Gujarat High Court
Ing Bank Nv vs Mv Naias (Imo - 9611254) on 11 August, 2020
Author: Sonia Gokani
Bench: Sonia Gokani
C/AS/9/2016 IA JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (OJ) NO. 2 of 2016
In R/ADMIRALITY SUIT NO. 9 of 2016
WITH
R/ADMIRALITY SUIT NO. 9 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE SONIA GOKANI
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1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== MV NAIAS (IMO - 9611254) Versus ING BANK NV ========================================================== Appearance:
MS RUJUTA R OZA for the PETITIONER(s) No. MS PAURAMI B. SHETH for the RESPONDENT(s) No. ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI Date : 11/08/2020 IA JUDGMENT
1. The applicant has approached this Court with following reliefs:-
"16. In the above premises, the applicant therefore prays Page 1 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT that:
[A] YOUR LORDSHIPS be pleased to set aside ex parte order dated 22nd February 2016 passed in Admiralty Suit No. 9 of 2016 to arrest the Defendant Vessel with consequential relief/s thereto;
[B] YOUR LORDSHIPS be pleased to direct the Plaintiff to compensate the Applicant for wrongful detention of defendant vessel, which may be determined byt eh Hon'ble Court;
[B] YOUR LORDSHIPS be pleased to direct the Plaintiff to compensate the Applicant for wrongful detention of defendant vessel, which may be determined by the Hon'ble Court;
[C] Pending the final hearing and disposal of the instant Application, YOUR LORDSHIPS be pleased to direct the Plaintiff to furnish countersecurity of USD 99,000 being the Applicant present formulated claim in damages for the wrongful arrest of the Defendant Vessel; [D] YOUR LORDSHIPS be pleased to award costs of this application to the Applicant.
[E] YOUR LORDSHIPS be pleased to grant any othe and further reliefs in the facts and circumstances of the case and in the interest of justice."
2.This is an application preferred by the applicant-NV Naias (IMO-9611254), which is a Company incorporated under the laws of Cyprus. It is the registered owner of the defendant-vessel and it has entered appearance for the protest for the limited purpose of vacating the order of arrest dated 22.02.2016, passed against the defendant-vessel.
Factual Matrix
2. The plaintiff is the bank incorporated under the banking rules. It entered into an English Omnibus Security Agreement dated 19.12.2013 and avers that it has a charge receivable of O.W. Bunkers Malta Limited Page 2 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT ('OW', herein after). The plaintiff had averred that it has stepped into the shoes of OW and is authorized to take actions under the said agreement for recovery of any dues. The defendant-vessel is a foreign sea going vessel, flying the flag of Cypress. By preferring the Admiralty Suit No. 9 of 2016, the plaintiff has sought judgment and decree against the defendant -vessel and the arrest, condemnation and sale of the said vessel for securing and satisfying the plaintiff's claim of principal amount of USD 176,400 plus accrued interest and costs amounting to USD 96,960.92 from due date of invoice, till date and USD 20,000 for costs of litigation with interest, aggregating to USD 293,360.92 with further interest at the rate of 3% per month on USD 176,400 from the date of the Suit, till realization.
3. As averred by the plaintiff, on 22.10.2014, Tatsou Consulting Limited, on behalf of the defendant-vessel/ master/ owner / charterers / managers and or operators approached OW for supply of 350 MT fuel, on having specifications 380CST 3.5% (bunkers) to the defendant-vessel at Port Syros on 23.10.2014. OW issued sales order confirmation, bearing No. 14519576 to Tatsou Consulting Limited on behalf of the defendant-vessel. On 23.10.2014, via its physical supplied, OW had supplied bunkers to the defendant- vessel at Port Syros. The receipt of bunker delivery, bearing No. 6890, was issued 0n 23.10.2014. The bunkers were accepted, without raising any protest or any demur. The master / Chief Engineer of the Page 3 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT defendant-vessel acknowledged receipt of bunker by endorsing upon the bunker delivery receipt. On 23.10.2014, OW issued an invoice on account of the defendant vessel for an amount of USD176,400. It is averred by the plaintiff that the sales order confirmation and the invoice provided would be governed by OW Bunker general terms and conditions. 2013. Clause-1, under the heading of 'Payment', stated that any delay in payment of the full sum shall entitle the seller to interest at the rate of 3% per month for each month or a part thereof without prejudice to any rights or remedies available to the seller. It is also the say of the plaintiff that it had on several occasions called upon Tatsou Consulting Limited and had made request for outstanding amount. However, it neglected and failed to make the payment. Therefore, on 15.01.2016, the plaintiff intimated the advocate, representing Tatsou Consulting Limited, but, to no avail. It is, further, its say that in December, 2013, OW had informed all its customers that they have signed a revolving credit facility, which will re-finance the current facility and will provide additional liquidity. It is, further, its say that the supply of bunkers to the defendant-vessel is governed by OW's general terms and conditions. The plaintiff's outstanding claim of principal amount in USD, plus accrued interest and costs, amounted to huge amount, which has remained unpaid, so far.
4. According to the plaintiff, the bunkers are essential for Page 4 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT operation of the defendant-vessel. It constitutes necessaries, and therefore, would constitute a maritime claim. It, further, avers that OW has lien on the vessel for the bunkers supplied and therefore, even a change in ownership of the vessel cannot defeat the claim of OW. OW supplied bunkers to the faith and credit of the vessel. It has recognized maritime claim within the Admiralty Courts Act, 1861, and various maritime international conventions. It is, further, averred that the Apex Court of this Country and the Gujarat High Court also recognized such a claim, constituting a valid maritime claim. Thus, the plaintiff is entitled to proceed in rem and this Court has jurisdiction to try and dispose off this Suit, filed under the Admiralty Courts Act, 1861 and the provisions and the principles of the admiralty law, applicable and having force in India. It is, further, averred that the plaintiff is entitled to proceed against the defendant- vessel in rem and in personam because it has maritime claim and maritime lien against the defendant-vessel, and therefore, arrest, sale and condemnation of the defendant-vessel for the satisfaction of the claim is also permissible.
5. On the ground that the defendant-vessel is lying at the port and harbor at Kandla, within the territorial waters of India and within the admiralty jurisdiction of this Court, the plaintiff made a request for arrest of the vessel. It had sounded urgency, as vessel was likely to leave Indian territorial waters, soon after discharging Page 5 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT cargo, and therefore, ex parte order was requested for.
6. This Court on 22.02.2016, directed the vessel-M. V. Naias (IMO 9611254) shall not travel, if, not already travelled beyond the territorial waters of India from the port of Kandla. The Port Officer and the Customs Authorities at Kandla Port were directed to arrest the vessel-M. V. NAIS, until further orders of the Court.
7. An application was moved being Civil Application No. 125 of 2016 in the said Suit and on 11.03.2016, this Court (Coram: Mr. N.V. Anjaria, J.) ordered the request, as had been made in the Suit, for modification of the order dated 22.02.2016, to the extent to allow the release from the order of arrest, upon furnishing bank guarantee of HSBC Bank, New Delhi, for the amount referred to in the order. It also made a prayer that the vessel- M.V. Naias may be allowed to sail away from the Kandla Port.
8. The Court, on hearing both the sides and on permitting the defendant to furnish bank guarantee of any nationalized bank of India for the amount of USD293,360.92, granted the prayer and subject to furnishing of the bank guarantee of HSBC Bank, New Delhi, of the aforementioned amount, the order dated 22.02.2016 was modified.
9. By way of this application, which was originally numbered as OJ Civil Application No. 126 of 2016 and later on, numbered as 2 of 2016, the applicant- defendant has made a grievance that the plaintiff does not have any maritime lien against the defendant-
Page 6 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT vessel. It is contended that there is no privity of contract between the plaintiff and the owner of the defendant vessel. There is a material suppression on the part of the plaintiff that the master of the vessel, at the time of accepting bunkers from vessel, issued a notice of protest to explicitly clarify that there is no privity of contract between the owner of the defendant vessel and the bunker supplier. It is denied that the plaintiff has supplied any necessities to the defendant- vessel, as the bunkers, according to the defendant, were not supplied by the defendant to the vessel, but, by one Sekavin S.A.. It is, further, contended that the plaintiff had, at no point of time, any right, title or property in the bunker, which has been supplied to the defendant-vessel. It is, further, contended that the alleged claim of plaintiff has been discharged by receipt of payment for the bunker supplied by the plaintiff's agent, namely Lekeren International Limited of Cypress. A license to burn bunkers is not a maritime claim, as recognized under the 1952 or 1999 or the Arrest Conventions or the Admiralty Act, 1996. It is contended that the applicant-defendant is the registered owner of the defendant-vessel, which is evident from the certificate of registration of the defendant-vessel, issued by Cypress Flag Registry. The applicant entered into time charter party, Dated:
21.10.2014, (erstwhile time charterer) with Itiro Corporation (Erstwhile Time Charterer). The applicant-
chartered and Itiro-time charterer agreed to take one Page 7 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT charter to the defendant- vessel for the period of 40 to 50 days. A copy of the time charter, Dated :
21.10.2014, is also forming the part of the record. It is, further, the say of the respondent that on the date of filing of the instant Suit before this Court, the erstwhile charter had already come to an end and the defendant-vessel had already been delivered by Itiro / erstwhile time charterer to the applicant on 21.12.2015. This, according to the defendant, is evident from a message received from the master of the defendant-vessel notifying the re-delivery of the vessel, under the erstwhile time charterer.
10. It is contended by the defendant and the erstwhile time charterer that the salient terms have provided that Itiro / erstwhile time charterer party is solely responsible for making, procuring bunkers for the defendant-vessel. Clause-31 of the charter states that "Charters undertake to bunker the vessel to their own account for the performance of the intended voyage." According to the applicant-defendant the erstwhile time charterer chartered through Itiro would be the party, solely responsible for making, procuring, stemming bunkers for the vessel and for making the payment for the same, as well, as provided in Clause- 31 (1) of the Charter states. "Charters undertake to bunker the vessel to their own account for the performance of the intended voyage." According to the defendant, the plaintiff has made false statement in relation to the bunkers provided. Moreover, the adverse Page 8 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT inference needs to be drawn, since, the plaintiff was also required to name its contractual counterpart to the bunker supplying contract. The time charterer explicitly excluded Itiro from procuring bunkers for the defendant-vessel. Clause-78 (2) of the Timer Charter stipulates as follows:
"The charterer will not procure any supplied for the vessel, services, port expenses and bunkers on the credit of the owners or in owner's name."
11. According to the defendant, it is a worldwide business norm that the time charterer is the sole party, having the obligation to procure bunkers for the ship and not the owner of the vessel. The erstwhile time charterer also precluded Itiro from allowing any third party to create a lien over the vessel.
12. In any event, under the Indian Law, contractual non-possessorily cannot be created by any party other than the owner of the ship. It is trite law, as urged by the plaintiff, bunker supplier does not have a maritime lien over the vessel for bunker supplied to the vessel and that maritime lien cannot be created by a contract, as provided in the decision of the Apex Court in (2003) 1 SCC 105.
13. According to the defendant, from the bunker delivery note annexed to the plaint, it is quite evident that the party, which supplied bunkers to the vessel was one Sekavin, as an independent bunker supplier. Therefore, it is blatantly false assertion that plaintiff Page 9 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT supplied necessities for the defendant-vessel. The plaintiff also mis-construed the purport of bunker supply note, where, there is a complete absence of any contractual counter-party. Being the applicant, there are no frank and full disclosures, while obtaining ex parte order of arrest. It maliciously suppressed that the master of the defendant-vessel, at the time of acknowledging the receipt of bunker supply receipt, had issued a note of protest, which was signed by the actual physical supplier of the bunkers-Sekavin, stating specifically that his signature was only lodged on the bunker delivery note. According to it, there is no contractual relationship between OW Bunker or Sekavin.
14. According to the defendant, OW Bunkers directed Lekeren of Cypress to supply bunkers to the defendant-vessel and Lekeren, in turn, directed the actual physical supplier of bunkers, i.e. Sekavin, to supply bunkers for the defendant-vessel on 23.10.2014. OW Bunkers failed to pay Lekeren for the value of bunkers sold to OW Bunkers and also failed to compensate Lekeren for its services rendered in supplying bunkers to the defendant-vessel.
15. It is, thus, clear that OW Bunkers had directed Lekeren International Limited, Cyprus, to supply the bunkers to the defendant vessel and the Lekeren had directed the physical supply consumer bunkers, i.e. Sekavin, to supply stem bunkers for the defendant- vessel. OW has failed to pay Lekeren for the value of Page 10 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the bunkers sold to the defendant-vessel, and therefore, OW Bunker, at no point of time, had title to property in bunkers that had been supplied to the defendant-vessel on 23.10.2014, as per the say of the defendant. Itiro-the time charterer entered into a settlement agreement on 08.12.2014, whereby, the Itiro agreed to pay Lekeren, a sum of USD175350 in substitution of OW bunkers. Lekeren, thus, had ostensible authority to buy OW bunkers with respect to the transactions carried out, relating to supply of bunkers to the defendant-vessel on 23.10.2014 and that would also include consideration for the services rendered for and on behalf of the OW Bunkers and settle claims for on its behalf. The erstwhile time charterer, in good faith, remitted the funds to the bank account of Lekeren and also discharged its obligations of bank under the bunker supply with the OW Bunker.
16. It is alleged by the applicant that the plaintiff, when obtained ex parte order of arrest against the defendant vessel on 22.11.2016, it willfully suppressed material fact that OW Bunkers did not have title or property in the bunkers, which had been supplied to the defendant-vessel. It also did not reveal that its agent had supplied bunkers to the defendant-vessel, which had already received payment for the same. Furthermore, OW bunker neglected to pay to the Lekeren for the value of the bunkers supplied. This is reflective of the fact that it has not approached the Court with the clean hands. It played fraud upon the Page 11 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Court, and therefore, it is alleged of culpable of crassa neglegentia and or malice with willful suppression of material facts. A grievance is also made that the ex parte order of arrest is obtained by the plaintiff, which is a palpably a wrong move on its part.
17. It is, further, urged by the defendant that it is incurring crippling losses, as a result of such an ex parte order of arrest, suppressing material facts. It is, therefore, urged to set aside the ex parte order passed of arrest of the vessel and also in wake of its furnishing the security to get the security back and to get the counter security of USD99000 towards the damages.
18. In the affidavit-in-reply filed on behalf of the original plaintiff, all the averments set out in this application have been denied in toto. It has relied upon the OW terms, which provide that the defendant- vessel, her owners and charterers are jointly and severally liable under the bunker supply contract. It is averred that OW terms provide for a maritime lien on the vessel, to whom the supply is made.
19. Clause-C.6, Clause 1.9 and Clause 3.5 have been heavily relied upon, which shall require discussion at this stage. According to the plaintiff, OW terms are standard terms, applicable for all the supplies made and also available on the website. Even the sales order confirmation indicates that the terms of supply will be governed by the said OW terms and from these clauses, an attempt is made to show that the plaintiff would have maritime lien over the defendant-vessel.
Page 12 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT The applicant-defendant had full knowledge of the said maritime lien, as OW specifically provided for the responsibility on the purchaser to communicate the terms and conditions of the OW terms to the owner of the vessel. There is no communication on the part of the buyer that would legitimately support the claim of the defendant. Rest of all aspects have been denied in toto. According to the plaintiff, OW terms, Clause E-4, also provides that the buyer had expressly undertaken not to make any endorsement, complaint before Court on the BDR, when presented for signature by the buyer's representative and any note of protest is opposed to supply document and does not alter the plaintiff's position and claim.
20. The plaintiff denies of having received any amount either by itself or its agent. It is also the say of the plaintiff that Lakeren had an ostensible authority to bind the plaintiff and also the supply contract was between the plaintiff and the defendant-vessel / her master /masters. Therefore, any funds, even if, in "good faith" remitted to Lekeren would in no manner discharge the obligation, which the vessel would have. According to the plaintiff, on one hand, the defendant is acknowledging the contractual obligation to make payment to the plaintiff and on the other hand, it alleges that the payment to be made to it, is the liability of Itiro and thus, making of payment to a third party without the knowledge of the plaintiff, dischargeS the liability of the vessel. According to the plaintiff, the Page 13 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT parties were clear in their understanding that the contractual obligation of making payment was to the OW bunker and the defence raised is only an attempt on the part of the defendant to hoodwink the plaintiff by failing and neglecting to pay.
21. It is also urged that the OW terms had provided that the title / property in the bunkers and the title remains with the seller, until full payment has been made and until that is done, the buyer is bailee of the bunkers and is entitled to use them only for propulsion of vessels and the title would continue to remain with the seller and buyer would have express permission to consume bunkers for the propulsion of the vessel. During the credit period, according to the plaintiff, the bunkers might be consumed. However, the title of the bunkers was never transferred from the plaintiff to the defendant. Since, (1) there was a retention of title clause in the bunker supply contract; (2) the period of credit given to the defendant before payment fell due and (3) it was only the permission given to the defendant to consume the bunkers during the such credit period and (4) the fact that some or all of the bunkers supplied were likely to be consumed before the credit period. The property in such bunkers would cease to exist upon the consumption. This according to the plaintiff would mean that the parties understood clearly that the title in the bunkers would never be transferred from the plaintiff to the defendant, unless the full payment is made. According to the plaintiff, Page 14 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT there are triable issues. The plaintiff is a global multi- national bank of excellent standard and therefore, the undertaking given by the plaintiff is valuable and no additional security would need to be provided, as requested for.
22. Affidavit-in-rejoinder, on the part of the applicant-defendant also, is already on the record, where, it has put forth its case, and therefore, any further reiteration, would not require any specific reference, at this stage, All the statements, allegations and contentions have been denied and disputed. According to the defendant, the plaintiff is seeking to blur the water-tight distinction between a maritime claim and a maritime lien. The bunkers were specifically received for and on behalf of Itiro, the erstwhile time charterer, with whom, OW Bunker had a bunker sell contract. It is, further, contended that as a general rule of contractual preparations, standard terms cannot be unilaterally incorporated into a contract without the other party being drawn to the same. The OW Group General Terms and Conditions, 2013, is not a general standard form in the shipping industry for the same to be incorporated by a mere reference. Itiro, the erstwhile time charterer, were not provided with the order, bunker supply standard terms, at the time of concluding the bunker sale contract with OW Bunkers. In any event, according to the defendant OW Bunker Supply Standard Terms are silent on who the contractual counterparty of the Page 15 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT bunker supplier would be. It is, further, urged that the clause defining the buyer may be enforceable in jurisdiction in such as United Stated of America, under whose domestic statutory law, supply of necessities is held to be a maritime lien. English law, which is the law governing the bunker sell contract, Indian law, which is the law applicable in the instant case and other common law jurisdiction, such as Singapore etc. would not recognize a maritime lien for bunker supply to a vessel. It is emphatically urged by the respondent that whether or not, the plaintiff has maritime lien, the applicable law would be the laws of the forum lex fori. It is the laws of jurisdiction in which the legal action is brought. It is the say of the defendant that the English law does not recognize the concept of maritime lien for necessaries, which means that for the charges goods and services rendered to the vessel, which is the supply of bunkers. English law does not accept the concept of maritime lien and the bunker supply will not obtain an order of arrest against a vessel in absence of privity of contract with the registered owner of the vessel. It is also the say of the defendant further that the Clause 78 of the erstwhile time charter party provide that the charterers undertake that during the period of the charter party they will not secure any supply, services, port expenses and bunkers on the credit of the owners or in the name of the owners, will provide evidence thereof to the owners. It is, therefore, denied that the plaintiff has a maritime lien against the Page 16 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT defendant vessel. The plaintiff can enforce its purported maritime claim against the vessel, if, it can demonstrate that the registered owner of the defendant-vessel is in personam liable for the claim of the plaintiff. For privity of contract with the registered owner of the defendant-vessel, nothing could be produced by it, to prima facie, permit the maintenance for bringing this Suit. It is the say of the defendant that OW Bunker Standard Supply Terms is governed by the English law, wherein, a maritime lien for the supply of bunkers cannot be created by the contract. The plaintiff is not permitted to cherry-pick maritime lien clause being Clause 3.5 in the OW Bunker Supply Standard Terms and contend that the said clause is subject to the laws of United State of America, while the remaining laws in the OW Bunker Supply Standard Terms are subject to Indian Laws. The parties cannot by contract create rights, detriment to the rights of other creditors, which are not enforceable in law. It is emphatically contended that the applicant was not involved with the procurement of the bunkers for the defendant vessel as the same was the sole responsibility of Itiro and therefore, there was no question of being aware of bunker sale contract, let alone, any terms of the OW Bunkers Supply Standard Terms. That stand on the part of the plaintiff that it was not actual physical supplied of the bunker to the defendant vessel is also not be challenged by urging that approbates and reprobates, while admitting that Page 17 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the intermediate was Lekeren in substitution of OW Bunker and the direction of the OW Bunker and on the other hand, it seeks to disassociate self from the act of Lekeren. It is, therefore, contended that the bunkers supplied to the defendant-vessel were not of the ownership of the plaintiff, but, that of Lekeren. The bunker delivery note, which is, sought to be much relied upon, according to the defendant, was only a mere receipt of knowledge that bunkers had been supplied to the vessel and nothing turns on the same. According to the defendant, a mere retention of title clause in a sale contract, does not take the contract out of the ambit of the contract for the sale of goods. Even if, the plaintiff has a claim under a contract to be a purported license to burn bunkers, the claim can only be lodged against Itiro the erstwhile time charterers. The plaintiff cannot saddle any party with the liability it deemed fit for the alleged breach of purported contract relating to licence to burn bunkers. Therefore, it is urged that it has not approached the court with clean hands.
23. This Court has heard the learned Counsels with the learned Advocates on both the sides and also has received the written submissions for and on behalf of the applicant-defendant and the plaintiff.
24. The thrust on the part of the defendant is that the plaintiff has tacitly admitted that Lekeren, an intermediary bunker supplier has till date not raised any claim on the liquidation of assets of OW Bunkers.
Page 18 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT This, according to the defendant, can be deduced from the inability of the plaintiff to place on record the documents, whereby, the Lekeren has made a claim of liquidation of assets of the OW Bunkers, despite, having been directed by this Court. Again, since, the plaintiff has not replied to the additional affidavit to bring on record further documents dated 11.01.2017, it has urged that the adverse inference should be drawn as further documents are missing even after 18 months, despite the fact that these documents relate to the transaction between OW bunkers and Lekeren. Since, ING Bank is an assignee of OW Bunkers, according to the defendant, it ought to be aware of the transaction between OW Bunkers and Lekeren. Again, Clause-9 of the Lekeren's terms and conditions provides that the title innate to the bunker delivered shall remain vested in the seller, until full payment is received by the seller of the sum due in connection with the respective delivery. Reliance is placed on Section 19(1) of the Sales of Goods Act, 1930, which provides that when there is a contract of sale of specific or ascertained goods, the property is transferred in the name of the buyers, at such time, when the parties to the contract intend the same to be transferred. It is emphasized that the property in the bunkers will pass from Lekeren to OW Bunkers only when, Lekeren receives payment from OW Bunkers. Until this point of time, OW Bunkers could not sell bunkers to a third party. With no document or material having come on Page 19 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT record, refuting the authenticity of the SWIFT receipt dated 09.12.2014, evidencing Itiro,the time charterer's remittance of USD175350 and SWIFT receipt dated 15.12.2014 having paid Lekeren, at the best there is a difference of USD 1000 and for such paltry sum, arrest of ship in this Admiralty jurisdiction could not have been urged. It is urged that the entire suit is bogus and does not deserve to be entertained.
25. It is also urged that plaintiff is unable to place any record refuting the settlement agreement dated 08.12.2014. SIt is, further, the say of the defendant that Section 4(1) of the Sales of Goods Act provides that a contract of sale of goods is a contract, whereby, the seller transfers or agrees to transfer the property in goods to the buyer for a price. Here, although, OW Bunkers did not have any property in the bunkers to transfer to the owner, it is emphasized that underlying contract, pursuant to which the Suit has been filed, has been repudiated and no cause of action existed against the defendant. It is, further, the say of the defendant that there exists no triable issues, which can be determined by way of a trial. Possible triable issues would be, wherein, there is a serious dispute of fact, where, both the parties would produce contradictory documents where OW Bunkers produced the documents indication that they have paid Lekeren or OW Bunkers produce documents, which reveal that Lekeren, despite being paid for the supply of the bunkers to the vessel, has lodged claim against Page 20 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT liquidated estates of OW Bunkers. It is urged that it would be a travesty of justice, if, the Court mechanically decides this application, then, the factual findings cannot be adjudicated or arrived at. Although, the facts are presently obvious from the documents, which are placed on record by the parties. According to the defendant, the Suit is an abuse of process of the Court, inasmuch as the OW Bunkers is not out of pocket by a penny and is trying to unjustly enrich. All in all, the say of the defendant is that there is a serious issue of privity of contract between the bunker supplier and the registered owner of the vessel and therefore also, this application needs to be allowed.
26. The plaintiff-opponent in its detailed submissions, oral as well as written, has questioned the existence of time charter party between Dymi- owner and Itiro as according to the Plaintiff, it is a disputed fact, as the plaintiff has denied the same. And again, the charter party is an internal arrangement and of which the plaintiff is not aware. It is only by leading the evidence, at the stage of trial, whether, the time charter had authority to bind the vessel or not can be proved. By accepting goods on board, the vessel, OW bunkers' general terms and conditions are accepted by the masters of the vessel.
27. According to the plaintiff, which has in detail argued orally as well as has given written submissions, the bunkers were admittedly supplied and received by the vessel and that aspect has not been questioned by Page 21 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the Dyami, the owner of the vessel. Supply of bunkers or necessaries is a maritime claim under Section 4 of Admiralty Act, 2017. The plaintiff has filed action in rem against the defendant vessel for recovery of the unpaid amount of bunkers supply made to the defendant vessel. The order, admittedly, was placed by Tatsou for and on behalf of the owner of the vessel and the same has been consumed by the vessel, which are the necessaries for her operation.
28. It is the say of the plaintiff that in a series of judgments of this Court, it has been held that the supply of bunkers to the defendant vessel constitute a maritime claim and they lay down clearly that bunkers are supplied to the credit of the faith and credit of a vessel and the vessel and her owner would be liable. A vessel is treated as a juridical entity and is held liable to be proceeded against in rem, as provided in the case of 'M.V. ELIZABETH' (1993) Suppl. SCC 433. It is, further, the case of the plaintiff that the supply is made, as per the plaintiff's general terms and conditions and by accepting the bunkers on port, the vessel and all interested in her, including the applicant, has accepted the said terms and conditions, where, lien is created in favour of the plaintiff.
29. According to the plaintiff, with regard to the note of protest argued by the defendant, according to the plaintiff, non-production of purported note of protest will have no bearing, at this stage. It is urged that even if such a note existed, whether, it was served to the Page 22 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT OW Malta or the physical supplier and whether, the OW was informed of the said issuance at the time when the bunker delivery was made and what was the stage of signing of the bunker delivery receipts are the questions to be decided at the time of trial and not at an interlocutory stage. It is urged that Clause E4 of the terms and conditions provides that the buyer expressly undertakes not to make any endorsement, complaint on the BDR, when presented for signature by the buyer's representative. Any such insertion shall be invalid and shall be of no effect whatsoever. Therefore, a clause or a note alleging no lien on the vessel is invalid.
30. So far as the question of the contract between the plaintiff and the Dymi is concerned, it is urged that the issue is already covered by a series of decisions and there exists privity of contract between the parties. A vessel, being treated as a juridical entity, is liable to be proceeded against in rem. It is insisted that the plaintiff has a maritime claim against the defendant- vessel as well as a maritime lien in respect of the necessities supplied to the said vessel. Various decisions have been relied on for the said purpose to urge that the test laid down in all these cases is, as to whether, the plaintiff is able to establish that it has a maritime claim on the basis of the documents produced with the plaint and the supply is made to the vessel at a faith and credit and all these aspects are to be proved and considered at the time of trial and not at Page 23 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT an interlocutory stage.
31. With regard to the settlement of agreement between Tatsou and Lakeren, it is the say of the plaintiff that this in no manner will bind the plaintiff. Lakeren was not authorized or an agent of the OW Malta nor was it entitled to accept the payment for and on behalf of the OW Malta. OW Malta was the sole seller under the sales order confirmation and any alleged payment to the third party unrelated cannot diminish the liability of the owner to pay for the bunkers supplied to it.
32. It is, further, the say of the plaintiff that no agreement executed between OW Malta and Lekeren has been produced by the defendant that there existed a contract between OW Malta and Lekeren. Merely, placing a purported invoice on record, raised by the Lekeren to OW Malta, without any supporting sale agreement, would not, according to the plaintiff, ipso facto suggest that a contract existed between the parties or that general terms and conditions of the Lekeren are binding to OW Malta and hence, the title would not pass to OW Malta and eventually to the plaintiff, and therefore, the same had been retained by the Lekeren.
33. It also has insisted on OW Malta's terms and conditions to govern the contract to supply between the parties and has relied on various clauses, which get referred to in its reply for the purpose of substantiating its claim. With regard to the security, Page 24 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the reliance is placed on the decision of 'VSNL VS. M.V. CAPITAL GOODS AND OTHERS', (1996)7 SCC 127, where, the Court has held that so long as the claim is not vexatious and is, in fact triable, the security requires to be retained. With regard to the counter- security or the costs, it is urged that such a question would arise only when the arrest of the defendant- vessel is held to be wrongful and that too after adjudication. The plaintiff has already tendered the undertaking, which is sufficient enough to take care of the interest of the defendant in case it succeeds. The defendant has not secured the release of the vessel immediately, despite having entered the appearance and getting the order of release from the Court on 11.03.2016. Therefore, the plaintiff cannot be saddled with any liability.
Reasonings
35. At the outset ,it is necessary to make a mention that after so many years when the matter is being heard , that too, the application for vacating the stay granted in the year 2016, ordinarily the Court is not to interfere and would prefer the matter to be posted for final hearing after recording the evidence. This being the Admiralty suit if it goes on a trial, recording of evidence is a must. However, noticing the fact that soon after the appearance, the defendant preferred this application which was pending for hearing and it was insisted on the part of the defendant that the suit itself Page 25 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT is not maintainable against the defendant under the realm of contract and Admiralty jurisdiction, the court may need to decide the issue of maintainability qua the defendant, without insisting on the parties to go for the trial, having found some substance in this plea of the defendant, this application for vacation of interim relief is heard and decided since the claim on the part of the plaintiff is that the plaintiff has maritime claims as well as maritime lien to purse the present remedy against the defendant.
36. It is to be noted that admittedly the supply of the bunker at the behest of Lekeren and the plaintiff in the year 2014 was made at Cypress by Sekavin locally and directly to the time charterers and not to the defendant who is the owner of the vessel.
37. This suit is brought on the premise that the Vessel, her owners and the charters are jointly and severally liable under the bunker supply contract of 0W. OW terms which are standard terms provide for a maritime Lien on the vessel regardless of the party to whom the supplies are made, and, they according to the plaintiff are applicable for all the supplies made and also are available on the website of OW. It is based also on the premise that when the bunkers were supplied to the defendant vessel at the Port SYROS, the receipt was issued on the very date, i.e. 23 October 2014 and acceptance of the bunkers were without a demur or any kind of protest by the master /chief engineer of the Vessel. It goes without saying that the Page 26 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT bunker supply is essential for operation of the defendant vessel and it constitutes necessaries. The agreement with the time charterer prima facie made it obligatory on the part of the time charterer to bunker the vessel to its own account for the performance of the intended voyage and it being a maritime claim essentially, privity of contract with the party is essential. Unless provided in the statute and falls under the definition of the maritime lien, defendant vessel for nonpayment or short payments of amount towards the outstanding of bunkers supplied, cannot be invoked.
38. Plaintiff also does not appear to have approached this court with all requisite disclosures. e.g. it has not stated the payment made to Lakeren by the time charters Itiro towards the payment of supply of bunkers. Assuming that Lakeren was not authorised by the plaintiff to accept any amount, nevertheless it was necessary for the Plaintiff to reveal the basic details since it approached this court invoking Admiralty jurisdiction, not having preferred the litigation at Cypress for any contractual breach. Although not for a moment there is any indication or suggestion that the right of the plaintiff to prefer any litigation at the place where the alleged breach is said to have been committed would obliterate the right of the party , if otherwise the issue that arose can also be adjudicated in Admiralty jurisdiction.
39. This court needs to take a note of protest dated 23 Page 27 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT October, 2014 issued on the day on which there was the delivery of bunker which is termed as a bunker delivery receipt by the master of the Vessel stating there in "The received bunkers are for the account of the time charterers M/s.Itiro Corporation BVI and ordered by them for my good vessel and this is a common procedure that we followed by adding these stamps in the bunker delivery receipts in all ports." It is not even out of place to make a mention of the fact that Lekeren/ intermediary bunker supplier raised invoice of US dollar 175,350 whereas the plaintiff has raised the invoice of US dollars 176,400 and therefore ,as rightly pointed out by the Learned senior counsel Mr. Soparkar that the difference is of a meager sum of USD 1050 for which the arrest of ship is made and that too, without placing on record the transactions between OW and Lekeren / intermediary supplier. The ING bank is an assignee of OW bunker and therefore, as rightly contended on behalf of the applicant/ defendant, it is supposed to be having all documents which may exist between OW and Lekeren (relating to the supply of bunkers for vessel.
40. Whether in absence of any privity of contract between the OW and the DYMI, the owner of the vessel, plaintiff can seek arrest of vessel and whether the maritime lien as defined under the law, permits arrest of vessel for the necessaries supplied shall need to be answered by looking at the the law on the subject.
Legal framework Page 28 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT
41. Before this Court decides further on merits of the case of the plaintiff in the instant case, the issue with regard to the maritime claim and the maritime lien shall need to be regarded being the most vital, firstly. For the said purpose, it would be apt to refer to the provisions of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, and some of the decisions, which are sought to be relied upon by the parties.
38. 'Admiralty jurisdiction' means, under Section 2(a) the jurisdiction exercisable by a High Court under Section 3, in respect of maritime claims specified under this Act.
1. Section 2(b) of the Admiralty Act provides the definition of the 'admiralty proceedings' which means any proceedings before a High Court, exercising admiralty jurisdiction.
2. Section 2(c) provides for the arrest, which means the detention or restriction for removal of a vessel by order of a High Court to secure maritime claim, including seizure of a vessel in execution or satisfaction of a judgment or order.
3. Section 2(e) provides the definition of a High Court in respect of admiralty proceedings, which means any of the High Court of Calcutta,High Court of Bombay, High Court of Madras,High Court of Karnataka,High Court of Gujarat and Page 29 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT other High Courts, as may be notified by the Central Government for the purpose of this Act.
4. 'Maritime claim' means, the claim referred to under Section 4, as per Section 2(f), and,
5. 'Maritime lien', as per Section 2(g) of the Admiralty Act,2017 means a maritime claim against the owner, demise charterer, manager or operator of the vessel, referred to in Clause (a) to
(e) of sub-Section (1) of Section 9, which will continue to exist under sub-Section (2) of that section.
6. 'Territorial water' is defined under Section 2(k), shall have the same meaning as assigned to in the Territorial Waters, Continental Shelf, Exclusive Economic Zones and other Maritime Economic Zones Act of 1976, and,
7. Section 2(l) defines the 'vessel' which would include any ship, boat, sailing vessel or other descriptions of vessel used or constructed for use for navigation in water, whether, it is propelled or not and includes a barge, lighter or other floating vessel of hovercraft and off-shore industry mobile unit, which also includes a vessel, which has sunk, stranded or abandoned or the remains of such a vessel.
8. Section 3 defines the 'Admiralty jurisdiction' which provides that subject to the provisions of Sections 4 and 5, the jurisdiction in respect of all maritime claims under this Act shall vest with the Page 30 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT respective High Court and it is exercisable over the waters up to and including the territorial waters of their respective jurisdiction, in accordance with the provisions contained in this Act.
39. As can be seen from the definition under Section 4, of maritime claim, it clearly provides that the High Court may exercise jurisdiction to hear and decide any question of maritime claim against any vessel. The kind of disputes, which would arise and would avail jurisdiction to the High Court for the purpose of determining the question, as to whether, it has maritime claim also has been dealt with in this provision. It is to be noted that Section 4(1)(w) says Maritime lien.
40. The High Court has discretion to order arrest of any vessel under Section 5 within its jurisdiction for the purpose of providing security against the maritime claim, which is a subject-matter of admiralty proceedings. This happens when the High Court has a reason to believe that (a)the person, who owned the vessel, at the time, when the maritime claim arose, is liable for the claim and is the owner of the vessel when the arrest is effected or (b)when the demise charterer of the vessel, at the time when the maritime claim arose, is liable for the claim and is the demise charterer or owner of the vessel, when the arrest is effected or (c) when the claim is based on mortgage or charge of the similar nature of the vessel or (d) the claim relates to Page 31 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the ownership or possession of the vessel or (e)the claim is against the owner, demise charterer, manager or operator of the vessel and secured by maritime lien, as provided under Section 9.
41. In other words, once the person, who owned the vessel, at the time, when the maritime claim arose, is found to be liable for the claim and is owner of the vessel, when the arrest is effected, the High Court has discretion to order arrest of the vessel for providing security against maritime claim and the claim if is against the owner and is secured by a maritime lien, as provided under Section 9, then also, the arrest of the vessel in rem is permissible.
42. What is important to be seen firstly is the maritime claim and as the High Court has powers to exercise jurisdiction to hear and determine any question on maritime claim, against any vessel, arising out of any disputes or issues as provided under Section 4,entire provision may not require reproduction and the relevant shall be, for the purpose of this civil application, Section 4(1)(l) as the issue concerns supply of bunker fuels for the vessel. Any dispute or question on a maritime claim arising out of any goods, materials, perishable or non-perishable provisions, bunker fuels or equipment (including containers) supplied or services rendered to the vessel for its operation, management, preservation or maintenance, including any fees payable or leviable would be covered under this provision. Admittedly, Page 32 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Section 4(1)(l) specifies that the question in relation to the supply of goods, material, bunker fuels or equipment is a maritime claim.
43. Section 9, under the heading 'Inter se Priority on Maritime Lien', provides from (a) to (e), the order of inter se priority. This defines, as to what are the maritime liens. Section 9(1)(a) states claims for wages and other sums due to the master, officer and other members of the vessels complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf.
Section 9(1)(b) provides for Claims in respect of loss of lives or personal injury occurring, whether on land or on water in direct connection with the operation of the vessel Section 9(c) claims for reward for salvage services, including special compensation, relating thereto, and 9(d) provides for claims for port, canal and other waterways dues, pilotage dues and any other dues related to the vessel; (e) and, the claims based on tort arising out of loss or damage caused by the operation of the vessel, other than loss and damage to the cargo and containers carried on the vessel.
1. Sub-Section (2) of Section 9 provides that the maritime lien specified in sub-Section (1) shall continue to exist on the vessel, notwithstanding any change of ownership or registration or of flag and shall be extinguished after expiry of a period Page 33 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT of one year, unless prior to expiry of such a period, the vessel has been arrested or seized and such arrest of seizure has led to a forced sale of the vessel by the Court. It, further, provides that for a claim in Clause (a) of sub-Section (1), the period shall be of two years or from the date on which the wage, sum or cost of social contribution fell due or payable.
2. Sub-section (3) of Section 9 provides that the maritime lien, as referred to in this Section shall commence in relation to the maritime lien under Clause (a) of sub-Section (1), upon the claims discharged from the vessel and Section 3 provides that in relation to the maritime lien clauses (b) to
(e) of sub-Section (1) when the claim arises and it shall run continuously without any suspension or interruption. The period, during which the vessel shall be under arrest or seizure, shall be excluded.
43.1 It is, thus, clear that from Section 9(a) to (e) as to what are the maritime liens. It is apparent that the goods, materials, perishable or non-perishable provisions, bunker fuels, equipment etc., which are specified as the maritime claim in Section4(1)(l) are not covered in the definition of Maritime lien and, it is a trite law that in personam liability of the owner of the vessel shall need to be established by the person claiming maritime claim. The plaintiff is, thus, legally required to show in personam liability Page 34 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT of the owner of the vessel for it to maintain action in rem against the vessel. Otherwise, the plaintiff would not be entitled to proceed against the vessel in rem nor to get the arrest of the vessel for securing any maritime claim, if, the owner of the vessel does not have in personam liability. This, of course, can happen, even without establishing any such liability, if, maritime lien exists.
44. It shall be quite appropriate, at this stage, to refer to various decisions, sought to be relied upon by the plaintiff, to urge that the supply made to the vessel, which is necessary for its operation, would make such supply of bunkers as maritime claim and contractual lien for which the action in rem is maintainable. The decisions sought to be relied upon shall be referred to one by one.
45. Taking firstly, the decision of this Court in the case of MVC Renown and another vs. Energy Net Limited, it was a Civil Application No.257 of 2001 in Admiralty Suit No.19 of 2001. The plaintiff filed the Admiralty Suit No.19 of 2001 against the defendant vessel Sea Renown seeking her arrest under the warrant of arrest. By way of an interim injunction, the Court protected the plaintiff and the defendant vessel was arrested. It was a case of the plaintiff in the plaint that it was contacted by brokers acting on behalf of the owners of the defendant vessel for supply of bunkers to the said vessel at the port Said Suez. It was stated that the bunkers were supplied to the vessel at the port by Page 35 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the plaintiff through local physical supplier and the Master and the Chief Engineer of the vessel endorsed the bunkers delivery receipts with their seal and signature. In this backdrop of facts, the Court held that the plaintiff has a maritime claim against the defendant vessel as well as maritime lien in respect of the necessaries supplied to the vessel. The Court also held that it is an established position of law that in admiralty, the vessel is treated as a juridical entity with a corporate personality and is liable to be proceeded against in respect of maritime claim irrespective of the character or personality of its own. Drawing the powers from the decision of the Apex Court in the case of M.V. Elisabeth and Ors vs Harwan Investment and Trading, 1992(1) SCALE 490, the Court did not agree to the request of the defendant to vacate the stay.
Apt would be to refer to paragraphs No.17 and 18 for this purpose:-
"17. The judicial power of this country, which is an aspect of national sovereignty, is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by courts empowered to exercise it. It is absurd to confine that power to the provisions of imperial statutes of a bygone age. Access to court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law. Where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience. [1058E,F] S.P. Gupta v. Union of India, [1982] 2 SCR 365, relied on. The Schooner Exchange v. M'Faddon & Ors., U.S. Page 36 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Supreme Court Reports, Cranch 5-9 P. 114, referred to.
18. All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law. The power to arrest a foreign vessel, while the waters of a coastal State, in respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty. This power is recognised by several international conventions. These conventions contain the unified rules of law drawn from different legal systems. Although many of these conventions have yet to be ratified by India, they embody principles of law recognised by the generally of maritime States, and can therefore be regarded as part of our common law. A specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation. It is appropriate that sufficient attention is paid to this aspect of the matter by the concerned authorities. Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence as is the position in England, can render valuable help in this regard. [1059D-H; 1060A]"
47. It is to be noted that the Court has made a specific note that the say of the defendant that it was not aware of the terms and conditions of the supply of bunkers and the same were not binding on it, are unacceptable as the delivery was on account of the owner of the vessel and it was made clear to the Master of the vessel at the time of supply of bunkers. The clause, which appeared on the face of the bunker's delivery receipt and signed of the Master or the Chief Engineer of the vessel would bind the owner of the vessel and would also hold the owner liable for payment of the bunkers."
48. The appeal against the said judgement rendered Page 37 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT by the learned Single Judge in OJ. C.A.No. 257 of 2001 filed in Admiralty Suit No.19 of 2001 had two prayers, firstly that the bank guarantee furnished by the appellant in favour of the Registrar of the High Court to obtain release of the vessel be returned and secondly the respondent be directed to pay the appellant a particular amount as damages, which had been refused. The Division Bench after detailed discussion of the entire material on record and also the law, did not entertain the appeal and while dismissing the same, it also did not entertain the Civil Application for early hearing. It is to be noted that various decisions of the Apex Court have been relied upon. The Court did not accept the contention of the appellant that there was no privity of contract between the appellant and the respondent and, therefore, the action in rem commenced against vessel was not well founded. However, before the Division Bench, it was conceded by the learned counsel for the respondent that the supply of bunkers gives rise to maritime claim but not a maritime lien. It is noteworthy that the Division Bench has also referred to the decision of the Apex Court in Epoch Enterrepots (supra). However, it has explained that paragraph No.15 of the said decision of the Apex Court explains that the ship may be arrested (1) to acquire jurisdiction (2) to obtain security for satisfaction of the claim when decreed or (3) in execution of the decree, whereas in paragraphs 21, it has listed 05 heads of lien.
Page 38 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT
49. This decision, according to the Division Bench, would not affect the claim advanced by the respondent plaintiff, as it remained a maritime claim actionable under section 5 of the Act. It is noteworthy to know that the Court has observed in the said judgment that the respondent original plaintiff relied upon two receipts issued by the Master of the vessel, wherein he had acknowledged the liability of the owners of the vessel to pay the price of the bunkers supplied. The decisions of the Bombay High Court rendered in the case of Scandinavian Bunkering Heirs and and Raj Shipping Agencies have not been followed in wake of this peculiar facts existing in this matter.
These are very peculiar facts, which are existing and have been discussed at length by the Division Bench. It shall be needed to be recorded as to whether the findings and observations of the Division Bench would have an applicability so far as the present case is concerned after a while.
50. The decision of MV Lucky Field Oils Limited vs. Universal Oil Limits , 2008(0) GLHELHC220877 requires reference at this stage. The defendant vessel through its owner Lucky Field Vessel Shipping Corporation SA, Republic of Panama filed an application for vacating and setting aside the order of arrest of defendant vessel passed by this Court and for discharge of return of security furnished as directed by the Court. It was a case of the owner of the defendant Page 39 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT vessel that there was no privity of contract between the plaintiff and the owner of the defendant vessel in order for the plaintiff to maintain an action in personam for the arrest of the vessel to secure its claim. It was further the case of the owner that in absence of any in personam liability of the owner, action in rem would not lie for the arrest of the owner's vessel. Here also, there was a case of supply of bunkers to the vessel, which was placed by IMC Maritime Group Inc. with the respondent and IMC Maritime Group Inc. were not the owners of the vessel, but the time charterers of the vessel. The request for supply of bunkers had come from the buyer and the buyer identified as IMC Maritime Group Inc. and the physical supplier of the plaintiff was one Universal Oil Limited. According to the defendant, it was very clear from the placing of the order by the broker that the buyer was IMC Maritime Group Inc. and not the original owner. It was also the case of the defendant that the decision of this Court in the case of MVC Renown and another vs. Energy Net Limited, relied upon by the plaintiff also was not applicable to the facts of this case inasmuch as in MV Sea Renown, the bunkers were supplied at the instance of time charterers. The Master expressly acknowledged the liability to pay for the bunkers supplied by issuing a receipt bearing his signature. There was an express acknowledgment of liability by the Master on behalf of the owners of the vessel for payment of bunkers supplied to the vessel and on Page 40 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT these facts, the Court had held that this had signified the acceptance of liability by the Master on behalf of the owner and consequently, it was open to the bunker suppliers to sue the owner of the vessel for recovery and file an action in rem for arrest of their vessel.
51. There was no such acknowledgment or acceptance of liability by the Master so far as this case was concerned on behalf of the vessel to pay for the bunkers supplied. The buyer IMC Maritime Group Inc. also acknowledged its liability to pay and the buyer in this case was not the owner of the vessel. It was, therefore, contended for and on behalf of the defendant that there was no privity of contract between the plaintiff and the owner of the vessel and no in personam liability of the owners of the vessel to pay for the bunkers, which were supplied at the request of IMC Maritime Group Inc. This Court, after a detailed discussion, referred to Admiralty Courts Act, 1861, which provided that the bunker supplied to the ship constitute necessaries so as to give rise to maritime claim. Again, the Court noticed that the charter party between the owner and the charterer was not known or made known or made known to the plaintiff at the time of supply of bunkers to the ship. Therefore, the plaintiff could not have known that ship was under a time charter. Since the Master of the ship/ Chief Engineers were the employees of the owner and, as they had not disclosed to the plaintiff about the time Page 41 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT charterer at the time of supply of bunkers, it was not possible for the plaintiff to know that such time charter existed.
52. Secondly, the Court also referred to the bunker confirmation, revised bunker nomination, which referred to the general terms and conditions subject to which the bunkers were supplied by the plaintiff, which provided that the sale of bunkers is subject to such general terms and conditions and the copy of the same is available on request. No such request was made by the Master of the ship and such terms and conditions were a part of the contract. The Bunker Delivery Note was again signed by the Master of the Ship and the original invoice was handed over to the Master of the ship. Looking to all these facts the Court found that they were triable and arguable issues and by no stretch imagination, it could be said that such claim can be described as vexatious. Apt would be to refer to paragraphs 15 to 19 at this stage:-
"15. Having heard the learned advocates appearing for the parties and having considered their pleadings and submissions made orally and in writing and having considered relevant provisions relating maritime laws and conventions as well as the decided case law on the subject, the Court does not find any substance or merits in this application and it is liable to be rejected. The applicant/defendant vessel's case in a nutshell is that;
1. That the m.v.Lucky Field was at all relevant time of the supply of bunkers under a time charter dated 1.2.2006 to IMC Maritime Group who under the alleged time charter party dated 1.2.2006 was liable to pay for the bunkers.
2. That though the bunkers were supplied and Page 42 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT delivered to the vessel m.v.Lucky Field by the plaintiff there was no privity of contract between the owners of the defendant vessel and the plaintiff.
3. That in absence of privity of contract, the vessel m.v. Lucky Field cannot be held liable or responsible to pay for the value of bunker and could therefore not be arrested in an action in rem.
4. That the Application of the owners of the defendant vessel is not for rejection of the plaint under Order VII Rule 11 for want of cause of action but is an application for setting aside an order of arrest and for damages.
5. The owner of the defendant vessel has also prayed for losses and damages to be paid to them for the alleged wrongful arrest of the vessel.
16. The submissions of the plaintiff in response to the above are as follows:
(i) The plaintiff had admittedly supplied and delivered bunkers to the vessel m.v. Lucky Field and the said vessel has consumed the said bunkers. The plaintiff submits that there was/is privity of contract with the owners of the vessel in relation to the supplies. In any event it is submitted that privity is not required.
(ii) The claim of the plaintiff falls under Section V of the Admiralty Courts Act, 1861 which reads as under:
"5. The High Court of Admiralty shall have jurisdiction over any claim for necessaries supplied to any ship elsewhere than in the port to which the ship belongs, unless it is shown to the satisfaction of the Court that at the time of institution of the cause any owner or part-owner of the ship is domiciled in England or Wales; provided always, that if in any such cause the respondents do not recover twenty pounds he shall not be entitled to any costs, charges, or expenses incurred by him therein, unless the Judge shall certify that the cause was a fit one to be tried in the said Court."
(Emphasis Supplied)
(iii) A plain reading of Section V of the 1861 Act contemplates the following Page 43 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT
(a) That an action is maintainable against the vessel if necessaries (fuel/bunkers) are supplied to the ship;
(b) That an action would not be maintainable against the vessel if the owner or part owner of the vessel is domiciled in England or Wales (note: England or Wales is to be read as "India" since this is pre independence enactment) It is, therefore, evident that Section V contemplates the following:
(I) That the owner is liable or deemed to be liable if the supplied are made to the vessel;
(ii) The vessel is liable to be proceeded against in an action in rem if the vessel is not registered in that:
(iii) Section V only contemplates the owner being liable if the supplies are made to the ship.
(iv) Section V in fact does not even contemplate requirement of the privity of contract between the supplied and the owner of the vessel Section V does not state that vessel will only be liable if the supplied are only requisitioned by the owner.
(iv) From the above, it is evident that there was privity of contract between the supplier and the owner of the vessel and that the owner of the vessel is liable in respect of the said supplies.
17. Disclosure of cause of action;
(i) For this Court to vacate the order of arrest and return the security, it is required to consider first and foremost whether the plaint discloses a cause of action. If on a plain reading the plaint discloses a cause of action, the order of arrest is not liable to be set aside and/or vacated.
(ii) If the plaint discloses a cause of action, the order of arrest cannot be vacated. This would lead to an incongruous situation where though the plaint discloses a cause of action, the order of arrest is vacated. It is therefore, imperative that whilst considering the present application the Court is bound to consider the same applying the principles of Order VII Rule 11 of the Code of Civil Procedure, 1908. In this regard, the attention of the Court is invited to the following judgment.
(a) In the case of m.v. Sea Renown and Anr.V.s. Energy Net Ltd. O.J. Appeal No231 of 2003, the Division Bench of the Court inter alia held:
"13. The plea that the learned Single Judge has committed Page 44 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT an error in treating the application filed by the appellants as an application filed under Order VII, Rule 11 of the CPC and, therefore, the impugned order should be set aside, cannot be accepted. Three circumstances, namely, (a) that no written statement was filed till the date of filing application;(b) that averments have been made in the application demanding dismissal of the suit on the ground that no cause of action is available to the respondent against the appellants; and (c) damages have been claimed by the appellants int eh application, may persuade a Court to treat the application as if filed under the provisions of Order VII, Rule 11 of the CPC. If the application is treated as one having been filed under the provisions of Order VII, Rule 11 of the CPC, then the Court will have to proceed on demurrer, and try to find out with reference to the averments made in the plaint and documents produced therewith, whether cause of action is available to the respondent against the appellant. In para 4 of the plaint, the respondent has made averments, inter alia as under...."
6. In the facts of the present case, the following similarities to the sea Renown case (Supra) may be noted:
1. The applicant has also not file its written statement.
2. The applicant has categorically stated that " the suit is not maintainable against the vessel in rem" and "the Court has no jurisdiction to entertain the suit."
Thus all 3 requirements set out in para No.13 of the judgment of the Division Bench of this Court in the m.v.Sea Renown case (Supra) are applicable to the presnt. The touchstones of order VII Rule 11 must necessarily be applied whilst considering the application. These touchstones are well enshrined in the judgment of the Bombay High Court (in an Admiralty matter) which set forth below:
(b) In the case of M/s. Crescent Petroleum Lted. vs.m.v.
MONCHEGORSK " and another, 2001 1 BCR 645 in para 4 & 5 the Bombay High Court held as under:
"4. The Court has the power under Order 7, Rule 11(a) of the Code of Civil Procedure to reject the plaint only if it comes to the conclusion that necessary averments and material has Page 45 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT not been placed before the Court to show, at least prima facie, that PAL had entered into the contract for bunkers at the instance, authority or faith of the vessel or its owners. In the vent the cause of action in personam against the owner of the vessel, then it would not be necessary to decide the question of law reqised by Mr. Mukherjee viz. For an action in rem to lie it is essential that the owner of the vessel is liable in personam. It would be necessary to decide this question only if the Court comes to the conclusion that necessary averments have not been made to disclose a cause of action in personam against the owner. Having perused the plaint and the documents which are made available, I am prima facie of the triable issue with regard to the bunkers being supplied to the owners. Therefore, it would not be necessary to decide the question of law at this stage come to the conclusion, at this interlocutory stage, that there are no averments showing that the bunkers have been supplied to the ship on the alleged authority of the owner..."
5. It would also be possible to accept the submission of Mr. Mukherjee to the effect that even prima facie it could not be held that the necessaries were supplied on express/implied authority of the vessel. The circumstances in which the plaint can be struck out as disclosing no cause of action has been considered by the Division Bench of this Court in the case of (Bomi Munchershaw Mistry vs. Kesherwani Co-Op. Housing Society Ltd. And other) 3, 1988(3) Bom.C.R.238. The ratio has been set out in para 12 and 19 of the judgment which are as follows:-
To my mind it is evident that our judicial system would never permit a respondent to be driven from the judgment seat in this way without any Court having considered his right to be heard, except in cases where the cause of action was obviously bad and almost incontestably bad. From the above it is therefore crystal clear that the plaint discloses a cause of action. The plaintiff is only required to make out a triable case. A reasonably arguable best case as per the test laid down by the Supreme Court in the VSNL vs. Kapitan Kud case, AIR 1996 SC 516 is to be satisfied.
3. Averments made in the plaint and the documents attached therewith disclose the cause of action.
18. Legal submissions; The submission fo the plaintiff made Page 46 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT during the course of hearing are broadly formulated as under:-
(i) The reliefs prays in OJ Civil Application NO.364 of 2006 can be granted only if the action of the plaintiff is frivolous or vexatious (See VSNL vs. m.vs. Kapitan Kud, 1996 SCC
127)
(ii)The Arrest Convention of 1999 has not been ratified by minimum number of countries. Such convention is not yet in force in any part of the world. The Arrest Convention fo 1999 cannot be resorted to for the purpose of restricting or truncating the wide and ever expanding jurisdiction of the High Court. The rights available under the 1952 Convention cannot be taken away by the 1999 Convention.
(iii) The question whether supply of bunkers in the instant case of the defendant vessel imposes the liability upon the owner of the ship is of such nature that it requires evidence at the time of trial and cannot be decided at this stage.
(iv) the return of security can be ordered only if the plaintiff has failed to disclose a cause of action against the defendant vessel. The Courts would be extremely slow in ordering the return of the security since the judgment in favour of the plaintiff will become unenforceable and infructuous in absence of security.
19. The Court now proceeds to deal with each of the aforesaid submissions.
Submission (i):- The plaintiff relied upon two decision in support of the first submission. In a decision reported in (1996) 7 SCC 127, it is held in para 15 that the claim was not vexatious, but the claim was triable and if there is a strong triable case, the security is required to be furnished. The only test for determining whether the case is triable or not is by finding out whether the claim is not vexatious. Therefore, it is established in an admiralty action that the claim is not vexatious and it is triable. The requirement of prima facie case as understood in the context of interim injunction under Order 39of the Code of Civil Procedure, 1908 is not to be imported while exercising the admiralty jurisdiction. It is sufficient to establish that the claim is triable and not vexatious.
In a decision reported in (1988) 2 Lloyd's Rep.357, it is held as follows:-
" It is certainly open to a defendant to apply to the court at Page 47 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT an early stage of an action for a stay on the ground that the action has no chance of success and is therefore, vexatious and the Court certainly has power in the exercise of its inherent jurisdiction to grant a stay on that ground...Court however, should only stay an action on that ground when the hopelessness of the respondent's claim is beyond doubt. If it is beyond doubt but on the contrary, the respondent has an arguable even though difficult case in fact and law, the action should be allowed to proceed to trial... This last principle applies, in my view, as much to an action in rem as to an action in personam, even though the former involves a defendant in providing security and maintaining it until the action is determined, while the later does not. Submissions (ii):
4. The Arrest Convention of 1999 is not yet ratified by 10 countries. A printout obtained from the website clearly provides that the international convention on arrest of ship, 1999 is not yet in force. Its statute indicates that there are only six signatories and seven parties to such convention. In the case reported in (2004) 9 SCC 512, there is a reference made by the Hon'ble Supreme Court to the Arrest Convention of 1999. In particular, para 43 of the judgment states that the countries mentioned in the said para have ratified convention. This is a factually not correct. The Arrest Convention, 1999 is not yet ratified by all the countries mentioned in the said para. The website clearly shows that such convention is not in force.
The Hon'ble Supreme Court was concerned with the Arrest Convention of 1999 in the context of the question whether the insurance premium paid for the ship constitutes 'necessaries' so as to give rise to a maritime lien. Such question is answered in the affirmative by referring to the Arrest Convention of 1999.
Arrest Convention of 1999 cannot be resorted to for the purpose of restricting or truncating the expanding Page 48 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT jurisdiction of Indian Courts. The rights available under the Arrest Convention of 1952 cannot be taken away by the Arrest Convention of 1999. The decision reported in (1993) Sup.2 SCC 433 clearly provides that India has not adopted the Brussels' convention and yet the provisions of the convention are the result of international unification and development of the maritime laws of the world and can be regarded as international common law and which can be adopted and adapted by the Courts to supplement and compliment national statute on the subject, in absence of specific statutory provisions. Although this convention may not have been ratified by India, they embodied the principles of law recognized by the generally of maritime states and can therefore, be regarded as part of our common law. In particular, it is held in para 64 that where statutes are silent and remedy is sought, it is the duty of the Court to devise procedural rules by analogy and expediency. Briefly stated, the Arrest Convention of 1952 read with the judgment of the Hon'ble Supreme Court in case of m.v. Elizabeth clearly establishes that the jurisdiction of the Indian Courts cannot be truncated or restricted except by national statutes. It is not proper to reject the claim of the plaintiff by putting 1999 Arrest Convention on the same footing as 1952 Convention. In the Sea Success case the Supreme Court of India applied the 1999 Arrest Convention because the 1952 Arrest Convention did not provide for P & I call money claims to be a maritime claim to enable the arrest of the vessel. It is in this context that the Supreme Court relied upon the 1999 Arrest Convention to expand the jurisdiction of the Court. By relying on the 1999 Arrest Convention which is wider is being sought to be narrowed or whittled down. It would be an error to hold that 1999 Arrest Convention has the effect of superseding 1952 Arrest Convention.
Submissions (iii).-Admiralty Court Act, 1861 provides that the bunkers supplied to the ship constitute 'necessaries' so as to give rise to maritime claim. In the instant case, the facts on record very clearly establish the following:-
(i) The charter party between the owner and the charterer was not known, or made known to the plaintiff at the time of supply of bunkers to the ship. The plaintiff did not and could not have known, that the ship was under a time charter (see para 18(vi) to(viii) to plaint). Since master of the ship/chief engineer are the employees of the owner and Page 49 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT since they have not disclosed to the plaintiff about the time charter at the time of supply of the bunkers, the plaintiff could not have known about the time charter at all.
(iii)The bunker confirmation, bunker nomination and revised bunker nomination clearly referred to the general terms and conditions subject to which the bunkers are supplied by the plaintiff. It clearly provides that the sale of the bunkers is subject such general terms and conditions and that the sale of the bunkers is subject to such general terms and conditions and that the copy of the same is available on request. No such request was made by the Master of the ship/Chief Engineer. Such terms and conditions are part of the contract. In a decision reported in (1978) 1 All England Report page 18 it is held that the reference made in the purchase order of the plaintiff to the general conditions of the contract obtainable at request was sufficient to incorporate into the contract such conditions. In the instant case also, similar language is used, and therefore, Clause 3.3. provides that the sale of the products is on the credit of the buyer, the receiving vessel and or otherwise provided in Clause 1.3 and that the settler shall have a maritime line against the receiving vessels and that the buyer or its agents are authorized to encumber the receiving vessels.
(iii) The bunker delivery note is signed by the Master of the Ship/Chief Engineer. Invoice is issues to the account of Owners/Charters/Master/Operator. The original invoice is handed over to the Master of the Ship/Chief Engineer."
53. This Court notices that essential thrust on the part of the Court is on the provision of Admiralty Courts Act, 1861 and other conventions where the courts refused to be restricted by any conventions unless there is a statute made in this country to put fetters on interpretations and moreover,the very peculiar facts which existed for the Court to hold against the defendant and in favour of the plaintiff.
54. In OJ.C.A.No.562 of 2015 in Admiralty Suit No.22 Page 50 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT of 2015 in the case of G.M. Shipping Company vs. Glender International Bunkering PTE Ltd., this Court (Coram :V.M. Pancholi, J.) on 04.11.2015 was dealing with the application of original intervener, which had sought setting aside of the ex parte order in Admiralty Suit No.22 of 2015, whereby the Court had directed the arrest of the defendant vessel with consequential relief so also refund of the security directed by the Court.
55. The original plaintiff had filed Admiralty Suit No.22 of 2015. The defendant vessel was a foreign sea going vessel flying the flag of South Korea. The claim on the part of the plaintiff was for the amount not paid by the contractual party for the bunker supplied. One Daebo International Shipping Company Limited, requested the plaintiff to supply the bunkers at Singapore Port and the plaintiff, therefore, issued the order of confirmation note which stipulated that the Glender International Bunkering PTE Ltd. terms and conditions shall be applicable to supply the bunkers. The bunkers were supplied to the defendant vessel at Singapore Port and two bunker delivery receipts were issued for the said supply. They were accepted without raising any protest or without any demur. The Master/Chief Engineer of the defendant vessel acknowledged the same. Invoice for account of the defendant vessel had been issued by the plaintiff. Several reminders were sent to Deabo as well as to the Page 51 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT registered owner for payment of outstanding dues, but the same had not been paid. Therefore, the Admiralty Suit had been brought seeking arrest of the vessel when it arrived at port and harbor of Mundra.
56. It was the say of the plaintiff that it had no acknowledgment of the arrangement made between the time charterer and the owner. In fact, the Master/Chief Engineer on board vessel were employed by the applicant owner and the Master counter signed the Bunker's Delivery Note and it never bothered to intimate the plaintiff about the time charter party. The plaintiff supplied the bunker to the defendant vessel on the faith and credit of the vessel and, therefore, the vessel was liable to pay for such supply. It can be seen from the said decision that reliance is placed on MV Lucky Field and other decisions and eventually, the Court held in favour of the plaintiff by holding that there is no privity of contract between the applicant and the original plaintiff and yet the action in rem of the supplier of bunkers gives rise to maritime claim. The Court did not find the decisions given by the Bombay High Court applicable to the facts of the case before it and also held that the decision rendered by the Apex Court in the case of Epoch Enterrepots (supra). is also not applicable to the facts, as the plaintiff before the Apex Court submitted that the claim is maritime claim under 1952 convention. Apt would be to refer to the findings of the Court in this Page 52 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT decision.
"15. Keeping in mind the aforesaid decisions rendered by this Court, if the facts of the present case are considered, it is clear that in the present case, the plaintiff supplied the bunkers at the request of Daebo to the defendant vessel. The applicant time chartered the defendant-vessel to Daebo for a period of six months from January 2014 to it was extended thereafter and ultimately the defendant- vessel was withdrawn from Daebo and fixture note dated 23.12.2014 on 17.2.2015. Thus, during the said period on 22.1.2015, the plaintiff supplied the bunkers to the defendant-vessel. The plaintiff issued bunker delivery receipts for the said supply. The bunkers were accepted without raising any protest and/or demur. The master/chief engineer of the defendant-vessel acknowledged receipt of bunker by endorsing upon both the bunker delivery receipts. Invoices were also issued by the plaintiff. Thus, it is not in dispute that bunkers were supplied to the defendant-vessel. If bunker delivery note produced at page nos.29 and 30 of the compilation of the Admiralty Suit is carefully seen, it is clear that in the said delivery note, it has been specifically stated that owner/borrower/owner or master. The master/chief engineer has affixed the rubber stamp and signed the said delivery note and accepted the bunkers. Invoice produced at page 31 is also helpful to the plaintiff. Thus, even if there is no privity of contract between the applicant and original plaintiff, the action in rem of the supplier of bunkers gives rise to maritime claim. When the plaintiff has supplied bunkers to the defendant-vessel which are necessaries for the operation of the said vessel, the plaintiff has a maritime claim against the defendant-vessel in respect of the said supplies. It is well settled that the vessel is treated as a juridical entity with a corporate personality and therefore is liable to proceed against in respect of maritime claim irrespective of the character or personality of its owners. In the admiralty jurisdiction, the vessel is treated as a wrong doer and liable to be proceeded against. From the above facts on record, it is sufficiently triable/arguable that Master/Chief Engineer of vessel had actual or implied authority. Thus, in view of the aforesaid discussion, this Court is of the opinion that the plaintiff is having prima facie case and reasonably arguable case on merits.Page 53 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021
C/AS/9/2016 IA JUDGMENT
16. The decisions relied upon by learned counsel appearing for the applicant-intervenor in the case of Gulf Petrochem (supra) decided by the Bombay High Court is not applicable to the facts of the present case. Even otherwise, in view of the binding decision of this court rendered by Hon'ble Division Bench of this Court in case of M.V.Sea Renows (supra), the decision rendered by Bombay High Court relied upon by learned counsel for the applicant is not helpful to him.
Similarly, reliance placed on the decision rendered by learned Single Judge of this Court rendered in the case of M.V.Leonis thro. Her Master, Prominent Shipping Pte.Ltd. (supra) is also misconceived. When the decision of Hon'ble Division Bench of this Court, in identical facts of the present case, is in favour of the plaintiff, the decision rendered by Hon'ble Division Bench is binding to this Court.
17. Similarly, the decision rendered by the Hon'ble Supreme Court in the case of Epoch Enterrepots (supra) is also not applicable to the facts of the present case as the plaintiff has submitted that the claim of the plaintiff is maritime claim under 1952 convention.
18. In view of the aforesaid discussion, the plaintiff is having prima facie case on merits and the plaintiff is also having reasonably arguable case on merits and therefore this Admiralty Suit cannot be dismissed at the threshold. Therefore, the applicant is not entitled for the reliefs prayed for in the present application. Accordingly, this application is dismissed. Main matter be listed for hearing on 11.12.2015."
57. While considering the present statute as well as the decision of the Apex Court in post Admiralty Act,2017 period, this decision need not be followed by this Court.
58. Reference will be needed of the case of Eco Maritime Venture Limited vs. ING Bank NV, the decision rendered by this Court (Coram: R.M. Chhaya, Page 54 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT J.) on 27.06.2016 in Civil Application No.234 of 2016 in Admiralty Suit No.27 of 2016.
59. The plaintiff filed Admiralty Suit No.27 of 2016 before this Court and sought arrest of the vessel, which was granted by this Court and the defendant moved an application seeking to set aside the order of arrest and also to return the security deposit on the ground that the plaintiff approached the Court with unclean hands and had not disclosed correctly the details of contract and also on the ground that plaintiff was guilty of suppression of material facts, it had not also disclosed the detail of time charter.
60. It was also contended that the plaintiff attempted to introduce a feeble case to suggest that the Copenship acted as agent on behalf of the disclosed principal that is the owner of the vessel. On the ground that Copenship had no authority to use the ship as security and on various other grounds raised, the request was made for vacating the order of arrest. It was contended before the Court that the time charterer imposed the sole liability upon the Copenship to purchase the bunker and plaintiff was aware and considered the Copenship alone as the debtor and has attempted charterer, the Copenship did not and could not pledge the credit of the defendant vessel. Relying on various decisions, for buttressing the arguments, the request was made to vacate the arrest.
Page 55 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT 61. This Court extensively considered the
submissions of both the sides and also took into account the case laws presented before it to hold that it was rightly contended by the plaintiff that a private arrangement between the owner and the charterer cannot deprive the plaintiff from taking action in rem for supply of goods, which were received and consumed by vessel for its operation which constituted maritime claim and which were duly acknowledged by Master and Chief Engineer. Therefore, the contention raised that the Master had not specifically confirmed the liability to pay for bunkers on behalf of the owners would not take case of the defendant any further. The Court also was not convinced on the contention that the suit invoice was paid in full that was held to be a highly disputable aspect. According to the learned Single Judge, as per the terms and conditions of sale for marine bunkers or OW bunkers, it was a maritime lien over the defendant vessel as prima facie pointed out by the plaintiff.
Paras 28 to 39 contain the detailed discussion on whether this was maritime claim or maritime lien and whether the privity of contract existed. What was argued by the defendant is contained in para28 which is reproduced, however, other paragraphs are not reproduced so as not to make this bulkier. The court held in favour of the plaintiff and against the applicant defendant.
"28) The learned counsel for the defendant has also Page 56 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT further contended that the plaintiff is required to make a prima fac ie case to show that it has a direct privity of contract with the owners of the defendant vessel.
29)It was contended by the learned counsel for thedefendant that the test is the same as provided under Order 38 of the Code of Civil Procedure.It was contended that the plaintiff is required to make out a prima facie case to show that -
a) They had a direct privity of contract with the applicantowners of the defendant vessel;
b) That the owner of the defendant vessel had impliedly or expressly confirmed that the credit of the ship was available as security;
c) That the entire invoice remains unpaid;
d) That the English Security Omnibus Agreement is admissible in evidence and has been adequately stamped;
e) That there was no willful concealment from this Hon'ble Court of various material facts dealt with above;
f) Copenship had the authority to pledge the credit of the vessel as security;
g) The owners of the defendant vessel agreed to be bound by the terms of the bunker supply contract."
62. This was challenged in OJ Appeal No. 14 of 2016 and the Division Bench, on 21st September, 2016 confirmed the judgment and order of the learned Single Judge, by which, it rejected the Civil Appeal (OJ) No. 234 of 2016 in Admiralty Suit No. 27 of 2016 and refused to vacate the order of arrest of vessel - MV Eco. The Division Bench held that the appeal since had arisen from the interlocutory order passed by the learned Single Judge, which was a well-reasoned speaking order, there was no requirement of interference. The Court also noted that prima facie Page 57 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT learned Single Judge had satisfied itself that plaintiff had a prima facie case and if the order of arrest was vacated and defendant vessel was permitted to go, the Court would not have any jurisdiction once the vessel is out of territorial jurisdiction of the Court and therefore, it rightly refused to vacate the order of arrest. The Court also held and observed that legality and validity of English Security Omnibus Agreement dated 19th December, 2013, which had been relied upon, needed consideration and whether on the strength thereof the plaintiff had maritime lien over the defendant vessel or not and whether the plaintiff had received the entire amount under different invoices as submitted for and on behalf of the defendant and whether the plaintiff at all was entitled to the amount claimed in the suit, with respect to the bunkers supplied which were already consumed, where the contention raised and were required to be considered at the time of trial. It was also a serious dispute whether the amount which the plaintiff allegedly received can be said to be full payment or whether the same was received by the plaintiff for which there was no dispute pending. The Court also recorded that contention raised by the defendant that plaintiff had no maritime lien on the vessel and had no locus nor authority to claim the amount due and payable under the respective invoices on behalf of OW bunker, could not be accepted in as much as the claim of the plaintiff was that by virtue of English Security Omnibus Page 58 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Agreement dated 19th December, 2013 as assignee of Cope and Ship bunkers AS, it had the authority to bring the suit. On the basis of the very agreement before the Danish Port also the plaintiff claimed the amount. It was the case of the plaintiff that the concerned invoices were signed and acknowledged by the Master/Chief Engineer of the defendant vessel which had consumed the bunker without any murmur.
63. The Court held and observed that these were all triable issues and considering the law on the point and the case pleaded on behalf of the plaintiff and also the material on record, the learned Single Judge had rightly observed that action taken against the defendant vessel is action-in-rem and learned Single Judge has correctly held and observed that the plaintiff had maritime lien over the defendant vessel.
64. Paragraphs 5.3 to 7 of the same would require reproduction at this stage: -
[5.3] On considering the impugned order passed by the learned Single Judge it appears that after considering the necessary averments in the plaint and the material on record and after considering the rival submissions, the learned Single Judge has prima facie come to the conclusion that the plaintiff has a maritime claim / maritime lien against the defendant Vessel for supply of the bunkers to the defendant Vessel and thereby the plaintiff has a prima facie case.
[5.4] On the aspect of the submission on behalf of the defendant that the plaintiff has not come with clean hands and has suppressed the material fact, the learned Single Judge has dealt with the same in paras 21 to 26 of the impugned order and considering the necessary averments made in the plaint and after discussing various decisions of the Hon'ble Supreme Court and this Court Page 59 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT which were relied upon by the learned advocates appearing for respective parties, the learned Single Judge has negatived the submission on behalf of the defendant that the order of arrest of Vessel is required to be vacated on the ground of suppression of material fact. Considering para 9 of the plaint and the necessary documents on record the learned Single Judge has specifically observed that there is no suppression of material fact by the plaintiff as alleged. All full particulars which are necessary for the purpose of determining / deciding the issue have been disclosed. Considering the material on record more particularly the averments in the plaint, we are in complete agreement with the view taken by the learned Single Judge that there is no suppression of material facts by the plaintiff as alleged, for which the order of Arrest is required to be vacated.
[5.5] Now, so far as the reliance placed upon the decision of the learned Single Judge in the case of Link Oil Trading Ltd. (Supra), confirmed by the Division Bench of this Court in OJ Appeal No.2/2010 dated 09.02.2011 is concerned, on considering the facts of the case in the case of Link Oil Trading Ltd. (Supra), we are of the opinion that the said decision shall not be applicable to the facts of the case on hand. In the case before the learned Single Judge confirmed by the Division Bench, the learned Single Judge specifically found that the plaintiff suppressed the material fact of filing suit for the same cause of action which came to be withdrawn and thereafter the subsequent suit was filed and in the subsequent suit the factum of filing of earlier suit was not disclosed. Under the circumstances, the said decision shall not be applicable to the facts of the case on hand. The plaintiff in para 9 has already disclosed that an amount of USD 1.1 Million has been received but the same is pending as bankruptcy proceedings before the Danish Court. The plaintiff has disclosed the cause of action. The plaintiff has also disclosed that the plaintiff has stepped into the shoes of O.W. Bunkers on the basis of English Security Omnibus Agreement dated 19.12.2013 and that they have charge on the receivables of O.W. Bunkers. They have also produced the invoice which was in the name of M.V. Copenship Eco and in the name of Copenship Bunkers A/S. Therefore, as such there is no suppression of material fact on the part of the plaintiff as alleged by the defendant. The learned Single Judge has considered the aforesaid in extenso Page 60 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT and thereafter by a speaking reasoned order has refused to vacate the order of arrest on the aforesaid ground. The contention on behalf of the defendant that the plaintiff did not state the correct facts before the Court while obtaining the ex parte order of arrest of the Vessel that the defendant Vessel is likely to leave the territory of Indian water is concerned, same has been dealt with by the learned Single Judge in para 27. The plaintiff based their case on the fact that defendant Vessel arrived at Hazira port on 19.05.2016 which gives admiralty jurisdiction to this Court. Therefore, as rightly observed by the learned Single Judge the plaintiff cannot have the knowledge of the fact that as to when after completing her cargo operations the Vessel is to leave the territory of Indian water. Under the circumstances, on the aforesaid ground the learned Single Judge has rightly refused to vacate the order of arrest.
[5.6] Now, so far as the submission on behalf of the defendant that the plaintiff has no maritime lien on the Vessel and/or has no locus and/or authority to claim the amount due and payable under the respective invoices on behalf of O.W. Bunkers is concerned, it is required to be noted that the plaintiff has claimed that they have lien by virtue of English Security Omnibus Agreement dated 19.12.2013 as assignee of Copenship Bunkers A/S. The invoices towards supply of bunkers to the Vessel have been produced on record. The plaintiff has claimed the amount even before the concerned Danish Court also, on the basis of the Agreement dated 19.12.2013. It is the case on behalf of the plaintiff that the concerned invoices were signed and acknowledged by the Master / Chief Engineer of the defendant Vessel and that they have consumed the bunkers without any demur. The aforesaid are all triable issues. On considering the law on the point and the case pleaded on behalf of the plaintiff and considering the material on record the learned Single Judge has observed that the action taken against the defendant Vessel is action in rem and the learned Single Judge has prima facie observed that the plaintiff has maritime lien over the defendant Vessel. [5.7] After having found the triable issues and having found prima facie case and having prima facie found that the plaintiff has a maritime lien over the defendant Vessel for the supply of bunker to the Vessel, thereafter when the learned Single Judge has refused to vacate the Page 61 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT order of arrest, it cannot be said that the learned Single Judge has committed any error which calls for interference of this Court in exercise of appellate jurisdiction more particularly when the suit is yet to be decided and tried.
[5.8] Even the contention on behalf of the defendant that the document English Security Omnibus Agreement dated 19.12.2013 is not admissible in evidence inasmuch as the same is on insufficient stamp is concerned, at the outset it is required to be noted that the said issue as such is highly triable issue, where the provisions of the Gujarat Stamp Act are required to be considered. The provision of Sections 18, 34 and 35 of the Gujarat Stamp Act are required to be considered in detail and in extenso at the time of trial and at an appropriate stage. Even the said defect is a curable defect within a time prescribed under Section 18 of the Gujarat Stamp Act. Even otherwise on the aforesaid ground when the plaintiff has made out a prima facie case for grant of interim order / order of arrest of the defendant Vessel and if the defendant Vessel is permitted to leave the territory of Indian water / territorial jurisdiction of the Court, in that case the plaintiff would not only suffer irreparable loss but in that case there shall be a serious dispute with respect to the jurisdiction of the Court thereafter. It cannot be disputed that in admiralty proceedings the Court assumes the jurisdiction the moment Vessel which is in the territorial jurisdiction of the Court is arrested, unless the defendant Vessel / defendant fulfills the conditions as per the order of arrest of the Vessel such as furnishing the security etc. Under the circumstances, if the order of arrest is vacated and the defendant Vessel is permitted to leave without complying with the order passed by the learned Single Judge imposed while ordering arrest of the defendant Vessel, there shall be a serious dispute with respect to jurisdiction and it can be very well contended that thereafter the Court would not have admiralty jurisdiction.
[5.9] Now, so far as the submission on behalf of the defendant that the plaintiff do not have any title to sue as the plaintiff has not stated whether they had paid any amount to the seller of the bunkers / goods and therefore, they cannot claim the amount under the invoices / towards goods supplied to the Vessel is concerned, it is required to be noted that as per the Page 62 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT provisions of the Sale of Goods Act more particularly Section 11, the title is passed over when the goods is parted with. In any case what is required to be considered is whether the goods were received by the Vessel and consumed by the same or not? The defendant is not concerned whether the O.W. Bunker made the payment to their suppliers who supplied the goods or not. Getting the title has nothing to do with the sale of goods on payment only. Under the circumstances, on the aforesaid ground the order of arrest is not required to be vacated and is rightly not vacated by the learned Single Judge. Similarly, so far as the contention on behalf of the defendant with respect to the applicability of Section 45 of the Arbitration Act is concerned, it is required to be noted that the stand taken by the defendant as such can be said to be contradictory. On one hand the defendant claims that defendant is not a party to the Agreement between plaintiff and the Copenship and still the defendant contends that in view of the arbitration clause the matter is required to be referred to arbitration. If the defendant claims that it is not a party to the contract between the plaintiff and the Copenship, the defendant cannot be permitted to contend and/or invoke the arbitration clause. [ 5.10] As observed hereinabove, number of submissions have been made by the learned Counsel appearing on behalf of the respective parties which are referred to hereinabove and number of decisions have been relied upon. However all the decisions have been dealt with in extenso by the learned Single Judge in the impugned order. Each decision has been dealt with by the learned Single Judge while passing the impugned order while considering the prima facie case and the effect of order vacating the order of arrest. As observed hereinabove the issues raised are all triable issues which are required to be considered at the time of trial. Under the circumstances, when a prima facie case is made out and it is prima facie found that the plaintiff has a maritime lien over the Vessel with respect to the goods supplied to the Vessel and consumed by the Vessel and therefore, the action is in rem, we do not propose to deal with the same in detail. We are in complete agreement with the view taken by the learned Single Judge.
[6.0] In view of the above and for the reasons stated Page 63 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT above and more particularly when it is found that the plaintiff has a maritime lien with respect to the goods supplied to the Vessel and consumed by the Vessel and it prima facie appears that the plaintiff claims to be in sue of Copenship in view of English Security Omnibus Agreement dated 19.12.2013 and the Vessel is in the territorial jurisdiction of the Court and therefore, if the order of arrest is vacated and the defendant Vessel is permitted to leave without complying with any conditions as stipulated in the order of arrest and is permitted to leave unconditionally, in that case, there shall be serious dispute with respect to the jurisdiction of the Court. We see no reason to interfere with the impugned order passed by the learned Single Judge and we confirm the impugned order passed by the learned Single Judge. However, it is observed that any observations made by the learned Single Judge while passing the impugned order and by this Court in the present order be treated as prima facie at the stage of passing of interlocutory order of arrest of Vessel and all the contentions and defences which may be available to the respective parties are kept open to be considered by the learned Single Judge at the time of deciding the suit. In the facts and circumstances of the case, we request the learned Single Judge to finally decide and dispose of the Admiralty Suit at the earliest. All concerned are directed to cooperate the learned Single Judge in early disposal of the suit finally. In the meantime it will be open for the defendant to comply with the conditions stipulated in the order of arrest of the Vessel if the defendant so chooses.
[7.0] In view of the above and for the reasons stated above, present OJ Appeal fails and the same deserves to be dismissed and is, accordingly, dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs."
65. Defendant challenged this order of the Division Bench of Civil Appeal No. 239 of 2017 by way of the Special Leave Petition No. 33865 of 2016. The matter was listed before the Apex Court on 3rd January, 2017, where the Apex Court gave certain suggestions. Thereafter, the defendant agreed to obtain Letter of Page 64 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Undertaking (LOU) for sum of USD 334,339.65 for the First-Class P&I Club. Since during the pendency of the Admiralty Suit No. 27 of 2016, a caveat was filed which had been replaced by the Admiralty Suit No. 01 of 2017, wherein, the respondent had put forth a claim amounting to the sum of USD 5,62,552.41 apart from the interest and cost accrued thereon, the Court directed the Letter of Undertaking for a sum of USD 7,00,000 as security for the claim put forth in both the suits from the First-Class P&I Club and filed it before the Registry of High Court where the Admiralty Suit was pending.
Relevant paragraphs from this order would be required to be reproduced at this stage:
" In course of hearing, it has been suggested by Mr. Mehta that the appellant has no objection to obtain Letter of Undertaking (LOU) for a sum of U.S.Dollars 334,339.65 from a first class P&I Club. Be it stated, to the obtainment of LOU from the first class P & I Club, Mr. Salve and Mr.Divan have no objection. However, the objection which is enormous in nature pertains to the quantum.
Regard being had to the claim put forth in both the admiralty suits, we think it appropriate to direct that if the appellant gets the Letter of Undertaking for a sum of U.S.Dollar 700,000 (U.S.Dollar seven hundred thousand only) as security for the claims put forth in both the suits from the first class P & I Club and file it before the Registry of the High Court where the admiralty suit is pending, the order directing warrant of arrest shall be lifted as soon as the guarantee is furnished. The learned Single Judge exercising admiralty jurisdiction shall make an endeavour to dispose of both the admiralty suits, as expeditiously as possible, preferably within six months. Needless to say, the furnishing of LOU is by way of security and, therefore, it is without prejudice to the contentions to be raised by the parties in the suits.
With the aforesaid modification in the order of the High Page 65 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Court, the appeal stands disposed of. There shall be no order as to costs."
67. Reference would be needed of the decision of the Bombay High Court in 'Soccer Turkey Petroleum Energy Limited Vs. MOA Fortune, where the Division Bench was looking into the challenge to the learned Single Judge order, where, in a notice of motion filed by the respondent in an Admiralty Suit, the Court set aside the ex parte order of arrest of the vessel and returned the security furnished to the defendant along with interest. The plaintiff before the Bombay High Court, operated in the field of fuel cells and was in the business of supplying products to the end users in the aviation and maritime segments. The defendant was a foreign sea going vessel, flying the flag of Hong Kong, China. The claim of the plaintiff was that the bunkers had been supplied to the vessel and the vessel had already benefited for prosecuting her voyage. No amount had been paid in respect of the said bunkers supplied by the plaintiff, and therefore, the suit action was filed. One Force Twin Shipping had approached the appellant-original plaintiff for supply of bunker fuels to various vessels. It was the case of the plaintiff that these bunkers were accepted without raising any protest, the master, chief engineer of the vessel acknowledged receipt of bunkers by endorsing on the bunker delivery receipts. It was the case of the plaintiff that the supply made by the plaintiff were governed by Page 66 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the terms of sales of marine fuels and despite the expiry of the due dates of the invoice, Force had failed and neglected to make payment under the invoices prepared by the plaintiff. On the ground that the respondent-vessel had been supplied bunkers, which were essential for the operation of the vessel and it was the goods and material supplied to ship for operation and maintenance and also constitutes necessaries, giving rise to and constituting a maritime claim / lien, the plaintiff brought the suit and sought the arrest of the vessel for security on the ground that it was entitled to proceed in rem against the vessel. Before the learned Single Judge, there was no caveat against the arrest filed. The plaintiff, according to the learned Single Judge, made out a prima facie case for arrest of the vessel as it had a maritime claim against the vessel for supply of necessaries and accordingly, the arrest was ordered. The defendant moved on the next date of hearing and sought the release of the vessel by furnishing security. Thereafter, a Notice of Motion was filed by the defendant before the learned Single Judge praying that ex parte order of arrest of vessel be set aside and the security furnished along with interest accrued thereon be returned to the defendant. After hearing both the sides, the Court held that there was no personal liability on the part of the owner of the vessel Fortune Marine Lines Limited, which was essential for an action in rem to lie against the vessel. There was neither maritime claim nor lien against the Page 67 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT vessel and its owner. The plaintiff was aware that the liability to pay for the bunkers was of the Force alone and because of that there was not a single demand that had been made from the owner, at any point of time,not even prior to the filing of the Suit. The Court also held that the plaintiff had suppressed the fact that when the bunkers were supplied to the vessel, master of the vessel had also issued a bunkering statement in which, it was clearly stated that, as per the instructions of the charterers, Trans Atlantica, the vessel will take fuel ordered and arranged by them at Istanbul. It was also informed that the bunkers supplied, if, ordered, shall be paid by the charterers and no lien or claim shall be raised against the vessel or the owner. Said bunkering statement was also signed by the plaintiff. The bunkering statement was signed by the same person, whose signature was appearing on the bunker delivery receipt produced by the plaintiff. The learned Single Judge held that there was no privity of contract and no personal liability of the owner of the respondent-vessel. When the plaintiff was aware of this position that the bunkers were to be paid by the charterers and there shall be no lien or claim against the owner of the vessel.
68. Learned Single Judge held that it was the settled position of law that before the action in rem lie against the vessel, there was personal liability on the part of the owner and there was no liability in view of the charter party to make the payment.
Page 68 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT
69. Division Bench did not agree with the Learned Single Judge on the strength of the material made available to it in support of the maritime claim and jurisdiction exercised in various countries and it held that Indian statute does not define 'Maritime Claim'. It relied on the Supreme Court Act, 1981, Brussels Convention, 1952 and other conventions to hold in favour of the defendant. According to the Division Bench, the reliance placed by the Learned Single Judge on the judgment in the case of 'Gulf Petro Energy Pvt. Ltd.' was not correct nor in consonance with the principles laid down for ascertaining the issue of privity of contract. According to it, the presumption of contract arises, when the bunkers are supplied to the subject vessel. Therefore, it held that it would be appropriate in the facts to settle these issues during the trial of the suit. The vessel, since, already had been released and the defendant had furnished the security, as directed by the Court, which was sought to be released, the order of the learned Single Judge was set aside and consequently, the costs of Rs.5/- lakh, as was imposed by the Court was also refunded to the plaintiff.
70. It is also noteworthy that various decisions, which are sought to be relied upon by the plaintiff of this Court, are prior to new Admiralty Act, 2017, having come into effect. The last judgment of 'Eco Page 69 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Marine Ventures' of the Gujarat High Court is dated 21.09.2016 and the Apex Court decision is also of 10.01.2017. However, the decision of Chrisomer Corporation Vs. MJR Steel Pvt. Ltd. of the Apex Court quoted in AIR 2017 SC 5530 came on 14.09.2017. There is also a major shift on the account of this Act having come into being. Since, not only the maritime lien, but, maritime claims also have been defined under the new Act. This shall need to be regarded and before proceeding further, the said decision, which is sought to be relied upon by the defendant-applicant, shall need to be discussed and relevant findings shall require reproduction.
71. The decision rendered in the case of Chrisomar Corporation (supra), as rightly urged by the learned Senior Advocate Mr.Soparkar, clinches the issue since the Apex Court has clearly held that necessary supply to the vessel is not maritime claim. The definition of Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 does not include claim for necessary supply to the vessel as maritime claim. Relevant paragraphs are reproduced as under: -
"13. The Republic of India has finally woken up to the need for updating its admiralty law. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 has been made by Parliament and has received the assent of the President on 9.8.2017, though it has not yet been brought into force. In this Act, "maritime claim" is defined in Section 2(1)(f) as being a claim referred to in Section 4 and a "maritime lien" is defined in sub- section (g) of 2(1) as follows:Page 70 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021
C/AS/9/2016 IA JUDGMENT "2. Definitions (1) In this Act,--
(g) "maritime lien" means a maritime claim against the owner, demise charterer, manager or operator of the vessel referred to in clauses (a) to (e) of sub- section (1) of section 9, which shall continue to exist under sub-section (2) of that section;" Section 4 reads as follows:
"4. Maritime Claim (1) The High Court may exercise jurisdiction to hear and determine any question on a maritime claim, against any vessel, arising out of any--
(a) dispute regarding the possession or ownership of a vessel or the ownership of any share therein;
(b) dispute between the co-owners of a vessel as to the employment or earnings of the vessel;
(c) mortgage or a charge of the same nature on a vessel;
(d) loss or damage caused by the operation of a vessel;
(e) loss of life or personal injury occurring whether on land or on water, in direct connection with the operation of a vessel;
(f) loss or damage to or in connection with any goods;
(g) agreement relating to the carriage of goods or passengers on board a vessel, whether contained in a charter party or otherwise;
(h) agreement relating to the use or hire of the vessel, whether contained in a charter party or otherwise;
(i) salvage services, including, if applicable, special compensation relating to salvage services in respect of a vessel which by itself or its cargo threatens damage to the environment;
(j) towage;
(k) pilotage;
(l) goods, materials, perishable or non-perishable provisions, bunker fuel, equipment (including containers), supplied or services rendered to the vessel for its operation, management, preservation or maintenance including any fee payable or leviable;
(m) construction, reconstruction, repair, converting or equipping Page 71 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT of the vessel;
(n) dues in connection with any port, harbour, canal, dock or light tolls, other tolls, waterway or any charges of similar kind chargeable under any law for the time being in force;
(o) claim by a master or member of the crew of a vessel or their heirs and dependents for wages or any sum due out of wages or adjudged to be due which may be recoverable as wages or cost of repatriation or social insurance contribution payable on their behalf or any amount an employer is under an obligation to pay to a person as an employee, whether the obligation arose out of a contract of employment or by operation of a law (including operation of a law of any country) for the time being in force, and includes any claim arising under a manning and crew agreement relating to a vessel, notwithstanding anything contained in the provisions of sections 150 and 151 of the Merchant Shipping Act, 1958;
(p) disbursements incurred on behalf of the vessel or its owners;
(q) particular average or general average;
(r) dispute arising out of a contract for the sale of the vessel;
(s) insurance premium (including mutual insurance calls) in respect of the vessel, payable by or on behalf of the vessel owners or demise charterers;
(t) commission, brokerage or agency fees payable in respect of the vessel by or on behalf of the vessel owner or demise charterer;
(u) damage or threat of damage caused by the vessel to the environment, coastline or related interests; measures taken to prevent, minimise, or remove such damage; compensation for such damage; costs of reasonable measures for the restoration of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; or any other damage, costs, or loss of a similar nature to those identified in this clause;
(v) costs or expenses relating to raising, removal, recovery, destruction or the rendering harmless of a vessel which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such vessel, and costs or expenses relating to the preservation of an abandoned vessel and maintenance of its crew; and (w) maritime lien.
Explanation.--For the purposes of clause (q), the expressions "particular average" and "general average" shall have the same Page 72 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT meanings as assigned to them in sub-section (1) of section 64 and sub-section (2) of section 66 respectively of the Marine Insurance Act, 1963.
(2) While exercising jurisdiction under sub-section (1), the High Court may settle any account outstanding and unsettled between the parties in relation to a vessel, and direct that the vessel, or any share thereof, shall be sold, or make such other order as it may think fit.
(3) Where the High Court orders any vessel to be sold, it may hear and determine any question arising as to the title to the proceeds of the sale. (4) Any vessel ordered to be arrested or any proceeds of a vessel on sale under this Act shall be held as security against any claim pending final outcome of the admiralty proceeding."
Under Section 5 of the Act, the High Court may order for the arrest of a vessel which is within its jurisdiction for the purpose of providing security against a maritime claim. Under Section 6 of the said Act, the High Court may also exercise admiralty jurisdiction by an order in personam in respect of the maritime claims referred to in Section 4. Section 9 of the Act sets out the inter se priority of maritime liens, but in so doing also informs us that they are restricted to five subject matters only. Section 9 reads as follows:
"Sec. 9 Inter se priority on maritime lien (1) Every maritime lien shall have the following order of inter se priority, namely:--
(a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
(b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;
(c) claims for reward for salvage services including special compensation relating thereto;
(d) claims for port, canal, and other waterway dues and pilotage dues and any other statutory dues related to the vessel;
(e) claims based on tort arising out of loss or damage caused by the operation of the vessel other than loss or damage to cargo and containers carried on the vessel.
(2) The maritime lien specified in sub-section (1) shall continue to exist on the vessel notwithstanding any change of ownership Page 73 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT or of registration or of flag and shall be extinguished after expiry of a period of one year unless, prior to the expiry of such period, the vessel has been arrested or seized and such arrest or seizure has led to a forced sale by the High Court:
Provided that for a claim under clause (a) of sub- section (1), the period shall be two years from the date on which the wage, sum, cost of repatriation or social insurance contribution, falls due or becomes payable.
(3) The maritime lien referred to in this section shall commence--
(a) in relation to the maritime lien under clause (a) of sub-section (1), upon the claimant's discharge from the vessel;
(b) in relation to the maritime liens under clauses (b) to (e) of sub-section (1), when the claim arises, and shall run continuously without any suspension or interruption:
Provided that the period during which the vessel was under arrest or seizure shall be excluded. (4) No maritime lien shall attach to a vessel to secure a claim which arises out of or results from--
(a) damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to any law for the time being in force;
(b) the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste."
15. Section 12 states that the Code of Civil Procedure is to apply in all proceedings before the High Court insofar as it is not inconsistent or contrary to the provisions of the Act. By Section 17, the Admiralty Court Acts of 1840 and 1861 and the Colonial Courts of Admiralty Acts of 1890 and 1891 stand repealed. Also, the Letters Patent of 1865, insofar as it applies to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts, also stands repealed.
16. An admiralty action in the courts of India commences against a vessel to enforce what is called a "maritime claim". Though India is not a signatory to the Brussels Convention of 1952, a long list of maritime claims is given in Article 1 thereof. Suffice it to say that sub-clause (k) of Article 1 states that important materials wherever supplied to a ship for her Page 74 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT operation or maintenance would fall within the definition of a maritime claim. A maritime lien, on the other hand, attaches to the property of the vessel whenever the cause of action arises, and travels with the vessel and subsists whenever and wherever the action may be commenced. In The Bold Buccleugh, (1852) 7 Moo PCC 267, Sir John Jervis defined maritime lien as follows:-
"[A] maritime lien is well defined ... to mean a claim or privilege upon a thing to be carried into effect by legal process ... that process to be a proceeding in rem.... This claim or privilege travels with the thing into whosesoever possession it may come. It is inchoate from the moment the claim or privilege attaches, and, when carried into effect by legal process by a proceeding in rem, relates back to the period when it first attached."
17. This judgment was referred to in M.V. Elisabeth and others v. Harwan Investment and Trading Private Limited, 1993 Supp. (2) SCC 433 at 462, paragraph 56 and Epoch Enterrepots v. M.V. Won Fu (2003) 1 SCC 305 at 311, paragraph 13. In M.V. Al Quamar v. Tsavliris Salvage (International) Ltd. and others, (2000) 8 SCC 278 at 301, the Supreme Court observed as follows:-
"33. Be it noted that there are two attributes to maritime lien: (a) a right to a part of the property in the res; and (b) a privileged claim upon a ship, aircraft or other maritime property in respect of services rendered to, or injury caused by that property. Maritime lien thus attaches to the property in the event the cause of action arises and remains attached. It is, however, inchoate and very little positive in value unless it is enforced by an action. It is a right which springs from general maritime law and is based on the concept as if the ship itself has caused the harm, loss or damage to others or to their property and thus must itself make good that loss. (See in this context Maritime Law by Christopher Hill, 2nd Edn.)."
18. Only a small number of claims give rise to maritime liens as was noted in M.V. Won Fu (supra). Paragraph 19 of the said judgment states as follows:-
"19. We have in this judgment hereinbefore dealt with the attributes of maritime lien. But simply stated, maritime lien can be said to exist or restricted to in the event of (a) damage done by a ship; (b) salvage; (c) seamen's and master's wages;
(d) master's disbursement; and (e) bottomry; and in the event a maritime lien exists in the aforesaid five circumstances, a right in rem is said to exist. Otherwise, a right in personam exists for any claim that may arise out of a contract." (at pages 314-315) Page 75 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT
19. In an illuminating judgment of the Calcutta High Court Justice Mrs. Ruma Pal, as she then was, dealt with an action in rem filed in the admiralty court jurisdiction in Calcutta. With respect to the plaintiffs claim of the price of bunkers supplied to the ship owners, the Court held that the supply of necessaries to a vessel does not create a maritime lien. In Bailey Petroleum Company v. Owners and parties interested in the vessel M.V. Dignity, (1993) 2 CHN 208 at 213-214, the learned Judge held:"16. It has been established by a wealth of decisions that the supply of necessaries does not create a maritime lien. Indeed the point was conceded by the counsel for the plaintiff at the hearing. It is only necessary to refer to two authorities on the point to emphasize the fact that this Court does not base its conclusion on the concession of the plaintiff's counsel but on the authorities cited.
17. It is not disputed that the jurisdiction of this court is governed by the Admiralty Court Act 1861 (Imp). Section 5 of the 1861 Act provides:
"5. The High Court of Admiralty shall have jurisdiction over any claim for necessaries supplied to any ship elsewhere than in the port to which the ship belongs, unless it is shown to the satisfaction of the court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales: Provided always, that if in any such cause the plaintiff do not recover twenty pounds, he shall not be entitled to any costs, charges, or expenses incurred by him therein, unless the judge shall certify that the cause was a fit one to be tried in the said Court."
18. In the case of Laws and others and Smith: the "Rio Tinto": 9 PD 356, the plaintiff had supplied necessaries to the vessel. The Trial Court held that the necessaries were supplied on the credit of the vessel and that the plaintiff had a right to a maritime lien and that, therefore, in spite of the fact that the vessel had been transferred subsequent to the supply of necessaries, the ship was liable. Sir James Hannen who delivered the opinion of the Privy Council held that the phrase "the court shall have jurisdiction" simply gave the Court jurisdiction but did not create any lien. A distinction was drawn between a provision for proceedings by arrest of the ship and the express creation of a lien. The Court held:
"The Admiralty Court Act, 1861 (24 Vict. c. 10) and the decisions upon it must next be considered. By the 5th section it is enacted that the High Court shall have jurisdiction over a claim for necessaries supplied to any ship elsewhere than in the port to Page 76 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT which the ship belongs, unless it is shown to the satisfaction of the court that, at the time of the institution of the cause, any owner or part owner of the ship is domiciled in England or Wales.
The words 'the High Court of Admiralty shall have jurisdiction', mean only what they purport to say, neither more nor less, that is, that the court shall take judicial cognizance of the cases provided for.
The conclusion [is] that there is nothing from which it can be inferred that by the use of the words "the court shall have jurisdiction" the Legislature intended to create a maritime lien with respect to necessaries supplied within the possession."
19. In Shell Oil Co. v. The Ship "Lastrigoni" 3 ALR 399 the plaintiff had filed a suit for enforcement of the claim on the ground of bunkers provided by the plaintiff under a contract between the plaintiff and the agents of the time charterer. The contract provided that the sale and delivery of inter alia necessaries would be made on the faith and credit of the vessel. The arguments before the Court were that the supply of fuel itself created maritime lien to which the ship was subject and which could be enforced by an action in rem in admiralty. The second was that, in the circumstances, an action in rem lay notwithstanding the absence of any contractual liability on the part of the owners to pay for the bunkers supplied and that this was so by virtue of section 6 of the Admiralty Court Act 1840 (Imp), and section 5 of the Admiralty Court Act 1861 (Imp), either with or without the aid of cl. 6.4 of the Bunker Fuel Oil Contract. Menzies, J. held:
"The matter was, I think, put at rest by the decision of the Privy Council in the Rio Tinto (1884) 9 APP Cas 356, by which it was decided that no maritime lien attaches to a ship in respect of coals or other necessaries supplied to it."
In Saba International Shipping and Project Investment Private Limited v. Owners and parties interested in the Vessel M.V. Brave Eagle, previously known as M.V. Lima-I and others, (2002) 2 CHN 280 at 287-288 and 289-290, another single Judge of the same High Court differentiated between a maritime claim and a maritime lien and held as follows:
"20. Now the issue is what is a maritime claim and what is a maritime lien. These questions are to be answered in this proceeding before continuation of the interim order or passing any further interim order.Page 77 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021
C/AS/9/2016 IA JUDGMENT
21. All cases of maritime lien are based on maritime claims but all maritime claims do not give rise to a maritime lien on the ship. Normally a lien in the general law is a rather limited right over some one else's property. It is a right to retain possession of that property usually to receive a claim. But a maritime lien differs from other liens in one very important respect. Liens generally require possession of the 'res' before they can come into effect. As an example an innkeeper has a lien over his guest's luggage against the payment of the bill, but if the guest is smart enough to remove his luggage, the innkeeper is left without a lien. But a maritime lien does not require prior possession for its creation. In a fit and proper case a claimant on the strength of his maritime lien can secure the arrest of a ship which then comes under the possession of the court and she cannot be moved without the court's order.
22. 'No Indian Statute defines a maritime claim' is the clear finding of Supreme Court in M.V. Elisabeth (AIR 1993 SC 1014, para 85, page 1040). But our Supreme Court followed the provisions of the Supreme Court Act 1981 of England where maritime claims have been listed on the basis of Brussels Convention of 1952 on the Arrest of Sea Going Ships. Under Article 1 of the said Convention various maritime claims have been catalogued. Out of which 1(k) answers the description of the claims of the plaintiff in this proceeding. Article 1(k) reads "goods or materials whether supplied to a ship for her operation or maintenance". Even though India is not a signatory to the Brussels Convention, but the Supreme Court held that the provisions of these Conventions should be regarded as part of International Common Law and these provisions 'supplement' and 'complement' our maritime laws and fill up the lacunae in The Merchant Shipping Act.
23. But in Elisabeth, the Hon'ble Supreme Court did not notice any convention on maritime lien. However the Hon'ble Supreme Court accepted in para 57 of Elisabeth the judicial determination of the concept of 'maritime lien' by English courts and which I quote as follows:
"A maritime lien is a privileged claim against the ship or a right to a part of the property in the ship, and it "travels" with the ship. Because the ship has to "pay for the wrong it has done", it can be compelled to do so by a forced sale. (See The Bold Buccleugh, (1852) 7 Moo PCC 267)."
24. A definition of maritime lien has also been given in Stroud's Judicial Dictionary, 5th Edition page 1466 to the following effect:
Page 78 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021C/AS/9/2016 IA JUDGMENT "A maritime lien may be defined as a right specifically binding a ship, her furniture, tackle, cargo, and freight, or any of them, for payment of a claim founded upon the maritime law and entitling the claimant to take judicial proceedings against the property bound to enforce, or to ascertain and enforce, satisfaction of his demand; thus, a salvor has a maritime lien on the property saved for such an amount as a court exercising admiralty jurisdiction shall award. Maritime lien are distinguished from all other liens in these two chief particulars: (i) they are in no way founded on possession or property in the claimant, (ii) they are exercised by taking proceedings against the property itself in a form of action styled an action in rem (The Glasgow Packet, 2 Rob. W. 312; The Repulse, 4 Notes of Cas. 170), and, from this and their secret nature, they closely resemble the species of security known to Roman law under the name of hypotheca (Dig.
xiii). Interest, if any allowed, and the costs of enforcing a claim for which a maritime lien exists, will be included in such lien (The Margaret, 3 Hagg. Adm. 240)."
25. According to the well known treatise of Thomas on maritime lien, the following claims may give rise to maritime lien namely:
"(a) Damage done by a ship
(b) Salvage
(c) Seamen's wages
(d) Master's wages and disbursements
(e) Bottomry and respondentia".
26. The aforesaid passage from Thomas has been approved by the Division Bench of Calcutta High Court in Mohammed Saleh Behbehani & Company v. Bhoja Trader, reported in (1983) 2 Calcutta Law Journal 334. At 344 of the report, the learned Judges of the Division Bench referred to maritime liens as representing 'a small cluster of claims' and referred to the aforementioned passage from Thomas.
(27) and (28) xxx xxx xxx
29. Counsel for the respondent also relies on a passage from Roscoe on The Admiralty Jurisdiction and Practice, 5th Edition. While dealing with necessaries, the learned author has stated as follows:
"Persons who have supplied a ship, whether British or foreign, with necessaries have not a maritime lien upon her, and the vessel does not become chargeable with the debt till the suit is actually instituted; consequently there can be no claim against a Page 79 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT ship which has been sold, even with notice of such a claim in respect of which an action has not been commenced, and a want of caution in supplying the necessaries may, it would seem, cause a postponement of claims to others more carefully begun. The necessaries claimant is not a secured creditor until the moment of arrest."
30. There is a direct judgment on this point by a learned Judge of this court in Bailey Petroleum, referred to above.
31. Relying on the judgment of the Privy Council in Rio Tinto, reported in 1884 (9) Appeal Cases 356 and the judgment in Shell Oil Co. v. The Ship Lastrigoni, reported in 1974 (3) All England Reports 399, the learned single Judge held in Bailey Petroleum that a claim arising out of the supply of necessaries may give rise to a statutory right of action 'in rem' under section 5 of Admiralty Court Act, 1861 but it does not give a rise to maritime lien. Paragraphs 23 and 24 of the judgment in Bailey Petroleum make it clear and I quote them in extenso:
"23. Whereas a maritime lien attaches to the res and travels with it and may be enforced against a subsequent purchaser of the res, a statutory right of action in rem is defeated by a change of ownership. This later principle follows from the nature of the right described in the preceding paragraph.
24. This view of the law is supported by a catena of decisions."
21. In fact, the International Convention on Maritime Lien and Mortgages, 1993 defines maritime liens in Article 4 as follows:-
"Article 4: Maritime liens I. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel:
(a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
(b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;
(c) claims for reward for the salvage of the vessel;
(d) claims for port, canal, and other waterway dues and pilotage dues;
(e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers' effects carried on Page 80 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT the vessel.
2. No maritime lien shall attach to a vessel to secure claims as set out in subparagraphs (b) and (e) of paragraph 1 which arise out of or result from:
(a) damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to international conventions or national law providing for strict liability and compulsory insurance or other means of securing the claims; or
(b) the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste."
22. Article 8 then states that the characteristics of such liens are as follows:-
"Article 8: Characteristics of maritime liens Subject to the provisions of article 12, the maritime liens follow the vessel, notwithstanding any change of ownership or of registration or of flag." It is, thus, clear that a claim for necessaries supplied to a vessel does not become a maritime lien which attaches to the vessel.
23. Shri Divan, however, cited U.S. case law in support of his submission that a claim for necessaries raises a maritime lien. We are afraid that given the Indian case law on the subject read with the various international Conventions referred to above, the U.S. seems to stand alone in considering that claims for necessaries would amount to maritime lien enforceable against the vessel as such wherever it goes. It is clear that in our country at least claims for necessaries, though maritime claims, do not raise a maritime lien.
24. What arises next, therefore, is the manner of enforcement of maritime claims in our Courts. In M.V. Elisabeth (supra) at 459- 462, this Court laid down, in some detail, the basic features of the admiralty jurisdiction in this country, and how maritime claims are to be enforced. The Court held:
"Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed against the owner. The arrest of the ship is regarded as a mere procedure to obtained security to satisfy judgment. A successful plaintiff in an action in rem has a right to recover damages against the property of the defendant. "The liability of the shipowner is not limited to the value of the res primarily proceeded against .... An action ... though originally Page 81 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability".' (Roscoe's Admiralty Practice, 5th ed. p. 29) The foundation of an action in rem, which is a peculiarity of the Anglo-American law, arises from a maritime lien or claim imposing a personal liability upon the owner of the vessel. A defendant in an admiralty action in personam is liable for the full amount of the plaintiff's established claim. Likewise, a defendant acknowledging service in an action in rem is liable to be saddled with full liability even when the amount of the judgment exceeds the value of the res or of the bail provided. An action in rem lies in the English High Court in respect of matters regulated by the Supreme Court Act 1981, and in relation to a number of claims the jurisdiction can be invoked not only against the offending ship in question but also against a 'sistership' i.e., a ship in the same beneficial ownership as the ship in regard to which the claim arose. "The vessel which commits the aggression is treated as the offender, as the guilty instrument or thing to which the forfeiture attaches, without any reference whatsoever to the character or conduct of the owner ...." (Per Justice Story, The United States v. The Big Malek Adhel [43 US (2 How) 210, 233 (1844)])." xxx xxx xxx A ship may be arrested (i) to acquire jurisdiction; or
(ii) to obtain security for satisfaction of the claim when decreed;
or (iii) in execution of a decree. In the first two cases, the court has the discretion to insist upon security being furnished by the plaintiff to compensate the defendant in the event of it being found that the arrest was wrongful and was sought and obtained maliciously or in bad faith. The claimant is liable in damages for wrongful arrest. This practice of insisting upon security being furnished by the party seeking arrest of the ship is followed in the United States, Japan and other countries. The reason for the rule is that a wrongful arrest can cause irreparable loss and damages to the shipowner; and he should in that event be compensated by the arresting party. (See Arrest of Ships by Hill, Soehring, Hosoi and Helmer, 1985).
The attachment by arrest is only provisional and its purpose is merely to detain the ship until the matter has been finally settled by a competent court. The attachment of the vessel brings it under the custody of the Marshal or any other authorized officer. Any interference with his custody is treated as a contempt of the court which has ordered the arrest. But the Marshal's right under the attachment order is not one of possession, but only of Page 82 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT custody. Although the custody of the vessel has passed from the defendant to the Marshal, all the possessory rights which previously existed continue to exist, including all the remedies which are based on possession. The warrant usually contains a monition to all persons interested to appear before the court on a particular day and show cause why the property should not be condemned and sold to satisfy the claim of the plaintiff. The attachment being only a method of safeguarding the interest of the plaintiff by providing him with a security, it is not likely to be ordered if the defendant or his lawyer agrees to "accept service and to put in bail or to pay money into court in lieu of bail". (See Halsbury's Laws of England, 4th edn., Vol. 1, p. 375 etc.).
xxx xxx xxx A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction. If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction.
An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person. Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam. It is, however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started. A decree of the court in such an action binds not merely the parties to the writ but everybody in the world who might dispute the plaintiff's claim. It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff. He does not sue the owner directly and by name; but the owner or any one interested in the proceedings may appear and defend. The writ is issued to "owners and parties interested in the property proceeded against". The proceedings can be started in England or in the United States in respect of a maritime lien, and in England in respect of a statutory right in rem. A maritime lien is a privileged claim against the ship or a right to a part of the property in the ship, and it "travels" with the ship. Because the ship has to "pay for the wrong it has done", it can be compelled to do so by a forced sale. [See Bold Buccleaugh (The) [Harmer v. Bell, (1851) 7 Moo PC 267 : 13 ER 884]]. In addition to maritime liens, a ship is liable to be arrested in England in enforcement of statutory rights in rem (Supreme Court Act 1981). If the owner does not Page 83 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT submit to the jurisdiction and appear before the court to put in bail and release the ship, it is liable to be condemned and sold to satisfy the claims against her. If, however, the owner submits to jurisdiction and obtains the release of the ship by depositing security, he becomes personally liable to be proceeded against in personam in execution of the judgment if the amount decreed exceeds the amount of the bail. The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court."
25. The Court went on to hold that though Indian statutes lag behind international law in this context, the principles in these Conventions derived from the common law of nations, will be treated as a part of the common law of India. Paragraph 76 in this behalf reads as under:-
"76. It is true that Indian statutes lag behind the development of international law in comparison to contemporaneous statutes in England and other maritime countries. Although the Hague Rules are embodied in the Carriage of Goods by Sea Act, 1925, India never became a party to the International Convention laying down those rules (International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, Brussels, 1924). The Carriage of Goods by Sea Act, 1925 merely followed the (United Kingdom) Carriage of Goods by Sea Act, 1924. The United Kingdom repealed the Carriage of Goods by Sea Act, 1924 with a view of incorporating the Visby Rules adopted by the Brussels Protocol of 1968. The Hague-Visby Rules were accordingly adopted by the Carriage of Goods by Sea Act 1971 (United Kingdom). Indian legislation has not, however, progressed, notwithstanding the Brussels Protocol of 1968 adopting the Visby Rules or the United Nations Convention on the Carriage of Goods by Sea, 1978 adopting the Hamburg Rules. The Hamburg Rules prescribe the minimum liabilities of the carrier far more justly and equitably than the Hague Rules so as to correct the tilt in the latter in favour of the carriers. The Hamburg Rules are acclaimed to be a great improvement on the Hague Rules and far more beneficial from the point of view of the cargo owners. India has also not adopted the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952. Nor has India adopted the Brussels Conventions of 1952 on civil and penal jurisdiction in matters of collision; nor the Brussels Conventions of 1926 and 1967 relating to maritime liens and mortgages [(a) International Convention relating to the Arrest of Seagoing Ships, Brussels, May 10, 1952 (IMC); (b) International Convention on Certain Rules concerning Civil Page 84 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT Jurisdiction in Matters of Collision, Brussels, May 10, 1952 (IMC); (c) International Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision, Brussels, May 10, 1952 (IMC); and (d) International Conventions for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages, Brussels, April 10, 1926, and the Revised Convention on Maritime Lines and Mortgages, Brussels, May 29, 1967 (IMC).] India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various conventions intended to facilitate international trade.
Although these conventions have not been adopted by legislation, the principles incorporated in the conventions are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common law of India and applicable for the enforcement of maritime claims against foreign ships." (at pages 469-470) A list of maritime claims was then referred to in paragraph 84 and the Brussels Convention relating to the Arrest of Sea-
Going Ships, 1992 was referred to and followed.
26. The next important aspect that was argued was that the ownership of the vessel to enforce a maritime claim has to be seen at the stage of institution of the suit and not at the stage of arrest. The general rule that is contained in our country as to what crystallises on the date of a suit is reflected in Rameshwar and others v. Jot Ram and others, 1976 1 SCR 847 at 851-52. This Court held:-
"In P. Venkateswarlu v. Motor & General Traders [(1975) 1 SCC 770, 772 : AIR 1975 SC 1409, 1410] this Court dealt with the adjectival activism relating to post-institution circumstances. Two propositions were laid down. Firstly, it was held that [SCC p. 772, para 4] 'it is basic to our processual jurisprudence that the right to relief must be judged to exist as on the date a suitor institutes the legal proceeding.' This is an emphatic statement that the right of a party is determined by the facts as they exist on the date the action is instituted. Granting the presence of such facts, then he is entitled to its enforcement. Later developments cannot defeat his right because, as explained earlier, had the court found his facts to be true the day he sued he would have got his decree. The Court's procedural delays cannot deprive him of legal justice or rights crystallised in the initial cause of action. This position finds support in Bhajan Lal v. State of Punjab [(1971) 1 SCC 34].
The impact of subsequent happenings may now be spelt out.Page 85 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021
C/AS/9/2016 IA JUDGMENT First, its bearing on the right of action, second, on the nature of the relief and third, on its impotence to create or destroy substantive rights.
Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments subsequent to the suit or even during the appellate stage, it is but fair that the relief is moulded, varied or reshaped in the light of updated facts. Patterson [Patterson v. State of Alabama, (1934) 294 US 600, 607] illustrates this position. It is important that the party claiming the relief or change of relief must have the same right from which either the first or the modified remedy may flow. Subsequent events in the course of the case cannot be constitutive of substantive rights enforceable in that very litigation except in a narrow category (later spelt out) but may influence the equitable jurisdiction to mould reliefs. Conversely, where rights have already vested in a party, they cannot be nullified or negated by subsequent events save where awthere is a change in the law and it is made applicable at any stage. Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri [1940 FCR 84 : AIR 1941 FC 5] falls in this category. Courts of justice may, when the compelling equities of a case oblige them, shape reliefs -- cannot deny rights -- to make them justly relevant in the updated circumstances. Where the relief is discretionary, courts may exercise this jurisdiction to avoid injustice. Likewise, where the right to the remedy depends, under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the Court, even in appeal, can take note of such supervening facts with fundamental impact. Venkateswarlu, read in its statutory setting, falls in this category."
27. However, the International Convention on the Arrest of Ships, 1999, in which India participated, states as follows:-
"Article 3: Exercise of right of arrest
1. Arrest is permissible of any ship in respect of which a maritime claim is asserted if:
(a) the person who owned the ship at the time when the maritime claim arose is liable for the claim and is owner of the ship when the arrest is effected; or
(b) - (e) xxx xxx xxx (2) xxx xxx xxx
3. Notwithstanding the provisions of paragraphs 1 and 2 of this Page 86 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT article, the arrest of a ship which is not owned by the person liable for the claim shall be permissible only if, under the law of the State where the arrest is applied for, a judgment in respect of that claim can be enforced against that ship by judicial or forced sale of that ship."
28. India is not a signatory to the aforesaid Convention, yet following M.V. Elisabeth (supra), this Convention becomes part of our national law and must, therefore, be followed by this Court. Article 3(1)(a) is in two parts. First, arrest is only permissible of any ship if a maritime claim is asserted against the person who owned the ship at a time when the maritime claim arose for which the owner is liable, and second, that the same ship owner should be the owner of the ship when the arrest is effected. Thus, article 3(1)(a) sets the controversy at rest because a maritime claim can be asserted only at the time the arrest is effected and not at the time of the institution of the suit. This being so, Shri Divan's reliance on English judgments to the contrary, namely Monica S. (1967) 2 Lloyd's Rep. 113 as followed in Re, Aro Co Limited 1980 1 All ER 1067, cannot be followed. Both judgments were prior to the 1999 Convention and it is this Convention that must be followed. It is, therefore, clear that the relevant date on which ownership of the vessel is to be determined is the date of arrest and not the date of institution of the suit"
72. Pethora of other decisions, the defendant applicant has sought to rely upon the same. It has also depended on legal submissions made by the registered owner of MV Silvia Glory (IMP-9622942) in Admiralty Suit No.1 of 2019. Reliance is also placed on the decision of Dreymoor Fertilizers Overseas Pte. Ltd. vs. M.V.Theoforos decided in 319 of 2012 and Admiralty Suit No.51 of 2011 on 18.03.2014 essentially pleading that the ex parte order, which had been obtained was based on the pleadings, which were untrue. The question arose before the Bombay High Court, whether the plaintiff should be allowed amendment of the plaint and the Court held that if the Page 87 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT ex parte order was based on untrue facts, the pleadings if are needed to be changed, the ex parte, the order also must go.
73. Although, here there is no question of change of any pleadings. However, this has been relied upon to urge that the ex parte order, in the instant case, has been obtained by the plaintiff without disclosing the fact that the payment has been made to the tune of 175,350 USD on the invoice raised by Lekeren, whereas the invoice raised by OW Bunkers is to the tune of 176,400 USD. There is a difference of USD 1,050/-, which is barely Rs.75,000/-, which is a marginal difference in the amount of invoice.
74. It is not needed for now to discussed all the judgments which are sought to be relied upon with a mention that the issues decided in case of Chrisomar Corporation(supra),t he Apex Court has clearly held that necessary supply to the vessel is not a maritime claim. In absence of any contract of the plaintiff with the owner of the defendant vessel, the arrest of the vessel on the ground of maritime claim is impermissible. All the cases of maritime liens as held by the Apex Court would be based on maritime claims, but all maritime claims would not give rise to maritime lien on the ship. The lien is a right on someones property to retain the possession of the same for the purpose of receiving a claim. The maritime lie, however, also is different than other liens where there Page 88 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT is no requirement of prior possession on the strength of the maritime lien, securing arrest of ship, which comes under the possession of the Court and the ship thereafter cannot be moved without the Court's order. Now, since both the maritime claim and maritime lien have been defined under the Act and in the decision of Chrisomar Corporation(supra) the Court has been categorical that a claim for necessaries supplied to vessel does not become a maritime lien and also having further said that a claim for necessary raises a maritime lien only in the USA, which stands alone in considering the claims for necessaries would amount to maritime lien as enforceable against the vessel where from it goes.
75. In India,the claims for necessaries through the maritime claims do not raise a maritime lien, is made unequivocally clear. Therefore, as provided under section 4(l) any goods, materials, perishable or non- perishable provisions, bunker vessels or equipment supplied or services rendered to the vessel for its operation, management, preservation or maintenance including any fees, payable or leviable being maritime claim, the same has to be claimed from a person with whom there is a privity of contract. In absence of any maritime lien with regard to necessaries supplied, there could be no arrest of the ship, which is owned by the owner in absence of any other agreement.
76. In the instant case, it is ING Bank, which is Page 89 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT assignee of the OW bunker, who has approached this Court seeking to arrest the ship for outstanding amount of the bunkers supplied where the details of the note of protest as mentioned hereinabove also has not come before the Court where the Master of the ship made a mention that it was on the part of the Itiro/time charterer to pay for the supplies of bunkers and not the owner of the ship. Even without entering into the aspect as to whether the title of the property of the bunkers would vest in the OW bunker from Lakeren and even without going into section 4(1) of the SOGA and section 14A of the SOGA, the Court needs to bear in mind that at the time when the suit was filed, the contract, pursuant to which the suit came to be filed was already over.
77. Apt would be to refer at this stage the decision of the Apex Court in the case of M/s. Liverpool and London, Steamship Protection and Indemnity Assocn. Ltd., vs. MT Symphony (ex-Arabian Lady) and others, AIR 2003 BOMBAY 417 where it has held thus:-
" for the aforementioned purpose the Vessel herein could file an application for vacation of stay. While considering such an application, the Court was entitled to consider not only a prima facie case but also the elements of balance of convenience and irreparable injury involved in the matter. In such a situation and particularly when both the parties disclose their documents which are in their possession, the Court would be in a position to ascertain even prima facie as to whether the Club has been able to make out that " Sea Glory" and "Sea Ranger" are sister Page 90 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT vessels of the "Vessel". Accordingly, pursuant to the Sea Success Judgment, even at the interlocutory stage when both parties disclose their documents in their possession the Admiralty Court can always make a determination on whether the Plaintiff have made out a prima facie case."
78. The Court is conscious that the plaintiff has made the basis of its claim as mentioned in paragraph 03 of the plaint, which says that OW having supplied the bunkers to the defendant vessel, and the defendant vessel having used and consumed and benefited from the said bunkers for prosecuting the voyage, and it is not having paid to OW the price of the bunkers supplied, it has approached this Court to file the suit to arrest the vessel. There are, already mentioned hereinabove non disclosure in relation to the settlement arrived at by Lakeren on the payment received from the time charterer Itirio, even if there are no terms between the OW Bunkers and the Lakeren so also SEKAVIN the true disclosure would be expected of the plaintiff who is seeking discretionary jurisdiction. It is a matter of fact that there is no document indicating that Lakeren has claimed on the assets of OW Bunkers for non-receipt of any payment. What transpired between OW and Lekeren shall need to be placed on record to claim from the third party, the owner of the vessel. Of course, the plaintiff is not expected to know the terms the time charter would have with the owner of the ship. Even if it is not a practice in the shipping industry for the owner to be bound by the terms and conditions of OW and they may not bind the owner Page 91 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT unless its contract with the time Charterer otherwise specifies, there are certain issues which would require, adjudication. Plaintiff insists that there was no contract nor any authorisation for Lekeren to receive any money from Itiro directly nor has Lekeren intimated any receipt to it. With a clear receipt of transfer of amount by the time charterer to the intermediary and a negligible difference, plaintiff shall need to be made accountable till the matter is tried on merits.
79. To say at this stage that raising of claim for necessary supplies for the same being maritime claim against the vessel was impermissible for not being maritime lien and seeking of arrest of the vessel for maritime claim has been made absolutely clear by the Admiralty Act of 2017 and furthermore from the decision of Chrisomar Corporation(supra) delivered on 14.09.2017, this court cannot be oblivious of the fact that this suit is of the year 2016 and the ex parte order also has been passed in the year 2016 and various decisions of this court also favored the plaintiff on the aspect of its maritime claim against the owner for the supply of bunkers, of course with specific facts and law, it would not be feasible for the Court to hold at this stage that to bring the suit was a misleading act on the part of the plaintiff or that it was a brazen abuse of process of the Court.
80. The purpose would be sub-served in wake of the discussion held hereinabove, more particularly,as the Page 92 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021 C/AS/9/2016 IA JUDGMENT payment is already made to the Lekeren, an intermediary and the difference between the demand raised by the plaintiff and the amount already paid by Itiro to Lekeren having the difference of US$1000,only, this application deserves to be allowed partly by directing the plaintiff to deposit amount of USD 99,000/-(USDollars Ninety Nine Thousand only) within four weeks.
81. Resultantly, this application OJCA 2 of 2016 is partly allowed. Without making any change in the order passed by this court on dated 16.02.2016, the plaintiff opponent is directed to deposit the sum of US dollars 99,000(US dollars ninety nine thousands only) within eight weeks. Let the plaintiff deposit such amount of USD 99,000/-(USD Ninety Nine Thousand only) within eight weeks of the receipt of copy of this order or in the alternative, furnish the bank guarantee of any nationalized bank in India of the said amount. On its failure, the interim order shall stand vacated.
82. Admiralty Suit No. 9 of 2016, being of the year 2016 even otherwise requires the adjudication. It is expected to be placed before the appropriate Bench by the Registry at the expiry of 10 weeks for final adjudication.
83. Application stands disposed of accordingly.
(MS. SONIA GOKANI, J. ) MISHRA AMIT V./sudhir Page 93 of 93 Downloaded on : Thu Feb 25 01:25:30 IST 2021