Amitava Majumdar (Raja)
Pabitra Dutta
Published On - June 22, 2023
A CASE STUDY OF OWNERS AND PARTIES INTERESTED IN THE VESSEL M.V. POLARIS GALAXY V BANQUE CANTONALE DE GENEVE.
In a much-awaited decision involving the issue of impleading Gulf Petrochem FZC as a proper/necessary party to the suit, the Supreme The Court of India had the opportunity of clarifying the scope of intra-court appeals from interim orders passed in admiralty actions being heard by the Commercial Division (Single Bench) (“Commercial Division”) to the Commercial Appellate Division (Division Bench) (“Appellate Division”) of the concerned High Court. The appeal before the Supreme Court of India arose from a decision of the Appellate Division of the High Court of Judicature at Madras rejecting the arguments against maintainability and allowing the appeal from the order of the Commercial Division which had ordered Gulf Petrochem FZC to be impleaded as the proper and necessary party to the admiralty suit. The authors were part of the legal team which represented the Appellants i.e., the registered owners of the vessel M.V. Polaris Galaxy (“Vessel”) in the aforesaid proceedings.
The Vessel was chartered by Polaris Marine Services, the commercial managers of the registered owners, to Profitable Wealth who in turn sub-chartered it to Gulf Petroleum FZC. Gulf Petrochem FZC purchased Marine Fuel (“Goods”) from Indian Oil Corporation Limited (“IOCL”) which was set to set to deliver to Aramco at the port of Fujairah (this was later changed to Singapore). The Respondents herein, i.e., Banque Cantonale De Geneve funded the transaction by issuing a Letter of Credit (“LOC”) in favor of IOCL. It is important to note that this LOC provided that in case of non-availability of the original Bill of Ladings (“BOL”), the payment under the LOC would have to be made against a Letter of Indemnity (“LOI”). In the BoL issued by the Master of the Vessel, the consignee of the Goods was Banque Cantonale De Geneve (“Consignee Bank”), and the party to be notified of the arrival of the vessel and her readiness of discharge cargo was Gulf Petrochem FZC (“Notify Party”).
On 21 st May 2020, the Notify Party instructed the Master of the Vessel to discharge the Goods to one Chevron Singapore Private Limited (“Chevron”). On 24 th May 2020, the sub-charterers of the Vessel, i.e., the Notify Party provided an LOI to the charterers of the Vessel, i.e., Profitable Wealth that in turn provided an LOI to the commercial managers of the registered owners, i.e., Polaris Marine Services. On 27 th May 2020, IOLC issued an invoice to the Notify Party. The Consignee Bank released the payment under the LOC. On 31st May 2020, the Vessel arrived in Singapore and issued a notice of readiness to the Notify Party as per the BOL. The Notify Party again instructed the Master of the Vessel to notify Chevron who were the receivers of the Goods. On 11 th June 2020, the Notify Party issued an invoice to Aramco. However, in light of no payment being received by the Consignee Bank through Aramco after the due date of this invoice, the Consignee Bank issued instructions that the Goods were not to be discharged without its consent. However, as mentioned above, the Goods had already been discharged to Chevron as per the instructions of the Notify Party.
Consequently, the Consignee Bank filed a maritime claim for the misdelivery of cargo under S. 4(1)(f) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (“Admiralty Act”) pleading that the owner of the Vessel had discharged the cargo without production of the original BoL. The Court of first instance the Commercial Division Single Bench) of the High Court passed an ex-parte order for the arrest of the Vessel. Eventually, the owners of the Vessel entered appearance, submitted security, and obtained vacation of the arrest of the Vessel. The Consignee Bank filed an application for a summary judgment under Order XIV Rule 8 and Order XIIIA of the Civil Procedure Code 1908 (“CPC”), as amended by the Commercial Courts Act 2015 (“Commercial Courts Act”). In their reply to this application, the owners contended that the suit involved aspects and questions that (i) necessitated the presence of the Notify Party to effectively adjudicate the involved issues, and (ii) required a trial as opposed to a summary judgment. The Commercial Division observed that the LOI contained a clause providing for the delivery of cargo on obtaining indemnity in case of temporary non-availability of the BOL. Further, the Notify Party being the customer of the Consignee Bank was a key player on whose instructions the cargo was delivered to Singapore and was held to be a necessary and proper party to the admiralty suit.
The Consignee Bank appealed this order to the Appellate Division under S. 13(1) of the Commercial Courts Act. The Appellate Division rejected the contentions of maintainability of the appeal and allowed the appeal directing the trial court to dispose of the application for summary judgment accordingly. Giving immense value to the documents of international trade, here the BOL, the Appellate Division stated that the claim in the instant admiralty suit was a simple one based on the BOL wherein, ordinarily, the consignee named in the BOL is entitled to obtain delivery of goods, and only the named or endorsed consignee can issue instructions or authorize the discharge of cargo to any other third party. A notified party, although notified of the readiness of the vessel to discharge cargo, is still required to produce the original BOL to obtain delivery. In contrast, by agreeing to deviate from the norm and deliver the Goods to Chevron on instructions of the Notify Party in the absence of the original BOL, the carrier agreed to absorb the risk of such deviation against an LOI. Since the discharge of Goods took place without the authority of the Consignee Bank, the arrangement between the owners and third parties becomes irrelevant to the instant admiralty suit, thus extinguishing the requirement of the presence of the Notify Party. Additionally, this effectively leaves the owners with the only option to chase the indemnity.
In order to decide whether the Appellate Division should have allowed the appeal and set aside the order of the Commercial Division, it was first necessary to decide whether an appeal lies from an order in an Admiralty Suit for the addition of party passed by the Commercial Division to the Appellate Division. Therefore, two issues were raised before the Supreme Court of India in the instant appeal. (a) Whether there lies an appeal from an order of the Commercial Division of a High Court adding a party to the suit to the Appellate Division? (b) If yes, whether the Appellate Division in the instant case had rightfully allowed the appeal in favor of the Consignee Bank?
The court must proceed on the basis of the international documents but the court is also required to ascertain the nature of the underlying transaction. At this stage, it must be noted that the owners had not made any application to add the notifying party as a necessary or proper party but had added it as its contention in replying to the application for summary judgment filed by the consignee bank.
