Saba International S... v. Owners & Parties Int...

Asok Kumar Ganguly, J.:— This admiralty suit has been filed by one Saba International Shipping & Project Investment Pvt. Ltd. in respect of its claim arising out of the supply of provisions made to M.V LIMA II. The case in the plaint is that the plaintiff has incurred expenses for supply of fresh water, garbage collection, overseas telephone calls etc. and also for the medical treatment for the crew. It has been stated in para 7 of the plaint itself that the expenses incurred by the plaintiff and goods supplied and services rendered to the said vessel M.V LIMA II were in the nature of necessaries supplied to the said vessel. It has also been stated that the plaintiff incurred other expenses on behalf of the said vessel towards payment of Port dues and for stevedoring expenses/charges. The plaintiff's case is that the defendant No. 3 from time to time requested the plaintiff to supply further provisions to the ship and the plaintiff further asserts that defendant No. 3 admitted its liability. On account of such services rendered and supplies made, the plaintiff submitted its disbursement account No. A/152/01 dated 2nd May, 2001 to the defendant No. 3 for U.S.S 85,747.02. The defendant No. 3 could not make payment of the dues to the plaintiff but the defendant No. 3 has represented to the plaintiff that pursuant to an agreement dated 7th April, 2001 entered between the defendant No. 1 and one Suvino International, Mumbai, India, the defendant No. 2 fixed cargo at the Port of Kandla in India to carry bagged salt to Philippines and the defendant No. 3 agreed to pay the dues of the plaintiff from the freight to be earned by the said vessel M.V LIMA II from the said prospective voyage to the Port of Kandla. It is the case of the plaintiff that pursuant to such agreement, the plaintiff allowed the defendant No. 2 the owner of the said vessel M.V LIMA II to leave the Port of Aden.

2. Subsequently, the plaintiff came to know that on account of default of defendant No. 3 and non-payment of dues to other creditors, an order of arrest was passed against the vessel M.V LIMA II while the said vessel was in the Port of Kandla. But M.V LIMA II somehow jumped the order of arrest and the fact remains that defendant No. 3 did not pay the plaintiff the outstanding sum of U.S.S 85,747.02 or any portion thereof.

3. Therefore, the plaintiff is seeking to arrest M.V LIMA I which is also owned by the defendant No. 3. The said vessel arrived in Calcutta in connection with her voyage. The said vessel was also subjected to an order of arrest for non-payment of dues of her creditors. In order to avoid payment to various creditors, the defendant No. 3 wrongly and illegally changed her name from M.V LIMA I to M.V BRAVE EAGLE.

4. It has been asserted by the plaintiff that its claim arising out of the supply of necessaries to vessel M.V LIMA II is a maritime lien and the plaintiff is entitled to enforce its maritime lien on the said vessel M.V LIMA I which is now known as M.V BRAVE EAGLE, a sister ship of M.V LIMA II.

5. As it was apprehended that the said vessel M.V LIMA I now known as M.V BRAVE EAGLE may, for avoiding payment, sail out of Calcutta Port, this Admiralty Suit was filed with the prayer to arrest the said ship.

6. On such proceeding being initiated, this court on 21st September, 2001 passed an interim order of injunction restraining the defendants from transferring, alienating, encumbering or otherwise dealing with in any manner the vessel M.V LIMAI/MV. LIMA II until the disposal of the application.

7. After such interim order was passed, an application was filed by one Sanjeev Kumar Jain on behalf of the Jain Udyog praying for vacation of the interim order of injunction dated 21 September, 2001. In connection with the said prayer an affidavit was filed by one Sanjeev Kumar Jain claiming thereby that applicant Jain Udyog is the owner of the vessel M.V LIMAI now known as YIN KIM and is interested in the said vessel and wants to intervene in this proceedings in view of the provisions contained Rule 12 of the Admiralty Rules of this Hon'ble Court.

8. The main ground on which the application was moved for vacating the injunction is that a claim arising out of supply of necessaries may be a maritime claim but it cannot be converted into a maritime lien.

9. It has been further argued by the learned Counsel that even if there is any lien arising out of supplies of necessaries but on the basis of such lien, a sister ship cannot be attached. Admittedly no supply was made to M.V LIMA I. Therefore, this ship cannot be attached where supplies were not made. The next point which was urged was that M.V LIMA I has ceased to be a foreign ship. So admiralty jurisdiction is not attracted. The last point which was urged was that the ship in question has ceased to be a ship as it was going to be dismantled.

10. So the principle question which has to be decided, at least prima facie, before the court orders further continuation of the interim order is whether the claim of the plaintiff arising out of the supply of necessaries can give rise to a maritime lien to enable it to obtain an injunction or an order of arrest in respect of a sister ship.

11. The learned Counsel for the plaintiff urged that the supplies made by it may be regarded as Master's disbursement and not only as supply of necessaries. The learned Counsel submitted that claims arising out of agent's disbursements which are countersigned by the master, assume the character of a maritime lien even under English Law. In this connection reliance was placed on paragraphs 2.228 and 2.229 of Enforcement of Maritime Claims, 3rd Edition by D.C Jackson. Those paragraphs run as follows:

“2.228 Such a claim carries a maritime lien and the meaning of ‘disbursement’ has been discussed in that context. There is no distinction between the type of claim which would attract a maritime lien and the claim which is within admiralty jurisdiction in personam or in rem.

2.229 It seems clear that the meaning of ‘disbursement’ should remain constant whether it be by the master or other person and, therefore, include any liability incurred. It has been held that it includes any fee for services (as, for example, agent's fees).”

12. Reliance was also placed on paragraph 18 contained in British Shipping Laws Volume 11 (The Merchant Shipping Acts) Seventh Edition by Michael Thomas. The relevant passage is set out below:

“The master of a ship shall have the same lien for his remuneration, and all disbursements or liabilities properly made or incurred by him on account of the ship, as a seaman has for his wages.”

13. The learned Counsel relied on British Shipping Laws, Vol. 14 which is maritime liens by D.R Thomas. The learned Counsel relied on chapter 1 page 2 of the book wherefrom it appears “maritime liens arise principally in cases of bottomry, damage done by a ship, salvage, seamen's and masters' wages and masters' disbursements”. It has also been stated in the said treatise that “the effect of a maritime lien is to give a claimant a charge on a res from the moment of the circumstances out of which the maritime lien arises and which thereafter it travels with the res into whosoever's possession it may pass”. This right of maritime lien is crystallized by an action in rem and such a proceeding may be prosecuted even when the res which is incumbranced and has passed into the hands of another bona fide purchaser without notice.

14. The learned Counsel for the plaintiff relied on section 18 of Merchant Shipping Act, 1970 which provides that the master of the ship shall have the same lien for his remuneration and all disbursements or liabilities properly made or incurred by him on account of the ship as a seaman has for his wages. The learned Counsel submitted that this is the law in England and that the same law is applicable in India and refers to sections 148(1) & (2) of Merchant Shipping Act, 1958 which is an Indian Act. Those two sections are set out below:

“148(1). The master of a ship shall, so far as the case permits, have the same rights, liens and remedies for the recovery of his wages as a seaman has under this Act or by any law or custom.

148(2). The master of a ship and every person lawfully acting as master of a ship by reason of the decease or incapacity from illness of the master of the ship shall, so far as the case permits, have the same rights, liens and remedies for the recovery of disbursements or liabilities properly made or incurred by him on account of the ship as a master has for the recovery of his wages.”

15. In support of the aforesaid contention, the learned Counsel relied on pages 18, 20, 21, 22, 25, 27, 28, 29 and 31 of his affidavit of arrest to show that in all the cases, master of the ship has signed the alleged disbursements. The learned Counsel has also relied on two decisions reported in 1883 Law Reports page 209 Probate Division and another decision reported in 67-69(2) Admiralty Ecclesiastical Courts, 65. The learned Counsel for the plaintiff has also resisted the prayer for vacation of the interim order inter alia on the ground that the vessel in question has changed hands several times as a result of sale during the period it was under an order of arrest. It has been stated that during the period from 9th April to 31 July, 2001 the vessel M.V LIMA I was lying at the Port of Haldia under orders of arrest passed in two Admiralty Suits. But during that period a memorandum of agreement was entered into between Mercury Ship Holding and Angsley Investment Ltd. to the effect that the said Mercury sold the vessel to Angsley. It is further stated that even though, the said sale has taken place but on the basis of averments contained in the affidavit filed by the defendant No. 3 and from the purported certificate of registry it appears that Mercury Shipping Inc. is the owner of the vessel M.V LIMA I and the said certificate shows that Mercury has purchased the vessel in April, 2001. Thereafter, there is a further memorandum of agreement between Angsley Investment Ltd. and Jain Udyog recording that Angsley sold the said vessel on 20 July, 2001 to Jain Udyog. There is a further agreement dated 20 July, 2001 between Angsley and Jain Udyog which records change in the name of the vessel to YIN KIN from LIMA I. The learned Counsel submitted that the interim order of arrest passed in Admiralty Suits was discharged only on 9 August, 2001 and in the meantime during the pendency of the interim order of arrest transactions took place. It has further been admitted by the plaintiff that on 9 August, 2001, the order of arrest was vacated and the suit was withdrawn and on 9 August, 2001 and the vessel M.V LIMA I was allegedly delivered to Jain Udyog, the intervener. Thereafter, 27 August, 2001 another order of arrest passed by the Gujarat High Court was served on the ship and the said ship is still under order of arrest. It has been stated by the plaintiff that this order of arrest dated 27 August, 2001 passed by the Gujarat High Court has been suppressed and has not been referred to in the affidavit filed on behalf of the intervener on 27 September, 2001 in which there is a prayer for vacating the interim order of injunction. The learned Counsel submitted that because of this suppression of facts in the vacating petition, it should be dismissed. In support of this submission the learned Counsel relied on a decision of Supreme Court in the case of Gujarat Bottling Co. Ltd. v. Coca Cola, reported in (1995) 5 SCC 545.

16. The learned Counsel for the plaintiff has however submitted that when a ship is under an order of arrest, the same is virtually under the possession of a Marshal who is an officer of the court. Therefore, a ship being under an order of arrest means a ship being under the possession of the court and any interference with the order of arrest would amount to contempt. In support of that submission, the learned Counsel for the plaintiff relied on British Shipping Laws, Vol. I para 270 which is to the following effect:

“From the moment the res is arrested the marshal is responsible for its custody, interference with it may be a contempt.”

17. The learned Counsel also relied on two decisions of the Supreme Court on this point to the effect that when a property is under custody of court by virtue of order of injunction or an order of attachment, the same cannot be interfered with and if any sale takes place during that period such sale is void. The learned Counsel referred to the decision in Khemka's case reported in AIR 1991 SC 899 and also to the decision in the case of Surjit Singh reported in 1995 (6) SCC 50. The learned Counsel for the respondent however submitted that those decisions are not attracted to the facts of this case inasmuch as an order of arrest could at the most be an order of attachment and in the case of order of attachment, the provision of section 64 of the Civil Procedure Code applies. Section 64 of the C.P.C permits alienation of the property during attachment. The only restriction is that it must not be contrary to the order of attachment. If the alienation is contrary to the order of attachment the same is void.

18. The learned Counsel for intervener, on the other hand, submitted that this admiralty action is not maintainable primarily on the ground that there cannot be any maritime lien on the ship arising out of supply of necessaries and as such on the basis of any right arising out of such supply of necessaries a sister ship cannot be attached. In support of the said submission, the learned Counsel relied on a decision of Calcutta High Court in the case of Bailey Petroleum Company Ltd. v. The Owners and parties interested in the Vessel M.V “Dignity” formerly known as “M.V.N Marmara”, reported in 1993 (2) CHN 208. The learned Counsel also relied on judgment of Bombay High Court in the case of Elinoil-Hellenic Petroleum Company S.A v. M.V Anny L (Ex-Alexia S) and Anr., reported in AIR 2000 Bombay 6. The learned Counsel also relied on the Admiralty Jurisdiction and Practice by Roscoe, 5th Edition page 206.

19. These are the rival contentions of the parties.

20. Now the issue is what is a maritime claim and what is a maritime lien. These questions are to be answered in this proceeding before continuation of the interim order or passing any further interim order.

21. All cases of maritime lien are based on maritime claim but all maritime claims do not give rise to a maritime lien on the ship. Normally a lien in the general law is a rather limited right over some one else's property. It is a right to retain possession of that property usually to receive a claim. But a maritime lien differs from other liens in one very important respect. Liens generally require possession of the ‘res’ before they can come into effect. As an example an innkeeper has a lien over his guest's luggage against the payment of the bill, but if the guest is smart enough to remove his luggage, the innkeeper is left without a lien. But a maritime does not require prior possession for its creation. In a fit and proper case a claimant on the strength of his maritime lien can secure the arrest of a ship which then comes under the possession of the court and she cannot moved without the court's order.

22. ‘No Indian Statute defines a maritime claim’ is the clear finding of Supreme Court in M.V Elisabeth (AIR 1993 SC 1014, para 85, page 1040). But our Supreme Court followed the provisions of the Supreme Court 1981 of England where maritime claims have been listed on the basis of Brassels Convention of 1952 on the Arrest of Sea Going Ships. Under Article 1 of the said Convention various maritime claims have been catalogued. Out of which 1(k) answers the description of the claims of the plaintiff in this proceeding. Article 1(k) reads “goods or materials whether supplied to a ship for her operation or maintenance”. Even though India is not a signatory to Brassels Convention, but the Supreme Court held that the provisions of these Conventions should be regarded as part of International Common Law and these provisions ‘supplement’ and ‘complement’ our maritime laws and fill up the lacunae in The Merchant Shipping Act.

23. But in Elisabeth, the Hon'ble Supreme Court did not notice any convention on maritime lien. However the Hon'ble Supreme Court accepted in para 57 of Elisabeth the judicial determination of the concept of ‘maritime lien’ by English court and which I quote as follows:

‘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, (1852) 7 Moo PCC 267).’

24. A definition of maritime lien has also been given in Stroud's Judicial Dictionary, 5th Edition page 1466 to the following effect:

“A maritime lien may be denned as a right specifically binding a ship, her furniture, tackle, cargo, and freight, or any of them, for payment of a claim founded upon the maritime law and entitling the claimant to take judicial proceedings against the property bound to enforce, or to ascertain and enforce, satisfaction of his demand; thus, a salvor has a maritime lien on the property saved for such an amount as a court exercising admiralty jurisdiction shall award. Maritime are distinguished from all other liens in these two chief particulars: (i) they are in no way founded on possession or property in the claimant, (ii) they are exercised by taking proceedings against the property itself in a form of action styled an action in rem (The Glasgow Packet, 2 Rob. W. 312; The Repulse, 4 Notes of Cas. 170), and, from this and their secret nature, they closely resemble the species of security known to Roman law under the name of hypotheca (Dig. xiii). Interest, if any allowed, and the costs of enforcing a claim for which a maritime lien exists, will be included in such lien (The Margaret, 3 Hagg. Adm. 240).”

25. According to the well known treatise of Thomas on maritime lien, the following claims may give rise to maritime lien namely:

“(a) Damage done by a ship

(b) Salvage

(c) Seamen's wages

(d) Master's wages and disbursements

(e) Bottomry and respondentia”.

26. The aforesaid passage from Thomas has been approved by the Division Bench of Calcutta High Court in Mohammed Saleh Behbehani & Company v. Bhoja Trader, reported in (1983) 2 Calcutta Law Journal 334. At 344 of the report, the learned Judges of the Division Bench referred to maritime liens as representing ‘a small cluster of claims’ and referred to the aforementioned passage from Thomas.

27. In 1993 there has been a convention known as International Convention on Maritime Liens and Mortgages, 1993 to which India is a signatory. Article 4 of the said Convention gives a list of Maritime Lines. Article 4 is set out below:

“Article 4; Maritime Liens:

1. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel:

(a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;

(b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;

(c) claims for reward for the salvage of the vessel;

(d) claims for port, canal and other waterway dues and pilotage dues;

(e) claims based on port arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers' effects carried on the vessel.

2. No maritime lien shall attach to a vessel to secure claims as set out in sub-paragraphs (b) and (e) of paragraph 1 which arise out of or result from:

(a) damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to international conventions or national law providing for strict liability and compulsory insurance or other means of securing the claims; or

(b) the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste.”

28. It is clear from what is extracted above that the attempt is to narrow down the items of maritime claims on which can give rise to liens. Since India is a signatory to these conventions, then on the authority of the decision in M.V Elisabeth, those conventions supplement and complement our maritime laws and fill up the gaps in them (see para 85 of M.V Elisabeth).

29. Counsel for the respondent also relies on a passage from Roscoe on The Admiralty Jurisdiction and Practice, 5 Edition. While dealing with necessaries, the learned author has stated as follows:

“Persons who have supplied a ship, whether British or foreign, with necessaries have not a maritime lien upon her, and the vessel does not become chargeable with the debt till the suit is actually instituted; consequently there can be no claim against a ship which has been sold, even with notice of such a claim in respect of which an action has not been commenced, and a want of caution in supplying the necessaries may, it would seem, cause a postponement of claims to others more carefully begun. The necessaries claimant is not a secured creditor until the moment of arrest.”

30. There is a direct judgment on this point by a learned Judge of this court in Bailey Petroleum, referred to above.

31. Relying on the judgment of the Privy Council in Rio Tinto, reported in 1884 (9) Appeal Cases 356 and the judgment in Shell Oil Co. v. The Ship Lastrigoni, reported in 1974 (3) All England Reports 399, the learned single Judge held in Bailey Petroleum that a claim arising out of the supply of necessaries may give rise to a statutory right of action ‘in rem’ under section 5 of Admiralty Court Act, 1861 but it does not give rise to maritime lien. Paragraphs 23 and 24 of the judgment in Bailey Petroleum make it clear and I quote them in extenso:

“23. Whereas a maritime lien attaches to the res and travels with it and may be enforced against a subsequent purchaser of the res, a statutory right of action in rem is defeated by a change of ownership. This later principle follows from the nature of the right described in the preceding paragraph.

24. This view of the law is supported by a catena of decisions.”

32. The matter has been further clarified by the learned Judge in paragraph 27 of the judgment by referring to other judgments of this court.

33. It is thus clear from the aforesaid discussion that a supplier of necessaries cannot convert his claim into a maritime lien on a sister ship. To counteract this position, the learned Counsel for the plaintiff submitted, as noted above, that the supplies made by the plaintiff cannot be categorized as necessaries only but they are in the nature of master's disbursement and a claim out of such supply will give rise to a maritime lien. But this point has been presented by the learned Counsel for the plaintiff without putting forward before the court all aspects of the matter in its proper perspective.

34. It is well known that the master cannot have any lien for disbursements for which he had no authority to pledge the ship owner's credit. The decision of the Appeal Court in the case of The Castle Gate, reported in 1893 Appeal Cases 38, makes it clear.

35. Apart from that, lien exists in respect of those disbursements only which are made in the ordinary course of the master's employment as master and for which the master could have pledged his owner's credit without any express authority. It may be further noted that the master can only pledge his owner's credit if the same is necessary for the purpose of his duty which demands that the goods should be supplied urgently and the master cannot have recourse to his owners permission before ordering the goods.

36. The aforesaid conditions have not been satisfied in this case in respect of master's disbursements. In fact, no such case has been made out in the plaint. The case made out in the plaint is one of supply of necessaries. It is not a case of masters' disbursements with the express authority of the owner of the ship. Therefore, this argument of the plaintiff cannot be accepted by the court.

37. The learned Counsel for the plaintiff also relied on two decisions, one of Supreme Court and one of Bombay High Court in order to contend that claim arising out of supply of necessaries may also lead to a maritime lien. Reference in this connection was made to the decision of the Supreme Court in M.V Elisabeth and para 99 of the said decision. The relevant portion in para 99 on which reliance was placed is set out below:

“From the maritime law sprang the right known as maritime lien ascribing personality to a ship for purposes of making good loss or damage done by it or its master or owner in tort or contract. In England it grew and was developed in course of which its scope was widened from damage done by a ship to claims of salvor, wages, bottomry, supply of necessaries and even to bills of lading.”

38. Reference was also made to a Single Bench decision of Bombay High Court in the case of Sigma Coatings BV v. Agios Nikolos, reported in AIR 1995 Bombay 281. The learned Judge of the Bombay High Court relying on the aforesaid observation of the Supreme Court in para 99 of M.V Elesabeth (supra) held that the plaintiff had maritime lien in respect of his claim arising out of supply of necessaries to the defendant vessel.

39. This court cannot accept the aforesaid judgment of Bombay High Court is correct. Nor does this court think that the learned Judge of Bombay High Court has correctly interpreted the judgment of the Supreme Court in M.V Elisabeth.

40. It cannot possibly to be disputed that in order to appreciate the ratio of judgment, the judgment has to be read as a whole. While so reading a judgment, it must be kept in mind that the judgment of a court and even of the supreme Court cannot be read as statues. Any stray observation on a point which has not fallen for the decision of Supreme Court cannot be considered as in exposition of law on the subject.

41. In M.V Elisabeth the issue before the Supreme Court was one of jurisdiction namely whether Andhra Pradesh High Court lacked admiralty jurisdiction to entertain a cause of action arising out of carriage of goods from a port. In India to a foreign port. In para 7 of M.V Elisabeth, there is express indication on that effect.

42. The learned Judges while considering the said question discussed in detail, the origin of Admiralty Jurisdiction of this court under British India and how the said jurisdiction is being continued and in doing so, the leading judgment has been delivered in M.V Elisabeth by Justice T.K Thommen. Justice R.M Sahai has expressly agreed with the judgment of Justice T.K Thommen. But in the concurring judgment His Lordship, Hon'ble Mr. Justice R.M Sahai has made certain observations. Those observations have been made by Justice Sahai in order to (a) impress upon the appropriate authority the urgency of enacting upto date law on Admiralty and (b) to express agreement only on scope of 1890 Act as well as the extensive jurisdiction enjoyed by High Courts after 1950. [This will appear from para 102 of the judgment].

43. It is therefore, clear that Justice Sahai did not want to lay down any opinion which is different from the opinion of Justice Thommen.

44. So the observations occurring in para 99 of the judgment in M.V Elisabeth about supply of necessaries giving rise to maritime lien cannot be taken to be a declaration of law on the subject as to bind all courts in India within the meaning of Article 141 of the Constitution. It may be noted that in a case where necessaries are supplied on masters' disbursements with the express authority of the ship owner, a case of maritime lien may crop up. But supply of necessaries, as in the instant case, does not give rise to a maritime lien. These aspects have not been discussed in detail in the observation of Justice Sahai. So with great respect, this court is of the view that the observations relating to necessaries made in para 99 of the judgment ought to be considered in the background of the case as a whole and not in isolation.

45. How such observations on a point which has not fallen for the decision of the court has to be read has been made clear by Supreme Court in the Constitution Bench judgment in the case of Madhav Rao Sindhia v. Union of India, reported in AIR 1971 SC 53. At page 578 (para 138) of the report the Supreme Court gave clear guidance in the following words:

“It is difficult to regard a word, a clause or a sentence occurring in a judgment of this Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment.”

46. Therefore, the learned single Judge in Bombay High Court in Sigma Coatings (supra) has not correctly laid down the law on necessaries. In fact in a subsequent judgment another learned single Judge of Bombay High Court in Elinoil-Hellenic Petroleum Company, reported in AIR 2000 Bombay 6, did not follow the judgment in Sigma Coatings (supra) and expressly differed from it.

47. Now comes the question of sale negotiations which took place during the period when the ship was under an order of arrest. The learned Counsel for the plaintiff submitted that all those sale negotiations must be declared void. Since the sale negotiations took place during the subsistence of an order of arrest, it has been argued, that no right can be said to have been acquired by parties who purchased the ship on the basis of such negotiation. This court has not been able to follow the reasons behind those submissions.

48. An order of arrest is a peculiar device evolved in Admiralty law to secure the claim of a person against another ship owner. The nature of business in shipping is such that in order to enforce a claim the claimant may have to follow a ship which sails from one port to another in different countries of the world. So procedural steps must have to be evolved so that a ship cannot frustrate awful claim by sailing from one port to another and thus evade the jurisdiction of a court to enforce its decree in favour of a rightful claimant. That is why when a ship is arrested, it becomes a proceeding in rem and continues to be so till the ship owners or persons interested in the arrested ship submit to the jurisdiction of the court arresting the ship. Then it becomes a proceeding against the owner in personam and by securing the claim the owner can get the order of arrest of the ship released or discharged. Therefore, what is of essence in an order of arrest is the custody and possession of the vessel. That is why it is said that when a ship is under arrest it is in the possession of the Marshal, who is an officer of court, and, therefore, it is in the possession of the court. Any interference with the possession of the ship during an order of arrest is contempt. But sale negotiations certainly do not cause any interference with the possession of the ship. What is prohibited in connection with such sale negotiation is that unless the order of arrest is released or discharged, the delivery of the ship cannot take place and she cannot move. It is not the case of the plaintiff here that defying the order of arrest delivery of the ship has taken place. In fact, delivery of the ship in question has taken place on 10 August, 2001 and the previous order of arrest came to an end on 9 August, 2001. Therefore, this court is not of the opinion that the sale negotiation in respect of ship, which is under order of arrest, is ‘per se’ bad. In other words, such a proposition as has urged by the learned Counsel of the plaintiff is contrary to both reason and logic.

49. Suppose the owner of the ship having failed to satisfy the claim of a rightful claimant suffers an order of arrest. The said claim of the claimant may be for Rs. 4 crores. But the value of the ship, may be, say Rs. 6 crores. In such a situation, the ship owner may negotiate with perspective buyers for selling the ship and may complete all formalities during the order of arrest and only after obtaining the sale price he may pay the claim and secure discharge of the order of arrest and then deliver the ship to the purchaser. There is nothing apparently illegal in such a transaction. In other words, such transactions are quite common in shipping business. Therefore, in the instant case, this court does not find that the case of the plaintiff can be improved in view of the sale negotiation in respect of the ship in question during the subsistence of her order of arrest.

50. The decisions of the Supreme Court cited in the cases of Khemka and Surjit Singh referred to above have been rendered in totally different factual context relating to transactions of immovable property and is not applicable to the facts of this case.

51. The decision in the case of Gujarat Bottling Co. Ltd., reported in (1995) 5 SCC 545, has been cited by the plaintiff's Counsel in order to show that the conduct of the defendant in filing its affidavit for vacating the injunction order is not fair as the affidavit does not disclose the order of arrest of Gujarat High Court in respect of the ship. This court is certainly of the view that the said of arrest should have been disclosed in the affidavit of the defendant and its non-disclosure is viewed with displeasure and is condemned by this court.

52. But non-disclosure of that order in the affidavit does not improve the plaintiff's legal right to obtain the interim order. In a case where the rights of the parties are evenly balanced, such cases of unfair conduct on the part of one of them may tilt the balance against that party in the exercise of discretion by court. But in this case unfortunately I am of the view that the plaintiff has no legal right to maintain this interim order and in that context the non-disclosure of a relevant fact by the defendant does not alter that situation.

53. In view of the facts and circumstances of this case and for the reasons discussed above, this court is of the opinion that the interim order granted on 21 September, 2001 is liable to be vacated and is hereby vacated. This court however, makes it clear that the vacation of this interim order will not have any effect on the order of arrest dated 27.08.2001 passed by the Gujarat High Court in Admiralty Suit No. 22 of 2001 in respect of the very self-same ship M.V LIMA I now renamed BRAVE EAGLE.

54. There will be no order as to costs.

LATER:

Mr. Mishra appearing on behalf of the petitioner prays for stay of operation of the judgment and order. Having regard to the facts and circumstances of the case the said prayer is refused.

Xerox certified copy of the judgment, if applied for, be made available to the parties expeditiously. All parties are to act on the signed copy of the operative part of this judgment on the usual undertaking.

Interim order vacated.

Prayer of stay refused.

T.K.B