Messrs BAMACRI S.A. Versus TAIPAN SHIPPING COMPANY INC., PANAMA
MAMOON KAZI, J.-- This appeal which has been filed under section 15 of the Code of Civil Procedure (Amendment) Ordinance, 1980 calls in question the order passed by the learned Single Judge of this Court, dated 11-10-1982, ordering that the security furnished by the Bank of America on behalf of the appellants in Admiralty Suit No. 24 of 1981 may not be discharged or cancelled till the disposal of the suit (Suit No. 810 of 1981) filed by the respondent No. 1 against the appellants and the respondent No. 2.
2. The circumstances under which the impugned order was passed are as follows:
3. By a Deed of Covenants, dated 19-2-1980, entered into by the respondents Nos. 1 and 2, the former obtained a loan of U.S. $ 350,000 from the latter and secured the same by mortgaging their ship m.v. TAIPAN PRIDE without possession in favour of the respondent No. 2, subject to the terms and conditions of the Deed of Mortgage dated 14-3-1980. During the period from 14 6-1980 to 14-11-1980 the respondent No. 1 filed to pay U.S. $ 258,000 being the amount of instalments according to the aforesaid Deed of Mortgage, consequent to which the respondent No. 2 called upon the respondent No. 1 to pay by 15-12 1980 a sum of Rs. U.S. $ 50,000 to them failing which the respondent No. 1 was warned that the former would exercise their rights under the mortgage and take steps to protect their interest, which admittedly included the right to sell the vessel being the subject-matter of the mortgage. The respondent No. 1 failed to comply with such request of the respondent No. 2 and on 16-12-1980 the latter assigned for consideration all their rights and remedies under the Decd of Mortgage to M/s. Mullain investment Corporation of Liberia. Consequent upon such arrangement on 24-12-1980 the aforesaid assignees sold the vessel to the appellant s consideration of a sum of U.S. $ 400,000. Thereafter, litigation ensued between the parties and the appellant filed Admiralty Suit No. 24 of 1981 against m.v. Taipan Pride for possession when the latter was berthed at Karachi Port and was expected to discharge its Cargo and sail away from the jurisdiction of this Court. Consequently the vessel was arrested under order of this Court, dated 21-11-1981. An application under Order XII, Rule 6 read with section 151, C.P.C. was also filed by the appellants for possession of the vessel in question. This application came up for hearing before the Admiralty Bench of this Court on 6-5-1981 and by an order passed on the same day application was disposed of in presence of the parties' counsel in the following terms:-
"In these circumstances, I pass the following order:-
(1) That Messrs Bamacri SA. shall furnish security to the satisfaction of the Nazir of this Court in the sum of U.S. $ 1,00,000.
(2) Messrs Bamacri SA. shall furnish security to the satisfaction of the Nazir to the extent-of the total value of all the suits, except Suit No. 24/81.
(3) That, on such security being furnished, the vessel shall stand released.
(4) All the port charges and other charges payable to the Customs Authorities, or the Karachi Port Trust shall be paid by Messrs Eamacri S.A. and
(5) the security mentioned in clause (2) above shall ensure to the benefit of the plaintiffs in suits other than Suit No.24/81 to the extent that the ultimate decree might relate to such clauses as are mentioned in sub section (2) of section 3 of the Admiralty Jurisdiction of High Courts Ordinance, 1980.
While this order was being dictated in presence of the learned Advocates, Mr. R.F. Virjee had expressed that it may be mentioned in the order as to why the security was being fixed at $ 1,00,000. This figure was arrived at by relation to the difference between the value of the vessel and the amount of mortgage money. What is more that, in fact, such figure was proposed by Mr. Muhammad Naim and accepted by Mr. R.F. Virjee."
After the possession of the vessel was handed over to the appellants, the suit filed by the appellants become infructuous and a request was, therefore, made on behalf of the appellants to the Court for withdrawal of the suit which was allowed on 20-12-1980 and the last paragraph of the order reads as follows:-
"Mr. R.F. Virjee has lastly contended that he may be given time, so that he can file a suit against the plaintiff, and during such time, the security offered by the plaintiff in the suit, may be kept alive. Mr. Mohammad Naim opposes this request but looking to the circumstances of this case, I am of the view that the security should be kept alive for two weeks as from today. The defendants may file a suit within two weeks, and, in case such suit is filed they can make an application for retention of security for further time and such application shall be considered on merits, if and when may be made."
Thereafter, on 27-12-1981 the respondent No. 1 filed Suit No. 810 of 1981 for the recovery of Rs. 10,00,000 equivalent to U.S $ 1,00,000. Alongwith the plaint an application under Order XXXIX, Rules 1 and 2, C.P.C. (C.hI.A No. 4231/82) was also filed praying for an order to restrain the Bank of America from discharging the security furnished on behalf of the appellants in Suit No. 24/81 till the final disposal of the subsequent suit. By an order dated 28-12-1981, an ad interim stay was first granted in favour of the respondent No.1 which was subsequently confirmed by the impugned order, and hence this appeal.
4. We have heard Mr. Muhammad Naeem, learned counsel for the appellants and Mr. R.F. Virjee, learned counsel.
5. Mr. Muhammad Naeem has assailed the impugned order on many grounds. It has been argued that the suit against the appellants out of which the impugned order has arisen is not maintainable as the appellants are bona fide purchasers of the vessel in question from the respondent No. 2. It has been further contended that the sale of the vessel to the appellants was made by the respondents after due notice to the owner thereof, namely the respondent No. 1 and according to section 69(3) of the Transfer of Property Act, the rights of the purchasers of a mortgaged property are fully protected. It has also been contended by the counsel that the plaint fails to furnish the full particulars as contemplated by Order VI, Rule 4 of the Code of Civil Procedure since collusion and fraud has been alleged against the appellants in the plaint. Lastly, it has been urged that the impugned order, in fact, operates as an order of attachment before judgment, although the conditions for passing of such order do not exist as contemplated by Order XXXVIII, Rule 1, C.P.C. Reliance has also been placed by the counsel on Ghulam Shabbir v. Mst. Nur Begum (P L D 1977 S C 75) and P.R. Govinda Swami Naicker v. Pukhraj Sower and another (A.I.R. 1940 Mad. 903). Mr. R.F. Virjee, on the other hand, has fully supported the impugned order. According to him, the plaint sufficiently discloses that the transaction between the appellant and the respondent No. 2 was collusive and passing of the impugned order was justified in order to protect the interest of the respondent No. 1 and the status quo obtaining prior to the filing of Suit No. 810/81.
6. We are not much impressed by the arguments advanced on behalf of the appellants. So far as the first contention of Mr. Muhammad Naeem is concerned, section 69(3) of the Transfer of Property Act, no doubt provides that:
"(3) When a sale has been made in professed exercise of such a power the title of the purchaser shall not he impeachable, on the ground that no case had arisen to authorise the sale, or that due notice was not given or that the power was otherwise improperly or irregularly exercised: b ut any person damnified by unauthorised or improper or irregular exercise of the power, shall have his remedy in damages against the person exercising the power."
However according to the plaint in the suit the cause of action against the appellant s is based on the allegations that the sale of the vessel to them by the respondent No.2 was collusive. Therefore, without going into the question, whether the title of the appellants has been impeached in the suit on any of the grounds referred to in subsection (3) of section 69, suffice it to say that since the suit is also based on additional grounds, per se, the case does not appear to be hit by the above provision of law. Mr. Mohammad Naeem has however, placed reliance on the case reported in A.I.R. 1940 Mad. 903 reference to which has already been made above. In this case it has been held that an action against the mortgagor and an auction-purchaser cannot form the subject-matter of the same suit. Without touching the merits of the proposition it may be pointed out that while hearing this appeal, which is against an interlocutory order we would not I like to enter into the question when the main suit is pending and apparently, the question was not raised before the original side Bench. It is always open to the appellant to raise such an issue before the original side Bench at the appropriate time when the same would be dealt with and finally determined.
7. The next argument of Mr. Mohammad Naeem is based on the provisions contained in Order VI, Rule 4, C.P.C. which provides that:
"4. Particulars to be given where necessary:- In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading."
The argument is that since fraud has been alleged in the plaint appellant and the respondent No. 2, the same fails to furnish in this regard as contemplated by Rule 4 of Order V1. In this respect, besides referring to the allegations contained in paragraphs Nos. 13 and 14 of the plaint we would also like to refer to the factors which weighed with the learned Single Judge while granting the respondent No.1, prayer for interim injunction. In paragraphs Nos. 13 and 14 of the plaint, the respondent No. i has clearly alleged that the disposal of the vessel was surreptitiously made by a private sale instead of a public auction which could have enabled the respondent No. 1 to prevent the loss of the vessel. Besides that the admitted failure on the part of the appellant to initiate a suit for foreclosure of the mortgage has also been referred to as an additional factor contributing to the allegations of collusion between the appellant and the respondent No. 2 and its assignees. Apart from that it is an admitted position that no specific notice was given by the respondent No. 2 or its assignees M/s. Mullian Corporation to the respondent No. 1 that the vessel was going to be sold and only a general notice dated 9-12-1981 was given in this respect. The consideration for the vessel, according to the respondent No. 1, was also very low which can lend further support to the allegations of fraud and collusion between the appellants and the respondent No. 2. The additional factors referred to by the learned Single Judge in his order which have not been controverted by Mr. Mohammad Naeem are, that admittedly the sale of the vessel had taken place on 16-12-1980 but the sale proceeds amounting to U.S. $ 4,17,000 were not credited forthwith in the account of the respondent No. 1 which became evident from a copy of the Bank Statement, dated 1-1-1981 issued by the respondent No. 2 showing an amount of U.S. $ 3,50,000 outstanding against the respondent No. 1 on 31-12-1980. Prima facie, if the amount had been realised through the sale of the vessel on 16-12-1980 the Bank Statement on 1-1-1981 could not have shown an amount of U.S. $ 3,50,000 outstanding against the respondent No. 1. Admittedly there was no material on record to clarify the aforesaid position. Apart from the above, a telex, dated 12-2-1981 had been produced by the respondent No. 1 which had been addressed to its Director, Terry Cheng and the same reads as follows:-
RE: YOUR TELEX TC/DI /OKS-HKB 12-2-1981 CONCERNING TAIPAN PRIDE
RESPONSIBLE PERSONS ABSENT UNTIL MONDAY, HOWEVER BELIEVE TOTAL AMOUNT DUE INCLUDING OF SALE ABOUT U.S. DOLLARS 550,000.---."
If the vessel had been sold on 16-12-1980, it is hard to understand in what capacity the Telex was addressed to respondent No. 2. In view of such circumstances, it is hard to accept Mr. Muhammad Naeem has contention that sufficient particular has not been furnished by the respondent No. 1 Mr. Mohammad Naeem has placed reliance on the case reported as Ghulam Shabbir v. Mst. Nur Begum wherein, no doubt, it has been observed that as a rule the pleadings must contain material facts on which a party relics for his claim or defence, but in view of the circumstances stated above this case is not attracted to the fact of the present case.
8. Turning to the next argument of Mr. Mohammad Naeem, the same is that, the impugned order, in fact, operates as an order of attachment before judgment as contemplated by Order XXXVIII, Rule 1, C.P.C. although the conditions for passing such an order do not exist in the present case. The argument appears to be without substance as in order to decide whether the plaintiff is entitled to an interim injunction the Court has to see whether there is a prima facie case and whether the plaintiff would suffer an irreparable injury if the interim injunction sought for is not granted in his favour and also the balance of convenience. In the present case as is evident from the order passed by the Admiralty Bench of this Court, dated 6-5-1981, that the vessel was released to the appellants on a condition of their furnishing security in the amount of U.S.$, 1,00,000 which, according to the claim of the respondent No. 1, was the difference between the sale price of the vessel and its actual price. Reference in this respect may also be made to the subsequent order passed by the same Bench, date 1 20-12-1981, whereby the appellants were allowed to withdraw the suit filed against m.v. TAIPAN PRIDE subject to a condition that the security would be kept alive for two weeks from the date of passing of the order to allow the respondent No. 1 in the present appeal to file a suit and to make an application for retention of the security furnished on behalf of the appellants. It would, therefore, be observed that the possession of the vessel was handed over to the appellants purely on a condition of their furnishing security in the sum of U.S. $ 1,00,000. This was apparently done to safeguard the interest of the respondent No. 1 in the vessel. We are therefore, clearly of the view that by granting an interim injunction in favour of the respondent No. 1, the learned Single Judge has only preserved the status quo obtaining prior to the filing of the suit. If this was not done, then nothing would have remained in the hands of the respondent No. 1 D to safeguard its interest. We have already shown above that the respondent No. 1 had succeeded before the learned Single Judge in establishing a prima facie case. The balance of convenience in view of the aforesaid circumstances was also in his favour. There was also a clear likelihood of an irreparable injury being caused to the respondent No. 1 in case its prayer for an interim injunction was refused there being nothing in its hands to secure its interest except the security furnished on behalf of the appellants. We are, therefore, of the view that the injunction was rightly granted by the learned Single Judge in favour of the respondent No. 1.
9. For the aforesaid reasons, we find no force in this appeal and the same is dismissed with no order as to costs.
AA./B-73/K. Appeal dismissed.