DIMITRIOS PAIZIS Vs. MOTOR VESSEL

JUDGEMENT

(1.) I am directed by this learned Chief Justice to try the preliminary issue of jurisdiction. That I hereby do. To that end, I briefly state the pertinent facts, recording at the outset Mr. Meghani's insistence that it be clarified that his clients, namely the 6th and 7th defendants, do not admit the plaintiffs' allegations in the pleadings. Neither party opted to lead any evidence.

(2.) THE plaintiffs' case is as follows : (A) Plaintiffs 1, 2 and 3 are Greek Nationals and possessed the entire shareholding of the 2nd defendant -Company in respect of the 1st defendant vessel (referred to hereafter as 'the Vessel') of which 22 shares are held by the 1st plaintiff, 39 shares by the 2nd plaintiff and 39 shares by the 3rd plaintiff, making an aggregate of 100 shares in respect of the Vessel. The Vessel is registered in Panama and belongs to the 2nd defendant which is a foreign company organised under Greek Law. the 3rd defendant was the President/Director of Defendant No. 2 -Company till his demise. which learned counsel state took place prior to the filing of the suit. The 4th defendant who is the widow of the 3rd defendant, is the Director/Vice President of the 2nd defendant -Company. The 5th defendant is the Secretary/Treasurer of the 2nd defendant -Company. The 6th defendant is a Company incorporated under the Companies Act, 1956 and carries on business at Bombay. The 7th defendant was at his own behest later impleaded in the suit in the circumstances set out a little later in this judgment. (B) In April 1982, plaintiffs 1, 2 and 3 sold their holdings of 100 shares in the 2nd defendant -Company to the 3rd defendant for a total consideration of U. S. 4,10,000. The 3rd defendant paid plaintiffs 1, 2 and 3 U. S. 2,85,000 and requested 6 months' time to pay the balance amount of 1,25.000. By a Transfer of Shares Agreement dated 30th April, 1982, the 3rd defendant having received the said 100 shares, agreed to pay the balance amount of 1.25,000 by 3 instalments of 35,000, 45,000 and 45,000 on or before 30th June, 1982, 30th Aug. 1982 and 30th Oct. 1982 respectively with interest at 20% per annum. (C) On 30th April 1982 the 2nd defendant -Company as owner of the Vessel executed in Greece in favour of plaintiffs 1, 2 and 3 as mortgagees, a First Preferred Mortgage of the Vessel and her appurtenances charging the Vessel and appurtenances as security for the due repayment of 1,25,000 and interest by the 3 instalments aforestated. In order to further secure the said debt of 1,25,000 and interest, the 2nd defendant -Company also executed in favour of plaintiffs 1, 2 and 3 other Security Documents including a Guarantee and assigned the freight, earnings and insurance of the Vessel to plaintiffs 1, 2 and 3. It was provided in the Mortgage document that in the event of the 2nd defendant -Company failing Court comply with the obligations contained therein and the Security Documents, plaintiffs 1, 2 and 3 would be entitled to enforce their rights under the Mortgage and Security Documents as also all their other rights as mortgagees under the mortgage and as creditors under the Security Documents and also to take possession of the Vessel and pay all costs, charges and expenses arising out of the incidental to the exercise of their rights in respect of the vessel. (D) Clause 16B of the Mortgage Deed gave liberty to the mortgagees, namely plaintiffs 1, 2 and 3, to take any proceedings in the Courts of any country for the protection and enforcement of the security or for the enforcement of the provisions of the Security Documents or to recover the outstanding indebtedness and stipulated that '............. for the enforcement of the security created by this Mortgage and/or the Guarantee, the Owner hereby submits to the jurisdiction of the Court of any country of the choice of the mortgagees'.The mortgage was registered by the 2nd defendant -Company in favour of plaintiff 1, 2 and 3 at Panama. A continuing guarantee dated 30th April 1982 in respect of the liability of 1,25,000 was also executed by the 2nd defendant -Company in favour of plaintiff 1, 2 and 3. (E) In June/July 1982 the Vessel arrived at Madras where she unloaded cargo and thereafter loaded cargo for the Persian Gulf. However, the freight earnings of the Vessel at Madras were received and utilised by the 2nd defendants agent, namely the 6th defendants, despite the latter's knowledge that the freight earnings amounting to 70,000 (Rs. 6,65,000/ -) were to be held on behalf of plaintiff 1, 2, and 3 as mortgagees and creditors, as the 2nd defendant -Company had failed to pay the first instalment of 35,000 on or before 30th June, 1982. (F) After loading cargo at Madras, the Vessel arrived at Bombay on 4th Aug. 1982. Despite the request of plaintiff 1, 2 and 3 to the 6th defendants to pay them the freight collected at Madras, the 6th defendants failed to do or to given an account thereof. The second instalment of 45,000 which became due on 30th Aug. 1982. was also not paid.

(3.) ON 17th Sept,. 1982 an order was passed for the arrest of the Vessel on the failure of defendants 1 to 6 to deposit in Court a sum of Rs. 7,94,490.00 P. as security towards satisfaction of the plaintiff claim. On 23rd Nov. 1982 an order was passed of r maintenance of the Vessel by plaintiff 1, 2 and 3 depositing with the Sheriff a sum of Rupees 90,000/ - and making provision for insurance. Against that order the plaintiff preferred an appeal and obtained ad interim stay pending admission.