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IN THE HIGH COURT OF BOMBAY
D.G. Deshpande, J.
St. George Shipping Co. Ltd. ..... Plaintiffs.
Versus
m.v. "Irene P" a foreign flag vessel others..... Defendants.
Notice of Motion No. 517 of 1999 in Admiralty Suit No. 79 of 1998, decided on 31-3-1999.
Advocates appeared :
Ms. F. Sethna with Ms. F. Bharucha i/b Dunmorr Sett, for the plaintiffs.
P.S. Pratap, for the defendant Nos. 1 and 4.
Section 26-Bombay High Court Original Side Rules, Rule 941Suit under admiralty jurisdiction Application for arrest of vessel under Rule 941-Applicant must give requisite undertaking-Prohibition under Section 26 will be attracted in such case.-Plaintiff having applied for arrest of the vessel it was the plaintiff who was required to give undertaking as required by Rule 941 of the Bombay High Court Original Side Rules. The wording of Section 26 of the Foreign Exchange Regulation Act, 1973 will not attract a party who files a suit under admiralty jurisdiction of the High Court and who applies under Rule 941 of the High Court Original Side Rules for arrest of the vessel, because what is prohibited by Section 26 is that except with the general or special permission of the Central Government or the Reserve Bank, no person resident in India shall give a guarantee in respect of any debt or other obligation or liability of a person resident in India, and due or owing to a person resident outside India, Rule 941 accepts the undertaking given by the constituted attorney. The undertaking has to be given by the party applying for arrest.
Section 26-See High Court Original Side Rules, 1980, Rule 941.
Rule 941-Foreign Exchange Regulation Act, 1973, Section 26-Admiralty suit-Application for arrest of vessel-Requirement of undertaking to be given by plaintiff-Contention of plaintiff that he could not give undertaking because of Section 26 of FERA Act-Held, contention not acceptable as plaintiff applying for arrest of vessel is under obligation to give undertaking.-It was contended by defendants that the undertaking that was required under the rules of the original side High Court was to be given by the party applying for arrest of the vessel and that the objection raised by defendant has no force. Court finds considerable force in this argument because 2nd part of Rule 941 lays down as A party applying under this rule shall give an undertaking in writing or through his Advocate, to pay such sum by way of damages as the Court may award as compensation.
It will, therefore, be clear that it was the plaintiff in the present suit who was applying and who has applied for arrest of the vessel and as such it was the plaintiff who was required to give undertaking. What is prohibited by Section 26 of the Foreign Exchange Regulation Act, 1973, is as under:
Except with the general or special permission of the Central Government or the Reserve Bank no person resident in India shall give a guarantee in respect of any debt or other obligation or liability. (i) of a person resident in India and due or owing to a person resident outside India or (ii) of a person resident outside India.
The wordings of the Section 26 will not attract a party who files a suit under admiralty jurisdiction of this Court and the who applies under Rule 941 of the High Court Original Side Rules for arrest of the vessel, because what is prohibited by Section 26 is that a person resident in India and due or owing to a person or resident out of India. The plaintiff is a foreign company not resident in India nor it comes under clause (ii) of a person resident outside India, because Rule 941 does not accept the undertaking to be given by the constituted attorney. The undertaking has to be given by the party applying for arrest and the party in the suit is the plaintiff. Therefore, the objection of defendant that plaintiff could not give undertaking because of Section 26 of the Foreign Exchange Regulation Act, 1973 has no legal basis and the same cannot be accepted.
2.I heard Mr. Pratap for the defendant Nos. 1 and 4 and Ms. F. Sethna for the plaintiffs at length in support of the notice of motion and in opposition thereto respectively.
3.It was contended by Mr. Pratap that the notice of motion was liable to be allowed and the order of arrest of ship was liable to be vacated for the following reasons:
For suppression of material facts by the plaintiffs, for seeking Judge's order without incorporating therein the condition regarding giving of undertaking to give security as is required by Rule 941 of the Original Side Rules of the High Court, for not filing affidavit in support of the Judge's order, for filing a fresh suit in this Court i.e. the present suit, even though Bhavnagar Court had returned the plaint of the plaintiffs for presentation to proper Court and not presenting the same plaint before this Court, for not joining the defendant No. 4 as a defendant in the suit in the beginning when the plaintiffs knew during the pendency of their suit in Bhavnagar Court (the plaint of which was returned subsequently by the said Court), about the interest of the defendant No. 4 in the defendant No. 1 ship. It was also contended by him that the suit of the plaintiffs was not maintainable because of cause of action, estoppel and issue estoppel and lastly because the plaintiffs did not submit to the jurisdiction of this Court but filed present suit only for the purpose of obtaining security from the defendants which was not permissible under the law.
4.On the other hand the notice of motion was strongly opposed by Ms. Sethna on various grounds. She contended that there was no suppression of any kind by the plaintiffs in the plaint, that the undertaking under Rule 941 of the Original Side Rules of the High Court could not have been given by the plaintiff because of the bar under section 26 of the Foreign Exchange Regulation Act, that filing of affidavit along with the Judge's order was not necessary since the plaintiffs had taken out notice of motion for the similar reliefs and affidavit in support was filed along with the said notice of motion. Ms. Sethna further contended that the suit which was filed in Bhavnagar Court was before the Civil Judge (Senior Division) and even though there was an order of Bhavnagar Court for presentation of the plaint to the proper Court, the same plaint could not have been filed before this Court without making necessary amendments and changes, this Court being the High Court exercising admiralty jurisdiction and therefore there was no legal defect or lacuna in filing the present suit, that non-joinder of defendant No. 4 initially in the suit was not detrimental to the interest of the defendant No. 4 because defendant No. 4 was already knowing about the suit being filed in Bhavnagar. She also contended that the defendant Nos. 1 and 4 were not entitled to get any relief in the notice of motion because of suppression of certain facts, namely, filing of the suit by defendant Nos. 1 and 4 against other defendants in Bhavnagar and lastly it was contended by her that the defendants could not become and had not become the owner of the defendant No. 1 ship and all the documents of the defendants in that regard were false and fabricated.
5.Apart from these main submissions, the allegations and counter allegations were made by both the advocates about non-supply of documents relied upon, and not giving inspection of the documents but I am not going to consider these objections because they have no bearings on the issue involved i.e. the prayers made in the notice of motion.
6.So far as the allegations of suppression of facts by the plaintiffs
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