Recent Cases on Ship Breaking in Pakistan

By Pir Abdul Wahid

As we have been getting a lot of queries lately regarding the different environmental, health and safety and tax issues pertaining to Ship Breaking Industry in Pakistan.We have compiled a recent list of cases for our clients, in order to aid their understanding of the legal issues involved.For professional legal advice regarding a matter pertaining to Ship Breaking in Pakistan, please contact jm@joshandmak.com

 HYDRI SHIP BREAKING INDUSTRIES LTD v SINDH GOVERNMENT 2007 MLD 770     KARACHI-HIGH-COURT-SINDH

–Rr. 48 & 216—Constitution of Pakistan” (1973), Art.199—Constitutional petition—Alternate remedy–Alternate remedy by way of appeal under Rr.48 & 216 of West Pakistan Municipal Committee Octroi Rules, 1964, was available to the petitioners—Petitioners in some cases, had in fact, filed appeals which were pending before’ concerned officers of Municipal Corporation; in other cases appeals had not been filed and the petitioners had straightaway approached the High Court—High Court entertained constitutional petitions for the reasons that the vires of the relevant Octroi Rules had been challenged in the petitions and it could not be reasonably expected that an officer of Principal Corporation, the designated Appellate Authority would decide that said Rules, were ultra vires that on merits the point involved in the petitions was the interpretation of the words “consumption, use or sale of the Octroi limits” used in West Pakistan Municipal Committee Octroi Rules, 1964; that nearly two years had passed and not a single decision by the Appellate Authority had apparently been given; that huge amounts were involved and practically the entire ship-breaking Industry was affected; that speedy decision on the question involved was not only necessary, but desirable to clarify the legal position that if petitioners would be directed to go back and file appeals, final decision would be further delayed by some years, that point involved for decision in the petitions, was a matter of general importance and was going to affect a very large number of citizens and that question being decided did not involve an inquiry into any disputed facts and in fact the decision being given was based on admitted facts only—Constitutional petition, in circumstances was the appropriate remedy in the present cases and appeal under Rr.48 & 216 of West Pakistan Municipal Committee Octroi Rules, 1964 was not an adequate and efficacious remedy.

 USMAN ENTERPRISES Vs.  FEDERATION OF PAKISTAN 1997 MLD 3161  QUETTA-HIGH-COURT-BALOCHISTAN

Customs Act 1969 —S. 83(2)—Deferment of Import Duty (On Ships for Scrapping) Rules, 1993, R.5—Constitution of Pakistan (1973), Art. 199—Constitutional petition–Penalty to recover mark-up—Essentials—Provision of S.83(2), Customs Act, 1969, indicated that if on return of Bill of Entry within period of 30 days, outstanding dues had not been paid, Department could claim surcharge at specified rate—Bill of Entry, so far having not been returned to petitioner, Department could not invoke impliedly such provision of law, except deterring petitioner not to carry out ship-breaking and declining him in future not to avail facility of Deferment Rules—No other penalty to recover specified mark-up dues could be charged from petitioner—Authorities were not competent to incorporate such penal clause (recovery of mark-up) in R.5, Deferment of Import Duty (On Ships for Scrapping) Rules, 1993—Action of Authorities claiming specified mark-up from petitioners being not sustainable in law, was declared to be without lawful authority and of no legal effect.

  SPHINX SHIPPING AGENCY P.E.C.H.S Vs.  M.V. JUSTICE 1997 PLD 216     KARACHI-HIGH-COURT-SINDH

Admiralty Jurisdiction of High Courts Ordinance 1980 Ss. 3(2)(o) & 4(4)(b)—Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2—Suit against vessel—Interim order of arrest of ship/vessel granted by Court—Validity—Defendants (vessel) claimed that plaintiff’s case was not covered under S.3(2)(o), Admiralty Jurisdiction of High Courts Ordinance, 1980; that litigation between parties at the Court in Egypt had been suppressed by plaintiff—Documentary evidence placed on record established that vessel in question was renamed a number of times and changed hands—Vessel against which plaintiffs based their claim had arrived at Bombay and was sold to ship-breaking company and was beached, dismantled and sold as scrap—Vessel in question, had been completely destroyed and no longer existed—Plaintiff’s claim was not covered by provisions of maritime lien—Application for arrest and detention of ship in question was without any substance .and was dismissed—Ad interim order earlier granted was recalled in circumstances.

 SPHINX SHIPPING AGENCY P.E.C.H.S Vs. M.V. JUSTICE  1997 PLD 216     KARACHI-HIGH-COURT-SINDH

Civil Procedure Code –Order XXXIX of C.P.C. Temporary Injunctions and Interlocutory Orders Ss. 3(2)(o) & 4(4)(b)—Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2—Suit against vessel—Interim order of arrest of ship/vessel granted by Court—Validity—Defendants (vessel) claimed that plaintiff’s case was not covered under S.3(2)(o), Admiralty Jurisdiction of High Courts Ordinance, 1980; that litigation between parties at the Court in Egypt had been suppressed by plaintiff—Documentary evidence placed on record established that vessel in question was renamed a number of times and changed hands—Vessel against which plaintiffs based their claim had arrived at Bombay and was sold to ship-breaking company and was beached, dismantled and sold as scrap—Vessel in question, had been completely destroyed and no longer existed—Plaintiff’s claim was not covered by provisions of maritime lien—Application for arrest and detention of ship in question was without any substance .and was dismissed—Ad interim order earlier granted was recalled in circumstances.

 

SEMCO SALVAGE PTE LIMITED Vs KAPTAN YUSUF KALKAVAN TURKISH 1995 MLD 706 QUETTA-HIGH-COURT-BALOCHISTAN

Admiralty Jurisdiction of High Courts Ordinance 1980 —-S.3—Maritime lien—Appellant’s claim pertaining to remuneration of salvage services—Vessel in question was arrested by Egyptian Authorities and was sold by auction; charges of port were deducted and balance was deposited in Suez Court of First Instance—Respondent purchased the vessel and brought it to Pakistan for ship-breaking —Appellant instituting action in rem for recovery of remuneration of salvage service by filing civil suit under original jurisdiction of High Court—Appellant’s claim for recovery of remuneration of salvage services on determination of preliminary issues was dismissed—Validity—Relevant law by which maritime lien would be determined—Vessel in question having been arrested and sold through auction in Egypt and balance amount being deposited with Egyptian Court, relevant law applicable would be Egyptian Law whereby maritime lien was attached with the vessel and in terms of said law, claim secured by the lien would follow the vessel into whatever hands it might pass and such right would cease to exist, when judicial sale had been effected—Sale by order of a competent Court in the proceedings in rem would extinguish all liens attached to the res and would convey valid title to purchaser free from all encumbrances against the whole world—Sale of ship in question by Administrative Authorities of Suez Port could not be equated with the sale by Admiralty Court—In absence of judicial sale by competent Court, appellant’s claim for salvage services had its maritime lien against the vessel under S.3, Admiralty jurisdiction of High Courts Ordinance, 1980 read with Arts. 1, 6 & 7 of Law No.35 of 1951 of Egypt.

GOVERNMENT OF BALOCHISTAN Vs. SHERSHAH INDUSTRIES LTD., KARACHI  1992 SCMR 1062     SUPREME-COURT

Baluchistan Local Government Act 1975 —-S.234—Balochistan Local Government Ordinance (IX of 1979), S.240–Efficacy of earlier notification authorising imposition of tax and their continuance was preserved by S.234 of Act XII of 1975 and S.240 of Ordinance IX of 1979—Imposition of duty on ship-breaking by local council concerned was in accordance with the terms of law then in force.

 FEDERATION OF PAKISTAN Vs. MESSRS NOORI TRADING CORPORATION (PRIVATE) LTD. 1992 SCMR 710     SUPREME-COURT

Central Excises and Salt Act 1944 —-S.3(c) (inserted by Central ,Excises and Salt Act (Amendment) Ordinance (III of 1980)—Levying of excise duty on iron and steel plates—Contention that ship-breaking had already taken place and plates were recovered before Ordinance III of 1980 came into field and thus such plates were not liable to excise duty, was misconceived—What had been made liable to tax was not the ship-breaking activity itself but certain items recovered as a result of ship-breaking and not all items—Liability to pay excise duty would be from the date on which goods were cleared for export or for home consumption.

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