Judgment 1 The issue that arises from the Sheriff Report No.24 of 2012 dated 5.7.2012 is “What is the quantum of poundage that is payable by the plaintiffs to the Sheriff of Mumbai?” 2 Rule 474, 475 & 476 of the Bombay High Court (O.S) Rules provide as under:- “474. Liability for Sheriff''s poundage - (1) In cases where a person is arrested or property is attached, the party or the Advocate on record for the party at whose instance the arrest was made or the attachment levied shall be liable to the Sheriff for his fees or poundage, as the case may be. (2) Any amount received by the judgment-creditor from the judgment-debtor in full or part satisfaction of a decree or order in respect of which a warrant of arrest or a warrant of attachment has been executed shall be presumed to have been realised under the warrant, if the warrant is merely suspended and not dead. (3) Where the execution-creditor or his Advocate on record receives directly any installment or other sum ordered to be paid by the Judgment-debtor in full or part satisfaction of the decree or order, he shall file a precipe in the Sheriff' office informing him of the payment made. (4) The Advocate on record shall be responsible for filing this precipe, if the payment has been made through his office or he has been informed of it by the execution-creditor. R.475. Advocate to file in Sheriff's Office copy of order releasing judgment-debtor or raising attachment. When an order is passed releasing a judgment-debtor or raising an attachment, the Advocate on record for the party at whose instance the order is made shall file a certified copy thereof in the Sheriff' office and shall inform the Sheriff whether there has been any satisfaction, compromise or settlement and, if so, for what amount and also whether poundage has been paid in respect thereof. R.476. Satisfaction not to be entered without Sheriff' certificate. When warrants in execution have been lodged with the Sheriff, no satisfaction in full or in part of any decree or order in any suit or matter shall be entered thereon without the production of a certificate of the Sheriff that no poundage is due to him.” Table of fees payable to the Sheriff of Mumbai provides as under:- “…......... When warrants in execution have been lodged with the Sheriff, no satisfaction in full or in part of any decree or order in any suit or matter shall be entered thereon without the production of a certificate of the Sheriff that no poundage is due to him.” Table of fees payable to the Sheriff of Mumbai provides as under:- “…......... 5 Poundage on every debt levied by execution including an attachment before judgment or in the event of the 1% claim being satisfied, compromised or settled upon the amount of such satisfaction, compromise or settlement.” 3 There is no dispute between the parties that the plaintiffs' claim has been satisfied/compromised/settled. The settlement agreement on which the plaintiffs and the Sheriff office rely is one dated 31.5.2012 (The settlement agreement) which is annexed at Exhibit-A to the affidavit-in-reply dated 23.7.2012 of one Ravindra Kumbhar, the Constituted Attorney of the plaintiff. This affidavit has been filed in reply to the Sheriff's report. 4 The plaintiffs also agree that poundage at 1% on the compromised or settled amount is payable to the Sheriff. 5 The facts which need to be mentioned in brief as it appears from the settlement agreement entered into between the parties thereto are as under:- (a) The plaintiffs by a charter party on an amended NYPE46 form had taken on sub-charter the vessel m.v Nasco Diamond (the said vessel) from one Da Sin Shipping Pte Ltd (Da Sin) for about 11 months/13 months in charterers' option. By a charter party evidenced by a fixture recap dated 6.10.2010 the plaintiffs as disponent owners gave on sub-charter the said vessel to one Tongli Shipping Co. Ltd., Samoa (Tongli) for one time charter trip from Southeastern Asia to China/Japan range for about 2535 days to carry nickel ore in bulk. (b) On or about 9.11.2010 the said vessel sank while she was on a voyage from Kolonodale to Lianyungang, China. There were totally 25 crew members on board of which 3 were saved and the rest were missing or presumed dead. China Shipping Mutual Assurance Association (CPI) being the protection and indemnity insurer of head owners, viz. YDM Shipping Company Ltd were notified the loss. There were totally 25 crew members on board of which 3 were saved and the rest were missing or presumed dead. China Shipping Mutual Assurance Association (CPI) being the protection and indemnity insurer of head owners, viz. YDM Shipping Company Ltd were notified the loss. As the plaintiffs got exposed to a possible claim from Da Sin and/or Head owners in view of the sinking of the said vessel with cargo on board while she was performing a voyage under the agreement with Tongli, the plaintiffs made a claim on Tongli and filed the present suit. The present suit in short, is by way of an indemnity action and was originally filed claiming a decree against the defendant-vessel Tongli yantai for a sum of USD 56.6 million together with further interest thereon at the rate of 12% p.a. from the date of the suit until payment. The claim was amended and was increased to USD 72.5 million. The amendment was carried out pursuant to the order dated 16.6.2011 of this Court. The 1st defendant-vessel m.v.Tongli yantai had been arrested pursuant to an order dated 9.12.2010 issued by this Court. The arrest was effected by the office of the Sheriff of Mumbai. (c) Pursuant to an order dated 22.6.2012 passed by this Court, the order of arrest was lifted and the vessel was allowed to sail. The reason for vacating the order of arrest was the settlement agreement i.e., Global Settlement Agreement dated 31.5.2012 entered into between the parties thereto, viz. one YDM Shipping Company Ltd., (head owners), Da Sin Shipping Pte. Ltd., the plaintiffs, and Tongli Shipping Company Ltd. The clauses in the settlement agreement which are relevant for the issue in hand are recitals M, clauses1, 3, 5, 6(2) & (3), 7(2) & (3), 8(2), 9 and 11 read as under: “ …............ one YDM Shipping Company Ltd., (head owners), Da Sin Shipping Pte. Ltd., the plaintiffs, and Tongli Shipping Company Ltd. The clauses in the settlement agreement which are relevant for the issue in hand are recitals M, clauses1, 3, 5, 6(2) & (3), 7(2) & (3), 8(2), 9 and 11 read as under: “ …............ M. In good faith, the parties wish to resolve any and all disputes and claims in contract and/or in tort and/or whatsoever nature, against each other or any of its or their subsidiaries, associated or related companies or any of its or their directors, partners, officers, agents, servants or employees and/or any P & I Club in which the Charterers were entered at the time the vessel sank, which have arisen out of, or may arise at any time hereafter and/or in connection with the 1st Charter, the 2nd Charter and/or the 3rd Charter (the “Time Charter Disputes”), amicably and have hereby agreed on terms and conditions of settlement.” 1 In preparation for the fulfillment of this Settlement Agreement, Da Sin and GPN shall each pay the sum of USD 2,675,000(Two Million Six Hundred and Seventy Five Thousand United States Dollars) (“Da Sin/GPN Contribution”) within 7 banking days of the execution of this Agreement to Reed Smith Richards Butler (“RSRB”) to be held by the same to the order of Da Sin and GPN pursuant to a solicitor's letter of undertaking. 3 Upon payment of the Da Sin/GPN Contribution to RSRB as referred to in Clause 1 above, on a without admission of liability basis and subject to the terms and conditions of this Settlement Agreement, the arties agree to have a full and final settlement of the Time Charter Disputes and matters referred to in the CPI Letter inclusive of interest and costs through the following measures subject to the terms and conditions of this Settlement Agreement:- (1) Following execution of this Settlement Agreement and within 7 banking days of receipt of the Da Sin/GPN Contribution, Tongli agrees to pay on behalf of Charterers, and the Head Owners, through their designated receiving agent CPI agree to accept from the Charterers payment in the sum of US$13,000,000 (Thirteen Million United States Dollars) (the “Global Settlement Sum”). (5) Subject to the terms of this Settlement Agreement and confirmation of CPI's receipt of the Global Settlement Sum, and without prejudice to the Assignment provided for in clause 3(3) above or to the Recovery Actions provided for in clause 3(4) above or to the Head Owners' entitlement to assert the claims under the 1st Charter, the 2nd charter and/or the 3rd Charter and the Charterers' liabilities for such claims in the context of and solely for the purpose of the Recovery Actions, the Parties shall not claim against each other for all or any part of its or their contribution to the Global Settlement Sum via claims, actions and/or legal proceedings, current, existing or potential, whether in contract and/or in tort and/or whatsoever nature against each other or any of its or their insurers, subsidiaries, associated or related companies or any of its or their directors, partners, officers, agents, servants or employees and/or any P & I Club referred to in Recital M above. Any and all such existing claims, actions and/or legal proceedings shall be immediately discontinued as provided in clause 6 below. 6 (2) & (3) Upon confirmation of receipt of the Global Settlement Sum in accordance with clause 3(2):- (2) Claims under the 2nd Charter between Da Sin and GPN (the “2nd Charter Claims”) (a)..................... (b) Da Sin and GPN shall completely release and discharge each other or any of its or their subsidiaries, associated or related companies or any of its or their directors, partners, officers, agents, servants or employees and/or any P & I Club referred to in Recital M above arising from and/or in connection with the 2nd Charter Claims and ; (c) Da Sin and GPN shall issue a Receipt and Release to each other in the form as provided in Schedule 5 to this Settlement Agreement. (3) Claims under the 3rd Charter between GPN and Tongli (the “3rd Charter Claims”) (a)......................... (3) Claims under the 3rd Charter between GPN and Tongli (the “3rd Charter Claims”) (a)......................... (b) GPN and Tongli shall completely release and discharge each other or any of its or their subsidiaries, associated or related companies or any of its or their directors, partners, officers, agents, servants or employees and/or any P & I Club referred to in Recital M above arising from and/or in connection with the 3rd Charter Claims ; (c) GPN and Tongli shall issue a Receipt and Release to each other in the form as provided in Schedule 5 to this Settlement Agreement. 7 The parties shall as soon as possible, but within 3 banking days of confirmation of receipt of the Global Settlement Sum by CPI as provided for in Clause 3(2) take the following actions:- (1)........................ (2) The arbitrations (a)........................ (b) GPN and Tongli shall jointly notify Mr. William Robertson and Mr. Philip Yang of the settlement and discontinuance of the 3rd Charter Arbitration; (c)......................... (3) The parties shall wholly discontinue, withdraw or otherwise abandon any and all other claims, actions and/or legal proceedings, current, existing or potential, in contract and/or in tort and/or whatsoever nature against each other or any of its or their subsidiaries, associated or related companies or any of its or their directors, partners, officers, agents, servants or employees and/or any P & I Club referred to in Recital M above arising out of and/or in connection with the Time Charter Disputes. 8.2) For the avoidance of doubt no claims will be pursued by Head Owners against the Charterers or against any of them or against any of the related or associated persons or entities, including the P & I Clubs referred to in Recital M above. 9 The parties shall bear their own legal costs in relation to the Time Charter Disputes (including but not limited to the 2nd Charter Arbitration, 3rd Charter Arbitration, the south African Proceedings and/or the Qingdao proceedings) and the legal costs arising out of or incidental to the preparation and execution of this Settlement Agreement. 11 This Settlement Agreement represents the whole agreement between the parties and supersedes any prior representation made by or on behalf of any of the parties. Any variation to the terms of this Settlement Agreement (including its Schedules) must be agreed in writing and shall be signed by or on behalf of all the parties. 11 This Settlement Agreement represents the whole agreement between the parties and supersedes any prior representation made by or on behalf of any of the parties. Any variation to the terms of this Settlement Agreement (including its Schedules) must be agreed in writing and shall be signed by or on behalf of all the parties. (Emphasis supplied) (d) The office of the Sheriff of Mumbai has not disputed the settlement agreement or the amounts mentioned therein but their contention is that as per the settlement agreement, the matter was globally settled between the parties for USD 13 million and Sheriff of Mumbai is entitled to poundage of 1% on total settlement amount of US$13 Million. The admitted position is that the plaintiffs' Advocate has paid a sum of Rs.42 lakhs being rupee equivalent to 1% of USD 7,650,000/at the rate of USD 1 = Rs.55. The Sheriff of Mumbai is now claiming 1% of the difference between USD 13 million and USD 7.65 million which is USD 5,350,000/. 6 I have heard the rival contentions and also considered the settlement agreement. As per the settlement agreement what in effect has transpired is out of the USD 13 million, which was paid to CPI by Tongli, the plaintiffs' contribution was USD 2.675 million. Da Sin's contribution was also for an equal amount of USD 2.675 million. Tongli has paid USD 7.65 million. The total of these figures (2.675 + 2.675 + 7.650) is USD 13 million. 7 In the normal way what should have been done is Tongli against whom the plaintiffs have a claim, should have paid USD 7.650 million to the plaintiffs. The plaintiffs would have added their contribution of USD 2.675 million to this amount of USD 7.650 million and paid to Da Sin a sum of USD 10.325 million. To this figure, Da Sin would add their contribution of USD 2.765 million and forward the total of USD 13 million to the head owners. Instead, Da Sin and the plaintiffs paid USD 2.675 million to the Advocates for Tongli, Reed-Smith Richards Butler (RSRB). RSRB along with USD 7.650 million contribution from Tongli forwarded USD 13 million to the Advocates of CPI, Holman Fenwick Willan. Instead, Da Sin and the plaintiffs paid USD 2.675 million to the Advocates for Tongli, Reed-Smith Richards Butler (RSRB). RSRB along with USD 7.650 million contribution from Tongli forwarded USD 13 million to the Advocates of CPI, Holman Fenwick Willan. 8 Under Rule 474 (2) read with serial no.5 of the Table of fees payable to the Sheriff of Mumbai, it is rather clear that the Sheriff is entitled to claim poundage, in the event of the claim being satisfied, compromised or settled, upon the amount of such satisfaction, compromise or settlement. Therefore, to calculate the amount payable as poundage, what we have to look for is the “amount of satisfaction or compromise or settlement” as received by the Judgment creditor from the judgment debtor in full or part satisfaction of the order. The amount that has to be considered for calculating poundage is the amount of satisfaction or compromise or settlement that the judgment debtor has received and not the overall settlement amount paid by different parties to the settlement agreement. The document that needs to be considered is the settlement/compromise agreement. 9 In this case on a holistic reading of the settlement agreement, it is rather obvious that what the plaintiffs have recovered or should have realized by this compromise/settlement, in effect would be only USD 7.65 million and not USD 13 million. Therefore, the Sheriff of Mumbai would be entitled to 1% poundage only on the amount USD 7.65 million and nothing more. The Sheriff is not entitled to claim 1% poundage on the entire amount of USD 13 million. The Sheriff has confirmed receipt of 1% on USD 7.65 million. 10 Mr. Rahul Narichania who is appearing for Halcyon Ocean Shipping Limited, the owner of the defendant-vessel states that the vessel that was arrested is owned by Halcyon Ocean Shipping Ltd., and was wrongly arrested. They are not parties to the settlement agreement. Halcyon Ocean Shipping Limited has in fact taken out a Notice of Motion for damages alleging wrongful arrest of the defendant vessel. 11 That is a totally independent issue and this order will have no bearing on the application taken out on behalf of Halcyon Ocean Shipping Limited which will be heard separately. 12 The Sheriff's report no.24 of 2012 dated 5.1.2012 is accordingly disposed of.