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2021 DIGILAW 130 (AP)

Crystal Sea Shipping Company Ltd. v. Bostomar Shipping Pte Ltd.

2021-03-05

M.VENKATA RAMANA

body2021
ORDER: I.COM.A.O.A.No.1 of 2021 is a petition filed by the petitioner against the respondents under Section 9 of Arbitration and Conciliation Act for the following reliefs: “a) an order of status quo, injunction and attachment of the respondent’s bunkers on board the vessel NIKOMARIN, IMO 9401506 presently lying at Krishnapatnam Port and Harbour towards security for the petitioners’ claim pending in Arbitration in London. b) an order directing the respondent to furnish security in favour of the petitioner for the sum of US $ 1,536,114 pending the issuance of the arbitration Award; c) costs of and/or incidental to this application be borne by the respondent.” 2. The petitioner described itself as an incorporated company at Mongkok, Hongkong engaged in business of ship chartering. The first respondent is another company carrying on business of ship chartering at Singapore. The respondents 2 and 3 got themselves impleaded as proper and necessary parties as per orders of this Court in I.A.Nos.2 and 5 of 2021 dated 02.03.2021. 3. The parties as arrayed in the petition shall be referred to hereinafter, for convenience. 4. The petitioner claimed that there has been breach of the contract by the first respondent, of Clean Fixture Recap voyage charter dated 30.07.2020 between itself and the first respondent for the vessel for a shipment of HSS (Heavy Grains, Soya Beans and Sorghums) from East Coast South America to China and the voyage was to commence in March 2021. The first respondent had to pay freight of US dollars 27.5 per metric ton approximately. However, according to the petitioner, there was a serious breach in nominating vessels either M.V.PRABHU DAS or MV CHOLA VIRTUE leading to exchange of a series of ‘e’ mails in between them. Ultimately, according to the petitioner, it invoked arbitration clause and had sent a ‘e’ mail dated 15-02-2021 as legal notice to the first respondent and appointed Ms.Sarra Kay, London as their nominee arbitrator/sole arbitrator. 5. The petitioner quantified its claim for damages in all in the region of 1,236,114 + interest + 150,000 legal costs + 150,000 arbitration costs in US dollars. 6. 5. The petitioner quantified its claim for damages in all in the region of 1,236,114 + interest + 150,000 legal costs + 150,000 arbitration costs in US dollars. 6. Stating that the bunkers of vessel MV NIKOMARIN, IMO 9401506 flying the flag of Cyprus belonged to the first respondent, since purchased at Singapore, which have approximate value of 900,000 US dollars and a quantity of 1,600 MT IFO and 175 MT LSMGO, the petitioner requested an order of the nature described in para-1 above, in order to provide security for its claim for damages against the first respondent. 7. By an order dated 25.02.2021, attachment of the bunkers on board the vessel MV NIKOMARIN, IMO 9401506 was directed in the event of respondent failing to furnish security for 1,536,114 US dollars within 48 hours of service of notice and a copy of the said order, upon hearing for the petitioner and considering the urgency expressed particularly having regard to the allegation of the petitioner that the vessel in question would be sailing away from Krishnapatnam Port and Harbour, where it was then available. 8. On account of the order so passed, the second respondent claiming as the owner of the ship MV NIKOMARIN and the third respondent as the charter of the vessel MV NIKOMARIN came on record seriously opposing the claim of the petitioner raising different grounds. 9. The second respondent filed I.A.No.6 of 2021 to vacate the order granted on 25.02.2021. The contentions of the second respondent are that it is the owner of the vessel MV NIKOMARIN along with bunkers on board. Another submission of the second respondent is that the first respondent is not the charter of this vessel and it is the third respondent. It further questioned the jurisdiction of this Court to entertain this petition and contended that it would affect enormously if the order of attachment continued, since the vessel cannot sail out of the present location. It also contended that the bunkers on the vessel are not owned by the first respondent nor the charterers paid for the bunkers on board. Thus, it is its contention that the bunkers on the board could not have been attached. Contending that on account of nature of the petition filed by the petitioner with false averments, the vessel is wrongfully detained in the Port at Krishnapatnam. Thus, it is its contention that the bunkers on the board could not have been attached. Contending that on account of nature of the petition filed by the petitioner with false averments, the vessel is wrongfully detained in the Port at Krishnapatnam. It also pointed out that cargo on this vessel is coal and which emits methane that it is likely to cause damage to the vessel as well as the Port. Thus stating denying the case of the petitioner in entirety, it requested to vacate the order so passed. 10. On behalf of the second respondent, almost identical contentions are raised denying the claim and case of the petitioner and contending that it is the charterer of the vessel MV NIKOMARIN, which is carrying on business at Hongkong, with an office at Singapore and whereas the first respondent is carrying on business at Singapore. Thus, it claimed that it is a different entity than the first respondent. It also contended that the bunkers attached, did not belong to the first respondent, which belonged to the second respondent being the owner of MV NIKOMARIN vessel. It further contended that on account of the order of attachment, it is suffering a daily loss of 12000 US dollars towards hire and that it has to pay to the owner of this vessel during the period of subsistence of this attachment as well as the Port charges. It also questioned the territorial jurisdiction of this Court and that no reasons are made out by the petitioner to apply Section 9 of Arbitration and Conciliation Act. Thus mainly contending among other grounds, the second respondent requested to vacate the order of attachment. 11. On behalf of the petitioner, reply affidavits are filed in both these petitions raising identical contentions and substantiating its claim against the first respondent. 12. Elaborate arguments are addressed on behalf of the petitioner by Sri Ashwin Shankar, learned counsel for Sri Sai Sanjay Suraneni, learned counsel for the petitioner. The first respondent did not appear through any one nor is represented by any advocate. Whereas Sri Majumdar, learned counsel for Indus Law Firm, learned counsel for the first respondent, Sri Bharucha, learned counsel for Sri S.V.S.S.Siva Ram, learned counsel for the second respondent addressed arguments. 13. The first respondent did not appear through any one nor is represented by any advocate. Whereas Sri Majumdar, learned counsel for Indus Law Firm, learned counsel for the first respondent, Sri Bharucha, learned counsel for Sri S.V.S.S.Siva Ram, learned counsel for the second respondent addressed arguments. 13. Now, the point for determination is, “Whether order of attachment dated 25.02.2021 is liable to be vacated in the circumstances stated by the respondents 2 and 3 and if it has to continue, as requested by the petitioner?” 14. The petitioner has invoked Section 9 of Arbitration and Conciliation Act requesting an interim measure on the ground that the first respondent is liable to pay damages in a sum of Rs.1,536,114 US dollars alleging breach of contract with reference to nomination of the vessels, whereupon it had invoked the arbitration clause, nominating a named arbitrator for constitution of Arbitral Tribunal at London. 15. Therefore, it is for the petitioner to make out the grounds for such purpose either to issue such an interim measure, which in this case attachment of the bunkers on board of MV NIKOMARINE a vessel flying the flag of Cyprus, which is now in the port and Harbour at Krishnapatnam. 16. Having regard to the nature of this petition, though both the parties addressed serious arguments touching upon the merits of the claim in between the petitioner and the first respondent, it is not necessary for this Court to go into such questions. The nature of consideration and adjudication in terms of Section 9 of Arbitration and Conciliation Act is only summary and the nature of dispute in between the parties to the contract cannot be a subject matter of determination in this petition. 17. On behalf of the petitioner and the respondents 2 and 3, contentions are advanced in relation to the contract touching upon charter agreement. In the sense, the respondents 2 and 3 disputed that the first respondent is the charterer of the vessel and that the third respondent is its charterer. Thus, the respondents 2 and 3 claimed that both are different entities. It is essentially a question of fact in issue in between these parties and therefore, in all probability, becomes a question for determination before the Arbitral Tribunal. 18. The petitioner is not disputing that the second respondent is the owner of the vessel MV NIKOMARINE. Thus, the respondents 2 and 3 claimed that both are different entities. It is essentially a question of fact in issue in between these parties and therefore, in all probability, becomes a question for determination before the Arbitral Tribunal. 18. The petitioner is not disputing that the second respondent is the owner of the vessel MV NIKOMARINE. However, it claims that the bunkers thereon belonged to the first respondent, which is again disputed by the respondents 2 and 3. Their common contention is that these bunkers on board of this vessel belonged to the second respondent, viz., the owner of the vessel. In such circumstances, it is for the petitioner to make out that these bunkers belonged to the charterer or with whom it has entered into a contract. No material is placed by the petitioner in this context. 19. A formidable question to consider in this context is the stoppage of the vessel MV NIKOMARINE at the Port where it is now stranded, on account of the orders passed by this Court. In the sense, admittedly this vessel cannot sail out of Krishnapatnam Port and Harbour on account of attachment of the bunkers thereon as per orders of this Court. When the ownership of this vessel to rest with the second respondent is admitted and when in the reply affidavit, the petitioner also stated that it has no objection for the vessel to sail out from its present location subject to fulfillment of certain terms and conditions, it is a factor to consider since it has any amount of bearing. As rightly contended for the second respondent, an innocent party, who has nothing to do with the alleged contract between the petitioner and the charterer of this vessel, cannot be made to suffer, due to detention of this vessel in the Port, without continuing its voyage to the next destination. Admittedly, this vessel has cargo of whatsoever nature. The next port of call is Haldia and on account of detention of this vessel, the consequences to flow and which the second respondent should bear on account of it, should be appreciated. 20. However, the contention of the petitioner that in a matter of this nature involving maritime claims, these incidences are quite common and usual, is not proper. The next port of call is Haldia and on account of detention of this vessel, the consequences to flow and which the second respondent should bear on account of it, should be appreciated. 20. However, the contention of the petitioner that in a matter of this nature involving maritime claims, these incidences are quite common and usual, is not proper. These enormous consequences, which the second respondent would face cannot be allowed to stand, just to support the claim of the petitioner. It is further to be noted that it is only a claim for money, which the petitioner is intending to pursue by means of arbitration. Therefore, it is a strong ground to vacate the order so granted on 25.02.2021. 21. The petitioner asserted the jurisdiction of this Court stating in para 13 of the petition as under: “The subject Arbitration is an International Commercial Arbitration and this Hon’ble Court has the necessary jurisdiction to try and dispose of this matter. The respondents voluntarily carryon business within the jurisdiction of this Hon’ble Court. They carry cargos to Andhra Pradesh, earn freight for the purpose of the same, appoint agents in Andhra Pradesh. Additionally, they conduct business with other customers on other vessels for loading of cargos into, and out of ports in Andhra Pradesh. They pay tax on freights earned here. Customs Duties, Port Charges and Light House Duties are also paid as part of their business operations in Andhra Pradesh Ports. The Petitioner is entitled to seek interim measures from this Hon’ble Court under the Indian Arbitration and Conciliation Act, 1996 and in particular, security in the form of attachment of the Respondent’s said bunkers. The security that is sought to be attached is currently on board a vessel in Krishnapatnam Port, Nellore which is within the territorial jurisdiction of this Hon’ble Court.” 22. It further relied on Section 2(1)(e)(II) of Arbitration and Conciliation Act to justify its stand in this context. 23. However, on behalf of the respondents 2 and 3, a serious objection is raised stating that the averments in the petition so made reflect only casual acts, which cannot clothe this Court with territorial jurisdiction and that the provisions of Arbitration and Conciliation Act relied on for the petitioner themselves indicate that this Court cannot have territorial jurisdiction to entertain this petition. 24. 24. Learned counsel for the respondents 2 and 3 relied on Section 20 CPC in this respect particularly the effect of its explanation. Section 20 CPC reads as follows: “Section 20: Other suits to be instituted where defendants reside or cause of action arises. --Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction -- (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. [Explanation]. : A corporation shall be deemed to carry on business at its sole or principal office in India or in respect of any cause of action arising at any place where it has also a subordinate office, at such place.” 25. All the parties to this petition are not residents of local limits of this Court to clutch at its territorial jurisdiction. The contract alleged in between the parties who would be the parties to arbitration proceedings are also residing or carrying on business without any office of the principle or agent or a subordinate office in India. No material is placed by the petitioner that it has it’s presence ordinarily within the territorial jurisdiction of this Court, within the State of Andhra Pradesh. 26. As rightly contended for the respondents 2 and 3, the averments in para – 13 of the petition reflect only certain acts of routine and casual nature and which do not in any sense make out that this Court has territorial jurisdiction to entertain this petition. They do not indicate that the petitioner has its presence through its subordinate or branch office, in ordinary course of business. 27. They do not indicate that the petitioner has its presence through its subordinate or branch office, in ordinary course of business. 27. With reference to Section 2(1)(e)(II) of Arbitration and Conciliation Act, the subject matter of arbitration in this case cannot be decided by this Court in exercise of its ordinary original civil jurisdiction. A suit for damages cannot be laid by the petitioner in this Court, against the first respondent, on the ground of breach of contract, which it intends to propound. Both these parties are not ordinarily residents or carrying on business within the jurisdiction of this Court. Nor any part of cause of action has arisen, to initiate a civil action in this Court, within territorial jurisdiction. Presence of a vessel owned by the second respondent at Krishnapatnam Port and Harbour, since being a part of its voyage, cannot vest this Court with such jurisdiction. 28. Therefore, these contentions of the respondents 2 and 3 have to be accepted, holding that this Court has no territorial jurisdiction to entertain this petition. 29. On the above two grounds, the order dated 25.02.2021 has to be vacated. The after-effects flowing from this order as rightly pointed out by the respondents 2 and 3 are enormous. Since the claim of the petitioner is only for realisation of money, if the order so granted is vacated, it would not suffer in any manner particularly, when it can be realised by the petitioner, if entitled to otherwise in due course from its adversary, by other legal process. 30. Therefore, I.A.No.3 of 2021 and I.A.No.6 of 2021 have to be allowed vacating the interim order granted on 25.02.2021. 31. In the result, I.A.No.3 of 2021 and I.A.No.6 of 2021 are allowed. The order dated 25.02.2021 in I.COM.A.O.A.No.1 of 2021 is vacated. Consequently, I.COM.A.O.A.No.1 of 2021 is dismissed. Attachment of the bunkers on board the vessel MV NIKOMARINE, IMO No.9401506 presently lying at Krishnapatnam Port and Harbour is raised. The vessel MV NIKOMARINE is at liberty to sail from the Krishnapatnam Port and Harbour and it is set free for all purposes. The authorities of Krishnapatnam Port and Harbour including customs, shall permit safe passage of the above vessel from the above Port and Harbour. The vessel MV NIKOMARINE is at liberty to sail from the Krishnapatnam Port and Harbour and it is set free for all purposes. The authorities of Krishnapatnam Port and Harbour including customs, shall permit safe passage of the above vessel from the above Port and Harbour. Learned counsel for the second respondent is permitted to intimate raising of attachment of the bunkers on the vessel MV NIKOMARINE, IMO No.9401506 to the authorities of Krishnapatnam Port and vacating the order dated 25.02.2021 in I.COM.A.O.A.No.1 of 2021. After pronouncing this order, Sri Ashwin Shankar, learned counsel for the petitioner requested suspension of this order till 08.03.2021 to take further steps. However, this request is rejected.