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High Court of Judicature at Bombay
K.R. SHRIRAM, J.
Dreymoor Fertilizers Overseas Pte. Ltd.
Versus
m.v.Theoforos-1, a vessel flying the flag of Panama
Notice of Motion No. 319 of 2012 In Admiralty Suit No. 51 of 2011
Decided on: 18-03-2014
ADMIRALTY - ARREST OF VESSEL - EX-PARTE ORDER - VACATION - MARITIME LIEN - TITLE TO SUE - ASSIGNMENT OF RIGHT TO SUE - SECTION 69 OF THE INDIAN CONTRACT ACT - RESTITUTION - AMERICAN LAW - INCORPORATION OF SALE CONTRACT IN BILL OF LADING - OWNERSHIP OF SHORTLANDED GOODS - REMEDY - EQUITY - COSTS.
Fact of the Case:
Plaintiff obtained an ex-parte order of arrest of defendant-vessel for short delivery of urea. Defendant filed a Notice of Motion for vacating the order of arrest and for return of security. Plaintiff claimed to have the necessary authority to sue on their behalf and also on behalf of the buyers and receivers of the cargo and the plaintiff has a maritime lien/claim against the defendant-vessel for short landing of cargo arising out of an agreement of carriage of goods.
Finding of the Court:
The plaintiff did not have the necessary authority to sue and had no title to sue under the Bill of Lading. The plaintiff had no maritime claim or lien against the defendant-vessel. The plaintiff's claim in tort for negligence, as it did not have legal ownership or possessory title to the goods at the time of the alleged loss or damage. The plaintiff could not sue as an assignee as there was no assignment of the right to sue by STC or IPL or any party to the plaintiff. The plaintiff was not entitled to sue in bailment because the plaintiff was not the bailor of the goods nor was the plaintiff entitled to immediate possession of the goods. The plaintiff's claim under Section 69 of the Contract Act could not be a maritime claim. The plaintiff's reference to American law was misconceived as U.S. Law did not apply to the contract of carriage. The Bill of Lading did not incorporate the terms and conditions of the sale contract. The plaintiff was not the owner of the shortlanded cargo. The plaintiff was not without a remedy and could have secured to itself the remedy when the plaintiff agreed to take on the liability for shortage under the contract and made appropriate provisions that would make it incumbent upon the Buyer STC under the contract to either file a suit for the benefit of the plaintiff or to assign its rights under the Bill of Lading to the plaintiff or authorise the plaintiff to file a suit on behalf of the Buyer STC or the receiver or the endorsee to whom upon or by reason of endorsement in the bills of lading the title and right to sue and be sued had passed.
Issues: Whether the plaintiff had the necessary authority to sue and had title to sue under the Bill of Lading.
Ratio Decidendi: A person who comes to Court must come with clean hands. The plaintiff has not been able to produce any authority to sue on behalf of those who could have otherwise sued. The plaintiff had no maritime claim or lien against the defendant-vessel. Only if the plaintiff has maritime claim or lien against the defendant-vessel, can the plaintiff file an action in rem for arrest of the defendant-vessel and not otherwise. The plaintiff has no 'agreement for carriage of goods' to which the plaintiff is a party nor has the plaintiff any authority to sue on behalf of the person lawfully entitled to sue under the said agreement. Consequently the plaintiff can have no maritime claim or lien against the defendant and hence is not entitled to invoke the Admiralty jurisdiction of this Court and is not entitled to arrest the defendant vessel.
Final Decision: The arrest of the defendant-vessel is set aside and the security returned to the defendant. The Notice of Motion is allowed in terms of prayer clauses (a) and (b). The plaintiff to pay to the defendant costs in the sum of Rs.5,00,000/- (Rupees Five lakh only) within two weeks from today by cheque drawn in favour of the defendant's advocate.
1. On 30.08.2011 the plaintiff obtained an ex-parte order of arrest of the defendant-vessel when she was in the port and harbour of Mundra. On 9.9.2011 the defendant-vessel was ordered to be released when on behalf of the defendant security in the sum of US$ 335,000.00 was furnished. This amount was deposited with Incisive Law LLC, Singapore, as the escrow agent.
2. The reason why the plaintiff filed the suit and obtained the ex-parte order of arrest was that the plaintiff suffered a loss in the sum of Rs.1,31,12,080/- being the cost of 520.300 MT of urea which was allegedly short delivered by the defendant-vessel. It is the case of the plaintiff that pursuant to an agreement dated 25.7.2011, the plaintiff had sold to State Trading Corporation of India Ltd., New Delhi (STC) 50,000/-MT + 10% granular bulk urea at the price of AED 1859.13 per MT C & F FO Mundra. In order, for the plaintiff, to supply this cargo to STC, the plaintiff entered into a contract dated 27.7.2011 with one Indagro SA Geneva for purchase of urea on CFR basis. To supply this cargo, Indagro Contractors S.A., Geneva a group company of Indagro SA Geneva entered into a charter party with one General Shipping Services Limited, the disponent owners of the defendant-vessel. Upon the completion of loading, the master of the vessel issued a bill of lading dated 12.8.2011 covering 54003.121 MT of granular bulk urea for discharge at Mundra. As per the bill of lading, the shipper was one Kermanshah Petro Chemical Industries Limited, Tehran; the consignee was Ministry of Chemical and Fertilizers (department of fertilizers), Government of India and notify party was State Trading Corporation of India Limited, New Delhi, i.e., STC.
3. It appears that the consignee, Ministry of Chemical and Fertilizers issued a letter of authority dated 12.8.2011 authorizing Indian Potash Limited (IPL) to take delivery of the cargo from the vessel. IPL had been appointed as handling agents. The defendant-vessel completed discharge at Mundra on 21.8.2011. On the same day, the final draft survey was done and the survey showed discharged quantity as 53483.021 MT as against the loaded quantity, as per the bill of lading of 54003.121 MT. On this basis, it is alleged by the plaintiff that there was a short fall of 520.30 MT. The plaintiff's claim as stated in the plaint is for short landing of 520.30 MT of granular bulk urea under the bill of lading dated 12.8.2011 issued by the Master of the defendant-vessel.
4. The original bill of lading was endorsed by the consignee viz. Ministry of Chemical and Fertilizers with instructions to deliver the cargo to IPL who in turn endorsed the bill of lading for delivery of the cargo to Mundra port and S.E.Z. Limited, Mundra. It is necessary to mention that the plaintiff was neither the shipper nor the consignee nor the notify party nor the endorsee nor the holder of the bill of lading.
5. It is for this reason the defendant has taken out the Notice of Motion for vacating the order of arrest dated 30.8.2011 and for return of security. It is the defendant's case that the plaintiff had no title to sue and is not entitled to maintain the present suit and the plaintiff has made false statement in the plaint that the plaintiff had authority to sue. It is also the defendant's case that the plaintiff has no maritime claim against the defendant and hence the plaintiff cannot maintain or continue with this action.
6. The plaintiff's case as averred in the plaint to maintain this action is that the plaintiff had the necessary authority to sue on their behalf and also on behalf of the buyers and receivers of the cargo and the plaintiff has a maritime lien/claim against the defendant-vessel for short landing of cargo arising out of an agreement of carriage of goods. Para 11 of the plaint reads as under :
“Para-11.........
The plaintiffs have the necessary authority to sue on their behalf and also on behalf of the buyers and receivers of the cargo.
….......
Para-
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