Messrs V.N. LAKHANI & COMPANY vs m.v. LAKATOI EXPRESS and 2 others

' SALEEM AKHTAR, J.---The petitioner seeks leave to appeal against the judgment of the learned Judges of the High Court Sindh, whereby Admiralty appeal filed against the judgment of the learned Judge in Chamber was dismissed in limine.

2. Briefly the facts are that the petitioner imported goods which were shipped under Bill of Lading on board the vessel "Commandante Revello" owned by M/s. C.N.M. Compagnie Di Navigazione Merzario S.R.L. (hereinafter referred to as "Merzario"). Although transhipment was prohibited, the goods were transhipped on board vessel "Lakatoi Express" belonging to M/s. Artemis Lines SA. From the evidence, it transpired that this vessel was time chartered to Marzario. The petitioner filed admiralty suit against m.v. "Lakatoi Express", its owners and M/s. Anchor Shipping & Trading Co. Ltd., the Local Agent of vessel. The Petitioner's claim was that the vessel being owned by the same owner at the time when cause of action arose in personam was liable to be arrested. The defence of the respondents, inter alia, was that the suit in rem was not maintainable and was liable to be dismissed as the vessel was under time charter to Marzario and the person who would be liable on the claim in an action in personam was not when the cause of action arose, beneficial owner as respect majority shares therein. The learned trial Court after assessing the evidence came to the conclusion that respondent No,2 was only a time charterer of the ship and the fact that action in personam could not have been brought against the real owner of the ship, the order of arrest passed earlier was recalled and the suit was dismissed. The appeal filed was also dismissed in limine.

3. The learned counsel for the petitioner contended that the goods were transhipped on board- respondent No,1 and as it was time chartered to respondent No,2, who were the owners of vessel "Commandante Revelo", the Court has jurisdiction to arrest the vessel. This argument essentially arises from subsection (4) of section 4 of the Admiralty Jurisdiction of High Courts Ordinance, 1980 (hereinafter referred to as the Ordinance) which reads as follows:-- "4(4) In the case of any such claim as is mentioned in clauses (e) to (h) and (j) to (q) of subsection

(2) of section 3, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charter of, or in possession or in control of the ship, the Admiralty jurisdiction of the High Court may, whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against--

(a) that ship, if at the time when the action is brought it is beneficially owned as respects majority shares therein by that person; or

(b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid."

4. The relevant facts for attracting the jurisdiction of the Court in the present case are that the ship which originally carried the goods was owned by Merzario who were the time charterer of respondent No,1. The petitioner had filed suit for arrest of respondent No,1 and not the original vessel, claiming it to be a sister-ship of the vessel "Commandante Revello" as both were owned by Merzario. If this would have been the situation, there would have been no difficulty to entertain the suit under the Ordinance and to pass order for arrest but from the evidence, it transpired that Merzario were the owners of "Commandante Revello", but so far respondent No,1 is concerned, they were only time charters. In these circumstances, the question arose whether under subsection (4) quoted above, the Court could exercise jurisdiction in rem against respondent No,1. In applying section 4(4) one has to take into consideration the existing facts at the time when cause of action arose in connection with the offending ship. In order to invoke the jurisdiction, the plaintiff has to establish that:

(1) The claim falls in any of the clauses as mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 and arises in connection with a ship.

(2) When the cause of action for action in personam arose.

(3) The person liable in an action in personam at the time when such cause of action arose, was the owner or charterer of or in possession A or in control of the offending ship.

(4) The offending ship or any other ship which is sought to be arrested, at the time action is brought is beneficially owned as respects majority shares by the person liable on the claim in an action in personam.

5. The key words in the provision are 'beneficially owned as respects majority shares'. The person liable for the claim in an action in personam should beneficially own majority shares. It is on compliance with this condition that action in rem for arrest of a sister vessel can be filed. Lord Denning in I Congreso del Partido (1981) 1 All England Law Reports 1092 at 1099), while considering the effect of section 3(4)(b) of Administration of Justice Act, 1956 of Britain, which is similar to section 4(4) of the Ordinance, with a difference so far the beneficial ownership as respect of the shares is concerned, as would be pointed out later, observed as follows:- "In applying section 3(4)(b) you have first to consider the position at the time when the cause of action arose in connection with the offending ship. You have then to discover a person who would be `liable on the claim in an action in personam'. Having discovered him, you have to consider the position at the time when the action is brought. You have then to inquire whether that person at that time beneficially owned any other ship (a sister-ship) besides the offending ship. If there is such a person, you can invoke the Admiralty jurisdiction of the High Court against that sister-ship."

6. We may point out that in the British Act, the person who would be liable on the claim in an action in personam should, when the action is brought, beneficially own as respects all the shares.

Whereas in the Ordinance such person should beneficially own majority shares. This provision came up for consideration in St Merriel's case (1963) 1 Lloyd's Report 63. It was a case for claim in respect of repair charges to the ship at the request of the demise charterer. It was held that the provisions of section 3(4)(b) of Administration of Justice Act, 1956 a charterer by demise is not included in the expression "beneficially owned as respects all the shares therein" which according to the learned Judge mean "the true owners of the ship". This provision came up for consideration in the case of The Andra Ursula Medway Drydock & Engineering Co. Ltd. v. Beneficial Owners of Ship "Andrea Ursula" (1971) 1 All England Law Reports 821. In this case Brandon, J. Took a completely different view holding that a demise charterer was a temporary owner and was covered by the aforestated expression and held him to be beneficial owner in respect of all the shares. This view seems to have been taken in view of the 1952 Convention and according to him to keep pace with the International Convention signed by the Government. This provision was again considered in I Congreso del Partido (1978) 1 All England Law Reports 1169 in which Robert Goff, J. Did not agree with this view and held that the expression does not include the time charterer. It was observed as follows:-- "I start with the 1956 Act, and the words with which I am particularly concerned, and which I have to construe in the context of the Act, are `beneficially owned as respects all the shares therein'. In my judgment, the natural and ordinary meaning of these words is that they refer only to such ownership as it vested in a person, who whether or not he is the legal owner of the vessel, is in any case the equitable owner; in other words, the first of the two meanings of which Brandon, J.

Thought the words to be capable. Furthermore, on the natural and ordinary meaning of the words, I do not consider them apt to apply to the case of a demise charterer or indeed any other person who has only possession of the ship, however full and complete such possession may be, and however much control over the ship he may have... ...

' Furthermore, no case has been drawn to my attention (and I am aware of none) in which a demise charterer had been described as a beneficial owner', still less as a 'beneficial owner as respects all the shares in the vessel'. Indeed any reference in this context to ownership as respects all the shares in the vessel' is, in my judgment, inapt to describe the possession of a demise charterer; such words are only appropriate when describing ownership in the ordinary sense of the word, and not possession which is concerned with a physical relationship with the vessel founded on control and has nothing to do with shares in the vessel. A demise charterer has, within limits defined by contract, the beneficial use of the ship; he does not however have the beneficial ownership as respects all the shares in the ship. Furthermore I can find nothing in the remainder of the 1956 Act to cause me to reject the natural and ordinary meaning of the words; certainly I would not construe other references in the Act to `ownership' (as in section 1(1)(a) or 'co-owner' (as in section 1(1)(b) as referring in any way to demise charterers."

7. An appeal was filed against this judgment but this aspect of the case was not touched upon and the Judges only considered the controversy regarding sovereign's right of immunity from suits. The judgment of the Court of Appeal is reported in (1981) 1 All England Law Reports 1092, in which the observations of Lord Denning made in this respect have been quoted above. However, as there was a difference of opinion among the two learned Judges of the Court of Appeal on question of immunity of foreign State vessel, the judgment of Robert Goff, J. Was affirmed. Appeal was then filed in the House of Lords and the judgment is reported in I Congreso del Partido (1981) 2 All England Law Reports 1064, which decided only question of immunity without in any manner and without referring to the provision of section 3(4) of the 1956 Adt. Therefore, the observations of Robert Goff, J. Hold the field. This question was also considered in the High Court in a case reported as Messrs Sun Line Agencies Ltd. v. Vessel m.v. Psiloritis' and 2 others (1984 CLC 1553) where Saeeduzzaman Siddiqui, J (as he then was) after considering the aforestated cases agree with the conclusions of Robert Goff, J. Again in the case of Messrs Arshad Corporation (Pvt.) Ltd. v. The Ship Maersk Astro and 2 others PLD 1988 Karachi 515, the same view was affirmed.

8. In our view the learned Judges have taken correct view by excluding the charterer, be it time charterer or charterer by demise, from the category of persons who beneficially own majority shares in the ship sought to be arrested. The pre-condition for invoking jurisdiction under section 4(4)(a)(b) is that the person who would be liable on the claim in an action in personam was, when the cause of action arose, should beneficially own majority shares in the ship only then sister-ship can be arrested. If we take the view that the words "beneficially owned" may include even a demise charterer then words "as respects majority shares" will be completely redundant. The ownership of majority shares may be beneficial or legal is a condition precedent for invoking the jurisdiction. It is a well-settled principle of interpretation of statute that each and every word of a statute has to be given its meaning and no part of a statute can be treated as redundant or surplus. It, therefore, seems clear that the legislature intended to give an effective meaning to the words "as respects majority shares" which can only be attributed to the owners. The petition is dismissed.