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Law Report, Bombay High Court
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Bomb
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ASN 1/24 Appeal(L)228-13 (copy).doc
INTHEHIGHCOURTOFJUDICATUREATBOMBAYADMIRALTYANDVICEADMIRALTYJURISDICTION
APPEALLODGINGNO.228OF2013
INNOTICEOFMOTIONNO.235OF2013
INADMIRALTYSUITNO.29OF2013
LufengShippingCompanyLtd.AcompanyincorporatedunderthelawsofthePeople'sRepublicofChina,havingitsregisteredofficeatNo.24,PuJiShiRoad,Qingdao,China.
..Appellant/Orig.Plaintiff.Vs.
1.M.V.RAINBOWACE,aforeignflatvesselflyingtheflagofPanamaalongwithherhull,gear,tackle,engine,machinery,bunkers,apparel,furnitureandfixturesandallappurtenancesandparaphernalia,presentlylyingattheportofPipavav,Gujarat,withintheterritorialwatersofIndiaandwithintheAdmiraltyJurisdictionofthisHon'bleCourt,andallpersonsinterestedinthesaidvessel;
2.WhimStarCharteringCo.Ltd.ACompanyincorporatedunderthelawsofHongKong,havingitsRegisteredofficeatRoomNo.904,9/FWaysumCommercialBuilding,28,ConnaughtRoad,WestHongKong.
..Respondent/Orig.Defendants
Mr.PrashantPratap,SeniorAdvocatewithMr.AshwiniSinha,Ms.TruptiAgarwali/byManojKhatri,AdvocatefortheAppellant.
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Mr. Virag Tulzapurkar, Senior Advocate with Mr. NikhilSakhardande, Mr. Amitava Majumdar, Mr. Shiv Kumar Iyer, Mr.SujanMalhotra, Mr. Nihal Shaikh i/byBose &Mitra &Co. forRespondentNo.1/DefendantNo.1.
CORAM:MOHITS.SHAH,C.J.AND M.S.SANKLECHA,J.
DATE:Reservedon17June2013 Pronouncedon02July2013
JUDGMENT:(PerM.S.SANKLECHA,J.)
Thisappealchallengestheorderdated6May2013of
the learnedSingle Judgevacatingthe orderdated28January
2013(passedonanapplicationbytheappellant)arrestingM.V.
RainbowAcerespondentNo.1vessel.Theimpugnedorderdated6
May2013vacatingthearrestofrespondentNo.1vesselwasonan
applicationtakenoutbythe ownerM/s.RainbowAceShipping
S.A.Panama(applicant)ofrespondentNo.1vessel.
2) Factsleadingtothisappeal:
a) TheappellantadmittedlyhasamaritimeclaimofUS$
1,628,658.07 against the Whim Star Chartering Co. Ltd.
(respondent No.2 company). This claimarises out of a voyage
charterpartyagreementdated6April2011enteredintobetween
theappellantasownersofavesselM.V.JTong andrespondent
No.2companyasacharterer.
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b) Theappellant's maritimeclaimon respondent No. 2
companyis coveredbyArticle 1(f)and(g)of theInternational
ConventionofArrest of Ships1999(ArrestConvention1999).
Consequently, the appellant was entitled to secure its maritime
claimbyproceedingagainstanyvesselintheregistered and/or
beneficialownershipofrespondentNo.2Companyintermsofthe
ArrestConvention,1999.
c) Theappellant's claim is that the beneficial ownerof
respondentNo.1vesselisalsothebeneficialownerofrespondent
No.2Company. It is the case of the appellant that one Wang
Wendong is the common beneficial owner of respondent No.1
vesselaswellasrespondentNo.2company.Theappellantshave
sought to establish the common beneficial ownership of
respondent No.1 vessel and respondent No.2 company in one
WangWendongbysubmittingthefollowingchart:
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d) On 28 January 2013, respondent No.1 vessel was
arrested attheinstanceoftheappellantforitsmaritimeclaim
against respondent No.2company. Thecaseof theappellant as
madeoutintheplaintforthearrestofrespondentNo.1vesselwas
that it was in the beneficial ownership of respondent No. 2
companyand that bothrespondent No.1 vessel andrespondent
No.2 company are in the commonbeneficial ownership of one
WangWendongand/oroneShanBing.
e) On11February,2013,theapplicanttookoutanotice
ofmotionbeforethelearnedsinglejudgeseekingthatthearrestof
respondent No.1 vessel by order dated 28 January 2013 be
vacated. In the application the applicant admit that it is
beneficiallyownedbyWangWendong.However,itisdeniedthat
respondent No.1 vessel is in the beneficial ownership of
respondentNo.2companyandthatitsbeneficialowner Wang
WendonghasanyinterestinrespondentNo.2companyandmuch
lessbeingitsbeneficialowner.Thus,theallegedmaritimeclaimof
theappellantonrespondentNo.2companycouldnotbesecured
bythearrestofrespondentNo.1vessel.
f)On6May2013,thelearnedSingleJudge,bytheimpugned
ordervacatedtheorderofarrestdated28January2013inrespect
ofrespondentNo.1vessel.Theimpugnedorderholdsthatthough
respondentNo.1vesselwasbeneficiallyownedbyWangWendong
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the respondent No. 2 company was not. Therefore respondent
No.1 vessel and respondent No.2 company were not in the
commonbeneficialownershipofWangWendong.Thusthearrest
of respondent No.1 vessel was not warranted. The impugned
Order while disposing the application for vacation of arrest of
respondent No.1vessel framed the following issues as arising
beforehim:
i) WhethertheInternationalConvention
ontheArrestofShips,1999canbeappliedtothe
presentdispute?
ii) If yes, whether by virtue of Article
3(2)thereof,arrestofashipbeneficiallyownedby
thepersonagainstwhomthereisamaritimeclaim
inrespectofanothership,ispermissible?
iii) Whetherthe1stDefendantvesselisof
thebeneficialownershipofdefendantNo.2?
f) Sofarasissues(i)and(ii)areconcerned,theywere
answeredintheaffirmativeandacceptedbyallthepartiestothe
presentproceedings.Theonlyissuewhichhasbeenraisedinthe
present appeal is with regard to question (iii) above being
answered in thenegative i.e. in favourof the respondent No.1
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vessel andagainst the appellant. The learned single judge also
records the fact that the case canvassed before him by the
appellant was not as raised in the plaint as formulated in
question(iii)abovebutthesubmissionbeforehimwasthatthe
respondentNo.1vesselandtherespondentNo.2companyarein
the commonbeneficial ownership of one Wang Wendong. This
submissionwhichisafacetoftheissueraisedin(iii)abovewas
alsoansweredinthenegativei.e.respondentNo.2companyisnot
inthebeneficialownershipofWangWendong.
Submissions:
3) Mr. Prashant Pratap, the learned Senior Counsel
appearing for the appellant challenges the impugned order
vacatingthearrestofrespondentNo.1vesselandrespondentNo.
2companybyholdingthattheyarenotinthecommonbeneficial
ownershipofWangWendong.Insupportoftheabovechallenge
followingsubmissionsaremade:
(a) Admitted position is that respondent No. 1 vessel is
beneficially owned by Wang Wendong. Similarly, though not
admittedbytherespondentsWangWendongisalsothebeneficial
owner of respondent No.2 company. The respondent No. 2
company is owned 100% by one Cartier Investment Co. Ltd,
Samoa(Cartier)whichinturnis100%ownedbyWangWendong.
This beneficial ownership can be established by lifting the
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corporate veil of Respondent No. 2 companyand thereafter by
liftingthecorporateveilofCartierasrespondentNo.2company
wasestablishedbyCartier;
(b) InviewofthelawsintheStateofSamoa,thenames
ofshareholdersanddirectorsofacompanyincorporatedinSamoa
arenotavailablefordisclosure.HowevertheownershipofWang
Wendongof Cartier and in turn of respondent No. 2 company
alongwiththeownershipofrespondentNo.1vesselisestablished
bythefollowingfactors:
(i) Commonaddressi.e.SunshineTowerQingdao,China
ofCartier, respondentNo.2company,WangWendong(as
evident from his business card), of the applicant and its
agent ZJHX Shipping Co. Ltd. as well as common fax
numbers.
(ii) Company called WhimStar Co. ltd. in which Wang
Wendongheld55%shareholdingwhichwasderegisteredon
12February2009 andtherespondentNo.2companyhad
thesameaddressviz.SunshineTowers,Qingdao,China;
(iii) ACommondirectorbythenameofLiHangwasinthe
subsidiary of the applicant company and also in the
respondentNo.2company;
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(iv) CommonSignatureonvariousfixtureNoteswhichare
contracts of carriage entered into by the appellant with
respondentNo.2companyaswellasWinStarCo.Ltd.The
samepersonhasalsosignedmortgagedocumentsonbehalf
ofoneRainbowShippingLtd.whichisapartof Rainbow
GroupCompaniesofwhichWangWendongistheowner.
(v) The appellant has a long association with Wang
Wendongsince1998.Theappellantshavestatedthatthey
had met Wang Wendong at his office at China and
whenever theynegotiatedwithWhimStar Group, it was
withWangWendong,itsowner.
(vi) The defunct WhimStar Co. Ltd., respondent No.2
company and the applicants along with its other group
companieswereallhavingoneZJHXShippingCo.Ltd.as
theircommonagent.Theagencyagreemententeredintoby
thefirstrespondentvesselwithM/s.ZJHXShippingCo.Ltd.
isdated1March2012wheninfactrespondentno.1vessel
wasdeliveredon4September2012isalsoevidenceofthe
factthattheyarealloneandthesame;
(c) ReliancewasplaceduponthedecisionoftheDivision
Bench of this Court in the matter of Great Pacific Navigation
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(Holdings)CorporationLtd.vs.M.V.TongliYantairenderedon14
October2011tocontendthatinalmostsimilarfactstheDivision
BenchofthisCourthadreversedtheorderofthelearnedSingle
Judgevacatingthearrestofavesselinthatcase.Thustheabove
casesshouldbeappliedtothepresentcasealso;and
(d) That for purposes of the arrest of respondent No.1
vessel, the appellant has merely to establish ana reasonably
arguablecasei.e.primafaciecasetobetriedatthefinalhearing.
Inthemeantime,respondentNo.1shouldbekeptunderarresttill
therespondentssecurethemaritimeclaimtobetriedatthefinal
hearing.
4) On the other hand, Mr. Tulzapurkar, Senior Counsel
appearingforrespondentNo.1vesselinsupportoftheimpugned
ordersubmitsasunder:
a) The arrest of the vessel in terms of Article3 of the
Arrest Convention1999 is subject to the samebeingpermitted
underthe lawsof thestate inwhichthearrest of thevessel is
beingsought.Thereforethearrestofthevesselnotownedbythe
personliableforthemaritimeclaimwouldbepermissibleonlyif
thearrestissoughtofthevesselwhichisbeneficiallyownedby
anotherperson.However,todeterminethebeneficialownershipit
is not open to lift the corporate veil and contend that the
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shareholderofthecompanyisthe ownerofthepropertyofthe
companyasisbeingsoughttobedonebytheappellant.Itishis
submissionthatasamatterofCorporatelawasexistinginIndia,
the identity of a company is different and distinct from the
identify of its shareholder. In the circumstances, the maritime
claimavailableagainstrespondentNo.2doesnotbecomemaritime
claimpayablebyitsallegedbeneficialownerWangWendong;
b) The entirecaseoftheappellantis thatrespondent
No.2isownedbyCartier whichinturnis ownedbyMr.Wang
Wendong,thusmakingWangWendong thebeneficialownerof
respondentNo.2company.ThisissoasWangWendonghasfiled
anaffidavitdated8February2013statingonoaththatheowns
nointerestdirectlyorindirectlyinCartiernorinrespondentNo.2
companyandheisnotadirectorinanyofthetwocompaniesi.e.
CartierandrespondentNo.2.Ontheface ofit,itisnotopento
the appellant to allege that Wang Wendong is the ultimate
beneficialownerofrespondentNo.2companyintheabsenceof
theaffidavitbeingfoundtobefalse.
c) The variouscircumstancesbeingrelieduponbythe
appellant such as common director, common address, common
agent etc. allegedby theapplicant donot establish that that
Wang Wendong is the beneficial owner of respondent No. 2
company.Allthesefactorswereexplainedbytheappellantandthe
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learnedSingleJudgewassatisfiedwiththeexplanationofferedby
the applicant to conclude prima facie that the arrest of
respondentNo.1vesselisnotwarranted.
d) Therelianceplacedbytheappellantuponthedecision
oftheDivisionBenchofthisCourtinthematterofGreatPacific
Navigation (Holdings) Corporation Ltd. vs. M.V. Tongli Yantai
renderedon14October2011ismisplacedasthesamehasbeen
setasidebytheApexCourtbyorderdated12December2012.
Consideration:
5) Wehaveconsideredthesubmissions. Wefindthatthough
theappellanthadmovedtheCourtseekingtoarrestrespondent
No.1vesselprimarily onthegroundthatit is inthebeneficial
ownershipofrespondentNo.2company,ithadalsoallegedinits
plaint that the common beneficial owner of respondent No. 1
vessel andrespondent No.2company is WangWendongand/or
ShanBing. Therefore,theissueofcommonbeneficialownership
ofWangWendongwasraisedbytheappellantwhilecomingtothe
Courtanditwasnotanewcasemadeoutduringargumentsas
contended by Mr. Tulzapurkar. The issue examined by the
learned Single Judge was whether the common beneficial
ownershipof therespondentNo.1vesselandrespondentNo.2
Company vest in one and the same person namely Wang
Wendong. This is borneout in para 58of the impugnedorder
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whereinitisrecorded:
I nowproceedtoexaminewhethertheplaintiffhas made out even a prima facie case thatdefendant No.1 vessel is in the same beneficialownershipofdefendantNo.2.
6) There is no dispute between the parties that the
appellanti.e.theownerofrespondentNo.1vesselisbeneficially
ownedbyWangWendong.HoweverWangWendongwhile not
disputinghisbeneficialownershipofrespondentNo.1vesselhas
filedanaffidavitdated8February,2013beforethelearnedsingle
judge denying that he is in any manner directly or indirectly
throughthemediumofCartierorotherwisethebeneficialowner
of respondent No.2 company. Notwithstanding the affidavit of
WangWendong(which is not proved to be false/incorrect) the
appellant seeks to establish the beneficial ownership of Wang
Wendong in respondent No. 2 by seeking to lift not only the
corporateveilofrespondentNo.2CompanybutalsoofCartier.
7) Beforeexaminingtheissueonfactsonewouldneedto
examineasapurequestionoflaw,whetheritispermissibleunder
theIndianlawtoupholdthesubmissionoftheappellantthatthe
shareholderofanincorporatedcompanyhasproprietaryrightsin
theassetsofanincorporatedcompanypermittingtheignoringof
theseparateidentityofaCorporateentity.
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8) Article 3 of the Arrest Convention 1999 and in
particular,insubArticle1and2ofArticle3permitsthearrestof
vehicleandalsoprovidesinsubArticle3thereofasunder:
3. Notwithstanding the provisions ofparagraphs1and2ofthisarticlethearrestofashipwhichisnotownedbythepersonliablefortheclaimshall bepermissibleonly if, under thelawoftheStatewherethearrest appliedfor,ajudgmentinrespectofthatclaimcanbeenforcedagainstthatshipbyjudicialofforcedsaleofthatship.
9) Whileinterpretingtheaboveprovision,the Supreme
Court in Liverpool andLondonS.P. &I AssociationLtd. v.Sea
Success2004(9)SCC512whileholdingthatArrestConvention
1999would be applicable to India even though India is not a
signatorytheretohasheldthatthesamewouldbesubjecttoa)
domestic law which may be enacted by Parliament and b) for
enforcement of the contract involving public law character.
Therefore the issue to be examined is whether the Indian
corporate law accepts the proposition that in the absence of
allegationoffraud,itisopentoignoretheindependentcorporate
identity of a limited company and to lift the corporate veil to
identifytheshareholderasownerofthepropertyofthelimited
company.
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10) The Supreme Court in Indo wind Energy Ltd. V.
Wescare (India) Ltd. 2010(5) SCC 306 has held that each
company incorporatedunder theCompanies Act hasa separate
and distinct legal entity from its shareholders and other
companies.Therefore,themerefactthatthetwocompanieshave
common shareholders or common Board of Directors will not
convert thetwocompaniesintoasingleentity.Similarlyasfar
backasin1955SupremeCourtin BachaF.Guzdar,BombayVs.
CommissionerofIncomeTax,BombayAIR1955SC74heldthat
thereisnowarranttoassumethatshareholderwhobuyssharesof
thecompaniesbuysanyinterestinthepropertyofthecompany.
This was on the basis that an incorporated company has an
identitydifferentanddistinctfromthatof itsshareholders.The
submissionoftheappellantthattheconceptofbeneficialownerby
itself implies the concept of lifting the corporate veil and in
supportofwhichrelianceisplaceduponthedecisionoftheApex
Court in M.V. Elisabeth andors. Vs. Harwan Investment and
TradingPvt.Ltd.1993Supp.(2)SCC433aswellasthedecision
inLiverpoolandLondonS.P.&IAssociationLtd.v.SeaSuccess
(supra)andtheCalcuttaHighCourtdecisioninOwners&Parties
InterestedintheVesselM.V.DongDoandanr.v.RameshKumar
&Co.Ltd.2001(2000)1CALLT367(H.C.).
11) We findthat thesubmissionof theappellant on the
abovebasisisnotsustainableasinnoneofthecasesdidthecourt
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permittheliftingofthecorporateveiltomaketheshareholderof
an corporate entity the owner of a property belonging to the
incorporatedcompany.InthecaseofM.V.Elisabeth(supra)the
issuewhicharoseforconsiderationwasthequestionofjurisdiction
viz.whetherAndharaPradeshHighCourthadjurisdictioninits
admiraltyjurisdictiontoproceedagainstaforeignshipownedbya
foreign company not having a place of business in India. The
arrestedvesselviz.M.V.Elizabethwasthevesselagainstwhicha
maritimeclaimhadarisenandnoissueofliftingthecorporateveil
arose.InthecourseofJudgmenttheApexCourthadobservedin
Para46thereofthatthejurisdictioncanbeinvokedagainstasister
shipi.e.ashipinthesamebeneficialownership.Inthepresent
casethearrestisbeingsoughtnotofasistershipi.e.ashipinthe
ownershipofthesamepersonbutaship/vesselownedbyasister
companyofthecompanyagainstwhichmaritimeclaimarose.In
Liverpool and LondonS.P. & I Association Ltd. v. Sea Successc
(supra) the issue for consideration was whether the non
paymentofinsurancepremiumgaverisetoamaritimeclaim.The
premiumwasnotpaidinrespectofvesselsSeaRangerandSea
Glory. Thevessels SeaRanger, SeaGloryandSeaSuccess were
ownedbythesameowner.Thevesselarrestedwas SeaSuccess.
Noissueofliftingthecorporateveilforthepurposeofarresting
SeaSuccessarose. InthecaseofM.V.DongDo(supra)Calcutta
High Court held that under the Indian Law, shareholders of a
companyarenottheownersoftheassetsofthecorporateentity.
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TheCourtsetasidethearrestof thevesseleventhoughit was
alleged that both the vessels were ultimately owned by the
SocialistRepublicofVietnamthroughthemediumoftwolimited
companies. The Calcutta High Court negatived the aspect of
beneficial ownership as extending to shareholders of an
incorporatedentityandasanillustrationpointedoutthatinIndia
various Government Companies are in existence who are
independentofeachotherhavingadistinctidentity.Thereforea
shipbelongingtoShippingCorporationofIndiacannotbesaidto
be a sister ship of a ship belonging to Oil & Natural Gas
Commissiontoenablethearrestofshipownedbyonecompany
forthemaritimeclaimarisinginrespectofanothercompany.
12) LearnedSingleJudgeofthisCourtinAdmiraltySuit
(L)No.3547of2008renderedon22December2008inPolestar
MaritimeLimitedVs.M.V.QILINMenandothersobservedthat
merelybecausetheshareholdersarecommonortheirholdingin
twodifferentcompaniesarecommon/identicalwouldnotmake
thetwocompaniesoneandthesameentity.Similarly,theGujarat
HighCourtinthematterofCroftSalesandDistributionLtd.v.M.V.
Basiland17ors.inCivilApplicationNo.73of2011inAdmiralty
Suit No.10of 2010renderedon17February2011theGujarat
HighCourtheldthatshareholdersaredistinctanddifferentfrom
the corporate entity and the two separate legal entities are so
regardedasindependentofeachother,anditisonlyinexceptional
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circumstancessuchasfraudetc.thattheCourtwould examine
questionofliftingthecorporateveil.
13) Inthiscaseitisnotthecaseoftheappellantthatthe
applicant company has been created so as to only defeat the
maritime claims against the respondent No.2 company. In the
presentfactsitisnotthecaseoftheappellantthattheapplicant
companyis asubsidiaryof therespondentNo.2companywhen
possibly it could be said that that the holding company is the
beneficial ownerofthesubsidiarycompany.Incaseswheretwo
independentcompaniesareboth100%subsidiaryof acommon
holding company then it may be possible to contend that the
beneficial ownerof boththecompanies is thecommonholding
company. These are not the facts in the present case as the
applicant company and the respondent No.2 company are not
subsidiariesofonecommonholdingcompanyorhavesubsidiary
andholdingcompanyrelationshipinterse.
14) The above principle of a corporate identity being
distinct from its shareholders and its shareholders not being
owners of the property of the company has been consistently
followed/applied in Admiralty proceedings by British Courts as
well. In thematterof TheEVPOAGNIC (1988)2LloydsLaw
Report411thecaseoftheplaintiffwasthatoneEvangelosorhis
companyPothicosShippingCompanywastherealowneroftwo
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shipsoneSkipper1(maritimeclaimarose)andEvpoAgnic(ship
soughttobearrested).Theownershipofthetwoshipswereintwo
independent companies though having the same mangers and
shareholders with the ultimate ownership of both the limited
companiesbeing foundtobeinEvangelosorhiscompany.The
argumentoftheplaintiffwasthatonliftingthecorporateveilit
wouldbefoundthatoneandthesamepersonwasthebeneficial
ownerofthetwocompanies.Thissubmissionwasrejectedonthe
groundthatthearrestcouldnotbemadeoftheshipofasister
companybutarrestcouldonlybemadeofthesistershipi.e.ship
ofwhichtheownerswasthesameastheshipinrespectofwhich
the maritimeclaimarose. Thecourt vacated the arrest of the
vessel Evpo Agnic holding that the ships are owned by two
different limitedcompanies whichownthem. Itisthelimited
companyandnotitsshareholderswhoarethelegalandequitable
ownersoftheship.
15) Theappellantplacedrelianceuponthedecisionofthe
Division Bench of this Court in Great Pacific Navigation
(Holdings)CorporationLtd.V.M.V.TongliYantairenderedon14
October2011onthegroundthatonsimilarfacts,thisCourthad
allowed the appeal of the appellant therein and set aside the
vacation of the arrest of the vessel. The aforesaid decision
renderedbythisCourton14October2011hasbeensetasideby
theApexCourtinCivilAppealNo.8988of2012inM.V.TongliVs.
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Great Pacific Navigation (Holdings) Corporation Ltd. on 12
December 2012. In view of the fact that the decision of the
DivisionBenchofthisCourtdated14October2011hasbeenset
aside,noreliancecanbeplaceduponthejudgment whichhas
been set aside. It is as though it never existed. In fact in
RamchandraVishnuTendulkarandors.Vs.StateofMaharashtra
andors.(1993)1Mah.L.J.892 thisCourthasheldthatoncea
JudgmentoftheDivisionBenchwassetasidebytheApexCourt
thenneithertheobservationsand/orconclusionofthejudgment
thathasbeensetasidecanbereliedupon.Consequently,reliance
upontheaforesaiddecisioninthematterofM.V.Tongli(supra)
renderedon14October2011iscompletelymisplaced.Therefore,
nooccasiontoconsiderthesameforthedisposalofthisappealcan
arise.
16) Inthesecircumstances,thearrestofrespondentNo.1
vesselisnotjustifiedasamatteroflawandtheorderpassedby
theleanedSingleJudgecannotbefoundfaultwith.
17) Inviewofourabovefindingthatarrestofrespondent
No.1vesselinthepresentfactsisnotwarrantedonan issueof
lawtheconsiderationoftheothersubmissionsuchasacommon
directorbetweentherespondentNo.2companyandasubsidiaryof
the applicant company, commonagent andcommonsignature
wouldallwarrantliftingthecorporateveiloftherespondentNo.
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2companytodetermineitsbeneficialownerwouldnotarise.The
entire basis for looking at surrounding circumstances arises
according to the appellant in view of the fact that 100%
shareholdingofrespondentNo.2companyisheldbyCartierwhich
isacompanyincorporatedinSamoa.Howeverunderthelawsof
Samoathenamesofthedirectors,shareholdersarenotrequiredto
bedisclosed.Itissubmittedbytheappellantthatinviewofthe
aforesaidpeculiar situationthatappellant is unable toestablish
beyonddoubttheownershipoftheWangWendonginCartierand
throughitinrespondentNo.2company.Howeverthenecessityto
examinethesurroundingcircumstancesandproceedonsuspicion
thatWangWendongisthebeneficialownerofrespondentNo.2
companyisobviatedforthereasonthatWangWendongwhois
allegedbytheappellanttobethebeneficialownerofrespondent
No.2companyhasfiledanaffidavitdated8February2013before
thelearnedSingleJudgewherein,heinteraliastatesasunder:
4.I state that I was never and I amnot theDirectornorholdanysharesofM/s.WhimStarCharteringCo.Ltd., theDefendantNo.2inthecaptioned proceedings, at any given point oftime.IfurtherstatethatIwasneverandIamnot the Director nor hold any shares of M/s.ZJHXShipping Co. Ltd. at any given point oftime.
5. IalsostatethatIwasneverandIamnottheDirectornorholdanysharesofM/s.CartierInvestmentCo.Ltd.atanygivenpointoftime.
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ASN 22/24 Appeal(L)228-13 (copy).doc
InviewoftheabovecategoricalstatementsonoathofMr.Wang
Wendong the reason to act on suspicious surrounding
circumstances cannot be sustained. In the face of the above
affidavititisimpossibletoacceptthesubmissionsoftheappellant
thatthearrestofthevesselwhichadmittedlyisbeneficiallyowned
byWangWendonghastobecontinuedtosecuretheappellants
maritimeclaimagainst respondent No.2company.The learned
singlejudgehasexaminedthevarioussurroundingcircumstances
andreachedafindingthatthesamedoesnotestablishthatWang
WendongisthebeneficialownerofrespondentNo.2.
18) InfactinthedecisionofQueen'sBenchDivision in
Mawan (1988)2LLYODLawReports 459, theargumenton
behalfoftheplaintiffwasthatifonelooksatalltheconnecting
links between the shareholders, the directors, and the
managementofthetwolimitedcompaniesitwouldbeclearthat
thebeneficial ownershipofthetwoships isvestedinthesame
personandtheyaretrulysistershipsevenifattemptismadeto
concealthefact.TheCourtnegativedtheaforesaidsubmissionby
holdingthattheapproachsuggestedinvolvesnotmerelyliftinga
corporateveilbutalsosweepingasideallthecorporatestructure.
Therefore, in the present facts, no fault can be found in the
impugnedorderdated6May2013.
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ASN 23/24 Appeal(L)228-13 (copy).doc
19) The appellant had also submitted that while
consideringtheapplicationforvacationofsaidarrestofthevessel,
theCourtisrequiredtoconsidernotonlytheprimafaciecasebut
balance of convenience and irreparable injury involved in the
matter.Theabovepropositionisindisputable.However,aprima
faciecasecannotbebuiltmerelyonsuspicion.Thearrestofthe
vesselonthebasisofthesuspicionraised certainlycausesmore
injury toa third party thantheplaintiff. Thus, the balanceof
conveniencewouldbeagainstthearrestofthevessel.Inthecase
ofAventicum1978Vol.ILLOYD'sLawReports184Queen'sBench
Division(AdmiraltyCourt)hasheldthatonusisupontheplaintiff
to show that the person against whom it is sought to invoke
Admiraltyjurisdictionisthepersonwhobeneficiallyownsboththe
vesselinrespectofwhichmaritimeclaimhasarisenaswell as
thevesselwhichissoughttobearrested. TheCourtfoundthat
therewereanumberoffactorstoindicatethatthereisveryclose
connectionbetweentwocompaniessuchascommonaddressetc.
yettheCourtonthebasisoftheevidencebeforeitheldthatthere
wasnopositiveevidenceproducedbytheplaintiff whichcould
establish the beneficial ownership of the vessel sought to be
arrestedisinthesamepersonasinrespectofthevesselinwhich
maritimeclaimarose.Theappellanthasnotbeenabletoestablish
that even prima facie that respondent No.2 vessel is in the
beneficialownershipofWangWendong.Inthecircumstancesthe
impugnedorderhastobeupheld.
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ASN 24/24 Appeal(L)228-13 (copy).doc
Conclusion:
20) Inviewoftheabove,weseenoreasontointerferewith
thewellreasonedorderofthelearnedSingleJudgedated6May
2013 setting aside the arrest done on 28 January 2013 of
respondentNo.1vessel.Accordingly,theappealis,dismissedwith
noorderastocosts.
CHIEFJUSTICE
M.S.SANKLECHA,J.
Afterpronouncementofthejudgment,learnedCounsel
fortheappellantpraysforcontinuingtheadinterimstaygranted
earlierinordertoenabletheappellanttohavefurtherrecoursein
accordancewithlaw.
In the facts and circumstances of the case, the ad
interimstaygrantedearlierwillcontinueforaperiodof2weeks
fromtoday.
CHIEFJUSTICE
M.S.SANKLECHA,J.
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