' In this Admiralty suit against the vessel "Eastern Navigator" plaintiff-company incorporated in U.S.A. Through its Attorney seeks judgment and decree in the following terms:
(i) A declaration that the mortgage is valid, binding and subsisting;
(ii) judgment and decree in favour of plaintiffs in the sum of U.S. $.17,971,691.99 as due and payable by the defendants jointly and severally to the plaintiff under the Mortgage as at 18th October, 1995 alternatively damages;
(iii) such further sums as may have become due and in the future become due and payable as of or said agreement in respect of continuing interest in accordance with paragraphs noted above and other costs and charges between 18th October, 1995 and the date of the judgment and actual payment (whichever shall be the later);
(iv) interest;
(v) costs of the suit;
(vi) grant any other relief/s as the Court may deem fit and proper.
(vii) order auction.
2. Seemingly plaintiff is a Financing Company. By loan agreement dated 22nd July, 1992 as supplemented by loan agreements of 1994 and 1995 between the plaintiff-company and defendant No,2, plaintiff agreed to advance to the defendant No,2 a loan of US $ 25,000,000 on the terms and conditions incorporated in the loan agreements. According to the agreement which is described as Panamanian Mortgage, the defendants agreed to keep the vessel insured against certain risks until all moneys due under the loan agreements have been paid in full. The defendants covenanted with the plaintiff to punctually pay all premiums, calls, contributions, etc. In respect of such insurance. According to the plaintiff, certain events have occurred which constitute events of default pursuant to the loan agreement and mortgage with particular reference to the following incidents:--
(a) the defendants have failed to pay all relevant insurance premiums due in accordance with Clause 6.01 of the Mortgage;
(b) the defendants have failed on demand to reimburse the plaintiff for costs incurred by the plaintiff in securing the insurances referred to in Mortgage as required by Clause 6.01 (b) of the Mortgage;
(c) the defendants have failed to pay all earnings to the Earnings Account (as defined in the Loan agreement) as required by Clause 8.02 of the 1992 Loan Agreement.
3. By letter dated 18th October, 1995, plaintiffs gave notices to the defendants of the aforesaid events of default and demanded repayment of the sum of US $ 17,971,691.99 payable under the loan agreement and Mortgage. It is the case of the plaintiff that since the defendants failed to pay the sums demanded and they are justly indebted to the plaintiff in such amount as shown in the notice and as the defendant No,1 vessel is presently lying afloat at Port Qasim, within the Harbour of Karachi, this Court has the jurisdiction to proceed with the matter, hence the suit.
4. Defendant No,2 filed a written statement through their Advocate Mr. Muhammad Sharif admitting the claim of the plaintiff while no written statement was filed on behalf of the vessel itself.
5. The vessel was ordered to be sold through Official Assignee vide order dated 13-3-1996 in Admiralty Suit No,686 of 1995 as well as the present suit which was ultimately auctioned. Vide order dated 9-5-1996 the offer of M/s. Transtrade (Pvt.) Limited for purchase of the ship for US $.2.5 million received by the Official Assignee was accepted by this Court.
6. Alongwith the plaint, plaintiffs filed C.M.A. No,244 of 1996 under Rule 731 of the Sindh Chief Court Rules (O.S.) read with section 151, C.P.C. Seeking the arrest of the vessel until furnishing of the security in the suit amount. On the same day, C.M.A. No,245 of 1996 was moved by the plaintiffs praying for an order for auction of the vessel, placing of advertisement for sale of the vessel and for a direction for investment of the money received for payment to the plaintiffs on grant of decree.
Both the C.M.As. Were contested by the Intervenor represented by Mr. Muhammad Naeem, Advocate but C.M.A. No,245 of 1996 was allowed in view of the fact that Official Assignee was already appointed to take steps for the sale of the ship in the earlier Suit No,686 of 1995. In its counter-affidavit, Intervenor took the stand that since the plaintiff failed to seek any relief against the vessel in rem, the suit was liable to be transferred to the Original Side of this Court for being tried as an ordinary suit.
7. Immediately on filing of the counter-affidavit by Intervenor, plaintiffs moved C.M.A. No,291 of 1996 under Order VI, Rule 17 read with section 151, C.P.C. Seeking amendment in the prayer clause by including a prayer for a direction that the defendant No,1 vessel be arrested forthwith and its auction ordered for satisfaction of the plaintiffs' claim from the proceeds thereof. This application was hotly contested by the Intervenor with the consequence that the prayer for amendment was declined by my learned brother Syed Deedar Hussain Shah, J. Vide order dated 28-10-1996. This order was challenged in Admiralty High Court Appeal No,3 of 1996 which is pending decision. By another order dated 28-10-1996 C.M.A. No,1479 of 1996 under Order XIV, Rule 2 read with section 151, C.P.C. For trial of preliminary issues moved by the Intervenors was allowed. This order is also sub judice in Admiralty High Court Appeal.
8. Preliminary Issues suggested by the Intervenors are as follows:--
(1) Was the above suit properly instituted in the Admiralty Jurisdiction of this Hon'ble Court and whether the suit as framed is maintainable?
(2) Whether the Admiralty jurisdiction of this Hon'ble Court was at any stage attracted and or invoked by the plaintiffs and if not what is the consequence?
(3) Could the parties i,e, the plaintiffs and the defendant No,2 by consent confer jurisdiction on this Hon'ble Court so as to obtain a decree on the alleged admission?
9. Both the learned counsel have addressed this Court on the aforesaid preliminary issues. While Mr. Muhammad Naeem, learned counsel for the Intervenor has vigorously contended that the suit as framed being not a suit in the admiralty jurisdiction of this Court is not maintainable and this Court cannot exercise its admiralty jurisdiction in the suit in hand. Mr. Qamar Abbas, learned counsel for the plaintiff has taken pains to convince this Court both on facts and law that the suit as framed is an Admiralty suit in rem and quite clearly falls within the admiralty jurisdiction of this Court which cannot lawfully be transferred to the Original Side of this Court.
10. It is contended on behalf of the plaintiff that rule 731 of the Sindh Chief Court Rules (O.S.) provides that when a suit is instituted in rem, any party may, on filing an affidavit obtain from the Court a warrant for the arrest of the property proceeded against. In essence, the purpose of such arrest of a vessel is to secure the claim against it and in fact jurisdiction of the Admiralty Court arises only subject to presence of a vessel within its jurisdiction. It is pointed out that in para.4 of C.M.A. 244 of 1996 filed for arrest of the ship alongwith the suit, the plaintiff categorically asserted that "unless the vessel is arrested immediately it will sail away any time after discharging cargo and/or furnishing securities in other claims for which it is held under arrest and it may sail away during the course of the day". It is pertinent to note that the vessel was arrested by an order of this Court dated 5-10-1995 passed in Suit No,686 of 1995 and undisputedly the vessel was physically present within the jurisdiction of this Court and after its arrest in custody of the Admiralty Court.
Besides an order of arrest was also passed in Suit No,678 of 1995 on filing of the suit and the only obvious legal inference which would arise is that every claimant would perhaps be entitled to decree of his claim against the vessel.
11. There is no gainsaying that with the institution of this suit C.M.A. No,245 of 1996 under Order XXXIX, rule 6 read with section 151, C.P.C. And Sindh Chief Court Rules Was moved by the plaintiff for auction of the vessel by placing advertisement for its sale and investment of sale proceeds for payment to the plaintiff against its claims. In para. 3 of the affidavit in support of this C.M.A. It was pointed out that the subject vessel has been under arrest for the last few months since 5th October, 1995 and though Suits Nos.678/1995, 686/1995, 692/1995, 699/1995 and 67/1996 are pending before this Court neither defendants nor owners or anyone else is defending such suits.
C.M.As. Nos.244 of 1996 and 245 of 1996 however could not be heard for one or the other reason when intervenor filed its counter-affidavit on 4-3-1996. On 13-3-1996 a learned Judge of this Court adjourned C.M.A. No,244 of 1995 while on C.M.A. No,245 of 1996 ordered as under:-- "Since orders have already been passed in Admiralty Suit No,686 of 1995 for the sale of the ship, this application is also allowed and the 0/A has already been appointed to take steps for the sale of the ship. Application stands disposed of in view of the above order."
12. C.M.A. No,244 of 1995 seeking arrest of the ship subsequently came up for hearing before a learned Judge on 25-9-1996 when learned counsel for the plaintiff stated at the Bar that in view of the circumstance that the vessel had already been auctioned, this application had become infructuous, he would therefore not press it, which accordingly stood disposed of.
13. In the meanwhile plaintiff moved C.M.A. No,291 of 1996 under Order VI, rule 17, C.P.C. Praying for amendment of the plaint in order to include a prayer that defendant No,1, vessel, be arrested forthwith, auction of the vessel ordered and the plaintiff's claim be satisfied from the proceeds thereof. Quite evidently, this prayer was made in order to meet the objections raised and position taken by the intervenor in its counter-affidavit. Paradoxically this application was congested by intervenor and was dismissed on 28-10-1996 by a learned Judge for the main reason that the vessel had since been auctioned, that the application for arrest of the vessel had been dismissed as withdrawn and the prayer clause in the plaint did not disclose a prayer for arrest of the ship. This order is also sub judice in Admiralty Appeal No,3 of 1996 filed by the plaintiff.
14. With regard to the maintainability of claim by the plaintiff mortgagee against the vessel, learned counsel has referred to section 4(2) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 which confers upon this Court jurisdiction to hear and determine any of the specified causes, questions and claims which includes any claim in respect of a mortgage or charge on a ship or any share therein vide clause (c). It is maintained that the title of the plaint in the suit categorically refers to "admiralty jurisdiction" of the Court and even the suit number of 1996 is preceded by the words 'Admiralty' and followed by the caption, Proceeding in rem against the ship "Eastern Navigator". Lastly it is urged that even in the relief clause a prayer for ordering auction of vessel would presuppose arrest of the ship and on this premise it cannot be possibly held that the suit was filed as an ordinary suit in original jurisdiction of this Court which in fact is an admiralty suit for an action in rem against the vessel.
15. On the other hand, Mr. Muhammad Naeem, learned counsel for the intervenor contended with all vehemence at his command that the plaintiff by not asking for arrest of the ship specifically and by mentioning in para.23 of the plaint that although no court-fee is payable on admiralty claim or on the original side of this Court has paid maximum court-fee of Rs,15,000 and the plaintiff itself was thus indecisive whether he wanted the relief in admiralty jurisdiction or in an original suit. Both the counsel referred to various judgments from Pakistan and British jurisdiction and more particularly to different paragraphs in Loyds Law Reports and British Shipping Laws.
' Issues Nos. 1 to 3:
16. To my mind as the plaintiff has invoked Admiralty jurisdiction of this Court, it is primarily for it to show very clearly that the suit is properly instituted and maintainable in its present form whereafter the onus to establish the contrary would shift on the intervenors who have assailed the maintainability of the suit before this Court in the exercise of its admiralty jurisdiction. Obviously the claim of the plaintiff-Corporation is founded on Panamanian Mortgage and the loan agreements amounts whereof the defendant vessel failed to pay. This claim would therefore fall within the purview of clause (c) of subsection (2) of section 3 of the Ordinance. Averments in the plaint in all material particulars raise a claim on account of mortgage of the vessel in favour of the plaintiff in consonance with Loan Agreement of 1992 as amended by Agreements of 1994 and 1995. On the face of it, agreement is neither against the provisions of law nor public policy. All that the plaintiff is required to demonstrate in such suits is the presence of the vessel within the territorial waters of Pakistan which is the admiralty jurisdiction of this Court.
In Ahmed Investment Limited v. m.v. Sunrise-IV and another (PLD 1980 Karachi 229), S.A. Nusrat, J.
After a review of the case-law on the subject and with reference to the observation by Lord Denning M.R. In the case of The Banco (1971) 1 All England Report 524 and Halsbury's Laws of England, 4th Edition observed that in a suit filed in rem, the prime action lies against the res or the property itself and in the exercise of the said jurisdiction it is left to the Court to exercise the same either by proceedings in rem or by proceedings in persona. The ship alter all is an inanimate object and cannot defend itself, and, of necessity, the action is to be defended by the Master, the owner or any person interested in the vessel irrespective of the fact whether they were joined a party to the suit or not. The plaint itself may also mention the name of the owners without formally impleading them as party to the suit. After referring to the dictum laid down by Judicial Committee of the Privy Council in the case of Pieve Superlore, learned Judge who was subsequently elevated to the Supreme Court ruled that a suit filed in rem in the admiralty jurisdiction will not fail merely on account of joinder of the owner of the vessel as party to the same and such interpretation also does not follow from section 35 of Admiralty Court Act, 1861.
18. This view was approved by a Division Bench of this Court in Bangladesh Shipping Corporation v. m.v. "Nedon" and another (PLD 1981 Karachi 246) Abdul Hayee Kureshi, C.J. (as he then was) who authored the judgment held that historically and legally an action in rem is against a ship without making it as a defendant. The real defendants are described as owners of or persons interested in the ship, and the writ of arrest may be effected by serving it on the ship which may be accepted by the Master, owner or by nailing or pasting it on the Mast of other conspicuous part of the ship. As a consequence of such service if the owner or any person interested in the res enters appearance and puts up the defence then the person so appearing becomes party to the action and thereby becomes personally liable for whatever may be decreed against him.
19. A similar question came up for consideration before Naimuddin, J. (as he then was) in Twaha v.
The Master m.v. "Asian Queen" (PLD 1982 Karachi 749) in which the same view was expressed. In the context of dispute as to jurisdiction of Admiralty Court, learned Judge who subsequently rose to the office of the Chief Justice of this Court observed that it is settled so far this country is concerned, that if a Court entertains a suit without jurisdiction but subsequently acquires jurisdiction or if the cause of action for the suit matures during the pendency of proceedings, then the suit would not fail.
20. A reference may also be made to Kuwait Flour Mills v. Kashmir and another (PLD 1989 Karachi 57) and The Renak" Queen's Bench Case reported in 1979 All England Law Report 397 expressing the view that the first and positive proposition is that the purpose of arresting a ship in an action in rem is to provide the plaintiff with security for the payment of any judgment which he may obtain in such action.
21. In a still more famous case The Banco (supra) the question by the Court of appeal, decided was, that the plaintiffs were not entitled to arrest more than one of the defendants vessel because the word "or" in section 3(4), Administration of Justice Act, 1956 must be construed strictly and not as meaning and/or, and the phrase "any other ship" must be construed as meaning ship' in the singular and not ships' in the plural.
22. In British Shipping Laws, Volume 14 under the title Maritime Lines Para. 97 authored by D.R.
Thomas he writes although the arrest of a res probably represented the ancient method of acquiring a jurisdiction in rem this would appear to be the case no longer under the contemporary law Provided a writ in rem has been properly served this is itself sufficient notwithstanding that the warrant of arrest remains unexecuted".
23. In the same series Volume I in paragraph 151, "action in rem" has been assigned the meaning as an Admiralty action in rem and "writ" means a writ of summons. In para. 232 at page 97 it is observed that arrest, however, is not necessary in all cases. Indeed, in the majority of actions in rem, no arrest occuRs, This is because the owners of the res or their insurers arrange for bail or some other acceptable security to be given.
24. Mr. Muhammad Naeem, learned counsel for the intervenor in order to reinforce his contention referred to the following paragraph from the judgment delivered by Lord Denning, M.R. In the famous "Banco case" reported in Lloyd's Law Reports, 1971, Volume I, page 49 (53): "... ....The right to arrest either the ship in respect of which the cause of action is alleged to have arisen or any other ship in the same ownership.... ..."
' That is clearly right. There is no doubt about it.
' I would add that the word "ship" in the phrase "any other ship" means "ship" and not "ships".
Although the Interpretation Act, 1889, says that words in the singular include the plural, that does not apply when the contrary intention appeaRs, The contrary intention does appear here. The jurisdiction may be invoked against either the offending ship or any other ship in the same ownership, but not more than one."
24-A. Learned counsel also referred to paragraphs 276 and 278 from the British Shipping Laws, "Admiralty Practice" published by Stevens and Sons, London, 1964 Edition. While para. 276 says that a plaintiff who has been informed of the existence of condition which makes an early application for an order for sale advisable will often apply to the Court for an order on motion and if he takes no action he will be given notice by latter by the marshal of his intention to apply to the Court for direction. This application would be in Chambers, usually to the Judge, and the plaintiff could attend and be heard if he wished, para. 278 deals with second, third or later writs or warrants in respect of the property already under arrest. In this paragraph the author writes that where it is proposed to begin a second or subsequent action against property which is already under the arrest of the Court, a second subsequent writ in rem must be taken out. But it is only if the second or subsequent plaintiff wishes to proceed to judgment before first plaintiff is ready to do so that the second or subsequent plaintiff need take out a warrant of arrest and actually arrest the property for the second or subsequent time.
25. A reference is also made to paragraphs 61, 63 & 67 of the British Shipping Laws, Volume 14 by B.R. Thomas relating to "action in rem" which is to the following effect: "The crux of such paragraphs is that action in rem is nonetheless the dominant feature of Admiralty practice and represents the form of proceeding most frequently resorted to by maritime claimants.
The action in rem is in essence a proceeding against property which once instituted may be made effective by the arrest and detention of the property proceeded against, and followed, if necessary, by the judicial sale of the property and with the claim satisfied out of the proceeds of sale.
Fundamental legal nature of an action in rem, as distinct from its ulterior object, is that it is the proceeding against a res. Thus when a ship represents such a res as is frequently the case, the action in rem is an action against the ship itself". The action in rem being in proceeding against the reds and whereunder the res may be appropriate to satisfaction of the plaintiff's claim, is patently distinct from an action in personam. The latter is a proceeding inter parties founded on personal service and if successful, leading to a judgment against the person of the defendant. Under the action in rem no direct demand is made against the owner of the res personally and this continues to be the case notwithstanding the form of the modern writ of summon in rem."
26. Learned counsel referred to plaintiff's C.M.As. Nos.2637 and 2638/1995 in Suit No,868/1995 filed by the present intervenors and urged that in the aforesaid CMAs plaintiff had filed caveat against the release of the vessel by expressing its intention to file a suit under mortgagee's claim whereupon he was allowed two weeks' time to file a suit. Subsequently on 14-1-1996 he filed CMA 2847/1995 under Order VII, rule 11, C.P.C. And CMA 2848/1995 under Order I, rule 10, C.P.C. After its joinder as one of the parties it withdrew the application for rejection of the plaint on 1-4-1996 and thus appeared to have lost its interest in an action in rem by reason of laches and inaction on its part. Learned counsel also contended that besides the joinder of the defendant No,2 as the owners of the vessel in the present suit is patently fatal to its claim and thus that the suit is filed in rem and not in personam because the suit against the defendant vessel alone would have been adequate enough to prove the claim as action in rem. Moreover by not seeking arrest of the vessel, the plaintiff seemingly was seeking its remedy in an action in personam against the owners of the ship.
27. After a careful consideration of the submissions advanced at the Bar I find myself unable to agree with the contention raised. In fact I am least impressed by the argument of the learned counsel which is hypertechnical in nature and most likely to defeat the ends of justice and advance the mischief. On facts stated in the plaint and relief sought by the plaintiff it is highly difficult to subscribe to the view of the learned counsel that the suit as framed is not maintainable or that it is improperly instituted in the Admiralty jurisdiction of this Court. I am fortified in my view by a judgment from Lahore jurisdiction reported as Mushtaq Ahmed v. Arif Hussain (1989 MLD 3495) in which learned Single Judge expressed the view that a cause could not be dismissed on hypertechnical grounds like form of suit. If relief claimed was improper or inadequate, Court could considerably mould and grant it. Defect if any, in form of the suit could have been cured by granting requisite declaration while passing a decree for possession. Learned Judge went to the extent of observing that under the law, the plaintiff is not obliged to file a suit in a particular manner. If it is open for him to frame his suit in any possible way, it cannot be insisted by the Court that he should frame the suit in any other way. Learned Judge referred to the cases of Hari Kishan Lal v. Barkat Ali (AIR 1942 Lahore) 209 and Taj Muhammad v. Muhammad Iqbal (1986 SCMR 276) in support of his view.
28. In Zahoor Elahi v. The State (PLD 1977 SC 273) it was held that there is no cavil against the proposition that the jurisdiction of superior Courts cannot be taken away except by express words or necessary implication. Distinct and unequivocal enactment is also required for the purpose of either adding to or taking from the jurisdiction of superior Courts of law. Likewise in Allied Bank Ltd. v. Khalid Farooqui (1991 SCMR 599) Supreme Court observed that it is recognized principle of law that a claim in respect of the ouster of power of the High Court in respect of any matter or subject available to it under the Codes of Civil and Criminal Procedure cannot be lightly accepted, unless there is a clear, definite and positive provision ousting the jurisdiction. Express words or clear intendment by necessary implication are required to take away the jurisdiction of High Court or any superior Court. Mr. Muhammad Naeem referred to Khurshid Ali v. Abdul Malik (1991 SCMR 1944) but the reported case is really of no assistance to him and rather supports the view taken by me.
29. As pointed out hereinbefore, "All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. English system of administration of justice on which our own is based may be to a certain extent technical but we are not to take from that system its defects. Any system which by giving effect to the form and not to the substance defeats substantial rights is defective to that extent. The ideal must always be a system that gives to every person what is his", was the rational view taken by Mr.Kaikaus, J. (as he then was) in Imtiaz Ahmed v. Ghulam Ali (PLD 1963 SC 382) with which I am in respectful agreement and indeed I have quoted it in a number of cases. Identical view was taken in Pakistan Engineering Council v. I.A. Osmani (1991 SCMR 654), Manager. Jammu & Kashmir Estate Property v. Khuda Yar (PLD 1975 SC 678); United Bank Ltd. v. Yousuf Haji Noor Muhammad (1988 SCMR 82) and Allah Ditta v. Barkat Ali (1992 SCMR 1974).
30. With regard to the contention that by joining owner of the vessel as party to the suit plaintiff has demonstrated its intention to bring an action in personam, a complete answer may be found in the Division Bench decision of this Court in Bangladesh Shipping Corporation's case cited supra in which it was expressly ruled that in an action in rem against the ship the real defendants are described as owners or persons interested in the ship.
31. No doubt I have referred to the commentaries by English authors including the British Shipping Laws, I am of the confirmed view that in the presence of statute law in Pakistan, the Courts in Pakistan are bound to determine a cause in the light of statute law rather than referring to British Law which are essentially founded on common law. In the facts and circumstances of he case I am of the definite view that the suit as framed is appropriately constituted and maintainable in Admiralty jurisdiction which has been rightly invoked by the plaintiff. Needless to say consent of parties cannot legitimately confer jurisdiction on a Court which it is not otherwise possessed of.
Preliminary issues stand answered accordingly. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.