Bombay High Court
Oil & Natural Gas Corporation Ltd. vs Osprey Underwriting Agencies Ltd. & ... on 24 March, 1998
Equivalent citations: 1998(5)BOMCR344, (1998)2BOMLR179
ORDER M.S. Rane, J.
1. The suit herein has been filed in somewhat peculiar circumstances as will be indicated herein below.
2. The plaintiff herein is a statutory body constituted under the Oil and Natural Gas Commission Act, 1959 and subsequently incorporated in 1994, under the Companies Act, 1956, as ONGC Limited. The 1st defendant is a foreign underwrite concern organized under the laws of United Kingdom and have undertaken the risk of Protection and Indemnity (P & I) in respect of the 3rd defendant-vessel which is Motor-vessel registered in India and owned by the plaintiffs. The 2nd defendants are the agents of the 1st defendant. The 4th defendant is a company who were entrusted with the work of salvage of the 3rd defendant vessel after it capsized in July, 1995 and the 5th defendant is the Port Trust. (For the brevity's sake hereinafter the plaintiffs are referred to as "ONGC", the 1st defendant as "Osprey", the 2nd defendant as "Allied Marine", the 3rd defendant as "the said vessel" the 4th defendant as "Abhay Ocean" and the 5th defendant as "Port Trust".)
3. The ONGC have filed the suit inter alia claiming reliefs seeking declaration that there exists valid, binding and subsisting enforceable Deed of Release between them and Osprey and Allied Marine in respect of the said vessel and in accordance with the said deed of release Osprey and Allied Marine be ordered and directed to remove the wreck of the said vessel lying in the precincts of Port Trust etc.
4. In the said suit the plaintiffs have made an application herein by way of Notice of Motion claiming certain reliefs one amongst which is pressed is as contained in prayer (c) thereof. For the sake of convenience same is reproduced hereinbelow:
"(c) that pending hearing and final disposal of the suit, this Mon'ble Court be pleased to order Defendants Nos. 1 and 2 to deposit in this Hon'ble Court or pay to the 5th Defendant the sum of Rs. 3.5 crore or such higher amount as this Hon'ble Court may deem fit towards the costs of the removal of the wreckage of the 3rd Defendant vessel from the precincts of the Port of Mumbai."
5. It would thus be noticed that by present application ONGC is insisting Osprey and Allied Marine to arrange for the payment of Rs. 3.5 crores towards the costs of removal of the wreckage of the said vessel from the sea. At the outset it may be stated that this is the relief which is strenuously pressed by and on behalf of ONGC and also supported by Port Trust. Needless to say that Osprey have vehemently opposed the said relief. As it is represented by Osprey, status for that matter present existence of Allied Marine, is left to oblivion and no one represents them before the Court. Abhay Ocean, a Salvage Contractor although served has not chosen to appear before the Court.
6. Before I proceed to advert to the relevant facts in brief in the background of dispute reference requires to be made to another suit being Adm. Suit No. 61 of 1996 which was filed by Abhay Ocean (defendant No. 4 in this Suit) in this Court against the said vessel Osprey and Allied Marine. The said suit was filed in this Court by lodging the plaint on 25-4-1996 and on the very next day i.e. on 26-4-1996 before the same could be numbered, the said suit has been disposed off by passing a decree on the basis of the consent terms filed therein between the parties on its lodging number itself. As will be pointed out hereinafter, much is said for and against the filing of the said suit and obtaining of consent decree therein.
7. Factual aspect and series of course and sequence of events can be recapitulated hereinafter:
(i) As stated ONGC was the owner of the said vessel registered with the Port Trust, Mumbai and was insured with M/s. National Insurance Company Limited for Hull and Machinery and the Protection & Indemnity (P & I risk) in respect thereof was covered by Osprey. These facts are not in dispute.
(ii) On 24-7-1995 the said vessel met with casualty and the following day i.e. on 25-7-1995 it capsized and sunk in the precincts of E-4 buoy within the jurisdiction of Bombay Port.
(iii) On 2-8-1995 ONGC Port Trust addressed a letter to the ONGC to arrange for the salvaging of wreck of the said vessel expeditiously. Implication was also given that should the plaintiffs fail to salvage the scrap within the reasonable time the Port Trust would proceed to take necessary steps for salvaging of the craft at the costs of the ONGC. Said letter is Ex. A to the plaint:
(iv) On 11-8-1995 ONGC issued notice of abandonment of the said vessel as provided under P & I Policy as also under the statute;
(v) On 28-9-1995 ONGC executed a deed of release abandoning, releasing and relinquishing its right, title and interest under the Hull Policy in favour of Abhay Ocean which according to the plaintiffs was done as required by Osprey and Allied Marine. Said deed of release is Ex. B to the plaint and it may be stated that it is the said deed of release which is sought to be enforced by the ONGC in this suit;
(vi) On 20-9-1995 ONGC Allied Marine entered into a contract of wreck removal of the said vessel with Abhay Ocean. It is pertinent to note that even before that, material available shows that on 31-7-1995 Allied Marine had approached one M/s. Asiatic Salvors, who are not party to the suit herein as also were not made party to the Suit No. 61 of 1996 and called from them proposal/quotation for the removal of the wreck of the said vessel. Said Asiatic Salvor have made an application in this suit being Chamber Summons No. 208 of 1998 seeking their impleadment as party defendant as necessary and proper party which is pending. They remained present in the Court when this application i.e. Notice of Motion was argued. They make reference to the communication of Allied Marine seeking their assistance in salvage of the said vessel and their response to the said enquiry by their letter dated 2-8-1995 addressed to Allied Marine by giving the proposed plan in the salvage operation of the said vessel and also submission of the quotation.
(vii) It is noticed (refer para 8 of the plaint in Suit No. 61 of 1996) that Allied Marine as local agents of Osprey entered in Wreck Removal Contract on the very day when deed of release was executed i.e. on 28-9-1995 with Abhay Ocean for the removal of said vessel. According to Abhay Ocean, Osprey and Allied Marine (defendants Nos. 2 and 3 in Suit No. 61/96) insisted that M/s. Asiatic Salvors be engaged as salvors for the purpose of carrying out salvage operation of the said vessel.This is what in para 9 of the plaint in Suit No. 61/96 Abhay Ocean as plaintiffs stated: "
9. The plaintiff says that the 2nd and 3rd defendants advised and in fact insisted that the plaintiffs appoint M/s. Asiatic Salvors Bombay (hereinafter referred to as "Asiatic") as salvors for the purpose of carrying out salvage operations of the 1st defendant vessel. Asiatic represented themselves to be salvors "with considerable" experience and expertise possessing state of the art equipment to carry out successful salvage of the 1st defendant vessel. Allied also represented to the plaintiff that Asiatic possessed the skill and equipment for the operation. Accordingly, the plaintiff as owners of 1st defendant vessel entered into a Salvage Agreement dated 14-10-1995 with Asiatic for salving the 1st defendant vessel:"
(viii) On 16-10-1995 Abhay Ocean informed the Port Trust about their agreement with Asiatic Salvors for the removal of the wreck of the said vessel;
(ix) On 26-10- 95 Asiatic Salvors also addressed a communication to the Port Trust.
It is noticed from the pleadings that as per the arrangement between Abhay Ocean and Asiatic Salvors mentioned herein above. Abhay Ocean issued their cheques of Rs. 70 lakhs) (Rs. 50 lakhs and Rs. 20 lakhs) in favour of Asiatic Salvors in furtherance of the agreement which cheques were bounced.
(x) As there was no progress in the removal of the wreck of the said vessel Port Trust addressed number of letters and reminders to ONGC and also pointed out that they i.e. Port Trust would be forced to take appropriate action under the provisions of Indian Ports Act, 1908, in particular under section 14 of the said Act.
(xi) On 29-3-1996 Allied Marine terminated their wreck removal contract with Abhay Ocean and on the very day of the termination by a separate letter, awarded the salvage contract of the said vessel to Asiatic Salvors. Letter of termination of contract with Abhay Ocean by Allied Marine is Ex. E to the plaint.
Across during the course of arguments learned Counsel for Asiatic Salvors (applicants in Chamber Summons No. 208 of 1998 referred to earlier) have made available letter bearing No. AMCI/OSP/SINDHU VII/95 dated 29-3-1996 addressed to them by Allied Marine, contents of which read as under:
"In the light of the cancellation of our contract for wreck removal with Abhay Ocean Projects Ltd. we are delighted to award the contract to you under the same terms and conditions.
(a) You will remove the wreck for the title to the hull (Please see attached Deed of Release).
(b) You will take on full responsibility of the Wreck Removal Notice issued by the Mumbai Port Trust.
(c) You will take on full responsibilities of the ownership of the Wreck Sindhu VII.
(d) You will produce to us a certificate from the Port Trust stating that you have removed the said wreck to entire satisfaction of the Port before the end of April 1996."
It would thus be clear that on the very day of termination of contract by Allied Marine with Abhay Ocean that the salvage contract was awarded to Asiatic Salvors. Pertinently Osprey maintained guarded silence over this contract in Suit No. 61 of 1996 as also in this suit as well.
(xii) On 25-4-1996 Abhay Ocean filed suit being Suit No. 61 of 1996 in this Court challenging the termination of the contract by Allied Marine. In the said suit said vessel is defendant No. 1. Osprey defendant No. 2 and Allied Marine defendant No. 3. As stated earlier it is in the said suit that on 26-4-1996 order by consent came to be passed by filing minutes of order. The relevant clauses of the consent terms are reproduced herein below :
MINUTES OF THE ORDER
1. Order and Decree in terms of prayer (c) and (i). The Plaintiffs undertake to remove the said vessel from the Port precincts to the satisfaction of the Port/Statutory authorities.
2. Ordered and decree (that the 3rd defendants shall forward a copy of the order duly authenticated by M/s. Mulla & Mulla & Craigie Blunt and Caroe. Attorneys for the plaintiffs and Mr. G.A. Rebello, Advocate for defendants Nos. 2 and 3 to the Deputy Conservator D.G. Shipping and Sr. Deputy Director of Shipping ONGC and other authorities as may be necessary.
3. The plaintiffs shall be entitled to apply for all permits, passes and authorities for the salvage/ floating /towing of "SINDHU-VII" and undertake such work as may be necessary for her removal at the plaintiffs, risks, costs and expenses.
4. It is understood that a copy of this Order shall operate as a notice of transfer of ownership of the said vessel "SINDHU-VII" in favour of the plaintiffs vis-a -vis all authorities concerned who shall be bound to act on it.
5. The defendants Nos. 2 and 3 declare that they have not assigned the work of salvage operations to any third party nor have they created any rights or lien or encumbrance thereof.
6. Save and except what is provided herein above both the parties hereto withdraw all personal allegations against each other and declare that they have no claims against each other of whatsoever nature.
It will also be necessary to quote the order that this Court passed on 26-4-1996 when the matter was moved:
"PC : Matter is placed on board on the application of the parties.
By consent suit on lodging number taken on board and called out for H & F.D. Defendants waive service.
Learned Counsels for the parties handed in Minutes of Order dated 26th April, 1996, signed by the representative of the plaintiffs and Counsels for both the sides, marked 'X' for identification.
Suit stands disposed of in terms of Minutes of Order.
Associate of this Court is authorized to issue authenticated copy or Minutes of Order and all authorities concerned shall act thereupon. C.C. expedited."
As mentioned in Clause No. 1 of the said consent terms prayers (c) and (i) in accordance with which decree was passed are reproduced hereinbelow:
(c) that this Hon'ble Court be pleased to order and declare that the plaintiffs are the owners of the 1st defendant vessel its hull, tackle engines etc. and entitled to possession thereof without any let or hindrance by the 2nd & 3rd defendant:
(i) that the defendants be ordered and decreed to do all such acts deeds and things as may be necessary to effectively secure the plaintiffs rights.
For the convenience it is to be noted that plaintiffs in the said suit are Abhay Ocean, 1 st defendant is the said vessel and defendants Nos. 2 and 3 are respectively Osprey and Allied Marine. It is further to be noted that Osprey and Allied Marine were represented by the same Advocates who are representing Osprey in this suit.
(xiii) Port Trust was informed of the said consent decree as provided in the consent terms. No progress in the removal of the wreck of the said vessel was made. There were persistent letters and reminders issued by Port Trust. The demand was made by the Port Trust upon ONGC as owner of the wreck to arrange to pay a sum of Rs. 3.5 crores towards the cost of removal of Wreck. It may be stated that this is the amount which ONGC is seeking to be deposited by Osprey and Allied Marine.
(xiv) Osprey moved application being Notice of Motion No. 3122 of 1996 on 8-11-1996 in the said Suit No. 61 of 1996, inter alia seeking for initiation of action for contempt against the Directors of the Abhay Ocean named as respondents Nos. 1 to 6 in the said suit for disobedience and breaching the consent order dated 26-4-1996 mentioned earlier. Port Trust was made respondent No. 7 in the said contempt application. Vide prayers (b) and (c) of the said application, Osprey and Allied Marine, it is pertinent to note, claimed reliefs as under:
(b) Pending the hearing and final disposal of this Notice of Motion the 7th respondent (i.e. Port Trust) be restrained by an order and injunction of this Court from demanding and/or making any demand either directly or indirectly upon the defendants and/or the Oil and Natural Gas Commission as security or otherwise in respect of the removal of O.S.V. SINDHU VII which is lying in the port precincts.
(c) Pending the hearing and final disposal of this Notice of Motion the plaintiffs and respondents Nos. 1 to 6 be ordered and directed to deposit and/or furnish security in favour of the 7th respondent a sum of Rs. 3.50 crores or such sum as 7th respondent may require and demand in accordance with the statutory provisions of Major Port Trust Act and/or Merchant Shipping Act, as the case may be within such time that this Court may deem fit and proper.
(xv) On 23-12-1996 which the said application came up for hearing before the Admiralty Court it was stated by learned Counsel for Osprey and Allied Marine that they did not want to press for any relief as far as Port Trust was concerned. Furthermore, said application of Osprey and Allied Marine was also withdrawn on the application of their Counsel on the same day with liberty to file fresh application and thereafter Osprey have filed contempt Petition being Mo. 21 of 1997 in the said Adm. Suit No. 61 of 1996 on 6-3-1997 seeking action for contempt against Abhay Ocean and its three Directors named therein as respondents. The said application is still pending. Needless to say that Osprey in the said contempt petition have stated about passing of the consent decree and undertaking given by Abhay Ocean for removal of the wreckage of the said vessel and their failure to complete the work as per the consent decree.
8. It is on this background of course and sequence of events and happenings that ONGC has instituted the suit herein in this Court on 11-1-1997 for the reliefs as mentioned hereinabove. On 18-10-1997 application herein was moved on behalf of the ONGC for ad interim relief after notice to the defendants when it was stated by and on behalf of Osprey that efforts would be made to work out the matter. Then on 29-1-1998 when the application came up before the Court for hearing Counsel for Osprey applied for adjournment on the ground of Osprey having filed arbitration petition being Arbitration Petition No. 29 of 1998 in this Court against the ONGC seeking reference of the dispute for arbitration and slay of the proceedings of this suit which, it was stated was pending and the application was adjourned to 5-2-1998. By judgment dated 17-2-1998 passed by my brother Judge Nijjar said Arbitration Petition No. 29 of the 1998 filed by Osprey was dismissed. After that this application could be taken up for hearing.
9. The plaintiffs in support of the reliefs of this application have made reference to the contract of P & I with Osprey and have made reference in particular to section 15 thereof which obliges Osprey and Allied Marine as their agents to arrange for removal of the wreck from the precincts of the Port Trust. They also make reference to Deed of Release dated 28-9-1995 which is sought to be enforced in this suit. It is the case of the plaintiffs that wreck removal is a risk specifically covered by P & I Policy and whatever necessary was required to be done after the mishap to the said vessel they have done. In as much as they issued a notice of abandonment to their Hull and Machinery Underwriters who refused to accept the same and treated the claim as a conlractual total loss and settled the claim for Rs. 6. 29 crores in respect of the said vessel and thereafter they issued a notice of abandonment to Osprey as Underwriters of the said vessel for protection and indemnities and 1st defendant took over the interest of the plaintiffs in the said vessel and became subject to all liabilities including wreck removal /salvage, treatment of oil pollution or any untoward incident that would occur during salvage as per P & I coverage.
10. Plaintiffs also make reference to the various demand notices received and served upon them by Port Trust as also the correspondence exchanged in that behalf. Plaintiffs assert and reiterate that it is the full responsibility of the Osprey to remove the wreckage of the said vessel and the consent decree obtained in Suit No. 61 of 1996 to which they are not parties will not be binding upon them.
11. The Port Trust have filed their affidavit in reply and they have recounted as to what transpired after capsizing of the said vessel. They make reference to their various letters, reminders, notice ot demand etc. Port Trust in their affidavit in reply have made extensive reference to correspondence and they have also annexed copies of such correspondence as exhibits thereto. They have stated that the existence of wreck of the said vessel is causing obstruction in invitation and all concerned parties like Police have been after them for removal.
12. It is further submitted by the Port Trust that they allowed the entry to the said vessel because of P & I undertaking of Osprey. The correspondence shows that the Port Trust have also issued warnings to ONGC of not permitting other vessels belonging to ONGC into the Port area.
13. It is also asserted that as provided under section 14 of the Indian Ports Act, it is their statutory responsibility to intervene and take necessary steps and statutorily they are entitled to recover charges. They justify their demand of Rs. 3.5 crores.
14. Then reference is made to awarding of wreck removal of the said vessel to one M/s. Madgavkar Salvage, Goa for lumpsum cost of Rs. 2.88 crores on "No Cure No Pay Basis" on 25-5-1997 by inviting quotations etc. (Refer pare 15 of the affidavit in reply filed by Capt. Sharad Deodhar on behalf of the Port Trust i.e. defendant No. 5 herein). It is further stated that the work of removal of wreck by the said contractor M/ s. Madgavkar Salvage is in process since 25-2-1997 to the knowledge of ONGC, Osprey and other concerned and Port Trust has to pay the charges to the said Contractor.
15. On behalf of Osprey the reliefs claimed in this application have been very vehemently opposed. The grounds of opposition may be summarized as under:
(i) That the said vessel as a result of execution of deed of release by ONGC has become the ownership of Abhay Ocean and therefore their exists no responsibility upon them to undertake the wreck removal.
(ii) The plaintiffs were aware of the consent decree passed in Suit No. 61 of 1996 and the said decree being a decree in rem in Admiralty jurisdiction will be binding upon ONGC and as also upon Port Trust. That ONGC and Port Trust are responsible for the delay in removal of the wreck. In any event, the doctrine of subrogation will disentitle the ONGC to claim any relief.
(iii) Learned Counsel for the Osprey submitted that relief claimed vide prayer (c) of the application asking for the deposit of Rs. 3.5 crores at the interim stage would tantamount to asking for a decree in the suit which cannot be done.
(iv) Reference was also made to certain provisions of the Marine Insurance Act, 1906, by and on behalf of Osprey to buttress the points of principles of subrogation. However, at the outset, it is to be stated that as per P & I contract, the law applicable is that of England and therefore, there needs no further elaboration on this submission.
16. I have given careful consideration to the facts and circumstances as obtained in the background of dispute as revealed and reflected in the pleadings in the suit and interim application herein and previous suit being Suit No. 61 of 1996 so also to the submissions advanced by Counsel for respective parties before this Court. The gist of factual background as also submissions has been spelt out hereinabove.
17. On the factual background of this dispute, as adverted to hereinabove, the issue of paramount importance and consideration assumes considerable significance and somewhat extra ordinary complexion as have been sought to be made out. As cause of action made out by the ONGC in its plaint, it is claimed that Osprey under the insurance policy are liable to fully indemnify ONGC against any claim in respect of wreck removal of the said vessel, including costs of expenses for removal of the wreck and liabilities incurred by the plaintiffs in that behalf. Port Trust, a Statutory Body under Indian Ports Act, 1908, has been proceeding to and insisting steps and action for removal of the wreck of the said vessel under the provisions of the said Act, as existence of wreck is impeding navigation operation. Port Trust had served ultimatum as last resort under the said Act as it found that despite persistent and repeated entreaties since July, 1995, i.e. to say about 32 months, the wreck of the said vessel remained to be salvaged. Osprey and its agents and salvage contractors, responded initially with letters and thereafter Osprey is trying to wash out its hands by flinging the consent decree between Salvors Abhay Ocean and itself and has taken a stand and stance notwithstanding P & I contract and section 14 of the Indian Ports Act, 1908, that the said Consent Decree would hold the ground. No matter ONGC and Port Trust are any way parties to the Consent Decree or not. The said Consent Decree must bind ONGC as also Port Trust since as provided in one of the clauses therein, both were informed about the passing of the said Decree, and have knowledge about the same. This is where it leads to if one takes the position taken by Osprey is taken to logical end. To say the least it is indeed preposterous on the part of insurance company to come out with such untenable and unbecoming stance, which only smacks of an attempt to shirk the contractual obligations under P & I policy and highly incredible for it to stoop so low as it has been doing.
18. From the facts and course of sequence of events as narrated hereinabove in somewhat details it clearly emerges that there is a Protection and Indemnity Contract between ONGC and Osprey in respect of the said vessel. Section 15 of the said contract covers the risk in respect of wreck liabilities. The said clause for the purpose of ready convenience is reproduced hereinbelow :
"SECTION 15 WRECK LIABILITIES A. Costs or expenses relating to the raising, removal, destruction, lighting, or marking of the wreck of the insured ship when such raising, removal, destruction, lighting or marking is compulsory by law or the costs thereof are legally recoverable from the Assured.
B. Costs or expenses relating to the raising, removal or destruction of any property being carried or having been carried on the insured ship, not being oil or any other substance within the scope of section 12 of this Rule, when such raising, removal or destruction is compulsory by law or the costs thereof are legally recoverable from the Assured but only if and to the extent that:
(i) Such property does not form part of the insured ship and is not owned or leased by the Assured or by any company associated with or under the same management as the Assured : and
(ii) the Assured is unable to recover such costs or expenses from the owner or insurer of such property or from any other party.
C. Liabilities incurred by the Assured as the result of any such raising, removal or destruction of the wreck of the insured ship or any property as is referred to in paragraphs (A) and (B) of this section or any attempt thereat.
D. Liabilities incurred by the Assured as the result of the presence or involuntary shifting of the wreck of the insured ship or as a result of his failure to remove, destroy, light or mark such wreck, including liability arising from the discharge or escape from such wreck of oil or any other substance.
PROVIDED ALWAYS that:
The insured ship became a wreck as the result of a casualty or event occurring during the period of that ship's insurance by the Company in which case the Company shall continue to be liable for the claim notwithstanding that in other respects the liability of the Company shall have terminated pursuant to Rule 12(c).
(ii) In respect of a claim under paragraph (A) of this section the value of all stores and materials saved as well as the wreck itself shall first be deducted from such costs or expenses and only the balance thereof, if any shall be recoverable from the Company.
(iii) Nothing shall be recoverable from the Company under this section if the Assured shall without the consent of the Company in writing have transferred his interest in the wreck, otherwise than by abandonment, prior to the raising, removal, destruction, lighting or marking of the wreck or prior to the incident giving rise to the liabilities cost and expenses referred to in this section.
(iv) Where the liability arises under the terms of an indemnity or contract, and would not have arisen but for those terms, such costs and expenses are only recoverable under this section if and to the extent that (i) the terms of the indemnity or contract have previously been approved by the Company and cover has been agreed between the Assured and the Company on such terms as the Company may require, or (ii) the Company in its discretion decides that the Assured should be reimbursed."
19. It is very plain from the above clause that Osprey have accepted their liability as Protection and Indemnity Underwriters which include salvage of the wreck of the said vessel capsized on 25-7-1995 and soon thereafter i.e. on 11-8-1995 ONGC as owner thereof and as provided in P & I contract has issued notice of abandonment and on 28-9-1995 has executed deed of release relinquishing its right, title and interest etc. This is in accordance with the P & I contract.
20. It is necessary to note subsequent conduct of Osprey and its Agents. Osprey and Allied Marine soon after the mishap of the said vessel have moved into the matter. In as much as on 31-7-1995 it is Allied Marine the agents of Osprey invited quotations from Asiatic Salvors and the said Asiatic Salvors later on were engaged as sub-contractors by Abhay Ocean for salvage of the wreck of the said vessel at the behest of Osprey.
21. Osprey and Allied Marine entered into a contract with Abhay Ocean awarding salvage of wreck contract to Abhay Ocean. Osprey later on terminated the contract with Abhay Ocean because of failure by Abhay Ocean to salvage the wreck. Abhay Ocean as staled earlier instituted a suit being Suit No. 61 of 1996 against the said vessel, Osprey and Allied Marine which suit was decreed on the basis, of consent terms/minutes filed between the said parties. There was failure on the part of Abhay Ocean to undertake and complete wreck salvage work as per Consent Decree requiring Osprey to adopt contempt proceedings against Abhay Ocean. Osprey soon after termination of salvage contract with Abhay Ocean awarded salvage contract to Asiatic Salvors. Due to persistent insistence and reminders by the Port Trust for the removal of wreck and consequent demand of Rs. 3.5 crores from ONGC it necessitated ONGC to file the suit herein and Osprey made unsuccessful bid to stall the proceedings of the suit herein by filing Arbitration petition.
22. If one carefully analyses and objectively assesses the facts intermingled with series of events, it clearly emerges that Osprey as Protection and Indemnity Underwriters of the said vessel and their local agents Allied Marine have been in picture right throughout ever since mishap of the said vessel. As a matter of fact as noticed earlier Allied Marine who were first to swing into the action as early as on 31-7-1995. It is they who invited quotations from Asiatic Salvors and also they are the instrument in introducing or inducting Abhay Ocean into the picture as salvage contractors. There is material which clearly indicates that it is at the behest of Osprey/Allied Marine that Asiatic Salvors appeared on the scene as a sub-contractor of Abhay Ocean. In as much as this is a specific and categoric case of Abhay Ocean in their Suit No. 61 of 1996 as noticed earlier.
23. Taking into consideration all these facts, the stance and the position which Osprey have sought to take in this suit while opposing the relief, in my view, is not at all justifiable and tenable. It is quite apparent that Osprey and its agents Allied Marine have been trying to pass off their contractual obligation under P & I policy in respect of salvage of wreck of the said vessel while they do not dispute that the ONGC has abandoned the said vessel. It is too much to suggest that by principles of subrogation Abhay Ocean have become the owners of the said vessel and therefore it is for the Abhay Ocean to do the work of wreck salvation and ONGC should get the same done through them. It is novel device of shirking the obligation, contractual as well as statutory, by the insurance company.
24. The conduct all throughout of the Osprey and their agents Allied Marine as noticed above would indicate that all along they were very much conscious and aware of their contractual obligation under the P & I policy. Their inviting quotations separately as on 31-7-1995, acceptance of the notice of abandonment, awarding the contract for salvage to Abhay Ocean, subsequent termination and awarding the salvage contract to Asiatic Salvors, being party to the consent terms and decree in Suit No. 61 of 1996 and on failure of Abhay Ocean to undertake work as per consent decree, adopting contempt proceedings against Abhay Ocean all these are clear testimonies of the fact that even Osprey have accepted their responsibility and obligation under the contract. Therefore the present stand taken by them clearly militates against their past conduct and action. This is apart from the fact that P & I contract in particular section 15 thereof reproduced hereinabove obliges them to take the responsibility of the wreck of the said vessel.
25. About much repeated contention of the consent decree in Suit No. 61 of 1996 being binding upon the ONGC and Port Trust, it needs to be stated that in the first instance neither ONGC nor Port Trust were parties to the said suit or for that matter to the consent decree. It is indeed a novel device whereby the insurance company Osprey is attempting to circumvent not only its contractual obligation but even preventing the statutory authority like Port Trust from performing their statutory duty. It was rightly contended by and on behalf of ONGC that in fact the consent decree is nothing but an abuse of process of law and apart therefrom neither ONGC nor Port Trust authority being party thereto same cannot bind either of them.
26. Something needs to be stated about the said consent decree and the way same was obtained. Hereinabove I have already reproduced the consent terms filed between Abhay Ocean on the one hand and Osprey and Allied Marine on the other hand as also the order passed by this Court on the basis of said minutes of consent order. The suit was filed on 25-4-1996 and the very next day the parties came ready with consent terms and got the suit disposed off. The consent terms in, particular clause 4 goes to the length of providing:
"It is understood that a copy of this order shall operate as a notice of transfer of ownership of the said vessel "SINDHU-VII" in favour of the plaintiffs vis-a-vis all authorities concerned who shall be bound to act on it."
27. Now Osprey and Allied Marine have taken shelter under the said clause to hold the said decree being binding upon ONGC as also Port Trust.
28. When the suit No. 61 of 1996 was filed Osprey the insurance company and their agent Allied Marine were very much aware of what had transpired before. The fact that they were required to terminate the salvage contract with Abhay Ocean was a clear testimony that the salvage work operation of the said vessel was not taking shape in the manner as expected. There is enough material available which indicates the status of Abhay Ocean. Their financial capacity as also professional ability to handle the salvage work, also becomes extremely doubtful. Osprey themselves have in their letter of termination of contract as also in correspondence more than once mentioned about the same. There is evidence to show that cheque issued by Abhay Ocean in favour of their sub-contractor i.e. Asiatic Salvors were bounced. It is also noticed that Abhay Ocean also could not furnish Bank security to the sub-contractor as required.
29. It is further to be noted that even after obtaining the consent decree and even after Abhay Ocean undertaking to complete the salvage work they could not do so and for which as noticed earlier, Osprey were required to adopt contempt proceedings. There is also material made available before the Court which goes to show that said Abhay Ocean have no permanent place of business. Their address as shown in the cause title of the plaint in Suit No. 61 of 1996 is that of Tardeo but it is noticed from the affidavit filed by Osprey themselves in respect of service of contempt petition upon Abhay Ocean that none was found at Tardeo address. Service was ultimately effected at some place at Andheri. In this suit also the process of the notice was sought to be served upon said Abhay Ocean through post at the address at Andheri which according to Osprey was the place where Abhay Ocean have their office at present. However, Court is shown the postal envelop addressed by the plaintiffs Advocate in this suit transmitting the process of this application at that address which is returned unserved. Said Abhay Ocean never participated in these proceedings at any stage. It is too much to say that Osprey and their agents Allied Marine were unaware about such status of Abhay Ocean.
30. It is indeed strange for insurance company like Osprey to plead and contend on the strength of said Consent Decree obtained in the circumstances and manner as noticed earlier and say that ONGC and Port Trust should go running after such company like Abhay Ocean whose financial status and capability as mentioned earlier is doubtful or questionable and whose whereabouts are also not to be traced.
31. In retrospect it needs to be stated that Osprey the insurance company has conducted itself and handled the situation in most inept manner which is highly unbecoming and incredible. It is also equally shocking and disturbing that they became willing and active party to the consent decree which was hushed up and rushed up affair done in hot haste. Court is constrained to observe that it is highly unbecoming for the insurance company like Osprey to conduct itself in the manner it has done.
32. It therefore follows that none else but the Osprey and their local agent Allied Marine are creation of the situation and present impasse. Their inept handling has resulted into a scenario which has complicated and compounded dimensions of the problem. Said vessel capsized on 25-7-1995 and it is almost 32 months that same has remained to be salvaged.
33. Further important fact that requires to be noted about the conduct of Osprey and its agents Allied Marine is that it is to their knowledge that Port Trust, because of unprecedented situation that arose because of non-removal of wreck of the said vessel for such a long time and because of obstacle in navigation operation, that it was compelled to give contract to M/s. Madgavkar Salvors and the Port Trust is getting the salvage operation through said contractor which is fully to the knowledge of the Osprey and as also their agents Allied Marine. Notwithstanding both of them have remained silent. For that matter even Abhay Ocean who according to Osprey and Allied Marine and as per consent decree in Suit No. 61 of 1996 have become owner have not come forth to do anything in the matter. This conduct of Osprey and Allied Marine is so glaring and illustrative that there needs no more comment or any elaboration. Osprey and Allied Marine have not explained as to why they did not take any steps in the matter.
34. Now, as far as the claim or demand made by the Port Trust upon ONGC and which has entailed the plaintiffs to file the suit herein and then moving the application. It is to be stated that the Port Trust have made demand of Rs. 3.5 crores upon ONGC under the provisions of section 14 of Indian Ports Act, 1908. Said section so far relevant reads as under :
"14. Raising or removal of wreck impeding navigation within limits of port:
(1) If any vessel is wrecked, stranded or sunk in any port in such a manner as to impede or likely to impede any navigation thereof, the conservator shall give notice to the owner of the vessel to raise, remove or destroy the vessel within such period as may be specified in the notice and to furnish such adequate security to the satisfaction of the conservator to ensure that the vessel shall be raised, removed or destroyed within the said period :
Provided that the conservator may extend such period to such further period as he may consider necessary having regard to the circumstances of such case and the extent of its impediment to navigation.
(IA) Where the owner of any vessel to whom a notice has been issued under sub-section (1) fails to raise, remove or destroy such vessel within the period specified in the notice or the extended period or fails to furnish the security required of him the conservator may cause the vessel to be raised, removed or destroyed.
(IB) Notwithstanding anything contained in the foregoing sub-section if the conservator is of the opinion that any vessel which is wrecked, stranded or sunk in any port is required to be immediately raised removed or destroyed for the purpose of uninterrupted navigation in such port he may without giving any notice under sub-section (1) cause the vessel to be raised, removed or destroyed.
(2) If any property recovered by a conservator acting under sub-section (1 -A) and (1-B) is unclaimed or the person claiming it fails to pay the reasonable expenses incurred by the conservator under that sub-section and a further sum of twenty per cent of the amount of such expenses the conservator may sell the property by public auction, if the property is of a perishable nature forthwith and if it is not of a perishable nature, at any time not less than (two months) after the recovery thereof.
(3) The expenses and further sum aforesaid shall be payable to the conservator out of the sale proceeds of the property and the balance shall be paid to the person entitled to the property recovered or, if no such person appears and claims the balance, shall be held in deposit for payment without interest, to any person thereafter establishing his right thereto."
35. Plain reading of the above quoted section shows that the Port Trust has been vested with powers to take all necessary steps for removal of wreckage of the vessel should its owner fail to do so and also to do so for ensuring uninterrupted navigation in the Port area. Same also permits the Port Trust to recover the amount required by such operation even by effecting sale etc. It is under this provision that the Port Trust has proceeded to take action in the matter. As stated earlier and from the correspondence exchanged between the Port Trust and ONGC and others that Port Trust have been calling upon for the prompt action for the removal of wreck as also made the said demand upon ONGC as provided under the statute. On account of failure on the part of the concerned to arrange for the removal of the wreck of the said vessel that Port Trust had already awarded contract for wreck removal to M/s. Madgavkar Salvors. Therefore taking into consideration all these facts and in view of the fact that the Port Trust has taken steps and acted strictly in accordance with statutory provisions mentioned hereinabove and in the circumstances they are justified to raise such demand.
36. Now, the question is whether plaintiffs are right and justified in claiming in this application deposit of Rs. 3.5 crores by the 1st and 2nd defendants. It is contended on behalf of the plaintiffs that because of extra ordinary situation of which creators are none else but the Osprey and their agents Allied Marine that the plaintiffs have to be indemnified to the extent of demand as made by the Port Trust.
37. In my view, taking into consideration over all facts and circumstances as obtained in the matter herein, the conduct of the parties in particular Osprey and their agents Allied Marine as graphically high lighted hereinabove and revealed from the material made available on record it prima facie shows that it is the Osprey and Allied Marine who are responsible for such state of affairs. Last 32 months have elapsed since said vessel capsized and it has remained in that position when it is noticed that ONGC as the owner have been prompt enough in issuing the notice of abandonment as noticed earlier.
38. Therefore taking into consideration somewhat peculiar situation that has arisen and to which as the material prima facie reveals Osprey as insurer are mainly and primarily responsible because of their inept handling of situation that it is very appropriate and proper that they are directed to indemnify the ONGC to the extent of the sum of Rs. 3.5 crores as claimed by the plaintiffs in their application herein vide prayer (c) of this application. In my view ONGC have made out strong prima facie case for passing the order in that behalf.
39. Tnis Court is compelled to note and expresses anguish over the manner in which the consent decree in Suit No. 61 of 1996 was obtained from this Court on 26-4-1996. Abhay Ocean were the plaintiffs in the said suit and represented by reputed Attorneys and Counsel. However the subsequent events show that to trace the whereabouts of the said party i.e. Abhay Ocean even for effecting service of the process of the Court the serving bailiff had to run from pillar to post. I have already commented upon the status of the said party as evidenced and revealed from the material on record adverted to hereinabove. It is more disturbing and shocking that the insurance company like Osprey who claims to be of international reputation readily offered and agreed to be party to the consent decree and the manner in which the same was obtained knowing fully well what had transpired before which was very much to the knowledge of M/s. Osprey and their Indian agents. The Court expresses its disapproval the way and manner in which the said decree was obtained from the Court. It is much more disturbing that such a decree is sought to be justified and defended by the insurance company like Osprey before the Court. In view of the foregoing discussions it is held that the plaintiffs are entitled to relief as claimed vide prayer (c) of this application. Furthermore considering the conduct of Osprey and their agents Allied Marine viz., defendants Nos. 1 and 2 respectively in my view, they should bear the costs as far as Port Trust defendant No. 5 is concerned which is a public authority dragged into litigation. Defendants Nos. 1 and 2 shall pay costs of this application to defendant No. 5 quantified at Rs. 10,000/- as exemplary costs. Hence the following order:
Notice of Motion made absolute in terms of prayer (c) excluding bracketed portion as indicated therein. Prayer granted to read :
(i) "(c) That pending hearing and final disposal of the suit this Hon'ble Court be pleased to order defendants Nos. 1 and 2 to deposit in this Hon'ble Court the sum of Rs. 3.5 crores towards the costs of the removal of the wreckage of the 3rd defendant vessel from the precincts of the Port of Mumbai."
(ii) Six weeks time is given to 1st and 2nd defendants i.e. upto 5-5-1998 to comply with the said order.
(iii) Liberty to the parties to seek further directions after the amount is deposited.
(iv) Defendants Nos. 1 and 2 shall pay costs of Rs. 10,000/- as exemplary costs to defendant No. 5 Port Trust of this application.
Application stands disposed off.
40. At this stage it is pointed out by Mr. Dwarkadas that the 2nd defendant was a sole proprietary concern and its proprietor was Captain Daraius Feroze Marker who died on 7-1-1997. Learned Counsel for the plaintiffs says that in the suit filed being Suit No. 61 of 1997 said defendants have been described as partnership firm. It is also pointed that in para 6 of affidavit dated 4-12-1997 filed by Mr. Ruben Fernandes on behalf of the 1 st defendant it is stated that the 2nd defendant were never a partnership firm. It is noticed that the same Advocate Mr. G.A. Rebello who appears for the 1 st defendant in this suit also represented defendant No. 2 in Suit No. 61 of 1996 who were also defendants in this suit. It is also necessary to note that the address of Allied Marine mentioned in the Suit No. 6 as also in the suit herein is the same i.e. ABC 504, Jolly Bhavan No. II, New Marine Lines, Mumbai 20, However process sent in this application then has returned with postal remark "left". Whereas it is noticed that in Suit No. 61 of 1996 they responded and process could be served upon them at the same address.
41. Since the status and existence of 2nd defendant is in doubt for that matter whether partnership firm or proprietary concern, which cannot be resolved in the absence of any credible evidence the operative part of order in Clause (i)(c), (ii) and (iv) of the order passed above it is made clear to be applicable and operative only against defendant No. I.
42. Ordered accordingly.