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2022 Supreme(Bom) 1035
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Madhav J. Jamdar, G. S. Patel, JJ.
The State of Maharashtra – Petitioner
Versus
Sinica Graeca Shipping Limited & Anr. – Respondents
Commercial Appeal No. 215 of 2019 In Notice of Motion No. 747 of 2017 In Commercial Suit No. 816 of 2017
Decided On : 06-07-2022
Advocate Appeared:
For the Petitioner: Mr. Ashutosh Kumbhakoni, Jyoti Chavan, Sneha Bhanage
For the Respondent: Mr. Rahul Narichania, Ruchir Goenka, Ashutosh Tiwari, Bose & Mitra & Co.
Poundage is not payable if there is no realisation or settlement traceable to an arrest effected by the Sheriff.
Headnote:
Sheriff's Poundage - Admiralty Law - Bombay High Court (Original Side) Rules 474, 475, 476 - The court addressed the issue of whether poundage was payable in a case where parties settled the matter before the Sheriff executed the warrant of arrest or served the order of arrest. The court held that poundage was not payable as there was no realisation or settlement traceable to an arrest effected by the Sheriff. The relevant rules were subsequently amended to substitute the provision for payment of poundage as a percentage with a flat fee.
Fact of the Case:
The case involved a collision between two vessels, Sinica Graeca and Chemroad Mega, leading to legal actions in multiple jurisdictions. The parties entered into agreements to refer their claims for determination and to compromise the suit, resulting in the arrest of Chemroad Mega being lifted.
Finding of the Court:
The court found that no poundage was payable as there was no realisation or settlement traceable to an arrest effected by the Sheriff. The court dismissed the appeal and clarified that the issue of whether poundage is to be computed according to the revised flat-fee schedule or on the earlier percentage basis was not before the court.
Issues: The issues included whether poundage was payable in cases where parties settled before the Sheriff executed the warrant of arrest, and whether the relevant rules for payment of poundage applied to the case.
Ratio Decidendi: The court held that poundage was not payable as there was no realisation or settlement traceable to an arrest effected by the Sheriff. The court also clarified that the issue of how poundage is to be computed was not before the court.
Final Decision: The appeal was dismissed with observations and clarifications, and there was no order as to costs.
JUDGEMENT :
G. S. Patel, J.
1. The Appeal is by the State Government with leave of the Court against an Order and Judgment dated 17th July 2018 (KR Shriram, J). Leave was required because the State Government was not a party to either of the Suits before the learned Single Judge.
2. Mr. Justice Shriram had before him two Commercial Suits. For the purposes of the Appeal we are concerned with only one of these. Commercial Suit No. 98 of 2015 (North Star Marine) is not the subject matter of the challenge and we need not concern ourselves with that portion of the order that deals with it.
3. Commercial Suit No. 816 of 2017 was brought by Sinica Graeca Shipping Limited (“Sinica Graeca”) against MT Chemroad Mega (“Chemroad Mega”) a vessel flying a Panamanian flag. Sinica Graeca is a company incorporated in the Marshall Islands.
4. The question that Shriram J addressed related to the Sheriff’s poundage. He identified the issues in paragraph 2 of the order (pages 11 to 12) thus:
“2. The issues can be split as under:
(i) In a case where, before the Sheriff of Mumbai executes the warrant of arrest issued by the Admiralty Registrar or before he serves the order of arrest passed by this Court in cases where warrant of arrest has been dispensed with the parties settle the matter, whether the Sheriff will be entitled to any poundage?
(ii) in a case where, order of arrest has been served or warrant of arrest has been executed levied against the vessel, parties have entered into an Agreement to refer the disputes either to arbitration or submit to the jurisdiction of a Court other than this Court, may be in a different country and have exchanged letters of undertaking to pay such amount as awarded by the Arbitrator or the Court, whether any poundage is payable?”
This Appeal is concerned with the second question.
5. What happened in the Sinica Graeca–MT Chemroad matter was this. On 17th August 2017 there was a collision between Chemroad Mega and Sinica Graeca’s vessel of the same name in Malaysian/Indonesian waters. Each party had a claim against the other for loss, expense or damage arising from this collision. On 18th August 2017, Sinica Graeca, the corporate owner of the vessel that bore its name, commenced an in rem action against Chemroad Mega in the Court at Kuala Lumpur in Malaysia. Before it could be arrested, Chemroad Mega sailed. On 24th September 2017, the owners of Chemroad Mega brought an in rem action against Sinica Graeca and its vessel in Singapore. MV Sinica Graeca was arrested. On 25th September 2017, the owners of Chemroad Mega began an in personam action against the interests of MV Sinica Graeca again in Singapore.
6. On 3rd October 2017, to procure the release from arrest of MV Sinica Graeca in Singapore, the MV Sinica Graeca interests furnished security to the MT Chemroad Mega interests. These took the form of two letters of undertaking issued by two different insurance firms, both based overseas. On 11th November 2017, the MV Sinica Graeca interests i.e. owners, filed the present Suit No. 816 of 2017. They applied for and obtained a warrant of arrest against MT Chemroad Mega. That vessel was arrested.
7. After this, Sinica Graeca and MT Chemroad Mega entered into two Agreements, both dated 14th November 2017. One is called the Collision Jurisdiction Agreement. This is an Agreement between the parties to refer their respective claims for determination and it identifies the applicable law and the agreed jurisdiction. It says that the English Law and jurisdiction is to apply with unrevised 1996 Protocol Limits of Liability. This will apply to each claim. Then the parties had what is called a Side Agreement. These were necessary to substitute the letters of undertaking issued by the insurance companies with mutual promises and obligations as reflected in the Side Agreement. The letters of undertaking were to be returned and replaced with security and the Side Agreement was subject to English Law and English High Court jurisdiction. The
