# MA YAR (H.K.) LTD. AND ORS v. OWNERS & PARTIES, VESSEL M.V. FORTUNE EXPRESS AND ORS

- **Citation:** [2006] 1 S.C.R. 860
- **Court:** Supreme Court of India
- **Decided:** 2006-01-30
- **Case number:** Civil Appeal No. 867 of2006
- **Bench:** Ruma Pal, P.P. Naolekar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ma-yar-h-k-ltd-and-ors-v-owners-parties-vessel-m-v-fortune-express-and-ors-21135
- **Pages:** 32

## Headnote

Admiralty Suit·-lndian Carriage of Goods by Sea Act, 1925--Section
2 and Schedule to the Act-~ivil Procedure Code 1908-0rder VII Rule //,
Order V Rule 2. Section JO-Power of High Court to grant stay--Charter
C Party Agreement between plaintiff and defendant company---Defendant
agreeing to carry on board the vessel a quantity of limber logs from various
ports of Malaysia to Calcutta Port--Out of 642 logs, 5 78 Jogs lying on deck
of the vessel and described as deck cargo in BOL-At Calcutta Port short
landing of 456 logs lying on deck-Plaintiff filing admiralty suit in the High
D Court at Ca/cul/a alleging breach of Charter Party Agreement by failing and
neglecting to carry on board the vessel the agreed quuntity of logs--Single
Judge directing arrest of the vessel--Subsequent direction to release vessel
on PNB submilling /el/er of intent for furnishing the hank guaranteeDefendants filing application under Order VII, Rule 11 for dismissal of suit
in Iimine alleging that Calcul/a Court has no jurisdiclion to entertain the
E suit and that the suit does not disclose any cause of action-Single Judge
dismissing the application--Division Bench granting permanent stay of the
suit and held that under the forum selection clause the Singapore Court
alone has jurisdiction to entertain the suit-Allowing the appeal, held that
since the defendant had not made out a case for stay of proceedings of the
F Admiralty Suit, the High Court erred in passing an order of permanent stayHowever, High Court was justified in holding thG: the powers under Order
VII. Rule 11 could not be exercised for rejection of suit.
Admiralty Suit--Civil Procedure Code-Order VII. Rule 11 and Section
10--rejection of plaint-Scope of power--Court has to read the entire plaint
G as a whole to find out whether it discloses a cause of action-··Plainl cannot
be rejected on the basis of allegalions made by the defendant- -As avermenls
made in the plaint do disclose the cause of action, the High Court \fas rig/11
in holding that powers under Order VII, Rule 11 could not be exercised for
rejection of suil.
H
860
(
\
MAY AR (HK) LTD.•·. OWNERS & PARTIES, VESSEL M.V. FORTUNE EXPRESS
86 J
Admiralty Suit-Civil Procedure Code 1908, Order VII, Rule //- A
Calcutta High Court (Original Side) Rule, admiralty rules 3, 4, 6, 27Jurisdiction-Admiralty Suit claiming damages for short delivery of cargoDefendant taking the plea of exclusion of jurisdiction under Forum selection
clause in the agreement between the parties-No reference to the said clause
in the plaintiff's pleading-Whether it is a case of suppression of material
facts-Held, it cannot be considered a case of suppression and the question B
of jurisdiction ought to be adjudicated on the basis of the material placed
on record at the trial.
Civil Procedure Code, Order VI, Rule 2-Admiralty Suit-PleadingsMateria/ facts-Material facts are the facts on which a party relies for his C
claim or defence-Plaintiff has to plead the facts on which he relies to prove
his case and it is for defendant to plead the facts on which his defence
stands-Plaintiff not required to plead facts on which defendant's defence
stands.
Exclusion Clause-Civil Procedure Code 1908, Order VI, Rule 2- ffi
When the Court has to decide question of jurisdiction pursuant to an ouster
clause it is necessary to construe ii properly to see whether there is ouster
of jurisdiction of other Courts-When the clause is clear, unambiguous and
specified, accepted notions of contract would bind the parties-Unless the
absence of ad idem can be shown, other courts should avoid exercising
jurisdiction.
F
Civil Procedure Code 1908, Order VI, Rule 2-Admiralty Suit-Stay of
suit on the ground of abuse of the process-Held defendant would be required
to show very strong case in his favour-The power could be exercised by the
court only if the defendant is able to show that the impugned action is F
frivolous, vexatious or is taken simply to harass the defendant or where there
is no cause of acti

## Text

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A
MA YAR (H.K.) LTD. AND ORS.
v.
OWNERS & PARTIES, VESSEL M.V. FORTUNE EXPRESS AND ORS.
JANUARY 30, 2006
B
[RUMA PAL AND P.P. NAOLEKAR, JJ.]
Admiralty Suit·-lndian Carriage of Goods by Sea Act, 1925--Section
2 and Schedule to the Act-~ivil Procedure Code 1908-0rder VII Rule //,
Order V Rule 2. Section JO-Power of High Court to grant stay--Charter
C Party Agreement between plaintiff and defendant company---Defendant
agreeing to carry on board the vessel a quantity of limber logs from various
ports of Malaysia to Calcutta Port--Out of 642 logs, 5 78 Jogs lying on deck
of the vessel and described as deck cargo in BOL-At Calcutta Port short
landing of 456 logs lying on deck-Plaintiff filing admiralty suit in the High
D Court at Ca/cul/a alleging breach of Charter Party Agreement by failing and
neglecting to carry on board the vessel the agreed quuntity of logs--Single
Judge directing arrest of the vessel--Subsequent direction to release vessel
on PNB submilling /el/er of intent for furnishing the hank guaranteeDefendants filing application under Order VII, Rule 11 for dismissal of suit
in Iimine alleging that Calcul/a Court has no jurisdiclion to entertain the
E suit and that the suit does not disclose any cause of action-Single Judge
dismissing the application--Division Bench granting permanent stay of the
suit and held that under the forum selection clause the Singapore Court
alone has jurisdiction to entertain the suit-Allowing the appeal, held that
since the defendant had not made out a case for stay of proceedings of the
F Admiralty Suit, the High Court erred in passing an order of permanent stayHowever, High Court was justified in holding thG: the powers under Order
VII. Rule 11 could not be exercised for rejection of suit.
Admiralty Suit--Civil Procedure Code-Order VII. Rule 11 and Section
10--rejection of plaint-Scope of power--Court has to read the entire plaint
G as a whole to find out whether it discloses a cause of action-··Plainl cannot
be rejected on the basis of allegalions made by the defendant- -As avermenls
made in the plaint do disclose the cause of action, the High Court \fas rig/11
in holding that powers under Order VII, Rule 11 could not be exercised for
rejection of suil.
H
860
(
\
MAY AR (HK) LTD.•·. OWNERS & PARTIES, VESSEL M.V. FORTUNE EXPRESS
86 J
Admiralty Suit-Civil Procedure Code 1908, Order VII, Rule //- A
Calcutta High Court (Original Side) Rule, admiralty rules 3, 4, 6, 27Jurisdiction-Admiralty Suit claiming damages for short delivery of cargoDefendant taking the plea of exclusion of jurisdiction under Forum selection
clause in the agreement between the parties-No reference to the said clause
in the plaintiff's pleading-Whether it is a case of suppression of material
facts-Held, it cannot be considered a case of suppression and the question B
of jurisdiction ought to be adjudicated on the basis of the material placed
on record at the trial.
Civil Procedure Code, Order VI, Rule 2-Admiralty Suit-PleadingsMateria/ facts-Material facts are the facts on which a party relies for his C
claim or defence-Plaintiff has to plead the facts on which he relies to prove
his case and it is for defendant to plead the facts on which his defence
stands-Plaintiff not required to plead facts on which defendant's defence
stands.
Exclusion Clause-Civil Procedure Code 1908, Order VI, Rule 2- ffi
When the Court has to decide question of jurisdiction pursuant to an ouster
clause it is necessary to construe ii properly to see whether there is ouster
of jurisdiction of other Courts-When the clause is clear, unambiguous and
specified, accepted notions of contract would bind the parties-Unless the
absence of ad idem can be shown, other courts should avoid exercising
jurisdiction.
F
Civil Procedure Code 1908, Order VI, Rule 2-Admiralty Suit-Stay of
suit on the ground of abuse of the process-Held defendant would be required
to show very strong case in his favour-The power could be exercised by the
court only if the defendant is able to show that the impugned action is F
frivolous, vexatious or is taken simply to harass the defendant or where there
is no cause of action in law or in equity.
Indian carriage of Goods by Sea Act, 1925-Article Ill clause (6),
Section 2-Limitation-Forum non convenience-Transportation of goods
by sea in ships from Malaysia to Calcutta port-Short landing of goods at G
Calcutta Port-Filing of Admiralty Suit in the High Court at CalcuttaDefendant 's plea for stay of proceedings on the ground of Forum non
',
convenience-Plaintiff's plea that if plaint now require to be filed in
Singapore, it would be barred by /imitation-Held, as the goods were not
carried from any port in India, provisions of the Act will have no application
for the purposes of limitation-However, there is no substance on record to H
862
SUPREME COURT REPORTS
(2006 J I S.C.R.
A show that there is other F arum having jurisdiction in which the case may be
tried more suitably for the interest of all the parties and for ends of justice.
Plaintiff is a company incorporated in Hong Kong and engaged in the
business of export and import of timber logs. Defendant is a company
incorporated in Singai>ore and carrying on shipping business. Defendant
B agreed to carry on board a quantity of timber logs from different ports of
Malaysia to Calcutta port for sale to various buyers in West Bengal, India.
As per 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 deck
of the vessel. At the time of discharge of cargo at Calcutta, it was found that
C 456 logs out of 578 logs which were lying on the deck were missing and had
been short landed. Plaintiff filed admiralty suit in the High Court at Calcutta
in admiralty jurisdiction alleging breach of Charter Party Agreement on the
part of defendant by failing and neglecting to carry on board the vessel the
agreed quantity of logs. Plaintiff also prayed for arrest of vessel along with
her tackle, apparel and furniture.
D
Single Judge of the High Court directed arrest of the vessel granting
liberty to defendant for release of the vessel on furnishing a bank guarantee.
The vessel was directed to be released on PNB submitting a letter of intent
for furnishing the said bank guarantee. Defendant filed an application under
Order VII, Rule 11, CPC alleging that Calcutta High Court has no jurisdiction
E to entertain the suit and the suit does not disclose any cause of action as
liability for deck cargo was excluded by clause 9 of BOL. Single Judge
dismissed the application. On appeal, Division Bench of the High Court granted
permanent stay of the suit and directed discharge of the bank guarantee
holding that under the forum selection clause the Singapore Court alone will
F
have jurisdiction to entertain the suit. It was also held that the goods lost
being the deck cargo, the carrier ship has no liability as per clause 9 of BOL
and plaintiffs made abuse of the process of the court by not pleading clause 3
and 9 in their suit. Appeal is preferred to this Court by the plaintiff.
Allowing the appeal, the Court
G
HELD : I. I 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,
H and where. the suit appears from the statement in the plaint to be barred by
MAY AR (H.K.) LTD.,. OWNERS & PARTIES, VESSEL M.V. FORTUNEEXPRESS
863
any law. 1874-C, DI
1.2. 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
A
by the Court exercising the powers under Order VII Rule 11 of the Code. B
Essentially, whether the plaint discloses a cause of action, is a question of
\
fact which has to be gathered on the basis of 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 C
in certain cases where the pleadings relied on are in regard to
misrepresentation, fraud, willful 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 do disclose the cause of action D
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. [875-F-H; 876-Al
1.3. 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 E
in a competent court between the parties raising directly and substantially
the same issues as raised in the present suit. (876-B)
Chillaranjan Mukherji v. Barhoo Mahto, AIR (1953) SC 472, Bhagat
Singh Bugga v. DewanJagbir Sawhney, 28 AIR (1941) Cal 670, Hansraj Bajaj F
v. Indian Overseas Bank Ltd., AIR (1956) Cal 33, Krishnan and Anr. v.
Krishnamurthi and Ors., AIR (1982) Madras 101, Mis Crescent Petroleum
Ltd. v. "MONCHEGORSK" and Anr., AIR (2000) Born 161, referred to.
T. Arivandandam v. T. V. Satyapal and Anr., (19771 4 SCC 467, Roop
Lal Sethi v. Nachhattar Singh Gill, 119821 3 SCC 487, ITC Ltd. v. Debts G
Recovery Appellate Tribunal, 11998(·2 SCC 70, Saleem Bhai and Ors. v. State
of Maharashtra and Ors., 12003( I SCC 557 and Popat and Kotecha Property
v. State Bank of India Staff Association, [2005( 7 SCC 510, relied upon.
2. 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 H
864
SUPRE\1E COURT REPORTS
12006] l S.C.R.
A 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 <o 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 wordings of Order VI Rule 2 the material
facts would be, upon which a party relies for his claim or defence. The material
B facts are facts upon which the plaintifrs cause of action or defendant's defence
depends and the facts which must be proved in order to establish the plaintifrs
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. As per
C the plaintifrs 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. 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. Therefore, absence of reference of Clause 3 of BOL in the
D
E
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 placed on record at the trial.
[879-F-H; 880-A; 880-G-H; 881-A; 881-Df
2.2. 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 not yet on record
F 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
G necessary facts which could only be adjudicated upon at the trial of the suit.
(881-G, H; 882-A, BJ
A.B.C.laminart Pvt. ltd. v. A.P.Agencies Salem, [1989( 2 SCCl63;
S.JS.Business Enterprises v. State of Bihar, (2004) 7 SCC 166 and R. v.
H General Commrs. for the purposes of the Income Tax Act for the District of
\ \-·
!
MA VAR (H.K.) LTD.''· OWNERS & PARTIES. VESSEL MV. FORTUNE EXPRESS
865
Kensington, (1917) 1 KB 486, referred to.
A
3. 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 B
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 exc/usio a/terius'
- expression of one is the exclusion of another-may be applied. What is an C
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.
(880-C-EI
4. 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 ofBOL would be a question required to be determined
by the Court after parties placed all material evidence before it and cou Id not
have been decided by the Division Bench at preliminary stage. Without there
b-eing 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. (883-8, Fl
5. The power of the court restraining the proceedings are to be exercised
D
E
sparingly or only in exceptional cases. The stay of proceedings is a serious F
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 power would be exercised by the Court if defendant could show to the G
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.
(884-D-F, C(
6. Under Clause (6) of Article III,.ofthe Schedule to Indian Carriage of
Goods by Sea Act, I 925, one year period was provided to file a suit against H
866
SUPREME CO!JRT REPORTS
[200611 S.C.R.
A the carrier or the ship for loss or damages which, by amendment in 1993,
has been extended to further period of thrc-e months if allowable 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
B 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
C by the consignor. Therefore, 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
D outside India. To apply the provisions of the Act and the Schedule there under,
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
E III of the Schedule and the provisions of the Act will have no application for
the purpose 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. 1885-C-HI
Smith Kline &French laboratories ltd v. Bloch, 119831 2 All ER 72
F and Spiliada Maritime Corp v. Cansu/ex ltd., [198613 All ER 843, referred
to.
7. The principal place of business would be where the governing power
of the corporation is exercised or the place ofa corporation's Chief Executive
Officers, which is typically viewed as the nerve center or the place designated
G as the principal place of busine~s of the corporation in its incorporation under
the various statute~. Therefore, to arrive at a finding as to which is the
princip1JI 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
H Court that the Singapore Court is another available forum which is clearly
MAY AR (H K IL TD ,. OWNERS & PARTIES. VESSEL M.V. FORTUNE EXPRESS [PP NAOLEKAR, J ] 867
or distinctly more appropriate than the Indian Courts. The Court has not taken A
into consideration that the action commenced by the plaintiff-applicants in
Calcutta Court founded on the facts which are most real and substantially
connected in ter111s 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
action in Calcutta High Court would work injustice to them because it is B
oppressive or vexatious to them or would be an abuse of the process. 1f the
Court. There was no material before the Court how the trial at Singapore
would be more convenient to th.e parties vis-a-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 C
deprive the plaintiffs of legitimate personal or juridical advantage available
to them. In the facts of the case, this court is 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. (889-C-GJ
8. From reading of Admiralty Rules, it appears that it is a usual and D
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. [891-E, Fl
9. The defendants have not made out a case for stay of the proceedings E
of Admiralty Suit and the High Court has committed an error in passing the
order of permanent stay and discharging the bank gua~antee. [891-G I
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 867 of2006.
From the Judgment and Order dated 23.8.2004 of the Calcutta High
Court in A.P.O.T. No. 679/2002.
F
C.S. Sundaram, Rana Mukherjee, R. Misra, S. Gautam and Goodwill
lndeevar for the Appellants.
R.F. Nariman, H.K. Puri, U. Banerjee, S.K. Puri, Ms. P. Puri and V.M.
Chauhan for the Respondents.
The Judgment of the Court was delivered by
P.P. NAOLEKAR, J. Leave granted.
G
This appeal is preferred by the plaintiff-appellants challenging the
judgment of the Division Bench of the Calcutta High Court dated 23.8.2004 H
868
SUPREME COURT REPORTS
(2006] 1 S.C.R.
A whereby the plaintiffs' suit filed in Admiralty jurisdiction was directed to
remain permanently stayed and the bank guarantee furnished by the defendantrespondents in the suit was directed to stand immediately discharged. The
plaintiff-appellants wen: also directed io pay the costs.
Appellant No. I Mayar (H.K.) Limited filed admiralty suit in the High
B 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 I appellant No .. I, against the defendant-respondents alleging, inter
alia, that plaintiff I appellant No. I (hereinafter called "A-1 ") is a company
incorporated under the laws of Hong Kong and engaged in the business of
C 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 a/ia,
at IOI, Cecil Street l0-04 Tong. Eng. Building, Singapore (description given
in the plaint) an owner on behalf of the vessel M.V. "Fortune Express"
D (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- I 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
E 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
F instance of the defendants so as to facilitate sale by A- I to various buyers
in West Bengal, India. The appellants I to 5 are the holders in due course
and/or endorsees of the six of those bills of lading which dealt with tht; 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
G
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 ·ying 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
H for reward and/as evidenced by the six bills of lading, the defendants have
MAY AR (HK ) LTD ''·OWNERS & PARTIES, VESSEL M.V FORTUNE EXPRESS (PP NAOLEKAR. l.J 869
failed to deliver 456 logs whereby the plaintiffs have suffered loss and A
damage. The plaintiffs have also alleged that the defendants also acted in
breach of their contract entered into with A- I 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 B
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.
l,30,19,688.44p. as per the particulars stated hereinbelow :
I.
Proportionate value of 456 logs of
aggregate value of Rs. l,56,87,298.44p.
2
Proportionate port charge and other
Rs. 1,09, 13,902.56p.
charges paid in respect of 456 logs.
Rs. 4,14,130.72p.
3.
Proportionate custom duty paid in respect
c
of 456 logs.
Rs. 5,00,264.73p. D
4.
Proportionate insurance payment made in
respect of 456 logs.
Rs. I0,9 l ,390.43p
Rs.l,30,19,688.44p
The plaintiffs have also claimed from the defendants interest on the aforesaid E
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 F
short-landing of the goods as mentioned in the affidavit of arrest amounting
to a total sum of Rs.1,30, l 9,688.44p. 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 G
in favour of the plaintiffs will frustrate the proceedings, as the defendantrespondents 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 b~ at H
870
SUPREME COURT REPORTS
1200611 S.C.R.
A libeny to apply before the Court for vacation of the order. On 12.4.2000, the
Punjab Nationai Bank, Calcutta, submitted a letter of intent before the Registrar,
High Cour.t, 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
B 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
C furnished the bank guarantee binding itself and the defendants for the payment
of the amount of Rs.1,30, I 9,688.44p. 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, tht: defendants filed an application purported to be under
D 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 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
E 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
F 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 v. 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
G that for application of Ciause 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.
H
Aggrieved by the said order of the learned Single Judge, an appeal was
\
)
\.
MAY AR (H.K.) LTD.,. OWNERS & PARTIES. VESSEL MV FORTUNE EXPRESS (PP. NAOLEKAR. J] 87 J
preferred before the Division Bench of the Calcutta High Court by the A
defendants which wi:s 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 B
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 C
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 arc. 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, D
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. E
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 F
by reason of the application thereof the goods are notdeck 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, G
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 wouid
be most unjust because the application by the defendants for treating the H
872
SUPREME COURT REPORTS
[2006] I S.C.R.
A 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 had been absolved of all Ii.ability 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
B 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
C 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 si11gle 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
D 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
E 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
F 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 che arrested ship lying in wait to satisfy the decree
that might be passed a sufficient money equivalent provided by the owners
G and the parties interested in the ship lies so in wait.
H
On consideration of th~ si.:bmissions 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
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MA YAR CH.K.) LTD.' OWNERS & PARTIES, VESSEL MV. FORTUNE EXPRESS [PP NAOLEKAR. J] 873
law by express contract. They should be held bound to it.
A
(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 B
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 ;my 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
action fully and wholly, but that by reason of the suppression contained in
c
D
E
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 F
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 th~
Court, which it always possesses to reject or stay, a plaint by treating it as G
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.
H
A
B
874
Sl:PREME COURT REPORTS
[2006 J I S.C.R.
The aforesaid finding clearly indicates that the order of pennanent 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 I 0 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
C regard to deck cargo.
Under Order VI I 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
D 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 Vil Rule l l of the Code would be on
consideration of the principles laid down by this Court. In T. Arivandandam
v.