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2025 Supreme(Online)(Mad) 20056
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Justice N.V.Ramana, J
Owners and Parties interested in the Motor Tug MT – Appellant
Versus
NILA LOGISTICS – Respondent
Admiralty Suit | 2024
For the Appellants/Petitioners:
For the Respondents:
Disputes under maritime charter parties are arbitrable unless the agreement is found null, void, or incapable of performance.
Headnote:(A) Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 - Arbitration and Conciliation Act, 1996 - Reference to arbitration - Dispute resolution clauses in time charter parties - The court must refer disputes to arbitration unless it finds the agreement null and void, inoperative, or incapable of being performed. (Paras 6, 17)
(B) Non-arbitrability - Allegations of fraud - Mere allegations of fraud do not render a dispute non-arbitrable unless they are serious and complex. (Paras 15, 16)
Facts of the case:
The plaintiff filed an action in rem for recovery of a maritime claim against the defendant, who provided security for the claim, leading to a request for arbitration.
Findings of Court:
The court found that the action in rem converted to action in personam upon providing security, and the disputes were arbitrable.
Issues: Whether the disputes were arbitrable and if the allegations of fraud affected the arbitration reference.
Ratio Decidendi: The court ruled that the arbitration clause was valid and that the allegations did not meet the threshold to decline arbitration.
Result: Disputes referred to arbitration.
| Table of Content |
|---|
| 1. facts of the case regarding the charter parties. (Para 1 , 2) |
| 2. arguments for arbitration based on dispute resolution clauses. (Para 3 , 4 , 5) |
| 3. court's observations on the arbitration agreement's validity. (Para 6 , 8 , 10 , 11 , 12) |
| 4. court's reasoning on fraud allegations and arbitration reference. (Para 13 , 14 , 15 , 16) |
| 5. final conclusion on referring disputes to arbitration. (Para 17 , 18) |
ORDER
The plaintiff entered into two time charter parties with the defendant in respect of the vessel “ASL Courageous” 2900 HP (the tug) and barge “ASLCO 3008” (the barge). Both the tug and the barge were operating under Singapore flags. As the charterer under these time charters, the plaintiff approached this Court by way of an action in rem under the the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (the Admiralty Act) by asserting a maritime claim. The suit claim is for recovery of a sum of Rs.1,66,66,666/- with further interest thereon at 18% p.a. from the date of suit till realization. The plaintiff had also prayed for the arrest of the tug and barge and for the sale thereof so as to enable the suit claim to be discharged from the sale proceeds.
2. By order dated 30.07.2024, a warrant of arrest was issued. Upon receipt of notice, the defendant came forward to provide security for the suit claim. After noticing that the interest claim was only from the date of plaint, by order dated 12.08.2024, a warrant of release was directed to be issued upon receiving banker's cheque dated 08.08.2024 for a sum of Rs.1,66,66,666/-, which represents the principal suit claim. The Registrar General of this Court was directed to invest the proceeds of the banker's cheque in an interest bearing fixed deposit account with the Indian Bank, Madras High Court Branch, to the credit of the suit. Such deposit was directed to be for an initial period of one year with the obligation to renew the same periodically until the disposal of the suit.
3. The defendant presented this application in the above facts and circumstances under Section 45 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act) seeking reference of the dispute to arbitration. The affidavit in support of the application was affirmed on 18.09.2024. Thereafter, the defendant filed an application to condone the delay of 89 days in filling the written statement. The said application is pending.
4. Learned counsel for the plaintiff submitted that the dispute is liable to be referred to arbitration for the following reasons:
(i) Time charter party dated 02.03.2024 in respect of the tug contains a dispute resolution clause, which provides for arbitration before the Singapore Chamber of Maritime Arbitration. Likewise, the charter party relating to the barge also provides for dispute resolution through arbitration by the Singapore Chamber of Maritime Arbitration.
(ii) Upon the release of the tug and barge by providing security for the suit claim, the suit is converted from an action in rem to an action in personam. In support of this contention, learned counsel referred to and relied upon the judgment of the Hon'ble Supreme Court in M.V.Elisabeth and others v. Harwan Investment and Trading Pvt. Ltd., 1993 Supp (2) SCC 433 (M.V. Elisabeth), particularly paragraph 83 thereof. Reliance was also placed on the judgment of a Division Bench of the Bombay High Court in Angsley Investments Limited v. Jupiter Denizcilik Tasimacilik Mumessillik San. Ve Ticaret Limited Sirketi and Others, 2023 SCC OnLine Bom 559 (Angsley Investments), especially paragraphs 11 and 12 thereof. By relying on the judgment of the Division Bench of the Bombay High Court in OSV Crest Mercury 1 (IMO 9724398) v. Vision Projects Technologies Pvt. Ltd. (OSC Crest Mercury 1), order dated 07.05.2024 in Commercial Appeal (L) No.30604 of 2022, he submits that the Bombay High Court concluded that the action in rem gets converted into an action in personam only upon the defendant providing securi
