IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEAL No 11 of 1999 in MISC.CIVIL APPLICATIONNo 16 of 1999 with CIVIL APPLICATION No 97 of 1999 For Approval and Signature: HON'BLE MR.JUSTICE KSHITIJ R.VYAS and HON'BLE MR.JUSTICE K.S.JHAVERI ============================================================ 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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- RELIANCE INUSTRIES LTD. Versus OWNERS AND ALL PERSONS INTERESTED IN VESSEL M.T."EMERALD SKY -------------------------------------------------------------- Appearance: 1. O.J.APPEAL No. 11 of 1999 MR UR GANDHI for Appellant No. Mr.Mihir Thakore with Mr.Buch & Mr.Jay Amin for SINGHI & BUCH ASSO. for Respondent No. 1 with Mr.Rahul Narichania & Mr.Samir Kazi,for Mulla & Mulla & Carigie Blunt & Caroe. MS PAURAMI B SHETH for Respondent No. 3 2. CIVIL APPLICATION No. 97 of 1999 MR UR GANDHI for Appellant No. .......... for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE KSHITIJ R.VYAS and HON'BLE MR.JUSTICE K.S.JHAVERI Date of decision: 07/05/2004 CAV JUDGEMENT (Per : HON'BLE MR.JUSTICE KSHITIJ R.VYAS) 1. The present appeal under Clause 15 of the Letters Patent preferred by the appellant- original plaintiff no.1 is directed against the order dated 12.3.1999 passed by the learned Single Judge in M.C.A. No. 16 of 1999 filed by the defendants in Admiralty Suit No. 5 of 1998. The learned Judge, in para 12, passed the following order: "12. In view of the aforesaid discussion, it is ordered as under: (1) The plaintiffs are given time of one month from today to get their insurers to survey or resurvey the old SBM with or without dismantling the concerned parts of the SBM. In any case, after one month from today, the defendants, their surveyors and repair Engineers shall be permitted by the plaintiffs to have the detailed inspection of the old SBM consistent with the claim of the plaintiffs or their insurers that the defendants cannot, in the process destroy or cause any further damage to the old SBM. Needless to say that the defendants alone shall bear the expenses for any facilities which may be required to be provided by the plaintiffs to the defendants, their surveyors or repair Engineers for such inspection. It also goes without saying that after the defendants/ their surveyors/ service Engineers dismantle any part of the old SBM consistent with the claim of the plaintiffs or their insurers as stated above, it would be for the defendants to put right the old SBM in the condition prior to dismantling. (2) Prayers (B) and (C) made in this application are not granted." The parties to the present appeal shall be referred by their original status, namely the plaintiffs and the defendants. 2. The plaintiffs, in the suit preferred by them while narrating the facts have stated that they installed a new Single Buoy Mooring (in short, 'SBM') at Hajira. The vessel "EMERALD SKY" met with an accident and caused damage to the SBM. The plaintiffs accordingly claimed following reliefs in the Admiralty Suit filed by them. "(a): to make an order of condemnation of the defendant vessel in favour of the plaintiffs or in the alternative, in the sum of US $ 19.76 Million equivalent to Rs. 83.98 crores (as per particulars in Ex.H) along with interest thereon for purchasing installing the new SBM. (b): to make an order of condemnation of the defendant vessel in favour of the 1st plaintiff in the sum of Rs. 160 crores (being the damages by way of loss of revenue and other like losses as per particulars in Ex.G) along with interest thereon. (c): to make an order of condemnation of the defendant vessel in favour of the 2nd plaintiff in the sum of Rs. 133.00 lacs (being the damages by way of loss of revenue and other like losses) along with interest." 3. In the pending suit, the defendant, as stated above, filed an application being Misc. Civil Application No. 16 of 1999 inter alia contending that after filing of the suit, the defendants called upon the plaintiffs to give inspection of old SBM and also to give access to the Surveyor and Repair Engineers of the defendants to witness and monitor the installation process of the new SBM. It is further stated that the representatives of the defendants were previously allowed to inspect the damaged SBM and upon such inspection, they were to carry out the casual estimate of general condition of the SBM, but the degree of damage suffered could not be ascertained properly as certain dismantling process had to be employed. According to the defendants, such process is not destructive and it is necessary for the Surveyors and Repair Engineers to have access to all the SBM compartments. During the earlier inspection, part of the instruments were obstructed which could not be removed without crane which was not available and without further inspection, it is not possible to ascertain whether the damaged SBM is a constructive total loss as claimed by the plaintiffs. The defendants, therefore, requested the plaintiffs to provide access for their Surveyors M/s London Offshore Consultants (LOC) to attend on board the crane barge throughout her work at Hazira in order to monitor the work and ensure that the costs were minimised on the ground that the plaintiffs have claimed cost of the new SBM at US $ 14.71 million and have also claimed installation costs of US $ 5.05 million. Since the requests of the defendants were not accepted, the application was filed by the defendants for the following reliefs. "(a): to direct the plaintiffs to give the defendants and their Surveyors and Repair Engineers free and unrestricted access to inspect and survey the damaged SBM immediately; (b): to direct the plaintiffs to allow the defendants and their Surveyors and Repair Engineers free and unrestricted access immediately to witness, supervise and monitor the installation process in the new SBM; (c): to direct the plaintiffs to furnish to the defendants the following documents immediately: (i): Stability Book; (ii): Principal Drawings of the Buoy." 4. The plaintiffs resisted the application by filing affidavit of the Additional General Manager (Legal). As far as the first prayer in the application was concerned, the plaintiffs inter alia stated that the old SBM was insured by their Insurance Company and the Insurance Company is yet to settle the damages suffered by the plaintiffs on account of damage caused to the SBM and until the Insurance Company settles the claim dismantling old SBM would expose the plaintiffs to difficulties in settlement and recovery of their claims with/ from the Insurance Company as dismantling process may cause further damage to the SBM. 5. With respect to the second prayer, it was submitted that the defendants were trying to collect evidence through the present application which was not permissible; only the old SBM is the subject matter of the suit and the damages claimed by the plaintiffs in the form of costs of process of installation of the new SBM cannot be said to be a property which is subject matter of the suit as the suit is for damages and the plaintiffs would prove the amounts which they are entitled to claim from the defendants. 6. With respect to the prayer to direct the plaintiffs to give them inspection of the Stability Book, it was stated that the request of the defendants for access to the Stability Book was far from clear. The Stability Book is used in connection with ships and is a set of calculations made by the Classification Society and certified by American Bureau of Shipping. At the very inception, the SBM is certified by the American Bureau of Shipping (Classification Society) that the same is functional and fulfils the requirements stipulated by the American Bureau of Shipping. Thereafter no Stability Book is maintained in respect of SBM. No such Stability Book is maintained by the plaintiffs. 7. "Principal Drawings" of the Buoys are "Proprietary Information" of IMODCO which had designed and supplied the equipment for the SBM in question. These drawings cannot be disclosed except after permission from the Classification Society and the American Bureau of Shipping which in turn may request IMODCO to provide such access and it is entirely upto IMODCO whether to disclose these drawings or otherwise. It was, therefore, submitted that the defendants are not entitled to the documents mentioned in the application. 8. The learned Single Judge, after hearing the learned Counsel appearing for the parties, as stated above, passed the impugned order. 9. Learned Senior Counsel Mr. J.J.Bhatt appearing for the plaintiffs fairly stated that the plaintiffs will have no objection as far as the first part of the order is concerned. He has further stated that the plaintiffs will have no objection if the inspection of the old SBM by the Surveyors/ Repair Engineers, Insurers for the purpose of survey or resurvey without dismantling the concerned parts of the SBM is carried out. He,however, submitted that for the purpose of carrying out inspection, the defendants cannot in the process, destroy or cause any further damage to the old SBM. Mr. Bhatt, however, strongly argued that the last part of the directions issued by the learned Single Judge, namely that after the defendants/ their Surveyors/ Service Engineers dismantle any part of the old SBM consistent with the claim of the plaintiffs or their insurer, it would be for the defendants to put right the old SBM in the condition prior to dismantling. According to the learned Counsel, the directions issued in the first and the second part of the order are not consistent with each other inasmuch as having accepted that the defendants cannot in the process of inspection destroy or cause any further damage to the SBM, the learned Judge ought to have refused inspection and could not have directed the defendants to put right the old SBM in the condition prior to dismantling. According to the learned Counsel, once the old SBM is dismantled, it is not possible to put right the old SBM in the condition prior to dismantling. The learned Counsel further submitted that allowing the dismantling of old SBM at this stage without Insurance Company settling their claim will cause prejudice to the plaintiffs in settling their claim for damages with the Insurance Company. 10. Learned Senior Counsel Mr. Mihir Thakore appearing for the defendant no.1, while supporting the reasonings of the learned Judge and by placing reliance on the three affidavits filed by Mr. Peter Holloway, the Managing Director of London Offshore Consultancy Ltd., submitted that for the purpose of ascertaining damage to the SBM, invasive survey/ pressure test of SBM is absolutely necessary. Mr. Thakore also raised preliminary contention regarding the maintainability of the present appeal by contending that as the present appeal is directed against the interim order, under Order XLIII Rule 1 of Civil Procedure Code, when the appeal is not competent against the interim order, the Letters Patent Appeal is certainly not competent against the order of inspection under Order XLIII Rule 1 of C.P.C. He submitted that the rights of the parties are not decided finally and this being an interlocutory order, this appeal under clause 15 of the Letters Patent is not maintainable. 11. It may be stated that during the pendency of appeal, the Division Bench of this Court (Coram: R.Balia and A.R.Dave,JJ.) on 10.5.1999, without prejudice to the respective contentions of the parties, directed that the appellant shall permit the respondents to have visual inspection of the disputed damaged SBM and to have its measurements in the position as it is, without having recourse to any alterations in the site whether by way of dismantling or erecting. The Division Bench further directed that at least 12 hours notice shall be served on the plaintiffs by the defendants wanting inspection giving details of the subject and the manner in which survey was to be carried out by the defendants. Access to all places through existing ingress was permitted. It was further observed in the said order that it was pointed out by the appellants that because of the presentloading/ unloading of the hyper sensitive material taking place at site, it may not be possible to operate any photographic instruments. In view of this, it was clarified that if the defendants wanted to have any photographs, they shall give a prior notice of 72 hours to the plaintiffs and in case there was any difficulty in permitting photographs at the site, the same shall be conveyed to the defendants in writing by pointing out the approximate period for which such activities were going to continue in order to facilitate the defendants to renew their request for having any photograph at the site after expiry of that period subject to same condition. 12. Thereafter again the Division Bench consisting of D.M.Dharmadhikari, C.J.(as he then was) and P.B.Majmudar,J., on 21.3.2001 passed the following order: "After hearing the learned Counsel appearing for the parties,in our opinion, an agreed programme may be chalked out involving also the insurance company for inspection of the SBM and for considering the necessity of dismantling and reassembling the same. Learned Counsel for the parties seek time to take instructions in the matter. Put up on 11th April 2001." Pursuant to the said directions, it appears that number of meetings were held to chalk out the procedure for inspection of MPDU under the supervision of IMODCO at Dynamic Machine at Los Angeles. It was also discussed that the detailed inspection of the other parts of SBM should be carried out at appropriate machine shop at Mumbai. The parties also considered the necessity of dismantling and reassembling the SBM. 13. Mr. Peter Holloway, the Managing Director of London Offshore Consultants Ltd., Independent Marine and Engineering Consultants filed three affidavits in the present appeal. He possessed the necessary technical knowledge and expertise to give his opinion on the process and requisites of carrying out an invasive survey and pressure test of the SBM. In the first affidavit, he has inter alia stated that invasive survey/ pressure test must be carried out to fully ascertain the damage to the SBM and the said test be carried out in India. In para 11, he offered comments on the feasibility and convenience of carrying out survey in India as set out thereunder. (a) The immediate and prima facie advantage of carrying out the invasive survey in India is that the considerable transportation costs involved in mobilising the SBM from India to the facilities suggested by RIL, i.e. IMODCO workshop in California, USA or Noel-Imac, Abu Dhabi, would not be incurred The cost involved in transporting the SBM to the IMODCO workshop in California, USA would be in the region of US $ 250000; as opposed to a cost in the region of US$ 40,000 for shipping it to a yard in India, or even less if the survey takes place in or around RIL's Jamnagar complex. (b) Secondly, as described above, the inspection is a simple one and there is no technical reason for the SBM to be sent out of India for the invasive survey. The main purpose of the inspection is to simply ascertain the extent of impact and submersion damage. This should be readily visible on the opening of the MPDU top. The removal of the upper cover will permit the immediate inspection and measurement of the upper bearings and seals. Further dismantling to reach the lower bearings and seals will find them in the same condition as the upper components because they share the same container i.e. the MPDU. (c) The increased costs of sending the SBM out of India for the survey are, therefore, completely disproportionate to the costs of the exercise itself. The SBM was sufficiently damaged due to its submersion that an invasive survey consisting of the opening of the MPDU is likely to indicate that the bearings and the seals alone were damaged nearly beyond economical repair. In addition, the MPDU will have corroded further with a content of seawater for nearly four years due to exposure to diurnal temperature ranges of 15 C- 45 C over the several intervening seasons. The seals and bearings inside the MPDU are also not designed to be exposed to the corrosive effects of salt water. The invasive survey is, therefore, likely to show that following submersion the MPDU was at least damaged to the point of requiring new bearings and seals. For whatever purpose the SBM/MPDU might be used in the future no end user would refurbish the units without replacing the seals and bearings. These are estimate to cost approximately US$ 350000. It is not cost effective to carry out a survey at a cost in excess of US$ 300000 to prove that the unit needs, in addition to measuring, cleaning and NDT (Non-Destructive Testing, usually by dye penetration or ultrasound) testing of other components, repair items costing some 85% of the cost of the survey itself. These items would have been damaged by the submersion itself, not by the impact. (d) The combined cost of the survey and complete bearing and seal refurbishment already reaches US$ 650000, in excess of what the seven year old refurbished MPDU might be considered to be worth on the open market, let alone to the smaller global market of naptha/ paraxylene SBM operators. As such it is a pointless waste of costs to incur the extra costs to transport the SBM or MPDU out of India for invasive testing. (e) I also do not agree with any contention that the MPDU should not be opened up in India for risk of further damage. I consider that in fact, the damage that will direct the course of the future of the MPDU can and should be ascertained in Jamnagar, where I note RIL, according to correspondence received from them dated 23rd August 2001 RIL have found a suitable site to dismantle the buoy within 2 kms. of its current location. (f) I further understand that IMODCO is allegedly resisting the proposal to carry out the requisite tests outside their own facilities in California or those in Dubai/Abu Dhabi on the ground that it would release their proprietary information. I disagree with the contention by IMODCO that the potential for the release of proprietary information requires the unit to be transported to California or Dubai. Whilst it is true that workshop or covered conditions are necessary for carrying out requisite tests, it is unnecessary to have the SBM transported to California or Dubai. The design of this unit is at least seven years old. It is a design which has few applications as far as I am aware anywhere else in the world. The majority of units built now have the turntable bearings integral with the MPDU/ Swivel whereas the Hazira No.3 unit is of simple design and has the unfavoured bogey wheel system which is used on very few SBMs around the world. The SBM is also routinely opened up for inspection by qualified inspectors who are not necessarily employed by IMODCO. (g) SBM units are however built in a number of facilities worldwide by builders with associations with IMODCO/SBM. The OPL 'Single Point Moorings of the World' guide, 5th Edition 1999, used throughout the industry, lists 15 CALM buoy units, of which the Hazira unit is one, operating in Indian waters (annexed and marked Ex. 'PH2). Eight of these units were designed by IMODCO of which three are noted to have been built in India, three in Abu Dhabi, none were built in California. They are not secret facilities, nor are the labourers who build them sworn to secrecy. I do not doubt that the design was once patented, but that would be for protection from copying, not for means of keeping from the very public domain in which they are built any significant scientific or mechanical proprietary detail. In any event, every detail of the patent, which has expired, was freely available to the general public from the US Patent Office. The technology of the seals of an SBM are not cutting edge science. They are ordered from independent manufacturers as and when required for the particular size and specialist cargo types that the subject unit might be transferring. From what I understand RIL/ IMODCO interest in the MPDU is of recent origin whereas the unit has been standing in the opn, with the high probability of being scrapped for nearly four years as understood from RIL's own senior marine superintendent following the non-invasive survey of July 1999 in Jamnagar. IMODCO's interest in the SBM and their insistence on its return to California or Dubai is questionable if over three years previously they declared it as scrap. (h) As the MPDU has been left unattended outside in Jamnagar, RIL must be aware that its condition does not justify its transportation to California or Dubai in order to carry out the invasive survey. RIL and IMODCO's argument that proprietary commercial detail might be released by opening the unit in India is inconveniencing. The majority of the equipment inside the MPDU is made by outside suppliers and IMODCO/SBM merely install the items manufactured to order by organisations such as Timken. The design of this unit is not commercially in demand. The same OPL Publication referred to above indicates that the majority of CALM buoy units are fitted with the internal bearings supporting the turntable. As stated earlier, this unit was designed at least seven years prior to the incident. If the design was such as to be cutting edge technology, the interior of this unit would now be obsolete and its interior of no interest to any commercial interests." In para 16 of the affidavit, he has stated that invasive survey is necessary for owners to fully ascertain the damage to the SBM. India is the most suitable and economically expedient location for the invasive survey of the SBM and there is no valid reason for sending the SBM outside India for the invasive survey. Upon opening the SBM, if the MPDU is found in a refurbishable condition, it can always be sent to yards outside India for repairs (if such repairs cannot be carried out in India). 14. In the second affidavit, the said deponent has tried to explain how to carry out invasive survey/ pressure test. Paras 4 and 5 of the said affidavit are relevant and they are reproduced as under: "4. The survey requested by Owners is a simple exercise. As explained at paragraph 6 of my First Affidavit, the survey consists of a pressure test and the invasive survey. After completion of the pressure test, the invasive survey necessasrily requires the opening up of the SBM's Multi Product Distribution Unit (MPDU). The MPDU is a simple device consisting of a steel liquid tight chamber with bearings to allow it to rotate or swivel and seals that allow it to rotate without leakage. Any competent mechanic could work on such a simple unit and open it up for the purposes of the invasive survey. 5. The key steps in the invasive survey are as follows: a: Survey unit and stands to ensure that it is stable; b: Create safe access to the top of the unit by means of scaffolding; c: Clean the inside of the unit and ensure all compartments are gas free; d: Cut away the bogey arms, pipes and damaged steel that prevent clear access to the MPDU top. e: Release the ring of bolts that hold down the top cover. Remove top cover. Survey top bearing and steel for corrosion. f: Remove top bearings and seals, inspect inner chambers. g: Remove lower bearings