PLJ 2022 Quetta 78
Present : MUHAMMAD KAMRAN KHAN MULAKHAIL , J.
DANAE INTERNATIONAL CORPORATION-- Plaintiff
versus
M.V. CAMEL (EX -CAMELOT) and another --Respondents
Admiralty Suit No. 01 of 2021, decided on 31.5.2021.
Admiralty Jurisdiction of High Court Ordinance, 1980 (XLII of 1980) --
----Ss. 3(2)(a) & 4 --Civil Procedure Code, (V of 1908), O.VII R. 11--Suit for recovery --
Negotiation for sale of vessel --Refusal to sale of
vessel --Vessel was sold out to Defendant No-- 1--Issuance of legal notice --Mari time claim--
Admiralty jurisdiction --Power of Court --Non -payment of amount regarding sale of vessel --
Maintainability --Neither plaintiff has paid any amount in respect of alleged sale transaction
nor delivery has taken place nor any such promise of payment a nd delivery has been made by
either of parties --Claim of plaintiff does not arise out of any of conditions provided in section
3 (2) of Ordinance as plaintiff has no claim of a nature provided in section 3(2) of Ordinance
upon or against defendant vessel --Damages apparently are not covered by provisions of
section 3(2) of Ordinance and cannot, in my view, be enforced in rem against defendant ship--Plaintiff has failed to make out a case for passing any decree his favour and against defendants in terms as pr ayed for --Suit was rejected. [Pp. 82 & 87] C, E, F & G
PLD 2011 Karachi 102 & 2002 SCMR 1771 ref.
Word & Phrases --
----Valid gift--Basic requirements --Basic requirements of a valid and enforceable contract are
offer, acceptance, exchange of consideration and mutuality of obligations. [P. 81] A
Sale Transaction --
----Essential elements --Essential elements for any sale transaction are (a) payment of sale price
of property moveable or immovable or promise to pay same by buyer to seller, and (b)
delivery of possession of property. [P. 82] B
Admiralty Jurisdiction of High Court Ordinance, 1980 (XLII of 1980) --
----S. 3(1)(g) --Claim of right--Any claim for loss of or damage to goods carried in a
ship. [P. 86] D
Mr. Agha Zafar , Advocate for Plaintiff.
Mr. Ismail Zahid, Advocate for Respondents. Date of hearing: 21.5.2021.
O
RDER
The plaintiff has filed this suit under the Admiralty Jurisdiction of this Court, for
recovery of damages of US $ 2,038,982 against the defendants with furthe r 15% interest per
annum. On the facts that Defendant No. 1, is the purchaser of vessel flying flag of St Vincent &
Gredadines , whereas, the Defendant No. 2 was the previous owner of the vessel. According to
facts, disclosed in the plaint, the plaintiff en tered into negotiation for sale of the defendant vessel
with the Defendant No. 2, while on 28th October 2020, they arrived to an agreement in terms of description, price, deposit, delivery, which was confirmed by the Defendant No. 2 on 29th
October 2020, t hus was requested by the plaintiff to forward the escrow agreement, but the same
was not forwarded by the Defendant No. 2 with an excuse that the approval of the Board of
Directors (BoD) is solicited; that it was assured by the authorized representative of the Defendant
No. 2 that no negotiation is carried out with anyone in respect of sale of the vessel, and thereafter
on 06th November 2021, the plaintiff was informed that the approval of BoD has been obtained
and memorandum of agreement (MOA) would be sent to the plaintiff for perusal; that since the plaintiff was awaiting the MOA for signature and was preparing for taking over the possession of the vessel, meanwhile, the Defendant No. 2 asked the plaintiff to revise the offer, as they are in negotiation w ith another buyer; that the plaintiff and the Defendant No. 2 were in agreement in
respect of the sale of vessel, but on 10th November 2020, the defendant refused to process the
sale of vessel with the plaintiff, and meanwhile, the plaintiff came to know that the defendant has
sold out the vessel to Defendant No. 1 for demolition in Pakistan, thus a legal notice was also issued to the Defendant No. 2; that due to the stubborn attitude of the Defendant No. 2 and reneging from the agreed sale of vessel, the plaintiff suffered loss of expected profit, and expenditure occurred during inspection and management, thus was/is having maritime claim against the defendant vessel under Section 3(2)(a) of the Admiralty Jurisdiction of the High Court Ordinance, 1980 of this Court; that the Defendant No. 2 was duly informed about the damages caused by the Defendant No. 2, but he did not pay any heed towards the request of the plaintiff, hence this suit with the following prayer:
“(i) Pass judgment and decree in favour of the Plaintiff in the sum of US$2,038,982
against the Defendants and whoever is interested in the res, with further 15 % interest per annum.
(ii) Direct the Defendant vessel to be arrested forthwith and may not be allowed to
leave the jurisdiction of this Hon’ble High Court unless and until solvent securities/bank guarantee equivalent to the suit amount is deposited with the officer of this Hon‘ble Court
(iii) Restrain the demolition of the Defendant vesse l;
(iv) Upon failure of the Defendants to furnish security, direct the Defendant vessel
alongwith her tackles, apparels and appurtenances; be sold and the claim of the Plaintiff be satisfied from the sale proceeds of the said Defendant vessel.
(v) Grant full cost of the suit.
(vi) Grant any further and better relief as may be deemed appropriate by this Hon‘ble
Court in the interest of Justice.”
2. The Defendant No. 1 filed an application under Order VII Rule 11 Civil Procedure
Code, challenging the maintainability of the instant suit on the ground that this Court being
empowered under the Admiralty Jurisdiction of High Court Ordinance 1980, is incompetent to proceed with the cases of recovery of damaged due to alleged recession of contract and performance of obligations.
3. I have considered the submission made by learned counsel and have gone through the
record of the case.
4. The record indicates that the plaintiff and the Defendant No. 2 were statedly in
negotiation with regard to purchase and sale of vessel, and as per plaintiffs stance they had
agreed to all terms of transaction, and only the terms were required to be brought into written shape, which process was in line, but meanwhile the Defendant No. 2 sought some time as the approval of board of directors was solicited, however, on according the approval by the BoD, the defendant asked the plaintiff to revise his rate as the Defendant No. 2 was in negotiation with third party, and meanwhile, the fact was revealed that the defendant vessel has been sold out for demolition in Pakistan. The plaintiff is pressing his right on the basis of alleged verbal assurance arrived at between him and the Defendant No. 2, whereas the Defendant No. 2 asserted that no
such contract agreement was executed in between them and till execution of any agreement
between them, mere negotiation cannot be termed as a valid contract agreement.
Be that as it may, it is settled law that a contract is an agreement having a lawful object,
entered into voluntarily by two or more parties each of whom intends to create one or more legal obligations between them. The basic requirements of a valid and enforceable contract are offer, acceptance, exchange of consideration and mutuality of obligations. Further, a fundamentally important ingredient of a valid contract is that it should be between the parties who are
competent to contract. The intention of the parties to a contract must be looked at to determine where a contract has come into existence. The essential elements for any sale transaction are (a)
payment of sale price of the property moveable or immovable or promise to pay the same by the buyer to the seller, and (b) delivery of possession of the property. In case, these two essential terms of sale of immovable property ca n be determined on the basis of contents of the agreement
between the parties, with certainty, it may constitute a valid agreement of sale between the
parties which, subject to discretion of the Court, can be directed to be specifically performed.
The basi c test for resolving whether the parties had reached consensus ad idem for concluding a
contract is to ascertain where the parties had consensus on all material points at the time the said agreement was executed between the parties. But in the case in hand , neither the plaintiff has
paid any amount in respect of alleged sale transaction nor the delivery has taken place nor any such promise of payment and delivery has been made by either of the parties. Moreover, even the price did not seem to be agreed by t he parties, as the plaintiff was asked to revise his rate, instead
the plaint shows that the plaintiff was preparing to take the possession of the defendant vessel. Even according to the plaint, the parties to such negotiation had allegedly agreed that a f ormal
and detailed agreement would follow. There is no denial of the fact that no such agreement followed, thus, mere negotiation, if any, or any consensus thereon, without being in written form,
cannot be termed a valid and enforceable contact agreement.
5. The plaintiff is seeking damages due to the alleged reneged act of the Defendant
No. 2 from the contract agreement, while invoking the Admiralty Jurisdiction of this Court. The provisions of sections 3 and 4 of the Admiralty Jurisdiction of High Courts Ordinance, 1980 (the Ordinance) stipulates as follows: --
“3. Admiralty Jurisdiction of the High Court.--
(1) The Sindh High Court and the High Court of Baluchistan shall have the exercise,
within their respective territorial jurisdiction, Admir alty jurisdiction as is in this
Ordinance provided and the Lahore High Court and the Peshawar High Court shall, within their respective territorial jurisdiction, have and exercise the said jurisdiction in cases in which any question or claim relating to ai rcraft is to be
determined.
(2) The Admiralty jurisdiction 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) Any claim to the possession or ownership of a ship or to the ownership of
any share therein or for recovery of documents of title and ownership of a ship, including registration certificate, log book and such certificates as may be necessary for the operation or navigation of the ship;
(b) any question arising between the co- owners of a ship as to possession,
employment or earnings of that ship;
(c) any claim in respect of a mortgage of or charge on a ship or any share
therein;
(d) any claim for damage done by a ship;
(e) any cla im for damage received by a ship;
(f) any claim for loss of life or personal injury sustained in consequence of any
defect in a ship or in her apparel or equipment, or of the wrongful act,
neglect or default of the owners, charterers or persons in possession or control of a ship or of the master or crew thereof or of any other person for which wrongful acts, neglects or defaults, the owners, charterers of persons in possession of control of a ship are responsible, being an act, neglect or default in t he navigation or management of the ship, in the loading, carriage
or discharge of goods on, in or from the ship or in the embarkation, carriage or disembarkation of persons on, in or from the ship;
(g) any claim for loss of or damage to goods carried in a ship:
(h) any claim arising out of any agreement relating to the carriage of goods in a
ship or to the use or hire of a ship;
(i) any action or claim in the nature of salvage of life from a ship or cargo or
any property on board a ship or the ship itself or its apparel, whether services rendered on the high sea or within territorial waters of internal waters or in a port, including any claim arising by virtue of the application by or under section 12 of the Civil Aviation Ordinance, 1960, ( XXXII of
1960), of the law relating to salvage to aircraft and their apparel and cargo;
(j) any claim in the nature of towage in respect of ship or an aircraft, whether
services were rendered on the high sea or within territorial waters or internal w aters or in a port;
(k) any claim in the nature of pilotage in respect of a ship or an aircraft;
(l) any claim in respect of necessaries supplied to a ship;
(m) any claim in respect of the construction, repair or equipment of a ship or
dock charges or dues;
(n) any claim by a master or members of the crew of a ship for wages and any
claim by or in respect of a master or member of the crew of a ship for any money or property which, under any of the provisions of the Merchant Shipping Acts or the Merchant Shipping Act, 1923 (XXI of 1923), is
recoverable as wages or in the Court and in the manner in which wages may be recovered;
(o) any claim by a master, shipper, charterer or agent in respect of
disbursement made on account of a ship;
(p) any claim arising out of an act which is or is claimed to be a general
average act;
(q) any claim arising out of bottomry or respondentia;
(r) any claim for the forfeiture or condemnation of a ship or of goods which are
being or have bee n carried, or have been attempted to be carried, in a ship as
a Naval Prize or in violation of customary law of the sea or otherwise, or for the restoration of a ship or any such goods after seizure, or for Doritos of
Admiralty, together with any other jur isdiction for the grant of such reliefs as
are provided under the Merchant Shipping Acts or the Merchant Shipping
Act, 1923 (XXI of 1923), any other jurisdiction which has vested in the High Courts as a Court of Admiralty immediately before the commencement of this Ordinance or is conferred by or under any law and any other jurisdiction
connected with ships or aircraft in respect of things done at sea which has by
tradition or custom of the sea been exercised by a Court of Admiralty apart
from this section.
(3) .......
(4) .......
(5) .......
(a) .......
(b) .......
(c) .......
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 case s 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) of sub- section (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 Admiralt y jurisdiction 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 is mentioned in clauses (e) to (h) and (j) to (q) of sub-section (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 of charterer of or in possession or in control of the ship, the Admiralty jurisdiction of the High Court may, whether the 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.
(5) In the case of the claim in the nature of towage or pilotage in respect of an aircraft, the Admiralty jurisdiction of the High Court may be invoked by an acti on in rem against
that aircraft if at the time when the action is brought it is beneficially owned by the person who would be liable on the claim in an action in personam. (6) In the case of a claim in the nature of a maritime lien, other than a claim on a Bottomry or Respondentia bond or to the possession of the ship, the Admiralty jurisdiction of the High Court may be invoked by an action in personam against the
owners of the property which would have been arrested if the proceedings had been in rem.
(7) Notwithstanding anything in the preceding provisions of this section, the Admiralty
jurisdiction of the High Court shall not be invoked by an action in rem in the case of any such claim as is mentioned in paragraph (n) of sub- section (2) of Section 3 unles s the
claim relates wholly or partly to wages, including any sum allotted out of wages or
adjudged by a competent authority under the relevant law to be due by way of wages. (8) Where, in the exercise of its Admiralty jurisdiction, the High Court orders any ship, aircraft or other property to be sold, the Court shall have jurisdiction to hear and determine any question arising as to the title to, or priorities of claim in, the proceeds of
sale.
(9) In determining for the purposes of sub- sections (4) and (5) whether a person would be
liable on a claim in an action in personam it shall, be assumed that he has his ordinary
residence or a place or business within Pakistan.
From reading of above provisions it is apparent that provision regarding invoking an act ion in
rem against a ship are laid down in section 3(2) of the Ordinance and its various sub- clauses,
which all deal with question of ownership, mortgage, damage done, damage received, loss of life, personal injury, damage to goods, claim arising out of agreement relating to carriage of goods, salvage of life and property, towage, supplies, construction, repairs, claim of master and crew, disbursement, general average, claim arising out of bottomry or respondentia, forfeiture or condemnation of goods etc. w hich all have to do with a delinquent or defaulting ship and in this
respect an action against res is permissible in law. The plaintiff claiming his right under Section 3(1)(g), which speaks about; “any claim for loss of or damage to goods carried in a shi p”, but
his case is entirely on different footings, seeking the damages for the alleged act of the defendant of being reneged from the contract of sale, however, as discussed herein
above, no such agreement existed between them nor proved. Moreover, in the present case
the claim of plaintiff does not arise out of any of the conditions provided in Section 3(2) of the Ordinance as the plaintiff has no claim of a nature provided in section 3(2) of the Ordinance upon or against defendant vessel. The claim of the plaintiff is that it has suffered damages on
account of agreement made by it for selling the defendant vessel to the plaintiff, but have failed in their obligations and to honour their contract, resulting in selling of said vessel to some other party. Such damages apparently are not covered by the provisions of Section 3(2) of the
Ordinance and cannot, in my view, be enforced in rem against defendant ship. Reliance is place on “Messers Kadriah -I Ltd. through duly Constituted Attorney v. M.V. “Spendour” through
owner & others (PLD 2011 Karachi 102) and “Messrs Masoomi Enterprises Pakistan (PVT)
Limited & others v. Messrs Ping Tan Fishery Company and others” (2002 SCMR 1771).
The plaintiff has failed to make out a case for passing any decree in his f avour and
against the defendants in the terms as prayed for, therefore, the suit being not maintainable is rejected and returned.
(Y.A.) Suit rejectedThis 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,
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