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OJA/2/2010 29/ 29 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
O.J.APPEAL
No. 2 of 2010
In
ADMIRALITY
SUIT No. 20 of 2009
With
CIVIL
APPLICATION No. 11 of 2010
In
O.J.APPEAL No. 2 of 2010
For
Approval and Signature:
HONOURABLE
MR.JUSTICE JAYANT PATEL
And
HONOURABLE
MR.JUSTICE J.C.UPADHYAYA
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================================
LINK
OIL TRADING LTD – Appellant(s)
Versus
M
V ST.PETER (FORMELY KNOWN AS ST.LUKE) – Opponent(s)
=========================================================
Appearance
:
MR
SN SOPARKAR, SR. COUNSEL with MS PAURAMI B SHETH
for
Appellant,
MR ASHWIN SHANKET with MR DHAVAL M BAROT for
Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE JAYANT PATEL
and
HONOURABLE
MR.JUSTICE J.C.UPADHYAYA
Date
: 09/02/2011
CAV
COMMON ORDER :
(Per
: HONOURABLE MR.JUSTICE J.C.UPADHYAYA)
1. The
challenge in this appeal is to the order dated 15/1/2010 rendered by
the Ld. Single Judge of this Court in Admiralty Suit No. 20/2009,
whereby the interim order of arrest of the respondent – vessel
“M.V. ST. PETER”
passed on 30/12/2009 came to be vacated and the Port officer and
Customs Officer at Kandla Port were directed to release the
respondent – vessel from the order of arrest and the warrant of
arrest was ordered to be cancelled.
2. The
appellant, who is original plaintiff, preferred Admiralty Suit NO.
20/2009 to secure claim amounting to US $ 4,34,602.43 with further
interest at the contractual rate of 36% p.a., on the sum of US $
2,68,935.39 from the date of the filing of the suit till the date of
payment/realization. The Admiralty Suit was preferred in this Court
on 12/10/2009. Incidentally,
the defendant – vessel came to be arrested in another Admiralty
Suit No. 19/2009 between the same parties vide order dated 27/11/2009
and, therefore, on 10/12/2009 when the instant Admiralty Suit bearing
Admiralty Suit No. 20/2009 came to be filed before this Court, it was
ordered that it was not necessary to pass any separate order of
arrest since the arrest order of the defendant ship had already been
passed in Admiralty Suit No. 19/2009. However, in the instant suit
bearing Admiralty Suit No. 20/2009 vide order dated 30/12/2009, this
Court passed an order of arrest of the defendant – vessel.
3. After the
institution of the instant Admiralty Suit, the respondent –
defendant filed reply affidavit on 30/12/2009 and in the reply
affidavit, the principal contention raised by the defendant was
regarding suppression of material facts in connection with one
earlier suit instituted at New York on the identical cause of action
as well as regarding part payment having been made. Pursuant to such
contention by the defendant in affidavit-in-reply, the plaintiff
requested for amendment of plaint and the amendment was allowed,
wherein the plaintiff admitted about institution of earlier suit
pertaining to the same cause of action instituted at New York, but it
was explained that the said suit had already been withdrawn before
the instant Admiralty Suit came to be filed before this Court.
Regarding receipt of part payment, by way of amendment in the plaint,
it was explained that on account of series of transactions between
the plaintiff and the defendant through including Belarussian
Shipping Company [for short ‘BSC’] and FEDCOM for supply of bunkers,
it had skipped from the mind of the plaintiff regarding receipt of
payment to the extent of US $ 1,68,935.39. Resultantly, the claim
amount of US $ 4,34,602.43 came to be reduced to US $ 1,72,196.67,
with further interest at the contractual rate of 36% p.a., on the sum
of US $ 1,00,000 from 9/12/2009 till payment / realization.
4. After
considering the materials on record and the submissions advanced on
behalf of both the sides, the Ld. Single Judge, vide impugned oral
order dated 15/1/2010 vacated the arrest order of the defendant ship
passed on 30/12/2009 and directed the concerned Port Officer to
release the defendant ship from the order of arrest and the warrant
of arrest was ordered to be cancelled. Hence, the present appeal.
5. Mr.
SN Soparkar, Ld. Sr. Counsel with Ms. PB Sheth, Ld. Advocate for the
appellant – plaintiff, at the out-set, submitted that there is
no dispute that at the time when the Admiralty Suit came to be
instituted before this Court, the factum of earlier suit instituted
at New York on the same cause of action and the factum regarding the
part payment were not pleaded. However, it was submitted that the
mistake in not disclosing such facts cannot be termed as malafide,
but it was bonafide mistake. The plaintiff was not going to gain any
undue advantage by not disclosing those facts initially in the
plaint. It is further submitted that as soon as the plaintiff came to
know about the mistake, immediately amendment in the plaint was
requested and the prayer for amendment was granted by the Ld. Single
Judge, whereby not only the plaintiff tendered reasonable
explanations in not disclosing those facts in the plaint, but even
tendered unconditional apology for the same. Mr. Soparkar, Ld. Sr.
counsel, therefore, submitted that on the one hand Ld. Single Judge
permitted the amendment in the plaint to be carried out and on the
other hand observed that the explanations tendered were
unsatisfactory.
5.1. Mr.
Soparkar, Ld. Sr. counsel, asserted that the real test which the Ld.
Single Judge should have adopted was to the effect that whether the
alleged suppression of facts were material facts so as to disentitle
the plaintiff from getting the equitable relief. It is submitted
that in the instant case as soon as the plaintiff realized about the
part payment, he immediately reduced his claim. Any reduction in the
suit claim cannot be viewed as malafide exercise. So far as the
institution of suit at New York was concerned, it was argued that
admittedly said suit came to be withdrawn on 14/11/2008 and the
instant Admiralty Suit came to be filed before this Court on
10/12/2009 and, therefore, the date on which the instant Admiralty
Suit was filed in this Court, New York suit was not pending, but it
was already withdrawn.
5.2. Mr.
Soparkar, Ld. Sr. counsel submitted that the plaintiff has a
prima-facie case and there is fair chance of success in the suit and
in such cases, if the arrest order of foreign vessel is not
continued and if it leaves the shore of Indian territorial water, it
would be difficult to get hold of it and virtually the plaintiff
would remain remedyless. It is submitted that though by the impugned
oral order the Ld. Single Judge vacated the arrest order dated
30/12/2009 and permitted the defendant ship to leave the shore of
Indian territorial water, but in this appeal, vide order dated
28/1/2010 the defendant vessel was allowed to sail out of the Indian
water upon furnishing by the respondent – defendant –
vessel a security in the sum of Rs.80 lac. It is submitted that the
security to the extent of Rs.80 lac has been furnished before the
Registry pursuant to the order in this appeal dated 28/1/2010 and it
is, therefore, submitted that said order is required to be continued
till the final disposal of the Admiralty Suit by allowing this
appeal.
5.3. In
support of the submissions, Mr. Soparkar, Ld. Sr. counsel, relied
upon the following decisions :
S.J.S.
Business Enterprises [P] Ltd. v/s. State of Bihar reported in [2004]
7 SCC 166,
Mayar
[H.K.] Ltd. v/s. Owners and parties, vessel M.V. FORTUNE EXPRESS
reported in [2006] 3 SCC 100,
Arunima
Baruah v/s. Union of India reported in [2007] 6 SCC 120 and
Videsh
Sanchar Nigam Ltd. v/s. M.V. Kapitan KUD reported in [1996] 7 SCC
127.
6. Per
contra, Mr. Ashwin Shanker, Ld. Advocate with Mr. DM Barot, Ld.
Advocate for the respondent – defendant vehemently opposed this
appeal and supported the impugned order passed by the Ld. Single
Judge and submitted that the Ld. Single Judge was perfectly
justified in coming to the conclusion that the appellant –
plaintiff was not entitled to any equitable relief on account of
suppression of material facts. It was further submitted that in the
earlier suit filed by the plaintiff at New York neither the defendant
vessel M.V. ST PETER nor its present owner, namely PETER MARITIME CO.
INC. were made parties in said suit though the subject matter and
the cause of action in said suit was the identical. Said suit was
filed against BSC and, therefore, as such there was no any
contractual relationship between the plaintiff and the present owner
of the defendant ship. The present owner purchased the ship on
22/12/2008, whereas the suit transactions took place much earlier to
that. However, it is submitted that apart from such factual aspects,
the material thing is that the Ld. Single Judge, examining the
materials on record and considering the submissions of both the
sides, correctly held that the plaintiff was not entitled to any
equitable relief and, therefore, it is prayed that the appeal may be
dismissed.
7. Having
considered the submissions advanced on behalf of both the sides and
the impugned order, so also the papers annexed with this appeal, it
is clear that the Ld. Single Judge vacated the earlier order of
arrest on the ground of suppression of material facts by the
plaintiff. There is also no dispute that before the amendment was
carried out in the plaint, the factums regarding the part payment and
the previous suit filed at New York Court have not been pleaded in
the plaint. There is also no dispute that the subject matter involved
in the previously instituted suit at New York and the subject matter
of instant Admiralty Suit, so also the cause of action in both the
suits are identical. There is also no dispute that in the previous
suit neither the defendant vessel nor the present owner of the vessel
were made the parties though the previously instituted suit was filed
by the present plaintiff for the identical cause of action. There is
no dispute that in the reply affidavit filed on behalf of the
defendant vessel in the suit, the defendant contended about the
suppression of those facts in the plaint. By virtue of the
amendment, the plaintiff reduced the claim amount and tendered
explanations for the mistake.
8. At
para. 8 in the impugned order, the Ld. Single Judge has reproduced
paras. 1.2 and 1.3 of the affidavit of the defendant, wherein the
contention regarding the suppression of material facts has been
raised by the defendant. Since in the impugned order the relevant
paras., from the affidavit of the defendant have been reproduced, we
need not reproduce here in this order those paras., but suffice it to
say that the defendant brought to the notice the previously
instituted suit on the same cause of action filed by the plaintiff at
New York and contended that the plaintiff considered BSC to be the
party with whom it had a contract rather than these defendants. It is
further contended that the plaintiff had already been paid for the
supplies [or atleast a substantial portion of fuel invoice]. It is
further contended that the defendants are innocent third party buyers
of the ship as the defendants purchased the ship on 22/12/2008
without notice of any such claim. It has been further contended that
the plaintiffs do not have a maritime lien and hence cannot survive a
change in ownership.
8.1. To
meet with such contentions made by the defendants, the plaintiff had
come out with the amendment application. At para. 9 in the impugned
oral order, relevant paras. 2 and 3 of the amendment application have
been reproduced. We deem it fit to reproduce in this order paras. 2
and 3, which run as under :-
“2. The
plaintiff states that the defendant filed and served copy of reply to
the advocate of the plaintiff to oppose granting/continuing arrest
contending interalia that the plaintiff has filed suit in the New
York Southern District Court and also pointed out that the plaintiff
has received part payment of USD 168935.39, a copy whereof has been
forwarded to the plaintiff by its Advocate. The plaintiff has
regular business dealing with the defendants through them and their
agents. While going through the copy of reply and upon looking at
their accounts and papers, the plaintiff realised that due to several
dealings with defendant through including Bealrusan and FEDCOM for
supply of bunkers to more than half a dozen of various vessels at
various times, it has been skipped from its mind while giving urgent
instructions to solicitors and their advocates about receipt of part
payment of USD 16935.39 with respect to invoice dated 27.2.2008 for a
sum of USD 938.39 since the vessel would have sailed on release of
earlier arrest. As such the total outstanding of such supplies have
been more than USD 3.00 million which despite repeated assurances on
behalf of the vessels / owners to the plaintiff, the same have yet
remained unpaid. Thus in a rush to file proceedings before this
Hon’ble Court and to obtain it the arrest could not point out tis
solicitors and advocates about the payment received and to claim for
balance amount only with interest for delayed payment thereon which
is its genuine, bonafide and unintentional mistake for which the
plaintiff unconditionally apologized to this Hon’ble Court.
3. The plaintiff
further states that as also pointed out the defendants to the
Hon’ble Court of their submission on the proceedings at New York
Court have been withdrawn.”
9. The
Ld. Single Judge permitted above amendment to be carried out in the
plaint. Since the amendment was permitted, on behalf of the plaintiff
before the Ld. Single Judge, it was contended that granting of the
amendment application permitting the plaintiff to amend the plaint
would indicate that the Court had accepted the explanation tendered
by the plaintiff. The Ld. Single Judge was perfectly justified in
rejecting such submission for the simple reason that the procedural
permission does not mean acceptance of an explanation in relation to
substantive rights of litigating parties nor can be termed to get
away from the suppression if any found prior to interim relief on
equitable consideration. However, the moot question which is required
to be considered is as to whether the suppression of the facts can be
said to be material suppression of facts or not. In S.J.S.
Business Enterprises [P] Ltd.’s case [supra] it has been held by
the Hon’ble Apex Court that as a general rule, suppression of
material fact by a litigant disqualifies such litigant from obtaining
any relief and that this rule has been evolved out of the need of the
courts to deter a litigant from abusing the process of court by
deceiving it. It has been further held that the suppressed fact must
be a material one in the sense that had it not been suppressed, it
would have had an effect on the merits of the case. The said
principle was reiterated in Arunima Baruah’s case [supra] and
in para. 12 in said decision Hon’ble the Apex Court observed as under
:-
“12. It is trite
law that so as to enable the court to refuse to exercise its
discretionary jurisdiction suppression must be of material fact.
What would be a material fact, suppression whereof would disentitle
the appellant to obtain a discretionary relief, would depend upon the
facts and circumstances of each case. Material fact would mean
material for the purpose of determination of the lis, the logical
corollary whereof would be that whether the same was material for
grant or denial of the relief. If the fact suppressed is not material
for determination of the lis between the parties, the court may not
refuse to exercise its discretionary jurisdiction. It is also trite
that a person invoking the discretionary jurisdiction of the court
cannot be allowed to approach it with a pair of dirty hands. But even
if the said dirt is removed and the hands become clean, whether the
relief would still be denied is the question.”
10. In
the case of Mayar [H.K.] Ltd. [supra] a plaint in Admiralty
Suit came to be rejected on the ground of suppression of facts.
Examining the facts and circumstances of said case, Hon’ble the Apex
Court allowed the appeal and observed that such rejection is
permissible only if the suppressed fact is material, in the sense
that had it not been suppressed it would have had an effect on the
merits of the case.
11. In
the background of the principle established by Hon’ble the Apex Court
if the instant case is examined, in the first instance, it becomes
clear that about claiming higher amount initially in the plaint and
subsequently when the defendant in the reply affidavit brought to the
notice of the court about payment, the plaintiff by way of amendment
reduced its claim, but about the said mistake a vague and general
explanation came to be tendered by the plaintiff stating that on
account of several transactions, it has been skipped from its mind
while giving urgent instructions to Solicitors and Advocates. It has
been tried to explain that in a rush to file proceedings before this
Court and to obtain order of arrest, the plaintiff could not point
out part payment in the plaint. About the suppression of factum
regarding previously instituted suit at New York is concerned, except
the fact that the proceedings at New York had already been withdrawn,
no explanation was tendered as to why said facts were not initially
pleaded in the plaint. There is no dispute that only after the
defendant filed its reply affidavit and brought to the notice of the
Court regarding the suppression of these facts, the plaintiff carried
out necessary amendment in the plaint. In the impugned order, the Ld.
Single Judge elaborately dealt with this aspect of the matter and
according to us, has rightly observed that there is no explanation as
to why the factum of instituting proceedings for the very same cause
of action viz. recovery of the very same principal amount, was not
forming part of the plaint before the amendment. The Ld. Single Judge
has also taken into consideration the fact that the previous suit
filed at New York came to be withdrawn on 14/11/2008 and the present
Admiralty Suit came to be instituted in this Court on 10/12/2009.
However, there is no dispute that the previous suit instituted at New
York was pertaining to the very same cause of action, but the said
suit was filed against BSC and not either against the defendant
vessel or against the owners of the defendant vessel. It is further
pertinent to note that this distinction is most relevant in the
context of the dispute raised on behalf of the defendant about
acquisition of ownership of the defendant vessel on 22/12/2008;
whereas the cause of action of the suit transaction occurred much
prior to that. In the impugned order, therefore, the Ld. Single Judge
has in the above background, rightly emphasized the fact that the
previous suit instituted at New York was only against BSC and not
either against the defendant vessel or the present owners of the
defendant vessel. If the cause of action, in fact, was qua the
defendant vessel or its present owners, then they would have been the
defendants in said suit.
12. About
the withdrawal of the previously instituted suit, however, in the
impugned order, the Ld. Single Judge observed that it is not
necessary to go into the reasons for withdrawal as at this stage the
Court is considering whether even if the aforesaid fact regarding
institution of previous suit and the withdrawal of the same, had
formed part of the plaint as originally presented, whether the
plaintiff was or was not entitled to ex-parte order of arrest of
vessel. Apart from the fact as to whether the previously instituted
suit was withdrawn reserving the liberty to file fresh suit on the
same cause of action or subject matter or not and if no such liberty
was reserved, whether the plaintiff is precluded from instituting any
fresh suit in respect of such subject matter or not, the relevant
aspect of the matter is that only after the defendant pointed out
about the suppression, the plaintiff amended its plaint. Moreover, it
is pertinent to note that neither the defendant vessel nor the
present owners of the defendant vessel were made party to that suit.
13. In
the impugned order, the Ld. Single Judge has examined this aspect of
the matter from one more angle as well. It has been observed that in
such an eventuality the Court has to further pose a question and
examine as to whether the plaintiff would suffer irreparable loss
if ex-parte ad-interim relief is not granted to the plaintiff at the
point of time when the suit was taken up for hearing in the first
instance. The Ld. Single Judge, replying this question in negative,
observed that if the plaintiff had not suffered any irreparable
damage for a period of more than one year, there is no question of
stating that in absence of any order of arrest of the vessel, the
plaintiff would suffer an irreparable loss, which could not be
compensated in terms of money. It is pertinent to note that the
previous suit instituted at New York Court came to be withdrawn on
14/11/2008 and after about more than one year on 10/12/2009 the
instant Admiralty Suit came to be instituted in this Court and in
that context, in the impugned order it has been observed that if at
all the plaintiff was going to sustain irreparable loss, he would not
have waited for more than one year. It has been submitted on behalf
of the appellant – plaintiff that the cause of action for this
suit arose only when the defendant vessel came to be bearthed at
Kandla Port within the Indian territorial water. This submission
would have definitely carried effect if the previously instituted
suit at New York was filed either against the defendant vessel or
against the present owners of the defendant vessel. In above view of
the matter, we do not find any infirmity in the impugned order when
the Ld. Single Judge examined the suppression of material fact from
the view point of irreparable injury.
14. Reliance
was placed upon the case of Videsh Sanchar Nigam Ltd.
[supra], wherein in Admiralty matter, considering peculiar facts and
circumstances emerged in said case, the Apex Court allowed appeal and
set aside the order of Bombay High Court directing release of a
commercial ship M/s. M.V. Kapitan Kud. However, on the basis of
materials available on the record, Hon’ble the Apex Court came to the
conclusion that the damage to the cable wire of Videsh Sanchar Nigam
Ltd., laid under the sea water of Indian territory came to be caused
by said vessel. There was no such defence regarding suppression of
material fact in that case. Furthermore, the learned Senior Counsel
for the appellant placed reliance upon the above referred decisions
of Hon’ble the Apex Court in the cases of S.J.S. Business Enterprises
(P) Ltd., Arunima Baruah, and Mayar (H.K.) Ltd. to substantiate the
submission that the suppression per se would not disentitle a
litigant in claiming equitable relief of interim order, is ill
founded in the facts and circumstances of the instant case as, in the
instant case, the suppression was pertaining to material facts. If
the appellant-plaintiff had pleaded in the plaint at the time of very
inception of the Admirality Suit the material facts regarding filing
of the previous suit at New York on the same cause of action,
non-joinder of the Suit vessel and its present owners in said suit,
withdrawal of said suit before about more than one year to the
institution of the instant Admiralty Suit in this Court etc., the
Court might not have passed ad interim order of arrest of the Suit
Vessel. These are such material facts which the Court would have
gone into before the grant of ad-interim order. At the same time,
while considering the factors of urgency on the part of the
appellant-plaintiff in obtaining ad interim order as well as
sustaining irreparable loss in case immediate measures are not taken,
if the appellant-plaintiff had brought to the notice of this Court
about filing of the instant Admiralty Suit after about more than one
year from the withdrawal of the previous suit, the Court would have
declined to pass ad interim order against the respondent-defendant.
Besides, the power of the High Court under Article 226 of the
Constitution in case when alternative remedy is resorted to before
other forum would not stand at par with jurisdiction in Admiralty
Suit like Civil Suit, when earlier, for the same cause of action a
suit was already filed and was withdrawn. Under such circumstances,
as found by the learned Single Judge and as find by us, the
suppression was so serious that it should disentitle the
appellant-plaintiff for equitable relief of interim order. Thus the
facts of the present case are totally different than the facts and
circumstances in the cases before Hon’ble the Apex Court and
consequently the decisions cited at bar would be of no help to the
appellant-plaintiff.
15. In
the impugned order, therefore, the Ld. Single Judge came to the
conclusion that there was suppression of material facts. It has been
further observed that applying the test as to whether the plaintiff
would be entitled to an order of arrest even if the said fact had
been originally incorporated in the plaint, the result would be that
the plaintiff was not entitled to any equitable consideration. We,
therefore, do not find that the Ld. Single Judge has exercised
discretionary powers either arbitrarily, capriciously, perversely or
against the settled principle of law. It is clear that in an appeal
against discretionary order, appellate Court shall not interfere even
if other view is possible, but considering the facts and
circumstances of the instant case, so also considering the impugned
order passed by the Ld. Single Judge, we are of the considered
opinion that no other view is possible than the one taken by the Ld.
Single Judge.
16. In
the above view of the matter, the appeal lacks merits and does not
require to be admitted but deserves dismissal. As observed above in
this order, in this appeal interim injunction was prayed by
preferring Civil Application No. 11/2010 and vide order dated
28/1/2010 in Civil Application No. 11/2010, this Court directed the
Registry to receive security in the sum of Rs.80 lac [Rupees eighty
lac only] furnished by the respondent vessel and on deposit of the
aforesaid sum of Rs.80 lac, the respondent vessel was allowed to sail
out of the Indian water. Pursuant to said order on behalf of the
respondent vessel, Rs.80 lac came to be deposited before the
Registry. Since the appeal lacks merits and is not admitted, Civil
Application No. 11/2010 does not survive and deserves dismissal.
Therefore, the respondent – defendant shall be at liberty to
withdraw the deposited amount.
17. For
the foregoing reasons, OJ Appeal No. 2/2010 and OJ Civil Application
No. 11/2010 stand dismissed without any order as to costs.
[
JAYANT PATEL, J. ]
[
J.C. UPADHYAYA, J.]
Pansala.
…..29…..
After
the pronouncement of the order, Mr. Soparkar, Ld. Sr. Counsel prays
that the operation of this order be stayed for some time so as to
enable his client to approach before the higher forum. Such prayer is
opposed by Mr. Barot, Ld. Counsel for the respondent.
As such, the operation of
the judgment does not deserve to be stayed. Considering the facts and
circumstances, it is observed that the amount which is so deposited
shall be retained by the office for further period of four weeks from
today.
[
JAYANT PATEL, J. ]
[ J.C. UPADHYAYA, J.]
* Pansala.
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