# CHRISOMAR CORPORATION v. MJR STEELS PRIVATE LIMITED & ANR

- **Citation:** [2017] 14 S.C.R. 17
- **Court:** Supreme Court of India
- **Decided:** 2017
- **Case number:** Civil Appeal No. 1930 of2008
- **Bench:** R. F. Nariman, Sanjay Kishan Kaul
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chrisomar-corporation-v-mjr-steels-private-limited-anr-31960
- **Pages:** 51

## Headnote

A
B
Contract Act, I872 - ss.62, 63 - Applicability of.:.. Vessel in
question owned by one Third Element Enterprises, a Cyprus
company :-- Appellant-plaintiff supplied bunkers and other C
necessaries to the vessel and raised invoices which were not paid
bv Third Element - Admiralty suit filed by appellant praying for
arrest of the vessel - Vessel arrested - Subsequently, howeve1;
appellant did not proceed with the matter as the parties had reached
.an out of court settlement/agreement dtd. I 8. I .2000 - But, since
no payment was made to the appellant, the vessel was re-arrested D
on 2.5.2000 - Respondent no.I filed written statement in the suit
claiming that it had purchased the vessel through successive transfer
of title in the vessel hence, no cause of action survived against
Third Element, the original owner - Single Judge of High Court
held that the plaintiffs were entitled to recover their dues- Division
E
Bench reversed the order - Whether on the day of arrest respondent
no.I was the owner of the vessel and hence, appellant's claim against
the original owner, Third Element on the date of institution of the
suit would not lie -Also, whether in view of s. 62 there was a novation
of the original agreement as the settlement dtd. I 8.1.2000 was acted
upon and therefore, the original agreement under which payment
F
was due to the appellant need not be performed - Held: For a
contract that is altered in material particulars, to fall u/s.62 the
alieration must go to the very root of the original contract and
change its essential character, so that the modified contrac;t must
be read as doing away with the original contract - However, in the
G
present case, the second agreement/settlement dealt with one leg of
the original transaction, i.e. the leg of payment which was not made,
while keeping the original transaction alive- Settlement read as a
whole does not amount to novation of the original agreement - s. 63
would apply to the facts of the present case - Further, respondent
17
H
18
SUPREME COURT REPORTS
[2017] 14 S.C.R.
A
no. I failed to prove that there was a change of ownership of the
vessel in its favour on the date of arrest i.e. on 2.5.2000 - Judgment
of High Court is set aside and the decree of trial court is restored -
Constitution of India - Art. 372 - The Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017 - s.2(1)(/), (g) and ss. 4,
B
5, 6, 9, 12, 17 - Brussels Convention of 1952- Art. l (k) -
International Convention of Maritime Lien and Mortgages, 1993Arts.4, 8- Brussels Convention relating to the Arrest of Sea-Going
Ships, 1992- International Convention on the Arrest of Ships, 1999Art.3(J)(a) - Letters Patents of 1823, 1862 and 1865 - Admiralty
Court Acts, 1840 and 1861 - Colonial Courts of Admiralty Act,
C
1890 - Colonial Courts of Admiralty (India) Act,1891- Supreme
Court of Judicature (Consolidation) Act, 1925 -Administration of
Justice Act of 1956 - Supreme Court Act of 1981.
Admiralty law - Maritime claim and Maritime lien - Difference
between - Plea of appellant that the necessaries supplied by it to
D
the vessel in question were not only maritime claim but also maritime
lien on the vessel - Held: Important materials wherever supplied to
a ship for her operation/maintenance would fall within the definition
of a maritime claim - A maritime lien, on the other hand, attaches to
the property of the vessel whenever the cause of action arises, and
E
F
travels with the vessel and subsists whenever and wherever the
action may be commenced - A claim for necessaries supplied to a
vessel does not become a maritime lien which attaches to the
vessel - Brussels Convention of 1952 - Art.I (k).
Admiralty law - Of India and England - History of -
Discussed.
Admiralty law - Maritime claim - When can be asserted -Held:
A maritime claim can be asserted only at the time the arrest of the
vessel is effected and not at the time of the institution of the suit -
International Convention on the Arrest of Ships, 1999

## Text

_Characters 0–39,843 of 116,608. This is a partial read: ask again with offset=39843 for what follows._

[2017] 14 S.C.R. 17
CHRISOMAR CORPORATION
v.
MJR STEELS PRIVATE LIMITED & ANR.
(Civil Appeal No. 1930 of2008)
SEPTEMBER 14,2017
[R. F. NARIMAN AND SANJAY KISHAN KAUL, JJ.]
A
B
Contract Act, I872 - ss.62, 63 - Applicability of.:.. Vessel in
question owned by one Third Element Enterprises, a Cyprus
company :-- Appellant-plaintiff supplied bunkers and other C
necessaries to the vessel and raised invoices which were not paid
bv Third Element - Admiralty suit filed by appellant praying for
arrest of the vessel - Vessel arrested - Subsequently, howeve1;
appellant did not proceed with the matter as the parties had reached
.an out of court settlement/agreement dtd. I 8. I .2000 - But, since
no payment was made to the appellant, the vessel was re-arrested D
on 2.5.2000 - Respondent no.I filed written statement in the suit
claiming that it had purchased the vessel through successive transfer
of title in the vessel hence, no cause of action survived against
Third Element, the original owner - Single Judge of High Court
held that the plaintiffs were entitled to recover their dues- Division
E
Bench reversed the order - Whether on the day of arrest respondent
no.I was the owner of the vessel and hence, appellant's claim against
the original owner, Third Element on the date of institution of the
suit would not lie -Also, whether in view of s. 62 there was a novation
of the original agreement as the settlement dtd. I 8.1.2000 was acted
upon and therefore, the original agreement under which payment
F
was due to the appellant need not be performed - Held: For a
contract that is altered in material particulars, to fall u/s.62 the
alieration must go to the very root of the original contract and
change its essential character, so that the modified contrac;t must
be read as doing away with the original contract - However, in the
G
present case, the second agreement/settlement dealt with one leg of
the original transaction, i.e. the leg of payment which was not made,
while keeping the original transaction alive- Settlement read as a
whole does not amount to novation of the original agreement - s. 63
would apply to the facts of the present case - Further, respondent
17
H
18
SUPREME COURT REPORTS
[2017] 14 S.C.R.
A
no. I failed to prove that there was a change of ownership of the
vessel in its favour on the date of arrest i.e. on 2.5.2000 - Judgment
of High Court is set aside and the decree of trial court is restored -
Constitution of India - Art. 372 - The Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017 - s.2(1)(/), (g) and ss. 4,
B
5, 6, 9, 12, 17 - Brussels Convention of 1952- Art. l (k) -
International Convention of Maritime Lien and Mortgages, 1993Arts.4, 8- Brussels Convention relating to the Arrest of Sea-Going
Ships, 1992- International Convention on the Arrest of Ships, 1999Art.3(J)(a) - Letters Patents of 1823, 1862 and 1865 - Admiralty
Court Acts, 1840 and 1861 - Colonial Courts of Admiralty Act,
C
1890 - Colonial Courts of Admiralty (India) Act,1891- Supreme
Court of Judicature (Consolidation) Act, 1925 -Administration of
Justice Act of 1956 - Supreme Court Act of 1981.
Admiralty law - Maritime claim and Maritime lien - Difference
between - Plea of appellant that the necessaries supplied by it to
D
the vessel in question were not only maritime claim but also maritime
lien on the vessel - Held: Important materials wherever supplied to
a ship for her operation/maintenance would fall within the definition
of a maritime claim - A maritime lien, on the other hand, attaches to
the property of the vessel whenever the cause of action arises, and
E
F
travels with the vessel and subsists whenever and wherever the
action may be commenced - A claim for necessaries supplied to a
vessel does not become a maritime lien which attaches to the
vessel - Brussels Convention of 1952 - Art.I (k).
Admiralty law - Of India and England - History of -
Discussed.
Admiralty law - Maritime claim - When can be asserted -Held:
A maritime claim can be asserted only at the time the arrest of the
vessel is effected and not at the time of the institution of the suit -
International Convention on the Arrest of Ships, 1999 -Art.3(l)(a).
G
Allowing the appeal, the Court
HELD: 1.1 Admiralty law in England, as was held by Lord
Halsbury in Currie v. M'Knight, is derived from the laws ofOleron
and other ancient maritime codes like the Rhodian Sea Law, the
Basilika, the Assizes of Jerusalem, the Baltic Laws of Wisbuy
H
and the Hanseatic Code. In England, the common law courts could
CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
19
LIMITED & ANR.
not give effective redress to cases which arose in admiralty, which A
were then left to the jurisdiction of specialist admiralty Judges.
By the 18'& Century, the admiralty jurisdiction had fallen into "a
feeble and neglected condition, and for long its proceedings
excited no attention". The Admiralty Court Act, 1840 was the
first of a series of statutes extending and defining the jurisdiction B
of the High Court of Admiralty in England. This was followed by
the 1861 Admiralty Court Act and various subsequent enactments
which were consolidated by the Supreme Court of Judicature
(Consolidation) Act, 1925. By the Administration of Justice Act
of 1956, the admiralty jurisdiction of the High Court was further
widened and the Supreme Court Act of 1981 now defines what C
the admiralty jurisdiction of the High Court in England is. [Para
11) (34-B-D]
Currie v. M'Knight 1897 AC 97 - referred to.
1.2 Insofar as our law is concerned, the admiralty law of
the chartered High Courts has historically been traced to the · D
charters of 1774 and 1798 as subsequently extended and clarified
by the Letters Patents of 1823, 1862 and 1865. The Admiralty
Court Act, 1840 and 1861, and the Colonial Courts of Admiralty
Act, 1890 and 1891 essentially stated what the admiralty law in
this country is, and these enactments continued as existing laws
E
under Article 372 of the Constitution of India. The Republic of
India has finally woken up to the need for updating its admiralty
law. The Admiralty (Jurisdiction and Settlement of Maritime
Claims) Act, 2017 has been made by Parliament and has received
the assent of the President on 9.8.2017, though it has not yet
been brought into force. In this Act, "maritime claim" is defined
F
in Section 2(1)(t) as being a claim referred. to in Section 4 and a
"maritime lien" is defined in sub-section (g) of 2(1). [Paras 12, .
13) (34-E-F; 36~C-D]
1.3 Under Section 5 of the 2017 Act, the High Court may
order for the arrest of a vessel which is within its jurisdiction for ·G
the purpose of providing security against a maritime claim. Under
Section 6 of the said Act, the High Court may also exercise
admiralty jurisdiction by an order in personam in respect of the
maritime claims referred to in Section 4. Section 9 of the Act
sets out the inter se priority of maritime liens, but in so doing H
20
SUPREME COURT REPORTS
[2017] 14 S.C.R.
A also informs that they are restricted to five subject matters only.
Section 12 states that the Code of Civil Procedure is to apply in
all proceedings before the High Court insofar as it is not
inconsistent or contrary to the provisions of the Act. By Section
17, the Admiralty Court Acts of 1840 and 1861 and the Colonial
B Courts of Admiralty Acts of 1890 and 1891 stand repealed. Also,
the Letters Patent of 1865, insofar as it applies to the admiralty
jurisdiction of the Bombay, Calcutta and Madras High Courts,
also stands repealed. An admiralty action in the courts of India
commences against a vessel to enforce what is called a "maritime
claim". Though India is not a signatory to the Brussels
C Convention of 1952, a long list of maritime claims is given in
Article 1 thereof. Sub-clause (k) of Article 1 states that important
materials wherever supplied to a ship for her operation or
maintenance would fall within the definition of a maritime claim.
A maritime lien, on the other hand, attaches to the property of
D the vessel whenever the cause of action arises, and travels with
the vessel and subsists whenever and wherever the action may
be commenced. [Paras 14-16) [39-B; 40-F-H; 41-AJ
1.4 The International Convention on Maritime Lien and
Mortgages, 1993 defines maritime liens in Article 4. Article 8
states the characteristics of such liens. It is clear that in our
E country at least claims for necessaries, though maritime claims,
F
do not raise a maritime lien. [Paras 21-23)[48-B-C, E-F; 47-C-D)
Bailey Petroleum Company v. Owners and parties
interested in the vessel M. V. Dignity (Decision of
Calcutta High Court) (1993) 2 CHN 208 - approved.
2.1 The next important aspect that was argued was that the
ownership of the vessel to enforce a maritime claim has to be
seen at the stage of institution of the suit and not at the stage of
arrest. The general rule in our country as to what crystallises on
the date of a suit is reflected in Rameshwar case. However, Article
G 3(l)(a), International Convention on the Arrest of Ships, 1999
which is in two parts states- First, arrest is only permissible of
any ship if a maritime claim is asserted against the person who
owned the ship at a time when the maritime claim arose for which
the owner is liable, and second, that the same ship owner should
H be the owner of the ship when the arrest is effected. India is not
'CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
21
LIMITED & ANR.
a signatory to the aforesaid Convention, yet following M.V.
A
Elisabeth case, this Convention becomes part of our national law
and must, therefore, be followed by this Court. Thus, Article
3(l)(a) sets the controversy at rest because a maritime claim can
be asserted only at the time the arrest is effected and not .at the
time of the institution of the suit. It is, therefore, clear that the B
relevant date on which ownership of the vessel is to be
determined is the date of arrest and not the date of institution of
the suit.[Paras 26, 28) [53-B; 55-A-C]
Rameshwar and Others v. Jot Ram and others [1976] 1
SCR 847 - relied on.
M V. Elisabeth and Others v. Harwan Investment and
Trading Private Limited (1993) Suppl. 2 SCC 433 :
[1992] 1 SCR 1003 - relied on.
Monica S.(1967) 2 Lloyd's Rep. 113 ; Re, Aro Cop
c
Limited 1980 1 All ER 1067- held inapplicable.
D
2.2 On facts, a perusal of the agreement would show that
so far as the appellant was concerned, performance was overnamely that a certain quantity of bunkers had in accordance with
the original agreement been supplied . .Indeed this is expressly
recited in the later agreement. It is only performance under the
E
original agreement that was lacking from the side of the owner of
the vessel, namely Third Element Enterprises. The very first
clause of the agreement shows that the ship owners confirm that
they owe to the appellant the original amount of the bunkers plus
interest plus legal costs, which amounts are parasitic on the
original invoice amount of US$ 94,611.25, and need. to be
F
recovered in order to put the appellant in the same position as if
the original contract had been performed by Third Element
Enterprises. The agreement then goes on to state that since the
vessel was being chartered for a voyage from Bangkok and would
earn freight, the part of the freight amounting to the original G
in.voice amount plus interest plus legal costs would be paid directly
by the charterers of the vessel to the bank account of the
appellants. It is the appellant's case that Section 63 of the
Contract Act is attracted to the facts of the present case whereas
it is the respondent's case that Section 62 is so atti:acted, the
result being that the original agreement is substituted by a fresh
H
22
SUPREME COURT REPORTS
[2017] 14 S.C.R.
A · agreement. The respondent's case is that Section 62 applies,
since the original contract has been "altered". This being the
case, the original contract need not be performed. It is clear that
where parties to a contract agree to substitute a completely
different contract for the first, or to rescind a contract, the
B performance under the original contract and/or rescinded contract
comes to an end. When parties to a contract "alter" a contract,
the ciuestion that has to be answered is as to whether the original
contract is altered in such a manner that performance under it is
at an end. [Paras 29, 31-~3) [55-D-G; 56-C-E]
2.3 In order that a contract that is altered in material
C particulars fall under Section 62, it must be clear that the
alteration must go to the very root of the original contract and
change its essential character, so that the modified contract must
be read as doing away with the original contract. On the other
hand, Section 63 of the Contract Act would clearly apply to the
D facts of the present case. Illustration "c" to Section 63 is apposite.
E
F
The said illustration makes it clear that a promisee may accept
satisfaction from a third party which then discharges the promisor
from further performance of the original contract. [Paras 35-37)
[57-E, F-C, HJ
2.4 In the present case the original contract was performed
only by one party to the contract and not by the other, the second
agreement was entered into so that the promisee (i.e. the
appellant herein) may accept, instead of the original performance
of the agreement, any satisfaction which it thinks fit. Thus, the
agreement deals with one leg of the original transaction, the leg
of payment which has not yet been made while keeping the original
transa.ction alive. The other clauses of the agreement buttress
this conclusion. Under clause 4, the ship owner would not sell
the vessel prior to the satisfaction of the aforesaid claim. And,
above all, under clause (6), if for any reason the said payment is
G not made, the appellant would be entitled to take all appropriate
legal steps, which included arrest of the vessel, for recovery of
the said amount. Even by clause (8), the original agreement was
kept alive. In the event that the ship was unable to proceed to
Bangkok, the appellant maintained its rights of recovery against
the shipowner and the vessel. If the original agreement had
H
CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
. 23
LIMITED & ANR.
disappeared by novatio, there was no question of taking A
appropriate steps to arrest the vessel which was owned by the
ship owner who was the promisee and who had not yet performed
his part of the contract. A guarantee clause contained in clauses
7 an.d 8 was again only an additional string to the bow of payment.·
The fact that exclusive jurisdiction was given to the courts at B
Piraeus, Greece has to be read with clause 6 of the agreement.
Obviously, arrest of the vessel for recovering the af(lresaid
amount in case payment was not made could be at any port, and
not merely at Piraeus. For all these reasons, the aforesaid
agreement read as a whole does not amount to a novatio of the
original agreement, but was in fact entered into keeping the C ·
original agreement alive in order to ensure that payment under
the original agreement was made to the appellants. In fact, the
agreement dated 18.1.2000 was not a settlement of the original
claim at a lesser amount. It was only a means of enforcing the
payment leg of the original transaction through a thifd party 0
charterer. Consequent upon the vessel not sailing to Bangkok
or the third party charterer failing to make payment, the original
obligation of the appellant continued, and was enforceable by the
arrest of the vessel. (Para 40] [59-C-H; 60-A-B]
2.5 It is settled law that an agreement such as the
agreement dated 18.1.2000 is not to be construed legalistically E
but is to be construed as ordinary businessmen would construe
it. Reading the agreement through the prism of a businessman's
eye, it is clear that all that the agreement does is to reinforce the
original agreement by seeing that the payment under the said
agreement is made. Therefore, the view taken by the Division
F
Bench that there is a novatio of the original agreement in the fact
circumstance of the present case is not acceptable. It is important
to remember that when Section 63 of the Contract Act is to be
applied, the High Courts in India have cautioned that, being a
wide departure from English law, the Section alone should be
enforced according to its terms and not in accordance with English
G
law. (Paras 40, 42 and 44] (60-B; 61-D; 62-A-B)
Satya Jain and Others v. Anis Ahmed Rushdie and others
(2013) 8 SCC 131 : [2013) 3 SCR 319 - relied on.
New Standard Bank, Ltd. v. Probodh Chandra
H
24
SUPREME COURT REPORTS
[2017] 14 S.C.R.
A
Chakravarty AIR 1942 Cal 87; Anandram Mangturam
v. Bholaram Tanumal AIR 1946 Born 1 - approved.
B
Hi/las v. Arcos [1932) All ER 494 - referred to.
3. Even if the passage in Halsbury, cited by respondents,
is to be applied, it is obvious that the settlement terms spoken of
must be made for good consideration, which is absent under
Section 63. Also, for such settlement to constitute a new and
independent agreement, it must put an end to the proceeding
which is thereby spent and exhausted; and it is for this reason
that the original cause of action is superseded altogether. On
c the facts of the present case by the order dated 25.1.2000, the
application in Suit No.1 of 2000 alone was dismissed for nonprosecution, only interim orders were vacated and it was stated
that "the vessel shall cease to be under arrest as of now." It is
clear, therefore, that in accordance with the agreement dated
18.1.2000, the proceedings were riot put an end to. Neither was
D the original cause of action superseded. The moment there is a
breach of the settlement agreement, the appellants would be
entitled to take appropriate legal steps against the ship owner,
including the arrest of the vessel, which can only be if the original
contract still subs.ists. [Para 46) [62-G-H; 63-A-B]
E
4. On the facts of the present case, the very sum due under
the original contract continued to be due and payable under the
settlement agreement. The fact that interest and legal costs were
added would not amount in itself to superseding the original
contract, as these relate to payments under the original contract
F and put the promisee in the same position as if the contract had
originally been performed. The original agreement was also not
superseded but was only sought to be enforced, the manner of
performance being different. This being the case, the High Court's
conclusion that there was a novatio of the original agreement on
G
H
the facts of the present case is incorrect. [Para 50) [64-B-D)
5.1 Whether, on the date of arrest i.e. 2.5.2000, respondent
no. l happened to be the owner of the vessel, as was found by the
impugned judgment. The High Court strongly relied upon an
oral admission of PWl to the effect that respondent no.1 had
become the owner of the vessel sometime in April 2000. On
CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
25
LIMITED & ANR.
going through the deposition of Mr. Stephen Livanos, it is clear A
that no such admission was ever made. The answers to questions
257 to 262 would clearly show that the witness's statement that
respondent no.I was the end buyer of the vessel was equivocal
at best, and was obviously hearsay as the answer to question 260
states that a lawyer in Greece had at some point of time told Mr.
B
Livanos what happened with the vessel. To therefore conclude
from this oral evidence that the vessel had changed hands in
April, 2000 does not take the respondent's case very far.
However, the High Court also relied upon a notarized bill of sale
dated 14.4.2000, the notice of readiness of 15.4.2000, which was
accepted by the respondent at 11.00 A.M, and was followed by
C
the delivery of possession of the vessel at 2.00 P.M. What is
important to note is that the signatory to the physical delivery
certificate was on behalf of Pennon Shipping Corporation, which
was only an agent of Third Element Enterprises, and not an agent
of Fairsteel. The High Court then went on to state that payment D
under the Letter of Credit was also made on 26.4.2000 and since
this would show that the property in the vessel was transferred
in April, 2000, no cause of action would survive against the new
O'\Yner of the vessel namely respondent no.I. The High Court
also went on to state that the transfers pleaded in the written
statement of respondent no.I, namely from Third Element E
Enterprises to Eastern Wealth Investment Limited and thereafter
to Fairsteel Corporation Limited after which Fairsteel sold and
transferred the vessel to respondent no.I, had not been proved
by respondent no.I, but that this did not affect the respondent's
c.ase. A bill of sale dated 27.4.2000 has been shown by which
Third Element Enterprises effected the first of these four sales
F
to Eastern Wealth Investment Limited, only on 27.4.2000. This
sale has for its consideration "one US Dollar and/or other valuable
consideration" casting grave doubts about its efficacy in law. Be
. that as it may, since this sale is the first sale in the chain of sales
made ultimately to respondent no.I, it is obvious that the sale G
made by Fairsteelto respondent no.I could only have been after
this date. It is necessary to prove and explain each back to back
sale from which respondent no.I ultimately derives its title, in
accordance with its pleading in the written statement filed by it.
As has correctly been held by the High Court, there is no proof
H
26
SUPREME COURT REPORTS
[2017] 14 S.C.R.
A of any of these back to back sales, and in point of fact the very
first sale from the original owner has taken place in favour of
Eastern Wealth after the High Court has found that the vessel
has been sold by Fairsteel to respondent no.1, which goes contrary
to the pleaded case of respondent no.1 itself. [Paras 52-54) [64-.
B D-F; 65-A-F]
5.2 With regard to the High Court finding that full payment
had been made under the Letter of Credit on 26.4.2000, the
respondent's own suit that was filed by it against Fairsteel on
9.5.2000 shows that no such payment had been made by the date
C of the filing of the said suit. Thus, it is clear that the High Court
was not correct in its view that it was proved by respondent no.1
that sale had taken place in April, 2000 by Fairsteel Corporation
to respondent no.1 by which respondent no.1 became the owner
of the vessel. It is clear, therefore, that respondent no. 1 has
failed to prove that there was a change of ownership of the vessel
D in its favour on the date of arrest i.e. on 2.5.2000. [Paras 55, 57)
E
F
G
H
(66-C; 67-A-Bl
The Di/mun Fu/mar (Decision of Singapore High
Court) (2003) SGHC 270 - distinguished.
Saba International Shipping and Project Investment
Private Limited v. Owners and parties interested in the
Vessel M V. Brave Eagle, previously known as M V.
Lima-I and Others (Decision of Calcutta High Court)
(2002) 2 CHN 280; Juggilal Kamlapat v. N. V.
Internationale Crediet-En-Handels Vereeninging
'Rotter-dam', AIR 1955 Cal 65- approved.
Epoch Enterrepots v. M V. Won Fu (2003) 1 SCC 305 :
(2002) 3 Suppl. SCR 507 ; M V. Al Quamar v. Tsavliris
Salvage (International) Ltd. and Others (2000) 8 SCC
278 : (2000) 2 Suppl. SCR 440 ; Chand Godha v. Mir
Nawab Himayatalikhan Azamjah, (1963) 2 SCR 168 -
relied on.
The Bold Buccleugh (1852) 7 Moo PCC 267
- referred to.
Roscoe s Admiralty Practice, 51h Edn. at Page 14
- referred to.
CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
27
LIMITED & ANR.
Case Law Reference
[1992) 1 SCR 1003
relied on
Para 17
[2002) 3 Suppl. SCR 507
relied on
Para 17
[2000) 2 Suppl. SCR 440
relied on
Para 17
(1993) 2 CHN 208
approved
Para 19
(2002) ·2 CHN 280
approved
Para 20
. [1976) 1 SCR 847
referred to
Para26
AIR 1955 Cal 65
approved
Para 34
[1963) 2 SCR 168 .
relied on
Para 38
[2013) 3 SCR 319
relied on
Para 41
AIR 1942 Cal 87
approved
Para 44
AIR 1946 Born 1
approved
Para45
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1930
of2008.
From the Judgment and Order dated 13 .09 .2006 of the High Court
at Calcutta in APD No. 244 of2005 arising out of Admiralty Suit No. 1
of2000.
Shyam Divan, Sr. Adv., Shatadru Chakraborty, Ms. Surbhi Anand,
Ms. Harshita Verma, Ms. Sonia Dube (for Mis. Victor Moses &
Associates), Advs. for the Appellant.
A
B
c
D
Ratnanko Banerji, Sr. Adv., Amitava Majumdar, Ms. Damayanti,
Sen, Siddhartha Dave, Ms. Jemtiben A. 0, Senthil Jagadeesan, Ashok
E
Mathur, Ad vs. for the Respondents.
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. The present appeal raises several
interestfug questions which arise in admiralty law. The vessel, M.V;
Nikolaos-S, was owned by one Third Element Enteiprises, a Cyprus
F
company, and was flying the flag of the Republic of Cyprus. The plaintiff
in the admiralty suit, who is the appellant before us, supplied bunkers
and other necessaries to the said vessel at the port of Durban on terms
and conditions agreed between the parties in November, 1999. According
to the plaintiff, the bunkers were received by the master of the vessel
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and services were rendered to the vessel as acknowledged by the master.
The plaintiff raised invoices on 26.11.1999 for US$ 94,611.25 which
have not yet been paid.
2. When the vessel docked in the port ofHaldia, the plaintiff filed
admiralty suit No.1 of 2000 in the Calcutta High Court praying for an
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A arrest of the vessel because, according to the plaintiff, the necessaries
supplied to the vessel would not only amount to a maritime claim but
would also be a maritime lien on the vessel. By an order dated 6.1.2000,
the vessel was so arrested but nobody came forward for release of the
vessel at that point of time. It is only on 25.1.2000 that learned counsel
B appearing on behalf of the plaintiff approached the learned admiralty
Judge expressing the plaintiff's intention not to proceed with the
application for arrest as, according to him, the parties had reached an
out ofcourt settlement. The order passed on 25.1.2000 reads as follows:-
c
D
"The Court by an order dated January 6, 2000 directed that the
vessel known as M.V.Nikolaos - S was to be arrested. On the
returnable date no one appeared on behalf of the respondents.
The directions for affidavits had been given on January l 0, 2000.
Today when the matter was called on for hearing, counsel
appearing for the petitioner submitted that an out of court
settlement has been reached between the parties and the
petitioner was not inclined to proceed with the matter any further.
For these reasons, this application is dismissed for non prosecution.
All interim orders are vacated.
The vessel shall cease to be under arrest as of now."
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3. It is important at this stage to advert to the agreement that was
entered into on 18.1.2000. Since both sides have argued extensively on
the aforesaid agreement, it is necessary to set it out completely. The
said agreement reads as follows:-
"AGREEMENT GUARANTEE
F
In·Piraeus and at the offices of "LALLIS OUTSINOS
ANAGNOSTOPOULOS" Lawyers Maritime Consultants of
100, Kololotroni Street, Piraeus, this Tuesday the 18'
11 January
2000, by and between:
A.
CHRISOMAR CORPORATION, a company duly
G
established and operating under the laws of Liberia,
maintaining an office in Greece (5 Solomou Str. Kifissia)
(hereinafter called Chrisomar), duly represented, for the
purpose of this agreement by its authorized lawyer Mr.
Dimitrios Voutsinos,
H
CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
29
LIMITED & ANR. [R. F. NARIMAN, J.]
B.
THIRD ELEMENT ENTERPRISES LTD, a company duly A
established and operating under the laws of Cyprus
(hereinafter called "THE SHIPOWNERS"), duly
represented for the purpose of this agreement by the
President of the Board of Directors, Mr. Sotirios Soulkas,
who also declared that he has the necessary authorization
B
and capacity to bind the company to this agreement by his
sole signature.
c.
Sotirios Soukas, of 145 Filonos Str, Piraeus, the following
were stated and agreed.
WHEREAS
c
1.
The shipowners are the legal owners of the Cyprus flag
vessel Nikolaos S, Int. Sign: P 3 KT 6 ("the vessel") managed
in Greece by Suter Shipping and Trading Ltd.
2.
Chrisomar has sold and delivered to the vessel in the port
of Durban a certain quantity of bunkers, on or about 26th
D
November, 1999, Chrisomar has issued its invoice no. 99232/
15.12.1999 for the amount ofUSD 94,611.25, payable on
261h November, 1999 (Copy of the invoice is attached
herewith as app. I).
3.
The owners have failed to pay the amount of the above
E
invoice by the 261h November 1999 and consequently,
Chrisomar arrested the vessel in the port of Haldia, India
for security of the above claim.
THE PARTIES AGREE AS FOLLOWS
1.
The shipowners hereby confirm that they owe to Chrisomar
F
USD 104,688.60, analysed as follows: USD 94,611.25 for
the invoice amount + USD 2, 177 .3 5 for interest accrued +
USD 7 ,900.00 for legal costs.
2.
The shipowners, through their President Mr. Sotirios Soukas,
represent to Chrisomar that (a) their vessel is due to be
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chartered out for a voyage from Bangkok, Thailand to ports
of West Africa as against a freight of about USD 3 5. 00 per
metric ton of cargo; (b) that if Chrisomar releases their
vessel from the above arrest shall be able to proceed to
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A
Bangkok for loading and to perform the intended charter
voyage; (c) that the shipowners as soon as their vessel is
released from its arrest by Chrisomar shall include in their
recap and charter party with the intended charterers of their
vessel a clause that part of the freight amounting to USD
B
104,668.60 shall be paid directly by the charterers to
Chrisomar's bank account as follows:
ANZ GRINDLAYS BANK
21,AktiMiaouli, 18535 Piraeus
Swift: GRNDGRAA,
c
AIC No. 815142 USD 40632
In favour ofChrisomar Corp.
3.
The above recap shall be faxed by the shipowners to
Chrisomar one ( l) working day after its conclusion.
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4.
The shipowners will not sell their vessel prior to the
satisfaction ofChrisomar's above claim and shall provide
Chrisomar with a report by fax of the movements of their
vessel every five ( 5) days.
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5.
The above payment shall be made in full and final settlement
of Chrisomar's above claim per capital and costs.
6.
If, for any reason the above amount is not paid to Chrisomar
within ten ( l 0) working days after the ships sailing from
the port of loading Bangkok or, the shipowners are in breach
F
of any of the representations and obligations set out in paras
2, 3 and 4 above then Chrisomar will be entitled to take all
the appropriate legal steps including the arrest of the vessel
for recovering the above amount or any higher one which
they may be entitled to.
7.
Sotirios Soukas hereby guarantees to Chrisomar and in
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favour of the shipowner the due payment of the above
amount, working the right of division and exclusion i.e. he
adlnits that he will pay amounts due to Chrisomar without
the latter having first to enforce its claim against the
shipowners and their vessel.
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'
CHRISOMAR CORPORATION v. MJR STEELS PRIVATE
'31
LTh,1ITED & ANR. [R. F. NARIMAN, J.]
8.
If the vessel is lost, for any reason or if the mortgagee bank A
or any other claimant arrests the vessel before reaching
Bangkok and as a result, the shipowners are unable to
proceed for loading to Bangkok, and thus execute the above
stated charter voyage, the above obligations of the guarantor
shall cease to exist but Chrisomar will maintain its rights of B
recovery only against the shipowners and the vessel but
not against the guarantor.
9.
This agreement is subject to Greek law and the exclusive
jurisdiction of the Piraeus Courts."
4. It appears that nothing in the meanwhile happened. At no point c
of time did the vessel sail for the port of Bangkok - it remained
continuously in Haldia. It is only on 2.5.2000 that the vessel was rearrested. The Court recorded that no payment had yet been made and
that the claim of the plaintiff continued to remain unsatisfied. It is this
re-arrest that is the bone of contention between the parties in the present
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matter.
5. A written statement was filed on behalf ofrespondent no.1,
MJR Steels, an Indian company who allegedly purchased the vessel
from one Fairsteel Corporation, Singapore. Apparently, an agreement
was entered into between Fairsteel and respondent no.1 on 21.1.2000.
The written statement filed by respondent no. 1 alleged: ·
E
"The said vessel was originally owned by The Third Element
Enterprises Shipping Ltd. Third Element Enterprises Shipping
Ltd. sold and transferred the said vessel to. Eastern Wealth
Investment Ltd. Eastern Wealth Investment Ltd. sold and
transferred the said vessel to Fairsteel Corporation. Fairsteel
F
Corporation sold and transferred the said vessel to this defendant.
This defendant acquired the right, title or interest in respect of
the said vessel from the said Fairsteel Corporation."
6. The learned single Judge by his judgment and order dated
28.4.2005 listed as many as seven issm;s and adverted to the fact that
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three witnesses were called on behalf of the plaintiffs, who not only
deposed and were cross-examined, but also produced various documents.
The defendants, however, did not produce any witness but tendered as
their evidence six exhibits which were produced only through the
plaintiff's witnesses.
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7. According to the learned single Judge, the order of 25 .1.2000
made it clear that suit No. l of 2000 was kept alive and remained alive
on the date of the re-arrest, namely, 2.5.2000. All that was done by the
order dated 2.5.2000 was to recall the order dated 25.1.2000, and when
that was done, the original order of arrest was automatically revived.
This being the case, it is clear that the plaintiffs were entitled to recover
B their dues. The learned single Judge further went on to hold that
respondent no.l's claim that ownership had changed and that they had
become owners of the vessel in April, 2000, was not conclusively proved.
The single Judge referred, among other documents, to a suit filed by
respondent no.l against Fairsteel Corporation on 9.5.2000 in which
C respondent no. I prayed for a decree for rescission of the agreement for
sale dated 21.1.2000, as also for cancellation of the said agreement, and
perpetual injunction restraining Fairsteel from claiming any money under
the Letter of Credit furnished by respondent no. l. It recorded that the
said suit was dismissed for non-prosecution on 12.10.2004, and from the
averments made in the said suit, it was clear that there was no concluded
D sale in favour of respondent no. I.
8. An app~l to the Division Bench by respondent no. I however
succeeded. By the impugned judgment dated 13. 9 .2006, it was held that
the plaintiff's first witness admitted the fact that the vessel's ownership
changed hands and that on the date of re-arrest, i.e. 2.5 .2000, it was
E respondent no.1 who was the owner. It also examined various documents
to arrive at the conclusion that the vessel physically changed hands on
15 .4.2000 and payments under the Letter of Credit were made pursuant
to the agreement dated 21.1.2000 on 26.4.2000. The Division Bench
further went on to hold that though the allegation as regards the successive
F transfers of title had not been proved by the defendant, the said fact
would make no difference. It also went on to hold that there could be a
good title by estoppel. The Division Bench further went on to apply
Section 62 of the Indian Contract Act, 1872 to the out of court settlement
dated 18.1.2000 and stated that as there was a novatio of the original
agreement in law, the original cause of action pleaded in admiralty Suit
G No. l of2000 no longer subsisted. Therefore, the claim made in the suit
was held to have been abandoned when the settlement dated 18.1.2000
was acted upon.· In this view of the case, the Division Bench reversed
the single Judge's decision and held that the suit was liable to be dismissed
on all these grounds.
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,··.·
CHRISOMARCORPORATION v. MJR STEELS PRIVATE
33
LIMITED & ANR. [R. F. NARIMAN, J.]
-
,.,_' ..
9. Shri Shyam Divan, learned senior counsel appearing on behalf A
of the appellants, has argued before us that the agreement dated 18.1.2000
would not amount to a novatio of the original agreement. According to
him, the original agreement continued and was in fact enforced by the
second order of arrest dated 2.5.2000. According to him, the right that
was vested in the appellant on 5.1.2000, i.e. the date of the institution o'f B
the suit, is alone material, and it is on that date, and not the date of arrest
on 2.5.2000, that th~ ownership of the vessel has to be seen. For this
purpose, he cited certain English precedents. He also cited an American
judgment to buttress his submission that the present was a case not
merely of a maritime claim but also of a maritime lien in that necessaries
supplied to the vessel would amount to a maritime lien. According to
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him, in any event, on facts, the Division Bench was completely wrong in
arriving at a conclusion that there was a concluded sale in April, 2000 in
favour of respondent no.1 inasmuch as several documents produced by
the plaintiff's witnesses would show that no such sale had, in fact,. taken
place.
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10 .. Shrl Banerjee, learned senior counsel appearing on behalf of
the respondents, has countered each of these submissions. According
to Shri Banerjee, the Division Bench is absolutely correct. The present
is the case of enforcement of a maritime claim, but there is no maritime
lien in law for necessaries supplied to the vessel. This being the case, it
is important to know who the owner of the vessel is on the date of E
arrest, i.e. on 2.5.2000. If the owner is respondent no. l; then a claim for
necessaries against the original owner, Third Element, on the date of
institution ofthe suit would not lie against the respondent on the date of
. arrest. According to learned counsel, English authorities cited by Shri
Divan would not apply to the present case as in England there is a F
completely different procedure for arresting a vessel. A writ of summons
is issued under Order 53 of the U.K. Civil Procedure Code for service
outside the jurisdiction of the court which is kept alive for a period of six
months. Further, according to learned counse~ Section 62 of the Contract
Act is squarely attracted inasmuch as the settlement dated 18.1.2000
completely replaced the original agreement as a result of which the
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original cause of action pleaded in the suit has disappeared. Le.arned
counsel also painstakingly took us through various documents to show
that the sale of the ve_ssel to respondent no. l had indeed taken place in
April, 2000 and that, therefore, on the date ofarrest, i.e. 2.5.2000, since
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[2017] 14 S.C.R.
A his client was the owner of the vessel, the amounts could not be recovered
from respondent no.1.
11. Admiralty law in England, as was held by Lord Halsbury in
Currie v. M'Knight 1897 AC 97, is derived from the laws of Oleron 1
and other ancient maritime codes like the Rhodian Sea Law, the Basil ika,
B the Assizes of Jernsalem, the Baltic Laws ofWisbuy and the Hanseatic
Code. In England, the common law courts could not give effective redress
to cases which arose in admiralty, which were then left to the jurisdiction
of specialist admiralty Judges. By the l81h Century, the admiralty
jurisdiction had fallen into "a feeble and neglected condition, and for long
its proceedings excited no attention" 2• The Admiralty Court Act, 1840
C was the first of a series of statutes extending and defining the jurisdiction
of the High Court of Admiralty in England. This was followed by the
1861 Admiralty Court Act and various subsequent enactments which
were consolidated by the Supreme Court of Judicature (Consolidation)
Act, 1925.