Citation Codes

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Case Number

A.P.O (T) No. of 1997 & G.A No. 3569 of 1997

Judges

Mr. Umesh Chandra Banerjee
Mr. Bhaskar Bhattacharya, JJ.

Acts

SECTION 17 ARBITRATION ACT 1940
provisions of para (4) of this Article and of Article 10,
provision of Section 86 of the Code of Civil Procedure,
Section 645A of the Code of Civil Procedure, 1882
Order 7 Rule 11 of the Code of Civil procedure
Order 14 Rule 2 of the Code of Civil Procedure
Order 39 Rule 4 of the Code of Civil Procedure.
Section 86 of the Code of Civil Procedure.35.
Section 86 of the Code of Civil Procedure.15.
ARTICLE 225 CONSTITUTION OF INDIA
Section 87B of the Code of Civil Procedure
ARTICLE 14 CONSTITUTION OF INDIA
Section 141 of the Code of Civil Procedure
Section 87 of the Code of Civil Procedure
Section 86 of the Code of Civil Procedure.
provision of Section 86 of the Code
SECTION 14 ARBITRATION ACT
Section 86 of the Code.26.
provisions of sub-rule (2),
Section 86(1) of the Code
INDUSTRIAL DISPUTES ACT
Section 86 of the Code

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Smart Summary

Structured Summary of the Judgment delivered by Bhattacharya, J. (with Banerjee, J. concurring)

Factual and Procedural Background

The respondent (a ship chandler and repair services provider at the Port of Calcutta) supplied stores, provisions and repair services to the vessel M.V. Kapitan between 6 and 23 September 1996 at the request of the owner Black Sea Shipping Company Limited (represented by its manager/agent Silverline Limited). The owner did not pay amounts claimed (Rs. 20,24,910/- with interest), and the Kapitan sailed away from Calcutta unpaid.

A sister ship, M.V. Toyvo Antikaynen (the "suit vessel"), owned by the same owner, arrived at Calcutta in or about 5 May 1997. The respondent instituted Admiralty Suit No. 9 of 1997 claiming recovery of the unpaid dues and seeking arrest and sale of the suit vessel. On 10 June 1997 a warrant of arrest was issued against the suit vessel.

The appellants (State of Ukraine and Black Sea Shipping Company Limited) entered appearance and applied for rejection of the plaint and vacation of the ad interim arrest order contending that the vessel was owned by the State of Ukraine and that Section 86 of the Code of Civil Procedure required prior written consent of the Central Government for a suit against a State. The learned Single Judge (trial court) by order dated 4 September 1997 stayed the operation of the arrest order but restrained removal of the ship from port and directed affidavits; an application by appellants to modify that order was not decided on 24 September 1997. The appellants challenged both orders by the instant appeal.

Legal Issues Presented

Whether the suit should be rejected because the suit vessel (or its owner) is a foreign State (State of Ukraine) and therefore the suit is barred unless written consent of the Central Government is obtained under Section 86 of the Code of Civil Procedure.
Whether the immunity recognized by Public International Law prevents the Municipal courts of India from proceeding against a foreign sovereign (i.e., whether sovereign immunity bars the proceedings in rem).
Whether Section 86 of the Code of Civil Procedure applies to proceedings in admiralty jurisdiction (in rem proceedings) or is limited to "suits" and therefore inapplicable to admiralty proceedings.
Whether an admiralty arrest of a sistership is maintainable when the plaintiff's cause of action arises in respect of another ship (i.e., the propriety of arresting a sistership).
Whether the present appeal is maintainable at all (preliminary objection that the impugned orders are not a "judgment" within Clause 15 of the Letters Patent).

Arguments of the Parties

Appellants' (State of Ukraine & Black Sea Shipping Company Ltd.) Arguments (as presented by Mr. I.P. Mukerji)

The certificate annexed to the application shows the suit vessel is owned by the State of Ukraine (or that appellant No. 2 is an organ/department of the Government of Ukraine), making the proceedings effectively a suit against a foreign State; in the absence of Central Government consent required under Section 86 CPC, the suit is not maintainable and the plaint should be rejected.
Even if Section 86 were inapplicable, public international law recognizes sovereign immunity and a sovereign State cannot be sued in a municipal court; that immunity should protect the appellants.
Newly raised (not taken before trial): No admiralty proceeding is maintainable for arrest of a sistership when the plaintiff has no cause of action against the particular ship arrested.
Relied upon numerous precedents (Indian and English) to support the above contentions (the opinion enumerates the cases relied upon by Mr. Mukerji).

Respondent's Arguments (as presented by Mr. Deb)

Preliminary objection: the appeal is not maintainable because the orders impugned are not a "judgment" within Clause 15 of the Letters Patent.
Substantive: Section 86's protection does not extend to admiralty proceedings because such Admiralty proceedings in rem are not "suits" within the meaning of Section 86 CPC; Section 141 CPC applies only procedural provisions of CPC to admiralty matters, not substantive provisions like Section 86.
International law rules on sovereign immunity are not enforceable in Indian courts unless adopted by statute; the statutory scheme (Section 86 CPC) already modifies any immunity.
On the sistership issue: E.C. Bose v. Banglar Swapna (relied upon by appellants) has been implicitly overruled by the Supreme Court in M.V. Elisabeth; admiralty practice (as reflected in English law and the Brussels Convention principles) permits arrest of a sistership where the maritime claim falls within enumerated categories.

Table of Precedents Cited

Precedent	Rule or Principle Cited For (as stated in the opinion)	Application by the Court (how the court used or interpreted it)
H. the Maharana Sahib Shri Bhagwat Singh Bahadur of Udaipur v. State of Rajasthan, AIR 1964 SC 444	Whether proceedings before a Tribunal under Industrial Disputes Act are "suits" within Sections 86/87B CPC (held not to be suits).	The Court cited it to illustrate that Section 86 protects against suits, not other non-suit proceedings; used to support inapplicability of Section 86 to non‑suit proceedings.
Nawab Usman Ali Khan v. Sagarmal, AIR 1965 SC 1798	Proceedings under arbitration statutes (Section 14 read with Section 17 Arbitration Act, 1940) are not suits; Section 86(1) does not apply.	Used to support the proposition that Section 86 does not automatically apply to non‑suit proceedings even if Section 141 CPC makes parts of the Code applicable.
Mirza Ali Akbar Kashani v. United Arab Republic, AIR 1966 SC 230	Section 86(1) applies where suits are brought against rulers/foreign states; foreign states fall within its scope; international law doctrine of immunity cannot be relied on to override statutory provisions.	The Court relied on it to conclude Section 86 is substantive and that municipal statutory provisions govern immunity rather than pure international law.
VEB Deautfracht Seereederet Rostock (D.S.P. Lines) v. New Central Jute Mills Co. Ltd., (1994) 1 SCC 282 : AIR 1994 SC 516	Effect of Section 86 is to modify the doctrine of immunity recognised by international law; entity treated as a department of government can be State for Section 86 purposes.	Distinguished: court held that those cases dealt with suits in the Original Side (ordinary suits) and therefore are not directly applicable to admiralty in rem proceedings.
Royal Nepal Airline Corporation v. Monorama Meher Singh Legha, AIR 1966 Calcutta 319	Division Bench held that a suit would not lie against a department of a State and immunity could be claimed even if foreign sovereign does not appear as defendant.	Cited but noted that subsequent Supreme Court authority (Mirza Ali Akbar Kashani) has limited that view; the Division Bench decision is not good law to the extent inconsistent with Supreme Court.
The Bombay and Perstal Steam Navigation Co. Ltd. v. Shepherd and Haji Ismail Hossein, ILR 1887 (1) Bombay 237	Interpretation that the Code applies to the Admiralty side of the High Court.	Referentially cited to indicate historical application of Code provisions to Admiralty matters; court nonetheless draws distinction between procedural and substantive provisions.
M.V. Elisabeth v. Harwan Investment and Trading Pvt. Ltd., 1993 Supp (2) SCC 433 : AIR 1993 SC 1014	Admiralty jurisdiction is part of the High Court's jurisdiction; Admiralty proceedings are distinct; referred to decisions on sistership arrest and adoption of Brussels Convention principles.	Applied as authoritative on (a) admiralty jurisdiction belonging to the High Court under Article 225, and (b) adoption by Admiralty courts of rules akin to Brussels Convention where no domestic code exists; used to reject E.C. Bose as reflecting present law.
The German Democratic Republic v. The Dynamic Industrial Undertaking Ltd., AIR 1972 Bombay 27	Doctrine of state immunity applies to India but with modification as per Section 86 CPC.	Cited to show municipal modification of international immunity doctrine; used for background but not determinative for admiralty in rem.
New Central Jute Mills Co. Ltd. v. VEB Deautfracht Seereederet Rostock (D.S.P. Lines), AIR 1983 Cal. 225	Earlier Division Bench decision dealing with immunity and maritime claims (later considered and reversed by Supreme Court).	Noted as earlier local precedent which was reversed by the Supreme Court in VEB Deautfracht (1994) to the extent indicated.
(1996) 2 Lloyd's Law Reports 362	English authority (cited by the parties) relevant to admiralty arrest rules (as reflecting Brussels Convention principles).	Cited by the appellants/respondent in support of arguments; the opinion notes English decisions but declines to rely on them beyond what Indian authorities permit.
Transworld Cargo Carriers v. Black Sea Shipping Company (District Court, USA) (certified photocopy)	Foreign (US) decision cited by appellants in support of immunity/related contentions.	The judgment was placed on record by counsel; the opinion records it among authorities relied upon but does not adopt it as binding.
E.C. Bose & Co. v. M.V. "Banglar Swapna", 1983 (2) Cal. LJ 229	Earlier Calcutta High Court decision (Sen, J.) that was taken to hold limits on arresting sisterships.	The present Court held that E.C. Bose does not reflect the correct present law in view of M.V. Elisabeth and related developments; it is implicitly overruled in its relevant proposition.
Mohanlal Jain v. His Highness Maharaja Sarat Man Singhji, AIR 1962 SC 73	Decision on validity of Section 87B CPC and constitutional challenge (held not to offend Article 14).	Cited for a subsidiary proposition about CPC provisions; not central to the admiralty immunity analysis.
Shoh Babulal Khimji v. Jayaben D. Kania, (1981) 4 SCC 8 : AIR 1981 SC 1786	Order refusing ad interim injunction or refusing certain interlocutory relief can be "judgment" within Clause 15 of Letters Patent.	Applied by the Court to hold that the impugned injunction/variation orders are judgments within Clause 15 and so the appeal is maintainable.
B.M. Biswas v. Monorama Debi, AIR 1948 Calcutta 77	Illustrative of limitations on applying substantive provisions of CPC to non‑suit proceedings.	Relied upon to support the conclusion that Section 86 (substantive) cannot be imported into admiralty proceedings via Section 141 CPC (which applies procedural provisions).
Noor Nahar Bewa v. R.N. Dub, 1988 (1) CHN 461 (Special Bench)	Similar proposition about procedural vs substantive application of CPC provisions to other proceedings.	Used to support the Court's view that substantive provisions like Section 86 do not apply to admiralty in rem by virtue of Section 141 CPC.
Jolly George Varghese v. The Bank of Cochin, (1980) 2 SCC 360 : AIR 1980 SC 470	International covenants/treaties are not binding as municipal law unless transformed into domestic law.	Applied to hold that rules of public international law (including sovereign immunity) are not enforceable in Indian courts unless transformed into municipal law.
Jayaswal Shipping Co. v. Steam Ship S.S. Leelayati, 58 CWN 468 : AIR 1934 Calcutta 415	Prior local decisions on admiralty arrest/sistership issues (cited in appellate decisions).	Noted as among cases relied upon by Calcutta appellate authority that earlier formed the basis for E.C. Bose reasoning; those earlier views were held to be overruled by later Supreme Court authority.
Rungta Sons Pvt. Ltd. v. S.S. Edison Meriner, 66 CWN 1083	Prior Calcutta practice on arrest of ships (cited historically).	Mentioned as part of prior case cluster which the Court considered outdated in light of M.V. Elisabeth.
Kamalakar Mahadeb Bhagat v. Scindia Steam Navigation, AIR 1961 Bombay 186	Bombay High Court authority regarding admiralty practice.	Cited as part of prior jurisprudence on the point; Court held the law has since evolved by Supreme Court authority.
National Co. Ltd. v. Asia Marines, 72 CWN 635	Prior decisions on admiralty arrest and co‑owner disputes (historical).	Included among earlier decisions which the Court considered superseded where inconsistent with current Supreme Court pronouncements.
Md. Saleh Behbehart & Co. v. Broja Traders, 1981 (2) CLJ 129	Earlier Calcutta High Court decision cited in E.C. Bose reasoning.	Noted as part of chain of reasoning relied on in E.C. Bose; the present Court regarded that chain as displaced by later higher authority.
Appellate decision (E.C. Bose appeal), 1983 (2) CLJ 334	Appellate consideration of earlier admiralty practice regarding sistership arrests.	The Court records that subsequent Supreme Court authority (M.V. Elisabeth) undermines the correctness of those local decisions.

Court's Reasoning and Analysis

The Court addressed the preliminary point of maintainability of the appeal first. It held (relying on Shoh Babulal Khimji) that orders granting an injunction or refusing to vary an injunction are "judgments" within Clause 15 of the Letters Patent and that the appeal was therefore maintainable. The preliminary objection taken by the respondent that the orders were not appealable was therefore overruled.

On the core substantive issues the Court proceeded in stages:

On whether the plaint could be rejected under Order 7 Rule 11 CPC because the suit was barred by Section 86 CPC: the Court observed that Order 7 Rule 11 permits rejection only where the plaint on its face shows that suit is barred by law. The pleading did not on its face show that the suit was barred. The question whether the defendant is in fact the State is an issue of fact to be decided after evidence. The Court quoted Order 14 Rule 2 CPC to emphasize that issues of law that dispose a case may be tried first, but the present matter did not permit rejection on pleadings alone.
On whether Section 86 CPC applies to admiralty proceedings: the Court analyzed prior Supreme Court authority (Mirza Ali Akbar Kashani, Nawab Usman Ali Khan, Maharana Sahib) and concluded that Section 86 is substantive in character and is not merely procedural. Section 141 CPC permits application of procedural parts of the Code to admiralty and miscellaneous proceedings but does not render substantive provisions applicable. Therefore Section 86 (a substantive statutory restriction on suits against States) cannot be applied to admiralty in rem proceedings by virtue of Section 141 CPC. The Court emphasized that admiralty in rem proceedings are not ordinary "suits" contemplated by the Code; admiralty jurisdiction is conferred on High Courts as superior courts of record (citing M.V. Elisabeth and Article 225) and exercises distinct powers, such as arrest in rem.
On the appellants' contention based on public international law: the Court reiterated the settled principle (citing Jolly George Varghese) that international conventions or principles of international law do not become enforceable municipal law unless they are adopted or transformed into domestic law. The full immunity of foreign sovereigns is not recognized in India absent statute; Section 86 is the domestic statutory modification of immunity. In any event, because Section 86 does not apply to admiralty in rem proceedings (as concluded above), reliance on pure international law did not assist the appellants.
On the sistership-arrest contention: the Court considered the Brussels Convention principles (as reflected in Article 1(1) and Article 3(1) of the Convention reproduced in the opinion) and the Supreme Court's treatment of those principles in M.V. Elisabeth. Article 1(1)(k) includes "goods or materials wherever supplied to a ship for her operation or maintenance" as maritime claims, and Article 3 permits arrest of another ship owned by the same person except for claims under Article 1(1)(o),(p),(q) (disputes of title, co-owner disputes, mortgage/hypothecation). The Court observed that M.V. Elisabeth recognized that Admiralty courts may adopt those provisions in the absence of a general maritime code in India. Consequently, E.C. Bose (which had limited sistership arrests) did not reflect the present law — the Court held that there is no bar to arresting a sistership where the maritime claim falls within the enumerated categories and is not of the excluded categories (o),(p),(q).
Having found the threefold contentions of appellants unsustainable (no plain‑face bar to suit, Section 86 not applicable to admiralty in rem, and sistership arrest permissible within the Brussels/English framework adopted by Admiralty courts), the Court concluded the impugned orders did not suffer from illegality.

Holding and Implications

Holding

The appeal is DISMISSED. The impugned orders dated 4 September 1997 and 24 September 1997 are upheld.

Implications

Direct effect: The trial court's injunction (restraining removal of the ship from port and related directions) stands; the application to vary that order was properly left undecided and the refusal to vary was sustained on appeal. The parties are directed to bear their own costs. Two connected appeals governed by the same facts and law are also dismissed.
On statutory and admiralty law: The Court held that Section 86 CPC is a substantive provision and cannot be applied to admiralty in rem proceedings by virtue of Section 141 CPC (which imports only procedural provisions). Therefore, the statutory bar requiring Central Government consent for suits against States (Section 86) does not operate to nullify admiralty in rem arrests made by the High Court under its admiralty jurisdiction, because such proceedings are not "suits" in the Code sense.
On public international law: Rules of public international law (including claims of sovereign immunity) are not binding in municipal courts unless transformed into municipal law; accordingly, appellants could not rely on international law to displace the municipal/admiralty framework the Court followed.
On sistership arrests: The Court adopted the position that Admiralty courts in India may follow principles reflected in the Brussels Convention and relevant English law (as recognized by the Supreme Court in M.V. Elisabeth). Arrest of a sistership is permissible where the maritime claim falls within the enumerated categories (for example, supplies for operation/maintenance per Article 1(1)(k)) and is not of the categories (o),(p),(q) which exclude arrest of another ship.
jurisprudential note: The Court stated that the local Calcutta decisions (including E.C. Bose) that ran contrary to the view in M.V. Elisabeth do not reflect the correct present position of law and are, in effect, displaced for the aspects criticized by the Court.

Concluding operational order: The appeal is dismissed; the parties to bear their own costs; the decision governs two connected appeals which are dismissed for similar reasons.

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State Of Ukraine & Anr. v. Elitarious Limited .

The Judgment of the Court was delivered by

Bhattacharya, J.:— This appeal is directed against orders dated September 4, 1997 and September 24, 1997 passed by a learned Single Judge of this Court in Admiralty Suit No. 9 of 1997 (Eltiarious Limited v. The Owners and Parties interested in the veasel “M.V Toyvo Antikaynen”).

2. The facts giving rise to the instant appeal are as follows:—

a) The respondent carries on business inter alia as Ship Chandlers. As a part of its business the respondent also renders repairing and other essential services to the vessels berthed in the port of Calcutta.

b) Of or about May 5, 1997 the vessel “M.V Toyvo Antikaynen” (hereinafter referred to as “the suit vessel”) arrived at the port of Calcutta and was berthed at 26, Kidderpore Dock. The suit vessel is registered at Odessa flying Ukrainean flag.

c) Between September 6, 1996 and September 23, 1996 the respondent supplied stores and provisions to a vessel called M.V Kapitan Kadetskiy (hereinafter referred to as Kapitan) which was then berthed in the port of Calcutta. The Kapitan was owned by one Black Sea Shipping Company Limited, Odessa which is also the owner of the suit vessel.

d) The respondent supplies stores and provisions to Kapitan at the request of the owner viz. Black Sea Shipping Company Limited made through its Manager and Agent Silverline Limited of United Kingdom. Apart from supplying stores and provisions, the respondent also rendered various repairing and other essential services to Kapitan.

e) It was agreed between Silverline Limited acting on behalf of the owner of Kapitan and the respondent that payment of the bills should be made within 30 days of the receipt of the invoices by Silverline Limited in London.

f) Inspite of sending demand by the respondent, the owner of Kipitan did not pay the dues of the respondent which amounted to Rs. 20,24,910/- with interest.

g) The vessel Kapitan sailed away from the port of Calcutta without paying the dues of the respondent.

h) Since a sistership of Kapitan belonging to the same owner viz. Black Sea Shipping Company Limited had arrived at the port at Calcutta, the respondent filed the aforesaid Admiralty Suit thereby claiming a sum of Rs. 20,24,910/- with interest. In the said suit the respondent further prayed for arrest and sale of the vessel.

3. In the aforesaid suit on an application of the respondent, a learned Single Judge of this Court by order dated June 10, 1997 issued a warrant of arrest in respect of the suit vessel. The present appellants viz. State of Ukraine and Black Sea Shipping Company Limited entered appearance in the said Admiralty Suit and filed an application for rejection of the plaint and for vacating the ad interim order dated June 10, 1997 on the ground that the suit vessel is owned by Black Sea Shipping Company Limited viz. appellant No. 2 and the said appellant No. 2 is an organ and/or part of and/or a division and/or department of the Government of Ukraine viz. appellant No. 1. In other words the appellants contention was that the owner of the said vessel was the Government of Ukraine and as such in view of mandatory provision of Section 86 of the Code of Civil Procedure, the said Admiralty Suit was not maintainable unless a written consent of the Central Government has been obtained by the respondent.

4. The learned Trial Judge by other dated September 4, 1997, after hearing the learned Counsels for the parties, stayed the operation of the order dated June 10, 1997 but at the same time restrained the defendant of the main suit from taking the ship out of the port. The port authorities and the local police authorities were directed to keep a strict vigil, so that the ship was not taken out of the port. By the said order the learned Trial Judge passed a direction for filing affidavits and the matter was adjourned till September 22, 1997.

5. lathe meantime the appellants filed a fresh application for modifying order dated September 4, 1997 passed by the learned Trial Judge thereby praying for limiting the operation of the order dated September 4, 1997 for a specified period of time and for further direction upon the respondent to pay detention charges to the appellants at the rate of $ 10,000 per diem from the date of arrest of the suit vessel till the date of payment.

6. By order dated September 24, 1997 the learned Trial Judge passed no order on the said application.

7. Being aggrieved by orders dated September 4, 1997 and September 24, 1997 as aforesaid, the appellants have preferred the Instant appeal.

8. After filing of the aforesaid appeal an application for stay was filed by the appellants and the said application for stay came up for hearing. In view of urgency of the matter, we decided to hear out the appeal itself along with the said application for stay and accordingly invited the learned Counsels for the parties to argue on the merit of the appeal itself.

9. Mr. I.P Mukerji, the learned Counsel appearing in support of the instant appeal has made three fold submissions. The first point raised by Mr. Mukerji is that it would appear from the certificate issued by the state of Ukraine which was annexed to the application for rejection of plaint that the suit vessel is owned by the State and as such the suit filed by the respondent was in reality a suit against state of Ukraine and therefore in the absence of consent required under Section 86 of the Code of Civil Procedure the suit was not maintainable and the learned Trial Judge ought to have rejected the plaint itself after vacating the order dated September 4, 1997.

10. The second contention of Mr. Mukerji is that even if it is assumed for the sake of argument that a suit in rem under the Admiralty Jurisdiction of the Original Side of this Court is not a suit, in that event apart from the Section 86 of the Code of Civil Procedure the appellants are entitled to the immunity recognised by Public International Law that a sovereign State cannot be sued in a Municipal Court of a country.

11. The third contention raised by him though not take before the Trial Court is that no Admiralty proceeding is maintainable for arrest of a sistership when the plaintiff has no cause of action against the suit vessel.

12. As regards the third contention, since the same is a pure question of law and for entertaining such question no investigation of new fact is necessary and the same will appear from the averment of the plaint itself, we had permitted Mr. Mukerji to raise such a new question for complete and effective adjudication of the matter in dispute. In support of the aforesaid threefold contentions, Mr. Mukerji has placed reliance upon the following decisions.

(1) H. the Maharana Sahib Shri Bhagwat Singh Bahadur of Udaipur v. The State of Rajasthan, AIR 1964 SC 444;

(2) Nawab Usman Ali Khan v. Sagarmal , AIR 1965 SC 1798;

(3) Mirza Ali Akbar Kashani v. The United Arab Republic, AIR 1966 SC 230;

(4) Veb Deautfracht Seereederet Rostock (D.S.P Lines) a Department of the German Democratic Republic v. New Central Jute Mills Co Ltd., (1994) 1 SCC 282 : AIR 1994 SC 516;

(5) Royal Nepal Airline Corporation v. Monorama Meher Singh Legha, AIR 1966 Calcutta 319;

(6) The Bombay and Perstal Steam Navigation Company Limited v. Shephered and Haji Ismail Hossein, ILR 1887 (1) Bombay 237;

(7) M.V Eltsabeth v. Harwan Investment and Trading Pvt. Ltd., Goa, 1993 Supp (2) SCC 433 : AIR 1993 SC 1014;

(8) The The German Democratic Republic v. The Dynamic Industrial Undertaking Ltd.*, AIR 1972 Bombay 27;

(9) New Central Jute Mills Co. Ltd. v. Veb Deautfracht Seereederet Rostock (D.S.P Lines), AIR 1983 Cal. 225;

(10) (1996) 2 Liyods Law Reports 362;

(11) Transworld Cargo Carriers v. Black Sea Shipping Company, Photocopy of the certified copy of the judgment of District Cowl of United States of America;

(12) E.C Bose & Co. v. M.V “Banglar Swapna”, 1983 (2) Cal. LJ 229 and

(13) Mohanlal Jain v. His Highness Maharaja Sarat Man Singhji, AIR 1962 SC 73.

13. Mr. Mukerji also relied upon several English decisions in support of his contention that Public International Law recognises absolute immunity of foreign states from being impleaded in any legal proceedings and the said law is recognised in England.

14. Mr. Deb, the learned Counsel appearing on behalf of the respondent has however opposed the aforesaid contentions raised by Mr. Mukerji. Mr. Deb at the very outset submits that the instant appeal is not maintainable inasmuch as the orders passed by the learned Trial Judge cannot be said to be “judgment” within the meaning of Clause 15 of the Letters Patent. Mr. Deb further contends that the protection given under Section 86 of the Code of Civil Procedure is not extended to a proceeding under the Admiralty Jurisdiction of this Court as according to Mr. Deb such proceeding is not a suit within the meaning of Section 86 of the Code of Civil Procedure.

15. Mr. Deb contends that although by virtue of Section 141 of the Code of Civil Procedure, the procedure provided in the Code are applicable to a suit under Admiralty Jurisdiction but the provision of Section 86 of the Code cannot be said to a procedural part of the Code but is a substantive part and by taking aid of Section 141 of the Code of Civil Procedure, the said substantive provision cannot be made applicable to a proceeding under Admiralty Jurisdiction.

16. Mr. Deb further contends that the second point railed by Mr. Mukerji is devoid of any merit inasmuch as any convention recognised by Public International Law cannot be enforced in any Court of this country unless the same is recognised by statute. Mr. Deb contends that the immunity recognised by Public international Law to a sovereign State from being sued in a Municipal Court is not fully recognised in this country inasmuch as by taking consent of Central Government a suit can be instituted and secondly such immunity is limited only to the institution of a suit but not to other proceedings.

17. In answer to the third point raised by Mr. Mukerji. Mr. Deb contends that the decision of Mr. Justice Dipak Kumar Sen (As His Lordship then was) in E.C Bose v. Banglor Swapna upon which Mr. Mukerji placed strong reliance has been impliedly overruled by the Apex Court in M.V Eltsabeth (supra). Mr. Deb further contends that according to present position of law as prevailing in England, a sistership can be arrested by an Admiralty Court notwithstanding the fact that cause of action arises in respect of another owned by the same owner.

18. First of all, we propose to deal with the preliminary objection takes by Mr. Deb as regards maintainability of the Instant appeal.

19. By this appeal the appellants have challenged two orders viz. order dated September 4, 1997 and order dated September 24, 1997. By the first order, an order of Injunction has been passed against the defendants. By the second order, be application of the appellants for variation of the said order of Injunction has been turned down. The said application for variation of the order of injunction was in the nature of an application under Order 39 Rule 4 of the Code of Civil Procedure. Thus, the orders impugned in the instant appeal are in reality an order of injunction and in order refusing to vary an order of injunction respectively.

20. In view of the decision of the Apex Court in (15) Shoh Babulal Khimji v. Jayaben D. Kania reported in (1981) 4 SCC 8 : AIR 1981 SC page 1786, we are left with no other alterative but to bold that the orders impugned are judgment within the meaning of Clause 15 of the Letters Patent.

21. In the aforesaid decision it was held that an order of the learned Trial Judge refusing to appoint a Receiver or to grant an ad Interim injunction is undoubtedly a judgment within the meaning of Clause 15 of Letters Patent. If that, be the position of law, it can be pronounced without hesitation that as order granting Injunction or refusing to vary an order of injunction will be a judgment within the meaning of the aforesaid clause of Letters Patent. Thus, we overrule the preliminary objection taken by Mr. Deb and proceed to decide the appeal on merits.

22. Before we proceed to deal with the first two questions raised by Mr. Mukerji it will be convenient to discuss the decisions relied upon by him. In H. the Maharana Sahib Shri Bhagwat Singh Bahadur of Udaipur (supra), the question before the Apex Court was whether a proceeding before a Tribunal under Industrial Disputes Act was a suit within the meaning of Sections 86 and 87B of the Code. The Supreme Court answered the said question is negative and held that Section 86 protects a Ruler from being “sued” and not against the institution of any other proceedings which it not in the nature of a suit.

23. In Nawab Usmanali Khan, AIR 1965 SC 1798, the Supreme Court held that a proceedings under Section 14 read with Section 17 of the Arbitration Act, 1940 is not a suit and Section 86(1) by its own force or by reason of Section 141 of the Code does not apply to such a proceedings.

24. In Mirza Alt Akbar Kashani, AIR 1966 SC 230, the Apex Court held that Section 86(1) applies to cases where suits are brought against Rulers of foreign states and all foreign states fall within its scope whatever be the form of Government. It was further held that it would not be open to a foreign state to rely upon the doctrine of immunity under International Law because the Municipal Courts in India would be bound by the statutory provisions such as those contained in the Code of Civil Procedure.

25. In Veb Deautfracht Seereederet Rostock, (1994) 1 SCC 282 : AIR 1994 SC 516, the Supreme Court while reversing the decision of the Division Bench of this Court in AIR 1983 Calcutta 223 held that the effect of Section 86 is to modify the extent of doctrine of immunity recognised by International Law. It was further held that in view of Article 12 of the Constitution of German Democratic Republic and in view of the certificate granted by the Consul General of the said Republic, the appellant therein should be treated to be a department of the Government and hence a State within the meaning of Section 86 of the Code.

26. In Mohanlal Jain, AIR 1962 SC 73, the Supreme Court while considering the validity of Section 87B of the Code of Civil Procedure held that the said provision does not offend Article 14 of the Constitution of India.

27. In Royal Nepal Airline Corporation, AIR 1966 Calcutta 319, a Division Bench of this Court held that a suit would not lie against a department of a State and an immunity can be claimed even though the foreign sovereign does not figure as a defendant. It is to be noted here that subsequently the Apex Court in Ali Akbar's case (supra) at Paragraph 17 in clear language held that for the purpose of Sections 86 and 87, the suit must be in the name of the State and thus the Division Bench decision (supra) to the aforesaid extent is no longer good law.

28. In Bombay and perstal Steam Navigation Company Limited, ILR 1887 (1) Bombay 237 a learned Single Judge of Bombay High Court on interpretation of Section 645A of the Code of Civil Procedure, 1882 held that the Code applies to Admiralty Side of High Court.

29. In M.V Elisabeth, 1993 Supp (2) SCC 433 : AIR 1993 SC 1014, the Apex Court while deciding the question whether Andhra Pradesh High Court possesses Admiralty Jurisdiction in affirmative held that the Admiralty Jurisdiction, despite the peculiarities of its origin and growth is nevertheless a part of totality of jurisdiction vested in the High Court as a superior Court of record having derived its authority under Article 225 of the Constitution of India.

30. In German Democratic Republic, AIR 1972 Bombay 27, a Division Bench of Bombay High Court held that the doctrine of immunity of foreign state from being sued in Municipal Court applies to India but with modification as laid down in Section 86 of the Code.

31. The English decisions cited by Mr. Mukerji are not required to be discussed for the reasons setforth hereinafter in the present judgment.

32. Now as regards the first contention raised by Mr. Mukerji is concerned, in our opinion, the same has got no force. In order that a plaint can be rejected under Order 7 Rule 11 of the Code of Civil procedure it must appear from the averment made in the body of the plaint itself that the suit is barred by any law. In the instant case as it appears from the averment of the plaint it cannot be said that the suit is barred by any law for the time being in force. Whether the defendant is really state of Ukraine or not is a matter of evidence and such fact can be decided only after taking evidence. In this connection reference may be made to Order 14 Rule 2 of the Code of Civil Procedure which is produced hereunder:—

“Court to pronounce judgment on all issues:—

1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues.

2) Where issues both of law and on fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of an issue of law only, it may try that issue first if that issue relates to:—

a) the jurisdiction of the Court, or

b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.”

33. In view of the aforesaid provision, an issue can be decided as preliminary Issue if the case may be disposed of on an issue of law only. Moreover, such issue must relate to jurisdiction of the Court or to a bar to suit created by any law for the time being in force. In the instant case from the averment made in the plaint it does not appear that the suit has been filed against any foreign state. Whether the vessel is really owned by the foreign state is an issue of fact and such fact can be adjudicated after consideration of materials on record. Therefore, there is no scope of rejection of the plaint at this stage or even deciding the suit itself on the basis of a preliminary issue.

34. Moreover, we find substance in the contention of Mr. Deb that the bar created under Section 86 of the Code is restricted only to a suit and not to any other proceeding. In this connection reference may be made to the decision of the Apex Court in the case of Mirza Ali Akbar Kashani v. The Untied Arab Republic reported in AIR 1966 SC 230. In the aforesaid decision, the Supreme Court has in clear language stated that Section 86(1) of the Code is not merely a procedural provision and the same is in a sense a counter part of Section 84. It is now well settled that by virtue of Section 141 of the Code of Civil Procedure only procedural part of the Code of Civil Procedure can be made applicable to a Misc. Civil Proceeding. But the substantive right created by the Code cannot be made applicable by taking aid of Section 141 of the Code of Civil Procedure. In this connection reference may be made to a decision of this Court in (15) B.M Biswas v. Monorama Debi reported in AIR 1948 Calcutta 77 and also to the Special Bench decision of this Court in (16) Noor Nahar Bewa v. R.N Dub reported in 1988 (1) CHN 461. Thus, the provision contained in Section 86 being substantive in character, the said provision has got no application to a proceeding under the Admiralty Jurisdiction of this Court. It may further be mentioned here that in the decision of His Highness, the Maharaja Sahib Shri Bhagwat Singh Bahadur of Udaipur v. The State of Rajasthan reported in AIR 1964 SC 444, it has been held that proceeding under Industrial Disputes Act is not a suit and as such Section 87 of the Code of Civil Procedure has got no application to such proceeding. Similarly in the decision reported in AIR 1965 SC 1798, it has been held that provision contained is Section 86 of the Code has got no application to a proceeding under Section 14 of the Arbitration Act. The decision of Royal Nepl Airlines v. Monorama Meher Singh Legha reported in AIR 1966 Cal. 319 and also of V.D.S Rostock reported in (1994) 1 SCC 282 : AIR 1994 SC 516, cited by Mr. Mukerji, is our opinion, are not applicable in the instant case as in those casts the Courts were dealing with a suit for recovery of money filed in the Original Side of this Court. It is now well settled that merely because the provision of the Code of Civil Procedure has been made applicable to a proceeding does not imply that the said proceeding is a suit within the meaning of the Code of Civil Procedure. The instant proceeding in rem is not an ordinary suit contemplated under the Coda of Civil Procedure. As held by the Apex Court in M.V Elisabeth (supra) it is by virtue of the over conferred by Article 225 of the Constitution of India that this Court as a superior Court of record can exercise its Admiralty and inherent power to arrest a ship. Apart from the aforesaid Admiralty Jurisdiction exercised by the High Courts as stated above, ordinary Courts having territorial and pecuniary jurisdiction are not vested with such power. Therefore, these proceedings are not suits within the meaning of Section 86 of the Code of Civil Procedure.

35. As regards the second contention raised by Mr. Mukerji, it is now well settled that the rules recognised by Public International Low are not in reality law in that ??? of the term unless it is recognised by any statute of a country. In this connection the definition of International Law as given in Osborn's Concise Law Dictionary, 7th Edition may be referred. There it has been clearly stated that International Law is only binding on the Court of the country in so far as it has been adopted and made pert of Municipal Law. As indicated above, the full immunity of a foreign state from being sued in a foreign country has not been recognised by the Statute is this country es will appear from Section 86 of the Code of Civil Procedure. Such immunity is limited to the extent as indicated in the said section.

36. In this connection reference may be made to the decision of the Supreme Court in (17) Jolly George Varghese v. The Bank of Cohtn reported in (1980) 2 SCC 360 : AIR 1980 SC page 470. While considering Article 11 of the International Covenant on Civil and Political right to which India is a signatory, the Apex Court in Paragraph 6 of the Judgment inter alia made the following observation:—

“…………………. India is now a signatory to this covenant and Article 51(c) of the Constitution obligates the state to “foster respect for International Law and treaty obligations in the dealings of organised peoples with one another”. Even so until the Municipal Law is changed to accommodate the covenant what binds the Court is the former, not the letter. A.H Robertson in “Human Rights—in national and International Law” rightly points out that International Conventional Law must go through the process of transformation into the Municipal Law before the international treaty can become an internal Law……………”

37. In view of the aforesaid decision of the Supreme Court, in our opinion, even of a suit appears from the statement in the plaint to be barred by any international Law the plaint cannot be rejected unless such International Law has gone through “the process of transformation into Municipal Law”. Thus, we conclude that in order to bring a case within the mischief of Order 7 Rale 11(d) of the Code of Civil Procedure, the suit must appear from the statement made in the plaint to be barred by any state-made law including any ordinance, order, bye-law, rule, regulation, notification, custom or usages having in the territory of India the force of law. As the word has not been defined in the Code of Civil Procedure, in arriving at the aforesaid conclusion, we have thought it profitable to take aid of Article 13(3)(a) of the Constitution of India. Thus, we find no force in the second contention of Mr. Mukerji.

38. As regards the third point raised by Mr. Mukerji, after hearing the answer given by Mr. Deb we feel no hesitation in rejecting the said point.

39. As Indicated earlier, in support of the aforesaid point, Mr. Mukerji relied upon a decision of this Court in E.C Bose v. Banglar Swapna reported in 1983 (2) CLJ 229. It appears that Sen, J. in the said decision relied upon an earlier decision of this Court in (18) Md. Saleh Behbehart and Co. v. Broja Traders reported in 1981 (2) CLJ 129. The aforesaid decision weal in appeal before a Division Bench and the decision of the Appellate Court is reported in (19) 1983 (2) CLJ 334. The aforesaid appellate Court placed strong reliance upon the following decisions:—

(20) Jayaswal Shipping Company v. Steam Ship S.S Leelayati, 58 CWN 468 ??? : AIR 1934 Calcutta 415;

(21) Rungta Sons Pvt. Ltd. v. S.S Edison Meriner, 66 CWN 1083;

(22) Kamalakar Mahadeb Bhagat v. Scindia Steam Navigation, AIR 1961 Bombay 186; and

(23) National Co. Ltd. v. Asia Marines, 72 CWN 635.

40. All the aforesaid decisions have been expressly overruled by the Apex Court in M.V Elisabeth (supra).

41. Mr. Deb has placed before us as a copy of the agreement arrived at the International convention relating to the arrest of seagoing ships, signed at Brussels of May 10, 1952 which is now made part of British Law.

42. According to Article 1(1) of the said agreement Maritime claim means a claim arising out of one or more of the following:—

“(a) damage caused by any ship either in collision or otherwise.

(b) …………………………………………

(d) …………………………………………

(e) …………………………………………

(f) …………………………………………

(g) …………………………………………

(h) …………………………………………

(i) …………………………………………

(j) …………………………………………

(k) goods or materials wherever supplied to a ship for her operation or maintenance.

(l) ………………………………………

(m) ………………………………………

(n) ………………………………………

(o) disputes as to title to or ownership of any ship.

(p) disputes between co-owners of any ship as to the ownership possession employment or earning of that ship.

(q) the mortgage or hypothecation of any ship.”

(Clauses not relevant herein have not been quoted) Article 3(1) of the said agreement is produced below:—

“Subject to the provisions of para (4) of this Article and of Article 10, a claimant may arrest either the particular ship in respect of which the Maritime claim arose or any other ship which is owned by the person who was, at the time when the Maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sail, but no ship, other that the particular ship in respect of which the claim arose, may be arrested in respect of any Maritime claims enumerated in Article 1(1), (o), (p) or (q).”

43. Mr. Deb relying upon the aforesaid Article contends that the claim of the respondent as made out in the plaint is in the category of (k) as mentioned in Article 1(1) above and having fallen in neither of the categories mentioned in Article 1(1), (o), (p) or (q), his client is entitled to arrest sistership.

44. It may be mentioned here that in Paragraphs 77 and 85 of the judgment delivered in M.V Elisabeth (supra), the Apex Court has taken note of the aforesaid Brussel's Convention and has held that although India is not a party to such convention, in the absence of general Maritime Code, those provisions can be adopted by an Admiralty Court.

45. The Supreme Court Act, 1981 of England has catalogued Maritime claims with reference to the unified rules adopted by the Brussel's Conventions of 1952 and in the absence of any statute on Admiralty Law enacted in this country, a Court of Admiralty is entitled to follow the aforesaid Act.

46. In view of the aforesaid decision of the Apex Court and in view of the fact that Sen, J., in E.C Bose (supra) did not take note of the Supreme Court Act, 1981 which is in tune with the Rules adopted by Brussel's Convention, we are constrained to hold that the law laid down in E.C Bose (supra) does not reflect the correct position of the present law and as such, in our opinion, there it no bar in arresting a sistership if the Maritime claim is not in the nature of any of the categories mentioned in Article 1(1), (0); (p) or (q) of the Rules adopted in Brnssel's Convention.

47. Therefore all the points taken by Mr. Mukerji having failed, we hold that the orders impugned do not suffer from any illegality.

48. Thus, there is no merit in the instant appeal and the same is dismissed. In the facts and circumstances of the case, the parties are directed to bear their own costs. This order will govern the other two connected appeals as the face and law involved therein are similar. Those are also dismissed accordingly.

49. Banerjee, J.: I agree.

50. S.K.G

State Of Ukraine & Anr. v. Elitarious Limited .

Structured Summary of the Judgment delivered by Bhattacharya, J. (with Banerjee, J. concurring)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' (State of Ukraine & Black Sea Shipping Company Ltd.) Arguments (as presented by Mr. I.P. Mukerji)

Respondent's Arguments (as presented by Mr. Deb)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

State Of Ukraine & Anr. v. Elitarious Limited .

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