Holding

The Court held that the jurisdiction and choice‑of‑law clauses in the bill of lading are binding on the consignee, that the appellant’s protest did not waive jurisdiction, and therefore the suit filed in the Cochin court is maintainable.

Summary

British India Steam Navigation Co., Ltd. chartered the vessel Steliosm to ship 4,445 bags of cashew nuts for Shanmughavilas Cashew Industries, but only 3,712 bags were delivered. The respondent sued the appellant in the Cochin Sub‑ordinate Court for the shortage; the trial court decreed in favour of the respondent and the High Court affirmed. The appellant appealed to the Supreme Court, contending that it was merely a charterer, that liability rested with the shipowner, and that clause 3 of the bills of lading – a jurisdiction and choice‑of‑law clause favouring English courts – barred the Indian suit. The Court examined the binding nature of the jurisdiction clause, the effect of the appellant’s appearance in protest on waiver of jurisdiction, the applicability of the Indian Bill of Lading Act and Carriage of Goods by Sea Act, and the liability of a charterer versus a shipowner. It held that the consignee is bound by the jurisdiction and choice‑of‑law clauses, that the appellant’s protest did not amount to a waiver, and that the Indian suit was maintainable. The appeal was allowed and the lower judgments set aside, with the case remanded for disposal.

Issues considered

The binding effect of clause 3 of the bills of lading on the consignee regarding jurisdiction and choice of law.
Whether the appellant’s appearance in protest constitutes a waiver of jurisdiction.
The applicability of the Indian Bill of Lading Act, 1856 and the Indian Carriage of Goods by Sea Act, 1925 to the contract.
The extent of liability of the charterer versus the shipowner for the shortage of cargo.
Whether the charterparty operates as a demise charter and its impact on liability.

Legislation cited

Subjects

bill of ladingjurisdiction clausechoice of lawcharterpartycarrier liabilityshortage of cargoprivate international lawwaiver of jurisdictionIndian Bill of Lading ActCarriage of Goods by Sea Act

Judgment

BRITISH INDIA STEAM NAVIGATION CO., LTD.
A
v.
SHANMUGHA VILAS CASHEW INDUSTRIES AND ORS.

MARCH 13, 1990

B [K.N. SAIKIA AND P.B. SAWANT, JJ.]

Indian Bill of Lading Act, 1856: Bill of Lading-Negotiation a/-
Contract of affreightment need not be expressed in writing; agreed
jurisdiction of a court and choice of law binding on the parties; no
submission to the jurisdiction of another court if appearance only to
C protest.

The Indian Carriage of Goods by Sea Act, 1925 Contract of
affreightment-'Voyage charterparty' 'time charterparty'; responsibility
of the charterer vis-a-vis the owner to be ascertained from the charter-
party and the bill of lading.
D
The first respondent, M/s Shanmughavilas Cashew Industries,
shipped 4445 bags of raw cashewnuts from East Africa to Cochin in the
vessel Steliosm chartered by the appellant M/s British India Steam
Navigation Co. Ltd., incorporated in England, pursuant to a contract '!f
affreightment evidenced by three bills of lading. But only 3712 bags
E were delivered at Cochin, there being thus short landing of 733 bags.

The first respondent sued the appellant in the Court of the Sub-
ordinate Judge, Cochin, seeking. damages. The Subordinate Judge
decreed the suit with interest. The appellant's appeal to the High Court
failed.
F
In the courts below the main contentions of the appellant were -""(
that it was a mere charterer of the vessel; that there was a charterparty
executed between the first respondent and the agent of the owner in
London; that as per clause 3 of the bill of lading the Court at Cochin had
no jurisdiction and only English Courts had jurisdiction; and that as
G per the charterparty and clause 4 of the bill of lading the remedy of the
first respondent, if any, was against the owner who alone was liable and j
not against the appellant charterer of the vessel. JI
The first respondent had denied that the appellant was only a
charterer and not liable for the shortage. It had also denied that only
H English Courts had jurisdiction in the matter.

884
INDIA STEAM NA VIGATJON v. SHANMUGHAVILAS 885

Before this Court, on behalf of the appellant it was submitted that
the appellant was an English company registered in England carrying A
on business· iii England, and it did not carry on any business in India; a~
the carrier under clause 3 of the bill of lading, only the appellant had an
option either to sue or be sued in England, or in Cochin, which was a
port of destination, but the shipper had no option to sue at Cochin; in its
written statement it was clearly stated that it had appeared under pro- B
test and without prejudice to the contention regarding jurisdiction
which contention it had also pressed at the time of the argument, and,
therefore, it could not be said to have submitted to the jurisdiction of
Cochin court as it never made any submission or raised any objection as
to the fact of short landing; and that the High Court has held clause 3 of
the bill of lading to be bad on two erroneous grounds, namely, that it
offends section 28 of the Contract Act and that it gives an unfair c
advantage to the carrier which advantage is not given to the consignee.

Allowing the appeal and remanding the case to the trial Court it
was,
D
HELD: (1) A bill oflading !s the symbol of the goods, and the right
to possess these passes to the transferee of the bill of lading, and the
right to sue passes with it. [893C]

Sewell v. Burdick, (1884] IO App. Cases 74 (85, 104), referred to.
E
(2) A bill of lading is intended to provide for the rights and
liabilities of the parties arising out of the contract of affreightmeni. If a
consignee claims the goods under a bill of lading, he is bound by its
terms. (904C]

(3) Tbe property in the cargo passes to the consignee or the F
endorsee of the bill of lading but the contract whereunder the con-
signment or endorsement is made has always to be taken into consi-
deration. Thus the consignee or endorsee gets only such rights as its
consignor or endorser bad in respect of the goods mentioned in the bill
of lading. (904C-DJ
G
(4) The jurisdiction of the Court may be decided upon the parties
themselves on the basis of various connecting factors, and the parties
should be bound by the jurisdiction clause to which they have agreed
unless there is some strong reason to the contrary. (897B; 899F)

(5) The first respondent is the consignee and holder of the bills of H
886 SUPREME COURT REPORTS [1990] I S.C.R.

lading alid ex facie should be bound by clause 3 thereof in regard to
jurisdiction. [892A] A

(6) If clause 3 of the bills of lading is held to be binding on the first
respondent the choice of Jaw by the parties would also be binding. [892C]

(7) In the event of the English Court alone having the jurisdic- B
tion, the application of Indian statutes and the jurisdiction of the Indian j
court would be, to that extent, inapplicable. [892D]

(8) There may, however, be submission to the jurisdiction of an
Indian Court by litigating in India. [896E]

Sirdar Gurdyal Singh v. Rajah of Faridkote, [1894] AC 670 (684), c
referred to.

(9) The question of jurisdiction in this case ought not to have been
determined by the High Court on the basis of the provisions of section
28 of the Indian Contract Act in the absence of a specific provision D
making it applicable to transactions in international trade. [895F]

( 10) Where the negotiation of a bill of lading is by the person
who had a right to sue on it, mere possession of it does not enable
the holder to sue any person who was not liable under it and not to sue
another who was liable under it, to make good the claim. He cannot E
also sue at a place not intended by the parties when intention has been
expressed. [893E-F]

(11) Although a defendant who appears and contests the case on
its merits will be held to have submitted to the jurisdiction, an appea-
rance merely to protest that the court does not have jurisdiction will not F
constitute submission, even if the defendant also seeks stay of proceed-
ings pending the outcome of proceedings abroad. I896F-G I

Williams & Glyn's Bank PLC v. Astro Dinamico Compania
Naviera S.A. & Anr. The Weekly Law Reports Vol. (I) 1984-438 and
Rein v. Stain, [1892] 66 LT 469, referred to. G

(12) In the instant case, in the Memo. of appeal before the lower
appellate court no specific ground as to jurisdiction was taken though
there were grounds on non-maintainability of the suit. Even in the
Special Leave Petition before this Court no ground oflack of jurisdiction
of the courts below has been taken. The appellant has, therefore, to be H
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS 887

)- held to have either waived the objection as to jurisdiction or to have A
submitted to the jurisdiction, in the facts and circumstances of the case.
The defence that the suit was not maintainable in the absence of the
owner of the ship could in a sense be said to have been on the merits of
the case. [899B-C]

( 13) Clause 3 of the bills of lading also contains the selection of B
law made by the parties. The contract is governed by English law and
disputes are to be determined according to English Law. (8990 I

(14) As the law has been chosen, the proper law will be the
domestic law of England and the proper law must be the law at the time
when the contract is made, throughout the life of the contract, and
there cannot be a "floating" proper law. (9000 I
c

Gienar v. Meyer, [1796] 2 Hy B1 603; Rex v. International Trustee
for the Protection of Bondholders AG, (1937] AG 500 (529); Vita Food
Products Inc. v. Unus Shipping Co. Ltd., (1939] AC 277 (289-90);
James Miller & Partners Ltd. v. Whitworth Street Estates (Manchester) D
Ltd., (1970] AC 583 (603); Mackendar v. Feldia AG, (1966] 3 All E.R.
847; Compagnie d'Armement Maritime SA ·v. Compagnie Tunisienne
de Navigation SA, (1971] AC 572: (1970] 3 All E.R. 7I and Acrow
(Automation) Ltd. v.Rex Chainbe/t Inc., (1971] 3 All E.R. 1175, refer-
red to.
E
(15) The bill of lading is not the contract of affreightment, for
that has been made before the bill of lading was signed and delivered,
but it evidences the terms of that contract. [90JB]

( 16) If certain clauses of the charterparty are referred to in the
bill of lading those should be referred to. in specific terms so as to bind F
the shipper and the consignee. A general reference may not be sufficient
under all circumstances. [902E]

T. W. Thomas & Co. Ltd. v. Portsea Steamship Co. Ltd., [1912]
AC l; Vita Food Products, Incorporated v. Unus Shipping Co. Ltd.,
(1939] AC 277 and Rex. v. International Trustee for the Protection of G
Bondholders, (1937] AC 500, referred to.

( 17) For the purpose of ascertaining the responsibility of a
charterer in respect of the cargo shipped and landed, it would be neces-
sary to know not only the stipulations between the shipper i.e. the
owner of the cargo and the charterer evidenced.by the bill oflading, but H
888 SUPREME COURT REPORTS [ 1990) I S.C.R.

·also those between the charterer and the owner of the ship. If the
A charter is by way of demise the problem would be simple inasmuch as -1
the bill of lading will be purely between the shipper and the charterer.
In cases of a 'voyage charter' or a 'time charter' one has to find out the
actual terms of the charter to ascertain whether they operated as char-
ter by demise or made the charterer only as an agent of the shipowner,
B and if so to what extent so as to ascertain the extent of privily / j
established between the shipper and the shipowner as stipulated in the '
bill of lading. l905G-H; 906A) -

(18) Whether a charterparty operates as a demise or not depends
on the stipulations of the charterparty. The principal test is whether the
master is the employee of the owner or of the charterer. [906G I
c
(19) It cannot be said that the bill of lading is not conclusive.
evidence of its terms and the person executing it is not necessarily
bound by all its stipulations, nnless he repudiates them on the ground
that, as he did not know, .and could not reasonably be expected to know,
D of their existence, his assent to them is not to be inferred from his
. acceptance of the bill oflading without objection. [907D I

(20) Where there is a charterparty, .the bill of lading is prima
facie, as between the shipowner and an indorsee, the contract on which
the goods are carried. This is so when the indorsee is Ignorant of the
E terms of the charterparty, and may be so even if he knows of them.
As between the shipowner and the charterer the bill of lading may in
some cases have the effect of modifying the contract as contained in
the charterparty, although, In general, the charterparty will prevail
and the bill of lading will operate solely as an acknowledgement of
receipt. [907E-F)
F
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 764
(N) of 1975.

From the Judgment and Decree dated 30.11.1973 of the Kerala
High Court in A.S. No. 365 of 1969.
G
R.F. Nariman, Mrs. A.K. Verma and D.N. Mishra for the
Appellant.

Ramamurthi (Not Present) for.the Respondents .
.
H The .Judgment of the Court was delivered by
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS ISAIKIA, J.J 889

K.N. SAIKIA, J. The first respondent M/s. Shanmughavilas
A
·y Cashew Industries, Quilon purchased from East Africa 350 tons of raw
cashewnuts which were shipped in the vessel SS Steliosm chartered by
the appellant M/s. British India Steam Navigation Co. Ltd., incor-
porated in England, pursuant to a contract of affreightment evidenced
by 3 bills of lading issued to the shipper for the 3 loads of cashewnuts.
l Out of 4445 bags containing the nuts carried in the said vessel only B
lo:- 3712 bags were delivered at Cochin, there being thus short landing of
733 bags.

The first respondent sued the appellant in suit No. 0.S. 18/1965
in the Court of the Subordinate Judge, Cochin seeking damages for the
shortage of 733 bags of raw cashewnuts amounting to Rs.44,438.03.
The suit having been decreed with interest @ 6% per annum from c
17.7.1964, for the sum total of Rs.46,659.93, the appellant preferred
J,,, therefrom appeal A.S. No. 365 of 1969 in the High Court of Kerala
which was pleased by its Judgments and decree dated 16.8.1973 and
30. 11.1973, to dismiss the appeal and affirm that of the Subordinate
Judge. Aggrieved, the appellant has preferred this appeal by special D
leave.

L. ( In the courts below the main contentions of the appellant, inter
alia, were that it was a mere charterer of the vessel which was owned
by S. Matas & Compnay c/o Lucas Matas & Sons, Piraeus, Greece;
that there was a charterparty executed between the first respondent E
and M/s. Victoria! Steamship Company as agents of the said owner of
~ the vessel in London on 27 .1.1964; that as per clause 3 of the bill of
"' lading the court at Cochin had no jurisdiction and only English courts
had jurisdiction; and that as per the charterparty and clause 4 of the
\.. bill of lading the remedy of the first respondent, if any, was against the
r: owner who alone was liable and not against the appellant charterer of F
the vessel. Exhibit D 1 is the photostate copy of the charterparty con-
cluded in London on 27 .1.1964 and Exhibit Pl to P3 are the 3 bills of
lading in the transaction. The first respondent denied that the appel-
lant was only a charterer and not liable for the shortage. It also denied
that only English Courts had jurisdiction in the matter.
G
Mr. R.F. Nariman the learned counsel for the appellant first
...--., submits that the appellant is an English company registered in England
carrying on business .in England, and it does not carry on any business
in India. It is submitted, as the carrier under clause 3 of the bill of
lading, only the appellant has an option either to sue or be sued in
England, or in Cochin, which is a port of destination but the shipper H
890 SUPREME COURT REPORTS I 1990) 1 S.C.R.
had no option to sue at Cochin. In its written statement it was clearly
A
stated that it had appeared under protest and without prejudice to the 'f
contention regarding jurisdiction which contention it had also pressed
at the time of the argument, and, therefore, it could not be said to have
submitted to the jurisdiction of Cochin court; and it never made any
submission or raised any objection as to the fact of short landing.
B According to counsel the High Court has held clause 3 of the bill of
lading to be bad on two erroneous grounds, namely, that it offends
section 28 of the Contract Act and that it gives an unfair advantage to
the carrier which advantage is not given to the consignee. Section 28,
according to counsel, is not applicable and clause 3 was not bad on the
ground of having given an unfair advantage to the carrier in giving him
the option to sue or be sued either in England or at the port of destina- •
c tion and that even if it was bad, only the offending portion could be
struck off, the rest of the clause would still be applicable and only the
English court would have jurisdiction.

Records show that in the written statement the appellant as
D defendant in para B stated that the contract evidenced by the bills of
lading was governed by English law and the parties had agreed that the
disputes were to be determined in England according to English law to
the exclusion of the jurisdiction of the courts of any other country and
that the institution of the suit at Cochin was in violation of that agree-
ment, and hence the Court had no jurisdiction to try the suit and the
E plaint should be returned for presentation to proper court. .,
In the Replication filed by the plaintiff it was said:

"The objection regarding jurisdiction raised in clause B of
written statement is not tenable. The cause of action for the
F suit has arisen within the local limits of the jurisdiction of -<\".
this Court. The defendant is also residing and carrying on
business within this court's jurisdiction. It is now well set-
tled that the parties cannot be consent confer or oust the
jurisdiction of a Court. The plaintiffs deny the agreement
mentioned in clause B and no agreement can oust the
G jurisdiction of the Court when the Court possesses the
jurisdiction."

Issue No. 1 was: "Whether the suit is properly filed in this
Court?" The trial court in its judgment dated 29.3. 1968 held:

H "This issue has been considered by this Court on 28.2. 1966
INDIA STEAM NAVIGATION v. SHANMUGHAV!LAS [SAIKJA, J.J 891

and it has been found that this Court has jurisdiction to try
A
the suit. The said finding has b.een cpnfifll)ed by the Hon-
'ble High Court on 6.4.1967 in C.R.P. 977/66."

That judgment is not b.efore us. In the memo of appeal to the High
Court apart from the general grounds that the judgment .and decree.of
the Court below were wrong in law and fact; that the .Court below B
should have hel!i that the suit was not maintainable in law and should
b.ave finally dismissed the suit as the owners of the vessel 'Steliosm' a
necessary party, .as he alone was liable, was not impleaded and pro-
ceeded against, no specific ground about jurisdiction was taken and
consequently we do not find any direct discussion on the point in the
High Court judgments.
.C
Even so, this being a question of jurisdiction going to the root of
l. the matter we allowed the app.eUant to make b.is submissions. The
appellant's submission that the cou.rts at Cochin had no jurisdiction is
based on clause 3 of the Bills of Lading which reads as follows:
D
"3. JURISDICTION: The contract evidence by this bill of
lading shall be governed _by English law and disputes
determined in England or, at the option of the Carrier, at
the port of destination according to English law to the
exclusion of the jurisdiction of the Courts of any other
country." E

If the above clause was binding on the first respondent, without any-
thing more, there could be no doubt that the suit claim arising out of
the contract of affreightment evidenced by the bills of lading will have
to be determined in England or, at the option of the carrier, that is the
appellant, at the port of destination, that is, Cochin, to the exclusion F
of the jurisdiction of the courts of any other country. Is the first
respondent bound by this clause of the Bill of Lading?

Clause 29 of both the bills of lading Exhibit Pl and P2 runs as
follows:
G
"Finally in Accepting This Bill,gf lading. The shipper, Con-
signee, and Owner of the goods, and the Holders of this
Bill of Lading, expressly accept and agree to all its stipula-
tions, exceptions, and conditions whether written, printed,
stamped or incorporated, as fully as if they were all signed
by snch Shipper, Consignee, Owner or H.older." H
892 ·SUPREME COURT REPORTS I1990] I S.C.R.
A The first respondent is the consignee and holder of the bills of
lading and ex facie should be bound by this clause. No doubt the bills of
lading were issued to the shipper from whom it was received by the
first respondent. There is no evidence to show that the shipper has
repudiated the stipulations in the bills of lading in any manner. Under
these circumstances would it be open to the first respondent to
B repudiate clause 3 of the bills of lading?

It is a settled principle of Private International Law governing
bills of lading that the consignee or an endorsee thereof derives the
same rights and title in respect of the goods covered by the bill of

c
lading as the shipper thereof had. For the purpose of jurisdiction the
action of the first respondent is an action in personam in Private Inter-
national Law. An action in personam is an action brought against a
person to compel him to do a particular thing. If clause 3 of the bills of
'
lading is held to be binding on the first respondent the choice of law by
the parties would also be binding. English courts would perhaps use
their own Private International Law to decide the dispute. In the event
D of the English Court alone having the jurisdiction, the application of
Indian statutes and the jurisdiction of the Indian courts would be, to
that extent, inapplicable.

Until the Bills of Lading Act, 1855 was passed in England the
endorsement of a Bill of Lading would not affect the contract
E evidenced in it, and the endorsee could not sue or be sued on such
contract, though he was the person really interested in goods, the ')
subject of the contract. By section 1 of the Bills of Lading Act, 1855, in
England "every consignee of goods named in a Bill of Lading, and
every endorsee of a Bill of Lading to whom the property of goods shall
pass, upon or by reason of such consignment or endorsement shall
F have transferred to and vested in him all rights of suit and be subject to
the same liabilities in respect of such goods as if the contract contained
in the Bills of Lading had been made with himself." In Sewell v.
Burdick, [1884] 10 App. Cas. 74 (85, 104) it is held that section 1 is to
be given effect in any proceeding in the English Court regardless of the
proper law governing the transfer of the bill of lading. The property
G passes by reason of consignment or endorsement and the right to sue
passes with it. The consignee or endorsee may lose his right or liabiHty
under the Act by such further endorsement of the bill of lading as .
divests him of the property. Such a vesting of rights and liabilities on
endorsement of a bill of lading does not in any way affect the ship-
owners' rights against the original shippers or owners of the goods for
H the freight or the shipper's rights under the bill of lading or the liability
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS ISAIKIA, J.] 893

of the consignee or indorste by reason of his being such consignee or
)' . indorsee. or of his receiving the goods in consequence of such consign-
A
mentor endorsement, or any nght of stoppag.e in transit.

The Indian Bill of Lading Act, 1856 was based on the English
Bills of Lading Act, 1855 (18 and 19 Viet. C. 111) (Act IX of 1856).
Under section 1 of the Indian Bills of Lading Act, 1856 also every B
k consignee of goods named in a bill of lading and every endorsee of a
bill of lading to whom the property in goods therein mentioned shall
pass, upon or by reason of such consig11ment or endorsement, shall
have transferred to and vested in him all rights of suit, and be subject
to the same liabilities in respect of such goods as if the contract con-
tained in the bill oflading had been made with himself.
c
The bill of lading is the symbol of the goods, and the right to
~. possess those passes to the transferee of the bill of lading. In other
words, its transfer is symbolic of the transfer of the goods themselves
and until the goods have been delivered, the delivery of the duly
endorsed bill of lading operates as between the transferor or trans- D
feree, and all who claim through them, as a physicai delivery of the
goods would do. The bill of lading is a negotiable instrument in the
sense of carrying with it the right to demand and have possession of the
,..----{_
goods described in it. It also carries with it the rights and liabilities
under the contract, where the property in the goods also is transferred.
However, a bill of lading is not a negotiable instrument in the strict E
~
sense of the transferee deriving better title than the transferor. The
transferee of a bill of lading gets no better title than the transferor
.,.. himself had. Mere possession of the bill of lading does not enable the
holder to sue a person at a place where the tranferor himself could not
,.. have done. Where the negotiation of a bill of lading is by the person
who had a right to sue on it, mere possession of it does not enable the F
holder to sue any person who was not liable under it and not to sue
another who was liable under it to make good the claim. He cannot
also sue at a place not intended by the parties when intention has been
expressed.

It would also be relevant to consider whether English courts G
would be likely to entertain the instant suit if instituted in England in
~ terms of the bills of lading so that the first respondent is not likely to be
without a remedy.

Dicey & Morris in the Conflict of Laws 11th Ed. have given the
following general principles as to jurisdiction in actions in personam: H
894 SUPREME COURT REPORTS [ 1990] I S.C.R.

"Rule 28, Sub-.rule 4: The court may assume jurisdiction if,
A
in the action begun by the writ, the claim is brought to
enforce, rescind, dissolve, annul or otherwise affect a con-
tract, or to recover damages or obtain other relief in
respect of the breach of a contract, being (in either case) a
contract which
B
(i) was made in England, or

(ii) was made by or through an agent trading or residing in
England .on behalf of a principal trading or residing out of
England, or ~

c (iii) is by its terms or by implication governed by English
law, or

(iv) contains a term to the effect that the court shall have
jurisdiction to hear and determine any action in respect of
D the contract."

Rule 34 deals with jurisdiction clauses and it says:

"( 1) Where a contract provides that all disputes between
the parties are to be referred to the jurisdiction of the
E English courts, the court normally has jurisdiction to hear
11nd ifetermine any action in respect thereof.

(2) Subject to clause (3) of this Rule, where a contract 'r-
provides that all disputes between the parties are to be·
referred to the exclusive jurisdiction of a foreign tribunal, -"(
F the English court will stay proceedings (or, as the case may
be, refuse to give leave to serve the writ out of the jurisdic-
tion) instituted in England in breach of such agreement,
unless the plaintiff proves that it is just and proper to allow
them to continue.

G (3) Where the case falls within the scope of the 1968 Con-
vention, unless the defendant submits to the jurisdiction,
the court has no jurisdiction to determine a dispute.

(a) if one or more of the parties is domiciled in a
Contracting State and the parties have agreed in
H accordance with Article 17 of the 1968 Convention
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS [SAIKJA, J.] 895

that the courts of a Contracting State other than the
United Kingdom are to have jurisdiction to settle any
A
such dispute; or

(b) if done of the parties is dofuiciied in a Conitact-
ing State and the parties have agreed in accordance
with Article 17 of the 1968 Convention that the courts B
of a Conitaciilig State other than the United king-
dom ate to have jurisdiction to settie any such dispute .
and the courts chosen have not declined jurisdiction."

Accotding to the authors the parties to a contract in intetnati<inal
trade or commerce may agree ih advance oii the forum which is to have
· jurisdiction to determine disputes which may arise between them. The c
chosen court may be a court in the country of one or both the parties,
l. or it may be a neutral forum. The. jurisdiction clause may provide for a
sub'1li>sion to the· courts of a particular country, or to a court identified
by a formula in a printed standard form, such as a ·bill of lading refer-
ring disputes to the courts of the carrier's principal place of business. It D
is a question of interpretation, governed by the proper law of the
contract, whether a jurisdiction clause is exclusive or non-exclusive, or
whether the claim which is the subject matter of the action falls within
its terms. If there is no express choice of the proper law of the con-
tract, the law of the country of the chosen court will usually, but not
invariably, be the proper law. E

Ii is accordingly unlikely that the first respondent would be with-
out any remedy if the terms of clause 3 of the bills of lading are
faithfully observed.

The question of jurisdiction in this case ought not ·to be F
determined by the High Court on the basis of the provisions of s. 28 of
the Indian Contract Act in the absence of a specific provision making it
applicable to transactions in international trade. The effective opera-
tion of statutes of a country in relation to foreigners and foreign pro-
perty, including ships, is subject to limitations . .Jn general, a statute
extends territorially, unle.ss the contrary is stated, throughout the G
country and will extend to the territorial wate~, and such places as
intention to that effect is shown. A statute extends to all persons
within tile country if that intention is shown. The Indian Parliament
therefore has no authority to legislate for foreign vessels or foreigners
in them on the high seas. Thus a foreign ship on the high seas, or her
fqreign owners or their agents in a foreign country, are not deprived of H
896 SUPREME COURT REPORTS [ 1990] I S.C.R.

A rights by our statutory enactment expressed in general terms unless it
provides that a foreign ship entering an Indian port or territorial ...
waters and thus coming within the territorial jurisdiction is to be
covered. If the Parliament legislates in terms which extend to foreign
ships or foreigners beyond the territorial limits of its jurisdiction, the
Indian court is of course bound to give effect to such enactment. How-
B ever, no such provision has been referred to in the impugned judg-
ments. Without anything more Indian statutes are ineffective against ,-l.
foreign property and foreigners outside the jurisdiction.

The Privy Council in Sirdar Gurdyal Singh v. Rajah of Farid-
kote, (1894] AC 670 (684) decided that no territorial legislation can ;
give jurisdiction in personal action which any foreign court should
c recognize against absent foreigners owing no allegiance or obedience to
the power which so legislates. Lore Selbome said: "In a personal
action to which none of these causes of jurisdiction apply, a decree
pronounced in absentem by a foreign court, to the jurisdiction of
which the defendant has not in any way submitted himself, is by inter-
D national law an absolute nullity. He is under no obligation of any kind
to obey it; and it must be regarded as a mere nullity by the courts of
every nation except (when authorised by special local legislation) in
the country of the forum by which it was pronounced." There may
however be submission to the jurisdiction of an Indian court by litigat-
ing in India. The question then is what would amount to submission to
E jurisdiction.

Cheshire & North's Private International Law 11th Ed., on sub-
mission to jurisdiction says: "Despite the fundamental principle that
the court cannot entertain an action against a defendant who is absent
from England, it has long been recognised that an absent defendant
p may confer jurisdiction on the court by submitting to it. This may be
done in a variety of ways, such as by the defendant acknowledging
service before actual service of the writ, or instructing a solicitor to
accept service on his behalf; Commencing an action as a plaintiff will
give the court jurisdiction over a counter claim. Although a defendant
who appears and contests the case on its merits will be held to have
0 submitted to the jurisdiction, an apearance merely to protest that the
court does not have jurisdiction will not constitute submission, even if
' the defendant also seeks a stay of proceedings pending the outcome of
proceedings abroad." The authors go on to say that any person may
contract, either expressly or impliedly, to submit to the jurisdiction of
a court to which he would not otherwise be subject. In case of an
intematicmal contract it is common practice for the parties, to agree that
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS {SAIKIA,l.] 897

any dispute arising between them shall be settled by the courts of A
another country even though both the parties are not resident of that
country. In such a case having consented to the jurisdiction one cannot
afterwards contest the binding effect of the judgment. The defendant
out of the jurisdiction of the country may be deemed to have been
served by service on his agent within the jurisdiction. However, parties
cannot by submission confer jurisdiction on, the court to entertain B
proceedings beyond its authority.

The jurisdiction of the court may be decided upon by the parties
themselves on basis of various connecting factors.

Wastlake says in his Treatise on Private Intematioqal Law, at C
page 5: "The principal grounds for selecting a particular national
jurisdiction in which to bring an action are that the subject of the
j action, if a thing, is situate, if a contract, was made, or was to be
performed, if a delict, was committed, within the territory: hence the
forum situs, or rei sitae, contractus, delicti, the two latter of which are
classed together as the forum speciale obligationis. Or that the jurisdic- D
tion is that in which all the claims relating to a certain thing or group of
things ought to be adjudicated on together, the forum concursus; or
that to which the defendant is personally subject, the forum rei."

In the instant case the appellant submits that as defendant it
appeared before the Indian court to protest its jurisdiction and put E
forth its defences subject to that protest. The appellant, it has been
stated in para 2 of the judgment under appeal, dated 30.4.1973, had
-y not filed any objection to the findings as to damages. Did it then
amount to submitting to the jurisdiction of the Indian court in which
the shipper or the first respondent had no right to sue?
F
In Williams & Glyn's Bank PLC v. Astra Dinamico Compania
Naviera S.A. & Anr., The Weekly Law Reports Vol. (l) 1984-438,
where the plaintiff-bank sought to enforce its securities against the
defendants by instituting proceedings in England in reliance of clause 7
of the guarantees, whereby each of the defendants were expressed to
submit irrevocably to the jurisdiction of the English courts. The G
respondents (defendants) made an application disputing the jurisdic-
tion of the English courts and had also simultaneously applied for stay
of the action. It was contended on behalf of the appellants (plaintiffs)
that the respondents (defendants) either had waived any objection to
the jurisdiction because they had taken a step in the action by applying
for a stay or that they would waive any objection if they persisted with H
898 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

their application in priority to disputing the jurisdiction, Lord Fraser
A
observed that it would surely be quite unrealistic to say that the
respondents had waived their objection to the jurisdiction by applying
for a stay as an alternative in the very summons in which they applied
for an order giving effect to their objection to the jurisdiction. That the
summons made it abundantly clear that they were objecting and the
B fact that they asked for a decision upon their objection to be post-
poned until the outcome of the Greek proceedings w;is known, was not
in any way inconsistent with maintaining their objection. There was no
reason in principle or in common sense why the respondents should
not be entitled to say: "We object to the jurisdiction of the English
courts, but we ask for the proceedings necessary to decide that and the ;
c other issues to be stayed pending the decision of the proceedings in
Greece." Reference was made to Rein v. Stein, [1892] 66 LT 469,
where it was said at page 471: "It seems to me that, in order to
establish a waiver, you must show that the party alleg@d to h~ve
waived his objection has taken some step which is only necessary or
only useful if the objection has been actually waived, or if the objec-
D tion has never been entertained at all." In Dulles' Settlement (No.2)
(1951) Ch. 842; the question 'Vas whether a father, who was an Ameri-
can resident qutside England, had submitted to tlw jurisdiction of the
English courts in a dispute about payment of maiqten11nce to his child
in England. He had been represented by counsel in the English court,
who argued that he was not subject to their jurisdiction. Denning U
E (as he then was) said at page 85():

"I cannot see how anyone can fairly say that a man has
voluntarily submitted to the jurisdiction of a court, when
-
he has all the time been vigorously protesting that it has no
jurisdiction. If he does nothing and lets judgment go
F against him in default of appearance, he clearly does not
submit to the jurisdiction. What difference in principle
does it make, if he does not merely do nothing, but actually
goes to the court and protests that it has no jurisdiction? I
can see no distinction at all."

G The judgment of the court of appeal which held that the applica-
tion for a stay involved assumption that .the court had jurisdiction to
entertain the action and therefore the question of jurisdiction must be
decided first, was set aside in appeal, and the appeal therefrom was
dismissed by the House of Lords.

H In the instant case the question is of initial jurisdiction on the
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS (SAIKIA, J.] 899

basis of claues 3 of the bills of lading. We have to ask the question
whether the shipper could or could not have the right to sue at Cochin A
')
under the bills of lading. If he could not have done so, the appellant's
appearance to protest about jurisdiction would not cure that defect of
jurisdiction. However, we find that in the Memo. of appeal before the
lower appellate· court no specific ground as to jurisdiction was taken
through there were grounds on non-maintainability of the suit. Even in B
I the Special Leave Petition before t.his Court no ground of lack of
<· jurisdiction of the courts below has been taken. We are, therefore, of
the view that the appellant has to be held to have either waived the
objection as to jurisdiction or to have submitted to the jurisdiction in
the facts and circumstances of the case. The defence that the suit was
:; not maintainable in the absence of the owner of the ship could in a
sense be said to have been on the merits of the case. The submission as c
to lack of jurisdiction is, therefore, rejected.
·~
~ Clause 3 of the bills of lading also contains the selection of law
made by the parties. The contract is governed by English law apd
disputes are to be determined according to English Law. Is the selec-
• lion of law binding? In Cheshire & North's Private International Law
11th Ed., page 495,, while discussing about the interpretation of con-
D

tracts the authors say: "When the stage has been reached where an
~~ obligation, formally and essentially valid and binding on parties of full
capacity, has been created, then in the further matters that may
require the irlte£Vention of the Court, there is, speaking generally, !lo E
reason in principle why the parties should not be free to select the
.-'."
, governing law." The express choice of law made by parties obviates
need for interpretation.
-(
In the absence ·of an express choice the question of the proper
)-- law of contract would arise. The parties to a contract should be bound F
by the jurisdiction clause to which they have agreed unless there is
some strong reason to the contrary.

Dicey & Morris in the Conflict of Laws formulate the following
rule on proper law of contract as Rule 180:
G
"The t~rm "Proper law of a contract" means the system of
law by 1which the parties intended the contract to be gover-
--.._ ned, or, where their intention is neither expressed nor to be
inferred from the circumstances, the system of law with
which the transaction has its closest and most real connec-
tion." H
L
900 SUPREME COURT REPORTS [1990] 1 S.C.R.

Sub-rule 1:
A
"When the inteation of the parties to a contract, as to the
law governing the contract, is expressed in words, this
expressed intention, in general, determines the proper law
of the contract."
B
Sub-rule 2:. ··~

"When the intention of the parties to a contract with regard
to the law governing the contract is not expressed in words,
their intention is to be inferred from the terms and nature
of the contract, and from the general circumstances of the
c case, and such inferred intention determines the proper law •
of the contract."

There can, therefore, be no doubt that the instant contract of
affreightment evidenced by the bills of lading will be governed by
D English law. As the law has been chosen, the proper law will be the
domestic law of England and the proper law must be the law at the
time when the contract is made throughout the life of the contract and
there cannot be a "floating" proper law. It has been recognised since
Gienar v. Meyer, [1796] 2 Hy Bl 608, that the the time of making the
contract the parties may expressly select the law by which it is to be
E governed and they may declare their common intention by a simple
statement that the contract shall be governed by the Jaw of a particular
country. This has been settled by a long line of decisions;· as Rex v.
International Trustee for the Protection of Bondholders AG, [1937] AC
500 (529); Vita Food Products Inc. v. Unus Shipping Co. Ltd., (1939]
AC 277 (289-90); James Miller and Partners Ltd. v. Whitworth Street
F Estates (Manchester) Ltd., (1970] AC 583 (603); Mackender v. Feldia
AG, (1966] 3 All E.R. 847; Compagnie d' Armement Maritime SA v.
Compagnie Tunisienne de Navigation SA, (1971] AC 572: (1970] 3 All
E.R. 71 and Acrow (Automation) Ltd. v. Rex Chainbelt Inc., [1971] 3
All E.R. 1175.

G It is true that in English law there are certain limitations on
freedom to choose the governing law. The choice must be bona fide
and legal, and not against public policy. It may not be permissible to
choose a wholly unconnected law which is not otherwise a proper law
of contract. English courts, it has been said, should, and do, have a
residual power to strike down for good reas.ons, choice of law clauses,
H totally unconnected with the contract. Where there is no express
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS [SAIKIA, J .1 901

choice of the proper law, itis open to Court to determine whether
A
there is an implied or inferred choice of law in the parties contract.

The next question to be decided is whether the appellant would
be liable for the suit claim. This would naturally depend on the contract
of affreightment. It is an accepted principle that the bill of lading is not
the contract of affreightment, for that has been made before the bill of B
lading was signed and delivered, but it evidences the terms of that
contract. The bill of lading serves as a receipt and also as a document
of tittle and may be transferred by endorsement and delivery. Article
III(3) of the Hague Rules says that a bill of lading is prima facie
evidence of the receipt by the carrier of the goods described therein.
The Hamburg Rules define a bill of lading under Article 1(7) as
follows: c
"Bill of lading" means a document which evidences a con-
tract of carriage by sea and the taking over or loading of the
goods by the. carrier, and by which the carrier undertakes
to deliver the goods against surrender of the. document. A D
provision in the document that the goods are to be deli-
vered to the order of a named person, or to order, or to
bearer, constitutes such an undertaking."

The Hague Rules say that after the goods are taken into his
charge, the carrier or his agent shall issue to the shipper, if he so E
demands, a bill of lading, showing among other things the particulars
of the goods.

The contract of affreightment need not necessarily be expressed
in writing. The bill of lading is evidence of the terms of the contract
which can also be ascertained from the charterparty where one exists. F
Dr. Justice T. Kochu Thommen in his book of Bills of Lading in
International Law and Practice at page 25 writes:

"As between the shipowner and the shipper, the bill of
lading is not conclusive evidence of the terms of the con-
tract and parties to the contract are entitled to prove that G
the stipulations in the bill of lading are at variance with the
agreed terms of the contract, as expressed or evidenced in
other documents. In practice, however, the terms of the
bill of lading govern the contractual relations between the
shipowner and the shipper, and the booking note generally
states that the carrier's regular forms of bill of lading shall H
902 \
I
I
SUPREME COURT REPORTS (1990] l S.C.R.

A be used and all the terms thereof shall form part of the
contract. The bill of lading assumes the character of cooclu-
sive evidence once it has passed into the hands of a con-
' . signee or indorsee and .evidence may not be given which .
. varies or contradicts it. The position is, hci\,~v.er, different
when the ship is under charter and stipulation~. in the
B. charterparty are expressly and clearly incorporated in the
bill of lading. In such a case the bill of lading, even after it
· · - · · has passed in to the hands of a consignee or indorsee, has to
be read subject to the charterparty stipulations. In the
hands of a charterer, the bill of lading is only a receipt and
the charterparty is the governing document as far as the
shipowner' and the charterer are.concerned."
c
Apart from the question of the charterparty having been proved
or not according to law the question in the instant case is whether
clause 4 of the charterparty as to responsibility of the shipowner in
respect of the goods carried wo'uld form part of or be incorporated in
· D the bills of lading. How far the charterparty clauses laying down the
responsibility and liabilities between the charterer and the shipowner
can be attributed to the consignee under the bill of lading? It is an
accepted principle that if certain clauses of the charterparty are refer-
red to in the bill of lading those should be referred to in specific teniis
so as to bind the shipper and the consignee. A general reference may
E. · not be sufficient under all circumstances. Thus in T. W. Thomas & Co.
Ltd. v. Portsea Steamship Co. Ltd., (1912] AC 1 in the bill of lading
· there
,__ -
was also a marginal
. clause in writing as follows:

"Deck load at shipper's risk, and all other terms and condi-
tions and exceptions of charter to be as per charterparty,
"--· F including negligence clause."_ ·
........ ~ \_
"' .. The question was whether the arbitration clause in th~ charter-
party was incorporated by the reference in the bill of lading. Lord
Loreburn L.C. answering this question whether an arbitration clause
fourid in the charterparty was applicable to the contract evidenced by
G. the bill of lading, and to disputes arising between the shipowners and
the. holders of the bill of lading under that document, replied in the
negative. Lord Atkinson observed that when it was sought to intro-
---,_ duce into a document like a bill of lading-a negotiable instrument-a
. /clause such as the arbitration clause, not germane to the receipt, car-
-- riage, or delivery of the cargo or the payment of freight, the proper
H subject matters with which the bill of lading is conversant, that should
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS [SAIKIA,J .] 903

be done by distinct and specific words, and not by such general words
as those written in the margin of the bill of lading in that case. A

In Vita Food Products, Incorporated v. Unus Shipping Co. Ltd.,
(1939] A.C. 277, the bill of lading set out in detail the terms and
conditions of the contract "which are hereby mutually agreed upon as
follows". Clause 7 contained a general exemption in respect of the B
goods carried from liability for all damage capable of being covered by
insurance and from liability above a certain value per package unless a
special declaration was made. The same clause also provided that
"these contracts have been governed by English Law." While
r determining what was the proper law of the contract the Privy Council
held that the expressed words of the bill of lading must receive effect
with the result that the contract was governed by English Law. It was c
said: "It is now well settled that by English Law (and the law of Nova
Scotia is the same) the proper law of the contract is the law which the
parties intended to apply. That intention is objectively ascertained,
and, if not expressed, will be presumed from the terms of the contract
and the relevant surrounding circumstances." In that case the goods D
were shipped in Newfoundland under bills of lading which did not
contain the statement required by section 3 of the Carriage of Goods
_....... by Sea Act, 1932 which incorporated the Hague rules subject to certain
·•
modifications but the bill of lading contained a general clause that the
contracts "shall be governed by English Law" and applying that law
the Shipowner was held to be within the exceptions which exempted E
him from liability. In Rex v .International Trustee for the protection of
Bondholders, (1937] AC 500, it was held that the. intention of the
parties would be ascertained from what is expressed in the contract,
which will be conclusive. Repelling the contention that the transaction
which was one relating to the carriage on a Nova Scotian ship of goods
from Newfoundland to New York between residents in those coun- F
tries, contain_ed nothing to connect it in any way with English law, and
that choice could not be seriously taken, their Lordships held that
connection with English law was not as a matter of principle essential.

The Indian Bills of Lading Act, 1856, which is based on the Bills
of Lading Act of 1855 of England in its preamble says: G

"Whereas by the custom of merchants a bill of lading of
goods being transferable by endorsement, the property in
the goods may thereby pass to the indorsee, but neverthe-
less all rights in respect of the contract contained in the bill
of lading continue in the original shipper or owner, and it is H
"If the vessel is not owned by or chartered by demise to the
company or Line by whom this bill of lading is issued (as
H may be the case notwithstanding anything that appears to
INDIASIBAMNAVIGATIONv.SHANMUGHAVILAS [SAIKIA,J.] 905

the contrary) this bill of lading shall take effect only as a
contract with the owner or demise charterers as the case A
may be as principal made through the agency of the said
company or Line who act solely as agents and shall be under
no personal liability whatsoever in respect thereof."

This clause ex facie establishes a privily of contract between the B
owner or demise charterer of the vessel on the one hand and the
shipper to whom the bill of lading has been issued by the appellant
company as the charterer otherwise than by demise. The High Court
construed this clause to be one relieving or lessening the carrier's
liability without considering whether it was otherwise than as provided
in the Rules under the Carriage of Goods Act, 1924 of England.
c
In Halsbury's Laws of England 4th edn. Vol. 43, para 401, it is
said.

"A contract for the carriage of goods in a ship is called in law a
contract of affreightment. In practice these contracts are usually writ- D
ten and most frequently are expressed in one or other of two types of
document called respectively a charterparty and a bill of lading." In
para 402 we read that a contract by charterparty is a contract by which ·
an entire ship or some principal part of her is let to a merchant, called
'the charterer', for the conveyance of goods on a determined voyage to
one or more places, or until the expiration of a specified period. In the E
first case it is called a "voyage charterparty", and in the second a "time
~· charterparty". Such a contract may operate as a demise of the ship
herself, to which the services of the master and the crew may or may
not be added, or it may confer on the charterer nothing more than the
right to have his goods conveyed by a particular ship, and, as sub-
sidiary to it, to have the use of the ship and the services of the master F
and crew.

· Thus for the purposes of ascertaining the responsibility of a
charterer in respect of the cargo shipped and landed, it would be
necessary to know not only the stipulations between the shipper i.e.
the owner of the cargo and the charterer, evidenced by the bill of G
lading and also those between the charterer and the owner of the ship.
If the charter is by way of demise the problem would be simple
inasmuch as the bill of lading will be purely between the shipper and
the charterer. In cases of a 'voyage charter' or a 'time charter' one has
to find out the actual terms of t.he charter to ascertain whether they
operated as charter by demise or made the charterer only as an agent H
906 SUPREME COURT REPORTS [1990] I S.C.R.

A of the shipowner and if so to what extent so as to ascertain the extent
of privily established between tbe shipper· and the shipowner as ·°'(
stipulated in the biil of lading.

Charterparties by way of demise, says Halsbury, at para 403, are
of two kinds: "(l) charter without master or crew, or "bareboat char-
ij ter", where the hull is the subject matter of the charterparty and (2)
charter with master and crew, under which the ship passes to the
charterer in a state fit for the purposes of mercantile adventure. In
both cases the charterer becomes for-the time being tbe owner of the
ship; the master and crew are, or become to all intents and purposes,
his employees, and through them the possession of the ship is in him.
The owner~ on the other hand, has divested himself of all control
C either over the ship or over the master and crew, his sole right being to
receive the stipulated hire and to take back the ship when tbe
charterparty comes to an end. During the currency of the charterparty, .~
therefore, the owner is under no liability to third persons whose goods
may have been conveyed upon the demised ship or who may have done
D work or supplied stores for her, and those persons must look only to
the charterer who has taken his place."

In para 404 Halsbury said:

"Although a charterparty which does not operate as a
E demise confers on the charterer the temporary right to ,
have his goods loaded and conveyed in the ship, tbe owner-
ship remains in the original owner, and through the master
and crew, who continue to be his employees, the possession
of the ship also remains in him. Therefore, the existence of
the charterparty does not necessarily divest the owner of
liability to third persons whose goods may have been con-
veyed on the ship, nor does it deprive him of his rights as
owners."

Whether a charterparty operates as a demise or not depends on
the stipulations of the charterparty. The principal test is whether the
(jJ master is the employee of the owner or of the charterer. In other words
where the master becomes the employee of tbe charterer or continues
to be the owner's employee. Where the charterparty is by way of \--
demise, the charterer may employ the ship in carrying eitber his own
goods or those of others. Where the charterparty does not operate as a
demise, the charterer's right vis-a-vis the owner depends upon the
l:I terms of the contract. "The contract of carriage is personal to the
INDIA STEAM NAVIGATION v. SHANMUGHAVILAS (SAIKIA, J.) 907

. charterer, and he cannot call upon the shipowner to undertake
) liabilities to third persons or transfer to third persons his own liabilities A
to the shipowner unless the contract so provides." A charterparty has
to be construed so as to give effect, as far as possible, to the intention
of the parties as expressed in the written contract. The stipulations of
charterparty may be incorporated in a bill of lading so that they are
thereby binding on the parties. It is an accepted principle that when B
stipulations of the charterparty are expressly incorporated, they be-
come terms of the contract contained in the bill of lading, and they can
be enforced by or against the shipper, cosignee or endorsee. The effect
of a bill of lading depends upon the circumstances of the particular
..~ case, of which the most important is the position of the shipper and of
the holder. Where there is a bill of lading relating to the goods, the
terms of the contract on which the goods are carried are prima facie to c
be ascertained from the bill of lading. However, if a shipper chose to
.l, receive a bill of lading in a certain from without protest he should
ordinarily be bound by it. Thus, it cannot be said that the bill of lading
is not conclusive evidence of its terms and the person executing it is not
necessarily bound by all its stipulations, unless he repudiate~ them on D
the ground that, as he did not know, and could not reasonably be
expected to know, of their existence, his assent to them is not to be
inferred from his acceptance of the bill of lading without objection.
Where there is a charterparty, the bill of lading is prima facie, as
between the shipowner and an indorsee, the contract on which the
goods are carried. This is so when the indorsee is ignorant of the terms E
of the charterparty, and may be so even if he knows of them. As
between the shipowner and the charterer the bill of lading may in some
cases have the effect of modifying the contract as contained in the
1 charterparty, although, in general, the charterparty will prevail and
the bill of lading will operate solely as an acknowledgement of receipt.
F
"' In the instant case we find from Exts. Pl to P3 that the following
has been prominently_printedjust below the signature 'For the Master
and Owners' in the bills of lading. SEE CONDffiONS OF CARRIAGE
· AND OTHER CONDffiONS OF REVERSE. It can not therefore be
said that the shipper, whose knowledge will be attributed to the first res-
pondent did not know of the conditions of carriage prinited on the reverse G
there being no other conditions printed elsewhere in th~ bills of lading .
............
None of the parties having repudiated the bills of lading in this
case, the High Court ought not to have accepted the submission of the
first respondent that clause 4 of the bills of lading offende.!! the provi-
sions of the Carriage of Goods by Sea Act, 1924 and therefore bad. H
908 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

A The Carriage of Goods by Sea Act, of 1924 of England was on the
Hague Rules which were amended by Brussels protocol 1968 which is
now embodied in the Carriage of Goods by Sea Act 1971 which came
into force in 1977. The Indian Carriage of Goods by Sea Act 1925 (Act
XXVI of 1925) which is an Act to amend the law with respect to the
carriage of goods by sea was passed after the International Conference
B
on Maritime Law held at Brussels in October 1922 and Brussels meet-
ing in October 1923. Under Section 2 of that Act which deals with
application of rules it is provided: "Subject to the provisions of this
Act, the rules set out in the Schedule (hereinafter referred to as "the
Rules") shall have the effect in relation to and in connection with the
carriage of goods by sea in ships carrying goods from any port in India
C to any other port whether in or outside India." To apply the Rules to a
case, the port of origin has to be an Indian Port. Unless the starting
point or the port of loading is a port in India the Rules are inapplicable.
These Rules have no application when goods are not carried from any
Indian port. As in the instant case goods were shipped in Africa and
O carried to Cochin, this Act obviously was not applicable.

There is nothing to show that the charterparty was by way of
demise. Pacta dant legem contractui-the stipulations of parties consti-
tute the law of the contract. Agreements give the law to the contract.
Clause 4 having been a stipulation in the contract evidenced by the
E bills of lading the parties could not resile therefrom. It is not clear
whether the English Carriage of goods by Sea Act, 1924 or the Indian
Carriage of Goods Act 1925 was applied by the High Court. The
Articles and the Rules referred to are to be found in the Schedule to
the Indian Act the Rules whereunder were not applicable to the facts
of the case. The dispute could not have been decided partly according
to municipal law and partly according to English law. The English law
F
was not proved before the court according to law.

The result is that this appeal must succeed. We accrodingly allow
this appeal, set aside the impugned judgments and remand the case to
the trial court for disposal according to law after giving opportunity to
G the parties to amend their pleadings and adduce additional evidence, if
they are so advised, in light of the observations made hereinabove. In
the facts and circumstances of the case we make no order as to costs.

R.S.S. Appeal allowed.