State Trading Coloration of India Ltd. vs General Navigation Ltd.

A.N. Sen, J.—This is an application on behalf of the Defendants for stay of this suit.

There are two Defendants in this suit. The first Defendant General Navigation Limited is a foreign company incorporated in Monrovia in Liberia. The second Defendant F.W. Heilgers and Co. (Private) Limited is an Indian company and the second Defendant is the Calcutta agent of the foreign company, the first Defendant herein. The foreign company acts as a common carrier of goods by sea for reward and is the owner of a vessel called ''African Sky''. Under six bills of lading, all dated June 4, 1962, consignments of unglazed white newsprint reels with distinctive marks were carried by the said ship ''African Sky'' from Uglfgorsk, Sakhalir, U.S.S.R., for delivery to State Trading Corporation of India Limited, the Plaintiff herein, at the port of Calcutta. Each of the six bills of lading on the basis of which the consignments had been shipped and carried, contained the following clauses:

Clause 26. All claims and disputes arising under and in connection with this bill of lading shall be judged in U.S.S.R.

Clause 27. All questions and disputes not mentioned in this bill of lading shall be determined according to the Merchant Shipping Code of U.S.S.R.

It is the case of the Plaintiff that the said ship had failed and neglected to deliver to the Plaintiff the entire consignments covered by the said bills of lading and there had been short landing or short delivery and the same was due to want of care and caution and/or negligence and/or misconduct on the part of the Defendants.

On June 29, 1962, the Plaintiff instituted this suit in this Court for recovery of Rs. 61,180-67 paise in enforcement of its claim for the alleged short delivery of the Plaintiff''s goods carried under the aforesaid six bills of lading. After service of the writ of summons, both the Defendants entered appearance through M/s Sandersons and Morgans who are acting as the Solicitors for the Defendants in this action. On November 19, 1962, the Defendants made an application in this suit for extension of time for the filing of the written statement on behalf of the Defendants. By an order made by this Court on December 13, 1962, on the said application time for filing written statement by the Defendants was extended till December 17, 1962. The Defendants have filed a joint written statement and the written statement on behalf of the Defendants was filed on December 17, 1962. In the written statement filed on behalf of the Defendants the Defendants have contended that by reason of Clause 26 contained in each of the said bills of lading which provided that

all claims and disputes arising under and in connection with this bill of lading shall be judged in the U.S.S.R.,

this Court should not entertain this suit and in view of the said clause in the bills of lading, this suit should be stayed and the Plaintiff relegated to its remedies, if any, in the Courts in U.S.S.R. The Defendants in the written statement have also relied on Clause 27 in each of the said bills of lading and have contended that in case this suit is tried by this Court, the Plaintiff should pay to the Defendants all costs which will be incurred in proving the relevant provisions of the said Merchant Shipping Code.

On September 16, 1963, the Plaintiff in this suit filed its affidavit of documents. Affidavit of documents by the Defendants was filed on April 8, 1964. Sometime before the long vacation in 1966 this suit appeared on the peremptory list of S.K. Mukherjea, J. for hearing. On that occasion the suit was adjourned and was directed to appear on the peremptory list for hearing after the long vacation. This suit thereafter appeared again on the peremptory list after the long vacation on November 21, 1966 and on that date it was adjourned till November 28, 1966, on the representation of the Defendants that they would make an application for stay of this suit.

On December 20, 1966, the notice of motion of the present application was taken out on behalf of the Defendants. The prayers asked for in this application are:

(a) An order for the dismissal of this suit with costs,

(b) alternatively, an order that this suit be stayed until further order or until such time as may be deemed fit and proper,

(c) an ad-interim order staying this suit until the disposal of this application,

(d) such further or other orders, directions and relief as may be considered necessary,

(e) an order providing for the costs of and incidental to this application.

At the hearing of this application the Petitioners have only pressed for the stay of this suit. Mr. Majumder, learned Counsel appearing in support of this application, has contended that in view of the provisions contained in Clauses 26 and 27 of each of the six bills of lading, this suit in this Court should not be allowed to proceed. It is his contention that the parties have agreed that all disputes and claims that may arise in respect of the consignments in suit will be adjudicated upon in U.S.S.R. and the Plaintiff in breach of this agreement should not be permuted to proceed with this suit in this Court. In support of this contention he has referred to the following decisions: Lloyds Triestino Societa Per Azinni Di Navigazione Sede in Lloyds Triestino Societa Per Azinni di Navigazione Sede in Triesta and Others Vs. Lakshminarayan Ramniwas, ; Lakhinarayan Ramniwas Vs. Lloyd Triestino Societa Per Azinni Di Navigaziene Sede in Triesta and Others, ; Lakshminarayan Ramniwas Vs. Compagnia Genovese D'' Esportazione and Others, and Swedish East Asia Company Ltd. Vs. B.P. Herman and Mohatta (India) Private Ltd., .

Mr. Majumder has argued that the balance of convenience of trial of this action is overwhelmingly in favour of Courts in U.S.S.R. and that it would be very difficult, if not impossible for the Defendants, to proceed with the trial of this action in this Court. Mr. Majumder has further argued that delay in making an application of this type is hot fatal and it does not deprive the Defendants of their rights under the agreement. He relies on the following observations of Bachawat, J. in the case of Motabhai Gulabdas and Co. v. Mahaluxmi Cotton Mills Ltd. 91 C.L.J. 1 (11):

Quite clearly a covenant to submit disputes to a foreign Tribunal may be enforced by a Defendant though he has filed his written statement. In St. Pierne v. South American Stores (1936) 1 K.B. 382 and Abdul Shakoor v. Ibrahim Shakoor (1940) ILR 1 Cal. 497, the Court refused to stay the suit on the footing of such covenant as there were complicated questions in issue but allowed the Defendant to take the point in the written statement so that he could ask for its enforcement at the hearing.

Mr. Dhar, learned Counsel appearing on behalf of the Plaintiff Respondent, has submitted that no order should be made at this stage. He has argued that the Defendants have so far been taking part in this litigation in this Court and by actively participating in this suit so far, the Defendants have forfeited their rights to claim any relief on the basis of Clause 26 of the bill of lading. He has relied on the decision in the case of The Fehmarn (1958) 1 All E.R. 333. Mr. Dhar has contended that in view of the inordinate delay on the part of the Defendants in making this application, the Court should not in any event exercise its discretion in favour of stay. He has also argued that the materials on record do not establish that the balance of convenience is overwhelmingly in favour of the suit being tried in a Court in U.S.S.R. and he has referred to the averments made in para. 14 of the petition wherein the Defendants have stated that considerable evidence is also necessary from the ports of Madras Cochin and Bombay. Mr. Dhar has also raised an argument that the Clauses 26 and 27 relied on by the Petitioners are vague and should not be enforced.

I shall now deal with the cases cited from the bar. In the case of Motabhai Gulabdas and Co. v. Mahaluxmi Cotton Mills Ltd. 91 C.L.J. 1 (11), a suit had been instituted in this Court in respect of contracts each of which contained a clause to the following effect:

This contract is subject to Bombay jurisdiction.

At the hearing of the suit jurisdiction of this Court had been challenged in view, of the aforesaid covenant and an issue had been raised as to whether this Court had jurisdiction to try this suit. Bachawat, J. who tried the suit observed at pp. 8 and 9 of the report as follows:

Parties sometimes enter into a covenant that they will litigate only in one of the ordinary Courts of this country and in no other Court. There has been considerable discussion about the legality and effect of such covenant and the mode and extent of its enforcement. It is desirable to state the law on such covenants generally before dealing specifically with the covenant in suit.

It is well-settled that individuals by private consent cannot confer jurisdiction upon a Court which it does not possess by the ordinary law. Individuals cannot also by agreement divest a Court of a jurisdiction which it possesses under the ordinary law. In spite of such covenant the Court therefore retains its jurisdiction to try the suit if it has such jurisdiction under the ordinary law. Ramnicklal Chaganlal v. Vivekananda Mills Co. Ltd. (1944) 49 C.W.N. 58; Musaji Lukhmanji v. Durgadas (1945) ILR 281.

It is also well-settled that such covenant does not contravene the provisions of Section 28 of the Indian Contract Art if the chosen Court has jurisdiction to try the suit under the ordinary law because the restriction is only partial and the Plaintiff is not restricted absolutely from enforcing his rights by the usual legal proceedings in the ordinary Tribunal: Narasimha Charyulu and Another Vs. Sowcar Lodd Govindoss and Another, ; Musaji Lukhmanji v. Durgadas (1945) ILR Lah 281; Ramnicklal Chaganlal v. Vivekananda Mills Co. Ltd. (1944) 49 C.W.N. 58; Dhanmal Marwari v. Jankidas Baijnath (1944) 49 C.W.N. 123, per Latifar Rahman, J.; Milton and Co. v. Ojha Automobile Engineering Co. (1930) ILR 57 Cal. 1280. The contrary view expressed by Mr. Justice Handerson in Chitta Ranjan Guha v. Parul Rani Nundi (1945) 50 C.W.N. 281, runs counter to the previous decision and is in my opinion unsound. If however the chosen Court has no jurisdiction in the matter under the ordinary law the covenant will not give it such jurisdiction and in such case the covenant contravenes Section 28 of the Contract Act and is unlawful: Dhanmal Marwari v. Jankidas Baijnath (1944) 49 C.W.N. 123.

The Court can and should in an appropriate case enforce such covenant where it is lawful. The Courts have enforced the covenant by an injunction restraining the prosecution of a suit instituted in a Court other than the chosen forum in breach of the covenant: Milton and Co. v. Ojha Automobile Co. (1930) ILR 57 Cal. 1280; Tilakram Chaudhuri Vs. Kodumal Jethanand Wadhwa, ; Becharam Baburam v. Baldeosahai Surajmul (1940) ILR All 232 and also by returning the plaint under Order 7, Rule 10 of the CPC for presentation to the chosen Tribunal, Narasimha Charyulu and Another Vs. Sowcar Lodd Govindoss and Another, .

The learned Judge further observed at pp. 11 and 12 of the report:

Quite clearly a covenant to submit disputes to a foreign Tribunal may be enforced by a Defendant though he has filed his written statement. In St. Pierne v. South American Stores (1936) 1 K.B. 382 and Abdul Shakoor v. Ibrahim Shakoor (1940) ILR 1 Cal. 497, the Court refused to stay the suit on the footing of such covenant as there were complicated questions in issue but allowed the Defendant to take the point in the written statement so that he could ask for its enforcement at the hearing. This could not be done if the covenant was an arbitration clause.

I must also observe that a covenant to submit disputes to the decision of one out of several Courts within this country is not always governed by the same legal principles which govern a covenant to submit disputes to the decision of a foreign Tribunal. In the case of a covenant to submit disputes to the decision of a foreign Court the intention of the parties gathered from the whole contract may be that such covenant should be governed by the foreign law and in such case the essential validity and effect of such covenant has to be determined by the foreign law. Hamlyn and Co. v. Talishker Distillery Co. (1894) A.C. 200. The covenant to submit disputes to the decision of a Court within this country is however generally governed by Indian Law and its essential validity and effect is to be judged by such law including Section 28 of the Indian Contract Act. If there is a covenant to submit disputes to the decision of a foreign Court the decision of that Court must be regarded in this country as one given by a Court of competent jurisdiction. Feyerick v. Hubbard (1902) 71 L.J. K.B. 509. The Court having competency according to rules of Private International Law its decision cannot be assailed in this country on the ground that the foreign Court was not a competent Court according to the municipal law of the foreign country. Vanquelin v. Bonard 15 C.B. (N.S.) 341; Pemberton v. Hughes (1899) 1 Ch. 781 (790-2). The covenant to submit disputes to the decision of a Court within this country however cannot confer jurisdiction upon that Court if it has no such jurisdiction under the ordinary law apart from such covenant.

The true natural effect and validity of a covenant to submit disputes to the decision of one out of several Courts within this country must therefore be judged on its own merits. The chosen Court does not act as an arbitration Tribunal while trying such litigation. As it is not an arbitration Tribunal it cannot by force of the covenant alone acquire a jurisdiction which it has not under the ordinary law. The Judge in the cause cannot act as an arbitrator at least unless there has been an order for reference of the disputes to him: Bengal Silk Mills Co. Ltd. Vs. Aisha Ariff, ; K.P. Dalal Vs. R.S. Jamadar, . The rules and principles governing arbitration proceedings and powers and duties of the Court with regard to such proceedings and with regard to the award of the arbitrator can have no application to the proceedings and the decision of the chosen Court. If a litigation is started in some other Court in breach of such covenant such other Court in the exercise of its jurisdiction may enforce such covenant and may decline to proceed with such suit. Such relief can be given at any stage of the suit even if the Defendant has taken steps and has filed written statement. The observations of Gentle J. to the contrary cannot be supported either on principle or authority and is unsound. Indeed in the same case of Ramnicklal Chaganlal v. Vivekananda Mills (1944) 49 C.W.N. 58, after the decision of Gentle J. the Defendant applied to this Court for an injunction restraining prosecution of the suit in this Court as it was instituted in breach of the covenant. McNair J. granted the injunction although as already stated the Defendant had taken steps in the suit and had filed written statement.

In view of the conduct of the Defendant who had denied the very existence of the contract, the learned Judge refused to dismiss or stay the suit holding that ''the Defendant who has denied the very existence of the contract cannot have one part of it specifically enforced''.

In the case of Lloyds Triestino Societa Per Azinni Di Navigazione Sede in Triesta v. Lakshminarayan Ramniwas (Supra), the facts were briefly as follows. The Plaintiff''s agents in Italy shipped certain goods to Plaintiff in Calcutta by a steamer belonging to the Defendants, an Italian shipping company. The bill of lading contained among others the following clauses:

all requests for compensation in respect of damage, shortage, deterioration, loss of goods loaded, shall be submitted for friendly settlement to the agencies of the shipping company at the place of discharge. Failing friendly agreement, both the shipper and the receiver as well as any other party interested in the cargo, if intending to take legal steps against the company, for the above mentioned causes and in general for whatsoever other causes, may summon them before Judicial Authorities of Trieste or Genoa, hereby expressly renouncing the competence of any other Judicial Authorities. No exception must be made to this exclusive competence even if the company is sued party (Defendant) by reason of connection or contingency of the law suits.

For anything which has not been provided for or foreseen in the present contract of carriage, the provisions of Italian Code of Navigation shall apply.

A suit for compensation had been instituted by the Plaintiff in the Calcutta High Court for alleged short delivery of the goods. The Defendants made an application for stay of the suit invoking the aforesaid covenant. G.K. Mitter, J. referred to and relied on the decision of Bachawat, J. in Motabhai Gulabdas and Co. v. Mahaluxmi Cotton Mills Ltd. (Supra) and held that the covenants did not contravene the provisions of Section 28 of the Contract Act, as the Italian Courts mentioned in the clause had jurisdiction to try the suit under the ordinary law. The learned Judge further held that a party who entered into a contract providing that a legal proceeding should be confined to a particular Court and renouncing the competence of other Judicial authority could not normally complain, if enforcement of such agreement was insisted upon and the Court should in appropriate cases enforce such covenant. Dealing with the question of delay in making the application for stay the learned Judge observed at p. 672 (para. 10):

Lastly, it was contended on behalf of the Respondents that the application is hopelessly belated and ought to be rejected in view of the following, viz., (a) the suit was filed in June, 1957 and the present application was not moved until May, 1958, (b) that an order for discovery has already been made long after the filing of the written statement and if the suit is stayed now there is no knowing as to whether the Plaintiff''s claim would be barred by limitation under the Italian Law. What the Italian Law on this point is has not been alleged by any one. Even if the suit is stayed, it does not mean that if the Plaintiff''s suit be thrown out in the Italian Courts on the ground of limitation he will not be allowed to go on with the suit in Calcutta afterwards. There is some force in the contention that the application ought to have been made much earlier than May, 1958, but I do not think I ought to refuse the application on the ground of this delay, specially in view of the fact that in February, 1958, when discovery was applied for the Defendant made its position clear that it was going to apply for a stay.

The learned Judge granted the application of the Defendants and stayed the suit in this Court.

An appeal was preferred against this decision of G.K. Mitter, J. The appeal was dismissed (Supra). In affirming the decision of G.K. Mitter. J. the Appeal Court at p. 156 of the report observed:

Though Clause 31 contained in those several contracts are valid, they cannot be pleaded as a bar to the jurisdiction of an Indian Court which otherwise has jurisdiction to try a suit instituted before it. The suit was instituted on the Original Side of this Court upon the allegation, inter alia, that a part of the cause of action arose in Calcutta. Leave under Clause 12 of the Letters Patent to institute the suit was duly obtained and the Court had un doubted jurisdiction to try the suit. The jurisdiction of the Court to try such a suit is vested in it by the Letters Patent and by the Constitution. Parties cannot by a private agreement, whether such agreement has beer entered into in India or outside India, take away a jurisdiction which is vested in this Court to try the suit just as the parties could not by such agreement confer upon it jurisdiction to try a case which it had otherwise no jurisdiction to try. Clause 31 of the contract remains valid as a contractual stipulation, but it cannot be pleaded as a bar to the jurisdiction of the Court. When the attention of the Court in which the suit is instituted is drawn to a contractual stipulation of his kind, the Court may in the exercise of its discretion stay its hands and refuse to try the suit until the competent Judicial authority to whose decision the parties have agreed to submit their disputes has pronounced its decision. The Court acts upon the principle that in general the Court will compel the parties to abide by their contracts. Instead of driving the Defendant to a separate suit to enforce the covenant, the Court may for the purpose of preventing multiplicity of litigation enforce the contract summarily on an application made to it in the suit instituted before it. The prima facie leaning of the Court is that the contract should be enforced and the parties should be kept to their bargain. Subject to this prima facie leaning, the discretion of the Court is guided by considerations of justice. The balance of convenience, the nature of the claim and of the defence, the history of the case, the proper law which governs the contract, the connection of the dispute with the several countries and the facilities for obtaining even-handed justice from the foreign Tribunal are all material and relevant considerations. If on a consideration of all the circumstances of the case the Court comes to conclusion that it will be unjust or unfair to stay the suit, the Court may refuse to grant the stay asked for.

Bachawat, J., who delivered the judgment of the Court of Appeal further observed at p. 157 of the report:

An application for the stay of the suit on the ground that the parties had agreed to submit their decisions to foreign Tribunal should be made without delay. In this case there has been some delay in making the application. Considering all the circumstances, G.K. Mitter, J. came to the conclusion. I think rightly, that the delay was not fatal to the application. It has not been made out that the Appellant has suffered any substantial prejudice by the delay.

In the case of Lakshminarayan Ramniwas v. Compagnia Genovese D''Esportazione (Supra), the facts were almost similar to the facts of the case of Lloyds Triestino Societa etc. v. Lakshminarayan Ramniwas (Supra), the material difference being that in this case the goods were shipped at Naples, whereas the goods in the case of Lloyds Triestino Societa etc. v. Lakshminarayan Ramniwas (Supra) were shipped at Trieste. G.K. Mitter, J. in this case, followed his decision in the earlier case of Lloyds Triestino Societa etc. v. Lakshminarayan Ramniwas (Supra) observed:

It was contended before me that it cannot be said definitely that the Courts at Trieste or Genoa will have jurisdiction in respect of a claim based on a shipment of goods at Naples. But this does not seem to me to be of much substance. A reference to Dicey''s Conflict of Laws, 7th ed., Ch. 31 which deals with ''staying of actions'' contains a sub-rule to Rule 203 at p. 1085 reading as follows:

Where a contract provides that all disputes between the parties are to be referred to the exclusive jurisdiction of a foreign Tribunal, the Court will stay proceedings instituted in England in breach of such agreement, unless the Plaintiff proves that it is just and proper to allow them to continue.

Under the comments below the sub-rule the learned author quotes from the judgment in The Fehmarn (1957) 1 W.L.R. 815 the following extract:

It is well established that, where there is a provision in a contract providing that disputes are to be referred to a foreign Tribunal, then, prima facie, this Court will stay proceedings instituted in this country in breach of such agreement and will only allow them to proceed when satisfied that it is just and proper to do so.

The commentator adds:

The Court''s power to grant a stay under this sub-rule is discretionary but, once the contract has been proved the onus of inducing it not to do so rests on the Plaintiffs. The ground on which the Court grants a stay is not that there is vexation and oppression but that the Court makes people abide by their contracts.

No provision of any Italian Law has been referred to in the affidavits to show either that the Courts at Trieste or Genoa will have jurisdiction or that the said Courts will not have jurisdiction in such a case. If the shipper entered into the contract contained in the bill of lading expressly covenanting himself to be bound by Clauses 31 and 32 thereof, I see no reason to hold that he or any person deriving title through him should not be held compelled to institute legal proceedings in the Courts at Genoa or Trieste unless good cause is shown.

The other decision referred to and relied on by Mr. Majumdar is the decision of the Appellate Court in the case of Swedish East Asia Co. Ltd. v. B.P. Herman and Mohatta (India) Private Ltd. (Supra). The Appellate Court allowed the appeal preferred against the order of the trial Judge refusing to stay the suit in this Court in a case in which the bill of lading contained a covenant of a similar nature and stayed the suit in this Court subject to the condition that it would be open to the Plaintiff in the suit to prosecute the suit in Calcutta in the event of any action brought by the Plaintiff in the Swedish Court (which was the Court agreed upon by the parties) being held barred by limitation. The Appellate Court observed at p. 604 of the report:

Generally speaking, the Courts try to hold contracting parties to their bargain. In this case, we have found nothing wrong in the contract contained in the bill of lading and when parties with their eyes wide open entered into an agreement to have their disputes settled in Sweden according to Swedish law, it would, we think, be improper, in the absence of any circumstance of an overriding nature to supersede that agreement.

The only case that has been cited by Mr. Dhar on behalf of the Plaintiff-Respondent is the English case of The Fehmarn (Supra). In this case a cargo was loaded at a Russian port by a Russian shipper on board The Fehmarn, a ship owned by a German company. The cargo was, by the terms of the bill of lading, shipped in apparent good order and condition and was to be delivered at the port of London in like older and condition. An English company purchased the cargo and became the holders of the bill of lading, thereby agreeing to be bound by its terms. The bill of lading contained the following clauses:

Clause 26. All claims and disputes arising under and in connection with the bill of lading shall be judged in the U.S.S.R.

Clause 27. All questions and disputes not mentioned in this bill of lading shall be determined according to the Merchant Shipping Code of the U.S.S.R.

The cargo owners alleged that at the port of London the cargo was found to be three tons short and contaminated. The ship was surveyed in London, the cargo owners and the ship owners being represented at the survey. The ship was a frequent visitor to England and the cargo owners asked the ship owners to give security for their claim and threatened to arrest the ship, when it next came to England, if security was not given. The ship owners were willing to submit the dispute to a private arbitrator but objected to giving security. The cargo owners then issued a writ against the ship owners claiming damages for breach of the contract of carriage evidenced by the bill of lading. The ship owners relying on the aforesaid Clauses Nos. 26 and 27 in the bill of lading applied for setting aside the writ or for the stay of the suit in the English Court. The application of the ship owners was dismissed and an appeal was preferred against the order refusing to set aside the writ or to stay the suit. The Court of appeal dismissed the appeal of the ship owners and held:

(i) The Admiralty Court had jurisdiction by virtue of the Administration of justice Act, 1956, Section 1(1)(g);

(ii) the Court should not exercise its discretion to stay the proceedings because

(a) a stipulation that all disputes should be judged by the Tribunals of a foreign country, although a matter to which the English Court will pay much regard and to which it will normally give effect, is subject to the overriding principle that no one by his private stipulation can oust the English Courts of their jurisdiction in a matter properly belonging to them.

(b) this dispute properly belonged to the English Court because, being a dispute between English cargo-owners and German shipowners, it was more closely connected with England than with Russia and because the facts showed that the shipowners did not object to the dispute being decided in England but wished to avoid giving security.

The following observations of Lord Denning at p. 335 of the report may usefully be quoted

The next question is whether the action ought to be stayed because of the provision in the bill of lading that all disputes are to be judged by the Russian Courts. I do not regard this provision as equal to an arbitration clause, but I do say that the English Courts are in charge of their own proceedings: and one of the rules which they apply is that a stipulation that all disputes should be judged by the Tribunals of a particular country is not absolutely binding. Such a stipulation is a matter to which the Courts of this country will pay much regard and to which they will normally give effect, but it is subject to the overriding principle that no one by his private stipulation can oust these Courts of their jurisdiction in a matter that properly belongs to them. I would ask myself therefore: is this dispute a matter which properly belongs to the Courts of this country? Here are English importers, the cargo-owners, who, when they take delivery of the goods in England, find them contaminated. The goods are surveyed by surveyors on both sides, with the result that the English cargo-owners make a claim against the German shipowners. The vessel is a frequent visitor to this country. In order to be sure that their claim, if substantiated, is paid by the shipowners, the English cargo-owners are entitled by the procedure of our Courts of Admiralty to arrest the ship whenever she comes here in order to have security for their claim. There seems to me to be no doubt that such a dispute is one that properly belongs for its determination to the Courts of this country. But still the question remains: ought these Courts in their discretion to stay this action?

It has been said by counsel for the shipowners that this contract is governed by Russian Law and should be judged by the Russian Courts, who know that law and that the dispute may involve evidence from witnesses in Russia about the condition of the goods on shipment. Then why, says counsel, should not it be judged in Russia as the condition says? I do not regard the choice of law in the contract as decisive. I prefer to look to see with what country the dispute is most closely concerned. Here the Russian element in the dispute seems to be comparatively small. The dispute is between the German owners of the ship and the English owners of the cargo. It depends on evidence here as to the condition of the goods when they arrived here in London and on evidence of the ship, which is a frequent visitor to London. The correspondence leaves in my mind, just as it did in the learned Judge''s mind, the impression that the German owners did not object to the dispute being decided in this country but wished to avoid the giving of security.

The dispute is more closely connected with England than with Russia and I agree with the judge that sufficient reason has been shown why the proceedings should continue in these Courts and should not be stayed.

A review, of these decisions, to my mind, indicates that the following propositions are well settled:

An agreement of this type under which the parties agree that a particular Court shall have jurisdiction to the exclusion of the jurisdiction of the other Courts is not an arbitration agreement.

Such an agreement does not offend against Section 28 of the Contract Act and is not void, provided the Court agreed upon has jurisdiction under the ordinary law of the land.

If the Court agreed upon does not have jurisdiction under the ordinary law, such an agreement will be void and of no consequence, as it is not open to the parties to create or confer jurisdiction on any Court by agreement, when the Court chosen does not otherwise have such jurisdiction.

An agreement of this kind, though otherwise lawful and valid, does not arid cannot oust the jurisdiction of other Courts, which jurisdiction such other Courts may have under the law of the land, as it is not open to the parties to take away the jurisdiction of any Court by any agreement between them.

If in any case in which there is any such agreement, valid and binding on the parties, any party chooses to institute a suit in some other Court having jurisdiction in breach of such agreement, the Court in which the suit has been filed, may stay the suit on an application made.

An application for stay should be made at an early stage without any unnecessary delay.

The power to stay the suit rests in the discretion of the Court. The Court should exercise such powers judicially, taking into consideration the facts and circumstances of each particular case.

Generally speaking, the Courts should try to hold the contracting parties to their bargain and should stay proceedings instituted in breach of such agreement and the Courts will allow such proceedings to continue, when satisfied, that it is just and proper to do so.

In the instant case it has not been contended before me that the covenant is void, as the Courts in U.S.S.R. will have no jurisdiction to adjudicate upon the disputes in suit. The materials on record, in my view, also do not warrant the conclusion that the Courts in U.S.S.R. shall not have any jurisdiction. The validity of the covenant has been sought to be challenged on behalf of the Plaintiff-Respondent only on the ground that the same is vague and it cannot be definitely ascertained in which Court in U.S.S.R. the proceedings should commence. This contention is clearly unsound. There is no vagueness in the covenant and it is open to the parties to take necessary action in any Court in U.S.S.R. which will have jurisdiction in the matter. It may be noted that identical covenants had come up for consideration in the case of The Fehmarn (Supra) and the Court had not pronounced the same to be invalid.

The only question that requires consideration, therefore, is whether in the facts and circumstances of this case, this suit in this Court should be stayed. After giving the matter a very anxious and careful consideration I have come to the conclusion that the Applicants in the instant case are not entitled to have the suit stayed in this Court at this stage.

If I had to determine this question, taking into consideration the subject-matter of dispute, the balance of convenience of the parties and the nature of the agreement between them, I would have exercised my discretion in favour of stay and would have stayed the suit. Had it been a case of mere delay only, I might have held that such delay by itself need not be fatal to the application. The question of delay is undoubtedly an important factor which has got to be given due consideration. It is eminently desirable that an application of this kind should be made as early as possible. Mere delay in making the application, however, may not necessarily disentitle the Applicant for stay to the relief. It may be noted that in the case of Motabhai Gulabdas and Co. v. Mahaluxmi Cotton Mills Ltd. (Supra), the question came to be considered at the trial of the action as an issue as to jurisdiction in the suit and in the case of Swedish East Asia Co. Ltd. (Supra) stay had been granted subject to a condition, in view of the question if limitation raised. In the case of Lloyds Triestino Supra G.K. Mitter, J. had ordered stay of the action although there was delay and the decision of G.K. Mitter, J. was upheld by the Court of appeal see case of Lakshminarayan Ramniwas (Supra).

In the facts of the instant case, I am, however, of the opinion that the Applicants by their conduct have forfeited their right to claim any relief on this application. In an application of this kind, the application really seek to specifically enforce the agreement between the parties. This application, in essence and in substance, is a proceeding for specific performance of the covenant. These applications are entertained to avoid multiplicity of proceedings. Bachawat, J., in my view, rightly observes in the case of Lakshminarayan Ramniwas (Supra), at p. 156:

Instead of driving the Defendant to a separate suit to enforce the covenant the Court may for the purpose of preventing multiplicity of litigation enforce the contract summarily on an application made to it in the suit instituted before it.

The relief, sought for in this application being a relief in the nature of specific performance of the agreement between the parties, could only be granted if the Applicants could have succeeded in a suit for specific performance of the agreement. The facts and circumstance of the present case clearly indicate, to my mind, that the Applicants would not be entitled to claim and enforce specific performance of the agreement at this stage. After the summons had been served on the Applicants, the Applicants, instead of making of any grievance with regard to the jurisdiction of this Court or applying for stay of this suit, made an application for extension of time to file written statement. In the said application for extension of time to file the written statement, the Applicants made no mention of the agreement between the parties regarding forum of litigation and raised no objection with regard to the jurisdiction of this Court. An order was made by this Court extending the time for filing the written statement in the suit and the Applicants had enjoyed the benefit of that order. Although in the written statement the Applicants referred to and relied on these covenants, yet the Applicants took no steps to enforce the same even after the written statement had been filed. The Applicants proceeded to participate in the suit and took all other and further steps necessary for the hearing of the suit without any protest against the suit proceeding in this Court. The suit became ripe for hearing and appeared on the peremptory list shortly before the long vacation in 1966. An adjournment of the hearing of the suit had been obtained till after the reopening. After the reopening the suit had again appeared on the daily list. The Applicants contend that after having obtained the adjournment before the long vacation, they realised that it would be very difficult, if not impossible, for them to defend the suit in Calcutta for want of proper evidence from U.S.S.R. In view of this difficulty the Applicants had applied for further adjournment of the suit, when the suit appeared on the daily list after the long vacation, to enable the Applicants to make this application. Active participation in the proceedings in this Court without seeking to enforce the agreement, allowing the suit to be ripe for hearing, obtaining benefits of orders made by this Court and obtaining adjournments of the hearing of this suit are, to my mind, facts and circumstance which establish that the Applicants had not been ready and willing to enforce the covenant and that they were willing to have the disputes in suit adjudicated upon by this Court. The inordinate delay on the part of the Applicants in making this application amounts, in the facts and circumstances of this case, to a clear acquiescence on the part of the Applicants in the suit being heard in this Court. The conduct of the Applicants and the inordinate delay in the instant case debar the Applicants from claiming specific performance of the covenant and from seeking to enforce the said covenant specifically at this stage in this application.

This application, therefore, fails and is dismissed. In the peculiar facts of the case I, however, direct that each party will pay and bear its own costs of this application. The suit will appear on the daily list for hearing on April 17, 1967.