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High Court Of Calcutta
S. B. SINHA, MAHEMMAD HABEEB SHAMS ANSARI
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V."Dong DO" - Appellant
Versus
RAMESH KUMAR - Respondent
G. A. 3324 Of 1999
Decided On : 09/30/1999
ADMIRALTY - ARREST OF SHIP - SISTER SHIP - OWNERSHIP - CORPORATE VEIL - MARITIME CLAIM - EVIDENCE - JURISDICTION - FOREIGN STATE - SECTION 86 OF THE CODE OF CIVIL PROCEDURE, 1908.
Fact of the Case:
A ship known as M. V. Kim Dong was directed to be arrested in an Admiralty Suit filed by the plaintiff-respondent. The vessel was carrying rice from the port of Paradeep in India to the Port of Chitagong. The Ministry of Food of the Government of Bangladesh did not take delivery of the said consignment of the rice. The vessel allegedly illegally left the Port of Chitagong for Hanoi on 10th July 1999 without discharging the cargo although all the documents in relation thereto had been seized by the appropriate authorities of the Government of Bangladesh. The Plaintiff in this suit had certain claim against the owners of the ship M. V. King Dong.
Finding of the Court:
1. The corporate veil of a company can be lifted only in exceptional circumstances, such as when the company is used as a sham or a facade to perpetrate fraud or illegality. 2. In the present case, the two ships in question, M. V. Kim Dong and M. V. Dong Do, belonged to two different concerns and were registered as being owned by different Companies. 3. The plaintiff-respondent failed to establish a prima facie case that the two ships were sister ships or that the owners of the two ships were the same. 4. The arrest of the ship M. V. Dong Do was, therefore, not justified.
Issues: 1. Whether the corporate veil of a company can be lifted in order to arrest a sister ship of a ship against which a maritime claim has been made. 2. Whether the two ships in question, M. V. Kim Dong and M. V. Dong Do, were sister ships. 3. Whether the plaintiff-respondent had established a prima facie case that the two ships were sister ships or that the owners of the two ships were the same.
Ratio Decidendi: 1. The corporate veil of a company can be lifted only in exceptional circumstances, such as when the company is used as a sham or a facade to perpetrate fraud or illegality. 2. In the present case, the two ships in question, M. V. Kim Dong and M. V. Dong Do, belonged to two different concerns and were registered as being owned by different Companies. 3. The plaintiff-respondent failed to establish a prima facie case that the two ships were sister ships or that the owners of the two ships were the same. 4. The arrest of the ship M. V. Dong Do was, therefore, not justified.
Final Decision: The appeal was allowed and the judgment and order under appeal were set aside. There was no order as to costs.
( 1 ) THIS appeal is directed against an order dated 29th July, 1999 passed in Admiralty Suit No. 16/99. In the aforementioned Suit filed by the plaintiff-respondent, the ship known as M. V. Kim Dong was directed to be in arrested.
( 2 ) THE fact of the matter is as follows: -TWO ships known as M. V. Kim Dong and M. V. Dong. Do allegedly belonged to the Socialist Republic of Vietnamese Government. The vessel M. V. Kim Dong was carrying rice from the port of Paradeep in India to the Port of Chitagong. For reasons, which are not relevant for the purpose of the present case, the Ministry of Food of the Government of Bangladesh did not take delivery of the said consignment of the rice. The said vessel allegedly illegally left the Port of Chitagong for Hanoi on 10th July 1999 without discharging the cargo although all the documents in relation thereto had been seized by the appropriate authorities of the Government of Bangladesh. The Plaintiff in this suit had certain claim against the owners of the ship M. V. King Dong.
( 3 ) THE vessel M. V. Dong Do had been arrested, by this court, on the following allegations: -"the Vessel" M. V. Dong Do" and the Vessel "m. V. Kim Dong" at all material times were and still are both owned in all respect by the Government of Socialist Republic of Vietnam. The plaintiff further states that at time when the cause of action in the instant suit arose both the vessels were in use or intended for use for commercial purpose. The Vessel Dong Do is a sister vessel of the Vessel M. V. Kim Dong. The said two vessel have common owners and both the vessel are owned and controlled in all respects by the Socialist Republic of Vietnam. "
( 4 ) AN application for vacating the stay was filed which was dismissed by reason of the impugned order, inter alia, on the ground that both the ships sisters' ships owned by the Socialist Republic of Vietnam -. The learned trial Judge in support of his aforementioned conclusion relied upon Martime Directory, from a perusal whereof it appears that there exists a heading "vietnam, Government of Socialist Republic" wherein the names of large number of Shipping Companies appeared including some allegedly belonging to the companies incorporated under the Indian Companies Act. The Vessel Kim Dong stated to have belonging to Kamchatka Shipping Co. in Lloyds Martime Directory, 1997 whereas admittedly the vessel Dong Do has been shown as belonging that of Eastern Dragon Shipping Co. Ltd.
( 5 ) MR. Gautam Chakraborty, the learned senior counsel appearing on behalf of the appellant, inter alia, submitted that in the instant case the Brussels Conventions which would be applicable, contained the following Articles: -"art. 3 (i) Subject to the provisions of paragraph 4 of this Article and of Article 10, the claimant may arrest either the particular ship in respect of which the Maritime claim arose and/or any other ship which is owned by the person who was at the time when the Maritime Claim arose, the owner of the particular ship, even though the ship arrested be ready to sail: but no ship, other than the particular ship in respect of which the claim arose may be arrested in respect of any of the Maritime claims enumerated in Article 1 (i), (o), (n), (p) or (q ). This was probably the first time an International Convention provided that arrest of a sister ship and agreed between the parties to the convention. Article 3 (4) is also import, which reads as follows: -'3 (4) when in the case of a Charter by demise of a ship the Charter and not the Registered owner is liable in respect of a Maritime Claim relating to that ship, the claimant may arrest such ship or any other ship in the Ownership in the Chartered by demise subject to the provisions of this convention, but no other ship in the ownership of the registered owner shall be liable to arrest in respect of such Maritime claims. "
( 6 ) MR. Chakraborty submits that Certificate of Registration granted in respect of the
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