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Chrisomar Corporation v. MJR Steels Private Limited & Anr.

Civil Appeal · 2017 INSC 905Decided 14 Sept 2017
Civil Appeal No. 1930 of 2008
Justice Rohinton Fali Nariman · Justice Sanjay Kishan Kaul

Background

The appellant had supplied bunkers and other "necessaries" worth US$94,611.25 to a vessel, M.V. Nikolaos-S, at the port of Durban in 1999, which went unpaid. It filed an admiralty suit in the Calcutta High Court and had the vessel arrested when it later docked at Haldia, but the arrest was lifted after the appellant was told an out-of-court settlement had been reached. The vessel was subsequently sold through a chain of transactions and ultimately came to be owned by the respondent, who resisted the claim on the ground that it had purchased the vessel without notice of the dues. The trial court decreed the claim in the appellant's favour, but the High Court reversed this, holding the respondent was a bona fide purchaser whose ownership predated any enforceable claim.

Decision Breakdown

The Supreme Court examined whether a claim for "necessaries" supplied to a ship creates a maritime lien (which travels with the vessel regardless of ownership change) or only a maritime claim/statutory right of action in rem (which can be defeated by a genuine sale to a purchaser without notice), concluding it is the latter. On the facts, however, the Court found that the respondent had failed to prove the chain of sale by which it claimed to have acquired the vessel: the documents relied upon (a notarised bill of sale, Letter of Credit payment, and intermediate transfers) were inconsistent, undated correctly, or contradicted by the respondent's own pleadings in a separate suit alleging fraud against its seller. Since the respondent could not establish it was a bona fide purchaser for value without notice at the time of arrest, the Court set aside the High Court's judgment and restored the trial court's decree in favour of the appellant for recovery of US$94,611.25 (equivalent to Rs. 42,57,500) from the security furnished in court.

Lesson Learnt

A claim for supplies/necessaries to a ship is enforceable against the vessel unless a subsequent purchaser can clearly prove a genuine, well-documented chain of title acquired without notice of the pending claim: vague or contradictory sale documentation will not protect a buyer from an earlier creditor's claim.

Official source (sci.gov.in)View Judgment (PDF)

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