Gujarat High Court
Board Of Trustees Of Port Kandla vs Jaisu Shipping Co. Pvt. Ltd. on 7 September, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/SCA/23329/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 23329 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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BOARD OF TRUSTEES OF PORT KANDLA
Versus
JAISU SHIPPING CO. PVT. LTD.
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Appearance:
MR KM PATEL, SENIOR ADVOCATE with MR MK VAKHARIA(1483) for the
PETITIONER(s) No. 1
MR SHAILESHKUMAR MISHRA, SENIOR ADVOCATE with JEET Y
RAJYAGURU(8039) for the RESPONDENT(s) No. 3
MR MB GOHIL(2702) for the RESPONDENT(s) No. 13
MR NS TAHILRAMANI(2576) for the RESPONDENT(s) No. 13
MR SP MAJMUDAR(3456) for the RESPONDENT(s) No. 1
MR SHALIN MEHTA, SENIOR ADVOCATE with MS VIDHI J BHATT(6155)
for the RESPONDENT(s) No. 10
NOTICE SERVED(4) for the RESPONDENT(s) No. 12,2,6,7,8
NOTICE UNSERVED(8) for the RESPONDENT(s) No. 11,4,5,9
MR UMESH SHUKLA, SENIOR ADVOCATE with MR SHASHVATA U
SHUKLA(8069) for the RESPONDENT(s) No. 14
Page 1 of 25
C/SCA/23329/2017 JUDGMENT
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 31/08/2018 - 07/09/2018
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This petition is filed by the Board of Trustees of Port of Kandla, popularly referred to as "Kandla Port Trust" which is how we would also refer to the petitioner as. Petitioner has challenged an order dated 16.11.2017 passed by the Commercial Court, Rajkot, by which the learned Judge dismissed the application Ex.109 in pending Commercial Civil Suit No.116 of 2016.
2. Facts briefly stated are as under. The petitioner is a body corporate constituted under the Major Port Trust Act, 1963 and in exercise of the powers vested in it, manages Kandla Port. In discharge of such functions, the petitioner had awarded the contract to the original sole defendant M/s. Jaisu Shipping Company Pvt. Ltd., (hereinafter referred to as "Jaisu Shipping") for the work of dredging at the port. Multiple disputes arose during the execution of such contract. As per the petitioner the original plaintiff Page 2 of 25 C/SCA/23329/2017 JUDGMENT the defendant was unable to pay huge debt to the Kandla Port Trust. On account of misfeasance on the part of the defendant, the marine activities at the port came to a practical halt. The crew working on the vessels deployed by the defendant were abandoned. They were not provided food, water, medication etc. All these responsibilities were undertaken by the Port Trust. Inter alia on such basis, the plaintiff filed Special Civil Suit No.41 of 2013 against Jaisu Shipping for recovery of sum of Rs.57.07 crores (rounded off). Upon establishment of the Commercial Court at Rajkot under the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as "Commercial Courts Act" for short) the suit was transferred to said Court and renumbered as Commercial Civil Suit No.116 of 2016.
3. In such suit, the plaintiff filed application Ex.5 for attachment before judgment. In such application the plaintiff detailed as many as twentyfive movable and immovable properties which should be attached pending the suit, failing which, in the opinion of the plaintiff the decree when Page 3 of 25 C/SCA/23329/2017 JUDGMENT passed would be difficult to execute. This list contained various vessels which admittedly were not of the ownership of the defendant but were owned by several other entities. The trial Court having refused to grant injunction as prayed for, Kandla Port Trust filed Appeal From Order No.467 of 2016 before the High Court which was disposed of by a judgment dated 23.12.2016. In the context of the ships which were registered in the names of the entities other than the defendant, the Court in the said judgment allowed the plaintiff to withdraw the Appeal From Order as well as a Special Civil Application which was filed for similar relief with a liberty to file appropriate application before the Commercial Court to join the respective owners of such vessels and thereafter to seek appropriate relief with respect to such properties.
4. Pursuant to such order, the plaintiff filed application Ex.109 before the Commercial Court and prayed that following entities may be joined as additional defendants : "(i) Zala & Co.
Address : 13, Station Plot, Gondal Rajkot, Gujarat - 360311.
(ii) The State Enterprise Black Sea & Azove Tea Dredging Co. (CHAMP) Having office at 7, Page 4 of 25 C/SCA/23329/2017 JUDGMENT Primorskaya Street, Odeesa - 65026, Ulrraine.
(iii) Pinkiman Shipping Ltd., Address : (i) Charlestown, Nevis
(ii) C/o. Jaisu Shipping Co.Lvt.Ltd., Kawalaramani House, Kandla - 370 210
(iv) Kenton Development Address : S.A. Panama City, Republic of Panama
(v) M/s. Pritam Brothers Address : (i) 16, Mevawala Market New Kandla, Kutch - 372010
(ii) 7, Maitri Society, Sindhi Society, Adipur, Kutch 370 205.
(vi) M/s. Jaisu & Company Pvt. Ltd., Address : 7, Maitri Society, Sindhi Society, Adipur, Kutch 370 205.
(vii) Shri Kenayalal G. Kewalramani Partner of M/s. Pritam Brothers, Address : 16, Mevawala Market, New Kandla, Kutch 372010
(viii) Shri Mohandas Gopaldas Kewalramani Address : 7, Maitri Society, Sindhi Society, Adipur, Kutch - 370 205.
(ix) M/s. Jaisu Dredging & Shipping Ltd., Address : Office No.2, 4th Floor, A Wing, Maradia Plaza, C.G. Road, Ahmedabad 380 009.
(x) Smt. Kavita M. Kewalramani Director of Jaisu Shipping Co.
Address : House No. DHZS172 (Full Unit), Ward12A, Gandhidham - Kutch
(xi) Pushpaben S. Kewalramani Address : Plot No.389, Ward 5B, Page 5 of 25 C/SCA/23329/2017 JUDGMENT Adipur, Kutch
(xii) Pritamji Kewalramani Director of Jaisu Shipping Co. Ltd., Address : Plot No.123, Ward 6 (Industrial) Gandhidham Kutch
(xiii) Amrut Dredging & Shipping Ltd., Address : Office No.8, Pawan Chambers, M.G.Road, Gondal, Gujarat 360 311."
5. In such application, the plaintiff contended that the original defendant who was given the contract for the work of dredging had deployed several vessels which were mentioned in the application for attachment before judgment. In the process the defendant had used the device of corporate entity by showing ownership of such vessels in different names with a view to defeat the liability which may arise on account of failure of the defendant to carry out the contractual obligation. It was contended that having regard to the share holding pattern and the commonality of directors managing the affairs of the different companies, it is evident that the object of showing vessels of the ownership of the different corporate entities was only to avoid the eventual liability. It was contended that some of the vessels were transferred by the defendant to the third parties during the pendency of the Page 6 of 25 C/SCA/23329/2017 JUDGMENT suit with a view to defeat the satisfaction of the plaintiff's claim. It was further contended that various vessels and other properties were transferred by the defendant in favour of the sister concerns. On such grounds, the plaintiff urged the trial Court to lift the corporate veil and permit joining of the additional defendants in the suit so that the prayer for attachment before judgment against the specified properties i.e. the vessels owned by such defendants can be pressed.
6. Several defendants, but not all, appeared before Commercial Court in response to the summons issued and filed the replies strongly objecting to the plaintiff's prayers. We may briefly refer to the replies of three of these entities.
(i) M/s. Jaisu Dredging & Shipping Ltd., filed reply at Ex.141 in which it was contended that there was no commonality of the managerial control between the defendant and the said third party respondent. The certificate issued by the Company Secretary based on the records maintained by the Registrar of Companies was produced to contended that for the relevant period during Page 7 of 25 C/SCA/23329/2017 JUDGMENT 2009 to 2013, there were no common directors between the two companies. It was further contended that the obligations arising out of the contract between the plaintiff and the defendant have no connection with the business of the deponent which is a separate legal entity. Even if there are common shareholders and common Board of Directors, that itself would not permit the Court to lift the corporate veil. It was contended that the application filed by Kandla Port Trust nowhere discloses the grounds enabling the Court to lift the corporate veil. It was denied that the vessels or any of those mentioned in the Ex.5 application were transferred by the defendant to the said deponent.
(ii) One Amrut Dredging & Shipping Ltd., filed reply at Ex.145 denying the averments made in the application of Kandla Port Trust for joining party. It was contended that the said deponent had no concern with M/s. Jaisu Shipping. It was denied that the deponent owns vessels which are referred to in Ex.5 application by the plaintiff which were purchased by way of same protocol from M/s. Jaisu Dredging & Shipping. Necessary documents in support of such contention were Page 8 of 25 C/SCA/23329/2017 JUDGMENT produced. It was therefore contended that the vessels were purchased by the deponent not from M/s. Jaisu Shipping but from M/s. Jaisu Dredging. They were purchased at a time when M/s. Jaisu Dredging was not a party to the suit and no injunction was granted against sale of the properties.
(iii) One Black Sea & Azove Sea Dredging Co. (hereinafter referred to as "Black Sea") which is a State enterprise of Ukraine had filed written notes of arguments before the Commercial Court in which it was pointed out that the said Company is an owner of several dredging vessels including one Genichesk - KAMAL LVI which is presently anchored at Kandla Port. Such vessel was handed over to the defendant who was put in possession of the dredger. However, Black Sea continued to be the owner thereof. The vessel was brought to India and deployed at Kandla Port for dredging work. It was therefore strongly urged that M/s. Jaisu Shipping not being the owner of the vessel, the vessel cannot be used for any recovery of dues from M/s. Jaisu Shipping.
7. The learned Judge of the Commercial Court by detailed impugned judgment dismissed the Page 9 of 25 C/SCA/23329/2017 JUDGMENT application of the Kandla Port Trust. Various authorities were cited before the Judge urging the Court to lift the corporate veil. The learned Judge did not find sufficient grounds for application of the said principles. It was held that no property of the defendant i.e. M/s. Jaisu Shipping was transferred to M/s. Jaisu Dredging., M/s. Jaisu Shipping Company Pvt. Ltd., and other defendants also. With respect to the M/s. Black Sea, the Court found that there was no ground at all to add the said entity as an additional defendant since all the documents of ownership of the vessel were clear and in fact within the possession of the Kandla Port Trust, despite which, an attempt was made to join said entity as additional defendant. In the opinion of the Court such attempt was plainly vexatious. With respect to the vessels belonging to M/s. Amrut Dredging & Shipping the Court made following observations: "Now, the issue of the purchase of vessels by Amrut Dredging. It appears that the Jaisu Dredging sold the vessel Kamal 8 (since Amrut 16) to Amrut Dredging in the year 2015. Similarly, Jaisu Dredging had also sold the vessel 'Durga" to Amrut Dredging in the year 2015. That part, Jaisu Dredging had also sold "M. V. Sahayak" to Amrut Dredging in the year 2015. Hence, such 3rd party transaction, Page 10 of 25 C/SCA/23329/2017 JUDGMENT between Jaisu Dredging and Amrut Dredging, cannot be faulted, for in the year 2015, Jaisu Dredging was not responsible for paying off debts of the defendant. This is in consonance with a discussion recorded by this Court concerning the lifting/piercing of corporate veil."
8. On the basis of such findings, the learned Judge allowed the application of the plaintiff only to the limited extent of joining one Zala & Company as defendant No.2. This part of the order is not in challenge before us. For the rest, the application of the plaintiff was dismissed. Cost of Rs.2 lacs was awarded in case of M/s. Black Sea and cost of Rs.4 lacs was awarded to M/s. Amrut Dredging Shipping. For those who had not appeared, cost of Rs.11,000/ per respondents was ordered to be deposited with the District Legal Service Authority. For the rest of the opponents cost of Rs.25,000/ each would be paid to them. This judgment the Kandla Port Trust original plaintiff has challenged before us.
07.09.2018
9. Learned senior counsel Shri K. M. Patel for the Kandla Port Trust submitted that at the stage of considering the application of the plaintiff for joining additional defendants Page 11 of 25 C/SCA/23329/2017 JUDGMENT all that the Court was required to examine was whether the proposed defendants were necessary or proper parties. At that stage, the strict proof of high degree of likelihood of obtaining a decree against such proposed defendants should not be insisted.
10. Counsel further submitted that looking to the shareholding pattern of various companies, commonality of the management between the original defendant and these companies and such other relevant factors, it was a fit case where the corporate veil was required to be lifted. Counsel submitted that the original defendant and other entities may be independent private limited companies, they had managed their affairs in such a way that dues of the original defendant should be allowed to be recovered from the other entities. Counsel further submitted that various vessels changed ownership during the course of the contract between Kandla Port Trust and M/s. Jaisu Shipping and in some cases the ownership was transferred from M/s. Jaisu Shipping to sister concerns during the pendency of the suit clearly indicating an attempt to frustrate the decree if eventually passed. Special focus was made by the counsel on three companies, namely, M/s. Jaisu & Page 12 of 25 C/SCA/23329/2017 JUDGMENT Company, M/s. Jaisu Dredging & Shipping and Amrut Dredging & Shipping. It was contended that at least with respect to these three entities, the plaintiff had made out a good case for bringing on the record as additional defendants.
11. Our attention was drawn to an undertaking dated 16.4.2015 filed by Amrut Dredging & Shipping before the High Court while seeking permission to carry out repairs of the vessels, namely, Kamal VIII and Kamal XXXII in which according to the counsel, the ownership of the vessels was acknowledged to be that of the original defendant i.e. M/s. Jaisu Shipping & Company. Counsel therefore argued that M/s. Jaisu Shipping now cannot take a contrary stand. Counsel lastly contended that in any case, the imposition of heavy cost by the trial Court even in cases where the proposed defendants did not appear before the Court was improper.
12. In support of these contentions counsel relied on the judgment of Supreme Court in case of State of Rajasthan and ors. Vs. Gotan Lime Stone Khanij Udyog Private Limited and another, reported in (2016) 4 SCC 469, in which the Court considered at length the Page 13 of 25 C/SCA/23329/2017 JUDGMENT concept of lifting of corporate veil with reference to several past judgments. After discussing the law the Court made following observations : "37. The learned Single Judge and the Division Bench have gone by only one aspect of law i.e. the general principle that sale of shares by itself is not sale of assets but this principle is subject to the doctrine of piercing of corporate veil wherever necessary to give effect to the policy of law. In the present case, this principle clearly applies as transfer of shares to cover up the real transaction which is sale of mining lease for consideration without previous consent of competent authority, as statutorily required. The statutory requirement is sought to be overcome with the plea that it was a transaction merely of transfer of shareholding when on the face of it the transaction is clearly that of sale of the mining lease. In view of the above, the view taken by the High Court cannot be sustained."
13. On the other hand, learned senior counsel Shri Shalin Mehta for M/s. Jaisu Dredging & Shipping pointed out that letter of intent was issued in favour of the original defendant in November, 2010. The contract was terminated on 26.1.2013. The civil suit was filed only on 30.9.2013. He submitted that none of the vessels has been transferred from original defendant i.e. M/s. Jaisu & Shipping Company to M/s. Jaisu Dredging & Shipping during this period. M/s. Jaisu Dredging & Shipping was the owner of several vessels.
Page 14 of 25C/SCA/23329/2017 JUDGMENT None of them was acquired from M/s. Jaisu
Shipping & Company during the above period or thereafter. He submitted that the plaintiff failed to establish necessary facts for lifting the corporate veil. Joining the said opponent as an additional defendant would cause undue hardship. In any case, no final relief can be granted against the said opponent nor the properties of the said company can be utilized for satisfying the decree against the original defendant even if passed by the Commercial Court. He pointed out that the plaintiff had referred to four vessels of the ownership of M/s. Jaisu Dredging & Shipping, namely, Kamal V, Kamal VIII, Durga, Saraswati and Sahayak. None of them was acquired by M/s. Jaisu Dredging & Shipping after the issuance of the LOE in favour of the defendant.
14. Learned counsel Shri Shukla for Amrut Dredging in addition to adopting the stand canvassed by Shri Mehta submitted that the undertaking filed before the Court by his client dated 16.4.2015 was for limited purpose, for carrying out repairs and survey of the vessels. Nowhere in this undertaking the deponent had accepted the ownership of the vessel to be that of M/s. Jaisu Shipping.
Page 15 of 25C/SCA/23329/2017 JUDGMENT No case for lifting the corporate veil has been made out. Application of Kandla Port Trust was bereft of any details.
15. Counsel Shri Shaileshkumar Mishra appeared for Black Sea and strongly opposed in the appeal. He submitted that the vessel Kamal 56 is of ownership of Black Sea. It merely leased to M/s. Jaisu Shipping and was being utilized for dredging work at Kandla Port. Black Sea is a Company owned by the Ukrainian Government. Clearly it had no concern with M/s. Jaisu Shipping except for leasing the vessel for the limited purpose.
16. The concept of lifting of corporate veil is neither new nor unknown to law. The modern style of doing business has given rise to creation of Corporations and Companies with limited liability. A registered company is considered as an entity, independent of its directors and shareholders. However, it is found on numerous occasions that such corporate structure and complex web is created solely for the purpose of evading legal liabilities. In such situations courts have invoked the principle of lifting the corporate veil which is also sometime referred as cracking the corporate shell. In Page 16 of 25 C/SCA/23329/2017 JUDGMENT case of Pravinbhai M. Kheni vs. Assistant Commissioner of Incometax and ors., reported in (2013) 353 ITR 585 (Guj.) Division Bench of this Court had a occasion to consider several past judgments on the issue rendered by the Supreme Court and other High Courts in the context of the provisions of Section 179 of the Incometax Act, 1961. As is well known, the said provision enables the Revenue to recover the unpaid taxes of a private limited company from a person who has been the director of the Company during the period when dues arose under certain circumstances. In the case on hand, the Revenue desired to apply the said provision in case of a public limited company arguing that the public limited company was nothing but a cloak and behind the company were individuals who are the directors and that therefore the recovery from the director should be permitted though Section 179 of the Incometax Act, 1961 would apply ordinarily in case of private limited companies. The Court referred to various judgments including in case of State Trading Corporation of India Ltd., vs. CTO, reported in (1963) 33 Comp Cas 1057, in which the nine Judge Bench of Supreme Court considered a question whether the Company can be Page 17 of 25 C/SCA/23329/2017 JUDGMENT considered a citizen and be permitted to approach the Supreme Court under Article 32 of the Constitution of India asserting its fundamental right. The Court also referred to the judgment of the Constitution Bench of Supreme Court in case of Tata Engineering and Locomotive Co. Ltd., reported in (1964) 34 Comp Cas 458, holding that a company not being a citizen cannot file petition under Article 32 of the Constitution. Reference was made to the decision in case of CIT vs. Sree Meenakshi Mills Ltd., reported in AIR 1967 SC 819, in which the Supreme Court invoked the principle of lifting of corporate veil observing that the Court would have power to disregard the corporate entity, if it is used for tax evasion or to circumvent tax obligation. Reference was also made to the decision of Supreme Court in case of Delhi Development Authority vs. Skipper Construction Company (P) Ltd., reported in AIR 1996 SC 2005, in which it was observed that where the corporate character is employed for the purpose of committing illegality or for defrauding others, the Court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass Page 18 of 25 C/SCA/23329/2017 JUDGMENT appropriate orders to do justice between the parties concerned. Reference was also made to the decision in case of Renusagar Power Co., reported in (1991) 70 Comp Cas 127, in which the Supreme Court observed that in the expanding horizon of modern jurisprudence, lifting of corporate veil is permissible. It must depend primarily on the realities of the situation. The Court thereupon observed as under : "15. From the above judicial pronouncements, it can be seen that concept of lifting or piercing the corporate veil as some times referred to as cracking the corporate shell, is applied by Courts sparingly and cautiously. It is however, recognised that boundaries of such principle have not yet been defined and areas where such principle may have to be applied may expand. Principally, the concept of corporate body being an independent entity enjoying existence independent of its directors, is a well known principle. Its assets are distinct and separate and distinct from those of its members. Its creditors cannot obtain satisfaction from the assets of its members. However, with ever developing world and expanding economic complexities, the Courts have refused to limit the scope and parameters or areas where corporate veil may have to be lifted.
16. Howsoever cautiously, the concept of piercing of corporate veil is applied by the Courts in various situations. Two situations where such principle is consistently applied are, one where the statute itself so permits or provides for and second where due to glaring facts established on record it is found that a complex web has been created only with a view to defraud the revenue interest of the State. If it is found that incorporation of an entity is only to create a smoke screen to defraud the revenue Page 19 of 25 C/SCA/23329/2017 JUDGMENT and shield the individuals who behind the corporate veil are the real operators of the company and beneficiaries of the fraud, the Courts have not hesitated in ignoring the corporate status and striking at the real beneficiaries of such complex design."
17. Thus, in a given set of circumstances where it is found that complex corporate structure is created or utilized for evading tax or for committing illegality, evading responsibility of the real wrong doers and such others, the Courts have ignored the corporate structure, lifted the veil and recognized the real personalities behind the so called companies in order to do justice between the parties. However, firmly enshrined the principle is that a company is an independent entity, separate from its shareholders and directors and unless necessary facts are available on record lifting of the corporate veil would not be permissible.
18. With this background, we may revert to facts of the case. The plaintiff desired to join as many as thirteen additional defendants. We have perused the application and documents produced by the plaintiff in support of such application. Such application in no manner lays down the basis for Page 20 of 25 C/SCA/23329/2017 JUDGMENT examining the question of lifting the corporate veil. Except for broadly suggesting that at the time of rising of cause of action for filing the suit there were various vessels lying in the premises of the plaintiff which were of ownership of the defendant and the defendant had deployed additional vessels for the dredging work and the defendant has used a device of corporate entity by showing the ownership of vessels in different names in order to avoid the ultimate liability, no other further details are provided. It is, of course, contended that having regard to the shareholding pattern and the director's managing affairs of different companies, the occasion for lifting the corporate veil has arisen.
19. Mere similarity of shareholding pattern or commonality of management would not be by itself sufficient to lift the corporate veil. Law do not prohibit creation of various companies and corporations for different and specific purposes under common management. Each company however retains its independent legal entity and character. Only when it is found that such corporate web was created with a view to defeating legal liabilities, question of lifting the corporate veil would Page 21 of 25 C/SCA/23329/2017 JUDGMENT arise. In the present case there is no prima facie basis suggesting that from the inception M/s. Jaisu Shipping had managed its affairs in such a way that any liability which may arise eventually could not be recovered from such company. The plaintiff has not been able to demonstrate even prima facie that any of the vessels against which the attachment before judgment order is desired, was of the ownership of the original M/s. Jaisu Shipping and which came to be transferred pending suit or even during the period of the execution of the contract between the Kandla Port Trust and M/s. Jaisu Shipping. The opponents have prima facie shown the documents suggesting that either the vessels were owned by the respective companies since long, in any case before M/s. Jaisu Shipping was awarded contract by the Kandla Port Trust and in some cases were acquired during the relevant period but from independent agencies.
20. The undertaking filed by Amrut Dredging before this Court in no way conceded to the ownership of the vessel being that of M/s. Jaisu Shipping. In such undertaking it was stated that Amrut Dredging as agent of M/s. Jaisu Shipping desired to get repair and Page 22 of 25 C/SCA/23329/2017 JUDGMENT survey of vessels, namely, Kamal VIII and Kamal XXXII which were presently lying at Kandla Port. It was undertaken that Amrut Dredging will ply the vessel for the purpose of drydocking, repairing and bunkering business and such vessel will not sail beyond Kandla port limit. While doing so it was further undertaken that, "4. M/s. Amrut Dredging & Shipping Ltd. further undertakes that this permission of repair, dry docking will not be used in the above court matters or consequent litigation as proof of evidence and it is fully understood that this permission is granted only for limited purpose i.e. for the urgent repairs, safety, survey & class certificate of the vessels and as such granting of permission cannot be constructed as recognizing M/s. Amrut Dredging & Shipping Ltd., as owners of vessel Kamal VIII & Kamal XXXII."
21. In this undertaking M/s. Amrut Dredging nowhere conceded anything with respect to the ownership of the said vessels. It merely agreed that the granting of the permission cannot be construed as recognition of the ownership of Amrut Dredging of the said vessel. The recognition by the Court of the ownership and undertaking or concession given by the deponent are two vastly different things. We, therefore, do not find that this undertaking would prevent Amrut Dredging from canvassing that M/s. Jaisu Shipping was not the owner of these vessels.
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22. We are conscious that at the stage of considering the request of the plaintiff for joining additional defendants the Court is concerned with the question whether the proposed defendants or any of them are necessary or proper parties. If the answer to this question is in the affirmative, the concerned opponent would be permitted to be joined as additional defendant. However, this exercise is not a mere mechanical exercise where the Court would act only as a post office. At least there has to be prima facie material showing that the proposed defendants are necessary or proper parties. Allowing joining an additional defendant who has no concern with the subject matter of the suit or against whom no relief can eventually be granted would cause unnecessary and undue hardship to such an entity. In the result, we do not find that the trial Court committed any error in rejecting the application of the Kandla Port Trust.
23. However, with respect to cost, we would like to say something. In so far as the cost of Rs.2,00,000/ awarded to Black Sea is concerned, we propose no change. This is so because as correctly observed by the learned Judge of the Commercial Court all necessary Page 24 of 25 C/SCA/23329/2017 JUDGMENT documents of the ownership and the lease of the ship in question would be within the possession of the Kandla Port Trust. Despite which an unnecessary attempt was made to rope in a defendant, who had no concern with the subject matter of the suit merely because the vessel owned by such entity was utilized by the defendant for the purpose of dredging, having acquired the vessels under a lease. So far as rest of the opponents who appeared before the trial Court, there would be uniform cost of Rs.25,000/ per opponent irrespective of the directions issued by the Commercial Court. In so far as those who did not appear, direction for payment of cost is rescinded.
24. Petition is disposed of in above terms.
(AKIL KURESHI, J) (B.N. KARIA, J) K.K. SAIYED Page 25 of 25