As regards the aforesaid decisions relied upon by Defendant No.2, it is
clear therefrom that any suppression or false statement must be apparent exfacie
and writ large; it cannot amount to suppression if what is alleged to be
suppressed is required to be ascertained on an interpretation of documents to
establish the correct legal and factual position, as is sought to be done by the
Applicant. As correctly submitted by the Plaintiff, this is a matter of trial and
evidence and would amount to prejudging
the issues between the parties
especially where the main issue in the Suit is the wrongful withdrawal of the
vessel from charter by Defendant No.2 and the same is yet to be decided.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
NOTICE OF MOTION NO.2582 OF 2012
IN
ADMIRALTY SUIT NO.76 OF 2011
Sinoriches Enterprises company ltd
Versus
m. v. XING XIANG AN,
CORAM :S.
J. KATHAWALLA, J.
Judgment Pronounced on :MAY
31, 2013.
Read original judgment here;click here
Citation 2014(3) ALL MR621
By the above Notice of Motion, the Applicant (Original Defendant No.2)
has sought dismissal of Admiralty Suit No.76 of 2011 on the ground that the
Plaintiff has suppressed the relevant facts from this Court as well as the
Defendant Nos.1 and 2 and has obtained an exparte
order of arrest on 27th
September 2011. By the above Notice of Motion, the Applicant has also
sought an order and direction to the Prothonotary and Senior Master of this
Court to return the security of Rs.4,91,54,500/to
the Applicant – Original
Defendant No.2 – with accrued interest till the date of payment and
realization.
2. The facts in the matter are briefly set out hereunder :
3. The Defendant No.1 vessel m. v. XING XIANG AN was chartered by
Defendant No.2 Shanghai Yang Pu Zhe Hai Shipping Co. Ltd./its Associate
Company M/s. Yang Pu Zhe Hai Shipping Co. Ltd. (referred to as ‘HK Co’), to
Defendant No.3 Hong Kong Chain Glory Shipping Limited for 2325
months
+/15
days. Accordingly, the charter was to come to an end on 15th
November 2011. Clause 18 of the Contract permitted Defendant No.3 to
sublet the vessel for the entire or any part of the time period covered by the
charter. On 21st December 2009, the Defendant No.1 vessel was chartered by
Defendant No.3 to the Plaintiff for a minimum of 20 months extended up to
21 months +/15
days. Accordingly the charter was to come to an end on
15th October 2011.
4. According to the Plaintiff, by 24th May 2011, 35 hire installments were
paid by the Plaintiff to Defendant No. 3, covering the period 30th December
2009 to 8th June 2011 after various offhire
and other deductions as evidenced
by the Statement of Account dated 24th May 2011. However on 1st June 2011,
with 137 days remaining, the Defendant No.2 withdrew the Defendant No.1
vessel which was chartered to Defendant No. 3. Thereupon, Defendant No. 3
withdrew the Defendant No. 1 vessel chartered by Defendant No. 3 to the
Plaintiff. On 27th September 2011, the Plaintiff filed a Suit before this Court
claiming a decree jointly and severally against the Defendants and an order of
arrest of the Defendant No.1 vessel was granted.
5. On 8th May 2011, the Defendant Nos.1 and 2 took out Notice of Motion
No.3030 of 2011 for the following reliefs :
(a) that the Admiralty Suit be dismissed against Defendant Nos.1
and 2 with exemplary costs;
(b) the order of arrest be vacated and/or set aside.
In respect of the Notice of Motion, it was contended by the Defendant No.2
that there was no privity of contract between the Plaintiff and the Defendant
No.2 and the vessel was not withdrawn from charter by the Defendant No.2
and the Suit should be dismissed. In paragraph 28 of the Affidavit in support
of the Notice of Motion, the Defendant No.2 also referred to the Arbitration
Agreement between the Plaintiff and Defendant No.3.
6. On 19th October 2011, the Notice of Motion of the Defendant No.2 was
dismissed and the learned Single Judge held that “further the charterparty
provisions regarding the withdrawal of the vessel and its impact on the claim of
the Plaintiff as against Defendant Nos.2 and 3 is something which can be
conclusively decided after the parties produce the necessary evidence.” The
learned Single Judge further held that “if cognizance is to be taken of the
statements made in the affidavit in support of the Notice of Motion, that would
entail holding of a trial; that is not permissible at this stage.”
7. Defendant Nos.1 and 2 preferred an Appeal from the said Order passed
by the learned Single Judge dated 19th October 2011. However, the Appeal
filed by Defendant Nos.1 and 2 was dismissed by an Order of the Hon’ble
Division Bench dated 8th December 2011.
8. Defendant Nos.1 and 2 preferred a SLP against the order passed by the
Hon’ble Division Bench dated 8th December 2011. However, the said SLP was
dismissed by an Order dated 6th February 2011, with a request to the High
Court to dispose of the Suit as expeditiously as possible and in any event,
within three months i.e. on or before 5th May, 2011.
9. However, Defendant No.2 filed its Written Statement only on 16th April
2012. The Defendant No.3 filed its Written Statement on 27th August 2012.
In August 2012, the Plaintiff submitted draft Issues. The Defendant No.2
amended its Written Statement on 10th October 2012 and also filed an
additional Written Statement on 30th November 2012.
10. On 12th December 2012, the Defendant No.2 took out the present
Notice of Motion on the following grounds set out in paragraph 3 of the
Affidavitinsupport
of the Notice of Motion :
“The plaintiff had suppressed that the Defendant No.3 had in fact
withdrawn the vessel from the subcharter
with the Plaintiff in
view of the Plaintiff’s failure to make full payment of charter hire
outstanding. The Plaintiff has also suppressed that months before
filing the present suit, it had initiated arbitration proceedings
against Defendant No.3 for the same claimed amount and that a
Tribunal had also been constituted.”
According to the Defendant No.2, the plaint is filed by the Plaintiff only on the
basis that the Defendant No. 1 vessel was withdrawn by Defendant No.3 from
the charter with the Plaintiff, only consequent to the withdrawal of the vessel
by Defendant No.2. This constituted a breach of contract by Defendant No.2
which breach caused loss and damage to the Plaintiff which the Plaintiff is
entitled to recover jointly or severally from the Defendant Nos.2 and 3.
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11. It is therefore submitted on behalf of Defendant No.2 that the Plaintiff
did not make any mention in the Plaint that owing to the Plaintiff not paying
the hire charges as called upon by the Defendant No.3, by its correspondence
annexed at Exhibits ‘B’ and ‘C’ to the Written Statement of Defendant No.3,
the Defendant No.1 vessel was withdrawn by Defendant No.3 from the
Plaintiff. In fact, arbitration proceedings have commenced between the
Plaintiff and Defendant No.3 under the Arbitration Agreement contained in
the contract executed between the Plaintiff and the Defendant No.3. It is
submitted that if the Plaintiff would have disclosed the facts contained in the
correspondence set out hereinabove, which is now disclosed by Defendant
No.3 in its Written Statement, the Plaintiff not would have been granted any
exparte
relief, which relief has been obtained by the Plaintiff by suppressing
the said facts and only by contending before the Court that due to the wrong
and illegal withdrawal of the vessel by the Defendant No.2 from the
Defendant No.3, the Defendant No.3 consequently withdrew the Defendant
No.1 vessel from the Plaintiff thereby causing loss and damage to the Plaintiff.
It is submitted on behalf of Defendant No.2 that the Plaintiff therefore
intentionally served the Writ of Summons on Defendant No.3 only on 27th
February 2012 and not earlier. It is submitted on behalf of the Defendant
No.2 that in view of such gross suppression of facts viz. that the Plaintiff had
not paid all the dues towards hire payment to Defendant No.3 and had
wrongly deducted huge amounts from the amounts due and payable to
Defendant No.3, Defendant No.3 had issued notices including a lien notice in
respect of the sums due, and also threatened action under Clause 11 of the
Time Charter by serving a notice of withdrawal on the Plaintiff, the Suit filed
by the Plaintiff deserves to be dismissed and Defendant Nos.1 and 2 are
entitled to return of the security amounts deposited by them with the
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Prothonotary and Senior Master of this Court.
12. The Defendants submit that it is well settled that :
i) ‘the applicant must state fully and fairly the facts’ and
that if ‘any
material facts has been suppressed or not properly brought forward’ the
order made earlier will be vacated and the litigant who has failed to
disclose material facts ‘loses his remedy’; and that the Court should
dismiss the Application without going into the merits and even though
there might otherwise be material for granting relief : The King vs The
General Commissioners For the Purpose of the Income Tax Acts for the
District of Kensington’ (1917) 1 KB 486).
ii) In the case of Chengalvaraya Naidu vs Jaganath (1994) 1 SCC 1, the
Supreme Court specifically overruled as ‘patent error’ and ‘perverse’, the
judgment of the Andhra Pradesh High Court holding that this
obligation of full and complete disclosure of facts was limited only to
Probate and other proceedings where a duty was cast upon a litigant to
disclose all facts and was not applicable to ordinary adversarial civil
litigation. The Supreme Court held that a person whose case was
based on falsehood had no right to approach the Court and ‘can be
summarily thrown out at any stage of the litigation.’
iii) Relying on the above two judgments, this Court has dismissed a
Company Petition where there was suppression of material facts. This
Court has held that it is the duty of a party seeking relief “to bring to
the notice of the Court all material facts” and “to make the fullest possible
disclosure of all material facts within his knowledge”. “It is no excuse for
the party to say that he / she was not aware of the importance of the facts
which he / she has omitted to bring forward” and that if facts were
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suppressed / withheld, “the Court would be left with no option but to
dismiss the application without going into the merits.” Agarwal
Industries vs. Golden Oil Industries P Ltd (1990) Vol. 101)2) Bom L R
476).
iv) In the case of The AA V [2000] 1 SLR 207 at 201/220, the High Court
of Singapore has held that ‘when an ex parte application is made for the
arrest of the vessel, the affidavit leading the warrant of arrest must
disclose all material facts known to the deponent in relation to the
arrest’ .. .. ‘The deponent of the affidavit must disclose those facts that
are relevant to the making of the decision whether or not a warrant for
arrest should be issued, that is a fact which should properly be taken into
consideration by the Court when weighing all the circumstances of the
case, though disclosure of the fact might not have the effect of leading to a
different decision being made’ AND that if material & relevant facts were
not duly disclosed, the warrant of arrest should be set aside on that
ground.
v) In Dalip Singh v. State of U.P. & Ors (2010) 2 SCC 114, the Supreme
Court stated ‘In last 40 years, a new creed of litigants has cropped up.
Those who belong to this creed do not have any respect for truth. They
shamelessly resort to falsehood unethical means for achieving their goals.
In order to meet the challenge posed by this new creed of litigants, the
courts have, from time to time, evolved new rules and it is now well
established that a litigant, who attempts to pollute the stream of justice or
who touches the pure fountain of justice with tainted hands, is not
entitled to any relief, interim or final.’
It is therefore submitted on behalf of Defendant No. 2 that the above Notice of
Motion be allowed.
13. The Plaintiff submitted that the assertion that the vessel has been
withdrawn by Defendant No.3 on the ground of nonpayment
of hire charges
is legally and factually incorrect. The Defendant No.3 has not withdrawn the
vessel from charter to the Plaintiff. The Plaintiff reiterates that the Defendant
No.2 withdrew the vessel from charter on 1st June 2011 and as a direct
consequence of this withdrawal, the vessel also stood withdrawn from the
Plaintiff’s charter party with Defendant No.3. It is submitted that this is, in
fact, supported by the very correspondence that the Applicant seeks to rely
upon. It is therefore submitted that the submission that the withdrawal of the
Defendant No.1 vessel by the Defendant No.3 from charter on account of the
Plaintiff’s failure to make full payment of charter hire is incorrect. It is further
submitted on behalf of the Plaintiff that the Plaintiff had paid almost US$ 5.5
million towards charter hire to the Defendant No.3. From the various hire
payments, it is apparent that there have been payments where certain offhire
deductions have been made by the Plaintiff and accepted by Defendant No.3.
Thus, it is not necessary that full hire payments should be paid for the period
if there are offhire
events which require hire to be reduced, and on no
occasion did Defendant No.3 withdraw the vessel from charter on account of
offhire
deductions made by the Plaintiff. If the Plaintiff had paid over US$
5.5 million as hire over the period, there was no earthly reason for it not to
pay a small amount of US$ 55149.00 which is the alleged shortfall (as per the
purported undated and unsigned withdrawal notice), and risk withdrawal of
the vessel from charter. Likewise, Defendant No.3 had paid over US$ 5
million to the owners, Defendant No.2 (the Applicant), for the period that the
vessel was on charter to Defendant No.3, as evident from the charter hire rate
of US$ 8,800.00 per day as stated in the charterparty in Clause 9. It is simply
not justifiable that Defendant No.2 was entitled to withdraw the vessel for
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nonpayment
of a paltry amount of US$ 13,000.00 as it appears from the
email dated 31st May 2011 addressed by Defendant No.2 to Defendant No.3.
The withdrawal by the Applicant/ Defendant No.2 appears exfacie
wrongful
and illegal and was done with a view to take benefit of higher charter rates
that Defendant No.2 would have earned by hiring the vessel to a third party.
This becomes even more apparent when it is clear from the correspondence
that Defendant No.3 in fact offered to pay the shortfall to Defendant No.2,
who did not accept the same.
14. As regards the contention taken by the Applicant that the Plaintiff did
not disclose that it had invoked arbitration against Defendant No.3, it is
submitted on behalf of the Plaintiff that this is irrelevant and has no bearing
on the Plaintiff’s claim against Defendant No.2. The charterparty between the
Plaintiff and Defendant No.3, which contains the arbitration clause, is on
record and filed along with the Plaint. The Applicant took out an earlier
Notice of Motion No.3030 of 2011, on 8th October 2011 for dismissal of the
Suit and vacating the arrest and in fact referred to the arbitration clause in the
charterparty in paragraph 18 of its Affidavitinsupport
of the Notice of
Motion. Thus, the Applicant was aware all along of the charterparty
arbitration clause and made no issue or grievance about the same as this was
clearly irrelevant as far as they were concerned.
15. The Plaintiff submitted that in the course of oral submissions, it was
contended on behalf of the Applicant that the Plaintiff took no steps to serve
Defendant No.3 until after the order of the Hon’ble Supreme Court dated 6th
February 2012. He submitted that this cannot be a ground on which the
Plaintiff’s Suit is required to be dismissed against Defendant Nos.1 and 2. The
Plaintiff did not take immediate steps to serve the Writ of Summons on
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Defendant No.3 because no interim relief was sought against Defendant No.3.
However, it is pertinent to note that the Applicant took no objection to nonservice
on Defendant No.3 at any stage during the hearing of the previous
Notice of Motion No.3030 of 2011, before the Single Judge or at the hearing
of the Appeal before the Hon’ble Division Bench or in the SLP filed by the
Applicant. The Applicant cannot therefore make any grievance about the
same at this stage. The reason why the Plaintiff took expeditious steps to serve
Defendant No.3 after the order of the Hon’ble Supreme Court dated 6th
February 2012 is because the Hon’ble Supreme Court expedited the hearing of
the Suit to be disposed of in three months. Consequently, it became
imperative for the Plaintiff to serve Defendant No.3, which the Plaintiff did in
March 2012.
16. The learned Senior Advocate appearing for the Plaintiff has submitted
that since the Plaintiff has not made any false submissions or suppressed any
material facts, the question of discharge of any exparte
order does not arise.
It is therefore submitted on behalf of the Plaintiff that the present Notice of
Motion is taken out by the Defendant No.2 with a view to scuttling the trial
because Defendant No.2 has no defence on merits and is seeking to clutch at
straws with a view to avoid trial and liability. It is therefore submitted that
the Notice of Motion be dismissed with costs.
17. I have considered the submissions advanced on behalf of the parties and
the case law cited on behalf of Defendant No.2. The Plaintiff has filed the
present Suit on the basis that the Defendant No.2 owner has wrongly and
illegally withdrawn the Defendant No.1 vessel from Defendant No.3 and as a
direct consequence of the said withdrawal, Defendant No.3 has withdrawn the
Defendant No.1 vessel from the Plaintiff thereby causing loss and damage to
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the Plaintiff, which the Plaintiff is entitled to recover jointly and severally from
Defendant Nos.1 and 2 and Defendant No.3. It is now the case of Defendant
No.2 that the documents annexed to the Written Statement by the Defendant
No.3 show that Defendant No.3 withdrew the Defendant No.1 vessel from the
Plaintiff not because the said vessel was withdrawn from Defendant No.3 by
Defendant No.2 but because the Plaintiff deducted huge amounts from the
hire payments payable to Defendant No.3 and failed to pay the same even
after receiving the withdrawal notice from Defendant No.3. It is submitted on
behalf of Defendant No.2 that these facts, as well as documents, are
suppressed by the Plaintiff in the Plaint. Instead, the Plaintiff proceeded on
an incorrect premise that the Defendant No.1 vessel was withdrawn by
Defendant No.3 from the Plaintiff as a direct consequence of the wrong and
illegal withdrawal of the Defendant No.1 vessel by Defendant No.2 from
Defendant No.3 and thereby wrongly obtained exparte
orders from this
Court. It is therefore necessary to go through the documents relied upon by
Defendant No.3, annexed to its Written Statement and relied upon by the
Applicant in the present Notice of Motion. The Applicant relied upon a letter
dated 1st June 2011 (Exhibit ‘B’ to the Written Statement of Defendant No.3)
written by Holman Fenwick Willan, Solicitors of Defendant No.3, wherein
Defendant No.3 demanded the outstanding additional cost of USD 62,078
before 2nd June 2011, failing which it would take appropriate steps to protect
its interest including, but not limited to, exercising a lien against the cargo as
per Clause 23 of the charterparty. By the said letter, Defendant No.3 did not
withdraw the vessel from the charter with the Plaintiff. In fact, Defendant
No.3 simply stated that it would exercise a lien against the cargo mentioned in
the charterparty which, in fact, as submitted by the Plaintiff, means that they
would maintain the charter. The annexure to the said letter dated 1st June
2011 is an undated and unsigned purported notice issued by Defendant No.3
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to the Plaintiff in accordance with Clause 11 of the charterparty where the
charterers were requested to rectify the failure and pay the outstanding hire
within a period of three clear banking/working days failing which it
threatened to exercise its contractual rights under Clause 11 of the
charterparty by withdrawing the vessel from the charterers. According to the
Plaintiff, not only has the said vessel not been withdrawn by/under the said
notice, but the said notice is also undated and unsigned and is not received by
the Plaintiff from Defendant No.3.
18. The next document that the Applicant relied upon is the letter dated 7th
June 2011, from Holman Fenwick Willan, Solicitors for Defendant No.3, to the
Plaintiff. As submitted by the Plaintiff, this letter primafacie
supports the
Plaintiff’s case in paragraph 9 of the Plaint because Defendant No.3, in
paragraph 5 of its letter has stated that, “.... since the Head Owners withdraw
the Vessel from the service to our clients, our clients must likewise do so under the
C/P with you.” The Plaintiff has correctly submitted that by the time this
letter was addressed on 7th June 2011, the vessel had already been withdrawn
by Defendant No.2 from charter from Defendant No.3, on 1st June 2011. That
is why Defendant No.3 has stated that since the vessel has already been
withdrawn by the Head Owners, it must do likewise. The last sentence in the
letter accepting repudiation of the charterparty must be seen and read in this
context because the Plaintiff never repudiated the charter but Defendant No.3
did, by the act of withdrawing the vessel since the vessel was withdrawn by
the Head Owners. This is made clear by the reply on behalf of the Plaintiff to
the letter dated 7th June 2011 from Holman Fenwick Willan (page 98 of the
Plaintiff’s compilation of documents) wherein the right of withdrawal by the
Head Owner is disputed by the Plaintiff.
19. Thus, primafacie,
it does appear, even after going through the letters
relied upon by the Applicant, that the Defendant No.3 has withdrawn the
vessel from the Plaintiff since the same was already withdrawn by the Head
Owners i.e. Defendant No.2, the Applicant herein. Thus, it cannot be held at
this stage, as prayed for by Defendant No.2 that the Defendant No.1 vessel
was withdrawn by Defendant No.3 from charter on account of the Plaintiff’s
failure to make full payment of charter hire. Consequently, it cannot be held
at this stage that the Plaintiff has suppressed the documents produced by
Defendant No.3 and relied upon by the Applicant in respect of the present
Notice of Motion. The issues whether on the basis of the documents
produced, Defendant No.2 and/or the HK Co were entitled to withdraw the
vessel from charter on account of the alleged nonpayment
of charter hire by
Defendant No.3 and whether Defendant No.3 withdrew the vessel from
charter to the Plaintiff because the vessel was withdrawn from its charter by
Defendant No.2, are required to be gone into and decided at the trial.
20. As regards the aforesaid decisions relied upon by Defendant No.2, it is
clear therefrom that any suppression or false statement must be apparent exfacie
and writ large; it cannot amount to suppression if what is alleged to be
suppressed is required to be ascertained on an interpretation of documents to
establish the correct legal and factual position, as is sought to be done by the
Applicant. As correctly submitted by the Plaintiff, this is a matter of trial and
evidence and would amount to prejudging
the issues between the parties
especially where the main issue in the Suit is the wrongful withdrawal of the
vessel from charter by Defendant No.2 and the same is yet to be decided. In
the case of R Vs. General Commissioners, District of Kensington, relied upon by
the Applicant, the Court has said,
“... this is a power inherent in the Court but one which should only
be used in cases which bring conviction to the mind of the Court that
it has been deceived. Before coming to this conclusion a careful
examination will be made .... but if the result of this examination
and hearing is to leave no doubt that the Court has been deceived,
then it will refuse to hear anything further...” (emphasis supplied).
From the documents relied upon by the Applicant, it cannot be finally decided
at this stage that the withdrawal of the vessel from charter by Defendant No.3
is due to nonpayment
of the hire payments by the Plaintiff. In fact, on
analysis of the documents, I have reached the primafacie
view, as set out
hereinabove, that Defendant No.3 has withdrawn the vessel from charter as a
consequence of the withdrawal of the vessel from charter by Defendant No.2.
In view thereof, it cannot be held that there has been suppression of facts,
much less, an attempt to deceive the Court.
21. The contention taken by the Applicant that the Plaintiff did not disclose
that it had invoked arbitration against Defendant No.3, is also of no relevance
to the issues that would be the subject matter of the present Suit. Delay in
service of the Writ of Summons on Defendant No.3 also does not entitle the
Defendant No.2 to get any reliefs as sought in the Notice of Motion.
22. In the circumstances, in view of the facts set out hereinabove, it is clear
that hearing of the Suit has been unnecessarily delayed despite directions of
the Hon’ble Supreme Court expediting the same. The need of the hour in the
present Suit is to expeditiously proceed with hearing of the Suit and not to
waste any further time. The Notice of Motion is therefore dismissed and the
matter be placed for framing of issues on 12th June 2013.
(S. J. KATHAWALLA, J.)
clear therefrom that any suppression or false statement must be apparent exfacie
and writ large; it cannot amount to suppression if what is alleged to be
suppressed is required to be ascertained on an interpretation of documents to
establish the correct legal and factual position, as is sought to be done by the
Applicant. As correctly submitted by the Plaintiff, this is a matter of trial and
evidence and would amount to prejudging
the issues between the parties
especially where the main issue in the Suit is the wrongful withdrawal of the
vessel from charter by Defendant No.2 and the same is yet to be decided.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
NOTICE OF MOTION NO.2582 OF 2012
IN
ADMIRALTY SUIT NO.76 OF 2011
Sinoriches Enterprises company ltd
Versus
m. v. XING XIANG AN,
CORAM :S.
J. KATHAWALLA, J.
Judgment Pronounced on :MAY
31, 2013.
Read original judgment here;click here
Citation 2014(3) ALL MR621
By the above Notice of Motion, the Applicant (Original Defendant No.2)
has sought dismissal of Admiralty Suit No.76 of 2011 on the ground that the
Plaintiff has suppressed the relevant facts from this Court as well as the
Defendant Nos.1 and 2 and has obtained an exparte
order of arrest on 27th
September 2011. By the above Notice of Motion, the Applicant has also
sought an order and direction to the Prothonotary and Senior Master of this
Court to return the security of Rs.4,91,54,500/to
the Applicant – Original
Defendant No.2 – with accrued interest till the date of payment and
realization.
2. The facts in the matter are briefly set out hereunder :
3. The Defendant No.1 vessel m. v. XING XIANG AN was chartered by
Defendant No.2 Shanghai Yang Pu Zhe Hai Shipping Co. Ltd./its Associate
Company M/s. Yang Pu Zhe Hai Shipping Co. Ltd. (referred to as ‘HK Co’), to
Defendant No.3 Hong Kong Chain Glory Shipping Limited for 2325
months
+/15
days. Accordingly, the charter was to come to an end on 15th
November 2011. Clause 18 of the Contract permitted Defendant No.3 to
sublet the vessel for the entire or any part of the time period covered by the
charter. On 21st December 2009, the Defendant No.1 vessel was chartered by
Defendant No.3 to the Plaintiff for a minimum of 20 months extended up to
21 months +/15
days. Accordingly the charter was to come to an end on
15th October 2011.
4. According to the Plaintiff, by 24th May 2011, 35 hire installments were
paid by the Plaintiff to Defendant No. 3, covering the period 30th December
2009 to 8th June 2011 after various offhire
and other deductions as evidenced
by the Statement of Account dated 24th May 2011. However on 1st June 2011,
with 137 days remaining, the Defendant No.2 withdrew the Defendant No.1
vessel which was chartered to Defendant No. 3. Thereupon, Defendant No. 3
withdrew the Defendant No. 1 vessel chartered by Defendant No. 3 to the
Plaintiff. On 27th September 2011, the Plaintiff filed a Suit before this Court
claiming a decree jointly and severally against the Defendants and an order of
arrest of the Defendant No.1 vessel was granted.
5. On 8th May 2011, the Defendant Nos.1 and 2 took out Notice of Motion
No.3030 of 2011 for the following reliefs :
(a) that the Admiralty Suit be dismissed against Defendant Nos.1
and 2 with exemplary costs;
(b) the order of arrest be vacated and/or set aside.
In respect of the Notice of Motion, it was contended by the Defendant No.2
that there was no privity of contract between the Plaintiff and the Defendant
No.2 and the vessel was not withdrawn from charter by the Defendant No.2
and the Suit should be dismissed. In paragraph 28 of the Affidavit in support
of the Notice of Motion, the Defendant No.2 also referred to the Arbitration
Agreement between the Plaintiff and Defendant No.3.
6. On 19th October 2011, the Notice of Motion of the Defendant No.2 was
dismissed and the learned Single Judge held that “further the charterparty
provisions regarding the withdrawal of the vessel and its impact on the claim of
the Plaintiff as against Defendant Nos.2 and 3 is something which can be
conclusively decided after the parties produce the necessary evidence.” The
learned Single Judge further held that “if cognizance is to be taken of the
statements made in the affidavit in support of the Notice of Motion, that would
entail holding of a trial; that is not permissible at this stage.”
7. Defendant Nos.1 and 2 preferred an Appeal from the said Order passed
by the learned Single Judge dated 19th October 2011. However, the Appeal
filed by Defendant Nos.1 and 2 was dismissed by an Order of the Hon’ble
Division Bench dated 8th December 2011.
8. Defendant Nos.1 and 2 preferred a SLP against the order passed by the
Hon’ble Division Bench dated 8th December 2011. However, the said SLP was
dismissed by an Order dated 6th February 2011, with a request to the High
Court to dispose of the Suit as expeditiously as possible and in any event,
within three months i.e. on or before 5th May, 2011.
9. However, Defendant No.2 filed its Written Statement only on 16th April
2012. The Defendant No.3 filed its Written Statement on 27th August 2012.
In August 2012, the Plaintiff submitted draft Issues. The Defendant No.2
amended its Written Statement on 10th October 2012 and also filed an
additional Written Statement on 30th November 2012.
10. On 12th December 2012, the Defendant No.2 took out the present
Notice of Motion on the following grounds set out in paragraph 3 of the
Affidavitinsupport
of the Notice of Motion :
“The plaintiff had suppressed that the Defendant No.3 had in fact
withdrawn the vessel from the subcharter
with the Plaintiff in
view of the Plaintiff’s failure to make full payment of charter hire
outstanding. The Plaintiff has also suppressed that months before
filing the present suit, it had initiated arbitration proceedings
against Defendant No.3 for the same claimed amount and that a
Tribunal had also been constituted.”
According to the Defendant No.2, the plaint is filed by the Plaintiff only on the
basis that the Defendant No. 1 vessel was withdrawn by Defendant No.3 from
the charter with the Plaintiff, only consequent to the withdrawal of the vessel
by Defendant No.2. This constituted a breach of contract by Defendant No.2
which breach caused loss and damage to the Plaintiff which the Plaintiff is
entitled to recover jointly or severally from the Defendant Nos.2 and 3.
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11. It is therefore submitted on behalf of Defendant No.2 that the Plaintiff
did not make any mention in the Plaint that owing to the Plaintiff not paying
the hire charges as called upon by the Defendant No.3, by its correspondence
annexed at Exhibits ‘B’ and ‘C’ to the Written Statement of Defendant No.3,
the Defendant No.1 vessel was withdrawn by Defendant No.3 from the
Plaintiff. In fact, arbitration proceedings have commenced between the
Plaintiff and Defendant No.3 under the Arbitration Agreement contained in
the contract executed between the Plaintiff and the Defendant No.3. It is
submitted that if the Plaintiff would have disclosed the facts contained in the
correspondence set out hereinabove, which is now disclosed by Defendant
No.3 in its Written Statement, the Plaintiff not would have been granted any
exparte
relief, which relief has been obtained by the Plaintiff by suppressing
the said facts and only by contending before the Court that due to the wrong
and illegal withdrawal of the vessel by the Defendant No.2 from the
Defendant No.3, the Defendant No.3 consequently withdrew the Defendant
No.1 vessel from the Plaintiff thereby causing loss and damage to the Plaintiff.
It is submitted on behalf of Defendant No.2 that the Plaintiff therefore
intentionally served the Writ of Summons on Defendant No.3 only on 27th
February 2012 and not earlier. It is submitted on behalf of the Defendant
No.2 that in view of such gross suppression of facts viz. that the Plaintiff had
not paid all the dues towards hire payment to Defendant No.3 and had
wrongly deducted huge amounts from the amounts due and payable to
Defendant No.3, Defendant No.3 had issued notices including a lien notice in
respect of the sums due, and also threatened action under Clause 11 of the
Time Charter by serving a notice of withdrawal on the Plaintiff, the Suit filed
by the Plaintiff deserves to be dismissed and Defendant Nos.1 and 2 are
entitled to return of the security amounts deposited by them with the
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Prothonotary and Senior Master of this Court.
12. The Defendants submit that it is well settled that :
i) ‘the applicant must state fully and fairly the facts’ and
that if ‘any
material facts has been suppressed or not properly brought forward’ the
order made earlier will be vacated and the litigant who has failed to
disclose material facts ‘loses his remedy’; and that the Court should
dismiss the Application without going into the merits and even though
there might otherwise be material for granting relief : The King vs The
General Commissioners For the Purpose of the Income Tax Acts for the
District of Kensington’ (1917) 1 KB 486).
ii) In the case of Chengalvaraya Naidu vs Jaganath (1994) 1 SCC 1, the
Supreme Court specifically overruled as ‘patent error’ and ‘perverse’, the
judgment of the Andhra Pradesh High Court holding that this
obligation of full and complete disclosure of facts was limited only to
Probate and other proceedings where a duty was cast upon a litigant to
disclose all facts and was not applicable to ordinary adversarial civil
litigation. The Supreme Court held that a person whose case was
based on falsehood had no right to approach the Court and ‘can be
summarily thrown out at any stage of the litigation.’
iii) Relying on the above two judgments, this Court has dismissed a
Company Petition where there was suppression of material facts. This
Court has held that it is the duty of a party seeking relief “to bring to
the notice of the Court all material facts” and “to make the fullest possible
disclosure of all material facts within his knowledge”. “It is no excuse for
the party to say that he / she was not aware of the importance of the facts
which he / she has omitted to bring forward” and that if facts were
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suppressed / withheld, “the Court would be left with no option but to
dismiss the application without going into the merits.” Agarwal
Industries vs. Golden Oil Industries P Ltd (1990) Vol. 101)2) Bom L R
476).
iv) In the case of The AA V [2000] 1 SLR 207 at 201/220, the High Court
of Singapore has held that ‘when an ex parte application is made for the
arrest of the vessel, the affidavit leading the warrant of arrest must
disclose all material facts known to the deponent in relation to the
arrest’ .. .. ‘The deponent of the affidavit must disclose those facts that
are relevant to the making of the decision whether or not a warrant for
arrest should be issued, that is a fact which should properly be taken into
consideration by the Court when weighing all the circumstances of the
case, though disclosure of the fact might not have the effect of leading to a
different decision being made’ AND that if material & relevant facts were
not duly disclosed, the warrant of arrest should be set aside on that
ground.
v) In Dalip Singh v. State of U.P. & Ors (2010) 2 SCC 114, the Supreme
Court stated ‘In last 40 years, a new creed of litigants has cropped up.
Those who belong to this creed do not have any respect for truth. They
shamelessly resort to falsehood unethical means for achieving their goals.
In order to meet the challenge posed by this new creed of litigants, the
courts have, from time to time, evolved new rules and it is now well
established that a litigant, who attempts to pollute the stream of justice or
who touches the pure fountain of justice with tainted hands, is not
entitled to any relief, interim or final.’
It is therefore submitted on behalf of Defendant No. 2 that the above Notice of
Motion be allowed.
13. The Plaintiff submitted that the assertion that the vessel has been
withdrawn by Defendant No.3 on the ground of nonpayment
of hire charges
is legally and factually incorrect. The Defendant No.3 has not withdrawn the
vessel from charter to the Plaintiff. The Plaintiff reiterates that the Defendant
No.2 withdrew the vessel from charter on 1st June 2011 and as a direct
consequence of this withdrawal, the vessel also stood withdrawn from the
Plaintiff’s charter party with Defendant No.3. It is submitted that this is, in
fact, supported by the very correspondence that the Applicant seeks to rely
upon. It is therefore submitted that the submission that the withdrawal of the
Defendant No.1 vessel by the Defendant No.3 from charter on account of the
Plaintiff’s failure to make full payment of charter hire is incorrect. It is further
submitted on behalf of the Plaintiff that the Plaintiff had paid almost US$ 5.5
million towards charter hire to the Defendant No.3. From the various hire
payments, it is apparent that there have been payments where certain offhire
deductions have been made by the Plaintiff and accepted by Defendant No.3.
Thus, it is not necessary that full hire payments should be paid for the period
if there are offhire
events which require hire to be reduced, and on no
occasion did Defendant No.3 withdraw the vessel from charter on account of
offhire
deductions made by the Plaintiff. If the Plaintiff had paid over US$
5.5 million as hire over the period, there was no earthly reason for it not to
pay a small amount of US$ 55149.00 which is the alleged shortfall (as per the
purported undated and unsigned withdrawal notice), and risk withdrawal of
the vessel from charter. Likewise, Defendant No.3 had paid over US$ 5
million to the owners, Defendant No.2 (the Applicant), for the period that the
vessel was on charter to Defendant No.3, as evident from the charter hire rate
of US$ 8,800.00 per day as stated in the charterparty in Clause 9. It is simply
not justifiable that Defendant No.2 was entitled to withdraw the vessel for
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nonpayment
of a paltry amount of US$ 13,000.00 as it appears from the
email dated 31st May 2011 addressed by Defendant No.2 to Defendant No.3.
The withdrawal by the Applicant/ Defendant No.2 appears exfacie
wrongful
and illegal and was done with a view to take benefit of higher charter rates
that Defendant No.2 would have earned by hiring the vessel to a third party.
This becomes even more apparent when it is clear from the correspondence
that Defendant No.3 in fact offered to pay the shortfall to Defendant No.2,
who did not accept the same.
14. As regards the contention taken by the Applicant that the Plaintiff did
not disclose that it had invoked arbitration against Defendant No.3, it is
submitted on behalf of the Plaintiff that this is irrelevant and has no bearing
on the Plaintiff’s claim against Defendant No.2. The charterparty between the
Plaintiff and Defendant No.3, which contains the arbitration clause, is on
record and filed along with the Plaint. The Applicant took out an earlier
Notice of Motion No.3030 of 2011, on 8th October 2011 for dismissal of the
Suit and vacating the arrest and in fact referred to the arbitration clause in the
charterparty in paragraph 18 of its Affidavitinsupport
of the Notice of
Motion. Thus, the Applicant was aware all along of the charterparty
arbitration clause and made no issue or grievance about the same as this was
clearly irrelevant as far as they were concerned.
15. The Plaintiff submitted that in the course of oral submissions, it was
contended on behalf of the Applicant that the Plaintiff took no steps to serve
Defendant No.3 until after the order of the Hon’ble Supreme Court dated 6th
February 2012. He submitted that this cannot be a ground on which the
Plaintiff’s Suit is required to be dismissed against Defendant Nos.1 and 2. The
Plaintiff did not take immediate steps to serve the Writ of Summons on
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Defendant No.3 because no interim relief was sought against Defendant No.3.
However, it is pertinent to note that the Applicant took no objection to nonservice
on Defendant No.3 at any stage during the hearing of the previous
Notice of Motion No.3030 of 2011, before the Single Judge or at the hearing
of the Appeal before the Hon’ble Division Bench or in the SLP filed by the
Applicant. The Applicant cannot therefore make any grievance about the
same at this stage. The reason why the Plaintiff took expeditious steps to serve
Defendant No.3 after the order of the Hon’ble Supreme Court dated 6th
February 2012 is because the Hon’ble Supreme Court expedited the hearing of
the Suit to be disposed of in three months. Consequently, it became
imperative for the Plaintiff to serve Defendant No.3, which the Plaintiff did in
March 2012.
16. The learned Senior Advocate appearing for the Plaintiff has submitted
that since the Plaintiff has not made any false submissions or suppressed any
material facts, the question of discharge of any exparte
order does not arise.
It is therefore submitted on behalf of the Plaintiff that the present Notice of
Motion is taken out by the Defendant No.2 with a view to scuttling the trial
because Defendant No.2 has no defence on merits and is seeking to clutch at
straws with a view to avoid trial and liability. It is therefore submitted that
the Notice of Motion be dismissed with costs.
17. I have considered the submissions advanced on behalf of the parties and
the case law cited on behalf of Defendant No.2. The Plaintiff has filed the
present Suit on the basis that the Defendant No.2 owner has wrongly and
illegally withdrawn the Defendant No.1 vessel from Defendant No.3 and as a
direct consequence of the said withdrawal, Defendant No.3 has withdrawn the
Defendant No.1 vessel from the Plaintiff thereby causing loss and damage to
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the Plaintiff, which the Plaintiff is entitled to recover jointly and severally from
Defendant Nos.1 and 2 and Defendant No.3. It is now the case of Defendant
No.2 that the documents annexed to the Written Statement by the Defendant
No.3 show that Defendant No.3 withdrew the Defendant No.1 vessel from the
Plaintiff not because the said vessel was withdrawn from Defendant No.3 by
Defendant No.2 but because the Plaintiff deducted huge amounts from the
hire payments payable to Defendant No.3 and failed to pay the same even
after receiving the withdrawal notice from Defendant No.3. It is submitted on
behalf of Defendant No.2 that these facts, as well as documents, are
suppressed by the Plaintiff in the Plaint. Instead, the Plaintiff proceeded on
an incorrect premise that the Defendant No.1 vessel was withdrawn by
Defendant No.3 from the Plaintiff as a direct consequence of the wrong and
illegal withdrawal of the Defendant No.1 vessel by Defendant No.2 from
Defendant No.3 and thereby wrongly obtained exparte
orders from this
Court. It is therefore necessary to go through the documents relied upon by
Defendant No.3, annexed to its Written Statement and relied upon by the
Applicant in the present Notice of Motion. The Applicant relied upon a letter
dated 1st June 2011 (Exhibit ‘B’ to the Written Statement of Defendant No.3)
written by Holman Fenwick Willan, Solicitors of Defendant No.3, wherein
Defendant No.3 demanded the outstanding additional cost of USD 62,078
before 2nd June 2011, failing which it would take appropriate steps to protect
its interest including, but not limited to, exercising a lien against the cargo as
per Clause 23 of the charterparty. By the said letter, Defendant No.3 did not
withdraw the vessel from the charter with the Plaintiff. In fact, Defendant
No.3 simply stated that it would exercise a lien against the cargo mentioned in
the charterparty which, in fact, as submitted by the Plaintiff, means that they
would maintain the charter. The annexure to the said letter dated 1st June
2011 is an undated and unsigned purported notice issued by Defendant No.3
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to the Plaintiff in accordance with Clause 11 of the charterparty where the
charterers were requested to rectify the failure and pay the outstanding hire
within a period of three clear banking/working days failing which it
threatened to exercise its contractual rights under Clause 11 of the
charterparty by withdrawing the vessel from the charterers. According to the
Plaintiff, not only has the said vessel not been withdrawn by/under the said
notice, but the said notice is also undated and unsigned and is not received by
the Plaintiff from Defendant No.3.
18. The next document that the Applicant relied upon is the letter dated 7th
June 2011, from Holman Fenwick Willan, Solicitors for Defendant No.3, to the
Plaintiff. As submitted by the Plaintiff, this letter primafacie
supports the
Plaintiff’s case in paragraph 9 of the Plaint because Defendant No.3, in
paragraph 5 of its letter has stated that, “.... since the Head Owners withdraw
the Vessel from the service to our clients, our clients must likewise do so under the
C/P with you.” The Plaintiff has correctly submitted that by the time this
letter was addressed on 7th June 2011, the vessel had already been withdrawn
by Defendant No.2 from charter from Defendant No.3, on 1st June 2011. That
is why Defendant No.3 has stated that since the vessel has already been
withdrawn by the Head Owners, it must do likewise. The last sentence in the
letter accepting repudiation of the charterparty must be seen and read in this
context because the Plaintiff never repudiated the charter but Defendant No.3
did, by the act of withdrawing the vessel since the vessel was withdrawn by
the Head Owners. This is made clear by the reply on behalf of the Plaintiff to
the letter dated 7th June 2011 from Holman Fenwick Willan (page 98 of the
Plaintiff’s compilation of documents) wherein the right of withdrawal by the
Head Owner is disputed by the Plaintiff.
19. Thus, primafacie,
it does appear, even after going through the letters
relied upon by the Applicant, that the Defendant No.3 has withdrawn the
vessel from the Plaintiff since the same was already withdrawn by the Head
Owners i.e. Defendant No.2, the Applicant herein. Thus, it cannot be held at
this stage, as prayed for by Defendant No.2 that the Defendant No.1 vessel
was withdrawn by Defendant No.3 from charter on account of the Plaintiff’s
failure to make full payment of charter hire. Consequently, it cannot be held
at this stage that the Plaintiff has suppressed the documents produced by
Defendant No.3 and relied upon by the Applicant in respect of the present
Notice of Motion. The issues whether on the basis of the documents
produced, Defendant No.2 and/or the HK Co were entitled to withdraw the
vessel from charter on account of the alleged nonpayment
of charter hire by
Defendant No.3 and whether Defendant No.3 withdrew the vessel from
charter to the Plaintiff because the vessel was withdrawn from its charter by
Defendant No.2, are required to be gone into and decided at the trial.
20. As regards the aforesaid decisions relied upon by Defendant No.2, it is
clear therefrom that any suppression or false statement must be apparent exfacie
and writ large; it cannot amount to suppression if what is alleged to be
suppressed is required to be ascertained on an interpretation of documents to
establish the correct legal and factual position, as is sought to be done by the
Applicant. As correctly submitted by the Plaintiff, this is a matter of trial and
evidence and would amount to prejudging
the issues between the parties
especially where the main issue in the Suit is the wrongful withdrawal of the
vessel from charter by Defendant No.2 and the same is yet to be decided. In
the case of R Vs. General Commissioners, District of Kensington, relied upon by
the Applicant, the Court has said,
“... this is a power inherent in the Court but one which should only
be used in cases which bring conviction to the mind of the Court that
it has been deceived. Before coming to this conclusion a careful
examination will be made .... but if the result of this examination
and hearing is to leave no doubt that the Court has been deceived,
then it will refuse to hear anything further...” (emphasis supplied).
From the documents relied upon by the Applicant, it cannot be finally decided
at this stage that the withdrawal of the vessel from charter by Defendant No.3
is due to nonpayment
of the hire payments by the Plaintiff. In fact, on
analysis of the documents, I have reached the primafacie
view, as set out
hereinabove, that Defendant No.3 has withdrawn the vessel from charter as a
consequence of the withdrawal of the vessel from charter by Defendant No.2.
In view thereof, it cannot be held that there has been suppression of facts,
much less, an attempt to deceive the Court.
21. The contention taken by the Applicant that the Plaintiff did not disclose
that it had invoked arbitration against Defendant No.3, is also of no relevance
to the issues that would be the subject matter of the present Suit. Delay in
service of the Writ of Summons on Defendant No.3 also does not entitle the
Defendant No.2 to get any reliefs as sought in the Notice of Motion.
22. In the circumstances, in view of the facts set out hereinabove, it is clear
that hearing of the Suit has been unnecessarily delayed despite directions of
the Hon’ble Supreme Court expediting the same. The need of the hour in the
present Suit is to expeditiously proceed with hearing of the Suit and not to
waste any further time. The Notice of Motion is therefore dismissed and the
matter be placed for framing of issues on 12th June 2013.
(S. J. KATHAWALLA, J.)
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