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Petitioner: SELAT MARINE SERVICES CO. LLC through Authorized Attorney VS Respondent: M.T. BOFORS and 2 others
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar Title:SELAT MARINE SERVICES CO. LLC through Authorized Attorney vs M.T. BOFORS
and 2 others Case No.: Admiralty Suit No. 4 of 2018 Date of Judgment:2019-04-29 Reported As: PLD 2019 Sindh 533 Result: Order accordingly Judgment ORDER. MUHAMMAD JUNAID GHAFF AR J.---This is a Suit under the Admiralty Jurisdiction of The High Court Ordinance, 1980 ("Ordinance 1980 "). Application at Serial No, 1 has been filed on behalf of the Plaintif f under Rule 731 of the Sindh Chief Court Rules (Original Side) ("SCCR ") read with Order XXXVIII, Rule 5 and Section 151 of Civil Procedure Code ("C.P .C.") for arrest of Vessel i.e. Defendant No,1, whereas, Application at Serial No,2 has been filed under Order XII, Rule 6, C.P.C. for passing of judgment and decree on the basis of purported admission of the Defendants as to the claim of the Plaintif f. 2. Precise facts, as stated are that Plaintif f is a Company offering shipping services including chartering of Vessels/tugs and boats; whereas, Defendant No,1 is a foreign Vessel under the UAE flag and was berthed at Karachi Port at the time of filing of this Suit. Defendant No,2 is the registered owne r as well as tanager/operator of Defendant No, 1; whereas, Defendant No,3 is a Refinery registered under the laws of Pakistan and is a regular importer of crude oil and has established Pakistan's first floating Single Point Mooring and port facilities, for which it has to hire tugs, pilot boats and utility boats. It is further stated that Defenda nts Nos,2 and 3 entered into negotiations and pursuant to such negotia tions an Operation and Maintenance Contract was signed which required Defendant No,2 to hire and put on disposal of Defendant No,3 various tugs, pilot boats and utility boats. Insofar as the arrangement and agreement between Defendants Nos,2 and 3 is concerned, it is not the issue in hand directly . However , for the purposes of honoring its commitment with Defendant No,3, the Defendant No,2 approached Plaintif f to hire one of its Utility . Boats namely "M.V. Osam Jumbo-5" bearing IMO No,8309048 and the said boat was chartered by Defendant No,2 from the Plaintif f pursuant to Time Charter Agreement dated 7.6.2014 at the rate of US $ 2,800 per day pro rata. It is case of the Plaintif f that Defendant No,2 failed to pay the hire charges and defaulted and for such recovery , the Plaintif f has invoked the Admiralty Jurisdiction of this Court and through order
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dated 20.02.2018, the Defendant No,1 i,e, "M.T.Bofors" owned by Defendant No,2 was arrested and then ordered to be released on furnishing of solvent surety of US $ 645,356.85. Thereafter , vide Order dated 02.03.2018, another ad-interim order was passed, whereby , Defendant No,3 was restrained from releasing the amount to Defendant No,2, on the basis of some compromise decree in a separate Admiralty Suit No,04/2017 to the extent of Plaintif f's claim of US $ 645,356.85. 3. Learned Counsel for the Plaintif f has contended that Defendant No,2 has admittedly defaulted in making payments of the hire charges and as of 31.05.2017, the amount, as claimed in this Suit, was outstanding; whereas, Defendant No,2 has repeatedly admitted the said amount and kept on promising to pay, and the only reason for delaying payment was for the reason that Defendant No,3 had delayed their payments, and as soon as such payments were released, the Plaintif f's outstanding amount would be duly and immediately paid. Learned Counsel has referred to various correspondence including emails placed on record and has contended that the amount being claimed against Defendant No,3 by Defendant No,2 has been settled through a compromise in Admiralty Suit No,04/2017 and despite this, no response has been given to the Plaintif f's outstanding claim; hence, instant Suit. He has further contended that the total value of the Vessel in question i,e, Defendant No,1 is a maximum of US $ 90,000/- as per the fresh Valuation Certificate; therefore, Plaintif f has also joined Defendant No,3 in this Suit and seeks an order of attachment before judgment as well as a garnishee order . Per learned Counsel in terms of Ordinance 1980, the claim of the Plaintif f in personam can be enforced in rem against Defendants Nos,1 and 2 and is covered by the Admiralty Jurisdiction of this Court. Learned Counsel has referred to Section 3 (2) (h) read with Section 4(4) of the Ordinance 1980 and has contended that Defendant No,1 is a sister-ship of the offending Vessel for all legal purposes under the Ordinance 1980, and therefore the claim is maintainable in the present form. According to him during correspondence, the claim has been admitted; therefore, even otherwise the Plaintif f's case is that the application under Order XII, Rule 6, C.P.C. may be allowed as prayed and a judgment and decree be also passed and in support he has read out the provisions of Order XII, Rule 6, C.P.C. In support of his contention he has relied upon the cases reported as Messrs MSC Textile (Pvt) Ltd. through Executive Director v. Asian Pollux and 5 others (2007 CLD 1465 ), Nippon Yusen Kaisha (NYK) Lines v. Messrs MSC Textiles (Pvt.) Ltd. and 6 others (PLD 2008 Karachi 244), [2008] ANZMarLawJ1 11, Court of Appeal [1982] Vol.1 Part-3, Page 225 LLOYD's Law Reports, Hong Kong Supreme Court [1982] V ol. 2 Part-5 Page-532 LLOYD's Law Reports. 4. On the other hand, learned Counsel for Defendants Nos,1 and 2 has contended that the Suit in the present form cannot be entertained under the Admiralty Jurisdiction of this Court for the reason that the offending Ship i,e, "M.V. Osam Jumbo-5" was never owned by Defendant No,2 and in fact is owned by the Plaintif f itself and was on a Time Charter with Defendant No,2 and when the cause of action arose for filing instant Suit, the said time Charter had expired, and therefore, the claim in personam against the said Vessel cannot be enforced in rem against Defendants Nos,1 and 2. Per learned Counsel it is also to be considered by the Court that whether the provisions of Order XXXVIII, Rule 5, C.P.C. could be invoked and applied in a case under its Admiralty Jurisdiction and it is the case of the Defendants that the same does not apply . He has further contended that there is no admission as claimed in respect of the Plaintif f's outstanding amount, and even otherwise, mere correspondence by an unauthorized person of the Company cannot be made basis for an admission of the claim. Learned Counsel, without prejudice, has further argued that in fact the offending Vessel was not a ship within the meaning of Section 2(k) of the Ordinance, 1980, as it is case of the Defendants that it was a Boat, which cannot be used in navigation as interpreted in the case reported as Aleem Ahmad Ansari v. M.V. Ashar (PLD 1986 Quetta 54), wherein, the learned Baluchistan High Court has held that a floating platform can be said to be useable in Navigation only, if it can withstand perils of sea, which would mean storms, tempest, tidal waves etc. whereas, the present boat in question hardly meets the said criteria; hence in terms of Section 2(k) of the Ordin ance 1980, it is not a valid claim within the Admiralty Jurisdiction of this Court. Per learned Counsel first it has to be seen that what is the cause of action in a case under the Admiralty Jurisdiction and as per Section 4(4) firstly the claim should arise relating to a ship, and 'secondly , one should be liable for claim in personam and at the relevant time be in control of the Ship i,e, "The Ship" in respect of which the claim arose, which is also called as the offending Ship. Per learned Counsel, secondly , when the action is brought, the law lays down that at the time when the action in rem is invoked against
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the offending Ship through its arrest as per Section 4(4) (a) of the 1980 Ordinance, it is a must that the offending Ship is beneficially owned as regards majority shares by the person liable for claim in personam. Per learned Counsel, alternatively under Section 4(4)(b) ibid, any other Ship, beneficially owned as regards majority shares therein by the said person can also be arrested, which commonly is known as a sister-ship under the Admiralty Practice i,e, the two ships have the same owners or in other words same parenta ge. According to him when the action was initiated, it ought to have been against the offending Vessel, first in personam i,e, "M.V. Osam Jumbo- 5"; however , since the time charter has expired and "M.V. Osam Jumbo-5 ", is beneficially owned by the Plaintif f, and instead at the time of filing of this Suit, an action in rem has been invoked against Defendant No, 1, whereas it is obvious that this could not have been done as Defendant No,1 is not a sister-ship of the offending Ship "M.V. Osam Jumbo-5 ". According to him this is not a case of a. Demise Charter i,e, a long term Charter when the Charterer is virtually the owner , and in certain cases under the Demise Charter could be regarded as sister vessel in view of the International Convention Relating to the Arrest of Sea Going Ships of 10.05.1952. According to him, admittedly , it is not the Plaintif f's case that "M.V. Osam Jumbo-5 " was under a Demise Charter . Per learned Counsel in this context the Pakistani law is somewhat different where according to the Ordinance 1980, the concept of Sister Vessel only applies, if two Vessels are beneficially owned as regards majority shares therein, and in support of his contention he has also relied upon the case of Messrs V.N. Lakhani & Company v. M.V. Lakatoi Express and 2 others (PLD 1994 SC 894). In addition to this objection, he has also contended that Order XXXVIII, Rule 5, C.P.C. does not apply in a case under Admiralty Jurisdiction as per dictum laid down by this Court in case reported as Bangladesh Shipping Corporation Dacca v. S.S. NENDN (PLD 1981 Karachi 419) and therefore, no attachment could be made in respect of the amount supposed to be paid by Defendant No,3 to Defendant No,2 pursuant to the compromise judgment and decree in Admiralty Suit No,04/2017. Lastly , he has contended that even otherwise the preconditions of invoking Order XXXVIII, Rule 5, C:P.C., do not apply in the facts and circumstances of this case as there is no property as yet of Defendant No,2, which could be attached before judgment and in support he has referred to the case reported as Muhammad Yousif v. Agha Amir Muhammad (PLD 1976 Karachi 926) and New Bengal Shipping Company v. Eric Lancaster Stump (PLD 1952. Dacca 22). Insofar as the allegation regarding admission and passing of a judgment and decree is concerned, learned Counsel has contended that the negotiating person was acting as an inter-mediatory and was not' authorized to make any commitment or admission on behalf of Defendant No,2. Per learned Counsel in fact the emails relied upon by the Plaintif f on the basis of a report of I.T. Expert reflects that they are forged; whereas, an admissio n in terms of Order XII, Rule 6, C.P.C. must be unqualified and unconditio nal, and if not then no judgment and decree can be passed on the basis of the said purported admission. In support he has relied upon the case of Kassamali Alibhoy -v. Shaikh Abdul Sattar (PLD 1966 (WP) Karachi 75) and Habib Khan v . Mst. T aj Bibi and others (1973 SCMR 227). 5. Insofar as Counsel for Defendant No,3 is concerned, he has contended that Defendant No,3 has no relation on agreement with the Plaintif f, and therefore, the Suit, is not maintainable against Defendant No,3 under the Admiralty Jurisdiction of this Court. Per, learned Counsel dispute, if any, is between Plaintif f and Defendants Nos,1 and 2, and therefore, no judgment and decree or a relief could be sought against Defendant No,3. 6. I have heard all the learned Counsel and perused the record. It is a matter of admitted fact that Plaintif f and Defendant No,2 entered into a Time Charter in respect of "M.V. Osam Jumbo-5 ", which continued and stood extended on a number of occasions. Though a contention has been raised on behalf of Defendant No,2 that in fact the Time Charter stood expired and the boat in question was returned; however , for the present purposes, this issue cannot be adjudicated for lack of evidence, and admittedly , the claim of hire charges against Defendant No,2 is in relation to the period when the Vessel was under the Time Charter . It is not disputed that "M.V. Osam Jumbo- 5" was under a Time Charter between Plaintif f and Defendant No,2 and was being used and deployed for necessary works by Defendant No,2 in relation to its services to Defendant No,3. It is also a matter of fact that insofar as Defendant No,3 is concerned, they have no direct nexus or relationship with the Plaintif f. It is the case of the Plaintif f that several dues and charges accrued in respect of the Time Charter and Defendant No,2 has defaulted. It is their further case that when approached, certain commitments were made and the claim was admitted for which the Plaintif f has also filed an application under Order XII, Rule 6, C.P.C. for passing of a
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compromise judgment and decree. The present Suit has been filed by the Plaintif f when a Vessel i,e, Defendant No, 1 was berthed at Karachi Port and according to the Plaintif f, since that Vessel was owned by Defendant No,2, this Court can and must exercise the Admiralty Jurisdiction under the Ordinance, 1980. An order for arrest of the Vessel was made on 20.02.2018 and the Vessel in question was arrested and was only directed to be released upon furnishing security or bank guarantee to the extent of US $ 645,356.85. 1 is a matter of record and not in dispute that Defendant No,2 has not furnished any guarantee for seeking release of Defendant No,1, the ship in question. Thereafter by means of another order dated 02.03.2018 at the request of the Plaintif f an order was passed in respect of attachment of certain amount, to be paid by Defendant No,3 to Defendant No,2 in another Admiralty Suit. Now presently the Plaintif f's case is that since the value of the Vessel arrested is much less as against their claim, therefore, not only the order of arrest of the Vessel be maintained under the Admiralty Jurisdiction of this Court; but so also the attachment of the amount can also be done by this Court under the said jurisdiction read with Order XXXVIII, Rule 5, C.P .C. 7. In order to have a clear understanding of the dispute in hand, it would be advantageous to refer to the relevant provisions of Section 3(2) (h) and so also Section 4 (4) of the 1980 Ordinance, which reads as under:- "3. Admiralty Jurisdiction of the High Court; (2) The Admiralty jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine any of the following causes, questions or claims- (h) Any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; 4. Mode of exercise of Admiralty jurisdiction. - (4) In the case of any such claim as is mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section (3), being a claim arising in connection with a ship. where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ship, the Admiralty jurisdiction of the High Court may, whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against-- that ship, if at the time when the action is brought it is beneficially owned as respects majority shares therein by that person; or Any other ship which, at the time when the action is brought, is beneficially owned as aforesaid: 8. Perusal of the aforesaid provisions reflects that Admiralty Jurisdiction has been conferred on this Court that is to say the jurisdiction to hear and determine any claim arising out of any Agreement relating to the carriage of goods in a Ship or to the use or hire of a Ship, whereas, the mode of exercise of such jurisdiction has been provided in Section 4(4), which states that in case of any such claim as is mentioned in Clauses (e) to (h) and (j) to (q) of Subsection (2) of Section 3, a claim arising in connection with a Ship where the person who would be liable on the claim in an action in personam was, when cause of action arose, the owner or charterer of, or in possession or in control of the ship, the admiralty jurisdiction of the High Court may, whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against that ship, if at the time when the action is brought it is beneficially owned as respects majority shares therein by that person; or any other ship which, at the time when the action is brought, is beneficially owned as aforesaid. Learned Counsel for Defendants Nos,1 and 2 has vehemently relied upon the judgment of the Hoh'ble Supreme Court in the case of V.N. Lakhani & Co., (Supra); however , before coming to that it would be advantageous to examine the judgment of the learned Single Judge of this Court in that case which is reported as Messrs V.N. Lakhani & Co. v. the Ship Lakatoi Express (1994 CLC 1498), wherein, the claim of the Plaintif f against the Defendants including a sister-ship of the offending ship was dismissed on the ground that the Plaintif f had failed to show that when the action was brought, ship was beneficially owned by shipper as respects majority of shares in the ship in question as the Defendant having entered into slot charter agreement with the shipper , no beneficial interest was conferred on him in the ship in question. The said judgment of the learned Single Judge went into Appeal and the order was upheld on 09.03.1994 in an Admiralty Appeal No-.01 / 1994. The Appellant being further aggrieved, approached the Hon'ble Supreme Court wherein the Hon'ble Supreme Court (though while refusing leave to appeal) has interpreted the question of invoking the Admiralty
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Jurisdiction against a sister-ship in a case where the offending ship is under a Charter Party Agreement. The relevant finding of the Hon'ble Supreme Court is contained in Paras Nos,4, 5 and 8, which reads as under:- "4. The relevant facts for attracting the jurisdiction of the. Court in the present case are that the ship which originally carried the goods was owned by Merzario who were the time charterer of respondent No.1 The petitioner had filed suit for arrest of respondent No,1 and not the original vessel, claiming it to be a sister-ship of the vessel "Commandante Revello " as both were owned by Merzario . If this would have been the situation, there would have been no difficulty to entertain the suit under the Ordinance and to pass order for arrest but from the evidence, it transpired that Merzario were the owners of "Commandante Revello ", but so far respondent No,1 is concerned, they were only time charters. In these circumstances, the question arose whether under subsection (4) quoted above, the Court could exercise jurisdiction in rem against respondent No1. In applying section 4(4) one has to take into connection with the of fending ship. In order to invoke the jurisdiction, the plaintif f has to establish that: (1) The claim falls in any of the clauses as mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 and arises in connection with a ship. (2) when the cause of action for action in personam arose. (3) The person liable in an action in personam at the time when such; cause of action arose, was the owner or charterer of or in possession or in control of the of fending ship. (4) The offending ship or any other ship which is sought to be arrested, at the time action is brought is beneficially owned as respects majority shares by the person liable on the claim in an action in personam. 5. The key words in the provision are beneficially owned as respects majority shares. The person liable for the claim in an action in personam should beneficially own majority shares. It is on compliance with this condition that action in rem for arrest of a sister vessel can be filed. Lord Denning in I Congreso del Partido (1981) 1 All England Law Reports 1092 at 1099), while considering the effect of section 3(4)(b) of Administration of Justice Act, 1956 of Britain, which is similar to section 4(4) of the Ordinance, with a difference so far the beneficial ownership as respect of the shares is concerned, as would be pointed out later , observed as follows:-- "In applying section 3(4)(b) you have first to consider the position at the time when the cause of action arose in connection with the offending ship. You have then to discover a person who would be 'liable on the claim in an action in personam'. Having discovered him, you have to consider the position at the time when the action is brought. You have then to inquire whether that person at that time beneficially owned any other ship (a sister-ship) besides the offending ship. If there is such a person, you can invoke the Admira lty jurisdiction of the High Court against that sister-ship." 8. In our view the learned Judges have taken correct view by excluding the charterer , be it time charterer or charterer by demise, from the category of persons who beneficially own majority shares in the ship sought to be arrested. The pre-condition for invoking jurisdiction under section 4(4)(a)(b) is that the person who would be liable on the claim in an action in personam was, when the cause of action arose, should beneficially own majority shares in the ship only then sister-ship can be arrested. If we take the view that the words "beneficially owned" may include even a demise charterer then words "as respects majority shares" will be completely Fedundant. The ownership of majority shares may be beneficial' or legal is a condition precedent for invoking the jurisdiction. It is a well settled principle of interpretation of statute that each and every word of a statute has to be given its meaning and no part of a statute can be treated as redundant or surplus. It, therefore, seems clear that the legislature intended to give an effective meaning to the words "as respects majority shares" which can only be attributed to the owners. The petition is dismissed. 9. From perusal of the aforesaid finding, it reflects that the Hon'ble Supreme Court has come to a definite conclusion that a Charter , be it a time Charter or Charter by Demise, is excluded from the category of persons who beneficially own majority shares in the ship sought to be arrested and the precondition in invoking jurisdiction under Section 4(4) (a) (b) is that the person, who would be liable on the claim in an action in personam or when the cause of action arose, should beneficially own majority shares in the ship, only then a sister-ship can be arrested. The gist of the above finding is that first and foremost, the person against whom the claim is being lodged must be an owner of the offending ship, and once such a condition is fulfilled, only then an order for arrest of a sister-ship can be
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made. However , when the facts of the reported case A are examined, it is somewhat different from the facts germane in the instant matter . In that case the shipment was effected on a Vessel called "Commandante Revello " owned by Merzario (in short) for which a bill of lading was issued which restricted transshipment of goods. However , notwithstanding this restriction, goods were transshipped on vessel "Lakatoi Express " belonging to M/s Artemis Lines S.A. This vessel i,e, "Lakatoi Express " was on a Time Charter with "Merzario" . The Admiralty Suit was filed against "Lakatoi Express " and its owners as well as local shipping agent and the same was resisted by the Defendants on the ground that the Suit in rem was not maintainable against "Lakatoi Express " as it was under a Time Charter to "Merzario " when it arrived at Karachi Port, and was not owned beneficially by it; hence, the claim against its actual owners for satisfying the claim in personam against "Merzario" , or for that matter against the offending Vessel, cannot be maintained. The Hon'ble Supreme Court while upholding the view of the learned Single Judge and the learned Division Bench then came to the aforesaid conclusion. When the facts of instant matter are examined and read in juxtaposition to the facts and law laid down in the case of V.N. Lakhani & Co., (Supra) hereinabove, then it transpires that the ratio of the said judgment is not applicable in this case. Here, the Vessel under arrest is owned by the then Time Charterer (Defendant No,2) against whom the Plaintif f has lodged the claim in personam , whereas, in the case of V.N. Lakhani & Co., (Supra), the Plaintif fs had filed its claim against a ship which was under a Time Charter and berthed within the Admiralty…
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