M V SEA RENOWN Vs. ENERGY NET LIMITED

JUDGEMENT

(1.) The Applicant has filed this application before this Court on 5th December 2001 seeking relief to the effect that the Bank Guarantee dated 16th August 2001 furnished by them in favour of the Registrar of this Court in order to obtain release of the applicant's vessel be returned duly discharged and that for an order directing the opponents to pay to the applicant a sum of 143230.28 US Dollars.

(2.) For the purpose of considering this application and granting or not granting the reliefs claimed therein, some bare facts are required to be looked into as well as they are to be appreciated in the light of legal position on the subject. These bare facts are briefly stated as under: 2.1. The opponent, who is the original plaintiff (hereinafter be referred to as 'the plaintiff' for the sake of convenience), is a company organised under the laws of Liberia and carries on business, inter alia, as suppliers of bunkers to various vessels worldwide. The applicant No.1, who is the original-defendant (hereinafter be referred to as the 'defendant' for the sake of convenience) is a foreign-flag vessel to which bunkers were supplied by the plaintiff. The applicant No.2 is stated to be the owner of the applicant No.1 vessel. 2.2. The plaintiff has filed the Admiralty Suit No. 19 of 2001 in this Court against the defendant vessel "SEA-RENOWN" seeking her arrest under the warrant of arrest and that the net sale proceeds thereof be applied towards the satisfaction of the plaintiff's claim in the suit and also for a decree against the defendant vessel in the sum of 128032.40 US Dollars together with interest at the rate of 24% p.a. from the date of filing of the suit till payment and/or realisation. By way of an interim injunction,the plaintiff has also claimed that the defendant-vessel be arrested and/or detained and/or be restrained by an order of injunction from sailing out of the port of Alang and/or moving in any manner from her present position at Alang and anchorage and maintain status-quo in respect of the vessel. 2.3. The plaintiff has stated in the plaint that on or about 24th July 2000 the plaintiff was contacted by brokers acting on behalf of the owners of the defendant-vessel for supply of bunkers to the said vessel at Port Said, Suez. It was further stated that an order confirmation dated 24th July 2000 was issued by the plaintiff to the owners of the said vessel confirming for the order of supply of 530 MT IFO 180 CST and M 80 MT MGO at a price of 148.50 US Dollars per MT for IFO and 325.00 US Dollars per MT for MGO. In the order confirmation the buyers were stated to be the vessel SEA-RENOWN and jointly and severally the owners/managing owners/operators/managers/disponent owners/charterers and vessel in rem. The order confirmation further stated that the receipt of the confirmation signifies the acceptance of responsibility for payment of the bunker invoice by each and all of the buyers listed in the order confirmation. The terms of the supply of bunkers require, inter alia, for payment to be made within 30 days from the date of delivery and interest on late payment to be charged at 2% per month. 2.4. It was further stated that in accordance with the order confirmation, bunkers were supplied to the said vessel at Port Said by the plaintiff through local physical suppliers MISR Petroleum Company on 30th July 2000. The supplies were acknowledged by the Master and the Chief Engineer of the said vessel who endorsed the bunker delivery receipts with their seal and signature. The receipt for bunkers, duly acknowledged and endorsed by the Master and the Chief Engineer of the defendant-vessel states that the bunkers delivered/received on Board are for account of the owners and/or managing owners and/or managers of the said vessel as well as of any other vessels managed by the same managers as appearing in Lloyds Register of Shipping or Greater Shipping Directory or any other Shipping Directors and/or for account Charterers and any of the abovementioned concerned are individually and/or jointly responsible for payment of the bunkers supplied to the vessel without any protest. 2.5. It was further stated that upon the said delivery being made, the local physical suppliers MISR Petroleum Company were duly paid by the plaintiff and the plaintiff in turn raised their invoice in respect of the said supplies on the Master and/or owners of the defendant-vessel. The invoice dated 9th August 2000 required payment of the total amount of the bunkers supplied aggregating to 104864.52 US Dollars to be within 30 days of the delivery date. The due date of payment was accordingly 30th August 2000. 2.6. It was further stated that the owners of the defendant-vessel did not make payment of the said amount despite repeated telephonic requests and reminders from time to time although repeated promises of payment were received. The intervening brokers by their E-mail dated 3rd August 2000 informed the plaintiff that the management had requested for extension of time for making the payment as they were making arrangements to remit the funds. On 2nd October 2000, the plaintiff was informed by the brokers that payment would be received from next day. It was also alleged that despite these assurances, no payment was received and that the plaintiff was misled by the owners, through their brokers from time to time and given false assurance of payment in order to induce the plaintiff not to take legal action for recovery. 2.7. It was further stated that bunkers are essential for the operation of the vessel and supply of bunkers to a vessel constitutes necessaries within the meaning of Section 5 of the Admiralty Courts Act, 1861. It was therefore averred that the plaintiff had a maritime claim against the defendant vessel for bunkers supplied. As stated earlier, the order confirmation issued by the plaintiff confirmed the buyers to be the owners of the said vessel who was otherwise individually and jointly liable to make payment. The bunker delivery receipt signed by the Master and the Chief Engineer of the vessel also stated that the bunkers have been received on Board for account of the owners who are individually and/or jointly responsible for payment without any protest. It was stated that the bunkers have been supplied on the faith and credit of the said vessel and the plaintiff was entitled to look to the said vessel and its owners for recovery of its dues. The plaintiff was, therefore, said to have been entitled to proceed in rem against the defendant vessel for recovery of the cost of the bunkers supplied and was also entitled to an order of arrest of the said vessel. 2.8. It was further stated that the plaintiff had also a maritime lien in respect of its claims for 'necessaries' supplied to the defendant vessel. A maritime lien attaches to the vessel as on the date of the supply and is not defeated by any subsequent ownership of the vessel. The plaintiff was therefore said to have been entitled to pursue its claim against the defendant vessel in rem notwithstanding any change in ownership of the vessel after the date of the supply. 2.9. The Admiralty Suit No. 19 of 2001 filed by the plaintiff came to be heard for the first time by this Court on 3.8.2001 and this Court, after hearing the ld. advocate, Mr. AS Vakil appearing for the plaintiff as well as after going through the averment made in the plaint and the affidavit in support thereof and also after considering the documents produced, granted ad-interim relief in terms of Para 17-B of the plaint and also ordered to issue a warrant for the arrest of the defendant-vessel. It was further ordered by this Court that in the event of the defendant depositing in this Court a sum of 128032.40 US Dollars towards the satisfaction of the plaintiff's claim in the suit and cost of the suit and on payment of the poundage, if any, or furnishing security in the said sum of 128032.40 US Dollars towards the satisfaction of the plaintiff's claim in the suit together with interest at the rate of 24% p.a. from the date of filing of the suit till payment and/or realisation to the satisfaction of the Registrar of this Court as security, the said warrant of arrest would not be executed against the vessel SEA-RENOWN. 2.10. On 10th August 2001, Mrs. Paulami Sheth, learned advocate has filed her appearance on behalf of the defendant-vessel and also tendered a fax copy of the letter of undertaking issued by U.K. Mutual Steam Ship Assurances (Bermuda) Ltd dated 8th August 2001 securing the amount of the claim of the plaintiff in the suit and further undertaking to the court that they shall furnish a bank guarantee of a nationalised bank in favour of the Registrar of the court in terms of the order dated 3rd August 2001 within a period of 2 weeks from the date of execution of the letter of undertaking. On this basis, this court has passed an order on 10th August 2001 releasing the defendant vessel. The bank guarantee was accordingly filed before this court pursuant to the order dated 10.8.2001.

(3.) The defendant has not filed any written statement to the suit, however the aforesaid Civil Application was moved before this Court on 5th December 2001. It was stated, inter alia, in the said application that by a Chartered Party dated 11th July 2000 the defendant-vessel was chartered by one M/s. Geepee Shipping & Trading Inc. on certain terms and conditions. The Chartered Party, inter alia, provided that the Charterers shall pay for all the fuel. An on hire bunker survey was conduced on or about 15th July 2000 at the time of the delivery in order to ascertain the quantity of fuel on board the vessel. It was further stated that the Managers on behalf of the Charterers had instructed the Master that they intended to steam the sufficient quantity of bunkers at Suez in order to redeliver the vessel with about the same quantity as on delivery. It was further stated that at the time when the vessel was being redelivered another survey was conducted in order to ascertain the bunkers remaining on board the vessel at the time of re-delivery. The brokers representing the Charterers had thereafter sent a statement of account giving credit to the defendants in respect of the bunkers on board the vessel at the time of taking delivery and crediting Charterer's account in respect of the bunkers on board at the time of redelivery. 3.1. The defendant has further stated in the application that by a fax message dated 10th October 2000 the brokers representing the Charterers pointed out that the Charterers regretted the delay in settlement and would revert with the arrangement at the earliest. Ultimately, on or about 12th October 2000 the brokers representing the Charterers informed the defendants that G. Premjee Trading, Singapore, has been placed under interim judicial management. It was the say of the defendant that these facts were placed on record to confirm the contractual relationship between the defendant and the Charterers who had chartered the said vessel. 3.2. The defendant has further stated in the application that the reliance placed by the plaintiff on the receipt signed by the Master of the vessel was totally misplaced inasmuch as a standard printed form has been furnished to the Master of the vessel who had merely acknowledged the quantity of the bunkers supplied by the supplier. It was further stated that the plaintiff had made false statements on oath alleging that they were contacted by the brokers acting on behalf of the owners of the defendant-vessel. The defendant has further stated that they were not having any business dealing or contact with the plaintiff either directly or through any brokers. 3.3. It was further stated by the defendant that the plaintiff had deliberately and knowing fully well that the Geepee Shipping had gone into liquidation and was now attempting to recover the alleged claim from the defendant who were not responsible for any payment in respect of the purported invoices towards alleged supply of bunkers to the defendant-vessel. It was further stated that the contract if any for supply of bunkers was made on behalf of the Charterers and/or their Managers of the said vessel and the party who will be liable if at all was the Charterers and not the vessel. The defendant therefore submitted that the suit was liable to be dismissed for want of cause of action against the vessel. It was further stated that the plaintiff was entitled to maintain an action in rem only if there exists a privity of contract between themselves and the owners of the vessel. There was no such contract between the plaintiff and the owners and the suit was therefore liable to be dismissed against the vessel. The defendant has therefore claimed that they are entitled to unconditional discharge of the bank guarantee furnished in favour of the Registrar of this Court. 3.4. The defendant has further submitted that they have suffered enormous financial loss as a result of the order of arrest of the vessel passed by this Court at the instance of the plaintiff. In this connection, reliance was placed by the defendant on a memorandum of agreement dated 5th July 2001 whereby the defendant had agreed to sell and deliver the vessel to one M/s. Angsley Investments Ltd., on or before 15th August 2001. In terms of Clause 15 of the said MOA, the defendant had given notice of readiness at all times and last of such notice was given on or before 6th August 2001. The buyers rejected the said notice on the ground that the vessel was already under an order of arrest dated 3rd August 2001 passed by this Court. The buyers have pointed out that the defendants have committed a breach of clause 1 of the MOA wherein the defendants have agreed to sell free of all liens and encumbrances. The defendant had agreed to sell the said vessel for a sum of 1140704 US Dollars. The buyers had through their brokers by e-Mail dated 7th August 2001 terminated the contract and called upon the defendant to refund the deposit lying in Escrow account. Finally by an order addendum dated 11th August 2001 the defendant had reduced the sale price of the vessel at the rate of 162 US dollars for long Ton aggregating to 66320 US dollars. The defendant had to incur an operating cost at the rate of 3500 US dollars per day aggregating to 59500 US $. The defendant had to incur a sum of Rs. 3,86,800 equivalent to 8247.33 US $ towards supply of L.D.O., Port Barge charges and Port Sundries during the period when the vessel was held up. The defendant had also to incur a sum of 9162.95 US dollars towards the bank charges for arranging the necessary bank guarantee. Thus, according to the defendant they have suffered financial losses in the sum of 143230.28 US dollars and the same was claimed by way of damages from the plaintiff.