Bombay High Court
Peninsula Petroleum Ltd vs Bunkers On Board The Vessel M V ... on 17 December, 2014
Bench: K.R. Sriram
1 NMS-385-2014.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY & VICE ADMIRALTY JURISDICTION
NOTICE OF MOTION NO.385 OF 2014
IN
ADMIRALTY SUIT NO.85 OF 2013
m.v. Geowave Commander ) ....Applicant/Org. Def. No.2
IN THE MATTER BETWEEN :
Peninsula Petroleum Ltd., a )
company incorporated under the )
laws of Republic of Ireland and )
having its office at Arthur Cox
ig )
Building, Earlsfort Terrace, Dublin 2, )
Republic of Ireland. ) ....Plaintiff
1. Bunkers on board the vessel, m.v. )
Geowave Commander, which vessel )
is presently in the port and harbour )
of Mumbai within the territorial )
waters of India and within the )
Admiralty Judisdiction of this Hon'ble )
Court and all interested in the )
bunkers. )
2. m.v. Geo Commander, a vessel )
flying a foreign Flag presently lying at )
Port of Mumbai, within the admiralty )
jurisdiction of this Hon'ble Court, )
alongwith her hull, engines, gears, )
machiner, tackle, bunkers, apparels, )
furnitures, fixtures and )
paraphernalia. )
3. Reflect Geophysical Pte. Ltd., a )
company incorporated under the )
laws of Singapore and having its )
office at 8, Temasek Boulevard, #17- )
01 Tower 3, Singapore - 038988. ) ....Defendants
----
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Ms. S. Priya a/w. Mr. Abhimanyu Singh and Mr. Abhishek Kumar for
the Plaintiff.
Mr. Prashant Pratap, Senior Advocate a/w. Ms. Trupti Agarwal for the
Defendant No.2.
----
CORAM : K.R.SHRIRAM,J
DATE : 17th DECEMBER, 2014
JUDGMENT :-
1 The Plaintiff's claim in the suit is that of unpaid seller. The
Plaintiff claims to have supplied bunkers to the 2nd defendant vessel
at the instance of and pursuant to a Purchase Order dated 14 th
November, 2012 issued by Defendant No.3. The counsel for the
Plaintiff submitted that an oral order for the supplies was placed by
Defendant No.3. At that time Defendant No.3 was the Bareboat
charterer of the 2nd defendant vessel. The Bareboat Charter Party
dated 29th June, 2012 was entered into between the Defendant No.3
and the owners of Defendant No.2 vessel, viz., Master & Commander
AS, Norway. The counsel also submitted that Defendant No.3 was
located in the same office building as the Plaintiff and they had past
dealings. The oral order which was given on 12th November, 2012
was confirmed subsequently in writing.
2 Based on this requisition, on or about 14 th November,
2012, the Plaintiff supplied 669.416 M.T. of MGO (bunkers) to the
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2nd defendant vessel when she was at Singapore. The Master of the
2nd defendant vessel acknowledged receipt of the bunkers on board
by endorsing the bunker delivery note. The Defendant No.3 however,
did not pay for the bunkers supplied and therefore, as agreed with the
Plaintiff on 21st December, 2012 arranged to remove the bunkers
from the vessel at Outside Port Limits (OPL), Singapore. This was
however, not carried out. Of course, it is the Plaintiff's case that the
Defendant No.3 purportedly informed the Plaintiff that under its
charter party with the Applicant herein, it was required to take
Applicant's permission for debunkering and that the Applicant was not
according the permission.
3 As the payment was not coming forth, the Plaintiff
commenced proceedings in Singapore for recovery of its claim and
obtained a warrant of arrest of the 2 nd defendant vessel. The counsel
for the Plaintiff submitted that when the Plaintiff took litigation/winding
up search in Singapore on Defendant No.3, it came to light for the first
time that winding up proceedings have been pending against
Defendant No.3 in Singapore since September, 2012. It should be
noted that the date of supply is 14 th November, 2012, i.e., about two
months after the winding up proceedings began. Therefore, the
Plaintiff fearing that they will not recover any money filed proceedings
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in South Africa and obtained a warrant of arrest of a vessel, viz., m.v.
Reflect Scorpio that was owned by Defendant No.3. The Plaintiff then
applied for default judgment but do not expect to recover any amount
as the vessel m.v. Reflect Scorpio was subject to another claim made
by a South African Shipyard. Looking at the quantum of the claim of
the South African Shipyard, according to the Plaintiff, they are unlikely
to recover any amount.
In the meanwhile, on or about 15th April, 2013, the
Bareboat Charter with Defendant N.3 admittedly was terminated by
the owners of the 2nd defendant vessel. The termination was for
non-payment of charter hire, etc., but it is not necessary to go into
that. The owners of Defendant No.2, it is alleged, have a claim of
around US$ 900,000/- or so against Defendant No.3. The Plaintiff is
aware that the vessel was no more in charter and the supply was
made at the Bareboat charterers behest and hence, the Plaintiff do
not have a maritime claim against the 2nd defendant vessel.
5 Therefore, the Plaintiff after filing this suit applied, on or
about 23rd April, 2013, for arrest of the bunkers on board the
2nd defendant vessel when she arrived at Port and Harbour of
Mumbai. The Plaintiff was directed to give notice to Defendant No.2
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and at the hearing of the application for arrest, the Defendant No.2,
without prejudice to the rights and contentions, agreed to furnish
security for the value of bunkers on board the vessel and the consent
order dated 30th April, 2013 was passed. The counsel for the Plaintiff
very fairly submitted that the Plaintiff has no privity of contract with
Defendant No.2 or her owners and the claim was against Defendant
No.3.
It is the case of the Plaintiff that under the bunker supply
contract between the Plaintiff and Defendant No.3, the risk in the
bunkers would pass on to Defendant No.3 on the bunkers being
delivered to the vessel but the title was to pass only upon payment for
the value of the bunkers delivered. Therefore, the Plaintiff
contractually was entitled to exercise their lien on the title in the
bunkers until they received payment for the same. The Plaintiff also
submitted that until payment was made, the property in the goods,
viz., the bunkers, did not pass on to the buyer, viz., Defendant No.3
until the conditions imposed by the Plaintiff-seller, are fulfilled.
Therefore, even if the owners of Defendant No.2 have not paid any
bareboat charter hire, still they cannot hold on to the bunkers or
appropriate the bunkers which in effect belonged to the Plaintiff. The
counsel submitted that the Court permitted that it would amount to
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permitting the Defendant No.2 to unjustly enrich itself and having
consumed the bunkers, the Applicant should pay to the Plaintiff the
value of the bunkers consumed.
7 The issue in this Notice of Motion which requires to be
decided is whether bunkers on board a vessel can be arrested
without any claim against the vessel and independent of the vessel.
Naturally it is the Plaintiff's case that the Court should allow and it is
the Defendants' case that the Court should not.
The Plaintiff's submission primarily was that this Court in
exercise of its admiralty jurisdiction must adopt a liberal interpretation
of the expression property which can be arrested in exercise of its
jurisdiction. The counsel also submitted that the Court must exercise
its jurisdiction in equity and law, unless expressly curtailed or barred
and as there is no express curtailment and/or bar on arrest of
bunkers, this Court must exercise jurisdiction to arrest bunkers.
8 The Plaintiff's counsel further submitted that the jurisdiction
of this Court to arrest the bunkers is carved out from the Letters
Patent, 1823 read with Letters Patent, 1865 and the Bombay High
Court (O.S.) Rules.
I do not agree with the counsel for the Plaintiff. Letters
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Patent nowhere provides that bunkers can be arrested without any
claim against the vessel and independent of the vessel. This Court in
the matter of Rushab Ship International LLC vs. The bunkers
onboard the Ship M.V. African Eagle and others (African Eagle) and
in the matter of 2M/s. Greenwich Meridian Logistics (India) Pvt. Ltd.
vs. M/s. Sapphire Kitchenware Pvt. Ltd. has held "the Letters Patent
is a procedural law to facilitate exercise of jurisdiction in aid of a
substantive law". No procedural law can vest jurisdiction which is not
provided under substantive law. Para 29 and 30 of M/s. Greenwich
Meridian matter (supra) reads as under :-
"29. I am afraid this cannot be accepted. Neither clause
53 of Letters Patent, 1823 nor clause 31 of Letters patent
1862 lay down the parameters of the Admiralty and vice
Admiralty jurisdiction of the Court. Nor do the Letters
Patent provide that the jurisdiction of the Admiralty and
vice Admiralty Court can be exercised de hors the
existence of a maritime claim against a vessel. The
Letters Patent is a procedural law to facilitate exercise of
jurisdiction in aid of a substantive law. Even the words in
the clauses can be read to mean as being related to the
nature of claim and not the property to be proceeded
against. All that Letters Patent 1823 and Letters Patent
1862 do, is to confer jurisdiction on the admiralty courts
to take cognizance of, examine, try and determine
certain types of maritime claims. This does not mean that
these claims can be entertained contrary to the limited
jurisdiction vested in the Admiralty Court by substantive
law. The plaintiff's submission on the Letters Patent
cannot be accepted.
30. Mr.Shankar, in his written submission also gave
1. Delivered on 4 th
February, 2014 in Notice of Motion (Lodg.) No.59 of 2013 in Admiralty Suit No.42 of 2013
2. Delivered on 17 th
April, 2014 in Admiralty Suit No.31 of 2008
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various examples or situations. None of them are
relevant."
9 Though bunkers could be termed necessaries supplied to
the vessel, the question herein is not claim against the vessel but it is
the claim against the bunker on board with no claim against the
vessel and independent of the vessel. Therefore, even if the bunkers
supplied are necessaries and for a claim of necessaries, a vessel
could be arrested, the same principle cannot be applied to arrest only
the bunkers when there is no claim against the vessel and
independent of the vessel.
10 The counsel for the Plaintiff also submitted that the
Admiralty Rules in Part III of the Bombay High Court (O.S.) Rules,
1980, in many rules has used the expression any property as
opposed to simply the ship. The counsel for the Plaintiff submitted
that where the rules are intended to restrict the application to ships
and not to any other property, the rules have set it out specifically. For
example, the counsel submitted that Rule 941 provides that in a suit
in rem an application for the arrest of the property proceeded against
shall be supported by affidavit and the affidavit shall state the nature
of the claim and the nature of the property to be arrested because
where it is intended that only ships can be arrested it is specifically
mentioned. The use of the word "property" in certain rules means that
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anything other than a ship can also be arrested. The counsel also
submitted that Rule 946 deals with how the warrant of arrest or writ of
summons on a arrested property has to be served. The rule provides
as to how the service shall be affected on a ship or cargo or freight
and if no property other than a ship, cargo or freight could be
arrested, the rules would have said so.
11 The Plaintiffs reliance on the High Court (O.S.) Rules,
1980 as vesting jurisdiction in this court to arrest bunkers is
misconceived. The rules do not provide for arrest of bunkers. The
rules do not provide for the manner in which the writ of summons or
warrant of arrest is to be served in case of arrest of bunkers. Rule 946
on the contrary sets out the manner in which the warrant of arrest or
writ of summons shall be served on the property against which the
suit is brought. Rule 946 (2) deals with a situation where the property
against which the suit is brought is ship or cargo on board. Rule 946
(3) refers to property against which the suit is brought is cargo which
has been landed or transshipped. It also deals with a case where the
cargo is in the custody of a person who will not permit access to it.
Rule 946 (4) deals with a situation where the property against which
the suit is brought is freight.
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12 If bunkers were property against which the suit could be
brought in rem, then the manner of service of writ of summons or
warrant of arrest of bunkers would also have been specifically
provided not like what the Plaintiff's counsel submitted that if no
property other than a ship, cargo or freight could be arrested, the
rules would have said so expressly. The rules indicate which are the
only properties against which a suit in rem can be brought and bunker
is not one of the property.
13 In my view, even the arrest of the cargo or freight can be
only to the limited extent of the amount payable on the cargo or
freight to the owner. In common law the freight is deemed earned only
upon completion of voyage. Therefore, the owner of the cargo would
pay for freight only when the cargo arrives at destination. In a
situation where a person who has a claim against the owner of the
ship brings an action in rem, he would also apply for and obtain the
arrest of the cargo on board so that when the owner of the cargo
comes to take delivery of the cargo, he would deposit the freight
payable to the credit of the suit. Otherwise the owner of the ship
would appropriate the freight. Similarly, if the freight is yet to be paid
to the owner of the vessel against whom the claim is made, to that
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extent the freight could be arrested. Nothing more than that. I gather
support on this from 3The Flora. The Court held, "It is beyond all
question that the cargo on board a ship which does damage to
another ship in collision is in no respect responsible for the damage. It
is equally clear that the freight due, the property of the owners of the
ship doing the damage is attachable to make good that damage; and,
in ordinary cases, the cargo is arrested for the purpose of making the
owners of the cargo, who at that time owe the freight to the
shipowners, pay into court to answer the damage which the latter are
bound to make good. But the cargo is liable to arrest for no other
purpose whatever". In the said decision the Court also held that it is
only that cargo on which freight is in presenti due that can be
proceeded against."
In African Eagle (supra), this Court, while considering the
case of 4M.V. Kaletan, observed as under :-
"In this case four questions arose for the consideration
of the Court : (i) Was the Writ good, that was to say,
could the owners of the freight be sued apart from the
owners of the ship or cargo?; (ii) Could a warrant of
arrest be issued against freight without a warrant of
arrest against the ship and/or the cargo?; (iii) Was the
service of the warrant of arrest properly effected?;
(iv) Was the service of the writ properly affected? The
first question was kept open. With respect to the second
question, the Court held that freight could not be
arrested unless it could be said to be the res and the
3. 1866 A & ELR 450
4. 1914 TLR 30
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freight collected and paid into the Bank had ceased to
be the res. The court further held that freight if it has
been earned, the cargo is held so long as it remains
unpaid. With respect to the third question, the Court held
that freight could not be arrested without arrest of the
cargo. With respect to the fourth question, the court held
that freight could not be arrested unless there was
access to cargo. It is submitted by the Plaintiff herein
that in Kaletan, the Court inter alia concluded that (i) a
warrant to arrest for freight could not be issued against
the freight separate from the ship and cargo or the ship
or cargo; and (ii) the warrant could not be issued against
freight already paid. As submitted by Defendant No.3 in
the case of Kaletan, the English Court has in fact
followed the decision in Castlegate and considered the
issue of the Court's power to arrest freight. The Court
concluded that warrant against freight cannot be issued
separate from ship and cargo or ship or cargo. The
Court followed the principle laid down in Castlegate and
stated that no warrant of arrest for cargo so as to get at
freight had ever been granted apart and separate from
the warrant for the corpus of the ship. The attachment of
the ship was an essential preliminary to the proper
exercise by the Court, on the lien on freight. Hence, if
there is no entitlement to arrest the ship, no action
against her freight can lie."
Ofcourse, in the present day scenario of contracts of
carriage, i.e., Bill of Lading, provides for clauses like "freight deemed
earned-cargo loss or not lost", "freight deemed earned within five
days of the vessel sailing" or "freight deemed earned upon issuance
of bill of lading-cargo lost or not", etc. Moreover, the freight is also
paid by tele-remittance or RTGS from one bank account to another
bank account and therefore, the scenario in which a freight or cargo
on board a ship or landed or freight to be paid to a ship can be
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arrested is as good as nil.
14 The High Court (O.S.) Rules have been framed for
regulating the procedure and practice in cases brought before the
High Court under the Colonial Courts of Admiralty Act, 1890. The
1890 Act declared that the Colonial Courts of admiralty can exercise
the same jurisdiction as the High Court of admiralty in England. The
counsel for the Plaintiff has not been able to show a single case
where the English Court's have exercised admiralty jurisdiction for
arrest of bunkers on board a ship independently of a ship and with no
claim against the ship. The only place where bunkers are being
arrested and stored is in South Africa where jurisdiction to arrest
bunkers is confirmed by statute.
15 Ms. Priya, the learned counsel for the Plaintiff also relied
upon the judgment of the Apex Court in the matter of 5m.v. Elisabeth
and Ors. vs. Harwan Investment and Trading to submit that legislation
has always marched behind time, but it is the duty of the Court to
expound and fashion the law for the present and the future to meet
the ends of justice. The counsel also submitted that where statutes
are silent and remedy has to be sought by recourse to basic
principles, it is the duty of the Court to devise procedural rules by
5. 1993 SUPP (2) SCC 433
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analogy and expediency. The High Court in India being superior
Courts of record they have inherent and plenary powers unless
expressly or impliedly barred and hence this Court should exercise
jurisdiction. The counsel in particular relied upon paragraph 14, 17,
32, 33, 34, 64, 66, 68, 69, 89, 98 and 99. For the purpose of this
judgment we need to reproduced only paragraph 17, 64, 66, 68 and
99 :-
"17. ................ Legislation has always marched behind
time, but it is the duty of the Court to expound and
fashion the law for the present and the future to meet
the ends of justice.
64. Where statutes are silent and remedy has to be
sought by recourse to basic principles, it is the duty of
the court to devise procedural rules by analogy and
expediency. Actions in rem, as seen above, were
resorted to by courts as a devise to overcome the
difficulty of personal service on the defendant by
compelling him to enter appearance and accept service
of summons with a view to furnishing security for the
release of the res; or, in his absence, proceed against
the res itself, by attributing to it a personality for the
purpose of entering a decree and executing the same by
sale of the res. This is a practical procedural device
developed by the courts with a view to rendering justice
in accordance with substantive law not only in cases of
collision and salvage, but also in cases of other maritime
liens and claims arising by reason of breach of contract
for the hire of vessels or the carriage of goods or other
maritime transactions, or tortious acts, such as
conversion or negligence occurring in connection with
the carriage of goods. Where substantive law demands
justice for the party aggrieved, and the statute has not
provided the remedy, it is the duty of the court to devise
procedure by drawing analogy from other systems of
law and practice.......
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66. ...... The High Courts in India are superior courts of
record. They have original and appellate jurisdiction.
They have inherent and plenary powers Unless
expressly or impliedly barred, and subject to the
appellate or discretionary jurisdiction of this Court, the
High Courts have unlimited jurisdiction, including the
jurisdiction to determine their own powers.
68. In decisions such as Jayaswal Shipping Company v.
S. S. Leelavati, AIR 1954 Calcutta 415; Kamalakar
Mahadev Bhagat v. Scindia Steam Navigation Co. Ltd.
Bombay, AIR 1961 Bombay 186; Rungta Sons Private
Ltd. v. S. S. 'Edison Mariner' (1962) 66 Cal WN 1083;
National Co. Ltd. v. Asia Mariner, (1968) 72 Cal WN
635; Mrs. Sahida Ismail v. Petko R. Salvejkoy, AIR 1973
Bombay 18 and Smt. Reena Padhi v. 'Jagdhir', AIR
1982 Orissa 57, the High Courts took an unduly
restrictive view of the courts' admiralty jurisdiction by
limiting it to what was permitted by the Admiralty Court
Act, 1861 and the Colonial Courts of Admiralty Act,
1890. This was, in our view, an unjustified abdication of
jurisdiction and a self-assumed fetter on competence to
render justice.
99. ...... Basis of Maritime Law has been necessity to
provide remedy for wrong done on high seas. Inclusion
or expansion of jurisdiction was in relation to any cause
which could have been cognisable under ordinary law.
Bottomry, salvage, seaman wages or towage are all
causes for which action could be brought in court of law
but their enforcement was rendered illusory with
disappearance of the person beyond territorial waters.
To overcome this difficulty this jurisdiction was created
making it actionable against person and finally the res
itself. What was basic was the existence of cause of
action, arising out of tort or contract in relation to the
master or owner of the ship....... Legislation may create
a right or it may recognize one founded on custom or
practice...."
The counsel submitted that in the past there were claims of
respondentia and bottomry which is not there anymore. The counsel
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submitted that in the olden days the vessel owner managed the
vessel, decided the operation, the route, the cargo to be carried, etc.,
but today the ships are owned by one given on bareboat charter to
another who in turn time charters to another to be given again on
voyage charter, vessels are managed by crewing managers who
have no say in the trading patterns of the vessel which are
determined by either the charterers or commercial managers of the
vessel, etc. Therefore, as times have changed the shipping industry
has changed the way of shipping business, its conduct has changed
and therefore, this Court also should expand the scope of arrest.
The counsel also relied on a judgment of the English Court
in the matter of 6The Saint Anna to submit that it was a charterer who
had supplied the bunkers to the vessel and following the judicial sale
of the vessel the Court held that the interveners charterers were the
owners of the fuel on board the vessel and therefore, the same was
not the property of the owners of the vessel. I am afraid, the judgment
in The Saint Anna (supra) has no applicability to the present case. In
The Saint Anna (supra), the mortgagees of the ship obtained an order
of arrest of the ship which at that point of time was on time charter to
another company who had supplied and paid for the bunkers on
board. The vessel was sold pursuant to the mortgagees' arrest and
the Court held that the bunkers belonged to the time charterer and
6. 1980 LLR (1) page 180
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were not available to the mortgagee. So also in the case of 7m.v.
Span Terza No.2. This judgment in The Saint Anna (supra), neither
deals with arrest of bunkers nor were bunkers arrested independently
of the ship. The said judgment only says that bunkers were the
property of the time charterer and not part of the mortgage security.
Ms. Priya, also submitted that the Apex Court has held in
the matter of 8Liverpool & London S.P. & I Asson. vs. M.V. Sea
Success I & Anr. (m.v. Sea Success) that with the change of time,
from narrow and pedantic approach, the Court may resort to broad
and liberal interpretation. The counsel emphasized on paragraph 65
of the said judgment which reads as under :-
"It is true that this Court is not bound by the American
decisions. The American decisions have merely a
persuasive value but this Court would not hesitate in
borrowing the principles if the same is in consonance
with the scheme of Indian law keeping in view the
changing global scenario. Global changes and outlook in
trade and commerce could be a relevant factor. With the
change of time; from narrow and pedantic approach, the
Court may resort to broad and liberal interpretation.
What was not considered to be a necessity a century
back, may be held to be so now."
16 The foundation of an action in rem has been extensively
dealt with by the Apex Court in the matter of m.v. Elisabeth (supra).
Both these judgments of the Apex Court in the matter of m.v.
7. (1984) 1 L.L.R.119
8. (2004) 9 SCC 512
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Elisabeth (supra) and m.v. Sea Success (supra) do not help the
cause of the Plaintiff. The observations in the matter of m.v. Elisabeth
(supra) make it clear that the admiralty jurisdiction of the High Court is
founded on the arrest of the ship and is directed against the ship. The
judgment also makes it clear that the foundation of an action in rem is
a maritime lien or claim imposing a personal liability upon the owner
of the vessel. Infact in paragraph 46, 55 and 82 of m.v. Elisabeth, the
Apex Court observed as under :-
"46. The foundation of an action in rem, which is a
peculiarity of the Anglo-American Law, arises from a
maritime lien or claim imposing a personal liability upon
the owner of the vessel. A defendant in an admiralty
action in personam is liable for the full amount of the
plaintiff's established claim. Likewise, a defendant
acknowledging service in an action in rem is liable to be
saddled with full liability even when the amount of the
judgment exceeds the value of the res or of the bail
provided. An action in rem lies in the English High Court
in respect of matters regulated by the Supreme Court
Act, 1981, and in relation to a number of claims the
jurisdiction can be invoked not only against the
offending ship in question but also against a `sistership'
i.e., a ship in the same beneficial ownership as the ship
in regard to which the claim arose.
"The vessel which commits the aggression is treated as
the offender, as the guilty instrument or thing to which
the forfeiture attaches, without any reference
whatsoever to the character or conduct of the owner...
(Per Justice Story, The United States vs. The Big Malek
Adhel).
55. An action in rem is directed against the ship itself to
satisfy the claim of the Plaintiff out of the res. The ship is
for this purpose treated as a person. Such an action
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may constitute an inducement to the owner to submit to
the jurisdiction of the court, thereby making himself
liable to be proceeded against by the plaintiff in
personam. It is, however, imperative in an action in rem
that the ship should be within jurisdiction at the time the
proceedings are started. A decree of the court in such
an action binds not merely the parties to the writ but
everybody in the world who might dispute the plaintiff's
claim.
82. The admiralty jurisdiction of the High court is
dependent on the presence of the foreign ship in Indian
waters and founded on the arrest of that ship. This
jurisdiction can be assumed by the concerned High
Court, whether or not the defendant resides or carries
on business, or the cause of action arose wholly or in
part, within the local limits of its jurisdiction. Once a
foreign ship is arrested within the local limits of the
jurisdiction of the High Court, and the owner of the ship
has entered appearance and furnished security to the
satisfaction of the High Court for the release of the ship,
the proceedings continue as a personal action."
(emphasis supplied)
17 Therefore, unless and until the owner of the ship is liable
for the claim, the admiralty jurisdiction of this Court cannot be
invoked. In the matters of m.v. Elisabeth (supra) and m.v. Sea
Success (supra), the Apex Court only expanded the types of maritime
claims for which an action in rem for arrest of a ship can be filed. The
judgments did not deal with the issue as to whether any property
other than a ship can be arrested or not. The judgments also did not
expand or even suggest that the scope of property against which
action in rem can be maintained has to be extended.
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18 This Court in the matter of Best Foods International
Private Limited vs. Navbharat International Limited and others (Best
Foods) has held that the res is the ship. The Division Bench of this
Court while referring to the judgment in m.v. Elisabeth (supra)
referred to admiralty jurisdiction conferring a right in rem against the
ship or cargo, the admiralty jurisdiction of the High Court is founded
on the arrest of the ship, etc. Reading the said judgment with m.v.
Elisabeth (supra) it is quite clear that there can be no action in rem
without arrest of the ship because that is the foundation of the
admiralty jurisdiction. Infact this Court in the matter of M/s.Greenwich
Meridian Logistics (India) Pvt. Ltd. (supra) has also held that an action
in rem is directed against the ship itself to satisfy the claim of the
Plaintiff out of the res. Infact in the Best Foods matter (supra) this
Court had rejected the submission that so long as the case before the
High Court pertains to a claim which has a maritime flavour or which
was recognized as falling within the Admiralty jurisdiction, jurisdiction
can be exercised over any property and the same was not restricted
to a ship. Infact the Apex Court in the matter of O. Konavalov vs.
Commander, Coast Guard, in paragraph 19 has observed that "one of
the distinctive features of Admiralty practice is proceedings in rem
which are against maritime property, i.e., the vessel, cargo or freight
9. Appeal No. 92 of 2010 in Notice of Motion No.271 of 2010 in Admiralty Suit (Lodg.) No.87 of 2010 delivered
on 23rd March, 2010
10. (2006) 4 SCC 620
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as the case may be."
19 I also find support for the view against jurisdiction to arrest
bunkers in African Eagle (supra). In that case, the Plaintiff sought
arrest of freight and bunkers and the same was opposed by the
Defendants on the ground that there is no jurisdiction to arrest freight
and bunkers by way of proceedings in rem filed in the Admiralty
Jurisdiction of this Court. The judgment in The African Eagle
considers various statues, letters patent, High Court Rules, various
judgments of the Apex Court (m.v. Elisabeth and m.v. Sea Success)
as well as of this Hon'ble Court (11The Mariner IV vs. Videsh Sanchar
Nigam Limited) and English law. The Court held the freight
independently of vessel cannot be arrested. The arrest of bunker
issue was left open as the Defendants had agreed to secure the
claim upto the value of the bunker then available on board on without
prejudice basis. The suit later was dismissed on other grounds. This
judgment it was submitted on behalf of Defendant No.2 that there is
no in rem jurisdiction to arrest bunkers. Although the judgment
decided only the issue of arrest of freight, in my view it applies in
equal measure to arrest of bunkers. Bunkers cannot be arrested
independently of or with the ship as separate maritime property.
11. 1998 1 Mh.L.J. 751
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20 It is not open to the Plaintiff to argue that bunkers can be
separated from the ship and treated as independent property capable
of arrest even though the vessel itself cannot be proceeded against
and arrested by the Plaintiff in respect of its claim against Defendant
No.3.
21 Therefore, whilst freight and cargo are considered as
maritime property, bunkers are not and hence arrest of bunkers is not
permissible irrespective of whether there is a maritime claim or lien
against the vessel. Bunkers cannot be considered as maritime
property independent of the ship. Bunkers are part of the ship and not
capable of independent arrest. In the event the bunkers belong to the
charterer against whom the Plaintiff has a maritime claim, the Plaintiff
has no remedy by way of arrest of bunkers and the Plaintiff must
pursue its claim against the charterer by adopting such other
remedies as are available in law. Any alleged lien over the bunkers
as provided in the bunker sales contract is of no consequence. It is a
contractual lien at best and does not bind a person who is not a party
to the contract. This does not give the Plaintiff any right to arrest the
bunkers on board the vessel nor does it entitle the Plaintiff to proceed
in rem against the bunkers.
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22 Moreover, there is no averment in the plaint as to how this
Hon'ble Court has jurisdiction to arrest bunkers or the source for this
Hon'ble Court to derive such jurisdiction. Mr. Priya submitted that the
changing global scenario should be kept in mind where there will be
so many parties involved in connection with a transaction and hence
this Court should extend the scope of arrest to bunkers on board.
I am afraid such a sweeping position cannot be taken. In fact in the
unreported judgment of this Court in the matter of Ishwar Overseas
FZE vs. The Bunkers on board the m.v. Yin Ning (Admiralty Suit
lodging No.2489 of 2009) dated 29th August, 2009, gives an indication
that this court would not have jurisdiction to arrest bunkers.
At paragraph 11, the Court has observed as under :-
"11. .............. However, the plaint allegations if read as
a whole, present a misleading picture and to say the
least, complete chain which would demonstrate how the
Plaintiffs' rights are vitally affect is not complete. There
are several matters which have not been brought to the
notice of this Court, including the fact that this Court
would not have jurisdiction to arrest the bunkers............."
23 The two orders of the Hon'ble High court of Calcutta relied
upon by the counsel for the Plaintiff do not lend any assistance
because both were ex parte orders and the issue of jurisdiction was
neither raised nor debated nor a finding rendered. In the case of
Proud Parents Investments Company vs. vessel m.v. Kea, the
12. APOT No.243 of 2011 dated 8.6.2011
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arrest order was granted simply on the basis of the statements and
averments made in the Plaint and the Hon'ble Court observed that
"as at the moment, in admiralty action one has to go by statements
and averments of the plaint and the petition...". In the case of Ray
Metal (Asia) Pte. Ltd. vs. m.v. DD Vigor, which was also an ex parte
order, Rules 1, 9 and 21 of the Admiralty Rules of the Hon'ble High
Court of Calcutta are referred to as permitting arrest of bunkers. On a
plain reading of the said Rules, it is clear that they do not even refer
to bunkers, much less permit arrest of bunkers. Consequently, the
said judgments are of no assistance of the Plaintiff.
24 Arrest of bunkers effectively results in arrest of the ship
although there is no claim against the shipowner. Thus the ship
owner, who is a third party, is seriously prejudiced and would suffer
substantial loss. Ordinarily Courts do not make an order that causes
serious prejudice to a third party. In such a situation, the interests of
the third party far outweigh the interests of a Plaintiff who is seeking
to secure its claim against the buyer of the bunkers. It is also no
answer for the Plaintiff's counsel to say in such a situation that it will
provide appropriate undertakings to compensate the ship owner for
detention of its vessel or that it is open to the ship owner to recover
charter hire from the charterer for the period the vessel is detained
13. GA No.3041 of 2011 & AS No.11 of 2011 dated 28.9.2011
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due to an order of arrest of bunkers. The English Court of Appeal in
the judgment of Galaxia Maritime S.A. vs. Mineral Import Export
and Ocean Blue Compania Naviera S.A.Galaxia Maritime S.A. has
also dealt with this argument including the submission that the ship
owner may well recover charter hire from the time charterer whose
bunkers are sought to be detained. On this, Eveleigh, L.J. And Kerr,
L.J., at page 799 and 800 said as under :-
"Eveleigh LJ. - But not only is the trading activity of the
third party interfered with in this case, but one does not
know what arrangements could be made by the
members of the crew, and perhaps others, for their own
movements after this vessel completes its voyage. At
this time of the year it is particularly relevant, it seems to
me, that this order may have the effect of interfering with
the Christmas of every single person on board and with
all their private arrangements.
I regard it as absolutely intolerable that the fact that
one person has a claim for a debt against another, that
third parties should be inconvenienced in this way, not
only to affect their freedom of trading but their freedom
of action generally speaking.
Kerr LJ. - But where the effect of service must lead to
interference with the performance of a contract between
the third party and the Defendant which relates
specifically to the assets in question, the right of the third
party in relation to his contract must clearly prevail over
the Plaintiff's desire to secure the Defendant's assets for
himself against the day of judgment.
However, even in cases of time charters, disputes
might well arise as to whether or not the vessel
remained on hire during the consequent delay. A
Plaintiff is not entitled, in my judgment to expose the
third party to the risk of such disputes merely by the
offer of an indemnity. He cannot, merely in order to
secure a benefit for himself, coerce the third party into a
14. (1982) 1 ALL ER 796
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serious risk of litigation or arbitration with the Defendant,
and thereafter possibly also with himself under the terms
of the proffered indemnity.
Where the effect of service of the injunction on the
third party substantially interferes with the third party's
business the rights of the third party must in my view
always prevail over the desire of the Plaintiff to secure
the ultimate recovery of debts or damages from the
Defendant with which the third party is in no way
concerned."
In a similar case the New Zealand Court in the case of
Gilfoyle Shipping Services Ltd. vs. Binosi Pty Ltd. decided on
19th December, 1983 by Barker, J. observed as under :-
".......... In my view, there would be an intolerable burden
on the owners; whilst one has every sympathy for the
Plaintiff which has given a lot of credit to a Defendant
which apparently does not intend to pay, that sympathy
must be outweighed by the inconvenience to the third
party."
25 A Court would certainly weigh the practical effects of
implementation of any order it makes particularly the difficulty
encountered in the realm of enforcement. An order of arrest of
bunkers can cause serious difficulty in implementation. Such an order
would require bunkers to be off-loaded from the vessel at the port
where the vessel is lying. Many vessels may not have facilities to
pump out bunkers. Many ports may not have fully fitted and equipped
barges available into which the bunkers can be discharged and
stored. The barges would have to be equipped with fire-fighting
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equipment in view of the hazardous nature of the bunkers. There
would be risk of oil pollution during discharge operations.
26 Discharge, storage and transportation of bunkers would
require appropriate permissions, licences and approvals under the
Petroleum Act, 1976 and the rules framed thereunder. The Plaintiff's
counsel in fairness agreed that the Customs permission would be
required and a special receiver of the bunkers would have to be
appointed for storage pending sale. As these are imported goods,
customs permissions would also be required for discharge and
storage under customs bond.
27 There are 13 major ports and over 50 active minor ports in
India engaged in commercial shipping activity and many of these may
not have facilities for discharge and storage of bunkers. Many of
these do not have the facility to provide bunkers to ships and this
would cause serious difficulty if bunkers are arrested and unloaded
from a ship. Such ships would effectively become dead ships and
cause serious threat to navigation in the port, apart from the
difficulties the Master and crew on board the same may face in the
absence of fuel to run the generators. If there is cargo on board, it
would also be exposed to serious risks of damage and deterioration
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depending on the nature of the cargo. All these impediments also
make it clear that an order of arrest of bunkers would face serious
difficulties in enforcement in Ports in India.
28 On the Plaintiff's submission of equity and justice, the
Plaintiff to seek such discretionary relief first has to establish that this
Court has jurisdiction to arrest bunkers on board a ship in which the
Plaintiff has failed. In my view, this Court does not have in rem
jurisdiction to arrest bunkers independent of ship.
29 Notice of Motion allowed in terms of prayer clause-(a) with
cost. The Plaintiff's to pay a sum of Rs.1,00,000/- as cost for this
Notice of Motion to the Defendant No.2 within four weeks.
30 At this stage, the counsel for the Plaintiff requests for stay
of the order. When this Court has held that it has no jurisdiction, the
question of granting any stay does not arise.
(K.R.SHRIRAM,J)
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