as .

divests him of the property. Such a vesting of rights and liabilities on

endorsement

of a bill of lading does not in any way affect the ship­

owners' rights against the original shippers or owners of the goods for

the freight or the shipper's rights under the bill of lading or the liability

'

')

INDIA STEAM NAVIGATION v. SHANMUGHA VILAS ISAIKIA, J.] 893

)' .

of the consignee or indorste by reason of his being such consignee or

A

indorsee.

or of his receiving the goods in consequence of such consign-

mentor endorsement, or any nght of stoppag.e in transit.

The Indian Bill of Lading Act,

1856 was based on the English

Bills of Lading Act,

1855 (18 and 19 Viet.

C. 111) (Act IX of 1856).

Under section 1 of the Indian Bills of Lading Act, 1856 also every B

k

consignee of goods named in a bill of lading and every endorsee of a

bill

of lading to whom the property in goods therein mentioned shall

pass, upon

or by reason of such consig11ment or endorsement, shall

have transferred to and vested in him all rights of suit, and be subject

to the same liabilities in respect of such goods as if the contract con-

tained in the bill oflading had been made with himself.

c

~.

The bill of lading is the symbol of the goods, and the right to

possess those passes to the transferee of the bill of lading. In other

words, its transfer

is symbolic of the transfer of the goods themselves

and until the goods have been delivered, the delivery of the duly

endorsed bill of lading operates

as between the transferor or trans- D

feree, and all who claim through them, as a physicai delivery of the

goods would do. The bill of lading

is a negotiable instrument in the

,..----{_

sense of carrying with it the right to demand and have possession of the

goods described in it.

It also carries with it the rights and liabilities

under the contract, where the property in the goods also is transferred.

However, a bill of lading

is not a negotiable instrument in the strict E

~

sense of the transferee deriving better title than the transferor. The

transferee

of a bill of lading gets no better title than the transferor .,.. himself had. Mere possession of the bill of lading does not enable the

holder to sue a person at a place where the tranferor himself could not

,..

have done. Where the negotiation of a bill of lading is by the person

who had a right to sue on it, mere possession of it does not enable the

F

holder to sue any person who was not liable under it and not to sue

another who was liable under it to make good the claim. He cannot

also sue

at a place not intended by the parties when intention has been

expressed.

It would also be relevant to consider whether English courts G

would

be likely to entertain the instant suit if instituted in England in

~ terms of the bills of lading so that the first respondent is not likely to be

without a remedy.

Dicey

& Morris in the Conflict of Laws 11th Ed. have given the

following general principles

as to jurisdiction in actions in personam: H

A

B

c

D

E

F

G

H

894 SUPREME COURT REPORTS [ 1990] I S.C.R.

"Rule 28, Sub-.rule 4: The court may assume jurisdiction if,

in the action begun

by the writ, the claim is brought to

enforce, rescind, dissolve, annul or otherwise affect a con­

tract,

or to recover damages or obtain other relief in

respect of the breach of a contract, being (in either case) a

contract which

(i) was made in England, or

(ii) was made by or through an agent trading or residing in

England

.on behalf of a principal trading or residing out of

England,

or

~

(iii) is by its terms or by implication governed by English

law, or

(iv) contains a term to the effect that the court shall have

jurisdiction to hear and determine any action

in respect of

the

contract."

Rule 34 deals with jurisdiction clauses and it says:

"( 1) Where a contract provides that all disputes between

the parties are to be referred to the jurisdiction of the

English courts, the court normally has jurisdiction to hear

11nd ifetermine any action in respect thereof.

(2) Subject to clause (3) of this Rule, where a contract 'r­

provides that all disputes between the parties are to be·

referred to the exclusive jurisdiction of a foreign tribunal, -"(

the English court will stay proceedings (or, as the case may

be, refuse to give leave to serve the writ out of the jurisdic-

tion) instituted

in England in breach of such agreement,

unless the plaintiff proves that it

is just and proper to allow

them to continue.

(3) Where the case falls within the scope of the

1968 Con­

vention, unless the defendant submits to the jurisdiction,

the court has no jurisdiction to determine a dispute.

(a) if one

or

more of the parties is domiciled in a

Contracting State and the parties have agreed in

accordance with Article

17 of the 1968 Convention

l.

INDIA STEAM NAVIGATION v. SHANMUGHAVILAS [SAIKJA, J.] 895

that the courts of a Contracting State other than the

United Kingdom are to have jurisdiction to settle any

such dispute; or

(b) if done of the parties is dofuiciied in a Conitact­

ing State and the parties have agreed in accordance

with Article 17 of the 1968 Convention that the courts

of a Conitaciilig State other than the United king­

dom

ate

to have jurisdiction to settie any such dispute .

and the courts chosen have not declined jurisdiction."

Accotding to the authors the parties to a contract in intetnati<inal

trade or commerce may agree ih advance oii the forum which is to have

· jurisdiction to determine disputes which may arise between them. The

chosen court may be a court in the country of one or both the parties,

or it may be a neutral forum. The. jurisdiction clause may provide for a

sub'1li>sion to the· courts of a particular country, or to a court identified

by a formula in a printed standard form, such as a ·bill of lading refer­

ring disputes to the courts of the carrier's principal place of business. It

is a question of interpretation, governed by the proper law of the

contract, whether a jurisdiction clause

is exclusive or non-exclusive, or

whether the claim which is the subject matter of the action falls within

its terms.

If there is no express choice of the proper law of the con­

tract, the law

of the country of the chosen court will usually, but not

invariably, be the proper law.

Ii is accordingly unlikely that the first respondent would be with­

out any remedy if the terms of clause 3 of the bills of lading are

faithfully observed.

A

B

c

D

E

The question of jurisdiction in this case ought not

·to be F

determined by the High Court on the basis of the provisions of s. 28 of

the Indian Contract

Act in the absence of a specific

provision making it

applicable to transactions

in international trade. The effective opera-

tion

of statutes of a country in relation to foreigners and foreign pro­

perty, including ships,

is subject to limitations . .Jn general, a statute

extends territorially,

unle.ss the contrary is stated, throughout the G

country and will extend to the territorial

wate~, and such places as

intention to that effect is shown. A statute extends to all persons

within tile country if that intention is shown. The Indian Parliament

therefore has no authority to legislate for foreign vessels

or foreigners

in them on the high seas. Thus a foreign ship on the high seas, or her fqreign owners or their agents in a foreign country, are not deprived of H

896 SUPREME COURT REPORTS [ 1990] I S.C.R.

A rights by our statutory enactment expressed in general terms unless it

provides that a foreign ship entering an Indian port or territorial ...

waters and thus coming within the territorial jurisdiction is to be

covered.

If the Parliament legislates in terms which extend to foreign

ships

or foreigners beyond the territorial limits of its jurisdiction, the

Indian court

is of course bound to give effect to such enactment. How-

B ever, no such provision has been referred to

in the impugned judg-

ments. Without anything more Indian statutes are ineffective against

,-l.

foreign property and foreigners outside the jurisdiction.

c

D

E

p 0

The Privy Council in Sirdar Gurdyal Singh v. Rajah of Farid­

kote, (1894] AC 670 (684) decided that no territorial legislation can

give jurisdiction in personal action which

any foreign court should

recognize against absent foreigners owing no allegiance or obedience to

the power which so legislates. Lore

Selbome said: "In a personal

action to which none of these causes of jurisdiction apply, a decree

pronounced in absentem

by a foreign court, to the jurisdiction of

which the defendant has not

in any way submitted himself, is by inter­

national law an absolute nullity. He

is under no obligation of any kind

to obey it; and it must be regarded as a mere nullity by the courts of

every nation except (when authorised

by special local legislation) in

the country of the forum by which it was

pronounced." There may

however be submission to the jurisdiction of an Indian court

by litigat­

ing in India. The question then

is what would amount to submission to

jurisdiction. Cheshire & North's Private International Law 11th Ed., on sub­

mission to jurisdiction says: "Despite the fundamental principle that

the court cannot entertain an action against a defendant who is absent

from England, it has long been recognised that

an absent defendant

may confer jurisdiction on the court

by submitting to it. This may be

done

in a variety of ways, such as by the defendant acknowledging

service before actual service of the writ,

or instructing a solicitor to

accept service on his behalf; Commencing

an action as a plaintiff will

give the court jurisdiction over a counter claim. Although a defendant

who appears and contests the case on its merits

will be held to have

submitted to the jurisdiction, an apearance merely to protest that the

court does not have jurisdiction

will not constitute submission, even if

' the defendant also seeks a stay of proceedings pending the outcome of

proceedings

abroad." The authors go on to say that any person may

contract, either expressly

or impliedly, to submit to the jurisdiction of

a court to which he would not otherwise be subject.

In case of an

intematicmal contract it

is common practice for the parties, to agree that

;

j

-y

INDIA STEAM NAVIGATION v. SHANMUGHAVILAS {SAIKIA,l.] 897

any dispute arising between them shall be settled by the courts of A

another country even though both the parties are not resident of that

country. In such a case having consented to the jurisdiction one cannot

afterwards contest the binding effect

of the judgment. The defendant

out of the jurisdiction of the country may be deemed to have been

served by service on his agent within the jurisdiction. However, parties

cannot by submission confer jurisdiction on, the court to entertain B

proceedings beyond its authority.

The jurisdiction of the court may be decided upon by the parties

themselves on basis of various connecting factors.

Wastlake

says in his Treatise on Private Intematioqal Law, at C

page 5: "The principal grounds for selecting a particular national

jurisdiction in which to bring an action are that the subject of the

action, if a thing,

is situate, if a contract, was

made, or was to be

performed, if a delict, was committed, within the territory: hence the

forum situs, or rei sitae, contractus, delicti, the two latter of which are

classed together as the

forum speciale obligationis.

Or that the jurisdic- D

tion is that in which all the claims relating to a certain thing or group of

things ought to be adjudicated on together, the

forum concursus; or that to which the defendant is personally subject, the forum rei."

In the instant case the appellant submits that as defendant it

appeared before the Indian court to protest its jurisdiction and put E

forth its defences subject to that protest. The appellant, it has been

stated in para

2 of the judgment under appeal, dated

30.4.1973, had

not filed any objection to the findings as to damages. Did it then

amount to submitting to the jurisdiction of the Indian court in which

the shipper

or the first respondent had no right to sue?

In

Williams & Glyn's Bank

PLC v. Astra Dinamico Compania

Naviera S.A. & Anr., The Weekly Law Reports Vol. (l) 1984-438,

where the plaintiff-bank sought to enforce its securities against the

defendants by instituting proceedings in England

in reliance of clause 7

F

of the guarantees, whereby each of the defendants were expressed to

submit irrevocably to the jurisdiction of the English courts. The G

respondents (defendants) made

an application disputing the jurisdic­

tion of the English courts and had also simultaneously applied for stay

of the action. It was contended on behalf of the appellants (plaintiffs)

that the respondents (defendants) either had waived any objection to

the jurisdiction because they had taken a step in the action by applying

for a stay

or that they would waive any objection if they persisted with H

A

B

c

898 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

their application in priority to disputing the jurisdiction, Lord Fraser

observed that it would surely be quite unrealistic to say that the

respondents had waived their objection to the jurisdiction

by applying

for a stay as an alternative

in the very summons in which they applied

for an order giving effect to their objection to the jurisdiction. That the

summons made it abundantly clear that they were objecting and the

fact that they asked for a decision upon their objection to be post­

poned until the outcome of the Greek proceedings

w;is known, was not

in any way inconsistent with maintaining their objection. There

was no

reason in principle or in common sense why the respondents should

not be entitled to say:

"We object to the jurisdiction of the English

courts, but

we ask for the proceedings necessary to decide that and the

other issues to be stayed pending the decision of the proceedings in Greece." Reference was made to Rein v. Stein, [1892] 66 LT 469,

where it was said at page

471:

"It seems to me that, in order to

establish a waiver, you must show that the party alleg@d to h~ve

waived his objection has taken some step which is only necessary or

only useful if the objection has been actually waived, or if the objec-

D tion has never been entertained at all." In Dulles' Settlement (No.2)

(1951) Ch. 842; the question 'Vas whether a father, who was an Ameri­

can resident qutside England, had submitted to tlw jurisdiction of the

English courts in a dispute about payment of maiqten11nce to his child

in England. He had been represented

by counsel in the English court,

E

F

who argued that he was not subject to their jurisdiction. Denning

U

(as he then was) said at page 85():

"I cannot see how anyone can fairly say that a man has

voluntarily submitted to the jurisdiction of a court, when

he has all the time been vigorously protesting that it has

no

jurisdiction. If he does nothing and lets judgment go

against him in default of appearance, he clearly does not

submit to the jurisdiction. What difference

in principle

does it make, if he does not merely

do nothing, but actually

goes to the court and protests that it has no jurisdiction? I

can see no distinction at

all."

G The judgment of the court of appeal which held that the applica-

tion for a stay involved assumption that .the court had jurisdiction to

entertain the action and therefore the question of jurisdiction must be

decided first, was set aside

in appeal, and the appeal therefrom was

dismissed by the House of Lords.

H

In the instant case the question is of initial jurisdiction on the

;

-

INDIA STEAM NAVIGATION v. SHANMUGHAVILAS (SAIKIA, J.] 899

basis of claues 3 of the bills of lading. We have to ask the question

A

')

whether the shipper could or could not have the right to sue at Cochin

under the bills of lading. If he could not have done so, the appellant's

appearance to protest about jurisdiction would not cure that defect of

jurisdiction. However,

we find that in the Memo. of appeal before the

lower

appellate· court no specific ground as to jurisdiction was taken

through there were grounds on non-maintainability of the suit. Even

in B I the Special Leave Petition before t.his Court no ground of lack of

<· jurisdiction of the courts below has been taken. We are, therefore, of

the view that the appellant has to be held to have either waived the

objection

as to jurisdiction or to have submitted to the jurisdiction in

the facts and circumstances of the case. The defence that the suit was

:;

not maintainable in the absence of the owner of the ship could in a

sense be said to have been on the merits of the case. The submission

as c

·~

to lack of jurisdiction is, therefore, rejected.

~ Clause 3 of the bills of lading also contains the selection of law

made by the parties. The contract is governed by English law apd

•

disputes are to be determined according to English Law. Is the selec-

D

lion of law binding? In Cheshire & North's Private International Law

11th

Ed., page 495,, while discussing about the interpretation of con-

tracts the authors say:

"When the stage has been reached where an

~~ obligation, formally and essentially valid and binding on parties of full

capacity, has been created, then

in the further matters that may

require the

irlte£Vention of the Court, there is, speaking generally, !lo

E

reason in principle

why the parties should not be free to select the .-'." governing law." The express choice of law made by parties obviates ,

-(

need for interpretation.

In the absence ·of an express choice the question of the proper

)--

law of contract would arise. The parties to a contract should be bound

F

by the jurisdiction clause to which they have agreed unless there is

some strong reason to the contrary.

Dicey

& Morris in the Conflict of Laws formulate the following

rule on proper law of contract

as Rule

180:

G

"The t~rm "Proper law of a contract" means the system of

--.._

law by

1

which the parties intended the contract to be gover-

ned, or, where their intention

is neither expressed nor to be

inferred from the circumstances, the system of law with

which the transaction

has its closest and most real connec-

tion." H

A

B

c

D

E

F

G

H

900

Sub-rule 1:

SUPREME COURT REPORTS [ 1990] 1 S.C.R.

"When the inteation of the parties to a contract, as to the

law governing the contract,

is expressed in words, this

expressed intention, in general, determines the proper

law

of the

contract."

Sub-rule 2:.

"When the intention of the parties to a contract with regard

to the law governing the contract

is not expressed in words,

their intention

is to be inferred from the terms and nature

of the contract, and from the general circumstances of the

case, and such inferred intention determines the proper

law

of the

contract."

There can, therefore, be no doubt that the instant contract of

affreightment evidenced

by the bills of lading will be governed by

English law. As the law has been chosen, the proper law will be the

domestic law of England and the proper

law must be the law at the

time when the contract

is made throughout the life of the contract and

there cannot be a

"floating" proper law. It has been recognised since

Gienar v. Meyer, [1796] 2 Hy Bl 608, that the the time of making the

contract the parties may expressly select the law

by which it is to be

governed and they may declare their common intention

by a simple

statement that the contract shall be

governed by the Jaw of a particular

country. This has been settled

by a long line of

decisions;· as Rex v.

International Trustee for the Protection of Bondholders AG, [1937] AC

500 (529); Vita Food Products Inc. v. Unus Shipping Co. Ltd., (1939]

AC 277 (289-90); James Miller and Partners Ltd. v. Whitworth Street

Estates (Manchester) Ltd., (1970] AC 583 (603); Mackender v. Feldia

AG, (1966] 3 All E.R. 847; Compagnie d' Armement Maritime SA v.

Compagnie Tunisienne de Navigation SA, (1971] AC 572: (1970] 3 All

E.R. 71 and Acrow (Automation) Ltd. v. Rex Chainbelt Inc., [1971] 3

All E.R. 1175.

It is true that in English law there are certain limitations on

freedom to choose the governing law. The choice must be bona fide

and legal, and not against public policy. It may not be permissible to

choose a wholly unconnected

law which is not otherwise a proper law

of contract. English courts, it has been said, should, and do, have a

residual power to strike down for good reas.ons, choice of

law clauses,

totally unconnected with the contract. Where there

is no express

L

··~

•

INDIA STEAM NAVIGATION v. SHANMUGHA VILAS [SAIKIA, J .1 901

choice of the proper law, itis open to Court to determine whether

there is an implied or inferred choice of law in the parties contract.

The next question to be decided

is whether the appellant would

be liable for the suit claim. This would naturally depend on the contract

of affreightment. It is an accepted principle that the bill of lading is not

the contract of affreightment, for that has

been made before the bill of

lading was signed and delivered, but it evidences the terms of that

contract.

The bill of lading serves as a receipt and also as a document

of tittle and may be transferred by endorsement and delivery. Article

III(3)

of the Hague

Rules says that a bill of lading is prima facie

evidence of the receipt by the carrier of the goods described therein.

The Hamburg Rules define a bill of lading under Article 1(7) as

follows:

"Bill of lading" means a document which evidences a con­

tract of carriage by sea and the taking over

or loading of the

goods by the. carrier, and by which the carrier undertakes

A

B

c

to deliver the goods against surrender of the. document. A D

provision in the document that the goods are to be deli­

vered to the order of a named person, or to order, or to

bearer, constitutes such

an

undertaking."

The Hague Rules say that after the goods are taken into his

charge, the carrier

or his agent shall issue to the shipper, if he so E

demands, a bill of lading, showing among other things the particulars

of the goods.

The contract of affreightment need not necessarily be expressed

in writing. The bill of lading

is evidence of the terms of the contract

which can also be ascertained from the charterparty where one exists. F

Dr. Justice T. Kochu Thommen in his book of Bills of Lading in

International Law and Practice at page 25 writes:

"As between the shipowner and the shipper, the bill of

lading

is not conclusive evidence of the terms of the con­

tract and parties to the contract are entitled to prove that G

the stipulations in the bill of lading are at variance with the

agreed terms of the contract, as expressed or evidenced

in

other documents. In practice, however, the terms of the

bill

of lading govern the contractual relations between the

shipowner and the shipper, and the booking note generally

states that the carrier's regular forms of bill of lading shall H

902

A

B.

c

I

I

SUPREME COURT REPORTS (1990] l S.C.R.

be used and all the terms thereof shall form part of the

contract. The bill of lading assumes the character of cooclu­

sive evidence once it has passed into the hands of a con-

' . signee or indorsee and .evidence may not be given which .

. varies

or contradicts it. The position is,

hci\,~v.er, different

when the ship is under charter and stipulation~. in the

charterparty are expressly and clearly incorporated in the

bill

of lading. In such a case the bill of lading, even after it · · -· · has passed in to the hands of a consignee or indorsee, has to

be read subject to the charterparty stipulations. In the

hands of a charterer, the bill of lading is only a receipt and

the charterparty is the governing document as far as the

shipowner' and the charterer are.concerned."

Apart from the question of the charterparty having been proved

or not according to law the question in the instant case is whether

clause 4

of the charterparty as to responsibility of the shipowner in

respect

of the goods carried wo'uld form part of or be incorporated in

· D the bills of lading. How far the charterparty clauses laying down the

responsibility and liabilities between the charterer and the shipowner

can be attributed to the consignee under the bill of lading? It is an

accepted principle

that if certain clauses of the charterparty are

refer­

red to in the bill of lading those should be referred to in specific teniis

so as to bind the shipper and the consignee. A general reference may

E. · not be sufficient under all circumstances. Thus in T. W. Thomas & Co.

Ltd. v. Portsea Steamship Co. Ltd., (1912] AC 1 in the bill of lading

· there was also a marginal clause in writing as follows:

,__ - .

"Deck load at shipper's risk, and all other terms and condi­

tions and exceptions of charter to be as per charterparty,

"--· F including negligence clause."_ ·

........ ~ \_

"' .. The question was whether the arbitration clause in th~ charter­

party was incorporated by the reference in the bill of lading. Lord

Loreburn L.C. answering this question whether an arbitration clause

fourid

in the charterparty was applicable to the contract evidenced by

G. the bill of

lading, and to disputes arising between the shipowners and

the. holders

of the bill of lading under that document, replied in the

negative.

Lord Atkinson observed that when it was sought to

intro­

---,_ duce into a document like a bill of lading-a negotiable instrument-a

. /clause such as the arbitration clause, not germane to the receipt, car­

--riage, or delivery of the cargo or the payment of freight, the proper

H

subject matters with which the bill of lading is conversant, that should

r

_ .......

·•

INDIA STEAM NAVIGATION v. SHANMUGHAVILAS [SAIKIA,J .] 903

be done by distinct and specific words, and not by such general words

as those written in the margin

of the bill of lading in that case.

In Vita Food Products, Incorporated v.

Unus Shipping Co. Ltd.,

(1939] A.C. 277, the bill of lading set out in detail the terms and

conditions

of the contract

"which are hereby mutually agreed upon as

follows". Clause 7 contained a general exemption in respect of the

goods carried from liability for all damage capable of being covered

by

insurance and from liability above a certain value per package unless a

special declaration was made. The same clause also provided that "these contracts have been governed by English Law." While

determining what was the proper law of the contract the Privy Council

held that the expressed words of the bill of lading must receive effect

with the result that

the contract was governed by English Law. It was

said:

"It is now well settled that by English Law (and the law of Nova

Scotia is the same) the proper law of the contract is the law which the

parties intended to apply. That intention

is objectively ascertained,

and, if not expressed, will be presumed from

the terms of the contract

and

the relevant surrounding circumstances." In that case the goods

were shipped in Newfoundland under bills of lading which did not

contain the statement required

by section 3 of the Carriage of Goods

by

Sea Act, 1932 which incorporated the Hague rules subject to certain

modifications but the bill

of lading contained a general clause that the

contracts

"shall be governed by English Law" and applying that law

the Shipowner was held to be within the exceptions which exempted

him from liability.

In Rex v .International Trustee for the protection of

Bondholders, ( 1937] AC

500, it was held that the. intention of the

parties would be ascertained from what

is expressed in the contract,

which will be conclusive. Repelling the contention that the transaction

which

was one relating to the carriage on a Nova Scotian ship of goods

from Newfoundland to New York between residents

in those coun­

tries, contain_ed nothing to connect it in any

way with English law, and

that choice could not be seriously taken, their Lordships held that

connection with English law was not

as a matter of principle essential.

The Indian Bills

of Lading Act, 1856, which is based on the Bills

A

B

c

D

E

F

of Lading Act of 1855 of England in its preamble says: G

"Whereas by the custom of merchants a bill of lading of

goods being transferable

by endorsement, the property in

the goods may thereby pass to the indorsee, but neverthe­

less all rights in respect

of the contract contained in the bill

of lading continue in the original shipper or owner, and it is H

H

"If the vessel is not owned by or chartered by demise to the

company

or Line by whom this bill of lading is issued (as

may be the case notwithstanding anything that appears to

~·

INDIASIBAMNAVIGATIONv.SHANMUGHAVILAS [SAIKIA,J.] 905

the contrary) this bill of lading shall take effect only as a

contract with the owner or demise charterers

as the case

may be

as principal made through the agency of the said

company or Line who act solely

as agents and shall be under

no personal liability whatsoever

in respect

thereof."

This clause ex facie establishes a privily of contract between the

owner

or demise charterer of the vessel on the one hand and the

shipper to whom the bill of lading has been issued

by the appellant

company

as the charterer otherwise than by demise. The High Court

construed this clause to be one relieving or lessening the carrier's

liability without considering whether it was otherwise than

as provided

in the Rules under the Carriage of Goods Act,

1924 of England.

In Halsbury's Laws of England 4th edn. Vol. 43, para

401, it is

said.

A

B

c

"A contract for the carriage of goods in a ship is called in law a

contract

of affreightment. In practice these contracts are usually writ-D

ten and most frequently are expressed in one or other of two types of

document called respectively a charterparty and a bill

of

lading." In

para 402 we read that a contract by charterparty is a contract by which ·

an entire ship or some principal part of her is let to a merchant, called

'the charterer', for the conveyance of goods on a determined voyage to

one or more places, or until the expiration of a specified period. In the E

first case it

is called a

"voyage charterparty", and in the second a "time

charterparty". Such a contract may operate as a demise of the ship

herself, to which the services of the master and the crew may or may

not be added, or it may confer on the charterer nothing more than the

right to have his goods conveyed

by a particular ship, and, as sub­

sidiary to it, to have the use

of the ship and the services of the master F

and crew.

· Thus for the purposes of ascertaining the responsibility of a

charterer in respect of the cargo shipped and landed, it would be

necessary to know not only the stipulations between the shipper i.e.

the owner of the cargo and the charterer, evidenced by the bill of G

lading and also those between the charterer and the owner of the ship.

If the charter is by way of demise the problem would be simple

inasmuch as the bill

of lading will be purely between the shipper and

the charterer. In cases of a 'voyage charter' or a 'time charter' one has

to find out the actual terms of t.he charter to ascertain whether they

operated as charter by demise or made the charterer only as an agent H

906 SUPREME COURT REPORTS [ 1990] I S.C.R.

A

of the shipowner and if so to what extent so as to ascertain the extent

of privily established between tbe

shipper· and the shipowner as ·°'(

stipulated in the biil of lading.

Charterparties by

way of demise, says Halsbury, at para

403, are

of two kinds: "(l) charter without master or crew, or "bareboat char-

ij ter", where the hull is the subject matter of the charterparty and (2)

charter with master and crew, under which the ship passes to the

charterer in a state

fit for the purposes of mercantile adventure. In

both cases the charterer becomes

for-the time being tbe owner of the

ship; the master and crew are,

or become to all intents and purposes,

his employees, and

through them the possession of the ship is in him.

The owner~ on the other hand, has divested himself of all control

C either over the ship or over the master and crew,

his sole

right being to

receive the stipulated hire and to take back the ship when tbe

charterparty comes to an end. During the currency

of the charterparty,

.~

therefore, the owner is under no liability to third persons whose goods

may have been conveyed upon the demised ship or who

may have done

D work

or supplied stores for her, and those persons must look only to

the charterer who has taken his

place."

E

In para 404 Halsbury said:

"Although a charterparty which does not operate as a

demise confers on the charterer the temporary right to

have his goods loaded and conveyed in the ship, tbe owner­

ship remains in the original owner, and through the master

and crew, who continue to be his employees, the possession

of the ship also remains in him. Therefore, the existence of

the charterparty does not necessarily divest the owner

of

liability to third persons whose goods may have been con­

veyed on the ship, nor does it deprive

him of his

rights as

owners."

Whether a charterparty operates as a demise or not depends on

the stipulations of the charterparty. The principal test

is whether the (jJ master is the employee of the owner or of the charterer. In other words

where the master becomes the employee of tbe charterer

or continues

,

to be the owner's employee. Where the charterparty is by way of \--

demise, the charterer may employ the ship in carrying eitber his own

goods

or those of others. Where the charterparty does not operate as a

demise, the charterer's right vis-a-vis the owner depends upon the l:I terms of the contract. "The contract of carriage is personal to the

INDIA STEAM NAVIGATION v. SHANMUGHA VILAS (SAIKIA, J.) 907

.

charterer, and he cannot call upon the shipowner to undertake

A

) liabilities to third persons or transfer to third persons his own liabilities

to

the shipowner unless the contract so

provides." A charterparty has

to

be construed so as to give effect, as far as possible, to the intention

of the parties as expressed in the written contract. The stipulations of

charterparty may be incorporated in a bill of lading so that they are

thereby binding on the parties.

It is an accepted principle that when B

stipulations of the charterparty are expressly incorporated, they be-

come terms of the contract contained in the bill of lading, and they can

be enforced by or against the shipper, cosignee or endorsee. The effect

of a bill of lading depends upon the circumstances of the particular

~ case, of which the most important is the position of the shipper and of ..

the holder. Where there is a bill of lading relating to the goods, the

c

terms of the contract on which the goods are carried are prima facie to

be ascertained from the bill of lading. However, if a shipper chose to

.l, receive a bill of lading in a certain from without protest he should

ordinarily be bound by it. Thus, it cannot be said that the bill of lading

is not conclusive evidence of its terms and the person executing it

is not

necessarily bound

by all its stipulations, unless he

repudiate~ them on D

the ground that, as he did not know, and could not reasonably be

expected to know, of their existence, his assent to them

is not to be

inferred from his acceptance

of the bill of lading without objection.

Where there

is a charterparty, the bill of lading is prima facie, as

between the shipowner and an indorsee, the contract on which the

goods are carried. This

is so when the indorsee is ignorant of the terms E

of the charterparty, and may be so even if he knows of them. As

between the shipowner and the charterer the bill of lading may in some

1

cases have the effect of modifying the contract as contained in the

charterparty, although, in general, the charterparty

will prevail and

the bill of lading will operate solely as an acknowledgement of receipt.

"'

F

In the instant case we find from Exts. Pl to P3 that the following

has been prominently_printedjust below the signature 'For the Master

and Owners'

in the bills of lading.

SEE CONDffiONS OF CARRIAGE

· AND OTHER CONDffiONS OF REVERSE. It can not therefore be

said that the shipper, whose knowledge

will be attributed to the first res-

pondent did not know of the conditions of carriage prinited on the reverse G

there being no other conditions printed elsewhere

in

th~ bills of lading .

............

None of the parties having repudiated the bills of lading in this

case, the High Court ought not to have accepted the submission of the

first respondent that clause 4 of the bills of lading offende.!! the provi-

sions

of the Carriage of Goods

by Sea Act, 1924 and therefore bad. H

908 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

A The Carriage of Goods by Sea Act, of 1924 of England was on the

Hague Rules which were amended

by Brussels protocol 1968 which is

now embodied in the Carriage of Goods by

Sea Act 1971 which came

into force in

1977. The Indian Carriage of Goods by

Sea Act 1925 (Act

XXVI of 1925) which is an Act to amend the law with respect to the

B

carriage of goods by sea was passed after the International Conference

on Maritime Law held at Brussels in October 1922 and Brussels meet­

ing in October

1923.

Under Section 2 of that Act which deals with

application

of rules it is provided:

"Subject to the provisions of this

Act, the rules set out in the Schedule (hereinafter referred to as "the

Rules") shall have the effect in relation to and in connection with the

carriage

of goods by sea in ships carrying goods from any port in India C to any other port whether in or outside India." To apply the Rules to a

case, the port

of origin has to be an Indian Port.

Unless the starting

point

or the port of loading is a port in India the Rules are inapplicable.

These Rules have no application when goods are not carried from any

Indian port. As in the instant case goods were shipped

in Africa and

O carried to Cochin, this Act obviously was not applicable.

There

is nothing to show that the charterparty was by way of

demise.

Pacta dant legem contractui-the stipulations of parties consti­

tute the law

of the contract. Agreements give the law to the contract.

Clause 4 having been a stipulation in the contract evidenced

by the

E bills

of lading the parties could not resile therefrom. It is not clear

whether the English Carriage of goods

by

Sea Act, 1924 or the Indian

Carriage

of Goods Act 1925 was applied by the High Court. The

Articles and the Rules referred to are to be found

in the

Schedule to

the Indian Act the Rules whereunder were not applicable to the facts

of the case. The dispute could not have been decided partly according

F

to municipal law and partly according to English law. The English law

was not proved before the court according to law.

The result

is that this appeal must succeed. We accrodingly allow

this appeal, set aside the impugned judgments and remand the case to

the trial court for disposal according to law after giving opportunity to

G the parties to amend their pleadings and adduce additional evidence, if

they are so advised,

in light of the observations made hereinabove. In

the facts and circumstances of the case we make no order as to costs.

R.S.S. Appeal allowed.