Aqua Marine Offshore Services v. Owners and Parties
2014-11-11
R.SUBBIAH
body2014
DigiLaw.ai
ORDER R. Subbiah, J. 1. Application No. 5772 of 2013 has been filed by the applicant/plaintiff seeking to grant an order of arrest of the Defendant Vessel DHARTI 24, in as is where is condition, together with her engines, gears, tackles, apparels, equipments, plant, machinery, furniture & fixtures and paraphernalia presently in Indian waters at the Port of Visakhapatnam, or wherever found within the territorial waters of India. Application No. 5922 of 2013 has been filed by the applicant/defendant praying to direct the parties to refer the present dispute to arbitration in terms of the Dispute Resolution clause in the Work Order dated 10.10.2011. 2. For the sake of convenience, the parties are referred to as per rankings in the suit. 3-1. It is the case of the plaintiff that the plaintiff - M/s. Aqua Marine Offshore Services is a registered Partnership Firm. They are the registered owner of Boat viz., MV AQUA PRIDE, which is a Multi Utility Survey, Security & Patrolling Boat. The said Boat was built in March 2011 for the plaintiff and it is having a Gross Tonnage of 60 M.T., Net Tonnage of 20 M.T. and Dead weight of 35 M.T. After taking delivery of the said Boat from the Nagapattinam Boat Yard in March, 2011, as a first business venture, the plaintiff entered into a Charter party contract on 10.10.2011 with one M/s. DHARTI DREDGING & INFRASTRUCTURE LTD (hereinafter referred to as 'owner of the defendant vessel'), having its registered and corporate office at Hyderabad. The owner of the defendant vessel issued a Work Order dated 10.10.2011 in favour of the plaintiff. Under the said Work Order, the said Multi Support Vessel/Boat AQUA PRIDE belonging to the plaintiff was hired by the owner of the defendant vessel, for the purpose of utilising it as a Tug for Crew/Manpower transportation, Anchor handling, towing, survey, fuel, Fresh water supply and any other assistance required for the dredgers Dharti 11 and Dharti 24, both owned by the owner of the defendant vessel, for their operations at Kyaukphyu (Myanmar) Port. The place Kyankphyu is a remote Island in Myanmmer with practically no proper infrastructure facilities and is also under military and defence control. 3-2.
The place Kyankphyu is a remote Island in Myanmmer with practically no proper infrastructure facilities and is also under military and defence control. 3-2. The dredgers viz., Dharti 24 and Dharti 11 belonging to the owners of the defendant vessel do not have power on its own and they are fully dependent on Boats which have to pull them for their dredging operations within the Port. The Work Order dated 10.10.2011 issued by the owner of the defendant vessel in favour of the plaintiff contains all the terms and conditions of the Charter party contract. Pursuant to the Work Order dated 10.10.2011 issued by the owner of the defendant vessel, the plaintiff's Multi Support Vessel/Boat AQUA PRIDE proceeded to the Port of Kyaukphyu (Myanmar) Port from Nagapattinam Port on 19.10.2011 to execute the contract entrusted to the plaintiff by the owners of the defendant vessel. Under the Work Order dated 10.10.2011, the owner of the defendant vessel agreed to pay a sum of Rs. 11,50,000/- as charter hire every month to the plaintiff from the date of delivery of the Multi Support Vessel/Boat AQUA PRIDE until re-delivery at the Port of Nagapattinam, after completing the operations at Port of Kyaukphyu (Myanmar). 3-3. As per the Contract, the owners of the defendant vessel will have to pay the plaintiff the charter hire from 19.10.2011, being the date on which the owner of the defendant vessel took delivery of the Multi Support Vessel/Boat AQUA PRIDE from the Port of Nagapattinam, till 21.10.2013. The plaintiff had raised several invoices from 18.10.2011 to 21.10.2013, for total sum of Rs. 2,75,38,082/-. But, the owner of the defendant vessel paid only a sum of Rs. 1,56,60,000/-, leaving the balance amount of Rs. 1,18,78,082/-, due and payable by the owner of the defendant vessel to the plaintiff. Due to the default committed by the owner of the defendant vessel in making the payment in accordance with the Work Order dated 10.10.2011, the plaintiff wanted to terminate the contract and requested the owner of the defendant to re-deliver the Multi Support Vessel/Boat AQUA PRIDE at Nagapattinam Port. But, the owner of the defendant vessel failed to re-deliver the Boat, instead they sought for extension of the contract by their email dated 17.10.2012, upto January 2013 or upto the Myanmar Project completion, whichever is earlier.
But, the owner of the defendant vessel failed to re-deliver the Boat, instead they sought for extension of the contract by their email dated 17.10.2012, upto January 2013 or upto the Myanmar Project completion, whichever is earlier. The owner of the defendant vessel has acknowledged their liability by their emails dated 08.07.2012, 12.12.2012, 13.12.2012, 10.02.2013 and 14.02.2013. In fact, in the email dated 12.12.2012, the owner of the defendant vessel has admitted that a sum of Rs. 47.9 lakhs is due and payable by them to the plaintiff, even though the plaintiff claim as on that date was much more. Apart from the letters acknowledging the liability, the owner of the defendant vessel has been promising to make the payment to the plaintiff, whenever the Managing Partner of the plaintiff contacted the owner of the defendant vessel requesting them to make the payment. Despite acknowledging their liability, the owner of the defendant vessel, all of a sudden, deliberately raised disputes relating to certain invoices on flimsy and untenable grounds, in order to avoid making the legitimate payment due to the plaintiff. The plaintiff has also been repeatedly requesting the owner of the defendant vessel to re-deliver the Multi Support Vessel/Boat AQUA PRIDE back to the plaintiff at Nagapattinam Port, including by way of email dated 17.03.2013. In spite of repeated reminders and requests, the owner of the defendant vessel did not re-deliver the Multi Support Vessel/Boat AQUA PRIDE, but continued to utilise the same till March, 2013, without paying the charter hire from December 2012 onwards. 3-4. Hence, the plaintiff was forced to negotiate with the owner of the defendant vessel. The Managing Partner of the plaintiff, personally went to Hyderabad on 20.09.2013 and met the Officials of the owner of the defendant vessel to sort out the differences. After negotiations, the plaintiff and the owner of the defendant vessel entered into a Memorandum of Understanding on 20.09.2013 and the Minutes of the same were duly signed by the plaintiff as well as the owner of the defendant vessel under which the plaintiff agreed to receive Rs. 20,14,765.47 from the owner of the defendant vessel towards full and final settlement of the balance dues, though the actual amount payable to the plaintiff was Rs. 1,18,78,082.
20,14,765.47 from the owner of the defendant vessel towards full and final settlement of the balance dues, though the actual amount payable to the plaintiff was Rs. 1,18,78,082. The plaintiff agreed to receive a lesser sum than what they are legally entitled as per the invoices only to minimise the losses which they have already suffered under the contract with the owner of the defendant vessel and to take back possession of the Boat MV AQUA PRIDE at the Port of Nagapattinam from the owner of the defendant vessel. 3-5. At the time of signing the Minutes of the Meeting i.e., on 20.09.2013, the plaintiff's vessel was at the Port of Kyaukphyu, Myanmar and it was the duty of the owner of the defendant vessel to re-deliver the vessel at the Port of Nagapattinam as per the Work Order dated 10.10.2011 issued by the owner of the defendant vessel. Since the owner of the defendant vessel failed to pay the re-delivery charges, the plaintiff had to bring the vessel MV AQUA PRIDE at its costs to the Port of Nagapattinam, incurring an additional sum of Rs. 3,78,082. The plaintiff sent several reminders dated 22.10.2013, 06.11.2013 and 22.11.2013, demanding the payment of a sum of Rs. 20,14,765.47 being the admitted debt of the owner of the defendant vessel as per the minutes of the meeting dated 20.09.2013 and Rs. 3,78,082/- towards the re-delivery charges for bringing the vessel MV AQUA PRIDE from the Port of Kyaukphyu, Myanmar to the Port of Nagapattinam. Instead of paying the admitted debt, the owner of the defendant vessel has now raised false, vexatious and frivolous disputes as if the plaintiff has to reimburse the owner of the defendant vessel certain charges. 3-6. The vessel MV AQUA PRIDE owned by the plaintiff was utilised for towage operations at the Port of Kyaukphyu, Myanmar. The defendant's Dredgers Dharti-24 and Dharti-11, both were fully dependent on the vessel MV AQUA PRIDE belonging to the plaintiff for their towage, crew men power for transportation, survey, fuel, fresh water transportation and anchor handling operations at Port of Kyaukphyu, Myanmar. Since the owner of the defendant vessel failed to make the payment, the plaintiff has filed the present suit for a judgment and decree for a sum of Rs.
Since the owner of the defendant vessel failed to make the payment, the plaintiff has filed the present suit for a judgment and decree for a sum of Rs. 24,96,538/- together with interest @ 24% p.a. from the date of the plaint till the date of realisation in full, and for arrest and sale of the defendant vessel Dharti 24, in as is where is condition, presently in Indian waters at Port of Visakapattinam or wherever available within the territorial waters of India. 3-7. Pending the suit, Application No. 5772 of 2013 has been taken out by the plaintiff for the arrest of the defendant's vessel Dharti 24 in as is where is condition together with her engines, gears, tackles, apparels, equipments, plant, machinery, furniture & fixtures and paraphernalia presently in Indian waters at the Port of Visakhapatnam, or wherever found with the territorial waters of India. 4-1. The defendant has filed a counter affidavit stating that the present suit is not maintainable because the contract is only between the plaintiff and M/s. Dharti Dredging & Infrastructure Ltd., an Indian Company; but the Vessel Dharti 24, which in fact is a dredger, is not owned either absolute or despondent ownership by M/s. Dharti Dredging & Infrastructure Ltd.; hence, the arrest of Vessel will not arise in this case. The Work Order issued by the defendant company contains a dispute resolution clause and any dispute shall be referred to Arbitration and the venue of the arbitration should be at Hyderabad. Further, the plaintiff has filed the suit for recovery of a sum of Rs. 23,92,847/-, whereas this defendant has, in fact, made several supplies for the maintenance of the plaintiff's tug boat, such as crew's boarding and lodging, travel and all the required fuel for the boat and there is a debit note raised by the defendant for a sum of USD 61,207.27 (approximately Rs. 38,00,000/-). Therefore, the plaintiff has to pay about Rs. 14,00,000/- to the defendant. 4-2. It is further stated in the counter by the defendant that this Court does not have territorial jurisdiction over this dispute and no part of the cause of action arose within the jurisdiction of this Court. As per Section 8 of the Arbitration and Conciliation Act 1996, any dispute arising out of a contract which consists an arbitration clause must be referred to Arbitrator.
As per Section 8 of the Arbitration and Conciliation Act 1996, any dispute arising out of a contract which consists an arbitration clause must be referred to Arbitrator. The plaintiff-company's Captain, who handles the vessel, had started to delay the progress of the work deliberately. Due to his non cooperation, the entire project was delayed and payments are still on hold with the principal employer namely M/s. Hyundai Heavy Industries and it has considerably increased the project cost and the defendant company is facing heavy monetary loss. The defendant company is registered in Hyderabad, Andhra Pradesh, and the Work Order was issued from the defendant's registered officer, so any legal proceeding should be in Andhra Pradesh. The defendant had also hired one more boat 'Profit Legend" from Singapore for support of the dredging operations in the same place. After the denial of the work by the plaintiff, the defendant had to hire one more vessel locally and finish survey work and it has incurred heavy monetary loss to the defendant. As per the Minutes of the Meeting, the defendant is not required to pay any amount to the plaintiff at this stage and the payment has to be made after the deduction only. The claim made by the plaintiff is illegal. Thus, the defendant sought for dismissal of the application. 5. The defendant has also taken out an Application No. 5922 of 2013 under Section 8 of the Arbitration and Conciliation Act, stating that as per Clause 9 of the Work Order dated 10.10.2011, it has been mutually agreed between the parties that all the disputes between the parties have to be resolved through Arbitration at Hyderabad. But, without invoking the above said Arbitration clause, the plaintiff has rushed to this Court and filed the present suit. Hence, the Application No. 5922 of 2013 has been filed by the defendant seeking to direct the parties to refer the present dispute to arbitration in terms of the Dispute Resolution clause in the Work Order dated 10.10.2011. 6. I have carefully heard the submissions made by the learned counsel for the plaintiff as well as the learned counsel for the defendant. 7. The plaintiff has filed the present the suit under admiralty jurisdiction for the recovery of a sum of Rs.
6. I have carefully heard the submissions made by the learned counsel for the plaintiff as well as the learned counsel for the defendant. 7. The plaintiff has filed the present the suit under admiralty jurisdiction for the recovery of a sum of Rs. 24,76,609/- together with interest and cost from the owner of the defendant vessel and for arrest and sale of the defendant vessel Dartti 24, which is now lying at the Port of Visakhapatnam, within the territorial waters of India. The plaintiff's MV AQUA PRIDE was hired by M/s. Dharti Dredging & Infrastructure Ltd., by way of Work Order dated 10.10.2011, in respect of the dredging operations at Kyaukphyu Port in Myanmar. For the period from 18.10.2011 and 21.10.2013, the plaintiff has raised several invoices for a total sum of Rs. 2,75,38,082. The owner of the defendant vessel paid only a sum of Rs. 1,56,60,000/-, leaving a sum of Rs. 1,18,78,082/- due and payable by the owner of the defendant vessel to the plaintiff. The plaintiff requested the owner of the defendant vessel to re-deliver the boat MV AQUA PRIDE to the plaintiff at port at Nagapattinam. But, the owner of the defendant vessel failed to re-deliver the Boat, instead they sought for extension of the contract by their email dated 17.10.2012, upto January 2013 or upto the Myanmar Project completion, whichever is earlier. The owner of the defendant vessel has acknowledged their liability by their emails dated 08.07.2012, 12.12.2012, 13.12.2012, 10.02.2013 and 14.02.2013. In fact, in the email dated 12.12.2012, the owner of the defendant vessel has admitted that a sum of Rs. 47.9 lakhs is due and payable by them to the plaintiff, even though the plaintiff claimed as on date much more amount. Since the owner of the defendant vessel did not re-deliver the boat MV AQUA PRIDE, the plaintiff was forced to negotiate with the owner of the defendant vessel. After the negotiations, the Minutes of the Meeting was jointly singed by the Managing Partner of the Plaintiff and owner of the defendant vessel on 20.09.2013, under which the plaintiff agreed to receive Rs. 20,14,765.47 from the owner of the defendant vessel towards full and final settlement of the balance dues, though the actual amount payable to the plaintiff was Rs. 1,18,78,082.
20,14,765.47 from the owner of the defendant vessel towards full and final settlement of the balance dues, though the actual amount payable to the plaintiff was Rs. 1,18,78,082. That part, since the owner of the defendant vessel failed to pay the re-delivery charges, the plaintiff had to bring the vessel MV AQUA PRIDE at its cost to the Port of Nagapattinam, incurring an additional sum of Rs. 3,78,082. The plaintiff sent several reminders dated 22.10.2013, 06.11.2013 and 22.11.2013, demanding the payment of a sum of Rs. 20,14,765.47 being the admitted debt of the owner of the defendant vessel as per the minutes of the meeting dated 20.09.2013 and Rs. 3,78,082/- towards the re-delivery charges for bring the vessel MV AQUA PRIDE from the Port of Kyaukphyu, Myanmar to the Port of Nagapattinam. Since the defendant has failed to make the payment, the present suit has been filed by the plaintiff for the reliefs as stated supra. Pending the suit, the plaintiff has filed the application for arrest of the vessel. 8. According to the learned counsel for the defendant, they have made several supplies for the maintenance of the plaintiff's tug boat, such as crew's boarding and lodging, travel and all the required fuel for the boat and there is a debit note raised by the defendant for a sum of USD 61,207.27 (approximately Rs. 38,00,000/-). Therefore, the plaintiff has to pay about Rs. 14,00,000/- to the defendant. Since there is a dispute resolution clause in the Work Order dated 10.10.2011, the present dispute has to be referred to the Arbitration. In view of the arbitration clause found in the Work Order, the present suit and the application filed by the plaintiff are not legally sustainable. Further, the learned counsel for the defendant submitted that since it is an Indian vessel, the arrest of the vessel is not necessary. It is further submitted by the learned counsel for the defendant that the defendant's vessel is now lying at the port of visakhapatnam and this Court has no territorial jurisdiction over the dispute and any legal proceedings can be initiated only within the jurisdiction of Andhra Pradesh. According to the learned counsel for the defendant, by dismissing the application filed by the plaintiff to arrest the vessel, the dispute shall be referred to the arbitration, in terms of the dispute resolution clause in the Work Order dated 10.10.2011. 9.
According to the learned counsel for the defendant, by dismissing the application filed by the plaintiff to arrest the vessel, the dispute shall be referred to the arbitration, in terms of the dispute resolution clause in the Work Order dated 10.10.2011. 9. But, it is the reply of the learned counsel for the plaintiff that the plaintiff's claim is an action in rem as the claim is made against the defendant vessel; since it is an action in rem, any arbitration clause in the agreement between the parties is not applicable. The learned counsel for the plaintiff further submitted that a part of cause of action arose at Chennai within the jurisdiction of this Court and the claim is made against the vessel; hence, the suit is maintainable under the admiralty jurisdiction of this Court. In this regard, the learned counsel for the plaintiff has relied upon the judgment reported in AIR 1993 SC 1014 (M.V. Elisabeth v. Harwan Investment & Trading Pvt. Ltd.). It is further submission of the learned counsel for the plaintiff that the vessel Dharti 24 is not an Indian vessel and it is flying Singapore Flag and not Indian flag and for all legal purposes, it is a foreign flag vessel. Even if it is an Indian vessel, there is no bar for arrest of the Indian flag vessel. In support of this contention, the learned counsel for the plaintiff relied upon the judgment reported in 2008 (1) BOM Cr 143 (Crown Maritime Company India Ltd. v. Barge Salina Li and others). With regard to admiralty jurisdiction of this Court, the learned counsel for the plaintiff submitted that the plaintiff is carrying on business at Chennai and since a part of the cause of action arose within the jurisdiction of this Court, as per Section 3(15) of the Merchant Shipping Act, under admiralty jurisdiction, this Court can order of arrest of the defendant vessel, which is now lying at the port of Visakhapatnam. 10. Further, the learned counsel for the plaintiff, by relying upon the unreported judgment of a Division Bench of the Bombay High Court in Appeal No. 59 of 2000, in the case of Mr. Kamla Mant Duhe and another v. M.V. Umand, a sea going motor vessel and all person interested therein and others, submitted that there is no bar for arrest the Indian vessel under the admiralty jurisdiction.
Kamla Mant Duhe and another v. M.V. Umand, a sea going motor vessel and all person interested therein and others, submitted that there is no bar for arrest the Indian vessel under the admiralty jurisdiction. Thus, the learned counsel for the plaintiff prayed for the arrest of the vessel. 11. In view of the submissions made on either side, the following question fall for consideration- "(i) Since the Work Order dated 10.10.2011 contains a clause for arbitration, whether the claim made by the plaintiff under the admiralty jurisdiction of this Court is maintainable? (ii) Whether the order to arrest could be passed in respect of the vessel flying with the Indian flag? (iii) Since the vessel is birth at Visakhapatnam, whether this Court can order for arrest of the vessel under admiralty jurisdiction." 12-1. Question No. 1:- It is the submission of the learned counsel for the defendant that since there is a dispute between the plaintiff and the owner of the defendant vessel in respect of the claim made by the plaintiff, this Court, by dismissing the application filed by the plaintiff, may refer the present dispute to arbitration in terms of the dispute resolute clause in the Work Order dated 10.10.2011. But, it is the submission of the learned counsel for the plaintiff that the present claim of the plaintiff is an action in rem as the claim is made against the defendant vessel. Therefore, being an action in rem, the arbitration clause is not applicable to the present case. In this regard, the learned counsel for the plaintiff has also relied upon the judgment delivered by a Full Bench of Bombay High Court reported in 2007(2) Arb. LR 104 (Bombay) in the case of J.S. Ocean Liner LLC v. M.V. Golden Progress and anr. The relevant portions in the said judgment read as follows- "31. Section 9(ii)(b) of Act of 1996 cannot be construed so as to read into it in rem jurisdiction. This provisions does not cover the arrest of the ship or the keeping of a ship under arrest in the exercise of the court jurisdiction in rem at all. What is provided by Section 9(ii)(b) is securing the amount in dispute in the arbitration by way of an interim measure which in our considered view does not include the arrest of vessel. ....... 78.
What is provided by Section 9(ii)(b) is securing the amount in dispute in the arbitration by way of an interim measure which in our considered view does not include the arrest of vessel. ....... 78. We shall, accordingly, articulate our conclusions thus: (i) An application under Section 9 of the Arbitration and Conciliation Act, 1996 is not maintainable for the arrest of the vessel for obtaining security of an award that may be made in arbitration proceedings. The view of the contrary in M.V. Indurva Valley, to that extent is overruled. (ii) An action in rem (in admiralty jurisdiction) for recovery of the claim and arrest of the vessel where they parties have agreed to submit the dispute to arbitration can be maintained and in such case if by way of an interim measure, the vessel is arrested or the security provided to obtain the release of the vessel, matter shall proceed in accord with Article VII of the International Convention on Arrest of Ships, 1999. (iii) If the proceedings are brought within the time so ordered by the court before the arbitral tribunal, any final decision resulting therefrom shall be recognised and given effect with respect to the arrested ship or to the security provided in order to obtain its release provided that the defendant has been given reasonable notice of such proceedings and a reasonable opportunity to present the case for defence and in accord with the provisions contained in Arbitration and Conciliation Act, 1996. (iv) With regard to Clauses (ii) and (iii), it is, however, clarified that retention of security shall remain a matter of discretion and it shall be for the court to pass appropriate order in that regard after taking into consideration all relevant circumstances. Let the Notice of Motion Nos. 2780 of 2005 and 3287 of 2005 be posted before the Admiralty Judge for disposal in the light of our answer to the reference." 12-2. The claim of the plaintiff is a Maritime claim under Article 1(j) of the International Convention on arrest of the Ships 1999 and the International Conventions have been made applicable as held by the Hon'ble Supreme Court in the case of M.V. Elisabeth and others v. Harwan Investment & Trading Pvt. Ltd. reported in AIR 1993 SC 1014 .
The claim of the plaintiff is a Maritime claim under Article 1(j) of the International Convention on arrest of the Ships 1999 and the International Conventions have been made applicable as held by the Hon'ble Supreme Court in the case of M.V. Elisabeth and others v. Harwan Investment & Trading Pvt. Ltd. reported in AIR 1993 SC 1014 . In the said Judgment, the Hon'ble Supreme Court has listed out various claims falling under the admiralty jurisdiction of the English High Court, by referring Sub-section 7 of Section 20 of the Supreme Court Act, 1981 (U.K.). The relevant portions in the said judgment read as follows- "39. Section 20 of the Supreme Court Act, 1981 enumerates various questions and claims falling under the admiralty jurisdiction of the English High Court. Apart from matters covered by the Merchant Shipping Acts 1894 to 1979 [referred to in sub-sec (3)] and certain other matters, various questions and claims are enumerated in sub-sec (2). They include: "any claim for loss of or damage to goods carried in a ship; any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; any claim for damage done by a ship. ............... 40. Sub-section (7) of this section specifically provides that the admiralty jurisdiction of the High Court extends to "all ships or aircrafts, whether British or not and wherever the residence or domicile of their owners may be, and to all claims wherever arising". It reads: "Sub-section(7). The proceeding provisions of this section apply- (a) to (i).......... (j) any claim in the nature of towage in respect of a ship or an aircraft. ..........................." In the instant case, the claim was made by the plaintiff in the nature of towage in respect of the vessel Dharti 24 and as such, the claim of the plaintiff falls under the category of (j) to sub-section 7 of Section 20 of Supreme Court Act, 1981 (U.K.), which says that any claim in the nature of towage in respect of a Ship or an aircraft is a maritime claim. Hence, the claim made by the plaintiff is an action in rem. When the claim made is an action in rem, as the claim is made against the defendant vessel, any arbitration clause between the parties is not applicable to the present case.
Hence, the claim made by the plaintiff is an action in rem. When the claim made is an action in rem, as the claim is made against the defendant vessel, any arbitration clause between the parties is not applicable to the present case. In the Judgment of the Hon'ble Supreme Court in 2011-3-L.W. 149 : (2011)5 SCC 532 (Booz Allen and Hamilton Inc v. SBI Home Finance Ltd. and others), it has been held as follows- "37. It may be noticed that the cases referred to above related to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject-matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, no merely among themselves but also against all person at any time claiming an interest in that property. Correspondingly, a judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and a judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (vide Black's Law Dictionary). 38. Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable. 39. That Act does not specifically exclude any category of disputes as being not arbitrable. Sections 34(2)(b) and 48(2)of the Act however make it clear that an arbitral award will be set aside if the court finds that "the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force.". 40. Russell on Arbitration (22nd Edn.) observed thus (p.28, Para 2.007): "Not all matters are capable of being referred to arbitration.
40. Russell on Arbitration (22nd Edn.) observed thus (p.28, Para 2.007): "Not all matters are capable of being referred to arbitration. As a matter of English law certain matters are reserved for the court alone and if a tribunal purports to deal with them the resulting award will be unenforceable. These include matters where the type of remedy required is not one which an Arbitral Tribunal is empowered to give." The subsequent edition of Russell (23rd Edn., P.470, Para 8.043) merely observes that English law does recognise that there are matters which cannot be decided by means of arbitration." A reading of the above judgment would show that all disputes relating to right in rem are required to be adjudicated only by Courts and public tribunals, being unsuited for private arbitration. In the instant case, since the claim is made by the plaintiff against the defendant vessel, it is only in action in rem and it is not an action in personam and therefore, the arbitration clause in the work order is not applicable to the present case. 12-3. In this regard, one more reference could be placed in the judgment of the Hon'ble Supreme Court reported in 2011-3-L.W. 149 : (2011)5 SCC 532 (Booz Allen and Hamilton Inc v. SBI Home Finance Limited and others), wherein it has been held as follows- "37. It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and Judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (Vide : Black's Law Dictionary). 38.
Correspondingly, judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and Judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (Vide : Black's Law Dictionary). 38. Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to sub-ordinate rights in personam arising from rights in rem have always been considered to be arbitrable. 39. The Act does not specifically exclude any category of disputes as being not arbitrable. Sections 34(2)(b) and 48(2)of the Act however make it clear that an arbitral award will be set aside if the court finds that "the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force." 40. Russell on Arbitration [22nd Edition] observed thus [page 28, para 2.007]: "Not all matter are capable of being referred to arbitration. As a matter of English law certain matters are reserved for the court alone and if a tribunal purports to deal with them the resulting award will be unenforceable. These include matters where the type of remedy required is not one which an arbitral tribunal is empowered to give." The subsequent edition of Russell [23rd Edition, page 470, para 8.043] merely observes that English law does recognize that there are matters which cannot be decided by means of arbitration." From the above judgment, it could be seen that a right in rem is a right exercisable against the world at large; whereas a right in personam is an interest protected solely against specific individuals. Action in rem refers to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. In the instant case, as referred to above, the claim has been made by the plaintiff only as against the vessel of the defendant. If any other person, who is having interest and claim as against the vessel, can always intervene in the matter. Therefore, it is an action in rem.
In the instant case, as referred to above, the claim has been made by the plaintiff only as against the vessel of the defendant. If any other person, who is having interest and claim as against the vessel, can always intervene in the matter. Therefore, it is an action in rem. When it is an action in rem, the arbitration clause in the Work Order cannot be invoked at this stage. 12-4. Further, from the dictum laid down in the M.V. Elisabeth case (referred to above), it could be seen that the action in rem will be converted into an action in personam, if the owner of the vessel subjects to the jurisdiction and obtains the release of the vessel by depositing the security. Therefore, in the event of the owner of the vessel obtained release of the vessel by depositing the security, the action in rem will be converted into action in personam. Only in that situation, the question of referring the dispute to the arbitration in terms of the dispute resolution clause in the Work Order dated 10.10.2011 will arise. Therefore, the prayer made by the learned counsel for the defendant in Application No. 5922 of 2013 under Section 8 of the Arbitration and Conciliation Act to refer the present dispute to the Arbitration in terms of the dispute resolution clause in the Word Order dated 10.10.2011, cannot be entertained at this stage. 13. Question No. 2:- It is the submission of the learned counsel for the defendant that since the vessel is an Indian vessel, there is no need to arrest the vessel as the other properties of the owner of the vessel are available in India and hence, even in case if the suit is decreed, there will not be any problem in executing the decree, as against the owner of the vessel. But, while dealing with the similar issue, a Division Bench of the Bombay High Court in the judgment reported in 2008 (1) BOM Cr 143 in the case of Crown Maritime Company India Ltd. v. Barge Salina Li and others, had held that there is no legal bar for arrest of Indian Flag Vessel. When there is no legal bar to arrest of the Indian Vessel, the submission made by the learned counsel for the defendant that there is no need to arrest the Indian vessel cannot be appreciated.
When there is no legal bar to arrest of the Indian Vessel, the submission made by the learned counsel for the defendant that there is no need to arrest the Indian vessel cannot be appreciated. However, I find that in the instant case, the defendant vessel is flying the Singapore flag and not Indian flag and for all legal purposes, it is only a foreign flag vessel. Therefore, the submission made by the learned counsel for the defendant has no relevance to the subject matter of the present suit. 14-1. Question No. 3:- It is another submission of the learned counsel for the defendant that the defendant's company was registered at Hyderabad and Work Order was also issued at Defendant's office at Hyderabad in Andhra Pradesh and vessel is presently birthed at visakhapatnam Port in Andhra Pradesh; therefore, this Court cannot order for arrest of the vessel under admiralty jurisdiction. 14-2. But, I find from the materials placed before this Court that the plaintiff-company is carrying on business at Chennai and invoices were also raised by the plaintiff on the owners of the defendant vessel only from Chennai and payments for the invoices have to be made by the owners of the defendant vessel only to the plaintiff's nominated Bank Account at Chennai. Therefore, a part of cause of action for filing the present suit arose only within the jurisdiction of this Court. When a part of cause of action arose within the jurisdiction of this Court, this Court can order for arrest of the vessel, which is birthed at visakhapatnam Port, in admiralty jurisdiction. In this regard, a reference could be placed in the judgment in M.V. Elisabeth case (referred to above). The relevant portion in the said judgment is as follows- "78. The Merchant Shipping Act, 1958 contains various provisions to enforce territorial jurisdiction. The Act being essentially regulatory in character, the various authorities, tribunals and Courts entrusted with the administration and enforcement of its provisions are specifically stated. The High Court is defined under Section 3(15) as follows- "3(15). "High Court", in relation to a vessel, means the High court within the limits of whose appellate jurisdiction- (a) the port of registry of the vessel is situate; (b) the vessel is for the time being; or (c) the cause of action wholly or in part arises; .............
The High Court is defined under Section 3(15) as follows- "3(15). "High Court", in relation to a vessel, means the High court within the limits of whose appellate jurisdiction- (a) the port of registry of the vessel is situate; (b) the vessel is for the time being; or (c) the cause of action wholly or in part arises; ............. (4)(a) International Convention relating to the Arrest of Seagoing Ships, Brussels, 10 May 1952 (IMC); (b) International Convention in Certain Rules concerning Civil Jurisdiction in Matters of Collision, Brussels, 10 May 1952 (IMC); (c) International Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision, Brussels, 10 May 1952 (IMC): and (d) International Conventions for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages, Brussels, 10 April 1926, and the Revised Convention on Maritime Liens and Mortgages, Brussels, 29 May 1967 (MC). Accordingly, a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises." 14-3. Therefore, following the dictum laid down in the above judgment, I am of the opinion that in the instant case, even though the vessel is now lying at the Port at Visakhapatnam, as a part of cause of action arose at Chennai, this Court can order for arrest of the vessel in the admiralty jurisdiction. 14-4. In this regard, reference could be placed in one more judgment (unreported) of a Division Bench of the Bombay High Court in Appeal No. 59 of 2000, in the case of Mr. Kamla Mant Duhe and another v. M.V. Umand, a sea going motor vessel and all person interested therein and others, wherein it has been held as follows:-- "46............We are, therefore, unable to accept the contention that merely because Article 214 states that there shall be a High Court for each State, and the Bombay High Court under the appropriate statute is declared to be the High Court for the State of Maharashtra, the jurisdiction exercisable by this High Court in Admiralty is abridged by Article214.
On the contrary, we are of the view that, in the absence of any clear cut provision in the Constitution or in a law made by the appropriate Legislature, the jurisdiction exercisable by this Court, atleast in Admiralty, continued as before under the Constitution and continues to be the same. Perhaps, it has been improved upon and expanded by the decision under the jurisdiction of the Supreme Court in M.V. Elizabeth (supra), but not whittled down, at any rate. 47. Another reason why we are not inclined to accept the contention of the defendants that the territorial jurisdiction of the State delimits the Admiralty jurisdiction of this Court, is that ships float on water and except when they are in dry dock, the Admiralty jurisdiction is exercisable with regard to ocean going ships. The power to arrest a ship is an incident of sovereignty. Sovereignty in this country resides in the people or country as a whole and not in any of the States. Though an imperfect federal pattern of policy has been adopted under the Constitution, the residuary powers are left with the Parliament and no State is sovereign by itself, though empowered to exercise such sovereign power as vested in it by the Constitution. ................ 49. Parliament has also passed the "Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976" in exercise of its legislative powers. Section 3 of this Act declares the sovereignty of India over the territorial waters of India and reads as under- "3. Sovereignty over, and limits of, territorial waters--(1) The sovereignty of India extends and has always extended to the territorial waters of India (hereinafter referred to as the territorial waters) and to the seabed and subsoil underlying, and the air space over such waters. (2) The limit of the territorial waters is the line every point of which is at a distance of twelve nautical miles from the nearest point of the appropriate baseline. (3) Notwithstanding anything contained in sub-section (2), the Central government may whenever it considers necessary so to do having regard to International Law and State practice, alter, by notification in the Official Gazette, the limit of the territorial waters.
(3) Notwithstanding anything contained in sub-section (2), the Central government may whenever it considers necessary so to do having regard to International Law and State practice, alter, by notification in the Official Gazette, the limit of the territorial waters. (4) No notification shall be issued under sub-section (3) unless resolutions approving the issue of such notification are passed by both Houses of Parliament." We are concerned with an ocean going ship which has to be berthed in the territorial waters. Its arrest can only be ordered by the authority which exercises sovereignty over the territorial waters. The provisions of the Constitution read with the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, make it clear that it is the Union of India, which exercises sovereignty over the territorial waters and law underneath them. Conversely, a State exercises no sovereignty over the territorial waters or the land thereunder. Thus, we are unable to accept the contention of Mr. Vyas that the Admiralty law jurisdiction for arrest of the ship can only be exercised by the High Court within the limits of the territorial jurisdiction. All limits of territorial jurisdiction of a Court are prescribed with reference to the land borders of the State. Nothing is shown to us that there is any concept of territorial waters of the State under the Indian Constitution; nor are we able to imagine what could be the territorial limits of a State over the sea adjoining it. May be, it is capable of artificial delimitation by a statute, but no such statute is shown to be applicable, barring the Merchant Shipping Act, 1958, which, we have already held does not apply to the case of the plaintiffs. 50. In Admiralty law, as developed under the International Law Maritime, the arrest of a foreign sea going vessel was a necessary concomitant of the exercise of sovereign power and could be exercised over a ship found in the territorial waters of a sovereign State. It is precisely for this reason that all ships within the territorial waters of India were liable to be arrested in the exercise of Admiralty jurisdiction of all High Courts exercising such jurisdiction as part of the sovereign powers of the country.
It is precisely for this reason that all ships within the territorial waters of India were liable to be arrested in the exercise of Admiralty jurisdiction of all High Courts exercising such jurisdiction as part of the sovereign powers of the country. We see, neither in the Constitution nor in any statute made by a competent Legislature, other than the Merchant Shipping Act, 1958, any limitation upon the exercise of such jurisdiction. We have already held that the Merchant Shipping Act, 1958 does not apply herein." In the above said the judgment, the Bombay High Court by holing that it is only the Union of India, which exercises sovereignty over the territorial waters and land underneath them, and the State does not exercise sovereignty over the territorial waters or land thereunder, rejected the contention that the Admiralty Jurisdiction for arrest of the ship can only be exercised by the High Court within the limits of the territorial jurisdiction. In the light of the above said dictum, I am of the opinion that in admiralty jurisdiction, this Court can entertain the present suit and order for arrest of the vessel, which is now lying in the port at Visakhapatnam or wherever found within the territorial waters of India. In view of the above, the application filed by the plaintiff is liable to be allowed. For the foregoing reasons, the Application No. 5772 of 2013 is allowed as prayed for. Registry is directed to issue warrant of arrest of the vessel DHARTI 24. Application No. 5922 of 2013 is dismissed.