India

Background: The owners of EVERRICH 8 (the Vessel), through their subsidiary Yuanland Ltd, entered into voyage charterparty with Rakha Al Khaleej International LLC (Charterers) for carriage of LPG on board the Vessel. The Charterers sub-chartered the Vessel to Indian Oil Corporation Limited (IOCL), a government of India undertaking for carriage of LPG from the Port of Ras-Laffan to the Ports of Sikka, Ennore and Haldia. The owners discharged partial cargo at Port of Ennore (Ennore). The balance cargo of 20,998MT LPG was due to IOCL, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) at the Port of Haldia (Haldia). Mare Maritime Singapore Pte Ltd (Plaintiff) obtained an order of arrest of the Vessel claiming payments due under Ship Management Agreement dated October 24, 2014. The Vessel was arrested at Ennore, on August 20, 2015. The owners of the Vessel moved the court for transfer of the Vessel under arrest, from Ennore to Haldia, to discharge balance Liquid Petroleum Gas (LPG).

The issue: The primary issue was whether the vessel be allowed to sail under arrest from Ennore to Haldia, to discharge balance cargo of LPG.

The Owner’s arguments: The owners contended that the vessel be allowed to sail for the following reasons:

  • The loss and prejudice caused by the delay to the owners
  • The Charterers and the receivers of the cargo were in urgent need of the balance cargo
  • The owners could face potential claims for late delivery and/or short delivery of the cargo
  • The Vessel was due to undergo repairs at Haldia.

The owners offered to be subject to certain conditions i.e. allowing the vessel to sail with Bailiff and police personnel onboard and to bear their expenses.

The plaintiff’s argument: The plaintiff’s submitted that:

  • The proposed voyage could in all probabilities render the Vessel to sail through international waters jeopardising the court’s jurisdiction over the Vessel
  • The owners are a foreign company with the Vessel as sole asset
  • The owners falsely represented the geographical location of the Vessel to avoid the court’s jurisdiction
  • Risk of maritime liens being created enroute (result of breakdown or collision).
  • The cargo to be transshipped to another vessel
  • Alternatively, the receivers could take delivery of the cargo at Ennore or could purchase similar cargo and later claim from owners.
  • Commercial considerations cannot be grounds for allowing the application.

Decision: The court held that the application cannot be decided on prejudice created by the plaintiff and needs consideration on its own merit. Further, the court considered that value of the Vessel exceeded the plaintiff’s claim, and the argument regarding possible creation of maritime liens, rendered as baseless. The proposed cargo trans-shipment seemed unrealistic. Conclusively, the court relied on receivers confirmation that failure to deliver the cargo at Haldia could lead to depletion of stock. Further, the Indian Coast Guard confirmed possibility of the Vessel to sail from Ennore to Haldia under surveillance and if the Vessel violates any orders of the court, the Coast Guard may pursue the Vessel and direct it back into Indian Territorial waters. The court relied on a Division Bench order of Bombay High Court, in Lufeng Shipping Co. Ltd. Vs. MV Rainbow Ace wherein the court directed the Vessel ‘RAINBOW ACE’ under arrest be moved from the Pipava Port to Mumbai Port. Therefore, the court allowed the Vessel to sail from Ennore to Haldia, subject to certain conditions:

  • That an independent master-mariner board the Vessel to supervise at all times.
  • That armed guards be present on the Vessel.
  • That at all times, the Vessel reports her coordinates to the Indian Coast Guard.
  • The court accepted the owners’ undertaking to bear all expenses.
  • The owner would bear all expenses of armed guards and independent master-mariner on board the Vessel.

Clasis Law
1st Floor, Bajaj Bhawan, 226, Nariman Point
Mumbai 400 021, India
Tel: (91) 22 4910 0000 / Fax: (91) 22 4910 0099
Email: mustafa.motiwala@clasislaw.com
avinav.mukherjee@clasislaw.com
Website: www.clasislaw.com

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