2018 Supreme(SC) 227

SUPREME COURT OF INDIA
J. Chelameswar, Sanjay Kishan Kaul, JJ.
SUNIL B. NAIK – Appellant
Versus
GEOWAVE COMMANDER – Respondent
CIVIL APPEAL No. 2617 of 2018 (Arising out of SLP(C) No. 18845/2013) And: CIVIL APPEAL No. 2618 of 2018 (Arising out of SLP(C) No. 18899/2013)
Decided On : 09-03-2018

IMPORTANT POINTS
Need to bring the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 into force.
Distinction between a beneficial ownership of a ship and the charterer of a ship.
For realizing maritime claim against a demise charterer who is not de jure owner of the chartered vessel, the chartered vessel cannot be arrested.

Headnote:(a) Admiralty law – Charter party – Demise charter – Demised charterer assumes in large measures the customary rights and liabilities of vessel owners in relation to third persons – Bareboat charter – Charter party agreement making Reflect Geophysical a de facto owner – Clause for converting the status to de jure owner never invoked – Appellants having maritime claim against Reflect Geophysical in personam – Such claims cannot be claimed against the respondent vessel. (Para 15, 44, 45, 66)

       (2003) 1 SCC 305 – Relied upon

       [1998] 1 Lloyd’s Rep 136; [1973] QB 265; (1979) Vol. 1 Lloyd’s Law Reports 327 – Referred

       (b) Admiralty law – Need to have admiralty law in India – Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 – Receiving assent of the President but not yet brought into force – Section 3, 4 and 6 – Admiralty jurisdiction of High Court – In personam in respect of a maritime claim – Administration of Justice Act, 1956 – Section 1. (Para 16, 20, 33)

       AIR 1993 SC 1014 – Relied upon

       [1976] Vol. I Lloyd’s Law Reports 81 – Referred

       (c) International Convention on Arrest of ship, 1999 – Article 1, clauses (f) and (l) and 3(3) – Maritime claim Principles utilized in India – Charter hire agreement – Appellants’ claim against Reflect Geophysical, not de jure owner of respondent vessel – Appellants not having any claim against de jure owner of respondent vessel – Respondent vessel could not have been arrested. (Para 24, 49, 50)

       (2004) 9 SCC 512 – Relied upon

       Admiralty Suit (Lodging) No.3547/2008 – Referred

       (d) Administration of Justice Act, 1956 – Section 3(4) – “Beneficially owned as respects all the shares therein” – Does not extend to demise charterer or any other person having only possession of the ship, however full and complete such possession may be, and however much control over the ship he may have – “Beneficial use” of a chartered ship would not ipso facto convert the status of a charterer into a “beneficial owner” – Distinction between a beneficial ownership of a ship and the charterer of a ship. (Para 58, 59, 65)

       [1973] QB 265; [1978] Q.B. 500; [1979] 2 Lloyd’s Rep. 364; (1979) Vol. 1 Lloyd’s Law Reports 327; [1990] 1 F.C 199; (1980) 1 SCR 553 – Referred

       Facts of the case:

       Oil and Natural Gas Corporation Limited awarded a contract to one Reflect Geophysical Pte. Ltd., Singapore for carrying out seismic survey operations off the coast of Gujarat near the Okha Port in the year 2012. Reflect Geophysical in turn entered into a Charter Party Agreement to charter the vessel ‘Geowave Commander’, the registered owner being Master and Commander AS Norway, for a period of three years.

       Reflect Geophysical entered into a Charter Hire Agreement on 30.10.2012 with M/s. Sunil B. Naik, the appellant in SLP(C) No.18845/2013, in terms whereof the said appellant agreed to supply 24 fishing trawlers being the chase vessels to assist in survey operations to be conducted by the charterers seismic vessel Geowave Commander. The charter was initially for 16 chase vehicles out of 24 fishing trawlers. The said agreement contained a dispute resolution clause 18 providing for arbitration.

       Similarly Yusuf Abdul Gani, appellant in SLP(C) No.18899/2013, agreed to give on hire the ‘Orion Laxmi’ to Reflect Geophysical to work in support with the survey vessel ‘Geowave Commander’.

       The two appellants claim to have raised invoices on Reflect Geophysical from time to time, which are stated not to have been paid. Reflect Geophysical also failed to pay the owners of the respondent vessel and consequently the owners gave a notice of default dated 4.3.2013 to the charterers, Reflect Geophysical, for non-payment of charter hire aggregating to US$ 4,36,790 (approximately Rs.2.23 crore). Reflect Geophysical, however, filed an application in the Singapore Court for placing the company under judicial management, which was published in a notification dated 15.3.2013 in the Singapore Gazette.

       Sunil B. Naik issued a demand notice to Reflect Geophysical for payment of outstanding dues on 16.3.2013. Yusuf Abdul Gani also raised various invoices to Reflect Geophysical in respect of the dues arising out of the contract, between 16.11.12 and 16.2.13.

       Yusuf Abdul Gani, moved the Bombay High Court by filing a suit against the respondent vessel as an admiralty suit and obtained an order on 15.3.2013 for arrest of the vessel. Similarly, on Reflect Geophysical expressing its inability to make payments on account of lack of funds, Sunil B. Naik, filed an admiralty suit and obtained an order of arrest of vessel on 12.4.2013. However, the vessel was already under arrest in pursuance of the order passed in Yusuf Abdul Gani’s case.

       The owners of the respondent vessel, Master and Commander AS Norway, filed a notice of motion in the two proceedings for vacation of the ex parte arrest of vessel. On hearing being held, the learned single Judge on 17.4.2013 vacated the ex parte arrest. The two appellants moved the Division Bench of the Bombay High Court, which dismissed the appeal.

       Finding of the Court:

       There is no infirmity in impugned judgment.

       Result: Appeals dismissed.