1998 Supreme(SC) 497

1998(4) Supreme 309
Supreme Court of India
(From Bombay High Court)
Sujata V. Manohar, S.P. Kurdukar and D.P. Wadhwa, JJ.
World Tanker Carrier Corporation -Appellant
versus
SNP Shipping Services Pvt. Ltd & Ors. etc. -Respondents
Civil Appeal No. 8534 of 1997
With
[C.A. Nos. 8535/1997, 8536/1997, C.A. Nos. 2145-2146/1998 (Arising out of SLP(C) Nos. 3 & 4/1998)]
Decided on 20-4-1998
Counsel for the Parties :
For the Appellant : K.K. Venugopal, S. Venkiteswaran, R.F. Nariman, Sr. Advocates, H. Parekh, Sameer Parekh, Amit Dhingra, Ms. S. Priya, Subramanian, Advocates.
For the Respondent S.N.P. Shipping : J. Sorabjee, S.P. Chinoy, Sr. Advocates, George, A. Rebello, Bharucha, N. Ganpathy, Advocates.
For the Respondent in Kara Mara Shipping : C.A. Sundaram, Sr. Advo­cate, A.M. Vernekar Ms. Madhavi Divan, Rajiv Dutta and Uday Kumar, Advocates.

Important Point
Where both the vessels colliding on high sea were foreign vessels and one of the Indian companies had management rights in one of the ves­sels which was brought to Bombay Port, that did not confer jurisdiction on Bombay High Court to entertain admiralty suits.

Headnote:(i) Merchant Shipping Act, 1958 -Part XA-Admiralty suits-Limi­tation of liability of owners of sea going vessels-Collision between two ships on high sea-Damage to vessel and cargo and death and injuries of crews-Both were foreign vessels-Vessel Ya Mawlaya and Vessel New World-One of the companies claiming ownership rights of vessel Ya Mawlaya was SNP which is a company registered in Bombay - Admiralty Suits in Bombay High Court-Question of jurisdiction-Whether Bombay HC has jurisdiction in Admiralty suits? (No).

       Held : The right of an owner to bring a limitation action is governed by Part XA of the Merchant Shipping Act, 1958. The whole purpose of limitation of liability is to protect an owner against large claims, for exceeding the value of the ship and cargo, which can be made against him all over the world in case his ship meets with an accident causing damage to cargo, to another vessel or loss of personal life or personal injury. A limitation action, though it is normally filed in the admiralty jurisdiction of a court, is somewhat different from an ordinary admiralty action which normally begins with the arrest of the defaulting vessel. The vessel itself, through its master is a party in the admiralty suit, and the plaintiff must have claims provable in admiralty against the vessel. In the case of an action for limitation of liability, it is the personal right of the owner of the vessel to file a limitation action or to use it as a defence to an action against him for liability. It is a “defensive” action against claims in admiralty filed by various claimants against the owner of the vessel and the vessel. A limitation action need not be filed in the same forum as a liability action. But it must be a forum having juris­diction to limit the extent of such claims and whose decree in the form of a limitation fund will bind all the claimants. (Para 16)

       A limitation action as in the present case, falls under the High Court’s Admiralty jurisdiction. But a limitation action, though filed in Admiralty, is not against a vessel. It is a protective action against claims which may be filed by others against owner of the vessel in admiralty jurisdiction. Therefore, a plea of limitation can be taken as a defence by the owner in an action in admiralty filed against him by the claimant against him and his ship. Hence, the court having jurisdiction to entertain an admiralty action, against the vessel of the owner has jurisdiction to set up a limitation fund for the owner. Similarly, if the owner initiates the “defensive” action in limitation, the court which has jurisdiction to entertain a liability claim will have jurisdiction to entertain the limitation action. If a liability claim is already filed, that court will have jurisdiction over limitation action also. But claims may be several, and they may be actually filed or may be apprehended. Any court where such a claim is filed or is likely to be filed will have jurisdiction to entertain a limitation action. The court of domicile of the owner and the ship is a court where such a claim is likely to be filed. Therefore, that court will also have jurisdiction. Out of these, the owner has the option to choose his court for filing a limitation action. (Para 31)

       A limitation action in admiralty jurisdiction cannot be filed in a court where a part of the cause of action arises when all claimants who are defendants to the action are foreigners who reside outside India, who do not carry on business in India and who have not submitted to the jurisdiction of any court in India, and have not filed a liability action here and are not likely to do so. (Para 33)

       In the present case the collision which gave rise to the owner’s liability has occurred on the high-seas off the coast of Portugal. Neither of the vessels involved in the collision is an Indian vessel. The owners of both these vessels are also foreigners. The charterers and sub-managers are also foreign companies. Only one out of several managers/sub-managers of Ya Mawlaya is an Indian company. And the only act of management in Bombay is said to be the recruitment of the crew. For reasons already stated, this factor alone will not confer juris­diction. (Para 36)

       The entire course of conduct appears to be a deliberate attempt on the part of the plaintiffs to bring the limitation action in Bombay with a view to obtain anti-suit injunctions against all the claimants who have filed proceedings against the owners and Ya Mawlaya in the courts of the United States prior to the filing of the admiralty suit here. The Bombay High Court, therefore, ought not to have entertained Admiralty Suit No. 26 of 1995 brought by SNP and others. (Para 38)

       In the present case, the Bombay High Court is not the domiciliary court of Kara Mara or its vessel. Nor is any claim for liability which can be limited, filed against Kara Mara in the Bombay High Court. None of the defend­ants to the suit is within the jurisdiction of the Bombay High Court. The fortuitous presence of the ship in the Bombay harbour will not entitle the owner to file a limitation action in the Bombay High Court in the absence of any claims being made or apprehended against him or the vessel in that court. (Para 40)

       Therefore, bringing the ship to the Bombay port, in order to confer jurisdiction on the Bombay High Court, has the character of forum shopping, rather than anything else. (Para 41)

       The presence of a foreign defendant who appears under protest to contest jurisdiction, cannot be considered as conferring jurisdiction on the court to take action. Unless a foreign defendant either resides within jurisdiction or voluntarily appears or has contracted to submit to the jurisdiction of the court, it is not possible to hold that the court will have jurisdiction against a foreign defendant. (Para 42)

       (ii) Contempt proceedings in Admiralty suit-Order passed by Bombay High Court without jurisdiction-Whether must be obeyed?

       Held : C.A.Nos. 8535 and 8536 of 1997 pertain to contempt proceedings taken against the appellant in the Bombay High Court. The respondents have strongly contended that an order passed by a High Court even though it may be without jurisdiction must be obeyed. If such an order is diso­beyed it amounts to contempt of court and proceedings can be taken in that connection against the contemnor. The respondents cite in sup­port, the decision of this Court in Tayabbhai M. Bagasarwalla & Anr. v. Hind Rubber Ind. Pvt. Ltd. & Ors. (1997) 3 SCC 443. There is no doubt that the conduct of the appellant in the various proceedings which have taken place before the Bombay High Court leaves much to be desired. Had the appellant initially filed appearance under protest to contest juris­diction, all these problems would not have arisen. The Bombay High Court itself, however, in its order dated 20/21-8-1997, after severely commenting on the conduct of the appellant, has allowed the appellant to defend the proceedings on condition that the appellant would, in future, obey the orders of the Bombay High Court. We, therefore, do not find it necessary to examine the questionable conduct of the appellant in the proceedings before the Bombay High Court. In view of our finding that the High Court has no jurisdiction to entertain the two admiralty suits, the future conduct of the appellant in these proceedings now becomes irrelevant. (Para 44)