LIVERPOOL AND LONDON S.P. AND I ASSON. LTD. v. M.V. SEA SUCCESS I AND ANR.

p. 896 Copy page pinpoint

A scenario inasmuch as the field of insurance has undergone a sea change from merely hull and machinery, the insurance companies cover various risks including oil spill damage to the Port, damage to the cargo etc. In that sense the term must be construed in a broad and liberal manner. The changing requirement of a ship so as to enable it to trade in commerce must be kept in mind which would lead to the conclusion that P & I Insurance cover would be necessary for operation of a ship.

It may be true that there are a large number of insurance covers; from hull and machinery insurance to protection and indemnity cover. But the question is not what insurance would be 'necessary' and what would not be; as the issue has to be considered not only on a mere hypothesis but having regard to the statutes framed by other countries as also the 1999 Arrest Convention.

LEX FOR/:

D In Benedict on Admiralty, 6th Edn., Vol.I, p. 19, it has been stated:

"A ship is, of necessity, a wanderer. She visits shores where her owners are not known or are inaccessible. The master is the fully authorized agent of the distant owners but is not usually of sufficient pecuniary ability to respond to unforeseen demands of the voyage. E These and other kindred characteristics of maritime commerce underlie the practice of finding in the ship itself security, in many cases, for demands against the master or owners in their conduct of the ship as an instrumentality, whether commercial or not, or in their contracts made on account of the ship."

F In British Shipping Laws, Volume 14, while contrasting maritime liens and statutory rights of action it is stated:

"Although maritime liens and statutory rights of action in rem are · similar in that they involve the Admiralty process in rem, there nonetheless exist fundamental differences between the two categories. G These differences may be categories as follows:

(I) Nature of the claim Although the point is not free of uncertainty it is probably the case that a maritime lien is a substantive right whereas a statutory right of action in rem is in essence a procedural remedy. The object behind the availability of a statutory right of H action in rem is to enable a claimant to found a jurisdiction and to

LIVERPOOL AND LONDON S.P. AND I ASSON. LTD. v. M.V. SEA SUCCESS I [S.B. SINHA, J.J 897

provide the res as security for the claim." A In Cheshire and North's Private International Law, 12th Edition, it is stated

"At first sight the principle seems almost se If-evident. A person who resorts to an English court for the purpose of enforcing a foreign B claim cannot expect to occupy a different procedural position from that of a domestic litigant. The field of procedure constitutes perhaps the most technical party of any legal system, and it comprises many rules that would be unintelligible to a foreign judge and certainly unworkable by a machinery designed on different lines. A party to litigation in England must take the law of procedure as he finds it. He C cannot by virtue of some rule in his own country enjoy greater advantages than other parties here; neither must he be deprived of any advantages that English law may confer upon a litigant in the particular form of action. To take an old example, an English creditor who sued his debtor in Scotland could not insist on trial by jury, nor, in the converse case, could a Scottish creditor suing in England refuse the intervention of a jury, on the ground that in Scotland, where the debt arose, the case would have been tried by a judge alone."

An insurance transaction more often than not have links with more than one country. In a given case for resolution of a complex question the principles of private inter-national law or the conflict of laws may have to be turned to but with a view to determine the same, disputes have to be resolved by reference to the system of law which governs the contract of insurance. The jurisdiction to deal with an action by or against insurers in England and EC Member States except Denmark are now governed by EC Council Regulation F No. 44/200 I. In other countries, however, the law which is prevailing therein would govern the field. It may be true that some conventions like Brussels and Lugano are no longer relevant in most cases involving EC Member States but they form an important part of the background to the current jurisdictional regime. For defending the limits of the jurisdiction of the case of a particular G company the same must, therefore, be governed by the law prevailing therein. The claim may be a maritime claim in a non-contracting country but not in others. The 'Club' in law, therefore, would be entitled to enforce its claims against the 'Vessel' keeping in view the law prevailing in India within whose territorial jurisdiction the ship is found. Only because, the claim can be H

p. 898 Copy page pinpoint

A enforced in our country and not in some other countries, by itself would not lead to the conclusion that it cannot be enforced at all irrespective of the domestic law.

Some countries like Canada, Australia and South Africa as well as communist regimes like China and Korea have made statutes as a result B whereof the maritime claims stand codified. The expression 'necessaries' is not used in the said statutes except the statutes of United States. The domestic legislation indisputably will prevail over any international convention irrespective of the fact as to whether the country concerned is a party thereto or not. c The rules for ship arrest in international fora are not uniform. Despite International Convention on the Arrest of Sea-going Ships 1952 as amended in the year 1999 either having been adopted by some c:ountries or adopted by others, the law is enforced by the concerned countries having regard to their own domestic legal system. Where, how and when can a maritime claimant most advisedly arrest a ship in pursuit of its claim either in rem or in personem had all along been a complicated question keeping in view the principles of 'lex Jori'.

As a matter of policy legislation or otherwise England did not want that arrears of insurance premium should be included as a maritime claim, but the same would not imply that in other countries despite the unpaid insurance premium being maritime claim, the same would not be enforced.

SUMMARY OF THE DISCUSSIONS:

The discussions made hereinbefore lead to the conclusion that having regard to the changing scenario and keeping in tune with the changes in both domestic and international law as also the statutes adopted by several countries, a stand, however, bold, may have to be taken that unpaid insurance premium of P&I Club would come within the purview of the expression "Necessaries supplied to any ship''. Other types of insurance, keeping in view the existing statutes may not amount to a "necessary''. In any event, such a question, we are not called upon to answer at present. The discussions made hereinbefore under different sub-titles of this judgment separately and distinctly may not lead us to the said conclusion but the cumulative effect of the findings thereunder makes the conclusion inevitable. The question has not only been considered from the angle of history of the judicial decisions rendered by different Courts having great persuasive value but also from the angle that

LIVERPOOL AND LONDON SP AND I ASSON. LTD. r. M.V. SEA SUCCESS I [S.B. SINHA.JJ899

with the change in time interpretative changes are required to be made. We, A therefore, in agreement with the judgment of the Bombay High Court, hold that unpaid insurance premium being a maritime claim would be enforceable in India.

MAINTAINABJLIY OF THE LETTERS PATENT APPEAL: B Submission of Mr. Pratap is that by refusing to exercise discretion to reject a plaint by account, no right or liability of the party is decided and by reason thereof the procedure for determining the rights and obligations of the parties are only set in motion. Such an order would akin to an order admitting the plaint, Mr. Pratap would submit. Reliance in this connection has been C placed on The Justices of the Peace for Calcutta v. Oriental Gas Company, (1872) Vol. VIII Bengal Law Reports 433 at 452.

It was urged that by not rejecting the plaint the defences set out by the defendant are not obliterated as they will be entitled to raise all such contentions at the trial. Reliance in this connectio:i has been placed on D Prahladrai Agarwal/av. Shri Renuka Pal, AIR (1982) Cal 259 at page 266.

Mr. Pratap would further contend that the High Court has misread and misinterpreted the decision of this Court in Shah Babula/ Khim) i v. Jayaben Kania, [1981] 4 SCC 8. E By way of an analogy, the learned counsel would argue that leave to defend a suit granted in favour of the defendant under Order 37 of the Code of Civil Procedure would not be a 'judgment' within the meaning of Clause 15 of the Letter Patent being an interlocutory order as damage or prejudice in such a matter to the defendant must be a direct and immediate one. F Clause 15 permits an appeal against the order passed by a Single Judge of the High Court in the second forum.

The relevant portion of Clause 15 of the Letters Patent reads thus:

"And we do further ordain that an appeal shall lie to the said High G Court of Judicature at Madras, Bombay, Fort William in Bengal from the-judgment ... of one Judge of the said High Court or one Judge of any Division Court, pursuant to Section 108 of the Government of India Act, and that notwithstanding anything hereinbefore provided, an appeal shall lie to the said High Court from a judgment of one Judge of the said High Court or one Judge of any Division Court, H

p. 900 Copy page pinpoint

A pursuant to Section I 08 of the Government of India Act, made (on or after the first day of February 1929) in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a court subject to the superintendence of the said High Court where the Judge who passed the judgment declares that the case is a fit one for appeal." B The right of appeal which is provided under Clause 15 of the Letters Patent cannot be said to be restricted.

In Suba/ Paul v. Malina Paul and Anr., JT (2003) 5 SC 193 this Court held: c "While determining the question as regards Clause 15 of the Letters Patent the court is required to see as to whether the order sought to be appealed against is a judgment within the meaning thereof or not. Once it is held that irrespective of the nature of the order, meaning thereby whether interlocutory or final, a judgment has been rendered, D Clause 15 of the Letters Patent would be attracted.

The Supreme Court in Shah Babula/ Khimji 's case (supra) deprecated a very narrow interpretation on the word 'judgment' within the meaning of Clause 15.

E This Court said:

"a court is not justified in interpreting a legal term which amounts to a complete distortion of the word 'judgment' so as to deny appeals even against unjust orders to litigants having genuine grievances so as to make them scapegoats in the garb of protecting vexatious appeals. In such cases, a just balance must be struck so as to advance the objection of the statute and give the desired relief to the litigants, if possible."

In Shah Babula/ Khimji 's case (supra), this Court in no uncertain terms referred to the judgment under the Special Act which confers additional jurisdiction to the High Court even in internal appeal from an order passed by the Trial Judge to a larger Bench. Letters Patent has the force of law. It is no longer res integra. Clause 15 of the Letters Patent confers a right of appeal on a litigant against any judgment passed under any Act unless the same is expressly excluded. H Clause 15 may be subject to an Act but when it is not so subject to

LIVERPOOL AND LONDON SP AND I ASSON. LTD. v. M.V SEA SUCCESS I [S.B. SINHA, J.]90 J

the special provision the power and jurisdiction of the High Court A a under Clause 15 to entertain any appeal ,from judgment would be effective.

The decision of this Court in Shah Babula/ Khimji 's case (supra) has been considered in some details by a Special Bench of the Calcutta High Court in Tanusree Art Printers and Anr. v. Rabindra Nath Pal, B (2000) 2 CHN 213 and 2000 (2) CHN 843. It was pointed out:

"If the right of appeal is a creature of a statute, the same would be governed by the said statute. Whether an appeal under Clause 15 of the Letters patent will be maintainable or not when the matter is governed by a Special Statute will also have to be C judged from the scheme thereof. (e.g. despite absence of bar, a Letters Patent appeal will not be maintainable from a judgment of the learned Single Judge rendered under the Representation of People Act.)"

It was pointed out that in Shah Babula/ Khimji 's case (supra) this D Court posed three questions namely:

(I) Whether in view of Clause 15 of the Letters Patent an appeal under Section I 04 of the Code of Civil Procedure would lie? 2) Whether Clause 15 of the Letters Patent supersedes Order 43, Rule I of the Code of Civil Procedure? 3) Even Section I 04 of E the CPC has no application, whether an order refusing to grant injunction or appoint a receiver would be a judgment within the meaning of Clause 15 of the Letters Patent?"

The Apex Court answered each of them from a different angle: F (a) Section I04 of the Code of Civil Procedure read with Order 43, Rule I expressly authorizes a forum of appeal against orders falling under various clauses of Order 43 Rule I to a Larger Bench of a High Court without at all disturbing interference with or overriding the Letters Patent jurisdiction. G (b) Having regard to the provisions of Section 117 and Order 49 Rule 3 of the Code of Civil Procedure which excludes various other provisions from the jurisdiction of the High Court, it does not exclude Order 43 Rule I of the CPC. (c) There is no inconsistency between Section 104 read with H

p. 902 Copy page pinpoint

A Order 43 Rule I and the appeals under Letters Patent, as Letters Patent in any way does not exclude or override the application under Section I04 read with Order 43 Rule I which shows that these provisions would not apply in internal appeals within the High Court."

B In Prataprai N. Kothari v. John Braganza, (1999] 4 SCC 403, even in a suit for possession only not based on title, a letters patent appeal was held to be maintainable.

The decision cf this Court in Sharda Devi v. State of Bihar, [2002] 3 sec 705 is also to the same effect, wherein in para 9 it was held: c "A Letters patent is the charter under which the High Court is established. The powers given to a High Court under the Letters Patent are akin to the constitutional powers of a High Court. Thus when a Letters Patent grants to the High Court a power of appeal, against a judgment of a Single Judge, the right to entertain the appeal D would not get excluded unless the statutory enactment concerned excludes an appeal under the Letters Patent."

Section 54 of the Land Acquisition Act, I 894 provides for an appeal before the High Court and thereafter to the Supreme Court and despite the same it was held that a letters patent appeal under Clause 15 E would be maintainable."

The view taken by the Calcutta and Bombay High Court that an order passed in tenns of Order 37 of the Code of Civil Procedure granting leave to defend would not be a judgment within the meaning of Clause 15 of the Letters Patent may not be of much relevance. F In M/s. Tanusree Art Printers and Anr. v. Rabindra Nath Pal (2000) 2 CHN 213 it has been noticed:

"In Mis. Merchants of Traders (P) Ltd. v. Mis. Sarmon Pvt. ltd., reported in (1997) I CHN 287, learned Division Bench although did not G consider this aspect of the matter but held that an order passed in tenns of Order 37 Rule 5 of the Code of Civil Procedure will not be appealable."

Reliance by Mr. Pratap upon a decision of the Calcutta High Court in H Prahladrai Agarwal/a and Ors. v. Smt. Renuka Pal and Ors., AIR (1982) Cal.

LIVERPOOL AND LONDON SP AND I ASSON. LTD. v. MV SEA SUCCESS I [S.B. SINHA, J.]903

259 wherein it has been held that an order under Order 7 Rule 11 of the Code A of Civil Procedure refusing to reject a plaint is not a judgment, is not apposite.

In the said judgment, however, the judgment of this Court in Shah Babula/ Khimji (supra) was not taken into consideration. The ratio of the decision of this Court in Shah Babula/ Khimji, as regard scope and ambit of the word "judgment" had not been noticed by the Calcutta High Court. B The submission, however, to the effect that in the suit all defences would be open to the defendant, in our opinion, is misconceived inasmuch as, no evidence can be adduced in absence of any pleading. There may not, furthermore be any requirement to go into the trial if the plaint does not disclose a cause of action.

The contention that an order refusing to reject a plaint is one akin to order amending the plaint would not be a correct proposition of law.

The question as to whether the defendant despite such an order refusing to reject a plaint will have a right to show that the case is false would again be of no consequence. The said submission, in our opinion, is based on a wrong premise.

An order refusing to grant leave to a defendant to defend the suit would be passed when it is found that the defence is a moonshine. E Clause 15 of the Letters Patent is not a special statute. Only in a case where there exists an express prohibition in the matter of maintainability of an intra court appeal, the same may not be held to be maintainable. But in the event there does not exist any such prohibition and if the Order will otherwise be a 'judgment' within the meaning of Clause 15 of the Letters F Patent, an appeal shall be maintainable.

What would be a judgment is stated in Shah Babula/ Khimji (supra) as under:

"We think that "judgment" in Clause 15 means a decision which G affects the merits 0f the question between the parties by determining some right or liability. It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined. H

p. 904 Copy page pinpoint

A 81. An analysis of the observations of the Chief Justice would reveal that the following tests were laid down by him in order to decide whether or not an order passed by the Trial Judge would be a judgment:

(I) a decision which affects the merits of the question between the parties; B (2) by determining some right or liability;

(3) the order detennining the right or liability may be final, preliminary or interlocutory, but the determination must be final or one which decides even a part of the controversy finally leaving other matters c to be decided later.

In lea Badin v. Upendra Mohan Roy, AIR (1935) Cal. 35, the Calcutta High Court held that an order refusing to appoint a receiver is detenninative of a right of the plaintiff and would accordingly be a judgment.

D Yet again in Chittaranjan Monda/ v. Sankar Prasad Sahani, AIR (1972) Cal. 469 the Calcutta High Court held that an order refusing to grant an injunction restraining execution of the judgment-debtor was a judgment within the meaning of Clause 15.

As by reason of an order passed under Order 7, Rule 11 of the Code E of Civil Procedure, the rights conferred upon the parties are determined one way or the other, stricto sensu it would not be an interlocutory order but having regard to its traits and trappings would be a preliminary judgment.

It is true that in Shah Babula/ Khimji (supra) it is stated that an order rejecting the plaint would be appealable but does not expressly state that an F order refusing to reject would not be appealable. Therein this Court gave 15 instances where an order would be appealable which are only illustrative in nature.

Such observations have to be understood having regard to the concept of finality which are of three types: G (I) a final judgment

(2) a preliminary judgment and (3) intermediary or interlocutory judgment.

H In our opinion the order refusing to reject the plaint falls in the category

LIVERPOOL AND LONDON SP. AND I ASSON LTD. v. M.V SEA SUCCESS I [SB. SINHA,J.J 905

of a preliminary judgment and is covered by the second category carved out A by this Court.

It is trite that a party should not be unnecessarily harassed in a suit. An order refusing to reject a plaint will finally determine his right in terms of Order 7 Rule 11 of the Code of Civil Procedure. B The idea underlying Order 7 Rule I IA is that when no cause of action is disclosed, the courts will not unnecessarily protract the hearing of a suit. Having regard to the changes in the legislative policy as adumbrated by the amendments carried out in the Code of Civil Procedure, the Courts would interpret the provisions in such a manner so as to save expenses, achieve expedition, avoid the court's resources being used up on cases which will C serve no useful purpose. A litigation which in the opinion of the court is doomed to fail would not further be allowed to be used as a device to harass a litigant. (See Azhar Hussain v. Rajiv Gandhi, [1986) Supp SCC 315 at 324- 35). D In Dhartipakar Aggarwal v. Rajiv Gandhi, [1987) Supp SCC 93, this court held:

"9. In K. Kamaraja Nadar v. Kunju Thevar, [1959) SCR 583 : AIR (I 958) SC 687 : I4 ELR 270, the Election Tribunal and the High Court both refused to consider preliminary objections raised by the returned E candidate at the initial stage on the ground that the same would be considered at the trial of the election petition. This Court set aside the order and directed that the preliminary objection should be entertained and a decision reached thereupon before further proceedings were taken in the election petition. Bhagwati, J. speaking for the Court observed thus : F We are of opinion that both the Election Tribunal and the High Court were wrong in the view they took. If the preliminary objection was not entertained and a decision reached thereupon, further proceedings taken in the election petition would mean a full-fledged trial involving examination of a large number of witnesses on behalf of the second G respondent in support of the numerous allegations of corrupt practices attributed by him to the appellant, his agents or others working on his behalf; examination of a large number of witness by or on behalf of the appellant controverting the allegations made against him; examination of witness in support of the recrimination submitted by H

p. 906 Copy page pinpoint

A the appellant against the second respondent; and a large number of visits by the appellant from distant places like Delhi and Bombay to Ranchi resulting in not only heavy expenses and loss of time and diversion of the appellant from his public duty in the various fields of activity including those in the House of the People. It would mean unnecessary harassment and expenses for the appellant which could B certainly be avoided if the preliminary objection urged by him was decided at the initial stage by the Election Tribunal.

It was opined that in a given case a full dressed trial need not be undertaken. c Yet again in Samar Singh v. Kedar Nath, (1987] Suppl. SCC 224 it has been held :

"In substance, the argument is that the court must proceed with the trial, record the evidence, and only after the trial of the election petition is concluded that the powers under the Code of Civil Procedure D for dealing appropriately with the defective petition which does not disclose cause of action should be exercised. With respect to the learned counsel, it is an argument which it is difficult to comprehend. The whole purpose of conferment of such powers is to ensure that a litigation which is meaningless and bound to prove abortive should not be permitted to occupy the time of the court and exercise the mind of the respondent."

"13. Furthermore, Section 86 deals with trial of election petitions, Sub- section (I) whereof is a part of it. Trial has not been defined. In Black's Law Dictionary at page 1348 it is stated: G "A judicial examination and determination of issues between parties to action, Gulf, C. & S.F. Ry. Co. v. Smit, Oki., 270 P.2d 629, 633; whether they be issues of law or of fact, Pulaski v. State, 23 Wis. 2d 138, 126 N.W. 2d 625, 628. Ajudicial examination, in accordance with law of the land, of a cause, either civil or H

LIVERPOOL AND LONDON SP. ANDI ASSON. LTD. v. M.V. SEA SUCCESS I [S.B. SINHA,J.]907

criminal, of the issues between the parties whether of law or fact, before a court that has proper jurisdiction''.

14. It is, therefore, not necessary that the trial must be a full dressed or a jury trial or a trial which concludes only after taking evidence of a parties in support of their respective cases.

15. Section 116A provides for an appeal. The said provision must be given a liberal and purposive construction. The scope of an appeal should be held to be wider than an application for judicial review or a petition under Article 136 of the Constitution of India.

16. Furthermore, the Representation of the People Act provides for a C complete machinery. The right of appeal conferred upon a suitor must be considered from that angle. When an order is passed under Section 98 of the Act, the same may be in tenns of either Sub-section (1) of Section 86 or otherwise. An appeal lies against a final order. An order passed under Sub-section (I) of Section 86 is also final. It may be that in the event an appeal therefrom is allowed, the matter may be required D to be sent back but that would not render an order passed thereunder as an interlocutory one. It does not take away the concept of the finality attached therewith."

In Central Mine Planning and Design Institute Ltd. v. Union of India and Anr., [2001] 2 SCC 588 this Court upon referring Shah Babula/ Khimji E (supra) held:

"Adverting to the facts of this case, Section 17-B of the ID Act confers valuable rights on the workmen and correspondingly imposes onerous obligations on the employer. The order in question passed by t~e learned Single Judge detennines the entitlement of the workmen F to receive benefits and imposes an obligation on the appellant to pay such benefits provided in the said section. That order cannot but be "judgment" within the meaning of clause 10 of Letters Patent, Patna. The High Court is obviously in error in holding that the said order is not judgment within the meaning of clause I0 of the Letters Patent of G Patna."

We, therefore, are of the opinion that Letters Patent Appeal was maintainable.

REJECTION OF PLAINT: H

908 SUPREME COURT REPORTS (20031 SUPP. 5 S.C.R.

A Whether a plaint discloses a cause of action or not is essentially a question of fact. But whether it does or does not must be found out from reading the plaint itself. For the said purpose the averments made in the plaint in their entirety must be held to be correct. The test is as to whether if the averments made in the plaint are taken to be correct in its entirety, a decree would be passed. B CAUSE OF ACTION:

A cause of action is a bundle of facts which are required to be pleaded and proved for the purpose of obtaining relief claimed in the suit. For the aforementioned purpose, the material facts are required to be stated but not C the evidence except in certain cases where the pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence.

Order 7 Rule 14 of the Code of Civil Procedure provides as follows:

"14 PRODUCTION OF DOCUMENT ON WHICH PLAINTIFF SUES D OR RELIES.

(I) Where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in Court when the plaint is presented by him and shall, at the same time deliver the document and E a copy thereof, to be filed with the plaint.

(2) Where any such document is not in the possession or power of the plaintiff, he shall, where possible, state in whose possession or power it is.

F (3) Where a document or a copy thereof is not filed with the plaint under this rule, it shall not be allowed to be received in evidence on behalf of the plaintiff at the hearing of the suit.

(4) Nothing in this rule shall apply to document produced for the cross-examination of the plaintiffs witnesses, or, handed over to a G witness merely to refresh his memory."

In the instant case the 'Club' not only annexed certain documents with the plaint but also filed a large number of documents therewith. Those documents having regard to Order 7 Rule 14 of the Code of Civil Procedure are required to be taken into consideration for the purpose of disposal of H application under Order 7 Rule I l(a) of the Code of Civil Procedure. The

LIVERPOOL AND LONDON S.P. AND I ASSON. LTD. v. M.V. SEA SUCCESS I [S.B. SINHA,J.]909

'Club' in its plaint pleaded: A "The Plaintiff is a Protection & Indemnity Association incorporated under the laws of the United Kingdom and carries on business through its Managers, Liverpool & London P&I Management Ltd. at Liverpool, UK. The Plaintiff is a mutual association of ship-owners and offers insurance cover in respect of vessels entered with it for diverse third B party risks associated with the operation and trading of vessels. This insurance is commonly known as Protection & Indemnity (P&I) cover in respect of various risks associated with the vessels in their maritime adventure. The !st Defendant vessel m.v. "Sea Success I" is a sistership of the vessels "Sea Ranger" and "Sea Glory" which were entered for C P&I risks with the Plaintiff Association. The said two vessels were entered into the Plaintiff's Association for the policy year 1999-2000 by Defendant No. 2, Singapore Soviet Shipping Co. Pte. Ltd. who, as per the terms of the insurance and Rules of the Plaintiff Association, were recognized and considered to be the owners of the said two vessels and the assured under the policy of insurance. The I st D Defendant vessel is owned and/ or controlled by Defendant No. 2 through its wholly owned I 00% subsidiary, Singapore Soviet Shipping Corporation Inc., Monrovia. The I st Defendant vessel is presently at the port and harbour of Mumbai within the territorial waters of India and within the Admiralty jurisdiction of this Hon 'ble Court. The 2nd Defendant is the owner of the I st Defendant and is also inter alia the party liable in personam in respect of the Plaintiff's claim.

The Plaintiff submits as more particularly stated in paragraph I above, that the !st Defendant vessel is a sistership of the two vessels "Sea Glory" and "Sea Ranger" in view of the beneficial ownership, management of all three vessels having vested in Defendant No. 2. The Plaintiff further submits that Defendant No. 2 is liable in personam in respect of the unpaid insurance premium in respect of the two _ vessels "Sea Glory" and "Sea Ranger". Consequently, the Plaintiff is entitled to arrest any other vessel in the ownership of Defendant No.

2. The !st Defendant vessel is owned by Defendant No. 2 through it's G I00% subsidiary S.S. Shipping Co. Inc. In the circumstances, the Plaintiff submits that they are entitled to proceed against the Defendant vessel in rem and are entitled to an order of arrest, detention and sale of the vessel for recovery of their outstanding dues in respect of insurance premium as more particularly stated above. The Plaintiff is, H

910 SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R.

A therefore, entitled to have the Defendant vessel along with her hull, gear, engines, tackle, machinery, bunkers, plant, apparel, furniture, equipments and all appurtenances thereto condemned and arrested under a warrant of arrest of this Hon 'ble Court for realization of the Plaintiff's dues. The Plaintiff is further entitled to have the Defendant vessel sold under the orders and directions of this Hon 'ble Court and B to have the sale proceeds thereof applied towards the satisfaction of the Plaintiffs claim in the suit. The Plaintiff is entitled to an order of arrest of the Defendant vessel as arrest is the only method of proceeding against the said vessel in rem. The Plaintiff submits that if such an order of arrest is not granted, irreparable harm and injury c will be caused to the Plaintiff inasmuch as the Plaintiff's suit will be rendered infructuous. There is no other alternative efficacious remedy available to the Plaintiff.

The Club has pleaded that the vessel is a sister ship of 'Sea Ranger' and 'Sea Glory' owned and possessed by the second defendant. The Club D has also pleaded that the defendant No. 2 is beneficial owner of the first defendant ship. Determination on such assertions would amount to determination of question of fact. If the 'Vessel' denies or disputes the same; an issue in that behalf will have to be framed and decided.

Beneficial ownership of a ship is not a question of fact alone. It is a E mixed question of fact and law. In William v. Wilcox, (1838) 8 Ad. & EL 331 it is held:

"It is an elementary rule in pleading that when a state of facts is relied, it is enough to allege it simply, without setting out the subordinate facts which are the means of proving it or the evidence sustaining the allegations."

The aforementioned dicta has been quoted with approval in Mohan Rawale v. Damodar Tatyaba and Ors., (1994] 2 SCC 392.

It may be true that Order 7 Rule 1l(a) although authorises the court to reject a plaint on failure on the part of the plaintiff to disclose a cause of action but the same would not mean that the averments made therein or a document upon which reliance has been placed although discloses a cause of action, the plaint would be rejected on the ground that such averments are not sufficient to prove the facts stated therein for the purpose of obtaining reliefs claimed in the suit. The approach adopted by the High Court, in this

LIVERPOOL AND LONDON S.P. AND I ASSON. LTD. v. M.V. SEA SUCCESS I [S.B. SINHA, J.]911

behalf, in our opinion, is not correct. A In D. Ramachandran v. R. V. Janakiraman and Ors., [1999] 3 SCC 267, this Court held:

"It is well settled that in all cases of preliminary objection, the test is to see whether any of the reliefs prayed for could be granted to the B appellant if the averments made in the petition are proved to be true. For the purpose of considering a preliminary objection, the averrnents in the petition should be assumed to be true and the court has to find out whether those averrnents disclose a cause of action or a triable issue as such. The court cannot probe into the facts on the basis of the controversy raised in the counter." C Furthermore a fact which is within the special knowledge of the defendant need not be pleaded in the plaint. In Punit Rai v, Dinesh Chaudhary, JT (2003) Supp. I SC 557, it is stated:

" ... These are the material facts relating to the plea raised by the D appellant that the respondent is not a Scheduled caste, We don't think if the respondent means to say that the petitioner should have stated in the petition that the respondent is not born of Deo Kumari Devi said to be married to Bhagwan Singh in village Adai. If at all these facts would be in the special knowledge of respondent, Bhagwan E Singh and Deo Kumari Devi hence not required to be pleaded in the election petition. It is not possible as well. In this connection, a reference may be made to a decision of this Court in Ba/wan Singh v, Lakshmi Nrain and Ors., AIR ( 1960) SC 770. This case also relates to election matter and it was held that facts which are in the special knowledge of the other party could not be pleaded by the election petitioner. It was found that particulars of the arrangement or hiring or procuring a vehicle would never be in the knowledge of the petitioner, such facts need not and cannot be pleaded in the petition."

In D. Ramachandran v. R. V. Janakiraman and Ors., [1999] 3 SCC 267, it has been held that the Court cannot dissect the pleading into several parts and consider whether each one of them discloses a cause of action.

In the aforementioned backdrop, the question as to whether the Club had been able to show that the Respondent No. I is a sister ship of "Sea Glory" and "Sea Ranger" admittedly belonging to the first respondent is a H

912 SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R.

A matter which is required to be gone into in the suit. In ascertaining whether the plaint shows a cause of action, the court is not required to make an elaborate enquiry into doubtful or complicated questions of law or fact. By the statute the jurisdiction of the court is .restricted to ascertaining whether on the allegations a cause of action is B shown. In Vijay Pratap Singh v. Dukh Haran Nath Singh. AIR (1962) SC 941 this Court held:

"By the express terms of r. 5 clause (d), the court is concerned the ascertain whether the allegations made in the petition show a cause of action. The court has not to see whether the claim made by the c petitioner is likely to succeed: it has merely to satisfy itself that the allegations made in the petition, if accepted as true, would entitle the petitioner to the relief he claims. If accepting those allegations as true no case is made out for granting relief no cause of action would be shown and the petition must be rejected. But in ascertaining whether the petition shows a cause of action the court does not enter upon a trial of the issues affecting the merits of the claim made by the petitioner. It cannot take into consideration the defences which the defendant may raise upon the merits; nor is the court competent to make an elaborate enquiry into doubtful or complicated questions of law or fact. If the allegations in the petition, prima facie, show a cause of action, the court cannot embark upon an enquiry whether the allegations are true in fact, or whether the petitioner will succeed in the claims made by him."

So long as the claim discloses some cause of action or raises some questions fit to be decided by a Judge, the mere fact that the case is weak and not likely to succeed is no ground for striking it out. The purported failure of the pleadings to .disclose a cause of action is distinct from the absence of full particulars. See Mohan Rawale (supra).

Beneficial ownership is not a pure question of fact. It is a mixed question of law and fact. In that view of the matter it was not necessary for the Club to set out the subordinate facts which arte means of proving it or the evidence sustaining the allegations. The High Court, however, in its order rejecting the plaint held:

"We have not gone into the merits of the Defendant No. 1 ship, we clarify, on the basis of any averments made by Defendant No. 1, to

LIVERPOOLANDLONDONS.P.AND I ASSON. LTD. v. M.V. SEA SUCCESS I [S.B. SINHA,J.J 9) 3

the contrary, but we have proceeded to examine the same on the basis of the averments made in the plaint to find out whether, as they stand, prove the Defendant No. I vessel Sea Success -I to be sister ship of vessels - "Sea Glory" and "Sea Ranger" being beneficially owned by Defendant No. 2. We have already indicated above that the allegations made in the plaint by themselves do not prove factum of Defendant No. I Sea Success-I being sister ship of vessels "Sea Glory" and "Sea B Ranger" in respect of whom the claim has been raised in the suit, we find it difficult to approve the view of the learned Single Judge in this regard. It cannot be overlooked that ship is a valuable commercial chattel and her arrest undeservingly severely prejudices third parties innocently as well as affect the interest of owner, crew member, C cargo owner, shipper etc. adversely and, therefore, it is all the more necessary to analyse the plaint meaningfully at the threshold to find out whether it discloses cause of action or not and not on technical and formal reading that if discloses cause of action and wait for trial." D The approach of the High Court, in our considered opinion, is not correct. For the purpose of rejecting a plaint it is not necessary to consider whether the averments made in the plaint prove the factum that the defendant No. I "Sea Success-I" is a sister ship of "Sea Glory" and "Sea Ranger" or the said two ships are beneficially owned by the defendant No. 2. The reasons which have been assigned in support of the said aforementioned finding that that the ship is a valuable commercial chattel and her arrest undeservingly prejudices third parties as well as affect the interest of owner and others is a question which must be gone into when passing a final order as regard interim arrest of ship or otherwise. For the aforementioned purpose the Vessel herein could file an application for vacation of stay. While considering such an application, the Court was entitled to consider not only a prima facie case but also the elements of balance of convenience and irreparable injury involved in. the matter. In such a situation and particularly when both the parties disclose their documents which are in their possession, the Court would be in a position to ascertain even prima facie as to whether the Club has been able to make out that "Sea Glory" and "Sea Ranger" are sister vessels of the "Vessel".

The reason for the aforementioned conclusiqn is that if a legal question is raised by the defendant in the written statement, it does not mean that the same has to be decided only by way of an application under Order 7 Rule H

914 SUPREME COURT REPORTS (2003) SUPP. 5 S.C.R.

A 11 of the Code of Civil Procedure which may amount to pre-judging the matter.

Furthermore, the question as to whether the asset of a I 00% subsidy can be treated as an asset of the parent company ..,.would again depend upon the fact situation of each case. B In The Aventicum [1978] I Lloyd's L.R. it has been held:

"I have no doubt that on a motion of this kind it is right to investigate the true beneficial ownership. I reject any suggestion that it is impossible "to pierce the corporate veil". I of course remember, as c Mr. Howard urges, the case of Saloman v. Saloman & Co., (1897] A.C. 22, but of course it is plain that s.3(4) of the Act intends that the Court shall not be limited to a consideration of who is the registered owner or who is the person having legal ownership of the shares in the ship; the directions are to look at the beneficial ownership. Certainly in a case where there is a suggestion of a trusteeship or a nominee D holding, there is no doubt that the Court can investigate it. I think that it may well be, without having to resolve th1: difference of opinion expressed by Mr. Justice Brandon and Mr. Justice Goff in the two cases to which I have referred that the Court has the power and should in some cases look even further." E Yet again in The Andrea Ursula, (1971] I Lloyd's L.R. 145, the Court opined:

"There is no definition in the Act of the expression· "beneficially owned" as used in sect. 3(4). It could mean owned by someone who, whether he is the legal owner or not, is in any case the equitable owner. That would cover both the case of a ship the legal and equitable title to which are in one person, A, and also the case of a ship the legal title to which is in one person, A, but the equitable title to which is in another person, B. In the first case the ship would be beneficially owned by A, and in the second case by B. Trusts of ships, express or implied, are however, rare and the words seem to me to be capable also of a different and more practical meaning related not to title, legal or equitable, but to lawful possession and control with the use and benefit which are derived from them. If that meaning were right, a ship would be beneficially owned by a person who, whether he was the legal or equitable owner or not, lawfully had full possession and

LIVERPOOL AND LONDON S.P. AND I ASSON. LTD. v. M.V. SEA SUCCESS I [S.B. SINHA,J.J 9 J 5

control of her, and, by virtue of such possession and control, had all the benefit and use of her which a legal or equitable owner would ordinarily have."

Furthermore, the question as to whether the concept of ownership of a ship which has been introduced in 18th Century when there had been no joint stock companies and the concept of shares in a ship so as to encourage the individuals to pool their resources by a sister ship so that they may become co-owners is a matter which is required to be considered at an appropriate stage. We do not think that such a question can justifiably be gone into at this stage.

We do not intend to delve deep jnto the questions as to whether the two ships named hereinabove are the sister ships of the respondent No. 1 Vessel or whether the requirement of law as regard ownership of a ship in the Respondent No. I as beneficial owner has been fulfilled or not Such issues must be considered at an appropriate stage.

CONCLUSION : D

We, therefore, direct that in the event, a proper application is filed either for dissolution of the interim order of injunction passed by the learned Single Judge or if the High Court in its wisdom thinks fit to decide any issue as a preliminary issue such questions may be gone into in greater details. Any E observations made by us must be considered to have been made only for the purpose of disposal of these appeals and not for the purpose of determining the merit of the matter. However, having regard to the facts and circumstances of this case, we will request the High Court to consider the desirability of disposing of the matter as expeditio_usly as possible and preferably within a period of three months from the date of receipt of a copy of this order. F For the reasons aforementioned, the judgment under challenge is set aside and the matter is sent back to the High Court. Civil Appeal No. 5665 of 2002 is accordingly allowed and Civil Appeal No. 5666 of 2002 is dismissed. No costs.

B.S. C.A.No. 5665/02 allowed. C.A.No. 5666/02 dismissed.