P L D 1989 Karachi 94 (PLP)

The plaintiff has examined one witness and produced all the vouchers and receipts in respect of supply of goods on board the vessels. At this stage I may clarify that if an action in rem is filed against a vessel, any person who claims any amount against her or any interest in the said vessel may intervene in the proceeding and A make his claim or object to the claim of the plaintiff. The Admiralty Court would be justified to entertain such claim/objection and if both the claims are found valid and proper and duly proved then the Court will have to determine their priority. " So far claim against defendant No. 1 is concerned it stands on a different footing. The plaintiff has claimed Rs. 24,963 in respect of necessaries supplied to defendant No.l. In this regard the bills and challan have been produced and a statement on oath has also been made in support thereof. Therefore, in my view the claim to the extent of Rs. 24,963.39 against defendant No.l is proved. Under the Admiralty jurisdiction an action in rem for recovery of dues in respect of necessaries supplied to the vessels can be filed against such vessel. The plaintiff is therefore, entitled to this amount claimed against defendant No.l. The main question for consideration here is whether the plaintiff's claim in respect of vessels other than Rice Trader can be entertained under the Admiralty Jurisdiction of the Court. Considering the nature of claim made by the plaintiff no maritime lien exists in its favour. The maintainability of plaintiffs suit against defendant No.l in respect of necessaries supplied to other vessels except RICE TRADER is under dispute. It is being challenged by the salvers, mortgagees and parties who have supplied goods and bunker to defendant No.l on the ground that as the defendant No.2 is not the owner/beneficial owner of defendant No.l or any other vessel the suit is not maintainable. The main contention of Mr. Virjee, the learned counsel for the plaintiff is that all the vessels are owned by Manta Line Inc and, therefore; they are sister vessels and fall within the ambit of section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 which is reproduced as follows: 4 ..................... (2) .. (3) (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 as 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." The learned counsel for the intervening parties contended that the defendant No.2 is not the owner of these vessels. It is merely an operator and manager. . To attract the provisions of section 4(4) of the Ordinance some questions of fact have to be determined first. It is to be decided who was the owner, charterer or in possession or control of the ship at the time cause of action arose and whether the same person at the time the proceedings were instituted is the person who beneficially owns majority shares in the other ship against which action has been filed. These questions of fact are to be decided on evidence and in many cases it is difficult to decide on affidavits alone. However, more often such questions are raised at an early) stage when defendant seeks to set aside the arrest of the vessel. In such cases the Court must give its decision on the basis of affidavits as it involves question of jurisdiction and cannot be postponed till the final hearing of the case. Reference can be made to THE I Congreso Del Partido (1977) 1 Lloyd's Law Report 536; The St. Marriel (1963) 1 Lloyd's Law Report 63; The Aventicum (1978) 1 Lloyd's Law Report

184. In the present case the plaintiff has examined witness and produced documents. I will first deal with the evidence which has been produced by the plaintiff to establish that all these vessels are owned by Manta Line Inc. The plaintiff's witness stated as follows: "These vessels in respect of which I have made claim are registered in the name of different owners but all of them are managed and operated by Manta Lines." He has produced Greek Shipping Directory in which at page 368 under the title Piraeus Shipping Offices Manta Lines has been mentioned and below it are given the names of seven vessels involved in, the suit. From this Directory it is clear that Manta Line has been shown as the Shipping Office at Piraeus of all the owners of these vessels. This entry does not disclose the names of the owners of these vessels. At page 08 in the last but one column the particulars of Palm Trader has been given in which Seaforth Investments Co. Ltd. Manrovia has been shown as the owners. At page 227 particulars of Rice Trader has been given. Manta Line Inc. is the Piraeus office and the owner's name has been given as Sport Maritime Inc. Monrovia. In both these entries the name of Georgios Sifakis has been mentioned as manager or director of Manta Line. At page 229 owner of RORO TRADER is mentioned as Monvillea Shipping Corporation, Monrovia and Manta Line is the Piraeus office. Georgios Sifakis is its manager/ director. According to this Directory except the owners of Rice Trader and Mimosa. Trader which are common to all other ships are owned by different companies but their Piraeus office is the same i.e. Manta Lines Inc. and Sifakis has been mentioned as its Director or manager. On the basis of this evidence Mr. Virjee the learned counsel has contended that if the veil of incorporation is torn all these companies will be proved to be owned by the same persons and the ownership of all the vessels is common. In this regard the learned counsel has referred to THE AVENTICUM (1978) 1 Lloyd's Law Reports 184 where it was observed at page 187. " where damages are claimed by cargo-owners and there is a dispute as to the beneficial ownership of the ship, the Court in all cases can and in some cases should look behind the registered owner to determine the true beneficial ownership." In cases where beneficial ownership of a vessel is to be determined the-Court is competent to investigate it in full and even probe into the facts to find out the person who really is the beneficial owner. D Such probing inquiry becomes necessary where it can be shown that by fraudulent and deceitful means the beneficial owner of majority shares is kept behind the scene to defraud the claimants. In such cases the Court can even 'pierce the Corporate Veil'. Even if this principle is applied to the present case the plaintiffs evidence is of such a nature that it does not prove that the defendant No.2 is the beneficial owner of majority shares in the vessels. The mere fact that Manta Line Inc. is the Piraeus office of all these vessels with Safakis as its director/ manager does not lead to the conclusion that the ships are owned by the common owner, therefore the question of invoking section 4(4) does not arise. The plaintiff however can maintain action in rem against defendant No.1 in respect of claim for necessaries supplied to her and Mimosa Trader owned by the same Company. The learned counsel for the plaintiff has referred to The Banco (1971) 1 Lloyd's Law Report 49 where Lord Denning, M.R. observed (at page 52) that "the admiralty jurisdiction in rem may be invoked either against the offending ship or against any other ship in the same ownership, but not against both. The principle decided in this case is that only one ship can be arrested at a time. It was also observed that where there is any doubt in the interpretation of the Administration of Justice Act 1956 which is similar to our Ordinance the Court can look to the terms of the International Convention of Shipping Law and Arrest of Ships 1952 as the Act has been enacted to give effect to that Convention. These questions do not seem to arise in the present case. In THE ANDREA URSULA (1971) 1 Lloyd's Law Report 145 = 1971 AER 825, it was held that beneficial owner must be given a meaning which includes not only a demise charterer, but also any other- person with similar complete possession and control who may thereby become liable on a claim within paragraphs (d) to (r) of section 1(1) of the Act. But as discussed in the following part of the Judgment this view has not been accepted or followed. The Eschersheim (1976) 2 Lloyd's Law Reports = (1976) 1 All ER 920 referred by the learned counsel for the plaintiff has no relevance to the present case. In THE PERMINA 108 (1978) 1 Lloyd's Law Reports 308 the Court of Appeal of Singapur observed that: "The ship that is liable to arrest is 'that ship' which is beyond doubt the ship in connection with which the claim arose." It was further observed that the terms of section 4(4) of the Act were free from any ambiguity and it was unnecessary and wrong to look at the International Convention relating to the Arrest of Sea going Ship signed at Brussels in 1952. It was held: "In our judgment, the construction we have given to cl. (b) of S.4(4) of the Act is in accord with the other provisions of the Act. Where there is a maritime lien, S.4(3) enables a plaintiff to invoke the Admiralty jurisdiction against the ship in connection with which the claim arose, whether or not at the time when the action is brought, it remains in the same ownership. Whether or not there is a maritime lien, in a claim under paras. (d) to (q) of S.3(1), S.4(4) enables the plaintiff to invoke the Admiralty jurisdiction against the ship in, connection with which the claim arose, if at the time when the action is brought, it is in the ownership of the person who would be liable on the claim in personam and who was, when the cause of action arose, the owner or the charterer of, or in possession or control of it; or against any other ship if at the time when the action is brought, that other ship is beneficially owned by the person liable on the claim in personam and who was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship in connection with which the claim arose." In THE LEDESCO UNO (1978) 2 Lloyd's Law Reports 99, which was decided by the Hong Kong Court of Justice (Admiralty Jurisdiction) the plaintiff owner of vessel ANTAIOS let her to defendant on a voyage charter party. As dispute about charter hire arose the plaintiff instituted an action in rem against the vessel LEDESCO which belonged to the defendant. The defendant applied for setting aside the arrest and it was held that the Court had no jurisdiction to entertain the action in rem as the defendant was not a demised charterer of the ANTAIOS and therefore Admiralty Jurisdiction in rem cannot be invoked to arrest LEDESCO. In I CONGRESO Del PATIDO (1978) 1 AER 1169 while considering the meaning of words "beneficial owner" it was observed as follows: 'My approach to the case before me is as follows: I start with the 1956 Act, and the words with which I am particularly concerned, and which I. have to construe in the context of the Act, are 'beneficially owned as respects all the shares therein.' In my judgment, the natural and ordinary meaning of these words is that they refer only to such ownership as is vested in a person who, whether or not he is the legal owner of the vessel, is in any case the equitable owner; in other words, the first of the two meanings of which Brandon, J. thought the words to be capable. Furthermore, on the natural and ordinary meaning of the words, I do not consider them apt to apply to the case of a demise charterer or indeed any other person who has only possession of the ship, however full and complete such possession may be, and however much control over the ship he may have ............................. ................................ Indeed any reference in this context to ownership as respects all the shares in the vessel, is, in my judgment, inapt to describe the possession of a demise charterer; such words are only appropriate when describing ownership in the ordinary sense of the word, and not possession which is concerned with a physical relationship with the vessel founded on control and has nothing to do with shares in the vessel. A demise charterer has, within limits defined by contract, the beneficial use of the ship; he does not however have the beneficial ownership as respects all the shares in the ship. Furthermore I can find nothing in the remainder of the 1956 Act to cause me to reject the natural and ordinary meaning of the words; certainly I would not construe other references in the Act to 'ownership' (as in S.1(1)(a) or 'co‑owner' (as I n S.1(1)(b), as referring in any way to demise charterers." This judgment was challenged in appeal before the Court of Appeal which dismissed the same. It is reported in (1984) 1 AER 1092. But in this Judgment only the question with regard to foreign soverign immunity .from suit was discussed and question regarding Admiralty Jurisdiction as decided by Admiralty Court was not challenged. This Judgment was again challenged before the House of Lords which dismissed the same (1981) 2 AER 1069. Here again the entire Judgment is in respect of foreign sovereign immunity. Therefore, the judgment of the Admiralty Court so far the jurisdiction of Admiralty Court is concerned has remained undisturbed. In this regard reference is also made to M/s. Sun Line Agencies v. M.V. PSILO RITIS and 2 others 1984 C L C 1553 where it was observed that 'a time charterer or a charterer by demise does not fall in the category of a person who beneficially owns as respect majority shares of the ship'. Perusal of all these authorities makes it clear that legal position with regard to interpretation of section 4(4) of the Ordinance is well‑settled. A ship which is not connected with the claim arising under clauses (e) to fh) and (j) to (q) of subsection (2) of section 3 of the Ordinance can be subjected to an action in rem if it is established that when the claim under the aforestated provisions arose I in connection with a ship, the person who would be liable in an action in personam was the owner or charterer of or in possession or in control of that ship and further that when the action is brought the same person is beneficial owner of majority shares in the other ship in respect of which writ of arrest is being sought to be issued. Mere possession and control of the other vessel as charterer, manager or operator does not fall within the meaning of words "beneficial owner" as regards majority shares therein. These words connote a definite meaning conveying an interest of that person in the majority shares of vessels as their owner. The charterer, operator or manager do not have right of ownership in the shares of the ship. Such ownership of shares may be real or beneficial. Applying the aforesaid principle it seems that the plaintiff will be entitled to claim in respect of necessaries supplied to Rice Trader and Mimosa Trader which according to the Greek Shipping Directory are owned by the same owner i.e. Sport Maritime Inc. The owners of other vessels .are different companies. So far the claim against Mimosa Trader is concerned the plaintiff has relied upon Exh. A-17 and Exh.A-18. They relate to the necessaries and goods worth Rs .x:74 and Rs.42,693.28 received by the Master of the vessel Therefore, the plaintiff is entitled to a decree of Rs.72,330.67 with proportionate r cost. The plaintiff would be entitled to realise the decretal amount from the sale proceeds of the Rice Trader subject to priorities. As l held in the case of Asian Queen P L D 1982 Kar. 749 and in Admiralty Suit No.311 of 1984 'necessaries usually has. a very low priority.' Such claim is preceded by the claim of Martial Charges, expenses in respect of maintenance of ship by the plaintiff during arrest possessory lien, salvage, damage, wages and mortgage created prior to the arrest of ship in the necessaries action. The plaintiff will be entitled to recover from the sale proceeds of the ship after the satisfaction of the decree if any passed in favour of any of the claimants who have precedence over the plaintiff's claim. A . A . / M-605 / K Suit partly decreed.