@JUDGMENTTAG-ORDER
D.G. Deshpande, J.@mdashThe plaintiffs in both the suits are different, however, the defendants vessel is same. Advocates for the plaintiffs and defendants are common. Issue involved in both these motions is also common, and therefore, both the motions were heard together, and I am passing a common order.
2. In both the suits the defendants vessel m.v. Bercy was arrested as per Judge''s Order passed. The defendants were directed to deposit in the Court a sum of US Dollars 109, 158=59 in Admiralty Suit No. 108 of 1996 with future interest at the rate of 1.5% per month on the principal amount of US Dollars 103, 762=92 from the date of the suit till payment inclusive of costs of arrest of the vessel and sheriff poundage etc. or defendants was given choice to furnish security for the amount aggregating to US Dollars 109, 158=59 to the satisfaction of Admiralty Registrar towards the plaintiffs'' claim, costs and sheriff poundage. On complying either of these conditions it was directed that the warrant of arrest shall not be executed against the defendants vessel m.v. Bercy.
3. Similar order was passed in Admiralty Suit No. 109 of 1996 subject to verification in the amount involved in that suit. However, in that suit the defendants were directed to pay interest at 3% per month or 36% per annum.
4. It is the matter of record that in both these suits the defendants vessel did not deposit the amount in cash but furnished security by way of Bank guarantee and these motions have been taken out by the defendants for reduction in the rate of interest in both these suits from 18% per annum in Suit No. 108 of 1996 and from 36% per annum in Suit No. 109 of 1996 to 5% per annum.
5. I heard both the advocates at length. It was contended by the Counsel for the defendants that if the Judge''s order is taken as it is, there is no direction to the defendants to pay interest or to furnish security covering interest accrued on the principal amount and condition to pay interest is only in respect of deposit of the principal amount in the Court. And therefore, he contended that the defendants cannot be made liable to furnish security covering interest on principal amount either at the rate of 18% p.a. or 36% p.a. according to the claim in the suits.
6. Secondly, it was contended by the defendant''s Counsel that Justice Shrikrishna by his order dated October 19, 1995 in Admiralty Suit No. 60 of 1995 observed and held that when a claim is in respect of U.S. Dollars, the rate of interest cannot be higher than the commercial rate of interest in the United States of America. And therefore, the rate of interest was reduced by Justice Shrikrishna to 5% p.a. since the claim was in U.S. Dollars. It was contended by the defendants'' Counsel that the defendants is a purchaser of the vessel and owner of the vessel was not joined, and therefore, if the liability of the defendant was to be considered then rate of interest could not be more than 5% p.a. Lastly it was contended that u/s 34 of the CPC it was a discretion of the Court to award future interest and since this transaction between the plaintiffs and original owner was not commercial transaction discretion granted u/s 34 of the CPC was required to be exercised by reducing rate of interest.
7. On the other hand it was contended by the Counsel for the plaintiffs that though admittedly there is a mistake in the Judge''s order regarding rate of interest in case defendants furnished security the plaintiffs could not be liable to suffer on account of the said mistake and he further contended that if party to Admiralty Suit deposited amount in cash, he was not made liable to pay future interest because amount was deposited by him could be invested so as to fetch maximum interest. He further contended that if the security was furnished in such cases by the defendant then defendant was made liable to pay interest on the principal amount claimed. It was further contended by the Counsel for the plaintiffs on the basis of certain rulings reported in 1)
8. So far as non-joinder of real owner is concerned, the law permits the plaintiffs to file suit in rem only against the vessel, and therefore, non-joinder of the real owner of the ship will not affect the suit. However, this objection was taken by the defendants regarding nonjoinder of the owner not for seeking dismissal of the suit but for pointing out circumstances to the Court for reduction of the interest from 18% or 36% to 5% p.a. Consequently it is true that if the plaintiffs make out a prima facie case then defendants can be asked to deposit requisite amount in Court inclusive of costs and interest or to furnish security. However, the question is that when the amount is paid in U.S. Dollars whether the Court could have ordered the party to pay interest at the rate of the contractual rate of interest?
9. Counsel for the plaintiffs relied upon certain judgments in support of his contention that rate of interest could be agreed by the parties even up to 75% and the Court had honoured this agreement and interest at that rate. It is also true that in his judgment reported in
10. However I am unable to accept the contentions of plaintiffs Counsel for two reasons, firstly, the Judge''s order does not require defendants to pay any interest on the amount of U.S. Dollars 109, 158=59. Condition to pay interest was only in respect of the amount deposited. I am reproducing part of the Judge''s order for the sake of convenience :-
"And I do further order that in the event of the defendants depositing with this Hon''ble Court U.S. $ 109,158.59 with interest at the rate of 1.5% per month on the principal amount of U.S. $ 103,762.92 from the date of filing of the suit till payment together with the sum U.S. $ 800 or equivalent to Indian Rupees 25,000/- (Rupees twenty five thousand only) for costs of the arrest of the vessel aggregating to U.S. $ 109,958.59 towards the plaintiffs claim, costs and sheriff''s poundage or furnishing security in the said sum of U.S. $ 109,958.59 to the satisfaction of the Admiralty Registrar of this Hon''ble Court as security towards satisfaction of the plaintiffs claim, costs and sheriff''s poundage herein, the Warrant of Arrest shall not be executed against the defendant vessel m.v. "BERCY".
From the wordings of the aforesaid order it is clear that if the defendants chose to furnish security the order did not require to cover amount of future interest. The security was to be in respect of satisfaction of the amount plus costs and sheriff''s poundage. Secondly, the contention made by the defendants advocate is strongly supported by the order of Justice Shrikrishna referred to above. I am reproducing relevant para at page No. 4 of the said order as below :-
"Mr. Rambhadran then contended that the claim was exaggerated and, therefore, it would be unjust to expect his clients to provide security for the full amount, the particular of which are exhibited in Exhibit ''Q'' to the plaint. He contended that there was no agreement for payment of interest at 21% per annum and, in any event, since the claim is in U.S. Dollars, the rate of interest cannot be higher than the commercial rate of interest in the United States of America. There is some justification in this grievance made by Mr. Rambhadran. The interest rates needs to be reduced to 5% since the claim is made in U.S. Dollars. Even taking the reduced rate of interest at 5% per annum, the total amount of the claim for repairs falling within section 5 of the Act would come to a figure of U.S. $ 111,400."
Admittedly, the claim in this suit is in respect of U.S. Dollars, and therefore, applying to the same analogy adopted by Justice Shrikrishna, the interest rate cannot be higher than the commercial rate of interest in the United State of America. In that case Justice Shrikrishna reduced the rate of interest to 5% and therefore, even if, the Judge''s order is silent in respect of interest in the present both these cases, the plaintiffs are entitled to 5% interest on their claim in respect of the principal amount. For all these reasons both the motions are partly allowed. The interest rate is reduced from 18% to 5% and 36% to 5% per annum respectively. Motions disposed of accordingly. This reduction is in respect of future interest from the date of the filing of the suits. At the request of the plaintiffs Advocate, operation of this order is stayed for three weeks on the condition that the plaintiffs preferred appeal they give 48 hours notice to the defendants.
