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The Admiralty Act, 2017-- An Overview

(By V.B. Hari Narayan, Advocate, High Court of Kerala, Ernakulam)

Finally the much awaited Act on maritime jurisdiction has seen the day of light when it obtained the Presidential accent on 9^th August, 2017. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 was passed by the Parliament paving way for welcoming changes in the Indian maritime regime. The new Act has replaced the Colonial legislations which was followed hitherto by Courts in exercising admiralty jurisdiction. The Act has repealed the archaic laws of the British period including The Admiralty Court Act, 1861; The Colonial Courts of Admiralty Act, 1890; The Colonial Courts of Admiralty (India) Act, 1891 and provisions of Letters Patent, 1865 in so far as it relates to admiralty jurisdiction of three Chartered High Courts and also seeks to consolidate the existing laws on civil matters of admiralty jurisdiction of Courts, admiralty proceedings on maritime claims and arrest of vessels.

Under the Colonial Courts of Admiralty Act, only the Chartered High Courts were vested with admiralty jurisdiction. It is by virtue of the decision rendered by the Hon’ble Supreme Court in M.V.Elizabethcase (AIR 1992 SC 1018) that the other Coastal High Courts in the Country could exercise admiralty jurisdiction for arrest of ships based on maritime claims. Under the new Act,  8 High Courts namely, Calcutta; Bombay; Madras; Karnataka; Gujarat; Orissa; Kerala; Hyderabad for the State of Telangana and the State of Andhra Pradesh could now invoke admiralty jurisdiction.

Section 3 of the Act specifies that the jurisdiction in respect of all maritime claims shall vest in the respective High Courts and be exercisable upto the territorial waters of their respective jurisdictions. However, the right to extend the admiralty jurisdiction up to Exclusive Economic Zone (EEZ) or any other maritime zone is reserved by the Union Government. The Act has catagorised the claims which come within the ambit of maritime claims, which alone will be subject to exercise of admiralty jurisdiction.

Further, the power of exercise of ship arrest is confined to the territorial limits of the respective High Courts thus preventing the arrest of vessels which are outside the territorial limits. The Act has provided safeguard against wrongful arrest in Section 11 by bringing in a provision for counter security from the claimant if the arrest is found to be wrongful or unjustified or excessive security having been demanded.

The Act has given a wider definition of a vessel under sub-section (i) of Section 2 to include ‘off-shore industry mobile unit’ which could include Oil rigs. It is also made applicable to all vessels irrespective of their flag, registration etc., except naval vessels or those owned and operated by Central or State Government for any non commercial purpose. Thus any vessel whether foreign or Indian to the exclusion of state owned ones could be arrested.

As far as in personamproceedings are concerned, it is interesting to note that proceedings may be instituted only if the cause of action arise either wholly or in part in India, or the defendant ‘actually and voluntarily resides or carries on business or personally works for gain in India’. Further the Act specifically restricts in personamproceedings if the same issues between the same parties are pending before any Court outside India. The Act also provides for the order of priority of maritime claims.

The conferring of admiralty jurisdiction to the 8 High Courts is a welcome change, in as much as the claimants could move the respective High Court where the cause of action has arisen or based on the domicile of party.  The Act seeks to build an admiralty law in line with the modern trends in the maritime sector and in uniformity with prevalent international practices. The jurisdiction of High Courts are thus increased providing for speedy disposal of admiralty related proceedings. Hope the objectives will be achieved.

Doubts on Doubts

(By Girish Panju M.S., Deputy Director of Prosecution, Kottayam)

“The Judge, even when he is free, is still is not wholly free. He is not to innovate at pleasure. He is not a knight errant roaming at will in pursuit of his own ideal of beauty or goodness. He is to draw inspiration from consecrated principles. He is not to yield to spasmodic sentiment to vague and unregulated benevolence. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system and subordinated to the primordial necessity of order in the social life”(Benjamin Cardozo).

Criminal trial is meant for doing justice to the accused, victim and the society at large so that law and order is maintained (Ambika v. State Delhi Admn.(2000 SCC (Crl.) 522). The paramount consideration of a criminal trial is to render justice and to convict the guilty and protect the innocent. For that the hands of the court cannot be tied up with the fetters of technical procedures so as to prevent them from arriving at the truth. Criminal trial is not like a fairy tale wherein one is free to give flight to one’s imagination and fantasy. It is too panic to say that now a days unmerited acquittals become general, and they tend to lead a cynical disregard of the law. Miscarriage of the justice arises from the acquittal of the guilty not less than from the conviction of an innocent. See Gangadhar Behra v. State of Orissa(2003 Cri.L.J. 41 (SC)) and State of U.P. v. Anil Singh(AIR 1988 SC 1998). It is not judicial heroism to blindly follow the repeated saying that let a hundred guilty men may be acquitted, but let not one innocent be punished. As rightly observed by our Apex Court in Jayal Sahu v. State of Orissa(1994 Cri.L.J. 2254). “An exaggerated devotion to benefit of doubt is a disservice to the society”. Acquittals on the grounds of irrelevant contradictions, irrelevant omissions and due to high technicalities are not a welcome trend.

Each trial has to be conducted within the four corners confined by the Evidence Act. “Court must endeavour to find the truth. There would be failure of justice not only by an unjust conviction but also by the acquittal of the guilty for unjustified failure to produce reliable evidence. Of course the rights of the accused have to be kept in mind and safeguarded,but they should not be over emphasized to the extent of forgetting that the victim also have rights.”See State of Maharashtra v. Dr.Praful B.Desai(2003 (2) KLT SN 35 (C.No.45) SC =2003 Cri. L.J. 2033 (SC).

Section 5 of the Indian Evidence Act stipulates that evidence may be given of fact in issue and relevant fact. Hence we can safely arrive at the conclusion that courts are concerned only with two types of facts and they are (1) fact in issue and (2) relevant fact. In a criminal prosecution the golden principle of jurisprudence is the immunity available to the accused i.e., the presumption of innocence and except in rare occasions the burden of proof is always on the part of the prosecution. As far as a criminal litigation is concerned the fact in issue means “Those facts that are necessary to be proved or disproved to establish the charge against an accused or to establish a defense. A fact is relevant to a fact in issue when the former fact is connected with the later fact in a particular manner or in anyone of the ways referred to in the provisions in Sec.5 to 55 of the Indian Evidence Act.

Fact in issue is the principal matter in dispute and relevant facts are facts which directly or by inference proves, disproves the fact in issue. The principal fact to be proved is known as “Factum probandum”and the evidentiary facts which follows the principal fact is known as “Factum probans”. Section 3 of the Indian Evidence says about the yardstick to be applied for the evaluation of evidence. It stipulates that the supposition of a prudent man is the standard to evaluate whether the material before the court can reasonably be acted to conclude whether a fact exists or not. It is pertinent to note that the legislature in its wisdom includes the words ordinary prudent man and not a juristic or intellectual man.

There are three features of evidences. They are

1.        Relevancy

2.        Admissibility

3.        Probative value

If a fact is relevant and admissible it is counted in evidence. But if a fact is admissible in evidence, but not relevant it cannot be admitted in evidence. After the admission in evidence the court will consider the probative value of evidence. Thus it can be seen that the court has to consider the admissibility first and then its relevancy and finally the probative value. The communication made by a spouse during marriage or professional communication between the counsel and his clients may be relevant in some cases. But it is not admissible and hence cannot admit in evidence. The questions put by the defense to the prosecution witnesses in cross examination only for the purpose of testing the veracity or to impeach the credibility is of nor relevance in most cases. But sorry to say that it is admissible in evidences unless and until it became indecent, scandalous or intended to annoy or insult the witnesses. Evidence is the medium of proof. It is the instrument by means of which fact in issue or relevant facts are brought before court. As already stated all admissible fact are not relevant. S.3 further states that a fact can be proved, disproved and not proved. In most of the acquitted cases the prosecution neither proves nor the defense disproves the fact in issue to the satisfaction of the court. Therefore the case will come under not proved beyond reasonable doubt and the benefit of doubt will be given to the accused. In this juncture it is significant to note what is benefit of doubt.

In the State of Haryana v. Bhagirathreported in (1999 (2) KLT SN 69 (C.No.74) SC) our Apex Court held the view that it is not a legal dosage to be administered at every segment of the evidence, but an advantage to be afforded to the accused at the final end. Unfortunately a misconception is being prevailed in the legal fraternity with respect to evaluation of the evidence and benefit of doubt. In Bhogam Bhai v. State of Gujaratour Hon’ble Supreme Court has got benevolent opportunity to discuss about the guidelines for evaluating the evidence. Apex Court cautioned the trial courts that over much importance cannot be attached to minor discrepancies and it cannot be benefited as reasonable doubts because

            1.         Witnesses cannot be expected to have photographic memory. Witness is not as videotape is played.

            2.         During the crime the witnesses will be overtaken by events. He would not have anticipated the occurrence which so often has an element of surprise.

            3.         Power of observation differs from person to person. What one may notice, the other may not.

            4.         People cannot accurately recall conversations and reproduce the same words used by them or heard by them.

            5.         In regard to the exact time or the time of duration of an occurrence they may make statement by guess. The sense differs from person to person.

            6.         They may not be able to recall the sequence of events. Witness is liable to get confused or mixed up when interrogated later.

         7.         A witness though wholly truthful is liable to be overawed by the unfamiliar court room and the piercing cross examination made by the counsel. Usually they became perplexed and get confused.

This does not mean that the role of test of cross examination for determining the veracity is to be minimized. As rightly observed by our Hon’ble Supreme Court in State of Himachal Pradesh v. Lakhraj((2000) 1 SCC 247) that the material discrepancies are those which are not normal and expected from a normal person. When a witness is subjected to a lengthy and attacking cross examination there is always a possibility of witness committing mistakes which can be termed as omissions, improvements and contradictions. Therefore these infirmities will have to be appreciated in the background of ground realities, which make the witness confused because of the filibustering tactics of the defence counsel. See Jai Shee Yadav v. State of U.P.(2005 (1) KLT SN 5 (C.No.7) SC). Always it is to be borne in mind that practically cross examination is a battle between a well equipped legal practitioner and an ignorant litigant who suffered a lot during the occurrence and continuing the trauma during the investigation and even in the trial. Hence the cardinal question is whether the inconsistencies will touch the fabric of the prosecution case? If it is so definitely it is fatal to the prosecution.

The wrong conceptions among the legal community that 161 statements are the pillars of the prosecution cases is the most panic thing. It is funny to say that they consider it as a holly cow or as sacred Bible. Giving undue importance to the 161 statement prepared by a police officer at his whims and fancies at the cost of the poor and ignorant victims is the most pathetic thing. 161 statements are purely the answers given to the question put by the investigating officers at the time of investigation. They are the answers which is relevant in the eye of a police officer. But on examination of the witness before the court either by a prosecutor or by the defence lawyer the witness will be compelled to answer more aspects on the question put to them. Unfortunately most of our friends think it as a serious aspect which diminishes the scope of the prosecution case. (See AIR 2000 SC 1833).

The legendary Indian Jurist of all time Justice V.R.Krishna Iyer while pronouncing judgement in Inder Singh & Anr. v. Delhi Administrationreported in (AIR 1978 SC 1091) held as follows.

“Credibility of testimony depends considerably on a judicial evaluation of the totality and not an isolated scrutiny. If a case is proved too perfectly, it would be urged that it is artificial. If a case has some flaws it is inevitable because human beings are prone to err. Proof beyond reasonable doubt is a guideline and not a fetish. A guilty man cannot get away with it because truth suffers from some infirmity when projected through a human process. Judicial quest for perfect truth often accounts for police presentation of foolproof convocation. We must be realistic.”

As laid down in Dharmarajan v. State of Keralareported in 2014 (2) KLT SN 62 (C.No.81) = 2014 Cri.L.J. 3162), “Creating doubts for the purpose of doubt is not a reasonable doubt. In this regard it is worth mentioning the dictum laid down by the Hon’ble Apex Court in Yogish Singh v. Mahabeer Singh & Ors.(AIR 2016 SC 5160) that it is the cardinal principle of criminal jurisprudence that guilt of the accused must be proved beyond all reasonable doubts and it is worth to reproduce the observation made by Justice Venkatachaliah in State of U.P. v. Krishna Gopal & Anr.(1988 (2) KLT SN 46 (C.No.62) SC = (1988) 4 SCC 302) that “Doubts would be called reasonable if they are free from zest for abstract speculation. Law cannot afford any favouritism other than truth. To constitute reasonable doubt it must be free from over emotional response. Doubts must be actual and substantial doubts as to the guilt of accused arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt, but a fair doubt based upon the reason and commonsense. It must grow out of the evidence in the case.” Justice further observed that “The concept of probability and its degree cannot be obviously be expressed in terms of units to be mathematically enumerated as to how many of such unit constitute proof beyond reasonable doubts. There is an unmistakable subjective element in the evaluation of degree of probability and question of proof. The protection given by the criminal process to the accused is not to be eroded, at the same time uninformed legitimization of trivialities would make a mockery of administration of criminal justice”. The above said words of the Supreme Court apparently show its genuine anxiety about the misconceptions in the field of appreciation of evidence.

Some Thoughts on Simplification of Court Procedures

(By Joseph Chirayath, Advocate, Thrissur)

India can be proud of the fact that we have elected governments under a democratic constitution we gave to ourselves. The Constitution of India is the supreme law of the country, the fountain source of law in India.Judiciary is the branch of government that is endowed with the authority to interpret and apply the law, adjudicate legal disputes and otherwise administer justice. Judicial system in India is one of the oldest legal systems in the world today. It is part of the inheritance India received from the British after two centuries of their colonial rule. The Supreme Court and the various high courts have the power of judicial review and have to interfere to protect the fundamental rights of the citizens, decide appeals and involve in special jurisdictions. They have got original, writ and appellate jurisdictions. All other courts including the district courts come under the category of subordinate courts. They are spread in all districts in the length and breadth of the country. It is with the said courts the people are attached with the most as complainant or accused, plaintiff or defendant, surety or witness etc. The subordinate courts are the supreme judiciary for the majority of the people in India. The system prevailing has done well in the past. But today about seven decades after independence are our courts in tune with the times? We have seen advancement in other sectors like roads, railways, telecommunication, education, health etc; but not in the lower courts. The introduction of alternate dispute redressal system may be in the right direction for bringing speedy justice. But what about the existing court system? I think degenerated practices have to be discontinued and some procedures and practices have to be simplified for imparting speedy and fair justice. I am giving below some points which if implemented will improve the system to some extent.

1. When judgement is pronounced a party has to wait for months to get a certified copy. An appeal or execution petition cannot be filed till the copy is received. As and when judgement is pronounced if copies of it are served to the concerned parties/counsel free of cost at the time of pronouncement will go a long way to ameliorate the hardship suffered by parties. Drafting of decree should be dispensed with to avoid delay. The decree holder can be allowed to include the costs etc. in the execution petition which the court can scrutinize later.

2. Execution shall follow the same suit proceeding. If the decree is to be executed in the same court no separate notice to the judgement debtors is necessary if they were not ex parteon the original side.

3. Process fee should be abolished. So also court fee for interlocutory applications. Work load of advocate clerks and court staff can thereby be reduced. The party approaching the court is paying a hefty court fee now. So it is not fair to ask him to pay for these charges.

4. In recent years courts are not issuing cheques and refund orders to advocates. They are not even handing over cheques and refund orders issued in favour of parties to advocates. The reason stated is that some advocate somewhere has committed foul play. But that is a one in a million case and  the remedy is not this. Stringent action has to be taken by the court against the delinquent under the criminal law and his practice itself can be terminated by the Bar Council. It is a pitiable sight to see very old, sick and lame people dragged to MACT verandas.  The alternative is direct transfer to the bank account of the recipients. Until that system is introduced the best way is to reinstate the practice of issuing cheques in the names of parties and handing them to the concerned advocate/s.

5. When calling cases the name of the advocate should also be mentioned. Mistakes happen when calling case numbers alone or when the numbers are not properly heard and comprehended. Sometimes suits are dismissed or defendants called ex parteor in criminal cases accused are ordered to be arrested or acquitted. It is true some bench clerks do mention the name of the advocate. But many do not. There should be general guideline.

6. Most of the court halls are congested and parties are waiting in the verandas and court yards. In congested court halls public address system should be introduced when calling cases with loud speakers put outside so that the parties can hear when their cases are called. We need larger court halls, more staff and more photostat machines. After all courts generate a good amount of revenue to the government by way of court fee and fine. Justice is not free! Many leaders have been lamenting of the fact that the justice delivery system has no speed. The general public also shares with the view. But the Kerala High Court has pitied on the “frugal budgetary support to the judicial system” (2016 (1) KLT 838). The government must understand that administration of justice is a paramount responsibility of the government.

7. For some time some courts have been publishing list of cases to be taken up on that day. But it seems it is discontinued now. It is good that it is restored. Also, steps should be taken to publish it in the court website on the previous day.

8. Often it is seen that when advocates, parties, witnesses come to court ‘no sitting’ sticker is pasted on the door of the court. There is no necessity to say that it causes much inconvenience to all. In majority of cases the presiding officers can co-operate by intimating absence beforehand which they often do not.

9. The presiding officers should be punctual. Commencement of the work should be at the appointed time both in the morning and in the afternoon sessions. If there is a likely delay in the starting of the work in the afternoon that should be informed in the open court before the court recess at noon. Some judges are doing fine well. It is necessary that there is a general guideline.

10. There is a trend that many new cases are posted to distant dates. It is not fair to drag such cases to far off dates. The person who has filed the suit must have the satisfaction that his adversary knows as early as possible that a suit has been filed against him. After the steps are completed they can be posted in the special list on a convenient date.

11. Receipt system should be introduced in courts. When a document is filed or when a payment is made there should be issued a receipt. Sometimes quarrels arise in courts about filing of vakalat, written statement etc. Along with the respective documents a receipt filled up by the concerned advocate should be got sealed by the court office.

12. When an ex partestay is granted by an appellate court, the appellant shall immediately inform the fact to the respondent by registerd post and file the acknowledgement in court.

13. When court sale is conducted one fourth of the purchase money has to be deposited at the time of sale and the balance and the value of stamp paper have to be deposited within 15 days from the date of sale. It will be better that balance and the value of stamp paper are insisted within 15 days of confirmation of sale but before issuance of sale certificate.

14. When warrants of arrest or attachment of movables are ordered the amins are deputed in most cases on the penultimate date of return of process. Unscrupulous judgement debtors just abscond temporarily on that day escaping the clutches of law thereby defeating the decree holders. That should change. “Every warrant for the arrest of a judgement debtor shall direct the officer entrusted with its execution to bring him before the Court with all convenient speed,...” as mandated by the C.P.C.

Recently, there is a computerisation drive in the courts. That will have good results if implemented responsibly. Let us hope the government wakes up to the reality and in consultation with the High Court try to develop a reformed vibrant subordinate judiciary.

How the Resolution of any Conflict between the (English) Arbitration Act 1996

and the Companies Act 2006 can Assist in the Application of Section 8 of the (Indian) Arbitration

and Conciliation Act 1996 as Amended

(By Lawrence Jacobson, In-House Barrister, Zaiwalla & Co LLP, London)

In broad terms, S.8 of the (Indian) Arbitration and Conciliation Act 1996, as amended, appears to have a similar mandatory effect to that of Section 9 (read together with S.4¹) of the Arbitration Act 1996 (the “Act”)² Act. Accordingly, it is hoped that the methods and analysis briefly mentioned below, may be of some assistance to our Indian colleagues.

In a relatively recent decision of a County Court in England³ it was held, among other things, rejecting the Defendant’s application for a stay under S.9 of the Respondent’s claim for audited accounts under S.476 of the Companies Act 2006, that a shareholder who might have been entitled to audited accounts under an arbitration agreement was also entitled to audited accounts outside the parameters of the arbitration agreement under S.476.

The decision of that court, while not binding because it is not a court of record, nevertheless may be of persuasive authority in any future proceedings on an application for a stay concerning matters provided for in an arbitration agreement. Furthermore, the decision may influence the determination of any court as to whether S.9 of the Act has primacy over the statutory rights of any counterparty to an arbitration agreement.

So far as material for the purposes of examining the cogency and efficacy of the County Court decision, the facts of the case are that the Claimant and the Defendant compromised legal proceedings, in which the Claimant had claimed damages based on the alleged market value of his shares in the Defendant Company. Previously, the Claimant had also made various requests for audited accounts to the Defendant Company under S.476 of the Companies Act 2006. No reasons are prescribed by statute for which any qualifying shareholder might make a request to a company.

The Settlement Agreement provided, among other things, that the mechanism for the valuation of the Claimant’s shares would be referred to an arbitrator for determination. It was further provided that once the shares had been valued in accordance with the terms of the agreement the Claimant, forthwith would transfer his shares to a named third party on payment of the valuation price. The parties failed to agree or to refer the matter to arbitration and the Claimant issued proceedings to enforce his request for audited accounts. In response the Defendant issued an application under S.9 to stay those proceedings in order to give effect to the arbitration clause in the Settlement Agreement. The Defendant reasoned that it was highly likely that in determining the mechanism of valuation, the arbitrator might well direct the preparation of audited accounts. In the circumstances, the Defendant formed the view that the Claimant’s claim related in whole or in part to a referred matter in the arbitration.

The Judgment comprised, among other things, the following primary finding:

The arbitration clause in the Settlement Agreement was not sufficiently widely drafted so as to exclude the Claimant’s right to bring the proceedings under S.476.

To what extent is the Judgment consonant with authority?

The Court of Appeal inFulham Football Club (1987) Ltd v. Richards⁴found that there were no express provisions in either the Act or the Companies Act 2006 which excluded arbitration as a possible means of determining disputes involving unfair prejudice to members of a company (S.994 of the Companies Act 2006). Precisely the same can be said of matters under S.476. Furthermore, it held that the Act clearly gave primacy to rights under an arbitration agreement by making a stay of court proceedings relating to the same dispute mandatory. ⁵The Court of Appeal went on to state that:”…the combined effect of an arbitration agreement which covers the dispute and Section 9(4) of the [Act] is that the agreement to refer the dispute to arbitration will exclude the parties’ right to bring or continue legal proceedings covering the same subject matter unless one of the exceptions contained in Section 9(4) is established..”⁶ Fulham Football Club is therefore authority for the proposition that where the arbitration agreement covers the dispute, S.9 has primacy over Sections 994 and 476 of the Companies Act 2006.

Moreover, an arbitration agreement remains binding and effective even if the parties agree to refer to arbitration only certain disputes that might arise from their relationship⁷.

The legal proceedings, as a whole, may be “in respect of “a referred matter although those proceedings concern both that and other matters. In those circumstances, the whole proceedings may need to be stayed if it cannot be determined without consideration of the referred parts.⁸

While it was accepted in the Judgment, that, objectively, one of the primary functions of the audited accounts was that it could be used in connection with the mechanism for valuation, it failed to take into account that such a purpose could not be severed from those functions unrelated to the arbitration agreement. In failing to do so, the Court may well have erred in fact and in law in not giving primacy to S.9 of the Act over S.476 of the Companies Act 2006 as in Fulham Football Club. It is therefore unlikely that this Judgment will be followed.

As none of the exceptions in S.9(4) was relevant, the Court, as expressly required by Parliament, firstly ought to have granted an immediate stay of the legal proceedings while the issue was referred to an arbitral tribunal and then secondly to have resumed the proceedings when the issue had been resolved in accordance with the parties’ agreement ⁹.

Foot Note:

1.     Section 9 has mandatory effect notwithstanding any agreement to the contrary.

2.     “9(1) A party to an arbitration agreement against whom legal proceedings are brought …in respect of a matter which under the agreement is to be referred to arbitration may ….apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter….(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed….”.

3.     Rene Herzfeld (Claimant) v. Morton Medical Ltd.(Defendant) (13 May 2016).

4.     [2012] Ch 333 CA @341 [para.28].

5.     Ibid @341 [para.31].

6.          6.        Ibid@345 [para.42].

7.     Lombard North Central Plc v GATX Group[2012] EWHC 1067 @6 [para.16].

8.     Ibid [paras.13(i) and 16].

9.         9.    Ibid[para.16].