P L D 2022 Balochistan 1
Before Naeem Akhtar Afghan, J
Messrs A&B PETROL URUNLERI PAZARLAMA through Authorized Attorney ---
Plaintiff
Versus
MV NAZLICAN and others ---Defendants
Admiralty Suit No. 2 of 2020, decided on 4th January, 2021.
Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980) ---
----Ss.3 & 4 ---Suit for recovery of money ---Maintainability ---Action in "rem" and
"personam" ---Scope ---Beneficial ownership ---Proof ---Plaintiff sought recovery of liability of
outstanding price of fue l/bunker services provided by it to defendant company for ships ---
When the suit was filed defendants had already sold the ships which were in the process of
breaking ---Validity ---Admiralty jurisdiction of High Court under S. 3(2)(l) of Admiralty
Jurisdict ion of High Courts Ordinance, 1980, could be invoked to determine any cause /
claim in respect of necessaries supplied to a ship including fuel / bunker service --- According
to S. 4(4) of Admiralty Jurisdiction of High Courts Ordinance, 1980, if a claim un der S.
3(2)(l) of Admiralty Jurisdiction of High Courts Ordinance, 1980, arising in connection with
a ship, claim could give rise to a maritime lien on the ship only when Admiralty jurisdiction
of High Court could be invoked by an action in rem against the ship, if at the time when the
action was brought, that ship was beneficially owned in respect of majority shares therein by
that person who was liable to the claim in an action in personam ---Suit filed by plaintiff was
not maintainable under Admiralty jur isdiction of High Court ---Suit was dismissed, in
circumstances.
Messrs International Bunkering Middle East DMCC v. M. T. Tridonawati 2012 CLD
1611; Atlantic Steamer's Supply Company v. m. v. Titisee and others PLD 1993 SC 88 and
Hong Leong Finance Limited v. Asian Queen PLD 1991 SC 1021 rel.
Yousuf Kazi v. s.s Phoenix PLD 1978 Kar. 1052; Sajid Plastic Factory v. MSC
Bahamas PLD 2020 Sindh 568; Khadija Edible Oil Refinery (Pvt.) Ltd. v. M.T "Galaxy"
2011 CLD 709; Ahmed Investment Ltd. v. M.V. "Sunrise IV" PLD 1980 Kar. 229; Yukong
Ltd. South Korean Company. v. M.T. Eastern Navigator PLD 2000 SC 57; Diamond
Engineering Mechanical, Electrical and Marine Engineering Contractors v. M.V LUCTOR -I
PLD 1978 Kar. 837 and MSC Textiles (Private) Limited v. Asian Pollu x 2007 CLD 1465
distinguished.
A. Nawaz Osmani and Nusrat Baloch for Plaintiff.
Aga Zafar Ahmed for Defendants Nos. 1, 2, 6 and 8.
Date of hearing: 21st December, 2020.
ORDER
NAEEM AKHTAR AFGHAN, J .---The instant Admiralty suit has been filed by the
plaintiff (A Turkish Company Supplying Fuel/ Bunker Services to the Vessels) against the
defendants before this Court on 29.10.2020 under section 3(2) of the Admiralty Jurisdiction
of High Courts Ordinance 1980 (hereinafter "the Ordinance").
2. Relevant pa ras of the plaint read as follows:
"2. That Defendant No.1 and Defendant No.2 are foreign vessels beached at Gaddani
Ship Breaking Yard, Gadani, Balochistan. The Defendants Nos. 3, 4 and 5 are the
registered/beneficial/ disponent owners, masters, operators inter alia of the
Defendants Nos.1 and 2, and Defendant No. 6, is the said to be purchaser of the
Defendants Nos. 1 and 2 vessels at Gadani, Balochistan. Defendant No. 7, is the
association, which manages and responsible the activities of ship breaking in Pakistan
and Defendant No. 8 is the place where Defendants Nos. 1 and 2, vessels are present
beached to be breaking.
3. That the Defendant No.1 received bunker services on 3rd January 2020, commencing
at HRS 15:15 and ending at HRS 17:20 at Port Mersin ac cording to Bunker Delivery
Receipt issued by the Plaintiff. Defendant No.1 received 60 Metric Tons (60,000 Kg)
of 10 PPM Motor in Gas/Oil, on 3rd January 2020. The Plaintiff according to the
terms and conditions regarding supply of fuel issued "Confirmatio n" dated
02.01.2020, in the name of Defendant No.4, clearly mentioning therein the vessel to
be fueled and the buyers for the purposes of such fuel supply. The delivery of bunker
services was duly evidenced through Bunker Delivery Receipt of the Plaintiff,
whereupon the Master of the Defendant No.1, working under ownership/control/
management/chartership of the Defendant No.3, endorsed with its stamp and signs,
evidencing completion and satisfaction of the supply of fuel. The total bill for the
supply of 3r d January 2020 for 60 MT of 10 PPM Motor in Oil/Gas along with
Transportation and Overtime amounted to USD 47,100/ - which was billed to
Defendant No.4, on 3rd January 2020 through File No. N012020000000008, with
mode of payment was 60DDD, which was from 3r d January to 31st March, 2020.
4. That the Defendant No.1 received another bunker services on 29th January 2020,
commencing at HRS 09:15 and ending at HRS 10:25 at Port Iskenderun according to
Bunker Delivery Receipt issued by the Plaintiff. Defendant No.1 received 40 Metric
Tons (40,000 Kg) of 10 PPM Motor in Gas/Oil on 29th January 2020. The Plaintiffs
upon such requests and after conclusion of terms regarding supply of fuel issued
"Confirmation" in the name of Defendant No.4, dated 22.01.2020, clearly me ntioning
therein the vessel to be fueled and the buyers for the purposes of such fuel supply.
The delivery of bunker services was duly evidenced through Bunker Delivery Receipt
of the Plaintiff; whereupon the Master of the Defendant No.1, working under
ownership/control/ management/ chartership of the Defendant No.3, endorsed its
stamp, evidencing completion and satisfaction of supply of fuel. That the total bill for
the supply on 29th January 2020 for 40 MT of 10 PPM Motor in Oil/Gas along with
Transportat ion and Overtime amounted to USD 30,000/ - which was billed to
Defendant No.5 on 23rd January 2020 through File No.ABX2020000000057, who
were the agents/representative of Defendant No.3. According to Terms and
Conditions was duly signed and confirmed by Def endant No.4 and received by the
Plaintiff; the mode of payment was 60DDDD and which was ended 25th March 2020.
5. That the Defendant No.2 received bunker services on 4th March 2020, commenced at
HRS 18:00 and ended at HRS 19:15 at Port Mersin according to Bunker Delivery
Receipt issued by Plaintiff. Defendant No.2 received 29 Metric Tons (29,000 Kg) of
10 PPM Motor in Gas/Oil on 4th March 2020. The Plaintiffs upon such requests and
after conclusion of terms regarding supply of fuel issued "Confirmation" dat ed 04 -03-
2020, in the name of Defendant No.5, clearly mentioning therein the vessel to be
fueled and the buyers for the purposes of such fuel supply. The delivery of bunker
services was duly evidenced through Bunker Receipt of the Plaintiff; whereupon the
Master of the Defendant No.2, working under
ownership/control/management/chartership of the Defendant No.3, endorsed its
stamp, evidencing completion and satisfaction of supply of fuel. That the total bill for
the supply on 4th March 2020 for 29 MT of 10 P PM Motor in Oil/Gas along with
Transportation and Overtime amounted to USD 17440/ - which was billed to
Defendant No.6 on 4th March 2020 through File No.ABX2020000000202, dated 04 -
03-2020, who were the agents/representative of Defendant No.3. According to T erms
and Conditions was duly signed and confirmed by Defendant No.5, and received by
the Plaintiff, the mode of payment was 60 DDD and the due date for the payment of
Bill for the Bunker Services received on 14th March 2020 was 3rd May 2020.
6. That despit e the lapse of such due dates, the Defendant No.3, failed to make any
payment to the plaintiff for the three (3) Bunker Services supplied at the request of
Defendants Nos.3, 4 and 5, causing severe problems for the plaintiff. The Plaintiff
pursued the Defe ndant No.3 for their outstanding payments, however without any
success. The Plaintiff emailed to Defendants and made certain correspondence and
Defendant No.3, categorically admitted and committed to pay the outstanding amount
but totally failed.
7. That t he Plaintiff sent Bills to the Defendant No.3 through Defendants Nos. 4 and 5,
regarding the accrual of the 2% interest per month since their due dates over the
Principal Amount of the three (3) outstanding bills.
8. That as per terms of fuel supply, being preconditions for supply of bunkers and the
very conditions regulating the duties, liabilities applicable according to law for
Plaintiff and Defendants, the supply of Bunkers results in creation of maritime lien
over the vessel to which the bunkers are su pplied. Even otherwise, as per the Turkish
as well as Pakistani Law, supply of necessaries create a maritime lien over the vessel,
and the same remains attached to the vessel till the time the payment is made. In case
the payment is not made and the owners hip of the vessel changes, the said maritime
lien shall continue to travel with the vessel notwithstanding change of ownership.
9. That in the instant case, the vessels have been sold to Defendant No.6 by Defendant
No.3, to break both the vessels and both vessels are presently available with
Defendant No.6, at place of Defendant No.8. While the Defendant No.7, is
responsible body to regulate the affairs of ship breakers all over Pakistan and
Defendant No.6, is under influence of Defendant No.7, therefore, P laintiff sent Legal
Notices dated 22 -10-2020. The said sales are in complete violation of the
international laws as well as ethics of the trade. The said sales are absolutely illegal,
unlawful and void ab initio as the same were made with the intention to defraud the
Plaintiff and other creditors of Defendants Nos.1 and 2.
10. That the Defendant No.3, failed to make the outstanding payment within 60 DDD
post-delivery, whereupon Plaintiff contacted Defendants Nos. 3, 4 and 5 through
direct communications whe reupon Defendant No.3 assured the Plaintiff of Payment
within a short period of time. The Plaintiff sent one last email to the Defendant No.3
regarding outstanding payment and represented that they would be constrained to take
all measures possible for rec overy of their outstanding amount. No reply to such
email was ever received from Defendant No.3".
3. With regard to accrual of cause of action for filing the instant Admiralty suit, the
plaintiff has stated as follows in para -14 of the plaint:
"That the cause of action arose in favour of Plaintiff and against the Defendants when
the Plaintiff supplied Bunker Services to the Defendants Nos. 1 and 2, on the request
on Defendants Nos.4 and 5 on the behalf of Defendant No.3, in the months of January
and March 2020. Secondly when the Plaintiff issued bills for the services. Thirdly
when the Plaintiff continuously kept on pursuing the Defendants for clearance of their
outstanding dues. Fourthly when the Plaintiff made last request to the Defendant for
clearing t heir outstanding amount and Finally when the Defendants Nos. 1 and 2,
were sold to Defendant No. 6, fraudulently without clearing the outstanding dues of
the Plaintiff".
4. The plaintiff has claimed the following relief in the suit:
"It is therefore plead ed before this honorable court may be pleased to pass judgment
and decree in favour of the Plaintiff and against the Defendants as follows:
1. That the Defendants Nos. 1 and 2, presently docked/ beached at Gadani Ship
Breaking yard, Gadani, Balochistan be Arrested.
2. That the Defendant No.3 is liable to pay the outstanding claim of Plaintiff amounting
to USD $ 94840 -, for bunker services provided on 3rd January 2020 and 29th January
2020 for Defendant No.1 and on 4th March 2020 for Defendant No.2.
3. That there is a maritime lien on the Defendants Nos.1 and 2.
4. That the Plaintiff has a charge on Defendants Nos.1 and 2 as per agreed Terms and
Conditions for bunker services.
5. That the Defendant No.3, the owners of Defendants Nos.1 and 2 be restrained from
carrying out the scrapping of this vessel.
6. That in addition to actual outstanding amount, the Defendant No.3 be ordered to pay
USD $ 80000 - plus 2% per month for every delayed month.
7. Any other benefit that the court deems fit".
5. The suit was filed by the plaintiff on 29.10.2020. It was registered on 09.11.2020.
Amended plaint was filed by the plaintiff on 25.11.2020 by correcting the name and
description of defendants Nos.6 and 8.
6. On the basis of statement made by learned counsel for the plainti ff that both vessels
(i.e. defendants Nos.1 and 2) have presently been anchored at Gaddani beach but have not
yet been dismantled/ scrapped, C.M.A. No.105/2020 was accepted by this Court vide order
dated 16.11.2020 and defendants Nos. 1 and 2 were ordered to be arrested till next date of
hearing. The interim order was further extended on subsequent dates.
7. On 08.12.2020, defendants Nos. 1, 2, 6 and 8 submitted joint written statement
contesting the suit on merits as well as on the basis of preliminary legal objections.
The relevant preliminary legal objections raised by defendants Nos.1, 2, 6 and 8 in
their joint written statement read as follows:
"I. The suit/claim of the Plaintiff is for alleged unpaid invoices towards supply of
bunkers. The claim for supply of bunker/ marine fuel under section 3(2)(1) of the
Admiralty Jurisdiction of High Courts Ordinance, 1980 (the "Admiralty Ordinance")
does not give rise to maritime lien as decisively settled by the superior courts and thus
the Plaintiff cannot enforce its claim against the Defendant No.1 or Defendant No.2
after change of ownership.
II. The Plaintiff failed to satisfy the conditions of section 4(4) of the Admiralty
Ordinance. The admiralty jurisdiction of this Hon'ble High Court has been wrongly
invoked as:
a. the person, if any who is liable in an action in personam in respect of Defendant
No.1 (m.v.Nazlican) is the Defendant No.4 (Atilim Gemi Isletmeciligi A.S) and
b. the personam if any who is liable in a action in personam in respect of Defend ant
No.2 (m.v.Nazlim) is the Defendant No.5 (Nazlim Gemi Isletmeciligi A.S).
III. The Plaintiff has itself stated in the plaint that the Defendant No.8 is the purchaser of
the Defendant No.1 (Nazlican) and Defendant No.6 is the purchaser of Defendant
No.2 (Nazlim). The Defendant No.8 purchased the Defendant No.1 (Nazlican) vide
Bill of Sale dated 22 -9-2020 and payment of sale consideration was paid through
letter of credit, whereas the Defendant No.6 purchased the Defendant No.2 (Nazlim)
vide Bill of Sale d ated 14 -10-2020 and payment of sale consideration was paid
through letter of credit, much before the day when the action/suit was brought.
IV. The Defendant No.1 was beached on 3 -10-2020 about 33 days prior to the filing of
the captioned Admiralty Suit, wh ereas the Defendant No.2 was beached on 18 -10-
2020, about 18 days prior to the filing of the captioned Admiralty suit. It is submitted
that once beached, the Defendant No.1 and Defendant No.2 have lost all their
respective attributes of a 'ship/vessel' as they are not capable of navigation as they are
neither seaworthy nor capable of getting any seaworthy certificates. When the suit
was filed, after beaching of the Defendants Nos.1 and 2 (when it ceased to be a
vessel) and further when the Defendant No.1 ha s been demolished over 70%, which
fact was known to the Plaintiff and has obtained wrongful arrest thereof from this
Honorable Court in active and deliberate supersession of material facts.
V The present suit is a dispute exclusively between the Plaintiff and the Defendant No.4
(who ordered alleged bunker supplies or the Defendant No.3 allegedly beneficial
owner of the Defendant No.1 at the time of making alleged supplies of bunker fuel.
The plaintiff's claim at best is against the Defendant No.3, 4 or 5 in personam, none of
whom is the owner of the Defendant No.1 or 2.
VI. The Plaintiff and the Defendants Nos.3, 4 and 5 are Turkish companies, yet the
Plaintiff chose to sue the said Defendants in Pakistan which is not permissible.
VII. Neither any cause of a ction accrued within the territorial jurisdiction of the court nor
any of the Defendants Nos.3, 4 and 5 reside or carries on the business within the
jurisdiction of this Hon'ble High Court".
8. The relevant paras of the joint written statement of defendant s Nos.1, 2, 6 and 8
pertaining to the merits of the case read as follows:
"2. That the contents of para -2 as stated are denied. The Defendants Nos.1 and 2 on
the day when the action/suit was brought had already been sold and owned by the
Defendants Nos.8 and 6 respectively. It is submitted that: -
Nazlican
(a) The true facts pertaining to Defendant No.1 (Nazlican) are that Defendant No.8 is/was
the owner of the Defendant No.1 at the time when the action/suit was filed. The
Defendant No.8 entered into a Memorandum of Agreement (MOA) dated 17 -0-
2020(sic.) for purchase of Defendant No.1 for demolition purposes with YALUMBA
INC. C/O 6 Shenton Way, #18 -08C, OUE Downton 2, SINGAPORE 068809
(hereinafter the Seller) @ US$ 342 per LDT long tonne. In terms of the said MOA,
the Defendant No.8 opened a Letter of Credit (LC) No.201NSU008905938 dated 21 -
9-2020 through Bank Alfalah Ltd. In favour of the said Seller/beneficiary. The Seller
issued Commercial Invoice dated 22 -09-2020 and also transferred the ownership and
executed Bill of Sale dated 22 -09-2020 in favour of the Defendant No.8. The payment
of US$ 1,312,356.60 (United States Dollars One Million Three Hundred Twelve
Thousand Three Hundred Fifty -Six and Cents Sixty Only) under the said LC was
encashed/released o n 28-09-2020 in favour of the Seller.
(b) The aforesaid Seller had earlier purchased the Defendant No.1 from one Messrs
Murali Maritime Inc. Nevis through an executed Bill of Sale dated 21 -09-2020. The
said Messrs Murali Maritime Inc. purchased the Defend ant No.1 from one M/s BAF
Bunkering and Shipping S de RL, Panama through an executed Bill of Sale dated 18 -
09-2020. The Defendant No.4 (Atilini Gemi Isletmeciligi A.S) sold Defendant No.1
on 11 -06-2020 and a Deletion Certificate was issued by the Turkish International
Register of Ships in this regard. The vessel was transferred to Panama Registry and
requisite Provisional Registration Certificate from the Panama Maritime Authority
No. 52728 -PEEXT was issued showing the said BAF Bunkering and Shipping S de
RL, Panama as owner of the Defendant No. 1. The Consulate General of Panama
issued a Certificate certifying that the Defendant No.1 appears provisionally
registered at the Public Registry Ships of Title at Panama and that there are no
encumbrances register ed on the vessel.
(c) The entire sale consideration was paid to the said Seller through an irrevocable Letter
of Credit No.201NSU008905938 dated 21.09.2020 through Bank Alfalah Ltd. In
favour of the said Seller/beneficiary much before the filing of the ins tant suit, whereas
the alleged claim for supply of bunker fuel is at the time when the Defendant No.1
was owned by Defendant No.4.
Nazlim
(d) The true facts pertaining to Defendant No.2 (Nazlim) are that the Defendant No.6
is/was the owner of the Defenda nt No.2 at the time when the action suit was filed.
The Defendant No.6 entered into a Memorandum of Agreement (MOA) dated
3.10.2020 for purchase of Defendant No.2 for demolition purposes with ACE EXIM
PTE LTD, 10, Anson Road, International Plaza, # 28 -11, Singapore 079903
(hereinafter the Seller) @ US$ 340 per LDT long tonne. In terms of the said MOA,
the Defendant No.6 opened a Letter of Credit (LC) No.201 NSU0089 - 6484 dated 6 -
10-2020 through Bank Alfalah Ltd. In favour of the said Seller/beneficiary. The Seller
issued Commercial Invoice dated 14 -10-2020 and also transferred the ownership and
executed Bill of Sale dated 14 -10-2020 in favour of the Defendant No.6. The payment
of US$ 1,590,904.20 (United States Dollars One Million Five Hundred Ninety
Thousan d Nine Hundred Four and Cents Twenty Only) under the said LC was
encashed/released on 14 -10-2020 in favour of the Seller.
(e) The aforesaid Seller had purchased the Defendant No.2 from one Messrs BAF
Bunkering and Shipping S de RL, Panama through an execut ed Bill of Sale dated 5 --
10-2020. The Defendant No.5 (Nazlim Gemi Isletmeciligi A.S) sold Defendant No.2
on 12.06.2020 and a Deletion Certificate was issued by the Turkish International
Register of Ships in this regard. The vessel was transferred to Comoro s Registry and
requisite Registration Certificate from the Maritime Administration of Union of
Comoros No.20/REG/1300737/584 dated 12 -06-2020 was issued showing the said
BAF Bunkering and Shipping S de RL, Panama as owner of the Defendant No.2
w.e.f. 12 -06-2020. The said Maritime Administration of Union of Comoros has also
issued a Certificate of Non -Encumbrance No.20/NEC/1300737/0253 dated 07 -10-
2020 certifying that the vessel is free from registered encumbrances, maritime lien,
mortgage, taxes and other d ebts whatsoever on record.
(f) That the entire sale consideration was paid to the Seller through an irrevocable Letter
of Credit No.201NSU008906484 dated 6.10.2020 through Bank Alfalah Ltd in favour
of the said Seller/beneficiary much before the filing of the instant suit, whereas the
alleged claim for supply of bunker fuel is at the time when the Defendant No.2 was
owned by Defendant No.5.
3-7 That the contents of paras 3, 4, 5, 6 and 7 are denied for want of knowledge as the
same pertains to Defendant No. 3, 4 or 5. The alleged supplies of bunker in January,
2020 and March 2020 were not supplied on the behest of the Defendant No.6 or
Defendant No.8 and in such alleged supplies do not give rise to maritime lien as
decisively settled by the superior courts an d thus the plaintiff cannot enforce its claim
against the Defendant No.1 or Defendant No.2 after change of ownership or from its
owners Defendant No.8 or 6 respectively.
8. That the contents of para 8 is vehemently denied. The Hon'ble apex Court has
decisi vely settled the law that the claim for necessaries (bunkering/marine fuel) under
section 3(2)(1) of the Ordinance does not give rise to maritime lien and therefore,
once the vessel changed hands, no claim of the plaintiff can survive against the
Defendant No.1 or 2. It is vehemently denied that the alleged claim of supply of
necessaries travel with the ship. It is further submitted that only the law of the form
(lex fori) viz. Pakistani law will regulate the admiralty jurisdiction under the
Admiralty Ordin ance as per judgment of the Apex Court. It is denied that Turkish law
will apply in Pakistan and in any case, the allegation that as per Turkish law supply of
necessaries create maritime lien is denied.
9. That the contents of para 9 as stated is denied. I t is denied that the Defendant No.3
sold the Defendants Nos. 1 and 2 to the Defendant No.6 as alleged in this para under
reply. The true facts as to how the Defendant No.8 acquired the ownership of
Defendant No.1 and Defendant No.6 acquired the ownership o f Defendant No.2 are
stated in para 2 above and are not reiterated for the sake of brevity only. It is denied
that the Defendant No.7 is the regulator of shipbreaker as alleged in the para under
reply. The Defendant No.7 is merely an association of the shi pbreakers and looks
after the welfare of the shipbreakers. It is vehemently denied that the sales are
violation of international law or alleged ethics of the trade. The respective
sales/transfer are lawful, bona fide, without notice of the alleged claim of the plaintiff
against Defendant No. 3, 4 or 5 and after payment of valuable consideration. The
sales/transfers are backed up by the respective Memorandum of Agreements, Bills of
Sale and Letters of credit issued by banks. These documents clearly establish es that
on the day when the suit was filed, the Defendants Nos. 1 and 2 were not beneficially
owned by the Defendant No. 3, 4 or 5/previous owners and as such the precondition
for an action in rem against the Defendants Nos.1 and 2 in terms of section 4(4) of the
Admiralty Ordinance was not met by the plaintiff. The notice dated 22 -10-2020
addressed to Mr. Ikhlaq Memon has no legal value, sanctity or value under the law as
the same was issued much after the completion of sale of Defendants Nos. 1 and 2. It
is surprising that the plaintiff and the Defendants Nos. 3, 4 and 5 are all Turkish
entities but no legal notice was either alleged to have been sent to Defendant No. 3, 4
or 5 nor attached with the plaint. For completion of facts, it is submitted that: -
(a) The Defendant No.1 was beached on 3 -10-2020, about 33 days prior to the filing
of the captioned Admiralty suit and Import General Manifest (IGM) No.61 dated
4-10-2020 was filed by the shipping agent of the vessel with the Customs
authorities attaching amongst other MOA and the letter of credit.
(b) That following its beaching at the yard, the regional Environment Protection
Agency at Hub, Lasbella, Balochistan (EPA) was pleased to inform the
Defendant No.8 on 2 -11-2020 that Initial Environmental Examina tion (IEE) has
was completed on 9 -10-2020 and that permitted the Defendant No.8 to initiate
demolition process including hot -works i.e. torch can also be used for cutting
hull.
(c) That in pursuant to the said permission, the hot works of the demolition in itiated
from the date of the said permission, whereas dismantling of all combustible
items initiated on 9 -10-2020 after receipt of IEE. The vessel at the time of the
arrest order has been dismantled/ demolished over 70% and thus by no stretch of
imaginatio n can be treated as vessel.
(d) That the Defendant No.8 is incurring a daily charge of Rs.48,753/ - plus
Rs.9,408/ - in respect of the LC established with Bank Al -Falah for the payment
of the purchase price of the Defendant No.1, which cost is in addition to the cost
of labor, yard and other allied costs incurred by the Defendant No.8 to prepare for
the dismantling of the Vessel, and unless the order dated 16.11.2020 is
immediately recalled by this Hon 'ble High Court, the costs for the Defendant
No.8 will mo unt exponentially for which it holds the plaintiff fully liable.
(e) The Defendant No.2 was beached on 18 -10-2020, about 18 days prior to the filing
of the captioned Admiralty Suit and Import General Manifest (IGM) No.67 dated
18-10-2020 was filed by the shipping agent of the vessel with the Customs
authorities attaching amongst other MOA and the letter of credit.
(f) That following its beaching at the yard, the regional Environment Protection
Agency at Hub, Lasbella, Balochistan (EPA) was pleased to infor m the
Defendant No.6 on 6 -11-2020 that Initial Environmental Examination (IEE) has
been completed. This permits the Defendant No.6 to initiate demolition process
except the use of hot -works i.e. no torch can be used for cutting hull.
(g) That the Defendant No.6 is incurring a daily charge of US$ 58.84 (approx..
Rs.9458/ -) in respect of the LC established with Bank Al Falah for the payment
of the purchase price of the Defendant No.2, which cost is in addition to the cost
of labor, yard and other allied costs incurred by the Defendant No.6 to prepare for
the dismantling of the Vessel, and unless the same is orders dated 16 -11-2020 are
immediately recalled by this Hon'ble Court, the costs for the Defendant No.6 will
mount exponentially for which it holds the pl aintiff fully liable.
10-12 That the contents of paras 10, 11 and 12 are denied for want of knowledge as
the same pertains to Defendant No.3, 4 or 5. The suit filed by the Plaintiff for
recovery of its alleged outstanding dues in Pakistan against the Defen dants Nos.1
and 2 which are not owned by Defendants Nos. 8 and 6 and has nothing to do
with the Defendants Nos.8 and 6 is highly unjust and prejudicial to the latter, and
will not, in any manner, benefit the plaintiff either.
13. That the contents of para 13 are vehemently denied. It is denied that the plaintiff
suffered any loss or injury because of any act or omission of the answering
Defendants. The plaintiff has no maritime lien against the Defendant No.1 or 2
and the suit of the plaintiff is liable to dismissed/plaint is liable to be rejected.
14. That no cause of action accrued against the answering Defendants in view of the
preliminary legal objections as well as on merits of the case. The admiralty suit in
rem against the Defendant No. 1 or 2 as well as the suit against the Defendants
Nos. 8 and 6 is not maintainable. The alleged supplies of bunker fuel do not
constitute maritime lien and the claim is not maintainable under section 4(4) of
the Admiralty Jurisdiction.
9. The verified contents of writte n statement of defendants Nos.1, 2, 6 and 8 are
supported by affidavit of defendant No.8.
No replication to the written statement or affidavit in rejoinder has been filed by the
plaintiff to deny the relevant facts disclosed in their joint written stateme nt by respondents
Nos.1, 2, 6 and 8.
10. On the basis of preliminary legal objections raised by defendants Nos.1, 2, 6 and 8 in
their joint written statement about maintainability of the Admiralty suit under the provisions
of the Ordinance, with consent of learned counsel for the parties, the following legal issue
was framed by this Court on 21.12.2020:
"As to whether the suit filed by the plaintiff is maintainable under the provisions of
the Admiralty Jurisdiction of the High Courts Ordinance, 1980"?
11. Learned counsel for the plaintiff and defendants Nos.1, 2, 6 and 8 were heard at
length on 21.12.2020.
12. After hearing learned counsel for the plaintiff and learned counsel for defendants Nos.
1, 2, 6 and 8. I have gone through the pleadings of the parties, have perused the available
record and have also gone through the provisions of the Ordinance.
Section 3(2)(l) of the Ordinance, being relevant, read as follows:
3. Admiralty Jurisdiction of the High Court. --- (1) .......
(2) The Admiralty juris diction of the High Court shall be as follows, that is to say,
jurisdiction to hear and determine any of the following causes, questions or claims ----
(a) ...................
(b) ...................
(c) ...................
(d) ...................
(e) ...................
(f) ...................
(g) ...................
(h) ...................
(i) ...................
(j) ...................
(k) ...................
(l) any claim in respect of necessaries supplied to a ship;
(m) ...................
(n) ......... ..........
(o) ...................
(p) ...................
(q) ...................
(r) ...................
13. Section 4(1)(2)(3) and (4) of the Ordinance, also being relevant, is reproduced herein
below:
4. Mode of exercise of Admiralty jurisdiction. - (1) Subject to the provisions of
section 5, the Admiralty jurisdiction of the High Court may in all cases be invoked by
an action in personam.
(2) The Admiralty jurisdiction of the High Court may in the cases mentioned in
clauses (a) to (d), (i) and (r) o f subsection (2) of section (3) be invoked by an action in
rem against the ship or property in question.
(3) In any case in which there is a maritime lien or other charge on any ship, aircraft
or other property of the amount claimed, the Admiralty jurisdi ction of the High Court
may be invoked by an action in rem against that ship, aircraft or property.
(4) In the case of any such claim as in mentioned in clauses (e) to (h) and (k) to (q) of
subsection (2) of section 3, being a claim arising in connection with a ship, where the
person who would be liable on the claim in an action in personam was, when the
cause of action arose, the owner or charterer of, or in possession or in control of, the
ship, the Admiralty jurisdiction of the High Court may, whether t he claim gives rise
to a maritime lien on the ship or not, be invoked by an action in rem against -
(a) that ship, if at the time when the action is brought it is beneficially owned as
respects majority shares therein by that person; or
(b) any other ship which, at the time when the action is brought, is beneficially owned
as aforesaid".
14. In the instant case, defendant No.4 availed 60 metric tonnes fuel/bunker services
worth USD 47,100 on 03.01.2020 for defendant No.1 as its owner from the plaintiff thr ough
defendant No.3 at Port Mersin (Turkey) which was payable from 03.01.2020 to 03.03.2020.
Defendant No.4 further availed 40 metric tonnes of fuel/bunker services for defendant
No.1 worth USD 30,000/ - through defendant No.3 at Port Iskenderun (Turkey) w hich was
payable up to 25.03.2020.
Defendant No.5 availed 29 metric tonnes of fuel/bunker services worth USD 17,440
on 04.03.2020 for defendant No.2 as its owner from plaintiff through defendant No.3 which
was payable up to 03.05.2020.
15. Before clearing the above liability/paying the price of fuel/ bunker services to the
plaintiff, defendants Nos. 4 and 5 sold defendants Nos.1 and 2.
Defendant No.4 sold defendant No.1 to BAF bunkering and shipping S de RL Panama
on 11.06.2020.
BAF bunkering and shipping S de RL Panama further sold defendant No.1 to Messrs
Murali Maritime Inc. Navis on 21.09.2020.
Messrs Murali Maritime Inc. Navis further sold defendant No.1 to YALUMBA INC.
Singapore on 21.09.2020.
YALUMBA INC. Singapore sold defendant No.1 to d efendant No.8 on 22.09.2020
through Bill of Sale dated 22.09.2020 against letter of credit dated 21.09.2020 of Bank Al -
Falah Limited opened by defendant No.8 in favour of the seller.
Defendant No.5 sold defendant No.2 to BAF bunkering and shipping S de RL Panama
on 12.06.2020.
BAF bunkering and shipping S de RL Panama further sold defendant No.2 to ACE -
EXIM PTE LTD Singapore on 05.10.2020.
ACE -EXIM PTE LTD Singapore sold defendant No.2 to defendant No.6 against letter
of credit of Bank Al -Falah Limited o pened on 06.10.2020 for which the seller issued
commercial invoice and Bill of Sale dated 14.10.2020 in favour of defendant No.6.
16. As per contents of written statement, defendant No.2 has been dismantled/scraped
about 70% and it cannot be considered as a vessel under the provisions of the Ordinance.
17. The relevant facts of 70% dismantling/scrapping of defendant No.2 by its purchaser
i.e. defendant No.6 at Gaddani beach, sale of defendants Nos.1 and 2 by defendants Nos.4
and 5 before paying the price of fuel/bunker services to the plaintiff and further sale of
defendants Nos. 1 and 2 by its purchasers have been concealed by the plaintiff in the plaint
and same have been disclosed by defendants Nos. 1, 2, 6 and 8 in their written statement
which have not been disputed/denied by the plaintiff as no replication to the written
statement or any affidavit in rejoinder has been filed by the plaintiff.
18. Section 3 and section 4 of the Ordinance have to be read with in conjunction.
Under section 3(2)(l) of the Ordinance, the Admiralty jurisdiction of this Court can be
invoked to determine any cause/claim in respect of necessaries supplied to a ship including
fuel/bunker services but according to section 4(4) of the Ordinance, in case of a claim under
section 3(2 )(l) of the Ordinance arising in connection with a ship, whether the claim gives
rise to a Maritime lien on the ship or not, the Admiralty Jurisdiction of this Court can be
invoked by an action in rem against the ship if at the time when the action is brou ght, that
ship is beneficially owned as respects majority shares therein by that person who would be
liable on the claim in an action in personam.
19. In the instant case, admittedly defendants Nos. 4 and 5 did not pay the price of
fuel/bunker services to the plaintiff by the due dates and before clearing their liability of
fuel/bunker services availed for defendants Nos.1 and 2, the defendant No.4 sold defendant
No. 1 on 11.06.2020 and defendant No.5 sold defendant No.2 on 12.06.2020.
The defendants Nos. 1 and 2 were further sold by its purchasers as mentioned in detail
in para -15 above.
20. The instant suit has been filed by the plaintiff on 29.10.2020. On the date when action
has been brought by the plaintiff against the defendants by filing the instant Admiralty suit
i.e. 29.10.2020, both the ships i.e. defendants Nos.1 and 2 were not beneficially owned by
defendants Nos. 4 and 5 and as such the precondition for an action in rem against the ships
(i.e. defendants Nos.1 and 2) in terms of section 4(4)(a) of the Ordinance is lacking due to
which the Admiralty suit filed by the plaintiff against the defendants is held not maintainable
before this Court under the provisions of the Ordinance. Reliance in this regard is placed on
the case of Messrs Internationa l Bunkering Middle East DMCC v. M. T. Tridonawati, 2012
CLD 1611, wherein it has been held as follow:
"15. The claim of the plaintiff is in respect of `necessaries' supplied to the ship,
therefore it needs examination whether the claim of the plaintiff is covered by
subsection (4) of section 4 of the Ordinance. A claim in rein against the ship would be
provided, in the language of clause (A) of the said subsection, the "ship, if at the time
when the action is brought it is beneficially owned... by that per son." The plaintiff
however has not rebutted that the ship on the day when the action was brought
(February 3, 2012) had already been sold to Sea Charm Shipping. In this regard
'Memorandum of Agreement' was executed by defendant No.2 on January 25, 2012
and 'Bill of Sale' executed in favour of Sea Charm Shipping on February 3, 2012 at
Singapore. The time of the execution of the Bill of Sale has not been mentioned,
however, as Singapore lies to the east of Pakistan the day starts earlier there. On its
part S alam's International has produced 'Memorandum of Agreement' executed in its
favour by Yalumba Inc. on February 2, 2012. Salam's International had also
established Irrevocable letter of credit through Bank Al -Habib Limited in favour of
Yalumba Inc. as payme nt for the ship on February 2, 2012. Whilst two parties may
manipulate dates on agreements or on bills of sale privately executed amongst
themselves, an irrevocable letter of credit is issued by a bank and cannot be
manipulated or back dated, nor any alleg ation is made in this regard by the plaintiff.
Salam's International had also obtained insurance (Marine Hull Cover Note) in
respect of the ship on February 3, 2012 from Habib Insurance Company Limited. A
number of formalities have to be met before a bank will establish an irrevocable letter
of credit or an insurance company provides insurance cover and it is reasonable to
presume that all this could not have been arranged at once, immediately upon learning
about the filing of the suit. The documents establ ish that on the day the suit was filed
(February 3, 2012) the ship was not `beneficially owned' by defendants Nos.2, 3
and/or 4, a precondition for an action in rem against the ship in terms of section
4(4)(A) of the Ordinance".
21. Reliance in the above regard is also placed on the case of Atlantic Steamer's Supply
Company v. m. v. Titisee and others, PLD 1993 SC 88, wherein it has been held as follows:
"18. At this stage, it may be pertinent to point out that the appellants' claim falls
within the above -quoted cause (l) and (m) of subsection (2) of section 3 of the
Ordinance, namely 'any claim in respect of necessaries supplied to a ship" and "any
claim in respect of the construction, repair or equipment of ship or dock charges or
dues," respectively. No ne of the above two clauses has been mentioned in subsections
(2), (3), (6) and (7) of section 4. However, they are covered by subsection (4) of
section 4 but in order to press into service above subsection (4)m it is incumbent to
show that the vessel in q uestion at the time of the commencement of the action was
beneficially owned as respects majority shares therein by the persons against whom
action in personam could have been maintained. In the instant case, it is an admitted
position that at the time of filing of the present suit, the vessel was not owned by
respondent No.2, who had received the supplies and got the repairs carried out, but
respondent No.5 was the owner. In this view of the matter, above subsection (4) is not
applicable. It will not be ou t of context to point out that section 4 of the Ordinance is
based on section 3 of the Administration of Justice Act, 1956, which is in force in
England. It may be observed that above clause (a) of subsection (4) of section 4 of the
Ordinance has been impr oved upon inasmuch as in place of the words, "it is
beneficially owned as respects all shares", the words "it is beneficially owned as
respects majority shares" have been employed. In other words, subsection (4) of
section 4 of the Ordinance can be pressed into service even when the person who
would be liable on the claim in an action in personam owned majority shares in the
ship and not all the shares, which is the requirement of subsection (4) of section 3 of
the English Act.
19. We may also observe that the words "or other charge" appearing in subsection (3)
of section 4 after the words "a maritime lien" would not cover a case falling under the
above clauses (l) and (m) of subsection (2) of section 3 of the Ordinance. The above
words "other charge" have been subject matter of interpretation in the case of Smith's
Dock Co. Ltd. v. Owners of the m.v. St. Merriel (1963) I All ER 537), wherein
Hewson, J. of Probate, Divorce and Admiralty Division, has made the following
observations: -
"As I read in this cont ext 'charge' refers to a charge in the nature of a mortgage. I am
fortified in this opinion by the wording of section 1(4)(c) of this Act. Such claims are
confined to the High Court. I now turn to section 3(3), which provides for similar
jurisdiction 'In a ny case in which there is a maritime lien or other charge on any
ship.... of the amount claimed.... '. Those clauses of claim are not confined to the High
Court. The Admiralty jurisdiction of the Liverpool Court of Passage or any county
Court may be invoke d subject to the provisions of section 2 of this Act; but there have
been some subsequent Acts which affect the jurisdiction of the county Court.
(2) A maritime lien does not in English law attach to a ship in respect of a claim such as
is made in this cas e, that is, a claim in respect of repairs to a particular ship. Where a
maritime lien exists, this subsection gives a right to an action in rem without any
restriction as to ownership . The words which have to be considered in this section
are, "or other c harge on any ship.... of the amount claimed"; and "other charge" is not
defined. But be it noted that the words are not "other claims". Claims in general are
dealt with in subsection (4).
Counsel for the defendants has submitted that where a statute enlar ges the jurisdiction
or changes the law it must do so in express terms which must be closely construed,
and in support of that submission he referred me to Smith v. Brown ( (1871), LR 6
QB 729 at p.733). He also referred me to Leach v. R. ((1912) A.C. 305) . Counsel for
the plaintiffs did not argue otherwise.
I must, therefore, do my best to construe this subsection strictly. "Other charge"
Obviously is meant to refer to something which though not within the restricted
definition of maritime lien, is, never theless, not as wide as 'any claim arising in
connection with the ship'. "
20. We may observe that Mr. Akbar Mirza, learned counsel for the appellants, is
unable to point out that at any point of time in Indo -Pak Sub -Continent, the High
Courts have treate d the items covered by above clauses (1) and (m) as the items
entitling a supplier to claim maritime lien in order to press into service the proviso to
subsection (2) of section 3. However, he has invited our attention to the case of
Global Shipping Co. (P vt.) Ltd. v. m.v. Sea Elite and others 1985 CLC 1569 and the
case of Azhar Ahmad Khan and others v. m.v. Ashar and 3 others PLD 1985 Quetta
278, in which inter alia the above sections 3 and 4 have been construed. The above
authorities do not touch upon the question which is in issue before us".
22. According to settled principles, claim under section 3(2)(l) of the Ordinance cannot
be considered as a "maritime lien" under the provisions of the Ordinance to attract the
Admiralty jurisdiction of High Courts. Reliance in this regard is placed on the above referred
case of 'ATLANTIC STEAMER'S SUPPLY COMPANY' as well as on the case of Hong
Leong Finance Limited v. Asian Queen, PLD 1991 SC 1021 wherein it has been held as
follows:
" ..... Every claim relating to the ship cannot create maritime lien. It arises and
attaches to the ship in cases of bottomary, damage done by a ship, salvage, Seamen
and Master's wages and Master's disbursements" .....
23. In the facts and circumstances of the case, it is concluded that the instant Admiralty
suit filed by the plaintiff against the defendants is not maintainable under the provisions of
the Ordinance and accordingly, the preliminary legal issue is resolved in negative.
24. The cases of Yousuf Kazi v. s.s Phoenix, PLD 1978 Karachi 1052, Sajid Plastic
Factory v. MSC Bahamas, PLD 2020 Sindh 568, Khadija Edible Oil Refinery (Pvt.) Ltd. v.
M.T "Galaxy", 2011 CLD 709, Ahmed Investment Ltd. v. M.V. "Sunrise IV", PLD 1980
Karachi 229, Yukong Ltd. South Korean Company. v. M.T. Easte rn Navigator, PLD 2000
Supreme Court 57, Diamond Engineering Mechanical, Electrical and Marine Engineering
Contractors v. M.V LUCTOR -I, PLD 1978 Karachi 837 and MSC Textiles (Private) Limited
v. Asian Pollux, 2007 CLD 1465 relied upon by learned counsel fo r the plaintiff are
distinguishable and same are not attracted to the facts and circumstances of the instant case.
For the above reasons, the Admiralty suit filed by the plaintiff against the defendants,
being not maintainable under the Ordinance, is dism issed. The earlier interim order dated
16.11.2020 passed by this Court with regard to arrest of ships MV Nazlican (defendant No.1)
and MV Nazlim (defendant No.2) is recalled.
MH/62/Bal. Suit dismisseThis judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
let us know.