TMI Blog2018 (5) TMI 1999X X X X Extracts X X X X X X X X Extracts X X X X ..... can arrest either the particular vessel or a sister vessel. Only one vessel can be arrested and not multiple vessels. Considering the position under the Brussels Convention 1952, and also under the position under the Admiralty Act, 2017 it is clear that it is not open to plaintiff to arrest more than one vessel in respect of its claim. The plaintiff has already arrested the vessel MT PRATIBHA NEERA. Consequently, plaintiff is not entitled to arrest any of the other sister vessels. The purpose of impleadment is only to assert a claim against the sister vessels and seek a decree against the vessels and/or the sale proceeds. Consequently, if the relief of arrest of the sister ship cannot be granted then the sister ship or its sale proceeds cannot be proceeded against and a decree granted. Hence no question arises of impleadment of the sister vessels. The submission that plaintiff would not be able to stake its claim against sale proceeds of other defendant is fallacious. Plaintiff cannot obtain decree against sister ship of the offending vessel at all. Question of other creditors being prejudiced or not do not arise in as much as that has no bearing on the additional defendant b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssels at serial nos.4,5 and 6 may have been sold after filing of this chamber summons. 3 In normal circumstances a new party could be added under the provisions of Order 1 Rule 10 of the Code of Civil Procedure (CPC) provided the proposed defendant is a proper and necessary party. Here is the case where plaintiff is not seeking to add a third party but the assets of the owner of defendant no.1 vessel describing each assets, viz., ship as defendant and Liquidator of the owner of defendant. As this is the first time such an application is being considered and there is nobody appearing for defendants, except through Official Liquidator, the Court appointed Mr. R.V. Narichania, senior advocate, Mr. V.K. Ramabhadran, senior advocate and Mr. Prashant S. Pratap, senior advocate, who all regularly practice in the Admiralty Court and who specialise in that field and as they were present in Court on the first date of hearing, as Amicus Curiae. Valuable contribution of Mr. R.V. Narichania, senior advocate, Mr. V.K. Ramabhadran, senior advocate and Mr. Prashant S. Pratap, senior advocate is hereby acknowledged. 4 It is plaintiff's case that : (a) if plaintiff had a cause of action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, it has a right to arrest other vessels as well in certain circumstances. The impleading of sister vessels ought to be permitted so as to protect plaintiff s said right; (g) parties who have arrested the sister vessels sought to be impleaded by plaintiff will not be prejudiced; (h) the only reason for seeking such impleading is to foreclose any argument that plaintiff cannot so execute the decree without having made the sister vessels parties to its suit and plaintiff is not seeking any declaration that it will be equal in priority to such creditors, who have arrested such sister vessels; (i) plaintiff can get a decree against more than one vessel but can execute it against more than one vessel only if such decree remains unsatisfied. Therefore, plaintiff will be able to deal with any objection that it can execute a decree to the extent it is unsatisfied, against sister vessels only if such sister vessels were party to plaintiff's suit; (j) plaintiff has an interest in the sister vessels and has already been permitted to intervene in suits filed against the sister vessels; (k) the fact that the company is in liquidation is irrelevant when considering the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng claims against the other ships may be prejudiced if plaintiff is allowed to make other vessels a party to the present suit. The response to this argument is that the issue of priority is still open for determination and these creditors will not lose priority. What happens where there are no creditors against the other ships ? In this situation would not plaintiff be prejudiced in recovering its claim from the other ships or their sale proceeds because it has no decree against these vessels. Mr. Narichania submitted that therefore, there is no bar to the amendment per se. 6 Mr. Ramabhadran and Mr. Pratap both have submitted that the amendment application should not be allowed and their reasons are almost similar. Mr. Kamat also was of the view that the amendment as sought should not be permitted. It was submitted that even though under Order 1 Rule 10 of the CPC the Court can permit plaintiff to add parties on such terms as it may appear to the Court as just, such order being a judicial order, the Court needs to be prima facie convinced plaintiff has a cause of action against the party proposed to be added as a defendant. This will be the position whether in a civil su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of The Banco (1971) 2 WLR 334 Claimant commenced the admiralty action against six ships including its owner. The offending ship was only The Banco . The owners applied to set aside the service of the writ and warrants of arrest in respect of all the vessels save The Banco and offered to put a bail in the value of Banco alone in the sum of 135,000. The application of the Defendant was accepted against which the Claimant filed Appeal before the Court of Appeal. The Court scanned through the historical jurisdiction of the Courts of Admiralty and then referred to Article 1(1) which defines the Maritime Claim , Article 1(2) which defines Arrest , Article 3(1) which permits Claimant to arrest not only the offending ship, but any other ship owned by the same owner and Article 3(3) which makes it clear that if a ship is arrested in any one of the jurisdiction of the convention countries or bail or other security has been given in such jurisdiction, any subsequent arrest of the ship or of any ship in the same ownership by the same Claimant for the same Maritime Claim shall be set aside and the ship released. After referring to the provisions of Convention, the Court held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 1952 Arrest Convention could be divided into three parts. The first is a prohibition to arrest a ship or obtain a security for its release more than once in respect of the same maritime claim; the second provides the remedy if the prohibition is infringed; the third specifies the exception to the prohibition . Berlingieri on Arrest of Ships (5th edition) published by INFORMA under the auspices of Committee Maritime International, Para 12.04 to 12.09 (f) Relying on Berlingieri on Arrest of Ships, arrest or rearrest or multiple arrest under the 1952 Arrest Convention and 1999 Arrest Convention seem to be similar. Mr. Ramabhdran referred to the following paragraphs : (i) If a ship has been released after security has been provided in place of arrest, but under local currency regulation money is not freely transferable; [para 12.12] (ii) A good cause either for maintaining or for granting a second arrest may be granted in case of bankruptcy of the guarantor , a situation where the actual amount of the claim proves to be higher than that originally estimated for which the arrest was requested and security was obtained; [para 12.14] (iii) Arrest of the ship could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amongst the creditors in terms of Section 529A and Section 529 of the Companies Act. (Rajasthan State Financial Corporation and Anr. Vs. The Official Liquidator and Anr. (2005) 8 SCC 190) (j) The Judgment of Madras High Court in the case of Smith India Marine Service Vs. Shanmugam Rajasekar (2018) SCC Online MAD 13 is directly contrary to the law laid down by the Supreme Court in Rajasthan State Financial Corporation (Supra). The Madras High Court has failed to take note of the fact that even to prosecute in admiralty proceedings, leave of the Company Court is mandatory, inasmuch as the assets of the company once in liquidation belong to all the creditors. The Madras High Court has erroneously held that the Companies Act is a general law. The Companies Act in fact is a special law to the extent that the relevant provisions of the Act gets triggered once the company goes into liquidation. It is in these circumstances the Supreme Court in the case of Rajasthan State Financial Corporation (Supra) has held that though the Debt Recovery Tribunal may proceed with the adjudication of claims, but the same would be subject to leave of the Company Court and the sale proceeds thereof woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould still not be entitled to arrest or proceed against other sister vessels or their sale proceeds having already obtained an order of arrest in respect of one of the sister vessels in respect of its claim. 9 I have considered the submissions of plaintiff, Mr. Narichania, Mr. Ramabhadran and Mr. Pratap. I am in agreement with Mr. Ramabhadran and Mr. Pratap for the following reasons. 10 Plaintiff has already obtained an order of arrest of M.T. PRATHIBHA NEERA which is a sister ship of M.T. CHANDRABHAGA in respect of which plaintiff says it has a maritime claim. This chamber summons has been taken out by plaintiff to implead the owner of the vessel as well as various other sister vessels and/or their sale proceeds. Plaintiff says that although the various sister vessels are not necessary parties since an effective order can be made even without them, nevertheless they are proper parties because plaintiff also has a claim against the sister vessels and is entitled to execute decree against the sister vessels. The impleadment is therefore sought to claim a decree against the sister vessels and/or their sale proceeds. The question is whether the impleadment of the sister vessels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, canal, dock, harbour and other waterway dues and charges; (o) wages and other sums due to the master, officers and other members of the ship's complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf; (p) disbursements incurred on behalf of the ship or its owners; (q) insurance premiums (including mutual insurance calls) in respect of the ship, payable by or on behalf of the shipowner or demise charterer; (r) any commissions, brokerages or agency fees payable in respect of the ship by or on behalf of the shipowner or demise charterer; (s) any dispute as to ownership or possession of the ship; (t) any dispute between coowners of the ship as to the employment or earnings of the ship; (u) a mortgage or a hypoth que or a charge of the same nature on the ship; (v) any dispute arising out of a contract for the sale of the ship. 2. Arrest means any detention or restriction on removal of a ship by order of a Court to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment or other enforceable instrument. Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was released either: (i) upon the application or with the consent of the claimant acting on reasonable grounds, or (ii) because the claimant could not by taking reasonable steps prevent the release. 5(2) Any other ship which would otherwise be subject to arrest in respect of the same maritime claim shall not be arrested unless: (a) the nature or amount of the security already provided in respect of the same claim is inadequate; or (b) the provisions of paragraph 1(b) or (c) of this article are applicable. 5(3) Release for the purpose of this article shall not include any unlawful release or escape from arrest. 13 As provided in Article 3 plaintiff can arrest either a particular ship in respect of which the maritime claim arose or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship. 14 Thus plaintiff can either arrest the particular ship or a sister ship. Plaintiff cannot arrest both ships or multiple ships. This has been so held in the judgment of the English Court of Appeal in the case of The Banco (Supra) whilst interpreting the provisions of the Administration of Justice Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to plaintiff to arrest more than one vessel in respect of its claim. plaintiff has already arrested the vessel MT PRATIBHA NEERA. Consequently, plaintiff is not entitled to arrest any of the other sister vessels. The purpose of impleadment is only to assert a claim against the sister vessels and seek a decree against the vessels and/or the sale proceeds. Consequently, if the relief of arrest of the sister ship cannot be granted then the sister ship or its sale proceeds cannot be proceeded against and a decree granted. Hence no question arises of impleadment of the sister vessels. 17 The position under the 1999 Geneva Arrest Convention may also be considered since this Convention is considered to be a part of our national law as observed by the Apex court in the case of Chrisomar Corporation (Supra). Article 5 of this Convention (quoted above) refers to the right of the rearrest and multiple arrest. 18 Even considering and applying Article 5(2), it is not open to plaintiff to arrest more than one ship in respect of the same maritime claim unless the security provided in respect of the claim is inadequate or the person who has already provided security is not or is unlike ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a view to arrest and this is made quite clear as plaintiff seeks a decree against all parties it seeks to implead. It also goes without saying that if you cannot arrest multiple ships you cannot seek a decree against multiple ships or the sale proceeds of multiple ships. Plaintiff, however, says that it is seeking only impleadment at this stage and the Court can decide at trial whether to grant a decree against multiple ship or their sale proceeds. This too is not correct because even for impleading a party by amending the Plaint, plaintiff has to demonstrate that the party sought to be impleaded is a necessary or proper party. Admittedly the proposed parties are not necessary parties. The proposed parties are also not proper parties since as a matter of law plaintiff is not entitled to claim against multiple ships or their sale proceeds after having obtained an order of arrest of one ship already. Under Order 1 Rule 10, at any stage of the proceedings, a party could be added as defendant. However, such defendant could be added only when Court finds that the presence of the proposed defendant is to enable the Court effectually and completely to adjudicate upon and settle all que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds in the present Suit for the purpose of obtaining a decree. The judgment of the English Court in In re Aro Co. Ltd. supports this position. Leave was necessary even though proceedings were filed before the order of winding up. 24 This of course does not preclude plaintiff from laying claim to the sale proceeds of the other vessels or other assets of the owners of M.T. PRATIBHA NEERA in execution of any decree that plaintiff may obtain against the owners if plaintiff is unable to satisfy its decretal claim from the vessel M.T. PRATIBHA NEERA and / or its sale proceeds. Of course now that the owner of defendant is in liquidation, plaintiff may lodge its claim for the shortfall with Official Liquidator of the company. In respect of the unsatisfied portion of the decretal amount, plaintiff along with other unsecured creditors would rank paripasu. In law, once the company is in liquidation, only such claimants would have charge over the vessel who has executed warrant of arrest prior to the date of admitting of winding up petition. Therefore, the submission that plaintiff would not be able to stake its claim against sale proceeds of other defendant is fallacious. Plaintiff ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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