Bombay High Court
O. S. V. Crest Mercuty One(Imo 9724398) vs Vision Projects Technologies Private ... on 7 May, 2024
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2024:BHC-OS:7447-DB
COMAPL.30604.22 - APRIL 27, 2024.DOCX
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL APPEAL(L)NO.30604 OF 2022
IN
INTERIM APPLICATION NO.3510 OF 2022
IN
COMMERCIAL ADMIRALTY SUIT NO.47 OF 2022
OSV Crest Mercury 1 (IMO 9724398) ..Appellant
(Orig.Defendant)
Versus
Vision Projects Technologies Pvt Ltd ..Respondent
(Orig.Plaintiff)
Mr.Ashwin Shanker with Rishi Murarka, Kunal Naik,
Advocates for the Appellant.
Mr.Prathamesh Kamat with Abhimanyu Singh, Kayush
Zaiwala i/b Priyanka Patel, Advocates for the Respondent.
CORAM : B. P. COLABAWALLA, J &
SOMASEKHAR SUNDARESAN, JJ.
Reserved On : April 18, 2024.
Pronounced On: May 07, 2024.
JUDGMENT [ Per B. P. Colabawalla, J. ]
1. The above Commercial Appeal is filed challenging the judgement dated 27th July 2022 passed by the learned Single Judge of this Court (N. J. Jamadar, J). By the impugned judgement, the Page 1 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX Interim Application filed by the Original Defendant - OSV Crest Mercury 1 (IMO 9724398), seeking unconditional release of the order of arrest dated 21st June 2021 was rejected, but the amount of security to be provided [by the Defendant] for the release of the vessel was reduced by:
(a) Rs.23 lakhs towards the claim of Unique
Marine Services.
(b) USD 12697.96 towards claim of Bureau Veritas.
(c) Rs.12,27,031/- towards the claim of Indian
Register of shipping.
(d) Rs.1,78,180/- towards claim of Triton Diving
Services.
2. The reduction of security as regards Item (c) and (d) above, was subject to the rights and contentions of the parties.
3. Before we delve into whether the impugned judgement requires any interference in appeal, a brief narration of facts would be necessary. For the sake of convenience, we shall refer to the parties as they were arrayed before the Learned Single Judge.
4. Vision Projects Technologies Private Limited (Vision Projects - the Plaintiff) instituted a Commercial Admiralty Suit praying for an order and decree against the Defendant Vessel [OSV Page 2 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX Crest Mercury 1 (IMO 9724398)] to pay to the Plaintiff a sum of USD 1,873,082.32 along with further interest @18% p.a.; for arrest and sale of the Defendant Vessel; and to apply the sale proceeds thereof towards the claim of the Plaintiff.
5. The Plaintiff asserted that the Defendant Vessel [OSV Crest Mercury 1 (IMO 9724398)] is a tug/offshore supply vessel carrying an Indian flag. On the date of institution of the Suit, it was lying at post and harbor at Mumbai port in Indian territorial waters. CONTINENTAL RADIANCE is the registered owner of the Defendant Vessel. A Bareboat Charterparty BARECON 2001 was executed between Vision Projects [the plaintiff] and CONTINENTAL RADIANCE on 19th October 2015 for a period of five years.
6. The Plaintiff claims that under the terms of BARECON 2001, it carried out a special survey, drydocking, and various repairs to the Defendant Vessel, at the instance of CONTINENTAL RADIANCE. Costs incurred for carrying out the special survey/statutory drydock, to the extent of 90%, was to be incurred by CONTINENTAL RADIANCE. The Plaintiff further averred that it had also arranged for agency services of Benline Agency Indian Page 3 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX Private Limited and had also made payments to various authorities, vendors etc. for and on behalf of the Defendant Vessel, at the instance of CONTINENTAL RADIANCE.
7. Since the dues of the Plaintiff were unpaid, this gave rise, according to the Plaintiff, to a maritime claim to the tune of USD 1,873,082.32 and for costs, for which the present Suit was filed.
8. Apprehending that the Defendant Vessel may be re- exported out of Indian waters without following proper procedure for re-export, the Plaintiff applied for arrest of the Defendant Vessel. The arrest was granted by this Court vide its order dated 21st June 2021. It is to vacate this order of arrest that the Defendant Vessel and her registered owner namely, CONTINENTAL RADIANCE, filed Interim Application No.3510 of 2022. In this Application, the relief sought was that the order of arrest issued against the Defendant Vessel dated 21st June 2021 be vacated and set aside unconditionally, or in the alternative, the security to be provided by the Defendant Vessel be reduced to USD 18,415, which according to the Defendant, was 90% of the special survey costs. Relief was also sought in the form of seeking counter security of Page 4 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX USD 4,885,024.74, as averred in paragraph 40 of the said Interim Application. It is this Interim Application that was dismissed by the learned Single Judge vide the impugned order. Hence the present appeal.
9. The five grounds on which the order of arrest was sought to be vacated before the learned Single Judge were the following:-
(a) A false case of urgency to arrest the Vessel was attempted to be made out to obtain the order of arrest;
(b) The order of arrest was obtained without notice to the Defendant despite the Defendant having lodged a Caveat under Section 148A of the Code of Civil Procedure, 1908 (for short the "CPC");
(c) The Plaintiff was guilty of active misrepresentation, namely, that despite the Caveat, the Defendant was not given any notice and the matter was moved ex-parte. This apart, obtaining the order of arrest was in breach of the undertaking given to this Court on 16th June 2021 in Commercial Arbitration (L) Nos.12391 of 2021 and 13292 of 2021;
(d) The claim of the Plaintiff on merits is not at all made out; and Page 5 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX
(e) Since the charterparty provided for dispute resolution through arbitration, security for an arbitration proceeding in personam could not have been taken in the form of an Admiralty action in rem.
10. The learned Judge heard and rejected all these defenses, save and except for reducing certain security amounts as mentioned in the operative part of the impugned Judgement, and mentioned by us earlier.
11. In this factual backdrop, Mr. Ashwin Shanker, the learned counsel for the Appellant, basically argued the same grounds that were canvassed before the Learned Single Judge. He firstly submitted that the learned Single Judge has failed to appreciate that the arrest of the present Vessel is nothing but to secure the claim in the arbitration proceedings initiated by the owners of the Defendant Vessel [paragraph 9(e) above]. Mr. Shanker submitted that as recorded in the order dated 16th June 2021, passed in Commercial Arbitration (L) Nos.12391 of 2021 and 13292 of 2021, the parties agreed that the disputes be resolved through arbitration in accordance with Indian Law. A Sole Arbitrator also came to be appointed. He submitted that looking at this development, the institution of the Admiralty Suit can only be Page 6 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX said to be for the purposes of the arrest of the Defendant Vessel so as to obtain security for the award which may eventually be passed in arbitration proceedings. Inviting the attention of the Court to the provisions of Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act"), Mr. Shanker submitted that an arrest of a ship in aid of security for a domestic Arbitration is legally impermissible. Since the Plaintiff has not disputed that Section 8 of the Arbitration Act applies with full force and vigor, and the disputes between the parties were required to be referred to arbitration, according to Mr. Shanker, nothing survives in the Admiralty Suit. If nothing survives in the Admiralty Suit, then, the question of arrest of the Defendant Vessel continuing cannot and does not arise, was his submission. The argument of Mr. Shanker on this aspect was that if the in personam arbitration proceedings, and the in rem admiralty proceedings, are allowed to run together, then, there is every likelihood of contrary findings between the Arbitral Tribunal's Award and the Admiralty Court's decree. Further, there is also a risk of the parties making contrary pleadings before the Arbitral Tribunal and the Admiralty Court. He further submitted that there is no express stay to the present Admiralty Suit, and in fact, the High Court has no power to grant Page 7 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX any such stay. This being the case, the present Suit ought to be dismissed and the arrest of the Defendant Vessel be lifted.
12. To bolster the aforesaid arguments, Mr. Shanker submitted that once the Defendant enters an appearance, the present Admiralty Suit no longer can be regarded as a Suit in rem but would be a Suit in personam. Once that is the case, the dispute is capable of being resolved through the mode of arbitration. In support of this submission, Mr. Shanker relied upon the decision of the English House of Lords in the case of Republic of India vs. Indian Steamship Co. Ltd (The Indian Grace No.2) [1998 AC 878] to contend that the House of Lords has disregarded the personification theory, and which is now replaced by the procedural theory under which, the in personam liability is owed by the Defendant shipowners. Once this is the case, the present Suit cannot lie in view of the fact that the Defendant owners have already invoked arbitration under the provisions of the Arbitration Act.
13. We have heard Mr. Shanker at great length. We find absolutely no merit in the aforesaid contention. This issue has been dealt with in great detail by the learned Single Judge from paragraphs 34 to 44 of the impugned Judgement. In our view, the Page 8 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX learned Single Judge has correctly relied upon a decision of another learned Single Judge in the case of Siem Offshore Redri AS v/s Altus Uber [2018 SCC OnLine Bom 2730] for short "Altus Uber SJ"; and the decision of a Division Bench in an Appeal therefrom, in the case of Altus Uber v/s Siem Offshore Rederi AS [2019 SCC OnLine Bom 1327] for short "Altus Uber DB". Relying upon the aforesaid decisions, the learned Single Judge has, in our view, correctly come to the conclusion that merely because the dispute is amenable to arbitration does not ipso facto imply that the Defendant Vessel cannot be arrested in an action in rem. In fact, the learned Single Judge has reproduced certain paragraphs not only of the decision of Altus Uber SJ but also that of Altus Uber DB. In Altus Uber DB, the Division Bench has clearly ruled that it cannot be said that the Court has no jurisdiction to arrest the Vessel or to maintain an arrest where the purpose of the Plaintiff is simply to obtain security for the award in arbitration proceedings. It was in terms observed that the "purpose" of the Plaintiff in invoking the admiralty jurisdiction cannot affect the "existence" of the said jurisdiction.
14. To get over these judgments, Mr. Shanker sought to contend that in Altus Uber SJ and Altus Uber DB the Page 9 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX arbitration proceedings were initiated abroad and not in India. He submitted that in the present case, since the arbitration proceedings are initiated in India, they would fall under Part I of the Arbitration Act. Section 5 of the Arbitration Act which provides that there should be no interference by Courts in arbitration proceedings, would squarely apply, was the submission.
15. We find this argument also to be without any merit. The distinction sought to be made by Mr. Shanker is a distinction without a difference. We say this for multiple reasons. Firstly, an action against the Defendant Vessel is an action in rem. The action against the owners of the Defendant Vessel (and which forms the subject matter of the arbitration) is an action in personam. It is now too well settled a position in law that an action in rem is converted into an action in personam only when: (a) the Defendant enters an appearance; (b) submits to the jurisdiction of the Court; and (c) furnishes security for release of the Vessel. Until these three conditions are fulfilled, the question of an action in rem being converted into an action in personam, does not arise. The argument canvassed by Mr. Shanker that by merely entering an appearance, an action in rem [against the Vessel] would convert itself into an action in personam [against the owners], is totally Page 10 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX untenable. It would effectively mean that the moment the Defendant enters an appearance, an action against the ship would no longer lie and automatically become an action in personam without furnishing any security. This argument is to be stated only to be rejected. This would mean that the Admiralty Act, 2017 is clearly rendered otiose. All that the owners of the Defendant Vessel would have to do is come to Court and enter appearance, and the Vessel which was arrested to provide security to the Plaintiff and all other creditors [if it is sold by the Court], would be allowed to sail away without furnishing any security. We, therefore, have absolutely no hesitation in rejecting such a ludicrous argument.
16. Secondly, it is now also too well settled that an action in rem is not an action that can be referred to arbitration. The action in rem in the present case is an action against the Defendant Vessel. This is clear from Section 5 of the Admiralty Act, 2017. If an action in rem against the Defendant Vessel cannot be referred to arbitration, the same cannot be circumvented by merely invoking arbitration, and thereafter contending that now there is an action in personam against the owners of the Defendant Vessel, and therefore, the Suit cannot lie. An action in rem is an action against the Defendant Vessel. In the admiralty jurisdiction, the Vessel is Page 11 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX treated as a separate juristic entity and can be sued even without suing the owners of the Defendant Vessel. This distinction is now too well-settled to require any further discussion. Once this is the case, we find that the argument of Mr. Shanker that merely entering appearance, the Admiralty Suit filed against the Defendant Vessel would become an action in personam, and that the arrest must be lifted without furnishing any security, stands rejected.
17. As mentioned earlier, we have noticed [in the impugned order] that the learned Single Judge has dealt with this issue in great detail to reject these submissions of Mr. Shanker. We find that the reasons given by the learned Single Judge are perfectly justified, taking into consideration the observations of the another learned Single Judge in Altus Uber SJ and the observations of the Division Bench in the case of Altus Uber DB. In the interest of brevity, we are not repeating these reasons in this judgement.
18. Before parting, we must mention that the reliance placed by Mr. Shanker on the decision of the English House of Lords in The Indian Grace No.2 [1998 AC 878] is wholly misplaced. The said judgment has in fact been thereafter considered by the Court of Appeal in the matter of Stolt Kestrel Page 12 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX B. V. & Sener Petrel Denzizcillik Ticaret as (Stolt Kestrel)- [2015] EWCA Civ 1035, where it is held that the observations in The Indian Grace No.2's Judgment regarding "in rem" and "in personam" actions, was limited only for the purpose of consideration and interpretation of Section 34 of the (English) Civil Jurisdiction and Judgments Act, 1982. In fact, the said decision in Indian Grace No.2 has also been considered by another Single Judge of this Court in the case of Raj Shipping Agencies v Barge Madhwa & Anr [2020 SCC OnLine Bom 651], and more particularly in paragraphs 43 to 51 thereof. We, therefore, find that the reliance placed on the judgment of the Indian Grace No.2 is of no assistance to Mr. Shanker.
19. Even the reliance placed by Mr. Shanker on the decision of the Hon'ble Supreme Court in the case of P. Gajapathi Raju & Ors v/s. P.V.G.(Dead) & Ors. reported in [(2000) 4 SCC 539] is wholly misplaced. This decision was not rendered under Admiralty Jurisdiction at all, and the observations therein cannot be imported to the facts of the present case.
20. The next argument canvassed by Mr. Shanker was the disregard of the Caveat filed under Section 148-A of the Code of Page 13 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX Civil Procedure, 1908 (for short "CPC") [paragraph 9(b) above]. It is the case of the Defendant that since the Defendant had filed a Caveat under Section 148-A, the Plaintiff ought to have given proper notice to the Defendant before applying for arrest. The Plaintiff also failed to disclose the said Caveat in the Admiralty proceedings. Once this is the case, Mr. Shanker would argue, the order of the arrest itself is bad and ought to be vacated.
21. We have heard Mr. Shanker on this aspect too at great length. We find that the arguments canvassed by Mr. Shanker are wholly misplaced. Section 148-A of the CPC will not apply to Admiralty jurisdiction at all. The Admiralty jurisdiction is a special jurisdiction, and for which special Rules have been framed in the Bombay High Court (Original Side) Rules, 1980, with particular regard to filing of a caveat and the consequences thereof. The relevant Rule for that purpose is Rule 1072 which reads thus:-
"1072. Caveat against arrest of ship
(b) Any person desiring to prevent the arrest of any ship shall file in the registry a praecipe, signed by himself or his Advocate, who may be acting for him, requesting for entering caveat against the arrest of such ship and undertaking to enter appearance in person or by vakalatnama in any suit that may be instituted against such ship and undertaking to Page 14 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX give security in such suit in a sum not exceeding the amount to be stated In the praecipe or to pay into the registry such sum. The caveat shall contain the name, address and email address of the caveator and/or his advocate, as the case may be.
Caveat against issue of a warrant or order of arrest of such ship shall thereupon be entered in a book to be kept in the registry, called "Caveat Warrant Book". The Caveat Warrant Book shall state the amount of security that the Caveator has undertaken to provide as per the praecipe.
(b) The fact that there is a caveat against arrest in force shall not prevent a party from applying for a warrant or order of arrest and the ship to which the caveat relates, arrested without notice to the Caveator. Where any ship with respect to which a caveat against arrest is in force is arrested in pursuance of a warrant or order of arrest, the person at whose instance the caveat has been entered may apply to the court by way of an interim application for an order under this rule and, on the hearing of the application, the court, unless it is satisfied that person procuring arrest of the ship had a good and sufficient reason for so doing, may order discharge of warrant or order of arrest and may also order such person to pay to the applicant, damages in respect of the loss suffered by the applicant as a result of the arrest.
(emphasis supplied)
22. A bare perusal of the aforesaid provisions and comparing and contrasting it with Section 148-A of the CPC, makes it evident that a caveator in an admiralty action, and who desires to prevent the arrest of any ship, gives two undertakings:-(i) to enter Page 15 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX appearance in-person or by filing a Vakalatnama in any Suit that may be instituted against the Vessel; and (ii) to give security in such Suit for a sum not exceeding the amount stated in the praecipe or to pay the said amount into the Registry. These two special requirements in a Caveat under Rule 1072 stem for the purposes for which a ship is ordered to be arrested. Rule 1070 also makes this position clear. It provides that in any Suit in rem, no service of writ of summons or warrant of arrest shall be required when the advocate for the Defendant agrees to accept service having entered a Caveat or otherwise or to give security or to pay money into Court.
23. Thus, undertakings to enter appearance and to give security or to pay money in Court serve a definite purpose. Once this is the case, it is rather difficult to accede to the submissions of Mr. Shanker that there is no qualitative difference between a Caveat under Section 148-A of the CPC and the one under Rule 1072 of the Bombay High Court (Original Side) Rules, 1980 and the party who files an ordinary caveat, under section 148A, is equally entitled to the privilege of notice and hearing before an order of arrest of a ship is passed. If we were to accept the submissions of Mr. Shanker, the whole purpose of enacting Rules in Admiralty jurisdiction, namely, Rule 1072 would stand eroded. In fact, Section 129 of the CPC Page 16 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX makes it explicitly clear that notwithstanding anything in the CPC, any High Court (not being the Court of Judicial Commissioner), may make such Rules not inconsistent with the Letters Patent or order or other law establishing it, to regulate its own procedure in exercise of its original civil jurisdiction as it shall think fit and nothing in the CPC shall affect the validity of such Rules which are in force on the commencement of the CPC. In fact, Section 129 even came up for consideration before the Hon'ble Supreme Court in the case of Iridium India Telecom Ltd v/s Motorola Inc. reported in [(2005) 2 SCC 145], wherein the Hon'ble Supreme Court opined that non obstante clause used in Section 129 is not merely declaratory, but indicative of Parliament's intention to prevent the application of the CPC in respect of civil proceedings on the Original Side of the High Courts. We, therefore, find that even the argument canvassed by Mr. Shanker that no notice was given because of the Caveat filed under Section 148-A of the CPC, necessitating the lifting of the arrest, holds absolutely no substance.
24. The next argument canvassed by Mr. Shanker is that the order of arrest ought to be lifted because the Plaintiff, in violation of the undertaking recorded in the order dated 16th June 2021 (in Commercial Arbitration Petition (L) Nos.12391 of 2021 Page 17 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX and 12392 of 2021), filed the present Suit and sought arrest of the Defendant Vessel [paragraph 9(c) above]. It is the argument of Mr. Shanker that in the order dated 16th June 2021, a statement was made on behalf of the Plaintiff herein that the Plaintiff shall not in any manner object to the Appellant [the Petitioner in Commercial Arbitration Petition (L) Nos.12391 of 2021 and 12392 of 2021] making necessary applications and taking all necessary steps to move the Vessel or to allow it to be sent out. It was further stated that if the Plaintiff's or their existing agent's consent or co- operation, whether for repairs or for removal of the vessel, is required, an assurance was given to the Court that this would be readily forthcoming from the Plaintiff. It is this statement that was accepted by the Court in arbitration proceedings. In breach of this statement, the Plaintiff has filed the Suit and has obtained the order of arrest. Since the order of arrest is obtained in breach of this undertaking, the order of arrest ought to be vacated, was the submission of Mr. Shanker.
25. We have carefully considered the aforesaid argument. This argument has been dealt with by the learned Single Judge in paragraphs 28 to 33 of the impugned order. As far as non- disclosure of this so-called undertaking is concerned, the learned Page 18 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX Single Judge noted that in paragraph 33 of the Plaint, the Plaintiff has made a reference to the arbitration proceedings initiated by CONTINENTAL RADIANCE and the order passed therein dated 16th June 2021. But what is even more important to note is that the undertakings given on 16th June 2021 were in the context of the allegations made during the course of the Arbitration Petitions filed by the owners under Section 9 of the Arbitration and Conciliation Act, 1996. In fact, in this very Suit, another learned Single Judge of this Court [B. P. Colabawalla J.], after hearing the parties on this issue, deemed it appropriate for the parties to obtain a clarification from the learned Single Judge who passed the order dated 16th June 2021 (G. S. Patel J). The Court that passed the order dated 16th June 2021, has, by order dated 24th September 2021 clarified that (i) the statement recorded in the order dated 16th June 2021 was confined to the facts of the Petition under Section 9 of the Arbitration and Conciliation Act, 1996 and could not have been extended to any other litigation; and (ii) the undertaking/statement made which was recorded in the said order could not operate as a restraint against the Plaintiff from adopting legal proceedings in accordance with law. Once this was the clarification given, we are afraid that Mr. Shanker is completely incorrect in his submission that there is a breach of the undertaking while seeking an arrest of the Page 19 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX Defendant Vessel. In this regard too, we find that the reasons given by the learned Single Judge are well founded and require no interference in appeal.
26. The next argument canvassed by Mr. Shanker was that the Plaintiffs have approached this Court with a false case of urgency [paragraph 9(a) above]. According to Mr. Shanker, it was impossible for the Defendant Vessel to leave the territorial waters without the necessary customs and port permissions, and therefore, no case of urgency was made out, and any representation to the contrary was misleading and false. According to Mr. Shanker, since the Plaintiff had imported the vessel by completing the customs formalities to bring the Defendant Vessel into India, only the Plaintiff could complete the re-export customs formalities before the Defendant Vessel could sail out. Further, the Mumbai Port Trust has not given its NOC for transfer of agency due to non- payment of port dues by the Plaintiff. The Plaintiff was aware of these material facts and these were not disclosed it in the Admiralty proceedings, and instead, made out a false case of urgency to justify the arrest of the Defendant Vessel. According to Mr. Shanker, the Plaintiff therefore came to Court with unclean hands, and was guilty of suppressing material facts, which would disentitle it to get any Page 20 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX equitable relief, much less the arrest of the Defendant Vessel.
27. We find this argument also to be without any merit. Whilst obtaining the order of arrest, the only test that the Plaintiff has to satisfy is that the Plaintiff has a maritime claim which is the subject matter of the Admiralty proceedings and the Court has reason to believe that the person who owns 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. This is clear from Section 5 of the Admiralty Act, 2017. Naturally, it goes without saying that the ship that is to be arrested has to be within the jurisdiction of the Court. When these tests are satisfied, the Court can arrest the Defendant Vessel. There is no question of any urgency to be made out in a matter like this as the principles for arrest of the ship are very different from the principles as envisaged under the provisions of the CPC. The arrest of a ship in an Admiralty claim in rem is "sequestration" and not "execution". The term "sequestration" has no particular technical meaning. It simply means detention of property by a Court of Justice for the purpose of answering a demand which is made. That is exactly what the arrest of a ship is. An arrest of a ship cannot be equated with an attachment under the CPC. Every maritime claimant has a right in Page 21 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX rem which he is entitled to exercise by seeking an arrest of the ship. The only test the claimant has to satisfy is to show that it has a maritime claim and establish the identity of the ship. As against this, an attachment before judgment is a discretionary interim order that any type of Claimant would be entitled to apply, upon satisfying the requirements of the CPC. He is not entitled to an attachment as a matter of right or as a matter of enforcement of a right. This is apart from the fact that in the facts of the present case, it is not in dispute that the Vessel was in the control of the owners. Once this is the case, to simply say that the Vessel was imported into India by the Plaintiff, and therefore, could not have left the territorial waters until the re-export formalities were completed, is wholly irrelevant. It is not unknown that even after orders of arrest, ships have jumped arrest and have left the territorial waters. It is undisputed that the owners of the Defendant Vessel were in full control of the Vessel. Even otherwise, we find that there was no false case of urgency made out to obtain the order of the arrest as alleged by Mr. Shanker. This argument of Mr. Shanker has in fact been dealt with by the learned Single Judge in paragraphs 71 to 75 of the impugned order. Here too, we find that the reasoning given by the learned Single Judge is well founded and requires no interference by us in appeal. This argument, therefore, also stands Page 22 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX rejected.
28. The last argument canvassed by Mr. Shanker was on the merits of the claim [paragraph 9(d) above]. The merits of the claim have been dealt with by the learned Single Judge in paragraphs 45 to 70. We have perused the impugned order carefully on this aspect, and we find that the reasoning given by the learned Single Judge is certainly a view which is a plausible view which does not require interference in appeal. We say this because at the end of the day, this is an appeal questioning the exercise of discretion by the learned Single Judge. As long as we find that the order of the learned Single Judge is a plausible and a possible view, the Appellate Court would loathe to interfere with the discretion exercised by him.
29. For all these reasons, we find that the above appeal is completely devoid of any merit. It is accordingly dismissed.
30. Since this is a Commercial Appeal, the Plaintiffs have filed their Bill of Costs of Rs.12,25,000/-. This includes the memo of fees of counsels as well as of the advocate. Considering that the Defendant had partly succeeded before the learned Single Judge [by Page 23 of 24 May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 ::: COMAPL.30604.22 - APRIL 27, 2024.DOCX having certain amounts reduced from the security to be furnished], under the provisions of Section 35 of the CPC, insofar as they apply to commercial disputes, we award costs of Rs.10 Lakhs to the Plaintiff. These costs shall be paid by the Defendant Vessel or its owners, either to the Plaintiff or their advocates within a period of two weeks from today, failing which the same shall be recovered as the arrears of land revenue under the provisions of the Maharashtra Land Revenue Code, 1966. This is apart from the fact that if the costs are not paid, the learned Single Judge hearing the above Suit would be at liberty to strike out the defence of the Defendant (the Appellant herein) as per the provisions of Order XXXIX Rule 11 of the CPC insofar as they apply to the State of Maharashtra.
31. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [SOMASEKHAR SUNDARESAN, J.] [B. P. COLABAWALLA, J.]. Page 24 of 24
May 07, 2024 Aswale ::: Uploaded on - 07/05/2024 ::: Downloaded on - 08/05/2024 18:27:24 :::