Calcutta High Court
I-Marine Infratech (India) Private ... vs The Owners And Parties Interested In The ... on 9 December, 2020
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
UL
ORDER SHEET
GA No. 1 of 2020
AS No. 5 of 2020
IN THE HIGH COURT AT CALCUTTA
Admiralty Jurisdiction
ORIGINAL SIDE
I-MARINE INFRATECH (INDIA) PRIVATE LIMITED
Versus
THE OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V.
MAHESHWARI & ANR.
BEFORE:
The Hon'ble JUSTICE MOUSHUMI BHATTACHARYA
Date : 9th December, 2020.
Appearance
Mr. K. R. Thakkar, Adv.
Mr. Anurag Bagaria, Adv.
...for the petitioner
The Court: An Affidavit of Arrest has been filed in an
Admiralty Suit filed by the plaintiff praying for, inter alia, arrest of the
vessel M. V. MAHESHWARI which is presently lying within the
territorial waters of India at Kolkata within the admiralty jurisdiction of
this Court. The facts on which the plaintiff seeks such an order are
stated below.
The plaintiff claims to be the owner and occupier of a fleet of
tugs which perform deep sea towing and coastal and harbour operations.
The case made out in the affidavit-of-arrest is that the plaintiff offered its
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TUG Ferrari for hire to the defendant/ respondent no.2 who has been
described as the "Charterer" in the affidavit of arrest. The parties entered into a Charter Party on 24th November, 2014 which is in the form of "BIMCO Time Charter for Offshore Service Vessels ..." by which the plaintiff/petitioner let the Tug for hire to the respondent no.2 for transportation of men and materials from Sandheads, Kolkata/Kanika Sand/Sagar Anchorage. The terms of the Charter Party annexed to the affidavit provides the particulars of the parties and the terms on which the second respondent hired the tug of the plaintiff.
During the subsistence of the initial hire period of three months, the respondent no.2 on 4th May, 2015 elected to extend the Charter Party for a further period of three years which was to be from 5th May, 2015 till 4th May, 2018. However, by an e-mail dated 10th August, 2017, the respondent no.2 served a notice of 30 days to the petitioner expressing its intention to prematurely terminate the Charter Party and re-deliver the said Tug on 9th September, 2017 at Haldia. By reason of such premature termination, the petitioner by e-mail dated 7th September, 2017 served three invoices on the respondent no.2, particulars of which were detailed in the e-mail and included an amount of Rs.1,28,64,360/- towards a proforma invoice being Charter Hire for the remainder of the Charter Period i.e. between 10th September, 2017 and 4th May, 2018. This claim was made on account of compensation for early termination of the Charter Party. Pursuant to the notice served by the respondent no.2 for premature termination on 9th September, 2017, 3 the vessel was delivered to the petitioner at Haldia Port. On 13th September, 2017 the respondent no.2 made a part payment against the first invoice mentioned in the e-mail of 10th August, 2017 but refused to pay towards hire charges against the second invoice.
Several letters were exchanged between the petitioner and the second respondent thereafter in relation to the amounts due to the petitioner including several requests made for such amounts in September, 2017. The total claim reflected in such e-mails was Rs.1,36,95,666/-. The respondent no.2 failed to make payment of the amounts mentioned in the invoices of the petitioner and denied and disputed the amounts due to the petitioner against the invoices raised. The respondent no.2 however did not dispute its liability to make payment against the third invoice on account of hire charges for the balance period of the Charter Party. On 22nd November, 2017, the respondent no.2 made remittance of Rs.42,760/- against two invoices towards differential fuel and messing charges. The correspondence between the parties culminated in a legal notice being sent by the petitioner to the second respondent on 25th August, 2020 which outlined the amounts outstanding with particular stress on the third invoice amounting to Rs.1,28,64,360/- towards unpaid Charter hire for the remainder of the Charter period from 10th September, 2017 to 4th May, 2018 as compensation for early termination of the Charter party. The respondent denied and disputed the contentions of the legal notice by a reply dated 3rd September, 2020.
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Mr. K. Thakker, learned counsel appearing for the plaintiff/petitioner submits that under these circumstances, the
petitioner was constrained to file an Admiralty Suit for a decree for Rs.2,13,41,345/- and for arrest of the vessel M.V. MAHESHWARI. Counsel submits that to the best of the knowledge of the petitioner, the vessel M.V. MAHESHWARI which is presently docked at Kolkata Port is the only asset of the second respondent within the jurisdiction of this Court.
Counsel has placed the terms of the Charter party which provides for early termination of Charterer as well as Clause 31 of the SUPPLYTIME 2005, Time Charter Party for Offshore Service Vessels which provides for early termination at the Charterter's option and convenience and stipulates that the Charterer shall pay the compensation for early termination stated in Box 13 etc. under the Charter Party up to the time of termination. The aforesaid Clause will however not apply if Box 13 is left blank. Counsel submits that the Charter Party has an arbitration clause in Clause 34(c). It is submitted clause 2.5 of the said reply does not dispute the third proforma invoice amounting to Rs.1,28,64,360/- which forms the crux of the dispute between the parties and remains unpaid till date. Counsel submits that the existence of an arbitration clause would not come in the way of passing an order of arrest since a Court, in exercise of its admiralty jurisdiction, is empowered to pass such an order in order to secure the claim of the plaintiff notwithstanding an arbitration clause in the 5 contract. Counsel relies on Alexandras Dryron S.A. -vs- Owners and parties interested in the vessel M. V. PRAPTI, a decision of this Court reported in AIR 1998 CAL 142 which held that the plaintiff was entitled in law to secure its claim by causing the vessel to be arrested and ultimately sold on the disposal of the suit. The Court further held that in the event the claim in the arbitration being secured cannot be a ground for rejecting the plaintiff's prayer for arrest. In that case the plaintiff had commenced arbitration proceedings against the Charterers which were pending in London. Counsel places a Single Bench decision of the Bombay High Court in Siem Offshore Redri AS vs. Altus Uber where the Court, relying on a full Bench decision of the Bombay High Court in J.S. Ocean Liner LLC vs. Golden Progress, was of the view that an action in rem may be used to obtain and retain security even though the merits of the dispute are to be determined in the arbitration proceedings. Counsel submits that this judgment was unsuccessfully challenged before the Division Bench of that the Bombay High Court.
Upon considering the submissions made in support of the prayer for arrest of the vessel, Rule 4 (3) of the Rules framed by the Calcutta High Court under Section 16 (3) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 empowers the Court to make an order of arrest, exparte, on the prayer of a plaintiff provided the relevant provisions of the parent Act namely, the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, are satisfied. Section 4 (1) (h) of the said Act provides that the High Court may exercise jurisdiction to 6 hear and determine any question on a maritime claim, against any vessel, arising out of any agreement relating to the use or hire of the vessel, whether contained in a Charter Party or otherwise. This rule is relevant since the present case involves a claim arising out of a Charter Party related to hire of the plaintiff's TUG by the second respondent.
Section 5 (1) of the Act provides that the High Court may order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding where the Court has reason to believe that 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. The relevant document in relation to this provision is a ship folder and management detail of the relevant Company indicating that the second respondent namely, Jindal ITF Limited, is the registered owner of the vessel M.V. MAHESWARI since 27th October, 2012.
Clause 2.5 of the reply of the second respondent dated 3rd September, 2020 shows that the third Invoice mentioned in the petitioner's e-mail dated 10th August, 2017 has not been disputed by the respondent no. 2. Paragraph 11 of the reply also establishes that the respondent no.2 does not have a defence to the petitioner's claim. In this paragraph, the stand of the respondent no. 2 that no amount of hire is payable since Box 13 of the Charter Party is blank is incorrect. In this context, it would be useful to revisit Box 13 of the Time Charter Party which provides for early termination of Charter with the additional 7 endorsement "allowed as per agreed terms". This should be read with clause 31 (a) of the 2005 Time Charter Party for Offshore Service Vessels under which a Charterer has the option of terminating a Charter Party at any time by giving written notice of termination to the Owners but upon payment of compensation for early termination as stated in Box 13 etc. Clause 31 (a) expressly provides that the clause will not apply if Box 13 is left blank. In the present case contrary to the stand of the second respondent in paragraph 11 of its reply, Box 13 contains a specific endorsement and it is clear therefore that the exit route in Clause 31 (a) is not available to the respondent no. 2.
The next issue urged is whether existence of an arbitration clause in the Charter Party can preclude a Court, sitting in Admiralty Jurisdiction, from making an order of arrest of a vessel. The decision of this Court in Alexandras Dryron makes it clear that even before The Admiralty Act of 2017 came into force, the Court opined that a vessel may be arrested to secure the claim of a plaintiff notwithstanding pendency of arbitration proceedings elsewhere. The decision in Altus Uber (2018 SCC Online Bombay 2730) reinforces this position. Notably, even though the Bombay High Court decision relied on a pre-2017 decision in J.S. Ocean Liner vs. M.V. Golden Progress. "Altus Uber" was pronounced on 25th September, 2018 after Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 had come into force. Golden Progress, a 2007 decision of the Bombay High Court, held that the existence of an arbitration clause would not bar a Court from exercising 8 its jurisdiction in a maritime claim and further that an action in rem is the correct procedure for arrest of a vessel as opposed to an application under Section 9 of The Arbitration and Conciliation Act, 1996.
On considering the decisions relied upon, this Court is of the view that The Admiralty Act, 2017 empowers a Court, in exercise of its admiralty jurisdiction, to make an order in relation to a maritime claim against a vessel subject to the conditions stipulated under Section 4 of the Act. Section 5 of the Act has been framed for the purpose of providing security against a maritime claim which is the subject matter of an admiralty proceeding subject to the "reason to believe" test of the Court is satisfied. The nature of the relief is premised on a real apprehension that the property which will secure the claim will not remain present for arrest/attachment for a length of time. The presumption is also that arrest of the vessel is the only effective order which can be passed in the circumstances. The underlying objective of an order of arrest of a vessel can be equated with the principles of Order XXXVIII Rule 5 of The Code of Civil Procedure, 1908 (attachment before judgment) where a defendant is called upon to furnish security and there is an imminent risk that the claim of the plaintiff may be frustrated by the subject-matter of the dispute being removed from the local limits of the jurisdiction of the Court.
In fit cases where an order of arrest is the only option available to a Court in exercise of its admiralty jurisdiction, existence of an arbitration clause between the parties cannot be a factor inhibiting 9 the Court's power of arrest. Moreover, the jurisdiction of a Court in matters involving maritime claims are essentially actions in rem in respect of the identified maritime claim where the Court is empowered to arrest a ship to secure such claims. On the other hand, a dispute contemplated in an arbitration clause is an action in personam involving two contesting parties who are bound by the adjudication.
Actions in rem are resorted to by Courts as a means to overcome the difficulty of personal service on a defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res or in the defendant's absence, proceed against the res itself by attributing to the res a personality for the purpose of entering and executing by sale of the res (ref M.V. Elisabeth: AIR 1993 SC 1014).
If a plaintiff is able to satisfy the jurisdictional test in the 2017 Act, namely, that the vessel is within jurisdiction and the vessel is liable to be arrested in exercise of powers conferred under Section 5 of the Act, the plaintiff is entitled to an order of arrest. The merits of the claim can be adjudicated in the arbitration which is pending or is to follow. Thus, this Court sees no impediment in passing an order of arrest notwithstanding the arbitration clause.
By reason of the above discussion, this Court is of the view that the petitioner has made out a prima facie case for arrest of the vessel M.V. MAHESHWARI and that the balance of convenience also lies in favour of the petitioner for obtaining an ex parte order of arrest of the 10 defendant no. 1 vessel. This Court has been informed that the vessel, which is presently docked at Kolkata Port, may leave the territorial waters of the State at any point of time and hence an ex parte order of arrest is warranted to secure the claim of the petitioner. This Court has also found that the amounts due to the petitioner from the respondent no. 2 remain outstanding as on date and that the respondent no. 2 has not been able to show any credible reason for refusing the amounts due and owing to the petitioner.
There shall accordingly be an order of arrest of the defendant no. 1 vessel M.V. MAHESHWARI (IMO No. 9664665) lying within the territorial waters at Kolkata port within the admiralty jurisdiction of this Court along with its tackle, apparel and furniture. The vessel shall not be released until the respondent no. 2 furnishes sufficient security to the plaintiff's claim along with interest and costs. It is clarified that if the owners and parties interested in the defendant no. 1 vessel deposit the amount of Rs.2,13,41,345/- to secure the claim of the plaintiff with the Registrar, Original Side of this Court, the order of arrest shall stand automatically vacated.
The Marshall shall forthwith communicate the order of arrest to the Master of the Vessel as well as the concerned Port Authority, Custom Authorities and Coast Guard Authorities by Fax as well as by e- mail. The Marshall shall serve the order of arrest including the copy of the affidavit of arrest on the Master of the Vessel upon payment of the necessary charges by the plaintiff. The Marshall's communication shall 11 be affixed on the Mast of the vessel. The petitioner shall also serve copies of the plaint and application together with the copy of this order on the Master of the defendant no. 1 vessel. The Port and the Custom Authorities as well as the Commandant, CISF are directed to render all necessary assistance to the Marshall for implementing this order.
The Marshall and all concerned parties including the Port and Custom Authorities and the Coast Guard shall act on a server copy of this order.
This matter is treated as on the day's list and is made returnable on 15th December, 2020.
(MOUSHUMI BHATTACHARYA, J.) sp3/RS/TO