Calcutta High Court
I-Marine Infratech (India) Private ... vs The Owners And Parties Interested In The ... on 21 December, 2020
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
ODC - 1
ORDER SHEET
IA No. GA No. 1 of 2020
AS No. 5 of 2020
IN THE HIGH COURT AT CALCUTTA
Admiralty Jurisdiction
ORIGINAL SIDE
I-MARINE INFRATECH (INDIA) PRIVATE LIMITED, MUMBAI
Versus
THE OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V.
MAHESHWARI (IMO NO 9664665) & ANR
BEFORE:
The Hon'ble JUSTICE MOUSHUMI BHATTACHARYA
Date : 21st December, 2020.
Appearance
Mr. K. Thaker, Adv.
Mr. Anurag Bagaria, Adv.
... for the plaintiff
Mr. Ratnanko Banerji, Sr. Adv.
Ms. Sumita Shaw, Adv.
Mr. Kapil Guha, Adv.
... for the defendant no.2
Mr. Tilak Kumar Bose, Sr. Adv.
Mr. Ashok Kumar Jena, Adv.
... for the Kolkata Port Trust
The Court: On 9th December, 2020, this court had passed an order
of arrest of M.V. Maheshwari, being the defendant no.1 vessel in the
Admiralty Suit filed by the plaintiff. On the returnable date, the owner
and party interested in the vessel M.V. Maheshwari (the defendant no.2
herein) sought to have the order vacated on the issue of the
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maintainability of the Admiralty Suit as well as on the merits of the claim
against the defendant no.2. The defendant no.2 was directed to file an
affidavit recording the location of the vessel as on 9th December since it
was submitted on behalf of the Port authorities that the vessel was not at
the Kolkata Port Trust on the date of the order of arrest.
The defendant no.2 has filed an affidavit pursuant to the direction
of the court and the plaintiff has filed a supplementary affidavit bringing
certain material facts on record.
The question whether the order of arrest of 9th December, 2020
should be vacated rests on three preliminary points urged by learned
counsel appearing for the parties. These are:
i) Whether this Court in exercise of its Admiralty jurisdiction, could
arrest the defendant no.1 vessel on 9th December, 2020?
ii) Whether the claim of the plaintiff falls within the definition of a
"maritime claim" under The Admiralty (Jurisdiction and Settlement of
Maritime Claims) Act, 2017?
iii) Whether the defendant no.1 vessel comes within the exception to the
application under Section 1(2) of the Admiralty Act, 2017?
The above points were urged by learned counsel appearing for the
parties as preliminary points of maintainability of the Admiralty Suit and
for vacating of the order of arrest. The points are being answered
sequentially.
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(i) Whether this court in exercise of its Admiralty jurisdiction, could
arrest the defendant no.1 vessel on 9th December, 2020?
In its affidavit affirmed on 17th December, 2020, the defendant
no.2 has made a categorical statement that the vessel had departed from
the Port of Kolkata on December 7, 2020 and on December 9, 2020, it
was near Sagar Anchorage. Hence, as on the date of arrest, the vessel
was within the territorial waters of the State and could be arrested under
Section 5(1), which stipulates the jurisdictional test which has to be
satisfied for arrest of a vessel. The relevant Section 5(1) of The Admiralty
Act is set out below;
"5. (1) The High Court may order arrest of any vessel which is within its
jurisdiction for the purpose of providing security against a maritime claim
which is the subject of an admiralty proceeding, where the court has
reason to believe that -
(a) the person who owned the vessel at the time when the maritime claim
arose is liable for the claim and is the owner of the vessel when the
arrest is effected;"
The order of arrest took into account a relevant document
indicating that the defendant no.2 is a registered owner of the vessel M.V.
Maheshwari since 27th October, 2012. In any event, the vessel reached
the Kolkata Port on 16th December, 2020 and the order of arrest was
implemented by the Marshall on that date. The vessel remains arrested
till date.
(ii) Whether the claim of the plaintiff falls within the definition of a
"maritime claim" under the Admiralty Act?
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The claim of the plaintiff arises out of a charter-party entered into
between the plaintiff and the defendant no.2 for hire of the plaintiff's Tug
M.V. Ferrari and a claim of compensation relating to the balance period of
hire after a premature termination thereof by the defendant no.2.
"Maritime claim" has been defined under Section 2(1)(f) as a claim
referred to in Section 4 of the Admiralty Act. Under 4(1), under which the
jurisdictional High Court may exercise its jurisdiction to hear and
determine any question on a maritime claim, against any vessel arising
out of any of the events contemplated under Section 4. The plaintiff, in
the present case, relies on Section 4(1)(h) which is;
"4. (1) (h) agreement relating to the use or hire of the vessel, whether contained in
a charter-party or otherwise".
The question, therefore, is whether the plaintiff's Tug can be said
to be a "vessel" under Section 4(1) of the Act. Section 2(1)(l) defines the
expression "vessel" as;
"2. (1) (l) "vessel" includes any ship, boat, sailing vessel or other description of
vessel used or constructed for use in navigation by water, whether it is propelled
or not, and includes a barge, lighter or other floating vessel, a hovercraft, an off-
shore industry mobile unit, a vessel that has sunk or is stranded or abandoned
and the remains of such a vessel.
Explanation. - A vessel shall not be deemed to be a vessel for the purposes
of this clause, when it is broken up to such an extent that it cannot be put into use
for navigation, as certified by a surveyor."
The above definition should be read in conjunction with Section
2(2) which states that the words and expressions used in the definition of
the Section (Section 2(1) of the Admiralty Act) not defined in the
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Merchant Shipping Act, 1958, shall have the meanings respectively
assigned to them in that Act.
Section 2(55) of the Merchant Shipping Act, 1958, defines "vessel"
includes any ship, boat, sailing vessel, or other description of vessel used
in navigation and Section 2(45) defines, "ship" does not include a sailing
vessel".
Hence read together, a vessel includes a ship which is not a sailing
vessel.
The plaintiff, in its supplementary affidavit, affirmed on 17th
December, 2020 has stated that the plaintiff's Tug, M.V. Ferrari is a self-
propelled vessel used for navigation by water and is registered as an
Indian vessel at the Port of Mumbai in terms of Section 34 of the
Merchant Shipping Act, 1958. The Certificate of Indian Registry dated
21st January, 2008 has been annexed to the supplementary affidavit,.
The plaintiff's Tug hence qualifies as a vessel. The question
whether the plaintiff's claim falls within the definition of a maritime claim
is thus answered in the affirmative. The jurisdictional High Court is
consequently empowered to exercise its jurisdiction to hear and
determine the dispute relating to the hire of the plaintiff's Tug contained
in the charter-party executed between the plaintiff and the defendant
no.2.
The consequential effect of the above is that the plaintiff would also
be entitled to arrest the defendant no.2 vessel for securing its maritime
claim under Section 5(1) which empowers the High Court to order the
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arrest of "any vessel" which is within its jurisdiction. Section 5(2) further
provides that the High Court may also order arrest of any other "vessel"
for the purpose of providing security against a maritime claim in lieu of
the "vessel" against which a maritime claim has been made under this
Act.
The jurisdictional test of Sections 4 and 5 of the Admiralty Act,
2017, namely, "maritime claim" and "arrest" thus stands satisfied for the
court to pass an order of arrest against defendant no.1 vessel.
(iii) Whether the defendant no.1 vessel comes within the exception to
the application of Section 1(2) of the Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017?
The relevant part of Section 1 of the Admiralty Act is set out below;
"1. (1) This Act may be called the Admiralty (Jurisdiction and Settlement of
Maritime Claims) Act, 2017.
(2) It shall apply to every vessel, irrespective of the place of residence or
domicile of the owner:
Provided that this Act shall not apply to an inland vessel defined in
clause (a) of sub-section (1) of section 2 of the Inland Vessels Act, 1917, or
a vessel under construction that has not been launched unless it is notified
by the Central Government to be a vessel for the purposes of this Act:"
It is clear from the above that an exception has been carved out in
the application of the provisions of the 2017 Act for inland vessels as
defined under The Inland Vessels Act, 1917. Section 2(1)(a) defines
"inland vessel" or "inland mechanically propelled vessel" as a
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mechanically propelled vessel, which ordinarily plies on inland water, but
does not include fishing vessel and a ship registered under the Merchant
Shipping Act, 1958.
The plaintiff, in its supplementary affidavit, has stated that the
defendant no.1 vessel is registered as an Indian ship under the
provisions of The Merchant Shipping Act, 1958 having Official No.4038.
A communication has been produced by the plaintiff from the defendant
no.2 dated 1st August, 2019 which states in the very first line that M.V.
Maheshwar (Official No.4038) is registered under the Merchant Shipping
Act. The fact that the defendant vessel is registered under the Merchant
Shipping Act takes it outside the definition of a "Inland Vessel" under
Section 2(1)(a) of The Inland Vessels Act, 1917. Since a Certificate of
Registration has been produced by the defendant no.2 with its affidavit
showing that the defendant no.1 vessel M.V. Maheshwar is registered
under Section 19F of The Inland Vessel Act, 1917, this Act deserves
some consideration.
Section 19F of The Inland Vessels Act, 1917, relates to any inland
mechanically-propelled vessel where the registering authority, on being
satisfied after an appropriate enquiry, shall grant to the applicant a
Certificate of Registration comprising of certain particulars. The fact of a
Certificate of Registration can be found in Section 19A which stipulates
that an inland mechanically-propelled vessel shall not proceed on any
voyage or be used for any service unless it has a Certificate of
Registration in force granted under The Inland Vessels Act, 1917. The
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Certificate of Registration produced by the defendant no.2 is, therefore,
to be seen in the context of Section 19A of the Act, namely, for the
purpose of using the vessel within the framework of The Inland Vessels
Act, 1917. Two important factors must be mentioned in this context. The
first proviso to Section 1(2) of the Admiralty Act restricts the exception
carved out to the definition of an inland vessel under the provisions of
The Inland Vessels Act, 1917 and stops there. The ambit of the exception
is not stretched beyond the definition of an Inland Vessel under Section
2(1)(a) to include the aspect of registration of an inland vessel under
Section 19A of The Inland Vessels Act, 1917. This should be seen as a
conscious and deliberate omission on the part of the Legislature to
exclude inland vessels which have been registered under the Merchant
Shipping Act from the ambit of the exception. In other words,
(a) inland vessels which come within the definition of section 2(1)(a)
of the Inland Vessels Act would be excluded from the operation of
the Admiralty Act, 2017;
(b) The provisions of The Admiralty Act, 2017 would apply to an
inland vessel registered under Section 19F of The Inland Vessels
Act;
(c) The provisions of The Admiralty Act, 2017 would apply to an
inland vessel registered under the Merchant Shipping Act, 1958.
The reliance of the defendant no.2 (Rule 1.5 of the Act) River-Sea
Notification, 2013, does not come to the assistance of the defendant no.2
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since under the said Rule, registration under the Merchant Shipping Act,
1958, as amended, is required to be obtained expressly for the purpose
of the Notification which is specifically for Survey, Certification and
Operation of Indian River-Sea vessels and has nothing to do with the
application of the Admiralty Act, 2017. The Notification, despite being of
2013, also does not find mention either in the Admiralty Act or The
Inland Vessels Act, 1917, modified as on 3rd December, 2018.
In view of the above, the defendant no.1 vessel is not entitled to
seek the cover of the exception carved out in the first proviso to Section
1(2) of the Admiralty Act, 2017. The plaintiff, therefore, can take recourse
to the provisions of the Admiralty Act, 2017 to seek an order of arrest of
the defendant no.1 vessel for the purpose of securing its maritime claim
against the defendant no.2.
Since, the order of arrest dated 9th December, 2020 is sustained on
the point of maintainability, the matter is now required to be decided on
merits, i.e. whether the defendant no.2 is liable to provide security in
respect of the maritime claim.
In this context, the points of objection taken by Mr. Ratnanko
Banerji, learned Senior Counsel appearing for the second defendant,
being the owner and party interested in the defendant no.1 vessel, needs
to be briefly mentioned. The first point is that the plaintiff has abused
the process of Court by invoking the Admiralty Jurisdiction of this Court
since the second defendant is an Indian party. The second point taken is
that the plaintiff has abandoned its claim for the balance period of hire
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which would be evident from the series of correspondence exchanged
between the parties from 2017 to 2020. Third, the contract between the
parties has an arbitration clause which the plaintiff has failed to pursue
for three years. Fourth, the Admiralty Suit is barred by the laws of
limitation by reason of the plaintiff's claim having arisen in September,
2017. The Admiralty Suit was filed on 27th November, 2020. Counsel also
points to an unexplained gap of 3 years in the interregnum.
With regard to the first point, since this Court has already
decided the issue of existence of a maritime claim under Section 4 of the
2017 Act and a consequent order of arrest of the defendant no.1 vessel
under Section 5 of the Act, the first ground of objection with regard to
abuse of process is rejected. It is relevant to mention that unlike the
earlier statutes, the Admiralty Act, 2017 makes no distinction between a
foreign and an Indian party, which would be evident from Section 1(2) of
the Act
"1. (2) It shall apply to every vessel, irrespective of the place of residence or
domicile of the owner:
Provided that this Act shall not apply to an inland vessel defined in clause
(a) of sub-section (1) of section 2 of the Inland Vessels Act, 1917, or a vessel
under construction that has not been launched unless it is notified by the
Central Government to be a vessel for the purposes of this Act:"
The point with regard to the plaintiff abandoning its claims
against the defendant no.2 is required to be gone into in some detail. The
objection with regard to abandonment is primarily based on letters dated
7th October, 2017 exchanged between the parties. Learned counsel for
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the defendant no.2 has relied on a reply by the defendant no.2 dated 7th
October, 2017 to an e-mail of the plaintiff of 3rd October, 2017 which
contain, according to the defendant, a clear denial of the plaintiff's
claims. According to counsel, despite such clear denial, the plaintiff
failed to pursue its claim with regard to hire charges/compensation for
the balance period of the Charter hire. In order to understand the claims
which were urged by the plaintiff, an e-mail of 7th September, 2017
should be considered. In the said e-mail, the plaintiff raised three
invoices in relation to letting out all its Tug Ferrari. The first invoice was
with regard to the period from 1st to 9th September, 2017; the second
invoice was in respect of demobilization charges and the third proforma
invoice for an amount of Rs.1,28,64,360/- was for the balance period till
4th May, 2018. The letters exchanged between the parties in respect of
these three claims would show that the denial on the part of the
defendant no.2 was only confined to the first two invoices, namely, for
the period from 1st - 9th September, 2017 and for the demobilization
charges. The defendant's letters after the plaintiff's e-mail of 7th
September, 2017 did not contain any denial of the third invoice which
was for the balance period of the Charter hire. The relevant invoice dated
7th September, 2017 raised by the plaintiff on the defendant reinforces
this position. The e-mails exchanged between the parties on 7th
September, 2017, 15th September, 2017, 16th September, 2017, the letter
from the defendant no.2 dated 7th October, 2017, a further e-mail from
the defendant no.2 sent on the same date shows that at all material
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times, the defendant no.2 was concerned only with the re-delivery and
demobilization charges in respect of the plaintiff's e-mail of 7th
September, 2017 and did not dispute the claim with regard to proforma
invoice for a sum of Rs.1,28,64,360/- for the balance period of the hire
period. The detailed letter written by the defendant's lawyers on 3rd
September, 2020 in reply to the plaintiff's legal notice on 25th August,
2020 denied the claim of the plaintiff in relation to the balance
period/the third proforma invoice for the first time. The series of
correspondence would establish that the plaintiff continued to pursue its
claim for compensation for the balance period of hire under Box 31(a) of
the SUPPLYTIME 2005, Time Charter Party for Offshore Service Vessels
and hence the argument that the plaintiff abandoned its claim as on 7th
October, 2017 cannot be accepted.
The issue with regard to the existence of an arbitration clause in
the Charter Party and the plaintiff failing to take any steps in pursuance
thereof for three years has been dealt with in the order of arrest of 9th
December, 2020. This Court is of the view that existence of an arbitration
clause would not preclude a Court from entertaining a maritime claim
provided the plaintiff is able to satisfy the test under Section 4 of The
Admiralty Act, 2017 together with the jurisdictional test under Section 5
of the Act. This Court had referred to several decisions in the order of
arrest which show that an action in rem is the correct procedure for
arrest of a vessel as opposed to an application under Section 9 of The
Arbitration and Conciliation Act, 1996. The competing claims can be
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adjudicated between the parties as and when arbitration proceedings are
commenced.
The fourth ground taken on behalf of the defendant no.2 is the
ground of limitation. Learned counsel has relied on the chain of
correspondence between the parties which continued from September,
2017 till 24th October/1st November, 2017 with a break of about three
years in between before the correspondence resumed with the plaintiff's
letter of 17th August, 2020. According to counsel for the defendant no.2,
the reason for the gap of three years in between has not been explained
in the relevant pleading and the suit could not have been filed beyond
September, 2020. In this context three orders passed by the Supreme
Court on 23rd March, 2020, 10th July, 2020 and 18th September, 2020
have been placed by counsel. These orders, read together, indicate that
the period of limitation in respect of various actions etc. has been
extended till further orders. If this be the case, then the limitation period
for filing the Admiralty Suit is extended from the first order of the
Supreme Court dated 23rd march, 2020. In any event, the e-mail of the
defendant no.2 dated 19th August, 2020 stating that amounts have been
paid to the plaintiff in full and final settlement and nothing further
remains due can be construed as a fresh cause of action for the purposes
of limitation under Section 18 of The Limitation Act, 1963. Although the
Supreme Court order of 18th September, 2020 observes that the benefit
of extension can only be taken by a diligent party, the plaintiff herein
cannot be brought within the type suggested by the Supreme Court. By
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reason of the aforesaid, the point taken in respect of limitation is not
accepted.
Videsh Sanchar Nigam Ltd. v. M.V. Kapitan Kud & Ors. (1996) 7
SCC 127, has been cited for the proposition of a party having to urge the
reasonably best arguable case in an admiralty action. Relying on
Moschanthy, The : (1971) 1 Lloyd's Report 37, the Supreme Court held
that an admiralty action should be allowed even where a plaintiff has a
difficult but arguable case and that such an action should only be stayed
where the hopelessness of the plaintiff's case was beyond doubt. In that
case, the respondent and the Ukrainian Government was directed to
furnish security for release of the vessel.
Wallace Pharmaceuticals Pvt. Ltd. v. M.V. Bunga Bidara 2013 SCC OnLine Bom 1302, has been cited on behalf of the defendant no. 2, in which the Bombay High Court observed that there may be cases of clever drafting for the purpose of obtaining order of arrest of a vessel in order to pressurize owners to settle the matter and that such practices should be deprecated.
These decisions do not assist the defendant no. 2 for having the order of arrest vacated. This Court does not find any substantive defence to the plaintiff's claim for compensation in respect of the balance period of hire which ensued after the defendant no.2 prematurely terminated the contract between the parties. Clause 31(a) gives a Charterer the option to terminate the Charter Party at any point of time by giving prior notice to the owners but does not relieve the Charterer from being liable 15 for compensation and other payments for the early termination unless Box 13 has been left blank. In the present case, Box 13 is not blank and has the endorsement "Allowed as per agreed terms".
In view of the above discussion, this Court dies not find any grounds in fact or in law for vacating the order of arrest dated 9th December, 2020. Since the order of arrest is sustained, the plaintiff providing an undertaking for damages or security under Section 11 of the Admiralty Act, does not arise.
With the confirmation of the order of arrest, a few issues need to be decided. The order dated 9th December, 2020 had given the defendant no. 2 the option to deposit an amount of Rs. 2,13,41,345/- for vacating the order of arrest. The particulars of the plaintiff's claim indicates this amount but includes a rate of interest at 18% per annum. As fairly pointed out by learned counsel for the plaintiff, this rate is contrary to the agreed rate of 1% per month mentioned in Box 25 of the Charter Party. Hence the amount is modified and the amount of security which the defendant no. 2 would have the option of depositing Rs.1,88,00,000/- with the Registrar, Original Side of this Court for vacating the order of arrest. The defendant no.2, if so advised, shall furnish this amount by way of a bank guarantee from a Scheduled Commercial Bank. Second, since the defendant vessel is lying in the custody of the Port Authorities after being arrested on 16th December, 2020, the Port Authorities will be at liberty to pursue their claims by 16 taking appropriate steps in accordance with law under The Major Port Trusts Act, 1963.
The application being GA No. 1 of 2020 is accordingly disposed of in terms of this order.
(MOUSHUMI BHATTACHARYA, J.) RS/TO/D.Ghosh