IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
ADMIRALTY SUIT No. 6 of 2012 with OJ CIVIL APPLICATION No. 144 of 2012 in ADMIRALTY SUIT No. 6 of 2012 with OJ CIVIL APPLICATION No. 145 of 2012 in ADMIRALTY SUIT No. 6 of 2012 with OJ CIVIL APPLICATION No. 188 of 2012 in ADMIRALTY SUIT No. 6 of 2012
For Approval and Signature:
HON'BLE SMT. JUSTICE ABHILASHA KUMARI
============================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the judgment ? No Whether this case involves a substantial question of
4 law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? No 5 Whether it is to be circulated to the civil judge ?
No ==============================================================
SRI LANKA TELECOM PLC Plaintiff(s)
Versus
M V ACX HIBISCUS IMO 9159141 Defendant(s)
=====================================================
Appearance :
MR MIHIR J THAKORE, SENIOR ADVOCATE WITH MR SHAMIK BHATT FOR M/S SINGHI & CO for Plaintiff MR MIHIR H JOSHI, SENIOR ADVOCATE WITH MR AMITAVA MAJUMDAR, MR ADITYA KRISHNAMURTHY AND MS RUJUTA R OZA for the Intervenor Bhuval Industries =====================================================
CORAM : HON'BLE SMT. JUSTICE ABHILASHA KUMARI
Date : 18/10/2012
C.A.V. JUDGMENT
1. The plaintiff, Sri Lanka Telecom PLC, is a Company incorporated and existing under the laws in force in Sri Lanka, having its registered office at the address mentioned in the cause title of the Plaint. It is stated in the Plaint that the plaintiff is a public listed Company in Sri Lanka and is the premier integrated telecommunications provider and the leading broadband and backbone infrastructure service provider in that country.
2. It is averred that the defendant, M.V. ACX Hibiscus–IMO 9159141, is a Motor Vessel, flying a Panamanian flag and is registered at St.Kitts and Nevis and is presently at the port and harbour of Alang, Bhavnagar, within the Admiralty and Vice Admiralty jurisdiction of this Court. As far as the plaintiff is aware, the owner of the defendantVessel is Tastec Yokohama, Japan. As per the averments made in the Plaint, the suit has been filed under extreme urgency and with limited information available on hand because the defendantVessel, which is stated to have caused loss and damage to the plaintiff, is likely to be beached at Alang, Bhavnagar, for demolition very shortly. It is stated in the Plaint that if the Vessel is fully demolished, the plaintiff's suit would be rendered infructuous.
3. As per the averments made in the Plaint, in the year 2006, the plaintiff entered into an agreement with Dhivehi Raajjeyge Gulhun (Plc) (Dhiraagu) (a joint venture Company in which 48% is owned by the Government of Maldives and 52% by Cable and Wireless Communications) for the construction and maintenance of Optical Fiber Submarine Cable System between Sri Lanka and the Maldives. The submarine cable landing point in Sri Lanka is at Colombo. The defendantVessel arrived at the anchorage of the port of Colombo on 14.04.2012 and was anchored in the vicinity of one of the submarine cables linking Sri Lanka and Maldives. It is stated that from 14.04.2012 to 18.04.2012, the defendantVessel was anchored at the outer anchorage of the port of Colombo. That it was observed by the plaintiff's Landing Station at Colombo on 18.04.2012, that the defendantVessel was in the vicinity of the cable. The plaintiff accordingly informed the Port Control that the defendantVessel was dangerously close to the said cable. The Harbour Master immediately informed the Port Control to instruct the defendantVessel to move from its position. It is further stated that at, or about, 9:50 pm on 18.04.2012, it was observed that the said cable was damaged at a location 26.7 kilometers away from Colombo Landing where the defendantVessel was anchored. It is the case of the plaintiff that the defendantVessel is guilty of negligence in causing damage to the physical integrity of the said cable. This damage has caused immense loss to the plaintiff. The particulars of the negligence of the defendant Vessel have been set out in the Plaint. It is stated by the plaintiff that the damage was caused recklessly, with knowledge that such loss would probably result to the plaintiff and the owner of the defendantVessel is vicariously liable for all acts, negligence and defaults committed by the Master and crew of the defendantVessel. It is stated that the plaintiff has suffered loss and damage aggregating to about USD 2.2 million as per the particulars of claim at Exhibit E, which loss or damage has been caused to the cable by the defendantVessel. Under the above circumstances, the plaintiff has filed the suit seeking arrest, detention and condemnation of the defendantVessel together with her hull, tackle, engines, gears, machinery, bunkers, apparel, furniture, equipment, paraphernalia and appurtenants to recover the sums payable to the plaintiff, as claimed therein. It is further stated in the Plaint that the defendantVessel is on its funeral voyage to the port of Alang, Bhavnagar. The plaintiff apprehends that the defendantVessel may be sold to a ship breaker and will be beached at Alang, Bhavnagar, for demolition. If the defendant Vessel is beached, it will be demolished in a very short span of time, rendering the suit of the plaintiff infructuous; therefore, it is necessary to issue an urgent order of arrest and detention of the defendantVessel, as prayed for.
Further, the plaintiff has prayed that the defendantVessel be ordered and directed to pay the plaintiff, a sum of USD 2.219 million (as per the particulars of the claim at Exhibit E) together with future interest thereon at the rate of 10% p.a. on USD 2.219 million from the date of filing of the suit till payment and/or realisation.
4. On 04.05.2012, this Court (Coram: R.M.Chhaya, J.) issued an order for arrest of the defendant Vessel.
5. The Ship Breaker, M/s.Bhuval Industries, has filed an application for intervention. It is stated on behalf of the Intervenor that as the Vessel is in a dilapidated condition, there is a possibility of oil spillage, therefore, the Intervenor be permitted to remove the Bunkers and sell the same and the sale proceeds would be deposited in a separate account upon intimation to the Court and the plaintiff. The said amount would not be withdrawn till the suit is heard finally.
6. By order dated 20.06.2012, this Court, after hearing learned Senior Counsel for the Intervenor and the plaintiff, permitted the Intervenor to remove the Bunkers from the defendantVessel and to sell the same, on condition that the sale proceeds of the consignments would be deposited in a separate account, with intimation to this Court and to the plaintiff. It was further directed that the amounts so deposited would not be withdrawn by the Ship Breaker till the final decision of the suit and that the Ship Breaker would be permitted to undertake activities
a ground for contending that the arrest of the defendantVessel cannot be continued.
7. The Intervenor has, by filing a separate application, raised a preliminary objection against the very maintainability of the suit on the ground that it is liable to be dismissed as the defendantVessel was beached prior to the order of arrest being passed by this Court. It is stated by the Intervenor in the application that the defendantVessel had already been beached on 04.05.2012 at 2:30 pm, at which point of time there was no arrest. The arrest order came to be passed at 4:30 pm on 04.05.2012, after the beaching of the Vessel. The Intervenor has annexed a copy of a Certificate dated 05.05.2012 No.PO/Alang/T/643 issued by the Gujarat Maritime Board, stating that the defendantVessel was beached on 04.05.2012 at 2:30 pm. It is stated that this Court (Coram: R.M.Chhaya, J.) passed an order on 04.05.2012, directing the arrest of the defendantVessel in the second session, that is, after 2:30 pm, whereas learned counsel for the plaintiff took permission from Honourable the Chief Justice of this Court on 04.05.2012 at 4:00 pm, to mention the matter before the Court at 4:30 pm; and this Court passed the order of arrest thereafter. It is further stated that on 08.03.2012, the Ship Breaker entered into a Memorandum of Agreement (MoA) with Navamosa Navigation S.A., Nevis for purchase of the defendantVessel for a consideration of USD 3,876,900 (United States Dollars Three Million Eight Hundred and Seventy Six Thousand Nine Hundred Only). A copy of the MoA dated 08.03.2012 and its subsequent addendums has been annexed at AnnexureB to the application. It is further stated that pursuant to the said MoA, on 22.03.2012, the Intervenor opened a Letter of Credit in favour of Navamosa Navigation SA from State Bank of India, Bhavnagar Branch, for the sum of USD 3,876,900. Payment under the said Letter of Credit was made on 03.05.2012. That on 03.05.2012, at 10:30 hrs., the Intervenor had taken physical delivery of the defendantVessel, which is evident from the Physical Delivery Certificate issued by the Master of the defendantVessel. As per the case of the Intervenor Ship Breaker, the Ship Breaker had obtained permission for the beaching of the defendantVessel from the Gujarat Maritime Board on 04.05.2012, allowing the defendantVessel to be beached at Plot No.169M Alang/ Sosiya. The Intervenor filed the Bill of Entry for Home Consumption being No.SBY/SI/20122013 with the Customs Department at Bhavnagar for import of the said ship for breaking, and the total duty payable for the import of the same was Rs.3,88,13,852/ (Rupees Three Crores Eighty Eight Lakhs Thirteen Thousand Eight Hundred and Fifty Two Only). The Intervenor remitted this sum by way of customs duty for the import of the defendantVessel for ship breaking/ recycling purposes, which is evident from Challan No.TR6/SBY/93/201213 dated 04.05.2012 in the State Bank of India, Bhavnagar (Copy annexed at AnnexureG). On the basis of the request made by the Intervenor to the Customs Department to beach the defendantVessel, the Customs Department issued a “No Objection” (to the beaching of the defendantVessel). The “No Objection” endorsement from the Superintendent of Customs, Bhavnagar, is annexed at AnnexureH to the application.
8. It is the case of the Intervenor that the defendantVessel is no longer amenable to an order of arrest, once the Intervenor has filed a Bill of Entry for Home Consumption in relation to the import of the defendantVessel into India. It is stated that in these circumstances, as the defendantVessel ceases to be a ship and would be considered, in law, to be goods imported into India, the Admiralty Suit is not maintainable as the order of arrest was passed after the defendantVessel was beached.
9. On merits, it is stated in the application that the allegation that the dropping of anchors from the defendantVessel led to the damage of the cable is factually incorrect, as prior to the Intervenor purchasing it, the Vessel was involved in a maritime casualty in which its bow was badly damaged. As a consequence of the maritime casualty, the said Vessel came to be scrapped and the Intervenor purchased it for the purpose of scrapping. It is stated that as a result of the maritime casualty, the defendantVessel was not in a position to drop its anchors and was, in fact, being towed to Alang. On 18.04.2012, while the defendantVessel was enroute from Singapore to Alang, it had only one anchor which was non operational. It is further stated by the Intervenor that the plaintiff has failed to substantiate the particulars of claim under any of the heads of claim and has chosen to make arbitrary, unconnected and immaterial claims simply to make the alleged claim look big. It is further stated in the application that the order of arrest of the defendantVessel dated 04.05.2012, passed by this Court will cause irreparable injury to the Intervenor, which cannot be compensated in terms of money, as the Intervenor would be restrained from demolishing the defendantVessel even after having purchased it for the said purpose. That, the plaintiff is not an Indian Company and it can prosecute its purported claim in an action in personam against Tastec of Yokohama, Japan, before the appropriate Court in Japan, if so advised. The Intervenor is continuing to incur crippling losses and its business is coming to a grinding halt as a result of the exparte order of this Court dated 04.05.2012. Admittedly, the plaintiff has no assets in India against which the Intervenor can enforce its claim for the wrongful arrest/injunction against the demolition of the defendantVessel.
10. On the above grounds, the Intervenor has prayed that the order of arrest of the defendantVessel dated 04.05.2012, be vacated and that the Admiralty Suit be dismissed, with costs.
11. Mr.Mihir H.Joshi, learned Senior Advocate with Mr.Amitava Majumdar, learned counsel for the Intervenor has made the following submissions:
(A) That only a legally navigable Vessel is amenable to an order of arrest. This Court, in the case of Destel Marine Limited v. M.V. Star 7 Admiralty Suit No.1 of 2011 decided on 11.05.2011, approved the judgment of the Division Bench of the Bombay High Court in the case of Communications and Commerce International Pvt. Ltd. v. M.V.Saba, wherein it is held that the dictionary meaning of `ship' is a “vessel employed in navigation and that navigability of a vessel is a dominant factor in deciding whether it is a ship or not. Navigability of a vessel would not depend only on its mechanical navigability, but would also depend on its legal navigability. The same view was taken by the Bombay High Court in New Era Shipping Limited v.
M.V.P. Express – 2007(6) Bom.C.R. 138, holding that the defendantVessel has ceased to be legally navigable when it was imported into India for demolition / ship breaking.
(B) That the Vessel had already been beached at 2:30 pm on 04.05.2012, as confirmed by the Gujarat Maritime Board and, therefore, at 4:30 pm on 04.05.2012, there was no Vessel. The character of the Vessel had been converted into goods and all characteristics of a ship/ Vessel had been lost, therefore, the Admiralty Court had no jurisdiction to issue the arrest order. At the time of arrest, the Vessel had been legally and physically incapable of navigation. The plaintiff was aware that the Vessel was coming for beaching. The onus was on the plaintiff to show that the Vessel is physically and legally in a navigable condition. Once the Vessel is damaged and is no longer in a navigable condition, it ceases to be a ship and becomes “goods”, more especially so if it is purchased for demolition, as in this case.
(C) The Bill of Entry was filed on 03.05.2012. The customs duty was paid on 04.05.2012. The “No objection” endorsement for beaching was given by the Competent Authority on 04.05.2012, and the Vessel was beached on 04.05.2012 at 2:30 pm, which facts are clearly borne out from the documents on record. It is not the case of the plaintiff that the said documents are false or concocted and there can be no dispute regarding the same.
(D) That the plaintiff was aware that the ship was on its funeral journey for the purpose of demolition, and the Ship Breaker has purchased the ship with the sole intention of demolishing it. The Ship Breaker has paid customs duty for the said purpose. The ship is beached and is not floating on water, therefore, it is no longer a Vessel.
(E) That, the Gujarat Maritime Board has issued a Certificate on 05.05.2012, stating that the defendantVessel was beached on 04.05.2012 at 2:30, at the Plot of the Intervenor. The plaintiff has placed reliance on a printout / snapshot taken from a website www.marinetraffic.com to indicate that the Vessel was anchored/moored near the Port of Alang and was not beached. It is pertinent to note that the printout on which the plaintiff has placed reliance does not state the date and time on which the details of the defendantVessel have been set out. As per the observations made by the Bombay High Court in New Era Shipping Ltd. V.
M.V.P Express and Ors and M/s.Hatimi Steels (supra), which have been relied upon by this Court in the case of Destel Marine Limited v. M.V.Star 7 (supra), when the Bills of Entry and the relevant documents clearly establish that the Vessel was beached for the purpose of demolition, for which permission was sought, then it is not possible to discard the documents in that behalf. In the present case, it is not the case of the plaintiff that the documents are false. In these circumstances, the original Certificate issued by the Gujarat Maritime Board should be considered as authentic. The plaintiff was served with the application of the Intervenor as early as 10.05.2012, and had more than enough time to verify whether the document is authentic, or not.
Moreover, the Certificate issued by the Gujarat Maritime Board is a public document.
(F) That, maritime lien is a part of maritime claim and cannot be enforced against a Vessel which is not legally navigable. In Destel Marine Limited v. M.V.Star 7 (supra), this Court came to a conclusion that the Vessel was not amenable to an order of arrest as its owner had imported it for the purpose of demolition and had paid customs duty. The Vessel had been beached before the order of arrest had been passed. As the suit was dismissed on the preliminary contention raised regarding beaching of the Vessel before the order of arrest was passed, the Court did not discuss the other issues, including the issue whether the plaintiff therein had a maritime lien over the Vessel, or not.
(G) That, in New Era Shipping Ltd. V. M.V.P Express and Ors and M/s.Hatimi Steels (supra), the Bombay High Court directed the arrest of the Vessel on the ground that the plaintiff had a maritime lien on account of a collusion that had taken place. It was also recognized that the plaintiff had a maritime lien over the Vessel. However, the said High Court went on to hold that the Vessel was not amenable to an order or arrest as the Vessel was no longer legally navigable and was beached prior to the passing of the order of arrest. Thus judgment would squarely apply to the facts of the present suit.
(H) That, a maritime lien is a species of maritime claim. All maritime liens are maritime claims, but not all maritime claims are maritime liens. This is clear from a bare perusal of the International Convention on Maritime Liens and Mortgages, 1993, as well as the decision of the Apex Court in the case of Epoch Enterrepots v.
M.V. Won Fu AIR 2003 SC 24. That, the only distinction between a maritime claim and maritime lien is that a plaintiff can arrest a Vessel for maritime lien even in circumstances where there is a change in the ownership of the Vessel. However, such a lien cannot be exerted when there is no ship “within the meaning of the territorial jurisdiction”. That the plaintiff’s purported maritime lien would only attach to a legally navigable Vessel/ ship, its hull, tackle, engines, gears, machinery, bunkers, apparel, furniture, equipment, paraphernalia and appurtenants and not to goods as has been held by the Bombay High Court in New Era Shipping Ltd.
V. M.V.P Express and Ors and M/s.Hatimi Steels (supra).
(I) The mere fact that the defendantVessel has not been demolished would not make it amenable to the territorial jurisdiction of the Court when such Vessel is not legally navigable. In this case, the Intervenor has purchased the ship for the purpose of demolition and not with the intention of using it as a ship and the owner has also sold the said Vessel for the said purpose.
(J) That, the plaintiffs are a public sector undertaking in Sri Lanka and Maldives in which the respective Governments have approximately 50% equity stake. Admittedly, Tastec, Yokohama, Japan, was the owner of the Vessel when the purported maritime casualty took place. Hence, Tastec is the party who is liable in personam for the plaintiff’s claim. The Intervenor is an Indian Ship Breaker, who is incurring crippling losses as a result of the wrongful order of arrest. The plaintiff has financial resources to pursue its claim in a Civil Suit against Tastec in an appropriate Court of Japan. The balance of convenience is in favour of the Intervenor, who would suffer irreparable loss and injury which cannot be compensated in terms of money, if the order of arrest is not vacated.
12. Mr.Mihir J.Thakore, learned Senior Advocate has made the following submissions on behalf of the plaintiff:
(I) The alleged beaching of the defendant Vessel prior to the passing of the order of arrest dated 04.05.2012 is a disputed question of fact and cannot be argued on a demurrer.
(a) The assertions of the Intervenor that the Vessel was beached prior to the order of arrest, being disputed questions of fact, would require evidence to be led at the Trial.
(b) The defendantVessel is not beached but is anchored/moored near the port of Alang and is, in fact, floating on water. The same can be seen from the snapshot taken from the website www.marinetraffic.com on 05.05.2012 at 12:54 pm, much after the aforesaid order of arrest was passed.
(c) It is an admitted fact that the defendant Vessel has not been demolished or broken. It possesses all the essential attributes to be described as a ship/ Vessel. In fact, by an order dated 20.06.2012, this Court had directed that the Bunkers which are lying in the Bunker Tanks be sold and the amount be deposited in a separate Bank Account. Accordingly, with the pumping mechanism of Vessel (i) 988.40 MT of Furnace Oil, (ii) 8.3 MT of Diesel Oil and (iii) 24,300 liters of Lubricating Oil, were discharged and sold for total consideration of Rs.3,49,79,502/ out of which a sum of Rs.2,50,00,000/ has been deposited by the Intervenor in a separate account. Clearly, therefore, the Vessel is capable of performing its essential attributes.
(II) The plaintiff has a maritime lien on the defendantVessel:
(a) The claim in the suit is for damage done by the defendantVessel to the plaintiff's submarine cables linking Sri Lanka and Maldives. It is settled law that a maritime lien can be said to exist in the event of: (I) damage done by a ship;
(ii) salvage; (iii) seamen's and master's wages, (iv) master's disbursement; and (v) bottomry [Epoch Enterrepots vs. M.V.Won Fu (AIR 2003 SC 24, paras 19, 21)]
(b) The claim of the plaintiff is secured by a maritime lien on the defendantVessel in view of Article 4(e) of the International Convention on Maritime Liens and Mortgages, 1993, to which India is a signatory. As per the said provision, claims based on tort arising out of physical loss or damage caused by an operation of the Vessel, other than loss or damage to cargo, containers and passengers' effects carried on the Vessel, are secured by a maritime lien on the Vessel.
(c) In light of Article 9 of the International Convention on Maritime Liens and Mortgages, 1993, a maritime lien, as set out in the aforementioned Article 4(e) would be extinguished after a period of one year since the claim secured by such maritime lien arises, unless, prior to the expiry of such a period, the Vessel has been arrested or seized, such arrest or seizure leading to forced sale. In the instant case, the defendant Vessel had caused damage to the plaintiff's aforesaid submarine cables on 18.04.2012 and the order of arrest in respect of the defendant Vessel was made on 04.05.2012. Thus, the plaintiff has a subsisting maritime lien on the defendantVessel. The legal position that the plaintiff has a maritime lien on the defendant Vessel has not been disputed by the Intervenor.
(III) A maritime lien on a Vessel is not extinguished on being imported for breaking/ demolition. A maritime lien survives beaching and/or demolition of such Vessel.
(a) A maritime lien survives the change of ownership of the Vessel. A maritime lien is a concept which is sui generis, but for all practical purposes, it may be considered as a charge upon maritime property, arising by operation of law and binding the property even in the hands of a bona fide purchaser for value and without notice. A maritime lien adheres to the ship from the time the facts happened which gave the maritime lien, and then continues binding on the ship until it is discharged, either by being satisfied or from the laches of the owner, or in any other way in which it may be discharged by law. It commences and then it continues to be binding on the ship until it comes to an end. In support of this submission, learned Senior Counsel for the plaintiff has placed reliance upon O. Konavalov v. Commander, Coast Guard Region and ors. (2006)4 SCC 620, paras 22, 23 and also referred to United Africa Co. Ltd. v. Owners of M.V. Tolten – (1946)2 All ER 372, at page 376.
(b) That a maritime lien travels with the Vessel into whosoever's possession it may come. It is inchoate from the moment the claim or privilege attaches, and when carried into effect by legal process by a proceeding in rem, relates back to the period when it first attached. Reliance has been placed upon Harmer v. Bell – The Bold Buccleugh VII Moore 267 : XIII English Reports 884, Page 890 and Epoch Enterrepots v. M.V.Won Fu (supra), M.V.Elisabeth & Ors. v. Harwan Investment & Trading Pvt. Ltd. JT 1992(2) SC 65, paras. 58, 100 : AIR 1993 SC 1014, paras.
57, 99, M.V. Al Quamar v. Tsavliris Salvage (International) Ltd. AIR 2000 SC 2826, para 43.
(c) In view of the aforesaid, the plaintiff has a maritime lien on the defendantVessel ever since the latter damaged the plaintiff's submarine cables, and the same continues to subsist in spite of the alleged sale of the defendantVessel to the Intervenor. The assertions of the Intervenor that, it being a bona fide Ship Breaker, is incurring crippling losses as a result of the order of arrest and the balance of convenience is in its favour, are not tenable in view of the law laid down in the aforesaid judgments.
(d) That, the Intervenor is entitled to indemnify himself against the consequences of all claims made against the defendantVessel, which may have been incurred prior to the delivery of the defendantVessel as per Clause 8 of the alleged MoA dated 08.03.2012 entered into by the Intervenor for the purchase of the defendant Vessel.
(IV) A maritime lien attaches to every part of the Vessel and cannot be defeated or extinguished by beaching or demolition. In The “Neptune” [1 HAGG 227 : CLXVI English Reports 81, page 85], in respect of a seaman's wages, it was held that a seaman had a right to cling to the last plank of his ship in satisfaction of his wages or part of them and that he shall be entitled upon the parts of the Vessel saved, in satisfaction of his wages already earned by past services and perils. Thus, the plaintiff's maritime lien attaches to every part of the defendantVessel and mere beaching and/or demolition of the defendantVessel or the alleged change in the character of the defendantVessel would not result in the extinguishment of the plaintiff's maritime lien thereupon.
(V) That, the judgment in Destel Marine Limited v. M.V. Star 7 in Admiralty Suit No.1 of 2011 relied upon by the Intervenor does not pertain to maritime lien. The claim made in the said suit was about the supply of necessaries. India does not recognize maritime lien in respect of supply of necessaries as laid down by the Supreme Court in Epoch Enterrepots v. M.V. Won Fu (supra). Further, the judgment of the Division Bench in the case of Destel Marine Limited v. M.V.Star 7 (supra) was in the appeal arising from the judgment of the learned Single Judge in the aforementioned suit for the supply of necessaries, which is not secured by maritime lien as per Indian law. The judgment of the High Court of Bombay (Coram: S.C.Dharmadhikari, J.) in the case of New Era Shipping Ltd. v. M.V.P. Express & Ors. And M/s.Hatimi Steels (supra), though in respect of maritime lien, does not specifically make observations in respect of the extinguishment of maritime lien on beaching of a Vessel. The legal argument that a maritime lien attaches to every part of the vessel and clings to the last plank was not raised before the Bombay High Court, hence, that Court had no occasion to consider this argument. Moreover, the appeal arising out of the judgment of the Bombay High Court is pending before the Supreme Court.
(VI) That, the Admiralty Court is the only Competent Court to adjudicate upon maritime liens on Vessels.
(a) The Supreme Court, in the case of O. Konavalov v. Commander, Coast Guard Region and ors. (supra), observed that the unique concept of all in admiralty law is the maritime lien. It is a concept which is sui generis, but for practical purposes, it may be considered as a charge upon maritime property, arising by operation of law and binding the property even in the hands of a bona fide purchaser for value and without notice, but which can only be enforced by an admiralty claim in rem.
(b) That, in Harmer v. Bell – The Bold Buccleugh (supra), a maritime lien is well defined by Lord Tenterden to mean a claim or privilege upon a thing to be carried into effect by legal process, and Mr.Justice Story (1 Sumner, 78) explains that process to be a proceeding in rem, and adds that wherever a lien or claim is given upon the thing, then the Admiralty forces it by a proceeding in rem, and indeed is the only Court competent to enforce it. A maritime lien is the foundation of the proceeding in rem, a process to make perfect a right inchoate from the moment the lien attaches; and whilst it must be admitted that where such a lien exists, a proceeding in rem may be had. It will be found to be equally true that in all cases where a proceeding in rem is the proper course, a maritime lien exists which gives a privilege or claim upon the thing, to be carried into effect by legal process.
(c) That, the contention of the Intervenor that the admiralty jurisdiction of this Court is barred on account of (i) the alleged change in the character of the defendantVessel from a Vessel to goods and (ii) purchase of the same by the Intervenor, who is an Indian citizen, are fallacious, as an Admiralty Court is the only Competent Court to adjudicate upon a maritime lien. The plaintiff's maritime lien on the defendantVessel would survive the alleged change in the latter's character as well as change of ownership. Reliance placed by the Intervenor on the judgment of the Division Bench of this Court in the case of Destel Marine Limited v. M.V. Star 7 (supra) in contending that once a ship is beached it is not amenable to an action in rem, is misplaced, as the said judgment does not pertain to a maritime lien but in fact deals with a maritime claim simpliciter. Thus, the case of Destel Marine Limited v. M.V. Star 7 (supra) is not applicable to the facts of the present case.
(VII) The plaintiff does not have any other remedy besides approaching this Court under its admiralty jurisdiction to realize its claims against the defendantVessel, secured by a maritime lien. Therefore, the order of arrest in respect of the defendantVessel should not be vacated unless appropriate security/ Bank Guarantee is provided in favour of the plaintiff. The application for release of the defendant Vessel filed by the Intervenor is, therefore, liable to be dismissed.
13. In rejoinder to the submissions made by learned Senior Counsel for the plaintiff, Mr.Mihir H.Joshi, learned Senior Counsel for the Intervenor, has reiterated the submissions made earlier. Additionally, it is further submitted as under:
(A) That, the admiralty jurisdiction of this Court can only be invoked to enforce an action in rem against a foreign defendant Vessel, and only when the foreign defendantVessel is in the coastal waters of India. In the instant case, the defendantVessel, being no longer legally navigable, is no longer a foreign Vessel but is, in law, deemed to be imported goods as customs duty has been paid by the Ship Breaker. The defendantVessel was not in the coastal waters of India at the time the order of arrest was passed by this Court, but was already beached in the Plot of the Ship Breaker, namely Plot No.169M Sosiya/ Alang. That the Division bench of this Court, in the case of M.V.Star 7 (supra), has held that once a ship is beached, it would no longer be in the Indian territorial waters and, consequently, Admiralty jurisdiction could not be invoked. Additionally, once a ship is beached and is on the land mass, the jurisdiction would be that of the Civil Court, as per the local laws, and the Admiralty Court would have no jurisdiction.
(B) That, Destel Marine Limited had filed SLP (C) No.27314 of 2011 in the Supreme Court against the aforesaid order of the Division Bench. However, the SLP was dismissed.
(C) That, the plaintiff has to satisfy the Court that the defendant is a Vessel amenable to the Admiralty jurisdiction of this Court. When the defendantVessel is no longer a vessel after having been beached, this Court does not have jurisdiction to pass an order of arrest.
(D) The Admiralty Court would be the only Court to deal with maritime lien, provided that it has jurisdiction. Admiralty jurisdiction stands on its own, and comes first. Only thereafter comes the question of arrest, maritime claim or maritime lien. If there is no jurisdiction, an order of arrest cannot be issued.
(E) Distinguishing the judgments relied upon by the learned Senior Counsel for the plaintiff, it is submitted that in the cases of Schwarz & Co. (Grain) Ltd. v. St. Elefterio Ex Arion (Owners) [(1957)1 LLR 283] and The Moschanthy [(1971) 1 LLR 37], referred to in Videsh Sanchar Nigam Ltd. v. M.V.Kapitan Kud & Ors – AIR 1996 SC 516, the Vessels were legally navigable whereas in the present case, the defendantVessel is, admittedly, no longer legally navigable. Moreover, the facts under consideration in the two cases relied upon by the plaintiff and the facts under consideration in the present case are different. In the present case, the Intervenor seeks to challenge the jurisdiction of this Court in view of the fact that the defendantVessel was beached before its arrest, therefore, it was not amenable to an action in rem which is the sine qua non for invoking the Admiralty jurisdiction. Such was not the factual situation in the cases relied upon by the plaintiff.
(F) It is further submitted that the facts in the case of O. Konavalov v. Commander, Cost Guard Region and ors. (supra) are totally different from the facts of the instant case. In that case, the seaman had asserted a maritime lien and did not deal with the admiralty jurisdiction of the Court. The Supreme Court had to deal with the question whether a maritime lien gets extinguished when a navigable Vessel is confiscated by the Government. The issue before this Court in the instant case, is whether the Admiralty Court would have jurisdiction to enforce a maritime lien when the Vessel is no longer legally navigable and has been beached for purposes of demolition before the order of arrest was passed.
(G) In Destel Marine Limited v. M.V.Star 7 (supra) this Court has concluded that as the ship has been beached for the purpose of demolition, it would not be amenable to an action in rem which is a sine qua non for invoking admiralty jurisdiction.
(H) That the contention that the seaman has right to cling to the last plank of the ship in satisfaction of the wages, or part of them, is merely a contention recorded by the Supreme Court. This cannot be taken to mean that the maritime lien attaches to various parts of ship in circumstances when the ship is no longer legally navigable and gets converted into goods.
(I) That, reliance placed by the plaintiff on the English case of The “Dundee” – 1 HAGG 109 : CLXVI English Reports 39, to the effect that the sale proceeds of fishing stores would also be sold to satisfy the claim when the Vessel was under arrest, would not be applicable in the present case as it was the intention of the owners of the Dundee to continue using her for navigation after repairs and was legally navigable, which is not so in the present case where the Vessel has been imported to be scrapped and/or recycled. The facts of the English case of Dundee can be distinguished from the facts of the instant case. However, there is no mention of the term “maritime lien” or even `lien’ in the said case.
(J) Distinguishing the English case of The Neptune (supra), it is submitted on behalf of the Intervenor that the proposition that where part of a Vessel had been saved by mariners, they were entitled to the payment of their wages as far as the fragments of the materials would form a fund, would also not be applicable to the facts of the present case. In that case, there was no order of arrest passed by the Court against the Vessel and no mention of the term “maritime lien” in the judgment. It was a summary civil suit.
(K) That, the above English Judgments do not contemplate a scenario when a Vessel has been imported for the purpose and with the intention of demolition/ ship recycling. The Vessels were not beached at a Ship Breaker’s Plot prior to the order of arrest being passed. In the above circumstances, a purported maritime lien cannot be enforced against goods but only against a legally navigable Vessel and the plaintiff can invoke Admiralty jurisdiction of this Court only when necessary conditions for the same exist which, on the facts and in the circumstances of the present case, do not present themselves.
14. On the strength of the above submissions, it is prayed that the order of arrest passed by this Court be vacated, and the suit dismissed.
15. It has been submitted on behalf of the plaintiff that the beaching of the defendantVessel prior to the passing of the order of arrest on 04.05.2012 is a disputed question of fact and cannot be argued on a demurrer. It has also been asserted by learned Senior Counsel for the plaintiff that the defendantVessel is not beached but is anchored/moored near the Port of Alang and is, in fact, floating on water. According to the plaintiff, this is evidenced by a snapshot taken from the website www.marinetraffic.com on 05.05.2012.
16. In the application filed by the Intervenor (OJ Civil Application No.145 of 2012), it has been stated that on 08.03.2012, the Intervenor entered into a Memorandum of Agreement with Navamosa Navigation S.A., Nevis (as amended vide subsequent Addendums) for purchase of the defendantVessel for a consideration of USD 3,876,900 (United States Dollars Three Million Eight Hundred and Seventy Six Thousand Nine Hundred Only). A copy of the MoA is annexed at AnnexureB. Thereafter, Letter of Credit in favour of Navamosa Navigation SA from State Bank of India, Bhavnagar, for the sum of USD 3,876,900 was opened by the applicant on 22.03.2012, as per AnnexureC. Payment under the said Letter of Credit was made on 03.05.2012, as evidenced from AnnexureD. The Intervenor took physical delivery of the defendantVessel on 03.05.2012 (10:30 hrs.) which is evidenced by the Physical Delivery Certificate issued by the Master of the defendantVessel, a copy of which is annexed at AnnexureE. The Intervenor obtained permission for beaching of the defendantVessel from Gujarat Maritime Board on 04.05.2012. The Certificate dated 04.05.2012 issued by the Gujarat Maritime Board allowing the defendantVessel to be beached at Plot No.169M, Alang, is to be found at AnnexureF. The Vessel was beached at 2:30 pm on 04.05.2012, as per the Certificate of the Gujarat Maritime Board.
17. Prior thereto, the Intervenor had filed a Bill of Entry for Home Consumption on 03.03.2012 being No.SBY/SI/20122013 with the Customs Department at Bhavnagar for import of the said ship for breaking and the total duty payable for import of the same was Rs.3,88,13,852/ (Rupees Three Crores Eighty Eight Lakhs Thirteen Thousand Eight Hundred and Fifty Two Only). The Intervenor had remitted this sum by way of customs duty for the import of the defendantVessel for ship breaking/recycling purposes. This is evident from Challan No.TR6/SBY/93/201213 dated 04.05.2012, a copy of which is annexed at AnnexureG. On the basis of the request made by the Intervenor to the Customs Department to beach the defendant Vessel, the Customs Department issued a “No Objection” dated 04.05.2012 to the beaching of the defendantVessel, which has been produced by the Intervenor at AnnexureH.
18. The plaintiff has filed OJ Civil Application No.144 of 2012 wherein it has been averred that the defendantVessel is lying afloat in the waters of Alang and is yet to be beached in the Ship Breaking Plot. In support of this averment, a copy of a snapshot taken from the website www.marinetraffic.com has been annexed at AnnexureC. On perusal of the snapshot, it does not appear to have any date endorsed upon it. It is, therefore, not possible for the Court to ascertain when the snapshot was taken.
19. On the other hand, the Intervenor has produced documents from the concerned authorities, the authenticity of which has not been denied by the plaintiff. Though, in the affidavitinreply filed by the plaintiff to the application of the Intervenor, there is a general denial of the documents annexed by the Intervenor, it has not been stated that the documents are either fabricated or concocted. No specific ground of denial has been advanced and the plaintiff has chosen to rest its case only on denials contained in the affidavitinreply. The Bills of Entry and other relevant documents clearly show that the defendantVessel has been purchased for the purpose of demolition and beaching permission has been sought on that basis. The said documents issued by the Competent Authority cannot be discarded outright. It is clearly mentioned in the MoA at Clause20 that “the Vessel has been sold for guaranteed purpose of demolition”. The intention of the Intervenor in purchasing the Vessel is thus made clear. The purpose of purchasing the defendantVessel is demolition. There is no intention on the part of the Intervenor to repair it or use it as a ship.
20. In this regard, the observations of the Division Bench made in Destel Marine Limited v. M.V. Star
7 OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters are pertinent and would apply to the present case. The same are reproduced hereinbelow:
“14. The attempt made by the learned Counsel for the appellants to contend that the documents by way of defence submitted are yet to be proved and till then the preliminary issue cannot be said as concluded, may prima facie appears to be attractive, but the pertinent aspect is that the documents so produced are part of the Government records and the Port Authorities'
records. Further, there is no pleadings to the effect that such documents are concocted. In any case, as observed earlier, even the plaintiffs have declared that the ship/vessel is brought to Alang Port for breaking purpose. Under these circumstances, we find that such contention is contrary to the stand of both the plaintiffs as stated in the plaints.”
In view of the principles of law laid down by the Division Bench, this Court is of the view that beaching of the defendantVessel is not a disputed question of fact as is attempted to be made out by the plaintiff. There is no reason to doubt the authenticity of the documents issued by various authorities.
21. The averments made by the plaintiff in the Plaint go to show that the plaintiff was very much aware, at the time of instituting the suit, that the defendantVessel was likely to be beached at Alang, for demolition. This is clear from Paragraph2 of the Plaint, which reads as below:
“2. At the outset, the Plaintiff states that the present suit is filed under extreme urgency with the limited information available at hand. This is because the Defendant Vessel, which has caused loss and damage to the Plaintiff, is likely to be beached at Alang Bhavnagar, for demolition very shortly. If the Vessel is fully demolished, the plaintiff's suit would be rendered infructuous.”
22. Further, in Paragraph16, the plaintiff has stated that:
“... the Defendant Vessel is lying in the port of Alang, Bhavnagar. The Defendant Vessel is on its way for the funeral voyage to the port of Alang, Bhavnagar. The Plaintiff apprehends that the Defendant vessel may be sold to a ship breaker and will be beached at Alang, Bhavnagar for demolition. If the Defendant Vessel is beached, it will be fully demolished in a very short span of time rendering the Plaintiff's suit infructuous. It is therefore absolutely necessary, just and convenient and in the interest of justice that this Hon'ble High Court Court be pleased to issue urgent order of arrest and detention of the Defendant vessel as prayed for herein”.
(emphasis supplied)
23. The Certificate dated 05.05.2012 issued by the Gujarat Maritime Board states that the defendant Vessel was beached on 04.05.2012 at 2:30 pm. The order of arrest of the defendantVessel was passed by this Court on 04.05.2012 at 4:30 pm, that is, after the beaching of the Vessel.
24. This Court, in Destel Marine Limited v. M.V. Star 7 (Admiralty Suit No.1 of 2011) held as below:
“8. In the admiralty jurisdiction of this Court, this Court can entertain an action in rem against a ship. The General Clauses Act also defines the term "Ship" but it also gives inclusive definition. Therefore, so far as the meaning of the term "Ship" is concerned, we will have to go back to the meaning attached to the term in common parlance. Dictionary meaning of the term "Ship" is a vessel employed in navigation. Thus navigability of the vessel is a dominant factor in deciding whether it is a ship or not. The navigability of a vessel will depend not only on its mechanical navigability but also on its legal navigability. Once the Authorities have undertaken and completed all the procedural formalities of beaching of the vessel, including payment of customs duty, etc., legally, the owners became disentitled to navigate the vessel, and therefore, from that moment the vessel ceased to be a ship. The defendantvessel was making final voyage for shipbreaking and when it was imported into India it was definitely a ship but the moment the buyers declared their intention to discontinue its use as ship or a vessel and not only declared their intention but acted pursuant to that intention and made declarations before the authorities and paid amounts, customs duty, etc., the intention was manifest to discontinue the use of the defendantvessel as a ship. In any case, when in the early morning at 4.30 a.m. on 5th January 2011 as per the certificate issued by the Gujarat Maritime Board, the vessel was beached for the purpose of demolition or breaking up, it could not have been described as a ship or a vessel. In my opinion, therefore, the defendantvessel was not amenable to an action in rem on 5.1.2011 and, therefore, obviously it could not have been arrested. Once the vessel was beached, it was no more in the territorial waters and the jurisdiction would be only of Civil Court as per the local law and no admiralty jurisdiction could have been invoked. Further, once the vessel was beached, it was no more in the territorial waters and the jurisdiction would be only of Civil Court as per the local law and no admiralty jurisdiction could have been invoked. In view of the law laid down by this Court in the case of Western Ship Breaking Industry vs. Laiki Bank (Helias) S.A., Manu/GJ/8251, the present suit deserves to be dismissed.”
25. The judgment of this Court has been confirmed by the Division Bench in Destel Marine Limited v.
M.V. Star 7 in OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters and the SLP filed against the judgment of the Division Bench has been dismissed.
26. This Court, in Michail Arhangelos SA C/o Agent Seawind Maritime Co. v. M.V.Star 7 (Ex MV Michail Arhangelos) – Admiralty Suit No.3 of 2011, has held as below:
“13. In the case of New Era Shipping Limited vs. m.v. P. Express, reported in 2007 (6) Bom.C.r. 138, the learned Single Judge of the Bombay High Court [Coram: Dharmadhikari S.C., J.], in paragraph 46, has relied upon the decision in the case of North End Oil Limited vs. m.v. Kim An and another, 1992 (2) Bom.C.R. 448, and the paragraph 66 of the said judgment was reproduced by Justice Dharmadhikari about the burden cast upon the plaintiff when the suit is filed for action in rem and arrest of vessel to primafacie prove that the res was in existence on the date of its arrest. If the defendant denies the existence of res and contends that res was demolished, the burden is still on the plaintiff to prove that on the date of arrest the res was intact in existence and not demolished to such an extent so as to get converted in to goods. Thereafter, while considering the judgment in the case of Saaba [supra], Justice Dharmadhikari held in paragraph 47 as under:
“47. The third decision is of another learned Single Judge of this Court, (D.K.Deshmukh, J). in Notice of Motion No.1302 of 2001 in Admiralty Suit No.14 of 2001 dated 28th June 2001. After considering the rival contentions in paras 7 and 8 this is what is observed by the learned Single Judge: “7. Now if in the light of these rival submissions the record of the case is perused, it is clear that when the plaint that is filed in the present suit was drafted, the plaintiffs were aware that the defendant No.1 vessel is at present lying at the port and harbour at Mumbai. The plaintiffs were also aware that she is scheduled to be beached on 19th May, 2001. The plaintiffs have stated in the plaint that they are carrying on business of managers of merchant vessels. If the plaintiffs on 19th May, 2001 were aware that the vessel is in Mumbai and that it is to be beached on 19th May, 2001 for the purpose of demolition, then in my opinion, considering the business which the plaintiffs carry on, the plaintiffs must have made enquiries with the port authorities. In my opinion, therefore, it would be safe to assume that the 46 plaintiffs were aware of the purpose for which the vessel has been brought to Mumbai. It is clear from the bill of entry produced by the defendants that the defendant No.1 vessel was imported into India for the purpose of demolishing and that because the vessel was brought in India for the purpose of demolition, the Importer was held liable for payment of customs duty on the vessel and it became goods which were being imported in India. In fact, the caption of the bill of entry is "Bill of Entry for Home Consumption". The bill of entry further shows that by 10th May, 2001, customs duty had already been paid for importing the vessel, but the plaintiffs chose not to disclose this in the plaint. It is difficult to believe that a plaintiff who know even the exact date on which the vessel is to be beached for demolition, was not in a position on enquiry to find out the purpose for which the vessel has been imported and as to whether any payment have been made for that purpose. Considering that the plaintiffs are in the business of managing the vessels, it would be safe to assume that, it knew that, for demolition of a vessel, the owners have to take a plot on lease, have to pay customs duty on the vessel, therefore it cannot be believed that the plaintiffs, who knew that the vessel is scheduled to be beached for demolition on 19th May, 2001, did not know that customs duty has been paid on 8th May, 2001, that a plot has been taken on lease for the purpose of beaching the vessel. But the plaintiffs have chosen not to disclose these facts in the plaint. It is further pertinent to note, according to the agreement between the plaintiffs and the owners of the vessel, the crew of the vessel was to be engaged by the plaintiffs and the defendants have stated in the affidavit, that when the vessel reached Mumbai, the crew of the vessel was Pakistani and the plaintiffs are also a Pakistani Company. In any case, from the bill of entry and documents produced by the defendants, it is clear that the vessel was imported in India for the purpose of breaking it. Perusal of provisions of clause 2 of Admiralty Act, 1861 shows that a ship includes any description of vessel used in navigation. Thus, the Admiralty Act does not define the word "Ship". In the admiralty jurisdiction of this Court, this Court can entertain an action in rem against a ship. The General Clauses Act also defines the term "Ship" but it also gives inclusive definition. Therefore, so far as the meaning of the term "Ship" is concerned, we will have to go back to the meaning attached to the term in common parlance. Dictionary meaning of the term "Ship" is a vessel employed in navigation. Thus navigability of the vessel is a dominant factor in deciding whether it is a ship or not. The navigability of a vessel will depend not only on its mechanical navigability but also on its legal navigability. It appears, that once the defendants, declared their intention to the authorities in India, that they are importing the vessel as goods in India and they want to discontinue its use as a ship for carrying cargo and paid customs duty on the vessel as goods. Legally, the owners became disentitled to navigate the vessel, and therefore, from that moment the vessel ceased to be a ship. The defendant No.1 vessel when it was imported into India was definitely a ship but the moment the owners declared their intention to discontinue its use as ship or a vessel and not only declared their intention but acted pursuant to that intention and made declarations before the authorities and paid amounts and took further actions like taking a patch on lease for breaking of the ship, their intention was manifest that they want to discontinue the use of the defendant No.1 vessel as a ship. A ship like any other thing remains entitled to its description until facts are established to show that it has become disentitled to its ordinary name or description. On import of the defendant No.1 vessel into India as goods and payment of customs duty pursuant to that, disentitled the owners to use the defendant No.1 as a ship or a vessel. In any case, when at 9.45 a.m. on 19th May, 2001, the vessel was beached for the purpose of demolition or breaking up, it could not have been described as a ship or a vessel. In my opinion, therefore, the defendant No.1 was not amenable to an action in rem on 19th May, 2001 and therefore, obviously it could not have been arrested.
8. In so far as the judgements referred to above relied on by the learned counsel for the plaintiffs are concerned, I have gone through the judgements. Those judgements cannot be said to be authority for the proposition that a ship continues to be treated as a ship either till its registration continues or till it looks like a ship. On the other hand, in my opinion, the judgement relied on by the learned counsel for the plaintiffs go to show that in determining whether a ship can be continued to be treated as a ship or not, the intention of the persons in control of the ship is material inasmuch as though a vessel or a ship may be incapable of being used as a ship or vessel temporarily either because it has met with an accident or because extensive repairs are necessary to it, but if the owners of the vessel intend to continue to use it as a ship; or a vessel and for that purpose, takes actions, then, the vessel can still be treated as a vessel. The judgements referred to above do not support the case of the plaintiffs."”
The abovequoted principles of law would squarely apply to the facts of the present case.
27. It was in the knowledge of the plaintiff that the defendantVessel was to be beached for the purpose of demolition and was on its “funeral journey”. The Intervenor has imported the
this purpose, customs duty has been paid by the Intervenor. Once the ship is beached for the purpose of demolition, it is no longer remains a vessel but becomes goods imported into India after paying customs duty. The intention of the Intervenor in purchasing the ship was solely for the purpose of demolition, as has also been stated by the plaintiff in the Plaint. Therefore, after import of the Vessel and its beaching in the Plot of the Intervenor for the purpose of demolition, it cannot be said that the defendant Vessel is a ship, fit for navigation. Rather, it could be described as imported goods, as it is not only the mechanical navigability of a Vessel that is the determining factor but also its legal navigability. The Intervenor has declared its intention of scrapping the ship, therefore, after import of the Vessel, payment of customs duty and its beaching on the Plot allotted to the Intervenor, the defendantVessel ceases to be a ship. In the view of this Court, as the defendantVessel had been beached for the purpose of demolition at 2:30 pm on 04.05.2012, that is, before the order of its arrest was passed at 4:30 pm on the same day, it was no longer in the territorial waters of India, and the Admiralty jurisdiction of this Court could not have been invoked. In this regard, reference may fruitfully be made to a judgment of the Supreme Court in M.V.Elisabeth & Ors. v. Harwan Investment & Trading Pvt. Ltd. (supra). The Supreme Court held that the Admiralty jurisdiction of a High Court in India can only be invoked to enforce an action in rem against a foreign defendantVessel and only in circumstances when the foreign defendant Vessel is in the coastal waters of India. Certain relevant extracts of the above referred judgment are reproduced hereinbelow:
“44. "The law of admiralty, or maritime law, .... (is the) corpus of rules, concepts, and legal practices governing ... the business of carrying goods and passengers by water." (Gilmore and Black, The Law of Admiralty, page 1. The vital significance and the distinguishing feature of an admiralty action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship, irrespective of the nationality of the ship or that of its owners, or the place of business or domicile or residence of its owners or the place where the cause of action arose wholly or in part.
45. "..... In admiralty the vessel has a juridicial personality, an almost corporate capacity, having not only rights but liabilities (sometimes distinct from those of the owner) which may be enforced by process and decree against the vessel, binding upon all interested in her and conclusive upon the world, for admiralty in appropriate cases administers remedies in rem, i.e., against the property, as well as remedies in personam, i.e., against the party personally...". Benedict, The Law of American Admiralty, 6th ed. Vol. I p.3.
... ... ...
75. All foreign merchant ships and persons thereon fall under the jurisdiction of a coastal State as they enter its waters. Subject to the right of ‘innocent passage’, the coastal State is free to exercise jurisdiction over such ships in respect of matters the consequence of which extend beyond the ships. Such ships are subject to the local jurisdiction in criminal, civil and administrative matters. This jurisdiction is, however, assumed only when, in the opinion of the local authorities, the peace or tranquility of the port is disturbed, when strangers to the vessel are involved or when the local authorities are appealed to. Questions which affect only the internal order and economy of the ship are generally left to the authorities of the flag State. Coastal States are entitled to assume jurisdiction in respect of maritime claims against foreign merchant ships lying in their waters. These ships are liable to be arrested and detained for the enforcement of maritime claims. The courts of the country in which a foreign ship has been arrested may determine the cases according to merits, provided they are empowered to do so by the domestic law of the country or in any of the cases recognised by the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952. (See also the International Conventions for the Unification of Certain Rules relating to Maritime Liens and Mortgages of 10th April, 1926 and May 27, 1967). The maritime claims in respect of which the power of arrest is recognised in law include claims relating to damage caused by any ship either in collision or otherwise; claims relating to carriage of goods in any ship whether by charter party or otherwise, loss of or damage to goods etc. These principles of international law, as generally recognised by nations, leave no doubt that, subject to the local laws regulating the competence of courts, all foreign ships lying within the waters of a State, including waters in ports, harbours, roadsteads, and the territorial waters, subject themselves to the jurisdiction of the local authorities in respect of maritime claims and they are liable to be arrested for the enforcement of such claims.
... ... ...
83. The admiralty jurisdiction of the High Court is dependent on the presence of the foreign ship in Indian waters and founded on the arrest of that ship. This jurisdiction can be assumed by the concerned High Court, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action.
... ... ...
90. All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law. The power to arrest a foreign vessel, while in the waters of a coastal State, in respect of a respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty. This power is recognised by several international conventions...”
(emphasis supplied) From the above pronouncement of law, it emerges that the plaintiff can invoke the Admiralty jurisdiction of the High Court only if (i) an action in rem is maintainable against a foreign defendantVessel and (ii) the foreign defendant Vessel is in the territorial waters of India. In the present case, the defendantVessel is no longer a foreign Vessel, having been purchased by an Indian buyer. It is no longer legally navigable and loses the characteristics of a foreign Vessel and is deemed to be imported goods, as customs duty has been paid by the Intervenor.
28. In Destel Marine Limited v. M.V. Star 7 OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters, the Division Bench of this Court has held that the sine qua non for invoking the Admiralty jurisdiction is an action in rem.
In the present case, the defendantVessel was not in the territorial waters of India at the time when the order of arrest was passed by this Court as it had already been beached in the Plot of the Intervenor. In Paragraph10 of the Judgment, the Division Bench has held as below:
“10. ....Further, once the ship is beached and it would no more be in the territorial waters and consequently no admiralty jurisdiction could be invoked. Additionally, once a ship is beached and it is on the land mass, the jurisdiction would be of the Civil Court as per the local laws and no admiralty jurisdiction could be invoked.”
29. It has been submitted by learned Senior Counsel for the plaintiff that the challenge to the decision of the Bombay High Court in New Era Shipping Limited v. M.V.P. Express (supra) is pending before the Supreme Court. In the above referred judgment (Destel Marine Limited v. M.V. Star 7 OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters), the Division Bench of this Court has dealt with this issue by stating as under:
“6. The learned Counsel for the appellants mainly contend that the view taken by the learned Single Judge on the aspects of non availability of the admiralty jurisdiction is incorrect and it was submitted that the decision upon which the reliance has been placed by the learned Single Judge of the Bombay High Court (one of the learned Single Judge and another of the Division Bench) has been carried in the SLP before the Apex Court and the SLP has been admitted and, therefore, it was submitted that the learned Single Judge ought not to have concluded the matter and it was also alternatively contended that this bench may not conclude the issue since the Apex Court is yet to finalize the legal position. It was submitted that the documents upon which the reliance has been placed by the defendants are yet to be proved and, therefore, at this stage, learned Single Judge ought not to have concluded the issue of navigability of ship or that the ship was already beached prior to arrest order and, therefore, the view taken by the learned Single Judge is erroneous and deserves to be interfered with.
... ... ...
10. ....We have gone through the reasons recorded by the learned Single Judge of this Court in the impugned judgement, including two views of Bombay High Court, one of the learned Single Judge and another of the learned Division Bench and it appears to us that the learned Single Judge of this Court has rightly found that the moment the buyer declared his intention to discontinue to use it as a ship, or as a vessel and further act upon the intention and has made declaration before the authorities and has paid the customs duty etc., the intention is further materialized. In any case, the ship has also been beached for demolition purpose and once the ship is beached, it was not amenable to the action in rem, which is a sine qua non for invoking the admiralty jurisdiction ”
(emphasis supplied) Special Leave Petitions were filed against the judgment of the Division bench of this Court in Destel Marine Limited v. M.V. Star 7 OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters. However, the SLPs came to be dismissed.
30. Learned Senior Counsel for the plaintiff has placed emphasis on the aspect that a maritime lien can be enforced even against a Vessel that is not legally navigable and has been beached. It has been submitted that in O. Konavalov v. Commander, Coast Guard Region and ors. (supra), the Supreme Court has held that a seamen had a right to cling to the last plank of the ship in satisfaction of the wages or part of them. In O. Konavalov v. Commander, Coast Guard Region and ors. (supra), the seamen had asserted a maritime lien against a legally navigable ship. The Supreme Court was dealing with the issue whether a maritime lien gets extinguished when a navigable Vessel is confiscated by the Government, which is clearly different from the issue before this Court whether a purported maritime lien can be extinguished when a ship is legally no longer navigable. As stated by Division Bench of this Court in Destel Marine Limited v. M.V. Star 7 OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters, once the ship has been beached for the purposes of demolition, it is not amenable to an action in rem, which is a sine qua non for invoking the admiralty jurisdiction.
31. In O. Konavalov v. Commander, Coast Guard Region and ors. (supra), the Supreme Court has observed as under: “26. The seamen's right to their wages have been put on a high pedestal. It is said that a seaman had a right to cling to the last plank of the ship in satisfaction of the wages or part of them as could be found in Neptune [166 ER 81 : 1 Hagg 227] and also Ruta [(2000)1 Lloyd's Rep 359 : 2000 ICR 1024].”
(emphasis supplied) The said observation of the Supreme Court cannot be taken as an affirmation so as to mean that maritime lien attaches to various parts of a ship in circumstances when the Vessel is no longer legally navigable and gets converted into goods, and is beached.
32. In the English case of The “Dundee” (supra), the proposition was that the sale proceeds of fishing stores would also be sold to satisfy the claim when a Vessel was under arrest. In that case, the Dundee was damaged after a collision with another Vessel and was brought to the parts for repairs. The Dundee was subsequently arrested while she was undergoing repairs. At the time when the order of arrest was passed, the intention of the owners of the Dundee was to continue using her for navigation. It was not the intention of the owners of the Dundee to scarp and recycle the Vessel. In the present case, the intention of the Intervenor is clearly to scrap and demolish the Vessel and for this purpose, it has paid customs duty for importing it. Under the circumstances, the facts in the case of The Dundee (supra) are clearly distinguishable from the facts of the present case. Further, there was no mention of maritime lien in the case of The Dundee (supra).
33. Reliance has been placed on behalf of the plaintiff on the English case of The “Neptune” (supra) in support of the proposition that where a part of thee Vessel had been saved by mariners, they were entitled to payment of their wages as far as the fragments of the materials would form a fund. In that case, there was no order of arrest passed by the Court against the Vessel. Further, there is no mention of maritime lien as well. The said suit was a summary civil suit and not a case where the admiralty jurisdiction was invoked.
34. The above English judgments do not contemplate a scenario when the Vessel has been imported with the express intention and purpose of demolition and scrapping. In the English cases, the Vessels were not beached at the Ship Breaker's Plot prior to the order of arrest being passed, therefore, those cases cannot be said to be authorities on the proposition of beaching of the Vessel.
35. The case of Harmer v. Bell – The Bold Buccleugh (supra) would also not be applicable in the present case as, in the factual scenario of the present case, it is not the intention of the Intervenor to use the Vessel for the purpose of navigation.
36. In New Era Shipping Limited v. M.V.P. Express (supra), the Bombay High Court recognised that the plaintiff therein had a maritime lien over the Vessel but as the Vessel was no longer legally navigable, having been beached prior to the order of arrest being passed, it was held that the Vessel was not amenable to an order of arrest. This judgment has been relied upon by this Court in Destel Marine Limited v. M.V. Star 7 Admiralty Suit No.1 of 2011 and by the Division Bench in Destel Marine Limited v. M.V. Star 7 OJ Appeal No.36/2011 in Admiralty Suit No.1/2011 and connected matters.
37. Even assuming that the plaintiff has a maritime lien over the Vessel, the plaintiff can invoke the Admiralty jurisdiction only if the Vessel is susceptible to the Admiralty jurisdiction and an order of arrest. As the ship has been beached, it cannot be considered as a Vessel any longer. The defendantVessel has been imported for the purpose of breaking. In the present case, the Bill of Entry has been filed and the Vessel has been cleared for breaking. The Vessel is no longer in the territorial waters of India but is beached on the Plot of the Intervenor. It, therefore, becomes goods and cannot be called a Vessel. Merely because the Bunkers could be removed from the Vessel pursuant to an order of this Court, cannot be taken to mean that the Vessel is legally navigable, as is sought to be argued on behalf of the plaintiff. The customs duty has been paid by an independent importer. The Vessel is no longer a foreign Vessel. On all these counts, therefore, the Admiralty jurisdiction of this Court could not have been invoked and an order of arrest could not have followed. When the Admiralty jurisdiction cannot be invoked by the plaintiff in the first place, the question of determining the plaintiff's lien does not arise. Jurisdiction is a prerequisite for all other claims. If there is no Admiralty jurisdiction, the Vessel is not amenable to an action in rem. In such circumstances, the appropriate Civil Court alone would have jurisdiction.
38. In view of the above conclusion, the other issues raised by learned counsel for the plaintiff are not required to be dealt with.
39. For the aforestated reasons, as the order of arrest of the defendantVessel was passed after it had been beached for the purpose of demolition, the defendantVessel was not amenable to an action in rem and the Admiralty jurisdiction of this Court could not have been invoked.
40. Consequently, the suit is dismissed. The order of arrest of the defendantVessel stands vacated. The Intervenor is permitted to withdraw the proceeds of the sale of Bunkers of the defendant Vessel that have been deposited in a separate account, as per the order of this Court dated 20.06.2012. The Civil Applications stand disposed of. Notice is discharged.
41. Direct Service of this order is permitted. Learned advocate for the Intervenor is permitted to communicate this order by fax at the cost of the Intervenor.
(Smt. Abhilasha Kumari, J.) Mr.B.H.Chhatrapati, learned advocate for M/s.Singhi and Company, learned counsel for the plaintiff, has requested that the operation of this order be stayed for four weeks, or for a shorter period. The request has been opposed by Ms.Rujuta Oza, learned advocate for the Intervenor.
Considering the facts and circumstances of the case, the request is declined.
(sunil) (Smt. Abhilasha Kumari, J.)