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TMI Blog2001 (11) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... maritime 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 entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l calls or premium levied by the plaintiff Association from time to time. It is the plaintiff's case that as per 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity in the form of Bank Guarantee to be issued by Standard Chartered Bank, Bombay. On 1-8-2000 the learned Single Judge permitted the owners of defendant No. 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 " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monetary claims made for goods or services supplied to a particular ship for her operation and maintenance. He submitted that claim for unpaid insurance premia cannot be regarded as "necessaries" as a vessel may and indeed 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive of the fact that unpaid insurance premia is a "necessary" under section 5 of the Admiralty Courts Act, 1861. Mr. Bharucha, thus, concluded that claim for unpaid insurance premia is not "necessary". 6 . Mr. V.C. Kotwal, the learned Senior Counsel who appeared as an intervenor 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust for their own requirement and not for the benefit of the ship or the P & I club. He also submitted that in view of the "pay to be paid" clause in all P & I clubs the third party has no recourse directly against the P & I club for recovery of any loss or damage caused to them and as the P & I cover is solely for the pecuniary 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 conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having stipulated that unpaid premia constitutes into a maritime claim. Mr. Rebello would urge that P & I cover is in the nature of "necessaries" supplied and/or services rendered if one looks into the ramifications of a vessel attempting to trade without protection and indemnity. By referring to the various services extended by the Association, Mr. Rebello submitted that without 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraphs 35, 36, 37, 38, 39, 40 and 41 which read thus: "35. The Admiralty Court Act, 1840 was the first of a series of statutes extending and defining the jurisdiction of the High Court of Admiralty in England. This Act was followed by the Admiralty Court Act, 1861 conferring larger powers upon the High Court of Admiralty. Section 6 of this Act empowered the High Court of Admiralty to assume jurisdiction over foreign ships in 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 jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence or domicile of their owners may be" and "in relation to all claims wheresoever arising". The jurisdiction in regard to the questions or claims specified under section 1(i) includes any claim for damage done by a ship", "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". See Clauses (d), (g) and (h). 38. These claims are now specifically mentioned under Clauses (e), (g) 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 (refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessaries.---The High Court of Admiralty shall have jurisdiction over any claim for necessaries supplied to any ship elsewhere than in the port to which the ship belongs, unless it is shown to the satisfaction of the Court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales: Provided always, that if in any such cause the plaintiff do not recover twenty pounds, he shall not be entitled to." 12. The important question referred by the learned Single Judge to be decided by us and which is indeed a vexed 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that there is a broad distinction between money expended on actually fitting the ship out and working her for the purpose of her navigation, and moneys which are merely expended for the purposes of protecting a shipowner in the event of her being lost. They are not in the least necessary for the ship; they are not supplied or furnished to the ship: they are mere moneys which are paid to insure the shipowner against his being out of pocket in case the ship is lost." 15. The Heinrich Bajorn was also followed in Stokes & others v. The Conference (supra) and it was held that the insurance of a ship is not a necessary. The same view appears to have been taken by Court 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.&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied to the ship must be linked to the working or running of that ship. In my opinion, bunker oil supplied to the ship for sale to other ships could not be conceived as goods supplied for her operation. The phrase operation of the ship should not be equated with the business activities of the shipowner and the section as enacted could not cover goods which are loaded onto the ship only to be unloaded or disposed of soon thereafter by sale." 18. The question with which we are faced is whether the construction of the word "necessaries" given in The Heinrich Bjorn, The Andre Theodore, Stokes etc. could be accepted and followed by us, albeit we are not bound by such view, in so far as the claim towards insurance premium is 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service of summons with a view to furnishing security for the release of the res; or, in his absence, proceed against the res itself, by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res. This is a practical procedural decide developed by the courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage, but also in cases of other maritime liens and claims arising by reason of breach of contract for the hire of vessels or the carriage of goods or other maritime transactions or tortious acts, such as conversion or negligence occurring in connection with the carriage of goods. 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. 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 actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these conventions is apparently not because of any policy disagreement, as is clear from active and fruitful Indian participation in the formulation of rules adopted by the conventions, but perhaps because of other circumstances, such as lack of an adequate and specialised machinery for implementation of the various international conventions by coordinating for the purpose the departments concerned of the Government. Such a specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation. It is appropriate that sufficient attention is paid to this aspect of the matter by the authorities concerned. Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence, as is the position in 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. This contribution is made partly as advance call and partly as supplementary call or calls, determined by the directors as needed to meet the overall liabilities of the club. 21. In India, it may be noted that major ports like Bombay and Calcutta have issued circulars in exercise of the powers conferred upon them that all ships calling at the concerned port must have a valid P & I cover or equivalent cover and a certificate of the entry of the vessel with such P & I club should be submitted to the port and the vessel which does not have such cover will be denied entry to the port. Without multiplying such circulars, we reproduce one of such circulars issued by Mumbai Port Trust on 8-8-1996 and other by the Calcutta Port Trust on 26-6-2001. Mumbai Port Trust's circular dated 8-8-1996 read 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 Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal correspondents who have been appointed in various parts of the world: (b) The assistance to the Master and the complement in relation to the port,customs and other municipal regulations that may be prevalent in a particular port, by engaging legal advisors in the matter: (c) Appointing experts, surveyors or inspectors as the case may be when thevessel is faced with problems with the port or other authorities or in her navigation such as in case of grounding etc. who inspect and/or take survey of the situation not only in respect of the vessel, but also in respect of the goods carried on board the vessel. (d) Appointing lawyers, participating in the proceedings in various courts, such as enquiries and investigations under the provisions of Merchant Shipping Act, 1958, supervising 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and proximately connected with the operation of the ship. The words operation of the ship cannot be construed narrowly and must be viewed as a complete commercial operation. All things reasonably requisite for a voyage or maritime adventure on which the ship is bound to be covered and held to come within the term necessaries. The operation of the ship would necessarily include operation of ship necessary for voyage. Even in England no distinction is drawn between the necessaries for the ship and necessaries for the voyage. The said test when applied in the context of P & I insurance cover would leave no manner of doubt that P & I insurance, which is mandatorily required by some of the major ports in India to enable such ships to enter respective port, can be construed to be necessary within the meaning 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&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that marine insurance in 1986 inures solely to the benefit of a ship's owner, in no way aiding, the ship, and therefore that no federal lien can be held for unpaid insurance premiums. This we cannot do. In the nineteenth century, an insurance policy on a ship was viewed as a contract for the personal Indemnity of the insured ship's owner. Under this reasoning, no lien against the ship itself could possibly arise as the result of an insurance policy; "unless the ship is benefited the ship should not pay". In Re Petition of (Insurance Co. of Pennsylvania), 22 F. 109, off 4 sub nom. Insurance Co. of Pennsylvania v. The Proceeds of the Sale of the Barge Waubauschene, 24 F. 559. It is no longer appropriate, however, to view maritime insurance this way. Even a vessel that simply sits at a dock without making any attempt to ply the waters 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or commercial purposes and as pointed out above they need P & I cover to carry on its normal business and complete commercial operation and, therefore, it cannot be said that P & I cover is meant for the benefit of the ship owner alone and not for the ship. In growing trade and commerce and the changing requirement of the ship to have P & I cover by various agencies including statutory authorities as well as charterers, shippers, etc., P & I insurance is a must to keep vessel in commerce and, therefore, has to be held as a necessary to the ship also and not to the ship owner alone. The law must march ahead and the term "necessary" as understood in maritime law cannot be left stagnant and has to be construed liberally and in a broad manner to meet the present needs and contexts particularly in the country like India where maritime claims are not catalogued. Even in England 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t show that amount paid by agent to a charterer towards Income Tax liability on a freight payable by the charterer can be recovered under that section, yet it is necessary for our law to keep abreast with the developments in the other fields of activity and, therefore, it will be unjust to deny the inclusion of such claim in a suit under the admiralty jurisdiction. The Andhra Pradesh High Court, thus, construed the expression "necessaries" in a broad manner to make the maritime law in this country more effective by including even claim towards Income Tax liability on a freight payable by the charterer covered under the expression "necessaries" supplied to the ship. The Division Bench of Andhra Pradesh High Court held thus: "The short controversy is whether such a payment of income tax by the plaintiffs as agents of the charterer could be recovered by them in an action; in admiralty jurisdiction as is akin to the supply 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 jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvention on Arrest of Ships dated April 14, 1997 were prepared for submission to diplomatic conference requested by JIGE, which was subsequently scheduled for March 1 to 12, 1999 in Geneva and accordingly text of the International Convention of the Arrest of Ships, 1999 was adopted at Geneva on March 12, 1999. The Convention remained open for signature from September 1, 1999 to August 31, 2000 and thereafter for accession and it would come into force six moths after the date ten States have expressed their consent to be bound by it. The Geneva Arrest Convention 1999 has not come into force as such but there cannot be any doubt that the 1999 Geneva Arrest Convention reflects the global view on the subject. In our view, what has been observed by the Apex Court regarding the applicability of International Convention relating to the Arrest of Sea-going Ships, Brussels 1952 to India is equally applicable to the Geneva Arrest Convention, 1999. India 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 facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court were declared to be competent to regulate their procedure and practice in exercise of admiralty jurisdiction in accordance with the rules made in that behalf. There is, therefore, neither reason nor logic in imposing a fetter on the jurisdiction of these High Courts by limiting it to the provisions of an imperial statute of 1861 and freezing any further growth of jurisdiction. This is all the more true because the Admiralty Courts Act, 1861 was in substance repealed in England a long time ago. .... There is no reason why jurisdiction of the Indian High Courts should have been considered to have frozen and atrophied on the date of the Colonial Courts Act on Admiralty Act, 1890 ..... Where statutes are silent and remedy has to be sought by recourse to basic principles, it is the duty of the Court to devise procedural rules by analogy and expediency. .....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 jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l waters of India and a maritime claim is made under the admiralty jurisdiction of High Court, it is irrelevant where cause of action arose or defendant resides or carries on business or nationality of the ship, such maritime claim is triable by the concerned High Court and such maritime claim cannot be thrown out if not berried expressly or impliedly under the domestic laws of the country on the ground that such claim is not entertainable in the country where contract or insurance was entered into. 29. For the reasons discussed above, we do not find any difficulty and rather have no hesitation in holding that unpaid insurance premia in respect of the ship amounts to "necessaries supplied" within the meaning of section 5 of the Admiralty Courts Act, 1861 so as to constitute maritime claim. In any case such claim is maritime claim giving rise to admiralty cause. 30. Having answered the question referred to us by the learned Single Judge, we now deal with the Appeal No. 226/2001 filed by the vessel m.v. "Sea Success I" and her owner. Mr. Prashant Pratap, the learned Counsel appearing for the plaintiffs- P & I Association raised objection about the maintainabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of action against him. It serves the public purpose in ensuring that the litigation where the plaint even if non-traversed would not entitle the plaintiff to the relief should be thrown out without enquiry and Court as well as the defendant must be saved from meaningless exercise. With reference to Order 7, Rule 11(a) C.P.C. the Apex Court in Azhar Hussein v. Rajiv Gandhi, 1986 Supp. S.C. 315 observed. "The powers in this behalf are meant to be exercised to serve the purpose for which the same have been conferred on the competent Court so that the litigation comes to an end at the earliest and the concerned litigants are relieved of the psychological burden of the litigation so as to be free to follow their ordinary pursuits and discharge their duties. And so that they can adjust their affairs on the footing that the litigation will not make demands on their time or resources, will not impede their future work, and they are free to undertake and fulfil other commitments.". Thus, it would be seen that the order refusing to reject plaint for failure to disclose a cause of action can cause grave prejudice and loss to a defendant and if defendant's objection for rejecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not an order passed by the trial Court would be a judgment: (1) a decision which affects the merits of the question; between theparties; (2) by determining some right or liability; (3) the order determining the right or liability may be final, preliminary or interlocutory, but the determination must be final or one which decides even a part of the controversy finally leaving other matters to be decided later. 82. Thus, examining the tests laid down by Sir Richard Couch, C.J., it seems to us that the view taken by the learned Chief Justice appears to place a very strict and narrow interpretation on the word 'judgment' under which orders deciding matters of moment or valuable right of the parties without finally deciding the suit may not amount to a judgment and hence, not appealable. In giving this interpretation the learned Chief Justice was guided by two considerations: (1) that a liberal interpretation may allow vexed litigants to carry anydiscretionary order of the trial Court in appeal; and (2) that it would confer more extensive right to appeal against theJudge sitting on the Original Side than the right of appeal given to a trial Judge sitting in the mof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment constitutes the reasons for the decree it follows as a matter of course that the judgment must be a formal adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy. The concepts of a judgment as defined by the Code of Civil Procedure seems to be rather narrow and the limitations engrafted by sub-section (2) of section 2 cannot be physically imported into the definition of the word judgment as used in Clause 15 of the Letters Patent because the Letters Patent has advisedly not used the terms order or decree anywhere. The intention, therefore, of the givers of the Letters Patent was that the word judgment should receive a much wider and more liberal interpretation than the word judgment used in the Code of Civil Procedure. At the same time, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent. It seems to us that the word judgment has undoubtedly a concept of finality in a broader and not a narrower sense. In other words, a judgment can be of three kinds: (1) A final jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote. For instance, where the trial Judge in a suit under Order 37 of the Code of Civil Procedure refuses the defendant leave to defend the suit, the order directly affects the defendant because he losses a valuable right to defend the suit and his remedy is confined only to contest the plaintiff's case on his own evidence without being given a chance to rebut that evidence. As such an order vitally affects a valuable right of the defendant it will undoubtedly be treated as a judgment within the meaning of the Letters Patent so as to be appealable to a larger Bench. Take the converse case in a similar suit where the trial Judge allows the defendant to defend the suit in which case although the plaintiff is adversely affected but the damage or prejudice caused to him is not direct or immediate but of a minimal nature and rather too remote because the plaintiff still posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trappings of finality either when the order decides the questions in controversy in an ancillary proceeding or in the suit itself or in a part of the proceedings. (3) The tests laid down by Sir White, C.J., as also by Sir Couch C.J.,as modified by later decisions of the Calcutta High Court itself which have been dealt with by us elaborately should be borne in mind. 120. Thus, these are some of the principles which might guide a Division Bench in deciding whether an order passed by the trial Judge amounts to a judgment within the meaning of the Letters Patent. We might, however, at the risk of repetition give illustrations of interlocutory orders which may be treated as judgments: (1) An order granting leave to amend the plaint by introducing a newcause of action which completely alters the nature of the suit and takes away a vested right of limitation or any other valuable right accrued to the defendant. (2) An order rejecting the plaint. (3) An order refusing leave to defend the suit in an action under Order 37, Code of Civil Procedure. (4) An order rescinding leave of the trial Judge granted by him underClause 12 of the Letters Patent. (5) An order deciding a preli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second category carved out by the Apex Court. The Apex Court observed, "Another shape which a preliminary judgment may take is that whether the trial Judge passes an order after hearing the preliminary objections raised by the defendant relating to maintainability of the suit e.g. bar of jurisdiction, res judicata a manifest defect in the suit, absence of notice under section 80 and the like, and these objections are decided by the trial Judge against the defendant, the suit is not terminated but continues and has to be tried on merits but the order of the trial Judge rejecting the objections doubtless adversely affects a valuable right of the defendant who, if his objections are valid, is entitled to get the suit dismissed on preliminary grounds. Thus, such an order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to a larger Bench". Refusing to reject the plaint which does not disclose cause of action though covered under Order 7, Rule 11(a) and which obligates the trial Court to do so definitely affects a very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he C.P.C. cannot be exercised at the threshold and the suit cannot be regarded as vexatious or meritless in the sense of not disclosing a clear right to sue. Mr. Bharucha, the learned Counsel for the appellants submitted that plaint is required to be read in a meaningful rather than formal manner to ascertain whether in fact a cause of action has been disclosed and to probe the cause of action in order to ascertain whether the same gives rise to legally recognised claim and while probing the allegations at the threshold, Court has a duty to ascertain whether plaintiff's claim is bound to fail or not. By referring to the relevant pleadings made in paras 1 and 14 of the plaint, Mr. Bharucha submitted that upon meaningful reading of the said pleadings relating to the appellants vessel being sistership, reveal two averments central to plaintiff's case; (i) that the defendant No. 2 is, according to plaintiffs rules of Association, the owner of vessels "Sea Ranger" and "Sea Glory" viz. the two vessels in respect of which the original plaintiff-respondent No. 1 claims amount due towards unpaid release calls: and (ii) the defendant No. 2 is owner (beneficial or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be rejected. In support of his contentions. Mr. Bharucha relied upon the judgment of the Apex Court in T. Arivandandam v. T.V. Satyapal [1978]1SCR742 , Shakthi Sugars v. Union of India, AIR1981Delhi212 , I.T.C. Limited v. Debts Recovery Appellate Tribunal AIR1998SC634 , Bacha Guzder v. CIT [1955]27ITR1(SC) , Saloman v. Saloman, 1897 A.C. 22, Freewheels India Ltd. v. Dr. Veda Mitra, AIR1969Delhi258 , Spencer & Co. v. CWT, [1969]72ITR33(Mad) , the judgment delivered by the Supreme Court of New South Wales in James Hardie Coy Pty. Ltd. v. Putt, 1998 NSWLR 434, (The St. Merriel), 1963 Pro 247, (The Permina 3001), 1979 (1) LLR 327, (I Congresso Del Partido), 1978 QB 500., (Father Thames), 1979 (2) LLR 364, (The Union Darwin), 1983 HKLR 248, (The Looiersgracht), 1995 (2) LLR 411, Ramprasad Chimanlal v. Hazarimal Lalchand AIR1931Cal458 , Phool Sundri v. Gurbans Singh, , National Insurance Co. v. Navrom Constkantza AIR1988Cal155 . (The Aventicum), 1978 (1) LL R 184, (The Temasek Eagle), 1999 (4) SLR 250, the judgment of New Zealand Court of Appeal in Vastock Shipping v. Confederation Limited, 1999 NZ C.A. 22 and (The Beldis), 1936 Pro 51. 40 . On the other hand Mr Pratap, the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, State of Orissa v. Klockner & Company & others AIR1996SC2140 Gaganmal Ramchand v. The Hongkong & Sanghai Banking Corporation, AIR1950Bom345 , Vijay Pratap Singh v. Dukh Haran Nath Singh AIR1962SC941 , British Airways v. Artworks Export Ltd., AIR1986Cal120 , (Saudi Prince), 1982 (2) LLR 255 and State of U.P. & others v. Renusagar Power Company AIR1988SC1737 . 41. The approach of the Court in consideration of the application for rejection of plaint for failure to disclose cause of action has come up for discussion in various cases but we deem proper to refer to some of the cases cited at bar in that regard. In T. Arivandandam v. T.V. Satyapal [1978]1SCR742 the Supreme Court observed thus: "......If on a meaningful-not formal reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, the trial Court should exercise its power under Order 7, Rule 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled." 42. The Delhi High Court in M/s. Sakthi Sugars Limited v. Union of India and another, AIR1981Delhi212 relying upon the aforesaid observations of the Supreme Court held thus:- "12. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court held that if some cause of action is disclosed, a pleading cannot be struck out merely because the case is weak and not likely to succeed. The Apex Court drew distinction between "material facts" and "full particulars" with reference to the provisions of section 83(1)(a) and (b) of the Representation of People Act, 1951 and further held that the distinction between "material facts" and "full particulars" is not sharp, but is one of degree. The material facts are those which a party relies upon and which, if he does not prove, he fails at that time. 46. In William v. Wilcox, 1838 (8) Ad & EI 331, Lord Denman, C.J., said thus: "It is an elementary rule in pleading that, when a state of facts is relied it is enough to allege it simply, without setting out the subordinate facts which are the means of providing it, or the evidence sustaining the allegations." 47. The learned Single Judge of Rajasthan High Court in Ranjeet Mal v. Poonam Chand and another, held, "what is to be determined by the Court at the stage of deciding as to whether the plaint discloses any cause of action or not, is to find out from the allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of issues which must fairly be left for decision at the hearing of the suit." 5 0 . In British Airways v. Artworks Export Ltd. AIR1986Cal120 , the Calcutta High Court followed the consistent view that ground embodied in Clause (a) of Rule 11 of Order 7 C.P.C. for rejection of plaint must appear on the face of the plaint and the correctness or otherwise of the allegation constituting cause of action is beyond the purview of Clause (b) of Order 7, Rule 11. 51. The cause of action has a well defined legal connotation, though not defined, which means bundle of essential facts, if traversed, has to be proved by the plaintiff to entitle him to the relief. It reflects to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved to entitle the plaintiff to the decree. The consistent legal position which is also mandatorily enacted by Order 7, Rule 11(a) C.P.C. is, that the Court must reject the plaint which does not disclose cause of action. Obviously there is a difference between the nondisclosure of cause of action in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndant vessel m.v. "See Success I" sistership of the vessel "Sea Ranger" and "Sea Glory" which were entered for P & I risks with the plaintiff Association. The said two vessels were entered into the plaintiff's Association for the policy year 1999-2000 by defendant No. 2, Singapore Soviet Shipping Co Pte. who, as per the terms of the insurance and rules of the Plaintiff Association, were recognised and considered to be the owners of the said two vessels and the assured under the policy of insurance. The 1st defendant vessel is owned and/or controlled by defendant No. 2 through its wholly owned 100% subsidiary. Singapore Soviet Shipping Corporation Inc. Monrovia. The 1st defendant vessel is presently at the port and harbour of Mumbai within the territorial waters of India and within the Admiralty jurisdiction of this Hon'ble Court. The 2nd defendant is the owner of the 1st defendant and is also inter alia the party liable in personam in respect of the plaintiff's claim. 14. The plaintiff submits as more particularly stated in paragraph 1 above, that the 1st defendant vessel is a sistership of the two vessels "Sea Glory" and " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vessel Sea Success-I. Section 25(a) of the Indian Merchant Shipping Act, 1958 provides that property in a ship shall be divided into ten shares. In maritime law worldwide ownership of a ship denoted by the concept of the owner of the shares in a ship. The shares in the defendant No. 1 vessel "Sea Success I" are not alleged in the plaint to be owned by defendant No. 2 viz. Singapore Soviet Shipping Co. Pte. Ltd. The ownership of the defendant No. 1 ship by defendant No. 2 is alleged to be on the basis of the defendant No. 2 wholly owning subsidiary S.S. Shipping Corporation Inc. Fundamentally each company incorporated in law is a distinct legal entity and mere incorporation of 100% subsidiary company by its parent company cannot lead to the conclusion that the assets of the former belong to and are owned by parent company. In Mrs. Bacha F. Guzdar v. Commissioner of Income Tax, [1955] 27 ITR 1(SC) , the Apex Court observed, "there is nothing in the Indian law to warrant the assumption that a shareholder who buys shares buys any interest in the property of the company which is juristic person entirely distinct from the shareholders". No doubt law recognises certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or not and we have to go by the allegations made in the plaint only. Save and except the bald statement made in the plaint that the defendant No. 1 vessel is owned and/or controlled by defendant No. 2 through its wholly owned 100% subsidiary S.S. Shipping Corporation Inc. Monrovia, material facts have not been pleaded warranting exercise of piercing the corporate veil. When in law the S.S. Shipping Company Inc. Monrovia is separate and distinct entity which holds the shares in defendant No. 1 vessel Sea Success I, the inference drawn in paragraphs 1 and 14 of the plaint that defendant No. 2 by virtue of being the sole and controlling shareholder of S.S. Shipping Corporation Inc. of Monrovia is the owner of defendant No. 1 vessel cannot on the intelligent analysis of the plaint be held to be disclosing legally recognisable claim against the defendant No. 1 vessel Sea Success I. 55. Admittedly the defendant No. 1 vessel "Sea Success I" is not the offending vessel or in other words claim of unpaid insurance premium is not towards the defendant No. 1 vessel. The action in rem under admiralty jurisdiction has been initiated by the plaintiffs against the defendant No. 1 ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sister ship in order for the plaint to disclose a cause of action and as law also permits the plaintiff to arrest a ship which is beneficially owned by defendant No. 2, then it is sufficient for the plaintiff to plead that defendant No. 2 is a beneficially owner of defendant No. 1 ship in order for the plaint to disclose a cause of action and all other facts would be subordinate facts cannot be accepted in abstract. If the law allows the arrest of sister ship then it is required of the plaintiff to plead material facts sufficiently about the relationship of the offending ship and the ship against which admiralty jurisdiction is sought to be invoked on the basis of such defendant ship being sister ship of offending ship. A bald statement in the pleading that the defendant ship is the sister ship of offending ship or the inference that the defendant ship is a sistership for the reasons disclosed which is legally not sustainable cannot be held to be sufficient to disclose a cause of action. Similarly though the law permits the plaintiff to arrest a ship which is beneficially owned by the defendant No. 2 then the plaintiff is required to plead the material facts which discloses the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the said judgment of Brandon, J., was ex parte and has not been followed and rather clearly dissented as not laying down correct law in subsequent cases. In Congresso Del Partido, 1978 QB 500, Goff, J., while construing the expression "beneficially owned as respects all the shares therein" in section 3(4) of the Administration of Justice Act, 1956 equated it to equitable ownership, whether or not accompanied by legal ownership but clearly held that the said expression did not include possession and control however complete without such ownership. Goff, J., in I Congresso Del Partido did not follow the judgment of Brandon J. in Andre Ursula and held that Andre Ursula does not lay down the correct law: 56. The view expressed in I Congresso Del Partido has been followed in the United Kingdom in the "Father Thames" 1979 (2) LLR 364. The said view has also been followed by Singapore Court of Appeal in the Permina 1979 (1) LR 327 and the Hong Kong High Court in the case of The Union: Darwin 1983 HKLR 248 and by the Federal Court of Canada in Canadian Case The Looiersgracht 1995 (2) LR 411. The broad consensual legal position seems to be that the concept of ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as some of the defendants are concerned and that would be a proper order under Order 7, Rule 11(a). The Delhi High Court in Sakthi Sugar (supra) rejected the plaint against one of defendants i.e. Union of India. The Calcutta High Court in National Insurance Company v. Navrom Constantza, AIR1988Cal155 , also rejected the plaint against some of the defendants for failure to disclose a cause of action. We, therefore, hold that the plaint does not disclose a cause of action against the defendant No. 1 vessel and the plaint in its entirety deserves to be rejected against the defendant No. 1 vessel Sea Success-I. 58. In so far as Appeal No. 739/2000 is concerned, the learned Counsel for the appellants did not argue any other point save and except challenging the finding recorded by the learned Single Judge that the claim of unpaid insurance premium cannot be considered as a necessary or supply of necessaries to the vessel m.v. Allisa. We have already held that a claim towards unpaid insurance premium of a maritime vessel made by P & I Association is necessary as contemplated under section 5 of the Admiralty Courts Act, 1861 so as to constitute maritime claim and even otherwise is a mar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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