Case: O. Konavalov Vs. Commander, Coast Guard Region

The vessel named - Kobe Queen I also known as Gloira Kopp was registered in Panama with its crew members belonging to Ukraine was spotted by the Officers of the Customs Department in the Indian territorial waters. It was noticed by the Department that the vessel was loaded with steel products on 22.12.1999. On 24.12.1999, interim order arresting the vessel was passed and a receiver was appointed for valuing the cargo and to take possession of it. On the same day, the master of the ship committed suicide. The crew were kept under arrest till 01.01.2000. Due to the suit filed by the under writers for T.W. Metals Ltd., the vessel was towed to Madras Port. On 14.01.2000, the learned Single Judge of the Madras High Court ordered for sale of ship. The appellant - O. Konavalov, who was the Chief Officer, filed an application No. 633/2000 claiming wages from out of the sale of the ship. The application was filed under Order XIV Rule 8 of the Original Side Rules read with Section 125 of the Merchant Shipping Act, 1958 praying to direct the receiver to pay wages to crew members out of the proceeds of the sale of the vessel. However, the Coast Guard moved the Division Bench of the High Court by way of OSA No. 42/2000 seeking the stay of the sale of the ship in view of the pending investigations. Respondent No.2 moved the Division Bench for withdrawing their claim of arrest and sale of the vessel. The Superintendent of Customs (Prevention), Chennai passed an order under Section 110 of the Customs Act, placing the vessel and cargo under seizure. They were placed in the custody of respondent No.1. The above appeal was heard and allowed by the Division Bench of the High Court. The High Court noted the withdrawal of prayers by respondent No.2 and permitted respondent No.1 Coast guard to deal with the crew, vessel and the cargo. The Commissioner of Customs issued a show cause notice to the Chief Officer of the ship calling upon him to explain why the cargo cannot be confiscated and penalty should not be imposed on the persons under Section 112(a) of the Customs Act, 1962. The counsel for the crew sent a reply mentioning the non-involvement of the crew in dealing with any narcotics/drugs and prayed that the crew be paid their wages and the cargo be dealt with according to law. The appellant moved three fresh applications, which are, Application Nos. 590/2000, 2449/2000 and 2450/2000. Application No. 2450/2000 was filed to pay the wages from the sale proceeds of the cargo or alternatively a direction for sale of the ship and pay the wages as a first charge. Respondent No.1 filed a counter affidavit contesting the applications. The respondents contested the applications stating that the crew of the vessel has not filed any independent suit and an application for the same is not maintainable and since the vessel has violated the sovereignty of the Indian territorial waters and the provisions of the Customs Act, the vessel is liable to be confiscated and there is no question of making any first charge on the vessel. The learned Single Judge of the High Court passed an order in the above applications directing the Coast Guard Authorities and the Customs Authorities to pay the wages lawfully due to the crew members on board of the ship and that the crew should be deported to their country and that the expenses should also be made by the Government Agencies out of the funds retained by them after selling the cargo. In other respects, the High Court dismissed the applications. It was further held that it is the duty of the Government Agencies to consider the legal dues payable to the crew men who are already suffering and they should not be made to suffer again by denying their legitimate wages. The Court has further observed that since the Custom Authorities have already sold the cargo for a price of Rs.16 Crores and the money is available with them, it is the paramount duty of the Government Agencies to meet the lawful claim of the crew men belonging to a different country. Aggrieved by the above order, respondent Nos. 1 and 2 filed two appeals, namely, O.S.A. Nos. 309 and 350 of 2000 before the Division Bench of the High Court. The Commissioner of Customs, Madras passed an order confiscating the vessel absolutely under Section 115(2) of the Customs Act,the Division Bench, the respondents contended the following:-(a) The Merchant Shipping Act, 1958 is not applicable to the foreign sea men.(b) The crew members had to file an independent Suit and an application in the pending matter is not maintainable.(c) Since the Government has confiscated the ship the crew men have no lien on the ship.(d) The Petitioner herein who has been served with a copy of the Order of confiscation has not challenged the same and it cannot be set aside in the proceedings before the High Court unless it is challenged separately before the Appellate TribunalThe Division Bench allowed both the appeals and held as22: We hold that the Chief of the Ship and crew can invoke the provisions of the Merchant Shipping Act as they are the sea men in a ship under the Act, or in other words, the words "under this Act" would refer and qualify the words "the ship" and not "Employed or engaged as a member of the crew". We are in entire agreement with the Ld. Single Judge that the provisions of the Act enables a sea man to resort to such a process and such process need not necessarily be an independent Civil Suit or any other independent or separate proceeding and in appropriate cases, it could be a step in aid in proceedings already pending at the instance of anotherto a judgment in The Bold Buccleugh (1852) 7 MOD PC 267 cited in Maritime Law by Christopher Hill, the High Court held that as per the legal position in England it appears that Maritime lien can be defeated where the res is transferred to a foreign Government who can plead sovereign immunity. The High Court further held that there is no transfer by the owner of the ship to a foreign Government. It held that since it is a case where the owner of a ship is deprived of the ship completely by way of penalty and the ship has vested by virtue of confiscation order, the State has become the absolute owner. The High Court compared this with the category where a Government claims sovereign immunity and held that the Maritime lien for wages on the ship extinguishes on the ship being confiscated by the Government. The High Court, however, made it clear that notwithstanding the decision, the Chief of the ship and the crew can question the validity of the order of confiscation separately, since it has only considered the effect of the order as to whether the vesting is subject to the crews Maritime lien for their wages. Aggrieved by the order of the Division Bench, the appellant preferred the above two appeals.

Court's reasoning:
In our opinion, the appellant and other crewmembers are entitled to a fair and just treatment and the confiscation of the ship shall not be treated as a prized catch of an enemy Ship deserving condemnation without exception. The case on hand does not present features of clear and demonstrated complicity of the crew. The comity of nations is a reciprocal courtesy which one member of the family of nations owes to the others. In our opinion, the crewmembers are not responsible for the confiscation and sale of the ship and the cargo. It is settled law that action of the State has to be based on reasonableness and it cannot deprive the basic human rights afforded under the Constitution of India more so under Articleour view, the impugned judgment is contrary to the principles of law laid down by this Court in M.V.Al Quamars and M.V. Elizabeths Cases (supra). In these cases, this Court has held that Maritime lien is a right which continues even if the ship is taken legally from an owner by requisition. The argument advanced by learned counsel for the first respondent that the Maritime lien is extinguished by confiscation has no force and is without any merit. The Courts have recognized and upheld the welfare of the citizens and have always recognized the rights of those who are in the lowest strata of the society especially when it comes to workers and their wages. The seamen have suffered a lot without wages from May, 1999 till the time they were deported by the Consulate. They have suffered a lot of mental and physical agony in spite of that they have not been given their wages till date due to a narrow approach. State should always be fair and reasonable in settling the lawful claims. It is seen from the counter affidavit filed by the Customs Department that the ship was sold for Rs.2.36 Crores through tender sale and the Cargo was sold off by customs through auction and a sum of Rs.18.75 Crores was realised. The seamen can claim their wages only from and out of the sale proceeds of theCourt in various judgments beginning from R.C.Coopers case and Maneka Gandhis case etc. have laid down that deprivation of rights is subject to judicial review. The State action is restrained by principles of reasonableness, justice and fair play. The principles enshrined in Article 21 are equally applicable to a foreigner as it is to a citizen. The confiscation by the Government of the vessel cannot extinguish the pre-existing rights of the crewmen. India has become a signatory to various International Conventions honouring the social, political, civil, economic rights of human beings. The Directive Principles of State Policy has also become fundamental right and justifiable. The Merchant Shipping Act, 1958 has laid down exhaustive provisions for seamens wages. The Act itself recognizes that recovery of wages shall not be subject to attachment. Section 445 of the Act provides that payment of wages of Seamen can be made by sale of ship. In the Companies Act, under Section 529(a) an overriding effect has been given and it has been provided that in winding up proceedings the workers dues have priority over other claims. The Madras High Court has failed to appreciate that India has travelled very far from 1950 and that the Courts have given way to a dynamic constructive approach in the aspect of social justice while referring to International Conventions etc.