MUSHIR ALAM, J. --- Appeals in hand arises out of common order dated 29.10.2010 passed by learned Judge in chamber on applications under Rule 731 of the Sindh Chief Courts Rule (O.S.) filed in Adm. Suits No. 17/2009 and Adm. Suit No. 21/2009 whereby, interim order of arrest was confirmed subject to furnishing surety in the reduced amounts in the sum of US$ 70,369 and US$ 61,097,911 respectively and the suits were set down for settlement of issues, with directions to the appellant to file written statement.
2. Brief facts as may be necessary to appreciate the rival controversy appears to be that the Respondent No. 1 (Plaintiff in suit No. 17/2009) claimed to be the shipping agent for the Appellant vessel M.V. Mustafa Bey; (herein after referred to as the delinquent vessel) rendered ship agency service to her in Singapore in February 2008, paid for necessities including bunkers, food, water, provisions. Spares, port dues, pilot fees, launch hire, crew transportation, accommodation, communication, wharf handling and other services. It was claimed that cheques issued for the services rendered were dishonoured. Later the Respondent No. 2 despite commitments, failed to pay the amount due. Suit in rem was filed on 1st June, 2009, writ was issued on the same day and served on 2nd June, 2009.
3. In suit No. 21/2009 the Respondent herein (Plaintiff therein) Trukuaz Deniz Hizemetlty Tasimacilik Tic Ltd. Claimed to have supplied lubricant oil to the vessel in the month of February and March, 2008 at Singapore Port, and the vessel without clearance of invoices left the port. Hence the suit for the recovery on account of necessaries supplied to the defaulting vessel, the Appellant herein was filed on 29.6.2009 and writ issued and served on 2nd July, 2009.
4. Proceeding in rem was drawn against the appellant vessel and claim was pressed under Section 3(2) (k), (1) and (m) read with Section 4(4) of the Admiralty Jurisdiction of the High Court Ordinance, 1980. (herein after abbreviated as the Ordinance 1980).
5. Mr. Mazhar lmtiaz Lari, learned counsel for the Appellant vehemently urged that the claim of the nature is not a maritime lien, therefore, claim in suit could only proceed in personam against the owner of the vessel, who at the relevant time was Unicorn Petroleum Chemical Industry Inc. Or under its Turkish name Unicorn Petrol v. Kimya therein after referred to as Unicorn), the Respondent No. 2 herein. According to Mr. Lari, delinquent vessel was sold to its present owners GND Shipping and Trading S.A., (herein after referred as GND Shipping). Under Bill of Sale dated 16.2.2009, which sale has been duly recorded by the Consulate of Panama, vessel was renamed "M.V. GOLOZ". It was further claimed that entire sale consideration has been paid, 100% share and beneficial ownership of the Appellant vessel vest in the new owners, no action could be brought against the vessel, action if at all, could be maintained in personam against the predecessor owner, Unicorn, the Respondent No. 2, in terms of Section 4(4)(a) of the Ordinance 1980, who at the time cause of action arose was the owner and when the cause was filed, delinquent vessel by then had changed hands. According to him, the claim in suit is not a maritime lien therefore it will not travel with the delinquent vessel or be followed in the hands of third party or the successive owner.
6. It was urged that provisional Bill of Sale culminated into final registration and protocolization on 11th June, 2009 as per laws of port of registry, namely Panama. According to Mr. Lan, once the final registration is made title as to majority shares in the appellant Vessel would vest into new owner from the date of Provisional Bill of Sale, which is dated 28.5.2009. He has drawn our attention to paragraph 8 of the judgment in the case reported as V.N. Lakhani & Co. V. M.V. Lakatoi Express PLD 1994 SC 894 @ 899. In cited case, principle resounds that action in rem could be invoked in respect of claim in suit under clause (I) and (m) to subsection (2) of Section 3 of Admiralty Act 1980 when persor liable at the time cause of action accrues was also the beneficial owner as the majority share in the vessel, is also owner at the time when the action is brought. It was, therefore, if at all, action in personam could be pursued against Unicorn, the previous owner of the vessel during whose term of ownership purported liability was created or cause of action accrued.
7. Mr. Lari further relied upon Bangladesh Shipping Corporation v. S.S. Nedon 1982 CLC 142 @ 144. In cited case Court was confronted with a situation, where the counter-affidavit was filed by the Master of the vessel under previous name of the offending vessel NENDON. The suit was later resisted and the written statement was filed by M/s. Ruta Azul Maritime Inc., claiming to be the owner of the vessel on the basis of Bill of Sale dated 18.7.1980 and the registration certificate dated 24.7.1980. Plaintiff refused to recognize them as necessary party unless they join the proceeding as defendant. The Court rejected the plea of the Plaintiff that the Bill of sale or registration certificate at that stage could be rejected as bogus and forged. It was held that defendant has made out arguable case to go for trial on the point that they are the owner of the vessel more so when the original owners Nedon Navigation Co. Ltd. Has not come forward to defend the suit. It was further held, at page 146 that "if at the trial, after evidence has been led, it is found that this company is not the owner of the vessel, necessary consequence would follow".
8. Mr. Lari, therefore, contends that impugned order is liable to tie set aside, arrest be discharged and if at all suit be continued in personam against the Respondent No. 2.
9. Aga Zafar Ahmed, learned counsel for the Respondents No. 1 vehemently opposed the appeal. It was argued that the vessel was arrested on 2/6/2009, all the documents filed with the Pakistan port authority bore the name of the owners as Unicorn, According to him, purported Bill of Sale is dated 6th February 2009 (page 103), which is a doubtful document, if at all, is merely an agreement to sell.
It is not a document of title, he argued that protocolization was issued on 11th June, 2009 and final registration was issued past over six months on 29.12.2009 and has been placed on record today at the time of arguments. It was contended that once order of arrest is made, it clinches on the vessel any change in hand would not defeat the arrest warrant, he has placed reliance on Kuwait Flour Mills Co. SAK. V. M.V. Kashmir and others 1990 M LD 2196. In said case, it appears that after the arrest warrants were served delinquent vessel was removed from the jurisdiction of the Court. The vessel arrived again but under different name and ownership, at page 2202 it was held "that change of ownership after issue of writ before its service or arrest would not defeat statutory right of action in rem. "Aga Zafar, therefore, contended that if arguments of appellant prevail, it will give another tool in the hands of the scrupulous vessel owners to defraud the creditors with convenience. It was urged that provisional permission to fly flag gives an opportunity to intending owners to ascertain that the vessel is free from all claims, liens, charges and encumbrances. He argued that vessel was arrested on 2.6.2009 and the present owners were on sufficient notice to vouch for their interest as they claimed to have acquired, if at alt, provisional rights in the vessel, and the title and beneficial ownership still vested with Unicorn. He placed reliance on the Case of Central Insurance Company Ltd. v. M.T. Tasman Spirit 2004 CLD 695. In said case sister ship failed as Court refused to pierce the veil of incorporation in absence of allegation of deceit and fraud (see page 706 of the citation). Mr. Lari exercising right to rebuttal has drawn our attention to last paragraph of the M. T. Tasman Spirit (2004 CLD 695) to urge that since the sister ship vessel was found to be in the ownership of different company arrest application was dismissed according to him, in present case also, since subject claim not being maritime lien but a statutory lien would not clinch to the delinquent vessel as provisional Patente was issued before the writ in rem was issued, present owner acquired rights in the vessel with out any charge or lien. He prays for the setting aside of the impugned order and seeks discharge of writ in rem against the present owner.
We have heard arguments and perused record.
10. Three types of liens are recognized in admiralty jurisprudence, maritime lien; Possessory lien and statutory lien.
11. Maritime lien is a substantive right, which springs into action and clings to the delinquent vessel instantaneously the moment incident of mischief is done by or for the ship. It invisible lethal claim, which, cling to the vessel like a leach and follows in the hands of bona fide purchaser for value and without notice, only exception is where change in ownership occurs on account of judicial sale, it is enforceable by action in rem against the res. The established categories of claims which give rise to maritime liens are salvage, damage done by a ship, crew and master's wages, master's disbursements, bottomry and respondentia last two mentioned if not obsolete, are now rare.
Possessory lien, is not relevant for the present controversy, therefore not dilated upon, however for discussion on possessory lien on may see Pong San Fisheries Company Ltd. v. M.V. Zohra-1 PLD 1988 Kar. 390 @ 392). Proceeding in hand relates to claim of necessary supplied (i.e. Bunkers, food, water, provisions, spares, port dues, pilot fees, launch hire, crew transportation, accommodation, communication, wharf handling and other services lubricant oil), which falls under clause (k), (I) and (m) to sub-section (2) of Section 3 of Act of 1980.
12. It is not that all nature of maritime claims is enforceable in action in rem, i.e. Against the delinquent or offending vessel irrespective of her ownership. Action in rem is in addition to action in personam against the delinquent vessel in respect of claims covered by clause (e) to (h) and (j) to
(q) of sub-section (2) of Section 3 of the Admiralty Jurisdiction of High Court Ordinance, 1980, which recognizes statutory right or lien of the plaintiff to invoke admiralty jurisdiction of the High Court by means of an action in rem in respect of a claim which conventionally is not classified as a maritime lien. Claims which can be enforced by Way of a statutory lien are set out in clauses (e) to
(h) and (j) to (q) to sub-section (2) of Section 3 of Act, 1980. Statutory liens could be invoked under Section 4(4) of the Admiralty Act, 1980 by invoking action in rem against the delinquent or offending ship or her sister ship, provided the offending ship and or the sister ship at the time when incident of mischief occurs is beneficially owned by the person who is also the beneficial owner when the action in rein is invoked. The claims referred to in these subsections are claim for carriage of goods, personal injury, charter party disputes, towage, necessaries, repair, or maintenance.
Claim of the Plaintiffs/Respondents No. 1 is for necessaries supplies, port dues, pilot, which squarely !Ails under clause (k), (I) and (m) to sub-section (2) of Section 3 ibid. Unlike maritime lien, which attaches to the offending vessel instantaneously, statutory lien only clings to the vessel once the writ in rem is served on the master, owner of the vessel or by nailing or pasting on the mast of the vessel within the territorial waters of Pakitan, provided vessel at the time cause is brought to the Court is beneficially owned by the same owner during whose ownership incident of mischief or delinquency occurred (See Rule 735 of Sindh Chief Courts Rules (OS), Yakong Ltd v. M.t. Eastern Navigator PLD 2001 SC 57; Aleem Ahmed Ansari v. m. v. Ashar PLD 1986 Q 54, Kuwait Floor Mills Co.
Sak v. m. v Kashmjr 1990 M LD 2196. Bangaladesh Shipping Corp v. M. V. Nedon PLD 1981 Kar. 246, and Monica S [196712 Lloyd Report 113).
13. It is the arrest of the offending ship or her sister ship that gives Plaintiff pre-judgment security, the institution of the action in rem starts with the issuance of the writ in rem. Upon issuance of the writ in rem, the statutory lien attaches to the ship and remains equally enforceable against a bona fide purchaser for value without notice, unless the vessel has been judicially sold. This means if there has been change in ownership between the time the cause of action accrues and the time when the action is brought, statutory right in rem is lost and cause in personam survives.
14. To be able to succeed in a proceeding in rem against the res (i.e. Delinquent vessel) or her sister ship in terms of clause (k), (I) and (m) to sub-section (2) of Section 3 of the Ordinance, 1980 read with Section 4(4) of the Ordinance 1980, burden lies on the Plaintiffs to show that (a) they had provided agency services, necessaries, disbursement to the delinquent vessel (b) that the delinquent vessel was owned by one and the same owner when the cause of action accrued and
(c) when the proceeding in rem were brought against her or her sister ship.
15. Crucial in present set of controversy is purported transfer of ownership of the delinquent vessel, if it is established from record that the beneficial title in the delinquent vessel has passed on to the new owner before the writ was issued and served, then the action in rem would not be sustainable and only action in personam would lie against the owner of the vessel namely Unicorn, Respondent No. 2 herein during whose ownership cause of action accrued,
16. From the material that has been brought on record/Suit No. 17/2009 was filed on 1st June, 2009, plaintiff claimed to have paid for the supply of necessaries to the delinquent vessel in the month of February, 2008 at Singapore, total value of services rendered, claim is in the sum of US$ 276.040.19, writ of arrest was issued on 2nd June, 2009 and served on 3rd June, 2009.
17. Suit No. 21/2009 was filed on 29 June, 2009, Plaintiff supplied fuel in the month of February and March, 2008, in Singapore, total value of the lubricant supplied is claimed to be US$ 55,22.61/- writ of arrest was issued on 1st July, 2009 and served on 2nd July, 2009.
18. Examining the purported sale transaction, new owners M/s. GND Shipping claimed that Bill of sale was signed on 16.2.2009, Patente Provisional De Navigation, i.e. Provisional navigational permit, was issued to them by Panama Maritime Authority on dated 28th May, 2009, protocolization was issued on 11th June, 2009 final registration Cortificate was issued by the Directorate General of Merchant Marine, Panama Maritime Authority, Republic of Panama of 29th December, 2009 valid until 28th December, 2014.
19. Agha Zafar has placed reliance on "Ship Registration" by N.P. Ready, a Lloyd's of London Press Ltd.
Publication 1991 edition, which dilate in details the law and procedure of registration of vessel, at page 119 of the book procedure for the registration of vessel under Panama law is dilated upon, the author after detailing the law noted "it should be noted that provisional patente is not a document of title; it is simply evidences the right of the vessel to fly the Panamanian flag. No mortgage may be registered until the owner's title has been recorded in the Panamanian Public Registry."
(underlined to. And emphasis). The provisional patente, is issued for period of six months and there are several requirements and documentation procedure that has to be followed before it is recorded in the public registry. At page 120 of the Ship Registration, the author summarizes as follows:--- "On receipt of the builder's certificate, bill of sale or other document evidencing title, the lawyers appointed as resident agent for the vessel in Panama arrange for the protocolization of the document before a Panamanian notary and the protocolized document is then recorded in the public registry."
20. It is after exhaustive verification and certification documentation is carried out, it is only then vessel is issued permanent patente valid for a period for four years for merchant vessel and two years in case of a pleasure yacht.
21. Respondent No. 1 has seriously disputed sale, it was vehemently argued that beneficial ownership of the delinquent vessel is still with the Unicorn: the respondent No. 2. Aga Zafar has drawn our attention to Annexure RD 1 to RD5 to his objections, to urge that M/s. Gunas Petrol Ve Denizclik is a subsidiary company of Unicorn Petrolium and Chemical Trade Industry Inc. And M/s. GND Shipping and Trading SA is a subsidiary of M/s. Gunas Petrol Ve Denizclik. There is serious dispute as to amount of sale value of the delinquent vessel as noted by learned judge in chambers, beside transaction is shady.
22. In the light of Kuwait Floor Mills Co. 1990 M LD 2196 @ 2201 (supra) transaction for the sale of vessel is not to be treated like ownership of ordinary chattel or goods. Like persons and corporations the ship also acquires a Nationality of the port of registry. Such registration is regulated by Municipal laws of the country where it is registered. Admittedly the delinquent vessel was registered as "Mustafa Bay". It arrived at Karachi under the same name, Bill of Sale or for that matter Provisional Patente may give rise to equitable right to claim and enforce sale and transfer of beneficial ownership in the vessel. As referred to above, under law of Panama Provisional Patente, is not a document title, it simply evidence the right of the vessel to fly the Panamanian flag. Purpose of issuance of provisional patente is clearly to give an opportunity to the intending owner to search out any claim, mortgages, charges or claims against the subject vessel. In the instant case as the record prima facie shows when the agency services were rendered to the delinquent vessel in February and March, 2009 she was beneficially owned by Unicorn, provisional patente was issued on 28th May, 2009, writ in rem was issued and served on the vessel on 2nd June and 3rd of July, 2009, prima facie the vessel was still in the beneficial ownership of Unicorn.
Arrest was confirmed on 29th October, 2009 and the final transfer of title in the delinquent vessel if at all, passed on to the present owner when the final "Patente Registration" date 29th December 2009 was issued, The Ordinance 1980 lays down two important preconditions to enforce statutory right in rem; namely that the offending or delinquent vessel or her sister ship must be in the beneficial ownership of the same person at two crucial juncture, one at the time of cause of action and secondly at the time of bringing cause to the Court. Ordinance, 1980 does not recognizes equitable owner or any other interest holder in the vessel for the purposes of such determination and adjudication of statutory right in rem.
23. It seems that the present owner despite having learnt that the vessel is under arrest during the period of purported provisional Patente, had over six months time to avoid the sale, or compel the beneficial owner to clear all the liability, once they have chosen to contest the matter without seeking ownership cause of action accrued and commenced, statutory lien clinched the vessel, therefore such lien would prima, facie will be inherited by the successive owner who despite notice chose to obtaining final Patente Registration after confirmation of arrest.
24. Above observation are tentative in nature, parties would be at liberty to establish their respective contentions at trial once the evidence is led as to the effect and implication of Provisional Patente, Protocolization, and Final Patente Registration under the laws of Panama, the port of Registry. We have also not examined the arguments of Aga Zafar as to pierce veil of incorporation to see whether change of ownership was merely a colourable and sham transaction and Is used as a cloak to defraud the creditors (Maritime Trader [1981] 2 Llyod Report 153 @ 157, The Saudi Prince 1982 2 Llyod Report 253). In case Plaintiffs fail at trial, consequence would follow.
25. For the foregoing reason we do not find any merit in these appeals same are dismissed, however, suit* may be set down for settlement of issues and evidence may be recorded on commission and matter be decided preferably within six months. .