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PETITIONER: VIDESH SANCHAR NIGAM LTD.

       Vs.

RESPONDENT: M.V. KAPITAN KUD & ORS.

DATE OF JUDGMENT10/11/1995

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. KIRPAL B.N. (J)

CITATION:  1996 AIR  516            1996 SCC  (7) 127  JT 1995 (8)   166        1995 SCALE  (6)339

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T K. Ramaswamy. J.      Leave granted.      This appeal  by special  leave arises  from  the  order dated October  13, 1995  passed by the Division Bench of the Bombay High  Court in  Appeal No.727  of 1995  in Notice  of Motion in  Admiralty Suit  No. 46  of 1995.  By the impugned order, the  Division Bench modified the order of the learned single judge  and directed  release of  commercial ship M/s. M.V. Kapita  Kud. The  facts not in dispute are that on July 21, 1995  at around  6.00 a.m. the International Cable which extends  on   sea-route  from  Singapore  to  France  having branches at  Bombay, experienced  a break  and the fault was got identified  by the  appellant-plaintiff at a distance of about 18.3  kms. from  its office  at Prabhadevi  in Greater Bombay whereat  its cable  station is situated. According to the  appellant,   due  to   break  of  the  cable,  overseas telecommunication  was  disrupted.  They  requisitioned  the services of  Coast Guard authorities to identify whether any ship had  anchored in  the vicinity  of the break-point. The appellant in  that behalf  wrote a letter to the Coast Guard authorities on July 21, 1995 itself and requested "to survey the area and identify if any vessel has anchored there". The co-ordinates of  the break  point were  indicated as 18 deg. 59.4’N  and   72  deg  41.0’E.  On  July  22,  1995,  Deputy Commandant of the Coast Guard Region [West] had stated thus: "A helicopter  reported that  a vessel  named  "Kapita  Kud" registered ODESSA  was found anchored in position 310 PRONGS - 0.9 miles, in 18 deg 58.5’North and 72 deg 40.7’ East".      The repairing  vessel which  repaired the faulted cable found thus:  "Cable fault caused by Shift anchor". The Coast Guard further  found that  no other  vessel was found in the vicinity. It contacted the vessel on radio and confirmed the position/mark co-ordinates  as determined  by the helicopter from the vessel itself. On July 29, 1995, the appellant laid

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the Admiralty  Suit No.  46 of  1995 against the respondent- vessel claiming  damages of  about Rs.28 crores the break-up whereof has been stated in Exh. ‘C’ of the plaint reproduced at page  94 of Additional Documents filed as Volume I at the exchange rate  of Rs.32  per US  Dollar. The  appellants had taken Notice  of Motion  for arrest  of the  vessel by order dated July 29, 1995, the vessel was arrested and detained by the sheriff  of Bombay.  It is  also not in dispute that the Captain of  the vessel  had not  made any  contact with  the appellants for more than one month and for the first time on September 1,  1995 the  vessel made  an application  for its release from  arrest by way of Notice of Motion. The learned Trial judge  having  Admiralty  jurisdiction  dismissed  the Motion and released the vessel.      Section 140  of Civil  Procedure Code 1908, [for short, ‘the Code’] provides that in any Admiralty or Vice-Admiralty cause of salvage.... the court, whether it be exercising its original  or   its  appellate   jurisdiction  may,   in  its jurisdiction on  request  by  either  party  summon  to  its assistance tow  competent assessors  in  the  manner  stated thereunder and  such assessors  shall attend  and assist the court accordingly.  The Government  of India  exercising its power under section 9 [1] of Merchant Shipping Act, 1958 [44 of  1958]   has  notified  the  officers  specified  in  the Schedule, to  be assessors for the purposes of the said Act. For the  Port of Bombay, the officers are Nautical Surveyor, Engineer and Ship Surveyor and Ship Surveyor attached to the Mercantile Marine  Department, Bombay  District  or  to  the Directorate General  of shipping, Bombay. The Division Bench by its order dated September 26, 1995 directed the assessors to  give  their  estimate  of  the  anchoring  position  and probable involvement of the first-respondent in the breakage of the  cable and  gave five  direction in that behalf. When the notice  was issued,  though initially the Captain of the vessel and  first respondent  responded, later they declined to participate  in the  proceedings before the assessors. On the basis  of the material available and the affidavit filed by the  Captain of  the vessel,  the assessors accepting the statement of  the Captain,  opined that the distance between the position  of 3rd  July and  29th July  approximately was 7.50 nautical  miles. The reason for the shifting was strong winds then  blowing from  Southward. The vessel anchored was not able to hold the ship in her position and the vessel was either continuously  or intermittently drifting in northerly direction. The  vessel should  have dropped  anchor  in  the designated anchorage  which was  about  5  miles  clear  and northward  from   the  subject   communication  cable.   The possibility of  the vessel having shifted her position after mishap completely  could not  be ruled out. Merchant vessels do not  customarily anchor in the vicinity of the prohibited positions. Coast  Guard authorities  were not able to locate any other  vessel within 3 nautical miles of the respondent- vessel. They  concluded that  "based on  the foregoing it is quite clear  that the  subject cable has been damaged by the anchor of an ocean going ship. The probability of that ocean going vessel  being the  1st Respondent  vessel,  as  stated above, is very high".      When the  correctness of  the report  was disputed  the Division Bench appointed two Commissioners who were nautical advisors, one  in service  and the other having retired from Government  of   India  service.   In   this   behalf,   one circumstance that  becomes relevant  to notice and could not be disputed  is that  after appointment of the Commissioners the  proceedings  of  the  Commissioners  do  indicate  that neither the  advocate nor the solicitors were present at the

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time of  inspection of  the vessel.  It would be relevant to note that when the report of the surveyors was submitted and when  two   Commissioners  were   appointed  to  assess  the anchoring  position   and  probable   involvement   of   the respondent-vessel, it  would be  highly  unlikely  that  the counsel or  the solicitors  of the  appellant would  abstain from   participating   in   the   proceedings   before   the Commissioners. On the other hand, having had the copy of the report of  the surveyors,  it would  be, likely  and  highly probable in  ordinary human  conduct that they would present and press  their case before the Commissioners. The case set up by the appellant is that when they went into the vessels, both,  the   advocate  and  the  solicitor  were  wrongfully confined in  the cabin  of the  vessel and they were thereby prevented to participate in the inspection and the report of the Commissioners  was one-sided.  It  would  appear  to  be probable though  the  objection  came  to  be  sent  by  Fax belatedly. The  delay by  itself is  not material in view of the highly  probable circumstance  referred to  earlier. The Commissioners’ report is in favour of the vessel.      The Division  Bench after considering the material held that  "it   cannot  be   said  that   the   claim   of   the appellant/original plaintiff is vexatious. It cannot be said that the  matter does  not warrant and trial."  The Division Bench was not inclined to draw any adverse inference for the inordinate delay of more than a month in providing access to the log book of the ship etc.      The crucial  question is whether the appellant has made out prima  facie case.  Rules on  Admiralty Jurisdiction  in Part III  were framed  by Bombay  High Court to regulate the procedure and  practice thereof  on the original side of the Bombay High  Court.  Equally,  Original  Side  Rule  941  is relevant in  this regard  which provides that party applying under this  rule in a suit in rem for arrest of the property shall given an undertaking in writing or through advocate to pay such  sum by  way of  damages as  the court may award as compensation in  the event  of a  party affected  sustaining prejudice by  such order.  In mahadeo Savlaram Shelke & Ors. v. Pune  Municipal Corporation  & Anr.  [ (1995)  3 SCC 33], even in  case of  civil court,  exercising its  power  under order 39 Rule 1, this Court held that while granting interim injunction, the  Civil Court  or Appellate Court is enjoined to impose  as a condition that in the event of the plaintiff failing to  prove the  case set up and if damages are caused to the defendant due to the injunction granted by the court, the court  would first ascertain whether the plaintiff would adequately be  compensated by  damages if  injunction is not granted. Equally  the court should also impose condition for payment of  damages caused  to the  defendant  in  the  same proceeding without  relegating the  parties for  a  separate suit. The  plaintiff should  give such  an undertaking  as a part of  the order  itself.  Rule  954  of  Admiralty  Rules provides that  subject to the provisions of Rule 952 [caveat property not  to be  released unless  notice is given to the caveator], property  arrested under a warrant may be ordered to be released - [i] at the request of the plaintiff, before an appearance  in person  or a  vakalatnama is  filed by the defendant; or  [ii] on  the defendant  paying into Court the amount claimed in the suit; or [iii] on the defendant giving such security  for the  amount claimed  in the  suit as  the Court may direct; or [iv] on any other ground that the Court may deem  just. Thus  a ship  arrested under  warrant  maybe released on  fulfilment of  any of  the conditions mentioned hereinbefore. This  could be  done on  the plaintiff showing prima facie best case.

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    Halsbury’s  Laws  of  England,  Volume  I  [I],  Fourth Edition at  page 436  on Admiralty  jurisdiction,  Para  386 states that  "the usual step following an acknowledgement of service in an action in rem is for the owner of the property arrested to  procure its  release by giving security for the plaintiff’s claim.  This may  be done  either by  paying the amount of  the plaintiff’s claim into court, or by providing bail in  a sufficient  amount, or  by furnishing a guarantee acceptable to  the plaintiff.  The third  method is nowadays the most  common in practice. Para 389 provides that "amount should  be   sufficient  to  cover  the  plaintiff’s  claim, together with  interest  and  costs  on  the  basis  of  his reasonably arguable best case."      The question,  therefor, is  whether the  appellant has reasonably arguable  best case  in an  admiralty action.  As stated earlier, the damage to the International Cable of the appellant is  not  in  dispute.  The  report  of  the  Cable repairing ship  shows that damage was done due to anchoring. The report  of the  survey conducted by helicopter which had flown over  the  vessel  immediately  after  the  notice  of breakage of  the cable  found the vessel in the vicinity. It found no  other vessel  in the  vicinity.  The  question  is whether the  vessel was anchored in the prohibited area. The map showing  that inner  approach to  Bombay Port  depths in meters would  indicate the  designated anchorage  area.  The survey conducted  by the  helicopter shows  that cable break had occurred  three nautical miles of the respondent-vessel. The bottle-green  color  marked  in  the  map  is  the  area surveyed by  the helicopter.  The survey  conducted  by  the helicopter is contemporaneous to the proximately to the date of occurrence. It is seen that as for the plan, the original position of  anchoring on  July 3, 1995 at 1850 hours was at point 1. Immediately thereafter at 1230 hours the vessel had anchored at  point 2.  It had moved to point 3 by 1030 hours on July  6, 1995.  It moved  towards point  4 on  12th July, 1995. Thereafter,  it was  found at point 5 between 13th and 29th July,  1995. The  crucial disputed  area is  at point 6 where  the   vessel  was  alleged  to  have  been  anchored. According to  the appellant-plaintiff,  she was  anchored at point 6  on July 21, 1995 as per as report of the helicopter of the  Coast Guard authorities. The cable was found damaged in the  early hours  of the  said day.  It is seen that till September 1,  1995 the  Captain of  the vessel had not given access to  the  log  book  etc  and  other  relevant  record maintained by  the vessel. The surveyors have stated that it was not  in dispute  that during  the mansoon season in July the blow of strong winds is very high in the West Coast. The report of  the repairing ship shows that damage to the cable was done due to anchoring of a commercial vessel.      The question,  therefore, is  whether  the  respondent- vessel was  one probably  involved in  causing the damage to the cable.  It is true as contended by Shri Harish N. Salve, learned senior  advocate that the Commissioners appointed by the Division  Bench are  advisors of  nautical  matters  but prima facie  the credibility of the report lost its efficacy when the advocate and the solicitor were not permitted to be present at  the time  of the  inspection. According  to  the appellant they  were wrongfully confined in the cabin of the ship. Therefore,  much of  the stream of the report lost its vitality.  We   have  the   report  of  the  surveyors,  the Government officials appointed by the Government of India by statutory notification. They are enjoined to assit the court under Section 140 of C.P.C. They have given reasons in their report to  which we  have been taken through. Prima facie we are satisfied  that the reasons given by them cannot be said

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to be  partial or  one-sided. They  have stated at more than one place  that they had no access to the log book and other records since  they were not placed before them. They relied on the affidavit filed by the Captain of the ship. They also relied on  the helicopter’s report, Coast Guard authorities’ report and  also repairing  vessel’s report. The respondent- vessel was  the one  highly probable for the breakage of the cable. They  also opined  that no  other vessel was found in the vicinity of the helicopter.      In M.V.  Elisabeth &  Ors. etc.  v. Harwan Investment & Trading Pvt.  Ltd., Goa  [(1993) Supp. 2 SCC 433] this Court held thus:      "Maritime law  is as  much a part of the      general legal system as any other branch      of the  law. It is within the competence      of the appropriate India Courts to deal,      in   accordance    with   the    general      principles  of   maritime  law  and  the      applicable provisions  of statutory law,      with all persons and things found within      their jurisdiction.  The  power  of  the      court is plenary and unlimited unless it      is expressly or by necessary implication      curtailed. Absent  such  curtailment  of      jurisdiction,  all  remedies  which  are      available to  the courts  to  administer      justice  are  available  to  a  claimant      against a  foreign ship  and  its  owner      found within  the  jurisdiction  of  the      High Court  concerned. This power of the      court to render justice must necessarily      include the  power to make interlocutory      orders for  arrest and attachment before      judgment.  Power   to   enforce   claims      against foreign  ships is  an  essential      attribute of  admiralty jurisdiction and      it is assumed over such ships while they      are within  the jurisdiction of the High      Court by  arresting and  detaining them.      This jurisdiction  can be assumed by the      High Court concerned, whether or not the      defendant   resides    or   carries   on      business, or  the cause  of action arose      wholly or  in  part,  within  the  local      limits  of   its  jurisdiction.  Once  a      foreign  ship  is  arrested  within  the      local limits  of the jurisdiction of the      High Court,  and the  owner of  the ship      has  entered  appearance  and  furnished      security to the satisfaction of the High      Court for  the release  of the ship, the      proceedings  continue   as  a   personal      action."      In The  Asiatic Steam  Navigation Co.  Ltd. vs. Sub-Lt. Arabinda Chakravarti  [(1959) Supp.  1 SCR  979] this  Court held that  the function  of the  nautical  assessors  is  to advise the  court upon  nautical matters.  Their  advise  is admissible in  admiralty courts on all issues of facts about the seamanship.  The decision,  however, rests entirely with the courts even on purely nautical matters. The Court is not bound to follow the advice of the assessors but on questions of  nautical   science  and  skill  greater  attention  must obviously be paid to the opinion of the assessors since they are the  only source of information on those points and some reason should be given for disregarding them.

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    In Schwarz & Co. [Grain] Ltd. v. St. Elefterio EX Arion [Owners].  [(1957)   Probate  Division   179],  Willmer,  J. considering the  scope of  prima facie case held at page 185 that "it  has not  been suggested  that the  proceedings are frivolous or  vexatious, so  as to  call for the exercise of the court’s  inherent jurisdiction  to halt such proceedings in  limine.  The  defendants  argument  is  founded  on  the proposition that section 3 [4] of the Act of 1956 introduced a new  restriction on the right to proceed in rem and that a plaintiff cannot  arrest a ship under that subsection unless he can prove - and prove at the outset - that he has a cause of  action   sustainable  in   law.  In   my  judgment  that proposition rests  upon a  misconception of  the purpose and meaning of section 3 [4]". It was held that the scope of the Act was  to enlarge  the jurisdiction of admiralty court but not to  restrict its  jurisdiction. At  page 187 it was held that "it  is possible  [these  things  have  been  known  to happen] that a higher court might take a different view; but in the  meantime the shop, which is a foreign ship, has been freed from  arrest, has  gone, and  may never return to this country.  It  might  be  that  in  those  circumstances  the plaintiffs would have lost their right for ever to entertain proceedings in  rem in  this country.  The  remedy  for  the defendants is  to release their ship is to be put in appeal. The action  will then  by tried at the appropriate time when all the  facts have  been ascertained due consideration will be given to the arguments at law which the defendants desire to advance.  Accordingly the  motion for release of the ship was dismissed.      In The  Moschanthy [(1971)  1 Lloyd’s Law Reports 37 at 42] where  the question was whether the admiralty action was vexatious,  following  the  ratio  of  Willmer,  J.  in  St. Elefterio [supra]  it was  held that  action  could  not  be successful. It  was held  that courts  should only  stay the action  on   the  ground   when  the   hopelessness  of  the plaintiff’s claim is beyond doubt. If it is not beyond doubt but on  the contrary the plaintiff has arguable, even though difficult, case  even in  law the action would be allowed to proceed to  trial. The  application for stay was accordingly rejected.      The admiralty  action is an action in rem. The Division Bench found that the claim was not vexatious but is triable. There is  strong evidence  to show that at the relevant time the respondent-vessel was within the vicinity of the damaged cable. The  Division Bench  declined  to  interfere  on  the ground that  the Captain  of the vessel filed an undertaking that the  vessel belonged  to the Black Sea Shipping Company which is  wholly owned  by  the  Ukrainian  Government.  The undertaking given  by the  Captain of the vessel that in the event of  the suit  being  decreed  they  would  honour  the decree, was  accepted by  the  Court  and  it  directed  the release of the vessel. We think that neither the approach of the Division  Bench of the High Court nor the finding of the learned Trial  Judge on  the admiralty  jurisdiction that no prima facie  case is  made out,  is right.  It is  seen that there is strong triable case for the reasons stated earlier. The ship  is a  foreign ship  and if it leaves the shores of Indian territorial  waters it is difficult to get hold of it and it  may not return to the jurisdiction of Indian courts. The  claim   thereby,  even   if  sucessful,   would  remain unexecutable or land in trouble in private international law in its enforcement. Under these circumstances, we are of the firm opinion  that the vessel may be released on the certain conditions, viz.,  [i] the respondent shall deposit a sum of Rs.10 crores;  [ii] the  Ukrainian Government  shall give an

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undertaking   through   its   accredited   authority,   more particularly may  be its  Ambassador attached to its Embassy in India  in writing  duly undertaking  that in the event of the suit  being decreed  they would  comply with  the decree without reference  to the  execution; [iv]  the  undertaking should be  for balance  amount of  Rs.18 crores  and towards costs and  other expenses  roughly put  at Rs.25  crores. It would be open to them to comply with these directions at any time. We  are not  fixing any time limit because it would be open to  them to  comply with  it at any time and until then the ship  shall remain  arrested and  shall  not  leave  the shores of the Indian territorial waters. On deposit of Rs.10 crores and on furnishing of undertakings to the satisfaction of the  Division Bench  of the  High Court, as stated above, the  High   Court  would   give  appropriate  direction  for releasing the vessel in accordance with law.      Accordingly, the  appeal  is  allowed.  The  notice  of motion is  made absolute subject to the above conditions. In the circumstances,  the parties  are directed  to bear their own costs.