F.I. Rebello, J.
1. The 4th defendant has taken out this motion for the following reliefs :--
(a) That the suit be dismissed:
(b) without prejudice to the above and in the alternative that the plaint be rejected.
(c) without prejudice to the above, an order of arrest dated 21-6-2002 be set aside and or vacated and or superseded.
2. The plaintiffs have described themselves as a foreign organization incorporated under Foreign Laws and having their registered office as shown in the cause title, sought arrest of vessel m.t. symphony for Insurance Premia dues. The case of the plaintiff was that second defendant a foreign company are owners of the first defendant vessel. The third defendants are also a foreign company and/or owners/Managers of the first defendant vessel. Various vessels are being operated by the third defendant including defendant No. 1 earlier known as Arabian Lady as set out in paragraph 4 of the plaint. It is the case of the plaintiffs that by contract of insurance made in or about 1998-1999, the plaintiffs agreed to insure vessels against P and I (Protection and Indemnity) risks on the terms as set out in the plaintiffs rules, in consideration of a payment by the defendants of calls which are also called premia. It is the case of the plaintiffs that defendants are due and liable to pay insurance premia amounts quantified in paragraph 9 of the plaint. The plaintiffs have invoked arbitral clause. The second defendants are participating in the arbitration proceedings. The present suit is an action in rem by invoking the admiralty jurisdiction for security pending arbitral proceedings and to secure the amount that would be awarded by the Award to be made in the proceedings. In fact prayer Clause (a) reads as under :--
'That the first defendant vessel m.t. SYMPHONY-1 (ex-ARABIAN LADY) along with her hull, tackle, engines, machinery, boats, apparel and other paraphernalia at present living in port and harbour Bombay be ordered to be arrested with a view to secure the plaintiffs claim in the arbitration proceedings instituted in London.'
The amount as claimed and or cause shown, is that policy of insurance was made on the terms that the vessels and each of them should be deemed to form part of 'fleet' for the purpose of Rule 5(e) and 9 of the Plaintiffs Rules 1998, pursuant to which the second and third defendants were and remained jointly and severally liable to pay all the amounts due to the plaintiffs by way of calls or otherwise in respect of all the vessels within the fleet for the relevant policy years and i.e. under 'fleet entry' principle. The compilation of documents which have been filed before this Court it is contended would indicate that even in respect of said vessel m.t. SYMPHONY there are unpaid premia. The 4th defendant had taken out motion for the reliefs as set out earlier. It is their contention as set out in the affidavit of Mehernoosh R. Khajotia, constituted attorney of the 4th defendants, who has earlier intervened for the release of ship and have subsequently to be added as defendants that they are the mortgagees of the first defendant vessel. It is their case that the owners of the first defendant vessel have executed in favour of the 4th defendants, two deeds of mortgage dated 8-7-2000 and 11-7-2001 which have been duly registered with the Registry of the St. Vincent and the Grenadines. The 4th defendants have filed a suit being Admiralty Suit No. 30 of 2002 for the enforcement of the said mortgage(s) and for the recovery of the mortgage debt of the amount as set out therein. It is their case that the claim for insurance premia is not a maritime claim. It is their further contention that the present suit is founded on a right/entitlement to seek security, for the satisfaction of the plaintiff's claim in arbitration. In the suit as presently filed, no money claim or decree has been sought and the suit merely seeks security for the award that may be passed in arbitration proceedings. It is therefore, contended that considering the nature of the plaintiff's claim whether it be maritime claim or maritime lien, the same has to be determined in accordance with Lex Loci and not lex fori. The plaintiffs are based in United Kingdom and claims are required to be determined by arbitration in accordance with the Arbitration Act (United Kingdom), 1996 and the rules applicable thereto. The English law does not recognize Insurance Premia as maritime claim and considering that, the suit is misconceived and not maintainable. Considering the mortgage in favour of defendant No. 4, their claim ranks higher in priority over that of the plaintiffs. In paragraph 10, it is set out that even considering for argument that P and I Club premium, constitutes a maritime lien, it is settled law that this maritime lien is confined to the vessel alone and will not extend to sister ships, Hence, at best, the plaintiff's claim is for US $ 16, 373.09. It is specifically set out that the first defendant vessel is, not sister ship vessel considering as to when a ship can be said to be a sister ship.
Mr. Cesar Pereira as constituted attorney of the plaintiffs has filed a reply. Various objections have been raised in paragraph 2 which need not be adverted to. It is then contended that the motion for dismissal of the suit is not maintainable as the suit is for security pending adjudication of the claim before the arbitral tribunal. The claim of the 4th defendant that there are mortgages in their favour is denied. It is then contended that the plaintiffs have sought order of arrest on the basis of the entitlement conferred by the International Convention on arrest of ships 1999 as well as the law laid down by the Division Bench of this Hon'ble Court in the M. V. Mehrab case. It is further averred that the dictum in the M. V. Mehrab case does not stipulate that an arrest pending arbitration can be granted only when the arbitration is in respect of a 'Maritime Claim'. The claim for unpaid P and I premia, is recognized to be Maritime claim in India, in light of the judgment passed by the appellate Bench of this Hon'ble Court, in the case of Sea Success 1. Various other contentions including priority of claims which is pointed out cannot be decided at this stage.
3. Considering the above, the issues which arise for consideration in this Notice of Motion may be formulated as under :
(a) Does the plaint disclose no cause of action and in these circumstances, ought to be dismissed and or in the alternative, this Court having no jurisdiction, direct the plaint to be returned to be filed before the proper court?
(b) Can action in rem be maintained only for security for realisation of amount in respect of an award that may be passed in the pending arbitral proceeding, without claiming any liquidated amount or substantive relief in favour of the plaintiff, or
(c) Can insurance premia claimed by P and I in terms of their contract be considered to be maritime claim based on which admiralty action in rem is maintainable?
(d) Are the plaintiffs entitled to claim security of unpaid insurance premia of the other ships in the fleet which admittedly do not come within the expression 'sister ship'?
4. Considering the contentions, we may now proceed to dispose of the controversy. Let us therefore, address ourselves to the first contention, as to whether the plaint discloses no cause of action as set out earlier. The plaintiffs have maintained the suit on the basis that the defendant's as originally sued are due and owing insurance premia which includes insurance premia payable by defendant No. 1 vessel. At this prima facie stage, what the court must consider are the pleadings in the plaint and whether pleadings as pleaded disclose a cause of action and or that the pleadings are frivolous or vexatious and not disclosing any cause of action. It is no doubt pointed out on behalf of the defendant No. 4 by their learned Counsel that the insurance premia as claimed by the plaintiff is not pursuant to any statutory enactment but merely contractual. In other words, it was pursuant to a contract between plaintiff on the one hand and the owners/disponent owner of the vessel who approached them for insurance premia. The 1999 convention has not yet been ratified by the minimum number of nations of the world, for the convention to come into force. The claim is for arrest of the vessel within jurisdiction of this Court. The vessel could only be arrested by an action in rem it the claim is a maritime claim or there is a maritime lien. The insurance contract was entered into in England. The Insurance premia prima facie is not considered to be maritime claim in that country. It is not necessary for me to go into that issue considering the judgment of the appellate Bench of this Court in M. V. Sea Success-1 v. Liverpool and London Steamship Protection and indemnity Association Ltd., AIR 2002 Bom 151, Various arguments on maritime convention were also raised in Sierrie International Shipping Corporation v. M. V. Umka in Notice of Motion No. 126 of 2003 in Admiralty Suit (Lodging) No. 58 of 2003 decided on January 16,2003 (reported in : AIR2003Bom265 ) which arguments have been noted and as such it is not necessary to once again repeal, the same. Suffice it to say that the appellate Bench of this Court in respect of insurance premia and considering the 1999 convention has held it to be Maritime claim based on which an admiralty action in rem is maintainable. The court is informed that the matter is in appeal before the Apex Court. Even if that be so the law as it now stands, at least within the jurisdiction of this Court, is that action in rem based on unpaid insurance premia is maintainable. There are insurance premia due for the arrested vessel as can be seen from the documents produced before this Court. Once that be the case, there is no question of rejecting the plaint and or returning the plaint on the ground of want of jurisdiction. The plaintiffs have succeeded in establishing that the plaint discloses cause of action and that the case would give rise to triable issues and in these circumstances, this contention as raised on behalf of defendant No. 4 has to be rejected.
Once it is held that admiralty action in rem is maintainable for unpaid insurance premia, consequently the third question which has been formulated namely whether insurance premia is a maritime claim has to be answered in the affirmative based on the position of law as it now stands.
5. We then come to the second contention as to whether an action in rem can be maintained only for security. Again this issue was in issue before another appellate Bench of this Court in the case of Islamic Republic of Iran v. M. V. Mehrab, : AIR2002Bom517 . The learned appellate Bench has taken a view that action only for security is maintainable. Apart from that there is clear support for that authority in the judgment of the Apex Court in M.V. Elizabeth v. Harwan Investment and Trading Pvt. Ltd., : [1992]1SCR1003 . I may advert to paragraphs 49 and 50 of the said judgment. The Apex Court in the case of M. V. Elizabeth (supra) observed as under at page 1030:
'49. A ship may be arrested (i) to acquire jurisdiction; or (if) to obtain security for satisfaction of the claim when decreed; or (iii) in execution of a decree. In the first two cases, the court has the discretion to insist upon security being furnished by the plaintiff to compensate the defendant in the event of it being found that the arrest was wrongful and was sought and obtained maliciously or in bad faith. The claimant is liable in damages for wrongful arrest. This practice of insisting upon security being furnished by the party seeking arrest of the ship is followed in the United States. Japan and other countries. The reason for the rule is that a wrongful arrest can cause irreparable loss and damages to the shipowner; and he should in that event be compensated by the arresting party.'
'50. The attachment by arrest is only provisional and its purpose is merely to detain the ship until the matter has been finally settled by a competent court. The attachment of the vessel brings it under the custody of the marshal or any other authorised officer. Any interference with his custody is treated as a contempt of the court which has ordered the arrest. But the Marshal's right under the attachment order is not one of possession, but only of custody. Although the custody of the vessel has passed from the defendant to the marshal, all the possessory rights which previously existed continue to exist, including all the remedies which are based on possession. The warrant usually contains admonition to all persons interested to appear before the court on a particular day and show cause why the property should not be condemned and sold to satisfy the claim of the plaintiff.'
It may be contended that this arrest can only be in respect if the action is maintainable before the very court itself for the main relief. However, the courts are now granting injunction which are described as Mareva injunction. A Mareva injunction is an order of a Court to a party or other persons over whom the Court has jurisdiction, directing the way in which the property is to be retained or dealt with so as to ensure that the property will be available to satisfy any judgment in the action. It may be noted that to obtain a Mareva injunction there must first be an action properly commenced within jurisdiction of the Court. Courts have extended their jurisdiction also to action in rem to restrain the property from leaving jurisdiction. See The Rena K. (1979) QB 377. The following paragraph is relevant :
'The Mareva injunction is granted in a case where a plaintiff has brought an action here against a foreign defendant, and the latter has moneys or chattels within the jurisdiction which, if he were not prevented from doing so, he would be free to remove out of the jurisdiction before the plaintiff could bring the action to trial, and, if successful, obtain and enforce a judgment against him.
The injunction takes the form of an order restraining the defendant, by himself, his servants or agents, from selling, disposing of or otherwise dealing with such moneys or chattels or from removing them out of the jurisdiction, usually until further order. Its purpose is to ensure that, if the plaintiff succeeds in the action, there will be property of the defendant available here out of which the judgment which the plaintiff obtains in it can be satisfied.'
The doctrine is however, evolving, permit-ling retaining security obtained until such time to satisfy the decree that may be obtained in proceedings commenced in other jurisdictions also. There can be therefore, no difficulty in maintaining an action for security as has been held by the Division Bench of this Court. Even therefore, if the action is merely for security pending final action in the arbitral proceedings none-the less it can read to mean security for satisfaction of the claim in respect of action which may be pending also in some other jurisdiction. Considering this aspect of the matter, to my mind the proceedings as presently filed is maintainable. In the light of that the second question will also have to be answered in the affirmative.
That being the position, the reliefs in form of Prayer Clause (a) and (b) as sought in the motion at this stage must be rejected.
6. We now come to the last issue as to whether the plaintiffs can maintain action for security for insurance premia in respect of what is described as 'fleet'. A Division Bench of this Court in M. V. Mariner, 1998 (1) Mah LJ 751 has held that an action can also be maintained against a sister ship. There is no averment that the insurance premia is due from a sister ship. Will that be the same position in so far as fleet is concerned. In other words, can plaintiff based on a contract, for insurance premia for the fleet, seek security for entire amount to have arrest of defendant No. 1 vessel. Plaintiffs for payment of insurance premia has formulated what is known as rules of the Liverpool and London Steamship Protection and Indemnity Association Ltd. The 'fleet entry' is described as under :
'the entry of more than one ship by one or more members on the basis that those ships will be treated together as a fleet for underwriting purposes.'
The owner -- an owner, part owner, charter, mortgagee, trustee, operator, insurer or builder of a ship or an associated company of any of these.
Membership is provided in Clause 5. The relevant clause for our discussion is 5(f) which reads as under :
'Applications for insurance may be made and accepted in respect of ships of which the beneficial ownership is separate on terms that the ships concerned shall be deemed (for these insurance purposes only) to form part of the specified fleet whereby the Association shall deal with the entries of such ships in combination and not individually, in consideration for which all members within each such fleet entry shall accept joint and several liability to pay all amounts due to the Association by way of calls or otherwise in respect of all ships within that fleet entry. Such joint, and several liability shall continue after cessation of entry in respect of amounts due to the Association.'
Reliance is also placed on Rule 40 which comes under the heading 'Security for calls'.
'The managers may at any time require as a condition of entry or continued entry of a ship that a member shall provide security for the payment of calls or other amounts due to the Association in the form of a bank guarantee for an amount specified by the managers given by a bank approved by the Managers. If a member fails to arrange such a bank guarantee within 14 days of being called upon by the managers to do so, the entry of the ship concerned will automatically cease without, further notice.
The Association shall have a lien on the ships of a member (including those of a co-assured) for any amounts owned to the Association by the member.'
Under the heading disputes, Clause 47(c) provides as under :
'Nothing herein shall affect or prejudice the right of the Association to take action and/or commence proceedings in any jurisdiction to enforce its right of lien on ships or to otherwise obtain security by seizure, attachment or arrest of assets for any amounts owned to the Association.'
The lien in terms of the rules of the association which are contractual terms could be given effect to in case of the disputes between Association and Member, to enforce their right of lien in any jurisdiction. It is based on these contractual terms that the plaintiffs contend that as they have a lien they are entitled to arrest the ship forming part of the fleet in respect of unpaid insurance premia payable to them. The action taken was ah action in rem against the vessel. The lien agreed by member and the association cannot be described as maritime lien. What constitutes Maritime liens as has now been set out by the Apex Court in the case of M. V. Won Fu 2002 AIR SCW 4409. Maritime liens are as under ;
(a) damage done by a ship
(b) salvage
(c) seamen's and master's wages
(d) master's disbursement; and
(e) bottomry.
In the instant, case, in the claims as pleaded none of the claims would fall within the expression maritime lien as set out in the judgment in M.V. Won Fu. Therefore, the Hen as set out in the contract would be contractual lien as provided under the English Law which would be a law applicable considering the contract between 'the parties. The issue whether this: Court if there is contrary municipal law would give effect to such a lien is not in issue in the matter. The action was riot commenced as an action in personam. The action commenced was also in rem. Admittedly there is no relationship of sistership. Once there is no relationship of sister ship and even if the insurance premia considering the law as accepted by the appellate Bench of this Court is considered, can the plaintiffs maintain an action in respect of the total unpaid premia, in respect of all the ships constituting the fleet. We had earlier adverted to Clause 5(f) wherein it is set out that if the beneficial ownership is separate, yet a joint application for insurance can be made under which all members within such fleet shall accept joint and several liability to pay all amount due to the Association. In other words, it is pursuant to a contract that a member who seeks insurance cover in the fleet, holds himself out to be made liable in terms of the contract between the parties. The ships are or may not be of the same ownership. In the instant case, they are what is described as disponent owners, meaning thereby a person or a company who controls the commercial operation of a ship, responsible for deciding the ports of call and the cargoes to be carried. Very often, the disponent owner is a shipping line which time charters a ship and issues its owner liner bills of lading. Can such a contract by itself result in a maritime claim against the fleet in the absence of the ships being sistership. Each of the individual members of the fleet.... itself can be sued in personam for the dues of even other members of the fleet. Admiralty practice will have to be borne in mind while considering the nature of relief assuming the claim is a maritime claim. Once I hold considering the judgment of this court that insurance premia to be maritime claim the suit was maintainable. If the disponent owner in terms of the contract binds himself for recovery of insurance premia, by creating a lien, can that by itself result in an Admiralty court seeking security from defendant No. 1 for unpaid insurance premia in respect of ships which are not sister-ships. Reliance was placed on judgment of the United State Court of Appeals for the Fifth circuit decided on June 27, 2002 in the case of Liverpool and London Steamship Protection and Indemnity Association Ltd. v. Queen of Lemon M. V. There the issue referred was in the matter of choice of law and the essential question was whether English or U.S.A. law would determine the existence of Maritime lien for unpaid insurance premia. There was no dispute that in English law there would be no maritime lien or claim. But in U.S. Law namely Federal Maritime Lien Act. Maritime lien includes insurance premia. The issue was answered by holding that when the ship sailed into water over which U. S. had jurisdiction then irrespective of the contract, that stated, it will be governed by English Law, the U.S. Law would apply. The argument advanced that such construction would lead to uncertainty and undermine the goal of uniformity in maritime lien was also rejected by holding that the existence of the maritime lien would only change as the ship enters the jurisdiction where parties are granted more expansive rights than English law.
Is it possible to extend this principle. Insurance Premia is recognized as a maritime claim considering the judgment in M. V. Sea Success. A maritime claim is distinguishable from a maritime Hen which is carried with the rest and can be enforced against the res even if there be change of ownership. It adheres to the ship from the time that the fact happens, to give a maritime lien and the continues binding the ship up to it being dislodged. Maritime lien in India are the liens as now recognized by the Apex Court in 'M. V. Wong Fu' (supra). Can the term in the contract of Insurance policy provided for exercising the lien on any member of the fleet jointly or severally be enforced. In M. V. Sea Success the claim was not against a sistership. Will the concept of fleet make a difference. Insurance Premia as a maritime claim has been recognized by the Court considering the 1999 Geneva Arrest Convention. The regulations issued by the Port Trust in India is that the ship cannot enter without a P. I. Insurance Policy or equivalent cover. If in England where the contract was entered into a ship cannot be arrested for failure to pay the insurance premia, it will be difficult to hold that a ship which forms part of the fleet can be arrested, when it is not a sister ship. In the Queen of Lemon, as there was Federal law recognizing a maritime lien. In answer to the contractual terms, it was held that as the ship enters a jurisdiction which granted more expansive rights than English Law, the Municipal Courts would enforce such a lien. For a maritime claim one of the incident is that the necessaries must be supplied to the ship. Therefore, can necessaries assuming insurance premia is a necessary, supplied to ships in the 'fleet' be said to be necessaries to the ship. Necessaries supplied to the other ships are not necessary for the voyage of the ship. All that happens is there is a difference in premia charged. The term 'fleet' is purely a contractual term for the purpose of underwriting purpose. The judgment in M. V. Sea Success shows that there are countries which have statutorily recognized insurance premia as a maritime claim. Neither India or England have till done so. Even if the Geneva Convention is considered, this Court till now has recognised the insurance as a maritime claim is recognized for the ship and refused to apply it except in case of a sistership. As shown from the documents on record, insurance premia for each ship in the fleet is also capable of being identified separately. It will be open to the plaintiff to maintain action in personam and seek reliefs in those proceedings against the 'fleet'. It will not be possible to extend this term of the contract of insurance premia to an action in rem to ships constituting the fleet.
To my mind therefore, security which defendant No. 4 was called upon to furnish for release of defendant No. 1, will have to be restricted to security of the insurance premia which was due by defendant No. 1. It is no doubt true that it was contended on behalf of defendant No. 4 that considering the law of limitation, part of that premia would also be barred by limitation. The parties themselves have held out that the law applicable would be law as applicable in England. The plaintiffs have pleaded that the law of limitation in England is of six years. Even otherwise, some of the Insurance premia which is due and payable is of the year 1999. Arbitral proceedings are pending where the issue will be in issue. Considering the law and considering the nature of the present proceedings, the defendant No. 4 will have to secure plaintiffs at least in so far as amounts of the unpaid insurance premia of defendant No. 1. That has been quantified in the affidavit of defendant No. 4 themselves in the sum of U.S. # 16,373.09. Considering the above, to my mind the security; furnished by defendant No. 4 will have to be restricted to sum of U.S. # 16,373.09.
7. In the light of the above, motion is partly allowed to the extent that the order whereby vessel was directed to be released on furnishing security, security amount is reduced to U.S. # 16,373.09.
In the circumstances of the case, there shall be no order as to costs.
The learned counsel for the defendant No. 4 seeks liberty to deposit the equivalent amount in Indian rupees with further directions that thereafter they may be entitled to give bank guarantee for the said amount which has been directed to be secured. I find no difficulty in accepting the said submission. Defendant No. 4 will therefore, be permitted in the first instance to deposit the amount in Indian rupees and thereafter to substitute the same by a bank guarantee, if so advised. Upon doing so, the concerned vessel to stand released.
On behalf of the plaintiffs, their learned counsel seeks stay of the order on the ground there are issues which require to consideration and arising from the judgment of this Court. Considering the above, the order not to be given effect to for the period of four weeks.
It is made clear that the stay would be to the extent of release of vessel. It will be open to the defendant No. 4 to furnish security as set out earlier. It is needless to say release of the vessel will be subject to any other caveats against release.
All parties and authorities to act on copy of this order authenticated by Personal Secretary.