Altus Uber Imo No. 9385300 vs Siem Offshore Rederi As

ALTUS UBER, offshore vessel having IMO ] No.9385300 a motor, flying the flat of Liberia ] Monrovia together with her engine, ] machinery, boats, tackle, outfit, fuels, spares, ] appurtenances and stores, presently at ] Mumbai, within Indian territorial waters, ] ... Appellant And all parties interested in her. ][Ori. Defendant]

Versus

Siem Offshore Rederi AS, a company ] incorporated under the Laws of Norway ] having its registered office at Nodeviga, ] ... Respondent 14, N-4610, kristiansand S, Norway ][Ori. Plaintiff]

WITH NOTICE OF MOTION (L) NO. 1089 OF 2018 IN COMMERCIAL APPEAL (L) NO. 465 OF 2018 IN JUDGE'S ORDER NO,. 107 OF 2018 IN ADMIRALTY SUIT (L) NO. 20 OF 2018

ALTUS UBER, offshore vessel having IMO ] No.9385300 a motor, flying the flat of Liberia ] Monrovia together with her engine, ] machinery, boats, tackle, outfit, fuels, spares, ] appurtenances and stores, presently at ]

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Mumbai, within Indian territorial waters, ] ... Applicant And all parties interested in her. ][Ori. Defendant]

IN THE MATTER BETWEEN :

ALTUS UBER, offshore vessel having IMO ] No.9385300 a motor, flying the flat of Liberia ] Monrovia together with her engine, ] machinery, boats, tackle, outfit, fuels, spares, ] appurtenances and stores, presently at ] Mumbai, within Indian territorial waters, ] ... Appellant And all parties interested in her. ][Ori. Defendant]

Versus

Siem Offshore Rederi AS, a company ] incorporated under the Laws of Norway ] having its registered office at Nodeviga, ] ... Respondent 14, N-4610, kristiansand S, Norway ][Ori. Plaintiff]

WITH NOTICE OF MOTION (L) NO. 1137 OF 2018 IN COMMERCIAL APPEAL (L) NO. 465 OF 2018 IN JUDGE'S ORDER NO,. 107 OF 2018 IN ADMIRALTY SUIT (L) NO. 20 OF 2018

SWORDFISH SHIPCO LIMITED, a company ] incorporated and existing under the laws of ] the United Kingdom and having its registered] address at 210 Pentronville Road, ] London N1 9JY ] ... Applicant

IN THE MATTER BETWEEN :

ALTUS UBER, offshore vessel having IMO ] No.9385300 a motor, flying the flat of Liberia ] Monrovia together with her engine, ] machinery, boats, tackle, outfit, fuels, spares, ]

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appurtenances and stores, presently at ] Mumbai, within Indian territorial waters, ] And all parties interested in her. ] ... Appellant

Versus

Siem Offshore Rederi AS, a company ] incorporated under the Laws of Norway ] having its registered office at Nodeviga, ] 14, N-4610, kristiansand S, Norway ] ... Respondent

WITH COMMERCIAL APPEAL NO. 86 OF 2019

SWORDFISH SHIPCO LIMITED, a company ] incorporated and existing under the laws of ] the United Kingdom and having its registered] address at 210 Pentronville Road, ] ... Appellant London N1 9JY ] [Ori. Def No.2.]

Versus

1 Siem Offshore Redri AS, a company ] incorporated under the Laws of Norway ] having its registered office at Nodeviga, ] ... Respondent 14, N-4610, kristiansand S, Norway ] No.1(Ori.Pltff).

1 ALTUS UBER, offshore vessel having IMO ] No.9385300 a motor, flying the flat of Liberia ] Monrovia together with her engine, ] machinery, boats, tackle, outfit, fuels, spares, ] appurtenances and stores, presently at ] Mumbai, within Indian territorial waters, ] ... Respondent And all parties interested in her. ] No.2 (Ori.Def.No.1)

Mr. Sunip Sen with Ms. Priyanka Pol i/b Pol Legal Juris for the Appellant in COMAPL No.465 OF 2018 and for the Applicant in NMCAST No.1089 of 2018.

Mr. Prashant Pratap, senior advocate with Mr. Vishal Muglikar

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and Mr. Nishaan Shetty i/b Mr. Kaushik S. Krishnaswamy for the Respondent / Original Plaintiff.

Mr. Aspi Chinoy, senior advocate with Mr. Akshay Kolse Patil, Mr. Amitava Majumdar, Ms. Damayanti Sen & Mr. Ruchir Goenka i/b Bose & Mitra & Co. for the Appellant in COMAP No.86 of 2019 and for the Applicant in NMCAST No.1137 of 2018.

CORAM : S.C. DHARMADHIKARI & B.P. COLABAWALLA, JJ.

Date of Reserving : 24TH APRIL, 2019

Date of Pronouncement : 23RD JULY, 2019

JUDGMENT :

[Per S.C. Dharmadhikari, J.]

1 This Appeal [Appeal (L) No. 465 of 2018] challenges

the judgment and order of a learned single Judge (K.R. Shriram,

J.) delivered in a Notice of Motion being Commercial Notice of

Motion (L) No. 1392 of 2018 in Commercial Admiralty Suit (L)

No. 20 of 2018.

2 By the order under challenge, pronounced on 25 th

September, 2018, the learned single Judge has proceeded to

dismiss the Notice of Motion with costs quantified at rupees five

lakhs. The appellant before us is the original defendant in the

Suit whereas the respondent is the original plaintiff. They shall

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be referred to hereafter as plaintiff and defendant.

3 The plaintiff instituted the Suit in the Admiralty and

Vice Admiralty Jurisdiction of this Court. Now, this Suit is

numbered as Commercial Admiralty Suit No. 62 of 2018.

4 At the outset, and before we proceed to refer to the

allegations in the Plaint, we at once clarify that this Appeal is

under section 14 of The Admiralty (Jurisdiction & Settlement of

Maritime Claims) Act, 2017 [for short "The Admiralty Act"]. The

parties before us have proceeded on the footing that the instant

appeal is maintainable. Hence we are not called upon to decide

the issue of maintainability or consider any objection of that

nature. We have, for the purposes of the present Appeal,

proceeded on the basis that the impugned order is capable of

being challenged in an appeal under section 14 of the Admiralty

Act.

5 Now, we come to the allegations in the Plaint. The

plaintiff is a company, incorporated under the laws of Monrovia.

It gives its vessels on various kinds of Charterparty, namely,

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Bareboat, Time and Voyage charters. The defendant is an

offshore supply vessel / platform vessel flying the flag of Liberia

and presently lying and being at Mumbai i.e. within the territorial

waters of India and within the Admiralty jurisdiction of this

Court. The defendant is owned by Marine Engineering Diving

Services FZC, [for short "MEDS"], a company incorporated under

the foreign laws, having its registered office at United Arab

Emirates.

6 The Suit is filed, inter alia, for recovery of an amount

of US$ 28,889,304/-, which includes charter hire in the sum of

US$ 6,797,554/- and claim for capital value of the vessel in the

sum of US$ 20,061,750/- together with further interest and costs

due to breach of the conditions stipulated in the Bareboat

Charterparty dated 13th May, 2015, copy of which is annexed as

Annexure A to the Plaint. It is claimed that as owners of a motor

vessel Siem Marlin, the plaintiff offered the same on Bareboat

Charterparty to Marine Engineering Diving Services FZC for a

period of five years with a purchase obligation at the end of five

years or a purchase option at the end of the first / second / third /

fourth year from the date of delivery. The plaintiff states that the

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process of chartering Siem Marlin had taken place through a

common chartering broker - Fathom Offshore Services Limited.

The brokers were also involved in correspondence relating to

compliance of the Bareboat Chaterparty terms.

7 In paragraph 8, the plaintiff reproduces the relevant

clauses of the Charterparty.

8 In paragraph 9, it is alleged that as per the terms of

the Bareboat Charterparty, the charterers / the owners of the

defendant vessel were required to take delivery of Siem Marlin

between 15th and 25th October, 2013. As per the terms and

conditions stipulated in the Bareboat Charterparty, fifteen days

prior to the delivery of the vessel to the charterers, they were

required to furnish bank guarantee for US$ 40,00,000/-. This is

to guarantee full performance of the obligations under the

charterparty. The bank guarantee was to be furnished between

10th to 15th September, 2015. The charterers / owners of the

defendant, in unequivocal terms, represented to the plaintiff that

they would be furnishing the requisite performance bank

guarantee to the plaintiff in due compliance with the terms of the

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Bareboat Charterparty. Following the execution of the Bareboat

Charterparty, the bank guarantee was not provided by the

charterers. In the month of August, 2015, through the brokers,

the plaintiff was informed that the charterers were having

difficulty in arranging the bank guarantee. The plaintiff and the

charterers discussed various proposals to amicably resolve the

issue, but no agreements were reached. One such proposal was to

enter into a Time Charterparty, but no agreement was ever

reached. Annexure B are copies of the letters exchanged between

the parties. Once again in the month of September / October,

2015, the plaintiff called upon the charterers to furnish the bank

guarantee. As the charterers were unable to furnish the bank

guarantee for the subsisting employment of the vessel Siem

Marlin, the parties agreed to a new delivery window for Siem

Marlin. Further correspondence was exchanged. It appears that

the bank guarantee was not provided despite the above

development and on 11th October, 2015, the plaintiff and the

charterers amended the Bareboat Charterparty by Addendum

No.l. That Addendum amended the time for delivery clause and

cancellation date.

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9 On 4th November, 2015, the plaintiff sent an email to

the charterers calling upon them to present the bank guarantee

before 8th November, 2015. Annexure-E is a copy of this email

dated 4th November, 2015. Thereafter, the defendant to the Suit

made a request and in that regard, paragraph Nos.14 to 16 of the

Plaint read as under :

"14 Thereafter, the Defendant herein, due to financial difficulties faced by them, made a request, whilst agreeing to keep the all the terms and conditions, rights and liabilities under the Bareboat Charterparty alive and subsisting, to enter into a fresh time charter party in respect of vessel Siem Marlin in place of the bareboat charterparty. The Plaintiff craves leave to refer to and rely upon the correspondence exchanged between the Plaintiff and the Defendant in respect of entering into Time Charterparty in place of Bareboat Charterparty, as and when produced.

15 On 7 November 2015, without prejudice to and whilst keeping all its the rights and remedies under the Bareboat Charter alive, the Plaintiff and Charterers / owners of the Defendant vessel entered into a BIMCO Supply time charterparty (Hereinafter referred to as "Time Charterparty"). As per clause 43 of the Time-charterparty, the Time Charterparty was to come into effect only upon Charterers/owners of the Defendant vessel furnishing the agreed Bank Guarantee. Clause 43 of the Time Charterparty set out below:

"The Charter-party will not come into effect before Charterers have presented the agreed Bank Guarantee to owners".

Under the Time charterparty Charterers/owners of the Defendant vessel was required to present a bank guarantee for USD 2,000,000/- (US Dollar Two Million).

16. The relevant terms of the Time Charterparty are as follows :

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Box 5 Date of delivery 15.12.2016

Box 6 Cancelling date : 15.01.2016

Box 7 Port or place of delivery :

Arriving pilot station, Dubai

Hereto annexed and marked as Exhibit F is copy of the Time Charterparty dated 7 November 2015"

10 On 12th November, 2015, the plaintiff sent an email to

the charterers / owners of the defendant informing them that the

time Charterparty will come into effect and replace the Bareboat

Charterparty only on the charterers furnishing the bank

guarantee under the time Charterparty. The plaintiff informed

the charterers that they were yet to receive the bank guarantee

under the Time Charterparty. They reserved their right to claim

damages under the Bareboat Charterparty. Annexure G to the

Plaint is a copy of the email dated 12th November, 2015. On 16th

November, 2015, the charterers / owners of the defendant vessel

sent an email replying to the plaintiff's email and they said that

they were relentlessly chasing their bankers on the subject of the

bank guarantee but confirmed that once the Time Charterparty

comes into effect the Bareboat Charterparty will stand cancelled.

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Then on 19th November, 2015, the Charterers / owners of the

defendant vessel sent an email to the plaintiff informing them

that the bank guarantee was being vetted by the bankers and

requested the plaintiff to advise if the format attached by them of

the bank guarantee was acceptable to the plaintiff or otherwise.

11 In paragraph 20 of the Plaint the plaintiffs state that

despite the above noted assurances and representations the

Charterers / owners of the defendant vessel failed and/or

neglected to furnish the requisite bank guarantee as

contemplated by the Charterparty and, therefore, a notice of

termination was issued by the plaintiff on 24th November, 2015

informing the Charterers that the plaintiff will take the necessary

steps to mitigate their loss but will hold the Charterers liable for

all losses suffered due to the repudiatory breach of the Bareboat

Charterparty. The plaintiff then recorded on 2 nd November, 2015,

that they were yet to receive the bank guarantee and, therefore,

even the Time Charterparty is rendered ineffective. The plaintiff

is, therefore, under no obligation to mobilise the vessel.

12 On 8th December, 2015, the Charterers / owners of the

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defendant vessel responded to the plaintiff's e-mail dated 24 th

November, 2015 and raised certain defences. These defences are

noted in paragraph 22 of the Plaint and the response thereto is

set out in paragraph 23.

13 It is then claimed that a Time Charterparty was signed

and sealed by the Charterers / owners of the defendant vessel on

7th January, 2016, but the plaintiff categorically informed them

that this will not come into force until the agreed bank guarantee

has been presented and the last date for presentation would be

21st January, 2016. Once again the repudiatory breach was noted

and on 26th November, 2016, the letter was addressed by the

plaintiff's attorney to which a reply was received on 31 st January,

2016 by email.

14 It is claimed that the bank guarantee was not

presented even by 1st February, 2016, after which there was

correspondence through advocates to which there was no reply

from the defendants, save and except an email of 1 st March, 2016.

Then, the plaintiff stated that the appointment of an Arbitrator

was made and that was also informed. The plaintiff also informed

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the Charterers of filing of their statement of claim before the

Arbitral Tribunal. It is clear that once the Arbitrator was

appointed / the Tribunal was constituted, the request was made

by the Charterers / owners of the defendant vessel to extend time

till mid-July, 2017 to submit their response/defence to the

plaintiff's statement of claim. In the further paragraphs of the

Plaint it is stated that the extension was not agreed. There were

talks and discussions, but no settlement/agreement could be

reached.

15 Paragraphs 35 to 37 of the Plaint are crucial for our

purpose and read thus :

"35 The Plaintiff states that it learned that in or around November 2017, the Charterers / owners of the Defendant vessel purchased the Defendant vessel Altus Uber. The Seaweb Report dated May 2018, confirms that the Charterers / owners of the Defendant vessel are the registered owners of the Altus Uber. Annexed hereto and marked as EXHIBIT - "Y" is a copy of the Equasis Report dated 30 May 2018.

36 The plaintiff further submits that correspondence exchanged between the parties clearly reveal the fact that the rights of the Plaintiff accruing under the

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bareboat charter party has been prejudiced for reasons more particularly set out herein below:

a. The Plaintiff gave its vessel Siem Marlin on bareboat Charter to the Charterers / owners of the Defendant vessel under the Bare Boat charterparty;

b. The Charterers / owners of the Defendant vessel in repudiatory breach of imperative condition and warranty of the Bareboat Charterparty failed to furnish the requisite performance guarantee in the sum of USD 4 Million;

c. With a view to arrive at a amicable solution keeping all the rights and remedies under the Bareboat charterparty and only with a view to mitigate the losses arising out of breach of Bareboat Charterparty by the Charterer / Owner of the Defendant vessel, the Plaintiff entered into short term Time Charterparty with Charterers / owners of the Defendant vessel which were to come into effect only when the Charterer furnishes the performance guarantee under the time charterparty in the sum of USD 2 Million;

d. The Charterer failed to furnish the abovementioned performance guarantee of USD 2 Million under the Time Charterparty;

e. Again with a view to arrive at a amicable solution, the Plaintiff was constrained to accede to the revision of the cancelling date under the Time Charterparty on two occasions with a view to afford the Charterer an opportunity

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to furnish the bank guarantee;

f. At each occasion the Charterer / owners of the Defendant vessel only gave hollow assurances of securing the performance bank guarantee;

g. The Plaintiff at each and every step of the dispute has accommodated the requests made by the Charterer / owners of the Defendant vessel for extension of the cancellation date, reducing the quantum of performance guarantee under the Time Charterparty, accommodating their request for delivery location of the vessel;

h. The failure of the Charterer to furnish the performance guarantee has caused the Plaintiff significant financial loss and damage running into millions of dollars which the Plaintiff is entitled to recover from the Defendant vessel;

i. The running into millions of dollars on one hand is evading to discharge its liability to make payment of the damages to the Plaintiff by citing lame excuses and on the other hand it has expended to acquire the Defendant vessel;

j. The Plaintiff submits that in spite of repeated failure and wilful default in discharging its liability which it owes to the Plaintiff which runs into millions of dollars, the Plaintiff was always ready and willing to have the vessel Siem Marlin delivered Charterers / owners of the Defendant within the canceling date stipulated under the Time Charterparty;

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37 In view of the above facts and circumstances, the Charterers / owners of the Defendant vessel are in repudiatory breach of the Bareboat Charterparty inter alia by breaching essential conditions and warranties of the Bareboat Charterparty. Therefore, the Plaintiff is entitled to claim damages from the Charterers / owners of the Defendant and are also entitled to be placed in the same position as if the Bareboat Charter Party had been performed.

a. The Plaintiff states that the amount of charter hire payable under the Bareboat Charterpaprty for the first year amounts to USD 8,395,000.00 (US Dollars Eight Million Three Hundred Ninety Five Thousand) (USD 23,00.00 x 365)

b. The Plaintiff states that at the date of the termination of the bareboat charterparty there was no market for a substitute bareboat charter for the minimum term of the charterparty, which was intended to continue for 5 years. Therefore, it was impossible for the Plaintiff to find a suitable charterer to take on bare boat charter at the same rate and terms. Therefore, in order to mitigate the loss the Plaintiff was constrained to employ the vessel under three short-term time charter parties in the spot market. During the first year of the charterparty i.e., from 22nd November 2015 to 22nd November 2016 the Plaintiff has made short terms time charterparty earnings in the sum of USD 6,215,696. A brief break up of the short term charter-parties are as follows :

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CP date Charterers Rate Period Earnings 07.12.15 Maritime 23,500 29.12.15 - 962,847 Platforms Ltd. 07.02.2016 10.03.16 Wagenborg 24,035 17.03.16 - 824,951 Offshore 20.04.16 Operations BV 26.04.20 Siem Offshore 20,361.42 26.04.16 - 4,427,898

16 Contractors 22.11.16 Gmbh Total 6,215,696

The Plaintiff states that this amount would be adjusted in the amount of damages that the Plaintiff is entitled to recover from the Charterers / owners of the defendant. The Plaintiff craves leave to produce, refer to and rely upon the papers and documents in support of the earnings from the short-term charter parties. The Plaintiff reserves their right further to revise the claim and amend the Plaint for loss of charter hire based on further and continuing losses being suffered by the Plaintiff.

c. The Plaintiff further states that, since the Plaintiff was constrained to let out the vessel on short term Time Charter parties, the Plaintiff was forced to incur operating costs and expenses (management, crewing etc.) under these time charter parties which they would not have had to incur under the bareboat chaterparty, under which such expenses would have been to the account of the Charterers / owners of the defendant vessel. Therefore, these expenses ought to be deducted from the comparable charter hire earned from the Short term charter parties. The Plaintiffs total operating expenses during the aforementioned period are to the tune of

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USD 4,618,250.00. Therefore, these expenses ought to be deducted from the comparable charter hire earned from the Short term time charter parties. The Plaintiffs total operating expenses during the aforementioned period are to the tune of USD 4,618,250.00. Therefore, the Plaintiffs claim for the loss of total charter hire under the Bareboat charterparty during the first year is USD 6,797,554.00 i.e., [(USD 8,395,000 (total amount that would have been earned by the Plaintiff under the bare boat charterparty) - (USD 6,215,696.00 (first year earnings from the short term time charter parties) - USD 4,615,250.00 (operating expenses incurred by the Plaintiff)]. Hereto annexed and marked as Exhibit "Z" is a brief summary of the operating expenses incurred by the Plaintiff under the three charter-parties. The Plaintiff craves leave to refer and reply upon further documents in support of the operating expenses.

d. The Plaintiff states that the Plaintiff is entitled to damages for loss of sale of the vessel Siem Marlin. The obligation of charterers / owners of the Defendant vessel to purchase the vessel Siem Marlin would have triggered at the end of fifth year from the date of delivery, as per Clause 32

(ii)(iv), but the Plaintiff's claim is based on the purchase price payable after the first year from the date of delivery of the vessel under the bareboat charterparty i.e., USD 47,061,750.00. This amount of capital cost of the vessel Siem Marlin is provided in Clause 32 of the 'Hire/Purchase Agreement' which is Part IV of the Bareboat Charterparty. The relevant portion of the Clause 32 reads as follows :

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"32 (i) During the period of hire of this Charter and provided the Charterers have fulfilled their obligations according to Part I and II, it is agreed by the parties that the Charterers shall have the following options to purchase vessel:

Within twenty five (25) days after the end of the first/second/third/fourth year from the Delivery date"

(Delivery date means the date when the vessel is delivered to Charterers under this Charter)

a. The first year from the date of delivery, at a price of USD 50,000,000.00 (United States Dollars Fifty Million) minus 35% of the hire payments made during the first year of charter i.e. a total sum of USD 47,061,250.,00 (United States Dollars Forty Seven million and Sixty one Thousand and Two Hundred and Fifty): or"

The Plaintiff states that this would have been the first purchase option available to charterers. The purchase price for the subsequent optional years 2, 3, 4 and 5 does not fully take into account the hire paid. The Plaintiff states however that the market for offshore supply vessels has dropped since the date when the Bareboat charterparty was entered into between the Plaintiff and the charterers/Owners of the Defendant vessel. Therefore, the Plaintiff estimates that the market value of the vessel at the time when the first purchase option available to the charterers/Owners of the Defendant vessel was about USD 25,000,000.00 (US Dollar twenty five million), therefore the Plaintiff is entitled to the claim for the

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loss of sale of the vessel Siem Marlin in the sum of USD 22,061,750.00 [USD 47,061,750.00 (US dollar forty seven million sixty one thousand and seven hundred and fifty)-USD 25,000,000.00 (twenty five million only)]. The market value of the Siem Marlin is evidenced by fleet valuation certificate dated 31 December 2016 issued by Pareto Brokers and vessel valuation report of Fearnely Offshore supply AS as of 31 December 2016. Hereto annexed and marked as Exhibit "A1" is copy of the Fleet valuation certificate dated 31 December 2016 issued by Pareto Brokers and Fearnely Offshore Supply AS."

16 Thus, the cause of action in the Suit is the claim on the

defendant vessel for recovery of charter hire as well as capital

value of the vessel which the plaintiff would have earned had the

Charterers / owners of the defendant vessel not breached the

essential condition and warranty of the Bareboat Charterparty.

The assertion in the Plaint is that this is a maritime claim. It is

valid, subsisting and enforceable against the defendant vessel.

The Suit was, therefore, maintainable. The requisite paragraphs

in that behalf are paragraphs 40 and 41 of the Plaint. The

prayers in the Plaint are to the following effect :

"55. In the facts and circumstances above the Plaintiff herein most respectfully prays that this Hon'ble Court be pleased to :

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a. Pass an order and decree directing the Defendant to pay to the Plaintiff sum of USD 28,889,304.00 (US Dollars Twenty Eight Million Eight Hundred Eighty Nine Thousand Three Hundred and Four Only), including costs (in the sum of USD 30,000.00) together with interest at the rate of 8% p.a. on the principal amount of USD 28,859,304.00 from the date of filing of the present suit till the payment and/or realisation as per the particulars of the claim at EXHIBIT A1 b. That this Hon'ble Court be pleased to order and decree that Defendant vessel together with her hull, tackle, engines, machinery, boats and all appurtenant be arrested and condemned and be sold for the amounts and interest mentioned in prayer clause (a) and the cost of the suit and for further cost, charges, expenses, enforcement fees and expenses to be incurred and that out of the sale proceeds thereof the Plaintiff's claim herein together with further cost, charges and expenses, enforcement and the expenses to be incurred, be directed to be paid over to the Plaintiff in satisfaction of its claim.

` i. Without prejudice and only In the alternative to the prayer clause (a) above, this Hon'ble Court be pleased to order vessel together with her hull, tackle, engines, machinery, boats and all appurtenant be arrested and condemned and be sold and the vessel or upon her condemnation sale under the orders of this Hon'ble Court, the sale proceeds of the Defendant vessel be applied as a security to enure for the benefit of an Award that would be passed in favour of the Plaintiff herein in the LMAA arbitration proceedings pending in London between the Plaintiff and the

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Charterer/Owners of the Defendant vessel. ii. That pending the hearing and final disposal of the present suit the Defendant vessel be arrested, seized, appraised, condemned and sold together with her hull, engines, machines, boats, tackles, bunkers, paraphernalia and appurtenant by and under the orders and directions of this Hon'ble Court and the sale proceeds be ordered to be deposited in the Admiralty Registry of this Hon'ble Court towards security and/or satisfaction of the Plaintiff's claim in the suit;

c. For ad-interim reliefs in terms of prayer clauses (d) &

(e) above.

d. For costs of the suit. e. For such other and further reliefs as the nature and

circumstances of the present case may require."

17 It is in such a Suit filed in this Court in its Admiralty

jurisdiction on 1st June, 2018, that the defendant moved this

Notice of Motion. The Notice of Motion was moved with the

prayer to set aside and/or recall the ex-parte ad-interim judgment

and order dated 1st June, 2018 and release the defendant vessel

Altus Uber from the order of arrest.

18 This Notice of Motion was moved because on

presentation of the Plaint, an order of arrest was sought and

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which came to be passed on 1st June, 2018.

19 The appellant / defendant's Notice of Motion was

supported by an affidavit of the authorised representative of the

Charterers and in that it is stated that Marine Engineering Diving

Services FZC are the Charterers of the defendant vessel. After

setting out the circumstances in which the order of arrest was

passed, in paragraph 4 of the affidavit it is stated that the plaintiff

has mischievously and erroneously contended that Marine

Engineering Diving Services FZC is the owner of the defendant

vessel and got the defendant vessel arrested on the basis of

incorrect assertion set out in paragraph 35 of the Plaint. It is

stated that Marine Engineering Diving Services FZC is not the

owner of the defendant vessel. It is stated that Swordfish Shipco

Limited is the owner of the defendant vessel and annexed and

marked as Exhibits A and B are copies of the certificate of

registry of Bareboat indicating Marine Engineering Diving

Services FZC as the Bareboat Charterers of the defendant vessel

and the Continuous Synopsis Record of the Liberian Maritime

Authority denotes the said Swordfish Shipco as the owner of the

defendant vessel. The certificate of registry is relied upon.

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Paragraph 5 of this affidavit, running page 73, reads as under :

"5. I say that the Plaintiff has annexed a Seaweb Report as Exhibit "Y" to the Plaint. I say that the plaintiff has relied upon a third party website which has shown incorrect information as to the Owner of the Defendant vessel. I further say that Plaintiff has annexed no other document showing/proving that the Marine Engineering Diving Services, (FZC) is the owner of the Defendant vessel. I say that the Seaweb Report is incorrect and has incorrectly shown Marine Engineering Diving Services, (FZC) as the owner of the Defendant vessel. I further say that the company operating the above webpage has not gained/asked any information from the Charterers before publishing this false information on the webpage and neither the Charterers of the Defendant vessel has provided such false information."

20 On this Notice of Motion being served, a detailed reply

was filed by the plaintiff denying all the allegations and

reiterating the averments in the Plaint.

21 With the above material, this Notice of Motion was

heard by the learned single Judge at great length. He came to the

conclusion that the contentions of the defendant cannot be

accepted. The Suit is maintainable. The order of arrest cannot be

vacated as prayed. Consequently, the Notice of Motion deserves

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to be dismissed with costs. That is how the Notice of Motion was

dismissed with costs quantified at Rs.5,00,000/-.

22 It is this order which is challenged in the instant

Appeal.

23 There is an Appeal also filed by Swordfish Shipco

Limited and that seeks to appeal against the very order.

24 It is clear that an independent application was made

by even Swordfish, but during the pendency of the same, it was

noticed that the instant appeal has been filed and moved. Hence,

Swordfish was advised to present its independent Appeal and

challenge the impugned order. Accordingly, the two Appeals were

taken up together and are being disposed of by this common

order.

25 We admit both these Appeals. The respective

respondents / plaintiff waive service of the Appeal. Since the

necessary documents and records are produced for our perusal,

we dispense with the filing of the paper-book. With the consent of

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both sides, both the Appeals are disposed of by this common

judgment.

26 In the first Appeal, Mr. Sunip Sen, learned counsel

appearing on behalf of the appellant/defendant would submit that

the impugned order is contrary to law and must be set aside. He

would submit that the order of the learned single Judge is

erroneous and illegal inasmuch as it fails to notice a salient

feature of the whole controversy. The salient feature being that

there is an arbitration which is pending. That arbitration is

between the plaintiff and the Charterers/owners of the defendant

vessel. The parties to the present lis have no nexus or connection

with India. The arbitration proceedings are being held abroad.

The seat of the arbitration and the applicable law to the claim may

also not be the Indian law bearing in mind the clauses and

covenants of the Bareboat Charterparty. In such circumstances,

whether it is permissible to obtain security for an arbitration

award through an action in rem/admiralty proceedings is the first

broad issue. Secondly, whether a suit in rem or otherwise lies in

view of the arbitration agreement and/or the ongoing arbitration

makes no difference.

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27 Mr. Sen then concluded the broad issues by urging

that the learned single Judge failed to consider as to whether

another bareboat chartered vessel can be arrested for claims

against the bareboat charterer which did not arise in respect of

that bareboat chartered vessel.

28 Mr. Sen would submit that the argument on the power

to arrest is in the alternative and without prejudice to the

primary argument on the maintainability of the Suit, as framed.

In elaboration of the alternate argument, Mr. Sen would submit

that there was a vessel in relation to which the Bareboat

Charterparty was executed. Admittedly, that vessel is not the

vessel before this Court, namely, the defendant. The defendant

vessel is sought to be proceeded against in purported exercise of

the power of arrest which also now is codified. In other words, no

assistance can be derived from the uncodified admiralty law or

principles laid down in relation thereto when we have an Act of

the Parliament. Now, The Admiralty Act, 2017 would alone be

looked into. So looked into, all the conventions, agreements and

common law principles are inapplicable insofar as the present lis

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is concerned. If the whole of this is inapplicable and the matter

has to be decided on the touchstone of the Admiralty Act, 2017,

then, the learned Judge should have assigned cogent and

satisfactory reasons, which would stand the scrutiny in law, while

proceeding to arrest the defendant.

29 Mr. Sen, therefore, submits that the issues as raised

touches the competence of this Court and this Court cannot be

oblivious of the fact that all earlier judgments of this Court as also

of the Hon'ble Supreme Court would not be of any assistance. We

would have to, as the learned single Judge was indeed required to,

necessarily consider the ambit and scope of the powers conferred

by the Admiralty Act 2017, particularly in relation to the power to

arrest. He would, therefore, submit that this Court must not place

such a wide and broad interpretation on the provisions and

particularly sections 4(4) and 5(1) and sub-section (2) of section

5 which would confer wholly unguided, unbridled and

unrestricted powers to arrest any vessel. The words " also order

arrest of any other vessel" appearing in sub-section (2) of section

5 would, therefore, have to be given a meaning consistent with the

aim and object of the enactment, the aim being to consolidate the

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laws relating to admiralty jurisdiction, legal proceedings in

connection with vessels, their arrest, detention, sale and other

matters connected therewith or incidental thereto. If we still fall

back on conventions and general principles of admiralty

jurisdiction as culled out from the orders and judgment of English

Courts and prior judgments of this Court, then, we would be doing

a violence to the plain language of The Admiralty Act, 2017, is the

contention.

30 Mr. Sen would submit that when a party seeks a

security for an Arbitration Award to be made in pending or future

proceedings, the issue is really one of the law governing

arbitration. Admiralty law comes only as an ancillary measure

because that process is resorted to so as to secure the Award.

Hence, the law relating to securing an Arbitration Award (present

or future) in present or future arbitrations and the scope for

using the Admiralty process to obtain security for an Arbitration

Award is the real issue.

31 Mr. Sen would submit that the purpose and

consequence of an arbitration agreement are two-fold. Firstly,

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there is a bar on the party from approaching the Courts. Thus,

such an agreement is saved by the exception to section 28 of the

Indian Contract Act, 1872. Secondly, by virtue of the various

provisions contained in the Arbitration Act, the ordinary Courts

are enjoined not to exercise jurisdiction and to stay or dismiss

actions if the subject matter is the same. This is, of course,

subject to such intervention as expressly permitted by the

Arbitration Act.

32 Mr. Sen would submit that under the earlier statutory

arbitration regime, stay of the Suit was discretionary. This was

the position in domestic arbitrations and mandatory in foreign

arbitrations, subject, of course, to the validity of the arbitration

agreement. This was also the position prevailing in the United

Kingdom. In general, the common law position was that there

could be no arrest for providing security for arbitration awards.

It was expressly held that this jurisdiction did not extend to using

power of arrest to secure maritime claim. In that regard, our

attention was invited by Mr. Sen to the observations and the

conclusions reached by Mr. Justice Brandon in the famous

decision in The Rena K. (1978) 1 Lloyd Law Reports P. 545.

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33 Mr. Sen would submit that even in the Court of Appeal

which disapproved the view of Justice Brandon and its theory as

per Rena K., it was held that there was no such power. There was

no power to even retain the security or conditional release

thereof. In that regard, our attention was invited to the decision

of the English Court reported in The "Tuyutt" 1984 Vol.II Lloyd

Law Reports 51.

34 Mr. Sen would emphasize that the purpose of an action

in rem as set out in the decision of the Court of Appeal has not

changed, but is reinforced by the Admiralty Act, 2017.

35 Mr. Sen would submit that the United Kingdom

enacted The Civil Judgments and Jurisdiction Act, 1982, to bring

in the European Union Brussels Convention. He invites our

attention to section 26 of that Act and would urge that this

expressly provides for arrest as security. However, Mr. Sen

submits that this was a statutory change in pursuance of the

European Union Convention and not in Common Law nor

International Convention affecting any non-member State. The

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English Arbitration Act deleted section 26 and replaced it with

section 11 in the Arbitration Act 1996. That again enacts a

provision for retention of security where admiralty proceedings

are stayed.

36 As far as the Indian legal position is concerned, Mr.

Sen submits that the Indian Arbitration Act, 1996, broadly

categorizes the arbitration as domestic arbitration and foreign

awards in arbitrations. Mr. Sen took us through the relevant

provisions of the Indian Arbitration Act 1996 to submit that they

provided for interim measures, inter alia, to secure the amount in

dispute, but limited to domestic arbitrations. There was no

provision for security in pending foreign arbitration proceedings.

37 Mr. Sen invites our attention to the Arrest Convention,

but which had not come into effect on 14 th September, 2011,l to

urge that absent any provision for security in arbitrations abroad,

considering the hardship and need to do justice, a Division Bench

of this Court in the case of 2002 (4) Mh. LJ., 584 Islamic Republic

of Iran Shipping Lines vs. m.v. Mehrab & Ors. held that an action

in rem was available and that the Court's jurisdiction extended to

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pending and future arbitrations.

38 There was a conflict with the earlier judgment in the

case of 2007 (2) Arb. L.R. 104 (Bombay) (FB) J.S. Ocean Llc. Vs.

m.v. Golden Progress & Anr. and, therefore, the matter was

referred to a Full Bench of this Court. Inviting our attention to

the Full Bench judgment of this Court, Mr. Sen would submit that

even if the legal position is that which is enunciated in this larger

Bench / Full Bench judgment, still, a later Supreme Court

judgment came to the conclusion that the Arbitration Act was a

complete self-contained code. That something is not provided

therein cannot be read into or inserted therein. It is in these

circumstances that he would rely upon the judgment of the

Hon'ble Supreme Court in the case of Bharat Aluminium

Company Limited vs. Kaiser Aluminium Technical Services Inc.

reported in (2012) 9 SCC 552. He urged that after BALCO, the

legal position is that the Courts cannot fill in gaps or lacunae in

law to relieve perceived hardship. That is for the Legislature to

do. That is how the Legislature stepped in after BALCO and

amended the Indian Arbitration Act, 1996. The 2015 amendment

was highlighted.

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39 According to Mr. Sen section 5 of the Indian

Arbitration Act 1996 has enacted a bar where judicial

intervention beyond that permitted by the said Statute would

have to be construed to mean that it applies across the board to

all judicial interventions in arbitrations, whether against or in aid

of arbitrations or awards.

40 Mr. Sen submits that the Admiralty Act, 2017, came in

as a consolidated statute after taking into account this state of

law in India and elsewhere. However, it limits the right of arrest

and the jurisdiction in that behalf to maritime claims and liens.

41 Mr. Sen would submit that arbitration Awards are

independent causes of action, apart from being a future cause of

action that has not arisen and is speculative. It is not one of the

specified causes of action, namely, maritime claim or maritime

lien on which an action in rem lies. On the contrary, the

jurisdiction of the Court as well as right of action in rem under the

Admiralty Act is limited.

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42 Mr. Sen contends that the Arbitration Act is a self-

contained, codifying and amending law. In all matters relating to

arbitration it will be impermissible to look outside the Act. The

argument is that even the Admiralty Act enjoys this position.

Even in Admiralty Act, which is a consolidating statute and

exhaustively defining maritime law, still, that does not change the

common law position that arrest was not a means of obtaining

security for arbitral awards. The Admiralty Act defines the stated

/ permitted causes of action for arrest. The Arbitration Act

specifies the methods of obtaining interim measures, including

securing the amount in dispute in the arbitration and read with

section 5 bars any other judicial intervention. The belief of theory

that it is upto the Courts to fill up lacuna in laws for the benefit of

litigants is thus inaccurate and has no place in law.

43 Mr. Sen has taken us through the provisions of both

the Arbitration Act and the Admiralty Act in great details. The

emphasis is that we cannot lose sight of the distinction between

an action in rem and action in personam. The arbitration is in

personam whereas the suit in this case is in rem. He would

submit that if an action is barred by an arbitration agreement or

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an on-going arbitration, the test is not who the parties are, but

what the subject matter is. If the subject matter is the same, the

suit is barred. Thus this distinction between an action in rem

being different from an action in personam obfuscates the true

issue. Here, the adjudication will be on the liability of the person

liable in personam and no other. Thus, once the attempt is to

secure the claim in the arbitration through this process adopted

by the plaintiff in this case, then, we must discourage it at all

costs. Mr. Sen has, therefore, emphasized the issue that when a

party seeks security for an arbitration Award to be made in

pending or future proceedings, the issue is really one of the law

governing admiralty. Admiralty law comes not only as an

ancillary because that process is sought to be made one of the

means of securing the Award. He has pointed out the

consequences of the arbitration agreement, the first one being a

bar on the party from approaching the Court. That is expressly

saved by section 28 of the Contract Act. Second, by virtue of the

provisions of the various Arbitration Acts, the Courts are

enjoined not to exercise jurisdiction and to stay or dismiss actions

if the subject matter is the same. This, of course, is always subject

to such intervention as expressly permitted by the Arbitration

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Act. Mr. Sen has thereafter emphasized the difference in the

language of the common law relating to providing security for

arbitration Awards. He also submits that under the earlier

statutory arbitration regime, stay was discretionary in domestic

arbitration and mandatory in foreign arbitration (subject to the

validity of the arbitration agreement). The position in UK was

brought to our notice and equally as far as admiralty is

concerned, the Brussels Convention. It is, therefore, clear,

according to Mr. Sen, that if one takes the Indian conspectus,

then, there was no provision for security in pending foreign

arbitration proceedings. Since there was no provision for

security for arbitration abroad considering the hardship and need

to do justice, a Division Bench of this Court held that action in rem

was available, but also held that the Court's jurisdiction extended

to pending and future arbitrations. However, there was a conflict

between judgments of this Court rendered earlier and the matter

was referred to a Full Bench. That was with a view to set the

controversy at rest. However, even the judgments of the Supreme

Court, post our Full Bench, should be noted according to Mr. Sen.

He would submit that the amended Arbitration Act bars any

judicial intervention otherwise than as permitted by Part I. This

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applies across the bar to all judicial interventions in arbitrations,

whether against or in aid of arbitration awards. Arrest to obtain

security for an award for such judicial intervention and is barred

by section 5 of the Arbitration Act. As far as the Admiralty Act is

concerned, even there we must note that difference and which is

significant. Earlier, the English regime was followed. Now, we

have our own Admiralty Act which is a consolidating statute and

exhaustively defines maritime claims, but does not change the

common law position. It is in these circumstances that he would

argue that even after initiation of the arbitration, the position

would be as noted by us. Now, we must go by the language of the

two laws and particularly the later consolidated statute on

admiralty.

44 Mr. Sen then invited our attention to sections 4 and 5

of the Admiralty Act to submit that the vessel in this case is a

bareboat charter to the appellant-defendant. It produced the

certificates of registration, both of the registered owner and of the

bareboat charterer. The learned Judge drew an adverse inference

since the charter was not produced. That is insignificant. It is an

inter-party document but the primary document of registration of

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two countries was produced. In any event, an adverse inference

could not have been drawn unless the party was first called upon

to produce that document and had refused. Mr. Sen also criticizes

the judgment of the learned single Judge for, according to him, it

fails to read the difference between sub-sections (1) and (2) of

section 5 of the Admiralty Act. He would submit that as far as

sub-clause (1) is concerned, the vessels cannot be different

because that sub-section deals with same-ship arrest. As far as

sub-section (2) is concerned, according to Mr. Sen, any other

vessel which can be arrested for the purpose of providing security

against a maritime claim would have to be the one excluded by

the proviso. Thus, clause (a) of sub-section (1) of section 5

enables the High Court to arrest any vessel which is within its

jurisdiction for the purpose of providing security against a

maritime claim which is the subject matter of an admiralty

proceeding where the 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. To summarize and conclude Mr. Sen would say

that in this case there is a clear attempt to secure the claim in the

pending foreign arbitration. That is, therefore, an attempt to

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secure the benefits in an award which, according to the plaintiff,

is likely to be made in its favour. For securing such a claim and in

relation to an arbitration which has no nexus with India is not

permitted and recourse to Admiralty Act of 2017 cannot be taken.

Secondly, even when the Admiralty law is taken recourse to, the

Court must be satisfied that the jurisdiction called upon to be

exercised is clearly falling under Chapter II of the Admiralty Act,

2017. Section 3 thereof with sub-section (1) spells out that the

admiralty jurisdiction vesting in the High Court is subject to the

provisions of sections 4 and 5. The extent of its jurisdiction is

specified in section 3. If section 4 guides and ought to guide us,

then, we cannot lose sight of sub-section (4) of section 4. We must

also note the difference in the language of sub-section (1) and sub-

section (2) of section 5 and all this being considered we would but

hold that this Court lacks jurisdiction to entertain and try the

suit. The impugned order is thus beyond the jurisdiction of the

Admiralty court. On that count alone, this Appeal must succeed.

45 Mr. Sen has also taken us through the Memo of Appeal

and he would submit that the arrest was challenged in the

backdrop of the facts set out in the Memo and also on the grounds

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which have been summarized. Mr. Sen argued that the learned

Judge failed to appreciate that the arrest of the vessel was

permissible only if the vessel being arrested was owned by or on

demise charter to MEDS at the time the cause of action arose as

well as the demise charterer owner of the vessel at the time the

cause of action arose and at the time the arrest was made were

liable. The learned Judge failed to appreciate that MEDS had no

connection with the arrested vessel at the time the cause of action

arose whether as owner or as bareboat and/or demise charterer.

46 The vessel Siem Marlin was never delivered and it is

no one's case that either vessel was on demise charter to MEDS.

It is in these circumstances that the findings of the learned Judge

indicate that this Court has assumed that the jurisdiction vests in

it. It does not vest in it in law and on facts.

47 For these reasons, he would submit that the Appeal be

allowed.

48 He has placed strong reliance upon the following

decisions :

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(1) 2007(2) Arb. LR. 104 (Bombay) (FB), J.S. Ocean LLc. vs. m.v. Golden Progress & Anr.

(2) AIR 2011 SC 2649 Fuerst Day Lawson Ltd. vs. Jindal Exports Ltd.

(3) (2012) 9 SCC 552 Bharat Aluminium Co. vs. Kaiser Aluminium Technical Service Inc. (4) 2002(4) Mh.LJ., 584 Islamic Republic of Iran Shipping Lines vs. m.v. Mehrab & Ors.

(5) 1993 Supp (2) SCC 433 m.v. Elizabeth & Ors. vs. Harwan Investment and Trading Pvt. Ltd.

(6) 3 Weekly Law Report (1997) 818 Republic of India & Anr.

vs. India Steamship Co. Ltd.

49 There is another appeal which is filed, being

Commercial Appeal No. 86 of 2019, by M/s. Swordfish Shipco

Limited and the same facts in relation thereto are highlighted.

There, Mr. Aspi Chinoy, learned senior counsel would submit that

the impugned order proceeds to arrest a vessel which in law could

not have been arrested by the Court.

50 Mr. Chinoy has highlighted the fact of the impugned

order is affecting the rights of the appellant in that appeal

periodically. The thrust of his submission is that the arrested

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vessel has absolutely no nexus with the underlying transaction

sought to be projected before this Court. He would submit that the

learned Judge, while giving an expansive meaning to the

provisions, inadvertently included a vessel and brought it under

arrest although, in law, it could not have been arrested.

51 Mr. Chinoy submits that the suit proceeds on an

erroneous basis that M/s. Marine Engineering Diving Services,

UAE, referred above as MEDS, is a party to a charterparty

arrangement with the appellant. That was a bareboat charter.

That has since been terminated by the appellant.

52 The learned Judge ought to have realised that the suit

proceeds erroneously by terming MEDS as the owners of the

second respondent-vessel. The arrest was challenged, inter-alia,

on the ground that the vessel could not been arrested under the

provisions of the Admiralty Courts Act. The learned Judge ought

to have realised that the appellant is the registered owner of the

vessel and it is not liable for the alleged claim of the original

plaintiff. The learned single Judge should have realised that the

original plaintiff cannot exercise a lien or any maritime claim on

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the property which is in the ownership of a party not liable for its

maritime claim. The learned single Judge also failed to note that

the party liable for the alleged claim of the plaintiff is not the

owner and/or beneficial owner of the vessel. The claim of the

plaintiff is arising out of a dispute between the plaintiff and

MEDS, but MEDS was not the charterer of the defendant vessel

under a contract between them. The contract concerns a

different vessel, not being the defendant vessel and the appellant

M/s. Swordsfish is not a party to the said contract. Once the claim

is unrelated to the second defendant vessel, then, the plaintiff has

no cause of action against the vessel. The plaintiff cannot have a

maritime claim or lien over the defendant vessel nor any reason

to maintain action in rem against the defendant vessel.

53 Mr. Chinoy emphasized that the wordings of sections 4

and 5 of the Admiralty Courts Act must be understood in the

backdrop of such a scenario. He submits that the learned single

Judge has not appreciated that the alleged breach of an

agreement relating to the use or hire of a ship whether by a

charterparty or otherwise would give rise to a maritime claim

only against the contractual counter party and in this case MEDS,

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and any vessel owned by MEDS. No claim can arise against any

other party or any vessel owned by any other party in any

manner whatsoever. The learned Judge, therefore, should have

appreciated that the plaintiff must have a right to proceed against

the defendant vessel. It does not have any right. Further, the

plaintiff does not have any maritime claim against the defendant

vessel or against the appellant (in Commercial Appeal No. 86 of

2019) who is the registered owner of the vessel. Thus, the

argument is that the impugned order has not been rendered

bearing in mind the settled legal position and which does not

undergo a drastic change. In fact, a recognition is given to a

common law principle in the statutory scheme. Unfortunately,

according to Mr. Chinoy, the learned Judge has misread and

misinterpreted the legal provisions. He has not considered them

in their proper perspective. Mr. Chinoy has taken us through the

documents to show that the registration of the vessel is evidenced

by these documents and certificates. They clearly indicate that

the owner is the appellant. For these reasons, Mr.Chinoy has

submitted that the appeal be allowed.

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54 We must straight away indicate that Mr. Chinoy's

arguments are based on the judgment of the Hon'ble Supreme

Court in the case of Sunil B. Naik vs. Geo Wave Commander

reported in (2018) 5 SCC 505. Mr. Chinoy submits that the

learned Judge committed a grave error of law and in paragraph

47 onwards held that the appellant in the present appeal has

failed to sight a single judgment of any Court in India or for that

matter, a foreign court that would have any bearing on the

submissions of the plaintiff or of the applicant. Far from it,

according to Mr. Chinoy this judgment in Sunil B. Naik vs. Geo

Wave Commander applies with full force to the issue raised before

us. He would submit that this judgment was very much before the

learned single Judge as it was expressly cited. The learned Judge

erroneously records that a copy of this judgment was tendered

but it was not pressed by the applicant. The learned Judge in one

line says it is not relevant. In fact, it is very much relevant and,

therefore, on failing to note a judgment of the Hon'ble Supreme

Court and fully applicable to the issue at hand is enough for us to

set aside the impugned judgment. Mr. Chinoy would invite our

attention to paragraphs 47 and 48 of the judgment under appeal

in that behalf.

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55 Thus, it is alleged by him that we should allow the

appeal and release the vessel from arrest.

56 Mr. Prashant Pratap learned senior advocate

appearing on behalf of the plaintiff would submit that the two

questions arising in this appeal are (i) whether an action in rem is

maintainable for arrest of a ship in respect of a maritime claim

where the disputes have been referred to arbitration, and (ii)

whether section 5(2) read with section 5(1)(b) of the Admiralty

Act would apply if the demise charterer of a vessel is liable for the

maritime claim and is it open to the claimant to arrest any other

vessel of which he is the demise charterer.

57 It is stated that on question No.1 the point is expressly

covered by a Division Bench and Full Bench judgment of this

Court. It is also elaborated by him that the Full Bench judgment

of this Court was rendered precisely to deal with the controversy

at hand. Therefore, it does not matter whether arbitration

proceedings have been commenced before filing of the action in

rem or are yet to commence. The Full Bench of this Court did not

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draw any distinction which it would have if it was of the view that

once an arbitration has commenced, an action in rem for recovery

of the claim cannot be filed. He submits that this question was

squarely raised before the Full Bench (see paragraph 2). It

matters not whether arbitration proceedings have been

commenced before filing of the action in rem or yet to be

commenced (pending or future - see Mehrab and the Jala Matsya

1987 Vol 2 Lloyds Law Reports 164 and Golden Progress

paragraph 2). The Full Bench did not draw any such distinction

which it would have if it was of the view that once an arbitration

has been commenced, an action in rem for recovery of the claim

cannot be filed, as the question was squarely raised in paragraph

2.

58 In fact the conclusions articulated in paragraph 78 (ii)

"where the parties have agreed to submit the dispute to

arbitration" contemplates merely an arbitration agreement and

not future submission to arbitration as contended by the

Applicant. As long as there is an agreement of arbitration, it

could have already been invoked or yet to be invoked. The

reference in paragraph 75 "Section 45 as the language suggests,

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empowers the judicial authority to refer parties to arbitration at

the request of one of the parties to such agreement where it is

seized of an action in a manner in respect of which the parties

have made the agreement as contemplated in Section 44. There is

no inherent lack of jurisdiction in the court in entertaining an

action in rem in respect of which the parties have an agreement

referred to in Section 44 and none of the parties has invoked

arbitration agreement" cannot be held to mean that if arbitration

is invoked there is inherent lack of jurisdiction and a party loses

its rights to file an action in rem. Neither does Section 45 of the

Arbitration Act contemplate a bar to filing an action (suit) if

arbitration has already been invoked. If fact a stay then becomes

mandatory as there would be no question of disputing the validity

of the arbitration agreement. In fact there is no provision in

Chapter I Part II of the Arbitration Act which bars the jurisdiction

of the Court to entertain an in rem action or a suit if parties have

invoked arbitration and arbitral tribunal has been constituted. If

that were to be the position then the question in paragraph 2

would have been answered differently.

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59 The question that arose in BALCO (at paragraph 10.5)

was whether a suit for preservation of assets pending an

arbitration proceedings is maintainable. It is in this context that

BALCO reiterates the settled legal position following the judgment

in the case of State of Orissa vs. Madan Gopal Rungta AIR 1952

SC 12 that interim relief can be granted only in aid of and as

ancillary to the main relief which may be available to the party on

final determination of his rights in a suit or proceeding. An

Admiralty action in rem is not a suit for preservation of assets

pending arbitration proceedings. It is a suit for enforcement of a

maritime claim by arrest of a ship.

60 The full bench judgment does not advocate a suit for

interim relief only. It holds that an action in rem is maintainable

for recovery of a maritime claim and arrest of a vessel where

parties have agreed to submit disputes to arbitration. This is not a

suit only for interim relief but is a substantive action for recovery

of a maritime claim. It is only when the ship is arrested and the

owner enters appearance and submits to jurisdiction that the

Court will not proceed with the suit in personam on merits but

refer the parties to arbitration. Thus what in effect happens is

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that the suit is stayed consistent with Section 45 of the

Arbitration and Conciliation Act, 1996. Retention of security is

then a matter of discretion for the Court in the event the suit is

stayed.

61 It may be borne in mind that interim relief is not a

matter of right, but is always discretionary. However, the

Admiralty Act, 2017 provides for a right in rem to arrest a ship to

obtain security for a maritime claim. This right is a substantive

right and cannot be denied to the Plaintiff merely because the

underlying disputes have been and/or are required to be

submitted to arbitration unless there is an express bar and there

is none.

62 Mr. Pratap sought to deal with the submission that the

impugned judgment is erroneous and incorrect because it allows

the Court to arrest a vessel to secure a claim in arbitration which

is not permissible in law as the Court can only arrest a vessel to

secure a decree that may be passed in the suit. He submits that

the impugned judgment does not say that the Court will make an

order to secure the claim in arbitration or that security must be

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provided in the arbitration. The judgment makes it clear that

security will be given in the suit and will be retained in the suit in

the event the suit is stayed and parties are referred to arbitration.

Retention of security in the suit is a matter of Court's discretion.

The security is not transferred to the arbitral proceedings and

neither is the security ordered to be in aid of arbitration

proceedings. Once there is an arbitral Award, then, the plaintiff

will apply to the Court to lift the stay and rely upon the Award as

binding between the parties and request the Court to decree the

suit in the sums awarded and permit execution of the decree

against the security in the suit. This satisfies the requirement of

section 4(4) of the Admiralty Courts Act, 2017.

63 Mr. Pratap, therefore, submits that the plaintiff has a

right to apply for a warrant of arrest and the Admiralty Court has

jurisdiction to issue the same. Once the warrant is executed and

the ship is arrested, if there is a stay of the suit, the Court has a

discretion as regards retention of security even if the suit is

stayed.

64 It is in these circumstances that Mr. Pratap would rely

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upon the judgment of the Kolkata High Court reported in AIR

1988 Cal. 142.

65 It is stated that the Full Bench judgment of this Court

is still a good law and Mr. Pratap would submit that the enacting

of the Admiralty Act 2017 has not altered the position in any

manner.

66 The Admiralty Act, 2017, is a Special Act. However, it

is not a self-contained code unlike the Arbitration and

Conciliation Act, 1996. There are several other statutes which

deal with arrest and detention of ships and maritime claims,

notably the Merchant Shipping Act, 1956, Indian Ports Act, 1908,

Major Port Trusts Act, 1963, etc. The observations in BALCO are

with reference to the Arbitration and Conciliation Act, 1996 being

a self-contained code as held in Fuerst Dahy Lawson vs. Jindal

Exports Ltd. AIR 2011 SC 2649. Thus it is not permissible to look

outside the Arbitration Act in order to fill any lacunae. These do

not apply to the Admiralty Act, 2017, which is not a self-contained

code.

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67 The Admiralty Act only deals with what constitutes a

maritime claim and arrest of ships to secure maritime claims.

The Act does not provide for what is required to be done after a

ship is arrested to secure a maritime claim and the owner enters

appearance and submits to jurisdiction. The Act is silent on the

procedure to be followed in the event the disputes are to be

referred to arbitration. Consequently, it is open to the Court to

look outside the Admiralty Act and adopt and apply general law

principles and broadly accepted international procedure to evolve

a procedure which involves interplay between actions in rem and

arbitration so as to advance the cause of justice and which is not

prohibited by domestic law, as was done in Golden Progress. This

procedure can be applied without any difficulty or conflict once a

ship is arrested in respect of a maritime claim under the

Admiralty Act, 2017. If the Admiralty proceedings are stayed and

security retained in the suit pending final outcome of the suit, the

same is consistent with Section 4(4) of the Admiralty Act, 2017.

Once there is an award which is not satisfied, then, an application

is filed in the Court for filing the stay and to rely on the award as

binding between the parties and that the conditions specified in

Section 48 are satisfied. Section 46 of the Arbitration Act, 1996

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permits the award to be relied upon in any legal proceedings in

India and all references to enforcement of a foreign award shall be

construed as including references to relying on an award. If the

objections to the award under section 48 are rejected, the award

would be considered as binding on the parties as per Section 46 of

the Arbitration Act, 1996 which permits the award to be relied

upon in any legal proceedings in India. The suit is then decreed

on the basis of the award for the sums awarded. This is the final

outcome of the suit. The security can then be made available to

the Plaintiff in execution of the decree.

68 No statute caters to every fact situation. The

submission that what is not provided of is impliedly excluded, is

not correct. The Admiralty Act 2017 is not a self-contained code

unlike the Arbitration and Conciliation Act, 1996. It sets out the

extent of the jurisdiction of the court (territorial and over ships -

section 3) , a list of maritime claims (section 4) and the powers of

the court to arrest a ship for the purpose of providing security in

respect of a maritime claim (section 5). The Admiralty Act, 2017

does not refer to stay of Admiralty proceedings once the ship is

arrested and security provided. That comes in by virtue of

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Section 45 of the Arbitration and Conciliation Act, 1996. This

does not mean that the suit is not maintainable or that there is an

implied bar. The presence of an arbitration agreement does not

oust the jurisdiction of a Civil Court. Even if the suit is stayed

there is no bar to retention of security in the suit.

69 The Apex Court has in several judgments supported

such interpretative changes having regard to the ever changing

global scenario (paragraph 56 of m.v. Sea Success (2004) 9 SCC

512). In the case of Al Quamar (2000) 8 SCC 278 para 43 the

Apex Court also observed that "the Court has to approach

modern problems with some amount of flexibility as is now being

faced in the modern business trend. Flexibility is the virtue of the

law courts as Roscoe Pound puts it. The pedantic approach of the

law courts are no longer existing by reason of the global change of

outlook in trade and commerce".

70 Courts promote alternate dispute resolution by

arbitration and mediation. A party willing to arbitrate cannot be

put at a disadvantage and be told that he has lost his right to

obtain security by arrest of a ship. Every charterparty and every

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other form of Standard Shipping Contract out of which most

disputes arise contains a printed arbitration clause. It would be a

retrograde step if in case of disputes a party has no right to obtain

security by arrest of a ship if he has a maritime claim. This would

not serve the cause of ADR in India which Courts are keen to

promote to ease the burden on Courts of law suits clogging the

system.

71 On Mr. Chinoy's submissions Mr. Pratap would submit

that section 5 of the Arbitration Act bars intervention of the

Court in matters governed by Part-I. The present case is not an

application under Part-I and consequently the bar of section 25 of

the Arbitration Act 1996 has no application. He would submit

that the suit is not barred inasmuch as it is only on an application

of the party that section 8 of the Arbitration Act 1996 applies. He

would submit that we must refer to section 10 of the Code of Civil

Procedure, 1908. The pendency of a suit in a foreign Court does

not preclude the Courts in India from trying a suit founded on the

same cause of action. If this be so, then, how can the pendency of

foreign arbitration proceedings be a bar to a suit in India on the

same cause of action. In such a case of a prior foreign suit, if

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security by way of interim relief is obtained by the plaintiff in the

suit in India the Court may, on the application of the defendant,

either put the plaintiff to an election if it is found to be vexatious

or stay the suit and retain security or make the stay conditional

upon alternate security being provided. The suit in India on the

same cause of action can be stayed and security retained. The

same can be done in the case of a foreign arbitration.

72 The submission that once there is an arbitration

agreement and arbitration has been invoked, the Court has no

jurisdiction to arrest a ship in exercise of the Admiralty

jurisdiction, has been specifically held to be incorrect by the

English Court of Appeal in The Andria. Thus the purpose of the

Plaintiff in invoking the Admiralty jurisdiction cannot affect the

existence of the jurisdiction. Thus it cannot be said that the Court

has no jurisdiction to arrest a ship or to maintain an arrest where

the purpose of the Plaintiff is simply to obtain security for an

award in arbitration proceedings. The jurisdiction is simply

there. The Court has the power to arrest.

73 The elaboration of the submissions of Mr. Pratap made

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orally and in writing revolves around the primary stand, namely,

that the Admiralty Act was not enacted to give effect to the 1999

Arrest Convention and section 5(2) of the Act has to be

considered independently without reference to the Convention.

The argument that it was enacted to give effect to the Arrest

Convention, according to Mr. Pratap is, therefore, inaccurate.

Besides that, under Article 3(2) of the Arrest Convention, arrest

is permissible of any other ship owned by the person who is liable

for a maritime claim and who, when the claim arose, was the

demise charterer, time charterer or voyage charterer of that

ship/vessel. This means that if a claim is against the demise

charterer, time charterer or voyage charterer, any other ship

owned by these three types of charterers can be arrested. Mr.

Pratap, outlining the difference between the Arrest Convention

and the Act, contends that under the Admiralty Act, 2017, if the

claim is against the time charterer or a voyage charterer, then,

there appears to be no provision for arrest of any other ship

owned by the time charterer or voyage charterer. The Act,

therefore, does not appear to give the right to arrest any ship

owned by the time charterer or voyage charterer if the claim is

against such charterers. However, the Arrest Convention Article

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3(2) expressly permits this.

74 From the above it can be seen that the powers of

arrest of "any other vessel" under section 5(2) of the Act differ

from those under the Convention. Thus recourse cannot be had to

the Convention when interpreting the provisions of section 5(2)

of the act which stands on a separate and independent footing.

75 When it comes to a maritime claim against a demise

charterer, the Convention restricts the right of arrest to any other

vessel owned by the demise charterer and does not permit arrest

of any other vessel on demise charter to the demise charterer.

However the Admiralty Act, 2017 permits the arrest of any other

vessel which is on demise charter to the demise charterer when

the arrest is affected or the demise charterer is the owner of that

vessel.

76 Section 5(2) permits the arrest of any other vessel in

lieu of the vessel against which a maritime claim is made subject

to the provisions of Section 5(1). This means that in case of a

maritime claim against a demise charterer (MEDS) in respect of a

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demise chartered vessel (SIEM MARLIN) any other vessel that

can be ordered to be arrested in lieu of the demise chartered

vessel (SIEM MARLIN) would be any other vessel of which the

demise charterer (MEDS) is the demise charterer or owner when

the arrest is effected as provided in Section 5(1)(b) which deals

with demise charterers. This other vessel is ALTUS UBER which

was on demise charter to MEDS on the date of the arrest, namely,

1 June 2018.

77 This is the conclusion reached by the learned single

Judge in paragraph 52 of the impugned order and is correct and

does not call for interference.

78 According to Mr. Pratap, the judgment of the Apex

Court in Geowave Commander is not applicable. This judgment

was simply cited by the appellant before the learned single Judge

but was not pressed by the appellant and for good reason (see

paragraph 47 of the impugned judgment at page 54). In Geowave

Commander, the Plaintiffs had given their ships on time charter

to the charterer Reflect Geophysical Pvt. Ltd. This reflects that

this was a time charterer and not a demise charterer. The

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Plaintiffs had claims under the time charter against the time

charterer Reflect Geophysical. For this purpose the Plaintiff could

only arrest a ship owned by Reflect Geophysical as provided by

Article 3(2) of the 1999 Arrest Convention. The Admiralty Act,

2017 was not then in force.

79 The Plaintiffs in Geowave Commander then contended

that even though Reflect was the demise charterer of Geowave

Commander, the demise charterer should be considered as the de-

facto owner of the ship and consequently the owner. This was

negatived by the Supreme Court who held that the word "owner"

denotes legal (de jure) ownership and not merely a de-facto

owner. If in law Reflect was not the legal owner of the vessel then

Reflect cannot be considered as the owner under Article 3(2) of

the Convention.

80 According to Mr. Pratap, the case of Geowave

Commander is completely different from the facts of the present

case. The law is also different. The Plaintiffs claim is against a

demise charterer. In Geowave Commander it was against a time

charterer. Section 5(2) read with Section 5(1)(b) of the

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Admiralty Act 2017 permits arrest of any other vessel either

owned or on demise charter to the demise charterer. This

question never arose in Geowave Commander because the

Plaintiffs in that case had a claim against a time charterer and

not a demise charterer and therefore could arrest any other ship

owned by the time charterer and not a ship on demise charter.

This is explained by the learned single Judge in paragraph 47 and

the Geowave Commander has been correctly distinguished.

81 It may be seen that the Admiralty Act, 2017 was not in

force when this case came up before the Bombay High Court and

even when the appeal was heard by the Supreme Court. Section

5(2) of the Admiralty Act is not referred to in the judgment in

Geowave Commander. It only refers to Section 5(1) which

contains provisions similar to Article 3(1). This case concerns

Section 5(2) for which there is no equivalent in the Convention.

82 The submission that construction of Section 5(2) as

adopted by the learned Single Judge leads to an absurd or

inequitable result by which a ship owned by a person who is not

liable in respect of a claim is arrested is misconceived. This is not

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an absurd result. The Convention itself permits arrest of a vessel

on demise charter [Article 3(1)(b)] where there is no personal

liability of the owner. For example, if the demise charterer were

to sub-charter the vessel on time charter and thereafter

wrongfully repudiate the sub-charterparty, it would be open to the

time charterer to arrest the vessel to secure its claim in damages

even though there is no personal liability on the owner of the

vessel who has done no wrong. What the Admiralty Act, 2017 has

done is to simply extend this to any other vessel on demise

charter to the demise charterer. Thus, if there is any such

principle that a vessel can be arrested only if there is personal

liability of the owner, an exception has been carved out by the

Arrest Convention itself to provide for arrest of a vessel on

demise charter even though the owner is not personally liable and

this exception has been extended by the Admiralty Act, 2017 to

cover any other vessel on demise charter to the demise charterer

even though there is no personal liability of the owner. Hence

there is nothing inherently wrong in permitting such an arrest as

sought to be argued by the Appellant who admits that Section

5(2) is unambiguous.

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83 Mr. Pratap has placed heavy reliance on the following

judgments :

(1) (2009) 2 SCC 134 Shakti Bhog Foods Limited vs. Kola

Shipping Limited.

(2) Lloyd's Law Reports (1987) Vol.2 - Queen's Bench Division

(Admiralty Court) - judgment dated 4th July, 1986.

(3) 1 Queen's Bench 377 (1979) - The Rena K.

84 For properly appreciating the rival contentions, it is

necessary to refer to the allegations in the plaint.

85 The suit is filed by the plaintiff for seeking to assert

the claim and the cause of action as set out in the plaint and

summarized in paragraph 38 onwards indicates that this is an in

rem action for enforcement of the plaintiff's maritime claim on

the defendant vessel for recover of charterhire as well as capital

value of the vessel (as provided in the bareboat charterparty)

which the plaintiff would have earned, had the charterers /

owners of the defendant vessel not breached the essential

condition and warranty of the bareboat charterparty. It is stated

that the maritime claim is valid, subsisting and enforceable

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against the defendant vessel. In view of the failure on the part of

the charterers / owners of the defendant vessel to comply with

the essential conditions under the bareboat charterparty, the

plaintiff says that it is entitled to file the present suit for recovery

of charterhire as well as the capital value of the vessel which the

plaintiff would have earned had that essential condition and

warranty not been breached.

86 It is clearly stated in paragraph 4 that this constitutes

a maritime claim under section 4(1)(h) of the Admiralty Act,

2017 and the Arrest Convention 1999. It is claimed that an action

in rem under the provisions of the Admiralty Act, 2017 and

Arrest Convention is a special and effective right and procedure

prescribed in Admiralty jurisdiction for recovery of a lien and a

claim by an action in rem against a vessel which are within the

jurisdiction of this Court. The plaintiff claims to be entitled to

proceed against the defendant vessel in an in rem action for

recovery of charter hire and the capital value of the vessel Siem

Marlin. It is, therefore, said that this Court has jurisdiction to

entertain, try and dispose of this suit.

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87 Insofar as the arrest is concerned, that is claimed,

based on section 5 of the Admiralty Act, 2017 and the

International Convention on the Arrest of Ships, 1999. It is

stated that the plaintiff is entitled to arrest the defendant vessel

in the present admiralty proceedings since the owner of the

defendant vessel is liable for the maritime claim and the owner of

the defendant vessel was the demise charterer of the vessel Siem

Marlin under the bareboat charterparty.

88 Before proceeding further, we must indicate that the

issue of jurisdiction of this Court is raised qua the subject matter.

This Court's territorial jurisdiction is not the issue at hand. The

competence of this Court to entertain and try the suit particularly

because of its subject matter is highlighted before the learned

single Judge as also before us. Like any other facet of jurisdiction,

even when one is dealing with the subject matter of the suit one

must proceed on the allegations in the plaint. They would have to

be presumed as true until the contrary is proved. Once we look at

the allegations in this plaint, then, we do not think that the

learned single Judge was in error in rejecting the objection to this

Court's competence and jurisdiction to entertain and try the suit.

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89 The plaint itself has highlighted that notwithstanding

the pendency of the arbitration proceedings and award that may

be passed in arbitration proceedings in London, they are entitled

to file the present Admiralty Suit seeking arrest of the defendant

vessel as security for their claim in the suit. The plaintiff is

entitled to seek a decree against the defendant vessel as claimed

in the suit and obtain security for its present claim. In the

alternative, the defendant vessel can be retained as security for

the arbitration proceedings commenced in London.

90 The fallacy in the argument of Mr. Sen and Mr. Chinoy

is in presuming that this Court has been approached by the

plaintiff only to obtain security for the arbitration proceedings

commenced in London. Far from it, the present suit is filed to

enforce a maritime claim and that is clear from a reading of the

plaint as a whole. It is well settled that the allegations will have to

be read as a whole and in their entirety. None of the allegations in

the plaint can be picked out of context and read in isolation. After

setting out the background, the plaint proceeds to say that this is

an in-rem action for enforcement of the plaintiff's maritime claim.

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Once this is how the plaint allegations are premised and the

ultimate relief, then, we are of the opinion that we cannot agree

with Mr. Sen as also Mr. Chinoy.

91 Mr. Sen's argument presumes that because there is a

pending arbitration and abroad, by its sheer pendency the

present suit is barred. For that purpose, he says that this suit is

filed to obtain security for the claim in the arbitration which is

going on abroad. In the foregoing paragraphs, we have already

said that this is not how the claim is founded. Secondly, Mr. Sen's

arguments proceed on an erroneous basis and namely that

pendency of the arbitration proceedings abroad by itself and

without anything more bars the filing of the suit. To our mind,

that is not the accurate position.

92 Section 5 of the Arbitration & Conciliation Act, 1996,

bars judicial intervention. That says that notwithstanding

anything contained in any other law for the time being in force, in

matters governed by this Part, no judicial authority shall

intervene, except where so provided in this Part. The word "Part"

may not be defined, but that is to be understood by the index and

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contents of the Arbitration & Conciliation Act, 1996. Part-I

thereof is titled as Arbitration and has as many as ten Chapters.

The ten chapters contain general provisions, arbitration

agreement, composition of arbitral tribunals, jurisdiction of

arbitral tribunals, conduct of arbitration proceedings, making of

arbitral award and termination of proceedings, records against

arbitral award and finality and enforcement of arbitral awards.

Chapters IX and X are titled as 'Appeals' and 'Miscellaneous'.

Part-II of the Act deals with enforcement of certain foreign

awards. Therefore, judicial intervention is permissible to the

extent indicated in section 5. Mr. Sen's argument overlooks the

fact that filing or presenting of the suit in this Court cannot be

said to be attracting the bar. Something more than that would

attract the bar. If presence of an arbitration agreement between

the parties itself attracts a bar, then, section 8 of the Arbitration

& Conciliation Act 1996 would become otiose and redundant.

That enacts a power to refer parties to arbitration where there is

an arbitration agreement. Therefore, a judicial authority before

which an action is brought in a matter which is subject of an

arbitration agreement shall, if a party to the arbitration

agreement or any person claiming through or under him so

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applies, then, dependent upon other conditions in sub-section (1)

of that section being satisfied, the parties have to be referred to

arbitration. For that, the Court will have to conclude that there is

a valid arbitration agreement. This sub-section has been

amended retrospectively with effect from 23 rd October, 2015.

Prior thereto, it was reading as under :

"8 Power to refer parties to arbitration where there is an arbitration agreement.- (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced and an arbitral award made."

93 Now, sub-section (2) and which is retained contains a

proviso with retrospective effect. By that proviso an original

arbitration agreement or a duly certified copy thereof has to be

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presented for an application under sub-section (1) of section 8 to

be entertained. The proviso enables the Court to exercise its

powers under sub-section (1) in the absence of the original

agreement. Sub-section (3) says notwithstanding that an

application has been made under sub-section (1) and that the

issue is pending before the judicial authority, an arbitration may

be commenced or continued and an arbitral award made.

94 Therefore, the judicial authority has to be approached

by making an application within the meaning of sub-section (1) so

as to enable it to exercise its power to refer parties to arbitration

where there is an arbitration agreement.

95 In the instant case, it is said that the arbitration is

pending abroad. Section 45 of the Arbitration & Conciliation Act,

1996, reads as under :

"45. Power of judicial authority to refer parties to arbitration.- Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless

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it finds that the said agreement is null and void, inoperative or incapable of being performed."

96 A bare perusal of this provision says that

notwithstanding anything contained in Part I or in the Code of

Civil Procedure, 1908 a judicial authority, when seized of an

action in a matter in respect of which the parties have made an

agreement referred to in section 44, shall, at the request of one of

the parties or any person claiming through or under him, refer

the parties to arbitration, unless it finds that the said agreement

is null and void, inoperative or incapable of being performed.

97 Once the institution or filing of the present suit is not

barred and the parties have to move and prevent the Court from

proceeding with the suit, then, we do not see how Mr. Sen's

argument can be accepted. Apart from the above, the learned

Single Judge's order can be sustained on facts.

98 We are not deciding any larger issue or wider

controversy simply because Mr. Sen's argument have not rested

on the above provision of the Arbitration Act alone. He has gone

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ahead and criticised the approach of the learned single Judge by

contending that the instant suit only seeks to protect or secure

the claim in the on-going foreign arbitration. Thus, his contention

is that this suit is filed to obtain a security for the ultimate award

that would be made in favour of the plaintiff.

99 Far from it, this suit is filed to recover the amounts,

more particularly set out in the prayer clause by urging that

there is a maritime claim. Mr. Sen pertinently does not dispute

that the underlying claim in this case is otherwise a maritime

claim. However, his argument is that such a claim, which is

referred to in section 4 of the Admiralty Act, 2017, is pressed by

the plaintiff in the on-going arbitration proceedings. Therefore,

the present suit is filed only to secure the claim and the fruits of

the arbitral proceedings abroad. Thus, in the event the Award

passed in favour of the plaintiff in the foreign arbitration has to be

enforced, then, there has to be a security for it and for that

reason, this suit is filed.

100 We do not think so. Ultimately, this aspect has to be

decided on the facts and circumstances of each case. No general

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rule can be laid down. One would have to read every plaint and

the allegations therein carefully. One would have to take the

plaint allegations as a whole and read them harmoniously. One

would have definitely and to arrive at a proper conclusion, read

the allegations in this manner. They would have to be assumed to

be true. Therefore, we are not saying that a suit to secure the

claim in the arbitral proceedings can be filed irrespective of the

requirements stipulated in the Admiralty Act, 2017. They have to

be fulfilled and all preconditions satisfied. We are not laying down

such a principle as is apprehended by Mr. Sen. All that we are

saying is that in the backdrop of the facts and circumstances of

this particular case, we do not think that the suit has been filed to

secure the claim in the pending foreign arbitral proceedings. By

this finding and conclusion and which is based entirely on the

facts and circumstances of each case, we are not laying down any

general rule, much less a principle of law that a suit simplicitor to

secure a claim in the arbitration abroad would be always

maintainable in the Admiralty jurisdiction of this Court. We think

that our clarification is enough to understand the ultimate

conclusion that we have reached. It is only to negate the

argument of Mr. Sen that the instant suit is filed to claim arrest of

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a vessel as a security for the pending foreign arbitration that we

have made these detailed observations.

101 Once we clear this ground, then, the remaining issue is

whether this Court's order of arrest, as made by the learned

single Judge, requires interference. In that regard, we must refer

to the Admiralty Act in some details. The Admiralty Act, 2017, is

an Act to consolidate the laws relating to Admiralty jurisdiction,

legal proceedings in connection with vessels, their arrest,

detention, sale and other matters connected therewith or

incidental thereto. The Statement of Objects and Reasons leading

to this enactment reads as under :

"STATEMENT OF OBJECTS AND REASONS

The present legal framework for admiralty jurisdiction in India flows from laws enacted by the British which confer admiralty jurisdiction only to those High Courts which were established under the Letters Patent, 1865. Subsequent to the judgment of the Supreme Court in its judgement in M.V. Elisabeth And Others Vs. Harwan Investment and Trading Pvt. Ltd. to codify and clarify the admiralty laws in the country, the Law Commission of India also in its 151st Report recommended for enacting a new admiralty Act for India.

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2. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Bill, 2016 consolidates the existing British era laws on civil matters of admiralty jurisdiction of courts, admiralty proceedings on maritime claims, arrest of vessels and related issues in line with modern trends in the maritime sector and in uniformity with prevalent international practices.

3. The Bill also proposes to confer admiralty jurisdiction on High Courts of coastal States. This jurisdiction extends up to Indian territorial waters. The Central Government is empowered to further extend, by a notification, upto exclusive economic zone or any other maritime zone of India or islands constituting part of the territory of India. The Bill covers every vessel irrespective of place of residence or domicile of owner. However, warships and naval auxiliary or other vessels used for non-commercial purposes are beyond its purview. Though inland vessels and vessels under construction are excluded from its application, the Central Government is empowered to make it applicable to these vessels also, by a notification, if necessary. The Bill provides for adjudication of identified maritime claims and, to ensure security against maritime claims, arrest of vessels in certain circumstances. The Bill also provides for inter se priority on maritime lien. The liability in respect of selected maritime claims on a vessel passes on to its new owners by way of maritime liens subject to a stipulated time limit. The Civil Procedure Code, 1908 shall be applicable in respect of aspects on which provisions are not laid down in the Bill. The Bill also

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deals with admiralty jurisdiction in personam and the order of priority of maritime claims.

4. It is proposed to repeal four archaic admiralty laws on civil matters, namely, (a) the Admiralty Court Act, 1861, (b) the Colonial Courts of Admiralty Act, 1890, (c) the Colonial Courts of Admiralty (India) Act, 1891, and (d) the provisions of the Letters Patent, 1865 in so far as it applies to the admiralty jurisdiction of the Bombay, Clacutta and Madras High Courts, as those provisions would become redundant with the enactment of this Legislation.

5. The Bill seeks to achieve the above objectives."

102 Now, a reference will have to be made to the provisions

of the Act so as to properly understand the intent of the

Parliament. In Chapter I titled "Preliminary", section 1 says that

this Act may be called the Admiralty (Jurisdiction and Settlement

of Maritime Claims) Act, 2017 and sub-section (2) of section 1

says that it shall apply to every vessel, irrespective of the place of

residence or domicile of the owner. The proviso thereto excludes

an inland vessel and a warship, naval auxiliary or other vessel

owned or operated by the Central or a State Government and used

for any non-commercial purpose. It shall also not apply to a

foreign vessel which is used for any non-commercial purpose as

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may be notified by the Central Government. The definitions are

contained in section 2. Clause (a) defines "admiralty jurisdiction"

to mean the jurisdiction exercisable by a High Court under section

3, in respect of maritime claims specified under this Act.

"Admiralty proceeding" means any proceeding before a High

Court exercising admiralty jurisdiction. The word "arrest" is

defined in section 2 clause (c) as under :

"2. Definitions.- (1) In this Act,-

(a) ......... (c) "arrest" means detention or restriction for removal of

a vessel by order of a High Court to secure a maritime claim including seizure of a vessel in execution or satisfaction of a judgment or order;"

103 A perusal of this definition would mean detention or

restriction for removal of a vessel by order of a High Court to

secure a maritime claim including seizure of a vessel in execution

or satisfaction of a judgment or order for arrest. The definition,

therefore, itself is so clear as requiring no elaboration. The term

"High Court" is defined in section 2 clause (e) and the term

"maritime claim is defined in clause (f) of section 2 to mean a

claim referred to in section 4. The term "maritime lien" is defined

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in section 2 clause (g) as under :

"2. Definitions.- (1) In this Act,-

(a) ......... (g) "maritime lien" means a maritime claim against the

owner, demise charterer, manager or operator of the vessel referred to in clauses (a) to (e) of sub-section (1) of section 9, which shall continue to exist under sub-section (2) of that section;"

104 The other definitions need not be referred to, save and

except the definition of the term "vessel" and that also is an

inclusive one. The controversy as to whether the defendant is a

vessel or not has not arisen in this case and, therefore, this

definition need not be elaborated in any details.

105 Chapter II contains very important provisions,

namely, sections 3, 4 and 5 and they read as under :

"3 Admiralty Jurisdiction.- (1) Subject to the provisions of sections 4 and 5, the jurisdiction in respect of all maritime claims under this Act shall vest in the respective High Courts and be exercisable over the waters up to and including the territorial waters of their respective jurisdictions in accordance with the provisions contained in this Act:

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Provided that the Central Government may by notification, extend the jurisdiction of the High Court up to the limit as defined in section 2 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976.

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--

(a) dispute regarding the possession or ownership of a vessel or the ownership of any share therein;

(b) dispute between the co-owners of a vessel as to the employment or earnings of the vessel;

(c) mortgage or a charge of the same nature on a vessel;

(d) loss or damage caused by the operation of a vessel;

(e) loss of life or personal injury occurring whether on land or on water, in direct connection with the operation of a vessel;

(f) loss or damage to or in connection with any goods;

(g) agreement relating to the carriage of goods or passengers on board a vessel,whether contained in a charter party or otherwise;

(h) agreement relating to the use or hire of the vessel, whether contained in a charter party or otherwise;

(i) salvage services, including, if applicable, special compensation relating to salvage services in respect of a vessel which by itself or its cargo threatens damage to the environment;

(j) towage;

(k) pilotage;

(l) goods, materials, perishable or non-perishable provisions,

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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;

(m) construction, reconstruction, repair, converting or equipping of the vessel;

(n) dues in connection with any port, harbour, canal, dock or light tolls, other tolls, waterway or any charges of similar kind chargeable under any law for the time being in force;

(o) claim by a master or member of the crew of a vessel or their heirs and dependents for wages or any sum due out of wages or adjudged to be due which maybe recoverable as wages or cost of repatriation or social insurance contribution payable on their behalf or any amount an employer is under an obligation to pay to a person as an employee, whether the obligation arose out of a contract of employment or by operation of a law (including operation of a law of any country) for the time being in force, and includes any claim arising under a manning and crew agreement relating to a vessel, notwithstanding anything contained in the provisions of sections 150 and 151 of the Merchant Shipping Act, 1958;

(p) disbursements incurred on behalf of the vessel or its owners;

(q) particular average or general average;

(r) dispute arising out of a contract for the sale of the vessel;

(s) insurance premium (including mutual insurance calls) in respect of the vessel,payable by or on behalf of the vessel owners or demise charterers;

t) commission, brokerage or agency fees payable in respect of the vessel by or on behalf of the vessel owner or demise

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charterer;

(u) damage or threat of damage caused by the vessel to the environment,coastline or related interests; measures taken to prevent, minimise, or remove such damage; compensation for such damage; costs of reasonable measures for the restoration of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; or any other damage, costs, or loss of a similar nature to those identified in this clause;

(v) costs or expenses relating to raising, removal, recovery, destruction or the rendering harmless of a vessel which is sunk, wrecked, stranded or abandoned,including anything that is or has been on board such vessel, and costs or expenses relating to the preservation of an abandoned vessel and maintenance of its crew; and (w) maritime lien.

Explanation.--For the purposes of clause (q), the expressions "particular average"and "general average" shall have the same meanings as assigned to them in sub-section (1) of section 64 and sub-section (2) of section 66 respectively of the Marine Insurance Act, 1963.

(2) While exercising jurisdiction under sub-section (1), the High Court may settle any account outstanding and unsettled between the parties in relation to a vessel, and direct that the vessel, or any share thereof, shall be sold, or make such other order as it may think fit.

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(3) Where the High Court orders any vessel to be sold, it may hear and determine any question arising as to the title to the proceeds of the sale.

(4) Any vessel ordered to be arrested or any proceeds of a vessel on sale under this Act shall be held as security against any claim pending final outcome of the admiralty proceeding.

5. Arrest of a 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

(b) the demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the demise charterer or the owner of the vessel when the arrest is effected; or

(c) the claim is based on a mortgage or a charge of the similar nature on the vessel; or

(d) the claim relates to the ownership or possession of the vessel; or

(e) the claim is against the owner, demise charterer, manager or operator of the vessel and is secured by a maritime lien as provided in section 9.

(2) The High Court may also order arrest of any other

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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."

106 A perusal of section 3 would reveal that it is subject to

the provisions of sections 4 and 5 that this Court exercises

Admiralty jurisdiction and that is defined with reference to a

maritime claim. Therefore, a jurisdiction vesting in the

respective High Courts is not the repository of all maritime claims

under the Admiralty Act and the extent of the jurisdiction is then

set out in sub-section (1) of section 3.

107 One finds curiously that section 3 has no further sub-

sections. It has only one sub-section. Section 4 deals with the

maritime claim. Sub-section (1) of section 4 says that High Court

may exercise jurisdiction to hear and determine any question on a

maritime claim arising out of the matters enlisted in clauses (a)

to (w) and sub-section (2) says that while exercising jurisdiction

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under sub-section (1), the High Court may settle any account

outstanding and unsettled between the parties in relation to a

vessel and direct that the vessel or any share thereof shall be

sold, or make such order as it may think fit. Sub-section (3) of

section 4 provides for hearing and determining any question

arising as to the title to the proceedings of the sale of the vessel

directed to be sold. Sub-section (4) of section 4 says that any

vessel ordered to be arrested or any proceedings of a vessel on

sale under this Act shall be held as security against any claim

pending final outcome of the Admiralty proceedings.

108 This sub-section was also read in isolation. It should

not be read so. This sub-section must be read with the definition

of the term "admiralty proceedings" which, in turn, means any

proceeding before a High Court exercising admiralty jurisdiction.

Further, the word "admiralty jurisdiction" means the jurisdiction

exercisable by a High Court under section 3 of the Admiralty Act

in respect of the maritime claims specified under this Act. So

read, it would be clear that sub-section (4) of section 4 enables an

arrested vessel or the proceeds of the sold vessel under this Act to

be held as security against any claim pending final outcome of the

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Admiralty proceeding. Then comes section 5 which confers a

power of arrest of a vessel in rem. Now, sub-section (1) of this

section enables the High Court to order arrest of any vessel which

is within its jurisdiction for the purpose of providing security

against a maritime claim which is the subject matter of an

admiralty proceeding, but the Court must have reason to believe

that clauses (a) or (b) or (c) or (d) or (e) of sub-section (1) are

attracted. By sub-section (2), discretionary power is conferred in

the High Court to 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 the

Admiralty Act, subject again to the provisions of sub-section (1) of

section 5. However, 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. That clause speaks of a dispute regarding

the possession or ownership of a vessel or the ownership of any

share therein. Naturally, therefore, the proviso to sub-section (2)

of section 5 says that if the maritime claim is of this nature, then,

no vessel shall be arrested under sub-section (2) of section 5. In

the instant case, the argument is that the claim is in relation to a

breach or violation of an agreement pertaining to Siem Marlin.

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The plaintiff has said that the defendant vessel is owned by MEDS

FZC, a company incorporated under the foreign laws having its

office in the United Arab Emirates. The plaintiff has said that

there is a breach of the conditions stipulated in the bareboat

charterparty dated 13th May, 2015 entered into between the

plaintiff and the owners of the defendant vessel. The plaintiffs are

owners of a motor vessel Siem Marlin. By the bareboat

charterparty, the plaintiff chartered Siem Marlin on bareboat

charter to MEDS for a firm period of five years with a purchase

obligation at the end of five years or a purchase option at the end

of the first / second / third / fourth year from the date of delivery.

There was a charterparty drawn and as per its terms, fifteen days

prior to delivery of the vessel Siem Marlin to the charterers, the

charterers were required to furnish a bank guarantee for USD 4

million as guarantee for full performance of the obligations under

the charterparty and which bank guarantee was to be furnished

between the time / extended time agreed between the parties.

Thus, the charterer / owners of the defendant vessel were

required to take delivery of Siem Marlin, but they failed to furnish

this bank guarantee. Consequently, the delivery could not be

taken.

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109 The plaintiffs have said that after committing a breach

of the same and not compensating the plaintiffs, the liability to

pay the amounts claimed in the suit arises and then the plaintiffs

allege that they are constrained to let out this vessel Siem Marlin

on short time charterparties; the plaintiff was forced to incur

operating costs and expenses (management crewing etc) under

these time charterparties which they would not have had to incur

under the bareboat charterparty, under which such expenses

could have been to the account of the charterers / owners of the

defendant vessel. Hence these expenses also have to be

reimbursed. There are damages for loss of sale of the vessel Siem

Marlin. The claim has been elaborated in that regard and we have

noticed how the plaintiffs termed this as a maritime claim. They

are saying that the maritime claim as set out in the plaint entitles

them to invoke their right in rem against the defendant vessel.

The plaintiffs in paragraph 44 of the plaint have clearly stated

that they are entitled to arrest the defendant-vessel in the

present Admiralty proceedings since the owner of the defendant

vessel is liable for the maritime claim and the owner of the

defendant vessel was the demise charterer of one of the vessel

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Siem Marlin under the bareboat charterparty. Hence, the arrest

of any vessel which is within the jurisdiction of this Court for the

purpose of providing security against a maritime claim which is a

subject matter of an admiralty proceeding enables the plaintiffs to

seek an arrest of the defendant-vessel. Clause (a) of sub-section

(1) of section 5 enables this Court to order arrest of any vessel

within its jurisdiction for the purpose aforesaid where this 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. Paragraph 44

of the plaint proceeds on this basis. Now, the whole argument is

that this boat or vessel (the defendant vessel) has nothing to do

with the claim in the suit. Its owner is not liable for the maritime

claim.

110 The application that was made to the learned single

Judge in June 2018 is that this Court should set aside an order

and/or recall the exparte / ad-interim order dated 1 st June, 2018

and release the defendant vessel Altus Uber from the order of

arrest.

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111 We now refer to the rival versions placed on affidavit

by the parties. We clarify that we accept neither. At this stage,

their acceptance or otherwise is unnecessary. The application

was moved by the defendant. In that application, an affidavit-in-

support was filed in which the authorised representative of MEDS

says that MEDS is wrongly described as owner of the defendant

vessel. In fact, the application for vacating the arrest is moved by

MEDS in the capacity of the charterers of the defendant vessel.

The plaintiffs have mischievously and erroneously contended that

MEDS is the owner of the defendant vessel and got the defendant

vessel arrested. It is not MEDS but Swordfish Shipco Limited (for

short "Swordfish") which is the owner of the defendant vessel.

Reliance in that behalf was placed on Exhibits A and B which are

copies of the certificate of registration of bareboat indicating that

MEDS as the bareboat charterers of the defendant vessel and the

latest Continuous Synopsis Record of the Liberian Maritime

indicating Swordfish as the owner and MEDS as bareboat

charterers of the defendant vessel.

112 However, the plaintiff has relied upon Exhibit-Y styled

as a Seaweb report. This is a third party website which has shown

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incorrect information as the owner of the defendant vessel. The

plaintiff has annexed no other document showing / proving that

MEDS is the owner or the defendant vessel. The Seaweb report is

incorrect and has incorrectly shown MEDS as the owner of the

vessel. Thus, this information could not have been relied upon.

113 It is then said that the arbitration proceedings

between the plaintiffs and MEDS relate to the vessel Siem Marlin

and the same are conducted in London. The subject matter of the

arbitration is not pertaining to the defendant vessel and,

therefore, no claim / right arises to arrest the defendant vessel.

For these reasons, it is submitted that the order be vacated.

114 Now, the Provisional Certificate of Bareboat Registry

in relation to Altus Uber shows the name of MEDS (see page 89 in

the appeal paper-book of Swordfish). The name of Swordfish is

shown as 'former name'. The Provisional Certificate of Bareboat

Registry shows that pursuant to provisions of chapter 2 of Title

21 of Liberian Code of Laws 1956 as amended, declaration is

made by one Ashutosh Choudhary. That is a declaration of

ownership and he does depose and that MEDS is the sole Bareboat

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Charterer of the named and described vessel. Then there is at

page 90, a Continuous Synopsis Record which shows the name of

the current registered owner and that is Swordfish Shipco

Limited. The registered bareboat charterer is MEDS. The Board

Resolution at page 92 of MEDS shows MEDS FZC as the

charterers of the vessel Altus Uber.

115 However, to this Notice of Motion (L) No.1392 of 2018,

in Judge's Order No.107 of 2018, the plaintiff filed a reply. It, in

paragraph 5(a), says that it has not wrongly declared MEDS as

owners of the defendant vessel. In fact, MEDS on its official

website has provided a company profile in column "About Us"

page. In the said company profile MEDS has specifically stated

that it continuously strives to maintain the highest standards of

compliance to the Global Safety and Environmental policies while

operating its fleet. It has the capability to offer three of its own

DP2 vessels on time charter basis. It has provided a list of the

above mentioned three DP2 vessels. In that list, MEDS has

specifically mentioned the defendant vessel with its photograph

alongwith two other vessels Altus Exertus and Altus Optimus.

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116 These documents are relied upon along with the

Seaweb report to establish that the defendant vessel is owned by

MEDS and, therefore, it is liable to be arrested and sold for

enforcement of the maritime claim against MEDS.

117 Then, in this affidavit-in-reply at Exhibit-B collectively,

are copies of documents relating to ownership and other details of

the defendant vessel as available on the website of the

Classification Society, namely, Indian Register of Shipping are

relied upon. This information is provided by MEDS to this

Classification Society. Once this information available on the

official website of the Classification Society demonstrates that

MEDS is the owner of the defendant vessel, then, really we are not

concerned with the assertion of Swordfish Shipco that the

contents of this documents are not correct.

118 To our mind, it is not as if there is a bald or vague

assertion of the plaintiff about the defendant vessel. There is a

categoric averment that the defendant vessel is owned by MEDS.

There is a reference to specific documents from which the plaintiff

has deduced that MEDS is the owner. It is not, therefore, that

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ownership is an undisputed position as claimed by the said

Swordfish. There is no admission, much less any concession by

the plaintiff that the ownership of the defendant vessel vests in

somebody else. In fact, they go as far as saying that the

documents annexed as exhibits to the affidavit-in-support of M/s.

MEDS, namely, purported certificate of registration of bareboat

and purported Continuous Synopsis Record purportedly of the

Liberian Maritime Authority are disputed and denied. The

plaintiff deny their authenticity and veracity. They claim that

these documents do not have any probative value. They put

MEDS to the strict proof of the existence as well as truth of the

contents of these purported documents. In fact, the argument is

that these documents appear to be concocted, fabricated and/or

manufactured documents solely with a view to create an illusion

in order to avoid the liability. Then, the affidavit refers to a

complete note and, relying upon that, it is argued that MEDS

cannot decisively urge that it is the owner of the defendant vessel.

The alleged certificate is only provisional.

119 In addition to that, the purported provisional

certificate of the bareboat registry recorded in the ownership

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declaration column to which we have referred to in details above

says that Ashutosh Chaudhary, the Managing Director of MEDS

submitted to the Liberian Maritime Authority that MEDS owns

the defendant vessel to the extent of one hundred percent. Thus,

every document submitted by MEDS falsifies their arguments.

120 We find much substance in the contentions of Mr.

Pratap that at this stage the Court was not concerned with the

authenticity and genuineness of the documents. At best, this is a

word against word. Mr. Pratap is right in urging that the plaintiff

cannot be non-suited by relying on such questionable documents.

The plaintiffs have then stated that Altus Uber can still be

arrested because the plaintiffs have a maritime claim against the

demise charterer MEDS in respect of their vessel Siem Marlin and

MEDS is the demise charterer of the vessel Altus Uber on the date

of the arrest. The plaintiffs have pointed out that the demise

charterer can change the name of the ship, its flag, Port of

registry and classification society and even represent to the

Indian Register of Shipping to be the owner of the ship as

appearing from the documents on record. All this was permitted

by the registered owner Swordfish assuming that the documents

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produced by Swordfish are genuine and authentic. According to

Mr. Pratap, still, Altus Uber can be arrested. Mr. Pratap says that

in the event clause (a) of sub-section (1) of section 5 does not help

the plaintiff, clause (b) comes to its aid and assistance. Therefore,

any vessel which is in the jurisdiction of this Court can be

arrested by this Court where there is reason to believe that a

demise charterer of the vessel at the time when the maritime

claim arose is liable for the claim and is the demise charterer or

the owner of the vessel when the arrest is effected. Thus, MEDS is

liable for the maritime claim of the plaintiff. The MEDS, at the

time when the claim arose, is the demise charterer when the

arrest of the vessel is effected. To our mind, sub-sections (1) and

(2) of section 5 enable this Court to 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 the Admiralty Act. However, that any vessel

can also be arrested for the purpose set out in sub-section (1)

where this Court has reason to believe that it was on demise

charter and its demise charterer was liable for the maritime claim

when it arose and is the demise charterer of the said Altus Uber

when the arrest is effected.

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121 Mr. Pratap has rightly submitted that these two

conditions have been satisfied in the instant case.

122 We have carefully perused the order of the learned

single Judge and we find that the learned Judge, in paragraph 52

has observed that the plaintiff gave their vessel Siem Marlin on

bareboat charter to MEDS under a bareboat charterparty dated

13th May, 2015. Thus, MEDS was the demise charterer of the

plaintiffs vessel. The plaintiff has various claims in respect of

breach of this charterparty. They are maritime claims under

section 4 of the Act. The learned Judge then rightly refers to sub-

section (2) of section 5 read with section 5(1)(b) to hold that the

plaintiff is entitled to arrest a vessel which is either owned by or

on demise charter to MEDS when the arrest is effected. The

learned Judge says that the plaintiff has referred to MEDS as

owner of the defendant vessel Altus Uber and in support of this

assertion, it relies upon the documents, namely, Seaweb Report

that shows MEDS as the registered owner, IR Classification

documents where the Classification Society IRS confirms that the

registered owner of the vessel is MEDS and the former name of

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the vessel was Swordfish and the vessel Port of vessel is Monrovia

and flag is Liberia. Then, the documents from the website of

MEDS have also been referred by the learned single Judge. The

learned single Judge says that there is a failure of MEDS to

disclose the alleged bareboat charterparty under which it claims

to be a demise charterer. Therefore, that assertion cannot be

accepted according to the learned single Judge. That is sufficient

to prima facie demonstrate that MEDS is the owner of the

defendant vessel. The learned single Judge has also referred to

the denial of MEDS that they are not owners, but are demise

charterers of the vessel. The learned Judge rightly says that this

makes no difference to the arrest of the defendant vessel. The

learned single Judge has also rightly made the distinction

between "the vessel" and "any other vessel". Finally, the learned

single Judge holds that assuming MEDS to be the demise

charterers of Altus Uber as contended by MEDS and Swordfish,

still, applying the provisions of section 5 (2) read with section

5(1)(b) of the Admiralty Act, the defendant vessel is liable to be

arrested for the purpose of providing security in respect of the

maritime claim of the plaintiff for which MEDS is liable as demise

charterer of the defendant vessel. This observation is criticised

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but what is material for us to note is that if the plea of ownership

of Altus Uber fails, still, MEDS claims that it is the demise

charterer of Altus Uber.

123 We find that in the Grounds of Appeal of Altus Uber

and which denote the stand of MEDS, Ground A of the Memo of

Appeal at page 3 [Commercial Appeal (L) 465 of 2018] reads as

under :

"A The Learned Judge failed to appreciate that the arrest of the vessel was permissible only if the vessel being arrested was owned by or on Demise charter to the MEDS at the time the cause of action arose as well as the demise charterer or owner of the vessel at the time of the arrest or alternatively, the owner or demise charterer of the offending vessel both at the time the cause of action arose and at the time when the arrest was made."

124 On the other hand, the Memo of Appeal of M/s.

Swordfish proceeds on the footing that it is the registered owner

of Altus Uber and it cannot be said to be liable for the alleged

claim of the plaintiff. The argument was that M/s. Swordfish is

not liable for the maritime claim of the plaintiff. The maritime

claim could not have been secured by arresting Altus Uber as

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Swordfish had denied and disputed the allegation that MEDS was

the owner.

125 In this Memo of Appeal of M/s. Swordfish,

[Commercial Appeal No. 86 of 2019] Ground N at page 8 reads as

under :

"N The Learned Single Judge has failed to appreciate that the Registry Certificate of the Defendant Vessel is a document available in the public domain and the Respondent No.1 / Original Plaintiff could have easily obtained full particulars of the actual registered owners of the Defendant Vessel before proceeding to institute the present action. That the Respondent No.1 / Original Plaintiff did not make any enquiry with the Appellant although it knew and was fully aware that MEDS was holding itself out as the charterer of the said vessel and that MEDS was not the registered owner of the Defendant Vessel, shows mala-fide on the part of the Respondent No.1 / Original Plaintiff."

126 The wording of this ground itself indicates that these

are conflicting versions. On the basis of these versions we do not

think that the learned single Judge was obliged to hold any

detailed inquiry at this stage. The learned single judge has not

assumed the jurisdiction which, by law, was not vesting in him.

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On the other hand, the observations in the impugned order

demonstrate that the learned single Judge was aware of the

scheme of Admiralty Courts Act, 2017. He was acting within the

parameters of the same. He has not travelled beyond the same.

He was not obliged, and as rightly urged by Mr. Pratap, to go into

other hypothetical question or issue for neither the bar under the

relevant sections of the Arbitration & Conciliation Act, 1996, was

invoked nor the argument canvassed goes to such extent as would

denote that filing or institution of the instant suit itself was

impermissible. Ultimately, as held by us above, the bar to the suit

will have to be invoked and within the parameters laid down in

the Arbitration and Conciliation Act, 1996. Once we take holistic

view and see the matter in a proper perspective, there is no need

to elaborate any further. The suit was to enforce a maritime

claim. The power to arrest was invoked by urging that in the

scheme of the Act, there is no prohibition to arrest a vessel other

than Siem Marlin, then, all contentions raised before us fall to the

ground. We have to give meaning to the language of sub-section

(1) and particularly when it employs the words "may order arrest

of any vessel". This discretionary power is not so uncontrolled as

is projected before us. The power is regulated and controlled by

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the language of the sub-section itself. The power vesting in the

High Court cannot be exercised unless it 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. We cannot accept the

argument that because the charterparty was in relation to the

vessel Siem Marlin, it is only that vessel which can be arrested.

That is not even suggested by the learned counsel appearing for

the appellants. To be fair to them, such extreme submission was

not canvassed, but the submissions that they canvass, with

respect, overlook the clear language of the section. The High

Court may order arrest of the vessel which is within its

jurisdiction for the purpose of providing security against a

maritime claim which is the subject of an Admiralty proceeding,

but it must have reason to believe and it had, in fact, reason to

believe in this case that MEDS held out itself to be the owner or, in

any event, as the language of clause (b) of sub-section (1) would

indicate that it was the demise charterer of the vessel at the time

when the maritime claim arose and is a demise charterer of the

vessel when the arrest is effected. Thus, the preconditions or

prerequisites set out in the clear language enables the High Court

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in this case to pass the order of arrest. It is now convenient for

Swordfish and MEDS to raise distinct versions on the contents of

the certificates and documents placed before the learned single

Judge. However, this was not the stage where the learned Judge

could have proceeded to grant opportunity to the parties to

dispute the contents of the certificates and documents placed

before him. In fact, the learned single Judge has indicated in

clearest terms and from the dates mentioned in the documents

with regard to ownership that the defendant vessel was belonging

to the applicant / appellant. At this stage, we do not see that

finding to be perverse. The learned single Judge has concluded

that prima facie ownership of MEDS is established.

127 The argument that MEDS failed to produce the demise

charter and that now it is produced takes the case nowhere.

Prima facie, even if we take that document, it is not as if the

contents thereof are so conclusive that a prima facie conclusion

other than the one recorded by the learned single Judge, on the

point of jurisdiction, can be recorded. The paper-book in

Commercial Appeal (L) No. 465 of 2018 at page 72 contains a

communication / notice signed for and on behalf of Swordfish,

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which is a wholly owned entity of M/s. Veolia Environmental

Services North America Llc. and owners of M.V. Altus Uber,

indicating that M/s. Altus Uber is currently on charter to M/s.

MEDS. The bareboat charterparty is dated 7th October, 2017.

Now, Veolia is stating that Swordfish is its wholly owned entity

and that it is the owner of M/s. m.v. Altus Uber. It says that the

July hire payment was due on 1st July, 2018, but that has not been

confirmed. A breach of clause 11 of the charterparty is alleged.

This is a notice threatening to withdraw the vessel and terminate

the charterparty. Then, this notice contains a further interesting

assertion:

"6 As MEDS are aware :

(a) the June hire payment of US$225,000 was due on 1 st June 2018 and Veolia accordingly served a Clause 25(a)(i) Notice of 6th June 2018; and

(b) interest on the June hire payment of US$809.59 was due on 1st July 2018 (calculated on the basis of 30 days at the ICE LIBOR 3 month US$ rate at 1st June 2018, being 2,31781%, plus an additional 2% as per clause 11(f) of the above Charterparty;

7 The sum total of items (a) and (b) above, constitutes the outstanding June hire due to Veolia as of 1 st July 2018, being US$225,809.59 (and which items are referred to

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effectively below as "the Unpaid June Hire")

8 Pursuant to an Order of the Bombay High Court dated 1st June 2018 (Order No. 107 in the Commercial Admiralty Suit (L) No. 20 of 2018), the Vessel was arrested at Mumbai (hereinafter referred to as "The Arrest"). Bay way of an e- mail to Veolia from Ashutosh Chaudhary (MEDS' Managing Director) dated 9th June 2018 timed at 02:20, MEDS provided an undertaking to Veolia that MEDS would lift the Arrest and release the Vessel."

128 Thus, we find that the notices which are given are

without prejudice to any other rights or claims Veolia may have

against MEDS under the charterparty. Once this is not the stage

to consider the matter in greater details, we can safely rest our

conclusion by holding that the prima facie view taken by the

learned single Judge is correct.

129 After asserting the claim as owners of the vessel Altus

Uber, curiously Swordfish in its application seeking to vacate the

order of arrest, makes a guarded statement that the applicant

Swordfish has a direct and vital interest in the defendant vessel at

all material times and as on the date of the filing of the application

it was and/or continues to be the registered owner of the

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defendant vessel. Reliance is placed on the certificate of

ownership and encumbrance dated 22nd November, 2017. It is

thereafter said that one M/s. Veolia Environmental Services

North America Llc owns all one hundred ordinary shares of the

applicant Swordfish and thereafter inter se agreement is relied

upon.

130 Prima facie, we do not think that the charterparty

referred in the affidavit in support of the application of Swordfish

is a charterparty of the nature projected before us. It is very

clear that pursuant to the charterparty MEDS changed the name

of the defendant vessel from Swordfish to Altus Uber. This is

ordinarily permissible. This, as Mr. Pratap would indicate, is a

pointer towards the arrangement being a demise charter.

Further, it appears that the vessel was renamed and for a period

of 114 days i.e. three months and forty five days with further

extensions being permissible by mutual agreement it was under

the control of M/s. MEDS, then, all the more we do not think that

the learned single Judge was in such error as would require our

intervention for its correction in our Appellate jurisdiction. It is

in these circumstances that in the teeth of the allegations and

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counter allegations between Swordfish and MEDS, above prima

facie conclusion refusing to vacate the order of arrest was enough

to return a finding, on the issue of jurisdiction, against the

defendant. This is a finding of fact. It is based on appreciation

and appraisal of the material produced and that too at a prima

facie stage to decide the objection on the competence of the Court

and its jurisdiction to entertain and try the instant suit. Beyond

that nothing should be read and there is no necessity to then go

into the versions projected before us. The divergence in the

versions is indicative of the fact that prima facie it will be unsafe

to uphold either of them. The learned Judge has rightly not given

any weightage to the same and at this prima facie stage. The

reference to the same, as was necessary at this prima facie stage,

has been made and we do not think that anything further should

be read in the impugned order.

131 The criticism that the learned single Judge accepted

the one sided version of the plaintiff is, therefore, totally uncalled

for. The learned Judge has applied his mind while recording the

finding on this court's jurisdiction against the defendant. The

finding, as held above, is neither vitiated by perversity nor by

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such legal infirmity as would warrant our interference in the

Appellate jurisdiction. The finding of fact is based on all the

materials produced and can hardly be termed as an approval of a

one-sided version of the plaintiff. The criticism, therefore, apart

from being uncalled for, is grossly unfair to the learned single

Judge. The appreciation and appraisal of the factual materials is

carried out by applying correct legal principles and in an overall

manner.

132 As a result of the above discussion, we do not find any

merit in either Appeals. Both are dismissed with no order as to

costs.

133 We do not think that we should burden this judgment

by making a reference to all the decisions cited at the bar. We

have seen that the learned single Judge has gone by the clear and

plain language of the Admiralty Act, 2017. Far from ignoring it, in

consonance therewith the order of arrest of the defendant vessel

has been made and that order of arrest is to provide security

against a maritime claim which is a subject of the Admiralty

proceeding. So viewed, this is not a case where a claim in the

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arbitration or the likely Award therein is secured by resorting to

a mode of arrest for obtaining security. This is a case where

within the four corners of the Admiralty Act, 2017, the order of

arrest has been made and it is not necessary, therefore, that

every judgment cited by Mr. Sen should be referred by us.

134 Now, the only judgment that requires a reference is a

judgment cited by Mr. Chinoy in the case of Sunil B. Naik vs.

Geowave Commander (2018) 5 SCC 505.

135 There, the facts were peculiar. There, Oil & Natural

Gas Corporation awarded contract to one Reflect Geophysical Pte.

Ltd. (for short "RG"). This contract was awarded for carrying out

certain operations for ONGC. In order to carry out these

obligations, RG in turn entered into a charterparty agreement

vide contract dated 29th June, 2012, to charter the vessel

Geowave Commander for a period of three years. The registered

owner of Geowave Commander was Master and Commander A S

Norway. The vessel is stated to be specialized ship equipped to

carry out seismic survey operations. In the terms of the contract

this was a bareboat charter. There was an option to purchase the

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vessel.

136 All the terms and conditions of the charterparty were,

therefore, referred and what is material for us is that RG entered

into a charterhire agreement on 30th October, 2012 with M/s.

Sunil B. Naik the appellant before the Hon'ble Supreme Court in

terms whereof Sunil Naik agreed to supply twenty four fishing

trawlers being the chase vessels to assist in survey operations to

be conducted by Geowave Commander. The charter was for

sixteen chase vehicles out of twenty four fishing trawlers initially.

There was an arbitration clause therein. Sunil Naik contended

that sixteen vessels were made ready for RG to ensure that

fishing vehicles were kept well clear of the towed in water seismic

equipment so that their fishing equipment is not damaged. The

daily hiring agreement varied. There was another appellant

before the Court, but we are not concerned with it because Sunil

Naik issued a demand notice to RG for payment of outstanding

dues and another party Yusuf Abdul Gani moved the Bombay

High Court by filing a suit against Geowave as an Admiralty Suit

and obtained an order of arrest of the vessel. Sunil Naik also filed

an Admiralty suit and obtained an order of arrest.

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137 The owner of the vessel Master and Commander A S

Norway filed Notice of Motion in the two proceedings for vacation

of the ex parte order of arrest and that order was vacated and the

order of the learned single Judge vacating the arrest was

unsuccessfully challenged before a Division Bench of this Court

which proceeded to dismiss the Appeals. That is how the two

Appeals before the Hon'ble Supreme Court.

138 It is in that context that the observations very heavily

relied upon by Mr. Chinoy are made. However, in paragraph 14,

the Hon'ble Supreme Court has held that a demise charterer like

RG who is the owner for services stipulated, assumes in large

measure the customary rights and liabilities of vessel owners in

relation to third persons, who have dealt with him or with the

ship, illustratively, repairs and supplies ordered for the vessel,

wages of seamen, etc. It is in that context that the appeal of Sunil

Naik was dismissed. It is clear that on the date when the matter

was considered by this Court, the Admiralty Act had not been

brought in to effect. We are, therefore, of the clear opinion that

the Motion of the owner of Geowave Commander was allowed, but

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in distinct factual circumstances. Therefore, the observations

made in this judgment and particularly highlighted, namely,

paragraphs 29, 30, 36 to 38 and 41 ought to be viewed in the

peculiar factual backdrop. Sunil B. Naik's case is, therefore,

clearly distinguishable. We cannot, unmindful of the language of

the Admiralty Act, 2017 and the factual conspectus before us,

apply these observations. Therefore, our conclusion is that this

decision is distinguishable on facts and also because that when it

was delivered the legal scenario was different. The Hon'ble

Supreme Court itself noted that the Conventions held that though

the draft of the Admiralty Act, 2017 was in place, the Admiralty

Act, 2017 received the assent of President of India on 9 th August,

2017 and was duly published in the Gazette on the said date, but

the date of its coming into force was not notified. In fact, the

Hon'ble Supreme Court says that the dispute before it is a

reminder to the Government to bring into force the Act.

139 The scenario has undergone a change after the Act is

indeed brought into effect and the learned single Judge has

decided the issue at hand applying the provisions of the

Admiralty Act, 2017.

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140 On these grounds, therefore, this decision can be

distinguished by us.

141 Before parting, we must again clarify that the

observations and findings in the impugned order as endorsed by

us are only tentative and prima facie. They are recorded for the

purpose of disposal of an objection raised to this Court's

jurisdiction. Since the argument was that the allegations set out

in the Plaint may be assumed to be true and the appellant as also

M/s. Swordfish proceeded on a demurrer, the learned single

Judge as also we have dealt with the matter accordingly.

Needless, therefore, to clarify that these prima facie observations

and tentative findings will not influence the merits, much less the

outcome of the suit. All contentions as far as merits of the claim

are, therefore, kept open.

142 In deciding this appeal the principle laid down by the

Hon'ble Supreme Court in the case of Exphar SA & Anr. vs.

Eupharma Laboratories Ltd, & Anr. reported in AIR 2004 SC

1682 have been applied by us. These principles, as summarised

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in paragraph 9, read as under :

"9 Besides when an objection to jurisdiction is raised by way of demurrer and not of the trial, the objection must proceed on the basis that the facts as pleaded by the initiator of the impugned proceedings are true. The submission in order to succeed must show that granted those facts the Court does not have jurisdiction as a matter of law. In rejecting a plaint on the ground of jurisdiction, the Division Bench should have taken the allegations contained in the plaint to be correct."

Once we reproduce the relevant paragraph of this judgment,

the manner of disposal of this appeal as well as the legal status of

our observations becomes apparent.

142 As concluded by us above, both appeals are without

any merit. They are dismissed.

143 We would only modify the order of the learned single

Judge insofar as it imposes costs of Rs.5,00,000/-. To our mind,

the costs have been imposed by the learned single Judge as he

concluded that no case is made out for vacating the order of

arrest. It was correctly granted under the provisions of the

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Admiralty Act, 2017. It is to possibly discourage such proceedings

that the costs have been imposed. However, the learned single

Judge was not only required to go into the basic facts but several

provisions of law. Some issues in relation thereto were raised as

well. Hence, in our view this was not a fit case to impose costs.

That part of the order of the learned single Judge, namely,

imposing costs, is, therefore, set aside.

144 Both the Appeals are, therefore, disposed of

accordingly.

B.P. COLABAWALLA, J. S.C. DHARMADHIKARI, J.

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