Patanjali Foods Limited vs The Owners And Parties Interested In The ...
2024 Latest Caselaw 2770 Cal/2

Calcutta High Court

Patanjali Foods Limited vs The Owners And Parties Interested In The ... on 30 September, 2024

Author: Sabyasachi Bhattacharyya

Bench: Sabyasachi Bhattacharyya

OCD-1

                     IN THE HIGH COURT AT CALCUTTA
                            Admiralty Jurisdiction
                              ORIGINAL SIDE
                          (COMMERCIAL DIVISION)


                               AS-COM/6/2024
                           IA NO: GA-COM/1/2024
                     PATANJALI FOODS LIMITED
                                VS
          THE OWNERS AND PARTIES INTERESTED IN THE VESSEL
                 MT PHILIPPA GLADYS IMO NO 9500352



  BEFORE:
  The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA

Date : 30th September, 2024.

Appearance:

Mr. Swatarup Banerjee, Adv.

..for the plaintiff.

Mr. K.R. Thaker, Adv.

Mr. Souvik Kundu, Adv.

...for the defendant.

The Court: The matter arises in connection with an Admiralty Suit.

By an order dated September 20, 2024, immediate arrest of the Vessel MT

Philippa Gladys (IMO No.9500352) was directed and a Special Officer was

appointed to conduct a survey through a competent surveyor for

undertaking full assessment of the condition of the cargo on board the said

vessel.

Thereafter the matter has come up for consideration as to whether the

interim order of arrest should be extended.

Learned counsel for the defendant/owners of the vessel opposes the

prayer for extension. It is argued that there is no pleading in the plaint or

the affidavit of arrest to the effect that the owners are in breach of their

obligation in relation to seaworthiness of the Vessel. In Clause 7(i) of the

Special Conditions of the Sale Contract, the plaintiff has expressly waived its

right to impose any liability on the carrier save where the claim relates to

damage to the cargo which is proven to have been caused by a breach of the

carrier‟s obligation in relation to the seaworthiness. Although the carrier is

not a party to the Sales Contract, the clause was included for the carrier‟s

benefit and protection and flows from the Charter Party pursuant to which

the owners carried the subject-cargo at the instance of the sailor/shipper.

The plaintiff is bound by the undertaking and waiver of right and the owners

are entitled to invoke the same.

It is argued that delay in delivery of cargo can occur due to a

multitude of reasons, in the present case illness of crew and subsequent

detention of the vessel in Indonesia as the vessel strayed into contiguous

Indonesian waters after sailing from Port Klang in Malaysia because of

inexperience of the Master and the Chief Officer. However, there is no

allegation as to unseaworthiness of the vessel, in the absence of which the

plaintiff is not entitled to maintain any claim for purported damage to goods

simpliciter by reason of purported delay in delivery.

The plaintiff relies on a "Port Clearance" certificate issued under

Article 219(1) of the Shipping Act No. 17, 2008 of Indonesia, which is

described as Shipping Approval Letter in the said Act. The certificate is only

issued if the vessel is seaworthy, safe and manned by competent crew and

does not establish the cause of detention; on the contrary, it shows that the

vessel was in seaworthy condition.

Secondly, it is argued that the claim on account of loss of interest on

the sum paid to the shipper is predicated on the premise that delivery in

seven days was a condition of the contract of carriage. However, there is no

such term in the Bills of Lading, which evidence the contract of carriage

between the parties. The sum paid to the shipper is for the cost of goods

and freight. There is no delivery date stipulated in the Sales Contract. The

only period stipulated is of shipment, which is June, 2024, which was

subsequently amended to June 1, 2024 - July 15, 2024. It is argued that

the claim is invalid and untenable as the purported date of delivery cannot

be the starting point for calculating interest as admittedly the goods are raw

materials which required refining before sale. There is no pleading of the

time required for refining which must be excluded from the alleged period of

delay in the delivery. There is no certainty and/or pleading as to when the

end product would be sold.

The sum paid for purchase, it is argued, would only been recovered on

the sale of the end product, and therefore, there is no specific starting date

nor any specific end date without which there cannot be any claim for

interest.

It is argued that the claim is remote and for indirect loss or damage

not arising naturally in the usual course of things from any alleged breach

on the part of the owners, nor did the parties know that such claim would

arise by reason of alleged delay in delivery.

Learned counsel places reliance on an order dated March 20, 2017

made by a co-ordinate Bench of this Court in AS 1 of 2017 [Gokul Refoils &

Solvent Ltd. vs MT Balim].

There is no contractual or statutory provision for payment of interest

on any sum by reason of alleged delay in delivery. No notice of interest

under the Interest Act was given.

Learned counsel appearing for the defendant next argues that the

claim on account of estimated loss in value and utility of cargo is not

supported by appropriate pleadings. The pleadings disclose only an

apprehension that the goods might have been damaged due to the purported

prolonged storage in the vessel‟s holds without any proof of actual damage.

Apart from a self-serving write-up prepared by the plaintiff, there is no

independent technical report or empirical data from any recognized palm oil

organization.

The allegation that storage beyond the purported voyage/delivery

period of seven days has caused damage is a bogey because part of the

goods was stored in the vessel from June 14, 2024 and loading was finally

completed on July 12, 2024, that is, almost a month thereafter. As pre-

shipment storage of one month was acceptable to the plaintiff, it is for the

plaintiff to plead and proof why and how cargo quality will deteriorate in two

months due to delay in delivery.

The owners‟ letter dated August 22, 2024 does not raise any claim

even after a purported delay of forty days. The plaintiff only sought

confirmation that the cargo is in fit condition and temperatures are being

maintained on the vessel so that the quality of cargo remains intact. No

subsequent event thereafter has been alleged to make out the case of

deterioration of the quality of cargo.

In the absence of any independent evidence, at the ad interim stage,

the letter should be treated as an admission by the plaintiff that the cargo

quality did not deteriorate even on prolonged storage if temperature was

maintained on board the vessel.

There is no evidence furnished to show that temperature was not

maintained on board the vessel or that the tanks were unfit for storage and

the entire claim is based on surmise of deficiency in the above. The

surveyor tested the heating coils, tanks, pumps and pipelines at the time of

loading and found those fit.

The plaintiff never claimed in any of its e-mails that cargo quality was

deteriorating due to prolonged storage.

All that the plaintiff sought was temperature logs which the seller

forwarded till August 2024. The plaintiff did not raise any claim on the seller

due to delay in delivery, although the shipment was the obligation of the

seller as price was inclusive of freight and the vessel was arranged by the

seller.

Just because the owners knew that temperature was required to be

maintained in the holds, it cannot be said that they had special knowledge

that the quality of goods would deteriorate if not delivered within a

reasonable time. The test of special knowledge and directness, as opposed

to remoteness and indirectness, of loss or damage as stipulated in Section

73 of the Contract Act is not satisfied. The plaintiff must prove its

reasonably arguable best case by satisfying the ingredients of Section 73

which, according to the defendant, has not been done in the present case.

The plaintiff cannot rely on presumption or adverse inference to be drawn on

purported withholding of temperature logs at this stage to make out a prima

facie case. Learned counsel cites Shree LTC Agro Sales Ltd vs. Mediterranean

Shipping Co., reported at 2013 SCC OnLine Bom 852, which was an identical

case of damages against carrier for perishable edible cargo of bananas.

There is no evidence, it is contended, by the defendant on quantum of

damages which has been claimed at 25 per cent of the purchase price. Even

in the self-serving write-up issued by the plaintiff, only financial impact of

late delivery has been mentioned without quantification of 25 per cent.

Increase in refining cost as alleged by the plaintiff could easily have been

quantified as the plaintiff carries out refining at its own plant, by giving the

basic cost of refining and the additional cost to be incurred, which are fixed

costs and do not depend or vary with the price of the raw material.

Reliance is placed on Hindustan Aegis LPG Ltd. vs. MT TSM Pollux,

reported at 2023 SCC OnLine Cal 4178 with regard to the proposition that

the entire claim for security on account of reduction in quantity of refined oil

is based on surmise and conjecture. In an SLP preferred by the plaintiff

from the said judgment, the quantum of security was enhanced by the

Supreme Court on parties agreeing to refer the disputes to arbitration.

Since no leave to appeal was granted, the doctrine of merger does not apply

and it cannot be said that the judgment of this Court was set aside or the

ratio reversed. Learned counsel also relies on Shree LTC Agro Sales Ltd

(supra) in such context.

No case of breach has been made out in the present case as the time

of delivery was not a condition of the contract.

Learned counsel relies on Shadiram and Sons Pvt. Ltd. vs. MV Riva

Wind, an unreported judgment on the Bombay High Court dated March 20,

2017, in such context. The allegations regarding the vessel having sailed to

Indonesia and then to Port Klang instead of directly sailing to Haldia is not

pleaded.

The claim regarding additional customs duty is also controverted by

the defendant. It is predicated, according to learned counsel for the

defendant, on the premise that the time of delivery was a condition of the

contract of carriage whereas no such condition is stipulated in the contract

or in law. Also, there is no pleading that increase in import duty was in the

contemplation of parties when they entered into the contract of carriage.

This claim is also wholly remote and indirect. Shadiram‟s case is on an

identical issue.

There is no proof of quantum of additional duty as well. The plaintiff

was required to file a Bill of Entry for home consumption on which the

import duty is assessed, which has not been furnished in the present case.

No particulars as to the quantum of duty but for the Custom Notification

dated September 13, 2024 have been produced.

Lastly, it is argued that an Admiralty Suit is not different from any

other suit for unliquidated damages where the plaintiff has to plead and

prove its claim by adducing evidence. The process of court cannot be

invoked to fish out evidence by appointment of surveyor. In that regard,

learned counsel places reliance on The Owners and Parties Interested in the

Vessel M.V. "Baltic Confidence" v. State Trading Corporation of India Ltd.,

reported at AIR 2000 Cal 91. As such, it is submitted, the Special Officer

should be discharged and the report prepared by him ought not to be taken

on record.

Learned counsel for the plaintiff controverts the submissions of the

defendant and argues that the vessel owners do not have any right of

audience, having not filed Vakalatnama and having not validly entered

appearance in the proceedings. However, it is required to be noted here that

this point was not specifically urged at the time of hearing and, as such, this

Court does not take note of the said argument.

The next argument of the plaintiff is that it is an importer and holder

of the original Bills of Lading in respect of the shipped quantity of 11,500

MT Crude Palm Oil and as such, entitled to sue the carrier under Section 1

of the Bills of Lading Act, 1856. The maritime claim relates to loss and

damage to the goods belonging to the plaintiff and carried on board the

defendant vessel. Thus, the plaintiff has an actionable maritime claim

against the vessel and her owners under Sections 4(1)(f) and 4(1)(g) of the

Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.

Under the Bills of Lading, the vessel was committed to travel from Port

Klang in Malaysia to the Haldia Port in India directly. Admittedly, the vessel

has committed breach of that obligation and has visited unauthorized,

unchartered and contractually impermissible locations, giving rise to

prolonged and unusual confinement of the plaintiff‟s goods inside the holds

of the vessel which has damaged the cargo. The vessel sailed from Port

Klang on July 12, 2024 and was required to call at the Haldia Port for

discharge operations within seven to ten days. However, it arrived at Haldia

on September 18, 2024, which is an admitted position.

This Court has power to arrest the vessel for securing the plaintiff‟s

maritime claim under Section 5(1) of the Admiralty Act, 2017.

It is argued that if the vessel sails out of the territorial waters of India

without security, the suit will be frustrated and the plaintiff will be left

without remedy and the jurisdiction of this Court would be lost. Learned

counsel places reliance on Videsh Sanchar Nigam Ltd. vs. MV Kapitan Kud

and ors., reported at (1996) 7 SCC 127, where it was held by the Supreme

Court that the test for security in an admiralty action would be whether the

plaintiff/claimant has a reasonably best arguable case. The Supreme Court

reiterated that the ship is a foreign ship and if it leaves the shores of Indian

territorial water, it is difficult to get hold of it since it may not return to the

jurisdiction of Indian ports. The claim thereby, even if successful, would

remain inexecutable or land in trouble in Private Internal Law in its

enforcement.

On the above consideration, the Supreme Court imposed condition of

security against release of the vessel.

The prolonged and unusual confinement of the plaintiff‟s cargo has

resulted in loss to the plaintiff. There has been degradation of quality and

specification of the cargo, which is borne out by the Technical Assessment

Report at pages 111-112 of the plaint.

Secondly, delay in delivery has upset the plaintiff‟s timeline for

production and has created gaps in the chain of manufacturing refined

finished products, leading to loss of business revenue and blocking its

financial investment made towards the price of goods. As such, the plaintiff

has, at this stage, claimed interest on its blocking and idling financial

investment made by the payment of price consideration to the foreign seller.

Thirdly, the exact amount of the shortage in quantity can only be

measured after completion of discharge of the vessel to shore tanks.

As to increase in customs duty during the period of inordinate and

unauthorized delay in delivery of the goods, the same is argued to be an

obvious corollary of the Notification relied on by the plaintiff.

All the above have been pleaded in the plaint and the affidavit of

assets.

Learned counsel for the plaintiff next argues that once the discharged

cargo reveals loss in quantity and degradation in quality and specification of

the goods, the plaintiff will not have any remedy if the vessel does not

remain arrested or security in lieu of release has been furnished to the

satisfaction of this Court. Hence, arrest is the only permissible legal

recourse to preserve the actionable right of the petitioner.

Learned counsel appearing for the petitioner next contends that a

misleading reference has been made to the decision of this Court in the case

of Hindustan Aegis (supra), by suppressing the subsequent order of the

Supreme Court passed in appeal preferred from the said order where

security of Rs.25 Cr. (increased from Rs.4.79 Cr. as directed by this Court)

has been awarded. The said security was directed as an interim measure

even on the allegation of absence of pleadings.

Pending final assessment, leave has been granted by this Court under

Order II Rule 2 of the Code of Civil Procedure in the instant matter on

completion of discharge and on ascertaining quantity short landed as well as

the extent of degradation, specification and quality of the cargo; hence, the

plaintiff still has opportunity to amend and alter the quantum of its claim.

The basis and foundation of its claim stands established, however, as on the

date of institution of the suit and is actionable.

The Master of the vessel refused to provide Temperature Logs to the

Special Officer appointed by this Court during his visit on September 22,

2024. The vessel owners did not provide temperature logs after August 1,

2024 despite repeated requests by the plaintiff. Thus, the condition of the

cargo inside the vessel for 48 days thereafter is not known to the plaintiff.

Even the temperature log submitted till August 1, 2024 shows that the

heating requirement prescribed during voyage, that is, 45 degrees Celsius

was not maintained throughout the journey. The financial consequence of

not maintaining the temperature as per prescribed standard and the

unchartered deviation in its course justify the claim in the plaint, it is

submitted.

The quantity shipped on the vessel has been specifically mentioned,

with qualification of 2 per cent more or less in the Sales Contract dated May

31, 2024. It has also been specified that title to the cargo has passed to the

plaintiff upon payment of cargo price. Under the heading "Additional Terms

and Conditions" in Clause 7 of the Sales Contract, the buyer (plaintiff) had

undertaken that should the cargo arrive in damaged condition, the plaintiff

would discharge the cargo and obtain security against the vessel without

any delay.

Clause 7(i) of the Special Conditions is of no consequence as,

nevertheless, under Clause 7(ii), the buyers can assert their claim against

the vessel/carrier contrary to Clause 7(i) but with an indemnification in

favour of the seller against the consequences thereof. This Clause is

superseded by Clause 7 of the Additional Terms and Conditions and also by

the breach and deviation of navigational course committed by the

vessel/carrier, which was not permissible in the sale agreement.

The weight and quality of the product as declared by an independent

surveyor nominated by the seller at Load Port constituted a paramount

basis for the agreement and since the seller was not to be responsible for

shortage in quantity received at the buyer‟s storage tank, the only recourse

left with the buyer (plaintiff) has to be against the vessel by arrest under the

Admiralty Act, 2017.

The Bills of Lading, it is argued, evidence the terms of contract of

carriage and obligation of the vessel to deliver the goods at Haldia Port. All

the Bills of Lading are "clean shipped onboard"; thus, the vessel has

acknowledged that there was no damage to the cargo. Despite a general

clause that the vessel would not know or certify the quantity of cargo

loaded, each of the Bills of Lading specifically evidences the quantity, HS

Code and specification of the cargo as surveyed at Load Port, as has been

admitted and recorded by the Master on the Bills of Lading.

The heating requirement of 45 degree Celsius, it is reiterated, has not

been maintained on the vessel.

The relevant e-mail messages produced by the plaintiff, it is argued,

show that the plaintiff diligently enquired about his cargo, recording the

anticipated loss due to delay and damage due to transit, although the vessel

or the owner was ominously silent.

The Port Clearance Certificate issued by the Republic of Indonesia on

September 7, 2024 discloses that the vessel left Indonesia on September 8,

2024 towards the Port of destination, named as "Port Klang" in Malaysia.

This is an aberration to the Voyage Contract and entitles the vessel to be

arrested for security and enforcement of maritime claim.

The vessel got entangled with Indonesian authorities because of

Master/crew‟s inexperience, which comprises abject breach and default on

the part of the vessel, which is demonstrated by the e-mail of August 7,

2024 issued by the foreign seller upon having received news from the vessel

owners. The legal notice issued by the plaintiff to the vessel owners records

the prima facie case of the plaintiff, to which there is, till date, no rebuttal

from the vessel‟s owners, even on August 22, 2024, when the plaintiff called

for status and condition of the cargo.

The plaintiff has paid for the goods to the foreign seller and its money

was commercially invested in the goods, being raw material for the plaintiff

to manufacture merchant products and realize revenue income. The

plaintiff has been deprived of the benefit of this investment and in its e-mail

dated August 5, 2024, complained of the gap in the supply chain which has

resulted in huge loss. The loss of interest on the investment has been

calculated in respect of the goods for 59 days of delay from July 21, 2024

since the vessel had sailed from the last Port of Loading on July 12, 2024.

The second head of claim is for estimated loss in the quantity and

valuation of the goods, which has been calculated for 25 per cent value of

the goods and the plaintiff has reserved its right to amend the claim subject

to final outcome of the laboratory analysis.

The third claim arises from enhancement in rate of import duty during

the period of delay. If the cargo had been delivered on stipulated time in

accordance with the contract, the plaintiff would not have been forced to pay

such enhanced customs duty. The vessel could not have sailed in

unchartered location and unauthorized territory indefinitely after sailing out

from the last port of loading, exposing the plaintiff to unforeseen risks, for

which the plaintiff is entitled to compensation for additional customs duty

payable by reason of the vessel‟s breach by delay.

Learned counsel for petitioner also seeks to distinguish the judgments

relied on by the defendant.

Heard learned counsel for the parties. The conclusions of the court are

as follows:

The defendant has argued that the plaintiff has waived its rights to

impose any liability on the carrier save where the claim relates to damage

relating to seaworthiness. To explore the said proposition, Clause 7 of the

Sales Contract dated May 31, 2024 is required to be scrutinized.

As per sub-clause (i) of Clause 7 under the Special Conditions, the

buyer/plaintiff has undertaken not to make any claim or allegation or bring

any proceedings against the owner of the carrying vessel or any other party

acting and/or contracting as carriers of the goods specified in the contract

which impose upon the carrier any liability whatsoever in connection with

the goods, whether in contract or otherwise, except where the claim relates

to damage to the cargo proven by the buyers to have been cause by a breach

of the carrier‟s obligation in relation to the seaworthiness.

However, sub-clause (ii) of Clause 7 substantially dilutes the said bar

by including an option of such claim or allegation being nevertheless made

by the buyers against the carrier, contrary to sub-clause (i). In such a case,

sub-clause (ii) provides that the buyers undertake to indemnify the sellers

against all consequences thereof, including without limitation any sums

paid or payable by the sellers to the carrier pursuant to any finding or

settlement of liability between the sellers and the carrier, whether pursuant

to the Charter Party or else in contract, bailment, tort or otherwise.

Thus, a conjoint reading of sub-clauses (i) and (ii) of Clause 7 reveals

that the focal point of the indemnity is not the owner or carrier but the seller

of goods. Sub-clause (ii) permits a claim to be made contrary to the bar in

sub-clause (i), only providing that in such case the seller should be

indemnified by the buyer. Hence, the restriction of claims for damages to

seaworthiness is not so absolute as sought to be made out by the defendant.

Again, as per Section 1 of the Indian Bills of Lading Act, 1856, the

property in the goods, along with the right to sue, has passed on the

buyer/plaintiff.

The „Title and Risk‟ clause in the Sales Contract also endorses such

position of law.

In the Additional Terms and Conditions of the Sales Contract, Serial

No.1 provides that sellers and owners are not responsible for any

loss/shortage of cargoes incurred outside of the vessel‟s manifold, thus

specifically implying that till the cargo is inside the hold of the vessel, the

owner cannot deny its liability.

In the Bills of Lading produced by the plaintiff, there is a general

clause to the effect that the quantity measurement, weight, gauge etc. are

unknown to the Vessel and the Master. However, the self-same Bills of

Lading clearly mention the quantity of the cargo.

Again, the Bills of Lading contain a clause near the bottom to the

effect that other than the ship owner or demise charterer, no person or legal

entity shall be deemed to be liable with respect to the shipment as carrier,

bailee or otherwise in contract or any tort.

Thus, by specific implication, the carrier/ship owner has liability with

regard to the cargo. The Sales Contract dated May 31, 2024, on the other

hand, also contains specifications of the cargo on the very first page. Hence,

the defendant cannot feign ignorance of the exact quality and quantity of the

cargo in order to avoid liability.

From another perspective, "seaworthiness" is a broad concept,

including within its purview all shades of fitness of a vessel to set sail over

waters (International waters, in the present case).

It is an admitted position, as prima facie evident from the

communications between the parties, that due to the fault of the Master and

Crew of the vessel and their inexperience, the vessel strayed into

unchartered waters.

The seaworthiness of a vessel is not confined to its physical fitness

alone but also takes within its fold the efficiency and minimum credentials

of its crew to ply it properly, because without its Master and crew, a vessel

would merely be a rudderless zombie. Hence, the ineptitude and

inexperience of the Master and crew casts liability of negligence on the

owner for having manned the vessel with such unworthy people.

Misadventures on unchartered waters for around two months, much beyond

the normally expected time of delivery of cargo, is inexcusable. Moreover,

there were several unplanned stoppages, as borne out by the materials on

record.

The vessel also violated maritime law of Indonesia which is evidenced

by the Port Clearance certificate issued to the vessel by the Indonesian

authorities, where it was not supposed to travel during the carriage-in-

question at all. The violation of the law and the inefficiency of the crew

including its Master added to the unseaworthiness of the vessel as a whole.

A "vessel" is not comprised of the physical chassis alone but also includes

within its connotation the pliability and fitness of the vessel, under the

guidance of the crew, to travel properly over waters (troubled or untroubled),

adhering to Maritime Law as well as the contract with the consignee. In the

present case, the admitted lack of experience of the Master and

unpreparedness of the crew, the unplanned stoppages and the expedition of

the vessel into unchartered waters, which took a seven-day journey to about

two months, is itself sufficient indication of the unseaworthiness of the

vessel; hence, justifying the claim for damages of the plaintiff.

The Bills of Lading clearly indicate the designated ports where the

vessel was to stop in transit, which schedule was squarely violated by it.

The plaintiff has run a case of damages for the delay which is prima

facie justified by the pleadings and materials before the court. The sale

consideration/price was paid by the buyer/plaintiff for the cargo taking into

account a period of about seven days of transit. The investment was made

by the plaintiff on such calculations. If the cargo was delivered on time, the

plaintiff could very well have refined the crude palm oil and sold it in the

market much earlier. Such process of manufacture was delayed by about

one and a half months, which constituted blockage of the sale-price

unnecessarily during the period of delay. Since the said blockage can be

directly traced to the unexplained and unchartered delay occasioned by the

vessel, it is evident that the plaintiff is entitled to make the first claim, which

is prima facie maintainable.

The plaintiff, at page 109 of the affidavit of arrest, has disclosed a

Satellite map which clearly denotes the average time taken for transport of

the cargo from the Port of Klang, Malaysia to the Haldia Dock Complex, thus

prima facie substantiating its claim of the travel time, being under normal

circumstances around seven days. In its letter dated August 22, 2024 to the

owners, the plaintiff clearly indicated that the cargo was expected to reach

the Haldia Port, that is, the Port of discharge within seven days from the

date of setting sail, that is, July 12, 2024.

The said communication refers to several other e-mails and also

records that there were unplanned halts and replacement of crew and that

the Master and crew of the vessel were detained by the Indonesian

authorities due to unauthorized entry into Indonesian waters. It is also

recorded in the said communication that the plaintiff was given to

understand that the owners would arrive at a settlement with the

Customs/Port Authorities within a week and obtain necessary clearances for

the release of the vessel. The inexperience of the Master and the crew were

also highlighted.

The plaintiff clearly requested to know the exact status of the cargo

and confirmation that it is in fit condition and temperatures were being

maintained on the vessel so that the quality of the cargo remained intact.

There is nothing on record to indicate that any specific reply was given

thereto or that the allegations made in the said communication were

controverted. All the ingredients of the present claim were mentioned

therein, seeking an immediate response which never came. Conspicuously,

it was clearly indicated that unless temperatures were maintained on the

vessel, the quality of cargo would deteriorate.

Hence, the defendant cannot feign ignorance on account of having

knowledge regarding the apprehended deterioration in case temperature was

not maintained and also due to the delay beyond the expected seven days.

Thus, there are sufficient ingredients in the materials annexed to the

plaint and the affidavit of arrest to justify the claim of estimated loss of

value and utility of the cargo. The technical assessment on crude palm oil

storage for a longer period done internally by the plaintiff, annexed at pages

107 and 108 of the affidavit of asset, in the absence of anything to the

contrary coming on record as yet, has to be taken as sacrosanct, since till

date there is no opposition/written statement by the defendant. The said

technical assessment prima facie substantiates the claims of the plaintiff

regarding the refining process costing higher in view of Oxidative

Degradation, Hydrolysis and contaminants and sedimentation as a result of

delay.

At this juncture, there is nothing to controvert the same and the claim

of the plaintiff on such count is justified.

Another aspect of the matter is that the temperature charts were

disclosed to the plaintiff only till August 1, 2024. The suppression of

subsequent temperature charts is a sufficient premise for drawing adverse

inference, even at the prima facie stage, in respect of the owners having not

complied with the temperature criteria agreed between the parties. Even

from the available temperature records, it is seen that the 45-degree Celsius

yardstick was not maintained all through. Unless the survey as directed by

this Court is completed, it is not possible for the plaintiff to finally quantify

the claim, which is quite understandable. However, the rudiments of the

cause of action for the claims are sufficiently available in the pleadings and

the materials on record.

The letter dated August 22, 2024 issued by the plaintiff does not

anywhere waive its claims but rather creates the basis for the same,

highlighting the repeated lack of reply from the end of the defendants.

Moving on to the additional customs duty claim, the plaintiff has

produced a Notification of the Customs Authorities which goes on to show

that the customs duty rates were enhanced after the expected time of

delivery of the product (crude palm oil).

The specious plea that the same was not known to the parties at the

relevant juncture is untenable. If the products were delivered within the

estimated time, as also repeatedly reiterated by the letters of the plaintiff,

the plaintiff would never be exposed to the additional customs duties at all.

The claim of damages on account of additional customs duties, thus, is

directly relatable to the breach on the part of the defendant in occasioning

inordinate delay of more than a month in delivering the cargo due to

inefficiency of its crew and the adventures of the vessel to unchartered

waters beyond the contract. Hence, the arguments of remoteness of the said

claim cannot be accepted, at least at the prima facie stage.

It is well-settled and has been reiterated time and again, inter alia in

MV Kapitan Kud (supra), that the test for security in an Admiralty Suit would

be whether the plaintiff has the reasonably best arguable case. The

expression "reasonably best arguable case" takes the standard of proof at

the ad interim stage to a much lower notch than an ordinary test of prima

facie case as in a regular civil suit/injunction, the rationale being that

unlike domestic disputes, if a ship sets sail beyond the territorial waters of

the country, Indian courts can no longer assume jurisdiction and the

plaintiff would be rendered remediless even if it ultimately succeeds in the

suit.

Seen from such perspective, the pleadings in the plaint and the

affidavit of arrest and the materials annexed thereto are taken to be

sacrosanct for the purpose of consideration at this stage and the reasonably

best case which can be made out on the basis of the same by the plaintiff

would be considered by the court in granting arrest of a vessel. The

plaintiff, as per the above discussions, has fully satisfied the said standard

in the present case and is, thus, entitled to continuance of the arrest as

directed previously.

Insofar as the judgments cited by the defendant are concerned, the

Division Bench of this Court in Hindustan Aegis LPG Ltd. (supra) held that

there was not an iota of pleading to support the case made out therein. The

facts of the case were entirely different, where damages were to be proved

with regard to the consequences of the damage caused to one of the twin

arms of the Port. As opposed to the same, in the present case, the delay

occasioned by the defendant in delivering the product is virtually admitted

and there are sufficient materials to indicate the ingredients of the claim for

damages.

Insofar as Shree LTC Agro Sales Ltd (supra) is concerned, the facts of

the said case are also different from the present case. The degradation and

damage to cargo in the present case, as apprehended by the plaintiff, are

directly relatable to the variation in temperature which is borne out by the

available temperature logs as well as can be inferred from the withholding of

subsequent temperature logs by the owners after August 1, 2024.

In Shree LTC Agro Sales Ltd (supra), it was only observed that even

assuming the test of reasonably best arguable case, the security cannot be

excessive in nature. In the present case, however, the security claimed by

the plaintiff is not exorbitant or disproportionate with the apprehended

damage to the cargo, for which ingredients in prasaenti are available on the

records.

In M.V. "Baltic Confidence" (supra), a Division Bench of this Court held

that the court has no inherent power to appoint the Commissioner to seize

documents under Order XXVI Rule 9 of the Code of Civil Procedure. In the

present case, no documents have been directed to be seized. Although a

Surveyor has been appointed through a Special Officer, the same is merely

to provide fuller body to the rudiments of the plaint claim, sufficient basis of

which, however, is already disclosed in the plaint. The reports filed by the

Surveyors in the reported case were held to be inconsistent which could not

justify by itself appointment of a receiver for assessing the damages. In the

present case, however, since the shipper loses liability as per contract

between the parties after the cargo is unloaded, unless a survey is done

while the cargo is on board, the entire suit would be rendered infructuous.

Also, in the said report, Surveyors had been appointed, only after which the

Court felt that their reports were inconsistent. Here, the matter is only at

the inchoate stage of appointment of Surveyors and their report(s) has/have

not yet come on record. Thus, the facts of the present case are completely

distinguishable from M.V. "Baltic Confidence" (supra).

In Shadiram and Sons Pvt. Ltd. (supra), it was held that the plaintiff

needs to lead necessary evidence for establishing the claim of loss. However,

in the present case, the inordinate delay of more than about one and a half

months after the time expected in normal course of events is a

distinguishing factor. In the instant case, the nature of the cargo was on

special notice to the vessel owners as well. The requirement to maintain the

temperature logs at 45 degree Celsius, which was not complied with, was

also known to the owners. However, the same was not adhered to by the

defendant.

Insofar as the customs duty is concerned, in the present case,

although the Notification in lieu of customs duty came subsequent to the

contract between the parties, the payability of customs duty itself is

common knowledge and was definitely known to the defendant. Even if the

Notification of enhancement was not within the knowledge of any of the

parties at the time of executing the contract, the same arose due to no fault

of the plaintiff, after the expected period of delivery was long over. Thus, the

plaintiff has been exposed to additional payment in lieu of customs duty

solely due to the delay caused by the defendants, due to no fault of the

plaintiff. If the cargo was delivered in time instead of the vessel roaming

about in unchartered waters and ports, the extra burden of enhanced

customs duty would not be payable by the plaintiff at all. Hence, the

connection between the claim of damage and the breach on the part of the

defendant is direct and the defendant cannot shirk liability for the same.

In view of the above, this Court of the opinion that the order of arrest

of the vessel as passed on September 20, 2024 was fully justified and there

is no reason why the said order should be vacated at this stage.

Accordingly, the interim order dated September 20, 2024 is extended till the

disposal of GA-COM 1 of 2024 on the same terms as stipulated therein.

The defendant shall file its affidavit-in-opposition to the affidavit of

asset within November 15, 2024. Reply if any shall be filed by November 22,

2024. The matter shall be listed for hearing on November 29, 2024.

The learned Special Officer shall file his report in a sealed envelope

within a week and circulate copies of the same to the parties.

The defendant shall file its written statement within the statutory

time-limit.

(SABYASACHI BHATTACHARYYA, J.)

Later

At this juncture, learned counsel for the defendant prays for being

permitted to put in the security amount as directed in the order dated

September 20, 2024 by way of bank guarantee, alternatively by cash. Such

leave is granted. The department is permitted to put in the security by way

of bank guarantee or cash without prejudice to the defendant‟s rights and

contentions in the suit or further proceedings in the suit.

Needless to say, upon such bank guarantee being furnished or cash

being deposited, an intimation shall be given to that effect by the defendant

to the plaintiff as well as to the Marshall and the latter shall act on the same

and take necessary steps for release of the vessel.

(SABYASACHI BHATTACHARYYA, J.)