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2002 DIGILAW 295 (DEL)

MMTC LIMITED v. SKATE SHIPPING COMPANY S. A.

2002-02-28

J.D.KAPOOR

body2002
J. D. Kapoor ( 1 ) BOTH the parties appear to be in catch 22 situation. ( 2 ) PETITIONER s concern is to redeem the cargo worth 4. 5 million dollars or its value. Respondent wants its vessel back Chinese Government wants its pound of flesh for retrieving the vessel and the cargo from buccaneers who are commonly known as high sea pirates. Chines authorities recognize only vessel owner. Diplomatic efforts of Government of India to get back the cargo have borne no fruits. On the representation of the petitioner respondent has been restrained from receiving the sale/auction proceeds. This order was obtained on the expectation that Chinese Authorities will release the cargo to the petitioner through the offices of the government of India, Petitioner was either over-confident from receiving the sale/auction proceeds. On the other hand respondent has under the garb of the restraint order obtained by the petitioner shown his inability to furnish the security without being allowed to receive the sale proceeds of the cargo. ( 3 ) THE facts relevant for resolving the dilemma of the parties need to be put in brief. ( 4 ) THE services of the respondent were engaged by mmtc Limited for carrying sugar worth 4. 5 million dollars to Thailand. The vessel was pirated on the Chinese High seas and was retrieved by the Chinese Government in october, 1995. The Chinese Government demanded a sum of 3,50,000 US $ for releasing the cargo and made it a condition that the cargo and the vessel would only be released to the owner of the vessel. The petitioner requested the respondent to get the vessel released and also offered to make payment of the said amount in the event the vessel owner initiated the process of releasing the vessel and the cargo. The demand was made by the chinese Government in the year 1996. However the cargo could not be released since as per the Public Security bureau of China the vessel owner was not coming forward. The Indian Embassy informed the MMTC that since the vessel owner had not come forward for the release of the vessel, the Chinese Government would auction the cargo and adjust the proceeds towards their demand. However the cargo could not be released since as per the Public Security bureau of China the vessel owner was not coming forward. The Indian Embassy informed the MMTC that since the vessel owner had not come forward for the release of the vessel, the Chinese Government would auction the cargo and adjust the proceeds towards their demand. ( 5 ) ACCORDING to the respondent since it was restrained by way of an ex parte order passed in the instant petition restraining it or its agents or any one claiming under it from interfering in the due discharge and/or disposal of cargo lying in vessel on board in china, he did not approach the Chinese Government for release/sale/auction of the cargo. ( 6 ) THE petitioner has made a claim before the arbitrator for the value of the cargo whereas the respondent has made a counter claim for the freight amount. ( 7 ) HOWEVER during the hearing of the petition the respondent contended that since the respondent has not acquired any right over the cargo it would not oppose the reliefs prayed for but there should be a security for the freight due to the respondent. On the basis of this contention an order was passed on 2. 11. 97 whereby the petitioner was directed to give a Bank Guarantee to the satisfaction of the Registrar in the sum of 6,80,000 US $ within 60 days. At the same time the petitioner was given the liberty to take all steps before the concerned authorities in China for the discharge and delivery of the cargo. Availing this liberty the petitioner approached the Public Security Bureau, Ministry of China but it refused to entertain the petitioner as the cargo owner because as per their rules they only recognise the vessel owner and not the cargo owner. As a consequence the petitioner moved the instant petition bearing OMP 157/97 seeking the following reliefs:- (A) to direct the Respondent to furnish a Bank guarantee or an acceptable tangible security in regard to the claim for a sum of rs. 20,00,00,000/- in favour of the petitioner. (b) To restrain the respondent from receiving the sale/auction proceeds from the Public Security bureau, Ministry of China. (c) To direct the respondent to give no objection to the petitioner to receive the sale proceeds from the Public Security Bureau, Ministry of China. 20,00,00,000/- in favour of the petitioner. (b) To restrain the respondent from receiving the sale/auction proceeds from the Public Security bureau, Ministry of China. (c) To direct the respondent to give no objection to the petitioner to receive the sale proceeds from the Public Security Bureau, Ministry of China. ( 8 ) IT is on account of the relief obtained by way of prayer (b) that the respondent contends that he would have been in contempt had he approached the Chinese authorities for release of the sale proceeds of the cargo. ( 9 ) SINCE the disputes of the parties are pending adjudication before the Arbitrator and the petitioner has also been directed to furnish the Bank Guarantee for securitizing the claim of the respondent towards freight charges, the interests of the petitioner are being jeopardised as the respondent has been restrained from receiving the sale or auction proceeds from the Public security Bureau. ( 10 ) ONCE, the Chinese Authorities made it clear to the respondent that they would release the cargo as well as the ship only to the vessel owner it was expected from the respondent to approach this Court to get himself relieved from the restraint order so as to show its bonafides that it was always ready to get the cargo released. The scope of Section 9 of the Arbitration Act is very limited and can be invoked by any of the party to the agreement only for interim protection, till the final decision of the Arbitrator. ( 11 ) KEEPING in view the rules and laws of the chinese Government it would be in interests of both the parties to first relieve the respondent from the restraint order which was obtained by the petitioner and has proved to his detriment from receiving sale or auction proceeds from the Public Security Bureau and at the same time direct the respondent to furnish the Bank Guarantee for the approximate value of the cargo in favour of the petitioner after receiving the sale or auction proceeds from the said Bureau as the disputes regarding claim and counter claims of the parties are pending adjudication before the Arbitrator. However the concern of the respondent that he may not receive the counter claim if awarded by the petitioner is misplaced. However the concern of the respondent that he may not receive the counter claim if awarded by the petitioner is misplaced. The petitioner is a Government of India Undertaking and in a better position to make the payment, of the counter-claim. On the contrary the petitioner runs a graver risk of not getting his money in the event of award being passed in its favour as the respondent is a foreign company and has neither roots nor presence in India. ( 12 ) CONSEQUENTLY orders by way of interim protection are passed: (I) That the interim order in terms of prayer (b) of the petition stands vacated. (ii) The respondent shall approach the Public security Bureau for the sale and auction of the cargo within four months and shall furnish a Bank Guarantee of rs. 17. 5 crores being the price of the cargo within one month therefrom failing which the Bank Guarantee furnished by the petitioner in the petition bearing OMP 102/96 filed by the respondent shall stand released. ( 13 ) IT is made clear that the limit of five months provided to the respondent to receive the sale/auction proceeds and furnish the Bank Guarantee shall be irrespective of the fact whether he receives the sale/auction proceeds during the said period or not. Similarly the petitioner shall also not be entitled to claim the discharge of the Bank Guarantee if it sets up a claim of the cargo before the Chinese Authorities. ( 14 ) WITH these observations both the petitions stand disposed off.