TMI Blog2001 (11) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... claim? 2 . The aforesaid question is also involved in Appeal No. 739/2000 arising out of Notice of Motion No. 1376/1998 in Admiralty Suit No. 30/1998 and, therefore, both the aforesaid appeals were heard together and are being disposed of by this common judgment. Besides the aforesaid question common to both appeals, there are distinct and separate issues involved which we shall deal with at an appropriate stage. 3. At the outset, we may observe that we afforded extensive hearing to the learned Counsel appearing in the matter not because it was so required but the research done and the labour put by the learned Counsel justified such indulgence. 4. As the aforesaid question has been referred in Admiralty Suit No. 32/2000, we shall refer to the facts obtaining in that suit before we proceed to discuss the aforesaid question. The plaintiff in Admiralty Suit No. 32/2000 is a Protection Indemnity Association incorporated under the laws of the United Kingdom which carries on business through its Managers, Liverpool London P I Management Ltd. at Liverpool, U.K. The plaintiff is mutual association of ship owners and offers insurance cover in respect of the vessels entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rules of the Association the member is liable to contribute by way of calls such amounts as may be called upon by the directors of the plaintiffAssociation. The insurance premium or calls that a member/owner is liable to pay to the plaintiff are: (a) advance calls during the policy year: (b) supplementary calls as may be determined by the Association after theclosing of the policy year: (c) release calls as may be determined by the Association on termination ofthe cover and (d) overspill calls in respect of any overspill claim incurred by the Association. For the policy year commencing on 20-2-2000 the plaintiff decided to stop offering insurance cover to all vessels entered with them and made arrangements for its existing members to obtain similar cover with other Associations. However, all existing members were liable to pay the premium as determined by the plaintiff for the previous policy years for which insurance cover had been effected. It is plaintiff's case that accordingly as per the rules of the Association, release calls which are part of the premium payable by the members after the expiry of the policy year were assessed and demanded by the plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 vessel to furnish a rupee denominated Pay Order to be substituted by Bank Guarantee within two weeks and thus the Pay Order was furnished by the owners of the defendant No. 1 vessel 'Sea Success I' and defendant No. 1 vessel was thereafter free to sail. The owners of defendant No. 1 vessel on 118-2000 furnished a Bank Guarantee on the requisite terms placed on the Pay Order. On 22-8-2000 the defendant No. 1 vessel and her owners took out Notice of Motion No. 2455/2000 seeking rejection of the plaint for failure to disclose cause of action and/or dismissal of the suit for want of jurisdiction. The crux of the contentions raised by the owners of the defendant No. 1 vessel for rejection of the plaint for failure to disclose cause of action and dismissal of suit for want of jurisdiction is based on two grounds viz., (a) that a claim for unpaid release calls described by plaintiff as insurance premia does not constitute a 'necessary' within the meaning of section 5 of Act of 1861 and (b) that the vessel Sea Success I is not a sistership of the vessel Sea Ranger or Sea Glory . The learned Single Judge by his order dated 1st/2nd February 2001 dismissed the notice o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed can operate and trade without insurance though it may be imprudent even to attempt it; in general on high seas no national law or conventional obliges a vessel owner to take out comprehensive P I insurance. The learned Counsel heavily relied upon (The Heinrich Bjorn), 1883 (8) P.D. 151, (The Andre Theodore), 10, Aspinall 94, Stokes v. The Conference, (1887) 8 NSWR 10, (The Emrald Transporter), 1985 (2) SALR 152. (The River Rima ), 1988 (2) LLR 193, (The Golden Petroleum), 1994 (1) SLR 92 and the provisions of aforesaid statutes and 1952 Brussels Arrest Convention and the Administration of Justice Act, 1956. Mr. Bharucha, the learned Counsel for the appellants also urged that amounts due towards unpaid insurance premia cannot be said to arise out of an agreement relating to the use or hire of a ship or an agreement relating to the carriage of goods in any ship and, also not a maritime claim under that head. In this connection, the learned Counsel referred to (Aifanourious), 1980 (2) LLR 403 and Gatoil International Inc. v. Arkwright-Boston Manufacturers Mutual Insurance Co. and others, 1985 (1) All E.R.129. He would also urge that the amounts due towards insurance premia i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tervenor supported the submissions of Mr. Bharucha and additionally contended that the concept of necessaries contemplated supply of goods or materials to a particular ship for her operation or maintenance and club cover is not comparable with the concept of necessaries supplied to the ship because upon entering into a ship the owner becomes a member of the company, who pays the membership fee and undertakes to pay contribution towards the losses incurred by himself as well as other members of the club and his liability to pay these contributions is a liability collateral to the membership. Mr. Kotwal submitted that consideration for payment of the call is the undertaking to contribute towards losses of other members, management expenses, reinsurance losses etc. and the foundation of the contract is not the payment of a premium, but an agreement that each member should bear his aliquot share of the losses of the year covered by the policy. According to Mr. Kotwal, club cover merely postulates the ownership being indemnified by the club provided; (a) the managers in their absolute discretion decided to indemnify the member, (b) the member has fulfilled all the conditions of givi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y benefit of the ship owner, a claim for unpaid insurance premia in respect of ship cannot be said to be covered by the expression necessary supplied within the meaning of section 5 of the Admiralty Courts Act, 1861. 8. On the other hand Mr. Prashant Pratap, the learned Counsel appearing for plaintiff Association respondent No. 1 in Appeal No. 226/2001 strenuously urged that the expression necessaries occurring in section 5 of the Admiralty Courts Act, 1861 must be construed in broad and liberal manner keeping in mind the ever changing requirement of a ship to be able to trade in commerce and in the present day context the insurance should be considered 'necessary' for the operation of the ship. He submitted that it is mandatory for a vessel to have a valid P I insurance cover at major ports in India and consequently at least as far as India is concerned insurance is a 'necessary'. The learned Counsel would urge that the absence for valid P I insurance cover as required by Port Regulations renders a vessel legally unseaworthy and consequently in breach of statutory requirements and hence P I insurance is deemed to be mandatory and should be considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout P I cover vessel is not in a position to undertake any maritime adventure. He also submitted that P I cover is far reaching as it caters to the eventualities in respect of the seamen liabilities, passenger liabilities and third party liabilities attending to the complement, stowaways, supernumeraries, life salvage and persons in distress and also liabilities arising as a result of collision, damage to the ships, damage to property, pollution, wreck removal, towage etc. and, therefore, what are necessaries today are entirely different from what were necessaries during historical times where trading was relatively simple. The learned Counsel submitted that though India is not signatory to numerous international conventions, in view of the dictum in m.v. Elisabeth , the principles can be adopted into our local context. Mr. Rebello referred to the International Convention on a Civil Liability for oil pollution, Brussels which requires compulsory insurance. The Merchant Shipping (Oil Pollution) Act, 1961 which makes insurance compulsory, the Major Port Trusts Act which entitles the major Port Trusts to issue notifications having the force of law and such notifications issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of claims to cargo carried into any port in England or Wales. Significantly, the Act did not apply to outward cargo. Section 7 of the Act, however, conferred jurisdiction on the High Court of Admiralty over any claim for damage done by any ship . This Act was followed by the judicature Act of 1873, which came into force in 1875 and which merged the High Court of Admiralty with the High Court of Justice resulting in a fusion of Admiralty law, common law and equity. It is of interest to note that the provision contained in section 6 of the Admiralty Court Act, 1861 limiting the jurisdiction of the Admiralty Court to claims respecting inward cargo was discarded by the Administration of Justice Act, 1920 which extended the jurisdiction of the High Court to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship, and; (c) any claim in tort in respect of goods carried in any ship. The Act thus applied to both inward and outward cargoes. 36. The Admiralty Court Act, 1861 and the subsequent enactments were consolidated by the Supreme Court of Judicature (Consolidation) Act, 1925. The admiralt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (h) respectively of section 20(2) of the Supreme Court Act, 1981, amongst other claims, as falling under the Admiralty jurisdiction of the High Court. Part II of this Act is derived substantially form Part I of the 1956 Act which was enacted to give effect to the Brussels Convention of 1952 relating to the arrest of sea-going ships and the rules concerning civil jurisdiction in matters of collision (Cmd 8954). 39 . Section 20 of the Supreme Court Act, 1981 enumerates various questions and claims falling under the admiralty jurisdiction of the English High Court. Apart from matters covered by the Merchant Shipping Acts, 1894 to 1979 (referred to in sub-section (3)) and certain other matters, various questions and claims are enumerated in sub-section (2). They include any claim for loss of or damage to goods carried in a ship; any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; any claim for damage received by a ship; and any claim for damage done by a ship. 40. Sub-section (7) of this section specifically provides that the admiralty jurisdiction of the High Court extends to all ships or aircrafts, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed and controversial one is as to what is real concept and purport of the term necessaries used in section 5 of the Act of 1861. Though the question is confined to whether claim for unpaid insurance premia in respect of ship amounts to necessaries supplied within the meaning of section 5 of the Admiralty Courts Act, 1861 so as to constitute a maritime claim, but we find the ancillary question that also arises for determination is whether a claim for unpaid insurance premia in respect of a ship is otherwise maritime claim giving rise to admiralty cause? 13. Statutorily by the Admiralty Court Act, 1840 the Court of Admiralty acquired jurisdiction over claims for necessaries supplied to any foreign ship or seagoing vessel. By the Admiralty Court Act, 1861 in respect of claims for necessaries supplied to any ship elsewhere than in the port to which the ship belonged, unless it was shown to the satisfaction of the Court that no owner or part owner of the ship was domiciled in England or Wales was extended to the jurisdiction of Court of Admiralty. The expression necessaries has not been defined in the Act of 1861. However, it seems in England the word necessaries had acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Durban in M.V. Emerald Transporter with reference to the provisions contained in Admiralty Jurisdiction Regulation Act 105 of 1983 wherein it was held that services which injured solely to the benefit of the shipowner, as was the position with the contracts of insurance, could not be classed as necessaries . It may be said that the observations were made by the Court in Durban in the context of ranking of claims against a fund comprising of sale proceeds of the vessel M.V. Emrald Transporter. 16. Article 1(k) of 1952 Brussels Arrest Convention which incorporates goods or materials wherever supplied to a ship for her operation or maintenance as a maritime claim came to be considered by the House of Lords in The River Rima. The House of Lord noted that Article 1(1) of the Convention listed 17 types of claims in paragraphs lettered (a) to (q) and the list of the types of the claims therein was derived as a whole from the list of types of claims in section 22 (1)(a) of 1992 Act which gave to the High Court of Admiralty jurisdiction over claims for necessaries which had previously been given, though not in precisely the same terms, to the High Court of Admiralty, first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned in the changing times when shipping industry has grown tremendously. Whatever be the misgivings of the Admiralty jurisdiction of the Indian High Courts earlier and restrictions put by themselves, after the authoritative pronouncement by the Apex Court in m.v. Elisabeth , no doubt is left that though Colonial statutes continue to remain in force by reason of Article 372 of the Constitution of India but that does not stultify the growth of law or blinker its vision or fetter its arms. In m.v. Elisabeth it has been held that the fact that the High Court continues to enjoy the same jurisdiction as it had immediately before the commencement of the constitution does not mean that a matter which is covered by Admiralty Court Act, 1861 cannot be otherwise dealt with by the High Court in exercise of its manifold jurisdiction which is unless barred, unlimited. The Supreme Court went on to observe that to the extent not barred expressly or by necessary implication, the judicial sovereignty of this country is manifested in the jurisdiction vested in the High Courts as superior courts. There is, therefore, neither reason nor logic in imposing a fetter on the jurisdiction of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the remedy, it is the duty of the Court to devise procedure by drawing analogy from other systems of law and practice. To the courts of the civil law countries in Europe and other places, like problems seldom arise, for all persons and things within their territories (including their waters) fall within their competence to deal with. They do not have to draw any distinction; between an action in rem and an action in personam. 65. It is likewise within the competence of the appropriate Indian Courts to deal in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found within their jurisdiction. The power of the Court is plenary and unlimited unless it is expressly or by necessary implication curtailed. Absent such curtailment of jurisdiction, all remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the High Court concerned. This power of the Court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment. 19. The Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... England, can render valuable help in this regard. Delay in the adoption of international conventions which are intended to facilitate trade hinders the economic growth of the nation. 20. At this stage it would be advantageous to appreciate the nature of the P I club and the insurance cover provided by such clubs. In the beginning P I clubs were loose associations of shipowners with no collective rights or exposure to outside legal action but today P I club is definitely a corporation. All P I clubs in UK are registered companies limited companies with no share capital because essentially these are non-profit making companies. Upon entering the ship the owner becomes member of the P I club and he pays the membership fee and undertakes to pay contribution towards the losses incurred by other members of the club which are payable by the Company. In other words the concept of guarantee is based upon a reciprocal system, that each member is cast under a duty to refund the damages suffered by any one of them and pay, on mutual basis, each other's claims. In mutual insurance association or P I clubs each member would be both the assured and insurer. The member is insur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead thus: MUMBAI PORT TRUST Deputy Conservator's Office Port House, 1st floor, Shoorji Vallabhdas Marg, Mumbai-400 001. CIRCULAR To, Ship Owners/Stevedores/Vessel/Agents The Secretary Bombay Nhave/Sheva Ship-Intermodel Agents Association, 3, Rex Chambers Ground floor, Valchand Hirachand Marg, Ballard Estate, Mumbai-400 001 The Secretary The Bombay Stevedores Association Ltd., Janmabhoomi Chambers, 2nd floor, Valchand Hirachand Marg, Ballard Estate, Mumbai 400 001. Subsequent to the Circular Nos. DC/C-SH/7200 dated 4th October, 1995 and DC/C-SH/2/3661 dated 9th July, 1996 and in view of recent experience gathered from the storm which hit the harbour on 18th and 19th June, 1996. It has been decided that vessels which do not possess valid P I club cover or suitable insurance cover will not be decked. The intention of the port is to eliminate all sub-standard vessels or ships without insurance cover, making Mumbai a port of call, because a mishap to such a vessel will render the port liable for expenses of wreck removal or other damages caused. 2. Therefore, notice is hereby given that from 1st November, 1996, ships, which do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng all that is required to be supervised in the process of ships voyage and/or her employment in a particular port in any matter touching therewith and (e) Rendering services to the complement on board viz. to the Master as andwhen he faces difficulties to assist him in lodging notes of protest before notaries or other legal advisors, arrange for the repatriation of stowaways, initiating release of vessels from arrest and give the clubs letter of indemnity which are accepted in various ports of the world, arrange for surveyors to attend to investigation, quantifying the damage that may be caused either to the cargo or to the vessel or in case of an accident to any of the crew members attend to hospitalisation and medical needs and variety of other situational exigencies that may arise from time to time as though the owners themselves were attending to these problems. -A. It has also been brought to our notice by the plaintiff association that the Western India Shippers Association which is an association of shippers to export cargo has issued directives to its members viz. shippers to ensure that only vessels which have been insured for hull and machinery and entered with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of section 5 of Admiralty Courts Act, 1861. It is true that in England the concept of cover given by P I Association has not been accepted as necessary, but several other countries such as South Africa, China and Australia statutorily provide that unpaid premia constitutes into a maritime claim. So far as U.S.A. is concerned, it has expanded the definition of necessaries to include unpaid premia in the absence of provisions under the enactments. In Equilease Corporation, in the appeals arising from United States Statutes District Court for the Eastern District of Louistana, the Circuit Judge held thus: (3) Equilease next argues that no maritime lien arises in favour of James because insurance is not a necessary and therefore neither general admiralty law nor the Act provides a maritime lien for unpaid insurance premiums. Equilease relies on Learned and on Gro v. Steel Gas Screw Lorraine K, 310 Fd 547 for this proposition. The Grow Court stated in one sentence without elaboration that there is no federal maritime lien for insurance premiums. 310 F. 2d at 549, and went on to grant the plaintiff insurance broker a lien under Michigan State Law. Grow is thus not of much ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs must today have hull protection and indemnity insurance. As the district Court noted, insurance is something that every vessel today needs just to carry on its normal business. Equilease, 568 F. Supp. 1263. Equilease itself required all of its affiliate companies to carry adequate insurance and would not do business with any company that failed to do so. Equilease, 568 F. Supp. 1263. The Bareboat Charter Party entered into by the Equilease shelf corporations with Dunnamis required that throughout the term of the charter the charterer shall, at his own expense, keep the vessel insured against ... risks .... in an amount ... not less than the greater of the initial cost of the vessel or the full commercial value of the vessel .... The agreement specifically required insurance coverage for property damage, personal injury and death to third parties and crew, breach of warrant, pollution, cargo and tower's liability, and provided that war risk hull and indemnity insurance would be required at the owner's discretion. The Charter Party also mandated that any insurance payments for losses greater than $ 10.000 (but less than total loss of the vessel) were to be made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of the word necessaries which was earlier confined to indispensable repairs, cables, sales and provisions have been given wider significance and gradually amplified by modern requirements inasmuch as Canal dues, dock dues, custom house and immigration services fee etc., which prevent the ship from sailing have been treated as covered by the expression necessaries ; a fortiori in the Indian context where some of the major ports do not permit an entry to the vessel which do not have P I cover, there is no reason why such insurance premium be not treated as necessaries for the ship as only such insurance would enable the vessel to enter into some major ports in the country. In other words, P I cover of a vessel seems to be not only an act of prudence of the ship owner, traditionally which had been the view in England, but without such cover the vessel is not in a position to undertake complete maritime adventure and, thus it can safely be said that what was considered earlier to be prudent act to have insurance of the ship centuries ago, has now in the changing time become necessity and, therefore, a necessary for the ship. Be it noted that the International C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of necessaries to keep the ship a float and moving. According to the law in England in the 19th century, various liens were being added to the list of the necessary supplied to the ship which could be recovered in an action in admiralty jurisdiction subsequently statutory provisions have been made specifying items which can be claimed under this head under the admiralty jurisdiction. Section 1 of the Administration of Justice Act, 1956 in England specify the various claims which can be entertained by the Court under admiralty jurisdiction. However, the law on this subject in our country has been stagnating since 1890. Though section 1 of the English Act does not show that an amount paid by an Agent to a Charterer towards income tax liability on a freight payable by the Charterer can be recovered under the section, but unless the various statutory provisions of that country are considered it will be difficult to say whether it can recover in England today or not. However, it is necessary that our law keeps abreast with the developments in the other fields of activity. It will be unjust to deny the inclusion of such claim in a suit under the admiralty jurisdiction. Otherwise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not adopted the Brussels Arrest Convention, 1952 but the Apex Court observed that though India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various Conventions in India to facilitate international trade and have not adopted these conventions, yet the principles incorporated in the conference which are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common Law of India and applicable for the enforcement of maritime claims against foreign ships is equally applicable to the Geneva Arrest Convention, 1999 which embodies also necessities of the international trade and, therefore, is applicable for enforcement of maritime claims against foreign ships and can be regarded as a pat of our common law. Though Mr. Bharucha, the learned Counsel for the appellants, strenuously urged that the Geneva Arrest Convention 1999 has not been come into force as even 10 States have not give their consent to be bound by it and, therefore, cannot be said to embody the principles of law recognised by the generality of maritime States but we find it difficult to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herent and plenary powers. Unless expressly or impliedly barred and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers. .... In equating the admiralty jurisdiction of the Indian High Court to that of English High Court the Colonial Court of Admiralty Act, 1890, significantly refers to the admiralty jurisdiction of the High Court in England whether existing by virtue of any statute or otherwise. This is an enabling statute, and not a statute of limitation of power. It aids, and does not fetter, the growth of jurisdiction. ......It is time to take a fresh look at the old precedents. We are constrained to hold for what we have held above which we need not repeat that the judgment of the learned Single Judge in m.v. Humber does not lay down the correct law in holding that a claim for unpaid insurance premium cannot be considered to be a necessary supplied to a ship. 28. The contention that call money to be paid by ship owner does not relate in a manner for coverage of the particular ship entered by a ship owner with the club and it is in the nature of an unpaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r owner. Mr. Prashant Pratap, the learned Counsel appearing for the plaintiffs- P I Association raised objection about the maintainability of Letters Patent Appeal. The submission of Mr. Pratap is that the order passed by the learned Single Judge refusing to reject the plaint for failure to disclose a cause of action under Order 7, Rule 11(a) of Code of Civil Procedure (C.P.C.) is not appealable as it is not a judgment within the meaning of Clause 15 of the Letters Patent. Mr. Pratap submitted that the impugned order does not conclusively or finally determine any of appellants rights and that no prejudice whatsoever is caused to the appellants by the impugned order of the learned Single Judge refusing to reject the plaint as all issues have been left open to be decided at the trial of the suit. To substantiate his submission about non-maintainability of appeal, Mr. Pratap relied upon, (i) Justices of the Peace for Calcutta v. The Oriental Gas Company (Limited), 1872 (8) BLR 433, (ii) Shri Goverdhanlalji Maharaj v. Shri Chandraprahavati, A.I.R. 1926 Bom 156, and (iii) Central Mine Planning and Design Institution Ltd. v. Union of India and another (2001)ILLJ1069SC . Mr. Pratap also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for failure to disclose a cause of action can cause grave prejudice and loss to a defendant and if defendant's objection for rejection of plaint for failure to disclose the cause of action is accepted that would save the defendant from worry and expense of being put to trial. 34. In this backdrop, we straightway refer to the judgment of the Apex Court in Shah Babulal Khimji (supra). In paragraphs 80, 81 and 82 of the report, the Apex Court considered the judgment of Calcutta High Court in the case of The Justices of the Peace for Calcutta and held that the Division Bench of Calcutta High Court through its Chief Justice Couch, C.J. has taken very narrow view of the meaning of the expression judgment within Clause 15 of the Letters Patent and the Court is not justified in interpreting a legal term which amounts to complete distortion of the word judgment . Instead of discussing the judgment of the Calcutta High Court in the case of Justices of the Peace for Calcutta independently we feel the discussion of the said judgment by the Apex Court in Shah Babulal Khimji, particularly paragraphs 80, 81 and 82 would suffice which read thus: 80. We now proceed to deal with the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst theJudge sitting on the Original Side than the right of appeal given to a trial Judge sitting in the mofussil. We are doubtless impressed with the argument of the Chief Justice and fully appreciate the force of the reasons given by him but we feel that despite those considerations the law must be interpreted as it stands and a Court is not justified in; interpreting a legal term which amounts to a complete distortion of the word judgment so as to deny appeals even against unjust orders to litigants having genuine grievances so as to make them scapegoats in the garb of protecting vexatious appeals. In such cases, a just balance must be struck so as to advance the object of the statute and give the desired relief to the litigants, if possible. Although it is true that this decision is practically the locus classicus so far as the Calcutta High Court is concerned and has been consistently followed by later decisions at the same time it cannot be denied that in a number of cases the conscience of the Judges was so shocked that they tried to whittle down or soften the rigours of this decision so much so that in one case the observations of the Chief Justice were not only not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not a narrower sense. In other words, a judgment can be of three kinds: (1) A final judgment.- A judgment which decides all the questions orissues in controversy so far as the trial Judge is concerned and leaves nothing else to be decided. This would mean that by virtue of the judgment, the suit or action brought by the plaintiff is dismissed or decreed in part or in full. Such an order passed by the trial Judge indisputably and unquestionably is a judgment within the meaning of the Letters Patent and even amounts to a decree so that an appeal would lie from such a judgment to a Division Bench. (2) A preliminary judgment.---This kind of a judgment may take twoforms---(a) where the trial Judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable. Here also, as the suit is finally decided one way or the other, the order passed by the trial Judge would be a judgment finally deciding the cause so far as the trial Judge is concerned and therefore appealable to the larger Bench, (b) Another shape which a preliminary judgment may tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or immediate but of a minimal nature and rather too remote because the plaintiff still possesses his full right to show that the defence is false and succeed in the suit. Thus, such an order passed by the trial Judge would not amount to a judgment within the meaning of Clause 15 of the Letters Patent but will be purely an interlocutory order. Similarly suppose the trial Judge passes an order setting aside an ex parte decree against the defendant, which is not appealable under any of the Clauses of Order 43 Rule 1 though an order rejecting an application to set aside the decree passed ex parte falls within Order 43, Rule 1 Clause (d) and is appealable, the serious question that arises is whether or not the order first mentioned is a judgment within the meaning of Letters Patent. The fact, however, remains that the order setting aside the ex parte decree puts the defendant to a great advantage and works serious injustice to the plaintiff because as a consequence of the order, the plaintiff has now to contest the suit and is deprived of the fruits of the decree passed in his favour. In these circumstances, therefore, the order passed by the trial Judge setting aside the ex parte dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trial Judge granted by him underClause 12 of the Letters Patent. (5) An order deciding a preliminary objection to the maintainabilityof the suit on the ground of limitation, absence of notice under section 80, bar against competency of the suit against the defendant even though the suit is kept alive. (6) An order rejecting an application; for a judgment on admission;under Order 12, Rule 6. (7) An order refusing to add necessary parties in a suit under section92 of the Code of Civil Procedure. (8) An order varying or amending a decree. (9) An order refusing leave to sue in forma pauperis. (10) An order granting review. (11) An order allowing withdrawal of the suit with liberty to file fresh one. (12) An order holding that the defendants are not agriculturists within the meaning of the special law. (13) An order staying or refusing to stay a suit under section 10 ofthe Code of Civil Procedure. (14) An order granting or refusing to stay execution of the decree. (15) An order deciding payment of Court fees against the plaintiff. 38. Though Mr. Pratap, learned Counsel for original plaintiffs-respondent No. 1 in Appeal No. 226/2001 submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 7, Rule 11(a) and which obligates the trial Court to do so definitely affects a very valuable right of the defendant since if such objection is upheld and lis is thrown out at the threshold, the defendant is spared from the agony of delay, expenses and mental torture. The decision by the trial Judge adversely to the defendant on the application made by him for rejection of plaint for want of disclosure of cause of action decides an important aspect of the trial affecting the very valuable right of the defendant and even though the suit is kept alive, such order has to be construed to be preliminary judgment and, therefore, appealable within the meaning of Clause 15 of Letters Patent. The judgment of the Apex Court in Central Mine Planning and Design Institute Ltd. v. Union of India and another (supra) cited by the learned Counsel for original plaintiff respondent No. 1 to buttress his argument that Letters Patent Appeal against the order refusing to reject the plaint is not maintainable, rather supporting him supports the view which we have taken. The Apex Court in that case was seized of the question; whether order passed by the Single Judge on application under section 17-B o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calls: and (ii) the defendant No. 2 is owner (beneficial or otherwise of the defendant No. 1 vessel Sea Success I . Hence the deduction that the original plaintiff attempts to draw from the aforesaid averments is that the vessels Sea Ranger and Sea Glory are sisterships of the vessels Sea Success I by virtue of being commonly owned by defendant No. 2. The submission of Mr. Bharucha is such deduction is rested on the assertion that the vessel Sea Success I (defendant No. 1) is owned/controlled by defendant No. 2 through its 100% wholly owned subsidiary S.S. Shipping Corporation Inc. of Monrovia, Liberia but such deduction is wholly misconceived and erroneous as the shareholder has no assets of the company in which it owns shares. Mr. Bharucha submitted that the exercise of piercing the veil is undertaken only in specified circumstances and are exceptions to the rule of the doctrine of incorporation and such specified circumstances have to be pleaded and particularised which have not been made in the plaint at all. The learned Counsel for appellants submitted that the title/ownership of a vessel is recognised in a person described as a beneficial owner of the shares in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l plaintiffrespondent No. 1 supported the view of the learned Single Judge and contended that paragraphs 1 and 14 of the plaint does disclose cause of action against the defendants. According to him, the pleadings made in paragraphs 1 and 14 clearly disclose cause of action for proceeding with the trial in the suit. Mr. Pratap argued that plea of want of cause of action is required to be taken at demurer i.e., on the basis that all averments made in the plaint are correct and treated as such and only when the Court finds that the said averments do not disclose any cause of action then Court can reject the plaint and not otherwise. Mr. Pratap submitted that the relationship between the defendant No. 2 and S.S. Shipping Company Inc. i.e., between the holding and subsidiary company respectively has to be seen by lifting the corporate veil to render justice irrespective of legal efficacy. He submitted that averments in the plaint cannot be examined on merits at this stage. It is the contention of Mr. Pratap that where there is a dispute as to beneficial ownership of the vessel the Court in all cases could and in some cases should look behind the registered owner to determine the true b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is laid down by the Supreme Court in T. Arivandandam v. T.V. Satyapal [1978]1SCR742 . It is laid down that if on a meaningful and not formal reading of a plaint it is manifest that the plaint is vexatious or meritless in the sense of not disclosing a clear right to sue trial Court should exercise its power under Order VII, Rule 11, Code of Civil Procedure, and should reject the plaint. So it is meaningful reading of the plaint which is required. It is to be seen if actually according to law, on the allegations contained in the plaint, defendant No. 2 was agent of the Union of India or not. Mere formal allegation of the plaintiff that defendant No. 2 was agent of the Union of India is not to be accepted. In view of the Supreme Court authority, it is the duty of the Court to probe whether allegations made in the plaint make defendant No. 2 as agent and the Union of India as the principal according to law. I have already held that according to law defendant No. 2 was not agent of the Union of India and that being so plaint does not disclose any cause of action against the latter. 43 . The Apex Court in Azhar Hussein v. Rajiv Gandhi [1986]2SCR782, though while dealing with the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was sought to be initiated under the garb of ingenious drafting of the plaint and to guard against the mischief of a litigant misusing the process of the Court, by entering into a false litigation, merely for the purposes of harassing the other party and obtaining undue advantage of the process of the Court by adopting tactics and in starting sham and shady actions. 48. The Apex Court in State of Orissa v. Klockner and Company and others. AIR1996SC2140 , approved the view of the High Court holding that plea that plaint does not disclose cause of action is different from plea that there was no cause of action for the suit and that for determining that the suit deserves to be wiped out under Rule 11(a) of Order 7 C.P.C., the averments in the plaint are required to be looked into. 49. While dealing with the provisions of Order 33, Rule 5 Clause (a), the Apex Court in Vijay Pratap Singh v. Dukh Haran Nath Singh, AIR1962SC941 , held in paragraph 9 of the report thus: (9).........By the express terms of Rule 5, Clause (d), the Court is concerned to ascertain whether the allegations made in the petition show a cause of action. The Court has not to see whether the claim made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is failure to disclose a cause of action and not that there is no cause of action for the suit. It is not competent for the Court to go into the correctness or otherwise of the allegations constituting the cause of action. In other words, the correctness or otherwise of the allegations constituting the cause of action is beyond the purview of Order 7 Rule 11(a) C.P.C. However, to find out whether the plaint discloses cause of action or not, the Court has to consider the allegations made in the plaint intelligently and meaningfully and need not be influenced by ingenious and clever drafting creating illusion of cause of action. The ritual of repeating a word or creation of an illusion in the plaint can certainly be unravelled and exposed by the Court while dealing with an application under Order 7, Rule 11(a). The Court must scan and scrutinise the allegations made in the plaint to find out whether forensic cleverness while drafting the plaint has been employed to get out of clutches of Order 7 Rule 11 C.P.C. and if on a careful scan and scrutiny of the pleading the conclusion of the Court is in affirmative, the consequence of rejection of plaint must follow. The Court has to see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiff further submits that defendant No. 2 is liable in personam in respect of the unpaid insurance premium in respect of the two vessels Sea Glory and Sea Ranger . Consequently the plaintiff is entitled to arrest any other vessel in the ownership of defendant No. 2. The 1st defendant vessel is owned by defendant No. 2 through its 100% subsidiary S.S. Shipping Co. Inc. In the circumstances, the plaintiff submits that they are entitled to proceed against the defendant vessel in rem and are entitled to an order of arrest, detention and sale of the vessel for recovery of their outstanding dues in respect of insurance premium as more particularly stated above. 54. A meaningful analysis of the aforesaid averments made in the plaint would reveal that according to the plaintiffs, defendant No. 2 is the owner of the vessels Sea Ranger and Sea Glory namely, the two vessels in respect of which the plaintiffs claim amounts due towards unpaid insurance premium (release calls) as per the Rules of Plaintiffs Association and that the defendant No. 2 is owner of defendant No. 1 vessel Sea Success I through its 100% wholly owned subsidiary S.S. Shipping Corporation Inc. of Monrovia, Liber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exception which is undertaken, only in certain specified circumstances. It is not that in all cases a subsidiary company must be treated as an asset of the holding company. If that be so, the subsidiary company shall have no independent identity and such subsidiary company will crack not under the pressure of its own uncongenial shareholders, but also of the pressure of the shareholders and creditors of the holding company. The view of Madras High Court in Spencer Co. v. CWT [1969] 72 ITR 33(Mad) , is to the same effect wherein it was held, Merely because a company purchases almost the entirety of the shares in another company, it will not serve as a means of putting an end to the corporate character of the other company or the controlling company acquiring the ownership of the controlled company, so as to treat them as one entity for purposes of right and liabilities . The Madras High Court went on to hold further, It is well settled that an incorporated company is a legal person and it cannot equate to its shareholders. The position continues to be the same even if the number of the shareholders is reduced to one by accident or otherwise. The act of the company cannot, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1998 (5) BomCR 312, the Division Bench of this Court held. The admiralty jurisdiction could be invoked not only against the offending ship in question but also against a sistership in regard to which the claim arose , and this legal position is not disputed before us but the question is whether the allegations made in the plaint, particularly paragraphs 1 and 14 which are only relevant paragraphs in that regard by themselves prove that defendant No. 1 vessel Sea Success I is the sister ship of the vessel Sea Glory and Sea Ranger . The answer is clearly no as the only pleading in respect of the defendant No. 1 vessel Sea Success I being sister ship of Sea Ranger and Sea Glory is that vessel Sea Success I is owned/controlled by defendant No. 2 through its 100% wholly owned subsidiary S.S. Shipping Corporation Inc. of Monrovia and we have already indicated above that on that basis defendant No. 2 cannot be held to be owner of the vessel Sea Success I since the ownership of a vessel is denoted by the shares in the ship and there is no allegation worth the name in the entire plaint that the defendant No. 2 owns the shares in the defendant No. 1 vessel Sea Success I. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions of fact or law and that the Court proceeds with the assumption that the facts stated therein true but then those facts as they stand must disclose plaintiffs right to sue. In the present case the plaintiff has averred that the beneficial ownership, management and control of all three vessels viz., Sea Glory, Sea Ranger and Sea Success-I vest in the defendant No. 2, but the deduction drawn in the plaint in that regard is fundamentally bad in law. As a person to be recognised in law as a rightful owner of a ship, he must be the owner of the shares in the ship i.e. the person having a right to sell, dispose of or alienate the shares in the ship and not the beneficial owner of shares in a company which in turn owns the ship. The expression management and control used by the plaintiff in paragraph 14 of the plaint on an intelligible reading of the said paragraph relate to management and control of defendant No. 2 over defendant No. 1 ship on the basis of defendant No. 2's holding 100% shares of its subsidiary S.S. Shipping Corporation Inc. Monrovia which we have already indicated is not legally tenable and cannot be said to be disclosing legally cognizable claim against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sea Glory and Sea Ranger in respect of which the claim is made is not legally supported and cannot be said to be showing sustainable right of the plaintiff to sue against the defendant No. 1 vessel Sea Success-I even assuming the averments made therein to be true. We have not gone into the merits of the ownership of the defendant No. 1 ship. We clarify, on the basis of any averments made by defendant No. 1 to the contrary, but we have proceeded to examine the same on the basis of the averments made in the plaint to find out whether, as they stand, prove the defendant No. 1 vessel Sea Success-I to be sister ship of vessels Sea Glory and Sea Ranger being beneficially owned by defendant No. 2. We have already indicated above that the allegations made in the plaint by themselves do not prove factum of defendant No. 1 Sea Success-I being sister ship of vessels Sea Glory and Sea Ranger in respect of whom the claim has been raised in the suit. We find it difficult to approve the view of the learned Single Judge in this regard. If cannot be overlooked that ship is a valuable commercial chattel and her arrest undeservingly severely prejudices third parties innocently as well as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise such claim for unpaid insurance premia in respect of a ship is a maritime claim giving rise to admiralty cause. (b) The objection of the respondent No. 1 original plaintiff in Appeal No. 225/2001 about is maintainability is overruled and appeal is held maintainable. (c) The order dated 1st/2nd February 2001 passed by the learned Single Judge in Notice of Motion No. 2455/2000 in Admiralty Suit No. 32/2000 impugned in Appeal No. 226/2001 to the extent, dismissed. Notice of Motion with reference to Clause (a) thereof is set aside and Notice of Motion No. 2455/2000 taken out by defendant No. 1 vessel Sea Success-I and her owner is granted in terms of prayer Clause (a) and, accordingly, the plaint is rejected against them for non-disclosure of cause of action. (d) All interim orders passed against the defendant No. 1 vessel m.v. SeaSuccess I in Admiralty Suit No. 32/2000 stand discharged and Bank of Guarantee dated 8-8-2000 furnished by the owners of defendant No. 1 vessel is cancelled and Prothonotary and Senior Master is directed to return the same to the owners of the defendant No. 1 vessel. (e) Appeal No. 739/2000 arising out of Notice of Motion No. 1376/1998 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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