# OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS GALAXY v. BANQUE CANTONALE DE GENEVE

- **Citation:** [2022] 10 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2022-09-23
- **Case number:** Civil Appeal Nos. 6897-6898 of 2022
- **Bench:** Indira Banerjee, A. S. Bopanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/owners-and-parties-interested-in-the-vessel-m-v-polaris-galaxy-v-banque-35520
- **Pages:** 37

## Headnote

Admiralty (Jurisdiction and Settlement of Maritime Claims)
Act, 2017 - s.14 - Code of Civil Procedure, 1908 - Or.1 r.10(2) -
Commercial Courts Act, 2015 - Whether an appeal lies to the
Commercial Appellate Division of the High Court from an order of
the Commercial Division (Single Bench) of the same High Court for
addition of a party, in an Admiralty Suit governed by the Admiralty
Act - Held: No - An order for addition of a party u/Or.1 r.10(2) of
the CPC is not appealable u/s.14 of the Admiralty Act -Maritime
Laws.
Admiralty (Jurisdiction and Settlement of Maritime Claims)
Act, 2017 - ss.12, 14 - Code of Civil Procedure, 1908 - Or. 1 r.10(2),
Or.43 r.1 - Commercial Courts Act, 2015 - s.13 - Interpretation of
Statutes - Harmonious Construction - Held: s.14 of the Admiralty
Act provides the fora for an appeal from any judgment, decree,
final order or interim order of a Single Judge of the High Court
under the Admiralty Act to a Division Bench of the High Court -
"any interim order" has to be read harmoniously with Or. 43, r. 1 of
the CPC in view of s.12 of the Admiralty Act r/w s.13 of the
Commercial Courts Act - It is not the intent of the overriding
provision of s.14 to nullify s.12 of the Admiralty Act - s.12 of the
Admiralty Act applies to all proceedings in the High Court whether
they be original proceedings or appellate proceedings - On a
harmonious reading of ss.12 and 14 of the Admiralty Act with s.13
of the Commercial Courts Act, an intra-court appeal under the
Admiralty Act to the Commercial Division of the High Court would
lie from any judgment, decree or final order under the Admiralty
Act or an interim order under the Admiralty Act relatable to the
orders specified in Or. 43, r.1 - It could not possibly have been the
legislative intent of the Admiralty Act to make all interim orders
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[2022] 10 S.C.R.
appealable - Such a wide interpretation of the expression "interim
order" would mean that any party would be able to delay the trial
and final disposal by filing appeals even from inconsequential orders
calling for affidavits and the like - Maritime Laws.
Bills of Lading - Concept of - Law governing bills of lading
- Discussed.
Interpretation of Statutes - Non-Obstante Clause in two or
more statutes - Held: As a general rule, the Special Statutes prevail
over General Statutes - If both statutes are general statutes or
special statutes containing identical or similar non-obstante clauses,
the later statute would prevail - However, the rule that a non-obstante
clause in a later statute prevails over the non-obstante clause in an
earlier statute is not an absolute rule - The question of which
provision prevails, would necessarily depend on the object of the
enactment and, in particular, the object of giving overriding effect
to the enactment or any specific provision thereof - When two or
more enactments operating in the same field contain a non obstante
clause stating that its provisions will have effect notwithstanding
anything inconsistent therewith contained in any other law, the
conflict has to be resolved upon consideration of the purpose and
policy underlying the enactments - Maxims - Generalia Specialibus
Non Derogant.
Commercial Courts Act, 2015 - s.2(1)(c)(iii) - Held: A dispute
arising out of issues relating to admiralty and maritime law is a
commercial dispute as defined in s.2(1)(c)(iii) of the Commercial
Courts Act - Maritime Laws.
Allowing the appeals, the Court
HELD: 1.1 Section 12 of the Admiralty Act applies the
provisions of the CPC to all Admiralty proceedings in the High
Court. Section 16 of the Commercial Courts Act makes it explicit
that the provisions of CPC, as amended by the Schedule to the
Commercial Courts Act, applies to suits relating to commercial
disputes governed by the Commercial Courts Act. There can be
no doubt that the Commercial Division of the High Court has the
power to add a party to an Admiralty suit, on its own, without any
application havi

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[2022] 10 S.C.R. 1
1
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V.
POLARIS GALAXY
v.
BANQUE CANTONALE DE GENEVE
(Civil Appeal Nos. 6897-6898 of 2022)
SEPTEMBER 23, 2022
[INDIRA BANERJEE AND A. S. BOPANNA, JJ.]
Admiralty (Jurisdiction and Settlement of Maritime Claims)
Act, 2017 - s.14 - Code of Civil Procedure, 1908 - Or.1 r.10(2) -
Commercial Courts Act, 2015 - Whether an appeal lies to the
Commercial Appellate Division of the High Court from an order of
the Commercial Division (Single Bench) of the same High Court for
addition of a party, in an Admiralty Suit governed by the Admiralty
Act - Held: No - An order for addition of a party u/Or.1 r.10(2) of
the CPC is not appealable u/s.14 of the Admiralty Act -Maritime
Laws.
Admiralty (Jurisdiction and Settlement of Maritime Claims)
Act, 2017 - ss.12, 14 - Code of Civil Procedure, 1908 - Or. 1 r.10(2),
Or.43 r.1 - Commercial Courts Act, 2015 - s.13 - Interpretation of
Statutes - Harmonious Construction - Held: s.14 of the Admiralty
Act provides the fora for an appeal from any judgment, decree,
final order or interim order of a Single Judge of the High Court
under the Admiralty Act to a Division Bench of the High Court -
"any interim order" has to be read harmoniously with Or. 43, r. 1 of
the CPC in view of s.12 of the Admiralty Act r/w s.13 of the
Commercial Courts Act - It is not the intent of the overriding
provision of s.14 to nullify s.12 of the Admiralty Act - s.12 of the
Admiralty Act applies to all proceedings in the High Court whether
they be original proceedings or appellate proceedings - On a
harmonious reading of ss.12 and 14 of the Admiralty Act with s.13
of the Commercial Courts Act, an intra-court appeal under the
Admiralty Act to the Commercial Division of the High Court would
lie from any judgment, decree or final order under the Admiralty
Act or an interim order under the Admiralty Act relatable to the
orders specified in Or. 43, r.1 - It could not possibly have been the
legislative intent of the Admiralty Act to make all interim orders
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[2022] 10 S.C.R.
appealable - Such a wide interpretation of the expression "interim
order" would mean that any party would be able to delay the trial
and final disposal by filing appeals even from inconsequential orders
calling for affidavits and the like - Maritime Laws.
Bills of Lading - Concept of - Law governing bills of lading
- Discussed.
Interpretation of Statutes - Non-Obstante Clause in two or
more statutes - Held: As a general rule, the Special Statutes prevail
over General Statutes - If both statutes are general statutes or
special statutes containing identical or similar non-obstante clauses,
the later statute would prevail - However, the rule that a non-obstante
clause in a later statute prevails over the non-obstante clause in an
earlier statute is not an absolute rule - The question of which
provision prevails, would necessarily depend on the object of the
enactment and, in particular, the object of giving overriding effect
to the enactment or any specific provision thereof - When two or
more enactments operating in the same field contain a non obstante
clause stating that its provisions will have effect notwithstanding
anything inconsistent therewith contained in any other law, the
conflict has to be resolved upon consideration of the purpose and
policy underlying the enactments - Maxims - Generalia Specialibus
Non Derogant.
Commercial Courts Act, 2015 - s.2(1)(c)(iii) - Held: A dispute
arising out of issues relating to admiralty and maritime law is a
commercial dispute as defined in s.2(1)(c)(iii) of the Commercial
Courts Act - Maritime Laws.
Allowing the appeals, the Court
HELD: 1.1 Section 12 of the Admiralty Act applies the
provisions of the CPC to all Admiralty proceedings in the High
Court. Section 16 of the Commercial Courts Act makes it explicit
that the provisions of CPC, as amended by the Schedule to the
Commercial Courts Act, applies to suits relating to commercial
disputes governed by the Commercial Courts Act. There can be
no doubt that the Commercial Division of the High Court has the
power to add a party to an Admiralty suit, on its own, without any
application having been made, if it is of the view that the presence
of that party before the Court may be necessary to effectively
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and completely adjudicate upon and settle all the questions
involved in the suit. The question is whether an order of the
Commercial Court or the Commercial Division of the High Court,
adding a party to an Admiralty Suit, is appealable under Section
13 of the Commercial Courts Act, read with Section 14 of the
Admiralty Act. [Paras 61, 62][27-B-D]
1.2 Both Section 13 of the Commercial Courts Act and
Section 14 of the Admiralty Act contain non-obstante clauses
giving the Sections overriding effect. While Section 14 of the
Admiralty Act which begins with a non-obstante clause as
observed, provides that notwithstanding contained in any other
law for the time being in force, an appeal shall lie from any
judgment, decree or final order or interim order under the
Admiralty Act, of a Single Judge of the High Court to a Division
Bench of the High Court, Section 13(2) of the Commercial Courts
Act says notwithstanding anything contained in any other law for
the time being in force, or the Letters Patent of the High Court,
no appeal shall lie from any order or decree of a Commercial
Division or Commercial Court otherwise than in accordance with
the provisions of the Commercial Courts Act. The proviso
restricts an appeal under the Commercial Courts Act, to such
orders as are specifically enumerated in Order 43 of the CPC.
[Para 67][29-F-H][30-A-B]
1.3 A clause with the words "notwithstanding anything
contained in any other law for the time being in force" is generally
appended at the beginning of a section with a view to give the
enacting part of the section overriding effect in case of conflict
with any other law. Ordinarily, when two or more statutes contain
statutory provisions which start with the clause "notwithstanding
anything contained in any other law for the time being in force"
and those statutes contain conflicting provisions, a question that
could arise is, which statute would prevail. As a general rule, the
Special Statutes prevail over General Statutes. If both statutes
are general statutes or special statutes containing identical or
similar non-obstante clauses, the later statute would prevail. The
rule that a non-obstante clause in a later statute prevails over
the non-obstante clause in an earlier statute is not an absolute
rule. The question of which provision prevails, would necessarily
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE
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[2022] 10 S.C.R.
depend on the object of the enactment and, in particular, the object
of giving overriding effect to the enactment or any specific
provision thereof. When two or more enactments operating in
the same field contain a non obstante clause stating that its
provisions will have effect notwithstanding anything inconsistent
therewith contained in any other law, the conflict has to be
resolved upon consideration of the purpose and policy underlying
the enactments. [Paras 68-70][30-B-F]
M V Elizabeth v. Harwan Investment and Trading Pvt.
Ltd. (1993) 2 Supp SCC 433 - referred to.
2.1 A dispute arising out of issues relating to admiralty and
maritime law is a commercial dispute as defined in Section 2(1)
(c)(iii) of the Commercial Courts Act. It is clear from a reading of
the Admiralty Act and the Commercial Courts Act, that orders
passed under the Admiralty Act pertaining to the exercise of in
rem jurisdiction by the High Court are the only orders which are
appealable under section 14 of the Admiralty Act, whereas orders
passed in the trial of a suit and on applications made under the
provisions of the Code of Civil Procedure, 1908 are not orders
under the Admiralty Act but orders under the CPC which would
be appealable only if they fall under Order 43 of the CPC as
provided in Section 13 of the Commercial Courts Act. Both the
Admiralty Act and Commercial Courts Act are Special Acts. Even
assuming that the Commercial Courts Act provisions are
considered to be general provisions relating to appeals, whilst
the provisions in the Admiralty Act are considered to be special
provision for appeal, then too the maxim Generalia Specialibus
Non Derogant, which is ordinarily attracted where there is a
conflict between a special and a general statute, would not apply.
[Paras 73, 78-80][31-E-F; 33-E-G; 34-B-C]
Ashoka Marketing Ltd. v. Punjab National Bank (1990)
4 SCC 406 : [1990] 3 SCR 649 - followed.
Kandla Corporation v. OCI Corp. (2018) 14 SCC 715
: [2018] 1 SCR 915 - relied on.
CTO v. Binani Cements 2014 SCC Online SC 140 -
referred to.
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2.2 If such an order under the Code of Civil Procedure
which does not fall under Order XLIII of CPC is held to be
appealable, then the entire purpose of the Commercial Courts
Act would be defeated, and every single order passed in a course
of a trial of an admiralty suit would be appealable under section
14 of the Act. Such orders would be large in number including
orders in relation to discovery, inspection, case management
hearing, admissibility of evidence, framing of issues,
interrogatories, etc. This would make a mockery of the intended
purpose of Parliament in enacting the Commercial Courts Act,
which is to expedite trials in commercial suits of a specified value,
and restrict the number of interlocutory appeals. An order for
addition of a party under Order 1 Rule 10(2) of the CPC is not
appealable under section 14 of the Admiralty Act. Gulf Petrochem
is a party to the dispute and the suit transaction and the Contract
of Carriage (Bill of Lading) and hence is a necessary party. Gulf
Petrochem is also a proper party whose presence is necessary
for complete and final decision on questions in the suit. The
pleadings in Paragraphs 10 to 12 of the Plaint [Page 264] which
are extracted in the Impugned Judgement at Page 11-13
demonstrate that Gulf Petrochem is a proper and necessary party
even though the Respondent may choose not to claim any reliefs
against them in the present Suit. [Paras 81-83][35-G-H; 36-A-E]
Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC
147 : [1994] 5 Suppl. SCR 135 - relied on.
2.3 Section 14 of the Admiralty Act provides the fora for an
appeal from any judgment, decree, final order or interim order of
a Single Judge of the High Court under the Admiralty Act to a
Division Bench of the High Court. The expression "any interim
order" has to be read harmoniously with Order 43, Rule 1 of the
Code of Civil Procedure in view of Section 12 of the Admiralty
Act read with Section 13 of the Commercial Courts Act. It is not
the intent of the overriding provision of Section 14 to nullify
Section 12 of the Admiralty Act. Section 12 of the Admiralty Act
applies to all proceedings in the High Court whether they be
original proceedings or appellate proceedings. On a harmonious
reading of Sections 12 and 14 of the Admiralty Act with Section
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE
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13 of the Commercial Courts Act, an intra-court appeal under
the Admiralty Act to the Commercial Division of the High Court
would lie from any judgment, decree or final order under the
Admiralty Act or an interim order under the Admiralty Act
relatable to the orders specified in Order 43, Rule 1. [Paras 8486][36-F-H; 37-A-B]
2.4 It could not possibly have been the legislative intent of
the Admiralty Act to make all interim orders appealable. Such a
wide interpretation of the expression "interim order" would mean
that any party would be able to delay the trial and final disposal by
filing appeals even from inconsequential orders calling for
affidavits and the like. We, therefore, hold that an appeal does
not lie to the Commercial Appellate Division of the High Court
from an order of the Commercial Division (Single Bench) of the
same High Court for addition of a party in an admiralty suit
governed by the Admiralty Act. Even otherwise, the Division
Bench erred in law in allowing the appeal from the order of the
Commercial Division (Single Judge) adding Gulf Petroleum as
party defendant to the suit. [Paras 88, 89][37-D-F]
Cho Yang Shipping Co. Ltd. v. Coral (UK) Ltd. (1997)
2 Lloyd's Rep 641 - referred to.
Magic Frames v. Radiance Media P Ltd 2019 SCC
Online Mad 38929 - held inapplicable.
Case Law Reference
[2018] 1 SCR 915
relied on
Para 73
[1990] 3 SCR 649
followed
Para 79
[1994] 5 Suppl. SCR 135
relied on
Para 82
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 68976898 of 2022.
From the Judgment and Order dated 28.10.2021 of the High Court
of Judicature at Madras in OSA (CAD) No. 88 of 2021 and CMP No.
16921 of 2021.
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K. V. Vishwanathan, Prashant S. Pratap, Sr. Advs., Amitava
Majumdar, Arvind Kumar Gupta, Pabita Dutta, Rishi Bhardwaj, Amartya
Saran, A. Sumant Gupta, Advs. for the Appellant.
Zarir Bharucha, Aditya Verma, Bimal Rajasekhar,
Chandrashekhar Haridh, Ms. Priyamvada Mishra, Rigved Prasad, Advs.
for the Respondent.
The Judgment of the Court was delivered by
INDIRA BANERJEE, J.
Leave granted.
2. These appeals are against a judgment and order dated
28th October 2021 passed by the Commercial Appellate Division of the
High Court of Judicature at Madras allowing Commercial Appeal being
O.S.A (CAD) No.88 of 2021 filed by the Respondent, and setting aside
an order dated 24th September 2021 passed by the Commercial Division
(Single Bench) of the High Court, adding Gulf Petroleum FZC as
defendant in the Admiralty Suit filed by the Respondent, Banque Nationale
De Geneve being CS (Commercial Division) No.96 of 2021.
3. The Appellant, M/s Galaxy Marine Services Limited is the
registered owner of the Vessel, M. V. Polaris Galaxy, a sea-going oil
tanker, flying the flag of Liberia, which is hereinafter referred to as, "the
Vessel".
4. M/s Polaris Marine Services, acting as Commercial Managers
of M/s Galaxy Marine Services, entered into a charterparty agreement
with Profitable Wealth Inc., a company registered in the British Virgin
Islands and operated by Wirana Shipping Corporation Private Limited, a
well-known maritime company based in Singapore, for charter of the
vessel to Profitable Wealth Inc. Profitable Wealth Inc. in turn subchartered the vessel to Gulf Petroleum FZC for carriage of cargo of
Marine Fuel Oil.
5. On 6th May 2020, Gulf Petroleum FZC entered into a contract
for purchase of 27-28,000 Metric Tons (MT) of Marine Fuel from Indian
Oil Corporation Limited (IOC) which was to be loaded at the Kandla
Port, for discharge at Fujairah.
6. Gulf Petroleum FZC requested the Respondent, Banque
Cantonale de Geneve, hereinafter referred to as the Respondent Bank,
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE
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to finance the purchase of the said 27-28,000 MT of Marine Fuel Oil
from IOC. Gulf Petroleum FZC informed the Respondent that the Marine
Fuel Oil had been sold to Aramaco for delivery at Fujairah, on open
credit.
7. By a letter dated 11th May 2020, the Respondent Bank requested
Gulf Petroleum FZC to provide a copy of the Sale Contract between
Gulf Petroleum FZC and Aramco and also sought certain clarifications.
On the same day i.e., 11th May 2020, Gulf Petroleum FZC and Aramco
entered into a Sale Contract for delivery of Marine Fuel Oil at Fujairah
between 23-30 May 2020, against credit of 60 days from the date of
invoice.
8. On 12th May 2020, a copy of the Sale Contract between Gulf
Petroleum FZC and Aramco was forwarded to the Respondent Bank.
Thereafter, the Respondent Bank agreed to finance the transaction. The
Respondent Bank issued a Letter of Credit in favour of IOC for USD
6,050,000.00. The Letter of Credit provided that if original Bills of Lading
were not available, then payment under the Letter of Credit would have
to be made against a Letter of Indemnity.
9. On 15th May 2020, Gulf Petroleum FZC requested the
Respondent Bank to amend the Letter of Credit by changing the Port of
Discharge from Fujairah to Singapore. The Respondent Bank sought
certain clarifications on the proposed amendment.
10. On 15th May 2020, Gulf Petroleum FZC and Aramco made an
addendum to their Sale Contract changing the Port of Discharge from
Fujairah to Singapore. On 17th May 2020, Gulf Petroleum FZC forwarded
a copy of the addendum to the Sale Contract, to the Respondent Bank.
On 18th May 2020, the Respondent Bank amended the Letter of Credit
by changing the Port of Discharge from Fujairah to Singapore.
11. On 21st May 2020, the Master of the Vessel issued a Bill of
Lading No.21052020/01, in respect of cargo of marine fuel. In terms of
the Bill of Lading the consignee was the Respondent Bank, the 'Notify
Party' was Gulf Petrochem FZC and the Port of Discharge was
Singapore. On the said date Gulf Petroleum FZC instructed the Master
of Vessel that the cargo should to be discharged to Chevron Singapore
Private Limited (hereinafter referred to as "Chevron") at the Horizon
Terminal at Singapore.
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12. On 24th May 2020, Profitable Wealth Inc. gave a Letter of
Indemnity to Polaris Marine Services. Gulf Petroleum FZC, in turn gave
a counter-indemnity to Profitable Wealth Inc.
13. IOC issued an invoice dated 27th May 2020 for USD
5,985,084.28 to Gulf Petroleum FZC. In terms of the Sale Contract
between IOC and Gulf Petroleum FZC, the Respondent Bank honoured
the Letter of Credit and paid IOC the amount due in terms of the invoice.
14. On 31st May 2020, the Vessel arrived at the Port of Discharge
at Singapore and tendered its Notice of Readiness as per the instructions
of Gulf Petroleum FZC. By an email dated 2nd June 2020, Gulf Petroleum
FZC requested the Vessel to tender Notice of Readiness to Chevron
being receivers of the cargo. Thereafter, between 9th June 2020 and
10th June 2020 the cargo was discharged at Horizon Terminal, Singapore.
15. On 11th June 2020, Gulf Petroleum FZC issued an invoice of
USD 6,707,357.38 to Aramco under a Sale Contract with Aramco. The
due date of the invoice was 10th August 2020 i.e. 60 days from the date
of discharge as agreed in terms of the Sale Contract.
16. On 15th June 2020, Gulf Petroleum FZC provided the
Respondent Bank with a copy of the invoice issued by Gulf Petroleum
FZC to Aramco. On 20th July 2020, GP Global Group being the parent/
holding company of the Gulf Petroleum FZC issued a media statement
with regard to financial restructuring of Gulf Petroleum FZC on account
of financial difficulties.
17. Thereafter, news reports surfaced that GP Global Group had
uncovered a massive fraud within Gulf Petroleum FZC. Gulf Petroleum
FZC and its employees were by various ways and means defrauding
and cheating various parties, including the Appellant
18. The Respondent Bank sent a letter to the Master of the Vessel
marking a copy to P&I Club and the registered owners stating that no
payment had been received by the Respondent Bank on the due date
which is 60 days after delivery of the cargo. The cargo should therefore
not be discharged without the consent of the Respondent Bank. However,
by this time the cargo had already been discharged and delivered on the
basis of instructions given by Gulf Petroleum FZC to Chevron.
19. In October 2020, there were news reports that another
company, Gulf Petrol Supplies LLC had filed criminal proceedings against
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE [INDIRA BANERJEE, J.]
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Gulf Petroleum FZC making allegations of fraud in relation to contracts
for refined product cargoes, including fuel oil. It was alleged that Gulf
Petroleum FZC had fabricated several contracts for supply of petroleum
products to Gulf Petrol Supplies LLC and had issued fraudulent/fake
invoices.
20. On 8th March 2021, the Respondent Bank instituted the
Admiralty Suit being C.S. (Commercial Division) No. 96 of 2021 before
the Commercial Division of the Madras High Court.
21. In the plaint filed in the said Admiralty suit, the Respondent
Bank pleaded the following:-
"7. The Plaintiff submits that its claim in the present suit arises
under a Bill of Lading and is for mis-delivery of cargo. The
claim is a maritime claim under section 4(1)(f) of the Admiralty
(Jurisdiction and Settlement of Maritime Claims) Act, 2017
(hereinafter referred to as the said Act). The claim is against
the owners of the Defendant vessel. The Defendant vessel is
within the territorial jurisdiction of this Hon'ble Court. In
the circumstances the Plaintiff is entitled to file the present
Suit in rem against the Defendant vessel and entitled to an
order of arrest of the Defendant vessel in respect of its
maritime claim.
8. The Plaintiff is the lawful holder of the original Bill of
Lading no. 21052020/01 dated 21st May 2020 issued by the
owner of the Defendant vessel for carriage of 27,132.411
MTs of marine fuel from Kandla to Singapore.
9. The central issue in the present suit is that the owner of the
Defendant vessel has unlawfully and in breach of its
obligations misdelivered cargo belonging to the Plaintiff to
someone else, without production of the original bill of lading.
The Defendant vessel and or its owner is therefore, liable to
the Plaintiff for the tort of conversion. The Plaintiff is entitled
to be compensated for its loss. The liability of the Defendant
vessel is established once the Plaintiff demonstrates that it
continues to be the lawful holder of the original bill of lading
and that the Defendant vessel has unlawfully delivered the
cargo to someone else. However, it may be useful to provide
some background.
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10. On 8th May 2020, one Gulf Petrochem FZC ("GP")
approached the Plaintiff seeking financing for a transaction
of purchase of fuel from Indian Oil Corporation Ltd.
("IOCL") and onward sale of marine fuel to Aramco Trading
Fujairah FZE ("Aramco"). The proposed transaction was as
follows :
a. GP would buy marine fuel from IOCL at USD 220.5880
per MT.
b. GP would sell on the marine fuel to Armco at USD 246.726
per MT
c. The load port for the cargo would be Kandla and the
discharge port would be Fujairah
d. The Plaintiff would finance the purchase of the fuel by
GP from IOCL by way of letter of credit so as to enable
GP to procure the cargo and sell it onward to Aramco.
The purchase price for the onward sale would be remitted
by Aramco into GP's bank account maintained with the
Plaintiff.
11. The payment terms under the sale by GP to Aramco were
to be on open credit given that Aramco was an Oil Major.
In other words, the Plaintiff would rely on the name of
Aramco as having never defaulted as security for payment
due from them. The relevant payment terms expressed in
the contract stated:
"THE PAYMENT SHOULD BE MADE WITHIN 60 (SIXTY)
CALENDAR DAYS FROM THE DATE OF INVOICE
(INVOICE DATE = DAY 0) AGAINST PRESENTATION OF
THE SELLER'S INVOICE AND COQ [Certificate of
Quality]."
12. The understanding between the parties in relation to this
aspect of security, was as follows:
a. It was agreed that the original Bill of Lading
representing the cargo would be issued by the
shipowner to the order of the Plaintiff. The title/
property in the cargo of fuel financed and paid for by
the Plaintiff would vest with the Plaintiff
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE [INDIRA BANERJEE, J.]
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b. Independent of the obligation to pay from Aramco, the
Plaintiff would remain the lawful holder of the original
Bill of Lading and would be entitled to delivery of the
cargo thereunder., the security for the Plaintiff's claim
was the cargo, i.e., the fuel itself. However, until the
Plaintiff received confirmation of the onward sale of
Aramco, the title/property in the cargo of fuel would
vest with the Plaintiff by virtue of being the lawful
holder of the original Bill of Lading.
11. Further emails were exchanged between GP and the
Plaintiff on the above proposed transaction. GP had, on
8 May 2020, provided to the Plaintiff the contract between
it (as buyer) and IOCL (as seller). On 12 May 2020, on
the basis of the above understanding, the Plaintiff opened
the Letter of Credit in IOCL's favour. There were some
amendments to the contract between GP and Aramco, as
regards the discharge port - it was changed from Fujairah
to Singapore. This was conveyed by GP to the Plaintiff on
17 May 2020. The corresponding amendment in the letter
of credit was carried out by the Plaintiff on 18 May 2020.
***
13. The relevant documents such as the bill of lading,
commercial invoice etc. were negotiated by IOCL under
the letter of credit opened by the Plaintiff. The Plaintiff
accordingly made payment to IOCL as per the financial
agreement with GP. The bill of lading was to the order of
the Plaintiff. By reason of the bill of lading being made
out to order and being the lawful holder of the bill of
lading, the Plaintiff acquired rights of suit against the
Defendant vessel in respect of the goods, pending further
onward endorsement.
14. The Plaintiff was concerned, when, even as 10 August
2020 (i.e., the deadline for Aramco to make payment for
the Cargo) was fast approaching, there was no update
about any such payment nor was there any news of the
status of the Cargo. This is in spite of the fact that, by
virtue of being in possession of the original bill of lading,
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it would have rights of suit against the Defendant vessel
if any mischief had been engaged in respect of the Cargo.
***
17. It now appears that the Defendant vessel has delivered
the Cargo to Aramco or an unknown third party, on or
about 10 August 2020, without insisting on production of
the original bill of lading. An invoice was raised on 11
June 2020, by GP on Aramco for the amount of USD
6,705,357.38 (approx INR 49,07,04,087.89 (Forty-Nine
Crore, Seven Lakh, Four Thousand and Eighty Seven only)
(CALCULATED AT 1 USD=73 INR). The Plaintiff learnt
about this subsequently when in the course of a fraud
investigation against GP."
22. On 9th March 2021, the Commercial Division of Madras High
Court (Single Bench) passed an ex parte order of arrest of the Vessel.
Thereafter, on 26th March 2021, the Respondent Bank filed an Application
No.1494 of 2021 in the said Admiralty suit, for summary judgment under
Order XIV Rule 8 and Order XIIIA of the Civil Procedure Code 1908,
as amended by the Commercial Courts Act 2015 (hereinafter referred
to as "Commercial Courts Act").
23. Pursuant to orders passed by the Commercial Division (Single
Bench) of the Madras High Court, on an application made by the
Appellant, the Appellant furnished a Bank Guarantee to secure the claim
of the Respondent Bank. Thereafter, on 6th July 2021, the Commercial
Division of the High Court passed an order vacating the order of arrest
of the vessel and allowing the Vessel to sail out.
24. On 16th July 2021, the Appellant filed its response to the interim
application being Application No.1494 of 2021, filed by the Respondent
Bank for summary judgment under Order XIV Rule 8 and Order XIIA
of the Code of Civil Procedure as amended by the Commercial Courts
Act. In its response/Counter-Affidavit, the Appellant pleaded:-
"(k) The Plaintiff's customer Gulf Petrochem who is alleged
to have cheated and defrauded the Plaintiff and provided
the Plaintiff with false and fraudulent documents on the basis
of which credit was granted by the Plaintiff, is a necessary
and/or proper party whose presence is necessary to effectively
adjudicate the issues that arise in the suit. Whether the
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE [INDIRA BANERJEE, J.]
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Plaintiff has been paid any amounts by Gulf Petrochem is an
issue that can only be gone into at trial and requires the
presence of Gulf Petrochem..."
25. On 13th August 2021, the Respondent Bank filed its Rejoinder
Affidavit to the aforementioned Application No.1494 of 2021 for summary
judgment. After hearing the respective parties and after considering the
documents on record, the Commercial Division of the High Court (Single
Bench) passed an order dated 24th September 2021 directing the
Respondent Bank to take necessary steps to implead Gulf Petroleum
FZC as a necessary and proper party to the suit.
26. The Single Bench observed and held:-
"6. In the written statement and the common counter filed by
the Vessel owner/the sole defendant, it is specifically stated
that on the instructions, the goods were delivered at Singapore
Port based on the delivery order issued by the customer of
the plaintiff. In such circumstances, the original Bill of Lading
is not required. Acting upon the e-mail communication dated
21.05.2020 by the Gulf Petrochem, the customer of the
plaintiff, the defendant delivered the cargo at Singapore. The
plaintiff is the financier to GP and the defendant is the carrier
for GP. The plaintiff is not the owner of the cargo. Hence the
suit has to be dismissed for non-joinder and mis joinder of
the party. If at all the plaintiff have any money claim, it has to
proceed against its customer Gulf Petrochem (GP) for breach
of contract and not a suit for maritime claim. The suit against
the carrier as if it is a maritime claim is abuse of law.
7. Heard. Records perused.
8. In the suit transaction, the Gulf Petrochem (GP), who is
the customer of the plaintiff, is the key player on whose
instructions, the goods have been delivered at Singapore by
the defendant. IOCL has sold marine fuel to GP based on the
LC issued by the plaintiff for USD 6,050,000. GP has engaged
the defendant to transport cargo. As per the Bill of Lading,
the cargo is supposed to be delivered at Singapore. The
defendant has discharged the cargo at Singapore Port based
on the letter of indemnity dated 24.05.2020 given by Profitable
Wealth INC, Singapore. In the documentary credit opening
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(LC) dated 12.05.2020 originated from the plaintiff there is a
clause which indicates cargo can be delivered on obtaining
indemnity in case of temporary non availability of original
Bill of Lading.
9. From the documents and the facts pleaded, this Court is of
the view that Gulf Petrochem (GP) who is the customer of the
plaintiff, is the proper and necessary party in the suit. Unless
the plaintiff impleads GP as a party, the suit cannot be
adjudicated to render proper justice."
27. The Respondent Bank filed an appeal being OSA (CAD) No.88
of 2021, against the said order dated 24th September 2021, in the
Commercial Appellate Division of the High Court (Division Bench), under
Section 13(1) of the Commercial Courts Act 2015. By the judgment and
order dated 28th October 2021 impugned in this appeal, the Commercial
Appellate Division of the High Court (Division Bench) allowed the appeal
and set aside the judgment and order of the Single Bench (Commercial
Division), imposing costs of Rs.1,50,000/- on the Appellant. The
preliminary objection raised by the Appellant, to the maintainability of
the appeal, was rejected.
28. After recording the submissions of the parties, the Division
Bench, observed and held:
"12. Indeed, the order impugned is spread over eight
paragraphs. The first five are the preliminary paragraphs. At
the sixth paragraph, it is recorded that the sole defendant
delivered the goods at Singapore based on a delivery order
apparently issued by the customer of the plaintiff and the
defendant apparently acted on the basis of an e-mail of May
21, 2020 issued by Gulf Petrochem. The trial court recorded
the defendant's contention that the plaintiff had financed the
transaction and that the plaintiff was not the owner of the
cargo and since the owner of the cargo was Gulf Petrochem
which had not been impleaded, the suit was liable to be
dismissed.
13. Upon noting such contention, the trial court concluded
as follows in the only paragraph in support of the order:
"8. In the suit transaction, the Gulf Petrochem (GP), who is
the customer of the plaintiff, is the key player on whose
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE [INDIRA BANERJEE, J.]
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instruction, the goods have been delivered at Singapore by
the defendant. IOCL has sold marine fuel to GP based on the
LC issued by the plaintiff for USD 6,050,000. GP has engaged
the defendant to transport the cargo. As per the Bill of Lading,
the cargo is supposed to be delivered at Singapore. The
defendant has discharged the cargo at Singapore Port based
on the letter of indemnity dated 24.05.2020 given by Profitable
Wealth Inc. Singapore. In the documentary credit opening (LC)
dated 12.05.2020 originated from the plaintiff there is a
clause which indicates cargo can be delivered on obtaining
indemnity in case of temporary non availability of original
Bill of Lading."
***
18. The matter falls within a very short compass. The primary
document is not disputed. The plaintiff is the named consignee
in the bill of lading and it is also accepted by the defendant,
in particular, that ordinarily it would be the consignee who
would be entitled to obtain delivery of the goods covered by
a bill of lading. In this case, it may also be noticed that Gulf
Petrochem is the notify party mentioned in the bill of lading.
In international trade, documents are of immense value and
courts must proceed on the basis of the letter of the documents
without seeking to ascertain the nature of the underlying or
any incidental transaction. If it is imperative that a carrier
notifies the party indicated as the notify party, what it implies
is that notice of the arrival of the vessel or the notice of
readiness to discharge cargo must be given to such party
whereupon such party would produce the bill of lading and
obtain the discharge of the cargo. It is also possible that the
consignee may authorise the carrier to release the cargo in
favour of the notify party or to any other as the consignee is
entitled to assign its right to obtain delivery under the bill of
lading to any party of the consignee's choice.
19. What is of paramount importance is that it is the consignee
and the consignee alone which can issue instructions or
authorise the delivery of the goods covered by the bill of lading
to any third party. The carrier is not obliged to act as per the
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directions or instructions of any third party as the bill of lading,
in a sense, is the document of title pertaining to the cargo
and it is elementary that it is only the owner of the goods who
has the right to alienate the goods or transfer the same.
20. Implicit in the letter of May 24, 2020 issued by Profitable
Wealth Inc. was that such entity required the carrier to do
something unusual or out of the ordinary, and, as such,
exposing the carrier to a risk in course of such deviation. As
a consequence, to induce the carrier to deviate from the usual
practice, Profitable Wealth Inc. indemnified the carrier
harmless against any claim that may be made against the
carrier for the carrier acting according to the instructions of
Profitable Wealth Inc. The plaintiff had nothing to do with
Profitable Wealth Inc. or any instructions that profitable
Wealth Inc. or Gulf Petrochem or even the Maharaja of
Gaipajama may have issued to the carrier. These instructions,
whether issued by Gulf Petrochem or Profitable Wealth Inc.,
were not backed by any authority of the plaintiff. In such
circumstances, what the arrangement between the defendant
and the third parties may have been may not be of any
relevance in the suit and in the context of the plaintiff's claim
herein.
21. As to the averments in paragraphs 10 to 12 of the plaint,
it is sometimes better not to say too much. However, the
averments may be seen as part of a narrative leading up to
the claim of the plaintiff and the plaintiff's cause of action
against the defendant. In the scheme of the action and the
particular claim of the plaintiff as the consignee in the bill of
lading against the defendant carrier, the transactions between
the plaintiff and Gulf petrochem or those between Gulf
Petrochem and Indian Oil Corporation or even that between
Gulf Petrochem and Aramco are of no relevance. Till such
time that the plaintiff's name appeared as the consignee in
the bill of lading, the defendant was obliged only to the plaintiff
to deliver the goods to the plaintiff or to the order of the
plaintiff and the defendant, in acting on the basis of
instructions issued by others may not have affected the right
of the plaintiff or the plaintiff's claim under the bill of lading.
OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS
GALAXY v. BANQUE CANTONALE DE GENEVE [INDIRA BANERJEE, J.]
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22. In such circumstances, Gulf Petrochem Inc., which may
have been financed by the plaintiff qua the subject transaction
is neither a necessary nor a proper party to the plaintiff's
simple claim against the carrier of the goods for the breach
of the contract of carriage and in the carrier's failure to
deliver the goods to the plaintiff or to the order of the plaintiff.
It is not unusual in the industry for goods to be released at
the request of a stranger, but that is precisely why the stranger
indemnifies the carrier. It is more likely than not that the entity
that induced the defendant to discharge the goods in
Singapore may be beyond the defendant's reach; but that may
not be an excuse to resist the plaintiff's claim. It is equally
possible that the plaintiff may have acquiesced in the delivery
instructions issued by Profitable Wealth Inc., but when the
plaintiff has not, it is only the indemnity furnished by the entity
that the defendant can chase.
23. The observations made herein must be understood to be
in the context of what was required to be considered and
should not unduly weigh with the trial court in course of the
expeditious disposal of the application for summary judgment
that the plaintiff has filed.
24. The order impugned dated September 24, 2021 is set aside.
The trial court is requested to take up the application for
summary judgment and disposal of the same in accordance
with law as expeditiously as the business of the trial court
permits. OSA (CAD) No.88 of 2021 is allowed as above. The
defendant will pay costs assessed at Rs.1,50,000/- CMP
No.16921 of 2021 is closed."
29. There is no doubt that in international trade, documents are of
immense value and that Courts must proceed on the basis of the
documents as held by the Division Bench. It is, however, difficult to
accept that the Court is not required to ascertain the nature of the
underlying transaction. The Division Bench rightly noted that when a
carrier notifies the party indicated as the 'notify party', what it implies is
that notice of the arrival of the vessel or notice of readiness to discharge
cargo must be given to such party, whereupon such party would produce
the Bill of Lading and obtain the discharge of the cargo.
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30. The law governing bills of lading is a combination of mandatory
international rules and rules of common law, while charterparties are
governed entirely by the common law.
31. The International Convention for the Unification of Certain
Rules of Law relating to Bills of Lading framed in 1924, and known as
the Hague Rules, govern the liability of carriers in respect of cargo,
covered by bills of lading.