Sapura Dana Spv Pte. Ltd vs Kreuz Subsea Pte Ltd And Anr
2023 Latest Caselaw 815 Bom

                                                     IAL-8108-2021INCOMAS21-2021.DOC

                                                                                Santosh
                           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                            ADMIRALTY AND VICE ADMIRALTY JURISDICTION
                                      IN ITS COMMERCIAL DIVISION

                                INTERIM APPLICATION (L) NO. 8108 OF 2021
                                                  IN
SANTOSH                           COMM ADMIRALTY SUIT NO. 21 OF 2021
SUBHASH
KULKARNI
Digitally signed by
SANTOSH
                      SAPURA DANA SPV PTE. LTD.                          ...Applicant
SUBHASH
KULKARNI              In the matter between
Date: 2023.01.27
18:18:47 +0530
                      KREUZ SUBSEA PTE LTD.                                ...Plaintiff
                                            Versus
                      BARGE SAPURA 2000 (MMSI NO.533130084)              ...Defendant

                      Mr. Prathamesh Kamat, a/w Shailesh Poria, Mr. Hrishikesh
                            Shukla, i/b Economic Laws Practive, for the Applicant/
                            Defendant.
                      Mr. Prashant Pratap, Senior Advocate, a/w Ms. Bulbul Singh
                            Rajpurohit, for the Plaintiff.


                                               CORAM:      N. J. JAMADAR, J.

                                               DATED :     24th JANUARY, 2023
                      ORDER:-

                      1.   Sapura   Dana SPV PTE.         Ltd.   ("Sapura Dana"),    the

registered owner of Barge Sapura 2000 (MMSI No.533130084),

the defendant - vessel, has preferred this application seeking a

declaration that the order of arrest of the defendant - vessel

dated 29th April, 2020, was wrongfully obtained and for refund

of the security of Rs.1,48,35,823.75 deposited by the applicant

on 30th April, 2020 for the release of the defendant - vessel,

alongwith the interest accrued thereon.

IAL-8108-2021INCOMAS21-2021.DOC

2. Background facts leading to this application can be stated

in brief as under:

(a) Kreuz Subsea PTE Ltd. ("Kreuz"), the plaintiff, is a

company incorporated under the Laws of Singapore. The

plaintiff is engaged in the business, inter alia, of providing

integrated subsea services to the offshore oil and gas industry.

The defendant - vessel is a Derrick Pipelay Barge flying the flag

of Malaysia. Sapura Dana is the registered owner of the

defendant - vessel.

(b) The plaintiff claims defendant - vessel is beneficially

owned by Sapura Energy Berhad. The latter is also the

Commercial Operator and Technical Manager of the defendant -

vessel. Sapura Energy group owns and controls many

subsidiaries around the world including Sapura Offshore SDN

BHD ("Sapura Offshore"), a 100% subsidiary of Sapura Energy.

(c) On 18th December, 2018 Sapura Offshore had placed

an order for supply of Reel Drive Unit ("RDU") with chute on

rental basis alongwith deployment of personnel and technicians

for operating the same. It was followed by a revised service order

dated 22nd May, 2019. Pursuant to the service order, the

plaintiff supplied the equipment and personnel to the defendant

- vessel, which utilized the same for its operations. On 24 th

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June, 2019, post a notice to invoice, a payment certificate was

issued by Sapura Offshore approving payment of US$ 410,

370.50. On the strength of the Payment Certificate the plaintiff

raised invoice dated 24th June, 2019 in the said sum of US$

410,370.50. Sapura Offshore failed to make the payment.

(d) In view of the default in the discharge of the liability,

the plaintiff instituted the suit for recovery of US$ 174,825 for

the charges for the use of the equipment and utilization of the

services of the personnel by the defendant - vessel, alongwith

the interest and cost. But for the equipments and the services

rendered by the personnel deployed by the plaintiff, the

defendant - vessel could not have been able to undertake her

operations for the project as it would not have been able to lay

cables in subsea waters. The plaintiff further avers Sapura

Offshore was an agent of Sapura Dana and it had expressly

warranted that it had authority from the defendant - vessel and

its owner to pledge the defendant - vessel's credit.

(e) With the aforesaid averments, the plaintiff moved for

the arrest of the defendant - vessel whilst it was at an

anchorage of the Port of Mumbai. By an order dated 29th April,

2020, this Court, finding a prima facie case, directed the arrest

of the defendant - vessel.

IAL-8108-2021INCOMAS21-2021.DOC

(f) On the following day, the defendant moved for

release of the vessel by depositing security amount in terms of

the Judge's Order, without prejudice to its rights and

contentions and admitting any liability. Thereupon the

defendant - vessel came to be released from arrest.

(g) Sapura Dana, the applicant, has preferred this

application contending that the arrest of the defendant - vessel

was wholly unjustified and patently wrongful. According to the

applicant, the plaintiff approached the Court with a case that

the defendant - vessel is beneficially owned by Sapura Engery

and Sapura Offshore is a 100% subsidiary of Sapura Engery,

and that Sapura Offshore had expressly warranted that it had

authority from defendant - vessel, its owner, to pledge the

defendant's credit.

(h) The applicant contends none of the aforesaid

assertions justified the arrest of the defendant - vessel as it is

indubitable that the Sapura Dana is the registered owner of the

defendant - vessel and the equipments and personnel were not

supplied pursuant to the contract between the plaintiff and

Sapura Dana. Thus the applicant has sought the refund of

security on two broad grounds. First, the plaintiff has no

maritime claim against the defendant - vessel and/or the

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applicant. Second, in the absence of such maritime claim, the

defendant - vessel could not have been arrested for an in

personam action against Sapura Offshore.

3. On the first count, the applicant contends, there was no

contractual or other jural relationship between the plaintiff and

the defendant - vessel and/or its registered owner. In the

absence of a claim against the Sapura Dana in personam the

plaintiff could not have proceeded against the defendant - vessel

in rem. Nor there is any material to show that Sapura Offshore

acted on behalf of or with the authority of the defendant -

vessel. The liability, if any, to the plaintiff is that of Sapura

Offshore and not the registered owner of the defendant - vessel.

In any event, the services purportedly rendered by the plaintiff

were for the benefit of the project and not for the defendant -

vessel. Consequently, the purported dues do not fall within the

ambit of the definition of maritime claim.

4. On the second count, the applicant asserts under the

Admiralty (Jurisdiction and Statement of Maritime Claims) Act,

2017 ("the Admiralty Act, 2017"), beneficial ownership arrest is

not contemplated. Thus the order of arrest obtained by the

plaintiff on the basis of the purported beneficial ownership is

plainly wrongful. Even otherwise, the plaintiff's claim of

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beneficial ownership is based on an incorrect understanding of

the Indian law whereunder every corporate entity is a separate

legal entity distinct from its shareholders, directors and other

companies.

5. In the alternative, whilst denying that Sapura Energy is

the beneficial owner of the defendant - vessel, the applicant

contends, arrest of the defendant - vessel even on the premise

that Sapura Energy is its beneficial owner is not sustainable as

the plaintiff does not have any claim much less a maritime claim

against Sapura Energy. Looked at from any perspective,

according to the applicant, the arrest of the defendant - vessel

was wrongfully obtained and, therefore, the security furnished

by the applicant is liable to be returned.

6. An affidavit-in-reply is filed on behalf of the plaintiff. It

primarily proceeds on denial of the contentions raised by the

applicant. The plaintiff avers the edifice of the applicant's case

is rested on a complete misconstruction of the plaintiff's case.

Refund of the security is sought by projecting a case which the

plaintiff had not pleaded. Moreover, there is no denial of the

fact that the equipments were supplied and services were

rendered by the plaintiff for the defendant - vessel.

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7. The plaintiff asserts the equipments supplied by the

plaintiff were necessary to equip the defendant - vessel to lay

wires/cables on subsea waters under the project. This gives

rise to and constitutes a maritime claim. Therefore, the

plaintiff's claim falls under the scope and ambit of Section 4(1)(l)

of the Admiralty Act, 2017.

8. It is further asserted that the plaintiff's case is not based

on beneficial ownership alone. In any event, according to the

plaintiff, group companies or holding/subsidiary companies are

treated as a single economic unit if the facts and circumstances

so warrant, as they do in the instant case.

9. Lastly, the plaintiff asserts since the application is in the

nature of an application for the rejection of the plaint under

Order VII Rule 11 of the Code of Civil Procedure, 1908 ("the

Code") and the averments in the pliant make out a prima facie

case, the application does not deserve to be entertained.

10. In the wake of the aforesaid pleadings, I have heard Mr.

Kamat, the learned Counsel for the applicant and Mr. Pratap,

the learned Senior Advocate for the plaintiff, at considerable

length. The learned Counsel took the Court through the

pleadings and the documents placed on record. Reliance was

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also placed on a number of precedents to substantiate their

respective contentions.

11. Mr. Kamat took a slew of exceptions to the order of arrest.

First and foremost, according to Mr. Kamat, with the

enforcement of the Admiralty Act, 2017, the defendant - vessel

could not have been arrested sans a maritime claim against

Sapura Dana, its registered owner. According to Mr. Kamat,

what accentuates the situation is the fact that the plaintiff knew

all along that Sapura Dana was the registered owner of the

defendant - vessel and there was no privity of contract between

the plaintiff and Sapura Dana. Thus, in the absence of a

maritime claim against the owner of the defendant - vessel in

personam, the plaintiff could not have moved to arrest the

defendant - vessel in rem.

12. Attention of the Court was invited to the service orders

and the invoice raised by the plaintiff. In none of these

documents, there is a reference to Sapura Dana. Thus, the

absence of privity of contract between the plaintiff and applicant

is writ large. Mr. Kamat would further urge that absence of

maritime claim against a person who is the owner of the

defendant - vessel renders the arrest in violation of the twin test

envisaged by Section 5(1)(a) of the Admiralty Act, 2017.

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13. To bolster up the submission that personal liability of the

owner of the vessel under Section 5(1)(a) is a sine quo non, Mr.

Kamat placed reliance on the judgments of the Gujarat High

Court in the cases of Zatrix Limited Vs. MV Nikiforos1, MV Silvia

Glory (IMO 9622942) vs. Bulk Marine Pvt. Ltd. 2, the judgment of

the Hyderabad High Court in the case of Monjasa DMCC & ors.

vs. MV Kiveli3, the judgment of the Supreme Court in the case of

Chrisomar Corporation vs. MJR Steels Pvt. Ltd. 4 and the

judgment of a learned Single Judge of this Court in the case of

M. V. Flag Mersinidi vs. Georim Oil Corporation5.

14. Mr. Kamat nextly urged that, in the case at hand, the test

for granting and now sustaining the order of arrest has not

been made out. It was urged that the plaintiff in an admiralty

action is required to make out a prima facie case for arrest of

the vessel. Over a period of time, the distinction between

"reasonably arguable best case", "and", "prima facie case" has

disappeared and it has been progressively held that the

"reasonably arguable best case" amounts to no more than a

prima faie case. To buttress this submission Mr. Kamat placed

1 Appeal No.18/2018 in Admiralty Suit No.37/2017, dt.6/3/2020. 2 CA1/2019 in Admiralty Suit No.11/2019 dt.26/6/2019.

4     (2018) 16 SCC 117.
5     2014 SCC Online Bom 479.

                                    IAL-8108-2021INCOMAS21-2021.DOC

a strong reliance on the Division Bench judgment of this Court

in the case of M/s. Kimberly - Clark Lever Private Ltd. vs. MV

Eagle Excellence6.

15. On the touchstone of the aforesaid legal premise,

according to Mr. Kamat, the plaintiff has miserably failed to

demonstrate a prima facie case, which would justify the arrest

of the defendant - vessel.

16. Thirdly, Mr. Kamat submitted that even if the case of the

plaintiff is taken at par, it would not fall within the ambit of a

maritime claim. Banking upon the service order Mr. Kamat

submitted that the services were to be provided for Sapura

Offshore. Thus the plaintiff cannot be said to have supplied the

material or rendered the services to the defendant - vessel.

Resultantly, the claim would not fall within the ambit of Clause

(l) of Sub-section (1) of Section 4, which the plaintiff wants the

Court to believe.

17. Fourth, the claim of the plaintiff that the services were

rendered on the basis of the representation of Sapura Offshore

that it was acting for and on behalf of the defendant - vessel

and its registered owner is ex facie bald and not borne out by

the documents pressed into service by the plaintiff. Mr. Kamat

6 Appeal No.240/2007 in NMS/2346/2006 in Admiralty Suit No.12/2006.

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made an endeavour to draw home the point that though the

instant application cannot be said to be for rejection of the

plaint under Order VII Rule 11 of the Code yet it is trite that

while evaluating whether the plaint discloses a cause of action

the Court is enjoined to consider the documents annexed with

the plaint and not mere avements in the plaint. In order to lend

support to this submission Mr. Kamat placed a strong reliance

on the judgment of the Supreme Court in the case of Dahiben

vs. Arvindbhai Kalyanji Bhanusali (Gajra) dead through Legal

Representatives and others7

18. Lastly, the case of beneficial ownership of the defendant -

vessel and the disparate attempt to justify the arrest on the said

premise, is legally unsustainable. In law, with the enactment of

the Admiralty Act, 2017 no beneficial arrest is permissible.

There was thus no warrant for arresting the defendant - vessel

on the premise that the person who owes the liability was the

beneficial owner of the vessel, where the registered owner owes

no obligation. On facts, according to Mr. Kamat, there is no

shred of material to demonstrate that either Sapura Offshore, or

for that matter, Sapura Energy beneficially owned the defendant

- vessel. A strenuous submission was advanced by Mr. Kamat

that no case was made out for lifting the corporate veil. A

7 (2020) 7 Supreme Court Cases 366.

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number of judgments were sought to be relied upon to draw

home this point.

19. Per contra, Mr. Pratap, the learned Senior Advocate would

urge that reference to any of the judgments cited by the parties,

is, in the facts of the case, unwarranted. A two-fold submission

was canvased by Mr. Pratap. First, the entire exercise on the

part of the applicant was to construct a case, for the plaintiff,

which has not been, in fact, pleaded and then demolish the

same. Second, there is no denial of the case which the plaintiff

has, in fact, pleaded. If the application is to proceed on a

demurer, which the application must, at this stage, and in this

proceeding, it cannot be said that no prima facie case is made

out. Therefore, according to Mr. Pratap, the intricate issues

sought to be urged by Mr. Kamat do not warrant determination

in this case and deserve a better cause.

20. Mr. Pratap submitted with tenacity that the contention of

the applicant that the services rendered by the plaintiff do not

fall within the meaning of maritime claim as defined under

Clause (l) of Section 4(1) of the Admiralty Act, 2017 is based on a

incorrect understanding of the import of the said clause. Mr.

Pratap would urge that Clause (l) is not restricted to the

provisions which are necessary for rendering the vessel

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seaworthy but subsumes in its fold the supplies and services

rendered to the vessel for its operation and management. To this

end, Mr. Pratap placed reliance on the judgment of the Supreme

Court in the case of Liverpool & London S.P. & I. Association

Ltd. vs. M. V. Sea Success I and Another8.

21. Mr. Pratap made an earnest endeavour to meet the

challenge of absence of contractual relationship, between the

plaintiff and the applicant, by canvassing a twin submission.

One, there are more than adequate averments in the plaint to

the effect that Sapura Offshore acted for and on behalf of the

defendant - vessel and its owner and defendant - vessel did

receive benefit from the supplies and services rendered by the

plaintiff in discharge of its role as a Pipelay Barge. Two, there

are documents of unimpeachable character which show that

both Sapura Offshore and Sapura Dana, the applicant, are the

wholly owned subsidiaries of Sapura Energy. In the face of such

material, the applicant cannot take mileage from absence of

document to establish direct contractual relationship. Reliance

was sought to be placed on the judgments of this Court in the

cases of M/s. Crescent Petroleum Ltd. vs. M. V. Monchegorsk 9,

8 (2004) 9 Supreme Court Cases 512.

9 1999 SCC Online Bom 610.

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Chemoil Adani Pvt. Ltd. vs. M. V. Hansa Sonderburg 10 and Socar

Turkey Petrol Enerji Dagitim San. Ve Tic. A.S. vs. M.V. Amoy

Fortune (IMO 9583639)11.

22. Mr. Kamat joined the issue by advancing a submission,

with a degree of vehemence, that all these judgments were

rendered on the basis of the legal regime which prevailed prior

to the enactment of the Admiralty Act, 2017. Therefore, the

enunciation therein is of no assistance to the plaintiff.

23. The aforesaid submissions now fall for consideration.

24. To begin with, it may be apposite to keep in view the test

which is to be applied in the matter of ordering the arrest of a

vessel in exercise of admiralty jurisdiction and also vacating the

order of arrest and/or return of security, when the defendant

seeks such relief. The Division Bench judgment of this Court in

the case of M/s. Kimberly - Clark Lever Pvt. Ltd. (supra) has

elaborately considered the test which should govern the exercise

of jurisdiction.

25. After adverting to the pronouncements of the Supreme

Court including the judgments in the cases of Videsh Sanchar

Nigam Ltd. vs. M. V. Kapitan Kud and others 12 and M.V.

10    2010 (7) Mh.L.J. 660.
11    2018 SCC Online Bom 1999.
12    (1996) 7 SCC 127.

                                   IAL-8108-2021INCOMAS21-2021.DOC

Elisabeth and another vs. M/s. Harwan Investment & Trading

Co. and another13, and comparing and contrasting the norms of,

"reasonably arguable best case" and "a prima facie case", the

Division Bench enunciated that to make out a reasonably

arguable best case, as held by the Supreme Court, the plaintiff

must establish a prima facie case and the distinction between

two tests, namely, "the reasonably arguable best case" and "the

prima facie case" has almost been obliterated and both the

expressions substantially convey the same meaning.

26. The observations of the Court in paragraph Nos.50 to 52

are instructive and hence extracted below:

"50. ............ In other words, after stressing need for the plaintiff to make out a reasonably arguable best case in an admiralty action for a fruitful order in his favour, the Apex Court proceeded to hold that to make out a reasonably arguable best case, what is required is that the plaintiffs must establish a prima facie case regarding the right and the claim of the plaintiff in such action. In other words, with the decision of the Apex Court in Videsh Sanchar Nigam Ltd.'s case (supra), the distinction between the two tests, namely "the reasonably arguable best case" and "the prima facie case", has almost been disappeared, and both the expressions substantially convey the same meaning, though grammatically the expressions may not be synonymous to each other.

51. It is true that in Moschanthy's case (supra), it was held that the defendant can plead and establish by motion that the plaintiff's case is not reasonably arguable best case and that it is hopeless and bound to fail and on that ground, the defendant can obtain release of the security. However, the said test in Moschanthy's case (supra) cannot be understood to be

13 AIR 1993 SC 1014.

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different from the test of prima facie case in view of the abovereferred rulings of the Apex Court i.e. m.v.Elisabeth, M.V.Al.Quamar, and M.V.Kapitan Kud's cases (supra) wherein the test of reasonably arguable best case being equated with a prima facie case. While dealing with the motion of the defendant for release of the security, the principles applicable to a case under Order 39 Rule 1 read with Order 38 of the Code of Civil Procedure will have to be borne in mind. Rule 954(IV) leaves no scope to contend that any other procedure can be adopted in such case. It is also to be noted that the Rule 966 of the Original Side provides that the rules and practice of the Court in the matter of suits and the proceedings on the Original Side of the Court shall, if not inconsistent with the rules in this part, apply to suits and proceedings on the Admiralty Side of the Court. Further it is well settled by the practice of this Court that whenever the rules on the Original Side are silent, the principles behind the provisions of the Code of Civil Procedure are to be followed, and this view gets support from the decision of the Apex Court in M.V. Elisabeth's case (supra).

52. It is, therefore, clear that while applying the test of reasonably arguable best case, the Court will have to ascertain whether the plaintiff has prima facie case or not, and in that regard the Court will have to analyse the materials on record. Though the provisions of Orders 38 and 39 of the Code of Civil Procedure would not be directly applicable, the principles thereunder could not be forgotten while dealing with the matter at the stage where the defendant having released the ship on furnishing the security applies for release of security on the ground that the plaintiff has no prima facie case or reasonably arguable best case."

27. In the light of the aforesaid exposition of law, without

delving into the semantics of the expressions, it has to be seen

whether the applicant has made out a prima facie case for

refund of the security on the ground that the arrest of the

defendant - vessel was wrongful and unjustifiable. An answer,

in turn, and necessarily, would depend on the question as to

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whether the plaintiff had then succeeded in making out a prima

facie case for the arrest of the defendant - vessel.

28. Under Section 5 of the Admiralty Act, 2017 the High Court

is vested with the jurisdiction to order the arrest of the vessel for

the purpose of providing security against a maritime claim. The

relevant part of Section 5 reads as under:

"5. Arrest of vessel in rem.

(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; or .........

(2) 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, subject to the provisions of sub-section (1):

Provided that no vessel shall be arrested under this sub-section in respect of a maritime claim under clause (a) of sub-section (1) of section 4."

29. On a plain reading of Clause (a) Sub-section (1) of Section

5, two conditions need to be satisfied before the jurisdiction to

arrest the vessel can be exercised. First, there must be a

maritime claim. Second, the maritime claim must be against

the person who owns the vessel, both at the time such claim

arose and at the time the arrest is effected.

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30. The enquiry thus proceeds to consider as to whether the

claim of the plaintiff falls within the meaning of any of the

Clauses of Sub-section (1) of Section 4, which defines a

maritime claim. As noted above, the plaintiff rests his claim on

Clause (l) of Sub-section (1) of Section 4, which reads as under:

"4. Maritime claim.

(1) The High Court may exercise jurisdiction to hear and determine any question on a maritime claim, against any vessel, arising out of any--

.......

(l) goods, materials, perishable or non-perishable provisions, bunker fuel, equipment (including containers), supplied or services rendered to the vessel for its operation, management, preservation or maintenance including any fee payable or leviable."

31. Clause (l), as is evident, comprises a broad category of

supplies and services rendered to the vessel for its operation,

management, preservation or maintenance, including any fee

payable or leviable. Clause (l) is thus not restricted to

"necessities", in the strict sense of the term.

32. In the case of Liverpool & London SP & I (supra), in the

context of the necessity of insurance cover, the Supreme Court

had an occasion to consider the import of the term "necessaries"

as it was not statutorily defined. After adverting to the

definition of the term necessaries in the Black's Law Dictionary

and American Jurisprudence 2nd, and the pronouncements

which deal with the said term, the Supreme Court exposited the

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import of the term, "necessaries". Paragraphs 79, 83, 97 and

98 read as under:

"79. The term 'necessaries' as defined in Black's Law Dictionary reads as under:

"What constitutes "necessaries" for which an admiralty lien will attach depends upon what is reasonably needed in the ship's business, regard being had to the character of the voyage and the employment in which the vessel is being used."

.........

83. In 70 American Jurisprudence 2d, at page 478, it is stated:

"The term "necessary" in this connection does not mean indispensable to the safety of the vessel and crew; necessaries which will create a lien upon the ship are such as are reasonably fit and proper for her under the circumstances, and not merely such as are absolutely indispensable for her safety or the accomplishment of the voyage. Whatever a prudent owner, if present, would be supposed to have authorized, the master may order, and for such expenditures the vessel will be held responsible.

.........

97. The term "necessary" is a term of art but the same cannot, in our opinion, be used in a limited context of mandatory claims made for goods or services supplied to a particular ship for her physical necessity as opposed to commercial operation and maintenance. Physical necessity and practicality would be a relevant factor for determination of the said question. Taking insurance cover would not only be a commercial prudence but almost a must in the present day context. The third party insurance may not be compulsory in certain jurisdiction but having regard to the present day scenario such an insurance cover must be held to be intrinsically connected with the operation of a ship.

98. One of the relevant factors for arriving at a conclusion as to whether anything would come within the expression "necessary" or not will inter alia depend upon answer to the question as to whether the prudent owner would provide to enable a ship to perform well the functions for which she has been engaged. If getting the vehicle insured with P&I club would be one of the things which would enable a prudent owner to sail his ship for the purposes for which she has been engaged, the same would come within the purview of the said term. The matter must be considered having regard to the changing scenario inasmuch as the field of insurance has undergone a sea change from merely hull

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and machinery, the insurance companies cover various risks including oil spill damage to the Port, damage to the cargo etc. In that sense the term must be construed in a broad and liberal manner. The changing requirement of a ship so as to enable it to trade in commerce must be kept in mind which would lead to the conclusion that P & I Insurance cover would be necessary for operation of a ship."

33. "Necessities", is therefore a relative term. Its scope cannot

be restricted to the essentials which are absolutely required to

keep the vessel merely floating or prevent black out on board.

Supplies and services rendered to a vessel which are necessary

for equipping the vessel to discharge the purpose for which the

vessel sails, would also fall within the ambit of the said term. If

viewed through this prism, the equipments supplied or services

rendered for its operation and management squarely fall within

the scope of Clause (l).

34. Reverting to the facts of the case, the plaintiff's claim that

it had supplied the equipments Reel Drive Unit with ancillary

material and the personnel to operate the said unit is

substantiated by the service orders, payment confirmation and

the invoice raised by the plaintiff. The service order makes a

specific reference to fact that the Reel Drive Unit with chute was

to be utilized for sub-sea well and Pipeline replacement project.

35. The character of the defendant - vessel namely a Pipelay

Barge cannot be lost sight of. The equipment supplied and

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services rendered were thus necessary for the operation of the

defendant - vessel for the purpose for which it was deployed. I,

therefore, find it rather difficult to accede to the submission that

the services were rendered for the project undertaken by the

Sapura Offshore and they had no connection with the operation

and management of the defendant - vessel. In my view, the

plaintiff succeed in making out a prima facie case that a

maritime claim within the meaning of Clause (l) of Sub-section

(1) of Section 4 arose.

36. This leads me to the principal challenge on behalf of the

applicant that the applicant was not liable for the maritime

claim and in the absence of a right to proceed in personam

against the applicant, the defendant - vessel, of which the

applicant has indubitably been the registered owner, could not

have been proceeded against in rem. Mr. Kamat would urge that

in the case at hand, indisputably, there is no contractual

relationship between the plaintiff and the applicant. Moreover,

it is not the case of the plaintiff that it had ever raised the

invoice against the applicant or called upon the applicant to

make the payment for the services rendered to the defendant -

vessel. At all times, the plaintiff had looked to Sapura Offshore

as the person who was liable for the charges. In these facts,

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according to Mr. Kamat, a bald assertion that the defendant -

vessel had utilized the services and, thus, its registered owner is

liable for the same cannot be countenanced.

37. Mr. Kamat placed a strong reliance on the judgment of a

learned Single Judge in the case of M. V. Flag Mersinidi vs.

Georim Oil Corporation.14 In the said case, repelling the

contention that under maritime law a ship has an independent

juridical personality and since the ship had received the

bunkers it was not open for the registered owner of the ship to

contend that there is no privity of contract, the learned Single

Judge enunciated the position in law in the following words:

"23. I totally disagree with Mr. Dhond. A vessel cannot enter into any contract with anybody. Only an owner or person authorised by the owner can enter into a contract and bind the vessel. In law a vessel may be looked at as an independent juridical personality. But to say that there is privity of contract with the vessel but not with the owners is stretching it too far and is incorrect. An action in rem against a vessel can be maintained only if there is an underlying obligation of the owner and an action in personam is maintainable against the owner. The contract is between the plaintiff and defendant no.2. Copy of the contract has not, admittedly, been even sent to the owner. There is not even an averment that the owner, defendant no.3, has held out that they will be bound by the terms and conditions of the contract that has been entered into between the plaintiff and defendant no. 2. Therefore, it can never be accepted that U.S. Law is applicable vis-a-vis, the plaintiff and defendant no. 3.

                                             (emphasis supplied)




14    2014 SCC Online Bom 479.

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38. In the case of Zatrix Limited (supra), the Division Bench of

Gujarat High Court, after adverting to the pronouncement of the

Supreme Court in the case of Chrisomer Corporation vs. MJR

Steels Pvt. Ltd.15 ruled that there cannot be any disagreement

with the proposition of law that the High Court may order arrest

of any vessel which is within its jurisdiction for the purpose of

providing security against the maritime claim in the admiralty

proceedings, where the High Court has reason to believe that

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, or where the Court has reason to

believe that the claim is based on a mortgage or a charge of

similar nature on the vessel.

39. It may be appropriate to immediately notice the

pronouncements in the cases of M/s. Crescent Petroleum Ltd.,

Chemoil Adani Pvt. Ltd. and Socar Turkey (supra) on which

reliance was placed on behalf of the plaintiff. All these cases

arose out of the supply of bunkers to the respective vessels. In

the case of M/s. Crescent Petroleum Ltd. (supra), a learned

Single Judge of this Court, in the facts of the said case,

observed that necessary averments were made to raise a triable

issue with regard to the bunkers having been supplied to the

15 (2018) 16 SCC 117.

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owners. Therefore, it would not be necessary to decide the

question of law, raised therein, namely, for an action in rem to

lay it is essential that the owner of the vessel is liable in

personam, at that stage. It was held that the Court was

satisfied that it was not the kind of case where the Court could

come to the conclusion, at an interlocutory stage, that there

were no averments showing that the bunkers had been supplied

to the ship on the alleged authority of the owner.

40. The aforesaid pronouncement was followed by the Division

Bench in the case of Chemoil Adani Pvt. Ltd. (supra). The

observations in paragraphs 48, 49 and 51 are relevant and

hence extracted below:

48. To our mind, this case should have been decided on the basis of the averments in the plaint, the documents annexed thereto and the assertions of the parties in the affidavits filed in the notice of motion. So considered, this is not a case for vacating the order of arrest. The appellants have made out a prima facie case and in our opinion, the arrest was justified. The arrest could not have been vacated merely because in the opinion of the learned Judge, there is absence of specific agreement between the appellant and respondent Nos.1 and 2.

49. The learned Judge should have appreciated that the case was covered by the Single Judges' judgment in Crescent Petroleum Ltd. (supra) (rendered by His Lordship Shri Justice Nijjar). The reliance placed on this judgment by Shri Nankani is apposite. Having carefully perused this judgment with the assistance of the learned counsel appearing for the parties, we are of the opinion that situation in this case is identical. The learned Judge in para 3 of this judgment has referred to the case of the plaintiff therein which is identical to that of the appellant before us. It may be true that this decision is rendered on an application made under Article 7 Rule 11(d), yet, the learned Judge has applied the settled principle that if the agreement

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shows that the bunkers have been supplied on the faith and credit of the vessel, that lien on the vessel is thereby created and that is how para 4 of the judgment of the Single Judge reads.

.........

51. We do not know how this judgment could have been distinguished by the learned Single Judge in our case. The stage at which the matter stood before Hon'ble Justice Nijjar and in this case is interlocutory. No conclusive judgment or finding was warranted and necessary to be rendered. In these circumstances, the reliance on this judgment should have clinched the issue. To our mind, this judgment has been erroneously distinguished although it is binding."

41. In the case of Socar Turkey (supra), it again was contended

on behalf of the defendant that there was no privity of contract

between the supplier and the owners of the defendant - vessel

and in the absence of personal liability on the part of the owner

of the vessel, an action in rem could not lay against the vessel.

The Division Bench adverted to the previous pronouncements,

including the aforesaid judgment of the Division Bench in the

case of Chemoil Adani Pvt. Ltd. (supra), and thereafter observed

as under:

"44. The learned Senior Counsel Mr. Chinoy, in the facts of the case, rightly submitted that as supply of bunkers to the vessel is not a disputed fact and as plaintiff did not receive the payment agreed against such supply, maritime claim arises in rem and in personam. A case is then made out for maritime lien. A privity of contract shall have to be presumed even if the bunkers were not supplied against clear and specific order placed by the Master or Chief Engineer of the vessel. In other words, even if in the facts the order was placed by Force Shipping or Sentex LDX, a subsidiary of Force shipping, to the vessel, the plaintiff's doors cannot be shut on the principle of lack of privity of contract between plaintiff and the present defendant.

45. In the facts of the case and considering the law cited, we find substance in the submissions advanced by the

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learned Senior Counsel Mr. Chinoy that at an interlocutory stage it would not be appropriate to deal with the issue of privity of contract. It can only be dealt with after leading evidence.

46. We are of the view that merely based on the bunker invoice and delivery receipt, it would be difficult to form a conclusive opinion at an interlocutory stage that there was no privity of contract between the appellant and the respondent. There is no such overwhelming material to reach to such conclusion. The issue in this case is that whether privity of contract is presumed to be in existence. Such issue relating to the maritime claim in question would thus be required to be addressed at the trial of the suit. It is an admitted position that the Master / Chief Engineer of the vessel had acknowledged the receipt of bunkers supplied to the vessel.

47. We further find substance in the submissions advanced by the learned Senior Counsel Mr. Chinoy that even if bunkers were supplied at the instance of Force shipping / Sentex LDX, the liability of the vessel to pay for the bunkers supplied does not get diminished on the plea of lack of privity of contract."

42. The aforesaid judgments,as is evident, have been rendered

in the facts where the supply of the bunkers to the respective

vessels was incontrovertible and a defence was sought to be

raised that the supply was not made at the instance of the

registered owner and the latter was not liable and, consequently,

in the absence of the personal liability of the owner, an action in

rem would not lay against the vessel. The Courts have held that

in such a fact-situation the issue of absence of privity of

contract cannot be satisfactorily adjudicated at an interlocutory

stage and must be left to be determined at trial.

43. It is imperative to note that, all these judgments were

rendered before the enactment of the Admiralty Act, 2017. In

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fact, in Socar Turkey (supra) the Division Bench expressly notes

that no Indian statute defined a maritime claim as has been

clarified in the finding of the Apex Court in the case of M.V.

Elisabeth (supra). Mr. Kamat, in my view, was justified in

canvassing a submission that the precedential value of these

judgments to the extent of drawing an inference of contractual

obligation is required to be appreciated keeping in view the

provisions contained in the Admiralty Act, 2017.

44. The pivotal question which thus crops up for consideration

is whether there are averments in the plaint and material on

record to satisfy the requirements under Clause (a) of Sub-

section (1) of Section 4 of the Admiralty Act, 2017. I have

already held that the existence of a maritime claim is, prima

facie, made out. The controversy thus boils down to the

question as to whether the liability for the said maritime claim

can be fastened on the applicant.

45. Indisputably the service orders were placed by Sapura

Offshore. Under the standard terms and conditions appended

to the said service order the term, "contract" or "buyer" was to

mean Sapura Engineering and Construction Pvt. Ltd., Sapura

Fabrication BHD and Sapura Offshore SDN BHD and the term

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"sub-contractor" was to mean the plaintiff. Invoice was also

raised on Sapura Offshore SDN BHD.

46. Banking on these documents it was urged on behalf of the

applicant that Sapura Dana, the registered owner was not at all

in the frame. On a first blush, the submission appears alluring.

However, on a close scrutiny the submission does not carry

conviction. There are clear and categorical averments in the

plaint that Sapura Offshore had placed the supply orders on

behalf of the vessel and her owner, and was an agent of the

owner of the defendant - vessel. It is further averred that

Sapura Offshore operates and manages the project undertaken

by the defendant - vessel and her owner/beneficial owner.

Sapura Energy, the holding company of Sapura Dana and

Sapura Offshore, is the commercial operator and technical

manager of the defendant - vessel.

47. Lloyd's List Intelligence Vessel Report (Exhibit-D) was

pressed into service to show that Sapura Energy Berhad was

reported to be the beneficial owner and commercial operator of

the defendant - vessel. Secondly, the annual report of the

Sapura Energy (Exhibit-E) was also relied upon to show that

Sapura Dana is a subsidiary of Sapura Energy Berhad. Thirdly,

the announcement made by Sapura Energy in respect of an

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order passed by the Malaysian Court for the proposed scheme of

arrangement and restraining order under Section 366 and 368

of the Companies Act, 2016 for Sapura Energy Berhad (the

"Company" and collectively with its subsidiaries, the "Group")

and certain of its wholly-owned subsidiaries, was relied upon to

show that both Sapura Dana and Sapura Offshore have been

shown as wholly owned subsidiaries of Sapura Energy.

48. Mr. Kamant made an attempt to urge that each corporate

entity is distinct and no liability can be fastened on the basis of

the aforesaid documents, which do not command authenticity.

Yet the fact remains that there is no categorical denial that

Sapura Dana is a wholly owned subsidiary of Sapura Energy.

This becomes evident from the documents placed on record

pertaining to not only Sapura Offshore but also Sapura Dana. It

is in the context of this relationship between Sapura Energy and

Sapura Dana, on the one part, and Sapura Energy and Sapura

Offshore, on the other part, and all pervasive control which

Sapura Engery seems to exercise over Sapura Dana and Sapura

Offshore, the averments in the plaint are required to be

appreciated.

49. In my view, the averments in the plaint if considered in

conjunction with the aforesaid nexus between the entities and

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the purpose for which the services were utilized by the

defendant - vessel, prima facie, sustain a case that the liability

was incurred for and on behalf of the vessel and its registered

owner.

50. In the facts of this case, any other view would erode

sanctity of the contractual obligation in a commercial

transaction having a maritime flavour, where the supplies are

made and services are rendered on the faith and credit of the

vessel. Such a view may give a long leash to a party who utilizes

the supplies and services by allowing an associate entity to

solicit the supplies and services and later on takes the defence

of absence of contractual obligation. It may not, therefore, be

appropriate to decide the contentious issue of in personam

liability of the applicant, at this stage, and sans evidence.

51. For the foregoing reasons, I am impelled to hold that no

case for a declaration that the arrest was wrongful and refund of

the security deposit is made out. Resultanly, the application

deserves to be rejected.

52. Hence, the following order.

:ORDER:

         (i)    The application stands rejected.

         (ii) Costs in cause.

                                              [N. J. JAMADAR, J.]