9911796707
TMI Blog2001 (1) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... reabouts. It appears that the vessel called at St. Vincent, Cape Verde island between 29th August, 1999 and 4th September, 1999 and subsequently at Laos on 18th October, 1999. The above ports were not the Port of Call as the vessel did not carry any cargo to be discharged for delivery in the said Ports. Probably, the vessel had been kept at sea, allegedly drifting in the area between Senegalese Coast and Cape Verde Islands. 2. The Officers of the Customs Department, Cuddalore, on 21.12.1999 spotted this Vessel bearing a different name Gloria Kopp anchored at about 6.5 nautical miles off Bommiyarpalayam Shore, near Pondicherry Coast. The Officers board the vessel in the afternoon of 22.12.1999 and noticed that the vessel was loaded with steel products. 3. M/s. Inter Cargo Insurance Company acting as underwriters and agents of M/s. T.W. Metals Limited (Owners of the Cargo) filed a suit in the admiralty jurisdiction of this Court in C.S. No. 1020 of 1999 on 23rd December, 1999 under Order 4, Rule 1 read with Order 42, Rule 2 of the Original Side Rules against the defendants viz., (i) the owners of the vessel of all persons interested in the vessel, (ii) Nominator Shipping Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai already made was brought to the notice of the Division Bench, In the said appeal, the Division Bench ruled that in the light of the subsequent developments the impugned order in that appeal O.S.A.42 of 2000 has become unsustainable and consequently the same was set aside. The Bench further ruled that the arrest of the vessel and Cargo ordered by the learned single Judge ceased to be in force. 7. The first respondent viz., the Chief Officer in the vessel took out three applications in the suit, (i) Application No. 590 of 2000 under Order 14, Rule 8 read with Order 40 of the Original Side Rules, praying the Court to appoint a Receiver in whose presence, sale of the Cargo, unloading the Cargo and further investigation of the Cargo and the ship should be done by the Government Agencies. (ii) Application No. 2449 of 2000 praying the Court to fix a time frame not beyond 30.6.2000 to complete the investigation of entire ship by all the Government Agencies either individually or collectively or in whatever manner the Government Agencies want. (iii) Application No. 2450 of 2000 praying the Court to pay the wages from the sale proceeds of the Cargo or alterna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cargo and ship ? (iii) Whether an order for sale of the ship for payment of wages to the crew has to be made ? With regard to the first two issues, the learned Judge came to the conclusion that considering the fact that the investigation and interrogation are over, coupled with the fact that the cargo had already been sold for a reasonable price, the appointment of a Receiver is absolutely unnecessary and no time frame need be fixed to complete the investigation as it is unnecessary. 11. With regard to the question as to whether the first respondent can invoke Section 146 of the Merchant Shipping Act, 1958 and whether filing of an application in the present suit claiming wages would be sufficient, the learned single Judge came to the conclusion that the decision of this Court in Udaya Shankar, P., v. Andhra Bank, 1983 (96) L.W. 502 wherein the Court held that the specific provision in the Act enables a seaman to resort to such a process and such a process need not necessarily be an independent civil suit or any other independent and separate proceeding and in appropriate cases it could be a step in aid in proceedings already pending at the instance of another part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the present case is concerned, the first respondent and the crew do not come under the definition of Section 3(42) and hence they cannot invoke the said provisions of the Act. (b) The proceedings for recovery of wages by seamen can be instituted in a civil Court only where the owner of the ship has been declared as invalid or ship is under arrest or sold by authority of any Court or where the Magistrate refers a claim to the Court. According to the Additional Solicitor General, the conditions are not satisfied and the first respondent could have only instituted a suit and it is not open to them to file an application claiming the wages due out of the sale proceeds of the ship. (c) By an order dated 26.9.2000, the Commissioner of Customs by virtue of powers conferred on him under the Customs Act, passed final orders confiscating the ship in question and in view of that, the first respondent and seamen cannot make any claim against the ship. (d) The first respondent was served with copy of the said order and it is made known to him that as against the said order, an appeal would lie under Section 129(A)(1) of the Customs Act 1962 to the Special Branch of Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icitor General, the Legislature would certainly have worded in that manner only. In this context, we would like to point out Section 99 which prohibits engagement of seamen in India Board without discharge certificate. That section reads thus, No person shall engage or carry to sea any seaman under this Act in any ship... (ii) As mentioned supra, the learned Additional Solicitor General referred to Section 86 to 117 in support of the above contention. A careful reading of these provisions show that these provisions only refer to required qualification for seamen and procedure to be followed in engaging a seamen. It is not as if, in the Act, a Commission or Board has been constituted for recruiting seamen or in other words, there is no recruiting Agency in that Act to engage or employ the seamen. (iii) The sections 86 to 117 referred supra deal with three types of cases; (a) Recruitment of seamen by the Indian ships in India; (b) Engagement of seamen outside India for Indian ships; (c) Engagement of seamen by Master of Ship other than Indian ships. If the submission of the learned Additional Solicitor General is to be accepted, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of the term seaman under section 2(42). The first contention, therefore, of the respondents has to be rejected. 22. We hold that the Chief of the ship and the crew can invoke the provisions of the Merchant Shipping Act as they are the seamen in a ship under the Act. Or in other words, the words 'Under this Act' would refer and qualify the words 'the ship' and not 'employed or engaged as a member of the crew'. Here in this case, the ship in question comes within the definition of the word 'ship' as occurring in section 3(45) of the Act. 23. The next contention of the learned Additional Solicitor General is that the Chief Officer of the vessel and crew have only resort to filing of a suit and further even assuming the application claiming for wages is maintainable as claimed, inasmuch as the suit was not one in rem pending on the date when the learned Single Judge passed the order, the application filed by the 1st respondent should have been dismissed. 24. The 2nd respondent/Insurance Company filed a suit in rem C.S. No. 1020 of 1999 under Order 42, Rule 2 of the Original Side Rules against the appellant and respondents 3 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n] Butterworths Publication explains the term Proceedings as: The term 'proceeding' is frequently used to note a step in an action, and obviously it has that meaning in such phrases as proceeding in any cause or matter . When used alone, however, it is in certain statutes to be construed as synonymous with, or including action [Halsbury's Laws (3rd Edition) 5, 6] The term Legal Proceedings is explained as : 'Legal Proceedings' mean prima facie that which the words would naturally import - i.e., legal process taken to enforce the rights of the Shipowner, Runchiman Co. v. Smyth Co., 1994 (20) T.L.R. 625, per Lord Alverstone,C.J., at P.626. The said Dictionary also refers to a Book The law of Pleading under the Code of Civil Procedure by Edwin E. Bryant, and quoted as under:- Proceeding is a word much used to express the business done in courts. A proceeding in Court is an act done by the authority or direction of the court, express or implied. It is more comprehensive than the word 'action', but it may include in its general sense all the steps taken or measures adopted in the prosecution or defense of an action, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originally suit in rem became suit in personam, this Court continues to have power, authority and jurisdiction to consider the said application on merits and dispose it of, as the proceeding/application for wages instituted when the ship was under arrest and the suit was one in rem. This view of ours gains support from the Ruling of the Supreme Court reported in M.V. Elisabeth v. Harwan Investment Trading Pvt. Ltd., Goa, wherein the Apex Court ruled as under: Where statutes are silent and remedy has to be sought by recourse to basis principles, it is the duty of the Court to devise procedural rules by analogy and expediency. Actions in rem, as seen above, were resorted to by Courts as a devise to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept 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 device developed by the Courts with a view to rendering justice in accordance with substantive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the particular court.' It is further held as under:- Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue against the owner as in any other suit. The arrest of the vessel while in Indian Waters by an order of the concerned High Court, as defined under the Merchant Shipping Act, 1958 (Section 3(15) attracts the jurisdiction of the competent court to proceed with the trial, as in the case of any other suit, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel. 33. In this view of the matter, as far as the issue is concerned, we hold that the term Proceeding would include an application under Order 14, Rule 8 of the Original Side Rules read with Section 125 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the nature of the right. We quote what the said Author has stated with reference to the right viz.. Maritime lien: A maritime lien is a proprietary interest in the 'res' it detracts from the absolute title of the 'res' owner. There has been a division of judicial opinion as to whether it is a right in the property (a jus in re) or a right against the property (a jus in rem) only. It is submitted that the Hen is both, a right in the property perfected by action (in rem) against it. Thus, a claimant who holds a maritime lien may bring an action in rem against the ship under Section 2(3), even though the ownership of the 'res' may have changed since the cause of action arose. The plaintiff an unqualified right to take proceedings in rem against the ship, irrespective of ownership. It is important to realise that whether or not a particular cause of action confers upon the claimant a maritime lien is determined by reference to the common maritime law. Nowhere will this question be answered in the wording of any statute, either the Administration of Justice Act, 1956 or any previous statute. In English Law, it is customary to regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) claims for loss of life of personal injury in direct connection with the operation of the vessel; (c) salvage; (d) claims for port, canal and other waterway dues and pilotage dues; (e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passenger's effects carried on the vessel. 37. The other notable and well known Book is Maritime Lien and Claims By William Tetley . We would like to mention here what the Author has opined in his Book : A traditional maritime lien is a secured right peculiar to maritime law (the lex maritima). It is a privilege against property (a ship) which attaches and gains priority without any court action or any deed or any registration. It passes with the ship when the ship is sold to another owner, who may not know of the existence of the lien. In this sense the maritime lien is a secret lien which has no equivalent in the common law, rather it fulfills the concept of a privilege under the civil law and the lex mercatoria. The seaman's lien is a true traditional maritime Hen. They key is servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in time the actual claim arose. In order to answer the question who binds the ship in the case of-a statutory right in rem two moments in time are relevant; when the cause of action arose and when the action was brought. It is clear that if the owner, his servants or his agents are in charge of the ship when the maritime lien arises, then the ship is bound. The lien continues even the ship taken legally from an owner by requisition:- Where a ship is taken legally from an owner by requisition, a difficult question arises but the answer follows logically; the ship should be bound. This is because maritime liens are against the ship. It does not matter who is in control as long as that person is legally in control. The owner who gives up his ship by requisitioning under law to the government, does so because he believes in the social contract and complies with the law of society. The owner whose ship is requisitioned has of course a claim at the end of the requisition period for the damage done to the ship and the obligations of the ship. Normally, as well, a requisitioned ship will be transferred into the name of the government who will be bound in personam and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, objecting to the confiscation. Suffice for us to quote the relevant paragraph which reads thus:- You are requested to refer to various provisions of the Merchant Shipping Act, which will give you an idea about crews obligations to the Master of the vessel as well as the owner of the vessel. Further, your action to confiscate the ship at the expense of the crew (as they have charge over the vessel for the wages} and penalise the workers for no fault on their part is against law and the principles of natural justice. {Italics supplied} 41. At this juncture, it may be pointed out that no claim was made by the crew that confiscation if any, can be only subject to their lien. What was claimed was that the confiscation was against law and the principles of natural justice. On 26.9.2000, the Commissioner of Customs (c) passed an order, confiscating the vessel M.V. Gloria Kopp @ Kobe Queen absolutely under Section 152 of the Customs Act. As against this Order of confiscation, an appeal would lie to the Appellate Authority under the Customs Act, 1962. The first respondent or the crew have not so far filed an appeal to set aside the said Order. However, the learned counsel app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir wages against the ship. It has to be pointed out that before this Court the only objection or nature of attack on the order of confiscation is that the confiscation order will not affect the right of the 1st respondent and the crew to claim wages or in other words their wages should be paid out of the sale proceeds of the ship. 44. Coming back to the discussion and the merits of the case, the next aspect to be considered is what is the effect of confiscation. The term confiscation has not been explained or defined in the Customs Act, 1962. It is needless to mention that confiscation is different from requisition. In the case of requisition, by an order, a claim is laid to the use of property, house or materials, by the Government for military or public use. Such an Order is not by way of penalty/punishment. Such property does not vest with Government. The Black's Law Dictionary, Seventh Edition, defines the term confiscate as : To appropriate property as forfeited to the Government; to seize property by authority of law The Law Lexicon by P. Bamantha Aiyar, explains the term as : To appropriate private property to the public trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g its provisions by the adoption of the procedure under the Sea Customs Act can at all arise. 46. In Collector of Customs v. D. Bhoormull, of the Judgment, the Supreme Court observed thus:- A reading of Section 167(8) and the related provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation under the first part of the entry in column (3) of clause (8) of the Schedule, is enforced against the goods irrespective of whether the offender is known or unknown. But imposition of the other kind of penalty, under the second party of the entry in column 3, is one in personam; such a penalty can be levied only on the person concerned in any offence described in column 1 of the clause. Goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without ascertaining who is their real owner or who was actually concerned in their illicit import. 47. In Union of India v. Lexus Export Private Limited, the Supreme Court reiterated the same legal position in para No. 3. by observing thus;- The Proceedings of seizure and confiscation are proceeding in rem. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in course of time, actions in rem and actions in personam acquired different content. When in an action the rights and interest of the parties themselves in the subject matter are sought to be determined, the action is in personam. The effect of such an action is therefore merely to bind the parties thereto. Where the intervention of the Court is sought for the adjudication of a right or title to property, not merely as between the parties but against all persons generally, the action is in rem. Such an action is one brought in the admiralty Division of the High Court possessing Admiralty jurisdiction by service of process against a ship or cargo within jurisdiction. There is another sense in which an action in rem is understood. A proceeding in relation to personal status is also treated as a proceeding in rem, for the judgment of the proper court within the jurisdiction of which the parties are domiciled is by comity of nations admitted to recognition by other courts. As observed by Cheshire in his Private International Law , Sixth Edition at page 109, In Roman law an action in rem was one brought in order to vindicate a jus in rem, i.e., a right such as ownership avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Dictionary as, (1) To confer ownership of (property) upon a person. (2) To invest (a person) with the full title to property. (3) To give (a person) an immediate, fixed right of present or future enjoyment. The Oxford Concise Dictionary defines the word vest as, give someone legal right, power, property, etc. As already quoted above, the ruling referred supra viz., Sewpujanrai I. Ltd.. v. Collector of Customs, lays down that once an order of confiscation is passed, it operates as transfer of absolute title to the Government. Though the meaning of the word 'absolute' is well known, for the purpose of completeness, we make the following reference. In Black's Law Dictionary, the word 'absolute' is defined as, I. Free from restriction, qualification or condition (absolute ownership); 2. Conclusive and not liable to revision (absolute delivery); 3. Unrestrained in the exercise of governmental power (absolute monarchy). The Law Lexicon, edited by Justice T.P.Mukherjee gives the meaning of the word 'absolute' as, 'complete; unconditional.' Law Lexicon Legal Maxims by Venkataramaiya, edited by Justice M.C.Desai exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the first one is, where the ship is sold by Order of a Court; the third one is, the holder of the lien has been negligent of his interest and from that waiver of his right is presumed. We are not concerned with these two conditions. The second one is, where transfer to a foreign Government, who can plead sovereign immunity. Of course, as far as the present case is concerned, there is no transfer by the owner of the ship to a foreign government. But, this is a case where the owner of the ship is deprived of the ship completely by way of penalty and the ship has vested by virtue of confiscation order and the State has become the absolute owner. Even though there is no positive provision in any of the relevant Acts, as already pointed out by us, by virtue of the Rulings of the Apex Court viz., that the Order of confiscation is a proceeding in rem and that the property vests with the Government absolutely, we have to only hold that this is identical to the category where a Government claims sovereign immunity. In other words, the Government claiming sovereign immunity and the highest court of the country holding that confiscation results in absolute vesting of the property i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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