Any Indemnity Claim In Respect Of Maritime Would Also Be A Maritime Claim U/s. 4 Of Admiralty Act: Bombay HC

Since Section 4(1) of the Admiralty Act says that “the High Court may exercise jurisdiction to hear and determine any question on a maritime claim, against any vessel, arising out of any……”, the Bombay High Court held that the claim for the liability to pay port dues for the vessel as made by first Respondent in the suit will be a maritime claim under Section 4 of the Admiralty Act.

Referring to the decisions of Conoco Britannia and Other Vessels [(1972)1 LLR 342] and Jakhau Salt Company Pvt. Ltd. Vs. M.V. Dhanlakhsmi [Dated 22nd, 23rd and 24th July 2008], a Division Bench of Justice K.R Shriram and Justice Rajesh S. Patil observed that "as long as the subject matter of claim is a maritime claim, any indemnity claim in respect of the same would also be a maritime claim".

Advocate Shyam Kapadia & Kunal S. Gaikwad appeared for the Appellant, whereas, Senior Advocate V.K. Ramabhadran appeared for the Respondent.

Going by the background of the case, it is the case of Appellant (Golden Star Marine FZE - vessel) that the order passed by this court arresting the vessel could not have been passed since the claim of first Respondent (agent of Appellant) was not a maritime claim under Section 4 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (the Admiralty Act). The second part of Appellant’s case is challenging the order of Single Judge in permitting second Respondent (Mumbai Port Trust) to withdraw an amount of Rs.1.31 Crores out of a sum of Rs.1.50 Crores that Appellant had deposited in the Apex Court, later transferred pursuant to the directions/order passed by the Apex Court to the Prothonotary and Senior Master, High Court, Mumbai who is also the Admiralty Registrar.

First Respondent had filed this Admiralty suit against the said vessel claiming indemnity for unpaid port charges regarding the said vessel. Towards the end of May 2018 first Respondent was appointed to provide agency services to the said vessel during her stay at Mumbai. The agency charges were agreed and Appellant was to pay port charges to second Respondent in advance but despite repeated reminders Appellant did not pay port charges. Accordingly, Respondent threatened of legal action. As Appellant was not paying either the Port or Respondent, an action in rem was filed claiming that it is liable to pay the port the dues for the said vessel. According to Respondent, though it would be indemnity, the underlying claim would be a maritime claim against the said vessel, under Section 4(1)(n) and 4(1)(p) of the Admiralty Act. Respondent went ahead and obtained the order for arrest of the said vessel. As Appellant did not furnish any security/put up bail, the said vessel was sold in auction for scrapping and the sale proceeds are lying with the Admiralty Registrar of this court. Hence, present appeal.

After considering the submissions, the High Court took support from the decision of Apex Court in Renusagar Power Co. Ltd. Vs. General Electric Co. [(1984) 4 SCC 679], and clarified that “The words “arising out of” and “in connection with” are of wide nature and can take in their sweep a maritime claim which is made against any vessel where there are dues of any vessel to the port including a claim by an agent who has to be indemnified against a port’s claim. It need not be a claim only by the port but it can be even by an agent on indemnity action, as is the case at hand”.

While refuting with the arguments of the Appellant’s counsel that the words “arising out of” and “in connection with” cannot be stretched to an extent that a third party, as the agent in this case, gets a right to have a maritime claim over the port dues in addition to port itself having such a right, the High Court clarified that “a narrow meaning has to be given and not their ordinary and natural meaning which are wide, it would have employed the words “arising out of”.

The Bench therefore opined that there was no need to pay off the claim before suing the indemnifier, and the only requirement is the indemnified should be able to show that absolute liability has been incurred by him.

As far as the amount having been paid to the port in the sum of approx. Rs.1.31 Crores, since the Apex Court had left it to the Single Judge to consider whether the claim of the port was entitled to receive the requisite part of the security amount deposited by Appellant, the Bench concluded that the Single Judge was correct in directing release of the amount.

Hence, the High Court dismissed the appeal.

Cause Title: MV Golden Pride v. GAC Shipping (India) Pvt. Ltd. and Ors.

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