1983 Supreme(Bom) 5

Bombay High Court
LENTIN
Dimitrios Paizis - Appellant
Versus
Motor Vessel Nicos - Respondent
Decided On : 01/12/1983

The Bombay High Court has jurisdiction to entertain and try a suit for recovery of the first and second instalments of $ 35,000 and $ 45,000 aggregating to Rs. 7,76,624.99 P. inclusive of interest on the first instalment, and for arrest and sale of the Vessel and other reliefs, filed by the plaintiffs for enforcement of a mortgage of a foreign vessel, registered abroad, where the parties have consented to the jurisdiction of the Court.

Headnote:

ADMIRALTY JURISDICTION - MORTGAGE OF FOREIGN VESSEL - JURISDICTION OF COURT - MERCHANT SHIPPING ACT, 1958 - COLONIAL COURTS OF ADMIRALTY ACT, 1890 - ADMIRALTY COURTS ACT, 1840 - ADMIRALTY COURTS ACT, 1861 - JURISDICTION OF BOMBAY HIGH COURT - CONSENT OF PARTIES - INTERVENTION OF FOREIGN STATE REPRESENTATIVE.

Fact of the Case:

Plaintiffs, Greek Nationals, sold their shares in the 2nd defendant-Company to the 3rd defendant for a total consideration of U.S. $ 4,10,000. The 3rd defendant paid plaintiffs U.S. $ 2,85,000 and requested 6 months' time to pay the balance amount of $ 1,25,000. By a Transfer of Shares Agreement dated 30th April, 1982, the 3rd defendant having received the said 100 shares, agreed to pay the balance amount of $ 1.25,000 by 3 instalments of $ 35,000, $ 45,000 and $ 45,000 on or before 30th June, 1982, 30th Aug, 1982 and 30th Oct. 1982 respectively with interest at 20% per annum. On 30th April 1982 the 2nd defendant-Company as owner of the Vessel executed in Greece in favour of plaintiffs as mortgagees, a first Preferred Mortgage of the Vessel and her appurtenances charging the Vessel and appurtenances as security for the due repayment of $ 1,25,000 and interest by the 3 instalments aforestated. In order to further secure the said debt of $ 1,25,000 and interest, the 2nd defendant-Company also executed in favour of plaintiffs other Security Documents including a Guarantee and assigned the freight, earnings and insurance of the Vessel to plaintiffs. Clause 16B of the Mortgage Deed gave liberty to the mortgagees, namely plaintiffs, to take any proceedings in the Courts of any country for the protection and enforcement of the security or for the enforcement of the provisions of the Security Documents or to recover the outstanding indebtedness and stipulated that - "for the enforcement of the security created by this Mortgage and/or the Guarantee, the Owner hereby submits to the jurisdiction of the Courts of any country of the choice of the mortgagees." The mortgage was registered by the 2nd defendant-Company in favour of plaintiffs at Panama. A continuing guarantee dated 30th April 1982 in respect of the liability of $ 1,25,000 was also executed by the 2nd defendant-Company in favour of plaintiffs. In June/July 1982 the Vessel arrived at Madras where she unloaded cargo and thereafter loaded cargo for the Persian Gulf. However, the freight earnings of the Vessel at Madras were received and utilised by the 2nd defendant's agent, namely the 6th defendant despite the latter's knowledge that the freight earnings amounting to $ 70,000 (Rs. 6,65,000/-) were to be held on behalf of plaintiffs as mortgagees and creditors, as the 2nd defendant-Company had failed to pay the first instalment of $ 35,000 on or before 30th June, 1982. After loading cargo at Madras, the Vessel arrived at Bombay on 4th Aug. 1982. Despite the request of plaintiffs to the 6th defendant to pay them the freight collected at Madras, the 6th defendant failed to do so or to give an account thereof. The second instalment of $ 45,000 which became due on 30th Aug, 1982 was also not paid. According to the plaintiffs, in these circumstances they filed the present suit against defendants 1 to 6, (a) for recovery of the first and second instalments of $ 35,000 and $ 45,000 aggregating to Rs. 7,76,624.99 P. inclusive of interest on the first instalment, (b) for arrest and sale of the Vessel and other reliefs. On 17th Sept, 1982 an order was passed for the arrest of the Vessel on the failure of defendants 1 to 6 to deposit in Court a sum of Rs. 7,94,490.99 P. as security towards satisfaction of the plaintiffs' claim. On 23rd Nov. 1982 an order was passed for maintenance of the Vessel by plaintiffs depositing with the Sheriff a sum of Rupees 90,000/- and making provision for insurance Against that order the plaintiffs preferred an appeal and obtained ad interim stay pending admission. During the pendency of the suit the 7th defendant claiming to be the owner of the Vessel, took out a Chamber summons on 17th Sept, 1982, for being added as a party to the suit. According to the 7th defendant, pursuant to an agreement dated 7th Nov.1981 entered into at Bombay between himself and plaintiffs, he that is the 7th defendant became the owner of the Vessel for the consideration of $ 2,75,000 plus certain additional amounts and that on his paying plaintiffs $ 50,000 and making certain further payments thereafter amounting to $ 3,13,302, in all aggregating $3,63,000, he received possession of the Vessel from plaintiffs. On the 7th defendant's Chamber Summons an order was passed on 5th Oct. 1982 directing the plaintiffs to implead the 7th defendant in the suit. That is how the 7th defendant comes into the picture. On 21st Oct, 1982 defendants 6 and 7 took out a Notice of Motion for release of the Vessel and other reliefs. In the affidavit-in-support of that motion, inter alia a Plea of want of jurisdiction was raised. On 28th Oct, 1982 an order was passed for trial of the preliminary issue of jurisdiction. Hence for that limited purpose, the matter comes up before me.

Finding of the Court:

The Court held that it has jurisdiction to entertain and try the suit filed by the plaintiffs for recovery of the first and second instalments of $ 35,000 and $ 45,000 aggregating to Rs. 7,76,624.99 P. inclusive of interest on the first instalment, and for arrest and sale of the Vessel and other reliefs.

Issues: 1. Whether this Court has no jurisdiction to try the plaintiffs' suit on the ground that the plaintiffs by their suit seek to enforce claim based on a disputed mortgage executed according to the plaintiffs in the State of Greece and registered according to the plaintiffs in the State of Panama? 2. Whether this Court has the jurisdiction to entertain and try the suit?

Ratio Decidendi: 1. The Court's jurisdiction is not circumscribed by the Merchant Shipping Act, 1958, which does not enable the Court to try a suit such as the present. 2. Consent by the 2nd defendant to the jurisdiction of the Court of any country of the plaintiffs' choice would, under Indian Law vest jurisdiction in this Court, as under Indian law parties could not by consent or acquiescence or estoppel confer jurisdiction on a Court which it does not otherwise have. 3. The effect of the 1890 Act is to make the entire English Maritime Law, which includes reiterated decisions and principles, a part of the jurisdiction of this Court in exercise of its Admiralty jurisdiction. 4. The Acts of 1890 and 1891 gives legislative sanction to the accepted principle of English Maritime Law, namely, that intervention of the representative of a foreign State devolving the jurisdiction of his own country, on the Court or consent of parties, would entitle the Admiralty Court to try cases between foreigners relating to the mortgage of a foreign vessel.

Final Decision: The preliminary issue of jurisdiction is answered against Mr. Meghani's clients.