1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALTY AND VICE-ADMIRALTY JURISDICTION APPEAL NO. 181 OF 2010 IN NOTICE OF MOTION NO. 739 OF 2010 IN ADMIRALTY SUIT (LODGING) NO. 3263 OF 2009 CHEMOIL ADANI PVT. LTD. ) a Company incorporated under the Companies ) Act, 1956, having its Registered Office at Adani ) House, Near Mithakali Circle, Navrangpura ) Ahmedabad 380 009 ).. Appellant (Org. Plaintiff) Versus 1) m.v. HANSA SONDERBURG ) (and her owners and all other persons ) concerned and/or interested in her) IMO ) Number 9155389, flying a Liberian Flag, ) together with her hull, tackle, engines, ) machinery, boats, bunkers, equipment, ) paraphernalia and all other appurtenances ) presently in the port and harbour of Mumbai) within the territorial waters of India and ) within the Admiralty & Vice Admiralty ) Jurisdiction of this Honourable Court. ) 2) HANSA SONDERBURG SHIPPING CORP. ) a company organized under the laws of , ) Germany, having its principal place of ) business at c/o Leonhardt & Blumberg ) Reederei GmbH & Co. KG. Neumuhlen ) 13, 22763 Hamburg, GERMANY. ) 2 3) HULL & HATCH LOGISTICS LLC ) a company organized under the laws of the ) United Arab Emirates, having its Registered ) Office at P.O. Box No.49653 Dubai ) UNITED ARAB EMIRATES. ).. Respondents (Org.Defendants) Mr. Vikram Nankani a/w Mr.Sushanth Murthy i/b M.R. Baya for the Appellant. Mr. Virag Tulzapurkar, Senior Advocate, with Mr.Rahul Narichania, Ms. Darshana Bhagjilal and Mr.N.J. Engineer i/b M/s.Gordhandas & Fozdar & Co. for Respondent Nos.1 and 2. CORAM : ANIL R. DAVE, C.J. AND S.C. DHARMADHIKARI, J. JUDGMENT RESERVED ON : 19TH APRIL 2010 JUDGMENTPRONOUNCED ON : 27THAPRIL, 2010 JUDGMENT (Per S.C. Dharmadhikari, J.) Appeal admitted. 2. The respondent Nos.1 and 2 waive service. None appears for respondent No.3 though served. In any event, the contesting respondents are respondent Nos.1 and 2. By consent of parties, appeal is taken up for hearing forthwith. 3 3. This appeal under clause 15 of the Letters Patent is directed against an order of the learned Single Judge dated 17th March, 2010 in the above notice of motion. 4. The appellant is the original-plaintiff whereas the respondents are original defendant Nos.1,2 and 3 in the above suit. In this notice of motion which has been moved by the original defendant Nos.1 and 2, the relief sought was for vacating the order of arrest dated 19th October, 2009 of the respondent No.1 (original defendant No.1) vessel. The other prayer in the motion is for an order and direction to the appellant-original plaintiff to furnish security in the sum of US $ 3,50,944.95 towards losses and damages suffered by the respondent No.2 (original second defendant) due to the wrongful arrest of the first defendant vessel. A further relief was sought by the appellant for payment in the sum of US $ 12,101.55 per day until release of the first defendant vessel. 5. By the impugned order, the learned Judge has vacated the order of arrest thereby releasing the first defendant vessel but has 4 declined to pass any order in terms of prayer clause (b) of the notice of motion. 6. Aggrieved by the order of the learned Single Judge vacating the order of arrest, the appellant-original plaintiff in the suit, has filed this appeal. 7. The appellant has filed the above Admiralty Suit in this court for an order and decree in the sum of US $ 3,54,279.05 against the first defendant vessel together with interest at 12% per annum from the date of institution of the suit till payment/realization and for an order of arrest of the first defendant vessel. It is also prayed that the vessel be sold by the Sheriff of Mumbai under orders and directions of this court and sale proceeds be applied towards the satisfaction of the appellants’ claim in the suit. 8. It is the case of the appellant that they are a company incorporated under the Companies Act, 1956 and carrying on the business of selling fuel oil and bunkers to the ocean going vessels. The first defendant is a vessel, presently at the Port and Harbor at 5 Mumbai within the Admiralty and Vice Admiralty jurisdiction of this court. Respondent No.2 is defendant No.2 in the suit and it is owning, managing and chartering vessels and is the disponent owner by demise charter of the first respondent vessel. Respondent No.3 is a company organised under the Laws of United Arab Emirates and has taken the first defendant vessel on time charter under a charter party dated 16th April, 2009 for the period from delivery of the vessel till 21st May, 2010. The plaint states that the bunkers were supplied at the request of the master of the first respondent vessel. Further, the supply was made in terms of the agreement between the appellants and respondent No.3 on 29th June, 2009. 9. After setting out the facts relating to the first respondent vessel being taken on a time charter, it has been stated that during the charter, the vessel was in need of bunkers. Respondent No.3 enquired from the appellants as to whether they are ready to supply 800 MT of bunkers. After negotiations, the terms of supply were agreed in an exchange of e-mails between the appellants and respondent No.3. It is stated that the terms were agreed on 29.6.2009. By this agreement, the appellants were to supply 800 6 MT of bunkers to the vessel at Mundra at the rate of US $ 412 per MT. Respondent No.3 was to pay for the bunkers within 30 days from the invoice being raised on it for the quantity of bunkers delivered to the first respondent vessel. Some of the terms of the agreement were referred to and a copy of the same was annexed as Annexure `A’ to the plaint. This agreement was referred to as the sale agreement. It was stated that on 5th July, 2009, the Master made a request to the appellants for the supply of 800 MT of bunkers to the first respondent vessel for the purpose of its onward journey to Eden. A copy of the Master’s request is annexed as Annexure `B’ to the plaint. 10. Accordingly, the aforementioned quantity of bunkers came to be supplied under a Bunker Delivery Note No.347 dated 5th July, 2009. It is stated that receipts of the bunkers were duly acknowledged by the Master of the first respondent vessel on the said Bunker Delivery Note and also by a Landing Certificate dated 5th July, 2009. Copies of these documents are annexed as Annexures `C’ and `D’ to the plaint. Thereafter, a detailed invoice bearing No.1150600624 dated 5th July, 2009 for US$ 329,279.05 was delivered. This was the sale consideration for the supply of 7 bunkers. The payment was to be made on/or before 4th August, 2009. A copy of the invoice is annexed as Annexure `E’ to the plaint. However, as the respondents failed to make payment of the sale consideration, the suit has been filed. The appellants stated that supply of bunkers amounts to supply of necessaries and the non-payment of price of the bunkers gives rise to a Maritime Claim. The claim is brought pursuant to the Arrest Convention. The appellants stated that since they have a Maritime Claim which entitles them to invoke the admiralty jurisdiction of this court and to procure the arrest, condemnation and sale of the first respondent vessel, as security for their claim. 11. It is in such circumstances the appellants stated that they are entitled to invoke the admiralty jurisdiction of this court. They stated that the first respondent vessel is presently in the port and harbour of Mumbai and after completion of her employment, is likely to sail to an unknown destination, thereby resulting in the claim remaining unsecured. It was stated that the vessel is likely to sail on 19th October, 2009. For all these reasons and making usual averments, the suit came to be filed on 19th October, 2009. 8 12. An application for arrest of the vessel was made and, accordingly, an order to that effect came to be passed. 13. Upon the arrest of the vessel, the respondent Nos.1 and 2 moved an application vide the above notice of motion and prayed for vacating the order of arrest and furnishing of security by the appellants towards the losses and damages. The notice of motion was moved sometime in December, 2009. 14. It was stated by the respondent No.2’s Constituted Attorney on affidavit that they are the demise charterers of the first respondent vessel having taken her on demise charter from her registered owner. After setting out the details with regard to the vessel and the owner, it was stated that the third respondent was looking for the substitute vessel and that is how the first respondent was offered to the third respondent for dues and hire under the time charter party. The terms of the charter party are referred to and thereafter, it is stated that the appellant-plaintiff has no privity of contract with the respondent Nos.1 and 2. The contract of the appellant is only with the third respondent. In the absence of any privity of contract, the appellant cannot have any 9 right to proceed against the first respondent vessel in rem and against the second respondent in personam. On this ground alone, the order of arrest should be vacated and/or set aside. 15. It is alleged that as a matter of universal practice when a vessel is under time charter, it is the responsibility of the time charterer to arrange and pay for the bunkers/fuel. Therefore, the appellant’s right to claim or receive payment under any invoice is only from the respondent No.3 and not from these respondents. 16. In paragraphs 5 and 6 of the affidavit, this is what is stated. "5. The two documents annexed to the Plaint and described as follows viz,: (i) "Master Requisition" dated 5.7.2009; and (ii) "Landing Certificate" dated 5.7.09 have been signed by the Chief Engineer of the 1st Defendant Vessel and not the Master of the 1st Defendant Vessel as falsely stated. Both these documents were presented by the Plaintiff to Chief Engineer for his signature while he was on board the 1st Defendant Vessel. This was done after the contract was already concluded between the Plaintiff and the 3rd Defendant for supply of bunkers. It is submitted that post contractual documents do not and cannot create privity of contract when a contract has already come into being prior thereto between the Plaintiff and the 3rd Defendant. 10 The two documents above were signed and stamped by the Chief Engineer only for the Customs purposes. The "Master Requisition" is a document which is printed (an mass) by the Plaintiff themselves. It was presented by the Plaintiffs after filling in the blanks to the Chief Engineer for signature on board the 1st Defendant Vessel. This document bears a certification at the bottom, which reads "I hereby certify that Vessel is under Foreign Run & above requirement are quite reasonable to reach our next port." The "Landing Certificate" was prepared by the Plaintiff after the bunker/fuel had been loaded on board and was handed over to the Chief Engineer of the 1st Defendant for his signature whilst he was on board the vessel. This document bears the signatures, stamp and seal of the Customs Officer evidencing the fact that it is issued for Customs purposes especially relating to the issue regarding Customs Duty in case of export of goods from the Mundra port and Special Economic Zone. The declaration on both the documents that the vessel was on foreign run establishes this fact. I say that the customs documentation relating to the supply of the bunkers will be in possession of the Plaintiffs. The Plaintiffs are bound and have to produce the same before this Honourable Court. 6. The Bunker Delivery Receipt (signed by the Chief Engineer of the 1st Defendant Vessel) is also a post contractual document. The Plaintiffs standard terms and conditions of supply were not made known to the 1st and 2nd Defendants. The legend at the bottom of the Bunder Delivery Receipt was not agreed to by these Defendants and is not binding on the 1st or 2nd Defendants. The signature of the Chief Engineer on the 11 Bunker Delivery Receipt only evidences, receipt of the bunkers and nothing more. The seller's standard Terms and Conditions for Sale of Marine Fuel are not binding on the 1st and 2nd Defendants. Neither the Master nor the Chief Engineer of the 1st Defendant Vessel placed any order upon the Plaintiff for the supply of bunkers. In fact, by emails dated 3rd and 4th July 2009, the 3rd Defendant had informed the Master of the 1st Defendant vessel that they were arranging to supply 800 tons of bunkers at Mundra. Hereto annexed and marked "Exhibit 3" is the exchange of the aforesaid emails. In any event, the Chief Engineer never had any authority from the 1st or 2nd Defendant to order bunkers or to bind the 1st or 2nd Defendants in relation to the supplies." 17. On these grounds, it was urged that neither the first or the second respondents are personally liable to the appellant’s claim in the suit. There is no failure on their part to pay the price/value of the bunkers. They were never supplied pursuant to the request from the first respondent or the second respondent, as falsely alleged. No such request was ever made. It is in such circumstances and because the appellant is pressurizing the respondent Nos.1 and 2 that the order of arrest should be set aside. 18. This is the stand taken in the affidavit in support of the notice of motion dated 17th November, 2009. 12 19. Thereafter a reply affidavit has been filed by the appellant- plaintiff in which the plaint averments have been reiterated and additionally, it was urged that undisputed facts are that respondent No.1 is owned/managed by respondent No.2 by demise charter. Further, on 5th July, 2009, the Master and/or Chief Engineer of respondent No.1 vessel made a requisition for the supply of 800 MT of bunkers. The bunkers were supplied by the appellants under a delivery note of the same date. The delivery note has been acknowledged and signed by one K. Bezbalov as the Master/Chief Engineer. Then reliance was placed upon the Bunker delivery note which incorporated the standard terms and conditions of sale of marine fuel. Reliance was also placed upon clause 3(e) of the contract dated 29th June, 2009. In such circumstances, it is clear that the supply is on the credit of the vessel and any disclaimer as to the creation of maritime claim of the ship and/or limiting the authority of ship’s officers signing this receipt to bind the vessel and her owners are null and void. It is then contended by the appellants that from a perusal of the documents annexed to the plaint, it is clear that the respondents are attempting to wriggle out of their liability. They are disputing 13 the relevance of Master’s request and Landing Certificate by claiming that these were signed and stamped by the vessel for the customs purposes only. It was stated that the Master’s requisition is not a document prescribed by the Customs Regulations nor is it in any way connected with the customs formalities. The documents are not signed for any purpose much less the one set out in the affidavit in support of the notice of motion by the respondent Nos.1 and 2. It was denied that the bunker delivery note is a post contract document. It was stated that bunker’s requisition made by respondent Nos. 1 and 2 read with the appellant’s standard terms constitutes the contractual relationship between the appellant and respondent Nos.1 and 2. Bunker delivery note evidences the performance of the said contract by the appellant. Having singed the bunker delivery note without any protest, it is not open for the respondent Nos.1 and 2 to deny or avoid the terms of the sale. Thus, the arrest order was justified and the motion be dismissed, was the reply of the appellant vide affidavit affirmed on 21st November, 2009. 20. There was a rejoinder affidavit to this affidavit in which the respondent Nos.1 and 2 have reiterated the contents of their 14 affidavit filed in support of the motion. It was urged that the document titled as “Master’s Requisition” was not even signed by the Master. The said document was signed by the Chief Engineer after it was presented to him on board the vessel after it took berth to facilitate bunkering. This was six days after the contract has been concluded between the appellant and the third respondent. Thus, the supplies were not made pursuant to the documents titled as "Master’s Requisition". Reliance was placed on a copy of the bunker supply report prepared by the independent surveyors arranged by the respondent No.3 as buyers of the bunkers. This report clearly shows that the vessel's gangway was placed at 2.20 a.m. on 5th July, 2009. Therefore, the document viz. Master’s requisition has been presented to the Chief Engineer by the appellant’s representative, thereafter. The report evidences that the bunker supply commenced at 6.35 a.m. on the same day. It is impossible for a bunkers supplier to arrange for 800 mt. of bunkers to be supplied at such a short notice. Thus, the order must have been placed several days in advance and hence, it stands to logic that the appellant had already organized the quantity of bunkers pursuant to their contract concluded earlier with respondent No.3 and not pursuant 15 to the alleged requisition of the Master or Chief Engineer of respondent No.1 vessel. 21. The very fact that appellant now chooses to describe Mr. K. Bezbalov as Master/Chief Engineer clearly establishes that the earlier assertion in the plaint that it was the Master who requisitioned the supply, is false. It is not disputed that Mr. K. Bezbalov was the Chief Engineer at the relevant time. Thus, the attempt was to show that the reliance on Master’s requisition by the appellant is misplaced. Further it was urged that the signature on the bunker delivery receipt evidences receipt of the same. The terms and conditions of the appellant’s contract with the respondent No.3 cannot be held to be binding on respondent No.1 and/or respondent No.2 by an attempt to incorporate them in the bunker delivery note which was signed merely for receipt of the supply of bunkers on board the vessel and that too only after the contract was already concluded between the appellant and respondent No.3. Thus, the bunkers were not supplied to the faith and credit of the vessel. 16 22. All earlier pleas were reiterated by respondent Nos.1 and 2 and it was prayed that the notice of motion be made absolute. It is with this material and written submissions of both sides that the motion came to be placed before the learned Single Judge. The learned Single Judge in the impugned order has concluded that there is no privity of contract between the appellant and respondent Nos.1 and 2. He concluded that there is nothing on record to show that respondent Nos.1 and 2 authorised respondent No.3 to act on their behalf. Reliance was placed on the time charter party and it was held by the learned Judge that the appellant have knowledge of the same. It is held that any officer authorized by the Master or Master signs any papers/documents/receipts including any other arrangements but it is the time charterers who are bound by such receipts and requisitions and they are liable to make payment. 23. However, the learned Judge in paragraphs 9, 10 and 13 of the impugned order observed thus- "9. There is no serious dispute to the preposition that a supply of bunkers gives rise to "Maritime claims" (1) m.v. Elisabeth and Ors. Vs. Harwan Investment and Trading Pvt.Ltd. (1993 Supp (2) SCC 433), (2) Liverpool and London S.P. & I. Association Ltd. V/s. m.v. Sea Success I and Anr. [(2004)9 SCC 5121, and 17 (3) Premium Nafta Products Ltd. & Ors. Vs. Fiji Shipping Company Ltd. & Ors. [2007] UKHL 40. 10. The bunkers requisition signed by Defendant No. 3-Vessel's Chief Engineer/Master and it was delivered accordingly on 05/07/2009. It is acknowledged by the vessel again through its Master/Chief Engineer. The bunkers delivery note incorporated the plaintiff's standard terms and conditions which provides that the marine fuel is to be supplied to the credit of the vessel. The signatures were without any qualification. 13. There is nothing on record that Defendant Nos.1 and 2 authorized Defendant No.3 to act on behalf of them neither it is the case of the Plaintiff to that effect. The documents so relied including requisitions and receipts for bunkers, need to be considered referring to Clauses 12(d)(i) and 13 of the Charter party. Therefore, merely because there is a maritime claims that itself cannot be the reason to arrest Defendant No. 1 for want of privity of contract and specific contract between the Plaintiff and Defendant No.3. The Plaintiff, therefore, cannot entitle to raise claim against these Defendants." 24. Concluding thus and also holding that the documents relied upon by the appellant were without signature of the Master, the appellant’s case that respondent Nos.1 and 2 are liable for the fuel charges cannot be accepted. Once the contract was only between the appellant and respondent No.3 and bunkers were ordered by respondent No.3 who are time charterers of respondent No.1 vessel, then, the appellant have no right to arrest respondent No.1 vessel as done in the instant case. 18 25. The learned Judge relied upon two Single Judge decisions of this court and distinguished some other judgments and finally, he proceeded to allow the notice of motion and set aside the order of arrest. It is this conclusion of the learned Judge which is impugned in this appeal. 26. Shri Nankani, learned counsel appearing on behalf of the appellant submits that the impugned order is erroneous and unsustainable in law. Shri Nankani submits that what is relevant at this stage is the case set out in the plaint. It may be true that this is an application made by respondent Nos.1 and 2 for vacating the order of arrest. Yet, that request or such application of the respondent Nos.1 and 2 can be decided only on basis of the averments in the plaint and at this stage, it was not permissible for the learned Judge to render any conclusive findings on the liability of the parties. The learned Judge has proceeded to analyse the documents and even considered the contents of the same. The learned Judge overlooked the fact that all this can be done only at the trial. The parties are yet to lead evidence in support of their rival cases. The appellant cannot be shut out and 19 denied an opportunity to lead evidence to prove their case that respondent Nos.1 and 2 are liable. Shri Nankani submits that this is not a matter where the learned Judge has held that the claim of the appellant is not maintainable in the Admiralty and Vice Admiralty Jurisdiction of this court. Once the learned Judge holds that there is a maritime claim, then, the motion should have been dismissed. The learned Judge exceeded his jurisdiction and has virtually rendered a conclusive finding at the interlocutory stage. In other words, at the interlocutory stage, merits of the claim have been gone into and decided. The oral and documentary evidence is yet to be led. Therefore, the order under challenge deserves to be quashed and set aside. 27. Shri Nankani submits that there was no case made out for vacating the order of arrest. He submits that the ground of lack of privity of contract between the appellant and respondent Nos.1 and 2 could not have