A valid termination notice under a bareboat charterparty ends the demise charterer's status regardless of physical repossession if the contract designates the charterer as a gratuitous bailee pending repossession, thus making the vessel ineligible for arrest based on the demise charterer's liability under the Admiralty Act.

JUDGMENT

SURYA KANT, CJI

Leave granted.

2. The instant appeal preferred by the registered owner of the vessel M.V. Nereus Progress is directed against the Judgment dated 30.04.2026 (Impugned Judgment) passed by a Division Bench of the High Court of Madras (High Court) whereby the Order dated 06.02.2026 passed by a learned Single Judge of the High Court (SJ Order) was affirmed and the arrest of the Appellant’s vessel, M.V. Nereus Progress (the Vessel) has been sustained.

3. The fulcrum of the dispute herein lies in respect of the continued arrest of the Vessel, effected at the instance of the Respondent, in exercise of the admiralty jurisdiction of the High Court. Before adverting to the respective contentions of the parties, we deem it appropriate to briefly narrate the factual background leading to the present appeal.

A. FACTUAL MATRIX

4. The instant controversy arises out of conflicting claims pertaining to the Vessel between the Appellant — the registered owner of the Vessel, and the Respondent — a creditor of Nereides Marine Services (Nereides). Nereides was the erstwhile demise charterer of the Vessel under a charterparty with the Appellant.

4.1 By way of a Bareboat Charterparty dated 03.10.2024 (BBC), executed on the BIMCO BARECON 2017 Form, the Appellant let out the Vessel on demise charter¹ [A Demise Charter is a legal agreement where a shipowner leases an empty vessel to a charterer, who assumes full possession, operational control, and financial responsibility for the ship during the period of the agreement] to Nereides, a UAE-based shipping operator. Contemporaneously, and independent of the aforesaid transaction, the Respondent, under a separate Bareboat Charterparty dated 24.07.2024 (Respondent’s BBC), had also let out its own vessel, M.V. Bharadwaj, to Nereides.

4.2 It appears that Nereides repeatedly failed to discharge its payment obligations towards the Appellant under the BBC. This led to the issuance of a series of demand notices by the Appellant between 22.09.2025 and 27.10.2025, calling upon Nereides to clear the outstanding dues.

4.3 The defaults having continued, the Appellant issued the Anti-Technicality Notice dated 06.11.2025, granting Nereides a three-day grace period to regularise the default. Upon expiry of the said period, the Appellant issued a Termination Notice dated 13.11.2025 (Termination Notice), invoking Clause 31 of the BBC and calling upon Nereides to disclose the whereabouts of the Vessel and to place it at the Appellant’s disposal. This was followed by a Repossession Notice dated 19.11.2025, issued under Clause 32 of the BBC, whereby the Appellant asserted its right to repossess the Vessel upon its berthing at Colombo, Sri Lanka.

4.4 In the subsequent communications exchanged between the Appellant and Nereides between 20.11.2025 to 28.11.2025, the Appellant was informed that the Vessel was in the vicinity of the Indian coast and was experiencing a technical issue with its engine. Thereafter, on 02.12.2025, Nereides informed the Appellant that the Vessel had reached Tuticorin, and sought instructions regarding redelivery at the V.O. Chidambaranar Port, Tuticorin (Tuticorin Port), within the next three to four days.

4.5 Parallelly, it appears that Nereides had also defaulted in the payment of hire due to the Respondent under their Bareboat Charterparty dated 24.07.2024. This led the Respondent to institute Commercial Suit No. 314/2025 before the High Court, invoking Section 5(1)(b) read with Section 5(2) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (Admiralty Act). The Respondent, whose maritime claim had arisen from Nereides’ default under a separate charter of M.V. Bharadwaj, sought arrest of the Vessel on the footing that Nereides continued to be its demise charterer as well, rendering the Vessel liable in rem, by way of sister-ship arrest under Section 5(2) of the Admiralty Act.

4.6 Before the Appellant could complete the taking of physical possession of the Vessel