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2015 Supreme(Bom) 534

High Court of Judicature at Bombay
S.C. GUPTE, J.
Gulf Petrochem Energy Pvt. Ltd. & Another – Appellant
Versus
M.T. VALOR& Another – Respondent
Notice of Motion (L) Nos. 581 of 2015, 805 of 2015 in Admiralty Suit (L) Nos. 94 of 2015, 240 of 2015
Decided On : 15-04-2015

Advocates appeared:
For the Plaintiffs:Shenoy Prasad a/w. Naishadh Bhatia, i/b. Crawford Baylely & Co., Ashwin Shanker, Advocates.
For the Defendants:Zarir Bharucha, i/b. Bimal Rajasekhar, Rahul Narichania, Senior Advocate, i/b. M/s. Mulla & Mulla & Craigie Blunt & Caroe, Advocates.

The standard of inquiry in cases of arrest or application for release from arrest is: Does the Plaintiff have a reasonably arguable best case.

Headnote:

ADMIRALTY SUIT - ARREST OF VESSEL - MARITIME CLAIM - PRIVITY OF CONTRACT - LIABILITY IN PERSONAM - STANDARD OF INQUIRY - REASONABLY ARGUABLE BEST CASE - DISCHARGE OF BANK GUARANTEE.

Fact of the Case:

Two admiralty suits were filed for vacating the arrest of defendant vessels for maritime claims of unpaid bunker supplies. The defendants contested the claims on the ground of lack of privity between the respective plaintiffs and the owners concerning the supply of bunkers.

Finding of the Court:

1. For effecting an arrest, there must be a link between the person liable in personam and the ship concerned in the claim at two critical times, i.e. when the cause of action arose and when the action is brought. 2. A liability in personam can arise only as a matter of contract or quasi contract or by way of tort or under statute. 3. The standard of inquiry in cases of arrest or application for release from arrest is: Does the Plaintiff have a reasonably arguable best case.

Issues: 1. Whether any underlying liability against owners of a ship is necessary for her arrest for enforcement of a maritime claim which does not give rise to a maritime lien? 2. What is the measure of assessment of a prima facie case to be applied for arrest of a ship in a case where the liability, or privity, as in this case, is contested?

Ratio Decidendi: 1. The court held that the plaintiffs did not have a reasonably arguable best case for claiming arrest of the vessels. There was no privity of contract between the plaintiffs and the owners of the vessels, and hence, no contractual liability on the part of the owners. The presumption of the supply of bunkers being on the credit of the ship was rebutted by the undisputed material on record. 2. The court also held that the standard of inquiry in cases of arrest or application for release from arrest is: Does the Plaintiff have a reasonably arguable best case.

Final Decision: 1. Notice of Motion (L) No. 581 of 2015 was made absolute in terms of prayer clause (a), and prayer (c) was adjourned to the hearing of the suit. 2. Notice of Motion (L) No. 805 of 2015 was dismissed. 3. The Defendant's contentions that the arrest is wrongful were kept open, and the Defendant was permitted to make a claim of damages in that behalf and apply for a security at the trial of the suit. 4. The Plaintiff in Notice of Motion (L) No. 581 of 2015 was granted a stay of the order for a period of two weeks on the condition of paying for the costs to cover the damages resulting from the stay. 5. The Defendant in Notice of Motion (L) No.805 of 2015 was permitted to secure the amount of the Plaintiff's claim by deposit of cash in Court.

Judgment :-

1. These two Motions are taken out by the Defendants in two admiralty suits for vacating the respective arrests of the Defendant vessels. The Motions involve common questions of law and are heard together.

2. The Defendant Vessel in Admiralty Suit No. 94 of 2015 is under arrest for a maritime claim of USD 67,458.87 towards supply of bunkers by the Plaintiff, whereas the vessel in Admiralty Suit No. 240 of 2015 is under arrest for a claim of USD 243,239.36 also in respect of supply of bunkers. Whereas the order of arrest was executed in the former case and a security for the claim was furnished and the vessel released against such security, in the latter case the arrest warrant was yet to be served on the vessel at the time the matter was argued, though the vessel was within the territorial waters of India. In both cases, the owners of the vessels contest the maritime claims on the ground of lack of privity between the respective Plaintiffs and the owners concerning the supply of bunkers, claiming that OW Bunker Middle East DMCC and OW Bunker Malta Ltd. were purchasers of bunkers, though bunkers were physically supplied to the vessels. These two OW companies are facing bankruptcy proceedings and both Plaintiffs seek to enforce their claims against the vessels, which are opposed by the owners of the vessels inter alia on the ground of lack of privity, as noted above. That is the gist of the controversy in the two Motions.

3. In Admiralty Suit No. 94 of 2015, the vessel M. T. VALOR was at port of Kandla in India, when OW Bunker Middle East DMCC (“OW Bunker”) approached the Plaintiff for supply of bunkers to the vessel. The Plaintiff issued order confirmation to OW Bunker, who in turn issued purchase order confirmation. The Plaintiff thereupon supplied bunkers against a Bunker Delivery Receipt, under which the Chief Engineer of the vessel acknowledged receipt of bunkers. The Plaintiff thereafter learnt that OW Bunker's parent company had become insolvent. The Plaintiff thereupon cancelled all credit provided to OW Bunker and issued a demand notice to the owners of the vessel. The Plaintiff asserts that the claim for bunkers supplied to the vessel is a maritime claim, which can be enforced against the vessel in rem. This is the case with which the Plaintiff has come before this Court and got the vessel arrested. On the other hand, the case of the owners of M. t. VALOR is that the Plaintiff appears to have entered into contracts with OW Bunker for supplies to various vessels and M. t. VALOR was only one of them. The vessel M. t. VALOR was on a time charter with Bryggen Shipping International AS (“Bryggen”); Bryggen ordered bunkers from Bergen Bunkers AS (“Bergen”); Bergen, who is a nonphysical bunker supplier, then entered into a contract with OW Bunker, another nonphysical bunker supplier; OW Bunker, in turn, entered into a contract with Gulf Petroleum Pte. Ltd., a Singapore based company, which is a group company of the Plaintiff; and the group company instructed the Plaintiff to make the physical supply. Based on these facts, which are not in dispute, firstly, it is submitted that the supply was to a time charterer (Bryggen) and not to the owner, and secondly, the contract of supply even as far as Bryggen is concerned, was with Bergen, whereas the Plaintiff or its group company's contract for supply was with OW Bunker. It is, therefore, submitted that there is no privity between the owners of the vessel, i.e. the Defendant, and the physical supplier of bunkers, i.e. the Plaintiff, and unless there is an underlying liability of the owners (or demise charterers as opposed to time charterers), the vessel is not liable to arrest for a maritime claim which does not create any maritime lien. That is the Defendant's case in the Notice of Motion.

4. The facts in the companion Notice of Motion, i.e. Notice of Motion (L) No. 805 of 2015, are more or less similar except that the vessel in question, M. t. Tradewind, was not on time











































































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