World Tanker Carrier Corp (WTCC) is the appellant in these appeals. WTCC is a foreign company registered in Monrovia, Liberia. It is the owner of a vessel MT New World. The vessel is registered in Hong Kong. On 21 December 1994, the New World was involved in a collision with the MV YA Mawlaya in international waters 200 nautical miles off the coast of Portugal. The YA Mawlaya is a vessel registered in Cyprus. It is owned by Kara Mara Shipping Co Ltd (Kara Mara), a company registered in Cyprus. Kara Mara sold the vessel to Vestman Shipping Co Ltd, a company registered in Cyprus. Kara Mara thereafter became the bareboat charterer of the Ya Mawlaya. Prior to the sale of the vessel, Kara Mara had entered into a management agreement with SNP Shipping Services Pvt Ltd (SNP), a company registered in India, for the management of the Ya Mawlaya. According to the appellant, on the sale of the vessel, Kara Mara's agreement with SNP came to an end. On the other hand, it is claimed by SNP that under the management agreement it was put in charge of recruiting crew and officers of the said vessel. SNP entered into a sub-contract with Holbud Ship Management Co Ltd (Holbud) for the commercial management of the vessel. Under this agreement, Holbud were in charge of booking cargo and collection of freight in respect of the vessel. Holbud is registered in the United Kingdom.

On 3 January 1995 Kara Mara commenced proceedings in Lisbon, Portugal, in which the New World was arrested. It was released on a letter of guarantee for USD 10,073,000 by WTCC's P&I club. Between 30 December 1994 and 31 January 1995, several proceedings were brought by various claimants against the owner of the Ya Mawlaya in the District Court of New Orleans, Louisiana, USA. These included an action by WTCC for recovery of damage for damage to its ship New World.

Kara Mara thereafter filed an action for limitation of liability in Hong Kong against WTCC and all possible claimants. The Hong Kong Court, however, stayed the writ in Hong Kong on the ground of Hong Kong being forum non conveniens. Kara Mara also made a conditional application for limitation of its liability before the District Court at New Orleans, USA.

During the pendency of all these proceedings, SNP filed an admiralty suit in the Bombay High Court for limitation of SNP's liability in respect of the collision. After the filing of this suit, the Ya Mawlaya was brought to the port of Bombay under ballast. On the application of SNP in the Bombay High Court, the vessel was arrested on 17 November 1995. On 22 March 1996 Kara Mara filed an admiralty suit seeking limitation of its liability and constituting a limitation fund in respect of its liability arising from the collision. Although WTCC did not appeal in the two admiralty suits initially, it has now appeared under protest to contest the jurisdiction of the Bombay High Court to entertain those admiralty suits.

In the two admiralty suits, the Bombay High Court also granted anti-suit injunctions against WTCC restraining it from proceeding with its claims in the US Court. Contempt proceedings were taken out for breach of the orders passed by the Bombay High Court. By an order of a single Judge of the High Court in the contempt proceedings, the defence of WTCC was ordered to be struck off. On the question of the jurisdiction, the Single Judge held that the Court had jurisdiction. From both these orders appeals were filed before a Division Bench of the Bombay High Court. The Division Bench, after considering the recalcitrant conduct of WTCC and the contempt committed by it, ultimately held that WTCC should be given one more chance to appear and defend the proceedings on condition that in future it complied with all the orders of the Court. On the question of jurisdiction, the Division Bench held that the Court had jurisdiction to entertain and try the suits. WTCC appealed to the Supreme Court.

Held: Appeal allowed.

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 (the LLMC 1924). In 1957 a new Convention on Limitation of Liability of Sea Going Vessels was drafted to replace the Brussels Convention of 1924. The new Convention, the LLMC 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 is to incorporate this Convention in our statute law that Part XA was inserted in the Merchant Shipping Act 1958 (the Act).

The right of an owner to bring a limitation action is governed by Part XA of the Act. The whole purpose of limitation of liability is to protect an owner against large claims, far exceeding the value of the ship and cargo, which can be made against it all over the world in case its ship meets with an accident causing damage to cargo, to another vessel or loss of personal life or personal injury. A limitation action, though it is normally filed in the admiralty jurisdiction of a court, is somewhat different from an ordinary admiralty action which normally begins with the arrest of the defaulting vessel. The vessel itself, through its master, is a party in the admiralty suit, and the plaintiff must have claims provable in admiralty against the vessel. In the case of an action for limitation of liability, it is the personal right of the owner of the vessel to file a limitation action or to use it as a defence to an action against it for liability. It is a 'defensive' action against claims in admiralty filed by various claimants against the owner of the vessel and the vessel. A limitation action need not be filed in the same forum as a liability action. But it must be a forum having jurisdiction to limit the extent of such claims and whose decree in the form of a limitation fund will bind all the claimants.

The LLMC 1957 does not specify the appropriate forum in which a limitation action may be instituted by the shipowner, However, art 7 of the LLMC 1957 gives to a Contracting State the right to exclude certain persons from the benefit of its provisions. Thus persons not ordinarily resident in a Contracting State nor having their principal place of business in the Contracting State and ships not flying the flag of the Contracting States can be excluded.

This Court had an occasion to deal with the question of jurisdiction with reference to foreign vessels and foreign owners of such vessels. In the case of British India Steam Navigation Co Ltd v Shanmughavilas Cashew Industries (1990) 3 SCC 48 (CMI897), this Court examined the effective operation of the statutes of a country in relation to foreigners and foreign ships and said:

In general, a statute extends territorially, unless the contrary is stated, throughout the country and will extend to the territorial waters, and such places as intention to that effect is shown. A statute extends to all persons within the country if that intention is shown. The Indian Parliament, therefore, has no authority to legislate for foreign vessels or foreigners in them on the high seas. Thus a foreign ship on the high seas, or her foreign owners or their agents in a foreign country, are not deprived of rights by Court statutory enactment expressed in general terms unless it provides that a foreign ship entering an Indian port or territorial waters and thus coming within the territorial jurisdiction is to be covered ... without anything more Indian statutes are ineffective against foreign property and foreigners outside the jurisdiction.

The provisions regarding a limitation action have been reduced to a statutory form in Part XA of the Act. Part XA does not deal with or contain provisions relating to vessels. It deals with the personal right of an owner of the vessel to limit its liability in respect of claims against it arising out of an 'occurrence' to its vessel. It is a right in personam that the owner seeks to enforce against the claimants. Therefore, ss 2 and 3(15) of the Act do not apply to his action. Part XA, which deals with limitation actions, also does not contain any express provision of the kind contemplated by art 7 of the LLMC 1957.

A limitation action, as in the present case, falls under the High Court's admiralty jurisdiction. But a limitation action, though filed in admiralty, is not against a vessel. It is a protective action against claims which may be filed by others against the owner of the vessel in admiralty jurisdiction. Therefore, a plea of limitation can be taken as a defence by the owner in an action in admiralty filed against it by the claimants against it and its ship. Hence, the court, having jurisdiction to entertain an admiralty action against the vessel of the owner, has jurisdiction to set up a limitation fund for the owner. Similarly, if the owner initiates the 'defensive' action in limitation, the court which has jurisdiction to entertain a liability claim will have jurisdiction to entertain the limitation action.

Any court where such a claim is filed or is likely to be filed will have jurisdiction to entertain a limitation action. The court of domicile of the owner and the ship is a court where such a claim is likely to be filed. Therefore, that court will also have jurisdiction. Out of these, the owner has the option to choose its court for filing a limitation action.

None of the claimants in respect of whose claims a limitation fund is sought to be set up is within the jurisdiction of the Bombay High Court, nor do they carry on business within the jurisdiction of the Bombay High Court, nor have they filed claims before it in respect of the occurrence in question or have submitted to the jurisdiction of the Court. There is also no likelihood of any claim being filed there since all claims are already filed before the US Court. The Bombay High Court has, therefore, no jurisdiction.

In the present case the collision which gave rise to the owner's liability occurred on the high seas off the coast of Portugal. Neither of the vessel involved in the collision is an Indian vessel. The owners of both of these vessels are also foreigners. The charterers and sub-managers are also foreign companies. Only one out of several managers/sub-managers of Ya Mawlaya is an Indian company and the only act of management in Bombay is said to be the recruitment of the crew. This factor alone will not confer jurisdiction.

Kara Mara claims jurisdiction on the ground that its vessel Ya Mawlaya was in the Bombay harbour at the time when it filed its suit for limitation. Reliance is placed on s 2(2) of the Act for this purpose. Section 2(2), however, has no application to a limitation action per se. A limitation action is not directed against the ship nor can the action be instituted by the arrest by the foreign vessel present in the territorial waters of the country where the action is instituted. It is an action by the owner acting personally against claimants who are seeking damages in respect of the loss or injury caused by the owner's vessel. Therefore, the presence of a foreign vessel in the territorial waters will not give the court jurisdiction to entertain a limitation action by its owner unless the presence of the foreign vessels given rise to an admiralty action by a claimant in that court, which claim is subject to limitation, or the presence of the vessel has created a likelihood of such action being taken there, or the court is a domiciliary court of the owner attracting such claims there. That is not the case here. In fact, at the time when Kara Mara filed the suit, all claims were already filed against it in the US Court. No doubt Kara Mara had challenged the jurisdiction of that court and had succeeded in the first round, but that was by no means a final adjudication. Nor can one legitimately conclude from this the likelihood of claims being filed in Bombay. In the present case, the Bombay High Court is not the domiciliary court of Kara Mara or its vessel. Nor is any claim for liability which can be limited filed against Kara Mara in the Bombay High Court. None of the defendants to the suit is within the jurisdiction of the Bombay High Court.

The fortuitous presence of the ship in the Bombay harbour will not entitle the owner to file a limitation action in the Bombay High Court in the absence of any claims being made or apprehended against the owner or the vessel in that court. Therefore, bringing the ship and to the Bombay Port, in order to confer jurisdiction on the Bombay High Court, has the character of forum shopping, rather than anything else.

The presence of a foreign defendant who appears under protest to contest jurisdiction, cannot be considered as conferring jurisdiction on the court to take action. Unless a foreign defendant either resides within the jurisdiction or voluntarily appears or has contracted to submit to the jurisdiction of the Court, it is not possible to hold that the Court will have jurisdiction against a foreign defendant. The Bombay High Court, therefore, should not have entertained the two admiralty suits.