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M/S Caravel Shipping Services Pvt. Ltd. v. M/S Premier Sea Foods Exim Pvt. Ltd.

Civil Appeal · 2018 INSC 1008Decided 29 Oct 2018
Civil Appeal Nos. 10800-10801 of 2018
Justice Rohinton Fali Nariman · Justice Navin Sinha

Background

Premier Sea Foods sued Caravel Shipping Services (its transport agent) to recover around Rs. 26.5 lakh, relying on a Bill of Lading as part of its cause of action. The Bill of Lading also contained a printed arbitration clause requiring disputes to be arbitrated in Chennai. Caravel sought to have the dispute referred to arbitration, but both the trial court and the Kerala High Court refused, reasoning that the printed arbitration clause was not binding because the Bill of Lading had not been signed by Premier Sea Foods.

Decision Breakdown

The Supreme Court held that under Section 7 of the Arbitration and Conciliation Act, 1996, an arbitration agreement must be in writing but need not necessarily be signed. Since Premier Sea Foods itself relied on the very same Bill of Lading as the basis of its lawsuit, it could not "blow hot and cold" by using the document to claim money while disowning its arbitration clause. The Court found the arbitration clause validly formed part of the contract and set aside the judgments of the lower courts, allowing the shipping agent's appeals.

Lesson Learnt

A party cannot pick and choose convenient parts of a contract: if you rely on a document (like a Bill of Lading) to make your claim, you are also bound by its other terms, including an arbitration clause, even if you never physically signed that particular document.

Official source (sci.gov.in)View Judgment (PDF)

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