According to a recent ruling by the Bombay High Court, a maritime claim made by a ship agent seeking indemnity from the shipowner for unpaid port dues can be entertained by the High Court under Section 4 of the Admiralty Act, 2017.
The division bench, comprising Justice KR Shriram and Justice Rajesh Patil, held that the phrase "arising out of" in Section 4(1), which pertains to the High Court's jurisdiction over maritime claims, has a broad meaning that encompasses an agent's indemnity claim against the vessel for unpaid port dues.
Brief Facts:
The appellant (Dominican vessel MV Golden Pride) had a ship that docked at Mumbai, and the respondent was appointed to provide services to the ship. In May 2018, GAC Shipping (India) Pvt. Ltd. (agent) was appointed as the agent of the vessel during her stay in Mumbai. The appellant was supposed to pay the port charges to the respondent, but they did not do so despite reminders.
The respondent warned the appellant that if the charges were not paid, they would face legal action. The respondent eventually filed a lawsuit against the ship, claiming that they are responsible for paying the port dues. The ship was arrested and later sold in an auction for scrapping, as the appellant did not pay the port charges. The appellant argued that the respondent's claim for indemnity is not valid, and therefore, the action against the ship was not allowed.
Contentions of the Appellant:
The appellant disputed the agent's indemnity action, claiming it's not a maritime claim under sections 4(1)(l), 4(1)(n) and 4(1)(p) or any other part of Section 4(1) of the Admiralty Act. The appellant further argued that only the port can claim port dues, not the agent, who is only entitled to receive the agency fee. The appellant further contended that the agent must first pay any dues and then claim indemnity from the vessel. Additionally, the appellant stated that the agent's claim was premature, and the court should not have ordered the vessel's arrest.
Contentions of the Respondent:
The respondent on the other hand argued that the owners of a ship can be held liable for expenses incurred by the agent, even if the expenses have not yet been paid at the time of the claim. The Admiralty Act allows the High Court to hear cases related to maritime claims against vessels, including fees for services rendered for the vessel's operation, such as port charges. Clause (n) of Section 4(1) of the Admiralty Act talks about money that a port might charge a ship for using its facilities. Therefore, it was argued that this includes any fees that the port might charge under the law. If someone, like an agent, has to pay those charges on behalf of the ship, they can make a claim under this clause.
Observations by the Court:
The court determined that the Respondent’s claim in the suit was a maritime claim under Section 4 of the Admiralty Act. The section provides that the High Court has jurisdiction to hear and determine any question on a maritime claim against any vessel arising out of anything listed in the section. The court noted that the expressions "arising out of" and "in connection with" used in the Act are of the widest amplitude and content and can include even questions as to the existence, validity, and effect of the arbitration agreement. In clause (n) of Section 4(1), the expression used is "dues in connection with port," which is of a wide nature and can take in its sweep a maritime claim, including an indemnity claim made by an agent against a port's claim.
The court also cited the case of The Conoco Britannia [1972] 1 Lloyd’s Report 342 where it was held that any indemnity claim in respect of a maritime claim would also be a maritime claim. The court disagreed with Plaintiff's argument that a third party, such as an agent, cannot have a maritime claim over the port dues in addition to the port itself. The court stated that the provisions of Section 4(1) are wide and comprehensive enough to take in its sweep an indemnity action of the nature at hand. The court held that both agent of the vessel and the port can simultaneously initiate action against the vessel for unpaid port dues.
Coming to the second argument by the respondent that an agent of the vessel and the port cannot maintain an action simultaneously, the court noted that this argument is deemed invalid as an indemnity action can be found to be maintainable, and both parties have separate causes of action available to them. One is in the nature of a maritime claim (agent's claim), and the other is a maritime lien (port's claim) or under Section 64 of The Major Port Trusts Act, 1963, the court held. Therefore, the agent’s claim would fall under paras (l), (n), and (p) of section 4(1) of the Act, the court held.
The decision of the Court:
The court directed it to pay costs of Rs 7,50,000/- each to the agent and the port.
Case Title: MV Golden Pride v. GAC Shipping (India) Pvt. Ltd.
Coram: Justice KR Shriram and Justice Rajesh Patil
Case no.: COMMERCIAL APPEAL NO. 55 OF 2022
Advocate for the Applicant: Mr. Shyam Kapadia i/b Mr. Kunal S. Gaikwad
Advocate for the Respondent: Mr Shyam Kapadia i/b Mr Kunal S. GaikwadMr. Bimal Rajasekhar a/w Ms Ridhi Nyati for Respondent No.1. Mr V.K. Ramabhadran, Senior Advocate a/w Mr Ajai Fernandes, Mr Deepak Motiwalla and Mr Rooshesh Motiwalla i/b Motiwalla and Co. for Respondent No.2.
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