1 nms3030-11.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALITY AND VICE ADMIRALITY JURISDICTION NOTICE OF MOTION NO.3030 OF 2011 IN ADMIRALTY SUIT (L) NO.2688 OF 2011 Sinoriches Enterprises Co Ltd .. Plaintiff versus m.v. Xin Xian An & Ors .. Defendants Mr.Prashant G. Pratap a/w Mr.H.G.Pratap for the plaintiff. Mr.Sunip Sen i/by Bose & Mitra for the applicants/defendant No.1 to 3. CORAM : S.C.DHARMADHIKARI, J. 19th October 2011. P.C.: . This is a notice of motion by the defendant Nos.1 and 2 seeking dismissal of the suit against defendant No.2. 2} The affidavit in support of this notice of motion, which is essentially seeking dismissal of the suit on the ground that the Court in its admirality and vice admirality jurisdiction, cannot take cognizance of the 2 nms3030-11.doc plaintiff’s claim, proceeds on the basis that the 2nd defendant is the owner of defendant No.1-Vessel and has chartered the vessel to a company called Yang Pu Zhe Hai Shipping (Hong Kong) Co Ltd, Hong Kong, which is a separate legal entity although it is an Associate company. The said Yang Pu Zhe Hai Shipping (Hong Kong) Company has chartered the vessel to Hong Kong Chain Glory Shipping Ltd, Chine, viz defendant No.3 and in turn defendant No.3 appears to have chartered the vessel to the plaintiff. 3} It is stated that the plaint wrongly portrays that defendant No.2 directly chartered the vessel to defendant No.3. In fact, the charter produced by the plaintiff does show that they were aware that the vessel was chartered by the said Yang Pu Zhe Hai Shipping (Hong Kong) Co Ltd, Hong Kong to defendant No.3, but they chose not to make it a party defendant in the suit. The plaintiffs have admitted the charter party between Yang Pu Zhe Hai Shipping (Hong Kong) Co Ltd and defendant No.2 and they have also admitted that they are aware of the Charter Party Agreement between the Yang Pu Zhe Hai Shipping (Hong Kong) Co Ltd and defendant No.3 and have annexed to the plaint the said charter party. It is clear that the plaintiffs are aware that both charter 3 nms3030-11.doc parties contain back to back terms and they do not even allege that the withdrawal of the charterparty by the Hong Kong based company was in any manner wrongful or in breach of its charter with defendant No.3. The plaint proceeds completely on erroneous basis that defendant No.2 withdrew the vessel from defendant No.3. The defendant No.2 had no contract with defendant No.3 and defendant No.2 has not withdrawn the vessel whether from the charter to Yang Pu Zhe Hai Shipping (Hong Kong) Co or anybody else. The charter party between defendant No.2 and the Hong Kong based company commenced on 23rd September 2009 and is still continuing. Neither the defendant No.2 nor the Hong Kong based company had any contract of carriage or charterparty with the plaintiff and the question of breaching the same does not arise. It is in such circumstances that it is alleged that the plaintiff entered into a charter party with defendant No.3 with full knowledge that charter between defendant No.3 and Hong Kong based company has withdrawal clause. Pertinently, it is not alleged that the purported withdrawal was in breach of contract between Hong Kong based company and defendant No.3. Once there is no duty or breach of duty by defendant No.2 and in any event such breach of duty would not be a maritime claim, that defendant No.2 has sought dismissal of the suit. 4 nms3030-11.doc Thus, the basis of the defendant No.1 and 2's case appears to be that on a plain reading of the plaint the plaintiff has an alleged claim against defendant No.3 for its purported breach of charterparty on account of the alleged wrongful withdrawal of defendant No.1-Vessel but there is no privity of contract between defendant No.2 and the plaintiff. In such circumstances and relying on paras 15 and 16 of the plaint, it is contended that the suit be dismissed. 4} Mr.Sen appearing in support of this notice of motion submitted that this notice of motion invokes the Court’s power under Order VII, Rule 11 (d) of the Code of Civil Procedure, 1908 and seeks dismissal of the suit on the foundation that the statement contained in the plaint demonstrates that in the Court’s admirality and vice admirality jurisdiction, the claim of the plaintiff cannot be entertained. He submits that in the affidavit in reply the plaintiffs have alleged that they have specifically pleaded that the claim against defendant No.2 is in tort for breach of duty and not for breach of contract. It is stated that the plaintiff had pleaded that withdrawal of the vessel by defendant No.2 from charter to defendant No.3 was wrongful and in breach of the contract. 5 nms3030-11.doc 5} Inviting my attention to International Convention Relating to the Arrest of Sea-Going Ships (Brussels, May 10, 1952) and particularly Article 1 thereof, it is submitted by Mr.Sen that Maritime Claim means a claim arising out of one or more of the claims set out in the said Article. As far as the subject suit is concerned, clauses (d) and (e) of the same are relevant. Therefore, Maritime Claim means a claim arising out of an agreement relating to the use or hire of any ship whether by charterparty or otherwise and agreement relating to the carriage of goods in any ship whether by charterparty or otherwise. Both these clauses of Article 1 would take within their import claims in relation to breach of contract. The claims arising out of and the foundation of which is tort, are out of the purview of admirality and vice admirality jurisdiction of this Court. The plaintiffs may have a claim against the defendant No.3 in tort but that would not be maintainable in the Admiralty and Vice Admiralty jurisdiction. He submitted that defendant No.3 and the plaintiff had some arrangement. It is pleaded in the plaint that there is no privity as between the plaintiff and defendant No.2. There is a distinct obligation under which the defendant No.2 permitted defendant No.3 to charter the vessel. However, there is no allegation that there was any contractual breach which resulted in the defendant No.3 withdrawing the 6 nms3030-11.doc vessel which was chartered to the plaintiff. For all these reasons, it is submitted that as against defendant No.2 the suit be dismissed at the threshold. 6} On the other hand, Mr.Pratap, learned counsel appearing on behalf of the plaintiff would submit that the plaint allegations must be read as whole. Even the convention which is relied upon should be seen in its entirety and it is apparent from a reading of the plaint allegations that the claim would squarely fall within the admirality jurisdiction of this Court. At this stage, it is not permissible to consider the defence or pleas on merits. This Court will have to proceed on the basis that the allegations in the plaint are true and correct. Even if the plaintiffs have proceeded to argue the Motion on the basis of denials, yet, this notice of motion must be seen as seeking dismissal of the suit on the statements made in the plaint. So seen and considered, this is clear case of a charter party between the plaintiff and defendant No.3. That charter party was on the basis that defendant No.3 had necessary authority from the defendant No.2 who claims to be the owner of the vessel to charter the vessel in favour of the plaintiff. Once, the act of defendant No.2 caused the defendant No.3 to breach the terms and conditions of 7 nms3030-11.doc the suit charterparty and that is the foundation of the plaintiffs claim and the whole case is that it is the charter in relation to the 1st defendant- Vessel and clauses (d) and (e) of Article 1 of the Brussels Convention being clearly attracted, then, the suit cannot be dismissed. This is not a stage where the Court can bifurcate or segregate the allegations in the plaint. It is clear from the charterparty dated 25th September 2009, Annexure A to the plaint, that the Hong Kong based company and the defendant No.2 are one and the same and the two names are used interchangeably. There is a charterparty between defendant No.2 as owner of defendant No.1-Vessel and defendant No.3. It is very clear from statements in the plaint that whether there was any charter between the defendant No.2 and its associate company, is not relevant at this stage and the suit cannot be dismissed because of the defence taken by the defendant Nos.1 and 2. Whether the Hong Kong based company is separate or distinct legal entity and whether the suit can proceed in the absence of Hong Kong based company or that it is a necessary party, are matters which cannot be decided at this stage. The plaintiff would take the consequences if at all it is found that any necessary party has not been joined. However, by merely relying upon some statements in the affidavit in reply, it cannot be contended that the 8 nms3030-11.doc suit is not maintainable in the admiralty and vice- admiralty jurisdiction of this Court. The plaint allegations must be seen and considered together and not in isolation. For all these reasons and since the claim falls within the purview of the Brussels Convention, that the motion be dismissed. 7} Reliance is placed by Mr.Pratap on a decision of the House of Lords in the case of Samick Lines Co Ltd Vs. Owners of The Ship “Antonis P. Lemos” decided on 14th January 1985 reported in [1985] Vol. 1 Lloyd’s Law Reports 283. 8} With the assistance of the learned counsel appearing for the parties, I have perused the plaint and the notice of motion so also the affidavits placed on record. I have perused the Brussels Convention as also the decision that has been brought to my notice. It is not necessary to refer to the provisions of the colonial courts of Admiralty Act or any other decisions interpreting them inasmuch as this motion can be decided only on the basis of the plaint allegations. The plaintiffs state in the suit that their claim arises out of an agreement relating to use or hire of a ship and is inter alia for breach of duty and/or breach of contract by 9 nms3030-11.doc defendant No.2 and/or defendant No.3 in the manner more particularly set out in the plaint. After referring to the charterparty dated 25th September 2009 in para 3 of the plaint and its salient and essential features in para 4 thereof, it has been stated that various clauses referred to by the plaintiff would indicate that the charter party postulates delivery of vessel which came to be delivered to the plaintiff on 30th December 2009. The charterparty would have ended on 13th October 2011, viz 21 months and 15 days have been the maximum permissible limits under the charter party dated 21st December 2009. This was consistent with the maximum period available to the defendant No.3 in its charterparty dated 25th September 2009 with defendant No.2 which would have ended by 15th November 2011. Thus, there is reference to both charter parties. It has been thus alleged that upon delivery of the vessel, the Master and defendant Nos.2 and 3 permitted the plaintiff to use the vessel under the plaintiff’s time charter with the defendant No.3 and the Master acted in accordance with the voyage instructions provided by the plaintiff from time to time. The payments in relation to the charter hire are then referred to in para 7 of the plaint and thereafter it has been contended that when the vessel reached the port of Ningbo, the plaintiff instructed the Master by e-mail dated 30th May 2011 to 10 nms3030-11.doc proceed to port of Shanghai for loading without any delay and from there to proceed to further destination. However, instead of the vessel sailing to the port of Shanghai as per the instructions of the plaintiffs, the defendant No.2 informed the agents at Ningbo by e-mail dated 1st June 2011 that they had withdrawn the vessel from the charter to defendant No.3. The vessel was eventually withdrawn and as a direct consequence of this withdrawal, the vessel was also to be withdrawn from plaintiffs charterparty with defendant No.3. Ex facie, the withdrawal from defendant No.2 was wrongful and illegal as charterparty was to expire on 13th November 2011. It is alleged that defendant No.2 had full knowledge that the vessel had been subchartered by defendant No.3 to the plaintiff on back to back terms and that withdrawal of the defendant No.2 would result in the plaintiff being deprived of the use and benefit of the said vessel and would suffer losses as a result thereof. 9} This is how the plaintiff allege breach of the charterparty as also a breach of duty. Paras 10, 11 of the plaint set out in detail the breach. Para 12 refers to the consequences of the breach of duty and/or breach of contract by defendant Nos.2 and 3 and they give rise to certain claims according to the plaintiffs, which they have elaborated. They 11 nms3030-11.doc have also elaborated in paras 13 and 14 as to how the adjustment is made. The consequence of the plaintiff not being in a position to honour their commitments, are set out in paras 15, 16 and 17 of the plaint. It is also stated thereafter that in addition to the claims for excess charter hire paid and for value of the bunkers, the plaintiff is also entitled to damages suffered as a result of premature withdrawal of the defendant No.1-Vessel before end of the charter. Thus, the claim has been crystalised and it is stated that this is a Maritime Claim arising out of an agreement relating to use and hire of defendant No.1-Vessel. The Admiralty Courts Act has been referred to and also the 1952 Brussels Convention. Para 22 of the plaint reads thus: “22 The plaintiff states that its claim is a maritime claim arising out of an agreement relating to the use and/or hire of the 1st defendant vessel. The plaintiff is entitled to proceed against the defendant No.1 vessel in rem in respect of its maritime claim under the provisions of the Admiralty Courts Act, 1861 and the 1952 Brussels Arrest Convention. The plaintiff is also entitled to proceed in personam against defendant No.2 being the owner of the 1st defendant vessel in tort for breach of duty and against defendant No.3 for breach of contract as more particularly stated above.” 12 nms3030-11.doc 10} In my view, upon a reading of the allegations in the plaint in their entirety together with the reliefs claimed it is not possible to agree with Mr.Sen that the claim is not covered or does not fall within the purview of admiralty and vice admiralty jurisdiction of this Court even against the defendant No.2. The Brussels Convention makes a reference and defines the claim, namely, maritime claim and in present case it is arising out of an agreement relating to the use of a ship whether under the charter party or otherwise. That is admittedly referred to and both charterparties have been annexed to the plaint and the compilation of documents. It is clear that the agreement related to use or hire of the ship and the carriage of goods in ship whether by charterparty or otherwise. The claim is, therefore, clearly covered by Article 1 and there is much substance in submissions of Mr.Pratap that the allegations in the plaint should not be seen in isolation. It has been categorically averred by the plaintiff that there is a breach of contract as also breach of duty. The claim has been made against both defendant Nos.2 and 3. It is not as if the plaintiffs have not referred to the charterparty as between the defendant Nos.2 and 3 and another company, which is a Hong Kong based company. However, the allegation is that the said 13 nms3030-11.doc company and defendant No.2 are associate companies. In such circumstances, reliance placed on the decision of the House of Lords is also appropriate. It is not possible to consider and to go into the rival contentions arising out of the reply to this motion and the statements made in the affidavit in support thereof. If cognizance is to be taken of the statements made in the affidavit in support of the motion, that would entail holding of a trial. That is not permissible at this stage. On the plaint allegations it is clear that defendant No.2 is also aware and the claim proceeds on the basis that the Hong Kong based company may be a separate legal entity according to defendant No.2, but the plaintiff states that it is its associate company. Further, the charterparty provisions regarding withdrawal of the vessel and its impact on the claim of the plaintiff as against defendant Nos.2 and 3 is something which can be conclusively decided only after parties produce the necessary evidence. It is not possible to conclude at this stage itself that the claim is only in tort and, therefore, out of purview of the admiralty jurisdiction. It is clear that the plaint proceeds on the basis that this is a maritime claim and the same arises out of a breach of the charterparty. Once the reciprocal obligation between defendant Nos.2 and 3 and the permission given by defendant Nos.2 to 3 to sub-let the vessel has been 14 nms3030-11.doc extensively referred to by the plaintiff, then, the Motion cannot succeed. Since defendant No.2 alleges lack of privity, that is how it seeks to dismiss the suit at this stage all the more the claim of the plaintiff requires further investigation and probe. 11} As a result of the above discussion, the notice of motion fails and it is dismissed but without any order as to costs. (S.C.DHARMADHIKARI, J)