M.V.FREE NEPTUNE and ADVENTURE TWELVE SA v DLF SOUTHERN TOWNS PRIVATE LIMITED, J.M.BAXI & CO., SHIPPING SUPPORT SERVICES, CHENNAI PORT TRUST, COSMOSTRANS NAVIGATION S.A., COCHIN PORT TRUST

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.J.CHELAMESWAR & THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON FRIDAY, THE 18TH FEBRUARY 2011 / 29TH MAGHA 1932 **W.A.No.1994 of 2010(E)** ## **--------------------------------------** AGAINST THE ORDER IN I.A.NO.435 OF 2010 IN Sp.J.C.2/2010 Dated 26/10/2010. .................... ## **APPELLANTS** /PETITIONERS/RESPONDENTS 1 & 2:- ----------------------------------------------------------------------------- 1. 'M.V.FREE NEPTUNE', A FOREIGN VESSEL BERTHED AT CHENNAI PORT, REPRESENTED BY HER MASTER. 2. ADVENTURE TWELVE SA, 89, AKTI MIAOULI & 4 MAVROKORDATRU STREET, PIRAEUS, GREECE. BY ADVS.SRI.V.J.MATHEW SRI.BIJISH B.TOM SRI.VIPIN P.VARGHESE ## **RESPONDENTS** /RESPONDENTS/PETITIONER & RESPONDENTS 3 TO 6:- - ----------------------------------------------------------------------------------------------------------- 1. DLF SOUTHERN TOWNS PRIVATE LIMITED, 1E, JHANDEWALAN EXTENSION, NAZZ CINEMA COMPLEX, NEW DELHI - 110 055, REPRESENTED BY ITS EXECUTIVE VICE PRESIDENT, LT. GEN.(RETD.) M.G. GIRISH. W.A.NO.1994/2010. - 2 - 2. J.M.BAXI & CO., SHIPPING SUPPORT SERVICES, REPRESENTED BY ITS MANAGING DIRECTOR, XXIV/1566, SUBRAMANIAN ROAD, WILLINGTON ISLAND, KOCHI - 682 003. 3. CHENNAI PORT TRUST, REPRESENTED BY ITS CHAIRMAN, CENTENARY BUILDING, RAJAJI SALAI, CHENNAI - 600 001. 4. COSMOSTRANS NAVIGATION S.A, REPRESENTED BY ITS AGENT, M/S.J.M.BAZI & CO., SHIPPING SUPPORT SERVICES, XXIV/1566, SUBRAMANIAN ROAD, WILLINGDON ISLAND, KOCHI - 682 003, REPRESENTED BY ITS MANAGING DIRECTOR. 5. COCHIN PORT TRUST, REPRESENTED BY ITS CHAIRMAN, WILLINGDON ISLAND, KOCHI - 682 009. R1 BY ADV.SRI.P.K.SURESH KUMAR. R2 & R4 BY ADV.SRI.PAUL MATHEW. R3 BY ADV.SMT.ANITHA THOMAS. R5 BY ADVS.SRI.E.K.NANDAKUMAR, SRI.A.K.JAYASANKAR NAMBIAR SRI.P.GOPINATH. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 19/01/2011, ALONG WITH W.A.NO.2064 OF 2010 AND Sp.J.C NO.2 OF 2010, THE COURT ON 18/02/2011 DELIVERED THE FOLLOWING:- ## J.Chelameswar,C.J. & P.R.Ramachandra Menon,J. -------------------------------------------------------- ## **W.A.Nos.1994 of 2010-E & 2064 of 2010** (arising out of Sp.J.C.No.2 of 2010) **& Sp.J.C.No.2 of 2010** --------------------------------------------------------- Dated, this the 18[th] day of February, 2011 ## **JUDGMENT** ## **J.Chelameswar, C.J.:** Sp.J.C.No.2 of 2010 is filed invoking Section 443 of the Merchant Shipping Act, 1958 and the Admiralty Jurisdiction of this Court read with Article 226 of the Constitution of India. 2. The parties are referred to in the order as they are arrayed in Sp.J.C.2 of 2010. The petition was originally filed with four respondents. Subsequently, two more respondents were added by way of amendment of the petition. 3. The petitioner is a private limited Company, engaged in the business of construction of buildings, etc. In connection with its business, the petitioner claims to have purchased 5002.900 metric tonnes of steel (Reinforcing Steel Bars) from M/s.Arcelor Mittal. It is not clear from the materials on record whether the said vendor is an individual or a corporate entity. It is stated in the petition that the W.A.No.1994/2010 & connected cases - 2 - abovementioned commodity was sought to be transported from the Port of Oktyabrsk in Ukraine by a vessel (respondent No.1) called M/V “Free Neptune”, owned by the 2[nd] respondent. It is the case of the petitioner that the said quantity of steel was received on board of the abovementioned vessel as evidenced by Exhibit P1, which is a copy of the Bill of Lading. It appears from the said copy that shipper of the material covered by the said Bill of Lading is one “OJSC Arcelormittal Kryviy Rih, 1, Ordzhonikidze Street, Kryviy Rih, 50095, Ukraine” and against the name of consignee, it is noted as “To Order”. The Bill of Lading also states that the Port of discharge is Cochin in India. The 3[rd] respondent herein is shown to be the “Discharge Port Agent”. 4. The 5[th] respondent is said to be the Charterer of the abovementioned vessel, M/V “Free Neptune”. The nature of the Charter party is not specified in the petition. 5. The vessel admittedly reached the Cochin Port on February 22, 2010. The cargo was discharged between 22.02.2010 and 27.02.2010. It was noticed that there was a short delivery of the material by 228.531 metric tonnes (55 bundles out of 1163 bundles that were allegedly put on board). It is alleged that the factum of short W.A.No.1994/2010 & connected cases - 3 - landing was brought to the notice of the Master of the Ship and also the Port authorities along with the 3[rd] respondent. The value of the short landed material is estimated by the petitioner at `.63,81,858/-. 6. The 1[st] respondent sailed off the Cochin Port on February 27, 2010. While it was berthed at Chennai Port, the instant Sp.J.C. came to be filed in this Court with prayers as follows:- _“(i) issue an order or writ or direction for the arrest and detention of the 1[st] respondent Vessel by name M/V “Free Neptune” which is now berthed at the Chennai Port till sufficient security for the amount of Rs.63,81,585/- (US Dollars 140000/-) is furnished by respondents 1 to 3 in favour of the petitioner in order to satisfy the claim of the petitioner raised as per Ext.P9 letter;_ _(ii) pass an order or decree or writ directing respondents 1 to 3 to forthwith compensate the loss suffered by the petitioner on account of the shortage in the cargo covered by Ext.P1 Bill of Lading by paying the amount as claimed in Ext.P9 letter by the petitioner;_ _(iii) issue such other orders as are deemed fit and proper in the circumstances of the case”._ Along with the main prayers, the petitioner also sought an interim prayer of the arrest and detention of the 1[st] respondent ship which, at W.A.No.1994/2010 & connected cases - 4 - that point of time, was berthed at the Chennai Port. The interim prayer is as follows:- _“For the reasons stated in the foregoing paragraphs, it is respectfully prayed that this Hon'ble Court may be pleased to pass an interim direction for the arrest and detention of the 1[st] respondent Vessel by name M/V “Free Neptune” which is now berthed at the Chennai Port till sufficient security for the amount of Rs.63,81,585/- (US Dollars 140000/-) is furnished by respondents 1 to 3 in favour of the petitioner in order to satisfy the claim of the petitioner raised as per Ext.P9 letter”._ 7. By order dated March 4, 2010, a learned Judge of this Court admitted the case and granted an interim order for the arrest and detention of the 1[st] respondent Vessel. The relevant portion of the interim order is as follows:- _“There will be an interim order as prayed for, for the arrest and detention of the 1[st] respondent vessel by name M/V “Free Neptune” which is now berthed at the Chennai Port till sufficient security for the amount of Rs.63,81,585/- (US Dollars 140000) is furnished by respondents 1 to 3 in favour of the petitioner in order to satisfy the claim of the petitioner raised as per Ext.P9 letter. The order will be communicated by fax at the expense of the petitioner to the 4[th] respondent for implementation”._ W.A.No.1994/2010 & connected cases - 5 - Subsequently, appearance on behalf of respondents 1 and 2 was made. The said respondents submitted a bank guarantee for the amount specified in the interim order dated March 4, 2010 towards the security of the claim of the petitioner. Therefore, the interim order dated March 4, 2010 was modified, directing the 4[th] respondent to release the 1[st] respondent Vessel. 8. Subsequently, I.A.No.435 of 2010 came to be filed by respondents 1 and 2 with a prayer as follows:- _“For the reasons stated in the accompanying affidavit, it is humbly prayed that this Hon'ble Court may be pleased to direct to return back to the respondents 1 and 2, the Bank Guarantee No.171020266171-HO dated 17/03/2010 for Rs.64,00,000/- drawn on Standard Chartered Bank, Chennai and dismiss the above Sp.J.C., in the interest of justice”._ The reasons for such a prayer are set out in the affidavit filed in the said I.A. 9. The said I.A. was rejected by order dated October 26, 2010, which reads as follows:- _“Prayer in this IA is to return the Bank Guarantee furnished by the petitioner for an amount of Rs.64 lacs, in compliance with the order dated 04-03-2010. The main averment in the IA is that the cargo which was short landed in Cochin was discharged at the Chennai Port and that the cargo was transported and is now stored in the Cochin_ W.A.No.1994/2010 & connected cases - 6 - _Port Trust. It is also the prayer of the petitioner herein that the petitioner's claim can only be against the additional fifth respondent, the charter of the vessel._ _2. Admittedly, the vessel carried the cargo and there was short landing in Cochin. Although it is true that the cargo was discharged at the Chennai Port and has now been transported and stored at Cochin Port, the case of the petitioner is that the cargo, which is now kept at the Cochin Port, is not the cargo which was consigned to them. It is also their case that even the weight of the cargo does not tally with the weight of the cargo which was short landed at the Cochin Port Trust._ _3. In view of the issues now raised, necessarily, the claim of the petitioner needs to be adjudicated. However, the question as to whether it is the petitioner or the additional fifth respondent is liable to make good the claim of the petitioner cannot be determined at this stage. Therefore, at this stage, it will be premature for the petitioner to seek unconditional release of the Bank Guarantee and, for that reason, I am not persuaded to pass the order as prayed for._ _The I.A. will stand rejected”._ Another I.A., No.603 of 2010, was filed by the petitioner praying that the petitioner may be permitted to amend the Sp.J.C. as set out in the said petition. I.A.No.604 of 2010 was filed seeking impleadment of additional 6[th] respondent. Both the I.As were allowed by order dated October 26, 2010. W.A.No.1994/2010 & connected cases - 7 - 10. Aggrieved by the order in I.A.No.435 of 2010, the first two respondents filed W.A.No.1994 of 2010 and aggrieved by the order in I.A.Nos.603 of 2010 and 435 of 2010 referred to above, W.A.No.2064 of 2010 is filed by respondents 3 and 5. 11. Both the Writ Appeals were admitted on 24.11.2010 and 8.12.2010 respectively. In view of the important questions of law involved in these appeals, all the three matters were directed to be listed for hearing. Accordingly, they were listed. 12. It is asserted by the petitioner that the petitioner has a **'maritime claim'** against the 1[st] respondent Vessel. The petitioner also asserts that in view of the declaration of law made by the Supreme Court in _**M.V.Elisabeth v. Harwan Investment and Trading**_ [1993 Supp (2) SCC 433 = AIR 1993 SC 1014] the High Courts in India have inherent admiralty jurisdiction. At para 6 of the petition, it is stated as follows:- _“The Vessel is now berthed at Chennai Port. The petitioner has a_ _**maritime claim** against the vessel which can be enforced by the arrest of the said vessel. International Convention for the Unification of Certain Rules relating to the Arrest of Sea going Ships, Brussels, May 10[th] 1952 explains what is a maritime claim in the following words:_ W.A.No.1994/2010 & connected cases - 8 - _“(6) International Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Ships, Brussels, May 10[th] 1952. Article 1 of this Convention reads:_ _(1) “Maritime Claim” means a claim arising out of one or more of the following:_ _(a) damage caused by any ship either in collision or otherwise; (b) loss of life or personal injury caused by any ship or occurring in connection with the operation of any ship; (c) salvage; (d) agreement relating to the use or hire of any ship whether by charterparty or otherwise (e) agreement relating to the carriage of goods in any ship whether by charterparty or otherwise; (f) loss of or damage to goods including baggage carried in any ship; (g) general average; (h) bottomry; (i) towage; (j) pilotage; (k) goods or materials wherever supplied to a ship for her operation or maintenance; (l) construction, repair or equipment of any ship or dock charges and dues; (m) wages of Masters, Officers, or Crew; (n) Master's disbursements, including disbursements made by shippers, charterers or agents on behalf of a ship or her owner; (o) disputes as to the title to or ownership of any ship; (p) dispute between co-owners of any ship as to the ownership, possession employment or earnings of that ship; (q) the mortgage or hypothecation of any ship”._ _Thus a claim based on loss of goods carried in a vessel is a_ _**maritime claim** enforceable by the arrest of the vessel. The Supreme Court of India in the decision reported in M/V.Elizabeth (AIR 1993 SC 1014) has made the above position abundantly clear. It has been further held in that decision that the_ _**High Courts in India have inherent admiralty jurisdiction and can invoke the same for the enforcement of a maritime claim”** ._ W.A.No.1994/2010 & connected cases - 9 - 13. For the sake of indicating the scope of the amended Sp.J.C., it may be mentioned here that it was allegedly noticed by the respondents while the 1[st] respondent was berthed at Chennai Port that the material said to have been short landed at Cochin was still available on board of the 1[st] respondent. Therefore, the same was discharged at Chennai Port and allegedly transported to Cochin by road after some correspondence with petitioner and all other appropriate authorities. The petitioner now claims that the said material **“does not form part of the cargo covered by Exhibit P1 Bill of Lading”** . There is a dispute regarding the identity, quality and quantity of the said material. 14. The right of the petitioner to seek the various reliefs claimed in the Sp.J.C. depend upon the existence of various facts asserted by the petitioner and the rights and obligations arising out of the various contracts between the shipper and the petitioner, the vessel and its owner on one side and the charter on the other, and the petitioner and respondents 1 and 2 and the charterer (respondent No.5). The examination of the interface of all the abovementioned rights will necessarily require recording of evidence. W.A.No.1994/2010 & connected cases - 10 - 15. The following questions are required to be examined to decide these matters: (i) Whether the claim such as the one made by the petitioner is a **“maritime claim”** as understood in law in this country? (ii) If it is a “maritime claim”, whether this Court is the appropriate forum for adjudicating such maritime claims? (iii) In the absence of any law structuring the admiralty jurisdiction of this Court [which has been declared to be inherent in this Court in _M.V.Elisabeth's case_ (supra)], what are the limits and contours of the said jurisdiction? and (iv) What is the procedure to be followed in exercising such jurisdiction? 16. It may be stated here that there is no statute or any other instrument known to law structuring the admiralty jurisdiction of the High Court of Kerala. No Rules are framed by this Court regarding the regulation of the admiralty proceedings before this Court. It is in the said background, we though it fit to withdraw the Sp.J.C. also for a comprehensive examination of these various issues for the purpose of not adjudicating the questions involved in the Sp.J.C., but for the purpose of settling the ambit of the admiralty W.A.No.1994/2010 & connected cases - 11 - jurisdiction of this Court and the procedure to be followed in exercising such jurisdiction. 17. The nature and scope of the law of admiralty ***** and the jurisdiction of the High Courts in India to deal with matters which can be described as falling under the admiralty jurisdiction of the Court fell for the consideration of the Supreme Court in _**M.V.Elisabeth's**_ case (supra), a judgment which instantly attained the status of “classic”. At paras 86 to 89, the Supreme Court dealt with the judicial power of the High Courts, which read as follows:- _“86. The judicial power of this country, which is an aspect of national sovereignty, is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by courts empowered to exercise it. It is absurd to confine that power to the provisions of imperial statutes of a bygone age. Access to court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law. Where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience._ **-------------------------------------------------------------------------------------------------------------------** _*_ _**“The law of admiralty, or maritime law, .... (is the) corpus of rules, concepts, and legal practices governing .... the business of carrying goods and passengers by water” (Gilmore and Black, The Law of Admiralty, page 1)**_ W.A.No.1994/2010 & connected cases - 12 - ## _87. In the words of Chief Justice Marshall:_ _“The jurisdiction of courts is a branch of that which is possessed by the nation as an independent sovereign power. The jurisdiction of the nation within its own territory is necessarily exclusive and absolute. It is susceptible of no limitation not imposed by itself ......”_ _(Schooner Exchange (The) v. M'Faddon)._ _88. Admiralty jurisdiction is an essential aspect of judicial sovereignity which under the Constitution and the laws is exercised by the High Court as a superior court of record administering justice in relation to persons and things within its jurisdiction. Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them._ _89. All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law. The power to arrest a foreign vessel, while in the waters of a coastal State, in respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty. This power is recognised by several international conventions. These conventions contain the unified rules of law drawn from different legal systems. Although many of these conventions have yet to be ratified by India, they embody principles of law recognised by the generality of maritime States, and can therefore be regarded as part of our common law”._ The Supreme Court at para 66 of the said judgment took note of the fact that the High Courts in this country are superior courts of unlimited jurisdiction and, therefore, declared that no matter is W.A.No.1994/2010 & connected cases - 13 - ## beyond the jurisdiction of the superior Courts. It was held: _“The High Courts in India are superior courts of record. They have original and appellate jurisdiction. They have inherent 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. (See Naresh Shridar Mirajkar v. State of Maharashtra (AIR 1967 SC 1). As stated in Halsbury's Laws of England, 4[th] edn., Vol.10, para 713:_ _“Prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the_ _**”** cognizance of the particular court”._ 18. The question therefore is, what are the matters which fall within the admiralty jurisdiction of the High Court. In the said judgment, the Supreme Court took note of the history of the admiralty jurisdiction in England and the limitations on such jurisdiction which existed at some point of time or the other and held at para 30: _“............. we see no reason why the jurisdiction of the Indian High Courts, governed as they now are by the Constitution of India, should in any way be subjected to the jurisdictional fetters imposed by the Privy Council in that decision. Legal history is good guidance for the future, but to surrender to the former is to lose the latter”._ W.A.No.1994/2010 & connected cases - 14 - The Supreme Court noticed the changes that were brought about from time to time in the admiralty jurisdiction of the High Court of England by various statutory provisions including the Supreme Court Act 1981. It also took note of the various enactments which deal with various aspects of the law of admiralty in India. At paras 75 and 76, dealing with the various enactments on the subject, the Supreme Court held that Indian legislation has not progressed in tune with the various international conventions, but declared that these conventions though not incorporated into Indian law, embodied the “ **felt necessities of international trade and are as such part of the common law of India”** . It was held as follows:- _“75. In India, carriage of goods by sea is governed by the Indian Bills of Lading Act, 1856, the Indian Carriage of Goods by Sea Act, 1925, the Merchant Shipping Act, 1958, and general statutes, such as the Marine Insurance Act, 1963, the Contract Act, 1872, the Evidence Act, 1872, the Indian Penal Code, 1860, the Transfer of Property Act, 1882, the Civil Procedure Code, 1908, the Criminal Procedure Code, 1973, the Companies Act, 1956, etc. etc. as well as the general principles of law such as the law of tort, public and private international law, etc. In this connection, reference may also be made to the Indian Ports Act, 1908 and the Major Port Trusts Act, 1963 concerning the administration of the port and jurisdiction over ships in_ W.A.No.1994/2010 & connected cases - 15 - _port, the Customs Act, 1962 containing various regulatory measures affecting ships, goods and persons in connection with importation or exportation of goods, as well as the provisions governing employment of labour. The Indian Bills of Lading Act, 1856 emphasises the negotiable and other characteristics of a bill of lading. The Carriage of Goods by Sea Act, 1925, contains the Hague Rules regulating the respective rights and liabilities of the parties to a contract governed by bills of lading or similar documents of title for carriage of goods by sea “from any port in India to any other port whether in India or outside India”. The Merchant Shipping Act embodies rules regarding registration of Indian ships; transfers or mortgages of ships or shares; national character and flag; employment of seamen; safety, nuclear ships; collisions, accidents at sea and liability; limitation of liability; navigation; prevention of pollution; investigation and enquiries; wreck and salvage; coasting trade; sailing vessels; penalties and procedure, etc. Many of these provisions have been adopted from rules formulated by various international conventions._ _76. It is true that Indian statutes lag behind the development of international law in comparison to contemporaneous statutes in England and other maritime countries. Although the Hague Rules are embodied in the Carriage of Goods by Sea Act, 1925, India never became a party to the International Convention laying down those rules (International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, Brussels, 1924). The Carriage of Goods by Sea Act, 1925 merely followed the (United Kingdom)_ W.A.No.1994/2010 & connected cases - 16 - _Carriage of Goods by Sea Act, 1924. The United Kingdom repealed the Carriage of Goods by Sea Act, 1924 with a view to incorporating the Visby Rules adopted by the Brussels Protocol of 1968. The Hague-Visby Rules were accordingly adopted by the Carriage of Goods by Sea Act 1971 (United Kingdom). Indian legislation has not, however, progressed, notwithstanding the Brussels Protocol of 1968 adopting the Visby Rules or the United Nations Convention on the Carriage of Goods by Sea, 1978 adopting the Hamburg Rules. The Hamburg Rules prescribe the minimum liabilities of the carrier far more justly and equitably than the Hague Rules so as to correct the tilt in the latter in favour of the carriers. The Hamburg Rules are acclaimed to be a great improvement on the Hague Rules and far more beneficial from the point of view of the cargo owners. India has also not adopted the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952. Nor has India adopted the Brussels Conventions of 1952 on civil and penal jurisdiction in matters of collision; nor the Brussels Conventions of 1926 and 1967 relating to maritime liens and mortgages. India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various conventions intended to facilitate international trade. Although these conventions have not been adopted by legislation, the principles incorporated in the conventions 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”._ W.A.No.1994/2010 & connected cases - 17 - 19. The Supreme Court in M.V. _Elisabeth's case_ (supra) traced out the devolution of jurisdiction starting from the Admiralty Courts Act, 1840 to the Supreme Court Act, 1981 and Merchant Shipping Act of 1979. At para 39 of the said judgment the Supreme Court took note that under Section 20(2) of the Supreme Court Act, 1981 the jurisdiction extends to **“any claim for loss of or damage to goods carried in a ship; .................”** and held at para 40 that **“................. jurisdiction is wide enough to cover all claims in tort or contract arising out of any agreement for carriage of goods by sea”** . 20. Coming to the amplitude of the jurisdiction of the Indian High Courts, the Supreme Court considered the issue at paras 63 to 65 and at para 65 held that the power of the Court is plenary and unlimited. _“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_ W.A.No.1994/2010 & connected cases - 18 - _of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment”._ Again at para 79, the Supreme Court held that the expression ' _**damage caused by a ship'**_ occurring in Section 443 of the Merchant Shipping Act is **“wide enough to include all maritime questions or claims”** . Para 79 reads as follows:- _“In the absence of any statute in India comparable to the English statutes on admiralty jurisdiction, there is no reason why the words 'damage caused by a ship' appearing in Section 443 of the Merchant Shipping Act, 1958 should be so narrowly construed as to limit them to physical damage and exclude any other damage arising by reason of the operation of the vessel in connection with the carriage of goods. The expression is wide enough to_ _**include all maritime questions or claims** . If goods or other property are lost or damaged, whether by physical contact or otherwise, by reason of unauthorised acts or negligent conduct on the part of the shipowner or his agents or servants, wherever the case of action has arisen, or wherever the ship is registered, or wherever the owner has his residence or domicile or place of business, such a ship, at the request of the person aggrieved, is liable to be detained when found within Indian jurisdiction by recourse to Sections 443 and 444 of the Merchant Shipping Act, 1958 read with the appropriate rules of practice and procedure of the High Court. These procedural provisions are but tools for enforcement of substantive rights which are rooted in general principles of law, apart from statutes, and for the enforcement of which a party aggrieved has a right to invoke the inherent jurisdiction of a superior court”._ W.A.No.1994/2010 & connected cases - 19 - In substance, the Supreme Court held that the High Courts of this country have admiralty jurisdiction which is wide enough to adjudicate all maritime questions or claims. 21. The claim of the petitioner in the instant case, therefore, is a “maritime claim” or a “damage caused by a ship” falling within the sweep of Section 443 of the Merchant Shipping Act to the property of the petitioner. The 1[st] respondent is admittedly a foreign ship. Therefore, such a claim is amenable to the jurisdiction of this Court which is declared to be plenary and inclusive of admiralty jurisdiction. 22. The next question that falls for consideration of this Court is, what is the procedure to be followed in exercising such jurisdiction? It may be mentioned here that initially when the admiralty jurisdiction was conferred on the three Chartered High Courts of Bombay, Madras and Calcutta, the Courts were empowered to regulate the procedure and practice to be followed in exercise of such jurisdiction by Section 7 of the Colonial Courts of Admiralty Act, 1890. Section 7 read as follows:- _**“7. Rules of Court.-** (1) Rules of Court for regulating the procedure and practice (including fees and costs) in a Court in a_ W.A.No.1994/2010 & connected cases - 20 - _British possession in the exercise of the jurisdiction conferred by this Act, whether original or appellate, may be made by the same authority and in the same manner as rules touching the practice, procedure, fees, and costs in the said Court in the exercise of its ordinary civil jurisdiction respectively are made”._ In exercise of such power, each of the abovementioned Courts framed certain Rules. A copy of such Rules framed by the Madras High Court is placed before us. Rule 3 of the said Rules contemplates the institution of various kinds of suits, like – suits _in rem_ , suits of wages or possession, suits of bottomry and suits of distribution of salvage. We are of the opinion that the reference of the suits made in Rule 3 is not exhaustive of the variety of suits that can be instituted and adjudicated in the admiralty jurisdiction, but only illustrative. The more important aspect emerging from Rule 3 is that the Madras High Court contemplated the institution of **suits** for the adjudication of any one of the disputes falling within the admiralty jurisdiction. Rule 2 of the said Rules reads as follows:- _“A suit shall be instituted by a plaint drawn up, subscribed and verifying according to the provisions of the Code save that if the suit is in rem, the defendants may subject to such variation as_ W.A.No.1994/2010 & connected cases - 21 - _the circumstances may require, be described as “the owners and parties interested in” the vessel or other property proceeded against instead of by name”._ It envisages that the suit filed invoking the admiralty jurisdiction of the High Court is required to be instituted by a plaint drawn up, subscribed and verified according to the provisions of the Code (obviously the Code of Civil Procedure). However, where the suit is “suit _in rem_ ”, the defendants may be described as the owners and parties interested in the named vessel. A **“** _**suit in rem**_ **”** in admiralty has special connotations. It is well settled in the law of admiralty that a ship has a corporate personality, capable of suing and being sued in its own name. 23. Normally, disputes falling within the admiralty jurisdiction arise out of contractual rights and obligation. They normally require investigation into factual allegations. In such cases, a suit is an appropriate proceeding. The conduct of the suits is regulated by the Code of Civil Procedure in this country, which provides for an elaborate procedure for the institution and trial of the suits. W.A.No.1994/2010 & connected cases - 22 - 24. This Court did not so far frame any Rules regulating the procedure for adjudicating the disputes arising under the admiralty jurisdiction. Therefore, we deem it appropriate to declare that henceforth any person approaching this Court invoking the admiralty jurisdiction of this Court shall institute a suit in accordance with the procedure contemplated under the Code of Civil Procedure, 1908. Such suit shall be tried by this Court following the procedure prescribed under the Code of Civil Procedure. We also declare that the Rules framed by the Madras High Court in so far as they are not inconsistent with any other provision of law for the time being in force and with appropriate modifications shall apply to the conduct of such suits until this Court modifies the said Rules or the Legislature intervenes in this regard. We make such a declaration not only because we owe an obligation under law to device a procedure for the regulation of the proceedings before this Court as was pointed out by the Supreme Court in _Elisabeth's case_ (supra) at para 64: _“Where substantive law demands justice for the party aggrieved, and the statute has not provided the remedy, it is the duty of the court to devise procedure by drawing analogy from other systems of law and practice”,_ but also for the reason that a part of the territory over which this High Court now exercise jurisdiction was within the territorial jurisdiction of W.A.No.1994/2010 & connected cases - 23 - the Madras High Court prior to the States Reorganisation Act, 1956. Therefore, for at least that part of the territory of the State of Kerala, which was within the jurisdiction of the Madras High Court prior to the States Reorganisation Act, 1956, was governed by the law administered by the Madras High Court which devolved upon this Court by virtue of the operation of Section 52 ***** of the States Reorganisation Act. 25. Therefore, the Sp.J.C.2 of 2010 as it is filed does not conform to the procedural requirements of the admiralty jurisdiction of this Court. However, we do not propose to non-suit the petitioner on that ground as the exact legal position in this regard remained uncertain and only for the first time a declaration of law is being made by this Court today as to the procedure that is to be adopted in invoking the admiralty jurisdiction of this Court. We are, therefore, of the opinion that the legal obligation of this Court to render justice to ----------------------------------------------------------------------------------------- _*S.52. Jurisdiction of High Courts for new States.- The High Court for a new State shall have, in respect of any part of the territories included in the law in force immediately before the appointed day, is exercisable in respect of that part of the said territories by any High Court or Judicial Commissioner's Court for an existing State._ W.A.No.1994/2010 & connected cases **==> picture [44 x 11] intentionally omitted <==** the parties demand that the petitioner be permitted to take appropriate steps to institute a suit in accordance with the law declared above within a period of four weeks from today. Thereupon such a suit is required to be tried in accordance with law. 26. The next question would be, what would happen to the Bank Guarantee given during the pendency of the Sp.J.C.2 of 2010? Section 443 of the Merchant Shipping Act embodies a principle of an admiralty action _in rem_ in the law, i.e., to arrest the ship. The arrest of a ship is regarded as a mere procedure to obtain security to satisfy a judgment. The nature of an admiralty action _in rem_ is explained in paras 44 and 45 in _M.V.Elisabeth's case_ (supra) as follows: _“The vital significance and the distinguishing feature of an admiralty_ _**action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship,** irrespective of the nationality of the ship or that of its owners, or the place of business or domicile or residence of its owners or the place where the cause of action arose wholly or in part._ _“_ _**.... In admiralty the vessel has a juridicial personality, an almost corporate capacity, having not only rights but liabilities (sometimes distinct from those of the owner) which may be enforced by process and decree against the**_ W.A.No.1994/2010 & connected cases - 25 - _**vessel, binding upon all interested in her and conclusive upon the world** , for admiralty in appropriate cases administers remedies in rem, i.e., against the property, as well as remedies in personam, i.e., against the party personally .....” (Benedict, The Law of American Admiralty, 6[th] ed., Vol.I p.3.)_ _45._ _**Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed against the owner. The arrest of the ship is regarded as a mere procedure to obtain security to satisfy judgment** . A successful plaintiff in an action in rem has a right to recover damages against the property of the defendant. “The liability of the shipowner is not limited to the value of the res primarily proceeded against ..... An action .... though originally commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of the liability”. (Roscoe's Admiralty Practice, 5[th] ed. p.29)”._ The arrest of a foreign ship by means of an action _in rem_ is a means of getting jurisdiction by a competent authority. The consequence is that such an action may constitute an inducement to the owner to submit to the jurisdiction of the Court. Once the owner or any other person interested in the ship submits to the jurisdiction of the Court W.A.No.1994/2010 & connected cases - 26 - to secure the release of the ship from arrest by providing appropriate security for the satisfaction of the claim of the plaintiff, the ship is released and the admiralty action _in personam_ continues. 27. In the instant case, pursuant to the order of arrest passed by this Court, the 2[nd] respondent submitted to the jurisdiction of this Court and offered security by way of a bank guarantee and obtained the release of the 1[st] respondent from arrest. Now, the 1[st] and 2[nd] respondents, by filing I.A.No.435 of 2010, sought the return of the Bank Guarantee. Their case is that the 1[st] respondent-vessel was under a charter party agreement with the 5[th] respondent at the relevant point of time when the goods in dispute were carried by the 1[st] respondent and, therefore, they are absolved of the liability for any damage done to the cargo of the petitioner. It is the further case of the respondents 1 and 2 that irrespective of the legal position whether the owner of a vessel is in any way liable for the damage caused to the cargo carried by the vessel while the vessel was under a charter party agreement, the subsequent conduct of the consignee such as the petitioner would relieve the respondents 1 and 2 from all the legal obligations and, therefore, they are entitled for the return of the Bank Guarantee furnished by them. W.A.No.1994/2010 & connected cases - 27 - 28. The subsequent conduct of the petitioner, evidenced by a letter dated 22.03.2010 ***** addressed to the Commissioner of Customs, Chennai would in any way absolve the respondents 1 and 2 from their liability is a mixed question of fact and law, which can be determined only after framing an appropriate issue and recording evidence with reference to the various allegations made in this behalf. ## **-----------------------------------------------------------------------------------------------------------** _***** The above subject vessel which carried material for various consignees including that ours for, Cochin and Chennai. The material belonging to Cochin was over carried to Chennai due which there was injunction issued by the Cochin court which available with your good office also._ _The vessel has discharged the cargo meant for Chennai consignees and the Cochin cargo which was over carried is still on board the vessel._ _We as DLF SOUTHERN HOMES PVT. LTD. have no objection to the owner of the vessel or their agents to manifest the cargo at Chennai and move the same under TSA to Cochin. We shall accept the cargo on receipt of the same at Cochin since the full qty bill of entry has been filed along with the duty there of._ _The necessary documentation for the TSA be done by the owner or agent of the vessel, upon safe arrival of the Cargo we as DLF would accept the cargo duly examined and out of charged by the Customs Cochin._ W.A.No.1994/2010 & connected cases - 28 - 29. We are, therefore, of the opinion that the learned Judge has rightly rejected I.A.No.435 of 2010 and we do not find any reason to interfere with the same. W.A.No.1994 is, accordingly, dismissed. 30. It may be mentioned here that I.A.No.146 of 2010 ***** in Sp.J.C.No.2 of 2010 was filed by the respondent Nos.1 and 2 herein praying that this Court may accept the Bank Guarantee furnished by them and lift the arrest order dated 04.03.2010. In the affidavit filed in support of the said petition, the _Master of the 1[st] respondent one_ ---------------------------------------------------------------------------------------- ***** _For the reasons stated in the accompanying affidavit, it is humbly prayed that this Hon'ble Court may be pleased to accept the Bank Guarantee No.171020266171 – HO dated 17/03/2010 drawn on Standard Chartered Bank, Chennai for a sum of INR 64,00,000.00 (Indian Rupees Sixty Four Lakhs only) in favour of the_ _**'The Registrar General, High Court of Kerala, Ernakulam'** , as security for the claim of the petitioner and order to release the 1[st] respondent vessel by lifting the arrest order dtd 04.03.2010 passed against the 1[st] respondent vessel by this court. It is also further prayed that the above order of lifting the arrest may be communicated directly to the Chairman & Deputy Conservator, Chennai Port Trust, Chennai by this Court's Registry enabling the above 1[st] respondent vessel / 'M.V. Free Neptune' to commence discharge of its cargo and sail from the Port of Chennai at the earliest, in the interest of justice._ W.A.No.1994/2010 & connected cases ## - 29 - ## _Captain William D.Dino stated at para 3 as follows:-_ _“The answering respondent denies all the averments and allegations in the arrest petition/admiralty suit except those that are admitted hereunder. It is respectfully submitted that the 2[nd] respondent is the owner of the vessel and the said 1[st] respondent_ _**vessel was under charter** to COSMO TRADE EXPORTS SA BVI c/o COSMOTRANS NAVIGATION S.A. - PIRAEUS / GREECE._ _**The charterer who is responsible for the shortage is not a party** to the arrest petition and is a necessary party to decide the alleged short landing dispute._ _**The 3[rd] respondent is the agent of the above said Charterer in cochin** . In fact,_ _**it is the charterer who is responsible for any short landing as alleged by the petitioner** , as the contract of carriage of the subject cargo is between the shipper/consignee/ petitioner and the charterer and not with the owner of the vessel. Hence, any short landing or liability on account of the arrest is the responsibility of the above said charterer”._ Subsequently, I.A.No.313 of 2010 came to be filed by the petitioner in the Sp.J.C. Praying that the petitioner be permitted to implead the Charterer as additional 5[th] respondent in the Sp.J.C. At para 2 of the affidavit filed in support of the said petition, it is stated as follows:- _“While submitting the writ petition the owner of the vessel and the vessel itself were made parties. But, however, the Charterer of the vessel has not been made a party to the proceeding. It is submitted that the Charterer of the vessel is absolutely a necessary party to_ W.A.No.1994/2010 & connected cases - 30 - _the proceeding. I_ _**t is the Charterer who is primarily responsible for compensating the loss suffered by the petitioner** . Therefore, it is humbly prayed that this Hon'ble Court be pleased to permit the petitioner to implead the 5[th] respondent herein as the additional 5[th] respondent in the above Sp.J.C. And all the interlocutory applications therein”._ The additional 5[th] respondent came to be impleaded as per order dated 09/07/2010 in I.A.No.313 of 2010. 31. In I.A.No.435 of 2010 filed by respondents 1 and 2 in Sp.J.C.No.2 of 2010, an affidavit was filed on behalf of the applicants therein by the Power of Attorney holder of respondent Nos.1 and 2 one Robert William. At para 4 therein, it is stated as follows:- _“It is submitted that the respondent Nos.1 & 2 are not responsible for the alleged short landing as the vessel was under a charter. In fact, it is the Charterer of the vessel i.e. COSMO TRADE EXPORTS SA BVI C/o.COSMOTRANS NAVIGATION S.A. - PIRAEUS / GREECE /_ _**Addl. Respondent No.5 who is responsible for the alleged short landing** . The said fact was brought to the attention of this Hon'ble Court vide I.A.No.146/2010 filed by the respondents Nos.1 & 2 for release of the vessel. Moreover, the petitioner who was also convinced that it was the said charterer who is responsible for making good the loss allegedly suffered by the petitioner had filed an impleading petition (I.A.No.313/2010) for impleading the said COSMOTRANS NAVIGATION S.A. as Addl._ W.A.No.1994/2010 & connected cases - 31 - _Respondent No.5 in the above case and the charterer was impleaded in the above case._ _**The petitioner has clearly stated in the said petition that it is the said charterer who is primarily responsible for compensating the loss suffered by the petitioner” ,**_ and, therefore, it is argued on behalf of respondents 1 and 2 herein that the Bank Guarantee furnished by the respondents be released and necessary security be obtained from the additional 5[th] respondent. 32. It may be stated here that though the allegations made in I.A.Nos.435 of 2010 and 146 of 2010 to the effect that the responsibility for compensating the loss, if any, suffered by the petitioner is on the Charterer, i.e. the Additional 5[th] respondent, such allegations were made at a point of time when the 5[th] respondent was not a party to the proceedings. However, a detailed counter affidavit dated 30.08.2010 is filed on behalf of respondents 3 and 5 disputing the claim of the petitioner on various grounds. But, in the said counter affidavit there is no specific denial of the averment made by the petitioner and the respondents 1 and 2 that it is the primary responsibility of the 5[th] respondent to satisfy the claim of the petitioner. It may also be stated here that the 5[th] respondent, for the W.A.No.1994/2010 & connected cases - 32 - purpose of the present case, is represented by the 3[rd] respondent and it is specifically averred in the above mentioned counter affidavit dated 30.08.2010 at para 1 that the 3[rd] respondent is the agent of the 5[th] respondent at Cochin. In the circumstances, we direct the 5[th] respondent, the Charterer, to furnish a Bank Guarantee in favour of the Registrar General of this Court for an amount of `64 lakhs (Rupees sixty four lakhs only). On furnishing of such Bank Guarantee by the 5[th] respondent, the Bank Guarantee given earlier by the 2[nd] respondent should be returned by the registry. We further direct that the petitioner shall also give a Bank Guarantee for an amount of `10 lakhs (Rupees ten lakhs only) as a counter guarantee to the guarantee given by the 5[th] respondent to cover the cost of the litigation and other incidental expenses in the event of the failure of the petitioner in the litigation. 33. We direct that such Bank Guarantee shall continue until the filing of the suit directed by this order and also during the pendency of the said suit unless ordered otherwise in the suit. We make it clear that as and when the suit is filed by the petitioner in obedience to this judgment, it is open to the petitioner to choose the frame of the suit and it would be equally open to the respondents to W.A.No.1994/2010 & connected cases - 33 - take all the defences available under the law. 34. Coming to W.A.No.2064 of 2010, the appeal, in our view, becomes academic. The appeal is filed aggrieved by the order in I.A.No.603 of 2010 seeking an amendment of Sp.J.C.No.2 of 2010. In view of our conclusion that the petitioner ought to file a suit in accordance with the Code of Civil Procedure and in view of our conclusion that the petitioner shall file such a suit within a period of four weeks from today, nothing survives in the said appeal. W.A.No.2064 of 2010 is, accordingly, closed. 35. The Sp.J.C.2 of 2010 is also closed, with liberty to the petitioner as indicated in this judgment. Sd/- J.Chelameswar, Chief Justice. Sd/- P.R. Ramachandra Menon, Judge. vku/- - true copy - P.A. to Chief Justice.