Bombay High Court
Crown Maritime Co (I) Ltd ... vs Barge Salina Ii, Vessel And Anr on 18 February, 2021
Bench: K.R. Sriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
ADMIRALTY SUIT NO. 36 OF 2007
Crown Maritime Co. (I) Ltd.,
a company incorporated under the
Laws of India and having its
registered office at B-3201, 32nd Floor,
Gokul Concorde, Thakur Village,
Kandivali (E), Mumbai - 400 101.
Represented by the Official Liquidator
attached to the Bombay High Court ...Plaintiff
Versus
1. Barge "Salina II", Vessel flying the
Indian Flag together with her hull,
gear, tackles, machinery, apparel,
furniture, equipments, and all and
other paraphernalia, presently lying
in the Port and Harbour of Mumbai,
within the territorial waters of India
and within the Admiralty Jurisdiction
of this Hon'ble Court. ...Defendant No.1
2. Sadhana Technical Works Pvt. Ltd.
is a company incorporated under the
laws of India and having its registered
office at 401/2/3, 4th Floor, Rex Chambers,
Walchand Hirachand Marg, Fort,
Mumbai - 400 001. ...Defendant No.2
----
Ms. Shweta Sadanandan i/b Mr. Ashwin Shanker for Plaintiff (In
Liquidation).
Mr. Manoj Khatri for Defendants.
----
CORAM : K.R.SHRIRAM, J.
DATED : 18th FEBRUARY 2021.
ORAL JUDGMENT :
1. This is a suit filed by plaintiff claiming a sum of Rs.98,23,397/-
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as per Particulars of Claim at Exhibit A, which reads as under :
Exhibit A
Particulars of Claim
1. Rs.98,23,397.00 (Rupees Ninety Eight Lakhs Twenty Three
Thousand Three Hundred And Ninety Seven Only), payable to the
Plaintiff, by the Defendant's, under the said "TOWCON"
Agreement, dated 31-07-2007, towards the following :
a. Demurrage, payable @ : Rs.96,00,000/-
Rs.3,00,000/- (Per Day),
from 03-08-2007, until filing
of the said Plaint, aggregating
to.
b. Anchorage charges. : Rs.9,860/-
c. Light Dues. : Rs.352/-
d. Port Dues : Rs.36,685/-
e. Accommodation for the : Rs.51,000/-
Defendant No.2's staff.
f. Food for the Defendant : Rs.25,500/-
No.2's staff
g. Damages caused by the : Rs.1,00,000/-
Defendant No.1, to the
Plaintiff's vessel.
GRAND TOTAL : Rs.98,23,397.00
(Rupees Ninety Eight Lakhs
Twenty Three Thousand
Three Hundred And Ninety
Seven Only)
2. Plus further interest @ 15% p.a. on the sum of Rs.98,23,397.00
(Rupees Ninety Eight Lakhs Twenty Three Thousand Three
Hundred And Ninety Seven Only) from the date of filing of the suit
till payment and/or realisation ;
3. PLUS COSTS.
2. As regards items (b) to (g) there is no evidence. No submissions
were also made. Plaintiff's counsel's arguments were restricted to item (a).
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3. It is plaintiff's case that plaintiff had entered into a "TOWCON"
Charter Party dated 31st July 2007 with defendant no.2 whereby plaintiff
agreed to tow defendant no.1 Barge Salina II, a dumb barge, from Mumbai
to the Port of Kakinanda for a lumpsum payment of Rs.79,00,000/-.
Plaintiff was to use one of its tug M.V. Crown - 1 to tow defendant no.1.
Plaintiff has relied upon the following clauses in support of its claim :
Clause 32 (Part I) : Lump sum towage price (also state when each
installment due and payable) (cl.2)
Clause 27 (Part I) : Free Time at Place of Destination (Cl.2 (g) 24
hrs.)
Clause 39 (Part I) : Number of additional clauses, covering special
provisions if agreed. (All Port dues, other statutory charges and
demurrage @ Rs.3,00,000/- per day on Hirer's account)
Price and Conditions of Payment Clause - 2 (c), 2 (f) and 2 (g)
(Part III)
2(c) The Lump Sum and all other sums payable to the Tugowner
under this Agreement shall be payable without any discount,
deduction set-off, lien, claim or counter-claim, each installment of
the Lump-sum shall be fully and irrevocably earned at the moment
it is due as set out in Box, 32. Tug and/or Tow lost or not lost and
all other sums shall be fully and irrevocably earned on a daily
basis.
2(f) Any delay payment due under this Agreement shall be paid to
the Tugowner as and when earned on presentation of the Invoice.
2(g) The Free Time specified in Boxes 26 and 27 shall be allowed
for the connecting and disconnecting of the Tow and all other
purposes relating thereto. Free Time shall commence when the Tug
arrives at the pilot station at the place of departure or anchors or
arrives at the usual waiting area off such places. Should the Free
Time be exceeded, Delay Payment(s) at the rate specified in Box 29
shall be payable until the Tug and Tow sail from the place of
departure or the Tug is free to leave the place of destination.
Permits and Ceritification - Clause 11 (Part II)
(a) The Hirer shall arrange at his own cost and provide to the Tug
owner all necessary licenses, authorizations and permits required
by the Tug and Tow to undertake and complete the contractual
voyage together with all necessary certification for the Tow to
enter or leave all or any ports of call or refuge on the contemplated
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voyage.
(b) Any loss or expenses incurred by the Tugowner by reason of the
Hirer's failure to comply with this Clause shall be reimbursed by
the Hirer to the Tugowner and during any delay caused thereby the
Tugowner shall receive additional compensation from the Hirer at
the Tug's Delay Payment rate specified in Box 29.
4. According to plaintiff, the tow line had been connected on 1st
August 2007 when the 24 hours free time as per Clause No. 2(g) of the
Charter Party commenced, the free time got over on 2 nd August 2007 and
therefore, Tug Crown I went on demurrage as per box 39 of the Charter
Party at Rs.3,00,000/- per day commenced. According to plaintiff the delay
was solely attributable to delay on the part of defendant no.2 in obtaining
necessary permission. It is plaintiff's case that in terms of Clause No.11 of
Part II of the Charter Party, defendant no.2 being hirer shall be required to
arrange at its own cost and provide to plaintiff all necessary permissions
required by the Tug and Tow to undertake and complete the contractual
voyage. The permission was required to be obtained from Mercantile Marine
Department, Mumbai for certifying the Tug and Tow as seaworthy and the
sailing permission was to be obtained from the office of the Directorate
General of Shipping (DGS). According to plaintiff, relying upon Clause
No.11 as quoted above, the permission of Mercantile Marine Department
(MMD) and later of DGS was to be applied and obtained by defendant no.2.
Plaintiff state that they have validated all necessary certificates and
approvals required to ply in the territorial waters of India. Ms. Sadanandan
submitted since defendant failed to obtain the necessary permission, as DGS
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was not giving permission in view of the prevailing weather conditions, the
entire contract had to be abandoned. Plaintiff is claiming demurrage of
Rs.3,00,000/- per day from 3rd August, 2007 until filing of the plaint. It is
not clear when the two line was disconnected but plaintiff is claiming
Rs.3,00,000/- per day upto the date of the suit. There is no explanation
why it was payable upto the date of the suit.
5. Admittedly, in accordance with the contract defendant no.2 had
given advance of Rs.40,00,000/- to plaintiff. Defendant had filed a counter
suit which came to be dismissed for default. Mr. Khatri said as plaintiff had
gone into liquidation, defendants decided not to apply for restoration of the
counter suit.
6. By letter dated 22nd August, 2007, DGS rejected Mercantile
Marine Department's recommendations to grant necessary towage
permission and asked them to put forth the request upon the monsoon
receding. Upon receiving the said letter, plaintiff by its letter dated 23 rd
August, 2007 (Exh.P-1/13) requested defendant no.2 to disconnect
defendant no.1 vessel from the Tug and move first defendant vessel to safer
anchorage until towing was permitted. None of the counsel were able to
state the date when the Tow was disconnected from the Tug. There were
communications exchanged between plaintiff and defendant no.2 making
allegations and counter allegations. The suit came to be lodged thereafter
on 3rd September 2007.
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7. Plaintiff obtained on 3rd September 2007 an order of arrest of
defendant no.1 vessel and security was furnished by defendant no.2 for
release of defendant no.1. In the counter suit defendant no.2 had arrested
plaintiff's vessel Crown I and plaintiff had furnished security for release of
Crown I.
8. By Consent Terms which were filed on 5th May, 2009 the order
of arrest dated 3rd September, 2007 was unconditionally vacated and set
aside and the security furnished for release of defendant no.1 was ordered
to be returned to advocate for defendants.
9. Defendant No.2 has filed written statement for itself and for
defendant no.1, and broadly, the defence taken are ;
a. This court does not have jurisdiction. [Mr. Khatri
stated he was not pressing this];
b. Plaintiff's Tow was unfit and unseaworthy for towage
as MMD surveyor pointed out various deficiencies in
plaintiff's tug;
c. Frustration of contract because the Directorate
General of Shipping declined to grant permission.
10. Issues were framed on 11th August, 2017 as under :
1) Whether this Court has jurisdiction to entertain and
try the present suit in view of the exclusive jurisdiction
clause in the Towage Contract Agreement entered into
by both the parties?
2) Whether plaintiff proves that the vessel Crown I was
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fit and seaworthy to undertake the towage of the
defendant Barge Salina II between 1st August, 2007 and
9th August, 2007 as per the Towage Agreement?
3) Whether defendants prove that plaintiff had
undertaken to obtain necessary permissions and
approvals?
4) Whether defendants prove that the Towage
Agreement was frustrated on account of lack of
necessary permission/ approval from the Statutory
Authorities and therefore the contract between the
parties stands void?
5) Whether plaintiff proves that they are entitled to
claim for demurrage from defendant?
6) If the answer to issue no.5 is in the affirmative,
whether plaintiff is entitled to a decree against
defendants jointly and/or severally for the sum of
Rs.98,23,397/- together with interest thereon at 15%
p.a. from the date of the suit until payment/realisation?
7) What decree? What order?
11. In view of Mr. Khatri's statement that he is not challenging the
jurisdiction, Issue No.1 has to be answered in the affirmative.
12. Plaintiff and defendants filed their respective affidavit of
documents and compilations. Plaintiff filed evidence of two witnesses, one
Samuel Bobby and Sujathan Kottapuram, but relied only on evidence of
Sujathan Kottapuram who was also the only witness made available to be
cross-examined. Defendants led evidence of one Kishore Gambani who was
cross-examined by plaintiff.
13. I have heard the counsels and also considered the pleadings,
evidence and documents in the matter. Ms. Sadanandan in fairness admitted
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that obligation to apply for permission to Mercantile Marine Department,
Mumbai was on plaintiff by simply filing the requisite applications.
Ms. Sadanandan hastened to add to ensure that the authorities are mollified
and permission was granted was on defendant no.2. Defendant stated that
plaintiff took it upon themselves to apply and obtain necessary permissions
and if plaintiff failed to obtain these permissions, defendant cannot be held
liable. On this issue questions were also asked in cross-examination by
plaintiff's counsel to defendant's witness Mr. Kishore Gambhani. Question
No.7, 8, 9, 10, 11, 13, 14, 15, 18, 19, 20, 21, 22 and 23 and the answers
thereto are pertinent and read as under :-
Q.7. According to you were there any mutually agreed
amendments made to the subject Charter Party ?
Ans. We have not made any written amendments to this
Charter Party but, we have verbally agreed that Plaintiff will
take the necessary towage permission from the respective
authorities for this particular towage.
Q.8. Is there any clause provided under the subject Charter
Party for written/verbal amendment? If yes, can you identify ?
Ans. As mentioned earlier, the clauses can be amended
mutually and same can be attached to this contract as
additional clauses. This is as per Box No.39 of the Charter
Party Agreement.
Q.9. I put it to you that there is no clause provided under the
subject Charter Party for written/verbal amendment?
Ans. I disagree. As earlier mentioned even verbally we can
agree to amend the clauses.
Q.10. Would it be correct to say that the subject Charter Party
is used widely in the towage industry?
Ans. Yes.
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Q.11. Would it be correct to say that generally the Tug hirer
obtains the necessary authorisations from the MMD from
undertaking a Tow voyage?
Ans. It depends on the agreed terms. The general practice is
that the Tug Owner who is going to tow the Barge takes the
necessary approvals from MMD/DG Shipping.
Q.13. Was an MMD surveyor appointed to inspect Tug and
Tow for issuance of towing certificates?
Ans. Yes, it was arranged by Tug owner.
Q.14. Would it be correct to say that under the prevailing
MMD rules the formal application is required to be made by
the Tug Owner?
Ans. Yes.
Q.15. Can you point out from the proceedings, that a MMD
surveyor was required to be arranged by the Tug Owner in the
present case?
Ans. There is nothing on record to show. But, it was verbally
agreed and that is how the tug Owner had made applications
to MMD for approval of towage.
Q.18. What documents relied upon by the Plaintiff made it
evident that it was the Plaintiff who had applied for the
permission of the towage?
Ans. In document marked as Exhibit P-1/13, it states that
Plaintiff has approached MMD for towing permission. Also
the documents at Exhibit P-1/3 and P-1/12 also shows the
same.
Q.19. What is the basis of your belief that the Plaintiff was to
obtain the necessary licenses, authorisations and permits
required by the Tug and Tow to undertake the voyage?
Ans. The application of towage to the MMD was made by
Plaintiff that is the basis of my belief.
Q.20. Would it be correct to say that there is no clause in the
Charter Party Contract to suggest that parties can vary the
terms by their conduct?
Ans. No, it is incorrect. There is a box 39 in the Charter Party
where we can put additional clauses. In this particular Charter
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Party we have not put any additional clauses but verbally we
had agreed that the towage approval from respective
authorities will be obtained by the tug owner.
Q.21. Who was the person orally communicating this
information from the Defendant No.2's side and who was
communicated to?
Ans. I was communicating with Capt. Suresh Kumar of the
Plaintiff.
Q.22. When was this information communicated?
Ans. I do not remember the exact date, but it was during the
final negotiations of Charter Party.
Q.23. Have you made a reference to this "oral agreement" in
your Written Statement?
Ans. Yes. It is at Page No.37 of the Written Statement, para 3,
under the tittle "Frustration of Contract" particularly sub-para
(a). The reference is extracted below :
"The Performance of the said TOWCON Agreement was
dependent upon necessary permission/approvals from the
Statutory Authority. It is the Plaintiff who undertook the
responsibility of getting necessary permission/approval and in
furtherance applied to MMD for towing permission."
14. In my view, reading the questions asked and the answers
thereto and the statement made by Ms. Sadanandan as recorded earlier,
even though printed clause no.11 provided for the hirer (defendant) to
arrange for necessary licenses, authorisation and permits required by the
Tug and Tow to undertake and complete contractual voyage, plaintiff, the
Tug owner, had assumed based on the understanding between the parties,
the responsibility to apply for and obtain all necessary licenses,
authorisation and permits. To a specific question by plaintiff in the cross-
examination, D.W. 1 states that it was verbally agreed with Captain Suresh
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Kumar of plaintiff. Plaintiff could have got Captain Suresh Kumar to give
rebuttal evidence to the answers given by D.W. 1, but plaintiff chose not to
do so. Therefore, considering the questions and answers as noted above,
parties had orally agreed that it will be plaintiff who shall apply for and
obtain all necessary licenses, authorisation and permits required by the Tug
and Tow to undertake and complete the contractual voyage. The obligation
was on plaintiff to obtain the necessary licenses, authorisation and permits.
Defendant cannot be blamed for DGS not accepting the recommendation of
MMD to grant the licenses or authorisation or permits for the voyage.
15. In any event, these licenses and authorisation were given by
Mercantile Marine Department on 16th August, 2007 (Exh.B-1/13) but
Directorate General of Shipping refused permission for the tug and tow to
take the voyage in view of the foul season.
16. Now let us consider, whether, if the permits or authorisations
were available, the Tug and Tow could have made the contractual voyage ?
Clause No.13 of Part II of the Charter Party provides for
seaworthiness of the Tug and it reads as under :
Clause 13 Seaworthiness of the Tug
The Tugowner will exercise due diligence to tender the Tug at the
place of departure in a seaworthy condition and in all respects
ready to perform the towage, but the Tugowner gives no other
warranties, express or implied.
Plaintiff has relied upon Exh.P-1/9 and P-1/12 which of course
have also been relied upon by defendants at Exh. D-8 and Exh. D-11. P-1/9
is a hand written document.
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Ms. Sadanandan and Mr. Khatri state that Exh.P-1/9 has been
hand written and issued by the Mercantile Marine Department surveyor. It
will be useful to reproduce the said letter which reads as under :
U/signed boarded m.v. Crown-I at ............ on 9/8/2007 for
towage permission for ............... from Mumbai to Kakinada.
Following deficiencies observed. Same need to be rectified before
towage permission can be recommended to DGS.
1. Steering Gear System of Crown-I is not functioning properly.
On hand steering when held to any side is given to say Port or stbd
10 degrees suddenly shows hard (25 deg) Port or stbd.
2. Navigational charts for the intended voyage to Kakinada are not
corrected up to date.
3. Passage Planning for the voyage is not ready.
4. Mr. V. Victor Chief Officer of the V/L is of more than 65 years of
age (DOB 20.04.1942). No age dispensation has been sought for
him.
5. In FSI Report dated 6/6/07 four numbers of deficiencies were
given code 17 are still not closed/rectified.
6. 7 Nos. of officers/crew Articles of agreement have not been
opened.
7. Boarding facility is not provided on the side of the tow.
8. Tow does not have 0.8% of the length trim by stern.
9. V/L (Tow) Stability Booklet and General Arrangement Plan has
only one crane fitted where as tow is fitted with additional 3 Nos.
containers on deck as cargo/equipment. Strength of the fastenings
of crane not calculated.
10. V/L to rectify deficiencies before departure
Sd/-
Item 1 to 6 above admittedly pertain to the defects on the tug
Crown I which was owned by plaintiff. In fact, plaintiff in its letter dated
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13th August, 2007 addressed to Mercantile Marine Department (Exh.P-1/12)
has admitted the deficiencies of the Tug as noted in Exh.P-1/9 and state that
these deficiencies have been rectified. Therefore, (a) plaintiff was in breach
of Clause 13, Part II, of the Charter Party and (b) the deficiencies on the Tug
were rectified and Mercantile Marine Department was informed only on
13th August, 2007.
17. Of course, there were some deficiencies on the Tow also as
noted at Sr. No.7, 8 and 9 of Exh.P-1/9. But by 13 th August, 2007 as per
plaintiff's case in Exh.P-1/12 even these deficiencies in the tow have been
rectified. Therefore, plaintiff cannot blame defendant alone for non
performance. Mercantile Marine Department recommended by its letter
dated 16th August 2007 (Exh.P-1/13) to DGS for grant of towing permission
which admittedly was not granted in view of foul season. At the same time
what has to be noted is it was not rejected but MMD was advised to apply
again after monsoon receded (Exh. P-1/17).
In the circumstances, plaintiff cannot place the blame at the
doors of defendant no.2.
18. Mr. Khatri for defendants submitted that in view of the
admitted position that the Directorate General of Shipping refused to grant
permission for the voyage (Exh. P-1/7), the contract became void. Mr. Khatri
relied on Section 56 of the Indian Contract Act, 1872 which read as under ;
56. Agreement to do impossible act.--An agreement to do an act
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impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful. A
contract to do an act which, after the contract is made, becomes
impossible, or, by reason of some event which the promisor could
not prevent, unlawful, becomes void when the act becomes
impossible or unlawful.
Compensation for loss through non-performance of act known to
be impossible or unlawful.--Where one person has promised to do
something which he knew, or, with reasonable diligence, might
have known, and which the promisee did not know, to be
impossible or unlawful, such promisor must make compensation to
such promisee for any loss which such promisee sustains through
the non-performance of the promise.
19. Mr. Khatri states that in view of the refusal of the permission by
DGS the act to be performed under the contract, after the contract was
made, became impossible by reason of the permission being refused by DGS.
Therefore, the contract had become void. As illustration Mr. Khatri submits
that A contracts to take in cargo for B at a foreign port. A's Government
afterwards declares war against the country in which the port is situated.
The contract becomes void if war is declared.
20. Mr. Khatri submits, assuming without admitting, that it was
defendant's responsibility to arrange and provide necessary licenses,
authorisation and permits required by the tug and tow to undertake and
complete the contractual voyage, DGS even on a recommendation made by
the Mercantile Marine Department refused the permission in view of the
foul season. Therefore, it became impossible to obtain permission required
by the tug and tow for the voyage and hence contract had become void.
21. Ms. Sadanandan submitted in response to this argument by
Mr. Khatri that the agreement was terminated by plaintiff under Clause
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No.16 of the Charter Party which gave option to plaintiff to withdraw from
the agreement if there was a delay on the day of departure exceeding
21 running days.
22. Even for a moment if I agree with the submissions of Ms.
Sadanandan that plaintiff was entitled to rely on Clause 16 to withdraw the
vessel, document Exh.P-1/17, which is a communication from DGS to
Mercantile Marine Department, would indicate that the contract was not
impossible of performance. Exh.P-1/17 shows that the permission required
has been denied keeping in view of the monsoon conditions prevailing and
MMD was advised to place the matter for consideration in case required,
once the monsoon receded. Therefore, in my opinion, the contract had not
become frustrated or void as submitted by Mr. Khatri.
23. One thing is certain that plaintiff is equally to be blamed for the
delay as the plaintiff, as noted earlier, did not make the tug available in a
seaworthy condition.
24. Ms. Sadanandan submits that plaintiff's obligation was only to
exercise due diligence to tender the tug in a seaworthy condition. But the
admitted fact is the tug was not so tendered and plaintiff had not exercised
due diligence as could be seen from Exh.P-1/9 read with Exh.P-1/12 which
was plaintiff's communication to Mercantile Marine Department.
I need to add Ms. Sadanandan wanted to rely on Exh.P-1/19
but later said she was not relying on the document as it was illegible and
plaintiff did not have a readable copy.
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25. In the circumstances, plaintiff is not entitled to any damages as
claimed. Therefore, Issue Nos.2, 3, 4, 5 and 6 are answered as under :
Issue No.2 : Negative
Issue No.3 : Affirmative
Issue No.4 : Negative
Issue No.5 : Negative
Issue No.6 : Negative
Issue No.7 : Suit dismissed. No order as to costs.
(K.R. SHRIRAM, J.)
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