Bombay High Court
Aurobindo Pharma Limited vs Nippon Yusen Kabushiki Kaisha on 20 August, 2024
Author: A. S. Chandurkar
Bench: A. S. Chandurkar
2024:BHC-OS:12697
Diksha Rane comm. appeal l no.18060-23.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL APPEAL (L) NO.18060 OF 2023
IN
INTERIM APPLICATION NO.540 OF 2020
IN
COMMERCIAL ADMIRALTY SUIT NO.14 OF 2020
WITH
INTERIM APPLICATION (L) NO.18362 OF 2023
IN
COMMERCIAL APPEAL (L) NO.18060 OF 2023
AUROBINDO PHARMA LIMITED ..APPELLANT
(ORIGINAL PLAINTIFF)
VS.
NIPPON YUSEN KASUSHIKI KAISHA
& ORS. ..RESPONDENTS
(ORIGINAL DEFENDANTS)
------------
Mr. Prathamesh Kamat a/w. Mr. Vishal Shriyan, Mr. Arsalan A. Thaver
i/b. Mr. Vishal Shriyan for the appellant/original plaintiff.
Mr. Venkatesh Dhond, Senior Advocate a/w. Ms. S. Priya, Mr. Akshay
Kolsepatil, Mr. Abhimanyu Singh, Mr. S. Venkiteswaran, Mr. S. P.
Sudharshan, Mr. Siddhanth Tuli for respondents.
------------
Coram : A. S. Chandurkar & Rajesh S. Patil, JJ.
Date on which the arguments were heard : 10th July 2024.
Date on which the judgment is pronounced : 20th August 2024.
JUDGMENT (PER : Rajesh S. Patil, J.)
1. The appellant is original plaintiff in commercial admiralty suit,
who has challenged order dated 7th June 2023, passed in Interim
Application No. 540 of 2020 in Commercial Admiralty Suit No.14 of
Diksha Rane comm. appeal l no.18060-23.doc
2020. The said Interim Application No. 540 of 2020 was filed by
original defendant no.2 (respondent no.1 herein) seeking dismissal of
suit and return of security amount deposited by defendants.
2. By the impugned order dated 7 June 2023, learned Single
Judge of this Court has dismissed the commercial admiralty suit filed
against defendant no.1 - vessel (respondent no.2 herein) and directed
that the cash deposit, as security against arrest of vessel by defendant
no.2 (respondent no.1 herein) be returned to defendant no.2 along
with interest accrued thereon and the suit to proceed against
defendant no.2 and defendant no.3.
3. The parties are hereinafter referred to as per their
nomenclature before the Admiralty Court, for the sake of
convenience.
4. The plaintiff has filed commercial admiralty suit against
defendant no.1 - containership, defendant no.2 named as a corporate
entity having its office in Japan and defendant no.3 - a company
incorporated in India set up by defendant no.2. No reliefs are sought
against defendant no.3. It is the case of the plaintiff that the plaintiff
had entrusted defendant no.2 with carriage of pharmaceuticals goods
to be carried from Port of Nhava-Sheva to London, Gateway Port,
Diksha Rane comm. appeal l no.18060-23.doc
U.K. which was to be carried by vessel 'CCNI ARAUCO 6327', Bill of
Lading was issued by defendant no.3. The said vessel - 'CCNI
ARAUCO 6327' caught fire at Hamburg port. Consequently, the said
goods of the plaintiff were carried to its destination by another vessel
'IOS MONTE ALERGRE'. On the goods reaching to its Port, Bailee
rejected to take delivery of the goods. The consignee thereafter
loaded the goods in vessel "Colombo Express" from London Gateway
port to Chennai, India. Upon the receipt of the goods by plaintiff in
India, the plaintiff took samples and carried out their own analysis to
check the Assay Percentile to know the effectiveness of the drug as
per the specified standard. There was reduction and hence
degradation. Since the source or nature of impurity could not be
identified, the goods would have to be necessarily rejected. All these
goods were meant to be used in the manufacture of medicines for
human consumption, if there are any doubts as to the strength or
quality of the product the same needed to be destroyed. Hence, the
plaintiff put up these facts before the defendant no.3.
5. The plaintiff thereafter lodged a claim with their insurers, the
New India Assurance Company Limited, who appointed surveyors to
investigate the claims. The said surveyors carried a survey and
assessed the loss and submitted its report dated 30 th April 2018. The
Diksha Rane comm. appeal l no.18060-23.doc
plaintiff being not satisfied with the observations, comments and
remarks made in the said survey report, the plaintiff filed the
commercial admiralty suit against the defendants in the admiralty
jurisdiction of this Court in the Commercial Division. In the suit, the
plaintiff sought arrest of defendant no.1- vessel and for a money
decree for a sum of US dollars 8,25,600 together with interest at the
rate of 18% p.a. from the date of the filing of the suit till payment
and further a sum of Rs. 23,53,542/- together with interest at the
rate of 18% p.a. from the date of filing of the suit.
6. An application was made by the plaintiff for arrest of the vessel
- defendant no.1. The defendant no.3, who is an Indian company
filed a caveat against arrest being Caveat No. 153 of 2019. The
defendant no.3 gave an undertaking to give security in such sum not
exceeding US dollars 1 million in accordance with Rule 936 of the
High Court Original Sides Rules. The parties thereafter entered into
Consent Terms and agreed on the security to be furnished.
7. The defendant no.2 thereafter filed Interim Application
No.540 of 2020 for rejection of plaint. So also, defendant no.1 -
vessel filed Interim Application No.548 or 2020, seeking dismissal of
the suit against them. The plaintiffs after that filed their replies to the
Diksha Rane comm. appeal l no.18060-23.doc
interim applications.
8. After hearing both the parties, by its order dated 7 June 2020
the Single Judge of this Court allowed Interim Application No.548 of
2020 of defendant no.1 - vessel and partly allowed Interim
Application No.540 of 2020 filed by defendant no.2. The Single
Judge directed that the amount of security of Rs.6,50,77,230.68
deposited by defendant no.2 be returned back to defendant no.2
along with accrued interest thereon and the suit filed against
defendant no.1 - vessel was dismissed and a further direction was
given that the suit to proceed against defendant nos.2 and 3.
9. Being aggrieved by the order passed by the learned Single
Judge of this Court on 7th June 2023 in Interim Application No.540 of
2020 and Interim Application No.548 of 2020, the plaintiff has
preferred the present commercial appeal before this Court.
SUBMISSIONS
10. Mr. Prathmesh Kamat made his submissions on behalf of the
appellant (plaintiff).
(I) He submitted that NYK Theseus being the registered owner of
defendant no.1- vessel and defendant no.2 were one and the same
entities, hence defendant no.1 - vessel was liable to be proceeded
Diksha Rane comm. appeal l no.18060-23.doc
against for enforcement of the liability of defendant no.3.
(II) He submitted that the vessel which was to be arrested was a
sister vessel of 'CCNI ARAUCO 6327' the vessel which carried the
goods of the plaintiff from Port of Nhava-Sheva to London, Gateway
Port, U.K. Both being owned by the same group.
(III) He submitted that the plaintiff should have been given an
opportunity to establish their case at trial by leading evidence,
instead of dismissing the suit at the interlocutory stage.
(IV) He submitted that the contents of the plaint have to be treated
as correct while considering or entertaining an application filed by
the defendant under Order 7 Rule 11 of the CPC.
(V) He submitted that in the present case, the learned Single Judge
while granting the defendants Interim Applications proceeded on the
basis of the averments made by the defendants in the Interim
Applications.
(VI) He submitted that even on merits the plaintiff had a good case
as it was the duty of the carrier that while the goods were in their
possession, they should have taken proper care and delivered the
goods in good condition to the bailee.
Diksha Rane comm. appeal l no.18060-23.doc
(VII) He submitted that the proposition of law as laid down in the
judgments cited by the plaintiffs were not considered in its proper
perspective.
(VIII) He referred to three judgments to support his submission, viz.:
(a) Kamala and others Versus K. T. Eshwara SA and others1
(b) Sapura Dana SPV PTE. Ltd. vs. Barge Sapura 2000 -
Order passed by Single Judge of Bombay High Court in I. A.
(L) No. 8108 of 2021 in Commercial Admiralty Suit No. 21 of
2021.
(c) Judgment passed in Notice of Motion No. 767 of 2014 in
Admiralty Suit No. 84 of 2013, by Single Judge of Bombay
High Court in MSC Mediterranean Shipping Company vs. MV
MSC Clementina and others.
(IX) He submitted that therefore this Court should allow the present
appeal and set aside the impugned order passed by the Single Judge
of this court.
11. Senior Counsel Mr. Venkatesh Dhond appeared on behalf of
respondents (original plaintiffs) and made submissions.
(I) Mr. Dhond submitted that the defendant no.1 - vessel which is
sought to be arrested by the plaintiff and the vessel on which the
1 (2008) 12 SCC 661
Diksha Rane comm. appeal l no.18060-23.doc
goods of the plaintiff were carried from Port of Nhava - Sheva to
London, Gateway Port, U.K., both the vessels are owned by two
different entities. Therefore, they are not sister concern which is a
fact as can be seen in the averment made in the plaint. Therefore, the
suit is not maintainable and should have been dismissed and has
been rightfully dismissed by the Single Judge of this court as against
the defendant no.1- vessel.
(II) He referred to the averments made in the plaint and took us
through the paragraph nos.8, 10, 36, 37, 39, 40 and 41 of the plaint,
to show what are the submissions made by the plaintiff, in order to
file the suit against the defendants.
(III) He thereafter referred to Exhibit 'O' of the plaint which is a
table referring to the various ships and the registered owners and
ship Managers of such ships. He submitted that the said list does not
mention the name of defendant no.1 - vessel.
(IV) He thereafter referred to the impugned order and more
particularly to paragraph 23 of the impugned order.
(V) He also referred to paragraphs nos.21, 24 and 25 of the
judgment of the Supreme Court in Kamala (supra). He submitted that
Diksha Rane comm. appeal l no.18060-23.doc
the ratio laid down in said judgment does not support the plaintiff
and in fact supports the case of the defendants.
(VI) He thereafter referred to the judgment of Sapura (supra) of
Bombay High Court and referred to paragraph nos.1, 2 (b) which
refers to the concept of non-sister vessel. He also referred to
paragraphs no.14,16,18 and 21 in order to prove the point of goods
supplied. He submitted that therefore even the judgment of Bombay
High Court in Sapura (supra) does not support the case of the
plaintiff and in fact is in favour of the arguments made on behalf of
the defendants.
(VII) He thereafter referred to the judgment of MSC Meditriann
(supra) and pointed out paragraph no.4, 8(2) and 40 of the said
judgment. He submitted that after going through these paragraphs
one can see that even this judgment supports the case of the
defendants and is of no help to the plaintiff.
(VIII) He thereafter cited Section 5(1) of the Admiralty Act, 2017.
(IX) He submitted that the learned Single Judge has carefully
considered the submissions made by both the parties and have also
considered the averments made in the plaint and taking into
Diksha Rane comm. appeal l no.18060-23.doc
consideration the relevant judgments on the point has rightly
dismissed the suit against defendant no.1- vessel and has directed
that the amount deposited by defendant no.2 should be returned
back.
(X) Mr. Dhond also further submitted that there are no averments
in the plaint that there was a fraud committed by the defendants.
Therefore, there was no question of lifting of a corporate veil.
(XI) He submitted that the present appeal is devoid of merits and
the same should be dismissed with costs.
ANALYSIS AND CONCLUSION:
12. We have heard learned counsel for both the sides and have also
gone through the pleadings.
13. The present Commercial Appeal challenges an impugned order
dated 7th June 2023 passed by the learned Single Judge of this Court
whereby the Interim Application filed by the defendant no.1 - vessel
has been allowed thereby dismissing the Commercial Admiralty Suit
filed against defendant no.1 - vessel, and the Interim Application
filed by the defendant no.2 has been partly allowed thereby directing
the return of security amount deposited by defendant no.2 along with
Diksha Rane comm. appeal l no.18060-23.doc
accrued interest.
14. The plaintiff claim is for damages or loss caused to its goods
carried on board the vessel m.v. CCNI ARAUCO 6327, which was
covered by bill of lading dated 8th August 2016 issued by defendant
no.3 as agent of defendant no.2.
15. The defendant no.3 had filed a caveat against the arrest of
defendant no.1 - vessel in this Court. The defendant no.3 in order to
avoid the order for arrest of defendant no.1- vessel on without
prejudice basis offered to furnish security for the plaintiff's alleged
claim in the suit, by way of a club letter of undertaking and to replace
the club letter of undertaking by a bank guarantee. This was accepted
by the Single Judge of this Court by his order dated 26 th September
2019. Accordingly, on 18th December 2019, the defendant on a
without prejudice basis furnished security for the plaintiff's claim in
the suit by way of cash deposit.
16. Thereafter, on 20th January 2020 the defendant no.2 filed an
Interim Application under the provisions of Order 7, Rule 11 of C.P.C.,
seeking therein dismissal of the suit and the security furnished by the
defendant by way of cash deposit be returned back to the defendant.
So also, Interim Application was filed by defendant no.1 - vessel for
Diksha Rane comm. appeal l no.18060-23.doc
dismissal of the suit.
17. We have gone through the averments made in the plaint. The
plaintiff claim is that the plaintiff's cargo was carried on board the
vessel m.v. CCNI ARAUCO 6327 from Nahva-Sheva port. The said
vessel m.v. CCNI ARAUCO 6327 is not made party defendant in the
present suit. Neither the owner of vessel m.v. CCNI ARAUCO 6327
has been made as a party defendant. It is the claim of the plaintiff
that defendant no.1 - vessel should be considered as a sister vessel of
m.v. CCNI ARAUCO 6327 as both the vessels belonged to the same
group company 'NYK Line'.
18. Plaintiff claimed that defendant no.1 - vessel and the vessel on
which the cargo of the plaintiff was carried m.v. CCNI ARAUCO 6327
should be considered as sister vessels since the owner of both the
vessels is a common group 'NYK Line'.
19. Under the Admiralty Law, there is no doubt that a sister ship of
the owner of the vessel can be arrested for maritime claim. The said
provision one finds in Section 5 of the Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017 (for short 'Admiralty Act').
20. In the present proceedings, the plaint goes on a footing that
Diksha Rane comm. appeal l no.18060-23.doc
defendant no.1 - vessel is owned by a one ship company, and
defendant no.2 is managing the defendant no.1 - vessel. Paragraph 7
of the plaint reads as under :
"7. The registered owner of the Defendant No.1 vessel is NYK
THESEUS CORP. S.A. a one-ship Company incorporated under the
laws of panama. The Defendant vessel is operated, managed and
controlled by Defendant No.2. The registered owner of the
Defendant vessel is also a company which is owned, financed,
operated, funded, managed and controlled entirely by Defendant
No.2. For all practical purposes Defendant No.2 is the owner and/or
deemed owner of the 1st Defendant vessel. An Equasis Report
showing the ownership and other details of the Defendant NYK
THESEUS vessel is annexed hereto and marked as Exhibit "A"."
21. Therefore, the plaint proceeds on the basis that defendant no.1
is a vessel which did not carry the subject goods. The owner of
defendant no.1 vessel is not a party defendant in the present
proceedings. It further states that the owner of defendant no.1 vessel
is a company which is owned, financed and controlled by defendant
no.2. As per the cause title of plaint, defendant no.2 is registered and
carrying on business at Japan. Paragraph 7 further states that for all
practical purposes defendant no.2 is an owner and/or deemed owner
of defendant no.1 vessel. Paragraph 5 of the plaint states that
defendant no.3 is joined as a proforma defendant whose presence
may be necessary for the purpose of the suit. However, no reliefs are
sought against defendant no.3. Paragraph 4 of the plaint reads as
Diksha Rane comm. appeal l no.18060-23.doc
under:-
"4. Defendant No.2 has set up a 100% subsidiary in India called
NYK Line (India) Pvt. Ltd. Defendant No.3 abovenamed, which has its
office at 12th Floor, "Windfall" Sahar Plaza Complex, Sir M.V. Road,
Andheri (East), Mumbai 400 059. Defendant No.2 owns 100% of the
share capital of Defendant No.3. Defendant No.3 canvases and solicits
business in India in the name of NYK Line. Defendant No.3 advertises
for and on behalf of NYK Line in India and also issue Bills of Lading
on their behalf. They also collect freight in respect of cargoes shipped
out of India on NYK Line vessels and remit the same to Defendant
No.2. Thus Defendant No.2 is deemed to carry on business in India
through Defendant No.3 NYK Line (India) Pvt. Ltd. at its address in
Mumbai."
22. Therefore, there is no dispute that the owner of defendant no.1
vessel is not being joined in the plaint. The ship on which the goods
were carried that vessel is not party to the present proceedings.
Neither the plaintiff could prove that owner of the said subject vessel
and the owner of the defendant no.1 vessel is the same entity.
23. Only making an averment and submitting that both the owners
of the vessels are group companies, the plaintiff at this stage is not
able to prove the said fact. Therefore, prima facie, there is no case is
made out by the plaintiff. Hence, we are of a view that since
defendant no.1 - vessel is not a sister vessel of m.v. CCNI ARAUCO
6327, the plaintiff's suit claim will not fall under the provisions of
Section 5(2) of the Admiralty Act.
24. The claim of the plaintiff is that defendant no.1 - vessel is a
Diksha Rane comm. appeal l no.18060-23.doc
one ship company. The said ships are owned by one ship company,
however, they belong to the group 'NYK', which is one of the biggest
ship company in the world ranked sixth.
25. We have considered the submission of the plaintiff, however,
the plaintiff was not able to show us any provisions in law whereby
there was any kind of a bar of floating a concept called as one ship
company. Since the vessel on which the plaintiff's cargo was carried
was m.v. CCNI ARAUCO 6327, is owned by a company who is not
made a party to the present proceedings and the defendant no.1 -
vessel is owned by a different ship company, the argument of the
plaintiff on this count fails, and not accepted by us.
26. Division Bench of this Court in the decision in Polygreen
International DMCC vs. Mt Pamboor 2 and Ors. 2, in Paragraph nos.
53 and 55 held as under:-
"53. Can this alter ego/pierced corporate veil Jurisprudence be
invoked willy-nilly every time it is found that one company is the
holding company or parent of another? There is enough law to
indicate that there is nothing so very wrong in one family setting up
with common shareholding multiple companies, each holding
different assets. A different consideration may arise when a company
is a debtor, and it deliberately incorporates another company to move
assets away to put them beyond the reach of the creditors. There,
courts have frowned upon these attempts and have always allowed a
creditor to follow the assets into the hands of the so-called separate
company. But what is required is that there must be an element of
deceit, an attempt at fraud, something colourable. In Cax & Kings Ltd
v SAP India Pvt Ltd & Anr. (2022 SCC Online SC 570; paragraph 90),
2 2002 SCC OnLine Bom 1704
Diksha Rane comm. appeal l no.18060-23.doc
the Supreme Court said that corporate law doctrines such as piercing
the veil and alter ego are a means by which to identify fraudulent
activity. Though this was in the context of binding third parties to
arbitration clauses, the principle remains. Similarly, in Vodafone
International Holdings BV v Union of India, (2012) 6 SCC 613:
paragarph 74 the Supreme Court held (in the context of taxation)
that to properly invoke the doctrines of beneficial ownership, lifting
the corporate veil or concept of alter ego. It must be shown that the
transaction was a colourable device. When this is successfully done,
the separate corporate juristic entity principle will be ignored, being
seen as a device or a conduit "In the pejorative sense".
55. Therefore, to deploy the 'alter ego' doctrine justifying a piercing of
the corporate veil, the defendant or debtor must, to use a Dickensian
phrase, be shown to be an "Artful Dodger". Otherwise, the very
essence of corporate/company law and its fundamental precept that
every company is a distinct legal entity would get effaced. The mere
commonality or common directorships or interlocking shareholding
are by themselves not even prima facie evidence or one being the
alter ego of the other."
(Emphasis supplied)
27. It is settled law, as held in the judgment of Kamala (supra) by
the Supreme Court, that while dealing with application filed under
Order 7, Rule 11 of C.P.C., what is relevant are the averments made
in the plaint. In the present proceedings taking into consideration the
averments of the plaint as discussed above, we are satisfied that the
admiralty suit will not be maintainable against defendant no.1 -
vessel.
28. In the judgment referred by the plaintiff of Sapura (supra), the
application filed by defendants, seeking declaration that order of
arrest of defendant no.1 - vessel was wrongfully and for refund of
security was rejected by learned Single Judge. However, the learned
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counsel informed that Appeal against the said order is pending. In the
said proceeding dismissal of the suit was not sought. So also, the
plaintiff had supplied the equipment and personnel to the defendant
no.1 - vessel. In the present proceedings, the plaintiff had not even
made the vessel which carried the goods of plaintiff as party
defendant to the suit.
29. In the judgment cited of Bombay High Court of MSC
Mediterranean Shipping Company (supra), the State of Maharashtra
had filed suit claiming compensation to the fisherman who suffered
loss due to the spill from vessel m.v. MSC Chitra. It was claimed that
defendant no.1 - vessel, and m.v. MSC Chitra were sister ship, and
defendant no.3 were the demise charter/managers of defendant of
both vessels. Therefore, the Court held that prima facie, the
application under Order 7, Rule 11 can't be granted. As the facts in
this proceeding were quite different than the present proceeding. The
ratio laid down will not be applicable to present proceeding.
30. Admittedly, the plaintiff's goods were not supplied in
defendant no.1 - vessel. So also, the defendant no.1 - vessel is not a
sister vessel of the vessel m.v. CCNI ARAUCO 6327 in which
plaintiff's goods were shipped, therefore, the plaintiffs claim will also
Diksha Rane comm. appeal l no.18060-23.doc
not fall under Section 5(1) of the Admiralty Act.
31. We are satisfied that the claim of the plaintiff against
defendant no.1 - vessel, will not fall under Section 4 (Maritime
Claim) of the Admiralty Act.
32. While allowing the Interim Application of the defendant, the
learned Single Judge held that plaintiff had made no efforts to
attribute an element of fraud in the plaint. It was also further held
that no effort was made to show as to who was registered owner of
the vessel m.v. CCNI ARAUCO 6327, against whom the Maritime
claim primarily arose. It was not the case of the plaintiff that the
defendant no.2 is the demise charterer of defendant no.1 - vessel and
the plaint was silent about the claim of fraud or dishonest intent on
the part of defendant no.2 so as to justify the lifting of corporate veil.
Therefore, the learned Single Judge came to a finding that in such a
situation the suit requires to be dismissed qua the defendant no.1 -
vessel and the amount deposited by the defendant no.2 requires to be
returned back. However, the claim of the defendants as regards the
suit being barred by the law of limitation and as regards the
jurisdiction bar, the same would be a question to be decided after the
issues are framed and the pleadings are laid by the parties. On the
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said findings the learned Single Judge has dismissed the suit against
defendant no.1 - vessel and has also directed to return the cash
deposit to the defendant no.2 with accrued interest.
33. We find no infirmity in the findings recorded by the learned
Single Judge, hence, the present Appeal filed by the plaintiff is
rejected. No costs.
34. The Interim Application is also disposed of.
[ RAJESH S. PATIL, J. ] [ A.S. CHANDURKAR, J. ]
35. At this stage the learned counsel for the appellant seeks
continuation of the interim direction staying the refund of security
deposit. The learned counsel for the respondent opposes the said
request. In the facts of the case, this judgment shall operate after a
period of four weeks from today.
[ RAJESH S. PATIL, J. ] [ A.S. CHANDURKAR, J. ]
Signed by: Diksha Rane
Designation: PS To Honourable Judge
Date: 20/08/2024 20:24:34
