Arab Shipping Co. v. J. S. Ocean Liners Pvt. Ltd. , Mumbai
2008-05-16
K.A.PUJ
body2008
DigiLaw.ai
JUDGMENT : K.A. Puj, J. The applicant, owner of the vessel M.V. Almansoor, has filed this application praying for dismissal of Admiralty Suit No. 4 of 2008 and the plaint filed in relation thereto be taken off the record of this Court. The applicant has also prayed for return of security furnished by the applicant with the registry of this Court. The applicant has sought for the direction to the plaintiff to pay sum of Rs. 45,17,300/- to the applicant as damages or in the alternative to make an inquiry into the loss and damages suffered by it due to the wrongful arrest of the said vessel by the plaintiff and payment of the sum as may be found due and payable from such enquiry. 2. It is the case of the applicant that on or about 13-4-2008, when the said vessel was at Kandla Port, the applicant was informed by the Master of the said vessel that he had been served with the copy of the order dated 11-4-2008 passed by the Division Bench of this Court along with the plaint filed in relation to the A.S. No. 4 of 2008. From a copy of the order dated 11-4-2008 passed in O.J. Appeal No. 115 of 2008, the applicant carne to learn that the plaintiff had obtained an ex parte ad-interim conditional order for the arrest of the said vessel upon deposit of Rs. 10 lacs and the matter was made returnable on 15-4-2008. The applicant further came to know that the plaintiff had preferred O.J. Appeal From Order dated 10-4-2008 passed by the learned single Judge of this Court whereby interim relief of arrest as sought by the plaintiff in the present suit was not granted. It is also the case of the applicant that the applicant had undertaken to transport Cargo from Mundra to Kuwait by the said vessel. However, the applicant was unable to sail the said vessel by reason of the order of the arrest due to which the applicant was suffering mounting loss and claims for the damages due to the delay in performing its contractual obligation. The vessel as a direct consequence of the wrongful arrest by the plaintiff was detained at the port of Kandla from 11-4-2008 to 17-4-2008.
The vessel as a direct consequence of the wrongful arrest by the plaintiff was detained at the port of Kandla from 11-4-2008 to 17-4-2008. On 17-4-2008, the Division Bench of this Court directed to release of the said vessel upon the applicant furnishing security in the sum of Rs. 1,23,86,000/- without prejudice to its rights and contentions. Thereafter, the O. J. Appeal No. 115 of 2008 was disposed of by the Division Bench of this Court vide its order dated 30-4-2008, wherein the Division Bench has not expressed any view on the maintainability of the suit and has left all issues to be decided by the learned single Judge after hearing the parties. 3. It is in this background of the matter the present application is filed by the applicant. 4. Mr. Majumdar, learned Advocate appearing with Mr. R. J. Oza for the applicant submitted that the suit filed by the plaintiff is not maintainable in law and is wholly vexatious, mala fide and it is nothing but harassment to the applicant. He has further submitted that the plaintiff has not complied with the mandatory provisions of the C.P.C., 1908 inasmuch as it has not furnished affidavit of the person verifying the plaint in support of the plaint. He has further submitted that the suit has not been instituted in the manner prescribed by law, and is therefore, null and void and non-est in the eyes of law. He has further submitted that the applicant has not been served with a copy of the affidavit of arrest which the plaintiff is required to file in order to obtain any interim relief in the above suit. The plaintiff cannot seek issuance of warrant of arrest in the absence of such affidavit. He has further submitted that the plaintiff has admittedly instituted the instant A.S. 'in rem' against the said vessel and this would be evident from the cause title and the averments made in the plaint. He has further submitted that the documents annexed with the plaint and styled as time charter is unsigned. The only signature on the purported time charter party is at Addendum No. 1 thereof wherein one M/s. Ashapura Shipping U.A.E F.Z.E. has been described as owner of the said vessel, meaning thereby, the despondent owner for the said vessel.
He has further submitted that the documents annexed with the plaint and styled as time charter is unsigned. The only signature on the purported time charter party is at Addendum No. 1 thereof wherein one M/s. Ashapura Shipping U.A.E F.Z.E. has been described as owner of the said vessel, meaning thereby, the despondent owner for the said vessel. He has further submitted that the plaintiff entered into the purported time charter party with M/s. Ashapura Shipping U.A.E F.Z.E., who at the relevant time was the disponent owner of the said vessel. The plaintiff was at the material time aware that Ashapura was not the owner of the said vessel. The plaintiff has not stated that it has entered into any contract with the applicant who is the owner of the said vessel. The plaintiff, in the plaint, inter alia, has made averment pertaining to its purported claim for alleged loss of profit arising on account of alleged breach of the purported charter party, namely, the failure of the said vessel to call at an Iranian Port as it had been blacklisted in Iran. The plaintiff has also averred in the plaint about its purported claim of refund of the hire paid by it for the period when the vessel is to be treated as off hire and for the value of bunkers consumed during such off hire period. In Paragraph 5 of the plaint, the plaintiff has inter alia alleged that the dispute in the suit is a Maritime claim arising from damage done by a ship to Cargo imported and a breach of contract for the carriage of goods by a ship. However, no case for alleged damage done by the said Vessel to a Cargo imported by the said vessel has been made out in the plaint. Such averments in Paragraph 5 are absolutely false and the plaintiff has deliberately made a false and misleading averment in the plaint. The plaintiff's purported claim for damages on account of breach of charter party does not give rise to a Maritime lien against the said vessel. As the plaintiff does not have a Maritime lien on the said vessel, it is not entitled to proceed in rem against the said vessel. 5. Mr. Majumdar has further submitted that at the highest, the plaintiff may have purported Maritime claim arising out of alleged breach of charter party committed by Ashapura.
As the plaintiff does not have a Maritime lien on the said vessel, it is not entitled to proceed in rem against the said vessel. 5. Mr. Majumdar has further submitted that at the highest, the plaintiff may have purported Maritime claim arising out of alleged breach of charter party committed by Ashapura. The plaintiff's claim for damages arising out of a breach of a charter party is claim in personam against Ashapura. Such claim can only be enforced in a proceeding in personam against Ashapura and not in an action in rem against the said vessel. He has, therefore, submitted that instant suit which has been filed in rem against the said vessel is not maintainable in law and is liable to and should be dismissed. In this regard, the applicant relied on International Convention for Arrest of Seagoing Vessels, 1999 signed at Brussels and the decision of the Apex Court in the case of Epoch Enterrepots v. M. V. Won Fu, reported in 2003 (1) SCC 305 . 6. Mr. Majumdar has further submitted that the plaintiff does not have any cause of action against the applicant and the plaint filed by it in relation to the said suit discloses no cause of action. The plaintiff does not have any Maritime claim against the applicant. The applicant submits that apart from it, no person or entity has any right or title or interest of any nature whatsoever in the said vessel. The plaintiff is, therefore, not entitled to an order of arrest against the said vessel. 7. Mr. Majumdar has further submitted that the applicant is entitled to the damages to the tune of Rs.45,17,300/- from the plaintiff on account of estimated legal and arbitral expenses, aggregate loss for 7 days during which the vessel was wrongfully detained by the order of arrest obtained by the plaintiff and Port charges that the applicant was compelled to pay by reason of the wrongful detention of the said vessel. The applicant has also been compelled to deposit security in the sum of Rs.1,23,86,000/- due to wrongful, illegal and mala fide acts of the plaintiff. He has, therefore, submitted that the suit deserves to be dismissed with cost, and over and above, returning the security, the applicant is also entitled to be awarded damages to the tune of Rs. 45,17,300/-. 8. A copy being served on the plaintiff, Mr.
He has, therefore, submitted that the suit deserves to be dismissed with cost, and over and above, returning the security, the applicant is also entitled to be awarded damages to the tune of Rs. 45,17,300/-. 8. A copy being served on the plaintiff, Mr. S.N. Soparkar, learned Senior Counsel appeared with Ms. Paurami Sheth, learned Advocate for the plaintiff. Mr. Soparkar has submitted that the plaintiff is not aware about the applicant being owner of the defendant vessel nor admit the same. The issues raised by the applicant in the present application are triable issues which cannot be decided at this stage without going to the trial. He has further submitted that the applicant has admittedly taken the defendant vessel on hire for time charter under charter party agreement. The said charter party agreement was lastly extended for further period of three months for 15 days under agreement dated 19-11-2007. The rest of the terms and conditions of original charter party of October, 2006 remained as they are. As there has been breach of terms and conditions of charter party, the plaintiff has Maritime claim since it is with respect to agreement relating to the use of hire of the defendant vessel. It is settled law that the vessel has a juridical personality an almost corporate capacity having not only rights but liabilities which may be enforced by process and decree against the vessel binding upon all interested in her and the claimant has right to proceed against the ship as distinguished from a right in personam to proceed against the owner. He has further submitted that the action in rem arises from a Maritime lien or claim imposing a personal liability upon the owner of the vessel. The defendant vessel has incurred liabilities in the course of voyage under time charter for which she is liable to be arrested for the enforcement of Maritime claim of the plaintiff. The defendant vessel at the time of filing suit and passing order of her arrest had been within territorial jurisdiction of this Court on account of which the jurisdiction had been assumed by this Court in respect of Maritime claim of the plaintiff by her arrest. 9. Mr.
The defendant vessel at the time of filing suit and passing order of her arrest had been within territorial jurisdiction of this Court on account of which the jurisdiction had been assumed by this Court in respect of Maritime claim of the plaintiff by her arrest. 9. Mr. Soparkar has further submitted that apart from Brussels Arrest (of Seagoing Ships) Convention, 1952 which is applicable to India and as per the decision of the Hon'ble Supreme Court in the case of Elisabeth reported in AIR 1993 SC 1014 , the plaintiff had become entitled to arrest the defendant vessel for enforcement of its Maritime claim. It is immaterial who the owner of the defendant vessel is. All that is necessary is that it must have been the offending vessel in respect of which the Maritime claim arose. The issues of ownership become relevant only in the case of sister ship arrest. 10. Mr. Soparkar has referred to and relied upon Article 3(1) of 1952 Convention which says that "subject to the provisions of Paragraph 4 of this Article and of Article 10, a claimant may arrest either the particular ship in respect of which the Maritime claim arose, or any other ship which is owned by the person who was, at the time when the Maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sale, but no ship other than the particular ship in respect of which the claim arose may be arrested in respect of any of the Maritime claims enumerated in Art. l(l)(o)(p) or (q)". He has further submitted that Brussels Arrest (of Seagoing Ships) Convention, 1952 forms part of the common law of India. In Elisabeth case (supra), the Court has held that although 1952 Convention have not been adopted by legislation, the principles incorporated in the Conventions are themselves derived from the common law of nations as embodying the felt necessities of international trade and/or as such part of the common law of India and applicable for the enforcement of Maritime claim against foreign ship.
The Court further held that although India has not adopted the various Brussels Convention, the provisions of these Conventions are the result of international unification and development of the Maritime laws of the world, and can therefore, be regarded as the international common law and transnational law rooted in and evolved out of the general principles of national laws, which in the absence of specific statutory provisions can be adopted and adapted by Courts to supplement and complement national statutes on the subject. In the absence of a general Maritime code, these principles aid the Courts in filling of the lacunae in the Merchant Shipping Act and other enactments concerning shipping. 11. Mr. Soparkar further submitted with regard to the averments made in the application that the applicant unnecessarily harps upon the fact of charter party being not signed while conveniently losing sight of the fact that the charter party was already acted upon. He has further submitted that whether Ashapura was owner or disponent owner is a matter of record can be decided at the time of trial and not at this stage. He has further submitted that nowhere it is stated in the application as to how Ashapura came into possession of the defendant vessel or whether there was any contract of the applicant with Ashapura and if so when the contract entered into and when it has expired. He has further submitted that at the time when the claim arose at relevant time on the basis of charter party the defendant vessel was with the plaintiff under time charter. 12. Mr. Soparkar has further submitted that the applicant has unnecessarily made an issue for averments made in Para 5 of the plaint. One has to read plaint as whole and then obviously it is spelt out that the words cargo imported and a breach of contract for the carriage of goods by a ship are through mistake and the basis of the case of the plaintiff is not on it. It is submitted that it is not the slightest intention of the plaintiff to make false and misleading averment in the plaint and the plaintiff craved leave to delete the said averment from Para 5 of the plaint. 13. Mr.
It is submitted that it is not the slightest intention of the plaintiff to make false and misleading averment in the plaint and the plaintiff craved leave to delete the said averment from Para 5 of the plaint. 13. Mr. Soparkar further submitted that there is no substance in the averment made on behalf of the applicant that the plaintiff's purported claim for damages on account of breach of charter party does not entitle it to proceed in rem against the defendant vessel or it is a claim in personam against Ashapura which cannot be enforced in proceeding in action in rem or the suit for action in rem is not maintainable in law, and hence, liable to be dismissed. He has further submitted that the decision relied upon by the applicant has no relevance with facts of the present case. 14. Mr. Soparkar further submitted that the applicant is the owner of the vessel or not is a disputed issue and thus triable issue. The Hon'ble Supreme Court has prescribed the standard of review that must be applied by the Court while determining an application for review of the order. He has further submitted that the decision of the Hon'ble Supreme Court in the case of Videsh Sanchar Nigam Ltd. v. M. V. Kapitan Kud, reported in AIR 1996 SC 516 , indicates that the security by way of an admiralty arrest should be denied only if the plaintiffs present claim is vexatious or does not warrant any trial. The Hon'ble Supreme Court has also proceeded to lay down the test for determination of security based on the plaintiff's reasonably arguable best case. The standard of review to find a prima facie case for an arrest is that the proceedings should not be found to be frivolous or vexatious, so as to call for the exercise of the Courts inherent jurisdiction to half such proceedings in limine. He has further submitted that the Court further held that a higher Court may take a different view, but in the meantime, the ship which is a foreign ship has been freed from arrest, has gone and may never return to this country. It might be that in those circumstances the plaintiffs would have lost their rights for ever to entertain proceedings in rem in this country.
It might be that in those circumstances the plaintiffs would have lost their rights for ever to entertain proceedings in rem in this country. The remedy for the defendants is to release their ship is to be put in appeal. The action then will be tried at the appropriate time when all the facts have been ascertained, due consideration will be given to the arguments at law, which the defendants desire to advance. He has further submitted that the Court was of the view that the action on the ground when the hopelessness of the plaintiff claim is beyond doubt, if it is not beyond doubt, but on the contrary, the plaintiff has an arguable, even though difficult case even in law, the action would be allowed to proceed to trial. In A.S. No. 19 of 2001, the applicant has filed an application seeking relief to return the Bank guarantee furnished to obtain an order of release of vessel. The Court after considering the entire case-law on the subject has held that at this stage when the suit is still pending and evidence is yet to be taken, the Court cannot accept the demand of defendant to get back the Bank guarantee duly discharged. The Court has also observed that at this interlocutory stage, this questions are not to be considered and in this view of the matter, the application was liable to be rejected and it was accordingly rejected. 15. Mr. Soparkar has further submitted that this order was challenged in the Division Bench of this Court in O.J. Appeal No. 21 of 2001 and the Division Bench by order dated 15-7-2003 has confirmed the order passed by the learned single Judge. 16.
15. Mr. Soparkar has further submitted that this order was challenged in the Division Bench of this Court in O.J. Appeal No. 21 of 2001 and the Division Bench by order dated 15-7-2003 has confirmed the order passed by the learned single Judge. 16. After having heard learned Advocate appearing for the respective parties and after having gone through the application and affidavit-in-reply filed thereto and after having perused relevant provisions of 1952 Convention and the case-law on the subject, the Court is of the view that the case on hand is totally different and facts are clearly distinguishable from the facts before the Hon'ble Supreme Court in the case of M. V. Elisabeth (supra) and also the facts of the case decided by the learned single Judge as well as Division Bench of this Court in M. V. Sea Renown (supra) as in that case, the question regarding supply of bunkers to the vessel was involved and the Master of the vessel has issued receipt of the confirmation which signified acceptance of responsibility for payment of the bunker. In view of the provisions contained in the Act as well as Brussels Arrest (of Seagoing Ships) Convention, 1952 the claim of the plaintiff being the Maritime claim was rightly entertained by the learned single Judge and as there was no infirmity in the order the same was confirmed in Appeal. The facts in the present case are clearly distinguishable. The plaintiff's claim is in respect of the alleged loss of profit arising on account of alleged breach of the purported charter party namely, the failure of the said vessel to call at an Iranian Port as it had been blacklisted in Iran. The purported claim for refund of hire paid by the plaintiff for the period when the vessel is to be treated as off hire and for the value of bunkers consumed during such off hire period. Though, the plaintiff has mentioned in the plaint that the dispute in the suit is a Maritime claim arising from damage done by a ship to cargo imported and a breach of contract for the carriage of goods by a ship, the plaintiff has subsequently given up his plea that the damage was done by the ship to cargo imported by stating that it was a genuine mistake.
However, this mistake appeared to have been committed only with a view to bring the plaintiffs case within ambit of Maritime claim and this plea was withdrawn only after the applicant has pointed out this fact in the present application. While distinguishing Epoch Enterrepots (supra) the Division Bench has observed in Para 16 of the judgment that it may not affect the claim advanced by the respondent as it remains a Maritime claim actionable under Sec. V of the Act. This cannot be applied to the facts of the present case as the claim made by the plaintiff in the present suit cannot remains a Maritime claim actionable under Sec. V of the Act. In M. V. Elisabeth case, the facts are so evident that the suit was based on tort, but it was an action against the vessel, i.e. suit, was in rein. However, the Supreme Court has held that arrest of the vessel, while in Indian waters by an order of concerned High Court attracts jurisdiction of the competent Court to proceed with the trial as in case of any other suit as an action against the owner. In the present case, the plaintiff has produced charter party agreement which is also unsigned. The plaintiff was aware about the fact that the Ashapura was not the owner of the vessel. Even in arrival report issued by Asstt. Commissioner of Customs, Kandla dated 8-4-2008 indicates the owner's name and address as M/s. Arab Shipping, U.A.E. Dubai. The plaintiff, has therefore, concealed the material facts from the Court for the purpose of obtaining order of arrest. Simply by pointing out distinction that there was no charter party agreement and some eventuality in future was stated to be the basis of cause of action, it cannot be said that M. V. Elisabeth's case has no application. Even after observing this the Hon'ble Supreme Court has held that the disponent owner was not a demise charterer, but it is on the happening of such an event in future that such a fixture note has been issued. The Court, therefore, clearly held that there was no sufficient evidence available as regards the action in rem making the vessel liable in the contract said to have been entered into, as recorded in the fixture note.
The Court, therefore, clearly held that there was no sufficient evidence available as regards the action in rem making the vessel liable in the contract said to have been entered into, as recorded in the fixture note. The Court further held that it was in the nature of a breach of contract, and hence, liability of the vessel would not arise. The Court, therefore, held that inasmuch as the claim in the present case arises out of contract de hors a Maritime lien, no action in rent is permissible, neither can a suit in the original jurisdiction of the Madras High Court be maintained against the vessel. The ratio of this decision is clearly applicable to the facts of the present case. There is no case of Maritime lien here. It is based on Maritime claim which arises out of contract de hors a Maritime lien and for breach of contract liability of the vessel would not arise. The Court, therefore, is of the prima facie view that the suit itself is not maintainable. However, on the basis of this prima facie view, the Court does not dismiss the suit at this stage as Ashapura is still not joined as a party and plaintiff's case may lie against Ashapura as a suit in personam. The Court, therefore, is of the view that the vessel was wrongly arrested for which the applicant has tendered a Bank guarantee so as to release the vessel. The suit is not dismissed at this stage for another reason that the applicant has claimed damages which can be examined during the course of trial. 17. Considering the entire facts and circumstances of the case, interest of justice would better be served if the registry is directed to return the Bank guarantee furnished by the applicant and suit may be proceeded for trial. At that time other prayers made in the present application can also be considered by the Court. Accordingly, the registry is hereby directed to return the Bank guarantee furnished by the applicant forthwith and present application is ordered to be heard along with the suit for rest of the prayers. 18. At this stage Mr. S.N. Soparkar, learned Senior Counsel prays for stay of this order for one week so as to enable the plaintiff to approach the higher forum. Mr. Majumdar has strongly objected to grant any stay against the order.
18. At this stage Mr. S.N. Soparkar, learned Senior Counsel prays for stay of this order for one week so as to enable the plaintiff to approach the higher forum. Mr. Majumdar has strongly objected to grant any stay against the order. However, considering the facts and circumstances of the case the Court has recorded the statement of Mr. Majumdar that he will not press for release of Bank guarantee till 21-5-2008. In view of this statement, no stay is granted against the impugned judgment. (HSS) Direction given, Order accordingly.