2004 (3) TMI 434 - HC - Companies Law

Lawsuit Dismissed Over Vessel Ownership Dispute Due to Procedural Failures

Floating Services Ltd. Versus MV ‘San Fransceco Dipalola’

Floating Services Ltd. Versus MV ‘San Fransceco Dipalola’ - [2004] 52 SCL 762 (GUJ.) Issues Involved:1. Ownership and title of the vessel.2. Allegation of clandestine removal of the vessel.3. Validity of the plaintiff's legal status to file the suit.4. Procedural defects in the presentation of the suit.5. Suppression of material facts and misrepresentation.6. Request for restoration of the company to the register.Issue-wise Detailed Analysis:1. Ownership and Title of the Vessel:The plaintiff, a Limited Company incorporated in the UK, claimed ownership of the vessel M.V. 'San Fransceco Di Paola' and sought a declaration that they were the sole owner. They alleged that defendant No. 2 had not paid the full consideration for the vessel and had used a forged bill of sale to obtain a certificate of registration. The plaintiff sought a mandatory injunction for the vessel's possession.2. Allegation of Clandestine Removal of the Vessel:The plaintiff alleged that defendant No. 2 clandestinely removed the vessel from Oostende Port, Belgium, without paying the balance consideration of US $360,000. The plaintiff claimed that defendant No. 2 used a forged bill of sale dated 30-6-2003 to obtain a certificate of registration from the Belize Ship Registry.3. Validity of the Plaintiff's Legal Status to File the Suit:The defendants argued that the plaintiff company had been dissolved on 16-12-2003 and thus had no legal standing to file the suit. The plaintiff admitted the dissolution but claimed that the sole shareholder-director was unaware of it and had taken steps to restore the company to the register. The court noted that a dissolved company could not initiate legal proceedings and that any subsequent restoration would not validate actions taken during the period of dissolution.4. Procedural Defects in the Presentation of the Suit:The plaintiff's suit was signed by a constituted attorney, Mr. Shridhar Burke, whose authority was questioned due to the lack of notarization and specific details in the power of attorney. The court found that the power of attorney did not meet the requirements of section 85 of the Evidence Act and that the suit was presented without proper authority.5. Suppression of Material Facts and Misrepresentation:The court found that the plaintiff had suppressed material facts, including the dissolution of the company, and had made false statements. The plaintiff's failure to disclose the dissolution and the contradictory statements regarding the restoration application amounted to fraud on the court. The court emphasized the need for full and frank disclosure in ex parte proceedings and held that the plaintiff's actions constituted suppression of material facts and misrepresentation.6. Request for Restoration of the Company to the Register:The plaintiff argued that once an order of restoration was made, the company would be deemed to have never been struck off the register. However, the court noted that the power of restoration under sections 651, 652, and 653 of the Companies Act, 1985, was discretionary and that the plaintiff had not demonstrated that the company was carrying on business or that it was just to restore the company. The court also highlighted that the properties of a dissolved company vest in the Crown, and the plaintiff could not claim ownership of the vessel without involving the Crown.Conclusion:The court dismissed the suit, vacated the ex parte order of arrest of the vessel, and ordered the plaintiff to bear the costs. The court rejected the plaintiff's request to continue the order of arrest to enable an appeal to a higher forum, citing the suppression of material facts and the procedural defects in the suit's presentation.