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Petitioner: Pakistan National Shipping Corporation & others VS Respondent: M/s. Coniston Limited & another
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar Title:Pakistan National Shipping Corporation & others vs M/s. Coniston Limited
& another Case No.: Suit No.1039 of 2018 Date of Judgment:2019-02-25 Reported As: 2020 CLC 454, 2019 SHC 56 Result: N/A Judgment Muhammad Junaid Ghaf far J. All these four applications are being decided through this common order . Application at Serial No.1 bearing CMA No.9966/2018 has been filed by Defendant No.1 under Order VII Rule 11 CPC for rejection of Plaint; whereas, rest of the applications have been filed on behalf of the Plaintif fs seeking interim relief by way of an anti-suit injunct ion and so also directions to the Defenda nt No.1 to deposit an amount of US$ 6.0 Million or its equivalent Pakistan Rupees with the Nazir of this Court. The Plaintif f has filed instant Suit seeking following reliefs:- a) declare that the arrest of vessels of the Plaintif fs i.e. M.V. Hyderabad and M.V. Chitral caused by the Defendant no. 1 in South Africa, so also any further arrests of vessels of the Plaintif fs pursued, contemplated or effected by the Defendant no. 1 anywhere in the world are unlawful, without jurisdiction, void ab-initio and of no legal ef fect; b) permanently and pending disposal of the main suit restrain the Defendant no. 1, its officers, agents, and servants from taking any steps so as to cause the arrest of any of the vessels of the Plaintif fs anywhere in the world in future; c) direct the Defendant no. 1 to deposit with Nazir of this Hon ble Court US$ 27.1 million or any further amount claimed by the Defendant no. 1 against the Defendant no. 2, while permitting the Plaintif fs to withdraw there-from US$ 581,622/- or any further amount to which the said Plaintif fs are so exposed; d) award damages to the tune of US$ 6 million against the Defendant no. 1 along with mark up and dollar indexation from the date of accrual till the date of actual payment; e) permanently and pending disposal of the main suit restrain the Defendant no. 1 from pursuing its claim of arbitration against the Defendant no.2, while staying further proceedings of such arbitration proceedings as prescribed in paras 7, 8 and 14 of the plaint; f) award costs and special costs;?
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g) award any other relief as deemed fit. 2. The facts as stated in brief are that the Plaintif f No.1 is a Statutory Corporation and National Flag Carrier of Pakistan and is engaged in transportation of dry bulk and liquid cargoes. The Plaintif f No.1 is an autonomous corporation, which functions under the overall control of the Ministry of Ports and Shipping, through The Director General Ports & Shipping who owns 85.16% shares in Plaintif f No.1, whereas, Plaintif fs No.2 to 10 are wholly owned subsidiaries of Plaintif f No.1, being independent entities, which are incorpo rated under the Company Laws of Pakistan, and are controlled and managed by their respective Board of Directors. The Defendant No.1 is a Company incorporated in Hong Kong engaged in the business of providing shipping and cargo services worldwide. The Defendant No.2 is a Company incorporated under the Companies Ordinance , 1984, (since repealed with the Companies Act, 2017), engaged in the business of steelmaking and various other products of steel having 100% beneficial shares owned by the Governm ent of Islamic Republic of Pakistan (as stated by it in Suit No.1785/2017 being objections to the award dated 8.4.2017). It is further stated that on 20.08.2008, Defendant No.1 and Defendant No. 2 (as charterers), agreed to load and to discharge a total quantity of 750,000 metric tons (+-10%) CHOPT (which is to say the margin of 10% was at "charterers option") of coal during the period 20.08.2008 to 31.08.2009. The aforesaid coal was to be loaded as follows: a. 400,000 metric tons to be loaded at Gladstone, Australia and discharged at Port Muhammad Bin Qasim, Karachi as aforesaid (the "Gladstone CoA"); b. 150,000 metric tons of coal to be loaded at Newcastle, Australia and discharged at Port Muhammad Bin Qasim, Karachi as aforesaid (the "Newcastle CoA"); and c. 200,000 metric tons to be loaded at Robert Bank, Canada and discharged at Port Muhammad Bin Qasim, Karachi as aforesaid (the "Robert Bank CoA"). The aforesaid contracts of Affreightment ("CoAs") were embodied in the form of three separate Americanized Welsh Coal Charters. 3. Pursuant to these CoAs several cargoes were carried and discharged, whereas, due to some dispute between them Defendant No.2 withheld payment of 10% balance freight under the terms of the CoAs. The Defendant No.1, through its agent invoked the Arbitration clause and appointed an Arbitrator and the dispute was referred to Arbitration at Karachi. It is the case of the Plaintiff that during pendency of the dispute before the learned Umpire for his final award, Defendant No.1 submitted to the jurisdiction of this Court at Karachi, by filing numerous Judicial Miscellaneous Applications under the Arbitration Act, 1940. However, whilst these were pending, Defendant No.1 applied to the High Court of South Africa invoking its Admiralty Jurisdiction under Section 5(3) of the Admiralty Jurisdiction Act No. 105 of 1983 ("South Africa Admiralty Act") for the arrest of Plaintiff's vessel "MV HYDERABAD" i.e. even before the passing of the interim award. Plaintiff No.1 had to arrange for an insurance guarantee from M/s. Aspen Insurance UK Limited for the release of the vessel M.V. Hyderabad. Thereafter again Defendant No.1 caused further arrest of the vessel "M.V. CHITRAL" through order of the High Court of South Africa at Durban, and for which in view of the Court's order, Plaintiff No.1 again had to furnish an insurance guarantee and make payments through M/s. Aspen Insurance UK Limited to seek the release of the vessel M.V. Chitral. It is alleged that Defendant No.1 maliciously approached the High Court of South Africa invoking its Admiralty jurisdiction, after having submitted to the jurisdiction of this Court multiple times by filing Judicial Miscellaneous Applications; hence the said proceedings before the High Court of South Africa are oppressive and vexatious, with the sole intention to prejudice the Plaintiffs, as the appropriate forum is this Court since the Plaintiffs are situated in Karachi. It is their case that Defendant No.1 could have approached this Court to seek relief under the Admiralty Jurisdiction of High Court Ordinance (XLII of 1980) ("Admiralty Ordinance, 1980"). However, the Defendant No. 1's invocation of South African jurisdiction in the present circumstances reeks of mala fide; hence, instant Suit seeking the aforesaid relief(s). 4. Learned Counsel for the Plaintif fs has made his submission by formulating certain propositions that as to whether; Plaintif fs? Suit is maintainable; whether this Court has jurisdiction to decide the issue; whether this Court can grant an Anti-Suit Injunction against Defendant No.1; and whether the Plaint can be rejected as prayed on behalf of Defendant No.1. Per learned Counsel, Defendant No.1 is a Company incorporated under the Laws of
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Hong Kong; whereas, Section 19 of the Code of Civil Procedure ("CPC ") states that where a wrong has been committed against the Plaintif f and the Defendant is not a resident of the local jurisdiction of the said Court, the discretion lies with the Plaintif f to institute proceedings for compensation of wrong done; either before the Court where the wrong has been committed, or where the Defendant resides. To support this arguments, learned Counsel placed reliance on the cases reported as Mazhar Valjee Vs. Sher Afghan Khan Niazi (SBLR 2004 Sindh 1041) and Ehsanul Haq Piracha, Etc. Vs. Tajammul Hussain (NLR 1991 Civil 493). He has then referred Section 20(c) of CPC and submitted that a Suit may be instituted within the local jurisdiction of the Court, where the cause of action wholly or partly arises and in this regard he has placed reliance on the cases of M/s. Popular Pharmacy , Karachi Vs. M/s. Nova Bio Medical and others (PLD 1996 Karachi 411), Munawar Ali Khan Vs. Marfani & Co. Ltd (PLD 2003 Karachi 382), Builders Association Ltd. Vs. The Federation of Pakistan and others (PLD 1986 Lahore 171), Muhammad Yasin and others Vs. Ch. Muhammad Abdul Aziz (PLD 1993 Supreme Court 395) and Province of Punjab through District Collector , Mianwali and others Vs. Mehmood- ul Hassan Khan (2007 SCMR 933). According to him in terms of Sections 19 & 20 CPC, it is clear that this Court has jurisdiction to adjudicate this matter as the Plaintif f is based in Karachi and cause of action, which culminated in the arrest of the Vessels i.e. Award dated 04.05.2017, passed by the learned Umpire in the Arbitration Proceedings between Defendant No.1 and Defendant No.2 arose within the territorial jurisdiction of this Court. Per learned Counsel it settled law that when a cause of action arises partly in both the places, then it is the plaintif f?s choice to institute the Suit where the Plaintif f resides. According to him, the Agreement between Defendants No.1 & 2 was entered into at Karachi, in which Arbitration Proceedings are also pending, then this Court has ample jurisdiction to entertain this matter . Learned Counsel then referred to the case from the United States Supreme Court reported as Burger King Corp v. John Rudzewicz - [471 US 462], wherein it has been held that the Court could exercise jurisdiction over a nonresident despite his physical absence, where an alleged injury arises out of or relates to actions by the defendant himself that are "purposefully directed towards forum residents". According to him it has been further held in this case that the plaintif f was required to show that such contacts resulted from the "actions by the defendant himself that created a substantial connection with the Forum State" i.e. he must have engaged in significant activities within the Forum State or have created continuing obligations between himself and residents of the Forum State. It has been has further held that for due process to establish minimum contact it has to be to ascertained that the defendant's conduct and the connection with the Forum State are such that he should reasonably anticipate being held into court before the Forum State, where the defendant purposefully avails itself of the privilege of conducting activity in the Forum State. Per learned Counsel the defendant can reasonably foresee being subjected to the Forum State's legal system. He then referred to the case of the High Court of Delhi reported as Independent News Service Pvt Limited v. India Broadcast Live LLC and Ors - [(2007) ILR 2 Delhi 1231] (paras 16, 26, 27 and 28), whereby, the Court has liberally interpreted Section 20(c) of CPC on the establishment of minimum contact of the defendant with the Forum State to exercise its jurisdiction. Insofar as interpretation of Section 20 C.P.C is concerned, learned Counsel has placed reliance on the cases reported as Province of Punjab v. Muhammad Tufail and Company (PLD 2017 Supreme Court 53) and Habib Bank Ltd. v. WRSM Trading Company, LLC (PLD 2018 Supreme Court 795) wherein the Apex Court has also adopted the minimum contact theory to expand jurisdiction of Courts when some non-residents are involved. Learned Counsel further argued that it is not in dispute that Defendant No.1 has an Agreement with Defendant No.2, which was entered into at Karachi and there is dispute between both these Defendants and matter has been referred for Arbitration; therefore, the stance of Defendant No.1 that they do not come within the territorial jurisdiction of this Court is baseless and without any justification. Learned Counsel next contended that this is a Suit, which could appropriately be called an Anti-Suit Injunction and the Plaintiff seeks restraining Defendant No.1 from pursuing proceedings against the Plaintiff in another jurisdiction. According to the learned Counsel in the case reported as The Hub Power Co. Vs. Wapda (1999 CLC 1320) it has been held that when the proceedings before another parallel Court are oppressive and vexatious, the Court is entitled to restrain the parties from pursuing the legal proceedings before another forum. Learned Counsel then referred to Section 56 of the Specific Relief Act 1877 in Pakistan and Section 41 of the Specific Relief Act, 1963 in India and contented that in terms of
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Section 56(b), there is no bar to restrain a party from pursuing a Suit in another Court not Sub-Ordinate to that from which the injunction is sought. Learned Counsel then referred to the case from Indian jurisdiction reported as AIR 2003 SC 1177 (Modi Entertainment Network and Ors Vs. W.S.G Cricket PTE. Ltd), wherein, Indian Supreme Court has laid down certain principles for grant or refusal of an Anti-Suit Injunction. According to the learned Counsel the principles laid down by the Indian Supreme Court in the aforesaid case fully applies to the case of the Plaintiff. Per learned Counsel the three tests laid down by the Indian Supreme Court; that the Defendant against whom injunction is being sought must be available to the personal jurisdiction of the Court; that if injunction is declined, ends of justice would be perpetuated; and the Principal of Comity-respect for the Court in which the commencement or continuance of action / proceeding is sought to be restrained-must be born in mind; are fully available in this case and based on these principles, the Defendant No.1 may be restrained by granting the prayer of Anti-Suit Injunction. Per learned Counsel the attempt by Defendant No.1 in getting the Vessels of Plaintiff arrested is not only oppressive and vexatious, as it has got nothing to do with the South African Court and Defendant No.1?s tactics are hostile and is by virtue of a mistaken impression that Plaintiffs are also owned by the Government of Pakistan, who owns Defendant No.2 as well. Per learned Counsel the South African Court has been misled by Defendant No.1 in getting the Vessels of the Plaintiff arrested and this Court is competent to pass the Orders as prayed. According to the learned Counsel the Defendant No.1 has knowingly approached the South African Courts as the Admiralty jurisdiction of this Court is of no help to the Defendant No.1 since different rules apply in South African Court as to the Admiralty jurisdiction. According to him Defendant No.1, who is already before this Court in Arbitration proceedings with Defendant No.2, has chosen a wrong forum just to black mail and harass the Plaintiffs. Learned Counsel in support of Anti-Suit Injunction has relied upon the case reported as Oil and Natrual Gas Commission V. Western Company of North America (AIR 1987 Supreme Court 674), A Milton and Co. V. Ojha Automobile Engineering Co. (AIR 1931 Cal 279) and Independent News Services Pvt. Limited V. India Broadcast Live LLC and Ors. (2007 ILR Delhi 1231). He has further contended that there are numerous judgments of this Court, wherein, inherent powers of this Court for grant of an injunction have been dilated upon, even if the case before the Court does not fall within the four corners of the well settled principles for grant of an injunction under Order 39 Rule 1 & 2 CPC and this has been done to prevent the ends of justice from being defeated. In support of this proposition he has relied upon the cases of Hussain A. Haroon v. Mrs. Laila Sarfaraz (2003 CLC 771) & Mst. Salma Jawaid v. S. M. Arshad (PLD 1983 Karachi 303). He has then referred to the cases of Jannana De Malucho Textile Mills Ltd. v. Waqar Ahmed (PLD 1972 SC 34) and Umapati Choudhuri v. Subodh Chandra Choudhuri (AIR 1953 Calcutta 377) and has contended that it has been held that there is no bar on the Court in terms of Section 56 of the Specific Relief Act, 1877, not to restrain a party from judicial proceedings before another forum. According to him this Court has to see that whether the conduct of Defendant No.1, by having two Vessels of the Plaintif fs arrested before the High Court of South Africa, is oppressive, vexatious and inequitable; hence tantamount to abuse of legal process, which as per Plaintif fs' case has been done, and therefore, the Plaintif f is entitled for an Anti-Suit Injunction. Insofar as CMA No.8738/2018 is concerned, learned Counsel contended that the plaintif fs have prayed to direct the Defendant No.1 to deposit US $ 6.0 Million or its equivalent of Pakistani rupees with the Nazir of this Court, which is the amount of Insurance Guarantees and legal costs that has been incurred by the Plaintif f for release of its two Vessel s from the South African Courts. According to the learned Counsel this Court has inherent powers to secure the interest of the Plaintif f by attaching the property of the Defendant so that same remains available for realization of the decretal amount and in support of this contention he has referred to the case of Mst. Afshan Vs. Syed Kamran Ali Shah (2013 CLC 1220 ). As to the issue that Plaintif fs and Defendant No.2 are not owned by the Government of Pakistan, he has contended that Plaintif f No.1 is a Statutory Corporation and a National Flag Carrier of Pakistan and functions under the overall control of Ministry of Ports and Shipping; whereas, the Director General Ports and Shipping owns 85.16% shares in Plaintif f No.1; whereas, Plaintif f No.2 to 10 are independent Companies duly incorporated under the erstwhile Companies Ordinance 1984 and in fact are 100% owned subsidiaries of Plaintif f No.1. He has read out various provisions of the Pakistan National Shipping Ordinance, 1979 to support his contention. According to the learned Counsel the Hon'ble
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Supreme Court has time and again settled the principle that commercial functions and business functions of the State are not the same and Companies that are incorporated under the Company Laws of Pakistan, may have Government shareholding; but neither the property , nor the income can be said to be the property or income of the Government. In support of his contention he has relied upon the cases reported as Central Board of Revenue, Islamabad v. WAPDA (2014 PTD 1861 ), Development Authority v. Central Board of Revenue (2000 AC 53), Printing Corporation of Pakistan v. Province of Sind (PLD 1990 Supreme Court 452), Province of N.W.F.P. v. Pakistan Telecommunication Corporation (PLD 2005 Supreme Court 670), National Fertilizer Marketing Ltd. v. Secretary Local Government and Rural Development Department (1992 MLD 1203 ). Per learned Counsel though the Director General Ports & Shipping owns 85.16% shares of the Plaintif f No.1; however , this by no means is to be ascertained that the Federal Government controls Plaintif f No.1 and the Hon'ble Supreme Court in the aforesaid cases has carefully deliberated upon that aspect of the Government's corporate functions, which are different from its sovereign functions; hence, Plaintif f No.1 along with Plaintif f No.2 to 10 are separate and distinct juristic entities, which are not under the Control of the Federal Government. As to the objections of the learned Counsel for Defendant No.1 that Plaintif f did not approached the South African Court to have the orders of arrest vacated, he has contended that this is not the subject matter of any of the applications pending before this Court, as instant Suit is in fact praying for an Anti-Suit Injunction and such aspect of the matter could be heard and decided at the time of hearing of the entire Suit at the trial stage. In these circumstances, learned Counsel has prayed to grant all applications of the Plaintif f while dismissing Defendant No.1?s application for rejection of plaint. 5. On the other hand, learned Counsel for Defendant No.1 has contended that this Court has no jurisdiction over Defendant No.1, who has neither any office, nor resides within the jurisdiction of this Court, and has in fact appeared before this Court only out of respect and to give assistance. Per learned Counsel, the case filed by Defendant No.1 before the South African Court is only to the extent of seeking security of the amount awarded in favour of Defendant No.1 against Defendant No.2 in the Arbitration proceedings, and it is the case of Defendant No.1 that Plaintif fs and Defendant No.2 are both owned by the Government of Pakistan; hence, the case filed before the South African Court is fully competent under the Admiralty Jurisdiction of that Court as well as the Arbitration Award. Per learned Counsel it is not in dispute that Defendant No.2 is in default in respect of freight charges and in the Arbitration proceedings, an interim award has been passed; whereas, 95% of the freight amount already stands paid and it is only the amount of 5%, which is being disputed since last 10 years and is still unpaid. According to the learned Counsel Defend ant No.2 has shut down its operation; is almost bankrupt, and is not in a position to pay the amount owed to Defendant No.1. Learned Counsel has then referred to PNSC Ordinance, whereby , the Plaintif f No.1 has been incorporated and according to him in terms of Section 11(2), Government of Pakistan owns not less than 51% shares; hence it is a Government entity for all legal and factual purposes. Per learned Counsel, the Plaintif fs after arres t of the Vessels have not approached the South African Court for seeking modification, varying of, or setting aside of such order and have instead submitted themselves to the jurisdiction of such Court by furnishing insurance guara ntee(s); hence, the present Suit is not maintainable and Plaint is liable to be rejected. According to the learned Counsel, the cause of action, as raised in this Suit, has not arisen within the territorial jurisdiction of this Court, as it is the arrest of the Vessel, which is the primary concern of the Plaintif fs, and for that, the jurisdiction lies with the South African Court and not with this Court. Similarly the prayer for deposit of US $ 6.0 Million, comes from nowhere and has got nothing to do with the arrest of Vessel in South Africa. He has further submitted that prayer of Anti-Suit Injunction cannot be granted, nor asked for against the Court irrespective of the fact that such Court has any jurisdiction or not and it is only against a party restraining it from approaching any other Court and for that the party against whom such orders are being solicited should be amenable to the jurisdiction of the Court, whereas, Defendant No.1 has neither any office nor any agent in Pakistan and is only before the Court in some proceedings, which are in respect of Arbitration and does not amounts to submitting to the jurisdiction of the Court. According to the learned Counsel, appearance before a Court in respect of some Arbitration proceedings does not amounts to submitting to the jurisdiction of the Court as it is only in respect of that very Agreement between the parties, whereas, Defendant No.1 has no such Agreement with the Plaintiffs. Learned Counsel has then referred to the South Africa Admiralty Act and various provisions thereof, by virtue of
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which according to him the South African Court has jurisdiction in the matter specifically in relation to the claims in matters of Arbitration. According to him Plaintiffs have already submitted to the jurisdiction of the South African Court by seeking release of the arrested Vessel(s) and they ought to have approached the very Court for any further relief and not this Court. He has further submitted that the prayer in this Suit is also imaginary and is seeking future restraining order(s) against Defendant No.1 from taking any further action against them, which according to the learned Counsel cannot be granted; whereas, to the extent of the Vessel(s) already arrested, this Suit has become infructuous. Insofar as the prayer for grant of Anti-Suit Injunction is concerned, learned Counsel, at the very outset, has contended that if this Court exercises any such jurisdiction in this matter, it would be against the principles of Comity of Nations as no Court ought to be restrained from exercising any jurisdiction. As to the question of equitable relief, he has contended that in such cases there must be some personal jurisdiction which must exist against a Defendant, but in the instant matter, this Court lacks such jurisdiction. He has further submitted that Defendant No.1 has already filed an application under Order VII Rule 11 CPC for rejection of the plaint as in terms of Sections 19 & 20 CPC, this Court lacks jurisdiction and none of the situations provided in both these provisions are applicable to the facts of this case. Per learned Counsel only because of the fact that Defendant Nos.1 & 2 have a dispute and in this regard some Arbitration proceedings are pending before this Court, would not amount to submitting to the jurisdiction of this Court. Insofar as Defendant…
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