[Cites 11, Cited by 0]
Madras High Court
Owners And Parties Interested In ... vs Om Freight Forwarders Limited on 30 April, 2026
Author: P.Velmurugan
Bench: P.Velmurugan
O.S.A.(CAD) No.41 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 08.04.2026
Pronounced on 30.04.2026
CORAM
THE HONOURABLE MR.JUSTICE P.VELMURUGAN
and
THE HONOURABLE MRS. JUSTICE K. GOVINDARAJAN THILAKAVADI
O.S.A.(CAD)No.41 of 2026
and C.M.P.Nos.6201 & 6202 of 2026
Owners and parties interested in
M.V. Nereus Progress (IMO 9170913)
a Motor Vessel flying the Flag of St. Kitts
& Nevis lying at V.O. Chidambaranar
Port, Tuticorin and represented by her Master ...Appellant
Vs.
Om Freight Forwarders Limited,
a Company Incorporated under the Laws of India,
having its Registered Office address
at 101, Jayanth Apartments, A Wing,
Opposite Sahar Cargo Complex,
Sahar, Andheri (East),
Mumbai 400 099,
Maharashtra, India
through its authorised signatory
Mr. Raj Ashwin Joshi ...Respondent
1/34
https://www.mhc.tn.gov.in/judis
O.S.A.(CAD) No.41 of 2026
Prayer : Original Side Appeal filed under Section 13 of the Commercial Courts
Act, 2015, read with Under Section 14 of the Admiralty (Jurisdiction and
Settlement of Maritime Claims) 2017, to set aside the impugned judgment dated
6th February 2026 passed in A.No.155 of 2026 in A.No.6081 of 2025 in
C.S.No.314 of 2025.
For Appellant : Mr. Prashant S. Pratap
Senior Advocate
for Ms. Deepika Murali
For Respondent : Mr. P. Giridharan
JUDGMENT
K. GOVINDARAJAN THILAKAVADI,J.
The Appellant/Defendant has preferred the present appeal against
common order dated 06.02.2026 passed in Application No.155 of 2026 and
Application No.6081 of 2025 in C.S.(Commercial Div) No.314 of 2025.
2.The Respondent as Plaintiff filed the suit in C.S.(Comm.Div)
No.314 of 2025 inter alia seeking an order and decree against the vessel
M.V.Nereus Progress (IMO 9170913) and/or her owners and / or parties interest
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in her;
a)for a sum of INR 8,82,42,636.70 comprising of principal amount of USD
73,550.06 equivalent to Rs.66,10,679.39 and INR 6,90,18,750.20 along with
interest of USD 20,069.03 (equivalent to INR 18,03,804.42) and
Rs.55,09,402.66 together with legal costs of Rs.53,00,000.00 with further
interest on principal amount of Rs.7,55,97,802.00 at the rate of 18% per annum
from the date of the suit till date of realization.
b)For arrest and sale of the Vessel M.V. Nereus Progress in as is,
where-is condition, together with the engines, tackles, cranes,
paraphernalia, fixtures, furniture and fittings, presently in Indian
waters at V.O.Chidambaranar Port, Tuticorin, Tamil Nadu State,
India within the jurisdiction of this Hon’ble Court and territorial
waters of India.
c)For a direction to adjust the sale proceeds of the Vessel M.V.
Nereus Progress against the suit claim;
d)And for costs of this suit.
3.The above suit is instituted by the Respondent/Plaintiff for recovery of
the above alleged dues arising under a charterparty entered into with Nereides
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Marine Services in respect of a vessel, M.V. Bharadwaj, invoking Section 5(1)
(b) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017
and also moved an application in A.No.6081 of 2025 seeking for arrest of the
appellant's vessel lying at V.O. Chidambaranar Port, Tuticorin, on the basis that
the Respondent/Plaintiff is the owner of the vessel MV Bharadwaj. The said
vessel was given on demise charterer by the Respondent/Plaintiff to Nereides
Marine Services, UAE, under a Demise Charterparty dated 24.07.2024. This
Charterparty is called a Bareboat Charterparty and is on the BARECON 2019
Standard Form of Contract published by BIMCO (Baltic and International
Maritime Council) which is an international Organization which publishes
Standard Forms of Charterparties to be used in the trade worldwide. The demise
charterer Nereides Marine Services, UAE committed defaults in hire payment
and a demand was raised by the Respondent for a sum of USD 73,550.06
(Rs.66,10,679.00) and Rs.5,28,12,794 aggregating to a total amount of
Rs.5,94,23,473.00. It is the case of the Respondent/plaintiff that this amount
was not paid and consequently they had a claim against the demise charter of
their own vessel Nereides Marine Services. The Respondent/plaintiff filed the
present suit and sought arrest of the Appellant/Defendant vessel Nereus
Progress under Section 5(2) read with Section 5(1)(b) of the Admiralty Act,
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2017 on the ground that Nereides Marine was the demise charterer of the vessel.
The Respondent/Plaintiff asserted that it had a maritime claim under Section
4(1)(h) of the Admiralty Act for unpaid Charter hire.
4.The claim of the Respondent/Plaintiff was resisted by the
Appellant/Defendant stating that the Appellant/Defendant namely H.K.Shipping
Ltd., Marshall Islands is the owner of the vessel MV Nereus Progress which
was ordered to be arrested by this Court by order dated 04.12.2025. HK
Shipping Limited had entered into a Demise Charterparty dated 03.10.2024 with
Nereides Marine Services, UAE, as Demise Charterer. This Charterparty was
also on the standard BARECON 2017 Form published by BIMCO. Thus, both
vessels viz., the Respondent's vessel MV Bharadwaj and Appellant’s vessel MV
Nereus Progress had the same Demise Charterer Nereides Marine Service, UAE
who defaulted in payment of hire charges both to the Appellant and to the
Respondent.
5.Due to defaults committed by the Demise Charterer, the
Appellant/Defendant terminated the charterparty on 13.11.2025 after issuing
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several notices and demands for payment of outstanding charter hire to the tune
of USD 696,500.00. The termination was in accordance with Clause 31 (a) (i)
and 32 of the Charterparty. Hence, prayed for dismissal of the suit.
6.Pending Suit, the Respondent/Plaintiff filed an application in
A.No.6081 of 2025 in C.S. No.314 of 2025 for an ex parte warrant of arrest
against the appellant / defendant and for some other consequential reliefs. An
interim order came to be passed on 04.12.2025 in A.No.6081 of 2025 in C.S.
No.314 of 2025. Pursuant to the said order, the appellant/plaintiff has moved an
Application in A. No.155 of 2026 for vacating the said order on the following
grounds:
(i) The Appellant/Defendant entered into a bareboat charter-party dated
03.10.2024 with one M/s.Nereides Marine Services, which is the bareboat
charterer in respect of the vessel for a period of three years.The said charter-
party, under Clause 31, provides for termination and the owners are entitled to
terminate the charter-party inter alia for non payment of hire as stipulated under
Clause 15 of the charter-party.
(ii) Clause 15 of the charter-party pertaining to hire has been substituted
by rider clauses to Barecon-2017 and more specifically Clause 6. In view of the
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same, since there was a default in payment of hire, the appellant/defendant,
through their solicitors, issued a demand notice dated 22.9.2025 to the bareboat
charterer, which failed to pay the outstanding sum of USD 695,500. Thereafter,
it was followed up with another letter dated 24.9.2025 by informing that the
appellant/defendant was considering termination of the charter-party in terms of
Clause 31.
(iii) In spite of receipt of the demand notice/letter, there was no response
and hence, another notice was issued on 27.10.2025 through the solicitors, by
which, it was made clear that the charter-party would be terminated in case of
default. As a follow up measure, on 06.11.2025, the appellant/defendant issued
an anti technicality notice to the bareboat charterer wherein it was stated that if
the payment was not received during the grace period, the appellant/defendant
would terminate the charter-party.
(iv) In spite of receipt of the said notice, the payment was not
forthcoming and therefore, the appellant/defendant issued a termination notice
dated 13.11.2025 and thereby lawfully terminated the bareboat charter-party
with immediate effect under Clause 31(a)(i) for being in breach of the terms of
hire. In the light of the above development, the appellant/defendant took a stand
that with effect from 13.11.2025, the bareboat charter's relationship with the
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defendant vessel stood completely severed.
(v) The possession in the hands of the charterer, at best, can only be in its
capacity as a gratuitous bailee pending repossession by the owner. Therefore,
the order of arrest passed by this Court on 04.12.2025 subsequent to the
termination notice dated 13.11.2025 is unsustainable since the entire foundation
of arrest under Section 5(1)(b) of the Admiralty (Jurisdiction & Settlement of
Maritime Claims)Act, 2017 (for short, the Act) is not satisfied.
The learned single judge, in the order dated 06.02.2026, allowed the
Application No.6081 of 2025 and dismissed the Application in A. No.155 of
2026, consequently made the interim order absolute.
7.Aggrieved by this, the Appellant/Defendant has preferred the present
appeal.
8.Mr.Prashant S.Pratap, learned Senior Counsel for the Appellant would
submit that the learned Single Judge failed to consider the provisions of Clause
31 and 32 of the Charterparty relating to termination of the demise charter and
physical repossession of the vessel. Though, the learned Single Judge made a
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finding of fact in the impugned order that, the termination notice was issued on
13.11.2025 in line with Clause 31 (a) (1) of the Charterparty Agreement,
however while interpreting Clause 32 of the Charterparty Agreement followed
the judgment of the Sri Lankan Court, which did not consider a Clause similar
to 32 but was concerned with a Lease Agreement providing for termination and
return of vessel which is completely distinct and different from Clause 31 and
32 of the Charterparty in question.
9.His further submission is that, a plain reading of Clause 32 indicates
that upon termination, owners shall have the right to repossess the vessel at its
current or its next port of call or at a port or place convenient to them and
pending physical repossession, Charterers shall hold the vessel as a gratuitous
bailee only to the owners. It is further submitted that the Sri Lankan Judgment is
clearly misplaced as the contract in question in the said judgment was not a
Demise Charterparty on the BARECON 2001 FORM or BARCON 2017
FORM. It was a lease agreement and did not provide for the Charterer to hold
the vessel as a gratuitous bailee pending physical repossession of the vessel.
10.Further, he would submit that, the learned Single Judge referred to the
Australian Judgment in the case of Hako Fortress which specifically deals
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with an identical termination and repossession Clause, but completely erred in
holding that a Charter by Demise can be terminated effectively only by actual
recovery of possession and control of the vessel. Whereas, the referred
Australian Judgment says that a Charter by Demise can be terminated by notice
and physical repossession is not necessary.
11.The learned counsel further submitted that the learned Single Judge
failed to take notice of the letter dated 19 November 2025 addressed by the
English Solicitors of the Appellant to the demise charterer in which it is stated
that,
"Our clients, the owners of the vessel hereby exercise
their right to repossess the vessel upon the vessel's berthing
at Colombo pursuant to Clause 32 of the Charterparty and
seek confirmation that possession would be given at that
time without hindrance or interference." .
12.This is a categorical overt act on the part of the vessel owner
(Appellant) to show that they actively asserted their right to regain possession
and control of the vessel upon berthing at Colombo. Therefore, the findings of
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the learned Single Judge that, there is also no material to prima facie conclude
that the Defendant actively assert their right to regain possession and control of
the vessel is completely erroneous and contrary to the record. The Learned
Single Judge erred in not considering and referring to the aforesaid letter dated
19 November 2025 which was on record before the Learned Single Judge. On
this ground alone the impugned judgment is liable to be set aside.
13.Thus he would contend that, if according to the Learned Single Judge
the Defendant must actively assert their right to regain possession and control of
the vessel, the Defendant has clearly done so by letter dated 19 November 2025.
Consequently if this assertion of right is required to show that the Demise
Charterparty was terminated then the Appellant/Defendant has clearly asserted
their right by virtue of letter dated 19 November 2025. In this view of the
matter, the Learned Single Judge ought to have allowed the application of the
Defendant for vacating the ex-parte order of arrest of the vessel.
14.His further contention is that, the vessel was on the high seas and
enroute to Colombo on 13 November 2025 when the demise charter was
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terminated by the Appellant/owners. It was impracticable to effect physical
delivery until the vessel reaches a port as provided in Clause 32. Consequently
the earliest that physical possession could have been taken was at Colombo.
However the vessel never went to Colombo and instead came to Tuticorin port
on 2nd December 2025 and was arrested on 4 December 2025 before the owner
could put their representative on board to indicate possession as per Clause 32
of the charterparty. The report of vessel's waiting at anchorage at Tuticorin port
as produced by the Plaintiff shows that the vessel MV Nereus Progress was at
anchorage on 29 November 2025. The vessel subsequently berthed on 2 nd
December 2025 as confirmed by the Plaintiff.
15.Therefore, the findings of the learned Single Judge that, the
Appellant/Defendant was also aware of the fact that the vessel is available at
V.O. Chidhambaranar Port, Tuticorin and as a prudent claimant, in order to
establish the control over the vessel and to substantiate their intention to
repossess the vessel, the overt act that was expected on the side of the
appellant/defendant was to proceed against the bareboat charterer for the
recovery of amount and seek for the arrest of the ship is incorrect. The Learned
Single Judge failed to appreciate that the Appellant cannot seek arrest of their
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own ship. Secondly the vessel was berthed at V.O. Chidhambaranar Port,
Tuticorin only on 2nd December 2025 and the vessel was arrested two days later
i.e., on 4th December 2025. Hence, there was no opportunity for the
owner/Appellant to take physical possession of the vessel.
16.The learned counsel further submitted that there are no triable issues
as contended by the Respondent and the question is entirely of interpretation of
Clause 32 of the Charterparty contract. He would further contend that the issue
raised by the Respondent/Plaintiff that there is some dispute as to whether the
owner of the arrested vessel MV Nereus Progress is HK Shipping Ltd., or H &
K Shipping Limited is of no consequence for the reason that, irrespective of
who the owner is, the Respondent/Plaintiff is not entitled to arrest the vessel as
the demise charterer of the vessel was not the demise charterer when the arrest
was effective. Therefore, the same is not a triable issue. His further contention is
that, Reliance on the judgment of the Hon'ble Apex Court in the case of Videsh
Sanchar Nigam Ltd. vs. MV Kapitan Kud & Ors reported in (1996) 7 SCC
127, is misconceived. In the facts and circumstances of that case, the Hon'ble
Apex Court applied the test of reasonably arguable best case, which is not
applicable to the facts and circumstances in the case on hand. The
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respondent/plaintiff has to make out a prima facie case for continuation of the
arrest and only upon such case being made out the respondent / plaintiff would
be entitled to sustain the arrest. No such prima facie case is made out by the
respondent/plaintiff and the balance of convenience is in favour of the appellant
alone.
17.Therefore, he would conclude that the Respondent/ Plaintiff failed to
make out a prima facie case for continuation of the arrest of the vessel after
having obtained an ex-parte order. The impugned judgment deserves to be set
aside as it proceeds on a completely erroneous and misplaced reliance on the Sri
Lankan judgment which does not interpret a Clause similar to Clause 32 of the
Charterparty. There has been a failure on the part of the learned Single Judge to
consider and apply the interpretation of an identical clause by the Federal Court
of Australia in the case of Hako Fortress. Having held that there must be some
overt act to show that the owner actively asserted their right to regain
possession and control of the vessel, the Learned Single Judge ought to have
considered letter dated 19th November 2025 addressed on behalf of the owners
to the demise charterers as sufficient assertion of their right to regain possession
and control of the vessel. Not considering this letter is fatal as this letter
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completely complies with the requirement of assertion by owners of their right
to take possession of their vessel at the port of Colombo. The demise charter
was terminated on 13 November 2025 and owners of the vessel asserted their
right to take possession of their vessel on 19 November 2025. Consequently the
demise charterer of the vessel was not the demise charterer when the arrest was
effected on 4 December 2025. The twin test requires that the demise charterer is
liable for the claim and is the demise charter (or owner) of the vessel when the
arrest is effected. The second part of the test that the demise charterer is the
demise charterer of the vessel when the vessel is arrested is not satisfied and the
order of arrest is liable to be and should be vacated.
18.For all the above reasons the impugned judgment is ex-facie wrong in
law and deserves to be set aside. In fact to the extent that the impugned
judgment requires the owners to actively assert their right to regain possession
of the vessel, the owners have done so by letter dated 19 November 2025 and
consequently the Learned Single Judge ought to have vacated the order of arrest
as the requirement of the Learned Single Judge that the owners must actively
assert their right to regain possession was complied with by the owners by
virtue of the said letter
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19.On the other hand, the contention of the learned counsel for the
Respondent /Plaintiff is that the application to vacate the order of arrest raises
several triable issues. He would further submit that whether the Bareboat
Charter Party was terminated or not raises triable issues of fact. The complete
transfer of possession and control from the shipowner to the charterer is the
very quintessence of a bareboat charter. Thus, physical redelivery (which effects
a reversion of the transfer of possession and control is necessary for its
termination. Clause 32 of the Bareboat Charter Party requires redelivery and
repossession of the Vessel. Under clause 32 of the Bareboat Charter Party,
pending physical re-delivery, the Bareboat Charterer shall hold the vessel as
gratuitous bailee only. The vessel shall be deemed to be repossessed by the
owners from the Bareboat Charterers upon the boarding of the vessel by the
Owners's representative. Triable issues of fact to determine whether the
Bareboat Charter Party was terminated.
20.His further submission is that, the Bareboat Charterer asserts that it
has not accepted the alleged termination notice and continued to be in firm
control and possession of the vessel. While so, the Appellant has to substantiate
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as to whether the alleged termination notice of the Bareboat Charter was
accepted and acted upon by the Bareboat Charterer. Therefore, the Bareboat
Charterer has not acted as gratuitous bailee since it has not accepted the
termination. In fact, the Bareboat Charterer raised a tax invoice upon the owner
and affirmed that it is in firm control and employment of the vessel even after
the alleged termination. It is further submitted that appellant could not track the
vessel through publicly available platforms which show its presence at
Tuticorin Anchorage on 28.11.2025. The V.O.Chidambaranar Port line up of
29.11.2025 shows the vessel is waiting at Anchorage to repossess the vessel.
Further, no alternate crew were arranged to take over the vessel by the appellant
and no arrangements were made to take possession of the vessel at Tuticorin
Anchorage. Further, the Authorized Representative of the Appellant did not
board the vessel, as required under Clause 32 of the Charterparty. The crew
change had taken place only in February 2026 when there was a humanitarian
crisis on board and no steps were taken for vacating arrest until 08.01.2026 i.e.,
35 days after the vessel was arrested.
21.He would further submit that, though the Appellant has relied on the
Federal Court of Australia's decision in Hako Endeavour [2013] FCAFC 21 to
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argue that a bareboat charter can be terminated without re-delivery or re-
possession, the said judgment is not applicable in the present case for the reason
that the said decision was a final judgment after evidence. The question of
termination was decided after a trial was conducted and evidence was recorded.
It only shows that a trial is required to determine whether the Bareboat
Charterparty was in fact terminated on 13.11.2025 as alleged by the Appellant.
The Australian Court was deciding the termination of the Bareboat Charterparty
for the purpose of Section 18 of the Australian Act, which is not pari materia to
Section 5 of the Admiralty Act, 2017. Further, in the said case, there was no
evidence that the Bareboat Charterer Hako Offshore ever disputed the amounts
of indebtedness claimed by the shipowners or, in particular, Dolphin 2's
exercise of its right to terminate the charterparty for Hako Fortress. In the case
on hand, the Bareboat Charterer has not accepted the termination and reaffirmed
that it is in firm control and employment of the vessel even after the alleged
termination, and had scheduled employment for the vessel even after the alleged
termination. Further, the Hong Kong Court of First Instance judgment relied
upon by the Appellant in Gulf Marine and Industrial Supplies Inc. v. The
Demise Charterers of the Ship or Vessel MV 'Trident Dawn', to argue that re-
delivery and re-possession are not required for termination of a Bareboat
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Charterparty, is not applicable to the case on hand for the reason that the Hong
Kong Court did not consider the English law position on the termination of
Bareboat Charterparties.
22.In the present case, the Bareboat Charterer did not accept termination
of the Bareboat Charterparty and there was no active assertion that the Bareboat
Charterer had no further rights in relation to the vessel. Despite the vessel being
in Tuticorin Anchorage since 28.11.2025, the Appellant has not asserted its
right over the vessel till date by taking actual possession. The Appellant failed
to assert its right or move for the release of the vessel for 35 days after the arrest
was ordered. The Bareboat charterer continued to assert its firm control over
vessel even after the alleged termination on 13.11.2025.
23.For the proposition that, physical re-delivery and re-possession are
essential for the termination of a bareboat charter party, the respondent places
reliance on the following decisions:
i. The Chem Orchid 2015 SGH 50] (paragraph 66
onwards from Page 227 of Index of Authorities filed by
Respondents)
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ii. New World P&l Service Co. Ltd. v. the Disponent
Owner and/or the Demise Charterer of the Ship and/or the
Vessel 'Es Valor' of the Port of Monrovia, Liberia |2024
Malayan Law Journal Unreported 3653) (paragraphs 92
onwards from Page 268 of Index of Authorities filed by
Respondents)
iii.Navi Bunkering Crop v. M.V. Evangeli
|CA/REM/02/2018] (pages 308 to 310 of Index of
Authorities filed by Respondents)
IV. Songa Product & Chemical Tankers III AS v.
Kairos Shipping II LLC [2025 EWCA Civ 1227) (paragraph
23 @ Pg 322 and paragraphs 41 - 50, pages 331 to 333 of
Index of Authorities filed by Respondents)
24.Further he would submit that, even if no physical re-delivery or re-
possession is required, the Appellant must still establish termination of the
bareboat charter and that the bareboat charterer thereafter acted only as a
gratuitous bailee. Both these have not been established by the Appellant. The
bareboat charter party was never terminated (even by the Notice of Termination
dated 13.11.2025), as evidenced by the conduct of the Parties from 13.11.2025
to 04.12.2025. The bareboat charterer had firm control and employment for the
vessel, even after the alleged termination, and was therefore not acting as a
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gratuitous bailee. The bareboat charterer was in control of the vessel with firm
employment when this Court ordered the arrest of the vessel.
25.His further contention is that the additional documents filed by the
appellant do not evidence valid termination of the Charter party. The above
documents are incomplete and the full chain of correspondence has been
concealed. The alleged email dated 05.12.2024 to show acceptance of
termination by the Bareboat charterer is incorrect and misleading. The alleged
email was sent after the arrest order was served on the Appellant and Bareboat
charterer. The correspondence is based on legal advice and not
contemporaneous between the parties. Despite the alleged termination, the
appellant failed to take any steps for redelivery or repossession of the vessel
from the time it reached Tuticorin Anchorage on 28.11.2025, till date. The crew
was changed only at the instance of the V.O.Chidamabaranar Port in February
2026, because of a humanitarian crisis on board. The appellant always knew the
vessel's location and movement status. This was available publicly on Marine
Traffic and showed the location as Tuticorin even on 28.11.2025. On
20.11.2025 the bareboat charterer wrote ''... We assure you that it remains our
intention to comply with all contractual obligations.'' to the appellant,
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evidencing intention to perform the charter party. On 27.11.2025 the bareboat
charterer requested the owner for additional time to amicably resolve all
outstanding payment matters. The vessel was underway to Colombo to fulfil
scheduled employment. Even on 27.11.2025, the appellant sought confirmation
on whether the vessel was on route for Colombo. This confirms subsistence of
the bareboat charter party post the alleged termination on 13.11.2025. On
02.12.2025, the bareboat charterer has written to the appellant '' As we have
firm employment and control of the vessel, we are confident of generating the
necessary funds to settle the outstanding higher payment.'' Even on 03.12.2025
the bareboat charterer has written to the appellant stating as follows:
(i) We sought guidance on whether the owners prefer to take repossession
at Tuticorin.
(ii) If repossession is to be exercised, it may be taken at Tuticorin
otherwise, we request that the vessel be allowed to proceed to Colombo to fulfil
the scheduled employment,
(iii) Upon receiving confirmation of continuity, we will promptly furnish
a firm hire payment plan, which we shall adhere to without fail.
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26.On 04.12.2025, the date of arrest ordered, the bareboat charterer wrote
to the appellant stating that it was awaiting a confirmed update from its
commercial team with respect to the cargo and voyage details.
27.Therefore, it is made clear from the additional documents that,
a.The bareboat charterer and appellant did not act in pursuance of any
alleged termination.
b.The vessel was in ''firm control and employment'' of the bareboat
charterer.
c.The bareboat charterer had scheduled employment for the vessel, and
d.The bareboat charterer held out to third-parties has being the lawful
bareboat charterer in control and possession of the vessel, for the scheduled
employment.
28.Moreover, the bareboat charterer is not a ''gratuitous bailee'' as
claimed by the appellant since the bareboat charterer has admittedly raised a
tax invoice of US $ 58,900 for the period of 01.12.2025 to 21.12.2025 upon the
appellant for operational debts on 26.12.2025. after the purported termination.
The invoice shows that operation, management, and control of the vessel
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continued with the bareboat charterer, and it was not merely a ''gratuitous
bailee''. Furthermore, it could not have had any scheduled employment for the
vessel after the alleged date of termination, nor expressed that it had firm
control and employment and was proceeding to Colombo to fulfil such
employment, had the charterparty in fact been terminated.
29.Further, the alleged reliance on the email of 05.12.2025 by the
appellant to show acceptance of termination by the bareboat charterer cannot be
accepted for the reason that the alleged email was sent after the arrest order was
served on the appellant and the bareboat charterer. The alleged acceptance of
termination is contrary to the parties conduct even as on 04.12.2025 i.e., the
date of order of arrest. Therefore, the said email is of no consequence to
support the case of the appellant.
30.Therefore, the Bareboat Charterer was never terminated on 13.11.2025
and the learned Single Judge rightly made the arrest order absolute, warrants
any interference by this Court.
31.Heard on both sides, records perused.
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32.The crucial question to be decided in this appeal is whether a demise
charterer of a vessel ceases to be a demise charterer upon termination of the
charter party or, Whether physical possession of the vessel is required to be
taken by the owner in order for the demise charterer to cease to be the demise
charter of the vessel. If it so, what is the overt act required on the part of the
owner to show that the owner has actively asserted their right to regain
possession of the control of the vessel.
33.Now, it has to be seen whether physical repossession is mandatory for
effective termination of charterparty and whether the Demise Charterer
continues to be the Demise Charterer until physical repossession is taken by the
owner or whether the vessels ceases to be on Demise Charterer upon
termination.
34.There is no binding precedent governing the issue of whether
termination of a Bareboat Charterer necessitates physical re-delivery or re-
possession, or whether it may be effected solely by issuance of a notice of
termination. The learned counsel for the appellant referring to Clause 32 of the
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Charter Party Agreement would contend that, the above Clause makes it clear
that upon termination, owner shall have the right to repossess the vessel at its
current or its next port of call or at a port or place convenient to them and
pending physical possession, Charterers shall hold the vessel as a gratuitous
bailee only to the owners.
35. According to the appellant, the termination notice was issued on
13.11.2025 in line with Clause 31(a)(i) of the Charter-Party Agreement. In the
said termination notice, the appellant enquired about the location of the vessel.
It is submitted that by letter dated 19.11.2025 addressed by the English
Solicitors of the Appellant to the demise charterer in which it is stated that,
''Our clients, the Owners of the vessel hereby exercised their right to repossess
the vessel upon the vessel's berthing at Colombo pursuant to Clause 32 of the
Charter party and seek confirmation that the possession would be given at that
time without hindrance or interference.'' Thus, according to the appellant, this is
a categorical overt act on the part of the appellant / vessel owner to show that
they actively asserted their right to regain possession and control of the vessel
upon berthing at Colombo.
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36.Where as, the respondent position is that, the bareboat charter party
was never terminated even by the notice of termination dated 13.11.2025, as
evidenced by the conduct of the parties from 13.11.2025 to 04.12.2025. the
bareboat charterer had firm control and employment for the vessel even after the
alleged termination, and was therefore, not acting as a gratuitous bailee at the
time of arrest ordered by this Court.
37.The specific case of the appellant is that as per the bareboat charter
party dated 03.10.2024, the parties have agreed that English law will govern
them.
38.Therefore, a demise (or Bareboat) charterer generally does not cease to
be the demise charterer immediately upon the contractual termination or
expiration of the charter party. Physical re-delivery of the vessel and the taking
of possession by the owner is usually required to terminate the demise
charterer's status. The ''quintessence'' of a demise charterer is the complete
transfer of possession and control, meaning the charterer steps into the shoes of
the owner. Consequently, the charterer remains the demise charterer until that
possession and control are returned to the owner, even if the Agreement has
terminated contractually, via a notice.
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39.While some Industry forms ( Eg. BARECON) and certain Court
views in Australia/Hong Kong suggest an owner may terminate without actual
physical possession, the strict requirement of re-delivery to end the status is the
commonly accepted rule to ensure security for maritime claims. Generally, the
doctrine of ''constructive re-delivery'', where a vessel is considered re-delivered
without physical handover is not strongly accepted in this context, as it could
prejudice third parties.
40.But common law, as affirmed in The Chem Orchid , the Singapore
High Court, dictates that a bareboat charterer is terminated only upon the
actual, physical re-delivery of the vessel back to the owner. This requirement
protects third parties who, after contractual termination but before re-delivery,
might otherwise be left with no party to hold accountable for liabilities. Without
physical re-delivery, a ''limbo'' period occurs where the charterer no longer
operates under the charterer but retains legal possession, making them still
liable as the demise charterer. For the purpose of liabilities and in rem actions,
the demise charterer continues to be the demise charterer until physical
possession is retaken by the owner. Therefore, physical re-delivery and
repossession are essential for the termination of a bareboat charter party.
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41.While, the English Maritime Law imposes a condition that the owner
of the vessel must take all reasonable efforts to repossess the vessel. While so,
the owner of the vessel is expected to take necessary steps for repossessing the
vessel and that if the same is done, it satisfies the requirement of the law of the
United Kingdom. If that being so, what is the overt act on the part of the
appellant/owner to show that it has actively asserted its right to regain
possession of the control of the vessel.
42.The next question arises for determination is whether the Respondent
has established a prima facie and reasonably arguable best case for the order of
arrest to be upheld and the matter must proceed to trial. According to the
respondent as of 03.11.2025, a principal sum of USD73,550.06 and
Rs.6,90,18,750.20 which approximately aggregates to Rs.7,56,29,429.59 is due
and payable by the Bareboat charterer to the Respondent. Since the Bareboat
charterer and the guarantor did not response to the above said claim and the
cheques issued were dishonoured due to insufficient funds/closed accounts, the
respondent has filed the present suit for recovery of money and for arrest and
sale of the Vessel belonging to the defendant. Therefore, the respondent has
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established by producing relevant documents that it has a maritime claim
against the defendant vessel under Section 4(1)(h) r/w Section 5(1)(b) and 5(2)
of the Admiralty (Jurisdiction and Settlement of Maritime claims) Act, 2017
and therefore is entitled to assert its maritime claim for the recovery of the
amounts due and payable to the applicant. Therefore, the plaintiff has made out
a prima facie case for grant of arrest.
43.Further, an order of arrest for a vessel can be vacated primarily by
providing sufficient security, such as a bank guarantee or cash deposit into
Court to cover the claim, interest and costs. Other grounds include showing the
arrest was wrongful, the claim is not a valid maritime claim, the Court lacks
jurisdiction, or by settling the claim directly with the plaintiff. The appellant
herein failed to establish that the arrest was wrongful and the claim is not a
valid maritime claim and that the Court lacks jurisdiction for vacating the order
of the arrest. The learned Single Judge while passing the interim order have
considered the entire materials on record, rightly found that the plaintiff has
made out a prima facie case and that the proceedings initiated by the plaintiff
was not vexatious or frivolous so as to halt the proceedings in limine.
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44.The learned Single Judge applied the principles laid down by the
Hon'ble Apex Court in Videsh Sanchar Nigam Limited Vs. M.V.Kapitan Kud
reported in 1996(7)SCC127 rightly held that, where a strong triable case has
been made out by the plaintiff, the Court has to be circumspect in releasing the
ship that has been arrested in the absence of any other security since, if a foreign
ship leave the shores of the Indian Territorial waters, it will be very difficult to
get hold of it and it may not return to the jurisdiction of the Indian Courts and
thereby the plaintiff lose their right forever to initiate proceedings in rem in this
country.
45.Further, it is pertinent to note that, once a third party, which has a
valid prima facie claim, loses its security by permitting the vessel to leave the
shores of India, it may lead to losing their right forever to entertain proceeding
in rem in this Country.
46.In the light of the above discussions, considering the fact that that
plaintiff has made out a prima facie case and applying the reasonably arguable
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best case test, as regards to identity of the ownership of the vessel and whether
the appellant has actively asserted their right to regain possession of the control
of the vessel, as triable issues, the learned Single Judge has rightly dismissed
the vacate petition filed by the appellant and made the interim order of arrest
absolute. No infirmity is found in the said order of the learned Single Judge
which warrants interference by this Court.
47.In the result, this original side appeal is dismissed. No costs.
Consequently, connected miscellaneous petition is closed.
(P.V.J.,) (K.G.T.J.,)
30.04.2026
Index: Yes/No
Internet: Yes/No
Speaking/Non-Speaking order
vsn
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To
1.M/s.Photon Factory
Rep. By its Partner,
Mr.Gautham Vasudev Menon
No.205, Lloyds Road,
Royapettah,
Chennai- 600 014
2.M/s.R.S.Infotainment (P) Ltd.,
Rep. By its Director, Mr.R.Jayaraman,
S/o. Sri A.Ramanujam
No.16, Bhagavandan Street,
Flat No.5, Goodwill Apartments,
T.Nagar, Chennai-17.
3.M/s.Escape Artists,
Represented by its Partner,
Mr.P.Madan,
No.205, Lloyds Road,
Royapettah,
Chennai-600 014
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P.VELMURUGAN,J.
and
K.GOVINDARAJAN THILAKAVADI,J.
vsn
Pre-delivery judgment made in
and C.M.P.Nos.6201 & 6202 of 2026
30.04.2026
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