A breach of contract in maritime agreements may support claims for damages and penalties under the Admiralty Act 2017, classifying such disputes as maritime claims.

ORDER :

Prayer in A.No. 138/24: This application has been filed seeking interim arrest of the Vessel MV Navdhenu Purna flying an Indian Flat having IMO No. 9339765 now lying at V.O.Chidambaranar Port, Tuticorin, together with her hull, tackle, engines, machinery, boats, bunkers, equipment, paraphernalia and all other appurtenances presently lying at the V.O. Chidambaranar Port, Tuticorin, pending disposal of the suit.

Prayer in A.No. 479/24: This application has been filed seeking to vacate the order dated 08.01.2024 of the interim arrest of the Vessel MV Navadhenu Purna (IMO No. 9339765) and allow the unconditional release of the said Vessel.

1. For the sake of convenience and clarity, the parties are referred to by their respective ranks in the main suit.

The issues that arise for consideration in these applications are as follows:

(a) Whether the claim of the plaintiff is a maritime claim falling under Section 4 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (in short “the Admiralty Act, 2017”)?

(b) Whether the owners of the defendant vessel have committed breach of contract under Memorandum of Agreement (MoA) dated 31.10.2023?

(c) Whether the defendant is required to furnish security to vacate the order of arrest dated 08.01.2024 passed against the defendant vessel?

2. The suit has been filed under the admiralty jurisdiction of this Court. The plaintiff had entered into a MoA dated 31.10.2023 with M/s.Arcadia Shipping Limited, the owner of the defendant vessel. Under the MoA, the plaintiff agreed to purchase the defendant vessel-MV Navdhenu Purna for a total consideration of USD 8.3 million. As per the terms and conditions of MoA, the plaintiff by way of security deposit lodged a deposit of 15% of the total sale consideration amounting to USD 1.245 million with the Escrow Agent, namely, Theo Sioufas Escrow Services LLP. On making the security deposit, an Escrow Agreement dated 09.11.2023 was entered into amongst the plaintiff, M/s.Arcadia Shipping Limited, owner of the defendant vessel, and Theo Sioufas Escrow Services LLP, the Escrow Agent.

3. As per Clause 8 of the MoA dated 31.10.2023, the owners of the defendant vessel are required to obtain delivery documentation in the nature of statutory clearances, governmental permissions and certificates for legal transfer of ownership of the vessel in favour of the plaintiff.

4. According to the plaintiff, the owners of the defendant vessel committed breach of MoA dated 31.10.2023 by not complying with their requirements as per the terms and conditions contained therein. According to the plaintiff, the owners of the defendant vessel failed to obtain the statutory clearances, governmental permission and statutory certificates for legal transfer of ownership of the defendant vessel in favour of the plaintiff. According to the plaintiff, the owners of the defendant vessel repeatedly sought time for issuing the notice of readiness and also sought for extensions for postponing the cancellation date. In the MoA dated 31.10.2023, the date on which the notice of readiness has to be issued and cancellation date has been specifically fixed. According to the plaintiff, the owners of the defendant vessel have committed breach of Clause 5 of the MoA dated 31.10.2023 and therefore, they have rightly terminated the contract and rightly entitled to the suit claim comprising the following:

(a) The security deposit paid by the plaintiff at USD 12,45,000 (received subsequent to the order of arrest passed