Full Judgment Text
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PETITIONER:
WORLD TANKER CARRIER CORPORATION
Vs.
RESPONDENT:
SNP SHIPPING SERVICES PVT. LTD. & ORS. ETC.
DATE OF JUDGMENT: 20/04/1998
BENCH:
SUJATA V. MANOHAR, S.P. KURDUKAR, D.P. WADHWA
ACT:
HEADNOTE:
JUDGMENT:
THE 20TH DAY OF APRIL, 1998
Present:
Hon’ble Mrs. Justice Sujata V. Manohar
Hon’ble Mrs. Justice S.P. Kurdukar
Hon’ble Mrs. Justice D.P. Wadhwa
K.K. Venugopal, S. Venkiteswaran, R.F. Nariman, Sr. Advs.
P.H. Parekh, Sameer Parekh, Amit Dhingra, Ms. S. Priya, S.
Subramanian, Advs. with them for the appellant.
Boli J. Sorabjee, S.P. Chinoy, Sr. Advs., George, A.
Rebello, Z. Bharucha, N. Ganpathy, Advs. with them for the
Respondent in S.N. P. Shipping.
C.A. Sundaram, Sr. Adv., A. M. Vernekari, Ms. Madhavi Divan,
Rajiv Dutta and Uday Kumar, Advs. with him for the
Respondent in Kara Mara Shipping
J U D G M E N T
The following Judgment of the Court was delivered:
[ With C.A. Nos. 8535/1997, 8536/1997, C.A. Nos. 2145-
2146/98] [Arising out of SLP(C) 3 & 4/1998)]
Mrs. Sujata V. Manohar, J.
Leave granted.
World Tanker Carrier Corporation (hereinafter referred
to as the ’WTCC’ ) is the appellant in these appeals. WTCC
is a foreign company registered in Monrovia, Liberia. It is
the owner of a vessel m.t. "New World". The vessel is
registered in Hong Kong. On 21st of December, 1994, New
World was involved in a collision with a vessel m.v. "YA
Mawlaya" international waters 200 nautical miles off the
coast of Portugal. YA Mawlaya is a vessel registered in
Cyprus. It is owned by M/S. Kara Mara Shipping Company Ltd.
(hereinafter referred to as "Kara Mara’), a company
registered in Cyprus. The said company is referred to
variously in these proceedings as disponent owner/charterer
of ya Mawlaya to Vestman Shipping Company Ltd., a company
registered in Cyprus. Kara Mara thereafter became bare boat
charterers of Ya Mawlaya. Prior to the sale of the said
vessel, kara mara had entered into a management agreement
dated 11th of April , 1994 with SNP Shipping Services P.
Ltd. (hereinafter referred to as ’SNP’), a company
registered in India for the management of the vessel Ya
Mawlaya. According to the appellant, on the sale of the said
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vessel, Kara Mara’s agreement with SNP came to an end. On
the other hand, it is claimed by SNP that under the said
management agreement they were put in charge of recruiting
crew and officers of the said vessel. SNP entered into a
sub-contract with one Holbud Ship Management Company Ltd.
for the commercial management of t he said vessel, under
this agreement, Holbud Ship Management Company Ltd. were in
charge of booking cargo and collection of freight in respect
of the said vessel Holbud Ship Management Company is a
company registered in the United Kingdom. Its holding
company Holbud ltd. is also a company registered in England.
thus in respect of the vessel Ya Mawlaya which is a foreign
vessel registered in Cyprus, all persons and/or companies
claiming ownership rights either as owners or as charterers,
managers or sub-managers are foreign companies save and
except SNP which is a company registered in Bombay, India.
The vessel New World with which it collided and its owners
are also foreigners/foreign companies.
As a result of the collision which took place between
New World and Ya Mawlaya off the coast of Portugal on 21st
of December, 1994, eight crew members of the vessel New
World died. There were injuries to some of the crew members
was damage to bot the vessels. There was also damage to the
cargo . At the time of collision Ya Mawlaya was carrying a
cargo of soyabeans belonging to the Italian firm of Cereol
Italia SRL which had been loaded on the vessel in new
Orleans, United States of America, new Orleans was the last
port of call of Ya Mawlaya before the collision. On 3rd
January, 1995 Kara Mara took proceedings in Lisbon, Portugal
in which New World was arrested. It was released on a letter
of guarantee for US $ 10,073,000 by WTCC’s P & I Club
Britannia on 18th January, 1995.
Between 30th on December, 1994 and 31st of January.
1995, several proceedings were adopted by various claimants
against the owners of Ya Mawlaya in the District Court of
New Orleans, Lousiana, united States of America. These
included an action by WTCC for recovery of damage for damage
to their ship New World. Cereol also filed a civil action
against both the vessels and against the owners of both the
vessels for damage to their cargo. The legal heirs of some
of the crew members who died in the collision also filed
civil actions for various amounts. The appellant WTCC,
between January 17 and 20, 1995 get two sister vessels of Ya
Mawlaya, Ya Latf and Ya Jaleel arrested in the action
brought by the appellant in the United States of America.
These vessels were pleased on the issue of a letter of
undertaking for U.S. $ 20 Million by P & I Club of Kara Mara
and SNP the New Castle Protection and Indemnity Association,
(hereinafter referred to as ’New Castle’).
Kara Mara thereafter filed an action for limitation of
liability in the Supreme Court of Hong Kong against WTCC and
all possible claimants. The court at Hong Kong has, however,
stayed the writ in Hong Kong on the ground of Hong Kong
being a forum non conveniens by an order dated 6th
September, 1995. Kara Mara also made a conditional
application for limitation of its liability before the
District court at New Orleans. Kara Mara and all Ya Mawlaya
interests have filed a common defence, inter alia, pleading
that the court at new Orleans lacks ground of forum non
conveniens. This issue is under examination there.
During the pendency of all these proceedings, on 12th
of May, 1995, SNP filed Admiralty Suit No. 26 of 1995 in the
Bombay High Court. The suit which has been filed in the
admiralty jurisdiction of the Bombay High Court is for
limitation of SNP’s liability in respect of the said
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collision. Prayers (a) to (e) in the Admiralty Suit No. 26
of 1995 pertain to setting up of a limitation fund and other
connected reliefs. Prayer (f) is for an indemnity from Kara
Mara, Vestman Shipping Company Ltd. and WTCC, in respect of
all claims against SNP relating to the collision, Interim
reliefs prayed for in prayers (h) and (i) are to restrain
those defendants who have instituted suits in the U.S.
courts or elsewhere from, in any manner proceeding with the
pre-trial proceedings or hearing of the complaints/civil
action instituted by them in the U.S. Courts or elsewhere
(anti-suit injunctions).
Originally, the only plaintiff in the Admiralty Suit
No. 26 of 1995 was SNP. Subsequently, Holbud Ship management
ltd., HOlbud Ltd., H. Merali and Shaukat Merali, Directors
of Holbud ship Management Ltd. have got themselves
transposed as plaintiffs 2 to 5.
On 15/16th of November, 1995, much after the filing of
Admiralty Suit No. 26 of 1995, the vessel Ya Mawlaya was
brought to the port of Bombay under ballast. On the
application of SNP in the Bombay High Court, the vessel was
arrested on 17th of November, 1995 in the said suit. In
January/February, 1996, three other admiralty suits were
filed by the Second officer, the Third Officer and the Chief
chief Engineer of Ya Mawlaya in respect of their claim for
wages and loss of future wages. The vessel Ya Mawlaya has
been arrested in these three suits also. One Galaxy
Multimodal ltd. filed an application in the pending
admiralty suit on SNP for the a fresh arrest of the same
vessel on the ground of non-payment for supply of
neceassities. And in that application also the ship has been
arrested.
On 22nd of March, 1996 Kara Mara mara filed Admiralty
Suit No. 28 of 1996 seeking limitation of their liability
and setting up of a limitation fund in respect of their
liability arising from the collision of Ya Mawlaya with New
World. Although WTCC did not appeal in the two admiralty
suite initially, it has now appeared under protest to
contest the issue of jurisdiction of law Bombay High Court
to entertain those admiralty suits to be tried as a
preliminary issue on a demurer.
In the two admiralty suits, the Bombay High Court has
also granted anti-suit injunctions against WTCC
restraining it from proceeding with its claims in the Court
at New Orleans in the State of Lousiana, U.S.A contempt
proceedings were taken out for breached of the orders passed
by the Bombay High Court in the connection. By an order of a
learned single judge of the High Court in the contempt
proceedings the defence of WTCC was ordered to the struck
off. We are not referring to these proceedings in detail
because of what has subsequently transpired on appeal before
the Division Bench. On the question of the jurisdiction, the
Single Judges held that the court has jurisdiction. From
both these orders appeals were filed before a Division Bench
of the Bombay High Court. The Division Bench, by its order
dated 20/21st of August, 1997 in Appeal No. 556 of 1997,
after considering the recalcitrant conduct of WTCC and the
contempt committed by it, ultimately held that WTCC car be
given one more chance to appear and defend the proceedings
on condition that in future in complies with all the orders
of the court. On the question of jurisdiction, the Division
Bench by a Separate order of 21.8.1997 held that the court
had jurisdiction to entertain and try the suits. Civil
Appeal No. 8534 of 1997 filed before us by WTCC is against
the order of 21.8.1997 holding that the Bombay High Court
has Jurisdiction to entertain and try the suit. Civil Appeal
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No. 8535 of 1997 is from the order dated 20/21./.1997 in
contempt proceedings.
Kara Mara and SNP also filed motions to compel WTCC to
deposit in India US $ 15 million said to be received by WTCC
from New Castle in settlement of its claim. According to
WTCC, this amount was held in escrow by leasers. Haight
Gardner Holland and Knight under certain arraignments, and
until further orders of the Bombay High Court. The High
Court, by its order dated 21.11.1997 in appeal in these
motions taken out in Admiralty Suit No. 28 of 1996, has
passed an order directing WTCC to deposit in the Bombay High
Court a sum of US $ 12.3 million and interest accrued
thereon to secure compliance by WTCC of orders of the Bombay
High Court. Civil Appeal No. 8536 of 1997 has been filed by
WTCC against this order of 21st of November, 1997.
The High Court has passed a further order dated
4.12.1997 in Admiralty suit No- 26 of 1996 as also as
Admiralty suit No. 28 of 1996. Posting these suits for
experts hearing in January, 1998 . Civil Appeals arising out
of S.L.P.(c) Nos. -3 and 4 of 1998 have teen filed against
these orders. By interim orders in these S.L.P.S the ex
parts hearing of the two suits has been stayed.
We have heard all these appeals together since common
questions of law arise in all these appeals. The first
question that requires consideration is the question of
jurisdiction. In order to consider the question of
jurisdiction. In order to consider the question of
jurisdiction, it is necessary first to examine the nature of
a limitation action.
Describing the nature of a limitation action, bar in
his book "Admiralty law of the Supreme Court " at page 154
traces the historic origins of limitation of liability as
follows:-
" [M]en would be deterred from
employing ships, if they lay under
the perpetual fear of being
answerable for the acts of their
masters to an unlimited extent."
Thus wrote the renowned Dutch
jurist, Hugo Grotius, in 1625. To
impose liability on shipowners for
acts of their masters would be
"neither consonant to natural
equity ... nor.... conductive to
the public good." referring to the
law of his own nation, Grotius
continued, "[I]t is an established
rule that no action can be
maintained against the owner for
any greater sum than the value of
the ship and cargo."
Although by no means uniform,
some sort of rule of limited
liability on the part of the
shipowner has been the law of the
leading maritime nations of
continental Europe since the middle
ages ...................."
In 1924 several leading nations adopted the
International Convention for the Unification of certain
Rules relating to the limitation of liability of owners of
sea-going vessels. This is commonly referred to as the
Brussels Convention of 1924. In 1957 a new convention on
Limitation of Liability of Sea Going Vessels was drafted to
replace the Brussels Convention of 1924. The new convention,
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of 1957 was signed by many leading maritime nations of the
world. It is also signed by India. The convention fixes the
limit of liability of an owner of a sea-going vessel on the
basis of the tonnage of the vessel without regard to the
vessel’s value. It is to incorporate this Convention in our
statute law that Part XA was inserted in the Merchant
Shipping Act, 1958.
The right of an owner to bring a limitation action is
governed by Part XA of the Merchant Shipping Act, 1958. The
whole purpose of limitation of liability is to protect an
owner against large claims, far exceeding the value of the
ship and cargo, which can be made against him all over the
world in case his ship meets with an accident causing damage
to cargo, to another vessel or loss of personal life or
personal injury. A limitation action, though it is normally
filed in the admiralty jurisdiction of a court, is somewhat
different from an ordinary admiralty action which normally
begins with the arrest of the defaulting vessel. The vessel
itself, through its master is a party in the admiralty suit,
and the plaintiff must have claims provable in admiralty
against the vessel. In the case of an action for limitation
of liability, it is the personal right of the owner of the
vessel to file a limitation action or to use it as a defence
to an action against him for liability. it is a "defensive"
action against claims in admiralty filed by various
claimants against the owner of the vessel and the vessel. A
limitation action need not be files in the same forum as a
liability action. But it must be a forum having jurisdiction
to limit the extent of such claims and whose decree in the
form of a limitation fund will bind all the claimants.
In the case of Volvox Hollandia, [1988 (2) Lolyds’’ Law
Reports Page 361], the English Court describing the natures
of a limitation action observed that the purpose of
limitation proceedings is, of course, to obtain a decree in
ram against all claimants for a single sum limited to the
amount of a limitation fund. Referring to the Brussels
Convention of 1957, the court referred to Article 4 which
provides that the Rules relating to the constitution and
distribution of the limitation fund, if any, and all Rules
of Procedure shall be governed by the national law of the
State in which the fund is constituted.
The Brussels Convention 1957 does not specify the
appropriate forum in which a limitation action properly so
called, may be instituted by the ship owner, However,
Article 7 of the Brussels Convention, 1957 gives to a
Contracting State the right to exclude certain persons from
the benefit of its provisions. Thus persons not ordinarily
resident in a contracting State nor having their principal
place of business in the Contracting State and ships not
flying the flag of the Contracting states can be excluded.
Article 7 is as follows
" This convention shall apply
whenever the owner of a ship, or
any other person having by virtue
of the provisions of Article 6
hereof the same rights as an owner
of a ship, limits or seeks to limit
his liability before the courts of
a contracting State or seeks to
procure the release of a ship or
other property given within the
jurisdiction of any such State.
Nevertheless, each contracting
State shall have the right to
exclude, wholl, or partially from
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the benefits of this, convention
any non-Contracting State, or any
person who, at the time when he
seeks to limit his liability or to
secure the release of a ship or
other property arrested or the bail
or other security in accordance
with the provisions of Article 5
hereof, is not ordinarily resident
in a Contracting State, or does not
have his principal palace of
business in a contracting State or
any ship in respect of which
limitation of liability or release
is sought which does not at the
time specified above fix the flag
of a contracting State."
(underlining ours)
Under principles of private International law, a court
cannot entertain an action against a foreigner resident
outside country or a foreigner not carrying on business
within the Country, unless he submits to the jurisdiction of
the court here. This principle applies to actions in
personam.
Regarding actions in rem, Cheshire and North in Private
International Law, Twelfth Edition, explain the position
with reference to admiralty actions. It is stated (p. 213):
" ... the only action in rem known
to English law is that which lines
in an Admiralty court against a
particular res, namely a ship or
some other res, much as cargo,
associated with the ship.
The Supreme Court Act 1981
lists the claims that lie within
the Admiralty Court and goes on to
make detailed provisions as to when
an action in rem may be brought. To
take one instance the rule has long
been that a maritime lien attaches
to and remains enforceable against
a ship that collides with and
damages another ......
That the ship is the defendant
in an action brought to enforce the
lien is underlined by the legal
process available to the plaintiff.
After obtaining the issue of a
summons in rem, he may procure a
warrant for the arrest of the ship
which is then affixed by the
Admiralty marshal of a short time
on any mast of the ship or on the
outside of any suitable part of the
ship’s superstructure, being later
replaced by a true copy. There is
no alternative method.
The person is the ship, and
therefore it is essential that it
should be ’so situated as to be
within the lawful control of the
State under the authority of which
the court sits’. In short, the
court is competent to entertain the
action if the ship lies within the
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territorial waters of
England........ "
This is also the basis on which chartered High Courts
exercise admiralty jurisdiction. Clause 32 of the Letters
patent of the Bombay High Court defines its admiralty
jurisdiction with reference to preceding letters patents
which derive jurisdiction under the Colonial Courts of
Admiralty Act, 1891 and the Admiralty Courts Act, 1811.
This court had an occasion to deal with the question of
jurisdiction with reference to foreign vessels and foreign
owners of such vessels. In the case of British India Steam
Navigation Co. Ltd. V. Shanmughavilas Cashew Industries &
Ors. [(1990) 3 SCC 481] this Court examined the effective
operation of the statutes of a country in relation to
foreigners and foreign ships. This court said (p. 492): "In
general , a statute extends territorially, unless the
contrary is stated, throughout the country and will extend
to the territorial waters, and such places as intention to
that effect is shown. A statute extends to all persons
within the country if that intention is shown. The Indian
Parliament, therefore, has no authority to legislate for
foreign vessels or foreigners in them on the high seas. Thus
a foreign ship on the high seas, or her foreign owners or
their agents in a foreign country, are not deprived of
rights by Court statutory enactment expressed in general
terms unless it provides that a foreign ship entering an
Indian port or territorial waters and thus coming within the
territorial jurisdiction is to be covered .............
without anything more Indian statutes are ineffective
against foreign property and foreigners outside the
jurisdiction." It is this principle which is reflected in
Section 2(2) of the Merchant Shipping Act, 1958.
Section 2 of the Merchant shipping Act, 1958 deals with
the application of the Act. It states that the provisions of
the Merchant Shipping Act which apply to a vessel, will
apply to those vessels which are specified in the section.
Section 2 is as follows:-
" Section 2 :
(1) Unless otherwise expressly
provided, the provisions of
this Act which apply to .
(a) any vessel which is registered
in India: or
(b) any vessel which is required by
this Act to be so registered; or
(c) any other vessel which is owned
wholly by persons to each of whom
any of t he descriptions specified
in clause (a) or in clause (b) or
in Clause (c) as the case may be ,
of section 21 applies,
shall so apply wherever the vessel
may be.
(2) Unless otherwise expressly
provided, the provisions of
this Act which apply to
vessels other than those
referred to in sub-section (1)
shall so apply only while any
such vessel is within India,
including the territorial
waters thereof."
(underlining ours)
In section 2(1)(c), the reference to persons specified in
clauses (a) , (b) and (c) of Section 21 is to: " (a) a
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citizen of India; or (b) a company or a body established by
or under Central or State Act which has its principal place
of business in India; or (c) a co-operative society which
satisfies the following requirements, namely; (f) the co-
operative society is registered or deemed to be registered
under the co-operative Societies Act, 1912, or any other law
relating to co-operative societies for the time being in
force in any State; (ii) every individual who is a member of
the co-operative society and where any other co-operative
society is member thereof, every individual who is a member
of such other co-operative society, is a citizen of India" .
Thus a vessel falling under Section 2(1) (c) is a vessel
owned wholly by Indian citizens/Indian Companies/Indian Co-
operative Societies.
Section 3(16) defines "High Court" in relation to a
vessel. It is as follows:
" Section 3(15) :
High Court, in relation to a
vessel, means the High Court within
the limits of whose appellate
jurisdiction -
(a) the port of registry of
the vessel is situate; or
(b) the vessel is for the time
being or;
(c) the cause of action wholly
or in part arises; "
Both these sections apply to those provisions of the
Act which apply to a vessel. Section 2 provides that those
provisions of the Merchant Shipping Act which apply to
vessels falling in Section 2(1), shall apply wherever such a
vessel may be. Those provisions which apply to vessels
falling in Section 2(2) i.e. foreign vessels, shall apply
only while the vessel is in Indian territorial waters. There
are several sections and/or parts of the Merchant Shipping
Act which apply to vessels. e.g. Part V of the Merchant
Shipping Act, 1958 (Sections 20 to 74) deals with
Registration of Indian Ships. Part VIII deals with passenger
ships and so on. In relation to litigation regarding vessels
the High Court having jurisdiction is specified in Section
3(15).
The provisions regarding a limitation action have been
reduced to a statutory from in part XA of the Merchant
Shipping Act, 1958. Part XA was introduced in the Merchant
Shipping Act, 1958 by Amending Act 25 of 1970, in order to
give effect to the Brussels International Convention of 1957
relating to the limitation of liability of the owners of
sea-going ships, to which India is a signatory. Part XA
consists of Section 352, 352A to 352F. Under Section 352A
the owner of a sea-going vessel may limit his liability in
respect of any occurrence to his vessel resulting in loss of
life of personal injury or loss of property or damage to
cargo either in respect of persons or property carried on
his vessel or on another vessel as also any liability in
respect of damage to a vessel. The owner is entitled to
limit his liability in respect of all such claims arising
from one occurrence, in the manner provided in Section 352B
provided that the occurrence giving rise to the claims did
not result from the actual fault or privity of the owner.
The burden of proving that the occurrence which has given
rise to a claim against the owner of a vessel did not result
from his actual fault or privity, shall be on the owner.
Thus Section 352A(1) and (2) provide as follows:
" Section 352A:
(1) The owner of a sea-going vessel
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may limit his liability in
accordance with the provisions
of section 352B in respect of
any claim arising from any of
the following occurrence
unless the occurrence giving
rise to the claim resulted
from the actual fault or
privity of the owners -
(a) loss of life of or personal
injury to, any person being
carried in the vessel, or loss
of, or damage to any property
on board the vessel;
(b) loss of life of, or personal
injury to, any other person
(whether on land or on water),
loss of or damage to any other
property or infringement of
any rights-
(i) which is caused by the act,
neglect or default or any
person on board the vessel for
whose act, neglect or default
the owner is responsible ; or
(ii) which is caused by the Act,
neglect or default or any
person on board the vessel for
whose act, neglect or default
the owner is responsible :
provided that the owner shall
be entitled to limit his
liability in respect of any
neglect or default as the
referred to in sub-clause (ii)
only when the act neglect or
default is one which occurs in
the navigation or the
management of the vessel or in
the loading, carriage or
discharge of cargo or in the
embarkation, carriage or
disembarkation of the
passengers.
(2) The burden of providing that
the occurrence giving rise to
a claim against the owner of a
vessel did not result from his
actual fault or privity shall
be on the owner".
Under Section 352B, the limit of liability is fixed on
the basis of the tonnage of the vessel.
Under Section 352C, Sub-sections (1), (2) and (3) are
as follows: -
" Section 352C:
(1) where any liability is alleged
to have been incurred by the
owner of a vessel in respect
of claims arising out of an
occurrence and the aggregate
of the claims exceeds or is
likely to exceed the limits of
liability of the owner under
Section 352B, then the owner
may apply to the High Court
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for the setting up of a
limitation Fund for the total
sum representing such limits
of liability.
(2) The High Court to which the
application is made under sub-
section (1) may, determine the
amount of the owner’s
liability and require him to
deposit such amount with the
High Court or furnish such
security in respect of the
amount as in the opinion of
the High Court is satisfactory
and the amount so deposited or
secured shall constitute a
limitation Fund for the
purposes of the claims
referred to in sub-section (1)
and shall be utilised only for
the payment of such claims.
(3) After the Fund has been
constituted, no person entitle
to claim against it shall be
entitled to exercise any right
against any other assets of
the owner in respect of his
claim against the Fund, if
that Fund is actually
available for benefit of the
claimant.
.......................
....................
Under Section 352F, for the purposes of Par XA, the
provisions relating to limitation of liability of an owner
of a vessel shall apply also to a charterer, manager and
operator of the vessel and to the master, members of the
crew and other servants of the owner, charterer, manager or
operator acting in the course of their employment. Section
352F (1) is as follows:-
" Section 352F:
(1) Subject to the provisions of
sub-section (2), the
provisions of this part
relating to limitation of
liability of an owner of a
vessel in respect of claims
arising out of an occurrence
shall apply to the charterer,
manager and operator of the
vessel and to the master,
member of the crew and other
servants of the owner,
charterer, manager or operator
acting in the course of their
employment in the same manager
as they apply in relation to
the owner.
provided that the total limits
of liability of the owner and
all other persons referred to
in this sub-section in respect
of personal claims arising on
a distinct occasion shall not
exceed the amounts determined
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in accordance with the
provisions of section 352B.
....................
....................
Part XA does not deal with or contain provisions
relating to vessels. It deals with the personal right of an
owner of the vessel to limit his liability in respect of
claims against him arising out of an "occurrence" to his
vessel. It is a right in personam that he seeks to enforce
against the claimants. Therefore, Sections 2 and 3(15) of
the Act do not apply to his action. part XA which deals with
limitation actions also does not contain any express
provision of the kind contemplated by Article 7 of the
Brussels Convention, 1957.
A limitation action as in the present case, falls under
the High Court’s Admiralty jurisdiction. But a limitation
action, though filed in Admiralty, is not against a vessel.
it is a protective action against claims which may be filed
by others against owner of the vessel in admiralty
jurisdiction. Therefore, a plea of limitation can be taken
as a defence by the owner in an action in admiralty filed
against him by the claimant against him and his ship. Hence,
the court having jurisdiction to entertain an admiralty
action against the vessel of the owner has jurisdiction to
set up a limitation fund for the owner. Similarly, if the
owner initiates the "defensive" action in limitation, the
court which has jurisdiction to entertain a liability claim
will have jurisdiction to entertain the limitation action.
If a liability claim is already filed, that court will have
jurisdiction over limitation action also. But claims may be
several, and they may be actually filed or may be apprehend.
Any court where such a claim is filed or is likely to be
filed will have jurisdiction to entertain a limitation
action. The court of domicile of the owner and the ship is a
court where such a claim is likely to be filed. Therefore,
that court will also have jurisdiction. Out of these, the
owner has the option to choose his court for filing a
limitation action.
Is there any other court which will have jurisdiction?
learned counsel for SNP drew our attention to Clause 12 of
the Letters Patent, Section 20(2) of the Civil Procedure
Code and Section 3(15) of the Merchant Shipping Act and
submitted that the Court within whose jurisdiction a part of
the cause of action arises is a court having jurisdiction in
a limitation action.
As earlier stated, Section 3(15) has no application to
a limitation action. Clause 12 of the Letters Patent also
has no application because a limitation action is governed
by Clause 32 of the Letters Patent and into Clause 12. For
the same reason, Section 20 of the Civil Procedure Code will
not govern the admiralty jurisdiction of a chartered High
Court regulated by its Letters patent. A limitation action
in admiralty jurisdiction cannot be filed in a court where a
part of the cause or action arises when all claimants who
are defendants to the action are foreigners who reside
outside India, who do not carry on business in India and who
have not submitted to the jurisdiction of any court in
India, and have not filed a liability action here and are
not likely to do so.
Admiralty Suit no. 26 of 1995 is filed by SNP, a
company registered in India, claiming to be the managers of
the vessel Ya Mawlaya and hence falling within the
definition of owner under Section 352F. Others who are
subsequently, transposed as plaintiffs are foreign companies
or foreigners. The claimants are some of the defendants.
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They are all foreigners. Other defendants are other owners,
all of whom are foreigners or foreign companies. None of the
claimants in respect of whose claims a limitation fund is
sought to be set up, is within the jurisdiction of the
Bombay High Court; nor do they carry on business within the
jurisdiction of the Bombay High Court, nor have they filed
claims before it in respect of the occurrence in question or
have submitted to the jurisdiction of the Court. some claims
in respect of Ya Malaya have been lodged, no doubt, in the
Bombay High Court by SNP. itself, and by some crew members
of Ya Mawlaya and others. But these claims do not fall
within Section 352A and are not capable of being limited.
There is also no likelihood of any claim being filed there
since all claims are already filed before the courts in the
U.S.A. The Bombay High Court has, therefore, no jurisdiction
in respect of Admiralty suit No. 26 of 1995. There is also
misjoinder of causes of action in the suit looking to the
prayers in the suit. But we need not examine this aspect
since in any event the Bombay High Court has no jurisdiction
to entertain the limitation action. Of course, in theory, if
in future any liability action is at all filed there which
is capable of limitation, SNP would be entitled to set up
limitation as a defence or file an independent limitation
action. But the present suit is without jurisdiction.
SNP has claimed that the Bombay High Court has
jurisdiction because a part of the cause of action has
arisen within its jurisdiction. SNP, under its management
agreement with Kara Mara, claims to have recruited the crew
of the vessel Ya Mawlaya in Bombay. since the owner is
required to establish "no fault or privity" on his part in
respect of the "occurrence", one of the relevant factors for
this purpose is recruitment by the owner of a competent
crew. Since recruitment was in Bombay, SNP claims that a
part of the cause of action has arisen in Bombay. Therefore,
SNP contends that the Bombay High Court has jurisdiction.
However, in view of what we have held above, this does not
confer jurisdiction on the High Court in an admiralty action
of the present type.
In the present case the collision which gave rise to
the owner’s liability has occurred on the high-seas off the
coast of Portugal. Neither of the vessel involved in the
collision is an Indian vessel. The owners of both these
vessels are also foreigners. The charterers and sub-managers
are also foreign companies. Only one out of several
managers/sub-managers of Ya Mawlaya in and Indian Company.
And the only act of management in Bombay is said to be the
recruitment of the crew. For reasons already stated, this
factor alone will not confer jurisdiction.
Moreover, when the right to set up a limitation fund is
a right which is common to all persons coming within the
category of "owner" under Section 352F and a common
limitation fund has to be set up, an act of management only
by one of the "owners" when all the other owners are outside
the jurisdiction of the Bombay High Court and all their acts
are outside the jurisdiction of the Bombay High Court, will
not be sufficient to confer jurisdiction. It is difficult to
consider the Bombay High Court as the domiciliary court of
the owners of Ya Mawlaya when the persons/companies to whom
the vessel belongs are domiciled outside India and out of
the entire body of persons/companies falling within the term
"owner" under Section 352F, only one manager is an Indian
company, and the vessel is registered in a foreign country.
The entire course of conduct appears to be a deliberate
attempt on the part of the plaintiffs to bring the
limitation action in Bombay with a view to obtain anti-suit
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injunctions against all the claimants who have filed
proceedings against the owners and Ya mawlaya in the Courts
of the United States prior to the filing of the admiralty
suit here. The Bombay High Court, therefore, ought not to
have entertained Admiralty Suit No. 26 of 1995 brought by
SNP and others.
Admiralty suit No. 28 of 1996 is filed by Kara Mara
for the purpose of setting up a limitation fund and to
obtain an anti-suit injunction in respect of all pending
litigations against it in foreign courts. In the case of
Kara Mara which is a foreign company registered in Cyprus,
no part of the cause of action has arisen within the
jurisdiction of the Bombay High Court. The vessel which met
with the collision giving rise to liability is a foreign
vessel. The collision took place in the high seas off the
port of Portugal. All the claims against Kara Mara have been
filed in foreign courts and the claims which have now been
filed before the Bombay High Court are not claims which can
be subjected to limitation.
Kara Mara, however, claims jurisdiction on the ground
that its vessel Ya Mawlaya was in the Bombay harbour at the
time when it filed its suit for limitation. Reliance is
placed on Section 2(2) of the Merchant Shipping Act for this
purpose. Section 2(2), however, has no application to a
limitation action per se, as stated earlier. A limitation
action is not directed against the ship nor can the action
be instituted by the arrest by the foreign vessel present in
the territorial waters of the country where the action is
instituted. It is an action by the owner acting personally
against his claimants who are seeking damages in respect of
the loss or injury caused by the owner’s vessel. Therefore,
the presence of a foreign vessel in the territorial waters
will not give the court jurisdiction to entertain a
limitation action by its owner unless the presence of the
foreign vessels given rise to an admiralty action by a
claimant in that court, which claim is subject to
limitation, or the presence of the vessel has created a
likelihood of such action being taken there, or the court is
a domiciliary court of the owner attracting such claims
there. That is not the case here. In fact, at the time when
Kara Mara filed the suit all claims were already filed
against it in the foreign court at New Orleans, U.S.A. No
doubt Kara Mara had challenged the jurisdiction of that
court and had succeeded in the first round. but that was by
no means a final adjudication. Nor can one legitimately
conclude from this the likelihood of claims being filed in
Bombay. In the present case, the Bombay High Court is not
the domiciliary court of Kara Mara or its vessel. Nor it any
claim for liability which can be limited filed against kara
mara in the Bombay High Court. None of the defendants to the
suit is within the jurisdiction of the Bombay High Court.
The fortuitous presence of the whip in the Bombay harbour
will not entitle the owner to file a limitation action in
the Bombay High Court in the absence of any claims being
made or apprehended against his or the vessel in that court.
Therefore, bringing the ship and to the Bombay Port, in
order to confer jurisdiction on the Bombay High Court, has
the character of forum shopping, rather than anything else.
The presence of a foreign defendant who appears under
protest to contest jurisdiction, cannot be considered as
conferring jurisdiction on the court to take action. Unless
a foreign defendant either resides within jurisdiction or
voluntarily appears or has contracted to submit to the
jurisdiction of the court, it is not possible to hold that
the Court will have jurisdiction against a foreign
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defendant. See in this connection R. Viswanathan v. Rukn-ul-
Mulk Syed Abdul Wajid [(1983) 3 SCR p. 22 at p. 51] and Raj
Rajendra Sardar maloji Marsingh Rao Shitole v. Sri Shankar
Saran & Ors. ([1963] 2 SCR at p.77 at pp. 587-588) , this
factor also, therefore, is against the respondents in the
present appeals.
The Bombay High Court, therefore, should not have
entertained the two admiralty suits.
C. I. Nos. 8535 and 8536 of 1997 pertain to contempt
proceedings taken against the appellant in the Bombay High
Court. The respondents have strongly contended that an order
passed by a High Court even though it may be without
jurisdiction must be obeyed. If such an order is disobeyed
in amounts to contempt of court and proceedings can be taken
in that connection against the contemnor. The respondents
cite in support, the decision of this Court in Tayabbhai M.
Bagasarwalla & Anr. v. Hind Rubber Industries Pvt. Ltd. &
Ors. ([1997] 3 SCC 443). There is no doubt that the conduct
of the appellant in the various proceedings which have taken
place before the Bombay High Court leaves much to be
desired. Had the appellant initially filed appearance under
protest to contest jurisdiction, all these problems would
not have arisen. The Bombay High Court itself, however, in
its order dated 20/21-8-1997, after severely commenting on
the conduct of the appellant, has allowed the appellant to
defend the proceedings on condition that the appellant
would, in future obey the orders of the Bombay High Court.
We, therefore, do not find it necessary to examine the
questionable conduct of the appellant in the proceedings
before the Bombay High Court. In view of our finding that
the High Court has no jurisdiction to entertain the two
admiralty suits, the future conduct of the appellant in
these proceedings now becomes irrelevant.
The impugned order of 21st of November, 1997 which is
the subject-matter of Civil Appeal No. 8536 of 1997 is also
for the purpose of securing the compliance by the appellant
of the orders of the high Court which may be made against
the appellant. The Division Bench had a justified
apprehension about the appellant not complying with the
orders of the High Court in view of the past conduct of the
appellant. The Division Bench, therefore, felt that the best
way of securing compliance of its orders by the appellant in
future would be to direct the appellant to bring into the
court the money which it had received from new castle, the
insurers of Kara Mara. As the question of the appellant’s
obeying any further orders of the court will not now arise.
the order of 21-11-1997 also now becomes purposeless.
We, therefore, allow Civil Appeal No.s 8535 of 1997 and
8536 of 1997 to the extent of setting aside the impugned
order of 21.11.1997. The order dated 20/21-08-97 has now
become infructuous and hence no further orders are necessary
in that connection. We however, make it clear that it the
respondents or any of theme have any right to proceed
against New Castle or the appellant in respect of the said
sum of US $ 15 millions paid by New Castle to the appellant
and held in escrow as stated earlier, the respondents or any
of them shall be free to adopt appropriate proceedings in
that connection in accordance with law.
In view of the above, the appeals arising from S.LP.(C)
Nos. 3 and 4 of 1998 are also allowed and the impugned order
of 4th of December, 1997 in both the admiralty suits is set
aside. All the appeals are accordingly allowed. Looking to
the conduct of the appellant and the totality of
circumstance, there will, however be no order as to costs.
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