2002 PLP 1771 (SCMR)

"3. Admiralty Jurisdiction of the High Court.‑‑(1)... ... ... ... ... (2)

(h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship."

4. Mode of exercise of admiralty jurisdiction.‑‑(1) ... ... .. ... .. (2) The admiralty jurisdiction of the High Court may in the cases mentioned in clauses (a) to (d), (i) and (r) of subsection (2) of section 3 be invoked by an action in rem against the ship or property in question. (4) In the case of any such claim as is mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ship, the admiralty jurisdiction of the High Court may, whether the claim gives rise to. a maritime lien on the ship or not, be invoked by an action in rem against‑‑ (a) that ship, if at the time when the action is brought it is beneficially owned in respects majority shares therein by that person; or (b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid."

6. Having thoroughly examined the pleas raised on behalf of the petitioners, learned Division Bench observed that claim of the petitioners did not arise from an agreement for hire of the ships and that no ship belonging to the petitioners was hired by the said respondent. Learned Division Bench also held that the agreement envisaged that the respondents were entitled to ply their ships on the licence of the petitioners and were liable to pay certain amounts by way of consideration for the same and these amounts allegedly were not paid. Learned Division Bench reached the conclusion that at best the agreement could be termed as one for hire or use of a licence and it did not fall under section 3(2) of the Ordinance, 1980. Learned High Court also held that even if it was assumed that respondent No.1 was sister concern and held majority shares in the owner company, yet no action in terms of clause (b) of subsection (4) of the Ordinance, 1980 could be brought against those vessels as the petitioners' claim did not arise from those vessels. Finally High Court held as follows:‑‑ "The jurisdiction to proceed against a vessel in rem in a special jurisdiction conferred upon the High Courts under the Admiralty Jurisdiction of High Courts Ordinance, 1980 and can only be invoked under the circumstances clearly stated in the Ordinance. Moreover, it may be added' that even the penalty clause relied upon by learned counsel only purports to enable the appellant to seek arrest of the Trawlers which were the subject‑matter of the agreement and not any other vessel even if it belonged exclusively to the respondent No. l."

7. It is contended on behalf of the petitioners that learned Single Judge had wrongly released Ships Nos.9203 and 9204, vide order dated 14‑11‑2000, and after the petitioners filed Appeal No.7 of 2000 before learned Appellate Bench of High Court, the ships were re‑arrested, as per order dated 22-11‑2000, but Ship No.9203 sank in an accident in Pakistan Sea Waters during fishing operations under the licence of the petitioners' company. After arrest of Ship No.9204 direction was issued to furnish bank guarantee for US$ 33,10,

000. Learned counsel also submitted that Ships Nos.235 and 236 were also wrongly released by learned Single Judge, vide order dated 21‑12‑2000, but the same were re‑arrested in compliance of learned Division Bench's order dated 23‑12‑2000 and direction was issued to furnish Bank Guarantee for the amount in question. Learned counsel also pointed out that, during pendency of appeal, learned Division Bench released the Ship No.235 on furnishing Bank Guarantee in the sum of Rs.5,00,000 instead of the suit amount. Learned counsel for the petitioners also stated that the petitioners filed an application under Order 47, rule 1, C.P.C. on 18‑1‑2001 praying that the claim of the petitioners was of US$ 33,10,000 and the Bank Guarantee of only Rs.5,00,000 which was nothing as there was no other property of the respondent No.1, except the ships from which the amount of decree could be recovered. The said application was dismissed by Division Bench and the petitioners against said order filed Civil Petition No.259 of 2001 before this Court and status quo order dated 25‑1‑2001 was passed by this Court, but the Ship No.235 knowing about above order escaped to UAE Port immediately. According to learned counsel, thereafter this Court directed that Ship No.236 shall not be allowed to leave Port of Karachi as per order of learned Division Bench dated 23‑12‑2000. Learned counsel also submitted that Vessels Nos. 9203 and 9204 returned back to China for repair and maintenance and the respondent No.1 brought its fishing Ships Nos.235 and 236 to Pakistan for operating the ships on the fishing licence of the petitioners.

8. In case reported as Yukong Ltd., South Korean Company, Seoul, South Korea v. M.T. Eastern Navigator and 2 others (PLD 2001 SC 57) authored by one of us (Nazim Hussain Siddiqui, J.) it was held:‑‑ "

17. Action in rem primarily is against the property which eventually may be arrested and sold out to satisfy the claim. Such action is resorted to in respect of any claim or question within the Admiralty Jurisdiction irrespective of the fact that it is in the nature of a maritime lien or not. In fact, it is a proceeding against the ship. In the words of Lord Watson the action is a remedy against the corpus of the offending ship. Sir George Jessel M.R. described the process in rem in the following terms:‑‑ 'You may in England and in most countries proceed against the ship. The writ may be issued against the owner of such a ship, and the owner may never appear, and you get your judgment against the ship without a single person being named from beginning to end. That is an action in rem, and it is perfectly well‑understood that the judgment is against the ship.'

18. The action in rem and action in personam are distinct. In case of former, it is the proceeding against ship, whereas in the latter it is a proceeding inter partes. "

9. It was contended before High Court and the same has been repeated before us that in view of clause (h) of subsection (2), section 3 of the Ordinance, 1980, action in rem is maintainable against the ships in question and that High Court erred by transferring the suits to be dealt with on its original side.

10. Perusal of clause (h) (ibid) unequivocally postulates that High Court has jurisdiction in any claim based on any agreement, relating to the carriage of goods in a ship or to the use or hire of a ship. It means that above clause is attracted on 3 conditions, firstly, if the agreement relates to the carriage of goods in a ship; secondly, to its use, and thirdly on its hiring. None of the conditions is attracted to the instant case. The agreement in question basically was for use of licence and such condition is not covered by clause (h) (ibid). It is a proven fact that two arrested vehicles were not those trawlers, which were being used in performance of the contract. The respondent No. l was only to ply its own ships on the licence of the petitioner No. l and to pay certain amount in that regard. Therefore, clearly the case of the petitioners was not covered by section 3(2)(h) of the Ordinance. Learned High Court reached the conclusion and rightly so that the ships in question ‑did not belong to respondent No. 1, as such, even action under subsection (4) of section 4 (ibid) was not warranted. The suits were rightly transferred original side.

11. In consequence, leave to appeal is refused and the are dismissed. S.A.K./M‑339/S Petitions dismissed.