This appeal was brought against a judgment of the Division Bench of the Calcutta High Court staying the plaintiffs' in rem proceeding and discharging the bank guarantee furnished by the defendants.

The first plaintiff, Mayar (HK) Ltd, was a Hong Kong company engaged in the export and import of timber logs. The first plaintiff entered into a charterparty with the second defendant, Trustrade Enterprises Pte Ltd, a Singapore company, in respect of the MV Fortune Express, a Singapore-flagged vessel, to carry logs from various ports of Malaysia to Calcutta. As per the stowage plan of the vessel, out of 642 logs which were loaded onto the vessel, 578 logs were lying on the deck of the vessel. The vessel arrived at the Port of Calcutta on 7 March 2000 and started discharging the cargo. It was found that 456 logs out of 578 logs which were lying on the deck of the vessel were missing. The plaintiffs sued under the bills of lading. The vessel was arrested and later released against a bank guarantee provided by the defendants.

The defendants filed an application for dismissal of the plaintiffs' suit and release of the bank guarantee, on the grounds that cl 3 of the bills of lading provided that 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 cll 2 and 9 read with cl 19 of the bills of lading; and that the suit did not disclose any cause of action. The Division Bench of the Calcutta High Court held that under the forum selection clause (cl 3) of the bills of lading, any dispute arising therefrom shall be decided in the country where the carrier had its principal place of business and, thus, the Singapore Court alone had jurisdiction to entertain the suit. The finding as regards the chosen forum of the Singapore Court and that the dispute is to be governed by the laws of Singapore was arrived at by the Division Bench only on the basis of the plaintiff mentioning that the second defendant was a company incorporated under the laws of Singapore and carrying on its business in Singapore.

The Court also observed that 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 Singapore ports, or even where goods 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 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 below found that the goods were carried on deck, and that there was no liability on the part of the carrier if the deck cargo was lost. The Court below further held that the defendants, by submitting the bank guarantee before the Court, did not submit to the jurisdiction of the Court.

The plaintiffs submitted that compelling them to file a suit for damages at this late stage in the Singapore Court would be most unjust. The plaintiffs' rights would be jeopardised because under art 3.6 of the Hague Rules, the carrier and the ship would be 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 below opined that under art 3.6 of the Hague Rules, the limitation was with respect to goods. However, art 1.c of the Hague Rules mentioned that the cargo which had been carried on deck would not come under the definition of 'goods'. Except for 135 logs, all of the others were described in the bills of lading as deck cargo, and thus the limitation prescribed for filing the suit would have no application. The plaintiffs, from the very outset of the suit, were aware of the fact regarding the appropriate forum, and hence could not plead at this stage to reap the benefit from their own fault. The Court below 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 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.

The plaintiffs appealed to the Supreme Court.

Held: Appeal allowed.

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. The allegations in the plaint are that the parties entered into a contract on 7 January 2000 to carry on board the vessel MV Fortune Express under the relevant bills of lading 642 logs from the port of Sarawak, Malaysia, for discharge at the port of Calcutta, India. As per the stowage plan, 578 logs were lying on the deck of the vessel. At the time of the discharge of the cargo, 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, customs 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 were alleged in the plaint. As the logs were not delivered at the port at Calcutta, the port of destination, part of the 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 might be pleaded by the defendants in their written statement that the Calcutta High Court has no jurisdiction on account of cl 3 of the bills of lading. 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 cl 3 of the bills of lading, it is clear that any dispute arising under the bills of lading 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 bills of lading.

Therefore, the 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 in Singapore, the clause has no application. The plaintiffs' description of the second defendant as carrying on business in Singapore, would not ipso facto establish the fact that the principal place of business of the second defendant is/was in Singapore to exclude the jurisdiction of the Calcutta Court, which admittedly had jurisdiction to try the suit. Therefore, the absence of a reference to cl 3 of the bills of lading in the pleadings cannot be said to be suppression of a 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.

Similarly, under cl 9 of the bills of lading, the carrier was not made liable for any loss or damage resulting from any act, neglect or default of its servants in the management of animals and 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 managing it. In fact, this would be the defence, if at all, to be raised by the defendants in their written statement. It was not 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 (the general paramount clause) of the bills of lading reads:

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, the Hague-Visby Rules 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, 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 art 1.c of the Hague Rules, 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, cargo which by the contract of carriage is carried on deck would not be goods under the Hague Rules, whereas under cl 9 of the bills of lading, deck cargo is also included 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 their management of the cargo. The question whether the cargo transported by the carrier would be governed by the Hague Rules on account of cl 2 (the paramount clause) or by cl 9 of the bills of lading 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 the bills of lading permits the carrier to stow the goods either on deck or under deck without notice to the merchant or at the carrier's option by means of containers or similar articles of transport used to consolidate goods. Clause 19(c) 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 that the goods shall contribute to the general average and shall receive compensation in general average. This clause has reference to cl 14 of the bills of lading 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, cl 19 cannot be relied upon for absolving the carrier from its liability for any damage or loss caused to the goods carried on ship.

To get the order of stay of a suit on the ground of abuse of process, the applicant must show that the plaintiff 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 cause in its favour. The power would be exercised by the Court if the 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 is 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 the substantive merits of its case. The High Court has granted a stay of proceedings, as it found the plaintiffs guilty of suppression of the jurisdiction clause in the bills of lading, and on the finding that the plaintiffs have no case on the merits, and thus it would be an abuse of process if the plaintiffs were permitted to go ahead with the trial in the Calcutta Court. This Court is not satisfied that the defendants have made out the case on any of the counts.

It was argued that the appellants would suffer irreparable injury if they are called upon to file a suit at Singapore Court after the expiry of the period of one year, and, therefore, the defendants could not claim the advantage of forum non conveniens. This argument was based on art 3.6 of the Schedule to the Carriage of Goods by Sea Act 1925 (the Act), which provides 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 that 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 art 1.c 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, 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, even if deck cargo, could be subject to the limitation as provided in art 3.6, but for s 2 of the Act which specifies that subject to the provisions of the Act, the rules set out in the Schedule 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 India or outside India. In the present case, 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, art 3.6 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 has placed before this Court the Singapore law applicable to the facts of the present case, nor has any argument has been advanced on that basis. The appellants on these facts cannot claim equity on the basis of the provisions of the Act and the limitation provided therein.

The Division Bench held as follows when considering the question of forum non conveniens:

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. El[is]abeth, reported at 1993 Supp.(2) SCC page 433 [(CMI883)], 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 ... 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 [carrier], and that if decree should be passed in their favour there would be no difficulty in its execution.

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 this, it is apparent that the Court below found that the Calcutta Court had jurisdiction to try the proceedings, except for the forum selection clause excluding the jurisdiction of the Court. The Court below 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 clause which conferred jurisdiction on the Court where the defendant has the principal place of business, which according to this Court has to be determined only after sufficient material is placed before the Court. The Court below could not 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 did not place any material before the Court below that the Singapore Court is another available forum which is clearly or distinctly more appropriate than the Indian Courts. The Court below did not take into consideration that the action commenced by the plaintiffs in the Calcutta Court was founded on facts which are most really 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 the 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 below how the trial at Singapore would be more convenient to the parties as opposed to the trial of the suit at Calcutta, and that justice could be done between the parties at substantially less inconvenience and expense. Nor has it been shown that a stay would not deprive the plaintiffs of a legitimate personal or juridical advantage available to them. On the facts of the case, this Court is not satisfied that there is another forum having jurisdiction in which the case may be tried more suitably for the interest of all the parties and for the ends of justice.

The defendants have not made out a case for a 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. This 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.