TaxTMI 
TaxTMI 
2001 (11) TMI 1050
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....o as to constitute maritime claim? 2 . The aforesaid question is also involved in Appeal No. 739/2000 arising out of Notice of Motion No. 1376/1998 in Admiralty Suit No. 30/1998 and, therefore, both the aforesaid appeals were heard together and are being disposed of by this common judgment. Besides the aforesaid question common to both appeals, there are distinct and separate issues involved which we shall deal with at an appropriate stage. 3. At the outset, we may observe that we afforded extensive hearing to the learned Counsel appearing in the matter not because it was so required but the research done and the labour put by the learned Counsel justified such indulgence. 4. As the aforesaid question has been referred in Admiralty Suit No. 32/2000, we shall refer to the facts obtaining in that suit before we proceed to discuss the aforesaid question. The plaintiff in Admiralty Suit No. 32/2000 is a Protection & Indemnity Association incorporated under the laws of the United Kingdom which carries on business through its Managers, Liverpool & London P & I Management Ltd. at Liverpool, U.K. The plaintiff is mutual association of ship owners and offers insurance cover in resp....
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....iff's case that as per the rules of the Association the member is liable to contribute by way of calls such amounts as may be called upon by the directors of the plaintiffAssociation. The insurance premium or calls that a member/owner is liable to pay to the plaintiff are: (a) advance calls during the policy year: (b) supplementary calls as may be determined by the Association after theclosing of the policy year: (c) release calls as may be determined by the Association on termination ofthe cover and (d) overspill calls in respect of any overspill claim incurred by the Association. For the policy year commencing on 20-2-2000 the plaintiff decided to stop offering insurance cover to all vessels entered with them and made arrangements for its existing members to obtain similar cover with other Associations. However, all existing members were liable to pay the premium as determined by the plaintiff for the previous policy years for which insurance cover had been effected. It is plaintiff's case that accordingly as per the rules of the Association, release calls which are part of the premium payable by the members after the expiry of the p....
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.... Single Judge permitted the owners of defendant No. 1 vessel to furnish a rupee denominated Pay Order to be substituted by Bank Guarantee within two weeks and thus the Pay Order was furnished by the owners of the defendant No. 1 vessel 'Sea Success I' and defendant No. 1 vessel was thereafter free to sail. The owners of defendant No. 1 vessel on 118-2000 furnished a Bank Guarantee on the requisite terms placed on the Pay Order. On 22-8-2000 the defendant No. 1 vessel and her owners took out Notice of Motion No. 2455/2000 seeking rejection of the plaint for failure to disclose cause of action and/or dismissal of the suit for want of jurisdiction. The crux of the contentions raised by the owners of the defendant No. 1 vessel for rejection of the plaint for failure to disclose cause of action and dismissal of suit for want of jurisdiction is based on two grounds viz., (a) that a claim for unpaid release calls described by plaintiff as insurance premia does not constitute a 'necessary' within the meaning of section 5 of Act of 1861 and (b) that the vessel "Sea Success I" is not a sistership of the vessel "Sea Ranger" or "Sea Glory". The learned Single Judge by his order....
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....e regarded as "necessaries" as a vessel may and indeed can operate and trade without insurance though it may be imprudent even to attempt it; in general on high seas no national law or conventional obliges a vessel owner to take out comprehensive P & I insurance. The learned Counsel heavily relied upon (The Heinrich Bjorn), 1883 (8) P.D. 151, (The Andre Theodore), 10, Aspinall 94, Stokes v. The Conference, (1887) 8 NSWR 10, (The Emrald Transporter), 1985 (2) SALR 152. (The River "Rima"), 1988 (2) LLR 193, (The Golden Petroleum), 1994 (1) SLR 92 and the provisions of aforesaid statutes and 1952 Brussels Arrest Convention and the Administration of Justice Act, 1956. Mr. Bharucha, the learned Counsel for the appellants also urged that amounts due towards unpaid insurance premia cannot be said to arise out of an agreement relating to the use or hire of a ship or an agreement relating to the carriage of goods in any ship and, also not a maritime claim under that head. In this connection, the learned Counsel referred to (Aifanourious), 1980 (2) LLR 403 and Gatoil International Inc. v. Arkwright-Boston Manufacturers Mutual Insurance Co. and others, 1985 (1) All E.R.129. He would also u....
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....l, the learned Senior Counsel who appeared as an intervenor supported the submissions of Mr. Bharucha and additionally contended that the concept of "necessaries" contemplated supply of goods or materials to a particular ship for her operation or maintenance and club cover is not comparable with the concept of "necessaries" supplied to the ship because upon entering into a ship the owner becomes a member of the company, who pays the membership fee and undertakes to pay contribution towards the losses incurred by himself as well as other members of the club and his liability to pay these contributions is a liability collateral to the membership. Mr. Kotwal submitted that consideration for payment of the call is the undertaking to contribute towards losses of other members, management expenses, reinsurance losses etc. and the foundation of the contract is not the payment of a premium, but an agreement that each member should bear his aliquot share of the losses of the year covered by the policy. According to Mr. Kotwal, club cover merely postulates the ownership being indemnified by the club provided; (a) the managers in their absolute discretion decided to indemnify the member, (b) ....
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....m and as the P & I cover is solely for the pecuniary benefit of the ship owner, a claim for unpaid insurance premia in respect of ship cannot be said to be covered by the expression "necessary supplied" within the meaning of section 5 of the Admiralty Courts Act, 1861. 8. On the other hand Mr. Prashant Pratap, the learned Counsel appearing for plaintiff Association respondent No. 1 in Appeal No. 226/2001 strenuously urged that the expression "necessaries" occurring in section 5 of the Admiralty Courts Act, 1861 must be construed in broad and liberal manner keeping in mind the ever changing requirement of a ship to be able to trade in commerce and in the present day context the insurance should be considered 'necessary' for the operation of the ship. He submitted that it is mandatory for a vessel to have a valid P & I insurance cover at major ports in India and consequently at least as far as India is concerned insurance is a 'necessary'. The learned Counsel would urge that the absence for valid P & I insurance cover as required by Port Regulations renders a vessel legally unseaworthy and consequently in breach of statutory requirements and hence P & I insurance i....
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....ed by the Association, Mr. Rebello submitted that without P & I cover vessel is not in a position to undertake any maritime adventure. He also submitted that P & I cover is far reaching as it caters to the eventualities in respect of the seamen liabilities, passenger liabilities and third party liabilities attending to the complement, stowaways, supernumeraries, life salvage and persons in distress and also liabilities arising as a result of collision, damage to the ships, damage to property, pollution, wreck removal, towage etc. and, therefore, what are "necessaries" today are entirely different from what were necessaries during historical times where trading was relatively simple. The learned Counsel submitted that though India is not signatory to numerous international conventions, in view of the dictum in m.v. "Elisabeth", the principles can be adopted into our local context. Mr. Rebello referred to the International Convention on a Civil Liability for oil pollution, Brussels which requires compulsory insurance. The Merchant Shipping (Oil Pollution) Act, 1961 which makes insurance compulsory, the Major Port Trusts Act which entitles the major Port Trusts to issue notifications ....
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.... of Admiralty to assume jurisdiction over foreign ships in respect of claims to cargo carried into any port in England or Wales. Significantly, the Act did not apply to outward cargo. Section 7 of the Act, however, conferred jurisdiction on the High Court of Admiralty "over any claim for damage done by any ship". This Act was followed by the judicature Act of 1873, which came into force in 1875 and which merged the High Court of Admiralty with the High Court of Justice resulting in a fusion of Admiralty law, common law and equity. It is of interest to note that the provision contained in section 6 of the Admiralty Court Act, 1861 limiting the jurisdiction of the Admiralty Court to claims respecting inward cargo was discarded by the Administration of Justice Act, 1920 which extended the jurisdiction of the High Court to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship, and; (c) any claim in tort in respect of goods carried in any ship. The Act thus applied to both inward and outward cargoes. 36. The Admiralty Court Act, 1861 and the subsequent enactments were consolidated by the Supr....
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.... 38. These claims are now specifically mentioned under Clauses (e), (g) and (h) respectively of section 20(2) of the Supreme Court Act, 1981, amongst other claims, as falling under the Admiralty jurisdiction of the High Court. Part II of this Act is derived substantially form Part I of the 1956 Act which was enacted to give effect to the Brussels Convention of 1952 relating to the arrest of sea-going ships and the rules concerning civil jurisdiction in matters of collision (Cmd 8954). 39 . Section 20 of the Supreme Court Act, 1981 enumerates various questions and claims falling under the admiralty jurisdiction of the English High Court. Apart from matters covered by the Merchant Shipping Acts, 1894 to 1979 (referred to in sub-section (3)) and certain other matters, various questions and claims are enumerated in sub-section (2). They include "any claim for loss of or damage to goods carried in a ship; any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; any claim for damage received by a ship; and any claim for damage done by a ship." 40. Sub-section (7) of this section specifically provides that t....
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.... be entitled to." 12. The important question referred by the learned Single Judge to be decided by us and which is indeed a vexed and controversial one is as to what is real concept and purport of the term necessaries used in section 5 of the Act of 1861. Though the question is confined to whether claim for unpaid insurance premia in respect of ship amounts to "necessaries supplied" within the meaning of section 5 of the Admiralty Courts Act, 1861 so as to constitute a maritime claim, but we find the ancillary question that also arises for determination is whether a claim for unpaid insurance premia in respect of a ship is otherwise maritime claim giving rise to admiralty cause? 13. Statutorily by the Admiralty Court Act, 1840 the Court of Admiralty acquired jurisdiction over claims for necessaries supplied to any foreign ship or seagoing vessel. By the Admiralty Court Act, 1861 in respect of claims for necessaries supplied to any ship elsewhere than in the port to which the ship belonged, unless it was shown to the satisfaction of the Court that no owner or part owner of the ship was domiciled in England or Wales was extended to the jurisdiction of Court of Admiralty. The ex....
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....hers v. The Conference (supra) and it was held that the insurance of a ship is not a necessary. The same view appears to have been taken by Court of Durban in M.V. Emerald Transporter with reference to the provisions contained in Admiralty Jurisdiction Regulation Act 105 of 1983 wherein it was held that services which injured solely to the benefit of the shipowner, as was the position with the contracts of insurance, could not be classed as "necessaries". It may be said that the observations were made by the Court in Durban in the context of ranking of claims against a fund comprising of sale proceeds of the vessel M.V. "Emrald Transporter." 16. Article 1(k) of 1952 Brussels Arrest Convention which incorporates "goods or materials wherever supplied to a ship for her operation or maintenance" as a maritime claim came to be considered by the House of Lords in The River Rima. The House of Lord noted that Article 1(1) of the Convention listed 17 types of claims in paragraphs lettered (a) to (q) and the list of the types of the claims therein was derived as a whole from the list of types of claims in section 22 (1)(a) of 1992 Act which gave to the High Court of Admiralty jurisdiction....
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....heodore, Stokes etc. could be accepted and followed by us, albeit we are not bound by such view, in so far as the claim towards insurance premium is concerned in the changing times when shipping industry has grown tremendously. Whatever be the misgivings of the Admiralty jurisdiction of the Indian High Courts earlier and restrictions put by themselves, after the authoritative pronouncement by the Apex Court in m.v. "Elisabeth", no doubt is left that though Colonial statutes continue to remain in force by reason of Article 372 of the Constitution of India but that does not stultify the growth of law or blinker its vision or fetter its arms. In m.v. "Elisabeth" it has been held that the fact that the High Court continues to enjoy the same jurisdiction as it had immediately before the commencement of the constitution does not mean that a matter which is covered by Admiralty Court Act, 1861 cannot be otherwise dealt with by the High Court in exercise of its manifold jurisdiction which is unless barred, unlimited. The Supreme Court went on to observe that to the extent not barred expressly or by necessary implication, the judicial sovereignty of this country is manifested in the jurisdi....
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....ligence occurring in connection with the carriage of goods. Where substantive law demands justice for the party aggrieved and the statute has not provided the remedy, it is the duty of the Court to devise procedure by drawing analogy from other systems of law and practice. To the courts of the "civil law countries" in Europe and other places, like problems seldom arise, for all persons and things within their territories (including their waters) fall within their competence to deal with. They do not have to draw any distinction; between an action in rem and an action in personam. 65. It is likewise within the competence of the appropriate Indian Courts to deal in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found within their jurisdiction. The power of the Court is plenary and unlimited unless it is expressly or by necessary implication curtailed. Absent such curtailment of jurisdiction, all remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the High Court concerned. This power ....
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.... the authorities concerned. Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence, as is the position in England, can render valuable help in this regard. Delay in the adoption of international conventions which are intended to facilitate trade hinders the economic growth of the nation." 20. At this stage it would be advantageous to appreciate the nature of the P & I club and the insurance cover provided by such clubs. In the beginning P & I clubs were loose associations of shipowners with no collective rights or exposure to outside legal action but today P & I club is definitely a corporation. All P & I clubs in UK are registered companies limited companies with no share capital because essentially these are non-profit making companies. Upon entering the ship the owner becomes member of the P & I club and he pays the membership fee and undertakes to pay contribution towards the losses incurred by other members of the club which are payable by the Company. In other words the concept of guarantee is based upon a reciprocal system, that each member is cast under a duty to refund the damages suffered by any one of them and....
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....ce one of such circulars issued by Mumbai Port Trust on 8-8-1996 and other by the Calcutta Port Trust on 26-6-2001. Mumbai Port Trust's circular dated 8-8-1996 read thus: "MUMBAI PORT TRUST" Deputy Conservator's Office Port House, 1st floor, Shoorji Vallabhdas Marg, Mumbai-400 001. CIRCULAR To, Ship Owners/Stevedores/Vessel/Agents The Secretary Bombay & Nhave/Sheva Ship-Intermodel Agents Association, 3, Rex Chambers Ground floor, Valchand Hirachand Marg, Ballard Estate, Mumbai-400 001 The Secretary The Bombay Stevedores Association Ltd., Janmabhoomi Chambers, 2nd floor, Valchand Hirachand Marg, Ballard Estate, Mumbai 400 001. Subsequent to the Circular Nos. DC/C-SH/7200 dated 4th October, 1995 and DC/C-SH/2/3661 dated 9th July, 1996 and in view of recent experience gathered from the storm which hit the harbour on 18th and 19th June, 1996. It has been decided that vessels which do not possess valid P & I club cover or suitable insurance cover will not be decked. The intention of the port is to eliminate all sub-standard vessels or sh....
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....horities or in her navigation such as in case of grounding etc. who inspect and/or take survey of the situation not only in respect of the vessel, but also in respect of the goods carried on board the vessel. (d) Appointing lawyers, participating in the proceedings in various courts, such as enquiries and investigations under the provisions of Merchant Shipping Act, 1958, supervising all that is required to be supervised in the process of ships voyage and/or her employment in a particular port in any matter touching therewith and (e) Rendering services to the complement on board viz. to the Master as andwhen he faces difficulties to assist him in lodging notes of protest before notaries or other legal advisors, arrange for the repatriation of stowaways, initiating release of vessels from arrest and give the clubs letter of indemnity which are accepted in various ports of the world, arrange for surveyors to attend to investigation, quantifying the damage that may be caused either to the cargo or to the vessel or in case of an accident to any of the crew members attend to hospitalisation and medical needs and variety of other situational exigencies that may arise fr....
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....y for voyage. Even in England no distinction is drawn between the necessaries for the ship and necessaries for the voyage. The said test when applied in the context of P & I insurance cover would leave no manner of doubt that P & I insurance, which is mandatorily required by some of the major ports in India to enable such ships to enter respective port, can be construed to be necessary within the meaning of section 5 of Admiralty Courts Act, 1861. It is true that in England the concept of cover given by P & I Association has not been accepted as necessary, but several other countries such as South Africa, China and Australia statutorily provide that unpaid premia constitutes into a maritime claim. So far as U.S.A. is concerned, it has expanded the definition of "necessaries" to include unpaid premia in the absence of provisions under the enactments. In Equilease Corporation, in the appeals arising from United States Statutes District Court for the Eastern District of Louistana, the Circuit Judge held thus: "(3) Equilease next argues that no maritime lien arises in favour of James because insurance is not a "necessary" and therefore neither general admiralty law nor the Act....
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.... as the result of an insurance policy; "unless the ship is benefited the ship should not pay". In Re Petition of (Insurance Co. of Pennsylvania), 22 F. 109, off 4 sub nom. Insurance Co. of Pennsylvania v. The Proceeds of the Sale of the Barge Waubauschene, 24 F. 559. It is no longer appropriate, however, to view maritime insurance this way. Even a vessel that simply sits at a dock without making any attempt to ply the waters must today have hull protection and indemnity insurance. As the district Court noted, insurance is something that every vessel today needs just to carry on its normal business. Equilease, 568 F. Supp. 1263. Equilease itself required all of its affiliate companies to carry adequate insurance and would not do business with any company that failed to do so. Equilease, 568 F. Supp. 1263. The Bareboat Charter Party entered into by the Equilease shelf" corporations with Dunnamis required that throughout the term of the charter "the charterer shall, at his own expense, keep the vessel insured against ... risks .... in an amount ... not less than the greater of the initial cost of the vessel or the full commercial value of the vessel .... The agreement specifi....
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....., P & I insurance is a must to keep vessel in commerce and, therefore, has to be held as a necessary to the ship also and not to the ship owner alone. The law must march ahead and the term "necessary" as understood in maritime law cannot be left stagnant and has to be construed liberally and in a broad manner to meet the present needs and contexts particularly in the country like India where maritime claims are not catalogued. Even in England the definition of the word "necessaries" which was earlier confined to indispensable repairs, cables, sales and provisions have been given wider significance and gradually amplified by modern requirements inasmuch as Canal dues, dock dues, custom house and immigration services fee etc., which prevent the ship from sailing have been treated as covered by the expression "necessaries"; a fortiori in the Indian context where some of the major ports do not permit an entry to the vessel which do not have P & I cover, there is no reason why such insurance premium be not treated as "necessaries" for the ship as only such insurance would enable the vessel to enter into some major ports in the country. In other words, P & I cover of a vessel seems to b....
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....w in this country more effective by including even claim towards Income Tax liability on a freight payable by the charterer covered under the expression "necessaries" supplied to the ship. The Division Bench of Andhra Pradesh High Court held thus: "The short controversy is whether such a payment of income tax by the plaintiffs as agents of the charterer could be recovered by them in an action; in admiralty jurisdiction as is akin to the supply of necessaries to keep the ship a float and moving. According to the law in England in the 19th century, various liens were being added to the list of the necessary supplied to the ship which could be recovered in an action in admiralty jurisdiction subsequently statutory provisions have been made specifying items which can be claimed under this head under the admiralty jurisdiction. Section 1 of the Administration of Justice Act, 1956 in England specify the various claims which can be entertained by the Court under admiralty jurisdiction. However, the law on this subject in our country has been stagnating since 1890. Though section 1 of the English Act does not show that an amount paid by an Agent to a Charterer towards income tax l....
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.... their consent to be bound by it. The Geneva Arrest Convention 1999 has not come into force as such but there cannot be any doubt that the 1999 Geneva Arrest Convention reflects the global view on the subject. In our view, what has been observed by the Apex Court regarding the applicability of International Convention relating to the Arrest of Sea-going Ships, Brussels 1952 to India is equally applicable to the Geneva Arrest Convention, 1999. India had not adopted the Brussels Arrest Convention, 1952 but the Apex Court observed that though India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various Conventions in India to facilitate international trade and have not adopted these conventions, yet the principles incorporated in the conference which are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common Law of India and applicable for the enforcement of maritime claims against foreign ships is equally applicable to the Geneva Arrest Convention, 1999 which embodies also necessities of the international trade and, therefore, is applicable fo....
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....jurisdiction of the Indian High Courts should have been considered to have frozen and atrophied on the date of the Colonial Courts Act on Admiralty Act, 1890 ..... Where statutes are silent and remedy has to be sought by recourse to basic principles, it is the duty of the Court to devise procedural rules by analogy and expediency. .....The High Courts in India are superior Courts of record. They have original and appellate jurisdiction. They have inherent and plenary powers. Unless expressly or impliedly barred and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers. .... In equating the admiralty jurisdiction of the Indian High Court to that of English High Court the Colonial Court of Admiralty Act, 1890, significantly refers to the admiralty jurisdiction of the High Court in England whether existing by virtue of any statute or otherwise. This is an enabling statute, and not a statute of limitation of power. It aids, and does not fetter, the growth of jurisdiction. ......It is time to take a fresh look at the old precedents." We are constrained to hold for what w....
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....o hesitation in holding that unpaid insurance premia in respect of the ship amounts to "necessaries supplied" within the meaning of section 5 of the Admiralty Courts Act, 1861 so as to constitute maritime claim. In any case such claim is maritime claim giving rise to admiralty cause. 30. Having answered the question referred to us by the learned Single Judge, we now deal with the Appeal No. 226/2001 filed by the vessel m.v. "Sea Success I" and her owner. Mr. Prashant Pratap, the learned Counsel appearing for the plaintiffs- P & I Association raised objection about the maintainability of Letters Patent Appeal. The submission of Mr. Pratap is that the order passed by the learned Single Judge refusing to reject the plaint for failure to disclose a cause of action under Order 7, Rule 11(a) of Code of Civil Procedure (C.P.C.) is not appealable as it is not a judgment within the meaning of Clause 15 of the Letters Patent. Mr. Pratap submitted that the impugned order does not conclusively or finally determine any of appellants rights and that no prejudice whatsoever is caused to the appellants by the impugned order of the learned Single Judge refusing to reject the plaint as all issues....
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....ion comes to an end at the earliest and the concerned litigants are relieved of the psychological burden of the litigation so as to be free to follow their ordinary pursuits and discharge their duties. And so that they can adjust their affairs on the footing that the litigation will not make demands on their time or resources, will not impede their future work, and they are free to undertake and fulfil other commitments.". Thus, it would be seen that the order refusing to reject plaint for failure to disclose a cause of action can cause grave prejudice and loss to a defendant and if defendant's objection for rejection of plaint for failure to disclose the cause of action is accepted that would save the defendant from worry and expense of being put to trial. 34. In this backdrop, we straightway refer to the judgment of the Apex Court in Shah Babulal Khimji (supra). In paragraphs 80, 81 and 82 of the report, the Apex Court considered the judgment of Calcutta High Court in the case of The Justices of the Peace for Calcutta and held that the Division Bench of Calcutta High Court through its Chief Justice Couch, C.J. has taken very narrow view of the meaning of the expression "ju....
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.... to place a very strict and narrow interpretation on the word 'judgment' under which orders deciding matters of moment or valuable right of the parties without finally deciding the suit may not amount to a judgment and hence, not appealable. In giving this interpretation the learned Chief Justice was guided by two considerations: (1) that a liberal interpretation may allow vexed litigants to carry anydiscretionary order of the trial Court in appeal; and (2) that it would confer more extensive right to appeal against theJudge sitting on the Original Side than the right of appeal given to a trial Judge sitting in the mofussil. We are doubtless impressed with the argument of the Chief Justice and fully appreciate the force of the reasons given by him but we feel that despite those considerations the law must be interpreted as it stands and a Court is not justified in; interpreting a legal term which amounts to a complete distortion of the word "judgment" so as to deny appeals even against unjust orders to litigants having genuine grievances so as to make them scapegoats in the garb of protecting vexatious appeals. In such cases, a just balance must b....
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....sedly not used the terms order or decree anywhere. The intention, therefore, of the givers of the Letters Patent was that the word judgment should receive a much wider and more liberal interpretation than the word judgment used in the Code of Civil Procedure. At the same time, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent. It seems to us that the word judgment has undoubtedly a concept of finality in a broader and not a narrower sense. In other words, a judgment can be of three kinds: (1) A final judgment.- A judgment which decides all the questions orissues in controversy so far as the trial Judge is concerned and leaves nothing else to be decided. This would mean that by virtue of the judgment, the suit or action brought by the plaintiff is dismissed or decreed in part or in full. Such an order passed by the trial Judge indisputably and unquestionably is a judgment within the meaning of the Letters Patent and even amounts to a decree so that an appeal would lie from such a judgment to a Division Bench. (2) A preliminary....
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....e right to defend the suit and his remedy is confined only to contest the plaintiff's case on his own evidence without being given a chance to rebut that evidence. As such an order vitally affects a valuable right of the defendant it will undoubtedly be treated as a judgment within the meaning of the Letters Patent so as to be appealable to a larger Bench. Take the converse case in a similar suit where the trial Judge allows the defendant to defend the suit in which case although the plaintiff is adversely affected but the damage or prejudice caused to him is not direct or immediate but of a minimal nature and rather too remote because the plaintiff still possesses his full right to show that the defence is false and succeed in the suit. Thus, such an order passed by the trial Judge would not amount to a judgment within the meaning of Clause 15 of the Letters Patent but will be purely an interlocutory order. Similarly suppose the trial Judge passes an order setting aside an ex parte decree against the defendant, which is not appealable under any of the Clauses of Order 43 Rule 1 though an order rejecting an application to set aside the decree passed ex parte falls within Order ....
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....trial Judge amounts to a judgment within the meaning of the Letters Patent. We might, however, at the risk of repetition give illustrations of interlocutory orders which may be treated as judgments: (1) An order granting leave to amend the plaint by introducing a newcause of action which completely alters the nature of the suit and takes away a vested right of limitation or any other valuable right accrued to the defendant. (2) An order rejecting the plaint. (3) An order refusing leave to defend the suit in an action under Order 37, Code of Civil Procedure. (4) An order rescinding leave of the trial Judge granted by him underClause 12 of the Letters Patent. (5) An order deciding a preliminary objection to the maintainabilityof the suit on the ground of limitation, absence of notice under section 80, bar against competency of the suit against the defendant even though the suit is kept alive. (6) An order rejecting an application; for a judgment on admission;under Order 12, Rule 6. (7) An order refusing to add necessary parties in a suit under section92 of the Code of Civil Procedure. (8) An order varying or amen....
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....hese objections are decided by the trial Judge against the defendant, the suit is not terminated but continues and has to be tried on merits but the order of the trial Judge rejecting the objections doubtless adversely affects a valuable right of the defendant who, if his objections are valid, is entitled to get the suit dismissed on preliminary grounds. Thus, such an order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to a larger Bench". Refusing to reject the plaint which does not disclose cause of action though covered under Order 7, Rule 11(a) and which obligates the trial Court to do so definitely affects a very valuable right of the defendant since if such objection is upheld and lis is thrown out at the threshold, the defendant is spared from the agony of delay, expenses and mental torture. The decision by the trial Judge adversely to the defendant on the application made by him for rejection of plaint for want of disclosure of cause of action decides an important aspect of the trial affecting the very valuable rig....
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....ether the same gives rise to legally recognised claim and while probing the allegations at the threshold, Court has a duty to ascertain whether plaintiff's claim is bound to fail or not. By referring to the relevant pleadings made in paras 1 and 14 of the plaint, Mr. Bharucha submitted that upon meaningful reading of the said pleadings relating to the appellants vessel being sistership, reveal two averments central to plaintiff's case; (i) that the defendant No. 2 is, according to plaintiffs rules of Association, the owner of vessels "Sea Ranger" and "Sea Glory" viz. the two vessels in respect of which the original plaintiff-respondent No. 1 claims amount due towards unpaid release calls: and (ii) the defendant No. 2 is owner (beneficial or otherwise of the defendant No. 1 vessel "Sea Success I". Hence the deduction that the original plaintiff attempts to draw from the aforesaid averments is that the vessels "Sea Ranger" and "Sea Glory" are sisterships of the vessels "Sea Success I" by virtue of being commonly owned by defendant No. 2. The submission of Mr. Bharucha is such deduction is rested on the assertion that the vessel "Sea Success I" (defendant No. 1) is owned/contr....
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....Hardie Coy Pty. Ltd. v. Putt, 1998 NSWLR 434, (The St. Merriel), 1963 Pro 247, (The Permina 3001), 1979 (1) LLR 327, (I Congresso Del Partido), 1978 QB 500., (Father Thames), 1979 (2) LLR 364, (The Union Darwin), 1983 HKLR 248, (The Looiersgracht), 1995 (2) LLR 411, Ramprasad Chimanlal v. Hazarimal Lalchand AIR1931Cal458 , Phool Sundri v. Gurbans Singh, , National Insurance Co. v. Navrom Constkantza AIR1988Cal155 . (The Aventicum), 1978 (1) LL R 184, (The Temasek Eagle), 1999 (4) SLR 250, the judgment of New Zealand Court of Appeal in Vastock Shipping v. Confederation Limited, 1999 NZ C.A. 22 and (The Beldis), 1936 Pro 51. 40 . On the other hand Mr Pratap, the learned Counsel for original plaintiffrespondent No. 1 supported the view of the learned Single Judge and contended that paragraphs 1 and 14 of the plaint does disclose cause of action against the defendants. According to him, the pleadings made in paragraphs 1 and 14 clearly disclose cause of action for proceeding with the trial in the suit. Mr. Pratap argued that plea of want of cause of action is required to be taken at demurer i.e., on the basis that all averments made in the plaint are correct and treated as such and ....
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....cussion in various cases but we deem proper to refer to some of the cases cited at bar in that regard. In T. Arivandandam v. T.V. Satyapal [1978]1SCR742 the Supreme Court observed thus: "......If on a meaningful-not formal reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, the trial Court should exercise its power under Order 7, Rule 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled." 42. The Delhi High Court in M/s. Sakthi Sugars Limited v. Union of India and another, AIR1981Delhi212 relying upon the aforesaid observations of the Supreme Court held thus:- "12. But the law in this respect is laid down by the Supreme Court in T. Arivandandam v. T.V. Satyapal [1978]1SCR742 . It is laid down that if on a meaningful and not formal reading of a plaint it is manifest that the plaint is vexatious or meritless in the sense of not disclosing a clear right to sue trial Court should exercise its power under Order VII, Rule 11, Code of Civil Procedure, and should reject the plaint. So it is meaningful reading of the plaint which is required. It is to be seen if actually according ....
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....he does not prove, he fails at that time. 46. In William v. Wilcox, 1838 (8) Ad & EI 331, Lord Denman, C.J., said thus: "It is an elementary rule in pleading that, when a state of facts is relied it is enough to allege it simply, without setting out the subordinate facts which are the means of providing it, or the evidence sustaining the allegations." 47. The learned Single Judge of Rajasthan High Court in Ranjeet Mal v. Poonam Chand and another, held, "what is to be determined by the Court at the stage of deciding as to whether the plaint discloses any cause of action or not, is to find out from the allegations of the plaint itself as to whether a bogus, wholly vexatious or frivolous litigation was sought to be initiated under the garb of ingenious drafting of the plaint and to guard against the mischief of a litigant misusing the process of the Court, by entering into a false litigation, merely for the purposes of harassing the other party and obtaining undue advantage of the process of the Court by adopting tactics and in starting sham and shady actions." 48. The Apex Court in State of Orissa v. Klockner and Company and others. AIR1996SC2140 , approved the view....
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....f essential facts, if traversed, has to be proved by the plaintiff to entitle him to the relief. It reflects to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved to entitle the plaintiff to the decree. The consistent legal position which is also mandatorily enacted by Order 7, Rule 11(a) C.P.C. is, that the Court must reject the plaint which does not disclose cause of action. Obviously there is a difference between the nondisclosure of cause of action in the plaint and the absence of cause of action for the suit. The ground for rejection of plaint is failure to disclose a cause of action and not that there is no cause of action for the suit. It is not competent for the Court to go into the correctness or otherwise of the allegations constituting the cause of action. In other words, the correctness or otherwise of the allegations constituting the cause of action is beyond the purview of Order 7 Rule 11(a) C.P.C. However, to find out whether the plaint discloses cause of action or not, the Court has to consider the....
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....defendant No. 2 through its wholly owned 100% subsidiary. Singapore Soviet Shipping Corporation Inc. Monrovia. The 1st defendant vessel is presently at the port and harbour of Mumbai within the territorial waters of India and within the Admiralty jurisdiction of this Hon'ble Court. The 2nd defendant is the owner of the 1st defendant and is also inter alia the party liable in personam in respect of the plaintiff's claim. 14. The plaintiff submits as more particularly stated in paragraph 1 above, that the 1st defendant vessel is a sistership of the two vessels "Sea Glory" and "Sea Ranger" in view of the beneficial ownership, management and control of all three vessels having vested in defendant No. 2. The plaintiff further submits that defendant No. 2 is liable in personam in respect of the unpaid insurance premium in respect of the two vessels "Sea Glory" and "Sea Ranger". Consequently the plaintiff is entitled to arrest any other vessel in the ownership of defendant No. 2. The 1st defendant vessel is owned by defendant No. 2 through its 100% subsidiary S.S. Shipping Co. Inc. In the circumstances, the plaintiff submits that they are entitled to proceed against the d....
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.... subsidiary company by its parent company cannot lead to the conclusion that the assets of the former belong to and are owned by parent company. In Mrs. Bacha F. Guzdar v. Commissioner of Income Tax, [1955] 27 ITR 1(SC) , the Apex Court observed, "there is nothing in the Indian law to warrant the assumption that a shareholder who buys shares buys any interest in the property of the company which is juristic person entirely distinct from the shareholders". No doubt law recognises certain situations in which the corporate veil is pierced such as fraud, or trading with the enemy or when required by the particular words of a statute, but then there has to be specific pleading to that effect as veil piercing is not a rule, but an exception which is undertaken, only in certain specified circumstances. It is not that in all cases a subsidiary company must be treated as an asset of the holding company. If that be so, the subsidiary company shall have no independent identity and such subsidiary company will crack not under the pressure of its own uncongenial shareholders, but also of the pressure of the shareholders and creditors of the holding company. The view of Madras High Court in Spen....
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.... No. 1 vessel cannot on the intelligent analysis of the plaint be held to be disclosing legally recognisable claim against the defendant No. 1 vessel Sea Success I. 55. Admittedly the defendant No. 1 vessel "Sea Success I" is not the offending vessel or in other words claim of unpaid insurance premium is not towards the defendant No. 1 vessel. The action in rem under admiralty jurisdiction has been initiated by the plaintiffs against the defendant No. 1 vessel Sea Success-I on the basis of allegations of it being a sistership i.e. a ship in the same beneficial ownership as the ships "Sea Glory" and "Sea Ranger" in regard to which the claim arose. In case of m.v. Mariner IV, a Foreign Flag Vessel v. Videsh Sanchar Nigam Ltd. 1998 (5) BomCR 312, the Division Bench of this Court held. "The admiralty jurisdiction could be invoked not only against the offending ship in question but also against a sistership in regard to which the claim arose", and this legal position is not disputed before us but the question is whether the allegations made in the plaint, particularly paragraphs 1 and 14 which are only relevant paragraphs in that regard by themselves prove that defendant No. 1 vessel....
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....p is a sistership for the reasons disclosed which is legally not sustainable cannot be held to be sufficient to disclose a cause of action. Similarly though the law permits the plaintiff to arrest a ship which is beneficially owned by the defendant No. 2 then the plaintiff is required to plead the material facts which discloses the beneficial ownership of the defendant No. 2 over the ship which is to be arrested and an inference drawn by itself in the pleading about beneficial ownership which is legally unsustainable cannot be said to disclose a cause of action. It is true that while ascertaining whether the plaint discloses a cause of action or not, the Court is not required to make any enquiry into doubtful or complicated questions of fact or law and that the Court proceeds with the assumption that the facts stated therein true but then those facts as they stand must disclose plaintiffs right to sue. In the present case the plaintiff has averred that the beneficial ownership, management and control of all three vessels viz., Sea Glory, Sea Ranger and Sea Success-I vest in the defendant No. 2, but the deduction drawn in the plaint in that regard is fundamentally bad in law. As a p....
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....in the Permina 1979 (1) LR 327 and the Hong Kong High Court in the case of The Union: Darwin 1983 HKLR 248 and by the Federal Court of Canada in Canadian Case The Looiersgracht 1995 (2) LR 411. The broad consensual legal position seems to be that the concept of beneficial ownership of the shares in a ship does not include possession and control of the vessel and the test of the beneficial ownership is a right of that person to sell, dispose of or alienate the shares in the ship. On a proper analysis and scrutiny of the allegations made in the plaint, particularly paragraphs 1 and 14, appears, thus, that the deduction drawn by the plaintiff in the plaint that defendant No. 1 vessel Sea Success-I is sister ship of the vessels "Sea Glory" and "Sea Ranger" in respect of which the claim is made is not legally supported and cannot be said to be showing sustainable right of the plaintiff to sue against the defendant No. 1 vessel Sea Success-I even assuming the averments made therein to be true. We have not gone into the merits of the ownership of the defendant No. 1 ship. We clarify, on the basis of any averments made by defendant No. 1 to the contrary, but we have proceeded to examine th....
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....id insurance premium of a maritime vessel made by P & I Association is necessary as contemplated under section 5 of the Admiralty Courts Act, 1861 so as to constitute maritime claim and even otherwise is a maritime claim giving rise to admiralty cause. 59. In the result, we dispose of the two appeals by the following order:- (a) The question referred to by the learned Single Judge while disposing ofNotice of Motion No. 2455/2000 in Admiralty Suit No. 32/2000 as to whether a claim for unpaid insurance premia in respect of a ship amounts to necessaries supplied within the meaning of section 5 of Admiralty Courts Act, 1861 so as to constitute a maritime claim is answered in the affirmative and we further hold that even otherwise such claim for unpaid insurance premia in respect of a ship is a maritime claim giving rise to admiralty cause. (b) The objection of the respondent No. 1 original plaintiff in Appeal No. 225/2001 about is maintainability is overruled and appeal is held maintainable. (c) The order dated 1st/2nd February 2001 passed by the learned Single Judge in Notice of Motion No. 2455/2000 in Admiralty Suit No. 32/2000 impugned in Appeal No. 226....