IMPORTANT POINT
Seamen who have a right to wages, which right is enforceable against the ship can legitimately lay a claim to the payment of wages out of the proceeds of the ship which has been confiscated.

Headnote:Merchant Shipping Act, 1958—Sections 138, 139, 140, 141 and 144, 145—Customs Act, 1962—Sections 115 and 226—Confiscation of ship—Assertion of Maritime liens or seamen’s wages—Constitutional and statutory protection of such wages—A maritime lien such as seamen’s wages is a right to a part of property in the res and a privileged claim upon a ship—There can be no extinction of loss of such lien owing to the act of confiscation u/s 115 rw/s 126 of the Custom Act—A vessel registered in Panama with its crew members belonging to Ukraine was spotted by the Officers of Customs Department in the Indian territorial waters—It was noticed by the Department that the vessel was loaded with steel products—Interim order arresting the vessel was passed and a receiver was appointed for valuing the cargo and to take possession of it—Master of the ship committed suicide—Crew were kept under arrest—Appellant who was the Chief Officer filed an application claiming wages from out of the sale of the ship—Members of the ship in question from the day of the engagement till their deportation were lawfully in the employment of the ship—Whether all the seamen who were on board the vessel are entitled to their full wages and perks—(Yes)—Constitution of India—Article 21.
       Held : In our opinion, the appellant and other crew members are entitled to a fair and just treatment and the confiscation of the ship shall not be treated as a prized catch of an enemy Ship deserving condemnation without exception. The case on hand does not present features of clear and demonstrated complicity of the crew. The comity of nations is a reciprocal courtesy which one member of the family of nations owes to the others. In our opinion, the crew members are not responsible for the confiscation and sale of the ship and the cargo. It is settled law that action of the State has to be based on reasonableness and it cannot deprive the basic human rights afforded under the Constitution of India more so under Article 21.(Para 43)
       The Courts have recognized and upheld the welfare of the citizens and have always recognized the rights of those who are in the lowest strata of the society especially when it comes to workers and their wages. The seamen have suffered a lot without wages from May, 1999 till the time they were deported by the Consulate. They have suffered a lot of mental and physical agony in spite of that they have not been given their wages till date due to a narrow approach. State should always be fair and reasonable in setting the lawful claims. It is seen from the counter affidavit field by the Customs Department that the ship was sold for Rs. 2.36 Crores through tender sale and the Cargo was sold off by customs through auction and a sum of Rs. 18.75 Crores was realised. The seamen can claim their wages only from and out of the sale proceeds of the vessel.(Para 44)
       The Merchant Shipping Act, 1958 has laid down exhaustive provisions for seamen’s wages. The Act itself recognizes that recovery of wages shall not be subject to attachment. Section 445 of the Act provides that payment of wages of Seamen can be made by sale of ship. In the companies Act, under Section 529(a) an overriding effect has been given and it has been provided that in winding up proceedings the worker’s dues have priority over other claims. The Madras High Court failed to appreciate that India has travelled very far from 1950 and that the Courts have given way to a dynamic constructive approach in the aspect of social justice while referring to International Conventions etc. We, therefore, unhesitently hold that all the seamen who were on board the vessel Kobe Queen I also known as Gloria Kopp are entitled to their full wages and perks. We, therefore, direct the Commander Coast Guard Region (East), Fort St. George, Chennai - 600 009 and the other respondents including the Customs Department and the concerned Department of the Government of India to pay the wages forthwith to all the crew members who were on board in the vessel.(Paras 46 & 47)

JUDGMENT

Dr. AR. Lakshmanan, J.—The above two appeals were filed against the final judgment and order dated 10.01.2001 passed by the High Court of Judicature at Madras in O.S.A. Nos. 309 and 350 of 2000 whereby the High Court allowed both the appeals filed by respondent Nos. 1 and 2, namely, The Commander, Coast Guard Region (East), Chennai and Inter Cargo Insurance Company acting as underwriters and agents for T.W. Metals Limited, Chennai. The Owners of the vessel, Nominator Shipping Corporation Monroviya Liberia, Chairman, Madras Port Trust and Deputy Port Conservator, Pondicherry were also impleaded as proforma respondents in the above appeals. The appellants in this appeal are the crew men.

2. The short facts of the case are as follows:

The vessel named – Kobe Queen I also known as Gloira Kopp was registered in Panama with its crew members belonging to Ukraine was spotted by the Officers of the Customs Department in the Indian territorial waters. It was noticed by the Department that the vessel was loaded with steel products on 22.12.1999.

3. On 24.12.1999, interim order arresting the vessel was passed and a receiver was appointed for valuing the cargo and to take possession of it. On the same day, the master of the ship committed suicide. The crew were kept under arrest till 01.01.2000. Due to the suit filed by the under writers for T.W. Metals Ltd., the vessel was towed to Madras Port. On 14.01.2000, the learned Single Judge of the Madras High Court ordered for sale of ship. The appellant - O. Konavalov, who was the Chief Officer, filed an application No. 633/2000 claiming wages from out of the sale of the ship. The application was filed under Order XIV Rule 8 of the Original Side Rules read with Section 125 of the Merchant Shipping Act, 1958 praying to direct the receiver to pay wages to crew members out of the proceeds of the sale of the vessels. However, the Coast Guard moved the Division Bench of the High Court by way of OSA No. 42/2000 seeking the stay of the sale of the ship in view of the pending investigations. Respondent No. 2 moved the Division Bench for withdrawing their claim of arrest and sale of the vessel. The Superintendent of Customs (Prevention), Chennai passed an order under Section 110 of the Customs Act, placing the vessel and cargo under seizure. They were placed in the custody of respondent No.1. The above appeal was heard and allowed by the Division Bench of the High Court. The High Court noted the withdrawal of prayers by respondent No.2 and permitted respondent No.1 Coast guard to deal with the crew, vessel and the cargo. The Commissioner of Customs issued a show cause notice to the Chief Officer of the ship calling upon him to explain why the cargo cannot be confiscated and penalty should not be imposed on the persons under Section 112(a) of the Customs Act, 1962. The counsel for the crew sent a reply mentioning the non-involvement of the crew in dealing with any narcotics/drugs and prayed that the crew be paid their wages and the cargo be dealt with according to law.

4. The appellant moved three fresh applications, which are, Application Nos. 590/2000, 2449/2000 and 2450/2000. Application No. 2450/2000 was filed to pay the wages from the sale proceeds of the cargo or alternatively a direction for sale of the ship and pay the wages as a first charge. Respondent No. 1 filed a counter affidavit contesting the applications. The respondents contested the applications stating that the crew of the vessel has not filed any independent suit and an application for the same is not maintainable and since the vessel has violated the sovereignty of the Indian territorial waters and the provisions of the Customs Act, the vessel is liable to be confiscated and there is no question of making any first charge on the vessel.

5. The learned Single Judge of the High Court passed an order in the above applications directing the Coast Guard Authorities and the Customs Authorities to pay the wages lawfully due to the crew

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2006 Supreme(SC) 257

IMPORTANT POINTSeamen who have a right to wages, which right is enforceable against the ship can legitimately lay a claim to the payment of wages out of the proceeds of the ship which has been confiscated.

Cases Referred (5)

IMPORTANT POINT
Seamen who have a right to wages, which right is enforceable against the ship can legitimately lay a claim to the payment of wages out of the proceeds of the ship which has been confiscated.