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High Court of Judicature at Bombay
K.R. SHRIRAM, J.
Navbharat International Ltd.
Versus
Cargo Onboard M.V. AMITEES (at Kandla) & Others
Notice of Motion No. 2853 of 2010 With Notice of Motion No. 3649 of 2010 In Admiralty Suit No. 19 of 2010
Decided on: 19-03-2014
ADMIRALTY JURISDICTION - ARREST OF VESSEL - UNDERTAKING - DAMAGES - RULE 941 OF BOMBAY HIGH COURT (ORIGINAL SIDE) RULES - MALICE - WRONGFUL ARREST - QUANTUM OF DAMAGES - FACTORS TO BE CONSIDERED - FALSE STATEMENT IN AFFIDAVIT - ABUSE OF PROCESS OF COURT - SUMMARY AWARD OF DAMAGES.
Fact of the Case:
Plaintiff obtained an order of arrest of Defendant No. 1 cargo on board m.v. Amitees at Kandla. Defendant No. 3 took out a Notice of Motion praying that the Court should forthwith vacate the order of arrest of Defendant No. 1 passed on 12th January, 2010 and discharge the warrant of arrest issued in furtherance thereto, by which the Defendant No. 1 was arrested. The Defendant No. 3 also prayed to allow them to reclaim its cargo on board the vessel m.v. Amitees at the earliest. The learned single Judge passed an ad-interim order and while posting the notice of motion for hearing and final disposal directed the Defendant No. 3 to furnish security to the extent of US$ 7.52 million as a pre-condition for vacating the order of arrest of Defendant No. 1. Against this order which was passed on 4th February 2010, the Defendant No. 3 filed an appeal. The appeal was disposed of by a judgment pronounced on 23rd March 2010 vacating the said order of arrest by holding that the Defendant No. 3 was entitled to the release of Defendant no.1 unconditionally and also that the Plaintiff's claim in the Suit was not within the purview of the admiralty jurisdiction of this Court. The Division Bench also held that the Plaintiff's Suit did not involve a maritime claim and they could not have instituted the Suit in the admiralty jurisdiction of this Court. The court did not go into the other issues of title, passing of property etc. m.v. Amitees ultimately sailed from the Port of Kandla on 24th March, 2010 with the entire cargo.
Finding of the Court:
The undertaking given by the Plaintiff is in accordance with the rules which are a ‘special law’. Rule 941 does not provide for any pre-condition. The rule is very clear that if any party sustaining prejudice pursuant to the order passed by this Court, the party obtaining the order shall pay such sum by way of damages as the Court may award as compensation. In effect it is a blank cheque which the Plaintiff gives to the Court and what is required is only to write the date, the name of the payee and the amount. It is an unconditional, unqualified, irrevocable undertaking. The judgments relied upon by the Plaintiff to submit that there was no malice and the Court can award damages only if there was malice or there was malafides in obtaining the order etc. are totally incorrect. None of the judgments deal with Rule 941 of the Bombay High Court (Original Side) Rules. None of the judgments also deal with a situation where an undertaking like the one given in this Suit has been given. Therefore, if the order has been obtained either without jurisdiction or if the order is held to be wrongful and the order of arrest is vacated, the liability under the undertaking is triggered. The next step, once liability is established, is to determine the quantum of damages to be awarded as compensation.
Issues: 1. Whether the undertaking given by the Plaintiff is in accordance with the rules which are a ‘special law’? 2. Whether Rule 941 provides for any pre-condition? 3. Whether the judgments relied upon by the Plaintiff to submit that there was no malice and the Court can award damages only if there was malice or there was malafides in obtaining the order etc. are totally incorrect? 4. Whether the undertaking given by the Plaintiff is in accordance with the rules which are a ‘special law’?
Ratio Decidendi: 1. The undertaking given by the Plaintiff is in accordance with the rules which are a ‘special law’. 2. Rule 941 does not provide for any pre-condition. 3. The judgments relied upon by the Plaintiff to submit that there was no malice and the Court can award damages only if there was malice or there was malafides in obtaining the order etc. are totally incorrect. 4. The undertaking given by the Plaintiff is in accordance with the rules which are a ‘special law’.
Final Decision: Both the notices of motions are accordingly rejected with no order as to costs.
1. Notice of Motion No. 2853 of 2010 is taken out on behalf of Defendant No. 2 and Notice of Motion No. 3649 of 2010 is taken out on behalf of Defendant No. 3. Both the parties have taken out their respective Notices of Motion as parties to whom prejudice was caused by the ex-parte order dated 12th January, 2010 obtained by the Plaintiff for arrest of Defendant No. 1 viz. 13,000/- MT of rice on board m.v. Amitees, when she was at Kandla.
2. I have already held by a judgment pronounced on 20-02-2014 that the two notices of motion do not fall under the expression 'Suit' occurring in sub-section 1 of Section 22 of Sick Industrial Companies Act, 1985 (SICA).
3. To decide on the merits of the two notices of motion some facts have to be recalled. On 12th January, 2010, the Plaintiff Gauri Gaekwad filed the above Admiralty Suit No. 19 of 2010 against the Defendant No. 1 and also against the 2nd Defendant. On the same date, based on the averments made by the Plaintiff in the plaint, the Plaintiff obtained from this Court an order of arrest against Defendant No. 1. Consequently the cargo on board m.v. Amitees, i.e., Defendant No. 1, was arrested by the Sheriff of Mumbai. At the time of applying for the arrest of Defendant No. 1 cargo, the Plaintiff gave an undertaking in writing to the Hon'ble Court to pay such sum by way of damages as this Hon'ble Court may award as compensation in the event of a party affected sustaining prejudice by such ex-parte order of arrest. This undertaking by the Plaintiff was given as required under Rule 941 of the Bombay High Court (O.S.) Rules, part III - admiralty jurisdiction. The Rule expressly provides that a party applying for arrest of the property in a Suit in rem 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 in the event of a party affected sustaining prejudice by such order. Rule 941 is as under:
“941. Application to arrest property in a Suit in rem.-
If the Suit is in rem an application for the arrest of the property proceeded against shall be made to the Judge in Chambers and shall be supported by affidavit. The affidavit shall state the nature of the claim and that it has not been satisfied. It shall also state the nature of the property to be arrested and if the property is a ship, the name and nationality of the ship. There shall be annexed to the affidavit a certificate of the Prothonotary and Senior Master certifying that search has been made in the Caveat Warrant Book and that no caveat has been filed against the issue of warrant of the arrest of the said property.
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 in the event of a party affected sustaining prejudice by such order.” (emphasis supplied)
4. The plaintiff has given such an undertaking. Clause (3) of the undertaking reads as under:-
“3. The Plaintiffs hereby give an undertaking to this Hon'ble Court to pay such sums by way of damages as this Hon'ble Court may award as compensation in the event of the Defendants and/or any affected party sustaining prejudice pursuant to the order passed by this Hon'ble Court directing the arrest of the Defendant cargo.”
5. The Defendant No. 3 took out a Notice of Motion No. 271 of 2010 praying that this Court should forthwith vacate the order of arrest of Defendant No. 1 passed on 12th January, 2010 and discharge the warrant of arrest issued in furtherance thereto, by which the Defendant No. 1 was arrested. The Defendant No. 3 also prayed to allow them to reclaim its cargo on board the vessel m.v. Amitees at the earliest. It was the case of Defendant No. 3 that the Plaintiff obtained the order of arrest dated 12th January 2010 by suppressing relevant and material facts from the Court. It was the case of Defendant No. 3 that the Plaint proceeds on the basis that Defendant No. 1 belongs
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