An action in rem against a vessel can coexist with arbitration proceedings, and the arrest of the vessel is permissible despite the invocation of arbitration.

JUDGMENT :

B.P. Colabawalla, J.

The above Commercial Appeal is filed challenging the judgement dated 27th July 2022 passed by the learned Single Judge of this Court (N. J. Jamadar, J). By the impugned judgement, the Interim Application filed by the Original Defendant - OSV Crest Mercury 1 (IMO 9724398), seeking unconditional release of the order of arrest dated 21st June 2021 was rejected, but the amount of security to be provided [by the Defendant] for the release of the vessel was reduced by:

(a) Rs. 23 lakhs towards the claim of Unique Marine Services.

(b) USD 12697.96 towards claim of Bureau Veritas.

(c) Rs. 12,27,031/- towards the claim of Indian Register of shipping.

(d) Rs. 1,78,180/- towards claim of Triton Diving Services.

2. The reduction of security as regards Item (c) and (d) above, was subject to the rights and contentions of the parties.

3. Before we delve into whether the impugned judgement requires any interference in appeal, a brief narration of facts would be necessary. For the sake of convenience, we shall refer to the parties as they were arrayed before the Learned Single Judge.

4. Vision Projects Technologies Private Limited (Vision Projects - the Plaintiff) instituted a Commercial Admiralty Suit praying for an order and decree against the Defendant Vessel [OSV Crest Mercury 1 (IMO 9724398)] to pay to the Plaintiff a sum of USD 1,873,082.32 along with further interest @18% p.a.; for arrest and sale of the Defendant Vessel; and to apply the sale proceeds thereof towards the claim of the Plaintiff.

5. The Plaintiff asserted that the Defendant Vessel [OSV Crest Mercury 1 (IMO 9724398)] is a tug/offshore supply vessel carrying an Indian flag. On the date of institution of the Suit, it was lying at post and harbor at Mumbai port in Indian territorial waters. Continental Radiance is the registered owner of the Defendant Vessel. A Bareboat Charterparty Barecon 2001 was executed between Vision Projects [the plaintiff] and Continental Radiance on 19th October 2015 for a period of five years.

6. The Plaintiff claims that under the terms of Barecon 2001, it carried out a special survey, drydocking, and various repairs to the Defendant Vessel, at the instance of Continental Radiance. Costs incurred for carrying out the special survey/statutory drydock, to the extent of 90%, was to be incurred by Continental Radiance. The Plaintiff further averred that it had also arranged for agency services of Benline Agency Indian Private Limited and had also made payments to various authorities, vendors etc. for and on behalf of the Defendant Vessel, at the instance of Continental Radiance.

7. Since the dues of the Plaintiff were unpaid, this gave rise, according to the Plaintiff, to a maritime claim to the tune of USD 1,873,082.32 and for costs, for which the present Suit was filed.

8. Apprehending that the Defendant Vessel may be re-exported out of Indian waters without following proper procedure for re-export, the Plaintiff applied for arrest of the Defendant Vessel. The arrest was granted by this Court vide its order dated 21st June 2021. It is to vacate this order of arrest that the Defendant Vessel and her registered owner namely, Continental Radiance, filed Interim Application No.3510 of 2022. In this Application, the relief sought was that the order of arrest issued against the Defendant Vessel dated 21st June 2021 be vacated and set aside unconditionally, or in the alternative, the security to be provided by the Defendant Vessel be reduced to USD 18,415, which according to the Defendant, was 90% of the special survey costs. Relief was also sought in the form of seeking counter security of USD 4,885,024.74, as averred in paragraph 40 of the said Interim Application. It is this Interim Application that was dismissed by the learned Single Judge vide the impugned order. Hence the present appeal.

9. The five grounds on which the order of arrest was sought to be vacated before the learned Single Judge were the following:-

(a) A false case of