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Petitioner: m.v. KAPTAN YOUSUF KALKAVAN VS Respondent: SEMCO SALVAGE PTD Ltd.
Court Name: Balochistan High Court Judge(s): Iftikhar Muhammad Chaudhry, Munawar Ahmed Mirza Title: m.v. KAPTAN YOUSUF KALKAVAN vs SEMCO SALVAGE PTD Ltd. Case No.:Civil Miscellaneous Admiralty Appeal No,1 of 1990,Applications Nos.259 of
JUDGMENT
Reported As: 1992 CLC 143 Result: Appeal accepted Judgment JUDGMENT ' IFTIKHAR MUHAMMAD CHAUDFIRY, J.---This appeal is directed against order dated 9-9-1990 passed by learned single Judge of this Court in Admiralty Suit No, 2/87 whereby two separate applications being Civil Misc: No 259/88 and 194/89 under Order VI, Rule 17 were allowed subject to all just exceptions. ' Concise facts relevant for disposal of this appeal are that plaintiff filed suit for recovery of U.S. Dollars 3,37,560/96 = Pak. Rs,66,07,316/80 with cost and interest against the defendants. ' The suit was contested and written statement was filed by the appellants on 5-10-1987. The Court framed issues for adjudication; the plaintiff produced evidence and got recorded statements of two witnesses. ' On 16-4-1988 Civil Misc. No, 259/88 was filed under Order VI, Rule 17. This application was followed by another Civil Misc. No, 194/89 on 11-3-1989. In C.M.No, 259/88 the plaintiff sought following amendments:- (1) After the title in the plaint the heading of the suit may be substituted as follows:- "Claim for b 244,707.12 equal to Pak. Rs,81,63,429.52 cost and interest." (2) That paragraph 16 of the plaint may be deleted and following new paragraphs No,16, 17, 18 and 19 may be added:- "16. That the cargo interest accordingly furnished security in the sum of U.S. Dollar 1.25 million with the Committee of Lloyd's pending determination of the salvage award by the Arbitrator in term of LOF 1980 and eventually settled the plaintiffs' claim amicably in the sum of US Dollar 537, 500.
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' The dispute before the Arbitrator was therefore confined to the share of the ship for which the then registered owners of the defendant No,1 though endeavoured through their London Solicitors to negotiate for a reduced sum of security failed altogether to furnish the same. Accordingly the Lloyds' Committee appointed Mr.A.P. Clarke, Queens Counsel as Sole Arbitrator who having issues notices of hearing to the then registered owners of the defendant No,1 vessel, proceeded to determine the plaintiff's salvage remuneration by evaluating the salvaged property namely the vessel and the cargo as follows:- "Value of the salvaged ship m.v. Kaptan Yusuf Kalkavan L 276,715.63 Value of the salvaged cargo L 436,036.76 Total: L 712 752.39 "17. That the then registered owners though served with notice remained unrepresented before the Arbitrator. M/s. Britten Bradshaw, the London Solicitors appointed by the defendant No,2 however on 101.1-1987 approached the plaintiffs' Solicitors Messrs Elborne Mitchell and requested information and documents and indicated the possibility of them being instructed to appear before the Arbitrator for protecting the interest of the defendant No,2 at the hearing fixed on 13th and 16th October, 1987, but eventually failed to make any appearance and the case was duly heard on the said dates." 18. That the learned Sole Arbitrator thus having concluded the hearing made his award on the Ist March, 1988 which was duly published by the Committee of Lloyds' London on 2-3-1988. "19. That the learned Sole Arbitrator thus awarded to the plaintiffs as follows:-{{TABLE}} (i) Proportionate salvage remuneration in respect of the defendant No,1 vessel. Interest from 25-11- 1987 to 3-3-1988. L 201,864.00 L 27,645.69 Cost incurred and taxed by the Arbitrator. L 9,474.48 Further legal cost. L 1,932.95 Arbitrator's fees. L 3,090.00 Committee of Lloyds fees. L 700.00 Total: L 244,707.12 3. That the existing paragraphs 17, 18, 19 and 20 of the plaint may be renumbered as paragraphs 20, 21, 22 and 23 respectively. 4. That the existing paragraph 21 of the plaint may be deleted and the following new paragraphs as paragraphs 24 and 25 may be added:- "24. That the plaintiffs respectfully submit that the sums awarded by the learned Sole Arbitrator referred to in paragraph 19 above are in the circumstances of the case, proper, reasonable and fair and the plaintiffs arc even otherwise entitled to the said sums. 25. That the defendant No,1 vessel is thus liable to be arrested and sold for recovery of the plaintiffs' dues to the extent of the sum of L 244,707.12 which is equal to Pak Rs, 81,63,429.52 at the present rate of exchange of L 1= Rs,33.36, with further interest on the principal sum at the rate of 10.75% per annum." 5. That the existing paragraph 23 may be deleted. 6. That the following new paragraphs may be added as paragraphs 26 and 27:- "26. That on 29-8-1987 this Hon'ble Court was pleased to direct the defendants to furnish security in the sum of Rs,4 million for securing the plaintiff's claim and directed them further to "Maintain detailed account concerning disposal of scrap and its sale consideration etc. For placing it before this Hon'ble Court if and when required." 27. That the plaintiffs therefore respectfully submit that the defendants No,2 are in terms of the said order liable to account for the entire sale proceeds of the scrap of the defendant No,1 for
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satisfaction of the plaintiffs' claim if and when decreed in excess of the said sum of Rs,4 million for which bank guarantee has been furnished." 7. That the existing paragraphs 24 and 25 of the plaint may be renumbered as paragraphs "28 an I 29" respectively. 8. That the existing paragraph 26 may be renumbered as paragraph 30 and the figure Rs,81,63,429.52 may be substituted for the figure Rs,6,607,316.80. 9. That in the prayer clause (i) of the plaint the said sum of Rs,81,63,429.52 may be substituted for the existing figure Rs,6,607,316.80 and the rate of interest may be substituted by "10.75% instead of 15%". 10. That at the foot of the plaint among the documents relied upon the following may be added:- "Lloyds' letter dated 2-3-1988, the Award dated 1-3-1988 together with the reasons given by the Arbitrator. The extract from the ship's registry, etc. Etc." ' Whereas in C.M. No,194/89 request was made for amendment in the plaint as under:- 1. After the proposed paragraph 20 the following two additional paragraphs 21 and 22 be added as follows:- "21. That thus the defendant No,1 vessel was on 2-3-1987 sold by the Red Sea Ports Authority for Egyptian pound 400,400 and after deducting therefrom Egyptian pound 97,507.67 being the port dues payable by the owners plus the cost of depositing, the said authority deposited the surplus in the sum of EGP 302,289.33, approximately equal to US Dollar 143,073.53 in their hands in the Suez Court of First Instance. 22. That at the request of the plaintiffs the Suez Court of First Instance vide its order of Attachment Injunction No, 22 of 1987 dated 8-6-1987 registered their claim provisionally in the sum of US Dollar 200,000 and is also seized of the following claims, which are pending adjudication and determination of priorities between them inter se vis-a-vis the plaintiffs and the next hearing if fixed on 22-3-1989:- (a) By Dominion International Services US Dollar 40972.03 Egyptian Agent of vessel. (b) By the Master of the vessel. US " 94500.00 (c) By the First Engineer US. " 79500.00 (d) By a Sailor. US. " 45650.00 ' and the plaintiffs do hereby undertake to bring on record the actual sum if any when eventually received from the said Suez Court of First Instance and make appropriate adjustment in their claim in the above suit." 2. That the proposed paragraphs 21 to 30 be accordingly renumbered as paragraphs 23 to 32. ' The appellants vehemently opposed the request of respondent for seeking amendment in the plaint on the ground that complexion of the suit would be altogether changed because the request for deleting paras 16, 21. And 23 as well as prayer clause from the original plaint has been sought to put up altogether a new case, as while filing suit for recovery of amount a lesser amount was claimed whereas in the amended plaint appellant has put up claim against the appellant for recovery in the sum of Pak. Rs,81,63,429.52 with cost and interest. Originally suit is based on statement of claim which is appended to plaint as Annexure-8, whereas now in entire substitution of this statement of claim respondent/plaintiff intends to replace the same with an arbitration award which has been determined to the tune of US Dollar 7,12,752.39 and under law during pendency of suit, Arbitration Award cannot be made basis for the claim. The plaintiff either to withdraw their suit and pursue remedy which is available to them under Arbitration Act or they should independently prove their claim on the basis of statement of claim which has already been placed on record. Similarly in the previous suit certain admissions have been made by the plaintiffs/respondents and if those parts of pleading are allowed to be deleted admission would also be withdrawn, therefore, on this point as well request for amendment of plaint is unwarranted.
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' The learned Single Judge after considering documents of both the parties allowed amendment in plaint as sought for vide impugned order, under these circumstances the instant Revision has been filed. ' In support of appeal Mr. Tariq Hussain, learned counsel has argued that amendments sought in pleading are in violation of provisions of Order VI Rule 17, C.P.C. If amendment as requested for, is granted this would amount to allowing the plaintiffs/respondents for putting up altogether a new case in the Court. In the previous suit certain important admissions have been made particularly in paragraphs Nos.16, 20 and 21 which are in favour of appellant and if those admissions are allowed to be deleted serious prejudice would be caused to appellants. The plaintiffs/respondents are trying to raise their claim before Court on basis of Arbitration Award delivered by Mr. A.P. Clarke Queens Counsel for Sole Arbitrator appointed by Lloyds Committee and respondents indirectly are attempting for making Arbitration Award as rule of the Court by adopting procedure other than as laid down under Arbitration Act. Because suit is pending for consideration, therefore, no effect can be given to Arbitration Award and if application for amendment is allowed, the appellant would have no choice to defend the suit because this Honourable Court would decide the case on the basis of Arbitration Award. Anyhow, there is no bar for plaintiffs/respondents to produce Arbitration Award in Court to substantiate the claim. Finally request was made that appeal may be accepted and application for amendment may be dismissed. ' Whereas on the other hand Mr. Muhammad Naeem Advocate for respondent/plaintiff argued that while allowing application for amendment no prejudice will be caused to appellants/defendants, the complexion of suit will not be changed, the Court is empowered under Order VI, Rule 17, C.P.C. To allow amendments in pleading at any stage which is just and necessary for final determination of suit between the parties. Learned counsel contended that while deleting paragraphs 16, 20 and 21 no prejudice will be caused to appellants, so far Arbitration Award is concerned, appellants/defendants have full knowledge that Committee of Lloyds had appointed Mr. Clarke as Arbitrator and as such they are bound under Lloyds Salvage Agreement to accept Arbitration Award. ' Learned counsel contended that at the time of filing suit, plaintiff assessed the claim approximately on the basis of document Annexure '8' and when now matter has been finally determined by the Arbitrator the plaintiffs are entitled to put up their claim for an amount which has been found due against the appellants. He further argued that order impugned in appeal has been passed subject to all just exceptions, therefore, the appellants can raise all legal objections before the trial Court and by no stretch of imagination any injustice has been caused in impugned order to them, as such appeal may be dismissed. ' We have heard the arguments of learned counsel for the parties and with their valuable assistance record of the case has also been perused. ' The examination of plaint and documents attached therewith reveals that respondent put up hit, claim for recovery of amount against appellant No,1 on account of 41% of the total cost of services of salvage rendered as per Lloyds Salvage Agreement LOF -1980 dated 25-3-1986 executed by Capt. Erol Erk Master of the vessel with Cosel Salvage Services Limited. The contents of the plaint further indicate that respondent served notice on Lloyds Committee at London for taking security from the cargo interest as well as from the owners of appellant No,1 in the sum of US Dollar 1.25 million and US Dollar 300,000.00, respectively pending determination of the salvage award, in pursuance of this letter cargo interests accordingly furnished security in the sum of US Dollar 1.25 million but the registered owners of appellant No,1 though endeavoured through London Solicitor to negotiate for a reduced amount of security but failed altogether to furnish the same, resulting in frustrating the proceedings before Lloyds Committee for determination of the salvage remuneration, the owners of appellant No,l. Have also failed to meet their financial obligations to
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the Port Suez and on account of their continued default the vessel was disposed of by Sucz authorities in March, 1987 by an administrative procedure, as vessel after its sale found her way to the Gadani Ship Breaking Yard, therefore, she is liable to he arrested and sold for recovery of the respondents' dues. In this behalf a complete statement of services rendered and the value thereof was annexed with the plaint as mark `8'. ' It is the case of respondent that the vessel is to be arrested for recovery of US Dollar 320,525.22 being 41% share of the total cost for which vessel is liable along,with interest at the rate of 15% per annum from 25-5-86 to 1-7-87 in the sum of US Dollar 57,035.74 thus aggregating total of US Dollar 377,560.96 =Pak.Rs 66,07,316.80 converted at the rate of Rs,17.50 =1 US Dollar. ' The appellants while submitting written statement denied the execution of Lloyds Standard Form of Salvage Agreement and LOF-1980 by Master of appellant No,1 with Cosell Salvage Limited, it was also denied that owners of appellant No,1 were called upon to furnish any kind of security equal to US Dollar 3.00 lac pending determination of alleged salvage award. It was further denied in the written statement that appellant No,1 did not endeavour through their solicitor to negotiate any amount of security on account of any alleged claim of the respondent. The contention of respondent/plaintiff was also denied to the effect that the appellant No,1 was sold by Suez Port authorities. It was however clarified that the appellants are aware that vessel in question i,e. Appellant No,1 was sold through public auction by "Red Sea Port Authorities" for recovery of their dues, due against her and she was sold through statutory sale to EL Sayed Abdel Fadil Muhammad and Ali Ahmed Ali Abdul Hafcz through public auction and open sale after duly advertising the same and according to the minutes of the sale and delivery, the vessel was sold free from all encumbrances i,e. All debts, duties and rights previously attached to the sale to above buyers, therefore, it was contended in written statement that ship was cleaned and free from all liens whatsoever. It was further contended that the respondent/plaintiff has no right of maritime lien on the vessel and if there was any such right as alleged by the respondent it was wiped off and cleaned when she was sold by Red Sea Port authorities as per Egyptian laws which thus rendered it clean and free from all encumbrances or liens which were attached to the vessel prior to its being sold. As such any lien thus claimed by respondent was transferred to the sale proceeds in the hands of the Red Sea Port Authority which ought to have been attached by the respondent. The claim of the plaintiff in respect of 41% of the total cost of salvage on account of services rendered by respondent was totally denied being false, fictitious and untenable. ' Provision of Order VI, Rule 17, C.P.C. Confers authority for allowing amendment of pleadings at any stage of the proceedings in such manner and in such terms as may be just and such amendments are to be allowed if necessary for the purpose of determination of real question in controversy between the parties. For reference Order VI, Rule 17, C.P.C. Is reproduced as under:- "The court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendment shall be made as may be necessary for the purpose of determining the real question in controversy between the parties." ' In view of the above provision of law and arguments advanced by learned counsel for the parties it is to be seen whether amendment in the plaint would amount to introducing a new case and whether any prejudice would be caused to apprellant if such amendments are allowed to be incorporated in plaint. ' In this behalf it is pertinent to consider that originally plaint was filed on basis of statement of expenditures annexed therewith as Mark '8', but now same is being substituted by Arbitration Award which is undoubtedly in favour of respondents, as such if award is considered as conclusive proof in favour of plaintiff's case it would mean that Court will not make investigation to adjudicate upon the matter independently. Earlier at the time of filing of suit no indication was given in plaint
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in respect of Arbitration proceedings pending before any lawful authority. Thus question would arise whether after institution of suit Arbitration Award can be made sole basis for acceptance of suit or not, or in other words in allowing amendment in the plaint under circumstances narrated above it would not amount to permit respondent to prove his case against appellants without affording them opportunity to contest the suit on basis of plea raised in written statement. ' The learned counsel for appellant to substantiate his arguments submitted that once jurisdiction of Court is invoked, the arbitration proceedings shall be nullity in the eye of law, therefore, claim of respondent cannot be adjudged basing on arbitration award. He further argued that according to the settled law the proceedings instituted in Civil Court shall supersede arbitration proceedings and no decision can be based by Civil Court on arbitration award which has been pronounced during pendency of suit. To substantiate these contentions, he relied on 1912-3 Kings Bench p.257. AIR 1922 Oudh p.15 AIR 1950 Orissa p. 1969, AIR 1934 Lahore p.887, AIR 1921 Calcutta p. 770, 1976 CLC p. 352. ' On the other hand, the counsel for respondent urged that under English law the salvage agreement of arbitration, invariably replaces the admiralty Court. To strengthen his contention he placed reliance on Chapter 5 at page 137 of Maritime Liens By Thomas (British Shipping Liens Vol. 14) and para 243 at page 139 was relied upon. For reference same is reproduced as under:- "Under such agreement arbitration invariably replaces the admiralty Court as the forum responsible for the quantification of a salvage award for the resolution of dispute which may arise in connection with salvage services." ' Besides above quotation he also relied on another book i,e. MARITIME LAW SALVAGE by Gcoffery Brice and paragraph 613 at p. 269 was referred to which reads as follows:- "In making his authority (which is confidential and published by Committee of Lloyds) the Arbitrator acts upon the same principles of law as those applicable to proceedings in the Admiralty Court as discussed in Chapter 2." ' There are three exceptions to this principle. First the arbitrator may (albeit rarely) be concerned to give effect to the exception to the principle of "no cure-no pay" contained in clause I (a) of LOF 1980. There is no parallel in any proceeds in Court (unless the provisions of CMI Draft Convention Article 3-3 come to have the force of law). Secondly the arbitrator will be concerned to give effect where appropriate to the provisions of clause 18 relating to changes in the value of money or rates of exchange. Thirdly the arbitrator will be concerned specifically to fix a rate of interest under clause 12. So far as the period during which interest shall run for the period prior to the making of the award is concerned, the arbitrator in practice usually deals with the matter in the same way as that in which it is dealt with in the admiralty Court; indeed the practice of allowing a period of six months for negotiation probably sprang from the practice of Arbitrators in this respect." ' The learned counsel for respondent further argued that by means of proposed amendments no attempt is being made to enforce arbitration award nor the suit is being converted into one which based on award, rather the award is in respect of same relief which is subject-matter of the above suit and has been given by Arbitrator duly appointed by Lloyds of London and award is being introduced as piece of material evidence in support of his claim in the suit. The counsel also referred to the case. Of "Alexander v. m.v. Rice Traders" being suit No, 316/1984 decided by his Lordship as then he was Mr. Justice Salim Akhtar, Judge of Sindh High Court and another judgment delivered by the same Honourable Judge reported in 1985 CLC p. 1355. In the judgment delivered in Suit No,316/1984 it was held as follows:- "The award has been filed like an ordinary piece of evidence and decree cannot be passed merely on that basis unless the Court on appreciation of evidence comes to the conclusion that the plaintiff's claim has been legally and factually of (sic) established). The award has so far been made rule of the Court have (sic) nor this suit has been filed on the basis of the award. It shall be
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treated as a piece of evidence to the effect that an award has been made in which remuneration mentioned therein has been granted to the plaintiffs." ' The provisions of section 4 of English Arbitration Act of 1889 and section 34 of Arbitration Act of 1940 are corresponding to each other. For reference both sections arc reproduced below:- Section 4: Power to stay proceedings where there is a submission.-- "If any party to a submission, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the submission or any person claiming through or under him in respect of any matter agreed to be referred any party to such legal proceedings may add any time after appearance and before delivering any pleadings or taking any other steps in the proceedings applied to that Court to stay the proceedings and that Court or a Judge thereof if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was at the time when the proceedings were commenced and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings." Section 34: "Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was at the time when the proceedings were commenced, and still remains ready and willing to do all things necessary to the proper conduct of the arbitration such authority may make an order staying the proceedings." ' In the case of 1912-3 Kings Bench p.257 the relevant portion is reproduced hereunder:- "The plaintiff brought an action against the defendants for sums which they alleged to have become due to them from the defendants under the contract and for damages for wrongful termination of the contract by the defendants. The defendants did not apply for a stay of proceedings in the action under section 4 of the Arbitration Act, 1889. Subsequently to the commencement of the action the defendants engineer under the before-mentioned clause without giving notice to the parties and without the knowledge or consent of the plaintiffs, made an award purporting to decide the matters which were the subject of…
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