LexLIVERPOOL AND LONDON S.P. AND I ASSON. LTD. versus M.V. SEA SUCCESS I AND ANR.
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LIVERPOOL AND LONDON S.P. AND I ASSON. LTD.
A
v
M.V. SEA SUCCESS I AND ANR.
NOVEMBER 20, 2003
f' .... '
B
[V.N. KHARE, CJ. AND S.B. SINHA, J.]
I
Admiralty Court Act, 1861-Sections 4, 5, 6 and 8-Protection and
Indemnity Insurance cover-Admiralty Suit for recovery of unpaid insurance
claims treating it to be 'necessaries supplied to a ship'-Validity of-Held C
Insurance is 'necessaries'-'Necessaries' should be construed in a broad and
liberal manner with changing scenario and the changes in both domestic
and international law-Admiralty Court Act, 1840; Sections 3, 4 and 6-
Supreme Court of Judicature {Consolation) Act, 1925; Section 22(I)-
Brussels Arrest Convention, 1952; Article l{k) and 2-1999 Arrest convention;
Article 14.
D
Code of Civil Procedure, 1908-0rder 7 Rules //, //A and 14-
Application for rejection .of plaint on the ground that cause of action is not
disclosed-Order rejitsing rejection of plaint-Letters Patent Appeal on such
Order-Validity of-Held, is valid, since the order is a preliminary judgment
and not an interlocutory order-Letters Patent; Clause 15.
Code of Civil Procedure, 1908-0rder 7 Rules// and 14-Disclosure
of cause of action in a plaint-Documents annexed with the plaint-Held, the
documents must be read into to find out the cause of action.
E
Appellant- club, an association incorporated in United Kingdom, offers F
insurance cover in respect of vessels entered with it for third party risks
associated with operation and trading of vessels. According to the appellant,
the protection and Indemnity (P & I) cover is compulsory to allow a ship to
enter major ports in India. Respondent no. 1- vessel has two sister vessels
and all the vessels are owned by respondent no. 2. The respondent no. 2 did G
not pay the insurance premium due for the two sister vessels for two years.
The appellant, treating the unpaid insurance calls as 'necessaries' under
section 5 of the Admiralty Courts Act, 1861, filed an Admiralty Suit before
High Court for a decree against the respondents for payment of unpaid
insurance amounts with interest and for the arrest ofrespondent no. 1- vessel
851
H
852
SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R.
A to secure the claim. Respondent no. I took out a Notice of motion under order
7 Rule 11 (a) CPC for rejection of the plaint of the appellant on the ground
that it does not disclose a cause of action and that the claim of unpaid
insurance premium was not 'necessaries' within the meaning of the Act.
Single Judge of the High Court refused to reject the plaint holding that the
plaint discloses sufficient cause of action for maintaining a suit. The Single
B Judge, however, referred the question whether the unpaid insurance premium
is 'necessaries' to a Division Bench of the High Court. Respondent no. I filed
a Letters patent appeal before Division Bench against the refusal by the Single
Judge to reject the plaint. The High Court held that unpaid insurance
premium is 'necessaries' under the Act. The High Court, however, held that
C the plaint of the appellant does not disclose a cause of action. Hence the appeals.
The appellant, in the main appeal, contended that the order of refusal
by Single Judge to reject the plaint under order 7 Rule 11 (a) CPC is an
interlocutory order and not a judgment for invoking Letters Patent Appeal;
and that the order is akin to an order granting leave to defend a suit under
D order 37 CPC or an order amending the plaint, which are not 'judgments'
under clause 15 of the Letters Patent.
In the cross appeal, it was contended that the unpaid insurance premium
is not a maritime claim entitling the appellant to invoke admiralty jurisdiction
of the High Court since it does not ccnstitute 'necessaries' under section 5
E of the Admiralty Courts Act, 1861; that the United Kingdom and some other
countries have held consistently for more than a century that the unpaid
insurance premium is not 'necessaries'; that the necessities should be looked
from the view point of physical necessity and practically and not from the view
point of prudence or sound economics; that if the P & I insurance is held to
p be 'necessaries', it will lead to incongruous situation when other forms of
insurance are not 'necessaries', and that the interpretation of the word
'necessaries' rendered by the English Courts should be followed since the
High Courts in India derive maritime jurisdiction from the pre-independence
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