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

Citation: [2003] SUPP. 5 S.C.R. 851

Court: Supreme Court of India

Bench: V.N. KHARE, S.B. SINHA

Judgment text

LIVERPOOL AND LONDON S. P. AND I ASSON. LTD. v M. V. SEA SUCCESS I AND ANR. NOVEMBER 20, 2003 f' .... ' [V. N. KHARE, CJ. AND S. B. SINHA, J. ] I Admiralty Court Act, 1861-Sections 4, 5, 6 and 8-Protection and Indemnity Insurance cover-Admiralty Suit for recovery of unpaid insurance claims treating it to be 'necessaries supplied to a ship'-Validity of-Held Insurance is 'necessaries'- 'Necessaries' should be construed in a broad and liberal manner with changing scenario and the changes in both domestic and international law-Admiralty Court Act, 1840; Sections 3, 4 and 6- Supreme Court of Judicature {Consolation) Act, 1925; Section 22(I)- Brussels Arrest Convention, 1952; Article l{k) and 2-1999 Arrest convention; Article 14. Code of Civil Procedure, 1908-0rder 7 Rules //, //A and 14- Application for rejection .

ofplaint on the ground that cause of action is not disclosed-Order rejitsing rejection ofplaint-Letters Patent Appeal on such Order-Validity of-Held, is valid, since the order is a preliminary judgment and not an interlocutory order-Letters Patent; Clause 15. Code ofCivil Procedure, 1908-0rder 7 Rules// and 14-Disclosure ofcause ofaction in a plaint-Documents annexed with the plaint-Held, the documents must be read into to find out the cause of action. Appellant- club, an association incorporated in United Kingdom, offers insurance cover in respect of vessels entered with it for third party risks associated with operation and trading ofvessels. According to the appellant, the protection and Indemnity (P & I) cover is compulsory to allow a ship to enter major ports in India. Respondent no. 1- vessel has two sister vessels and all the vessels are owned by respondent no. 2. The respondent no. 2 did not pay the insurance premium due for the two sister vessels for two years.

The appellant, treating the unpaid insurance calls as 'necessaries' under section 5 of the Admiralty Courts Act, 1861, filed an Admiralty Suit before High Court for a decree against the respondents for payment of unpaid insurance amounts with interest and for the arrest ofrespondent no. 1- vessel to secure the claim. Respondent no. I took out a Notice of motion under order 7 Rule 11 (a) CPC for rejection of the plaint of the appellant on the ground that it does not disclose a cause of action and that the claim of unpaid insurance premium was not 'necessaries' within the meaning of the Act. Single Judge of the High Court refused to reject the plaint holding that the plaint discloses sufficient cause of action for maintaining a suit. The Single Judge, however, referred the question whether the unpaid insurance premium is 'necessaries' to a Division Bench of the High Court. Respondent no.

I filed a Letters patent appeal before Division Bench against the refusal by the Single Judge to reject the plaint. The High Court held that unpaid insurance premium is 'necessaries' under the Act. The High Court, however, held that the plaint ofthe appellant does not disclose a cause ofaction. Hence the appeals. The appellant, in the main appeal, contended that the order of refusal by Single Judge to reject the plaint under order 7 Rule 11 (a) CPC is an interlocutory order and not a judgment for invoking Letters Patent Appeal; and that the order is akin to an order granting leave to defend a suit under order 37 CPC or an order amending the plaint, which are not 'judgments' under clause 15 of the Letters Patent.

In the cross appeal, it was contended that the unpaid insurance premium is not a maritime claim entitling the appellant to invoke admiralty jurisdiction of the High Court since it does not ccnstitute 'necessaries' under section 5 ofthe Admiralty Courts Act, 1861; that the United Kingdom and some other countries have held consistently for more than a century that the unpaid insurance premium is not 'necessaries'; that the necessities should be looked from the view point of physical necessity and practically and not from the view point of prudence or sound economics; that if the P & I insurance is held to p be 'necessaries', it will lead to incongruous situation when other forms of insurance are not 'necessaries', and that the interpretation of the word 'necessaries' rendered by the English Courts should be followed since the High Courts in India derive maritime jurisdiction from the pre-independence statutes and have the same jurisdiction as that ofthe courts in England.

In reply the appellant in the main appeal contended that the term 'necessaries' must be construed in a broad and liberal manner keeping in mind the ever changing requirements of a ship to be able to trade in commerce; that a valid P & I insurance cover has been made compulsory for the vessels entering Indian ports; and that the domestic legislation also provides for a compulsory insurance cover; that the term 'necessaries' must be flexible LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I 853 having regard to the global change and outlook in trade and commerce. Allowing the main appeal and dismissing the cross appeal, the court HELD: 1. 1. The term 'necessaries' is a term of art but it cannot be used in a limited context of mandatory claims made for goods or services supplied to a particular ship for her physical necessity as opposed to commercial operation and maintenance.

Physical necessity and practicality would be a relevant factor for determination ofthe said question. Taking insurance cover would not only be a commercial prudence but almost a must in the present day context. The third party insurance may not be compulsory in certain jurisdiction but having regard to the present day scenario such an insurance cover must be held to be intrinsically connected with the operation ofa ship. (895-E-F] 1. 2. One ofthe relevant factors for arriving at a conclusion as to whether anything would come within the expression 'necessary' or not will inter alia depend upon answer to the question as to whether the prudent owner would provide to enable a ship to perform well the functions for which she has been engaged. Ifgetting the vehicle insured P & I club would be one ofthe things which could enable a prudent owner to sail his ship for the purposes for which she has been engaged, the same would come within the purview of the said term.

The matter must be considered having regard to the changing scenario in as much 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. There are a large number of insurance covers. But the question is not what insurance would be 'necessary' and what would be not 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. (895-F-H; 896-A-CI 1. 3.

Appellant Club would be entitled to enforce its claims against the vessel keeping in view t~e law prevailing in India within whose jurisdiction the ship is found. Only because, the claim can be enforced in India and not in some other countries, by itself would not lead to the conclusion that it cannot be enforced at all irrespective to the domestic law. The domestic legislation will prevai• over any international convention irrespei! tive ofthe fact as to whether the country concerned is a party thereto or not. 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. [897-G-H; 898-A-DI 1. 4.

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 clilb would come within the purview ofthe ofthe expression 'necessaries supplied to the ship'. 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 with the change in time interpretative changes are required to be made. (898-F-H; 899-A) M V. Elisabeth, (1993[ Supp. 2 SCC 433; M V. Al Quamar v. Isavliris Salvage (International) Ltd. and Ors. , [2000) 8 SCC 278; Kapila Hingorani v. State ofBihar, JT [2003) 5 SCC I; John Val/amattom and Anr. v. Union of India, JT (2003) 6 SC 37; Indian Handicrafts Emporium and Ors. v. Union of India, (2003[ 6 SCALE 831; Motor General Traders andAnr. v. State ofAndhra Pradesh and Ors.

, (1984) I SCC 222; Rattan Arya and Ors. v. State ofTamil Nadu and Anr. , (1986) 3 SCC 385; Synthetic & Chemicals Ltd. and Ors. v. State ofU. P. and Ors. , (1990[ l SCC 109 and National Insurance Co. Ltd. , Chandigarh v. Nicolletta Rohtagi and Ors. , [2002[ 7 SCC 456 referred to. Queen v. Judge of the City of London Court, (1891) 1 QB 273; The Beldis (1936 P. 51); Webster v. Seekamp, [1821 4B & Aid 352[; Heinrich Bjorn (1883 8 P. O. 151); The Andre Theodre (10 Aspinall 94); Stokes v. The Conference, (18878NSWR10); The River Rima (1988 2 L Rep 193); The Emerald Transporter [1985 2 SALR 152); The Golden Petroleum [1994 l SLR 92[; The Aifanourious [1980 2 L Reps. 403); Gatoil International Inc. v. Arwkright Boston Manufacturers Mutual lns,,rance Co. and other, The Sandrina, [1985[ 1 All ER 129; Equilease Corp. v. M V. Sampson, (793 F. 2d 598- U. S. Court of Appeals(; Gouldv. Cornhill Insurance Co. Ltd. , (l DLR 4th Edition 183[; The Riga ((1869-72) L. R.

3 A & E 516[; The Edinburgh Castle (1999 F Vol. 2 Lloyd's Reports 362[; Nore Challenger and Nore Commander (2001Vol. 2 Lloyd's Report 103[; M. V. Emerald Transporter (1985) 2 SALR 448; Marazura Navegacion S. A. and Ors. v. Oceanus Mutual Underwriting Association (Bermuda) Ltd. & John Laing (Management) Ltd. LIVERPOOLAND LONDON SP. AND IASSON LTD. v. M. V. SEA SUCCESS I 855 (1977) I Lloyd's Rep. 283; Equilease Corporation v. M V. Sampson, (793 F. 2d 598); Trident Marine Managers Inc. v. Serial No. CEBRF 0661586, (1988) American Maritime Cases 763), referred to. Modern Admiralty Law by Aleka M,;ndaraka-Sheppard; Shipping Law by Simon Baughen (Second Edition); Benedict on Admiralty (6th Edition, vol. I); Principles ofMaritime Law by Susan Hodges and Christopher Hill; Law and Practice by Steven J. Hazelwood; British Shipping Laws (Vol.

14); Cheshire and North's Private International Law (12th EditionI; Black's Law Dictionary; Bouvier's Law Dictionary; Canadian Law Dictionary; Ballentine's Law Dictionary; 70 American Jurisprudence 2d; International Convention on Arrest ofShips 1999 by Richard Shaw; Project Gabcikovo-Nagymaros (Op. Ind. Weeramantry), referred to. 2. 1. The contention of the appellant that in the suit, all defences would be open to the defendant is misconceived in as much as, no evidence can be adduced in the absence ofany pleading. There may not, furthermore be any requirement to go into the trial if the plaint does not disclose a cause ofaction. The contention that an order refusing to reject a plaint is one akin to an 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. (903-8-D) 2. 2.

An order passed under Order 7 Rule 11 CPC would determine the rights conferred on the parties one way or the other. Hence, stricto sensu, it would not be an interlocutory order but having regard to its trails and trappings would be a preliminary judgment. It is trite that a party should not be necessarily harassed in a suit. An order refusing to reject a plaint will finally determine his right in terms of Order 7 Rule 11 CPC. 1904-E; 905-A) 2. 3. The idea underlying Order 7 Rule llA 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 CPC, 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 serve no useful purpose.

A litigation, which in the opinion ofthe court is doomed to fail, would not further be allowed to be used as a device to harass a litigant. Hence, the Letters Patent Appeal against the order refusing to reject the plaint is maintainable. (905-B-C; 907-D( ' Shah BabulalKhimjiv. Jayaben Kania, 1198114 SCC 8; Subal Paulv. Malina Paul and Anr. , JT (2003) 5 SC 193; Azhar Hussain v. Rajiv Gandhi, 11986] Supp. SCC 315; Dhartipakar Aggarwal v. Rajiv Gandh~ 119871 Supp. SCC 93; Samar Singh v. Kedar Nath, 119871 Suppl SCC 224; Dipak Chandra Ruhidas v. Chandan Kumar Sarkar;l200317 SCC 66; Central Mine Planning _&Design Institute Ltd v. Union o/lndiaandAnr. ; 1200112 SCC 588, referred to. The Justices ofthe Peace/or Calcutta v. Oriental Gas Comparry, 118721 . Vol VIII Bengal Law Reports 433; PrahladrajAgarwal/av. Shri. Renuka Pal, AIR (1982) Cal 259; Mis Tanusree Art Printers and Anr. v. Rabindra Nath Pal, 1200012 CHN 213; lea Badin v.

Upendra Mohan Roy, AIR (1935) cal 35 and Chittaranjan Monda/ v. Sankar ProsadSahani, AIR (1972) Cal 469, referred to. 3. 1. The documents annexed with the plaint by the appellant having regard to Order 7 Rule 14 CPC are required to be taken into consideration for the purpose ordisposal ofapplicatio~ under'on1er 7 Rule ll(a) CPC. Under the Order, the court is authorised 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 bas been placed which discloses a cause ofaction, the plaint would be rejected on the ground that such averments are not sufficient to prove the facts stated therein for the purpose orobtaining reliefs claimed in the suit. The approach adopted by the High Court in this behalf is not correct. [908-G-H; 910. G-HI 3. 2.

In ascertaining whether the plaint shows a cause ofaction, 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 ascertain whether on the allegations, a cause oraction is shown.. So long as the claim discloses some cause of action or raises some questions lit to be decided by a Judge, the mere fact that the case is weak and not likely to succeed is not 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. 1912-A-B; F) 3. 3. For the purpose of rejecting the plaint, it is not necessary to consider whether the averments made in the plaint prove the facts.

The reasons which have been assigned in support of the finding that the ship is a valuable commercial chattle and her arrest ulideservingly p~ejudices thinl parties as well as affect the interest of owner and others is a question which must be LIVERPOOLAND LONDON SP. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA, J. J 857 gone into when passing a final order as regard interim arrest of ship or otherwise. For the purpose, the respondent vessel could file an application for stay. While considering such an application, the Court could consider not only a prima facie case but also elements of balance of convenience and irreparable injury in the matter. The reason 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 ofan application under Order 7 Rule 11 CPC which may amount to pre-judging the matter. (913-D-H; 914-A) Mohan Rawale v. Damodar Tatyaba and Ors,. [199412SCC392; D. Ramachandran v. R.

V. Janakiraman and Ors. , (199913 SCC 267; Punit Rai v. Dinesh Chaudhary, JT(2003) Supp. I SC 557 and Vijay Pratap Singh v. Dukh Haran Nath Singh, AIR (1962) SC 941, referred to. William v. Wilcox, (183818 Ad. & EL 331 and The Aventicum; (197811 Lloyd's L. R. and The Andrea Ursula, (197111 Lloyd's L. R. 145, referred to. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5665 of2002. From the Judgment and Order dated 28. 11. 2001 of the Bombay High Court in A. No. 226/2001 in Notice ofMotion No. 2455/2000 in Admiralty Suit No. 32 of2000. WITH C. A. No. 5666 of2002 Prashant S. Pratap, Siddhartha Dave, Ms. Vibha Datta Makhija, Zarir P. Bharucha, Ms. Reetu Sharma, R. N. Karanjawala, Ms. Manik Karanjawala, Ms. Avantika Keswani, R. K. Agarwal, Sanjay Dua, Arun K. Sinha and Rakesh Singh for the Appearing parties. The Judgment of the Court was delivered by S. 8. SINHA,J. THE BACKGROUND FACT: The appellant (Club) herein is an association incorporated under the laws of the United Kingdom.

It is a mutual association of ship owners. It offers insurance cover in respect of the vessels entered with it for diverse third party risks associated with the operation and trading of vessels. According to the appellant, no vessel operates without a Protection & Indemnity (P&I) cover and the same has been made compulsory to allow a ship to enter major ports in India. 'Sea Ranger' and 'Sea Glory' are the sister vessels ofthe 1st respondent vessel and they are allegedly owned by the 2nd respondent. The first two vessels entered into a contract with the appellant's association for the years 1998-1999 and 1999-2000 but they have not paid the unpaid insurance premium due and payable by the 2nd respondent for various P&I risks for which they had been insured. These unpaid insurance calls being "necessaries" was enforceable within the "admiralty jurisdiction" of the Bombay High Court.

For the arrest ofthe 1st respondent vessel which came to Mumbai Port within the territorial waters of India, a suit was filed by the club inter a/ia for the prayers : "(a) for a decree against the respondents in the sum of US$ I,18,194. 89 together with interest at the rate of 12% per annum, which was the unpaid insurance premium amount due to the club and payable by the 2nd respondent; and (b) for arrest of the Ist respondent vessel to secure the claim. " On an application for arrest of the Ist respondent vessel having been made, the 2nd respondent appeared and undertook to furnish security in respect ofthe appellant's claim and further gave an undertaking that until the security is furnished the said vessel will not leave the Port of Mumbai. However, thereafter S. S. Shipping Corporation Inc.

, Liberia claiming to be the registered owner ofthe Ist respondent furnished a bank-guarantee in relation to the appellant's claim in discharge of the undertaking of security given by the second respondent. The Ist respondent thereafter took out a Notice of Motion for rejection of the plaint purported to be under Order 7 Rule Il(a) of the Code of Civil Procedure inter alia on the ground that the averments contained therein do not disclose a cause of action as the claim of unpaid insurance premium was not a "necessary" within the meaning ofSection 5 of the Admiralty Courts Act, 1861. A learned Single Judge of the High Court after hearing the Notice of Motion by an order dated 1-212/200I referred the said question to a Division Bench as it could not agree with a decision rendered by another leanied Single Judge.

However, on the other two grounds it discharged the Notice of Motion holding that the averments made in paragraphs I and 14 of the plaint inter alia to the effect that all the three . ships are beneficially owned by the 2nd respondent disclose a cause of action. An appeal thereagainst was preferred by the respondent herein. The Division Bench took up the appeal preferred by the respondent herein as also LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA,J. l 859 the reference made by the learned Single Judge and passed a commonjudgment.

ISSUES: The questions which arose for consideration before the High Court were: (Q whether arrears of insurance premium due and payable to the appellant by the 2nd respondent would fall within the scope and ambit of Section 5 of the Admiralty Courts Act, 1861; (iI) whether refusing to reject the plaint under Order 7 Rule 11(a) upon holding that the plaint discloses a cause of action is 'judgment' within the meaning ofClause 15 ofthe Letters Patent of the Bombay High Court and was, thus, appealable; and (iit) Whether the averments made in paragraphs 1 and 14 of the plaint disclose sufficient cause of action for maintaining a suit. The Division Bench while answering the question No. I in favour of appellant, answered question Nos. 2 and 3 against it. Appeal No. 226 of2001 has been filed by the 'club' whereas Civil Appeal No. 5666 of2002 has been filed by the 'vessel'. Submissions : Mr.

Bharucha, the learned counsel appearing on behalf ofthe "Vessel" would inter alia submit: (i) The amount of arrears of insurance premium alleged to be due to the 1st respondent towards release calls is not a maritime claim entitling the Club to invoke the admiralty jurisdiction ofthe High Court as such unpaid insurance money does not constitute 'necessaries' within the meaning of Section 5 of the Admiralty Courts Act, I861. (ii) Sufficiently direct and proximate connection between insurance and the vessel is a prerequisite for bringing an action in rem. Insurance is meant primarily as a means of indemnifying and protecting the vessel owner against the loss of his vessel and/ or claims that that may arise as a result ofdamage or loss caused by the vessel. Although it may be a commercial necessity but the same would not come within the purview of the term 'necessaries' within the meaning of the provisions of the said Act.

The provisions contained in the Admiralty Courts Act of 1840 and 1861, Section 22 of the Supreme Court of Judicature Act, 1925, the 1952 Brussels Arrest Convention as also the Administration ofJustice Act, 1956 disclose one uniform feature that in order that a monetary claim qualifies for and is recognized as a maritime claim the same must be necessary for operation of the ship. (iii) In United Kingdom, it has consistently been held for more than a century that unpaid insurance premium is not a "necessary" within the conventional meaning of the said term as understood in maritime law. The said view has been reiterated by the Courts of Australia, South Africa and Singapore. In support of the said contention, strong reliance has been placed on Queen v. Judge ofthe City ofLondon Court (1891) QB 273, The Be/dis [1936 P. 51], Webster v. Seekamp (1821) 4B & Aid 352, Heinrich Bjorn (1883) 8 P. O. 151, The Andre Theodore [10 Aspinall 94], Stokes v.

The Conference (1887) 8NSWR 10, The River Rima (1988) 2 L Rep 193, a South African Court decision in The Emerald Transporter (1985) 2 SALR 152 as also a decision ofSingapore High Court in The Golden Petroleum, (1994) 1SLR92. (iv) The expression "necessaries supplied to any ship" although has not statutorily been defined; over a long period oftime, the same had attained a definite connotation, i. e. , goods or services supplied to a specifically identified ship in order to successfully prosecute the voyage in question, and, thus, applying the said test unpaid insurance premium does not answer the said definition. The matter has furthermore to be looked at from the point of view ofphysical necessity and practicality and not from the viewpoint of prudence or sound economics. (v) There are a large number of categories.

of insurance from hull and machinery insurance, to protection and indemnity (P&I) ' cover, through war risks, to freight demurrage and defence cover (FD&D), oil spill cover (TOVALOP), and strike cover etc and in that view of the matter if P&I should be held to be a necessary, others are not, the same would lead to an incongruous situation. (vi) In view ofthe decision in The Aifanourious (1980) 2 L Reps. 403 as also the decision rendered by the House of Lords in Gatoil LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA,J. J86J International Inc. v. Arwkright Boston Manufacturers·Mutual Insurance Co. & Other The Sandrina, (1985] 1 All ER 129, holding that claim for unpaid insurance has never been recognized as maritime claim under any other head and the Courts ofEngland expressly held the same to have been excluded as such under Article 1 ofthe Brussels Arrest Convention, 1952.

Such a claim, thus, due to unpaid insurance premium would not be a maritime claim also under the head "disbursements made on· account ·of a ship". (vii) In the decision of this Court in M V. Elisabeth, [1993] Supp. 2 SCC 433, it was merely held that the High Courts in India will have an extended jurisdiction under the Admiralty Courts Act, 1861 and the said principle cannot be further extended. (viii) As the maritime jurisdiction of the High Courts in India was derived from the pre-independence statutes and as the High Courts of India exercise the same jurisdiction as that of the courts in England, it must necessarily be held that the interpretation ofthe word "necessaries" rendered by the English Courts and which has been followed by other courts except by the American Court should prevail. Mr. Prashant S.

Pratap, the learned counsel appearing on behalf of the Club, on the other hand, would submit that: (i) "necessaries" are the thiiigs which a prudent owner would provide to enable a ship to perform the functions wherefor she has been engaged and, thus, the provision of services would come within the definition of necessaries. (u') The term "necessaries" must be construed in a broad and liberal manner keeping in mind the ever changing requirements of ship to be able to trade in commerce. (iii') Contemporary maritime statutes in England do not use the term "necessaries" but the American Federal Maritime Liens Act does and, thus, decision rendered by the American Courts that insurance is a "necessary" should be held to be correct. Equilease Corp. v. M V. Sampson 793 F. 2d 598 - U. S. Court of Appeals.

(iv) A valid P&l insurance cover is necessary for a ship to call at major ports in India and consequently so far as India is concerned, it is a necessity having regard to the fact that Mumbai Port, JNPT and Kolkata Port have issued a statutory direction in this behalf. (v) The domestic legislation in India also provide for a compulsory insurance. Reference in this connection has been placed on the Inland Vessels Act, 1917 (as amended in the year 1977), the Merchant Shipping Act, 1956 (as amended in 1983) and Multimodal Transportation of Goods Act, 1993 (as amended in 2000) and in that view of the matter the pedantic and regressive view should be discouraged specially in the light ofthe judgment of this Court in M V. Elisabeth (supra).

(vi) By reason of the 1999 Arrest Convention inter alia unpaid insurance calls had been added and in absence ofany codification and maritime claim by a statute in India the same should be taken into consideration for determination of the jurisdiction of the High Court. Several countries such as Canada, South Africa, Australia, China and Korea have given the claim for unpaid insurance premium in respect of a ship, the status of a maritime claim. (vii) Flexibilities being the virtue of law court, the High Court has rightly held that the marine premium would come within the purview of the term "necessaries" having regard to the global change and outlook in trade and commerce. Reliance in this connection has been placed on M V. Al Quamar v. Tsavliris Salvage (International) Ltd. and Ors. , [2000) 8 SCC 278. STATUTORY PROVISIONS: The relevant provisions of Admiralty Court Act, 1840 are as follows: "3. WHENEVER AVESSEL SHALL BE ARRESTED, ETC.

, COURT TO HAVE JURISDICTION OVER CLAIMS OF MORTGAGEES: Whenever any ship or vessel shall be under arrest by process issuing from the said High Court of Admiralty, or the proceeds of any ship or vessel having been so arrested shall have been brought into and be in the registry of the said court, in either such case the said court shall have full jurisdiction to take cognizance of all claims and causes of action of any person in respect of any mortgage of such ship or vessel, and LIVERPOOLAND LONDON S. P. ANDIASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA,J. J863 to decide any suit in~tituted by any such person in respect of any such claims or causes of action respectively. 4. COURT TO DECIDE QUESTIONS OF TITLE, ETC.

: The said Court of Admiralty shall have jurisdiction to decide all questions as to the title to or ownership of any ship or vessel; or the proceeds thereof remaining in the registry, arising in any cause of possession, salvage, damage, wages or bottomry, which shall be instituted in the said courf after the passing of this Act. 6. THE COURT IN CERTAIN CASES MAY ADJUDICATE, ETC. : The High Court of Admiralty shall have jurisdiction to decide all claims and demands whatsoever in the nature ofsalvage for services rendered to or damage received by any ship or sea-going vessel or in the nature of towage, or for necessaries supplied to any foreign ship or seagoing vessel, and to enforce the payment thereof, whether such ship or vessel may have been within the body of a country, or upon the high seas, at the time when the services were rendered or damage received, or necessaries furnished, in respect of which such claim is made.

The relevant provisions of Admiralty Court Act, 1861 are as under: "4. AS TO CLAIMS FOR BUILDING, EQUIPPING, OR REPAIRING OF SHIPS: The High Court ofAdmiralty shall have jurisdiction over any claim for the building, equipping, or repairing ofany ship, ifat the time of the institution of the cause the ship or the proceeds thereof are under arrest of the court. 5. AS TO CLAIMS FOR NECESSARIES: The High Court ofAdmiralty shall have jurisdiction over any claim for necessaries supplied to any ship elsewhere than in the port to which the ship belongs, unless it is shown to the satisfaction of the court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales: Provided always, that if in any such cause the plaintiff do not recover twenty pounds, he shall not be entitled to. 6.

AS TO CLAIMS FOR DAMAGE TO CARGO IMPORTED: The High Court of Admiralty shall have jurisdiction over anydaim by the\iwner or consign~e or assignee of any bill of lading of any goods carried into any p'ort in England or Wales in any ship, for damage done to the goods or any part thereof by the negligence or misconduct of or for any breach of duty or breach of contract on the part ofthe owner, master, or crew of the ship, unless it is shown to the satisfaction of the court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales: Provided always, that if any such cause the plaintiff do not recover twenty pounds, he shall not be entitled to any costs, charges, or expenses incurred by him therein, unless the judge shall certify that the cause was a fit one to be tried in the said court. 8. HIGH COURT OF ADMIRALTY TO DECIDE QUESTIONS AS TO OWNERSHIP, ETC.

OF SHIPS: The High Court of Admiralty shall have jurisdiction to decide all questions arising between the co-. owners, or any of them, touching the' ownership, possession, employment, and earnings ofany ship registered at any port in England or Wales, or any share thereof, and may settle all accounts outstanding and unsettled between the parties in relation thereto, and may direct the said ship or any share thereof to be sold, and may make such order in the premises as to it shall seem fit. Section 2 of Colonial Courts of Admiralty Act, 1890 reads thus: "2. Colonial Courts ofAdmiralty.

- (I) Every court oflaw in a British possession, which is for the time being declared in pursuance of this Act to be a Court of Admiralty, or which, if no such declaration is in force in the possession, has therein original unlimited civil jurisdiction, shall be a Court ofAdmiralty, with thejurisdiction in this Act mentioned, and may for the purpose of that jurisdiction, exercise all the powers which it possesses for the purpose of its other civil jurisdiction, and such Court in reference to the jurisdiction conferred by this Act is in this Act referred to as a Colonial Court of Admiralty....

(2) The jurisdiction of a Colonial Court of Admiralty shall, subject to the provisions of this Act, be over the like places, persons, matters, and things, as the Admiralty jurisdiction ofthe High Court in England, whether existing by virtue of any statute or otherwise, and the Colonial Court of Admiralty may exercise such jurisdiction in like manner and to as full an extent as the High Court in England, and shall have the same regard as that Court to international law and the comity of nations. LIVERPOOLANDLONDON S. P. AND IASSON. LTD. v. M. V. SEASUCCESS I[S. 8. SINHA,J. J865 Section 2 of The Colonial Courts of Admiralty (India) Act, 1891 reads as under: 2. APPOINTMENT OF COLONIAL COURTS OF ADMIRALTY: The following Courts ofunlimited civil jurisdiction are hereby declared to be Colonial Courts of Admiralty, namely:- (1) the High Court of Judicature at Fort William in Bengal; (2) the High Court of Judicature at Madras, and (3) the High Court of Judicature at Bombay.

" Section 22(1) ofSupreme Court ofJudicature (Consolidation) Act, 1925 reads thus: "22. ADMIRALTY JURISDICTION OF HIGH COURT: (I) The High Court. shall, in relation to admiralty matters, have the following jurisdiction (in this Act referred to as "admiralty jurisdiction") that is to say - (a) Jurisdiction to hear and determine any of the following questions or claims: *** *** *** (viii) Any claim by. a seaman of a ship for wages earned by him on.

board the ship, whether due under a special contract or otherwise, and any claim by the master of a ship for wages earned by him on board the ship and for disbursements made by him on account of the ship; (IX) Any claim in respect ofa mortgage ofany ship, being a mortgage duly registered in accordance with the provisions ofthe Merchant Shipping Acts, 1894 to 1923, or in respect of any mortgage of a ship which is, or the proceeds whereof are, under the arrest of the court;" (x) Any claim for building, equipping or repairing a ship, if at the time of the institution of the proceedings the ship is, or the proceeds thereof are, under the arrest of the court. " Articles I(k) and 2 of the 1952 Brussels Convention are as under: "(I) "Maritime Claim" means a claim arising out ofone or more ofthe following: ... ••• *** (k) goods or materials wherever supplied to a ship for her operation or maintenance; 2.

A ship flying the flag of one of the Contracting States may be arrested in the jurisdiction of any of the Contracting States in respect of any maritime claim, but in respect of no other claim; but nothing in this Convention shall be deemed to extend or restrict any right or powers vested in any Governments or their Departments, Public Authorities, or Dock or Harbour Authorities under their existing domestic laws or regulations to arrest, detain or otherwise prevent the sailing of vessels within their jurisdiction. " HISTORY OFJURISDICTION OF THE HIGH COURT: The jurisdiction of the High Court of Admiralty in England used to be exercised in rem in such matters as from their very nature would give rise to maritime lien - e. g. collision, salvage, bottomry. The jurisdiction ofthe High Court of Admiralty in England was, however, extended to cover matters in respect of which there was no maritime lien, i. e. , necessaries supplied to a foreign ship.

In terms ofSection 6 ofthe Admiralty Act, 1861, the High Court of Admiralty was empowered to assume jurisdiction over foreign ships in respect of claims to cargo carried into any port in England or Wales. By reason ofJudicature Act of 1873, the jurisdiction ofthe High Court ofJustice resulted in a fusion: ofadmiralty law, common law and equity. The limit ofthe jurisdiction ofthe Admiralty court in terms of Section 6 of the 1861 Act was discarded by the Administration of Justice Act, 1920 and the jurisdiction of the High Court thereby was extended to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship; and (c) any claim in tort in respect of goods carried in any ship.

The admiralty jurisdiction of the High Court was further consolidated by the Supreme Court of Judicature (Consolidation) Act, 1925 so as to include va~ious matters such as any claim "for damage done by a ship", and claim 'arising out of an agreement relating to the use or hire of a ship'; or 'relating to the carriage of goods in a ship'; or "in tort in respect of goods carried in ship". LIVERPOOLAND LONDON S. P. ANO IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA, J. J 867 The admiralty jurisdiction ofthe High Court was further widened by the Administration of Justice Act, I956 so as to include not only the claims specified under Section I(i) of Part I but also any other jurisdiction whkh either was vested in the High Court of Admiralty immediately before the date ofcommencement ofthe Supreme Court ofJudicature Act, 1873 (i. e.

November I, I875) or is conferred by or under an Act which came into operation on or after that date on the High Court as being a court with admiralty jurisdiction and any other jurisdiction connected with ships vested in the High Court apart from this section which is for the time being assigned by rules of court to the Probate, Divorce and Admiralty Division. Sub-Section (4) of Section I removed the restriction based on the ownership ofthe ship. By reason ofClauses (d) (g) and (h) of the said Section the jurisdiction in regard to question or claims specified under Section I(i) included any claim for loss of or damage to goods carried in a ship, any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship. In the course of time the jurisdiction of the High Courts vested in all the divisions alike. The Indian High Courts after independence exercise the same jurisdiction.

NECESSARIES - AS A MARITIME CLAIM: The concept "as to claims for necessaries" is specified under Section 5 ofthe Admiralty Court Act, 186I, wh:ch provides for the jurisdiction of High Court as regard "Necessaries supplied to any ship elsewhere than in the port to which the ship belongs, unless it is shown to the satisfaction of the court that at the time of institution of the cause an owner or part owner of the ship is domiciled in England or Wales". The term "necessaries" had not been defined in the Act of 1861. It was given a meaning by judicial pronouncements. It stands accepted that having regard to the legislative and executive policy, England and Wales never considered the arrears of insurance premium as a 'necessary'. The Courts of England further maintained a distinction between a maritime claim and maritime lien. The decisions cited by Mr. Bharucha go to show that the English Courts proceeded on the premise that for the .

purpose of considering as to whether any necessary has been supplied to ship or not must haye a sufficient and direct connection with the operation of the ship. It held that unpaid insurance premium is not a maritime claim as it is not needed to keep it going. See Queen v. Judge ofthe City ofLondon Court (supra), Heinrich Bjorn (supra), The Andre Theodore (supra). The Aifanourious (supra). The English Courts, thus, refm'! d to put a wide construction on that term. A similar view was also adopted by an Australian High Court in Gould v. Cornhil/ /nsurance Co. Ltd. , [1 DLR 4th Ed. 183]. In The Riga (1869-72) L. R. 3 A&E 516], it is stated: "The definition ofthe term "necessaries" given by Lord Tenterden in Webster v. Seekamp (4 B. & Aid. 352) adopted and applied in proceedings in Admiralty. Semble, there is no distinction between necessaries for the ship and necessaries for the voyage. " In The Edinburgh Castle (1999) Vol.

2 Lloyd's Law Reports 362], it has been held: "To address these concerns, Mr. Charkham helpfully invited my attention to a number of the authorities and to such discussion as there is on s. 20(2)(m) and its predecessors. Taking the matter very shortly, for present purposes, the following propositions emerge: I. The words "in respect of" are wide words which should not be unduly restricted: The Kommunar, [1997] 1 Lloyd's Rep. 1, at p. 5. 2 Section 20(2)(m), which is derived from the equivalent provision in the Administration of Justice Act, 1956, contains a jurisdiction which is no narrower than the predecessor jurisdiction in respect p ofclaims for "necessaries": The Fairport (No. 5), [1967] 2 Lloyd's Rep. 162; The Kommunar, sup. 3. No distinction is to be drawn: ... between necessaries for the ship and necessaries for the voyage, . and all things reasonably requisite for the particular adventure on which the ship is bound are comprised in this category.

[Roscoe, The Admiralty Jurisdiction and Practice, 5th ed. , at p. 203: The Riga (1872) L. R. 3 Ad. & Ecc. 516]. 4. The jurisdiction extends to the provision of services: The Equator, (1921) 9 L1. L. Re. I: The Fairport (No. 5), sup. LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. MV. SEA SUCCESS I[S. B. SINHA, J. ] 869 In the light of these propositions, I am satisfied that the plaintiffs bring their claims within s. 20(2)(m). Provisions for the passengers were "necessaries" for the particular adventure on which this passenger vessel was engaged. The provision of services is capable of coming within the sub-section and does so here, given the nature of the services provided. I should mention that I was referred in addition to The River Rima, [I 988] 2 Lloyd's Rep. 193 (H. L. ) and [1987] 2 Lloyd's Rep. 106 (C. A. ) but, as I uriderstand it, nothing said there precludes my decision in favour of the plaintiffs on the facts of this case. " In Nore Challenger and Nore Commander (2001) Vol.

2 Lloyd's Law Reports I03 the claim relating to supply of crew was held to be "necessary" stating: "Before considering whether the concept of necessaries encompasses the provision or supply of crew, it is important to bear in mind that it has long been established that no distinction need be drawn between the supply of necessaries and the payment for such supply. " Identical view has been taken by a Court of D.. irban in M V Emerald Transporter (1985) 2 SALR 448 with reference to the provisions contained in Admiralty Jurisdiction Regulation Act 105 of 1983 wherein it was held that services which are insured solely to the benefit of the ship owner would not be classed as necessaries. The said decision was, however, rendered in the context ofranking ofclaims against a fund comprising of sale proceeds ofthe vessel M. V. Emerald Transporter.

The House of Lords in The River Rima (supra) considered the provisions ofArticle l(l)(k) ofthe 1952 Brussels Arrest Convention incorporating "goods or materials wherever supplied to a ship for her operation or maintenance" as a maritime claim. Having regard to the provisions contained in Section 6 of Admiralty Court Act, 1840 and Section 5 ofAdmiralty Court Act, 1861 it was held: "In other words, what is now called a claim in respect of goods or materials supplied to a ship for her operation or maintenance is the equivalent of what used to be called a claim for necessaries, but without the restrictions which formerly applied to such a claim. " (Emphasis Supplied) The Singapore High Court also in Golden Petroleum (1994) I SLR 92 considered the expression "goods supplied to a ship for her operation and maintenance" in the following terms: "In my opinion, bunker oil supplied to the ship for sale to other ships could not be conceived as goods supplied for her operation.

The phrase 'operation of the ship' should not be equated with the business activities of the shipowner and the section as enacted could not cover goods which are loaded onto two ship only to be unloaded or disposed of soon thereafter by sale. " It appears that the matter is pending in appeal. Yet again in Gatoil International (supra), it was held: "An agreement for the cancellation of a contract for the carriage of goods in a ship or for the use or hire of a ship would, I think, show a sufficiently direct connection. It is unnecessary to speculate what other cases might be covered. Each case would require to be decided on its own facts. As regards the contract of insurance founded on in the instant appeal, I am of opinion that it is not connected with the carriage of goods in a ship in a sufficiently direct sense to be capable of coming within para (e).

" The question, however, is as to whether having regard to the changed situation unpaid insurance premium should be held to be a commercial necessity. With a view to answer the question it is necessary to consider as to whether a failure to insure the security is a matter which would have a bearing upon the security of the ship. Whether the provisions of insurance is to be considered to be a service? further question which may arise is as to whether such service is to the ship or not ? INSURANCE COVERS - EXTENT OF: The law of marine insurance rested almost entirely on common law. Only few isolated points were dealt with by statute. Although, there may be a plethora of authority on some points, the decisions may be meagre on others. The interpretative changes made from time to time turned upon new commercial conditions, the old ones having become obsolete. Some countries enacted · and codified marine laws while many did not.

With the passage of time, the scope and ambit of the contracts of insurance increased not only having LIVERPOOL AND LONDON S. P. AND IASSON. LTD. v. MY SEA SUCCESS I[S. B. SINHA,J. J 87] regard to the experience gathered by the contracting parties but also by the legislators and the Court. A lot of amendments in the statutes as also interpretive changes took place. The decisions rendered by different courts on marine insurance law even fre requisite barely to support life, but includes many of the conveniences of refined society. A racing bicycle was held a necessary for an apprentice earning 2ls. a week and living with his parents; 78 L. T. 296" In The Canadian Law Dictionary, the tenn 'necessaries' has been defined as follows: "In the case of ships, the term denotes whatever is fit and proper for the service on which the ship is engaged, whatever the owner of that vessel, as a prudent man would have ordered if present at the time. Victoria Machinery Depot Co. Ltd v.

The 'Canada' and the 'Triumph', (1913) 15 Ex. C. R. 136, 14 D. L. R. 318. " In Ballentine's Law Dictionary, the term 'necessaries' has been defined as follows: "Under the maritime law permitting the master of a ship to pledge the owner's credit for necessaries, the word does not import absolute necessity, but the circumstances must be such that a reasonable prudent owner, present, would have authorized the expenditures, and it is usually sufficient if they are reasonably fit and proper, having regard to the exigencies and requirements of the ship, for the port where she is lying and the voyage on which she is bound. 48 Am JIst Ship' 133.

" In 70 American Jurisprudence 2d, at page 478, it is stated: 'The term "necessary" in this connection does not mean indispensable to the safety of the vessel and crew; necessaries which will create a lien upon the ship are such as are reasonably fit and proper for her under the circumstances, and not merely such as are absolutely indispensable for her safety or the accomplishment of the voyage. Whatever a prudent owner, if present, would be supposed to have authorized, the master may order, and for such expenditures the vessel will be held responsible. " We may further notice that in Modern Admiralty Law by Aleka Mandaraka-Sheppard at page 52, it is stated: "However, the decision of the Scottish Court of Session in The Aifanourios, mentioned above, shattered the hopes of P&I clubs. It took 19 years for the wheel to tum round and so to include such claims in the list of claims provided by the new Arrest Convention 1999.

The new Arrest Convention 1999 has incorporated in the list of maritime claims for insurance premiums and brokerage, including claims by a P&l club for unpaid calls. Such claims will qualify for an arrest LIVERPOOLAND LONOON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA,l] 89J of a ship to be made once the Convention comes into force, or is enacted by the UK. " In Principles of Maritime Law by Susan Hodges and Christopher Hill at page 364 it is stated: "Failure to insure the ship: The authorities of Laming v. Seater, The Heather Bell, and Law Guarantee and Trust Society v. Russian Bank for Foreign Trade and others have all confirmed that a failure to insure the security is a matter which would have a bearing upon the security of the ship. In such an event, the mortgagee may enter into possession in order to make the ship available as security for the debt.

It is to be noted that, ·in the last two cases, the court had also pointed out that a failure to insure the vessel (though it may constitute the basis of a right for the mortgagee to take possession) is not itself a legitimate ground for interfering with the performance of the charterparty. " It is interesting to note that in P&I clubs - Law and Practice by Steven J. Hazelwood, it is stated: "The defendant shipowners challenged the competence of the court to deal with the action as an action in rem. The catalogue of claims which entitle a claimant to proceed with an action in rem in the courts of Scotland are stated in section 47(2) ofthe Administration ofJustice Act 1956 which provides, inter a/ia: "This section applies to any claim arising out of one or more of the following, that is to say ... (d) any agreement relating to the use or hire of any ship whether by charter or otherwise;".

" The learned author, however, noticed the shortcomings in the statutes operating in United Kingdom and made a prophecy to the effect that contract of maritime insurance may be included in the list of claim giving the right of arrest in the following terms: "The current position is, therefore, that claims arising out ofcontracts ofmarine insurance are not claims which entitle a claimant to proceed by way of action in rem and claimants in respect of P. &I. Club membership are in no better position than those claiming in respect of traditional hull and cargo insurance. In this context there is one respect in which the insurance cover offered by P. &J. Clubs differs from hull and cargo insurance and which has yet to receive the attention of the courts. Certain heads of P. &I. Cover have ceased to be matters which are, as Sir James Hannen P. once described, merely prudence but have become compulsory by law.

Compulsory liability insurance was introduced in the area of oil pollution liability by the International Convention on Civil Liability for Oil Pollution 1969. Under the regime thereby introduced a shipowner is legally unable to trade or put to sea without having effected oil pollution indemnity insurance and having adequate liability insurance is as 'necessary' to a shipowner as having fuel, stores, navigational equipment or other well-recognised "necessaries". It is also arguable that as oil cannot be lawfully transported without the carrier having the required insurance cover, a contract for the entry of the vessel in a P&I Club could fairly be regarded as an agreement closely "relating to the carriage of goods in a ship or to the use of a ship".

It may be that in any future review ofthe 1952 Arrest Convention, claims relating to contracts ofmarine insurance will be included in the list of claims giving the right of arrest and provided the wording is framed appropriately to include club entry it may be that members who do not pay calls may one day find their vessels liable to arrest in this country. " The said prophecy has come true. The learned author has also noted the decision in Marazura Navegacion S. A. and Ors. v. Oceanus Mutual Underwriting Association (Bermuda) Ltd. and John Laing (Management) Ltd, (1977) 1 Lloyd's Rep.

283 wherein it has been noticed: "Clubs can and do arrest vessels for non-payment of calls in jurisdictions which allow such actions; for example, the United States;" In an interesting article "the International Convention on Arrest of Ships 1999" by Richard Shaw, it was opined: "The 1999 Arrest Convention has produced a set of principles which are generally regarded as reasonably balanced, between the interests of legitimate claimants and those ofshipping organizations seeking to ensure freedom of world trade without undue interference. The 1952 Arrest Convention has achieved a widespread degree of acceptance, and indeed there were those who argued that it was preferable to retain its well-tried principles rather than risk upsetting them while LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA, J. J 893 correcting its few deficiencies.

The extension ofthe right ofarrest to claims for environmental damage, wreck removal, insurance premiums, commissions, brokerage and agency fees, and ship sale contracts are all significant steps to correct those recognized deficiencies, while still retaining the exhaustive list ofmaritime claims which is the heritage ofthe common law Admiralty jurisdiction. The remainder ofthe 1999 Convention contains nothing revolutionary, the radical UK proposal on associated ship arrest having been rejected by the conference, but there are a number of provisions which provide useful clarification ofthe law. The active participation in the conference of delegations from China, Russia and the USA leads one to hope that these major states may, despite their relatively low rate of ratification of other maritime conventions, find this one sufficiently non-controversial to commend it to their legislatures.

" The learned author further stated: "The principles ofinternational law relating to jurisdiction have evolved significantly since 1952, in Europe in particular under the European Convention on Jurisdiction and Judgments 1968, but also with the development in English Law ofthe doctrine of forum non conveniens in cases such as the "ABDIN DAVER" [1984) A. C. 398. The terms of Article 7 have therefore been drafted to reflect the modem law, while retaining the original principle in paragraph I that, in the absence of another rule of the lex Jori arresti, the courts of the state where the ship has been arrested shall have jurisdiction to decide the merits of the claim. " In Project Gabcikovo-Nagymaros (Op. Ind. Weeramantry) the International Court in its judgment dated 25. 9.

1997 at page I14 albeit in a different context observed: "As this Court observed in the Namibia case, "an international instrument has to be interpreted and applied within the framework of the entire legal system prevailing at the time of the interpretation" (Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) notwithstanding Security Council Resolution 276 (1970), Advisory Opinion, l. C. J. Reports 1971, p. 31, para 53), and these principles are "not limited to the rules of international law applicable at the time the treaty was concluded. " In Equilease Corporation v. M. V. Sampson 793 F. 2d 598 the Court was considering interpretation of Ship Mortgage Act, 46 providing for right to a federal maritime lien to "any person furnishing repairs, supplies, or other necessaries, to any vessel.

It was held: "Equilease next argues that no maritime lien arises in favor of James because insurance is not a "necessary" and therefore neither general admiralty law nor the Act provides a maritime lien for unpaid insurance premiums. Equilease relies on Learned and on Grow v. Steel Gas Screw Lorrains K, 310 F. 2d 547 (6th Cir. 1962), for this proposition. The Grow court stated in one sentence without elaboration that there is no federal maritime lien for insurance premiums, 310 F. 2d at 549, and went on to grant the plaintiff insurance broker a lien under Michigan state law. Grow is thus not of much aid to us here. We focus instead on Learned. " "Equilease urges us to apply Learned and to find that marine insurance in 1986 insures solely to the benefit of a ship's owner, in no way aiding the ship, and therefore, that no federal lien can be had for unpaid insurance premiums. This we cannot do.

In the nineteenth century, an insurance policy on a ship was viewed as a contract for the personal indemnity of the insured ship's owner. Under this reasoning, no lien against the ship itself could possibly arise as the result of an insurance policy; "unless the ship is benefited the ship should not pay. " In Re Petition of Insurance Co. of Pennsylvanis, 22 F. 109, 116 (N. D. N. Y. 1884), aff'd sub non. Insurance Co. of Pennsylvania v. The Proceeds of the Sale of the Barge Waubauschene, 24 F. 559 (C. C. N. D. N. Y. 1885). It is no longer appropriate, however, to view maritime insurance this way. Even a vessel that simply sits at a dock without making any attempt to ply the waters must today have hull protection and indemnity insurance. As the district court noted, insurance is something that every vessel today needs just to carry on its normal business.

" It was further held "We therefore hold that because insurance is essential to keep a vessel in commerce, insurance is a "necessary" under 46 U. S. C. Sec. 971 and unpaid insurance premiums to give rise to a maritime lien under the FMLA. " LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA,J. ] 895 Equilease Corp. (supra) has a greater persua! live value having regard to the fact that contemporary maritime statutes in England and other countries do not use the term "necessaries" but the American Federal Maritime Liens Act does. The Indian courts need not follow the English judicial ideologies blindly. We must remind ourselves that in many fields, particularly, in the matter of preservation of 'Human Rights' and 'Ecology', Indian courts have gone far ahead than their English counterparts.

The decisions of the English Courts have been held to be a departure by the American Courts with regard to the jurisdiction of the admiralty but such departure is a well-known one. Equilease Corporation has been noticed in Trident Marine Managers Inc. v. Serial No. CEBRF 0661586 (1988) American Maritime Cases 763. The question, however, is whether a prudent shipowner would provide for an insurance. A compulsory insurance regime has come into being and keeping in view the changed situation the definition of the expression "necessaries" should also undergo a change. The term "necessary" is a term of art but the same cariilot, in our opinion, be used in a limited context of mandatory claims made for goods or services supplied to a particular ship for her physical necessity as opposed to commercial operation and maintenance. Physical necessity and practicality would be a relevant factor for determination of the said question.

Taking insurance cover would not only be a commercial prudence but almost a must in the present day context. The third party insurance may not be compulsory in certain jurisdiction but having regard to the present day scenario such an insurance cover must be held to be intrinsically connected with the operation of a ship. - One of the relevant factors for arriving at a conclusion as to whether anything would come within the expression "necessary" or not will inter a/ia depend upon answer to the question as to whether the prudent owner would provide to enable a ship to perform well the functions for which she has been engaged. If getting the vehicle insured with P&I club would be one of. the things which would enable a prudent owner to sail his ship for the purposes for which she has been engaged, the same would come within the purview ofthe said term.

The matter must be considered having regard to the changing 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. LEXFOR/: 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. 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. " 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.

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 action in rem is to enable a claimant to found a jurisdiction and to LIVERPOOLAND LONDON S. P. AND IASSON. LTD. v. M. V. SEA SUCCESS I[S. B. SINHA,J. J 897 provide the res as security for the claim. " In Cheshire and North's Private International Law, 12th Edition, it is stated "At first sight the principle seems almost seIf-evident. A person who resorts to an English court for the purpose of enforcing a foreign 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 ofprocedure as he finds it. He 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 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 ofthe background to the current jurisdictional regime. For defending the limits of the jurisdiction ofthe case of a particular 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 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 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. 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, 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 IASSON. LTD. r. M. V. SEA SUCCESS I[S. B. SINHA. JJ899 with the change in time interpretative changes are required to be made. We, 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 PATENTAPPEAL: 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 placed on The Justices ofthe 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 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. 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.

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 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, f pursuant to Section I08 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. " 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: "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, 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. 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. Clause 15 may be subject to an Act but when it is not so subject to LIVERPOOL AND LONDON SP AND IASSON. LTD. v. M. V SEA SUCCESS I[S. B. SINHA, J. ]90J the special provision the power and jurisdiction of the High Court under Clause 15 to entertain any appeal ,from ajudgment 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, (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 ofthe Letters patent will be maintainable or not when the matter is governed by a Special Statute will also have to be 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 Court posed three questions namely: (I) Whether in view ofClause 15 ofthe Letters Patent an appeal under Section I04 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 I04 of 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: (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 ofa High Court without at all disturbing interference with or overriding the Letters Patent jurisdiction. (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 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. " 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 cfthis Court in Sharda Devi v. State ofBihar, [2002] 3 sec 705 is also to the same effect, wherein in para 9 it was held: "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 would not get excluded unless the statutory enactment concerned excludes an appeal under the Letters Patent. " Section 54 of the Land Acquisition Act, I894 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 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. 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 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 Prahladrai Agarwal/a and Ors. v. Smt. Renuka Pal and Ors. , AIR (1982) Cal. LIVERPOOL AND LONDON SP AND IASSON. 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 ofthe Code ofCivil 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.

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. 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 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 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. 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 ajudgment: (I) a decision which affects the merits of the question between the parties; (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 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. 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 ofthe 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 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 bu