Bombay High Court
Angsley Investments Ltd vs Jupiter Denizcilik Tasimacilik ... on 8 March, 2023
Bench: K.R. Shriram, Rajesh S. Patil
Digitally signed
by GAURI 1/31 APP-902-2006.doc
GAURI AMIT
AMIT GAEKWAD
GAEKWAD Date:
2023.03.09
10:19:28 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.902 OF 2006
IN
ADMIRALTY SUIT NO.15 OF 2001
Angsley Investments Limited )
a Company incorporated under the laws of St. )
Vincent And the Grenadines, and carrying on ) ....Appellant (Original
business at 112, Bonadie Street, Kingston, St. ) Defendant
Vincent and the Grenadines ) No.3/Intervener)
V/s.
Jupiter Denizcilik Tasimacilik Mumessillik San. Ve )
TicaretLimited Sirketi, a company incorporated )
under the laws of Turkey and having its office at )
Kuyubasi Kayisdagi Caddesi Bureu Apt. No.122/5, )
81030 Kadikoy, Istanbul, Turkey ) (Original plaintiff)
m.v. Lima II, a motor vessel flying the Flag of Turkey )
and presently in Port and Harbor of Kandla within )
the Admiralty and Vice Admiralty jurisdiction of this ) (Original Defendant
Hon'ble Court. ) No.1)
Lima Denizcilik Ve Tic Ltd. Sti, a foreign Company )
organized under foreign laws and carrying on ) (Original Defendant
business at Altunizade, Erdem Sok. Sabuncuoglu Sit. ) No.2)
C Block No.6, D:9 Uskudar, Istanbul, Turkey ) ....Respondents
WITH
NOTICE OF MOTION NO.4423 OF 2006
IN
APPEAL NO.902 OF 2006
----
Mr. Vishal Kanade a/w. Mr. Shadab Peerzade and Ms. Janhavee Joshi i/b. Mr. Munir
Merchant for appellant.
Mr. Prathamesh Kamat, Amicus Curiae.
----
CORAM : K. R. SHRIRAM & RAJESH S. PATIL, JJ.
RESERVED ON : 17th FEBRUARY 2023
PRONOUNCED ON : 8th MARCH 2023
JUDGMENT (PER K.R. SHRIRAM, J.) :
1 Since nobody was appearing for respondent, this Court
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appointed Mr. Prathamesh Kamat, Advocate, as Amicus Curiae. We must
express our appreciation for the assistance rendered and endeavour put
forth by Mr. Prathamesh Kamat, learned Amicus Curiae, for it has been of
immense value in rendering the judgment.
2 This appeal impugns an order and judgment dated
8th November 2006 passed by the learned Single Judge decreeing the suit in
terms of prayer clauses - (c) and (i). Prayer clauses - (c) and (i) read as
under :
(c) For an order and decree in favour of the plaintiffs and
against the defendants in the sum of US$ 100,798 as per the
particulars of claim shown in Exhibit 'A' hereto with interest
thereon at the rate of 30% p.a. from the date of institution of
the suit till payment and/or realization.
(i) Costs of the suit may otherwise be provided for.
3 Plaintiff is a Turkish company carrying on business of supplying
bunkers to various vessels. According to plaintiff, for the period between
9th October 2000 to 13th March 2001 plaintiff had supplied bunkers to
defendant no.1 m.v. LIMA II on the basis of orders placed by defendant no.2,
the owners of m.v. LIMA II.
4 As per the invoice raised, payment was to be made within
30 days or else plaintiff was entitled to charge interest at 30% p.a.
Defendant no.2 committed default in payment and, therefore, plaintiff and
defendant no.2 entered into a protocol in relation to the payment that was
to be made by defendant no.2 to plaintiff. According to plaintiff, despite
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entering into the protocol, an amount of US$ 100,798/- remained unpaid.
Plaintiff, therefore, filed Admiralty Suit No.15 of 2001 to arrest defendant
no.1 vessel which was at port of Kandla. The order of arrest was made on
17th May 2001, which was served upon the Port and Customs Authorities. So
also upon agent of defendant no.1 vessel. The warrant of arrest could not be
served on Master of m.v. LIMA II because she was in stream in the outer
anchorage. m.v. LIMA II jumped arrest and escaped from the port of Kandla.
5 Later plaintiff got information that a vessel by the name m.v.
LIMA I, which according to plaintiff was owned by defendant no.2, was at
the port of Calcutta and, therefore, plaintiff moved a Notice of Motion
bearing No.1970 of 2001 before the Admiralty Court. By an ad-interim
order dated 14th August 2001 m.v. LIMA I was restrained from leaving the
port of Calcutta. The notice of motion was finally disposed by an order
dated 31st October 2001 confirming the ad-interim order. The Court clarified
that on furnishing of security to the satisfaction of the Prothonotary and
Senior Master, the said interim order shall cease to operate.
6 Defendant no.3, the present appellant, furnished security in
terms of the orders of the Court while disposing the Notice of Motion
No.1970 of 2001 on 31st October 2001. As a result, m.v. LIMA I was allowed
to sail. Defendant no.3, i.e., appellant, thereafter, took out Notice of Motion
No.529 of 2002 seeking leave of the Court to intervene in the suit. It was
appellant's case that it was an interested party because it had purchased the
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vessel from Mercury Shipholding Inc. (Mercury) of London which had
purchased the vessel from defendant no.2. It had thereafter, sold the vessel
to one Jain Udyog for demolition and Jain Udyog had asked appellant to
have the vessel m.v. LIMA I released from various legal proceedings.
The said notice of motion was allowed and plaintiff was
directed to join appellant as defendant no.3.
No written statement has been filed by defendant no.1 or
defendant no.2. Only appellant as defendant no.3 filed written statement. It
was appellant's case that :
(a) m.v. LIMA I is not the sister ship of m.v. LIMA II either at the
time of filing the suit or at the time of grant of arrest (injunction) of m.v.
LIMA I, i.e., 31st October 2001. m.v. LIMA I was sold by original defendant
no.2 to Mercury under a Bill of Sale dated 10th April 2001 and was flying the
flag of St. Vincent and Grenadines at the time of her arrest. Subsequently,
m.v. LIMA I was purchased by appellant (original defendant no.3) from
Mercury pursuant to a Bill of Sale dated 1st August 2001 and Memorandum
of Agreement dated 21st May 2001. Appellant sold the vessel further to Jain
Udyog by a Bill of Sale dated 6th August 2001 and a Memorandum of
Agreement;
(b) Pursuant to the protocol dated 15th February 2001,
respondent's (original plaintiff) claim could not be termed as a claim for
necessaries under Section 5 of the Admiralty Courts Act 1861, but payment
on balance of account, if any;
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(c) This Court did not have jurisdiction to entertain the suit.
7 Before we proceed further, we have to note that since defendant
no.3 was added as party defendant to the suit only on its application to be
joined, no reliefs have been sought against defendant no.3. There are no
averments against defendant no.3 and there is not even a cause of action
alleged against defendant no.3 as the plaint was not amended to attribute
any pleading against appellant as defendant no.3. In the absence of any
pleading/relief against appellant, the prayer clause - (c) as sought against
'defendants' has to be read as prayer only against defendant no.1 and
defendant no.2.
8 The Court framed the following issues :
(1) Whether the plaintiffs prove that the 1 st defendant vessel
is a foreign Flag vessel flying the flag of Turkey and owned by
the 2nd Defendants?
(2) Whether the plaintiffs prove that various orders for
supply of bunkers as contended in the Plaint are placed by
the owners of the 1st defendant vessel?
(3) Whether the plaintiffs prove that they have made
arrangement for supply of various bunker deliveries
contractually as stated in the plaint?
(4) Whether the plaintiffs prove that they had entered into a
Protocol dated 15th February, 2001?
(5) Whether the plaintiffs prove that the claim for supplies
have not been novated by the Protocol dated
15th February, 2001 and is it thus maritime claim?
(6) Whether the plaintiffs prove that the supplies made after
signing of the protocol is a supply for necessaries/maritime
claim as completed under Admiralty Court Act,1861?
(7) Whether the plaintiffs are sellers of the bunkers and have
raised invoices on Defendant no.2 for the supply of bunkers
and/or claim monies thereof?
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(8) Whether the plaintiffs prove that the suit is tenable
against the Defendant no.2?
(9) Whether the suit is tenable against the Defendants vessel
without the plaintiffs having obtained arrest order of the said
vessel?
(10) Whether the plaintiffs are entitled to an order and
decree in their favour against the Defendants for the sum of
US $ 100,798 and whether they are entitled to interest @
30% p.a.?
(11) Whether the plaintiffs prove that the supplies of bunkers
constitute into supply of necessaries and accordingly a
Maritime claim/Maritime Lien against the 1st Defendant
vessel and thus entitled to an arrest under the Admiralty
Courts Act,1861?
(12) Whether the plaintiffs prove that m.v.LIMA I was the
sister ship of the 1st Defendant vessel at the time of the grant
of arrest of LIMA I on 31st October, 2001?
(13) Whether the plaintiffs prove that they are entitled to
arrest another vessel (Respondent Vessel - m.v. Yim Kim ex
Lima-1) in lieu of the 1st Defendant vessel?
(14) Whether the plaintiffs prove that the suit filed by them
is within the period of limitation?
9 Oral evidence and documentary evidence was led by one
witness on behalf of plaintiff. Similarly one witness for appellant was
examined, who also produced documents. On 8 th November 2006, the suit
was decreed by the learned Single Judge of this Court holding in favour of
respondent (original plaintiff) and decreeing the suit accordingly. On
8th December 2006, the present appeal was filed impugning the judgment
dated 8th November 2006.
10 So far as issue nos.1 to 7 are concerned, the same pertain to the
merits of the bunkers supplied to the vessel m.v. LIMA II. Facts concerning
the said issues have not been denied by appellant (original defendant no.3)
as it was not aware. The facts have also not been denied by defendant nos.1
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and 2 as they have not filed written statement. In view thereof, issue nos.1
to 7 must be answered in favour of respondent (original plaintiff). However,
the said fact does not entitle respondent (original plaintiff) to a decree
against appellant. The issues that would be really relevant for this appeal
would be issue nos.8, 9, 10, 11, 12 and 13.
11 Having heard Mr. Kanade and Mr. Kamat, in our view, the
points which we have to answer are :
(a) whether the Court could have exercised jurisdiction against
m.v. LIMA I by :
(i) not making m.v. LIMA I a party to the suit;
(ii) when, admittedly no order of arrest was issued against m.v.
LIMA I and m.v. LIMA I was not arrested;
(iii) when, admittedly, even assuming m.v. LIMA I was a sister
ship of m.v. LIMA II (defendant no.1), defendant no.2, the owner of both
the vessels not being within the jurisdiction of this Court, could this Court
have passed the order of restrain dated 14th August 2001 confirmed on
31st October 2001 stopping m.v. LIMA I from sailing from the port of
Calcutta;
(b) if no decree has been passed against appellant (defendant
no.3) and there is no decree against m.v. LIMA I because she was not a party
to the suit, should the security given by appellant (defendant no.3) be
returned to appellant (defendant no.3).
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Mr. Kanade submitted as under :
12 Issue no.9, i.e., "Whether the suit is tenable against the
Defendants vessel without the Plaintiffs having arrest order of the said
vessel?" :
(a) m v. LIMA I was never made party defendant to the said
suit. Respondent did not make a claim against m v. LIMA I in rem and,
therefore, the Trial Court could not have exercised admiralty jurisdiction to
entertain the said suit.
(b) The impugned order records essentially that, m v. LIMA I
was restrained by an order of temporary injunction and not an order of
arrest. The exercise of powers by the Trial Court while passing of an order of
injunction was by way of exercising powers analogous to Order 39 and/or
Order 38 Rule 5 of the Code of Civil Procedure, 1908 (CPC).
(c) It is pertinent to note that the vessel m v. LIMA I was at port
of Calcutta and beyond the territorial jurisdiction of this Court. In the facts
of the present case, the said m.v. Lima I being at Calcutta, the Trial Court
did not have territorial jurisdiction to pass an order of restrainment. Such
proceedings could have only been filed at an appropriate forum in Calcutta.
(d) The Trial Court could not have passed such an order of
temporary injunction in respect of the property of appellant that was outside
the local limits of the jurisdiction of this Court.
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(e) Considering the aforesaid, it is apparent that no action in
rem against m v. LIMA I was ever initiated by respondent. Hence, if only had
respondent impleaded vessel m v. LIMA I as party defendant, a maritime
claim perhaps could have survived against the said vessel to invoke
admiralty jurisdiction of this Court.
(f) It was only as a result of an action in personam against
defendant no.2, that m v. LIMA I was sought to be restrained as respondent
believed it to be the property/asset of defendant no.2. Thus, it can be
inferred that no maritime claim existed against m v. LIMA I. It is also
pertinent to note that at the relevant time when the said suit was filed and
interim order against m v. LIMA I was passed by this Court, defendant no.2
was not within the territorial jurisdiction of this Court. The Trial Court could
not have exercised jurisdiction qua defendant no.2 being a company based
in Turkey. In V. M. Salgaoncar & Bros. Ltd. V/s. M. V. Priyamvada1 this Court
has held that unless the movables in respect of which adjudication of right,
title, and interest is sought are situate within the jurisdiction of the
particular Court, the Court will have no jurisdiction.
13 Issue no.12, i.e., "Whether the Plaintiffs prove that m. v. LIMA I
was the sister ship of the 1st Defendant vessel at the time of the grant of
arrest of LIMA I on 31st October 2001?" :
In the absence of jurisdiction, the said issue could not have
been gone into by this Court.
1. 2015 SCC OnLine Bom 4174
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14 Furthermore, in view of the above, issue no.13, i.e., "Whether
the Plaintiffs prove that they are entitled to arrest another vessel
(Respondent Vessel - m v. Yim Kim ex LIMA I) in lieu of the 1 st Defendant
vessel?" ought to have been answered in the negative by this Court. In fact,
it is pertinent to note that no finding has been rendered to arrive at an
affirmative finding for issue nos.9 and 13.
15 In view of the above and especially in the absence of
jurisdiction as well as in the absence of any reliefs sought against appellant,
the impugned order and decree against appellant has to be set aside.
16 Mr. Kamat submitted as under :
(a) The suit as against defendant no.2 was not tenable because
an action in personam against defendant no.2 (foreign defendant) not
within the jurisdiction of the Court is not maintainable. Respondent(original
plaintiff) had sought to make a claim in personam against original
defendant no.2. Original defendant no.2 is a foreign party who neither
resides, nor carries on business within the jurisdiction of this Court. It is
nobody's case that defendant no.2 even submitted to the jurisdiction of this
Court. Defendant no.2 had not entered appearance and not furnished any
security for release of defendant no.1 m. v. LIMA II.
(b) As held by World Tanker Carrier Corporation V/s. S.N.P.
Shipping Services Pvt. Ltd.2 and followed in Kohinoor Carpet Manufacturers
2. (1998) 5 SCC 310
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V/s. Forbes Gokak Ltd. and Another3, no action in rem can be maintained
against a party which was not within the jurisdiction of the Court and which
has not submitted itself to the jurisdiction of the Court.
(c) An action in rem is converted into an action in personam, if
the owner of vessel enters appearance, furnishes security and submits to the
jurisdiction of the Court. Until then the suit continues to be an action in rem
against the vessel as held in Siem Offshore Redri AS V/s. Altus Uber4 and
Owners and Parties Interested in the Vessel M.V. Polaris Galaxy V/s. Banque
Cantonale De Geneve5. Defendant no.2 has neither entered appearance nor
furnished security or submitted to the jurisdiction of this Court.
(d) The learned Single Judge has erred in observing that since
the Court had passed an order of arrest against defendant no.1 (m. v. LIMA
II) it had assumed jurisdiction over the subject matter of the suit. An arrest
of a vessel will only confer jurisdiction over the vessel arrested and not
jurisdiction over the subject matter or over parties which are not within the
territorial jurisdiction.
(e) m.v. LIMA I was not made a party to the suit and the settled
position in law is that a party cannot be added to the interim application
without being a party to the suit and on this ground also, the appeal
deserves to be allowed (Movin F. D'Souza V/s. Vivian daughter of Wilfred
Foncesca and wife of Ravi Shetty and Ors.6).
3. 2001 SCC OnLine Bom 1076
4. 2018 SCC OnLine Bom 2730
5. 2022 SCC OnLine SC 1293
6. Order dated 2nd September 2008 in Appeal No.41 of 2008
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(f) Though Admiralty Act 2017 came into force only in 2018,
the purport of all these provisions of Admiralty Act 2017 were always
followed.
Section 5 of the Admiralty Act 2017 provides that in order to
proceed against a sister vessel, assuming that m.v. LIMA I was arrested
(instead of order of restrain being passed) and m.v. LIMA I and m.v. LIMA II
were sister vessels at the time of arrest, the sister vessel has to be made a
party to the suit and has to be proceeded against in rem. Section 5(1) of the
Admiralty Act 2017 contemplates that to order arrest of a vessel for
enforcement of a maritime claim, the vessel inter alia must be a subject of
an admiralty proceeding. This would necessarily mean that the vessel has to
be a party to the admiralty suit. Section 5(2) which contemplates arrest of a
sister-ship is subject to Section 5(1) and, therefore, to obtain arrest of a
sister-ship, plaintiff has to satisfy all tests of Section 5(1) which would
include to make the sister-ship a party to the suit.
(g) Respondent (original plaintiff) could not have obtained an
injunction against m.v. LIMA I because in personam action like an injunction
is not maintainable against a vessel. The suit filed by respondent (original
plaintiff) continued to be an action in rem against m.v. LIMA II. Even if m.v.
LIMA I is assumed to be owned by original defendant no.2, respondent
(original plaintiff) could not have obtained an injunction against m.v. LIMA I
since an injunction is in the nature of an action in personam. This has been
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so stated in the book Admiralty Jurisdiction and Practice7.
(h) The Court should not approve the action of plaintiff who
moved a hybrid action, i.e., in rem action against m.v. LIMA II and an in
personam action by way of an injunction against m.v. LIMA I and that also
without joining m.v. LIMA I in the suit. In Admiralty Law and Practice 8, the
author has stated that jurisdictions like in England, Singapore and Malaysia
do not permit bringing a hybrid writ conjoining an action in rem and an
action in personam.
(i) It is settled law that a vessel is treated as a juristic entity for
a limited purpose of an action in rem and it cannot be stretched to treat a
vessel as a juristic entity to initiate an action in personam as held in M.V.
Elisabeth & Ors. V/s. Harwan Investment and Trading Pvt. Ltd. 9 and Georim
Oil Corporation V/s. M.V. Flag Mersinidi & Ors.10
(j) It needs to be borne in mind that a vessel can never satisfy a
test of attachment before judgment or an injunction. An injunction is
different from an arrest. For arrest, once the Court is satisfied with the test
laid down in Section 5 of the Admiralty Act 2017, the Court will grant
arrest. For injunction on the other hand, the test laid down in CPC has to be
met as held in Raj Shipping Agencies V/s. Barge Madhwa & Anr.11
(k) The learned Single Judge has erred in holding that it was
not necessary for the Admiralty Court to pass an order of arrest against m.v.
7. Fourth Edition (2011) by Nigel Meeson and John A. Kimbell in paragraph 1.56 at page 22
8. 2nd Edition (2007) by Toh Kian Sing, SC at page 20
9. (1993) Supp. (2) SCC 433
10. (2014) SCC Online Bom 479
11. (2020) SCC OnLine Bom 651
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LIMA I because m.v. LIMA II, which was owned by defendant no.2, was
already arrested. That finding is erroneous. The Court assumes jurisdiction
over a vessel not by an order of injunction but by an order of arrest and just
because an order of arrest has been passed does not mean that it can pass
an injunction against another vessel because the Admiralty Court had
no jurisdiction in personam either against defendant no.2 or against m.v.
LIMA I.
(l) Plaintiff was not entitled to a decree against defendant no.3
because there was no pleading or averment or cause of action disclosed
against defendant no.3.
(m) As regards issue no.11 ("Whether the plaintiffs prove that
the supplies of bunkers constitute into supply of necessaries and accordingly
a Maritime claim/Maritime Lien against the 1 st Defendant vessel and thus
entitled to an arrest under the Admiralty Courts Act,1861?") , supply of
bunkers certainly constitute supplies of necessaries and it will be a maritime
Claim and not a maritime lien. Such a claim cannot be enforced against m.v.
LIMA I because supply of bunkers only constitutes a maritime claim and not
a maritime lien as held in Chrisomar Corporation V/s. MJR Steels Pvt. Ltd.
& Anr.12
(n) As regards issue nos.12 ("Whether the Plaintiffs prove that
m. v. LIMA I was the sister ship of the 1 st Defendant vessel at the time of the
grant of arrest of LIMA I on 31st October 2001?" ) and 13 ("Whether the
12. (2018) 16 SCC 117
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Plaintiffs prove that they are entitled to arrest another vessel [Respondent
Vessel - m v. Yim Kim ex LIMA I] in lieu of the 1 st Defendant vessel?"), these
will be purely academic because even assuming m.v. LIMA I was the sister-
vessel of m.v. LIMA II, it would make very little or no difference because
this, as the suit is framed, would not entitle plaintiff to a decree against m.v.
LIMA I or the bail amount deposited by defendant no.3.
(o) Appeal, therefore, requires to be allowed.
OUR FINDINGS :
17 Issue No.8 - "Whether the plaintiffs prove that the suit is
tenable against the Defendant No.2?"
(A) Action in personam against defendant no.2 (foreign defendant) not
within the jurisdiction of the Court is not maintainable :
(i) Respondent (original plaintiff) has sought to make a claim in
personam against original defendant no.2. Original defendant no.2,
however, is a foreign party who neither resides, nor carries on business
within the jurisdiction of this Court. There is also no record of defendant
no.2 having voluntarily submitted to the jurisdiction of this Court. In fact,
defendant no.2 has chosen to not enter appearance before this Court.
Therefore, the suit filed before this Court against original defendant no.2 is
not tenable.
(ii) It is trite law that a suit in personam qua a foreign
defendant who is not within the jurisdiction of the Court and who has not
voluntarily submitted himself to the jurisdiction, is not maintainable. This is
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evident from the following judgments :
(a) World Tanker Carrier Corporation V/s. S.N.P. Shipping
Services Pvt. Ltd. (Supra) -
"43. The presence of a foreign defendant who appears under
protest to contest jurisdiction, cannot be considered as
conferring jurisdiction on the court to take action. Unless a
foreign defendant either resides within jurisdiction or
voluntarily appears or has contracted to submit to the
jurisdiction of the court, it is not possible to hold that the
court will have jurisdiction against a foreign defendant. See
in this connection R. Viswanathan v. Rukn-ul-Mulk Syed
Abdul Wajid [AIR 1963 SC 1 : (1963) 3 SCR 22] (SCR at p.
51) and Raj Rajendra Sardar Moloji Nar Singh Rao Shitole v.
Shankar Saran [AIR 1962 SC 1737 : (1963) 2 SCR 577] (SCR
at pp. 587-588). This factor also, therefore, is against
respondents in the present appeals.
44. The Bombay High Court, therefore, should not have
entertained the two admiralty suits."
(emphasis supplied)
(b) Kohinoor Carpet Manufacturers V/s. Forbes Gokak Ltd. and
Another (Supra) -
"6. We then come to the other part of the argument namely
whether the suit against defendant No. 2 who does not carry
on business and or have the office within the jurisdiction of
this Court could be maintained. From the pleadings, though
it was contended that the suit is also filed as an action in rem
against vessel, there is nothing on record to show that when
the suit was filed that the vessel was within the admiralty
jurisdiction of this Court. In other words, there would be no
action in rem in so far as facts of the present case are
concerned. At the highest it would be action in personam.
Therefore, would an action in personam be maintained
against defendant No. 2 in this Court. Defendant No. 2 has
not submitted themselves to the jurisdiction of this Court. On
the contrary they have raised a plea contesting the
jurisdiction of this Court. In the light of that, the issue needs
to be answered. Gainful assistance may be made from the
judgment in the case of (World Tanker Carrier Corporation v.
S.N.P. Shipping Services Pvt. Ltd.)2, 1999 (1) Bom. C.R.
(S.C.) 196 : (1998) 5 SCC 310. The Apex Court dealing with
this aspect of the matter held as under:
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"The presence of a foreign defendant who appears under
protest to contest jurisdiction, cannot be considered as
conferring jurisdiction on the Court to take action. Unless a
foreign defendant either resides within jurisdiction or
voluntarily appears or has contracted to submit to the
jurisdiction of the Court, it is not possible to hold that the
Court will have jurisdiction against a foreign defendant." See
in this 4 connection (R. Vishwanathan v. Rukh-ul-Mulk Sayed
Abdul Wajid)3, 1963 (3) S.C.R. 22 : A.I.R. 1963 S.C. 1
(Rajendra Sardar Moloji Nar Singh Rao Shitole v. Shankar
Saran)4, 1963 (2) S.C.R. 577 : A.I.R. 1962 S.C. 1737.
7. This statement of law, therefore, is against plaintiff in the
present suit. That was action in what is known as limitation
action. Needless to say that to sue a foreign defendant in this
country, the foreigner either must be resident and or carry on
business. These are the principles applicable in Private
International Law. The only exception is if such party submits
to the jurisdiction. In the instant case, defendant has not. In
view of that, to my mind, suit against defendant No. 2 before
this Court as filed was not maintainable. Issue No. 2
therefore, has to be partly answered in the affirmative in as
much as the suit against defendant No. 2 will have to be
dismissed on the ground of want of jurisdiction."
(emphasis supplied)
(B) Action in rem not converted to action in personam :
(i) Furthermore, as original defendant no.2 has neither entered
appearance nor furnished security or submitted to the jurisdiction of this
Court, the suit filed by respondent (original plaintiff) continues to be an
action in rem against m.v. LIMA II, original defendant no.1. On this ground
also the suit is not maintainable against original defendant no.2.
(ii) It is trite law that an action in rem gets converted into an
action in personam if the owner of the vessel enters appearance, furnishes
security and submits to the jurisdiction of this Court. Until then, the suit
continues to be an action in rem against the vessel. In this regard, the
following judgments are of relevance -
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(a) Siem Offshore Redri AS V/s. Altus Uber (Supra) -
"47. It is clear from the above quoted portions from M.V.
Smart (Supra) which relies upon paragraphs 55, 56 and 58
of M.V. Elizabeth (Supra) that it is only after the owner enters
appearance and submits to jurisdiction and furnishes security
that the action in rem gets converted into an action in
personam. It is at this stage before proceeding further with
the action in personam, the Court will adopt the procedure
devised by the Full Bench in Golden Progress (Supra). Until
such time as the owner has entered appearance and
submitted to jurisdiction and furnished security, the action in
rem remains an action in rem and the vessel is available to
the Plaintiff as security in respect of its maritime claim which
is the subject matter of in personam proceedings by way of
arbitration against the owner or the party liable in personam.
Furnishing of security is also essential for the action in rem to
be converted to an action in personam because until such
time security is furnished, the vessel remains under arrest
and the action against the vessel continues in rem.
(emphasis supplied)
(b) Owners and Parties Interested in the Vessel M.V. Polaris
Galaxy V/s. Banque Cantonale De Geneve (Supra) -
"70. When two or more enactments operating in the same
field contain a non obstante clause stating that its provisions
will have effect notwithstanding anything inconsistent
therewith contained in any other law, the conflict has to be
resolved upon consideration of the purpose and policy
underlying the enactments. Mr. Vishwanathan, learned
Senior Counsel appearing for the Appellant, argued that
Section 14 provides for appeals from an interim order of a
Single Judge of a High Court under the Admiralty Act which
means an interim order in relation to an action in rem. Once
the owner of the Vessel enters appearance and submits to the
jurisdiction and provides security for release of the Vessel, the
Admiralty Action proceeds to trial as an action in personam
as in any other suit. This view finds support from the
judgment of this court in MV Elizabeth v. Harwan Investment
and Trading Pvt. Ltd."
(emphasis supplied)
(C) Errors in the findings of the learned Single Judge on this issue :
(i) Though the learned Single Judge has framed the issue and
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has sought to answer it in paragraph 7, the learned Single Judge held that
since the Court had passed an order of arrest against defendant no.1 (Lima
II), it had assumed jurisdiction over the "subject matter" of the suit. The
judgment of the learned Single Judge overlooks the position that the arrest
of a vessel will only confer jurisdiction over the vessel arrested and not
jurisdiction over the "subject matter" or over parties which are not within its
territorial jurisdiction.
Thus, the learned Single Judge has clearly erred in assuming
jurisdiction either over defendant no.2 or the "subject matter" of the suit.
(ii) Defendant no.2 is a company based in Turkey. Therefore,
defendant no.2 was not within the jurisdiction of this Court. If defendant
no.2 had furnished security for release of defendant no.1 m.v. LIMA II, we
could have held that an action in rem against defendant no.1 m.v. LIMA II
got converted into an action in personam against the owner, i.e., defendant
no.2, by virtue of defendant no.2 furnishing security and submitting to the
jurisdiction of this Court. None of that happened and, therefore, the suit
against defendant no.2 was a mere action in personam. The Court had no
jurisdiction against defendant no.2. The suit against defendant no.2 was not
maintainable. Therefore, there can be no decree against defendant no.2.
18 Issue No.9 - "Whether the suit is tenable against the Defendants
vessel without the plaintiffs having obtained arrest order of the said vessel?"
(A) m.v. LIMA I was not made a party to the suit :
(i) m.v. LIMA I was restrained from moving out of the Port of
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Calcutta by an ad-interim order dated 14th August 2001, confirmed
thereafter by an order dated 31 st October 2001. However, such an injunction
was passed against m.v. LIMA I without it being added as a party to the suit.
(ii) It is settled position in law that a party cannot be added to
an interlocutory application (here Notice of Motion) without the same being
a party to the suit. Since, m.v. LIMA I was not a party defendant to the suit,
she could not have been made a party to the notice of motion. On this
ground also, the appeal deserves to be allowed.
In this regard, it has been held by this Court in Movin F.
D'Souza V/s. Vivian daughter of Wilfred Foncesca and wife of Ravi Shetty
and Ors. (Supra) that -
"14. While parting with the matter, it has come to our notice
that in many matters, the Advocates join the parties directly
in a Notice of Motion without joining them in original
proceedings which is not in consonance with the Code of
Civil Procedure and office has not taken any objection in this
regard. We make an observation that whenever it is found in
the suit while executing the interim orders that third party is
in possession of the suit property, the interim order shall not
be executed against the third party unless the third party is
made a party to the main suit and pre-contests on merit to
the interlocutory orders. Otherwise, the Plaintiffs and other
parties to the suit may obtain interlocutory orders without
disclosing to the Court that some other party is in possession
of the property and which we find is a fraudulent move to be
adopted in the Court and therefore, we have observed that
henceforth no Notice of Motion should be entertained by the
office wherein the party who is not party in the suit and is
made a party in the Motion only."
(emphasis supplied)
(iii) Therefore, a party cannot be added simply as a party to a
notice of motion without being a party to the suit.
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(iv) Apart from the above, even under the Admiralty
(Jurisdiction and Settlement of Maritime Claims) Act 2017 ("Admiralty Act
2017") in order to proceed against a sister vessel (assuming that m.v. LIMA I
and m.v. LIMA II were sister vessels at the time of arrest), the sister vessel
has to be made a party to the suit and has to be proceeded against in rem.
This is evident from analysis of Section 5 of the Admiralty Act 2017. Though
this Act came into force only on 1 st April 2018, the purport of all these
provisions were always followed. This Court in Raj Shipping Agencies V/s.
Barge Madhwa & Anr. (Supra) in paragraphs 12 and 13 says :
12. Admiralty (Jurisdiction and Settlement of Maritime
Claims) Act, 2017.
13. The Admiralty Act came into force on 01 April 2018. The
preamble to the Admiralty Act provides "to consolidate the
laws relating to Admiralty Jurisdiction, legal proceedings in
connection with vessels, their arrest, detention, sale and
other matters connected therewith or incidental thereto."
(v) Section 5 reads as under :
"Arrest of vessel in rem
(1) The High Court may order arrest of any vessel which is
within its jurisdiction for the purpose of providing security
against a maritime claim which is the subject of an admiralty
proceeding, where the court has reason to believe that--
(a) the person who owned the vessel at the time when the
maritime claim arose is liable for the claim and is the owner
of the vessel when the arrest is effected; or
(b) the demise charterer of the vessel at the time when the
maritime claim arose is liable for the claim and is the demise
charterer or the owner of the vessel when the arrest is
effected; or
(c) the claim is based on a mortgage or a charge of the
similar nature on the vessel; or
(d) the claim relates to the ownership or possession of the
vessel; or
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(e) the claim is against the owner, demise charterer, manager
or operator of the vessel and is secured by a maritime lien as
provided in section 9.
(2) The High Court may also order arrest of any other vessel
for the purpose of providing security against a maritime
claim, in lieu of the vessel against which a maritime claim
has been made under this Act, subject to the provisions of
sub-section (1).
(emphasis supplied)
Section 5(1) contemplates that to order arrest of a vessel for
enforcement of a maritime claim, the vessel inter alia must be a subject of
an admiralty proceeding. This would necessarily mean that the vessel has to
be a party to the admiralty suit. Section 5(2) which contemplates arrest of a
sister-ship is subject to Section 5(1). Therefore, to obtain arrest of a sister-
ship, plaintiff has to satisfy all tests of Section 5(1) which would include to
make the sister-ship a party to the suit.
(vi) As noted earlier, m.v. LIMA I was never made a party
defendant to the suit. Hence, an order of arrest was never made against m.v.
LIMA I. No order of arrest but only an injunction order dated 14th August
2001, which was confirmed on 31st October 2001, was passed. As observed
in the subsequent paragraphs, it would be evident that the injunction cannot
be equated to arrest.
(B) Respondent (original plaintiff) could not have obtained an injunction
against m.v. LIMA I :
1. An in personam action like an injunction is not maintainable against a
vessel :
(i) An injunction or even an attachment cannot be made against
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a vessel. An injunction and attachment are actions in the realms of in
personam proceedings. No action in personam can proceed against a vessel.
Only an action in rem can be maintained against a vessel.
(ii) As stated above, in the present case, the suit filed by
respondent (original plaintiff) continued to be an action in rem against m.v.
LIMA II (where also the warrant was never executed upon the vessel). There
was no action in personam against original defendant no.2. Therefore, even
if m.v. LIMA I is assumed to be owned by original defendant no.2,
respondent (original plaintiff) could not have obtained an injunction against
m.v. LIMA I, especially since an injunction is in the nature of an action in
personam.
In Admiralty Jurisdiction and Practice, Fourth Edition (2011) by
Nigel Meeson and John A. Kimbell (See paragraph 1.56 at Page 22) (Supra),
the author opines as under :
"It is a feature of the Admiralty procedure that not only may
an action be brought in rem (so that jurisdiction may be
founded by service of process upon the ship notwithstanding
the absence of a means of establishing jurisdiction over the
shipowner in personam) but the ship may also be arrested so
as to provide security for the claim. This is often for practical
purposes the reason to invoke Admiralty jurisdiction as
opposed to proceeding by means of an ordinary in personam
claim in the Commercial Court. By arrest security is obtained
for the claim. This is to be contrasted to what is perceived to
the obtaining of security by means of a freezing injunction. A
freezing injunction is not security but an in personam
procedure that merely preserves a fund against which
execution may be taken if a judgment is subsequently
obtained by the applicant..."
(emphasis supplied)
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This clearly indicates that an attachment (equivalent to a
freezing injunction) is clearly in the realms of in personam proceedings.
2. Conjoining actions of in rem and in personam :
(i) What respondent (original plaintiff) attempted to do in the
present case was to move a hybrid action, i.e., in rem action against m.v.
LIMA II and an in personam action (by way of an injunction) against m.v.
LIMA I and that also without joining m.v. LIMA I as party defendant in the
suit. It is now settled that such hybrid writ conjoining an action in rem and
an action in personam is disapproved.
In Admiralty Law and Practice, 2nd Edition (2007) by Toh Kian
Sing, SC (See page 20) (Supra), the author says as under :
"It is no longer possible to bring a hybrid writ conjoining an
action in rem and an action in personam in England and
Singapore. In England it used to be possible to begin such
mixed actions in rem and in personam by means of a single
writ. Similarly, in Singapore, it was assumed in The Eishian
Maru that such a writ could be issued. The purpose of such
hybrid writs appears to be saving of costs, which is achieved
by issuing one writ instead of two. Such writs are no longer
permitted in England. They have also been judicially
disapproved of in Singapore because the Rules of the Court
do not provide for them and that, in any event, such a
practice of hybrid actions may in circumstances lead to
embarrassing complications. It follows that in both these
jurisdictions, admiralty jurisdiction must be invoked by
proceedings either in rem or in personam. The Malaysian
Rules of High Court 1980, similarly do not expressly provide
for such hybrid writs. The English and Singaporean position
has been adopted in Malaysia."
(emphasis supplied)
(ii) It is settled law that a vessel is treated as a juristic entity for
a limited purpose of an action in rem. The same cannot be stretched to treat
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a vessel as a juristic entity to initiate an action in personam.
(a) In M.V. Elisabeth & Ors. V/s. Harwan Investment and
Trading Pvt. Ltd. (Supra), the Apex Court held :
"55. An action in rem is directed against the ship itself to
satisfy the claim of the plaintiff out of the res. The ship is for
this purpose treated as a person. Such an action may
constitute an inducement to the owner to submit to the
jurisdiction of the court, thereby making himself liable to be
proceeded against by the plaintiff in personam. It is, however,
imperative in an action in rem that the ship should be within
jurisdiction at the time the proceedings are started. A decree
of the court in such an action binds not merely the parties to
the writ but everybody in the world who might dispute the
plaintiff's claim.
56. It is by means of an action in rem that the arrest of a
particular ship is secured by the plaintiff. He does not sue the
owner directly and by name; but the owner or any one
interested in the proceedings may appear and defend. The
writ is issued to "owners and parties interested in the
property proceeded against". The proceedings can be started
in England or in the United States in respect of a maritime
lien, and in England in respect of a statutory right in rem. A
maritime lien is a privileged claim against the ship or a right
to a part of the property in the ship, and it "travels" with the
ship. Because the ship has to "pay for the wrong it has done",
it can be compelled to do so by a forced sale. [See Bold
Buccleaugh (The) [Harmer v. Bell, (1851) 7 Moo PC 267 : 13
ER 884] ]. In addition to maritime liens, a ship is liable to be
arrested in England in enforcement of statutory rights in rem
(Supreme Court Act 1981). If the owner does not submit to
the jurisdiction and appear before the court to put in bail and
release the ship, it is liable to be condemned and sold to
satisfy the claims against her. If, however, the owner submits
to jurisdiction and obtains the release of the ship by
depositing security, he becomes personally liable to be
proceeded against in personam in execution of the judgment
if the amount decreed exceeds the amount of the bail. The
arrest of the foreign ship by means of an action in rem is thus
a means of assuming jurisdiction by the competent court.
58. The real purpose of arrest in both the English and the
Civil Law systems is to obtain security as a guarantee for
satisfaction of the decree, although arrest in England is the
basis of assumption of jurisdiction, unless the owner has
submitted to jurisdiction. In any event, once the arrest is
made and the owner has entered appearance, the
proceedings continue in personam. All actions in the civil law
-- whether maritime or not -- are in personam, and arrest of
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a vessel is permitted even in respect of non-maritime claims,
and the vessel is treated as any other property of the owner,
and its very presence within jurisdiction is sufficient to clothe
the competent tribunal with jurisdiction over the owner in
respect of any claim. [See D.C. Jackson, Enforcement of
Maritime Claims, (1985) Appendix 5] [ See D.C. Jackson,
Enforcement of Maritime Claims, (1985) Appendix 5, p. 437
et seq.] . Admiralty actions in England, on the other hand,
whether in rem or in personam, are confined to well defined
maritime liens or claims and directed against the res (ship,
cargo and freight) which is the subject-matter of the dispute
or any other ship in the same beneficial ownership as the res
in question."
(emphasis supplied)
(b) In Georim Oil Corporation V/s. M.V. Flag Mersinidi & Ors.
(Supra), a learned Single Judge of this Court held :
"21. At the outset, Mr.Dhond very fairly agreed that in India,
the law does not recognise claim for supply of bunkers or
claim for necessaries can have a maritime lien. Mr. Dhond's
submission was that the bunker supply contract provides that
the provisions thereof shall be governed by the law of United
States of America and under clause 14.4, it is provided that
the contract shall be binding between the seller and any
Buyer........ and the buyer includes master, owner of the vessel
through which bunker was supplied and hence the defendant
no. 3 was bound by it.
22. Mr. Dhond further submitted that the transaction in issue
was admittedly for supply of bunkers which were supplied to
and received by the vessel. Because the vessel received the
bunkers, and under Maritime Law a ship has an independent
juridical personality independent from its owners, a
subsequent disclaimer by the Master of the vessel is of no
avail. According to Mr. Dhond, the moment the supply is
effected, a contract between the plaintiff and the said vessel
sprang into existence. Mr. Dhond submits that whether the
disclaimer endorsed by the vessel or the pre-emptive
avoidance of such a disclaimer described by the plaintiff
should prevail can only be decided at the trial. As the
plaintiff has in its terms and conditions mentioned about US
Law as the applicable law and the defendant no. 2 has
accepted the same, the US Law must be enforced. As there is
privity with the vessel, the owners namely defendant no. 3
cannot argue there is no privity and hence US Law is validly
incorporated and applicable.
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23. I totally disagree with Mr. Dhond. A vessel cannot enter
into any contract with anybody. Only an owner or person
authorised by the owner can enter into a contract and bind
the vessel. In law a vessel may be looked at as an
independent juridical personality. But to say that there is
privity of contract with the vessel but not with the owners is
stretching it too far and is incorrect. An action in rem against
a vessel can be maintained only if there is an underlying
obligation of the owner and an action in personam is
maintainable against the owner. The contract is between the
plaintiff and defendant no.2. Copy of the contract has not,
admittedly, been even sent to the owner. There is not even an
averment that the owner, defendant no. 3, has held out that
they will be bound by the terms and conditions of the
contract that has been entered into between the plaintiff and
defendant no. 2.Therefore, it can never be accepted that U.S.
Law is applicable vis-a-vis, the plaintiff and defendant no. 3."
(emphasis supplied)
(iii) In any event, it needs to be borne in mind that a vessel can
never satisfy a test of attachment before judgment or an injunction. The
purpose of the vessel itself is to travel and leave a jurisdiction of a Court in
the course of its business. This is not done to defeat the claims of the
creditors. In this regards an injunction is different from an arrest. For arrest,
once the Court is satisfied with the test laid down in Section 5 of the
Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017, the
Court will grant arrest. For injunction on the other hand, the test laid down
in the Code of Civil Procedure, 1908 has to be met.
(a) In Raj Shipping Agencies V/s. Barge Madhwa & Anr.
(Supra), a learned Single Judge of this Court held :
"88. Also, to be borne in mind is the difference between an
arrest and an attachment. An arrest cannot be equated to an
attachment. A maritime claimant has a right in rem which he
is entitled to exercise by an arrest of the ship. The only test he
has to satisfy is to show that he has prima facie a maritime
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claim and identify the ship. As against this, an attachment
before judgment is a discretionary interim order that any type
of Claimant would be entitled to apply upon satisfying the
requirements of the Code of Civil Procedure (CPC). He is not
entitled to an attachment as a matter of right or as a manner
of enforcement of a right."
(emphasis supplied)
(iv) For the reasons above, an injunction could not have been
granted against m.v. LIMA I especially given that m.v. LIMA I was not a
party to the suit and that it was not proceeded against in rem or any bail
amount submitted in lieu of it.
(C) Errors in the findings of the learned Single Judge :
(i) The learned Single Judge held that it was not necessary for
the Admiralty Court to pass an order of arrest against m.v. LIMA I. This was
because the Court had already passed an order of arrest against m.v. LIMA II
which was owned by defendant no.2. The said finding is clearly erroneous.
The Court assumes jurisdiction over a vessel not by an order of injunction
but by an order of arrest. Merely because the Court had ordered arrest of
m.v. LIMA II (defendant no.1) does not mean that it can pass an injunction
against another vessel. This is because the Admiralty Court has no
jurisdiction in personam either against defendant no.2 nor against m.v.
LIMA I. It was, therefore, not permissible for the Court to proceed against a
vessel not a party to the Suit and in personam proceedings (by injunction)
against m.v. LIMA I, which in any case was not within the ordinary original
civil jurisdiction of the Court.
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19 Issue No.10 : "Whether the Plaintiff is entitled to a decree
against Defendants for the sum of US$ 100,798 with interest at 30% per
annum?"
The suit as filed has only sought decree against defendant
nos.1 and 2. Though defendant no.3 (i.e., appellant) was impleaded as
party, no decree was ever sought against defendant no.3. Therefore, the
term "defendants" will not include appellant (defendant no.3). In the plaint
it is only averred that a decree was sought in rem against defendant no.1
(m.v. LIMA II) and in personam against defendant no.2. There is no
pleading making a claim or alleging any cause of action against appellant
(defendant no.3). Therefore, no decree could be granted against appellant
(defendant no.3).
20 Issue No.11 : "Whether Supply of bunkers constitute supplies of
necessaries and whether the same constitutes a maritime Claim or a
maritime lien?"
(i) The issue is purely academic. There is no contest by either
parties that supply of bunkers constitutes a supply of necessaries. However,
the plaint proceeds on the basis that the said supply to m.v. LIMA II
(defendant no.1) was at the instance of defendant no.2. m.v. LIMA II, to
which bunkers were supplied, could not be eventually arrested, i.e., though
the order of arrest was granted, the warrant of arrest was never effected on
m.v. LIMA II (defendant no.1). Therefore, no arrest was effected.
(ii) m.v. LIMA I was injuncted but as mentioned above, it was
never arrested or made a party. Therefore, the maritime claim cannot be
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enforced against m.v. LIMA I. In any event, it is trite law that supply of
bunkers only constitutes a maritime claim. The same is not a maritime lien.
This position is clarified by the Hon'ble Supreme Court in Chrisomar
Corporation V/s. MJR Steels Pvt. Ltd. & Anr. (Supra).
(iii) In any event, the issue whether supply of bunkers
constitute a maritime claim or lien is academic. Plaintiff could not serve the
warrant of arrest upon defendant no.1 vessel, i.e., m.v. LIMA II. Since,
plaintiff wanted to proceed against another vessel in lieu of m.v. LIMA II,
i.e., m.v. LIMA I, it could in any event, never enforce a maritime lien. It is
settled position of law that a maritime lien can only be enforced against the
very vessel in respect of which it arose. A maritime lien cannot be enforced
against a sister-vessel.
21 Issue Nos.12 and 13: "Whether MV Lima-I was the sister ship of
Defendant No.1 vessel at the time of arrest of MV Lima-I on 31st October
2001?" and "Whether the Plaintiff was entitled to arrest MV Lima-I in lieu of
Defendant No.1 vessel?"
This issue is purely academic. Assuming m.v. LIMA I was the
sister-vessel of m.v. LIMA II, it would make very little or no difference. This,
as the suit is framed, would not entitle plaintiff to a decree against m.v.
LIMA I or the bail amount deposited by defendant no.3 (i.e., appellant) in
lieu of m.v. LIMA I. For the reasons above, since plaintiff could not proceed
against m.v. LIMA I itself. Therefore, even if m.v. LIMA I is held to be the
sister-vessel of m.v. LIMA II, plaintiff for the reasons aforesaid, still cannot
get decree against m.v. LIMA I or the bail amount deposited.
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22 For the reasons above, the appeal is liable to allowed and is
hereby allowed.
23 Appeal disposed accordingly. No order as to costs.
Consequently, interim application, if any, also stands disposed.
24 Appellant may apply to the Prothonotary and Senior Master for
return of security deposited pursuant to order dated 31 st October 2001
together with accumulated interest, if any.
(RAJESH S. PATIL, J.) (K. R. SHRIRAM, J.)
Gauri Gaekwad
