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Petitioner: KHADIJA EDIBLE OIL REFINERY (PVT.) LTD.s VS Respondent: M.T. "GALAXY" and 4 others
Court Name: Sindh High Court Judge(s): Muhammad Tasnim Title: KHADIJA EDIBLE OIL REFINERY (PVT.) LTD.s vs M.T. "GALAXY" and 4 others Case No.:Admiralty Suits Nos. 3, 4 and C.M.As. Nos. 22 and 24 of 2011 Suits Nos. 3 and
4 of 2011 Suits Nos. 3 and 4 of 2011 C.M.As. Nos. 22 and 24 of 2011 M.As. Nos. 22 and 24 of 2011 Date of Judgment:2011-02-18 Reported As: 2011 CLD 709 Result: Applications dismissed Judgment ORDER ' MUHAMMAD TASNIM, J.---Since common facts and law are involved in Admiralty Suits Nos. 3 and 4 of 2011, the pending applications under Rule 731 of the Sindh Chief Court Rules being C.M.As. Nos. 22 and 24 of 2011 respectively are being disposed of by this order. 2. For disposal of above applications, facts in brief, as per plaint, are mentioned hereunder:-- ' Facts of Adm. Suit No, 03 of 2011 3. In the plaint, plaintiff has stated that defendant No,2 is the registered owner of defendant No, 1- vessel. It is further stated that defendant No, 2 is the wholly owned subsidiary of defendant No, 4, who being the holding company of defendant No,2 are in fact group/beneficial owners of defendant No,1 and acts as its Managers/OperatoRs, It has further been claimed in the plaint that defendant No,4 is also the group owners/beneficial owners/Mangers/Operators of another vessel M.T. "PROSPERITY" registered in the name of defendant No,3, who are also a wholly owned subsidiary of defendant No,4 and as such vessel M.T "GALAXY" and M.T "PROSPERITY" are sister vessel. It is alleged that a consignment of 4000.000 Metric Tones Crude Palm Oil was imported by the plaintiff under Eight Bills of Lading from Malaysia for delivery at Port Qasim and C & F price of the consignment was US$ 3,097,000.00. It is stated that said consignment reached Karachi at Port Qasim through M.T "PROSPERITY" on 22-9-2010. On discharge of Crude Palm Oil from the vessel to shore tanks it was noticed that there was a short landing of 39.740 M. Tons, value whereof comes to US $ 48,647.00. For the aforesaid amount present suit has been filed against defendant No,1 M.T "GALAXY" for arrest of the said vessel on the ground that it is sister ship of M.T "PROSPERITY". Along
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with the suit an application under Rule 731 of the Sindh Chief Court Rules (0.S) seeking arrest of vessel M.T "GALAXY" has been filed. 4. The aforesaid application was taken up by the Court when after hearing of learned counsel for plaintiff following order was passed; "2. It is, inter alia, contended by the learned counsel for the plaintiff that plaintiff had imported 4000.000 Matric Tons Crude Palm Oil from Malaysia which consignment reached Karachi from M. T. PROSPERITY and on arrival of the consignment it was noted that it was short landed by 39.740 Matric Tons Crude Palm Oil. As per plaintiff assessment the value of short landed consignment is US $ 48,679. Learned counsel further submits that defendant No,4 are also the group owners/ beneficial owners/managers/operators of others vessels including M.T GALAXY which is presently berthed at Port Qasim. Learned counsel says that on arrival of the consignment when short landing came to the notice of the plaintiff the claim was lodged by the plaintiff upon the carriers but such claim remained unsettled till date. Learned counsel says that M. T. GALAXY a sister ship of M. T. PROSPERITY is presently berthed at Port Qasim and she may be arrested. In the circumstances of the case office to issue notice to the defendants for 18-1-2011. Till then M. T. GALAXY shall remain arrested and concerned Authorities are directed not to issue port clearance to the said vessel. However, if defendants pay the suit amount to the plaintiff or furnish solvent surety of the equivalent amount of claim with the Nazir of this Court the ship in question may be allowed to sail." 5. After service of the notice of the above application, defendants appeared and filed their counter-affidavit. In the counter affidavit it was stated by the defendant that application for arrest of M.T "GALAXY" is false, frivolous, misconceived and the same be dismissed. It was denied by the defendants that defendant No,4 are group/beneficial owners of the vessel M.T "GALAXY" or that of M.T "PROSPERITY" and that M.T "GALAXY" and M.T "PROSPERITY" are the sister ships. It was stated in the counter affidavit that order for arrest of defendant No,1 vessel was obtained by the plaintiff on concealment of facts and by misrepresentation. It was also denied that any short landing in the previous consignment had taken place. Along with counter affidavit, copies of Lloyd's register certificate of Panama Registry of M.T "GALAXY", certificate of Singapore. Registry of M.T "PROSPERITY", ship, information extracts from the website have been attached as annexures "A/l, A/2, A/3, A/4 and A/5" respectively. It is stated in the counter-affidavit that Lloyd's Register has been in existence since 1764 and information contained therein is considered to be authoritative, which pertains to the actual description and the ownership of the ship. In this view of the matter, it has been stated in the counter- affidavit that order passed for arrest of vessel be recalled and application be dismissed. 6. After receipt of copy of counter-affidavit by the plaintiff, they have filed their affidavit-in- rejoinder, wherein plaintiff has denied the contentions of defendants contained in counter-affidavit and has maintained their stand in the suit. Facts of Adm. Suit No, 04 of 2011 7. In the plaint, plaintiff has stated that defendant No,2 is the registered owner of defendant No,1- vessel. It is further stated that defendant No,2 is the wholly owned subsidiary of defendant No,4, who being the holding company of defendant No,2 are in fact group/beneficial owners of defendant No,1 and acts as its Managers/OperatoRs, It has further been claimed in the plaint that defendant No,4 is also the group owners/beneficial owners/Mangers/Operators of another vessel M.T. "HORIZON" registered in the name of defendant No,3, who are also a wholly owned subsidiary of defendant No,4 and as such vessels M.T "GALAXY" and M.T "HORIZON" are sister vessels. It is alleged that a consignment of 4482.000 Metric Tones RBD Palm Olein was imported by the plaintiff under Nine Bills of Lading from Malaysia for delivery at Port Qasim and C and F price of the consignment was US $ 36,25,670.00. It is stated that said consignment reached Karachi at Port Qasim through M.T "Horizon" on 1-8-2010. On discharge of RBD Palm Olein from the vessel to shore tanks it was
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noticed that there was a short landing of 26.097 M. Tons, value whereof comes to US $ 33,554.00. For the aforesaid amount present suit has been filed against defendant No,1 M.T "GALAXY" for arrest of the said vessel on the ground that it is sister ship of M.T "HORIZON". Along with the suit an application under Rule 731 of the Sindh Chief Court Rules (0.S) seeking arrest of vessel M.T "GALAXY" has been filed. 8. The aforesaid application was taken up by the Court when after hearing of learned counsel for plaintiff following order was passed:- "2. It is, inter alia, contended by the learned counsel for the plaintiff that plaintiff had imported 4482.000 Matric Tons R.B.D. Palm Olein from Malaysia which consignment reached Karachi from M. T. HORIZON and on arrival of the consignment it was noted that it was short landed by 26.097 Matric Tons R.B.D. Palm Olein. As per plaintiffs assessment the value of short landed consignment is US $ 33,554. Learned counsel further submits that defendant No,4 are also the group owners / beneficial owners / managers/ operators of others vessels including M. T. GALAXY which is presently berthed at Port Qasim. Learned counsel says that on arrival of the consignment when short landing came to the notice of the plaintiff the claim was lodged by the plaintiff upon the carriers but such claim remained unsettled till date. Learned counsel says that M. T. GALAXY a sister ship of M. T. HORIZON is presently berthed at Port Qasim and she may be arrested. In the circumstances of the case office to issue notice to the defendants for 18-1-2011. Till then M. T. GALAXY shall remain arrested and concerned Authorities are directed not to issue port clearance to the said vessel. However, if defendants pay the suit amount to the plaintiff or furnish solvent surety of the equivalent amount of claim with the Nazir of this Court the ship in question may be allowed to sail." 9. After service of the notice of the above application, defendants appeartd and filed their counter- affidavit. In the counter affidavit it was stated by the defendants that application for arrest of M.T "GALAXY" is false, frivolous, misconceived and the same be dismissed. It was denied by the defendants-that defendant No,4 is the wholly company of defendant No,3 or the group / beneficial owners of the vessel M.T "HORIZON". It was also denied by defendants that defendant No,4 is group or beneficial owners of M.T "GALAXY" or that of M.T "HORIZON" and that M.T "GALAXY" and M.T "HORIZON" are the sister ships. It was stated in the counter affidavit that order for arrest of defendant No,1 vessel was obtained by the plaintiff on concealment of facts and by misrepresentation and it was also denied that any short landing in the previous consignment had taken place. Along with counter-affidavit, copies of Lloyd's register certificate of Panama Registry of M.T "GALAXY", certificate of Singapore Registry of M.T "HORIZON" & M.T. "PROSPERITY", ships information extracts from the website have been attached as annexures "A/1, A/2, A/3, A/4 and A/5" respectively in both the suits. It is stated in the counter-affidavit that Lloyd's Register has been in existence since 1764 and information contained therein is considered to be authoritative, which pertains to the actual description and the ownership of the ship. In this view of the matter, it has been stated in the counter-affidavit that order passed for arrest of vessel be recalled and application be dismissed. 10. After receipt of copy of counter-affidavit by the plaintiff, they have filed their affidavit-in- rejoinder, wherein plaintiff has denied the contentions of defendants contained in counter-affidavit and has maintained their stand in the suit. 11. Mr. Mazhar Imtiaz Lari, Advocate for plaintiff has submitted that defendant No,4 are Mangers/Operators and beneficial owner of defendant No, 1. He further submitted that earlier consignment had reached Karachi through M.T "PROSPERITY" and M.T "HORIZON", wherein short landings had taken place and for recovery of money for the short landed goods present suit has been filed. He further submitted that since M.T "GALAXY", M.T "PROSPERITY" and M.T "HORIZON" are sister ships hence defendant No,1 be arrested till suit amount is paid by the defendants to the plaintiff or defendants furnish solvent surety with the Nazir of this Court. Learned counsel for plaintiff
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has submitted that defendant No,2 is registered owner of defendant No,1 which is the subsidiary of defendant No,4 hence defendant No,1 may be arrested. In support of his contentions, learned counsel has relied upon the following case law: (1) Yukong Ltd. v. M. T. Eastern Navigator (PLD 2001 SC 57), (2) V. N. Lakhani & Co. v. M. V. Lakatoi Express (PLD 1994 SC 894), (3) Union Council v. Associated Cement (Pvt.) Ltd., (1993 SCMR 468), (4) Messrs Maratos and Co. v. Rice Trader (PLD 1989 Karachi 94). (5) Central Insurance Co. v. M. T. Tasman Spirit (SBLR 2004 (SINDH) 414), and (6) Nazar Muhammad v. Ali Akbar (PLD 1989 Karachi 635). 12. Conversely Mr. Khalid A. Rehman, Advocate for defendants has submitted that action in rem and personam cannot be joined in one suit hence the proceedings are incompetent. He further submitted that M.T "PROSPERITY" was owned by Golden Regency Maritime Pte. Ltd., which is incorporated in Singapore and has invited my attention to annexure A/3 (in Adm. Suit No,3/ 2011) to the counter-affidavit and submitted that perusal of the annexure A/3 shows that Golden Regency Maritime Pte. Ltd., is registered owner of M.T "PROSPERITY" hence learned counsel for defendants submitted that claim of the plaintiff against defendant No,1-vessel is of no consequences. He further submitted that order of arrest of defendant No,1-vessel has been obtained by misrepresentation of facts. Learned counsel further submitted that M.T "GALAXY" is owned by defendant No,2 Messrs Galaxy Maritime Ltd. S.A. And has invited my attention to annexure A/2 (in Adm.Suit No,3 of 2011) to the counter-affidavit, which shows that M.T "GALAXY" is 100% owned by defendant No,2-Messrs Galaxy Maritime Ltd. S.A. Learned counsel for defendants has further submitted that plaintiff may have claimed against M.T "PROSPERITY", but cannot press their claim against defendant No,1-vessel. ' Similarly learned counsel for defendants further submitted that M.T "HORIZON" is not owned by defendant No,2 and M.T "HORIZON" is not sister ship of defendant No,1-vessel. Learned counsel has invited my attention to annexures A/3 to the counter-affidavit, which is a certificate of Singapore Registry, which shows that M.T "HORIZON" is owned by defendant No,3-Messrs Prosperity Maritime Pte. Ltd. Learned counsel has further submitted that M.T "GALAXY" is not sister ship of M.T "HORIZON", hence defendant No,1-vessel cannot be arrested. Learned counsel has also invited my attention to annexures A/2 to the counter-affidavit and submitted that in the aforesaid document it has been shown that M.T "GALAXY" is 100% owned by defendant No,2-Messrs Galaxy Maritime Ltd. S.A. Hence plaintiff cannot press their claim against defendant No,1 vessel as well. Learned counsel has submitted that applications under disposal may be dismissed and order of arrest of defendant No,1-vessel be recalled. 13. In support of his contentions, learned counsel has relied upon the following case law:-- (1) Pak American Fertilizers Ltd. Mianwali v. Amir Abdullah Khan and another (1984 CLC 2170) (2) Atlantic Steamer's Supply Company v. M.V. Titisee and others (PLD 1993 SC 88) (3) Messrs" V. N. Lakhani and Company v. M.V. Lakatoi Express and others (PLD 1994 SC 894) (4) Central Insurance Company Ltd. And others v. M.T. Tasman Spirit and others {2004 CLD 695) (5) M. V. Sea Success I v. Liver Pool and London Steamship Rotection and Indemnity Association Ltd. (AIR 2002 Bombay 151) (6) Messrs Maratos and Co. v. Rice Trader and others (PLD 1989 Karachi 94) (7) Proceeding in Rem Against the Vessel M.T. Portofino and another v. M.T. Protofino (2003 CLD 1655) (8) Global Tradeways Ltd. v. Tsavliris Russ (World Salvage and Towage) Limited and another (2004 YLR 2581) 14. Now taking up the first contention of learned counsel for defendants that action in rem and personarn cannot be joined together and the present proceedings are defective and liable to be
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dismissed. This particular point has come up for consideration in case of Messrs MSC Textiles (Private) Limited v. Asian Pollux and others (2007 CLD 1465), wherein learned Single Judge of this Court (Now the Honourable Chief Justice) while dealing with the above issue has held as under:-- The jurisdiction in rem is invoked, against offending vessel, when one proceeds in rem, the purpose is to draw out the owner or charterer, or any person who claims to be interested or in possession or in control of the offending vessel. In such event, the person having any interest in the offending vessel has two options either to come out and defend the entire claim or abstain. However, if such person chooses to abstain, then the liability is limited to the extent to the vessel otherwise not. The position in English and in Pakistan law is different. In English law action in rem and personam cannot be clubbed together. ' In Ahmed Investment Ltd. v. Sunrise IV PLD 1980 Kar. 229, in the contest of section 35, of the Admiralty Court Act, as then applicable, held that the admiralty jurisdiction is exercisable in rem as well as in personam. Such position was affirmed in Bangladesh Shipping Corporation v. Nedon PLD 1981 Kar. 246 and finally in the case of Yukong Ltd. South Korea Co. v. M.T. Eastern Navigation PLD 2001 SC 57 our Supreme Court has finally endorsed the above position and objection as to joinder of owners in action in rem against the vessel was repelled by the Supreme Court. As noted in the cited cases in Pakistan, position on the subject is settled, any discussion would be nothing but an attempt to reinvent the wheel. In the light of above objection as to joinder of vessels as well as the owner/charterer raised by, the learned counsel for the contesting defendant is not sustainable. C.M.A.No,2270 of 2004 under Order VII, Rule 11, C.P.C. Is dismissed." 15. This question was also considered by learned Division Bench of this Court in the case of Bangladesh Shipping Corporation v. M.V. Nedon and another (PLD 1981 Karachi 246), wherein learned Division Bench dealt with the issue in the following words:-- "...... Regarding the matter historically and legally an action in rem is against a ship without making it as a defendant. The real defendants are described as owner of or persons interested in the ship, and the writ of arrest may be effected by serving it on the ship which may be accepted by the Master, owner or by nailing or pasting it on the Mast or other conspicuous part of the ship. As a consequences of such service if the owner or any person interested in the respondent enters appearance and puts up the defence then the person so appearing becomes party to the action and thereby becomes personally liable for whatever may be decreed against him. If no appearance is entered the action remains as an action in rem operating only against the ship arrested and if a judgment is passed in favour of the plaintiff it can be enforced by sale of the ship but not against the owner personally or any of his property. If any authority is needed reference can be made to the observations made by Lord Denning M. R. In the case of The Banco (1)." 16. Finally above point was dealt with by the honourable Supreme Court of Pakistan in the case of Yukong Ltd. South Korean Company, Seoul, South Korea (supra) in the following words:-- 17 Action in rem primarily is against the property which eventually may be arrested and sold out to satisfy the claim. Such action is resorted to in respect of any claim or question within the Admiralty Jurisdiction irrespective of the fact that it is in the nature of a maritime lien or not. In fact, it is a proceeding against the ship. In the words of Lord Watson the action is a remedy against the corpus of the offending ship. Sir George Jessel M.R. Described the process in rem in the following terms:-- "You may in England and in most courtiers proceed against the ship. The writ may be issued against the owner of such a ship, and the owner may never appear, and you get your judgment against the ship without a single person being named from beginning to end. That is an action in rem, and it is perfectly well understood that the judgment is against the ship." 18. The action in rem and action in personam are distinct. In case of former, it is the proceeding against ship, whereas in the latter it is a proceeding inter parties."
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17. In view of above legal position, objection of defendants as to joinder of vessel as well as owner raised by learned counsel for defendants is not sustainable, accordingly same is repelled. 18. The next point, which requires consideration is whether action in rem against the defendant No,1-vessel is maintainable for a claim, which according to learned counsel for plaintiff, was against a sister vessel. Before proceedings further, it would be appropriate to refer the provisions of sections 3 and 4 of the Admiralty Jurisdiction of High Court Ordinance, 1980 (hereinafter called as "Ordinance, 1980"), which are hereunder:-- "(3) Admiralty jurisdiction of the High Court. --(1) The Sindh High Court and the High Court of Balochistan shall have and exercise, within their respective territorial jurisdiction. Admiralty jurisdiction as is in this respective territorial jurisdiction. Admiralty jurisdiction as is in this Ordinance, provided and the Lahore High Court and the Peshawar High Court shall, within their respective territorial jurisdiction have and exercise the said jurisdiction in cases in which any question or claim relating to aircraft is to be determined. (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 claim:-- any claim for loss of or damage to goods carried in a ship; (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. (1) 0) (k) .................................................. (1) .................................................. (m) (n)..................................... (0) ............................ (p) ............................................................... (q) ........................................... (r) ........................................... (3) ........................................... (4) ........................................... (5) ........................................... (a) ........................................... (b) ........................................... (c) ........................................... (4) Mode of exercise of Admiralty Jurisdiction.--- (1) Subject to the provisions of section 5, the Admiralty jurisdiction of the High Court may in all cases be invoked by an action in personam. (2) The Admiralty jurisdiction of the High Court may in the cases mentioned in clauses (a) to (d), (I) and (r) of subsection (2) of section 3 be invoked by an action in rem against the ship or property in question. (3) In any case in which there is a maritime lien or other charge on any ship, aircraft or other property of the amount claimed, the Admiralty jurisdiction of the High Court may be invoked by an action in rem against that ship, aircraft or property. (4) In the case of such claim as is mentioned in clauses (e) to (h) and (i) 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--- "
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19. Section 4(3) of the Ordinance, 1980 enables a plaintiff to invoke the Admiralty jurisdiction against the ship in connection with which the claim arise, whether or not at the time when the action is brought. It remains in the same ownership. 20. Section 4(4) of the Ordinance, 1980 enables the plaintiff to invoke Admiralty jurisdiction, in respect of any such claim as is mentioned in clauses (e) to (h) and (i) 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 the charterer of or in possession or in control of the ship, the Admiralty Jurisdiction of High Court may, whether the claim gives rise to a maritime lien or the ship or not may be invoked by an action in rem against:-- (a) that ship, at the time when the action is brought it is beneficially owned as respect majority share therein by that person; or (b) any other ship which at the time when the action is brought is beneficially owned as aforesaid. 21. In applying section 4(4) of the Ordinance, 1980 one has to take into consideration the existing facts at the time when cause of action arose in connection with offending ship. In order to invoke the jurisdiction, the plaintiff has to plead that:-- (a) The claim falls in any of the clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 and arises in connection with a ship. (b) When the cause of action in personam arose. (c) 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 offending ship. (d) The offending ship or any other ship when is sought to C be arrested at the time when action is brought is beneficially owned as respect of majority shares by the person liable on the claim is an action in personam. 22. The significant expressions in the provisions are beneficially owned as respect majority share. The person liable for the claim in an action in personam should beneficially own majority shares. On compliance of this D condition an action in rem for arrest of a sister vessel can be filed. Lord Denning in I Congreso del parlido R1981)] 1 All England Law Reports 1092…
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