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Sunil B. Naik v. Geowave Commander

Civil Appeal · 2018 INSC 225Decided 9 Mar 2018
Civil Appeal No. 2617 of 2018
Justice J. Chelameswar · Justice Sanjay Kishan Kaul

Background

ONGC awarded a seismic-survey contract to a Singapore company, Reflect Geophysical, which in turn chartered a specialised survey vessel, "Geowave Commander," from its Norwegian owners under a bareboat charter. The appellants (owners of other vessels, such as fishing trawlers and the "Orion Laxmi") had maritime claims against Reflect Geophysical as the charterer, and sought to secure those claims by having the Bombay High Court order the arrest/restraint of the Geowave Commander: a ship owned not by Reflect Geophysical but by a third party (the Norwegian owners). The question was whether a ship can be arrested for a maritime claim against its charterer when the ship itself belongs to someone else entirely uninvolved in that claim.

Decision Breakdown

The Supreme Court dismissed the appeals, holding that the Geowave Commander could not be arrested for the appellants' maritime claims. Applying principles under the International Convention on Arrest of Ships, 1999 (and India's then-pending 2017 Admiralty legislation reflecting the same principle), the Court held that a ship may only be arrested if the person liable for the maritime claim is either the owner of that very ship, or its demise/time/voyage charterer at the relevant time and still its charterer or owner when the arrest is sought. Here, the appellants' claims arose from their own vessels being chartered by Reflect Geophysical for unrelated purposes: Reflect Geophysical was not shown to be the "demise charterer" (effectively a temporary owner with full possession and control) of the Geowave Commander in the relevant sense, and the actual owners of the Geowave Commander had no connection to the appellants' claims at all. The Court dissolved the earlier interim order that had led to money being deposited in court and directed that the deposited amount, with interest, be returned to the Geowave Commander's owners.

Lesson Learnt

A ship cannot be seized to satisfy a claim against someone else's debt merely because that debtor also happens to have chartered it: the law allows arrest only against the ship actually owned by, or genuinely under the full control of, the person who owes the maritime claim.

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

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