The appellant appeals from a decision of a single Judge of the High Court dismissing its application for the arrest of the respondent ship. The appellant contends that:

1. Glory Ship Management Pte Ltd (Glory) is the beneficial owner of the ships MT Prosperity, MT Horizon and the respondent MT Galaxy;
2. The companies which are shown to be the registered owners of these three ships are merely sham companies;
3. The shareholders of Glory and the three shipowning companies are the same except that the numbers of shares they hold in each company is different;
4. The three registered owners of the ships are subsidiaries of Glory;
5. These companies have been formed to defraud the creditors and claimants of the ships;
6. Glory is in fact the owner of the ships and not a mere management company;
7. Glory beneficially owns 100% shares of the three companies; and 
8. The respondent ship was beneficially owned by the Glory when the cause arose and at the time when the action was brought and is liable for the losses caused by the respondent ship as a sister ship to the MT Prosperity and MT Horizon.

The appellant further contends that the words 'beneficially owned as respects majority shares therein' appearing in s 4(4)(a) of the Admiralty Jurisdiction of High Courts Ordinance 1980 (Ordinance) would be redundant if they were restricted to the registered owner only. The word 'beneficial' can be attributed to a person who has a beneficial interest in the shares of the ship. This person can be a registered owner or someone else. If the appellant is able to prima facie prove that the beneficial owner is someone other than the registered owner, the Court will have to pierce the veil of incorporation to find out who the beneficial owner is. Such piercing of the veil of incorporation depends upon the particular facts of each case.

The respondent argues that the appellant has wrongly invoked the admiralty jurisdiction of the Court as Glory is not the owner of the three ships. Rather, all three ships are registered in the name of three different companies which are their real and beneficial owners. Section 4(4) of the Ordinance qualifies the words 'beneficially owned' with 'majority shares'. Glory has no shares in the respondent ship or the other two ships. Fraud is alleged by the appellant but no particulars of fraud have been pleaded. One-ship companies in themselves do not provide a basis for a case of fraud. It is common practice in the shipping industry to form companies owning a single ship. Keeping liabilities limited to the extent of single ship is not prohibited by law. The appellant's argument that the three companies are a sham is altogether unfounded and no case of piercing the veil of incorporation is made out.

Held: Appeals dismissed. The appellant has not made out a case for arrest for the respondent ship as a sister ship of the MT Prosperity and the MT Horizon.

The irresistible conclusion on the facts is that the respondent companies are the respective registered as well as beneficial owners of the respondent vessels. Being companies, they have their independent legal entities and can own and disown their properties. The natural persons own the shares of the companies whereas the companies own the properties. Even if it is traced out who owns the respondent companies, the legal position will be that the respondent companies are the owners of the respondent vessels and not the persons/individuals who own the shares of the respondent companies. Unveiling of the incorporation would only be required if there is an allegation of fraud and deceit on the part of any of the respondents. In the present case the appellant has not made any such allegation. The appellant has also admitted that the respondent companies were the registered owners of the respondent vessels. No further investigation is required to ascertain the ownership/beneficial ownership of the respondent vessels. It would not be just and legal to discard and ignore the admitted position and rely upon the common factors of the respondent companies.

In MV Sea Success I v Liverpool & London Steamship Protection & Indemnity Association Ltd (AIR 2002 Bombay 151), a judgment of the Division Bench of the Bombay High Court, the Court noted the requirement of common ownership for sister ships under the Arrest Convention 1952: 'The ships are deemed to be in the same ownership when all the shares are owned by the same person or persons (Article 3(2) of 1952 Brussels Arrest Convention).'

The facts do not establish that the respondent shipowning companies are subsidiaries of Glory. Rather, what emerges is that there are common shareholders/directors of Glory and the three companies. Even if the three companies were subsidiaries of Glory, this in itself would still not provide justification to hold that the ships registered as owned by the three companies are beneficially owned as respects majority shares by Glory. The respondent companies have filed documents of registration of the three ships and these show that 100% of the shares in the ships are held by their registered owners.

As regards the question of fraud, the only thing mentioned in the appeal is that there are more than 1,000 suits pending against the scrapped ships and this fact establishes that fraud is being committed by Glory to avoid liability of the claims. It is further averred that the ships scrapped were sold by Glory. Mere pendency of the suits in themselves is not a sufficient ground to sustain a claim of fraud.