TaxTMI 
TaxTMI 
2001 (1) TMI 1014
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....be made on 8.11.1999 in the Lloyds List, enquiring about the vessel's whereabouts. It appears that the vessel called at St. Vincent, Cape Verde island between 29th August, 1999 and 4th September, 1999 and subsequently at Laos on 18th October, 1999. The above ports were not the Port of Call as the vessel did not carry any cargo to be discharged for delivery in the said Ports. Probably, the vessel had been kept at sea, allegedly drifting in the area between Senegalese Coast and Cape Verde Islands. 2. The Officers of the Customs Department, Cuddalore, on 21.12.1999 spotted this Vessel bearing a different name Gloria Kopp anchored at about 6.5 nautical miles off Bommiyarpalayam Shore, near Pondicherry Coast. The Officers board the vessel in the afternoon of 22.12.1999 and noticed that the vessel was loaded with steel products. 3. M/s. Inter Cargo Insurance Company acting as underwriters and agents of M/s. T.W. Metals Limited (Owners of the Cargo) filed a suit in the admiralty jurisdiction of this Court in C.S. No. 1020 of 1999 on 23rd December, 1999 under Order 4, Rule 1 read with Order 42, Rule 2 of the Original Side Rules against the defendants viz., (i) the owners of the v....
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....seizure of the vessel and the Cargo by the Superintendent of Customs, Chennai already made was brought to the notice of the Division Bench, In the said appeal, the Division Bench ruled that in the light of the subsequent developments the impugned order in that appeal O.S.A.42 of 2000 has become unsustainable and consequently the same was set aside. The Bench further ruled that the arrest of the vessel and Cargo ordered by the learned single Judge ceased to be in force. 7. The first respondent viz., the Chief Officer in the vessel took out three applications in the suit, (i) Application No. 590 of 2000 under Order 14, Rule 8 read with Order 40 of the Original Side Rules, praying the Court to appoint a Receiver in whose presence, sale of the Cargo, unloading the Cargo and further investigation of the Cargo and the ship should be done by the Government Agencies. (ii) Application No. 2449 of 2000 praying the Court to fix a time frame not beyond 30.6.2000 to complete the investigation of entire ship by all the Government Agencies either individually or collectively or in whatever manner the Government Agencies want. (i....
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....es ? (ii) Whether any Receiver has to be appointed for sale of the Cargo, unloading the cargo and further investigation of the cargo and ship ? (iii) Whether an order for sale of the ship for payment of wages to the crew has to be made ? With regard to the first two issues, the learned Judge came to the conclusion that considering the fact that the investigation and interrogation are over, coupled with the fact that the cargo had already been sold for a reasonable price, the appointment of a Receiver is absolutely unnecessary and no time frame need be fixed to complete the investigation as it is unnecessary. 11. With regard to the question as to whether the first respondent can invoke Section 146 of the Merchant Shipping Act, 1958 and whether filing of an application in the present suit claiming wages would be sufficient, the learned single Judge came to the conclusion that the decision of this Court in Udaya Shankar, P., v. Andhra Bank, 1983 (96) L.W. 502 wherein the Court held that the specific provision in the Act enables a seaman to resort to such a process and such a process need not necessarily be an independent civil suit or ....
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....raised the following contentions; (a) The Merchant Shipping Act, 1958 is made applicable only to those seamen who come under the definition of Section 3(42) and as far as the present case is concerned, the first respondent and the crew do not come under the definition of Section 3(42) and hence they cannot invoke the said provisions of the Act. (b) The proceedings for recovery of wages by seamen can be instituted in a civil Court only where the owner of the ship has been declared as invalid or ship is under arrest or sold by authority of any Court or where the Magistrate refers a claim to the Court. According to the Additional Solicitor General, the conditions are not satisfied and the first respondent could have only instituted a suit and it is not open to them to file an application claiming the wages due out of the sale proceeds of the ship. (c) By an order dated 26.9.2000, the Commissioner of Customs by virtue of powers conferred on him under the Customs Act, passed final orders confiscating the ship in question and in view of that, the first respondent and seamen cannot make any claim against the ship. ....
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....' 20. We do not accept this submission of the learned Additional Solicitor General, this is because of the following reasons. (i) If the provision has to be read and understood in the manner as put forward by the learned Additional Solicitor General, the Legislature would certainly have worded in that manner only. In this context, we would like to point out Section 99 which prohibits engagement of seamen in India Board without discharge certificate. That section reads thus, "No person shall engage or carry to sea any seaman under this Act in any ship..." (ii) As mentioned supra, the learned Additional Solicitor General referred to Section 86 to 117 in support of the above contention. A careful reading of these provisions show that these provisions only refer to required qualification for seamen and procedure to be followed in engaging a seamen. It is not as if, in the Act, a Commission or Board has been constituted for recruiting seamen or in other words, there is no recruiting Agency in that Act to engage or employ the seamen. (iii) The sections 86 to 117 referred supra deal with three t....
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.... Section 2(45)... "ship" does not include a sailing vessel." Therefore, crew of all ships which are covered under the Act come under the definition of "Seaman". It was also submitted that the petitioners are not seamen under the Act because they do not possess a CDC under this Act. This contention cannot be accepted in view of the wide definition of the term "seaman" under section 2(42). The first contention, therefore, of the respondents has to be rejected. 22. We hold that the Chief of the ship and the crew can invoke the provisions of the Merchant Shipping Act as they are the seamen in a ship under the Act. Or in other words, the words 'Under this Act' would refer and qualify the words 'the ship' and not 'employed or engaged as a member of the crew'. Here in this case, the ship in question comes within the definition of the word 'ship' as occurring in section 3(45) of the Act. 23. The next contention of the learned Additional Solicitor General is that the Chief Officer of the vessel and crew have only r....
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....n the General Clause Act. Oxford Dictionary explains the term "Proceeding" as "an action taken in a Court to settle a dispute." The Black's Law Dictionary, Seventh Edition, Edited by Bryan A. Garner, Editor-in-Chief, gives the meaning of the word "Proceeding" as "the regular and orderly progression of a law suit. Including all acts and events between the time of commencement and the entry of judgment; any procedural means for seeking redress from a tribunal or agency". Words and Phrases (Legally Defined) [2nd Edition] Butterworths Publication explains the term "Proceedings" as: " The term 'proceeding' is frequently used to note a step in an action, and obviously it has that meaning in such phrases as "proceeding in any cause or matter". When used alone, however, it is in certain statutes to be construed as synonymous with, or including "action" [Halsbury's Laws (3rd Edition) 5, 6] The term "Legal Proceedings" is explained as : 'Legal Proceedings' mean prima facie that which the words would naturally import - i.e., legal process taken to enforce the rights of the Shipowner, Runchiman & Co. v. Smyth & Co., 1994 (20) T.L.R. ....
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....application, the Order of the Court arresting the ship should be in force and the suit to be one in rem. In the absence of any specific provision under the Merchant Shipping Act, imposing restriction for consideration of the application by the Court only during the period when the ship was under arrest, we are inclined to take the view that notwithstanding the fact that the order of arrest of the ship ceased to be in force by virtue of the 2nd respondent herein withdrawing the reliefs "b and c" (para-22) in the plaint, and notwithstanding the suit which was originally suit in rem became suit in personam, this Court continues to have power, authority and jurisdiction to consider the said application on merits and dispose it of, as the proceeding/application for wages instituted when the ship was under arrest and the suit was one in rem. This view of ours gains support from the Ruling of the Supreme Court reported in M.V. Elisabeth v. Harwan Investment & Trading Pvt. Ltd., Goa, wherein the Apex Court ruled as under: "Where statutes are silent and remedy has to be sought by recourse to basis principles, it is the duty of the Court to devise procedural rules by an....
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....ject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers. See Naresh Shridhar Mirajkar v. State of Maharashtra,. As stated in Halsbury's Laws of England, 4th Edition Vol.10, para 713: 'Prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court.' " It is further held as under:- "Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue against the owner as in any other suit. The arrest of the vessel while in Indian Waters by ....
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....hat property. Maritime lien thus attaches to the property in the event the cause of action arises and remain attached. It is, however, inchoate and very little positive in value unless it is enforced by an action. It is a right which springs from general maritime law and is based on the concept as if the ship itself caused the harm, loss or damage to others or to their property and this must itself make good that loss. (See in this context 'Maritime Law' Christopher Hill. 2nd Edn.) 36. As we have seen above, the Apex Court has indicated that the Textbook "Maritime Law By Christopher Hill" can be referred to for further understanding about the nature of the right. We quote what the said Author has stated with reference to the right viz.. Maritime lien: " A maritime lien is a proprietary interest in the 'res' it detracts from the absolute title of the 'res' owner. There has been a division of judicial opinion as to whether it is a right in the property (a jus in re) or a right against the property (a jus in rem) only. It is submitted that the Hen is both, a right in the property perfected by action (in rem) against it. &nbs....
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....ims it is interesting to note that salvage has priority over (a) earlier salvage, (b) earlier damage, (c) earlier wages, (d) earlier claims to forfeiture by the crown, (e) subsequent possessory liens, (f) necessaries, and (g) mortgages. A salvors lien ranks first (and in reverse order of time if there is more than one salvor - ie., later before earlier) simply because without the emergency services he renders there would be no funds preserved out of which anybody could be satisfied. The 1993 Convention does not define maritime liens but only lists them under Article 4 (Convention liens), namely:- (a) Master and crew wages including costs of repatriation and social insurance contributions; (b) claims for loss of life of personal injury in direct connection with the operation of the vessel; (c) salvage; (d) claims for port, canal and other waterway dues and pilotage dues; (e) claims based on tort arising out of physical loss or damage c....
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.... the moment. The various ancient sea codes attempted to provide seamen with rights against their employers and over the centuries, maritime liens evolved in favour of seamen against their employers and over the centuries, maritime liens evolved in favour of seamen against the ship. Finally seamen were given a lien second only to custodia legis and court costs. (Lawyers somehow always managed to protect themselves and have never required the same solicitude). Seamen have had and still have a high priority maritime lien under the general maritime law in the U.K. It is a lien which follows the ship no matter who is the owner. It survives even against a foreign purchaser. One of the characteristics of maritime liens is that, once they come into existence, they follow the ship (droit de suite) into whosesoever hands it may come. In order, therefore, to answer the question "who can bind the ship" in the case of a maritime lien, one need only be concerned with that moment in time the actual claim arose. In order to answer the question "who binds the ship" in the case of-a statutory right in rem two moments in time are relevant; when the cause of....
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.... to the property in the even the cause of action arises and remains attached. It is a right which springs from general maritime law and it is based on the concept as if the ship itself caused the harm and that itself must make good that loss. A lien continues even if the ship is taken legally from a owner by requisition. 39. As far as the present case is concerned, pending the above appeal, the Customs Authorities issued a show cause notice dated 31.8.2000 under Section 124 of the Customs Act, 1962, calling upon the persons concerned to reply within ten days from the date of receipt of the said notice, as to why the vessel M.V. Gloria Kopp 8 Kobe Queen I valued at Rupees One Crore approximately should not be confiscated under Section 115(2) of the Customs Act, 1962 and as to why penalty should not be imposed on him/them under Section 114 of the said Act. 40. This notice was admittedly served on the crew of the vessel in question. The crew of the vessel engaged a counsel by name Mr.K.R. Muralai, Advocate, and the said counsel sent a reply dated 8th September, 2000 for the said show cause notice, objecting to the confiscation. Suffice for us to quote the relevant paragraph whic....
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.... filed an application in Application No. 2450 of 2000, praying the Court to direct sale of the ship and pay their wages from the sale proceeds. The learned Single Judge held that he is not inclined to order sale of the vessel and it is open to the Customs Authorities either to confiscate or sale of the vessel in accordance with law if they are empowered to do the same. 43. Learned counsel appearing for the 1st respondent has conceded before this Court that wages cannot be paid to the crew out of the sale proceeds of the cargo. In those circumstances, the first respondent should have filed separate appeal or cross objection in Appeal No. 309 of 2000, making a request to this Court to consider the claim of the first respondent viz., to sell the ship and to pay the wages. The proceedings to confiscate the ship were under consideration by the Customs Authorities at the time when the learned Single Judge passed Orders, and subsequently, when the crew were called upon to reply to the show cause notice, it was followed by an order of confiscation. Notwithstanding that, we are considering the claim of the crew for their wages against the ship. It has to be pointed out that before thi....
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....p; "When any goods are confiscated under this Act, such goods shall thereupon vests with the Central Government." This Section corresponds to Section 184 of the Sea Customs Act 1898 which reads: " When anything is confiscated under Section 182, such thing shall thereupon vest in Government." In the decision reported in Sewpujanrai I. Ltd., v. Collector of Customs, the Supreme Court observed thus:- "The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in rem and the penalty is enforced against the goods whether the offender is known or not known the order of confiscation under Section 182, Sea Customs Act, operates directly upon the status of the property, and under Section 184 transfers an absolute title to Government. Therefore, in a case where the Customs Authorities can proceed only against the goods, there can be no question of applying Section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant Company as respects Section 8(3), the remedy under the Sea Customs Act against the smuggled goods can not be barred; when on the facts of the ca....
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....in the term "in rem" as, "A judgment in rem determines the status of a person and settles the destiny of the res and in conclusive evidence of the matter actually decided. It binds the parties as well as strangers." Webster's Third New International Dictionary explains the term as, "against or with respect to a thing (as a right, status, or title to property) without reference to the persons involved." Oxford Concise dictionary gives the meaning of the term as, "Law made against or affecting a thing" The Apex Court, in R. Viswanathan and others v. Abdul Wajid, held thus. "The Roman lawyers recognised a right either as a jus in rem or a jus in per sonam. According to its literal meaning "jus in rem" is a right in respect of a thing, a "jus in personam" is a right against or in respect of person. In modern legal terminology a right in rem postulates a duty to recognise the right imposed upon all persons generally, a right in personam postulates a duty imposed upon a determinate person or class of persons. A right in rem is, therefore protected against the world at large; a right in pe....
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....s, merely determines the rights of the litigants inter se to the res. The former looks beyond the individual rights of the parties, the latter is directed solely to those rights. ........A foreign judgment which purports to operate in rem will not attract extra-territorial recognition unless it has been given by a court internationally competent in this respect. In the eyes of English law, the adjudicating court must have jurisdiction to give a judgment binding all persons generally. If the judgment relates to immovables, it is clear that only the court of the situs is competent. In the case of movables, however, the question of competence is not so simple, since there would appear to be at least three classes of judgments in rem: (a) Judgments which immediately vest the property in a certain person as against the whole world. These occur, for instance, where a foreign court of Admiralty condemns a vessel in prize proceedings. (b) Judgments which decree the sale of a thing in satisfaction of a claim against the things itself and (c) Judgments which....
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....s referred supra and the discussions would in our considered view would persuade this Court to the conclusion that by virtue of the order of confiscation the ship in question has vested with the Government absolutely and that the Chief in charge of the vessel and the crew do not have any manner of right whatsoever. Or in other words, the maritime lien had been defeated by the order of confiscation. Christopher Hill in his well known and classic Book 'Maritime Law', after referring to what is Maritime Lien (we have already referred to in extenso in the earlier part of our Judgment}, quotes the Ruling in The Bold Buccleugh, 1852 (7) MOO PC 267. We quote that passage from the said Text Book:- " The facts of this case are not of significance but this was one of the early leading cases which decided that a maritime lien does not require possession. It can be defined to mean a claim or privilege upon a thing (res) to be carried into effect by legal process. It is the foundation for a proceeding in rem, the legal machinery to perfect a right born at the moment the lien attaches. It can however, be defeated if the res is either (a) sold by order of a court,....