Bombay High Court
Ms Nordlake Gmbh vs Union Of India And Another on 17 February, 2023
Bench: N. J. Jamadar
SWAROOP Digitally
SWAROOP
signed by
SHARAD SHARAD PHADKE
Date: 2023.02.17
PHADKE 19:05:00 +0530
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
NOTICE OF MOTION NO.41 OF 2017
IN
COMM. ADMIRALTY SUIT NO.14 OF 2014
Ms M.V.Nordlake GmbH, a limited liability
company, incorporated under the laws of
Germany and having its place of business at
Vorsetzen 50, 20459, Hamburg, The Federal
Republic of Germany ... Applicant/Plaintiff
versus
1. Union of India
through the Indian Navy,
The Commanding Officer,
INS Vindhyagri
C/o Fleet Mail Office,
Mumbai - 400 001.
2. All other persons claiming or being
entitled to claim losses and/or damages
by reason of the collision of M.V.M.V.Nordlake
with INS Vindhyagiri
Near the Sunk Rock lighthouse
off the Colaba Coast on 30 January 2011 ... Defendants
Mr. Atul Rajyadhayksha, Senior Advocate with Mr. Sunip Sen, Mr. Ashwini Sinha,
Mr. Adil Patel, Ms. Sanika Kulkarni i/by Bhatt and Saldanha for Applicant in NMCD
41 of 2017 and for Defendants in ADMS 23 of 2011.
Mr. Rahul Narichania, Senior Advocate with Mr. Ashish Mehta, Ms. Aarya More, Ms.
Shiny Rey, Ms. Komal Bhail i/by Ethos Legal Alliance, for Respondents in NMCD 41
of 2017 and for Plaintiff in ADMS 23 of 2011.
CORAM : N. J. JAMADAR, J.
RESERVED ON : 29 SEPTEMBER 2022
PRONOUNCED ON : 17 FEBRUARY 2023
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JUDGMENT :
1. The Plaintiff has taken out this Notice of Motion seeking declaration
that it is entitled to limit its liability in respect of all losses and damages in respect of
all property claims and consequential losses resulting from the collision between
M.V.Nordlake and INS Vindhyagiri on 30 January 2011 at Mumbai Port in accordance
with the provisions of Part XA of the Merchant Shipping Act, 1958 (the Act, 1958).
The Plaintiff also seeks directions for constitution of Limitation Fund, to limit the
liability of the Plaintiff in the sum of SDR 27,89,234 equivalent to Rs.20,01,86,113/-
and for appropriation of the said amount out of the security deposited by the Plaintiff
in ADMS No.23 of 2011; refund of the balance amount, and injunction in rem
restraining the Defendants and other claimants from exercising any right against any
assets and property of the Plaintiff and consequential reliefs.
2. The Plaintiff is a company incorporated under the laws of Germany. The
Plaintiff is the owner of the Vessel M.V.Nordlake, registered at the Port of Limassol,
Cyprus and flying the Cyprus flag.
3. Defendant No.1 is Union of India through Indian Navy. Defendant No.2
are all other persons claiming or being entitled to claim losses and/or damages either
in rem or in personam against the Vessel M.V.Nordlake and/or its owners resulting
from the collision of M.V.Nordlake with INS Vindynagiri.
4. The Plaintiff asserts, gross tonnage of M.V.Nordlake is 16,202 MTS.
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Cyprus is a signatory to the Convention on Limitation of Liability for Maritime
Claims, 1976 (Convention, 1976). M.V.Nordlake was flying the flag of one of the
parties to Convention 1976. The Plaintiff, thus, claims to be entitled to invoke the
right to limit its liability under Section 352A of the Act, 1958.
5. The Plaintiff has approached the Court with a case that on 30 January
2011 at about 16.18 IST, the out-bound M.V.Nordlake was close to North Karanja
buoy, at Mumbai Port. It was advised that a convoy of 14 naval ships was inbound.
At the same time, another vessel M.V.Seaeagle was entering the harbour. Post
communication, the lead navalship and second naval ship in the said convoy moved to
the western side of the channel and passed, M.V.Nordlake 'green to green', as agreed.
The third and fourth naval ship 'INS Vindhyagiri' did not move to their left as had
been agreed with the original leader of the convoy and it appeared that the third naval
ship and 'INS Vindhyagiri' were shaping to pass M.V.Nordlake from the eastern side
which was contrary to the plan, as agreed.
6. In the meanwhile, another Vessel M.V.Seaeagle was spotted entering the
harbour. M.V.Seasegal was contacting each naval ship, in turn, to seek their permission
to overtake. There was a fair amount of confusion in the passing of the vessels and, as
a result thereof, M.V.Nordlake was being closed upon by three approaching vessels,
namely the third vessel in the original convoy, 'INS Vindhyagiri' (being the fourth
ship in the convoy) and M.V.Seaeagle. The confusion ultimately resulted in collision
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between M.V.Nordlake and INS Vindhyagiri. INS Vindhyagiri, post collision, was
taken to the Port. INS Vindhyagiri sank at her berth on the day following the collision.
7. The Defendant No.1 filed a suit for the arrest of M.V.Nordlake. The
Plaintiff made a deposit of Rs.33,98,90,000/- as security and M.V.Nordlake was
released from arrest by an order dated 25 April, 2012 in Notice of Motion No.1525 of
2011 in ADMS 23 of 2011. The Plaintiff had instituted a suit No.20 of 2011 without
giving notice under Section 80 of the Code of Civil Procedure, 1908 and, therefore,
the said Suit was withdrawn with liberty to institute a fresh suit on the same cause of
action by an order dated 20 January 2014.
8. In the instant suit, the Plaintiff seeks a decree under Section 352C of the
Act, 1958 limiting its liability for the said collision in the sum of SDR 27,89,234
equivalent to Rs.20,01,86,113/-. The Plaintiff asserts, apart from Defendant No.1, no
other person has made claim, in this Court or any other Court in India or elsewhere
for loss or damages arising out of the collision between M.V.Nordlake and INS
Vindhyagiri.
9. The Plaintiff has taken out the instant Notice of Motion asserting that
under the provisions of Act, 1958, the entitlement of the Plaintiff to limit its liability
for claim or claims resulting from the aforesaid collision is absolute. This right to
limit the liability by the owner of the Vessel is de hors the resultant loss suffered or any
act or omission on the part of the owner, who seeks to limit the liability. The claims
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arising out of the aforesaid collision are covered under Section 352A of the Merchant
Shipping Act, and, therefore, the Plaintiff's right to limit the liability for the said
collision is indefeasible and absolute.
10. Without prejudice to the aforesaid assertions, the Plaintiff avers that the
right of the Plaintiff to limit the liability can only be curtailed upon proof that the loss
resulted from the personal act or omission committed with an intent to cause such loss
or recklessly with the knowledge that such loss would probably result. However, in
that event, the burden of proof would be on the Defendant No.1 / Plaintiff in Suit
No.23 of 2011. The Defendant No.1 made no endeavour to substantiate such a case by
furnishing particulars of the personal act or omission of the Plaintiff. Therefore, the
Plaintiff cannot be deprived of the right to limit its liability.
11. It is further averred that the suit claim and security towards the release
of the vessel demanded by Defendant No.1, in Suit No.23 of 2011, is in excess of the
sum of Rs.20,01,86,113/-, the amount for which the Plaintiff is entitled to limit its
liability. Hence, this Notice of Motion for the aforesaid reliefs.
12. An Affidavit in Reply is filed on behalf of Defendant No.1. At the
outset, the Defendant No.1 contends that the prayers in the instant Notice of Motion
manifest dishonest intent on the part of the Plaintiff to withdraw the security
deposited under the order of the Court. Laying emphasis on the fact that on account
of the collision, Defendant No.1 lost a warship which sank on 30 / 31 January 2011,
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the Defendant No.1 contends that prayer of limiting the liability is wholly
misconceived. The tenability of the Application is also assailed on the count that the
provisions contained in Part XA of the Act, 1958 do not govern naval warships.
13. The Defendant No.1 contends that it was the sole negligence on the part
of M.V.Nordlake, which principally contributed to the collision. Reliance is sought to
be placed on the judgment of the English Court, whereby 60% of the blame was
attributed to M.V.Nordlake. A party who is guilty of causing loss resulting from his
personal act or omission with intent to cause such loss, or committed recklessly with
knowledge that such loss will probably result, looses the right to limit the liability
under the Convention, 1976. A ship-owner, according to the Defendant No.1, can
never have an absolute right to limit the liability. In the event, the Plaintiff is
permitted to limit the liability and the limitation fund is constituted in the sum as
prayed for by the Plaintiff, the Defendant No.1, who has a huge claim of 1397.76
Crores, would suffer an irreparable loss. Therefore, the Notice of Motion be rejected.
14. An Affidavit in Rejoinder is filed by the Plaintiff controverting the
contentions in the Affidavit in Reply. It is categorically denied that the provisions of
the Act, 1958 do not govern the case at hand. Since the Applicant is the owner of a
merchant vessel, it is entitled to seek setting up of the limitation fund. Likewise, the
contention of the Defendant No.1 that the aspect of negligence becomes relevant is
controverted.
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15. In the light of the aforesaid pleadings, I have heard Mr. Atul
Rajyadhayksha, learned Senior Advocate appearing for the Plaintiff, and Mr. Rahul
Narichania, learned Senior Advocate appearing for Defendant No.1. With the
assistance of the learned Counsel for the parties, I have perused the pleadings and the
material on record.
16. Mr. Rajyadhayksha submitted that under the provisions of Part XA of
the Act, 1958, once a case falls within the ambit of Section 352A of the Act, the right
to limit liability is absolute. Taking the Court through the historical perspective of the
rationale behind the principle of limiting the liability, Mr. Rajyadhayksha strenuously
submitted that the question of fault is wholly irrelevant. Even otherwise, according to
Mr. Rajyadhayksha, there is no material to demonstrate negligence on the part of
M.V.Nordlake, or for that matter, a major portion of the blame lay on M.V.Nordlake.
17. Mr. Rajyadhayksha also traced the history of the Maritime Convention
on limiting liability and the incorporation thereof in the domestic law in the shape of
Part XA of the Act, 1958. Mr. Rajyadhayksha further submitted that the absolute
nature of the right to limit the liability is no longer res integra. Banking heavily upon
the judgment of a learned Single Judge of this Court in the case of Murmansk
Shipping Company V/s. Adani Power Rajasthan Ltd. & Ors. 1, Mr.Rajyadhayksha
submitted that after an elaborate discussion, it has been authoritatively laid down that
1 2016 SCC Online Bom 167
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the ship owner's right to limit the liability is absolute as long as the claims in respect of
which limitation is sought, are claims being capable of limitation under Section 352A
of the Act, 1958. A ship owner's right under Part XA of the Act, 1958 is absolute and
without reference to any proof of loss resulting from personal act or omission of the
ship owner.
18. In law, according to Mr. Rajyadhayksha, there is no prohibition to
constitute a limitation fund at an interim stage without going for a full fledged trial. In
the context of the nature of the dispute, it would be proper to determine the issue of
limitation of liability at the earliest and it need not await a full fledged trial. Mr.
Rajyadhayksha further submitted that the limitation fund is required to be constituted
in accordance with the provisions of the Convention, 1976, as it stood when the
collision occurred. Mr. Rajyadhayksha further submitted that once this position in law
is appreciated, the resistance sought to be putforth on behalf of the Defendant does
not merit countenance. Reliance on the judgment of the English Court in the matter
of apportioning the blame amongst the Vessels, is of no assistance as the question of
fault becomes wholly inconsequential.
19. In opposition to this, Mr. Rahul Narichania submitted that the instant
application for limiting the liability does not deserve to be entertained for reasons
more than one. Firstly, in Notice of Motion No.1525 of 2011 the Plaintiff had come
up with an identical prayer of constitution of limitation fund and restricted the
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application to furnish security equivalent to value of the Vessel. Thus, on the basis of
the principle analogous to one under Order XXIII Rule 1 of CPC, the Plaintiff is
precluded from seeking the same relief which was not pressed in the said Notice of
Motion.
20. Secondly, the order of limitation of liability cannot be passed at an
interim stage. In view of the provisions contained in Rule 1105 of the Bombay High
Court ( Original Side) Rules, 1980, a prayer for limitation of liability can only be made
by way of a suit. Since the Defendant No.1 has already filed a written statement and
trial has commenced and one of the witnesses has also been examined, at this stage,
there is no propriety in entertaining the application for limiting the liability.
21. Thirdly, under Part XA of the Act, 1958, apart from the question as to
whether the Plaintiff, being the owner of the Vessel, has an absolute right to limit the
liability, disputed questions of facts arise for determination which cannot be
adjudicated in a Notice of Motion sans evidence.
22. Mr. Narichania would urge that the tonnage certificate, upon which
reliance is sought to be placed by the Plaintiff/Applicant, which bears upon the
quantum of the limitation fund, is not an authenticated document. This issue,
therefore, must go for trial.
23. On legal premise, Mr. Narichania submitted that Article 4 of the
Convention 1976, is implicit in the provisions contained in Part XA of the Act of 1958.
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The judgment in the case of Murmansk Shipping Company (supra), according to
Mr. Narichania, does not lay down the correct proposition of law. Mr. Narichania
would urge that a reference of the said decision to a larger Bench is necessitated. Mr.
Narichania further submitted that further issues as to whether Protocol 1996 in the
matter of the quantum of the liability would apply and what shall be the proper rate of
conversion, also arise for adjudication. All these issues, according to Mr. Narichania,
ought to be adjudicated at the final hearing of the suit and not at this stage.
24. The aforesaid submissions now fall for consideration. Three issues
wrench to the fore. First, whether the right to limit the liability under Section 352A
of the Act, 1958 is absolute and de hors the question of fault on the part of the Vessel
or its registered owner. Second, whether the prayer to limit the liability and
constitute the limitation fund can be entertained at an interim stage and decided
without full fledged trial. Third, in the event the Court comes to the conclusion that
the liability of the Plaintiff deserves to be limited, whether the quantum is to be fixed
in accordance with the provisions of the Convention, 1976 or Protocol 1996 and what
should be the date to be reckoned for the purpose of conversion of SDR into USD or
Indian currency.
25. Before adverting to deal with the aforesaid contentious issues, it may be
apposite to note the relevant provisions of Part XA of the Act, 1958 providing for
limitation of liability.
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"Section 352. Definitions.- In this Part, unless the context
otherwise requires-
(a) "claim" means a personal claim or property claim;
[(b) "Convention" means the Convention on Limitation of Liability for
Maritime Claims, 1976 as amended from time to time;]
(c) "Fund", in relation to a vessel, means the Limitation Fund constituted
under section 352C;
(d) "liability", in relation to owner of a vessel, includes liability of the vessel
herself;
..........
(j) "Special Drawing Rights" means Special Drawing Rights as determined
by the International Monetary Fund]
[352A. Limitation of liability for damages in respect of certain claims.-
(1) The ship owner, salvor, any person for whose act, neglect or default the
ship owner or salvor, as the case may be, is responsible, and an insurer of
liability for claims to the same extent as the assured himself, may limit his
liability as provided under section 352B in respect of,-
(a) claims arising from loss of life of or personal injury to, or loss of or damage
to, property (including damage to harbour works, basins and waterways and
aids to navigation), occurring on board or in direct connection with the
operation of the ship or with salvage operations, and consequential loss
resulting therefrom;
(b) claims arising out of loss resulting from delay in the carriage by sea of
cargo and passengers of their luggage;
(c) claims arising out of other loss resulting from infringement of rights other
than contractual rights, occurring in direct connection with the operation of
the ship or salvage operations;
(d) claims of a person other than the person liable in respect of measures
taken in order to avert or minimise loss for which the person liable may limit
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his liability in accordance with the provisions of the Convention or the rules
made in this behalf prescribe, as the case may be, and such further loss caused
by such measures;
Explanation 1.- For the purpose of this section, the act of involving limitation
of liability shall not constitute an admission of liability.
Explanation 2.- For the purpose of this Part, the liability of a ship owner shall
include liability in an action brought against the ship herself.]
..........
[352B. Limitation of liability.- The amount of which any person referred to
in sub-section (1) of section 352A may limit his liability in accordance with the
provisions of the Convention and in cases where the provisions of the
Convention are not applicable, the limit shall be in accordance with the rules
in this behalf prescribe.]
352C. Limitation fund and consolidation of claims 1[***].- 2(1) Where any
liability is alleged to have been incurred by a person referred to in sub-section
(1) of section 352A in respect of claims arising out of an occurrence, and legal
proceedings are instituted in respect of claims subject to limitation, then such
person may apply to the High Court for the setting up of a limitation. Fund for
the total sum representing the amounts set out in the Convention or the rules
made in this behalf under this Part applicable to claims for which that person
may be liable together with interest thereon from the date of occurrence giving
rise to the liability until the date of the constitution of the Fund.]"
..............
26. It would be contextually relevant to note the provisions of the
Convention 1976 which bear upon the determination of the controversy at hand.
Chapter 1 of the Convention 1976 contains 5 Articles under the caption 'The right of
Limitation'. Article 4 which constitutes the sheet anchor of the submission on behalf
of Defendant No.1, reads as under :
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Article 4 - Conduct barring limitation
"A person liable shall not be entitled to limit his liability if it is proved that
the loss resulted from his personal act or omission, committed with the
intent to cause such loss, or recklessly and with knowledge that such loss
would probably result."
27. Chapter II subsumes 5 articles under the caption 'Limits of Liability'.
Article 6 provides for the general limits and the method of calculation. Chapter III
providing for Constitution of the limitation fund defines the governing law in Article
14 as under :
"Article 14 - Governing Law
Subject to the provisions of this Chapter the rules relating to the constitution
and distribution of a limitation fund, and all rules of procedure in connection
therewith, shall be governed by the law of the State Party in which the fund is
constituted."
28. Protocol 1996 which amended the Convention 1976 provides for
enhanced limit of liability by substituting para 1 of Article 6. Article 9 of the Protocol
1996 bears upon the aspect of the applicability of the first para of Article 6 under
Convention 1976 or the first para as amended by the Protocol 1996. It reads as under :
"1.The convention and this Protocol shall, as between the parties to this
Protocol, be read and interpreted as one single instrument.
2. A State which is party to this Protocol but not a party to the Convention
as amended by this Protocol in relation to other States Parties hereto, but
shall not be bound by the provisions of the Convention in relation to States
Parties only to the Convention.
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3. The Convention as amended by this Protocol shall apply only to claims
arising out of occurrences which take place after the entry into force for each
State of this Protocol.
4. Nothing in this Protocol shall affect the obligations of a State which is a
party both to the Convention and to this Protocol with respect to a State
which is a party to the Convention but not a party to this Protocol."
29. In the backdrop of the aforesaid provisions contained in the Act, 1958,
Convention 1976 and the Protocol 1996, an answer to the first question, formulated
above, is required to be explored. We have noted that Article 4 of the Convention
1976 incorporates the principle of 'breaking of limitation', to provide that a person on
account of whose personal act or omission committed with intent to cause such loss or
recklessly and with knowledge that such loss would probably result, will not be entitled
to limit his liability. Being the signatory to the Brussels Limitation Convention of
1957, the precursor of the Convention of 1976, India introduced Part XA to provide for
limitation of liability by Act 25 of 1970. Part XA suffered significant amendments
under the Amendment Act 63 of 2002, which came into force with effect from 1
February 2003. Before the said amendment, Section 352A of the Merchant Shipping
Act, 1958 provided for an exception to the right to limit the liability by providing that
the owner of a sea going vessel may limit his liability in respect of the claims arising
from named occurrences unless the occurrence giving rise to the claim resulted from the
actual fault or privity of the owner. It was also provided under sub-section (2) of Section
352A that the burden of proving that the occurrence did not result from his actual fault
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or privity shall be on the owner. Post amendment of 2002, italicised portion does not
find place in sub-section (1) of Section 352A and sub-section (2), (in the aforesaid
terms) stands deleted.
30. The distinction in the matter of the nature of fault on the part of the
owner and on whom the onus lay, under the Convention 1976 and the unamended
provisions of Act, 1958, is of critical salience. The Convention of 1976 while
providing for conduct barring limitation or breaking of limitation cast a very high
degree of proof, to deprive a person liable of the right to limit the liability. Under the
unamended Act of 1958, a person liable would be deprived of the right to limit the
liability, if the occurrence giving rise to the claim resulted from the actual fault or
privity of the owner. In contrast, the Convention of 1976 incorporates a higher degree
of culpability, by providing that the loss ought to result from personal act or omission,
committed with intent to cause such loss, or recklessly and with knowledge that such
loss would probably result. The latter part of Article 4 of the Convention touching
upon the mental element or recklessness bordering on wantonness coupled with
knowledge, in effect casts an almost impossible onus to prove to the contrary.
Secondly, the onus is on the claimant who opposes the limitation of liability.
31. It is in the backdrop of the aforesaid context, the omission of the
exception, from Section 352A of the Act, 1958, providing for limitation of liability is
required to be appreciated. For this purpose, the rationale behind provision for the
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limitation of the liability must be kept in view. The avowed purpose of limitation of
liability is to protect the owner of the Vessel against large claims far exceeding the
value of the ship and cargo which can be made against the Vessel and the owner all
over the world in case the Vessel is involved in an occurrence causing damage to cargo,
another vessel or loss of any other property or personal life or personal injury. It is in
the nature of a 'defensive' action. It is a well recognized concept in admiralty
jurisdiction.
32. In the case of World Tanker Carrier Corporation V/s. SNP Shipping
Services Pvt. Ltd.2 the Supreme Court had an occasion to expound the nature of a
limitation action, in the context of the challenge to the jurisdiction of this Court in
entertaining such action. The observations of the Supreme Court in Paragraphs 13 to
17 illuminate the path, and, thus, extracted below :
"13. We have heard all these appeals together since common questions of
law arise in all these appeals. The first question that requires consideration
is the question of jurisdiction. In order to consider the question of
jurisdiction, it is necessary first to examine the nature of a limitation action.
14. Describing the nature of a limitation action, Baer in his book Admiralty
Law of the Supreme Court at p. 154 traces the historic origins of limitation
of liability as follows :
" '[M]en would be deterred from employing ships, if they lay under the
perpetual fear of being answerable for the acts of their master to an unlimited
extent.' Thus wrote the renowned Dutch jurist, Hugo Grotius, in 1625. To impose
liability on shipowners for acts of their masters would be 'neither consonant to
natural equity ...nor ... conducive to the public good'. Referring to the law of his
2 (1998) 5 SCC 310
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own nation, Grotius continued, '[I]t is an established rule that no action can be
determined against the owner for any greater sum than the value of the ship an
cargo.'
Although by no means uniform, some sort of rule of limited liability on the part
of the shipowner has been the law of the leading maritime nations of continental
Europe since the middle ages..."
15. In 1924 several leading nations adopted the International Convention for
the Unification of Certain Rules relating to the limitation of liability of
owners of sea-going vessels. This is commonly referred to as the Brussels
Convention of 1924. In 1957, a new convention on Limitation of Liability of
Sea-Going Vessels was drafted to replace the Brussels Convention of 1924.
The new convention, commonly referred to as the Brussels Limitation
Convention of 1957 was signed by many leading maritime nations of the
world. It is also signed by India. The convention fixes the limit of liability of
an owner of a sea-going vessel on the basis of the tonnage of the vessel
without regard to the Vessel's value. It was to incorporate this Convention
in our statute law that Part X-A was inserted in the Merchant Shipping Act,
1958.
16. The right of an owner to bring a limitation action is governed by Part X-A
of the Merchant Shipping Act, 1958. The whole purpose of limitation of
liability is to protect an owner against large claims, for exceeding the value of
the ship and cargo, which can be made against him all over the world in case
his ship meets with an accident causing damage to cargo, to another vessel
or loss of personal life of personal injury. A limitation action, though it is
normally filed in the admiralty jurisdiction of a court, is somewhat different
from an ordinary admiralty action which normally begins with the arrest of
the defaulting vessel. The vessel itself, through its master is a party in the
admiralty suit, and the Plaintiff must have claims provable in admiralty
against the vessel. In the case of an action for limitation of liability, it is the
personal right of the owner of the vessel to file a limitation action or to use it
as a defence to an action against him for liability. It is a "defensive" action
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against claims in admiralty filed by various claimants against the owner of
the vessel and the vessel. A limitation action need not be filed in the same
forum as a liability action But it must be a forum having jurisdiction to limit
the extent of such claims and whose decree in the form of a limitation fund
will bind all the claimants.
17. In case of Volvox Hollandia3 the English Court describing the nature of a
limitation action observed that the purpose of limitation proceedings is, of
course, to obtain a decree in rem against all claimants for a single sum
limited to the amount of a limitation fund. Referring to the Brussels
Convention of 1957, the Court referred to Article 4 which provides that the
rules relating to the constitution and distribution of the limitation fund, if
any and all rules of procedure shall be governed by the national law of the
State in which the Fund is constituted.
33. If considered through the aforesaid prism of the rationale behind
incorporating the statutory provisions providing for limits of liability, the omission by
the Indian Parliament to provide for the exception to the right to limit the liability
becomes crystal clear. On first principles, the omission to incorporate a provision
breaking limitation deserves to be given due weight.
34. Mr. Narichania would urge that notwithstanding the omission of
exception incorporating a provision for breaking limitation, Article 4 of the
Convention 1976 must be deemed to have been incorporated in the Act of 1958 and
there is no absolute right to limit the liability. It was urged that in the event it is held
that the Plaintiff has an absolute right to limit the liability, the Defendant No.1 who has
3 (1988) 2 Lloyds; LR 361
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suffered huge loss on account of a reckless action on the part of the Plaintiff, would be
deprived of the opportunity to show that the said reckless act was with intent to cause
such loss or with the knowledge that such loss would result therefrom. Mr. Narichania
was at pains to persuade the Court to hold that the judgment of Murmansk Shipping
Company (supra) requires a reconsideration.
35. In the case of Murmansk Shipping Company (supra), this Court, inter
alia, considered the very question which is sought to be agitated by the Defendant :
(iii) Whether the ship-owner's statutory right to limit liability under
Part XA is absolute and without reference to any proof of loss resulting from a
personal act or omission of the ship owner (referred to in admiralty pariance as
"conduct barring limitation") ?
36. After an elaborate analysis, S.C.Gupte, J. came to the conclusion that the
right to limit liability is absolute. The observations in paragraphs 33 to 41, 47 and 48
incorporate the very submissions, which were sought to be, by and large, reiterated
before this Court, and the reasons which weighed with the Court in repelling those
submissions. They read as under :
"33. That brings us to the nub of the controversy in the present suit,
namely, whether the shipowner's right to limit liability is absolute and without
reference to any proof of loss resulting from his personal act or omission. The
controversy may be briefly outlined thus: The 1957 convention allowed the
shipowners to limit liability (Article 1.1) in respect of claims arising from
certain occurrences "unless the occurrence giving rise to the claim resulted from the
actual fault or privity of the owner". It further provided (Article 1.6) that the
question upon whom lied the burden of proving whether or not the occurrence
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resulted from the actual fault or privity of the owner would be determined by
the lex fori. Indian Law, whilst adopting these Articles, i.e. the MS Act as it
stood prior to the 2002 amendments, provided (Section 353 A(1)) that the
owner of a sea-going vessel may limit his liability in respect of claims arising
from named occurrences "unless the occurrence giving rise to the claim resulted
from the actual fault or privity of the owner". It also provided (Section 352 A(2))
that the burden of proving that the occurrence did not result from his actual
fault or privity shall be on the owner. The 1976 convention makes a departure
from the earlier convention. It provides (Article 4) that a person liable shall
not be entitled to limit his liability "if it is proved that the loss resulted from his
personal act or omission, committed with the intent to cause such loss, or recklessly
and with knowledge that such loss would probably result". In other words, the 1976
convention does two things. In the first place, it casts a very heavy onus (or
indeed, an almost impossible one, as some English judgments describe it),
namely, to show that not only did the loss result from the owners' personal act
or privity, but that such act or omission was committed either (a) with intent to
cause such loss or (b) recklessly and with knowledge that such loss would
probably result. Secondly, it does not leave the incidence of the onus of proof
on the lex fori, but, going by the very nature of the proof required, it casts that
onus squarely on the defendant or claimant asserting a claim for loss against
the shipowner. Indian Law, on the other hand, i.e. the MS Act after the 2002
amendments, does not make any express provision for defeating the right to
limit liability upon proof that the shipowner's personal act or omission was
responsible for the loss or for addressing the question of incidence of such
onus. The Plaintiff claims that since there is no reference to any proof that the
loss resulted from the owner's personal act or omission in Indian Law now, the
shipowner's right to limit is absolute or without reference to any such proof.
The Defendants, on the other hand, contend that such proof is implicit in
Indian Law. The Defendants submit that since the MS Act, as amended, refers
(Section 352B) to the amount to which the owner may limit his liability in
accordance with the provisions of the contention, it incorporates by reference all
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provisions of the 1976 convention including, of course, Article 4 thereof, which
refers to the proof of the owner's act or omission causing the loss. In other
words, the Defendants' case is that by reason of this reference in Section 352B,
Indian Law, i.e. the MS Act as amended, is on par with the 1976 convention
and restricts the owner's right to limit liability if the proof referred to in Article
4 of the 1976 convention is offered against the owner. Issue No.4 requires me
to decide who is right - whether the Plaintiff contending in favour of the
shipowner's absolute right to limit or the Defendants rooting for such right
being subject to the proof of the loss resulting from the shipowner's act or
omission.
34. We have already noted that unlike the unamended Part XA of the
MS Act which made a specific provision in Section 352A about the
shipowner's entitlement to limit being subject to a proof that the occurrence
did not result from his actual fault or privity, the amended part XA has no such
specific provision. We only have to see if the words "in accordance with the
provisions of the Convention" used in amended Section 352B incorporate
Article 4 of the 1976 convention restricting the right to limit upon proof of a
personal act or omission referred to therein, in amended part XA.
Incorporation of an existing law into a later Act is a legislative device often
adopted by the legislature. When an earlier Act or certain provision/s of the
Act is/are incorporated by reference into a later Act, the provisions so
incorporated become part or parcel of the later Act. This is broadly referred to
as legislation by incorporation. Sometimes, instead of incorporating a
particular previous statute or any provision of it, the later Act simply refers to
the earlier statute on the subject generally. The distinction between a mere
reference or citation of one statute into another and incorporation is well
known. In the case of the latter, the earlier statute or provision becomes a part
and parcel of the later Act as if it had been "bodily transposed into it" so that a
repeal or amendment of the earlier statute or provision does not affect the later
Act. The incorporated earlier Act remains frozen in the later Act to what it
was when it was incorporated. In the former case, however, any modification,
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repeal or re-enactment of the earlier statute (referred to or cited) will also have
effect for the later statute (in which it is referred). This distinction, however,
need not bother us in the present case, since the word "convention" in the
expression "in accordance with the provisions of the convention" in Section
352B is defined in the MS Act as "the Convention on Limitation of Liability
for Maritime Claims, 1976 as amended from time to time". Thus, irrespective
of whether it is termed as incorporation, or a mere reference or citation,
amendments in the convention would also have effect insofar as Section 352B
is concerned. What we simply need to consider in this case is whether, by
means of reference to the 1976 Convention in Section 352B of the MS Act,
Article 4 of the 1976 Convention is, as suggested by the Defendants, made part
of Part XA of the MS Act. If it is so made, there is no denying that
amendments made from time to time to that Article would also form part of
the MS Act.
35. The arguments of the Defendants in support of incorporation of
Article 4 of the 1976 Convention by reference in Section 352 B may be summed
up as follows :
(i) On a plain reading of S. 352B, it is clear that Article 4,
along with Article 6 of 1976 Convention, is incorporated in it. There is no
warrant or justification to whittle down the plain language of S. 352 B to
exclude Article 4.
(ii) Article 4, which deals with the well-known concept of
'conduct barring limitation' which has been a part of the admiralty law for a
long time, is a substantive and crucial provision of the 1976 Convention. The
Convention itself does not countenance (Article 18(1)) any exception or
reservation by any State party to the substantive provisions of the Convention
other than Article 2, paragraphs 1(d) and (e). In accordance with Article 18(1),
our Parliament, whilst incorporating Article 2(1) in the domestic law, did
exclude Articles 2(1)(d) and (e). It is inconceivable that the Parliament, whilst
legislating the amendments of the MS Act expressly to implement and give
effect to the 1976 Convention, would exclude Article 4.
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(iii) The intention of the Parliament is manifest in this behalf
from the Statement of Objects and Reasons (SOR) of Bill No. LXVI of 2002
(which was finally enacted into the Amendment Act 63 of 2002 which inter alia
amended Part XA of the MS Act). The SOR expressly refers to barring of
limitation of liability upon proof that the loss resulted from a personal act or
omission of the shipowner.
(iv) In any event, the Court must interpret the MS Act in a
manner so as to give full effect to the 1976 Convention. In interpreting
domestic statutes the Court must avoid confrontation with the comity of
nations and choose an interpretation which accords with an international
convention to which the country is a party. Even if there were to be a lacuna or
ambiguity in the law adopting the Convention, such lacuna must be filled or
ambiguity cleared so as to make the domestic law accord with the Convention.
36. Let us first see, if the plain language of Section 352B suggests
incorporation of Article 4. Section 352 B is worded as follows :
"352B Limitation of liability.- The amount to which any person referred to
in sub-section (1) of section 352A may limit his liability in accordance with the
provision of the Convention and in cases where the provision of the Convention are
not applicable, the limit shall be in accordance with the rules made in this behalf
prescribe."
37. At the outset it needs to be noted that Section 352B, though
somewhat inelegantly worded and contains obvious grammatical errors, deals
with the amount or limit of liability which a shipowner (or other person
referred to in Section 352A) may ask for, whilst constituting a limitation
fund. It does not deal with the entitlement to limit liability, but only the
quantum of the limitation fund. It has nothing to do with claims which can
be subjected to limitation or the exceptions to them, which are matters dealt
with in Section 352A. It also does not deal with when and how a limitation
fund is constituted. That is dealt with by Section 352C, whilst Section 352E
deals with the scope of an application for constitution of a fund, the
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provisions of which inter alia bear on the jurisdiction of the Court
constituting a fund. (Article 4, on the other hand, deals with circumstances
in which the person liable cannot limit his liability.) Secondly, it is plain that
Section 352B deals with two situations, whilst determining the quantum of
the fund : (a) Where the provisions of the 1976 Convention apply and (b)
where they do not apply. The first part of the Section, namely, the words
"The amount to which a person ......... may limit his liability in accordance
with the provisions of the Convention" applies to cases covered by (a). The
second part, quite obviously, applies to cases covered under (b). In cases
covered by (a), the amount of the fund (i.e. the amount to which a person
may limit his liability) shall be determined in accordance with the
Convention, whilst in cases under (b) the amount shall be determined in
accordance with the rules made in that behalf. The plain language of Section
352B, thus, does not suggest incorporation of Article 4. What it instead does
is to incorporate the provisions of Chapter II of the Convention, which
provide for the manner of working out limits of liability, into the MS Act.
38. Apart from the considerations noted above, there are several
other internal aids offered by the provisions of Part XA themselves for this
particular interpretation of Section 352B. Part XA, as noted above, evidently
seeks to make 1976 Convention a part of our municipal law with such
modifications as the Parliament deems fit. Chapter I of the 1976 Convention
deals with "the right of limitation". It has four Articles : (1) Article 1
providing for "persons entitled to limit liability", (2) Article 2 dealing with
"claims subject to limitation", (3) Article 3 dealing with "claims excepted
from limitation" and (4) Article 4 which provides for "conduct barring
limitation" or circumstances in which liability cannot be limited. Section
352A comprehensively deals with "the right of limitation". It is an amalgam
of Articles 1, 2 and 3. Notably, Article 4 is excluded. In contrast to Article 2
of the Convention, which makes the right to limit liability inter alia subject to
Article 4 (namely, conduct barring limitation), Section 352A does not make
limitation subject to any conduct barring limitation. This may at once be
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contrasted with the unamended Section 352A which expressly provided for
the entitlement of shipowners to limit liability being subject to the exception,
namely, where "the occurrence giving rise to the claim resulted from the
actual fault or privity of the owner." Section 352A as amended refers to
Section 352B insofar as "limits of liability" are concerned. "Limits of
Liability", which are dealt with in Chapter II of the Convention, notably
Articles 6 to 9 thereof, are comprised in Section 352B of the MS Act. In
cases to which the Convention applies, such limits shall be in accordance
with the Convention. A further indication that Section 352B merely deals
with limits, that is to say, the quantum, comes in Section 352D of the MS
Act. Section 352D provides that, "Where a vessel or other property is detained
in connection with a claim which appears to the High Court to be founded on a
liability to which a limit set by Section 352B applies." A clear indication that
what Section 352B does is to prescribe or set the limit. Lastly, it is important
to note that if the expression "may limit his liability in accordance with the
provisions of the Convention" in Section 352B were to be read as an omnibus
clause incorporating all provisions of the Convention, all other Sections of
Part XA would simply be regarded as redundant, for then every provision of
the Convention could effectively get incorporated into the MS Act by that
simple expedient. A plain reading of the provisions of Part XA would
militate against such an interpretation. The Parliament has taken care to
incorporate specific provisions of the Convention regarding particular
aspects of limitation of liability by enacting them fully with modifications and
used advisedly, as I have explained below, the device of incorporation by
reference only in respect of 'limits of liability'.
39 Another important internal aid in the MS Act, is Part XB of that Act
introduced by the same amending Act, namely, Amendment Act 63 of 2002.
Part XB which was substituted by the Amendment Act 63 of 2002, was to
enact the provisions of International Convention on oil pollution damage
which India was party to, into the MS Act. That convention had provisions
on 'conduct barring limitation' similar to the 1976 convention. In
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contradistinction with Part XA, the Amending Act enacted the particular
provisions of 'conduct barring limitation' forming part of the relevant
corresponding Articles of the International Convention on Civil Liability for
Oil Pollution Damage, 1992 into Part XB of the MS Act. Sections 352I (6)
and 352J(2) of Part XB provides that no claim for compensation for pollution
damage against persons referred to therein may be made "unless the
incident causing such damage occurred as a result of their personal act
or omission committed or made with intent to cause such damage or
recklessly and with knowledge that such damage would probably result".
The conspicuous absence of a similar provision in Part XA, amended by the
same Amending Act, clearly supports the view that the corresponding
provision of 'conduct barring limitation' contained in the 1976 convention is
not enacted into our law.
40. The net result of the foregoing discussion is that the plain reading
of the provisions of the MS Act (as amended) does not suggest incorporation
of Article 4. It rather suggests exclusion of Article 4.
41. Let us now consider the argument that the Parliament could not
have meant exclusion of Article 4. We must, at the outset, note that whilst
interpreting a statute, the intention of the legislature must be gathered, so far
as is practicable, from the words used in the statute itself. If the meaning of
the statute is plain and clear, nothing further needs to be considered. "The
first and primary rule of construction", as Gajendragadkar, J. said in Kanailal
Sur Vs Paramnidhi Sadhukhan4 "is that the intention of the legislature
must be found in the words used by the legislature itself." If, on the other
hand, the language used in the statute is ambiguous or capable of two
meanings, then the Court is called upon to use various aids of interpretation
and invoke other rules of construction. This is so even for a law enacted to
give effect to an international convention or treaty such as Part XA of the MS
Act. The primary guide for interpreting the provisions of amended Part XA
of the MS Act is the language employed in it and not the provision of the
1976 Convention, to give effect to which the amendments were introduced in
4 1958 SCR 360
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Part XA. The Supreme Court in V/O Tractoroexpert, Moscow Vs M/s
Tarapure and Co.5 had this to say :
"16. Now, as stated in Halsbury's Laws of England Vol. 36, p. 414, there is a
presumption that Parliament does not assert or assume jurisdiction which goes beyond the
limits established by the common consent of nations and statutes are to be interpreted
provided that their language permits, so as not to be inconsistent with the comity of
nations or with the established principles of International Law. But this principle applies
only where there is an ambiguity and must give way before a clearly expressed intention. If
statutory enactments are clear in meaning, they must be construed according to their
meaning even though they are contrary to the comity of nations or International Law.
17. We may look at another well-recognised principle. In this country, as is the case in
England, the treaty or International Protocol or convention does not become effective or
operative of its own force as in some of the continental countries unless domestic legislation
has been introduced to attain a specified result. Once, the Parliament has legislated, the
Court must first look at the legislation and construe the language employed in it. If the
terms of the legislative enactment do not suffer from any ambiguity or lack of clarity they
must be given effect to even if they do not carry out the treaty obligations. But the treaty or
the Protocol or the convention becomes important if the meaning of the expressions used by
the Parliament is not clear and can be construed in more than one way. The reason is that
if one of the meanings which can be properly ascribed is in consonance with the treaty
obligations and the other meaning is not so consonant, the meaning which is consonant is
to be preferred. Even where an Act had been passed to give effect to the convention, which
was scheduled to it, the words employed in the Act had to be interpreted in the well
established sense which they had in municipal law (See Barras v. Aberdeen Steam
Trawling and Fishing Co. Ltd. 1933 AC 402.)"
47. Obviously, the 1976 Convention operates to restrict the rights of
citizens and others and also modifies the existing municipal law of India. Making of
a law, therefore, under the authority of Entry Nos. 10 and 14 of List 1 of the
Seventh Schedule read with Article 253, by the Parliament is necessary to give
effect to the Convention. The Convention would apply in India only to the extent
and subject to such modifications as the Parliament may provide whilst giving effect
5 AIR 1971 Supreme Court 1
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to the Convention by amending our municipal law, namely, the MS Act. Once this
is clear, it must be held as a necessary corollary that the Parliament is not bound to
follow the restricted mandate reserved in the Convention itself for the member
states to derogate from its provisions. The Parliament may certainly overstep and
disregard that mandate. Any such conscious overstepping or disregard will have its
full play. There is no principle of statutory interpretation which requires us to then
interpret the legislation of the Parliament so that it accords with the Convention.
48. The Defendants contend that absurd consequences would result from
the absence of Article 4 in Indian law. They submit that in the absence of Article 4,
a shipowner could go scotfree and get to limit his liability despite having caused loss
through a personal act or omission committed either (a) with intent to cause such
loss or (b) recklessly and with knowledge that such loss would probably result. This
may, at the first blush, seem an attractive argument. A closer scrutiny, however,
dispels such impression. If one compares the provisions of the two Conventions,
i.e. the 1957 Convention (on which the original Part XA of the MS Act was based)
and the 1976 Convention (on which the amended provisions of Part XA are based),
three striking features emerge : Firstly, the quantum of limitation in 1957
Convention is raised manifold in the 1976 Convention. Secondly, persons seeking to
limit liability are given what is described by Courts as a virtually unbreakable right to
limit. Whereas, for defeating the right to limit, the inquiry under the 1957
Convention envisaged whether or not the occurrence (giving rise to the loss)
resulted from the actual fault or privity of the owner, the 1976 requires a proof not
only that the loss resulted from a personal act or omission of the person seeking to
limit but that such act or omission was committed (a) with intent to cause such loss,
or (b) recklessly and with knowledge that such loss would probably result. It is not
hard to imagine that this would be a near impossible onus for a person opposing the
owner's application to limit liability. Thirdly, the right to limit under the 1976
Convention is clearly a presumptive right so that the onus (and an extremely heavy
one at that, as noted above) is cast upon those seeking to defeat that right, unlike in
the case of the 1957 Convention where the onus was to be determined by lex fori (the
Indian law casting a negative onus, i.e. onus to show that the loss was not caused by
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his fault or privity, indubitably on the person seeking to limit). These three features
together form a distinct pattern and contain each other's rationale. Based on these,
courts in various jurisdictions have given summary judgments and limitation decrees
to shipowners and others." (emphasis supplied)
37. The aforesaid observations, in my considered view, lay down the correct
position in law. In view of the elaborate consideration, it may be superfluous to
supplement the aforesaid reasons. However, I deem it appropriate to test the
sustainability of the course which Mr. Narichania wants the Court to adopt on the
touchstone of well recognized principles of interpretation. In substance, the
submission of Mr. Narichania is that though the Indian Parliament, in its wisdom,
considered it appropriate not to provide for a clause of 'breaking limitation' or deprive
the person liable of the right to limit the liability, in the event the occurrence took
place on account of the fault or privity on the part of such person, yet the Court
should consider that Article 4 incorporating 'Conduct Barring Limitation' is implicit
in the provisions of Section 352A and be read as part thereof.
38. The cardinal principle of interpretation is to find the intention of the
legislature from the words employed by the legislature. If the language is clear and
unambiguous, the intent of the legislature reflected in the words of the legislation must
be given effect to without adding or subtracting any words thereto. The endeavour of
the Defendant No.1 is to impress upon the Court to supplant the words of the
legislation. Such a course of action, as an interpretative tool, is simply impermissible.
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39. A useful reference in this context, can be made to the judgment of the
Supreme Court in the case of Rohitash Kumar and Ors. V/s. Om Prakash Sharma
and Ors.6 wherein after referring to the previous pronouncements, the Supreme
Court expounded the principles of interpretation as under :
"Addition and subtraction of words
27. The Court has to keep in mind the fact that, while interpreting the
provisions of a statute, it can neither add, nor subtract even a single word.
The legal maxim "A verbis legis non est recedendum" means, "from the words
of law, there must be no departure". A section is to be interpreted by reading
all of its parts together, and it is not permissible to omit any part thereof. The
Court cannot proceed with the assumption that the legislature, while enacting
the statute has committed a mistake; it must proceed on the footing that the
legislature intended what it has said; even if there is some defect in the
phraseology used by it in framing the stature, and it is not open to the court to
add and amend, or by construction, make up for the deficiencies, which have
been left in the Act. The Court can only iron out the creases but while doing
so, it must not alter the fabrics, of which an Act is woven. The Court, while
interpreting statutory provisions, cannot add words to a statute, or read words
into it which are not part of it, especially when a literal reading of the same
produces an intelligible result. (Vide Nalinakhya Byasck V/s. Shyam Sunder
Haldar7, Sri Ram Ram Narain Medhi V/s. State of Bombay 8, M. Pentiah V
Muddala Veeramallappa9, Balasinor Nagrik Coop. Bank Ltd. V/s. Babubhai
Shankerlal Pandya10 and Dadi Jagannadham V/s. Jammulu Ramulu11, SCC pp.
78-79, para 13).
28. The statute is not to be construed in the light of certain notions that the
6 (2013) 11 SCC 451
7 AIR 1953 SC 148
8 AIR 1959 SC 459
9 AIR 1961 SC 1107
10 (1987) 1 SCC 606
11 (2001) 7 SCC 71
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legislature might have had in mind, or what the legislature is expected to have
said, or what the legislature might have done, or what the duty of the
legislature to have said or done was. The Courts have to administer the law as
they find it, and it is not permissible for the court to twist the clear language of
the enactment in order to avoid any real or imaginary hardship which such
literal interpretation may cause.
29. In view of the above it becomes crystal clear that under the garb of
interpreting the provision, the Court does not have the power to add or
substract even a single word, as it would not amount to interpretation, but
legislation." (emphasis supplied)
40. In the said case, the Supreme Court also expounded the principle that
hardship or inconvenience caused to a party, in a given case, cannot be used as basis to
alter the meaning of the language employed by the legislature, if there is no ambiguity.
The Supreme Court stated the principle as under :
"Hardship of an individual
23. There may be a statutory provision, which causes great hardship or
inconvenience to either the party concerned, or to an individual, but the
Court has no choice but to enforce it in full rigour. It is a well settled
principle of interpretation that hardship or inconvenience caused cannot be
used as a basis to alter the meaning of the language employed by the
legislature, if such meaning is clear upon a bare perusal of the statute. If the
language is plain and hence allows only one meaning, the same has to be
given effect to, even if it causes hardship or possible injustice. [Vide CIT
(Ag) V Keshab Chandra Mandal12 and D.D.Joshi V. Union of India13].
24. In Bengal Immunity Co. Ltd. V. State of Bihar 14 (SCC p. 685, para
12 AIR 1950 SC 265
13 (1983) 2 SCC 235
14 AIR 1955 SC 661
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43), it was observed by a Constitution Bench of this Court that, if there is
any hardship, it is for the legislature to amend the law, and that the court
cannot be called upon to discard the cardinal rule of interpretation for the
purpose of mitigating such hardship. If the language of an Act is sufficiently
clear, the court has to give effect to it, however, inequitable or unjust the
result may be. The words, "dura lex sed lex" which mean "the law is hard but
it is the law" may be used to sum up the situation. Therefore, even if a
statutory provision causes hardship to some people, it is not for the court to
amend the law. A legal enactment must be interpreted in its plain and literal
sense, as that is the first principle of interpretation.
25. In Mysore SEB v. Bangalore Woolen Cotton & Silk Mills Ltd. 15
(AIR p. 1139, para 27) a Constitution Bench of this Court held that,
"inconvenience is not" a decisive factor to be considered while interpreting
a statute. In Martin Burn Ltd. V. Corpn. Of Calcutta 16, this Court, while
dealing with the same issue observed as under : (AIR p. 535, para 14)
"14. .... A result flowing from a statutory provision is never an
evil. A Court has no power to ignore that provision to relieve what is considers a
distress resulting from its operation. A statute must of course be given effect to
whether a court likes the result or not."
26. Therefore, it is evident that the hardship caused to an individual,
cannot be a ground for not giving effective and grammatical meaning to every
word of the provision, if the language used therein is unequivocal."
(emphasis supplied)
41. A profitable reference can also be made to a recent pronouncement of the
Supreme Court in the case of Saregama India Ltd. V/s. Next Radio Limited and
Ors17, wherein the Supreme Court proscribed the course of supplementing the words
15 AIR 1963 SC 1128
16 AIR 1966 SC 529
17 (2022) 1 SCC 701
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of the legislature where they are clear and unambiguous. The observations in
paragraph 21 read as under :
21. It is a settled principle of law that when the words of a statute are clear
and unambiguous, it is not permissible for the court to read wourds into the
statute. A constitution Bench of this Court in padma sundara Rao V. State of
T.N.6has observed : (SCC p. 542, paras 12 & 14)
"12. ... the court cannot read anything into a statutory provision which is plain
and unambiguous. A statute is an edict of the legislature. The language employed
in a statute is determinative factor of legislative intent. The first and primary rule
of construction is that the intention of the legislation must be found in the words
used by the legislature itself. The question is not what may be supposed and has
been intended but what has been said.
14. While interpreting a provision the Court only interprets the law and
cannot legislate it. If a provision of law is misused and subjected to the abuse of
process of law, it is for the legislature to amend, modify or repeal it, if deemed
necessary." (emphasis supplied)
42. The aforesaid exposition of law is a complete answer to the submissions
sought to be canvassed on behalf of Defendant No.1. Neither the Court can loose
sight of the conscious omission of the provisions of 'breaking of limitation', while
amending Part XA by the Amendment Act 63 of 2002. Nor the Court can import the
provisions contained in Article 4 of the Convention of 1976 providing for 'Conduct
barring limitation', as it would amount to supplanting the legislation. From this
standpoint, I do not find any justifiable reason to take a different view of the matter
than the one which this Court was persuaded to take in the case of Murmansk
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Shipping Company (supra). I am, therefore, impelled to hold that the right to limit
liability under Part XA of the Act of 1958 is absolute and without reference to the
question of fault or privity on the part of the person who is liable and seeks to limit the
liability.
43. The aforesaid finding bears upon the challenge to the action on the count
that the same is not permissible at an interim stage. The edifice of the objection was
sought to be built on the premise that Rule 1105 of the Bombay High Court (Original
Side) Rules, 1980 provides that any Application for limitation of liability filed under
Part XA of the Act, 1958 shall be by way of a Suit as contemplated in Chapter L-X of
the Rules, 1980.
44. Mr. Narichania would urge that, of necessity, the question of limitation of
liability must be decided post trial. Notice of Motion seeking limitation of liability, if
allowed, would amount to grating a final relief at an interim stage without adjudication
of the Suit.
45. Indeed Rule 1105 provides that an Application for limitation shall be by way
of a Suit. Yet the aforesaid submission, though attractive at the first blush, does not
pass judicial muster. As indicated above, once it is reckoned that the right to limit
liability is absolute and de hors the question of fault or privity, on the part of the owner
who approaches the Court to limit liability, the inquiry would be restricted to the
question as to whether the application satisfies the conditions stipulated in Section
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352A of the Act, 1958 and the quantum of amount to which the liability should be
limited as envisaged by Section 352B of the Act, 1958. In a given case, where there is a
dispute as to the very applicability of Section 352A, different considerations may come
into play. However, where the Defendant/Claimant opposes the Application for
limitation, be it at an interim stage, on the ground that the Plaintiff is not entitled to
limit liability on account of fault or privity, in my view no adjudication which merits
trial arises. In the case at hand, apart from contesting the absoluteness of the right to
limit liability, the only issue which the Defendant No. 1 endeavored to dispute was the
tonnage of M.V.Nordlake.
46. Mr. Narichania submitted that the claim of the Plaintiff that M.V.Nordlake's
weight is 16202 MTS is not supported by a document of unimpeachable character.
Taking the Court through the intrinsic evidence of the certificate, Mr. Narichania
would urge that no implicit reliance can be placed on the said claim of tonnage.
Correct tonnage of M.V.Nordlake is necessarily a matter for trail.
47. Mr. Rajyadhyaksha joined the issue by canvassing a submission that the
tonnage of M.V.Nordlake is an admitted fact. There is an admission in the pleadings of
the Defendant No. 1. The plaint in ADMS 23 of 2011 contains a clear and explicit
admission that gross registered tonnage of M.V.Nordlake is 16202 tonnes. In view of
the said admission, it is now not open to Defendant No. 1 to put the said issue in
controversy.
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48. The Plaintiff has annexed the International Tonnage Certificate (1969)
issued by Republic of Cyprus, Ministry of Communications and Works Department of
Merchant Shipping, which shows gross tonnage of M.V.Nordlake at 16202 tonnes.
The certificate seems to have been issued on 01/06/2009, before the date of
occurrence. I am not persuaded to delve into the infirmities, like it does not bear the
signature and seal etc., which according to Mr. Narichania dent the veracity of the
certificate. Apparently, the certificate seems to have been issued by the Competent
Authority of the country of which flag M.V.Nordlake was flying.
49. Moreover, Mr. Rajyadhyaksha was justified in banking upon an admission on
the part of the Defendant No. 1 in Plaint in ADMS 23 of 2011. Paragraph No. 2
thereof reads as under-
The 1st Defendant vessel is a Motor Vessel flying the flag of
Cyrus and registered at a port outside India. As far as the
Plaintiff is aware, the 1st Defendant vessel is owned by the 2nd
Defendant viz. MS M.V.Nordlake GMbh, a company
incorporated under foreign laws having its place of business at
the address mentioned in the cause title above. The gross
registered tonnage of the 1st Defendant Vessel is 16,202
Tonnes. The 1st Defendant Vessel is a fully cellular container
vessel.
50.. Evidently, all the particulars correspond with the averments of the Plaintiff
in the instant suit. There is a clear, unequivocal and unqualified assertion that the
gross tonnage is 16202 Tonnes. Since it is an admission in pleadings, it stands on a
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higher footing than the evidentiary admission and can very well form the basis for a
finding.
51. Reliance placed by Mr. Rajyadhyaksha on the judgment of Supreme Court in
the case of Nagindas Ramdas V/s. Dalpatram Iccharam 18 is well founded. In the
said case, it was observed that "admissions if true and clear are by far the best proof of
the facts admitted. Admissions in pleadings or judicial admissions, admissible under
Section 58 of the Evidence Act, made by the parties or their agents at or before the
hearing of the case, stand on a higher footing than the evidentiary admissions. The
former class of admissions are fully binding on the party that makes them and
constitute a waiver of proof. They by themselves can be made the foundation of the
rights of the parties. On the other hand, evidentiary admissions which are receivable
at the trial as evidence, are by themselves, not conclusive. They can be shown to be
wrong".
52. The situation which thus obtains is that the the only factual dispute sought
to be putforth on behalf of Defendant No.1 stands determined by its own admission in
pleadings in the companion suit. Mr. Narichania made an attempt to impress upon
the Court that the Defendant No.1 deserves an opportunity to explain away the said
admission, if it is construed to be one. In view of the nature of the said admission,
coupled with the certificate relied by the Plaintiff, in the instant suit, I am not inclined
18 (1974) 1 SCC 242
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to accede to this submission.
53. Undoubtedly, Rule 1105 of the Rules, 1980 mandates that an application for
limitation of liability shall be by way of a suit. The Applicant has instituted a suit.
Once the suit is instituted, it is not imperative that the order to limit liability can only
be after a full fledged trial. The Court is not precluded from passing a decree at an
intermediate stage without the trial running its full course. An instance in point is, a
decree based on admission. In the case at hand, as indicated above, the primary
resistance to the application for limitation of liability is founded on an incorrect
impression that the right to limit the liability is not absolute. The Defendant No.1
professes to urge the ground of fault. The second ground sought to be canvassed
before the Court was the tonnage of the Vessel.
54. The first point stands concluded against the Defendant No.1 by the
judgment in the case of Murmansk Shipping Company (supra) and for the reasons
noted above. The second stands concluded by the own admission of the Defendant
No.1. In the facts and circumstances of this case, in my view, there is no impediment
in ordering limitation of liability at an interim stage and in this Notice of Motion.
55. Another challenge to the tenability of the action for limitation of liability was
based on an order passed by this Court on 25 April, 2012. The Court noted that the
Defendant, Plaintiff herein, did not press for relief in terms of prayer clause (a), which
read thus :
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"(a) Upon the Defendants providing security or guarantee of Rupees
20,01,86,113 (Rupees Twenty Crores) as provided for under Section 352B of
the Merchant Shipping Act, 1958, this Court be pleased to order release of
the 1st defendant vessel from the order of arrest under Section 352D of the
Merchant Shipping Act, 1958."
56. The aforesaid act on the part of the Plaintiff amounts to abandonment of the
right to seek limitation of liability, urged Mr. Narichania. In contrast, Mr.
Rajyadhyaksha submitted that the prayer clause (b) in the said Notice of Motion was,
in the alternative and without prejudice to the aforesaid prayer clause (a), and,
therefore, it cannot be urged that the Plaintiff herein had given up the right to seek
limitation of liability. According to Mr. Rajyadhyaksha, a without prejudice action
implies that the matter has not been decided on merits and fresh proceedings were
not barred.
57. To bolster up this submission, reliance was sought to be placed on a
judgment of the Supreme Court in the case of Superintendent (Tech I) Central
Excise, IDD Jabalpurand Ors. V/s. Pratap Rai 19 wherein the import of the term
'without prejudice' was explained as under :
"7. In short, therefore, the implication of the term "without prejudice"
means (1) that the cause or the matter has not been decided on merits, (2)
that fresh proceedings according to law were not barred............"
58. The context in which the aforesaid prayers were made in Notice of Motion
19 ()1978) 3 SCC 113
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No.1525 of 2011 cannot be lost sight of. The prayer in the said application was
primarily for the release of the Vessel. In that context, a reference was made to the
right to get the vessel released upon furnishing security as envisaged by Section 352D
of the Act, 1958. In the circumstances, especially when the said application was made
in Suit No.23 of 2011, instituted by the Defendant No.1 herein, whilst M.V.Nordlake
was under the order of arrest, the Plaintiff cannot be deprived of a statutory right to
limit liability by instituting a suit, even if it is assumed that the non-pressing of prayer
clause (a), extracted above, at that stage, was the conscious act. I am, therefore,
persuaded to hold that there is no embargo either under the provisions of the Code or
Rules 1980 to entertain the application for limitation of the liability.
58. Evidently, the claim of Defendant No.1 / Plaintiff in ADMS No.23 of 2011 is
primarily covered by clause (a) of sub-Section (1) of Section 352A of the Act, of 1958.
The Plaintiff has, thus, succeeded in establishing that it has a right to limit the liability.
This propels me to the aspect of the quantum to which the liability is to be limited.
60. As noted above, para 1 of Article 6 of the Convention 1976, which provided
for the method of computation of the limit of liability came to be substituted by
Protocol 1996, which prescribes the enhanced limit of liability. Mr. Narichania would
urge that Article 6, as amended by Protocol 1996, must govern the computation of the
liability.
61. In opposition to this, Mr. Rajyadhyaksha stoutly submitted that it is the date
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of occurrence which is of determinitive significance. On the date of occurrence,
Protocol 1996, which amended Para 1 of Article 6 of Convention 1976, was not brought
into force in India. Resultantly, the limit of liability must be in accordance with
Article 6 of the Convention of 1976.
62. The parties are not at issue over the fact that the Protocol 1996 came into
effect in India on 21 June, 2011. Mr. Narichania would urge that under Section 352B,
(extracted above) the person liable may limit his liability in accordance with the
provisions of the Convention. Therefore, the quantum of liability should be
determined in accordance with the provisions of the Convention which obtained as of
the date of the Application. Attention of the Court was invited to Clause (b) of
Section 352 under which 'Convention' means Convention on Limitation of Liability
for Maritime Claims, 1976 as amended from time to time. Thus, Protocol 1996,
according to Mr. Narichania would automatically stand incorporated into Part XA of
the Act, 1958.
63. To bolster up the submission that it is the date of application and not the
date of occurrence, which governs the quantum of limit of liability, Mr. Narichania
placed reliance on the following observations in the case of Murmansk Shipping
Company (supra), :
"All these references show that they naturally deal with the provisions of the
Convention for the time being in force i.e. as they may exist, when sought to be
applied in such amended form as the case may be."
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55. According to Mr. Narichania, since the action for limitation of liability was
filed in the month of January 2014, much after Protocol 1996 came into effect, the
limit set out in Protocol 1996 should apply and not the limit originally prescribed
under Convention 1976.
64. Mr. Rajyadhyaksha, on the other hand, laid emphasis on the provisions
contained in Article 9(3) of the Protocol 1996, which provides that the Convention
1976, as amended by the Protocol 1996, shall apply only to claims arising out of the
occurrences which took place after the entry into force for each State of the said
Protocol. Therefore, for all the occurrences which took place before the Protocol
1996 came into force in India i.e. 21 June 2011, the provisions contained in original
Article 6 of the Convention 1976 would apply.
65. Mr. Narichania would urge that the aforesaid submission runs counter to the
foundational premise of the Plaintiff's case that all the provisions of the Convention
1976, especially Article 4, do not get embodied in the Indian law, unless specifically
incorporated. By the same token, according to Mr. Narichania, Article 9(3) of the
Protocol 1996 would not govern the situation.
66. It is trite, treaty or International Protocol or Convention does not become
effective or operative on its own force, unless it is brought into force in the manner
known to law either by domestic legislation or executive instructions certifying the
acceptance.
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67. Indisputedly, in the case at hand, Protocol 1996 came into force in India on
21 June 2011 i.e. after about six months of the date of occurrence. It would be
contradiction in terms if the definition of 'Convention' under Section 352 is read to
mean Convention 1976 as amended from time to time, irrespective of its acceptance
and enforcement by India in the manner known to law. Such an interpretation would
run counter to well settled principle of incorporation of treaty obligations in domestic
law. Murmansk Shipping Company (supra) adverts to this position. The most
critical difference in the case of Murmansk and this case is that in the case of
Murmansk, the occurrence took place after the Protocol 1996 was given effect to in
India.
68. In the case of m.v. "Eleni (IMO No.9460277) V/s. Hanwha General
Insurance Co. Ltd.20 another learned Single Judge of this Court adverted to these
facets of incorporation of Convention 1976 and Protocol 1996 in the domestic law as
under :
"34. On the point as to MS. Act applicable or not, it has to be noted that
India although has signed the 1976 Convention and the 1996 Protocol, the entire
Convention has not been enacted as a part of domestic law. Part XA of the MS
Act sets out provisions pertaining to limitation of liability. Only some of the
provisions of the Convention as amended have been incorporated into the MS
Act. This shows the Parliament did not want to include those provisions of the
Convention which are not incorporated in Part XA of the MS Act. Notable
among the exceptions are the follows :
20 2015 SCC Online Bom 22
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(a) The Article 4 of the Convention which refers to conduct barring
limitation, or breaking limitation as is more commonly understood.
(b) The free standing right to limit liability set out in Article X of the
Convention. Thus, limitation of liability can only be invoked in the event legal
proceedings are instituted in respect of claims subject to limitation as provided
in Section 352C (1).
(c) Article 13 of the Convention has not been incorporated into the
domestic legislation in its entirety. Only the second part of Article 13(2) [the
mandatory provisions] and Article 13(3) is incorporated with some changes.
35. The English Merchant Shipping Act 1995 sets out the 1976 Convention in
Schedule 7 and the Convention has been adopted in its entirety as a part of the
English Merchant Shipping Act. This is not the position under Indian law.
Consequently, the English decisions and commertaries on Article 10 and Article
13 are not really relevant." (emphasis supplied)
69. The matter can be looked at from another perspective. The broad
submission on behalf of Defendant No.1 that it is the date of the application which
should determine the quantum to which the liability is to be limited, is fraught with
infirmities. It would introduce an artificial element into determination. In contrast,
the date of occurrence has an element of definitiveness. For this reason, Article 9(3)
of Protocol 1996 provides that the Convention amended by the said Protocol 1996,
shall apply to claims arising out of the occurrences which took place after the entry
into force of the said Protocol for the concerned State. I am, therefore, inclined to
hold that the limit of liability needs to be computed in accordance with the provisions
of the Article 6 of the Convention 1976.
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70. This takes me to the facets which bear upon the constitution of the
limitation of fund. Under Section 352C, the fund shall represent the amount set out in
the Convention 1976 together with interest thereon from the date of occurrence giving
rise to the liability until the date of the constitution of the fund. The parties are ad-
idem on the point that the rate of interest shall be the prime lending rate as of the date
of occurrence. There is a consensus on the point that the prime lending rate as of the
date of occurrence was 12.75% p.a.
71. On the aspect of conversion of SDR into Indian currency, during the course
of the submissions, Mr. Rajyadhyaksha, on instructions, submitted that the Plaintiff is
not averse to the conversion of SDR as calculated under Article 6 of the Convention
1976 into Indian rupees at the applicable rate of conversion. As regards the rate of
exchange, in the case of Murmansk Shipping Company (supra), this Court directed
that the rate of conversion of SDR into USD or INR shall be as applicable on the date
of the constitution of the fund or giving of the security.
72. In my view, the date on which the fund is ordered to be constituted should
be the appropriate date for reckoning the rate of exchange. I am fortified by the
judgment of the Supreme Court in the case of Forasol V/s. Oil & Natural Gas
Commission21 In the said case, the Supreme Court was confronted with a question as
to the date to be selected by the Court for converting Indian rupees in French Franc
21 1984 (Supp) SCC 263
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part of the award in respect of which no rate of exchange had been fixed either by the
contract between the parties or the award. In paragraph 24 of the judgment, the
Supreme Court considered five dates which compete for selection as under:
"24. In an action to recover an amount payable in a foreign currency, five
dates compete for selection by the Court as the proper date for fixing the rate of
exchange at which the foreign currency amount has to be converted into the
currency of the country in which the action has been commenced and decided.
These dates are:
(1) the date when the amount become due and payable;
(2) the date of the commencement of the action;
(3) the date of the decree;
(4) the date when the court orders execution to issue; and
(5) the date when the decretal amount is paid or realized."
73. After an elaborate analysis, the Supreme Court held in paragraph 53 that
it would be fair to both parties for the Court to take the date of passing of the decree as
date for conversion. Paragraph 53 reads as under:
"53. This then leaves us with only there dates from which to make our selection,
namely, the date when the amount became payable, the date of the filing of the suit
and the date of the judgment, that is, the date of passing the decree. It would be
fairer to both the parties for the court to take the latest of these dates, namely, the
date of passing the decree, that is, the date of the judgment." (emphasis
supplied)
74. For the foregoing reasons, the Notice of Motion deserves to be allowed.
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75. Hence, the following order :
ORDER
(i) It is declared that the Plaintiff is entitled to limit its liability in
respect of all losses and damages in respect of all property claims and consequential
losses resulting from the collision between INS Vindhyagiri and M.V.Nordlake on 30
January 2011 under the provisions of the Merchant Shipping Act, 1958.
(ii) It is declared that the aggregate principal liability of the Plaintiff for all
claims in respect of all losses and damages in respect of all property claims and
consequential losses resulting from the aforesaid collision shall be in the sum of
Special Drawing Rates (SDR) 27,89,234/-.
(iii) SDR shall be converted to Indian Rupees at the conversion rate as of
the date of this order.
(iv) It is ordered that the principal sum of SDR 2789,234/- shall carry
interest @ 12.75% p.a. from 30 January 2011 till the date of this order.
(v) It is ordered that the sum of Rs.33,98,90,000/- deposited by the
Plaintiff by way of security in ADMS 23 of 2011 along with interest accrued thereon,
till the date of this order, stands appropriated towards the constitution of limitation
fund.
(vi) In the event the corpus formed by the amount deposited by the Plaintiff
by way of security and interest accrued thereon, till date, falls short of the amount
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required to constitute limitation fund, as ordered above, the Plaintiff shall deposit the
short fall within a period of four weeks along with interest @ 12.75% p.a. from today till
the date of deposit.
(vii) In the event the corpus so formed exceeds the limitation fund to be
constituted, as ordered above, the balance amount be refunded to the Plaintiff.
(viii)Upon constitution of the limitation fund, as ordered above, the
Defendants and all other claimants, who may have a claim arising from the aforesaid
collision, stand restrained from exercising any right against any property or assets of
the Plaintiff.
(ix) Upon constitution of the fund, the Plaintiff shall give individual notices
to the parties whose suits for enforcement of claims against the Plaintiff or the Vessel
M.V.Nordlake are pending in this Court or any other Court and also place
advertisements in three local newspapers, two in English and one in local language,
specifying a period of ninety days for filing of claims against the fund, so constituted
(x) The claims received in pursuance of such notices and advertisements
shall be placed before the Court and directions shall be sought for distributing the
amount constituting the fund amongst the claimants as per rules.
(xi) In the circumstances, there shall be no order as to costs.
( N.J.JAMADAR, J. )
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At this stage, Mr. Narichaniya, the learned Senior Counsel for the defendant
No. 1 seeks stay to the execution, operation and implementation of this order to
facilitate the Defendant No.1 to prefer an Appeal.
Mr. Rajyadhyaksha, the learned Counsel for the plaintiff opposes the prayer
of stay.
Having regard to the issues determined by this Court and their ramifications
on the claim of the Defendant No.1, it may be expedient to stay this order.
Hence, the execution, operation and implementation of this order stands
stayed for six weeks.
( N.J.JAMADAR, J. )
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