High Court Of Delhi
HINDUSTAN FERTILIZER CORPORATION LIMITED - Appellant
Versus
GREAT EASTERN SHIPPING COMPANY LIMITED - Respondent
ORIGINAL MISCELLANEOUS PETITION 47 of 1995
Decided On : 05/22/1998
{'KEYWORD': 'ARBITRATION AGREEMENT', 'SUBJECT': 'VALIDITY OF ARBITRATION AGREEMENT AND JURISDICTION OF COURT', 'ACT SECTION LIST': ['SECTION 19', 'SECTION 20', 'SECTION 130', 'SECTION 1', 'RIDER NO. 51']}
Fact of the Case:
The petitioner, a wholly owned Government company, sought a declaration about the existence of a valid arbitration agreement between the petitioner and respondent No. 1 and the validity of the reference of disputes between the parties to the two joint arbitrators. The petitioner claimed to be the assignee of the bill of lading and authorized agent of the Government of India for handling and distribution of imported fertilizers. The respondent was a common carrier by sea and the owner of the merchant ship "Jagrahat". A Charter Party Agreement was executed between the President of India and the respondent company, wherein the respondent company undertook to carry a cargo of Di-Ammonium Phosphate from the U.S. Gulf to India. The cargo was delivered to the petitioner, but during the period of loading, heavy rains caused the cargo to become wet and solidified. The petitioner suffered losses due to the damaged cargo and sought arbitration as per the arbitration clause in the Charter Party Agreement. The respondent contested the arbitration agreement and the jurisdiction of the court, arguing that the petitioner was not a party to the arbitration agreement and that the court lacked territorial jurisdiction.
Finding of the Court:
The court held that the petitioner, as an agent of a disclosed principal, could not sue in its own name due to the provisions of Section 230 of the Contract Act. The court further held that there was no valid arbitration agreement between the petitioner and the respondent, and that the petitioner lacked the necessary cause of action to sue in its own name. The court also found that it lacked territorial jurisdiction to hear the petition, as the agreement was entered into in Bombay, the cargo was to be delivered in Kakinada, and none of the respondents resided or carried on business within the jurisdiction of the court.
Issues: ['Validity of arbitration agreement', 'Jurisdiction of the court', 'Right of the plaintiff to sue as an agent']
Ratio Decidendi: The court relied on various legal provisions and principles to reach its decision, including:
Final Decision: The petition was dismissed due to lack of territorial jurisdiction and the petitioner's inability to sue in its own name.
( 1 ) BY this petition, the petitioner a wholly owned Government company seeks declaration about existence of a valid arbitration agreement between the petitioner, assignee under the bill of lading and respondent No. 1 and valid reference of disputes between the parties to the two joint arbitrators-respondent Nos. 2 and 3 and in the alternative seeks reference of the disputes to the arbitrators already appointed.
( 2 ) 1 The petitioner themselves claims that petitioner company is authorised agent of Government of India in regard to handling and distribution of imported fertilizers. The respondent is a common carrier by sea and is the owner of the merchant ship "jagrahat . 2. 2 Under a Charter Party Agreement dated April 22, 1992 between the President of India and the Respondent company-The Great Eastern Shipping Co. Ltd. , the respondent company undertook that its vessel "m. v. JAGRAHAT would call at one or two safe ports in U. S. , Gulf, part of Tampa and there it could load full and comp lete cargo of 33,000 M. t. at owner s option Bulk Di-Ammonium Phosphate all under deck and carry the same to one or two safe ports, safe anchorages, West or East Coast of India and there deliver the cargo in the same good condition as they were loaded to or to the order of the petitioner for consideration as mentioned in the Charter party. 2. 3 Seminole Fertilizer Corporation Stamford, U. S. A. executed the contract for sale of 31,853. 478 M/t of DAP to Government of India through its Canalising Agent MMTC. M. V. Jagrahat issued a bill of lading dated 25th April, 1992. The Charter Party contains an arbitration clause under Rider No. 51. The petitioner is the assignee of the said bill of lading for it was endorsed by the Ministry of Chemical and Fertilizers, Government of India to the effect that "the cargo may be released to M/s. Hindustan Fertilizers on behalf of the Ministry of Chemical and Fertilizers" The cargo was delivered accordingly to the petitioner. During the period of loading between April 2, 1992 and April 25, 1992 there were rains on 23rd and 24th April, 1992. The vessel "m. v. Jagrahat" arrived at the port of discharge, Kakinada, India and commenced discharge on June 7, 1992 completed it on August 5, 1992. The bulk DAP cargo was found to be wet, solidified, hardened and damaged. Large portion of cargo could not be removed in the normal procedure, extra workers, crowbars and shovels were required to break the solidified cargo and thereafter the same was bagged and/or otherwise unloaded. The Marine Surveyors representing the petitioner and the respondent verified that the holds were not closed prior to every rain period and that the hardening of the cargo was due to this rain water falling in the holds and loading was almost nearing completion. Cargo to the extent of 349. 762 M. T. S. was damaged to such an extent that it became totally unfit for its intended purpose due to negligence of the respondent in neither covering the hatches before rain water entered into the holds and wetted the cargo and nor making any arrangement or taking any precaution to dry the cargo before further loading of the same. Due to breach of agreement and breach of duty coupled with negligence on the part of the respondent the claimant/petitioner suffered loss and damage as under: Particulars F. O. B. value of 349. 762 M. T. at the rate of USD 157. 50 per M. T. = USD 55087. 515 rs. 17,35,257. 00 Freight for 349. 762 M. T. = 342. 766 L. T. at the rate of Rs. 1,088. 00 per M. T. Rs. 3,88,307. 00 Additional expenses incurred towards handling, survey and disposal of 349. 762 M. T. damaged cargo rs. 1,48,370. 00 Total rs. 22,71,934. 00 2. 4. 1 In view of the loss suffered dispute arose. Both the parties agreed to refer the dispute to arbitration as per the Clause 51 of Charter Party. Mr. A. K. Basu and Dr. S. N. Sanklecha were appointed as arbitrators under the Charter Party Agreement. The petitioner filed a statement of claim claiming int
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