2006 (1) TMI 600 - SC - Indian Laws

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? Whether 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?

Summary

Issues Involved:
1. Jurisdiction of the Calcutta High Court.
2. Forum selection clause in the Bill of Lading (BOL).
3. Liability for deck cargo under BOL.
4. Alleged suppression of material facts by plaintiffs.
5. Application of Order VII Rule 11 of the Code of Civil Procedure.
6. Inherent discretionary jurisdiction to stay proceedings.
7. Forum non conveniens.
8. Admiralty jurisdiction and arrest of the vessel.

Detailed Analysis:

1. Jurisdiction of the Calcutta High Court:
The plaintiffs filed an admiralty suit in the High Court at Calcutta alleging non-delivery of 456 logs, causing a loss of Rs. 1,30,19,688.44. The defendants challenged the jurisdiction of the Calcutta High Court based on Clause 3 of the BOL, which stipulated that disputes should be decided in the country where the carrier has its principal place of business, i.e., Singapore. The Division Bench held that the Singapore Court alone had jurisdiction due to the forum selection clause. However, the Supreme Court noted that the exclusion clause would only apply if the principal place of business of the defendant was established to be Singapore, which required evidence.

2. Forum Selection Clause in the Bill of Lading (BOL):
Clause 3 of the BOL specified that disputes should be resolved in the country where the carrier has its principal place of business. The Division Bench found that the plaintiffs suppressed this clause and thus, the Calcutta High Court should not proceed with the suit. The Supreme Court, however, emphasized that the principal place of business needed to be proven and that the mere mention of Singapore in the cause title did not establish it as the principal place of business.

3. Liability for Deck Cargo under BOL:
Clause 9 of the BOL excluded the carrier's liability for any loss or damage resulting from the act, neglect, or default of its servants in managing deck cargo. The Division Bench concluded that the defendants were not liable for the lost deck cargo. The Supreme Court held that this issue required factual determination during the trial, as the plaintiffs disputed whether the logs were carried on deck.

4. Alleged Suppression of Material Facts by Plaintiffs:
The Division Bench found that the plaintiffs suppressed the forum selection and liability exclusion clauses, constituting an abuse of the court process. The Supreme Court disagreed, stating that these clauses were matters of defense for the defendants to plead and prove, not material facts that the plaintiffs were required to include in their plaint.

5. Application of Order VII Rule 11 of the Code of Civil Procedure:
The Division Bench suggested that the suit could be stayed under the inherent jurisdiction of the court due to the suppression of material facts. The Supreme Court clarified that under Order VII Rule 11, a plaint could only be rejected if it did not disclose a cause of action or was barred by law, neither of which applied here. The plaint did disclose a cause of action, and thus, the suit could not be rejected or stayed under this provision.

6. Inherent Discretionary Jurisdiction to Stay Proceedings:
The defendants argued that the court had inherent jurisdiction to stay proceedings in appropriate cases. The Supreme Court acknowledged this but emphasized that such power should be exercised sparingly and only in exceptional cases. The defendants failed to demonstrate that continuing the suit in Calcutta would be oppressive or vexatious.

7. Forum Non Conveniens:
The Division Bench considered the doctrine of forum non conveniens, suggesting that Singapore was a more appropriate forum. The Supreme Court noted that the defendants did not provide sufficient evidence that Singapore was a clearly more appropriate forum or that the trial in Calcutta would be oppressive. The plaintiffs would suffer injustice if required to file a suit in Singapore after the expiration of the limitation period.

8. Admiralty Jurisdiction and Arrest of the Vessel:
The plaintiffs obtained an arrest order for the vessel M.V. Fortune Express, which was released upon furnishing a bank guarantee. The Division Bench held that the arrest was wrongful due to the forum selection clause. The Supreme Court found that the arrest was justified under the Admiralty Rules, as the plaintiffs had provided the necessary particulars in their affidavit. The defendants' submission to the court's jurisdiction was conditional and did not preclude them from challenging it later.

Conclusion:
The Supreme Court set aside the Division Bench's order, allowing the suit to proceed in the Calcutta High Court. The court found that the issues of jurisdiction, liability under the BOL, and the applicability of the forum selection clause required factual determination during the trial. The defendants failed to make a strong case for staying the proceedings or proving that Singapore was a more appropriate forum. The arrest of the vessel was justified, and the plaintiffs did not suppress any material facts warranting a stay of the suit.