Gujarat High Court
Transworld Ship Management Llc vs Roro Shaker 1 Imo No 7929102 on 15 October, 2018
Author: R.M.Chhaya
Bench: R.M.Chhaya
C/AS/22/2018 IA ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (OJ) NO. 1 OF 2018
IN
R/ADMIRALTY SUIT NO. 22 OF 2018
WITH
CIVIL APPLICATION (OJ) NO. 1 OF 2018
IN
R/ADMIRALTY SUIT NO. 24 OF 2018
===================================================
MARLIN MARITIME TRADING LTD.
Versus INTEROCEAN SHIP REPAIRS LLC =================================================== Appearance in OJCA 1/18 in AS 22/18:
MR PRATHAMESH KAMAT with MR SHIVKUMAR IYER with MS ADITI MAHESHWARI with MR TEJAS P SATTA for the applicant MR VISHAL SHETH with MR RISHI MURARKA with MS PAURAMI B SHETH for the opponent Appearance in OJCA 1/18 in AS 24/18:
MR SAURABH N SOPARKAR, SENIOR ADVOCATE assisted by MR PRATHAMESH KAMAT with MR SHIVKUMAR IYER with MS ADITI MAHESHWARI with MR TEJAS P SATTA for the applicant MR VISHAL SHETH with MR RISHI MURARKA with MS PAURAMI B SHETH for the opponent =================================================== CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 15/10/2018 COMMON CAV IA ORDER
1. In both these applications, identical contentions more or less the same and identical contentions are raised and hence were heard together and are disposed of by this common order. Admiralty Suit no.22 of Page 1 of 111 C/AS/22/2018 IA ORDER 2018 was filed on 18.6.2018, wherein the plaintiff has prayed for the following reliefs: "a) for a decree in its favour and against the defendant vessel in the sum of AED 598,487 along with further interest @ 12% p.a. on the principal sum of AED 535,000 from the date of filing of this suit till payment/ realization and for costs of INR 500,000, as per the particulars of the plaintiff's claim.
b) That the defendant vessel RORO SHAKER 1 [IMO No. 7929102], along with her hull, gear engines, tackle, bunkers, machinery, plant, furniture, fixtures, equipment boats, apparel and other paraphernalia at present lying in port and harbor Bhavnagar/ Alang and/or within the territorial waters over which this Hon'ble Court exercises jurisdiction be ordered to be arrested under a warrant of arrest issued by this Hon'ble Court;
c) That the defendant vessel, RORO SHAKER 1 [IMO No.7929102] along with her hull, gear engines, tackle, bunkers, machinery plant, furniture, fixtures, equipment boats, apparel and other paraphernalia at present lying in port and harbour of Bhavnagar/Aland and/or within the territorial waters over which this Hon'ble Court exercises jurisdiction be detained, condemned and sold under orders and directions of this Honourable Court and the sale proceeds thereof be applied towards the satisfaction of the plaintiff's Page 2 of 111 C/AS/22/2018 IA ORDER claim in the suit;
d) That pending the hearing and final disposal of the suit, the defendant vessel, RORO SHAKER 1 [IMO No.7929102], along with her hull, gear engines, tackle, bunkers, machinery, plant, furniture, fixtures, equipment boats, apparel and other paraphernalia be arrested and detained under the orders of this Hon'ble Court and/or be restrained by an order of injunction of this Hon'ble Court from sailing out of the port and harbour of Alang and/or moving out of the territorial waters of India;
e) That pending the hearing and final disposal of the suit, the defendant vessel, RORO SHAKER 1 [IMO No. 7929102], be appraised by any suitable marine surveyors according to true value thereof and upon such value certified in writing by the said surveyors to sell the said vessel by public auction free and clear from all existing claims, liens, and/or any encumbrances for the highest price that can be obtained for the said vessel;
f) For interim and adinterim reliefs in terms of prayer clause (b)
(d) & (e) be granted;"
2. This Court passed an order of arrest dated 18.6.2018, whereby it is provided in Paragraph 4 as under: "4. The Port Officer and the Customs Authorities at Bhavnagar/Alang are Page 3 of 111 C/AS/22/2018 IA ORDER directed to arrest the Defendant Vessel RORO SHAKER 1 at present lying at Bhavnagar/Alang within the Indian territorial waters and to keep the vessel under arrest until further orders of this Court. It is further ordered that the Port Officer and the Customs Officer at Bhavnagar/Alang shall render all assistance to the plaintiff or its representative in effecting the warrant of arrest for the Defendant Vessel."
3. Whereas Admiralty Suit no.24 of 2018 was filed on 21.6.2018, wherein it is prayed as under: "a. for a decree in its favour and against the defendant vessel in the sums of AED 304,000 and USD 204,508.44 along with further interest @ 6% p.a. on the principal sums of AED 300,000 and USD 204,508.44 from the date of filing of this suit till payment/realization and for costs of INR 500,000, as per the particulars of the claim.
b. That the defendant vessel RORO SHAKER 1 [IMO No.7929102], along with her hull, gear engines, tackle, bunkers, machinery, plant, furniture, fixtures, equipment boats, apparel and other paraphernalia at present lying in port and harbor Bhavnagar/ Alang and/or within the territorial waters over which this Hon'ble Court exercises jurisdiction be ordered to be arrested under a warrant of arrest issued by this Hon'ble Court;
c. That the defendant vessel, RORO SHAKER 1 [IMO No.7929102] along with her hull, gear engines, tackle, Page 4 of 111 C/AS/22/2018 IA ORDER bunkers, machinery plant, furniture, fixtures, equipment boats, apparel and other paraphernalia at present lying in port and harbour of Bhavnagar/Aland and/or within the territorial waters over which this Hon'ble Court exercises jurisdiction be detained, condemned and sold under orders and directions of this Honourable Court and the sale proceeds thereof be applied towards the satisfaction of the plaintiff's claim in the suit;
d. That pending the hearing and final disposal of the suit, the defendant vessel, RORO SHAKER 1 [IMO No.7929102], along with her hull, gear engines, tackle, bunkers, machinery, plant, furniture, fixtures, equipment boats, apparel and other paraphernalia be arrested and detained under the orders of this Hon'ble Court and/or be restrained by an order of injunction of this Hon'ble Court from sailing out of the port and harbour of Alang and/or moving out of the territorial waters of India;
e. That pending the hearing and final disposal of the suit, the defendant vessel, RORO SHAKER 1 [IMO No. 7929102], be appraised by any suitable marine surveyors according to true value thereof and upon such value certified in writing by the said surveyors to sell the said vessel by public auction free and clear from all existing claims, liens, and/or any encumbrances for the highest price that can be obtained for the said vessel;
Page 5 of 111 C/AS/22/2018 IA ORDER
f. For interim and adinterim
reliefs in terms of prayer clause (b)
(d) & (e) be granted;"
4. This Court passed an order of arrest dated 21.6.2018, whereby it is provided in Paragraph 5 as under: "5. The Port Officer and the Customs Authorities at Bhavnagar/Alang are directed to arrest the Defendant Vessel RORO SHAKER 1 at present lying at Bhavnagar/Alang within the Indian territorial waters and to keep the vessel under arrest until further orders of this Court. It is further ordered that the Port Officer and the Customs Officer at Bhavnagar/Alang shall render all assistance to the plaintiff or its representative in effecting the warrant of arrest for the Defendant Vessel."
5. The applicants, in both the applications, have preferred this application for vacating the order of arrest dated 18.6.2018 and 21.6.2018 respectively and has also prayed to hold that the arrest was wrongful and has further prayed that the defendant vessel be permitted to sail out forthwith.
6. Before referring to the Civil Applications which are filed in nutshell, it would be appropriate to refer to the claims raised in both the Suits. The plaintiff in Admiralty Suit no.22 of 2018 has raised total claim of Page 6 of 111 C/AS/22/2018 IA ORDER AED 598,487 and INR 5,00,000/ as legal cost and expenses in India along with 12% interest per annum as set out in particulars of claim. As alleged in the Suit, the plaintiff carried out repairs for which invoices were raised and some part payments have been received, more particularly, as narrated in Paragraphs 5, 6 and 7 of the plaint. The invoices which are raised in Admiralty Suit no.22 of 2018 relates to SHAKER 1. Admiralty Suit no.24 of 2018 is filed for a total claim of AED 304,000, which relates to SHAKER and SHAKER 2, USD 204,508.44 relating to SHAKER 2 and INR 500,000 towards legal cost and expenses in India along with 6% interest as set out in particulars of claim.
7. Both the applications have been filed by the applicants for vacating the exparte orders of arrest dated 18.6.2018 and 21.6.2018 respectively. Identical questions and contentions have been raised in both the applications and the contentions raised in O.J. Civil Application no.1 of 2018 in Admiralty Suit no.22 of 2018 is made basis of this order as far as the facts are concerned. It is the case of the applicant that the applicant is the registered owner of the defendant vessel and has purchased the same from its owner - M/s. North Star Marine Limited under an agreement dated 18.4.2018. It Page 7 of 111 C/AS/22/2018 IA ORDER is contended by the applicant that the defendant vessel is renamed as MV Aker and currently, the defendant vessel is flying the flag of Union of Comoros and is registered in the Registry of Union of Comoros. It is contended by the applicant that the present application is filed without prejudice to the applicant's rights and without submitting to the jurisdiction of this Court. It is also contended that exparte order of arrest is obtained by the plaintiff without disclosing the relevant and material facts and by misleading the Court by making various false and incorrect statements which are contrary and inconsistent with the documents on record. It is contended by the applicant that the plaintiff has no maritime claim against the defendant vessel as set out in Paragraphs 5 to 15 of the application. The applicant has also contended that the defendant vessel cannot be detained for plaintiff's claim against HOM. It is also, interalia, contended that in these circumstances, the plaintiff is liable to furnish the counter security for wrongful arrest. It is therefore prayed that the orders of arrest dated 18.6.2018 and 21.6.2018 deserve to be vacated and the applicants have also prayed to hold that the same was wrongful and permit the defendant vessel to sail out forthwith. The applicants have relied upon the Page 8 of 111 C/AS/22/2018 IA ORDER Provisional Registration Certificate dated 8.6.2018 issued by the Union of Comoros, the bill of sale dated 7.6.2018 issued by M/s. North Star Marine Limited and have also relied upon the invoice which is issued in the name of the applicant for supply of provision and fresh water supply and necessities to the defendant vessel. Sales invoice dated 13.5.2018 issued by CMOG Fuel DMCC in the name of the applicant, bunker delivery note dated 10.5.2018, copy of the agreement between Morrito Maritime Inc. and the applicant.
8. In response to the notice issued by this Court, the plaintiff has filed the reply to the Civil Application and has denied the contentions raised by the applicant. The applicant has contended that as far as the assertion of the applicant as regards ownership is concerned, the same is issue of fact which can only be determined at the trial stage after the evidence is led. It is alleged that the documents have been created and transactions have been backdated to make out the case that the applicant is the owner of the vessel. It is contended by the plaintiff that the applicant has not produced any documents to show the alleged transaction of sale from HOM to M/s. North Star Marine Limited and it is asserted that the defendant Page 9 of 111 C/AS/22/2018 IA ORDER vessel was registered with Togolese Maritime Authority under the ownership of HOM. It is contended that M/s. North Star Marine Limited has no title over the vessel and therefore, the question of applicant obtaining title over the defendant vessel cannot arise. It is also contended that no document is produced, such as, agreement for sale or proof of payment by the applicant to M/s. North Star Marine Limited. It is also contended that the bill of sale dated 7.6.2018 produced by the applicant appears to be a got up document created for the purpose of this litigation and the same is backdated and the same is neither notarized nor apostilled as required in law. It is also alleged that the Provisional Registration Certificate dated 8.6.2018 issued by Registry of Comoros appears to be sham and no deletion certificate from the previous Registry is obtained. It is alleged by the plaintiff that on making inquiry, it has been informed by Togolese Registry that the vessel was still registered with Togolese Registry on 8.6.2018. It is also alleged by the plaintiff that usually, the registration certificate is valid for 2 months, whereas in the present case, it has validity of 6 months. The plaintiff has also relied upon the copy of the port declaration filed by the defendant vessel at Oman dated 8.6.2018 which shows that the flag Page 10 of 111 C/AS/22/2018 IA ORDER of the defendant ship was of Togolese and the owner was shown as WadiAlNeel. It is also contended by the plaintiff that M/s. North Star Marine Limited and the applicant are alter egos and relationship between both are such that the sale which is alleged is sham sale. It is alleged that the applicant is attempting to perpetrate a fraud on this Court and at the very least there are a host of triable issues which arise. It is contended that whether the applicant was the owner of the vessel on the date of the arrest is one which can be decided only after the evidence is led. The applicant has failed to make out a prima facie case for setting aside the order of arrest at the interim stage. It is contended that if the vessel is allowed to be beached, the plaintiff will be irretrievably prejudiced, inasmuch as, it will be unsecured for its legitimate maritime claim and the same would render the suit infructuous. The plaintiff has denied all the contentions raised in the application. It is contended that the application is unmeritorious and frivolous. It is asserted that the plaintiff admittedly repaired the vessel in respect of which payments are outstanding and the same is undisputed. It is contended by the plaintiff on the basis of the same that the plaintiff has a strong prima facie case in its favour Page 11 of 111 C/AS/22/2018 IA ORDER and there is no question of vacating the orders of arrest at interlocutory stage and the applicant is free to raise objections at the trial of the Suit and therefore, has contended that the application deserves to be dismissed.
9. The applicant has filed an affidavitin rejoinder denying the contentions raised by the plaintiff in the reply. The applicant has reiterated that M/s. North Star Marine Limited was the registered owner of the defendant vessel prior to applicant purchasing the same and the ownership of the same is registered with Union of Comoros and the same is prima facie evidence of the ownership of M/s. North Star Marine Limited who in turn sold the defendant vessel to the applicant by issuing a bill of sale dated 7.6.2018. The applicant has relied upon the email dated 29.7.2018 sent by the applicant to the M/s. North Star Marine Limited and the copy of the bill of sale, email dated 25.7.2018 sent by Comoros Maritime Administration and the copy of the Provisional Registration Certificate dated 7.6.2018 as well as reply of M/s. North Star Marine Limited dated 8.6.2018. It is further contended by the applicant that the applicant is the owner of the defendant vessel who has been arrested at the instance of the applicant Page 12 of 111 C/AS/22/2018 IA ORDER and has thus locus standi to file the present application. The applicant has further contended that at the relevant time, balance documents were not readily available with the applicant and therefore, inspection of the same could not be provided. The applicant has also denied that there exists triable issues in the matter as alleged or at all and it is contended that on the contrary, Civil Application makes it amply clear that the arrest is wrongfully obtained by the plaintiff without doing proper due diligence and that applicant is the rightful owner of the defendant vessel. The applicant has thus denied all factual contentions raised by the plaintiff in its reply and has reiterated that the application be allowed as prayed for.
10. Heard Mr. Saurabh Soparkar, learned Senior Advocate assisted by Mr. Prathamesh Kamat, learned counsel with Mr. Shivkumar Iyer, learned counsel with Ms. Aditi Maheshwari, learned counsel with Mr. Tejas P. Satta, learned counsel for the applicant and Mr. Vishal Sheth, learned counsel with Mr. Rishi Murarka, learned counsel with Ms. Paurami B. Sheth, learned counsel for the opponent in O.J. Civil Application no.1 of 2018 in Admiralty Suit no.24 of 2018 as well as Mr. Prathamesh Kamat, learned counsel with Mr. Page 13 of 111 C/AS/22/2018 IA ORDER Shivkumar Iyer, learned counsel with Ms. Aditi Maheshwari, learned counsel with Mr. Tajas P. Satta, learned counsel for the applicant and Mr. Vishal Sheth, learned counsel with Mr. Rishi Murarka, learned counsel with Ms. Paurami B. Sheth, learned counsel for the opponent in O.J. Civil Application no. 1 of 2018 in Admiralty Suit no.22 of 2018. The learned counsel were also permitted to submit their written submissions which are also taken on record as base of this common order.
11. Mr. Saurabh N. Soparkar, learned counsel for the applicant in O.J. Civil Application no.1 of 2018 in Admiralty Suit no.24 of 2018 has contended that the alleged claim of the plaintiff arises under the loan agreement dated 2.7.2017 and the same is not a maritime claim under the provisions of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (hereinafter referred to as "the Act"). It was contended that the loan agreement dated 2.7.2017 is executed with WadiAlNeel in his personal capacity and the same is not a maritime claim as provided under Section 4 of the Act. It was further contended that at the highest, the claim is in the nature of loan to WadiAlNeel and the loan simplicitor does not constitute a "maritime claim" as contemplated under Section 4 of the Page 14 of 111 C/AS/22/2018 IA ORDER Act. It was further contended that the onus is on the plaintiff to show that the alleged aforesaid claim is a maritime claim as per the Act and the plaintiff has failed to discharge this burden. It was further contended that the document itself is titled as loan agreement and not a loan mortgage and therefore, the claim of the plaintiff is not a mortgage claim or a claim of charge and the same would not constitute a maritime claim. It was further contended that simplicitor loan does not constitute the maritime claim. It was further contended that even though it is the case of the plaintiff that the intention of the parties was to create a charge on the vessel, the same cannot be borne out from the document and the document does not contemplate creation of any charge akin to mortgage on any of the vessel. On the said basis, it was contended that there is no mortgage upon both the vessels i.e. SHAKER and SHAKER 2. It was further contended that the said loan agreement does not constitute a maritime claim. It was further contended that a bare reading of the loan agreement indicates that only maritime lien is there on both the vessels - SHAKER and SHAKER 2. Referring to Section 2(g) read with Section 9 of the Act, it was contended that the plaintiff's claim for loan does not constitute the maritime claim under the Page 15 of 111 C/AS/22/2018 IA ORDER provisions of the Act. It was therefore contended on behalf of the defendant that the plaintiff has not supplied any goods or rendered any service to the defendant - vessel or any of the other vessels i.e. SHAKER and SHAKER 2. It was further contended that the loan agreement would not fall within the scope and ambit of Section 4 of the Act. It was also contended that the plaintiff has wrongly relied upon the provision of Section 4(1)(p) of the Act and that the plaintiff has failed to make out any case much less prima facie case that the alleged money advanced to Wadi AlNeel under the loan agreement was disbursed or spent or expended on the vessels - SHAKER 1 and SHAKER 2.
12. It was further contended that even if it is believed that the alleged loan is given to WadiAlNeel who happens to be the erstwhile Manager of the vessels - SHAKER and SHAKER 2, but was not given to HOM who was the erstwhile owner. Relying upon the provision of Section 5 of the Act, it was contended that the said provision contemplates the action in rem for maritime claim against the vessel only for the liability of the owner of the vessel and not for the personal liability of any other party. It was further contended that the loan document itself indicates that the loan was Page 16 of 111 C/AS/22/2018 IA ORDER granted to WadiAlNeel and its personal individual request and therefore, the alleged maritime claim would be against WadiAlNeel in his personal capacity who is admittedly not the owner of the vessel - SHAKER and SHAKER 2. It was therefore contended that even if it is believed that there is a maritime claim, the same cannot be enforced by an action in rem against the defendant - vessel or any other vessels. It was therefore contended that Section 5(1) of the Act is not applicable and therefore, there is no question of applicability of subsection (2) as the same is dependent on subsection (1) of Section 5 of the Act.
13. It was further contended that even if the alleged maritime claims are raised or not, the same are not enforceable against the defendant
- vessel. It was contended that as per the claim of the plaintiff, SHAKER 1 and SHAKER 2 are sister vessels. However, it is an admitted position that SHAKER 1 and SHAKER 2 are owned by a separate and distinct entities. It was contended that prior to 17.4.2018, the vessel- SHAKER 1 was owned by HOM and SHAKER 2 was owned by Masraha and therefore, in such situation, the arrest as sought for by the plaintiff cannot be considered as a sister ship arrest. It was contended that only when Page 17 of 111 C/AS/22/2018 IA ORDER two vessels are owned by the same entity, in that event, only arrest of the vessel for a claim of other vessel i.e. sister vessel can be made. It was contended that even if two entities are sister concerns owning different vessel in lieu of one vessel, the arrest of vessel belonging to a different Company is not permissible. Referring to and relying upon the provisions of Sections 5(1) and 5(2) of the Act, it was contended that the plaintiff had a maritime claim against the owner of SHAKER 2 or against SHAKER 2 itself and therefore, at the highest, the plaintiff is entitled to arrest either SHAKER 2 or any other vessel belonging to Masraha who is owner of SHAKER 2 and admittedly, the defendant - vessel was never owned by Masraha and therefore, as per the provision of Section 5(1) and 5(2) of the Act, the plaintiff is not entitled to arrest the defendant - vessel. It was reiterated that the claim in respect of vessel - SHAKER is admittedly based on the alleged claim arising out of the loan agreement which does not qualify as maritime claim and therefore, there is no question of an action in rem against the defendant - vessel. On the aforesaid grounds, it was therefore contended that SHAKER and SHAKER 2 are separate and are not sister vessels and therefore, the very contention raised by the plaintiff arresting the Page 18 of 111 C/AS/22/2018 IA ORDER defendant - vessel is misplaced. It was further contended that Section 5 of the Act does not contemplate arrest of beneficial ownership at all and hence, in absence of any statutory provisions, arrest for beneficial ownership is not permissible and permitting such arrest would tantamount to rewriting the statute and the same would be contrary to the intention of the Parliament. It was contended that the plaintiff has to make out a case to establish that the beneficial owner of the defendant - vessels SHAKER and SHAKER 2 and WadiAlNeel is Hashim and Ayman. It was further contended that even without prejudice to the aforesaid and assuming that the arrest for beneficial owner is permissible, the plaintiff has failed to make out any case for such arrest. It was contended that for arrest for beneficial ownership, a Court has to lift the corporate veil and no fraud is pleaded by the plaintiff. It was therefore contended that merely because two Companies have common Directors and common agent, the same is no ground to lift a corporate veil and unless and until it is demonstrated that such a Company is set up to perpetuate the fraud, corporate veil ought not to be lifted. It was contended that even though it is alleged by the plaintiff that WadiAlNeel which is common link between HOM and Masraha, there is no Page 19 of 111 C/AS/22/2018 IA ORDER material on record to show the composition of WadiAlNeel and only because the alleged loan agreement has been executed for WadiAlNeel by Ayman, the same cannot be linked with HOM or Masraha. It was further contended that it is very clear from the loan agreement that Ayman has signed the same as authorized signatory of WadiAlNeel and any unrelated third party can be made an authorized signatory and the same does not have bearing on directorship or ownership of a Company. It was therefore contended that the plaintiff has failed to discharge the burden to demonstrate even a prima facie case to show that the 2 entities are one and the same. It was therefore contended that under the garb of arrest for beneficial ownership, the plaintiff intends to obtain an associate ship arrest which is impermissible under the Indian laws and only because Ayman - Hashim i.e. Father Son Duo have signed certain documents in their capacity as authorized signatory, it cannot be presumed that WadiAlNeel is also a part of or equal to HOM. Mr. Soparkar has relied upon the judgments in the case of Croft Sales and Distribution Ltd. Vs. M.V. Basil & Ors, 2011 (2) GLR 1027, Croft Sales and Distribution Ltd. Vs. M.V. Basil & Ors, (MANU/GJ/0136/2011), Lufeng Shipping Company Page 20 of 111 C/AS/22/2018 IA ORDER Ltd. Vs. M.V. Rainbow Ace, 2013 SCC OnLine Bom 733 and Universal Marine & Anr. Vs. M.T. Hartati & Anr., 2014 SCC OnLine Bom 223.
14. Mr. Soparkar, further referring to the record of this case, contended that on 17.4.2018, HOM (the erstwhile registered owner) sold the defendant - vessel to one M/s. North Star Marine Limited under a bill of sale of consideration of US$ 775,000. Mr. Soparkar further referring to the rejoinder filed in Civil Application contended that on 18.4.2018, M/s. North Star Marine Limited executed an agreement with the applicant for sale of the defendant - vessel. Relying upon the communication dated 6.6.2018, Mr. Soparkar contended that HOM applied for deletion of the vessel from the Registry of Togo and on 7.6.2018, M/s. North Star Marine Limited registered the defendant - vessel as AKER with the Union of Comoros and a Provisional Registration Certificate has been issued by the Union of Comoros showing M/s. North Star Marine Limited as owner of the defendant - vessel. It was further contended that on 7.6.2018, M/s. North Star Marine Limited transferred the ownership/title of the defendant - vessel to the applicant under the bill of sale dated 7.6.2018 for consideration of AED 2,852,000. Mr. Soparkar also referred Page 21 of 111 C/AS/22/2018 IA ORDER to the receipt dated 8.6.2018 which is forming part of the record of the Civil Application. It was further contended that on 8.6.2018, the defendant - vessel AKER was registered with the Union of Comoros by the applicant and a Provisional Registration Certificate has been issued on the said date. It was therefore contended that as per the Provisional Registration Certificate, the applicant is shown as the owner of the defendant - vessel. On the aforesaid document, it was therefore contended that the applicant is the owner of the defendant - vessel and therefore, the maritime claims as alleged do not survive because of change of ownership. It was therefore contended that the present claim of the plaintiff cannot be enforced against the defendant - vessel in view of the fact that the ownership of the same has been transferred to the applicant before the date of arrest. Mr. Soparkar relied upon the judgment in the case of The Bineta, (1967) 1 WLR 121. Mr. Soparkar further referring to Section 11(1) of the Act, contended that as per the said provision, now in addition to an undertaking, counter security can be provided as a condition precedent for arrest and also for continuation of the same. It was further contended that as per the said provision, there is no requirement in the said Section Page 22 of 111 C/AS/22/2018 IA ORDER for any finding of wrongful arrest by the Court. It was contended that the present case warrants furnishing of counter security as the plaintiff is a foreign entity with no assets in India and therefore, in the event, the applicant obtains a decree from the Court, it will be unable to enforce the same against the plaintiff and the same will be nothing more than a "paper decree" in hands of the applicant. It was therefore contended that the plaintiff should be called upon to forthwith deposit security to the tune of US$ 244,414 along with US$ 1600 per day towards crew wages from 21st July 2018 till arrest is vacated, bunker cost of about US$ 594 per day as prayed for in O.J. Civil Application no.1 of 2018.
15. Mr. Prathamesh Kamat, learned counsel for the applicant in O.J. Civil Application no.1 of 2018 in Admiralty Suit no.22 of 2018 has adopted the arguments made by Mr. Soparkar, learned counsel for the applicant in O.J. Civil Application no.1 of 2018 in Admiralty Suit no.24 of 2018. Mr. Kamat reiterated that the ownership of the defendant - vessel has undergone change before the arrest of the defendant - vessel and has relied upon the same set of documents of transfer of ownership from HOM to M/s. North Star Marine Limited and from M/s. North Star Marine Limited to the Page 23 of 111 C/AS/22/2018 IA ORDER applicant, as relied upon by Mr. Soparkar. Mr. Kamat has relied upon the same documents to buttress his arguments. It was therefore contended by Mr. Kamat that the applicant is the owner of the defendant - vessel and no maritime claim survives because of change of ownership and the claim raised by the plaintiff in the present Suit cannot be enforced against the defendant - vessel in view of the fact that the ownership of the same has been transferred to the applicant before the date of the arrest. Mr. Kamat also referring to Section 11(1) of the Act, contended that the plaintiff should be asked to forthwith deposit security to the tune of AED 2,852,000. On the aforesaid submissions, it was submitted by both the learned counsel that the applications be allowed and the orders of arrest may be vacated as prayed for.
16. Mr. Vishal Sheth, learned counsel for the plaintiff has reiterated 3 points which were formulated by the learned counsel for the applicant. Firstly, referring to Admiralty Suit no.22 of 2018, learned counsel contended that the only issue which arises in the said Suit is that the claim in the said Suit relates to SHAKER 1 itself, which was repaired and therefore, the issue of beneficial owner does not arise in the said Suit. Relying upon Page 24 of 111 C/AS/22/2018 IA ORDER the provision of Section 4(1)(m) of the Act, it was contended that the claim raised in Admiralty Suit no.22 of 2018 arises out of the repairs which were carried out and it is a maritime claim.
17. Mr. Sheth, learned counsel for the plaintiff has contended that the present applications are filed before filing the written statement and therefore, while deciding such applications, the Court is required to examine whether the plaintiff has reasonably arguable prima facie case or not on the basis of its pleadings and documents. It was contended that unless the arrest is exfacie, vexatious or hopelessness of the plaintiff's case is beyond doubt, the order of arrest must be continued. It was further contended that if there are triable issues or disputed questions of fact and law, the proper course is for the defendant to file a written statement, so all the issues can be determined at the trial. Mr. Sheth, relied upon the following judgments to buttress his arguments: [a] VSNL v. Kapitan Kud, (1996) 7 SCC 127.
[b] M.V. Sea Renown v. Energy Net Ltd., rendered by this Court in O.J. Appeal no.21 of 2002- MANU/GJ/0322/2003.
Page 25 of 111 C/AS/22/2018 IA ORDER
[c] Eco Maritime Ventures Ltd. v. ING Bank,
rendered by this Court in O.J. Appeal no.14 of 2016 dated 21.09.2016.
[d] M.V. Lucky Field v. Universal Oil Ltd., 2008 (0) GLHELHC 220877.
[e] Socar Turkey Petrol Enerji Dagitim Vs. M.V. Amoy Fortune, rendered by the Bombay High Court in Commercial Appeal (L) No.287 of 2018 dated 2.8.2018.
18. It was contended by the learned counsel for the plaintiff that the claim of the applicant that it was owner of vessel - SHAKER 1 on the date of first arrest i.e. 18.6.2018 is disputed. It was further contended that SHAKER 1 was owned by HOM Management Consultancy as per Togolese Registry certificate dated 6.6.2018 which is forming part of the documents in the plaint. Referring to the affidavitinreply filed in O.J. Civil Application filed by the applicant, it was contended that the sales are sham and the applicant does not have any title over SHAKER
1. It was also contended that the applicant has changed its case while arguing. It was also contended that there are contradictions Page 26 of 111 C/AS/22/2018 IA ORDER even in the pleadings of O.J. Civil Application and the rejoinder and the applicant must be held to its pleaded case and cannot argue or succeed on a case not pleaded. Referring to the case of the applicant in Paragraphs 9, 10, 11 and 13 of the Civil Application, it was contended that as per the case pleaded, SHAKER 1 was owned by HOM and had a Togo Flag and that on 18.4.2018, there were back to back sales of SHAKER 1 from HOM to M/s. North Star Marine Limited and from M/s. North Star Marine Limited to the applicant. It is further the case of the applicant that upon being sold to M/s. North Star Marine Limited, SHAKER 1 was named as AKER. Mr. Sheth, further referring to the contents in the application, contended that SHAKER 1 was sold by the applicant on 18.4.2018. The bill of sale was executed by M/s. North Star Marine Limited on 7.6.2018 after the applicant paid the purchase price of AED 2,852,000 and that too, with effect from 8.6.2018, the applicant was registered owner of the vessel - SHAKER 1. It was pointed out by the learned counsel for the plaintiff that in O.J. Civil Application, it is mentioned that the title in SHAKER 1 passed from HOM to M/s. North Star Marine Limited on 18.4.2018. Referring to Paragraphs 9 and 12 of the Civil Application, it was contended by the learned Page 27 of 111 C/AS/22/2018 IA ORDER counsel that it is mentioned in the application that the transfer of title from M/s. North Star Marine Limited to the applicant was on 18.4.2018. However, in Paragraph 11, it is mentioned that the bill of sale was issued in its favour on 7.6.2018 executed by M/s. North Star Marine Limited in favour of the applicant with the application which was neither notarized nor apostilled along with the Provisional Certificate of Registry dated 7.6.2018. It was contended that the plaintiff disputes the authenticity of the documents produced by the applicant in its reply. In furtherance to the contention as regards authenticity of the said documents, it was contended that the documents showing sale of SHAKER 1 was from HOM to M/s. North Star Marine Limited are not produced. It was contended that if SHAKER 1 was sold back to back, these documents should be available. It was also contended that the MoA between the applicant and M/s. North Star Marine Limited for purchase of SHAKER 1 is not produced at all. It was also contended that the proof of payment by M/s. North Star Marine Limited and the applicant was not produced. Mr. Sheth, further referring to the rejoinder filed by the applicant, contended that the applicant has produced further documents i.e. bill of sale dated 17.4.2018 executed by HOM in favour Page 28 of 111 C/AS/22/2018 IA ORDER of M/s. North Star Marine Limited. However, the same is neither notarized, nor apostilled along with the Provisional Certificate of the Registry dated 7.6.2018 issued by Comoros Ship Registry in favour of M/s. North Star Marine Limited and a letter dated 8.6.2018 issued by M/s. North Star Marine Limited confirming receipt of AED 2,852,000.
19. Mr. Sheth, learned counsel for the plaintiff has extensively taken this Court through the aspect of contradiction in the applicant's case comparing the contentions raised in the application and the variance found in the rejoinder filed in the present application. It was contended that in the Civil Application, the case of the applicant is that SHAKER 1 was sold back to back on 18.4.2018 and was renamed as AKER. However, in rejoinder, the applicant denies that SHAKER 1 was renamed on 18.4.2018 or sold by HOM on 18.4.2018, based upon the averments made in Paragraph 20 of the rejoinder. It was further contended that however, the applicant does not clarify when the sale from HOM to M/s. North Star Marine Limited took place, if not on 18.4.2018. It was further contended that the applicant has made a reference to the bill of sale dated 17.4.2018 issued by HOM. However, in their arguments before this Court, the applicant Page 29 of 111 C/AS/22/2018 IA ORDER submitted that this is the document under which title in SHAKER 1 was transferred to M/s. North Star Marine Limited. It was therefore contended that the bill of sale is crucial for determining transfer of title. Referring to Paragraphs 5, 7 and 19 of the rejoinder, it was contended that considering the said averments, certain inconsistencies emerge. In furtherance, it was pointed out that if title in SHAKER 1 passed to M/s. North Star Marine Limited on 17.4.2018, there is no explanation why the application for deletion of SHAKER 1 from Togo Registry was made on 6.6.2018 or why M/s. North Star Marine Limited waited till 7.6.2018 to provisionally register SHAKER 1 with Comoros Registry. It was further contended that as per the case of the applicant, M/s. North Star Marine Limited became owner of SHAKER 1 on 17.4.2018. However, in rejoinder, the applicant has pleaded that HOM applied for port clearance on 6.6.2018 when the vessel was under the ownership of HOM. However, in argument, it was contended by the learned counsel for the applicant that there is a typographical error and instead of word "control", the word "ownership" is typed. On the aforesaid basis, it was contended that meaning of both the words are different and it cannot be a typographical error. It was further contended Page 30 of 111 C/AS/22/2018 IA ORDER that if such a crucial statement was made in error, the applicant should have filed affidavit explaining the mistake and even while arguing, it is not pointed out before this Court that the word "ownership" is a typographical error. It was also contended by the learned counsel for the applicant that similar statement is made in the affidavitin rejoinder filed in Admiralty Suit no.22 of 2018 as well and therefore, it cannot be believed that the applicant has made the typographical error twice. On the aforesaid facts, it was contended that the applicant approached this Court with a case that it purchased SHAKER 1 on back to back sale which sale the plaintiff has impugned and therefore, inconsistence stand taken by the applicant is material because it casts doubts on facts pleaded by the applicant.
20. Further, referring to Paragraphs 9 and 14 of the rejoinder filed by the applicant, it was contended that thereafter, the applicant has stated that the title in SHAKER 1 was transferred to it on 7.6.2018 i.e. the date of bill of sale issued by M/s. North Star Marine Limited. However, in O.J. Civil Application, the applicant states that pursuant to the payment of consideration, M/s. North Star Marine Limited issued a bill of sale dated Page 31 of 111 C/AS/22/2018 IA ORDER 7.6.2018. It was therefore contended that it is the case of the applicant that after it paid M/s. North Star Marine Limited, a bill of sale was issued on 7.6.2018 transferring title in SHAKER 1. However, no proof of payment was submitted by the applicant along with the O.J. Civil Application and even in rejoinder, a letter dated 8.6.2018 issued by M/s. North Star Marine Limited purporting to be a receipt for payment is produced. It was therefore contended that such case is contrary to the applicant's own case that it made payment on or before 7.6.2018. It was contended that even if the letter dated 8.6.2018 is believed, the same would mean that M/s. North Star Marine Limited received approximately AED 2.85 Million in cash. On the aforesaid basis, it was contended that the same is not only unusual, but raises triable issues since it is the plaintiff's case that the transaction is a sham and no payment has been changed hands and it is strange that the entity based in Nevis (i.e. M/s. North Star Marine Limited) accepted payment in cash in AED currency. It was also alleged that as the letter was not produced with the Civil Application, but was produced for the first time with the rejoinder, suggest that it was manufactured as an afterthought. It was further contended that as per the case of the applicant, the applicant took delivery Page 32 of 111 C/AS/22/2018 IA ORDER of SHAKER 1 on 8.6.2018. However, in the Civil Application, the applicant has produced a bunker invoice dated 13.5.2018 raised by CMOG FUEL DMCC in which the applicant is shown as the buyer. It was pointed out that the applicant has not explained why it stemmed bunkers in May, 2018 when it claims to have purchased/taken delivery of SHAKER 1 on 7/8.6.2018. It was further contended that the applicant has attempted to have alternative argument to the effect that nothing turned on this invoice since it is produced to support the claim for counter security and is relevant only for that purpose. It was contended by the applicant that thus, the applicant ask this Court to disregard the invoice and to believe the version of events and vacate the arrest. It was further alleged by the learned counsel for the plaintiff that the applicant has approached this Court with a false case and got up documents. It was also contended that by the learned counsel for the plaintiff that the contradictions in the applicant's case and the documents on the basis of which this Court must decide whether to believe the applicant's version of events or not. It was also contended that the applicant cannot produce documents and then argue that the same are irrelevant and should be disregarded when confronted with contradictions.
Page 33 of 111C/AS/22/2018 IA ORDER 21. Referring to the Provisional Certificate of
Registry issued by Comoros Ship Registry dated 7.6.2018 and 8.6.2018, it was contended that the applicant has relied upon the Commercial Documents of Evidence Act, 1939 (CDEA) and more particularly, Section 3(a) r/w Part I Item 7, to contend that this Court must presume the certificates to be genuine and their contents to be correct. Such proposition does not require to be accepted. It was further contended that Section 1 of the CDEA provides that the presumptions mentioned therein are to be drawn in relation to or for the purpose of Indian Evidence Act, 1872. However, it was contended that if the document listed in CDEA is introduced in evidence at trial, then only, the presumptions set out in the CDEA are attracted. It was further contended that the Provisional Certificates of Registry are not introduced in evidence at trial, but are produced in interlocutory proceedings by way of an affidavit. Referring to Section 1 of the Indian Evidence Act, 1872, it was contended that it does not apply to the affidavits. Relying upon the judgment of the Hon'ble Apex Court in the case of Smt. Sudha Devi Vs. M.P. Narayanan & Ors. (1988) 3 SCC 366 and more particularly, Paragraph 4 thereof, it was contended that as the Indian Page 34 of 111 C/AS/22/2018 IA ORDER Evidence Act, 1872 does not apply to affidavits in interlocutory proceedings, the question of presumptions under the CDEA being attracted cannot arise. It was therefore contended that CDEA does not lay down a rule of "conclusively proof" as incorrectly submitted by the applicant before this Court. It was contended that such presumptions are rebuttable and to rebut the presumption, a party should have a chance to lead evidence/crossexamine the person producing the document in respect of which the presumption is sought to be drawn and such would be possible only at the trial. Further, referring to Part 1, Item 11 of the Schedule to the CDEA, it was contended that the same provides that the presumption must be drawn in respect of a "notarized note of protest" made by a master of a Vessel. In such a case, if the contention raised by the applicant is accepted, a note of protest produced at the interim stage, even if forged or incorrect must be taken to be genuine and correct without the opposite party having an opportunity to test the veracity of the same by leading evidence or crossexamining the person producing the document and such cannot be the proposition of law.
Page 35 of 111C/AS/22/2018 IA ORDER 22. Further referring to the CDEA, it was
contended that the said Act provides specific documents in respect of which, presumptions "shall" or "may" be drawn. It was further contended that whilst the Certificate of Registry is one such document, the CDEA does not refer to a Provisional Certificate of Registry and therefore, it was contended that no presumption can be drawn under CDEA in relation to Provisional Certificates of Registry produced by the applicant and there is a difference between the Provisional Certificate of Registry and a Certificate of Registry.
23. It was further contended that the title does not pass based upon the certificate of Registry much less the Provisional Certificate of Registry and it was contended that the registration of a vessel is unconnected with passing of title or ownership. Referring to Section 19 of the Sale of Goods Act, 1930, it was contended that the title in SHAKER 1 will pass when the parties intended for it to pass and this is to be determined from the contract and conduct of the parties. It was further contended that the intention of the parties is a matter of trial, more so, because the applicant has not produced the contracts for salepurchase of SHAKER 1 or convincing proof Page 36 of 111 C/AS/22/2018 IA ORDER of payment. It was further contended that in any case, admittedly when bill of sale can be proved at the time of the trial, the Registry Certificate issued on that basis cannot determine that the title is passed or ownership is changed.
24. It was further contended that the Provisional Certificate of Registry is issued on the basis of the information and limited documents filed by the party applying for registration like letter of undertaking or bill of sale, which can be prepared. It was further contended that it is the case of the applicant that Comoros Registry issued provisional certificates on the basis of an undertaking that deletion certificates will be provided. It was, however, contended that even as per the claim of the applicant that they purchased SHAKER 1 on 7.6.2018 and took delivery on the next day i.e. on 8.6.2018 and thus, the provisional certificate was issued to the applicant on 8.6.2018 without conducting any independent verification of the information/ documents submitted and such certificate can be tested only at the time of trial. It was further contended that the Provisional Certificate of Registration is a temporary document with limited validity and unless converted to permanent registration by submission of Page 37 of 111 C/AS/22/2018 IA ORDER additional documents/ information, it lapses as in the case of the provisional certificate issued to M/s. North Star Marine Limited and the applicant, the same were valid only till 30.8.2018. On the aforesaid premises, it was contended that CDEA provides for certificate of Registry and does not include provisional certificate since the certificate of Registry is a permanent document issued after all information is provided and it remains valid till registration is cancelled or deleted while the provisional certificate is a temporary document with limited validity. Referring to the facts of the case on hand, it was contended that firstly, SHAKER 1 was registered with Togo Registry and the applicant has not produced any proof of deletion of SHAKER 1 from Togo Registry or a copy of the application for deletion of SHAKER 1 from the Togo Registry. Secondly, it was contended that the provisional certificates produced by the applicant are not issued by the Government of Comoros, but by the agent of Registry based in UAE. Referring to the said document, it was further contended that the email issued by the administrator of Comoros Ship Registry does not mention any address. However, the email, fax, phone and contact numbers confirm that the administrator of the Comoros Ship Registry is based in UAE.
Page 38 of 111C/AS/22/2018 IA ORDER
25. It was further contended that the Provisional Registration Certificate contains inconsistencies relating to the former name/flag of SHAKER 1 and a misspelling of Sweden. It was further contended that during oral argument before this Court, the applicant produced emails dated 9.8.2018 purporting to explain inconsistencies in the former name/flag of SHAKER 1 and that the former name and flag mentioned in the certificate issued to the applicant will remain SHAKER 1 and Togo because the applicant did not change registries after purchasing SHAKER 1. However, the said emails were produced for the first time during the course of arguments and therefore, it was contended that the this Court should not attach weight to them. It was also contended that when it suits its case, the applicant can procure email clarifications from the Comoros Registry at short notice. However, the applicant does not produce deletion certificate evidencing that SHAKER 1 is deleted from Togo Registry which it claims to have filed with Comoros Registry. It was also contended that misspelling of Sweden is not properly explained by the applicant. Mr. Vishal Sheth, learned counsel for the plaintiff has relied upon the authority of Law of Ship Mortgages by David Osborne, 2nd Edition Page 39 of 111 C/AS/22/2018 IA ORDER to contend that the loan agreement is a maritime claim similar in nature to a mortgage or an equitable mortgage/charge. On the aforesaid contentions, it was submitted that the applications are liable to be rejected. It was also contended that there are serious triable issues and the orders of arrest dated 18.6.2018 and 21.6.2018 do not deserve to be vacated.
26. Mr. Saurabh N. Soparkar, learned counsel for the applicant has, in his rejoinder, made further submissions as under:
27. Mr. Soparkar, learned counsel for the applicant, in rejoinder, has reiterated the contentions raised in the application and has contended that the authority cited by the plaintiff on Law of Ship Mortgages by David Osborne, 2nd Edition is not applicable to the present case. It was contended that the commentary contemplates a situation, where the parties by their action create a consensual security which are of 3 types, (i) legal mortgage, (ii) equitable mortgage, and (iii) equitable charge. However, in the present case, the plaintiff's own document does not show creation of any charge or mortgage (either registered or otherwise) or charge on any of the vessel. It was contended that in Page 40 of 111 C/AS/22/2018 IA ORDER the present case, the loan agreement does not contemplate any transfer of title at all and therefore, the same would not qualify as legal mortgage. Referring to Paragraph 3.1.4 of the said authority, it was further contended that in facts of this case, it is not even an equitable mortgage. It was further contended that the loan agreement does not contemplate conferring any such right of realization by judicial process upon the plaintiff and therefore, the same would not qualify as an equitable charge. It was further contended that even without prejudice to the aforesaid, the loan agreement in question contemplates a desire to create a charge on a future date and thus, there is no consensual creation of any form of security as contemplated in the commentary. Relying upon the loan agreement, it was contended that in the instant case, WadiAlNeel is admittedly not the owner of any of the vessels, but is only a manager and as a manager, it possess no authority whatsoever to create any such lien on the same and therefore, it was contended that WadiAl Neel could never create much less consent creating charge or lien on the said vessels. It was further contended that the Act is a code by itself and anything not contemplated therein cannot be imported from English law. It was further contended that the applicant Page 41 of 111 C/AS/22/2018 IA ORDER has produced all relevant documents evidencing the title to M/s. North Star Marine Limited to the defendant - vessel. It was further contended that on a submission raised by the plaintiff, the applicant vide email dated 29.7.2018 requested M/s. North Star Marine Limited for relevant documents and to answer various queries and the same is responded by M/s. North Star Marine Limited vide its email dated 29.7.2018 and has also brought the applicant with a copy of the bill of sale dated 17.4.2018 issued by HOM in favour of M/s. North Star Marine Limited. It was further contended that the said document shows the sale of the defendant - vessel and transfer of title to M/s. North Star Marine Limited. It was further contended that the applicant has produced a copy of the Provisional Registration Certificate on 7.6.2018 issued by the Union of Comoros showing M/s. North Star Marine Limited to be the owner of the defendant - vessel. It was contended that the said document is an independent document issued by a sovereign country which can never be backdated or said to be a sham document. It was contended that the bill of sale coupled with the Provisional Registration Certificate issued by the Union of Comoros established beyond doubt that the ownership of the defendant - vessel had shifted from HOM to Page 42 of 111 C/AS/22/2018 IA ORDER M/s. North Star Marine Limited on 17.4.2018 which was entered into the Registry of Comoros on 7.6.2018 and thus, on the date of arrest, HOM was no longer the owner of the defendant - vessel. It was further contended that Provisional Registration Certificate cannot be issued without or in absence of a bill of sale and as the Provisional Registration Certificate is issued on 7.6.2018, the bill of sale has to be prior to the same and therefore, it was contended that the allegation of backdating of bill of sale dated 17.4.2018 issued by HOM to M/s. North Star Marine Limited is devoid of any merit and without any material particulars or substance to that effect and it is nothing but bald allegation without any basis or any supporting documents to the contrary. It was contended that on the contrary, the registration requirement of the Union of Comoros produced by the plaintiff in the affidavitinreply shows that a copy of the bill of sale is a sine qua non for registration of the defendant
- vessel with Union of Comoros. It was further contended that thus, the argument raised by the plaintiff is based on conjectures and surmises without any basis to merely create prejudice. It was further contended that even the contention of the plaintiff that the deletion certificate or even the application Page 43 of 111 C/AS/22/2018 IA ORDER for deletion preferred by HOM with Togolese Registry is not produced and therefore, the sale transaction appears to be suspicious, is without any substance and has no bearing on the said transaction. It was reiterated that the applicant has produced all relevant documents necessary to show the sale transaction of the defendant - vessel for HOM to M/s. North Star Marine Limited and M/s. North Star Marine Limited had a good title to the defendant - vessel and therefore, it was contended that the application for deletion preferred by HOM with Togolese Registry is irrelevant and the applicant has no role in the said transaction and therefore, it cannot be expected to have the same. It was also contended that thus, the deletion certificate having been obtained by HOM and submitted to the Union of Comoros, the applicant cannot be faulted for not having the same.
28. It was contended that the contention raised by the plaintiff that the defendant - vessel on the date of the arrest was of the ownership of HOM is a fallacy. It was contended that the plaintiff has not produced any document which would evidence that as on 18.6.2018 (i.e. the date of arrest), HOM was the registered owner of the defendant - vessel and the registration certificate issued by Togolese Registry is Page 44 of 111 C/AS/22/2018 IA ORDER dated 6.6.2018. Relying upon email dated 29.7.2018 addressed by M/s. North Star Marine Limited to the applicant, it was contended that the same shows that on 6.6.2018, HOM applied to Togolese Registry for deletion of the defendant - vessel from the said Registry. This fact has not been refuted by the plaintiff in any of its pleadings or argument. Thus, the fact that the application for deletion was preferred to the Togolese Registry is an admitted fact. It was further contended that the vessel is always required to have some flag and therefore, it is possible for the vessel to be an overlap in registration of the vessel. It was contended that in any event and without prejudice to the above, registration is only a prima facie proof of ownership of a vessel and the bill of sale is a document of title, which evidences the ownership/title of a vessel. Referring to the facts arising in the application, it was contended that the bill of sale dated 17.4.2018 issued by HOM to M/s. North Star Marine Limited, the ownership of the defendant-vessel stood transferred from HOM to M/s. North Star Marine Limited and therefore, HOM, as on the date of arrest, was not the owner of the defendant - vessel.
Page 45 of 111C/AS/22/2018 IA ORDER 29. Mr. Soparkar also contended that similarly,
the contention raised by the plaintiff that the applicant has not produced any documents in support of sale of the vessel from M/s. North Star Marine Limited to the applicant is also a fallacy. It was reiterated that the applicant has produced all relevant documents necessary to establish its title over the defendant - vessel. It was also contended that the applicant has produced the bill of sale dated 7.6.2018 issued by M/s. North Star Marine Limited evidencing its title to the defendant-vessel and the applicant has also produced the Provisional Registration Certificate dated 8.6.2018 much before the arrest of the defendant - vessel i.e. on 18.6.2018. It was contended that the applicant has also furnished a receipt dated 8.6.2018 issued by M/s. North Star Marine Limited evidencing payment of consideration for purchase of the defendant - vessel. It was further contended that the contention raised by the plaintiff that the sale transaction is suspicious is without any substance as bill of sale acknowledges the receipt of the entire consideration pursuant to which it transferred all its shares in the ship in favour of the applicant. It was further contended that the receipt being issued after the bill of sale does not affect the genuineness of the sale Page 46 of 111 C/AS/22/2018 IA ORDER transaction in any manner. It was contended that even the contention that M/s. North Star Marine Limited is based at Nevis and it accepted the sale consideration in AED (Dirhams) is without any merit and it was contended that it is a commercial call of M/s. North Star Marine Limited to accept consideration in any currency it deems fit and it is not uncommon in trade and many a times, even the Companies in India accept consideration in US Dollars and therefore, such an argument evidences a desperate attempt by the plaintiff to prejudice the Court as it has no concrete grounds to sustain its wrongful arrest. It was contended that even the contention raised by the plaintiff that the sale consideration receipt issued by M/s. North Star Marine Limited does not establish that sale consideration has been paid by the applicant and that it should be only a Bank wire transfer is erroneous. It was contended that the sale consideration does not determine the transfer of title or ownership over the vessel. It was further contended that in commercial transactions where title gets transferred in absence of any consideration being paid or partial consideration being paid. It was contended that payment in cash is acceptable medium for purchase of a vessel and the concept of cash buyers is not unknown to Page 47 of 111 C/AS/22/2018 IA ORDER the shipping industry. Thus, the receipt from the seller is a sufficient proof of payment of consideration. With regard to the contention raised by the plaintiff that no sale agreement is produced by the applicant, it was contended that the sale agreement is not a mandatory requirement for completion or effecting a sale transaction. It was contended that the sale agreement would be of assistance in determining whether the applicant has title to the defendant - vessel. It was reiterated that the applicant has produced all relevant documents to establish the title over the defendant - vessel, more particularly, the bill of sale dated 7.6.2018, registration certificate dated 8.6.2018 which bolsters the fact that the defendant - vessel is under the ownership of the applicant prior to the order of arrest. It was also contended that the applicant has provided inspection of originals of both these documents to the advocate of the plaintiff and therefore, the contention that the documents are not produced is of no consequence and in no way assists the case of the plaintiff.
30. Mr. Soparkar further contended that the contention raised by the plaintiff that the bill of sale is not notarized as required by law is misplaced and without any substance. It Page 48 of 111 C/AS/22/2018 IA ORDER was submitted that act of notarization has no bearing on the sale transaction that has taken place and lack of notarizing can never belie or invalidate the factum of sale and therefore, the said contention has no bearing in determining the ownership of the defendant- vessel. It was contended that the said contention is contrary to the registration requirements of Union of Comoros as relied upon by the plaintiff. It was contended that the registration requirements clearly mention that the requirement is only for a copy of bill of sale to be notarized and there is no requirement for original bill of sale to be notarized and therefore, the contention raised by the plaintiff that the applicant's bill of sale is not notarized has no bearing on the genuineness as alleged by the plaintiff at all and the same is based on mere bald allegation and the plaintiff has failed to substantiate such allegation with any legal provision. It was contended that during the course of arguments, as an afterthought, the plaintiff has contended that the copy of the bill of sale stated in the provisional registration requirements of the Union of Comoros refers to sets of bill of sale. Such contention raised by the plaintiff is not tenable and is clearly not in consonance with the registration requirements of Union of Comoros as it is Page 49 of 111 C/AS/22/2018 IA ORDER evident from the said document. It was contended that the bill of sale is issued in multiple sets. It was contended that however, it can never be that the multiple sets are copies of the original. It was further contended that even the case of the plaintiff that the applicant has changed its case in O.J. Civil Application and in rejoinder is without any substance. It was further contended that back to back sale does not mean that the sale has happened on the same date and that back to back sale would mean a consecutive sale which is further evidenced by the sale document being bill of sale dated 17.4.2018 and the said document speaks for itself. It was therefore contended that there cannot be any inconsistency. It was further contended that the applicant has rightly denied that HOM has transferred the title of the defendant - vessel to M/s. North Star Marine Limited on 17.4.2018 and not on 18.4.2018 and the same is because the sale of HOM to M/s. North Star Marine Limited took place under the bill of sale dated 17.4.2018 and therefore, the title was passed on 17.4.2018 and not on 18.4.2018, as alleged by the plaintiff.
31. It was further contended that the bill of sale is a document of title and therefore, the Page 50 of 111 C/AS/22/2018 IA ORDER title/ownership to the defendant - vessel had transferred to and rested with the applicant as on 7.6.2018 i.e. the date on which the bill of sale was executed by M/s. North Star Marine Limited in favour of the applicant. Referring to Paragraph 19 of the rejoinder, it was contended that as stated therein on 6.6.2018, the vessel remained under the ownership of HOM which is an obvious error and that obviously, the possession of the vessel was with HOM (through WadiAlNeel). It was contended that in fact on reading Paragraph 19 of the rejoinder, it is clear that what was meant was possession and not ownership. Mr. Soparkar further referring to the contents of Paragraph 19 of the rejoinder contended that there is no inconsistency. It was contended that the contention raised by the plaintiff that the applicant having title to the defendant - vessel only on 7.6.2018 would have purchased the bunkers on 13.5.2018 and therefore, the same amounts to inconsistency and departure of stand taken in the Civil Application is without any substance. It was contended that such allegation of the plaintiff has no bearing for determination of the issue whether the applicant is owner of the defendant - vessel. It was further contended that the said aspect is not pleaded by the plaintiff in its reply and the same has been raised for the Page 51 of 111 C/AS/22/2018 IA ORDER first time in the oral arguments. Reiterating the factual aspects, it was contended that the defendant - vessel was by HOM to M/s. North Star Marine Limited under the bill of sale dated 17.4.2018 and thereafter, M/s. North Star Marine Limited executed an agreement dated 18.4.2018 with the applicant for sale of the defendant - vessel. It was contended that the bunkers were delivered to the defendant - vessel on 10.5.2018 for which the invoice was raised on 13.5.2018 and the same was issued to Master and/or Owner and/or Managing Owners and/or Operators and/or Charterers and/or buyers of SHAKER. It was therefore contended that it is apparent from the said bill that the applicant was the buyer of the defendant - vessel (though not yet the owner of the defendant - vessel) and therefore, the invoice was raised in its name and thus, it was contended that the said fact is further supported by the fact that time to make the payment was until 7.8.2018 and thus, there is no inconsistency and/or change of stand as alleged by the plaintiff.
32. It was contended that the contention raised by the plaintiff that there is inconsistency in terms of certain documents is misplaced as no inconsistency has been pleaded in any of the pleadings. Referring to the arguments raised Page 52 of 111 C/AS/22/2018 IA ORDER by the plaintiff as regards inconsistency in 2 provisional certificates issued by Union of Comoros to M/s. North Star Marine Limited and the applicant, it was submitted that such argument is entirely misplaced. It was contended that there is no requirement for comparing the aforesaid registration certificates as the applicant having established that prior to arrest of the defendant - vessel, the ownership of the same had transferred from HOM to M/s. North Star Marine Limited, the plaintiff's alleged claim would not be tenable against the defendant - vessel as HOM would not be the owner of the defendant - vessel. It was contended that without prejudice to the same, the registration certificates show that the details regarding previous flag and name of the defendant - vessel are entered under the heading "Shipping Particulars". It was contended that Registry of Union of Comoros is recording all the particulars vizaviz the defendant - vessel. It was further contended that the certificate of registration issued by Union of Comoros reflect and maintain the previous name of the defendant - vessel and its flag are maintained as SHAKER 1 and TOGO which are the previous particulars of the defendant - vessel immediately preceding registration with the Union of Comoros and Page 53 of 111 C/AS/22/2018 IA ORDER therefore, it can never be that the previous name and flag of the defendant - vessel will reflect identical particulars. Otherwise, such requirement for previous particulars with the registry would be rendered redundant. It was further contended that what would be reflected in such certificate would only be change of ownership and that the name and flag is retained in any event when the defendant - vessel having been sold by M/s. North Star Marine Limited to the applicant. The learned counsel for the applicant relied upon the email dated 9.8.2018 issued by the Union of Comoros and contended that the clarification issued by Union of Comoros supports the said contention. It was contended that as stated in the email dated 9.8.2018 clearly shows that the allegation made by the plaintiff that even spelling of Sweden is misspelled, is without any substance and it is similar in both the Provisional Registration Certificates and the same has no effect on the genuineness of such certificates. It was contended that such a mistake cannot be termed as a triable issue for which the parties would have to lead the evidence.
33. It was further contended that even the allegation that the provisional registration certificate is sham, is without any substance.
Page 54 of 111C/AS/22/2018 IA ORDER It was further contended that the plaintiff cannot use the term "sham" as a catchall phrase in order to nullify the legal situation. It was further contended that the test to qualify a document as sham would be where the parties intentionally execute a document to give to third parties or to the Court the appearance of creating legal rights and obligations different from the actual legal rights and obligations intended. It was contended that the plaintiff has not come with a case or made out a case that the sale transaction between HOM and M/s. North Star Marine Limited and thereafter, to the applicant was done to meet the above test. Moreover, it is not the case of the plaintiff that the said Provisional Registration Certificate was issued by Union of Comoros to intentionally give appearance of ownership when that was not intended. Referring to Section 3 read with Schedule Part 1 of the Schedule of the Commercial Documents of Evidence Act, 1939, it was contended that the Union of Comoros Registration Certificates would fall within the ambit of Schedule I of the said Act and therefore, the mandatory presumption should be drawn towards its genuineness and accuracy. The plaintiff has placed no material on record to rebut this mandatory presumptions and the plaintiff has Page 55 of 111 C/AS/22/2018 IA ORDER merely raised vague and superficial allegations pertaining to the documents which in no way have a bearing the genuineness and accuracy of the same. The learned counsel for the applicant relied upon the judgment of the Hon'ble Supreme Court in the case of Union of India & Anr. Vs. Azadi Bachao Andolan & Anr. (2004) 10 SCC 1 on the said aspect. It was contended that the contention raised by the plaintiff that there is a belated registration of the defendant - vessel by M/s. North Star Marine Limited is of no consequence and the same is being raised just to prejudice the Court and would have no bearing on determining whether the owner of the defendant - vessel is HOM and/or the applicant and the fact that the M/s. North Star Marine Limited has preferred to register the defendant - vessel at a later date can never belie a sale transaction in favour of M/s. North Star Marine Limited. Relying upon the bill of sale dated 17.4.2018, it was contended that the said bill of sale is a document of title and by the said document, the title had passed from HOM to M/s. North Star Marine Limited on 17.4.2018. Relying upon the email of M/s. North Star Marine Limited dated 29.7.2018, it was contended that it is clear that the possession of the defendant - vessel was given to M/s. North Star Marine Limited on 7.6.2018. The defendant - vessel Page 56 of 111 C/AS/22/2018 IA ORDER was registered with Union of Comoros on 7.6.2018. It was further contended that it is plausible that M/s. North Star Marine Limited agreed to take delivery of the defendant - vessel only after HOM settled its prior liabilities. It was contended that in any event, M/s. North Star Marine Limited registered the defendant - vessel on 7.6.2018 and the same is prior to the date of arrest.
34. Denying the contention raised by the plaintiff that Comoros Registry has a flag of convenience and the Court should disregard the registration certificate if underlying documents are not produced, is exfacie a fallacy. It was contended that firstly, there is no pleadings alleging that the Union of Comoros is a flag on convenience. It was further contended that the registering a vessel with a flag convenience is a legitimate medium for registration of vessels and is a rampant industry practice. It was contended that the law does not discriminate between vessels registered with flags of convenience or otherwise and such argument is contrary to the pleadings of the plaintiff itself. It was further contended that it is not the case of the plaintiff that the Registry or the Union of Comoros is a party to fraud. It was reiterated that the applicant has produced a Page 57 of 111 C/AS/22/2018 IA ORDER bill of sale, receipt evidencing payment of consideration and the Provisional Registration Certificate issued by Comoros. Thus, the necessary underlying documents to prove the transactions have been furnished by the applicant, even the inspection of the original documents have been given to the advocate of the plaintiff and therefore, there is nothing warranting to disregard the Provisional Registration Certificate. Even the contention orally raised during the arguments that the registration certificates being a flag of convenience can be easily obtained through Dubai office, is misplaced. It was contended that the plaintiff has failed to show any basis for submitting that the registration certificates are issued by Dubai office of the Union of Comoros. It was contended that without prejudice to the above, even if it is assumed whilst denying that the said registration certificates are issued by Dubai office, the same has no bearing on the genuineness of the documents. It was further contended that the registration certificates issued by Dubai office of Union of Comoros do not in any way make it any less of document issued by Union itself. It was further contended that Dubai office, if any, would be a part of the Union with the necessary authority to issue certificates. It is common Page 58 of 111 C/AS/22/2018 IA ORDER for Registry to have consular offices in different parts of the world. Moreover the registration certificate on the face of it bears that the same is issued by the Union of Comoros Maritime Administration. It was further contended that the contention raised by the plaintiff that the bill of sale is only a document of title when read together with the sale agreement and payment proof, is erroneous and untenable. It was contended that the applicant has failed to show any legal position in any support of this contention and such requirement can never be sustained. Relying upon the decision in the case of The Bineta (supra), it was contended that the bill of sale itself is a document of title. It was further contended that the sale agreement and/or payment of proof have no bearing on the factum of sale. It can never be a sale. It was contended that it is very common for the commercial sale transactions to take place without an agreement and in such cases, it cannot be said that the purchaser has acquired bad title to the goods. It was further contended that similarly, transfer of title is not always based on payment of consideration and therefore, the said contention raised by the plaintiff is without any basis and the bill of sale does not require an agreement to validate the same or given any consideration Page 59 of 111 C/AS/22/2018 IA ORDER to determine whether bill of sale is a document of title. It was further contended that the contention raised by the plaintiff during the oral arguments to the effect that the intention of the parties was to create a charge and what was the intention of the parties is a triable issue completely belies the case of the plaintiff. It was further contended that if the document does not specify and the intention is not reflected from the document, then, the plaintiff has failed to make out any prima facie case or reasonably arguable best case for arrest.
35. Referring to the decision in the case of Chrisomar Corporation Vs. M.J.R. Steels Pvt. Ltd. (2017) SCC OnLine SC 1104, it was contended that the said judgment is not applicable to the present case. It was contended that the said judgment does not lay down any absolute proposition of transfer of ownership and is based on entire circumstances of the case therein. On the basis of the facts of the said case, it was contended that the plaintiff has failed to appreciate that the judgment and its findings have to be read with regard to the facts of that particular case and the judgment cannot be read in isolation and applied across the board to another matter which has different facts.
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36. Referring to the facts in the case of
Chrisomar Corporation (supra), it was
contended that in the case on hand, the facts are different. Reiterating facts of the case, it was contended that the case of back to back sale in the present case is proved by bill of sale, proof of payment consideration coupled with the certificate of registration from Union of Comoros. It was contended that HOM sold to M/s. North Star Marine Limited under the bill of sale dated 17.4.2018 and M/s. North Star Marine Limited sold the same to the applicant under the bill of sale dated 7.6.2018 and in facts of this case, with the case of Chrisomar Corporation (supra), it was contended that the said judgment is not applicable. Further, referring to the judgment in the case of Profer AG Vs. Owners of the Ship TJASKEMOLEN, (1997) C.L.C. 521 and referring to the facts of the said case, it was contended that the facts of the present case are completely different. It was further contended that unlike in the facts of the said case, there is admittedly no relation between M/s. North Star Marine Limited and HOM and therefore, the same was not a sale within the same group and with an intention to defraud HOM's creditors. It was further contended that Page 61 of 111 C/AS/22/2018 IA ORDER in the present case, it is not anybody's case that M/s. North Star Marine Limited acquired the vessel even before its incorporation. It was further contended that in the present case, unlike in the aforesaid judgment, the bill of sale was much before the order of arrest and in the said case, the bill of sale was after the arrest order which prompted the Court to believe it is sham and the deletion certificate unlike in the said case was applied by HOM to Togolese Registry on 6.6.2018 before the arrest.
37. Referring to the decision in the case of MSC Mediterranean Shipping Company Vs. M.V. MSC Clementina, (2015) SCC Online Bom 4224, it was contended that the said judgment would not apply to the present case on the ground that the present case involves commercial contractual dispute and therefore, the test of lifting the corporate veil as canvassed in the judgment would not apply to the present case as the same was based on a tortuous action which had elements of public interest involved. It was further contended that without prejudice to the above and in any event, the said judgment is not in consonance with the judgment of the Division Bench of this Court in the case of Croft Sales and Page 62 of 111 C/AS/22/2018 IA ORDER Distribution Ltd. (supra) as well as judgment of the learned Single Judge of this Court in the same case Croft Sales and Distribution Ltd. (supra) and therefore, the said judgment of the Hon'ble Division Bench would prevail.
38. Referring to the decision in the case of M.V. Cape Climber Vs. Glory Wealth Shipping Pvt. Ltd., (2015) SCC Online Guj l956, it was contended that the said judgment would not be applicable to the present case on the ground that the plaintiff has failed to plead fraud and/or make out any case warranting the lifting of the corporate veil. It was further contended that the plaintiff has only produced trade licenses to show that HOM and the Masraha have common Directors/shareholders. However, it is settled law that the same simplicitor does not warrant lifting of corporate veil in absence of substantial proof of fraud to defeat the claim of creditors and in respect of WadiAlNeel, the plaintiff has failed to produce any documents to show that the same is owned and controlled by Ayman and Hashim. It was further contended that the plaintiff has failed to make out any case much less prima facie and/or reasonably arguable best case for lifting the corporate veil. It was further contended that moreover, in the Page 63 of 111 C/AS/22/2018 IA ORDER present case, there is no finding much less conclusive finding of fraud with an intention to defeat creditors and in any event, this argument of the plaintiff can have no bearing on the case of the applicant or the present application as the plaintiff has not come with a case that M/s. North Star Marine Limited, HOM/Masraha/WadiAlNeel and the applicant are one of the same or have common Directors/ shareholders or that M/s. North Star Marine Limited and the applicant are the creation of HOM/Masraha/WadiAlNeel, which have been established to defraud the creditors or that the sale of the defendant - vessel was made by HOM to M/s. North Star Marine Limited and thereafter, to the applicant to defraud the alleged creditors of HOM/Masraha/WadiAlNeel.
39. Referring to the decision in the case of Bhatia Industries and Infrastructure Limited Vs. Asian Natural Resources (India) Limited, (2016) SCC OnLine Bom 10695, it was contended that the said judgment was in context of execution of decree and it was in this context that the learned Judge lifted the corporate veil. Admittedly, the present case is not at the stage of execution. It was further contended that the parties whose corporate veil was to be lifted were made part to the proceedings. This has not happened in the Page 64 of 111 C/AS/22/2018 IA ORDER present case as HOM, WadiAlNeel, Masraha have not been made party defendants. It was further contended that in the said judgment, there was a clear allegation of fraud and the Court concluded that the corporate structure was utilised to perpetuate fraud or to defeat the claims of the creditor. It was further contended that in the said case, the Court has arrived at finding that the corporate veil can be lifted in cases where there is enough material on record to show that there is an intention to defeat the claim of creditors and the Court has arrived at finding that the entities in question were formed to perpetuate fraud. In the present case, there is no material whatsoever to show that the entities were created in order to perpetuate a fraud to defeat creditors. There is only a bald allegation to this effect.
40. Referring to the decision in the case of VSNL vs. Kapitan Kud, (1996) 7 SCC 127, it was contended that the said judgment is based on the principle that as long as the plaintiff has an arguable case and the same is not hopeless beyond doubt, then, such an action should proceed to trial. It is pertinent to note that the Hon'ble Apex Court has analysed substantial evidence for reaching its conclusion that of there being triable issues Page 65 of 111 C/AS/22/2018 IA ORDER in the case. It was further contended that in the present case, the plaintiff has come with case that HOM/Masraha and WadiAlNeel are beneficially owned and controlled by Hashim and Ayman. It was further contended that the alleged basis for this is the fact that the aforesaid personnel are Directors in HOM and Masraha. It was further contended that the plaintiff save and except for the fact that the loan agreement for WadiAlNeel has been signed by Ayman (as a mere authorized signatory) has failed to show any document/ substantial basis showing that WadiAlNeel is owned/controlled by Hashim and Ayman. It was further contended that in the present case, even if this Court was to proceed on a demurrer, the case of the plaintiff is deemed to fail and is hopeless beyond doubt as the plaintiff has failed to establish its basis for proceeding in rem against the defendant - vessel in absence of any proof of the fact that WadiAlNeel and the defendant - vessel are beneficially owned/controlled by Hashim and Ayman. It was further contended that the plaintiff has failed to show any documents/ substantial evidence in support of the alleged triable issues raised by it and the same is based on surmises and conjectures.
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41. Referring to the decision in the case of M.V. Sea Renown & Anr. Vs. Energy Net Limited, (MANU/GJ/0322/2003), it was contended that the said judgment is based on legal position prior to the enactment of the Admiralty Act, 2017. This previous position is no longer good law as the current statute contemplates an action in rem only in respect of the underlying in personam liability of the owner and that the said judgment is rendered in context of supplies of bunkers and does not consider issues pertaining to ownership of the vessel. It was further contended that this was a case where necessaries i.e. bunker was supplied to the vessel and the learned Judge observed that it is customary in the shipping business for brokers to have the authority to order bunkers on behalf of the vessel and the owner and the owner being liable for the same and displacing the said assumption would not be feasible at the interlocutory stage. In the present case, it is apparent that the plaintiff has given an alleged loan/advance to WadiAlNeel (the manager of the vessels) in its personal capacity which would not constitute necessaries supplied to the vessel and therefore, no similar assumption can be raised in the present case. It was further contended that moreover, in this case, the Bunker Delivery Note duly acknowledged by the Master Page 67 of 111 C/AS/22/2018 IA ORDER and Chief Engineer of the vessel stated that the bunkers were delivered on board were on account of the owners and/or managing owners and/or managers of the vessel. It is in this context that the learned Judge has rendered its judgment. In the present case, the alleged loan agreement executed between the plaintiff and WadiAlNeel has no such statement binding the owners and any other related party. It was further contended that the learned Judge has passed its order after taking into account the averments in the plaint duly supported by substantial documents. In the present case, the plaintiff has failed to make any relevant averment and/or produce any document in support of its case that WadiAlNeel is beneficially owned/controlled by Hashim and Ayman and therefore, it forms a part of HOM/Masraha. It was further contended that in the said case, the learned Judge relying on the Hon'ble Apex Court judgment in the case of Kapitan Kud has arrived at a factual conclusion that it is difficult to conclude that hopelessness of the plaintiff's claim is beyond doubt. In the present case, the plaintiff has failed to meet this test as explained in Paragraph (i)(2),(3)(4) above.
42. Referring to the decision in the case of Eco Maritime Ventures Ltd. Vs. ING Bank NV, Page 68 of 111 C/AS/22/2018 IA ORDER rendered in O.J. Appeal no.14 of 2016 dated 21.9.2016, it was contended that the said judgment is based on legal position prior to the enactment of the Admiralty Act, 2017 and that this previous position is no longer good in law as the current statute contemplates an action in rem in respect of the underlying in personam liability of the owner of the vessel and the said judgment is rendered in context of supplies of bunkers and does not consider the issues pertaining to the ownership of the vessel. It was further contended that this case involved inherently triable factual disputes regarding the issues relating to payment of dues and whether any dues subsisted after the alleged payments towards the bunker supplies. Both parties produced substantial documents in support of their allegations and that the effect of ongoing foreign insolvency proceedings. That, the issues relating to stamp duty and the effect thereof on the reliability of a document at an interlocutory stage. It was further contended that in light of the foregoing issues, the learned Judge has held that the matter requires to be sent to the trial and evidence to be led. In the present case, no such inherently factual triable issues have been raised by the plaintiff. Moreover, the plaintiff has failed to produce any document in support of the Page 69 of 111 C/AS/22/2018 IA ORDER triable issues.
43. Referring to the decision in the case of M.V. Lucky Field Vs. Universal Oil Limited, 2008 (0) GLHEL HC 220877, it was contended that the said judgment is based on legal position prior to the enactment of the Admiralty Act, 2017 and that this previous position is no longer good in law as the current statute contemplates an action in rem in respect of the underlying in personam liability of the owner of the vessel and the said judgment is rendered in context of supplies of bunkers and does not consider issues pertaining to ownership of the vessel. It was further contended that in this case, the learned Judge relied upon the fact that the plaintiff had no knowledge or neither had he been provided with any information regarding the charterparty between the owner and the charterer and therefore, the owner was held to be liable. However, in the present case, the plaintiff was very well aware that his contractual counterpart was Manager of the vessel i.e. WadiAlNeel and therefore, the vessel cannot be made liable for the alleged personal liabilities of the Manager. It was further contended that the learned Judge came to a finding that bunkers supplied to the credit a vessel is a sufficiently triable issue to Page 70 of 111 C/AS/22/2018 IA ORDER arrest a ship irrespective of whether the owner is liable in personam or not. In the present case, no such assumption can be drawn as the alleged claim is of a different nature to bunker supplied. The alleged claim is based on an alleged loan agreements executed between the plaintiff and the Manager of the vessel (in its personal capacity) and therefore, warrants determination of the in personam liability of the owner of the vessel, if any. It was further contended that the learned Judge held that it was sufficiently triable that the Master/Chief Engineer of a vessel had actual or implied or ostensible authority to acknowledge bunkers to the credit of the vessel/its owners. However, in the present case, it would be a laughable assumption to make that the Manager of the vessel i.e. Wadi AlNeel would have authority to create a maritime lien over vessels for its personal loan. It was further contended that the learned Judge endorses the view of the Hon'ble Apex Court in the case of Kapitan Kud and follows that the plaintiff will have to establish a case which is arguable and not hopelessly beyond doubt.
44. Referring to the decision in the case of Socar Turkey Petrol Enerji Dagitim Vs. M.V. Amoy Fortune, rendered in Comm. Appl. (L) No.287 of Page 71 of 111 C/AS/22/2018 IA ORDER 2018, it was contended that the said judgment is not applicable to the present case.
45. The learned counsel for the applicant further relied upon the judgment of the Hon'ble Apex Court in the case of M/s. Kimberly Clarke Lever Private Vs. M.V. Eagle Excellence, rendered in Appeal no.240 of 2007 in Notice of Motion no.2346 of 2006 in Admiralty Suit no.12 of 2006 dated 13.8.2008, more particularly, Paragraphs 50, 51 and 52 and has contended that the principles of Order 38 and 39 of the Code of Civil Procedure, 1908 have to be borne in mind considering whether the plaintiff has prima facie case or not. On the aforesaid grounds, it was contended that the application be allowed.
46. Mr. Prathamesh Kamat, learned counsel has reiterated the submissions and the contentions raised by Mr. Soparkar and has dealt with the judgments cited by the plaintiff and has also on similar counts and has also relied upon the same judgment of the Hon'ble Bombay High Court.
47. In view of the fact that certain arguments were raised during the course of arguments at the stage of rejoinder, the plaintiff was permitted to make further submissions. The Page 72 of 111 C/AS/22/2018 IA ORDER plaintiff was further permitted to make submissions. It was contended that the case of the applicant that though the bill of invoice is dated 7.6.2018, the bunkers were standing since May, 2018. However, the same would have been consumed after 7.6.2018 and that is why the invoice is raised on the applicant is not pleaded anywhere and therefore, it is a triable issue. The learned counsel for the plaintiff further referred to the judgments which were cited by the applicant during the course of arguments. It was submitted that the judgment in the case of The Bineta (supra) relied upon by the applicant to contend that since the bill of sale and the certificate of registration is issued in its favour, the same must be regarded as proof of ownership and that the Court should look no further is not the ratio of the judgment. It was contended that the said judgment in fact, supports the case of the plaintiff. Referring to the facts of the said case, it was contended that the said judgment is in plaintiff's favour since the Court disregarded registration of the ship in Garthwaite's name and has held that Dalby has title in the ship having paid Ms. Simmonds. It was submitted that it is the case of the plaintiff that a party does not acquire title in a ship by registering her and the Court must examine the contract of sale, Page 73 of 111 C/AS/22/2018 IA ORDER intention parties and if payment is made to decide if the title is transferred from seller to buyer. Referring to the judgment of Profer AG (supra), it was submitted that English Court whilst considering the application for discharge of security basis alleged sale of a vessel is disregarded as Provisional Certificate of Registry and examined if the title in vessel passed from seller to buyer or not. It was contended that the Court examined the evidence produced by the parties and concluded that the sale was sham and that it did not have the effect of divesting Bayland of the beneficial ownership of the vessel. It was contended that the applicant distinguished the said judgment stating that since there is a Division Bench judgment of this Court on the issue of beneficial ownership, this judgment is not relevant. However, the plaintiff did not cite the abovereferred judgment in context of the beneficial ownership. Referring to the judgment of the Hon'ble Apex Court in the case of Chrisomar Corporation (supra) and more particularly, Paragraphs 55 to 62, it was contended on behalf of the plaintiff that the applicant claims to have purchased SHAKER 1 back to back from M/s. North Star Marine Limited who in turn purchased SHAKER 1 from HOM. However, the applicant has not even demonstrated transfer of title in SHAKER 1 Page 74 of 111 C/AS/22/2018 IA ORDER from M/s. North Star Marine Limited to it let alone from HOM to M/s. North Star Marine Limited and have tried to distinguish the said judgment on the ground that the facts are different. It was contended that the Hon'ble Apex Court was considering the issue of passing of title in case of back to back sale of a vessel. It was further contended that this Court is required to draw presumption in relation to the certificate of Registry produced by the applicant and prima facie there is material including inconsistencies in the applicant's case itself, which rebuts such presumption.
48. It was further contended during the arguments in rejoinder that the payment is not relevant since parties can sell the goods on credit. However, it is not the case of the applicant in the pleadings that the parties sold SHAKER 1 on credit. It was further contended that whether the parties intended to sell SHAKER 1 on credit is triable issue more so because the applicant has not produced the sale contracts.
49. It was further contended that it is the case of the applicant that it does not the matter if the applicant cannot show that it purchased SHAKER 1 so long as the applicant shows that the SHAKER 1 did not belong to HOM on the date Page 75 of 111 C/AS/22/2018 IA ORDER of the arrest. However, it was contended that the applicant approached this Court with a specific case that it is the owner of SHAKER 1 and the applicant cannot be now permitted to abandon this case. Secondly, it was contended that unless the applicant shows that it is owner of SHAKER 1, it does not have locus to maintain the present Civil Application. Based upon the aforesaid contentions as well as the contentions raised in the reply to the Civil Application, it was contended by the learned counsel for the plaintiff that the applicant has not established that there was a bonafide transfer of title in SHAKER 1 from HOM to M/s. North Star Marine Limited and from M/s. North Star Marine Limited to it prior to arrest and such issues are serious triable issues relating to sale of SHAKER 1. The learned counsel for the plaintiff reiterated the contentions which were taken in reply and contended that the plaintiff advanced money to meet operational and technical expenses of SHAKER 1 and SHAKER 2. It was contended that as set out in loan agreement, a lien was created on SHAKER 1 and SHAKER 2 to secure repayment of money advanced and this transaction is a "maritime claim" under Section 4(1)(c)(l) and/or (p) of the Act. It was further contended that Section 4(1)(c) of the Act is not restricted to mortgages, but Page 76 of 111 C/AS/22/2018 IA ORDER extends to charges. It was further contended that the section does not require the encumbrance to be registered or contained in a formal document, but only for it to have been created/exist. It was further contended that even an oral agreement to create a charge on vessel will be enforceable as a maritime claim under Section 4(1)(c) of the Act. It was also contended that what was created on SHAKER and SHAKER 2 was a charge akin to an equitable charge. Referring to the extracts from the book on The Law of Ship Mortgages (2nd Edition) and more particularly, Paragraphs 3.14, 3.71 to 3.73, it was contended that whether a charge is created depends on intention of the parties. Referring to the contents of the plaint, it was contended that the plaintiff has alleged that the parties created a charge on SHAKER and SHAKER 2 to secure repayment of the loan and even if the applicant denies this, what the intention of the parties was is a triable issue. It was further contended that every maritime claim arising out of a contract will have an underlying financial transaction attached to it. It was further contended that it is difficult to understand the contentions raised by the applicant that a charge does not fall within Section 4(1)(c) of the Act. In reply to the contentions raised by the applicant based upon Clause 3 of the loan Page 77 of 111 C/AS/22/2018 IA ORDER agreement to the effect that the parties intended to create a maritime lien on SHAKER and SHAKER 2 by relying upon Section 9 of the Act and has contended that the charge to secure money is not a maritime claim is incorrect. It was contended that it is not the plaintiff's case that the maritime lien was created on SHAKER and SHAKER 2 and so Section 9 of the Act has no application. It was further contended that it is the case of the plaintiff that the charge was created on SHAKER and SHAKER 2. The fact that the parties may have called the "charge" as a maritime lien in the loan agreement makes no difference and all that this Court is required to determine is if parties intended to create a charge on SHAKER and SHAKER 2 or not. It was contended that it is settled law that without interpreting contracts, what is important is not "headings" or "specific words", but the intention of the parties and "businesslike"
interpretation must be given to the contracts which are in form of informal documents. Relying upon the judgment of the Bombay High Court in the case of Mumbai Metropolitan Region Development Authority Vs. Unity Infraproject Ltd., 2008 SCC OnLine Bom 190 and more particularly, Paragraphs 15, 19 and 35, it was contended that if the test provided in the said judgment is to apply, it is clear Page 78 of 111 C/AS/22/2018 IA ORDER that the parties intended to create a charge/encumbrance on SHAKER and SHAKER 2 to secure the repayment of amounts advanced. It was alternatively submitted by the plaintiff that since the amount advanced by it were utilized to defray operational and technical expenses of SHAKER and SHAKER 2, the said claim falls within Section 4(1)(l) and/or 4(1)
(p) of the Act and therefore, it was contended by the plaintiff that the claim of AED 304,000 is a maritime claim within the meaning of Section 4(1) of the Act. The learned counsel for the plaintiff reiterated the contentions raised as regards beneficial ownership of SHAKER, SHAKER 1 and SHAKER 2 and contended that the issue of beneficial ownership is only relevant to claim for US$ 204,508 since that claim relates to SHAKER 2. It was further contended that as far as SHAKER 1 and SHAKER 2 are concerned, as per the case of the plaintiff, both are owned by HOM. Thus, SHAKER and SHAKER 1 are sisters ships and SHAKER 1 can be arrested to recover the amounts due on SHAKER under Section 5(2) of the Act. The learned counsel has also tried to explain the relationship between HOM and Masraha Shipping SA who is the registered owner of SHAKER 2 relying upon the trade licence issued for HOM and registration certificate issued for Masraha which is part of the documents Page 79 of 111 C/AS/22/2018 IA ORDER produced along with the plaint. It was contended that HOM and Masraha are owned and controlled by father and son duo - Hashim Omer Mohamed Ali Adlan (Hashim) and Ayman Hashim Omer Mohamed (Ayman). It was therefore contended that Hashim and Ayman are 100% owners of HOM as well as Masraha to buttress the contention that SHAKER 1 and SHAKER 2 are sister vessels. Relying upon the judgment of the Bombay High Court in the case of MSC Clementina, 2015 SCC OnLine Bom 4224, (Paragraph 41 and 42) as well as the judgment of the Bombay High Court in the case of Bhatia Industries & Infrastructure Ltd., 2016 SCC OnLine Bom 10695 (Paragraphs 19, 20, 26, 27, 34, 37 and 53) and the judgment of this Court in the case of M.V. Cape Climber, 2015 SCC OnLine Guj 956 (Paragraph 4.3, 4.6, 4.7 and 58 to 60), it was contended that the plaintiff provides reason why this is a fit case for this Court to look beyond the registered owners and to the beneficial owners, as averred in the plaint. It was contended that this Court must look beyond the registered owners and to the beneficial owners of SHAKER, SHAKER 1 and SHAKER 2. It was also contended that the judgments of the Bombay High Court in the case of MSC Clementina (supra) as well as Bhatia Industries & Infrastructure Ltd.Page 80 of 111
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(supra) clarify the question of beneficial
ownership is something to be determined at the trial. The learned counsel for the plaintiff referring to the judgment of MSC Clementina (supra) contended that the applicant has relied upon the observations made in Paragraph 23 of the said judgment. It was contended that the said Paragraph records a submission and not a finding and relying upon Paragraphs 41 and 42 of the said judgment, it was contended by the learned counsel for the plaintiff that though the claim in the said case arises out of a tort, the discussions and findings on the issue of beneficial ownership indicate that the Court did not apply a different standard merely because it was considering a claim in tort. Referring to the contentions raised by the applicant as regards the judgment in the case of Bhatia Industries & Infrastructure Ltd. (supra) which was general principals relating to corporate law are applied by Courts without considering the beneficial ownership even in the admiralty context. It was further contended that the fact that the Court pierced the corporate veil in execution makes the plaintiff's case better. It was therefore contended that if the corporate veil can be pierced in execution, it is clear that this Court can so do in a Suit. The learned counsel for the plaintiff submitted that the Page 81 of 111 C/AS/22/2018 IA ORDER facts in the case of Croft Sales and Distribution Ltd. (supra) and confirmed in appeal by the Division Bench of this Court are different. Comparing the facts of the said case, it was contended that the facts in the case on hansd are different as the plaintiff had demonstrated that SHAKER, SHAKER 1 and SHAKER 2 are owned and controlled by Hashim and Ayman. Referring to the judgment in the case of Croft Sales and Distribution Ltd. (supra), it was contended that the facts of the case both before the learned Single Judge as well as the Division Bench were different than the present. It was contended that the primary base for vacation of the order of arrest in matter of M.V. Basil (supra) was because the Court found that the plaintiff did not have a maritime claim under 1999 arrest convention. The learned counsel for the plaintiff also referred to the judgments relied upon by the applicant in the cases of Western Light, 2014 SCC OnLine Bom 257 (Paragraphs 17 and 19) and Universal Marine & Anr. Vs. M.T. Hartati & Anr., 2014 SCC OnLine Bom 223 and contended that the same are based on the fact that the plaintiff did not plead that there was an underlying element of dishonesty on the part of the defendant in creating separate entities and therefore, it Page 82 of 111 C/AS/22/2018 IA ORDER is held that it is not possible to look at who is the beneficial owner of the vessel. It was further contended that it is the case of the plaintiff that Hashim and Ayman have incorporated entities to defeat the creditors.
It was also contended that both the judgments were subsequently considered by the same Judge in the matter of MSC Clementina (supra) and it was held that in facts of the said case, the issue of beneficial ownership can be examined even de hors an element of fraud/dishonesty. It was submitted that even the judgment in the case of Universal Marine (supra) has been considered by this Court in the matter of M.V. Cape Climber (supra) and after such consideration, this Court upheld the order of arrest.
50. Referring to Paragraphs 13, 17 and 19 of the judgment of the Bombay High Court in the case of M.V. Rainbow, 2013 SCC OnLine Bombay 733, it was contended that in the present case, the plaintiff does not rely on suspicion and there is material on record to shows that all entities are owned/controlled by Hashim and Ayman. Further, referring to Paragraph 13 of the said judgment, it was contended by the learned counsel for the plaintiff that on the contrary, the said judgment is in favour of Page 83 of 111 C/AS/22/2018 IA ORDER the plaintiff and that if all Companies are 100% subsidiaries of a common holding Company, it is possible to argue that there is a common beneficial owner and it is the case of the plaintiff that HOM and Masraha are 100% owned by Hashim and Ayman. Relying upon Paragraph 5 of the plaint, it was contended by the learned counsel for the plaintiff that the plaintiff has pleaded the case that WadiAlNeel is another entity incorporated by Hashim and Ayman and is owned and controlled by them. It was further contended that the question of ownership or control of WadiAlNeel is something to be proved at the trial and at the interim stage, the plaintiff is not required to show that it is pleaded and prima facie demonstrated connections between WadiAlNeel and Hashim/Ayman, which is done by the plaintiff.
51. It was also contended that it is the case of the plaintiff that WadiAlNeel acted as the representative or under authority of HOM and Masraha and concluded contracts on behalf of both HOM and Masraha, more particularly, as stated in Paragraphs 6 and 12 of the plaint. It was further submitted that the plaintiff has filed documents which bare out that Wadi AlNeel were managers of SHAKER 1 and SHAKER
2. It was also contended that WadiAlNeel Page 84 of 111 C/AS/22/2018 IA ORDER executed shipman agreement on behalf of Masraha. Referring to the email at Page59 of the plaint in Admiralty Suit no.22 of 2018, which is an email addressed by WadiAlNeel in which WadiAlNeel refers to its 3 vessels and makes inquiries about dry docking of its vessel SHAKER 2. It was therefore contended that even there if prima facie material which bears out that WadiAlNeel is intrinsically connected with Hashim, Ayman, HOM and Masraha. It was also contended that the applicant cannot question WadiAlNeel's status/ authority, inasmuch as, in support of its claim that it purchased SHAKER 1, the applicant relies on a bill of sale executed by WadiAlNeel in favour of M/s. North Star Marine Limited. It was contended that thus, the bill of sale is signed by the same person who signed addendum to the loan agreement. Referring to Paragraph 8 of the complaint, it was submitted by the learned counsel for the plaintiff that the plaintiff identifies the signature of Hashim. On the aforesaid contentions, it was therefore contended by the learned counsel for the plaintiff that this Court must look at the beneficial owner of the vessel and once this is done, it becomes clear that SHAKER, SHAKER 1, SHAKER 2, HOM, Masraha and WadiAlNeel are all owned and controlled by Hashim and Ayman. In light of the aforesaid Page 85 of 111 C/AS/22/2018 IA ORDER submissions, it was contended by the learned counsel for the plaintiff that the order of arrest must be continued as there are serious triable issues which arise and so the arrest cannot be vacated at the interim stage.
52. Having considered the submissions made by both the sides and upon perusal of the record of both the Suits and also considering the judgments cited by both the sides, the facts of both the Suits deserve to be noted at this stage.
53. In Admiralty Suit no.22 of 2018, the plaintiff has prayed for arrest of the defendant-vessel- RORO SHAKER 1 (IMO7929102). It is averred in the Suit that the registered owner of the defendant vessel is one HOM Management Consultancy and WadiAlNeel Forwarding and Shipping is the Manager and the defendant vessel is registered with Togolese Maritime Authority. The said assertion is made on the basis of the document at ExhibitA. The claim raised in the Suit, more particularly, in Paragraph 4 of the Suit relates to steel renewal hull treatment and repairs of the defendant - vessel. The plaintiff has also relied upon the work completion certificate, the invoices dated 26.6.2016, 10.7.2016 and 28.7.2016 and the factum of two cheques having Page 86 of 111 C/AS/22/2018 IA ORDER been made by the Manager of the defendant vessel which have been dishonoured and thus, the amount claimed in the Suit is on the said basis and therefore, the plaintiff has prayed for a decree in its favour and against the defendantvessel for sum of AED 598,487 along with 12% interest per annum on the principal amount of AED 535,000 from the date of filing of the Suit till payment and further cost of Rs.5,00,000/ along with other prayers.
54. In Admiralty Suit no.24 of 2018, the plaintiff has relied upon the similar document dated 10.6.2018. The said Suit is based on the agreement dated 2.7.2017 with WadiAlNeel and according to the plaintiff, WadiAlNeel acting for and on behalf of and with authority of HOM and Masraha, concluded the said agreement for an advance of AED 300,000 which was utilized to defray the operational expenses relating to the vessels - SHAKER 1 and SHAKER 2, more particularly, as set out in Paragraph 6 of the plaint. Even in this Suit, it is the case of the plaintiff that the plaintiff did not receive any payment in terms of the agreement and hence, the plaintiff deposited post dated cheques which were dishonoured due to insufficient funds. It is also averred in the plaint that another agreement dated 16.3.2018 was executed between Page 87 of 111 C/AS/22/2018 IA ORDER WadiAlNeel and the plaintiff being Financial Rights Settlement Agreement and according to the plaintiff, such agreement was executed by Hashim Omar Mohamed Ali Adlan on behalf of WadiAlNeel. It is the case of the plaintiff that the claim is a maritime claim falling within the meaning of Section 4(1)(c)(l) and/or (p) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. Further claim of USD 204,508.44 is based on ship management agreement dated 2.7.2017 between WadiAlNeel and according to the plaintiff, WadiAlNeel acting for and on behalf of/with the authority of Masraha concluded the ship management agreement relating to vessel - SHAKER 2 with the plaintiff, pursuant to which, the plaintiff rendered technical and crew management service to SHAKER 2. It is alleged that as there was default in payment by WadiAlNeel/Masraha, reminders were sent and thus, it is the case of the plaintiff that it is a maritime claim falling within the meaning of Section 4(1)(c) of the Act. It deserves to be noted that certain other contentions are also raised which, in opinion of this Court, are not necessary to be dealt with at this stage and the aforesaid observation is only to describe the basis on which two Suits are preferred by the plaintiff against the defendant - vessel.
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The said facts are also evident from the
particulars of claim raised in the Suit. Upon considering the submissions made in both the applications mainly the following questions arise for consideration of this Court:
(a) Whether the defendant vessel is of the ownership of HOM/Masraha/WadiAlNeel as Manager or not on the date of both the arrest orders or whether HOM/Masraha/WadiAlNeel were not the owners, but the applicant was the owner, title having been passed from HOM to M/s. North Star Marine Limited and M/s. North Star Marine Limited to the applicant.
(b) Whether the plaintiff has made out a case to establish that HOM, Masraha and WadiAlNeel are all one and managed by the same entities, the father son duo - Hashim and Ayman and whether the plaintiff has made out a case that the beneficial owner of the defendant vessel-SHAKER 1 and SHAKER 2 are all one and resultantly, the defendant vessel - SHAKER 1 and SHAKER 2 are sister vessels.
(c) Whether the claims raised in both the Suits are maritime claims within the meaning of the provisions of the Act and more particularly, Section 4 of the Act? Whether the amount due and payable under the loan agreement is a Page 89 of 111 C/AS/22/2018 IA ORDER maritime claim under the provisions of the Act or not and whether the counter security ought to be furnished at this stage?
55. The maritime claim as provided under Section 4 of the Act is as under: "4. Maritime claim.- (1) The High Court may exercise jurisdiction to hear and determine any question on a maritime claim, against any vessel, arising out of any--
(a) dispute regarding the possession or ownership of a vessel or the ownership of any share therein;
(b) dispute between the coowners of a vessel as to the employment or earnings of the vessel;
(c) mortgage or a charge of the same nature on a vessel;
(d) loss or damage caused by the operation of a vessel;
(e) loss of life or personal injury occurring whether on land or on water, in direct connection with the operation of a vessel;
(f) loss or damage to or in
connection with any goods;
(g) agreement relating to the
carriage of goods or passengers on board a vessel, whether contained in a charter party or otherwise;
(h) agreement relating to the use or Page 90 of 111 C/AS/22/2018 IA ORDER hire of the vessel, whether contained in a charter party or otherwise;
(i) salvage services, including, if applicable, special compensation relating to salvage services in respect of a vessel which by itself or its cargo threatens damage to the environment;
(j) towage;
(k) pilotage;
(l) goods, materials, perishable or nonperishable provisions, bunker fuel, equipment (including containers), supplied or services rendered to the vessel for its operation, management, preservation or maintenance including any fee payable or leviable;
(m) construction, reconstruction, repair, converting or equipping of the vessel;
(n) dues in connection with any port, harbour, canal, dock or light tolls, other tolls, waterway or any charges of similar kind chargeable under any law for the time being in force;
(o) claim by a master or member of the crew of a vessel or their heirs and dependents for wages or any sum due out of wages or adjudged to be due which may be recoverable as wages or cost of repatriation or social insurance contribution payable on their behalf or any amount an employer is under an obligation to pay to a person as an employee, whether the obligation arose out of a Page 91 of 111 C/AS/22/2018 IA ORDER contract of employment or by operation of a law (including operation of a law of any country) for the time being in force, and includes any claim arising under a manning and crew agreement relating to a vessel, notwithstanding anything contained in the provisions of sections 150 and 151 of the Merchant Shipping Act, 1958;
(p) disbursements incurred on behalf of the vessel or its owners;
(q) particular average or general average;
(r) dispute arising out of a contract for the sale of the vessel;
(s) insurance premium (including mutual insurance calls) in respect of the vessel, payable by or on behalf of the vessel owners or demise charterers;
(t) commission, brokerage or agency fees payable in respect of the vessel by or on behalf of the vessel owner or demise charterer;
(u) damage or threat of damage caused by the vessel to the environment, coastline or related interests; measures taken to prevent, minimise, or remove such damage; compensation for such damage; costs of reasonable measures for the restoration of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; or any other damage, costs, or loss of a similar nature to those Page 92 of 111 C/AS/22/2018 IA ORDER identified in this clause;
(v) costs or expenses relating to raising, removal, recovery, destruction or the rendering harmless of a vessel which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such vessel, and costs or expenses relating to the preservation of an abandoned vessel and maintenance of its crew; and (w) maritime lien."
Section 5 of the Act reads as under: "5. Arrest of vessel in rem. (1) The High Court may order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding, where the court has reason to believe that--
(a) the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected; or
(b) the demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the demise charterer or the owner of the vessel when the arrest is effected; or
(c) the claim is based on a mortgage or a charge of the similar nature on the vessel; or Page 93 of 111 C/AS/22/2018 IA ORDER
(d) the claim relates to the ownership or possession of the vessel; or
(e) the claim is against the owner, demise charterer, manager or operator of the vessel and is secured by a maritime lien as provided in section
9. (2) The High Court may also order arrest of any other vessel for the purpose of providing security against a maritime claim, in lieu of the vessel against which a maritime claim has been made under this Act, subject to the provisions of subsection (1):
Provided that no vessel shall be arrested under this subsection in respect of a maritime claim under clause (a) of subsection (1) of section 4."
56. It is the case of the applicant in the application itself that the defendant - vessel was purchased by the applicant by back to back sale on 18.4.2018. In the application, the applicant has relied upon the Provisional Registration Certificate of vessel - SHAKER 1 issued by Union of Comoros, which is dated 8.6.2018, wherein the name of the ship is changed to AKER. The said certificate is valid only upto 30.8.2018, that too, only for single voyage in ballast condition from OPL Salalah (Oman) to Alang (India), Chittagong (Bangladesh) or Gadani (Pakistan) for Page 94 of 111 C/AS/22/2018 IA ORDER demolition, wherein the name of the present applicant is mentioned. The same is issued by the Deputy Commissioner for Maritime Affairs.
It deserves to be noted that the transfer of ownership of the defendant vessel from HOM to M/s. North Star Marine Limited was not supported by any such Provisional Registration Certificate. However, as the said contention was raised in the reply to the Civil Application by the plaintiff, in rejoinder again, a Provisional Registration Certificate issued by Union of Comoros by the Deputy Commissioner for Maritime Affairs on 7.6.2018 is annexed at AnnexureC to the rejoinder, wherein name of the owner is mentioned as M/s. North Star Marine Limited (Nevis). All other details have remained the same. In order to support the claim raised by the applicant that the consideration has been paid by the applicant to M/s. North Star Marine Limited on the basis of the alleged back to back contract, the applicant has relied upon a communication dated 8.6.2018 addressed by M/s. North Star Marine Limited to Marlin Maritime Trading Ltd., wherein it is indicated that consideration is paid in AED 2,852,000.00 of United Arab Dirhams in cash pursuant to the Memorandum of Agreement dated 18.4.2018. However, the sale agreement is not brought on record. It is also a matter of record that the Page 95 of 111 C/AS/22/2018 IA ORDER applicant relies upon the bill of sale dated 7.6.2018 issued by M/s. North Star Marine Limited in favour of the applicant, which is also dated 7.6.2018. As pointed out by the plaintiff, Union of Comoros, under the maritime administration, has its own rules for provisional registration. The requirement no.2 relating to bill of sale clearly provides that a copy of the bill must be submitted to the administration and the signature of seller must be legalized by a notary/lawyer/consul or any other official authority. Such requirement is provided under the Rules of Union of Comoros for permanent registration. As the facts unfold from the record of the Suit, the defendant vessel has sailed to the port at Alang in India. The defendant vessel - SHAKER 1 as per the departure notice which is relied upon at AnnexureB to the reply by the plaintiff, sailed from the port known as Kas in Sultanate of Oman and the next port of call is mentioned as Alang, India. The date of sail is mentioned as 8.6.2018. The flag/port of Registry is mentioned as Togo. The owner of the vessel is mentioned as WadiAlNeel Company. Crew and Nationality is mentioned as 13/India. Name of Master is mentioned as Paswan and such declaration is dated 7.6.2018 made by Salalah Shipping and Marine Services Co. LLC. to the Director of Customs, Royal Page 96 of 111 C/AS/22/2018 IA ORDER Oman Police, Salalah. The said certificate therefore indicates that on its last voyage before reaching Alang port that is to say before the order of arrest, it is declared before the competent authority by the shipping agent that the owner of the vessel is WadiAl Neel. Vizaviz such piece of evidence, the applicant has relied upon the email issued by Comoros Marine administration branch office in UAE dated 25.7.2018 to one Azar Saiyad Mohammad a copy of the bill of sale issued by HOM C/o WadiAlNeel Forwarding and Shipping Company LLC in favour of M/s. North Star Marine Limited for the defendant vessel SHAKER 1 on 17th day of April, 2018 and as stated hereinabove, on the communication dated 8.6.2018 issued by M/s. North Star Marine Limited to the applicant and the copy of the Provisional Registration Certificate issued by the Union of Comoros dated 7.6.2018. In this set of evidence which is on record, even if the provisions of the Commercial Documents of Evidence Act, 1939 is made applicable as averred by the applicant, the fact remains that when the defendant vessel sailed from its last port from UAE, as per the said departure notice, which is issued by the port control shows different details. Even the name of the Master mentioned in the departure notice dated 7.6.2018, wherein it is recorded Page 97 of 111 C/AS/22/2018 IA ORDER that the owner of the vessel is WadiAlNeel Company is Pasvan (as shown Pasvan Dharmendra by the applicant in the application). The aforesaid facts and the documents on record therefore indicate different versions as regards the ownership of the defendant vessel which would, in opinion of the Court, requires to be proved by the parties asserting accordingly. In such set of facts and circumstances therefore, whether the applicant has become owner before the date of the arrest or not would require detailed scrutiny and hence, it is a triable issue, as rightly contended by Mr. Sheth, learned counsel for the plaintiff. Unless and until the same is proved, the departure notice dated 7.6.2018 cannot be discarded at this stage. It is no doubt true that the bill of sale is an important document which may indicate a transfer. However, as the facts reveal, the bill of sale from HOM to M/s. North Star Marine Limited is dated 17.4.2018 and the Provisional Registration Certificate is dated 7.6.2018. However, the contract of sale is not brought on record.
57. Furthermore, even considering the provisions of Section 3 of the Commercial Documents of Evidence Act, 1939, the same provides for a presumption as regards the registration Page 98 of 111 C/AS/22/2018 IA ORDER certificate as per the Schedule PartI. However, the certificates of Registry which are relied upon by the applicant are provisional in nature which is not notarized and therefore, the same cannot be considered as registration certificate as envisaged under Section 3(a) of the Act read with Entry no.7 of ScheduleI PartI of the said Act and unless and until the said aspect is put to trial, it cannot be conclusively held that the applicant was the owner of the defendant vessel on the date of the arrest.
58. Even it deserves to be noted that the Provisional Certificate of Registration by the Union of Comoros is relied upon at the stage of deciding the application for vacation of the exparte order of arrest and the same cannot be construed as a conclusive proof. In light of the aforesaid therefore, the case of the applicant that the defendant vessel was transferred in favour of the applicant before the date of arrest is a disputed question of fact and the triable issue.
59. Considering the claim raised by the plaintiff in the Suits, it will have to be determined whether it is a maritime claim under Sections 4(1)(c), 4(1)(l) or 4(1)(p) of the Act as contended by the plaintiff in the Suits and in Page 99 of 111 C/AS/22/2018 IA ORDER light of the facts, the same can be determined by appreciation of the evidence at the time of trial and in facts of this case, it cannot be decided conclusively at this prima facie stage.
60. It is a matter of fact as observed hereinabove that in rejoinder for the first time, the applicant has tried to bring on record the fact that the consideration was paid in cash. However, except the letter from M/s. North Star Marine Limited, nothing is brought on record in form of a receipt, which also would require scrutiny at the time of trial.
61. As such issues are required to be gone into in detail after scrutiny and appreciation of the evidence that may be adduced. From the material on record, it cannot be conclusively held that the applicant has become the owner of the defendant-vessel. As observed hereinabove, the question whether the applicant was owner of the defendant - vessel on the date of the arrest or not is a disputed question of fact. Similarly, whether the defendantvessel SHAKER 1 and SHAKER 2 are sister vessels or not, shall also follow the same course.
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62. As averred in the plaint as well as the case of the applicant and the reply to the applications also indicate that it is the case of the plaintiff that HOM, Masraha and Wadi AlNeel - all 3 concerns, though names are different, are owned by the father son duo Hashim and Ayman with 100% share and prima facie, it bornes out from the record that the same are meant, owned and controlled by the same persons, more particularly, as averred in the plaint and therefore, even the issue of beneficial ownership will have to be examined in detail in the Suit.
63. The same cannot be decided at the stage of examining the prima facie case of the plaintiff. The record indicates that HOM was owner of vessel - SHAKER 1 and Masraha was owner of the vessel - SHAKER 2 and are manned by the same persons i.e. Hashim and Ayman, father son duo, which can prima facie be culled out from the record of the Suit as well as the present applications.
64. The learned counsel for the applicant has relied upon the judgment of Croft Sales and Distribution Ltd. (supra), more particularly, Paragraphs 7.2, 8.2 and 8.4 as well as the Division Bench judgment confirming the said judgment and has contended that the corporate Page 101 of 111 C/AS/22/2018 IA ORDER veil of an entity would have to be lifted which can only be done if there is a finding of fraud coupled with an intention to defeat the claim of the creditors and only because the common Directors and common shareholders of the Company or common address by itself are not the grounds to arrive at a finding that the corporate entities are one of the same nor does it warrant the finding of fraud. The learned Single Judge of this Court has considered the facts of the said case in Paragraphs 15 and 16 of the said judgment and in Paragraph 21.2, it is observed by this Court that in facts of this case, no such exercise is necessary in view of legal and valid incorporation of the Company registered with the countries as per the documents produced as early as in 2007 and on such factual basis, the Admiralty Suit came to be dismissed. The said judgment has been confirmed by the Hon'ble Division Bench. However, in case on hand, as observed hereinabove, the applicant has relied upon the Provisional Registration Certificate issued by the Union of Comoros which has not only limited validity, but the same requires to be proved by the applicant and the same is a triable issue, as rightly contended by the learned counsel for the opponentplaintiff and therefore, the ratio laid down by the learned Page 102 of 111 C/AS/22/2018 IA ORDER Single Judge in the case of Croft Sales and Distribution Ltd. (supra) as well as the judgment of the Division Bench in the said case is not applicable to the facts of the present case.
65. The learned counsel for the applicant has relied upon the judgment of the Hon'ble Bombay High Court in the case of M.V. Rainbow, 2013 (supra) and has contended that the applicant cannot be considered to be the beneficial owner of the defendant - vessel and therefore, it was contended that the applicant cannot be made liable for the claim of WadiAlNeel or Masraha. It was also contended that thus, the plaintiff has not been able to establish a reasonably arguable case i.e. prima facie case and relying upon the observations of the Hon'ble Bombay High Court, more particularly in Paragraphs 13 to 19, it was contended by the learned counsel for the applicant that the defendant-vessel cannot be arrested only mere on suspicion raised. It was therefore submitted that as held by the Hon'ble Bombay High Court, the balance of convenience would be against the arrest of the defendant - vessel. On the said aspect, the learned counsel for the applicant has also relied upon the judgment of the Hon'ble Bombay High Court in the case of Universal Marine (supra) and Page 103 of 111 C/AS/22/2018 IA ORDER submitted that a person can own different ships in the name of different Companies and the onus is on the plaintiff to show that the same is sham and in the case on hand, the plaintiff has not been able to even establish that prima facie and therefore, the arrest orders deserve to be vacated as prayed for. In the case on hand, the case of the applicant that the ownership is changed as observed hereinabove is not fully established and even at the cost of repetition, it deserves to be observed that the said claim is based on the provisional certificates and copy of bill of sale which are yet to be examined and proved. In facts of this case, the aforesaid two judgments would not be applicable.
66. The learned counsel for the applicant has also relied upon the judgment in the case of The Bineta (supra) to contend that the bill of sale is a document of title by virtue of which the title passes. Apart from the fact that in the present case, the applicant has relied upon the Provisional Registration Certificate with limited validity, the said judgment is based on peculiar facts of the said case and even though the registration was existing in name of the first purchaser who had not paid the price, the Court has came to the conclusion that the original owner had a right Page 104 of 111 C/AS/22/2018 IA ORDER to sell the vessel to another person and has held that as the plaintiff had paid the purchase price to the original owner and that the original owner had a right to resale the ship under Section 48(3) of the Sale of Goods Act, the plaintiff had a good title from the bill of sale. The said judgment would not be applicable in the present case.
67. The learned counsel for the applicant has relied upon the judgment in the case of Union of India Vs. Azadi Bachao Andolan (supra) in their written submissions and has contended that in the said judgment, the Hon'ble Apex Court has considered the constitution of sham document of transaction. The Hon'ble Apex Court has examined the circular issued by the Central Board of Direct Taxes with regard to assessment of case, in which, IndoMauritius Double Tax Avoidance Convention (DTAC), 1983 was applied and it was examined in relation to the provisions of Sections 90 and 119 of the IncomeTax Act, 1961. The Hon'ble Apex Court has examined the circular dated 13.4.2000 in a different context and the same is not applicable in the case on hand.
68. The learned counsel for the applicant has further relied upon the judgment of the Hon'ble Bombay High Court in their written Page 105 of 111 C/AS/22/2018 IA ORDER submissions in the case of M/s. Kimberly Clarke Lever Private (supra) and has contended that relying upon the observations made by the Delhi High Court in Paragraphs 50, 51 and 52, it was contended that the provisions of Order 38 and 39 of the Code of Civil Procedure, 1908, though would not directly apply, the principles thereunder could not be forgotten while dealing with the matter at the stage where the defendant having released the ship on furnishing the security applies for release of security on the ground that the plaintiff has no prima facie or reasonably arguable best case. The Division Bench of Hon'ble Bombay High Court in the said case, has come to the conclusion that the learned Single Judge of the Hon'ble Bombay High Court on perusal of the material produced on record has clearly arrived at a finding that inspite of the fact that the Suit is essentially based on account of alleged damages caused to the goods, the plaintiff did not take any pain to have a joint survey of the goods before they were subjected to alleged repairs on account of their alleged damage. On considering the facts of the said case, the Division Bench has confirmed the view taken by the learned Single Judge in the said case. In facts of this case, it cannot be said that the plaintiff has not been able to prove the prima facie case and Page 106 of 111 C/AS/22/2018 IA ORDER therefore, even the said judgment would not be applicable in the present case.
69. The learned counsel for the plaintiff has relied upon the judgments in the cases of VSNL (supra) and more particularly, Paragraphs 13, 14 and 15, M.V. Sea Renown (supra) and more particularly, Paragraphs 9 and 14, Eco Maritime Ventures Ltd. (supra), more particularly, Paragraphs 4.20, 5.0 to 5.2, 5.7 and 5.10, M.V. Lucky Field (supra), more particularly, Paragraphs 9(A), 9(A)(vii), 19 to 22 and 26 and Socar Turkey Petrol Enerji Dagitim (supra), more particularly, Paragraphs 33, 35, 37 and 39, to buttress the argument that if there is a reasonably arguable prima facie case and if triable issues are there, the proper course is for the defendant to file a written statement and all issues can be decided at the trial.
70. Over and above the aforesaid judgments, the plaintiff has, in their written submissions, also relied upon the judgment of the Hon'ble Apex Court in the case of Smt. Sudha Devi (supra) to contend that the affidavit is not included in Section 1 of the Evidence Act and Section 1 of the Evidence Act does not apply to the affidavits and therefore, it was Page 107 of 111 C/AS/22/2018 IA ORDER contended that the provisions of the Commercial Documents of Evidence Act, 1939 cannot be construed to be conclusive proof.
71. Relying upon the judgment of the Hon'ble Apex Court in the case of Chrisomar Corporation (supra), it was contended by the learned counsel for the plaintiff that in the case on hand also, a party claiming to have obtained title pursuant to a back to back sale must prove and explain each back to back sale and on the basis of the facts of this case, it was contended that the applicant has not even demonstrated transfer of title in SHAKER 1 from M/s. North Star Marine Limited to it later on from HOM to M/s. North Star Marine Limited. The plaintiff has also in written submissions has relied upon the judgment of the Hon'ble Bombay High Court in the case of Mumbai Metropolitan Region Development Authority (supra) and more particularly, relying upon the observations of the Hon'ble Bombay High Court in Paragraphs 15, 19 and 35 has contended that if the test as provided in the said judgment is applied to the present case, it is clear that the parties intended to create a charge/encumbrance on SHAKER and SHAKER 2 to secure repayment of the amounts advanced. Similarly, relying upon the Page 108 of 111 C/AS/22/2018 IA ORDER judgments in the case of MSC Mediterranean Shipping Company (supra), more particularly, Paragraphs 41 and 42, Bhatia Industries and Infrastructure Limited (supra), more particularly, Paragraphs 19, 20, 26, 27, 34, 37 and 53, and M.V. Cape Climber (supra), more particularly, Paragraphs 4.3, 4.6, 4.7 and 58 to 60, it was contended by the learned counsel for the plaintiff that this Court not only can but must look beyond the registered owners to the beneficial owners of SHAKER, SHAKER 1 and SHAKER 2 and also contended that the question of beneficial ownership is something to be determined at the trial and an issue which can be decided at the trial not at this interlocutory stage.
72. The learned counsel for the applicant has also attempted to distinguish the aforesaid judgments cited by the learned counsel for the plaintiff and has contended that as per Section 5 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, it is clearly provided that in order to proceed in rem against the vessel and in personam liability of the owner of the vessel is a condition precedent. The learned counsel for the applicant has also distinguished the judgments which are relied upon by the Page 109 of 111 C/AS/22/2018 IA ORDER plaintiff and contended that as the ownership is transferred which can be culled out from the documents which are relied upon by the applicant, the judgments relied upon by the plaintiff are not applicable to the present case.
73. Having considered the submissions made as a whole and also considering the judgments cited by both the parties, it clearly appears that many triable issues arise in the Suit and the arrest cannot be vacated at this interim stage. The issues which are raised by the applicant cannot be conclusively concluded on basis of the submissions made and the documents which are relied upon. As observed hereinabove, many triable issues are raised which are required to be tried and in facts of this case, it cannot be said that the plaintiff has failed to make out any prima facie arguable case. Even considering the principles of Orders 38 and 39 of the Code of Civil Procedure, 1908, all factors of the said provision are prima facie in favour of the plaintiff. In light of the aforesaid therefore, the question of asking the plaintiff to furnish counter security does not arise and the said contention raised by the applicant also deserves to be negatived in the facts of this case. Similarly, the question Page 110 of 111 C/AS/22/2018 IA ORDER whether under the alleged back to back contract, the applicant has become the owner cannot be conclusively determined at this stage merely relying upon the provisional certificates as well as the photocopy of the bill of sale and the same are required to be proved by the applicant. In facts of this case, in opinion of this Court, it cannot be exfacie said that the plaintiff has failed to prove a reasonably arguable prima facie case. In light of the aforesaid, the other ingredients of Order 38 and Order 39 of the Code of Civil Procedure, 1908 prima facie exist in these Suits. In light of the observations, the question of providing counter security does not arise.
74. The applications are thus liable to be rejected and are hereby rejected. It would be open for the plaintiff to furnish security to the tune of the claims raised in the Suit. It is, however, further clarified that the observations made in this order are only based on the contentions raised, more particularly, by the applicant and the same are relevant only for deciding the prayers prayed for in the application at the interim stage.
(R.M.CHHAYA, J.) mrp Page 111 of 111