1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1999 OF 2009 IN ADMIRALTY SUIT NO. 25 OF 2009 AND NOTICE OF MOTION NO. 3683 OF 2009 IN ADMIRALTY SUIT NO. 34 OF 2009 Dodsal Engineering and Construction LLC, P.O.Box No.2300, Ruwi, Post Code 112, Sultanate of Oman. And Acquamar Shipping LLC. ... Plaintiffs. V/s. 1. M.V.“Thor Guardian” a foreign flag vessel flying the flag of Panama, together with her hull, engines, gears, tackle, machinery, bunkers, apparel, plaint, furniture, fixtures, equipment and all other appurtenances, presently lying at the port and harbour of Mangalore within the territorial waters of India and within the Admiralty Jurisdiction of this Hon’ble Court. 2. Amigo Shipping Corporation, a company incorporated under the laws of Panama and having its office at Torres de las Americas, Suite – 406-407, Tower B, Puntsa Pacifica, City of Panama, Republic of Panama. 3. Master of the Vessel Capt. S.D.S.Dadwal m.V. Thor Guardian presently lying at the Port and Harbour of Mangalore. 2 4. Aquamar Shipping LLC incorporated under the laws of UAE having their office at P.O. Box 31970, Dubai, United Arab Emirates. 5. Astral Freight Forwarders Pvt. Ltd. a company incorporated under the Companies Act, 1956 having their office at Esplanade School Building, 3rd floor, Room No.2,3,4, 160, D.N. Road, Fort, Mumbai – 400 001, India. ... Defendants. Mr. Janak Dwarkadas, Sr. Counsel a/w. V.K. Rambhadran a/w. Mohan Salian & G.T. Mestha i/b. Gagrats for the Plaintiffs in ADMS 25/09 and Intervenor In ADMS 34/09. Mr. F.E. D’Vetre, Sr. Counsel a/w. Mr. Rahul Narichania, Vishal Shett i/b. Ashwin Shankar for Defendants 1 and 2 in both Suits. Mr. Santosh Shetty for the Defendant No.5 in S.25/09. Mr. Prashant Pratap i/b. Manoj Khatri for Defendant No.4 in S. 25/09 and for the Plaintiffs in ADMS 34/09. Mrs. Uma Palsule Desai, AGP for State. CORAM : S.C. DHARMADHIKARI,J. RESERVED ON : 12th AUGUST 2009. PRONOUNCED ON : 12th OCTOBER 2009. ORAL JUDGMENT :- This is a Notice of Motion by the Plaintiffs seeking arrest of the First Defendant Vessel and further that pending the hearing and final disposal of the Suit, the Suit consignment be ordered to be discharged at the Port of New Mangalore at the cost of Plaintiffs without prejudice to the Plaintiffs’ rights to 3 claim all losses and damages. Prayers (c) and (d) of this Notice of Motion read as under :- “(c) Pending the hearing and final disposal of the suit in the event of the Defendants depositing the amount so ordered by this Hon’ble Court or furnishing security in the form of Bank Guarantee to secure the Plaintiffs claim, such deposit and/or the Bank Guarantee may ensure to the benefit of the Plaintiffs in respect of the Suit claim. (d) Pending the hearing and final disposal of the suit the First Defendant Vessel M.V. “THOR GUARDIAN” along with her hull, engines, tackles, gear, machinery, plant, apparel, appurtenances and other paraphernalia presently lying at port of Mangalore be condemned and sold through the Sheriff of Bombay under the orders and directions of this Hon’ble Court and the sale proceeds thereof be applied towards the satisfaction of the Plaintiff’s claim in the suit.” 2. On this Notice of Motion, an order has been passed by this Court on 11th June 2009. This order reads as under :- “ Heard the learned Counsel for the Plaintiffs and the Defendants for quite some time. The learned Counsel appearing for the parties are in agreement and the agreed terms set out herein below are without 4 prejudice to the rights and contentions of the parties. (A) the Plaintiffs shall forthwith pay to the Second Defendant a sum of U.S. Dollars 1 Lac 50 Thousand by remitting the same to the nominated bank account as provided below :- 1. Name of Bank :- Indian Overseas Bank 2. Name of Beneficiary :- Royal Cruises and Allied Shipping Pvt. Ltd. 3. Bank address :- Vasco-Da-Gama Branch Pe Jose Vaz Road, Goa – 403802. 4. Beneficiary account swift code :- IOBAINBB001 5. Corresponding Bank :- Wachovia Bank, New York. 6. Corresponding Bank swift code :- PNBPUS3NNYC (B) Upon the Second Defendant’s Bankers confirming receipt of US Dollars 1 Lac 50 Thousand into the nominated bank account, the Second Defendant forthwith shall permit discharge and delivery of the suit consignment comprising of two transformers and accessories etc. All the costs and expenses associated with discharge and port related charges relating to discharge of the suit cargo shall be borne by the Plaintiffs. (C) As security for repayment of US Dollars 1 Lac 50 Thousand the First Defendant’s vessel shall stand arrested subject to the further orders. 5 (D) All rights, contentions, claims, counter claims and consequential defences of both the parties are kept open including the Plaintiffs’ right to apply for arrest of the vessel for rest of the claim forming part of the suit. (E) The present terms do not in any manner amount to waiver, variation or alteration of the MOU of any of its term or acceptance thereof by the Plaintiffs. (F) Port, Customs, Police, Director General of Shipping and all concerned authorities to act on an ordinary copy of this order duly authenticated by the Associate of this Court. 2. There shall be ad-interim order in the above agreed terms. No reasons are recorded in support of the order as the order is passed by consent of the parties. The parties are granted liberty to approach this Court if needed. 3. Stand over to 23rd July, 2009.” 3. Thereafter, this and the connected Notice of Motion was placed for hearing and final disposal before me. 4. On 6th August 2009, both matters were part-heard before me and I had invited the attention of the learned Senior Counsel appearing for parties to the fact that one of the 6 representatives of Defendant Nos.1 and 2 in Suit No.25 of 2008 was related to me. However, on statements being made after instructions from parties that they would have no objection in my taking up the matters further and disposing them off in accordance with law, that the hearing proceeded on further dates. Upon the conclusion of the hearing on 12th August 2009 and giving opportunity to parties to put in written submissions, if any, that the orders were reserved. 5. Admiralty Suit No.25 of 2009 is filed by one Dodsal Engineering and Construction LLC against One M.V. “THOR GUARDIAN” which is a Foreign Flag Vessel and its owners (Second Defendant). The Third Defendant is the present Master of the First Defendant Vessel. The Fourth Defendants, who are Plaintiffs in the other Suit claim to be Charterers of the first Defendant Vessel. The Fifth Defendants are agents of the First, Second and Fourth Defendants in India. 6. It is the case of the Plaintiffs that the Suit consignment is owned by them. It is stated that this consignment was loaded on board the First Defendant Vessel on 24th January 2009 at Mumbai. The Bill of Lading dated 24th January 2009 is issued 7 for and on behalf of Defendant Nos.1,2 and 5 under the Authority of the Master of the First Defendant Vessel. The Suit consignment was to be delivered to the Plaintiffs at Jebel Ali in United Arab Emirates on or about 30th January 2009. It is the case of the Plaintiffs that the First Defendant Vessel left the Port of Mumbai and called at the Port of Ras-Al-Khaimah on or about 19th February 2009. The Vessel called at this Port to discharge certain other cargo not belonging to the Plaintiffs. The plaint proceeds to allege that on 19th February 2009 there was an incident of Fire on the Vessel. It damaged the cargo belonging to the Plaintiffs. It is alleged that the cargo was damaged because the Defendants did not take due care to protect the same. The protection was required because there were certain repair works to the ship. The First Defendant Vessel thereafter sailed from the Port of Ras-Al-Khaimah in United Arab Emirates around 30th March 2009 and was expected to arrive at the Port of Jebel Ali on 31st March 2009. It is alleged that the First Defendant Vessel did not proceed to the Port of Jebel Ali and instead sailed to West Coast of India and remained in the international waters. 7. It is the case of the Plaintiffs that the Vessel was un- 8 seaworthy and was deficient in several aspects. It sailed from Mumbai on 13th February 2009. Upon the Plaintiffs receiving information with regard to the incident of fire of 19th February 2009 at the Port of Ras-Al-Khaimah, they took steps to survey the cargo on 22nd February 2009. The Surveyors appointed by the Plaintiffs’ under-writers, upon visual inspection found that there was no external damage to the main transformer unit but the accessories which were laden on board were found to be damaged. According to the Plaintiffs, the claim made by the Port Authorities at Ras-Al-Khaimah to extinguish the fire was not settled either by the Second or by the Fourth Defendants. There were disputes between the Second Defendant as owners and the Fourth Defendant as a Charterer in regard to the claim made by the Port Authorities. Thereafter, some negotiations took place and the Second Defendants paid a sum of US $ 72,250 at the end of March 2009 to the Port Authorities at Ras-Al-Khaimah. 8. The First Defendant Vessel sailed from the Port of Ras-Al- Khaimah on or about 30th March 2009. The Plaintiffs’ Agent had made all arrangements for taking delivery of the Suit consignment directly from the vessel at this Port. Upon 9 receipt of the delivery order, the Plaintiffs have taken steps to file Bill of Entry for delivery of the Suit consignment. This Bill of Entry was filed much prior to the date of arrival at Jebel Ali. The Plaintiffs had paid custom duty and the amount is specified in paragraph 8 of the plaint. However, the Vessel did not arrive at Port of Jebel Ali on 31st March 2009. In para 9 of the plaint, the Plaintiffs have stated about disputes between the Second and the Fourth Defendants with regard to the incident of fire. 9. In paragraph 10 of the plaint, the Plaintiffs have referred to the Second Defendant’s Brokers’ communication dated 7th April 2009 addressed to the Charterers in which it was claimed that the Vessel is in international waters and the cargo was safe, that Bill of Lading has not been furnished to them and further alleged fraud of the Charterers. Since it is alleged that the First Defendant did not provide to the owners a copy of the Bill of Lading, the Plaintiffs had forwarded a copy of the Bill of Lading to all concerned including the First and Second Defendants with a request to deliver their consignment forthwith at Jebel Ali. A copy of the aforementioned communication dated 7th April 2009 is annexed as Annexure ‘I’ 10 to the plaint. 10. Thereafter, it is alleged that the representative of the Second Defendant purported to claim that the Charterers were in breach of certain clauses of the Charter Party. The communication between the representative of the Second Defendant and the Plaintiff is referred to and it is stated that the Suit consignment was urgently required for fulfilling the Plaintiff's obligation under the project contract with the Petroleum Development, Oman, a subsidiary of the Government of Oman. From the exchange of correspondence, it appears that the Second Defendant as owners have claimed certain amounts from the Fourth Defendant as Charterer which they were disputing and the Plaintiffs are not concerned with the same. However, with a view to find an amicable solution, a meeting was arranged at the Office of the Plaintiffs at Dubai on 13th April 2009, at which, representative of the Fourth Defendant, Second Defendant were present/available. Despite best efforts of the Plaintiffs, an amicable solution could not be found to resolve the dispute between the Second and the Fourth Defendants. The plaint alleges that the First and the Second Defendants were not willing to proceed to 11 discharge the Suit consignment at the Port of Jebel Ali unless additional amount was paid. The consignment was detained by the Defendants. 11. It is alleged that since the Fourth Defendants were unwilling to sort out the dispute with Defendant No.2 and as the Plaintiffs were desirous of obtaining delivery of the suit consignment which was required for their project urgently, the Plaintiffs were compelled to negotiate with the Second Defendant. This was to enable the Plaintiffs to obtain delivery of the suit consignment at an early date. The vessel was in international waters and the Second Defendant refused to proceed to the Port of Jebel Ali or any other Port unless they were additionally compensated. Therefore, the Plaintiffs started negotiations with the Second Defendants. In paragraph 15 of the plaint, it is alleged that the Plaintiffs were held to ransom on account of the alleged collusion between the Defendants with each other. Since their contractual obligations in delivering the suit consignment worth invoices valued at US $ 2.1 Million was not delivered and even the inspection was declined, the Plaintiffs were compelled to place an order for supply of two transformers alongwith the 12 accessories with Crompton Greaves. The said Crompton Greaves stated that it would take 12 to 13 months to complete the manufacturing process and deliver the transformers at Mumbai. However, when it was found that the transformers were urgently required the Plaintiffs persuaded Crompton Greaves to deliver the transformers. In normal course, the transformers would have been delivered around March/April 2009. However, the Plaintiffs had persuaded the said Crompton Greaves to deliver the same in the third week of January 2009. That was the consignment which was to be delivered and if now a fresh order is to be placed, the delivery would take about four months. Thus, the Plaintiffs also would be compelled to pay additional sums of US $ 6,97,600/- for the purchase of very same transformers and accessories. In these circumstances, the Plaintiffs were compelled to negotiate with the Defendants and more so, when the Defendants had the custody of the cargo/suit consignment for the period exceeding three months. Therefore, re-negotiations took place, there were exchange of several drafts and ultimately the Plaintiffs had no option but to agree under coercion and duress to pay sum of US $ 1,50,000/- towards the Second 13 Defendant's claim of general average. It is pointed out that all along the Second Defendant were claiming the costs, attached to the incident of fire only because of Fourth Defendant. Since the Fourth Defendant declined to pay any amount to the Second Defendant, the Plaintiffs had no option and agreed to pay sum of US $ 1,50,000/- to the Second Defendant under duress and coercion. That is how, the MOU dated 5th May 2009, a copy of which is the annexure 'L' to the claim came to be executed. 12. The Plaintiffs have stated that under the Contract of Carriage as evidenced by the Bill of Lading, the Defendants were bound and liable to discharge the suit consignment at the Port of Jebel Ali. The correspondence indicates that the fire took place at the port of Ras-Al-Khimah due to certain acts and omissions on the part of the Defendants. In the correspondence the Second Defendant held the Fourth Defendant responsible for this incident whereas the Fourth Defendant held the Second Defendant liable. The Plaintiffs have nothing to do with this inter-se dispute but with a view to fulfill their contractual obligation they had no option but to negotiate and re-negotiate and enter into the subject MOU. 14 The purported MOU is without any consideration and is void and non-est. That is because the First Defendant Vessel was anchored in the international waters and the Defendants even did not permit the Plaintiffs to inspect the Suit consignment. The Plaintiffs do not owe any amount to any of the Defendants under the Contract of Carriage as evidenced by the Bill of Lading. Each of the Defendants are guilty of fraud, mis- appropriation of property and conversion. The purported MOU came to be executed as a result of economic duress and fraudulent act on the part of the First and the Second Defendants. 13. It is, in these circumstances, that the Plaintiffs have claimed the declaration that the MOU is non-est, illegal and null and void. 14. The Plaintiffs have referred to the criminal complaint filed by the Fifth Defendant with the yellow gate police station and the inspection pursuant thereto. They have also referred to the letters on the subject of inspection of the suit consignment on Board the First Defendant Vessel. They have pointed out as to how the First Defendant Vessel was not in berth at the Port of Mangalore on 12th May 2009 and thus, the 15 Plaintiffs' representative had to return from Mangalore without inspecting the Suit consignment. They have accused the Defendants of diverting the vessel and failing to fulfill their obligations of discharging and delivering the consignment at the port of Jebel Ali. Yet, the Plaintiffs had to became a party to the MOU. For all these reasons, the Plaintiffs claimed the reliefs referred to above. In paragraph 27 of the plaint, reference is made to the issuance of more than one Bill of Lading. In paragraph 28 of the plaint, reference is made to the Commercial invoice and the value of the suit consignment and thereafter, in paragraph 29 a claim is made on the basis of the liquidated damages which would be claimed by M/s. Petroleum Development, Oman. That is how, the claim in paragraphs 28 to 30 also proceeds. 15. The plaint is amended after the ad-interim orders passed and reproduced above to include costs of replacement of the accessories, re-packing of the damaged Cargo and refund of US $ 1,50,000/-. 16. That is how, the plaint allegations in Admiralty Suit No. 16 25 of 2009 read. The Notice of Motion is moved for the aforementioned interim reliefs and it is supported by the affidavit of one Bijoy Kumar Sinha, Constituted Attorney of the Plaintiffs. He has confirmed the plaint averments and has further referred to an order in the 4th Defendant’s Suit. It is pointed out that the 4th Defendant had filed a Suit in this Court which is the companion Suit No.34 of 2009. It is alleged that in that Suit an order of arrest was passed on 21st May 2009. The Plaintiff filed a Notice of Motion therein being Notice of Motion No.1811 of 2009 seeking intervention in order to obtain delivery and discharge of the suit consignment. An affidavit in reply was filed. Ultimately, that Motion was disposed off by an order dated 25th May 2009 and this Court permitted the Plaintiffs herein to inspect the Cargo. The Suit is filed thereafter. 17. To this Notice of Motion, an affidavit in reply has been filed by the Second Defendant’s Director Mr. Gautam Trehon. He submitted that the Plaintiffs are guilty of suppressing material facts and documents. He submits that the Suit is not maintainable and should be dismissed because the Plaintiffs 17 have failed to produce the original Bill of Lading. They were obliged to do so. It is only thereafter they could have alleged that they have a claim towards the suit consignment. In the absence of original Bill of Lading, the Plaintiffs have no right, title or locus to maintain the proceedings. Further, it is alleged that there is no privity of contract between the Plaintiffs and Defendant No.2 save and except the MOU dated 5th May 2009. There is no cause of action. Inviting the Court’s attention to clauses 4 and 6 of the MOU, it is stated that this is a false Suit filed to challenge the validity of MOU. The MOU was executed after one month of dialogue and therefore, it cannot be said to be vitiated much less void. It is then contended that there was in incident of fire on Board of vessel while she was at the port of Ras-Al-Khaima on or about 19th /20th February 2009. On account of this incident of fire, the Second Defendant became entitled to declare General Average and seek a contribution from the interested parties claiming to be the cargo interest. It is stated that after repeated request on or about 7th April 2009, the Plaintiffs forwarded a copy of the Bill of Lading but that was incomplete. Thereafter, there were discussions regarding 18 various issues and through a tripartite correspondence and E- mails. The affidavit refers to all the E-mails and discussions leading to the MOU. The events after the MOU till the institution of the Suit have been thereafter set out and finally it is urged that the MOU is a valid document. The Plaintiffs are falsely and dishonestly trying to avoid the MOU. The affidavit then refers to the allegations as against the 4th Defendant. There is a justification given for the vessel not being taken to Jebel Ali. In paragraphs 14 and 15 of the affidavit in reply and finally in paragraph 25, the stand of the 2nd Defendant is pointed out and it is prayed that the Motion be dismissed. 18. The Plaintiffs filed a rejoinder affidavit and while reiterating the plaint averments and allegations in paragraph 6 of the rejoinder affidavit, the Plaintiffs stated that the claim for damages which were not known or quantified were not covered by the Agreement. Subsequent to the discharge of the suit consignment, a survey was conducted of the machinery at the port of Mangalore. The interim surveyor revealed that the consignment has been damaged. Consequently, the Defendants are bound and liable to 19 compensate the Plaintiffs for damages pursuant to the disclosure of the survey. Thus, it is stated that it is not that by taking delivery of the Cargo and making the payment that any discharge has been given by the Plaintiffs. Having challenged the MOU on the aforementioned grounds and the losses being enormous as set out in the plaint that there is justification to proceed and claim interim reliefs. 19. My attention is also invited to the order passed by Hon’ble Mr. Justice A.P. Deshpande and the prayer made in that behalf, namely, a direction to deliver the consignment without prejudice to the rights of the Plaintiffs to claim of losses and damages. Thus, it is stated that the order of Hon’ble Mr. Justice Deshpande does not affect the rights and contentions of the Plaintiffs and the Suit therefore, must proceed in accordance with law. Until and unless the Suit is pending and the Plaintiffs having already paid the sum of US $ 1,50,000/- for taking delivery of the cargo, that, the order of arrest of the 1st Defendant vessel should be continued so that if the Plaintiffs succeed, then, their decree will be satisfied by disposing off the vessel. The vessel is thus, a security for the 20 claim and it will not be proper to release the same. 20. The aforesaid is the basis of the interim reliefs and Mr. Dwarkadas, learned Senior Counsel for the Plaintiffs after inviting my attention to the plaint averments, the necessary and relevant documents including the MOU contended that this is a clear case of economic duress and coercion. The Plaintiffs were put under tremendous pressure and virtually held by the gun. They had no choice but to execute the MOU as that was the only way they could have fulfilled their obligations undertaken to the Oman party. Once, the Defendants on account of their own problems and disputes did not take the vessel to the port of destination, that is Jebel Ali, then, the Plaintiffs had to arrange for transportation of the Cargo to the port of destination. It was necessary for the Plaintiffs to obtain discharge and delivery of the cargo. That they