1983 PLP 2030 (CLC)

While this order was being dictated in presence of the learned Advocates, Mr. R. F. Veerji bad expressed that it may be mentioned in the order as to why the security was being fixed at $ 1,00,000‑ This figure was arrived at by relation to the difference between the value of the vessel and the amount of mortgage money. What is more that, in fact, such figure was proposed by Mr. Muhammad Naim and accepted by Mr. R. F. Veerji." ‑ Thereafter on'15th December, 1981 C. M. A. No. 3606/81 was filed by defendant No. 1 as plaintiff in Admiralty Suit No. 24/81 under Order XXIII, rule 1 read with section 151, C. P. C. stating that the present plaintiff had failed to disclose any material defence to the Admi ralty Suit No. 24/81 and also failed to prefer any counter claim and in the circumstances defendant No. 1 did not wish to proceed with Admiralty Suit No. 24/81 any further, as the suit had become infructuous. This application was disposed of by the Honourable Chief Justice by order dated 20th December, 1981 passed in Admiralty Suit No. 24/81. The said application was granted. The last paragraph of order dated 20th December, 1981 of the Honourable Chief Justice may be reproduced here : ‑ Mr. R. F. Virjee has lastly contended that be may be. given time, so‑ that he can file a suit against the plaintiff, and during such time, the security offered by the plaintiff in the suit, may be kept alive. Mr. Muhammad Naim opposes this request but, looking to the circumstances of this case, I am of the view that the security should be kept alive for two weeks as from today. The defendants may file a suit within two weeks, and, in case such suit is filed they can make an application for retention of security for further time and such application shall be considered on merits, if and when may be made. Thereafter on 27th December, 1981, present Suit No. 810 of 1981 was filed for the recovery of Rs. 10,00,000 equivalent to U. S. $ 1,00.000. By order dated 28th December, 1981 ad interim stay was granted on C. M. A. No. 4321/82. By this order, the said application under Order XXXIV, rules 1 and 2 read with section 151, C., P. C. (C. M.\ A. No. 4231/82) will be disposed of. I have heard R. F. Virjee, learned counsel for the plaintiff and Mr. Muhammad Naim, learned counsel, who appeared on behalf of both the defendants. The mortgage deed dated 14th March, 1980 admittedly has very vast powers for defendant No. 2 bank in case of default in the pay ment of instalments of the loan on the part of the plaintiff. ‑ It is also an admitted position that the defaults have been committed by the plaintiff in the payment of instalments and under the . terms of the mortgage‑deed dated 14th March, 1980 various actions/steps could be taken by defendant No. 2 bank on account of the defaults having been committed by the plaintiff and there inter alia included :‑ (a) To take possession of the vessel; (b) To sell the vessel by public auction or private contract at any place in the world with or without advertisement (c) To delegate all or any of the powers and discretion vested in the mortgagee bank to any person. It is the case of defendant No. 2 bank that under the powers conferred upon defendant No. 2 bank, as there were various defaults in ‑the payment of instalments by the plaintiff, defendant No. 2 bank assigned its rights and benefits to Mullion Investment Corporation, which in turn sold the vessel on 16th December, 1980 to defendant No. 1 in the sum around U. S. $ 4,17,

000. It was further pointed out by Mr. Muhammad Naim, learned counsel for the defendants that prior to the action taken by defen dant No. 2 bank, a notice had been given by defendant No. 2 bank to the plaintiff on 9tb December, 1980 through telex that unless U. S. $ 50,000 were paid by the plaintiff and an assignment of charter party covering subsequent voyage was signed, the bank will. exercise their rights as mortgagee and take any steps they deem necessary to protect their interest. According to Mr. R. F. Virjee, learned counsel for the plaintiff, a prima facia case has been made out by the plaintiff against the defendants and that according to the circumstances in which the assignment had taken place in favour of Mullion Investment Corpora tion and the sale of the vessel had been carried out, indicate that the actions were not bona, fide. It was urged that no specific notice bad been given to the plaintiff either by Mullion Investment Corpora tion or by defendant No. 2 bank that the vessel was going to be sold and only a general notice dated 9th December, 1981, bad been given. It was further pointed out by the learned counsel for the plaintiff that in case defendant No. 2 as mortgagee had wanted to exercise its rights for sale of the vessel through public auction, the plaintiff would have been entitled under the terms of the mortgage deed to take part in the auction, and this deliberate action on the part of defendant No. 2 bank not to sell the vessel in case of default through public auction but through assignment anal private treaty casts doubt on the genuineness and bona fides of the parties concerned. It was also contended that the vessel was sold at a very low price and that there was collusion between the two defendants inter se. 1n view of the terms of the mortgage‑deed and the fact that a general notice had in fact been given on 9th December, 1981, and if there had been no other facts on record, I would have been of the view that prima facie case has not been made out by the plaintiff. However, there are certain other facts, which are relevant for the purposes of deciding the point whether a prima facie case has been made out or not by the plaintiff. If the sale bad taken place on 16th December, 1980. as is the case of the defendants, the proceeds, which amounted to about U. S. $ 4,17,000 would have been forthwith credited to the account of the plaintiff. However, there is a copy of the bank statement dated Ist January, 1981 issued by defendant No. 2 bank, which still shows an amount of U. S. $ 3,50,000 outstanding against the. plaintiff company as on 31st December, 1980. This is an F admitted document, prima facie if the amount had been realized through sale of vessel on 16th December, 1980, the bank statement on 1st January, 1981, could not show an amount of U. S. $ 3,50,00 outstanding against the plaintiff. It may be mentioned that the vessel had been mortgaged by , the plaintiff in the sum of U. S. $ 3,50,000 with defendant No. 2 bank. According to Mr. Muhammad Naim, learned counsel for the defendants, this bank statement must have been issued through oversight and there must be some mistake, as according to the learned counsel the bank statement, even if the vessel had not been sold, would have shown a figure of more than U. S. $ 3,50,000 as considerable interest had accrued upto the period ,‑when the said bank statement was issued. At this. stage it is not proper to decide whether this bank statement was issued through oversight or there must have been a mistake committed on the part of defendant No. 2 bank. It is sufficient to observe at this stage that this document, the bank statement dated 1st January, 1981, is an admitted document and no other document or material is on record to explain or clarify as to why and how this bank statement had been issued when the vessel had already been sold on 16th Decem ber, 1980. Then there is another document on record which is a telex dated 12th February, 1981, of defendant No. 2 bank addressed to the Director of the plaintiff, Terry Chong, which is to the following effect :‑ "RE: YOUR TELEX TC/DL/OKS‑HKB 12th FEBRUARY, 1981 CONCERNING TAIPAN PRIDE. RESPONSIBLE PERSONS ABSENT UNTIL MONDAY, HOWEVER BELIEVE TOTAL AMOUNT DUE INCLUDING INTE REST, INSURANCE AND FEE FOR RELEASE/BILL OF SALE ABOUT U S DOLLARS 5,50,000." As observed earlier, the above telex is dated 12th February, 1981, If the vessel had already been sold as far back as 16th December, 1980, in what capacity was this telex being issued by defendant No.2 bank was either in a position to get the sale cancelled or that the sale had not been finalized. If the sale had already taken place as far back as 16th December, 1980; without the concurrence of defendant No. 1, defendant No. 2 could not send this telex dated 12th February, 1981, that the sale could be cancelled. In the normal course, defendant No. 2 bank would have sold the vessel through public auction after specific notice in that regard to I the plaintiff. It such action had been taken there could not have been any grievance under the law on the part of the plaintiff on account of the default having been committed. No doubt, as observed earlier, defendant No. 2 bank has prima facie right to assign or sell the vessel under the terms of the mortgage‑deed without notice to the plaintiff but in view of the haste in which the assignment and sale had taken place‑General notice is dated 9th December, 1980, and the sale is dated 16th December, 1980, and the bank statement dated 1st January, 1981, and the telex dated 12th February, 1981 prima facie casts a doubt on the transaction of assignment and sale in favour of defendant No.

1. In my view, therefore, a prima facia case has been made out by the plaintiff. Balance of convenience is also in favour of grant of temporary injunction. Apparently defendants have no other assets within the jurisdiction of this Court against which the decree, if passed in this suit, might be executed. C. M. A. No. 4231/82 is accordingly granted and it is ordered that the security furnished by bank of America on behalf of defendant No. 1 in Admiralty Suit No. 24181 will not be discharged or cancelled till the disposal of this suit. K. M. A. Application granted