Gujarat High Court Case Information System Print OJCA/[SECTION]69[SECTION]0/[SECTION]008 16/ 3[SECTION] ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CIVIL APPLICATION No. [SECTION]69 of [SECTION]008 In ADMIRALTY SUIT No. 6 of [SECTION]008 [ENTITY] - Applicant(s) Versus [ENTITY] - Respondent(s) Appearance : MR [ENTITY] with MS [ENTITY] for Applicant(s) : 1, MR [ENTITY], senior advocate with MR [ENTITY] for SINGHI & CO for Respondent(s) : 1, CORAM : HONOURABLE MS.JUSTICE H.N.DEVANI Date : [SECTION]6/[SECTION]9/30-09-[SECTION]008 ORAL ORDER
1. By an order dated 4th September, [SECTION]008 passed in Admiralty Suit No.6 of [SECTION]008, this Court had ordered arrest of the vessel MV '[ENTITY]' which, at the relevant time, was lying at the Port of Dahej. It was further ordered that if the defendant vessel and/or those interested in her deposit before this Court a sum of Rs.[SECTION],97,[SECTION]1,868/- together with interest at the rate of 15% per annum from the date of filing of the suit till payment/realization to the satisfaction of the Registrar of this Court as security towards the satisfaction of the plaintiff's claim in the suit, the said warrant of arrest shall not be executed against the defendant. Notice to the defendants was made returnable on 15th September, [SECTION]008. However, it was made clear that it would be open for the defendants to approach this Court even prior to the returnable date, by giving 48 hours' advance notice to the plaintiff and/or its advocate for necessary modification of this order.
[SECTION]. The applicant [ENTITY], stated to be the operator/disponent owner of the vessel MV '[ENTITY]' (hereinafter referred to as 'the vessel'), at present lying under arrest at Port Harbour Dahej, has filed this application praying for the following reliefs:-
a) Vacate the order dated 4th September [SECTION]008 and thereupon direct to release the vessel [ENTITY].
In the alternative, to modify the order dated 4th September [SECTION]008 by reducing the quantum of security required to be furnished by the defendant to such amount as this Hon'ble Court may deem fit and proper having regard to the facts and circumstances of the present case.
b) Direct the release the vessel [ENTITY] presently lying under arrest at port and harbour Dahej, forthwith on furnishing security of such amount as may be directed by this Hon'ble Court.
c) Direct plaintiff to hand over to the defendant possession of 868.75 MTS of the allegedly contaminated goods and direct that the defendant be permitted to dispose off the same in any manner that it may deem fit and proper or in the alternative that this Hon'ble Court appoint a commissioner/receiver to take possession of 868.75 MTS of the allegedly contaminated goods and direct the commissioner/receiver so appointed to sell off the goods and that the proceeds realized from such sale be deposited in this Hon'ble Court to the credit of the suit.
d) Direct the plaintiff to furnish counter security to the extent of USD [SECTION][SECTION]0,000/-
e) Grant such other and further relief/s as may be deemed fit and proper in the facts and circumstances and in the interest of justice.
f) Provide cost of this application.
3. Heard Mr. [ENTITY], learned advocate with Ms. [ENTITY], learned advocate for the applicant original defendant and Mr. [ENTITY], learned senior advocate with Mr. [ENTITY], learned advocate for the respondent original plaintiff. For the sake of convenience, the parties are hereinafter referred to as 'the defendant' and 'the plaintiff'.
4. Mr. [ENTITY], learned advocate for the defendant has submitted that for the purpose of grant of injunction in favour of the plaintiff, a prima facie case has to be established on the basis of the averments made in the plaint and the documents annexed thereto. It is submitted that from the averments made in the plaint and the documents annexed thereto, it is apparent that part of the claim made in the suit is not maintainable and as such, ought to be rejected having regard to the provisions of [SECTION] of the [ACT] (hereinafter referred to as 'the Code') and/or principles analogous thereto. It is further submitted that out of the total claims raised by the plaintiff, three claims are not based upon any documentary evidence whereas two claims are not supported by any averments in the plaint. It is urged that apart from the fact that the claims are not supported by any documentary evidence or necessary averments in the plaint, they are highly inflated and as such, the plaint should be rejected under [SECTION] of the Code as no cause of action can be stated to have arisen qua those claims. It is submitted that insofar as contamination of the cargo is concerned, the defendant is ready and willing to deposit the damages in respect thereto, at the price at which the goods had been purchased by the seller namely, at the rate of 115 US Dollars per metric tonne. It is submitted that accordingly, the defendant is ready to put up security of 1,[SECTION]0,000/- US Dollars but the plaintiffs are not entitled to claim exorbitant security, as has been claimed in the suit.
5. It is next submitted that there is no privity of contract between the plaintiff and the defendant and that the present suit has been filed merely on the basis of the bill of lading. It is contended that it is not the case of the plaintiff that there was a contract to arrive on a certain date and at a certain time and that the vessel did not arrive at that time. Drawing attention to the [ACT] between the plaintiff and the seller, it is pointed out that it was for the seller to inform the plaintiff regarding the approximate arrival date of the vessel. In the circumstances, no claim can be raised against the defendant in respect of any delay in arrival of the vessel. It is further submitted that it is not the case of the plaintiff that no notice, as envisaged under Clause 8.8 of the Shipping terms, has been given to the plaintiff. Hence, it cannot be said that there was any unscheduled arrival on the part of the vessel, so as to make the vessel liable for any costs/damages connected therewith.
6. Referring to the claims individually, the learned advocate for the defendant has pointed out that the first claim whereby damages due to replacement cost of contaminated cargo are claimed as well as the sixth claim whereby replacement cost of short-landed goods is claimed, are calculated on the basis of the replacement cost i.e. at 485 US Dollars instead of the actual cost of 115 US Dollars. It is submitted that at best, the plaintiff can claim the actual loss incurred by them. However, the plaintiff is not entitled to claim replacement cost, that too, without any proper basis for claiming the rate of 485 US Dollars. It is submitted that there is no invoice in support of the claim for replacement cost and that the entire claim of 485 US Dollars per metric tonne is based upon a single e-mail dated 07th August, [SECTION]008, which does not reflect the grade of Rock Phosphate to which the same relates to. It is further submitted that the vessel had arrived on 16th August, [SECTION]008, whereas the plaintiff was in receipt of the e-mail prior thereto. Hence, the plaintiff could very well have based it s claim on the same right from the inception, however, the plaintiff had not chosen to do so and had pitched its claim at [SECTION]00 US Dollars. Referring to the sale agreement it is pointed out that the same provides for fluctuation of price. It is urged that when the plaintiff has claimed an exorbitant increase of 300 US Dollars per metric tonne within a short span of time, the Court should be cautious in accepting the claim. It is contended that as the plaintiff has claimed replacement cost on the basis of the market price, the plaintiff could have obtained quotations and if the price claimed was denied by the defendant, only then would the question of triable issue have arisen.
7 As regards the second claim of 71,000 US Dollars, it is submitted that no document has been produced in support of this claim or in support of the quantum thereof; that the said claim represents a remote and unforeseeable loss and consequently the defendant cannot be liable for the same. It is further pointed out that as per the sale contract disclosed by the plaintiff, these charges, if at all recoverable, are recoverable from the seller GETAX and not from the defendant. It is accordingly submitted that the arrest to the extent of US Dollars 71,000 is required to be vacated or varied. It is contended that nothing is spelt out in the plaint as to how the defendant is responsible for any loss suffered by the plaintiff in respect of the said claims.
7. As regards the claim for [SECTION]3,800 US Dollars towards pilotage, mooring and other DHL dues for reberthing of vessels, it is submitted that there is no documentary evidence in support of the same nor are there any averments in respect of the said claim in the entire plaint. Drawing attention to the contents of paragraph 14 of the plaint, it is submitted that except for a bald assertion that an amount of [SECTION]3,800 US Dollars is due to pilotage, mooring and other DHL dues for reberthing of the vessel, there are no other supporting averments or documents.
8. Similar arguments are advanced in respect of the claim of [SECTION]3[SECTION]5 US Dollars due to additional expenses on loading, shifting and unloading of contaminated goods to dump yard as well as in respect of the third claim for 77,500 US Dollars.
9. It is next contended that the plaintiff should be called upon to provide security for any loss or damage incurred by the defendant on account of the exorbitant claim made by the plaintiff. It is pointed out that, at best, the claim of the plaintiff could be the actual loss to the extent the cargo was damaged which would not exceed 1,[SECTION]0,000 US Dollars. That, had the plaintiff claimed lesser amount of security, the defendant would have been able to make arrangements for the funds and furnish the same and would have been in a position to get the ship released. However, on account of the exorbitant claim made by the plaintiff, the defendant was not in a position to manage for such a huge amount and as such, is suffering from huge amount of losses on account of arrest of the ship. It is submitted that the defendant vessel has been languishing under arrest in port and has been incurring standing costs of US Dollars [SECTION],000 per day. The vessel has also been deprived of hire for the said period. At the current market rates, chartered hire for similar vessels are in the region of US Dollars [SECTION]0,000 per day. Thus, as on date, the defendant has been deprived of income to the extent of [SECTION],[SECTION]0,000 US Dollars. Hence, the plaintiff be directed to furnish counter security to the extent of at least [SECTION],[SECTION]0,000 US Dollars.
10. In support of his submissions, the learned advocate for the defendant placed reliance upon an unreported decision of the Bombay High Court in the case of [PRECEDENT]' rendered on 13th August, [SECTION]008 in Admiralty and Vice Admiralty Jurisdiction Appeal No.[SECTION]40 of [SECTION]007 in Notice of Motion No.[SECTION]346 of [SECTION]006 in Admiralty Suit No.1[SECTION] of [SECTION]006. Relying upon the said decision, it was contended that while applying the test of reasonably arguable best case, the Court will have to ascertain whether the plaintiff has prima facie case or not and in that regard the Court will have to analyse the material on record. That the principles under [SECTION] and [SECTION] of the [ACT] should be kept in mind while dealing with the matter at the stage when the defendant whose ship has been arrested thinks it fit to appear and fight out its liability before the court on the ground that the plaintiff has no prima facie case or reasonably arguable best case. It is submitted that even when there is a reasonably arguable best case, the Court has to consider the plaintiff's case, and only after embarking upon necessary inquiry in that regard, the Court can arrive at a proper conclusion to justify order of security.
11. Reliance is also placed upon a decision of the Supreme Court in case of United Commercial Bank vs. Bank of India and Others [(1981) [SECTION] SCC 766] for the proposition that no injunction could be granted under [SECTION], [SECTION] and [SECTION] of the Code unless the plaintiffs establish that they had a prima facie case, meaning thereby that there was a bona fide contention between the parties or a serious question to be tried. It was submitted that on facts, the plaintiff has failed to make out a prima facie case or that triable issues arise at least qua the claims regarding additional demurrage and additional expenses namely, the 3rd, 4th and 5th claims. It is contended that when a plaintiff seeks ex parte orders from a Court, there is a high duty on him of disclosure to summarise the evidence, identify the crucial points and not rely on general statements. It is submitted that on the facts of the present case, there are no specific pleadings as regards the claims made by the plaintiff. In the circumstances, the injunction in favour of the plaintiff is required to be vacated.
1[SECTION]. Reliance is placed upon a decision of the Rajasthan High Court in the case of [PRECEDENT] for the proposition that a prima facie case implies the probability of the plaintiff obtaining a relief on the materials before the court. Every piece of evidence produced by either party has to be taken into consideration in deciding the existence of a prima facie case to justify issuance of a temporary injunction. Attention is drawn to the judgment of the Supreme Court in the case of [PRECEDENT] [([SECTION]004) 9 SCC 51[SECTION]] and more particularly to the contents of paragraph 59 thereto wherein it is held thus:-
[ENTITY] is an authority for the proposition that the changing global scenario should be kept in mind having regard to the fact that there does not exist any primary act touching the subject and in absence of any domestic legislation to the contrary; if the 195[SECTION] Arrest Convention had been applied, although India was not a signatory thereto, there is obviously no reason as to why the 1999 Arrest Convention should not be applied.
13. Attention is also drawn to [SECTION] of the [ACT] which provides for protection of owners and demise charterers of arrested ships to submit that in case where excessive security is demanded and provided, the owner of the vessel may be obliged to provide security in respect of loss upon damage, as may be incurred by the defendant in consequence thereto.
14. Mr. [ENTITY], learned Senior Advocate for the plaintiff has at the outset pointed out that the present application for modification of the earlier order has been filed without filing any written statement in response to the averments made in the plaint, to submit that in the circumstances the matter must proceed on demurrer on the basis of the averments made in the plaint. It is submitted that for the purpose of ascertaining as to whether the plaintiff has a reasonably arguable best case and as to whether a warrant of arrest should be issued or whether the defendant should be directed to deposit the security amount, the factor that should be kept in mind is that the proceedings should not be vexatious and that the claim should not be vexatious.
15. The learned Counsel for the plaintiff has submitted that the defendant is liable for all the loss or damages which have been caused to the plaintiff due to negligence and failure on its part to take die and proper care of the stowage of goods of the plaintiff during carriage. It is pointed out that the initial claim of the plaintiff was an ad hoc claim pending assessment of further damage. That subsequently, the plaintiff has further assessed the loss that has been actually suffered by the plaintiff due to failure on the part of the defendant to protect the goods of the plaintiff and consequences thereto. It is urged that the present case is based upon certain undisputed facts, namely, (1) that certain part of the cargo shipped through the defendant vessel was contaminated due to oil leakage, (ii) that the parties came to know about the said fact only at the time when the cargo was discharged from the defendant vessel for the first time,
(iii) that the defendant vessel was thereafter sent to anchorage to pump out the oil from the contaminated cargo, (iv) that the defendant vessel was once again allowed berthing at the port to discharge the remaining cargo; and (v) that the partial claim of the plaintiff has been accepted by the defendant. It is pointed out that the aforesaid facts are clearly borne out from the documents on record, namely, (i) survey reports, (ii) statement of facts, (iii) Discharge Completion Certificate, and (iv) e-mails exchanged between the plaintiff and defendant and/or its agent, all of which form part of the plaint. It is pointed out that even in the present application the defendant has not disputed or denied the fact that the goods were contaminated while in the custody of the defendant. It is argued that the question as to whether the plaintiff has produced enough documents to substantiate quantum of its claim or whether the claim raised by the plaintiff is inflated or not are issues to be decided at the time of trial.
16. Dealing with the contention as regards there being no specific pleadings in respect of the claims raised by the plaintiff, attention is drawn to the provisions of [SECTION] of the Indian [ACT], 187[SECTION] to submit that in respect of claims which arise naturally in the usual course of things from a breach, no specific pleadings are required. It is submitted that general damages which flow from the alleged breach do not require to be specifically pleaded. It is only when special damages are claimed that specific pleadings would be necessitated. Referring to the exposition of [ENTITY] on the subject Pleading and Proof , it is pointed out that in a statement of claim, the plaintiff must give particulars of special damage, but need not give particulars of general damage unless the damage is of a kind which is not the necessary and immediate consequence of the defendant's wrongful act. It is submitted that in the facts of the present case, it is an admitted position that part of the cargo has been damaged on account of spillage of oil. Insofar as the said damage is concerned, it flows from the breach. It is submitted that the other claims raised in the suit naturally flow from the first breach, inasmuch as the ship was required to be berthed initially to unload the cargo. However, in view of the fuel leakage, the defendant vessel had to be shifted to anchorage to pump out the oil from the contaminated goods lying in Hatch No.4. Once the process of pumping out oil from the goods was over, the vessel was again required to be berthed for the purpose of discharging the remaining goods. It is accordingly submitted that the additional expenses incurred on account of the leakage of fuel are general damages which flow from the initial breach. Hence, no specific pleadings are required in respect thereto. It is submitted that if such claims can be backed up at some stage, the Court will allow the claims to be raised. It is submitted that the function of the pleadings is to see that the party is not taken by surprise. In the facts of the present case, there is no question of party being taken by surprise as all the claims raised in the plaint are general damages. It is submitted that there is a causal chain in connection with the cause of action, hence, the contention raised that there are no specific averments qua the claims in the plaint is misconceived.
17. It is next submitted that the basic issue which is required to be examined is as to whether the claims are vexatious. It is pointed out that the damage to the cargo is admitted, hence, by no means can the proceedings be said to be vexatious. It is submitted that under the provisions of [SECTION] of the [ACT], the plaintiff is required to be compensated for any loss or damage caused to him, which naturally arises in the usual course of things from such breach. It is submitted that the expense of reberthing is entirely due to the oil spill which naturally arises from the damage caused to the cargo. It is submitted that the pleadings are enough to put the defendant to notice. Hence, the claims are not vexatious.
18. Insofar as the contention regarding replacement cost is concerned, it is submitted that the replacement cost is an accepted position of law. In support thereto, reliance is placed upon a decision of the Supreme Court in the case of [PRECEDENT] and in the case of [PRECEDENT] for the proposition that the plaintiff is entitled to claim as damages, the difference between the contract price and the market price on the date of breach. It is submitted that the claim on the basis of replacement cost is based on the market price; that in absence of any written statement being filed by the defendant, what is stated in the plaint has to be accepted at this stage. Referring to the decision of the Bombay High Court, it is submitted that the said decision may not be applicable to the facts of the case inasmuch as in the facts of the present case, the suit is not vexatious and the claim is not vexatious. It is submitted that prima facie case cannot be pitched to a level that the plaintiff is called upon to prove its case in the plaint itself. Reliance is placed upon the decision in the case of The '[ENTITY]' [1971 Volume 1 Lloyd's Law Reports Page 37] for the principle that the plaintiff is entitled to sufficient security to cover the amount of his claim with interest and costs on the basis of his reasonably arguable best case. Reliance is also placed upon the observation that in interlocutory proceedings, the Court cannot try the case. It may be that the plaintiff could, at a trial, produce independent evidence to corroborate his figure, and the fact that he has not done so at this stage ought not to result in his being denied the opportunity later. It is accordingly submitted that this is not the stage when the Court would examine the claims minutely.
19. As regards the contention that there is no cause of action, it is submitted that to say that there is no cause of action and to say that on this cause of action, one has no case are two different things. Reliance is placed on the decision of the Supreme Court in the case of [PRECEDENT] (supra) for the proposition that in ascertaining whether the plaint shows a cause of action, the Court is not required to make an elaborate inquiry into doubtful or complicated questions of law or fact. By the statute the jurisdiction of the court is restricted to ascertaining whether on the allegations a cause of action is shown. It is submitted that so long as the claim discloses some cause of action or raises some questions fit to be decided by a Judge, the mere fact that the case is weak and not likely to succeed is no ground for striking it out.
[SECTION]0. Reliance is also placed upon a decision of a Division Bench of this Court in the case of [PRECEDENT] rendered on 15th July, [SECTION]003 in O.J. Appeal No.[SECTION]1 of [SECTION]003 wherein the Court after referring to the decision of the Supreme Court in the case of Videsh Sanchar Nigam Limited vs. M.V. Kapitan Kud & Ors. [(1996) 7 SC 1[SECTION]7] as well as the principles laid down in The [ENTITY] (supra), has held that if the respondent has a reasonably good arguable case and even if the case is difficult one, action should be allowed to proceed to trial; that highly contested issues cannot be determined at this stage and therefore, the matter must proceed to trial. It is submitted that if the bar insofar as pleadings is concerned is raised so high as is contended on behalf of the defendant, it would amount to giving undue benefit to the defendant.
[SECTION]1. Referring to the claims individually, it is submitted that insofar as the first claim is concerned, there is no denial to the claim per se. The only denial is as regards the rate on which the damages are claimed. As regards the second claim of 71,000 US Dollars, the defendant has not denied that such expenses have been incurred. Referring to the statement of facts at page [SECTION]4 of the compilation, it is pointed out that the vessel had reberthed on 01st September, [SECTION]008. Hence, at the relevant date on [SECTION][SECTION]nd August, [SECTION]008, when the Bank guarantee was sought initially, the said claim could not have been raised. As regards claim (c), it is submitted that the defendant has not denied that the expense has been incurred. Insofar as the claims in respect of pilotage, mooring and other DHL dues due to reberthing are concerned, it is submitted that the fact of demurrage has not been disputed.
[SECTION][SECTION]. As regards the subsequent increase in the claim for damages, it is submitted that initially on [SECTION][SECTION]nd August, [SECTION]008, the defendant had been called upon to furnish a bank guarantee that [SECTION],00,000 US Dollars only, however the other damages came to light later on. It is submitted that the claims raised in the suit are basic damages which flow as a result of the breach. It is submitted that even on facts, the defendant has not made out a case; that the suit is vexatious; that no sufficient particulars have been provided or that the plaintiff is not entitled to security. It is submitted that on the facts and pleadings as they stand, the Court was satisfied at the initial stage, that the plaintiff has a reasonably arguable best case and has accordingly directed arrest of the ship. It is accordingly submitted that the arrest order alongwith security is required to be confirmed.
[SECTION]3. In rejoinder, Mr. [ENTITY], learned advocate for the defendant has submitted that the vessel today is a security and whether the defendant puts any security in any other form is not relevant. It is pointed out that the practice in England is that when persons whose ship has been arrested think it fit to appear and fight out the liability before the Court, the persons so appearing as defendants become parties to the action and thereby become personally liable to pay, whatever the result, may be decreed against them and the action which originally commenced in rem becomes a personal action against the defendants upon appearance.
[SECTION]4. Reliance is placed upon the decision of the Supreme Court in the case of [ENTITY] and others vs. Harwan Investment & Trading Pvt. Ltd. Hanoekar House, Swatontapeth, Vasco-De-Gama, Goa [AIR 1993 SC 1014] for the proposition that admiralty action, though originally commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability. It is also held in the said decision that once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue against the owner as in any other suit. It is contended that in the circumstances, the provisions of the [ACT] would be applicable to the proceedings.
[SECTION]5. It is further submitted that while praying for injunction which is a discretionary relief, pleadings have to be specific. Reliance is placed upon a decision of the Supreme Court in the case of United Commercial Bank (supra) wherein it has been held that no injunction can be granted under [SECTION], [SECTION] and [SECTION] of the Code unless the plaintiffs establish that they have a prima facie case, meaning thereby that there is a bonafide contention between the parties or a serious question to be tried. It is further contended that in case something is not pleaded in the plaint, no evidence can be led in that regard. In absence of pleadings, documents would not be admissible. It is accordingly submitted that the documents relied upon on behalf of the plaintiff without any corresponding averments made in the plaint would not be admissible in evidence.
[SECTION]6. In conclusion, it is submitted that the plaint is lacking in averments as well as supporting material in support of the claims; that this court has the power to vary its orders and in the facts and circumstances of this case, the same ought to be exercised in favour of the applicant.
[SECTION]7. This court has heard the learned advocates for the parties at length and in detail and has perused the documents on record as well as the decisions cited at the bar. In the facts and circumstances noted hereinabove, the question that arises for consideration is as to whether the plaintiff has a reasonably arguable best case in an admiralty action. The fact that damage had been caused to the cargo is not in dispute. Admittedly, there was oil leakage in Hatch No.4 of the vessel leading to the cargo being contaminated to an extent of 868.75 metric tonnes. Besides, there was short-landing of cargo of 51.751 metric tonnes. The applicant in the application, has not disputed the fact of damage caused to the cargo and without admitting that the applicant - defendant is liable to compensate the plaintiff for the alleged loss of 9[SECTION]0.099 MTS of the goods, the defendant is ready and willing to pay forthwith security for an amount of US Dollars 1,05,811.385. Thus, it cannot be said that there is no cause of action insofar as institution of the suit is concerned or that no cause is made out on the averments made in the plaint.
[SECTION]8. The main contention raised by the learned advocate for the defendant is that the claims raised in the plaint are not supported by averments or documentary evidence. In this regard, a perusal of the averments made in the plaint shows that it is stated on the basis of two draft survey reports that the total goods discharged by the defendant vessel was 30,948.651 metric tonnes out of total 31,000 metric tonnes which were shipped in the vessel. Therefore, there was a short-landing of 51.349 metric tonne goods. As per the discharge completion certificate, out of total goods of 31,000 metric tonnes, 30,079.900 metric tonne goods discharged were of sound quality and 868.751 metric tonne goods were contaminated/damaged. In paragraph 14 of the plaint, it has been stated that the plaintiff has suffered damages of US Dollars 4,63,478 (@ 868.75 metric tonne x US Dollars 485 x 1.1) as replacement cost of the contaminated goods, US Dollars 71,000 due to additional demurrage for other waiting vessels for half a day each due to priority berthing as vessel was running out of MGO, US Dollars 77,500 due to additional demurrage of half day for other waiting vessels at the time of reberthing of the vessel, US Dollars [SECTION]3[SECTION]5 due to additional expenses on loading, shifting and unloading of contaminated goods to dump yard, US Dollars [SECTION]3,800 due to pilotage, mooring and other DHIL dues for reberthing of the vessel, US Dollars [SECTION]7,[SECTION]4 due to replacement cost of short-landed goods of 51.349 metric tonne (@ 51.349 metric tonne x US Dollars 485 x 1.1) and legal cost of US Dollars 10,000. It is contended on behalf of the defendant that on the averments made in the plaint, no cause of action has been made out as to why the defendant is liable for this amount. In this regard, it may be pertinent to note that insofar as the damage to the cargo is concerned, the same is an admitted position. It is the case of the plaintiff that the rest of the claims flow from the first claim inasmuch as they are all connected to the main claim. It is pointed out that it is not disputed that certain part of the cargo shipped through the defendant vessel was contaminated due to oil leakage; that the parties came to know about the said fact only at the time when the cargo was discharged from the defendant vessel for the first time; that the defendant vessel was thereafter sent to anchorage to pump out oil from the contaminated cargo; that the defendant vessel was once again allowed berthing at the port to discharge the remaining cargo and that the partial claim of the plaintiff has been accepted by the defendant.
[SECTION]9. In view of the fact that as yet no written statement has been filed in response to the averments made in the plaint, the Court will have to proceed on demurrer and try to find out with reference to the averments made in the plaint and the documents produced therewith whether any cause of action has been made out against the defendant.
30. The claims raised in the plaint are as follows:-
damages due to replacement cost of ) USD 463,478 contaminated cargo @ USD 485 X 1.1 for ) 868.75 MT) ) Add:
Loss suffered due to additional ) USD 71,000 demurrage for other waiting vessels for ) half day each due to priority berthing as vessel was running out of MGO Add:
due to additional demurrage of half USD 77,500 day for other waiting vessels at the time of reberthing of the vessel due to additional expenses on loading, USD [SECTION],3[SECTION]5 shifting and unloading of contaminated goods to dump yard due to pilotage, mooring and other DHIL USD [SECTION]3,800 dues for reberthing of the vessel due to replacement cost of short landed USD [SECTION]7,[SECTION]4 good of 51.751 MT (@ 51.349 MT X USD X 1.1) Legal Cost USD 10,000
LOSS/DAMAGES USD 675,497
31. Insofar as the first claim is concerned, that is the principal claim. The damage to the cargo that has been caused on account of oil leakage in Hatch No.4, is admitted. The quantity of contaminated cargo i.e., 868.75 metric tonnes as well as short-landed cargo of 51.751 metric tonnes is also not in dispute. The plaintiff has claimed damages due to replacement cost of contaminated cargo at the rate of US Dollars 485 per metric tonne, whereas according to the defendant, the rate can, at best, be US Dollars 115 per metric tonne which is the price at which the plaintiff has purchased the goods. The Supreme Court, in the case of [PRECEDENT] (supra) and in the case of [PRECEDENT] (supra) has held that a party is entitled to claim as damages, the difference between the contract price and the price on the date of the breach. No doubt, the said decisions were rendered in the context of contract for sale of goods, however, that would not mean that the same would not be applicable to the facts of the present case. At least, the claim of the plaintiff on the basis of replacement cost cannot be thrown out at the threshold as the same does give rise to a triable issue. It is further contended on behalf of the defendant that the replacement cost of US Dollars 485 per metric tonne is not based on any proper evidence as the only piece of evidence on which it is based is an offer made vide an e-mail dated 07th August, [SECTION]008 by a buyer to the plaintiff. As to whether the evidence sought to be relied upon by the plaintiff for the purpose of basing its claim of replacement cost is sufficient evidence or not, would again be a triable issue. Hence, at this stage, it cannot be said that the claim of damages based on replacement cost is inflated or exorbitant, as is sought to be contended on behalf of the defendant.
3[SECTION]. The second claim is for US Dollars 71,000 on account of loss suffered due to additional demurrage for other waiting vessels for half a day each due to priority berthing as the vessel was running out of MGO. In respect of this claim, it is stated that the late and unscheduled arrival of the defendant vessel caused bunching of vessels at DHIL Port. Few vessels which arrived prior to the defendant vessel were already waiting for their turn. Therefore, the DHIL Port authority was not in a position to immediately discharge the goods on the Port. That the operators of the defendant vessel informed the plaintiff that the defendant vessel was running out of Marine Gas Oil (MGO) and, therefore, requested the plaintiff to take the defendant vessel on priority to the other waiting vessels. That considering the request made by the operator of the defendant vessel, the plaintiff requested the DHIL to arrange for early berthing of the defendant vessel out of turn on 16th August, [SECTION]008. Thus, qua this claim, it has been specifically averred in the plaint that on account of the fact that the defendant vessel was running out of MGO, at the request of the Operators, the plaintiff had arranged for early berthing of the defendant vessel out of turn and thereby was required to incur demurrages for additional waiting of other vessels for half a day. This fact is also borne out from the e-mail dated [SECTION][SECTION]nd August, [SECTION]008 sent at 3.31 p.m. at page 33. In another e-mail of the same date sent at 5.55 p.m. at page [SECTION]9, the plaintiff has stated as under:-
3. There had been stoppages from time to time in unloading of cargo from hatch no.4 to avoid any oil spillage towards the remaining cargo. We had visited the ship twice to see the condition of cargo on 17th & 18th August, [SECTION]008 when the discharge operations were suspended and various options for pumping out the oil were being worked out. The cumulative stoppages must be more than 8 to 10 hours. Further, the discharge operation was also slow as a precautionary measure to avoid contamination. This has further caused delay in deberthing of vessel, which missed one tide.
Therefore, we have considered half day delay for computation of demurrage for the waiting vessels.
33. Besides, alongwith the affidavit-in-reply filed in response to the application, the plaintiff has annexed a statement of additional demurrage on the waiting vessel on account of delay in discharging due to contamination in Rock Phosphate Per MV [ENTITY]. This statement gives the breakup of the total demurrage of US Dollars 71,000 vessel wise. Thus, as regards this claim, it cannot be said that there are no averments made in the plaint or that the same are not supported by any documentary evidence.
34. The third claim is for US Dollars 77,500 for additional demurrage of half a day for other waiting vessels at the time of reberthing of the vessel. This is a claim, which has arisen subsequently as the vessel had to be shifted to anchorage after complete discharge of sound cargo for pumping out the oil from Hatch No.4 and had to be reberthed on 01st September, [SECTION]008 for discharge of the contaminated cargo. This fact is borne out from the statement of facts at page [SECTION]4 to the plaint as well as notice dated 01st September, [SECTION]008 issued by the plaintiff to the defendant submitting its claim for US Dollars 6,65,497 as per the details given thereunder.
35. The statement of additional demurrage annexed with the affidavit-in-reply of the plaintiff also gives a breakup of the total demurrage of US Dollars 77,500 on account of delay due to reberthing of MV [ENTITY] to discharge balance cargo on 31st August, [SECTION]008. Thus, it is evident that at the time when the initial claim was made, this claim could not have been included.
36. The fourth claim of US Dollars [SECTION],3[SECTION]5 is due to additional expenses on loading, shifting and unloading of contaminated goods to dump yard. It is an admitted position that the goods have been contaminated and, therefore, it goes without saying that additional expenses incurred for loading, shifting and unloading the contaminated goods to the dump yard would follow as a natural corollary. The statement of facts at page [SECTION]4 of the plaint clearly shows that contaminated cargo to the extent of 868.751 metric tonne Rock Phosphate was discharged on 01st September, [SECTION]008. The breakup of the cost of shifting contaminated cargo has been specified in the statement annexed with the affidavit-in-reply. This claim is, therefore, directly related to the main claim of damages on account of contamination of goods.
37. The fifth claim of US Dollars [SECTION]3,800 is due to pilotage, mooring and other DHIL dues due to reberthing of the vessel. From the facts noted hereinabove, it is apparent that on account of oil leakage, the vessel had to be shifted to anchorage after complete discharge of sound cargo for pumping out oil from Hatch No.4 and had to be reberthed for discharging the contaminated cargo. This exercise has naturally resulted into extra expense towards pilotage, mooring and other DHIL dues. The fact of damages due to pilotage, mooring and other DHIL dues due to reberthing are not in dispute. What is disputed is that the plaintiff has no privity of contract with the defendant and that there are no supporting documents. In this regard, reliance has been placed by the defendant on Clause 8.10 of the [ACT], which lays down that All vessel related charges payable at Dahej Port shall be to the Seller's/Vessel owner's account. All cargo related charges shall be to the Buyer's account to submit that the vessel related charges were at the Seller's account and that the defendant not being privy to the contract, could not be made liable for the same. This Court is of the view that the interpretation of Clause 8.10 of the [ACT], would also be a triable issue which can be decided only at the stage of trial. At this stage, it would not be possible to state that the defendant cannot be said to be liable for vessel related charges. Insofar as calculation of these charges is concerned, the statement annexed to the affidavit-in-reply gives a complete breakup of the same.
38. The last claim is of US Dollars [SECTION]7,[SECTION]4 due to replacement cost of short-landed goods weighing 51.751 metric tonnes. Again, the short-landing of goods is not in dispute. This fact is also borne out from the Master's remarks at page [SECTION] of the Statement of Facts which records thus:- 3. Draft survey on 1/9/08 after completion of balance cargo discharged gives total cargo discharged as 30,948.651 MT. Thus, short-landing 51.349 MT . Hence, for the same reasons as stated in the case of the first claim, it cannot be said at this stage that no cause of action is made out for making such a claim.
[SECTION]. Apart from the documents referred to in respect of each claim, the claims made by the plaintiff also receive support from the two draft survey reports.
40. Another contention raised on behalf of the defendant is that the price of Rock Phosphate would vary depending upon the content of P[SECTION]O5 as evidenced by Clause 5.3.8 of the [ACT] which provides that the Rock is guaranteed for minimum 35.[SECTION]5% P[SECTION]O5 content. For shipment(s) having less than/greater than 35.[SECTION]5% P[SECTION]O5 content, prorata price decrease/increase will apply for P[SECTION]O5 content. It is contended that there is nothing on record to show that the cargo of Rock Phosphate in the present case met with the specification laid down in the said Clause. In this regard, it would be pertinent to refer to the Certificate of Quality/Analysis at Page 13 to the plaint which certifies that the product Rock Phosphate has P[SECTION]O5 content at 36.38% which is more than the minimum content guaranteed under the agreement. Hence, at this stage, the said contention does not merit acceptance.
41. As is rightly contended by the learned Counsel for the plaintiff, the object of pleadings is to prevent the other side from being taken by surprise, to enable the parties to know what evidence to obtain, to limit and define the issues between the parties, and to give the defendant notice of the case which he has to meet so that he can prepare for trial and if necessary, make a payment into court. On the basis of the findings recorded hereinabove, it is apparent that the defendant is not being taken by surprise and has due notice of the case which he is required to meet with. In the circumstances, the contention that the plaint is lacking in necessary averments does not merit acceptance.
4[SECTION]. On the question of injunction, the Supreme Court in the case of United Commercial Bank (supra), has held that no injunction can be granted under [SECTION], [SECTION] and [SECTION] of the Code unless the plaintiffs establish that they have a prima facie case, meaning thereby that there was a bonafide contention between the parties or a serious question to be tried. On the facts of the present case, even if it were to be held that the provisions of the [ACT] are applicable to the present proceedings, in the opinion of this court, the plaintiff has succeeded in establishing that it has a prima facie case and that there are triable issues which require determination.
43. As regards the contention that the plaint is required to be rejected under [SECTION] of the [ACT] as the same does not disclose any cause of action, as noticed hereinabove, the plaint does disclose a cause of action. The other questions raised can be gone into only at the stage of trial.
44. The Supreme Court in the case of Mayar (H.K.) Ltd. and Others vs. Owners & Parties, Vessel M.V. Fortune Express and Others [([SECTION]006) 3 SCC 100] has held that the court has to read the entire plaint as a whole to find out whether it discloses a cause of action and if it does, then the plaint cannot be rejected by the court exercising the powers under [SECTION] of the Code. Essentially, whether the plaint discloses a cause of action, is a question of fact which has to be gathered on the basis of the averments made in the plaint in its entirety taking those averments to be correct. A cause of action is a bundle of facts which are required to be proved for obtaining relief and for the said purpose, the material facts are required to be stated but not the evidence except in certain cases where the pleadings relied on are in regard to misrepresentation, fraud, wilful default, undue influence or of the same nature. So long as the plaint discloses some cause of action which requires determination by the court, the mere fact that in the opinion of the Judge, the plaintiff may not succeed cannot be a ground for rejection of the plaint.
45. In [PRECEDENT] (supra), the Supreme Court approved of the principles laid down in [ENTITY] (supra) and held as under:-
In [ENTITY], The where the question was whether the admiralty action was vexatious, following the ratio of [ENTITY], J. in [ENTITY] it was held that action could not be successful. It was held that courts should only stay the action on the ground when the hopelessness of the plaintiff's claim is beyond doubt. If it is not beyond doubt but on the contrary the plaintiff has an arguable, even though difficult, case even in law the action would be allowed to proceed to trial. The application for stay was accordingly rejected.
46. Applying the principles laid down by the Supreme Court in the above cited decision to the facts of the present case, it is difficult to come to the conclusion that the hopelessness of the plaintiff's claim is beyond doubt. On the contrary, the plaintiff has made out a reasonably arguable case and as held in the aforesaid decision, even in case it is a difficult one, action should be allowed to proceed to trial. In view of the averments made in the plaint as supported by the documents annexed therewith as well as alongwith the affidavit-in-reply filed in response to the present application, several triable issues arise for consideration by this court, which cannot be determined at this stage and, therefore, the matter must proceed to trial.
47. Another relief prayed for in the application is that the plaintiff be directed to furnish counter security to the extent of USD [SECTION][SECTION]0,000/-. In this regard the learned Senior Advocate for the plaintiff has placed reliance upon the decision rendered by a Division Bench of this Court in the case of [PRECEDENT]. (supra) wherein it has been held thus:
The second relief, which was claimed by the appellants, namely, to direct the respondent to pay a sum of US$1,43,[SECTION]30.[SECTION]8 as damages cannot be entertained at this stage because this Court has come to the conclusion that the arrest of the appellant No.1-vessel was not illegal or unjustified. As it is held that the arrest of the vessel is justified, there is no question of granting damages at this stage. Further, the extent of damages suffered will have to be proved by the appellants by leading cogent evidence, and the claim for damages by the appellants itself would merit trial of the case. Having regard to the totality of the facts emerging from the record of the case, this Court is of the view that the learned Judge did not commit any error in refusing the prayer made by the appellants to direct the respondent to pay damages as mentioned in paragraph [SECTION]1(b) of the application. The finding recorded by the learned Single Judge on this point is, therefore, hereby upheld. The plea that the respondent should be called upon to furnish bank guarantee for securing the amount which is claimed by the appellants as damages, cannot be upheld because on behalf of the respondent plaintiff its constituted power of attorney holder has filed necessary undertaking as directed by the Court vide order dated August 3, [SECTION]001. The undertaking, which is filed, is in consonance with the Rules applicable to an admiralty suit which may be instituted in this High Court. Moreover, calling upon the respondent to furnish bank guarantee for the claim of damages of the appellants may not be justified more particularly when the appellants have not filed written statement and made counter claim. On the facts and in the circumstances of the case, the prayer to direct the respondent to furnish bank guarantee for claim of damages mentioned in the application cannot be accepted, and is hereby rejected.
The aforesaid decision would be squarely applicable to the facts of this case. In the present case, the plaintiff has filed an undertaking in consonance with the Rules applicable to an admiralty suit which may be instituted in this High Court. Besides, the applicant-defendant has not filed written statement nor has it raised any counter claim, hence, at this stage there is no justification for calling upon the plaintiff to furnish counter security. In the circumstances, the prayer to direct furnishing of counter security does not merit acceptance.
48. For the foregoing reasons, no case has been made by the applicant defendant for grant of the reliefs prayed for in the present application. The application, therefore, fails and is accordingly rejected.
( [ENTITY], J. ) hki