IN THE HIGH COURT OF GUJARAT AT AHMEDABAD ADMIRALITY SUIT No 12 of 2000 with MISC.CIVIL APPLICATION No 35 of 2000 For Approval and Signature: Hon'ble MR.JUSTICE K.M.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- SHIPBUILDING & GENERAL REPAIRS CO. VESTALCO LTD. Versus MV RIVER EX-MV SMART 1 EX-MV GLOBAL SKY EX-ALEKSANDR --- K. -------------------------------------------------------------- Appearance: 1. ADMIRALITY SUIT No. 12 of 2000 MR. M.J. THAKORE SR. COUNSEL WITH MR YN RAVANI for Petitioner MR. K.S. NANAVATI, SR. COUNSEL WITH MR BHARAT T RAO for Respondent No. 1 2. MISC.CIVIL APPLICATIONNo 35 of 2000 MR. M.J. THAKORE SR. COUNSEL WITH MR YN RAVANI for Petitioner MR. K.S. NANAVATI SR. COUNSEL WITH MR. BHARAT T. RAO for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE K.M.MEHTA Date of decision: 26/9/2000 C.A.V. JUDGEMENT Ship Building and General Repairs Co., Vestalco Ltd.-plaintiff having its office and works at Piraeus in Greece, has filed this Admiralty Suit under clause 32 of the Letters Patent for obtaining decree in the sum of US Dollar 6,84,653 equivalent to Rs. 2,94,39,000/- in favour of the plaintiff and against the defendant and also arrest of MV RIVER EX-MV SMART 1 EX MV GLOBAL SKY EX-ALEKSANDR defendant's vessel together with her engines, machineries, boats and others for the due satisfaction of the decree passed under the suit. The plaintiff has also filed Miscellaneous Civil Application No. 35 of 2000 for interim orders. In support of the contentions, the plaintiff has also filed written submissions. FACTS: 1. The plaintiff is carrying on business of ship building and general repairs. It was stated in the plaint that the plaintiff carried out repairs of MV River ex-MV Smart ex-MV Global Sky ex-Aleksandr Ognivtsev Ex-Athina K. - defendant vessel at Piraeus during the period 28.5.1994 to 5.7.1994. For the said repairs the plaintiff raised an invoice in the sum of US $ 6,17,750. 2. As defendants failed to make payment of the said amount and therefore the plaintiff was entitled to recover the said amount being the cost of repairs and overhaul. The plaintiff stated in or around May, 1998 that the defendant vessel arrived at Port of Suez, Egypt. At that time, the plaintiff through their power of attorney moved the President of Suez Court of first instance for preventive attachment/arrest of the vessel M.V. Global Sky flying the flag of St. Vincent and Grenadines and lying in the port and harbour of Suez for security in the sum of US $ 6,17,750 being the cost of repairs. The President of the Court of first instance imposed a preventive attachment / arrest on the defendant vessel on 24.5.1998 vide Preventive Attachment Order No. 45 for security in the sum of US $ 6,17,750 for the maritime debt of the plaintiff. The said order validly served on 26.5.2000. 3. Thereafter the plaintiff on 1.6.1998 within eight days of the attachment / arrest being served on the captain filed an action being law Suit No. 36 of 1998 in the court of first instance for recovery of their claim of US $ 6,17,750 (Six lakh seventeen thousand seven hundred and fifty) with interest. The plaintiff sought confirmation of the order of attachment / arrest passed earlier and for sale of the vessel by public auction fixing the conditions for such sale in view of the aforesaid order dated 24.5.1998 continued to operate pursuant to the filing of the suit. On 10.5.2000 the competent judicial court at Suez passed judgement in law Suit No. 36 of 1998 holding that the preventive attachment / arrest ordered on 24.5.1998 being No. 45 of 1998 on the Vessel MV Global Sky was correct and further holding that the first and second defendant to pay to the US $ 6,17,750 plus legal interest from the date of the suit, i.e. 1.6.1998. 4. It was further stated that during the pendency of the aforesaid proceedings on 22.12.1999 the Red Sea Port Authorities have administratively sold the vessel in the sum of LE 1,04,000 (One lakh four thousand) . It was stated that the defendant applied to the court for permission to carry out sea trial of the defendant vessel. The said permission was granted by the court and during that period defendant vessel escaped from the Egyptian territorial sea waters on 1.4.2000. 5. It was stated that in the plaint and ultimately at the time of hearing that the defendant vessel has arrived at the port of Alang ship breaking yard (Dist. Bhavnagar) and is lying in the territorial waters of India near the Alang Ship breaking yard. Therefore, the plaintiff filed the present suit for recovery of US$ 684653 equal to Rs. 2,94,39,000/- as well as the arrest of the ship. When the matter came up for hearing before this court on 5.7.2000, this court passed an order of arrest of the ship. Thereafter, the defendants have appeared and filed their reply to the interim injunction application and the plaintiff has also filed rejoinder and ultimately the matter was heard at great length. 6. On behalf of the plaintiff Mr. M.J. Thakore, learned Senior counsel with Mr. Yogesh Ravani, learned advocate appeared. He has stated that the plaintiff under Law of Egypt applied for arrest/conservatory attachment of the vessel vide application No. 45 of 1998 on 24.5.1998. The said order of arrest/conservatory attachment was served on 26.5.1998 on the vessel and amongst others, the Red Sea Port Authorities. It was further submitted that Red Sea Port Authorities (the Auctioneer) had sold the vessel on 22.12.1999 when the vessel was under arrest and in the custody of the court in an action in rem initiated against the vessel by the plaintiff bearing arrest order No. 45 of 1998 followed by suit No. 36 of 1998. Therefore, such sale was effected without permission of the Court of First Instance at Egypt in whose custody the vessel was. Such sale cannot give any title to the purchaser. 6.1 It was further stated that the purchaser's title is subject to the charge on the vessel created by the Court of First Instance and the charge of the court is attached to the vessel, irrespective of where the vessel is and irrespective of in whose hands the vessel is. The sale effected by Red Sea Port Authority cannot be compared with a sale by an Admiralty Marshal. It was further stated that the plaintiff has to file a second suit based on the judgement obtained in the foreign court treating the judgement as conclusive under Section 13 of the CPC. It was stated that since the suit is against the respondent, namely, vessel which is lying within the territorial waters of India abutting the State of Gujarat, therefore, the present Admiralty Suit has been filed. In support of the same, the learned Sr. counsel Mr. Mihir Thakore has relied on the decision in the case of BRIJLAL RAMJIDAS AND ANOTHER VS. GOVINDRAM GORDHANDAS SEKSARIA AND OTHERS reported in A.I.R. (34) 1947 PRIVY COUNCIL 192. The Privy Council after referring to the judgement in the case of 30 A.I.R. 1943 Bom. 201, in para 8, has observed as under:- "Some difficulty has been occasioned in the interpretation of S. 13, by the definition of `judgement' contained in S. 2. Notwithstanding this definition, their Lordships agree with the learned Chief Justice that the expression `foreign judgement' in S. 13 must be understood to mean "an adjudication by a foreign Court upon the matter before it." The Chief Justice pointed out that "it would be quite impracticable to hold that a `foreign judgement' means a statement by a foreign Judge of the reasons for his order," since `if that were the meaning of "judgement" the other section (viz. S. 13) would not apply to an order where no reasons were given." In para 10 of the judgement, the Privy Council has further observed as follows: "This argument was disposed of satisfactorily by both Chagla J. and the Appellate Court who rightly pointed out that the question whether a foreign Court is the "proper Court" to deal with a particular matter according to the law of the foreign country is a question for the Courts of that country. There is no doubt that some Court in Indore was "a Court of Competent jurisdiction." It was for the High Court of Indore to interpret its own law and rules of procedure, and its decision that the High Court was the "proper" Court must be regarded as conclusive. It may be added that the appellants appear to have consented to the transfer of the proceedings from the District Judge's Court to the High Court." He has further relied on the decision of the Supreme Court in the case of ROSHANLAL NUTHIALA VS. R.B. MOHAN SINGH (AIR 1975 SC 824). In para 26 the Supreme Court has held thus:- "..... Normally, a money claim due under a foreign decree can be enforced on the original side by a suit under Sections 9, 13 and 26 of C.P.C. in the appropriate court and the executing court has no jurisdiction to straightway levy execution under O. 21, C.P.C. An exception is provided in this regard by the Governor General's Order and a special forum viz. the High Court is indicated, when the decree to be executed is of the Supreme Court of Pakistan. All this pertains to jurisdiction and in the Associated Hotel's case this Court negatived executability solely on grounds jurisdictional or quasi jurisdictional. Section 14 thus comes to the rescue of the defendent in this suit (sic)" The learned counsel for the plaintiff has further relied on the following decisions: 1 GOPALSINGH HIRASINGH VS. PUNJAB NATIONAL BANK (AIR 1976 DELHI 115) 2. SETABGANJ SUGAR MILLS VS. BENOZIR AHMED (AIR (39) 1952 CALCUTTA 116) 6.2 It was further submitted that as the plaintiff suit is for arrest of the `res' based on the judgement in foreign court and therefore an action in rem can lie only in the Gujarat High Court which has Admiralty jurisdiction. It was further stated that the foreign judgement of the Court of First Instance at Suez dated 10.5.2000 in an action in rem against the vessel is a judgement in rem. It was further stated that it shall be conclusive as to the matters directly adjudicated upon between the plaintiff and the vessel, since (1) it has been pronounced by a competent court, (2) it has been given on the merits of the case (3) it appears that on the face of the proceedings to be founded on the Arrest Convention 1952 which is the correct international law applicable to Greece, India and Egypt (4) it is not opposed to natural justice since in an action in rem if the owner opts not to appear and leave the respondent for condemnation there is no question of the judgement becoming opposed to natural justice, (5) it has not been obtained by fraud, the defendants are not able to establish any fraud and (6) it is not based on a claim founded on a breach of any law in India. 6.3 It was further stated that the suit is filed for the purpose of obtaining a decree on the basis of a judgement of a foreign court dated 10.5.2000 and is within the period of limitation prescribed under Article 101 of the Limitation Act. It was further stated by the plaintiff that this court at this stage may not hold that the suit is not maintainable much less in absence of pleadings or declare the hopelessness of the plaintiff's case. All the aforesaid issues are complex issues of Law on which no opinion should be expressed at the interlocutory stage. He has further stated that in view of the judgement in case of SCHWARZ & CO. (GRAIN) LTD. VS. ST. ELEFTERIO 1957 PROBATE DIVISION 179 which has been approved by the Hon'ble Supreme Court in the case of VSNL Vs. M.V. KAPITAN KUD (AIR 1996 SC 516) if the vessel is released there will be no scope for the plaintiff to get any relief at the end of the trial. He has further stated that the court 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 arguable, even though difficult case even in law the action would be allowed to proceed to trial. The Supreme Court also observed that the ship is a foreign ship and if it leaves the shore of Indian territorial waters, it is difficult to get hold of it and it may not return to the jurisdiction of Indian Court. the claim thereby even if successful would remain unexecutable or land in trouble in private international law in its enforcement. 6.4 The plaintiff has filed this suit for claiming US$6,84,653. The plaintiff has prayed for a decree in favour of the plaintiff and against the defendant in the principal sum of US$ 617750 with interest US$ 66903 in all US$ 684653 equivalent to Rs. 2,94,39,000/- with further interest at such rate the Court orders and the defendant to furnish security in the sum of US $ 684653 for due satisfaction of the judgement passed against the defendant and for arrest of the ship. For that purpose the plaintiff has relied on the judgement passed by the competent court in favour of the plaintiff on 10.5.2000. 6.5 The learned counsel for the plaintiff has relied on the decision of the Supreme Court in the case of M.V. ELISABETH VS. HARWAN INVESTMENT & TRADING PVT. LTD., GOA reported in AIR 1993 SC 1014 and stated that in view of this judgement, this court has jurisdiction to order arrest of vessel which is under the jurisdictional territorial water of this court. He also relied on VOL. 1(1) ADMIRALTY at page 382, para 304 regarding foreign aspect of Admiralty Jurisdiction and para 345 regarding extent of jurisdiction and contended that this court has jurisdiction to order arrest of the vessel. He has also relied on the judgement of PROBATE DIVISION (1957) at page 179 in the case of SCHWARZ & CO. (GRAIN) LTD. VS. ST. ELEFTERIO EX ARION (OWNERS) and contended that foreign jurisdiction binding on them. 7. Mr. K.S. Nanavati, learned Sr. Counsel with Mr. B.T. Rao, learned counsel has made the following submissions. He has also filed written submissions. It was stated by the defendant in the reply that the suit of the plaintiff is based on the repair of the ship which was done in 1994 and therefore the present suit is completely time barred. It was further stated that the suit of the plaintiff is based on the judgement delivered by Sues Court in Law Suit No. 36 of 1998. The judgement passed in the Egyptian Court is not judgement in rem and in persona judgement and therefore also the present suit is not maintainable. It was further stated that the defendant vessel had been sold by the Red Sea Port Authority under authority and lawful statutory sales and the said sale was made on 22.12.1999. The effect of such sale is to confer upon the purchaser complete title to the vessel free from all lien and encumbrances. It was stated that Sannal Aly Fouda, on behalf of Open Sea Company, was the purchaser of the vessel at the said statutory sale. Full consideration L.E. 697949.80 (Only Six lakh ninety seven thousand nine hundred forty nine Egyptian Pounds and eighty piasters) was paid for acquisition of the vessel free from all lien and encumbrances, at the auction held by the Port Authorities (Defendant No. 4 to the said suit). It is further stated that under Egyptian Law upon such an auction sale, under the provisions of the relevant Egyptian statute the ownership of the vessel stood validly transferred to the purchaser and all prior claims thereon stood extinguished. Whatever claim that any person may have had against the vessel could only now lie against the sale proceeds. Pursuant to the sale on 22.12.1999, the new owner deposited with Port Authorities the consideration of LE 6,97,949.80 on 18.1.2000. 7.1 He has stated that it is the case of the plaintiff that the Court of first instance exercised its jurisdiction under the Maritime Trade Law. The plaintiff has chosen to produce only few provisions of the said law. They relied on the entire text of the provisions of the said law in this behalf being Law No. 8/90. It was further submitted that since the jurisdiction is exercised under the aforesaid la, the question would is whether the Egyptian Court could have entertained an action in rem against the ship in question. It was also submitted that Article 6 of the Maritime Trade Law provides that every Egyptian ship shall fly the flag of Arab Republic of Egypt. Article 10 reads as under: "Art. 10 - The Court of First Instance within the jurisdiction of which is located the office at which the ship flying the flag of the Arab Republic of Egypt is registered shall be concerned with examining the Actio in Rem (Real Action) connected with that ship, unless otherwise prescribed in the law." 7.2 Now the said action was heard by the Court of Suez on 30.5.2000, when after reading pleadings and perusing papers, the Court was pleased to issue a judgement nullifying the seizure of the defendant vessel and accepted the claim of the present owners of the defendant vessel and directed the persons who had claim against the defendant vessel, to agitate the same against her sale proceeds. A copy of the said judgement, letter dated 18.1.2000, from the new owners to the Port Authorities enclosing payment and copy of the Certificate issued by the Port Authorities confirming the sale are filed in separate compilation of documents. It was further stated that in view of the said judgement, the judgement dated 10.5.2000 no longer survives and has no effect and no legal sanction. The said judgement has been really set aside. 7.3 It was further submitted that the Court of First Instance of Suez would entertain action in rem only in respect of the ship flying the flag of the Arab Republic of Egypt. There is no other provisions in the Act conferring jurisdiction on the Court of First Instance to entertain any `action in rem'. It is not shown that the Court of First Instance at Suez had any jurisdiction, independent of Art. 12 to entertain and action in rem against any foreign vessel. It is an admitted position that the ship in question is a foreign ship flying the flat of St. Vincent & Grenadines and not the flag of Arab Republic of Egypt. The Court of First Instance at Suez, therefore, would have no jurisdiction to entertain an action in rem against the ship in question. The judgement of the Suez Court, therefore, not a judgement in rem. 7.4 It was further submitted that Article 60 provides for preventive attachment for settlement of a marine debt which inter alia includes debt in respect of repairs. However, the Egyptian Court has not passed an order of preventive attachment under Art. 60 of the Maritime Trade Law and therefore it was further submitted that the claim made by the plaintiff is not a maritime claim and according to them only three claims fall within the category of maritime lien in any country and claim for repairs is not one of them. It was submitted that the claim for repairs is not a maritime claim. 7.5 It is further submitted that in any case even if Maritime Trade Law No. 8/98 were to be applied, the maximum period available under the Act for enforcing the claim is three years from the date it arose. It was further submitted that judgement of the Court of First Instance at Suez is not a judgement as defined in Section 2(9) of the C.P. Code which reads thus:- " Sec. 2(9) Judgement means the statement given by the judge of the grounds of a decree or order". 7.5(a) It was submitted that the term `judgement' occurring in Section 13 of the C.P.C. will have to be understood as defined in Section 2(9) of the C.P.C. To be a judgement within the meaning of Sect. 2(9) read with section 13, the proceedings should have terminated and have culminated in `decree' or `order'. Section 2(2) defines the term `decree' as under: "Section 2(2) `decree' means the formal expression of an adjudiction which, so far as regards the Court expressing it conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final." 7.5(b) It has been submitted that from the operative portion of the document purporting to be judgement, the proceedings before the Suez Court of First Instance is not concluded. 7.5(c) It was submitted that proceedings of the Egyptian Court do not stand concluded inasmuch as the `judgement and decree' or `order' produced before this Court does not purport to dispose of the proceedings finally and conclusively by the Suez Court of First Instance. The document produced with the list dated 24.8.2000 cannot be treated as a `judgement' within the meaning of Section 2(9) and Section 13 of the C.P.C. The learned counsel for the defendant therefore submitted and relied on the judgement of the Supreme Court in the case of SHAH BAHULAL KHIMJI VS. DAYABEN D. KANIYA reported in (1981) 4 SCC page 8 wherein the ho'ble court held that every order passed by a Trial Judge would not amount to a judgement. It has been further held that the word `judgement' has undoubtedly a concept of finality in a broader sense and it should decide all questions or issues in controversy so far as the trial judge is concerned and leave nothing else to be decided.It was further submitted that the court was exercising civil jurisdiction for adjudicating of a commercial dispute and not exercising the admiralty jurisdiction. 7.6 It was further submitted that judgement of the Suez Court is not conclusive under Section 13 of the C.P.C. because it has not been directly adjudicated upon between the same parties, (ii) it is not shown to have been pronounced by a Court of competent jurisdiction; (iii) it is not being given on the merits of the case and (iv) it appears on the face of the proceedings to be founded on an incorrect view of international law. 7.7 It was further submitted that a perusal of the judgement shows that proceedings have been proceeded ex-parte. There is no appearance on behalf of the contesting defendants namely, defendants Nos. 1 and 2. No defence has been filed. No issue has been raised. No evidence, oral or documentary, has been laid by the plaintiff. The Court has not examined the correctness or otherwise of the claim. There is no application of mind to either the pleadings or to the merits of the claim or to the law applicable to the subject. There is, thus, no adjudication of the claim on merits. This cannot be said to be a judgement given on the merits of the case. It is well settled that a judgement not given on the merits of the case is not conclusive as to any matter adjudicated upon between the parties. 7.8 The learned counsel has also relied on the judgement of the Supreme Court in the case of SMT. SATYA VS. TEJA SINGH reprted in AIR 1975 SC 105 where the