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ISLAMIC REPUBLIC OF IRAN SHIPPING LINES V/S M.V. MEHRAB & ORS. , decided on Wednesday, July 25, 2001.
[ In the High Court of Bombay, NOTICE OF MOTION NO.1273 OF 2001 IN ADMIRALTY SUIT NO.13 OF 2001 . ] 25/07/2001
Judge(s) : HON’BLE D.K. DESHMUKH
Advocate(s) : Mr.G.A. Rebello with Ms.E.D. Marker Plaintiffs. Ms.Ferishte Sethna with Ms.A. Nader i/b Dummor Sett & Co. Defendants Nos.1 & 4. Mr.A.V. Doijode .
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    Case Law Referred :M.V. Elisabeth vs. Harwan Investment & Trading Pvt. Ltd. AIR 1993 S.C. 1014 (Para 5).     P.C. This Notice of Motion is taken out by the Plaintiff. The Plaintiff has filed this suit. The first relief that is claimed in the suit is that the first Defendant vessel MEHRAB be arrested with a view to secure the Plaintiffs claim in arbitration proceedings to be instituted in London. The second relief is for sale of the said vessel for the same purpose and third prayer is for taking security from the Defendants for the same purpose. 2.By this Notice of Motion the Plaintiff seeks an order of arrest of the said vessel. It also seeks an order from this court directing the Defendants and the Respondents to furnish security in favour of the Prothonotary & Sr.Master of this Court to secure the Plaintiffs claim. 3.The facts that are relevant and material for deciding this Notice of Motion are that in June 2000 the Plaintiff entered into an agreement with Defendant No.2. According to the Plaintiff Defendant No.2 committed breach of that agreement and therefore the Plaintiff became entitled to recover substantial amount from the Defendant No.2. According to the Plaintiff Defendant No.2 is the owner of the Defendant No.1/ vessel. In the agreement that was entered into between the plaintiff and the Defendant No.2 there is an arbitration clause. The Plaintiff invoked that arbitration clause on 1-3-2001 and the arbitration proceedings are pending in London. The Plaintiff has filed this suit for Security of its claim by arrest of vessel or by security from the Defendants to secure the enforcement of the award that the Arbitrator may pass in the arbitration proceedings. The Plaintiff also seeks a relief claimed by prayer Clause (b) of this Notice of Motion on the basis of the provisions of Rules 930 935 and 937 of the Original Side Rules. 3.This Notice of Motion is opposed by the Defendant No.4 who claims that the Defendant No 4 had purchased the vessel from the Defendant No.2 in the month of January 2000 before alleged agreement between the Plaintiff and the Defendant No.2 was entered into. Notice of Motion is also opposed on the ground that considering the nature of the suit and the reliefs claimed therein the Plaintiff is not entitled to any relief from this Court. 4.For considering so far as prayer Clause (a) of the Notice of Motion is concerned it becomes necessary to consider the nature of reliefs that are claimed in this suit. Prayer clauses (a) b) & (c) reads as under:(a) That the first defendant vessel m.v. MEHRAB along with her hull tackle engines machinery boats apparel and other paraphernalia at present lying in port and harbour Porbandar be ordered to be arrested with a view to secure the Plaintiffs claim in the Arbitration proceedings to be instituted in London. (b) That the first Defendant vessel m.v. MEHRAB together with her hulls tackle engines machinery boats apparel and other paraphernalia at present lying in port and harbour Porbandar be detailed condemned and sold under orders and directions of this Honble Court and the sale proceeds thereof applied towards the satisfaction of the Plaintiffs claim in the Arbitration proceedings to be instituted in London. (c) For an order for security in favour of the Plaintiffs and against the Defendants in the sum of sterling Pound 436 646 84 and United States dollars 358 081.00 as per the particulars of claim annexed at Exhibit A together with interest thereon at the rate of 12% per annum from the date of the institution of the suit till payment and/or realisation.5.It is clear from the prayer clauses (a) (b) & (c) quoted above that the Plaintiff is claiming relief of arrest of the vessel and security from the Defendants and the Respondent in aid of the execution of the award that may be passed in favour of the Plaintiff by the Arbitrator in London. The learned Counsel for the Plaintiff relied on a judgment of the learned single Judge of this court in Civil Suit No.1 of 199 and Civil Application No.175 of 1996 dated 8/11th November 1996 in the case of Prime International Ltd. vs. M.V. Mariner IV. The learned Counsel relying on that judgment submits that though the matter is pending before the arbitrator this court can make interim order. However perusal of the judgment of the learned single Judge in that case shows that in that case when the suit was filed though there was an arbitration clause in the agreement between the parties no reference to arbitration was made and an application for making the reference to arbitration was made by the Defendant in the suit and on that application under Section 45 of the Arbitration & Conciliation Act 1996 the matter was referred to arbitration and the question that was considered by the court was whether at the time of making reference to the arbitration the court can pass interim orders to protect the interest of the Plaintiff. In so far as the present case is concerned the reference to arbitration was already made when the present suit was instituted. In the suit a decree in the amount which according to the Plaintiff was due to the Plaintiff in that case was claimed. In the present case however there is no decree from the Court is claimed in the amount that is allegedly due to the Plaintiff from the Defendant. The final reliefs claimed in the suit are in the nature of interim reliefs to operate during the arbitration proceedings. The Supreme Court has considered in detail the power of the admiralty court in making an order for arrest of the ship in the case of m.v. Elisabeth vs. Harwan Investment & Trading Pvt. Ltd. AIR 1993 S.C. 1014. The relevant observations of the Supreme Court are to be found in paragraph 56 57 65 and 93 of the judgment which read as under:-56. An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person. Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court thereby making himself liable to be proceeded against by the plaintiff in personam. It is however imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started. A decree of the court in such an action binds not merely the parties to the writ but everybody in the world who might dispute the plaintiffs claim.57. It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff. He does not sue the owner directly and by name; but the owner or any one interested in the proceedings may appear and defend. The writ is issued to owners and parties interested in the property proceeded against. The proceedings can be started in England or in the United States in respect of a maritime lien and in England in respect of a statutory right in rem. A maritime lien is a privileged claim against the ship or a right to a part of the property in the ship and it travels with the ship. Because the ship has to pay for the wrong it has done it can be compelled to do so by a forced sale. (See The Bold Buccleugh (185Z) 7 Moo PCC 267). In addition to maritime liens a ship is liable to be arrested in England in enforcement of statutory rights in rem (Supreme Court Act 1981). If the owner does not submit to the jurisdiction and appear before the court to put in bail and release the ship it is liable to be condemned and sold to satisfy the claims against her. If however the owner submits to jurisdiction and obtains the release of the ship by depositing security he becomes personally liable to be proceeded against in personam in execution of the judgment of the amount decreed exceeds the amount of the bail. The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court. 65. 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. Action in rem as seen above were resorted to by courts as a devise to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res; or in his absence proceed against the res itself by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res. This is a practical procedural device developed by the courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage but also in cases of other maritime liens and claims arising by reason of breach of contract for the hire of vessel or the carriage of goods or other maritime transactions or tortuous acts such as conversion or negligence occurring in connection with the carriage of goods. Where substantive law demands justice for the party aggrieved and the stature 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 courts is 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.93. 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 statutes 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 an order of the concerned High Court as defined under the Merchant Shipping Act 1958 (Section 3(15)) attracts the jurisdiction of the Competent court to proceed with the trial as in the case of any other suit as an action against the owner and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction including the security furnished by him for release of the vessel.6.It is clear from the observations of the Supreme Court that the power of the court in exercise of its admiralty jurisdiction to arrest the ship is not an end itself it is a means to an end. If the Plaintiff files a suit before the Court claiming a monetary decree against the owner of the vessel the court can assume the jurisdiction over that suit though the owner does not reside within the territorial jurisdiction of the court. The agreement between the parties which is the subject matter of the suit has neither taken place within the jurisdiction of the court nor has it been breached within the jurisdiction of the court. By arrest of the vessel by making an order of arrest in view of the judgment of the Supreme Court in m.v. Elisabeths case two options are achieved by the court i.e. the court assumes the jurisdiction over the subject matter of the claim and the arrest provides a security to the Plaintiff for satisfaction of the decree that the court may pass against the Defendant. In so far as the present suit is concerned the Plaintiff is not seeking any monetary decree against the Defendant. The entitlement or otherwise of the Plaintiff to a monetary decree against the Defendant is to be decided in the arbitration proceedings. The power of the court to order an arrest of the vessel is thus for providing a security for the decree that the admiralty court may pass against the Defendant.7.In this view of the matter in my opinion the suit of the present nature would not prime facie be maintainable only for the purpose of securing an arrest of a vessel without seeking a final monetary decree against the owner of the vessel and therefore in my opinion the Plaintiff is not entitled to the relief claimed by it by prayer clause (a). So far as prayer clause (b) is concerned it is based on the caveat that has been filed by the Respondent pursuant to the provisions of the Original Side Rules. Perusal of provisions of Rule 937 of Original Side Rules shows that a consequence of the failure of the persons who have filed a caveat to submit an undertaking is also provided namely that the Plaintiff can move the Prothonotary & Sr.Master for setting down the suit for ex-parte decree for failure of the persons who have filed a caveat to submit an undertaking. Therefore in this scheme of the rules there is no scope to force the Respondent to furnish a security which he had undertaken to furnish. Failure of the Respondent to furnish security which he had undertaken to furnish is provided by Rule 937 and the consequence is that the Plaintiff becomes entitled to have its suit set down before the court for ex-parte decree. Therefore the relief claimed by prayer clause (b) also cannot be granted.Notice of motion is disposed of. No order as to costs.