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CASE NO.:

Appeal (civil) 867 of 2006

PETITIONER:

Mayar (H.K.) Ltd. & Ors.

RESPONDENT:

Owners & Parties, Vessel M.V. Fortune Express & Ors

DATE OF JUDGMENT: 30/01/2006

BENCH:

RUMA PAL & P.P. NAOLEKAR

JUDGMENT:

JUDGMENT

[arising out of Special Leave Petition (Civil) No. 17906 of 2004]

P.P. NAOLEKAR, J. :

Leave granted.

This appeal is preferred by the plaintiff-appellants challenging the

judgment of the Division Bench of the Calcutta High Court dated 23.8.2004

whereby the plaintiffs' suit filed in Admiralty jurisdiction was directed to

remain permanently stayed and the bank guarantee furnished by the

defendant-respondents in the suit was directed to stand immediately

discharged. The plaintiff-appellants were also directed to pay the costs.

Appellant No. 1 Mayar (H.K.) Limited filed admiralty suit in the High

Court at Calcutta on 27.3.2000 in admiralty jurisdiction along with

appellants Nos. 2 to 5 with whom a contract to sell the goods was entered

into by plaintiff / appellant No.1, against the defendant-respondents alleging,

inter alia, that plaintiff / appellant No. 1 (hereinafter called "A-1") is a

company incorporated under the laws of Hong Kong and engaged in the

business of export and import of timber logs. By and under a Charter Party

Agreement entered into on 7.1.2000 between plaintiff No. 1-Mayar (H.K.)

Limited and defendant No. 2-Trustrade Enterprises PTE Ltd., a company

incorporated under the appropriate laws of Singapore and carrying on

business, inter alia, at 101, Cecil Street 10-04 Tong. Eng. Building,

Singapore (description given in the plaint) an owner on behalf of the vessel

M.V. "Fortune Express" (hereinafter referred to as "the vessel"), a foreign

vessel flying the flag of Singapore, the defendants agreed to carry on board

the vessel a quantity of 5200 CBM Barawak Round logs or upto vessel's full

capacity for discharge at the Port of Calcutta, India. In or about January

2000, A-1 purchased various quantities of Malaysian Barawak logs for the

purpose of shipment to the Port of Calcutta and to sell the same to various

third parties having their offices in West Bengal, India. Under five bills of

lading dated 21.2.2000, 17.2.2000, 24.2.2000, 15.2.2000 and 18.2.2000, the

defendants agreed to carry on board the said vessel 1638 pieces of logs of

different quality measuring 5325.2941 CBM from various ports of Malaysia

to the Port of Calcutta, India. At the request of A-1, the five bills of lading

were split into 17 bills of lading at the instance of the defendants so as to

facilitate sale by A-1 to various buyers in West Bengal, India. The

appellants 1 to 5 are the holders in due course and/or endorsees of the six of

those bills of lading which dealt with the 642 pieces of logs. As per the

stowage plan of the vessel, out of 642 logs, the subject matter of bills of

lading, which were loaded on board the vessel, 578 logs were lying on the

deck of the vessel. The vessel arrived at the Port of Calcutta on 7.3.2000

and started discharging the cargo lying on its deck from that date till

15.3.2000. At the time of the discharge of the cargo lying on the deck of the

vessel, it was found that 456 logs out of 578 logs which were lying on the

deck of the vessel were missing and had been short-landed. It has been

alleged that in breach of the defendants' duty as a carrier and/or bailees for

reward and/as evidenced by the six bills of lading, the defendants have failed

to deliver 456 logs whereby the plaintiffs have suffered loss and damage.

The plaintiffs have also alleged that the defendants also acted in breach of

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their contract entered into with A-1 being the shipper under the aforesaid six

bills of lading. The defendants have acted in breach of the Charter Party

Agreement entered with A-1 by failing and neglecting to carry on board the

vessel from the loading point to the discharge port, the agreed quantity of

logs. As the logs were not delivered, all the plaintiffs are entitled to claim

from the defendants the proportionate value and expenses incurred on

account of the said missing 456 logs which is approximately valued at Rs.

1,30,19,688.44p. as per the particulars stated hereinbelow :

1. Proportionate value of 456 logs of aggregate

value of Rs.1,56,87,298.44p. Rs.1,09,13,902.56p.

2. Proportionate port charge and other charges

paid in respect of 456 logs. Rs. 4,14,130.72p.

3. Proportionate custom duty paid in respect

of 456 logs. Rs. 5,00,264.73p

.

4. Proportionate insurance payment made

in respect of 456 logs. Rs. 10,91,390.43p

---------------------

----

Rs.1,30,19,688.44p.

---------------------

----

The plaintiffs have also claimed from the defendants interest on the

aforesaid sum at the rate of 24 per cent per annum until realization of the

entire sum from the defendants. The plaintiffs have prayed for the arrest of

the vessel along with her tackle, apparel and furniture.

On 27.3.2000 itself, the learned Single Judge of the Calcutta High

Court passed an order that it appears that the claim of the plaintiffs arises

out of short-landing of the goods as mentioned in the affidavit of arrest

amounting to a total sum of Rs.1,30,19,688.44p. The vessel in question is a

foreign vessel and does not have any assets within the jurisdiction of the

Court. The said vessel is now lying at Kidderpore Dock and if the said

vessel is allowed to ply from the said dock then the decree that may have

been passed in the suit in favour of the plaintiffs will frustrate the

proceedings, as the defendant-respondents have no assets within the

jurisdiction of the Court and in view thereof the Marshall is directed to arrest

the said vessel M.V. Fortune Express along with her tackle, apparel and

furniture. It was made clear in the order that if the said vessel furnishes a

bank guarantee for the amount mentioned in the order, with the Registrar,

Original Side, High Court, Calcutta, they will be at liberty to apply before

the Court for vacation of the order. On 12.4.2000, the Punjab National

Bank, Calcutta, submitted a letter of intent before the Registrar, High Court,

Original Side, Calcutta regarding furnishing of the bank guarantee on behalf

of the defendant-respondents seeking order of the court for release of the

vessel. On submission of the letter of intent for furnishing the bank

guarantee on behalf of the owners and parties interested in the vessel, i.e.,

the respondents, dated 12.4.2000, the learned Single Judge of the Calcutta

High Court on 12.4.2000 itself has passed an order releasing the vessel from

arrest vacating the order of arrest dated 27.3.2000. The order was passed

without prejudice to the rights and contentions of the owners of the vessel

that the suit is not maintainable. On 17.5.2000, the Punjab National Bank

furnished the bank guarantee binding itself and the defendants for the

payment of the amount of Rs.1,30,19,688.44p. The guarantee incorporated a

term that the defendants and the Bank do thereby submit themselves to the

jurisdiction of the Court.

On 7.7.2001, the defendants filed an application purported to be

under Order VII Rule 11 of the Code of Civil Procedure 1908 (for short "the

Code") alleging therein that the suit filed by the plaintiffs is liable to be

dismissed in limine and as a consequence thereof the bank guarantee is

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liable to be released, on the grounds that as per Clause 3 of the Bill of

Lading (for short "BOL") the court having jurisdiction to entertain the suit,

is the court of the carrier's country and thus the Calcutta High Court has no

jurisdiction to entertain the suit; that the contract for carriage was for deck

cargo and, therefore, liability of the carrier was excluded by application of

Clause 2 and Clause 9 read with Clause 19 of BOL and the same being

binding on the plaintiffs the defendants are not at all liable for payment of

the damages; and that the suit does not disclose any cause of action. The

learned Single Judge by his order dated 1.7.2002 dismissed the application

filed by the defendants for dismissal of the suit relying on the decision of

this Court in Chittaranjan Mukherji vs. Barhoo Mahto, AIR 1953 SC 472,

that the defendants having received a favourable order from the Indian court

cannot turn around and challenge the jurisdiction of the very court at a later

stage. It was also held that for application of Clause 9 of BOL and

exonerating the carrier from its liability and responsibility, it would be

necessary to prove that the loss or damage is the result of any act, neglect or

default on account of any servant of the carrier who is in the management

of the deck cargo, which is a matter of evidence and cannot be ascertained at

the preliminary stage.

Aggrieved by the said order of the learned Single Judge, an appeal

was preferred before the Division Bench of the Calcutta High Court by the

defendants which was allowed by order dated 23.8.2004 The Division

Bench of the High Court has held that under the forum selection clause

(Clause 3) of BOL any dispute arising therefrom shall be decided in the

country where the carrier has its principal place of business governing the

law of such country and, thus, the Singapore Court alone will have

jurisdiction to entertain the suit. Some interesting findings have been

arrived at by the Division Bench which have material bearing in deciding

the present appeal and, therefore, they are referred herein. The Division

Bench has said that the vessel (Fortune Express) having sailed into the

Calcutta Port and the claim being of an admiralty nature the Court had

jurisdiction by the laws of India in the same manner as it would have

jurisdiction if a Singapore trader happened to open up a place of business

within the local limits of the ordinary original civil jurisdiction of the

Court. The issue is not one of possession of jurisdiction but of its exercise.

If the parties have chosen a particular forum and a particular set of laws in

the world to govern them, then they are, in the large majority of ordinary

cases, to be held to their bargain and not to be allowed to depart therefrom

only because one party finds it convenient and, therefore, chooses to do so.

The finding as regards the chosen forum of Singapore Court and to be

governed by the laws of Singapore has been arrived at by the Division

Bench only on the basis of the plaintiffs mentioning that defendant No. 2

Trustrade Enterprises PTE Ltd. is a company incorporated under the

appropriate laws of Singapore and is carrying on its business at Singapore.

The Court has also observed that the Singapore law with regard to the

discharge of liability is quite different. According to the Singapore Act, the

Hague Rules have been somewhat amended. For voyages which start from

ports of Singapore or even the goods which are first shipped from there, the

Act seems to include even deck cargo as goods. There is not a single line in

the plaint stating either that the Singapore law is the applicable law or that

by reason of the application thereof the goods are not deck cargo. As

regards the liability of the defendants, the Court has found that admittedly

the goods were carried on the deck and there is no liability of the carrier if

the deck cargo is lost. The Court has further held that the defendants by

submitting the bank guarantee before the Court did not submit to the

jurisdiction of the Court, particularly so when the order dated 12.4.2000

passed by the learned Single Judge specifically mentioned that the order was

being passed without prejudice to the rights and contentions of the owners of

the vessel that the suit is not maintainable. As regards the submission of the

plaintiffs that compelling the plaintiffs to file a suit for damages at this late

stage at Singapore Court would be most unjust because the application by

the defendants for treating the plaint off the record of the Court had been

filed on 7.7.2001 when the order for arrest of the vessel was passed on

27.3.2000 and particularly the plaintiffs' right would be jeopardized

because under Article 3(6) of the Hague Rules, 1924 the carrier and the ship

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had been absolved of all liability in respect of the loss or damage if suit were

not brought within one year after delivery of the goods or the date when the

goods should have been delivered, the Court has opined that under Article 3,

Clause 6 of the Hague Rules, 1924, the limitation had been with respect to

the goods. However, Article 1(c) of the Hague Rules, 1924 mentioned that

the cargo which had been carried on deck would not come under the

definition of `goods'. Except 135 logs, all others were described in BOL as

deck cargo and thus the limitation prescribed for filing of the suit would

have no application. The Court has further observed that though the law of

Singapore on the point had been different in the sense that even the deck

cargo would be considered under the definition of `goods' , but the plaintiffs

had not mentioned a single word in their plaint regarding the applicability of

the Singapore law. It was further held that the plaintiffs, from the very

outset of the suit, were aware of the fact regarding the appropriate forum and

hence now at this stage they could not plead to reap the benefit from their

own fault. The Court held that the plaintiffs' plaint suppressed the forum

selection clause relating to the law governing the contract and approached a

wrong court to get an ex parte arrest order against the defendants' vessel. It

has been observed that the suppression of fact regarding forum selection

was of serious nature and that would be sufficient to dismiss the suit filed by

the plaintiffs.

As regards the contention of the plaintiffs that the defendants having

submitted to the jurisdiction of the Court, could not challenge the

jurisdiction of it at a later stage, the Court has held that the defendants

raised the objection regarding the maintainability of the suit at the first

opportunity itself which is also reflected in the order. It has been held by the

Court that by release of the vessel the defendants have not taken advantage

of the Court's order because instead of the arrested ship lying in wait to

satisfy the decree that might be passed a sufficient money equivalent

provided by the owners and the parties interested in the ship lies so in

wait.

On consideration of the submissions made by the parties before the

Division Bench and the relevant provisions of BOL and the provisions of the

Indian Carriage of Goods by Sea Act, 1925, the Division Bench has arrived

at the following findings :

(i) The parties have chosen the Singapore Court and the Singapore

law by express contract. They should be held bound to it.

(ii) Arrest of the ship was obtained from the Calcutta High Court in

Calcutta wrongfully since it was in breach of the above clause.

(iii) The defendants never submitted to the Calcutta jurisdiction as they

made reservation about the maintainability of the suit within about

a fortnight of the arrest when the order for furnishing Bank

Guarantee and release of the vessel was obtained on their behalf.

(iv) Save for 135 longs, the lost logs being 456 in number are covered

entirely by the exclusion clause agreed upon which excludes

liability for any defaults of the shippers' servants in the

management of the deck cargo.

(v) Deck cargo is that which is described as such in the Bill of Lading

and is also carried as such. The admissions in the plaint are clear

as to the deck cargo nature of the said balance number of logs and

the admissions in the plaint are equally clear that the loss thereof

occurred due to the actions or neglect of the defendants' servants.

(vi) The plaintiffs suppressed the jurisdiction clause and the liability

exclusion clause; arrest of the ship being obtained thereupon the

Court should decline to proceed any further on the improper plaint,

improperly proceeded with by the plaintiffs."

The Court has, inter alia, recorded a finding that Order VII Rule 11 of the

Code might not in terms be applicable as the plaint discloses the cause of

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action fully and wholly, but that by reason of the suppression contained in it,

had the exclusion clause been inserted, the cause of action would be lost

with regard to the lost cargo excepting for 135 logs. Again, under the said

Rule the suit might not be held to be barred as such, because the Calcutta

High Court does have the necessary admiralty jurisdiction to entertain the

plaint and even cause arrest of the ship. The case is not so much on the

terms of Order VII Rule 11 of the Code as upon the inherent jurisdiction of

the Court, which it always possesses to reject or stay, a plaint by treating it

as complete and by notionally removing the suppression for that purpose.

After treating the plaint as complete in that manner, if the Court finds that

the cause of action is lacking, it can reject the plaint just as it could reject a

plaint had it been properly presented along with all relevant and necessary

materials. It can also similarly stay a suit permanently.

The aforesaid finding clearly indicates that the order of permanent

stay of the suit was made by the Division Bench not because the plaint is

liable to be rejected on the grounds that it falls within the parameters of

Order VII Rule 11 of the Code or the suit is liable to be stayed in exercise of

the powers under Section 10 of the Code or that the Court has passed an

order under Order VI Rule 16 of the Code which has not been complied

with. The Division Bench, in fact, has exercised the jurisdiction for stay of

the suit as the plaintiffs did not disclose the forum selection clause whereby

the Court at Calcutta had no jurisdiction to entertain the suit and further

suppressed the fact that the claim in the suit shall be governed by the laws

applicable in the Singapore Court and that plaintiffs have no case because

the claim is in regard to deck cargo.

Under Order VII Rule 11 of the Code, the Court has

jurisdiction to reject the plaint where it does not disclose a cause of

action, where the relief claimed is undervalued and the valuation is

not corrected within a time as fixed by the Court, where insufficient

court fee is paid and the additional court fee is not supplied within

the period given by the Court, and where the suit appears from the

statement in the plaint to be barred by any law. Rejection of the plaint in

exercise of the powers under Order VII Rule 11 of the Code would be on

consideration of the principles laid down by this Court. In T. Arivandandam

vs. T.V. Satyapal and Another, (1977) 4 SCC 467, this Court has held that if

on a meaningful, not formal, reading of the plaint it is manifestly vexatious,

and meritless, in the sense of not disclosing a clear right to sue, the Court

should exercise its power under Order VII Rule 11 of the Code taking care

to see that the ground mentioned therein is fulfilled. In Roop Lal Sethi vs.

Nachhattar Singh Gill, (1982) 3 SCC 487, this Court has held that where the

plaint discloses no cause of action, it is obligatory upon the court to reject

the plaint as a whole under Order VII Rule 11 of the Code, but the rule does

not justify the rejection of any particular portion of a plaint. Therefore, the

High Court could not act under Order VII Rule 11(a) of the Code for striking

down certain paragraphs nor the High Court could act under Order VI Rule

16 to strike out the paragraphs in absence of anything to show that the

averments in those paragraphs are either unnecessary, frivolous or vexatious,

or that they are such as may tend to prejudice, embarrass or delay the fair

trial of the case, or constitute an abuse of the process of the court. In ITC

Ltd. Vs. Debts Recovery Appellate Tribunal, (1998) 2 SCC 70, it was held

that the basic question to be decided while dealing with an application filed

by the defendant under Order VII Rule 11 of the Code is to find out whether

the real cause of action has been set out in the plaint or something illusory

has been projected in the plaint with a view to get out of the said provision.

In Saleem Bhai and Others vs. State of Maharashtra and Others, (2003) 1

SCC 557, this Court has held that the trial court can exercise its powers

under Order VII Rule 11 of the Code at any stage of the suit before

registering the plaint or after issuing summons to the defendant at any time

before the conclusion of the trial and for the said purpose the averments in

the plaint are germane and the pleas taken by the defendant in the written

statement would be wholly irrelevant at that stage. In Popat and Kotecha

Property vs. State Bank of India Staff Association, (2005) 7 SCC 510, this

Court has culled out the legal ambit of Rule 11 of Order VII of the Code in

these words :

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"There cannot be any compartmentalization, dissection,

segregation and inversions of the language of various

paragraphs in the plaint. If such a course is adopted it would

run counter to the cardinal canon of interpretation according to

which a pleading has to be read as a whole to ascertain its true

import. It is not permissible to cull out a sentence of a passage

and to read it out of the context in isolation. Although it is the

substance and not merely the form that has to be looked into,

the pleading has to be construed as it stands without addition or

subtraction of words or change of its apparent grammatical

sense. The intention of the party concerned is to be gathered

primarily from the tenor and terms of his pleadings taken as a

whole. At the same time, it should be borne in mind that no

pedantic approach should be adopted to defeat justice on hair-

splitting technicalities."

From the aforesaid, it is apparent that the plaint cannot be rejected on

the basis of the allegations made by the defendant in his written statement or

in an application for rejection of the plaint. The Court has to read the entire

plaint as a whole to find out whether it discloses a cause of action and if it

does, then the plaint cannot be rejected by the Court exercising the powers

under Order VII Rule 11 of the Code. Essentially, whether the plaint

discloses a cause of action, is a question of fact which has to be gathered on

the basis of the averments made in the plaint in its entirety taking those

averments to be correct. A cause of action is a bundle of facts which are

required to be proved for obtaining relief and for the said purpose, the

material facts are required to be stated but not the evidence except in certain

cases where the pleadings relied on are in regard to misrepresentation, fraud,

wilful default, undue influence or of the same nature. So long as the plaint

discloses some cause of action which requires determination by the court,

mere fact that in the opinion of the Judge the plaintiff may not succeed

cannot be a ground for rejection of the plaint. In the present case, the

averments made in the plaint, as has been noticed by us, do disclose the

cause of action and, therefore, the High Court has rightly said that the

powers under Order VII Rule 11 of the Code cannot be exercised for

rejection of the suit filed by the plaintiff-appellants.

Similarly, the Court could not have taken the aid of Section 10 of the

Code for stay of the suit as there is no previously instituted suit pending in a

competent court between the parties raising directly and substantially the

same issues as raised in the present suit.

It is contended by Mr. R F Nariman, learned senior counsel appearing

for the defendant-respondents that the court has inherent discretionary

jurisdiction to stay the proceedings in appropriate matters where the court

thinks fit to do so. This jurisdiction of the court to stay the proceedings in

appropriate cases is not limited to the jurisdiction conferred on the court in

India under Section 10 of the Code. It is distinct from the jurisdiction

conferred by the Code and for this proposition reliance was placed on

Bhagat Singh Bugga vs. Dewan Jagbir Sawhney, (28) AIR 1941 Calcutta

670, Hansraj Bajaj vs. Indian Overseas Bank Ltd., AIR 1956 Calcutta 33,

Krishnan and Another vs. Krishnamurthi and Others, AIR 1982 Madras 101

and M/s. Crescent Petroleum Ltd. vs. "MONCHEGORSK" and Anr., AIR

2000 Bombay 161. In the aforesaid matters, the Court has recognized the

inherent power of the High Court to stay the proceedings in appropriate

cases. In Bhagat Singh Bugga's case (supra), it is said that the Code is not

exhaustive and does not expressly provide a remedy in all eventualities and,

therefore, the Court has in many cases where the circumstances warrant it,

and the necessities of the case require it, to act upon the assumption of the

possession of an inherent power to act ex debito justitiae and to do real and

substantial justice. In exercise of this power, the High Court can restrain a

defendant by injunction in another Court in spite of provision of Section 10

of the Code. In Hansraj Bajaj's case (supra), the High Court put a note of

caution while upholding the inherent power of the High Court to stay the suit

though filed in a competent court when it said:

"The jurisdiction to stay an otherwise competent suit is to

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be sparingly exercised and within the strict limits of the rigorous

condition, whose principles may be stated thus : the first principle

is that a mere balance of convenience is not a sufficient ground

for depriving a plaintiff of his right of prosecuting his action in or

his right of access to the competent Courts of the land.

The second principle is that the Court stays an action

brought within the jurisdiction in respect of a cause of action

arising entirely out of the jurisdiction when it is satisfied that the

plaintiff will thereby suffer no injustice whereas if the action is

continued the defendant will, in defending the action, be the

victim of such injustice as to amount to vexation and oppression

and which vexation and oppression would not arise for the

defendant if the action were brought in another accessible Court

where the cause of action arose.

In such a case the Courts have also insisted that the onus is

upon the defendant to satisfy the Court, first, that the continuance

of the action would work an injustice because it would be

oppressive or vexatious to him or would be an abuse of the

process of the Court and, secondly, also that the stay will not

cause any injustice to the plaintiff. \005\005"

In Krishnan's case (supra), the Court laid down that if the ends of justice

require or it is necessary to prevent the abuse of the process of the court, the

court has jurisdiction to stay the trial of a suit pending before it, but the

exercise of such power would depend upon the facts and circumstances of

each case.

For the sake of convenience, we may reproduce certain relevant

clauses of the Bill of Lading (BOL) and provisions of the Indian Carriage of

Goods by Sea Act, 1925 (hereinafter referred to as "the Act") as under :

Bill of Lading

"3. Jurisdiction

Any dispute arising under the Bill of Lading shall be decided in the

country where the carrier has his principal place of business and

the law of such country shall apply except as provided elsewhere

herein."

"9. Live Animals and Deck Cargo

shall be carried subject to the Hague Rules as referred to in Clause

2 hereof with the exception that notwithstanding anything

contained in Clause 19 the Carrier shall not be liable for any loss

or damage resulting from any act, neglect or default of his servants

in the management of such animals and deck cargo."

"19. Optional Stowage Unitization

(a) Goods may be stowed by the Carrier as received or, at Carrier's

option, by means of containers, or similar articles of transport use

to consolidate goods.

(b) Containers, trailers and transportable tanks whether stowed by

the Carrier or received by him in a stowed condition from the

Merchant, may be carried on or under deck without notice to the

Merchant.

(c) The Carrier's liability for cargo stowed as aforesaid shall be

governed by the Hague Rules as defined above notwithstanding the

fact that the goods are being carried on deck and the goods shall

contribute to general average and shall receive compensation in

general average."

Indian Carriage of Goods by Sea Act, 1925

"2. Application of Rules : Subject to the provisions of this Act,

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

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

carriage of goods by sea in ships carrying goods from any port in

India to any other port whether in or outside India."

"SCHEDULE

RULES RELATING TO BILLS OF LADING

Article I

Definitions

In these Rules the following expressions have the meanings hereby

assigned to them respectively, that is to say \026

xxx xxx xxx

(c) "Goods" includes goods, wares, merchandises, and articles of

every kind whatsoever, except live animals and cargo which by the

contract of carriage is stated as being carried on deck and is so

carried; [unamended clause]

(c) "Goods" includes any property including live animals as well

as containers, pallets or similar articles of transport or packaging

supplied by the consignor, irrespective of whether such property is

to be or is carried on or under the deck" [as amended by Act

44/2000]

"Article III

Responsibilities and Liabilities.

xxx xxx xxx

(6) \005. \005.. \005.

In any event the carrier and the ship shall be discharged from all

liability in respect of loss or damage unless suit is brought within one

year after delivery of the goods or the date when the goods should

have been delivered.

*[This period may, however, be extended if the parties so agree

after the cause of action has arisen:

Provided that a suit may be brought after the expiry of the

period of one year referred to in this sub-paragraph within a further

period of not more than three months as allowed by the court]*.

\005.. \005.. \005.."

---------------

*Added by Act 28/1993

While working out the equity between the parties and directing

permanent stay of the suit and release of the bank guarantee, the Division

Bench was mainly impressed by two factors that (i) Clause 3 of BOL gives

exclusive jurisdiction to the Singapore Court to try and decide any dispute

arising between the parties under the BOL and the parties shall be governed

by the law which is applicable in Singapore; and (ii) the goods lost being

the deck cargo the carrier ship has no liability in respect of the loss or

damage as per Clause 9 of BOL. The Division Bench has said that Clause 3

and Clause 9 of BOL are material clauses which should have been pleaded

by the plaintiff-appellants in their suit and, therefore, abuse of process of the

Court.

As per law of pleadings under Order VI Rule 2 of the Code, every

pleading should contain, and contain only, a statement in a concise form of

the material facts on which the party relies for his claim or defence, as the

case may be. Thus, the facts on which the plaintiff relies to prove his case

have to be pleaded by him. Similarly, it is for the defendant to plead the

material facts on which his defence stands. The expression `material facts'

has not been defined anywhere, but from the wording of Order VI Rule 2 the

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material facts would be, upon which a party relies for his claim or defence.

The material facts are facts upon which the plaintiff's cause of action or

defendant's defence depends and the facts which must be proved in order

to establish the plaintiff's right to the relief claimed in the plaint or the

defendant's defence in the written statement. Which particular fact is a

material fact and is required to be pleaded by a party, would depend on the

facts and circumstances of each case. In A.B.C. Laminart Pvt. Ltd. Vs.

A.P. Agencies, Salem, (1989) 2 SCC 163, this Court has considered the

ambit of the exclusion clause whereby the jurisdiction of one court is

excluded and conferred upon another court by agreement of the parties and

said that in a suit for damages for breach of contract, the cause of action

consists of making of the contract, and of its breach, so that the suit may be

filed either at the place where the contract was made or at the pace where it

should have been performed and the breach occurred. When the court has to

decide the question of jurisdiction pursuant to an ouster clause, it is

necessary to construe the ousting expression or clause properly to see

whether there is ouster of jurisdiction of other courts. When the clause is

clear, unambiguous and specific accepted notions of contract would bind the

parties and unless the absence of ad idem can be shown, the other courts

should avoid exercising jurisdiction. As regards construction of the ouster

clause when words like `alone', `only', `exclusive' and the like have been

used, there may be no difficulty. Even without such words in appropriate

cases, the maxim `expressio unius est exclusio alterius' \026 expression of one

is the exclusion of another \026 may be applied. What is an appropriate case

shall depend on the facts of the case. In such a case, mention of one thing

may imply exclusion of another. When certain jurisdiction is specified in a

contract, an intention to exclude all others from its operation may in such

cases be inferred. It has, therefore, to be properly construed.

The allegations in the plaint are to the effect that the parties have

entered into a contract on 7.1.2000 to carry on board the vessel M.V.

Fortune Express under the six split bills of lading 642 logs from the port of

Sarawak, Malaysia for discharge at the port of Calcutta, India. As per

stowage plan, 578 logs were lying on the deck of the vessel. At the time of

the discharge of the cargo lying on the deck of the vessel, it was found that

456 logs out of 578 logs were missing and had been short-landed. The

plaintiffs claimed a decree for the proportionate value of 456 logs, port and

other charges, custom duty and proportionate insurance payment. As per the

plaintiffs' allegation, the logs, which were to be carried on the vessel owned

by the defendants, had not been delivered at the port of destination. Thus,

all the material facts on the basis of which the plaintiffs claimed the decree

are alleged in the plaint. As the logs were not delivered at the port at

Calcutta, the port of destination, the part of cause of action arose within the

jurisdiction of the Calcutta Court and, thus, the suit filed by the plaintiffs at

Calcutta was maintainable although it may be pleaded by the defendants in

their written statement that the Calcutta High Court has no jurisdiction on

account of Clause 3 of BOL. For the purpose of the cause of action, it was

not necessary for the plaintiffs to plead the ouster of the jurisdiction of the

Calcutta Court. In fact, it was for the defendants to plead and prove the

ouster of the jurisdiction of the Calcutta Court and conferment of the

jurisdiction in the Singapore Court alone. On a bare reading of Clause 3 of

BOL, it is clear that any dispute arising under the BOL shall be decided in

the country where the carrier has its principal place of business and the law

of such country shall apply except as provided elsewhere in the BOL.

Therefore, the exclusion clause refers to the jurisdiction of a court where the

carrier has its principal place of business. Unless and until it is established

that the defendant-carrier has its principal place of business at Singapore, the

exclusion clause has no application. Simply because in the cause title of the

plaint, the plaintiffs have described defendant No. 2-Trustrade Enterprises

PTE Ltd. to be carrying on business at Singapore, would not ipso facto

establish the fact that the principal place of business of defendant No.2

(respondent herein) is/was at Singapore to exclude the jurisdiction of the

Calcutta Court which admittedly has the jurisdiction to try the suit.

Therefore, absence of reference of Clause 3 of BOL in the pleadings cannot

be said to be suppression of the material fact as the question of jurisdiction

would be required to be adjudicated and decided on the basis of the material

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placed on record at the trial.

In S.J.S. Business Enterprises (P) Ltd. vs. State of Bihar and Others,

(2004) 7 SCC 166, this Court has accepted the principle that the suppression

of a material fact by a litigant disqualifies such litigant from obtaining any

relief. The rule has been evolved out of the need of the courts to deter a

litigant from abusing the process of court by deceiving it. But the

suppressed fact must be a material one in the sense that had it not been

suppressed it would have had an effect on the merits of the case. It must be

a matter which was material for the consideration of the court, whatever

view the court may have taken. Reliance was placed on R. vs. General

Commrs. for the purposes of the Income Tax Act for the District of

Kensington, (1917) 1 KB 486.

Similarly under Clause 9 of BOL, the carrier was not made liable for

any loss or damage resulting from any act, neglect or default of his servants

in the management of animals and deck cargo. Under this clause, the carrier

is excluded from making good any loss or damage to the deck cargo which

has resulted from any act, neglect or default of his servants who are in the

management of such deck cargo. The facts are yet to come on record that

the loss or damage to the deck cargo was the result of any act, neglect or

default of the carrier's servants who were in the management of the deck

cargo. In fact, this would be the defence if at all to be raised by the

defendants in their written statement. It was not at all required for the

plaintiffs to introduce this clause in their plaint. The liability of the

defendants to pay or not to pay any loss or damages to the cargo, would

depend on proof of certain necessary facts which could only be adjudicated

upon at the trial of the suit.

Clause 2 (General Paramount Clause) of BOL reads as under:

"The Hague Rules contained in the International Convention

for the Unification of certain rules relating to Bills of Lading,

dated Brussels the 25th August 1924 as enacted in the country of

shipment shall apply to this contract. When no such enactment

is in force in the country of shipment, the corresponding

legislation of the country of destination shall apply, but in

respect of shipments to which no such enactments are

compulsorily applicable, the terms of the said Convention shall

apply.

Trades where Hague-Visby Rules apply.

The trades where the International Brussels Convention 1924 as

amended by the Protocol signed at Brussels on February 23rd

1968. The Hague-Visby Rules apply compulsorily, the

provisions of the respective legislation shall be considered

incorporated in this Bill of Lading. The Carrier takes all

reservations possible under such applicable legislation, relating

to the period before loading and after discharging and while the

goods are in the charge of another Carrier and to deck cargo and

live animals."

Under this Clause of BOL, the Hague Rules contained in the International

Convention for the Unification of Certain Rules Relating to Bills of Lading,

Brussels, August 25, 1924 and Protocol to amend the said Convention,

Brussels, February 23, 1968, as enacted in the country of shipment shall

apply to this contract and if no such enactment is in force in the country of

shipment, the corresponding legislation of the country of destination shall

apply, but if no such enactments are compulsorily applicable then the terms

of the Convention shall apply, that is to say, in the absence of any enactment

in the country of shipment or in the country of destination, the Hague Rules

shall apply. Under Article 1, clause (c) of the Hague Rules , the goods shall

include goods, wares, merchandise, and articles of every kind whatsoever

except live animals and cargo which by the contract of carriage is stated as

being carried on deck and is so carried. Thus, the cargo which by the

contract of carriage is carried on the deck would not be goods under the

Hague Rules, whereas under Clause 9 of BOL deck cargo is also included

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for the purposes of the liability of the carrier if the loss or damage to the

goods is not on account of the neglect or default of the servants of the

carriage in the management. The question whether the cargo transported by

the carrier would be governed by the Hague Rules on account of Clause 2

(General Paramount Clause) or by Clause 9 of BOL would be a question

required to be determined by the Court after the parties placed all material

evidence before it and could not have been decided by the Division Bench at

the preliminary stage. Clause 19 of BOL permits the Carrier to stow the

goods either on deck or under deck without notice to the merchant as

received by him or at the Carrier's option by means of containers or similar

articles of transport used to consolidate goods. Sub-clause (c) thereof

provides that the Carrier's liability for the cargo stowed shall be governed by

the Hague Rules as defined above notwithstanding the fact that the goods are

being carried on deck and the goods shall contribute to the general average

and shall receive compensation in general average. This clause has

reference to Clause 14 of BOL which provides for general average and

salvage in respect of goods in the event of accident, danger, damage or

disaster before or after commencement of voyage. This clause has no

reference to the liability, if any, of the Carrier or the cargo ship for non-

delivery of the goods. In any case, without there being material on record,

Clause 19 cannot be relied upon for absolving the Carrier from his liability

for any damage or loss caused to the goods carried on ship.

It is urged by Shri C.S. Sundaram, learned senior counsel for the

plaintiff-appellants that on 4.12.2001 reply was filed to the application filed

by the defendants under Order VII Rule 11 of the Code wherein the

plaintiffs have denied that 578 out of 642 logs were carried on deck or that

456 out of the said 578 logs which were carried on deck had been short-

landed; that at the time of filing of the suit, information of the plaintiffs was

based on the six split bills of lading contained in Annexures "A" to "F" of

the plaint and the representations made on behalf of the defendant No. 2;

that it subsequently transpired that the allegation that 578 logs were carried

on deck is wholly incorrect and false; and that the original five bills of

lading more fully referred to in paragraph 7 of the plaint did not state that the

logs were carried on deck. From this, it appears that the plaintiffs are

alleging and asserting that the logs were not carried on deck and, therefore,

Clause 9 has no application. We are not recording any finding on this issue,

but on the basis of the aforesaid factual questions raised, the High Court

without going into the merits of the case could not have held that the

plaintiffs would not be entitled to a decree on account of Clause 9 of BOL.

Besides this, the Court will be required to give meaning to the words used in

Clause 9 as to whether the term `loss' in the Clause has to be separately

read or it has to be read and construed as having reference to, damage to

deck cargo and whether it will cover the case of shortlanding of the goods

and not to damaged goods.

To get the order of stay of a suit on the ground of abuse of process,

the applicant must show that plaintiff would not succeed but that he could

not possibly succeed on the basis of the pleadings and in the circumstances

of the case. In other words, the defendant would be required to show very

strong case in his favour. The power would be exercised by the Court if

defendant could show to the court that the action impugned is frivolous,

vexatious or is taken simply to harass the defendant or where there is no

cause of action in law or in equity. The power of the court restraining the

proceedings are to be exercised sparingly or only in exceptional cases. The

stay of proceedings is a serious interruption in the right, that a party has to

proceed with the trial to get it to its legitimate end according to substantive

merit of his case. The court to exercise the power to stay the proceedings

has to keep in mind that the positive case has been made out by the

defendant whereby the court can reach to the conclusion that proceedings,

however, indicate an abuse of the process of Court. The High Court has

granted stay of proceedings as it found plaintiffs guilty of suppression of

jurisdictional clause of BOL and on the finding that plaintiffs have no case

on merits, and thus it would be abuse of process of the Court if the plaintiffs

are permitted to go ahead with the trial in Calcutta Court. We are not

satisfied that the defendants have made out the case on any of the counts.

It is urged by the learned senior counsel that where jurisdiction is

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founded on the basis of cause of action arising in Calcutta Court as non

delivery of logs are claimed to be at Calcutta, the defendants are entitled to

apply to the court to exercise its discretion to stay the proceedings on the

ground of forum non conveniens. It was urged before the High Court and by

Shri C.S. Sundaram, learned senior counsel appearing for the appellants

before us that the appellants will suffer irreparable injury if they are called

upon to file a suit at Singapore Court after the expiry of period of one year,

particularly so when the objection to the jurisdiction of the Calcutta Court

was raised by the defendants on 7.7.2001 and, therefore, the defendants

cannot claim advantage of forum non conveniens.

The argument is based on the basis of Clause (6) of Article III of the

Schedule to Indian Carriage of Goods by Sea Act, 1925, wherein it has been

provided that in any event the carrier and the ship shall be discharged from

all liability in respect of loss or damage unless suit is brought within one

year after delivery of the goods or the date when the goods should have been

delivered. By Act No. 28 of 1993, it has been provided that this period may

be extended if the parties so agree after the cause of action has arisen,

and further under the proviso a suit may be brought after the expiry of the

period of one year within a further period of not more than three months as

allowed by the court. Under Clause (6) of Article III, one year period was

provided to file a suit against the carrier or the ship for loss or damages

which, by amendment in 1993, has been extended to further period of three

months if allowed by the court and can also be extended for a period till the

filing of the suit if the parties to the suit agree after the cause of action has

arisen. Under Article I of the Schedule, `goods' are defined and as per the

substitution brought about by Act No. 44 of 2000, the goods shall include

any property including live animals as well as containers, pallets or similar

articles of transport or packaging supplied by the consignor, irrespective of

whether such property is to be or is carried on or under the deck. By the

amended definition, the deck cargo is also included in the definition of

goods provided the deck cargo is in the form of containers, pallets or similar

articles of transport or packaging supplied by the consignor. Therefore, on

a first reading, the goods transported on a carriage, even if it is a deck cargo,

could be subject to the limitation as provided in Clause (6) of Article III, but

for Section 2 of the Act which specifies that subject to the provisions of the

Act, the rules set out in the Schedule 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 to any other port whether in India or outside India. To

apply the provisions of the Act and the Schedule thereunder, the goods

should be carried by sea in a ship from any port in India to any other port in

India or outside India. In the present case, admittedly, the goods in

question were carried on the ship from Malaysia for discharge at Calcutta.

The goods having not been carried from any port in India, Clause (6) of

Article III of the Schedule and the provisions of the Act will have no

application for the purposes of limitation. Therefore, it cannot be said that

by virtue of the Act, the suit would be barred by limitation if the plaint is

required to be presented in the Singapore Court. None of the parties have

placed before us the Singapore law applicable to the facts of the present

case, nor any argument has been advanced on that basis. The plaintiff-

appellants on these facts cannot claim equity on the basis of the provisions

of the Act and the limitation provided therein.

In Smith Kline & French Laboratories Ltd. & Ors. Vs. Bloch [ (1983)

2 All ER 72], the first plaintiffs (the English Company) were

pharmaceutical company in England and were a wholly owned subsidiary of

the second plaintiffs (the U.S. Company) The defendant was a research

worker working in England. The defendant brought an action for damages

in Pennysylvania against both the English and the U.S. Companies. The

English Company (plaintiff) sought an injunction in the English Court to

restrain the defendant from further proceedings with his claim in

Pennysylvania or from making any further claims outside the jurisdiction of

English Court and further sought declarations that the proper law of

agreement was that of England and that the English Company were not

liable for the breaches complained of. The judge granted the injunction

sought. The defendant appealed and it was held while dismissing the appeal

that "the Court had jurisdiction to grant an injunction restraining a litigant

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from continuing proceedings in a foreign court where the parties were

amenable to the English jurisdiction and where it is satisfied (a) that justice

could be done between the parties in the English forum at substantially less

inconvenience and expense; and (b) that the stay of proceedings did not

deprive the litigant in the foreign proceedings of any legitimate personal or

juridical advantage which would otherwise have been available to him. The

jurisdiction was nevertheless to be exercised with great caution.

In Spiliada Maritime Corp Vs. Cansulex Ltd. [ (1986) 3 All ER 843], the

House of Lords explained the ambit of the principle of forum non

conveniens for issuing the order of stay and held:

"(1) The fundamental principle applicable to both

the stay of English proceedings on the ground that

some other forum was the appropriate forum and

also the grant of leave to serve proceedings out of

the jurisdiction was that the court would choose

that forum in which the case would be tried more

suitably for the interests of all the parties and for

the ends of justice

(2) In the case of an application for a stay of

English proceedings the burden of proof lay on the

defendant to show that the court should exercise its

discretion to grant a stay. Moreover, the

defendant was required to show not merely that

England was not the natural or appropriate forum

for the trial but that there was another available

forum which was clearly or distinctly more

appropriate than the English forum. In considering

whether there was another forum which was more

appropriate the court would look for that forum

with which the action had the most real and

substantial connection, e.g. in terms of

convenience or expense, availability of witnesses,

the law governing the relevant transaction, and the

places where the parties resided or carried on

business. If the court concluded that there was no

other available forum which was more appropriate

than the English court it would normally refuse a

stay. If, however, the court concluded that there

was another forum which was prima facie more

appropriate the court would normally grant a stay

unless there were circumstances militating against

a stay, e.g. if the plaintiff would not obtain justice

in the foreign jurisdiction."

In this case the Division Bench has held while considering the

question of forum non conveniens as under :

"Let us see, therefore, what are the factors

weighing in favour of the Indian Courts as against

the Courts of Singapore. The evidence regarding

shortage of goods was said to be in India. In our

opinion this evidence does not justify the

continuance of the action in the wrong Court,

because the shortage is practically admitted; in any

event the proof of it in Singapore is not a matter of

any very great difficulty. The other great factor in

favour of the Indian action is that the ship Fortune

Express lost the goods in the very voyage in which

it happened to travel to the Port of Calcutta and

that by reason thereof, it could be quite clearly and

easily arrested and the security obtained for the

action upon the lost logs. This, in our opinion,

takes a very one sided view of the matter. The

arrest conventions, the decision of the Supreme

Court in the case of M.V. Elezabeth, reported at

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1993 Supp.(2) SCC page 433, and the various

observations therein from, say paragraphs 75 to 85

of the judgment, no doubt show that the Fortune

Express could be arrested on an admiralty claim of

the present nature. That arrest makes the action of

the consignee very much secure. But we are not

deciding upon the issue of security; we are

deciding upon the issue of appropriate

commencement of the action. If the action can be

appropriately commenced in Calcutta, security can

be obtained and to that extent the consignee can

feel safe. This does not mean that the reverse is

true. It would be putting the cart before the horse

if one were to say that because the plaintiff can

commence an action and obtain security here the

action should be held as appropriately commenced.

This is not the correct way to look at the case at

all. If that were so, parties would be encouraged

not to pay the attention to solemnly agreed clauses

of forum selection and they would rush to the

Admiralty Court even contrary to such a selection

clause and obtain arrest, thereafter arguing, that the

arrest was most convenient for them, that it

produced a security from the shipper, and that if

decree should be passed in their favour there

would be no difficulty in its execution.

xxx xxx xxx

The factor for leaning heavily in favour of

Singapore is that the parties have chosen

Singapore law. We have not had any experts on

Singapore law attending the proceedings before us

and indeed this choice of law was also suppressed

by the plaintiffs like the choice of Court. No

doubt, arrest of a ship and the consequent

obtaining of security would be of great advantage

to a plaintiff if it were shown that the owners of

the ship were difficult to trade or had to sue. Not

so here. The owners have come forward. They can

be sued in their country. There is nothing to show

that they are so impecunious or that they are such

slippery customers that filing a suit against them in

Singapore would be a matter of no use at all.

These factors are not present in the case. We do

not see why in view of these circumstances we

should not hold the parties to their bargain and

send them away from a Court which they had not

agreed to come to."

From the aforesaid, it is apparent that the Court has found that the

Calcutta Court has jurisdiction to try the proceedings except when the forum

selection clause excludes the jurisdiction of the Court. The Court has also

found that the law of Singapore is not known. The case of the defendant

carrier/owner of the ship, of exclusion of the Calcutta Court, is solely based

on the exclusion clause which conferred jurisdiction on the Court where the

defendant has the principal place of business, which according to us has to

be determined only after sufficient material is placed before the Court. In

Advanced Law Lexicon, 3rd Edition 2005, by P.Ramanatha Aiyar, at page

3717, `principal place of business' is defined as under:

"where the governing power of the corporation is exercised,

where those meet in council who have a right to control its

affairs and prescribe what policy of the corporation shall be

pursued, and not where the labour is performed in executing the

requirements of the corporation in transacting its business.

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The place of a corporation's chief executive offices, which is

typically viewed as the "nerve center".

\005\005.. the place designated as the principal place of business of

the corporation in its certificate of incorporation."

From this, it appears that the principal place of business would be where the

governing power of the corporation is exercised or the place of a

corporation's Chief Executive Offices, which is typically viewed as the

nerve center or the place designated as the principal place of business of the

corporation in its incorporation under the various statutes. Therefore, to

arrive at a finding as to which is the principal place of business, the parties

would be required to place the relevant material before the Court. The Court

cannot arrive at a finding of a particular place being the principal place of

business at the preliminary stage of the hearing of the suit. The defendants

have not placed any material before the Court that the Singapore Court is

another available forum which is clearly or distinctly more appropriate than

the Indian Courts. The Court has not taken into consideration that the action

commenced by the plaintiff-appellants in Calcutta Court founded on the

facts which are most real and substantially connected in terms of

convenience or expense, availability of the witnesses and the law governing

the relevant transaction in the Indian Court. There is no averment in the

application filed by the defendants that continuance of the action in Calcutta

High Court would work injustice to them because it is oppressive or

vexatious to them or would be an abuse of the process of the Court. There

was no material before the Court how the trial at Singapore would be more

convenient to the parties vis-`-vis the trial of the suit at Calcutta and that

justice could be done between the parties at substantially less inconvenience

and expense. Nor it has been shown that stay would not deprive the

plaintiffs of legitimate personal or juridical advantage available to them. In

the facts of the case, we are not satisfied that there is other forum having

jurisdiction, in which the case may be tried more suitably for the interest of

all the parties and for ends of justice.

The Rules of the High Court of Calcutta on the Original Side,

Appendix No. 5 under the caption `Admiralty Rules', the Rules for

regulating the procedure and practice in cases brought before the High Court

at Calcutta under the Colonial Courts of Admiralty Act, 1890 were framed.

The suit was defined to mean any suit, action, or other proceedings instituted

in the said court in its jurisdiction under the Colonial Courts of Admiralty

Act.

Rule 3 provides for institution of the suit. Under this Rule, a suit shall

be instituted by a plaint drawn up, subscribed and verified according to the

provisions of the Code of Civil Procedure.

Rule 4 is in relation to the arrest warrant after affidavit which reads as

under:

"In suits in rem a warrant for the arrest of property

may be issued at the instance either of the plaintiff

or of the defendant at any time after the suit has

been instituted, but no warrant of arrest shall be

issued until an affidavit by the party or his agent

has been filed, and the following provisions

complied with:-

(a) The affidavit shall state the name and

description of the party at the whose

instance the warrant is to be issued, the

nature of claim or counter-claim, the name

and nature of the property to be arrested, and

that the claim or counter-claim has not been

satisfied.

(b) In a suit of wages or of possession the

affidavit shall state the national character of

the vessel proceeded against; and if against a

foreign vessel, that notice of the institution

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of the suit has been given to the Consul of

the State to which the vessel belongs, if

there be one resident in Calcutta and a copy

of the notice shall be annexed to the

affidavit.

(c) In a suit of bottomry the bottomry bond, and

in a foreign language also a notarial

translation thereof, shall be produced for the

inspection and perusal of the Registrar, and

a copy of the bond, or of the translation

thereof, certified to be correct shall be

annexed to the affidavit.

(d) In a suit of distribution of Salvage the

affidavit shall state the amount of Salvage

money awarded or agreed to be accepted,

and the name, address and description of the

party holding the same.

Rule 6 provides that in suits in rem no service of writ or warrant shall

be required when the attorney of the defendant waives service and

undertakes in writing to appear and to give security or to pay money into

Court in lieu of Security.

Rules 27 provides for caveat to be filed against the arrest warrant.

The Court can issue the warrant for the arrest if the affidavit contains the

particulars as required under Rule 4.

Rule 6 permits the attorney of the defendant to ask for waiving of

warrant of arrest by giving an undertaking in writing to appear and to give

security. In the present case suit was instituted on 27.3.2000 and affidavit

was filed for issuance of warrant of arrest of the vessel along with tackle,

apparel and furniture as the same day the court directed for the arrest of the

vessel. On 12.4.2000 letter of intention regarding furnishing guarantee on

behalf of the Owners & Parties, Vessel M.V. Fortune was filed and on the

same date the vessel was directed to be released. In the order of release

dated 12.4.2000 the court has specifically mentioned that the order of

release was passed without prejudice to the rights and contentions of the

owner of the vessel that the suit is not maintainable. Thus, the

maintainability of the suit filed by the plaintiff-appellants was the question

raised before the court and the court was quite aware of the fact that the

defendants are submitting to the jurisdiction of the court subject to their

rights and contentions that the suit is not maintainable in the Calcutta High

Court. Thus, it cannot be said that at the time of the filing of the letter of

intention for furnishing guarantee parties were not aware that the question of

the jurisdiction of the court would be raised. Not only the parties the court

was also aware that the issue of jurisdiction of the court would be in

question. The defendants have not pressed for dismissal of the suit even

when the bank guarantee was furnished on 17.5.2000. The defendants have

not asserted dismissal of suit on the ground of jurisdiction of the Court at the

outset when letter of intention was furnished by the Punjab National Bank

on their behalf nor at the time of furnishing bank guarantee and waited till

7.7.2001 to file an application. From reading of Admiralty Rules, it appears

that it is a usual and common practice to issue warrant of arrest if the

affidavit filed under Rule 4 contains all particulars required. Thus, it cannot

be said that arrest of the ship was obtained by the plaintiffs suppressing

material facts which would warrant stay of suit by the Court.

For the reasons aforementioned, we are of the view that the

defendants have not made out a case for stay of the proceedings of

Admiralty Suit No. 11 of 2000 pending in the Calcutta High Court and the

High Court has committed an error in passing the order of permanent stay

and discharging the bank guarantee. The appeal is allowed with costs. The

order of the Division Bench of the High Court is set aside. The suit shall

now proceed in the Calcutta Court in accordance with law.