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Petitioner: Messrs A&B Petrol Urunleri Pazarlama through Authorized Attorney VS Respondent: MV Nazlican and others
Court Name: Balochistan High Court Judge(s): Naeem Akhtar Afghan Title:Messrs A&B Petrol Urunleri Pazarlama through Authorized Attorney vs MV
Nazlican and others Case No.: Admiralty Suit. No. 2 of 2020 Date of Judgment:2021-01-04 Reported As: 2021 CLD 1049, PLD 2022 Balochistan 1 Result: Suit dismissed Judgment ORDER NAEEM AKHT AR AFGHAN, J.---The instant Admiralty suit has been filed by the plaintif f (A Turkish Company Supplying Fuel/Bunker Services to the Vessels) against the defendants before this Count on 29.10.2020 under section 3(2) of the Admiralty Jurisdiction of High Courts Ordinance 1980 (hereinafter " the Ordinance "). 2. Relevant paras of the plaint read as follows: "2. That Defendant No.1 and Defendant No.2 are foreign vessels beached at Gaddani Ship Breaking Yard, Gadani, Balochistan. The Defendants Nos. 3, 4 and 5 are the registered/beneficial/ disponent owners, masters, operators inter alia of the Defendants Nos. I and 2, and Defendant No. 6, is the said to be purchaser of the Defendants Nos. 1 and 2 vessels at Gadani, Balochistan. Defendant No. 7, is the association, which manages and responsible the activities of ship breaking in Pakistan and Defendant No. 8 is the place where Defendants Nos. 1 and 2, vessels are present beached to be breaking. 3. That the Defendant No.1 received bunker services on 3rd January 2020, commencing at HRS 15:15 and ending at HRS 17:20 at Port Mersin according to Bunker Delivery . Receipt issued by the Plaintiff. Defendant No.1 received 60 Metric Tons (60,000 Kg) of 10 PPM Motor in Gas/Oil, on 3rd January 2020. The Plaintiff according to the terms and conditions regarding supply of fuel issued "Confirmation" dated 02.01.2020, in the name of Defendant No.4, clearly mentioning therein the vessel to be fueled and the buyers for the purposes of such fuel supply . The delivery of bunker services was duly evidenced through Bunker Delivery Receipt of the Plaintiff, whereupon the Master of the Defendant No.1, working under ownership/control/ management/chartership of the Defendant No.3, endorsed with its stamp and signs, evidencing completion and satisfaction of the supply of fuel. The total bill for the supply of 3rd January 2020 for 60 MT of 10 PPM Motor in Oil/Gas along with Transporta tion and Overtime amounted to
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USA) 47,100/- which was billed to Defendant No.4, on 3rd January 2020 through File No. N012020000000008, with mode of payment was 60DDD, which was from 3rd January to 31st March, 2020. 4. That the Defendant No.1 received another bunker services on 29th January 2020, commencing at HRS 09:15 and ending at HRS 10:25 at Port Iskenderun according to Bunker Delivery Receipt issued by the Plaintiff. Defendant No.1 received 40 Metric Tons (40,000 Kg) of 10 PPM Motor in Gas/Oil on 29th January 2020. The Plaintiffs upon such requests and after conclusion of terms regarding supply of fuel issued "Confirmation" in the name of Defendant No.4, dated 22.01.2020, clearly mentioning therein the vessel to be fueled and the buyers for the purposes of such fuel supply . The delivery of bunker services was duly evidenced through Bunker Delivery Receipt of the Plaintiff whereupon the Master of the Defendant No.1 working under ownership/control/ management/ chartership of the Defendant No.3, endorsed its stamp, evidencing completion and satisfaction of supply of fuel. That the total bill for the supply on 29th January 2020 for 40 MT of 10 PPM Motor in Oil/Gas along with Transportation and Overtime amounted to USD 30,000/- which was billed to Defendant No.5 on 23rd January 2020 through File No.ABX2020000000057, who were the agents/representative of Defendant No.3. According to Terms and Conditions was duly signed and confirmed by Defendant No.4 and received by the Plaintiff; the mode of payment was 60DDDD and which was ended 25th March 2020. 5. That the Defendant No.2 received bunker services on 4th March 2020, commenced at HRS 18:00 and ended at HRS 19:15 at Port Mersin according to Bunker Delivery Receipt issued by Plaintiff Defendant No.2 received 29 Metric Tons (29,000 Kg) of 10 PPM Motor in Gas/Oil on 4th March 2020. The Plaintiffs' upon such requests and after conclusion of terms regarding supply of fuel issued "Confirmation" dated 04-03-2020, in the name of Defendant No.5, clearly mentioning therein the vessel to be fueled and the buyers for the purposes of such fuel supply . The delivery of bunker services was duly evidenced through Bunker Receipt of the Plaintiff; whereupon the Master of the Defendant No.2, working under ownership/control/n-management/ chartership of the Defendant No.3, endorsed its stamp, evidencing completion and satisfaction of supply of fuel. That the total bill for the supply on 4th March 2020 for 29 MT of 10 PPM Motor in Oil/Bas along with Transportation and Overtime amounted to USD 17440/- which was billed to Defendant No.6 on 4th March 2020 through File No.AB X2020000000202, dated 04-03- 2020, who were the agents/representative of Defendant No.3. According to Terms and Conditions was duly signed and confirmed by Defendant No.5, and received by the Plaintiff, the mode of payment was 60 DDD and the due date for the payment of Bill for the Bunker Services received on 14th March 2020 was 3rd May 2020. That despite the lapse of such due dates, the Defendant No.3, failed to make any payment to the plaintiff for the three (3) Bunker Services supplied at the request of Defendants Nos.3, 4 and 5, causing severe problems for the plaintiff. The Plaintiff pursued the Defendant No.3 for their outstanding payments, however without any success. The Plaintiff emailed to Defendants and made certain correspondence and Defend ant No.3, categorically admitted and committed to pay the outstanding amount but totally failed. 7. That the Plaintiff sent Bills to the Defendant No.3 through Defendants Nos. 4 and 5, regarding the accrual of the 2% interest per month since their due dates over the Principal Amount of the three (3) outstanding bills. 8. That as per terms of fuel supply , being preconditions for supply of bunkers and the very conditions regulating the duties, liabilities applicable according to law for Plaintiff and Defendants, the supply of Bunkers results in creation of maritime lien over the vessel to which the bunkers are supplied. Even otherwise, as per the Turkish as well as Pakistani Law, supply of necessaries create a maritime lien over the vessel, and the same remains attached to the vessel till the time the payment is made. In case the payment is not made and the ownership of the vessel changes, the said maritime lien shall continue to travel with the vessel notwithstanding change of ownership. That in the instant case, the vessels have been sold to Defendant No.6 by Defendant No.3, to break both the vessels and both vessels are presently available with Defendant No.6, at place of Defendant No.8. While the Defendant No.7, is responsible body to regulate the affairs of ship breakers all over Pakistan and Defendant No.6, is under influence of Defendant No.7, therefore, Plaintiff sent Legal Notices dated 22-10-2020. The said sales are in complete violation of the international laws as well as ethics of the trade. The said sales are absolutely illegal, unlawful and void ab initio as the same were made with the intention to defraud the Plaintiff and other creditors of Defendants Nos.1 and 2.
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10. That the Defendant No.3, failed to make the outstanding payment within 60 DDD post-delivery , whereupon Plaintiff' contacted Defendants Nos. 3, 4 and 5 through direct communications whereupon Defendant No.3 assured the Plaintiff of Payment within a short period of time. The Plaintiff sent one last email to the Defendant No.3 regarding outstanding payment and represented that they would be constrained to take all measures possible for recovery of their outstanding amount. No reply to such email was ever received from Defendant No.3". 3. With regard to accrual of cause of action for filing the instant Admiralty suit, the plaintif f has stated as follows in para-14 of the plaint: "That the cause of action arose in favor of Plaintiff and against the Defendants when the Plaintiff supplied Bunker Services to the Defendants Nos. 1 and 2, on the request on Defendants Nos.4 and 5 on the behalf of Defendant No.3, in the months of January and March 2020. Secondly when the Plaintiff issued bills for the services. Thirdly when the Plaintiff continuously kept on pursuing the Defendants for clearance of their outstanding dues. Fourthly when the Plaintiff made last request to the Defendant for clearing their outstanding amount and Finally when the Defendants Nos. 1 and 2, were sold to Defendant No. 6, fraudulently without clearing the outstanding dues of the Plaintiff". 4. The plaintif f has claimed the following relief in the suit: "It is therefore pleaded before this honorable ' court may be pleased to pass judgment and decree in favor of the Plaintiff' and against the Defendants as follows: 1. That the Defendants Nos. 1 and 2, presently docked/ beached at Gadani Ship Breaking yard, Gadani, Balochistan be Arrested. That the Defendant No.3 is liable to pay the outstanding claim of Plaintiff amounting to USD $ 94840-, for bunker services provided on 3rd January 2020 and 29th January 2020 for Defendant No.1 and on 4th March 2020 for Defendant No.2. 3. That there is a maritime lien on the Defendants Nos.1 and 2. 4. That the Plaintiff has a charge on Defendants Nos.1 and 2 as per agreed Terms and Conditions for bunker services. 5. That the Defendant No.3, the owners of Defendants Nos.1 and 2 be restraint from carrying out the scrapping of this vessel. 6. That in addition to actual outstanding amount, the Defendant No.3 be ordered to pay USD $ 80000- plus 2% per month for every delayed month. 7. Any other benefit that the court deems fit". 5. The suit was filed by the plaintif f on 29.10.2020. It was registered on 09.11.202 0. Amended plaint was filed by the plaintif f on 25.1 1.2020 by correcting the name and description of defendants Nos.6 and 8. 6. On the basis of statement made by learned counsel for the plaintif f that both vessels (i.e. defendants Nos.1 and 2) have presently been anchored at Gaddani beach but have not yet been dismantled/ scrapped, C.M.A. No.105/2020 was accepted by this Court vide order dated 16.11.2020 and defendants Nos. 1 and 2 were ordered to be arrested till next date of hearing. The interim order was further extended on subsequent dates. 7. On 08.12.2020, defendant Nos. 1, 2, 6 and 8 submitted joint written statement contesting the suit on merits as well as on the basis of preliminary legal objections: The relevant preliminary legal objections raised by defendants Nos.1, 2, 6 and 8 in their joint written statement read as follows: "I. The suit/claim of the Plaintiff is for alleged unpaid invoices towards supply of bunkers. The claim for supply of bunker /marine fuel under section 3(2)(1) of the Admiralty Jurisdiction High Courts Ordinance, 1980 (the "Admiralty Ordinance ") does not give rise to maritime lien as decisively settled by the superior courts and thus the Plaintiff cannot enforce its claim against the Defendant No.1 or Defendant No.2 after change of ownership. II. The Plaintiff failed to satisfy the condit ions of section 4(4) of the Admiralty Ordin ance. The admiralty jurisdiction of this Hon'ble High Court has been wrongly invoked as: the person , if any who is liable in an action in personam in respect of Defendant No.1 (m.v.Nazlican) is the Defendant No.4 (Atilim Gemi Isletmeciligi A. S) and b. the personam if any who is liable in a action in personam in
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respect of Defendant No.2 (m.v .Nazlim) is the Defendant No.5 (Nazlim Gemi Isletmeciligi A. S). III. The Plaintiff has itself stated in the plaint that the Defendant No.8 is the purchaser of the Defendant No.1 (Nazlican) and Defendant No.6 is the purchaser of Defendant No.2 (Nazlim). The Defendant No.8 purchased the Defendant No.1 (Nazlican) vide Bill of Sale dated 22-9-2020 and payment of sale consideration was paid through letter of credit, whereas the Defendant No.6 purchased the Defendant No.2 (Nazlim ) vide Bill of Sale dated 14-10- 2020 and payment of sale consideration was paid through letter of credit, much before the day when the action/suit was brought. IV. The Defendant No.1 was beached on 3-10-2020 about 33 days prior to the filing of the captioned Admiralty Suit, whereas the Defendant No.2 was beac hed on 18-10-2020, about 18 days prior to the filing of the captioned Admiralty suit. It is submitted that once beached, the Defendant No.1 and Defendant No.2 have lost all their respective attributes of a 'ship/vessel' as they are not capable of navigation as they are neither seaworthy nor capable of getting any seaworthy certificates. When the suit was filed, after beaching of the Defendants Nos.1 and 2 (when it ceased to be a vessel) and further when the Defendant No.1 has been demolished over 70%, which fact was known to the Plaintiff and has obtained wrongful arrest thereof from this Honorable Court in active and deliberate supersession of material facts. V The present suit is a dispute exclusively between the Plaintiff and the Defendant No.4 (who ordered alleged bunker supplies or the Defendant No.3 allegedly beneficial owner of the Defendant No.1 at the time of making alleged supplies of bunker fuel. The plaintiff's claim at best is against the Defendants Nos.3, 4 or 5 in personam, none of whom is the owner of the Defendant No.1 or 2. VI. The Plaintiff and the Defendants No.3, 4 and 5 are Turkish companies, yet the Plaintiff chose to sue the said Defendants in Pakistan which is not permissible VII. Neither any cause of action accrued within the territorial jurisdiction of the court nor any of the Defendants Nos.3, 4 and 5 reside or carries on the business within the jurisdiction of this Hon'ble High Court". 8. The relevant paras of the joint written statement of defendants Nos.1, 2, 6 and 8 pertaining to the merits of the case read as follows: "2. That the contents of para-2 as stated are denied. The Defendants Nos.1 and 2 on the day when the action/suit was brought had already been 'sold and owned by the Defendants Nos.8 and 6 respectively . It is submitted that:- Nazlican (a) The true facts pertaining to Defendant No.1 (Nazlican) are that Defendant No.8 is/was the owner of the Defendant No.1 at the time when the action/suit was filed. The Defendant No.8 entered into a Memorandum of Agreement (MOA) dated 17-0-2020(sic.) for purchase of Defendant No.1 for demo lition purposes with YALUMBA INC. 0/0 6 Shenton Way, #18-08C, OUE Downton 2, SINGAPORE 068809 (hereinafter the Seller) @ US$ 342 per LDT long tonne. In terms of the said MOA, the Defendant No.8 opened a Letter of Credit (LC) No. 201NSU008905938 dated 21-9-2020 through Bank Alfalah Ltd. In favour of the said Seller/beneficiary . The Seller issued Commercial Invoice dated 22-09-2020 and also transferred the ownership and executed Bill of Sale dated 22-09-2020 in favour of the Defendant No.8. The payment of US$ 1,312,356.60 (United States Dollars One Million Three Hundred Twelve Thousand Three Hundred Fifty-Six and Cents Sixty Only) under the said LC was encashed/released on 28-09-2020 in favour of the Seller . (b)The aforesaid Seller had earlier purchased the Defendant No.1 from one Messrs Murali Maritime Inc. Nevis through an executed Bill of Sale dated 21-09-2020. The said Messrs Murali Maritime Inc. purchased the Defendant No.1 from one M/s BAF Bunkering and Shipping de RL, Panama through an executed Bill of Sale dated 18-09- 2020. The Defendant No.4 (Atilini. Gemi Isletmeciligi A. S) sold Defendant No.1 on 11-06-2020 and a Deletion Certificate was issued by the Turkish International Register of in this regard. The vessel was transferred to Panama Registry and requisite Provisional Registration Certificate from the Panama Maritim e Authority No. 52728- PEEXT was issued showing the said BAF Bunkering and Shipping S de RL, Panama as owner of the Defendant No. 1. The Consulate General of Panama issued a Certificate certifying that the Defendant No.1 appears provisionally registered at the Public Registry Ships of Title at Panama and that there are no encumbrances registered on the vessel.
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The entire sale consideration was paid to the said Seller through an irrevocable Letter of Credit No.20INSU008905938 dated 21.09.2020 through Bank Alfalah Ltd. In favour of the said Seller/beneficiary much before the filing of the instant suit, whereas the alleged claim for supply of bunker fuel is at the time when the Defendant No.1 was owned by Defendant No.4. Nazlim (d) The true facts pertaining to Defendant No.2 (Nazlim) are that the Defendant No.6 is/was the owner of the Defendant No.2 at the time when the action suit was filed. The Defendant No.6 enter -d into a Memorandum of Agreement (MOA) dated 3.10.2020 for purchase of Defendant No.2 for demolition purposes with ACE EXIM PTE LTD, 10, Anson Road, International Plaza, # 28-11, Singapore 079903 (hereinafter the. Seller) (@ US$ 340 per LDT long tonne. In terms of the said MOA, the Defendant No.6 opened a Letter of Credit (LC) No.20 INSU0089- 6484 dated 6-10-2020 through Bank Alfalah Ltd. In favour of the said Seller/beneficiary . The Seller issued Commercial Invoice dated 14-10-2020 and also transferred the ownership and executed Bill of Sale dated 14-10- 2020 in favour of the Defendant No.6. The payment of US$ 1,590,904.20 (United States Dollars One Million Five Hundred Ninety Thousand Nine Hundred Four and Cents Twenty Only) under the said LC was encashed/released on 14-10-2020 in favour of the Seller . (e) The aforesaid Seller had purchased the Defendant No.2 from one Messrs BAF Bunkering and Shipping S de RL, Panama through an executed Bill of Sale dated 5-10-2020. The Defendant No.5 (Nazlim Gemi Isletmeciligi A. S) sold Defendant No.2 on 12.06.2020 and a Deletion Certificate was issued by the Turkish International Register of Ships in this regard. The vessel was transferred to Comoros Registry and requisite Registration Certificate from the Maritime Administration of Union of Comoros No.20/REG/1300737/584 dated 12-06-2020 was issued showing the said BAF Bunkering and Shipping S de RL, Panama as owner of the Defendant No.2 w.e.f. 12-06-2020. The said Maritime Administration of Union of Comoros has also issued a Certificate of Non-Encumbrance No. 20/NEC/1300737/0253 dated 07-10-2020 certifying that the vessel is free from registered encumbrances, maritime lien, mortgage, taxes and other debts whatsoever on record. 09 That the entire sale consideration was paid to the Seller through an irrevocable Letter of Credit No.201NSU008906484 dated 6.10.2020 through Bank Alfalah Ltd in favour of the said Seller/beneficiary much before the filing of the instant suit, whereas the alleged claim for supply of bunker fuel is at the time when the Defendant No.2 was owned by Defendant No.5. 3-7 That the contents of paras 3, 4, 5, 6 and 7 are denied for want of knowledge as the same pertains to Defendants Nos.3, 4 or 5. The alleged supplies of bunker in January , 2020 and March 2020 were not supplied on the behest of the Defendant No.6 or Defe ndant No.8 and in such alleged supplies do not give rise to maritime lien as decisively settled by the superior courts and thus the plaintiff cannot enforce its claim against the Defendant No.1 or Defendant No.2 after change of ownership or from its owners Defendant No.8 or 6 respectively . 8. That the contents of para 8 is vehemently denied. The Hon'ble apex Court has decisively settled the law that the claim for necessaries (bunkering/marine fuel) under section 3(2)(1) of the Ordinance does not give rise to maritime lien and therefore, once the vessel changed hands, no claim of the plaintiff can survive against the Defendant No.1 or 2. It is vehemently denied that the alleged claim of supply of necessaries travel with the ship. It is further submitted that only the law of the form (lex fari) viz. Pakistani law will regulate the admiralty jurisdiction under the Admiralty Ordinance as per judgment of the Apex Court. It is denied that Turkish law will apply in Pakistan and in any case, the allegation that as per T urkish law supply of necessaries create maritime lien is denied. 9. That the contents of para 9 as stated is denied. It is denied that the Defendant No.3 sold the Defendants Nos. 1 and 2 to the Defendant No.6 as alleged in this para under reply . The true facts as to how the Defendant No.8 acquired the ownership of Defendant No.1 and Defendant No.6 acquired the ownership of Defendant No.2 are stated in para 2 above and are not reiterated for the sake of brevity only. It is denied that the Defendant No.7 is the regulator of shipbreaker as alleged in the para under reply . The Defendant No.7 is merely an association of the shipbreakers and looks after the welfare of the shipbreakers. It is vehemently denied that the sales are violation of international law or alleged ethics of the trade. The respective sales/transfer are lawful, bona fide, without notice of the alleged claim of the plaintiff against Defendants Nos. 3, 4 or 5 and after payment of valuable consideration. The
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sales/transfers are backed up by the respective Memorandum of Agreements, Bills of Sale and Letters of credit issued by banks. These documents clearly establishes that on the day when the suit was filed, the Defendants Nos. 1 and 2 were not beneficially owne d by the Defendants Nos. 3, 4 or 5/previous owners and as such the precondition for an action in rem against the Defendants Nos.1 and 2 in terms of section 4(4) of the Admiralty Ordinance was not met by the plaintiff. The notice dated 22-10-2020 addressed to Mr. Ikhlaq Memon has no legal value, sanctity or value under the law as the same was issued much after the completion of sale of Defendants Nos. 1 and 2. It is surprising that the plain tiff and the Defendants Nos. 3, 4 and 5 are all Turkish entities but no legal notice was either alleged to have been sent to Defendants Nos. 3, 4 or 5 nor attached with the plaint. For completion of facts, it is submitted that:- (a) The Defendant No.1 was beached on 3-10-2020, about 33 days prior to the filing of the captioned Admiralty suit and Import General Manifest (IGM) No.61 dated 4-10-2020 was filed by the shipping agent of the vessel with the Customs authorities attaching amongst other MOA and the letter of credit. (b) That following its beaching at the yard, the regional Environment Protec tion Agency at Hub, Lasbella, Balochistan (EPA) was pleased to inform the Defendant No.8 on 2-11-2020 that Initial Environmental Examination (IEE) has was completed on 9-10-2020 and that permitted the. Defendant No.8 to initiate demolition process including hot-works i.e. torch can also be used for cutting hull. (c) That in pursuant to the said permiss ion, the hot works of the demolition initiated from the date of the said permission, whereas dismantling of all combustible items initiated on 9-10-2020 after receipt of IEE. The vessel at the time of the arrest order has been dismantled/ demolished over 70% and thus by no stretch of imagination can be treated as vessel. That the Defendant No.8 is incurring a daily charge of Rs.48, 753/- plus Rs.9,408/- in respect of the LC .established with Bank Al-Falah for the payment of the purchase price of the Defendant No.1, which cost is in addition to the cost of labor , yard and other allied costs incurred by the Defendant No.8 to prepare for the dismantling of the Vessel, and unless the order dated 16.11.2020 is immediately recalled by this Hon 'ble High Court, the costs for the Defendant No.8 will mount exponentially for which it holds the plaintiff fully liable. (e) The Defendant No.2 was beached on 18-10-2020, about 18 days prior to the filing of the captioned Admiralty Suit and Import General Manifest (IGM) No.67 dated 18-10-2020 was filed by the shipping agent of the vessel with the Customs authorities attaching amongst other MOA and the letter of credit. (f) That following its beaching at the yard, the regional Environment Protection Agency at Hub, Lasbella, Balochistan (EPA) was pleased to inform the Defendant No.6 on 6-11-2020 that Initial Environmental Examination (IEE) has been completed. This permits the Defendant No.6 to initiate demolition process except the use of hot- works i.e. no torch can be used. or cutting hull. (g) That the Defendant No.6 is incurring a daily charge of US$ 58.84 (approx.. Rs.9458/-) in respect of the LC established with Bank Al Falah for the payment of the purchase price of the Defendant No.2, which cost is in addition to the cost of labor , yard and other allied costs incurred by the Defe ndant No.6 to prepare for the dismantling of the Vessel, and unless the same is orders dated 16-11-2020 are immediately recalled by this Hon'ble Court,…
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