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2004(1) Supreme 365
SUPREME COURT OF INDIA
(From Bombay High Court)
V.N. Khare, CJI. & S.B. Sinha, J.
Liverpool & London S.P. & I. Asson. Ltd. -Appellant
versus
M.V. Sea Success I and Anr. -Respondents
Civil Appeal No. 5665 of 2002
With
Civil Appeal No. 5666 of 2002
Decided on 20-11-2003
Counsel for the Parties :
For the Appearing Parties : Prashant S. Pratap, Siddhartha Dave, Ms. Vibha Datta Makhija, Zarir P. Bharucha, Ms. Reetu Sharma, R.N. Karanjawala, Ms. Manik Karanjawala, Ms. Avantika Keswani, R.K. Agarwal, Sanjay Dua, Arun K. Sinha, Rakesh Singh, Advocates.
Held : Having regard to the changing scenario and keeping in tune with the changes in both domestic and international law as also the statutes adopted by several countries, a stand, however, bold, may have to be taken that unpaid insurance premium of P&I Club would come within the purview of the expression "Necessaries supplied to any ship". Other types of insurance, keeping in view the existing statutes may not amount to a "necessary". In any event, such a question, we are not called upon to answer at present. The discussions made hereinbefore under different sub-titles of this judgment separately and distinctly may not lead us to the said conclusion but the cumulative effect of the findings thereunder makes the conclusion inevitable. The question has not only been considered from the angle of history of the judicial decisions rendered by different Courts having great persuasive value but also from the angle that with the change in time interpretative changes are required to be made. We, therefore, in agreement with the judgment of the Bombay High Court, hold that unpaid insurance premium being a maritime claim would be enforceable in India. (Para 110)
(ii) Letters Patent Appeal-Clause 15-Civil Procedure Code, 1908-Order 7, Rule 11-Right of appeal-Refusing to exercise discretion to reject a plaint-Whether it would be a judgment within the meaning of Clause 15 of the Letters Patent.
Held : In our opinion the order refusing to reject the plaint falls in the category of a preliminary judgment and is covered by the second category carved out by this Court. It is trite that a party should not be unnecessarily harassed in a suit. An order refusing to reject a plaint will finally determine his right in terms of Order 7 Rule 11 of the Code of Civil Procedure. The idea underlying Order 7 Rule 11A is that when no cause of action is disclosed, the courts will not unnecessarily protract the hearing of a suit. Having regard to the changes in the legislative policy as adumbrated by the amendments carried out in the Code of Civil Procedure, the Courts would interpret the provisions in such a manner so as to save expenses, achieve expedition, avoid the court s resources being used up on cases which will serve no useful purpose. A litigation which in the opinion of the court is doomed to fail would not further be allowed to be used as a device to harass a litigant. (Paras 134 and 136)
(iii) Civil Procedure Code, 1908-Order 7 Rules 11 and 14-Cause of action-Production of document on which plaintiff sues or relies-In ascertaining whether plaint shows a cause of action, Court is not required to make an elaborate enquiry into doubtful or complicated questions of law or fact.
Held : A cause of action is a bundle of facts which are required to be pleaded and proved for the purpose of obtaining relief claimed in the suit. For the aforementioned purpose, the material facts are required to be stated but not the evidence except in certain cases where the pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence. (Para 144)
It may be true that Order 7 Rule 11(a) although authorises the court to reject a plaint on failure on the part of the plaintiff to disclose a cause of action but the same would not mean that the averments made therein or a document upon which reliance has been placed although discloses a cause of action, the plaint would be rejected on the ground that such averments are not sufficient to prove the facts stated therein for the purpose of obtaining reliefs claimed in the suit. (Para 150)
Furthermore a fact which is within the special knowledge of the defendant need not be pleaded in the plaint. (Para 152)
In ascertaining whether the plaint shows a cause of action, the court is not required to make an elaborate enquiry into doubtful or complicated questions of law or fact. By the statute the jurisdiction of the court is restricted to ascertaining whether on the allegations a cause of action is shown. (Para 155)
So long as the claim discloses some cause of action or raises some questions fit to be decided by a Judge, the mere fact that the case is weak and not likely to succeed is no ground for striking it out. The purported failure of the pleadings to disclose a cause of action is distinct from the absence of full particulars. (Para 156)
If a legal question is raised by the defendant in the written statement, it does not mean that the same has to be decided only by way of an application under Order 7 Rule 11 of the Code of Civil Procedure which may amount to pre-judging the matter. (Para 159)
The legal document discusses a dispute involving unpaid insurance premiums for ships and whether such claims can be enforced through maritime law in India. It clarifies that unpaid insurance premiums, especially those related to protection and indemnity (P&I) cover, are considered maritime claims because they are essential for the operation and security of ships. This means that such claims can be enforced in Indian courts under maritime law, as they are recognized as necessary for the ship's functioning (!) (!) .
The document also explains that the term "necessaries," which refers to supplies or services that are essential for a ship, has evolved over time. Modern laws and international agreements now include insurance as a necessary supply for ships, especially when insurance is legally required for ports and international trade (!) (!) (!) .
Furthermore, the document discusses the legal procedures related to the rejection of a claim or plaint in court. It states that an order refusing to dismiss a claim (or plaint) is a preliminary decision that affects the rights of the parties and can be appealed. Such an order is considered a judgment because it determines whether the case can proceed or not (!) (!) .
In summary, the key points are: - Unpaid insurance premiums, particularly P&I insurance, are now recognized as maritime claims that can be enforced in India. - Insurance is regarded as a necessary service for ships in modern maritime law. - Orders related to the rejection or acceptance of claims are considered judgments and can be appealed. - The law has adapted to changing international standards and the evolving needs of maritime trade, broadening the scope of what constitutes a maritime claim.
This understanding helps determine whether a claim for unpaid insurance premiums can be legally enforced through maritime courts in India.
JUDGMENT
S.B. Sinha, J:
THE BACKGROUND FACT:
1. The appellant (Club) herein is an association incorporated under the laws of the United Kingdom. It is a mutual association of ship owners. It offers insurance cover in respect of the vessels entered with it for diverse third party risks associated with the operation and trading of vessels. According to the appellant, no vessel operates without a Protection & Indemnity (P&I) cover and the same has been made compulsory to allow a ship to enter major ports in India.
2. "Sea Ranger' and 'Sea Glory' are the sister vessels of the 1st respondent vessel and they are allegedly owned by the 2nd respondent. The first two vessels entered into a contract with the appellant's association for the years 1998-1999 and 1999-2000 but they have not paid the unpaid insurance premium due and payable by the 2nd respondent for various P&I risks for which they had been insured. These unpaid insurance calls being "necessaries" was enforceable within the "admiralty jurisdiction" of the Bombay High Court.
3. For the arrest of the 1st respondent vessel which came to Mumbai Port within the territorial waters of India, a suit was filed by the club inter alia for the prayers : "(a) for a decree against the respondents in the sum of US$1,18,194.89 together with interest at the rate of 12% per annum, which was the unpaid insurance premium amount due to the club and payable by the 2nd respondent; and (b) for arrest of the 1st respondent vessel to secure the claim."
4. On an application for arrest of the 1st respondent vessel having been made, the 2nd respondent appeared and undertook to furnish security in respect of the appellant's claim and further gave an undertaking that until the security is furnished the said vessel will not leave the Port of Mumbai. However, thereafter S.S. Shipping Corporation Inc., Liberia claiming to be the registered owner of the 1st respondent furnished a bank-guarantee in relation to the appellant's claim in discharge of the undertaking of security given by the second respondent. The 1st respondent thereafter took out a Notice of Motion for rejection of the plaint purported to be under Order 7 Rule 11(a) of the Civil Procedure Code inter alia on the ground that the averments contained therein do not disclose a cause of action as the claim of unpaid insurance premium was not a "necessary" within the meaning of Section 5 of the Admiralty Courts Act, 1861. A learned Single Judge of the High Court after hearing the Notice of Motion by an order dated 1-2/2/2001 referred the said question to a Division Bench as it could not agree with a decision rendered by another learned Single Judge. However, on the other two grounds it discharged the Notice of Motion holding that the averments made in paragraphs 1 and 14 of the plaint inter alia to the effect that all the three ships are beneficially owned by the 2nd respondent disclose a cause of action.
5. An appeal thereagainst was preferred by the respondent herein. The Division Bench took up the appeal preferred by the respondent herein as also the reference made by the learned Single Judge and passed a common judgment.
ISSUES :
6. The questions which arose for consideration before the High Court were:
(i) whether arrears of insurance premium due and payable to the appellant by the 2nd respondent would fall within the scope and ambit of Section 5 of the Admiralty Courts Act, 1861;
(ii) whether refusing to reject the plaint under Order 7 Rule 11(a) upon holding that the plaint discloses a cause of action is a 'judgment' within the meaning of Clause 15 of the Letters Patent of the Bombay High Court and was, thus, appealable; and
(iii) Whether the averments made in paragraphs 1 and 14 of the plaint disclose sufficient cause of action for maintaining a suit.
7. The Division Bench while answering the question No. 1 in favour of appellant, answered question Nos. 2 and 3 against it. Appeal No. 226 of 2001 has been filed by the 'club' whereas Civil Appeal No. 5666 of
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