This was an appeal and counter-appeal from the decision of a single Judge in proceedings arising from the sinking of the MSC Elsa 3 off the Kerala coast. Several cargo owners and fishers filed admiralty claims. The shipowners applied under s 352-C of the Merchant Shipping Act 1958 (the MSA) for a limitation of liability decree. The claimants argued that a limitation suit did not lie under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the AA). The single Judge held the owners' limitation suit to be maintainable.

Held: A suit for limitation of liability falls within the admiralty jurisdiction of the High Court under the AA.

The right of a shipowner to seek limitation of its liability is provided for under Pt X-A of the MSA. The evolution of the doctrine was explained in World Tanker Carrier Corp v SNP Shipping Services Pvt Ltd [1998] INSC 186, (1998) 5 SCC 310 (CMI896):

14. Describing the nature of a limitation action, Baer in his book Admiralty Law of the Supreme Court at p. 154 traces the historic origins of limitation of liability as follows:

'[M]en would be deterred from employing ships, if they lay under the perpetual fear of being answerable for the acts of their masters to an unlimited extent.' Thus wrote the renowned Dutch jurist, Hugo Grotius, in 1625. To impose liability on shipowners for acts of their masters would be 'neither consonant to natural equity ... nor ... conducive to the public good'. Referring to the law of his own nation, Grotius continued, '[I]t is an established rule that no action can be maintained against the owner for any greater sum than the value of the ship and cargo.'

Although by no means uniform, some sort of rule of limited liability on the part of the shipowner has been the law of the leading maritime nations of continental Europe since the middle ages ...

15. In 1924 several leading nations adopted the International Convention for the Unification of Certain Rules relating to the limitation of liability of owners of sea-going vessels. This is commonly referred to as the Brussels Convention of 1924. In 1957 a new contention on Limitation of Liability of Sea-Going Vessels was drafted to replace the Brussels Convention of 1924. The new convention, commonly referred to as the Brussels Limitation Convention of 1957 was signed by many leading maritime nations of the world. It is also signed by India. The convention fixes the limit of liability of an owner of a sea-going vessel on the basis of the tonnage of the vessel without regard to the vessel's value. It was to incorporate this Convention in our statute law that Part X-A was inserted in the Merchant Shipping Act, 1958.

Section 352-C of the MSA confers jurisdiction on the High Court for an action for limitation of liability, the constitution of a limitation fund, and for consolidation of claims arising out of an incident. In World Tanker, the Supreme Court held that the High Court having jurisdiction to entertain an admiralty action against the vessel, also has jurisdiction to entertain an action for limitation of liability. Further, any Court where such claim is filed or is likely to be filed, will have jurisdiction to entertain a limitation action. The incident has occurred within the territorial waters within the jurisdiction of this Court, and claims have also been filed in this Court. The jurisdiction of this Court to entertain the present action for limitation of liability is not in dispute.

Having found the jurisdiction of this Court to entertain the action for limitation of liability, it is to be considered whether such action can be maintained as a suit under the AA. In MV Elisabeth v Harwan Investment & Trading [1992] INSC 60, 1993 Supp (2) SCC 433 (CMI883), the 'Admiralty jurisdiction' of the High Court was explained as follows:

88. Admiralty jurisdiction is an essential aspect of judicial sovereignty which under the Constitution and the laws is exercised by the High Court as a superior court of record administering justice in relation to persons and things within its jurisdiction. Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them.

89. All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law ...

91. Admiralty jurisdiction, despite the peculiarities of its origin and growth - rooted as it is in history and nurtured by the growing demands of international trade - is nevertheless a part of the totality of jurisdiction vested in the High Court as a superior court of record, and it is not a distinct and separate jurisdiction as was once the position in England before the unification of courts ...

Jurisdiction under the AA is confined to maritime claims specified under the Act. Section 2(1)(f) defines a 'maritime claim' as meaning 'a claim referred to in section 4'. The admiralty jurisdiction of the High Court under the AA is thus confined to the maritime claims arising out of s 4(1)(a)-(w). It is possible to consider that the admiralty jurisdiction under the AA lies in a narrower compass than the 'admiralty jurisdiction' as understood in common parlance.

The objections raised by the claimants, opposing the jurisdiction of the High Court under the AA over a limitation action, have no force. The words 'any question on a maritime claim' would necessarily take within their sweep the 'settlement of a maritime claim'. Questions regarding the settlement of a maritime claim cannot be said not to be 'questions on a maritime claim'. The AA is evidently intended to provide for 'jurisdiction' and 'settlement' of maritime claims. The preamble to the Act reads:

An Act to consolidate the laws relating to admiralty jurisdiction, legal proceedings in connection with vessels, their arrest, detention, sale and other matters connected therewith or incidental thereto.

Constitution of a limitation fund and its rateable distribution are questions regarding settlement of a maritime claim, and hence fall within the scope of 'any question on a maritime claim' under s 4(1) of the AA.