M/S Caravel Shipping Services Pvt. Ltd. vs M/S Premier Sea Foods Exim Pvt. Ltd.

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 10800-10801 OF 2018 (Arising out of SLP (C) Nos. 31101-31102/2016)

M/S CARAVEL SHIPPING SERVICES PVT. LTD. Appellant(s)

VERSUS

M/S PREMIER SEA FOODS EXIM PVT. LTD. Respondent(s)

J U D G M E N T

R.F. Nariman, J.

1) Leave granted.

2) The present appeals arise out of a document styled as

“Multimodal Transport Document/Bill of Lading” dated

25.10.2008. This Bill of Lading states that the

Consignor/Shipper is one M/s Premier Seafoods Exim Private

Limited of Kerala, and that Caravel Shipping Services Private

Limited, who is the appellant before us, is the agent who

facilitates transport. The very opening Clause of the Bill of

Lading specifies:

“In accepting this Bill of Lading the Merchant

Signature Not Verified expressly agrees to be bound by all the terms, Digitally signed by R NATARAJAN Date: 2018.11.02 16:35:09 IST conditions, clauses and exceptions on both sides Reason:

of the Bill of Lading whether typed, printed or

otherwise.” 2

3) The Respondent filed a Suit being O.S. No. 9 of 2009

before the Sub-Judge’s Court in Kochi to recover a sum of Rs.

26,53,593/- in which the Bill of Lading was expressly stated

to be a part of cause of action. Soon after the Suit was

filed, an I.A. being I.A. No. 486 of 2009 was filed by the

appellant under Section 8 of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as “the Act”) in which it

was pointed out to the Court that an arbitration clause was

included in the printed terms annexed to the Bill of Lading.

The I.A. also pointed out that a Section 11 petition to

appoint an Arbitrator in accordance with Clause 25, being the

printed term in question, has also been filed in Chennai. The

Sub-Court, Kochi, by its judgment dated 08.01.2013 dismissed

the I.A., stating that printed conditions annexed to the Bill

of Lading would not be binding upon the parties, and also that

as no part of the cause of action arose in Chennai, the I.A.

would have to be dismissed.

4) In the Original Petition filed under Article 227 of the

Constitution of India, the High Court referred to certain

provisions of the Multimodal Transportation of Goods Act, 1993,

and also stated that the arbitration clause, being in a printed

condition, there being no intention to arbitrate and nothing to

show that Clause 25 was brought to the notice of the

respondent, agreed with the learned Sub-Judge and dismissed the

Original Petition. A Review filed against the said judgment

was also dismissed by a judgment dated 14.06.2016. 3

5) Ms. Liz Mathew, learned counsel appearing on behalf of

the appellant pointed out that printed conditions of the Bill

of Lading were expressly referred to in the Bill of Lading and

both parties were stated to be bound by the same. This being

so, in accordance with Section 7(5) of the Arbitration Act

read with this Court’s judgment in M.R. Engineers and

Contractors Private Limited vs. Som Datt Builders Limited,

(2009) 7 SCC 696 would make it clear that there was a

reference in the contract to the arbitration clause, and since

it is in writing and the reference is such that the

arbitration clause formed part of the contract, according to

her, both the courts were in error. She also pointed out to

us that, in the meanwhile, the Madras High Court, by order

dated 09.01.2015, has referred to the Kerala proceeding, but

nonetheless applied the arbitration clause and appointed a

Senior Advocate to arbitrate between the parties in that

proceeding.

6) On the other hand, Mr. P.A. Noor Muhamed, learned counsel

for the respondent, invited our attention to Section 7(4) of

the Act and argued that Section 7(4)(a) requires an

arbitration agreement to be in a document that is signed by

the parties. Since the Bill of Lading was not signed by his

client, according to him, he is, therefore, not bound by the

arbitration clause contained in that document. Further, he

has also argued that at present the stage of the suit is that

issues have been struck and one witness is being examined. 4

7) Having heard learned counsel for both parties, we are of

the view that the Bill of Lading makes it clear that the term

“Merchant” (which is defined in the Standard Conditions

Governing Multimodal Transport Documents - Clause (1) (e) as

meaning shipper, consigner or consignee) expressly agrees to

be bound by all the terms, conditions, clauses and exceptions

on both sides of the Bill of Lading whether typed, printed or

otherwise. The arbitration clause, which is Clause 25 being a

printed condition annexed to the Bill of Lading, reads as

under:

“25. Jurisdiction/Arbitration:

The contract evidenced by the Bill of Lading

shall be governed by the laws of India, and

subject to the exclusive jurisdiction of court

in Chennai only. Disputes/difference arising

out of this contract and/or connection with the

interpretation of any of its clauses shall be

settled by arbitration in India in accordance

with the Arbitration & Conciliation Act, 1996.

The No. of Arbitrators shall be three, the

Arbitrators shall be commercial persons the

venue for arbitration shall be Chennai.”

8) A perusal of the same shows that the respondent has

expressly agreed to be bound by the arbitration clause despite

the fact that it is a printed condition annexed to the Bill of

Lading. Secondly, it must be remembered that the respondent

has itself relied upon the Bill of Lading as part of its cause 5

of action to recover the sum of Rs.26,53,593/- in the suit

filed by it. The respondent, therefore, cannot blow hot and

cold and argue that for the purpose of its suit, it will rely

upon the Bill of Lading (though unsigned) but for the purpose

of arbitration, the requirement of the Arbitration Act is that

the arbitration clause should be signed.

9) In addition, we may indicate that the law in this behalf,

in Jugal Kishore Rameshwardas vs. Mrs. Goolbai Hormusji, AIR

1955 SC 812, is that an arbitration agreement needs to be in

writing though it need not be signed. The fact that the

arbitration agreement shall be in writing is continued in the

1996 Act in Section 7(3) thereof. Section 7(4) only further

adds that an arbitration agreement would be found in the

circumstances mentioned in the three sub-clauses that make up

Section 7(4). This does not mean that in all cases an

arbitration agreement needs to be signed. The only pre-

requisite is that it be in writing, as has been pointed out in

Section 7(3).

10) This being the case, the present is a clear case where,

under Section 7(5) of the Act read with M.R. Engineers and

Contractors Pvt. Ltd. (supra) (paras 22 & 24), the reference

in the Bill of Lading is such as to make the arbitration

clause part of the contract between the parties.

11) The fact that the stage of the present suit is that a

particular witness is being examined would not come in the way

of the Section 8(3) application being allowed inasmuch as the

Section 8(3) application was filed in the same year as that of 6

the suit. We may also add that we have not gone into the

Multimodal Transportation of Goods Act, 1993 for the reason

that whether the present Bill of Lading is governed by the

provisions of the Act (Section 26 in particular) or not would

not make any difference to the position that an arbitration

clause forms part of an agreement between the parties, and

would, therefore, be governed by Section 7 of the Arbitration

Act.

12) We, therefore, allow the appeals and set aside the

judgments of the High Court.

.......................... J.

(ROHINTON FALI NARIMAN)

.......................... J.

(NAVIN SINHA) New Delhi;

October 29, 2018.