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The appellant intervened in the said matter FAC |
The writ petition was disposed of vide order dated 20th August,1999.While disapproving in principle,the action of the IOC in inviting fresh price bids after opening the bids,but without recording final opinion on the merits of the issues raised in writ petition,the Court disposed of the petition,inter alia,directing th... |
to 31st August,1999.It is not in dispute that the vessel JAG PRAJA ,with which we are concerned,continued to be chartered by the appellant till 31st August,1999 RLC |
It appears that pending finalization of a new charter party for the period commencing 1st September,1998,certain meetings took place between the Oil Companies and the Ship Owners,including the respondent herein FAC |
On 12th October,1998,the respondent informed the IOC that if all its nine vessels,mentioned in the letter,are used at a fair and reasonable rate for one year,from 1st September,1998 to 31st August,1999 for which the tender had been floated,they were agreeable to apply the new agreed rates for use of the said nine vesse... |
the IOC faxed to the respondent relevant portion of the message received by them from Oil Co-ordination Committee,extending the period of usage of the existing coastal tanker fleet for the month of October,1998,at 80% charter hire rates,prevailing till 30th June,1998,on provisional basis,subject to adjustment of provis... |
The respondent responded immediately vide their letter dated 5th November,1998,agreeing in principle that revised charter hire rates,as and when finalized in response to tender floated by the IOC on 1st September,1998,would be applicable to the vessels which are selected under the tender,retrospectively from 1st Septem... |
It was clearly stated that since the tender was not finalized,the owners will be guided by the existing terms and conditions FAC |
Some other objections,not relevant at this stage,were also indicated FAC |
As such,all said and done,Oil Co-ordination Committee s proposal was not accepted FAC |
Nevertheless,some suggestions to resolve the controversy were given FAC |
Thus,the proposal by the Oil Co-ordination Committee was not accepted by the respondent FAC |
In the alternative,it was suggested by the respondent that the charter period be extended by six months on the existing terms and conditions at a mutually discussed time charter rate FAC |
Admittedly,the vessels continued to be chartered by the appellant beyond the date of this letter FAC |
Thereafter,for almost two months,there was no communication between the parties FAC |
It was only on 31st December,1998 when the IOC issued a fax to the respondent,enclosing draft letter regarding charter party agreement to be signed between the charterers and owners (with minor modification,if necessary),requesting the respondent to sign as per proposal by the 4th January,1999,on which date the respond... |
Finally,it was suggested that: "We,therefore,suggest that we sign an agreement with you for the period from 1st September,1998 until the matter is finally decided by you under the tender on the existing terms and conditions with the charter hire being provisionally paid on an ad hoc basis at 90% of the rate which was p... |
Kindly confirm in order to draw up a suitable agreement accordingly FAC |
Emphasis supplied FAC |
Vide letter of even date,i.e.4th January,1999,the appellant suggested to the respondent that in the absence of a formal charter party with effect from 1st September,1998,a provisional arrangement for a period of four months effective from 1st September,1998 with an option for extension of one month may be mutually agre... |
The respondent was asked to convey their acceptance to the said suggestion FAC |
It appears that the respondent did not respond to the said suggestion by the appellant but all the same its vessel continued to be on charter with the appellant FAC |
The writ petition was ultimately disposed of on 20th August,1999.It was only after a gap of about seven months that on 15th March,2000,the IOC informed the respondent about the evaluation of the tenders in terms of the order passed by the High Court FAC |
Charter hire rate worked out by the Committee for vessel JAG PRAJA for the period from 1st September,1998 to 31st August,1999 was communicated to the respondent FAC |
In response,the respondent,while expressing their disappointment with the rate but purportedly,in view of their long business relations with the appellant conveyed their acceptance of the proposed rate in respect of each of the vessels named in separate letters,all dated 1st FAC |
May,2000,with the expectation that their outstanding balance of the hire shall be paid to them at the earliest FAC |
However,the respondent did not convey their acceptance of the charter hire rates for two vessels,viz FAC |
JAG PRAJA and JAG PRAYOG FAC |
It appears that the respondent wrote various letters to the appellant for upward revision of the rate in respect of these two vessels but seemingly their request was ultimately turned down on 2nd November,2000,on receipt of which,the respondent slammed a legal notice dated 6th November,2000,on the appellant,inter alia,... |
Having failed to receive any reply to the said notice,by another legal notice dated 1st December,2000,the respondent called upon the appellant to pay balance amount of Rs.43,947,517/-to them as charter hire in respect of vessel JAG PRAJA for the period from 1st September,1998 to 31st August,1999 within 15 days from dat... |
The name of the arbitrator was also communicated to the appellant FAC |
It seems that pursuant to the said notice and some subsequent correspondence exchanged between the parties,an Arbitral Tribunal was constituted FAC |
Claims and counter claims were filed before the Arbitral Tribunal FAC |
On the basis of the pleadings of the parties,the Arbitral Tribunal framed as many as eight issues FAC |
However,arguments were heard only on the following three issues FAC |
Issue No.1:-Whether the Hon ble Arbitral Tribunal has no jurisdiction to adjudicate upon the dispute between the Claimant and the Respondent for the period September,1998 to August,1999 Ratio |
in respect of the vessel Jag Praja for the reasons stated in para 1 of the written statement Ratio |
Issue No.2:-Whether there is any common practice that if the vessel is not re-delivered at the end of the period mentioned in the time charter the vessel would be governed by the charter party under which originally it was chartered Ratio |
Issue Ratio |
No.5:-Whether the time charter party dated 6th Ratio |
May,1997 came to an end by efflux of time on 30th August,1998 Ratio |
Vide order dated 12th FAC |
May,2003 the Arbitral Tribunal came to the conclusion that the appellant having invoked the arbitration clause contained in charter party agreement dated 6th May,1997,which was valid upto 31st August,1998 FAC |
and as the dispute between the parties related to the period subsequent to 31st FAC |
August,1998,they had no jurisdiction to decide the Reference FAC |
The learned Tribunal found issue No.2 in the negative and issue No.5 in the affirmative FAC |
According to the Tribunal on and after 1st September,1998,charter party agreement dated 6th May,1997 was superseded by a fresh agreement and a term of the agreement was that the charter hire rate would be determined by the Oil Co-ordination Committee of the IOC.In nutshell,the Tribunal was of the view that with the per... |
The respondent challenged the said Award before the High Court FAC |
By the impugned order,the learned Single Judge has set aside the said Award,inter alia,holding that Arbitral Tribunal has the jurisdiction to adjudicate the disputes between the parties as the vessel continued to be hired by the appellant for the period subsequent to 31st August,1998 on the same terms and conditions,as... |
The learned Judge also felt that the Tribunal had erred in totally excluding from its consideration cls.23 and 4.1 of the charter party dated 6th May,1997,whereunder the charter party was to come to an end on re-delivery of the vessel FAC |
Admittedly,after 31st August,1998,re-delivery of vessel did not take place and,therefore,in terms of clause 23,the vessel continued to be hired on the same terms and conditions except the term as to the hire charges,on which there was disagreement between the parties FAC |
It was thus,held that the charter party dated 6th May,1997 did not come to an end by efflux of time and it was extended by the parties on the same terms and conditions except the rate of hire FAC |
Correctness of this order of the High Court is questioned in this appeal Ratio |
Mr ARG |
Sudhir Chandra,learned senior counsel appearing on behalf of the appellant has assailed the impugned order on the sole ground that the Charter Party dated 6th May,1997 having come to an end by efflux of time on 31st August,1998,the arbitration clause contained in it also perished and,therefore,in the absence of a fresh... |
Shyam Divan,learned senior counsel appearing on behalf of the respondent,on the other hand,submitted that notwithstanding the fact that the period fixed originally under the Charter Party or under the Addendum dated 29th June,1998 had come to an end,the subsequent conduct of the parties goes to show that charter of the... |
Learned counsel argued that even otherwise till the vessel was not re-delivered in terms of Cls.4 and 23 of Charter Party dated 6th May,1997,the said agreement could not come to an end ARG |
It was pointed out that all the obligations of the owners as well as of the charterers during the period the vessel was in use continued to be discharged under the Charter Party dated 6th May,1997 even after the expiry of the period of the Charter Party ARG |
In support of the proposition that the concurrence of a party can be gathered from his conduct,like continued user of the vessel in the present case,without any objection to respondent s letter dated 4th January,1999,reliance is placed on a decision of this Court in The Godhra Electricity Co ARG |
Ltd.& Anr ARG |
Vs ARG |
The State of Gujarat & Anr 1974 Indlaw SC 253 ARG |
It was also submitted that the view taken by the High Court being a plausible view,interference in exercise of extra-ordinary jurisdiction u/art.136 of the Constitution is unwarranted ARG |
Thus,the short question for determination is whether on the expiry of the extended period of charter hire on 31st August,1998,Charter Party dated 6th May,1997 came to an end and the arbitration agreement between the parties perished with it Ratio |
Before we proceed to examine the rival stands,we may note,at the outset,that neither the Arbitral Tribunal nor the High Court have gone into the question whether the claim made by the respondent would otherwise fall within the ambit of the arbitration clause in the Charter Party or not Ratio |
What is in dispute is whether the arbitration agreement between the parties had got extinguished after 31st August,1998,i.e.the date of expiry of the extended period of the Charter Party Ratio |
Therefore,we refrain from expressing any opinion on the scope and ambit of the arbitration clause though,prime facie,it appears to be quite widely worded Ratio |
It is,no doubt,true that the general rule is that an offer is not accepted by mere silence on the part of the offerree,yet it does not mean that an acceptance always has to be given in so many words Ratio |
Under certain circumstances,offerree s silence,coupled with his conduct,which takes the form of a positive act,may constitute an acceptance an agreement sub silentio Ratio |
Therefore,the terms of a contract between the parties can be proved not only by their words but also by their conduct Ratio |
In our view,the principle of sub silentio is clearly attracted in the present case Ratio |
As noted above,after the extended period of Charter Party dated 6th May,1997 had come to an end on 31st August,1998 Ratio |
and the bids received pursuant to fresh invitation were pending finalization,vide their letter dated 12th Ratio |
October,1998,the respondent had informed the appellant that they were agreeable to apply new rates for use of the vessel from 1st July,1998 provided all the nine vessels are used Ratio |
However,on 31st October,1998,the appellant faxed IOC s message informing them of the extension of the existing coastal tanker fleet for the month of October,1998 at reduced rates,viz.80% of the Charter Party rates prevailing till 30th August,1998.On receipt of the said letter,the respondent vide their letter dated 5th ... |
October,1998.Yet again while responding to appellant s fax dated 31st December,1998,whereby the respondent was required to sign a provisional charter party by 4th January,1999,vide their letter dated 4th January,1999,the respondent,pointed out to the appellant that usual practice is that pending finalization of the new... |
It was suggested that an agreement may be signed between them for the period from 1st September,1998 until the matter was finally decided by the appellant under the tender,on the existing terms and conditions with the charter hire being provisionally paid on ad hoc basis at 90% of the rate which was prevailing under th... |
As noted hereinabove,there was no response by the appellant to respondent s letter dated 4th January,1999 though it appears that vide their letter of even date,the appellant did suggest to the respondent that as a token of formal agreement the said letter may be jointly signed by the charterers and the vessel owners Ra... |
Admittedly,no such agreement was signed between the parties Ratio |
Indubitably,there was no further exchange of correspondence between the parties during the year Ratio |
Nevertheless,the appellant continued to use the vessel on hire with them under the time charter dated 6th May,1997.The conduct of the parties,as evidenced in the said correspondence and,in particular appellant s silence on respondent s letters dated 5th November,1998 and 4th Ratio |
January,1999,coupled with the fact that they continued to use the vessel,manifestly goes to show that except for the charter rate,there was no other dispute between the parties Ratio |
They accepted the stand of the respondent sub silentio and thus,continued to bind themselves by other terms and conditions contained in the Charter Party dated 6th May,1997,which obviously included the arbitration clause Ratio |
We may examine the issue from another angle,based on respondent s stand that charter party dated 6th May,1997 continues to be in vogue till the chartered vessel is re-delivered Ratio |
In this context,it would be appropriate to refer to Cls.4 and 23 of the Charter Party dated 6th May,1997.These are in the following terms: "4.Delivery & Redelivery 4.1 STA |
The vessel shall continue to be on charter to charterers in direct continuation from 2348 hrs.22.09.1996 to 30.06.1998.The vessel shall be re-delivered by charterers to owners on dropping last outward pilot at any port on west coast of India at charterers option STA |
Charterers to give owners 15 days notice to probable port of re-delivery STA |
4.2 Charterers to load last three cargoes clean and re-deliver the vessel in clean condition STA |
Final Voyage Should the vessel be on her voyage towards the port of redelivery at the time of payment of hire is due,payment of hire shall be made for such length of time as Owners and Charterers may agree upon as being estimated time necessary to complete the voyage,less any disbursements made or expected to be made o... |
Notwithstanding the provisions of cl.4 hereof should the vessel be upon voyage at the expiry of the period of this charter,Charterers shall have the use of vessel at the same rate and conditions for such extended time as may be necessary for the completion of the round voyage on which she is engaged and her return to a... |
On a conjoint reading of the said clauses,it is plain that the appellant was under an obligation to re-deliver the vessel as per the procedure contemplated in the afore-noted clauses Ratio |
Indisputably,the vessel in question had not been re-delivered at least during the relevant period and the appellant continued to use the vessel beyond 31st August,1998.Having failed to re-deliver the vessel in terms of Cl.4.1 of the Charter Party,the appellant cannot plead that the Charter Party had been fully worked o... |
It is clear from the pleadings and issue No.2,framed by the Arbitral Tribunal,that it was respondent s consistent stand that since the hired vessel had not been re-delivered at the end of the time charter party,the vessel would be governed by the terms and conditions in the Charter Party dated 6th May,1997 Ratio |
However,the Arbitral Tribunal answered the said issue against the respondent Ratio |
It appears to us that even the question in regard to the effect and consequences of non-delivery of the vessel in terms of the Cl.4.1 and 23 would by itself be a dispute arising under the said Charter Party .With Ratio |
respect Ratio |
the learned Arbitral Tribunal overlooked this aspect of the matter Ratio |
We are,therefore,of the opinion that though performance of the Charter Party agreement dated 6th May,1997 may have come to an end on 31st August,1998 RPC |
but it was still in existence for some purposes,viz.the effect of vessel s non re-delivery as per the prescribed mechanism and its continued use beyond the stipulated time RPC |
and,thus,the arbitration clause in the said Charter Party operated in respect of these and other allied purposes RPC |
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