Bombay High Court
Socar Turkey Petrol Enerji Dagitim San ... vs Mv Amoy Fortune (Imo 9583639) on 4 June, 2018
Author: K.R. Shriram
Bench: K.R.Shriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL NOTICE OF MOTION NO.199 OF 2017
IN
COMMERCIAL ADMIRALTY SUIT NO.223 OF 2017
MV Amoy Fortune (IMO No.9583639) ....Applicant
IN THE MATTER BETWEEN :
SOCAR Turkey Petrol Enerji Dagitim Sav. Ve. Tic. A.S. ....Plaintiff
Vs.
MV Amoy Fortune (IMO No.9583639) ....Defendant
----
Mr. V.K. Ramabhadran, senior advocate a/w. Ms. Bulbul Singh-Rajpurohit
i/b. Crawford Bayley and Co. for plaintiff.
Mr. Prashant Pratap, senior advocate a/w. Mr. Ruchir Goenka and
Mr. Nishant Shetty i/b. Bose and Mitra and Co. for applicant/defendant.
----
CORAM : K.R.SHRIRAM, JJ.
RESERVED ON : 11th APRIL, 2018
PRONOUNCED ON : 4th JUNE, 2018
P.C.:
1 Plaintiff has approached this Court seeking a decree against
defendant vessel as an unpaid supplier of bunkers to the defendant vessel. Pursuant to an order dated 16th March 2017, defendant vessel came to be arrested. Defendant furnished bail in the form of Bank Guarantee to secure plaintiff's claim in this suit.
2 Fortune Marine Lines Limited (applicant), as owners of defendant vessel has taken out the present notice of motion for vacating the order of arrest of defendant vessel and for return of security. It is the case of applicant that there is no privity of contract between plaintiff and applicant Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 2/40 nmcd.199.2017.doc and no cause of action or liability in personam against applicant which is essential for maintaining an action in rem against defendant vessel. 3 Shri Pratap for applicant submitted as under :
(a) The issues that arise in this application are covered by a judgment of a Learned Single Judge of this Hon'ble Court in the case of Gulf Petrochem Energy Pvt. Ltd. vs. M.T. VALOR 1. The facts are more or less identical. The case of applicant herein stands on a much better footing than the case of applicant in M.T. VALOR (Supra).
(b) Plaintiff does not have any cause of action against applicant/owner of defendant vessel and there is no plea that the owner of defendant vessel is liable in respect of the supply of bunkers to the vessel.
The plea simply is that plaintiff supplied bunkers to the defendant vessel (which has used and consumed the same) and consequently plaintiff has a maritime claim against the vessel for supply of necessaries and is entitled to an order of arrest of the vessel. As such plaintiff does not satisfy the requirement of Article 3(i) of the 1999 Arrest Convention and the requirements for an order of arrest as exemplified by the Supreme Court in the case of Sunil B. Naik vs. m.v. Geowave Commander2.
(c) The pleaded case of plaintiff, as set out in the plaint and
1. 2015 SCC Online Bom 1367
2. 2018 SCC Online SC 203 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 3/40 nmcd.199.2017.doc documents annexed to the plaint, is as follows:-
(i) Plaintiff has an on-going business relationship with Force Shipping for supply of bunkers to various vessels. If supplies are made to vessels undertaking cabotage voyages then Force Shipping requests plaintiff to invoice them but if the vessel is undertaking international voyages Force Shipping requests plaintiff to raise an invoice in the name of Sentex LDX, an off Shore Company which is wholly owned by Force Shipping.
(ii) An order for supply of bunkers to defendant vessel at Istanbul Port was placed by Force Shipping on plaintiff on 21 st September 2016. It is evident from the order at Exhibit B (page 23) that it is not on behalf of defendant vessel and/or master and/or owners and/or managers and/or operators as incorrectly pleaded in paragraph 4(b). In fact it says "Our order" signifying that the order is placed by Force Shipping.
(iii) There is no order confirmation issued by plaintiff.
(iv) Plaintiff supplied 1,100 mts. of bunkers to defendant vessel on 4 th October 2016 and a Bunker Delivery Receipt was issued signed by the Master and/or Chief Engineer (Exhibit C page 24). This merely acknowledges receipt of the bunkers. It does not contain any term imposing liability on the owner nor is there any reference to or incorporation of plaintiff's terms of sale for marine fuels.
(v) Invoice is raised by plaintiff on Sentex as per the arrangement with Force Shipping (a copy of the invoice is at Exhibit D page 26 of the Plaint). It is evident from the invoice that it is not addressed to defendant vessel and/or master and/or owners and/or charterers and/or managers and/or operators, contrary to the pleading in paragraph 4(d) of the plaint. It is addressed to Sentex Ltd. as per the arrangements between plaintiff and Force Shipping. Invoice too does not incorporate or make a reference to plaintiff's terms of sale for marine fuel.
(vi) It is not the case of plaintiff that the invoice was at any time sent to the owners of defendant vessel.
(vii) According to plaintiff, Force Shipping has failed and neglected to make payment under the said invoice and plaintiff has demanded payment from Force Shipping. No such demand letter or correspondence is produced. Admittedly no demand for payment was made on the owners of defendant vessel at any stage, not even prior to filing of the suit.
It is clear from the facts set out in the plaint itself and the documents annexed to the plaint that the contract for supply of bunkers was Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 4/40 nmcd.199.2017.doc between plaintiff and Force Shipping (In Turkish it appears, it is FORS instead of FORCE - source "www.forceshipping.com". The document does not show that Force Shipping has placed the order on behalf of defendant vessel and/or its owners. It is not the case of plaintiff that Force Shipping had authority to act on behalf of the owners of the vessel and bind the owners. Plaintiff invoiced Force Shipping in accordance with the arrangements entered into between them. Plaintiff claims it demanded payment from Force Shipping. No invoice was sent to the owners of defendant vessel nor was any demand for payment made on the owners of defendant vessel. It is clear, therefore, that there is no privity of contract between plaintiff and the owners of defendant vessel. Plaintiff knew that it was Force Shipping alone that was liable to make payment and consequently plaintiff invoiced and demanded payment from Force Shipping alone and not from the applicant, owners of defendant vessel.
(d) All of the above goes to show that according to plaintiff the contractual liability to make payment was that of Force Shipping and that is why they looked only to Force Shipping for payment. Even the terms of sale for marine fuels produced by plaintiff at Exhibit F to the plaint are not referred to or incorporated either in the order for supply or in the Bunker Delivery Receipt or in the invoice. Consequently, these terms are of no assistance to plaintiff as they do not even form a part of their contract with Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 5/40 nmcd.199.2017.doc Force Shipping let alone apply to the owners of defendant vessel. Clause 1 of the said terms provide that the sale of products shall be confirmed by email, fax or other writing from the Seller to the Buyer and the confirmation shall incorporate the General Terms by reference. No such confirmation from plaintiff, who is the Seller, is produced.
(e) It is settled law as held in the case of M.T. VALOR (Supra) that there must be a liability in personam on the owners of the vessel who should be liable in respect of the claim. A liability in personam can arise only as a matter of contract or quasi contract or by way of Tort or under statute. As plaintiff's case is based on contract, it is necessary for plaintiff to show privity of contract between plaintiff and the owner of defendant vessel; for without such privity, no contract can be said to exist. On the facts as pleaded and documents produced by plaintiff, it is crystal clear that the contract is between plaintiff and Force Shipping and not between plaintiff and applicant, owners of defendant vessel. Consequently, there can be no liability in personam on the owners of defendant vessel and in the absence of which no action in rem can lie against defendant vessel.
(f) Plaintiff has suppressed documents in as much as plaintiff did not disclose and produce the Letter of Guarantee issued by Force Shipping to plaintiff, pursuant to which, Force Shipping has unconditionally and irrevocably guaranteed to pay the debt which is not paid by Sentex Ltd.
Gauri Gaekwad
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This Letter of Guarantee makes it clear that the liability to make payment was that of Force Shipping/Sentex Ltd. alone and no one else. Plaintiff has suppressed this document which ought to have been disclosed when making an ex-parte application for arrest of defendant vessel and on this ground alone ex-parte order ought to be vacated.
(g) Mr.Pratap in support of his submissions also relied upon :
(a) Kimberly-Clark Private Limited vs. m.v.Eagle Excellence3
(b) Raj Shipping Agencies vs. m.v. Bunga Mas Tiga and Anr.4
(c) S.P.Chengalvaraya Naidu (Dead) by LRs. vs. Jagannath & Ors.5
(d) The Vasso6
(e) T.Arivandandam vs.T.V.Satyapall7 4 Shri Ramabhadran for plaintiff submitted as under :
(I) Security needs to be retained based on the test of reasonably arguable best case :
(a) In support of plaintiff's claim for supply of necessaries, plaintiff has produced the following documents:
3 Unreported-DB of Bombay High Court-13th August, 2000 in Appeal No.240 of 2007 4 AIR 2001 Bom 451 5 AIR 1994 SC 853 6 (1984) LLR 295 Vol.1 7 1977(4) SCC 467 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 7/40 nmcd.199.2017.doc (1) Order confirmation dated 21st September 2016; (2) Bunker Delivery Receipt in favour of plaintiffs dated 4th October 2016 acknowledging the receipt of bunkers on board defendant vessel duly signed by the Master/Chief Engineer of defendant vessel;
(3) Copy of Terms of Sale for Marine Fuels;
(b) Plaintiff has pleaded that Force Shipping placed the order for supply of bunkers on behalf of defendant vessel and/or master and/or owners, that the Master/Chief Engineer has acknowledged receipt of bunkers and the supply made by plaintiff were governed by the terms of sale for marine fuels and relied upon clause-8 which is reproduced herein below:
"8. Credit and Security a. Products supplied in each transaction are sold and effected on the credit on the Receiving vessel, as well as promise of the buyer to pay, and its agreed that the buyer warrants that the seller will have and may assert a maritime lien against the Receiving vessel for the amount due for the products delivered.
....... Disclaimer of lien stamps placed on a Bunker Delivery Receipt shall have no effect towards the waiver of such lien. b. Xxxxxx c. xxxxxx d. All sales made under these terms and conditions are made to the registered Owner of the vessel, in addition to any other parties that may be listed as buyer in the confirmation. Any bunkers ordered by agent, management company, charterer, broker or any other party or order on behalf of registered Owner and the Registered Owner is liable as a principal for payment of the bunker invoice.
(c) If the averments made in the plaint are read along with documents in support thereof, prima facie it would establish that order for Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 8/40 nmcd.199.2017.doc supply of bunkers was placed on behalf of the owners of defendant vessel.
(d) It is trite law that plaintiff needs to plead only material facts and not evidence in support of its pleadings. The Apex Court in VSNL vs. MV Kapitan Kud8, has held "As long as claim is not vexations but is triable, the security requires to be retained". If plaintiff has even an arguable case, even though it may be difficult, the action must be allowed to proceed and the security furnished by defendant deserves to be retained.
(II) Return of security would amount to rejection of plaint :
(a) In an admiralty action, the security furnished by defendant could be released only if there are no documents to substantiate the amount claimed in the suit, or in the alternative, the plaint does not disclose any cause of action.
(b) There is no third category in which a security could be discharged. In an admiralty suit like the present one which is in respect of supply of necessaries to the vessel, if the security furnished requires to be released it could be only on the ground that plaint discloses no cause of action. In the present case pleadings and documents are sufficient enough to disclose cause of action against defendant vessel.
(c) Plaintiff is entitled to lead oral evidence in the trial to
8. 1996 SCC (7) 127 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 9/40 nmcd.199.2017.doc establish that Force Shipping had authority to place orders on behalf of the owners of defendant vessel for supply of bunkers to defendant vessel.
Therefore, release of security at this interlocutory stage based on the oral arguments by defendant without even prima facie establishing either the vessel was on charter or that charterer had in fact placed order with another third party or that such third party has been paid, would be inequitable as it would amount to non- suiting plaintiff.
(d) In terms of the High Court rules, plaintiff has furnished an undertaking to pay damages in the event of any party sustaining prejudice by wrongful arrest. That alone, should protect the interest of defendant which has been the practice in admiralty matter from time immemorial. The decree against defendant which plaintiff hope to obtain would become infructuous if the security furnished by defendant at this stage is returned to defendant.
(III) No reliefs should be granted to defendants who approach this Hon'ble Court with a false case and/or fabricated documents :
(a) Defendant has produced Bunkering Statement dated 3rd October 2016, Unsigned charter party dated 11th July 2016, email communications, payment receipt etc. to assert that vessel is not liable, that the vessel was on time charter, that the time charterer had placed order for bunkers and that the charterer's have made payment and all these documents are fabricated/unreliable.
Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 10/40 nmcd.199.2017.doc (IV) Plaintiff's case is squarely covered by the Judgment in Chemoil, Crescent Petroleum and MV Sea Renown :
Chemoil Adani Pvt. Ltd. vs. Hansa Sonderburg and Ors. 9
(a) In the said case, plaintiff had pleaded thus:
"2. Plaintiff understands that defendant No.3 has taken defendant Vessel on a time charter from defendant No.2, under a Charter Party dated 16/04/2009, for the period upto 21.05.2010.
"During the charter, defendant Vessel was in need of bunkers and defendant No.3 enquired with plaintiffs for the supply of 800 MT of bunkers. After negotiations, the terms of supply were agreed in an exchange of emails between plaintiffs and defendant No.3 on 29/06/2009. Under the said Agreement, plaintiffs were to supply 800 MT of bunkers to the vessel at Mundra @ US$ 412 Per MT, and defendant No.3 was to pay for the bunkers within 30 days of the Invoice being raised on it for the quantity of bunkers delivered to the Vessel."
(b) The Learned Single Judge therefore directed release of the security by holding:
"There is nothing on record that Defendant No. 1 and 2 authorised Defendant No. 3 to act on behalf of them, neither it is the case of plaintiff to that effect".
(c) Although in the said case, plaintiff had pleaded that the supply of bunkers was made at the request of the master of defendant vessel, in the Affidavit in Rejoinder to the Notice of Motion taken out by the owners of defendant vessel, plaintiff stated thus :
"Further, on 5th July 2009, the Master and/or Chief Engineer of respondent No.1 vessel made a requisition for the supply of 800 MT of bunkers. The bunkers were supplied by the appellants under a delivery note of the same date. The delivery note has been acknowledged and signed by one K. Bezbalov as the Master/Chief Engineer."
9. 2010 (7) Mh. L.J.660 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 11/40 nmcd.199.2017.doc
(d) The Division Bench in para 44, 47 and 48 held thus:
"44. To our mind, whether the Chief Engineer had no authority to place any order or sign the delivery notes and it was only the master of the vessel who had such authority, then, all such matters are to be gone into and concluded only at the trial. The Appellant cannot be shut out at this prima facie stage."
"47..... If there is no serious dispute about the proposition that supply of bunkers gives rise to maritime claim and there is a maritime claim, then, order of arrest could not have been vacated for want of privity of contract or specific contract as held in para 13 of the impugned order."
"48. The arrest could not have been vacated merely because in the opinion of the Learned Judge, there is absence of specific agreement between the Appellant and the Respondent No. 1 and 2."
Therefore, (a) Admittedly the supply was at the request of Time Charterers (Defendant No.3); (b) The contract for supply of bunkers was concluded with the Time Charterers and (c) Admittedly the invoice was raised upon the Time Charterers.
The Division Bench took cognizance of the fact that it is the Chief Engineer who has placed order of supply of bunkers and not the Master of the vessel. The Division Bench further held that even though there is no specific agreement between the Appellant/bunker supplier and Respondent No. 1 and 2 (Vessel and the owner) arrest could not have been vacated. The contention of defendant that the Division Bench sustained the order of arrest based on the "legend" appearing in the bottom of the Bunker Delivery Receipt has no relevance whatsoever. Such endorsement on the Bunker Delivery Receipt would have made difference only if Chief Engineer had made any Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 12/40 nmcd.199.2017.doc endorsement to the effect that the vessel is not liable as the order for supply of bunkers is placed by the Charterer.
In the present case, plaintiff has demonstrated beyond reasonable doubt that the vessel was not on charter and therefore supply for bunkers was made only at the behest of owners of the vessel. The Division Bench has also approved the ratio in the case of M/s. Crescent Petroleum Ltd. vs. m.v. Monchegorsk10.
M/s. Crescent Petroleum Limited vs. m.v. Monchegorsk (Supra)
(a) Even in the said case admittedly the order confirmation was made to the Time Charterers, i.e., PAL. Admittedly, there was no communication between plaintiff and the owners of the vessel. Admittedly, the receipt of supply of bunkers was acknowledged by Chief Engineer of the vessel. Admittedly, plaintiff had also filed a suit against PAL in New York and obtained judgment and recovered a part of plaintiff's claim. The aforesaid fact was not even disclosed by plaintiff while obtaining the order of arrest of defendant Vessel, yet, the Learned Single Judge by referring to decision of Division Bench of this Hon'ble Court in case of Bomi Munchershaw Mistry v. Kesharwani Co-op. Housing Society Ltd. and others has held thus, "The plaint can only be rejected where it does not disclose a cause of
10. AIR 2000 Bom 61 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 13/40 nmcd.199.2017.doc action or where the suit appears from the statements made in the plaint to be barred by any provision of the law. While exercising the power of rejecting the plaint, the Court has to act with utmost caution. This power ought to be used only when the Court is absolutely sure that plaintiff does not have an arguable case at all."
(b) Although the court was concerned with an application under order 7 Rule 11 of Code of Civil Procedure (CPC), the ratio of the aforesaid judgement is endorsed with approval by the Division Bench in Chemoil Case, in which the application was in respect of return of security by the owners of defendant Vessel.
11
MV Sea Renown and Anr. vs. Energy Net Limited
(a) It was pleaded that brokers acting on behalf of the owners of the vessel had placed order for supply of bunkers. The physical supplier of bunkers was one MISR Petroleum Company (and not plaintiff). The Original invoice was drawn for the account of one Geepee Shipping and Trading Inc. (managers to the charterers). Although it was pleaded that "reminders were sent to the owners from time to time", no such reminders were produced even though plaintiffs were called upon to do so.
(b) The Division Bench of the High Court of Gujarat dismissed the appeal filed by owners of the vessel by holding thus, "The facts in M.V. Elisabeth makes it evident that the suit was based on tort, but it was an action against the vessel, i.e. suit, was in rem. However, the Supreme Court has held that arrest of the vessel, while in Indian Waters by an order of concerned High Court attracts
11. Unreported - DB of Gujarat High Court in OJ Appeal No.21 of 2003 dated 15 th July, 2003 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 14/40 nmcd.199.2017.doc jurisdiction of the competent Court to proceed with the trial as in case of any other suit as an action against the owner. Applying the principle laid down in the said decision to the facts of the present case, this Court is of the opinion that the suit can now certainly proceed against the appellant No. 2 also."
Therefore, in all the three cases referred to hereinabove, namely Chemoil, Crescent Petroleum and MV Sea Renown (Supras) :
(a) No documentary evidence was produced to establish privity of contract with the owners of the vessel;
(b) Invoices were drawn on the charterers alone;
Plaintiff's case is squarely covered by the aforesaid decisions and in that behalf would also rely upon the judgement of the Hon'ble Supreme Court of India in Dental Council of India vs. Mr. Hedgewar Smruti Rugna Seva Mandal Hingoli & Ors.12 (V) Reliance on decision rendered by this Hon'ble Court in MT Valor is misplaced :
MT Valor (Supra)
(a) There is a finding of fact by the court that defendant Vessel was on Time Charter;
(b) Defendant had produced documents to establish chain of bunker supply contract and thus establishing that not only the chain of contracts, but the owners had not placed order for supply of bunkers upon
12. (2017) 13 SCC 115 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 15/40 nmcd.199.2017.doc plaintiff;
(c) It is in these facts, the Learned Judge held that no case at all for arrest of defendant vessel was made and security furnished was directed to be released.
It is plaintiff who has established that the vessel was not on charter. It is plaintiff who has established that there was no chain of contracts and it is plaintiff who has established that the documents produced by defendants were fabricated. In fact, defendants while making the submission in rejoinder did not even attempt to contest the submission made on behalf of plaintiff that the document produced by defendants are unreliable.
Therefore, reliance by defendant on the judgment of MT Valor (Supra) is misplaced.
(vi) The reliance placed by defendant on judgement of Division Bench in the case of Kimberly- Clark Private Limited (Supra) is completely misplaced. That was an admiralty suit in relation to claim for damages. Both the Learned Single Judge and the Division Bench in the facts of the case rendered an express finding that Plaintiff has not produced any document in support of its claim. In the present case, the fact that bunkers were supplied to defendant Vessel which is acknowledged is not disputed. The only question is whether the owners of the vessel is liable. There is sufficient material produced on record that prima facie indicate that the supply of Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 16/40 nmcd.199.2017.doc bunkers was made on behalf of the vessel.
(vii) The question before the Hon'ble Supreme Court of India in MV Geowave Commander (Supra) was only whether a claimant who has a maritime claim against the charterer of a ship who is not the dejure owner of the ship, is entitled to proceed against a ship owned by a third party. It is for this purpose the Hon'ble Supreme Court has considered Article 3 (3) of the Arrest Convention 1999, and has come to a conclusion that plaintiff's claim though a maritime claim, is not entitled to proceed against a registered owner of the vessel when the vessel was on demise charter in as much as in such a case plaintiff is entitled to proceed only against the demise charterer.
Therefore, reliance upon the said decision is also misplaced.
(viii) The reliance by defendant upon the judgement in the case of Raj Shipping Agencies vs. m.v. "Bunga Mas Tiga" and Anr. (Supra) is also misplaced. In the said case, admittedly order for supply of bunkers was placed only by a third party. It was not even pleaded in the Plaint that the order for supply was made on behalf of the owners of the vessel. Further, there were no terms and conditions for sale like the present suit and in those circumstances, the Learned Single Judge vacated the order of arrest.
(ix) Defendant's reliance in rejoinder upon S.P Chengalvaraya Naidu (Dead) by LRs vs. Jagannath & Ors. (Supra) to buttress its Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 17/40 nmcd.199.2017.doc arguments that Plaintiff had suppressed a guarantee issued by Force Shipping and therefore security furnished by defendant ought to be returned is misplaced. This is because plaintiff's cause of action is based on order for supply of bunkers made on behalf of the owners of the vessel. Making no reference to the guarantee issued by Force Shipping has no relevance whatsoever to plaintiff's case against the owners of defendant vessel.
(x) The Hon'ble Supreme Court of India in Mayer (HK) Ltd. vs. Owners of Parties, m.v. Fortune Express and Ors.13 observed as under :
"Plaintiff must plead only the material facts under Order 6 Rule 2 of the CPC. It may be the defence of defendant which they may raise in the written statement, effect of which could be considered only in a trial."
(xi) Further the Madras High Court, relying upon S.P Chengalvaraya Naidu vs Jagannath & Ors. (Supra) had dismissed an appeal filed by defendant impugning final judgement/decree passed by the trial court decreeing the suit in favour of plaintiff against defendant in a suit for specific performance in an agreement to sell an immovable property. The Supreme Court of India on appeal filed by defendant in P. Meenakshisundram versus P Vijaykumar14 held thus:
"Further, reliance on the decision in S.P. Chengalveraya Naidu (supra) was also misplaced. That case did not arise from a suit for specific performance and more over plaintiff
13. (2006) 3 SCC 100
14. Civil Appeal Nos.3353-3354 of 2018 dated 20th March, 2018 [Arising out of SLP (Civil) Nos.22018-22019 of 2014] Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 18/40 nmcd.199.2017.doc in that case was found to have withheld relevant documents and as such the judgment rendered by the trial Court dismissing his claim was restored by this Court. The principle laid down therein cannot apply either on facts or in law to the present case."
Therefore, merely because no reference is made to the guarantee issued by Force Shipping, that cannot be a ground for return of security furnished by defendant.
(xii) The reliance of defendant in the judgment of the English Court in "The Vasso" (Supra) is also misplaced. The Hon'ble Supreme Court of India in Mayer (HK) (Supra) has in terms held that only material facts needs to be stated under order 6 rule 2 of CPC. Plaintiff have pleaded all the material facts and therefore the judgment of the English Court which would be based on their rules of pleading can have no bearing on facts of the present case.
5 Have heard the opposing counsel and also considered the plaint, affidavits etc. Before we proceed further, for the purpose of this notice of motion, it will be useful to reproduce certain portions of the plaint. They are as under :
2. CAUSE OF ACTION :
By this suit, plaintiff seeks judgment and degree against defendant vessel and the arrest, sequestration, condemnation and sale of defendant vessel, for securing and/or satisfying plaintiff's outstanding amount to USD 309,994.31. The principal claim amounting to a sum of USD 285,300 along with interest at the rate of 1% per month amounting to USD 12,694.31 from the due date of each date and Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 19/40 nmcd.199.2017.doc further interest @ 1% p.m. till its realization, cost of litigation in India amounting to USD 12,000 plus poundage. Plaintiff is entitled to receive the said amounts, as summarized herein below, on account plaintiff having supplied bunkers to defendant vessel as more particularly set out herein below. Defendant vessel has used and/or consumed and/or benefited from the said bunkers and/or have availed of the same for prosecuting her voyages. Plaintiff has, however, not been paid in respect of the said bunkers supplied. Plaintiff has therefore, been constrained to file the present suit. xxxxxxxxx
4. FACTUAL MATRIX :
a) In usual course of business, one Force Twins Shipping ("Force Shipping") approaches plaintiff for supply of fuel/bunkers to various vessels. If the supplies are made to vessels undertaking cabotage voyages, Force Shipping requests plaintiff to invoice the same to them, however, for vessel undertaking international voyages. In each supply, Force Shipping sends the orders with regards to invoicing. Time to time they request plaintiff to raise invoice in name of one Sentex LDX, an offshore company which is wholly owned by Force Shipping.
b) On 21st September 2016, Force Shipping on behalf of defendant vessel and/or master and/or owners and/or managers and/or operators approached plaintiff for supply of 1100 mts IFO 380 CST (hereinafter referred to as "Bunkers") to defendant vessel at Istanbul Port on 27th September 2016. A copy of the email dated 21st September 2016 is annexed hereto and marked as Exhibit "B".
c) On 4th October 2016, plaintiff supplied 1100 mts of bunkers to defendant vessel at Port of Istanbul. The Bunker Delivery Receipt bearing no.006834 dated 4th October 2016 was issued for the said supply. The Bunkers were accepted without raising any protest and/or demur. The Master/Chief Engineer of defendant vessel acknowledged receipt of Bunkers by endorsing upon the Bunker Delivery Receipt. A copy of the Bunker Delivery Receipt bearing no.006834 dated 4th October 2016 is annexed hereto and marked as Exhibit "C".
d) On 3rd October 2016, on request of Force Shipping, plaintiff issued an Invoice bearing no.011172 on account of defendant vessel and/or master and/or owners and/or charterers and/or managers and/or operators and/or Sentex LDX for an amount of USD 283,800. The Invoice provided that payments made beyond the due date would be charged interest @ 1% (two percent) per month. Further, an invoice bearing no.011173 was issued for USD 1,500 towards barging charges. A copy of the invoice bearing Invoice No.011172 and 011173 is annexed hereto and marked as Exhibit "D" and Exhibit "E" respectively.
e) All the supplied made by plaintiff are governed by Terms of Sale for Marine Fuels. The said terms and conditions inter alia provide that :
8. CREDIT AND SECURITY :
Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 20/40 nmcd.199.2017.doc a. Products supplied in each Transaction are sold and effected on the credit of the Receiving Vessel, as well as on the promise of the Buyer to pay, and it is agreed and the Buyer warrants that the Seller will have and may assert a maritime lien against the Receiving Vessel for the amount due for the Products delivered. This maritime lien shall extend to the vessel's freight payments for that particular voyage during which the bunkers were supplied and to freights on all subsequent voyages. Disclaimer of lien stamps placed on a Bunker Delivery Receipt shall have no effect towards the waiver of such lien.
b. In the event of a breach of the warranty set forth in sub- paragraph (a) above before delivery, the Seller shall be entitled to terminate the Transaction. Further, the Seller reserves the right to impose a cancellation fee in the amount set forth in Section 10 below.
c. If the purchase of products is contracted for by an agent, then such agent, as well as the principal, shall be bound by and be fully liable for obligations of the Buyer in the Transaction, whether such principal be disclosed or undisclosed. d. All sales made under these terms and conditions are made to the registered owner of the vessel, in addition to any other parties that may be listed as Buyer in the confirmation. Any bunkers ordered by an agent, management company, charterer, broker or any other party are ordered on behalf of the registered owner and the registered owner is liable as a principal for payment of the bunker invoice.
f) Despite expiry of the due date of invoice, Force Shipping (on behalf of defendant vessel) has failed and neglected to make payment the under the said invoices. Plaintiff has demanded payment from Force Shipping (on behalf of defendant vessel), however, no payment has been forthcoming.
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5. Plaintiff's claim arises by reason of bunkers supplied to defendant vessel. Plaintiff submits that bunkers are essential for the operation of defendant vessel. The supply of bunkers was a supply of goods or materials supplied to a ship for her operation or maintenance and also constitutes "necessaries". The same therefore give rise to and/or constitute a maritime claim/lien. This can be enforces and/or crystallized against defendant vessel. Plaintiff is entitled to look to defendant vessel for security. In the circumstances, plaintiff is entitled to proceed in rem against defendant vessel for security of its claim for the cost of bunkers, supplied and delivered and is entitled to an order of arrest of defendant vessel. In any event, the claim is in respect of disbursement made on account of defendant vessel.
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8. In the circumstances, plaintiff is entitled to maintain an action in rem against defendant vessel under the provisions of law and generally under the Admiralty Jurisdiction of this Hon'ble Court. The supply of bunkers by plaintiff was not gratuitous. Plaintiff states that defendant vessel is presently lying at the Port and Harbour of Dhamra, within the territorial waters of India and within the Admiralty Jurisdiction of this Hon'ble Court. Plaintiff is entitled to have defendant vessel arrested and condemned under a warrant of arrest of this Hon'ble Court and/or to have defendant vessel sold under the orders and directions of this Hon'ble Court and for the sale proceeds to satisfy plaintiff's claim in the present suit. The bunkers were supplied to the faith and credit of defendant vessel. Plaintiff is entitled to an order of arrest of defendant vessel as arrest is the only method of proceeding against defendant vessel in rem. Plaintiff submits that if such order of arrest is not passed, irreparable harm and injury will be caused to plaintiff and plaintiff's claim will be rendered infructuous.
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10. Plaintiff submits that it has a valid, lawful and irrefutable claim against defendant vessel for supply of necessaries, in this case bunkers that were essential and necessary to the operation of defendant vessel. Accordingly, plaintiff claims it is entitled to a Judgment and Decree for the sum set out in the Particulars of Claim.
6 It is, therefore, clear from the cause of action pleaded in the plaint and in particular para 2 above, plaintiff's case is not that the bunkers were supplied at the request of the owners or under a contract with the owners or that the owner is liable in personam in respect of the claim. Plaintiff's case simply is that they had supplied bunkers to defendant vessel and the vessel is liable, having used or consumed the bunkers. However, this is not the correct position in law and the mere fact of supply of bunkers to the vessel does not make the owners of the vessel liable in personam unless it is the owners or a person having authority to bind the owners who has entered into a contract with plaintiff for supply of bunkers.
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7 This is also the pleaded case of plaintiff in paragraphs 5 and 10
of the Plaint. Thus on plaintiff's cause of action as pleaded in the Plaint itself, it is clear that the same does not give rise to an action in rem against defendant vessel.
8 Apart from the judgment in the case of M.T. VALOR (Supra),the provisions of Article 3 of the International Convention on Arrest of Ships, 1999 (arrest convention) makes the position free from any doubt whatsoever. As held by the Apex Court in Chrisomar Corporation vs. MJR Steels Pvt. Ltd.15 (paragraphs 30 and 31);
"Although India is not a signatory to the International Convention on Arrest of Ships 1999, yet following M.V. ELIZABETH this Convention becomes part of our National law and must therefore be followed by this Court."
The said Convention provides in Article 3 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".
9 The above provision makes it clear that arrest of any ship is permissible if the person who owned the ship at the time when maritime claim arose is liable for the claim and is owner of the ship when the arrest is
15. 2017 SCC Online SC 1104 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 23/40 nmcd.199.2017.doc effected. Thus liability of the owner of the ship is a pre-requisite to commencing an action in rem for arrest of that ship. Same is the position under the new Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. In the present case, there is no privity of contract between plaintiff and the owner of the ship and no liability of the owner in contract or otherwise towards plaintiff.
10 In the recent judgment, in m.v. Geowave Commander (Supra), the Apex Court had occasion to consider the provisions of the arrest Convention and the right of arrest set out in Article 3 thereof and applied the said provisions in considering whether plaintiff therein had a sustainable cause of action for arrest of a vessel which was owned by a third party and not the person against whom plaintiff has a maritime claim. The Apex Court held that this was not permissible. Paragraphs 50, 51 and 70 read as under :
50.Mr. Naphade, learned Senior Advocate while relying on the judgment in M.V. Elisabeth & Ors. had referred to the expanding jurisdiction of a maritime claim. However, the observations made in the said judgment reproduced hereinabove in para 21 would show that the arrest of the ship is regarded as a mere procedure to obtain security to satisfy the judgment. To that extent it is distinguished from a right in personam to proceed against the owner but there has to be a liability of the ship owner and in that eventuality the legal proceedings commenced in rem would become a personal action in personam against the defendant when he enters appearance. There cannot be a detention of a ship as a security and guarantee arising from its owner for a claim which is in respect of a non-owner or a charterer of the ship.
51. On turning to the provisions of the Convention, a maritime claim is specified as relating to use or hire of a ship whether contained in a charter party or otherwise [clause (f)]. Insofar as clause (l) is concerned they relate inter alia to services rendered to the ship. The Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 24/40 nmcd.199.2017.doc question, however, is - which is the ship in question? Such an order of detention can be in respect of a ship where there is identity of the owner against whom the claim in personam lies and the owner of the ship. It cannot be used to arrest a ship of a third party or a non-
owner.
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70. The appellants have neither any agreement with the owners of the respondent vessel nor any claim against the respondent vessel but their claim is on account of their own vessels hired by the charterer of the respondent vessel. There is no claim against the owners of the respondent vessel.
11 It is not necessary to consider the documents produced by applicant, as on plaintiff's pleaded case itself and the documents relied upon by them, it is apparent that there is no privity of contract between plaintiff and the owners of defendant vessel.
12 M.T. Valor (Supra) correctly lays down the test of what is a reasonably arguable best case in Admiralty matters in paragraph 11 of the judgment. The Court held, in paragraph 11, that whilst considering whether plaintiff has a reasonably arguable best case;
"11. ... there is nothing in law to require the Court to restrict the inquiry to only the averments made in the plaint and material produced therewith and not look at the defence. ... it does not mean that only plaintiff's material should be looked at. There is a great danger in allowing plaintiff in all cases to have the vessel arrested on unilateral assertions. It may be that plaintiff suppresses important documents, which are themselves indisputable. ..."
"... The requirements of the standard of 'reasonably arguable case' are satisfied if on the basis of the material before the Court, whether brought by plaintiff or defendant, plaintiff can be said to have a case to go to trial with"
Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 25/40 nmcd.199.2017.doc 13 In Wallace Pharmaceuticals Pvt. Ltd. vs. Bunga Bidara 16 this Court in paragraph 22 referred to the order vacating the arrest and observed :
"In the matter of an admiralty action to arrest a ship, it cannot be mere averments that would support the action. It must be supported by documentary evidence to show that the goods were in fact shipped to maintain action against the vessel".
14 It is the case of applicant that defendant vessel was on time charter to Transatlantica Commodities S.A. (Plaintiff denies the charterparty just as in the case of M.T. VALOR). As in all cases of time charter, the obligation to provide and pay for bunkers is that of the charterer. Accordingly, the documents indicate the charterer, Transatlantica Commodities S.A. placed an order on Bunkernet for supply of bunkers to defendant vessel at the port of Istanbul. An invoice was raised by Bunkernet on the time charterer who made payment in advance for the price of bunkers to be supplied to defendant vessel. The swift evidencing payment is also produced. Bunkernet in turn placed an order on K.P. Bridge Oil who in turn placed an order on Force Shippin/Sentex Ltd. who in turn placed an order on plaintiff. Force Shipping/Sentex Ltd. have issued confirmation that they have received payment from K.P. Bridge Oil in respect of bunkers supplied to defendant vessel at the port of Istanbul. This shows that it is Force Shipping who has defaulted in payment to plaintiff. Whilst this confirmation is
16. 2013 SCC Online Bom 1302 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 26/40 nmcd.199.2017.doc disputed on the ground that this has been issued by Sentex Ltd. only to assist the Applicant, the fact remains that this confirmation is issued by plaintiff's contractual buyer who has said that he has received payment from his contractual buyer K.P. Bridge Oil. The least that could have been expected is for plaintiff to inquire from its contractual buyer whether they have issued this confirmation and whether they have received the payment. In the absence of this, a bare denial is meaningless.
15 Applicant also has produced a Letter of Guarantee issued by Force Shipping to plaintiff, pursuant to which Force Shipping has unconditionally and irrevocably guaranteed to pay the debt which is not paid by Sentex Ltd. This Letter of Guarantee is not disputed by plaintiff. This Letter of Guarantee makes it clear that the liability to make payment was that of Force Shipping / Sentex Ltd. alone and no one else. It is apparent that plaintiff has suppressed this document which it ought to have disclosed when making an ex-parte application for arrest of defendant vessel. In fact, on this ground alone, the ex-parte order ought to be vacated since plaintiff has failed in its duty to make a full and frank disclosure of all facts and documents. Had this Letter of Guarantee been disclosed, it would have been apparent that the liability to pay plaintiff for the bunkers supplied to defendant vessel was of Force Shipping / Sentex Ltd. alone. The Guarantee also shows that Force Shipping contracted with plaintiff as a principal and Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 27/40 nmcd.199.2017.doc not on behalf of the owner. If Force shipping was placing an order as agent of the owner then Force shipping was under no liability and the Guarantee was not required / meaningless. The Guarantee demonstrates that it was Force shipping alone who was liable to pay and had guaranteed all payment as plaintiff and Force shipping had an on-going business relationship as pleaded in paragraph 4(a) of the Plaint.
16 This highlights the hopelessness of plaintiff's case. It is also now apparent from the plaint and documents of plaintiff itself that plaintiff does not even have a semblance of a prima facie case for arrest of defendant vessel both on facts and in law.
17 Applicant relied upon the judgment of this Hon'ble Court in the case of M.T. VALOR. (Supra). In M.T. VALOR (Supra) the order for supply of bunkers was placed on plaintiff Gulf Petrochem Energy Pvt. Ltd. by OW Bunkers and not by the owners of the vessel or by any person authorized by the owners. In that case the vessel M.T. VALOR was on time charter to Bryggen who placed the order for supply of bunkers on Bergen who in turn placed an order on OW Bunkers who in turn placed an order on plaintiff. Plaintiff of course disputed the time charter. The chain is similar to the facts of the present case. The Learned Judge (S.C. Gupte, J.) in M.T. VALOR (Supra) held that there was no privity of contract between the owners of the vessel and plaintiff and hence no contractual liability on the part of the Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 28/40 nmcd.199.2017.doc owners. The Court further held, if the undisputed material on record indicates that the parties who supplied the necessaries did not do so at the instance of the owners of the ship but of another person to whom they invoiced and looked alone for payment, it is sufficient to rebut any presumption that the bunkers were supplied on the credit of the ship and no trial is required for this purpose. This observation was in the context of the fact that plaintiff's terms and conditions of supply stated that bunkers were supplied on the credit of the ship and these terms and conditions were included in the order confirmation issued by plaintiff. Even then the Court held :
"13. ... This Court is at a complete loss to appreciate how a third party non-physical bunker supplier can at all make a representation to a physical supplier on behalf of the owners of the vessel (or even the time charters, for that matter) and seek to bind the vessel or deal with the physical supplier on the credit of the vessel. To show such entitlements, there must be at least an arguable case of the owners having authorized the third party non-physical supplier to do so. There is not even an allegation in the plaint, leave aside a reasonably arguable case, that OW Bunker had the requisite authority to bind the vessel or trade on its credit. All that the plain states is that OW Bunker acted on behalf of the owners of the vessel. The plaint is silent on how OW Bunker gets the authority to do so."
Further it is not even plaintiff's case that they had contacted the owners, who confirmed the order. Plaintiff could have also asked Force shipping, before making the supply, to produce an authority from the vessel owners authorising Force shipping to place the order for bunkers/fuel supplied. There is not even a whisper about these in the plaint.
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18 In the present case plaintiff disputes the time charterparty relied
upon by the Applicant. This makes no difference. In M.T. Valor too, plaintiff disputed the charterparty (Para 14 at page 9; "No doubt plaintiff does not admit either the factum of the charterparty agreement or its terms...") and the court held that "... it is for plaintiff to show that there is privity of contract between him and the owners of the vessel under which his maritime claim has arisen."
19 The Court also held that in the face of an enforceable express contract, a quasi-contract cannot be made the foundation of a claim. As in that case, in the case at hand also there was an enforceable contract between plaintiff and Force Shipping and consequently no claim based on quasi contract can be made.
20 The other judgment that applicant relied upon was Raj Shipping Agencies vs. M.V. Bunga Mas Tiga (Supra) decided by a Learned Single Judge of this Court on 11.4.2001. In that case, this Court held that "8. ... existence of a right in plaintiff against the owner of the vessel is a must and further that supply of necessity would not make the owner of the vessel liable to pay the price of the supplier unless plaintiff proves that the supplies were made at the instance of either the owner of the vessel or at the instance of the person authorized by the owners of the vessel".
21 Just as in that case, in the present case too there is no such pleading to this effect and the documents of plaintiff are quite to the Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 30/40 nmcd.199.2017.doc contrary. In M.V. Bunga Mas Tiga (Supra), the owners of the vessel had placed the order on North End Oil Ltd. and made payment to North End Oil Ltd. North End Oil Ltd. in turn placed an order on plaintiff but did not make payment. Plaintiff invoiced North End Oil Ltd. No demand was made on the owners. The Court held that owners have already made payment to North End Oil Ltd. and if the claim of plaintiff is held to be maintainable then the consequence would be that the owner of the vessel is liable to pay the price of the oil twice over to two parties. Such a course of action would not amount to advancing justice. These comments are apposite in the facts of the present case. Here too Force Shipping, as stated by applicant, has been paid the price of bunkers by the charterers of the vessel and Force Shipping in turn may not have paid plaintiff. In such a situation the remedy of plaintiff is against Force Shipping alone. No doubt plaintiff disputes the confirmation issued by Force that it has been paid but then it is for plaintiff to take up the matter with Force with whom it has a contract and seek confirmation whether it has been paid or not. Plaintiff advisedly did not do so because if Force shipping confirmed that it had been paid then it was one more point for plaintiff's case to fail.
22 Plaintiff's reliance on the judgments in Chemoil Adani Pvt. Ltd. vs. M.V. Hansa Sondenburg, (Supra) M.V. Sea Renown vs. Energy Net Ltd. (Supra) and Crescent Petroleum Ltd. vs. M.V. Monchegorsk (Supra) is Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 31/40 nmcd.199.2017.doc misplaced. Each of the three judgments are plainly distinguishable on facts and correctly distinguished by the Learned Single Judge in M.T. Valor (Supra). The chart below sets out the facts in each of these three judgments and comparing the same with the facts in Gulf Petrochem Energy Pvt. Ltd. vs. M.T. Valor, Raj Shipping Agencies vs. Bunga Mas Tiga and the present case of MV Amoy Fortune.
CHART SHOWING FACTS IN VARIOUS JUDGMENTS AND ITS EFFECT ON THE RESULT Sr. Case Whether Whether any order Whether Whether Whether Whether Application Result No. order placed confirmation issued BDR/BDN invoice terms and any or requisition by bunker supply? signed by raised on conditions of demand made by Master/Chief owners supply or any for Master Engineer and/or other term payment and/or owner contains any Master imposing made on or any person clause and/or liability on owner of acting on imposing Charterers vessel/owners the vessel?
their behalf liability on and/or incorporated
for supply of the vessel/its operators, in order
bunkers? owners etc? confirmation
or BDR/BDN
or Invoice?
1 Chemoil Adani Pvt. Yes.( Para 9) No. Yes (Para 41) No Yes in Bunker No For return of Arrest order
Ltd. vs. M.V. Delivery Note. security confirmed.
Hansa Sonderburg (Para 41)
2 M.V. Sea Renown Yes. By broker Yes. Showing Buyer as Yes. (Para 13) Yes.(Para Yes. In order Yes For rejection Plaint not
vs. Energy Net Ltd. acting on behalf vessel Sea Renown and 13) confirmation (disputed) of plaint rejected and
of owner. (Para jointly and severally the and BDR. (Para under Order 7 arrest order
2) owners/managing 13) Rule 11 of confirmed.
owners/operators/manag CPC and for
ers/ disponent owner/ return of
charterers. (Para 13) security
3 Crescent Not clear. Yes. Showing Buyer as No. Yes. (Para 3) Yes. In order Not clear. For rejection Plaint not
Pertroleum Ltd. vs. Project Asia Lines and/or (Page 3/166) confirmation. of Plaint rejected
M.V. Monchegorsk Master and/or Owners (Para 4) under Order 7 under Order 7
and/or Charterers and/or Rule 11 of Rule 11 of
Operators. (Para 4) CPC CPC. Arrest
confirmed.
4 Raj Shiping No. No. No. No. No. No. For rejection Plaint
Agencies vs. M.V. of plaint rejected
Bunga Mas Tiga under Order 7 Arrest set
Rule 11 of aside and
CPC security
returned.
5 Gulf Petrochem No. No. No. No. Yes. In order No. For return of Arrest set
Energy Pvt. Ltd. confirmation security aside and
vs. M.T. Vatlor issued by security
plaintiff to OW returned.
Bunkers but no
pleading that
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OW Bunkers
had authority to
bind
vessel/owners
(para 13)
6 The present case No. No. No. No. No. No. For return of
(Amoy Fortune) security
* BDN = Bunker Delivery Note ; BDR = Bunker Delivery Receipt.
It is, therefore, clear that the three judgments at Sr. Nos.1, 2 and 3 relied upon by plaintiff have been decided on the facts of the case whereas in the remaining two judgments at Sr. Nos.4 and 5 none of the compelling factors which persuaded the Court in the first three judgments, were present and are also absent in sr.no.6, the present case. Consequently, the application of the Applicant for return of security is consistent with the facts in Gulf Petrochem Energy Pvt. Ltd. vs. M.T. Valor (Supra) and Raj Shipping Agencies vs. Bunga Mas Tiga (Supra) and ought to be allowed. 23 In Chemoil Adani Pvt. Ltd. vs. M.V. Hansa Sondenburg (Supra) there was a requisition by the Master and the Bunker Delivery Note contained an express legend that the marine fuel as described in the Bunker Delivery Note is delivered in accordance with the standard terms and conditions of sale, copy of which has been provided to the Buyer on delivery and "on credit of the vessel". It further stated that any restrictions as to the authority of the ship's officer signing this note to bind the vessel and her owner are null and void. This puts matters beyond doubt that there was a prima facie case that the ship's officer, whether it be the Master or Chief Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 33/40 nmcd.199.2017.doc Engineer, who has signed the note has acknowledged that the bunkers have been delivered on the credit of the vessel as provided on the face of the Bunker Delivery Note. Thus a prima facie case of liability of the owner in personam was made out.
24 Similarly in the case of M.V. Sea Renown vs. Energy Net Ltd. (Supra) the order confirmation issued by plaintiff states that the Buyer of the bunkers is "M.V. Sea Renown" and jointly and severally Owners/Managing Owners/ Operators/Managers/Disponent Owners/Charterers and vessel in rem and Geepee Shipping & Trading Inc. Mere receipt of this confirmation prima facie signifies acceptance of responsibility for payment of the bunker invoices by each or all of them. Similarly the Bunker Delivery Receipt duly acknowledged and endorsed by Master and the Chief Engineer of the vessel also states that the bunkers delivered/received on board are for account of the Owners and/or Managing Owners and/or Managers of this vessel. Thus, in those facts and circumstances, it was held, a clear prima facie case of liability of the owner in personam was made out and that would furnish a clear cause of action to respondent (plaintiff) to proceed against appellants (vessel and owner).
25 In both these cases, the Bunker Delivery Note signed by the Master/Chief Engineer provided that the bunkers were supplied on the credit of the vessel or for account of the owners thereby creating a liability on Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 34/40 nmcd.199.2017.doc owners to pay for the same.
26 Same was the case in Crescent Petroleum Ltd. vs. M.V. Monchegorsk (Supra) which was a case under Order 7 Rule 11 of Code of Civil Procedure where the order confirmation incorporated terms and conditions of supply imposing a liability on vessel/owners and the order confirmation also showed the Buyer as Master and/or Owners and/or Charterers and/or Operators of the vessel. Thus on facts, it was held, a prima facie case of cause of action against the owners and liability of owners was made out. As a result the arrest was sustained and the Plaint was not rejected.
27 In the case of M.T. Valor (Supra), however, there was neither any order placed by the Master nor any order confirmation issued by the bunker supplier, nor any clause on the Bunker Delivery Note/Receipt imposing a liability on the vessel/its owner nor is the invoice raised on Owners and/or Master of the vessel nor are the terms and conditions of supply incorporated in the order confirmation or Bunker Delivery Receipt or invoice. The bunker supplier's terms and conditions are incorporated in the order confirmation issued by the bunker supplier to the party placing the order (OW Bunkers). Even then the Court held that this was not sufficient to impose liability in personam on the owner, unless it is shown that the party placing the order had authority to bind the vessel or trade on its credit.
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28 In the present case of Amoy Fortune there is no order placed by
the Master nor any order confirmation issued by plaintiff (bunker supplier) nor any clause on the Bunker Delivery Receipt imposing liability on the vessel/ its owners nor is the invoice raised on owners and/or Master nor are the terms and conditions of supply incorporated in the bunker delivery receipt or invoice nor is any demand for payment made on owner. In fact, there is not even an order confirmation issued by plaintiff [as was the case in M.T. Valor (Supra) where an order confirmation was issued by plaintiff to OW Bunkers incorporating Plaintiffs terms and conditions]. Consequently if the Court in M.T. Valor (Supra) held that there was not even a reasonably arguable case of privity of contract and liability in personam of the owners, it is all the more apposite to hold the same in the present case. 29 Shri Ramabhadran submitted that M.T. Valor (Supra) is wrongly decided and incorrectly distinguished the judgments in Chemoil Adani Pvt. Ltd. vs. M.V. Hansa Sondenburg (Supra) and Crescent Petroleum Ltd. vs. M.V. Monchegorsk (Supra). This is not correct as is evident from the chart shown above. The judgment in M.T. Valor (Supra) is consistent with the judgment in Raj Shipping Agencies (Supra) as well as with the observations of this Hon'ble Court in the case of Flag Mersindi17 quoted in paragraph 15 of M.T. Valor (Supra) judgment. For ease of reference, the said para 15 is quoted :
17. 2014 SCC Online Bom 479 Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 36/40 nmcd.199.2017.doc "15. A learned Single Judge of our Court in the case of M.V. Flag Mersinidi also has, in a somewhat similar situation, whilst dealing with an argument that there was a privity of contract with the vessel, held as follows :
"23..............A vessel cannot enter into any contract with anybody. Only an owner or person authorised by the owner can enter into a contract and bind the vessel. In law a vessel may be looked at as an independent juridical personality. But to say that there is privity of contract with the vessel but not with the owners is stretching it too far and is incorrect. An action in rem against a vessel can be maintained only if there is an underlying obligation of the owner and an action in personam is maintainable against the owner. The contract is between the plaintiff and defendant No.2. Copy of the contract has not, admittedly, been even sent to the owner. There is not even an averment that the owner, defendant No.3, has held out that they will be bound by the terms and conditions of the contract that has been entered into between the plaintiff and defendant No.2. Therefore, it can never be accepted that U.S.Law is applicable vis-a-vis, the plaintiff and defendant No.3."
30 In my view, non-disclosure of the guarantee issued by Force Shipping to plaintiff also is fatal to plaintiff's case and its defence to the present Application. It may be seen that this guarantee is not disputed or denied. This is a guarantee issued to plaintiff by Force shipping stating that they would make payment of the sums due and payable by Sentex Ltd. There was no occasion for Force shipping to issue this guarantee unless they were contracting as principals with plaintiff. If Force Shipping was contracting as an agent on behalf of the owners of the vessel then there would be no liability on Force Shipping and there was no necessity to issue such a guarantee. Not only does the guarantee defeat the case of plaintiff, but suppression of this crucial document puts plaintiff in clear breach of its obligation to make full and frank disclosure whilst making an ex-parte Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 37/40 nmcd.199.2017.doc application for arrest of the ship. In this regard, the Apex Court in S.P. Chengalvaraya Naidu vs. Jagannath (Supra) (paragraphs 5 and 6), particularly paragraph 6 has said :
"... a litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the Court as well as on the opposite party".
31 The English Court of appeal in the case of The VASSO (Supra) held at page 243 that :
"It is axiomatic that in ex-parte proceedings there should be full and frank disclosure to the Court of facts known to the applicant, and that failure to make such disclosure may result in the discharge of any order made upon the ex-parte application, even though the facts were such that, with full disclosure an order would have been justified."
32 This Hon'ble Court had occasion to observe in the case of M.V. Bunga Bidara (Supra) in paragraph 24 that :
"24. When a ship is arrested the owners are put to immense pressure and loss. It is not only the owners but even those whose cargo are on board the vessel suffer. Any attempt of parties to cleverly draft the plaint and create an illusion of the cause of action and obtain orders of arrest of vessel to pressurize owners to settle the matter should be nipped in the bud. Some owners may succumb to the pressure, particularly in view of the fact that cost of litigation is very high today. It will save lot of time of the Courts if fraudulent and frivolous litigations are not entertained".
33 The above observations are very apposite in the present suit. Not only has plaintiff suppressed the guarantee but has sought to cleverly draft the plaint with a view to creating an illusion of a cause of action where there is none whatsoever in the hope that the matter will be proceeded to trial Gauri Gaekwad ::: Uploaded on - 04/06/2018 ::: Downloaded on - 05/06/2018 02:07:26 ::: 38/40 nmcd.199.2017.doc thereby putting pressure on the applicant to settle failing which the applicant will incur substantial costs of a protracted trial. 34 It is apparent on the reading of the plaint that an attempt is made to create an illusion of a cause of action. The observations in paragraphs 5 and 6 of judgment of the Apex Court in the case of T. Arivandandam v. T.V. Satyapal (Supra) clearly apply in the present case. Paragraphs 5 and 6 read as under :
5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentently resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful -- not formal --
reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7, Rule 11 CPC taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order 10, CPC. An activist Judge is the answer to irresponsible law suits. The trial courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Cr. XI) and must be triggered against them. In this case, the learned Judge to his cost realised what George Bernard Shaw remarked on the assassination of Mahatma Gandhi:
"It is dangerous to be too good."
6. The trial court in this case will remind itself of Section 35-A CPC and take deterrent action if it is satisfied that the litigation was inspired by vexatious motives and altogether groundless. In any view, that suit has no survival value and should be disposed of forthwith after giving an immediate hearing to the parties concerned. 35 However, it is stressed by Shri Pratap that the application of applicant is not for rejection of the plaint but for return of security.
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Nonetheless above observations and judgment in M.V. Bunga Bidara (Supra) and the T. Arivandandam (Supra) clearly assist applicant. 36 In the circumstances, on the reading of the plaint and documents produced by plaintiff and the judgment of this Court in M.T. VALOR (Supra) and M.V. BUNGA MAS TIGA (Supra), it is apparent that plaintiff does not have a prima facie case for arrest of defendant vessel. In fact plaintiff's case is hopelessly misconceived and cannot be considered as even reasonably arguable. The order of arrest is liable to be vacated and the security returned as prayed for. Notice of Motion made absolute in terms of prayer clause (a), which reads as under :
(a) To vacate and/or set aside the ex parte order of arrest dated 16th March 2017 passed in the present suit and return the security furnished by applicant/original defendant along with interest accrued thereon.
Costs:
37 Plaintiff also seeks exemplary costs. One of the factors that the Court may consider is the suppression of the Letter of Guarantee issued by Force Shipping to plaintiff as well as the settled legal position following the judgment in M.T. VALOR (Supra) which ought to have been known to plaintiff as the judgment was delivered on 15 April 2015 whereas the Suit was filed only on 16.3.2017. Costs should be such as are a deterrent to parties who embark on speculative litigation such as this.
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Hence, plaintiff is directed to pay cost in the sum of Rs.5 lakhs to defendant.
Notice of Motion accordingly disposed.
(K.R. SHRIRAM, J.) Mr. Ramabhadran appearing for plaintiff seeks stay of this order by four weeks. Stay granted by four weeks.
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