' MUNIB AKHTAR, J.---By means of these two applications, the plaintiff seeks orders for the arrest and subsequent sale of the defendant No,1, F.T. Selnes (hereinafter referred to as the "defendant vessel"). The plaintiffs claim against the defendant vessel arises under section 3(2)(c) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 (hereinafter referred to as the "1980 Ordinance"). According to learned counsel, the plaintiff (which at the material time did its business under the name and style of the International Commercial Bank of China) obtained a first preferred mortgage over the defendant vessel in respect of financing that had been provided for its acquisition. It appears that by means of a loan agreement dated 8-12-1999 ("Loan Agreement"), entered into between the defendants Nos. 3 and 4 as borrowers and Messrs Central Finance (BVI)
Co. Ltd. ("Central Finance") as lender, a loan was made to the defendants aforesaid for the purposes of financing the acquisition of the defendant vessel. Among other provisions, the Loan Agreement provided that a first preferred mortgage over the defendant vessel would be created in favour of the plaintiff. Since at that time the defendant vessel operated under the flag of the Faroe Islands and was registered there, the mortgage in favour of the plaintiff was also to be registered with the relevant authorities at the Faroe Islands. The Loan Agreement contained a number of terms to which I will presently refer, but at the present time, it suffices to note that by means of a deed of assignment ("Assignment") executed on the same day, i.e. 8-12-1999, Central Finance assigned all its rights as lender under the Loan Agreement to the plaintiff. By means of another document dated 8-12-1999, the defendants No,3 and 4 (who were the borrowers under the Loan Agreement) gave their consent ("Consent") for the discharge of an earlier mortgage that had existed over the defendant vessel in favour of the defendant No,4, on account of the first preferred mortgage created in favour of the plaintiff as noted above. Learned counsel submitted that thereafter, the mortgage in favour of the plaintiff was duly registered with the relevant authorities of the Faroe Islands. His case is that the loan amount covered by the mortgage has not been repaid and is substantially overdue and in default, which gives the plaintiff the right, as mortgagee, to have the defendant vessel arrested and disposed of in accordance with law. Learned counsel submitted that subsequent to the foregoing transactions, the defendants No,3 and 4 and/or their beneficial owners, through various acts of subterfuge, attempted to prevent the plaintiff from enforcing its rights against the defendant vessel. For this purpose, the ostensible ownership of the defendant vessel was changed to the name of Messrs Full Harvest International Fishing Inc. ("Full Harvest") and its registration shifted from the Faroe Islands to the Philippines. Learned counsel submitted that although the plaintiff made efforts to locate the defendant vessel, the same proved unsuccessful. It appears that the defendant vessel came to Pakistan in late 2010, when it was promptly arrested by other claimants by means of Admiralty suits, which are pending in this Court.
It was only thereafter that the plaintiff, according to learned counsel, became aware of the whereabouts of the defendant vessel and the present suit was filed seeking the relief as noted above. He submitted that there was, prima facie, a clear case of a claim in rem against the defendant vessel and in favour of the plaintiff.
2. Learned counsel for the defendant vessel strongly opposed the applications under consideration. He submitted that learned counsel for the plaintiff had not been appointed by proper authority from the plaintiff. I may note immediately that a similar objection was taken by learned counsel for the plaintiff in respect of the appointment of learned counsel for the defendant vessel. In my view, these objections can properly be decided at the trial of the present suit and therefore, nothing more need be said at the present time about this objection and counter objection. Learned counsel for the defendant vessel submitted that the plaintiff had no locus standi to institute the present proceedings and that the suit, being not maintainable, was liable to be dismissed as such. In this regard, he referred to the Loan Agreement, and submitted that no material had been placed on record to show how the mortgagee mentioned therein, Messrs International Commercial Bank of China, had changed its name as presently stated in the title of the plaint. He submitted further that the defendants Nos.3 and 4 were not the owners of the defendant vessel and they did not hold any beneficial share therein and that therefore, the suit against them was in any case mala fide and not maintainable. Learned counsel further submitted that all the relevant facts, even as per the Loan Agreement and the various averments made in the plaint, had no connection or nexus with Pakistan and were admittedly relatable either to the Republic of China (i.e., Taiwan) or some other jurisdiction. He therefore contended that the suit was liable to be dismissed for this reason alone. Learned counsel further submitted that the jurisdiction clause of the Loan Agreement conferred exclusive jurisdiction in respect of any dispute in terms thereof on the courts of Taiwan and that the suit was not maintainable before this Court. He also submitted that the suit was barred by limitation, and in this regard placed reliance on section 6 of the 1980 Ordinance, which provides for a period of limitation of two years for the matters therein specified. Learned counsel submitted that since the suit had admittedly been filed beyond the aforesaid period, it was hopelessly time barred. Finally, he took the objection that certain proceedings in bankruptcy (the details of which are given and considered below) had also not been fully revealed and placed before the Court and that this was an additional ground for the dismissal of the suit. Learned counsel relied on a number of decisions to which reference will be made below.
3. Exercising his right of reply, learned counsel for the plaintiff asserted that the beneficial owner of the ostensible owner of the defendant vessel as per the maritime record of the Philippines, i.e., Full Harvest, was in fact, the beneficial owner of the defendants Nos.3 and 4 as well and that therefore, the liability of the said defendants was fully made out. He also submitted that the suit was not barred by limitation nor was it otherwise liable to be dismissed as not maintainable.
4. I have heard learned counsel for the parties and have examined the record with their assistance and have considered the case-law relied upon. Since the claim of the plaintiff is based squarely on the Loan Agreement and other documents executed on 8-12-1999, it is necessary, in the first instance, to examine these documents in some detail. As already noted, the Loan Agreement was executed between the defendants Nos.3 and 4 as borrowers and Central Finance as lender. Articles 1.01 and 1.02 of the agreement stated that there had earlier been an agreement dated 17-7-1999 between the defendants Nos.3 and 4 whereby the defendant No,4 had extended a loan of US Dollar 10.00 million to the defendant No,3 for the purposes of financing the purchase of the defendant vessel, which was being sold by the defendant No,4 to the defendant No,3. Article 1.02 stated that Central Finance was making available a loan of Japanese Yen 747,450,000 to the defendants Nos.3 and 4 with respect to the defendant vessel subject to a number of conditions set forth therein. The first of these conditions was the cancellation of the earlier loan agreement dated 17-7-1999 between the defendants and its replacement by the present Loan Agreement. (There was also reference to a separate loan agreement to be entered into between the two defendants to cover a certain balance amount of approximately US Dollar 3.00 million, but that is not relevant for present purposes.) Article 1.02 also required the creation of the aforementioned first preferred mortgage over the defendant vessel in favour of the plaintiff. This was a mortgage for an amount of Japanese Yen 996,600,000 subject to the foregoing and other terms of the Loan Agreement, Article 2.01 provided for the aforesaid loan of Japanese Yen 747,450,000 being extended to the defendants Nos.3 and 4, and Article 2.02 provided that the loan was to be made by way of transfer to an account designated by the said defendants in one lump sum. Articles 2.03 and 2.04 made provisions for the payment of interest and default interest on the loan, and Article 2.05 provided that the loan was to be repaid in 84 consecutive instalments spread over a period of 7 yeaRs, Article 6.10 is also relevant and stated as follows:-- "CHANG JONG-TA, CHANG LIANG CHI-LIEN, LIANG CHU-MING and LIANG LIN SHU HUI own one hundred percent (100%) of Borrower free from any liens, charges or encumbrances of any kind whatsoever."
' It may be noted that the first three of the aforesaid individuals, along with certain corporate entities, were the guarantors of the transaction (being defined as such in Article 1.03). Article 11.01 provided for the guarantee given, jointly and severally, by the guarantors for the repayment of the loan. Article 11.05 expressly noted that the guarantors were the "shareholders, directors, officers and/or affiliates of the Borrower/Co-borrower". (It may be clarified that the defendant No,3 was defined in the Loan Agreement as the "Co-borrower", while defendant No, 4 was defined as the "Borrower".) Article 7.09 made a specific provision with regard to the mortgage being registered over the defendant vessel and provided as follows:-- "Unless Lender shall have given its, prior written consent otherwise, Borrower/Co-borrower shall at all times make Sp/f Selnes during the term of this. Agreement maintain the registration of mortgage over the Vessel in favour of Lender's designate under the laws and flag of Faroe Islands and maintain the Vessel in class in sound and seaworthy condition and repair."
5. Article 10 listed a number of occurrences any one of which would constitute an event of default under the agreement, and as was to be expected, a failure to make payment of any amount, when due and payable, constituted such an event. Article 10.02 specifically provided that if an event of default occurred, there would be an acceleration, i.e., all amounts due and payable under the Loan Agreement would become due and payable immediately without any "presentment, demand, protest or notice or any kind". Finally, reference must be made to Article 12.04, which provided as follows:-- "12.4 Law and Jurisdiction.
(a) This Agreement shall be governed by and construed in all respect in accordance with the laws of the Republic of China.
(b) For the benefit of Lender, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Agreement against Borrower/Co-borrower or Guarantors or any of their respective assets may be brought in the Kaohsiung District Court which shall have nonexclusive jurisdiction along with any other Court of Lender's choosing to settle any disputes arising out of or in connection with this Agreement.
(c) Borrower/Co-borrower and Guarantors un-conditionally and irrevocably submit to the jurisdiction of such Courts and Borrower/Co-borrower and Guarantors irrevocably designate Ron Shang Fishery Co., Ltd. At its registered office for the time being at No,7, Chien-Shin 2nd St., Ku-Shan Dist., Kaohsiung, Taiwan, R.O.C., to receive for it and on its behalf, service of any legal process in any legal action or proceedings arising out of or in connection with this Agreement, but Lender reserves the right to serve process on Borrower/Co-borrower or the Guarantors in any other manner permitted by law. The submissions to such jurisdiction shall not (and shall not be construed so as to) limit the right of Lender to take proceedings against Borrower/Co-borrower and Guarantors in any other Court of competent jurisdiction, including but not limited to the Courts of Faroe Islands or shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. In the proceeding raised by Lender against Borrower/Co-borrower or any of Guarantors, whatever Lender present or introduce to the court with respect to the amount of the outstanding debt Borrower/Co-borrower or any of Guarantors owes to Lender shall be deemed conclusive and not subject to dispute.
(d) Borrower/Co-borrower waives any objection it may now or hereafter have to the laying of venue of any legal action or proceeding arising out of or in connection with this Agreement or any of the Security Documents in any Court and may claim it may now or hereafter have that any such legal action or proceedings has been brought in an inconvenient forum."
6. As noted above, on the same day, i.e. 8-12-1999, the aforesaid Central Finance, by means of the Assignment, assigned all its rights as lender under the Loan Agreement to the plaintiff. Also on that date, the defendants Nos.3 and 4 -executed the Consent, which document expressly provided that since the loan agreement dated 17-7-1999 between the defendants was coming to an end, the mortgage on the defendant vessel that had been earlier created also stood discharged. The registration of the first preferred mortgage in favour of the plaintiff over the defendant vessel was also duly recognized.
7. In my view, the combined effect of the foregoing documents, insofar as is presently relevant, is as follows. There had initially been an agreement between the defendant No,4 and the defendant No,3 dated 17-7-1999, whereby the former had provided financing to the latter for purposes of acquiring the defendant vessel. In connection with this financing a mortgage had. Been created in favour of the lender, i.e. The defendant No,4. Subsequently, fresh or alternative financing was arranged in respect of the defendant vessel, which was duly given affect to by means of the Loan Agreement, and the other documents dated 8-12-1999 referred to above. The financing arrangement between the defendants Nos.3 and 4 came to an end and stood cancelled, and was replaced by other or fresh financing provided by Central Finance. Central Firlance, it would appear, had some arrangement with the plaintiff (perhaps by way of on-lending or otherwise). The result was that the rights of Central Finance as lender stood assigned to the plaintiff, which also acquired a first preferred mortgage over the defendant vessel. This situation was duly and expressly recognized by the defendants Nos.3 and 4 in terms of the Consent executed by them. The result, therefore, was that not merely was the plaintiff a mortgagee of the defendant vessel, but it also stood in the shoes of the lender by way of the Assignment. In view of this position, it would appear, facie, that the plaintiff does have a claim against the dendant vessel, which can be pursued in rem against it under section 3(2)(c) of the 1980 Ordinance.
8. I now turn to consider the specific objections that have been taken by learned counsel for the defendant vessel. Insofar as the objection as to the locus standi of the plaintiff and the maintainability of the suit is concerned, that objection, in my view stands answered against the defendant vessel on a proper scrutiny of the relevant documents, i.e., the Loan Agreement, the Assignment and the Consent, and in terms of the conclusions which I have drawn in the last preceding para. In my view, the plaintiff, prima facie, has standing to initiate the present proceedings against the defendant vessel.
9. Insofar as the change of name of the plaintiff from International Commercial Bank of China to its present name is concerned, learned counsel for the plaintiff, along with the affidavit in rejoinder, placed on record the banking business licence issued to the plaintiff and its Articles of Incorporation. These documents, prima facie, provide a complete answer to this objection, since they clearly show that the plaintiff is duly incorporated, has the power to conduct its business, and changed its name as stated by learned counsel appearing on its behalf.
10. As regards the objection taken by learned counsel for the defendant vessel that nothing has been placed on record to show that the beneficial ownership of the defendants Nos.3 and 4 on the one hand, and of the owner of the defendant vessel as per the maritime record of the Philippines, i.e., Full Harvest on the other, is the same, in my view, that objection is not relevant for present purposes. It is to be noted that in response to the objection under consideration, learned counsel for the plaintiff did place on record certain material that prima facie tends to show that the beneficial owners behind the scenes in respect of the various legal entities are indeed the same, and include at least some of the individuals who were the guarantors under the Loan Agreement.
However, it is not necessary to consider this material in any detail. The plaintiff is pursuing a claim in rem against the defendant vessel on account of the mortgage created in its favour over the vessel and the present applications are concerned with this claim, by way of the arrest and sale of the ship. The plaintiff appears also to assert a claim against the defendant Nos.3 and 4 arising out of the same transaction (i.e., the financing for the purchase of the defendant vessel) which could be a claim in personam, i.e., a claim against the said defendants by the plaintiff on account of the Assignment of the Loan Agreement made in its favour, as described above. Since the claim in rem does, prima facie, for the reasons noted above, come within the relevant provision of the 1980 Ordinance, it is, in my view, not necessary, at least for present purposes, to consider whether, and if so how, the claim in personam against the defendants Nos.3 and 4 ought to be pursued. In connection with this objection learned counsel for the defendant vessel placed reliance on Oriental Shipping Company Limited v. M.V. Mone Cristo and others 1984 CLC 2265 (BHC; SB), and on Proceedings in rem against the vessel M.T. Portofino and another 2003 CLD 1655 (SHC; SB). The first mentioned case was concerned with a claim for supplies, salaries, medical bills of crew and other provisions made to the vessel concerned, whereas the second mentioned case disposed of a miscellaneous application whereby a person applied to become a party to the suit on account of a claim in personam. As is obvious, the facts of these cases are quite different from those of the present suit. This objection is therefore also without substance insofar as the present applications are concerned.
11. The next objection taken by learned counsel for the defendant vessel is on the basis of Article 12.04 of the Loan Agreement. Learned counsel contended that the exclusive jurisdiction in respect of disputes lay with, and could only be taken before, the courts of Taiwan and that, therefore, the present suit was not maintainable. Article 12.04 has already been reproduced herein above and in my view, the Article does not support the submission made by learned counsel. This is clear from a bare reading of the Article. It first provided that the agreement was to be governed and construed in accordance with laws of the Republic of China (i.e. Taiwan). Obviously, this is a choice of law clause, and has no bearing on the present matter. The Article then went on to provide that any action against the defendants Nos.3 and 4 or the guarantors could be brought in the courts of Taiwan "which shall have nonexclusive jurisdiction along with any other court of Lender's choosing to settle any dispute arising out of or in connection with this Agreement." As is clear, the jurisdiction of the Taiwanese courts was expressly nonexclusive, and not exclusive as erroneously concluded by learned counsel for the defendant vessel. The other provisions of Article 12.04 simply reinforced the point in language which is typically to be found in such agreements, and provided, inter alia, that the defendants Nos.3 and 4 and the guarantors unconditionally and irrevocably submitted to the jurisdiction of the Taiwanese courts, but such submission "shall not (and shall not be construed so as to) limit the right of Lender to take proceedings against Borrower/Co-borrower and Guarantors in any other court of competent jurisdiction". In view of these clear and categorical provisions, in my view, the objection taken by learned counsel for the defendant vessel is simply not sustainable. Learned counsel placed reliance on certain decisions being State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCM R 393, Kadir Motors v. National Motors Limited 1992 SCM R 1174, E.F.U. General Insurance Limited and others v. Fahimul Haq 1997 CLC 1441 (BHC; DB). Abdul Rahman and others v. Member Judicial, Board of Revenue and others 2001 YLR 2284 (SHC; DB), Bankers Equity Limited v. Iqas Weaving Mills (Put.) Limited 2001 CLC 169 (LHC; SB) and Syed, Asadul Haq v. Balochistan Glass Limited 2001 CLC 294 (SHC; SB). None of these cases arose under the 1980 Ordinance or related to the Admiralty jurisdiction of this Court. Furthermore, the facts of these cases were entirely different from the ones before me today, and as already noted, since the jurisdiction of the Taiwanese courts is expressly nonexclusive and does not prevent the lender (who is now the plaintiff on account of the Assignment) from pursuing its remedies in other jurisdictions, the principles enunciated in the case law, though well-established, have no application in the facts and circumstances of the present case.
12. The next objection taken by learned counsel relates to the point of limitation, for which reliance was placed on section 6 of the 1980 Ordinance. This section provides as follows:-- "6. Limitations of maritime lien.-- No action shall be brought before the High Court to enforce a maritime lien for the damage sustained in consequence of collision wheresoever occurring or any other maritime lien unless proceedings therein are commenced within two years from the date of the damage occurring or the maritime lien arising, subject to the discretion of the High Court to extend this period."
' Learned counsel submitted that the plaintiffs claim in respect of the defendant vessel was in the nature of a maritime lien, and since such a claim had to be filed within two years of the accrual of the cause of action, the present suit was hopelessly time barred. In this regard, learned counsel referred to para 13 of the plaint wherein it has been categorically stated that the cause of action first arose in favour of the plaintiff on 3-9-2002 when the registration of the defendant vessel was shifted from the Faroe Islands to the Philippines, and learned counsel contended that the suit having been brought more than two years after this date was liable to be dismissed as time barred. Now section 6 of the 1980 Ordinance is applicable only in respect of maritime liens, and the first question that therefore arises is as to what categories of claim come within the scope of maritime liens. Learned counsel relied, in particular, on a Division Bench judgment of this Court reported as Messers Abdoun Oil Company SA v "MIT Abdoun Discovery" and another 2004 CLD 286.
In this decision it has been observed as follows:-- "An action in rem can be instituted against the ship or the property on which Maritime Lien is claimed by the appellants. It is to be seen whether the plaintiff has Maritime Lien which is a privilege claim which a claimant exercises over the res (ship) in respect of which it arises and can be enforced by legal process. A Maritime Lien or his privileged claim or charge upon Maritime property in respect of the services rendered to it (repairs) or purchase or damage done to the ship, it occurs the moment, cause of action arises and attaches to the property to which the cause has accrued. It travels with the property secretly and unconditionally and can be enforced by an action in rem. The Maritime Property means, a ship, cargo and freight irrespective of the Nationality. The claim which is recognized as giving rise to the Maritime Lien seamen, Master's charged and disbursement, damage done by ship to the salvage and respondentia. Toe appellants' claim falls under respondents, a legal term applied to Maritime contract mortgaging the ship and their cargo for money advance. It is the case of the appellants that the amount was paid in instalment for purchase of the respondent-ship and for repayment, the respondent No, 2 had created charge over the respondent No, 1." (pp. 309-10)
13. The case put forward by learned counsel on the basis of the foregoing appears to be that since the plaintiffs claim in rem is as mortgagee of the defendant vessel, and a claim for the mortgage of the ship is a claim in respondent and such a claim is in the nature of a maritime lien, section 6 is applicable and the period of limitation is two yeaRs, Before proceeding to consider further the foregoing decision relied upon, it will be appropriate to first refer to the other case-law relied on by learned counsel for the defendant vessel as to what constitutes a maritime lien. Learned counsel referred to Atlantic Steamers Supply Company v. M.V. Titisee and others PLD 1993 SC 88, V N.
Lakhani and Company v. M.V. Lakatoi Express and others PLD 1994 SC 894, Masoomi Enterprises Pakistan (Put) Limited and others v. Ping Tan Fishery Company and others 2002 CLD 936 (SC) and Sun Line Agencies Limited v. M.V. Psiloritis and others 1984 CLC 1553 (SHC; SB). The first of these cases was concerned with a claim that fell under clauses (e), (1) and (m) of section 3(2) of the 1980 Ordinance and related to claims in respect of damage to the ship and repair thereof, and supply of necessaries. On the facts, this case is quite obviously different from the claim raised by the plaintiff, which falls under a totally different clause of section 3(2). The second mentioned case was an action in rem seeking the arrest of a sister vessel of the ship against which the plaintiff had his claim, and the suit had been brought, inter alia, in terms of section 4(4) of the 1980 Ordinance.
Again, the facts of this case were entirely different. The third mentioned case also involved facts similar to the second mentioned case and likewise, in my respectful view, is not relevant for the issues raised by means of the present suit. Finally, the single Bench decision of this Court relied on was also in connection with a suit in which the claim was for services provided to the sister vessels of the ship sought to be arrested. Thus, these cases cannot, in my respectful view, be called in aid of the objection now under consideration. Finally, before moving on, I may note that learned counsel also referred to United Bank Limited v. Nephew and Nephew Co. Ltd. 2004 M LD 319 (SHC; SB), but that case has no bearing on the issues raised in the present suit.
14. I now return to the decision of the learned Division Bench in the Abdoun Oil Company case (supra). The relevant passage from this decision has already been reproduced above. In this case also (which was on an appeal from the order of a learned single Judge reported as Messrs Abdoun Oil Company SA v. M. T. Camaro Pride and another 2003 CLD 1774) the claim put forward by the plaintiff was on the basis of certain financing provided for the purposes of the acquisition of the defendant ship and the plaintiff claimed to hold a mortgage or charge in respect thereof. It will be seen that these facts were similar in their essential particulars to the facts and circumstances of the present case. I have carefully considered the decision of the learned Division Bench and in particular the passage reproduced above. The key portion in the passage is where the learned Division Bench has observed that a claim in respondentia is "a legal term applied to Maritime contract mortgaging the ship and their cargo for money advance." Now, in the Stamp Act, 1899, the terms "bottomry" and "respondentia" are defined and described as follows:-- ' BOTTOMRY BOND, that is to say, an instrument whereby the master of a sea-going ship borrows money on the security of the ship to enable him to preserve the ship or prosecute her voyage.
' RESPONDENTIA BOND, that is to say, any instrument securing a loan on the cargo laden or to be laden on board a ship and making repayment contingent on the arrival of the cargo at port of destination.
' The foregoing Articles have been part of the Stamp Act from inception, and thus it will be seen that the terms "respondentia" and "bottomry" have been defined in specific statutory terms for the last about 120 yeaRs, (The terms are currently Articles 10(D) and (E) in the schedule to the Stamp Act as applicable in Sindh.) The crucial aspect of these definitions, especially in relation to "respondentia" is that this term refers to a lien on the cargo laden or to be laden on board a ship, while "bottomry" relates to money borrowed by the master of a sea going ship on the security of the ship to enable him to preserve the ship or prosecute (i.e., continue) the voyage. Thus, in my respectful view, and this is crucial, a mortgage or charge simpliciter on a ship, especially one relating to the financing of its purchase or acquisition does not come within the concept of "bottomry" or "respondentia" as defined in the Stamp Act. The meanings ascribed in the Stamp Act are consistent with the definitions of these terms given in the law dictionaries, and reference may, in this regard, be made to the following:- ' Black's Law Dictionary sixth ed., 1990)
' Bottomry. In maritime law, a contract by which the owner of a ship borrows for the use, equipment, or repair of the vessel, and for a definite term, and pledges the ship (or the keel or bottom of the ship, pars pro toto) as security; it being stipulated that if the ship be lost in the specified voyage, or during the limited time by any of the perils enumerated, the lender shall lose his money.
' A contract by which a ship or its freightage is hypothecated as security for a loan, which is to be repaid only in case the ship survives a particular risk, voyage, or period. The contract usually in form a bond. When the loan is not made on the ship, but on the goods on board, and which are to be sold or exchanged in the course of the voyage, the borrower's personal responsibility is deemed the principal security for the performance of the contract, which is therefore called "respondentia."
' Respondentia. The hypothecation of the cargo or goods on board a ship as security for the repayment of a loan, the term "bottomry" being confined to hypothecations of the ship herself; but now the term "respondentia" is seldom used, and the expression "bottomry" is generally employed, whether the vessel or her cargo or both be the security.
' A contract by which a cargo, or some part thereof, is hypothecated as security for a loan, the repayment of which is dependent on maritime risks."
' Word and Phrases (Permanent Edition)
' Respondentia. The word "respondentia" properly applies to a loan of money upon merchandise retained on board a ship the repayment whereof is made to depend upon the safe arrival of the merchandise at the destined port. Maitland v. The Atlantic, 16 Fed. Cas. 522, 523"
' Maritime and Shipping Dictionary (by Aga Faquir Mohammad, 2006)
' Bottomry bill or bond. The pledge of a ship, or of her cargo, as security for repayment of money advanced to the Master in an emergency, and of no avail if the ship be lost.
' Respondentia. The hypothecation of the ship's cargo by the Master while away from the vessel's home port, as security for a loan to pay for goods or services needed to preserve the ship or complete the voyage."
' In all the authorities that I have been able to examine, the foregoing definitions or descriptions have been used. I have also extensively searched on the Internet, and the result has been the same. With the utmost respect, I have not been able to find a single authority in which "respondentia" has been described or defined as generally including a claim in the nature of a mortgage or charge on the ship, especially in relation to the financing of its acquisition. A careful examination of the passage under consideration, and of the judgment as a whole, indicates to me that the learned Division Bench did not intend to alter the law on this point, i.e., as to the legal meaning of "respondentia", but merely sought to state the law as it stood. The only conclusion, therefore, that can possibly be drawn is that, with the utmost respect, the learned Division Bench was not properly assisted in the matter and the relevant statutory provisions (in the shape of more than century old descriptions given in the Stamp Act) and other relevant authorities were not placed before the Court. Therefore, it must respectfully be concluded that to this extent, the decision of the learned Division Bench is per incuriam. Accordingly, in my respectful view, to this extent, the decision of learned Division Bench cannot be regarded as constituting binding authority.
A claim in respondentia does not include a claim by way of a. General mortgage or charge on the ship itself, especially one in relation to financing its acquisition, and the case is likewise with a bottomry bond. It therefore necessarily follows that since such a mortgage is not a claim in respondentia, it is not a maritime lien, and hence section 6 of the 1980 Ordinance has no application in respect thereof. A suit based on a claim that falls under clause (c) of section 3(2) of the 1980 Ordinance cannot therefore be regarded as barred by limitation on account of section 6.
This section has no application in the facts and circumstances of the present case, given the nature of the mortgage claim being made by the plaintiff. Whether the suit would be otherwise barred by limitation is a matter that can only be considered at a subsequent stage, once the parties have led their evidence at the trial. However, at the present time the specific objection raised by learned counsel for the defendant vessel cannot be accepted.
15. The last objection raised by learned counsel for the defendant vessel was in relation to certain proceedings in bankruptcy, which are stated to be in progress (or have been in progress) in other jurisdictions including in particular the courts of the Faroe Islands. In my view, those proceedings have no bearing on the present applications and do not affect the Admiralty Jurisdiction of the Court under the 1980 Ordinance in respect of the defendant vessel.
16. Learned counsel for the plaintiff also relied on certain case-law, but in the circumstances, it is not necessary to consider the cases relied upon.
17. It is to be noted that no specific objection, as such, was taken by learned counsel for the defendant vessel that the acquisition of the ship was not financed by loan financing, or that the Loan Agreement was not in relation to the defendant vessel. No objection was also taken that there had not been any default in respect of the loan financing. Learned counsel did refer to a. Letter issued by the Maritime Industry Authority of the Philippines dated 6-5-2004, which stated that as per its records, there were no maritime liens, mortgages or encumbrances on the defendant vessel. However, since the plaintiffs. Mortgage was registered when the defendant vessel was flying the flag of the Faroe Islands, it was registered there, and would not therefore appear in the records of the Philippines. This is especially so when the plaintiffs case, in part, is precisely that an attempt was made to hide the defendant vessel in order to prevent the plaintiff from asserting its rights in respect thereof. Prima facie therefore, the plaintiffs claim as mortgagee in respect of the loan financing has not been rebutted by anything that appears on the record. Since all of the objections taken by learned counsel for the defendant vessel are, in my view, without force, and the plaintiff has been able to make out a prima facie case in respect of its claim on the basis of the mortgage, C.M.A. No, 1314 of 2010 is hereby allowed and the interim order dated 30-12-2010 is confirmed. C.M.A.
No,1315 of 2010 on the other hand is deferred and may be taken up and considered at an appropriate stage in the litigation.