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Petitioner: M/s Sing Fuels Pte Ltd VS Respondent: M.V. "Yasa Aysen" & others
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar Title: M/s Sing Fuels Pte Ltd vs M.V. "Yasa Aysen" & others Case No.: Adm. Suit No. 10 of 2017 Date of Judgment:2019-08-29 Reported As: 2020 CLD 70, 2019 SHC 318 Result: N/A
Judgment Muhammad Junaid Ghaffar J. - This is a Suit under Section 3(2) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 ("Ordinance") seeking recovery of US$ 667,599.35 in respect of the principal outstanding amount, interest, damages and legal costs etc. Through listed application the Plaintiff has sought issuance of warrants of arrest for the Vessel i.e. Defendant No.1 and detain the same until sufficient guarantees are furnished for the outstanding claim of the Plaintiff. 2. The precise case as set up in the plaint on behalf of the Plaintif f is that they are engaged in the business of Bunker supplies to Vessels calling at various Ports globally, either by itself or through its nominated physical bunker suppliers. It is further stated that such supply of bunkers is subject to the "General Terms and Conditions of Sale" mentioned on the Bunker Delivery Advice as well as the general rules of such supplies recognized globally. According to the Plaintiffs the Defendant No.5 ("Charterers") which is a company incorporated in UAE is engaged in Chartering of Vessel and in May, 2016 the Plaintiff was contacted for supply of 290 MT (Metric Tons) of IFO 380 CST (Intermediate Fuel Oil) as well as 40 MT of MGO (Marine Gas Oil) to the Vessel in question owned and operated by Defendant No.2 to 4 ("Owners"). It is the case of the Plaintiff that requisite bunkers were supplied, whereas, Charterer has defaulted in making payments and therefore, owners as well as Charterers are liable to pay jointly and severally; hence, instant Suit. 3. Learned Counsel for the Plaintif f has contended that the supply in question is not in dispute, whereas, the bunkers were supplied to the Vessel of the owners and such supplies were with the consent and knowledge of the said owners; hence, the claim of the Plaintiff against the Vessel is maintainable under the Admiralty Jurisdiction of this Court. According to him, owners of the Vessel remained actively involved in the entire process of supply of bunkers to the Vessel, whereas, they even inquired about complete schedule of bunkering cost and expenses. He has further contended that physical supplier of the bunkers also kept on
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informing the owners in respect of the supplies and therefore, notwithstanding the fact that the order was placed by the Charterers, the owners and their Vessel is equally responsible for payment for such supplies. Per learned Counsel, a notice was also issued to the Charterer and various correspondence was entered into through which the Charterer undertook to make payment; but ultimately they failed to honor their commitment and therefore, the listed application must be allowed and evidence be led by the parties in respect of the claim of the Plaintiff. According to him, the claim of the Plaintiff is maintainable under the Admiralty Jurisdiction in terms of Section 3 & 4 of the Ordinance and therefore, the objection of the owners in respect of lack of jurisdiction of this Court is misconceived. Per learned Counsel, once the bunkers are supplied and payments are not made, then there is a lien of the unpaid seller against the Vessel and the owners are equally responsible and should have been vigilant to see that the Charterer honors the commitment in respect of supply of bunkers to their Vessel. He has lastly contended that the Time Charter was terminated before the expiry of the agreed period, whereas, the bunkers supplied by the Plaintiff have been utilized by the owners and in fact it has intermingled and such determination of the consumption as well as balance of the bunkers supply can only be adjudicated at the trial of the Suit, therefore, the application be allowed by confirming the orders of arrest passed by this Court. In support of his contention he has relied upon Henry V. Geoprosco International Ltd. Lloyd's Law Reports (1974 Vol. 2), Re: Dulles' Settlement Trusts Dulles V. Vidler (All England Law Reports (June 14, 1951) Vol. 2), Francis Jackson Developments, Ltd. V. hall and another (All England Law Reports (June 14, 1952 (Page 2265) Vol. 2), PST Energy 7 Shipping LLC and another V. O W Bunker Malta Ltd and another (Lloyd's Law Reports (2016 Vol 1 (5), Forsythe International (UK) Ltd. V. Silver Shipping co. Ltd. and Petroglobe International Ltd. (The "Saetta") (Lloyd's Law Reports (1993 Vol. 2 (268), Bangladesh Shipping Corporation V. M. V. Nedon' and another (PLD 1981 Karachi 246) and Yukong Ltd. South Korean Company, Seoul, South Korea V. M. T. Eastern Navigator and 2 others (PLD 2001 SC 57). 4. On the other hand, learned Counsel for the owners has contended that the Vessel in question was on a Time Charter and all negotiations in respect of supply of bunkers was done with Defendant No. 5 and at no point of Time the owners had undertaken any liability as to the claim of the Plaintiff. Per learned Counsel, the Charter Party Agreement clearly provides that the bunkers are to be purchased and paid for by the Charterer, whereas, the Plaintiff pursuant to its arrangement had also obtained security in the shape of postdated cheques and therefore, no case is made out against the owners for such default on the part of the Charterer. Insofar as the communication of the owners with the bunker suppliers as alleged is concerned, he has contended that it was only in respect of berthing of Vessel which is a normal practice in a Time Charter as navigation is monitored by the owners, and therefore, the same cannot be made a basis to satisfy the Plaintiff's claim. According to him, even the legal notice for recovery of the amount was also issued to the Charterer and not to the owners of the Vessel as it was in the knowledge of the Plaintiff that such dealings in respect of supply of bunkers were independent in nature and had nothing to do with the owners of the Vessel. Per learned Counsel, to maintain a claim under the Admiralty Jurisdiction of this Court, first it is to be established that the claim can be maintained in personam against a defaulting party and only then a claim in rem can be maintained against a Vessel and therefore, since admittedly there is no claim in personam against the owners; hence, the Vessel in question cannot be arrested and detained for such a claim. Per learned Counsel, under the Admiralty Law in Pakistan the claim in respect of a bunker supply does not have a mariTime lien, and is therefore, to be governed by the provisions of Section 3 & 4 of the Ordinance only. He has further argued that in a Time Charter, per settled law, no claim in respect of a bunker supply is maintainable. He has also referred to the bunker supply receipts and has contended that the master of the Vessel has clearly affixed a stamp to the effect that such supplies are on account of the Charterer and therefore, notwithstanding the fact that the master represents the owner of the Vessel, no such claim can be maintained against the Vessel. In support of his contention he has relied upon Atlantic Steamer`s Supply Company V. m. v. Titisee and others (PLD 1993 SC 88), Messrs V. N. Lakhani & Company V.
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m. v. Lakatoi Express and 2 others (PLD 1994 SC 894) and Messrs Naseem Oils through Proprietor V. M. T. Miramis through Master / Chief Officer and 3 others (2012 CLD 1413). 5. While exercising his right of rebuttal, learned Counsel for the Plaintiff has contended that mere affixation of a stamp on the delivery receipt has no relevance, whereas, once it is admitted that bunkers were supplied, the Vessel and its owners are equally responsible for making payment for such supplies. He has further argued that since the Time Charter was cut short by the owners and at that point of Time the bunkers supplied by the Plaintiff were still on board and therefore, the owners are responsible for making payment of the bunker supplies available on board at the relevant Time. 6. I have heard both the learned Counsel and perused the record. The facts of this case depicts that the Plaintiff has invoked Admiralty jurisdiction of this Court under the Ordinance for recovery of its claim as mentioned in the plaint which is in respect of principal amount of the bunkers (US$ 109,930.00), interest (US$ 37669.35 till 13.11.2017), Damages (US$ 500,000.00) and legal costs (US$ 20,000.00). Along with the Suit an application under Rule 731 of the Sindh Chief Court Rules (Original Side) of this Court was also filed for the arrest of the Vessel in question and on 15.11.2017 an order for arrest was passed and the Vessel was allowed to sail if the Defendants furnish solvent surety for the principal amount of US$ 109,930.00 which has been done by the owners, whereas, the Charterer has chosen not to appear before the Court. It is the case of the Plaintiff that the bunkers were supplied to the Vessel at the request of the Charterer; however, at all Times the owners of the Vessel were privy to such supplies and it was done with their implied consent, whereas, the Charterer had authority to contract on behalf of the owners. It is further case of the Plaintiff that through email dated 18.5.2016 (pg: 167) the owners were in contact with the material suppliers of the Plaintiffs and therefore, the owners now cannot plead any ignorance in respect of the bunkers supplies. According to the Plaintiff, since the bunkers were supplied to the Vessel, the same falls under Section 3(2)(l) of the Ordinance which provides for claims in respect of necessaries supplied to a ship read with Section 4 thereof, wherein, the mode of exercise of the Admiralty jurisdiction of this Court has been provided. Their further case is that since the bunkers were received by the master of the Vessel, who is and was, under employment of the owners; hence, the owners cannot plead ignorance once the supplies have been made. Before proceeding further, as to whether the claim of the Plaintiff falls within the Admiralty Jurisdiction of this Court or not, it would be advantageous to refer to the relevant provisions of Section 3(2)(l) and so also Section 4(4) of the 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- (l) any claim in respect of necessaries supplied to a ship. 4. Mode of exercise of Admiralty jurisdiction. - ... (4) In the case of any such claim as in 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 mariT ime lien on the ship or not, be invoked by an action in rem against-- (a) that ship, if at the Time when the action is brought it is beneficially owned as respects majority shares therein by that person; or (b) Any other ship which, at the Time when the action is brought, is beneficially owned as aforesaid." 7. Perusal of the aforesaid provisions reflects that Admiralty Jurisdiction has been conferred on this Court in terms of s.3 of the Ordinance which provides for various claims as mentio ned from clauses (a) to (r) and clause (l) which is relevant for the present purposes deals with claims in respect of necessaries supplied to 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
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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 the owners in addition to certain other cases has also relied upon the judgment of the Hon'ble Supreme Court in the case of V.N. Lakhani 8a Co., (Supra). That case originated from the order of a learned Single Judge of this Court reported as Messrs V.N. Lakhani 8a Co. v. the Ship Lakatoi Express (1994 CLC 1498), wherein, the claim of the Plaintiff against the Defendants including a sister-ship of the offending ship was dismissed on the ground that the Plaintiff had failed to show that when the action was brought, the 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 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 Para Nos.4, 5 & 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.l. The petitioner had filed suit for arrest of respondent No.l 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.l 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 No.l. In applying section 4(4) one has to take into consideration the existing facts at the Time when cause of action arose in connection with the offending ship. In order to invoke the jurisdiction, the plaintiff 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 offending 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 Admiralty 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
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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 redundant. 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." 8. From perusal of the aforesaid observations 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) ibid is that the person, who would be liable for a 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 the ship (offending ship) or a sister -ship can be made. However , when the facts of the reported case are examined, they are somewhat different from the facts germa ne 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 "Zakatoi Express" belonging to M/s Artemis Lines S.A. This Vessel i.e. "Zakatoi Express" was on a Time Charter with "Merzario" . The Admiralty Suit was filed against "Zakatoi 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 "Zakatoi 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, "Commandante Revello" 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. 9. In the instant matter the situation is somewhat different inasmuch as the Vessel in question is in fact the ship or the offending ship; and can be arrested if the other conditions for exercise of the Admiralty jurisdiction are fulfilled; however, admittedly, it is not owned by the Charterer and at least when this Suit was filed and the action in question has been brought before this Court, the Charter Party Agreement had expired or for that matter terminated as contended. In short the relationship between the Vessel and its owner with the Charterer had come to an end. Here, though the legal principle enunciated by the Hon'ble Supreme Court would apply, but for that the facts must also be kept in mind. The Plaintiffs claim is against the Charterer for supply of bunkers and according to it since the Vessel in question had received the supply and even consumed, therefore, the Vessel and as a consequence thereof, the owners as well are liable in personam; hence the Vessel can be ordered to arrested. 10. Learned Counsel for the owners has also relied upon two other judgments from our jurisdiction. The firs one is Atlantic Steamers Supply Company (Supra) . This one has also been relied upon in support of the proposition that a claim in respect of supply of necessaries to a ship as mentioned in s. 3(2) (l) of the Ordinance does not fall within a mariT ime lien. It has also been relied for the proposition that an action under ss. 3 and 4 of the Ordinance can only be brought before this Court when the Vessel when the cause has been initiated was beneficially owned as respects the majority shares. This in fact has been referred to in addition to the case of Lakatoi Express (Supra) as already discussed in detail hereinabove. 11. The third case relied upon is the case of Naseem Oils (Supra). In this case the facts were identical to the facts of the present case in that the Plaintiff had supplied bunkers to the Vessel and payment was not made. The Suit was filed and Vessel was arrested; however, the owners came before the Court and argued that the Vessel,
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when bunkers were supplied, was on a Time Charter with the Charterers, whereas the supplies were made pursuant to an order placed by the Charterer and not the owner; hence, the claim against the Vessel or owners in rem was not maintainable. A learned Single Judge of this Court while agreeing with the arguments of the owners and the Vessel was pleased to hold as under; 7. From the perusal of plaint it appears that plaintiff has shown the Vessel as defendant No.1, owner of the Vessel as defendant No.2, "Time Charter" as defendant No.3 and fuel agent as defendant No.4. No doubt it is an admitted position that Bunkers were supplied to defendant No.1 Vessel at the request of defendant No.4 and the same were acknowledged by the master of the Vessel and as per plaintiff's claim payment for such Bunkers were not made by the defendants Nos.3 and 4. Along with the counter affidavit the defendants Nos.1 and 2 have filed a certificate of MALTA REGISTRY showing the ownership of defendant No.1 by defendant No.2 as also copy of "Charter Party" dated 9-11-2010 between the owners of the ship and defendant No.3.... 9. In view of above settled legal position it can safely be concluded that in the present case subject Bunkers were supplied by the plaintiff to the Charterer at the request of defendant No.4. It is also apparent that Bunkers were not supplied at the request of the owner of the Vessel the defendant No.2. It is an admitted position that defendants Nos.3 and 4 were not the owners of the Vessel. Under the terms of "Charter Party" the Charterer was under obligation to make payment of the subject Bunkers to the Plaintiff and not defendants Nos.1 and 2. As pointed out above that defendant No.1 Vessel was owned by defendant No.2 as is evident from the perusal of certificate of MALTA REGISTRY which shows that defendant No.1 is solely owned by Defendant No. 2. It is also an admitted position that plaintiff had the knowledge that the ship was on "Time Charter" with defendant No.3. The Plaintiff has also failed to make out any case in personam against the owner of Vessel i.e. defendant No.2, the claim in rem against defendant No.1 Vessel could not be maintained in the circumstances of the case. Accordingly no case against defendants Nos.1 and 2 is made out. The application under disposal is liable to be dismissed. Consequently the application in hand is hereby dismissed and the order dated 19-11-2011 is hereby recalled. 12. Insofar as the present case is concerned, firstly , it needs to be appreciated that the only correspondence which has been placed on record and heavily relied upon on behalf of the Plaintiff in support of this argument that the owners were in loop and in knowledge of the bunker…
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