1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2112 OF 2008 IN ADMIRALTY SUIT NO.17 OF 2008 Jakhau Salt Company Pvt. Ltd. ..... Plaintiff. V/s M.V. Dhanlakhsmi .....Defendants. ------ Mr. Zal Adhyarunjinha, Mr. S. Dalvi i/b Siganporia & Dalvi for the applicants/defendants in support of the Notice of Motion. Mr. Virag Tulzapurkar, Mr. Z.B. Bharucha i/b Ashwin Shankar for the plaintiff. ------ CORAM: V.M. KANADE, J. DATE : 22ND/23RD/24TH JULY, 2008 ORAL ORDER: 1. This Notice of Motion is taken out by the defendants in which the following reliefs are claimed:- "A] That the order dated the 12th day of May 2008 ordering the arrest of defendants vessel Dhanalakhsmi along with her hull, engines, plant, 2 machinery, apparel, appurtenances and other paraphernalia at present lying in the port and harbour Marmugoa be revoked and set aside. B] That in the alternative the Defendants be permitted to move their vessel Dhanalakhsmi along with her hull, engines, plant, machinery, apparel, appurtenances and other paraphernalia at present lying in the port and harbour Marmugoa to any ports in India on such terms and conditions that this Hon' ble Court deems fit to impose on the Defendants except security as ordered for. C) For Ad-interim and Interim reliefs in terms of prayer (a) and (b) above. D) For costs of this Notice of Motion and. E] For such further and other reliefs and the nature and circumstances of the case may require in the ends of justice." 2. Defendants are seeking an order from this Court releasing their vessel MV Dhanalakhsmi from the order of arrest passed by this Court dated 12/05/2008. 3 3. Brief facts are as under:- 4. Plaintiff is a company incorporated in India and is carrying on business of chartering vessels from various owners all over the world. The defendant vessel is a barge and, at present, it is at Marmugoa. Plaintiff has filed this suit inter alia for recovery of collision damages and/or to seek indemnity from the owners of the defendant vessel for securing aggregate USD 753,909.37, arising out of the collision between the defendant vessel and another vessel MV STAR LEIKANGER which was chartered by the plaintiff. 5. On 11/10/2007, M/s Star Shipping A/S Bergen of Norway agreed to charter the vessel MV STAR LEIKANGER to the plaintiff for loading salt from one West Port of India to one safe port in Vietnam. One of the clauses of the said charter party was that the charterers were held to be responsible for the damages caused to the vessel and that the charterers would indemnify the owner for all costs, damages and liabilities resulting from the operation of the ship. Prior to the said charter of the vessel MV STAR LEIKANGER, the plaintiff had, on 29/09/2007, entered into an agreement with one Vinayak Multimodal 4 Transport Ltd. for the charter of certain barges, including the present barge MV DHANALAKHSMI. The period of the charter was from 1st week of October 2007 to 30th April, 2008. Clause 16 of the said charter party agreement provided as under:- "16. INSURANCE: Owners will take third party insurance cover for the damages to barges, its hull and machinery, its crew, mother vessel, port properties, other barges, of whatsoever nature for the entire charter period and hold the charterers fully indemnified against any claims howsoever arising and of whatsoever nature except as stated in clause 13 b. However, the owners are not responsible for the third party damages or any damage/loss or shortage of cargo carried due to negligence of stevedores for whatsoever reason. A copy of the insurance policy should be submitted to the Charterers on the 1st day of the Charter Period." 6. The vessel MV STAR LEIKANGER and the barge DHANALAKHSMI collided and the loss was caused and the MV STAR LEIKANGER was damaged after collision. A complaint was lodged by 5 the MV STAR LEIKANGER. The ship was detained. The owners of the ship wrote a letter to the plaintiff holding them fully liable for the negligence of the defendant barge owner. The Indian Coast Guard permitted MV STAR LEIKANGER to sail after it gave P & I club posted security. 7. It is the case of the plaintiff that the dispute between the plaintiff and the owners of MV STAR LEIKANGER remained unsolved and, therefore, they issued a notice on 18/01/2008 which was followed by a complaint for a Rule B attachment for the aggregate amount of USD 858,307.57 in New York on 11/01/2008 against the plaintiff. It is the case of the plaintiff that in view of the ex parte order passed against the plaintiff, they had to give security for the said amount. The arbitration proceedings were initiated against the plaintiff by the owner of the vessel MV STAR LEIKANGER at London which are still pending. Plaintiff continued to use the barge MV DHANALAKHSMI till the end of the charter party agreement and, after the said period was over, the barge was handed over to the defendants and, thereafter, the present suit was filed after the defendants refused to give security in respect of the claim which was made by the owner of MV STAR LEIKANGER. An ex parte order was 6 passed by this Court on 12/05/2008 and the barge was arrested. It is the case of the plaintiff in the plaint that they have a maritime lien and/or maritime claim against the said barge for collision damage and/or breach of the agreement for the use or hire of the defendant vessel and also for a declaration that they are entitled to be indemnified by the defendants in respect of their liability to the owners of MV STAR LEIKANGER. Plaintiff therefore, has filed this claim pursuant to Article 1(a) (loss or damage caused by the operation of a ship) and/or (f) (any agreement relating to the use or hire of a ship) viz of the 1999 Geneva Arrest Convention. Thereafter, the defendants have taken out the present Notice of Motion. 8. Mr. Adhyarunjinha, the learned Counsel appearing on behalf of the defendants submitted, firstly, that the claim was in the nature of indemnity and, therefore, this claim could not be entertained in the admiralty jurisdiction of this Court. His second submission is that, in any event, the claim by the plaintiff against the defendants was premature since the claim had not become ripe and the arbitration proceedings which were initiated against the plaintiff by the disponent owners of MV STAR LEIKANGER had not culminated in an award being passed against the plaintiff. It is submitted that the 7 statement of defence or counter-claim also had not been filed by the plaintiff in the arbitration proceedings and/or if they have filed, the said reply filed by them was not disclosed to the defendants. It is submitted that, on that count therefore, an action in rem could not be taken against the ship under these circumstances. Thirdly, it is submitted that the claim is without jurisdiction and fourthly it is submitted that there is gross delay in filing the present suit for arrest of the ship. It is lastly contended that the barge in question is not a ship and, therefore, there could be no maritime claim in respect of the said barge. 9. The learned Counsel appearing on behalf of the defendants submitted that Article 1(a) stipulates that the action would be taken only in respect of damage caused by a ship. He submitted that the barge was an inland vessel and was not registered as a ship and such an inland vessel was not a ship but was a boat. He relied upon a judgment in the case of Panduronga Timblo Industries Vs. Union of India, reported in AIR 1992 SC 1194 in support of his submission that the barge is not a ship. He further relied on section 3 of the Inland Vessels (Amendment) Act, 2007 and pointed out that in view of the aforesaid definition, the said barge would not fall within the 8 definition of a ship. He then submitted that, even assuming without admitting that the barge is a ship, the entire claim of the plaintiff was based on indemnity clause and, as such, such a suit on the basis of indemnity could not be filed. He relied upon the judgment in the case of m.t. Arctic Flower & Anr. Vs. Star Ship Management Ltd. reported in 1999(2) ALL MR 383. In support of the said submission, he relied upon number of judgments of this Court and the Apex Court as also the judgment by other courts. He relied upon the judgment of this Court in the case of Noy Vallesina Engineering Spa Vs. Jindal Drugs Limited, reported in 2006(4) Bom.C.R. 155. He also relied upon the judgment of the Apex Court in the case of State of Saurashtra Vs. Ashit Shipping Services (P) Ltd and another reported in (2002) 4 SCC 736. He also relied upon the judgment of the learned Single Judge of this Court in the case of Gajanan Moreshwar Parelkar Vs. Moreshwar Madan Mantri reported in AIR (29) 1942 Bombay 302. He also relied upon the judgment of the Apex Court in the case of M.V. Elisabeth Vs. Harwan Investment & Training Pvt Ltd. reported in AIR 1993 SC 1014. He further relied upon the judgment of the Division Bench of this Court in Khetarpal Amarnath Vs. Madhukar Pictures reported in AIR 1956 Bom. 106. He also relied upon the judgment of the learned Single Judge of this Court in 9 the case of Abdul Hussain Shaikh Gulamali Jambawalla Vs. M/s Bombay Metal Syndicate reported in AIR 1972 Bombay 252. He also referred to the judgment of the Queen's Bench Division in the case of THE MAYOR, &c. OF SOUTHPORT vs. MORRIS reported in 1893 I.Q.B. 359 in support of the submission that the barge is not a ship. He further invited my attention to the Privy Council's Judgment in the case of Currie vs. M.K. Night reported in (1897) A.C. 97. He then relied upon the Division Bench judgment of this Court in the case of Islamic Republic of Iran Shipping Lines Vs. m.v. MEHRAB and others, reported in 2002(4) Mh.L.J. 584. He also invited my attention to the Full Bench Judgment of this Court in the case of J.S. OCEN LINER LLC, BUR DUBAR (U.A.E.) vs. m.v. GOLDEN PROGRESS and another reported in 2007(2) Mh.L.J. 410. He invited my attention to the Inland Vessel (Amendment) Act, 2007 No.35 of 2007 and more particularly the definition of "inland vessel" in section 3(a) and "mechanically propelled vessel" in section 3 (c) of the said Act. 10. Mr. Tulzapurkar, the learned Counsel appearing on behalf of the plaintiff, on the other hand, submitted that the proposition that on the claim of indemnity, arrest of the ship cannot be obtained is incorrect. 10 He distinguished the judgments on which reliance was placed by the learned Counsel appearing on behalf of the defendants. He submitted that the judgment would have a binding effect only if the ratio of the case is applicable to the facts of the case and the judgment would not be read as a statute. He relied upon the judgment of the Apex Court in support of the said submission. He submitted that the facts of each case on which reliance is placed by the Counsel for defendants are entirely different and, therefore, ratio of the said cases would not apply to the facts of the present case. He submitted that the plaintiff had filed a suit on the basis of a maritime claim under Article 1(a) and 1(f) of the International Convention on the Arrest of Ships which is known as Geneva Convention. He invited my attention to the clauses in the charter party agreement and submitted that the interpretation which is sought to be given to clause 16 of the charter party agreement by the Counsel for defendants is incorrect. He submitted that the defendants were liable for whatsoever acts which were committed in whatsoever manner and the defendants had unequivocally agreed to pay all claims, damages which were caused to the Ship as a result of operation of the barge. He submitted that, therefore, the claim was not restricted to the claim of indemnity but was also a claim for loss or damage caused by operation of the ship 11 and was pertaining to an agreement relating to the use or hire of the ship. He submitted that, therefore, the case of the plaintiff squarely fell within the definition of maritime claim as defined under Article 1 (a) and 1(f). He further invited my attention to the various judgments of other courts in support of his submission that it was not necessary that in order to file a claim against defendants, the claim of the plaintiff had to become ripe or that the decree had to be passed against the plaintiff and, thereafter, the claim could be filed against the defendant ship. In support of these submissions, he relied upon number of judgments. He relied on Geneva Convention by Berlingieri on Arrest of Ships, Fourth Edition. He then relied on the judgment in the case of Gillespie Brothers & Co. Ltd. Vs. Roy Bowles Transport Ltd and another, reported in [1973] ALL ER 193 which was a judgment of Court of Appeal, Civil Division. He then relied upon the judgment of the United States District Court, E.D. Louisiana in the matter of the Complaint of MURMANSK SHIPPING CO. as owner and manager of M/V Ivan Susanin. He then relied upon the judgment and order in the case of Daeshin Shipping Co. Ltd. vs. Meridian Bulk Carriers Ltd. which was given by the United States District Court, S.D. New York. He then relied upon the the judgment in the case of Staronset Shipping Ltd. vs. Northstar Navigation Inc 12 (659 F. supp.89), given by United States District Court, S.D. New York. He then relied upon the judgment of the High Court of the Hong Kong Special Administrative Region Court of first Instance in the case of Northrop Grumman Ship Systems, Inc and the Owners and/or Demise Charterers of the Ship or Vessel "ASIAN ATLAS". He also relied upon the judgment of the Court of appeal in the case of `The Trade Fair'; Owners of the Ship or Vessel `Trade Fair' v Lim & Sons (Pte) Ltd. reported in [1994] 3 SLR 827. He then relied upon the judgment of the Queen's Bench Division, Admiralty Court in the case of The Owners of the Ship "Beatanavis" v The Owners of the Ship "Banglar Kakoli". He then relied upon the judgment in the case of "HAMBURG STAR" given by the Queen's Bench Division, Admiralty Court, reported in [1994] Vol.1 Lloyd' s Law Reports 399. He then relied upon the judgment in the case of The Conoco Britannia reported in 2 Q.B. 543. He then relied upon the judgment of the learned Single Judge of this Court in the case of Crown Maritime Co. (I) Ltd. Vs. Barge Salina II & Ors. reported in 2008(1) Bom.C.R. 143. He then relied upon the judgment of the Apex Court in the case of Videsh Sanchar Nigam Ltd. vs. M.V. Kaptan Kud & Others reported in (1996) 7 SCC 127. He also relied upon the judgment of the Apex Court in Epoch Enterrepots vs M.V. Won Fu reported in (2003) 13 1 SCC 305. He then relied upon the judgment of the learned Single Judge of this Court viz Bharucha J. (as he then was) in the case of The Shipping Development Fund, Committee vs. M.V. Charisma and another reported in AIR 1981 Bombay 42. He also relied upon the judgment of the Calcutta High Court in the case of Profulla Kumar Basu vs. Gopee Bullabh Sen and another, reported in AIR (33) 1946 Calcutta 159. 11. In rejoinder to the submissions made by the learned Counsel appearing on behalf of the plaintiff, the learned Counsel appearing on behalf of the defendants relied on the judgment of the Hong Kong Special Administrative Region, Court of Appeal, in Civil Appeal No.257 of 2007 between Northrop Grumman Ship Systems Inc and the owners and/or Demise Charterers of the Ship or Vessel "Asian Atlas". He also relied upon the judgment in the case of Cactus Pipe & Supply Co. Inc. vs. M/V Montmartre (756 F. 2d 1103). He also relied upon the judgment of the United States District Court, Southern District of New York, March 19, 2007 in the case of Sonito Shipping Company Ltd. vs Sun United Maritime Ltd. reported in [2007 AMC 1018]. He also relied on the judgment of United States District Court, Southern District of New York in the case of J.K. International, 14 PTY. Ltd. vs. Agriko S.A.S. He finally relied upon the judgment in the case of The Nautik of the Probate Division. 12. I have given my anxious consideration to the submissions made by the learned Counsel appearing on behalf of the plaintiff and defendants. 13. In the present case, though, initially, defendants had denied the incident of collision, between MV STAR LEIKANGER and m.v. DHANALAKHSMI, the material on record indicates that on the basis of the said incident the admitted position is that the disponent owners of MV STAR LEIKANGER have obtained an order of attachment against the plaintiff and only after the adequate security was furnished by the plaintiff, the said attachment is lifted. It is also an admitted position that the arbitration proceedings have been commenced by the disponent owners of MV STAR LEIKANGER against the plaintiff. The said proceedings are pending and the award is likely to be passed within a period of six months. The present suit has been filed by the plaintiff after the arbitration proceedings were initiated by the disponent owners of MV STAR LEIKANGER. Though the collision had taken place in October, 2007, the suit was filed in May, 2008. 15 The barge was in possession of the plaintiff till April, 2008 and after the delivery was handed over, the present suit has been filed. 14. The first question which falls for consideration before me is : whether the barge is a ship within the meaning of the Admiralty Court Act, 1861 and whether a claim under Article 1(a) could be filed in respect of defendant barge m.v. DHANALAKHSMI? 15. The learned Counsel appearing on behalf of the defendants strenuously urged that keeping in view the definition of a Ship as defined in section 3(a) of the Inland Vessels (Amendment) Act, 2007, the barge is a vessel which is operated only in Indian inland and can never be called as a ship and, therefore, no maritime claim or lien could be filed against the said barge. 16. Section 3(a) defines the term "inland vessel" and section 3(c) defines the term "mechanically propelled vessel". Section 3(d) defines the term "inland water". Mr. Adhyarujinha has relied on number of judgments in support of the said submission. It would be fruitful to refer to the said judgments on which reliance is placed by the learned Counsel appearing on behalf of the defendants in support of the said 16 submission. He has relied on the judgment in the case of Panduronga Timblo Industries (supra). In this case the Apex Court was called upon to answer the question whether the barge is a boat in the context of answering the question as the same would determine the challenge to the constitutional validity of the tax levied on barges under the Goa, Daman and Diu Barge Tax Act, 1973. Reliance was placed by learned Counsel on para 3 of the said judgment and more particularly a reference was made to the observation made by the Apex Court in the said paragraph. Finally, the learned Counsel for defendants relied on paragraphs 4 and 5 of the said judgment. The Apex Court in para 5 of the said judgment has made the following observations:- "5.................Therefore, a vessel which is exclusively propelled by oars would not fall within the definition of a ship but would be covered by the wider definition of a vessel. From these two definitions it cannot be inferred that a mechanically propelled vessel is not a boat for the simple reason that the definition of vessel is wide enough to include a ship which is mechanically propelled. Both the definitions are inclusive 17 definitions and the definition of vessel is wide enough to include boats of every description, both mechanically propelled and those propelled exclusively by oars.........." He also relied upon the judgment of Queen's Bench Division in the case of The Mayors &c. of South Port (supra). In the said case by section 318 of the Merchant Shipping Act, 1854, "If any passenger steamer plies ...... with any passengers on board without having one of the duplicates (of her Board of Trade certificate) put up in some conspicuous part of the ship," the owner shall be liable to a penalty and by section 2 of the same Act, "` ship' shall include every description of vessel used in navigation not propelled by oars." In the said case, it was held that a launch which was used for the purpose of carrying passengers on pleasure trips round an artificial lake half a mile long by 180 yards wide, without having any duplicate of a Board of Trade certificate put up in her, was not a vessel used for navigation and, therefore, not a passenger steamer within the meaning of section 318. 17. So far as the first submission is concerned made by the learned Counsel for the defendants that the barge is not a ship, cannot be 18 accepted. The word "ship" has been defined in General Clauses Act, 1897 under section 3(55) to mean that "ship" shall include every description of vessel used in navigation not exclusively propelled by oars. The word "vessel" also has been defined under section 3(63) of the said Act to mean that "vessel" shall include any ship or boat or any other description of vessel used in navigation. A reading of the definition of "vessel" and "ship", therefore, clearly indicates that only boats which are propelled by oars are excluded from the definition of ship. In the present case, it is an admitted position that the said barge is mechanically propelled and, therefore, it cannot be treated as a boat. Even under the Admiralty Court Act, 1861 a ship has been defined as under:- " 'Ship' shall include any description of vessel used in navigation not propelled by oars." The ratio of the Judgments on which reliance is placed by the learned Counsel appearing on behalf of the defendants, in my view, will not apply to the facts of the present case. The judgment given by the Apex Court in the case of Panduronga Timblo Industries (supra) was in the context of the question which was raised before the Apex Court 19 as to whether the tax levied on the barges under the Goa, Daman and Diu Barge Tax Act, 1973 could be levied by the State Legislature and whether the State had legislative competence to enact the Act by virtue of power conferred by Entry 38, List II, Sch.VII of the Constitution of India which permits levy of taxes on animals and boats. It is obvious that, in this context, the Apex Court has made the aforesaid observation in the aforesaid judgment. 18. Before I deal with the rival submissions on the other aspects, since both the Counsel relied on number of judgments, it would be fruitful to notice the law laid down by this Court and the Apex Court on the binding nature of precedent. It is a well settled position in law that a judgment becomes a binding precedent only after considering the fact situation in each case. In the case of Ashwani Kumar Singh Vs. U.P. Public Service Commission and Others reported in (2003) 11 SCC 584, the Apex Court had an occasion to consider the