ORDER
A.S. Venkatachalamoorthy, J.
1. The vessel Kobe Queen 1 is an ocean carrier registered in Panama. The vessel was loaded with cargo steel products in Istanbul. Turkey in or about June, 1999 and the port of discharge was Montego Jamaica in the Caribean Islands. A part of the cargo consisting of 49,450 Metric Tons was consigned to the Order of Global Marketing Services Inc. having office at 420, Lexhind Avenue Site 607, New Your, New York with the notifying party as TW Metals Limited, Kingston, Jamaica. The vessel sailed from Istanbul in or about 3rd August, 1999 and proceeded to Darkar. There was inordinate delay in its voyage and the receiver of the cargo made frantic efforts to locate the vessel and finally an advertisement was caused to be made on 8.11.1999 in the Lloyds List, enquiring about the vessel's whereabouts. It appears that the vessel called at St. Vincent, Cape Verde island between 29th August, 1999 and 4th September, 1999 and subsequently at Laos on 18th October, 1999. The above ports were not the Port of Call as the vessel did not carry any cargo to be discharged for delivery in the said Ports. Probably, the vessel had been kept at sea, allegedly drifting in the area between Senegalese Coast and Cape Verde Islands.
2. The Officers of the Customs Department, Cuddalore, on 21.12.1999 spotted this Vessel bearing a different name Gloria Kopp anchored at about 6.5 nautical miles off Bommiyarpalayam Shore, near Pondicherry Coast. The Officers board the vessel in the afternoon of 22.12.1999 and noticed that the vessel was loaded with steel products.
3. M/s. Inter Cargo Insurance Company acting as underwriters and agents of M/s. T.W. Metals Limited (Owners of the Cargo) filed a suit in the admirality jurisdiction of this Court in C.S.No.1020 of 1999 on 23rd December, 1999 under Order 4, Rule 1 read with Order 42, Rule 2 of the Original Side Rules against the defendants viz., (i) the owners of the vessel of all persons interested in the vessel, (ii) Nominator Shipping Corporation, Liberia-, (iii) Chairman, Madras Port Trust, (iv) Deputy Port Conservator. Pondicherry and (v) Commander, Coast Guard, Chennai Port, for the reliefs namely; (a) decree against the defendants making them jointly and severally for a sum of USD 1,038,735.62 equivalent to Indian Rupees 4,51,85,000 calculated at the rate of 1 USD = Rs.43.50, with further interest at 18% per annum till the date of payment; (b) Arrest of the Ship MV Gloria Kopp alias Kobe Queen and detention of the vessel until the claim of the Insurance Company (Plaintiff) is satisfied in full; (c) for the sale of the vessel M V Gloria Kopp/Kobe Queen with tackles, apparels, boats, machineries and furnitures, banker cargo and to adjust the sale proceeds towards the suit claim. On 24.12.1999, this Court passed an interim order in application No.4591 of 1999 arresting the vessel. A Receiver was appointed and he was directed to inspect the cargo and take possession of the same.
4. On 11th February, 2000, the first respondent herein viz., the Chief Officer of the vessel on his behalf and on behalf of the crew of the vessel, filed an application under Order 14, Rule 8 of Original side Rules read with Section 125 of the Merchant Shipping Act, 1958 application No.633 of 2000 praying the Court to direct the Advocate Receiver to pay the wages to them out of the proceeds of the sale of the vessel.
5. The ship was towed off coast of Pondicherry to Chennai by the Coast Guard. The learned single Judge on 14.1.2000 in application No.4594 of 1999 ordered the sale of the ship. On 25th February, 2000, the learned single Judge ordered that the earlier order of sale of ship not to be given effect to.
6. As per the Order of this Court dated 25.2.2000, investigations were taken up by the Joint Investigation Team, comprising of Customs, DRI and NCB. While investigations were in progress, on 23.3.2000, M/s. Inter Cargo Insurance Company which has filed the Civil Suit, moved this Court, for withdrawing the claim of arrest and sale of the vessel, (i.e.,) the reliefs sought for in para 22 (b) and (c) of the plaint.
On 27.3.2000, O.S.A.42 of 2000 filed against the application No.815 of 1999 by the appellant herein viz., Commander of Coast Guard, came for hearing before a Division Bench of this Court, At that time, the order of seizure of the vessel and the Cargo by the Superintendent of Customs, Chennai already made was brought to the notice of the Division Bench, In the said appeal, the Division Bench ruled that in the light of the subsequent developments the impugned order in that appeal O.S.A.42 of 2000 has become unsustainable and consequently the same was set aside. The Bench further ruled that the arrest of the vessel and Cargo ordered by the learned single Judge ceased to be in force.
7. The first respondent viz., the Chief Officer in the vessel took out three applications in the suit,
(i) Application No.590 of 2000 under Order 14, Rule 8 read with Order 40 of the Original Side Rules, praying the Court to appoint a Receiver in whose presence, sale of the Cargo, unloading the Cargo and further investigation of the Cargo and the ship should be done by the Government Agencies.
(ii) Application No.2449 of 2000 praying the Court to fix a time frame not beyond 30.6.2000 to complete the investigation of entire ship by all the Government Agencies either individually or collectively or in whatever manner the Government Agencies want.
(iii) Application No.2450 of 2000 praying the Court to pay the wages from the sale proceeds of the Cargo or alternatively direction directing the sale of the ship and pay the wages from the sale proceeds as a first charge.
8. In the common affidavit filed in support of all the three applications, first respondent viz., the Chief Officer of the vessel submitted that himself and the other crew have been on the Board from May 1999 and that they have not been paid their wages. According to them, they have no objection for the' sale of Cargo in public auction which was fixed on 18.6.2000 and inasmuch as the plaintiff, the Insurance Company had given up its right on the Cargo and has preferred to take a personal decree against the owners of the vessel, they prayed that their wages may be paid out of the sale proceeds of the cargo taking as first charge on the sale proceeds.
9. On behalf of the appellants, the Deputy Commissioner of Customs (Legal), Customs House, Office of the Commissioner of Customs filed an affidavit denying various allegation made and rights claimed, by the first respondent. As the prayers 'B' and 'C' in the plaint were given up, the suit which was originally a suit in rem, became a suit in personam. A plea has also been raised in the said affidavit to the effect that the cargo had already been confiscated pursuant to the orders of seizure and brought for sale and that since the vessel is also under an order of seizure and confiscation proceedings underway, there is no question of the vessel being brought to sale. In the said affidavit, it was reiterated that the crew having not filed any independent suit, they cannot have any relief as regards their claim for the wages in the suit filed by the persons claiming to be in the shoes of the cargo owners. The vessel in fact changed its name in the mid sea and owners of the vessel erstwhile or the present have not surfaced. According to the Customs department as set out in the affidavit, no question of making any first charge on the vessel arises.
10. Learned single Judge by an order dated 7th September, 2000 disposed of the said three applications by a common order. The learned single Judge framed three issues for consideration viz.,
(i) Whether a time schedule has to be framed to complete the investigation of the entire ship by the Government Agencies ?
(ii) Whether any Receiver has to be appointed for sale of the Cargo, unloading the cargo and further investigation of the cargo and ship ?
(iii) Whether an order for sale of the ship for payment of wages to the crew has to be made ?
With regard to the first two issues, the learned Judge came to the conclusion that considering the fact that the investigation and interrogation are over, coupled with the fact that the cargo had already been sold for a reasonable price, the appointment of a Receiver is absolutely unnecessary and no time frame need be fixed to complete the investigation as it is unnecessary.
11. With regard to the question as to whether the first respondent can invoke Section 146 of the Merchant Shipping Act, 1958 and whether filing of an application in the present suit claiming wages would be sufficient, the learned single Judge came to the conclusion that the decision of this Court in Udaya Shankar, P., v. Andhra Bank, 1983 (96) L.W. 502 wherein the Court held that the specific provision in the Act enables a seaman to resort to such a process and such a process need not necessarily be an independent civil suit or any other independent and separate proceeding and in appropriate cases it could be a step in aid in proceedings already pending at the instance of another party, would apply to this case as well. Taking that view, the learned single Judge held that whatever wages they are entitled to, they must be paid and it is not necessary that the crewmen should be driven to the necessity of filing a civil suit to get their wages. The learned single Judge ruled that in view of various provisions in the Customs Act, and when the Government has got power to confiscate the vessel after complying with various provisions of the Act and that the proceedings are already on, the sale of ship through Court by appointment of Receiver is not feasible. In that view of the matter, the learned single Judge was not inclined to order sale of the vessel and observed that it is open to the Customs authorities either to confiscate or sale of vessel in accordance with law if they are empowered to do the same. The Court ruled,
'the coast guard authorities and the Customs authorities are directed to pay the wages lawfully due to the crew members on board of the ship within a period of two weeks from this date and they should be deputed to their country .... and expenses also should be met by the Government Agencies out of the funds retained by them after selling the cargo ...'
12. Being aggrieved by the order of the learned single Judge directing payment of wages out of the sale proceeds of the Cargo, 6th respondent in the application No.2450 of 2000 viz., the Commander of Coast Guard, Chennai filed the appeal in O.S.A.No.309 of 2000.
13. Similarly, the plaintiff in the suit also filed an appeal against the very same order and that has been numbered as O.S.A.No.350 of 2000.
14. When the appeal was taken up Sri.Sampathkumar, learned counsel appearing for the first respondent Chief Officer in the vessel and the crew frankly conceded that the order of the learned single Judge directing payment of wages due to the Chief Officer and the crew out of the sale proceeds of the Cargo is erroneous as the maritime lien of the seamen is only against the ship.
15. In view of this, we can straight away hold that O.S.A.No.350 of 2000 filed by the plaintiff/Insurance Company has to be allowed.
16. The learned Additional Solicitor General appearing for the appellant raised the following contentions;
(a) The Merchant Shipping Act, 1958 is made applicable only to those seamen who come under the definition of Section 3(42) and as far as the present case is concerned, the first respondent and the crew do not come under the definition of Section 3(42) and hence they cannot invoke the said provisions of the Act.
(b) The proceedings for recovery of wages by seamen can be instituted in a civil Court only where the owner of the ship has been declared as invalid or ship is under arrest or sold by authority of any Court or where the Magistrate refers a claim to the Court. According to the Additional Solicitor General, the conditions are not satisfied and the first respondent could have only instituted a suit and it is not open to them to file an application claiming the wages due out of the sale proceeds of the ship.
(c) By an order dated 26.9.2000, the Commissioner of Customs by virtue of powers conferred on him under the Customs Act, passed final orders confiscating the ship in question and in view of that, the first respondent and seamen cannot make any claim against the ship.
(d) The first respondent was served with copy of the said order and it is made known to him that as against the said order, an appeal would lie under Section 129(A)(1) of the Customs Act 1962 to the Special Branch of Customs Excise and Gold Control Appellate Tribunal, New Delhi or southern regional bench of the Tribunal depending upon the nature of the claim by the aggrieved party. No appeal has been filed before any Forum questioning the correctness of the said order. The order of confiscation cannot be set aside or declared to be invalid or unlawful in these proceedings before this Court.
17. The first question is whether the first respondent and the crew of the ship in question can invoke the provisions of Merchant Shipping Act, 1958 or in other words whether they come under the definition of 'seamen' as defined under Section 3(42) of the said Act.
18. As referred supra, the vessel originally known as MV KOBE QUEEN1 and later known as GLORIA KOPP was registered in Panama. There is no dispute that all those who claim for wages before this Court are not Indian citizens or in other words, we are now concerned with the case of a ship other than Indian ship with the Chief of the ship and crew who are not Indian citizens. The contention of the learned Additional Solicitor General is that the reading of Section 3(42) of the Merchant Shipping Act, 1958, which defines the term seamen and Sections 86 to 117 particularly Sections 86, 86A, 102, 114 and 115 could only show that the Act will apply only to such seamen, who are engaged or employed under the provisions of this Act. Section 3(42) reads thus,
'Seamen' means every person (except a Master, Pilot or Apprentice) employed or engaged as a member of the crew of the ship under this Act, but in relation to Sections 178 to 183 (inclusive) includes a Master;' (Italics supplied)
19. The contention of the learned Additional Solicitor General is that the words 'under this Act' (underlined) qualify and referable only to the words 'employed or engaged as member of the crew', or in other words the words under this Act do not refer to ship. To put it in a different way, according to the learned Additional Solicitor General, the correct way of understanding the section is to read as 'a person employed or engaged as a member of the crew, under this Act, of a ship.'
20. We do not accept this submission of the learned Additional Solicitor General, this is because of the following reasons.
(i) If the provision has to be read and understood in the manner as put forward by the learned Additional Solicitor General, the Legislature would certainly have worded in that manner only. In this context, we would like to point out Section 99 which prohibits engagement of seamen in India Board without discharge certificate. That section reads thus,
'No person shall engage or carry to sea any seaman under this Act in any ship...'
(ii) As mentioned supra, the learned Additional Solicitor General referred to Section 86 to 117 in support of the above contention. A careful reading of these provisions show that these provisions only refer to required qualification for seamen and procedure to be followed in engaging a seamen. It is not as if, in the Act, a Commission or Board has been constituted for recruiting seamen or in other words, there is no recruiting Agency in that Act to engage or employ the seamen.
(iii) The sections 86 to 117 referred supra deal with three types of cases;
(a) Recruitment of seamen by the Indian ships in India;
(b) Engagement of seamen outside India for Indian ships;
(c) Engagement of seamen by Master of Ship other than Indian ships.
If the submission of the learned Additional Solicitor General is to be accepted, then the resultant position will be that if an Indian citizen is employed in a foreign port, in a foreign ship, he would not come within the definition of 'seamen'. But on the other hand, a foreign ship engages a foreigner (who is not an Indian Citizen), in any of the Ports in India, then he will come under the definition of 'seamen' and he can have the benefits under the Act.
21. In this context, we refer to the ruling of the Bombay High Court reported in P.B.Abdul Rehman v. Director General of Shipping, 1994 (1) B.C.R. 134 the Division Bench of Bombay High Court (consisting of Smt.Sujata Manohar and S.H.Kapadia, JJ) had occasion to consider the Section 3(42). The Division Bench after pointing out that the Act not only applies to Indian vessel but also to foreign vessel while they are in Indian water, ruled thus,
'4. The term 'seaman' is defined under section 2(42) to mean 'every person (except a master, pilot or apprentice) employed or engaged as a member of the crew of a ship under this Act, but in relation to sections 178 to 183 (inclusive) includes a master.' Therefore, the term 'seaman' covers every member of a ship's crew. It was submitted before us that this has a reference only to the crew of an Indian Ship. There is, however, no warrant for such an interpretation. 'A ship under this Act' cannot be interpreted to mean only a Ship which falls under section 2(1) of the Merchant Shipping Act, 1958. Section 2(2) covers foreign ships also. The term 'Seaman' is freely used throughout the Act and the Act applies not merely to Indian Ships but also to foreign ships so long as they are in the Indian territorial waters. Therefore, it would not be proper to restrict the definition of 'Seaman' only to the crew of an Indian Ship. It will extend to crews of all ships to which the provisions of the Merchant Shipping Act, 1958 apply. In fact, the phrase a 'ship under this Act' has a reference to the definition of ship under Section 2(45). A ship is defined under this section as follows:
Section 2(45)...
'ship' does not include a sailing
vessel.'
Therefore, crew of all ships which are covered under the Act come under the definition of 'Seaman'. It was also submitted that the petitioners are not seamen under the Act because they do not possess a CDC under this Act. This contention cannot be accepted in view of the wide definition of the term 'seaman' under section 2(42). The first contention, therefore, of the respondents has to be rejected.
22. We hold that the Chief of the ship and the crew can invoke the provisions of the Merchant Shipping Act as they are the seamen in a ship under the Act. Or in other words, the words 'Under this Act' would refer and qualify the words 'the ship' and not 'employed or engaged as a member of the crew'.
Here in this case, the ship in question comes within the definition of the word 'ship' as occuring in section 3(45) of the Act.
23. The next contention of the learned Additional Solicitor General is that the Chief Officer of the vessel and crew have only resort to filing of a suit and further even assuming the application claiming for wages is maintainable as claimed, inasmuch as the suit was not one in rem pending on the date when the learned Single Judge passed the order, the application filed by the 1st respondent should have been dismissed.
24. The 2nd respondent/Insurance Company filed a suit in rem C.S. No.1020 of 1999 under Order 42, Rule 2 of the Original Side Rules against the. appellant and respondents 3 to 6 herein, invoking the admiralty jurisdiction of this Court. In Application No.4591 of 1999, this Court passed an Order of arrest of ship in question on 24.12.1999. Shortly, thereafter, ie.. in the 2nd week of February, 2000, the 1st respondent herein filed Application No.633 of 2000, claiming their wages under Order 14, Rule 8 of the Original Side Rules read with Section 146 of the Merchant Shipping Act. An application filed by the 2nd respondent/Insurance Company, withdrawing the claim B and C in the plaint viz., for arrest of the ship and for sale of the ship, a Division Bench of this Court on 27.3.2000, allowed the said application, with the result, the suit in rem became a suit in personam.
25. The 1st aspect to be considered is as to whether the Act contemplates the 1st respondent and the crew filing only a suit to claim their wages or even application in the pending suit is sufficient.
26. Section 146 of the Merchant Shipping Act, 1958 reads thus:
' A proceeding for the recovery of wages due to a seaman or apprentice shall not be instituted by or on behalf of any seaman or apprentice in any civil court except where
(a) the owner of the ship has been declared insolvent
(b) the ship is under arrest or sold by the authority of any court;
(c) a magistrate refers a claim to the Court.
27. First, we have to consider what exactly the Proceeding would mean. The word 'Proceeding' has been defined in Section 31 of the Merchant Shipping Act, 1958 as 'proceeding in relation to Sections 178 to 193 (inclusive) includes any suit, appeal or application.'
Inasmuch as the Act is silent as to how the word Proceeding occurring in Section 146 has to be understood, we have to consider as to how the said word is understood and employed in legal parlance.
The Word 'Proceeding' has not been defined in the General Clause Act.
Oxford Dictionary explains the term 'Proceeding' as 'an action taken in a Court to settle a dispute.'
The Black's Law Dictionary, Seventh Edition, Edited by Bryan A. Garner, Editor-in-Chief, gives the meaning of the word 'Proceeding' as 'the regular and orderly progression of a law suit. Including all acts and events between the time of commencement and the entry of judgment; any procedural means for seeking redress from a tribunal or agency'.
Words and Phrases (Legally Defined) [2nd Edition] Butterworths Publication explains the term 'Proceedings' as:
' The term 'proceeding' is frequently used to note a step in an action, and obviously it has that meaning in such phrases as 'proceeding in any cause or matter'. When used alone, however, it is in certain statutes to be construed as synonymous with, or including 'action' [Halsbury's Laws (3rd Edition) 5, 6]
The term 'Legal Proceedings' is explained as :
'Legal Proceedings' mean prima facie that which the words would naturally import - i.e., legal process taken to enforce the rights of the Shipowner, Runchiman & Co. v. Smyth & Co., 1994 (20) T.L.R. 625, per Lord Alverstone,C.J., at P.626.'
The said Dictionary also refers to a Book 'The law of Pleading under the Code of Civil Procedure' by Edwin E. Bryant, and quoted as under:-
' Proceeding' is a word much used to express the business done in courts. A proceeding in Court is an act done by the authority or direction of the court, express or implied. It is more comprehensive than the word 'action', but it may include in its general sense all the steps taken or measures adopted in the prosecution or defense of an action, including the pleadings and Judgment.'
28. This Court is of the considered view that the term 'proceeding' would only mean a legal process taken to enforce the rights.
29. Hence, we are in entire agreement with the learned Single Judge that the provisions of the Act enables a seaman to resort to such a process and such process need not necessarily be an independent civil suit or any other independent and separate proceeding and in appropriate cases, it could be a step in aid in proceedings already pending at the instance of another party.
30. We also point out that in the absence of any express provision in the Merchant Shipping Act, 1958, restricting the meaning of the term 'Proceeding' with reference to Section 146 of the said Act to suits/applications independently instituted by the Seamen, this, court is inclined to take the view that the word 'Proceeding' would include an application like the one filed in a pending suit (not initiated by them) by the Seamen under Order 14, Rule 8 of the Original Side Rules read with Section 125 of the Merchant Shipping Act. 1958.
31. For Seamen, to invoke the provisions of Section 146 of the Merchant Shipping Act, they have to satisfy two conditions, (as far as the present case is concerned) viz., (i) there must be an order or arrest of the ship/vessel on the relevant date; and (ii) they should have instituted a proceeding for recovery of wages.
32. There is no dispute that when the 1St. respondent and the crew filed the application in February, 2000, the suit was one in rem and the Court exercising admiralty jurisdiction. It has to be noted, the Section specifies the arrest of the ship to be in force only at the time of institution of the proceeding. In other words, the Section is not to the effect that even at the time of considering the said application, the Order of the Court arresting the ship should be in force and the suit to be one in rem. In the absence of any specific provision under the Merchant Shipping Act, imposing restriction for consideration of the application by the Court only during the period when the ship was under arrest, we are inclined to take the view that notwithstanding the fact that the order of arrest of the ship ceased to be in force by virtue of the 2nd respondent herein withdrawing the reliefs 'b and c' (para-22) in the plaint, and notwithstanding the suit which was originally suit in rem became suit in personam, this Court continues to have power, authority and jurisdiction to consider the said application on merits and dispose it of, as the proceeding/application for wages instituted when the ship was under arrest and the suit was one in rem. This view of ours gains support from the Ruling of the Supreme Court reported in M.V. Elisabeth v. Harwan Investment & Trading Pvt. Ltd., Goa, wherein the Apex Court ruled as under:
'Where statutes are silent and remedy has to be sought by recourse to basis principles, it is the duty of the Court to devise procedural rules by analogy and expediency. Actions in rem, as seen above, were resorted to by Courts as a devise to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res; or, in his absence, proceed against the res itself, by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res. This is a practical procedural device developed by the Courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage, but also in cases of other maritime liens and claims arising by reason of breach of contract for the hire of vessels or the carriage of goods or other maritime transactions, or tortious acts, such as conversion or negligence occurring in connection with the carriage of goods. Where substantive law demands justice for the party aggrieved, and the statute has not provided the remedy, it is the duty of the Court to devise procedure by drawing analogy from other systems of law and practice. To the courts of the 'civil law countries' in Europe and other places, like problems seldom arise, for all persons and things within their territories (including their waters) fall within their competence to deal with. They do not have to draw any distinction between an action in rem and an action in personam.
It is likewise within the competence of the appropriate Indian Courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found with their jurisdiction. The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed. Absent such curtailment of jurisdiction, all remedies which are available to the Courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the concerned High Court. This power of the Court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before Judgment.
The High Courts in India are superior courts of record. They have original and appellate jurisdiction. They have inherent and plenary powers. Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers. See Naresh Shridhar Mirajkar v. State of Maharashtra, . As stated in Halsbury's Laws of England, 4th Edition Vol.10, para 713:
'Prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court.' '
It is further held as under:-
'Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue against the owner as in any other suit. The arrest of the vessel while in Indian Waters by an order of the concerned High Court, as defined under the Merchant Shipping Act, 1958 (Section 3(15) attracts the jurisdiction of the competent court to proceed with the trial, as in the case of any other suit, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel.
33. In this view of the matter, as far as the issue is concerned, we hold that the term 'Proceeding' would include an application under Order 14, Rule 8 of the Original Side Rules read with Section 125 of the Merchant Shipping Act, 1958 and that the said application can be considered on merits by the Court even after the suit ceases to be one in rent, when once at the time of Institution of the proceeding there was an order of arrest in force and the suit was one in rem.
34. The next point to be considered is what is the maritime lien and whether the order of confiscation passed under the Customs Act, 1962 would defeat such a claim.
The ordinary meaning of the term lien according to the Oxford Dictionary is a right to keep possession of the property belonging to another person until a debt owed by that person is discharged.
The Black's Law Dictionary, Seventh Edition gives the meaning of the term 'lien' as 'a legal right or interest that a creditor has in another's property, lasting until a debt or duty that it secures is satisfied.' The Dictionary defines maritime lien as a lien on a vessel, given to secure the claim of a creditor who provided maritime services to the vessel or who suffered an injury from the vessel's use.
The term 'secret lien' is explained as a lien not appearing of record and unknown to purchasers; a lien reserved by the vendor and kept hidden from third parties, to secure the payment of goods after delivery.
35. The Supreme Court, in a case reported in M.V. AL. Quamar v. Tsavliris Salvage (International) Ltd., AIR 2000 SCW 3101 had an occasion to deal with the nature of a right viz., maritime lien and observed thus:-
' Be it noted that there are two attributes to maritime lien : (a) a right to a part of the property in the res; and (b) a privileged claim upon a ship, aircraft or other maritime property in respect of services rendered to, or injury caused by that property. Maritime lien thus attaches to the property in the event the cause of action arises and remain attached. It is, however, inchoate and very little positive in value unless it is enforced by an action. It is a right which springs from general maritime law and is based on the concept as if the ship itself caused the harm, loss or damage to others or to their property and this must itself make good that loss. (See in this context 'Maritime Law' Christopher Hill. 2nd Edn.)
36. As we have seen above, the Apex Court has indicated that the Textbook 'Maritime Law By Christopher Hill' can be referred to for further understanding about the nature of the right.
We quote what the said Author has stated with reference to the right viz.. Maritime lien:
' A maritime lien is a proprietory interest in the 'res' it detracts from the absolute title of the 'res' owner. There has been a division of judicial opinion as to whether it is a right in the property (a jus in re) or a right against the property (a jus in rem) only. It is submitted that the Hen is both, a right in the property perfected by action (in rem) against it.
Thus, a claimant who holds a maritime lien may bring an action in rem against the ship under Section 2(3), even though the ownership of the 'res' may have changed since the cause of action arose. The plaintiff an unqualified right to take proceedings in rem against the ship, irrespective of ownership.
It is important to realise that whether or not a particular cause of action confers upon the claimant a maritime lien is determined by reference to the common maritime law. Nowhere will this question be answered in the wording of any statute, either the Administration of Justice Act, 1956 or any previous statute. In English Law, it is customary to regard the following causes of action as conferring a maritime lien: (i) damage resulting from a collision; (ii) bottomry (and respondentia) (it is interesting to note that the Admiralty Court has not heard a case concerning bottomry for many years and the Admiralty jurisdiction in this type of claim might be regarded as obsolete); (iii) salvage (see the Tequita below which although not a decision of an English Court, illustrates this point); (iv) Wages of seamen (see the Hal cyan Skies below); (v) ship's Master's wages and disbursements (this is a product of statute rather than the common law; whether the Admiralty court would willingly entertain a claim for wages brought by the Master or crew of a non-British ship would, in olden time, have been contingent upon the consent of the parties, or at least someone representing their native country (these days an English Court would require to know that notice to the relevant consul had been given before it would agree to issue an arrest warrant); and (vi) fees and expenses incurred by a receiver of wreck.
The damage lien holder, on the other hand, being a person who has suffered loss or damage by reason not of broken contract but as a result of another's wrongful or tortious act has got, by the very nature of the incident, this benefit of such forewarning or foreknowledge of the likelihood of such loss or damage; the innocent, injured passenger after collision at sea is an obvious example. That damage lien holders should rank for priority, generally speaking, before the holders of contractual liens is not only logical but also is the basic rule.
In relation to the ranking of claims it is interesting to note that salvage has priority over (a) earlier salvage, (b) earlier damage, (c) earlier wages, (d) earlier claims to forfeiture by the crown, (e) subsequent possessory liens, (f) necessaries, and (g) mortgages. A salvors lien ranks first (and in reverse order of time if there is more than one salvor - ie., later before earlier) simply because without the emergency services he renders there would be no funds preserved out of which anybody could be satisfied.
The 1993 Convention does not define maritime liens but only lists them under Article 4 (Convention liens), namely:-
(a) Master and crew wages including costs of repatriation and social insurance contributions;
(b) claims for loss of life of personal injury in direct connection with the operation of the vessel;
(c) salvage;
(d) claims for port, canal and other waterway dues and pilotage dues;
(e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passenger's effects carried on the vessel.'
37. The other notable and well known Book is 'Maritime Lien and Claims By William Tetley'. We would like to mention here what the Author has opined in his Book :
' A traditional maritime lien is a secured right peculiar to maritime law (the lex maritima). It is a privilege against property (a ship) which attaches and gains priority without any court action or any deed or any registration. It passes with the ship when the ship is sold to another owner, who may not know of the existence of the lien. In this sense the maritime lien is a secret lien which has no equivalent in the common law, rather it fulfills the concept of a 'privilege' under the civil law and the lex mercatoria.
The seaman's lien is a true traditional maritime Hen. They key is service to the ship; the lien is not dependent on who hired the seaman, be it the owner of the charterer. Thus seamen were , granted a Hen even where they were employed by person who had stolen the ship, there being no complicity on their part; Similarly a master had a Hen despite having been hired by a fraudulent possessor. This is confirmed in Section 21(3) of the Supreme Court Act, 1981 which is the statutory recognition of considerable judicial findings.
Seamen in the U.K. have been traditionally treated with respect and care, if not with benevolence, and in consequence, even after the arrest of the ship, the salaries of the chief officer and the chief engineer 'doing necessary maintenance work' have been held to be proper items of Marshal's costs.
Subsistence monies incurred after the arrest and crew repatriation expenses have also been ordered as a first charge against the ship, probably as wages rather than custodia legis. Compensation for termination of the contracts of the master, officers and crew, as well as repatriation expenses, deductions for taxes and crew's welfare funds and union does have all been granted as emoluments although a number arose after arrest. They thus ranked ahead of the mortgage and necessaries.
Seamen, throughout history, have been treated with respect, admiration and gratitude after the fact, but often harshly and unfairly at the moment. The various ancient sea codes attempted to provide seamen with rights against their employers and over the centuries, maritime liens evolved in favour of seamen against their employers and over the centuries, maritime liens evolved in favour of seamen against the ship. Finally seamen were given a lien second only to custodia legis and court costs. (Lawyers somehow always managed to protect themselves and have never required the same solicitude).
Seamen have had and still have a high priority maritime lien under the general maritime law in the U.K. It is a lien which follows the ship no matter who is the owner. It survives even against a foreign purchaser.
One of the characteristics of maritime liens is that, once they come into existence, they follow the ship (droit de suite) into whosesoever hands it may come. In order, therefore, to answer the question 'who can bind the ship' in the case of a maritime lien, one need only be concerned with that moment in time the actual claim arose. In order to answer the question 'who binds the ship' in the case of-a statutory right in rem two moments in time are relevant; when the cause of action arose and when the action was brought.
It is clear that if the owner, his servants or his agents are in charge of the ship when the maritime lien arises, then the ship is bound.
The lien continues even the ship taken legally from an owner by requisition:-
Where a ship is taken legally from an owner by requisition, a difficult question arises but the answer follows logically; the ship should be bound. This is because maritime liens are against the ship. It does not matter who is in control as long as that person is legally in control. The owner who gives up his ship by requisitioning under law to the government, does so because he believes in the social contract and complies with the law of society. The owner whose ship is requisitioned has of course a claim at the end of the requisition period for the damage done to the ship and the obligations of the ship. Normally, as well, a requisitioned ship will be transferred into the name of the government who will be bound in personam and the ship in rem, if sovereign immunity does not apply.
The fact that a ship is requisitioned should not affect the claim of third parties against the ship for maritime liens being collision damages, salvage, wages of master's disbursements.
In any case in which there is a maritime lien or other charge on any ship, aircraft or other property for the amount claimed, an action in rem may be brought in the High Court against that ship, aircraft or property.
Maritime liens are a common law concept in India. India nevertheless follows the laws of the U.K. in respect of maritime liens.
In dealing with cases relating to maritime liens, Indian Courts recognise the law of flag. ie.. law of the State where the ship is registered.'
38. With reference to maritime lien, the legal position appears to be that seamen had always higher priority maritime lien and it follows the ship, no matter who is the owner. In fact, the Apex Court in M.V. AL Quamar v. Tsavliris Salvage (International) Limited, AIR 2000 SCW 3101 has noted that there are two attributes to maritime lien viz., (i) right over a part of the property in the res; (ii) a privileged claim upon a ship in respect of services rendered to, or injury caused by that property. Maritime lien attaches to the property in the even the cause of action arises and remains attached. It is a right which springs from general maritime law and it is based on the concept as if the ship itself caused the harm and that itself must make good that loss. A lien continues even if the ship is taken legally from a owner by requisition.
39. As far as the present case is concerned, pending the above appeal, the Customs Authorities issued a show cause notice dated 31.8.2000 under Section 124 of the Customs Act, 1962, calling upon the persons concerned to reply within ten days from the date of receipt of the said notice, as to why the vessel M.V. Gloria Kopp 8 Kobe Queen I valued at Rupees One Crore approximately should not be confiscated under Section 115(2) of the Customs Act, 1962 and as to why penalty should not be imposed on him/them under Section 114 of the said Act.
40. This notice was admittedly served on the crew of the vessel in question. The crew of the vessel engaged a counsel by name Mr.K.R. Muralai, Advocate, and the said counsel sent a reply dated 8th September, 2000 for the said show cause notice, objecting to the confiscation. Suffice for us to quote the relevant paragraph which reads thus:-
'You are requested to refer to various provisions of the Merchant Shipping Act, which will give you an idea about crews obligations to the Master of the vessel as well as the owner of the vessel. Further, your action to confiscate the ship at the expense of the crew (as they have charge over the vessel for the wages} and penalise the workers for no fault on their part is against law and the principles of natural justice. {Italics supplied}
41. At this juncture, it may be pointed out that no claim was made by the crew that confiscation if any, can be only subject to their lien. What was claimed was that the confiscation was against law and the principles of natural justice. On 26.9.2000, the Commissioner of Customs (c) passed an order, confiscating the vessel M.V. Gloria Kopp @ Kobe Queen absolutely under Section 152 of the Customs Act. As against this Order of confiscation, an appeal would lie to the Appellate Authority under the Customs Act, 1962. The first respondent or the crew have not so far filed an appeal to set aside the said Order. However, the learned counsel appearing for the first respondent/crew contended that the validity or otherwise of the Order of confiscation can be questioned by them in this appeal as this Court has to consider the nature of the right viz., maritime lien for the disposal of this appeal and according to the counsel, no separate proceedings need be instituted by the 1st respondent or the crew of the ship in question, questioning the validity of the order of confiscation. But, so far as the present case is concerned, it has to be noted that all the crew left abroad ie., they have gone back to their native country. Owner-of the vessel is not known. In this appeal, this Court is considering the maritime lien of the crew viz., their claim for wages for a period of two years. In these circumstances, this Court feels that the ends of justice would rather demand this Court considering the nature, scope and effect of the confiscation order only to find out whether such order defeats the claim of maritime lien by the crew or in other words the vesting with the Government is subject to the (maritime lien) claim of crew for their wages. However, it is made clear that this Court is not considering the validity of the Order.
42. There is yet another aspect to be pointed out. The first respondent filed an application in Application No.2450 of 2000, praying the Court to direct sale of the ship and pay their wages from the sale proceeds. The learned Single Judge held that he is not inclined to order sale of the vessel and it is open to the Customs Authorities either to confiscate or sale of the vessel in accordance with law if they are empowered to do the same.
43. Learned counsel appearing for the 1st respondent has conceded before this Court that wages cannot be paid to the crew out of the sale proceeds of the cargo. In those circumstances, the first respondent should have filed separate appeal or cross objection in Appeal No.309 of 2000, making a request to this Court to consider the claim of the first respondent viz., to sell the ship and to pay the wages. The proceedings to confiscate the ship were under consideration by the Customs Authorities at the time when the learned Single Judge passed Orders, and subsequently, when the crew were called upon to reply to the show cause notice, it was followed by an order of confiscation. Notwithstanding that, we are considering the claim of the crew for their wages against the ship.
It has to be pointed out that before this Court the only objection or nature of attack on the order of confiscation is that the confiscation order will not affect the right of the 1st respondent and the crew to claim wages or in other words their wages should be paid out of the sale proceeds of the ship.
44. Coming back to the discussion and the merits of the case, the next aspect to be considered is what is the effect of confiscation.
The term confiscation has not been explained or defined in the Customs Act, 1962.
It is needless to mention that confiscation is different from requisition. In the case of requisition, by an order, a claim is laid to the use of property, house or materials, by the Government for military or public use. Such an Order is not by way of penalty/punishment. Such property does not vest with Government.
The Black's Law Dictionary, Seventh Edition, defines the term 'confiscate' as :
To appropriate property as forfeited to the ' Government; to seize property by authority of law'
The Law Lexicon by P. Bamantha Aiyar, explains the term as :
To appropriate private property to the public treasury by way of penalty; to deprive of property as forfeited to the State '
Wharton's Law Lexicon by A.S. Oppe {OF THE INNER TEMPLE, BARRISTER-AT-LAW), gives the meaning as :
' the condemnation and adjudication of property to the public treasury, as of goods seized under the Customs Act. -
45. As to what is the nature of the Order, confiscating the property, and what is the effect of the same, can be understood from the relevant provisions in the Act and the Rulings of the Apex Court.
Chapter XIV of the Customs Act, 1962 deals with confiscation of goods and imposition of penalties.
Section 111 of the Act is to the effect that the goods enumerated in that section brought outside India shall be liable for confiscation.
The next relevant section is section 115, which deals with confiscation of conveyance. Section 124 lays down that no order confiscating any goods from imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing and giving opportunity for him to make representation. Section 126 deals with what is the effect of confiscation, which reads thus,
'When any goods are confiscated under this Act, such goods shall thereupon vests with the Central Government.'
This Section corresponds to Section 184 of the Sea Customs Act 1898 which reads:
' When anything is confiscated under Section 182, such thing shall thereupon vest in Government.'
In the decision reported in Sewpujanrai I. Ltd., v. Collector of Customs, the Supreme Court observed thus:-
'The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in rem and the penalty is enforced against the goods whether the offender is known or not known the order of confiscation under Section 182, Sea Customs Act, operates directly upon the status of the property, and under Section 184 transfers an absolute title to Government. Therefore, in a case where the Customs Authorities can proceed only against the goods, there can be no question of applying Section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant Company as respects Section 8(3), the remedy under the Sea Customs Act against the smuggled goods can not be barred; when on the facts of the case Section 23 can have no application, no question of prejudicing its provisions by the adoption of the procedure under the Sea Customs Act can at all arise.'
46. In Collector of Customs v. D. Bhoormull, of the Judgment, the Supreme Court observed thus:-
' A reading of Section 167(8) and the related provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation under the first part of the entry in column (3) of clause (8) of the Schedule, is enforced against the goods irrespective of whether the offender is known or unknown. But imposition of the other kind of penalty, under the second party of the entry in column 3, is one in personam; such a penalty can be levied only on the 'person concerned' in any offence described in column 1 of the clause.
Goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without ascertaining who is their real owner or who was actually concerned in their illicit import.'
47. In Union of India v. Lexus Export Private Limited, , the Supreme Court reiterated the same legal position in para No.3. by observing thus;-
'The Proceedings of seizure and confiscation are proceeding in rem.'
From the provisions of Customs Act referred above and the rulings cited supra, the following would emerge:
(1) The order of confiscation is a proceeding in rem.
(2) The order of confiscation operates directly upon the status of property and transfers absolute title to the Government (i.e. vests with the Govern-ment).
Let us proceed to consider what exactly the words 'in rem' means.
The Black's Law Dictionary, Seventh Edition, edited by Bryan A. Gamer would define as,
'(Latin 'against a thing') involving or determining the status of a thing, and therefore the rights of persons generally with respect to that thing. An action in rem is one in which the judgment of the court determines the title to property and the rights of the parties, not merely as between themselves but also as against all persons at any time dealing with them or with the property upon which the court had adjudicated. R.H.Graveson, Conflict of Laws 98 (7th ed. 1974).'
Prem's Judicial Dictionary by Daulat Ram Prem would explain the term 'inrem' as,
'A judgment in rem determines the status of a person and settles the destiny of the res and in conclusive evidence of the matter actually decided. It binds the parties as well as strangers.'
Webster's Third New International Dictionary explains the term as,
'against or with respect to a thing (as a right, status, or title to property) without reference to the persons involved.'
Oxford Concise dictionary gives the meaning of the term as,
'Law made against or affecting a thing'
The Apex Court, in R. Viswanathan and others v. Abdul Wajid, held thus.
'The Roman lawyers recognised a right either as a jus in rem or a jus in per sonam. According to its literal meaning 'jus in rem' is a right in respect of a thing, a 'jus in personam' is a right against or in respect of person. In modern legal terminology a right in rem postulates a duty to recognise the right imposed upon all persons generally, a right in personam postulates a duty imposed upon a determinate person or class of persons. A right in rem is, therefore protected against the world at large; a right in personam against determinate individuals or persons. An action to enforce a jus in personam was originally regarded as an action in personam and an action to enforce a jus in rem was regarded as an action in rem. But in course of time, actions in rem and actions in personam acquired different content. When in an action the rights and interest of the parties themselves in the subject matter are sought to be determined, the action is in personam. The effect of such an action is therefore merely to bind the parties thereto. Where the intervention of the Court is sought for the adjudication of a right or title to property, not merely as between the parties but against all persons generally, the action is in rem. Such an action is one brought in the admiralty Division of the High Court possessing Admiralty jurisdiction by service of process against a ship or cargo within jurisdiction. There is another sense in which an action in rem is understood. A proceeding in relation to personal status is also treated as a proceeding in rem, for the judgment of the proper court within the jurisdiction of which the parties are domiciled is by comity of nations admitted to recognition by other courts. As observed by Cheshire in his 'Private International Law', Sixth Edition at page 109,
'In Roman law an action in rem was one brought in order to vindicate a jus in rem, i.e., a right such as ownership available against all persons, but the only action in rem known to English law is that which lies in an Admiralty court against a particular res, namely, a ship or some other res, such as cargo, associated with the ship.'
Dealing with judgments in rem and judgments in personam, Cheshire observed at page 653,
'It (judgment in rem) has been defined as a judgment of a court of competent jurisdiction determining the status of a person or thing (as distinct from the particular interest in it of a party to the litigation); and such a judgment is conclusive evidence for and against all persons whether parties, prives or strangers of the matter actually decided'......A judgment in rem settles the destiny of the res itself and binds all persons claiming an interest in the property inconsistent with the judgment even though pronounced in their absence; a judgment in personam, although it may concern a res, merely determines the rights of the litigants inter se to the res. The former looks beyond the individual rights of the parties, the latter is directed solely to those rights.......A foreign judgment which purports to operate in rem will not attract extra-territorial recognition unless it has been given by a court internationally competent in this respect. In the eyes of English law, the adjudicating court must have jurisdiction to give a judgment binding all persons generally. If the judgment relates to immovables, it is clear that only the court of the situs is competent. In the case of movables, however, the question of competence is not so simple, since there would appear to be at least three classes of judgments in rem:
(a) Judgments which immediately vest the property in a certain person as against the whole world.These occur, for instance, where a foreign court of Admiralty condemns a vessel in prize proceedings.(b) Judgments which decree the sale of a thing in satisfaction of a claim against the things itself and (c) Judgments which order movables to be sold by way of administration.'
48. Hence, once an order of confiscation is passed, it operates against all, even if they are not parties to the proceedings.
As referred supra, section 126 lays down that any goods confiscated under the Customs Act shall thereupon vests with the Central Government.
The word 'vest' is explained in Black's Law Dictionary as,
(1) To confer ownership of (property) upon a person. (2) To invest (a person) with the full title to property. (3) To give (a person) an immediate, fixed right of present or future enjoyment.'
The Oxford Concise Dictionary defines the word 'vest' as, 'give someone legal right, power, property, etc.'
As already quoted above, the ruling referred supra viz., Sewpujanrai I. Ltd.. v. Collector of Customs, lays down that once an order of confiscation is passed, it operates as transfer of absolute title to the Government. Though the meaning of the word 'absolute' is well known, for the purpose of completeness, we make the following reference.
In Black's Law Dictionary, the word 'absolute' is defined as,
I. Free from restriction, qualification or condition (absolute ownership); 2. Conclusive and not liable to revision (absolute delivery); 3. Unrestrained in the exercise of governmental power (absolute monarchy).
The Law Lexicon, edited by Justice T.P.Mukherjee gives the meaning of the word 'absolute' as, 'complete; unconditional.'
Law Lexicon & Legal Maxims by Venkataramaiya, edited by Justice M.C.Desai explains the word 'absolute' as Tree; unconditional; unrestricted; not dependent upon nor appurtenant to something else.'
Wharton's Law Lexicon by A.S.Oppe (OF THE INNER TEMPLE, BARRISTER-AT-LAW), explains the term 'absolute' as 'complete, unconditional'.
The Lexicon Webster Dictionary would give the meaning as;
'Free from restriction or limitation; unconditioned or unconditional; unqualified; perfect; pure....'
The question is since in the present case, the Customs Authorities confiscated the ship in question, whether it has vested with the Government absolutely even free from the claim by the first respondent and the crew for their wages on the ground that it is a maritime Hen which is a privileged claim.
49. The materials referred supra and the discussions would in our considered view would persuade this Court to the conclusion that by virtue of the order of confiscation the ship in question has vested with the Government absolutely and that the Chief in charge of the vessel and the crew do not have any manner of right whatsoever. Or in other words, the maritime lien had been defeated by the order of confiscation.
Christopher Hill in his well known and classic Book 'Maritime Law', after referring to what is Maritime Lien (we have already referred to in extenso in the earlier part of our Judgment}, quotes the Ruling in The Bold Buccleugh, 1852 (7) MOO PC 267. We quote that passage from the said Text Book:-
' The facts of this case are not of significance but this was one of the early leading cases which decided that a maritime lien does not require possession. It can be defined to mean a claim or privilege upon a thing (res) to be carried into effect by legal process. It is the foundation for a proceeding in rem, the legal machinery to perfect a right born at the moment the lien attaches. It can however, be defeated if the res is either (a) sold by order of a court, or (b) transferred to a foreign government who can plead sovereign immunity, or (c) the holder of the lien has been neglectful of his interest and thus deemed to have waived or forfeited his rights.'
50. From the only reported decision that has been brought to our notice, the legal position in England appears to be that maritime lien can however be defeated under certain circumstances. Three circumstances have been pointed out, the first one is, where the ship is sold by Order of a Court; the third one is, the holder of the lien has been negligent of his interest and from that waiver of his right is presumed.
We are not concerned with these two conditions.
The second one is, where transfer to a foreign Government, who can plead sovereign immunity.
Of course, as far as the present case is concerned, there is no transfer bythe owner of the ship to a foreign government. But, this is a case where theowner of the ship is deprived of the ship completely by way of penalty and theship has vested by virtue of confiscation order and the State has become theabsolute owner. Even though there is no positive provision in any of therelevant Acts, as already pointed out by us, by virtue of the Rulings of theApex Court viz., that the Order of confiscation is a proceeding in rem and thatthe property vests with the Government absolutely, we have to only hold thatthis is identical to the category where a Government claims sovereignimmunity. In other words, the Government claiming sovereign immunity andthe highest court of the country holding that confiscation results in absolutevesting of the property in the Government, are similar (i.e.,) sameeffect/consequence.
51. In the result, both the appeals stand allowed. There will be no order as to cost.
52. We make it clear, notwithstanding the decision in these appeals it is open to the Chief of the ship and the crew to question the validity of the order of confiscation since we have only considered the effect of the order as to whether the vesting is subject to the crew's maritime lien for their wages.