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2019 Supreme(Bom) 1709
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Pradeep Nandrajog, Bharati Dangre, JJ.
Rainbow Ace Shipping S.A. Panama - Appellant
Versus
Lufeng Shipping Co. Ltd. - Respondent
Commercial Appeal No. 206 of 2018 in Notice of Motion No. 456 of 2018 in Admiralty Suit No. 29 of 2013
Decided On : 09-12-2019
For the Appellant :F.E. DeVitre, Senior Advocate with Nikhil Sakhardande, Aditya Krishnamurthy, Ruchir Goenka, Tripti Sharma i/by Bose & Mitra & Co., Advocates.
For the Respondent:Prashant Pratap, Senior Advocate with Kumar Abhishek Singh, Nishaan Shetty, Shubham Agrahari, Nishant Bhatia i/b Anoma Law Group LLP, Advocates.
Headnote:
Contract Act - Section 73- M.V. Rainbow Act- Claim of compensation – Bank – Injury - One Lucent Shipping Company Ltd (Respondent in the Appeal) lodged a maritime claim by filing Admiralty Suit No.29 of 2013. The claim of the plaintiff in the said suit was based on an agreement entered into by the plaintiff as owners of vessel M.V.J. Tong with Whim Star Chartering Co. Ltd, Hong Kong as charterers for the hire of the vessel for carriage of goods. The claim arises out of a voyage – charter party evidenced by a Fixture Note claim was instituted for an amount US$ on an allegation that on account of the detention of its vessel at the port of loading, it had suffered damages and losses. In the said suit, Rainbow Ace Shipping S.A., Panama (appellant), the registered owners of vessel M.V. Rainbow Ace was imp leaded as defendant – Held, As is the usual practice in shipping industry when claims are made against a vessel or its owners, they approach the P & I Club to ascertain whether claim is covered under their insurance for either P & I or F.D.&D. (Freight, Demurrage and Defence) Risk. Furnishing security was an option to mitigate and the learned Single Judge on remand, has noted that in the first round litigation, no stand was ever taken that the Appellant had no means to furnish security, however, on remand, the additional documents came to be examined and the said contention that there was no means to furnish security came to be dispelled by the learned Single Judge. On remand it is recorded that the Appellant had means to furnish security by depositing the amount in the court or by providing Bank Guarantee and this has been recorded as a finding of fact. The test to be applied is of a prudent man and mitigation is about to loss avoidance. The arrest of vessel passes a loss on daily basis and the endeavor of a prudent man would be to avoid this loss, who would have arranged for all his finances so as to offer security and obtain release of his ship. Mere filing of an application to vacate arrest of the vessel would not and in fact did not release the vessel of the Appellant. The duty cast on the Appellant was to mitigate the loss and in any case filing of an application was only a step to mitigate the damages and it was not a completed action of mitigation and the Appellant, undisputedly, got stuck as he had to cross the stages step by step till the matter was put to rest by the highest court. In addition, there is a looming uncertainty depending on the final decision as to whether the Court could be persuaded to grant relief in its favour and the only certain way could be and the one which was available, considering it from a prudent man’s view is to furnish security and continue with the charter of the vessel so as to minimize the loss by allowing the vessel to be stranded. Perusal of the Memo of Appeal, the Appellants have disclosed why they did not deposit the security, the Appeal Memo proceeds to state that if they would have done so, they would not have got priority in hearing of the matter. The prudent man surely would have not left the vessel idle and merely mused over the application for vacation of the order of arrest. We do not find any infirmity in the order of the learned Single Judge – Appeal dismissed
JUDGMENT :
Bharati Dangre, J.
1. The appellant Rainbow Ace Shipping S.A. Panama, the Owners of Vessel M.V. Rainbow Ace is aggrieved by an order dated 21st March 2018 passed by the learned Single Judge on a Notice of Motion taken out by the appellant in an Admiralty Suit instituted by one Lufeng Shipping Co. Ltd.
2. In order to appreciate the contentions raised by the appellant it would be necessary for us to glean the necessary facts which resulted in the passing of the impugned order.
3. One Lufeng Shipping Company Ltd (Respondent in the Appeal) lodged a maritime claim by filing Admiralty Suit No.29 of 2013. The claim of the plaintiff in the said suit was based on an agreement entered into by the plaintiff as owners of vessel M.V.J. Tong with Whim Star Chartering Co. Ltd, Hong Kong (Defendant No.2) as charterers for the hire of the vessel for carriage of goods. The claim arises out of a voyage – charter party evidenced by a Fixture Note dated 6th April 2011. The claim was instituted for an amount of 1,68,658.07 US$ on an allegation that on account of the detention of its vessel at the port of loading, it had suffered damages and losses. In the said suit, Rainbow Ace Shipping S.A., Panama (appellant), the registered owners of vessel M.V. Rainbow Ace was impleaded as defendant no.1. The Lufeng Shipping Co. Ltd sought arrest of the vessel M.V. Rainbow Ace on the ground that it is in the same beneficial ownership as the defendant no.1 who is the voyage charter. The registered owner of the vessel Rainbow Ace according to the plaint, was Rainbow Ace Shipping S.A. Co. registered in Panama and reliance was placed on the mortgage documents to demonstrate that for construction of vessel Rainbow Ace, a loan agreement was executed between the appellant Company and China Mingling Banking Corporation Limited, pursuant to which the vessel was mortgaged to the Bank. The claim set out is that in respect of the vessel Rainbow Ace, the group owners and operator of the vessel is ZJHX Shipping Company and the registered owner is the present appellant. On the basis of this averment, the present appellant was impleaded as the defendant no.1 in the said Suit. At the time of instituting the suit and moving the application seeking ex-parte order of arrest, an undertaking came to be submitted by the plaintiff in terms of Rule 941 of the Bombay High Court (Original Side) Rules to the following effect:-
“We Lufeng Shipping Co. Ltd through their Constituted Attorney Mr. A.M.Krishnan do hereby give an undertaking to this Hon'ble Court to pay such sums by way of damages as this Hon'ble Court may award as compensation in the event of the defendant and/or any affected party sustaining prejudice pursuant to the order passed by this Hon'ble Court for the arrest of M.V. Rainbow Ace.
4. On 28th January 2013, the Admiralty Judge at Bombay ordered arrest seizure and detention of the defendant vessel of M.V. Rainbow Ace” along with her hull, gear, tackle, machineries, bunkers, apparel, furniture and fixtures fixed equipments and all appurtenances at the port of Pipavav or such other place wherever the vessel was found within the territorial waters of India. The warrant of arrest was directed to be executed at the hands of Sheriff of Bombay. It was also ordered that in the event of the defendant depositing in the Court a sum of 1627.658.10 US$ towards satisfaction of the plaintiff's claim in the suit and cost of the Suit amounting to Rs.3,50,000/- and on payment of the Sheriff's poundage, if any, or on furnishing the security of the amount claimed in the suit along with interest of 9% p.a. from the date of inception of the Suit till its payment, the want of arrest shall not be executed against the vessel M.V. Rainbow Act.
5. The Appellant, being aggrieved by the order of Arrest dated 28th January 2013 took out a Notice of Motion in capacity as the owner of the vessel M.V. Rainbow Ace. In the Notice of Motion, relief was sought to pay the owners the sum of US$ 2,310,225 with
